Execution Copy
GE CAPITAL CREDIT SERVICES AND LICENSE AGREEMENT *
This GE CAPITAL CREDIT SERVICES AND LICENSE AGREEMENT,
dated as of June 4, 1996, is entered into by and among General
Electric Capital Corporation ("GE Capital"), FDS National Bank
("FDS Bank"), Federated Department Stores, Inc. ("Federated") and
FACS Group, Inc. ("FACS") (FDS Bank, Federated and FACS being
sometimes referred to herein as the "FDS Parties"). Certain
capitalized terms used herein have the meanings given to them in
Article 1 hereof or, if not defined herein, have the meanings
given to them in the Program Agreement.
WHEREAS, FDS Bank is the owner of the FDS Serviced
Accounts;
WHEREAS, GE Capital is the owner of the GE/Macy's
Commercial Accounts and GE Capital Consumer Card Co. ("GE Bank")
is the owner of the GE/Macy's Accounts;
WHEREAS, GE Bank has provided heretofore all credit
processing and collection services with respect to the GE/Macy's
Accounts utilizing credit systems owned or licensed by GE Capital
and GE Capital has provided certain credit services with respect
to certain FDS/Macy's Accounts, and FACS has provided all credit
processing and collection services with respect to the FDS
Serviced Accounts (including certain FDS/Macy's Accounts)
utilizing credit systems owned or licensed by FACS or its
affiliates;
WHEREAS, the FDS Parties and GE Capital wish to
facilitate generally uniform treatment of, and performance by,
the GE/Macy's Accounts and the FDS Serviced Accounts by utilizing
common systems and software for the servicing of all such
accounts;
WHEREAS, GE Capital and the FDS Parties expect that
certain economies of scale would be derived from allocating the
responsibility for providing all credit processing services
required with respect to GE/Macy's Accounts and FDS/Macy's
Accounts between GE Capital and FACS such that each would provide
certain credit services with respect to such accounts;
Rider X
______________________
* Confidential portions of this Exhibit have been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
WHEREAS, in furtherance of the foregoing, (a) GE
Capital and the FDS Parties are entering into this Agreement for
purposes of setting forth the terms and conditions that will
govern the provision of certain services by GE Capital to the FDS
Parties and the license by GE Capital to the FDS Parties of
certain software and (b) GE Bank, GE Capital, and FACS are
entering into, contemporaneously herewith, the FACS Credit
Services and License Agreement for purposes of setting forth the
terms and conditions that will govern the provision of certain
services by FACS to GE Bank and GE Capital and the license by
FACS to GE Capital and GE Bank of the FACS credit system and
software.
NOW, THEREFORE, in consideration of the terms and
mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions
. When used in this Agreement, the following
capitalized terms shall have the meaning specified below:
"Agreement" means this GE Capital Credit Services and
License Agreement as it may be amended, modified or restated from
time to time.
"Credit Insurance Program" means all credit life,
disability, and involuntary unemployment insurance programs.
"FACS Services Agreement" means the FACS Credit
Services and License Agreement among GE Bank, GE Capital and FACS
dated as of the date of this Agreement as it may be amended,
modified or restated from time to time.
"FDS Event of Default" has the meaning given to it in
Section 8.3.
"FDS Information" means data with respect to FDS
Serviced Accounts transmitted by computer to GE Capital.
"FDS Information Condition" means, with respect to any
FDS Information, that (i) such information is received by GE
Capital at a time which allows GE Capital to perform the GE
Capital Services as required hereby, (ii) such information is
complete and accurate and (iii) such information is in a form
that is readily usable by the GE Capital Credit System.
"FDS Serviced Accounts" means (i) the FDS/Macy's
Accounts and (ii) all other private label credit card accounts
owned by, and with respect to which credit is extended by, FDS or
FDS Bank and that utilize any tradename owned by the retail
divisions of FDS as of the date hereof (each group of accounts
utilizing each such tradename constitutes a "Non-Macy's
Portfolio").
"GE Capital License" means the license of the GE
Capital Credit Software by GE Capital to the FDS Parties pursuant
to Section 4.1.
"GE Capital Services" means the services required to be
provided by GE Capital hereunder with respect to the FDS Serviced
Accounts as described in Article 3 hereof and in Section I of
Exhibit A hereto.
"GE Capital Credit Software" means the personal
computer software programs identified in Section I of Exhibit B.
"GE Capital Credit System" means the mainframe computer
system and GE Credit Software developed, owned and utilized by GE
Capital to provide credit processing services, as the same may be
modified, enhanced or replaced from time to time after the date
hereof.
"GE Event of Default" has the meaning given to it in
Section 8.1.
"Licensed Location(s)" means the location(s) identified
in Section II of Exhibit B in which certain authorized employees
of the FDS Parties may access and use the GE Capital Credit
Software in accordance with the GE Capital License.
"Material Adverse Effect" means any material adverse
change in the quality or financial condition of the FDS/Macy's
Accounts or any Non-Macy's Portfolio, each taken as a whole.
"Program Agreement" means the Amended and Restated
Credit Card Program Agreement, dated as of the date hereof,
entered into by and among Federated, FDS Bank, GE Bank, FACS and
the other parties thereto as it may be amended, modified or
restated from time to time.
"Service Fees" means the fees payable by the FDS
Parties for the GE Capital Services, as specified in Article 3.
"Service Standards" means the minimum service
performance levels at which the GE Capital Services are required
to be provided hereunder, as specified in Section II of Exhibit
A.
"Term" has the meaning given to it in Section 2.1
hereof.
1.2. General
. Except as the context may otherwise require, (i)
words of any gender include the other gender, (ii) words using
the singular or plural number also include the plural or singular
number, respectively, (iii) the terms "hereof", "herein",
"hereby", and any derivative or similar words refer to this
entire Agreement, and (iv) the term "including" means "including,
but not limited to". Whenever this Agreement refers to a number
of days or months, such number shall refer to calendar days or
months unless otherwise specified. The Exhibits and Schedules
attached hereto are incorporated herein by this reference and
constitute a part of this Agreement.
ARTICLE 2
TERM
2.1 Term
. The term of this Agreement shall commence on the
date hereof and expire simultaneously with the termination of the
Program Agreement, unless sooner terminated as provided herein
(the "Term"), provided that following termination of this
Agreement the FDS Parties shall have the right to require GE
Capital to continue providing all or a portion of the GE Capital
Services for up to six months after termination pursuant to the
provisions of Section 8.6.
ARTICLE 3
CREDIT SERVICES
3.1 Appointment of GE Capital
. Each of FDS Bank, Federated and FACS hereby appoints
GE Capital, and GE Capital hereby accepts appointment, as the
agent of FDS Bank, Federated and FACS, respectively, for
providing the GE Capital Services with respect to the FDS
Serviced Accounts. The parties hereby acknowledge and agree that
notwithstanding any other provisions of this Agreement to the
contrary, all obligations of GE Capital to perform the GE Capital
Services shall be subject to the prior satisfaction of the FDS
Information Condition.
3.2 GE Capital Services
. GE Capital shall provide the GE Capital Services
(including, without limitation, delivery of the reports described
on Schedule A-3 hereto) and shall comply with the Credit and
Collection Policy and the FACS License (as defined in the FACS
Services Agreement) in providing the GE Capital Services. In
providing the GE Capital Services, GE Capital will use the FACS
Credit System which has been licensed to GE Capital pursuant to
the FACS Services Agreement. In this regard, GE Capital agrees
to be bound by and to comply with the terms and conditions of the
Program Agreement including, without limitation, Sections 4.4 and
4.5 thereof. GE Capital shall operate credit operations and
facilities in a high quality, ethical manner, in such a way as
not to disparage or embarrass the FDS Parties or any of their
names, and with a level of service to the holders of FDS/Macy's
Accounts that is not less than the level of service provided to
(i) the holders of FDS/Macy's Accounts by the GE Parties prior to
the date hereof and (ii) the holders of GE/Macy's Accounts by GE
Capital prior to and from and after the date hereof. The GE
Capital Services provided to the FDS/Macy's Accounts shall be of
the same type, quality and nature as, and implemented and
executed in the same manner as, the services provided by GE
Capital to GE Bank with respect to the GE/Macy's Accounts, except
to the extent such services may differ due to changes to the
Credit and Collection Policy applicable to only the GE/Macy's
Accounts or FDS/Macy's Accounts pursuant to the provisions of
Sections 4.4 or 4.5 of the Program Agreement.
3.3 Service Standards
. GE Capital shall use its best efforts to (i) design
systems to achieve, (ii) employ qualified personnel to meet, and
(iii) otherwise satisfy on average (determined with respect to
each FDS full fiscal quarter commencing after the completion of
the relevant conversion of services) the Service Standards.
3.4 Service Fees.
(a) Postage. At least ten (10) days prior to the
beginning of each month during the Term, GE Capital shall deliver
an invoice to FDS for an amount equal to GE Capital's good faith
estimate of the postage costs it will incur in the upcoming month
in providing the GE Capital Services. Within five (5) days after
receiving each such invoice, FDS shall pay to GE Capital, by wire
transfer of immediately available funds, the full amount
indicated on such invoice. Following the end of each month for
which FDS has prepaid postage pursuant to this Section 3.4(a), GE
Capital will calculate whether actual postage costs for such
months were more or less than the amount of FDS's estimated
payment. To the extent actual postage costs for such month were
more or less than the estimated payment made by FDS for such
month, GE Capital shall make appropriate adjustments to the next
service fee statement delivered to FDS pursuant to Section
3.4(b).
(b) Service Fees. No later than ten (10) days
after the beginning of each month during the Term, GE Capital
shall deliver an invoice to FDS setting forth in reasonable
detail the aggregate amount of Service Fees to be paid by the FDS
Parties for the GE Capital Services rendered in the immediately
preceding month. The amount of such fees shall be calculated in
accordance with Schedule 3.4(b). FDS shall pay to GE Capital,
within ten (10) days after receipt of each such statement, the
full amount set forth thereon by wire transfer of immediately
available funds or by such other method as the parties may agree.
Any disputes with respect to any invoice delivered pursuant to
Section 3.4(a) or 3.4(b) shall be resolved in accordance with the
provisions of Section 9.9 of the Program Agreement.
(c) Inventory. The parties hereby agree that, in
addition to the Service Fees payable pursuant to Section 3.4(b),
all paper, envelopes and plastic required for production and
mailing of billing statements and credit cards with respect to
the FDS Serviced Accounts will either (i) be purchased by GE
Capital as agent for FDS Bank in consultation with the FDS
Parties, in which case GE Capital will invoice FDS directly for
such purchases and FDS will pay GE Capital for such invoices
(including shipping and taxes), by wire transfer of immediately
available funds, or (ii) be purchased by FDS in consultation with
GE Capital at FDS's sole cost and expense, provided that material
qualities and quantities must be reasonably satisfactory to GE
Capital.
(d) Adjustments. The parties hereto acknowledge
and agree that the Service Fees are intended to provide GE
Capital with payment for its actual costs of performing the GE
Capital Services. The parties agree to take all commercially
reasonable efforts, and to cooperate in all commercially
reasonable respects (in each case taking into consideration their
respective businesses and operations as a whole) to minimize such
costs. On each six-month anniversary of the date hereof during
the Term, either GE Capital or FDS may, if it believes that the
fees set forth on Schedule 3.4(b) have resulted in GE Capital
receiving Services Fees for the immediately prior six-month
period in an amount either more or less than its actual costs for
providing the GE Capital Services for such period, deliver a
written notice to the other party requesting that the other party
meet to discuss making appropriate modifications to Schedule
3.4(b). Any such modifications would be intended to assure that
for the next six-month period GE Capital receives Service Fees
equal to its cost of providing the GE Capital Services for such
period, as adjusted to reflect the amount by which the Service
Fees received by GE Capital for the immediately prior six month
period were more or less than the amount of GE Capital's actual
costs of providing the GE Capital Services for such period. If
one party delivers a notice to the other party pursuant to this
Section 3.4(d) and either the other party refuses to meet to
discuss modifying Schedule 3.4(b) or the parties are unable to
agree on modifications to Schedule 3.4(b) within twenty (20) days
after delivery of such notice, then the notifying party may cause
the dispute to be resolved in accordance with Section 9.9 of the
Program Agreement. Any Person chosen to resolve such dispute
pursuant to Section 9.9 of the Program Agreement shall approve
any proposed increase in the fees on Schedule 3.4(b) (i) to the
extent such proposed increase reflects an actual increase in
costs of performing the GE Capital Services and (ii) to the
extent such proposed increase is reasonable based on, among other
things, historical costs and the impact of inflation on such
costs.
3.5 Compliance with Law
. GE Capital shall implement and execute the Credit
and Collection Policy in compliance with all requirements of
applicable Law and shall perform the GE Capital Services in
compliance with all requirements of applicable Law, except, in
either case, to the extent a failure of GE Capital to so
implement, execute and perform in compliance with applicable law
is due solely to (i) the failure of the FDS Information Condition
to be satisfied or (ii) GE Capital following specific written
instructions of an Authorized FDS Person.
3.6 Cooperation
. GE Capital agrees to cooperate with the FDS
Companies in resolving all disputes with FDS Serviced Account
holders.
3.7 Payment Processing
. The parties intend that in addition to the GE
Capital Services provided hereunder, subject to the mutual
agreement of the parties with respect to fees payable in respect
thereof (the parties agreeing to negotiate in good faith to reach
agreement on such fees), GE Capital shall provide payment
processing services as described and subject to the Service
Standards set forth in Exhibit A with respect to the FDS Serviced
Accounts.
3.8 Third Party Review
. Within 120 days after the date hereof, GE Capital
will cause to be completed an initial operational and/or systems
review of GE Capital by an independent third party accounting
firm reasonably satisfactory to FDS Bank and shall provide FDS
Bank with a copy of all reports generated by such review (and the
work papers related thereto) promptly after available. If any
regulatory authority with jurisdiction over FDS Bank requests a
third party operational and/or systems review of GE Capital, the
GE Capital Credit System and/or all systems relating to the GE
Capital Services, GE Capital shall, upon the request of FDS Bank,
cause such a review (the scope of which meets such regulatory
requirements) to be conducted by an independent third party
accounting firm reasonably satisfactory to FDS Bank and shall
provide FDS Bank with a copy of all reports generated by such
review (and the work papers related thereto) promptly after
available. The expenses of any such review shall be borne by GE
Capital.
3.9 Conversion
. FACS and the GE Parties shall cooperate so that GE
Capital is able to accomplish the conversion of all FDS Serviced
Accounts to the GE Capital Services in an accurate, orderly and
efficient manner in accordance with an agenda and schedule agreed
to by all parties hereto. GE Capital agrees to use commercially
reasonable efforts to effect such conversion in an accurate,
orderly and efficient manner, except to the extent such
conversion fails to be accurate, orderly and efficient due solely
to the failure of the FDS Information Condition to be satisfied.
ARTICLE 4
LICENSE
4.1 License.
(a) Grant of License. GE Capital hereby grants
to each of the FDS Parties, for the Term and for the period of
any extended servicing pursuant to Section 8.6, a non-exclusive
and non-transferable license to use the GE Capital Credit
Software in the Licensed Locations strictly as set forth in this
Section 4.1.
(b) Permitted Use. As further set forth herein,
the GE Capital Credit Software may be used only at the Licensed
Locations by employees of the FDS Parties ("Authorized FDS
Users") who are provided with passwords approved by GE Capital
and who are listed on a list of authorized users (which list will
include the extent of such authorized user's authority to use the
GE Capital Credit Software) maintained by the FDS Parties and
provided to GE Capital. The Authorized FDS Users may only use
the GE Capital Credit Software strictly for the benefit of the
GE/Macy's Accounts and FDS Serviced Accounts, including the
performance of the FACS Services to be performed under the FACS
Services Agreement.
(c) Authorized Users. The FDS Parties may amend
the list of Authorized FDS Users from time to time by providing
reasonable notice of such amendments to GE Capital and GE Capital
agrees to promptly provide any new Authorized FDS Users with
appropriate passwords. In the event any Authorized FDS User
ceases to be an employee of one of the FDS Parties or ceases to
have responsibilities related to the Program or the FDS Serviced
Accounts, the FDS Parties agree (i) to provide GE Capital with
notice thereof as promptly as practicable, but in no event later
than thirty (30) days thereafter, in order to permit GE Capital
to terminate such employee's password and (ii) to be responsible
for such employee's password until the date such notice is
provided to GE Capital. The FDS Parties shall provide GE Capital
with an updated list of the Authorized FDS Users within 20 days
after the end of each calendar year.
(d) Additions to or Relocation of Licensed
Locations. In the event that any Licensed Location is relocated
or any new Licensed Location is added, the FDS Parties shall give
reasonable advance notice of such relocation or addition to GE
Capital and any costs and expenses required to be incurred by the
FDS Parties or GE Capital so that GE Capital can fulfill its
obligations hereunder as a result of such relocation or addition
of a Licensed Location shall be borne by the FDS Parties.
(e) Limitations. The FDS Parties may not:
(i) use the GE Capital Credit Software
except as permitted herein or in any location other than a
Licensed Location;
(ii) copy or duplicate the GE Capital Credit
Software except as necessary to utilize the same as specifically
permitted herein;
(iii) remove any proprietary or copyright
legend from the GE Capital Credit Software;
(iv) create, or authorize any other party to
create, the source code to the GE Capital Credit Software by
reverse engineering, decompiling or otherwise;
(v) permit access to the GE Capital Credit
Software to any Person other than an Authorized FDS User without
requiring each such Authorized FDS User to sign a confidentiality
agreement in the form of Exhibit C;
(vi) modify or alter any of the GE Capital
Credit Software; or
(vii) use any software to access the GE
Credit Software other than (x) software approved by GE Capital in
writing and (y) in a manner which GE Capital has had the
opportunity to review and has approved in writing.
(f) Property Rights. The FDS Parties acknowledge
that the GE Capital Credit Software is proprietary to, and is the
property of, GE Capital and that the GE Capital Credit Software
contains the confidential, proprietary and trade secret
information of GE Capital and that GE Capital will be irreparably
harmed and will have no adequate remedy at law if the FDS Parties
fail to perform any of their obligations under this Section 4.1.
It is accordingly agreed that, in addition to any other remedies
which may be available at law or in equity, GE Capital shall have
the right to obtain injunctive relief to restrain a breach or
threatened breach of, or otherwise obtain specific performance
of, the FDS Parties' covenants and agreements contained in this
Section 4.1.
(g) Access. During the Term, subject to and in
accordance with the GE Capital License, GE Capital shall provide
the FDS Parties all such links to the GE Capital Credit System as
may be necessary in order to enable the FDS Parties to receive
the GE Capital Services hereunder.
(h) Modifications and Enhancements. GE Capital
shall not modify, enhance or replace the GE Capital Credit System
in any way that would cause any amendment or modification to the
Major Credit and Collection Policies without the prior written
consent of the FDS Parties. In the event that any portion of the
GE Capital Credit System which relates to or affects any of the
links referred to in Section 4.1(g) is modified, enhanced or
replaced, GE Capital shall provide to the FDS Parties, when such
modification, enhancement or replacement is released for use in
conjunction with the FDS/Macy's Accounts, the benefit thereof at
no cost to the FDS Parties. If any such modification,
enhancement or replacement would require the FDS Parties to incur
any costs or expenses to permit the FDS Parties' credit system
(as existing as of the date hereof) to be compatible with the GE
Capital Credit System so as to enable the FDS Parties to exercise
the links referred to in Section 4.1(g), such costs shall be
borne by GE Capital.
4.2 Maintenance
. During the Term, GE Capital shall provide, or cause
to be provided, maintenance services to the FDS Parties with
respect to the GE Capital Credit Software as described in this
Section 4.2.
(a) Help Desk. GE Capital shall maintain a help
desk which the FDS Parties may access by telephone during all
hours when collections on the FDS Serviced Accounts may be
legally made. Such help desk shall be available to the FDS
Parties for problem reporting.
(b) Code Corrections. GE Capital shall provide
to the FDS Parties, from time to time, any known code corrections
that may be made to the GE Capital Credit Software promptly after
such corrections are made by or become available to GE Capital.
4.3 License Fees
. For the license and maintenance services provided
hereunder, the FDS Parties shall pay to GE Capital a one-time
license fee of $[OMISSION].
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Mutual Representations and Warranties
. Each party to this Agreement represents and warrants
to the other party on the date hereof and on each date that GE
Capital provides any of the GE Capital Services hereunder that:
(i) Such party (A) is duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its organization; (B) is duly qualified and in
good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualifications, except (x) in the case of GE
Capital, where failure to be so qualified would not have a
Material Adverse Effect or a material adverse effect on the
ability of GE Capital to perform its obligations pursuant to the
terms of this Agreement and (y) in the case of the FDS Parties,
where failure to be so qualified would not have a material
adverse effect on their ability to perform their obligations
hereunder; (C) has the requisite power and authority and the
legal right to own, pledge, mortgage, and operate its properties,
to lease the properties it operates under lease, and to conduct
its business as now conducted and hereafter contemplated to be
conducted; (D) has all necessary licenses, permits, consents, or
approvals from or by, and has made all necessary notices to, all
authorities having jurisdiction, to the extent required for such
current ownership and operation or as proposed to be conducted,
except (x) in the case of GE Capital, where failure to obtain
such license, consent, permit or approval, or to give such notice
would not have a Material Adverse Effect or a material adverse
effect on the ability of GE Capital to perform its obligations
pursuant to the terms of this Agreement and (y) in the case of
the FDS Parties, where the failure to obtain such license,
consent, permit or approval or to give such notice would not have
a material adverse effect on their ability to perform their
obligations hereunder; and (E) is in compliance with its
certificate of incorporation and by-laws.
(ii) The execution, delivery, and performance
of this Agreement and all instruments and documents to be
delivered hereunder: (A) are within such party's power; (B) have
been duly authorized by all necessary or proper action of such
party; (C) do not and will not contravene any provisions of such
party's certificate of incorporation or by-laws; (D) will not
violate any law or regulation or any order or decree of any court
or governmental instrumentality applicable to such party;
(E) will not conflict with or result in the breach of, or
constitute a default under any indenture, mortgage, deed of
trust, lease, agreement, or other instrument to which such party
is a party or by which any of its property is bound; and (F) do
not require any filing or registration with or the consent or
approval of any governmental body, agency, authority, or any
other person which has not been made or obtained previously.
Each party to this Agreement further represents and warrants that
this Agreement has been duly executed and delivered by, and
constitutes a legal, valid, and binding obligation of such party,
enforceable against it in accordance with its terms, subject to
the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect
and to the availability of equitable remedies.
5.2. Representations and Warranties of GE Capital
. GE Capital represents and warrants to the FDS
Parties, on behalf of itself and any Affiliate performing any of
the GE Capital Services, on the date hereof and on each date that
GE Capital provides any of the GE Capital Services hereunder
that:
(i) GE Capital (A) has all of the necessary
facilities, equipment and personnel to provide the GE Capital
Services in accordance with the terms of this Agreement; and
(B) has and shall maintain disaster recovery procedures and
systems with respect to the FDS Serviced Accounts satisfactory to
the FDS Parties and at least comparable to those maintained on
the date hereof for the GE/Macy's Accounts.
(ii) GE Capital is Solvent.
(iii) GE Capital is not in default with
respect to any material contract, agreement, lease, or other
instrument to which it is a party, nor has it received any notice
of default under any such material contract, agreement, lease or
other instrument, which as a consequence of any such default
would materially and adversely affect the performance of its
obligations under this Agreement.
(iv) No contract, lease, agreement, or other
instrument to which GE Capital is a party or by which it is
bound, and no provision of applicable Law, materially and
adversely affects the business, operation, prospects, property,
or financial condition of GE Capital such as to impair its
ability to meet its obligations under this Agreement.
(v) GE Capital has the right to use the GE
Capital Credit System to provide the GE Capital Services
hereunder without infringement or violation of the intellectual
property, trademark, trade secret, copyright, patent or other
rights of others.
(vi) GE Capital has the right to license the
GE Capital Credit Software hereunder without infringement or
violation of the intellectual property or other rights of others,
provided that this warranty is limited and does not apply to (x)
the use of the GE Capital Credit Software other than in
accordance with the GE Capital License and the operating
instructions provided by GE Capital and (y) any copy of the GE
Capital Credit Software that is modified by any person other than
an authorized representative of GE Capital.
ARTICLE 6
CONFIDENTIALITY
6.1 Trade Secrets and Confidential Information
. GE Capital, on the one hand, and the FDS Parties, on
the other, acknowledge that in the course of performance
hereunder, each of them and/or their respective Affiliates may
receive the trade secrets and confidential information of the
other.
(a) Trade Secrets. As used herein, "trade
secrets" shall mean information including or containing technical
or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, or a list of actual or potential
customers or suppliers that (i) derives economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by other persons who can
obtain economic value from its disclosure or use, and (ii) is the
subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
(b) Confidential Information. As used herein,
"confidential information" shall mean information including data,
as to operation, use, prices, sales, vendors, customer lists,
customer information, account information, business plans or
administrative, financial or marketing plans, that is
competitively sensitive and not generally known by or made
available to the public, or that are treated as confidential by
the owner thereof but that does not rise to the level of a trade
secret under applicable law.
6.2 Non-Disclosure Obligations
. GE Capital, on the one hand, and the FDS Parties, on
the other, acknowledge that the confidentiality of the trade
secrets and the confidential information of the other is
necessary and, except as provided in Section 6.3, agree at all
times, during and after the Term, not to use, communicate,
publish, disclose or disseminate, directly or indirectly, any
trade secrets or confidential information of the other for any
purpose except for the purpose of performing in accordance with
this Agreement. In the event any information can be treated as
both trade secrets and confidential information, such information
shall be treated as trade secrets for purposes of this Agreement.
Each party shall use the same care to prevent disclosure to third
parties of the trade secrets and confidential information of the
other as it employs to avoid disclosure, publication or
dissemination of its own information of a similar nature. Use or
disclosure by the FDS Parties of the GE Capital Credit Software
in any manner other than as permitted herein, in the Program
Agreement, in the Commercial Accounts Agreement or in the FACS
Services Agreement shall be an unauthorized disclosure of GE
Capital's trade secrets. The parties agree that, in addition to
any other remedies which may be available at law or in equity,
each party shall have the right to obtain injunctive relief to
restrain a breach or threatened breach, or otherwise obtain
specific performance of, the other party's covenants and
agreements in this Section 6.2.
6.3 Permitted Disclosure
. Notwithstanding the foregoing, a receiving party may
disclose some or all of the trade secrets and confidential
information of the other party which are:
(i) required to be disclosed by law or order
of court or governmental agency applicable to the receiving
party, provided that the receiving party shall give prompt notice
to the other party of any request for such disclosure so that the
other party may seek a protective order or other appropriate
remedy, and notwithstanding any such disclosure, such disclosed
trade secrets or confidential information shall remain
confidential and otherwise subject to the provisions of
Article 6;
(ii) generally known and available in the
public domain, or become part of the public domain through no
violation of any confidentiality provisions of this Agreement; or
(iii) developed by the recipient or its
representatives independently of such information or trade
secrets.
6.4 Use of Trade Secrets or Confidential Information
. Neither GE Capital nor the FDS Parties may:
(i) acquire any right in or assert any lien
against the trade secrets or confidential information of the
other; or
(ii) refuse to return promptly upon the
reasonable request of the other as permitted herein any
confidential information or trade secrets of the other that it
may have in its possession.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification.
(a) Indemnification by GE Capital. GE Capital
shall indemnify, defend and hold harmless each of the FDS Parties
and each of their Affiliates and the officers, directors,
employees, agents, shareholders, successors and assigns of the
FDS Parties and each of their Affiliates (collectively, the
"FDS Indemnified Parties") from and against any and all claims,
actions, damages, losses, liabilities, costs and expenses,
including reasonable attorneys' fees and expenses (collectively
"Damages") caused by, relating to or arising out of (i) the
failure of any representation or warranty of GE Capital hereunder
to be true and correct in any material respect when made or
remade; (ii) the breach by GE Capital or any of its Affiliates of
any of their covenants or agreements hereunder; (iii) any act or
omission by GE Capital or its Affiliates, employees or agents in
performing, implementing and/or executing the GE Capital Services
and the Credit and Collection Policy, except to the extent (x)
the Credit and Collection Policy specifically describes how such
act should be implemented and GE Capital implemented such act in
conformity with such description (other than modifications to the
Credit and Collection Policy (including the Major Credit and
Collection Policies) made by GE Capital without the approval of
the Policy Committee pursuant to Section 4.4 of the Program
Agreement) or (y) any such performance, implementation or
execution was effected in accordance with specific written
instructions from an Authorized FDS Person or (z) the Damages
arising out of such act or omission are due solely to the failure
of the FDS Information Condition to be satisfied; (iv) any acts
or omissions of the FDS Parties, their employees or any of their
agents taken at the specific written request of any Authorized GE
Person; (v) the failure of the GE Information (as defined in the
FACS Services Agreement) provided by GE Capital pursuant to the
terms of the FACS Services Agreement to be accurate, and (vi)
notwithstanding the provisions of Section 7.1(a)(iii) hereof, any
judgmental decisions (i.e., any determination or decision made
which is not specifically directed by the Credit and Collection
Policy) effected by GE Capital or its employees or agents in
effecting the GE Capital Services.
(b) Indemnification by the FDS Parties. The FDS
Parties shall indemnify, defend and hold harmless GE Capital and
its Affiliates and the officers, directors, employees, agents,
shareholders, successors and assigns of GE Capital and each of
its Affiliates (collectively, the "GE Indemnified Parties") from
and against any and all Damages caused by, relating to or arising
out of (i) the breach by the FDS Parties of any of their
covenants or agreements hereunder; (ii) the failure of any
representation or warranty of the FDS Parties hereunder to be
true and correct in any material respect when made or remade;
(iii) any act or omission by GE Capital or its employees or
agents in performing, implementing and/or executing the GE
Capital Services and the Credit and Collection Policy effected in
accordance with specific written instructions from an Authorized
FDS Person; and (iv) the use by GE Capital in performing the GE
Capital Services of any tradename owned by any FDS Company or
their Affiliates which tradename is not licensed to GE Capital
under the Trademark and License Agreement.
7.2 Infringement Indemnity.
(a) Indemnity. GE Capital shall indemnify,
defend and hold harmless each of the FDS Indemnified Parties from
and against any and all Damages caused by, relating to or arising
out of any claim of infringement asserted in the United States by
third parties of any United States letters patent, trade secrets,
copyright, trademark, service mark, trade name, or similar
proprietary right conferred by common law or by any statute that
is alleged to have occurred because of use by the FDS Parties of
the GE Capital Credit Software as permitted herein.
(b) Remedies. In the event an FDS Indemnified
Party is enjoined by reason of any infringement claim, GE Capital
shall, without limiting any other rights of the FDS Indemnified
Party, either:
(i) procure the right to continue to use the
GE Capital Credit Software or any component thereof, as
contemplated hereunder or, at its option,
(ii) replace or modify the GE Capital Credit
Software or any component thereof, to permit the performance of,
or to render use thereof, or any component thereof, noninfringing
while performing substantially the same functions without
substantial degradation of performance.
(c) Limitations. Notwithstanding the provisions
of this Section 7.2, GE Capital shall not have any duty to
investigate or warn the FDS Indemnified Parties of any such
possibility of infringement.
7.3 Conduct of Litigation
. In the event a claim or judicial action is brought
or threatened against an indemnified party with respect to
matters covered by Section 7.1 or 7.2, the indemnifying party
shall have the sole right to defend such claim or action at its
expense and to control the defense and settlement thereof,
provided, that the indemnified party shall have the right to
participate in such defense and negotiations using counsel at its
own expense and the indemnifying party shall obtain the
indemnified party's consent, prior to entering into a settlement,
consent decree, compromise or consenting to any injunctive relief
with respect to such claim or action. Any indemnified party
shall provide prompt notice to the indemnifying party of any
claims for which the indemnified party intends to seek
indemnification for hereunder, provided that the failure to
provide such notice shall not affect the obligations of the
indemnifying party except to the extent such failure causes
actual harm to the indemnified party.
ARTICLE 8
DEFAULT; REMEDIES
8.1 GE Events of Default
. It shall be a "GE Event of Default" if any of the
events set forth below shall occur and be continuing and remain
unremedied prior to the expiration of the specified period.
(a) Service Standards Default. If GE Capital
shall consistently fail to perform its obligations under Section
3.3, and such consistent failure to perform shall (i) have a
Material Adverse Effect or a material adverse effect on the
Program, and (ii) remain unremedied for a period of seventy-five
(75) days after delivery of written notice thereof by any FDS
Party to GE Capital.
(b) Credit and Collection Policy Defaults.
(i) If GE Capital shall fail to perform the
GE Capital Services in accordance with any provision of the
Credit and Collection Policy where such failure is or results in
a violation of applicable Law, and such failure is not remedied
within seven (7) days after delivery of written notice thereof by
any FDS Party to GE Capital, provided that if, notwithstanding GE
Capital's diligent, best efforts to cause its employees and
agents to perform the GE Capital Services so as not to violate
applicable Law, certain employees or agents have failed to so
perform the GE Capital Services, the time period set forth in
this Section 8.1(b)(i) shall be extended, but not by more than an
additional 10 days, as long as GE Capital continues to use
diligent, best efforts to remedy such failure.
(ii) If GE Capital shall fail to perform the
GE Capital Services in accordance with any provision of the
Credit and Collection Policy where such failure is not or does
not result in a violation of applicable Law, and such failure
(x) has a Material Adverse Effect and (y) is not remedied within
thirty (30) days after delivery of written notice thereof by any
FDS Party to GE Capital.
(iii) If GE Capital shall consistently
fail to perform any of the GE Capital Services in accordance with
any provision of the Credit and Collection Policy where such
failure is not or does not result in a violation of applicable
Law and does not have a Material Adverse Effect, and is not
remedied within seventy-five (75) days after delivery of written
notice thereof by any FDS Party to GE Capital; provided that each
of the time periods in this Section 8.1(b) shall be extended upon
agreement of the parties, but not by more than 60 days, so long
as GE Capital is using its diligent, best efforts to remedy such
failure in the event that (x) the provision of the Credit and
Collection Policy that GE Capital has failed to perform is a
provision of the Credit and Collection Policy which FDS or one of
its Affiliates has unilaterally modified pursuant to Section 4.4
of the Program Agreement and (y) the reason GE Capital has been
unable to so perform is because the GE Credit System requires
modifications in order to implement such unilaterally modified
provision of the Credit and Collection Policy.
(c) Credit Systems Default. If GE Capital shall
fail to perform all or substantially all of the GE Capital
Services for a period of seven (7) consecutive days due to a
failure of the GE Credit System or otherwise.
(d) Breach of Infringement Warranty. If GE
Capital shall fail to provide the remedy specified in Section
7.2(b) as indemnitor with respect to a claim of infringement as
specified in Section 7.2.
(e) Breach of Agreement. If GE Capital shall
breach any of its obligations under this Agreement or any of its
representations and warranties under this Agreement (other than
obligations, representations or warranties the breach of which is
otherwise addressed in this Section 8.1) and such breach has a
Material Adverse Effect and is not cured within thirty (30) days
after delivery of written notice thereof by any FDS Party to GE
Capital.
(f) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to GE Capital.
(g) Material Adverse Change. If there shall have
been a material adverse change to the business, financial
condition, or operations of GE Capital which change has a
material adverse effect on its ability to fulfill its obligations
hereunder pursuant to the terms hereof.
8.2 FDS Remedies
. Upon the occurrence of a GE Event of Default
pursuant to Section 8.1(a) or 8.1(b)(ii), the FDS Parties may, in
addition to any other remedies they may have at law or equity,
terminate the GE Capital Services being provided with respect to
the FDS/Macy's Accounts or any Non-Macy's Portfolio only to the
extent such portfolio suffered the Material Adverse Effect that
was the basis for such GE Event of Default; however, the FDS
Parties may not terminate the Agreement based on such GE Event of
Default unless such Material Adverse Effect has occurred with
respect to all the FDS Serviced Accounts. Upon the occurrence of
a GE Event of Default pursuant to any other provision of Section
8.1, the FDS Parties may, in addition to any other remedies they
may have at law or equity, terminate this Agreement by delivering
a written notice of termination to GE Capital.
8.3 FDS Events of Default
. It shall be an "FDS Event of Default" if any of the
events set forth below shall occur and be continuing and remain
unremedied prior to the expiration of the specified period.
(a) Breach by the FDS Parties as Licensee. If
any of the FDS Parties shall breach any of their obligations
under Section 4.2, and fail to cure the same within twenty (20)
days after delivery of written notice thereof by GE Capital.
(b) Breach of Agreement. If the FDS Parties
shall breach in any material respect any of their obligations
under this Agreement or any of their representations and
warranties under this Agreement (other than obligations,
representations and warranties the breach of which is otherwise
addressed in this Section 8.3), and fail to cure such breach
within thirty (30) days after delivery of written notice thereof
by GE Capital to any FDS Party.
(c) Bankruptcy. If an Event of Bankruptcy shall
have occurred with respect to any FDS Party.
8.4 GE Capital Remedies
. Upon the occurrence of an FDS Event of Default, GE
Capital may, in addition to any other remedies it may have at law
or equity, terminate this Agreement by delivering a written
notice of termination to the FDS Parties.
8.5 Excuse For Non-Performance
. In the event one party (the "Performing Party") is
unable to comply with or perform any of its obligations hereunder
solely due to (i) the other party (the "Non-Performing Party")
failing to perform its obligations hereunder or under any other
Transaction Document or (ii) the quality, nature, timeliness,
completeness or accuracy of any goods, services or data provided
by the Non-Performing Party to the Performing Party, the
Performing Party shall be excused from such performance (and no
event of default shall be deemed to have occurred) provided that
the Performing Party shall (a) notify the Non-Performing Party as
soon as practicable describing the default and explaining how the
Performing Party's performance has been affected; (b) use
reasonable efforts to mitigate the effect of the Non-Performing
Party's failure; and (c) perform its obligations hereunder to the
extent reasonably practicable. Both parties shall use diligent,
uninterrupted efforts to cure the failure and eliminate the
effects thereof.
8.6 Post-Termination Procedures
. Upon termination or expiration for any reason of
this Agreement, the parties shall comply with their respective
post-termination obligations, if any, as set forth below:
(a) Payments. Except as may be expressly
provided otherwise herein, within ten (10) business days after
the effective date of termination of this Agreement, each party
shall pay the other party any amounts that as of that effective
date were due and owed thereto pursuant to this Agreement.
(b) Extended Servicing. The FDS Parties may
cease to receive GE Capital Services hereunder from and after the
effective date of termination, provided that the FDS Parties may
elect to require GE Capital to continue to provide all or a
portion of the GE Capital Services to the FDS Serviced Accounts
for up to a maximum of six (6) months following the effective
date of termination. In the event of an election by the FDS
Parties to receive GE Capital Services, GE Capital shall provide
GE Capital Services as described herein subject to payment by the
FDS Parties of the applicable Services Fees then in effect and
the GE Capital License granted hereunder shall continue for such
time.
(c) Deconversion. Subject to the provisions of
Section 8.6(b), FACS and the GE Parties shall cooperate in good
faith so that the GE Parties are able to promptly accomplish the
conversion of all FDS Serviced Accounts to the FDS Parties in an
accurate, orderly and efficient manner. In this regard, GE
Capital agrees that it will provide the FDS Parties and their
respective designees, officers, employees, accountants, and other
representatives with all access rights to the GE Credit System as
reasonably required by the FDS Parties in order to enable the FDS
Parties to effect a prompt, accurate, orderly and efficient
conversion. The FDS Parties agree that in the event of any such
conversion, they shall use commercially reasonable efforts to
effect such conversion in an accurate, orderly and efficient
manner, except to the extent such conversion fails to be
accurate, orderly and efficient due solely to the failure of
conversion information provided by GE Capital at the time to be
accurate in all material respects.
(d) Return of Materials. The FDS Parties shall
(i) surrender to GE Capital all copies of the GE Capital Credit
Software remaining in the possession of the FDS Parties or any
person acquiring any such copy through any of the FDS Parties in
accordance with the terms and conditions hereof and (ii) return
to GE Capital all written instructions or manuals in the
possession of the FDS Parties relating to the GE Capital Credit
Software.
ARTICLE 9
MISCELLANEOUS
9.1 Governing Law; Jurisdiction
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard
to its rules governing conflicts of law.
9.2 Audit and Access Rights
. Each of the parties hereto shall have the right to
access the premises and audit the records of the other parties
hereto as set forth herein.
(a) Rights of FDS Parties. The FDS Parties shall
have all such rights to access the premises of GE Capital, the GE
Credit System and audit the records of GE Capital as may be
necessary or desirable to permit the FDS Parties to fulfill all
of their responsibilities, and exercise all of their rights,
under the Transaction Documents. Without limiting the generality
of the foregoing, GE Capital shall permit the FDS Parties and
their designees, officers, employees, attorneys, accountants
and/or other representatives during normal business hours with
reasonable advance notice, in such a manner as to minimize
interference with the normal business operations of GE Capital
(i) to observe, monitor and obtain information regarding the FDS
Serviced Accounts and to observe and monitor the implementation
by GE Capital personnel of the Credit and Collection Policy,
(ii) to observe whether the GE Capital Services and the Credit
and Collection Policy are being applied consistently between the
FDS Serviced Accounts and the GE/Macy's Accounts and in
compliance with the provisions of the Program Agreement and (iii)
to examine, audit, inspect, copy and make copies of all of the
data, records, files, and books of account under the control of
GE Capital (whether received on computer, electromagnetic storage
vehicles, paper, film or other medium) and relating strictly to
the FDS Serviced Accounts and to the back-up documentation
relating to the reports provided hereunder by GE Capital to the
FDS Parties. The costs and expenses of any exercise by the FDS
Parties of their rights hereunder shall be borne by the FDS
Parties. Notwithstanding any other provision of this Agreement,
the FDS Parties shall not have any access or audit rights with
respect to any information in the possession of GE Capital or its
Affiliates regarding services provided by GE Capital or its
Affiliates to any non-affiliated third party other than the FDS
Parties. Employees of GE Capital shall be permitted to be
present during the exercise by the FDS Parties of any of their
audit and access rights under this Section 9.2(a).
(b) Rights of GE Capital. The FDS Parties shall
permit GE Capital and its respective designees, officers,
employees, attorneys and accountants and/or other representatives
during normal business hours with reasonable advance notice, in
such manner as to minimize interference with the normal business
operations of the FDS Parties, to examine, audit and inspect each
of the Licensed Locations in order to ensure compliance with the
terms and conditions governing the GE Capital License as set
forth in Section 4.1 and with the provisions of Article 6. The
cost and expense of all such audits or examinations shall be
borne by GE Capital. Employees of the FDS Parties shall be
permitted to be present during the exercise by GE Capital of any
of its audit and access rights under this Section 9.2(b).
9.3 Entire Agreement; Amendments; Waivers
. This Agreement contains the entire agreement of the
parties hereto as to the subject matter discussed herein. Any
amendment to or modification of this Agreement must be in writing
and executed by authorized officers of GE Capital and the FDS
Parties. No waiver by either party of any right or power it has
under this Agreement shall impair or be construed as a further
waiver of such right or power. To be effective, all waivers must
be in writing and signed by the party waiving its rights.
9.4 Assignability
. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns. Except as expressly provided with respect
to indemnification rights in Article 7, nothing herein shall
create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement. Neither
GE Capital, on the one hand, nor the FDS Parties, on the other,
may assign their rights or obligations hereunder without the
prior consent of the other, except that in the case of a proposed
assignment by GE Capital to an Affiliate, such consent shall not
be unreasonably withheld by the FDS Parties, provided that in
connection with any such assignment GE Capital delivers to the
FDS Parties instruments reasonably satisfactory to the FDS
Parties pursuant to which the terms of the GE Capital Guaranty
will be extended to this Agreement.
9.5 Relationship of Parties
. In performing under this Agreement, the parties are
acting as independent contractors and this Agreement shall not be
construed as providing either party with the right, power or
authority to impose any duty or obligation on the other except as
expressly provided herein.
9.6 Survival
. The provisions of Article 6, Article 7, and Sections
4.1 (for as long as any post-termination servicing occurs
pursuant to Section 8.6), 8.6 and Section 9.2 (for as long as any
post-termination servicing occurs pursuant to Section 8.6), of
this Agreement shall survive a termination or expiration of this
Agreement.
9.7 Notices
. Any notice or other communication required or
otherwise provided for under this Agreement shall be in writing
and shall be deemed given when delivered by hand or by courier or
express mail or by registered or certified United States mail,
return receipt requested, postage prepaid, or by facsimile if
receipt is acknowledged (except that a notice of termination or
breach shall not be sent by facsimile) and shall be addressed as
follows:
In the case of the FDS Parties:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, OH 45202
Attn: Law Department
Fax: (513) 579-7897
with copies to:
FACS Group, Inc.
9111 Duke Blvd.
Mason, OH 45040
Attn: Senior Vice President
Fax: (513) 573-2039
In the case of GE Capital:
General Electric Capital Corporation
5665 New Forsyth Road
Macon, Georgia 31210
Fax: (912) 471-5014
Attn: Senior Vice President - Retailer Financial
Services
with copies to:
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attn: Counsel, Retailer Financial Services
Fax: (203) 357-3353
and
Macy's Credit Services
4605 Duke Drive
Mason, OH 45040
Attn: Executive Vice President
Fax: (513) 573-3251
Either party hereto may, from time to time, change its address or
designated recipient for notification purposes by giving the
other party notice thereof and the date upon which it shall
become effective.
9.8 Ownership
. GE Capital shall have no right, title or interest in
any FDS Serviced Account or the proceeds thereof. All payments
to be made by FDS Serviced Account debtors shall be paid directly
to the FDS Parties. In the event that GE Capital is at any time
in possession of the proceeds of any FDS Serviced Account, GE
Capital shall hold such funds as agent on behalf of FDS Serviced
Account debtors for transfer to the FDS Parties.
9.9 Designees
. [OMISSION].
9.10 Credit Insurance Programs.
(a) All net revenue from Credit Insurance
Programs, whether currently existing or hereafter created, with
respect to GE/Macy's Accounts shall be shared [OMISSION] between
GE Capital and FDS.
(b) Replacements or substitutes for any Credit
Insurance Programs with respect to GE/Macy's Accounts shall
require the mutual consent of the FDS Parties, on the one hand,
and GE Capital, on the other hand.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Richard A. Hayes
Name: Richard A. Hayes
Title: Senior Vice President
Retailer Financial Services
FDS NATIONAL BANK
By: /s/ James R. Gudmens
Name: James R. Gudmens
Title: President
FEDERATED DEPARTMENT STORES,
INC.
By: /s/ Ronald W. Tysoe
Name: Ronald W. Tysoe
Title: Vice Chairman and
Chief Financial Officer
FACS GROUP, INC.
By: /s/ Robert C. Seppelt
Name: Robert C. Seppelt
Title: Vice President
Exhibit A
GE CAPITAL SERVICES TO FDS PARTIES
General. All of the GE Capital Services described hereafter
shall be provided by GE Capital (i) in accordance with, and as
more fully described in, the then applicable Credit and
Collection Policy and (ii) without limiting the FDS Parties'
rights or altering the obligations of the FDS Parties under the
Program Agreement including pursuant to Section 4.4 of the
Program Agreement.
I. GE CAPITAL SERVICES
1. Billing Statement Production
1.1. Provide billing statement processing services as
described below and in accordance with the
technical specifications and billing cycle
timeframes established between GE Capital and the
FDS Parties.
(i) Receive and process the electronic periodic
billing statement file.
(ii) Trim, burst and fold all periodic billing
statements.
(iii) Insert all periodic billing statements
as described in Section 2.2 below.
(iv) Place required postage on all periodic
billing statement envelopes.
(v) Presort all qualified mail.
(vi) Seal and deliver all periodic billing
statement envelopes to US Postal Service.
2. Billing Statement Mailing
2.1. Mail periodic billing statements, except those
periodic billing statements otherwise agreed to by
the FDS Parties, within the timeframe established
in Section II of this Exhibit A.
2.2. Insert marketing material approved by the FDS
Parties and received by GE Capital in usable form
that conforms to materials specifications of GE
Capital into the designated periodic billing
statements. The inserts are to be distributed
within the periodic billing statement in the
following order:
(i) First, any inserts or messages that the FDS
Parties, in their sole judgment, determine
are required by Law to be included in a
periodic billing statement shall be included
and shall have priority over all other
inserts and messages;
(ii) Second, any inserts or messages that any FDS
Company is contractually required to include
in a periodic billing statement shall be
included;
(iii) Third, any inserts or messages that FDS,
in its sole discretion, determines should be
included in a periodic billing statement
shall be included; and
(iv) Fourth, any inserts or messages with respect
to programs approved by FDS and GE Bank for
inclusion in a periodic billing statement
shall be included.
2.3. Mail periodic billing statements within the
timeframe required by Regulation Z.
2.4. Exercise reasonable quality control review of
periodic billing statements.
2.5. In the event of any material disruption in
periodic billing statement services, GE Capital
will use commercially reasonable efforts to notify
FACS of such disruption on the same business day,
and, in any event will provide notice as promptly
as practicable.
2.6. Provide the following reporting for the periodic
billing statement services:
(i) Daily statement status report by Division of
cycles billed, mailed and quantity.
(ii) Monthly inventory report for all supplies.
(iii) Monthly statement analysis report of
mailings by Division with associated costs
and breakdown.
2.7. Notwithstanding the above, GE Capital will also be
responsible for inventory control, warehousing of
the periodic billing statements and associated
materials.
3. Credit Card Production
3.1. GE Capital will emboss and encode FDS/Macy's
Credit Cards and credit cards for other FDS
Serviced Accounts as described below and in
accordance with the technical specifications and
credit card production schedules established
between GE Capital and the FDS Parties.
(i) Receive and process the electronic Credit
Card file.
(ii) Emboss two (2) lines of data unless otherwise
specified.
(iii) Magnetically encode the cards.
(iv) Print the customer information on the Credit
Card card carrier form.
(v) Data match the Credit Cards and the Credit
Card card carriers.
(vi) Insert as described in Section 4.2 below.
(vii) Trim, burst and fold the Credit Card
card carriers.
(viii)Insert the Credit Card card carriers
into the Credit Card card carrier envelopes.
(ix) Place required postage on the Credit Card
card carrier envelopes.
(x) Seal and deliver all Credit Card card carrier
envelopes to US Postal Service.
3.2. FDS/Macy's Credit Cards shall be in the design and
format jointly established by the FDS Parties and
GE Bank and shall include the Macy's Tradename.
4. Credit Card Mailing
4.1. Mail Credit Cards within the timeframe established
in Section II of this Exhibit A.
4.2. Insert marketing material approved by the FDS
Parties that conforms to materials specifications
of GE Capital into the envelope carrying the
designated Credit Card card carrier. The inserts
are to be included with the Credit Card card
carrier in the following order:
(i) First, any inserts or messages that the FDS
Parties, in their sole judgment, determine
are required by Law to be included in a
Credit Card card carrier shall be included
and shall have priority over all other
inserts and messages;
(ii) Second, any inserts or messages that any FDS
Company is contractually required to include
in a Credit Card card carrier shall be
included;
(iii) Third, any inserts or messages that FDS,
in its sole discretion, determines should be
included in a Credit Card card carrier shall
be included; and
(iv) Fourth, any inserts or messages with respect
to programs approved by the FDS Parties for
inclusion in a Credit Card card carrier shall
be included.
4.3. Exercise reasonable quality control review of
Credit Cards.
4.4. In the event of any material disruption in credit
and production or mailing services, GE Capital
will use commercially reasonable efforts to notify
FACS of such disruption on the same business day,
and, in any event will provide notice as promptly
as practicable.
4.5. Provide the following reporting for the Credit
Card services:
(i) Daily Credit Card Status report by Division
of cards produced and mailed.
(ii) Monthly Inventory report for all supplies,
including reconciliation of any lost and
damaged materials.
(iii) Monthly Credit Card Inventory report.
(iv) Monthly Credit Card analysis report of cards
embossed and mailed by Division with
associated costs and breakdown.
4.6. Notwithstanding the above, GE Capital will also be
responsible for inventory control, warehousing of
the Credit Cards and associated materials, and
providing adequate security for all credit cards
and discount coupons.
5. Remittance Processing
5.1. Provide remittance processing services as
described below and in accordance with the
technical specifications and payment processing
production schedules established between GE
Capital and the FDS Parties.
(i) Perform lock box services, daily depositing
of monetary medium in account(s) designated
by FDS, I/O Control, data entry, balancing of
payments and forwarding of miscellaneous
Cardholder correspondence (including gift
certificates) received through the lock box
assigned for Cardholder payment remittance.
GE Capital agrees to maintain the
separateness of the FDS Parties' funds,
including, without limitation, by arranging
for all such cash management and lockbox
arrangements as the FDS Parties shall
reasonably request.
(ii) Receive payments from a lock box assigned for
Cardholder remittances, process payments and
forward other customer communications
received.
(iii) Retain the original payment remittance
for 7 days from the date of receipt.
(iv) All payments shall be dated as of the date
received.
(v) Process or handle exceptions as provided by
the FDS Parties. An "Exception" to standard
processing occurs when (i) the provided
envelope is not used, (ii) the envelope
includes anything other than one remittance
advice and one check (iii) the payment amount
or account number on the check, does not
match those on the remittance advice and
(iv) GE Capital performs special handling
instructions on behalf of the FDS Parties.
5.2. The FDS Parties will be responsible for
establishing accounts for daily deposit of
monetary medium received for payment remittances.
5.3. FACS will provide the appropriate system access
for performing the account look-up function to the
authorized users at GE Capital. The account look-
up function is only to be used by GE Capital for
processing Cardholder payment remittances when the
cardholder account number does not appear on the
monetary medium nor the periodic billing statement
when the payment remittance is received by GE
Capital.
5.4. Provide the following reporting for the Remittance
Processing services:
(i) Daily Remittance Processing Status report by
Division of payments received (including gift
certificates, cash, electronic media, and pay-
by-phone) and exceptions returned to FACS.
II. SERVICE STANDARDS
Services Category Standard
(All days are Business Days,
measured from but excluding the
date inquiry or notice or data
is received by GE Capital; all
standards expressed are
averages calculated over a
measurement period of an FDS
fiscal quarter).
1. Billing Statement Production Best efforts to mail within 2
days after receipt by GE
Capital of file, and, in any
event, mailed not later than 4
business days after receipt by
GE Capital of FDS Information
that satisfies the FDS
Information Condition.
2. Credit Card Production Mailing Mailed not later than 2
business days after receipt by
GE Capital of FDS Information
that satisfies the FDS
Information Condition
(excluding card production
and/or mailing in connection
with reissuances, prescreen
solicitations, or other events
which do not relate to
applications made at the point
of sale in the ordinary course
of business).
3. Payment Processing For processing (including
depositing to account(s)
designated by the FDS Parties)
other than exception
processing, best efforts to
process within 1 day after
receipt by GE Capital, and, in
any event, processed not later
than 2 business days after
receipt by GE Capital of FDS
Information that satisfies the
FDS Information Condition.
EXHIBIT B
I. GE Capital Credit Software
1. Prospector system for managing the printing,
inserting and messaging for billing statements and
credit card mailings
2. Credit insurance management system
II. Licensed Locations
FACS Group, Inc.
9111 Duke Blvd.
Mason, OH 45040
EXHIBIT C
FORM OF EMPLOYEE CONFIDENTIALITY AGREEMENT
(For FDS Authorized Users)
Pursuant to an Agreement between FDS National Bank,
Federated Department Stores, Inc., FACS Group, Inc. ("FACS")
(collectively, the "FDS Parties") and General Electric Capital
Corporation ("GE Capital"), GE Capital provides processing and
other services to the FDS Parties and GE Capital has licensed
certain software to the FDS Parties for their use.
In the course of your employment you may receive or
otherwise have access to information, data or materials owned by
GE Capital which the FDS Parties are under an obligation to treat
as strictly confidential. (For purposes of this Confidentiality
Agreement, information, data and materials relating to systems,
applications, related documentation and other trade secret
information of GE Capital is referred to as "Confidential
Information".)
In order to preserve and protect the confidentiality of
all Confidential Information, you are required to sign a copy of
this Confidentiality Agreement, thereby acknowledging and
agreeing that:
(i) You have been informed of and understand
the confidential nature of the
Confidential Information you may receive
or have access to;
(ii) You will not disclose the
Confidential Information except (x) to a
fellow employee, subcontractor,
consultant or agent who also has executed
a Confidentiality Agreement and then,
only on a "need-to-know" basis or (y) as
compelled to do so by a court or other
governmental or quasi-governmental entity
or as consented to in writing by the FDS
Parties;
(iii) That disclosure of any Confidential
Information to any person other than as
permitted herein may cause serious injury
to GE Capital and the FDS Parties; and
(iv) During and after your employment
with us, except as required to perform
your assigned duties as our employee, you
will not use or reproduce, for any
purpose, any of the Confidential
Information that you receive or to which
you have access.
I hereby acknowledge that I have read and understood
the foregoing Confidentiality Agreement, and I agree not to
disclose, use or reproduce any Confidential Information except as
provided herein.
(Signature)
(Print)
Date
Schedule 3.4(b)
Service Fees
[OMISSION]
Schedule A-3
GE Capital Required Reports
Production Services
Monthly Reports
1. Statement Release Report Number of statements mailed and
time to release
2. Remittance Processing Number of remittances processed
Service Delivery Report and time to process
3. Card Embossing Volume Number of cards embossed (new and
Report replacement) and time to emboss
4. Form Inventory Report Number of statements, envelopes
and standard inserts in inventory
5. Advertising Insert Number of promotional inserts in
Inventory Report inventory
Daily Reports
1. Statement Release Report Number of statements mailed and
time to release
2. Remittance Processing Number of remittances processed
Service Delivery Report (new and replacement) and time to
emboss
3. Card Embossing Volume Number of cards embossed (new and
Report replacement) and time to emboss