Document:

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._

RESTATED THIRD
AMENDMENT TO

CREDIT CARD PROGRAM AGREEMENT

          This THIRD AMENDMENT TO CREDIT CARD PROGRAM AGREEMENT (this
"Third Amendment") is  restated on May 31, 2008, effective as of
February 3, 2008 (the "Effective Date"), by and among Macy's, Inc., f/k/a
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., f/k/a FACS Group, Inc., an Ohio corporation
("MCCS"), Macy's Department Stores, Inc., an
Ohio corporation ("Macy's"), Bloomingdale's, Inc., an Ohio corporation
("Bloomingdale's") (collectively the "Macy's Companies"),
and Department Stores National Bank, a national banking association, as
assignee of Citibank, N.A. ("Bank").  

WHEREAS, the Macy's Companies and Bank are parties to a
certain Credit Card Program Agreement dated as of June 1, 2005, as amended
pursuant to amendments dated October 24, 2005 and May 19, 2006, respectively,
and as further amended by Letter Agreements effective December 18, 2006, March
22, 2007, April 6, 2007 and June 1, 2007, respectively (as so amended, the "Program
Agreement"), whereby Bank and the Macy's Companies operate a credit card
program (the "Program"), as more fully described in the Program
Agreement; 

WHEREAS, the parties hereto desire to amend the Program
Agreement in accordance with Section 18.5 of the Program Agreement, effective
as of the Effective Date.

NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:

1.         Defined Terms.  Capitalized terms used without
definition in this Third Amendment have the meanings assigned to them in the
Program Agreement. 

2.         Amendments
of Section 1.1.  

(a)        Section 1.1 of the Program Agreement is hereby
amended by deleting the definition of "Net Credit Sales" in Section
1.1 in its entirety and substituting the following in its place:

"Net Credit Sales" means, for
any Fiscal Year or Fiscal Month, an amount equal to (i) 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)
during such Fiscal Year or Fiscal Month, minus (ii) the sum of credits
for returned goods and cancelled services and other credits granted at the point
of sale (such as concessions, discounts and adjustments) on Accounts during
such Fiscal Year or Fiscal Month."

                        (b)        Section
1.1 of the Program Agreement is hereby amended by adding thereto the following
new definition:

"Double Net Credit Sales"
means, for any Fiscal Year or Fiscal Month, an amount equal to Net Credit Sales
during such Fiscal Year or Fiscal Month minus the sum of back office credits
granted during such Fiscal Year or Fiscal Month with respect to (i) new
Accounts, (ii) employee discounts on employee Accounts, and (iii) charges for
alterations, delivery services and gift wrap services that are rebated for
certain Cardholders."

3.         Amendment of Section (a) of Schedule 9.3(a).  Section (a) of Schedule 9.3(a)
(FDS Compensation (for each Fiscal Month) ) of the Program Agreement (as
previously amended pursuant to the Second Amendment to Credit Card Program
Agreement) is hereby amended  by deleting the same in its entirety
and substituting the attached new Section (a) to Schedule 9.3(a) in its place.

4.         New Schedule 9.3 (a)(ii).  The Program Agreement is hereby
amended by adding a new Schedule 9.3 (a)(ii) attached hereto. 

5.         Amendment of Section 18.12.         The Program Agreement is
hereby amended with respect to the addresses for Notice for Bank by removing
the addresses currently appearing for Bank and replacing them with the
following:

	
  If to Bank:  

  	
  Citibank, N.A.

  c/o Department Stores National Bank

  701 E. 60th North

    Sioux Falls, South Dakota  57104

  Attention:  David Zimbeck

  Facsimile:  (605) 330-6745

  
	
  With a copy to:

  	
  Citicorp Credit Services, Inc. (USA)

  Attention:  General Manager

  50 Northwest Point Blvd.

  Elk Grove Village, Illinois  60007

  Fax:  (224) 222-4024

  
	
  With a copy to:

  	
  Citicorp Credit Services, Inc. (USA)

  Attention:  Legal Department

  50 Northwest Point Blvd.

    Elk Grove Village, Illinois  60007

  Fax:  (224) 222-4029

  

6.         Capacity; Authorization; Validity.  

             (a)        Macy's, Inc. hereby represents and
warrants to Bank as of the date hereof that:  

                        (i)  Each Macy's Company has all
necessary corporate or similar power and authority to (A) execute and enter
into this Third Amendment and (B) perform the obligations required of such Macy's
Company hereunder and the other documents, instruments and agreements to be
executed and delivered by such Macy's Company pursuant hereto.

                        (ii)  The execution and delivery by
the Macy's Companies of this Third Amendment and all documents, instruments and
agreements executed and delivered by the Macy's Companies pursuant hereto, and
the consummation by the Macy's Companies of the transactions specified herein,
have been duly and validly authorized and approved by all necessary corporate
or similar actions of the Macy's Companies.

                        (iii)  This Third Amendment (A) has
been duly executed and delivered by the Macy's Companies, (B) constitutes the
valid and legally binding obligation of the Macy's Companies, and (C) is
enforceable against the Macy's Companies in accordance with its terms (subject
to applicable bankruptcy, insolvency, reorganization, receivership or other
laws affecting the rights of creditors generally and by general equity
principles including those respecting the availability of specific
performance).

(b)        Bank hereby represents and warrants to the Macy's
Companies as of the date hereof:  

            (i)         Bank has all necessary corporate or
similar power and authority to (A) execute and enter into this Third Amendment
and (B) perform the obligations required of it hereunder and the other
documents, instruments and agreements to be executed and delivered by Bank
pursuant hereto.  

            (ii)        The execution and delivery by Bank
of this Third Amendment and all documents, instruments and agreements executed
and delivered by Bank pursuant hereto, and the consummation by Bank of the
transactions specified herein, has been duly and validly authorized and
approved by all necessary corporate or similar actions of Bank.  

            (iii)       This Third Amendment (A) has been
duly executed and delivered by Bank, (B) constitutes the valid and legally
binding obligation of Bank and (C) is enforceable against Bank in accordance
with its terms (subject to applicable bankruptcy, insolvency, reorganization,
receivership or other laws affecting the rights of creditors generally and by
general equity principles including those respecting the availability of
specific performance).

7.         Effect of Amendment.  This Third Amendment is effective
as of the Effective Date and is hereby incorporated into and made a part of the
Program Agreement.  Except as amended by this Third Amendment, all terms and
provisions of the Program Agreement shall continue and remain in full force and
effect and binding upon the parties thereto.

 

8.         Binding Effect.  This Third Amendment shall be
binding in all respects and inure to the benefit of the successors and
permitted assigns of the parties hereto. 

      9.         Governing Law.  This Third Amendment and all
rights and obligations hereunder, including matters of construction, validity
and performance, shall be governed by and construed in accordance with the laws
of the State of Delaware applicable to contracts made to be performed within
such State and applicable federal law.

10.       Counterparts/Facsimiles.  This Third Amendment 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 Third
Amendment, it shall not be necessary to produce or account for more than one
such counterpart.  Any facsimile of an executed counterpart shall be deemed an
original.

IN
WITNESS WHEREOF, each of the parties hereto has caused this Third Amendment to
be duly executed as of the date first above written.

 

Department Stores National Bank, 

By:  /s/ Douglas C. Morrison

Name: Douglas C. Morrison

Title:    Citi Cards

            Vice President
and Chief Fin. Officer

             Sioux Falls, SD

MACY'S, 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 SERVICE, 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

BLOOMINGDALES, INC.

By:  /s/ Dennis J. Broderick

Name: Dennis J. Broderick

Title: Vice President

Section (a) to Schedule 9.3 (a) 

FDS Compensation

(for each Fiscal Month)

          a)         Monthly Net Credit Sale Share: 
The compensation payable to Macy's, Inc. on a monthly basis shall be reduced by
an amount equal to the product of the aggregate Net Credit Sale Share paid to
FDS Bank pursuant to Schedule 9.3(a)(i) during the preceding Fiscal Month
multiplied by the annualized Funding Cost for such Fiscal Month, divided by
360, and multiplied by 20. 

                        Double
Net Credit Sale Share. The compensation payable to Macy's, Inc. on a
monthly basis shall be further reduced by an amount that is equal to the amount
by which (i) the Monthly Net Credit Sale Share paid to FDS Bank pursuant to
Schedule 9.3(a)(i) during the preceding Fiscal Month exceeds (ii) the Double
Net Credit Sale Share.  This excess amount shall be included in the calculation
of the FDS Revenue Share.  As used herein, "Double Net Credit Sale Share" means
an amount determined in accordance with Schedule 9.3(a)(ii).

SCHEDULE
9.3(a)(ii)

FDS
Compensation

Double Net Credit Sale Share

An amount
equal to the sum of:

(i)         with respect to the
prior Fiscal Month, an amount equal to 140 bps of Double Net Credit Sales; 

(ii)        with respect to the
prior Fiscal Month, an additional amount equal to 30 basis points of Double Net
Credit Sales when the aggregate Net Credit Sales exceed $24 billion in the
current Fiscal Year (or, with respect to any Fiscal Year in the Term that is
less than twelve Fiscal Months, a pro rata portion of $24 billion based upon
the number of days in such Fiscal Year in the Term).

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