FIRST AMENDMENT TO MERCHANT SERVICES BANKCARD AGREEMENT
EXHIBIT 10.111
FIRST AMENDMENT TO MERCHANT SERVICES BANKCARD AGREEMENT
This First Amendment (“Amendment”) is to the Merchant Services Bankcard Agreement (the “Agreement”)
dated April l6, 2003 among America West Airlines, Inc. (“CUSTOMER”), JPMorgan Chase Bank, N.A.,
successor-in-interest to JPMorgan Chase Bank (“BANK”) and Chase Merchant Services, L.L.C. (“CMS”).
CMS and BANK are collectively referred to as the “SERVICERS”.
WHEREAS, US Airways Group, Inc. and its domestic subsidiaries (collectively, “Debtor”) filed
for bankruptcy protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Eastern District of Virginia (the “Bankruptcy Court”) on September 12, 2004 (the
“Bankruptcy Proceeding”). Debtor remains in the Bankruptcy Proceeding as of the date the parties
are signing this Amendment;
WHEREAS, CUSTOMER has advised SERVICERS of the prospective merger of its parent, America West
Holdings Corporation into a newly created wholly-owned subsidiary of US Airways Group, Inc. named
Barbell Acquisition Corp. (which subsidiary will be formed subsequent to entry of the Order, as
defined herein below), with the result that America West Holdings Corporation will be the surviving
entity (the “Merger”). After the completion of the Merger, America West Holdings Corporation
(CUSTOMER’s parent) and US Airways, Inc. will be domestic subsidiaries of US Airways Group, Inc.;
WHEREAS, the merger or consolidation of CUSTOMER or its parent with or into another Person,
including, without limitation, a subsidiary of US Airways Group, Inc., is considered an assignment
or transfer of the Agreement, pursuant to Section 18.1, and requires the prior written consent of
SERVICERS;
WHEREAS, Bank of America currently performs Visa and Mastercard card processing for US
Airways, Inc., which is a domestic subsidiary of US Airways Group, Inc. The parties intend to
transfer such processing to SERVICERS as soon as possible after the completion of the Merger; and
WHEREAS, SERVICERS are providing their consent to such assignments and transfers by CUSTOMER
subject to satisfaction of the conditions precedent set forth below and in accordance with the
additional and modified terms and conditions outlined below.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Defined Terms; Annex 1.
(a) All capitalized terms not otherwise defined in this Amendment shall have the meaning ascribed
to such term in the Agreement.
(b) As of the Effective Date, the term “CUSTOMER”, as used in the Agreement, as amended,
shall mean America West Airlines, Inc. which is a wholly-owned subsidiary of America West Holdings
Corporation, which is a wholly-owned subsidiary of US Airways Group, Inc. On the Effective Date,
CUSTOMER, as defined in the immediately preceding sentence shall provide to SERVICERS an
acknowledgement of its assumption of the Agreement, as successor-in-interest following a merger,
and the representations and warranties in substantially similar form to those attached as Exhibit A
to this Amendment. On the Effective Date, US Airways Group, Inc. will provide a guaranty to
SERVICERS (in addition to the Guaranty), which is in substantially similar form as the Guaranty.
Upon provision of such guaranty, “GUARANTOR” shall mean America West Holdings Corporation
and US Airways Group, Inc.
(c) As of the Conversion Date, the term “CUSTOMER”, as used in the Agreement, as amended,
shall collectively mean America West Airlines, Inc. (as defined in Subsection 1(b) of this
Amendment) and US Airways, Inc., which is a wholly owned subsidiary of US Airways Group,
Inc., jointly and severally. On the Conversion Date, the parties shall enter into an amendment to
the Agreement which adds US Airways, Inc. as a party to the Agreement in the capacity of being
jointly and severally obligated, liable and responsible for any and all obligations of CUSTOMER
arising out of or related to the Agreement.
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(d) The following changes are hereby made to Annex 1:
(i) In Section 1.24 “Corporate Debt Rating of America West Airlines” is hereby changed
to “Corporate Debt Rating of CUSTOMER”. Section 1.19 and 1.20, which define Net Air
Traffic Liability and Net Reserve Percentage, respectively, are hereby deleted.
(ii) Section 1.13, which defines “Gross Air Traffic Liability” is hereby superseded by and
replaced with the following: “1.13 “Gross Air Traffic Liability” means, at any given time,
the greater of (a) the sales price of all tickets or services sold by CUSTOMER which, pursuant to
CUSTOMER’s policies, represents a valid obligation of CUSTOMER (and shall include, for sake of
clarification, Breakage, i.e., Breakage is not to be subtracted) for which the holder or purchaser
of the ticket or service has paid via a Card transaction and has not yet traveled or used the
ticket or service” (whether such travel or service is to be provided by CUSTOMER or another
carrier), and (b) the dollar amount of any and all unfulfilled tickets or services which may be or
become subject to Chargeback pursuant to Association Rules.”
(iii) Section 1.14, which defines “Gross Reserve Percentage” is hereby superseded by
and replaced with the following: “1.14 “Gross Reserve Percentage” is a factor multiplied by
the Gross Air Traffic Liability for the most recent week as reported by CUSTOMER each weekly period
as of midnight (Arizona time) each Friday in determining the amount to be maintained in the Reserve
Account.”
2. Section 3.3. (a) Section 3.3(ii) of the Agreement is hereby deleted and is hereby
replaced with the following:
“(ii) a brief description of the goods or services sold, returned or cancelled, which shall include, but not be limited to, flight itinerary information for all travel segments (as further described below);”. The following language is hereby added to the end of Section 3.3: “The flight itinerary information shall include, but not be limited to, original departure date, origination city, destination city, airport codes, carrier ID, and any additional services provided.”
“(ii) a brief description of the goods or services sold, returned or cancelled, which shall include, but not be limited to, flight itinerary information for all travel segments (as further described below);”. The following language is hereby added to the end of Section 3.3: “The flight itinerary information shall include, but not be limited to, original departure date, origination city, destination city, airport codes, carrier ID, and any additional services provided.”
(b) CUSTOMER (America West Airlines, Inc. and US Airways, Inc., as defined in Paragraph 1(c)
of this Amendment) covenants and agrees that it shall use all commercially reasonable diligent
efforts to take, or cause to be taken, as promptly as practicable all actions which are necessary
or appropriate to ensure that, for systems under its control, flight itinerary information with
respect to ticket sales is provided in accordance with a standard of [Redacted]completeness and
accuracy as expeditiously as reasonably possible following the Conversion Date. For avoidance of
doubt, this Paragraph 2(b) shall be deemed to be a material term of the Agreement, as amended.
3. Section 4. The caption of Section 4 is hereby changed to “Operation Guide;
Association Rules; Data Security”. The following language is hereby added to Section 4:
“CUSTOMER agrees that CUSTOMER and its Service Providers shall follow and comply with the
VISA Cardholders Information Security Guidelines (presently available online at VISA’s
website xxx.xxxx.xxx), the MasterCard Site Data Protection Program (presently available
online at MasterCard’s website xxx.xxxxxxxxxxxxxxxxxx.xxx), as well as any other
security guidelines or requirements established by any applicable Association or by
SERVICERS in response to Association Rules or applicable state or federal law, rules or
regulations (collectively, “Data Security Requirements”). CUSTOMER shall be liable
for any fees or fines imposed by an Association as a result of CUSTOMER’s or its Service
Providers’ failure to comply with any such security guidelines.
CUSTOMER shall be responsible for (a) verifying its (and ensuring its Service Providers’)
compliance with Data Security Requirements, from time to time, which includes, but is not
limited to, having security audits performed and (b) all costs related to verification, and
for any fines or penalties arising out of or related to CUSTOMER’s or its Service Providers’
non-compliance with Data Security Requirements. In addition, in the event of a security
incident or issue, or reasonable suspicion of such, related to CUSTOMER and/or its Service
Providers, CUSTOMER shall cooperate in, and shall be responsible for the costs of, an audit
or investigation pertaining to such incident or issue. If there is any conflict between the
terms of this Agreement and the Operating Guide, the terms of this Agreement, as amended,
will govern.
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CUSTOMER shall notify SERVICERS of all Service Providers CUSTOMER utilizes. Service
Providers shall be responsible for their registration, and associated costs with the
applicable Associations. CUSTOMER shall only utilize Service Providers that are registered
with the applicable Associations and that are certified by the applicable Associations as
compliant with such Association’s security guidelines. As used in this Section,
“Service Provider” shall mean any individual or entity secured by or performing
services on behalf of CUSTOMER that stores, processes, or transmits Cardholder data.”
4. Section 18; Consent to Assignments or Transfers of the Agreement; Conditions Precedent.
(a) CUSTOMER acknowledges that its parent is in the process of completing the Merger described in
the recitals. Upon the Effective Date, CUSTOMER hereby assigns to America West Airlines, Inc.
(which will have new ownership as a result of the Merger, as outlined in Paragraph 1(b) of this
Amendment), and America West Airlines, Inc. shall accept and assume, the Agreement and all of
CUSTOMER’s rights and obligations arising out of or related to the Agreement. CUSTOMER and America
West Airlines, Inc. shall provide SERVICERS with any such supporting documents and resolutions as
SERVICERS may reasonably request related to completion of the Merger and America West Airlines,
Inc.’s assumption of the Agreement pursuant to the foregoing, which will include, but not be
limited to, providing the acknowledgments, representations and warranties on Exhibit A to this
Amendment.
(b) Conditions Precedent to effectiveness of Amendment. Each of the following shall be
conditions precedent to the effectiveness of this Amendment:
(i) Entry by [Redacted]of a final and non-appealable order (the “Order”) by the
Bankruptcy Court confirming Debtor’s plan of reorganization (the “Plan”) under which Debtor
shall emerge from the Bankruptcy Proceeding as a going concern, which Plan shall include, but not
be limited to, the merger or consolidation of Barbell Acquisition Corp., a wholly-owned subsidiary
of US Airways Group, Inc. which will be created subsequent to entry of the Order into America West
Holdings Corp. SERVICERS shall be provided with a copy of the Plan upon filing, and further shall
be provided with other financial information from CUSTOMER, as may be reasonably requested by
SERVICERS; and
(ii) Board of Director approval of this Amendment by America West Holdings Corporation and US
Airways Group, Inc.
(c) Conversion Requirement. CUSTOMER shall complete the conversion, which shall mean, for
sake of clarification, conversion of [Redacted]of the US Airways, Inc.’s Card transaction volume
from US Airway, Inc.’s existing processor to SERVICERS for processing as soon as practicable, but
no later than [Redacted]days from the Effective Date (the “Conversion Date”). SERVICERS
agree to work with CUSTOMER in good faith and to use commercially reasonable efforts to assist
CUSTOMER in completing the conversion as soon as reasonably practicable, including, without
limitation, providing CUSTOMER with the applicable processing system specifications.
5. Section 19.2; Term of Agreement. The initial term of this Agreement is set to expire on
April 15, 2008. The foregoing notwithstanding, the parties agree that the initial term shall
expire three (3) years from the Effective Date of this Amendment. Upon expiration of the initial
term, the Agreement shall automatically renew for successive one-year periods pursuant to the terms
of Section 19.2 of the Agreement.
6. Section 19.3 and Section 19.4; Events of Default.
(a) The following is hereby added to the beginning of Subsection 19.3(vii): “not including the
Bankruptcy Proceeding,”
(b) | The following additional subsections are hereby added to Section 19.3: | |
“(x) any general suspension of commercial air transportation on the United States for a consecutive period [Redacted](xi) failure to provide information as required by this Agreement and/or as may be reasonably requested from time to time by SERVICERS, before converting the US Airway’s Card transaction volume to SERVICERS for processing; or |
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(xii) CUSTOMER has failed to provide to SERVICERS any Gross Air Traffic Liability information
outlined in Section 21 of this Agreement, as amended, within the timeframes indicated therein.”
(c) The following sentence is hereby added after the second sentence in Section 19.4: “For any
event specified in subparagraphs (xi) and (xii) above, the cure period shall be [Redacted]Business
Days.”
7. Section 20; Reserve Account.
(a) CUSTOMER acknowledges that in addition to the weekly adjustments contemplated by Section 20.1
of the Agreement, as amended herein below, there shall be two adjustments to the amount maintained
in the Reserve Account in connection with the Merger, as follows:
(i) On the Effective Date, the amount required to be maintained in the Reserve Account shall
be increased to reflect an amount based upon a Gross Reserve Percentage of [Redacted]which is
calculated based upon the Gross Air Traffic Liability for America West Airlines, Inc. (as defined
in Paragraph 1(b) of this Amendment). America West Airlines, Inc. shall fund the additional amount
required to be maintained in the Reserve Account within [Redacted]Days of SERVICERS’ calculation
and notification of the amount. In connection with such review, [Redacted]days prior to the
Effective Date, CUSTOMER shall provide SERVICERS with reports outlining America West Airlines,
Inc.’s Gross Air Traffic Liability for the prior [Redacted]weeks.
(ii) On the Conversion Date, the amount required to be maintained in the Reserve Account shall
be increased to reflect an amount based upon a Gross Reserve Percentage of [Redacted]which shall be
calculated based upon the combined Gross Air Traffic Liability of CUSTOMER (America West Airlines,
Inc. and US Airways, Inc., as defined in Paragraph 1(c) of this Amendment). SERVICERS will
calculate and notify CUSTOMER of the additional amount required to be maintained in the Reserve
Account (the “Reserve Account Shortfall”). The Reserve Account Shortfall shall be funded (x) by
wire transfer of funds to SERVICERS by or before the Conversion Date should an indemnification
agreement be completed and executed by the applicable parties by or before [Redacted]days prior to
the Conversion Date, as outlined in and pursuant to Paragraph 12 of this Amendment, or
alternatively, (y) if each of the requirements of (x) are not fully satisfied, pursuant to the
foregoing, SERVICERS may deduct and hold-back settlement monies due to CUSTOMER related to US
Airway, Inc.’s Card transactions on a ratable basis over a period of [Redacted]weeks to fund the
Reserve Account Shortfall. In connection with SERVICERS review and calculation of Gross Air
Traffic Liability under this Paragraph 7(a)(ii), CUSTOMER shall provide SERVICERS with reports
outlining America West Airlines, Inc.’s and US Airways, Inc.’s combined Gross Air Traffic Liability
for the prior [Redacted]weeks [Redacted]days prior to the Conversion Date.
(b) Section 20.1. The following changes are hereby made to Section 20.1:
(i) The fourth and fifth sentences of Section 20.1 are hereby deleted and shall be replaced
with the following:
“Subject to Section 20.2, upon the Effective Date the amount required to be maintained in the
Reserve Account will be reviewed and adjusted by SERVICERS on a [Redacted]basis. In conducting
such [Redacted]reviews, SERVICERS will review the most recently available reports of Gross Air
Traffic Liability and financial reports provided by CUSTOMER pursuant to Section 21.1, as amended;
provided, however, that if (x) SERVICERS reasonably believe that CUSTOMER’s reports of Gross Air
Traffic Liability contain materially inaccurate information and/or material information is omitted,
or (y) CUSTOMER fails to provide a [Redacted]report of Gross Air Traffic Liability within the
timeframe specified in Section 21.1, as amended, then SERVICERS may, at their sole discretion,
elect to reasonably estimate Gross Air Traffic Liability based upon information available to
SERVICERS. The adjusted amount to be maintained in the Reserve Account (the “Adjusted Reserve
Result”) pursuant to this Section 20.1 shall be based upon a Gross Reserve Percentage of
[Redacted](the “Baseline Reserve Amount”) based upon the prior week’s reports of Gross Air
Traffic Liability (in accordance with the definition of Gross Reserve Percentage in Section 1.14 of
Annex 1).”
(ii) Additionally, the sixth sentence of Section 20.1 is hereby deleted. The following
language is hereby added to Section 20.1 in place of such deleted sentence: “If SERVICERS’ weekly
review under this Section 21.1 indicates (x) an increase in the amount required to be maintained in
the Reserve Account, funding of the deficiency by CUSTOMER by wire transfer to an account
designated by SERVICERS shall be completed within [Redacted], as
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provided herein, or (y) a decrease in the amount required to be maintained in the Reserve Account,
SERVICERS will within [Redacted]return the overage to CUSTOMER; provided, however, that an increase
or decrease pursuant to the foregoing shall only be made if the amount of the deficiency or overage
is equal to or greater than [Redacted]as measured against the amount currently maintained in the
Reserve Account. If CUSTOMER has not funded the amount of any deficiency within[Redacted],
pursuant to the above, SERVICERS may fund the deficiency in the amount maintained in the Reserve
Account, pursuant to Subsection 20.1(x), by making one or more deductions from the settlement
monies due to CUSTOMER, or alternatively, at their sole discretion, SERVICERS may require CUSTOMER
to immediately fund the amount of the deficiency into the Reserve Account.”
(c) Section 20.2 of the Agreement is hereby modified as follows:
(i) The third “bullet” paragraph of Section 20.2 is hereby deleted. The paragraph in Section
20.2 in between the bullet points (outlining certain events) and the guidelines table (outlining
Net and Gross Reserve Percentage, such table hereinafter referred to as “Reserve Percentage
Table”) is hereby deleted. In place of such deleted paragraph, the parties acknowledge and
agree that the Baseline Reserve Amount shall be applicable with respect to determining the amount
required to be maintained in the Reserve Account under Section 20.1, as amended, from the Effective
Date forward, unless a higher amount applies pursuant to the terms of the Agreement as amended
(i.e., Full Coverage); provided, however, that upon the conclusion of [Redacted]following the
Effective Date, and the receipt and review by SERVICERS of at least [Redacted]of financial reports,
SERVICERS will consider an adjustment to the Baseline Reserve Amount, as follows: In the event
CUSTOMER’s and GUARANTOR’s Corporate Debt Rating are equal to the Corporate Debt Ratings identified
for particular row within the Reserve Guidelines Table (each of the two rows hereinafter referred
to as “tiers”), then SERVICERS will base the amount required to be maintained in the Reserve
Account upon the Gross Reserve Percentage for such tier.
(ii) In the Reserve Percentage Table, (a) column four, which outlines Net Reserve Percentage,
is hereby deleted, and (b) the percentages in column five, which outlines Gross Reserve Percentage,
is hereby changed from [Redacted]and [Redacted](c) the caption of column two is hereby changed from
“Corporate Debt Rating of America West Airlines, Inc. (S&P)” to “Corporate Debt Rating of CUSTOMER
(S&P)”, and (d) the caption of column three is hereby changed from “Corporate Debt Rating of
America West Airlines, Inc. (Xxxxx’x)” to “Corporate Debt Rating of CUSTOMER (Xxxxx’x)”.
(iii) The two paragraphs in Section 20.2 which immediately follow the Reserve Percentage Table
are hereby deleted. The following language is hereby added to Section 20.2 following the Reserve
Percentage Table in place of such deleted paragraphs:
“In the event a Gross Reserve Percentage from the Reserve Percentage Table is applied in accordance
with the forgoing, the Reserve Account will be reviewed and adjusted on a weekly basis, as outlined
in Section 20.1 of the Agreement, as amended, and in accordance with the method for adjustments
outlined therein. Notwithstanding the foregoing, (x) if CUSTOMER no longer qualifies for a
particular tier within the Reserve Percentage Table, the Reserve Account will be adjusted, at
SERVICERS’ sole discretion, based upon the applicable tier within the Reserve Percentage Table, or
alternatively, (y) if CUSTOMER no longer qualifies for either tier within the Reserve Percentage
Table (i.e., CUSTOMER and GUARANTOR’s Corporate Debt Ratings are below the Corporate Debt Ratings
identified for the tiers in the Reserve Percentage Table), the Reserve Account will be adjusted, at
SERVICERS’ sole discretion, to an amount calculated based upon a Gross Reserve Percentage of
[Redacted], if such is otherwise permitted under the Agreement, as amended.
The applicable Gross Reserve Percentage within the Reserve Percentage Table will be determined
based upon the lowest of the Corporate Debt Rating of CUSTOMER as reported by S&P, the Corporate
Debt Rating of CUSTOMER as reported by Xxxxx’x, or the Corporate Debt Rating of GUARANTOR.
Notwithstanding anything herein to the contrary, in the event CUSTOMER and GUARANTOR do not have a
Xxxxx’x and/or S&P Corporate Debt Rating, then the Reserve Account will be adjusted, at SERVICERS’
sole discretion, to an amount calculated based upon a Gross Reserve Percentage of [Redacted]is
otherwise permitted under the Agreement. ”
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(d) Section 20.6. In Section 20.6 of the Agreement, references to “Net Reserve
Percentage” and “Net Air Traffic Liability” are hereby deleted. Section 20.6 shall only refer to
Gross Reserve Percentage. In the second sentence of Section 20.6, the “and” which precedes
subsection (y) is deleted and the following new subsection is hereby added following subsection
(y): “or (z)[Redacted]”. In the fifth sentence of Section 20.6, the language: “shall not exceed
the greater of (i) the Net Reserve Percentage, (ii) the Gross Reserve Percentage or (iii) the total
amount of CUSTOMER’s Chargebacks during the prior [Redacted]month period” is hereby changed
to: “shall not exceed the greater of (i) the Gross Reserve Percentage, (ii) the total amount
of CUSTOMER’s Chargebacks during the prior [Redacted]month period, or (iii)[Redacted].”
8. Acknowledgment by CUSTOMER concerning Section 20.2 and Section 20.6. CUSTOMER
acknowledges that notwithstanding anything to the contrary in the Section 20 of the Agreement, as
amended hereby, upon the occurrence of one of the events outlined in Section 20.2 and/or with
respect to a Termination Reserve Account under Section 20.6, SERVICERS shall have the right to
elect to base the amount required to be maintained in the Reserve Account upon the greater of: (i)
the amount calculated utilizing the applicable Gross Reserve Percentage and the prior week’s
reports of Gross Air Traffic Liability (in accordance with the definition of Gross Reserve
Percentage in Section 1.14 of Annex 1); or (ii) the amount of[Redacted], based upon the highest
amount Gross Air Traffic Liability will reach over a [Redacted]period (in accordance with the
definition of [Redacted]in Section 1.12 of Annex 1).
9. Section 21.1. (a) The term “Net Air Traffic Liability” shall be deleted from the
fourth and seventh sentences of Section 21.1 as well as every other place used in the Agreement.
In addition to the [Redacted]reports of Gross Air Traffic Liability outlined in Section 21.1 of the
Agreement, CUSTOMER shall additionally provide [Redacted]reports of summary Gross Air Traffic
Liability for the prior [Redacted]The [Redacted]Gross Air Traffic Liability reports to be provided
by CUSTOMER shall include an electronic file (in a mutually agreed upon format) of the data upon
which CUSTOMER has based such reports of Gross Air Traffic Liability (i.e., including, without
limitation, itinerary and flight data). It is acknowledged that such [Redacted]electronic data
file will be very large and SERVICERS shall be responsible for their costs of receiving and
processing such electronic data file. Each [Redacted]summary report of and Gross Air Traffic
Liability pursuant to the foregoing, shall be as of midnight (Arizona time) on Friday of the
previous [Redacted]and shall be based on the latest available actual data and an estimate of
transportation that has already been provided by other carriers as of the report date in cases
where CUSTOMER has sold a ticket where all or part of the transportation has been provided by
another carrier.
(b) The sentence which precedes the last sentence of Section 21.1, is hereby deleted and shall be
replaced with the following: “Upon request and reasonable notice, CUSTOMER shall provide to
SERVICERS or their representatives reasonable access to CUSTOMER’s facilities and records for the
purpose of (x) performing any inspection and/or copying of CUSTOMER’s books and/or records related
to Card transactions processed pursuant to this Agreement, (y) to verify transaction data and
information, and/or (z) to perform an audit of the Gross Air Traffic Liability data provided by
CUSTOMER.” Such inspections or audits will not take place more than [Redacted]per calendar year,
except as may otherwise be required by an Association.
10. Section 19.6. Subsections 19.6(a) and (b) shall be applicable, notwithstanding
anything to the contrary in such subsections in the Agreement, only upon expiration of
[Redacted]from the Effective Date. In addition, Section 19.6 is hereby modified as follows: (i)
“Third Party Processor”, as used in Section 19.6, shall mean one of the top [Redacted]U.S. bank
card acquirers, as rated by The Xxxxxx Report (or such successor or comparable rating publication
concerning the payment systems industry), or a bank card acquirer which is publicly traded (i.e.,
it has shares of common stock actively traded on an organized national domestic exchange), and (ii)
“better terms and conditions”, as used in subsection (a) shall be qualified by a materiality
threshold of [Redacted]and “pricing which is better” or “better pricing”, as used in subsection
(b), shall be qualified by a materiality threshold of [Redacted]I.e., with respect to subsection
(a), the Third Party Processor Offer Reserve Notice must be based upon a reserve which is less than
the reserve being held by SERVICERS by [Redacted]or more, and with respect to subsection (b), the
Third Party Processor’s pricing must be less than the pricing provided by SERVICERS pursuant to
this Agreement by [Redacted]or more.
11. Schedule A. Effective as of the Conversion Date, on Schedule A, Section 1(a), the
settlement fee of [Redacted]per settled transaction is hereby changed to [Redacted]per settled
transaction. On Schedule A, Section 2(b) is hereby changed to: “b) Chargeback Processing
/ Excessive Fee: In addition, in the event CUSTOMER’s Chargeback Percentage is greater than
[Redacted]of CUSTOMER’s Card transaction volume in any given calendar
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month, then CUSTOMER will be charged [Redacted]per Chargeback during such calendar month (which fee
is, in accordance with Section 12.5 of the Agreement, in addition to any applicable Association
fines or fees.”
12. Transition of Bank of America Processing; Substitute Collateral. After the Conversion
Date, SERVICERS will process Card Transactions of US Airways, Inc. pursuant to the terms of the
Agreement, as amended. Subject to CUSTOMER funding the Reserve Account as required pursuant to
Paragraph 7(a)(ii) of this Amendment on the Conversion Date, CMS will use good faith efforts to
work with CUSTOMER in negotiating an agreement with Bank of America pursuant to which CMS would
indemnify Bank of America against any Chargebacks relating to VISA and MasterCard card transactions
which were processed by Bank of America prior to the Conversion Date and Bank of America would
release and fund its reserve account (which has the meaning provided to such term in the services
agreement between Bank of America and US Airways, Inc.) to CUSTOMER; provided, however, that any
such agreement shall be upon terms satisfactory to CMS in its sole discretion and reached within a
reasonable period of time (i.e., completed at least [Redacted]prior to the Conversion Date). If
for any reason CUSTOMER and CMS are unable to negotiate and execute such an indemnity agreement
with Bank of America by the Conversion Date and cause such release and funding to CUSTOMER, then
the Reserve Account Shortfall shall be funded by deduction and hold-back from settlement monies
pursuant to Paragraph 7(a)(ii)(y) of this Amendment. CUSTOMER (as defined in Paragraph 1(c) of
this Amendment) may at any time elect to substitute a letter of credit in accordance with Section
20.3 of the Agreement for all or any portion of the amount of the Reserve Account. For sake of
clarification and notwithstanding anything in this Amendment to the contrary, in the event the
amount released and funded to CUSTOMER by Bank of America is less than the Reserve Account
Shortfall (as defined in Paragraph 7(a)(ii) of this Amendment), then CUSTOMER shall wire transfer
funds to SERVICES in the amount of such deficiency to ensure that the Reserve Account is funded as
required pursuant to Paragraph 7(a)(ii) of this Amendment by the Conversion Date.
13. Section 20.3 and Section 20.5; Control Agreement. (a) The last sentence of Section
20.3 is hereby deleted. The second and third sentences of Section 20.5 are hereby deleted. In
place of such deleted sentences, the following language is hereby added as new paragraphs to
Section 20.3:
“Except as expressly provided otherwise in this Section 20.3, CUSTOMER’s funds held in a Reserve
Account will be maintained in a separate investment account established by CUSTOMER and identified
as “Chase Merchant Services, L.L.C., reserve account owned by America West Airlines, Inc. and US
Airways, Inc.”, which account shall be subject to (x) SERVICER’s security interest pursuant to
Section 20.5 of the Agreement, and (y) an account control agreement (as defined by the applicable
sections of the Uniform Commercial Code, hereinafter referred to as “Control Agreement”) among
CUSTOMER, the institution at which such account is held (such institution hereinafter referred to
as “Depository”) and SERVICERS (such investment account hereinafter referred to as the “Control
Account”), pursuant to the following. The Control Agreement shall be in form and substance
satisfactory to SERVICERS. The Depository shall be a National Association bank or a nationally
recognized brokerage firm which is mutually acceptable to CUSTOMER and CMS. Funds held in the
Control Account may be invested (and reinvested, as applicable) by CUSTOMER only in Qualified
Assets (as defined below); provided, however, that CUSTOMER must diversify its investment
activities such that no more than [Redacted]of the total reserve amount can be placed with any one
issuer at any given time, except for the following exception. Such diversification requirement
will not apply with respect to Direct Obligations of the US Treasury (item 1. on Schedule C to the
Agreement, as amended). CUSTOMER shall ensure that SERVICERS receive access to whatever account
statements, on-line (i.e., Web) access and phone/voice access are available for the Control
Account. For sake of clarification and without limiting the foregoing, SERVICERS shall directly
receive from Depository and/or CUSTOMER unaltered and complete account statements which Depository
provides (on a monthly or more frequent basis), a user ID/password for on-line access to view
account activity (to the extent such on-line access is available), and a phone number(s) for
phone/voice access to account information. The account statements, pursuant to the foregoing,
shall outline at a minimum: (a) the investment activities in detail for the period being reported,
(b) the current real-time Reserve Account balance, and (c) any other information typically conveyed
in such statements. CUSTOMER acknowledges and agrees that should it violate any of the foregoing
requirements, including, without limitation, the requirement to invest in Qualified Assets,
diversify CUSTOMER’s investment activities, and provision of account statements to SERVICERS,
SERVICERS shall then be entitled to immediately assume managerial control over the Reserve Account,
which includes, but is not limited to, transferring such funds, money or amounts to, and holding
them in, a commingled reserve account(s) of SERVICERS (i.e., may be commingled with other funds of
SERVICERS, or with other funds of customers of SERVICERS) and CUSTOMER agrees to execute
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any all documents necessary to effectuate such. “Qualified Assets” shall mean the
investments listed on Schedule C to the Agreement, as amended herein.
CUSTOMER shall be entitled to the income and gain arising from the investment activities for the
Control Account (the “Interest Payments”). Except with respect to Interest Payments, no
distributions or withdrawals from the Control Account shall be allowed without the prior written
consent of CMS. Nothing herein (including CUSTOMER’s entitlement to Interest Payments) shall limit
or modify CUSTOMER’s requirement to at all times maintain the Control Account in the amount
required to be maintained in the Reserve Account pursuant to the terms of the Agreement, as amended
hereby. All items of income, gain, expense and loss recognized in the Control Account shall be
reported to the Internal Revenue Service and all state and local taxing authorities under the name
and taxpayer identification numbers of America West Airlines, Inc. and US Airways, Inc.
(b) In the event (i) CUSTOMER and Depository fail to deliver to SERVICERS an executed Control
Agreement in form and substance agreeable to SERVICERS no less than [Redacted]Days prior to the
Conversion Date, in accordance with Paragraph 13(a) above, or (ii) an executed Control Agreement is
subsequently terminated, CUSTOMER acknowledges and agrees that the Reserve Account will be held in
the name of SERVICERS and under SERVICERS’ control in a commingled reserve account(s) of SERVICERS
(as described in Section 20.3, as amended in Paragraph 13(a) of this Amendment), until such time as
a Control Agreement in form and substance agreeable to SERVICERS is executed by CUSTOMER and
Depository and delivered to SERVICERS.
(c) For sake of clarification and notwithstanding anything in the Agreement, as amended hereby, to
the contrary, in the event SERVICERS deduct, holdback, suspend, off set or set off (collectively
“Set Off Funds”) any settlement monies or amounts otherwise due CUSTOMER pursuant to terms of the
Agreement, as amended hereby, CUSTOMER acknowledges that such Set Off Funds will be held in a
commingled reserve account(s) of SERVICERS (as described in Section 20.3, as amended in Paragraph
13(a) of this Amendment) until such time as such Set Off Funds are wired or deposited by SERVICERS
into any Reserve Account which is in the name of CUSTOMER pursuant to Section 20.3, as amended.
SERVICERS will transfer Set Off Funds from their commingled reserve account(s) as soon as
practicable using commercially reasonable efforts.
14. Schedule C; Qualified Assets. Schedule C of the Agreement is hereby deleted and shall
be replaced with the new Schedule C which is attached hereto and executed herewith.
15. Continued Effectiveness of Agreement. Except as expressly set forth above, the
Agreement, as amended, shall continue in full force and effect in accordance with its terms.
16. Effective Date of Amendment. This Amendment shall become effective upon entry of the
Order and completion of the Merger(the “Effective Date”).
17. Counterparts. The parties may execute this Amendment in multiple counterparts, each of
which constitutes an original, and all of which, collectively, constitute only one agreement.
[REMAINDER OF PAGE INTENTIONALY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Amendment by their duly authorized officers.
America West Airlines, Inc. | JPMorgan Chase Bank, N.A | |||||
(“CUSTOMER”) | (“Bank”) | |||||
By: |
/s/ Xxxxx X. Xxxx | By: | /s/ Xxxxxx Xxxxxx | |||
Name: |
Xxxxx X. Xxxx | Name: | Xxxxxx Xxxxxx | |||
Title: |
Chief Financial Officer | Title: | Credit Director, FDMS | |||
Date: |
August 4, 2005 | Date: | August 4, 2005 | |||
Chase Merchant Services, L.L.C. | ||||||
(“CMS”) | ||||||
By: |
/s/ Xxxxxx Xxxx | |||||
Name: |
Xxxxxx Xxxx | |||||
Title: |
Chief Operations Officer | |||||
Date: |
August 4, 2005 | |||||
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EXHIBIT A
Acknowledgements, Representations and Warranties
Reference is made to that certain Merchant Services Bankcard Agreement (the “Agreement”) dated
April l6, 2003, as amended, among America West Airlines, Inc. (“CUSTOMER”), JPMorgan Chase Bank,
N.A., successor-in-interest to JPMorgan Chase Bank (“BANK”) and Chase Merchant Services, L.L.C.
(“CMS”). CMS and BANK are collectively referred to as the “SERVICERS”.
1. [___] hereby accepts and assumes, the Agreement and all of CUSTOMER’s rights and
obligations arising out of or related to such Agreement. [___] is hereby substituted
as CUSTOMER under the Agreement and agrees to be bound by to the terms and condition of the
Agreement.
2. Representations and Warranties. [___] hereby represents and warrants to
SERVICERS that (i) it is a [___] duly organized, validly existing and in good standing
under the laws of the State of [___] with a principal place of business at
[___]; (ii) it has the full authority to accept the assignment of the
Agreement from America West Airlines, Inc. and to enter into the Amendment as amended to; (iii)
upon execution of this letter, the Agreement as amended will constitute a legal, valid and binding
obligation of Assignee, enforceable against Assignee in accordance with their terms.
3. Recipient for Notices. The notices information for CUSTOMER shall be as follows:
Attn: |
||||
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AMENDED SCHEDULE C
1. | Direct obligations of the US Treasury Such as Treasury Bills, Treasury Notes and Treasury Bonds. | |
2. | Debentures and Notes issued or guaranteed by the US Government, its agencies or instrumentalities Debt issued by US Government agencies and instrumentalities include such obligations as securities of Federal Home Loan Banks (supported by the right of the issuer to borrow from the Treasury); and Federal National Mortgage Association obligations (sponsored by the US Government and supported by the credit of the instrumentality). | |
3. | Certificates of Deposit (“CD’s”), Time Deposits (“TD’s”) and Bankers’ Acceptances (“BA’s”) CD’s are short-term negotiable obligations of commercial banks. TD’s are non-negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. BA’s are time drafts drawn on commercial banks, usually in connection with international transactions. CD, TD and BA investments are limited to those instruments issued by institutions with total assets in excess of [Redacted], and where the long term obligations are rated “[Redacted]” or better by Moody’s and “[Redacted]” or better by S&P and the short-term deposits are rated[Redacted], respectively. | |
4. | Commercial Paper Short-term, unsecured, negotiable promissory note of a domestic company. Commercial paper must have a rating of [Redacted]or better by at least two of the Nationally Recognized Statistical Rating Organizations (as defined in Item 10 of this Schedule C). | |
5. | Repurchase Agreements Transactions in which the purchaser acquires a security and simultaneously agrees to sell it back at a higher price, normally within seven days. Such agreements may be entered into with domestic organizations, including banks and broker-dealers, which have a long term debt rating of “[Redacted]or better by at least two NRSRO’s. The underlying securities must be the types of investments identified on this Schedule C. | |
6. | Money Market Mutual Funds (“Money Funds”) No-load mutual funds which seek to maximize current income for shareholders consistent with the preservation of capital by investing in a diverse portfolio of high quality, short-term instruments that maintain compliance with Rule 2a-7 of the Investment Company Act of 1940. The funds strive to maintain a constant share price and offer daily purchase and redemption privileges. CUSTOMER’s investment in any Money Fund shall not be greater than[Redacted] the overall fund size. |
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7. | Fixed and Floating Rate Corporate Debentures and Medium-Term Notes Short to medium-term debt issuances of major corporations and financial institutions. The ratings of the issue/issuer must have a long term debt rating of “[Redacted]” or better by at least two of the following NRSRO’s: Xxxxx’x, S&P or Fitch. | |
8. | Tax-Exempt and Tax-Advantages Securities Limited to issues rated MIG1, A1, P1, or AA, or higher by at least two NRSRO’s. |
a. | Tax-exempt commercial paper Short term commercial paper issued by tax-exempt entities. | ||
b. | Variable rate demand obligations Long-term obligations of tax-exempt entities which have variable interest rates, and which reset periodically based on a specified index and formula. Because these obligations always have current market interest rates, they trade near their par value, and thus, are considered short-term instruments. | ||
c. | Fixed rate, fixed maturity municipal notes, including long-term notes with a “put” at the sole option of the investor. |
9. | Any and all investments are specifically limited to those types of investments noted above and any particular investment shall have a maximum final stated maturity of [Redacted]or less (in any event, the maturity date of any particular investment shall not exceed the term of the Agreement). | |
10. | All investments must be denominated in US dollars. For purposes of this Schedule C, “Nationally Recognized Statistical Rating Organizations or NRSRO” shall mean Xxxxx’x (as defined in Annex 1 of the Agreement), S&P (as defined in Annex 1 of the Agreement) or Fitch. “Fitch” shall refer to Fitch, Inc. or any successor thereto. |
Initials for acknowledgement and agreement by:
America West Airlines, Inc.
JPMorgan Chase Bank, X.X
Xxxxx Merchant Services, L.L.C.
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