Neiman Marcus 2008 Annual Report Download - page 776

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