Execution Copy
FACS CREDIT SERVICES AND LICENSE AGREEMENT *
This FACS CREDIT SERVICES AND LICENSE AGREEMENT, dated
as of June 4, 1996, is entered into by and among GE Capital
Consumer Card Co. ("GE Bank"), General Electric Capital
Corporation ("GE Capital") (GE Bank and GE Capital being
sometimes referred to herein as the "GE Parties") and FACS Group,
Inc. ("FACS"). Certain capitalized terms used herein have the
meanings given to them in Article 1 hereof or, if not defined
herein, have the meanings given to them in the Program Agreement
or the Commercial Accounts Agreement.
WHEREAS, GE Capital is the owner of the GE/Macy's
Commercial Accounts and GE Bank is the owner of the GE/Macy's
Accounts;
WHEREAS, FDS National Bank ("FDS Bank") is the owner of
the FDS/Macy's Accounts and certain other private label credit
card accounts (the "Other FDS Accounts") and Federated Department
Stores, Inc. ("FDS") is the owner of certain commercial private
label credit card accounts (the "Commercial FDS Accounts");
WHEREAS, GE Bank has provided heretofore all credit
processing and collection services with respect to the GE/Macy's
Accounts utilizing credit systems owned or licensed by GE Capital
and GE Capital has provided certain credit services with respect
to certain FDS/Macy's Accounts, and FACS has provided all credit
processing and collection services with respect to the Other FDS
Accounts, the Commercial FDS Accounts and certain FDS/Macy's
Accounts utilizing credit systems owned or licensed by FACS or
its affiliates;
WHEREAS, the GE Parties, FDS and FDS Bank wish to
facilitate generally uniform treatment of, and performance by,
the GE/Macy's Serviced Accounts and FDS/Macy's Accounts by
utilizing common systems and software for the servicing of all
such accounts;
Rider X
_____________________
* Confidential portions of this Exhibit have been omitted and
filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
WHEREAS, the GE Parties, FDS and FDS Bank expect that
certain economies of scale would be derived from allocating the
responsibility for providing all credit processing services
required with respect to GE/Macy's Serviced Accounts, FDS/Macy's
Accounts and Other FDS Accounts between GE Capital and FACS such
that each would provide certain credit services with respect to
such accounts;
WHEREAS, in furtherance of the foregoing, (a) the GE
Parties and FACS are entering into this Agreement for purposes of
setting forth the terms and conditions that will govern the
provision of certain services by FACS to the GE Parties and the
license by FACS to the GE Parties of the FACS Credit System and
(b) GE Capital, FACS, FDS Bank and FDS are entering into,
contemporaneously herewith, the GE Capital Services Agreement for
purposes of setting forth the terms and conditions that will
govern the provision of certain services by GE Capital to FDS
Bank and FDS and the license by GE Capital to FACS of certain
credit software.
NOW, THEREFORE, in consideration of the terms and
mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions
. When used in this Agreement, the following
capitalized terms shall have the meaning specified below:
"Agreement" means this FACS Credit Services and License
Agreement as it may be amended, modified or restated from time to
time.
"Authorized GE Users" has the meaning given to it in
Section 4.2(b).
"Authorized Systems Uses" has the meaning given to it
in Section 4.1(c).
"Commercial Accounts Agreement" means the Amended and
Restated Commercial Accounts Agreement, dated as of the date
hereof, entered into by and among GE Capital, FDS, FDS Bank and
the other parties thereto as it may be amended, modified or
restated from time to time.
"Deemed Prepared" has the meaning given to it in
Section 8.7.
"FACS Credit Software" means the credit systems
software identified in Section I of Exhibit B.
"FACS Event of Default" has the meaning given to it in
Section 8.1.
"FACS Credit System" means the mainframe computer
system and FACS Credit Software developed, owned and utilized by
FSG and FACS, and utilized by FSG and FACS to provide credit
processing services to FDS Bank, as the same may be modified,
enhanced or replaced from time to time after the date hereof.
"FACS License" means the license of the FACS Credit
System by FACS to the GE Parties pursuant to Section 4.2.
"FACS Services" means the services required to be
provided by FACS hereunder with respect to the GE/Macy's Serviced
Accounts as described in Article 3 hereof and in Section I of
Exhibit A hereto.
"FSG" means Federated Systems Group, Inc., a wholly
owned subsidiary of Federated and an affiliate of FACS.
"GE Capital Services Agreement" means the GE Capital
Credit Services and License Agreement among GE Capital, FDS Bank,
FDS and FACS dated as of the date of this Agreement as it may be
amended, modified or restated from time to time.
"GE Capital Credit Software" has the meaning given to
it in the GE Capital Services Agreement.
"GE Conversion Information" means the following written
information provided by either of the GE Parties to FDS or its
Affiliates: (i) the documents and materials attached hereto as
Exhibit C, (ii) a personal computer disk containing billing terms
regarding the GE/Macy's Serviced Accounts and (iii) the Master
File delivered by the GE Parties to FACS containing GE/Macy's
Account information.
"GE Event of Default" has the meaning given to it in
Section 8.3.
"GE Information" means data with respect to GE/Macy's
Serviced Accounts transmitted by computer to FACS.
"GE Information Condition" means, with respect to any
GE Information, that (i) such information is received by FACS at
a time which allows FACS to perform the FACS Services as required
hereby, (ii) such information is complete and accurate and
(iii) such information is in a form that is readily usable by the
FACS Credit System.
"GE/Macy's Serviced Account" means (i) any GE/Macy's
Account and (ii) any GE/Macy's Commercial Account (as defined in
the Commercial Accounts Agreement).
"Licensed Location(s)" means the location(s) identified
in Section II of Exhibit B in which certain authorized employees
of the GE Parties may access and use the FACS Credit System in
accordance with the FACS License.
"Material Adverse Effect" means any material adverse
change in the quality or financial condition of the GE/Macy's
Serviced Accounts, taken as a whole.
"Program Agreement" means the Amended and Restated
Credit Card Program Agreement, dated as of the date hereof,
entered into by and among FDS, FDS Bank, GE Bank and the other
parties thereto as it may be amended, modified or restated from
time to time.
"Service Fees" means the fees payable by the GE Parties
for the FACS Services, as specified in Article 3.
"Service Standards" means the minimum service
performance levels at which the FACS Services are required to be
provided hereunder, as specified in Section II of Exhibit A.
"Term" has the meaning given to it in Section 2.1
hereof.
1.2. General
. Except as the context may otherwise require, (i)
words of any gender include the other gender, (ii) words using
the singular or plural number also include the plural or singular
number, respectively, (iii) the terms "hereof", "herein",
"hereby", and any derivative or similar words refer to this
entire Agreement, and (iv) the term "including" means "including,
but not limited to". Whenever this Agreement refers to a number
of days or months, such number shall refer to calendar days or
months unless otherwise specified. The Exhibits and Schedules
attached hereto are incorporated herein by this reference and
constitute a part of this Agreement.
ARTICLE 2
TERM
2.1 Term
. The term of this Agreement shall commence on the
date hereof and expire simultaneously with the termination of the
Program Agreement, unless sooner terminated as provided herein
(the "Term"), provided that following termination of this
Agreement the GE Parties shall have the right to require FACS to
continue providing all or a portion of the FACS Services for up
to six (6) months after termination pursuant to the provisions of
Section 8.6.
ARTICLE 3
CREDIT SERVICES
3.1 Appointment of FACS
. GE Bank hereby appoints FACS, and FACS hereby
accepts appointment, as the agent of GE Bank for providing the
FACS Services with respect to the GE/Macy's Accounts. GE Capital
hereby appoints FACS, and FACS hereby accepts appointment, as the
agent of GE Capital for providing the FACS Services with respect
to the GE/Macy's Commercial Accounts. The parties hereto
acknowledge and agree that notwithstanding any other provisions
of this Agreement to the contrary, all obligations of FACS to
perform the FACS Services shall be subject to the prior
satisfaction of the GE Information Condition.
3.2 FACS Services
. FACS shall provide the FACS Services (including,
without limitation, delivery of the reports described in Schedule
A-3 hereof) and shall comply with the Credit and Collection
Policy and the GE Capital License (as defined in the GE Capital
Services Agreement) in providing the FACS Services. In this
regard, FACS agrees to be bound by and to comply with the terms
and conditions of the Program Agreement, including, without
limitation, Sections 2.2, 4.4 and 4.5 thereof. FACS shall
operate credit operations and facilities in a high quality,
ethical manner, in such a way as not to disparage or embarrass
the GE Parties or any of their names, and with a level of service
to the holders of GE/Macy's Accounts and the GE/Macy's Commercial
Accounts that is not less than the level of service provided to
(i) the holders of GE/Macy's Accounts by GE Bank prior to the
date hereof and to the holders of GE/Macy's Commercial Accounts
by GE Capital prior to the date hereof and (ii) the holders of
FDS/Macy's Accounts by FACS from and after the date hereof. The
FACS Services provided to the GE/Macy's Serviced Accounts shall
be of the same type, quality and nature as, and implemented and
executed in the same manner as, the services provided by FACS to
FDS Bank with respect to the FDS/Macy's Accounts, except to the
extent such services may differ due to changes to the Credit and
Collection Policy applicable to only the GE/Macy's Serviced
Accounts or FDS/Macy's Accounts pursuant to the provisions of
Sections 4.4 or 4.5 of the Program Agreement.
3.3 Service Standards
. FACS shall use its best efforts to (i) design
systems to achieve, (ii) employ qualified personnel to meet, and
(iii) otherwise satisfy on average (determined with respect to
each FDS full fiscal quarter commencing after the completion of
the relevant conversion) the Service Standards.
3.4 Service Fees
. For the FACS Services provided hereunder by FACS
with respect to the GE/Macy's Accounts and the GE/Macy's
Commercial Accounts, GE Bank and GE Capital, respectively, shall
pay FACS a monthly service fee in an amount equal to [OMISSION]%
of budgeted GE/Macy's Credit Sales as set forth on Schedule 5.2
of the Program Agreement. The Service Fees with respect to the
GE/Macy's Accounts shall be expenses of the Program for purposes
of calculating the Bank Net Return and shall be payable by GE
Bank by adjusting the Projected Monthly Discount for the month in
which the Service Fee is incurred or in such other manner as the
parties may mutually agree. The Service Fees with respect to the
GE/Macy's Commercial Accounts shall be expenses of the Commercial
Accounts Program and shall be payable by GE Capital by adjusting
the Projected Monthly Discount for the month in which the Service
Fee is incurred or in such other manner as the parties may
mutually agree.
3.5 Compliance with Law
. FACS shall implement and execute the Credit and
Collection Policy in compliance with all requirements of
applicable Law and shall perform the FACS Services in compliance
with all requirements of applicable Law, except, in either case,
to the extent a failure of FACS to so implement, execute and
perform in compliance with applicable Law is due solely to
(i) the failure of the GE Conversion Information to be accurate,
(ii) the failure of the GE Information Condition to be satisfied
or (iii) FACS following the specific written instructions of an
Authorized GE Person.
3.6 Use of Fraud Data Base
. All determinations regarding the manner and use of
fraud data bases in connection with the performance of the FACS
Services shall be determined by the Policy Committee and FACS
agrees that it will so use fraud data bases in a manner
consistent with the directions of the Policy Committee.
3.7 Third Party Review
. Within 120 days after the date hereof, FACS will
cause to be completed an initial operational and/or systems
review of FACS by an independent third party accounting firm
reasonably satisfactory to GE Bank and shall provide GE Bank with
a copy of all reports generated by such review (and the work
papers related thereto) promptly after available. If any
regulatory authority with jurisdiction over GE Bank requests a
third party operational and/or systems review of FACS, the FACS
Credit System and/or all systems relating to the FACS Services,
FACS shall, upon the request of GE Bank, cause such a review (the
scope of which meets such regulatory requirements) to be
conducted by an independent third party accounting firm
reasonably satisfactory to GE Bank and shall provide GE Bank with
a copy of all reports generated by such review (and the work
papers related thereto) promptly after available. The expenses
of any such review shall be borne by FACS.
3.8 Cooperation
. FACS agrees to cooperate with the GE Parties in
resolving all disputes with GE/Macy's Account Debtors.
ARTICLE 4
SYSTEMS
4.1 Systems.
(a) Conversion. FACS and the GE Parties shall
cooperate so that FACS is able to accomplish the conversion of
all GE/Macy's Serviced Accounts to the FACS Credit System and in
an accurate, orderly and efficient manner in accordance with an
agenda and schedule agreed to by all parties hereto. FACS agrees
to use commercially reasonable efforts to effect such conversion
in an accurate, orderly and efficient manner, except to the
extent such conversion fails to be accurate, orderly and
efficient due solely to the failure of the GE Conversion
Information to be accurate in all material respects.
(b) Systems. During the Term, FACS shall utilize
the FACS Credit System and the GE Capital Credit Software for
providing the FACS Services required to be provided hereunder by
FACS.
(c) Access. During the Term, subject to and in
accordance with the FACS License, FACS shall provide the GE
Parties all such links and access to the FACS Credit System as
may be necessary in order to enable the GE Parties (i) to receive
the FACS Services hereunder, (ii) to view such screens as may be
necessary for the GE Parties to observe the GE/Macy's Serviced
Accounts and FDS/Macy's Accounts, (iii) to monitor and obtain
information regarding the GE/Macy's Serviced Accounts and the
FDS/Macy's Accounts, and (iv) to permit the GE Parties to fulfill
all of their obligations and exercise all of their rights
hereunder, under the Program Agreement, the Commercial Accounts
Agreement, the GE Capital Services Agreement and the GE
Capital/GE Bank Credit Services Agreement (items (i) through
(iv), collectively, the "Authorized Systems Uses").
(d) Modifications and Enhancements. FACS shall
not modify, enhance or replace the FACS Credit System in any way
that would cause any amendment or modification to the Major
Credit and Collection Policies without the prior written consent
of GE Bank. In the event that any portion of the FACS Credit
System which relates to or affects any of the Authorized Systems
Uses is modified, enhanced or replaced, FACS shall provide to the
GE Parties, when such modification, enhancement or replacement is
released for use in conjunction with the FDS/Macy's Accounts, the
benefit thereof at no cost to the GE Parties. If any such
modification, enhancement or replacement would require the GE
Parties to incur any costs or expenses to permit the GE Parties'
credit system (as existing as of the date hereof) to be
compatible with the FACS Credit System so as to enable the GE
Parties to exercise the Authorized Systems Uses, such costs shall
be expenses of the Program.
(e) Deconversion Software. FACS shall use its
best efforts to assist the GE Parties in formulating and
maintaining deconversion software which provides mapping between
the FACS Credit System and the GE Parties' computer system and
shall provide the GE Parties monthly with copies of all FACS back-
up tapes relating to the GE/Macy's Serviced Accounts.
4.2 License.
(a) Grant of License. FACS hereby grants to each
of the GE Parties, for the Term and for the period of any
extended servicing pursuant to Section 8.6, a non-exclusive and
non-transferable license to use the FACS Credit System in the
Licensed Locations strictly as set forth in this Section 4.2.
(b) Permitted Use. As further set forth herein,
the FACS Credit System may be used only at the Licensed Locations
by employees of the GE Parties ("Authorized GE Users") who are
provided with passwords approved by FACS and who are listed on a
list of authorized users (which list will include the extent of
such authorized users' authority to use the FACS Credit System)
maintained by the GE Parties and provided to FACS. The
Authorized GE Users may only use the FACS Credit System for the
Authorized Systems Uses.
(c) Authorized Users. The GE Parties may amend
the list of Authorized GE Users from time to time by providing
reasonable notice of such amendments to FACS, and FACS agrees to
promptly provide any new Authorized GE Users with appropriate
passwords. In the event any Authorized GE User ceases to be an
employee of one of the GE Parties or ceases to have
responsibilities related to the Program, the GE Parties agree
(i) to provide FACS with notice thereof as promptly as
practicable, but in no event later than thirty (30) days
thereafter, in order to permit FACS to terminate such employee's
password and (ii) to be responsible for such employee's password
until the date such notice is provided to FACS. The GE Parties
shall provide FACS with an updated list of the Authorized GE
Users within twenty (20) days after the end of each calendar
quarter.
(d) Additions to or Relocations of Licensed
Locations. In the event that any Licensed Location is relocated
or any new Licensed Location is added, the GE Parties shall give
reasonable advance notice of such relocation or addition to FACS
and any costs and expenses required to be incurred by FACS or the
GE Parties so that FACS can fulfill its obligations hereunder as
a result of such relocation or addition of a Licensed Location
shall be borne by the GE Parties.
(e) Limitations. The GE Parties may not:
(i) use the FACS Credit System except as
permitted herein or in any location other than a Licensed
Location;
(ii) copy or duplicate the FACS Credit System
except as necessary to utilize the same as specifically permitted
herein;
(iii) remove any proprietary or copyright
legend from the FACS Credit System;
(iv) create, or authorize any other party to
create, the source code to the FACS Credit System by reverse
engineering, decompiling or otherwise;
(v) permit access to the FACS Credit System
to any Person other than an Authorized GE User and without
requiring each such Authorized GE User to sign a confidentiality
agreement in the form of Exhibit D and undertake to protect the
confidentiality of the sign-on code or password of such
individual;
(vi) modify or alter any of the FACS Credit
System; or
(vii) use any software to access the FACS
Credit System screens or data other than (x) the software
described on Schedule 4.2(e) hereto (as such schedule may be
amended from time to time by the GE Parties with the prior
approval of FACS which approval shall not be unreasonably
withheld) and (y) in a manner which FACS has had the opportunity
to review and has approved in writing.
(f) Property Rights. The GE Parties acknowledge
that the FACS Credit System is proprietary to, and is the
property of, FACS and that the FACS Credit System contains the
confidential, proprietary and trade secret information of FACS
and that FACS will be irreparably harmed and will have no
adequate remedy at law if the GE Parties fail to perform any of
their obligations under this Section 4.2. It is accordingly
agreed that, in addition to any other remedies which may be
available at law or in equity, FACS shall have the right to
obtain injunctive relief to restrain a breach or threatened
breach of, or otherwise obtain specific performance of, the GE
Parties' covenants and agreements contained in this Section 4.2.
4.3 Maintenance
. During the Term, FACS shall provide, or cause to be
provided, maintenance services to the GE Parties with respect to
the FACS Credit System as described in this Section 4.3.
(a) Help Desk. FACS shall maintain a help desk
which the GE Parties may access by telephone during all hours
when collections on the GE/Macy's Serviced Accounts may be
legally made. Such help desk shall be available to the GE
Parties for problem reporting.
(b) Code Corrections. FACS shall provide to the
GE Parties, from time to time, any known code corrections that
may be made to the FACS Credit Software promptly after such
corrections are made by or become available to FACS.
4.4 License Fees
. For the license and maintenance services provided
hereunder, the GE Parties shall pay to FACS a one-time license
fee of $[OMISSION].
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Mutual Representations and Warranties
. Each party to this Agreement represents and warrants
to the other party on the date hereof and on each date that FACS
provides any of the FACS Services hereunder that:
(i) Such party (A) is duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its organization; (B) is duly qualified and in
good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualifications, except (x) in the case of FACS,
where failure to be so qualified would not have a Material
Adverse Effect or a material adverse effect on the ability of
FACS to perform its obligations pursuant to the terms of this
Agreement and (y) in the case of the GE Parties, where failure to
be so qualified would not have a material adverse effect on their
ability to perform their obligations hereunder; (C) has the
requisite power and authority and the legal right to own, pledge,
mortgage, and operate its properties, to lease the properties it
operates under lease, and to conduct its business as now
conducted and hereafter contemplated to be conducted; (D) has all
necessary licenses, permits, consents, or approvals from or by,
and has made all necessary notices to, all authorities having
jurisdiction, to the extent required for such current ownership
and operation or as proposed to be conducted, except (x) in the
case of FACS, where failure to obtain such license, consent,
permit or approval, or to give such notice would not have a
Material Adverse Effect or a material adverse effect on the
ability of FACS to perform its obligations pursuant to the terms
of this Agreement and (y) in the case of the GE Parties, where
the failure to obtain such license, consent, permit or approval
or to give such notice would not have a material adverse effect
on their ability to perform their obligations hereunder; and
(E) is in compliance with its certificate of incorporation and
by-laws.
(ii) The execution, delivery, and performance
of this Agreement and all instruments and documents to be
delivered hereunder: (A) are within such party's power; (B) have
been duly authorized by all necessary or proper action of such
party; (C) do not and will not contravene any provisions of such
party's certificate of incorporation or by-laws; (D) will not
violate any law or regulation or any order or decree of any court
or governmental instrumentality applicable to such party;
(E) will not conflict with or result in the breach of, or
constitute a default under any indenture, mortgage, deed of
trust, lease, agreement, or other instrument to which such party
is a party or by which any of its property is bound; and (F) do
not require any filing or registration with or the consent or
approval of any governmental body, agency, authority, or any
other person which has not been made or obtained previously.
Each party to this Agreement further represents and warrants that
this Agreement has been duly executed and delivered by, and
constitutes a legal, valid, and binding obligation of such party,
enforceable against it in accordance with its terms, subject to
the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect
and to the availability of equitable remedies.
5.2. Representations and Warranties of FACS
. FACS represents and warrants to the GE Parties, on
behalf of itself and any Affiliate performing any of the FACS
Services, on the date hereof and on each date that FACS provides
any of the FACS Services hereunder that:
(i) FACS (A) has all of the necessary
facilities, equipment and personnel to provide the FACS Services
in accordance with the terms of this Agreement; and (B) has and
shall maintain disaster recovery procedures and systems with
respect to the GE/Macy's Serviced Accounts at least comparable to
those maintained on the date hereof for the FDS/Macy's Accounts
and Other FDS Accounts.
(ii) FACS is Solvent.
(iii) FACS is not in default with respect
to any material contract, agreement, lease, or other instrument
to which it is a party, nor has it received any notice of default
under any such material contract, agreement, lease or other
instrument which as a consequence of any such default, would
materially and adversely affect the performance of its
obligations under this Agreement.
(iv) No contract, lease, agreement, or other
instrument to which FACS is a party or by which it is bound, and
no provision of applicable Law, materially and adversely affects
the business, operation, prospects, property, or financial
condition of FACS such as to impair its ability to meet its
obligations under this Agreement.
(v) FACS has the right to use the FACS
Credit System to provide the FACS Services hereunder without
infringement or violation of the intellectual property,
trademark, trade secret, copyright, patent or other rights of
others.
(vi) FACS has the right to license the FACS
Credit System hereunder without infringement or violation of the
intellectual property or other rights of others, provided that
this warranty is limited and does not apply to (x) the use of the
FACS Credit System other than in accordance with the FACS License
and the operating instructions provided by FACS and (y) any copy
of the FACS Credit Software that is modified by any person other
than an authorized representative of FACS.
ARTICLE 6
CONFIDENTIALITY
6.1 Trade Secrets and Confidential Information
. FACS, on the one hand, and the GE Parties, on the
other, acknowledge that in the course of performance hereunder,
each of them and/or their respective Affiliates may receive the
trade secrets and confidential information of the other.
(a) Trade Secrets. As used herein, "trade
secrets" shall mean information including or containing technical
or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, or a list of actual or potential
customers or suppliers that (i) derives economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by other persons who can
obtain economic value from its disclosure or use, and (ii) is the
subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
(b) Confidential Information. As used herein,
"confidential information" shall mean information including data,
as to operation, use, prices, sales, vendors, customer lists,
customer information, account information, business plans or
administrative, financial or marketing plans, that is
competitively sensitive and not generally known by or made
available to the public, or that are treated as confidential by
the owner thereof but that does not rise to the level of a trade
secret under applicable law.
6.2 Non-Disclosure Obligations
. FACS, on the one hand, and the GE Parties, on the
other, acknowledge that the confidentiality of the trade secrets
and the confidential information of the other is necessary and,
except as provided in Section 6.3, agree at all times, during and
after the Term, not to use, communicate, publish, disclose or
disseminate, directly or indirectly, any trade secrets or
confidential information of the other for any purpose except for
the purpose of performing in accordance with this Agreement. In
the event any information can be treated as both trade secrets
and confidential information, such information shall be treated
as trade secrets for purposes of this Agreement. Each party
shall use the same care to prevent disclosure to third parties of
the trade secrets and confidential information of the other as it
employs to avoid disclosure, publication or dissemination of its
own information of a similar nature. Use or disclosure by the GE
Parties of the FACS Credit System in any manner other than as
permitted herein, in the Program Agreement, in the Commercial
Accounts Agreement or in the GE Capital Services Agreement shall
be an unauthorized disclosure of FACS's trade secrets. The
parties agree that, in addition to any other remedies which may
be available at law or in equity, each party shall have the right
to obtain injunctive relief to restrain a breach or threatened
breach, or otherwise obtain specific performance of, the other
party's covenants and agreements in this Section 6.2.
6.3 Permitted Disclosure
. Notwithstanding the foregoing, a receiving party may
disclose some or all of the trade secrets and confidential
information of the other party which are:
(i) required to be disclosed by law or order
of court or governmental agency applicable to the receiving
party, provided that the receiving party shall give prompt notice
to the other party of any request for such disclosure so that the
other party may seek a protective order or other appropriate
remedy, and notwithstanding any such disclosure, such disclosed
trade secrets or confidential information shall remain
confidential and otherwise subject to the provisions of
Article 6;
(ii) generally known and available in the
public domain, or become part of the public domain through no
violation of any confidentiality provisions of this Agreement; or
(iii) developed by the recipient or its
representatives independently of such information or trade
secrets.
6.4 Use of Trade Secrets or Confidential Information
. Neither FACS nor the GE Parties may:
(i) acquire any right in or assert any lien
against the trade secrets or confidential information of the
other; or
(ii) refuse to return promptly upon the
reasonable request of the other as permitted herein any
confidential information or trade secrets of the other that it
may have in its possession.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification.
(a) Indemnification by FACS. FACS shall
indemnify, defend and hold harmless each of the GE Parties and
each of their Affiliates and the officers, directors, employees,
agents, shareholders, successors and assigns of the GE Parties
and each of their Affiliates (collectively, the "GE Indemnified
Parties") from and against any and all claims, actions, damages,
losses, liabilities, costs and expenses, including reasonable
attorneys' fees and expenses (collectively "Damages") caused by,
relating to or arising out of (i) the failure of any
representation or warranty of FACS hereunder to be true and
correct in any material respect when made or remade; (ii) the
breach by FACS or any of its Affiliates of any of their covenants
or agreements hereunder; (iii) any act or omission by FACS or its
Affiliates, employees or agents in performing, implementing
and/or executing the FACS Services and the Credit and Collection
Policy, except to the extent (x) the Credit and Collection Policy
specifically describes how such act should be implemented and
FACS implemented such act in conformity with such description
(other than modifications to the Credit and Collection Policy
(including the Major Credit and Collection Policies) made by FDS
without the approval of the Policy Committee pursuant to Section
4.4 of the Program Agreement), (y) any such performance,
implementation or execution was effected in accordance with
specific written instructions from an Authorized GE Person or
(z) the Damages arising out of such act or omission are due
solely to the failure of the GE Conversion Information to be
accurate or the GE Information Condition to be satisfied;
(iv) any acts or omissions of the GE Parties, their employees or
any of their agents taken at the specific written request of any
Authorized FDS Person; (v) notwithstanding the provisions of
Section 7.1(a) (iii) hereof, any judgmental decisions (i.e., any
determination or decision made which is not specifically dictated
by the Credit and Collection Policy) effected by FACS or its
employees or agents in effecting the FACS Services and (vi) the
failure of the FDS Information (as defined in the GE Capital/GE
Bank Services Agreement) provided to GE Capital pursuant to the
terms of the GE Capital/GE Bank Services Agreement to be
accurate.
(b) Indemnification by the GE Parties. The GE
Parties shall indemnify, defend and hold harmless FACS and its
Affiliates and the officers, directors, employees, agents,
shareholders, successors and assigns of FACS and each of its
Affiliates (collectively, the "FACS Indemnified Parties") from
and against any and all Damages caused by, relating to or arising
out of (i) the breach by the GE Parties of any of their covenants
or agreements hereunder; (ii) the failure of any representation
or warranty of the GE Parties hereunder to be true and correct in
any material respect when made or remade; (iii) any act or
omission by FACS or its employees or agents in performing,
implementing and/or executing the FACS Services and the Credit
and Collection Policy effected in accordance with specific
written instructions from an Authorized GE Person; and (iv) the
failure of the GE Conversion Information to be accurate in any
material respect.
7.2 Infringement Indemnity
. (a) Indemnity. FACS shall indemnify, defend and
hold harmless each of the GE Indemnified Parties from and against
any and all Damages caused by, relating to or arising out of any
claim of infringement asserted in the United States by third
parties of any United States letters patent, trade secrets,
copyright, trademark, service mark, trade name, or similar
proprietary right conferred by common law or by any statute that
is alleged to have occurred because of use by the GE Parties of
the FACS Credit System as permitted herein.
(b) Remedies. In the event a GE Indemnified
Party is enjoined by reason of any infringement claim, FACS
shall, without limiting any other rights of the GE Indemnified
Party, either:
(i) procure the right to continue to use the
FACS Credit System or any component thereof, as contemplated
hereunder or, at its option,
(ii) replace or modify the FACS Credit System
or any component thereof, to permit the performance of, or to
render use thereof, or any component thereof, noninfringing while
performing substantially the same functions without substantial
degradation of performance.
(c) Limitations. Notwithstanding the provisions
of this Section 7.2, FACS shall not have any duty to investigate
or warn the GE Indemnified Party of any such possibility of
infringement.
7.3 Conduct of Litigation
. In the event a claim or judicial action is brought
or threatened against an indemnified party with respect to
matters covered by Section 7.1 or 7.2, the indemnifying party
shall have the sole right to defend such claim or action at its
expense and to control the defense and settlement thereof,
provided, that the indemnified party shall have the right to
participate in such defense and negotiations using counsel at its
own expense and the indemnifying party shall obtain the
indemnified party's consent, prior to entering into a settlement,
consent decree, compromise or consenting to any injunctive relief
with respect to such claim or action. Any indemnified party
shall provide prompt notice to the indemnifying party of any
claims for which the indemnified party intends to seek
indemnification for hereunder, provided that the failure to
provide such notice shall not affect the obligations of the
indemnifying party except to the extent such failure causes
actual harm to the indemnified party.
ARTICLE 8
DEFAULT; REMEDIES
8.1 FACS Events of Default
. It shall be a "FACS Event of Default" if any of the
events set forth below shall occur and be continuing and remain
unremedied prior to the expiration of the specified period.
(a) Service Standards Default. If FACS shall
consistently fail to perform its obligations under Section 3.3,
and such consistent failure to perform shall (i) have a Material
Adverse Effect or a material adverse effect on the Program, and
(ii) remain unremedied for a period of seventy-five (75) days
after delivery of written notice thereof by either GE Bank or GE
Capital to FACS.
(b) Credit and Collection Policy Defaults.
(i) If FACS shall fail to perform the FACS
Services in accordance with any provision of the Credit and
Collection Policy where such failure is or results in a violation
of applicable Law, and such failure is not remedied within seven
(7) days after delivery of written notice thereof by either
GE Bank or GE Capital to FACS; provided that if, notwithstanding
FACS's diligent, best efforts to cause its employees and agents
to perform the FACS Services so as not to violate applicable Law,
certain employees or agents have failed to so perform the FACS
Services, the time period set forth in this Section 8.1(b)(i)
shall be extended, but not by more than an additional ten (10)
days, as long as FACS continues to use its diligent, best efforts
to remedy such failure;
(ii) If FACS shall fail to perform the FACS
Services in accordance with any provision of the Credit and
Collection Policy where such failure is not or does not result in
a violation of applicable Law, and such failure (x) has a
Material Adverse Effect and (y) is not remedied within thirty
(30) days after delivery of written notice thereof by either
GE Bank or GE Capital to FACS;
(iii) If FACS shall consistently fail to
perform any of the FACS Services in accordance with any provision
of the Credit and Collection Policy where such failure is not or
does not result in a violation of applicable Law and does not
have a Material Adverse Effect, and is not remedied within
seventy-five (75) days after delivery of written notice thereof
by either GE Bank or GE Capital to FACS;
provided that each of the time periods in this
Section 8.1(b) shall be extended upon agreement of the parties,
but not by more than 60 days, so long as FACS is using its
diligent, best efforts to remedy such failure in the event that
(x) the provision of the Credit and Collection Policy that FACS
has failed to perform is a provision of the Credit and Collection
Policy which GE Bank has unilaterally modified pursuant to
Section 4.4 of the Program Agreement and (y) the reason FACS has
been unable to so perform is because the FACS Credit System
requires modifications in order to implement such unilaterally
modified provision of the Credit and Collection Policy.
(c) Credit Systems Default. If FACS shall fail
to perform all or substantially all of the FACS Services for a
period of seven (7) consecutive days due to a failure of the FACS
Credit System or otherwise.
(d) Breach of Infringement Warranty. If FACS
shall fail to provide the remedy specified in Section 7.2(b) as
indemnitor with respect to a claim of infringement as specified
in Section 7.2.
(e) Breach of Agreement. If FACS shall breach
any of its obligations under this Agreement or any of its
representations and warranties under this Agreement (other than
obligations, representations or warranties the breach of which is
otherwise addressed in this Section 8.1) and such breach has a
Material Adverse Effect and is not cured within thirty (30) days
after delivery of written notice thereof by either GE Bank or GE
Capital to FACS.
(f) Net Credit Sales Default. If FACS shall
(i) intentionally or negligently fail to comply with, or
supervise or cause the compliance with, any of the provisions of
Section 2.2 of the Program Agreement which are within the direct
or indirect control of FACS, or (ii) fail to implement the New
Accounts Allocation Percentage in the manner required by such
Section 2.2, or (iii) fail to implement the provisions of
Section 2.2(e)(ii) of the Program Agreement in the manner
required thereby or (iv) fail to implement the provisions of
Section 2.2 of the Program Agreement to the extent directed by
the Policy Committee, and such failure shall remain unremedied
for thirty (30) days after delivery of written notice thereof by
either GE Bank or GE Capital to FACS.
(g) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to FACS.
(h) Material Adverse Change. If there shall have
been a material adverse change to the business, financial
condition, or operations of FACS or Federated (it being hereby
agreed by the parties that an Event of Bankruptcy with respect to
Federated shall be deemed to constitute such a material adverse
change to the business, financial condition, or operations of
Federated) which change has a material adverse effect on the
ability of FACS to fulfill its obligations hereunder pursuant to
the terms hereof.
8.2 GE Remedies
. Subject to the provisions of Section 8.7, upon
the occurrence of a FACS Event of Default, the GE Parties may, in
addition to any other remedies they may have at law or equity,
terminate this Agreement by delivering a written notice of
termination to FACS.
8.3 GE Events of Default
. It shall be a "GE Event of Default" if any of the
events set forth below shall occur and be continuing and remain
unremedied prior to the expiration of the specified period.
(a) Breach by the GE Parties as Licensee. If
either of the GE Parties shall breach any of its obligations
under Section 4.2, and fail to cure the same within twenty (20)
days after delivery of written notice thereof by FACS.
(b) Breach of Agreement. If the GE Parties shall
breach in any material respect any of their obligations under
this Agreement or any of their representations and warranties
under this Agreement (other than obligations, representations and
warranties the breach of which is otherwise addressed in this
Section 8.3), and fail to cure such breach within thirty (30)
days after delivery of written notice thereof by FACS to either
GE Party.
(c) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to GE Bank or GE Capital.
8.4 FACS Remedies
. Upon the occurrence of a GE Event of Default, FACS
may, in addition to any other remedies it may have at law or
equity, terminate this Agreement by delivering a written notice
of termination to the GE Parties.
8.5 Excuse For Non-Performance
. In the event one party (the "Performing Party") is
unable to comply with or perform any of its obligations hereunder
solely due to (i) the other party (the "Non-Performing Party")
failing to perform its obligations hereunder or under any of the
Transaction Documents or (ii) the quality, nature, timeliness,
completeness or accuracy of any goods, services or data provided
by the Non-Performing Party to the Performing Party, the
Performing Party shall be excused from such performance (and no
event of default shall be deemed to have occurred) provided that
the Performing Party shall (a) notify the Non-Performing Party as
soon as practicable describing the default and explaining how the
Performing Party's performance has been affected; (b) use
reasonable efforts to mitigate the effect of the Non-Performing
Party's failure; and (c) perform its obligations hereunder to the
extent reasonably practicable. Both parties shall use diligent,
uninterrupted efforts to cure the failure and eliminate the
effects thereof.
8.6 Post-Termination Procedures
. Upon termination or expiration for any reason of
this Agreement, the parties shall comply with their respective
post-termination obligations, if any, as set forth below:
(a) Payments. Except as may be expressly
provided otherwise herein, within ten (10) business days after
the effective date of termination of this Agreement, each party
shall pay the other party any amounts that as of that effective
date were due and owed thereto pursuant to this Agreement.
(b) Extended Servicing. The GE Parties may cease
to receive FACS Services hereunder from and after the effective
date of termination, provided that the GE Parties may elect to
require FACS to continue to provide all or a portion of the FACS
Services to the GE/Macy's Serviced Accounts for up to a maximum
of six (6) months following the effective date of termination.
In the event of an election by the GE Parties to receive FACS
Services, FACS shall provide FACS Services as described herein
subject to payment by the GE Parties of the applicable Services
Fees then in effect and the FACS License granted hereunder shall
continue for such time.
(c) Deconversion. Subject to the provisions of
Section 8.6(b), FACS and the GE Parties shall cooperate in good
faith so that the GE Parties are able to promptly accomplish the
conversion of all GE/Macy's Serviced Accounts to GE Capital's
and/or GE Bank's credit systems in an accurate, orderly and
efficient manner. In this regard, FACS agrees that it will
provide the GE Parties and their respective designees, officers,
employees, accountants, and other representatives with all access
rights to the FACS Credit System as reasonably required by the
GE Parties in order to enable the GE Parties to effect a prompt,
accurate, orderly and efficient conversion. The GE Parties agree
that in the event of any such conversion, they shall use
commercially reasonable efforts to effect such conversion in an
accurate, orderly and efficient manner, except to the extent such
conversion fails to be accurate, orderly and efficient due solely
to the failure of conversion information provided by FACS at the
time to be accurate in all material respects.
(d) Return of Materials. The GE Parties shall
(i) surrender to FACS all copies of the FACS Credit Software
remaining in the possession of the GE Parties or any person
acquiring any such copy through any of the GE Parties in
accordance with the terms and conditions hereof and (ii) return
to FACS all written instructions or manuals in the possession of
the GE Parties relating to the FACS Credit System.
8.7 Special Provisions.
In the event of a FACS Event of Default pursuant to
the provisions of Section 8.1, the GE Parties may terminate the
Agreement with respect to any one or more of the FACS Services.
However, such terminated FACS Services will revert to the GE
Parties only at such time as the GE Parties are Deemed Prepared
to perform any such one or more of such FACS Services, provided
that the requirement that the GE Parties be Deemed Prepared shall
not be applicable with respect to the performance of any
provision of the Program Agreement, the Credit and Collection
Policy or the FACS Services which can only be performed if the
GE/Macy's Accounts and the FDS/Macy's Accounts are serviced on
the same computer system. If the GE Parties are not Deemed
Prepared to perform any of the FACS Services by the later of (i)
six months after the effective date of termination and (ii) the
date that a FACS Event of Default with respect to such FACS
Services no longer exists, then the GE Parties shall lose their
right to perform the FACS Services for which they are not so
Deemed Prepared. In the event of a subsequent FACS Event of
Default pursuant to the provisions of Section 8.1, the provisions
of this Section 8.7 shall again be applicable.
"Deemed Prepared" means, with respect to any one of the
FACS Services, either (i) FACS and the GE Parties have agreed
that the GE Parties are reasonably well prepared to perform such
services or (ii) an arbitrator, selected at the request of the GE
Parties by the President of the AAA, has determined what steps
the GE Parties must take to be reasonably well prepared to
perform such services at a level at least as high as FACS is
required to perform hereunder and the GE Parties have taken such
steps.
ARTICLE 9
MISCELLANEOUS
9.1 Governing Law; Jurisdiction
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard
to its rules governing conflicts of law.
9.2 Audit and Access Rights
. Each of the parties hereto shall have the right to
access the premises and audit the records of the other parties
hereto as set forth herein.
(a) Rights of GE Parties. GE Bank and GE Capital
shall have all such rights to access the premises of FACS, the
FACS Credit System and audit the records of FACS as may be
necessary or desirable to permit GE Bank and GE Capital to
fulfill all of their respective responsibilities, and exercise
all of their respective rights, hereunder and under the
Transaction Documents. Without limiting the generality of the
foregoing, FACS shall permit GE Capital and GE Bank and their
respective designees, officers, employees, attorneys, accountants
and/or other representatives during normal business hours with
reasonable advance notice, in such a manner as to minimize
interference with the normal business operations of FACS (i) to
observe, monitor and obtain information regarding the GE/Macy's
Serviced Accounts and to observe and monitor the implementation
by FACS personnel of the Credit and Collection Policy, (ii) to
observe whether the FACS Services and the Credit and Collection
Policy are being applied consistently between the GE/Macy's
Serviced Accounts and the FDS/Macy's Accounts and in compliance
with the provisions of the Program Agreement and (iii) to
examine, audit, inspect, copy and make copies of all of the data,
records, files, and books of account under the control of FACS
(whether received on computer, electromagnetic storage vehicles,
paper, film or other medium) and relating strictly to the
GE/Macy's Serviced Accounts and the FDS/Macy's Accounts and to
the back-up documentation relating to the reports provided
hereunder by FACS to the GE Parties. The GE Parties shall
exercise their rights to audit jointly. The costs and expenses
of any exercise by the GE Parties of their rights hereunder shall
be expenses of the Program and shall be borne by FACS and/or its
Affiliates to the extent such costs and expenses are included in
the Operating Expense Budget for the applicable Period in which
such costs and expenses were incurred. Notwithstanding any other
provision of this Agreement, the GE Parties shall not have any
access or audit rights with respect to any information in the
possession of FACS regarding services provided by FACS to any non-
affiliated third party other than the GE Parties. Employees of
FACS shall be permitted to be present during the exercise by the
GE Parties of any of their audit and access rights under this
Section 9.2(a).
(b) Rights of FACS. GE Bank shall permit FACS
and its respective designees, officers, employees, attorneys and
accountants and/or other representatives during normal business
hours with reasonable advance notice, in such manner as to
minimize interference with the normal business operations of GE
Bank, to examine, audit and inspect each of the Licensed
Locations in order to ensure compliance with the terms and
conditions governing the FACS License as set forth in Section 4.2
and with the provisions of Article 6. The cost and expense of
all such audits or examinations shall be borne by FACS.
Employees of GE Bank shall be permitted to be present during the
exercise by FACS of any of its audit and access rights under this
Section 9.2(b).
9.3 Entire Agreement; Amendments; Waivers
. This Agreement contains the entire agreement of the
parties hereto as to the subject matter discussed herein. Any
amendment to or modification of this Agreement must be in writing
and executed by authorized officers of FACS and the GE Parties.
No waiver by either party of any right or power it has under this
Agreement shall impair or be construed as a further waiver of
such right or power. To be effective, all waivers must be in
writing and signed by the party waiving its rights.
9.4 Assignability
. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns. Except as expressly provided with respect
to indemnification rights in Article 7, nothing herein shall
create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement. Neither
FACS, on the one hand, nor the GE Parties, on the other, may
assign their rights or obligations hereunder without the prior
consent of the other, except that in the case of a proposed
assignment by GE Bank to an Affiliate such consent shall not be
unreasonably withheld by FACS. FACS acknowledges that in
connection with a securitization or participation of GE/Macy's
Receivables pursuant to Section 9.4 of the Program Agreement, GE
Bank may agree to provide the credit processing services provided
hereunder to a trustee or other third party and FACS hereby
agrees that, in such circumstance, FACS shall continue to provide
the FACS Services to the GE Parties pursuant to the terms and
conditions hereof.
9.5 Relationship of Parties
. In performing under this Agreement, the parties are
acting as independent contractors and this Agreement shall not be
construed as providing either party with the right, power or
authority to impose any duty or obligation on the other except as
expressly provided herein.
9.6 GE Parties Rights and Obligations
. The rights and obligations of the GE Parties
hereunder are several and not joint. Without limiting the
generality of the foregoing, (i) the FACS Services to be provided
hereunder to GE Bank shall only be provided with respect to the
GE/Macy's Accounts and the Service Fees payable by GE Bank
hereunder shall only be payable with respect to the GE/Macy's
Accounts, (ii) the FACS Services to be provided herein to
GE Capital shall only be provided with respect to the GE/Macy's
Commercial Accounts and the Service Fees payable by GE Capital
hereunder shall only be payable with respect to the GE/Macy's
Commercial Accounts and (iii) GE Bank shall not have any
indemnification obligation hereunder with respect to Damages
arising out of or in connection with GE/Macy's Commercial
Accounts and GE Capital shall not have any indemnification
obligation hereunder with respect to Damages arising out of or in
connection with GE/Macy's Accounts.
9.7 Survival
. The provisions of Article 6, Article 7, and Sections
4.2 (for as long as any post-termination servicing occurs
pursuant to Section 8.6), Sections 8.6 and 8.7 (for as long as
any FACS Services continue to be provided by FACS hereunder), and
Section 9.2 (for as long as any post-termination servicing occurs
pursuant to Section 8.6) of this Agreement shall survive a
termination or expiration of this Agreement.
9.8 Notices
. Any notice or other communication required or
otherwise provided for under this Agreement shall be in writing
and shall be deemed given when delivered by hand or by courier or
express mail or by registered or certified United States mail,
return receipt requested, postage prepaid, or by facsimile if
receipt is acknowledged (except that a notice of termination or
breach shall not be sent by facsimile) and shall be addressed as
follows:
In the case of the GE Parties:
GE Capital Consumer Card Co.
5300 Kings Island Drive
Mason, OH 45040
Attn: Secretary
Fax: (513) 459-6888
and
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attn: Counsel, Retailer Financial Services
Fax: (203) 357-3353
with copies to:
Macy's Credit Services
4605 Duke Drive
Mason, OH 45040
Attn: Executive Vice President
Fax: (513) 573-3251
In the case of FACS:
FACS Group, Inc.
9111 Duke Blvd.
Mason, OH 45040
Attn: Senior Vice President
Fax: (513) 573-2039
with copies to:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, OH 45202
Attn: Law Department
Fax: (513) 579-7897
Either party hereto may, from time to time, change its address or
designated recipient for notification purposes by giving the
other party notice thereof and the date upon which it shall
become effective.
9.9 Ownership
. FACS shall have no right, title or interest in any
GE/Macy's Account, GE/Macy's Commercial Account, GE/Macy's
Receivable or GE/Macy's Commercial Receivable or the proceeds
thereof. All payments to be made by GE/Macy's Account Debtors or
Commercial Account Debtors shall be paid directly to GE Bank or
GE Capital, as the case may be. In the event that FACS is at any
time in possession of the proceeds of any GE/Macy's Receivable or
GE/Macy's Commercial Receivable, FACS shall hold such funds as
agent on behalf of GE/Macy's Account Debtors for transfer to GE
Bank or GE Capital, as the case may be.
9.10 Designees
. [OMISSION]
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
GE CAPITAL CONSUMER
CARD CO.
By: /s/ Kevin Knight
Name: Kevin Knight
Title: Executive Vice
President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Richard A. Hayes
Name: Richard A. Hayes
Title: Senior Vice President
Retailer Financial Services
FACS GROUP, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
Agreed and Acknowledged:
Federated Department Stores, Inc.
By: /s/ Ronald W. Tysoe
Name: Ronald W. Tysoe
Title: Vice Chairman and Chief Financial Officer
FDS National Bank
By: /s/ James R. Gudmens
Name: James R. Gudmens
Title: President
EXHIBIT A
FACS SERVICES
General. For purposes of this Exhibit A, references
herein to the "GE Parties" shall mean the "applicable GE
Parties." All of the FACS Services described hereafter shall be
provided by FACS (i) in accordance with, and as more fully
described in, the then applicable Credit and Collection Policy
and (ii) without limiting GE Bank's rights or altering the
obligations of Federated or any Retailers under the Program
Agreement or limiting GE Capital's rights under the Commercial
Accounts Agreement, including, without limitation, pursuant to
Sections 2.2, 4.4 and 4.5 of the Program Agreement.
I. FACS SERVICES
1. Marketing.
1.1 In accordance with the Program Agreement,
design and supervise all credit promotions.
1.2 Subject to the GE Parties' approval in
writing of all final GE/Macy's Credit Card Documentation (other
than charge slips, credit slips and receipts for payment) and
offers of credit, design, prepare and provide all of the
foregoing, including (a) credit card applications, (b) credit
card agreements, and (c) any required notices relating to changes
in GE/Macy's Serviced Account terms.
1.3 Develop and manage credit revenue programs,
other than programs provided by the GE Parties or their
Affiliates.
2. Account Approval and Setup.
2.1 Review all credit card applications by or on
behalf of prospective GE/Macy's Serviced Account holders,
determine the creditworthiness of prospective GE/Macy's Serviced
Account holders, approve creditworthy applicants, advise other
applicants of action taken, including mailing of adverse action
letters on behalf of the GE Parties.
2.2 Develop scoring criteria and establish and
revise credit guidelines for particular GE/Macy's Serviced
Account holders.
2.3 Provide reports of credit histories to credit
bureaus, as needed and as required by Law.
2.4 Establish credit lines and perform other
credit guideline management procedures.
3. Purchase Authorizations.
3.1 Process credit authorizations, which services
shall include looking up account numbers, processing
authorizations, verifying customer identification, reviewing and
making decisions with respect to referrals and authorizing sales
transactions.
4. Customer Service.
4.1 Provide authorization and instructions to GE
Capital on the issuance of credit cards to GE/Macy's Serviced
Account holders and authorized users, and perform routine account
maintenance functions, including address and name changes,
balance inquiries and lost and stolen card coding and execute
credit balance refunds.
4.2 Establish appropriate policies and procedures
to comply with applicable consumer credit law, including the
handling of Fair Credit Billing Act inquiries.
4.3 Provide fraud claims processing services in
accordance with the Credit and Collection Policy, and otherwise
use reasonable efforts to assist the GE Parties in fraud
prevention.
4.4 Resolve disputes with GE/Macy's Serviced
Account holders and as promptly and as amicably as possible make
necessary financial adjustment in accordance with the Credit and
Collection Policy.
4.5 Provide all services necessary to effect the
chargeback provisions set forth in the Program Agreement.
5. Systems Services.
5.1 Post, or cause to be posted, promptly all in
store payments and all payments received and transmitted via file
tapes by GE Capital to FACS or FSG, as the case may be, and
timely create and transmit to GE Capital billing files for each
GE/Macy's Serviced Account.
5.2 Use commercially reasonable efforts to
develop and introduce state-of-the-art technologies, design
systems to achieve, employ qualified personnel to meet and
otherwise satisfy the applicable Service Standards.
5.3 Maintain its computer files with respect to
the GE/Macy's Serviced Accounts such that the GE/Macy's Serviced
Accounts and receivables created thereunder may be specifically
identified and, upon the reasonable prior request of the GE
Parties and/or their agents or lenders, make available to the GE
Parties during FACS's normal business hours, any computer
programs necessary to make such identification and ensure data
integrity and data security and retain data and other records as
necessary.
5.4 Provide a computer link to give the GE
Parties, in accordance with the FACS License, direct access to
all agreed upon reports and information regarding the GE/Macy's
Serviced Accounts and the FDS/Macy's Accounts and agreed upon
electronic display of and access to (a) the account holder's
historical information, (b) account status information, (c) alpha
search capabilities and (d) reports and financial data.
5.5 Establish and maintain appropriate system
redundancy and back-up procedures for disaster relief.
6. Miscellaneous.
6.1 Post credit sales information.
6.2 Use commercially reasonable efforts to
protect the privacy of Account holder information from third-
party inquiries.
6.3 Provide all reports identified on Schedule A-
3 hereto, which reports may be provided on a divisional basis.
With respect to those reports on Schedule A-3 that indicate a
"need to be developed", the following provisions shall apply:
FACS shall use its best efforts to produce such reports or their
equivalent within 120 days after the date hereof. The GE Parties
agree to cooperate with FACS in this regard and assist FACS by
defining for FACS the parameters of such reports. The 120 day
period referred to above shall be extended with respect to any
report for the time, if any, that the GE Parties require in order
to provide FACS with the foregoing assistance.
6.4 Promptly advise the GE Parties of any
material litigation which may adversely affect (i) the
performance of FACS's responsibilities hereunder, or (ii) the
GE/Macy's Serviced Accounts or the GE/Macy's Receivables and
GE/Macy's Commercial Receivables.
6.5 FACS shall retain GE/Macy's Account
Documentation and GE/Macy's Commercial Accounts Documentation as
provided in the Credit and Collection Policy.
6.6 Maintain an updated GE Parties "do not call"
list and shall comply with all non-solicitation requests included
in such list. FACS shall update such list on a regular basis as
required by the GE Parties and provide copies thereof to the GE
Parties if requested.
6.7 Printing and mailing of collection letters as
requested by GE Bank in accordance with the Credit and Collection
Policy.
6.8 Inform all suppliers of credit and fraud
information to FACS in connection with the FACS Services that
such services and information shall be used for the benefit of
GE Bank.
II. FACS SERVICE STANDARDS
Service Category Standard
(all days are Business Days,
measured from but excluding
date inquiry or notice or data
is received by FACS; all
standards expressed are
averages calculated over a
measurement period of an FDS
fiscal quarter)
New Accounts
- - Mail-in application - elapsed 7 days
time from date received until
decision is made
- - In-store application inquiries 5 minutes
- - response not requiring
verification within
- - Speed of answer 15 seconds
- - Percent of calls abandoned 2.5 percent
Purchase Authorizations
- - Speed of answer 15 seconds
- - Percent of calls abandoned 2.5 percent
- - Lost and stolen card coding Immediately
- - Point-of-sale (POS) network Less than 3 seconds
switch to FSG and return to POS
switch
Customer Satisfaction
- - Credit balance refunds - 3 days
elapsed time from inquiry date
until check request transmitted
to GE Bank
- - Presidential complaints 2 days (best effort same day)
(receipt by Presidential Desk)
- - Customer contact within
- - Fair Credit Billing (FCB) 5 days
inquiry acknowledged
- - FCB resolution According to Fair Credit
Billing Act
- - Speed of answer 20 seconds
- - Percent of calls abandoned 4 percent
- - Customer correspondence - 7 days
response and action taken
Systems
- - On line availability 98.5%*
- - Response Time To be not slower than (i) that
received at FACS locations and
(ii) FACS historical response
time for 1996.
_______________
* To be calculated with respect to hours during which
collections on GE/Macy's Serviced Accounts can be legally
made, other than downtime due to power failures, natural
disasters or other force majeure events.
EXHIBIT B
I. FACS Credit Software
FSG Systems
SCM - FSG Credit System
TRMS - FSG Report Management Utility
TPX - Security Gateway
PC Based Collections Screen
II. Licensed Locations
1. Arlington, TX
GE Capital Credit Services
1301 S. Bowen Road
Arlington, TX 76013
2. Addison, IL
GE Capital Credit Services
2100A Corporate Drive
Addison, IL 60101
3. Macon, GA
GE Capital Credit Services
5665 New Forsyth Road
Macon, GA 31210
4. Atlanta, GA
Financial Services Group
5665 New Northside Drive
Atlanta, GA 30328
5. Alpharetta, GA
GE Capital
1001 Windward Concourse
Alpharetta, GA 30202
6. Mason, OH
Macy's Credit Services
4605 Duke Drive
Mason, OH 45040
7. Stamford, CT
GE Capital
1600 Summer Street
Stamford, CT 06927
EXHIBIT C
GE CONVERSION INFORMATION
[OMISSION]
EXHIBIT D
FORM OF EMPLOYEE CONFIDENTIALITY AGREEMENT
(For GE Authorized Users)
Pursuant to an Agreement between FACS Group, Inc.
("FACS"), GE Capital Consumer Card Co. and General Electric
Capital Corporation (collectively, the "GE Parties"), FACS
provides processing and other services to the GE Parties and has
licensed certain systems and software to the GE Parties.
In the course of your employment you may receive or
otherwise have access to information, data or materials owned by
FACS which the GE Parties are under an obligation to treat as
strictly confidential. (For purposes of this Confidentiality
Agreement, information, data and materials relating to systems,
applications, related documentation and other trade secret
information of FACS are referred to as "Confidential
Information".)
In order to preserve and protect the confidentiality of
all Confidential Information, you are required to sign a copy of
this Confidentiality Agreement, thereby acknowledging and
agreeing that:
(i)You have been informed of and understand
the confidential nature of the
Confidential Information you may receive
or have access to;
(ii) You will not disclose the
Confidential Information except (x) to a
fellow employee, subcontractor,
consultant or agent who also has executed
a Confidentiality Agreement and then,
only on a "need-to-know" basis or (y) as
compelled to do so by a court or other
governmental or quasi-governmental entity
or as consented to in writing by FACS;
(iii) That disclosure of any Confidential
Information to any person other than as
permitted herein may cause serious injury
to FACS and the GE Parties; and
(iv) During and after your employment
with us, except as required to perform
your assigned duties as our employee, you
will not use or reproduce, for any
purpose, any of the Confidential
Information that you receive or to which
you have access.
I hereby acknowledge that I have read and understood
the foregoing Confidentiality Agreement, and I agree not to
disclose, use or reproduce any Confidential Information except as
provided herein.
__________________________
(Signature)
______________________________
(Print) Date
FACS Reports
Schedule A-3
GE Capital will be provided with EZ Trieve reporting in equivalent
priority with other internal FACS requests as future needs are identified.
Finance and Operations
GECCCC Reports Description FACS Report Exhibit
&
# Pages
General Ledger/Control Financial data by cycle XSCM2090
Totals & CMR and A/R Control totals
General Ledger A/R daily activity XSCM295
General Ledger/CMR/Misc. Write-off/recovery XSCM405
Dispatll Reports information and misc.
financial-data by cycle
Ad Hoc System Report By Unused open-to-buy XSCM285 A-1 pg
RFS-IS balance
Ad Hoc System Report by Total credit limit on XSCM285 A-1 pg
RFS-IS accounts (open accounts
only)
Ledger Reconciliation Detail posting for G/L XSCM882
System accounts
Client Management Reports Delinquency Data XSCM435/436
Client Management Reports Total active accounts XSCM146 (Currently
(financial reports purchase
active/inactive) active. Needs to
be financial
active.)
General Ledger/Dispatll ABIG insurance premium XSCM176-01&02
Reports activity by state
General Ledger/Dispatll Financial activity on XSCM422
agency accounts
General Ledger Write-off activity XSCM440
Dispatll Write-off projections XSCM888
General Ledger Write-off due to XSCM996
bankruptcy
Monthly Operating Review Monthly totals for Needs To Be B-12 pgs
sales, calls, head Developed
count, etc.
Charge Backs By Category Charge Backs By Category Needs To Be C-2 pgs
By Division By Division Developed
# and $ Dispute By Age Summary of accounts in Needs To Be D-1 pg
and By Queue dispute by time and by Developed
category
# and $ In Dispute Not In Summary of accounts in Needs To Be D-1 pg
Queue By Age # and $ In dispute that are not in Developed
Dispute Bt Age a queue to be worked and
summary of accounts in
dispute by age
# Of Items In Dispute By Number of items in Needs To Be E-1 pg
Queue Beyond Charge Back dispute by queue (i.e., Developed
Big ticket, media,
fraud, etc.) beyond
contractual chargeback
time frame
Service Level By Day By Daily service level Needs To Be F-4 pgs
Division reporting by area (i.e., Developed
Authorization, New
Accounts, Customer
Service)
General Ledger Sub-total of write-off XSCM996
activity for
bankruptcies
Ad Hoc - Account Type Balance and FC Needs To Be G-2 pgs
Summary information by account Developed
type (i.e., CCCS, Club,
Commercial, etc.)
Ad Hoc - Periodic Rate Periodic rate with # and Needs To Be H-4 pgs
by Division $'s of accounts Developed
Ad Hoc - Status Code O/S and FC by status Needs To Be I-2 pgs
Summary Report code Developed
Ad Hoc - Status Code Performance by status Needs To Be J-2 pgs
Activity Report code Developed
General Ledger Insurance premium XSCM421
adjustments
Ad Hoc - Convenience Balance and count Needs To Be AJ-10
Users Summary information on Developed pgs
convenience users and
revolvers
Ad Hoc - Payment Errors Summary of dollar and Needs To Be AK-1
Monthly Summary number of errors by Developed pg
division
Risk
GECCCC Reports Description FACS Report Exhibit
&
# Pages
History Of Changes - A log of authorization 511-01 Action
Authorizations variable changes and who Table Change Log
(IDMRCS59) made the changes
Authorization Transaction Authorization 395-01, 05, 06, 07
Summary (A111D005) transaction statistics Credit Statistical
on POS approvals, Report
referrals, denials, and
referral overrides
Algorithm Override A count of referrals by 609-01, 02
Summary (A111M084) referral type and final Referral Analysis
outcome of the referral Report
Behavior Score Distribution of number 950
Distribution of accounts by Behavior
score
GEMM Score Distribution Distribution of number Needs To Be M-3 pgs
of accounts by Bureau Developed
Score
Applications On Hold By Lists applications which 215-04, 215-05
Age - via OLMACD04 have been processed, but
not yet decisioned
Credit Bureau Report Displays the number of 124-06, 248-01,
Tallies - via OLMACW07 credit bureaus requested 248-02
Application Statistics By Statistical volume and 218-02, 218-04
Store - via OLMACW25 approval information by
store
Source Mix - via OLMACW08 Provides statistical 215-01
and OLMACW32 data by type of
application input
Application Overrides - Summary of override 7031
via OLGECM29 activity by outcome code
(i.e., number of policy
reject overrides)
Prescreen Tracking - via Response rates, 146-1 N-1 pg
Promotion Tracking utilization rates, etc.,
of pre-screen mailings
Utilization Of C/L Tracks balances on Needs To Be O-3 pgs
Reporting accounts vs. credit Developed
lines available
Auditing Associate Used to monitor employee Needs To Be P-1 pg
Decisions Greater Than adherence to their Developed
Their Delegated Level Of credit line authority
Authority
Bad Rates By Line Used to measure score 146-1
Assignment - via Score cut-offs, credit line
performance report assignments
Score Performance Measures the validity FICO 307 and 309
(vintage, geographical, and profitability of
region) - via IDMSMBS and scoring algorithms
Through The Door (TTD)
Dist.
System Table Change To monitor changes made Needs To Be
Audit - Apps. to application tables, Developed -
profiles (display audit Exhibit Not
trail) Included
Credit Line Assignment Reviews validity of EZ Trieve as S-2 pgs
Review - via Score credit line assignment needed
Performance Report tables
Audit Of Guideline Used to monitor possible Needs To Be Q-1 pg
Increases On Employee internal fraudulent Developed
Accounts guideline increases
Portfolio Review Vintage Portfolio statistics by Needs To Be R-1 pg
Analysis date open Developed
Ad Hoc - Totals For W/O Sum of # and $'s written T-2 pgs
Accts and Regular off by write-off code
Accounts Over $10,000 and a list of accounts
over $10,000
Ad Hoc - List Of Accounts List Of Accounts With U-1 pg
With Balances Over Balances Over $10,000
$10,000
Ad Hoc - Credit Limit To Outstandings by credit V-2 pgs
Outstandings limit
Collections
GECCCC Reports Description FACS Report Exhibit
&
# Pages
Merchant Status Report Summary report detailing 405
all financial changes to
the cycle being billed
New Collection Accounts Lists new accounts added 406
to collections
Removal From Collections Lists accounts removed 407
from collections
Special Activity Reports Lists and credits or 421
debits assessed to an
account for a specific
revenue accounts
Financial Activity on Shows financial activity 422
Agency Accounts on an account that has
an agency code
Daily Financial Aging Provides balance totals 435
Totals by account type
Delinquency Aging Totals Provides balance totals 436
by account type
Agency/Attorney Lists accounts assigned 437
to attorneys and
agencies
New P&L Accounts Lists accounts new to 440
P&L
Write-off By Effort Lists actions taken to 450
collect on accounts
prior to the time of
write-off
Category Workload Summarizes the 464
collection category
workloads
Collector Detail Accounts worked by 465
collector
Promises Met VS. Promises Promise to pay ratio by 467
Expected collector
Daily Effort By Collector Accounts worked by 468
collector
Daily Payments Received Daily dollars generated 470
Against Collection by collector
Accounts
Application Request For Displays applications 471
Collection Accounts requested to be viewed
by the collection
department
Collection Auto Dun Lists accounts that 471-03
Letter Recipient received an automatic
Dun letter
Collection Control Lists accounts by 479
Selected Category category
Accounts
Write-off Projection Projection of write-offs 888
Current Billing Cycle
Financial Cycle Aging Analysis of dollars in 987
collections based on the
financial age of
accounts in addition to
write-off information
Old P&L Now Bankrupt Detail on accounts 991
assigned to a specific
agency for recovery
New Bankrupt P&L Detailed information on 996
accounts that have filed
bankruptcy
Team Trend Report Report showing dollars Needs To Be K-10 pgs
delinquent and Developed
collections
effectiveness/roll rate
by delinquent age/by
region/frequency: each
billing or on demand mid-
month
Extension Report Report tracking number Needs To Be L-1 pg
of extensions/manual Developed
cures
Marketing
GECCCC Reports Description FACS Report Exhibit
&
# Pages
Express Credit Approval Application/approval 218
Report volumes for express
credit by store location
POS Report Monthly POS performance 7030/7051/7052
(activation/sales (First Time
analysis) Shopper)
Program Profitability Various GECCCC reports Source Code
Reporting that track the following Reports* for the
customer segments following:
Express Credit Accounts Express Credit
Accounts
All Prescreen Accounts All Prescreen
Accounts
Hostess Booths Accounts Hostess Booths
Accounts
Insured/Non-Insured Needs To Be AG-1 pg
Accounts Developed
Premier Club Accounts Needs To Be AG-1 pg
Developed
President's Club Needs To Be AG-1 pg
Accounts Developed
Revolver/Transactors Needs To Be AG-1 pg
Developed
Account Type (Flex, TOP, Needs To Be AG-1 pg
Club) Developed
Converted Accounts Needs To Be AG-1 pg
Developed
Credit Penetration Credit Sales by store Standard Report
Reports and department
Insurance Adjustment Premium Adjustments by Special Activity
Report Account Report
Promotion Tracking Reactivation/Activation LCAURM39 - Needs AH-1 pg
To Be Developed
President's Club LCAURM39 - Needs AH-1 pg
To Be Developed
Attrition/Inactivity Tracks trends in Needs To Be AI-2 pgs
Analysis inactivity/attrition Developed
APPS08 Store Insurance Needs To Be W-2 pgs
Penetration Developed
Insurance Response Response information by Needs To Be X-1 pg
Reports source Developed
Top 100 Top 100 customers by Needs To Be Y-1 pg
store Developed
PPS - Insurance Insurance Financial Needs To Be Z-1 pg
Performance Analysis Developed
Pyramid Monthly Client Segment by time on file Needs To Be AA-2 pgs
Update (2) Developed
Pyramid Customer Decile Customer deciles by Needs To Be AB-1 pg
accounts Developed
Pyramid Dollar Decile Customer deciles by Needs To Be AC-1 pg
spending Developed
Pyramid Decile Movement Customer decile movement Needs To Be AD-1 pg
Developed
Revolvers Monthly Revolver Needs To Be AE-2 pgs
Performance Developed
Deferred Billing Deferred Billing 405
transactions
Premier Club Performance Premier Club customer Needs To Be AH-1 pg
performance Developed
Ad Hoc - Credit Limit to YTD sales by credit Needs To Be AF-2 pgs
YTD Sales limit Developed
(1) Report needed for non-Macy's divisions for new accounts if
joint insurance program is implemented
(2) Current report with minor adjustments
*With "First Day's Purchases" (sales/Trans) added to source code
and activation reports
Schedule 4.2(e)
Permitted GE Access Software
I. Terminal Emulation Software: used for online user
interaction with mainframe software applications.
Software Application Manufacturer
1. Personal Communications/3270v3.0 and IBM
higher
2. EXTRA!v4.2 and higher Attachmate Corp.
3. Quick3270v1.0 and higher none-shareware
II. SNA Gateway Software: used for establishing communication
between mainframe and display or print devices.
Software Application Manufacturer
1. Netware for SAAv2.0 and higher Novell
III. File Transfer Software: used for copying data files to
the mainframe from Local Area Network (LAN) and from LAN to
mainframe.
Software Application Manufacturer
1. CONNECT:Directv1.2 and higher Sterling Commerce
2. XCOMv1.0 and higher Computer Associates
IV. Other Software/Systems: receive data from or transmit data
to the mainframe.
Software Application Manufacturer
1. Unison (autodialer) Davox Corp.
2. Recover Master Rothenberg Systems Intl.