SECOND AMENDMENT TO MERCHANT SERVICES BANKCARD AGREEMENT
Exhibit 10.2
SECOND AMENDMENT TO MERCHANT SERVICES BANKCARD AGREEMENT
THIS SECOND AMENDMENT TO MERCHANT SERVICES BANKCARD AGREEMENT (the “Amendment”) is by and
between US Airways Group, Inc., the parent company of America West Airlines, Inc., and US Airways,
Inc. (collectively, “CUSTOMER”), on one hand and Chase Alliance Partners, LLC (successor to Chase
Merchant Services, LLC)(“CAP”), and JPMorgan Chase Bank, N.A. (“Bank”) (collectively, CAP and Bank
are referred to as “SERVICERS”) on the other.
WHEREAS, CUSTOMER and SERVICERS are parties to a Merchant Services Bankcard Agreement dated
April 16, 2003, as amended (the “Agreement”);
WHEREAS, CUSTOMER now operates as US Airways Group, Inc., following the Merger described in
the First Amendment to Merchant Services Bankcard Agreement between CUSTOMER and SERVICERS on or
about August 8, 2005 (the “First Amendment”), which amended the Agreement;
WHEREAS, CUSTOMER and SERVICERS desire to again amend the Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Fees. The Schedule A attached to the Agreement is deleted and replaced, in its
entirety, with the Schedule A attached to this Amendment. Additionally, Section 12.2 in the
Agreement is deleted and replaced with the following: “Section 12.2 The Fees charged CUSTOMER may
be adjusted in the event CUSTOMER materially changes its method of transaction submission to CAP or
in the event the most recent ** average number of CUSTOMER’s transactions for any of the Card
services provided in this Agreement falls below ** of the average number of transactions for the
same ** period in the preceding ** or the number of CUSTOMER’s transactions for a ** falls below **
(**) of the corresponding ** of the prior **. If CUSTOMER’s Fees are adjusted pursuant to this
Section, CUSTOMER may, within ** days’ after such adjustment, provide notice to SERVICERS that
CUSTOMER intends to solicit offers from a third party (a “Third Party Processor”) to process
CUSTOMER’s bankcard transactions on ** terms better than those to which SERVICERS have agreed under
his Agreement. CUSTOMER may, within ** days after providing CAP such notice of its intent,
provide CAP notice of an offer from a Third Party Processor setting forth all material terms
regarding the proposed agreement between CUSTOMER and the Third Party Processor (a “Third Party
Processor ** Offer Notice”). Unless SERVICERS agree to match the better ** terms of the Third
Party Processor within ** days of SERVICERS’ receipt of the Third Party Processor ** Offer Notice,
CUSTOMER may terminate this Agreement as of the date ** days following SERVICERS receipt of the
Third Party Processor ** Offer Notice.”
2. Annex 1. Annex 1 attached to the Agreement is amended to add the following definition:
“Unrestricted Cash” shall mean any cash or cash equivalent as defined under then-current GAAP that
is not legally restricted as to usage or withdrawal, including currency on hand, demand deposits
and cash equivalent instruments in investment accounts. For clarity, the parties agree that
Unrestricted Cash shall include amounts maintained in any Reserve Account by SERVICERS as set forth
in the Reserve Percentage Table in Section 20.2.
3. Term. CUSTOMER and SERVICERS agree that the term of the Agreement is hereby
extended so that the initial term shall expire five (5) years from 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.
** | Confidential Treatment Requested. |
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4. Section 19.6 is deleted and replaced in its entirety with the following new Section 19.6:
19.6 | If any other processor of bankcard transactions (a “Third Party Processor”) has
offered to process CUSTOMER’s bankcard transactions upon at least substantially the
same terms and conditions as SERVICERS have agreed to under this Agreement, and such
Third Party Processor has also agreed it will reduce the amount required to be held in
the Reserve Account by at least ** of the
amount then required by SERVICERS, then CUSTOMER may provide notice of such fact to
SERVICERS. Such notice shall set forth all material terms regarding the proposed
agreement between CUSTOMER and the Third Party Processor (a “Third Party Processor
Offer Reserve Notice”). Unless SERVICERS agree to match the better credit terms of
the Third Party Processor within ** days of SERVICERS’ receipt of the Third Party
Processor Offer Reserve Notice, CUSTOMER may terminate this Agreement as of the date
** days following SERVICERS receipt of the Third Party Processor Offer Reserve
Notice. The parties agree that CUSTOMER may provide Third Party Processor Offer
Reserve Notice ** per calendar **. |
5. Reserve. Sections 20.1 and 20.2 of the Agreement, as amended, are deleted and
replaced in their entirety with the following new Sections 20.1 and 20.2:
20.1. | CUSTOMER expressly authorizes SERVICERS to establish and maintain a Reserve
Account pursuant to the terms and conditions set forth in this Section 20. The amount
of such Reserve Account will be the amount required according to the Reserve Percentage
Table set forth below. 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 ** basis. In conducting such ** 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 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. If SERVICERS’ ** 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 **, as provided herein, or (y) a
decrease in the amount required to be maintained in the Reserve Account, SERVICERS will
within ** 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 ** as measured against the amount currently
maintained in the Reserve Account. If CUSTOMER has not funded the amount of any
deficiency within **, 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.” |
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20.2 | Notwithstanding the provisions of Section 20.1 or any other provision of this
Agreement, upon notice to CUSTOMER, SERVICERS may increase the Reserve Percentage
required to be maintained in the Reserve Account up to ** following the occurrence of
any of the following events: |
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Any Event of Default specified in Section 19.3 of this Agreement. |
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A Material Adverse Change has occurred in the condition of CUSTOMER. For the
purposes of this Agreement, “Material Adverse Change” shall mean either (A) a
material change to CUSTOMER’s financial condition or its business that, in
SERVICERS’ reasonable determination, either (i) then materially and adversely
affects, or (ii) may in the foreseeable future materially and adversely affect,
CUSTOMER’s ability to perform its obligations under this Agreement, its ability to
fulfill travel services associated with the Card transactions submitted to SERVICERS
for processing, or (B) a material adverse change in the business procedures, Card
processing procedures, products or services of CUSTOMER which, in SERVICERS’
reasonable determination, materially increases SERVICERS’ potential exposure or
liability related to Chargebacks related to CUSTOMER’s Card transactions. |
** | Confidential Treatment Requested. |
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SERVICERS shall provide written notice to CUSTOMER describing in reasonable detail
the circumstances or event that
SERVICERS deem to constitute a material adverse change, and notifying CUSTOMER of
the Reserve Percentage SERVICERS require. After receiving any such notice CUSTOMER
shall, within ** days following receipt of such notice, increase the Reserve Account
to the required Reserve Percentage. If CUSTOMER shall fail, within said ** day
period, to increase the Reserve Account to the required Reserve Percentage,
SERVICERS may immediately thereafter elect to take immediate action to fund the
Reserve Account to the required Reserve Percentage. Pursuant to Section 19.3(v)(b),
CUSTOMER’s failure to fund the Reserve Account within said ** day period shall
constitute an Event of Default. |
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This Agreement has been terminated by either party (other than for a termination by
CUSTOMER exclusively pursuant to Section 18.2 or 19.6 of this Agreement in which
case the balance to be maintained in the Termination Reserve Account will be
governed by Section 20.6 of this Agreement.) |
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After written request from SERVICERS and passage of a ** cure period, CUSTOMER shall
fail to either make public or deliver to SERVICERS any of the financial reports or
information described in Section 21.1 within the time frames described in Section
21.1. |
The Reserve Percentage Table is deleted and replaced with the following Reserve Percentage
Table:
Reserve | Fixed Charge | Unrestricted | ||||
Reserve Tier | Percentage | Coverage Ratio | Cash/Revenues | |||
** | ** | ** | ** |
The “Reserve Percentage” shall be a percentage of Gross Air Traffic Liability at the
end of the last ** of the immediately preceding **. The “Fixed Charge Coverage
Ratio” in the Reserve Percentage Table shall be calculated based on the immediately
preceding ** and shall be calculated by dividing CUSTOMER’s earnings before
interest, taxes, depreciation, amortization and aircraft rents (“EBITDAR”) by the
sum of aircraft rents and gross interest expense. “Revenues” in the Reserve
Percentage Table shall be the immediately preceding ** of combined passenger and
cargo revenue. In order to qualify for a particular Tier, CUSTOMER must meet both
of the criteria for that particular Tier. Additionally, to qualify for Tier **,
CUSTOMER must also maintain **. |
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(iv) | Upon execution of this Amendment, SERVICERS agree to review and, if needed,
adjust, the amount required to be maintained in the Reserve Account on a ** basis. |
6. Section 21.1 of the Agreement is amended as follows:
Section 21 (a) of the First Amendment is deleted and replaced in its entirety with the
following:
“(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. The ** 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 ** electronic data file will be very large and SERVICERS shall be responsible
for their costs of receiving and processing such electronic data file.” |
Additionally, the parties recognize that CUSTOMER is obligated to produce the **
internal results, forecast, and operating plan referenced in Section 21.1 only to the extent
requested by SERVICERS. CUSTOMER shall also provide SERVICERS with ** financial statements
and ATL reports.
** | Confidential Treatment Requested. |
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7. Accounting Terms.
(a) All accounting terms not specifically defined herein shall be construed in
conformity with GAAP and all accounting determinations required to be made pursuant
hereto shall, unless expressly otherwise provided herein, be made in conformity
with GAAP. |
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(b) If any change in accounting principles used in preparation of the most recent
financial statements referred to herein is required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accountants Accounting
Standards Board or the American Institute of Certified Public Accountants (or any
successor thereto) and such change is adopted by the CUSTOMER with the agreement of
its independent public accountants and results in a material change relating to any
of the calculations required by Section 20.2, both parties agree to review the
change and its impact in good faith in order to amend such provisions so as to
equitably reflect such change with the desired result that the criteria for
evaluating such compliance with such covenants by the CUSTOMER shall be the same
after such change as if such change had not been made. In any case, while SERVICERS
and CUSTOMER are negotiating potential changes to the financial thresholds
contemplated in Section 20.2, SERVICERS shall have the right to continue to make
adjustments to the Reserve based on the rules that were in place prior to the
change. |
8. 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.
This Amendment shall be effective as of April 11, 2008 (the “Effective Date”).
Chase Alliance Partners, LLC | US Airways Group, Inc. | |||||||||||||
For itself and on
behalf of JPMorgan Chase Bank, N.A. |
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By: | /s/ Xxxxx Trunks | By: | /s/ Xxxxx X. Xxxx | |||||||||||
Name: | Xxxxx Trunks | Name: | Xxxxx X. Xxxx | |||||||||||
Title: | Chief Administrative Officer | Title: | Sr. Vice President and Chief Financial Officer |
** | Confidential Treatment Requested. |
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Paymentech, LLC | Schedule A to Merchant Agreement | |
US Airways | Assumptions and Fees |
Assumptions |
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Chargeback % |
* | * | ||
Auth / Capture % |
* | * | ||
Fees |
1. Initiation & Service Fees
Supply fee
þ Per Order |
||||
Frame Relay/Leaseline: |
||||
Monthly Fee |
* | * | ||
Dial Backup authorization surcharge |
* | * |
2. Transaction Fees
Bank Card
Transactions: * |
** |
* | As of the Effective Date of this agreement Merchant will begin at **. Thereafter, a new Bankcard
Pricing may be applied based on the trailing ** Bankcard transaction volume. It is the
responsibility of the CUSTOMER to notify the SERVICER in writing when a new Bankcard Pricing tier
is obtained. The new Bankcard Pricing and fees set forth therein will be applied on the ** of the
following calendar month following written notification. SERVICER agrees to review, on a ** basis,
CUSTOMER’s actual Interchange costs and qualification levels. If, based on such review, SERVICER
has recommendations to CUSTOMER that could impact CUSTOMER’s Interchange costs and/or Interchange
qualification levels, SERVICER will make such recommendations to CUSTOMER. CUSTOMER understands
that a number of variables affect Interchange qualification levels and SERVICER will provide to
CUSTOMER recommendations for improvement where applicable. If SERVICER fails to process
transactions in accordance with industry standards, causing greater Interchange expense to
CUSTOMER, then SERVICER will reimburse any monies due to CUSTOMER in the month following the
failure. |
3. Authorization fees
Voice Authorizations |
* | * | ||
Terminal Authorizations: |
||||
American Express Electronic Authorization |
* | * | ||
Discover Electronic Authorization |
* | * | ||
JCB Electronic Authorization |
* | * |
4. Reporting Options
Monthly Statement fee |
* | * | ||||||||||
Statement Type & Frequency: |
Mail - (F) | Statement Only | Monthly |
5. Discount Information
MC/Visa Target Qualification Level: |
MasterCard: | 013 | Passenger Transport | |||||||||
Visa: | 027 | CPS/Passenger Transport AIR |
** Pass-thru of MC/Visa Interchange and Assessments** | see I/C Rate Schedule |
|||||||||||
MasterCard / Visa Assessment Rates |
* | * | * | * | ||||||||
MasterCard / Visa Authorization Access Fees*** |
* | * | * | * | ||||||||
Visa Risk Identification Fee*** |
* | * | * | * | ||||||||
US Currency | Non-US Currency | |||||||||||
** Pass-thru of MC Cross-Border Assessment Fee |
** | ** | ||||||||||
** Pass-thru of VI International Service Assessment Fee |
* | * | ||||||||||
** Pass-thru of PIN Debit Network Fees |
* | * | ||||||||||
Discount frequency: ** |
** | The Interchange applicable to each transaction will be based on the actual qualification
level of the transaction. For each transaction not qualifying at the Target Qualification
Level, we will charge you an additional fee calculated as described on the following page
under the heading “Additional Information About Your Fees”. |
|
*** | Currently the following fees are included at no additional charge in SERVICER’S authorization
fees set forth herein: (1) the MasterCard Authorization Fee of ** per authorization, (2) the
Visa Acquirer VIP Variable Access Fee of ** per authorization, and (3) the Visa Risk
Identifier Fee of ** per settled transaction. In the event that one or more of these fees
increases above current levels, all such incremental cost increases (and any additional
increases thereafter) shall be a direct cost pass through to CUSTOMER. |
6. Processing fees
Minimum Monthly Discount fee |
* | * | ||
Chargeback Processing fee |
* | * | ||
Batch Settlement fee |
* | * | ||
VRU Fax Statement fee |
* | * | ||
ACH fee |
* | * | ||
ACH Return fee |
* | * |
Initials: DK | Date: 4/8/2008 |
** | Confidential Treatment Requested. |
Paymentech, LLC | Schedule A to Merchant Agreement | |
US Airways | Assumptions and Fees |
Additional Information About Your Fees
Interchange
A significant amount of the fees that we charge you for processing your Payment Transactions
consists of charges that we must pay to issuing banks (or that are otherwise charged to us by the
Payment Brands) under the Rules. These charges are often referred to as “Interchange fees”, or
simply “Interchange”. Interchange fees are set by the Payment Brands based upon a series of
Interchange levels that they establish and modify from time to time. Thus, the Interchange fee
charged for a given transaction depends on the Interchange level applicable to that transaction;
and that Interchange level depends on a number of factors established by the Payment Brands, such
as the type of Payment Instrument presented, specific information contained in the transaction, how
and when the transaction is processed, your industry, and other factors. For a transaction to
qualify at any specific Interchange level, the applicable qualification criteria must be met. Note
that the Payment Brands regularly add new Interchange levels, and change the Interchange rates and
qualification criteria for existing Interchange levels.
Target Discount Rate and Target Qualification Level
The Target Qualification Level is the Interchange level that we expect to apply to your
transactions. It is determined based on the type of transactions you submit and how they will most
likely be processed. However, it is possible that some or many of your transactions will downgrade
to a more costly Interchange level, resulting in higher Interchange. This may occur because those
“Non-Qualified Transactions” do not meet the criteria to qualify at your Target Qualification
Level. Paymentech has set your Target Qualification Level (as set forth on your pricing schedule)
based on the assumption that all of your transactions will satisfy the criteria established by the
Rules to meet that qualification level. The actual Interchange applicable to each transaction,
though, will be based on the actual qualification level of the transaction. A summary of the
primary qualification criteria for each Interchange level established by the Payment Brands is
available at xxx.xxxxxxxxxx.xxx/xxxxxxxxxxx_xxxxx.
Capitalized Terms: Please review the definitions in your Agreement so that you understand
the capitalized terms we use in the pricing schedule. The capitalized term “Payment Brand” has the
same meaning as the term “Payment Brand” or “Association” in your agreeement. The capitalized term
“Rules” has the same meaning as the term “Rules”, Association Rules”, or “Regulations” in your
Agreement. The capitalized term “Payment Transaction” has the same meaning as the term “Payment
Transaction”, “Card Transaction”, or “Sales Data” in your Agreement. The capitalized term “Payment
Instrument” has the same meaning as the term “Payment Instrument”, “Card”, or “credit card” in your
agreement.
US Airways
By:
|
/s/ Xxxxx X. Xxxx | Title: | Sr. Vice President & Chief Financial Officer | Date: 4/08/08 | ||||
(Authorized Signature) | (Month/Day/Year) |