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EXECUTION COPY
CERTAIN INFORMATION (AS INDICATED BELOW) HAS BEEN OMITTED FROM THIS AGREEMENT
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
PROGRAM AGREEMENT AMENDMENT
PROGRAM AGREEMENT AMENDMENT, dated as of February 3, 1996, by
and among GE Capital Consumer Card Co. (formerly known as Monogram Bank, USA
("GE Bank"); Federated Department Stores, Inc. ("FDS"), successor by merger to
R.H. Macy & Co., Inc. ("R.H. Macy"); FDS National Bank ("FDS Bank"); and the
other parties listed on the signature pages hereto.
W I T N E S S E T H :
WHEREAS, the parties hereto (or their predecessors in
interest) are party to a Credit Card Program Agreement dated as of May 10, 1991,
as amended from time to time to the date hereof (the "Program Agreement")
(capitalized terms used herein have the meaning given to them in the Program
Agreement unless otherwise defined herein);
WHEREAS, since the date of the Program Agreement, FDS acquired
R.H. Macy through a merger in which Federated Department Stores, Inc. merged
into R.H. Macy and R.H. Macy survived the merger and changed its name to
"Federated Department Stores, Inc.";
WHEREAS, the parties desire to enter into certain interim
arrangements for the Program Agreement with respect to the period between
February 4, 1996 and August 3, 1996 (the "New Interim Period"); and
WHEREAS, the parties anticipate that at the end of the New
Interim Period, either the Program Agreement will be in effect (with only those
modifications set forth herein that expressly survive the end of the New Interim
Period) or the parties will have definitively agreed on an alternative
arrangement to the Program.
NOW THEREFORE, in consideration of the terms and mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the
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receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Discounts and Adjusters.
1.1. Bank Service Discount.
The Bank Service Discount for each Fiscal Month during the New
Interim Period shall be as set forth on the line entitled "Discount Rate" on
Exhibit A hereto.*
1.2. Discount Adjusters.
During the New Interim Period, the Discount Adjusters, except
the Money Cost Adjuster, set forth in Section 4.2 of the Program Agreement shall
not be in effect. The Money Cost Adjuster shall remain in effect, and shall
operate to adjust the Bank Service Discount, as provided in Section 4.2(a) of
Program Agreement.
2. Certain Cross Servicing Arrangements. The parties agree that the
provisions of this Section 2 shall be effective both during and after the New
Interim Period:
2.1. Each party agrees that to the extent it receives
inquiries from a customer that holds a Specified Account (as defined below), it
will use reasonable efforts to assist such customer with respect to his or her
inquiries. In this regard, FDS shall direct electronic authorization inquiries
to the appropriate account servicer based on account ownership for purposes of
providing on-line servicing to credit card account holders. If account ownership
is undetermined, an account lookup file, to be established and maintained on
FDS's computer system, will be utilized by each party. The account lookup file
will contain account lookup information with respect to each holder of a
Specified Account. The account lookup file shall be accessible to GE Capital and
GE Bank during normal business hours and at other reasonable times upon
reasonable request by GE Capital or GE Bank. The account lookup file shall be
regularly updated by each party. FDS shall ensure system availability during all
store operating hours and shall also provide a "help desk" to assist GE Capital
in the event of systems malfunctions.
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* Exhibit A has been omitted.
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"Specified Accounts" means (i) with respect to inquiries received by GE Capital:
either (x) a Jordan Marsh, Broadway, Weinstock's or Emporium private label
account or (y) an FDS Bank owned Macy's private label account (an "FDS/Macy's
Account") and (ii) with respect to inquiries received by FDS: a GE Capital or GE
Bank owned Macy's, Bullock's, I. Magnin, Charter Club and/or Aeropostale private
label account (a "GE/Macy's Account").
2.2. (a) If the account lookup file indicates that the account
is a Specified Account, then the party answering the inquiry may provide
information on the account to the credit card holder and routine maintenance of
the type described on Schedule 2.2* (or as may otherwise be agreed to by the
parties) may be performed on the account by the party answering the inquiry. If
adjustments to or decisions on the account beyond those set forth on Schedule
2.2* or otherwise agreed to by the parties are required or requested by the
credit card holder, the answering party shall immediately transfer the credit
card holder to the account owning party.
(b) If the account lookup file indicates that the credit card
holder has duplicate Specified Accounts owned by both FDS Bank and GE Bank, an
account lookup team for each party shall determine which account is the
"ongoing" account for purposes of answering the inquiry and the inquiry will be
directed to the party owning such account. The determination of which account is
"ongoing" for purposes of this Section 2.2(b) shall be made in the same manner
as the treatment of duplicate accounts, as described in Schedule 3.2(b) hereof*
and Exhibit B hereto*. The non-owning party may provide information on the
account to the credit card holder and routine maintenance of the type described
on Schedule 2.2* (or as may otherwise be agreed by the parties) may be performed
on the account by the non-owning party. If adjustments to or decisions beyond
those set forth on Schedule 2.2* or otherwise agreed to by the parties are
required or requested by the credit card holder, the answering party shall
immediately transfer the credit card holder to the account owning party.
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* Schedule 2.2 and 3.2(b) and Exhibit B have been omitted.
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2.3. All expenses incurred by FDS and FDS Bank in connection
with providing the services described in this Section 2 shall be borne by FDS
and FDS Bank and all such expenses incurred by GE Capital and GE Bank shall be
expenses of the Program.
3. Jordan Marsh, Broadway, Weinstock's and Emporium Stores. The parties
agree that the provisions of this Section 3 shall be effective both during and
after the New Interim Period:
3.1 Account Utility. FDS agrees that from the date that any of
its Jordan Marsh, Broadway, Weinstock's or Emporium stores is converted to the
Macy's tradename, such stores (each, a "Converted Store") will accept Macy's
private label credit cards, whether such cards relate to a GE/Macy's Account or
an FDS/Macy's Account.
3.2 Account Conversion/Duplicate Accounts.
(a) If as of the JM Determination Date (as defined on Schedule
3.2(b) hereto*), a holder of a Jordan Marsh private label credit card account
does not also hold a GE/Macy's Account, such holder's account (or accounts)
shall be converted into an FDS/Macy's Account. If as of the Broadway
Determination date (as defined on Schedule 3.2(b)* hereto), a holder of a
Broadway, Weinstock's or Emporium private label credit card account does not
also hold a GE/Macy's Account, such holder's account (or accounts) shall be
converted into an FDS/Macy's Account.
(b) If as of the applicable Determination Date, a holder of a
Converted Store private label credit card account also holds a GE/Macy's
Account, then such duplicate accounts shall be treated as described in Schedule
3.2(b) hereto.*
4. Ownership of Macy's Accounts Opened After the Date Hereof. The
parties acknowledge and agree that (a) except for the specifically described
exceptions set forth in this Section 4 and in the letter set forth as Exhibit B
hereto*, GE Bank shall continue to have the exclusive right to open new Macy's
accounts pursuant to the terms of the Program Agreement and (b) that, without
limiting the generality of the foregoing, if FDS
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* Schedules 2.2 and 3.2(b) and Exhibit B have been omitted.
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converts any stores to the "Macy's" tradename after the date hereof, private
label accounts of the converted store held by persons who also hold a GE Bank
owned Macy's account (i) shall not be accepted at any Macy's store nor issued an
FDS owned Macy's account without the prior written agreement of GE Bank, and
(ii) shall be treated in a manner to be mutually agreed upon at the time by FDS
Bank and GE Bank with the intent of supporting achievement of the Target
Percentages then in effect in a manner consistent with equitable distribution
across Macy's markets that ensures portfolio risk and performance distribution
for GE Bank that is no worse than for FDS Bank.
4.1 Ownership of Accounts. The parties intend to develop and
install systems that would be capable of allocating new accounts automatically
on the basis of the account ownership methodology set forth in Sections 4.2,
4.3, 4.4, 4.5 and 4.6. Until such systems capability is implemented, the parties
will work in good faith to achieve account ownership allocation in accordance
with the methodology set forth herein by placing GE Bank or FDS Bank application
forms in designated Macy's stores as described below or by assignment of
pre-screens or other appropriate methods, which may be modified from time to
time by agreement of the parties to obtain the desired results. Subject to the
further provisions of this Section 4, (i) all newly opened Macy's private label
accounts which are either opened at, or with an application from, a Converted
Store (which, for the purpose of this Section 4.1, will include those stores
listed on Schedule 4.1 under the caption "FDS Stores", and will not include
those stores listed on such Schedule under the caption "GE Capital Stores") or a
former A&S store, shall be FDS/Macy's Accounts owned by FDS Bank or another
affiliate of FDS and credit with respect thereto shall be provided by FDS Bank
and (ii) all other newly opened Macy's private label accounts shall be GE/Macy's
Accounts owned by GE Capital or GE Bank and credit with respect thereto shall be
provided by GE Capital and/or GE Bank. Applications for FDS/Macy's Accounts will
be provided only in (i) former A&S Stores and (ii) Converted Stores (which, for
the purpose of this Section 4.1, will include those
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stores listed on Schedule 4.1 under the caption "FDS Stores", and will not
include those stores listed on such Schedule under the caption "GE Capital
Stores") and applications for GE/Macy's Accounts will be provided in all other
Macy's stores (including those listed on Schedule 4.1 under the caption "GE
Capital Stores"). FDS and GE Bank agree that when opening new Macy's accounts
they will use the account lookup file or credit bureau subscriber codes to avoid
opening any duplicate Macy's accounts. Each party acknowledges and agrees that
all credit offers, pre-screens and other account marketing programs will be
developed by FDS Bank in consultation with GE Bank with the intent of supporting
achievement of the applicable Target Percentages in a manner consistent with
equitable distribution across Macy's markets that ensures portfolio risk and
performance distribution for GE Bank that is no worse than for FDS Bank. The
final form of all such programs shall require the approval of GE Bank.
4.2. Adjustments to Account Ownership. The parties recognize
that FDS is in the process of converting certain stores to the "Macy's"
tradename and that FDS may, in the future, convert other stores to the "Macy's"
tradename and/or open newly built stores using the "Macy's" tradename. The
parties have agreed on a mechanism, set forth below, to allocate new Macy's
accounts between the parties by providing GE Bank with the effect of credit
sales changes in Comp Stores (as defined below) and the benefit of half of all
credit sales generated by New Stores (as defined below). Formulas used in the
mechanism and illustrative examples of the mechanism are set forth in Exhibit C
hereto*. While the parties believe that this mechanism will be effective to meet
the parties' intent (which intent includes the goal of achieving equitable
distribution across Macy's markets that ensures portfolio risk and performance
distribution for GE Bank that is no worse than for FDS Bank), they agree that to
the extent it does not work fairly to meet such intent they will work together
in good faith to develop a different or modified mechanism.
4.3 Definitions. The following terms which are used in
Sections 4.4 through 4.7 below have the meanings given to them in this Section
4.3. References in
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* Exhibit C has been omitted.
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such Sections to years or quarters are references to the applicable FDS fiscal
year or FDS fiscal quarter, respectively.
"Actual Percentage" means the GE Actual Percentage or the FDS
Actual Percentage, as the case may be.
"Acquired Stores" means stores which are acquired by FDS after
the date hereof or owned by FDS prior to the date hereof and, in either case,
are converted to the "Macy's" tradename and have pre-existing private label
credit card accounts, provided that for purposes hereof, an Acquired Store shall
only be treated as an Acquired Store between the date it becomes an Acquired
Store and the period ending on the last day of the fiscal year in which it
became an Acquired Store, provided, that if such period would consist of less
than four full quarters, such period shall end on the last day of the
immediately succeeding fiscal year.
"Comp Stores" means all Macy's stores other than any store
which in the 12 months immediately prior to the time of determination had either
(i) a newly built Macy's store open within a 50 mile radius of it, (ii) had a
Macy's store close within a 50 mile radius of it or (iii) had a store which was
located within a 50 mile radius of it and which had been operated under a
tradename other than "Macy's", convert its tradename to "Macy's".
Notwithstanding the foregoing, all Macy's stores that were formerly A&S stores
will not be taken into account for any purposes in determining Comp Stores with
respect to any period in 1996.
"Comp Store Factor" means, with respect to any period, the
percentage derived by dividing (i) the amount of Net Credit Sales from Comp
Stores for such period by (ii) the amount of Net Credit Sales from the same
stores for the same period in the immediately prior year.
"FDS Actual Percentage" means, with respect to any period, the
percentage of total Net Credit Sales in respect of such period represented by
the amount of FDS Net Credit Sales in respect of such period.
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"FDS Credit Sales Share" means, with respect to any period,
the credit sales derived by subtracting (i) the GE Credit Sales Share for such
period from (ii) total Net Credit Sales for such period.
"FDS Net Credit Sales" means, with respect to any period, the
aggregate amount of Net Credit Sales generated with respect to such period by
FDS/Macy's Accounts.
"FDS Revised Credit Sales Share" means, with respect to any
period on a year to date basis, the amount of Net Credit Sales derived from the
application of the following formula:
[(Net Credit Sales minus Net Credit Sales generated by New
Stores and Acquired Stores) times FDS Target Percentage] plus
(50% of Net Credit Sales generated by New Stores) plus (100%
of Net Credit Sales generated by Acquired Stores)
"FDS Revised Target Percentage" means, with respect to any
period, an amount equal to the percentage of total Net Credit Sales with respect
to such period represented by the FDS Revised Credit Sales Share for such
period.
"FDS Target Percentage" means, with respect to any period, the
percentage derived by subtracting (i) the GE Target Percentage applicable to
such period from (ii) 100%.
"GE Actual Percentage" means, with respect to any period, the
percentage of total Net Credit Sales in respect of such period represented by
the amount of GE Net Credit Sales in respect of such period.
"GE Credit Sales Share" means, with respect to any period, an
amount equal to the product of (i) the amount of total GE Net Credit Sales for
the same period in the immediately prior year times (ii) the Comp Store Factor
applicable to such period.
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"GE Net Credit Sales" means, with respect to any period, the
aggregate amount of Net Credit Sales generated with respect to such period by
GE/Macy's Accounts.
"GE Revised Credit Sales Share" means, with respect to any
period on a year to date basis, the amount of Net Credit Sales derived from the
application of the following formula:
[(Net Credit Sales minus Net Credit Sales generated by New
Stores and Acquired Stores) times GE Target Percentage] plus
(50% of Net Credit Sales generated by New Stores)
"GE Revised Target Percentage" means, with respect to any
period, an amount equal to the percentage of total Net Credit Sales with respect
to such period represented by the GE Revised Credit Sales Share for such period.
"GE Target Percentage" means, with respect to any period, the
percentage of total Net Credit Sales with respect to such period represented by
the GE Credit Sales Share applicable to such period, provided that after 1996
the calculation of Net Credit Sales used for purposes of this definition shall
include the amount of all Virtual Comp Net Credit Sales but not include the
amount of any Virtual Non-Comp Net Credit Sales.
"Net Credit Sales" means, with respect to any period, the
aggregate face amount of receivables generated in such period by FDS/Macy's
Accounts and GE/Macy's Accounts, less an amount equal to the aggregate dollar
amount of credit adjustments against sales to such accounts during such period.
"New Accounts Allocation Percentage" means (i) with respect to
a party whose Actual Percentage for a period was less than its Target Percentage
(where Sections 4.4 or 4.5.1 are applicable) or Revised Target Percentage (where
Sections 4.5.2 or 4.5.3 are applicable) for such period, a percentage amount
equal to its Target Percentage or Revised Target Percentage, as applicable, for
the period plus five times the
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applicable Percentage Variance and (ii) with respect to a party whose Actual
Percentage for a period was more than its Target Percentage (where Sections 4.4
or 4.5.1 are applicable) or Revised Target Percentage (where Sections 4.5.2 or
4.5.3 are applicable) for such period, a percentage amount equal to its Target
Percentage or Revised Target Percentage, as applicable, for the period minus
five times the applicable Percentage Variance.
"New Stores" means stores which are (i) newly built Macy's
stores that open after the date hereof, or (ii) acquired by FDS after the date
hereof and converted to the "Macy's" tradename and which do not have
pre-existing private label credit card accounts at the time of acquisition, or
(iii) owned by FDS prior to the date hereof and which are converted to the
"Macy's" tradename and do not have pre-existing private label credit card
accounts as of the date hereof, provided that for purposes hereof, a New Store
shall only be treated as a New Store between the date it becomes a New Store and
the period ending on the last day of the fiscal year in which it became a New
Store, provided, that if such period would consist of less than four full
quarters, such period shall end on the last day of the immediately succeeding
fiscal year.
"Non-Overlapping Acquired Stores" means Acquired Stores (i)
which are within a 50 mile radius of an existing Macy's store and which do not
individually or in the aggregate account for Net Credit Sales in excess of $100
million in the 12-month period immediately prior to becoming Acquired Stores or
(ii) which are not within a 50 mile radius of an existing Macy's store.
"Overlapping Acquired Stores" means Acquired Stores other than
Non-Overlapping Acquired Stores.
"Percentage Variance" has the meaning given to it in Section
4.4.3 hereof.
"Revised Target Percentage" means the GE Revised Target
Percentage or the FDS Revised Target Percentage, as the case may be.
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"Target Percentage" means the GE Target Percentage or the FDS
Target Percentage, as the case may be.
"Virtual Comp Net Credit Sales" means all Net Credit Sales
effected both (i) other than by a transaction in a Macy's store and (ii) by
customers who reside in states in which there was at least one Macy's store as
of the date of the transaction.
"Virtual Non-Comp Net Credit Sales" means all Net Credit Sales
effected other than by a transaction in a Macy's store, other than Virtual Comp
Net Credit Sales.
4.4 Provisions Applicable to 1996. The following provisions shall be
applicable with respect to each quarter of 1996, regardless of whether any New
Stores or Acquired Stores are opened or acquired by FDS during such time:
4.4.1 Within 15 days following the end of each quarter in 1996
(i.e., those quarters ending April 27, 1996, August 3, 1996, November 2, 1996
and February 1, 1997), the parties shall calculate as of the quarter then ended
on a year-to-date basis (i) the GE Target Percentage and the FDS Target
Percentage and (ii) the GE Actual Percentage and the FDS Actual Percentage.
4.4.2 If the Target Percentages and the Actual Percentages for
the year-to-date as of the quarter then ended are the same, then applications
for new Macy's accounts in the next succeeding quarter will be allocated between
FDS Bank and GE Bank based on the Target Percentages so calculated.
4.4.3 If either party's Actual Percentage for the year-to-date
period as of the end of a quarter is less than its Target Percentage for such
year-to-date period as of the end of such quarter (such difference, a
"Percentage Variance") then applications for new Macy's accounts in the next
succeeding quarter will be allocated between FDS Bank and GE Bank based on the
New Account Allocation Percentages.
4.5 1997 and Thereafter. The following provisions shall be applicable
with respect to 1997 and thereafter:
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4.5.1 Subject to the provisions of Section 4.5.2, below,
within 15 days following the end of each quarter commencing with the end of the
first quarter of 1997, the parties will calculate as of the quarter then ended
on a year-to-date basis whether, based on the Target Percentages then in effect,
there was a Percentage Variance for the year-to-date as of the quarter then
ended. In the event there is a Percentage Variance for any such period,
applications for new Macy's accounts in the next succeeding quarter will be
allocated between FDS Bank and GE Bank based on the New Accounts Allocation
Percentage.
4.5.2 Notwithstanding the provisions of Section 4.5.1, (i) if
FDS opens or acquires any New Stores or Non-Overlapping Acquired Stores during
any year commencing with 1997, then the calculation of Percentage Variance for
any periods in which such stores are considered New Stores or Acquired Stores in
accordance with the definitions thereof shall be done based on the difference
between the Actual Percentages and the Revised Target Percentages applicable to
such periods and (ii) if FDS opens or acquires any Overlapping Acquired Stores
during any year commencing with 1997, then the calculation of Percentage
Variance for any periods in which such stores are considered Acquired Stores in
accordance with the definition thereof shall be done based on the difference
between the Actual Percentages and the Revised Target Percentages (which shall
be derived from a calculation of the FDS Revised Credit Sales Share and the GE
Revised Credit Sales Share), applicable to such periods, it being agreed that
for purposes of each such calculation of the FDS Revised Credit Sales Share and
the GE Revised Credit Sales Share, the Target Percentages used in such
calculation shall be calculated as of the date the FDS Revised Credit Sales
Share and the GE Revised Credit Sales Share are being calculated. In the event
there is a Percentage Variance for any such period, applications for new Macy's
accounts in the next succeeding quarter will be allocated between FDS Bank and
GE Bank based on the New Accounts Allocation Percentage.
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4.5.3 If the procedures described in Section 4.5.2 have been
applied due to the opening or acquisition of a New Store or Acquired Store,
then, at such time as the provisions of Section 4.5.2 are no longer applicable
(i.e., because such New Stores and/or Acquired Stores cease to be treated as
such in accordance with the definitions thereof) the provisions of Section 4.5.1
shall be applicable for all later periods in which no New Stores or Acquired
Stores are opened or acquired, provided that the calculation of Percentage
Variance required by Section 4.5.1 shall be based on the Revised Target
Percentages last in effect rather than the Target Percentages last in effect.
4.6 General.
4.6.1 Notwithstanding any other provision of this Agreement,
but subject to Section 4.6.2 below, no party's Target Percentage, New Accounts
Allocation Percentage or Revised Target Percentage shall ever be less than 10%
or more than 90%.
4.6.2 Notwithstanding any other provision of this Agreement,
the parties agree that GE Net Credit Sales for each fiscal year shall constitute
not less than 50% of Net Credit Sales for each such fiscal year, and agree to
take all actions necessary or desirable to achieve this requirement, including,
without limitation, adjusting applications for new Macy's accounts in a manner
contrary to that which would otherwise be required or permitted by Sections 4.3
through 4.6.1.
4.6.3 The parties acknowledge that future sales of merchandise
on Macy's accounts and openings of new Macy's accounts may occur through means
not contemplated by this Agreement, including, without limitation, home
shopping, pre-screen solicitations and/or through on-line account applications.
In this regard, the parties agree (i) that for purposes of calculating any Comp
Store Factor, all Virtual Comp Net Credit Sales shall be aggregated together and
deemed to be a single Comp Store (a "Virtual Comp Store"), provided that, in
determining Comp Stores, (a) such Virtual Comp Store shall not be applied to
eliminate any Macy's store from being a Comp Store and (b) such Virtual Comp
Store shall not be subject to elimination as a Comp Store, and
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(ii) that applications for new Macy's accounts which are made available to
customers other than at a store (e.g., pursuant to telephone solicitations,
pre-screen solicitations or on-line services) shall be allocated between FDS
Bank and GE Bank in the same manner as applications are otherwise required to be
allocated between the parties pursuant to the terms of this Section 4.
5. A&S Accounts. All A&S private label credit card accounts have been
treated as described in the letter from GE Capital to FDS attached as Exhibit B
hereto. The parties have agreed that on or about April 28, 1996 all FDS/Macy's
Accounts that were originated in a former A&S store and which were former A&S
accounts which became FDS/Macy's Accounts pursuant to the provisions of Exhibit
B hereto, shall be transferred to FDS Bank's systems and serviced by FDS Bank
thereafter. The parties agree that the 60 day notice period referred to in
Section 5 of Exhibit B is hereby deemed satisfied.
6. FDS Support.
6.1 Notwithstanding any provisions of the Program Agreement to
the contrary, FDS shall indemnify and hold harmless General Electric Capital
Corporation, GE Bank, and each of their respective officers, directors,
employees and agents harmless from and against any losses, liabilities,
obligations, actions, costs, damages, penalties, expenses or settlements,
including reasonable attorneys fees ("Damages") arising out of or in connection
with GE Bank imposing, contracting for and/or collecting (whether before or
after the date hereof) in reliance on Ohio law finance charges, late fees,
returned check fees or any other fees, charges, terms or conditions (including,
without limitation, balance calculation methods and grace periods (collectively,
"Rate Exported Terms") on Macy's accounts as specified in the Credit Card
Agreement applicable to GE/Macy's Accounts attached hereto as Exhibit E that GE
Bank would not otherwise be permitted to impose, contract for and/or collect
under the respective state laws of Account Debtors in effect from time to time
governing such imposition, contracting and/or collection;
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provided that if FDS directs GE Bank in writing to reduce certain such fees or
charges or alter certain such terms or conditions ("Specified Fees") to not
greater than the amount identified by FDS, and GE Bank fails to so follow FDS's
directions (initiation of consumer notification by GE Bank shall be deemed
compliance with FDS directions), then FDS shall not be obligated to provide an
indemnity pursuant to this Section 6.1 with respect to Damages arising out of or
in connection with the failure of such Specified Fees to comply with such
identified law. The parties agree to use reasonable efforts to advise each other
of any changes in such laws that they have actual knowledge of; provided that
any failure to use such reasonable efforts or failure to so advise the other
party shall not limit, modify, reduce or in any way affect the indemnification
obligations set forth in this Section 6.1.
6.2 FDS hereby waives the provisions of Section 13.3(c) of the
Program Agreement to the extent such Section imposes any obligations on GE Bank
with respect to matters described in Section 6.1 hereof, and hereby releases GE
Bank from any and all liabilities or obligations it may have pursuant to Section
13.3(c) of the Program Agreement to such extent.
7. Sundry Income. For purposes hereof, a "revenue enhancement program"
means a program that yields sundry income from solicitations to sell services
such as offers to sell credit card protection, auto and travel clubs and similar
services and which do not relate to merchandise
(a) Subject to paragraph (b), below, all net revenue from
revenue enhancement programs in effect as of the date hereof shall accrue to the
benefit of FDS. The revenue from all such programs shall be calculated and
established in accordance with Exhibit D hereto, and is referred to herein as
"net revenue."
(b) Notwithstanding the provisions of paragraph (a), above,
all net revenue from creditlife, disability, and involuntary unemployment
insurance programs
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("Insurance Programs"), including adjustments to revenues against potential
future claims, shall accrue [Information omitted] to the benefit of FDS and
[Information omitted] to the benefit of GE Bank.
(c) [Information omitted]
(d) No net revenue from any revenue enhancement program
(including Insurance Programs) will be taken into account in calculating Bank
Net Return, and all such revenue shall be accounted for by the parties outside
of the Program.
8. Limitations on Agreement. During the New Interim Period all
provisions of the Program Agreement and the Program, other than those
temporarily suspended for the New Interim Period to the extent strictly
necessary to reflect the provisions of this Agreement or the Interim Agreement
II dated as of the date hereof between General Electric Capital Corporation and
FDS, shall remain in full force and effect. Certain financial and other
provisions (as more fully described herein) shall be implemented for the New
Interim Period and for that period only shall modify the related provisions set
forth in the Program Agreement. If, prior to the last day of the New Interim
Period, FDS and FDS Bank, on the one hand, and GE Capital and GE Bank, on the
other hand, have not executed and delivered one or more definitive agreements
regarding the terms and structure of the Program which supersede the Program
Agreement, then the Program Agreement shall, as of such last day, revert to its
original terms and the provisions hereof shall no longer be applicable, provided
that (i) FDS Bank shall nonetheless continue to own and service all FDS/Macy's
Accounts that it owned and serviced as of the end of the
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New Interim Period and (ii) the provisions of Sections 2, 3, 4, 5, 6 and 7
hereof shall be deemed to modify and amend the Program Agreement from and after
such time.
9. Miscellaneous.
9.1. Certain Limitations.
Except to the extent expressly amended hereby the Program
Agreement shall remain unchanged and shall remain in full force and effect.
9.2. Governing Law.
This Program Agreement Amendment shall be governed by the laws
of the State of New York without regard to its conflicts of laws provisions.
9.3. Counterparts.
This Program Agreement Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
17
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IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have entered into this Program Agreement Amendment as of the day
and year first above written.
FEDERATED DEPARTMENT GE CAPITAL CONSUMER CARD CO.
STORES, INC.
By: /s/ Dennis J. Broderick By: /s/ Kevin Knight
------------------------------------- ------------------------------
Name: Dennis J. Broderick Name: Kevin Knight
Title: Sr. Vice President & Title:Executive Vice president
General Counsel
FDS NATIONAL BANK
By: /s/ Susan P. Storer
-------------------------------------
Name: Susan Storer
Title: Treasurer
MACY'S EAST, INC.
By: /s/ Dennis J. Broderick
-------------------------------------
Name: Dennis J. Broderick
Title: Vice President
MACY'S WEST, INC.
By: /s/ Dennis J. Broderick
-------------------------------------
Name: Dennis J. Broderick
Title: Vice President
18
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BULLOCK'S, INC.
By: /s/ Dennis J. Broderick
-------------------------------------
Name: Dennis J. Broderick
Title: Vice President
I. MAGNIN, INC.
By: /s/ Dennis J. Broderick
-------------------------------------
Name: Dennis J. Broderick
Title: Vice President
MACY SPECIALTY STORES, INC.
By: /s/ Dennis J. Broderick
-------------------------------------
Name: Dennis J. Broderick
Title: Vice President
MCO, INC.
By: /s/ Dennis J. Broderick
-------------------------------------
Name: Dennis J. Broderick
Title: Vice President
19
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SCHEDULE 4.1
------------
FDS STORES
- ----------
Sun Valley
Valley Fair
GE CAPITAL STORES
- -----------------
Sun Rise
Pleasantown - Stoneridge
BW Plaza - Walnut Creek
Northgate - Marin
Fashion Valley/Mission Valley
Carlsbad
The Oaks/1,000 Oaks
Modesto
Fresno
Coddingtown