Exhibit
10.52


 


Confidential
Treatment Requested.


 


Certain material (indicated by asterisks) has
been omitted from this document and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.


 


SEVENTH AMENDMENT TO CREDIT CARD PROGRAM AGREEMENT


 


This Seventh Amendment to
Credit Card Program Agreement (the “Seventh Amendment”) is entered into this 21st day of April 2008
by and among The Neiman Marcus Group, Inc. and Bergdorf Goodman, Inc.
on the one hand, and HSBC Private Label Corporation (formerly, Household
Corporation) and HSBC Bank Nevada, N.A. on the other hand, to that certain
Credit Card Program Agreement, dated June 8, 2005 (as amended, the “Agreement”),
among the foregoing parties. All capitalized terms used herein and not
otherwise defined shall have the meanings given to them in the Agreement.


 


1.                                       The following new defined terms shall be
added in Section 1.1 of the
Agreement in the appropriate alphabetical order:


 


“Active Account” means an
Account with debit or credit activity within the last [***] days.


 


“Average
Number of Active Accounts” means, with respect to any period, the sum of the
number of Active Accounts on the last day of each calendar month during such
period divided by the number of calendar months in such period.


 


“Average
Gross Receivables” means, (i) with
respect to the RAM Measurement Period, the average of the Gross Receivables on
the last day of each calendar month during the period from [***]
and (ii) with respect to any Reference Period, the average of the Gross
Receivables on the last day of each calendar month during the period from [***]
through the end of such Reference Period.


 


“High/Low
Collar Review Period” means the period of 120
days following the effective date of the February 2008 Change of
Terms (as that term is defined in the Letter Agreement between the parties
executed on February 22, 2008), and an additional [***]
days in which the Parties shall attempt to mutually agree upon a new High
Collar and Low Collar.


 


“Inactive
Account” means any Account that is not an Active Account.


 


“Net
Credit Sales”, for purposes of this Seventh Amendment, means, for any period,
an amount equal to (A) gross credit sales on Accounts (including gift card
sales, sales tax, delivery charges, Licensee sales and any other amount
included in the full amount charged by Cardholders) reflected in the NMG Charge
Transaction Data during such period, minus (B) the sum of credits for
returned goods and cancelled services and other credits (such as concessions,
discounts and adjustments) on Accounts reflected in the NMG Charge Transaction
Data during such period.


 


1

















 


“Net
Write-Off Ratio” means, with respect to any period, (i) Net Write-Offs (as defined below) during such period
divided by (ii) Net Credit Sales
during such period.


 


“Next
Gen” means an individual consumer’s (including Cardholders) credit score based
upon that consumer’s overall credit performance and history as provided by the
three major credit bureaus (Equifax-Pinnacle, Experian-Experian/Fair Isaac
Advanced Risk Score and TransUnion-Precision).


 


“RAM
Measurement Period” means the period from (and including) [***]
through [***].


 


“Reference
Period” means with respect to any interim annual payment required pursuant to Section 9.1
(a)(vii) or (viiI), the period from (and including) [***]
preceding the due date for the Year-End Settlement Sheet on which such payment
will be reflected.


 


“Risk
Adjusted Margin” means, with respect to the RAM Measurement Period (or in the
case of any interim payment pursuant to Section 9.1 (a) (vii), the
relevant Reference Period), the percentage equivalent of a fraction equal to (A) (i) Gross
Financing Income for such period, minus (ii) Net Write-Offs for
such period, minus(iii) Funding Costs for such period, plus (iv) the
total of all amounts paid by NMG pursuant
to Section 9.1(a)(viii) at any time during such period divided
by (B) the Average Gross Receivables for such period.”


 


“Rolling
12 Net Write-Off Ratio” means, with respect to any calendar month, the Net
Write-Off Ratio for the period of 12 consecutive calendar months ending on and
including the month immediately preceding such calendar month.


 


“Shared
Write-Off Amount” means, with respect to the RAM Measurement Period (or in the
case of any interim payment pursuant to Section 9.1 (a)(viii), the
relevant Reference Period), the amount by which Net Write-Offs for such period
exceed [***]
of Net Credit Sales up to and including [***]
of Net Credit Sales for such period (it being understood for the avoidance of
doubt that if the Net Write-Off Ratio for such period is less than or equal to [***],
then the Shared Write-Off Amount shall be zero, and that the Shared Write-Off
Amount cannot exceed an amount equal to [***]  of Net Credit Sales).


 


“Variable
Break-Even Margin” means (i) Gross
Financing Income (defined below) plus (ii) the amounts paid by NMG
pursuant to Section 9.1 (a) (viii) minus (iii) Funding
Costs (defined below) minus (iv) Net Write-Offs (defined below) minus (v) the
Total of All Amounts Bank Paid to NMG (defined below) minus (vi) Marketing
Expenses (defined below) minus (vii) Fraud Loss (defined below) minus (viii) Standard
Variable Operating Expenses (defined below). 
As used to determine Variable Break-Even Margin, the following terms
shall have the following meanings:


 


(1) “Gross
Financing Income” means, with respect to any period, an amount equal to the sum
of assessed or accrued finance charges, late fees, NSF fees and any other
interest or fees payable under the Program and any amounts paid by NMG to Bank
pursuant to Section 4.10 or 4.11 during such period less the sum of
finance charge waivers, fee waivers, the amount required under GAAP to be
amortized by Bank as deferral amortization pursuant to Financial Accounting
Standard No. 91 during such period and any amounts paid by Bank to NMG
pursuant to Section 4.10 or 4,11 during such period. Fees from Approved
Ancillary Products are not included as part of Gross Financing Income.


 


(ii) “Funding
Costs” means for each calendar month during any period, the product of (A) business
daily average of one month LIBOR as published by Bloomberg Financial Markets
plus [***],
times (B) the average of [***]
of the Gross Receivables for each day during such calendar month.


 


(iii) “Net
Write-Offs” means, with respect to Accounts that have been written off in a
particular period in accordance with the credit and collection policies
contained in. the’ Risk Management Policies, (a) the portion of the total
Gross Receivables charged-off as uncollectible to the written-off Accounts in
accordance with such credit and collection policies (and not as a result of
fraud losses) during such period minus (b) any recoveries,
including sales tax recoveries, received during such period on previously
written-


 

















 


off
Accounts.


 


(iv) “Total
of All Amounts Bank Paid to NMG” means the amounts paid by Bank pursuant to Section .9.1
(a)(i) and Section  and Section 9.1(a)(vii) (A).


 


(v) “Fraud Loss”
means, during any period, actual fraud loss incurred by Bank during such period
net of chargebacks to NMG during such period.


 


(vi) “Marketing
Expense” means, during any period, actual marketing expenses incurred by Bank
or reimbursements made by Bank to NMG of marketing expenses incurred by NMG during
such period, in each case that satisfy the marketing commitments set forth in
Schedule 5.2 of the Program Agreement.


 


(vii) “Standard
Variable Operating Expenses” means (A) for the period of [***],
[***]
multiplied by the Average Number of Active Accounts during such period, (B) for
the period of [***],
[***]
multiplied by the Average Number of Active Accounts during such period, (C) for
the period of [***],
[***]
multiplied by the Average Number of Active Accounts during such period, and (D) for
the RAM Measurement Period, the sum of the amounts calculated in accordance
with the foregoing clauses (A) - (C). 
In the event that any additional Services are assumed by the Bank under
Schedule 9.1(a)(i), the parties shall negotiate in good faith to determine an
appropriate amendment to the foregoing amounts to appropriately take such
additional Services into account.


 


2.                                       Section 3.2(g) of
the Agreement is amended by adding the following clause (v) as an
additional “Bank Matter” at the end thereof:


 


“(v) if
at any time during the Term, the Rolling 12 Net Write-Off Ratio is greater than
[***]
but equal to or less than [***]
for [***]
consecutive calendar months, for so long as the Rolling 12 Net Write-Off Ratio
remains greater than [***]
but equal to or less than [***],
changes to Risk Management Policies that are designed to reduce the Net Write-
Off Ratio, provided that such changes:


 


(A) will
not affect a group of Accounts for which the historic ratio of (1) Net
Credit Sales lost to (2) Net Write-Offs reduced in respect of each ten (10) point
Next Gen score band (e.g. 600-609) is greater than [***]
(as set forth in the report provided by HSBC to NMG).  Such report shall be provided to NMG at least
30 days in advance of making any such changes and shall demonstrate the most
recent rolling 3 month authorization after 12 months on book (Example attached
as Exhibit B) for each such group of Accounts.  Bank may blend groups of Accounts in adjacent
ten (10) point Next Gen
score bands together (e.g. 600-609  and 590-599) so long as (x) the
ratio of Net Credit Sales lost to Net Write-Offs reduced for the group at
Accounts in the highest ten (10) point Next Gen score band (e.g., 600-609
would be higher than 590-599) of the groups to be blended does not exceed [***]
and (y) the total blended rate of Net Credit Sales lost to Net Write Offs
reduced does not exceed [***]
for the combined groups.  Notwithstanding
the foregoing, Bank may implement changes to Risk Management Policies in
respect of a subgroup of Accounts within an individual ten (10) point Next
Gen score band whose Net Write Off ratio is greater than [***],
if, by utilizing other risk attributes that historically correlate (consistent
with Bank’s past practice) to the likelihood of Net Write Offs, such subgroup
of Accounts within such ten (10) point Next Gen score band has a Net Write
Off ratio of less than [***],
as set forth in the report provided by HSBC to NMG (Example attached as Exhibit C).


 


(8) (i) will
not result in the closure of Accounts that are current or one payment
delinquent (currently known as “X days”), unless NMG otherwise agrees;


 


(ii) will
not decrease credit lines on Active Accounts below the current balance or [***], whichever is higher; and


 


(iii) will
not decrease credit lines on Inactive Accounts below [***];
and


 

















 


(C) will
not be made to any Account segment without NMG’s prior approval if Bank has
previously implemented a change in any Risk Management Policy in respect of
such Account segment within the prior 3 months.”


 


3.                                       Section 3.2(g) of
the Agreement is amended by adding the following clause (vi) as an
additional “Bank Matter” at the end thereof:


 


“(vi) if
at any time during the Term, the Rolling 12 Net Write-Off Ratio is greater than
[***]
for [***]
consecutive calendar months, for so long as the Rolling 12 Net Write-Off Ratio
remains greater than [***],
changes to Risk Management Policies that are designed to reduce the Net
Write-Off Ratio, provided that such changes will not affect a group of Accounts
for which the historic ratio of (1). Net Credit Sales lost to (2) Net
Write-Offs reduced in respect of each ten (10) point Next Gen score band
(e.g. 600-609)
is greater than [***] (as set forth in the report provided by HSBC to
NMG).  Such report shall be provided to
NMG at least 30 days in advance of making any such changes and shall
demonstrate the most recent rolling 3 month authorization after 12 months on
book (Example attached as Exhibit 8) for each such group of Accounts.  Bank may blend groups of Accounts in adjacent
ten (10) point Next Gen score bands together (e,g, 600-609 and 590-599) so
long as (x) the ratio of Net Credit Sales lost to Net Write-Offs reduced
for the group of Accounts in the highest ten (10) point Next Gen score
band (e,g., 600-609 would be higher than 590-599) of the groups to be blended
does not exceed [***] and (y) the total blended rate of Net Credit Sales
lost to Net Write Offs reduced does not exceed [***] for the combined groups. Notwithstanding the
foregoing,  Bank may implement changes to
Risk Management Policies in respect of a subgroup of Accounts within an
individual ten (10) point Next Gen score band whose Net Write Off ratio is
greater than [***], if, by utilizing other risk attributes that
historically correlate (consistent with Bank’s past practice) to the likelihood
of Net Write Offs, such subgroup of Accounts within such ten (10) point
Next Gen score band has a Net Write Off ratio of less than [***], as set forth in the report provided by HSBC to NMG
(Example attached as Exhibit C).”


 


4.                                       The
following shall be added as a new Section 3.4 of the Agreement:


 


“Section 3.4.  Consideration of Change of Terms.  The Management Committee will consider
implementing an additional change of terms during calendar year 2008, with the
goal of creating an additional [***]
in annual pre-tax profit improvement for the Program, net of all associated
expenses. Notwithstanding anything to the contrary in this Article Ill,
and excluding any change in terms that may be necessary pursuant to Applicable
Law (which shall continue to be governed by Section 3.2(g)(ii) of
this Agreement), unless all members of the Management Committee approve such
additional calendar year 2008 change of terms, including the terms of
implementation thereof, such change of terms shall be deemed rejected.  For the avoidance of doubt, and subject to
the immediately preceding sentence (i) no change of terms proposed during
calendar year 2008 shall constitute an Unapproved Matter or a Bank Matter, (ii) no
such change of terms proposal shall be subject to the dispute resolution
procedures of Section 3.2(e)(ii)(B) and, if rejected by any NMG
Designee, each such change of terms proposal shall be deemed rejected by the
Management Committee.”


 


5.                                       The
following shall be added as a new Section 4.6(e) of the Agreement:


 


“Effective
March 2008, the Risk Management Policies are amended as set forth in
Schedule 4.6(e), attached hereto.  NMG is
allowed to accept the credit risk for any Account affected by the actions taken
pursuant to these as well as any other future Risk Management Policy changes
pursuant to the existing recourse programs between the parties, as set forth in
Article XX of this Agreement, and via the process outlined in the attached
Exhibit A to Schedule 4.6(e).”


 


6.                                       Schedule
1.1 (f) shall be amended to reflect a mutually agreed upon new High Collar
and Low Collar upon the expiration of the High/Low Collar Review Period. If the
Parties are unable to reach a mutual agreement at the expiration of the
High/Low Collar Review Period, the existing High Collar and Low Collar meanings



 

















 


set
forth in Schedule 1.1 (f) of the Program Agreement, as amended via the
Sixth Amendment to the Program Agreement, dated as of July 17, 2007 (“Sixth
Amendment”), shall continue to apply. For the avoidance of doubt, the High Collar
and Low Collar meanings from the Sixth Amendment shall apply during the
High/Low Collar Review Period.


 


7.                                       Schedule 4.6(c) of the Agreement is
amended as follows:


 


(a) by
deleting the “Collections” (Net Write-Off Percentages to Credit Sales) target from
such Schedule; and


 


(b) by
adding the following paragraph at the end of paragraph (A) thereof:


 


“Notwithstanding
the foregoing provisions of this Schedule, in the event that the Rolling 12 Net
Write-Off Ratio for any two consecutive calendar months is greater than [***],
then the Risk Management Targets set forth in this Schedule 4.6(c) shall
be suspended.  Once the Rolling 12 Net
Write-Off Ratio for a calendar month is below [***],
the Risk Management Targets set forth in this Schedule 4.6(c) shall be
automatically reinstated (however, if the Roiling 12 Net Write-Off Ratio range
is between [***]
to [***]
for [***]
consecutive calendar months, the Parties shall meet to discuss reinstatement of
the Risk Management Targets, timing of such and whether to readjust such Risk
Management Targets further), and HSBC shall have [***] days
to achieve such Risk Management Targets, as they may be adjusted, after such
reinstatement.  If the Risk Management
Targets have not been met by the end of such [***]-day period, the NMG Companies shall have the right to
terminate the Agreement pursuant to Section 15.2(h) thereof.”


 


8.                                       The
attached Schedule 7.1 (e) replaces in its entirety Schedule 7.1 (c) to
the Agreement.


 


9.                                       The
following new Section 7.1 (d) shall be added at the end of Section 7.1:


 


“(d) 
On each “Report Date” reflected on Schedule 7.1 (d), Bank will deliver to NMG a
calculation of (i) the Risk Adjusted Margin, the Net Write-Off Ratio, Variable Break-Even Margin and each component
of each of the foregoing (including, in the case of Gross Financing Income,
separately reported amounts in respect of finance charges, late fees and fee
waivers), in each case calculated as if the Reference Period were the period
indicated as such in such Schedule and (ii) the dollar amount that would
be payable by Bank to NMG (or by NMG to Bank) pursuant to each of Section 9.1(a)(vii) (A) and
(B) and 9.1(a)(viii) if such payment were due in respect of the
reported period.  Such calculations shall
be in such form and shall reflect such detail with respect to each of the
foregoing items, and each component thereof) as shall be mutually agreed upon
by the Parties.  The financial
information set .forth in such reports from HSBC is derived from its General
Ledger (GL) and/or its supporting financial accounting subsystems.


 


10.                                 The
following shall be added as new Sections 9,1 (a) (vii), (viii) and (ix) of
the Agreement:


 


“(vii)  Bank
will pay to NMG the following amounts in respect of the RAM Measurement Period,
with interim annual payments in respect of the total amount payable (calculated
on an estimated basis based on the relevant Reference Period) being reflected
on and paid pursuant to each Year-End Settlement Sheet, and with the final
payment in respect of the full RAM Measurement Period being due and payable on [***]:


 


(A)  [***] of the product of (1) the amount, if any, by which
the Risk Adjusted Margin exceeds [***] times (2) the
Average Gross receivables Amount; provided, however, that, in
calculating any payment in respect of the total amount owing by Bank pursuant
to this clause (A), there shall be deducted from such payment the net amount
previously paid by Bank pursuant to this clause (A) (after adding all
previous interim payments and deducting all previous interim refunds paid by NMG
to Bank pursuant to the following sentence of this clause (A)).  In the event that the amount owing by Bank to
NMG pursuant to this clause (A) is less than the net amount already paid
by Bank to NMG pursuant to this clause (A) (after applying this sentence),
NMG shall refund to Bank the excess of the net amount previously paid by Bank
over the total amount payable by Bank in respect of the RAM Measurement Period
(or the relevant Reference Period, as applicable).  For the avoidance of doubt, in no event shall
the total payments by NMG pursuant to this clause (A) exceed the total
amounts received by it from Bank pursuant to this clause (A); and


 


(B)  [***] of the amount, if any, by which the Variable Break-Even
Margin exceeds zero; provided, however, that, in calculating any
payment in respect of the total amount owing by Bank


 

















 


pursuant to this clause (B), there shall be deducted from
such payment the net amount previously paid by Bank pursuant to this clause (B) (after
adding all previous interim payments and deducting all previous interim refunds
paid by NMG to Bank pursuant to the following sentence of this clause
(B)).  In the event that the amount owing
by Bank to NMG pursuant to this clause (B) is less than the net amount
already paid by Bank to NMG pursuant to this clause (B) (after applying
this sentence), NMG shall refund to Bank the excess of the net amount
previously paid by Bank over the total amount payable by Bank in respect of the
RAM Measurement Period (or the relevant Reference Period, as applicable).  For the avoidance of doubt, in no event shall
the total payments by NMG pursuant to this clause (B) exceed the total
amounts received by it from Bank pursuant to this clause (B).


 


(viii)  NMG will pay to Bank [***] of the Shared Write Off Amount, if any, with respect to
the RAM Measurement Period, with interim annual payments in respect of the
total amount payable (calculated on an estimated basis based on the relevant
Reference Period) being reflected on and paid pursuant to each Year-End Settlement
Sheet, and with the final payment in respect of the full RAM Measurement Period
being due and payable on [***], provided, however, that, in calculating
any payment in respect to the total amount owing by NMG pursuant to this clause
(viii), there shall be deducted from such payment the net amount previously
paid by NMG pursuant to this clause (viii) (after adding all previous
interim payments and deducting all previous interim refunds paid by Bank to NMG
pursuant to the following sentence of this clause (viii)) in the event that the
amount owing by NMG to Bank pursuant to this clause (viii) is less than
the net amount already paid by NMG to Bank pursuant to this clause (viii) (after
applying this sentence).  Bank shall
refund to NMG the excess of the net amount previously paid by Bank over the
total amount payable by Bank in respect of the RAM Measurement Period (or the
relevant Reference Period, as applicable). 
For the avoidance of doubt, in no event shall the total payments by Bank
pursuant to this clause (viii) exceed the total amounts received by it
from NMG pursuant to this clause (viii).


 


(ix)  Set
forth on Schedule 9.1(a0(ix), are illustrative calculations of the payments
described in clauses (vii) and (viii) above.


 


11.                                 The
attached Schedule 9.1(a)(i) shall replace in its entirety Schedule 9.1(a)(i) of
the Agreement.


 


12.                                 Within
five (5) business days of the execution of this Seventh Amendment by NMG
and Bank, NMG shall dismiss, without prejudice, the proceedings before the
District Court in Dallas County, Texas as well as its accompanying temporary
restraining order (“Lawsuit”).


 


13.                                 The
parties agree that, if either is contacted by the media and/or customers
regarding the Lawsuit, that each may state only that the matter has been
satisfactorily resolved.  The parties
will mutually agree upon scripting to address any inquiries by the media and/or
customers with respect to the February 2008 Change of Terms and any
additional change in terms.


 


14.                                 Except
as otherwise modified herein, the terms and conditions of the Agreement remain
in full force and effect.


 


AGREED TO AND EXECUTED
on this the 21st day of April, 2008.


 


	
  HSBC BANK NEVADA, N.A.

  	
   

  	
  HSBC PRIVATE LABEL CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Eliabeth F. McCombe

  	
   

  	
  By:

  	
  /s/ Elizabeth F.
  McCombe

  
	
  Its:

  	
  EVP

  	
   

  	
  Its:

  	
  VP

  



 


 


	
  THE NEIMAN MARCUS GROUP, INC.

  	
   

  	
  BERGDORF GOODMAN, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/  James E. Skinner

  	
   

  	
  By:

  	
  /s/  James E.
  Skinner

  
	
  Its:

  	
  EVP & CFO

  	
   

  	
  Its:

  	
  VP

  



 

















 


Schedule
4.6 (e)


 


Changes
to Risk Management Policies to be Implemented by the end of March 2008


 


	
  —

  	
  Reduce the credit line
  to the balance on accounts with a Next Gen score less than [***] ([***] implementation)

  
	
   

  	
   

  
	
  —

  	
  Reduce the credit line
  to the balance on “X day” (i.e., [***] days delinquent) accounts with balances
  less than [***] and Next Gen scores less than [***] ([***] implementation).

  
	
   

  	
   

  
	
  —

  	
  Reduce the credit line
  to the balance on [***] day accounts with balances less than [***] and a Next Gen scores less than [***] ([***] implementation).

  
	
   

  	
   

  
	
  —

  	
  Reduce the credit line
  to the balance .on all accounts that are [***] &  [***] authorizations ([***] implementation).

  
	
   

  	
   

  
	
  —

  	
  Close all accounts that
  are [***] ([***] implementation)

  
	
   

  	
   

  
	
  —

  	
  Increase POS cut .off
  to [***] In
  Store, and [***] Neiman Marcus Direct and Neiman Marcus/Bergdorf
  Goodman Online ([***] implementation).

  
	
   

  	
   

  
	
  —

  	
  All accounts that are
  noted as [***] and/or
  [***] will
  be exempted from the foregoing actions (currently known as [***]).

  



 

















 


Exhibit A
to Schedule 4.6(e)


Recourse
Review Process


 


Beginning as of the
Effective Date, Bank and NMG shall comply with the following Recourse Review
process prior to any Risk Management Policy changes.


 


	
  Process
  Owner

  	
   

  	
  Description

  	
   

  	
  Timing

  
	
  Bank

  	
   

  	
  Will provide a report
  of Accounts (inactive and active) that would be affected by impending Risk
  Management Policy changes. The report will include Account number, block
  code(s), Account open date, LTD purchases, YTD purchases, current balance,
  credit line, cycle due, and will be sorted from High Balance to Low Balance.

  	
   

  	
  30 days before
  implementation of Risk Management Policy changes.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NMG

  	
   

  	
  Will review the
  Accounts and provide Bank with a list of Accounts that they would like to
  take on full recourse, per the Fourth Amendment to the Agreement executed
  April 3, 2007.

  	
   

  	
  15 days before
  implementation of Risk Management Policy changes.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank

  	
   

  	
  Bank will flag the
  identified Accounts as full recourse using the then current recourse
  management procedures. These Accounts will be included in the monthly
  recourse portfolio reporting.

  	
   

  	
  Within 5 days of
  implementation of Risk Management Policy changes.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank

  	
   

  	
  After the initial
  implementation, Bank will provide reporting, (not less than quarterly) on any
  new Accounts, not previously identified, that will be impacted by previous
  changes to Risk Management Policies.

  	
   

  	
  On Going

  



 

















 


SCHEDULE
7.1(e)


Yearly
Settlement Sheet


 


The Yearly Settlement
Sheet shall set forth:


 


(a)                                  the aggregate of all Joint Marketing
Commitment Amounts spent by the NMG Companies in the last Fiscal Month of such
Fiscal Year; and


 


(b)                                 the number of In-Store Payments received
by any of the NMG Companies in the last Fiscal Month of such Fiscal Year;


 


(c)                                  the Finance Charge Reversal Percentage
for such Fiscal Year and the calculation of any amounts due pursuant to Section 4.10(b);


 


(d)                                 the Late Fee Reversal Percentage for such
Fiscal Year and the calculation of any amounts due pursuant to Section 4.10(c);


 


(e)                                  Average Private Label Receivables, (ii) Average
Interest Free Receivables and (iii) the Net Yield for such Fiscal Year
calculated on all Billed Cardholder Debt and the calculation of any amounts due
pursuant to Section 4.11; and


 


(f)                                    any other amounts owed to the NMG
Companies as explicitly provided herein or as otherwise agreed by the parties
in writing with line item specificity, which amounts may be netted.


 


(g)                                 The net amount payable by one party to
the other after giving effect to payments owing pursuant to Sections 9.1(a)(vii) and
(viii).


 

















 


Schedule
7.1(d)


Reporting


 


The calculation of Risk
Adjusted Margin, the Net-Write-Off Ratio, Variable Break-Even Margin and each
component of the foregoing will begin on [***] and will be measured quarterly
(through the end of the RAM Measurement Period) and the payments contemplated
by Sections 9.1(a)(vii) and (viii) shall be settled annually based on
the below:


 


	
  Measurement
  Period

  	
   

  	
  Report Date

  	
   

  	
  Payment Date

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  



 
















 


Schedule 9.1 (a)(i)


 


Daily NMG
Compensation


 


Bank shall pay to NMG an
amount equal to the aggregate for all Private Label Accounts and Non-Card
Payment Plans of the following:


 


For each such Private
Label Account or Non-Card Payment Plan, the product of (A) the sum of (x) the
Program Fee Percentage applicable to such Account and (y) the Servicing
Fee Percentage and (B) Net Credit Sales under such Account reflected in
all NMG Charge Transaction Data required to be paid for by Bank on such
Business Day pursuant to Section 8.4.


 


Determination of Program
Fee Percentage


 


The “Program Fee
Percentage” with respect to each Account means [***].


 


Determination of
Servicing Fee Percentage


 


The “Servicing Fee
Percentage” means [***].  The Servicing
Fee Percentage applicable to all Accounts shall be decreased on the date that
Bank begins providing the following Services to the Program:


 


	
  Service

  	
   

  	
  Amount

  	
   

  	
  Definition

  
	
  General Late Stage Collections

  	
   

  	
  [***]

  	
   

  	
  Bank is collecting
  balances which are at least [***] days past their due date

  
	
  Universal Agents to Bank
  Payroll

  	
   

  	
   

  	
   

  	
  Bank is employing the
  Persons responsible for customer service and related activities

  
	
  Early
  Stage Collections

  	
   

  	
  [***]

  	
   

  	
  Bank is collecting
  balances which are less than [***] days past their due date

  
	
  Customer
  Service Services

  	
   

  	
  [***]

  	
   

  	
  Bank is staffing the
  call center and resolving customer and store inquiries

  
	
  Credit
  Processing Services

  	
   

  	
  [***]

  	
   

  	
  Bank is processing and
  decisioning new applications and pending sale transaction

  



 


During the Term, while
NMG is providing the Services set forth above, a portion of some of the
Services may be subject to sales and use tax in Texas.  Refer to Section 19.6 for treatment of
sales and use tax on these Services.


 

















 


Schedule
9.1(a)(ix)


Illustrative
Calculations


 


[***]


 


	
  Average
  Gross Receivables

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Net
  Credit Sales

  	
   

  	
  [***]

  	
   

  
	
  Number
  of Average Active Accounts

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Gross
  Finance Income

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less
  Cost of Funds (actual internal charge)

  	
   

  	
  [***]

  	
   

  
	
  Less
  Net Write-Offs

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Increased
  late fee due to 6th amendment

  	
   

  	
   

  	
   

  
	
  Adjust

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Risk
  Adjusted Margin

  	
   

  	
  [***]

  	
   

  



 


Variable
Margin


 


	
  Gross
  Finance Income**

  	
   

  	
  [***]

  	
   

  
	
  Less
  Cost of Funds*

  	
   

  	
  [***]

  	
   

  
	
  Less
  Net Write-Offs

  	
   

  	
  [***]

  	
   

  
	
  Less
  All Payments Bank paid to NMG

  	
   

  	
  [***]

  	
   

  
	
  Less
  Fraud Loss

  	
   

  	
  [***]

  	
   

  
	
  Less
  marketing Expense

  	
   

  	
  [***]

  	
   

  
	
  Less
  Standard Variable Expenses

  	
   

  	
  [***]

  	
   

  
	
  Variable
  Margin

  	
   

  	
  [***]

  	
   

  



 






*  Avg
1 month Libor for 2007 + [***] = [***] times [***] of Gross receivables
([***]).


**  Includes
income from the Late Fee Change 6th amendment for Nov & Dec.


 

















 


Example
of 2009 Year End Settlement


 


	
  Assumptions
  for Calculations

  	
   

  	
   

  	
   

  
	
  Average
  Gross Receivables

  	
   

  	
  [***]

  	
   

  
	
  Net
  Credit Sales

  	
   

  	
  [***]

  	
   

  
	
  Number
  of Average Active Accounts

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Gross
  Finance Income

  	
   

  	
  [***]

  	
   

  
	
  1-Month-LIBOR

  	
   

  	
  [***]

  	
   

  
	
  Net
  Write-Offs at [***] of Net Credit Sales

  	
   

  	
  [***]

  	
   

  
	
  Recoveries

  	
   

  	
  [***]

  	
   

  
	
  Fraud
  Loss

  	
   

  	
  [***]

  	
   

  
	
  Marketing
  Expense

  	
   

  	
  [***]

  	
   

  
	
  Payment
  to NMG for Processing In-Store Payments

  	
   

  	
  [***]

  	
   

  



 


Schedule 1


 


	
  Gross
  Receivables to Write-Off

  	
   

  	
  [***]

  	
   

  
	
  Less
  Recoveries

  	
   

  	
  [***]

  	
   

  
	
  Net
  Write-Offs

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [***]
  of Credit Sales

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Shared
  Net Write-Offs

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NMG
  Payable to Bank [***] of Shared

  	
   

  	
  [***]

  	
   

  



 


Schedule 2 [***] RAM Sharing


 


	
  Gross
  Finance Income

  	
   

  	
  [***]

  	
   

  
	
  Plus
  NMG Paid to Bank Shared W/O Amount

  	
   

  	
  [***]

  	
   

  
	
  Less
  Cost of Funds (1)

  	
   

  	
  [***]

  	
   

  
	
  Less
  Net Write-Offs

  	
   

  	
  [***]

  	
   

  
	
  Risk-Adjusted
  Revenue

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Risk-Adjusted
  Margin

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  
	
  Excess
  Available for RAM Sharing

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank
  Payable to NMG of [***] RAM Sharing

  	
   

  	
  [***]

  	
   

  



 


Schedule 3 Variable Break-Even


 


	
  Gross
  Finance Income

  	
   

  	
  [***]

  	
   

  
	
  NMG
  Payable to Bank [***] of Shared

  	
   

  	
  [***]

  	
   

  
	
  Less
  Cost of Funds(1)

  	
   

  	
  [***]

  	
   

  
	
  Less
  Net Write-Offs

  	
   

  	
  [***]

  	
   

  
	
  Less
  All Payments Bank Paid to NMG (2)

  	
   

  	
  [***]

  	
   

  
	
  Less
  Fraud Loss

  	
   

  	
  [***]

  	
   

  
	
  Less
  Marketing Expense

  	
   

  	
  [***]

  	
   

  
	
  Less
  Standard Variable Expenses (3)

  	
   

  	
  [***]

  	
   

  
	
  Variable
  Margin

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank
  Payable to NMG of [***] Variable Break Even

  	
   

  	
  [***]

  	
   

  
	
  (1)

  	
   

  	
   

  	
   

  
	
  1
  Month LIBOR times [***] of Average Gross Receivables

  	
   

  	
  [***]

  	
   

  
	
  [***]
  times [***] of Average Gross Receivables

  	
   

  	
  [***]

  	
   

  
	
  Cost
  of Funds

  	
   

  	
  [***]

  	
   

  



 

















 


	
  (2)

  	
   

  	
   

  	
   

  
	
  [***]
  NMG Program Fee

  	
   

  	
  [***]

  	
   

  
	
  [***]
  Servicing Fee

  	
   

  	
  [***]

  	
   

  
	
  Payment
  to NMG for Processing In-Store Payments

  	
   

  	
  [***]

  	
   

  
	
  Bank
  Payable to NMG of [***] RAM Sharing

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  
	
  (3)

  	
   

  	
   

  	
   

  
	
  Number
  of Average Active Accounts

  	
   

  	
  [***]

  	
   

  
	
  [***]
  cost per average account

  	
   

  	
  [***]

  	
   

  



 

















 


EXHIBIT B


 


Authorization 12
Month On Book (MOB) Report — Next Gen Score


 


	
  [***]

  	
   

  
	
  [***]

  	
   

  	
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  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
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  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
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  [***]

  	
   

  
	
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  [***]

  	
   

  	
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  [***]

  	
   

  
	
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  [***]

  	
   

  	
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  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
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  [***]

  	
   

  	
  $

  	
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  $

  	
  [***]

  	
   

  	
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  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
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  [***]

  	
   

  	
  $

  	
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  $

  	
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  [***]

  	
   

  	
  $

  	
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  $

  	
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  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
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  $

  	
  [***]

  	
   

  	
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  [***]

  	
   

  	
  $

  	
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  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
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  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
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  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
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  [***]

  	
   

  	
  $

  	
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  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
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  [***]

  	
   

  	
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  [***]

  	
   

  	
  $

  	
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  [***]

  	
   

  	
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  [***]

  	
   

  	
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  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
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  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT C


 


Authorizations 12 Months On
Book (MOB) Report-Next Gen Score 600-609 (EXAMPLE ONLY)


 


	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
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  [***]

  	
   

  	
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  [***]

  	
   

  	
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  [***]

  	
   

  	
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  [***]

  	
   

  	
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  [***]

  	
   

  	
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  [***]

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  [***]

  	
   

  
	
  [***]

  	
   

  	
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  [***]

  	
   

  	
  $

  	
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  $

  	
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  [***]

  	
   

  	
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*Sample Attribute


**Sample Band