AMENDED AND RESTATED CUSTOMER BUSINESS AGREEMENTFinancial Services Agreement |
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Exhibit 10.29
CERTAIN PORTIONS OF THIS EXHIBIT
HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE
SYMBOL “****” HAS BEEN INSERTED
IN PLACE OF THE PORTIONS SO OMITTED.
EXECUTION VERSION
Amended and Restated Customer Business Agreement
This agreement (including all Exhibits and Annexes attached hereto, the “Agreement”) is made as of the Effective Date (as defined below) by and between MasterCard International Incorporated, a Delaware corporation having its principal place of business at 2000 Purchase Street, Purchase, New York 10577-2509 (together with its Affiliates, “MasterCard”), and Bank of America, N.A., having its principal place of business at 100 North Tryon Street, Charlotte, North Carolina 28255-0001 (together with its Affiliates, “BAC”).
WHEREAS, BAC is licensed to issue MasterCard Cards pursuant to the Rules;
WHEREAS, MasterCard and BAC desire to enter into an arrangement by which MasterCard will provide Support to help increase the issuance, usage and activation of BAC’s MasterCard Cards;
WHEREAS, MasterCard and BAC previously entered into that certain Customer Business Agreement executed as of May 5, 2006 (the “Prior Agreement”);
WHEREAS, MasterCard and BAC acknowledge and agree that this Agreement shall supersede the Prior Agreement, and the Prior Agreement shall have no further force or effect as of the date of execution of this Agreement; and
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
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1.0 |
Definitions. |
Capitalized terms used in this Agreement shall have the meanings given to them in Exhibit A or elsewhere in this Agreement.
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2.0 |
MasterCard Support. |
In consideration for BAC’s timely performance of its obligations under this Agreement, MasterCard shall provide BAC with the Support outlined below during the Term, subject to the conditions and limitations contained herein.
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2.1 |
**** Incentive. |
Subject to Section 3, as of the Effective Date, MasterCard will provide BAC with **** MasterCard-branded **** Cards issued by BAC and MasterCard-branded **** Cards issued by BAC. Adjustments as set forth herein will be made at the end of each quarter and Year of the Term to effectuate such incentive (the “****”).
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A. |
Quarterly Calculation |
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1. |
Unless otherwise adjusted as provided herein, the **** for each Year of the Term will be distributed by calendar quarter, as follows (“Quarterly ****”): |
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Table 1 |
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Measurement Period |
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Quarterly
**** |
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1st quarter |
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$ **** |
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2nd quarter |
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$ **** |
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3rd quarter |
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$ **** |
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4th quarter |
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$ **** |
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Total **** |
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$ **** |
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2. |
BAC shall pay all fees at MasterCard Standard Pricing as applicable under the Rules and with the same frequency as required in the MCBS Manual. At the conclusion of each calendar quarter of the Term for each of the first three calendar quarters of every Year after the Effective Date, and within thirty (30) days after BAC has provided the Required Reports for such quarter, MasterCard shall make the appropriate calculation and **** of BAC’s actual payments of the **** for such period pursuant to this Section 2. |
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3. |
Unless otherwise adjusted as provided herein, the appropriate **** and the corresponding applicable **** and **** for such quarter shall be determined in Table 2. Notwithstanding the foregoing, the **** to be applied the **** Year of the **** Term shall be the **** that was applied to **** in the immediately preceding Year. |
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Table 2 |
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**** ($) |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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4. |
In order to determine the appropriate **** for use in the calculation below, and as part of the quarterly reconciliation process, MasterCard will determine and reconcile based on a **** annual tier level for which BAC will qualify by **** and **** its cumulative quarterly **** by the following ****: |
1st Qtr. ****– by ****,
Year-to-date to end of 2nd Qtr. – by ****
Year-to-date to end of 3rd Qtr. – by ****
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5. |
The **** for a quarter is calculated as: |
****
****. See Annex A for examples of this calculation.
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B. |
Annual Calculation. At the end of the 4th calendar quarter of each Year during the Term, and within thirty (30) days after BAC has provided all Required Reports for such Year, MasterCard shall make the appropriate calculation and **** as follows: |
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1. |
The **** will be used with Table 2 to determine the corresponding ****, as well as **** and the ****, for that Year. Notwithstanding the foregoing, the **** to be applied the **** Year of the **** Term shall be the **** that was applied to **** in the immediately preceding Year. |
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2. |
The “****” is calculated as follows: |
****
Then, the “****” is calculated as follows:
****
****. See Annex A for examples of this calculation.
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2.2. |
**** Benefit |
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A. |
Quarterly Calculation. At the conclusion of each calendar quarter of the Term for each of the first three calendar quarters of every Year after the Effective Date, and within thirty (30) days after BAC has provided the Required Reports for such quarter, MasterCard shall make the appropriate calculation to determine the **** earned for such period pursuant to this Section 2.2 (the “****”). The quarterly **** during the Term will be determined by **** from Table 3, below, based upon the **** determined pursuant to Section 2.1(A)(4) and will be subject to **** as provided herein. Notwithstanding the foregoing, the **** to be applied the last Year of the **** Term shall be the **** that was applied to **** in the immediately preceding Year. |
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Table 3 |
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**** ($ ) |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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B. |
Annual Calculation. At the end of the 4th calendar quarter of each Year during the Term, and within thirty (30) days after BAC has provided all Required Reports for such Year, MasterCard shall make the appropriate calculation and **** to determine the **** as follows: |
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1. |
The **** will be used with Table 3 to determine the corresponding ****, as well as **** for that Year. Notwithstanding the foregoing, the **** to be applied the **** Year of the **** Term shall be the **** that was applied to **** in the immediately preceding Year. |
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2. |
The “****” is calculated as follows: |
****
****. See Annex B for examples of this calculation.
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2.3 |
****. As of the Effective Date and for each Year of the Term, MasterCard will provide BAC with **** (as set forth in Exhibit B, Section B) at such ****, which, subject to Section 3 and the terms hereof, is the **** for which BAC will be actually responsible in connection with the **** in such Year (“****”). At the conclusion of each Year of the Term, MasterCard shall make an annual reconciliation versus actual payments made in accordance with MasterCard Standard Pricing, based on the following calculation for each ****: |
****
For the avoidance of doubt, the calculation referenced above shall apply to **** for the **** Year of the **** Term.
Notwithstanding the foregoing, if the **** in any year is ****, the **** will not apply with respect to MasterCard-branded **** Cards, and BAC will pay MasterCard Standard Pricing for **** with respect to
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MasterCard-branded **** Cards, which includes any pricing adjustments or increases. At the end of the 4th quarter for each Year during the Term, and within thirty (30) days after BAC has provided all Required Reports for such Year, MasterCard shall make such calculations in accordance with the above and the examples set forth in Annex C to determine if any **** is owed to BAC. MasterCard will make an annual reconciliation of the components of its analysis and its calculations as to the amount of **** and the **** as set forth in Exhibit B.
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2.4 |
**** Support. |
MasterCard will make **** support funds available to BAC as provided hereunder (the “****”):
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A. |
**** Support. For each Year during the Credit Term, MasterCard shall make available to BAC **** Support, which amount shall be based upon **** as calculated herein (“**** Support”). The total amount of **** Support available to BAC in each Year will be determined in accordance with the following calculation: |
****
**** Support will be subject to reduction in any Year if **** for such Year is less than the Annual Target. If it is determined at the end of any Year that BAC did not earn the full amount of **** Support, the difference shall be adjusted as part of the true-up calculation for such year, and if insufficient, then shall be factored into any subsequent Year until satisfied. If it is determined at the end of any Year that BAC earned more **** Support than it was provided in such year, an adjustment will be made in conjunction with the **** Support available in the first quarter of the next Year. A portion of the annual **** Support will be allocated to each **** based on each ****, as calculated based on the prior Year’s actual **** for such ****, unless otherwise mutually agreed. Notwithstanding the foregoing, any **** Support payable in **** shall be decreased by (i) the cost of **** incurred by BAC prior to the execution of this Agreement and (ii) the cost of **** incurred pursuant to the terms of any other agreement in effect between the parties at such time. Deployment of the annual **** Support shall be determined by the Co-Chairs (as defined below) in their reasonable discretion.
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B. |
**** Support. For each Year during the **** Term, MasterCard shall make available to BAC **** Support, which amount shall be based upon **** and as set forth in this Section 2.4B (“Support”). The total amount of **** Support available to BAC in each Year of the **** Term will be determined in accordance with the following calculation: |
****
****. In addition, BAC shall be eligible for incremental **** Support (“Incremental **** Support”) for the period ending on **** (the “**** Year,” or “Year”), for a total of up to **** in **** Support and Incremental **** Support for such period, subject to **** pursuant to Annex L. If it is determined at the end of any Year based upon the actual **** for such Year that BAC did not earn the full amount of **** Support or Incremental **** support for such Year, the difference shall be adjusted as part of the true-up calculation for such Year, and if insufficient, then shall be factored into any subsequent Year until satisfied. If it is determined at the end of any Year that BAC earned more **** Support than it was provided in such Year, an adjustment will be made in conjunction with the **** Support available in the first quarter of the next Year. Deployment of the annual **** Support shall be determined by the Co-Chairs (as defined below) in their reasonable discretion. Until BAC provides the forecast required by ****, the **** for any Year shall be ****.
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C. |
**** Committee. For each ****, a **** committee will be established that will be co-chaired by MasterCard’s **** or **** designee, and a designated BAC executive (the “Co-Chairs”). The Co-Chairs will oversee and approve all initiatives to be funded by the **** Support. Deployment of all **** Support will be based on a disciplined business case and prioritization process, as may be determined by the Co-Chairs, in their reasonable discretion, from time to time. |
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D. |
**** Committee. For ****, a **** committee will be established that will be co-chaired by MasterCard’s **** or **** designee, and a designated BAC **** executive (the “Co-Chairs”). The Co-Chairs will oversee and approve all initiatives to be funded by the **** Support. Deployment of all **** Support will be based on a disciplined business case and prioritization process, as may be determined by the Co-Chairs, in their reasonable discretion, from time to time. |
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E. |
Use of **** Support. **** Support available in any Year shall be used in such Year to support the growth of MasterCard Cards only, and the deployment of **** Support in any Year shall be determined by **** of such Year. Examples of potential deployment of the annual **** Support or **** Support budgets include, but are not limited to, those set forth in Annex D. In the event **** Support is used to reimburse BAC, then BAC shall provide to MasterCard appropriate detailed invoices supporting such reimbursement. |
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F. |
No Carry Over. To the extent that the entire value of any **** Support available in any Year of the Term is not used in such Year, any such unused **** Support will be forfeited, and MasterCard will have no obligation to make any rebate or other consideration to BAC for the unused amount of **** Support, provided, however, that in the event a reasonable person would determine in good faith that MasterCard has failed to act reasonably expeditiously in assisting BAC to utilize such budget(s) during any Year, then the unused portion of such budgets for that Year shall roll into and be added to the budgets for the following Year. |
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2.5 |
**** Support. |
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A. |
**** Support. MasterCard will provide annual support of up to **** for **** services for **** (“**** Support”). |
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B. |
**** Support. MasterCard will provide annual support of up to **** during the **** Year and up to **** for **** Year **** for **** services for **** (“**** Support”). In the event that BAC’s actual **** for any Year is **** of the **** for such Year, then MasterCard may, in its sole discretion, **** the **** for the **** Year. |
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C. |
Value and Use of Support. Deployment of the **** Support and the **** Support (collectively, the “**** Support”) in any Year shall be determined by **** of such Year, and shall be managed and delivered by MasterCard. The value of **** shall be determined in accordance with **** standard pricing in effect at the time such **** Support is delivered. MasterCard’s obligation to provide this support is subject to BAC’s execution and delivery to MasterCard of reasonable and appropriate protective documentation. Examples of potential utilization of the **** Support include, but are not limited to those set forth in Annex E. |
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D. |
No Carry Over. To the extent that the entire value of any **** Support available in any Year of the Term is not used in such Year, any such unused **** Support will be forfeited, and MasterCard will have no obligation to make any rebate or other consideration to BAC for the unused amount of **** Support, provided, however, that in the event a reasonable person would determine in good faith that MasterCard has failed to act reasonably expeditiously in assisting BAC to utilize such budget(s) during any Year, then the unused portion of such budgets for that Year shall roll into and be added to the budgets for the following Year. |
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2.6 |
Additional Support. |
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A. |
Initiatives. MasterCard will provide additional support to BAC to be used in the **** Year of the **** Term for the **** initiatives as set forth in Annex F (the “Additional Support”). To the extent that any services relating to any initiative set forth in Annex F are to be provided by ****, MasterCard’s obligation to provide Additional Support for such initiative is subject to BAC’s execution and delivery to MasterCard of appropriate documentation with **** before work begins. MasterCard and BAC will |
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work together in good faith to expedite the initiatives in Annex F so that the Additional Support can be used in ****. |
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B. |
No Carry Over. Use of Additional Support shall be determined by **** of the **** Year. To the extent that any of the Additional Support set forth in Annex F is not spent in the **** Year, any such unused Additional Support will be forfeited, and MasterCard will have no obligation to make any rebate or other consideration to BAC for the unused amount of Additional Support, provided, however, that in the event a reasonable person would determine in good faith that MasterCard has failed to act reasonably expeditiously in assisting BAC to utilize such budget(s) during such Year, then the unused portion of such budgets for that Year shall roll into the following Year. Notwithstanding the above, in the event BAC is unable to utilize the Additional Support in ****, MasterCard will make a good faith effort, where appropriate, to preserve such Additional Support for BAC use in ****, the preservation of Additional Support to be determined by MasterCard in its sole discretion. |
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2.7 |
**** Support. |
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A. |
MasterCard will provide BAC with an annual incentive for ****, pursuant to the table below, for each Year of the **** Term in which certain **** thresholds, as set out below, are met for ****. The **** shall be calculated in accordance with the formulas in Annex G. |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
For the purpose of calculating this incentive for any Year, a ****. All must have achieved an aggregate, annualized, minimum **** of **** annually (“****”) to fully earn the incentive. See Annex G for a sample calculation.
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B. |
In the event that at least a **** is achieved in any Year, but there is **** shortfall, the **** will be reduced by a percentage equivalent to the **** shortfall ****. |
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C. |
Once the **** required to allow BAC to **** has been completed by BAC during the Term and such completion date has been reported to MasterCard, MasterCard will provide the following additional support to BAC, based upon the annual **** commitment made by BAC, during the twelve month period following such **** completion date: |
****
Provision of such additional support shall be subject to execution by BAC of reasonable and appropriate protective documentation. In the event that BAC does not attain the **** commitment **** for such first Year, then it shall ensure that such **** commitment is attained in the subsequent Year.
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2.8 |
**** Bonus. MasterCard will also provide a **** bonus to BAC in each Year in which the Annual Target (as defined in Section 3.1 below) for such Year is achieved, pursuant to the calculations and subject to the limitations herein (“****”). The amount of **** paid to BAC shall be **** that BAC achieves **** the Annual Target, such that only the **** that is **** the Annual Target shall be eligible for such support. **** Notwithstanding anything to the contrary, for the purposes of performing the calculations required by this Section ****, shall not include ****. Notwithstanding anything to the contrary, for the purposes of performing the calculations required by this Section ****, shall include ****. |
In the event that MasterCard **** such Cards **** and BAC **** unless the **** by MasterCard ****. MasterCard will determine the amount of the applicable ****, and to the extent it is **** than the **** paid by MasterCard, MasterCard will pay to BAC the ****, as determined by MasterCard in its sole discretion.
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In any case, MasterCard will use reasonable efforts to ensure the **** will be used to support card issuance programs.
The parties hereto acknowledge that nothing in this Section 2.8 will be interpreted as MasterCard requiring or not requiring ****.
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2.9 |
Acquired Portfolios. |
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A. |
BAC shall promptly notify MasterCard of any Acquired Portfolio transaction as soon as reasonably practicable after such transaction is finalized. In the event that BAC acquires any MasterCard payment card portfolio or any entity that offers, or intends to offer, payment card programs similar to the programs that are the subject matter of the Agreement, then the **** associated with such acquired portfolios or programs will be eligible for the **** and incentives and such portfolios or programs will be subject to all other provisions of the Agreement at such time **** and subject to ****. |
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B. |
In the event that BAC acquires a portfolio of MasterCard-branded Cards generating an average aggregate annual **** of **** or ****, the **** (together with the Quarterly ****) and Annual Targets will each be automatically adjusted (such revised ****, the “Revised ****”; such revised Annual Targets, the “Revised Annual Targets”) by MasterCard to reflect **** of the prior **** of **** generated on such Acquired Portfolio (the “****”). With respect to ****, such acquired portfolio volumes will be eligible for **** as outlined herein upon inclusion of such volumes in BAC’s reporting and upon adjustments as provided above. See Annex H for an example of this calculation. |
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C. |
Notwithstanding anything in this Agreement to the contrary, in the event that BAC acquires a portfolio of MasterCard-branded **** Cards, the **** generated by such Cards **** BAC’s **** Requirement or **** Requirement set forth in Section 3.1B and 3.1C, respectively. |
2.10 **** Incentive.
A. **** Incentive. In consideration of BAC’s commitment **** of the ****, MasterCard will pay BAC **** after **** and ****. This section is subject to the provisions of Section 3.1B.
B. **** Incentive. In consideration of BAC’s commitment **** of the ****, MasterCard will pay BAC **** within forty-five days of the **** occurring on a MasterCard-branded **** Card issued by BAC. This section is subject to the provisions of Section 3.1C.
2.11 **** Bonus. In the event that in any Year during the **** Term the actual **** exceeds the minimum **** threshold, set forth in the table below (the “Minimum **** Threshold”) for such Year, MasterCard shall pay to BAC for such Year an amount equal to **** the incremental ****, determined in accordance with the following calculation:
****
****
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Year |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
2.12 **** Support. MasterCard will provide BAC with **** supporting **** Cards with a value of **** in **** Year of the **** Term for **** approved in advance by **** (“**** Support”). MasterCard will work jointly with BAC to **** will receive ****. In the event that BAC’s actual **** for any Year **** of the **** for such Year, then MasterCard may, in its sole discretion, reduce the **** Support for the **** Year.
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3. |
BAC Covenants. |
In consideration for the Support to be provided to BAC by MasterCard as described above and to the other terms and conditions set forth in the Agreement, BAC agrees and acknowledges that:
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3.1 |
Annual Volume Targets. |
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A. |
“Annual Targets,” when used in this Agreement, shall have the following meanings with respect to **** in each Year of the **** Term: |
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Year |
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Annual |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
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**** |
****
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B. |
“**** Requirement,” when used in this Agreement, shall have the following meanings with respect to **** generated by MasterCard-branded **** Cards in each Year of the **** Term: |
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Year |
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**** Requirement: |
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**** |
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$ **** |
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**** |
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$ **** |
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**** |
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$ **** |
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**** |
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$ **** |
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**** |
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$ **** |
In the event that by **** or in any **** Year during the **** Term the **** than the **** Requirement for such period (the “**** Year”), then BAC’s **** for such shortfall, except as provided in Section ****, shall be to pay to MasterCard an amount calculated using the following formula:
****
****. If in the Year immediately following **** Year BAC **** the shortfall from such **** Year by generating **** in excess of the **** Requirement for such Year by an amount at least equal to **** Year, then **** pursuant to **** Section **** for such **** Year.
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C. |
“**** Requirement,” when used in this Agreement, shall have the following meanings with respect to **** generated in each Year of the **** Term: |
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Year |
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**** Requirement: |
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**** |
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**** |
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**** |
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**** |