Credit Card Program Agreement

EXHIBIT 10.2


CREDIT CARD PROGRAM AGREEMENT


by and among


THE NEIMAN MARCUS GROUP, INC.


BERGDORF GOODMAN, INC.


HSBC BANK NEVADA, N.A.


and


HOUSEHOLD CORPORATION

Dated as of June 8, 2005

Table of Contents

Page


ARTICLE I DEFINITIONS 1

1.1 Generally 1

1.2 Miscellaneous 13

ARTICLE II ESTABLISHMENT OF THE PROGRAM 14

2.1 Credit Program 14

2.2 Exclusivity. 14

ARTICLE III PROGRAM MANAGEMENT AND ADMINISTRATION 16

3.1 Program Objectives 16

3.2 Management Committee 17

3.3 Program Relationship Managers; Program Team 21

ARTICLE IV PROGRAM OPERATIONS 22

4.1 Operation of the Program 22

4.2 Certain Responsibilities of the NMG Companies 22

4.3 Certain Responsibilities of Bank 24

4.4 Ownership of Accounts; Account Documentation 24

4.5 Branding of Accounts/Credit Cards/Cardholder Documentation/Solicitation Materials 26

4.6 Underwriting and Risk Management 26

4.7 Cardholder Terms. 27

4.8 Internet Services. 27

4.9 Sales Taxes 28

4.10 Participation in Reversals 29

4.11 Interest Free Accounts 29

ARTICLE V MARKETING 30

5.1 Promotion of Program 30

5.2 Marketing Commitment 30

5.3 Communications with Cardholders. 31

5.4 Additional Marketing Support. 31

5.5 Approved Ancillary Products 33

5.6 Marketing Plan. 33

ARTICLE VI CARDHOLDER INFORMATION 34

6.1 Customer Information 34

6.2 Cardholder Data 35

6.3 NMG Shopper Data; NMG Prospect Data 38

ARTICLE VII OPERATING STANDARDS 41

7.1 Reports 41

7.2 Servicing 41

7.3 Service Level Standards 43

7.4 Credit Systems 43

7.5 Systems Interface; Technical Support 44

7.6 Customer Management Systems 45

ARTICLE VIII MERCHANT SERVICES 45

8.1 Transmittal and Authorization of NMG Charge Transaction Data 45

8.2 POS Terminals 46

8.3 In-Store Payments 46

8.4 Settlement Procedures 46

8.5 Bank' s Right to Charge Back 47

8.6 Exercise of Chargeback 48

8.7 No Merchant Discount 48

ARTICLE IX PROGRAM ECONOMICS 48

9.1 NMG Compensation 48

9.2 Dispute Resolution 49

ARTICLE X INTELLECTUAL PROPERTY 49

10.1 The NMG Licensed Marks 49

10.2 The Bank Licensed Marks 50

10.3 Intellectual Property 51

ARTICLE XI REPRESENTATIONS, WARRANTIES AND COVENANTS 52

11.1 General Representations and Warranties of NMG 52

11.2 General Representations and Warranties of the Bank Companies 54

11.3 No other Representations or Warranties 57

11.4 General Covenants of the NMG Companies. 57

11.5 General Covenants of the Bank Companies. 58

ARTICLE XII ACCESS, AUDIT AND DISPUTE RESOLUTION 59

12.1 Access Rights 59

12.2 Audit Rights 60

12.3 Accounting Dispute Resolution. 60

12.4 Dispute Resolution 62

ARTICLE XIII CONFIDENTIALITY 63

13.1 General Confidentiality. 63

13.2 Use and Disclosure of Confidential Information. 64

13.3 Unauthorized Use or Disclosure of Confidential Information 65

13.4 Return or Destruction of Confidential Information 65

ARTICLE XIV RETAIL PORTFOLIO ACQUISITIONS 65

14.1 Retailer that Operates a Credit Card Business 65

14.2 Retailer that has a Credit Card with another Issuer 66


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14.3 Retailer that has a Credit Card with Bank 66

14.4 Co-Branded Credit Card 66

14.5 Conversion of Purchased Accounts 67

14.6 No Other NMG Obligations 67

ARTICLE XV EVENTS OF DEFAULT; RIGHTS AND REMEDIES 68

15.1 Events of Default 68

15.2 Defaults by Bank 68

15.3 Defaults by the NMG Companies 69

15.4 Remedies for Events of Default 70

ARTICLE XVI TERM/TERMINATION 70

16.1 Term 70

16.2 Termination by NMG Prior to the End of the Initial Term or a Renewal Term 70

16.3 Termination by Bank Prior to the End of the Initial Term or a Renewal Term 71

16.4 Automatic Termination 71

ARTICLE XVII EFFECTS OF TERMINATION 72

17.1 General Effects. 72

17.2 The NMG Companies' Option to Purchase the Program Assets. 72

17.3 Fair Market Value 73

17.4 Dedicated Program Personnel 74

17.5 Rights of Bank if Purchase Option Not Exercised. 74

ARTICLE XVIII INDEMNIFICATION 75

18.1 NMG Indemnification of Bank 75

18.2 Bank Companies' Indemnification of the NMG Companies 76

18.3 Procedures. 77

18.4 Notice and Additional Rights and Limitations. 78

ARTICLE XIX MISCELLANEOUS 78

19.1 Precautionary Security Interest 78

19.2 Securitization, Participation or Pledge of Cardholder Indebtedness. 78

19.3 Assignment 79

19.4 Sale or Transfer of Accounts 79

19.5 Subcontracting 79

19.6 Sales and Use Tax 79

19.7 Amendment 79

19.8 Non-Waiver 80

19.9 Severability 80

19.10 Waiver of Jury Trial and Venue 80

19.11 Governing Law; Compliance with Law. 80

19.12 Specific Performance 80

19.13 Captions 81

19.14 Notices 81


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19.15 Coordination of Consents and Approvals 81

19.16 Further Assurances 82

19.17 No Joint Venture 82

19.18 Press Releases 82

19.19 No Set-Off 82

19.20 Conflict of Interest 82

19.21 Third Parties 83

19.22 Force Majeure 83

19.23 Entire Agreement 83

19.24 Binding Effect 83

19.25 Counterparts/Facsimiles 84

19.26 Survival 84


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CREDIT CARD PROGRAM AGREEMENT


This Credit Card Program Agreement is made as of the 8 th day of June, 2005, by and among The Neiman Marcus Group, Inc., a Delaware corporation (" NMG" ), Bergdorf Goodman, Inc., a New York corporation (" BG , and together with NMG, the " NMG Companies" ), HSBC Bank Nevada, N.A., a national credit card bank (" Bank" ), and Household Corporation, a Delaware corporation (" Primary Servicer" ).


WITNESSETH :


WHEREAS, the NMG Companies are engaged in, among other activities, operating retail department stores and the Credit Card Business (as hereinafter defined);

WHEREAS, concurrently with the execution of this Agreement, the NMG Companies, Bank and Bank Parent (as hereinafter defined) are entering a purchase and sale agreement (the " Purchase Agreement" ) pursuant to which Bank shall purchase specified assets related to the NMG Companies' Credit Card Business, including certain Credit Card and payment plan accounts and associated receivables (" Purchased Accounts" );

WHEREAS, the NMG Companies have requested that Bank establish a program pursuant to which, following the Effective Date of this Agreement, Bank shall issue NMG Credit Cards (as hereinafter defined) and Non-Card Payment Plans (as hereinafter defined) to be serviced, marketed and promoted in accordance with the terms hereof; and


WHEREAS, the Parties hereto agree that the goodwill associated with the NMG Licensed Marks (as hereinafter defined) contemplated for use hereunder are of substantial value that is dependent upon the maintenance of high quality services and appropriate use of the trademarks pursuant to this Agreement;


NOW, THEREFORE, in consideration of the terms, conditions and mutual covenants contained herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I


DEFINITIONS


1.1 Generally . The following terms shall have the following meanings when used in this Agreement:


" Account" means any account (including any Private Label Account, Non-Store Account or Non-Card Payment Plan account) under which a purchase, cash advance, convenience check or balance transfer transaction may be or has been made by or to a Person (or any Person authorized by such Person) pursuant to a Cardholder Agreement established pursuant to the terms of this Agreement or acquired pursuant to the Purchase Agreement. For the avoidance of doubt, the term Account shall include the Purchased Accounts.


" Account Documentation" means, with respect to an Account, any and all documentation relating to that Account, including Cardholder Documentation, checks or other forms of payment with respect to an Account, notices to Cardholders, adverse action notices, change of terms notices, other notices, correspondence, memoranda, documents, stubs, instruments, certificates, agreements, magnetic tapes, disks, hard copy formats or other computer-readable data transmissions, any microfilm, electronic or other copy of any of the foregoing, and any other written, electronic or other records or materials of whatever form or nature, including tangible and intangible information, arising from or relating or pertaining to any of the foregoing to the extent related to the Program; provided that Account Documentation shall not include NMG' s or any of its Affiliates' register tapes, invoices, sales or shipping slips, delivery or other receipts or other indicia of the sale of NMG Goods and Services, any reports, analyses or other documentation prepared by any of the NMG Companies or their Affiliates for use in the retail business operated by the NMG Companies and their Affiliates regardless of whether derived in whole or in part from the Account Documentation or any other document not directly related to the Credit Card Business.


" Accountants" has the meaning set forth in Section 12.3 hereof.


" Affiliate" means, with respect to any Person, each Person that controls, is controlled by, or is under common control with, such Person. For purposes of this definition, " control" of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.

" Agreement" means this Program Agreement, together with all of its schedules and exhibits, as modified, altered, supplemented, amended and/or restated from time to time.


" Applicable Law" means all applicable federal, state and local laws (including common law), statutes, regulations, written regulatory guidance, orders or directives, as may be amended and in effect from time to time during the Term, including (i) the Truth in Lending Act and Regulation Z; (ii) the Equal Credit Opportunity Act and Regulation B; (iii) the Fair Debt Collection Practices Act; (iv) the Fair Credit Reporting Act; (v) the Gramm-Leach-Bliley Act; (vii) the USA PATRIOT Act; and (vii) the Unfair and Deceptive Trade Practices Act, and, in each case, any implementing regulations or interpretations issued thereunder.

" Applicable Order" means, with respect to any Person, a judgment, injunction, writ, decree or order of any Governmental Authority, in each case legally binding on that Person or on any material amount of its property.


" Application" means the credit application that must be completed and submitted in order to establish an Account (including any such application submitted at the POS, by phone or via the Internet).


" Approved Ancillary Products" means any Credit Card enhancement and other products (other than the NMG Credit Cards and the Non-Card Payment Plans) approved by the Management Committee for offering under the Program from time to time.

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" Average Interest Free Receivables" means, for any Fiscal Year, the average for each Fiscal Month occurring in such Fiscal Year of the Fiscal Month-end Billed Cardholder Debt under Private Label Accounts that do not bear interest (other than CCCS Accounts and Accounts for which a payment plan was instituted in connection with the servicing and collection thereof).


" Average Private Label Receivables" means, for any Fiscal Year, the average for each Fiscal Month occurring in such Fiscal Year of the Fiscal Month-end Billed Cardholder Debt under Private Label Accounts.

" Bank" has the meaning set forth in the preamble hereof.


" Bank Companies" means, collectively, Bank and Primary Servicer.


" Bank Event of Default" means the occurrence of any one of the events listed in Section 15.2 hereof or an Event of Default where a Bank Company is the defaulting Party.

" Bank Guaranty" means the Guaranty by Bank Parent of Bank' s and Primary Servicer' s obligations under this Agreement and the Servicing Agreement.


" Bank Licensed Marks" means the trademarks, tradenames, service marks, logos and other proprietary designations of Bank listed on Schedule 1.1(a) and licensed to the NMG Companies under Section 10.2 hereof.


" Bank Matters" has the meaning set forth in Section 3.2(g) hereof.

" Bank Parent" means HSBC Finance Corporation, a Delaware corporation.


" Bank Systems" means Systems owned, leased or licensed by and operated by or on behalf of Bank or any of its Affiliates.


" Bankruptcy Code" means Title 11 of the United States Code, as amended, or any other applicable state or federal bankruptcy, insolvency, moratorium or other similar law and all laws relating thereto.


" BG" has the meaning set forth in the preamble hereof.


" Billed Cardholder Debt" means (i) all amounts charged and owing to Bank by Cardholders that were billed with respect to the Private Label Accounts (including principal balances from outstanding charges, charges for Approved Ancillary Products, finance charges, NSF fees, late charges, pay-by-phone fees and any other fees and charges), less (ii) the amount of any credit balances owing by Bank to such Cardholders, including in respect of any payments and any credits associated with returns of NMG Goods and Services and other credits and adjustments, in each case, that were reflected in the Billing Statement with respect to the Account.

" Billing Cycle" means the interval of time between regular periodic Billing Dates for an Account.

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" Billing Date" means, for any Account, the day as of when the Account is billed.


" Billing Statement" means a summary of Account credit and debit transactions for a Billing Cycle including a descriptive statement covering purchases, charges, past due account information and Loyalty Program information.


" Business Day" means any day, other than (i) a Saturday or Sunday, or (ii) a day on which financial institutions in New York or Texas are authorized by law to close; provided that for purposes of Sections 8.4 and 9.1, " Business Day" shall exclude any day on which the Fedwire system is closed.

" Card Association" means American Express, Visa International Inc., Visa U.S.A., Inc. or MasterCard International Inc., or any other payment system that is generally acceptable to sellers of goods and services.


" Cardholder" means any Person who has been issued an NMG Credit Card or Non-Card Payment Plan (including any guarantor of the Account related to such NMG Credit Card) and includes authorized user(s).


" Cardholder Agreement" means the agreement between Bank and a Cardholder (and any replacement of such agreement), governing the use of an Account, together with any amendments, modifications or supplements that now or hereafter may be made to such Cardholder Agreement (and any replacement of such agreement).

" Cardholder Data" means all personally identifiable information about a Cardholder (A) received by or on behalf of Bank (including by NMG Servicer in its capacity as such) in connection with the Cardholder' s application for use of an NMG Credit Card, Non-Card Payment Plan or Account or (B) otherwise obtained by or on behalf of Bank (including information obtained by NMG Servicer in its capacity as such) for inclusion in its database of Cardholder information (including information about a Cardholder purchased by Bank), including all transaction and experience information collected by or on behalf of Bank (including by NMG Servicer in its capacity as such) with regard to each purchase charged by a Cardholder using his or her NMG Credit Card, Non-Card Payment Plan or Account (including NMG Charge Transaction Data with respect to charges on Private Label Accounts and transaction and experience information with respect to charges on Non-Store Accounts).


" Cardholder Documentation" means, with respect to the Accounts, all Applications, Cardholder Agreements, NMG Credit Cards, Loyalty Cards and Billing Statements relating to such Accounts.


" Cardholder Indebtedness" means all amounts charged and owing to Bank by Cardholders with respect to Accounts (including principal balances from outstanding charges, charges for Approved Ancillary Products, finance charges, NSF fees, late charges, pay-by-phone fees and any other fees and charges), whether or not billed, less the amount of any credit balances owing by Bank to Cardholders, including in respect of any payments and any credits associated with returns of goods and/or services and other credits and adjustments, whether or not billed.


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" Cardholder List" means any list (whether in hardcopy, magnetic tape, electronic or other form) that identifies Cardholders, including any such listing that sets forth the names, addresses, email addresses (as available), telephone numbers or social security numbers of any or all Cardholders.

" Change of Control" means, with respect to NMG or Bank, as the case may be, (the " subject Person" ), (i) a Person or group becomes the " beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934 (except that a Person or group shall be deemed to own all securities it has the right to acquire)), directly or indirectly, of more than fifty percent (50%) of the total voting power of the subject Person, (ii) such subject Person merges, consolidates, acquires, is acquired by, or otherwise combines with any other Person in a transaction in which the subject Person is not the surviving entity or which constitutes a " merger of equals" , it being understood that a subject Person shall not be considered the " surviving entity" of a transaction if either (A) the members of the Board of Directors of the subject Person immediately prior to the transaction constitute less than a majority of the members of the Board of Directors of the ultimate parent entity of the entity surviving or resulting from the transaction or (B) the Persons who were beneficial owners of the outstanding voting securities of the subject Person immediately prior to the transaction beneficially own less than fifty percent (50%) of the total voting power of the ultimate parent entity of the entity surviving or resulting from the transaction, or (iii) the subject Person sells all or substantially all of its assets to a Person that is not an Affiliate of the subject Person.

" Closing" has the meaning set forth in the Purchase Agreement.


" Co-Branded Credit Card" means a Credit Card that bears a NMG Licensed Mark and the trademarks, tradenames, service marks, logos and other proprietary designations of a Card Association, including any Dual-Line Credit Card.

" Comparable Partner Programs" means from time to time other major Credit Card programs of Bank designated annually by the Management Committee that are comparable to the Program in terms of program size, public profile and brand image. As of the date hereof, the " Comparable Partner Programs" include those listed on Schedule 1.1(b).


" Competing Retail Programs" means from time to time major retailer Credit Card programs other than the Program, whether or not Bank or any of its Affiliates participate in such other programs.

" Competitive" with respect to any feature or aspect of the Program, means that such feature or aspect is both (i) no less favorable to the NMG Companies than comparable aspects and features of the Comparable Partner Programs and (ii) consistent and competitive with the comparable aspects and features of the Competing Retail Programs (to the extent publicly known in the case of Competing Retail Programs in which neither of the Parties or their respective Affiliates are participants).


" Confidential Information" has the meaning set forth in Section 13.1 hereof.

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" CPI" means the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, as published by the United States Department of Labor Bureau of Labor Statistics, or any successor organization.

" Credit Card" means a credit card pursuant to which the cardholder or authorized user may purchase goods and services, obtain cash advances or convenience checks, and transfer balances through open-end revolving credit, commonly known as a credit or charge card; provided that the term does not include: (i) any gift card; (ii) any debit card, stored value card, electronic or digital cash card or any other card that does not provide the holder thereof with the ability to obtain credit other than through an overdraft line or similar feature; or (iii) any card issued to the holder of a securities brokerage account that allows the holder to obtain credit through a margin account.


" Credit Card Business" means the business relating to the ownership, administration and management of the Accounts and Receivables (including the extension of credit to Cardholders, the processing of transactions under the Accounts and the servicing of the Accounts) and, following the Effective Date, includes all activities relating to the Program established pursuant to this Agreement.


" Credit Card Production Services" has the meaning set forth in the Servicing Agreement.

" Customer Management System" means the Systems developed by the Bank with the features set forth on Schedule 7.6.


" Development Period" has the meaning set forth in Section C of Schedule 2.2(c)(i).

" Disclosing Party" has the meaning set forth in Section 13.1(d) hereof.


" Documentation Services" has the meaning set forth in the Servicing Agreement.

" Documentation Services Transition Date" has the meaning set forth in Section 7.2(d) hereof.


" Dual-Line Card Deadline" has the meaning set forth in Section C of Schedule 2.2(c)(i)..


" Dual-Line Credit Card" means a Credit Card that (i) bears a NMG Licensed Mark and the trademarks, tradenames, service marks, logos and other proprietary designations of a Card Association and (ii) is linked to a Non-Store Account and a Private Label Account.


" Dual-Line Testing Date" has the meaning set forth in Section C of Schedule 2.2(c)(i).

" Effective Date" means the Closing Date as the term is defined in the Purchase Agreement.

" Event of Default" means the occurrence of any one of the events listed in Section 15.1 hereof.


" Fair Market Value" has the meaning set forth in Section 17.3 hereof.


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" Federal Funds Rate" means the offered rate as reported in The Wall Street Journal in the " Money Rates" section for reserves traded among commercial banks for overnight use in amounts of one million dollars or more or, if no such rate is published for a day, the rate published for the preceding Business Day, calculated on a daily basis based on a 365 day year.


" Finance Charge Reversal Percentage" means, with respect to any Fiscal Year, an amount, expressed as a percentage, equal to (i) the aggregate amount of all finance charges that had been assessed on the Accounts and then reversed by NMG during such Fiscal Year, divided by (ii) the aggregate amount of all finance charges assessed on the Accounts during such Fiscal Year; provided , however , that, for purposes of arriving at the foregoing percentage, the finance charges assessed and reversed on any Accounts that have undergone any change in any of the terms set forth in Schedule 4.7 in such Fiscal Year shall be excluded from both the numerator and denominator during the period of one hundred twenty (120) days after the effective date of such terms change.


" Fiscal Month" means each four (4) or five (5) week period designated as such in the calendar published by the National Retail Federation for retailers on a Fiscal Year-reporting basis; provided that the Fiscal Month in which the Effective Date occurs shall be deemed to begin on the Effective Date.


" Fiscal Quarter" means each three (3) Fiscal Month period set forth in the calendar published by the National Retail Federation for retailers on a Fiscal Year-reporting basis; provided that the Fiscal Quarter in which the Effective Date occurs shall be deemed to begin on the Effective Date.

" Fiscal Year" means the fiscal year set forth in the calendar published by the National Retail Federation setting forth the fiscal year for retailers on a 52/53 week fiscal year ending on the Saturday closest to July 31; provided that the first Fiscal Year under this Program shall be the period beginning on the Effective Date and ending on the Saturday closest to July 31, 2006.


" Force Majeure Event" has the meaning set forth in Section 19.22 hereof.


" Future Subcontractors" has the meaning set forth in Section 6.2(g)(i) hereof.


" GAAP" means United States generally accepted accounting principles, consistently applied.

" Governmental Authority" means any federal, state or local domestic, foreign or supranational governmental, regulatory or self-regulatory authority, agency, court, tribunal, commission or other governmental, regulatory or self-regulatory entity.

" Gross Receivables" means amounts owing (net of credit balances) from cardholders with respect to accounts in a Credit Card portfolio (including outstanding loans, cash advances and other extensions of credit; billed or unbilled finance charges and late charges; and any other billed or unbilled fees, charges and interest assessed on such accounts).

" High Collar" has the meaning set forth on Schedule 1.1(f) hereto


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" Indemnified Party" has the meaning set forth in Section 18.3 hereof.

" Indemnifying Party" has the meaning set forth in Section 18.3 hereof.


" Initial Term" has the meaning set forth in Section 16.1 hereof.


" Inserts" has the meaning set forth in Section 5.3 hereof.


" In-Store Payment" means any payment on an Account made in a retail store owned or operated by NMG or any of its Subsidiaries by a Cardholder or a person acting on behalf of a Cardholder.

" Intellectual Property" means, on a worldwide basis, all intellectual property, including (i) rights associated with works of authorship, including copyrights, moral rights and mask-works; (ii) trademarks, service marks and other source indicators and the goodwill associated therewith; (iii) trade secret rights; (iv) patents, designs, algorithms and other industrial property rights; (v) other intellectual and industrial property rights of every kind and nature, however designated, whether aris ...