1
Exhibit 10.n
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT ( the
"Agreement") is made and entered into as of the ___ day of
October, 1996 by and among Fingerhut Companies, Inc., a
Minnesota corporation, ("FCI"), Direct Merchants Credit Card
Bank, National Association ("Direct Merchants Bank"), a
national banking association, and Metris Companies Inc.
("Metris"), a Delaware corporation.
WHEREAS, FCI has performed and following the initial
public offering of Metris will continue to perform (or cause
to be performed) certain Services (as defined herein) on
behalf of Direct Merchants Bank, Metris and their
subsidiaries; and
WHEREAS, Direct Merchants Bank and Metris, desire to
use the Services of FCI;
NOW THEREFORE, in consideration of the mutual promises
and agreements set forth herein, the parties hereby agree as
follows:
I. SERVICES
Section 1.1 Services. During the term of this
Agreement, FCI agrees to perform the services (herein
"Services") set forth in Exhibits 1 through 8 (including any
schedules to such Exhibits) attached hereto and incorporated
herein by reference. Exhibit 9, attached hereto and
incorporated herein by reference, reflects Services which
Metris has agreed to perform for FCI. Each Exhibit shall be
subject to the terms as identified in the Exhibit. In the
event any Exhibit is terminated, the Agreement shall remain
in effect unless otherwise terminated as provided herein.
The Exhibits may be amended from time to time as the parties
may mutually agree as evidenced by an amendment signed by
the President, and/or Chief Financial Officer of each party.
The most recent of each Exhibit shall supersede all earlier
dated Exhibits. In the event of any conflict between the
terms of this Agreement and any Exhibit, the terms of this
Agreement shall govern. For purposes of this Agreement,
Services and resources provided by FCI shall include
services rendered and resources provided by any of its
subsidiaries or affiliates other than Metris and Direct
Merchants Bank.
2
Section 1.2 Performance of Services.
(a) FCI shall perform the Services with the same
degree of care, skill and prudence customarily exercised for
its own operations. In the event FCI changes the degree of
care, skill and prudence customarily exercised for its own
operations, the Services performed hereunder may be modified
by FCI to meet its revised internal performance standards
for the Services hereunder. It is understood and agreed
that the Services will be substantially identical in nature
and quality to the Services performed by FCI during the
years prior to the execution of this Agreement, except as
required by Metris becoming a public company.
(b) Each party acknowledges that the Services will be
provided only with respect to the business (including joint
ventures and partnerships) of the party receiving such
Services and its subsidiaries as such businesses exist as of
the execution of this Agreement or as otherwise mutually
agreed by the parties. Services will not be requested for
the benefit of any entity other than Direct Merchants Bank,
Metris and their respective subsidiaries. Each party agrees
that it will use the Services only in accordance with all
applicable federal, state and local laws, regulations and
tariffs, and in accordance with reasonable conditions,
rules, regulations and specifications which are or may be
set forth in any manuals, materials, documents or
instructions of the party providing the Services. The
parties hereto each reserve the right to take all actions,
including the termination of any Services, in order to
assure that the Services are provided in accordance with any
applicable laws, regulations and tariffs.
(c) Any input or information needed by either party to
perform the Services pursuant to the provisions of this
Agreement shall be provided by the other party or its
subsidiaries, as the case may be, in a manner consistent
with the practices employed by the parties during the year
prior to the execution of this Agreement. Should the
failure to provide such input or information render the
performance of the Services impossible or unreasonably
difficult, the party providing the Services may, upon
reasonable notice to the other parties hereto, refuse to
provide such Services.
3
Section 1.3 Compensation. FCI shall be compensated
for the Services rendered under this Agreement and Services
rendered prior to this Agreement as determined and as set
forth in the Exhibits hereto. Metris shall be responsible
for payments owed to FCI hereunder. In the event Metris
incurs an Event of Default and after FCI has exercised its
remedies pursuant to Section 4.2, Direct Merchants Bank and
any other subsidiary of Metris shall be responsible for
payment to FCI for Services it received hereunder. Payments
shall be made by the thirtieth (30th) of the month following
the month in which such Services are performed either by
check or wire transfer. If there are additional Services,
and to the extent charges are to be agreed upon in the
future in accordance with any Exhibit, the charges will be
determined as follows:
(i) Charges for Services performed by a third party
shall be equal to the incremental costs charged by such
third party to perform those Services as agreed to by the
parties. With respect to all other Services not to be
provided by a third party, the parties hereto will negotiate
in good faith, fees to be charged on a monthly basis. Fees
for Services not provided by third parties shall be based on
the estimated costs of providing such Services, which shall
include a reasonable allocation of direct and indirect
overhead costs (including, without limitation, employee
salaries, benefits and other costs) expected to be incurred
in connection therewith.
(ii) If any additional Services provided by FCI and as
set forth in the Exhibits attached hereto, or if the scope
or nature of Services provided at any time under this
Agreement change materially, the parties hereto will
negotiate in good faith new fees based on the estimated cost
of providing such additional or revised Services. Fees for
Services not provided by third parties shall be based on the
estimated costs of providing such Services, which shall
include a reasonable allocation of direct and indirect
overhead costs (including, without limitation, employee
salaries, benefits and other costs) expected to be incurred
in connection therewith.
4
II. CONFIDENTIALITY
Section 2.1 Confidentiality of Information. All
Confidential Information (as hereinafter defined) disclosed
by any of the parties to any other party hereunder is
confidential and proprietary to such disclosing party. Each
party, its affiliates, and officers, directors, employees,
agents, consultants and contractors shall not use any of the
Confidential Information for any purpose other than as
expressly permitted hereunder. Confidential Information
furnished by any of the parties to any other in connection
with this Agreement (or previously disclosed prior to
execution of this Agreement) and the transactions
contemplated hereby will be kept in confidence by such other
party, including its affiliates or subsidiaries, in
accordance with its policies for maintaining the confidence
of its own information of similar content. The term
Confidential Information shall mean and include: (i) all
trade secrets and other confidential business information
learned in the course of performance by any party of its
obligations hereunder, (ii) any information, data, software
or computer programs which are disclosed by any party to the
other party under or in contemplation of this Agreement.
Confidential Information may be either the property of the
disclosing party or information provided to the disclosing
party by a corporate affiliate of the disclosing party or by
a third party. Notwithstanding the foregoing, the term
"Confidential Information" shall not include information
which: (i) is already known to such other party when
received (except for information previously disclosed which
the parties have identified as Confidential Information and
subject to the confidentiality requirements of this
Agreement), (ii) thereafter becomes generally obtainable by
a party other than as a result of an unauthorized disclosure
by the party taking advantage of this clause, (iii) is
required by law, regulation or court order to be disclosed
by such party, provided that in the case of this clause,
prior notice of such disclosure has been given to the party
which furnished such information, when legally permissible,
and that such other party which is required to make the
disclosure uses its best efforts to provide sufficient
notice to permit the party which furnished such information
to take legal action to prevent the disclosure or (iv) is
reasonably necessary, in the opinion of counsel, to be
disclosed in the context of a legal proceeding or regulatory
investigation provided that prior notice shall be given to
the party which furnished the information. This Section 2.1
shall survive any termination of this Agreement for five (5)
years.
5
III. CONFLICT RESOLUTION
Section 3.1 Conflict Resolution. Any dispute,
controversy or claim relating to this Agreement (a
"Dispute") shall initially be referred to the executive
management of each of the parties to the Dispute. In the
event executive management cannot come to an agreement on a
particular Dispute, then the matter shall be submitted to
the respective Chief Executive Officers and General Counsel
("Designated Officers") of the parties to the Dispute. The
Designated Officers of each party then shall investigate and
evaluate the dispute. The parties agree to cooperate in
this process by exchanging relevant information unless such
information is privileged. The Designated Officers or their
respective designees shall meet as appropriate to, in good
faith, resolve the dispute.
IV. EVENTS OF DEFAULT AND REMEDIES
Section 4.1 Event of Default. An "Event of Default"
shall be deemed to occur upon the earliest to occur of the
following:
(a) A material breach of a material representation,
agreement or other obligation of any of the parties to this
Agreement (any such breach is herein referred to as a
"Material Breach"); provided, however, that no Event of
Default shall be deemed to have occurred unless and until:
(i) a non-breaching party provides the breaching party with
written notice of such Material Breach, describing in
reasonable detail the nature of such Material Breach, (ii)
the breaching party shall have had an opportunity to cure
such Material Breach within sixty (60) days after such
notice, (unless such Material Breach is with respect to a
monetary matter, the cure of which requires only the payment
of a specified amount of money pursuant to the terms of this
Agreement, in which case the breaching party shall have had
an opportunity to cure within ten (10) business days after
such notice); (iii) the breaching party does not cure such
Material Breach within the applicable time period, or, if
such Material Breach, other than a Material Breach relating
to a monetary matter, cannot reasonably be cured within such
period, but is curable, the breaching party does not (x)
6
undertake to cure such Material Breach within such sixty
(60) day period and (y) after such sixty (60) day cure
period, diligently and continuously use all reasonable
efforts to cure, and (iv) the notifying party thereafter
declares an Event of Default. In respect of clause (iii),
(x), (y) of this Section 4.1(a), such extended cure period
shall continue so long as the parties hereto reasonably
agree that the actions being taken by the breaching party
are reasonably expected to cure such Material Breach.
(b) If, at any time within twelve (12) months
following the expiration of any cure period provided in
Section 4.1(a) above, there shall occur a Material Breach
(the "Second Material Breach") and such Second Material
Breach is of the same nature as the Material Breach (the
"First Material Breach") by the breaching party that gave
rise to such cure period, then an Event of Default shall be
deemed to have occurred upon the delivery of notice of such
Second Material Breach to the breaching party by the
notifying party referred to in paragraph (a) of this Section
4.1 and upon such notifying party declaring an Event of
Default.
(c) If there shall occur a "Bankruptcy," as
hereinafter defined, of any party, any non-bankruptcy party
may declare an Event of Default. For purposes of this
Agreement, the term "Bankruptcy" shall mean (i) the entry of
a decree or order for relief by a court of competent
jurisdiction in any involuntary case under any bankruptcy,
insolvency or similar law now or hereafter in effect, and
such decree or order shall not be vacated, set aside or
stayed within ninety (90) days after its entry, (ii) the
entry of a decree or order appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or
similar agent for any substantial part of the assets or
property and such decree or order shall not be vacated, set
aside or stayed within ninety (90) days after its entry,
(iii) the ordering of the winding up or liquidation of the
affairs of a party and such order shall not be vacated, set
aside or stayed within one hundred twenty (120) days after
its entry, (iv) the filing of a petition in any such
involuntary bankruptcy case, which petition remains
undismissed for a period of ninety (90) days or which is not
dismissed or suspended pursuant to Section 305 of Title 11
of the United States Code (or any corresponding provision of
any future United States Bankruptcy law), (v) the
commencement of a voluntary case under any bankruptcy,
insolvency or similar law now or hereafter in effect, (vi)
the consent to the entry of an order for relief in an
7
involuntary case under any such law or to the appointment of
or taking possession of any substantial part of the assets
or property by a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar agent, or (vii) the
making of any general assignment for the benefit of
creditors
Section 4.2 Remedies. Each of the parties hereto
shall be liable to the other parties for damages arising out
of or in connection with any breach of this Agreement
including any breach by their respective subsidiaries
(except to the extent that Direct Merchants Bank and Metris
are subsidiaries of FCI) to the extent permitted by law,
subject to the duty of the non-breaching parties to take all
reasonable actions in order to mitigate such damages. The
parties agree that in no event shall any party to this
Agreement be liable to the other parties for punitive,
indirect, special or consequential damages arising out of a
breach of this Agreement. It is understood and agreed that
monetary damages may not be a sufficient remedy for any
Event of Default. Accordingly, the non-breaching parties
shall, to the extent permitted by law or equity, be entitled
to specific performance and injunctive or other equitable
relief as a remedy for any breach of, or Event of Default
under this Agreement. The remedies described in this
Section 4.2 shall not be deemed to be the exclusive remedies
for any breach of, or Event of Default under this Agreement,
but shall be in addition to all other remedies available to
the parties at law or in equity, subject to the limitations
with respect to damages set forth above in this Section 4.2.
V. INDEMNIFICATION
Section 5.1 Indemnification Obligations
(a) By Direct Merchants Bank. Direct Merchants Bank
shall be liable to and shall defend, indemnify and hold
harmless, Metris, FCI and their affiliates, and their
respective officers, directors, employees and permitted
assigns, from and against any and all Losses (as hereinafter
defined) incurred by any of them by reason of or related to
Direct Merchants Bank's failure to perform its obligations
hereunder.
(b) By FCI. FCI shall be liable to and shall defend,
indemnify and hold harmless, Direct Merchants Bank, Metris
and their affiliates, and their respective officers,
directors, employees and permitted assigns, from and against
any and all Losses (as hereinafter defined) incurred by
reason of or related to FCI's failure to perform its
obligations hereunder.
8
(c) By Metris. Metris shall be liable to and shall
defend, indemnify and hold harmless, Direct Merchants Bank,
FCI and their affiliates, and their respective officers,
directors, employees and permitted assigns from and against
any and all Losses (as hereinafter defined) incurred by any
of them by reason of or related to Ff.'s failure to perform
its obligations hereunder.
(d) "Losses" Defined. For purposes of this Section
5.1, the term "Losses" shall mean any losses, liability,
claims, damages, costs, and expenses, including attorney's
fees, disbursements and court costs, reasonably incurred by
an indemnified party, judgments, fines and other amounts
paid in settlement, incurred or suffered by an indemnified
party in connection with any threatened, pending or
adjudicated claim, demand, action, suit or proceeding
(whether civil, criminal, administrative or investigative,
by an unaffiliated third party arising out of or in
connection with any breach or alleged breach of this
Agreement) without regard to whether or not such Losses
would be deemed material under this Agreement.
Section 5.2 Procedures
(a) Notice of Claims. The parties agree that in case
any claim is made, or any suit or action is commenced which,
if not corrected, may give rise to a right of
indemnification by a party hereunder ("Indemnified Party")
from one of the other parties ("Indemnifying Party"), the
Indemnified Party will give notice to the Indemnifying party
as promptly as practicable after the receipt by the
Indemnified party of such notice or knowledge of such claim,
suit, or action. On a best efforts basis, notice to the
Indemnifying Party shall be given no later than fifteen days
after receipt by the Indemnified Party in the event a suit
or action has commenced or thirty days under all other
circumstances; provided, however, that the failure to give
prompt notice shall not relieve an Indemnifying Party of its
obligation to indemnify except to the extent that the
Indemnifying Party is materially prejudiced by such failure.
The Indemnified Party shall make available to the
Indemnifying Party and its counsel and accountants at
reasonable times and for reasonable periods, during normal
business hours, all books and records of the Indemnified
Party relating to any such possible claim for
indemnification, and each party will render to the other
such assistance as it may reasonably require of the other in
order to ensure prompt and adequate defense of any suit,
claim or proceeding based upon a statement of facts which
may give rise to a right of indemnification hereunder.
9
(b) Selection of Counsel. The Indemnifying Party
shall have the right to defend, compromise and settle any
suit, claim or proceeding in the name of the Indemnified
Party to the extent that the Indemnifying Party may be
liable to the Indemnified Party under Section 5.1 above in
connection therewith; provided, however, that the
Indemnifying Party shall not compromise or settle a suit,
claim or proceeding unless it assumes the obligation to
indemnify for all Losses related thereto. In the event two
of the parties to this Agreement must indemnify the third,
the parties agree the two Indemnifying Parties must agree to
select one to be the Indemnifying Party to the third
Indemnified Party and the third Indemnified Party shall look
to one party to this Agreement for indemnification. The
Indemnifying Party shall notify the Indemnified Party within
ten days of having been notified pursuant to Section 5.2(a)
of this Agreement if the Indemnifying Party elects to assume
the defense of any such claim, suit or action and employ
counsel in a reasonable exercise of its discretion. The
Indemnified Party shall have the right to employ its own
counsel to participate in such defense, compromise or
settlement, but the fees and expenses of such counsel shall
be at the Indemnified Party's expense, unless the
Indemnifying Party shall not have employed counsel to take
charge of the defense thereof.
(c) Settlement of Claims. The Indemnified Party may
at any time notify the Indemnifying Party of its intention
to settle or compromise any claim, suit or action against
the Indemnified Party in respect of which indemnification
payments may be sought from the Indemnifying Party
hereunder, but shall not settle or compromise any matter for
which indemnification may be sought without the consent of
the Indemnifying Party. Any settlement or compromise of any
claim, suit or action in accordance with the preceding
sentence, or any final judgment or decree entered on or in
any claim, suit or action which the Indemnifying Party did
not assume the defense of in accordance herewith, shall be
deemed to have been consented to by, and shall be binding
upon, the Indemnifying Party as fully as if the Indemnifying
Party had assumed the defense thereof and a final judgment
or decree had been entered in such suit or action, or with
regard to such claim, by a court of competent jurisdiction
for the amount of such settlement, compromise, judgment or
decree.
10
(d) Subrogation. The Indemnifying Party shall be
subrogated to any claims or rights of the Indemnified Party
as against any other persons with respect to any amount paid
by the Indemnifying Party under this Section 5. The
Indemnified Party shall cooperate with the Indemnifying
Party, at the Indemnifying Party's expense, in the assertion
by the Indemnifying Party of any such claim against such
other persons.
(e) Indemnification Payments. Amounts owing under
this Section 5 shall be paid promptly upon written demand
for indemnification containing in reasonable detail the
facts giving rise to such liability; provided, however, if
the Indemnifying Party notifies the Indemnified Party within
thirty (30) days of receipt of such demand that it disputes
its obligation to indemnify and the Parties are not
otherwise able to reach agreement, the controversy shall be
settled by final order entered by a court of competent
jurisdiction.
Section 5.3 Survival of Indemnification. The
provisions of this Section 5 shall expressly survive any
termination of this Agreement or otherwise for a period of
five (5) years.
VI. TERM AND TERMINATION
Section 6.1 Term and Termination. This Agreement
shall take effect upon the date first written above, and
shall remain until December 31, 1998 ("Initial Term").
Thereafter, this Agreement will automatically renew for an
additional term of one (1) year ("Renewal Term") unless each
party provides written notice to the other parties to this
Agreement of not less than six (6) months prior to the end
of the Initial Term or Renewal Term of its intent to
terminate this Agreement. Any party may terminate this
Agreement reserving all other remedies and rights hereunder
in whole or in part and otherwise available in law or in
equity, upon the following conditions:
(a) the occurrence of an Event of Default. Upon the
occurrence of an Event of Default, a non-defaulting party
may terminate this Agreement by giving no less than 30 days
prior written notice of its intent to terminate to each of
the other parties to this Agreement which notice shall
describe the Event of Default;
(b) at any time upon mutual agreement of the parties
upon 90 days' prior written notice;
11
(c) any party may terminate any Exhibit upon mutual
agreement of the parties during any Initial Term or Renewal
Term without terminating this Agreement; or
(d) FCI shall have the right to terminate this
Agreement by written notice to Metris and Direct Merchants
Bank upon the occurrence of a Change of Control (as defined
below) with respect to Metris. A "Change in Control" shall
be deemed to have occurred if (i) any person or group
(within the meaning of Rule 13d-5 of the Securities Exchange
Act of 1934 as in effect on the date hereof) other than FCI
shall own directly or indirectly, beneficially or of record,
shares representing more than 25% of the aggregate ordinary
voting power represented by the issued and outstanding
capital stock of Metris; (ii) a majority of the seats (other
than vacant seats) on the Board of Directors of Metris shall
at any time be occupied by persons who were neither (1)
nominated by FCI or by the Board of Directors of Metris, nor
(2) appointed by directors so nominated; or (iii) any person
or group other than FCI shall otherwise directly or
indirectly have the power to exercise a controlling
influence over the management or policies of Metris.
VII. MISCELLANEOUS
Section 7.1 Additional Actions and Documents. Each
of the parties hereto agrees to take or cause to be taken
such further actions, to execute, acknowledge, deliver and
file or cause to be executed, acknowledged, delivered and
filed such further documents and instruments, and to use all
reasonable efforts to obtain such consents, as may be
necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this
Agreement.
Section 7.2 Notice. All notices, demands, requests
or other communications which may be or are required to be
given pursuant to this Agreement shall be in writing and
shall be personally delivered, mailed by first class,
registered or certified mail postage prepaid, or sent by
electronic or facsimile transmission, addressed as follows:
12
(a) If to Metris:
Metris Companies Inc.
000 Xxxxx Xxxxxxx 000, Xxxxx 0000
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: President
(b) If to FCI:
Fingerhut Companies, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
(c) If to Direct Merchants Bank:
Direct Merchants Credit Card Bank, National
Association
1455 West 0000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: President
Each party may designate by notice in writing a new
address to which any notice, demand, request or
communication may thereafter be so given, served or sent.
Each notice, demand, request or communication which shall be
delivered, mailed or transmitted in the manner described
above shall be deemed sufficiently given, served, sent or
received for all purposes at such time as it is delivered to
the addressee or at such time as delivery is refused by the
addressee upon presentation.
Section 7.3 Severability. Whenever possible, each
provision of this Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law,
but if one or more of the provisions of this Agreement is
subsequently declared invalid or unenforceable, such
invalidity or unenforceability shall not in any way affect
the validity or enforceability of the remaining provisions
of this Agreement (unless those provisions which are
invalidated or unenforceable are clearly material and
inseparable from such other provisions). In the event of
such declaration of invalidity or unenforceability, this
Agreement, as so modified, shall be applied and construed so
as to reflect substantially the intent of the parties and
achieve the same economic effect as originally intended by
the terms hereof. In the event that the scope of any
provision to this Agreement is deemed unenforceable by a
court of competent jurisdiction, the parties agree to the
reduction of the scope of such provision as such court shall
deem reasonably necessary to make such provision enforceable
under the circumstances.
13
Section 7.4 Survival. It is the express intention
and agreement of the parties hereto that all covenants,
agreements, statements, representations, warranties and
indemnities made in this Agreement shall survive the
execution and delivery of this Agreement.
Section 7.5 Waivers. Neither the waiver by any
party hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure of any party
hereto, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right,
remedy or privilege hereunder shall thereafter be construed
as a waiver of any such provisions. The provisions, rights,
remedies, warranties and conditions of this Agreement may be
waived only by a written instrument executed by the party
warning compliance.
Section 7.6 Audit Rights. Each party agrees that
all records relating to this Agreement at all times shall be
subject to inspection and review by each party's internal
auditors or its designees and the examiners of any
regulatory agency, having jurisdiction over each party to
this Agreement. If any party to this Agreement receives any
requests or demands under authority of law (subpoenas, so
called discovery means, or audit demands of any taxing
authority) for access to information of any other party, the
party receiving such request or demand but shall immediately
inform the party from whom such information is requested of
such request or demand but shall not grant access to such
information without FCI's, Metris' and/or Direct Merchant
Bank's permission. By entering into this Agreement, FCI
agrees that the appropriate bank regulatory agency will have
the authority and responsibility to do all things required
or contemplated by applicable banking laws or regulations
provided to the other regulatory agencies relating to
services performed by contract or otherwise for a bank or
bank holding company. FCI further agrees to reasonably
cooperate with and provide any reasonable information to the
appropriate bank regulatory agency.
Section 7.7 Binding Effect. Subject to any
provisions hereof restricting assignment, this Agreement
shall be binding upon and shall inure to the benefit of the
parties and their respective successors and permitted
assigns.
14
Section 7.8 Pronouns. All pronouns and any
variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the
identity of the person may require.
Section 7.9 Headings. Section headings contained in
this Agreement are inserted for convenience of reference
only, shall not be deemed to be a part of this Agreement for
any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions
hereof.
Section 7.10 Governing Law. This Agreement, the
rights and obligations of the parties hereto, and any claims
or disputes relating thereto, shall be governed by and
construed in accordance with the internal laws of the State
of Minnesota without giving effect to the principles of
conflicts of laws thereof.
Section 7.11 Execution In Counterparts. To
facilitate execution, this Agreement may be executed in as
many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each
party, or that the signatures of all persons required to
bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each
party, or that the signatures of the persons required to
bind any party, appear on one or more of the counterparts.
All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of
this Agreement to produce or account for more than the
number of counterparts containing the respective signatures
of, or on behalf of all of the parties hereto.
Section 7.12 Assignment. No party to this Agreement
shall have the right to assign or otherwise transfer its
rights or obligations under this Agreement, except with the
prior written consent of the other parties hereto;
notwithstanding, any party may assign or otherwise transfer
its rights or obligations under this Agreement to a
successor in interest, subsidiary or affiliate upon notice
to the other parties. Regardless of the party to whom an
assignment is made pursuant to this Section 7.13, the
assignee shall, as a condition to such assignment, by
written undertaking satisfactory to the other parties,
represent and warrant that that assignment was made in
accordance with all applicable laws and regulations and
assume and agree to be bound by the terms, provisions and
conditions of this Agreement to the same extent as the
assignor; provided, however, that no such assignment shall
15
relieve the assignor of its obligations (which shall be
primary and which may be discharged in whole or in part by
the assignee) under this Agreement, to the extent
applicable. Any unauthorized assignment and any assignment
made in contravention of this Section 7.12 shall be null and
void.
Section 7.13 No Agency. This Agreement shall not be
deemed expressly or by implication to create an agency,
employee, or servant relationship between or among any of
the parties hereto, or any affiliates of the parties hereto
for any purpose whatsoever.
Section 7.14 Force Majeure. No party shall be liable
for any failure of or delay in the performance of this
Agreement for the period that such failure or delay is due
to acts of God, public enemy, war, strikes or labor
disputes, or any other cause beyond the parties' reasonable
control; it being understood that lack of financial
resources is not to be deemed a cause beyond a party's
control. Each party shall notify the other parties promptly
of the occurrence of any such cause and carry out this
Agreement as promptly as practicable after such cause is
terminated; provided, however, that the existence of any
such cause shall not extend the term of this Agreement.
Section 7.15 Time. Time is to be considered of the
essence for the purposes of this Agreement.
Section 7.16 Amendment and Modification. This
Agreement or any Exhibits may only be amended or modified by
a subsequent written agreement by and among the parties
hereto.
Section 7.17 Adherence To Applicable Law. In
connection with the performance of their respective
obligations and the exercise of their respective rights
hereunder, each of the parties hereto agrees, on behalf of
itself, and its subsidiaries or affiliates (except to the
extent that Direct Merchants Bank and Metris are affiliates
of FCI), to comply in all material respects with all
applicable state, federal and local laws and regulations.
Section 7.18 Entire Agreement. This Agreement and
the Exhibits represent the entire undertaking of the parties
hereto with respect to the subject matter hereof. This
Agreement and the Exhibits supersede all prior agreements
and all contemporaneous agreements not required or
contemplated hereby, whether oral or written, and all
representations, warranties, undertakings, and
understandings by and between the parties with respect to
the subject matter hereof.
16
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the date and year first written above;
notwithstanding the date of execution, this Agreement shall
be effective on [January 1, 1991.]
FINGERHUT COMPANIES, INC.
By
Title
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION
By
Title
METRIS COMPANIES INC.
By
Title
EXHIBIT 1
Treasury Services
FCI agrees that it has or will on behalf of Direct Merchants
Bank and/or Metris (including subsidiaries) as the case may
be:
1. Use its best reasonable efforts to arrange and will
administer all financing arrangements, including the
securitization of assets, any corporate financing and
execution of any leases.
2. Arrange and Administer all interest rate and similar
hedging transactions, and the leasing or sale leaseback
of any real or personal property, including the
execution of any leases.
3. Provide cash management administration and banking
advisory services.
17
Duration:
Effective through December 31, 1996.
Compensation:
1. Incremental third party expenses, and
2. A Pro rata share of department expenses as agreed to by
the parties for each of the calendar years ended as
reflected below:
EXHIBIT 2
General Accounting and Administrative Services
1. Tax Services
FCI agrees that it has or will on behalf of Direct
Merchants Bank and/or Metris (including subsidiaries) as the
case may be:
1. Prepare all Federal tax filings, including any
extensions thereof, and any payroll tax filings
for Metris, or its predecessor, and its
subsidiaries and affiliates, including Metris
Financial Services Receivables, Inc. ("MFSRI") and
Direct Merchants Bank. Prepare and file any and
all estimated tax installments required hereunder
pursuant to the Tax Sharing Agreement dated
__________.
.
2. Prepare any and all state tax filings, any
extensions thereof, and any other non-federal tax
filings, including any payroll tax filings, for
Metris, or its predecessor and subsidiaries and
affiliates, and for the states of Minnesota, Utah
and Oklahoma. Any tax filings for other states
where it is determined that Metris or its
predecessor and its subsidiaries and affiliates
have income tax nexus shall require an amendment
to this Exhibit. Prepare and file any and all
estimated tax installments required hereunder
pursuant to the Tax Sharing Agreement dated
_________.
18
3. Assist in the analysis of any and all
securitization, interest rate hedging and other
financing arrangements and any and all other
transactions or arrangements which may have tax
ramifications for the purpose of determining the
proper tax treatment for such transactions or
arrangements;
4. Assist in the analysis of any and all employee
compensation issues from a tax perspective
5. Assist with any tax planning and research for
Metris, or its predecessor, and their subsidiaries
or affiliates; and
6. Be the sole and exclusive agent and representative
of Metris, or its predecessor, and subsidiaries
and affiliates, in any matters relating to the tax
filings noted above, and subject to examination by
representatives of the Internal Revenue Service or
any similar state agency pursuant to the Tax
Sharing Agreement dated __________.
Duration:
Effective through December 31, 1997.
2. Insurance Services/Risk Management
FCI agrees that it has or will:
Use its best reasonable efforts to arrange and will
administer all existing insurance arrangements,
including: Xxxxxxx'x Compensation Insurance, Property
and Casualty Insurance, excess liability insurance,
Employee Blanket Bond Insurance, Director and Officer
liability insurance and any other types of insurance
reasonably required by Metris, or its predecessor, and
its subsidiaries and affiliates, including Direct
Merchants Bank. FCI may, subject to notification of
Metris, fulfill its obligation with respect to any of
the identified coverages by arranging for Metris and
its subsidiaries and affiliates to be included under
FCI's policies.
Duration:
Effective through December 31, 1997
19
3. General Accounting Services
FCI agrees that it has or will:
1. Provide the assistance of its Chief Financial
Officer, Corporate Controller and other accounting
staff in the preparation of the financial
statements and other financial information of
Metris for internal and external business needs,
or its predecessor, and its subsidiaries and
affiliates including Direct Merchants Bank. Such
FCI personnel will also assist such parties by
providing financial advice and guidance, where
necessary, in the conduct of their business,
including financial advice provided in the
negotiation of any contractual arrangements and
other financial transactions;
2. Provide Metris, or its predecessor, and its
subsidiaries and affiliates, including Direct
Merchants Bank with access and use of FCI's
general ledger system for the recording and
analyzing of such entities financial transactions;
3. Provide accounts payable and other disbursement
services for Metris, or its predecessor, and its
subsidiaries and affiliates, including Direct
Merchants Bank; and
4. Provide payroll and other employee compensation
accounting services for Metris, or its
predecessor, and its subsidiaries and affiliates,
including Direct Merchants Bank
Compensation:
1. Incremental third party expenses; and
2. A pro rata share of expenses as agreed to by the
parties for each of the calendar years ended as reflected
below:
* To be negotiated in good faith subsequent to the execution
of this agreement.
20
EXHIBIT 3
Human Resource Services
FCI agrees that it has or that it will on behalf of Direct
Merchants Bank and/or Metris (including subsidiaries) as the
case may be:
1. Use its best reasonable efforts to arrange and will
administer all human resource activities, including the
development and administration of all policies and
procedures for the determination of all Metris, or its
predecessor and its subsidiaries and affiliates,
including Direct Merchants Bank employee compensation
and benefits including the development and
administration of all related benefit plans which such
employees may now, have been or hereafter may be
participants in.
2. Assist in the review and determination of all hiring
and termination decisions of employees of Metris, or
its predecessor, and Direct Merchants Bank, and its
subsidiaries, including the development of policies and
procedures therefor; and including assistance in
interviewing, placing adds and hiring search firms for
new employees
3. Assist in the counseling process for employees,
including all job performance reviews, and maintain all
personnel records, including those required by the laws,
rules and regulations of the states or the Federal
Government.
Duration:
Effective through December 31, 1997.
Compensation:
1. Incremental third party expenses; and
2. A pro-rata share of department expenses as agreed to by
the parties for each of the calendar years ended as
reflected below:
*To be negotiated in good faith subsequent to the execution
of this agreement.
21
EXHIBIT 4
Legal Services
FCI agrees that it has or that it will on behalf of Direct
Merchants Bank and/or Metris (including subsidiaries) as the
case may be, provide legal services, including the retention
and management of outside counsel:
1. Assist in the preparation and review of all contractual
obligations of Metris, Direct Merchants Bank and their
subsidiaries.
2. Assist in the assessment of the applicability and
subsequent compliance of the laws, rules and
regulations of the various authorities which have
jurisdiction over Metris, Direct Merchants Bank and
their subsidiaries.
3. Review and recommend changes to the legal structure and
organization of the business of Metris. Direct
Merchants Bank and their subsidiaries.
4. Provide counsel on all other business issues as
appropriate
5. Assist in the preparation and review of all required
filings with the SEC, OCC, FDIC, the Federal Reserve
and any other applicable authority having jurisdiction
over Metris, Direct Merchants Bank and their
subsidiaries.
6. Any matter which any party deems to create a conflict
or possible conflict with any other party shall be
handled by separate independent counsel on behalf of
each party. FCI's legal department shall only
represent FCI in any such matter, even if the conflict
or potential conflict is between FFS and Direct
Merchants Bank.
Duration:
Effective date through December 31, 1997.
Compensation:
1. Incremental third party expenses, and;
2. A pro-rata share of department expenses as agreed to by
the parties in this agreement for each of the calendar
years ended as reflected below:
* To be negotiated in good faith subsequent to the execution
of this agreement.
22
EXHIBIT 5
Internal Audit
FCI agrees that it has or it will on behalf of Direct
Merchants Bank and/or Metris (including subsidiaries) as the
case may be:
1. Conduct periodic audits and reviews of the operations
and the level of compliance with both Metris, or its
predecessor, Direct Merchants Bank and their
subsidiaries' policies and procedures and the rules and
regulations of the various authorities having
jurisdiction over them; Assess the adequacy of the
internal control structure of both Metris, Direct
Merchants Bank and their subsidiaries and provide
written reports summarizing the conclusions from such
audits and reviews, including recommendations for
improvement in the areas audited or reviewed.
Duration:
Effective date through December 31, 1997.
Compensation:
1. Incremental third party expenses, and;
2. A pro-rata share of department expenses as agreed to by
the parties to this agreement for each of the calendar
years ended as reflected below:
* To be negotiated in good faith subsequent to the execution
of this agreement.
23
EXHIBIT 6
Marketing Analysis
FCI agrees that it has or that it will on behalf of Direct
Merchants Bank and/or Metris (including subsidiaries) as the
case may be:
1. Provide the equivalent of up to one full time analyst
in the marketing analysis department to assist with
access, review, selection and segmentation of the
Customer Database as allowed for under separate
agreements between FCI and/or its subsidiaries, and
Metris and/or its subsidiaries, including Direct
Merchants Bank. Also, assist Metris and Direct
Merchants Bank and their subsidiaries, in conducting
marketing research, including present customer and
potential customer surveys and competitive analysis,
among other similar projects.
Duration:
Effective through December 31, 1996.
Compensation:
1. Incremental third party expenses, and;
2. A pro-rata share of department expenses as agreed to by
the parties to this agreement for each of the calendar
years ended as reflected below:
24
EXHIBIT 7
Executive Time & Space/Property Allocations
FCI agrees that it has or it will on behalf of Direct
Merchants Bank and/or Metris (including subsidiaries) as the
case may be:
1. Provide executive time and leadership in the
development of the businesses of Metris, or its
predecessor, Direct Merchants Bank and their subsidiaries.
2. Review and conclude on all business deals, contracts
and transactions of Metris, or its predecessor, Direct
Merchants Bank or their subsidiaries which would
normally require such level of review and approval.
Provide any other assistance normally required of
executive talent where necessary.
3. Provide adequate space and fixed assets necessary for
the conduct of the business of Metris or its
predecessor, Direct Merchants Bank and their
subsidiaries, including mainframe computer and
peripherals access and use.
Duration:
Effective through December 31, 1995
Compensation:
1. Incremental third party expenses, including leases in
Tulsa, Oklahoma, and Salt Lake City, Utah, but excluding
the lease at the Interchange Tower in St. Louis Park,
Minnesota or at the Seagate Building in Minnetonka,
Minnesota.
2. A pro-rata portion of executive time and space, other
than that noted in 1 above, and a pro-rata portion of
the depreciation and amortization expense of fixed
assets utilized by Metris, Direct Merchants Bank, and
their subsidiaries, other than that which Metris
already owns or has contracted for itself directly,
including mainframe computer and peripherals usage as
agreed to by the parties to this agreement for each of
the calendar years ended as noted below:
25
EXHIBIT 8
Information Systems Services
FCI agrees that it has or that it will on behalf of Direct
Merchants Bank and/or Metris (including subsidiaries) as the
case may be:
I Provide certain "Systems", which shall mean certain
data processing hardware and software that Metris
and/or Direct Merchants Bank do not own because they do
not have the processing needs to justify ownership of
such hardware or software, or where such hardware and
software is proprietary to FCI, but such hardware and
software is integral to the ongoing business operations
of Metris and its subsidiaries and affiliates,
including Direct Merchants Bank. Such hardware and
software shall include but not be limited to mainframe
computers, certain data and voice communication
hardware and software, certain telephone lines, certain
telecommunications equipment. and certain local and
wide area networking services, software and equipment.
2. Provide certain "System Resources", which shall mean
certain skilled employees or independent contractors of
FCI who are programmers, system analysts, data
processing and data communications technical support
staff who support the Systems. Such System Resources
shall not include those personnel who are employees or
independent contractors of Metris, and its subsidiaries
and affiliates, including Direct Merchants Bank, and
shall primarily be those personnel whose functions
Metris or its subsidiaries and affiliates cannot
justify a full-time need for. Metris and FCI may
mutually agree to transfer System Resources to the cost
center of Metris.
3. During the service periods noted below, provide the
System Resources and maintain the Systems, in
accordance with the Service Level Agreement attached
hereto and incorporated herein by reference as Schedule
I to Exhibit 8, in connection with the services to be
provided to Metris in the operation of its businesses.
4. Ensure that the operations, hardware configurations,
software and other facilities and procedures relating
to access to, operation and use of the Systems
Resources and Systems made available by FCI shall,
throughout the term of this agreement, be consistent
with the Operating System and Procedures attached
hereto and incorporated herein by reference as Schedule
2 to Exhibit 8, as in effect immediately prior to the
date hereof, except as described in any "Change Control
Procedures" which shall be agreed to in writing by the
signatories to this Agreement prior to any such Change
Control Procedures taking place.
26
5. Upon notification from Metris of non-application
processing errors, and as reasonably practicable to do
so after discovery thereof by Metris, use its
reasonable best efforts to correct any non-application
processing errors with respect to the System.
6. FCI agrees to maintain Metris' and Direct Merchant
Bank's customer data ("Customer Data") on its computers
(i.e. data processing equipment and software), and to
maintain (including update) Metris and Direct Merchant
Bank Customer Data with the same degree of care it uses
to maintain its customer database information. FCI
will segregate Metris and Direct Merchant Bank Customer
Data from customer database information and will
maintain procedures that FCI, in its sole discretion,
does not become a credit reporting agency as defined
under the Fair Credit Reporting Act and its
implementing regulations.
7. Maintain Metris', and its subsidiaries and affiliates,
including Direct Merchants Bank, customer data
(hereinafter "Metris Customer Data") on its computers
(i.e. data processing equipment and software), and to
maintain (including updates) such Metris Customer Data
with the same degree of care it uses to maintain
customer data. Subject to the confidentiality
requirements of Section 2.1 in the Agreement, FCI
agrees that it has and it will continue to segregate
Metris Customer Data from its customer data and will
maintain procedures such that FCI does not become a
credit reporting agency as defined under the Fair
Credit Reporting Act and its implementing regulations.
Metris' use and its unlimited exclusive access to the
Metris Customer Data shall include file selection,
segmentation, response modeling, storage, updating, and
maintenance of Metris Customer Data.
Additionally, FCI agrees that has or that it will
provide, on a timely basis, the requested Metris
Customer Data via magnetic tape or such other forms as
the parties may from time to time agree. FCI also will
continue to provide the requested data on a timely
basis to ensure Metris' production and solicitation
deadlines are met, Throughout the term of this
Agreement, FCI will also update the Metris Customer
Data with all additions, deletions, and other
amendments ("Updates") made or developed by Metris in
the ordinary course of its business, including without
27
limitation, the addition of name and other information
related thereto of all persons on the Metris Customer
Database, and such Updates shall thereafter become part
of the Metris Customer Database for purposes of this
Exhibit to this Agreement.
FCI also agrees that it has or that it will maintain a
backup, archival or disaster recovery copy ("Back-up
Copy") of the Metris Customer Data. Metris shall have
the right to access such Back-Up Copy in the event of
(1) FCI's or Fingerhut Corporation's Bankruptcy (as
defined within Section 4.1 (c) of the Agreement), (ii)
FCI's main computer system is unable to process its
files, and (iii) upon expiration of this Agreement
without renewal.
8. Maintain for the benefit of Metris an adequate supply
of tape cartridges, desk spaces and general computer
supplies or the operation of the business contracted
for herein.
9. Maintain hours of operation for the Systems Resources
and the Systems performed and provided by FCI hereunder
on a basis consistent with the practice of FCI for the
periods prior to the execution of this Agreement,
except as otherwise provided in the Service Level
Agreement, as provided in Schedule I to this Exhibit.
If such hours of operations are interrupted for any
reasons whatsoever, Metris shall be notified as soon as
reasonably possible.
10. If for any reason, including without limitation, system
failures, power failures, interruption of data
communication lines or otherwise (but excluding periods
of "down time" scheduled in advance for any purpose
consistent with the practice of FCI prior to the
execution of this Agreement, i.e. systems maintenance
or systems modifications), FCI shall not be able to
provide Metris the Systems Resources and the Systems
during the hours of operation (in each case, a "System
Failure"), (i) notify Metris as soon as reasonably
possible thereafter of each such System Failure, (ii)
use its reasonable best efforts to correct each such
System Failure, and (iii) keep Metris informed on a
reasonably frequent basis during each such System
Failure as to the status thereof. As a result of such
System Failure, and subject to the provisions of item
#15 below and except in the case that any such System
Failure results from or arises out of FCI's gross
28
negligence or willful misconduct, FCI shall not be
liable to Metris for any damages (direct or indirect,
consequential or otherwise), losses or other
liabilities arising from or caused by any System
Failure or any failure by FCI to provide any notice
required to be provided hereby, except for an
appropriate credit, as agreed upon by the parties to
this Exhibit 8, in an amount equal to the full amount
of the Systems Resources and Systems which were not
provided or performed due to such System Failure.
Subject also to the provisions of item #15 below, in
the event any System Failure continues for more than 24
consecutive hours, in addition to Metris' right to
receive a credit as noted above, Metris shall have the
right to obtain the provision and/or performance of the
System Resources and Systems from a third party
provider,
11. Exercise and provide back-up procedures and systems
consistent with the practice of FCI prior to the
execution of this Agreement in its provision of the
Systems Resources and Systems in the event
circumstances beyond the control of FCI prevent FCI
from being able to provide the Systems Resources and
Systems as provided for hereunder. FCI further agrees
that it will continue to use the same level of care,
consistent with the practice of FCI for the periods
prior to the execution of this Agreement, to minimize
the likelihood of all damages, losses of data, delays
and errors resulting from uncontrollable events; and
should such damages, losses of data, delays or errors
occur, that FCI will use its reasonable best efforts,
consistent with the practice of FCI for the periods
prior to the execution of this Agreement, to mitigate
the effects of such occurrence.
12. As a supplement to the confidentiality provisions of
Article 11 within the Agreement, define as
"Confidential Information", (i) all of Metris' Customer
Data and other information or data and all software and
computer programs to be provided (or to which access is
granted) by Metris to Fingerhut and to be processed or
used in connection with the provision and performance
of the System Resources and Systems for Metris, and all
data and all software and computer programs supplied by
Metris which shall have been processed or used by FCI
in connection with its provision and performance of the
System Resources and Systems for Metris and all data
and other information resulting therefrom and (ii) any
other customer data, customer lists, customer identity
and other information or data owned by Metris or any of
its affiliates, direct or indirect subsidiaries or any
of its customers, or any software or computer programs
or other proprietary information owned by Metris or any
of its affiliates, direct or indirect subsidiaries or
its customers, provided to FCI (or to which FCI may
have access) as a result of the arrangements provided
for herein or otherwise.
29
13. Ensure that such Confidential Information provided (or
to which access is granted) by Metris to FCI under this
Agreement and this Exhibit to such Agreement, is
stored, processed and transmitted by FCI in confidence
in accordance with FCI's standard security policies and
procedures, and in such manner that use thereof and
access thereto is limited to the use and access
necessitated by the provision and performance of the
System Resources and Systems as contemplated by this
Agreement in accordance with FCI's standard security
policies and procedures. Specifically, consistent with
FCI's standard security policies and procedures, FCI
agrees that access to such Confidential Information
shall be limited to FCI's employees, agents and
consultants whose duties reasonably justify the need
for such access to such Confidential Information to
perform their assigned duties for FCI in connection
with the provision and performance of the System
Resources and Systems. FCI also agrees that it shall
continue to use its reasonable best efforts, in
accordance with its standard security policies and
procedures, to assure that any Confidential Information
provided by Metris to FCI or to which FCI, or any of
its employees, agents or consultants, or any other
party which obtains has or gains access to such
Confidential Information through FCI, shall be used and
processed solely for the purpose of providing and
performing the System Resources and Systems in
accordance with this Exhibit to this Agreement.
Anything herein to the contrary notwithstanding, FCI
shall not, and shall cause each of its employees,
agents and consultants not to, access or use any data
and/or software purchased from a third party for any
purpose whatsoever.
Take such precautions and observe such procedures to
protect the security of the Confidential Information.
Such precautions and procedures shall include, without
limitation, the restriction of physical and electronic
access to the Confidential Information to those persons
identified in Article 11 of this Agreement as
authorized to have access thereto, in all cases at
least to the extent that FCI protects its own
confidential and proprietary information and data. In
addition, consistent with FCI's standard security
policies and procedures, take such precautions to
protect the Confidential Information against
unauthorized access by persons who pursuant to the
terms of this Exhibit and the Agreement, or otherwise,
are not authorized to access the Confidential
Information, including without limitation, taking
reasonable precautions against unauthorized access over
phone lines, data networks or other communications
means.
30
Should any employee, agent or consultant, or any other
party that obtains access to the Confidential
Information through FCI or within the scope of their
employment with FCI, improperly access, use, transfer,
distribute or disclose (or otherwise provide
unauthorized access to) such Confidential Information,
FCI agrees that it has or that it will, notify Metris,
as soon as reasonably practicable after learning of (or
having reasonable reason to suspect) any such conduct,
and, at its own expense for its legal fees and other
expenses, cooperate with Metris (and, as appropriate,
any third party whose data or other proprietary
information may have been comprised) to assist Metris
or such third party to enjoin and otherwise redress
such conduct, and discourage any repetitions by the
offending individual, entity or others similarly
situated, and will take such further steps as Metris
(or such third party) shall reasonably request
(including complaints to law enforcement authorities).
In the event that civil litigation is desired by Metris
(or such third party), and subject further to the
indemnification provisions of Article V of the
Agreement, Metris (or such third party) shall have
supervision and control and, in defense of any
counterclaim, the parties shall, to the extent it is
mutually beneficial, cooperate in preparing such
defense and consider a joint defense, and generally,
shall conduct and defend any litigation in such manner
as to preserve the attorney client and work-product
privileges and maintain the Confidential Information in
confidence, such as through entry of appropriate
protective orders.
14. Cause each of its employees, agents and consultants to
use due care to protect all Confidential Information
provided (or to which access is granted) by Metris to
FCI under this Agreement. If any Confidential
Information is lost or damaged by FCI, or lost, damaged
or stolen by any of its employees, agents or
consultants while such Confidential Information is in
FCI's possession, then, except as provided below, as
Metris' sole remedy, FCI shall, without cost to Metris,
regenerate, to the extent reasonably practicable, the
lost, destroyed or stolen Confidential Information from
copies of such Confidential Information maintained by
FCI, which copies shall be created and maintained by
FCI at the sole cost of Metris in accordance with
procedures reasonably requested by Metris. For
purposes of this item #13, "due care" shall mean care,
not less than that level of care exercised by FCI in
protection of its own confidential and proprietary
information and data. Nothing in this item #13 shall
be deemed to release FCI from any liability to Metris
or from any other liabilities arising from or caused by
any gross negligence or willful misconduct by FCI. The
foregoing notwithstanding, FCI agrees that, to the
extent any loss, damage or theft referred to in this
item #13 is or may be the basis for a claim by FCI or
any of its affiliates under any insurance policy
maintained by FCI or any of its affiliates, then FCI
shall pursue such claim and shall assign the proceeds
(or portion thereof as agreed to by the parties) with
respect to any such loss, damage or theft to Metris.
31
15. Make available to Metris during normal business hours
and as necessary by situation, the personnel, services
and resources to assist Metris in developing its own
capabilities to provide and perform the System
Resources and Systems, or a portion thereof, until the
earlier of (i) the date Metris has actually developed
such capabilities, which date shall be the date set
forth in a termination notice with respect to this
Exhibit as provided under Article VI, Section 6.1(c),
in the Agreement, or (ii) the Agreement termination
date under Article VI of the Agreement.
16. Use its reasonable best efforts in cooperating with
Metris to obtain any consents, waivers or licenses on
the most favorable terms and conditions as practicable
which are necessary, or which may become necessary, to
enable FCI to provide the Systems Resources and Systems
during the term of this Agreement.
Duration.
Effective date through December 31, 1996.
Compensation:
A Systems and Systems Resource user fee, broken out between
those costs which would be capitalizable for software
development projects and those costs which would not be
capitalizable, all as in accordance with generally accepted
accounting principles, is as reflected for the Service
Periods below:
32
SCHEDULE 1
SERVICE LEVEL AGREEMENT
1. Service Level Review and Change Procedure
A review of this Service Level Agreement may be called
for by any participant at any time. Consistent with
past practice, the Information Systems Department of
FCI (hereinafter the "Service Supplier") shall
reasonably cooperate with Metris, including its
subsidiaries and affiliates (hereinafter "Metris"), to
address additional Systems or Systems Resources needs
and the particular requirements of Metris, including
particular job requirements.
A formal review will also be held after the first six
months of this agreement.
2. Statement of Intent
This document defines the service level agreement
between FCI and Metris.
The scope of this agreement covers the level of service
provided by FCI Data Center. The primary areas of
service levels and responsibility are:
*Hours of Operation
*Tape Drive Availability
*Initiator Availability
*Printer Availability
*Wide Area Network (WAN) Support
*Notification Procedures
- Local Area Network (LAN) Support
- Project Support
- PC Support
The intent is to set up Metris in as "standalone" a
manner as possible with the ability to control the
prioritization of its work load. Although Metris will
still occasionally request one-time deviations to
address business necessities, the objective it to
create a self-managing environment with mutually-
accepted expectations.
33
3. Participant's Signatories
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxx
Chief Executive Officer Senior Vice
President,
Metris Companies Inc. Information Services
Fingerhut Companies, Inc.
4. Service Details
Metris test jobs that do not utilize cartridge/tape
drives will use class 3.
All Metris production jobs will be submitted under
class H, whether they come from the scheduling package
(CA7) or are submitted by other means.
The class H jobs will be the same performance class as
F.
A JES priority level (9-15) will be established for
each type of job submitted by the owner. Metris will
vary the job priorities as necessary in order to best
manage its workload. Metris will also designate who
will be authorized to modify job priority levels.
FCI will insure that all shipping instructions received
by 5:00 p.m. Monday through Saturday will be processed
and the packages shipped by 5:45 p.m. that same day,
subject to practical limitations relating to excess
volume, consistent with past practice. Shipping
instructions received after 5:00 p.m. will be processed
ASAP. but there will not be a 5:45 p.m. shipping
guarantee.
In addition to normal work hours, the Marketing Control
area will be staffed on Saturday afternoons year-round
for tape copying of files received on Saturday
mornings.
Wide Area Network (WAN) support will be provided from
FCI to Metris. The WAN will be error-free and
available 99% of the time measured on a monthly basis,
or FCI will actively work with Metris to achieve this
objective.
34
Local Area Network (LAN) support will be provided from
FCI to Metris. The LAN will be error-free and
available 99% of the time measured on a monthly basis,
or FCI will actively work with Metris to achieve this
objective.
5. Service Communications
Service level drops and/or job cancellations will
result in direct notification to Metris.
A. In the event of system degradation, FCI and the
Metris Customers will share on a prorated basis
the remaining system resources.
B. Individual job cancellations will be addressed as
follows:
Weekday Business Hours: 8 a.m. - 5 p.m. (Monday
through Friday)
Call to office phones in the following priority:
Will provide individuals to contact
Non-Business Hours:
Will provide pager numbers
35
EXHIBIT 9
Credit Insurance Management Services
Metris agrees that it has or that it will on behalf of
Direct Merchants Bank and/or Metris (including subsidiaries)
as the case may be:
1. Provide FCI with the personnel and other resources to
manage the insurance products offered within the closed-
end installment coupon book, including credit insurance
offers therein. Manage the relationship with the third
party insurance provider and coordinate resolution of
legal and regulatory issues.
2. Budget, forecast and project insurance premiums and
related expenses, including claims and other
fulfillment costs, on a daily basis. Report on
insurance and provide other reports to management on
the experience of the program.
3. Coordinate all marketing activities for such insurance
product offers including any modifications to such
offers. Review, modify and approve all insurance
literature and coordinate any tests with customer
service, credit marketing and operations.
4. Manage the continuing development and maintenance of
the insurance database. Monitor and modify individual
state rate and product tables as necessary. Also,
monitor the coupon master file.
5. Manage the insurance customer service functions.
6. Assist in Fingerhut's transition to a proprietary open-
end revolving charge product, particularly with respect
to the development of credit insurance offers for such
product.
7. Transition the above functions to FCI personnel in late
1996, but no later than January 1, 1997.
Metris agrees to perform the above services in accordance
with the Performance of Services in Section 1.2 and other
terms and conditions of the Agreement.
Duration:
Effective through December 31, 1996.
Compensation:
1. Incremental third party expenses, and
2. A pro-rate share of Metris' insurance and warranty
department's expenses as agreed to by the parties for
each of the calendar years ended as reflected below:
