Department Stores National Bank

701 E. 60th Street North

Sioux Falls, South Dakota 57104






 

 May
30, 2008


Macy's, Inc.

7 West Seventh Street

Cincinnati, Ohio 45202

Attention:  General
Counsel




FDS Bank

9111 Duke Boulevard

Mason, Ohio 45040

Attention:  President




Macy's Credit and Customer Services, Inc

9111 Duke Boulevard

Mason, Ohio 45040

Attention:  President




Ladies and Gentlemen:




            Reference is made to the Credit Card Program Agreement,
dated as of June 1, 2005 (as amended, supplemented or otherwise modified from
time to time, the "Program Agreement"), by and among Macy's, Inc. (fka
Federated Department Stores, Inc.), a Delaware corporation, ("Macy's, Inc."),
FDS Bank, a federally-chartered stock savings bank ("FDS Bank"), Macy's
Credit and Customer Services, Inc. (fka FACS Group, Inc.), an Ohio corporation
("MCCS"), FDS Bank, Macy's Department Stores,
Inc., an Ohio corporation ("Macy's"), Bloomingdale's, Inc., an Ohio
corporation ("Bloomingdale's") (collectively the "Macy's Companies"), and
Citibank, N.A., a national banking association ("Bank"), the interest of
which under the Program Agreement was subsequently assigned to Department
Stores National Bank ("DSNB").  Capitalized terms used herein but not
defined herein shall have the meanings given to such terms in the Program
Agreement.




DSNB and the FDS Companies
wish in this restated letter effective as of June 1, 2007 (the "Letter
Agreement") to confirm our practice in certain respects. 


1.         Schedule 1.1(i) is hereby amended by deleting
the same in its entirety and substituting the attached new Schedule 1.1(i) in
its place.


2.         Except as expressly
amended by this Letter Agreement, the Program Agreement, as previously amended,
remains unchanged.


3.         This Letter
Agreement may be executed in any number of counterparts, all of which together
shall constitute one and the same instrument, but in making proof of this
Letter Agreement, it shall not be necessary to produce or account for more than
one such counterpart.  Any facsimile or PDF of an executed counterpart shall be
deemed an original.


4.         The agreements of
the Parties set forth herein shall have the same effect as if approved by the
unanimous approval of the Operating Committee pursuant to Article III of the
Program Agreement.  


[Remainder
of Page Intentionally Left Blank]


















Please
acknowledge your agreement with the foregoing by executing this Letter
Agreement as indicated below.




                                                                              Very
truly yours,                 




By:   /s/
Douglas C. Morrison

Name:
Douglas C. Morrison

Title: Citi Cards

        Vice
President and Chief Fin. Officer

         Sioux Falls, SD




Agreed to by:




MACY'S, INC.
(fka Federated Department Stores, Inc.) 




By:   /s/ 
Dennis J. Broderick

Name: 
Dennis J. Broderick

Title:  SVP, General Counsel & Secretary




FDS BANK




By:   /s/ 
Teresa Huxel

Name: Teresa Huxel

Title:  President






MACY'S CREDIT
AND CUSTOMER SERVICES, INC. (fka FACS Group, Inc.)




By:   /s/ 
Teresa Huxel

Name:  Teresa Huxel

Title:  SVP & CFO 




MACY'S
DEPARTMENT STORES, INC.




By:   /s/ 
Dennis J. Broderick

Name: Dennis J. Broderick

Title:  President






BLOOMINGDALE'S,
INC.




By:   /s/
Dennis J. Broderick

Name:  
Dennis J. Broderick

Title:   Vice President






SCHEDULE
1.1(i)


Pre-Tax Profit,
FDS Profit Share, Program Expenses and Program P&L


"FDS Profit Share" means
the sum of:


            


	

  	
  (a)     10% of Pre-Tax Profit with respect to Pre-Tax Adjusted ROAA of
  1.50% or less; provided that upon a Total Servicing Transfer, the 10%
  amount shall increase to 20% 

  
	
  plus

  	
  (b)     35% of Pre-Tax Profit with respect to Pre-Tax Adjusted ROAA of
  greater than 1.50% and less than or equal to 3.00%;

  
	
  plus

  	
  (c)     60% of Pre-Tax Profit with respect to Pre-Tax Adjusted ROAA of
  greater than 3.00% and less than or equal to 4.50%; and

  
	
  plus

  	
  (d)     85% of FDS Pre-Tax Profit with respect to Pre-Tax Adjusted ROAA
  of greater than 4.50%.

  





The FDS Profit Share will be
calculated monthly based on the sum of the monthly Pre-Tax Profit for the
period from the beginning of the then-current Fiscal Year through the end of
the preceding Fiscal Month. 




The Parties
acknowledge that they have prior to the June, 2007, Fiscal Month recognized net
finance charge on a billed sum-of-cycles basis for purposes of determining FDS
Profit Share.  The Parties further acknowledge that during and after the June,
2007 Fiscal Month, the Parties shall instead recognize net finance charge on a
billed sum-of-cycles basis plus an accrual to account for five or six (5
or 6) days of unbilled interest.  The Parties, in their discretion, will
mutually agree on an appropriate method of calculating the accrued five or six
(5 or 6) days of unbilled interest.


"Pre-Tax Adjusted ROAA" equals
(a) Pre-Tax Profit divided by (b) an amount equal to the product of (i)
Average Receivables divided by the total number of days in the applicable
Fiscal Year multiplied by (ii) the number of days to date in the
applicable Fiscal Year.




"Pre-Tax Profit" means the sum of:


	

  	
  (a)     income (from all sources, including finance charges, late fees,
  interchange fees, returned check or NSF fees, over limit fees, cash advance
  fees, foreign currency fees and other fees earned on the Accounts and
  Approved Ancillary Product revenues less direct expenses), excluding income
  from the Card Association payable to FDS pursuant to Section 9.3(c);

  
	
  minus

  	
  (b)     the sum of all concessions, reversals and write-offs of any
  portion of the Cardholder Indebtedness (including any principal or items of
  income of the type referred to in clause (a));

  
	
  plus

  	
  (c)     the amount of all recoveries on Accounts written off subsequent
  to the Effective Date or reversals (including through receipt of merchant chargebacks
  and Sales Tax Refunds) of concessions, reversals and write-offs referred to
  in clause (b);

  
	
  minus

  	
  (d)     Program Expenses;

  
	
  minus

  	
  (e)     the amount of any increase in the Bad Debt Reserve for such
  period;

  
	
  plus

  	
  (f)      the amount of any decrease in the Bad Debt Reserve for such
  period;

  
	
  minus

  	
  (g)     Funding Costs;

  
	
  minus

  	
  (h)     the FDS Revenue Share;

  



 


provided that the amounts set forth in clause (a) of
this definition that are unbilled finance charges and fees that constitute
Gross Receivables (as defined in the Purchase Agreement) shall be excluded from
the calculation of Pre-Tax Profit for the first Fiscal Month following the
Effective Date; provided further, that conversion, start-up
(including the establishment of the Program's initial Bad Debt Reserve (which
shall reflect any impact from changes in cure, aging, or write-off policies))
and other one-time costs (including increases in Bad Debt Reserve required as a
result of changes in Applicable Law applicable to Bank) shall not be deducted
in calculating Pre-Tax Profit.  The Operating Committee may agree from time to
time to include or exclude any other amounts in the calculation of Pre-Tax
Profit; provided that to the extent the Agreement expressly provides
that an amount shall be included or excluded from such calculation, such
amounts shall be included or excluded, respectively, in or from such
calculation.  The attached form of Program P&L shall be prepared on a
monthly basis in accordance with this definition of Pre-Tax Profit.  




"Program Expenses" means the sum of the following
(without duplication): 


	

  	
  (a)     amount payable by Bank to the Macy's Companies pursuant to
  clause (d) of Schedule 9.3(a) (Marketing Reimbursement);

  
	
  plus

  	
  (b)     amount payable by Bank to the Macy's Companies pursuant to
  clause (e) of Schedule 9.3(a) (In-Store Payment Reimbursement);

  
	
  plus

  	
  (c)     amount payable by Bank to the Macy's Companies pursuant to
  clause (f) of Schedule 9.3(a) (Account Application SPIF Reimbursement);

  
	
  plus

  	
  (d)     amount payable by Bank to the Macy's Companies pursuant to
  clause (g) of Schedule 9.3(a)  in respect of the FDS Servicing Charge;

  
	
  plus

  	
  (e)     amount payable by Bank to the Macy's Companies pursuant to
  clause (h) of Schedule 9.3(a) (Value Proposition Payments) 

  minus 

  amount payable by the Macy's Companies to Bank pursuant to
  section IV of Schedule 4.8(a);

  
	
  plus

  	
  (f)      the amount of the Partner Servicing Charge;

  
	
  plus

  	
  (g)     additional marketing expenses incurred with the prior approval
  of the Operating Committee;

  
	
  plus

  	
  (h)     fraud losses incurred by Bank other than those subject to
  chargeback pursuant to Section 8.5;

  
	
  plus

  	
  (i)      the costs paid by Bank pursuant to (1) Section 2.3(f) in
  connection with conversion of acquired accounts into the Program, (2) Section
  4.5(b) in connection with the development and delivery of Credit Card
  Documentation, FDS Credit Cards and Solicitation Materials, (3) Section 4.10
  in connection with excess sales tax cost reimbursements to FDS, (4) Section
  5.3(a) in connection with Inserts required by Applicable Law and (5) Section
  5.4 in connection with production and marketing costs, in each case to the
  extent the applicable Section expressly permits treatment of such costs as
  Program Expenses. 

  





Except as otherwise expressly provided in Section 5.4, in no
event shall the costs and expenses associated with Bank's obligations set forth
in such Section be included in Program Expenses.  The Operating Committee may
agree from time to time to include or exclude any other expense (or credit)
amounts in the calculation of Program Expenses; provided that to the
extent the Agreement expressly provides that an expense (or credit) is or is
not a Program Expenses, such amounts shall be included or excluded,
respectively, in or from the calculation of Program Expenses.