SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal quarter ended
August 3, 1996.
FEDERATED DEPARTMENT STORES, INC.
151 West 34th Street
New York, New York 10001
(212) 695-4400
and
7 West Seventh St.
Cincinnati, Ohio 45202
(513) 579-7000
Delaware 1-13536 13-3324058
(State of (Commission File No.) (I.R.S. Employer
Incorporation) Identification Number)
The Registrant has filed all reports required to be filed by
Section 12, 13 or 15 (d) of the Act during the preceding 12
months and has been subject to such filing requirements for the
past 90 days.
207,811,452 shares of the Registrant's Common Stock, $.01 par
value, were outstanding as of August 31, 1996.
<TABLE>
PART I -- FINANCIAL INFORMATION
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Operations
(Unaudited)
(thousands, except per share figures)
<CAPTION>
13 Weeks Ended 26 Weeks Ended
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales, including leased
department sales $3,284,228 $3,047,249 $6,584,893 $6,035,255
Cost of sales 1,995,573 1,862,915 4,010,221 3,686,836
Selling, general and
administrative expenses 1,113,984 1,067,887 2,267,049 2,137,846
Business integration and
consolidation expenses 98,917 89,023 176,605 172,345
Charitable contribution to
Federated Department Stores
Foundation - 25,581 - 25,581
Operating Income 75,754 1,843 131,018 12,647
Interest expense (126,996) (114,057) (250,341) (223,558)
Interest income 11,382 10,841 22,446 22,790
Loss Before Income Taxes (39,860) (101,373) (96,877) (188,121)
Federal, state and local income
tax benefit 12,667 34,447 31,738 64,196
Net Loss $ (27,193) $ (66,926) $ (65,139) $ (123,925)
Loss per Share $ (.13) $ (.37) $ (.31) $ (.68)
Average Number of Shares
Outstanding 207,663 182,830 207,187 182,754
</TABLE>
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
<TABLE>
FEDERATED DEPARTMENT STORES, INC.
Consolidated Balance Sheets
(Unaudited)
(thousands)
<CAPTION>
August 3, February 3, July 29,
1996 1996 1995
<S> <C> <C> <C>
ASSETS:
Current Assets:
Cash $ 134,133 $ 172,518 $ 238,173
Accounts receivable 2,768,417 2,842,077 2,157,512
Merchandise inventories 3,234,271 3,094,848 2,694,564
Supplies and prepaid expenses 176,729 176,411 107,509
Deferred income tax assets 115,541 74,511 198,123
Total Current Assets 6,429,091 6,360,365 5,395,881
Property and Equipment - net 6,270,870 6,305,167 5,261,698
Intangible Assets - net 731,047 744,689 1,027,033
Notes Receivable 204,035 415,066 407,276
Other Assets 397,326 469,763 365,436
Total Assets $ 14,032,369 $ 14,295,050 $ 12,457,324
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term debt $ 375,363 $ 733,115 $ 259,988
Accounts payable and accrued
liabilities 2,386,569 2,358,543 2,139,335
Income taxes 3,211 6,411 35,729
Total Current Liabilities 2,765,143 3,098,069 2,435,052
Long-Term Debt 5,644,524 5,632,232 5,121,445
Deferred Income Taxes 730,725 732,936 873,285
Other Liabilities 561,847 558,127 503,223
Shareholders' Equity 4,330,130 4,273,686 3,524,319
Total Liabilities and Shareholders'
Equity $ 14,032,369 $ 14,295,050 $ 12,457,324
</TABLE>
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
<TABLE>
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(thousands)
<CAPTION>
26 Weeks Ended 26 Weeks Ended
August 3, 1996 July 29, 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (65,139) $ (123,925)
Adjustments to reconcile net loss to
net cash provided (used) by operating
activities:
Depreciation and amortization of
property and equipment 251,657 206,556
Amortization of intangible assets 13,642 21,656
Amortization of financing costs 14,159 9,955
Amortization of original issue discount 225 981
Amortization of unearned restricted stock 1,334 2,569
Changes in assets and liabilities:
Decrease in accounts receivable 273,457 108,139
Increase in merchandise inventories (139,423) (313,943)
Increase in supplies and prepaid
expenses (318) (7,950)
Decrease in other assets not
separately identified 22,517 29,982
Increase (decrease) in accounts
payable and accrued liabilities
not separately identified 49,213 (9,700)
Decrease in current income taxes (3,200) (29,590)
Decrease in deferred income taxes (43,241) (69,064)
Increase (decrease) in other
liabilities not separately identified 3,420 (1,612)
Net cash provided (used) by operating
activities 378,303 (175,946)
Cash flows from investing activities:
Purchase of property and equipment (264,402) (169,932)
Disposition of property and equipment 105,053 23,841
Net cash used by investing activities (159,349) (146,091)
Cash flows from financing activities:
Debt issued 688,665 597,106
Financing costs (11,016) (3,859)
Debt repaid (1,034,350) (208,916)
Decrease in outstanding checks (21,187) (36,676)
Acquisition of treasury stock (598) (375)
Issuance of common stock 121,147 6,440
Net cash (used) provided by financing
activities (257,339) 353,720
</TABLE>
(Continued)
<TABLE>
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(thousands)
<CAPTION>
26 Weeks Ended 26 Weeks Ended
August 3, 1996 July 29, 1995
<S> <C> <C>
Net (decrease) increase in cash $ (38,385) $ 31,683
Cash at beginning of period 172,518 206,490
Cash at end of period $ 134,133 $ 238,173
Supplemental cash flow information:
Interest paid $ 219,793 $ 168,239
Interest received 13,611 23,046
Income taxes paid (net of refunds
received) 9,368 28,861
</TABLE>
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies
A description of the Company's significant accounting policies
is included in the Company's Annual Report on Form 10-K for
the fiscal year ended February 3, 1996 (the "1995 10-K"). The
accompanying Consolidated Financial Statements should be read
in conjunction with the Consolidated Financial Statements and
notes thereto in the 1995 10-K.
Because of the seasonal nature of the general merchandising
business, the results of operations for the 13 and 26 weeks
ended August 3, 1996 and July 29, 1995 (which do not include
the Christmas season) are not indicative of such results for
the fiscal year.
The Consolidated Financial Statements for the 13 and 26 weeks
ended August 3, 1996 and July 29, 1995, in the opinion of
management, include all adjustments (consisting only of normal
recurring adjustments) considered necessary to present fairly,
in all material respects, the consolidated financial position
and results of operations of the Company and its subsidiaries.
2. Acquisition of Companies
The Company acquired Broadway Stores, Inc. ("Broadway")
pursuant to an Agreement and Plan of Merger dated August 14,
1995. The total purchase price of the Broadway acquisition
was approximately $1,620.0 million, consisting of (i) 12.6
million shares of common stock and options to purchase an
additional 1.5 million shares of common stock valued at $352.9
million and (ii) $1,267.1 million of Broadway debt. In
addition, a wholly owned subsidiary of the Company purchased
$422.3 million of mortgage indebtedness of Broadway for 6.8
million shares of common stock of the Company and a $242.3
million promissory note.
The Broadway acquisition was accounted for under the purchase
method and, accordingly, the results of operations of Broadway
have been included in the Company's results of operations
since July 29, 1995 and the purchase price has been allocated
to Broadway's assets and liabilities based on their estimated
fair values as of that date.
The following unaudited pro forma condensed statements of
operations gives effect to the Broadway acquisition and
related financing transactions as if such transactions had
occurred at the beginning of the period presented.
13 Weeks Ended 26 Weeks Ended
July 29, 1995 July 29, 1995
(millions, except per share figures)
Net sales $3,507.9 $6,919.8
Net loss (90.3) (174.2)
Loss per share (.45) (.86)
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
The foregoing unaudited pro forma condensed statements of
operations give effect to, among other pro forma adjustments,
the following:
(i) Interest expense on debt incurred in connection with the
acquisition and the reversal of certain of Broadway's historical
interest expense;
(ii) Amortization, over 20 years, of the excess of cost over net
assets acquired;
(iii) Depreciation and amortization adjustments related to
fair market value of assets acquired;
(iv) Adjustments to income tax expense related to the above; and
(v) Adjustments for shares issued.
The foregoing unaudited pro forma information is provided for
illustrative purposes only and does not purport to be
indicative of results that actually would have been achieved
had the Broadway acquisition been consummated on the first day of
the periods presented or of future results.
3. Business Integration and Consolidation Expenses
During the 26 weeks ended August 3, 1996, the Company recorded
$176.6 million of business integration and consolidation
expenses associated with the integration of Broadway into the
Company ($148.7 million) and the ongoing consolidation of
Macy's and other support operation restructurings ($27.9
million). Included in the Broadway integration expenses were
$65.7 million of inventory valuation adjustments to
merchandise in lines of business which the Company, subsequent
to acquisition, eliminated or replaced. The remainder of the
Broadway integration expenses relate primarily to the costs
associated with converting the Broadway stores to other name
plates (including advertising, credit card issuance and
promotion, and other name change expenses) and the costs of
operating Broadway central office functions for a transitional
period.
During the 26 weeks ended July 29, 1995, the Company recorded
$172.3 million of business integration and consolidation
expenses associated with the integration of Macy's into the
Company ($145.2 million) and the consolidation of the
Company's Rich's/Goldsmith's and Lazarus divisions ($27.1
million). The primary components of the Macy's integration
expenses were $67.8 million of inventory valuation adjustments
to merchandise in lines of business which the Company,
subsequent to the acquisition, eliminated or replaced, $21.6
million of costs to close and sell certain stores and to
convert a number of stores to other nameplates, $19.7 million
of severance costs and $36.1 million of other costs and
expenses associated with integrating Macy's into the Company.
Of the $27.1 million of expenses associated with the
divisional consolidation referred to above, $20.4 million
relates to inventory valuation adjustments to merchandise of
the affected divisions in lines of business which were
eliminated or replaced as a result of the consolidation.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Comparison of the 13 Weeks Ended August 3, 1996 and July 29, 1995
For purposes of the following discussion, all references to
"second quarter of 1996" and "second quarter of 1995" are to
the Company's 13-week fiscal periods ended August 3, 1996 and
July 29, 1995, respectively.
Net sales for the second quarter of 1996 totaled $3,284.2
million, compared to net sales of $3,047.3 million for the
second quarter of 1995, an increase of 7.8%. Net sales for
the second quarter of 1996 include the stores added in the
Broadway acquisition. On a comparable store basis, net sales
for the second quarter of 1996 increased 0.8% over the second
quarter of 1995. Net sales for the second quarter of 1996
were somewhat negatively impacted by the Company's efforts to
gradually reduce the degree to which it utilizes promotional
selling practices with respect to home-related merchandise.
Cost of sales was 60.8% as a percent of net sales for the
second quarter of 1996 compared to 61.1% for the second
quarter of 1995. The improvement reflects the lower level of
promotional activity for home-related merchandise and
increased sales of higher margin private label merchandise.
Cost of sales was not impacted by the valuation of merchandise
inventory on the last-in, first-out basis in the second
quarter of 1996 or the second quarter of 1995.
Selling, general and administrative expenses were 33.9% as a
percent of net sales for the second quarter of 1996 compared
to 35.1% for the second quarter of 1995. The improvement
primarily reflects the operating efficiencies resulting from
the integration of Macy's into the Company in fiscal 1995 and
other support operation restructurings.
Business integration and consolidation expenses for the second
quarter of 1996 consist of $82.7 million associated with the
integration of Broadway and $16.2 million related to the
ongoing consolidation of Macy's and other support operation
restructurings. During the remainder of fiscal 1996, the
Company expects to incur approximately $120.0 million of
additional business integration and consolidation expenses in
connection with the consolidation of Broadway, the ongoing
consolidation of Macy's and the support operation
restructurings.
Business integration and consolidation expenses for the second
quarter of 1995 consist of $71.7 million associated with the
integration of Macy's into the Company and $17.3 million
related to the consolidation of the Company's
Rich's/Goldsmith's and Lazarus divisions.
Net interest expense was $115.6 million for the second quarter
of 1996, compared to $103.2 million for the second quarter of
1995. The higher interest expense for the second quarter of
1996 is principally due to the higher levels of borrowings
incurred in connection with the acquisition of Broadway.
The Company's effective income tax rate of 31.8% for the
second quarter of 1996 differs from the federal income tax
statutory rate of 35% principally because of permanent
differences arising from the amortization of intangible assets
and state and local income taxes.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Comparison of the 26 Weeks Ended August 3, 1996 and July 29, 1995
For purposes of the following discussion, all references to
"1996" and "1995" are to the Company's 26 week fiscal periods
ended August 3, 1996 and July 29, 1995, respectively.
Net sales for 1996 were $6,584.9 million compared to $6,035.3
million for 1995, an increase of 9.1%. On a comparable store
basis, net sales for 1996 increased 2.7%, over 1995. Net
sales for 1996 were somewhat negatively impacted by the
Company's efforts to gradually reduce the degree to which it
utilizes promotional selling practices with respect to home-
related merchandise.
Cost of sales was 60.9% as a percent of net sales for 1996
compared to 61.1% for 1995. The improvement reflects the
lower level of promotional activity for home-related
merchandise and increased sales of higher margin private label
merchandise. Cost of sales includes no charge in 1996
compared to a charge of $1.8 million in 1995 resulting from
the valuation of merchandise inventory on the last-in, first-
out basis.
Selling, general and administrative expenses were 34.4% as a
percent of net sales for 1996 compared to 35.4% for 1995. The
improvement primarily reflects the operating efficiencies
resulting from the integration of Macy's into the Company in
fiscal 1995 and other support operation restructurings.
Business integration and consolidation expenses for 1996
consist of $148.7 million associated with the integration of
Broadway and $27.9 million related to the ongoing
consolidation of Macy's and other support operation
restructurings.
Business integration and consolidation expenses for 1995
consist of $145.2 million associated with the integration of
Macy's into the Company and $27.1 million related to the
consolidation of the Company's Rich's/Goldsmith's and Lazarus
divisions.
Net interest expense was $227.9 million for 1996 compared to
$200.8 million for 1995. The higher interest expense for
1996 is principally due to higher levels of borrowing incurred
in connection with the acquisition of Broadway.
The Company's effective income tax rate of 32.8% for 1996
differs from the federal income tax statutory rate of 35.0%
principally because of permanent differences arising from the
amortization of intangible assets and state and local income
taxes.
Liquidity and Capital Resources
For purposes of the following discussion, all references to
"1996" and "1995" are to the Company's 26 week fiscal periods
ended August 3, 1996 and July 29, 1995, respectively.
The Company's principal sources of liquidity are cash from
operations, cash on hand and available credit facilities.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Net cash provided by operating activities in 1996 was $378.3
million an increase of $554.2 million compared to net cash
used by operating activities of $175.9 million in 1995. In
addition to improved operating results, the most significant
factors contributing to this improvement were greater
reductions in customer accounts receivable due to Broadway
store closings and lower increases in merchandise inventories.
Net cash used in investing activities was $159.3 million in
1996 with purchases of property and equipment totaling $264.4
million and dispositions of property and equipment,
principally Broadway stores, totaling $105.1 million. During
1996, the Company opened two new furniture galleries,
converted an existing Stern's store to a Macy's store and
closed the existing Macy's store in that trading area and
closed three other stores.
Net cash used by the Company for all financing activities was
$257.3 million in 1996. During 1996, the Company repaid
$1,034.4 million of debt, including $386.5 million of
commercial paper borrowings under a receivables based credit
facility of a subsidiary of Broadway which was terminated on
May 14, 1996, $64.0 million of asset-backed notes issued by a
subsidiary of Broadway and $214.2 million of term borrowings
and $230.0 million of revolving credit loans under its bank
credit facility.
During 1996, the Company issued $450.0 million of 8-1/2%
Senior Notes due 2003 and a wholly owned subsidiary of the
Company issued $238.8 million of asset-backed certificates in
two separate classes. The two classes are: (i) $218.0
million in aggregate principal amount of 6.70% Class A Asset-
Backed Certificates, Series 1996-1 due May 15, 2001 and (ii)
$20.8 million in aggregate principal amount of 6.85% Class B
Asset-Backed Certificates, Series 1996-1 due June 15, 2001.
The Company also issued 4.1 million shares of common stock and
received $99.0 million in proceeds upon the exercise of its
Series A Warrants.
On May 3, 1997, a $200.0 million installment of a note
receivable matures and $176.0 million of borrowings under a
note monetization facility become due and payable.
Accordingly, as of August 3, 1996, such amounts have been
included in accounts receivable and short-term debt,
respectively.
Management believes the department store industry will
continue to consolidate. Accordingly, the Company intends
from time to time to consider additional acquisitions of
department store assets and companies.
Management of the Company believes that, with respect to its
current operations, cash on hand and funds from operations,
together with its credit facilities, will be sufficient to
cover its reasonably foreseeable working capital, capital
expenditure and debt service requirements. Acquisition
transactions, if any, are expected to be financed through a
combination of cash on hand and from operations and the
possible issuance from time to time of long-term debt or other
securities. Depending upon conditions in the capital markets
and other factors, the Company will from time to time consider
other possible capital markets transactions, including the
refinancing of indebtedness.
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC.
Item 1. Legal Proceedings
The information regarding legal proceedings in the
Company's Quarterly Report on Form 10-Q for the period
ended May 4, 1996 covers events known to the Company
and occurring prior to June 4, 1996. Subsequent to
that date, the Company and its subsidiaries have been
involved in various legal proceedings incidental to the
normal course of their business. Management does not
expect that any of such proceedings will have a
material adverse effect on the Company's consolidated
financial position or results of operations.
Item 5. Other Information
On June 4, 1996, the Company and GE Capital Consumer
Card Co. ("GE Bank") and certain of their respective
affiliates entered into various agreements pursuant to
which the contractual arrangements previously entered
into between Macy's and GE Bank were modified to
provide for, among other things, a methodology that
will govern the allocation of the ownership of Macy's
credit card accounts between GE Bank and the Company.
In addition, the parties entered into certain cross-
servicing arrangements with a view to facilitating
uniform treatment of Company-owned Macy's accounts and
GE Bank-owned Macy's accounts.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amended and Restated Credit Card Program
Agreement, dated as of June 4,
1996, by and among GE Capital Consumer Card Co.
("GE Bank"), the Company, FDS National Bank ("FDS
Bank"), Macy's East, Inc., Macy's West, Inc.,
Bullock's, Inc., Broadway Stores, Inc., FACS
Group, Inc. ("FACS") and MSS-Delaware, Inc. *
10.2 Amended and Restated Trade Name and Service Mark
License Agreement,
dated as of June 4, 1996, by and among the
Company, GE Bank and General Electric Capital
Corporation ("GE Capital")
10.3 FACS Credit Services and License Agreement, dated
as of June 4, 1996, by and
among GE Bank, GE Capital and FACS *
10.4 FDS Guaranty, dated as of June 4, 1996
10.5 GE Capital Credit Services and License Agreement,
dated as of June 4, 1996, by and among GE Capital,
FDS Bank, the Company and FACS *
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC.
10.6 GE Capital/GE Bank Credit Services Agreement,
dated as of June 4, 1996, by
and among GE Capital and GE Bank *
10.7 Amended and Restated Commercial Accounts
Agreement, dated as of June 4,
1996, by and among GE Capital, the Company, FDS
Bank, Macy's East, Inc., Macy's West, Inc.,
Bullock's, Inc., Broadway Stores, Inc., FACS and
MSS-Delaware, Inc. *
11 Statement re computation of per share earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter
ended August 3, 1996.
* Confidential portions of this Exhibit were omitted and filed
separately with the SEC pursuant to Rule 24b-2 under the Exchange
Act.
FEDERATED DEPARTMENT STORES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunder duly authorized.
FEDERATED DEPARTMENT STORES, INC.
Date September 17, 1996 /s/ Dennis J. Broderick
Dennis J. Broderick
Senior Vice President, General Counsel
and Secretary
/s/ John E. Brown
John E. Brown
Senior Vice President and Controller
(Principal Accounting Officer)
Execution Copy
AMENDED AND RESTATED CREDIT CARD PROGRAM AGREEMENT *
Dated as of
June 4, 1996
by and among
GE CAPITAL CONSUMER CARD CO.,
FEDERATED DEPARTMENT STORES, INC.,
FDS NATIONAL BANK,
MACY'S EAST, INC.,
MACY'S WEST, INC.,
BULLOCK'S, INC.,
BROADWAY STORES, INC.,
FACS GROUP, INC., and
MSS-DELAWARE, INC.
Rider X
_________________________
* Confidential portions of this Exhibit have been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
TABLE OF CONTENTS
SECTION Page
I. DEFINITIONS 1
1.1. DEFINITIONS 1
1.2. FISCAL PERIODS 21
II. CONTINUATION OF PROGRAM; OWNERSHIP OF ACCOUNTS 21
2.1. CONTINUATION OF PROGRAM 21
2.2. OWNERSHIP AND TREATMENT OF MACY'S ACCOUNTS
OPENED AFTER THE PRIOR AMENDMENT DATE 21
2.3. CONVERSION OF JORDAN MARSH, BULLOCK'S,
BROADWAY, WEINSTOCK'S AND EMPORIUM STORES. 25
2.4. A&S ACCOUNTS. 26
2.5. GE/MACY'S CREDIT CARDS; GE/MACY'S ACCOUNT
DOCUMENTATION 27
III. ADMINISTRATION AND SETTLEMENT PROCEDURES 27
3.1. REMITTANCES 27
3.2. [RESERVED] 29
3.3. [RESERVED] 29
3.4. MONTHLY SETTLEMENTS 29
3.5. GE BANK'S RIGHT TO CHARGEBACK 30
3.6. RETURNS OF MERCHANDISE 33
3.7. IN-STORE PAYMENTS 34
3.8. MAXIMUM CARDHOLDER CREDIT AMOUNT 34
3.9. OWNERSHIP OF GE/MACY'S
ACCOUNTS AND GE/MACY'S RECEIVABLES 36
3.10. OWNERSHIP OF FDS/MACY'S ACCOUNTS AND RELATED
RECEIVABLES 37
3.11. RECEIPT OF PAYMENTS 37
IV. OPERATING PROCEDURES 37
4.1. GE BANK'S RESPONSIBILITIES 37
4.2. RETAILERS' RESPONSIBILITIES 38
4.3. POLICY COMMITTEE 40
4.4. CREDIT AND COLLECTION POLICY 41
4.5. MARKETING PROGRAMS AND PROCEDURES. 42
4.6. GE/MACY'S ACCOUNT DEBTOR LISTS 42
4.7. INSERTS AND MAILERS 44
4.8. CERTAIN CROSS SERVICING ARRANGEMENTS 44
4.9. SERVICING IN THE EVENT FACS SERVICES
AGREEMENT TERMINATES 46
4.10. SERVICING IN THE EVENT GE CAPITAL/GE BANK
SERVICES AGREEMENT TERMINATES 46
4.11 DESIGNEES 46
4.12 OTHER 46
V. PROGRAM ECONOMICS 47
5.1. INTERIM PERIOD 47
5.2. USE OF BUDGETS 47
5.3. PREPARATION OF BUDGETS 47
5.4. ADJUSTMENTS. 49
5.5. DETERMINATION OF BANK NET RETURN. 50
5.6. LOSS OF RIGHT TO FINALIZE BUDGET AND RELATED
PROJECTED MONTHLY DISCOUNT 51
5.7. SPECIAL PROVISIONS 52
5.8. REVENUE ENHANCEMENT PROGRAMS 53
5.9. GE BANK CAPITAL STRUCTURE 53
5.10. CALCULATION OF GE BANK'S AFTER-TAX INCOME 54
VI. REPRESENTATIONS AND WARRANTIES BY THE FDS COMPANIES 54
6.1. ORGANIZATION AND GOOD STANDING 55
6.2. AUTHORIZATION 55
6.3. EFFECT OF AGREEMENT 55
6.4. CONSENTS 55
6.5. EXECUTIVE OFFICES AND NAMES; LIENS 56
6.6. SOLVENCY 56
6.7. PERMITS, LICENSES, ETC 56
6.8. COMPLIANCE WITH APPLICABLE LAWS 56
6.9. LITIGATION 57
6.10. GE/MACY'S RECEIVABLES 57
6.11. FDS PARTIES TO AGREEMENT 58
VII. REPRESENTATIONS AND WARRANTIES BY GE BANK 58
7.1. ORGANIZATION AND GOOD STANDING 58
7.2. AUTHORIZATION 58
7.3. EFFECT OF AGREEMENT 58
7.4. CONSENTS 59
7.5. SOLVENCY 59
7.6. PERMITS, LICENSES, ETC. 59
7.7. COMPLIANCE WITH APPLICABLE LAWS 59
7.8. LITIGATION 59
7.9. FACILITIES. 60
VIII. COVENANTS AND CONDITIONS 60
8.1. FURTHER ASSURANCES 60
8.2. COVENANTS OF THE FDS COMPANIES 60
8.3. FDS'S REPORTS AND NOTICES 62
8.4. COVENANTS OF GE BANK 62
8.5. CONDITIONS PRECEDENT TO GE BANK'S
OBLIGATIONS 63
IX. OTHER AGREEMENTS 63
9.1. DISPUTES REGARDING CONTESTED AMOUNTS 63
9.2. CONVERSION EXPENSES 64
9.3. FDS THIRD-PARTY ACQUISITIONS; NEW FDS
AFFILIATES 64
9.4. SECURITIZATION; PARTICIPATION 65
9.5. CONTINUED LIABILITY 66
9.6. AUDIT AND ACCESS RIGHTS 66
9.7. EXCLUSIVITY 68
9.8. OBLIGATIONS SUBJECT TO LAW 68
9.9. DISPUTE RESOLUTION 69
9.10. CERTAIN EQUIPMENT 69
X. INDEMNIFICATION 69
10.1. INDEMNIFICATION BY THE FDS COMPANIES 69
10.2. INDEMNIFICATION BY GE BANK 71
10.3. NOTICES REGARDING INDEMNIFICATION; CONTROL
OF PROCEEDINGS 72
10.4. LIMITATION 72
XI. TERM AND TERMINATION 72
11.1. TERM OF AGREEMENT 72
11.2. GE TERMINATION RIGHTS 72
11.3. GE BANK'S RIGHTS FOLLOWING A GE TERMINATION
TRIGGER 74
11.4. FDS TERMINATION RIGHTS 75
11.5. FDS'S RIGHTS FOLLOWING AN FDS TERMINATION
TRIGGER 76
11.6. FDS PURCHASE OF GE/MACY'S ACCOUNTS AND
GE/MACY'S RECEIVABLES FOLLOWING TERMINATION 76
11.7. CALCULATION OF PURCHASE PRICE FOR GE/MACY'S
ACCOUNTS AND GE/MACY'S RECEIVABLES 77
11.8. NO CROSS DEFAULT 79
XII. GENERAL 79
12.1. CONFIDENTIALITY 79
12.2. SPECIFIC PERFORMANCE 80
12.3. WAIVERS 80
12.4. ENTIRE AGREEMENT; AMENDMENTS 81
12.5. BINDING EFFECT 81
12.6. ASSIGNMENT 81
12.7. HEADINGS 82
12.8. COUNTERPARTS 82
12.9. GOVERNING LAW 82
12.10. WAIVER OF JURY TRIAL 82
12.11. SEPARABILITY 83
12.12. ANNOUNCEMENTS 83
12.13. PAYMENTS 83
12.14. SURVIVAL 83
12.15. RELATIONSHIP OF PARTIES 84
12.16. NOTICES 84
12.17. COMPLIANCE WITH ANTITRUST LAWS 85
12.18. COOPERATION WITH GOVERNMENTAL AUTHORITIES 85
Table of Exhibits, Schedules and Annexes
Exhibits
Exhibit A Account Sharing Formulas and Examples
Exhibit B Monthly Adjustment Certificate
Exhibit C GE/Macy's Credit Card Agreement
Schedules
Schedule 1 Major Credit and Collection
Policies
Schedule 1.1 GE Bank Reserve Calculation
Schedule 2.3(b) Jordan Marsh and Broadway
Duplicate Account Sharing
Schedule 3.1 Daily Settlement Statement
Schedule 3.4 Monthly Settlement Statement
Schedule 4.8 Routine Maintenance for Cross-Shopping
Schedule 5.1A Interim Budget for February to
July 1996
Schedule 5.1B Interim Budget Money Cost
Adjuster
Schedule 5.2 Budget Format
Schedule 5.4(b) Monthly Adjuster Formula
Schedule 5.4(e) Projected Monthly Discount Money
Cost Adjuster
Schedule 6.5 FDS Companies Legal Names and
Executive Offices
Schedule 6.9 FDS Companies Litigation
Schedule 7.8 GE Bank Litigation
Annexes
Annex I Collection Services
AMENDED AND RESTATED CREDIT CARD PROGRAM AGREEMENT
AMENDED AND RESTATED CREDIT CARD PROGRAM AGREEMENT,
dated as of June 4, 1996, by and among GE Capital Consumer Card
Co. ("GE Bank"), Federated Department Stores, Inc. ("FDS"), FDS
National Bank ("FDS Bank"), Macy's East, Inc. ("Macy's East"),
Macy's West, Inc. ("Macy's West"), Bullock's, Inc. ("Bullock's"),
Broadway Stores, Inc. ("Broadway"), FACS Group, Inc. ("FACS") and
MSS-Delaware, Inc. ("MSS").
WHEREAS, Monogram Bank, USA, R.H. Macy & Co., Inc.,
Macy's Northeast, Inc., Macy's South, Inc., Macy's California,
Inc., Bullock's, I. Magnin, Inc., and Macy Specialty Stores, Inc.
entered into a Credit Card Program Agreement dated as of May 10,
1991 (such agreement, as it has been amended from time to time,
the "Original Program Agreement"); and
WHEREAS, GE Bank (as the successor to Monogram Bank,
USA), FDS (as the successor to R.H. Macy & Co., Inc.), FDS Bank,
Macy's East (as the successor to Macy's Northeast, Inc. and
Macy's South, Inc.), Macy's West (as the successor to Macy's
California, Inc.), Bullock's, and the other parties hereto desire
to amend and restate the Original Program Agreement in its
entirety.
NOW, THEREFORE, in consideration of the terms and
mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE
I.
DEFINITIONS
1.1. Definitions
. When used in this Agreement, the following capitalized terms
shall have the meaning given to them below:
"AAA" means the American Arbitration Association or any
successor thereto.
"A&S" means Abraham & Straus, Inc., a former retail
division of FDS.
"A&S Accounts" has the meaning given to it in Section
2.4(a).
"Acquired Stores" means stores which are acquired by
FDS after the Prior Amendment Date or owned by FDS prior to the
Prior Amendment Date and, in either case, are converted to the
Macy's Tradename and have pre-existing private label credit card
accounts, provided that for purposes hereof, an Acquired Store
shall only be treated as an Acquired Store during the period
between the date it becomes an Acquired Store and the last day of
the succeeding fiscal year in which it became an Acquired Store.
"Actual Percentage" means the GE Actual Percentage or
the FDS Actual Percentage, as the case may be.
"Affiliate" means, with respect to any Person, each
Person that controls, is controlled by, or is under common
control with, such Person. For the purpose of this definition,
"control" of a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting
securities, control of such Person's board of directors, by
Contract or otherwise.
"Aggregate Remittance" has the meaning given to it in
Section 3.1(c).
"Agreement" means this Amended and Restated Credit Card
Program Agreement, including all amendments, modifications,
supplements, annexes, exhibits and schedules hereto.
"Amended and Restated Trademark Agreement" means the
Amended and Restated Trade Name and Service Mark License
Agreement between FDS, GE Capital and GE Bank, dated as of the
date hereof, pursuant to which, among other things, FDS licenses
the Marks (as defined therein) to GE Capital and GE Bank, on the
terms and subject to the conditions thereof, as such agreement
may be amended, modified or restated from time to time.
"Audit Period" has the meaning given to it in Section
5.5(b).
"Authorized FDS Person" means the senior vice president-
credit operations of FACS, as agent for FDS Bank.
"Authorized GE Person" means the executive vice
president-general manager of Macy's Credit Services.
"Authorized User" means, with respect to any GE/Macy's
Account, any Person authorized from time to time by the relevant
GE/Macy's Account Debtor to purchase Merchandise on credit
pursuant to such GE/Macy's Account.
"Average GE/Macy's Gross Receivables" means, with
respect to any period, an amount equal to (a) the sum of (i) the
GE/Macy's Gross Receivables on the first day of such period and
(ii) an amount equal to the sum of the GE/Macy's Gross
Receivables on the last day of each fiscal month in such period
and divided by (b) the integer which is equal to one plus the
number of fiscal months in such period.
"Average GE/Macy's Net Receivables" means, with respect
to any period, an amount equal to (a) the sum of (i) the
GE/Macy's Gross Receivables on the first day of such period, less
the Reserve Balance on such day and (ii) an amount equal to the
sum of the GE/Macy's Gross Receivables on the last day of each
fiscal month in such period, less the Reserve Balances on such
days divided by (b) the integer which is equal to one plus the
number of fiscal months in such period.
"Bank Net Return" means, for any fiscal year, the
ratio, expressed as a percentage, of GE Bank's net after-tax
income from the Program for such year, over the Deemed Equity
Amount for such year. GE Bank's net after-tax income shall be
calculated, for purposes of determining the Bank Net Return,
pursuant to Section 5.10.
"Bank Service Discount" has the meaning given to it in
Section 5.1.
"Bank Servicing Expenses" has the meaning given to it
in Section 5.2.
"Bankruptcy Code" means Title 11 of the United States
Code, as amended, or any other applicable state or federal
bankruptcy, insolvency, moratorium or other similar Law and all
Laws relating thereto.
"Broadway" has the meaning given to it in the Preamble.
"Broadway Determination Date" has the meaning given to
it in Schedule 2.3(b).
"Bullock's" has the meaning given to it in the
Preamble.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banks are required or permitted by Law
to be closed in the State of Ohio.
"Charge Data" means, with respect to each Division on
each Transaction Day, the following information reported on the
system register balancing reports or other equivalent reports
generated by such Division for such Transaction Day: (a) the
unaudited aggregate GE/Macy's Credit Card sales originated by
such Division on such Transaction Day not previously reported to
GE Bank, (b) the unaudited aggregate amount of GE/Macy's Credit
Slips issued by such Division on such Transaction Day, together
with the aggregate amount of all other adjustments to GE/Macy's
Account Balances by such Division on such Transaction Day, in
each case not previously reported to GE Bank and (c) the
unaudited aggregate amount of In-Store Payments accepted by such
Division on such Transaction Day not previously reported to GE
Bank.
"Closing Date" has the meaning given to it in Section
11.7(b).
"Collection Services" has the meaning given to it in
Section 4.1(a).
"Comp Store Factor" means, with respect to any period,
the percentage derived by dividing (i) the amount of Net Credit
Sales from Comp Stores for such period by (ii) the amount of Net
Credit Sales from the same stores for the same period in the
immediately prior year.
"Comp Stores" means all Macy's Stores other than any
store which in the 12 months immediately prior to the time of
determination had either (i) a newly built Macy's Store open
within a 50 mile radius of it, (ii) had a Macy's Store close
within a 50 mile radius of it or (iii) had a store which was
located within a 50 mile radius of it and which had been operated
under a tradename other than the Macy's Tradename, and which had
converted its tradename to the Macy's Tradename. Notwithstanding
the foregoing, all Macy's Stores that were formerly A&S stores
will be deemed Comp Stores with respect to all periods in 1996.
"Contested Amount" means any amount owed (i) by any FDS
Company or any Affiliate of an FDS Company to GE Bank or any
Affiliate of GE Bank or (ii) by GE Bank or any Affiliate of GE
Bank to any FDS Company or any Affiliate of an FDS Company, as
the case may be, pursuant to the terms of this Agreement with
respect to which a Contested Amount Notice has been delivered.
"Contested Amount Notice" means a written notice
delivered by an FDS Company to GE Bank or by GE Bank to an FDS
Company, as the case may be, which disputes an amount owed by (i)
any FDS Company or any Affiliate of an FDS Company to GE Bank or
any Affiliate of GE Bank, or (ii) by GE Bank or any Affiliate of
GE Bank to any FDS Company or any Affiliate of an FDS Company, as
the case may be, under this Agreement.
"Contract" means any contract, lease, credit agreement,
indenture, loan agreement or other legally binding agreement,
arrangement, understanding or commitment of any nature, whether
written or oral.
"Converted Store" has the meaning given to it in
Section 2.3(a).
"Conveyance" has the meaning given to it in Section
9.4.
"Credit and Collection Policy" means the major and non-
major credit and collection policies applicable to GE/Macy's
Accounts and FDS/Macy's Accounts (which may differ due to changes
to the Credit and Collection Policy applicable to only the
GE/Macy's Accounts or FDS/Macy's Accounts effected pursuant to
the provisions of Section 4.4), which include, without
limitation, the terms and conditions of credit card agreements,
the terms and conditions under which credit is extended to
account debtors or credit lines are reduced, the policies and
procedures for determining the creditworthiness of individual
applicants under the Program, the policies and procedures for
determining the range of credit limits to be made available to
individual account debtors, the policies and procedures for
determining whether to suspend or terminate credit privileges of
any account debtors, and the policies and procedures for
collecting past due accounts, writing off accounts, placing
accounts with collection agencies, producing and mailing
statements and credit cards, and processing payments, in the form
initialed by the parties hereto simultaneously with the execution
and delivery of this Agreement, as such policies may be amended,
modified or changed from time to time in accordance with the
terms and conditions of this Agreement.
"Current Interim Period" has the meaning given to it in
Section 5.1.
"Daily Settlement Statement" has the meaning given to
it in Section 3.1(a).
"Damages" has the meaning given to it in Section
10.1(a).
"Deemed Equity Amount" means, with respect to any
fiscal year, an amount equal to [OMISSION] of the Average
GE/Macy's Net Receivables outstanding during such fiscal year.
"Division" means any of (a) Macy's East, (b) Macy's
West, (c) Bullock's, (d) Broadway, (e) MSS and (f) any other
Person (other than a Licensee) that operates, conducts business
or makes sales under the Macy's Tradename.
"Dual Use Card" means a [OMISSION].
"Eligible Chargeback GE/Macy's Receivables" has the
meaning given to it in Section 3.5(b).
"Estimated Remittance" has the meaning given to it in
Section 3.1(b).
"Event of Bankruptcy" means, with respect to any
Person, the occurrence of any of the following events: (a) with
respect to any Person subject to the jurisdiction of the Federal
Deposit Insurance Corporation (the "FDIC"), the FDIC or any other
Governmental Authority having jurisdiction over such Person shall
order the appointment of a custodian, receiver, liquidator,
assignee, trustee, or sequestrator (or similar official) of such
Person or of any substantial part of its properties, or order the
winding-up or liquidation of the affairs of such Person and such
order shall not be vacated, discharged, stayed, or bonded within
60 days after the date of entry thereof, or (b) a decree or
order, by a Governmental Authority having jurisdiction, shall be
entered with respect to such Person and shall not be vacated,
discharged, stayed or bonded within 60 days after the date of
entry thereof, (i) for relief in respect of such Person pursuant
to the Bankruptcy Code, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee, or sequestrator (or similar
official) of such Person or of any substantial part of its
properties, or (iii) ordering the winding-up or liquidation of
the affairs of such Person, or (c) a person or entity other than
such Person shall file a petition seeking the institution of any
proceedings specified in clauses (b)(i), (ii) or (iii) in respect
of such Person, and such petition shall not be discharged or
dismissed within 60 days after the date of filing thereof, or (d)
such Person shall (i) file a petition seeking relief pursuant to
the Bankruptcy Code, (ii) consent to the institution of
proceedings pursuant thereto or to the filing of any such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of such Person or of any
substantial part of its properties, or the winding up or
liquidation of its affairs or (iii) take corporate action in
furtherance of any such action.
"Extended Term" has the meaning given to it in Section
11.1(a).
"Face Amount" means, with respect to any GE/Macy's
Receivable, an amount equal to the total amount reflected on the
GE/Macy's Charge Slip with respect to such GE/Macy's Receivable.
"FACS" has the meaning given to it in the Preamble.
"FACS Services Agreement" means the FACS Credit
Services and License Agreement dated as of the date hereof by and
among FACS, GE Bank and GE Capital pursuant to which, among other
things, FACS provides certain services to GE Bank and GE Capital,
as such agreement may be amended, modified or restated from time
to time.
"FACS Servicing Fee" has the meaning given to it in
Section 5.2.
"FDS" has the meaning given to it in the Preamble.
"FDS Actual Percentage" means, with respect to any
period, the percentage of total Net Credit Sales in respect of
such period represented by the amount of FDS Net Credit Sales in
respect of such period, provided that for purposes of calculating
the FDS Actual Percentage, the aggregate amount of any credit
sales generated by Non-Permitted Credit Programs and/or any
credit program described in Section 9.7(c) shall be added to the
amount of both Net Credit Sales and FDS Net Credit Sales.
"FDS Bank" has the meaning given to it in the Preamble.
"FDS Companies" means FDS, FDS Bank, each of the
Divisions and FACS.
"FDS Credit Sales Share" means, with respect to any
period, the credit sales derived by subtracting (i) the GE Credit
Sales Share for such period from (ii) total Net Credit Sales for
such period.
"FDS Guaranty" means the FDS Guaranty made by FDS in
favor of the Guaranteed Parties thereunder, dated as of the date
hereof.
"FDS Indemnified Parties" has the meaning given to it
in Section 10.2(a).
"FDS Legal Changes" means changes to the Credit and
Collection Policy unilaterally made by the FDS Companies pursuant
to Section 4.4(c).
"FDS Material Adverse Effect" means a material adverse
effect on (a) GE Bank's title to the GE/Macy's Accounts or
GE/Macy's Receivables taken as a whole, (b) the ability of any
FDS Company to perform its obligations under this Agreement or
(c) the Program, or the GE/Macy's Receivables or the GE/Macy's
Accounts, in each case taken as a whole, provided that the sale
by FDS of MSS shall not constitute an FDS Material Adverse Effect
as long as the business and operations of MSS at the time of such
sale are substantially similar to the business and operations of
MSS on the date hereof.
"FDS/Macy's Account" means any Macy's Account (other
than GE/Macy's Accounts) which, pursuant to the provisions of
Article II of the Agreement, is owned by, and with respect to
which credit is extended by, FDS or FDS Bank.
"FDS/Macy's Credit Card" means any card issued by FDS
Bank to a Person, which card can only be used by such Person to
purchase Merchandise on credit from one or more of the Retailers
pursuant to an FDS/Macy's Account (i) owned by FDS Bank,
(ii) transferred to FDS Bank pursuant to this Agreement or
(iii) established by FDS Bank pursuant to this Agreement.
"FDS Net Credit Sales" means, with respect to any
period, the aggregate amount of Net Credit Sales generated with
respect to such period by FDS/Macy's Accounts.
"FDS Revised Credit Sales Share" means, with respect to
any period on a year to date basis, the amount of Net Credit
Sales derived from the application of the following formula:
[(Net Credit Sales minus Net Credit Sales generated by
New Stores and Acquired Stores) times FDS Target
Percentage] plus ([OMISSION]% of Net Credit Sales
generated by New Stores) plus ([OMISSION]% of Net
Credit Sales generated by Acquired Stores)
"FDS Revised Target Percentage" means, with respect to
any period, an amount equal to the percentage of total Net Credit
Sales with respect to such period represented by the FDS Revised
Credit Sales Share for such period.
"FDS Target Percentage" means, with respect to any
period, the percentage derived by subtracting (i) the GE Target
Percentage applicable to such period from (ii) 100%.
"FDS Termination Trigger" has the meaning given to it
in Section 11.4.
"Fees" means all late fees (less unpaid late fee
reversals net of recoveries), returned check fees and similar
fees charged on GE/Macy's Accounts.
"Final Agreement Date" has the meaning given to it in
Section 5.3(b).
"Final Projected Receivables Balance Statement" has the
meaning given to it in Section 3.8(c).
"Final Purchase Price" has the meaning given to it in
Section 11.7(d).
"Finance Charge Income" means finance charges billed to
cardholders less unpaid finance charge reversals (net of
recoveries of such reversals) on account balances written-off,
less other concessions and adjustments in the normal course of
business.
"Fraudulent Charges" has the meaning given to it in
Section 3.5(c)(iv).
"GE Actual Percentage" means, with respect to any
period, the percentage of total Net Credit Sales in respect of
such period represented by the amount of GE Net Credit Sales in
respect of such period, provided that for purposes of calculating
the GE Actual Percentage, the aggregate amount of any credit
sales generated by Non-Permitted Credit Programs and/or any
credit program described in Section 9.7(c) shall be added to the
amount of Net Credit Sales.
"GE Bank" has the meaning given to it in the Preamble.
"GE Capital" means General Electric Capital
Corporation.
"GE Capital Services Agreement" means the GE Capital
Credit Services and License Agreement dated as of the date hereof
by and among GE Capital, FDS, FDS Bank and FACS pursuant to which
GE Capital provides certain services to FDS and FDS Bank, as such
agreement may be amended, modified or restated from time to time.
"GE Capital/GE Bank Services Agreement" means the GE
Capital/GE Bank Credit Services Agreement between GE Capital and
GE Bank, dated as of the date hereof, as such agreement may be
amended, modified or restated from time to time.
"GE Credit Sales Share" means, with respect to any
period, an amount equal to the product of (i) the amount of total
GE Net Credit Sales for the same period in the immediately prior
year times (ii) the Comp Store Factor applicable to such period.
"GE Designee" means Richard A. Hayes or, if Richard A.
Hayes ceases to hold his current position with GE Capital, the
individual who replaces Richard A. Hayes at such position or, if
such position ceases to exist at GE Capital, an individual
appointed by an employee of GE Capital who holds a position
senior to such eliminated position.
"GE Indemnified Parties" has the meaning given to it in
Section 10.1(a).
"GE Legal Changes" means changes to the Credit and
Collection Policy unilaterally made by GE Bank pursuant to
Section 4.4(c).
"GE Material Adverse Effect" means a material adverse
effect on (a) GE Bank's ability to perform its obligations under
this Agreement or (b) the Program, or the GE/Macy's Accounts or
the GE/Macy's Receivables taken as a whole.
"GE Net Credit Sales" means, with respect to any
period, the aggregate amount of Net Credit Sales generated with
respect to such period by GE/Macy's Accounts.
"GE Revised Credit Sales Share" means, with respect to
any period on a year to date basis, the amount of Net Credit
Sales derived from the application of the following formula:
[(Net Credit Sales minus Net Credit Sales generated by
New Stores and Acquired Stores) times GE Target
Percentage] plus ([OMISSION]% of Net Credit Sales
generated by New Stores)
"GE Revised Target Percentage" means, with respect to
any period, an amount equal to [OMISSION].
"GE Target Percentage" means, with respect to any
period, the percentage of total Net Credit Sales with respect to
such period represented by the GE Credit Sales Share applicable
to such period, provided that (i) after 1996 the calculation of
Net Credit Sales used for purposes of this definition shall
include the amount of all Virtual Comp Net Credit Sales but not
include the amount of any Virtual Non-Comp Net Credit Sales and
(ii) the GE Target Percentage shall never be less than 50%
subject to Section 3.8(f).
"GE Termination Trigger" has the meaning given to it in
Section 11.2.
"GE/Macy's Account" means a GE Bank owned credit-card-
accessed open-end consumer credit Macy's Account established at
any time (past, present or future) in favor of a GE/Macy's
Account Debtor and used primarily for personal, family or
household purposes or uses that is established pursuant to a
GE/Macy's Credit Card Agreement and which is identified by a
unique GE/Macy's Account number. Notwithstanding the foregoing,
"GE/Macy's Account" does not include: (a) any non-credit-card-
accessed account, (b) any account established at any time (past,
present or future) in favor of GE/Macy's Account Debtors and used
primarily for other than personal, family or household purposes
or uses, (c) any account issued to Persons other than natural
Persons, (d) any closed-end credit account and (e) any accounts
generated pursuant to layaway plans.
"GE/Macy's Account Balance" means, with respect to any
GE/Macy's Account, the outstanding balance of such GE/Macy's
Account at the time of determination, which shall consist of,
without limitation, the sum of (i) the aggregate Face Amount of
GE/Macy's Receivables posted to such GE/Macy's Account prior to
such time and (ii) the aggregate amount of any and all fees and
charges posted to such GE/Macy's Account prior to such time,
including, without limitation, interest and finance charges,
returned check charges or late charges, and insurance premiums,
minus the aggregate amount of all credits, payments, adjustments,
and employee discounts posted to such GE/Macy's Account prior to
such time, provided that the GE/Macy's Account Balance of any of
the following accounts shall be zero (whether or not any
GE/Macy's Receivables with respect to such account are included
on the Master File at such time): any GE/Macy's Account where,
as of the time of determination, (a) the GE/Macy's Account Debtor
has been coded on the Master Files with respect to any prior
billing cycle as having filed a petition for relief under the
Bankruptcy Code, having made a general assignment for the benefit
of creditors, having had filed against it any petition or other
application for relief under the Bankruptcy Code, or having
suffered a receiver or trustee to be appointed for all or a
significant portion of its assets, and under the Credit and
Collection Policy such GE/Macy's Account was required to be
written off, but was not written off, (b) such GE/Macy's Account
is 210 days or more past due, (c) such GE/Macy's Account has been
referred to an attorney, collection agency, or other entity for
collection and has been written off in accordance with the Credit
and Collection Policy, or (d) such GE/Macy's Account has been
written off as uncollectible under the Credit and Collection
Policy at any time prior to the time of determination.
"GE/Macy's Account Debtor" means any natural Person who
is a party to a GE/Macy's Credit Card Agreement or who is or who
may become obligated under, with respect to, or on account of, a
GE/Macy's Account from time to time.
"GE/Macy's Account Debtor List" has the meaning given
to it in Section 4.6.
"GE/Macy's Account Documentation" means, with respect
to a GE/Macy's Account, any and all documentation from time to
time relating to such GE/Macy's Account, including, without
limitation, GE/Macy's Credit Card Documentation, checks and
stubs, correspondence, memoranda, documents, instruments,
certificates, agreements, invoices, sales or shipping slips,
delivery and other receipts, magnetic tapes, disks, hard copy
formats, and other computer-readable data transmission, and any
other records of whatever form or nature, related to any of the
foregoing, any other written, electronic or other material
related to any of the foregoing, any microfilm, electronic or
other copy of any of the foregoing and all other materials,
including, without limitation, tangible and intangible
information, arising from any of the foregoing or pertaining
thereto.
"GE/Macy's Charge Slip" means a sales receipt,
including, but not limited to, an invoice, evidencing a purchase
of Merchandise on credit pursuant to a GE/Macy's Account.
"GE/Macy's Credit Card" means any card issued by
GE Bank, to a Person, which card can only be used by such Person
to purchase Merchandise from one or more of the Retailers on
credit pursuant to a GE/Macy's Account (i) owned by GE Bank,
(ii) transferred to GE Bank pursuant to the Purchase Agreement or
(iii) established by GE Bank pursuant to this Agreement.
"GE/Macy's Credit Card Agreement" means a revolving
credit card agreement entered into between GE Bank and a
GE/Macy's Account Debtor (and any replacement of such agreement),
in each case pursuant to which such GE/Macy's Account Debtor and
Authorized Users may be permitted to purchase Merchandise from
any Retailer on credit granted by GE Bank to such GE/Macy's
Account Debtor from time to time, whether or not there is a
finance charge computed from time to time, together with any
amendments, modifications or supplements which now or hereafter
may be made to such GE/Macy's Credit Card Agreement (and any
replacement of such agreement) and any replacements thereof.
"GE/Macy's Credit Card Application" means any
application for a GE/Macy's Account completed and submitted
(whether by mail, telephone or other electronic means) by or on
behalf of any Person or Persons.
"GE/Macy's Credit Card Documentation" means, with
respect to a GE/Macy's Account, all GE/Macy's Credit Card
Applications, GE/Macy's Credit Card Agreements, GE/Macy's Credit
Cards, GE/Macy's Charge Slips, GE/Macy's Credit Slips, credit
bureau reports, periodic billing statements, prescreen
solicitations and offers of credit relating to GE/Macy's
Accounts, adverse action notices, change of terms notices and
receipts for In-Store Payments.
"GE/Macy's Credit Slip" means (a) a sales credit
receipt evidencing a return or exchange of Merchandise purchased
pursuant to a GE/Macy's Account, or (b) a credit on a GE/Macy's
Account as an adjustment on account, including for Merchandise
purchased from any Retailer.
"GE/Macy's Gross Receivables" means, for the day in
question, an amount equal to the aggregate GE/Macy's Account
Balances outstanding as updated through the close of business on
such day.
"GE/Macy's Receivable" means any and all amounts owing
from time to time with respect to the purchase of Merchandise on
credit pursuant to a GE/Macy's Account, including, without
limitation, any charges for sales tax, regardless of whether such
GE/Macy's Receivable consists of an "account," "chattel paper,"
an "instrument" or a "general intangible" under and as defined in
Article or Division 9 of the UCC applicable to such GE/Macy's
Receivable and all proceeds of any of the foregoing, together
with (a) any and all GE/Macy's Account Documentation relating to
such GE/Macy's Receivable and any "document" (as defined in the
UCC) covering any Merchandise relating to such GE/Macy's
Receivable, (b) any and all rights and remedies as to stoppage-in-
transit, reclamation, return and repossession of Merchandise with
respect to such GE/Macy's Receivable, whether arising by Contract
or by Law, (c) any and all Merchandise, goods or other property
that is security for such GE/Macy's Receivable or for any item
referred to in clause (a), (b), (d), (e), or (f) of this
definition, (d) any and all contracts of indemnity, guaranties,
sureties, letters of credit, proceeds of insurance claims,
security interests, or other direct or indirect security or
support held by or granted to any Retailer by any Person to
secure payment of such GE/Macy's Receivable, (e) any and all
other rights, remedies, benefits, interests and titles, both
legal and equitable, to which any Retailer or any Affiliate of
any Retailer may now or at any time hereafter be entitled in
respect of any of the foregoing, and (f) any and all proceeds of
any of the foregoing. Each purchase of Merchandise by a
GE/Macy's Account Debtor or an Authorized User pursuant to a
GE/Macy's Account shall constitute a separate GE/Macy's
Receivable.
"Governmental Authority" means any government, any
state, or any other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, in each
case whether federal, state or local.
"Guaranty Agreements" means (i) the Amended and
Restated GE Capital Guaranty made by GE Capital in favor of the
Guaranteed Parties thereunder, dated as of the date hereof,
together with (ii) the FDS Guaranty.
"In-Store Payment" means any payment on a GE/Macy's
Account made by a GE/Macy's Account Debtor (or any other Person
acting on behalf of such GE/Macy's Account Debtor) at a Macy's
Store.
"Independent Firm" has the meaning given to it in
Section 9.9.
"Initial Term" has the meaning given to it in Section
11.1(a).
"JM Determination Date" has the meaning given to it in
Schedule 2.3(b).
"Key Credit Activities" means (i) making Remittances in
connection with any GE/Macy's Receivables and (ii) authorizing
extensions of credit pursuant to the provisions of this Agreement
or the GE/Macy's Credit Card Documentation.
"Law" means all laws, codes, statutes, ordinances,
rules, regulations, decrees and orders of any Governmental
Authority.
"Licensee" means any Person who, pursuant to a Contract
with an FDS Company or Affiliate of an FDS Company, is permitted
from time to time by such FDS Company (or such Affiliate) to make
credit sales of Merchandise to GE/Macy's Account Debtors or
Authorized Users pursuant to or utilizing GE/Macy's Credit Card
Agreements.
"Lien" means any mortgage, pledge, hypothecation,
assignment, claim, lien (statutory or other), right of first
refusal, charge or encumbrance, imperfection of title or other
matters affecting title, and any rights of third parties
whatsoever, including, without limitation, any liens or
encumbrances (whether choate or inchoate) arising in respect of
taxes.
"Litigation" means any claim, action, suit, proceeding,
arbitration, investigation or inquiry before, by or on behalf of
any Governmental Authority.
"Macy's Account" means a private label credit card
accessed open-end consumer credit Macy's account used primarily
for personal, family or household purposes for Sales of
Merchandise whether from Macy's Stores or otherwise.
"Macy's East" has the meaning given to it in the
Preamble.
"Macy's Stores" means any and all stores which are
operated, conduct business or make sales under the Macy's
Tradename.
"Macy's Tradename" means "Macy's", "Charter Club",
"Bullock's", "Aeropostale" and any successor, substitute or
replacement tradename for any of them.
"Macy's West" has the meaning given to it in the
Preamble.
"Major Credit and Collection Policies" means the Credit
and Collection Policies described on Schedule 1 hereto.
"Master File" means, with respect to each Division, on
any date, the computer files containing the most recently posted
financial, GE/Macy's Account status and demographic information
with respect to any of such Division's GE/Macy's Accounts,
including, without limitation, active, inactive and recovery
GE/Macy's Accounts, which computer files represent the GE/Macy's
Gross Receivables of such Division on such date, together with
corresponding control reports.
"Maximum Amount Notice" has the meaning given to it in
Section 3.8(d).
"Maximum Cardholder Credit Amount" has the meaning
given to it in Section 3.8(a).
"Maximum Cardholder Credit Solution" has the meaning
given to it in Section 3.8(f).
"Merchandise" means all goods and services sold by
Retailers.
"Merchandise Adjustments" has the meaning given to it
in Section 3.5(c)(i).
"Misrepresented GE/Macy's Receivables" has the meaning
given to it in Section 3.5(c)(v).
"Missing Media" has the meaning given to it in Section
3.5(c)(ii).
"Money Cost" means, for any period, the aggregate
interest expense incurred by GE Bank to finance the GE/Macy's
Receivables for such period, calculated in accordance with
Schedule 5.4(e).
"Monthly Penalty" has the meaning given to it in
Section 5.7(b).
"Monthly Review Period" has the meaning given to it in
Section 5.4(a).
"Monthly Settlement Statement" has the meaning given to
it in Section 3.4.
"MSS" has the meaning given to it in the Preamble.
"Net Book Value" means, with respect to any group of
GE/Macy's Accounts and related GE/Macy's Receivables, an amount
equal to (a) the sum of (i) the aggregate amount of the GE/Macy's
Account Balances of such GE/Macy's Accounts which have a debit
balance as of the date of determination, and (ii) the aggregate
Face Amount of deferred receivables with respect to which
Merchandise has been delivered as of the date of determination,
which amount has not been posted as of the date of determination,
less (b) the sum of (i) the Reserve Balance as of the date of
determination and (ii) the aggregate amount of all GE/Macy's
Account Balances of such GE/Macy's Accounts which have a credit
balance as of the date of determination.
"Net Credit Sales" means, with respect to any period,
the aggregate Face Amount of receivables generated in such period
by FDS/Macy's Accounts and GE/Macy's Accounts, less an amount
equal to the aggregate dollar amount of credit adjustments
against sales to such accounts during such period.
"Net Return Dispute Notice" has the meaning given to it
in Section 5.5(c).
"Net Return Statement" has the meaning given to it in
Section 5.5(a).
"Net Write-Offs" means, with respect to any period, (a)
the aggregate GE/Macy's Account Balances written-off as losses
during such period, less (b) any unpaid finance charges and fees
(other than agency and attorneys' fees) on such Account Balances
during such period, less (c) the aggregate amount recovered with
respect to previously written-off GE/Macy's Account Balances (net
of finance charge and fee recoveries) during such period.
"New Accounts Allocation Percentage" means [OMISSION].
"New Stores" means stores which are (i) newly built
Macy's Stores that open after the Prior Amendment Date, or
(ii) acquired by FDS after the Prior Amendment Date and converted
to the Macy's Tradename and which do not have pre-existing
private label credit card accounts at the time of acquisition, or
(iii) owned by FDS prior to the Prior Amendment Date and which
are converted to the Macy's Tradename and do not have
pre-existing private label credit card accounts as of the Prior
Amendment Date, provided that for purposes hereof, a New Store
shall only be treated as a New Store during the period between
the date it becomes a New Store and the last day of the
succeeding fiscal year in which it became a New Store.
"Newly Opened Macy's Account" means Macy's Accounts,
including, but not limited, to Macy's Accounts opened as a result
of prescreens and other methods, opened after the Prior Amendment
Date at (i) any Macy's Store existing as of the Prior Amendment
Date, (ii) any new Macy's Store opened after the Prior Amendment
Date and (iii) an Acquired Store after the date of conversion of
such store into a Macy's Store.
"Non-Overlapping Acquired Stores" means Acquired Stores
(i) which are within a 50 mile radius of an existing Macy's Store
and which do not individually or in the aggregate account for Net
Credit Sales in excess of $100 million in the 12-month period
immediately prior to becoming Acquired Stores or (ii) which are
not within a 50 mile radius of an existing Macy's Store.
"Non-Permitted Credit Program" means any consumer
credit, debit or charge program which may be utilized for the
purchase of goods and services, other than a program which the
FDS Companies are permitted to accept, utilize, market or promote
pursuant to Section 9.7 hereof.
"Operating Expense Budget" has the meaning given to it
in Section 5.3.
"Operating Expenses" means all costs and expenses
directly incurred (including appropriate accruals) by GE Bank in
connection with the Program (other than overhead assigned to GE
Bank by GE Capital, Net Write-Offs, Reserve Change, taxes, Bank
Servicing Expenses, and FACS Servicing Fees).
"Original Program Agreement" has the meaning given to
it in the Preamble.
"Other Costs" has the meaning given to it in Section
9.2(a).
"Overlapping Acquired Stores" means Acquired Stores
other than Non-Overlapping Acquired Stores.
"Percentage Variance" has the meaning given to it in
Section 2.2(c)(iii).
"Period" has the meaning given to it in Section 5.2.
"Period Penalty" has the meaning given to it in Section
5.6(a).
"Permit" means any license, permit, certificate,
consent, authorization, franchise, or other approval from any
Governmental Authority.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit
corporation, entity or Governmental Authority.
"Policy Committee" has the meaning given to it in
Section 4.3(a).
"Previously Paid GE/Macy's Receivables" has the meaning
given to it in Section 3.5(c)(vi).
"Prime Rate" means, on the date of determination, the
highest bank prime loan rate reported in the "Money Rates"
section of The Wall Street Journal (or, if such publication is
discontinued, such other publication of similar type as agreed to
by FDS and GE Bank) as the "Prime Rate" on such date, whether or
not such rate is ever actually charged or paid by any Person.
"Prior Amendment Date" means February 3, 1996.
"Prior Remittance" has the meaning given to it in
Section 3.1(a).
"Program" means the credit card program established by
the Original Program Agreement and continued pursuant to this
Agreement.
"Projected Monthly Discount" has the meaning given to
it in Section 5.2.
"Projected Receivables Balance Statement" has the
meaning given to it in Section 3.8(c).
"Purchase Agreement" means the Account Purchase
Agreement, dated as of May 10, 1991, by and among Monogram Bank,
USA, R.H. Macy & Co., Inc., Macy Credit Corp., Macy Receivables
Funding Corp., Macy's California, Inc., Macy's Northeast, Inc.,
Macy's South, Inc., Bullock's, Inc., I. Magnin, Inc., Macy
Receivables Master Servicing Corp., and Macy Specialty Stores,
Inc.
"Purchase Price" has the meaning given to it in Section
11.7(b).
"Purchase Price Audit Period" has the meaning given to
it in Section 11.7(c).
"Purchase Price Dispute Notice" has the meaning given
to it in Section 11.7(c).
"Rate Exported Terms" has the meaning given to it in
Section 10.1(a)(vii).
"Remittance" has the meaning given to it in Section
3.1(a).
"Required Coverage Percentage" means [OMISSION].
"Reserve Balance" means, on any date, an amount equal
to the product of (i) the GE/Macy's Gross Receivables on such
date and (ii) the Required Coverage Percentage.
"Reserve Change" means Reserve Balance as of the end of
the applicable period minus Reserve Balance as of the beginning
of such period.
"Retailers" means each Division and each Licensee.
"Revenue Enhancement Program" has the meaning given to
it in Section 5.8.
"Revised Target Percentage" means the GE Revised Target
Percentage or the FDS Revised Target Percentage, as the case may
be.
"Sale" means the sale of goods, services or purchase
certificates to any Person, whether such sale occurs in a store,
by mail order, by telephone order, by computer or other direct
access method, or by any other medium or method through which a
sale can be effected.
"Solvent" means, when used with respect to any Person
on a particular date, that on such date (a) the fair value of the
property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value
of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person is
able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not
intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and
liabilities mature, and (e) such Person is not engaged in
business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would
constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities
will be computed at the amount which, in light of all the facts
and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured
liability.
"Specified Accounts" has the meaning given to it in
Section 4.8(a).
"Specified Fees" has the meaning given to it in Section
10.1(a)(vii).
"Target Percentage" means the GE Target Percentage or
the FDS Target Percentage, as the case may be.
"Target Return" means, with respect to any period, a
Bank Net Return of [OMISSION]% (on an annualized basis) for such
period.
"Third Party Acquisition" means the direct or indirect
acquisition by any FDS Company, or any Affiliate of any FDS
Company, of (a) all or substantially all of the assets of any
retailer, (b) more than 50% of the outstanding voting securities
of any retailer, or (c) the power to direct or cause the
direction of any retailer's management or policies, whether
through the ownership of securities, control of such retailer's
board of directors, by Contract, or otherwise.
"Transaction Amount" has the meaning given to it in
Section 3.1(a).
"Transaction Day" means any day, including any non-
Business Day, on which Merchandise is sold by Retailers.
"Transaction Documents" means all agreements,
certificates and other documents being executed and delivered at
or prior to the closing of the transactions contemplated by this
Agreement, including the FACS Services Agreement, the GE Capital
Services Agreement, the Amended and Restated Trademark Agreement,
the Guaranty Agreements, and the letter from GE Capital to FDS
dated as of the date hereof and shall refer to such documents as
the same may be in effect at the time such reference is
operative.
"Two-Year Sales Projection" has the meaning given to it
in Section 3.8(b).
"UCC" means the Uniform Commercial Code (or analogous
personal property security Law) of the jurisdiction with respect
to which such term is used as in effect from time to time.
"Uncontested Amount" means an amount equal to or
greater than $[OMISSION], which amount is owed (i) by any FDS
Company or any Affiliate of an FDS Company to GE Bank or to any
Affiliate of GE Bank, or (ii) by GE Bank or any Affiliate of GE
Bank to any FDS Company or any Affiliate of an FDS Company, as
the case may be, pursuant to the terms of this Agreement, and
with respect to which a Contested Amount Notice has not been
delivered.
"Unidentifiable Media" has the meaning given to it in
Section 3.5(c)(iii).
"Virtual Comp Net Credit Sales" means all Net Credit
Sales effected both (i) other than by a transaction in a Macy's
Store and (ii) by customers who reside in states in which there
was at least one Macy's Store as of the date of the transaction.
"Virtual Comp Store" has the meaning given to it in
Section 2.2(e)(iii).
"Virtual Non-Comp Net Credit Sales" means all Net
Credit Sales effected other than by a transaction in a Macy's
Store, other than Virtual Comp Net Credit Sales.
1.2. Fiscal Periods. All references to fiscal years,
fiscal quarters or fiscal months in this Agreement refer to FDS
fiscal years, FDS fiscal quarters or FDS fiscal months, as the case may be.
ARTICLE
II.
CONTINUATION OF PROGRAM; OWNERSHIP OF ACCOUNTS
2.1. Continuation of Program
. The parties hereto agree to continue the credit
card program established pursuant to the Original Program
Agreement in accordance with the terms hereof and so hereby amend
and restate the Original Program Agreement in its entirety. The
parties hereto acknowledge and agree that all sales of
Merchandise by the FDS Companies under the Macy's Tradename are
subject to the terms and conditions of this Agreement. In this
regard, the Agreement provides a methodology pursuant to which
the parties will share allocation of Newly Opened Macy's Accounts
provided that, subject to the provisions of Sections 2.2(e)(ii)
and 3.8(f), the parties intend that GE Bank own accounts
representing not less than [OMISSION]% of all private label
credit card sales under the Macy's Tradename.
2.2. Ownership and Treatment of Macy's Accounts Opened
After the Prior Amendment Date
. The parties acknowledge and agree that (a) except for the
specifically described exceptions set forth in Sections 2.2, 2.3,
2.4 and 3.8(f), GE Bank shall continue to have the exclusive
right to open new Macy's Accounts subject to and in accordance
with the terms of this Agreement and (b) that, without limiting
the generality of the foregoing, if FDS converts any stores to
the Macy's Tradename after the Prior Amendment Date, private
label accounts of such store held by Persons who also hold a
GE/Macy's Account (i) shall not be accepted at any Macy's Store
nor issued an FDS/Macy's Account without the prior written
agreement of GE Bank, and (ii) shall be treated in a manner to be
mutually agreed upon at the time by FDS Bank and GE Bank with the
intent of supporting achievement of the Target Percentages then
in effect in a manner consistent with equitable distribution
across Macy's markets that ensures portfolio risk and performance
distribution for GE Bank that is no worse than for FDS Bank
(subject to differences in the Credit and Collection Policy
applicable to only the GE/Macy's Accounts or the FDS/Macy's
Accounts pursuant to the provisions of Section 4.4). Each
Retailer agrees that it shall not, directly or indirectly, take
any action that conflicts with, or is inconsistent with, the
account sharing methodology set forth in this Section 2.2 and
each Retailer agrees that it will comply with and take all
reasonable efforts to effect (and will take all reasonable steps
to assure that each of their employees and agents will comply
with and take all reasonable efforts to effect) the provisions of
this Section 2.2, including, without limitation, Section 2.2(b).
(a) Ownership of Accounts. The parties intend to
develop and install systems that would be capable of allocating
new accounts automatically on the basis of the account ownership
methodology set forth in Subsections (b), (c), (d), and (e) of
this Section 2.2. Until such systems capability is implemented,
the parties will work in good faith to achieve account ownership
allocation in accordance with the methodology set forth herein by
placing GE Bank or FDS Bank application forms in designated
Macy's Stores as described below or by assignment of pre-screens
or other appropriate methods, which may be modified from time to
time by agreement of the parties to obtain the desired results.
Subject to the further provisions of this Section 2.2, (i) all
Newly Opened Macy's Accounts which are either opened at, or with
an application from, a Converted Store or a former A&S store,
shall be FDS/Macy's Accounts owned by FDS Bank or another
Affiliate of FDS and credit with respect thereto shall be
provided by FDS Bank and (ii) all other Newly Opened Macy's
Accounts shall be GE/Macy's Accounts owned by GE Capital or GE
Bank and credit with respect thereto shall be provided by GE
Capital and/or GE Bank. Applications for FDS/Macy's Accounts
will be provided only in (i) former A&S stores and (ii) Converted
Stores and applications for GE/Macy's Accounts will be provided
in all other Macy's Stores. FDS and GE Bank agree that when
opening new Macy's Accounts they will use the account lookup file
or credit bureau subscriber codes to seek to avoid opening any
duplicate Macy's Accounts.
(b) Adjustments to Account Ownership. The
parties recognize that FDS is in the process of converting
certain stores to the Macy's Tradename and that FDS may, in the
future, convert other stores to the Macy's Tradename and/or open
newly built stores using the Macy's Tradename. The parties have
agreed on a mechanism, set forth below, to allocate new Macy's
Accounts between the parties by providing GE Bank with the effect
of credit sales changes in Comp Stores and the benefit of half of
all credit sales generated by New Stores. Formulas used in the
mechanism and illustrative examples of the mechanism are set
forth in Exhibit A hereto. While the parties believe that this
mechanism will be effective to meet the parties' intent (which
intent includes the goal of achieving equitable distribution
across Macy's markets that ensures portfolio risk and performance
distribution for GE Bank that is no worse than for FDS Bank
(subject to differences in the Credit and Collection Policy
applicable to only the GE/Macy's Accounts or the FDS/Macy's
Accounts pursuant to the provisions of Section 4.4)), they agree
that to the extent it does not work fairly to meet such intent
they will work together in good faith to develop a different or
modified mechanism.
(c) Provisions Applicable to 1996. The following
provisions shall be applicable with respect to each quarter of
fiscal year 1996, regardless of whether any New Stores or
Acquired Stores are opened or acquired by FDS during such time:
(i) Within 15 days following the end of each
fiscal quarter in 1996 (i.e., those quarters ending May 4, 1996,
August 3, 1996, November 2, 1996 and February 1, 1997), the
parties shall calculate as of the quarter then ended on a fiscal
year-to-date basis (x) the GE Target Percentage and the FDS
Target Percentage and (y) the GE Actual Percentage and the FDS
Actual Percentage.
(ii) If the Target Percentages and the Actual
Percentages for the year-to-date as of the fiscal quarter then
ended are the same, then applications for new Macy's Accounts in
the next succeeding quarter will be allocated between FDS Bank
and GE Bank based on the Target Percentages so calculated.
(iii) If either party's Actual Percentage
for the fiscal year-to-date period as of the end of a fiscal
quarter is less than its Target Percentage for such year-to-date
period as of the end of such quarter (such difference, a
"Percentage Variance") then applications for new Macy's Accounts
in the next succeeding fiscal quarter will be allocated between
FDS Bank and GE Bank based on the New Accounts Allocation
Percentages.
(d) 1997 and Thereafter. The following
provisions shall be applicable with respect to fiscal year 1997
and thereafter:
(i) Subject to the provisions of
Section 2.2(d)(ii), below, within 15 days following the end of
each fiscal quarter commencing with the end of the first quarter
of 1997, the parties will calculate as of the fiscal quarter then
ended on a fiscal year-to-date basis whether, based on the Target
Percentages then in effect, there was a Percentage Variance for
the fiscal year-to-date as of the quarter then ended. In the
event there is a Percentage Variance for any such period,
applications for new Macy's Accounts in the next succeeding
fiscal quarter will be allocated between FDS Bank and GE Bank
based on the New Accounts Allocation Percentages.
(ii) Notwithstanding the provisions of
Section 2.2(d)(i), (x) if FDS opens or acquires any New Stores or
Non-Overlapping Acquired Stores during any fiscal year commencing
with 1997, then the calculation of Percentage Variance for any
periods in which such stores are considered New Stores or
Acquired Stores in accordance with the definitions thereof shall
be done based on the difference between the Actual Percentages
and the Revised Target Percentages applicable to such periods and
(y) if FDS opens or acquires any Overlapping Acquired Stores
during any fiscal year commencing with 1997, then the calculation
of Percentage Variance for any periods in which such stores are
considered Acquired Stores in accordance with the definition
thereof shall be done based on the difference between the Actual
Percentages and the Revised Target Percentages (which shall be
derived from a calculation of the FDS Revised Credit Sales Share
and the GE Revised Credit Sales Share), applicable to such
periods, it being agreed that for purposes of each such
calculation of the FDS Revised Credit Sales Share and the GE
Revised Credit Sales Share, the Target Percentages used in such
calculation shall be calculated as of the date the FDS Revised
Credit Sales Share and the GE Revised Credit Sales Share are
being calculated. In the event there is a Percentage Variance
for any such period, applications for new Macy's Accounts in the
next succeeding fiscal quarter will be allocated between FDS Bank
and GE Bank based on the New Accounts Allocation Percentage.
(iii) If the procedures described in
Section 2.2(d)(ii) have been applied due to the opening or
acquisition of a New Store or Acquired Store, then, at such time
as the provisions of Section 2.2(d)(ii) are no longer applicable
(i.e., because such New Stores and/or Acquired Stores cease to be
treated as such in accordance with the definitions thereof) the
provisions of Section 2.2(d)(i) shall be applicable for all later
periods in which no New Stores or Acquired Stores are opened or
acquired, provided that the calculation of Percentage Variance
required by Section 2.2(d)(i) shall be based on the Revised
Target Percentages last in effect rather than the Target
Percentages last in effect.
(e) General.
(i) Notwithstanding any other provision of
this Agreement, but subject to Section 2.2(e)(ii), no party's
Target Percentage, New Accounts Allocation Percentage or Revised
Target Percentage shall ever be less than [OMISSION]% or more
than [OMISSION]%.
(ii) Subject to Section 3.8(f),
notwithstanding any other provision of this Agreement, the
parties intend that the GE Actual Percentage for each fiscal
quarter shall not be less than [OMISSION]% . However, the
provisions of this Section 2.2 shall not prohibit FDS from
(i) acquiring any retailer, (ii) converting such retailer or any
other FDS retail division to the Macy's Tradename, and
(iii) converting such retailer's non-duplicate private label
accounts to FDS/Macy's Accounts, even if such conversion would
cause the GE Actual Percentage to be less than [OMISSION]% , so
long as if any such event causes the GE Actual Percentage for any
fiscal quarter to constitute less than [OMISSION]% of Net Credit
Sales for such fiscal quarter then, notwithstanding the other
provisions of this Section 2.2, (A) the percentage of
applications for new Macy's Accounts allocated to FDS Bank will
be immediately revised to equal the GE Actual Percentage for such
fiscal quarter and (B) the percentage of applications for new
Macy's Accounts allocated to GE Bank will be immediately revised
to equal the FDS Actual Percentage for such fiscal quarter. The
allocations described in Section 2.2(e)(ii)(A) and (B) shall
remain in effect until such time as the GE Actual Percentage
equals or exceeds [OMISSION]% .
(iii) The parties acknowledge that future
sales of Merchandise on Macy's Accounts and openings of new
Macy's Accounts may occur through means not contemplated by this
Agreement, including, without limitation, home shopping, pre-
screen solicitations and/or through on-line account applications.
In this regard, the parties agree (x) that for purposes of
calculating any Comp Store Factor, all Virtual Comp Net Credit
Sales shall be aggregated together and deemed to be a single Comp
Store (a "Virtual Comp Store"), provided that, in determining
Comp Stores, (A) such Virtual Comp Store shall not be applied to
eliminate any Macy's Store from being a Comp Store and (B) such
Virtual Comp Store shall not be subject to elimination as a Comp
Store, and (y) that applications for new Macy's Accounts which
are made available to customers other than at a store (e.g.,
pursuant to telephone solicitations, pre-screen solicitations or
on-line services) shall be allocated between FDS Bank and GE Bank
in the same manner as applications are otherwise required to be
allocated between the parties pursuant to the terms of this
Section 2.2.
2.3. Conversion of Jordan Marsh, Bullock's, Broadway,
Weinstock's and Emporium Stores.
(a) Account Utility. FDS agrees that from the
date that any of its Jordan Marsh, Bullock's, Broadway,
Weinstock's or Emporium stores is converted to the Macy's
Tradename, such stores (each, a "Converted Store") will accept
Macy's private label credit cards, whether such cards relate to a
GE/Macy's Account or an FDS/Macy's Account. FDS agrees that from
the date that any of its other stores is converted to the Macy's
Tradename, such stores will accept Macy's private label credit
cards, whether such cards relate to a GE/Macy's Account or an
FDS/Macy's Account. Notwithstanding the foregoing, the parties
agree that (i) certain stores which convert to the Macy's
Tradename may not have the capability of accepting Macy's private
label credit cards, whether such cards relate to a GE/Macy's
Account or an FDS/Macy's Account, immediately following such
conversion and (ii) in such event, such converted stores may be
operated under the Macy's Tradename without accepting Macy's
private label credit cards, provided that (x) such arrangement
does not continue for a period exceeding six months following the
conversion of such store, and (y) pre-existing private label
credit cards of the converted store, if any, are not accepted in
any other Macy's Store following the conversion of such store.
(b) Account Conversion/Duplicate Accounts.
(i) If as of the JM Determination Date (as
defined on Schedule 2.3(b) hereto), a holder of a Jordan Marsh
private label credit card account does not also hold a GE/Macy's
Account, such holder's account (or accounts) shall be converted
into an FDS/Macy's Account. If as of the Broadway Determination
Date (as defined on Schedule 2.3(b) hereto), a holder of a
Broadway, Weinstock's or Emporium private label credit card
account does not also hold a GE/Macy's Account, such holder's
account (or accounts) shall be converted into an FDS/Macy's
Account.
(ii) If as of the applicable Determination
Date, a holder of a Converted Store private label credit card
account also holds a GE/Macy's Account, then such duplicate
accounts shall be treated as described in Schedule 2.3(b) hereto.
2.4. A&S Accounts.
All A&S private label credit card accounts have been treated as
follows:
(a) A&S private label accounts ("A&S Accounts")
held between February 16, 1994 and February 16, 1995 by persons
who did not hold a GE/Macy's Account during such period have been
installed on and converted over to GE Capital's system. Holders
of certain of these accounts were identified by FDS Bank and such
holders received from FDS Bank a new FDS/Macy's Credit Card. All
ownership interests in these converted A&S Accounts are vested in
FDS Bank. The holders of the remaining A&S Accounts described in
this Section 2.4(a) did not receive new credit cards and such
accounts were installed on and converted over to GE Capital's
systems solely for collection of the remaining unpaid balances.
All ownership interests in these accounts are vested in FDS Bank.
(b) All A&S Accounts held between February 16,
1994 and February 16, 1995 by persons who were identified as
holders of an active GE/Macy's Account during such period have
been installed on and converted over to GE Capital's system
solely for the purpose of collecting the remaining unpaid
balances. All ownership interests in these A&S Accounts are
vested in FDS Bank. All ownership interests in the active
GE/Macy's Accounts have continued to vest in GE Bank.
(c) All A&S Accounts held between February 16,
1994 and February 16, 1995 by persons who were identified as
holders of an inactive GE/Macy's Account during such period have
been installed on and converted over to GE Capital's system.
Holders of certain of these accounts were identified by FDS Bank
and such holders received from FDS Bank a new FDS/Macy's Credit
Card. The ownership interests in the converted A&S Accounts are
vested in FDS Bank. All ownership interests in the inactive
GE/Macy's Accounts have continued to vest in GE Bank. The
remaining holders of the A&S Accounts described in this
Section 2.4(c) did not receive new credit cards and such accounts
were installed on and converted over to GE Capital's system
solely for collection of the remaining unpaid balances. All
ownership interests in these A&S Accounts are vested in FDS Bank.
(d) All A&S Accounts have been transferred to
FACS's credit system and none are now serviced by GE Bank's
credit system.
2.5. GE/Macy's Credit Cards; GE/Macy's Account
Documentation
. All GE/Macy's Credit Cards and FDS/Macy's Credit Cards shall
be in the design and format jointly established by FDS and GE
Bank and shall include the Macy's Tradename. All GE/Macy's
Credit Cards issued after the date hereof shall also include, on
the back of the GE/Macy's Credit Card, in no greater than six
point print, the following language: "This card is issued and
credit is extended by GE Capital Consumer Card Co. in Cincinnati,
Ohio. This card is subject to surrender upon request. If found,
this card should be returned to [INSERT ADDRESS DESIGNATED BY GE
BANK]." Except as provided in this Section 2.5, the GE/Macy's
Credit Cards and the FDS/Macy's Credit Cards shall be identical.
All GE/Macy's Credit Card Documentation shall also indicate that
credit under the applicable GE/Macy's Account is extended by GE
Bank, provided that charge slips, credit slips and receipts for
payment shall only be required to include such language regarding
the extension of credit as is determined by the Policy Committee.
GE/Macy's Credit Cards and FDS/Macy's Credit Cards may only be
accepted for the Sale of Merchandise under the Macy's Tradename.
GE Bank agrees that if (i) FDS purchases the GE/Macy's Accounts
following termination of this Agreement, (ii) any of the
GE/Macy's Credit Cards have the foregoing identification language
printed on them and (iii) following such purchase FDS is required
by Law to reissue such GE/Macy's Credit Cards solely because such
identification language appears on the back of the cards, then GE
Bank, at its option, shall either (A) have such GE/Macy's Credit
Cards reissued at GE Bank's cost or (B) pay, or reimburse FDS
for, up to $[OMISSION] of FDS's actual documented out-of-pocket
costs and expenses incurred to reissue such GE/Macy's Credit
Cards.
ARTICLE
III.
ADMINISTRATION AND SETTLEMENT PROCEDURES
3.1. Remittances
. (a) On each Business Day during the term of
this Agreement (beginning on the first Business Day after the
date hereof), each Division shall transmit or otherwise make
available to GE Bank, not later than 11:00 a.m. Eastern Time on
such Business Day, all Charge Data originated by such Division on
the immediately preceding Transaction Day(s). On each Business
Day during the term of this Agreement (beginning on the first
Business Day after the date hereof), with respect to each
Division from which GE Bank has received, or had access to,
Charge Data by 11:00 a.m. Eastern Time on such Business Day, GE
Bank shall initiate a wire transfer (each such transfer a
"Remittance") to such Division of an amount equal to the
following: (i) the sum of (A) the excess of the aggregate
GE/Macy's Credit Card sales reported in the Charge Data
transmitted, or made available, by such Division to GE Bank by
11:00 a.m. Eastern Time on such Business Day over the aggregate
amount of GE/Macy's Credit Slips and other credit adjustments on
GE/Macy's Account Balances reported in such Charge Data (the
"Transaction Amount"), and (B) any other amounts required or
permitted to be added to a Remittance pursuant to the terms of
this Agreement, minus (ii) the sum of (A) the product of (1) such
Transaction Amount and (2) the Bank Service Discount in effect on
such Business Day, provided that the provisions of this
clause (A) shall only be operative between the date hereof and
the earlier of February 1, 1997 and the date that the provisions
of Sections 5.2 through 5.6 become operative, (B) the aggregate
amount of In-Store Payments reported in such Charge Data, (C) any
other amounts required or permitted to be deducted from a
Remittance pursuant to the terms of this Agreement and (D) any
previously made Remittance or Estimated Remittance with respect
to the Charge Data being transmitted. Each Remittance shall be
calculated with respect to each Division for each Business Day
during the term of this Agreement pursuant to a settlement
statement in the form of Schedule 3.1 hereto (a "Daily Settlement
Statement"). The parties acknowledge that GE Bank will not have
final information at the time the Remittance with respect to each
Division on each Business Day is calculated, and that each
Remittance will therefore be a preliminary estimate of the actual
amount that should be remitted to such Division on such Business
Day. Accordingly, each Remittance shall be subject to further
adjustment to the extent that final credit sales adjustments for
Transaction Day(s) with respect to which a Remittance has
previously been made (a "Prior Remittance") indicates that the
Prior Remittance was overstated or understated.
(b) On each Business Day during the term of this
Agreement (beginning on the first Business Day after the date
hereof), with respect to each Division that, after taking
reasonable precautions, as a result of circumstances beyond the
control of the FDS Companies (e.g., computer or telecommunication
breakdown), failed to transmit or otherwise make available Charge
Data to GE Bank by 11:00 a.m. Eastern Time on such Business Day,
GE Bank shall initiate a wire transfer (each such transfer, an
"Estimated Remittance") of GE Bank's good faith estimate of the
amount that should be transferred to such Division on such
Business Day. GE Bank's good faith estimate shall be based on
FDS's then most recent projections of GE Net Credit Sales and
shall take into account, among other things, holidays and
seasonal and other sales fluctuations. Notwithstanding the
foregoing, GE Bank shall have no obligation to make an Estimated
Remittance on more than five consecutive Business Days.
(c) On each Business Day during the term of this
Agreement, GE Bank shall, at the direction of the Divisions,
satisfy its obligations under Section 3.1(a) and/or
Section 3.1(b) by initiating a wire transfer (each such transfer,
an "Aggregate Remittance") to a single account designated by, and
in the name of, all of the Divisions and as to which all of the
Divisions are account parties, for the account of each Division,
of an amount equal to the aggregate amount of Remittances (or, if
applicable, the Estimated Remittances) payable by GE Bank on such
Business Day; provided that in such case GE Bank shall provide
FDS with a Daily Settlement Statement with respect to each
Division on such Business Day. Each Division may, at any time
during the term of this Agreement, require GE Bank to satisfy its
Remittance obligation to such Division by initiating a wire
transfer to any account designated by, and solely in the name of,
such Division.
(d) All Remittances made pursuant to this
Section 3.1 shall be initiated by GE Bank not later than
2:00 p.m. Eastern Time on the applicable Business Day. If on any
Business Day during the term of this Agreement the Charge Data
applicable to such Business Day would require a negative
Remittance, then (x) GE Bank shall have no Remittance obligation
with respect to any Division on such Business Day and (y) FDS, on
behalf of the Divisions, shall pay GE Bank the amount indicated
on such Charge Data by the close of business on such Business
Day.
(e) In the event that the FACS Services Agreement
terminates prior to the termination of this Agreement, the
parties agree that they will cooperate to revise the Remittance
procedures of this Section 3.1 to reflect any systems changes
effected as a result of the termination of the FACS Services
Agreement and that such revised Remittance procedures shall be
based on the provisions hereof.
3.2. [Reserved]
3.3. [Reserved]
3.4. Monthly Settlements
. [OMISSION].
3.5. GE Bank's Right to Chargeback
. (a) GE Bank and the FDS Companies acknowledge and
agree that general guidelines with respect to GE Bank's
chargeback rights are set forth in this Section 3.5. These
guidelines are subject to additional details and procedures which
may be agreed to by the parties from time to time. In addition,
the parties acknowledge that as of the date hereof, FACS will be
providing certain credit services to GE Bank, and that such
services will include responsibility for chargebacks. The
parties therefore agree that notwithstanding the provisions of
this Section 3.5, GE Bank's rights to chargeback shall not be
limited or prejudiced by any act or omission of FACS or any of
its agents relating to their chargeback responsibilities.
(b) When any GE/Macy's Receivable included in
Charge Data remitted against by GE Bank pursuant to this
Agreement becomes an Eligible Chargeback GE/Macy's Receivable (as
hereafter defined), GE Bank shall have the right, subject to the
terms hereof, to charge back to the applicable FDS Company an
amount equal to the Face Amount (less prior adjustments with
respect thereto) of such GE/Macy's Receivable. The following are
"Eligible Chargeback GE/Macy's Receivables," to the extent set
forth in Section 3.5(c) hereof: (i) Merchandise Adjustments,
(ii) Missing Media, (iii) Unidentifiable Media, (iv) Fraudulent
Charges, (v) Misrepresented GE/Macy's Receivables, and
(vi) Previously Paid GE/Macy's Receivables.
(c) The following conditions and procedures are
to be used for determining Eligible Chargeback GE/Macy's
Receivables:
(i) Merchandise Adjustments. Requests
received by GE Bank from GE/Macy's Account Debtors for adjustment
("Merchandise Adjustments") will be promptly communicated by GE
Bank directly to the applicable Division. GE Bank shall honor
the FDS Companies' customer service policies and determinations
in respect of Merchandise Adjustments. Merchandise Adjustment
requests that are not frivolous and that are not resolved by the
applicable Division within 120 days (or such later date as GE
Bank has agreed to) after the date such request was communicated
to the applicable Division may be charged back by GE Bank to the
applicable Division unless an additional period of time is agreed
to by the applicable Division and GE Bank. GE Bank may also
charge back the GE/Macy's Receivable to the applicable Division
if such notice states that the Division believes the dispute
should be resolved in the customer's favor. Notwithstanding the
foregoing, in no event may GE Bank charge back to any Division
any GE/Macy's Receivable described in this Section 3.5(c)(i)
later than 45 days after the expiration of the foregoing 120-day
or longer period.
(ii) Missing Media. Requests received by GE
Bank from GE/Macy's Account Debtors for supporting media will be
promptly communicated by GE Bank directly to the applicable
Division. Such Division shall be responsible for providing GE
Bank with a legible copy of the requested media within 30 days
after receipt of the request. GE/Macy's Receivables represented
by media not provided within such 30-day period ("Missing Media")
may be charged back by GE Bank to the applicable Division. Such
Division has 40 days after the chargeback to locate the media and
reverse the chargeback, whereupon such Eligible Chargeback
GE/Macy's Receivable shall again become a GE/Macy's Receivable
eligible for inclusion in Charge Data. Notwithstanding the
foregoing, in no event may GE Bank charge back any GE/Macy's
Receivable described in this Section 3.5(c)(ii) later than 45
days after the date on which GE Bank received the request for
supporting media from the GE/Macy's Account Debtor and in no
event more than 180 days after the date the credit sale occurred.
(iii) Unidentifiable Media.
"Unidentifiable Media" are media that do not have a valid account
number or that have any other characteristic that prevents GE
Bank from properly posting such media to a GE/Macy's Account. GE
Bank and the applicable Division shall work together to try to
resolve any Unidentifiable Media problems during the 30-day
period following the time at which such Unidentifiable Media is
recognized by GE Bank as such. If GE Bank and the applicable
Division are unable to resolve such problems during such 30-day
period, GE Bank has the right to charge back any GE/Macy's
Receivable relating to such Unidentifiable Media to the
applicable Division. Such Division has 40 days (or such longer
period of time as the parties agree) after the date of any
chargeback pursuant to this Section 3.5(c)(iii) to complete
additional research and, if successful, reverse the chargeback,
whereupon such Eligible Chargeback GE/Macy's Receivable shall
again become a GE/Macy's Receivable eligible for inclusion in
Charge Data. Notwithstanding the foregoing, in no event may GE
Bank charge back any GE/Macy's Receivable because of
Unidentifiable Media later than 45 days after the date such
Unidentifiable Media is recognized by GE Bank as such. Any In-
Store Payments that have been deducted in determining Remittances
as to which GE Bank is unable to identify the GE/Macy's Account
to which such payment should be credited shall be reversed.
(iv) Fraudulent Charges. GE Bank may charge
back (or, at its election, reduce the FACS Servicing Fee in
connection with) any GE/Macy's Receivable which resulted from any
fraud of a customer at the point-of-sale or any GE/Macy's
Receivable incurred pursuant to a GE/Macy's Account that was
created pursuant to a fraudulent GE/Macy's Credit Card
Application unless FDS can demonstrate that the applicable FDS
Company followed all applicable account origination and customer
identification procedures specified in the Credit and Collection
Policy (collectively, "Fraudulent Charges"). GE Bank will use
commercially reasonable efforts to obtain fraud questionnaires in
connection with all Fraudulent Charges. GE Bank may charge back
any GE/Macy's Receivable described in this Section 3.5(c)(iv) to
the applicable Division at any time within 60 days after the date
on which GE Bank receives a signed fraud questionnaire from the
relevant GE/Macy's Account Debtor or, if circumstances are such
that a fraud questionnaire cannot be obtained because of GE Bank
inability to locate the GE/Macy's Account Debtor, within 60 days
after the date on which GE Bank discovers the applicable fraud,
provided that, in the event the applicable fraud is the subject
of an ongoing investigation pursuant to United States federal
Law, such 60-day period shall be extended by mutual agreement of
the parties. GE Bank and FDS agree that no GE/Macy's Receivable
may be charged back to any Division pursuant to this
Section 3.5(c)(iv) if such GE/Macy's Receivable arose in
connection with fraudulent actions taken by any employee of GE
Bank or any Affiliate of GE Bank (provided that the FDS Companies
and their Affiliates shall not be deemed Affiliates of GE Bank)
in connection with performing their duties pursuant to the
Program, including servicing the GE/Macy's Accounts and the
GE/Macy's Receivables pursuant to the FACS Services Agreement.
(v) Misrepresented GE/Macy's Receivables.
GE Bank may charge back any GE/Macy's Receivable with respect to
which the representations and warranties set forth in
Section 6.10 are not true and correct as and when made
("Misrepresented GE/Macy's Receivables"). Notwithstanding the
foregoing, in no event may GE Bank charge back to the applicable
Division any GE/Macy's Receivable described in this
Section 3.5(c)(v) later than 45 days after the date on which GE
Bank discovers such breach.
(vi) Previously Paid GE/Macy's Receivables.
GE Bank may charge back any GE/Macy's Receivable which has been
included in the Charge Data previously and in respect of which GE
Bank has made a Remittance ("Previously Paid GE/Macy's
Receivables").
(d) (i) Prior to the time GE Bank exercises its
right of chargeback with respect to any GE/Macy's Receivable, GE
Bank shall, in a manner consistent with the Credit and Collection
Policy, use reasonable commercial efforts to collect such
GE/Macy's Receivable from the relevant GE/Macy's Account Debtor
to the extent permitted by applicable Law. Effective immediately
upon GE Bank's exercise of its right of chargeback with respect
to any GE/Macy's Receivable, (x) GE Bank shall assign to FDS all
of its right, title and interest in and to such GE/Macy's
Receivable, free and clear of any and all Liens created by GE
Bank, but without recourse and without any other warranty,
express or implied, and the ownership interest of GE Bank in such
GE/Macy's Receivable shall be terminated and (y) any payments
received by GE Bank in respect of such GE/Macy's Receivable shall
be promptly forwarded by GE Bank to FDS.
(ii) Notwithstanding any other provision of
this Agreement to the contrary, no GE/Macy's Receivable shall
become an Eligible Chargeback GE/Macy's Receivable until after
(A) the time period for the applicable Division response to the
chargeback request with respect to such GE/Macy's Receivable has
elapsed and (B) GE Bank has completed its research as to the
validity of and documentation for such chargeback. In no event
shall GE Bank charge back any GE/Macy's Receivable based solely
upon the failure of the relevant GE/Macy's Account Debtor to make
scheduled payments on his GE/Macy's Account.
(e) If GE Bank exercises its right of chargeback
with respect to any GE/Macy's Receivable, GE Bank shall provide
the applicable Division with the following information, if
available, regarding such GE/Macy's Receivable: the GE/Macy's
Account Debtor's name, address and telephone number; the
GE/Macy's Account number; the location of the store in which such
GE/Macy's Receivable arose; the Face Amount of such GE/Macy's
Receivable; the reason for the chargeback; the date such
GE/Macy's Receivable arose and the relevant transaction number.
3.6. Returns of Merchandise
. (a) A GE/Macy's Account Debtor or Authorized User
that returns Merchandise purchased on credit pursuant to a
GE/Macy's Account shall, if the Retailer accepts the return, be
issued a GE/Macy's Credit Slip by the applicable Retailer, and
the applicable Retailer shall not knowingly or willingly return
cash to such Person and shall use commercially reasonable efforts
not to return cash to such Person. With respect to each
Division, on each Business Day during the term of this Agreement,
the aggregate amount of GE/Macy's Credit Slips with respect to
such Division shall be deducted in computing the Remittance (or,
if applicable, the Estimated Remittance) for such Division, as
provided in Section 3.1(a) hereof.
(b) In no event shall any FDS Company have any
obligation to repossess or dispose of Merchandise in connection
with the collection of GE/Macy's Receivables. GE Bank shall be
entitled to repossess or dispose of Merchandise in connection
with the collection of GE/Macy's Receivables (other than with
respect to GE/Macy's Receivables assigned to FDS pursuant to
Section 3.5(d)(i) or purchased by FDS Bank pursuant to
Section 11.6) to the extent permitted under the Credit and
Collection Policy.
3.7. In-Store Payments
. (a) The FDS Companies shall have the right to
accept In-Store Payments with respect to GE/Macy's Accounts only
so long as the FDS Companies are accepting in-store payments with
respect to FDS/Macy's Accounts on similar terms and conditions.
Notwithstanding the foregoing, the Retailers shall not advertise
or otherwise generally promote the fact that GE/Macy's Account
Debtors (or other Persons acting on behalf of GE/Macy's Account
Debtors) may make In-Store Payments. At the time that any In-
Store Payment is made, the FDS Companies shall give the Person
making such In-Store Payment a receipt which will comply with
applicable Law and, upon reasonable prior notice by GE Bank,
state that "In-store payments are accepted by Federated
Department Stores, Inc. as a convenience for account holders and
are not deemed received or accepted by the creditor until
actually received by such creditor." The FDS Companies shall
have no right, title or interest in any In-Store Payments, and
shall take possession of such funds solely as agent on behalf of
GE/Macy's Account Debtors for transfer to GE Bank. In those
cases where receipts for In-Store Payments are not provided, the
FDS Companies and GE Bank shall cooperate in designing and
implementing a procedure for providing notification similar to
the foregoing to customers who make In-Store Payments.
(b) With respect to each Division, on each
Business Day during the term of this Agreement, the aggregate
amount of In-Store Payments with respect to such Division shall
be deducted in computing the Remittance for such Division, as
provided in Section 3.1(a) hereof.
3.8. Maximum Cardholder Credit Amount.
(a) The "Maximum Cardholder Credit Amount" with
respect to the GE/Macy's Accounts means $[OMISSION] or such
greater amount as may be determined pursuant to the provisions of
this Section 3.8.
(b) At the beginning of each fiscal year during
the Program, FDS shall deliver to GE Bank a report setting forth
in reasonable detail FDS's projected Net Credit Sales on a month-
by-month basis for each of the next two years, the "Two-Year
Sales Projection"). Promptly following the end of the second
quarter of each such fiscal year, FDS shall deliver to GE Bank a
report updating the then current Two-Year Sales Projection.
(c) GE Bank shall deliver to FDS, within 30
Business Days after its receipt of each Two-Year Sales
Projection, a written report setting forth in reasonable detail
GE Bank's estimate, based on the Two-Year Sales Projection, of
the projected GE/Macy's Gross Receivables at the end of each
fiscal month during the two-year period covered by such Two-Year
Sales Projection (the "Projected Receivables Balance Statement").
If FDS does not deliver to GE Bank within five Business Days
after its receipt of a Projected Receivables Balance Statement, a
written objection to such statement, the Projected Receivables
Balance Statement shall be deemed to have been accepted by FDS
and shall be final and binding on the parties for purposes of
this Section 3.8. If FDS delivers to GE Bank within five
Business Days after its receipt of a Projected Receivables
Balance Statement, a written objection to such statement, FDS and
GE Bank shall work together for a period of 10 Business Days
after GE Bank's receipt of such objection to attempt to reach
agreement on the Projected Receivables Balance Statement. If FDS
and GE Bank are unable to agree on the Projected Receivables
Balance Statement within such 10 Business Day period, the dispute
will be resolved pursuant to Section 9.9. Each Projected
Receivables Balance Statement, as either agreed to (or deemed
agreed to) by FDS and GE Bank or finalized pursuant to
Section 9.9, shall be referred to as a "Final Projected
Receivables Balance Statement".
(d) If (i) the Final Projected Receivables
Balance Statement indicates that the GE/Macy's Gross Receivables
at the end of any month during the two-year period covered by the
Two-Year Sales Projection will be equal to or greater than 90% of
the Maximum Cardholder Credit Amount or (ii) the GE/Macy's Gross
Receivables at any time during the term of this Agreement are
actually equal to or greater than 90% of the Maximum Cardholder
Credit Amount, then GE Bank shall deliver written notice to FDS
(the "Maximum Amount Notice") not later than 60 days after the
occurrence of the earliest of the events described in clause (i)
or (ii) above, stating either that GE Bank will (x) permanently
increase the Maximum Cardholder Credit Amount (and specifying the
increased Maximum Cardholder Credit Amount and the date on which
it will be effective) or (y) not increase the Maximum Cardholder
Credit Amount.
(e) In the event that GE Bank elects to increase
the Maximum Cardholder Credit Amount, the Maximum Cardholder
Credit Amount shall, effective as of the date specified by GE
Bank in the Maximum Amount Notice, be automatically increased to
the amount set forth on the Maximum Amount Notice, provided that
such revised Maximum Cardholder Credit Amount shall in no event
be less than 111% of the maximum projected GE/Macy's Gross
Receivables contained in the Final Projected Receivables Balance
Statement or the then actual GE/Macy's Gross Receivables, as the
case may be.
(f) In the event that GE Bank elects not to
increase the Maximum Cardholder Credit Amount, FDS and GE Bank
shall work together, in good faith for a period of 60 days after
GE Bank has delivered the Maximum Amount Notice, to agree upon a
mutually acceptable means of reducing the maximum projected
GE/Macy's Gross Receivables for the relevant two-year period
below 90% of the Maximum Cardholder Credit Amount (the "Maximum
Cardholder Credit Solution"). A Maximum Cardholder Credit
Solution may include, without limitation, securitizing the
GE/Macy's Receivables, or any other mutually acceptable means
through which a Maximum Cardholder Credit Solution may be
achieved other than by limiting the authorized credit amount
under any then existing GE/Macy's Accounts. If GE Bank and FDS
have worked together in good faith to reach a mutually agreeable
Maximum Cardholder Credit Solution for a period of 60 days after
GE Bank has delivered the Maximum Amount Notice but have failed
to do so (i) all Macy's Accounts opened after such 60 day period
shall be FDS/Macy's Accounts until such time, if any, as
GE/Macy's Gross Receivables are less than 90% of the Maximum
Cardholder Credit Amount and (ii) GE Bank may take any action
with respect to GE/Macy's Accounts, other than limiting the
authorized credit amount as permitted under the Credit and
Collection Policy under any then existing GE/Macy's Accounts,
that GE Bank may consider necessary to avoid having the GE/Macy's
Gross Receivables exceed the Maximum Cardholder Credit Amount,
including, but not limited to, ceasing to open new GE/Macy's
Accounts.
3.9. Ownership of GE/Macy's Accounts and GE/Macy's
Receivables.
(a) All transactions and borrowings in connection
with the GE/Macy's Accounts and the GE/Macy's Receivables shall
create the relationship of debtor and creditor between each
GE/Macy's Account Debtor and GE Bank, respectively, and GE Bank
shall be the owner of all the GE/Macy's Accounts and the
GE/Macy's Receivables and, except as otherwise specifically
provided herein, shall have all rights, powers, and privileges
with respect thereto as such owner, including, without
limitation, the right at any and all times to receive directly
payments on GE/Macy's Accounts from GE/Macy's Account Debtors.
In this regard, GE Bank shall bear all risks of collections of
GE/Macy's Receivables other than with respect to Eligible
Chargeback GE/Macy's Receivables. Each FDS Company acknowledges
and agrees that it has no right, title or interest in or to
(i) any of the GE/Macy's Accounts or the GE/Macy's Receivables,
or (ii) any payments made by GE/Macy's Account Debtors with
respect to the GE/Macy's Accounts or the GE/Macy's Receivables.
(b) GE Bank and the FDS Companies acknowledge that
under the Program GE Bank extends credit directly to GE/Macy's
Account Debtors. However, in the unlikely event it were ever to
be determined by a final order of a court of competent
jurisdiction that FDS (or the FDS Companies) is deemed to be
extending credit directly to GE/Macy's Account Debtors, the FDS
Companies and GE Bank acknowledge and agree that GE Bank shall be
deemed to be purchasing the receivables created by such
arrangements and that GE Bank's remittances pursuant to this
Agreement shall be deemed to be payment for the purchase of such
receivables and GE Bank shall be deemed to have purchased such
receivables effective when GE Bank incurred the obligation to
make payment therefor. In this regard, GE Bank and the FDS
Companies agree that, on or before the date of this Agreement,
and thereafter from time to time, they will execute and file such
financing statements under the UCC as would be necessary and
appropriate to protect GE Bank's interest to the same extent as
if GE Bank was purchasing such receivables.
3.10. Ownership of FDS/Macy's Accounts and Related
Receivables
. FDS Bank shall be the owner of all the FDS/Macy's
Accounts and the receivables relating thereto and, except as
otherwise specifically provided herein, shall have all rights,
powers, and privileges with respect thereto as such owner,
including without limitation, the right at any and all times to
receive directly payments on FDS/Macy's Accounts. GE Bank
acknowledges and agrees that it has no right, title or interest
in or to (i) any of the FDS/Macy's Accounts or FDS/Macy's
Receivables or (ii) any payments made by account holders with
respect to FDS/Macy's Accounts.
3.11. Receipt of Payments
. (a) The primary and exclusive right to receive
payments from GE/Macy's Account Debtors with respect to GE/Macy's
Receivables shall be vested in GE Bank. In this regard, GE Bank
shall be entitled to retain for its account all finance charges,
returned check fees, late fees and any other fees and other
income collected, if any, with respect to the GE/Macy's Accounts
and the GE/Macy's Receivables.
(b) The primary and exclusive right to effect
collection of FDS/Macy's Receivables shall be vested in FDS Bank.
In this regard, FDS Bank shall be entitled to retain for its
account all finance charges, returned check fees, late fees and
any other fees and other income collected, if any, with respect
to the FDS/Macy's Receivables.
ARTICLE
IV.
OPERATING PROCEDURES
4.1. GE Bank's Responsibilities
. (a) GE Bank, either itself or through designees
(subject to the provisions of Section 4.11), shall operate
(except as may otherwise be explicitly provided herein) all
credit operations and facilities with respect to the GE/Macy's
Accounts. All such operations shall be conducted in a high
quality, ethical manner, in such a way as not to disparage or
embarrass the Retailers or their name, and with a level of
service to GE/Macy's Account Debtors and Retailers that is not
less than the level of service provided to GE/Macy's Account
Debtors by GE Bank prior to the date hereof. GE Bank's
responsibilities shall include, without limitation, providing the
following services during the term of this Agreement: (i)
marketing and credit promotions, (ii) account approval and set-
up, (iii) purchase authorizations, (iv) customer service, (v)
systems services, (vi) billing statement processing and mailing,
(vii) credit card processing and mailing, (viii) payment
processing and (ix) collections. After due consideration, GE
Bank has identified GE Capital and FACS as appropriate designees
to perform certain services hereunder and GE Bank shall, in order
to assure continued compliance with safety and soundness and
related regulatory requirements applicable to GE Bank, regularly
monitor the performance by GE Capital and/or FACS of any such
services. The parties acknowledge that as of the date hereof GE
Bank has retained GE Capital and FACS to perform certain of GE
Bank's credit service responsibilities hereunder other than
collections (the "Collection Services"). The terms and
conditions applicable to the performance by GE Bank of Collection
Services are set forth on Annex I hereto.
(b) Provided GE Bank complies with the provisions
of this Agreement and with applicable Law, the rejection of any
GE/Macy's Credit Card Application, for any reason whatsoever,
shall not give rise to any claim, liability, demand, offset,
defense, or counterclaim by any Retailers against GE Bank or its
Affiliates.
4.2. Retailers' Responsibilities
. (a) Retailers, jointly and severally, in accordance
with the terms and conditions hereof (including, without
limitation, Article II hereof), shall perform all in-store credit
services, including services in Retailers' stores that generate
GE/Macy's Accounts, in a high quality, ethical manner, in such a
way as not to disparage or embarrass GE Bank or its name, and
with a level of service which is not less than that which is
currently provided by Retailers to GE/Macy's Account Debtors and
Authorized Users, in order to encourage the creation of Macy's
Accounts and encourage and facilitate the use of Macy's Accounts
by Macy's Account holders and Authorized Users in accordance with
GE Bank's and Retailers' operating procedures as agreed to by the
parties from time to time and in accordance with the provisions
of this Agreement and the Credit and Collection Policy. Such
services shall include, without limitation, the following in-
store activities:
(i) promoting, subject to Section 4.5, and
accepting Macy's Credit Card Applications, and communicating
credit information about prospective Macy's Account holders
through electronic means.
(ii) Forwarding requests for changes of
address for GE/Macy's Account Debtors or adjustments from
GE/Macy's Account Debtors and promptly forwarding all such
information.
(iii) Obtaining electronic credit
authorization which authorization shall be obtained by a Retailer
through on-line systems or dial-up terminals prior to such
Retailer's creation of any GE/Macy's Receivable; provided,
however, that in the event of down-time, a Retailer may (A)
permit a GE/Macy's Account Debtor to make a purchase in an amount
equal to or less than the applicable floor limit established from
time to time and (B) permit a GE/Macy's Account Debtor to make a
purchase in an amount greater than such floor limit upon receipt
of telephonic approval from GE Bank or its designee.
(iv) Utilizing only GE/Macy's Credit Card
Documentation in the form approved by GE Bank from time to time
(other than charge, credit and payment receipts).
(v) Assisting GE/Macy's Account Debtors in
communication with GE Bank through a toll free telephone number
maintained at a facility in Retailers' retail stores, which shall
include providing and maintaining existing types of
telecommunication equipment (but not the toll free number) in the
retail stores.
(vi) Managing in-store hostess programs, if
any, to solicit applications for Macy's Accounts.
(vii) Providing special services, if any,
to "preferred" Macy's credit card customers.
(viii) Training and employing sufficient
personnel to promote the creation and use of Macy's Accounts and
perform the duties of Retailers hereunder.
(ix) Continuing to offer assistance to
customers requesting applications for Macy's Accounts and
resolution of credit-related problems.
(x) Displaying promotional material related
to Macy's Accounts prominently in appropriate areas of retail
stores attractive to, and frequented by, customers of Retailers
as determined in the Retailer's reasonable discretion.
(xi) Providing all Macy's charge slips and
credit slips for use in the Program.
(xii) Promptly advising GE Bank of any
material Litigation (A) concerning Retailers' responsibilities
under this Agreement, or (B) which may adversely affect the
GE/Macy's Accounts, the GE/Macy's Receivables or the Program.
(xiii) Obtaining proper identification
consistent with the Credit and Collection Policy.
(xiv) Obtaining the account number where
a GE/Macy's Account Debtor does not have his or her GE/Macy's
Credit Card.
(b) Each Retailer shall use commercially
reasonable efforts promptly to furnish to, or inform GE Bank of,
all material information received by such Retailer relating to
the collectibility of a GE/Macy's Account, any changes of address
of GE/Macy's Account Debtors, and notices of filings under the
Bankruptcy Code with respect to GE/Macy's Account Debtors.
(c) Retailers shall keep GE/Macy's Charge Slips,
GE/Macy's Credit Slips, and all other GE/Macy's Account
Documentation and/or copies thereof which originally come into
Retailers' possession in accordance with the terms and conditions
of the Credit and Collection Policy. Retailers shall keep all
such originals or copies of GE/Macy's Credit Slips, GE/Macy's
Charge Slips and other GE/Macy's Account Documentation free and
clear of any Liens (other than Liens in favor of GE Bank).
Retailers, jointly and severally, shall make sufficient
arrangements with respect to such GE/Macy's Charge Slips,
GE/Macy's Credit Slips and other GE/Macy's Account Documentation
so that Retailers shall be able to deliver such items to GE Bank
within 30 days after GE Bank's request therefor (or such shorter
period of time as may be required by any Governmental Authority).
(d) Provided Retailers comply with the provisions
of this Agreement and with applicable Law, the rejection of any
GE/Macy's Credit Card Application, for any reason whatsoever,
shall not give rise to any claim, liability, demand, offset,
defense, or counterclaim by GE Bank against any Retailers, except
to the extent based on in-store acts or omissions of Retailers
not expressly permitted by the Credit and Collection Policy.
4.3. Policy Committee
. (a) As promptly as practicable after the date
hereof, FDS and GE Bank shall organize a policy committee (the
"Policy Committee") which shall consist of four members. The
members of the Policy Committee shall be: the Authorized GE
Person, the GE Designee, the Authorized FDS Person, and the Chief
Financial Officer of FDS. If the Authorized GE Person and/or the
GE Designee cannot attend a meeting of the Policy Committee, GE
Bank shall be entitled to send other representative(s) to such
meeting. If the Authorized FDS Person and/or the Chief Financial
Officer of FDS cannot attend a meeting of the Policy Committee,
FDS shall be entitled to send other representative(s) to such
meeting.
(b) Two members of the Policy Committee, one of
whom shall be an FDS designee and the other a GE Bank designee,
present at a meeting either in person or by proxy, shall be
required for a quorum for the transaction of business at any
meeting of the Policy Committee, which meetings may be held in
person or by means of telephonic conference call in which all
parties can communicate with each other. The approval of all
members of the Policy Committee present at a meeting of the
Policy Committee shall constitute the act of the Policy
Committee.
(c) FDS and GE Bank shall each be permitted to
call meetings of the Policy Committee at any time during the term
of this Agreement by delivery of at least 10 Business Days prior
written notice to the other, which notice shall be deemed waived
by attendance at any such meeting by the members of the Policy
Committee.
(d) The Policy Committee may designate all or a
portion of its authority from time to time to FDS's and GE Bank's
respective marketing, risk and collection managers. Any
authority not expressly delegated by the Policy Committee shall
remain with the Policy Committee.
4.4. Credit and Collection Policy
. (a) The Credit and Collection Policy shall
govern all aspects of the Program that are addressed therein.
The parties acknowledge that notwithstanding the fact that the
GE/Macy's Accounts and GE/Macy's Receivables are owned by GE Bank
and that the Program is conducted by GE Bank, there may be
certain changes over time to the Program which could have a
substantial adverse competitive, economic or other impact on FDS,
and that to protect FDS's interests as a seller of Merchandise,
FDS and GE Bank have agreed that neither GE Bank, on the one
hand, nor the FDS Companies on the other hand, may amend or
modify any of the Major Credit and Collection Policies, or fail
to follow or implement any of the Major Credit and Collection
Policies, without the prior consent of the Policy Committee.
(b) Subject to the foregoing, each party may
amend or modify any provision of the Credit and Collection Policy
(other than the Major Credit and Collection Policies) that
governs the provision or performance of any services being
provided or performed by such party, provided that such party
uses its commercially reasonable efforts to provide the other
party with prior notice of any such amendments or modifications.
FDS Bank and GE Bank agree to cause the Policy Committee to meet
promptly following the end of each fiscal quarter in order to
review all changes to the Credit and Collection Policy made
during the preceding quarter and to update the Credit and
Collection Policy to reflect all such changes.
(c) Notwithstanding the foregoing, GE Bank may,
with respect to the GE/Macy's Accounts, and FDS Bank may, with
respect to the FDS/Macy's Accounts, take any action or effect any
modification to the Credit and Collection Policy (including to
the Major Credit and Collection Policies) without the approval of
the Policy Committee, but after prior consultation and discussion
with the Policy Committee, which GE Bank or FDS Bank, as the case
may be, believes in good faith, after consultation with counsel,
are required by Law.
(d) The Credit and Collection Policy shall at all
times be applicable to all GE/Macy's Accounts and FDS/Macy's
Accounts without distinction, except to the extent (i) one party
has required that its accounts be treated differently pursuant to
Section 4.4(c) or (ii) the parties otherwise agree in writing.
4.5. Marketing Programs and Procedures.
Each party acknowledges and agrees that all
credit offers, pre-screens and other account marketing programs
related to Macy's Accounts (other than advertising) will be
developed by FDS Bank in consultation with GE Bank with the
intent of supporting achievement of the applicable Target
Percentages in a manner consistent with equitable distribution
across Macy's markets that ensures portfolio risk and performance
distribution for GE Bank that is no worse than for FDS Bank
(subject to differences in the Credit and Collection Policy
applicable to only the GE/Macy's Accounts or the FDS/Macy's
Accounts effected pursuant to the provisions of Section 4.4).
The final form of all such programs shall require the approval of
GE Bank, provided that if GE Bank does not provide notice to FDS
Bank of GE Bank's approval or disapproval, as the case may be, of
any such proposed marketing program within five Business Days
after the delivery of such program in its final form by FDS Bank
to an Authorized GE Person, such program shall be deemed to have
been approved by GE Bank. In this regard, FDS Bank agrees to
apply similar resources (both economic and otherwise) to
marketing GE/Macy's Accounts as it applies to marketing
FDS/Macy's Accounts and to continue marketing efforts and support
comparable to historical levels.
4.6. GE/Macy's Account Debtor Lists
. (a) During the term of this Agreement, GE Bank
shall be entitled to utilize the list of names and addresses of
the GE/Macy's Account Debtors (the "GE/Macy's Account Debtor
List") solely in connection with the performance of GE Bank's
obligations under this Agreement and GE Capital's performance of
its obligations under the GE Capital Services Agreement and the
GE Capital/GE Bank Services Agreement (including, without
limitation, for purposes of effecting collections of all
GE/Macy's Receivables) without prior approval of any FDS Company
and GE Bank shall not utilize the GE/Macy's Account Debtor List
directly or indirectly for purposes of providing (or soliciting
others to provide) any other credit program or any other goods or
services. During the term of this Agreement, FDS shall have the
right to utilize, or permit the utilization of, the GE/Macy's
Account Debtor List for any purpose at its sole discretion other
than directly or indirectly providing (or soliciting others to
provide) any Non-Permitted Credit Program to any Person, provided
that without the prior approval of GE Bank, FDS shall not
(i) use, or permit the use by any Person of, the GE/Macy's
Account Debtor List for the purpose of providing credit to any
Person, (ii) sell or lease the GE/Macy's Account Debtor List to
any Person or entity which is in (or intends to be in) the
principal business of providing credit (it being agreed by FDS
that if it sells or leases the list to any Person which is in (or
intends to be in) the business of providing credit but not as a
principal business, such Person shall, as a condition to
receiving the list, agree to be bound by the terms and conditions
of this Section 4.6(a)) or (iii) use, or permit the use of, the
GE/Macy's Account Debtor List for the purpose of engaging in any
of the activities contemplated by the Agreement other than
pursuant to the terms of the Agreement.
(b) If this Agreement is terminated for any
reason and, in connection with such termination, FDS or a
designee has purchased all or substantially all of the GE/Macy's
Accounts and GE/Macy's Receivables as of the date of such
termination, the GE/Macy's Account Debtor List shall, upon such
termination, be the sole and exclusive property of FDS or the
designee of FDS, as the case may be, and GE Bank shall thereafter
have no right to utilize the GE/Macy's Account Debtor List for
any purposes other than with respect to GE/Macy's Accounts and
GE/Macy's Receivables not purchased by FDS or its designee. If,
however, in such circumstances, FDS or a designee has not
purchased all or substantially all of the GE/Macy's Accounts and
GE/Macy's Receivables as of the date of such termination, the
GE/Macy's Account Debtor List shall, upon such termination, be
the sole and exclusive property of GE Bank, GE Bank shall
thereafter have the right to utilize the GE/Macy's Account Debtor
List for any purposes whatsoever without any compensation to the
FDS Companies or any other Person, and the FDS Companies shall
thereafter have no right to utilize the GE/Macy's Account Debtor
List for any purposes (other than selling or promoting the sale
of Merchandise in the ordinary course of their business), and may
not, in such circumstances, utilize the GE/Macy's Account Debtor
List in connection with directly or indirectly providing (or
soliciting others to provide) any credit program to any GE/Macy's
Account Debtor for a period of three years after the Agreement
has been terminated.
(c) GE Bank and the FDS Companies agree that if
the Agreement is terminated for any reason, and in any case the
FDS Companies elect to purchase the GE/Macy's Receivables and
GE/Macy's Accounts in accordance with the provisions of this
Agreement and GE Bank is prohibited from conveying to FDS or a
designee any GE/Macy's Accounts or GE/Macy's Receivables, under
applicable Law, GE Bank shall continue for a reasonable period of
time to be obligated to sell, and FDS shall continue to be
obligated to purchase GE/Macy's Accounts and GE/Macy's
Receivables on the terms and conditions provided in this
Agreement and the FDS Companies and GE Bank shall work together
in good faith for a reasonable period of time to try to remove
such legal impediment and convey the effected GE/Macy's Accounts
and/or GE/Macy's Receivables promptly thereafter.
4.7. Inserts and Mailers
. (a) All space available for promotional inserts and
messages in each periodic billing statement sent to GE/Macy's
Account Debtors shall be utilized based on the following order of
priority:
(i) First, any inserts or messages that GE
Bank, in its sole judgment, determines are required by Law to be
included in a periodic billing statement shall be included and
shall have priority over all other inserts and messages;
(ii) Second, any inserts or messages that any
FDS Company is contractually required to include in a periodic
billing statement pursuant to the terms of any Contract which is
in effect on the date hereof shall be included;
(iii) Third, any inserts or messages that
FDS in its sole discretion determines should be included in a
periodic billing statement shall be included; and
(iv) Fourth, any inserts or messages with
respect to programs approved by FDS and GE Bank for inclusion in
a periodic billing statement shall be included.
(b) All inserts to be included by the FDS
Companies in Macy's Account periodic billing statements shall be
available for review by GE Bank at a time reasonably prior to the
applicable billing date. All inserts to be included by GE Bank
in Macy's Account periodic billing statements shall be available
for review by FDS at a time reasonably prior to the applicable
billing date.
(c) Any additional incremental postage costs and
other expenses incurred by GE Bank as a result of the inclusion
of items provided to GE Bank by the FDS Companies pursuant to
this Section 4.7 shall be borne solely by FDS.
4.8. Certain Cross Servicing Arrangements
. The provisions of this Section 4.8 shall be
applicable (i) from the date hereof until the date that all
Macy's Accounts have been converted to the FDS system and
(ii) from and after such time, as any, that the FACS Services
Agreement terminates prior to the termination of this Agreement
and GE Bank has converted the GE/Macy's Accounts to its system.
(a) Each party agrees that to the extent it
receives inquiries from a customer that holds a Specified Account
(as defined below), it will use reasonable efforts to assist such
customer with respect to his or her inquiries. In this regard,
the FDS Companies shall direct electronic authorization inquiries
to the appropriate account servicer based on account ownership
for purposes of providing on-line servicing to credit card
account holders. If account ownership is undetermined, an
account lookup file, to be established and maintained on FDS's
computer system, will be utilized by each party. The account
lookup file will contain account lookup information with respect
to each holder of a Specified Account. The account lookup file
shall be accessible to GE Bank and its designees during normal
business hours and at other reasonable times upon reasonable
request by GE Bank. The account lookup file shall be regularly
updated by each party. FDS shall ensure system availability
during all store operating hours and shall also provide a "help
desk" to assist GE Bank in the event of systems malfunctions.
"Specified Accounts" means (i) with respect to inquiries received
by GE Bank: either (x) a Jordan Marsh, Broadway, Weinstock's or
Emporium private label account or (y) an FDS/Macy's Account and
(ii) with respect to inquiries received by FDS: a GE/Macy's
Account.
(b) If the account lookup file indicates that the
account is a Specified Account, then the party answering the
inquiry may provide information on the account to the credit card
holder and routine maintenance of the type described on
Schedule 4.8 (or as may otherwise be agreed to by the parties)
may be performed on the account by the party answering the
inquiry. If adjustments to or decisions on the account beyond
those set forth on Schedule 4.8 or otherwise agreed to by the
parties are required or requested by the credit card holder, the
answering party shall immediately transfer the credit card holder
to the account owning party.
(c) If the account lookup file indicates that the
credit card holder has duplicate Specified Accounts owned by both
FDS Bank and GE Bank, an account lookup team for each party shall
determine which account is the "ongoing" account for purposes of
answering the inquiry and the inquiry will be directed to the
party owning such account. The determination of which account is
"ongoing" for purposes of this Section 4.8(c) shall be made in
the same manner as the treatment of duplicate accounts, as
described in Schedule 2.3(b) hereof and Section 2.4. The non-
owning party may provide information on the account to the credit
card holder and routine maintenance of the type described on
Schedule 4.8 (or as may otherwise be agreed by the parties) may
be performed on the account by the non-owning party. If
adjustments to or decisions beyond those set forth on
Schedule 4.8 or otherwise agreed to by the parties are required
or requested by the credit card holder, the answering party shall
immediately transfer the credit card holder to the account owning
party.
(d) All expenses incurred by FDS and FDS Bank in
connection with providing the services described in this
Section 4.8 shall be borne by FDS and FDS Bank and all such
expenses incurred by GE Bank and its designees shall be expenses
of the Program.
4.9. Servicing in the Event FACS Services Agreement
Terminates
. In the event the FACS Services Agreement
terminates prior to the termination of this Agreement, all
GE/Macy's Accounts would be serviced by GE Bank pursuant to the
terms and conditions of the FACS Services Agreement (with GE Bank
being responsible for providing the FACS Services (as defined
therein)), provided that in the event that GE Bank fails to
perform any of its obligations thereunder, the FDS Companies'
only rights with respect thereto shall be to terminate, in
accordance with the terms and conditions of the FACS Services
Agreement, GE Bank's rights to perform such services and to
recommence the provision by FACS of the FACS Services in
accordance with the FACS Services Agreement, and such failure
shall not give rise to any termination right or other remedy of
any of the FDS Companies under this Agreement. All expenses
incurred by GE Bank in so servicing the GE/Macy's Accounts shall
be expenses of the Program to the extent in conformity with a
servicing budget to be agreed upon by the parties.
4.10. Servicing in the Event GE Capital/GE Bank
Services Agreement Terminates
. In the event the GE Capital/GE Bank Services
Agreement terminates prior to the termination of this Agreement,
all GE/Macy's Accounts would be serviced by FACS as designee of
GE Bank pursuant to the terms and conditions of the GE Capital
Services Agreement (with FACS being responsible for providing the
GE Capital Services (as defined therein)), provided that in the
event that FACS fails to perform any of its obligations
thereunder, GE Bank's only rights with respect thereto shall be
to terminate, in accordance with the terms and conditions of the
GE Capital Services Agreement, FACS's rights to perform such
services and to recommence the provision of the GE Capital
Services by GE Capital in accordance with the GE Capital Services
Agreement, and such failure shall not give rise to any
termination right or other remedy of GE Bank under this
Agreement. All expenses incurred by FACS in so servicing the
GE/Macy's Accounts shall be expenses of the Program.
4.11 Designees
. [OMISSION].
4.12 Other
. The FDS Companies agree that in the event any
of them or any of their Affiliates are providing payment
processing and/or collections services with respect to any
GE/Macy's Accounts, such parties shall not commingle GE Bank's
funds with funds of any other Person and shall maintain the
separateness of GE Bank's funds, including, without limitation,
by arranging for all such cash management and lockbox
arrangements as GE Bank shall reasonably request, provided that
the foregoing shall not be deemed to modify or limit the rights
of the FDS Companies to accept in-store payments to the extent
provided in Section 3.7.
ARTICLE
V.
PROGRAM ECONOMICS
5.1. Interim Period
. The provisions of Sections 5.2 through and including
Section 5.6 shall not become effective until February 2, 1997.
From the date hereof through August 3, 1996 (the "Current Interim
Period") the "Bank Service Discount" for each month shall be as
set forth on Schedule 5.1A and on the fifth Business Day of each
fiscal month during such period the Bank Service Discount shall
be adjusted to reflect changes in the cost of money as provided
in Schedule 5.1B hereto. The parties agree that prior to
August 3, 1996 they will amend Schedule 5.1A for the period from
August 4, 1996 through February 1, 1997 and that the money cost
adjuster described in the preceding sentence will be applicable
for such period. In the event the parties cannot agree on an
amended Schedule 5.1A at least five days prior to August 4, 1996,
the provisions of Sections 5.2 through and including Section 5.6
shall become effective on August 4, 1996.
5.2. Use of Budgets
. A budget will be prepared for each six month period
of the Program (each, a "Period") in accordance with this Article
V. Each budget will be in the form of Schedule 5.2 hereto. The
budget for each Period will include, among other things, (i) a
projected discount amount (the "Projected Monthly Discount") in
an amount equal to the amount necessary so that, if actual
results for such Period equal budgeted amounts for such Period,
GE Bank will receive a Bank Net Return for such Period equal to
the Target Return, (ii) as an expense of the Program, a service
fee (the "FACS Servicing Fee") determined as set forth in the
FACS Services Agreement payable by GE Bank to FACS for services
to be rendered during such Period by FACS to GE Bank and its
Affiliates pursuant to the FACS Services Agreement and (iii) as
an expense of the Program, the amount of anticipated expenses to
be incurred by GE Bank for each month in the Period determined as
set forth in the GE Capital/GE Bank Services Agreement (the "Bank
Servicing Expenses"). The Projected Monthly Discount for each
month shall be settled, not later than the fifteenth day of such
month, by adjusting Remittances.
5.3. Preparation of Budgets
. (a) Prior to any party exercising its right to
finalize a budget pursuant to Section 5.3(b), FDS and GE Bank
will work together in good faith in preparing each budget and
related Projected Monthly Discount. In so working together, each
party will base its budget proposals on its experiences with
similarly situated accounts owned by it. If the parties are able
to agree on a budget and related Projected Monthly Discount, then
the agreed upon budget and related Projected Monthly Discount
shall be the budget and related Projected Monthly Discount for
the applicable Period. Each party will use good faith efforts to
(i) promptly provide all information reasonably requested by the
other in connection with the preparation of the budget and
related Projected Monthly Discount and (ii) incorporate
information received from the other party into the preparation of
the budget and related Projected Monthly Discount.
(b) In the event that on or prior to the fifth
Business Day of any Period (the "Final Agreement Date") FDS and
GE Bank shall not have agreed on a budget and Projected Monthly
Discount as provided in Section 5.3(a) for such Period, FDS and
GE Bank will, subject to Section 5.6, have the right to finalize
the budget (except with respect to the Operating Expense Budget
which, absent such agreement, shall equal the Operating Expense
Budget for the prior Period) and related Projected Monthly
Discount for alternating Periods and GE Bank shall have the
right, subject to Section 5.6, to finalize the budget and related
Projected Monthly Discount for the initial Period. The party
which finalizes the budget and related Projected Monthly Discount
for any Period must exercise this right in good faith, based on
such finalizing party's experience with similarly situated
accounts owned by it. The party finalizing the budget and
related Projected Monthly Discount shall provide to the other
party, within five Business Days after the Final Agreement Date,
the final budget and related Projected Monthly Discount and the
assumptions underlying such final budget and related Projected
Monthly Discount, as well as the rationale for any changes made
to the budget and related Projected Monthly Discount during the
preparation of such budget and related Projected Monthly
Discount. Notwithstanding the foregoing, each party shall have
the right, exercisable one time only during the term of the
Agreement, to pass on its right to finalize the budget and
related Projected Monthly Discounts for one Period in exchange
for the right to finalize the budget and related Monthly Discount
for the immediately succeeding Period and then commence
alternating Periods based on the revised order. In order to
exercise such right, the passing party must provide the other
party with written notice thereof at least 30 days prior to the
commencement of the applicable Period.
(c) The parties agree to work together in good
faith to agree upon an initial budget of Operating Expenses for
the Program, taking into account, among other things, GE Bank's
staffing and other requirements reasonably necessary to permit GE
Bank to perform all of its ongoing obligations and exercise all
of its rights under the Transaction Documents, while providing
for GE Bank's safety and soundness. Notwithstanding the
foregoing, if the parties are unable to agree on a mutually
acceptable initial Operating Expenses budget for the Program,
then the initial Operating Expenses budget shall consist of
(i) an amount for administrative functions that equals the
amount for such functions provided for in the Operating Expenses
budget previously agreed to for the Current Interim Period and
(ii) such other amounts as the parties shall agree. The
Operating Expenses budget for the Program as initially determined
pursuant to this Section 5.3(c), and as it may be subsequently
revised from time to time hereunder, is referred to as the
"Operating Expense Budget."
5.4. Adjustments.
(a) During the first five Business Days of each
fiscal month (the "Monthly Review Period"), the parties shall
review the extent and manner, if any, by which budgeted
assumptions for the prior month differed from actual experience
for such month. If during the Monthly Review Period FDS and GE
Bank agree that, based on the prior month's experiences, the
budget and Projected Monthly Discount for the current month
should not be adjusted, then no adjustment shall be made, and the
budgeted Projected Monthly Discount shall be settled pursuant to
Section 5.2.
(b) If during the Monthly Review Period FDS and
GE Bank agree that based on the prior month's experiences, the
budget and Projected Monthly Discount for the then current month
is not likely to provide GE Bank with the Target Return for such
month, then, prior to the end of the Monthly Review Period, the
parties shall adjust the then current month's budget and
Projected Monthly Discount by either (i) applying the adjuster
formula described on Schedule 5.4(b) hereto to such budget and
Projected Monthly Discount, which adjuster formula is designed to
adjust the monthly budget on a prospective basis only or (ii)
applying a modified form of such adjusted methodology (any such
modifications shall be as mutually agreed to by the parties) to
such budget and Projected Monthly Discount in a manner which is
prospective only and applicable only with respect to future
Remittances (i.e., will be applicable to only the then current
month and may not "make-up" for prior months) so that if actual
results for the then current month equal budgeted amounts (as so
adjusted), GE Bank will receive the Target Return for such month.
(c) If prior to the end of the Monthly Review
Period the parties are unable to agree on the manner in which the
then current month's budget and Projected Monthly Discount should
be adjusted, then the party that had the right to finalize the
six-month budget for the then current Period (whether or not such
party actually exercised its right) shall have the right to
unilaterally adjust the then current month's budget (except with
respect to the Operating Expense Budget which, absent such
agreement, shall equal the Operating Expense Budget for the prior
month) and Projected Monthly Discount. Any such adjustment shall
be prospective only and applied only with respect to future
Remittances (i.e., will be applicable to only the then current
month and may not "make-up" for prior months) so that if actual
results for the then current month equal budgeted amounts (as so
adjusted), GE Bank will receive the Target Return for such month.
Any party that exercises its right to unilaterally adjust a
monthly budget and Projected Monthly Discount must exercise this
right based on the methodology set forth in the immediately
preceding sentence in good faith, based on such party's
experience with similarly situated accounts owned by it (and must
present the other party with written evidence of the recent
performance of the adjusting party's similarly situated
accounts). Such party shall provide the other party, within five
Business Days after the end of the Monthly Review Period, the
adjusted monthly budget and Projected Monthly Discount and the
assumptions underlying such adjusted budget and Projected Monthly
Discount, as well as the rationale for the adjustments thereto.
(d) Any adjustments to any monthly budget,
whether made by agreement of the parties pursuant to Section
5.4(b) or unilaterally by one party pursuant to Section 5.4(c),
shall require the party or parties effecting the adjustment to
deliver an adjustment certificate in the form of Exhibit B
hereto.
(e) In addition to the foregoing, on the fifth
Business Day of each fiscal month (unless the adjuster formula
described on Schedule 5.4(b) has been applied with respect to
such month), the Projected Monthly Discount shall be adjusted
prospectively to reflect changes in the cost of money as provided
in Schedule 5.4(e) hereto.
(f) In addition to the foregoing, on or prior to
the fifteenth day of each fiscal month, the Projected Monthly
Discount for such month shall be adjusted to reflect the amount,
if any, by which the actual Bank Servicing Expenses for the
immediately preceding month were more or less than the amount for
Bank Servicing Expenses budgeted for such immediately preceding
month.
5.5. Determination of Bank Net Return.
(a) Within 30 days after the end of each Period, GE
Bank shall cause to be delivered to FDS a written statement
(including appropriate schedules and footnotes) of the Bank Net
Return for the immediately preceding Period, audited by (i) KPMG
Peat Marwick as long as such firm is then being used by both GE
Bank and FDS as their independent public accountants or (ii) if
GE Bank and FDS are then both using another firm as their
independent public accountants, by such other firm or (iii) if GE
Bank and FDS are not then both using the same firm as their
independent public accountants, by an independent, nationally
recognized certified public accounting firm selected and engaged
by GE Bank (a "Net Return Statement"). All fees and expenses
payable to such accounting firm shall be expenses of the Program.
(b) Upon receipt of each Net Return Statement,
FDS and its accountants shall, subject to the provisions of
Section 12.1 hereof, be permitted during the succeeding 15-day
period (the "Audit Period") to have reasonable access, during
normal business hours, with reasonable advance notice, in such a
manner as to minimize interference with normal business
operations, to examine the records, files and books of account of
GE Bank and shall have access to partners and employees of GE
Bank's accountants and to the work papers, audit program and
other documents prepared by GE Bank's accountants in the course
of its audit of the Net Return Statement. During the Audit
Period, GE Bank and GE Bank's accountants shall be permitted to
be present during such examinations by FDS and its accountants.
(c) If FDS does not deliver written notice to GE
Bank within five Business Days after the end of an Audit Period
which states that FDS objects to the Net Return Statement, and
sets forth in reasonable detail the basis for such objection (a
"Net Return Dispute Notice"), such Net Return Statement shall be
deemed to have been accepted by FDS and shall be final and
binding on the parties for purposes of this Section 5.5. If FDS
delivers to GE Bank a Net Return Dispute Notice within five
Business Days after the end of any Audit Period, FDS and GE Bank
shall work together for a period of 20 days from GE Bank's
receipt of the Net Return Dispute Notice to attempt to reach
agreement on the Net Return Statement. If FDS and GE Bank are
unable to agree on the Net Return Statement within such 20 day
period, the dispute will be resolved pursuant to Section 9.9.
5.6. Loss of Right to Finalize Budget and Related
Projected Monthly Discount
. (a) Notwithstanding the provisions of Section
5.3(b), if (i) at the end of any Period the Bank Net Return for
the Period (as set forth in the final Net Return Statement for
such Period) is less than [OMISSION]% (on an annualized basis)
and (ii) either (x) FDS exercised its right to unilaterally
adjust one or more monthly budgets and Projected Monthly
Discounts during such Period and, but for the Bank Net Return
realized for the month(s) that FDS exercised such right, the Bank
Net Return for the Period would have been greater than
[OMISSION]% (on an annualized basis), or (y) FDS exercised its
right to unilaterally finalize the budget for the Period, then
FDS shall lose the right to finalize the budget and related
Projected Monthly Discount for one future Period to which it
would have otherwise been entitled (up to a maximum loss of three
Periods to which it would have otherwise been entitled) for each
1% or portion thereof that such Bank Net Return is less than
[OMISSION]% (on an annualized basis). Notwithstanding the
provisions of Section 5.3(b), if (i) at the end of any Period the
Bank Net Return for the Period (as set forth in the final Net
Return Statement for such Period) is greater than [OMISSION]% (on
an annualized basis) and (ii) either (x) GE Bank exercised its
right to unilaterally adjust one or more monthly budgets and
Projected Monthly Discounts during such Period and, but for the
Bank Net Return realized for the month(s) that GE Bank exercised
such right, the Bank Net Return for the Period would have been
less than [OMISSION]% (on an annualized basis), or (y) GE Bank
exercised its right to unilaterally finalize the budget for the
Period, then GE Bank will lose the right to finalize the budget
and related Projected Monthly Discount for one future Period to
which it would have otherwise been entitled (up to a maximum loss
of three Periods to which it would have otherwise been entitled)
for each 1% or portion thereof that such Bank Net Return is
greater than [OMISSION]% (on an annualized basis). The loss by
one party of the right to unilaterally finalize the budget and
Projected Monthly Discounts for a Period pursuant to this Section
5.6(a) is referred to as a "Period Penalty."
(b) If the Bank Net Return for any Period with
respect to which FDS is subject to a Period Penalty exceeds
[OMISSION]% (on an annualized basis), then FDS will cease to be
subject to one Period Penalty for each 1% or portion thereof that
such Bank Net Return exceeded [OMISSION]% (on an annualized
basis). If the Bank Net Return for any Period with respect to
which GE Bank is subject to a Period Penalty is less than
[OMISSION]% (on an annualized basis), then GE Bank will cease to
be subject to one Period Penalty for each 1% or portion thereof
that such Bank Net Return is less than [OMISSION]% (on an
annualized basis).
5.7. Special Provisions
. From the beginning of the third fiscal quarter of
2004 until the termination of this Agreement, the provisions of
Sections 5.4 and 5.6 shall be modified as follows:
(a) Notwithstanding the provisions of Section
5.4, the parties shall alternate having the right to unilaterally
adjust monthly budgets and Projected Monthly Discounts
(irrespective of which party has the right to finalize the budget
for the Period).
(b) Within five Business Days after the end of
each fiscal month, GE Bank shall deliver to FDS a statement
setting forth GE Bank's good faith determination of the Bank Net
Return for the prior month, based on the books and records
prepared for GE Bank's internal auditors. If (i) any such
statement indicates that the Bank Net Return for the applicable
month was less than [OMISSION]% (on an annualized basis) and (ii)
FDS had exercised its rights to unilaterally adjust the budget
and Projected Monthly Discount for such month, then FDS shall
lose the right to finalize the budget and Projected Monthly
Discount for one future month (up to a maximum loss of three
months to which it would have otherwise been entitled) for each
1% or portion thereof that such Bank Net Return was less than
[OMISSION]% (on an annualized basis). If (i) any such statement
indicates that the Bank Net Return for the applicable month was
greater than [OMISSION]% (on an annualized basis) and (ii) GE
Bank had exercised its rights to unilaterally adjust the budget
and Projected Monthly Discount for such month, then GE Bank shall
lose the right to finalize the budget and Projected Monthly
Discount for one future month (up to a maximum loss of three
months to which it would have otherwise been entitled) for each
1% or portion thereof that such Bank Net Return was greater than
[OMISSION]% (on an annualized basis). The loss by any party of
the right to unilaterally adjust a future monthly budget and
Projected Monthly Discount pursuant to this Section 5.7(b) is
referred to as a "Monthly Penalty."
(c) If (i) any party receives a Monthly Penalty
and (ii) the final Net Return Statement for the Period covering
the fiscal month which caused the Monthly Penalty indicates that
GE Bank's calculation of the Bank Net Return for such month was
not accurate and that the Monthly Penalty should not have been
assessed, then the party who received the Monthly Penalty in
error shall have the right to unilaterally adjust one additional
monthly budget and Projected Monthly Discount for each Monthly
Penalty that was so assessed in error.
5.8. Revenue Enhancement Programs
. For purposes hereof, a "Revenue Enhancement
Program" means a program that yields sundry income from
solicitations to sell services such as offers to sell credit card
protection, auto and travel clubs and similar services and which
do not relate to Merchandise. During the term of the Agreement,
the decision to adopt any program that relates to merchandise
sold through billing statements or other mail or telephone
solicitations shall be made exclusively by FDS. During the term
of the Agreement, the decision to adopt any new Revenue
Enhancement Program for the Program shall be made by FDS subject
to the following: [OMISSION]. Notwithstanding the foregoing, no
Revenue Enhancement Program shall be implemented which GE Bank
believes, in its good faith judgment, would embarrass or
disparage GE Bank or any of its Affiliates in any respect or
would violate any provision of applicable Law. FDS agrees to
provide GE Bank with a description of each such Revenue
Enhancement Program and with copies of all consumer materials
relating to Revenue Enhancement Programs prior to the date such
programs are commenced. No revenue from any Revenue Enhancement
Program will be taken into account in calculating the Bank Net
Return and all such revenue (except as provided in Section 9.10
of the GE Capital Services Agreement) shall be revenue of FDS
unless the parties otherwise agree.
5.9. GE Bank Capital Structure
. GE Bank's capital structure for the Program, after
taking into account the Deemed Equity Amount, shall consist of
various tranches of fixed rate debt and floating rate debt as
determined from time to time by GE Bank in consultation with FDS
in order to minimize overall funding costs and refinancing risks
of the Program.
5.10. Calculation of GE Bank's After-Tax Income
. In calculating GE Bank's net after-tax income from
the Program with respect to any Period (i) the following shall be
deemed revenue of the Program for such Period: (A) Finance
Charge Income for such Period, (B) all revenue from Fees (after
deducting therefrom late fee and returned check fee write-offs)
for such Period, (C) the amount of all Bank Service Discounts and
Projected Monthly Discounts, for such Period, and (D) any other
items designated as revenue of the Program pursuant to this
Agreement with respect to such Period, (ii) the following items
shall be deemed expenses of the Program with respect to such
Period: (A) Money Costs for such Period, (B) Operating Expenses
for such Period (which, for purposes hereof, shall not exceed
105% of the applicable Operating Expense Budget for such Period
and, to the extent such expenses exceed 105% of such applicable
Operating Expense Budget, shall not be considered expenses of the
Program), (C) overhead for such Period (which for purposes hereof
shall be deemed to be, with respect to any Period, an amount
equal to [OMISSION] of Average GE/Macy's Net Receivables for such
Period, provided that such overhead amount shall not exceed
$[OMISSION] with respect to any year), (D) all bank franchise
taxes or other taxes, if any (not including penalties or interest
incurred due to late filings or non-filings by GE Bank) incurred
by GE Bank with respect to the operation of the Program for such
Period, (E) all Net Write-Offs plus Reserve Change on GE/Macy's
Accounts for such Period, (F) the amount of all FACS Servicing
Fees and Bank Servicing Expenses applicable to such Period and
(G) any other items designated as expenses of the Program
pursuant to this Agreement with respect to such Period, and (iii)
taxes for such Period on GE Bank's income from the Program shall
be calculated at the statutory federal, state and local rates in
effect during such Period. Following the end of each GE Bank
fiscal year, GE Bank shall determine whether the actual amount of
taxes paid on GE Bank's income from the Program for any Period in
such fiscal year was less than the amount of taxes used to
calculate GE Bank's after-tax income for such Period. The amount
of any such difference shall be accounted for as a reduction to
the Projected Monthly Discount in the Period in which such
difference is calculated.
ARTICLE
VI.
REPRESENTATIONS AND WARRANTIES BY THE FDS COMPANIES
On the date hereof, and on the date of each Remittance
(by acceptance by any FDS Company thereof), the FDS Companies,
jointly and severally, represent, warrant and covenant to GE Bank
as follows:
6.1. Organization and Good Standing
. Each FDS Company (a) is a corporation duly
organized, validly existing and in good standing under the Law of
the state of its incorporation, (b) is qualified or licensed to
do business as a foreign corporation and is in good standing in
each jurisdiction in which the character of any of its assets or
the nature of the business conducted by it makes such
qualification necessary, except where failure to be so qualified
or licensed would not have an FDS Material Adverse Effect, and
(c) has all requisite corporate power and authority (i) to own or
lease and operate its assets and carry on the business conducted
by it as presently being conducted and (ii) to execute, deliver
and perform this Agreement and to consummate the transactions
contemplated hereby.
6.2. Authorization
. Each FDS Company has taken all necessary corporate
action (including, without limitation, obtaining the approval of
its Board of Directors and any consent of its stockholders
required by Law or by its Certificate of Incorporation or By-
laws), to authorize the execution, delivery and performance by
such FDS Company of this Agreement and the consummation of the
transactions contemplated hereby. Each FDS Company has duly and
validly authorized, executed and delivered this Agreement, and
this Agreement constitutes the legal, valid and binding
obligation of such FDS Company enforceable against such FDS
Company in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar Laws affecting the enforcement of
creditors' rights generally.
6.3. Effect of Agreement
. The execution, delivery and performance of this Agreement by
the FDS Companies and the consummation by the FDS Companies of
the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both, (a) violate
any provision of Law to which any FDS Company or any of its
property is subject, (b) violate any judgment, order, writ or
decree of any Governmental Authority applicable to any FDS
Company or any of its property, or (c) result in the breach of,
or conflict with, any term, covenant, condition or provision of,
accelerate the performance required by, constitute a default
under, or result in the creation or imposition of any Lien upon
any of the GE/Macy's Accounts or GE/Macy's Receivables pursuant
to, the corporate charter or By-laws of any FDS Company or any
material Contract to which any FDS Company is a party or by which
any FDS Company or its assets or properties is or may be bound.
6.4. Consents
. No consent, authorization or approval of, or
exemption by, or filing with, any Governmental Authority or any
other Person is required in connection with the execution,
delivery and performance by the FDS Companies of this Agreement
or the consummation by the FDS Companies of the transactions
contemplated hereby except for consents, authorizations,
approvals and filings made or obtained prior to the date hereof
and except for such failures which would not have an FDS Material
Adverse Effect.
6.5. Executive Offices and Names; Liens
. The addresses of the chief executive offices and
principal places of business of each of the FDS Companies are and
will continue to be set forth on Schedule 6.5 hereto (as amended
from time to time). The legal name of each FDS Company is and
will continue to be set forth on Schedule 6.5 and that name (or
such other name as may be set forth on Schedule 6.5 beside its
legal name) is the only name under which it conducts business.
No FDS Company has granted to any Person any security interest in
any GE/Macy's Account or GE/Macy's Receivable and no Person other
than GE Bank has filed any UCC-1 or similar financing statements
naming any FDS Company as debtor which covers or purports to
cover any GE/Macy's Accounts or GE/Macy's Receivables.
6.6. Solvency
. The FDS Companies, taken as a whole, are, and
immediately after the consummation of the transactions
contemplated hereby, will be, Solvent.
6.7. Permits, Licenses, Etc
. The FDS Companies have all Permits that are required
to be obtained by or given to any FDS Company in order to perform
the FDS Companies' obligations under the Program and to
consummate the transactions contemplated hereby, and the FDS
Companies are not in violation or default of any such Permits,
except for such failures which would not have an FDS Material
Adverse Effect.
6.8. Compliance with Applicable Laws
. The conduct of the Program by the FDS Companies does
not violate any Laws in effect at the time this representation,
warranty and covenant is being made or deemed made, except for
(i) such violations as would not have an FDS Material Adverse
Effect, (ii) violations which are due to information supplied by
GE Bank to FDS by computer transfer or in writing and (iii)
violations which relate to the status of the GE/Macy's Accounts
prior to the date hereof (other than with respect to matters for
which FDS or any of its Affiliates is indemnifying GE Bank under
any of the Transaction Documents), provided the FDS Companies
make no representations or warranties pursuant to the Section 6.8
with respect to acts or omissions of GE Bank, its Affiliates or
their agents. No FDS Company has received any notice of any
violation of Law applicable to such FDS Company's participation
in the Program and, to the FDS Companies' knowledge, no
reasonable basis for the allegation of any such violation exists,
except for violations which would not have an FDS Material
Adverse Effect. Without limiting the generality of the
foregoing, the in-store policies and procedures of the Retailers
which relate to the Program do not violate any Laws, except for
such violations as would not have an FDS Material Adverse Effect.
6.9. Litigation
. There is no Litigation pending before any
Governmental Authority or any private arbitration tribunal, or,
to the knowledge of any FDS Company, threatened, against,
relating to or affecting any FDS Company or any of its
Affiliates, the resolution of which would reasonably be expected
to have an FDS Material Adverse Effect. Except as set forth on
Schedule 6.9, (a) no FDS Company has been permanently or
temporarily enjoined or barred by order, judgment or decree of
any Governmental Authority or private arbitration tribunal from
engaging in or continuing any conduct or practice in connection
with the Program and (b) no order, judgment or decree of any
Governmental Authority or private arbitration tribunal exists
enjoining any FDS Company from taking or requiring any FDS
Company to take any action of any kind with respect to the
Program.
6.10. GE/Macy's Receivables
. On the date of each Remittance, each GE/Macy's
Receivable being remitted against by GE Bank: (a) is free and
clear of any and all Liens incurred or existing by, through or on
behalf of, or in favor of any Person, (b) arose in connection
with a bona fide sale and delivery of Merchandise by a Retailer
to or on behalf of a GE/Macy's Account Debtor or Authorized User,
provided that for purposes of this Section 6.10(b), delivery of
Merchandise shall be deemed to have occurred on the date of sale
with respect to Merchandise which is billed in accordance with
FDS's historical, customary practices and shipped to the
GE/Macy's Account Debtor within 72 hours of purchase or such
longer period as is applicable to special orders or customer
requested delayed deliveries, (c) is for a liquidated amount
payable in U.S. dollars as stated in the GE/Macy's Account
Documentation related thereto, subject to returns, allowances and
other adjustments, in the ordinary course of business, (d) did
not arise out of any fraud or malfeasance of any customer of any
Retailer that would give GE Bank the right of chargeback pursuant
to Section 3.5(c)(iv) or any fraud, malfeasance or negligence of
any employee or agent of any Retailer, (e) is not subject to any
offset, counterclaim or defense against GE Bank, or repurchase or
return right (other than pursuant to the FDS Companies' regular
return policy), in either case based on any act or omission of
any Retailer or any employee or agent of any Retailer in
connection with the sale of Merchandise, provided that any
GE/Macy's Receivables to be charged back pursuant to this
Section 6.10(e) that involve Merchandise disputes shall be
subject to the provisions of Section 3.5(c)(i), and (f) the Face
Amount of such GE/Macy's Receivable is net of any employee or
similar discount to which the relevant GE/Macy's Account Debtor
is or may be or become entitled. Notwithstanding the foregoing,
the parties recognize that in the normal course of business the
representations set forth in this Section 6.10 may not be true,
and the parties agree that as long as the failure of the
representations set forth in this Section 6.10 to be true does
not have an FDS Material Adverse Effect, GE Bank's sole remedy
with respect thereto shall be chargebacks pursuant to Section
3.5.
6.11. FDS Parties to Agreement
. All Affiliates of FDS or any of the FDS Companies
that operate, conduct business or make Sales under the Macy's
Tradename are parties to this Agreement (except to the extent
otherwise permitted by the last sentence of Section 2.3(a)).
ARTICLE
VII.
REPRESENTATIONS AND WARRANTIES BY GE BANK
On the date hereof, and on the date of each Remittance
(by transmittal by GE Bank thereof), GE Bank represents and
warrants to the FDS Companies as follows:
7.1. Organization and Good Standing
. GE Bank (a) is a banking corporation duly organized,
validly existing and in good standing under the Law of the State
of Ohio, (b) is qualified or licensed to do business as a foreign
banking corporation and is in good standing in each jurisdiction
in which the character of any of its assets or the business
conducted by it makes such qualification necessary, except where
failure to be so qualified or licensed would not have a GE
Material Adverse Effect and (c) has all requisite corporate power
and authority (i) to own or lease and operate its assets and
carry on the business conducted by it as presently being
conducted and (ii) to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby.
7.2. Authorization
. GE Bank has taken all necessary corporate action
(including, without limitation, obtaining the approval of its
Board of Directors and any consent of its stockholders required
by Law or by its Certificate of Incorporation or By-laws) to
authorize the execution, delivery and performance by it of this
Agreement and the consummation by it of the transactions
contemplated hereby. GE Bank has duly and validly authorized,
executed and delivered this Agreement, and this Agreement
constitutes the legal, valid and binding obligation of GE Bank
enforceable against GE Bank in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar Law affecting the
enforcement of creditors' rights generally.
7.3. Effect of Agreement
. The execution, delivery and performance by GE Bank of
this Agreement and the consummation by GE Bank of the
transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time, or both, (a) violate any
provision of Law to which GE Bank or any of its properties is
subject, (b) violate any judgment, order, writ or decree of any
Governmental Authority applicable to GE Bank or any of its
property, or (c) result in the breach of, or conflict with, any
term, covenant, condition or provision of, accelerate the
performance required by, constitute a default under, or result in
the creation or imposition of any Lien upon any of the FDS/Macy's
Accounts or FDS/Macy's Receivables pursuant to GE Bank's Articles
of Incorporation, By-laws or any Contract to which GE Bank is a
party or by which any of its assets or properties is or may be
bound.
7.4. Consents
. No consent, authorization or approval of, or
exemption by, or filing with, any Governmental Authority or any
other Person is required to be obtained by GE Bank in connection
with the execution, delivery and performance by GE Bank of this
Agreement or the consummation by GE Bank of the transactions
contemplated hereby except for consents, authorizations,
approvals and filings made or obtained prior to the date hereof
and except for such failures which would not have a GE Material
Adverse Effect.
7.5. Solvency
. GE Bank is, and immediately after the consummation
of the transactions contemplated hereby, will be, Solvent.
7.6. Permits, Licenses, Etc.
GE Bank has all Permits that are required to be
obtained by or given to GE Bank in order to perform its
obligations under the Program and to consummate the transactions
contemplated hereby, except where such failure would not have a
GE Material Adverse Effect.
7.7. Compliance with Applicable Laws
. The conduct of the Program by GE Bank does not
violate any Laws in effect at the time this representation and
warranty is being made or deemed made, except for such violations
as would not have a GE Material Adverse Effect, and GE Bank has
not received any notice of any violation of Law applicable to its
participation in the Program and, to GE Bank's knowledge, no
reasonable basis for the allegation of any such violation exists
except for violations which would not have a GE Material Adverse
Effect, provided that GE Bank makes no representations or
warranties pursuant to this Section 7.7 with respect to acts or
omissions of any of the FDS Companies or their agents except to
the extent taken consistent with express written instructions
from an Authorized GE Person.
7.8. Litigation
. There is no Litigation pending before any
Governmental Authority or any private arbitration tribunal, or,
to the knowledge of GE Bank, threatened, against, relating to or
affecting GE Bank or its Affiliates, the resolution of which
would reasonably be expected to have a GE Material Adverse
Effect. GE Bank has not been permanently or temporarily enjoined
or barred by order, judgment or decree of any Governmental
Authority or private arbitration tribunal from engaging in or
continuing any conduct or practice in connection with the
Program. Except as set forth on Schedule 7.8, no order, judgment
or decree of any Governmental Authority or private arbitration
tribunal exists enjoining GE Bank from taking or requiring GE
Bank to take any action of any kind with respect to the Program.
7.9. Facilities.
GE Bank has all of the necessary facilities,
equipment and personnel to provide the Collections Services in
accordance with the terms of Annex I hereto.
ARTICLE
VIII.
COVENANTS AND CONDITIONS
8.1. Further Assurances
. At any time or from time to time after the date
hereof, each party hereto shall, at the request of any other
party hereto, execute and deliver any further instruments or
documents and take all such further action as the requesting
party may reasonably request in order to evidence or give effect
to the consummation of the transactions contemplated hereby.
8.2. Covenants of the FDS Companies
. The FDS Companies, jointly and severally, covenant
and agree that, unless GE Bank shall otherwise consent in
writing, from and after the date hereof until the termination of
this Agreement:
(a) The FDS Companies shall cooperate in all
reasonable respects with GE Bank promptly to resolve all disputes
with GE/Macy's Account Debtors.
(b) Each FDS Company shall, and shall cause each
of its Affiliates to, keep proper records, files and books of
account in which full, true and correct entries shall be made of
all dealings and transactions in relation to the GE/Macy's
Accounts, the GE/Macy's Account Documentation, the GE/Macy's
Receivables and the Program.
(c) In connection with the Program, each FDS
Company shall comply in all material respects with all
requirements of Law.
(d) No FDS Company shall permit or agree to any
extension, compromise or settlement, or make any change or
modification of any kind or nature with respect to any GE/Macy's
Account, GE/Macy's Credit Card Documentation or GE/Macy's
Receivable, including any of the terms relating thereto (other
than (i) in the case of GE/Macy's Receivables, in connection with
returns, exchanges of Merchandise or adjustments to GE/Macy's
Accounts made in the ordinary course of business, and
(ii) pursuant to the provisions of this Agreement, the Credit and
Collection Policy and the FACS Services Agreement).
(e) Without 30 days' prior written notice to GE
Bank, (i) no FDS Company shall transfer its executive offices or
principal place of business to any location other than those set
forth in Schedule 6.5 hereto with respect to it and (ii) no FDS
Company shall change its corporate name; and, notwithstanding (i)
and (ii) hereof, no change may be effected before the applicable
FDS Company shall have furnished to GE Bank signed copies of all
filings and all actions as GE Bank may reasonably determine to be
necessary or appropriate to preserve and maintain at all times
the perfection and priority of the Liens granted or purported to
be granted to GE Bank pursuant to the Purchase Agreement with
respect to the GE/Macy's Accounts and the GE/Macy's Receivables
and the parties agree that, upon consummation of all other
actions required to be taken pursuant to this Section 8.2(e),
Schedule 6.5 will be amended so that the representations and
warranties set forth in Section 6.5 are true and correct. During
the term of this Agreement, the FDS Companies shall use their
commercially reasonable efforts to provide GE Bank with
reasonable advance notice prior to opening any store in a state
other than in which the FDS Companies maintain a store on the
date hereof.
(f) No FDS Company shall change its name,
identity or structure in any manner that might make any financing
statement filed to preserve and maintain the perfection and
priority of any Liens, if any, granted or purported to be granted
to GE Bank under the Purchase Agreement seriously misleading
within the meaning of Section 9-402(7) (or comparable provision)
of the UCC unless such FDS Company shall have given GE Bank at
least 30 days' prior written notice thereof and shall have
furnished to GE Bank signed copies of any amendments to such
financing statements and all other filings and all other actions
as may be necessary to preserve and maintain at all times the
perfection and priority of the security interests granted or
purported to be granted to GE Bank under the Purchase Agreement.
(g) All representations, warranties, agreements
and covenants of the FDS Companies with respect to (i) GE Bank's
Liens, as set forth in Section 6.1(b) of the Purchase Agreement,
(ii) the FDS Companies' undertakings with respect to such Liens,
as set forth in Section 6.1(c) of the Purchase Agreement, and
(iii) the FDS Companies' appointment of attorney-in-fact as set
forth in Section 6.2 of the Purchase Agreement, are reaffirmed
and agreed to by the FDS Parties as of the date hereof with
respect to the GE/Macy's Accounts, GE/Macy's Receivables and
GE/Macy's Account Documentation and are incorporated by reference
herein as if set forth in their entirety herein, without regard
to any amendment or termination of any such provision under the
Purchase Agreement.
(h) The FDS Companies, jointly and severally,
agree that any Affiliate of FDS that becomes a party to this
Agreement after the date hereof shall license to GE Bank, for use
with the Program, any such Affiliate's tradenames or marks which
are reasonably necessary for the conduct of the Program.
(i) The FDS Companies agree to be responsible for
all acts and omissions of the Licensees in connection with the
Program and of any FDS Company with respect to any Licensee, and
shall assure that such Licensees comply with the terms and
conditions of this Agreement applicable to the Retailers.
8.3. FDS's Reports and Notices
. Until the termination of this Agreement:
(a) FDS shall deliver to GE Bank, within 45 days
after the end of each FDS fiscal quarter a certificate of a
senior FDS financial officer stating that, to the best knowledge
of such officer, all representations and warranties of the FDS
Companies contained herein are true and correct in all material
respects and no GE Termination Triggers (or events which, with
the passage of time or giving of notice or both, would constitute
a GE Termination Trigger) have occurred.
(b) FDS shall deliver to GE Bank, within 15 days
after the sending or filing thereof, copies of all Annual
Reports, Forms 10-K, 10-Q, and 8-K which any FDS Company files
with the Securities and Exchange Commission, any national
securities exchange or the National Association of Securities
Dealers, Inc.
(c) FDS shall provide GE Bank with copies of all
annual business plans and related financial forecasts which FDS
provides to any of its commercial bank lenders within five days
after FDS has so provided such information to such lenders.
(d) If during the term of this Agreement, FDS
ceases to be subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, FDS shall continue
to deliver to GE Bank such financial statements as FDS would have
been required to file with the Securities and Exchange Commission
if it were so subject, such delivery to occur within 15 days
after the date FDS would have been so required to file with the
Securities and Exchange Commission.
8.4. Covenants of GE Bank
. GE Bank covenants and agrees that, unless FDS shall
otherwise consent in writing, from and after the date hereof
until the termination of this Agreement:
(a) GE Bank shall deliver to FDS, within 45 days
after the end of each FDS fiscal quarter a certificate of a
senior financial officer of GE Bank stating that, to the best
knowledge of such financial officer, all representations and
warranties of GE Bank contained herein are true and correct in
all material respects and no FDS Termination Triggers (or events
which, with the passage of time or giving of notice or both,
would constitute an FDS Termination Trigger) have occurred.
(b) GE Bank shall cooperate in all reasonable
respects with the FDS Companies promptly to resolve all disputes
with GE/Macy's Account Debtors.
(c) GE Bank shall keep proper records, files and
books of account in which full, true and correct entries shall be
made of all dealings and transactions in relation to the
GE/Macy's Accounts, the GE/Macy's Account Documentation, the
GE/Macy's Receivables and the Program.
(d) In connection with the Program, GE Bank shall
comply in all material respects with all requirements of
applicable Law.
(e) GE Bank shall continue to extend credit to
GE/Macy's Account Debtors in accordance with and subject to the
terms of this Agreement.
(f) GE Bank shall deliver to FDS, within 15 days
after the public filing thereof, copies of all publicly available
portions of GE Bank's quarterly call reports.
(g) GE Bank shall not permit or agree to any
extension, compromise or settlement, or make any change or
modification of any kind or nature with respect to any GE/Macy's
Account, GE/Macy's Credit Card Documentation or GE/Macy's
Receivable, including any of the terms relating thereto (other
than pursuant to the provisions of this Agreement, the Credit and
Collection Policy and the GE Capital Services Agreement).
8.5. Conditions Precedent to GE Bank's Obligations
. GE Bank shall not be required to fulfill its
Remittance obligation pursuant to Article III hereof with respect
to any GE/Macy's Receivable for which the representations and
warranties set forth in Section 6.10 hereof are not true and
correct as of the date of such Remittance.
ARTICLE
IX.
OTHER AGREEMENTS
9.1. Disputes Regarding Contested Amounts
. (a) FDS and GE Bank shall attempt, in good faith,
for the 10 Business Days immediately following the date any
Contested Amount Notice is either delivered by FDS to GE Bank or
delivered by GE Bank to FDS, to resolve the payment dispute that
is the subject of such notice. If the parties do not reach
agreement with respect to Contested Amounts which exceed $250,000
in the aggregate, such dispute shall promptly be referred to
arbitration. Such arbitration shall be conducted by three
arbitrators (the first selected by FDS, the second selected by GE
Bank and the third selected by the first two arbitrators) in New
York, New York, pursuant to the rules of the AAA, or a similar
organization chosen by FDS and GE Bank if the AAA or a successor
thereto is not then in existence. The decision of the
arbitrators shall be final and binding on the parties to this
Agreement, and any party hereto may have such award entered as a
judgment in a court of competent jurisdiction and enforce it
against the other like any other judgment. Payment of any
Contested Amount required to be paid shall be made within five
Business Days after the arbitrators' decision (and shall
thereupon be deemed to be an Uncontested Amount) and shall
include interest calculated at the Prime Rate from the due date
on any contested payment. All costs and expenses of the AAA
shall be borne equally by the parties and each party shall
otherwise bear its own expenses.
(b) Daily Settlement Statements and/or Monthly
Settlement Statements may be made up of both Contested Amounts
and Uncontested Amounts. To the extent that a Daily Settlement
Statement and/or Monthly Settlement Statement includes a
Contested Amount, the disposition of such amount shall be
resolved in accordance with Section 9.1(a) hereof and the
settlement shall be made without taking into account any
Contested Amount.
9.2. Conversion Expenses
. (a) [OMISSION].
(b) [OMISSION].
(c) Except as expressly provided in
Sections 9.2(a) and 9.2(b), each party will bear its own costs
incurred in effecting the systems conversion and the account
servicing reorganization contemplated hereby and by the other
Transaction Documents. No amounts paid or reimbursed to GE Bank
pursuant to this Section 9.2 shall be included in calculating the
Bank Net Return.
9.3. FDS Third-Party Acquisitions; New FDS Affiliates
. (a) In the event that a Third Party Acquisition is
consummated at any time during the term of this Agreement and the
acquired stores are converted to the Macy's Tradename, then the
FDS Companies shall cause the acquired retailer to (i) execute
and deliver to GE Bank instruments reasonably satisfactory to GE
Bank pursuant to which such retailer shall agree to be bound by
the terms and conditions of this Agreement and (ii) execute and
deliver to GE Bank a trademark licensing agreement in form and
substance substantially similar to the Amended and Restated
Trademark Agreement, but applicable to such retailer's tradenames
and marks as may reasonably be required to be used by GE Bank in
connection with the Program.
(b) In the event that any Affiliate of FDS that
is not a party to this Agreement on the date hereof (whether now
existing or hereafter created) shall operate, conduct business or
make Sales under the Macy's Tradename, the FDS Companies shall
cause such Affiliate to (i) execute and deliver to GE Bank
instruments satisfactory to GE Bank pursuant to which such
Affiliate shall agree to be bound by the terms and conditions of
this Agreement, and (ii) execute and deliver to GE Bank a
trademark licensing agreement in form and substance substantially
similar to the Amended and Restated Trademark Agreement, but
applicable to such Affiliate's tradenames and marks as may
reasonably be required to be used by GE Bank in connection with
the Program.
9.4. Securitization; Participation
. GE Bank and its Affiliates shall have the right,
subject to the provisions of this Section 9.4, without being
required to consult with, or receive the approval of, any FDS
Company, to securitize, participate or otherwise convey or
transfer an interest in, or pledge or create a Lien (a
"Conveyance") in respect of any or all of the GE/Macy's
Receivables at any time during the term of this Agreement. GE
Bank shall provide FDS with reasonable advance notice of the
relevant terms of any Conveyance of GE/Macy's Receivables. GE
Bank agrees that no Conveyance of GE/Macy's Receivables shall
restrict or prohibit the FDS Companies from exercising their
rights to purchase GE/Macy's Accounts and GE/Macy's Receivables
to the extent provided in this Agreement or otherwise impair the
FDS Companies' rights under this Agreement or impose any
additional obligations on the FDS Companies (other than notice
and other similar ministerial obligations) or require, directly
or indirectly, the FDS Companies to assume any obligation under
such securitization. For all purposes of this Agreement relating
to financial and economic matters, including, without limitation,
adjustments to the Projected Monthly Discount pursuant to
Section 5.3 hereof and determination of the capital structure of
GE Bank pursuant to Section 5.9 hereof, any securitization or
participation shall not be taken into account and all such
adjustments, calculations and determinations shall be made as
though any such securitization or participation did not occur and
the GE/Macy's Receivables subject to such securitization or
participation were owned by GE Bank and not subject to such
securitization or participation and all income and expenses
relating thereto were for the account of GE Bank. Accordingly,
all incremental costs and benefits with respect to a
securitization or participation will be for the account of GE
Bank outside of the Program and will have no impact on FDS. The
FDS Companies agree to cooperate with GE Bank and its Affiliates,
and to use their commercially reasonable efforts (without being
required to incur out-of-pocket costs) to assist GE Bank and its
Affiliates, in connection with any Conveyance of GE/Macy's
Receivables effected by GE Bank or any of its Affiliates (which
do not limit the FDS Companies' rights to purchase GE/Macy's
Accounts and GE/Macy's Receivables as provided herein or
otherwise impair the FDS Companies' rights under this Agreement
or impose an additional obligation on the FDS Companies (other
than notice and other similar ministerial obligations)).
9.5. Continued Liability
. Notwithstanding any other provision of this
Agreement, (a) the FDS Companies shall remain liable under any
Contract with any GE/Macy's Account Debtor that relates to the
Merchandise purchased by such GE/Macy's Account Debtor (as
opposed to the GE/Macy's Credit Card Agreement, GE/Macy's Account
or GE/Macy's Receivable), and to the extent set forth in such
Contract, the FDS Companies shall perform all of their duties and
obligations pursuant thereto to the same extent as if this
Agreement had not been executed, (b) the exercise by GE Bank of
any of its rights pursuant to this Agreement shall not release
any FDS Company from any of its duties or obligations under any
Contract with any GE/Macy's Account Debtor that relates to
Merchandise purchased by such GE/Macy's Account Debtor, and
(c) GE Bank shall not have any obligation or liability of any
nature, secured or unsecured, whether fixed, contingent or
otherwise, with respect to any Merchandise other than arising in
connection with the repossession thereof by GE Bank or its
Affiliates or designees and provided that the FDS Companies shall
retain all rights they may have against any Person with respect
to Merchandise manufactured or sold by such Person (including,
without limitation, General Electric Company and its Affiliates).
9.6. Audit and Access Rights
. (a) In addition to the other rights set forth in
this Agreement, each FDS Company shall, subject to the
confidentiality provisions set forth in Section 12.1 hereof,
(i) permit GE Bank and its designees, and their respective
officers, employees, attorneys, accountants and/or other
representatives during normal business hours with reasonable
advance notice, in such a manner as to minimize interference with
such FDS Company's normal business operations, to examine, audit,
inspect, copy and make copies of all of the data, records, files
and books of account (including, without limitation, non-
financial information and any information relating to any
calculation required to be made pursuant to the terms of this
Agreement) under the control of such FDS Company relating to
GE/Macy's Accounts, GE/Macy's Account Debtors, GE/Macy's
Receivables and all aspects of the Program and the transactions
contemplated by this Agreement, including without limitation, the
identity of all Licensees, and (ii) use commercially reasonable
efforts to facilitate GE Bank's exercise of such right. The FDS
Companies shall use commercially reasonable efforts to deliver
any document or instrument necessary for GE Bank to obtain such
information from any Person maintaining records for the FDS
Companies. The cost and expense of any such examinations shall
be expenses of the Program to the extent such costs and expenses
are related to work performed by GE Bank or Macy's Credit
Services personnel to the extent such personnel are accounted for
in the Operating Expense Budget for the applicable period.
Notwithstanding anything to the contrary contained herein, FDS
Bank shall not be required to provide GE Bank or any other Person
with access to information or records to the extent that such
access (A) is prohibited by applicable Law, (B) would violate
contractual obligations or (C) could reasonably be expected to
cause FDS Bank to be a consumer credit reporting agency (or be
subject to any similar Laws with respect to consumer privacy)
under state and/or federal Law. FDS Bank shall use commercially
reasonable efforts (i) to facilitate the maximum level of access
by GE Bank in light of constraints under applicable Law and (ii)
without being required to incur any costs or expenses, to enter
into Contracts that do not restrict FDS Bank's ability to provide
GE Bank with access to information. No action taken by (or on
behalf of) GE Bank pursuant to this Section 9.6(a) shall diminish
or obviate any of the representations, warranties, covenants or
agreements of any FDS Company contained herein. Employees of the
FDS Companies shall be permitted to be present during the
exercise by GE Bank of any of its audit and access rights under
this Section 9.6(a).
(b) In addition to the other rights set forth in
this Agreement, GE Bank shall, subject to the confidentiality
provisions set forth in Section 12.1 hereof, (i) permit FDS and
its designees, and their respective officers, employees,
attorneys, accountants and/or other representatives, during
normal business hours with reasonable advance notice, in such a
manner as to minimize interference with GE Bank's normal business
operations, to examine, audit, inspect, copy and make copies of
all of the data, records, files and books of account (including,
without limitation, non-financial information and any information
relating to any calculation required to be made pursuant to the
terms of this Agreement) under the control of GE Bank and its
Affiliates relating to GE/Macy's Accounts, GE/Macy's Account
Debtors, GE/Macy's Receivables and all aspects of the Program and
the transactions contemplated by this Agreement and (ii) use
commercially reasonable efforts to facilitate FDS's exercise of
such right. GE Bank shall use commercially reasonable efforts to
deliver any document or instrument necessary for FDS to obtain
such information from any Person maintaining records for GE Bank.
The cost and expense of all such examinations shall be expenses
of FDS. Notwithstanding anything to the contrary contained
herein, GE Bank shall not be required to provide FDS or any other
Person with access to information or records to the extent that
such access (A) is prohibited by applicable Law, (B) would
violate contractual obligations or (C) could reasonably be
expected to cause GE Bank to be a consumer credit reporting
agency (or be subject to any similar Laws with respect to
consumer privacy) under state and/or federal Law. GE Bank shall
use commercially reasonable efforts (i) to facilitate the maximum
level of access by FDS in light of constraints under applicable
Law and (ii) without being required to incur any costs or
expenses, to enter into Contracts that do not restrict GE Bank's
ability to provide FDS with access to information. No action
taken by (or on behalf of) FDS pursuant to this Section 9.6(b)
shall diminish or obviate any of the representations, warranties,
covenants or agreements of GE Bank contained herein. Employees
of GE Bank shall be permitted to be present during the exercise
by the FDS Companies of their audit and access rights under this
Section 9.6(b).
9.7. Exclusivity
. (a) Except for sales by converted stores solely to
the extent permitted pursuant to Section 2.3(a), no FDS Company
shall, directly or indirectly, accept, or permit to be accepted
or utilized by any Person, for any Sales of Merchandise under the
Macy's Tradename, any consumer credit, debit or charge account,
card or program which carries, refers to or is co-branded with
the Macy's Tradename, other than the FDS/Macy's Accounts and
GE/Macy's Accounts. No FDS Company shall, directly or
indirectly, encourage, promote, market or solicit the use of, for
any Sales of Merchandise under the Macy's Tradename, any consumer
credit, debit or charge account, card or program other than
(i) pursuant to FDS/Macy's Accounts and GE/Macy's Accounts,
subject to the provisions of Section 4.5 and (ii) credit provided
by generally accepted multi-purpose credit or charge cards such
as American Express, MasterCard, Visa and Discover, or generally
accepted multi-purpose debit cards, provided such cards (x) are
not co-branded with the Macy's Tradename and (y) are not owned,
sponsored, marketed or originated by FDS Bank or any of its
Affiliates.
(b) Notwithstanding the provisions of Section
9.7(a), the FDS Companies may, subject to the approval of the
Policy Committee, accept for the Sale of Merchandise a Dual Use
Card, provided that (i) the allocation of whether the Macy's
Account portion of any such Dual Use Card shall be a GE/Macy's
Account or an FDS/Macy's Account shall be made in accordance with
the provisions of Article II and (ii) if any Dual Use Cards which
carry a GE/Macy's Account are not purchased by FDS following
termination of this Agreement, FDS shall either (A) have such
cards reissued at FDS's cost so that the GE/Macy's Accounts shall
be represented by separate cards or (B) pay, or reimburse GE Bank
for, up to $[OMISSION] of GE Bank's actual documented out-of-
pocket costs and expenses incurred to so reissue such cards.
(c) [OMISSION].
9.8. Obligations Subject to Law
. Notwithstanding any other provision of this
Agreement or any of the other Transaction Documents, all of GE
Bank's and the FDS Companies' obligations hereunder and
thereunder shall be subject to all provisions of applicable Law.
9.9. Dispute Resolution
. Any dispute which is required to be resolved
pursuant to this Section 9.9 shall be resolved (i) by KPMG Peat
Marwick as long as such firm is then being used by both GE Bank
and FDS as their independent public accountants or (ii) if GE
Bank and FDS are then both using another firm as their
independent public accountants, by such other firm. If GE Bank
and FDS are not then both using the same firm as their
independent public accountants, GE Bank and FDS shall jointly
select and engage an independent, nationally recognized certified
public accounting firm (the "Independent Firm") to resolve any
such disputes. If FDS and GE Bank do not jointly select an
Independent Firm within five days after the end of any required
reconciliation or discussion period, any such disputes shall be
resolved by an Independent Firm selected by the President of the
AAA or his designee. FDS and GE Bank and their respective
accountants shall make readily available to the Independent Firm
all relevant books, records, work papers and personnel reasonably
requested by such Independent Firm. The resolution of all
disputes, whether such resolution is reached by KPMG Peat
Marwick, another firm used by both FDS and GE Bank, or the
Independent Firm, shall be final and binding on FDS and GE Bank
upon written notice thereof to each such party. The fees and
expenses of any accounting firms used pursuant to this Section
9.9 shall be borne equally by GE Bank and FDS.
9.10. Certain Equipment
. Capital equipment which has been used exclusively
for the Program [OMISSION] and which has been fully depreciated
as an expense of the Program shall, when fully depreciated,
become an asset of the Program. Upon termination of the Program,
FDS may purchase, [OMISSION], all capital equipment (not
including any applications software) (i) which has been, and as
of the end of the Program is, used exclusively for the Program
and (ii) with respect to which all depreciation has been charged
as an expense of the Program. All costs and expenses of moving
any such purchased equipment shall be borne by FDS.
ARTICLE
X.
INDEMNIFICATION
10.1. Indemnification by the FDS Companies
. (a) The FDS Companies, other than FDS Bank,
jointly and severally, and FDS Bank, but only to the extent of
any actions or omissions of FDS Bank or attributable to FDS Bank,
shall indemnify and hold GE Bank, each of its Affiliates, and all
officers, directors, employees and other agents of GE Bank and/or
its Affiliates (collectively, the "GE Indemnified Parties"),
harmless from and against any actions, suits, losses,
liabilities, settlements, costs, expenses, including any
reasonable attorneys' fees (collectively, "Damages") relating to,
arising out of, or in connection with:
(i) the failure of any representation or
warranty of any of the FDS Companies hereunder to be true and
correct when made or remade;
(ii) the breach by any of the FDS Companies
of any of their covenants or agreements hereunder;
(iii) the exercise by any of the FDS
Companies of their audit and access rights pursuant to
Section 9.6 hereof;
(iv) any acts or omissions of GE Bank, its
employees or any of its agents taken at the request of any
Authorized FDS Person;
(v) any acts or omissions of any Licensee or
any acts or omissions of any FDS Company with respect to any
Licensee;
(vi) all advertising programs, materials and
documentation prepared or conducted by any of the FDS Companies,
including, without limitation, credit related advertising;
(vii) GE Bank imposing, contracting for
and/or collecting (whether before or after the date hereof) in
reliance on Ohio law finance charges, late fees, returned check
fees or any other fees, charges, terms or conditions (including,
without limitation, balance calculation methods and grace
periods) (collectively, "Rate Exported Terms") on GE/Macy's
Accounts as specified in the GE/Macy's Credit Card Agreement
attached hereto as Exhibit C that GE Bank would not otherwise be
permitted to impose, contract for and/or collect under the
respective state laws of GE/Macy's Account Debtors in effect from
time to time governing such imposition, contracting and/or
collection; provided that if FDS requests GE Bank's approval in
writing to reduce certain such fees or charges or alter certain
such terms or conditions ("Specified Fees") to not greater than
the amount identified by FDS, and GE Bank fails to so approve
(initiation of consumer notification by GE Bank shall be deemed
compliance with FDS directions), then FDS shall not be obligated
to provide an indemnity pursuant to this clause (vii) with
respect to damages arising out of or in connection with the
failure of such Specified Fees to comply with such identified
law;
(viii) any provision of the Credit and
Collection Policy which is modified, amended, or waived by the
FDS Companies without the prior written approval of the Policy
Committee;
(ix) any Merchandise (other than with respect
to the collectibility of the related GE/Macy's Receivable),
including, without limitation, any product liability claims with
respect thereto; and
(x) the credit line decrease strategy set
forth in the Credit and Collection Policy.
(b) Notwithstanding the foregoing, the FDS
Companies shall not have any obligation to indemnify or hold a
GE Indemnified Party harmless from and against any Damages
arising from any willful misconduct, negligence or unlawful act
(other than, in the case of unlawful acts, those taken pursuant
to instructions from an Authorized FDS Person) or omission of
such GE Indemnified Party.
10.2. Indemnification by GE Bank
. (a) GE Bank shall indemnify and hold the FDS
Companies and each of their Affiliates, and all officers,
directors, employees and other agents of the FDS Companies and/or
their Affiliates (collectively, the "FDS Indemnified Parties"),
harmless from and against any Damages relating to, arising out
of, or in connection with:
(i) the failure of any representation or
warranty of GE Bank hereunder to be true and correct when made or
remade;
(ii) the breach by GE Bank of any of its
covenants or agreements hereunder, provided that GE Bank shall
not have any indemnity obligation pursuant to this Section
10.2(a)(ii) with respect to any covenants or agreements of GE
Bank which are performed (or required to be performed) by any FDS
Company or any of their agents except as provided in Section
10.2(a)(iv);
(iii) the exercise by GE Bank of its
audit and access rights pursuant to Section 9.6 hereof;
(iv) any acts or omissions of any of the FDS
Companies, their employees or any of their agents taken at the
request of any Authorized GE Person;
(v) any provision of the Credit and
Collection Policy which is modified, amended or restated by GE
Bank without the prior written approval of the Policy Committee.
(b) Notwithstanding the foregoing, GE Bank shall
not have any obligation to indemnify or hold an FDS Indemnified
Party harmless from and against any Damages arising from any
willful misconduct, negligence or unlawful act (other than, in
the case of unlawful acts, those taken pursuant to instructions
from an Authorized GE Person) or omission of such FDS Indemnified
Party.
10.3. Notices Regarding Indemnification; Control of
Proceedings
. Each party shall promptly notify the other party of
any claim, demand, suit, or threat of suit of which that party
becomes aware (except with respect to a threat of suit either
party may institute against the other) which may give rise to a
right of indemnification pursuant to this Agreement. The
indemnifying party shall be entitled to control the defense
thereof with counsel satisfactory to the indemnified party. In
any case, the indemnified party shall have the right to
participate in such defense. The indemnifying party shall not
enter into any settlement, consent, decree, compromise or consent
to injunctive relief with respect to such claim or action without
the prior written consent of the indemnified party.
10.4. Limitation
. In no event shall either party be liable for
special, exemplary or punitive damages for any damages caused by
such party, except in the case of willful or intentional
misconduct by such party.
ARTICLE
XI.
TERM AND TERMINATION
11.1. Term of Agreement
. (a) Unless otherwise sooner terminated pursuant to
this Article 11, this Agreement shall remain in full force and
effect until and including April 30, 2006 (the "Initial Term").
Thereafter, this Agreement shall be automatically renewed for
successive one year terms (the term of this Agreement, as so
renewed, being referred to herein as the "Extended Term")
thereafter unless either FDS, on the one hand, or GE Bank, on the
other hand, shall have delivered written notice to the other
party in accordance with the provisions of Section 11.1(b) hereof
of its election to terminate this Agreement at the expiration of
the Initial Term or the Extended Term, as the case may be.
(b) In order to be effective, any notice of an
election to terminate this Agreement at the expiration of the
Initial Term must be delivered at least two years, but not more
than three years, prior to the expiration of the Initial Term.
In order to be effective, any notice of an election to terminate
this Agreement at the expiration of any Extended Term must be
delivered at least one year prior to the expiration of the
Extended Term. For example, in order to terminate this Agreement
at the end of the Initial Term, notice must be delivered on or
after April 30, 2003 and on or prior to April 30, 2004. In order
to terminate this Agreement at the end of any Extended Term,
notice must be delivered not later than the first day of such
Extended Term.
11.2. GE Termination Rights
. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute a
"GE Termination Trigger":
(a) Any FDS Company or any Affiliate of an FDS
Company shall fail to pay GE Bank or any Affiliate of GE Bank any
Uncontested Amount when due and payable or declared due and
payable, and such failure to pay shall remain unremedied for a
period of 10 days after delivery of written demand therefor by GE
Bank to FDS.
(b) (i) Any representation or warranty of the FDS
Companies contained in this Agreement shall fail to be true and
correct either as of the date hereof or on the date of any
Remittance and the failure of such representation or warranty to
be true and correct has an FDS Material Adverse Effect or
(ii) any FDS Company shall fail to perform any of the covenants
or agreements required to be complied with and performed by such
FDS Company pursuant to this Agreement, and such failure has an
FDS Material Adverse Effect and shall not in the case of either
(i) or (ii) have been cured within 75 days after delivery of
written notice thereof by GE Bank to FDS, provided that GE Bank
expressly acknowledges and agrees that the failure of any FDS
Company to perform any of its covenants, agreements or
obligations to provide servicing (i) in the event the GE
Capital/GE Bank Services Agreement terminates and the provisions
of Section 4.10 hereof become applicable or (ii) in the event GE
Bank's right to provide the Collection Services pursuant to Annex
I terminates and FACS or an Affiliate performs Collection
Services, shall not under any circumstances constitute a GE
Termination Trigger.
(c) An Event of Bankruptcy shall have occurred
with respect to any FDS Company.
(d) One or more defaults shall have occurred
under any agreements, indentures or instruments under which any
FDS Company then has outstanding indebtedness in excess of
$[OMISSION], and, in any such case, such default (i) continues
beyond any period of grace provided with respect thereto and
(ii) results in such indebtedness becoming due prior to its
stated maturity or occurs at the final maturity of such
indebtedness.
(e) A judgment shall have been entered against
any FDS Company or any Affiliate of any FDS Company by a
Governmental Authority which judgment creates a liability of
$[OMISSION] or more in excess of insured amounts and has not been
stayed (by appeal or otherwise), vacated, discharged, or
otherwise satisfied within 60 days of the entry of such judgment.
(f) GE/Macy's Accounts, GE/Macy's Receivables,
GE/Macy's Charge Slips or proceeds thereof in an aggregate amount
of $[OMISSION] or more shall be (or shall purportedly be)
(i) attached, seized, levied upon or subject to a writ by a
creditor of any Retailer, or shall come within the possession of
any receiver, trustee, custodian, or assignee for the benefit of
creditors of any Retailer or (ii) subject to any Lien directly or
indirectly arising by, through or on account of any Retailer or
any creditor thereof which has arisen in the ordinary course of
business of the FDS Companies and which has not been released or
discharged within 60 days after the creation thereof.
(g) GE/Macy's Gross Receivables shall be less
than [OMISSION] and shall remain less than $[OMISSION] for a
period of longer than 30 days.
(h) The line of business of the Divisions, taken
as a whole, shall be materially different from the operation of
retail department or specialty stores offering a wide assortment
of merchandise with a substantial focus on medium to higher
priced lines.
(i) Any Retailer shall implement or participate
in, directly or indirectly, any Non-Permitted Credit Program and
such implementation or participation shall continue for a period
of greater than 30 days after the earlier of (i) actual knowledge
thereof by any officer of FDS or (ii) the delivery of written
notice thereof by GE Bank to FDS.
(j) Any of the FDS Companies shall have assigned
this Agreement in a manner not permitted by Section 12.6.
(k) GE Bank shall have exercised its right to
terminate this Agreement pursuant to Annex I hereto.
(l) Net Credit Sales generated by Licensees shall
constitute more than 5% of Net Credit Sales in any fiscal
quarter.
11.3. GE Bank's Rights Following a GE Termination
Trigger
. If any GE Termination Trigger shall have
occurred and be continuing, GE Bank, in its sole discretion, may
(i) terminate this Agreement by delivering written notice to FDS
setting forth the basis for termination and the effective date of
termination and/or (ii) exercise any other rights or remedies
available to it at Law or in equity, subject to the terms of this
Agreement, provided that GE Bank expressly acknowledges and
agrees that (x) under no circumstances shall it have a right to
terminate this Agreement due to the failure of any FDS Company to
perform any of its covenants, agreements or obligations to
provide servicing in the event the GE Capital/GE Bank Services
Agreement terminates and the provisions of Section 4.10 hereof
become applicable or in the event GE Bank's right to provide the
Collection Services pursuant to Annex I terminates and FACS or an
Affiliate performs Collection Services and (y) no provisions of
this Agreement other than those referred to in clause (x) shall
be applicable with respect to any servicing performed or to be
performed by any FDS Company.
11.4. FDS Termination Rights
. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an
"FDS Termination Trigger":
(a) GE Bank shall fail to pay to any FDS Company
or any Affiliate of any FDS Company any Uncontested Amount when
due and payable or declared due and payable, and such failure to
pay shall remain unremedied for a period of 10 days after
delivery of written demand therefor by FDS to GE Bank.
(b) (i) Any representation or warranty of GE Bank
contained in this Agreement shall fail to be true and correct
either as of the date hereof or on the date of any Remittance and
the failure of such representation or warranty to be true and
correct has a GE Material Adverse Effect (it being agreed that
the representations and warranties set forth in Section 7.9 shall
be deemed not to be representations or warranties of GE Bank for
purposes of this Section 11.4(b)) or (ii) GE Bank shall fail to
perform any of the covenants or agreements required to be
complied with and performed by GE Bank pursuant to this Agreement
and such failure has a GE Material Adverse Effect and shall not
in the case of either (i) or (ii) have been cured within 75 days
after delivery of written notice thereof by FDS to GE Bank,
provided that each of the FDS Companies expressly acknowledges
and agrees that neither (x) the failure of GE Bank to perform any
of its covenants, agreements or obligations set forth in
Section 4.1 hereof or Annex I hereto nor (y) the failure of GE
Bank to perform any of its covenants, agreements or obligations
to provide servicing in the event the FACS Services Agreement
terminates and the provisions of Section 4.9 hereof become
applicable, shall under any circumstances constitute an FDS
Termination Trigger.
(c) An Event of Bankruptcy shall have occurred
with respect to GE Bank.
(d) One or more defaults shall have occurred
under any agreements, indentures or instruments under which
GE Bank then has outstanding indebtedness in excess of
$[OMISSION], and, in any such case, such default (i) continues
beyond any period of grace provided with respect thereto and
(ii) results in such indebtedness becoming due prior to its
stated maturity or occurs at the final maturity of such
indebtedness.
(e) A judgment shall have been entered against GE
Bank by a Governmental Authority which judgment creates a
liability of $[OMISSION] or more in excess of insured amounts and
has not been stayed (by appeal or otherwise), vacated,
discharged, or otherwise satisfied within 60 days of the entry of
such judgment.
(f) GE Bank shall have assigned this Agreement in
a manner not permitted by Section 12.6.
(g) GE Bank and its Affiliates shall be
prohibited by Law from performing Key Credit Activities with
respect to GE/Macy's Accounts for which the Average GE/Macy's
Gross Receivables for the 12-month period immediately prior to
the date GE Bank and its Affiliates are so prohibited, equaled or
exceeded, in the aggregate, 25% of the Average GE/Macy's Gross
Receivables for such immediately prior 12-month period for all
GE/Macy's Accounts.
11.5. FDS's Rights Following an FDS Termination
Trigger
. If any FDS Termination Trigger shall have
occurred and be continuing, FDS, in its sole discretion, may
(i) terminate this Agreement by delivering written notice to GE
Bank setting forth the basis for termination and the effective
date of termination and/or (ii) exercise any other rights or
remedies available to it at Law or in equity, subject to the
terms of this Agreement, provided that each of the FDS Companies
expressly acknowledges and agrees that (A) under no circumstances
shall any of them have a right to terminate this Agreement due to
(x) the failure of GE Bank to perform any of its covenants,
agreements or obligations set forth in Section 4.1 hereof or
Annex I hereto or (y) the failure of GE Bank to perform any of
its covenants, agreements or obligations to provide servicing in
the event the FACS Services Agreement terminates and the
provisions of Section 4.9 hereof become applicable and (B) no
provisions of this Agreement other than those referred to in
clauses (x) and (y) shall be applicable with respect to any
servicing performed or to be performed by GE Bank or its
designees.
11.6. FDS Purchase of GE/Macy's Accounts and
GE/Macy's Receivables Following Termination
. (a) In the event that this Agreement expires by its
terms or is terminated earlier for any reason, FDS shall have the
right, exercisable by delivery of written notice to GE Bank, to
purchase all of the GE/Macy's Accounts and GE/Macy's Receivables
included on the Master File owned by GE Bank as of such date, for
a purchase price as determined in accordance with Section 11.7.
In order to be effective, any notice of an election to require GE
Bank to sell its GE/Macy's Accounts and GE/Macy's Receivables
pursuant to this Section 11.6 must be irrevocable and delivered
by FDS to GE Bank (A) in the event this Agreement is terminated
by FDS, simultaneously with delivery of FDS's written notice of
termination, or (B) in the event this Agreement is terminated by
GE Bank, within 10 Business Days after delivery of GE Bank's
written notice of termination. If FDS delivers an effective
notice of election pursuant to this Section 11.6(a), the parties
shall use their commercially reasonable efforts to close the
purchase and sale of the GE/Macy's Accounts and GE/Macy's
Receivables within 90 days after GE Bank's receipt of the notice
of election and such closing shall, in any event, take place
within 180 days after GE Bank's receipt of such notice, provided
that if this Agreement is terminated due to expiration of the
Initial Term or any Extended Term, and FDS has delivered an
effective notice of election pursuant to this Section 11.6(a),
the purchase and sale of the GE/Macy's Accounts and GE/Macy's
Receivables shall occur simultaneously with such expiration.
(b) Upon any termination of this Agreement,
should FDS not have elected to purchase all of the GE/Macy's
Accounts and GE/Macy's Receivables pursuant to Section 11.6(a),
(i) GE Bank shall have the right, in addition to and retaining
all other rights it may have under the terms of this Agreement or
applicable Law, to liquidate such GE/Macy's Accounts and
GE/Macy's Receivables in any such lawful manner which may be
expeditious or economically advantageous to GE Bank including,
without limitation, the issuance of replacement or substitute
GE/Macy's Credit Cards, and the sale of such GE/Macy's Accounts
and GE/Macy's Receivables to any Person not a party to this
Agreement, and (ii) the FDS Companies expressly agree to
cooperate with GE Bank and take any action reasonably necessary
to effectuate any such liquidation or replacement or substitute
GE/Macy's Credit Card issuance in an orderly manner, including,
without limitation, accepting the GE/Macy's Credit Cards for up
to 36 months following the effective date of termination and/or
taking any other action as GE Bank may reasonably require to
encourage use or acceptance of such replacement or substitute
cards.
11.7. Calculation of Purchase Price for GE/Macy's
Accounts and GE/Macy's Receivables
. (a) If this Agreement is terminated (i) due to
expiration of the Initial Term or any Extended Term in accordance
with Section 11.1, (ii) as a result of any of the FDS Termination
Triggers set forth in Section 11.4 or (iii) as a result of the GE
Termination Triggers set forth in Sections 11.2(g), (h), (k) or
(l), the purchase price to be paid by FDS for the GE/Macy's
Accounts and GE/Macy's Receivables shall be an amount equal to
the Net Book Value of the GE/Macy's Accounts as of the purchase
date. If this Agreement is terminated as a result of any of the
GE Termination Triggers set forth in Sections 11.2(a), (b), (f),
(i) or (j), the purchase price to be paid by FDS for the
GE/Macy's Accounts and Receivables shall be an amount equal to
the Net Book Value of the GE/Macy's Accounts and the GE/Macy's
Receivables as of the purchase date plus an amount equal to
[OMISSION]% thereof if the purchase occurs during the 1996 or
1997 fiscal year, [OMISSION]% thereof if the purchase occurs
during the 1998 or 1999 fiscal year, [OMISSION]% thereof if the
purchase occurs during the 1999 or 2000 fiscal year, [OMISSION]%
thereof if the purchase occurs during the 2000 or 2001 fiscal
year, [OMISSION]% thereof if the purchase occurs during the 2001
or 2002 fiscal year, and [OMISSION]% thereof if the purchase
occurs thereafter. If this Agreement is terminated as a result
of any of the GE Termination Triggers set forth in Sections
11.2(c), (d) or (e), the purchase price to be paid by FDS for the
GE/Macy's Accounts and GE/Macy's Receivables shall be an amount
equal to the Net Book Value thereof as of the purchase date plus
an amount equal to [OMISSION]% thereof.
(b) GE Bank shall deliver to FDS, not less than
five Business Days prior to the date any GE/Macy's Accounts and
GE/Macy's Receivables are to be purchased by FDS pursuant to
Section 11.6 (the "Closing Date"), a written statement setting
forth in reasonable detail GE Bank's good faith calculation of
the purchase price for such GE/Macy's Accounts and GE/Macy's
Receivables in accordance with the provisions of Section 11.7(a)
(the "Purchase Price"). The purchase price to be paid by FDS for
any GE/Macy's Accounts and GE/Macy's Receivables purchased on the
Closing Date shall be equal to the Purchase Price.
(c) For 20 Business Days after the Closing Date
(the "Purchase Price Audit Period"), FDS shall, subject to the
provisions of Section 12.1, be permitted to have reasonable
access, during normal business hours, with reasonable notice, in
such a manner as to minimize interference with normal business
operations, to examine the records, files and books of account of
GE Bank to the extent reasonably necessary to confirm the
Purchase Price. If FDS does not deliver written notice to GE
Bank within five days after the end of a Purchase Price Audit
Period which states that FDS objects to the Purchase Price, and
setting forth in reasonable detail the basis for such objection
(a "Purchase Price Dispute Notice"), the Purchase Price shall be
deemed to have been accepted by FDS and shall be final and
binding on the parties.
(d) If FDS delivers to GE Bank a Purchase Price
Dispute Notice within five days of the end of any Purchase Price
Audit Period, FDS and GE Bank shall work together for a period of
10 days after GE Bank's receipt of the Purchase Price Dispute
Notice to attempt to reach agreement on the Purchase Price. If
FDS and GE Bank are unable to agree on the Purchase Price within
such 10-day period, the dispute shall be resolved pursuant to the
provisions of Section 9.9. The Purchase Price, as either agreed
to (or deemed agreed to) by FDS and GE Bank, or finalized
pursuant to Section 9.9, shall be referred to as the "Final
Purchase Price."
(e) If the Purchase Price paid by FDS exceeds the
Final Purchase Price then GE Bank shall pay FDS within three
Business Days of the date the Purchase Price became the Final
Purchase Price, an amount equal to such excess (plus interest on
such excess at the Prime Rate, calculated from and including the
Closing Date until but excluding the date of such settlement).
If the Purchase Price paid by FDS is less than the amount of the
Final Purchase Price then FDS shall pay GE Bank within three
Business Days of the date the Purchase Price became the Final
Purchase Price, an amount equal to such deficiency (plus interest
on such deficiency at the Prime Rate, calculated from and
including the Closing Date until but excluding the date of such
settlement).
(f) Upon the receipt by GE Bank of the Purchase
Price, GE Bank shall transfer to FDS all right, title, and
interest in the GE/Macy's Accounts and GE/Macy's Receivables to
FDS, together with all GE/Macy's Account Documentation and
GE/Macy's Credit Card Documentation and all other records and
documentation relating to the GE/Macy's Accounts. GE Bank agrees
to cooperate in all reasonable respects to effectuate the
transfer.
11.8. No Cross Default
. The parties hereto expressly acknowledge and agree that no
default under, noncompliance with, or breach of, the FACS
Services Agreement or the GE Capital Services Agreement by any
party thereto shall constitute a default hereunder or give any
party hereto any right to cancel, terminate or suspend this
Agreement.
ARTICLE
XII.
GENERAL
12.1. Confidentiality
. (a) From and after the date hereof, the FDS Companies shall
(and shall use their commercially reasonable efforts to cause
their respective Affiliates, directors, officers, employees,
representatives and other agents to) hold in confidence, not
utilize for any purpose not expressly contemplated hereby, and
not disclose to any Person not a party to this Agreement,
proprietary or non-public information or documents obtained from
GE Bank or its Affiliates, directors, officers, employees,
representatives and other agents.
(b) From and after the date hereof, GE Bank shall
(and shall use its commercially reasonable efforts to cause its
Affiliates, directors, officers, employees, representatives and
other agents to) hold in confidence, not utilize for any purpose
not expressly contemplated hereby, and not disclose to any Person
not a party to this Agreement (other than an Affiliate of GE Bank
that agrees to be bound by the provisions of this Section 12.1),
any proprietary or non-public information or documents obtained
from any FDS Company. GE Bank's duty of confidentiality
contained herein is specifically intended to apply, without
limitation, to the GE/Macy's Account Debtor List (which shall be
deemed proprietary information of FDS) maintained in connection
with GE/Macy's Account Debtors, provided that nothing contained
in this Section 12.1 shall limit GE Bank's right to utilize such
information as provided in this Agreement.
(c) Notwithstanding the provisions of
paragraphs (a) and (b) of this Section 12.1, nothing contained in
this Agreement shall limit the right of any party to disclose any
information (i) as required by Law or by any Governmental
Authority, (ii) if such information becomes public knowledge,
other than due to a breach by such party of Sections 12.1(a) or
(b), (iii) to the extent that such information is disclosed to
recover the GE/Macy's Receivables or amounts owing hereunder from
another party hereto, (iv) for purposes of effecting any
securitization or participation in accordance with the provisions
of Section 9.4, except for any proprietary or non-public
information with respect to FDS or any information with respect
to FDS/Macy's Accounts or FDS/Macy's Account Debtors on an
individual (as opposed to a pooled) basis or (v) with the prior
written consent of the party whose information is proprietary or
non-public; provided, however, that the financial terms of this
Agreement and the Transaction Documents may not be disclosed by
GE Bank (other than to an Affiliate, director, officer, employee,
representative or other agent of GE Bank on a need-to-know basis)
or the FDS Companies (other than to an Affiliate, director,
officer, employee, representative or other agent of the FDS
Companies on a need-to-know basis), in each case, except in the
circumstances described in clauses (i) and (ii) of this
Section 12.1(c), to any Person if there are practical ways,
determined after consultation between GE Bank and FDS, of
avoiding such disclosure and provided, further, that GE Bank
shall not disclose such information to any retail competitor of
any FDS Company and the FDS Companies shall not disclose such
information to any financial service competitor of GE Bank
(except, in either case, in the circumstances described in
clauses (i) and (ii) of this Section 12.1(c)). Prior to
disclosing any proprietary or non-public information of another
party hereto to any Person pursuant to the provisions of this
Section 12.1(c), the party making such disclosure shall give
prior notice to the appropriate party of the nature of such
disclosure and of the fact that such disclosure will be made.
The FDS Companies and GE Bank agree that prior to filing any
copies of this Agreement with any Governmental Authority they
will consult with each other with respect to redacting, to the
maximum extent practicable and consistent with applicable Law,
portions of this Agreement.
12.2. Specific Performance
. (a) The FDS Companies acknowledge that GE Bank will be
irreparably harmed and GE Bank will have no adequate remedy at
Law if the FDS Companies fail to perform any of their material
obligations under this Agreement. It is accordingly agreed that,
in addition to any other remedies which may be available at Law
or in equity, GE Bank shall have the right to obtain injunctive
relief to restrain a breach or threatened breach of, or otherwise
obtain specific performance of, such obligations of the FDS
Companies.
(b) GE Bank acknowledges that the FDS Companies
will be irreparably harmed and the FDS Companies will have no
adequate remedy at Law if GE Bank fails to perform any of its
material obligations under this Agreement. It is accordingly
agreed that, in addition to any other remedies which may be
available at Law or in equity, the FDS Companies shall have the
right to obtain injunctive relief to restrain a breach or
threatened breach of, or otherwise obtain specific performance
of, such obligations of GE Bank.
12.3. Waivers
. Any party hereto may, by written notice to the other parties
hereto, (a) extend the time for the performance of any of the
obligations or other actions of any other party under this
Agreement; (b) waive any inaccuracies in the representations or
warranties of any other party contained in this Agreement or in
any document delivered pursuant to this Agreement; (c) waive
compliance with any of the conditions or covenants of any other
party contained in this Agreement; or (d) waive or modify
performance of any of the obligations of any other party under
this Agreement. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or
agreement contained herein. No failure on the part of any party
hereto to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise or waiver of any such right preclude any
other or further exercise thereof. The waiver by any party
hereto of any condition or of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
other condition or other breach. The waiver by any party of any
of the conditions precedent to its obligations under this
Agreement shall not preclude it from seeking redress for breach
of this Agreement other than with respect to the condition so
waived.
12.4. Entire Agreement; Amendments
. This Agreement and the other Transaction Documents embody the
entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect thereof. This
Agreement may not be amended, modified or changed orally, but
only by an agreement in writing signed by all of the parties
hereto. The parties hereto agree that use of the Marks (as
defined in the Amended and Restated Trademark Agreement) shall be
governed solely by the Amended and Restated Trademark Agreement.
12.5. Binding Effect
. This Agreement shall inure to the benefit of and shall be
binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. The FDS
Companies shall not, directly or indirectly, in one transaction
or a series of related transactions, sell or otherwise transfer
for value all or substantially all of the FDS Companies' assets
to one Person or to a "group" of Persons (as such term is defined
for purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended), unless such Person or "group" of Persons shall
have executed and delivered an instrument or instruments
satisfactory to GE Bank pursuant to which such Person or "group"
of Persons shall, upon consummation of such sale or transfer for
value, assume all of the FDS Companies' rights and obligations
hereunder.
12.6. Assignment
. Neither this Agreement nor any of the rights or
obligations hereunder may be transferred or assigned by GE Bank,
on the one hand, or any of the FDS Companies, on the other hand,
without the prior written consent of the other, except that (a)
in the case of a proposed assignment by GE Bank to an Affiliate,
the consent of the FDS Companies shall not be unreasonably
withheld and (b) GE Bank may assign its rights with respect to
the GE/Macy's Receivables in order to effect a securitization or
participation thereof. Any assignments or transfers by any of
the FDS Companies shall not relieve the assigning or transferring
party from its obligations hereunder and the assignee or
transferee of this Agreement shall assume, by instrument
reasonably acceptable to GE Bank, the assignor's obligations
under this Agreement theretofore and thereinafter arising. Any
assignment or transfer by GE Bank or its assignees to an
Affiliate of GE Bank shall relieve GE Bank or such assignee or
transferee of its obligations hereunder and such party shall no
longer be a party to this Agreement; provided, that the assignee
or transferee assumes, by instrument reasonably satisfactory to
FDS, all of the assignor's obligations under this Agreement
theretofore and thereinafter arising. GE Bank agrees that the
provisions of this Section 12.6 shall not prohibit any merger,
consolidation, split up or similar reorganization transaction of
any FDS Company with any other FDS Company as long as (i) FDS
provides GE Bank with not less than 30 days prior written notice
of any such merger, consolidation, split up or similar
reorganization transaction, (ii) prior to such merger,
consolidation, split up or similar reorganization transaction,
FDS executes (or causes to be executed) and delivers to GE Bank
such documents, certificates or other instruments as GE Bank
shall reasonably require to assure that the party surviving such
transaction shall be bound by the terms of this Agreement and the
other Transaction Documents to the extent applicable and
(iii) FDS has executed and delivered to GE Bank all such
instruments as GE Bank shall reasonably require to assure that
the FDS Guaranty shall continue to be applicable with respect to
such surviving entity and all other FDS Companies.
12.7. Headings
. The section and other headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12.8. Counterparts
. This Agreement may be executed in any number of counterparts,
each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same
instrument.
12.9. Governing Law
. The validity, performance and enforcement of this Agreement
shall be governed by the Laws of the State of New York, without
giving effect to the principles of conflicts of law thereof.
12.10. Waiver of Jury Trial
. (a) Each of the parties hereto shall, and hereby does, waive
trial by jury in any action or proceeding involving any of the
parties hereto on any matters whatsoever arising out of or in any
way connected with this Agreement or the Transaction Documents;
provided that such waiver shall not apply to cross claims in any
bona fide action originally involving a third party and a jury
trial or any bona fide action brought by a third party against
one or more of the parties hereto and involving a jury trial.
(b) The FDS Companies (i) consent and submit to
the jurisdiction of the Courts of the State of New York and of
the Courts of the United States for the Southern District of New
York for all purposes of this Agreement and the Transaction
Documents, including, without limitation, any action or
proceeding instituted for the enforcement of any right, remedy,
obligation or liability arising under or by reason hereof or
thereof; and (ii) consent and submit to the venue of such action
or proceeding in the City and County of New York (or such
judicial district of a Court of the United States as shall
include the same).
(c) GE Bank (i) consents and submits to the
jurisdiction of the Courts of the State of New York and of the
Courts of the United States for the Southern District of New York
for all purposes of this Agreement and the Transaction Documents,
including, without limitation, any action or proceeding
instituted for the enforcement of any right, remedy, obligation
or liability arising under or by reason hereof or thereof; and
(ii) consents and submits to the venue of such action or
proceeding in the City and County of New York (or such judicial
district of a Court of the United States as shall include the
same).
12.11. Separability
. Any term or provision of this Agreement which is invalid or
unenforceable shall be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement.
12.12. Announcements
. GE Bank and the FDS Companies agree that neither GE Bank nor
any FDS Company shall make any publicity release or public
announcement concerning this Agreement or the Transaction
Documents or the transactions contemplated hereby or thereby
without the prior approval of the other party, except as may be
required by Law.
12.13. Payments
. All payments and Remittances required to be made to any of the
parties hereunder shall, unless the applicable provision
expressly provides for an alternative means of payment, be made
by wire transfer of immediately available United States funds to
an account or accounts designated by the party to be paid.
12.14. Survival
. Notwithstanding any other provision of this Agreement,
Sections 2.5 (last full sentence only), 3.4, 3.5, 3.9, 3.10, 4.6,
6.10, 8.2(e), (f) and (g) (each for so long as there shall be any
GE/Macy's Receivables owned by GE Bank), Sections 9.1, 9.5, 9.9,
9.10, Article X, Sections 11.6, 11.7, 12.1, 12.10, 12.14 and
12.18 hereof, and Sections 3.4 and 5 of Annex I shall survive any
termination of this Agreement.
12.15. Relationship of Parties
. Nothing herein contained shall be deemed or construed to
create a partnership or joint venture between the parties hereto.
Each party shall be responsible for its own employees.
12.16. Notices
. Any notice required or permitted under this Agreement shall be
given in writing and (i) hand delivered or mailed, by certified
or registered mail, return receipt requested, and (ii) sent by
facsimile to the following addresses:
(a) If to FDS or the FDS Companies (other than FDS
Bank):
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, OH 45202
Attn: Law Department
Fax: (513) 579-7897
(b) If to FDS Bank:
FDS National Bank
9111 Duke Blvd.
Mason, OH 45040
Fax: (513) 573-2039
with a copy to:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, OH 45202
Attn: Law Department
Fax: (513) 579-7897
and to:
FACS Group, Inc.
9111 Duke Blvd.
Mason, OH 45040
Attn: Senior Vice President - Operations
Fax: (513) 573-2039
(c) If to GE Bank:
GE Capital Consumer Card Co.
5300 Kings Island Drive
Mason, OH 45040
Attn: Secretary
Fax: (513) 459-6888
with a copy to:
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attn: Counsel, Retailer Financial Services
Fax: (203) 357-3353
and to:
Macy's Credit Services
4605 Duke Drive
Mason, OH 45040
Attn: Executive Vice President
Fax: (513) 573-3251
Any party may, by notice to the other parties hereto,
change the address designated above.
12.17. Compliance with Antitrust Laws
. The parties hereto agree that, as necessary, each shall take
appropriate actions to ensure continued compliance with all
applicable antitrust laws, including, but not limited to,
limitations as to which employees of which party may receive
confidential cost information, or information regarding joint
marketing practices.
12.18. Cooperation with Governmental Authorities
. Each of GE Bank, on the one hand, and the FDS
Companies, on the other hand, agree to cooperate with each other,
and each other's Affiliates, and their respective attorneys,
agents and other representatives in connection with any inquiry,
proceeding or investigation of, or examination by, any
Governmental Authority relating to GE Bank or the FDS Companies,
as the case may be, or any of their respective Affiliates,
employees, agents or other representatives, including, without
limitation, inquiries, proceedings, investigations and
examinations by any state or federal banking regulators.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have entered into this Agreement as of the day and
year first above written.
GE CAPITAL CONSUMER CARD CO.
By: /s/ Kevin Knight
Name: Kevin Knight
Title: Executive Vice
President
FEDERATED DEPARTMENT
STORES, INC.
By: /s/ Ronald W. Tysoe
Name: Ronald W. Tysoe
Title: Vice Chairman and
Chief Financial Officer
FDS NATIONAL BANK
By: /s/ James R. Gudmens
Name: James R. Gudmens
Title: President
MACY'S EAST, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
MACY'S WEST, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
BULLOCK'S, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
BROADWAY STORES, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
FACS GROUP, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
MSS-DELAWARE, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
Exhibit A
Account Sharing Formulas and Examples
[OMISSION]
Exhibit B
Monthly Adjustment Certificate
The undersigned [agree] [believe] that actual performance of
the Program last month [exceeded] [underperformed] budgeted
performance for such month. In addition, the undersigned [agree]
[believe] that based upon all current facts and circumstances
actual performance of the Program for the remaining portion of
the current budget period is likely to [exceed] [underperform]
the current budget for such period. The undersigned therefore
intend to adjust the budget for each of the future months in the
remaining portion of the current budget period as described
below. Such adjustment will be prospective only and applied only
with respect to future remittances (i.e., will be applicable only
to future months and will not "make-up" for prior months) so that
if actual performance for such months equals adjusted budgeted
performance for such months, GE Bank will receive the Target
Return for each of such future months.
[Describe adjustments, including comparative historic
performance and rationale for deviations from budgeted or
adjusted amounts in each line item]
[Federated Department Stores, Inc.] [GE Capital Consumer Card Co.]
[By:_______________________] [By:_______________________]
Exhibit C
GE/Macy's Credit Card Agreement
This certificate entitles you to
10% Off
All Day
Today
This certificate is not transferable and can be used only when
validated by a Macy's sales associate on the date printed above
Just open a Macy's charge account
with any sales associate*
Plus: As our Preferred Charge Customer, you'll have all
these advantages:
- - No annual fee
- - No Interest when balance is paid off monthly
- - 10% off coupon for your first purchase when
your permanent card arrives
- - Accountgard (Optional insurance available to
protect your account)
Macy's Express Credit Temporary Pass
Acct No.
Customer Name
Id Type Number Exp Date
Customer
Signature
*Subject to credit approval "10% off" applies to purchases on
your new Macy's account today only, and does not include
Electronics, Gifts/Merchandise Certificates and Non-Merchandise
departments. Not valued during Fine Jewelry Bonus events, on
prior purchases or other specified sales events. Certificate
cannot be combined with other coupons. Employees not eligible.
macy's Charge Account Application
If ANY of the following apply, please check the box(es) and fill
in the information below.
[ ] Joint Account [ ] Recent Name Change [ ] Recently Moved
[ ] College Student
Primary Account Name (First, Initial, Last) Date of Birth
Month Day Year
Social Security Number Home Phone (Required)
( )
Present Address/Street/Apt. # (If P.O. Box, include residential
street # and name)
City State Zip Code
Employer or Firm Name
Business Phone Number Mother's Maiden Name
( )
Annual Household Income Relied on for Repayment*
A [] Less than $12,000 B [] $12,000 to $30,000 C [] $30,001 to
$60,000 D [] Over $60,000
*Alimony, child support, spouse's income, separate maintenance or
other income need not be included if you do not wish to have it
considered as a basis for repaying this obligation
Previous or Permanent Address/Street/Apt. #
City State Zip Code
Joint Applicant - Name Social Security Number
Joint Applicant Present Address Zip Code
Complete if you checked College Student Above: Class Status
Name of College [ ] Freshman [ ] Sophomore [ ] Junior
[ ] Senior [ ] Other_______________
SIGN HERE
You have read and agree to be bound by the accompanying Federal
and State Notices and terms of the attached Macy's Credit Card
Agreement, each of which are incorporated by reference in and
made a part of this Application
X
Applicant's Signature Date
X
Joint Applicant's Signature Date
ACCOUNTGARD PROTECTION PLAN
If you sign below, you request enrollment in the Accountgard
Insurance Program providing Credit Life. Disability and
Involuntary Unemployment Insurance coverage on your Account to
the extent available in your state. By signing below, you also
acknowledge that (1) THIS INSURANCE IS VOLUNTARY AND NOT REQUIRED
TO OBTAIN CREDIT FROM US AND WILL NOT BE PROVIDED UNLESS YOU SIGN
AND AGREE TO PAY THE ADDITIONAL COST;
(2) You have reviewed the premium rates, coverages, age
qualifications and conditions shown in the Summary of Insurance
Coverage accompanying this Application. (3) As described in the
Summary of Insurance Coverages, not all are available in every
state. If you wish to obtain one or more types of insurance
coverage separately please see the accompanying "Summary of
Insurance Coverages".
X
Signature of Primary Accountholder Date
FOR PENNSYLVANIA RESIDENTS ONLY: The Pennsylvania Insurance
Department requires that the following questions be asked for
insurance purposes only: Do you work for salary or wages 35 hours
or more per week for at least 9 months of the year? [ ] Yes [ ] No
FOR VIRGINIA AND WISCONSIN RESIDENTS ONLY: If you would like to
enroll in Accountgard check the following box and we will send
you an application [ ]
FOR STORE USE ONLY
Store Associate Enter Customer's Account Number here
[ ] ANA _____ [ ] RAV _______
Sales Associate Name/Number Store No. G
MACY'S W (4/96) 1059-AN
SUMMARY OF INSURANCE COVERAGES
LIFE BENEFITS: If you or your co-accountholder (spouse, if no co-
accountholder) die, Accountgard will pay the outstanding balance
on your account as of the date of death, up to the master policy
maximum of $10,000. Except in MD and MO suicide is excluded for
up to 2 years, depending on your state, see your certificate for
details. Single Life only in MA.
DISABILITY/UNEMPLOYMENT BENEFITS: In most states, if you become
disabled through an accident or illness, and are under a doctor's
care and cannot work, or become involuntarily unemployed,
Accountgard will pay your account balance as of the date of loss
after 90 consecutive days of unemployment or disability. In NJ,
NY, NC, PA and TX, after 30 consecutive days of unemployment or
disability. Chargegard pays your scheduled minimum monthly
payment based on your outstanding balance as of the date of loss,
while you are unemployed or disabled, and will continue until
your balance is paid off, you return to work, or you reach the
master policy limits of $10,000, whichever occurs first.
Retirement is not covered. Strikes and labor disputes are not
covered in AR, IL, KS, NY, and WV. Disability coverage is not
available in ID. Unemployment coverage is not available in MN.
Unemployment benefits re limited to 6 months in NY; 12 months in
PA.
You are eligible for these coverages if you are employed full-
time in a non-seasonal occupation. This seasonal restriction
does not apply in MT, NM, NY, PA and WI. In AZ, CA, MD, NJ, TX
and OR this seasonal restriction only applies to unemployment
coverage and in MI and NC this seasonal restriction only applies
to disability coverage. These benefits are not available to the
co-accountholder. Additional exclusions apply. Please read your
certificate carefully.
COST OF COVERAGE: The monthly premium will be $1.50 per $100 of
your outstanding balance in most states, exceptions: $1.80 in MI;
$1.66 in AR; $1.499 in MA; $1.495 in UT; $1.494 in VA; $1.49 in
AZ and CA; $1.48 in WI; $1.467 in VT; $1.43 in SC; $1.37 in NM;
$1.34 in CT; $1.33 in AL; $1.306 in WA; $1.284 in ME; $1.275 in
OR; $1.255 in GA; $1.245 in FL; $1.242 in NH; $1.081 in HI; $1.07
in ID; 48.4 cents in NY; 64.6 cents in NC; 60 cents in NJ; 63.08
cents in PA; 49.0 cents in IA; 42.7 cents in TX; 33.6 cents in MN.
TERMS OF INSURANCE: This coverage becomes effective on the date
you elect the insurance. It stops if (1) you are more than 90
days late in making the required account payment; (2) you ask for
it to stop, in writing; (3) your insurance is terminated
according to its terms.
Maximum enrollment age is 64 in all states, except age 65 in CO,
ID, IA, NM, NV, NY, OR, and TX; age 69 in AZ, NC, OK and VA; age
70 in FL, GA, MI and MO. All coverages end at age 65, except age
66 in CO, ID, IA, NM, NY, OR and TX; age 70 in AZ, NV, OK and VA;
age 71 in FL, GA, MI and MO; and without limitation if initially
eligible in NC and SD.
A separate application for insurance is required in VA and WI.
In NJ, NY, NC, PA and TX, the Insurance Coverage described in
this application is called Chargegard.
Coverage is underwritten by American Bankers Life Assurance
Company of Florida and American Bankers Insurance Company of
Florida, 11222 Quail Roost Drive, Miami, Florida 33157-6596. In
TX, Life and Disability certificate number is AC3181CB-0592 (3.53
RA). In TX, Unemployment coverage provided on forms AD913CQ-0791
& B2754EQ-1089. In NY, Life and Disability coverage provided by
Bankers American Life Assurance Company, One Blue Hill Plaza,
Pearl River, NY 10965.
SEPARATE COVERAGES: If you wish to obtain any one or more of the
Credit Life, Disability, or involuntary Unemployment Insurance
coverages on your Account separately, please call us at 1-800-743-
6229 and an application for separate coverages will be sent to
you. Disability coverage is only available to applicants
electing Life coverage in MN, MO, TX and WA; Disability and
Unemployment coverages are only available together in AL, CO, DE,
FL, IA, KY, LA, ME, MD, MT, NE, NH, NM, ND, SD, VT, VA, and WV.
FEDERAL AND STATE NOTICES
Applicant(s) please read the following: Applicant(s) ("you")
requests a credit(s). You represent that the information
supplied in the Application is complete and accurate and that
your Account will be used only for personal, family or household
purposes. You authorize GE Capital Consumer Card Co., Mason,
Ohio ("we", "us" or "our") to make whatever inquiries we consider
necessary and appropriate concerning this information and to
request a consumer report from consumer reporting agencies. You
agree that there is no agreement between you and us until we
approve your Application and accept the Agreement at our offices
in Ohio and that is has been deemed to have been made in Ohio.
You affirm that you are eighteen (18) years of age or older.
Married Applicants may apply for separate Accounts. After credit
approval each Applicant shall have the right to use this Account
to the extent of any credit limit set by the creditor and each
Applicant will be liable either together or individually as we
shall determine for all amounts of credit extended under this
Account to any Applicant or Authorized user. You agree that the
attached Agreement provides for the compounding of finance
charges (except for NC residents).
NOTICE TO APPLICANT(S): (A) DO NOT SIGN THE APPLICATION/AGREEMENT
BEFORE YOU READ IT OR IF THE AGREEMENT CONTAINS ANY BLANK SPACES.
(B) YOU ARE ENTITLED TO A COMPLETELY FILLED IN COPY OF THE
AGREEMENT. Service (finance) charges at rates not in excess of
those permitted by law will be charged on outstanding balances
from month to month.
OHIO RESIDENTS: THE OHIO LAWS AGAINST DISCRIMINATION REQUIRE
THAT ALL CREDITORS MAKE CREDIT EQUALLY AVAILABLE TO ALL CREDIT
WORTHY CUSTOMERS, AND THAT CREDIT REPORTING AGENCIES MAINTAIN
SEPARATE CREDIT HISTORIES ON EACH INDIVIDUAL UPON REQUEST. THE
OHIO CIVIL RIGHTS COMMISSION ADMINISTERS COMPLIANCE WITH THIS
LAW. WISCONSIN RESIDENTS: If you are applying for an individual
Account combine your and your spouse's financial information on
the Application. No provision of a marital property agreement, a
unilateral statement under Sec. 766.59 Wis. Stats. or a court
decree under Sec. 766.70, Wis. Stats. adversely affects the
interest of the creditor unless the creditor, prior to the time
credit is granted, is furnished a copy of the agreement,
statement or decree or has actual knowledge of the adverse
provision when the obligation to the creditor is incurred.
Cards are issued and credited is extended by GE Capital Consumer
Card Co., Mason, Ohio.
To find out about changes in the terms of the attached Agreement,
write to us at P.O. Box 8182, Mason, OH 45040.
MACY'S CREDIT CARD AGREEMENT - SECURITY AGREEMENT
RETAIL INSTALLMENT CREDIT AGREEMENT
1. Definitions: The definitions listed below apply whenever we
use these words in this Agreement "We", "us" and "our" mean GE
Capital Consumer Card Co., 4605 Duke Drive, Mason, OH 45040.
"You" and "your" mean each person who signed a Macy's ("Macy's")
Application/Credit Card Agreement or otherwise agreed to open a
Credit Card Account with us and each person who is authorized to
use the Macy's Credit Card Account ("Account") established by us
or our assignors. "Credit Card" means the Credit Card issued to
you by us or our assignors to allow you to make purchases on
credit from time to time under your Account. This Agreement
includes and incorporates the Macy's Application you sign, and
its effective date is the date we first approve your signed
Macy's Application or you make a purchase on credit evidenced by
a signed sales slip or memorandum. Please read this Agreement
carefully because by signing the Application or using or
accepting the Credit Card you will be agreeing with us to
everything written here.
2. Types of Charges: There are three types of charges ("Plans")
under your Account Flexible charges. Time Option Plan ("TOP")
charges and Club charges. You may make a Flexible charge for any
merchandise or service Macy's offers without any minimum purchase
requirements. You may make a TOP charge for certain merchandise
categories subject to a minimum purchase requirement. You may
make a Club charge for selected merchandise, as permitted by
Macy's, subject to a minimum purchase requirement. Your desire
to charge purchases to your Club Plan must be indicated at the
time of purchase.
3. Payment: You will pay us for credit we extend if any, on your
behalf to pay for all purchases (including mail and phone orders
if any) made by you, and all other amounts owed to us under the
terms of this Agreement. You understand that Flexible charges,
TOP charges and Club charges will be billed separately on the
monthly billing statement ("Statement"). When there is a balance
due on any Plan, called the New Balance, on the Statement, you
will pay in time for receipt by us within 25 days after the
Billing Date, either (a) each New Balance in full, or (b) at
least the Minimum Payments called for. You agree that any
payments on your Account made at Macy's store are handled by
Macy's as a convenience for you and are not deemed received or
accepted by us until received by us. Payment will be credited as
of date of receipt at the address on the payment stub of your
Statement if received by 9:00 am Eastern Time Monday through
Friday (otherwise next business day), but if payment is not in US
dollars, not accompanied by payment stub or not received at that
location, credit may be delayed up to five days.
4. No Finance Charge Feature (Club Account): No Finance Charge
will be assessed on your Club Plan in any billing period during
which the payment is at least equal to the Minimum Payment due as
shown on the statement. If your Account is 2 or more payments
past due, the entire balance will be subject to a Finance Charge
as outlined in Paragraphs 5 and 6 below.
5. Finance Charges: When there is a balance subject to Finance
Charge under any Plan on your Account, the FINANCE CHARGE will be
computed by applying a daily periodic rate of .05918% (ANNUAL
PERCENTAGE RATE 21.6%) to the balance subject to Finance Charge.
In MT, the daily periodic rate will be .05753% (ANNUAL PERCENTAGE
RATE 21%). In IA, the daily periodic rate will be .05424%
(ANNUAL PERCENTAGE RATE 19.8%). In ME, MN, NC and WI the daily
periodic rate will be .04931% (ANNUAL PERCENTAGE RATE 18%). A
minimum FINANCE CHARGE of $.50 will be assessed for any billing
period in which a FINANCE CHARGE that results from application of
the daily periodic rate would be less than $.50 except in ME and
NC there will be no minimum FINANCE CHARGE.
6. Balance Subject to Finance Charge: We will figure the Finance
Charge on your Account for each Plan each day by multiplying the
daily balance by the applicable daily periodic rate. At the end
of the billing period we will add up the results of these daily
calculations to get the total Finance Charge for the billing
period. The daily balance will be determined on each day by
first adding the following to the previous day's balance: any
purchases made (except current purchases are not added in ME or
NC), unless, at our option, we post a purchase at a later date,
any fees or other charges imposed on that day, and the Finance
Charge applied at the daily periodic rate to the pervious day's
balance, and then subtracting any payments and credits made on
that day. We will not include in the daily balance any unpaid
Finance Charge in NC, any Late Payment Fee in WI, or the cost of
credit insurance.
7. Grace Period for Avoidance of Finance Charge: If you have a
balance due on more than one Plan, the disclosure below applies
to each Plan. In all states except ME and NC, Finance Charges
begin to accrue as of the date a purchase is posted to your
Account. Therefore, a Finance Charge will appear on your
Statement each month, if there is a balance due, including the
first Statement you receive for new purchases. However, you can
avoid paying the Finance Charge shown on a Statement if (i) the
Previous Balance shown on that Statement is zero (or is a credit
balance) or the sum of the payments and credits shown on that
Statement equals or exceeds that Previous Balance, and (ii) you
make payments (and/or receive credits) by the Payment Due Date
shown on that Statement which equal or exceed the New Balance
minus the Finance Charge shown on that Statement. In ME and NC,
no Finance Charge is imposed in any billing period (1) in which
there is no balance at the beginning of the billing period (the
"Previous Balance" shown on your Statement) or (2) in which the
sum of your payments and credits is at least equal to the
Previous Balance. In these cases, new purchases in ME and NC do
not incur a Finance Charge in the billing period when they are
made or if they are paid within 25 days after the Billing Date.
In all other cases, in ME and NC new purchases do not begin to
accrue a Finance Charge until the start of the period following
the billing period in which they are made.
8. Minimum Payment: You agree to pay the Minimum Payment each
time we send you a Statement plus in each case, any past due
amount(s).
The Minimum Payment for Flexible charges will be the greater of
$5 or 5% of the New Balance rounded up to the next whole dollar
amount. When your new Balance for Flexible charges is less than
$5 you must pay us your total New Balance.
The Minimum Payment for TOP charges is based upon the highest
balance of your TOP Plan as follows:
Highest Minimum Highest Minimum
New Balance Payment New Balance Payment
$ .01 $4.99 New Balance $351.00 $380.99 $19.00
$5.00 $100.99 $5.00 $381.00 $400.99 $20.00
$101.00 $300.99 $5.00 plus $1.00 for $401.00 $420.99 $21.00
each $20.00 increment $421.00 $450.99 $22.00
or part thereof over $451.00 $460.99 $23.00
$100.99
$301.00 $340.99 $17.00 $461.00 $480.99 $24.00
$341.00 $350.99 $18.00 $481.00 $600.99 $25.00
When the highest New Balance equals or exceeds $601.00 the
Minimum Payment for TOP charges will increase by $5.00 for each
$120.00 of additional New Balance until the New Balance exceeds
$1,000.99. When the highest New Balance equals or exceeds
$1,001.00 the Minimum Payment or TOP charges will be $30.00 plus
$2.50 for each $75.00 of additional New Balance or part thereof.
Since the Minimum Payment for qualifying major purchases is based
on the highest New Balance in the Account until the New Balance
is paid in full, that Minimum Payment will not decrease as the
New Balance decreases but it will increase if a new purchase
increases the New Balance above a previous high.
The Minimum Payment for Club charges will be the greater of $20
or 1/12th of the highest New Balance of your Account rounded up
to the nearest whole dollar amount since it last had a $0
balance. When your New Balance for Club charges is less than $20
you must pay us your total New Balance.
You may at any time pay your entire balance in full or more than
the Minimum Payment.
9. Change in Terms/Change in Address: We may change any term of
this Agreement or add a new term at any time, including changes
in the minimum payment schedule(s) or the Finance Charge rates,
and may apply the new terms to any unpaid balances, as well as to
any future balances, unless prohibited by applicable law. When
required by applicable law, we will mail you prior notice of the
change(s). In NJ, prior notice of any increase in Finance Charge
rates or amounts is required.
You agree to notify us promptly if you move. You understand that
your Account will be subject to the terms of this Agreement
applicable to your state of residency, unless we receive written
notice that you have moved to another state, in which case you
agree that your Account, including any unpaid balances, will be
subject to the terms of this Agreement applicable to the state of
your new address.
10. Special Payment Plans: From time to time we may offer special
promotional programs with respect to certain purchases on your
Account. These plans may include, but are not limited to,
deferred payment, skip payment and finance charge waiver plans.
These plans may be discontinued at any time.
11. Credit Reports and Account Information: You give us
permission to request information from you and to make whatever
inquiries we consider necessary and appropriate (including
requesting a consumer report from consumer reporting agencies) in
considering your Application and for the purposes of any updates,
renewals or extensions of credit or reviewing or collecting your
Account. Upon your request to us at P.O. Box 8109, Mason, OH
45040 we will inform you of the name and address of each consumer
reporting agency from which we obtained a consumer report
relating to you. We may also obtain information about your
credit worthiness and employment from others and may furnish
information concerning your Account as well as information
concerning you to consumer reporting agencies and to other proper
parties. You acknowledge and agree that we are authorized at any
time, to the fullest extent permitted by applicable law, to allow
Macy's complete access to information in our possession
concerning you or your Account.
12. Returned Check Fee: In all states except CA, IA, ME, NC, PA
and WI, we may impose a Returned Check Fee of $20.00 if any check
sent to us in payment on your Account is returned to us unpaid by
your bank. The Returned Check Fee will be $10.00 in CA and IA
and $15.00 in WI. There will be no Returned Check Fee in ME, NC
and PA.
13. Late Payment Fee: In all states except IA, ME, NC, PA and WI,
we may impose a Late Payment Fee of $15.00 ($10.00 in CA) if your
Minimum Payment is not received by the Payment Due Date shown on
your current Statement. In IA, ME, and PA no Late Payment Fee
will be imposed. In NC and WI, the Late Payment Fee we may
impose is described below. We reserve the right to waive all or
any part of this Late Payment Fee in case of certain
delinquencies. If we do, we will not lose our right to impose a
Late Payment Fee in future billing periods. In NC, if your
Minimum Payment is not received within 30 days after the Payment
Due Date shown on your current Statement, we may impose a Late
Payment Fee of $5.00. In WI, if your Minimum Payment is not
received within 5 days after the Payment Due Date shown on your
current Statement we may impose a Late Payment Fee of $10.00,
except we will not impose a Late Payment Fee in any billing
period in which a $.50 minimum FINANCE CHARGE is imposed.
14. Security Interest: Except in MO (on any purchase under $150),
NC and NY, we will have a purchase money security interest in all
merchandise purchased on your Account until such merchandise is
paid in full. If you do not make your Minimum Monthly Payment on
time we may repossess only the merchandise which has not been
paid in full to the extent permitted by law. We agree that no
security interest is or will be retained or acquired under this
Agreement in any real property which is used or is expected to be
used as your dwelling.
15. Our Rights: Subject to the requirements or limitations of
applicable law, we may do any of the following (a) declare the
entire indebtedness due and payable on any Plan if you fail to
make any required payments when due on any Plan (b) charge
reasonable attorney's fees on the amount owing on your Account
(in NJ 20% on the first $500 and 10% on any remainder of this
amount) plus allowable court costs, if your Account is sent for
collection to an attorney who is not our salaried employee, (c)
limit the amount of credit extended under your Account or
terminate your Account in which case the terms of this Agreement
will apply until full payment of the amount owing on your Account
including Finance Charges to the date payment is received, and
(d) accept, without losing our rights under this Agreement or
otherwise, late or partial payments or check or money orders
marked payment in full.
16. Credit Cards: The Credit Card issued to you by us remains our
property and you will surrender it to us upon demand. You agree
to promptly notify us if your Credit Card is lost or stolen or of
the unauthorized use of your Credit Card. Notify us by writing
to P.O. Box 8102, Mason, OH 45040 by calling us at 1-800-743-6229
or by visiting any Macy's store. You may be liable for up to $50
for unauthorized use before you notify us. If you give us notice
orally you agree to confirm it in writing. Subject to the
requirements of applicable law, we may cancel your Account if you
fail to notify us immediately of any of these events.
17. Governing Laws: This Agreement is entered into in Ohio. We
make decisions about granting credit, extend credit from and
accept payments at our offices in Ohio. Ohio law and applicable
federal law will govern this Agreement and your Account.
18. Assignment: We may assign your Account and our rights under
this Agreement to our affiliates or some other financial
institution or company without prior notice to you. Following
such assignment, that entity will take our place in this
Agreement.
19. Entire Agreement: This is the entire Agreement governing
your Account. This Agreement may not be amended except in
accordance with the provisions of paragraph 9 of this Agreement.
20. Telephone Monitoring: We treat every customer call
confidentially. To ensure that you receive accurate and
courteous customer service, on occasion, your call may be
monitored by a second employee.
21. Disputed Amounts: All written communications concerning
disputed amounts, including any check or other payment instrument
in an amount less than the full amount due that you send to us
marked "paid in full", you tender with other conditions or
limitations, or you otherwise tender as full satisfaction of a
disputed amount, must be sent to us at the address for billing
inquiries shown on the billing statement.
Marketing Information: You give us and any holder of this
Agreement permission to furnish information about you (usually
only your name, address and other identifying data) to other
persons who may use this information to solicit you for products
or services. You can request that we discontinue furnishing this
information by calling us at 1-800-743-6229 or writing to us at
P.O. Box 8102, Mason, OH 45040.
GE Capital Consumer Card Co., 4605 Duke Dr., Mason, OH 45040
By
Kevin Knight, Executive Vice President and General Manager
Notice: For important information regarding your right to dispute
billing errors under federal law see the "Billing Rights" Notice
below.
YOUR BILLING RIGHTS - KEEP THIS NOTICE FOR FUTURE USE
This notice contains important information about your rights and
our responsibilities under the Fair Credit Billing Act.
Notify Us In Case of Errors or Questions About Your Bill
If you think your bill is wrong, or if you need more information
about a transaction on your bill, write us on a separate sheet at
the address shown on your Statement under Billing Inquiries.
Write to us as soon as possible. We must hear from you no later
than 60 days after we sent you the first bill on which the error
or problem appeared. You can telephone us, but doing so will not
preserve your rights.
In your letter, give us the following information:
- -Your name and account number.
- -The dollar amount of the suspected error.
- -Describe the error and explain, if you can, why you believe
there is an error. If you need more information, describe
the item you are not sure about.
Your Rights and Our Responsibilities After We Receive Your
Written Notice
We must acknowledge your letter within 30 days, unless we have
corrected the error by then. Within 90 days, we must either
correct the error or explain why we believe the bill was correct.
After we receive your letter, we cannot try to collect any amount
you question, or report you as delinquent. We can continue to
bill you for the amount you question, including finance charges,
and we can apply any unpaid amount against your credit limit.
You do not have to pay any questioned amount while we are
investigating, but you are still obligated to pay the parts of
your bill that are not in question. If we find that we made a
mistake on your bill, you will not have to pay any finance
charges related to any questioned amount. If we didn't make a
mistake, you may have to pay finance charges, and you will have
to make up any missed payments on the questioned amount. In
either case, we will send you a statement of the amount you owe
and the date that it is due. If you fail to pay the amount that
we think you owe, we may report you as delinquent. However, if
our explanation does not satisfy you and you write to us within
ten days telling us that you still refuse to pay, we must tell
anyone we report you to that you have a question about your bill.
And, we must tell you the name of anyone we reported you to. We
must tell anyone we report you to that the matter has been
settled between us when it finally is.
If we don't follow these rules, we can't collect the first $50 of
the questioned amount, even if your bill was correct.
Special Rule for Credit Card Purchases
If you have a problem with the quality of property or services
that you purchased with a credit card, and you have tried in good
faith to correct the problem with Macy's, you may have the right
not to pay the remaining amount due on the property or services.
There are two limitations on this right
(a)You must have made the purchase in your home state or, if not
within your home state, within 100 miles of your current
mailing address; and
(b)The purchase price must have been more than $50
These limitations do not apply if we own or operate Macy's, or if
we mailed you the advertisement for the property or services.
MACY'S W (4/96) 1059 AN
Schedule 1
Major Credit and Collection Policies
All of the following policies apply with respect to both new
and existing Macy's Accounts
1. All aspects of Credit Promotions including:
Terms
Pre-Screens
In Store Procedures
Credit marketing programs materials (other than
advertising)
Target Marketing for credit purposes
2. Credit Approval Scorecards, Cut-offs and Guideline
Assignments
3. Judgmental Queues and Criteria
4. Authorization Algorithm
5. Deferred finance charge sales exceeding 12% of outstandings;
or "future obligations" sales exceeding the greater of
(i) 5% of outstandings or (ii) the percentage of
outstandings which constitute "future obligations" sales on
the date hereof.
6. Collection/Recovery Strategy, Coverage and Agencies
7. Writeoff, Aging and Cure Parameters
8. All Account Terms and Credit Card Documentation
Schedule 1.1
GE Bank Reserve Calculation
[OMISSION]
Schedule 2.3(b)
Jordan Marsh and Broadway Duplicate Account Sharing
[OMISSION]
Schedule 3.1
Daily Settlement Statement
[OMISSION]
Schedule 3.4
Monthly Settlement Statement
[OMISSION]
Schedule 4.8
Routine Maintenance for Cross-Shopping
[OMISSION]
Schedule 5.1A
Interim Budget for February to July 1996
[OMISSION]
Schedule 5.1B
Interim Budget Money Cost Adjuster
[OMISSION]
Schedule 5.2
Budget Format
[OMISSION]
Schedule 5.4(b)
Monthly Adjuster Formula
[OMISSION]
Schedule 5.4(e)
Projected Monthly Discount Money Cost Adjuster
[OMISSION]
FDS Companies
Legal Names and Executive Offices
Legal Entity Tradename(s) Executive Offices Principal Place of
Business
Federated Federated 151 West 34th St. 151 West 34th St.
Department Merchandising New York, New York New York, New York
Stores, Inc. (FM) 10001 10001
Federated Product and and
Development (FPD) 7 West Seventh St. 7 West Seventh St.
Cincinnati, Ohio Cincinnati, Ohio
45202 45202
FDS National Bank n/a 9111 Duke Boulevard 9111 Duke Blvd.
Mason, Ohio 45040 Mason, Ohio 45040
Macy's East, Inc. Macy's 151 West 34th St. 151 West 34th St.
New York, New York New York, New York
10001 10001
FACS Group, Inc. n/a 9111 Duke Boulevard 9111 Duke Blvd.
Mason, Ohio 45040 Mason, Ohio 45040
Macy's West, Inc. Macy's 50 O'Farrell St. 50 O'Farrell St.
San Francisco, San Francisco,
California 94108 California 94108
Bullock's, Inc. Bullock's 50 O'Farrell St. 50 O'Farrell St.
Macy's San Francisco, San Francisco,
California 94108 California 94108
Broadway Stores, Macy's 50 O'Farrell St. 50 O'Farrell St.
Inc. San Francisco, San Francisco,
California 94108 California 94108
MSS-Delaware, Aeropostale 131 Market St. 131 Market St.
Inc. Charter Club Newark, New Jersey Newark, New Jersey
07102 07102
Schedule 6.9
FDS Companies Litigation
I. Government Authority Actions
A. Orders enjoining Business:
1. Macy's New York Fair Credit Billing Act Consent
Order with the Federal Trade Commission. (Docket No. C-
3130) (1983).
2. Bamberger's (former division of R.H. Macy & Co.,
Inc.) Assurance of Voluntary Compliance with Office of
the Attorney General, Commonwealth of Pennsylvania, in
respect of debt collection practices. (1978)
B. Macy Letter Agreements
R.H. Macy Letter of Understanding with the Federal
Trade Commission in respect of credit balances (1976).
C. FDS orders which applied to operations of Bullock's and
I. Magnin divisions.
1. Federal Trade Commission Consent Order in respect
to Fair Credit Reporting Act notification obligations
when credit denied based on information in a consumer
report. (FTC Docket No. 3175) (1985).
2. USA v. Federated Department Stores, Inc. Consent
Judgment in respect to consideration of income under the
Equal Credit Opportunity Act (USDC Southern District
Ohio, Western Division, Civil Action No. C-1-78-730)
(1978).
3. Federal Trade Commission Consent Order in respect
of credit balances (FTC Docket No. C-2880) (1977).
II. Investigations
The FDS Companies are involved in a pending
investigation by the Federal Trade Commission ("FTC")
concerning notifications under the Fair Credit Reporting
Act when employment has been denied based in whole or in
part on information in a consumer report.
Schedule 7.8
GE Bank Litigation
None
ANNEX I
Definitions: Certain capitalized terms used herein not
defined herein shall have the meaning given to them under the
FACS Services Agreement or the GE Capital Services Agreement.
SECTION 1
COLLECTION SERVICES
1.1 GE Bank Services
. GE Bank shall provide the Collection Services
(including, without limitation, delivery of the reports described
in Section 6(b) hereof) and shall comply with the Credit and
Collection Policy in providing the Collection Services during the
term of the Program Agreement unless GE Bank's right to provide
the Collection Services is terminated in accordance with this
Annex I. GE Bank shall operate credit operations and facilities
in a high quality, ethical manner, in such a way as not to
disparage or embarrass the FDS Companies or any of their names,
and with a level of Collection Services to the holders of
GE/Macy's Accounts that is not less than the level of Collection
Services provided to the holders of GE/Macy's Accounts by GE Bank
prior to the date hereof. The parties hereto acknowledge and
agree that notwithstanding any other provisions of this Annex I
to the contrary, all obligations of GE Bank to perform the
Collection Services shall be subject to the prior satisfaction of
the FDS Information Condition.
1.2 Service Standards
. GE Bank shall use its best efforts to (i) design
systems to achieve, (ii) employ qualified personnel to meet, and
(iii) otherwise satisfy on average (determined with respect to
each FDS full fiscal quarter commencing after completion of the
relevant conversion) the service standards for Collection
Services specified in Section 6 hereof (the "Service Standards").
1.3 Expenses
. Expenses of GE Bank incurred in providing the
Collection Services shall be expenses of the Program and included
as an expense item in each Operating Expense Budget.
1.4 Compliance with Law
. GE Bank shall implement and execute the Credit and
Collection Policy in compliance with all requirements of
applicable Law and shall perform the Collection Services in
compliance with all requirements of applicable Law, except, in
either case, to the extent a failure of GE Bank to so implement,
execute and perform in compliance with applicable Law is due
solely to (i) the failure of the FDS Information Condition to be
satisfied or (ii) GE Bank following specific written instructions
of an Authorized FDS Person.
1.5 Systems
. During the Term, GE Bank shall utilize the FACS
Credit System and the GE Credit Software and shall comply with
the terms of Sections 4.2 and 6 of the FACS Services Agreement in
providing the Collection Services.
1.6 Cooperation
. GE Bank agrees to cooperate with the FDS Companies
in resolving all disputes with GE/Macy's Account Debtors.
SECTION 2
REPRESENTATIONS AND WARRANTIES
GE Bank represents and warrants to the FDS Companies,
on the date hereof and on each date that GE Bank provides any of
the Collection Services that:
2.1 Facilities
. GE Bank (i) has all the necessary facilities,
equipment and personnel to provide the Collection Services in
accordance with the terms of this Annex I, and (ii) has and shall
maintain disaster recovery procedures and systems with respect to
the GE/Macy's Accounts at least comparable to those maintained on
the date hereof for such accounts.
2.2 Systems
. GE Bank has the right to use the GE Credit System to
provide the Collection Services without infringement or violation
of the intellectual property, trademark, trade secret, copyright,
patent or other rights of others.
SECTION 3
SERVICING TERMINATION
3.1 GE Bank Servicing Termination Events
. It shall be a "GE Bank Servicing Termination Event"
if any of the events set forth below shall occur and be
continuing and remain unremedied prior to the expiration of the
specified period.
(a) Service Standards Default. If GE Bank shall
consistently fail to perform its obligations under Section 1.2,
and such consistent failure to perform shall (i) have a material
adverse change on the quality or financial condition of the
GE/Macy's Accounts, taken as a whole (a "Material Adverse
Effect") or a material adverse effect on the Program, and (ii)
remain unremedied for a period of seventy-five (75) days after
delivery of written notice thereof by FDS to GE Bank.
(b) Credit and Collection Policy Defaults.
(i) If GE Bank shall fail to perform the
Collection Services in accordance with any provision of the
Credit and Collection Policy where such failure is or results in
a violation of applicable Law, and such failure is not remedied
within seven (7) days after delivery of written notice thereof by
FDS to GE Bank, provided that if, notwithstanding GE Bank's
diligent, best efforts to cause its employees and agents to
perform the Collection Services so as not to violate applicable
Law, certain employees or agents have failed to so perform the
Collection Services, the time period set forth in this
Section 3.1(b)(i) shall be extended, but not by more than 10
days, as long as GE Bank continues to use diligent, best efforts
to remedy such failure.
(ii) If GE Bank shall fail to perform the
Collection Services in accordance with any provision of the
Credit and Collection Policy where such failure is not or does
not result in a violation of applicable Law, and such failure
(x) has a Material Adverse Effect and (y) is not remedied within
thirty (30) days after delivery of written notice thereof by FDS
to GE Bank.
(iii) If GE Bank shall consistently fail to
perform any of the Collection Services in accordance with the
applicable provisions of the Credit and Collection Policy where
such failure is not or does not result in a violation of
applicable Law and does not have a Material Adverse Effect, and
is not remedied within seventy-five (75) days after delivery of
written notice thereof by FDS to GE Bank;
provided that each of the time periods in this
Section 3.1(b) shall be extended upon agreement of the parties,
but not by more than 60 days, so long as GE Bank is using its
diligent, best efforts to remedy such failure in the event that
(x) the provision of the Credit and Collection Policy that GE
Bank has failed to perform is a provision of the Credit and
Collection Policy which one of the FDS Companies has unilaterally
modified pursuant to Section 4.4 of the Program Agreement and
(y) the reason GE Bank has been unable to so perform is because
the GE Bank credit system requires modifications in order to
implement such unilaterally modified provision of the Credit and
Collection Policy.
(c) Credit Systems Default. If GE Bank shall
fail to perform all or substantially all of the Collection
Services for a period of seven (7) consecutive days due to a
failure of the GE Bank credit system or otherwise.
(d) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to GE Bank.
(e) Material Adverse Change. If there shall have
been a material adverse change to the business, financial
condition, or operations of GE Bank which change has a material
adverse effect on the ability of GE Bank to fulfill its
obligations hereunder pursuant to the terms hereof.
(f) Other Breaches. If GE Bank shall breach any
of its obligations under this Annex I or any of its
representations or warranties set forth in the Agreement or this
Annex I (other than obligations, representations or warranties
the breach of which is otherwise addressed in this Section 3.1)
and such breach has a Material Adverse Effect and is not cured
within 30 days after delivery of written notice thereof by FDS to
GE Bank.
3.2 FDS Remedies
. Subject to the provisions of Section 3.5, upon
the occurrence of a GE Bank Servicing Termination Event, FDS may,
in addition to any other remedies it may have at law or equity,
terminate GE Bank's right to perform the Collection Services by
delivering a written notice of termination to GE Bank.
3.3 Excuse For Non-Performance
. In the event GE Bank (the "Performing Party") is
unable to comply with or perform any of its obligations hereunder
solely due to (i) any FDS Company (the "Non-Performing Party")
failing to perform its obligations under the Program Agreement or
any Transaction Document or (ii) the quality, nature, timeliness,
completeness or accuracy of any goods, services or data provided
by the Non-Performing Party to the Performing Party, the
Performing Party shall be excused from such performance (and no
event of default shall be deemed to have occurred) provided that
the Performing Party shall (a) notify the Non-Performing Party as
soon as practicable describing the default and explaining how the
Performing Party's performance has been affected; (b) use
reasonable efforts to mitigate the effect of the Non-Performing
Party's failure; and (c) perform its obligations hereunder to the
extent reasonably practicable. Both parties shall use diligent,
uninterrupted efforts to cure the failure and eliminate the
effects thereof.
3.4 Post-Termination Procedures
. Upon termination or expiration for any reason of GE
Bank's right to provide the Collection Services pursuant to this
Annex I, the parties shall comply with their respective post-
termination obligations, if any, as set forth below:
(a) Extended Servicing. The FDS Parties may
elect to require GE Bank to continue to provide all or a portion
of the Collection Services to the GE/Macy's Accounts for up to a
maximum of six (6) months following the effective date of
termination. In the event of an election by the FDS Parties, GE
Bank shall provide Collection Services as described herein as an
expense of the Program.
(b) Transition. Subject to the provisions of
Sections 3.4(a) and 3.5, FACS and GE Bank shall cooperate in good
faith so that GE Bank is able to promptly accomplish the
transition of the Collection Services in an accurate, orderly and
efficient manner. In this regard, GE Bank agrees that it will
provide FACS and its designees, officers, employees, accountants,
and other representatives with all access rights to the GE Bank
credit system as reasonably required by FACS in order to enable
the transition of the Collection Services in a prompt, accurate,
orderly and efficient manner. GE Bank agrees that in the event
of any such transition, it shall use commercially reasonable
efforts to effect such transition in an accurate, orderly and
efficient manner, except to the extent such transition fails to
be accurate, orderly and efficient due solely to the failure of
transition information provided by FACS at the time to be
accurate in all material respects.
3.5 Special Provisions
. In the event of a GE Bank Servicing Termination
Event pursuant to Section 3.1, GE Bank shall elect, by delivering
written notice to FDS within 20 days after the effective date of
the GE Bank Servicing Termination Event, either (i) to terminate
the Program Agreement or (ii) to allow FDS or its Affiliates to
perform the Collection Services. In the event of a GE Bank
Servicing Termination Event, if GE Bank elects to allow FDS or
its Affiliates to perform the Collection Services (x) GE Bank
shall retain the right to terminate the Program Agreement at any
time during which FDS or its Affiliates is performing the
Collection Services and (y) neither FDS nor any of its Affiliates
may commence performing the Collection Services until the date,
if any, that they are Deemed Prepared (as hereafter defined) to
perform the Collection Services. If FDS and/or its Affiliates
are not Deemed Prepared to perform the Collection Services by the
later of (A) six months after the effective date of the GE Bank
Servicing Termination Event and (B) the date that no GE Bank
Servicing Termination Event exists, then FDS shall lose the right
to perform (either itself or through an Affiliate) the Collection
Services due to the GE Bank Servicing Termination Event. In the
event of a subsequent GE Bank Servicing Termination Event, the
provisions of this Section 3.5 shall again be applicable.
"Deemed Prepared" means, with respect to the Collection Services
either (i) GE Bank and FDS have agreed that FDS or its Affiliates
are reasonably well prepared to perform such services or (ii) an
arbitrator, selected at the request of FDS by the President of
the AAA, has determined what steps FDS or its Affiliates must
take to be reasonably well prepared to perform such services at a
level at least as high as GE Bank is required to perform
hereunder and FDS or its Affiliates have taken such steps.
SECTION 4
AUDIT AND ACCESS
The FDS Parties shall have all such rights to access
the premises of GE Bank, the GE Bank credit system and audit the
records of GE Bank as may be necessary or desirable to permit the
FDS Parties to fulfill all of their responsibilities, and
exercise all of their rights, under the Transaction Documents.
Without limiting the generality of the foregoing, GE Bank shall
permit the FDS Parties and their designees, officers, employees,
attorneys, accountants and/or other representatives during normal
business hours with reasonable advance notice, in such a manner
as to minimize interference with the normal business operations
of GE Bank (i) to observe, monitor and obtain information
regarding the GE/Macy's Accounts and to observe and monitor the
implementation by GE Bank personnel of the Credit and Collection
Policy, (ii) to observe whether the Collection Services and the
Credit and Collection Policy are being applied in compliance with
the provisions of the Program Agreement and (iii) to examine,
audit, inspect, copy and make copies of all of the data, records,
files, and books of account under the control of GE Bank (whether
received on computer, electromagnetic storage vehicles, paper,
film or other medium) and relating strictly to the GE/Macy's
Accounts and to the back-up documentation relating to the reports
provided hereunder by GE Bank to the FDS Parties. The costs and
expenses of any exercise by the FDS Parties of their rights
hereunder shall be borne by the FDS Parties. Notwithstanding any
other provision of this Agreement, the FDS Parties shall not have
any access or audit rights with respect to any information in the
possession of GE Bank regarding services provided by GE Bank to
any other Person.
SECTION 5
INDEMNIFICATION
5.1 Indemnification by GE Bank
. In addition to its indemnities under
Section 10.2 of the Program Agreement, GE Bank shall indemnify,
defend and hold harmless each of the FDS Indemnified Parties from
and against any and all Damages caused by, relating to or arising
out of (i) any act or omission by GE Bank or its Affiliates,
employees or agents in performing, implementing and/or executing
the Collection Services and the Credit and Collection Policy,
except to the extent (x) the Credit and Collection Policy
specifically describes how such act should be implemented and GE
Bank implemented such act in conformity with such description
(other than modifications to the Credit and Collection Policy
(including the Major Credit and Collection Policies) made by GE
Bank without the approval of the Policy Committee pursuant to
Section 4.4 of the Program Agreement) or (y) any such
performance, implementation or execution was effected in
accordance with specific written instructions from an Authorized
FDS Person or (z) the Damages arising out of such act or omission
are due solely to the failure of the FDS Information Condition to
be satisfied; and (ii) notwithstanding the provisions of Section
5.1(i) hereof, any judgmental decisions (i.e., any determination
or decision made which is not specifically dictated by the Credit
and Collection Policy) effected by GE Bank or its employees or
agents in effecting the Collection Services.
5.2 Indemnification by the FDS Parties
. The FDS Parties shall indemnify, defend and
hold harmless the GE Indemnified Parties from and against any and
all Damages caused by, relating to or arising out of any act or
omission by GE Bank or its employees or agents in performing,
implementing and/or executing the Collection Services and the
Credit and Collection Policy effected in accordance with specific
written instructions from an Authorized FDS Person.
SECTION 6
(a) Service Standards.
Service Category Standard
(all days are Business Days,
measured from but including
date file is received by
GE Bank; all standards
specified are averages
calculated over a measurement
period of a fiscal quarter)
Inbound collection calls -
speed of answer 20 seconds
Percent of calls abandoned 4 percent
Bankruptcy Coding Upon account
identification
(generally 1 day)
Customer Correspondence - response 7 days
and action taken
FCB inquiry acknowledged 5 days
FCB resolution According to Fair
Credit Billing Act
Presidential complaints - customer 2 days (best efforts
contact same day)
Contacts per collection account 2 per month
(letter to customers equivalent to
contact)
Written off accounts placed with 2 days
agencies
Recovery account recall if no 14 days
payment within 6 months
(b) GE Bank Reports. GE Bank shall provide the
following reports:
GE Bank Reports
Collection Reports
Davox -Monthly
1. Management Summary Report Summarizes agent activity on all lists
2. System Summary Report Calling results by list plus
summary for all lists
Rothenberg-Monthly
1. Current Inventory (Report 2) Inventory of all accounts
2. Account Summary by Status Detail information on single or
(Report 3) group of status
3. Agency Payment Aging Payments received from all
(Report 5) agencies by placement month
4. Monthly Inventory (Report 8) Comparison of current month to
previous month inventory
5. Monthly Bankruptcy Summary Count and balance of Chapter 7
(Report 10) and 13 accounts
6. Agency Financial Comparison Agency performance by placement
(Report 19) and group code
7. Score Performance by Summary of accounts by score
Chargeoff Date (Report 44) range and month
*All reports by store division
AMENDED AND RESTATED TRADE NAME AND SERVICE MARK
LICENSE AGREEMENT
AMENDED AND RESTATED TRADE NAME AND SERVICE MARK LICENSE
AGREEMENT, dated as of June 4, 1996, by and among Federated
Department Stores, Inc. ("Licensor"), GE Capital Consumer Card Co.
("GE Bank") and General Electric Capital Corporation ("GE
Capital"). GE Bank and GE Capital may be referred to herein
individually as a "Licensee" or collectively as "Licensees."
Capitalized terms used, but not otherwise defined herein, have the
meanings set forth in the Amended and Restated Credit Card Program
Agreement dated as of the date hereof (the "Amended and Restated
Program Agreement").
WHEREAS, Monogram Bank, USA ("Monogram"), R.H. Macy &
Co., Inc. ("Macy") Macy's Northeast, Inc. ("Macy's Northeast"),
Macy's South, Inc. ("Macy's South"), Macy's California, Inc.
("Macy's California"), Bullock's, Inc. ("Bullock's"), I. Magnin,
Inc. ("I. Magnin") and Macy Specialty Stores, Inc. ("Macy's
Specialty") entered into a Credit Card Program Agreement dated as
of May 10, 1991 (the "Program Agreement");
WHEREAS, GE Capital, Macy, Macy Credit Corp., Macy
Receivables Funding Corp., Macy's California, Macy's Northeast,
Macy's South, Bullock's, I. Magnin, Macy Receivables Master
Servicing Corp. and Macy's Specialty entered into a Commercial
Accounts Agreement dated as of May 10, 1991 (the "Commercial
Accounts Agreement");
WHEREAS, contemporaneously with the execution of the
Program Agreement and the Commercial Accounts Agreement, Macy,
Monogram and GE Capital entered into a Trade Name and Service Mark
License Agreement dated as of May 10, 1991 (the "License
Agreement");
WHEREAS, contemporaneously herewith, GE Bank (as the
successor to Monogram), Licensor (as the successor to Macy), FDS
National Bank ("FDS Bank"), Macy's East (as the successor to
Macy's Northeast and Macy's South), Macy's West (as the successor
to Macy's California), Bullock's, Broadway Stores, Inc., FACS
Group, Inc. ("FACS") and MSS-Delaware, Inc. ( Macy's East, Macy's
West, Bullock's, Broadway Stores, Inc. and MSS-Delaware, Inc.
referred to hereinafter collectively as the "Store Group
Licensees" ) are entering into the Amended and Restated Program
Agreement amending and restating the Program Agreement in its
entirety;
WHEREAS, contemporaneously herewith, GE Capital,
Licensor and the Store Group Licensees are entering into the
Amended and Restated Commercial Accounts Agreement amending and
restating the Commercial Accounts Agreement in its entirety;
WHEREAS, contemporaneously herewith, GE Capital, FDS,
FACS and FDS Bank are entering into the GE Capital Services
Agreement for purposes of setting forth the terms and conditions
that will govern the provision of the GE Capital Services (as
defined therein) with respect to the FDS Serviced Accounts (as
defined therein); and
WHEREAS, Licensor, GE Bank and GE Capital desire to
amend and restate the Trade Name and Service Mark License
Agreement in its entirety.
NOW, THEREFORE, in consideration of the terms,
conditions and mutual covenants contained herein, and for other
good and valuable consideration, the sufficiency of which is
hereby acknowledged, Licensor and Licensees agree as follows:
1. Grant of License. Licensor hereby grants to
Licensees, and Licensees hereby accept from Licensor, upon the
terms and conditions set forth herein, a non-exclusive, royalty-
free license to use the trade names, corporate names, company
names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers
identified in Schedule A annexed hereto which have been licensed
to and used by the Store Group Licensees (each individually
referred to as a "Mark" and all collectively referred to as the
"Marks") in the United States of America and elsewhere, solely in
connection with the GE/Macy's Account Documentation, GE/Macy's
Commercial Account Documentation and such services or other
actions or activities in connection with the Program, the
Commercial Accounts Program and the GE Capital Services Agreement
(hereinafter collectively referred to as the "Services") as are
permitted by the Amended and Restated Program Agreement, the
Amended and Restated Commercial Accounts Agreement and the GE
Capital Services Agreement (the "License"). Any use of the Marks
by Licensees other than as specified herein and in the Amended and
Restated Program Agreement, the Amended and Restated Commercial
Accounts Agreement and the GE Capital Services Agreement without
Licensor's prior written approval, is prohibited. Each Mark shall
not be used with respect to any Store Group Licensee other than
the Store Group Licensee set forth on Schedule A hereto beside
such Mark.
2. Term. The term of the License granted herein shall
commence as of the date of execution of this Agreement by all
parties hereto, and shall terminate with respect to each Mark
individually, upon the later of (i) the date that Licensees own no
GE/Macy's Accounts, GE/Macy's Receivables, GE/Macy's Commercial
Accounts or GE/Macy's Commercial Receivables in connection with
which such Mark is used by Licensees hereunder, (ii) the date that
Licensees have no obligation to Service any GE/Macy's Accounts or
GE/Macy's Commercial Accounts under the Amended and Restated
Program Agreement or Amended and Restated Commercial Accounts
Agreement and (iii) the date that Licensees have no obligation to
Service any FDS Serviced Accounts and other FDS accounts under the
GE Capital Services Agreement. After termination of the Amended
and Restated Program Agreement, Licensees shall not use the Marks
for any purpose other than in connection with the Servicing and/or
collecting of GE/Macy's Accounts, GE/Macy's Receivables, GE/Macy's
Commercial Accounts, and GE/Macy's Commercial Receivables as to
which such Marks relate.
3. Restrictions and Quality Controls. The License to
use the Marks shall be subject to the following conditions and
restrictions:
(a) All displays of the Marks by Licensees shall
be solely in the form approved by and shall strictly conform to
all standards set by Licensor from time to time for its own
displays of the Marks and those of the Store Group Licensees. At
no time, without Licensor's prior written approval, shall any of
the Marks be used together or appear jointly in connection with
any GE/Macy's Account Documentation or GE/Macy's Commercial
Account Documentation, Service or otherwise. Licensor shall have
the unilateral right, at its sole discretion, to amend Schedule A
hereto by substituting a modified logo if such modified logo is
adopted by Licensor for all or a substantial portion of its own
business or that of any Store Group Licensee. If such
modification is made by Licensor, Licensor shall have the right to
require Licensees to substitute the modified logo form for the
prior logo form. Substitution of the modified logo by Licensees
shall be accomplished in accordance with Licensor's directions
which shall be reasonably calculated to minimize expense or
disruption to the business of Licensor and Licensees, but Licensor
may require that such substitution be completed by Licensees as
soon as 180 days after the date Licensor notifies Licensee that
the substitution is required. Licensor shall reimburse Licensees
for all reasonable costs and expenses incurred by any Licensee
arising solely as a consequence of such substitution of the
modified logo form; provided that Licensees shall reasonably
cooperate with Licensor in an attempt to minimize such costs.
(b) In utilizing the Marks, Licensees shall
include all notices and legends with respect to the Marks as are
or may be required by applicable Laws or which may be reasonably
requested by Licensor.
(c) Licensees shall at no time adopt or use,
without Licensor's prior written consent, any variation of the
Marks or any word or mark similar to or likely to be confused with
the Marks.
(d) Licensees shall comply in all material
respects with all Laws applicable to the use of the Marks by the
Licensees.
(e) Licensees shall not use any other trademarks,
trade names, corporate names, company names, business names,
fictitious names, trade styles, service marks, logos or other
business identifiers in conjunction with the Marks except to the
extent permitted by the Amended and Restated Program Agreement,
the Amended and Restated Commercial Accounts Agreement or the GE
Capital Services Agreement.
(f) Licensees shall utilize the Marks solely in a
manner consistent with the then-current practices of Licensor, and
in accordance with good trademark practice.
(g) Licensees shall not do anything or commit any
act which harms the goodwill or reputation of Licensor associated
with the Marks or prejudice or adversely affect the validity of
the Marks or Licensor's ownership thereof.
(h) Licensees shall, during the term of this
Agreement and after termination hereof, execute all such documents
as Licensor may request from time to time to confirm and enforce
Licensor's rights in the Marks and to ensure that all right, title
and interest in and to the Marks reside in Licensor, provided that
Licensor shall reimburse Licensees for any out-of-pocket costs and
expenses incurred in connection therewith.
4. Samples of Licensees' Products and Services and
Approvals by Licensor. (a) No GE/Macy's Account Documentation or
GE/Macy's Commercial Accounts provided by GE Bank or GE Capital
shall be used, distributed or made available to the public in any
manner by Licensees except upon the prior submission by Licensees
to Licensor of a reasonable number of free samples and Licensor's
prior written approval of Licensees' use of the Marks therein;
provided, that if Licensor has not responded within six Business
Days from receipt its approval shall be deemed to have been given.
Licensees shall annually provide Licensor with a reasonable number
of samples of all such GE/Macy's Credit Card Documentation so that
Licensor may assure itself of Licensees' maintenance of quality
standards.
(b) Licensees shall not use the Marks on any
service of any type other than as provided herein without
Licensor's prior approval, in Licensor's sole discretion.
5. Ownership. (a) Licensees hereby acknowledge
Licensor's ownership of Marks and agree not to take or cause any
actions to be taken which would interfere with Licensor's
ownership, use or registration thereof. Any and all goodwill
arising from use of the Marks under this Agreement shall inure
solely to the benefit of Licensor.
(b) Licensees agree that during the term of this
License and thereafter they will at no time claim any title to the
Marks or any right to use the Marks except as permitted by this
Agreement, the Amended and Restated Program Agreement and the GE
Capital Services Agreement, including, without limitation, by
making any assertion that any failure of Licensor to set standards
for, or police Licensees' use of, the Marks results in an
abandonment of Licensor's rights in the Marks or that Licensees
have any rights hereunder other than as licensees. Licensees
shall not during the term of this License or thereafter, directly
or indirectly question, attack, contest or, in any other manner,
impugn the validity of the Marks or Licensor's rights in and to
the Marks, or the License herein granted, including, without
limitation thereto, in any action in which enforcement of any
provision of this Agreement is sought; nor shall Licensees
willingly become a party adverse to Licensor in any litigation in
which any third-party is contesting the validity of the Marks or
Licensor's rights in and to the Marks.
6. Infringement. Licensees shall promptly bring to
Licensor's attention any infringements, dilutions, limitations or
unauthorized use of the Marks by others (collectively,
"Infringements") of which Licensees become aware. Licensor shall
in its sole discretion, take such steps as it deems reasonable in
the circumstances to abate such Infringements. Licensor shall
have the exclusive right, at its sole cost and expense, to
commence or prosecute any action on account of any such
Infringements, and Licensees agree to assist and cooperate with
Licensor, as Licensor may request, in connection with any such
action. Licensor shall have the sole right to settle such
Infringements and shall be entitled to all resulting damages
and/or other compensation paid by the infringer(s) except to the
extent necessary to reimburse any Licensee for any reasonable
costs and expenses incurred by it in connection with any action,
including, but not limited to, reasonable attorneys' fees.
7. Indemnification. (a) In addition to any
indemnification contained in the Amended and Restated Program
Agreement, the GE Capital Services Agreement and the Amended and
Restated Commercial Accounts Agreement, Licensor, at its sole cost
and expense, shall defend and indemnify and save and hold
Licensees (which for the purposes of this indemnification includes
Licensees, their subsidiaries, divisions, affiliated companies and
the officers, directors, employees and agents of each of them)
harmless from and against any and all liabilities, claims, causes
of action, suits, damages and expenses (including reasonable
attorneys' fees) for which Licensees become liable, or may incur
or be compelled to pay by reason of claims that Licensees' use of
the Marks in accordance with this Agreement violates trademark
rights of a third party.
(b) Licensees, at their sole cost and expense,
shall defend and indemnify and save and hold Licensor (which for
the purposes of this indemnification includes Licensor, its
subsidiaries, divisions, affiliated companies and the officers,
directors, employees and agents of each of them) harmless from and
against any and all liabilities, claims, causes of action, suits,
damages and expenses (including reasonable attorneys' fees) for
which Licensor becomes liable, or may incur or be compelled to pay
by reason of claims relating to use of the Marks by Licensees or
their permitted sublicensees (i) other than as permitted by the
Amended and Restated Program Agreement, the Amended and Restated
Commercial Accounts Agreement, and the GE Capital Services
Agreement and (ii) by Licensor at the request or direction of
either Licensee, except claims subject to indemnification under
Section 7(a) hereof.
8. Effects of Termination. Upon the termination of
this Agreement, (i) all rights of Licensees with respect to the
Marks under the License granted herein shall terminate and
automatically and immediately revert to Licensor and
(ii) Licensees shall immediately discontinue the use of the Marks,
provided, however, that Sections 3(c), 3(h), 5(b) and 7 hereof
shall survive termination of this Agreement.
9. Relationship. Licensees shall act independently
under this Agreement and shall not be deemed expressly or by
implication to be an agent, joint-venturer, partner, employee or
servant of Licensor for any purpose whatsoever and Licensees have
no authority (and shall not hold themselves out as having any
authority) hereunder to bind Licensor or the Store Group Licensees
in any manner. Licensees' employees shall not be deemed
Licensor's employees for any purpose. Licensor shall be
responsible for all duties, tariffs, taxes, reports, fees and
other similar charges or requirements imposed with respect to the
use of the Marks under this Agreement other than (i) Licensees'
income taxes and (ii) state franchise taxes to which Licensees may
be subject.
10. Assignment. This License is personal to Licensees
and Licensees may not sublicense or assign their rights or
delegate any of their duties or obligations hereunder except in
connection with an assignment or transfer by GE Bank to an
Affiliate of GE Bank of any or all of its rights or obligations
pursuant to the terms of the Amended and Restated Program
Agreement or by GE Capital pursuant to the terms of the Amended
and Restated Commercial Accounts Agreement or the GE Capital
Services Agreement. Any sublicense or assignment in violation
hereof or by operation of law shall be null and void. No
assignment or sublicense shall be made unless and until such
assignee or sublicensee has agreed in writing to be bound by this
Agreement, in this form, or otherwise by an instrument reasonably
acceptable to Licensor. Any assignments or transfers by Licensor
shall not relieve Licensor from its obligations hereunder and the
assignee or transferee of this Agreement shall assume, by
instrument reasonably acceptable to Licensees, the assignor's
obligations under this Agreement theretofore and thereinafter
arising. Any assignment or transfer by any Licensee or its
assignees pursuant to this Section 10 shall relieve such Licensee
or such assignee of its obligations hereunder and such party shall
no longer be a party to this Agreement; provided, that (i) the
Amended and Restated GE Capital Guaranty dated as of the date
hereof made by GE Capital in favor of the Guaranteed Parties
specified therein is confirmed by GE Capital at the time of such
assignment and (ii) the assignee assumes by instrument reasonably
satisfactory to Licensor, all of assignor's obligations under this
Agreement theretofore and thereinafter arising. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective legal representatives and
permitted successors and assigns. Notwithstanding the foregoing,
Licensees shall each be permitted to allow their non-Affiliated
designees to utilize the Marks to perform the services that such
designees may perform pursuant to the terms of the Amended and
Restated Program Agreement, the Amended and Restated Commercial
Accounts Agreement and the GE Capital Services Agreement, provided
that any such sublicensees or designees shall acknowledge
Licensor's rights with respect to the Marks and shall agree that
Licensor may, at its option, enforce its rights with respect to
the Marks directly against such sublicensee or designee.
Licensees shall be responsible for any use of the Marks by their
sublicensees or designees to the same extent as Licensees are
responsible for their own use of the Marks.
11. Material Furnished by Licensor. In addition to the
requirements of Section 3 hereof, Licensees shall use their best
efforts to use all art work, photographs, drawings, samples,
graphics requirements and other such materials relating to the
Marks, the GE/Macy's Credit Card Documentation, the GE/Macy's
Commercial Accounts Documentation and the Services and Licensor
shall cooperate with Licensees in furnishing such materials which
may be reasonably requested by Licensees.
12. Notices. All notices and statements to be given by
the parties to this Agreement shall be given or made as applicable
in the same number as notices are required or permitted to be
given pursuant to the Amended and Restated Program Agreement.
13. Governing Law. The construction, validity,
performance and enforcement of this Agreement, shall be governed
by the Laws of the State of New York, without giving effect to
principles of conflicts of law thereof.
14. Further Assurances. The parties agree to promptly
execute and deliver all further instruments, agreements or other
documents to further the purposes of this Agreement.
15. Modification, Amendment, Supplement or Waiver. No
modification, amendment, supplement to or waiver of this Agreement
or any of its provisions shall be binding upon the parties hereto
unless made in writing and duly signed by the party or parties
against whom any waiver, change, amendment, modification or
discharge may be sought. A failure or delay of any party to this
Agreement to enforce at any time the provisions of this Agreement
or to require at any time performance of the provisions hereof,
shall in no way be construed to be a waiver of such provisions of
this Agreement. A waiver by any party of the terms and conditions
of this Agreement in any one instance shall not be deemed a waiver
of such terms or conditions in the future, or of any subsequent
breach thereof.
16. Irreparable Injury. Licensees hereby acknowledge
and agree that any unauthorized use of the Marks in violation of
the terms of this Agreement would cause Licensor immediate and
irreparable injury and that (in addition to all other remedies
available to Licensor) Licensor shall be entitled to injunctive
and/or equitable relief to prevent a breach of such obligations
and to secure enforcement thereof and compliance therewith.
17. Joint and Several Obligations. All obligations of
Licensees hereunder shall be joint and several obligations of
Licensees.
18. Entirety of Agreement. This Agreement in
conjunction with the Transaction Documents constitute the entire
agreement between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements, promises,
representations, understandings and negotiations whether written
or oral, between the parties with respect thereto.
19. Separability. Any term or provision of this
Agreement which is invalid or unenforceable shall be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement.
20. Headings. The headings in this Agreement are for
reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
21. Consent of Store Group Licensees.
Contemporaneously herewith, the Store Group Licensees are
executing the Consent of Store Group Licensees annexed hereto as
Schedule B.
IN WITNESS WHEREOF, the parties hereto intending to be
legally bound, have entered into this Agreement as of the day and
year first above written.
FEDERATED DEPARTMENT STORES, INC.
By: /s/Ronald W. Tysoe
Name: Ronald W. Tysoe
Title: Vice Chairman and Chief Financial
Officer
GE CAPITAL CONSUMER CARD CO.
By: /s/ Kevin Knight
Name: Kevin Knight
Title: Executive Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Richard A. Hayes
Name: Richard A. Hayes
Title: Senior Vice President Retailer
Financial Services
SCHEDULE A
LIST OF MARKS
STORE GROUP LICENSEE MARKS
(1) MACY'S EAST, INC. Reg'd Macy's (and design)
Unreg'd Macy's Gold+
Unreg'd Flexible (Flex)+
Unreg'd Santa Society +
Unreg'd Time Option Plan (TOP)+
Unreg'd Club Plan+
Unreg'd Homemaker+
Reg'd Bamberger's*
Unreg'd Credit Now +
Unreg'd In-Person+
(2) MACY'S WEST, INC. Reg'd Macy's (and design)
Unreg'd All Purpose Account+
Unreg'd Time Option Plan (TOP)+
Unreg'd Club Plan+
Unreg'd 30-Day Regular Account+
Unreg'd Macy's Business Account+
(3) BULLOCK'S, INC. Reg'd Bullock's (and design)
Unreg'd Prestige Bullock's Account (PBA)+
Unreg'd Termway+
Unreg'd Club Plan+
Unreg'd Regular Thirty Day (RTD)+
Unreg'd Silver Club Plan+
Reg'd Bullocks Wilshire*
Unreg'd Take-A-Minute
Unreg'd Take-One
Unreg'd Take Charge!
(4) MSS-DELAWARE, INC. Reg'd Charter Club
___________________
+ Each Mark denoted with a cross is to be used only in connection with the
type of account with which it is used by the respective Store Group Licensees
as of the date hereof and not with any other type of account.
* Each Mark denoted with an asterisk is to be used only in connection with
the servicing of existing customer accounts having credit cards issued under
such Mark solely to the extent used by the respective Store Group Licensees as
of the date hereof. Marks denoted with an asterisk are not to be used to open
any new account or service any other account whatsoever, or to replace any
existing credit card or account.
SCHEDULE B
CONSENT OF STORE GROUP LICENSEES
Effective as of June 4, 1996, the undersigned each
acknowledge that their respective use of the Marks listed on
Schedule A hereto is exclusively by virtue of the trademark and
service mark license agreement entered into by each of them with
Federated Department Stores, Inc. ("Licensor") and each hereby
consents to the terms and conditions of the License for use of
such Marks with is granted to GE Capital Consumer Card Co. and
General Electric Capital Corporation by virtue of the Amended and
Restated Trade Name and Service Mark License Agreement to which
this Schedule B is attached.
Macy's East, Inc.
Macy's West, Inc.
Broadway Stores, Inc.
Bullock's, Inc.
MSS-Delaware, Inc.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
Execution Copy
FACS CREDIT SERVICES AND LICENSE AGREEMENT *
This FACS CREDIT SERVICES AND LICENSE AGREEMENT, dated
as of June 4, 1996, is entered into by and among GE Capital
Consumer Card Co. ("GE Bank"), General Electric Capital
Corporation ("GE Capital") (GE Bank and GE Capital being
sometimes referred to herein as the "GE Parties") and FACS Group,
Inc. ("FACS"). Certain capitalized terms used herein have the
meanings given to them in Article 1 hereof or, if not defined
herein, have the meanings given to them in the Program Agreement
or the Commercial Accounts Agreement.
WHEREAS, GE Capital is the owner of the GE/Macy's
Commercial Accounts and GE Bank is the owner of the GE/Macy's
Accounts;
WHEREAS, FDS National Bank ("FDS Bank") is the owner of
the FDS/Macy's Accounts and certain other private label credit
card accounts (the "Other FDS Accounts") and Federated Department
Stores, Inc. ("FDS") is the owner of certain commercial private
label credit card accounts (the "Commercial FDS Accounts");
WHEREAS, GE Bank has provided heretofore all credit
processing and collection services with respect to the GE/Macy's
Accounts utilizing credit systems owned or licensed by GE Capital
and GE Capital has provided certain credit services with respect
to certain FDS/Macy's Accounts, and FACS has provided all credit
processing and collection services with respect to the Other FDS
Accounts, the Commercial FDS Accounts and certain FDS/Macy's
Accounts utilizing credit systems owned or licensed by FACS or
its affiliates;
WHEREAS, the GE Parties, FDS and FDS Bank wish to
facilitate generally uniform treatment of, and performance by,
the GE/Macy's Serviced Accounts and FDS/Macy's Accounts by
utilizing common systems and software for the servicing of all
such accounts;
Rider X
_____________________
* Confidential portions of this Exhibit have been omitted and
filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
WHEREAS, the GE Parties, FDS and FDS Bank expect that
certain economies of scale would be derived from allocating the
responsibility for providing all credit processing services
required with respect to GE/Macy's Serviced Accounts, FDS/Macy's
Accounts and Other FDS Accounts between GE Capital and FACS such
that each would provide certain credit services with respect to
such accounts;
WHEREAS, in furtherance of the foregoing, (a) the GE
Parties and FACS are entering into this Agreement for purposes of
setting forth the terms and conditions that will govern the
provision of certain services by FACS to the GE Parties and the
license by FACS to the GE Parties of the FACS Credit System and
(b) GE Capital, FACS, FDS Bank and FDS are entering into,
contemporaneously herewith, the GE Capital Services Agreement for
purposes of setting forth the terms and conditions that will
govern the provision of certain services by GE Capital to FDS
Bank and FDS and the license by GE Capital to FACS of certain
credit software.
NOW, THEREFORE, in consideration of the terms and
mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions
. When used in this Agreement, the following
capitalized terms shall have the meaning specified below:
"Agreement" means this FACS Credit Services and License
Agreement as it may be amended, modified or restated from time to
time.
"Authorized GE Users" has the meaning given to it in
Section 4.2(b).
"Authorized Systems Uses" has the meaning given to it
in Section 4.1(c).
"Commercial Accounts Agreement" means the Amended and
Restated Commercial Accounts Agreement, dated as of the date
hereof, entered into by and among GE Capital, FDS, FDS Bank and
the other parties thereto as it may be amended, modified or
restated from time to time.
"Deemed Prepared" has the meaning given to it in
Section 8.7.
"FACS Credit Software" means the credit systems
software identified in Section I of Exhibit B.
"FACS Event of Default" has the meaning given to it in
Section 8.1.
"FACS Credit System" means the mainframe computer
system and FACS Credit Software developed, owned and utilized by
FSG and FACS, and utilized by FSG and FACS to provide credit
processing services to FDS Bank, as the same may be modified,
enhanced or replaced from time to time after the date hereof.
"FACS License" means the license of the FACS Credit
System by FACS to the GE Parties pursuant to Section 4.2.
"FACS Services" means the services required to be
provided by FACS hereunder with respect to the GE/Macy's Serviced
Accounts as described in Article 3 hereof and in Section I of
Exhibit A hereto.
"FSG" means Federated Systems Group, Inc., a wholly
owned subsidiary of Federated and an affiliate of FACS.
"GE Capital Services Agreement" means the GE Capital
Credit Services and License Agreement among GE Capital, FDS Bank,
FDS and FACS dated as of the date of this Agreement as it may be
amended, modified or restated from time to time.
"GE Capital Credit Software" has the meaning given to
it in the GE Capital Services Agreement.
"GE Conversion Information" means the following written
information provided by either of the GE Parties to FDS or its
Affiliates: (i) the documents and materials attached hereto as
Exhibit C, (ii) a personal computer disk containing billing terms
regarding the GE/Macy's Serviced Accounts and (iii) the Master
File delivered by the GE Parties to FACS containing GE/Macy's
Account information.
"GE Event of Default" has the meaning given to it in
Section 8.3.
"GE Information" means data with respect to GE/Macy's
Serviced Accounts transmitted by computer to FACS.
"GE Information Condition" means, with respect to any
GE Information, that (i) such information is received by FACS at
a time which allows FACS to perform the FACS Services as required
hereby, (ii) such information is complete and accurate and
(iii) such information is in a form that is readily usable by the
FACS Credit System.
"GE/Macy's Serviced Account" means (i) any GE/Macy's
Account and (ii) any GE/Macy's Commercial Account (as defined in
the Commercial Accounts Agreement).
"Licensed Location(s)" means the location(s) identified
in Section II of Exhibit B in which certain authorized employees
of the GE Parties may access and use the FACS Credit System in
accordance with the FACS License.
"Material Adverse Effect" means any material adverse
change in the quality or financial condition of the GE/Macy's
Serviced Accounts, taken as a whole.
"Program Agreement" means the Amended and Restated
Credit Card Program Agreement, dated as of the date hereof,
entered into by and among FDS, FDS Bank, GE Bank and the other
parties thereto as it may be amended, modified or restated from
time to time.
"Service Fees" means the fees payable by the GE Parties
for the FACS Services, as specified in Article 3.
"Service Standards" means the minimum service
performance levels at which the FACS Services are required to be
provided hereunder, as specified in Section II of Exhibit A.
"Term" has the meaning given to it in Section 2.1
hereof.
1.2. General
. Except as the context may otherwise require, (i)
words of any gender include the other gender, (ii) words using
the singular or plural number also include the plural or singular
number, respectively, (iii) the terms "hereof", "herein",
"hereby", and any derivative or similar words refer to this
entire Agreement, and (iv) the term "including" means "including,
but not limited to". Whenever this Agreement refers to a number
of days or months, such number shall refer to calendar days or
months unless otherwise specified. The Exhibits and Schedules
attached hereto are incorporated herein by this reference and
constitute a part of this Agreement.
ARTICLE 2
TERM
2.1 Term
. The term of this Agreement shall commence on the
date hereof and expire simultaneously with the termination of the
Program Agreement, unless sooner terminated as provided herein
(the "Term"), provided that following termination of this
Agreement the GE Parties shall have the right to require FACS to
continue providing all or a portion of the FACS Services for up
to six (6) months after termination pursuant to the provisions of
Section 8.6.
ARTICLE 3
CREDIT SERVICES
3.1 Appointment of FACS
. GE Bank hereby appoints FACS, and FACS hereby
accepts appointment, as the agent of GE Bank for providing the
FACS Services with respect to the GE/Macy's Accounts. GE Capital
hereby appoints FACS, and FACS hereby accepts appointment, as the
agent of GE Capital for providing the FACS Services with respect
to the GE/Macy's Commercial Accounts. The parties hereto
acknowledge and agree that notwithstanding any other provisions
of this Agreement to the contrary, all obligations of FACS to
perform the FACS Services shall be subject to the prior
satisfaction of the GE Information Condition.
3.2 FACS Services
. FACS shall provide the FACS Services (including,
without limitation, delivery of the reports described in Schedule
A-3 hereof) and shall comply with the Credit and Collection
Policy and the GE Capital License (as defined in the GE Capital
Services Agreement) in providing the FACS Services. In this
regard, FACS agrees to be bound by and to comply with the terms
and conditions of the Program Agreement, including, without
limitation, Sections 2.2, 4.4 and 4.5 thereof. FACS shall
operate credit operations and facilities in a high quality,
ethical manner, in such a way as not to disparage or embarrass
the GE Parties or any of their names, and with a level of service
to the holders of GE/Macy's Accounts and the GE/Macy's Commercial
Accounts that is not less than the level of service provided to
(i) the holders of GE/Macy's Accounts by GE Bank prior to the
date hereof and to the holders of GE/Macy's Commercial Accounts
by GE Capital prior to the date hereof and (ii) the holders of
FDS/Macy's Accounts by FACS from and after the date hereof. The
FACS Services provided to the GE/Macy's Serviced Accounts shall
be of the same type, quality and nature as, and implemented and
executed in the same manner as, the services provided by FACS to
FDS Bank with respect to the FDS/Macy's Accounts, except to the
extent such services may differ due to changes to the Credit and
Collection Policy applicable to only the GE/Macy's Serviced
Accounts or FDS/Macy's Accounts pursuant to the provisions of
Sections 4.4 or 4.5 of the Program Agreement.
3.3 Service Standards
. FACS shall use its best efforts to (i) design
systems to achieve, (ii) employ qualified personnel to meet, and
(iii) otherwise satisfy on average (determined with respect to
each FDS full fiscal quarter commencing after the completion of
the relevant conversion) the Service Standards.
3.4 Service Fees
. For the FACS Services provided hereunder by FACS
with respect to the GE/Macy's Accounts and the GE/Macy's
Commercial Accounts, GE Bank and GE Capital, respectively, shall
pay FACS a monthly service fee in an amount equal to [OMISSION]%
of budgeted GE/Macy's Credit Sales as set forth on Schedule 5.2
of the Program Agreement. The Service Fees with respect to the
GE/Macy's Accounts shall be expenses of the Program for purposes
of calculating the Bank Net Return and shall be payable by GE
Bank by adjusting the Projected Monthly Discount for the month in
which the Service Fee is incurred or in such other manner as the
parties may mutually agree. The Service Fees with respect to the
GE/Macy's Commercial Accounts shall be expenses of the Commercial
Accounts Program and shall be payable by GE Capital by adjusting
the Projected Monthly Discount for the month in which the Service
Fee is incurred or in such other manner as the parties may
mutually agree.
3.5 Compliance with Law
. FACS shall implement and execute the Credit and
Collection Policy in compliance with all requirements of
applicable Law and shall perform the FACS Services in compliance
with all requirements of applicable Law, except, in either case,
to the extent a failure of FACS to so implement, execute and
perform in compliance with applicable Law is due solely to
(i) the failure of the GE Conversion Information to be accurate,
(ii) the failure of the GE Information Condition to be satisfied
or (iii) FACS following the specific written instructions of an
Authorized GE Person.
3.6 Use of Fraud Data Base
. All determinations regarding the manner and use of
fraud data bases in connection with the performance of the FACS
Services shall be determined by the Policy Committee and FACS
agrees that it will so use fraud data bases in a manner
consistent with the directions of the Policy Committee.
3.7 Third Party Review
. Within 120 days after the date hereof, FACS will
cause to be completed an initial operational and/or systems
review of FACS by an independent third party accounting firm
reasonably satisfactory to GE Bank and shall provide GE Bank with
a copy of all reports generated by such review (and the work
papers related thereto) promptly after available. If any
regulatory authority with jurisdiction over GE Bank requests a
third party operational and/or systems review of FACS, the FACS
Credit System and/or all systems relating to the FACS Services,
FACS shall, upon the request of GE Bank, cause such a review (the
scope of which meets such regulatory requirements) to be
conducted by an independent third party accounting firm
reasonably satisfactory to GE Bank and shall provide GE Bank with
a copy of all reports generated by such review (and the work
papers related thereto) promptly after available. The expenses
of any such review shall be borne by FACS.
3.8 Cooperation
. FACS agrees to cooperate with the GE Parties in
resolving all disputes with GE/Macy's Account Debtors.
ARTICLE 4
SYSTEMS
4.1 Systems.
(a) Conversion. FACS and the GE Parties shall
cooperate so that FACS is able to accomplish the conversion of
all GE/Macy's Serviced Accounts to the FACS Credit System and in
an accurate, orderly and efficient manner in accordance with an
agenda and schedule agreed to by all parties hereto. FACS agrees
to use commercially reasonable efforts to effect such conversion
in an accurate, orderly and efficient manner, except to the
extent such conversion fails to be accurate, orderly and
efficient due solely to the failure of the GE Conversion
Information to be accurate in all material respects.
(b) Systems. During the Term, FACS shall utilize
the FACS Credit System and the GE Capital Credit Software for
providing the FACS Services required to be provided hereunder by
FACS.
(c) Access. During the Term, subject to and in
accordance with the FACS License, FACS shall provide the GE
Parties all such links and access to the FACS Credit System as
may be necessary in order to enable the GE Parties (i) to receive
the FACS Services hereunder, (ii) to view such screens as may be
necessary for the GE Parties to observe the GE/Macy's Serviced
Accounts and FDS/Macy's Accounts, (iii) to monitor and obtain
information regarding the GE/Macy's Serviced Accounts and the
FDS/Macy's Accounts, and (iv) to permit the GE Parties to fulfill
all of their obligations and exercise all of their rights
hereunder, under the Program Agreement, the Commercial Accounts
Agreement, the GE Capital Services Agreement and the GE
Capital/GE Bank Credit Services Agreement (items (i) through
(iv), collectively, the "Authorized Systems Uses").
(d) Modifications and Enhancements. FACS shall
not modify, enhance or replace the FACS Credit System in any way
that would cause any amendment or modification to the Major
Credit and Collection Policies without the prior written consent
of GE Bank. In the event that any portion of the FACS Credit
System which relates to or affects any of the Authorized Systems
Uses is modified, enhanced or replaced, FACS shall provide to the
GE Parties, when such modification, enhancement or replacement is
released for use in conjunction with the FDS/Macy's Accounts, the
benefit thereof at no cost to the GE Parties. If any such
modification, enhancement or replacement would require the GE
Parties to incur any costs or expenses to permit the GE Parties'
credit system (as existing as of the date hereof) to be
compatible with the FACS Credit System so as to enable the GE
Parties to exercise the Authorized Systems Uses, such costs shall
be expenses of the Program.
(e) Deconversion Software. FACS shall use its
best efforts to assist the GE Parties in formulating and
maintaining deconversion software which provides mapping between
the FACS Credit System and the GE Parties' computer system and
shall provide the GE Parties monthly with copies of all FACS back-
up tapes relating to the GE/Macy's Serviced Accounts.
4.2 License.
(a) Grant of License. FACS hereby grants to each
of the GE Parties, for the Term and for the period of any
extended servicing pursuant to Section 8.6, a non-exclusive and
non-transferable license to use the FACS Credit System in the
Licensed Locations strictly as set forth in this Section 4.2.
(b) Permitted Use. As further set forth herein,
the FACS Credit System may be used only at the Licensed Locations
by employees of the GE Parties ("Authorized GE Users") who are
provided with passwords approved by FACS and who are listed on a
list of authorized users (which list will include the extent of
such authorized users' authority to use the FACS Credit System)
maintained by the GE Parties and provided to FACS. The
Authorized GE Users may only use the FACS Credit System for the
Authorized Systems Uses.
(c) Authorized Users. The GE Parties may amend
the list of Authorized GE Users from time to time by providing
reasonable notice of such amendments to FACS, and FACS agrees to
promptly provide any new Authorized GE Users with appropriate
passwords. In the event any Authorized GE User ceases to be an
employee of one of the GE Parties or ceases to have
responsibilities related to the Program, the GE Parties agree
(i) to provide FACS with notice thereof as promptly as
practicable, but in no event later than thirty (30) days
thereafter, in order to permit FACS to terminate such employee's
password and (ii) to be responsible for such employee's password
until the date such notice is provided to FACS. The GE Parties
shall provide FACS with an updated list of the Authorized GE
Users within twenty (20) days after the end of each calendar
quarter.
(d) Additions to or Relocations of Licensed
Locations. In the event that any Licensed Location is relocated
or any new Licensed Location is added, the GE Parties shall give
reasonable advance notice of such relocation or addition to FACS
and any costs and expenses required to be incurred by FACS or the
GE Parties so that FACS can fulfill its obligations hereunder as
a result of such relocation or addition of a Licensed Location
shall be borne by the GE Parties.
(e) Limitations. The GE Parties may not:
(i) use the FACS Credit System except as
permitted herein or in any location other than a Licensed
Location;
(ii) copy or duplicate the FACS Credit System
except as necessary to utilize the same as specifically permitted
herein;
(iii) remove any proprietary or copyright
legend from the FACS Credit System;
(iv) create, or authorize any other party to
create, the source code to the FACS Credit System by reverse
engineering, decompiling or otherwise;
(v) permit access to the FACS Credit System
to any Person other than an Authorized GE User and without
requiring each such Authorized GE User to sign a confidentiality
agreement in the form of Exhibit D and undertake to protect the
confidentiality of the sign-on code or password of such
individual;
(vi) modify or alter any of the FACS Credit
System; or
(vii) use any software to access the FACS
Credit System screens or data other than (x) the software
described on Schedule 4.2(e) hereto (as such schedule may be
amended from time to time by the GE Parties with the prior
approval of FACS which approval shall not be unreasonably
withheld) and (y) in a manner which FACS has had the opportunity
to review and has approved in writing.
(f) Property Rights. The GE Parties acknowledge
that the FACS Credit System is proprietary to, and is the
property of, FACS and that the FACS Credit System contains the
confidential, proprietary and trade secret information of FACS
and that FACS will be irreparably harmed and will have no
adequate remedy at law if the GE Parties fail to perform any of
their obligations under this Section 4.2. It is accordingly
agreed that, in addition to any other remedies which may be
available at law or in equity, FACS shall have the right to
obtain injunctive relief to restrain a breach or threatened
breach of, or otherwise obtain specific performance of, the GE
Parties' covenants and agreements contained in this Section 4.2.
4.3 Maintenance
. During the Term, FACS shall provide, or cause to be
provided, maintenance services to the GE Parties with respect to
the FACS Credit System as described in this Section 4.3.
(a) Help Desk. FACS shall maintain a help desk
which the GE Parties may access by telephone during all hours
when collections on the GE/Macy's Serviced Accounts may be
legally made. Such help desk shall be available to the GE
Parties for problem reporting.
(b) Code Corrections. FACS shall provide to the
GE Parties, from time to time, any known code corrections that
may be made to the FACS Credit Software promptly after such
corrections are made by or become available to FACS.
4.4 License Fees
. For the license and maintenance services provided
hereunder, the GE Parties shall pay to FACS a one-time license
fee of $[OMISSION].
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Mutual Representations and Warranties
. Each party to this Agreement represents and warrants
to the other party on the date hereof and on each date that FACS
provides any of the FACS Services hereunder that:
(i) Such party (A) is duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its organization; (B) is duly qualified and in
good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualifications, except (x) in the case of FACS,
where failure to be so qualified would not have a Material
Adverse Effect or a material adverse effect on the ability of
FACS to perform its obligations pursuant to the terms of this
Agreement and (y) in the case of the GE Parties, where failure to
be so qualified would not have a material adverse effect on their
ability to perform their obligations hereunder; (C) has the
requisite power and authority and the legal right to own, pledge,
mortgage, and operate its properties, to lease the properties it
operates under lease, and to conduct its business as now
conducted and hereafter contemplated to be conducted; (D) has all
necessary licenses, permits, consents, or approvals from or by,
and has made all necessary notices to, all authorities having
jurisdiction, to the extent required for such current ownership
and operation or as proposed to be conducted, except (x) in the
case of FACS, where failure to obtain such license, consent,
permit or approval, or to give such notice would not have a
Material Adverse Effect or a material adverse effect on the
ability of FACS to perform its obligations pursuant to the terms
of this Agreement and (y) in the case of the GE Parties, where
the failure to obtain such license, consent, permit or approval
or to give such notice would not have a material adverse effect
on their ability to perform their obligations hereunder; and
(E) is in compliance with its certificate of incorporation and
by-laws.
(ii) The execution, delivery, and performance
of this Agreement and all instruments and documents to be
delivered hereunder: (A) are within such party's power; (B) have
been duly authorized by all necessary or proper action of such
party; (C) do not and will not contravene any provisions of such
party's certificate of incorporation or by-laws; (D) will not
violate any law or regulation or any order or decree of any court
or governmental instrumentality applicable to such party;
(E) will not conflict with or result in the breach of, or
constitute a default under any indenture, mortgage, deed of
trust, lease, agreement, or other instrument to which such party
is a party or by which any of its property is bound; and (F) do
not require any filing or registration with or the consent or
approval of any governmental body, agency, authority, or any
other person which has not been made or obtained previously.
Each party to this Agreement further represents and warrants that
this Agreement has been duly executed and delivered by, and
constitutes a legal, valid, and binding obligation of such party,
enforceable against it in accordance with its terms, subject to
the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect
and to the availability of equitable remedies.
5.2. Representations and Warranties of FACS
. FACS represents and warrants to the GE Parties, on
behalf of itself and any Affiliate performing any of the FACS
Services, on the date hereof and on each date that FACS provides
any of the FACS Services hereunder that:
(i) FACS (A) has all of the necessary
facilities, equipment and personnel to provide the FACS Services
in accordance with the terms of this Agreement; and (B) has and
shall maintain disaster recovery procedures and systems with
respect to the GE/Macy's Serviced Accounts at least comparable to
those maintained on the date hereof for the FDS/Macy's Accounts
and Other FDS Accounts.
(ii) FACS is Solvent.
(iii) FACS is not in default with respect
to any material contract, agreement, lease, or other instrument
to which it is a party, nor has it received any notice of default
under any such material contract, agreement, lease or other
instrument which as a consequence of any such default, would
materially and adversely affect the performance of its
obligations under this Agreement.
(iv) No contract, lease, agreement, or other
instrument to which FACS is a party or by which it is bound, and
no provision of applicable Law, materially and adversely affects
the business, operation, prospects, property, or financial
condition of FACS such as to impair its ability to meet its
obligations under this Agreement.
(v) FACS has the right to use the FACS
Credit System to provide the FACS Services hereunder without
infringement or violation of the intellectual property,
trademark, trade secret, copyright, patent or other rights of
others.
(vi) FACS has the right to license the FACS
Credit System hereunder without infringement or violation of the
intellectual property or other rights of others, provided that
this warranty is limited and does not apply to (x) the use of the
FACS Credit System other than in accordance with the FACS License
and the operating instructions provided by FACS and (y) any copy
of the FACS Credit Software that is modified by any person other
than an authorized representative of FACS.
ARTICLE 6
CONFIDENTIALITY
6.1 Trade Secrets and Confidential Information
. FACS, on the one hand, and the GE Parties, on the
other, acknowledge that in the course of performance hereunder,
each of them and/or their respective Affiliates may receive the
trade secrets and confidential information of the other.
(a) Trade Secrets. As used herein, "trade
secrets" shall mean information including or containing technical
or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, or a list of actual or potential
customers or suppliers that (i) derives economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by other persons who can
obtain economic value from its disclosure or use, and (ii) is the
subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
(b) Confidential Information. As used herein,
"confidential information" shall mean information including data,
as to operation, use, prices, sales, vendors, customer lists,
customer information, account information, business plans or
administrative, financial or marketing plans, that is
competitively sensitive and not generally known by or made
available to the public, or that are treated as confidential by
the owner thereof but that does not rise to the level of a trade
secret under applicable law.
6.2 Non-Disclosure Obligations
. FACS, on the one hand, and the GE Parties, on the
other, acknowledge that the confidentiality of the trade secrets
and the confidential information of the other is necessary and,
except as provided in Section 6.3, agree at all times, during and
after the Term, not to use, communicate, publish, disclose or
disseminate, directly or indirectly, any trade secrets or
confidential information of the other for any purpose except for
the purpose of performing in accordance with this Agreement. In
the event any information can be treated as both trade secrets
and confidential information, such information shall be treated
as trade secrets for purposes of this Agreement. Each party
shall use the same care to prevent disclosure to third parties of
the trade secrets and confidential information of the other as it
employs to avoid disclosure, publication or dissemination of its
own information of a similar nature. Use or disclosure by the GE
Parties of the FACS Credit System in any manner other than as
permitted herein, in the Program Agreement, in the Commercial
Accounts Agreement or in the GE Capital Services Agreement shall
be an unauthorized disclosure of FACS's trade secrets. The
parties agree that, in addition to any other remedies which may
be available at law or in equity, each party shall have the right
to obtain injunctive relief to restrain a breach or threatened
breach, or otherwise obtain specific performance of, the other
party's covenants and agreements in this Section 6.2.
6.3 Permitted Disclosure
. Notwithstanding the foregoing, a receiving party may
disclose some or all of the trade secrets and confidential
information of the other party which are:
(i) required to be disclosed by law or order
of court or governmental agency applicable to the receiving
party, provided that the receiving party shall give prompt notice
to the other party of any request for such disclosure so that the
other party may seek a protective order or other appropriate
remedy, and notwithstanding any such disclosure, such disclosed
trade secrets or confidential information shall remain
confidential and otherwise subject to the provisions of
Article 6;
(ii) generally known and available in the
public domain, or become part of the public domain through no
violation of any confidentiality provisions of this Agreement; or
(iii) developed by the recipient or its
representatives independently of such information or trade
secrets.
6.4 Use of Trade Secrets or Confidential Information
. Neither FACS nor the GE Parties may:
(i) acquire any right in or assert any lien
against the trade secrets or confidential information of the
other; or
(ii) refuse to return promptly upon the
reasonable request of the other as permitted herein any
confidential information or trade secrets of the other that it
may have in its possession.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification.
(a) Indemnification by FACS. FACS shall
indemnify, defend and hold harmless each of the GE Parties and
each of their Affiliates and the officers, directors, employees,
agents, shareholders, successors and assigns of the GE Parties
and each of their Affiliates (collectively, the "GE Indemnified
Parties") from and against any and all claims, actions, damages,
losses, liabilities, costs and expenses, including reasonable
attorneys' fees and expenses (collectively "Damages") caused by,
relating to or arising out of (i) the failure of any
representation or warranty of FACS hereunder to be true and
correct in any material respect when made or remade; (ii) the
breach by FACS or any of its Affiliates of any of their covenants
or agreements hereunder; (iii) any act or omission by FACS or its
Affiliates, employees or agents in performing, implementing
and/or executing the FACS Services and the Credit and Collection
Policy, except to the extent (x) the Credit and Collection Policy
specifically describes how such act should be implemented and
FACS implemented such act in conformity with such description
(other than modifications to the Credit and Collection Policy
(including the Major Credit and Collection Policies) made by FDS
without the approval of the Policy Committee pursuant to Section
4.4 of the Program Agreement), (y) any such performance,
implementation or execution was effected in accordance with
specific written instructions from an Authorized GE Person or
(z) the Damages arising out of such act or omission are due
solely to the failure of the GE Conversion Information to be
accurate or the GE Information Condition to be satisfied;
(iv) any acts or omissions of the GE Parties, their employees or
any of their agents taken at the specific written request of any
Authorized FDS Person; (v) notwithstanding the provisions of
Section 7.1(a) (iii) hereof, any judgmental decisions (i.e., any
determination or decision made which is not specifically dictated
by the Credit and Collection Policy) effected by FACS or its
employees or agents in effecting the FACS Services and (vi) the
failure of the FDS Information (as defined in the GE Capital/GE
Bank Services Agreement) provided to GE Capital pursuant to the
terms of the GE Capital/GE Bank Services Agreement to be
accurate.
(b) Indemnification by the GE Parties. The GE
Parties shall indemnify, defend and hold harmless FACS and its
Affiliates and the officers, directors, employees, agents,
shareholders, successors and assigns of FACS and each of its
Affiliates (collectively, the "FACS Indemnified Parties") from
and against any and all Damages caused by, relating to or arising
out of (i) the breach by the GE Parties of any of their covenants
or agreements hereunder; (ii) the failure of any representation
or warranty of the GE Parties hereunder to be true and correct in
any material respect when made or remade; (iii) any act or
omission by FACS or its employees or agents in performing,
implementing and/or executing the FACS Services and the Credit
and Collection Policy effected in accordance with specific
written instructions from an Authorized GE Person; and (iv) the
failure of the GE Conversion Information to be accurate in any
material respect.
7.2 Infringement Indemnity
. (a) Indemnity. FACS shall indemnify, defend and
hold harmless each of the GE Indemnified Parties from and against
any and all Damages caused by, relating to or arising out of any
claim of infringement asserted in the United States by third
parties of any United States letters patent, trade secrets,
copyright, trademark, service mark, trade name, or similar
proprietary right conferred by common law or by any statute that
is alleged to have occurred because of use by the GE Parties of
the FACS Credit System as permitted herein.
(b) Remedies. In the event a GE Indemnified
Party is enjoined by reason of any infringement claim, FACS
shall, without limiting any other rights of the GE Indemnified
Party, either:
(i) procure the right to continue to use the
FACS Credit System or any component thereof, as contemplated
hereunder or, at its option,
(ii) replace or modify the FACS Credit System
or any component thereof, to permit the performance of, or to
render use thereof, or any component thereof, noninfringing while
performing substantially the same functions without substantial
degradation of performance.
(c) Limitations. Notwithstanding the provisions
of this Section 7.2, FACS shall not have any duty to investigate
or warn the GE Indemnified Party of any such possibility of
infringement.
7.3 Conduct of Litigation
. In the event a claim or judicial action is brought
or threatened against an indemnified party with respect to
matters covered by Section 7.1 or 7.2, the indemnifying party
shall have the sole right to defend such claim or action at its
expense and to control the defense and settlement thereof,
provided, that the indemnified party shall have the right to
participate in such defense and negotiations using counsel at its
own expense and the indemnifying party shall obtain the
indemnified party's consent, prior to entering into a settlement,
consent decree, compromise or consenting to any injunctive relief
with respect to such claim or action. Any indemnified party
shall provide prompt notice to the indemnifying party of any
claims for which the indemnified party intends to seek
indemnification for hereunder, provided that the failure to
provide such notice shall not affect the obligations of the
indemnifying party except to the extent such failure causes
actual harm to the indemnified party.
ARTICLE 8
DEFAULT; REMEDIES
8.1 FACS Events of Default
. It shall be a "FACS Event of Default" if any of the
events set forth below shall occur and be continuing and remain
unremedied prior to the expiration of the specified period.
(a) Service Standards Default. If FACS shall
consistently fail to perform its obligations under Section 3.3,
and such consistent failure to perform shall (i) have a Material
Adverse Effect or a material adverse effect on the Program, and
(ii) remain unremedied for a period of seventy-five (75) days
after delivery of written notice thereof by either GE Bank or GE
Capital to FACS.
(b) Credit and Collection Policy Defaults.
(i) If FACS shall fail to perform the FACS
Services in accordance with any provision of the Credit and
Collection Policy where such failure is or results in a violation
of applicable Law, and such failure is not remedied within seven
(7) days after delivery of written notice thereof by either
GE Bank or GE Capital to FACS; provided that if, notwithstanding
FACS's diligent, best efforts to cause its employees and agents
to perform the FACS Services so as not to violate applicable Law,
certain employees or agents have failed to so perform the FACS
Services, the time period set forth in this Section 8.1(b)(i)
shall be extended, but not by more than an additional ten (10)
days, as long as FACS continues to use its diligent, best efforts
to remedy such failure;
(ii) If FACS shall fail to perform the FACS
Services in accordance with any provision of the Credit and
Collection Policy where such failure is not or does not result in
a violation of applicable Law, and such failure (x) has a
Material Adverse Effect and (y) is not remedied within thirty
(30) days after delivery of written notice thereof by either
GE Bank or GE Capital to FACS;
(iii) If FACS shall consistently fail to
perform any of the FACS Services in accordance with any provision
of the Credit and Collection Policy where such failure is not or
does not result in a violation of applicable Law and does not
have a Material Adverse Effect, and is not remedied within
seventy-five (75) days after delivery of written notice thereof
by either GE Bank or GE Capital to FACS;
provided that each of the time periods in this
Section 8.1(b) shall be extended upon agreement of the parties,
but not by more than 60 days, so long as FACS is using its
diligent, best efforts to remedy such failure in the event that
(x) the provision of the Credit and Collection Policy that FACS
has failed to perform is a provision of the Credit and Collection
Policy which GE Bank has unilaterally modified pursuant to
Section 4.4 of the Program Agreement and (y) the reason FACS has
been unable to so perform is because the FACS Credit System
requires modifications in order to implement such unilaterally
modified provision of the Credit and Collection Policy.
(c) Credit Systems Default. If FACS shall fail
to perform all or substantially all of the FACS Services for a
period of seven (7) consecutive days due to a failure of the FACS
Credit System or otherwise.
(d) Breach of Infringement Warranty. If FACS
shall fail to provide the remedy specified in Section 7.2(b) as
indemnitor with respect to a claim of infringement as specified
in Section 7.2.
(e) Breach of Agreement. If FACS shall breach
any of its obligations under this Agreement or any of its
representations and warranties under this Agreement (other than
obligations, representations or warranties the breach of which is
otherwise addressed in this Section 8.1) and such breach has a
Material Adverse Effect and is not cured within thirty (30) days
after delivery of written notice thereof by either GE Bank or GE
Capital to FACS.
(f) Net Credit Sales Default. If FACS shall
(i) intentionally or negligently fail to comply with, or
supervise or cause the compliance with, any of the provisions of
Section 2.2 of the Program Agreement which are within the direct
or indirect control of FACS, or (ii) fail to implement the New
Accounts Allocation Percentage in the manner required by such
Section 2.2, or (iii) fail to implement the provisions of
Section 2.2(e)(ii) of the Program Agreement in the manner
required thereby or (iv) fail to implement the provisions of
Section 2.2 of the Program Agreement to the extent directed by
the Policy Committee, and such failure shall remain unremedied
for thirty (30) days after delivery of written notice thereof by
either GE Bank or GE Capital to FACS.
(g) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to FACS.
(h) Material Adverse Change. If there shall have
been a material adverse change to the business, financial
condition, or operations of FACS or Federated (it being hereby
agreed by the parties that an Event of Bankruptcy with respect to
Federated shall be deemed to constitute such a material adverse
change to the business, financial condition, or operations of
Federated) which change has a material adverse effect on the
ability of FACS to fulfill its obligations hereunder pursuant to
the terms hereof.
8.2 GE Remedies
. Subject to the provisions of Section 8.7, upon
the occurrence of a FACS Event of Default, the GE Parties may, in
addition to any other remedies they may have at law or equity,
terminate this Agreement by delivering a written notice of
termination to FACS.
8.3 GE Events of Default
. It shall be a "GE Event of Default" if any of the
events set forth below shall occur and be continuing and remain
unremedied prior to the expiration of the specified period.
(a) Breach by the GE Parties as Licensee. If
either of the GE Parties shall breach any of its obligations
under Section 4.2, and fail to cure the same within twenty (20)
days after delivery of written notice thereof by FACS.
(b) Breach of Agreement. If the GE Parties shall
breach in any material respect any of their obligations under
this Agreement or any of their representations and warranties
under this Agreement (other than obligations, representations and
warranties the breach of which is otherwise addressed in this
Section 8.3), and fail to cure such breach within thirty (30)
days after delivery of written notice thereof by FACS to either
GE Party.
(c) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to GE Bank or GE Capital.
8.4 FACS Remedies
. Upon the occurrence of a GE Event of Default, FACS
may, in addition to any other remedies it may have at law or
equity, terminate this Agreement by delivering a written notice
of termination to the GE Parties.
8.5 Excuse For Non-Performance
. In the event one party (the "Performing Party") is
unable to comply with or perform any of its obligations hereunder
solely due to (i) the other party (the "Non-Performing Party")
failing to perform its obligations hereunder or under any of the
Transaction Documents or (ii) the quality, nature, timeliness,
completeness or accuracy of any goods, services or data provided
by the Non-Performing Party to the Performing Party, the
Performing Party shall be excused from such performance (and no
event of default shall be deemed to have occurred) provided that
the Performing Party shall (a) notify the Non-Performing Party as
soon as practicable describing the default and explaining how the
Performing Party's performance has been affected; (b) use
reasonable efforts to mitigate the effect of the Non-Performing
Party's failure; and (c) perform its obligations hereunder to the
extent reasonably practicable. Both parties shall use diligent,
uninterrupted efforts to cure the failure and eliminate the
effects thereof.
8.6 Post-Termination Procedures
. Upon termination or expiration for any reason of
this Agreement, the parties shall comply with their respective
post-termination obligations, if any, as set forth below:
(a) Payments. Except as may be expressly
provided otherwise herein, within ten (10) business days after
the effective date of termination of this Agreement, each party
shall pay the other party any amounts that as of that effective
date were due and owed thereto pursuant to this Agreement.
(b) Extended Servicing. The GE Parties may cease
to receive FACS Services hereunder from and after the effective
date of termination, provided that the GE Parties may elect to
require FACS to continue to provide all or a portion of the FACS
Services to the GE/Macy's Serviced Accounts for up to a maximum
of six (6) months following the effective date of termination.
In the event of an election by the GE Parties to receive FACS
Services, FACS shall provide FACS Services as described herein
subject to payment by the GE Parties of the applicable Services
Fees then in effect and the FACS License granted hereunder shall
continue for such time.
(c) Deconversion. Subject to the provisions of
Section 8.6(b), FACS and the GE Parties shall cooperate in good
faith so that the GE Parties are able to promptly accomplish the
conversion of all GE/Macy's Serviced Accounts to GE Capital's
and/or GE Bank's credit systems in an accurate, orderly and
efficient manner. In this regard, FACS agrees that it will
provide the GE Parties and their respective designees, officers,
employees, accountants, and other representatives with all access
rights to the FACS Credit System as reasonably required by the
GE Parties in order to enable the GE Parties to effect a prompt,
accurate, orderly and efficient conversion. The GE Parties agree
that in the event of any such conversion, they shall use
commercially reasonable efforts to effect such conversion in an
accurate, orderly and efficient manner, except to the extent such
conversion fails to be accurate, orderly and efficient due solely
to the failure of conversion information provided by FACS at the
time to be accurate in all material respects.
(d) Return of Materials. The GE Parties shall
(i) surrender to FACS all copies of the FACS Credit Software
remaining in the possession of the GE Parties or any person
acquiring any such copy through any of the GE Parties in
accordance with the terms and conditions hereof and (ii) return
to FACS all written instructions or manuals in the possession of
the GE Parties relating to the FACS Credit System.
8.7 Special Provisions.
In the event of a FACS Event of Default pursuant to
the provisions of Section 8.1, the GE Parties may terminate the
Agreement with respect to any one or more of the FACS Services.
However, such terminated FACS Services will revert to the GE
Parties only at such time as the GE Parties are Deemed Prepared
to perform any such one or more of such FACS Services, provided
that the requirement that the GE Parties be Deemed Prepared shall
not be applicable with respect to the performance of any
provision of the Program Agreement, the Credit and Collection
Policy or the FACS Services which can only be performed if the
GE/Macy's Accounts and the FDS/Macy's Accounts are serviced on
the same computer system. If the GE Parties are not Deemed
Prepared to perform any of the FACS Services by the later of (i)
six months after the effective date of termination and (ii) the
date that a FACS Event of Default with respect to such FACS
Services no longer exists, then the GE Parties shall lose their
right to perform the FACS Services for which they are not so
Deemed Prepared. In the event of a subsequent FACS Event of
Default pursuant to the provisions of Section 8.1, the provisions
of this Section 8.7 shall again be applicable.
"Deemed Prepared" means, with respect to any one of the
FACS Services, either (i) FACS and the GE Parties have agreed
that the GE Parties are reasonably well prepared to perform such
services or (ii) an arbitrator, selected at the request of the GE
Parties by the President of the AAA, has determined what steps
the GE Parties must take to be reasonably well prepared to
perform such services at a level at least as high as FACS is
required to perform hereunder and the GE Parties have taken such
steps.
ARTICLE 9
MISCELLANEOUS
9.1 Governing Law; Jurisdiction
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard
to its rules governing conflicts of law.
9.2 Audit and Access Rights
. Each of the parties hereto shall have the right to
access the premises and audit the records of the other parties
hereto as set forth herein.
(a) Rights of GE Parties. GE Bank and GE Capital
shall have all such rights to access the premises of FACS, the
FACS Credit System and audit the records of FACS as may be
necessary or desirable to permit GE Bank and GE Capital to
fulfill all of their respective responsibilities, and exercise
all of their respective rights, hereunder and under the
Transaction Documents. Without limiting the generality of the
foregoing, FACS shall permit GE Capital and GE Bank and their
respective designees, officers, employees, attorneys, accountants
and/or other representatives during normal business hours with
reasonable advance notice, in such a manner as to minimize
interference with the normal business operations of FACS (i) to
observe, monitor and obtain information regarding the GE/Macy's
Serviced Accounts and to observe and monitor the implementation
by FACS personnel of the Credit and Collection Policy, (ii) to
observe whether the FACS Services and the Credit and Collection
Policy are being applied consistently between the GE/Macy's
Serviced Accounts and the FDS/Macy's Accounts and in compliance
with the provisions of the Program Agreement and (iii) to
examine, audit, inspect, copy and make copies of all of the data,
records, files, and books of account under the control of FACS
(whether received on computer, electromagnetic storage vehicles,
paper, film or other medium) and relating strictly to the
GE/Macy's Serviced Accounts and the FDS/Macy's Accounts and to
the back-up documentation relating to the reports provided
hereunder by FACS to the GE Parties. The GE Parties shall
exercise their rights to audit jointly. The costs and expenses
of any exercise by the GE Parties of their rights hereunder shall
be expenses of the Program and shall be borne by FACS and/or its
Affiliates to the extent such costs and expenses are included in
the Operating Expense Budget for the applicable Period in which
such costs and expenses were incurred. Notwithstanding any other
provision of this Agreement, the GE Parties shall not have any
access or audit rights with respect to any information in the
possession of FACS regarding services provided by FACS to any non-
affiliated third party other than the GE Parties. Employees of
FACS shall be permitted to be present during the exercise by the
GE Parties of any of their audit and access rights under this
Section 9.2(a).
(b) Rights of FACS. GE Bank shall permit FACS
and its respective designees, officers, employees, attorneys and
accountants and/or other representatives during normal business
hours with reasonable advance notice, in such manner as to
minimize interference with the normal business operations of GE
Bank, to examine, audit and inspect each of the Licensed
Locations in order to ensure compliance with the terms and
conditions governing the FACS License as set forth in Section 4.2
and with the provisions of Article 6. The cost and expense of
all such audits or examinations shall be borne by FACS.
Employees of GE Bank shall be permitted to be present during the
exercise by FACS of any of its audit and access rights under this
Section 9.2(b).
9.3 Entire Agreement; Amendments; Waivers
. This Agreement contains the entire agreement of the
parties hereto as to the subject matter discussed herein. Any
amendment to or modification of this Agreement must be in writing
and executed by authorized officers of FACS and the GE Parties.
No waiver by either party of any right or power it has under this
Agreement shall impair or be construed as a further waiver of
such right or power. To be effective, all waivers must be in
writing and signed by the party waiving its rights.
9.4 Assignability
. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns. Except as expressly provided with respect
to indemnification rights in Article 7, nothing herein shall
create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement. Neither
FACS, on the one hand, nor the GE Parties, on the other, may
assign their rights or obligations hereunder without the prior
consent of the other, except that in the case of a proposed
assignment by GE Bank to an Affiliate such consent shall not be
unreasonably withheld by FACS. FACS acknowledges that in
connection with a securitization or participation of GE/Macy's
Receivables pursuant to Section 9.4 of the Program Agreement, GE
Bank may agree to provide the credit processing services provided
hereunder to a trustee or other third party and FACS hereby
agrees that, in such circumstance, FACS shall continue to provide
the FACS Services to the GE Parties pursuant to the terms and
conditions hereof.
9.5 Relationship of Parties
. In performing under this Agreement, the parties are
acting as independent contractors and this Agreement shall not be
construed as providing either party with the right, power or
authority to impose any duty or obligation on the other except as
expressly provided herein.
9.6 GE Parties Rights and Obligations
. The rights and obligations of the GE Parties
hereunder are several and not joint. Without limiting the
generality of the foregoing, (i) the FACS Services to be provided
hereunder to GE Bank shall only be provided with respect to the
GE/Macy's Accounts and the Service Fees payable by GE Bank
hereunder shall only be payable with respect to the GE/Macy's
Accounts, (ii) the FACS Services to be provided herein to
GE Capital shall only be provided with respect to the GE/Macy's
Commercial Accounts and the Service Fees payable by GE Capital
hereunder shall only be payable with respect to the GE/Macy's
Commercial Accounts and (iii) GE Bank shall not have any
indemnification obligation hereunder with respect to Damages
arising out of or in connection with GE/Macy's Commercial
Accounts and GE Capital shall not have any indemnification
obligation hereunder with respect to Damages arising out of or in
connection with GE/Macy's Accounts.
9.7 Survival
. The provisions of Article 6, Article 7, and Sections
4.2 (for as long as any post-termination servicing occurs
pursuant to Section 8.6), Sections 8.6 and 8.7 (for as long as
any FACS Services continue to be provided by FACS hereunder), and
Section 9.2 (for as long as any post-termination servicing occurs
pursuant to Section 8.6) of this Agreement shall survive a
termination or expiration of this Agreement.
9.8 Notices
. Any notice or other communication required or
otherwise provided for under this Agreement shall be in writing
and shall be deemed given when delivered by hand or by courier or
express mail or by registered or certified United States mail,
return receipt requested, postage prepaid, or by facsimile if
receipt is acknowledged (except that a notice of termination or
breach shall not be sent by facsimile) and shall be addressed as
follows:
In the case of the GE Parties:
GE Capital Consumer Card Co.
5300 Kings Island Drive
Mason, OH 45040
Attn: Secretary
Fax: (513) 459-6888
and
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attn: Counsel, Retailer Financial Services
Fax: (203) 357-3353
with copies to:
Macy's Credit Services
4605 Duke Drive
Mason, OH 45040
Attn: Executive Vice President
Fax: (513) 573-3251
In the case of FACS:
FACS Group, Inc.
9111 Duke Blvd.
Mason, OH 45040
Attn: Senior Vice President
Fax: (513) 573-2039
with copies to:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, OH 45202
Attn: Law Department
Fax: (513) 579-7897
Either party hereto may, from time to time, change its address or
designated recipient for notification purposes by giving the
other party notice thereof and the date upon which it shall
become effective.
9.9 Ownership
. FACS shall have no right, title or interest in any
GE/Macy's Account, GE/Macy's Commercial Account, GE/Macy's
Receivable or GE/Macy's Commercial Receivable or the proceeds
thereof. All payments to be made by GE/Macy's Account Debtors or
Commercial Account Debtors shall be paid directly to GE Bank or
GE Capital, as the case may be. In the event that FACS is at any
time in possession of the proceeds of any GE/Macy's Receivable or
GE/Macy's Commercial Receivable, FACS shall hold such funds as
agent on behalf of GE/Macy's Account Debtors for transfer to GE
Bank or GE Capital, as the case may be.
9.10 Designees
. [OMISSION]
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
GE CAPITAL CONSUMER
CARD CO.
By: /s/ Kevin Knight
Name: Kevin Knight
Title: Executive Vice
President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Richard A. Hayes
Name: Richard A. Hayes
Title: Senior Vice President
Retailer Financial Services
FACS GROUP, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
Agreed and Acknowledged:
Federated Department Stores, Inc.
By: /s/ Ronald W. Tysoe
Name: Ronald W. Tysoe
Title: Vice Chairman and Chief Financial Officer
FDS National Bank
By: /s/ James R. Gudmens
Name: James R. Gudmens
Title: President
EXHIBIT A
FACS SERVICES
General. For purposes of this Exhibit A, references
herein to the "GE Parties" shall mean the "applicable GE
Parties." All of the FACS Services described hereafter shall be
provided by FACS (i) in accordance with, and as more fully
described in, the then applicable Credit and Collection Policy
and (ii) without limiting GE Bank's rights or altering the
obligations of Federated or any Retailers under the Program
Agreement or limiting GE Capital's rights under the Commercial
Accounts Agreement, including, without limitation, pursuant to
Sections 2.2, 4.4 and 4.5 of the Program Agreement.
I. FACS SERVICES
1. Marketing.
1.1 In accordance with the Program Agreement,
design and supervise all credit promotions.
1.2 Subject to the GE Parties' approval in
writing of all final GE/Macy's Credit Card Documentation (other
than charge slips, credit slips and receipts for payment) and
offers of credit, design, prepare and provide all of the
foregoing, including (a) credit card applications, (b) credit
card agreements, and (c) any required notices relating to changes
in GE/Macy's Serviced Account terms.
1.3 Develop and manage credit revenue programs,
other than programs provided by the GE Parties or their
Affiliates.
2. Account Approval and Setup.
2.1 Review all credit card applications by or on
behalf of prospective GE/Macy's Serviced Account holders,
determine the creditworthiness of prospective GE/Macy's Serviced
Account holders, approve creditworthy applicants, advise other
applicants of action taken, including mailing of adverse action
letters on behalf of the GE Parties.
2.2 Develop scoring criteria and establish and
revise credit guidelines for particular GE/Macy's Serviced
Account holders.
2.3 Provide reports of credit histories to credit
bureaus, as needed and as required by Law.
2.4 Establish credit lines and perform other
credit guideline management procedures.
3. Purchase Authorizations.
3.1 Process credit authorizations, which services
shall include looking up account numbers, processing
authorizations, verifying customer identification, reviewing and
making decisions with respect to referrals and authorizing sales
transactions.
4. Customer Service.
4.1 Provide authorization and instructions to GE
Capital on the issuance of credit cards to GE/Macy's Serviced
Account holders and authorized users, and perform routine account
maintenance functions, including address and name changes,
balance inquiries and lost and stolen card coding and execute
credit balance refunds.
4.2 Establish appropriate policies and procedures
to comply with applicable consumer credit law, including the
handling of Fair Credit Billing Act inquiries.
4.3 Provide fraud claims processing services in
accordance with the Credit and Collection Policy, and otherwise
use reasonable efforts to assist the GE Parties in fraud
prevention.
4.4 Resolve disputes with GE/Macy's Serviced
Account holders and as promptly and as amicably as possible make
necessary financial adjustment in accordance with the Credit and
Collection Policy.
4.5 Provide all services necessary to effect the
chargeback provisions set forth in the Program Agreement.
5. Systems Services.
5.1 Post, or cause to be posted, promptly all in
store payments and all payments received and transmitted via file
tapes by GE Capital to FACS or FSG, as the case may be, and
timely create and transmit to GE Capital billing files for each
GE/Macy's Serviced Account.
5.2 Use commercially reasonable efforts to
develop and introduce state-of-the-art technologies, design
systems to achieve, employ qualified personnel to meet and
otherwise satisfy the applicable Service Standards.
5.3 Maintain its computer files with respect to
the GE/Macy's Serviced Accounts such that the GE/Macy's Serviced
Accounts and receivables created thereunder may be specifically
identified and, upon the reasonable prior request of the GE
Parties and/or their agents or lenders, make available to the GE
Parties during FACS's normal business hours, any computer
programs necessary to make such identification and ensure data
integrity and data security and retain data and other records as
necessary.
5.4 Provide a computer link to give the GE
Parties, in accordance with the FACS License, direct access to
all agreed upon reports and information regarding the GE/Macy's
Serviced Accounts and the FDS/Macy's Accounts and agreed upon
electronic display of and access to (a) the account holder's
historical information, (b) account status information, (c) alpha
search capabilities and (d) reports and financial data.
5.5 Establish and maintain appropriate system
redundancy and back-up procedures for disaster relief.
6. Miscellaneous.
6.1 Post credit sales information.
6.2 Use commercially reasonable efforts to
protect the privacy of Account holder information from third-
party inquiries.
6.3 Provide all reports identified on Schedule A-
3 hereto, which reports may be provided on a divisional basis.
With respect to those reports on Schedule A-3 that indicate a
"need to be developed", the following provisions shall apply:
FACS shall use its best efforts to produce such reports or their
equivalent within 120 days after the date hereof. The GE Parties
agree to cooperate with FACS in this regard and assist FACS by
defining for FACS the parameters of such reports. The 120 day
period referred to above shall be extended with respect to any
report for the time, if any, that the GE Parties require in order
to provide FACS with the foregoing assistance.
6.4 Promptly advise the GE Parties of any
material litigation which may adversely affect (i) the
performance of FACS's responsibilities hereunder, or (ii) the
GE/Macy's Serviced Accounts or the GE/Macy's Receivables and
GE/Macy's Commercial Receivables.
6.5 FACS shall retain GE/Macy's Account
Documentation and GE/Macy's Commercial Accounts Documentation as
provided in the Credit and Collection Policy.
6.6 Maintain an updated GE Parties "do not call"
list and shall comply with all non-solicitation requests included
in such list. FACS shall update such list on a regular basis as
required by the GE Parties and provide copies thereof to the GE
Parties if requested.
6.7 Printing and mailing of collection letters as
requested by GE Bank in accordance with the Credit and Collection
Policy.
6.8 Inform all suppliers of credit and fraud
information to FACS in connection with the FACS Services that
such services and information shall be used for the benefit of
GE Bank.
II. FACS SERVICE STANDARDS
Service Category Standard
(all days are Business Days,
measured from but excluding
date inquiry or notice or data
is received by FACS; all
standards expressed are
averages calculated over a
measurement period of an FDS
fiscal quarter)
New Accounts
- - Mail-in application - elapsed 7 days
time from date received until
decision is made
- - In-store application inquiries 5 minutes
- - response not requiring
verification within
- - Speed of answer 15 seconds
- - Percent of calls abandoned 2.5 percent
Purchase Authorizations
- - Speed of answer 15 seconds
- - Percent of calls abandoned 2.5 percent
- - Lost and stolen card coding Immediately
- - Point-of-sale (POS) network Less than 3 seconds
switch to FSG and return to POS
switch
Customer Satisfaction
- - Credit balance refunds - 3 days
elapsed time from inquiry date
until check request transmitted
to GE Bank
- - Presidential complaints 2 days (best effort same day)
(receipt by Presidential Desk)
- - Customer contact within
- - Fair Credit Billing (FCB) 5 days
inquiry acknowledged
- - FCB resolution According to Fair Credit
Billing Act
- - Speed of answer 20 seconds
- - Percent of calls abandoned 4 percent
- - Customer correspondence - 7 days
response and action taken
Systems
- - On line availability 98.5%*
- - Response Time To be not slower than (i) that
received at FACS locations and
(ii) FACS historical response
time for 1996.
_______________
* To be calculated with respect to hours during which
collections on GE/Macy's Serviced Accounts can be legally
made, other than downtime due to power failures, natural
disasters or other force majeure events.
EXHIBIT B
I. FACS Credit Software
FSG Systems
SCM - FSG Credit System
TRMS - FSG Report Management Utility
TPX - Security Gateway
PC Based Collections Screen
II. Licensed Locations
1. Arlington, TX
GE Capital Credit Services
1301 S. Bowen Road
Arlington, TX 76013
2. Addison, IL
GE Capital Credit Services
2100A Corporate Drive
Addison, IL 60101
3. Macon, GA
GE Capital Credit Services
5665 New Forsyth Road
Macon, GA 31210
4. Atlanta, GA
Financial Services Group
5665 New Northside Drive
Atlanta, GA 30328
5. Alpharetta, GA
GE Capital
1001 Windward Concourse
Alpharetta, GA 30202
6. Mason, OH
Macy's Credit Services
4605 Duke Drive
Mason, OH 45040
7. Stamford, CT
GE Capital
1600 Summer Street
Stamford, CT 06927
EXHIBIT C
GE CONVERSION INFORMATION
[OMISSION]
EXHIBIT D
FORM OF EMPLOYEE CONFIDENTIALITY AGREEMENT
(For GE Authorized Users)
Pursuant to an Agreement between FACS Group, Inc.
("FACS"), GE Capital Consumer Card Co. and General Electric
Capital Corporation (collectively, the "GE Parties"), FACS
provides processing and other services to the GE Parties and has
licensed certain systems and software to the GE Parties.
In the course of your employment you may receive or
otherwise have access to information, data or materials owned by
FACS which the GE Parties are under an obligation to treat as
strictly confidential. (For purposes of this Confidentiality
Agreement, information, data and materials relating to systems,
applications, related documentation and other trade secret
information of FACS are referred to as "Confidential
Information".)
In order to preserve and protect the confidentiality of
all Confidential Information, you are required to sign a copy of
this Confidentiality Agreement, thereby acknowledging and
agreeing that:
(i)You have been informed of and understand
the confidential nature of the
Confidential Information you may receive
or have access to;
(ii) You will not disclose the
Confidential Information except (x) to a
fellow employee, subcontractor,
consultant or agent who also has executed
a Confidentiality Agreement and then,
only on a "need-to-know" basis or (y) as
compelled to do so by a court or other
governmental or quasi-governmental entity
or as consented to in writing by FACS;
(iii) That disclosure of any Confidential
Information to any person other than as
permitted herein may cause serious injury
to FACS and the GE Parties; and
(iv) During and after your employment
with us, except as required to perform
your assigned duties as our employee, you
will not use or reproduce, for any
purpose, any of the Confidential
Information that you receive or to which
you have access.
I hereby acknowledge that I have read and understood
the foregoing Confidentiality Agreement, and I agree not to
disclose, use or reproduce any Confidential Information except as
provided herein.
__________________________
(Signature)
______________________________
(Print) Date
FACS Reports
Schedule A-3
GE Capital will be provided with EZ Trieve reporting in equivalent
priority with other internal FACS requests as future needs are identified.
Finance and Operations
GECCCC Reports Description FACS Report Exhibit
&
# Pages
General Ledger/Control Financial data by cycle XSCM2090
Totals & CMR and A/R Control totals
General Ledger A/R daily activity XSCM295
General Ledger/CMR/Misc. Write-off/recovery XSCM405
Dispatll Reports information and misc.
financial-data by cycle
Ad Hoc System Report By Unused open-to-buy XSCM285 A-1 pg
RFS-IS balance
Ad Hoc System Report by Total credit limit on XSCM285 A-1 pg
RFS-IS accounts (open accounts
only)
Ledger Reconciliation Detail posting for G/L XSCM882
System accounts
Client Management Reports Delinquency Data XSCM435/436
Client Management Reports Total active accounts XSCM146 (Currently
(financial reports purchase
active/inactive) active. Needs to
be financial
active.)
General Ledger/Dispatll ABIG insurance premium XSCM176-01&02
Reports activity by state
General Ledger/Dispatll Financial activity on XSCM422
agency accounts
General Ledger Write-off activity XSCM440
Dispatll Write-off projections XSCM888
General Ledger Write-off due to XSCM996
bankruptcy
Monthly Operating Review Monthly totals for Needs To Be B-12 pgs
sales, calls, head Developed
count, etc.
Charge Backs By Category Charge Backs By Category Needs To Be C-2 pgs
By Division By Division Developed
# and $ Dispute By Age Summary of accounts in Needs To Be D-1 pg
and By Queue dispute by time and by Developed
category
# and $ In Dispute Not In Summary of accounts in Needs To Be D-1 pg
Queue By Age # and $ In dispute that are not in Developed
Dispute Bt Age a queue to be worked and
summary of accounts in
dispute by age
# Of Items In Dispute By Number of items in Needs To Be E-1 pg
Queue Beyond Charge Back dispute by queue (i.e., Developed
Big ticket, media,
fraud, etc.) beyond
contractual chargeback
time frame
Service Level By Day By Daily service level Needs To Be F-4 pgs
Division reporting by area (i.e., Developed
Authorization, New
Accounts, Customer
Service)
General Ledger Sub-total of write-off XSCM996
activity for
bankruptcies
Ad Hoc - Account Type Balance and FC Needs To Be G-2 pgs
Summary information by account Developed
type (i.e., CCCS, Club,
Commercial, etc.)
Ad Hoc - Periodic Rate Periodic rate with # and Needs To Be H-4 pgs
by Division $'s of accounts Developed
Ad Hoc - Status Code O/S and FC by status Needs To Be I-2 pgs
Summary Report code Developed
Ad Hoc - Status Code Performance by status Needs To Be J-2 pgs
Activity Report code Developed
General Ledger Insurance premium XSCM421
adjustments
Ad Hoc - Convenience Balance and count Needs To Be AJ-10
Users Summary information on Developed pgs
convenience users and
revolvers
Ad Hoc - Payment Errors Summary of dollar and Needs To Be AK-1
Monthly Summary number of errors by Developed pg
division
Risk
GECCCC Reports Description FACS Report Exhibit
&
# Pages
History Of Changes - A log of authorization 511-01 Action
Authorizations variable changes and who Table Change Log
(IDMRCS59) made the changes
Authorization Transaction Authorization 395-01, 05, 06, 07
Summary (A111D005) transaction statistics Credit Statistical
on POS approvals, Report
referrals, denials, and
referral overrides
Algorithm Override A count of referrals by 609-01, 02
Summary (A111M084) referral type and final Referral Analysis
outcome of the referral Report
Behavior Score Distribution of number 950
Distribution of accounts by Behavior
score
GEMM Score Distribution Distribution of number Needs To Be M-3 pgs
of accounts by Bureau Developed
Score
Applications On Hold By Lists applications which 215-04, 215-05
Age - via OLMACD04 have been processed, but
not yet decisioned
Credit Bureau Report Displays the number of 124-06, 248-01,
Tallies - via OLMACW07 credit bureaus requested 248-02
Application Statistics By Statistical volume and 218-02, 218-04
Store - via OLMACW25 approval information by
store
Source Mix - via OLMACW08 Provides statistical 215-01
and OLMACW32 data by type of
application input
Application Overrides - Summary of override 7031
via OLGECM29 activity by outcome code
(i.e., number of policy
reject overrides)
Prescreen Tracking - via Response rates, 146-1 N-1 pg
Promotion Tracking utilization rates, etc.,
of pre-screen mailings
Utilization Of C/L Tracks balances on Needs To Be O-3 pgs
Reporting accounts vs. credit Developed
lines available
Auditing Associate Used to monitor employee Needs To Be P-1 pg
Decisions Greater Than adherence to their Developed
Their Delegated Level Of credit line authority
Authority
Bad Rates By Line Used to measure score 146-1
Assignment - via Score cut-offs, credit line
performance report assignments
Score Performance Measures the validity FICO 307 and 309
(vintage, geographical, and profitability of
region) - via IDMSMBS and scoring algorithms
Through The Door (TTD)
Dist.
System Table Change To monitor changes made Needs To Be
Audit - Apps. to application tables, Developed -
profiles (display audit Exhibit Not
trail) Included
Credit Line Assignment Reviews validity of EZ Trieve as S-2 pgs
Review - via Score credit line assignment needed
Performance Report tables
Audit Of Guideline Used to monitor possible Needs To Be Q-1 pg
Increases On Employee internal fraudulent Developed
Accounts guideline increases
Portfolio Review Vintage Portfolio statistics by Needs To Be R-1 pg
Analysis date open Developed
Ad Hoc - Totals For W/O Sum of # and $'s written T-2 pgs
Accts and Regular off by write-off code
Accounts Over $10,000 and a list of accounts
over $10,000
Ad Hoc - List Of Accounts List Of Accounts With U-1 pg
With Balances Over Balances Over $10,000
$10,000
Ad Hoc - Credit Limit To Outstandings by credit V-2 pgs
Outstandings limit
Collections
GECCCC Reports Description FACS Report Exhibit
&
# Pages
Merchant Status Report Summary report detailing 405
all financial changes to
the cycle being billed
New Collection Accounts Lists new accounts added 406
to collections
Removal From Collections Lists accounts removed 407
from collections
Special Activity Reports Lists and credits or 421
debits assessed to an
account for a specific
revenue accounts
Financial Activity on Shows financial activity 422
Agency Accounts on an account that has
an agency code
Daily Financial Aging Provides balance totals 435
Totals by account type
Delinquency Aging Totals Provides balance totals 436
by account type
Agency/Attorney Lists accounts assigned 437
to attorneys and
agencies
New P&L Accounts Lists accounts new to 440
P&L
Write-off By Effort Lists actions taken to 450
collect on accounts
prior to the time of
write-off
Category Workload Summarizes the 464
collection category
workloads
Collector Detail Accounts worked by 465
collector
Promises Met VS. Promises Promise to pay ratio by 467
Expected collector
Daily Effort By Collector Accounts worked by 468
collector
Daily Payments Received Daily dollars generated 470
Against Collection by collector
Accounts
Application Request For Displays applications 471
Collection Accounts requested to be viewed
by the collection
department
Collection Auto Dun Lists accounts that 471-03
Letter Recipient received an automatic
Dun letter
Collection Control Lists accounts by 479
Selected Category category
Accounts
Write-off Projection Projection of write-offs 888
Current Billing Cycle
Financial Cycle Aging Analysis of dollars in 987
collections based on the
financial age of
accounts in addition to
write-off information
Old P&L Now Bankrupt Detail on accounts 991
assigned to a specific
agency for recovery
New Bankrupt P&L Detailed information on 996
accounts that have filed
bankruptcy
Team Trend Report Report showing dollars Needs To Be K-10 pgs
delinquent and Developed
collections
effectiveness/roll rate
by delinquent age/by
region/frequency: each
billing or on demand mid-
month
Extension Report Report tracking number Needs To Be L-1 pg
of extensions/manual Developed
cures
Marketing
GECCCC Reports Description FACS Report Exhibit
&
# Pages
Express Credit Approval Application/approval 218
Report volumes for express
credit by store location
POS Report Monthly POS performance 7030/7051/7052
(activation/sales (First Time
analysis) Shopper)
Program Profitability Various GECCCC reports Source Code
Reporting that track the following Reports* for the
customer segments following:
Express Credit Accounts Express Credit
Accounts
All Prescreen Accounts All Prescreen
Accounts
Hostess Booths Accounts Hostess Booths
Accounts
Insured/Non-Insured Needs To Be AG-1 pg
Accounts Developed
Premier Club Accounts Needs To Be AG-1 pg
Developed
President's Club Needs To Be AG-1 pg
Accounts Developed
Revolver/Transactors Needs To Be AG-1 pg
Developed
Account Type (Flex, TOP, Needs To Be AG-1 pg
Club) Developed
Converted Accounts Needs To Be AG-1 pg
Developed
Credit Penetration Credit Sales by store Standard Report
Reports and department
Insurance Adjustment Premium Adjustments by Special Activity
Report Account Report
Promotion Tracking Reactivation/Activation LCAURM39 - Needs AH-1 pg
To Be Developed
President's Club LCAURM39 - Needs AH-1 pg
To Be Developed
Attrition/Inactivity Tracks trends in Needs To Be AI-2 pgs
Analysis inactivity/attrition Developed
APPS08 Store Insurance Needs To Be W-2 pgs
Penetration Developed
Insurance Response Response information by Needs To Be X-1 pg
Reports source Developed
Top 100 Top 100 customers by Needs To Be Y-1 pg
store Developed
PPS - Insurance Insurance Financial Needs To Be Z-1 pg
Performance Analysis Developed
Pyramid Monthly Client Segment by time on file Needs To Be AA-2 pgs
Update (2) Developed
Pyramid Customer Decile Customer deciles by Needs To Be AB-1 pg
accounts Developed
Pyramid Dollar Decile Customer deciles by Needs To Be AC-1 pg
spending Developed
Pyramid Decile Movement Customer decile movement Needs To Be AD-1 pg
Developed
Revolvers Monthly Revolver Needs To Be AE-2 pgs
Performance Developed
Deferred Billing Deferred Billing 405
transactions
Premier Club Performance Premier Club customer Needs To Be AH-1 pg
performance Developed
Ad Hoc - Credit Limit to YTD sales by credit Needs To Be AF-2 pgs
YTD Sales limit Developed
(1) Report needed for non-Macy's divisions for new accounts if
joint insurance program is implemented
(2) Current report with minor adjustments
*With "First Day's Purchases" (sales/Trans) added to source code
and activation reports
Schedule 4.2(e)
Permitted GE Access Software
I. Terminal Emulation Software: used for online user
interaction with mainframe software applications.
Software Application Manufacturer
1. Personal Communications/3270v3.0 and IBM
higher
2. EXTRA!v4.2 and higher Attachmate Corp.
3. Quick3270v1.0 and higher none-shareware
II. SNA Gateway Software: used for establishing communication
between mainframe and display or print devices.
Software Application Manufacturer
1. Netware for SAAv2.0 and higher Novell
III. File Transfer Software: used for copying data files to
the mainframe from Local Area Network (LAN) and from LAN to
mainframe.
Software Application Manufacturer
1. CONNECT:Directv1.2 and higher Sterling Commerce
2. XCOMv1.0 and higher Computer Associates
IV. Other Software/Systems: receive data from or transmit data
to the mainframe.
Software Application Manufacturer
1. Unison (autodialer) Davox Corp.
2. Recover Master Rothenberg Systems Intl.
Execution Copy
FDS GUARANTY
GUARANTY, dated as of June 4, 1996 ("Guaranty"), made
by FEDERATED DEPARTMENT STORES, INC., a Delaware corporation (the
"Guarantor"), in favor of the Guaranteed Parties referred to
below. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Amended and Restated Program
Agreement, dated as of the date hereof (the "Amended and Restated
Program Agreement").
WHEREAS, Monogram Bank, USA ("Monogram"), R. H. Macy &
Co., Inc. ("Macy"), Macy's Northeast, Inc. ("Macy's Northeast"),
Macy's South, Inc. ("Macy's South"), Macy's California, Inc.
("Macy's California"), Bullock's, Inc. ("Bullock's"), I. Magnin,
Inc. and Macy Specialty Stores, Inc. entered into a Credit Card
Program Agreement dated as of May 10, 1991 (the "Program
Agreement"); and
WHEREAS, contemporaneously herewith, GE Capital
Consumer Card Co. (as the successor to Monogram) ("GE Bank"),
Guarantor (as the successor to Macy), FDS National Bank ("FDS
Bank"), FACS Group, Inc. ("FACS"), Macy's East (as the successor
to Macy's Northeast and Macy's South), Macy's West (as the
successor to Macy's California), Bullock's, Broadway Stores, Inc.
("Broadway") and MSS-Delaware, Inc. ("MSS") are entering into the
Amended and Restated Program Agreement amending and restating the
Program Agreement in its entirety; and
WHEREAS, General Electric Capital Corporation ("GE
Capital"), Macy, Macy Credit Corp., Macy Receivables Funding
Corp., Macy's California, Macy's Northeast, Macy's South,
Bullock's, I. Magnin, Macy Receivables Master Servicing Corp. and
Macy Specialty entered into a Commercial Accounts Agreement,
dated as of May 10, 1991 (the "Commercial Accounts Agreement");
and
WHEREAS, contemporaneously herewith, GE Capital,
Guarantor, FDS Bank, Macy's East, Macy's West, Bullock's,
Broadway, FACS, and MSS are entering into the Amended and
Restated Commercial Accounts Agreement amending and restating the
Commercial Accounts Agreement in its entirety; and
WHEREAS, contemporaneously with the execution of the
Amended and Restated Program Agreement and the Amended and
Restated Commercial Accounts Agreement, GE Bank, GE Capital and
FACS are entering into the FACS Services Agreement and GE
Capital, Guarantor, FDS Bank and FACS are entering into the GE
Capital Services Agreement (the Amended and Restated Program
Agreement, the Amended and Restated Commercial Accounts
Agreement, the FACS Services Agreement and the GE Capital
Services Agreement, as they may be amended, supplemented or
otherwise modified from time to time, referred to hereinafter
collectively as the "Guaranteed Agreements"); and
WHEREAS, FDS Bank and the other FDS Companies are
wholly owned subsidiaries of Guarantor; and
WHEREAS, Guarantor desires to execute this Guaranty to
induce GE Bank and GE Capital to execute, deliver and perform
their respective obligations under the Guaranteed Agreements (GE
Bank, GE Capital, their Affiliates and their respective officers,
directors, agents and representatives are referred to herein
collectively as the "Guaranteed Parties").
NOW, THEREFORE, in consideration of the premises and to
induce the Guaranteed Parties to execute, deliver and perform
their respective obligations under the Guaranteed Agreements, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor
hereby agrees as follows:
SECTION 1. Guaranty. (a) The Guarantor hereby
unconditionally and irrevocably guarantees the full and prompt
payment when due and performance, subject to, and on the terms
and conditions set forth in the Guaranteed Agreements, of the
specific obligations of FDS Bank, FACS, and each of the other FDS
Companies and their respective successors and assigns
(collectively, the "Obligors") under the Guaranteed Agreements
whether now existing or hereafter arising (collectively, the
"Obligations"), and any and all expenses (including, without
limitation, counsel fees and expenses) incurred by any of the
Guaranteed Parties in enforcing any rights under this Guaranty to
the extent such Guaranteed Party is entitled to performance or
payment under this Guaranty. This Guaranty is an absolute
guaranty of payment and performance and not a guaranty of
collection.
SECTION 2. Guaranty Absolute. (a) The Guarantor
guarantees that the Obligations will be paid and performed
strictly in accordance with the terms of each of the Guaranteed
Agreements as then in effect, provided that the liability of the
Guarantor under this Guaranty shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of any
provision of any of the Guaranteed Agreements or any other
agreement or instrument relating to the Guaranteed Agreements, or
avoidance or subordination of any of the Obligations;
(ii) any change in the time, manner or place of payment
or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of any term of, or
any consent to departure from any requirement of, any of the
Guaranteed Agreements;
(iii) any waiver, consent, extension, forbearance
or granting of any indulgence by any of the Guaranteed Parties
with respect to any provision of any of the Guaranteed
Agreements; or
(iv) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a
guarantor.
(b) Subject to the foregoing provisions of Section
2(a) hereof, the Guarantor shall only be liable hereunder with
respect to any Obligation to the same extent that the respective
Obligor would be liable under the respective Guaranteed Agreement
with respect to that Obligation (subject to the terms, conditions
and limitations set forth in Article X of the Amended and
Restated Program Agreement and Article 7 of the FACS Services
Agreement).
SECTION 3. Waiver. (a) The Guarantor hereby
(i) waives (A) promptness, diligence, notice of acceptance and
any and all other notices with respect to any of the Obligations
or this Guaranty, (B) the filing of any claim with any
Governmental Authority in the event of the insolvency or
receivership of any of the Obligors, (C) protest or notice with
respect to nonperformance or nonpayment of all or any of the
Obligations, and (D) all demands whatsoever; and (ii) covenants
and agrees that this Guaranty will not be discharged except by
complete performance of the Obligations and any other obligations
of the Guarantor hereunder.
(b) If, in the exercise of any of its rights and
remedies, any of the Guaranteed Parties shall forfeit any of its
rights or remedies, whether because of any applicable Law
pertaining to "election of remedies" or the like, the Guarantor
hereby consents to such action by such Guaranteed Party and
waives any claim based upon such action. Any election of
remedies which results in the denial or impairment of the right
of such Guaranteed Party to seek a deficiency judgment against
any of the Obligors shall not impair the obligation of the
Guarantor to pay the full amount of the Obligations or any other
obligation of the Guarantor contained herein.
(c) The Guarantor consents and agrees that the
Guaranteed Parties shall be under no obligation to marshal any
assets in favor of the Guarantor or otherwise in connection with
obtaining payment of any or all of the Obligations from any
Person or source.
SECTION 4. Representations and Warranties. The
Guarantor hereby represents and warrants to the Guaranteed
Parties as follows:
(a) Organization and Good Standing. The Guarantor (i)
is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware, and (ii) has
all requisite corporate power and authority to execute, deliver
and perform this Guaranty.
(b) Authorization. The Guarantor has taken all
necessary corporate action to authorize the execution, delivery
and performance by the Guarantor of this Guaranty. The Guarantor
has duly and validly authorized, executed and delivered this
Guaranty, and this Guaranty constitutes the legal, valid and
binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(c) Effect of Agreement. The execution, delivery and
performance by the Guarantor of this Guaranty will not, with or
without the giving of notice or the lapse of time, or both, (a)
violate any provision of Law to which the Guarantor is subject,
(b) violate any judgment, order, writ or decree of any court
applicable to the Guarantor, or (c) conflict with any provision
of the Certificate of Incorporation or By-Laws of the Guarantor
or result in the breach of, or conflict with, any term, covenant,
condition or provision of any Contract to which the Guarantor is
a party or by which any of its assets or properties is or may be
bound, other than violations, breaches or conflicts which could
not reasonably be expected to have a material adverse effect upon
Guarantor's ability to fulfill its obligations hereunder (a
"Guarantor Material Adverse Effect").
(d) Consents. No Consent, authorization or approval
of, or exemption by, or filing with, any Governmental Authority
or any other Person is required to be obtained by the Guarantor
in connection with the execution, delivery and performance by the
Guarantor of this Guaranty or the consummation by the Guarantor
of the transactions contemplated hereby, except for consents,
authorizations, approvals and filings made or obtained prior to
the date hereof or those the failure to obtain or make which
could not reasonably be expected to have a Guarantor Material
Adverse Effect.
(e) Litigation. There is no Litigation pending before
any Governmental Authority or any private arbitration tribunal,
or, to the knowledge of the Guarantor, threatened against,
relating to or affecting the Guarantor, the resolution of which
could reasonably be expected to have a Guarantor Material Adverse
Effect.
SECTION 5. Amendments, Etc. No amendment or waiver of
any provision of this Guaranty nor consent to any departure by
the Guarantor herefrom shall in any event be effective unless the
same shall be in writing and approved and signed by GE Capital
and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 6. Addresses for Notices. All notices and
other communications provided for hereunder shall be in writing
(including telegraphic, telex or facsimile communication) and
mailed (return receipt requested), telegraphed, telexed,
facsimilied, delivered via next day courier or delivered by hand.
If to the Guarantor, such notices shall be addressed to it at the
address indicated on the signature page hereto. If to any
Guaranteed Party, such notices shall be addressed to it at the
address of such Guaranteed Party specified in the Amended and
Restated Program Agreement. Either party may provide such other
address as shall be designated by such party in a written notice
to each other party complying as to delivery with the terms of
this Section 6. All such notices and other communications shall
be effective when received by the party to whom addressed.
SECTION 7. No Waiver; Remedies. (a) No failure on
the part of any of the Guaranteed Parties to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by Law
or the Guaranteed Agreements.
(b) Failure by any of the Guaranteed Parties at any
time or times hereafter to require strict performance by any of
the Obligors or the Guarantor of any of the provisions,
warranties, terms or conditions contained in any of the
Guaranteed Agreements shall not waive, affect or diminish any
right of any of the Guaranteed Parties any time or times
hereafter to demand strict performance thereof, and such right
shall not be deemed to have been modified or waived by any course
of conduct or knowledge of any of the Guaranteed Parties or any
agent, officer or employee of any of the Guaranteed Parties.
(c) No waiver by the Guaranteed Parties of any default
shall operate as a waiver of any other default or the same
default on a future occasion, and no action by any of the
Guaranteed Parties permitted hereunder shall in way affect or
impair any of the rights of the Guaranteed Parties or the
obligations of the Guarantor under this Guaranty or under the
Guaranteed Agreements. Any determination by a court of competent
jurisdiction of any amount constituting any of the Obligations
shall be conclusive and binding on the Guarantor irrespective of
whether the Guarantor was a party to the suit or action in which
such determination was made.
SECTION 8. Continuing Guaranty. This Guaranty is a
continuing guaranty and shall (i) remain in full force and effect
until indefeasible payment and performance in full of the
Obligations and all other amounts payable under this Guaranty,
(ii) be binding upon the Guarantor, its successors and assigns,
and (iii) inure to the benefit of and be enforceable by the
Guaranteed Parties and their respective successors, transferees
and assigns.
SECTION 9. Reinstatement. This Guaranty shall remain
in full force and effect and continue to be effective should any
of the Obligors become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed
for all or any significant part of the assets of any of the
Obligors, and shall, to the fullest extent permitted by Law,
continue to be effective or be reinstated, as the case may be, if
at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable Law, rescinded or
reduced in amount, or must otherwise be restored or returned by
any obligee of the Obligations or such part thereof, whether as a
"voidable preference," "fraudulent transfer," or otherwise, all
as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Obligations shall, to the
fullest extent permitted by Law, be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored
or returned.
SECTION 10. Governing Law. This Guaranty shall be
governed by, and construed and interpreted in accordance with,
the Laws of the State of New York without regard to its conflict
of Laws provisions. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective
and valid under applicable Law, but if any provision of this
Guaranty shall be prohibited by or invalid under applicable Law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity and without invalidating the remaining
provisions of this Guaranty.
SECTION 11. Submission to Jurisdiction. (a) Any
legal action or proceeding with respect to this Guaranty or any
document related thereto may be brought in the courts of the
State of New York or the United States of America for the
Southern District of New York, and, by execution and delivery of
this Guaranty, the Guarantor hereby accepts for itself and in
respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Guarantor hereby
irrevocably waives any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective
jurisdictions and consents to the granting of such legal or
equitable relief as is deemed appropriate by such courts.
(b) The Guarantor irrevocably consents to the service
of process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Guarantor at its address
provided herein, such service to become effective 30 days after
such mailing.
(c) Nothing contained in this Section shall affect the
right of any Guaranteed Party to serve process in any other
manner permitted by Law or commence legal proceedings or
otherwise proceed against the Guarantor or any of the Guarantor's
property in any other jurisdiction.
SECTION 12. Miscellaneous. All references herein to
the Obligors or to the Guarantor shall include their respective
successors and assigns, including, without limitation, a
receiver, trustee or debtor-in-possession of or for any of the
Obligors or the Guarantor. All references to the singular shall
be deemed to include the plural where the context so requires.
IN WITNESS WHEREOF, the Guarantor has caused this
Guaranty to be fully executed and delivered by its duly
authorized officer on the date first above written.
FEDERATED DEPARTMENT STORES, INC.
By: /s/ Ronald W. Tysoe
Name: Ronald W. Tysoe
Title: Vice Chairman and Chief Financial
Officer
ADDRESS FOR NOTICES:
7 West Seventh Street
Cincinnati, OH 45202
Attention: Law Department
Execution Copy
GE CAPITAL CREDIT SERVICES AND LICENSE AGREEMENT *
This GE CAPITAL CREDIT SERVICES AND LICENSE AGREEMENT,
dated as of June 4, 1996, is entered into by and among General
Electric Capital Corporation ("GE Capital"), FDS National Bank
("FDS Bank"), Federated Department Stores, Inc. ("Federated") and
FACS Group, Inc. ("FACS") (FDS Bank, Federated and FACS being
sometimes referred to herein as the "FDS Parties"). Certain
capitalized terms used herein have the meanings given to them in
Article 1 hereof or, if not defined herein, have the meanings
given to them in the Program Agreement.
WHEREAS, FDS Bank is the owner of the FDS Serviced
Accounts;
WHEREAS, GE Capital is the owner of the GE/Macy's
Commercial Accounts and GE Capital Consumer Card Co. ("GE Bank")
is the owner of the GE/Macy's Accounts;
WHEREAS, GE Bank has provided heretofore all credit
processing and collection services with respect to the GE/Macy's
Accounts utilizing credit systems owned or licensed by GE Capital
and GE Capital has provided certain credit services with respect
to certain FDS/Macy's Accounts, and FACS has provided all credit
processing and collection services with respect to the FDS
Serviced Accounts (including certain FDS/Macy's Accounts)
utilizing credit systems owned or licensed by FACS or its
affiliates;
WHEREAS, the FDS Parties and GE Capital wish to
facilitate generally uniform treatment of, and performance by,
the GE/Macy's Accounts and the FDS Serviced Accounts by utilizing
common systems and software for the servicing of all such
accounts;
WHEREAS, GE Capital and the FDS Parties expect that
certain economies of scale would be derived from allocating the
responsibility for providing all credit processing services
required with respect to GE/Macy's Accounts and FDS/Macy's
Accounts between GE Capital and FACS such that each would provide
certain credit services with respect to such accounts;
Rider X
______________________
* Confidential portions of this Exhibit have been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
WHEREAS, in furtherance of the foregoing, (a) GE
Capital and the FDS Parties are entering into this Agreement for
purposes of setting forth the terms and conditions that will
govern the provision of certain services by GE Capital to the FDS
Parties and the license by GE Capital to the FDS Parties of
certain software and (b) GE Bank, GE Capital, and FACS are
entering into, contemporaneously herewith, the FACS Credit
Services and License Agreement for purposes of setting forth the
terms and conditions that will govern the provision of certain
services by FACS to GE Bank and GE Capital and the license by
FACS to GE Capital and GE Bank of the FACS credit system and
software.
NOW, THEREFORE, in consideration of the terms and
mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions
. When used in this Agreement, the following
capitalized terms shall have the meaning specified below:
"Agreement" means this GE Capital Credit Services and
License Agreement as it may be amended, modified or restated from
time to time.
"Credit Insurance Program" means all credit life,
disability, and involuntary unemployment insurance programs.
"FACS Services Agreement" means the FACS Credit
Services and License Agreement among GE Bank, GE Capital and FACS
dated as of the date of this Agreement as it may be amended,
modified or restated from time to time.
"FDS Event of Default" has the meaning given to it in
Section 8.3.
"FDS Information" means data with respect to FDS
Serviced Accounts transmitted by computer to GE Capital.
"FDS Information Condition" means, with respect to any
FDS Information, that (i) such information is received by GE
Capital at a time which allows GE Capital to perform the GE
Capital Services as required hereby, (ii) such information is
complete and accurate and (iii) such information is in a form
that is readily usable by the GE Capital Credit System.
"FDS Serviced Accounts" means (i) the FDS/Macy's
Accounts and (ii) all other private label credit card accounts
owned by, and with respect to which credit is extended by, FDS or
FDS Bank and that utilize any tradename owned by the retail
divisions of FDS as of the date hereof (each group of accounts
utilizing each such tradename constitutes a "Non-Macy's
Portfolio").
"GE Capital License" means the license of the GE
Capital Credit Software by GE Capital to the FDS Parties pursuant
to Section 4.1.
"GE Capital Services" means the services required to be
provided by GE Capital hereunder with respect to the FDS Serviced
Accounts as described in Article 3 hereof and in Section I of
Exhibit A hereto.
"GE Capital Credit Software" means the personal
computer software programs identified in Section I of Exhibit B.
"GE Capital Credit System" means the mainframe computer
system and GE Credit Software developed, owned and utilized by GE
Capital to provide credit processing services, as the same may be
modified, enhanced or replaced from time to time after the date
hereof.
"GE Event of Default" has the meaning given to it in
Section 8.1.
"Licensed Location(s)" means the location(s) identified
in Section II of Exhibit B in which certain authorized employees
of the FDS Parties may access and use the GE Capital Credit
Software in accordance with the GE Capital License.
"Material Adverse Effect" means any material adverse
change in the quality or financial condition of the FDS/Macy's
Accounts or any Non-Macy's Portfolio, each taken as a whole.
"Program Agreement" means the Amended and Restated
Credit Card Program Agreement, dated as of the date hereof,
entered into by and among Federated, FDS Bank, GE Bank, FACS and
the other parties thereto as it may be amended, modified or
restated from time to time.
"Service Fees" means the fees payable by the FDS
Parties for the GE Capital Services, as specified in Article 3.
"Service Standards" means the minimum service
performance levels at which the GE Capital Services are required
to be provided hereunder, as specified in Section II of Exhibit
A.
"Term" has the meaning given to it in Section 2.1
hereof.
1.2. General
. Except as the context may otherwise require, (i)
words of any gender include the other gender, (ii) words using
the singular or plural number also include the plural or singular
number, respectively, (iii) the terms "hereof", "herein",
"hereby", and any derivative or similar words refer to this
entire Agreement, and (iv) the term "including" means "including,
but not limited to". Whenever this Agreement refers to a number
of days or months, such number shall refer to calendar days or
months unless otherwise specified. The Exhibits and Schedules
attached hereto are incorporated herein by this reference and
constitute a part of this Agreement.
ARTICLE 2
TERM
2.1 Term
. The term of this Agreement shall commence on the
date hereof and expire simultaneously with the termination of the
Program Agreement, unless sooner terminated as provided herein
(the "Term"), provided that following termination of this
Agreement the FDS Parties shall have the right to require GE
Capital to continue providing all or a portion of the GE Capital
Services for up to six months after termination pursuant to the
provisions of Section 8.6.
ARTICLE 3
CREDIT SERVICES
3.1 Appointment of GE Capital
. Each of FDS Bank, Federated and FACS hereby appoints
GE Capital, and GE Capital hereby accepts appointment, as the
agent of FDS Bank, Federated and FACS, respectively, for
providing the GE Capital Services with respect to the FDS
Serviced Accounts. The parties hereby acknowledge and agree that
notwithstanding any other provisions of this Agreement to the
contrary, all obligations of GE Capital to perform the GE Capital
Services shall be subject to the prior satisfaction of the FDS
Information Condition.
3.2 GE Capital Services
. GE Capital shall provide the GE Capital Services
(including, without limitation, delivery of the reports described
on Schedule A-3 hereto) and shall comply with the Credit and
Collection Policy and the FACS License (as defined in the FACS
Services Agreement) in providing the GE Capital Services. In
providing the GE Capital Services, GE Capital will use the FACS
Credit System which has been licensed to GE Capital pursuant to
the FACS Services Agreement. In this regard, GE Capital agrees
to be bound by and to comply with the terms and conditions of the
Program Agreement including, without limitation, Sections 4.4 and
4.5 thereof. GE Capital shall operate credit operations and
facilities in a high quality, ethical manner, in such a way as
not to disparage or embarrass the FDS Parties or any of their
names, and with a level of service to the holders of FDS/Macy's
Accounts that is not less than the level of service provided to
(i) the holders of FDS/Macy's Accounts by the GE Parties prior to
the date hereof and (ii) the holders of GE/Macy's Accounts by GE
Capital prior to and from and after the date hereof. The GE
Capital Services provided to the FDS/Macy's Accounts shall be of
the same type, quality and nature as, and implemented and
executed in the same manner as, the services provided by GE
Capital to GE Bank with respect to the GE/Macy's Accounts, except
to the extent such services may differ due to changes to the
Credit and Collection Policy applicable to only the GE/Macy's
Accounts or FDS/Macy's Accounts pursuant to the provisions of
Sections 4.4 or 4.5 of the Program Agreement.
3.3 Service Standards
. GE Capital shall use its best efforts to (i) design
systems to achieve, (ii) employ qualified personnel to meet, and
(iii) otherwise satisfy on average (determined with respect to
each FDS full fiscal quarter commencing after the completion of
the relevant conversion of services) the Service Standards.
3.4 Service Fees.
(a) Postage. At least ten (10) days prior to the
beginning of each month during the Term, GE Capital shall deliver
an invoice to FDS for an amount equal to GE Capital's good faith
estimate of the postage costs it will incur in the upcoming month
in providing the GE Capital Services. Within five (5) days after
receiving each such invoice, FDS shall pay to GE Capital, by wire
transfer of immediately available funds, the full amount
indicated on such invoice. Following the end of each month for
which FDS has prepaid postage pursuant to this Section 3.4(a), GE
Capital will calculate whether actual postage costs for such
months were more or less than the amount of FDS's estimated
payment. To the extent actual postage costs for such month were
more or less than the estimated payment made by FDS for such
month, GE Capital shall make appropriate adjustments to the next
service fee statement delivered to FDS pursuant to Section
3.4(b).
(b) Service Fees. No later than ten (10) days
after the beginning of each month during the Term, GE Capital
shall deliver an invoice to FDS setting forth in reasonable
detail the aggregate amount of Service Fees to be paid by the FDS
Parties for the GE Capital Services rendered in the immediately
preceding month. The amount of such fees shall be calculated in
accordance with Schedule 3.4(b). FDS shall pay to GE Capital,
within ten (10) days after receipt of each such statement, the
full amount set forth thereon by wire transfer of immediately
available funds or by such other method as the parties may agree.
Any disputes with respect to any invoice delivered pursuant to
Section 3.4(a) or 3.4(b) shall be resolved in accordance with the
provisions of Section 9.9 of the Program Agreement.
(c) Inventory. The parties hereby agree that, in
addition to the Service Fees payable pursuant to Section 3.4(b),
all paper, envelopes and plastic required for production and
mailing of billing statements and credit cards with respect to
the FDS Serviced Accounts will either (i) be purchased by GE
Capital as agent for FDS Bank in consultation with the FDS
Parties, in which case GE Capital will invoice FDS directly for
such purchases and FDS will pay GE Capital for such invoices
(including shipping and taxes), by wire transfer of immediately
available funds, or (ii) be purchased by FDS in consultation with
GE Capital at FDS's sole cost and expense, provided that material
qualities and quantities must be reasonably satisfactory to GE
Capital.
(d) Adjustments. The parties hereto acknowledge
and agree that the Service Fees are intended to provide GE
Capital with payment for its actual costs of performing the GE
Capital Services. The parties agree to take all commercially
reasonable efforts, and to cooperate in all commercially
reasonable respects (in each case taking into consideration their
respective businesses and operations as a whole) to minimize such
costs. On each six-month anniversary of the date hereof during
the Term, either GE Capital or FDS may, if it believes that the
fees set forth on Schedule 3.4(b) have resulted in GE Capital
receiving Services Fees for the immediately prior six-month
period in an amount either more or less than its actual costs for
providing the GE Capital Services for such period, deliver a
written notice to the other party requesting that the other party
meet to discuss making appropriate modifications to Schedule
3.4(b). Any such modifications would be intended to assure that
for the next six-month period GE Capital receives Service Fees
equal to its cost of providing the GE Capital Services for such
period, as adjusted to reflect the amount by which the Service
Fees received by GE Capital for the immediately prior six month
period were more or less than the amount of GE Capital's actual
costs of providing the GE Capital Services for such period. If
one party delivers a notice to the other party pursuant to this
Section 3.4(d) and either the other party refuses to meet to
discuss modifying Schedule 3.4(b) or the parties are unable to
agree on modifications to Schedule 3.4(b) within twenty (20) days
after delivery of such notice, then the notifying party may cause
the dispute to be resolved in accordance with Section 9.9 of the
Program Agreement. Any Person chosen to resolve such dispute
pursuant to Section 9.9 of the Program Agreement shall approve
any proposed increase in the fees on Schedule 3.4(b) (i) to the
extent such proposed increase reflects an actual increase in
costs of performing the GE Capital Services and (ii) to the
extent such proposed increase is reasonable based on, among other
things, historical costs and the impact of inflation on such
costs.
3.5 Compliance with Law
. GE Capital shall implement and execute the Credit
and Collection Policy in compliance with all requirements of
applicable Law and shall perform the GE Capital Services in
compliance with all requirements of applicable Law, except, in
either case, to the extent a failure of GE Capital to so
implement, execute and perform in compliance with applicable law
is due solely to (i) the failure of the FDS Information Condition
to be satisfied or (ii) GE Capital following specific written
instructions of an Authorized FDS Person.
3.6 Cooperation
. GE Capital agrees to cooperate with the FDS
Companies in resolving all disputes with FDS Serviced Account
holders.
3.7 Payment Processing
. The parties intend that in addition to the GE
Capital Services provided hereunder, subject to the mutual
agreement of the parties with respect to fees payable in respect
thereof (the parties agreeing to negotiate in good faith to reach
agreement on such fees), GE Capital shall provide payment
processing services as described and subject to the Service
Standards set forth in Exhibit A with respect to the FDS Serviced
Accounts.
3.8 Third Party Review
. Within 120 days after the date hereof, GE Capital
will cause to be completed an initial operational and/or systems
review of GE Capital by an independent third party accounting
firm reasonably satisfactory to FDS Bank and shall provide FDS
Bank with a copy of all reports generated by such review (and the
work papers related thereto) promptly after available. If any
regulatory authority with jurisdiction over FDS Bank requests a
third party operational and/or systems review of GE Capital, the
GE Capital Credit System and/or all systems relating to the GE
Capital Services, GE Capital shall, upon the request of FDS Bank,
cause such a review (the scope of which meets such regulatory
requirements) to be conducted by an independent third party
accounting firm reasonably satisfactory to FDS Bank and shall
provide FDS Bank with a copy of all reports generated by such
review (and the work papers related thereto) promptly after
available. The expenses of any such review shall be borne by GE
Capital.
3.9 Conversion
. FACS and the GE Parties shall cooperate so that GE
Capital is able to accomplish the conversion of all FDS Serviced
Accounts to the GE Capital Services in an accurate, orderly and
efficient manner in accordance with an agenda and schedule agreed
to by all parties hereto. GE Capital agrees to use commercially
reasonable efforts to effect such conversion in an accurate,
orderly and efficient manner, except to the extent such
conversion fails to be accurate, orderly and efficient due solely
to the failure of the FDS Information Condition to be satisfied.
ARTICLE 4
LICENSE
4.1 License.
(a) Grant of License. GE Capital hereby grants
to each of the FDS Parties, for the Term and for the period of
any extended servicing pursuant to Section 8.6, a non-exclusive
and non-transferable license to use the GE Capital Credit
Software in the Licensed Locations strictly as set forth in this
Section 4.1.
(b) Permitted Use. As further set forth herein,
the GE Capital Credit Software may be used only at the Licensed
Locations by employees of the FDS Parties ("Authorized FDS
Users") who are provided with passwords approved by GE Capital
and who are listed on a list of authorized users (which list will
include the extent of such authorized user's authority to use the
GE Capital Credit Software) maintained by the FDS Parties and
provided to GE Capital. The Authorized FDS Users may only use
the GE Capital Credit Software strictly for the benefit of the
GE/Macy's Accounts and FDS Serviced Accounts, including the
performance of the FACS Services to be performed under the FACS
Services Agreement.
(c) Authorized Users. The FDS Parties may amend
the list of Authorized FDS Users from time to time by providing
reasonable notice of such amendments to GE Capital and GE Capital
agrees to promptly provide any new Authorized FDS Users with
appropriate passwords. In the event any Authorized FDS User
ceases to be an employee of one of the FDS Parties or ceases to
have responsibilities related to the Program or the FDS Serviced
Accounts, the FDS Parties agree (i) to provide GE Capital with
notice thereof as promptly as practicable, but in no event later
than thirty (30) days thereafter, in order to permit GE Capital
to terminate such employee's password and (ii) to be responsible
for such employee's password until the date such notice is
provided to GE Capital. The FDS Parties shall provide GE Capital
with an updated list of the Authorized FDS Users within 20 days
after the end of each calendar year.
(d) Additions to or Relocation of Licensed
Locations. In the event that any Licensed Location is relocated
or any new Licensed Location is added, the FDS Parties shall give
reasonable advance notice of such relocation or addition to GE
Capital and any costs and expenses required to be incurred by the
FDS Parties or GE Capital so that GE Capital can fulfill its
obligations hereunder as a result of such relocation or addition
of a Licensed Location shall be borne by the FDS Parties.
(e) Limitations. The FDS Parties may not:
(i) use the GE Capital Credit Software
except as permitted herein or in any location other than a
Licensed Location;
(ii) copy or duplicate the GE Capital Credit
Software except as necessary to utilize the same as specifically
permitted herein;
(iii) remove any proprietary or copyright
legend from the GE Capital Credit Software;
(iv) create, or authorize any other party to
create, the source code to the GE Capital Credit Software by
reverse engineering, decompiling or otherwise;
(v) permit access to the GE Capital Credit
Software to any Person other than an Authorized FDS User without
requiring each such Authorized FDS User to sign a confidentiality
agreement in the form of Exhibit C;
(vi) modify or alter any of the GE Capital
Credit Software; or
(vii) use any software to access the GE
Credit Software other than (x) software approved by GE Capital in
writing and (y) in a manner which GE Capital has had the
opportunity to review and has approved in writing.
(f) Property Rights. The FDS Parties acknowledge
that the GE Capital Credit Software is proprietary to, and is the
property of, GE Capital and that the GE Capital Credit Software
contains the confidential, proprietary and trade secret
information of GE Capital and that GE Capital will be irreparably
harmed and will have no adequate remedy at law if the FDS Parties
fail to perform any of their obligations under this Section 4.1.
It is accordingly agreed that, in addition to any other remedies
which may be available at law or in equity, GE Capital shall have
the right to obtain injunctive relief to restrain a breach or
threatened breach of, or otherwise obtain specific performance
of, the FDS Parties' covenants and agreements contained in this
Section 4.1.
(g) Access. During the Term, subject to and in
accordance with the GE Capital License, GE Capital shall provide
the FDS Parties all such links to the GE Capital Credit System as
may be necessary in order to enable the FDS Parties to receive
the GE Capital Services hereunder.
(h) Modifications and Enhancements. GE Capital
shall not modify, enhance or replace the GE Capital Credit System
in any way that would cause any amendment or modification to the
Major Credit and Collection Policies without the prior written
consent of the FDS Parties. In the event that any portion of the
GE Capital Credit System which relates to or affects any of the
links referred to in Section 4.1(g) is modified, enhanced or
replaced, GE Capital shall provide to the FDS Parties, when such
modification, enhancement or replacement is released for use in
conjunction with the FDS/Macy's Accounts, the benefit thereof at
no cost to the FDS Parties. If any such modification,
enhancement or replacement would require the FDS Parties to incur
any costs or expenses to permit the FDS Parties' credit system
(as existing as of the date hereof) to be compatible with the GE
Capital Credit System so as to enable the FDS Parties to exercise
the links referred to in Section 4.1(g), such costs shall be
borne by GE Capital.
4.2 Maintenance
. During the Term, GE Capital shall provide, or cause
to be provided, maintenance services to the FDS Parties with
respect to the GE Capital Credit Software as described in this
Section 4.2.
(a) Help Desk. GE Capital shall maintain a help
desk which the FDS Parties may access by telephone during all
hours when collections on the FDS Serviced Accounts may be
legally made. Such help desk shall be available to the FDS
Parties for problem reporting.
(b) Code Corrections. GE Capital shall provide
to the FDS Parties, from time to time, any known code corrections
that may be made to the GE Capital Credit Software promptly after
such corrections are made by or become available to GE Capital.
4.3 License Fees
. For the license and maintenance services provided
hereunder, the FDS Parties shall pay to GE Capital a one-time
license fee of $[OMISSION].
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Mutual Representations and Warranties
. Each party to this Agreement represents and warrants
to the other party on the date hereof and on each date that GE
Capital provides any of the GE Capital Services hereunder that:
(i) Such party (A) is duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its organization; (B) is duly qualified and in
good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualifications, except (x) in the case of GE
Capital, where failure to be so qualified would not have a
Material Adverse Effect or a material adverse effect on the
ability of GE Capital to perform its obligations pursuant to the
terms of this Agreement and (y) in the case of the FDS Parties,
where failure to be so qualified would not have a material
adverse effect on their ability to perform their obligations
hereunder; (C) has the requisite power and authority and the
legal right to own, pledge, mortgage, and operate its properties,
to lease the properties it operates under lease, and to conduct
its business as now conducted and hereafter contemplated to be
conducted; (D) has all necessary licenses, permits, consents, or
approvals from or by, and has made all necessary notices to, all
authorities having jurisdiction, to the extent required for such
current ownership and operation or as proposed to be conducted,
except (x) in the case of GE Capital, where failure to obtain
such license, consent, permit or approval, or to give such notice
would not have a Material Adverse Effect or a material adverse
effect on the ability of GE Capital to perform its obligations
pursuant to the terms of this Agreement and (y) in the case of
the FDS Parties, where the failure to obtain such license,
consent, permit or approval or to give such notice would not have
a material adverse effect on their ability to perform their
obligations hereunder; and (E) is in compliance with its
certificate of incorporation and by-laws.
(ii) The execution, delivery, and performance
of this Agreement and all instruments and documents to be
delivered hereunder: (A) are within such party's power; (B) have
been duly authorized by all necessary or proper action of such
party; (C) do not and will not contravene any provisions of such
party's certificate of incorporation or by-laws; (D) will not
violate any law or regulation or any order or decree of any court
or governmental instrumentality applicable to such party;
(E) will not conflict with or result in the breach of, or
constitute a default under any indenture, mortgage, deed of
trust, lease, agreement, or other instrument to which such party
is a party or by which any of its property is bound; and (F) do
not require any filing or registration with or the consent or
approval of any governmental body, agency, authority, or any
other person which has not been made or obtained previously.
Each party to this Agreement further represents and warrants that
this Agreement has been duly executed and delivered by, and
constitutes a legal, valid, and binding obligation of such party,
enforceable against it in accordance with its terms, subject to
the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect
and to the availability of equitable remedies.
5.2. Representations and Warranties of GE Capital
. GE Capital represents and warrants to the FDS
Parties, on behalf of itself and any Affiliate performing any of
the GE Capital Services, on the date hereof and on each date that
GE Capital provides any of the GE Capital Services hereunder
that:
(i) GE Capital (A) has all of the necessary
facilities, equipment and personnel to provide the GE Capital
Services in accordance with the terms of this Agreement; and
(B) has and shall maintain disaster recovery procedures and
systems with respect to the FDS Serviced Accounts satisfactory to
the FDS Parties and at least comparable to those maintained on
the date hereof for the GE/Macy's Accounts.
(ii) GE Capital is Solvent.
(iii) GE Capital is not in default with
respect to any material contract, agreement, lease, or other
instrument to which it is a party, nor has it received any notice
of default under any such material contract, agreement, lease or
other instrument, which as a consequence of any such default
would materially and adversely affect the performance of its
obligations under this Agreement.
(iv) No contract, lease, agreement, or other
instrument to which GE Capital is a party or by which it is
bound, and no provision of applicable Law, materially and
adversely affects the business, operation, prospects, property,
or financial condition of GE Capital such as to impair its
ability to meet its obligations under this Agreement.
(v) GE Capital has the right to use the GE
Capital Credit System to provide the GE Capital Services
hereunder without infringement or violation of the intellectual
property, trademark, trade secret, copyright, patent or other
rights of others.
(vi) GE Capital has the right to license the
GE Capital Credit Software hereunder without infringement or
violation of the intellectual property or other rights of others,
provided that this warranty is limited and does not apply to (x)
the use of the GE Capital Credit Software other than in
accordance with the GE Capital License and the operating
instructions provided by GE Capital and (y) any copy of the GE
Capital Credit Software that is modified by any person other than
an authorized representative of GE Capital.
ARTICLE 6
CONFIDENTIALITY
6.1 Trade Secrets and Confidential Information
. GE Capital, on the one hand, and the FDS Parties, on
the other, acknowledge that in the course of performance
hereunder, each of them and/or their respective Affiliates may
receive the trade secrets and confidential information of the
other.
(a) Trade Secrets. As used herein, "trade
secrets" shall mean information including or containing technical
or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, or a list of actual or potential
customers or suppliers that (i) derives economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by other persons who can
obtain economic value from its disclosure or use, and (ii) is the
subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
(b) Confidential Information. As used herein,
"confidential information" shall mean information including data,
as to operation, use, prices, sales, vendors, customer lists,
customer information, account information, business plans or
administrative, financial or marketing plans, that is
competitively sensitive and not generally known by or made
available to the public, or that are treated as confidential by
the owner thereof but that does not rise to the level of a trade
secret under applicable law.
6.2 Non-Disclosure Obligations
. GE Capital, on the one hand, and the FDS Parties, on
the other, acknowledge that the confidentiality of the trade
secrets and the confidential information of the other is
necessary and, except as provided in Section 6.3, agree at all
times, during and after the Term, not to use, communicate,
publish, disclose or disseminate, directly or indirectly, any
trade secrets or confidential information of the other for any
purpose except for the purpose of performing in accordance with
this Agreement. In the event any information can be treated as
both trade secrets and confidential information, such information
shall be treated as trade secrets for purposes of this Agreement.
Each party shall use the same care to prevent disclosure to third
parties of the trade secrets and confidential information of the
other as it employs to avoid disclosure, publication or
dissemination of its own information of a similar nature. Use or
disclosure by the FDS Parties of the GE Capital Credit Software
in any manner other than as permitted herein, in the Program
Agreement, in the Commercial Accounts Agreement or in the FACS
Services Agreement shall be an unauthorized disclosure of GE
Capital's trade secrets. The parties agree that, in addition to
any other remedies which may be available at law or in equity,
each party shall have the right to obtain injunctive relief to
restrain a breach or threatened breach, or otherwise obtain
specific performance of, the other party's covenants and
agreements in this Section 6.2.
6.3 Permitted Disclosure
. Notwithstanding the foregoing, a receiving party may
disclose some or all of the trade secrets and confidential
information of the other party which are:
(i) required to be disclosed by law or order
of court or governmental agency applicable to the receiving
party, provided that the receiving party shall give prompt notice
to the other party of any request for such disclosure so that the
other party may seek a protective order or other appropriate
remedy, and notwithstanding any such disclosure, such disclosed
trade secrets or confidential information shall remain
confidential and otherwise subject to the provisions of
Article 6;
(ii) generally known and available in the
public domain, or become part of the public domain through no
violation of any confidentiality provisions of this Agreement; or
(iii) developed by the recipient or its
representatives independently of such information or trade
secrets.
6.4 Use of Trade Secrets or Confidential Information
. Neither GE Capital nor the FDS Parties may:
(i) acquire any right in or assert any lien
against the trade secrets or confidential information of the
other; or
(ii) refuse to return promptly upon the
reasonable request of the other as permitted herein any
confidential information or trade secrets of the other that it
may have in its possession.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification.
(a) Indemnification by GE Capital. GE Capital
shall indemnify, defend and hold harmless each of the FDS Parties
and each of their Affiliates and the officers, directors,
employees, agents, shareholders, successors and assigns of the
FDS Parties and each of their Affiliates (collectively, the
"FDS Indemnified Parties") from and against any and all claims,
actions, damages, losses, liabilities, costs and expenses,
including reasonable attorneys' fees and expenses (collectively
"Damages") caused by, relating to or arising out of (i) the
failure of any representation or warranty of GE Capital hereunder
to be true and correct in any material respect when made or
remade; (ii) the breach by GE Capital or any of its Affiliates of
any of their covenants or agreements hereunder; (iii) any act or
omission by GE Capital or its Affiliates, employees or agents in
performing, implementing and/or executing the GE Capital Services
and the Credit and Collection Policy, except to the extent (x)
the Credit and Collection Policy specifically describes how such
act should be implemented and GE Capital implemented such act in
conformity with such description (other than modifications to the
Credit and Collection Policy (including the Major Credit and
Collection Policies) made by GE Capital without the approval of
the Policy Committee pursuant to Section 4.4 of the Program
Agreement) or (y) any such performance, implementation or
execution was effected in accordance with specific written
instructions from an Authorized FDS Person or (z) the Damages
arising out of such act or omission are due solely to the failure
of the FDS Information Condition to be satisfied; (iv) any acts
or omissions of the FDS Parties, their employees or any of their
agents taken at the specific written request of any Authorized GE
Person; (v) the failure of the GE Information (as defined in the
FACS Services Agreement) provided by GE Capital pursuant to the
terms of the FACS Services Agreement to be accurate, and (vi)
notwithstanding the provisions of Section 7.1(a)(iii) hereof, any
judgmental decisions (i.e., any determination or decision made
which is not specifically directed by the Credit and Collection
Policy) effected by GE Capital or its employees or agents in
effecting the GE Capital Services.
(b) Indemnification by the FDS Parties. The FDS
Parties shall indemnify, defend and hold harmless GE Capital and
its Affiliates and the officers, directors, employees, agents,
shareholders, successors and assigns of GE Capital and each of
its Affiliates (collectively, the "GE Indemnified Parties") from
and against any and all Damages caused by, relating to or arising
out of (i) the breach by the FDS Parties of any of their
covenants or agreements hereunder; (ii) the failure of any
representation or warranty of the FDS Parties hereunder to be
true and correct in any material respect when made or remade;
(iii) any act or omission by GE Capital or its employees or
agents in performing, implementing and/or executing the GE
Capital Services and the Credit and Collection Policy effected in
accordance with specific written instructions from an Authorized
FDS Person; and (iv) the use by GE Capital in performing the GE
Capital Services of any tradename owned by any FDS Company or
their Affiliates which tradename is not licensed to GE Capital
under the Trademark and License Agreement.
7.2 Infringement Indemnity.
(a) Indemnity. GE Capital shall indemnify,
defend and hold harmless each of the FDS Indemnified Parties from
and against any and all Damages caused by, relating to or arising
out of any claim of infringement asserted in the United States by
third parties of any United States letters patent, trade secrets,
copyright, trademark, service mark, trade name, or similar
proprietary right conferred by common law or by any statute that
is alleged to have occurred because of use by the FDS Parties of
the GE Capital Credit Software as permitted herein.
(b) Remedies. In the event an FDS Indemnified
Party is enjoined by reason of any infringement claim, GE Capital
shall, without limiting any other rights of the FDS Indemnified
Party, either:
(i) procure the right to continue to use the
GE Capital Credit Software or any component thereof, as
contemplated hereunder or, at its option,
(ii) replace or modify the GE Capital Credit
Software or any component thereof, to permit the performance of,
or to render use thereof, or any component thereof, noninfringing
while performing substantially the same functions without
substantial degradation of performance.
(c) Limitations. Notwithstanding the provisions
of this Section 7.2, GE Capital shall not have any duty to
investigate or warn the FDS Indemnified Parties of any such
possibility of infringement.
7.3 Conduct of Litigation
. In the event a claim or judicial action is brought
or threatened against an indemnified party with respect to
matters covered by Section 7.1 or 7.2, the indemnifying party
shall have the sole right to defend such claim or action at its
expense and to control the defense and settlement thereof,
provided, that the indemnified party shall have the right to
participate in such defense and negotiations using counsel at its
own expense and the indemnifying party shall obtain the
indemnified party's consent, prior to entering into a settlement,
consent decree, compromise or consenting to any injunctive relief
with respect to such claim or action. Any indemnified party
shall provide prompt notice to the indemnifying party of any
claims for which the indemnified party intends to seek
indemnification for hereunder, provided that the failure to
provide such notice shall not affect the obligations of the
indemnifying party except to the extent such failure causes
actual harm to the indemnified party.
ARTICLE 8
DEFAULT; REMEDIES
8.1 GE Events of Default
. It shall be a "GE Event of Default" if any of the
events set forth below shall occur and be continuing and remain
unremedied prior to the expiration of the specified period.
(a) Service Standards Default. If GE Capital
shall consistently fail to perform its obligations under Section
3.3, and such consistent failure to perform shall (i) have a
Material Adverse Effect or a material adverse effect on the
Program, and (ii) remain unremedied for a period of seventy-five
(75) days after delivery of written notice thereof by any FDS
Party to GE Capital.
(b) Credit and Collection Policy Defaults.
(i) If GE Capital shall fail to perform the
GE Capital Services in accordance with any provision of the
Credit and Collection Policy where such failure is or results in
a violation of applicable Law, and such failure is not remedied
within seven (7) days after delivery of written notice thereof by
any FDS Party to GE Capital, provided that if, notwithstanding GE
Capital's diligent, best efforts to cause its employees and
agents to perform the GE Capital Services so as not to violate
applicable Law, certain employees or agents have failed to so
perform the GE Capital Services, the time period set forth in
this Section 8.1(b)(i) shall be extended, but not by more than an
additional 10 days, as long as GE Capital continues to use
diligent, best efforts to remedy such failure.
(ii) If GE Capital shall fail to perform the
GE Capital Services in accordance with any provision of the
Credit and Collection Policy where such failure is not or does
not result in a violation of applicable Law, and such failure
(x) has a Material Adverse Effect and (y) is not remedied within
thirty (30) days after delivery of written notice thereof by any
FDS Party to GE Capital.
(iii) If GE Capital shall consistently
fail to perform any of the GE Capital Services in accordance with
any provision of the Credit and Collection Policy where such
failure is not or does not result in a violation of applicable
Law and does not have a Material Adverse Effect, and is not
remedied within seventy-five (75) days after delivery of written
notice thereof by any FDS Party to GE Capital; provided that each
of the time periods in this Section 8.1(b) shall be extended upon
agreement of the parties, but not by more than 60 days, so long
as GE Capital is using its diligent, best efforts to remedy such
failure in the event that (x) the provision of the Credit and
Collection Policy that GE Capital has failed to perform is a
provision of the Credit and Collection Policy which FDS or one of
its Affiliates has unilaterally modified pursuant to Section 4.4
of the Program Agreement and (y) the reason GE Capital has been
unable to so perform is because the GE Credit System requires
modifications in order to implement such unilaterally modified
provision of the Credit and Collection Policy.
(c) Credit Systems Default. If GE Capital shall
fail to perform all or substantially all of the GE Capital
Services for a period of seven (7) consecutive days due to a
failure of the GE Credit System or otherwise.
(d) Breach of Infringement Warranty. If GE
Capital shall fail to provide the remedy specified in Section
7.2(b) as indemnitor with respect to a claim of infringement as
specified in Section 7.2.
(e) Breach of Agreement. If GE Capital shall
breach any of its obligations under this Agreement or any of its
representations and warranties under this Agreement (other than
obligations, representations or warranties the breach of which is
otherwise addressed in this Section 8.1) and such breach has a
Material Adverse Effect and is not cured within thirty (30) days
after delivery of written notice thereof by any FDS Party to GE
Capital.
(f) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to GE Capital.
(g) Material Adverse Change. If there shall have
been a material adverse change to the business, financial
condition, or operations of GE Capital which change has a
material adverse effect on its ability to fulfill its obligations
hereunder pursuant to the terms hereof.
8.2 FDS Remedies
. Upon the occurrence of a GE Event of Default
pursuant to Section 8.1(a) or 8.1(b)(ii), the FDS Parties may, in
addition to any other remedies they may have at law or equity,
terminate the GE Capital Services being provided with respect to
the FDS/Macy's Accounts or any Non-Macy's Portfolio only to the
extent such portfolio suffered the Material Adverse Effect that
was the basis for such GE Event of Default; however, the FDS
Parties may not terminate the Agreement based on such GE Event of
Default unless such Material Adverse Effect has occurred with
respect to all the FDS Serviced Accounts. Upon the occurrence of
a GE Event of Default pursuant to any other provision of Section
8.1, the FDS Parties may, in addition to any other remedies they
may have at law or equity, terminate this Agreement by delivering
a written notice of termination to GE Capital.
8.3 FDS Events of Default
. It shall be an "FDS Event of Default" if any of the
events set forth below shall occur and be continuing and remain
unremedied prior to the expiration of the specified period.
(a) Breach by the FDS Parties as Licensee. If
any of the FDS Parties shall breach any of their obligations
under Section 4.2, and fail to cure the same within twenty (20)
days after delivery of written notice thereof by GE Capital.
(b) Breach of Agreement. If the FDS Parties
shall breach in any material respect any of their obligations
under this Agreement or any of their representations and
warranties under this Agreement (other than obligations,
representations and warranties the breach of which is otherwise
addressed in this Section 8.3), and fail to cure such breach
within thirty (30) days after delivery of written notice thereof
by GE Capital to any FDS Party.
(c) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to any FDS Party.
8.4 GE Capital Remedies
. Upon the occurrence of an FDS Event of Default, GE
Capital may, in addition to any other remedies it may have at law
or equity, terminate this Agreement by delivering a written
notice of termination to the FDS Parties.
8.5 Excuse For Non-Performance
. In the event one party (the "Performing Party") is
unable to comply with or perform any of its obligations hereunder
solely due to (i) the other party (the "Non-Performing Party")
failing to perform its obligations hereunder or under any other
Transaction Document or (ii) the quality, nature, timeliness,
completeness or accuracy of any goods, services or data provided
by the Non-Performing Party to the Performing Party, the
Performing Party shall be excused from such performance (and no
event of default shall be deemed to have occurred) provided that
the Performing Party shall (a) notify the Non-Performing Party as
soon as practicable describing the default and explaining how the
Performing Party's performance has been affected; (b) use
reasonable efforts to mitigate the effect of the Non-Performing
Party's failure; and (c) perform its obligations hereunder to the
extent reasonably practicable. Both parties shall use diligent,
uninterrupted efforts to cure the failure and eliminate the
effects thereof.
8.6 Post-Termination Procedures
. Upon termination or expiration for any reason of
this Agreement, the parties shall comply with their respective
post-termination obligations, if any, as set forth below:
(a) Payments. Except as may be expressly
provided otherwise herein, within ten (10) business days after
the effective date of termination of this Agreement, each party
shall pay the other party any amounts that as of that effective
date were due and owed thereto pursuant to this Agreement.
(b) Extended Servicing. The FDS Parties may
cease to receive GE Capital Services hereunder from and after the
effective date of termination, provided that the FDS Parties may
elect to require GE Capital to continue to provide all or a
portion of the GE Capital Services to the FDS Serviced Accounts
for up to a maximum of six (6) months following the effective
date of termination. In the event of an election by the FDS
Parties to receive GE Capital Services, GE Capital shall provide
GE Capital Services as described herein subject to payment by the
FDS Parties of the applicable Services Fees then in effect and
the GE Capital License granted hereunder shall continue for such
time.
(c) Deconversion. Subject to the provisions of
Section 8.6(b), FACS and the GE Parties shall cooperate in good
faith so that the GE Parties are able to promptly accomplish the
conversion of all FDS Serviced Accounts to the FDS Parties in an
accurate, orderly and efficient manner. In this regard, GE
Capital agrees that it will provide the FDS Parties and their
respective designees, officers, employees, accountants, and other
representatives with all access rights to the GE Credit System as
reasonably required by the FDS Parties in order to enable the FDS
Parties to effect a prompt, accurate, orderly and efficient
conversion. The FDS Parties agree that in the event of any such
conversion, they shall use commercially reasonable efforts to
effect such conversion in an accurate, orderly and efficient
manner, except to the extent such conversion fails to be
accurate, orderly and efficient due solely to the failure of
conversion information provided by GE Capital at the time to be
accurate in all material respects.
(d) Return of Materials. The FDS Parties shall
(i) surrender to GE Capital all copies of the GE Capital Credit
Software remaining in the possession of the FDS Parties or any
person acquiring any such copy through any of the FDS Parties in
accordance with the terms and conditions hereof and (ii) return
to GE Capital all written instructions or manuals in the
possession of the FDS Parties relating to the GE Capital Credit
Software.
ARTICLE 9
MISCELLANEOUS
9.1 Governing Law; Jurisdiction
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard
to its rules governing conflicts of law.
9.2 Audit and Access Rights
. Each of the parties hereto shall have the right to
access the premises and audit the records of the other parties
hereto as set forth herein.
(a) Rights of FDS Parties. The FDS Parties shall
have all such rights to access the premises of GE Capital, the GE
Credit System and audit the records of GE Capital as may be
necessary or desirable to permit the FDS Parties to fulfill all
of their responsibilities, and exercise all of their rights,
under the Transaction Documents. Without limiting the generality
of the foregoing, GE Capital shall permit the FDS Parties and
their designees, officers, employees, attorneys, accountants
and/or other representatives during normal business hours with
reasonable advance notice, in such a manner as to minimize
interference with the normal business operations of GE Capital
(i) to observe, monitor and obtain information regarding the FDS
Serviced Accounts and to observe and monitor the implementation
by GE Capital personnel of the Credit and Collection Policy,
(ii) to observe whether the GE Capital Services and the Credit
and Collection Policy are being applied consistently between the
FDS Serviced Accounts and the GE/Macy's Accounts and in
compliance with the provisions of the Program Agreement and (iii)
to examine, audit, inspect, copy and make copies of all of the
data, records, files, and books of account under the control of
GE Capital (whether received on computer, electromagnetic storage
vehicles, paper, film or other medium) and relating strictly to
the FDS Serviced Accounts and to the back-up documentation
relating to the reports provided hereunder by GE Capital to the
FDS Parties. The costs and expenses of any exercise by the FDS
Parties of their rights hereunder shall be borne by the FDS
Parties. Notwithstanding any other provision of this Agreement,
the FDS Parties shall not have any access or audit rights with
respect to any information in the possession of GE Capital or its
Affiliates regarding services provided by GE Capital or its
Affiliates to any non-affiliated third party other than the FDS
Parties. Employees of GE Capital shall be permitted to be
present during the exercise by the FDS Parties of any of their
audit and access rights under this Section 9.2(a).
(b) Rights of GE Capital. The FDS Parties shall
permit GE Capital and its respective designees, officers,
employees, attorneys and accountants and/or other representatives
during normal business hours with reasonable advance notice, in
such manner as to minimize interference with the normal business
operations of the FDS Parties, to examine, audit and inspect each
of the Licensed Locations in order to ensure compliance with the
terms and conditions governing the GE Capital License as set
forth in Section 4.1 and with the provisions of Article 6. The
cost and expense of all such audits or examinations shall be
borne by GE Capital. Employees of the FDS Parties shall be
permitted to be present during the exercise by GE Capital of any
of its audit and access rights under this Section 9.2(b).
9.3 Entire Agreement; Amendments; Waivers
. This Agreement contains the entire agreement of the
parties hereto as to the subject matter discussed herein. Any
amendment to or modification of this Agreement must be in writing
and executed by authorized officers of GE Capital and the FDS
Parties. No waiver by either party of any right or power it has
under this Agreement shall impair or be construed as a further
waiver of such right or power. To be effective, all waivers must
be in writing and signed by the party waiving its rights.
9.4 Assignability
. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns. Except as expressly provided with respect
to indemnification rights in Article 7, nothing herein shall
create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement. Neither
GE Capital, on the one hand, nor the FDS Parties, on the other,
may assign their rights or obligations hereunder without the
prior consent of the other, except that in the case of a proposed
assignment by GE Capital to an Affiliate, such consent shall not
be unreasonably withheld by the FDS Parties, provided that in
connection with any such assignment GE Capital delivers to the
FDS Parties instruments reasonably satisfactory to the FDS
Parties pursuant to which the terms of the GE Capital Guaranty
will be extended to this Agreement.
9.5 Relationship of Parties
. In performing under this Agreement, the parties are
acting as independent contractors and this Agreement shall not be
construed as providing either party with the right, power or
authority to impose any duty or obligation on the other except as
expressly provided herein.
9.6 Survival
. The provisions of Article 6, Article 7, and Sections
4.1 (for as long as any post-termination servicing occurs
pursuant to Section 8.6), 8.6 and Section 9.2 (for as long as any
post-termination servicing occurs pursuant to Section 8.6), of
this Agreement shall survive a termination or expiration of this
Agreement.
9.7 Notices
. Any notice or other communication required or
otherwise provided for under this Agreement shall be in writing
and shall be deemed given when delivered by hand or by courier or
express mail or by registered or certified United States mail,
return receipt requested, postage prepaid, or by facsimile if
receipt is acknowledged (except that a notice of termination or
breach shall not be sent by facsimile) and shall be addressed as
follows:
In the case of the FDS Parties:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, OH 45202
Attn: Law Department
Fax: (513) 579-7897
with copies to:
FACS Group, Inc.
9111 Duke Blvd.
Mason, OH 45040
Attn: Senior Vice President
Fax: (513) 573-2039
In the case of GE Capital:
General Electric Capital Corporation
5665 New Forsyth Road
Macon, Georgia 31210
Fax: (912) 471-5014
Attn: Senior Vice President - Retailer Financial
Services
with copies to:
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attn: Counsel, Retailer Financial Services
Fax: (203) 357-3353
and
Macy's Credit Services
4605 Duke Drive
Mason, OH 45040
Attn: Executive Vice President
Fax: (513) 573-3251
Either party hereto may, from time to time, change its address or
designated recipient for notification purposes by giving the
other party notice thereof and the date upon which it shall
become effective.
9.8 Ownership
. GE Capital shall have no right, title or interest in
any FDS Serviced Account or the proceeds thereof. All payments
to be made by FDS Serviced Account debtors shall be paid directly
to the FDS Parties. In the event that GE Capital is at any time
in possession of the proceeds of any FDS Serviced Account, GE
Capital shall hold such funds as agent on behalf of FDS Serviced
Account debtors for transfer to the FDS Parties.
9.9 Designees
. [OMISSION].
9.10 Credit Insurance Programs.
(a) All net revenue from Credit Insurance
Programs, whether currently existing or hereafter created, with
respect to GE/Macy's Accounts shall be shared [OMISSION] between
GE Capital and FDS.
(b) Replacements or substitutes for any Credit
Insurance Programs with respect to GE/Macy's Accounts shall
require the mutual consent of the FDS Parties, on the one hand,
and GE Capital, on the other hand.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Richard A. Hayes
Name: Richard A. Hayes
Title: Senior Vice President
Retailer Financial Services
FDS NATIONAL BANK
By: /s/ James R. Gudmens
Name: James R. Gudmens
Title: President
FEDERATED DEPARTMENT STORES,
INC.
By: /s/ Ronald W. Tysoe
Name: Ronald W. Tysoe
Title: Vice Chairman and
Chief Financial Officer
FACS GROUP, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
Exhibit A
GE CAPITAL SERVICES TO FDS PARTIES
General. All of the GE Capital Services described hereafter
shall be provided by GE Capital (i) in accordance with, and as
more fully described in, the then applicable Credit and
Collection Policy and (ii) without limiting the FDS Parties'
rights or altering the obligations of the FDS Parties under the
Program Agreement including pursuant to Section 4.4 of the
Program Agreement.
I. GE CAPITAL SERVICES
1. Billing Statement Production
1.1. Provide billing statement processing services as
described below and in accordance with the
technical specifications and billing cycle
timeframes established between GE Capital and the
FDS Parties.
(i) Receive and process the electronic periodic
billing statement file.
(ii) Trim, burst and fold all periodic billing
statements.
(iii) Insert all periodic billing statements
as described in Section 2.2 below.
(iv) Place required postage on all periodic
billing statement envelopes.
(v) Presort all qualified mail.
(vi) Seal and deliver all periodic billing
statement envelopes to US Postal Service.
2. Billing Statement Mailing
2.1. Mail periodic billing statements, except those
periodic billing statements otherwise agreed to by
the FDS Parties, within the timeframe established
in Section II of this Exhibit A.
2.2. Insert marketing material approved by the FDS
Parties and received by GE Capital in usable form
that conforms to materials specifications of GE
Capital into the designated periodic billing
statements. The inserts are to be distributed
within the periodic billing statement in the
following order:
(i) First, any inserts or messages that the FDS
Parties, in their sole judgment, determine
are required by Law to be included in a
periodic billing statement shall be included
and shall have priority over all other
inserts and messages;
(ii) Second, any inserts or messages that any FDS
Company is contractually required to include
in a periodic billing statement shall be
included;
(iii) Third, any inserts or messages that FDS,
in its sole discretion, determines should be
included in a periodic billing statement
shall be included; and
(iv) Fourth, any inserts or messages with respect
to programs approved by FDS and GE Bank for
inclusion in a periodic billing statement
shall be included.
2.3. Mail periodic billing statements within the
timeframe required by Regulation Z.
2.4. Exercise reasonable quality control review of
periodic billing statements.
2.5. In the event of any material disruption in
periodic billing statement services, GE Capital
will use commercially reasonable efforts to notify
FACS of such disruption on the same business day,
and, in any event will provide notice as promptly
as practicable.
2.6. Provide the following reporting for the periodic
billing statement services:
(i) Daily statement status report by Division of
cycles billed, mailed and quantity.
(ii) Monthly inventory report for all supplies.
(iii) Monthly statement analysis report of
mailings by Division with associated costs
and breakdown.
2.7. Notwithstanding the above, GE Capital will also be
responsible for inventory control, warehousing of
the periodic billing statements and associated
materials.
3. Credit Card Production
3.1. GE Capital will emboss and encode FDS/Macy's
Credit Cards and credit cards for other FDS
Serviced Accounts as described below and in
accordance with the technical specifications and
credit card production schedules established
between GE Capital and the FDS Parties.
(i) Receive and process the electronic Credit
Card file.
(ii) Emboss two (2) lines of data unless otherwise
specified.
(iii) Magnetically encode the cards.
(iv) Print the customer information on the Credit
Card card carrier form.
(v) Data match the Credit Cards and the Credit
Card card carriers.
(vi) Insert as described in Section 4.2 below.
(vii) Trim, burst and fold the Credit Card
card carriers.
(viii)Insert the Credit Card card carriers
into the Credit Card card carrier envelopes.
(ix) Place required postage on the Credit Card
card carrier envelopes.
(x) Seal and deliver all Credit Card card carrier
envelopes to US Postal Service.
3.2. FDS/Macy's Credit Cards shall be in the design and
format jointly established by the FDS Parties and
GE Bank and shall include the Macy's Tradename.
4. Credit Card Mailing
4.1. Mail Credit Cards within the timeframe established
in Section II of this Exhibit A.
4.2. Insert marketing material approved by the FDS
Parties that conforms to materials specifications
of GE Capital into the envelope carrying the
designated Credit Card card carrier. The inserts
are to be included with the Credit Card card
carrier in the following order:
(i) First, any inserts or messages that the FDS
Parties, in their sole judgment, determine
are required by Law to be included in a
Credit Card card carrier shall be included
and shall have priority over all other
inserts and messages;
(ii) Second, any inserts or messages that any FDS
Company is contractually required to include
in a Credit Card card carrier shall be
included;
(iii) Third, any inserts or messages that FDS,
in its sole discretion, determines should be
included in a Credit Card card carrier shall
be included; and
(iv) Fourth, any inserts or messages with respect
to programs approved by the FDS Parties for
inclusion in a Credit Card card carrier shall
be included.
4.3. Exercise reasonable quality control review of
Credit Cards.
4.4. In the event of any material disruption in credit
and production or mailing services, GE Capital
will use commercially reasonable efforts to notify
FACS of such disruption on the same business day,
and, in any event will provide notice as promptly
as practicable.
4.5. Provide the following reporting for the Credit
Card services:
(i) Daily Credit Card Status report by Division
of cards produced and mailed.
(ii) Monthly Inventory report for all supplies,
including reconciliation of any lost and
damaged materials.
(iii) Monthly Credit Card Inventory report.
(iv) Monthly Credit Card analysis report of cards
embossed and mailed by Division with
associated costs and breakdown.
4.6. Notwithstanding the above, GE Capital will also be
responsible for inventory control, warehousing of
the Credit Cards and associated materials, and
providing adequate security for all credit cards
and discount coupons.
5. Remittance Processing
5.1. Provide remittance processing services as
described below and in accordance with the
technical specifications and payment processing
production schedules established between GE
Capital and the FDS Parties.
(i) Perform lock box services, daily depositing
of monetary medium in account(s) designated
by FDS, I/O Control, data entry, balancing of
payments and forwarding of miscellaneous
Cardholder correspondence (including gift
certificates) received through the lock box
assigned for Cardholder payment remittance.
GE Capital agrees to maintain the
separateness of the FDS Parties' funds,
including, without limitation, by arranging
for all such cash management and lockbox
arrangements as the FDS Parties shall
reasonably request.
(ii) Receive payments from a lock box assigned for
Cardholder remittances, process payments and
forward other customer communications
received.
(iii) Retain the original payment remittance
for 7 days from the date of receipt.
(iv) All payments shall be dated as of the date
received.
(v) Process or handle exceptions as provided by
the FDS Parties. An "Exception" to standard
processing occurs when (i) the provided
envelope is not used, (ii) the envelope
includes anything other than one remittance
advice and one check (iii) the payment amount
or account number on the check, does not
match those on the remittance advice and
(iv) GE Capital performs special handling
instructions on behalf of the FDS Parties.
5.2. The FDS Parties will be responsible for
establishing accounts for daily deposit of
monetary medium received for payment remittances.
5.3. FACS will provide the appropriate system access
for performing the account look-up function to the
authorized users at GE Capital. The account look-
up function is only to be used by GE Capital for
processing Cardholder payment remittances when the
cardholder account number does not appear on the
monetary medium nor the periodic billing statement
when the payment remittance is received by GE
Capital.
5.4. Provide the following reporting for the Remittance
Processing services:
(i) Daily Remittance Processing Status report by
Division of payments received (including gift
certificates, cash, electronic media, and pay-
by-phone) and exceptions returned to FACS.
II. SERVICE STANDARDS
Services Category Standard
(All days are Business Days,
measured from but excluding the
date inquiry or notice or data
is received by GE Capital; all
standards expressed are
averages calculated over a
measurement period of an FDS
fiscal quarter).
1. Billing Statement Production Best efforts to mail within 2
days after receipt by GE
Capital of file, and, in any
event, mailed not later than 4
business days after receipt by
GE Capital of FDS Information
that satisfies the FDS
Information Condition.
2. Credit Card Production Mailing Mailed not later than 2
business days after receipt by
GE Capital of FDS Information
that satisfies the FDS
Information Condition
(excluding card production
and/or mailing in connection
with reissuances, prescreen
solicitations, or other events
which do not relate to
applications made at the point
of sale in the ordinary course
of business).
3. Payment Processing For processing (including
depositing to account(s)
designated by the FDS Parties)
other than exception
processing, best efforts to
process within 1 day after
receipt by GE Capital, and, in
any event, processed not later
than 2 business days after
receipt by GE Capital of FDS
Information that satisfies the
FDS Information Condition.
EXHIBIT B
I. GE Capital Credit Software
1. Prospector system for managing the printing,
inserting and messaging for billing statements and
credit card mailings
2. Credit insurance management system
II. Licensed Locations
FACS Group, Inc.
9111 Duke Blvd.
Mason, OH 45040
EXHIBIT C
FORM OF EMPLOYEE CONFIDENTIALITY AGREEMENT
(For FDS Authorized Users)
Pursuant to an Agreement between FDS National Bank,
Federated Department Stores, Inc., FACS Group, Inc. ("FACS")
(collectively, the "FDS Parties") and General Electric Capital
Corporation ("GE Capital"), GE Capital provides processing and
other services to the FDS Parties and GE Capital has licensed
certain software to the FDS Parties for their use.
In the course of your employment you may receive or
otherwise have access to information, data or materials owned by
GE Capital which the FDS Parties are under an obligation to treat
as strictly confidential. (For purposes of this Confidentiality
Agreement, information, data and materials relating to systems,
applications, related documentation and other trade secret
information of GE Capital is referred to as "Confidential
Information".)
In order to preserve and protect the confidentiality of
all Confidential Information, you are required to sign a copy of
this Confidentiality Agreement, thereby acknowledging and
agreeing that:
(i) You have been informed of and understand
the confidential nature of the
Confidential Information you may receive
or have access to;
(ii) You will not disclose the
Confidential Information except (x) to a
fellow employee, subcontractor,
consultant or agent who also has executed
a Confidentiality Agreement and then,
only on a "need-to-know" basis or (y) as
compelled to do so by a court or other
governmental or quasi-governmental entity
or as consented to in writing by the FDS
Parties;
(iii) That disclosure of any Confidential
Information to any person other than as
permitted herein may cause serious injury
to GE Capital and the FDS Parties; and
(iv) During and after your employment
with us, except as required to perform
your assigned duties as our employee, you
will not use or reproduce, for any
purpose, any of the Confidential
Information that you receive or to which
you have access.
I hereby acknowledge that I have read and understood
the foregoing Confidentiality Agreement, and I agree not to
disclose, use or reproduce any Confidential Information except as
provided herein.
(Signature)
(Print)
Date
Schedule 3.4(b)
Service Fees
[OMISSION]
Schedule A-3
GE Capital Required Reports
Production Services
Monthly Reports
1. Statement Release Report Number of statements mailed and
time to release
2. Remittance Processing Number of remittances processed
Service Delivery Report and time to process
3. Card Embossing Volume Number of cards embossed (new and
Report replacement) and time to emboss
4. Form Inventory Report Number of statements, envelopes
and standard inserts in inventory
5. Advertising Insert Number of promotional inserts in
Inventory Report inventory
Daily Reports
1. Statement Release Report Number of statements mailed and
time to release
2. Remittance Processing Number of remittances processed
Service Delivery Report (new and replacement) and time to
emboss
3. Card Embossing Volume Number of cards embossed (new and
Report replacement) and time to emboss
Execution Copy
GE CAPITAL/GE BANK CREDIT SERVICES AGREEMENT *
This GE CAPITAL/GE BANK CREDIT SERVICES AGREEMENT,
dated as of June 4, 1996, is entered into by and among General
Electric Capital Corporation ("GE Capital") and GE Capital
Consumer Card Co. ("GE Bank"). Certain capitalized terms used
herein have the meanings given to them in Article 1 hereof or, if
not defined herein, have the meanings given to them in the
Program Agreement.
WHEREAS, GE Bank is the owner of the GE/Macy's Accounts
and desires to retain GE Capital to provide the GE Capital
Services, with respect thereto;
WHEREAS, FDS Bank is the owner of the FDS/Macy's
Accounts and simultaneously herewith GE Capital is entering into
the GE Capital Services Agreement pursuant to which it will
provide the GE Capital Services to FDS Bank with respect to the
FDS/Macy's Accounts and certain other accounts owned by FDS
(collectively, the "FDS Serviced Accounts");
WHEREAS, GE Capital, FDS, GE Bank and FDS Bank desire
that GE Capital provide the GE Capital Services with respect to
the FDS/Macy's Accounts on substantially the same terms and
conditions that it provides the GE Capital Services with respect
to the GE/Macy's Accounts;
WHEREAS, FDS Bank and GE Bank wish to facilitate
generally uniform treatment of, and performance by, the GE/Macy's
Accounts and the FDS/Macy's Accounts by utilizing common systems
and software for the servicing of all such accounts;
WHEREAS, in furtherance of the foregoing, GE Capital
and GE Bank are entering into this Agreement for purposes of
setting forth the terms and conditions that will govern the
provision of certain services by GE Capital to GE Bank.
NOW, THEREFORE, in consideration of the terms and
mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
Rider X
______________________
* Confidential portions of this Exhibit have been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
ARTICLE 1
DEFINITIONS
1.1 Definitions
. When used in this Agreement, the following
capitalized terms shall have the meaning specified below:
"Agreement" means this GE Capital/GE Bank Credit
Services Agreement as it may be amended, modified or restated
from time to time.
"FDS Information" means data with respect to GE/Macy's
Accounts transmitted by computer to GE Capital.
"FDS Information Condition" means, with respect to any
FDS Information, that (i) such information is received by GE
Capital at a time which allows GE Capital to perform the GE
Capital Services as required hereby, (ii) such information is
complete and accurate and (iii) such information is in a form
that is readily usable by the GE Credit System.
"GE Bank Event of Default" has the meaning given to it
in Section 8.3.
"GE Capital Event of Default" has the meaning given to
it in Section 8.1.
"GE Capital Services" means the services required to be
provided by GE Capital hereunder with respect to the GE/Macy's
Accounts as described in Article 3 hereof and in Section I of
Exhibit A hereto.
"GE Credit System" means the mainframe computer system
and GE Credit Software developed, owned and utilized by GE
Capital to provide credit processing services, as the same may be
modified, enhanced or replaced from time to time after the date
hereof.
"Material Adverse Effect" means any material adverse
change in the quality or financial condition of the GE/Macy's
Accounts, taken as a whole.
"Program Agreement" means the Amended and Restated
Credit Card Program Agreement, dated as of the date hereof,
entered into by and among FDS, FDS Bank, GE Bank and the other
parties thereto as it may be amended, modified or restated from
time to time.
"Service Fees" means the fees payable by GE Bank for
the GE Capital Services, as specified in Article 3.
"Service Standards" means the minimum service
performance levels at which the GE Capital Services are required
to be provided hereunder, as specified in Section II of Exhibit
A.
"Term" has the meaning given to it in Section 2.1
hereof.
1.2. General
. Except as the context may otherwise require, (i)
words of any gender include the other gender, (ii) words using
the singular or plural number also include the plural or singular
number, respectively, (iii) the terms "hereof", "herein",
"hereby", and any derivative or similar words refer to this
entire Agreement, and (iv) the term "including" means "including,
but not limited to". Whenever this Agreement refers to a number
of days or months, such number shall refer to calendar days or
months unless otherwise specified. The Exhibits and Schedules
attached hereto are incorporated herein by this reference and
constitute a part of this Agreement.
ARTICLE 2
TERM
2.1 Term
. The term of this Agreement shall commence on the
date hereof and expire simultaneously with the termination of the
Program Agreement, unless sooner terminated as provided herein
(the "Term"), provided that following termination of this
Agreement GE Bank shall have the right to require GE Capital to
continue providing all or a portion of the GE Capital Services
for up to six (6) months after termination pursuant to the
provisions of Section 8.6.
ARTICLE 3
CREDIT SERVICES
3.1 Appointment of GE Capital
. GE Capital hereby accepts appointment, as the agent
of GE Bank, for providing the GE Capital Services with respect to
the GE/Macy's Accounts. The parties hereby acknowledge and agree
that notwithstanding any other provisions of this Agreement to
the contrary, all obligations of GE Capital to perform the GE
Capital Services shall be subject to the prior satisfaction of
the FDS Information Condition.
3.2 GE Capital Services
. GE Capital shall provide the GE Capital Services and
shall comply with the Credit and Collection Policy and the FACS
License (as defined in the FACS Services Agreement) in providing
the GE Capital Services. In providing the GE Capital Services,
GE Capital will use the FACS Credit System which has been
licensed to GE Capital pursuant to the FACS Services Agreement.
In this regard, GE Capital agrees to be bound by and to comply
with the terms and conditions of the Program Agreement,
including, without limitation, Sections 4.4 and 4.5. GE Capital
shall operate credit operations and facilities in a high quality,
ethical manner, in such a way as not to disparage or embarrass GE
Bank or its name, and with a level of service to the holders of
GE/Macy's Accounts that is not less than the level of service
provided to (i) the holders of GE/Macy's Accounts by GE Capital
prior to the date hereof and (ii) the holders of FDS/Macy's
Accounts pursuant to the GE Capital Services Agreement. The GE
Capital Services provided to the GE/Macy's Accounts shall be of
the same type, quality and nature as, and implemented and
executed in the same manner as, the services provided by GE
Capital to FDS Bank with respect to the FDS/Macy's Accounts,
except to the extent such services may differ due to changes to
the Credit and Collection Policy applicable to only the GE/Macy's
Accounts or FDS/Macy's Accounts pursuant to the provisions of
Sections 4.4 or 4.5 of the Program Agreement.
3.3 Service Standards.
GE Capital shall use its best efforts to (i) design
systems to achieve, (ii) employ qualified personnel to meet, and
(iii) otherwise satisfy on average (determined with respect to
each FDS full fiscal quarter commencing after the completion of
the relevant conversion of services) the Service Standards.
3.4 Service Fees.
(a) Postage. GE Bank shall reimburse GE
Capital for all postage costs incurred in providing the GE
Capital Services in such manner as agreed upon by the parties.
(b) Service Fees. No later than ten (10) days
after the beginning of each month during the Term, GE Capital
shall deliver an invoice to GE Bank (with a copy to FACS) setting
forth in reasonable detail the aggregate amount of Service Fees
to be paid by GE Bank for the GE Capital Services rendered in the
immediately preceding month. The amount of such fees shall be
calculated in accordance with Schedule 3.4(b). GE Bank shall pay
to GE Capital, within ten (10) days after receipt of each such
statement, the full amount set forth thereon. Any disputes with
respect to any invoice delivered pursuant to Section 3.4(a) or
3.4(b) shall be resolved in accordance with the procedures
described in Section 9.9 of the Program Agreement.
(c) Inventory. The parties hereby agree that, in
addition to the Service Fees payable pursuant to Section 3.4(b),
all paper, envelopes and plastic required for production and
mailing of billing statements and credit cards with respect to
the GE/Macy's Accounts will either (i) be purchased by GE Capital
in consultation with GE Bank, in which case GE Capital will
invoice GE Bank (with a copy to FACS) directly for such purchases
and GE Bank will pay GE Capital for such invoices (including
shipping and taxes), or (ii) be purchased by GE Bank in
consultation with GE Capital at GE Bank's sole cost and expense,
provided that material qualities and quantities must be
reasonably satisfactory to GE Capital.
(d) Adjustments. The parties hereto acknowledge
and agree that the Service Fees are intended to provide GE
Capital with payment for its actual costs of performing the GE
Capital Services. The parties agree to take all commercially
reasonable efforts, and to cooperate in all commercially
reasonable respects (in each case taking into consideration their
respective businesses and operations as a whole) to minimize such
costs. On each six-month anniversary of the date hereof or at
any time that the provision of the GE Capital Services requires a
material variation from the assumptions set forth on Schedule
3.4(b), either GE Capital or GE Bank may, if it believes that the
fees set forth on Schedule 3.4(b) have resulted in GE Capital
receiving Services Fees for the immediately prior six-month
period in an amount either more or less than its actual costs for
providing the GE Capital Services for such period, deliver a
written notice to the other party requesting that the other party
meet to discuss making appropriate modifications to Schedule
3.4(b). Any such modifications would be intended to assure that
for the next six-month period GE Capital receives Service Fees
equal to its cost of providing the GE Capital Services for such
period, as adjusted to reflect the amount by which the Service
Fees received by GE Capital for the immediately prior six-month
period were more or less than the amount of GE Capital's actual
costs of providing the GE Capital Services for such period. If
one party delivers a notice to the other party pursuant to this
Section 3.4(d) and either the other party refuses to meet to
discuss modifying Schedule 3.4(b) or the parties are unable to
agree on modifications to Schedule 3.4(b) within twenty (20) days
after delivery of such notice, then the notifying party may cause
the dispute to be resolved in accordance with the procedures
described in Section 9.9 of the Program Agreement. Any Person
chosen to resolve such dispute pursuant to Section 9.9 of the
Program Agreement shall approve any proposed increase in the fees
on Schedule 3.4(b) (i) to the extent such proposed increase
reflects an actual increase in costs of performing the GE Capital
Services and (ii) to the extent such proposed increase is
reasonable based on, among other things, historical costs and the
impact of inflation on such costs.
3.5 Compliance with Law
. GE Capital shall implement and execute the Credit
and Collection Policy in compliance with all requirements of
applicable Law and shall perform the GE Capital Services in
compliance with all requirements of applicable Law, except, in
either case, to the extent a failure of GE Capital to so
implement, execute and perform in compliance with applicable Law
is due solely to the failure of the FDS Information Condition to
be satisfied.
3.6 Cooperation
. GE Capital agrees to cooperate with GE Bank in
resolving all disputes with GE/Macy's Account Debtors.
3.7 Payment Processing
. The parties intend that in addition to the GE
Capital Services provided hereunder, GE Capital shall provide
payment processing services as described and subject to the
Service Standards set forth in Exhibit A with respect to the
GE/Macy's Accounts. In this regard, the parties agree that the
fees payable for such services by GE Bank to GE Capital will be
the same as the fees paid by FDS Bank with respect to the FDS
Serviced Accounts for such services, which are being negotiated
as of the date hereof. Until such negotiation results in an
agreement, the fees payable by GE Bank to GE Capital shall be
expenses of the Program as specified in the budget for the
Interim Period and as part of each budget prepared pursuant to
Article V of the Program Agreement.
ARTICLE 4
[Intentionally Omitted]
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Mutual Representations and Warranties
. Each party to this Agreement represents and warrants
to the other party on the date hereof and on each date that GE
Capital provides any of the GE Capital Services hereunder that:
(i) Such party (A) is duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its organization; (B) is duly qualified and in
good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualifications, except (x) in the case of GE
Capital, where failure to be so qualified would not have a
Material Adverse Effect or a material adverse effect on the
ability of GE Capital to perform its obligations pursuant to the
terms of this Agreement and (y) in the case of GE Bank, where
failure to be so qualified would not have a material adverse
effect on their ability to perform their obligations hereunder;
(C) has the requisite power and authority and the legal right to
own, pledge, mortgage, and operate its properties, to lease the
properties it operates under lease, and to conduct its business
as now conducted and hereafter contemplated to be conducted;
(D) has all necessary licenses, permits, consents, or approvals
from or by, and has made all necessary notices to, all
authorities having jurisdiction, to the extent required for such
current ownership and operation or as proposed to be conducted,
except (x) in the case of GE Capital, where failure to obtain
such license, consent, permit or approval, or to give such notice
would not have a Material Adverse Effect or a material adverse
effect on the ability of GE Capital to perform its obligations
pursuant to the terms of this Agreement and (y) in the case of GE
Bank, where the failure to obtain such license, consent, permit
or approval or to give such notice would not have a material
adverse effect on their ability to perform their obligations
hereunder; and (E) is in compliance with its certificate of
incorporation and by-laws.
(ii) The execution, delivery, and performance
of this Agreement and all instruments and documents to be
delivered hereunder: (A) are within such party's power; (B) have
been duly authorized by all necessary or proper action of such
party; (C) do not and will not contravene any provisions of such
party's certificate of incorporation or by-laws; (D) will not
violate any law or regulation or any order or decree of any court
or governmental instrumentality applicable to such party;
(E) will not conflict with or result in the breach of, or
constitute a default under any indenture, mortgage, deed of
trust, lease, agreement, or other instrument to which such party
is a party or by which any of its property is bound; and (F) do
not require any filing or registration with or the consent or
approval of any governmental body, agency, authority, or any
other person which has not been made or obtained previously.
Each party to this Agreement further represents and warrants that
this Agreement has been duly executed and delivered by, and
constitutes a legal, valid, and binding obligation of such party,
enforceable against it in accordance with its terms, subject to
the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect
and to the availability of equitable remedies.
5.2. Representations and Warranties of GE Capital
. GE Capital represents and warrants to GE Bank on the
date hereof and on each date that GE Capital provides any of the
GE Capital Services hereunder that:
(i) GE Capital (A) has all of the necessary
facilities, equipment and personnel to provide the GE Capital
Services in accordance with the terms of this Agreement; and
(B) has and shall maintain disaster recovery procedures and
systems with respect to the GE/Macy's Accounts satisfactory to GE
Bank and at least comparable to those maintained on the date
hereof for the GE/Macy's Accounts.
(ii) GE Capital is Solvent.
(iii) GE Capital is not in default with
respect to any material contract, agreement, lease, or other
instrument to which it is a party, nor has it received any notice
of default under any such material contract, agreement, lease or
other instrument which as a consequence of any such default,
would materially and adversely affect the performance of its
obligations under this Agreement.
(iv) No contract, lease, agreement, or other
instrument to which GE Capital is a party or by which it is
bound, and no provision of applicable Law, materially and
adversely affects the business, operation, prospects, property,
or financial condition of GE Capital such as to impair its
ability to meet its obligations under this Agreement.
ARTICLE 6
CONFIDENTIALITY
6.1 Trade Secrets and Confidential Information
. GE Capital, on the one hand, and GE Bank, on the
other, acknowledge that in the course of performance hereunder,
each of them and/or their respective Affiliates may receive the
trade secrets and confidential information of the other.
(a) Trade Secrets. As used herein, "trade
secrets" shall mean information including or containing technical
or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, or a list of actual or potential
customers or suppliers that (i) derives economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by other persons who can
obtain economic value from its disclosure or use, and (ii) is the
subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
(b) Confidential Information. As used herein,
"confidential information" shall mean information including data,
as to operation, use, prices, sales, vendors, customer lists,
customer information, account information, business plans or
administrative, financial or marketing plans, that is
competitively sensitive and not generally known by or made
available to the public, or that are treated as confidential by
the owner thereof but that does not rise to the level of a trade
secret under applicable law.
6.2 Non-Disclosure Obligations
. GE Capital, on the one hand, and GE Bank, on the
other, acknowledge that the confidentiality of the trade secrets
and the confidential information of the other is necessary and,
except as provided in Section 6.3, agree at all times, during and
after the Term, not to use, communicate, publish, disclose or
disseminate, directly or indirectly, any trade secrets or
confidential information of the other for any purpose except for
the purpose of performing in accordance with this Agreement. In
the event any information can be treated as both trade secrets
and confidential information, such information shall be treated
as trade secrets for purposes of this Agreement. Each party
shall use the same care to prevent disclosure to third parties of
the trade secrets and confidential information of the other as it
employs to avoid disclosure, publication or dissemination of its
own information of a similar nature. The parties agree that, in
addition to any other remedies which may be available at law or
in equity, each party shall have the right to obtain injunctive
relief to restrain a breach or threatened breach, or otherwise
obtain specific performance of, the other party's covenants and
agreements in this Section 6.2.
6.3 Permitted Disclosure
. Notwithstanding the foregoing, a receiving party may
disclose some or all of the trade secrets and confidential
information of the other party which are:
(i) required to be disclosed by law or order
of court or governmental agency applicable to the receiving
party, provided that the receiving party shall give prompt notice
to the other party of any request for such disclosure so that the
other party may seek a protective order or other appropriate
remedy, and notwithstanding any such disclosure, such disclosed
trade secrets or confidential information shall remain
confidential and otherwise subject to the provisions of
Article 6;
(ii) generally known and available in the
public domain, or become part of the public domain through no
violation of any confidentiality provisions of this Agreement; or
(iii) developed by the recipient or its
representatives independently of such information or trade
secrets.
6.4 Use of Trade Secrets or Confidential Information
. Neither GE Capital nor GE Bank may:
(i) acquire any right in or assert any lien
against the trade secrets or confidential information of the
other; or
(ii) refuse to return promptly upon the
reasonable request of the other as permitted herein any
confidential information or trade secrets of the other that it
may have in its possession.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification.
(a) Indemnification by GE Capital. GE Capital
shall indemnify, defend and hold harmless GE Bank and each of its
Affiliates and the officers, directors, employees, agents,
shareholders, successors and assigns of GE Bank and each of its
Affiliates ("GE Bank") from and against any and all claims,
actions, damages, losses, liabilities, costs and expenses,
including reasonable attorneys' fees and expenses (collectively,
"Damages") caused by, relating to or arising out of (i) the
failure of any representation or warranty of GE Capital hereunder
to be true and correct in any material respect when made or
remade; (ii) the breach by GE Capital or any of its Affiliates of
any of their covenants or agreements hereunder; (iii) any act or
omission by GE Capital or its Affiliates, employees or agents in
performing, implementing and/or executing the GE Capital Services
and the Credit and Collection Policy, except to the extent (x)
the Credit and Collection Policy specifically describes how such
act should be implemented and GE Capital implemented such act in
conformity with such description (other than modifications to the
Credit and Collection Policy (including the Major Credit and
Collection Policies) made by FDS without the approval of the
Policy Committee pursuant to Section 4.4 of the Program
Agreement) or (y) any such performance, implementation or
execution was effected in accordance with specific written
instructions from an Authorized GE Person or (z) the Damages
arising out of such act or omission are due solely to the failure
of the FDS Information Condition to be satisfied; (iv) any acts
or omissions of GE Bank, its employees or any of its agents taken
at the specific written request of a senior manager of GE Capital
Retailer Financial Services, and (v) notwithstanding the
provisions of Section 7.1(a)(iii) hereof, any judgmental
decisions (i.e., any determination or decision made which is not
specifically dictated by the Credit and Collection Policy)
effected by GE Capital or its employees or agents in effecting
the GE Capital Services.
(b) Indemnification by GE Bank. GE Bank shall
indemnify, defend and hold harmless GE Capital and its Affiliates
and the officers, directors, employees, agents, shareholders,
successors and assigns of GE Capital and each of its Affiliates
from and against any and all Damages caused by, relating to or
arising out of (i) the breach by GE Bank of any of its covenants
or agreements hereunder; (ii) the failure of any representation
or warranty of GE Bank hereunder to be true and correct in any
material respect when made or remade; and (iii) any act or
omission by GE Capital or its employees or agents in performing,
implementing and/or executing the GE Capital Services and the
Credit and Collection Policy effected in accordance with specific
written instructions from an Authorized GE Person.
7.2 Conduct of Litigation
. In the event a claim or judicial action is brought
or threatened against an indemnified party with respect to
matters covered by Section 7.1, the indemnifying party shall have
the sole right to defend such claim or action at its expense and
to control the defense and settlement thereof, provided, that the
indemnified party shall have the right to participate in such
defense and negotiations using counsel at its own expense and the
indemnifying party shall obtain the indemnified party's consent,
prior to entering into a settlement, consent decree, compromise
or consenting to any injunctive relief with respect to such claim
or action. Any indemnified party shall provide prompt notice to
the indemnifying party of any claims for which the indemnified
party intends to seek indemnification for hereunder, provided
that the failure to provide such notice shall not affect the
obligations of the indemnifying party except to the extent such
failure causes actual harm to the indemnified party.
ARTICLE 8
DEFAULT; REMEDIES
8.1 GE Capital Events of Default
. It shall be a "GE Capital Event of Default" if any
of the events set forth below shall occur and be continuing and
remain unremedied prior to the expiration of the specified
period.
(a) Service Standards Default. If GE Capital
shall consistently fail to perform its obligations under Section
3.3, and such consistent failure to perform shall (i) have a
Material Adverse Effect or a material adverse effect on the
Program, and (ii) remain unremedied for a period of seventy-five
(75) days after delivery of written notice thereof by GE Bank to
GE Capital.
(b) Credit and Collection Policy Defaults.
(i) If GE Capital shall fail to perform the
GE Capital Services in accordance with any provision of the
Credit and Collection Policy where such failure results in a
violation of applicable Law, and such failure is not remedied
within seven (7) days after delivery of written notice thereof by
GE Bank to GE Capital, provided that if, notwithstanding GE
Capital's diligent, best efforts to cause its employees and
agents to perform the GE Capital Services so as not to violate
applicable Law, certain employees or agents have failed to so
perform the GE Capital Services, the time period set forth in
this Section 8.1(b)(i) shall be extended, but not by more than an
additional ten (10) days, as long as GE Capital continues to use
its diligent, best efforts to remedy such failure.
(ii) If GE Capital shall fail to perform the
GE Capital Services in accordance with any provision of the
Credit and Collection Policy where such failure does not result
in a violation of applicable Law, and such failure (x) has a
Material Adverse Effect and (y) is not remedied within thirty
(30) days after delivery of written notice thereof by GE Bank to
GE Capital.
(iii) If GE Capital shall consistently
fail to perform any of the GE Capital Services in accordance with
any provision of the Credit and Collection Policy where such
failure does not result in a violation of applicable Law and does
not have a Material Adverse Effect, and is not remedied within
seventy-five (75) days after delivery of written notice thereof
by GE Bank to GE Capital; provided that each of the time periods
in this Section 8.1(b) shall be extended, but not by more than 60
days, so long as GE Capital is using its diligent, best efforts
to remedy such failure in the event that (x) the provision of the
Credit and Collection Policy that GE Capital has failed to
perform is a provision of the Credit and Collection Policy which
has been modified pursuant to Section 4.4 of the Program
Agreement and (y) the reason GE Capital has been unable to so
perform is because the GE Credit System requires modifications in
order to implement such modified provision of the Credit and
Collection Policy.
(c) Credit Systems Default. If GE Capital shall
fail to perform all or substantially all of the GE Capital
Services for a period of seven (7) consecutive days due to a
failure of the GE Credit System or otherwise.
(d) Breach of Agreement. If GE Capital shall
breach any of its obligations under this Agreement or any of its
representations and warranties under this Agreement (other than
obligations, representations or warranties the breach of which is
otherwise addressed in this Section 8.1) and such breach has a
Material Adverse Effect and is not cured within thirty (30) days
after delivery of written notice thereof by GE Bank to GE
Capital.
(e) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to GE Capital.
(f) Material Adverse Change. If there shall have
been a material adverse change to the business, financial
condition, or operations of GE Capital which change has a
material adverse effect on its ability to fulfill its obligations
hereunder pursuant to the terms hereof.
8.2 GE Bank Remedies
. Subject to the provisions of Section 8.7, upon
the occurrence of a GE Capital Event of Default, GE Bank may, in
addition to any other remedies it may have at law or equity,
terminate this Agreement by delivering a written notice of
termination to GE Capital.
8.3 GE Bank Events of Default
. It shall be a "GE Bank Event of Default" if any of
the events set forth below shall occur and be continuing and
remain unremedied prior to the expiration of the specified
period.
(a) Breach of Agreement. If GE Bank shall breach
in any material respect any of its obligations under this
Agreement or any of their representations and warranties under
this Agreement (other than obligations, representations and
warranties the breach of which is otherwise addressed in this
Section 8.3), and fail to cure such breach within thirty (30)
days after delivery of written notice thereof by GE Capital to GE
Bank.
(b) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to GE Bank.
8.4 GE Capital Remedies
. Upon the occurrence of a GE Bank Event of Default,
GE Capital may, in addition to any other remedies it may have at
law or equity, terminate this Agreement by delivering a written
notice of termination to GE Bank.
8.5 Excuse For Non-Performance
. In the event one party (the "Performing Party") is
unable to comply with or perform any of its obligations hereunder
solely due to (i) the other party (the "Non-Performing Party")
failing to perform its obligations hereunder or under any
Transaction Document or (ii) the quality, nature, timeliness,
completeness or accuracy of any goods, services or data provided
by the Non-Performing Party to the Performing Party, the
Performing Party shall be excused from such performance (and no
event of default shall be deemed to have occurred) provided that
the Performing Party shall (a) notify the Non-Performing Party as
soon as practicable describing the default and explaining how the
Performing Party's performance has been affected; (b) use
reasonable efforts to mitigate the effect of the Non-Performing
Party's failure; and (c) perform its obligations hereunder to the
extent reasonably practicable. Both parties shall use diligent,
uninterrupted efforts to cure the failure and eliminate the
effects thereof.
8.6 Post-Termination Procedures
. Upon termination or expiration for any reason of
this Agreement, the parties shall comply with their respective
post-termination obligations, if any, as set forth below:
(a) Payments. Except as may be expressly
provided otherwise herein, within ten (10) business days after
the effective date of termination of this Agreement, each party
shall pay the other party any amounts that as of that effective
date were due and owed thereto pursuant to this Agreement.
(b) Extended Servicing. GE Bank may cease to
receive GE Capital Services hereunder from and after the
effective date of termination, provided that GE Bank may elect to
require GE Capital to continue to provide all or a portion of the
GE Capital Services to the GE/Macy's Accounts for up to a maximum
of six (6) months following the effective date of termination.
In the event of an election by GE Bank to receive GE Capital
Services, GE Capital shall provide GE Capital Services as
described herein subject to payment by GE Bank of the applicable
Services Fees then in effect.
8.7 Special Provisions.
In the event of a GE Capital Event of Default
pursuant to the provisions of Section 8.1, GE Bank may terminate
the Agreement with respect to any one of the GE Capital Services
only at such time as GE Bank's designee is Deemed Prepared to
perform any one of such GE Capital Services. If GE Bank's
designee is not Deemed Prepared to perform any of the GE Capital
Services by the later of (i) six (6) months after the effective
date of termination and (ii) the date that a GE Capital Event of
Default with respect to such GE Capital Services no longer
exists, then GE Bank shall lose its right to perform the GE
Capital Services for which it is not so Deemed Prepared. In the
event of a subsequent GE Capital Event of Default pursuant to the
provisions of Section 8.1, the provisions of this Section 8.7
shall again be applicable.
"Deemed Prepared" means, with respect to any one of the
GE Capital Services, either (i) GE Capital and GE Bank have
agreed that GE Bank's designee is reasonably well prepared to
perform such services or (ii) an arbitrator, selected at the
request of GE Bank by the President of the AAA, has determined
what steps GE Bank's designee must take to be reasonably well
prepared to perform such services at a level at least as high as
GE Capital is required to perform hereunder and GE Bank's
designee has taken such steps.
ARTICLE 9
MISCELLANEOUS
9.1 Governing Law; Jurisdiction
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard
to its rules governing conflicts of law.
9.2 Audit and Access Rights
. GE Bank shall have all such rights to access the
premises of GE Capital, the GE Credit System and audit the
records of GE Capital as may be necessary or desirable to permit
GE Bank to fulfill all of its responsibilities, and exercise all
of its rights, hereunder and under the Transaction Documents.
Without limiting the generality of the foregoing, GE Capital
shall permit GE Bank and its designees, officers, employees,
attorneys, accountants and/or other representatives during normal
business hours with reasonable advance notice, in such a manner
as to minimize interference with the normal business operations
of GE Capital (i) to observe, monitor and obtain information
regarding the GE/Macy's Accounts and to observe and monitor the
implementation by GE Capital personnel of the Credit and
Collection Policy, (ii) to observe whether the GE Capital
Services and the Credit and Collection Policy are being applied
consistently between the GE/Macy's Accounts and the FDS/Macy's
Accounts and in compliance with the provisions of the Program
Agreement and (iii) to examine, audit, inspect, copy and make
copies of all of the data, records, files, and books of account
under the control of GE Capital (whether received on computer,
electromagnetic storage vehicles, paper, film or other medium)
and relating strictly to the GE/Macy's Accounts and to the back-
up documentation relating to the reports provided hereunder by GE
Capital to GE Bank. The costs and expenses of any exercise by
GE Bank of its rights hereunder shall be expenses of the Program
to the extent such costs and expenses are included in the
Operating Expense Budget for the applicable Period in which such
costs and expenses were incurred. Notwithstanding any other
provision of this Agreement, GE Bank shall not have any access or
audit rights with respect to any information in the possession of
GE Capital regarding services provided by GE Capital to any non-
affiliated third party other than the FDS Parties. Employees of
GE Capital shall be permitted to be present during the exercise
by GE Bank of any of its audit and access rights under this
Section 9.2.
9.3 Entire Agreement; Amendments; Waivers
. This Agreement contains the entire agreement of the
parties hereto as to the subject matter discussed herein. Any
amendment to or modification of this Agreement must be in writing
and executed by authorized officers of GE Capital and GE Bank.
No waiver by either party of any right or power it has under this
Agreement shall impair or be construed as a further waiver of
such right or power. To be effective, all waivers must be in
writing and signed by the party waiving its rights.
9.4 Assignability
. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns. Neither GE Capital, on the one hand, nor
GE Bank, on the other, may assign their rights or obligations
hereunder without the prior consent of the other, except that
(i) in the case of a proposed assignment by GE Capital to an
Affiliate, such consent shall not be unreasonably withheld,
provided that in connection with any such assignment GE Capital
delivers to the FDS Companies instruments reasonably satisfactory
to the FDS Companies pursuant to which the terms of the GE
Capital Guaranty will be extended to the Agreement and (ii) in
the case of a proposed assignment by GE Bank, such consent shall
not be unreasonably withheld.
9.5 Relationship of Parties
. In performing under this Agreement, the parties are
acting as independent contractors and this Agreement shall not be
construed as providing either party with the right, power or
authority to impose any duty or obligation on the other except as
expressly provided herein.
9.6 Survival
. The provisions of Article 6, Article 7, and
Sections 8.6 and 9.2 of this Agreement shall survive a
termination or expiration of this Agreement.
9.7 Third Party Beneficiaries
. Nothing herein shall create or be deemed to create
any third party beneficiary rights in any Person not a party to
this Agreement except (i) as expressly provided with respect to
indemnification rights in Article 7 and (ii) that FDS is an
intended third party beneficiary hereof such that, among other
things, no amendment to this Agreement shall be effective without
the consent of FDS (other than amendments that would not have an
adverse effect on the rights or obligations of GE Capital, GE
Bank or FDS) and FDS shall have the right to enforce the
obligations of GE Capital hereunder.
9.8 Notices
. Any notice or other communication required or
otherwise provided for under this Agreement shall be in writing
and shall be deemed given when delivered by hand or by courier or
express mail or by registered or certified United States mail,
return receipt requested, postage prepaid, or by facsimile if
receipt is acknowledged (except that a notice of termination or
breach shall not be sent by facsimile) and shall be addressed as
follows:
In the case of GE Bank:
GE Capital Consumer Card Co.
5300 Kings Island Drive
Mason, OH 45040
Attn: Secretary
Fax: (513) 459-6888
with copies to:
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attn: Counsel, Retailer Financial Services
Fax: (203) 357-3353
and
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, OH 45202
Attn: Law Department
Fax: (513) 579-7897
and
FACS Group, Inc.
9111 Duke Blvd.
Mason, OH 45050
Attn: Senior Vice President
Fax: (513) 573-2039
In the case of GE Capital:
General Electric Capital Corporation
5665 New Forsyth Road
Macon, Georgia 31210
Fax: (912) 471-5014
Attn: Senior Vice President - Retailer Financial Services
with copies to:
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attn: Counsel, Retailer Financial Services
Fax: (203) 357-3353
and
Macy's Credit Services
4605 Duke Drive
Mason, OH 45040
Attn: Executive Vice President
Fax: (513) 573-3251
Either party hereto may, from time to time, change its address or
designated recipient for notification purposes by giving the
other party notice thereof and the date upon which it shall
become effective.
9.9 Designees
. [OMISSION].
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Richard A. Hayes
Name: Richard A. Hayes
Title: Senior Vice President
Retailer Financial Services
GE CAPITAL CONSUMER CARD CO.
By: /s/ Kevin Knight
Name: Kevin Knight
Title: Executive Vice President
Exhibit A
GE CAPITAL SERVICES TO GE BANK
General. All of the GE Capital Services described hereafter
shall be provided by GE Capital (i) in accordance with, and as
more fully described in, the then applicable Credit and
Collection Policy and (ii) without limiting GE Bank's rights or
altering the obligations of GE Bank under the Program Agreement
including pursuant to Section 4.4 of the Program Agreement.
I. GE CAPITAL SERVICES
1. Billing Statement Production
1.1. Provide billing statement processing services as
described below and in accordance with the
technical specifications and billing cycle
timeframes established between GE Capital and GE
Bank.
(i) Receive and process the electronic periodic
billing statement file.
(ii) Trim, burst and fold all periodic billing
statements.
(iii)Insert all periodic billing statements
as described in Section 2.2 below.
(iv) Place required postage on all periodic
billing statement envelopes.
(v) Presort all qualified mail.
(vi) Seal and deliver all periodic billing
statement envelopes to US Postal Service.
2. Billing Statement Mailing
2.1. Mail periodic billing statements, except those
periodic billing statements otherwise agreed to by
GE Bank, within the timeframe established in
Section II of this Exhibit A.
2.2. Insert marketing material approved by GE Bank and
received by GE Capital in usable form that
conforms to materials specifications of GE Capital
into the designated periodic billing statements.
The inserts are to be distributed within the
periodic billing statement in the following order:
(i) First, any inserts or messages that GE Bank,
in its sole judgment, determines are required
by Law to be included in a periodic billing
statement shall be included and shall have
priority over all other inserts and messages;
(ii) Second, any inserts or messages that any FDS
Company is contractually required to include
in a periodic billing statement shall be
included;
(iii)Third, any inserts or messages that FDS,
in its sole discretion, determines should be
included in a periodic billing statement
shall be included; and
(iv) Fourth, any inserts or messages with respect
to programs approved by FDS and GE Bank for
inclusion in a periodic billing statement
shall be included.
2.3. Mail periodic billing statements within the
timeframe required by Regulation Z.
2.4. Exercise reasonable quality control review of
periodic billing statements.
2.5. In the event of any material disruption in
periodic billing statement services, GE Capital
will use commercially reasonable efforts to notify
GE Bank and FACS of such disruption on the same
business day, and, in any event will provide
notice as promptly as practicable.
2.6. Provide the following reporting for the periodic
billing statement services:
(i) Daily statement status report by Division of
cycles billed, mailed and quantity.
(ii) Monthly inventory report for all supplies.
(iii)Monthly statement analysis report of
mailings by Division with associated costs
and breakdown.
2.7. Notwithstanding the above, GE Capital will also be
responsible for inventory control, warehousing of
the periodic billing statements and associated
materials.
3. Credit Card Production
3.1. GE Capital will emboss and encode GE/Macy's Credit
Cards as described below and in accordance with
the technical specifications and credit card
production schedules established between GE
Capital and FACS.
(i) Receive and process the electronic Credit
Card file.
(ii) Emboss two (2) lines of data unless otherwise
specified.
(iii)Magnetically encode the cards.
(iv) Print the customer information on the Credit
Card card carrier form.
(v) Data match the Credit Cards and the Credit
Card card carriers.
(vi) Insert as described in Section 4.2 below.
(vii)Trim, burst and fold the Credit Card
card carriers.
(viii)Insert the Credit Card card carriers
into the Credit Card card carrier envelopes.
(ix) Place required postage on the Credit Card
card carrier envelopes.
(x) Seal and deliver all Credit Card card carrier
envelopes to US Postal Service.
3.2. GE/Macy's Credit Cards shall be in the design and
format jointly established by FACS and GE Bank and
shall include the Macy's Tradename.
4. Credit Card Mailing
4.1. Mail Credit Cards within the timeframe established
in Section II of this Exhibit A.
4.2. Insert GE Bank approved marketing material that
conforms to materials specifications of GE Capital
into the envelope carrying the designated Credit
Card card carrier. The inserts are to be included
with the Credit Card card carrier in the following
order:
(i) First, any inserts or messages that GE Bank,
in its sole judgment, determines are required
by Law to be included in a Credit Card card
carrier shall be included and shall have
priority over all other inserts and messages;
(ii) Second, any inserts or messages that any FDS
Company is contractually required to include
in a Credit Card card carrier shall be
included;
(iii)Third, any inserts or messages that FDS,
in its sole discretion, determines should be
included in a Credit Card card carrier shall
be included; and
(iv) Fourth, any inserts or messages with respect
to programs approved by FDS and GE Bank for
inclusion in a Credit Card card carrier shall
be included.
4.3. Exercise reasonable quality control review of
Credit Cards.
4.4. In the event of any material disruption in credit
and production or mailing services, GE Capital
will use commercially reasonable efforts to notify
GE Bank and FACS of such disruption on the same
business day, and, in any event will provide
notice as promptly as practicable.
4.5. Provide the following reporting for the Credit
Card services:
(i) Daily Credit Card Status report by Division
of cards produced and mailed.
(ii) Monthly Inventory report for all supplies,
including reconciliation of any lost and
damaged materials.
(iii)Monthly Credit Card Inventory report.
(iv) Monthly Credit Card analysis report of cards
embossed and mailed by Division with
associated costs and breakdown.
4.6. Notwithstanding the above, GE Capital will also be
responsible for inventory control, warehousing of
the Credit Cards and associated materials, and
providing adequate security for all credit cards
and discount coupons.
5. Remittance Processing
5.1. Provide remittance processing services as
described below and in accordance with the
technical specifications and payment processing
production schedules established between GE
Capital and FACS.
(i) Perform lock box services, daily depositing
of monetary medium in account(s) designated
by GE Bank, I/O Control, data entry,
balancing of payments and forwarding of
miscellaneous Cardholder correspondence
(including gift certificates) received
through the lock box assigned for Cardholder
payment remittance.
(ii) Receive payments from a lock box assigned for
Cardholder remittances, process payments and
forward other customer communications
received.
(iii)Retain the original payment remittance
for 7 days from the date of receipt.
(iv) All payments shall be dated as of the date
received.
(v) Process or handle exceptions as provided by
GE Bank. An "Exception" to standard
processing occurs when (i) the provided
envelope is not used, (ii) the envelope
includes anything other than one remittance
advice and one check (iii) the payment amount
or account number on the check, does not
match those on the remittance advice and
(iv) GE Capital performs special handling
instructions on behalf of GE Bank.
5.2. GE Bank will be responsible for establishing an
account for daily deposit of monetary medium
received for payment remittances.
5.3. FACS will provide the appropriate system access
for performing the account look-up function to the
authorized users at GE Capital. The account look-
up function is only to be used by GE Capital for
processing Cardholder payment remittances when the
cardholder account number does not appear on the
monetary medium nor the periodic billing statement
when the payment remittance is received by GE
Capital.
5.4. Provide the following reporting for the Remittance
Processing services:
(i) Daily Remittance Processing Status report by
Division of payments received (including gift
certificates and cash) and exceptions
returned to FACS.
II. SERVICE STANDARDS
Services Category Standard
(All days are Business Days,
measured from but excluding the
date inquiry or notice or data
is received by GE Capital; all
standards expressed are
averages calculated over a
measurement period of an FDS
fiscal quarter).
1. Billing Statement Production Best efforts to mail within 2
days after receipt by GE
Capital of file, and, in any
event, mailed not later than 4
business days after receipt by
GE Capital of FDS Information
that satisfies the FDS
Information Condition.
2. Credit Card Production Mailing Mailed not later than 2
business days after receipt by
GE Capital of FDS Information
that satisfies the FDS
Information Condition
(excluding card production
and/or mailing in connection
with reissuances, prescreen
solicitations, or other events
which do not relate to
applications made at the point
of sale in the ordinary course
of business).
3. Payment Processing For processing (including
depositing to account(s)
designated by GE Bank) other
than exception processing, best
efforts to process within 1 day
after receipt by GE Capital,
and, in any event, processed
not later than 2 business days
after receipt by GE Capital of
FDS Information that satisfies
the FDS Information Condition.
Schedule 3.4(b)
Service Fees
[OMISSION]
Execution Copy
AMENDED AND RESTATED COMMERCIAL ACCOUNTS AGREEMENT *
AMENDED AND RESTATED COMMERCIAL ACCOUNTS AGREEMENT,
dated as of June 4, 1996, by and among GENERAL ELECTRIC CAPITAL
CORPORATION ("GE Capital"), FEDERATED DEPARTMENT STORES, INC.
("FDS"), FDS NATIONAL BANK ("FDS Bank"), MACY'S EAST, INC.
("Macy's East"), MACY'S WEST, INC. ("Macy's West"), BULLOCK'S,
INC. ("Bullock's"), BROADWAY STORES, INC. ("Broadway"), FACS
Group, Inc. ("FACS") and MSS-DELAWARE, INC. ("MSS").
W I T N E S S E T H :
WHEREAS, GE Capital, R.H. Macy & Co., Inc., Macy Credit
Corp., Macy Receivables Funding Corp., Macy's California, Inc.,
Macy's Northeast, Inc., Macy's South, Inc., Bullock's, Inc., I.
Magnin, Inc., Macy Receivables Master Servicing Corp. and Macy
Specialty Stores, Inc. entered into a Commercial Accounts
Agreement, dated as of May 10, 1991 (such agreement, as it has
been amended from time to time, the "Original Agreement"); and
WHEREAS, GE Capital, FDS (as the successor to R.H. Macy
& Co., Inc.), FDS Bank, Macy's East (as the successor to Macy's
Northeast, Inc. and Macy's South, Inc.), Macy's West (as the
successor to Macy's California, Inc.), Bullock's, and the other
parties hereto desire to amend and restate the Original Agreement
in its entirety (other than Article Seven thereof, which shall
continue unamended);
NOW, THEREFORE, in consideration of the terms,
conditions and mutual covenants contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as
follows:
Rider X
_________________________
* Confidential portions of this Exhibit have been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
ARTICLE ONE
DEFINITIONS
1.1. Certain Capitalized Terms
. Capitalized terms used but not otherwise defined
herein have the meanings set forth in the Amended and Restated
Program Agreement.
1.2. Definitions.
As used in this Agreement, the following terms have
the respective meanings set forth below:
"Agreement" means this Amended and Restated Commercial
Accounts Agreement, including all amendments, modifications,
supplements, exhibits, and schedules hereto, and shall refer to
this Agreement as the same may be in effect at the time such
reference is operative.
"Amended and Restated Program Agreement" means the
Amended and Restated Credit Card Program Agreement, dated as of
the date hereof, by and among GE Capital Consumer Card Co. and
the FDS Companies, as it may be amended from time to time.
"Authorized Commercial User" means, with respect to any
GE/Macy's Commercial Account, any Person authorized from time to
time by the relevant Commercial Account Debtor to purchase
Merchandise on credit pursuant to such GE/Macy's Commercial
Account.
"Commercial Account Agreement" means any credit
agreement entered into between GE Capital and a Commercial
Account Debtor (or any replacement of such agreement) pursuant to
which such Commercial Account Debtor and Authorized Commercial
Users may be permitted to purchase Merchandise from any Retailer
on credit from time to time, whether or not there is a finance
charge computed from time to time, together with any amendments,
modifications or supplements which now or hereafter may be made
to such Commercial Account Agreement (or any replacement of such
agreement) and any replacements thereof.
"Commercial Account Application" means any application
for a GE/Macy's Commercial Account completed and submitted
(whether by mail, telephone or other electronic means) by or on
behalf of any Person or Persons.
"Commercial Account Balance" means, with respect to any
GE/Macy's Commercial Account, the outstanding balance of such
GE/Macy's Commercial Account at the time of determination, which
shall consist of, without limitation, the sum of (i) the
aggregate Face Amount of GE/Macy's Commercial Receivables posted
to such GE/Macy's Commercial Account prior to such time and
(ii) the aggregate amount of any and all fees and charges posted
to such GE/Macy's Commercial Account prior to such time,
including, without limitation, interest and finance charges,
returned check charges or late charges, insurance premiums and
attorneys' fees, minus the aggregate amount of all credits,
payments, adjustments, and employee discounts posted to such
GE/Macy's Commercial Account prior to such time, provided that
the Commercial Account Balance of any of the following accounts
shall be zero (whether or not any GE/Macy's Commercial
Receivables with respect to such account are included on the
Master File at such time): any GE/Macy's Commercial Account
where, as of the time of determination, (a) the Commercial
Account Debtor has been coded on the Master Files with respect to
any prior billing cycle as having filed a petition for relief
under the Bankruptcy Code, having made a general assignment for
the benefit of creditors, having had filed against it any
petition or other application for relief under the Bankruptcy
Code, or having suffered a receiver or trustee to be appointed
for all or a significant portion of its assets, and under the
Credit and Collection Policy such GE/Macy's Commercial Account
was required to be written off, but was not written off, (b) such
GE/Macy's Commercial Account is 180 days or more past due, (c)
such GE/Macy's Commercial Account has been referred to an
attorney, collection agency, or other entity for collection and
has been written off in accordance with the Credit and Collection
Policy, or (d) such GE/Macy's Commercial Account has been written
off as uncollectible under the Credit and Collection Policy at
any time prior to the time of determination.
"Commercial Accounts Business" means the business of
extending credit in connection with the sales of Merchandise on
credit by any of the Retailers pursuant to a GE/Macy's Commercial
Account, and servicing such credit purchases of Merchandise.
"Commercial Account Debtor List" means all lists of
Commercial Account Debtors, including the addresses and phone
numbers of, and other demographic data with respect to, such
Commercial Account Debtors, maintained by any of the FDS
Companies and/or any Affiliate of any of the FDS Companies.
"Commercial Accounts Program" means the Commercial
Accounts Program established by the Original Agreement and
continued pursuant to this Agreement.
"Commercial Books and Records" means all books,
records, files (including, without limitation, the Commercial
Master File), credit information, business records and plans,
reports, correspondence, and other financial and corporate data
used or held by any of the FDS Companies or any Affiliate of any
of the FDS Companies for use in connection with or relating to
the Commercial Accounts Business or the Commercial Collateral.
"Commercial Collateral" has the meaning set forth in
Section 6.1(a) hereof.
"Commercial Credit Card" means any card issued by any
of the FDS Companies, any Affiliate of any of the FDS Companies
or by GE Capital, to a Person, which card can be used by such
Person only to purchase Merchandise on credit from one or more of
the Retailers pursuant to a GE/Macy's Commercial Account.
"Commercial Credit Card Documentation" means, with
respect to a GE/Macy's Commercial Account, all of the following
items relating to such GE/Macy's Commercial Account: Commercial
Account Applications, Commercial Account Agreements, Commercial
Credit Cards, credit bureau reports, GE/Macy's Charge Slips,
GE/Macy's Credit Slips, periodic billing statements, receipts for
in-store payments, adverse action notices and change of terms
notices.
"Commercial Intellectual Property" means all shop
rights, inventions, discoveries, improvements, designs, patterns,
processes, formulae, trade secrets, proprietary rights and data,
ideas and know-how, whether or not patentable or registrable,
from time to time owned by any of the FDS Companies or any
Affiliate of any of the FDS Companies and used or held for use
solely in connection with the Commercial Accounts Business.
"Commercial Master File" means, with respect to each
Division on any date, the computer files containing the most
recently-posted financial, GE/Macy's Commercial Account status
and demographic information with respect to any of such
Division's GE/Macy's Commercial Accounts, including, without
limitation, active, inactive and recovery GE/Macy's Commercial
Accounts, which computer files represent the aggregate amount of
Commercial Account Balances on such date, together with
corresponding control reports.
"Cut-off Time" means May 9, 1991 at 11:59 p.m., New
York City Time.
"GE/Macy's Commercial Account" means any of the
following credit accounts owned by GE Capital established at any
time (past, present or future) in favor of a Commercial Account
Debtor and identified by a unique account number, whether or not
established in favor of any particular class of Persons: (a) a
non-GE/Macy's Credit-Card accessed credit account, (b) a credit
account not used primarily for personal, family or household
purposes or uses, (c) a closed-end credit account and (d) any
other credit account (in each case in clauses (b), (c) and (d) of
this definition, whether or not such credit account is accessed
through a GE/Macy's Credit Card). As used in this Agreement, the
term "GE/Macy's Commercial Account" includes New Commercial
Accounts. Notwithstanding the foregoing, "GE/Macy's Commercial
Account" does not include (x) any account generated pursuant to a
layaway plan and (y) any GE/Macy's Account.
"Commercial Account Debtor" means any Person who is a
party to a Commercial Account Agreement or who is or who may
become obligated under, with respect to, or on account of, a
GE/Macy's Commercial Account from time to time.
"GE/Macy's Commercial Account Documentation" means,
with respect to a GE/Macy's Commercial Account, any and all
documentation from time to time relating to such GE/Macy's
Commercial Account, including, without limitation, Commercial
Credit Card Documentation, checks and stubs, correspondence,
memoranda, documents, instruments, certificates, agreements,
invoices, sales or shipping slips, delivery and other receipts,
magnetic tapes, disks, hardcopy formats, any other computer-
readable data transmissions, and any other records of whatever
form or nature, related to any of the foregoing, any other
written, electronic or other material related to any of the
foregoing, any microfilm, electronic or other copy of any of the
foregoing and all other materials, including, without limitation,
tangible and intangible information, arising from any of the
foregoing or pertaining thereto.
"GE/Macy's Commercial Receivable" means any and all
amounts owing from time to time with respect to the purchase of
Merchandise on credit pursuant to a GE/Macy's Commercial Account,
including, without limitation, any charges for sales tax,
regardless of whether such GE/Macy's Commercial Receivable
consists of an "account," "chattel paper," an "instrument" or a
"general intangible" under and as defined in Article or
Division 9 of the UCC applicable to such GE/Macy's Commercial
Receivable, and all proceeds of any of the foregoing, together
with (a) any and all GE/Macy's Commercial Account Documentation
relating to such GE/Macy's Commercial Receivable and any
"document" (as defined in the UCC) covering any Merchandise
relating to such GE/Macy's Commercial Receivable, (b) any and all
rights and remedies as to stoppage-in-transit, reclamation,
return and repossession of Merchandise with respect to such
GE/Macy's Commercial Receivable, whether arising by Contract or
by Law, (c) any and all Merchandise, goods or other property that
is security for such GE/Macy's Commercial Receivable or for any
item referred to in clause (a), (b), (d), (e) or (f) of this
definition, (d) any and all contracts of indemnity, guaranties,
sureties, letters of credit, proceeds of insurance claims,
security interests, or other direct or indirect security or
support held by or granted to any Retailer by any Person to
secure payment of such GE/Macy's Commercial Receivable, (e) any
and all other rights, remedies, benefits, interests and titles,
both legal and equitable, to which any of the FDS Companies or
any Affiliate of any of the FDS Companies may at any time (past,
present or future) be entitled in respect of any of the
foregoing, and (f) any and all proceeds of any of the foregoing.
Each purchase of Merchandise by a GE/Macy's Commercial Account
Debtor or an Authorized Commercial User pursuant to a GE/Macy's
Commercial Account shall constitute a separate GE/Macy's
Commercial Receivable. As used in this Agreement, the term
"GE/Macy's Commercial Receivable" includes New Commercial
Receivables. Notwithstanding the foregoing, "GE/Macy's
Commercial Receivable" does not include (x) any receivable
generated pursuant to a layaway plan or (y) any GE/Macy's
Receivable.
"New Commercial Accounts" means all GE/Macy's
Commercial Accounts originated on or after the date of the
Original Agreement.
"New Commercial Receivable" means any GE/Macy's
Commercial Receivable arising after the Cut-off Time.
"Transferable Commercial Business Permits" means all
Permits (a) that are required in order to carry on the Commercial
Accounts Business and to consummate the transactions contemplated
by this Agreement and (b) that are transferable to GE Capital.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES OF FDS COMPANIES
2.1. Amended and Restated Program Agreement
Representations and
Warranties
. On the date hereof, and on the date of each
Remittance, the FDS Companies, jointly and severally, hereby make
each representation and warranty made by the FDS Companies in
Article VI of the Amended and Restated Program Agreement mutatis
mutandis with respect to the Commercial Accounts Program. Each
such representation and warranty shall survive to the extent
provided in the Amended and Restated Program Agreement.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF GE CAPITAL
3.1. Amended and Restated Program Agreement
Representations and Warranties
. On the date hereof and on the date of each
Remittance, GE Capital hereby makes each representation and
warranty made by GE Bank in Article Seven of the Amended and
Restated Program Agreement mutatis mutandis with respect to the
Commercial Accounts Program. Each such representation and
warranty shall survive to the extent provided in the Amended and
Restated Program Agreement.
ARTICLE FOUR
INCORPORATION OF PROVISIONS
4.1. Amended and Restated Program Agreement
. Unless specifically provided to the contrary in this
Agreement, the terms and provisions applicable to the Program
which are contained in the Amended and Restated Program Agreement
shall apply mutatis mutandis to the Commercial Accounts Program.
ARTICLE FIVE
OTHER PROVISIONS
5.1. Commercial Accounts Remittances
. Notwithstanding any other provision of this
Agreement or Section 3.1 of the Amended and Restated Program
Agreement, Remittances with respect to GE/Macy's Commercial
Accounts shall not be separated by Divisions.
5.2. GE Capital Service Discount
. During the term of this Agreement, the budget and
Monthly Discount in effect on any day shall be included in the
budget and Monthly Discount in effect under the Amended and
Restated Program Agreement on such date.
5.3. Maximum Commercial Amount
. Notwithstanding any other provision of this
Agreement to the contrary or the provisions of Section 3.8 of the
Amended and Restated Program Agreement, if (a) the aggregate
Commercial Account Balances of GE/Macy's Commercial Accounts
established in favor of Persons other than natural persons
("Corporate Accounts") would not exceed $[OMISSION] or (b) the
aggregate Commercial Account Balances of any GE/Macy's Commercial
Accounts other than Corporate Accounts ("Other Commercial
Accounts") would exceed $[OMISSION], GE Capital and the FDS
Companies shall have all the rights provided in Section 3.8(f) of
the Amended and Restated Program Agreement.
5.4. Termination
. Notwithstanding any other provision of this
Agreement to the contrary, this Agreement shall automatically
terminate upon the termination of the Amended and Restated
Program Agreement pursuant to its terms.
5.5. Indemnification
. (a) The FDS Companies shall indemnify GE Capital
with respect to the Commercial Accounts Program pursuant to this
Agreement to the same extent, and subject to the same
limitations, as the FDS Companies indemnify GE Bank with respect
to the Program pursuant to Article X of the Amended and Restated
Program Agreement.
(b) In addition to the foregoing, GE Capital
shall indemnify the FDS Companies with respect to the Commercial
Accounts Program pursuant to this Agreement to the same extent,
and subject to the same limitations, as GE Bank indemnifies the
FDS Companies with respect to the Program pursuant to Article X
of the Amended and Restated Program Agreement.
5.6. Other
. Notwithstanding any other provision of this
Agreement to the contrary, (i) the provisions of Article II of
the Program Agreement shall not be applicable to the Commercial
Accounts Program and (ii) the provisions of Article Seven of the
Original Agreement shall remain unchanged and in full force and
effect.
5.7. Servicing
. Unless the parties otherwise agree, the GE/Macy's
Commercial Accounts shall be serviced pursuant to the terms of
the FACS Services Agreement.
5.8. Certain Limitations
. If at any time during the term hereof either (i) the
aggregate Commercial Account Balances of GE/Macy's Commercial
Accounts equals $[OMISSION] or (ii) the aggregate account
balances of all FDS/Macy's Accounts established in favor of
persons other than natural persons ("FDS/Macy's Commercial
Accounts") equals $[OMISSION], then the parties shall negotiate
in good faith to agree upon a mutually acceptable manner of
sharing volume of GE/Macy's Commercial Accounts and FDS/Macy's
Commercial Accounts. Subject to the foregoing, GE Capital may
continue to originate new GE/Macy's Commercial Accounts and FDS
may continue to originate new FDS/Macy's Commercial Accounts.
ARTICLE SIX
OWNERSHIP OF ACCOUNTS AND RECEIVABLES
6.1. Ownership of GE/Macy's Commercial
Accounts and GE/Macy's Commercial Receivables
. (a) All transactions and borrowings in connection
with the GE/Macy's Commercial Accounts and the GE/Macy's
Commercial Receivables shall create the relationship of debtor
and creditor between each Commercial Account Debtor and GE
Capital, respectively, and GE Capital shall be the owner of all
the GE/Macy's Commercial Accounts, the GE/Macy's Commercial
Receivables, the GE/Macy's Commercial Accounts Documentation,
pending Commercial Account Applications, Commercial Books and
Records, and the Commercial Account Debtor List and, except as
otherwise specifically provided herein, shall have all rights,
powers, and privileges with respect thereto as such owner,
including, without limitation, the right at any and all times to
receive directly payments on GE/Macy's Commercial Accounts from
Commercial Account Debtors. In this regard, GE Capital shall
bear all risks of collections of GE/Macy's Commercial Receivables
(other than as a result of the application of Section 3.5 of the
Program Agreement to the GE/Macy's Commercial Accounts). Each
FDS Company acknowledges and agrees that it has no right, title
or interest in or to (i) any of the GE/Macy's Commercial Accounts
or the GE/Macy's Commercial Receivables, or (ii) any payments
made by Commercial Account Debtors with respect to the GE/Macy's
Accounts or the GE/Macy's Receivables.
(b) GE Capital and the FDS Companies acknowledge that
under the Commercial Accounts Program GE Capital extends credit
directly to Commercial Account Debtors. However, in the unlikely
event it were ever to be determined by a final order of a court
of competent jurisdiction that FDS (or the FDS Companies) is
deemed to be extending credit directly to Commercial Account
Debtors, the FDS Companies and GE Capital acknowledge and agree
that GE Capital shall be deemed to be purchasing the receivables
created by such arrangements and that GE Capital's remittances
pursuant to this Agreement shall be deemed to be payment for the
purchase of such receivables and GE Capital shall be deemed to
have purchased such receivables effective when GE Capital
incurred the obligation to make payment therefor. In this
regard, GE Capital and the FDS Companies agree that, on or before
the date of this Agreement, and thereafter from time to time,
they will execute and file such financing statements under the
UCC as would be necessary and appropriate to protect GE Capital's
interest to the same extent as if GE Capital was purchasing such
receivables.
ARTICLE SEVEN
GENERAL
7.1. Headings
. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
7.2. Counterparts
. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be
an original and all of which together shall be deemed to be one
and the same instrument.
7.3. Notices
. All notices, requests, demands, applications,
services of process and other communications which are required
to be or may be given under this Agreement to be effective shall
be made in accordance with the provisions of Section 12.16 of the
Amended and Restated Program Agreement except that no notice
required to be delivered hereunder shall be sent to GE Bank.
7.4. Governing Law
. The validity, performance and enforcement of this
Agreement shall be governed by the Laws of the State of New York,
without giving effect to the principles of conflicts of law
thereof.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have entered into this Agreement as of the day and
year first above written.
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Richard A. Hayes
Name: Richard A. Hayes
Title: Senior Vice President Retailer Financial
Services
FEDERATED DEPARTMENT STORES, INC.
By: /s/ Ronald W. Tysoe
Name: Ronald W. Tysoe
Title: Vice Chairman and Chief Financial Officer
FDS NATIONAL BANK
By: /s/ James R. Gudmens
Name: James R. Gudmens
Title: President
MACY'S EAST, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
MACY'S WEST, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
BULLOCK'S, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
BROADWAY STORES, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
FACS GROUP, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
MSS-DELAWARE, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
EXHIBIT 11
<TABLE>
FEDERATED DEPARTMENT STORES, INC.
Exhibit of Primary and Fully Diluted Loss Per Share
(thousands, except per share figures)
<CAPTION>
13 Weeks Ended 26 Weeks Ended
August 3, 1996 July 29, 1995 August 3, 1996 July 29, 1995
Shares Loss Shares Loss Shares Loss Shares Loss
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss and average number of
shares outstanding 207,663 $(27,193) 182,830 $(66,926) 207,187 $(65,139) 182,754 $(123,925)
Loss per share $(.13) $(.37) $(.31) $(.68)
PRIMARY COMPUTATION:
Average number of common
share equivalents:
Shares to be issued to the
U.S. Treasury 40 81 40 81
Deferred compensation plan 222 158 217 151
Warrants 1,846 86 1,614 43
Stock options 1,618 - 849 - 1,576 - 613 -
Adjusted number of common
and common equivalent
shares outstanding and
adjusted net loss 211,389 (27,193) 184,004 (66,926) 210,634 (65,139) 183,642 (123,925)
Primary loss per share $(.13) $(.36) $(.31) $(.67)
FULLY DILUTED COMPUTATION:
Additional adjustments to a
fully diluted basis:
Warrants 663 113 663
Stock options 1 - 450 - 96 - 450 -
Adjusted number of shares
outstanding and net loss
on a fully diluted basis 211,390 $(27,193) 185,117 $(66,926) 210,843 $(65,139) 184,755 $(123,925)
Fully diluted loss per
share $(.13) $(.36) $(.31) $(.67)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000794367
<NAME> FEDERATED DEPARTMENT STORES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> AUG-03-1996
<CASH> 134,133
<SECURITIES> 0
<RECEIVABLES> 2,768,417
<ALLOWANCES> 0
<INVENTORY> 3,234,271
<CURRENT-ASSETS> 6,429,091<F1>
<PP&E> 6,270,870
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,032,369<F2>
<CURRENT-LIABILITIES> 2,765,143
<BONDS> 5,644,524
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,032,369<F3>
<SALES> 3,284,228
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,995,573
<OTHER-EXPENSES> 1,212,901
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126,996
<INCOME-PRETAX> (39,860)<F4>
<INCOME-TAX> (12,667)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,193)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
<FN>
<F1>Includes the following:
Supplies and prepaid expenses 176,729
Deferred income tax assets 115,541
<F2>Includes the following:
Intangible assets - net 731,047
Notes receivable 204,035
Other assets 397,326
<F3>Includes the following:
Deferred income taxes 730,725
Other liabilities 561,847
Shareholders' Equity 4,330,130
<F4>Includes the following:
Interest Income 11,382
</FN>
</TABLE>
