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