Document/Exhibit Description Pages Size
1: 10-Q Mastercard Incorporated HTML 369K
2: EX-10.1 Settlement Agreement 39 102K
3: EX-10.2 $1,200,000,000 Credit Agreement 132 468K
4: EX-10.3 Indenture 110 458K
5: EX-10.4 Lease 65 253K
6: EX-31.1 302 Certification: CEO HTML 11K
7: EX-31.2 302 Certification: CFO HTML 11K
8: EX-32.1 906 Certification: CEO HTML 7K
9: EX-32.2 906 Certification: CFO HTML 7K
Exhibit 10.1
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - - x
MASTER FILE NO. CV-96-5238
IN RE VISA CHECK/MASTERMONEY (Gleeson, J.) (Mann, M.J.)
ANTITRUST LITIGATION
- - - - - - - - - - - - - - - - - - - x
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Settlement Agreement" or "Agreement")
is made as of the 4th day of June 2003, by Defendant MasterCard International,
Incorporated ("MasterCard") and Plaintiffs in In Re Visa Check/MasterMoney
Antitrust Litigation, No. 96-CV-5238 (JG), a Class Action (the "Class Action" or
"Action"), on behalf of each and every member of the Class defined herein
(collectively, the "Plaintiffs" or "Class Members").
WHEREAS the first of the complaints comprising this Action was filed on
October 25, 1996;
WHEREAS, by Order dated December 27, 1996, the Court (i) consolidated
the original complaint with numerous additional complaints filed subsequent to
the filing of the original complaint alleging similar or identical claims
against MasterCard and Visa U.S.A. Inc. ("Visa"), and (ii) designated the law
firms of Constantine & Partners ("C&P") and Hagens Berman ("HB") as Plaintiffs'
Co-Lead Counsel.
WHEREAS the operative complaint in this Action, the Second Amended
Consolidated Class Action Complaint and Jury Demand (the "Complaint"), was filed
on May 26, 1999;
WHEREAS, the Complaint alleges, among other things, that MasterCard has
violated the Sherman Act (15 U.S.C. Sections. 1 and 2) based on the following
claims, among others: (i) MasterCard has illegally tied merchant acceptance of
its debit card services to merchant
acceptance of its credit card services under MasterCard's so-called "Honor All
Cards" rule, (ii) MasterCard, together with Visa, have used their respective
tying arrangements, and other anticompetitive conduct, in an attempt to
monopolize the market consisting of debit card services to merchants; (iii)
MasterCard, together with Visa, have conspired to monopolize the debit card
services market; and (iv) MasterCard's anticompetitive conduct has resulted in
merchants paying higher interchange fees for accepting MasterCard card
transactions;
WHEREAS, this Action involved the production of more than five (5)
million pages of document discovery and approximately four-hundred (400)
depositions taken over five-hundred (500) days;
WHEREAS, by Order dated February 22, 2000, the Court certified this
Action as a class action under Rules 23(b)(2) and 23(b)(3) of the Federal Rules
of Civil Procedure;
WHEREAS, by decision dated October 17, 2001, the United States Court of
Appeals for the Second Circuit affirmed the Court's Order certifying this Action
as a class action;
WHEREAS, on June 10, 2002, the United States Supreme Court denied Visa
and MasterCard's petition for a writ of certiorari of the Second Circuit's
decision affirming the Court's Order certifying this Action as a class action;
WHEREAS, by Order dated April 1, 2003, the Court denied in their
entirety Visa and MasterCard's motions for summary judgment, and granted in part
and denied in part Plaintiffs' motion for summary judgment.
WHEREAS, by Order dated April 1, 2003, the Court denied MasterCard's
motion for severance or a separate trial;
2
WHEREAS, on April 30, 2003, Plaintiffs and MasterCard entered into a Memorandum
of Understanding regarding the proposed settlement of this Action as against
MasterCard;
WHEREAS, MasterCard denies each and every one of Plaintiffs'
allegations of unlawful conduct and damages and has asserted a number of
defenses to Plaintiffs' claims;
WHEREAS, Plaintiffs and MasterCard agree that this Settlement Agreement
shall not be deemed or construed to be an admission or evidence of any violation
of any statute or law or of any liability or wrongdoing by MasterCard or of the
truth or merit, or lack of truth or merit, of any of the claims or allegations
alleged in the Class Action;
WHEREAS, arm's length settlement negotiations have taken place between
counsel for Plaintiffs and MasterCard, and this Settlement Agreement, including
its exhibits, which embodies all of the terms and conditions of the Settlement
between MasterCard and the Plaintiffs, has been reached, subject to the final
approval of the Court;
WHEREAS, Plaintiffs' Counsel have concluded, after extensive discovery
and investigation of the facts and after carefully considering the circumstances
of the Class Action and the applicable law, that the terms and conditions of
this Settlement Agreement are fair, reasonable, and adequate to Plaintiffs, and
in their best interests, and have agreed to settle the claims raised in the
Action after considering (i) the substantial benefits that Plaintiffs will
receive under the Settlement Agreement, and (ii) the burden, expense and
uncertainties of litigation, and particularly complex litigation such as this
Action;
WHEREAS, MasterCard has concluded, despite its belief that it is not
liable for the claims asserted and has good defenses thereto, that it will enter
into this Settlement Agreement to avoid the further expense, inconvenience and
burden of this protracted litigation, and the
3
distraction and diversion of its personnel and resources, and thereby to put to
rest this controversy with valued business customers, and to avoid the risks
inherent in uncertain complex litigation;
NOW THEREFORE, without any admission or concession on the part of
Plaintiffs of any lack of merit of the Action whatsoever, and without any
admission or concession of any liability or wrongdoing or lack of merit in the
defenses whatsoever by MasterCard, it is hereby AGREED by the undersigned, on
behalf of MasterCard and Plaintiffs, that the Class Action and all claims of the
Plaintiffs be settled, compromised and dismissed on the merits and with
prejudice as to MasterCard, and, except as hereinafter provided, without costs
as to Plaintiffs or MasterCard, subject to the approval of the Court, on the
following terms and conditions:
ADDITIONAL DEFINITIONS
1. As used herein, and for the purposes of the Settlement
Agreement only, the following additional terms shall be defined as set forth
below:
a. "Authorized Claimant" means a Class Member who is
entitled to receive a distribution from the Net Settlement Fund as provided for
in the Plan of Allocation of Settlement Funds.
b. "Claims Administrator" means the firm of Garden City
Group, Inc., which shall administer the Settlement and the provision of Notice
under Plaintiffs' Co-Lead Counsel's supervision.
c. "Class," as defined in the Court's class
certification Order dated February 22, 2000, means all persons and business
entities who have accepted MasterCard and/or Visa credit cards and therefore
have been required to accept MasterCard branded and/or Visa branded
4
debit cards under the challenged tying arrangements at any point during the
Class Period within the continental United States (and Alaska and Hawaii).
Excluded from the Class are any putative class members who previously excluded
themselves from this Action by filing a request for exclusion in accordance with
the requirements set forth in the Consent Order Concerning Notice of Pendency of
Class Action dated June 21, 2002, and the Notice of Pendency previously provided
to Class Members.
d. "Class Member" means any member of the Class.
e. "Class Period" means the period of time from October
25, 1992 through the date of the first publication of Notice, expected to be on
or around June 21, 2003.
f. "Effective Date" means the date of Final Settlement
Approval as specified in paragraph 26 below.
g. "Fee and Expense Application" means the application
submitted by Plaintiffs' Co-Lead Counsel seeking Plaintiffs' attorneys' fees,
expenses and costs.
h. "Fee Award" means Plaintiffs' attorneys' fees,
expenses and costs as may be awarded by the Court to Plaintiffs and their
counsel.
i. "Final Settlement Approval" means final approval of
the Settlement as specified in paragraph 26 below.
j. "Gross Settlement Fund" means the Settlement Fund,
and any interest earned thereon.
k. "MasterCard Branded Product" means any MasterCard POS
Debit Device or Other MasterCard Product.
5
l. "MasterCard POS Debit Device" means any MasterCard
branded consumer product, device, program, or service issued within the
continental United States (and Hawaii and Alaska) by United States member
financial institutions, that, when presented for payment in the United States,
accesses, debits, holds or settles funds from the consumer's demand deposit or
asset account. Attached hereto as Exhibit A is a list of all current MasterCard
products, devices, programs, or services that, as determined by MasterCard
through its reasonable efforts, qualify as a MasterCard POS Debit Device.
Notwithstanding the foregoing, the term MasterCard POS Debit Device shall not
include (i) any product, device, program, or service that accesses, debits,
holds or settles funds from the user's demand deposit or asset account fourteen
(14) days or more after the date of the purchase, (ii) any cards issued under
the specific brokerage account deferred debit programs listed on Exhibit B, or
(iii) any cards issued under the specific brokerage account deferred debit
programs listed on Exhibit H to the Visa Settlement Agreement to the extent that
MasterCard and any of its issuers convert the cards in such programs to
MasterCard branded cards, and so long as those cards are issued under the same
brokerage account deferred debit card program.
m. "Net Settlement Fund" means the Gross Settlement
Fund, less the amount of the Fee Award and Court-approved expenses, taxes, and
costs of Notice and administration.
n. "Notice" means the notice of this Settlement,
attached hereto as Exhibits C and D, that will be sent by First Class Mail to
all Class Members and published in various periodicals, respectively, in the
manner provided for in the Notice Plan.
6
o. "Notice Plan" means the method by which Notice will
be sent to all Class Members as detailed in the Stipulation and Order for
Providing Notice of Settlement, attached hereto as Exhibit E.
p. "Order and Final Judgment" means the proposed Order
and Final Judgment to be entered by the Court approving the Settlement, attached
hereto as Exhibit F.
q. "Other MasterCard Product" means any MasterCard
branded product, device, program, or service that does not fall within the
definition of MasterCard POS Debit Device. Attached as Exhibit G hereto is a
list of all current MasterCard products, devices, programs, or services that, as
determined by MasterCard through its reasonable efforts, qualify as an Other
MasterCard Product.
r. "Plaintiffs' Co-Lead Counsel Signatories" means the
individual attorneys from C&P and HB who are the signatories to this Agreement.
s. "Plaintiffs' Counsel" means Plaintiffs' Co-Lead
Counsel and other counsel representing any of the named Plaintiffs in this
Action.
t. "Plan of Allocation of Settlement Funds" means the
terms and procedures for allocating the Net Settlement Fund among, and
distributing the Net Settlement Fund to, Authorized Claimants as set forth in
the Notice, or such other plan of allocation as the Court shall approve.
u. "Preliminary Approval Order" means the proposed order
preliminarily approving the Settlement and directing Notice to the Class,
attached hereto as Exhibit H.
v. "Released Parties" means MasterCard and any past,
present or future officers, directors, stockholders, member financial
institutions, agents, employees, legal
7
representatives, trustees, parents, associates, affiliates, subsidiaries,
divisions, partners, heirs, executors, administrators, purchasers, predecessors,
successors, assigns, and any of their legal representatives.
w. "Released Claims" means only the claims of the
Releasing Parties from which the Released Parties will be released and
discharged upon Final Settlement Approval as specified in paragraphs 26 and 30
below.
x. "Releasing Parties" means the named Plaintiffs and
any Class Members who have not timely excluded themselves from the Class Action
-- including any of their past, present or future officers, directors,
stockholders, agents, employees, legal representatives, trustees, parents,
associates, affiliates, subsidiaries, divisions, partners, heirs, executors,
administrators, purchasers, predecessors, successors and assigns -- whether or
not they object to the Settlement and whether or not they make a claim upon or
participate in the Settlement Fund, whether directly, representatively,
derivatively or in any other capacity.
y. "Settlement" means the settlement contemplated by
this Agreement.
z. "Settlement Fund" means the amounts to be paid into
the Settlement Fund Account by MasterCard as specified in paragraph 3 below.
aa. "Settlement Fund Account" means (i) prior to the
Effective Date, a joint interest-bearing account at such financial institution
as the Settling Parties may agree into which MasterCard will make the Settlement
Fund payments, and (ii) after the Effective Date, an account at such financial
institution as Plaintiffs' Co-Lead Counsel designate into which MasterCard will
make the Settlement Fund payments, including without limitation, a trust
account.
8
bb. "Settling Parties" means Plaintiffs and MasterCard.
TERMS AND CONDITIONS
2. The Settling Parties agree to the following terms and conditions in
full and final disposition of the Action as against MasterCard, and any and all
Released Claims as against all Released Parties.
PAYMENT OF SETTLEMENT FUNDS
3. (a) MasterCard shall pay the Settlement Fund Account, in
settlement of the claims against it, a total of one billion and twenty five
million dollars ($1,025,000,000), which includes the payment referenced in
paragraph 8(b) below, to be made by wire transfer under the following schedule:
Payment One: ten million dollars ($10,000,000) on or before
July 4, 2003;
Payment Two: one-hundred fifteen million dollars
($115,000,000) on or before December 22, 2003;
Payment Three: one-hundred million dollars ($100,000,000) on
or before December 22, 2004;
Payment Four: one-hundred million dollars ($100,000,000) on or
before December 22, 2005;
Payment Five: one-hundred million dollars ($100,000,000) on or
before December 22, 2006;
Payment Six: one-hundred million dollars ($100,000,000) on or
before December 22, 2007;
Payment Seven: one-hundred million dollars ($100,000,000) on
or before December 22, 2008;
9
Payment Eight: one-hundred million dollars ($100,000,000) on
or before December 22, 2009;
Payment Nine: one-hundred million dollars ($100,000,000) on or
before December 22, 2010;
Payment Ten: one-hundred million dollars ($100,000,000) on or
before December 22, 2011; and
Payment Eleven: one-hundred million dollars ($100,000,000) on
or before December 22, 2012.
Nothing in this Agreement will require the Settlement Fund Account to be funded
or established before the Agreement is submitted to the Court for preliminary
approval.
(b) Notwithstanding the payment schedule set forth in
subparagraph (a), MasterCard may request that Plaintiffs work with MasterCard,
to the extent it does not interfere with Plaintiffs' efforts to sell, assign,
securitize, or obtain financing using the Settlement Fund as set forth in
subparagraph (f) below, to establish a mutually agreeable discount rate to apply
to any prepayment(s) in the event that MasterCard desires to make one or more
payments on an accelerated basis.
(c) Disbursements of funds from the Settlement Fund
Account shall require a signature from each of the Plaintiffs' Co-Lead Counsel
Signatories, and a signature from a partner of Simpson Thacher & Bartlett
("ST&B"). Any requests for disbursements of funds shall be accompanied by
appropriate documentation supporting the expenditures. Plaintiffs' Co-Lead
Counsel and ST&B agree to hold the funds in the Settlement Fund Account for the
purposes set forth herein. Upon the Effective Date of the Settlement, ST&B will
resign as a co-signatory on the Settlement Fund Account. Thereafter, Plaintiffs'
Co-Lead Counsel Signatories shall be the sole signatories on the Settlement Fund
Account.
10
(d) The Gross Settlement Fund shall be used to pay (i)
the Notice and administration costs specified in paragraph 11 below, (ii) the
Fee Award specified in paragraph 14 below, (iii) any additional Plaintiffs'
attorneys' fees, costs and expenses incurred for the benefit of the Class and
approved by the Court including, without limitation, any fees, costs, and
expenses incurred in obtaining Final Settlement Approval or administering the
Settlement, and (iv) any taxes owed on any income from the funds held in the
Settlement Fund Account as well as expenses and costs incurred in connection
with the payment of such taxes. The balance of the funds of the Settlement Fund
Account shall be the Net Settlement Fund which shall be distributed to the
Authorized Claimants.
(e) The Settling Parties agree that the Settlement Fund
Account is intended to be a Qualified Settlement Fund within the meaning of
Treasury Regulation Section 1.468B-1. All taxes with respect to the earnings on
the funds in the Settlement Fund Account shall be the responsibility of the
Settlement Fund Account. Plaintiffs' Co-Lead Counsel shall administer the
Settlement Fund Account. Plaintiffs' Co-Lead Counsel may designate the Claims
Administrator to administer the Settlement, subject to Court approval. It shall
be the responsibility of the Plaintiffs' Co-Lead Counsel, with the cooperation
of MasterCard as set forth in paragraphs 46 and 47 below, to establish and
maintain the Settlement Fund Account as a Qualified Settlement Fund within the
meaning of Treasury Regulation Section 1.468B-1.
(f) Nothing in this Agreement shall prevent Plaintiffs
from selling, assigning, or securitizing the Settlement Fund, or using the
Settlement Fund to obtain financing. In the event Plaintiffs seek to sell,
assign, securitize, or in any way obtain
11
financing using the Settlement Fund, they must apply to the Court for approval,
upon notice to MasterCard. MasterCard will not oppose any such application and
will provide reasonable assistance to Plaintiffs in the event Plaintiffs seek to
sell, assign, securitize, or obtain financing using the Settlement Fund.
Plaintiffs shall reimburse MasterCard from the Settlement Fund for MasterCard's
reasonable costs in connection with such assistance. Such assistance shall be
limited to reasonably cooperating in providing information necessary for credit
rating purposes. MasterCard agrees to deliver Settlement Fund payments to either
(i) the Settlement Fund Account, or (ii) an account of any trustee, paying agent
or other entity designated by Plaintiffs' Co-Lead Counsel in order to effect the
sale, assignment, securitization or the use for financing of the Settlement
Fund, provided, however, that any such account referenced in (ii) above shall
also qualify as, and shall not disqualify the Settlement Fund Account as, a
Qualified Settlement Fund within the meaning of Treasury Regulation Section
1.468B-1. Such payment instructions may be modified by Plaintiffs' Co-Lead
Counsel from time to time as may be required and upon reasonable notice to
MasterCard (provided that any new account designated shall also qualify as, and
shall not disqualify the Settlement Fund Account as, a Qualified Settlement Fund
within the meaning of Treasury Regulation Section 1.468B-1).
MASTERCARD'S COMMITMENTS
Unbundling of Debit and Credit
4. (a) MasterCard shall adopt rules in the continental
United States (and Alaska and Hawaii) that will, effective January 1, 2004,
unbundle, and MasterCard agrees not to bundle in the future, merchant acceptance
of MasterCard POS Debit Devices and merchant acceptance of any Other MasterCard
Products. "Unbundle" as
12
used herein means that MasterCard shall not require that as a condition of
accepting Other MasterCard Products, merchants must accept MasterCard POS Debit
Devices, and vice versa.
(b) These rules shall provide that, commencing January 1,
2004, with respect to any contract existing on that date under which a merchant
accepts MasterCard Branded Products: (i) merchants may choose to stop accepting
MasterCard POS Debit Devices by providing no less than thirty (30) days advance
written notice to their acquirers (which may be given prior to January 1, 2004);
and (ii) merchants may choose to stop accepting Other MasterCard Products by
providing no less than thirty (30) days advance written notice to their
acquirers (which may be given prior to January 1, 2004). The rules shall further
provide that merchants who want to begin accepting MasterCard Branded Products
after January 1, 2004 will be free to accept MasterCard POS Debit Devices only,
Other MasterCard Products only, or both MasterCard POS Debit Devices and Other
MasterCard Products.
(c) These rules shall also require that any contract used
by an acquirer with any merchant shall provide the clear option (including a
statement of applicable merchant discount rates by product) for the merchant to
elect to accept MasterCard POS Debit Devices, Other MasterCard Products, or
both.
(d) MasterCard shall require that, from August 1, 2003
through January 1, 2004, acquirers provide, in any regular communications with
merchants, but no more often than monthly, clear and conspicuous notice to
merchants that as of January 1, 2004 they will have the right to (i) accept
MasterCard POS Debit Devices without accepting Other MasterCard Products, and
(ii) accept Other MasterCard Products without
13
accepting MasterCard POS Debit Devices. On or before July 1, 2003, MasterCard
will provide Plaintiffs' Co-Lead Counsel an exemplar of its communication to its
acquirers requiring compliance with this provision.
(e) Nothing herein shall prevent MasterCard from adopting
and enforcing an Honor All Cards rule that requires merchants who choose to
accept any MasterCard POS Debit Device to accept all, or any subset of,
MasterCard POS Debit Devices. However, nothing in this Agreement requires any
merchant to purchase or install a PIN pad in order to continue to accept
MasterCard POS Debit Devices which are authorized by signature. The parties
agree that nothing in this Agreement or otherwise, including the Honor All Cards
rule for MasterCard POS Debit Devices contemplated in this paragraph, permits
MasterCard to apply any honor all cards rule to require merchants to install a
PIN pad in order to continue accepting MasterCard POS Debit Devices which are
authorized by signature.
(f) Nothing herein shall prevent MasterCard from adopting
and enforcing an Honor All Cards rule that requires merchants who choose to
accept any Other MasterCard Product to accept all, or any subset of, Other
MasterCard Products.
(g) On or about June 30, 2003, December 31, 2003, June
30, 2004, and December 31, 2004, MasterCard shall provide Plaintiffs' Co-Lead
Counsel with written notice of any MasterCard products, devices, programs, or
services that MasterCard is then offering or has announced it will offer to
issuers that would qualify as either a MasterCard POS Debit Device or an Other
MasterCard Product (or a multi-function MasterCard Branded Product as described
below) that are not identified on Exhibits A and G as either a MasterCard POS
Debit Device or an Other MasterCard Product.
14
(h) If MasterCard offers in the United States a
MasterCard Branded Product that incorporates the payment functions of both a
MasterCard POS Debit Device and an Other MasterCard Product, a merchant will be
free to accept the MasterCard POS Debit Device payment function only, the Other
MasterCard Product payment function only, or both the MasterCard POS Debit
Device and Other MasterCard Product payment functions, consistent with the
provisions of this Agreement. Any such multi-function MasterCard Branded Product
will satisfy, so far as practicable, the requirements for the clear and
conspicuous identifier and unique electronic identity, consistent with the terms
set forth in paragraphs 5 and 7 below, that would enable merchants to identify
any such MasterCard Branded Product and its different payment functions.
MasterCard shall provide Plaintiffs' Co-Lead Counsel within sixty (60) days
before it is implemented written notice of the unique identifier (e.g.,
"Relationship Card") that would be used to denote the multi-function nature of
such a product.
Clear and Conspicuous Debit Identifier
5. (a) On or before January 1, 2004, MasterCard shall
implement rules requiring issuers in the United States to place on the face of a
MasterCard POS Debit Device the word "Debit" in clear and conspicuous letters,
or another term, name or mark, so long as the word, term, name or mark is used
consistently and uniformly for all MasterCard POS Debit Devices. MasterCard
shall provide Plaintiffs' Co-Lead Counsel within 30 days before they become
effective, and in no event later than December 1, 2003 (i) a copy of the rules
adopted by MasterCard that implement the design requirements of this paragraph,
and (ii) an exemplar of a MasterCard POS Debit Device that complies with the
rules.
15
(b) The rules specified in subparagraph 5(a) shall
require that such design changes occur upon issuance of new MasterCard POS Debit
Devices, and within the normal reissuance cycles of existing cards, provided
however that MasterCard will cause to have 80 percent of outstanding MasterCard
POS Debit Devices in compliance herewith by July 1, 2005, and 100 percent in
compliance by January 1, 2007. MasterCard shall provide Plaintiffs' Co-Lead
Counsel written certification that upon its reasonable belief the 80 percent and
100 percent compliance requirements have been reached and the basis thereof.
(c) In lieu of using the debit identifier on MasterCard
POS Debit Devices as described in paragraph (a) above, MasterCard retains the
right at any time to adopt a new debit identifier for all devices herein defined
as MasterCard POS Debit Devices, so long as these devices comply with the design
requirements of subparagraph (a) above, and all other terms of this Agreement,
and MasterCard provides Plaintiffs' Co-Lead Counsel within sixty (60) days
before it is implemented both (i) written notice of any such debit identifier,
and (ii) an exemplar of a MasterCard POS Debit Device that carries the new debit
identifier.
(d) In lieu of using the MasterCard brand on MasterCard
POS Debit Devices, MasterCard retains the right to adopt a new brand for all or
any devices herein defined as MasterCard POS Debit Devices, so long as these
devices comply with the design requirements of subparagraphs (a) and (b) above,
and all other terms of this Agreement, and MasterCard provides Plaintiffs'
Co-Lead Counsel within sixty (60) days before it is implemented both (i) written
notice of any such brand, and (ii) an exemplar of a MasterCard POS Debit Device
that carries the new brand.
16
Signage
6. On or before January 1, 2004, MasterCard shall deliver signage
to acquirers, upon request, for merchant usage in the continental United States
(and Alaska and Hawaii) at the point of sale and at the entrance to the store,
communicating the fact that a given merchant accepts MasterCard POS Debit
Devices. Any merchant who requests such signage agrees to use it for such
purposes for a minimum of three (3) months. MasterCard shall provide Plaintiffs'
Co-Lead Counsel an exemplar of such signage by November 1, 2003.
Electronic Identification
7. (a) MasterCard shall adopt rules, effective January 1,
2004, requiring that MasterCard POS Debit Devices issued in the continental
United States (and Alaska and Hawaii) not already having one be given unique
Bank Identification Numbers ("BINs"), which each merchant and acquirer can
utilize, with currently available technology, to distinguish MasterCard POS
Debit Devices from Other MasterCard Products. This BIN shall be encoded in the
magnetic stripe and any other electronic component of the card used for
authorization and/or settlement (e.g., a chip) in such a way that all electronic
point-of-sale terminals are, or can reasonably be made, capable of reading the
electronic information. MasterCard shall provide a copy of these rules to
Plaintiffs' Co-Lead Counsel no later than November 15, 2003.
(b) These rules shall apply to any MasterCard POS Debit
Devices issued after January 1, 2004, and to MasterCard POS Debit Devices issued
before January 1, 2004 upon their reissuance in accordance with normal
reissuance cycles, provided however that MasterCard will require issuers to have
80 percent of outstanding
17
MasterCard POS Debit Devices in compliance herewith by July 1, 2005, and 100
percent in compliance by January 1, 2007. MasterCard shall provide Plaintiffs'
Co-Lead Counsel written certification that upon its reasonable belief the 80
percent and 100 percent compliance requirements have been reached and the basis
thereof.
(c) These rules shall also provide that MasterCard shall
require its acquirers to make available to merchants, upon merchants' request
and in any form they reasonably request, a complete list of the BIN numbers that
apply to all MasterCard POS Debit Devices, updated consistent with the current
practice of MasterCard's acquirers.
(d) Commencing July 1, 2004, for the period ending
January 1, 2007, MasterCard shall use reasonable efforts to attempt to offer an
electronic service to enable merchants or acquirers to identify MasterCard POS
Debit Devices in the event that, exercising its reasonable business judgment,
MasterCard concludes that there is a reasonable business case that justifies
such service. In the event of a dispute as to whether MasterCard has exercised
its reasonable business judgment, the question shall be determined by the Court
or by such arbitrator as the Court may designate.
(e) Until the time that MasterCard has, based on its
reasonable belief, reached 100 percent compliance with the design requirements
provided in paragraph 5 above, merchants that choose not to accept MasterCard
POS Debit Devices and that use any of the above methods for electronically
identifying MasterCard POS Debit Devices shall not incur any charges by either
MasterCard or its acquirers for a MasterCard POS Debit Device transaction that
is declined or rejected because the merchant does not accept MasterCard POS
Debit transactions.
18
Interchange Rate Reductions
8. (a) By August 1, 2003, MasterCard shall set one or more
off-cycle, separate interchange rates for all MasterCard POS Debit Device
transactions at Class Members that reduce the aggregate effective rate by at
least one-third from the aggregate effective rate for these transactions in
effect on April 30, 2003. On January 1, 2004 the requirement in the preceding
sentence shall terminate, and MasterCard shall be free to set interchange rates
without restriction after that date, as otherwise permitted by law. On or before
July 1, 2003, MasterCard will provide Plaintiffs' Co-Lead Counsel with a
schedule that contains the actual interchange rates that will take effect by
August 1, 2003 for each type and category of MasterCard POS Debit Device
transaction at Class Members and the rates for these transactions in effect on
April 30, 2003. MasterCard will provide notice to acquirers forty-five (45) days
in advance of the first change in interchange rates for MasterCard POS Debit
Device transactions occurring on or after January 1, 2004, and MasterCard will
require its acquirers to provide written notice of such changes to merchants in
the acquirers' next regular communication with their merchants. In the
alternative, MasterCard will provide Plaintiffs' Co-Lead Counsel with thirty
(30) days advance written notice of such interchange rate changes. Nothing
contained in this Agreement shall be deemed to prohibit MasterCard from
providing negotiated interchange rates to merchants to incent acceptance or
promotion of any MasterCard Branded Products or prevent issuers and acquirers
from setting individual rates.
(b) In addition, as provided for in the payment schedule
set forth in paragraph 3 above, in recognition of the interim period between the
execution of the
19
Memorandum of Understanding on April 30, 2003, and August 1, 2003, on or before
December 22, 2003, MasterCard shall pay the Settlement Fund Account the sum of
twenty-five million dollars ($25,000,000).
Steering
9. MasterCard will not enact any rules in the continental United
States (and Alaska and Hawaii) that prohibit merchants from encouraging or
steering MasterCard POS Debit Device cardholders to use other forms of payment
or that prohibit merchants from providing a discount to consumers who pay by any
other form of payment.
Null and Void If No Final Settlement Approval
10. In the event there is no Final Settlement Approval, then the
foregoing provisions of paragraphs 4 through 9 relating to MasterCard's
commitments will become null and void pursuant to the terms of paragraph 28
below.
NOTICE AND ADMINISTRATION COSTS
11. The Gross Settlement Fund shall be used to pay the costs and
expenses associated with the administration of the Settlement, including without
limitation, the costs of identifying Class Members and effecting the mailing and
publishing of Notice, the administrative expenses incurred and fees charged by
the Claims Administrator in connection with providing Notice and administering
the distribution of the Net Settlement Fund, the payment of any taxes on the
earnings of the Gross Settlement Fund, and the provision of any educational
materials to merchants and consumers explaining the terms and conditions of this
Agreement. If Plaintiffs' Co-Lead Counsel determine that such payments are
necessary prior to the Effective Date, ST&B will not unreasonably withhold its
signature on such expenditures from the Settlement Fund
20
Account, and Plaintiffs' Co-Lead Counsel, or at their direction, the Claims
Administrator, may make such expenditures without Court approval. In the event
that ST&B is requested by Plaintiffs' Co-Lead Counsel, under this paragraph or
paragraph 3(c), to provide its signature to authorize payment for notice or
administration expenses or for any other expenditure, and ST&B so provides its
signature, then Plaintiffs (solely through the Settlement Fund) will indemnify
and hold harmless MasterCard and ST&B from and against any and all claims
asserted by any person arising out of such payment. In the event that ST&B
unreasonably withholds its signature, then MasterCard will indemnify and hold
harmless Plaintiffs and Plaintiffs' Co-Lead Counsel from and against any and all
claims asserted by any person arising out of the failure to provide such
payment.
PLAN OF ALLOCATION OF SETTLEMENT FUNDS
12. (a) On or before August 18, 2003, Plaintiffs' Co-Lead
Counsel shall file a motion for approval of a Plan of Allocation of Settlement
Funds that in their opinion will fairly and adequately address the questions of
settlement administration, any claims requirements, and allocation of the Net
Settlement Fund among the Class Members. MasterCard shall not directly or
indirectly take any position with respect to any plan of allocation or amount of
distribution to any Class Member, counsel, expert or consultant, or any other
person in connection with this Class Action.
(b) Except as otherwise expressly provided in this
Settlement Agreement, in no event shall any portion of the Gross Settlement Fund
be distributed or revert to MasterCard, under any circumstances.
(c) After Final Settlement Approval, the amounts
remaining in the Gross Settlement Fund shall be distributed as ordered by the
Court.
21
13. In no event shall MasterCard have any liability or
responsibility with respect to the distribution and administration of the Gross
Settlement Fund, including, but not limited to, the costs and expenses of such
distribution and administration, and the costs and expenses of Notice. The Plan
of Allocation of Settlement Funds is a matter separate and apart from this
Settlement Agreement, and any decision by the Court concerning the plan of
distribution shall not effect the validity or finality of the Settlement as to
MasterCard.
ATTORNEYS' FEES AND EXPENSES
14. On or before August 18, 2003, Plaintiffs' Co-Lead Counsel
shall file a Fee and Expense Application for distribution from the Gross
Settlement Fund of a Fee Award consisting of an award of Plaintiffs' attorneys'
fees and reimbursement of expenses. Plaintiffs' Co-Lead Counsel reserves the
right to make additional applications for fees and expenses incurred in
obtaining Final Settlement Approval and administering the Settlement. C&P shall
allocate the Fee Award among Plaintiffs and their counsel, and with respect to
Plaintiffs' attorneys' fees, in a manner in which they in good faith believe
reflects the contributions of Plaintiffs' Counsel to the prosecution and
settlement of the Action. MasterCard agrees that it shall not directly or
indirectly take any position on Plaintiffs' Fee and Expense Application.
15. MasterCard shall not be liable for any costs, fees or expenses
of any of Plaintiffs' respective attorneys, experts, advisors, agents and
representatives. All such costs, fees and expenses, including the costs and
expenses of the class representatives, as approved by the Court, shall be paid
out of the Gross Settlement Fund. Except as provided in paragraphs 3 and 11
relating to MasterCard's obligation to reasonably
22
consent to the distribution of settlement funds for the payment of Notice and
administration costs prior to the Effective Date, MasterCard shall not have any
liability with respect to the distribution and administration of the Gross
Settlement Fund, including, but not limited to, the costs and expenses of such
distribution and administration or to the giving of Notice, including, but not
limited to, the costs and expenses associated with identifying Class Members.
16. Upon the Court's entry of the Order and Final Judgment,
Plaintiffs' Co-Lead Counsel may make an application to the Court for immediate
payment of the Fee Award. MasterCard will take no position on such an
application, subject to Plaintiffs' counsel's obligation to pay back any such
amount if, or to the extent that, the Fee Award is amended, reversed on appeal,
or does not become final.
17. The procedure for the allowance or disallowance by the Court
of any applications for Plaintiffs' attorneys' fees, costs and expenses to be
paid out of the Gross Settlement Fund, are distinct from the Settlement set
forth in the Settlement Agreement, and are to be considered by the Court
separately from the Court's consideration of the fairness, reasonableness and
adequacy of the Settlement. Any order or proceedings relating to any fee and
expense application, or any appeal from any order relating thereto or reversal
or modification thereof, shall not operate to terminate or cancel the Settlement
Agreement, or affect or delay the finality of the Order and Final Judgment
approving the Settlement Agreement.
BEST EFFORTS TO EFFECTUATE THIS SETTLEMENT
18. The Settling Parties and their counsel agree to recommend
approval of this Settlement Agreement by the Court and to undertake their best
efforts, including all steps
23
and efforts contemplated by this Settlement Agreement and any other steps and
efforts that may be necessary or appropriate, by order of the Court or
otherwise, to secure Final Settlement Approval and otherwise carry out the terms
of this Settlement Agreement.
19. MasterCard will cooperate with Plaintiffs by using reasonable
efforts to provide Plaintiffs existing merchant specific and aggregate
transaction data from MasterCard's databases to be used in connection with the
allocation of the Net Settlement Fund (with all reasonable costs incurred under
this paragraph and paragraph 23 to be paid out of the Settlement Fund Account
and capped at $35,000).
MOTION FOR PRELIMINARY APPROVAL
20. By June 9, 2003, Plaintiffs shall submit to the Court a motion
for preliminary approval of the Settlement, and for a stay of all proceedings in
the Class Action against MasterCard until the Court has approved the Settlement
and entered the Order and Final Judgment. MasterCard will not oppose this
motion. This motion shall include (i) the proposed form of Order and Final
Judgment, attached hereto as Exhibit F, and (ii) the proposed form of
Preliminary Approval Order preliminarily approving this Settlement Agreement,
attached hereto as Exhibit G. By June 9, 2003, Plaintiffs shall also submit to
the Court for approval a Stipulation and Order for Providing Notice of
Settlement, attached hereto as Exhibit E, which contains the Notice Plan and the
forms of mail and publication Notice, approved by MasterCard (which approval
shall not be unreasonably withheld).
NOTICE TO CLASS
21. In the event that the Court preliminarily approves the
Settlement on or before June 16, 2003, and as more fully set forth in the Notice
Plan, Plaintiffs shall
24
pursuant to Rule 23 of the Federal Rules of Civil Procedure (i) on or before
July 5, 2003, provide Class Members who have been identified by reasonable
means, notice of the Settlement by first class mail, unless circumstances beyond
the control of Plaintiffs prevent Plaintiffs from providing such mail notice, in
which case Plaintiffs shall take all necessary and appropriate steps to insure
that such notice is provided as soon as possible pursuant to an order of the
Court approving Notice, and (ii) on or before August 4, 2003, provide Class
Members notice by publication in a Notice Plan designed to have at least the
same reach as that approved by the parties and the Court and implemented in the
Fall of 2002 for the purposes of providing Class Members with Notice of
Pendency.
22. The Settling Parties shall cooperate in effecting Notice to
the Class that satisfies the requirements of due process and Rule 23 of the
Federal Rules of Civil Procedure.
23. MasterCard will cooperate with Plaintiffs by using reasonable
efforts to provide Plaintiffs existing merchant specific and aggregate data from
MasterCard's databases to be used in connection with providing Notice to the
Class (with all reasonable costs incurred under this paragraph and paragraph 19
to be paid out of the Settlement Fund Account and capped at $35,000).
NO OPT-OUT RIGHTS
24. Class Members who were in existence as of June 21, 2002 and
did not exclude themselves from the Class pursuant to the Consent Order
Concerning Notice of Pendency of Class Action dated June 21, 2002 will not be
provided another opportunity to opt-out. This provision shall not be amended in
whole or in part without the consent of both Plaintiffs and MasterCard.
25
MOTION FOR ENTRY OF FINAL JUDGMENT
25. If, after Notice to the Class, the Court approves this
Settlement Agreement, then Plaintiffs shall seek, and MasterCard will not
oppose, entry of an Order and Final Judgment, in the form attached hereto as
Exhibit F, which among other things:
a. Approves finally this Settlement and its terms as
being a fair, reasonable and adequate settlement as to Plaintiffs within the
meaning of Rule 23 of the Federal Rules of Civil Procedure and directing its
consummation pursuant to its terms;
b. Approves finally the Plan of Allocation of Settlement
Funds, Notice, and the Notice Plan, as being fair and reasonable within the
meaning of, and satisfying the requirements of, Rule 23 of the Federal Rules of
Civil Procedure and due process;
c. Directs that, as to MasterCard, the Class Action be
dismissed with prejudice and, except as provided for herein, without costs;
d. Directs that MasterCard comply with its payment
obligations and other commitments set forth in the Agreement;
e. Reserves to this Court exclusive jurisdiction over
the Settlement and this Settlement Agreement, including the administration and
consummation of this Settlement;
f. Determines pursuant to Rule 54(b) of the Federal
Rules of Civil Procedure that there is no just reason for delay and directing
that the judgment of dismissal shall be final and appealable; and
g. Directs that, for a period of five years, the Clerk
of the Court shall maintain the record of those members of the Class who have
timely excluded themselves
26
from the Class and that a certified copy of such records shall be provided to
MasterCard, at its expense.
FINAL SETTLEMENT APPROVAL
26. This Settlement Agreement shall become final upon the
occurrence of all of the following three events:
a. Approval of the Settlement Agreement in all material
respects by the Court as required by Rule 23(e) of the Federal Rules of Civil
Procedure;
b. Entry by the Court, as provided for in paragraph 25,
of an Order and Final Judgment of dismissal with prejudice as to MasterCard
against all Plaintiffs and members of the Class who have not timely excluded
themselves from the Class Action and the Order and Final Judgment is not vacated
or modified in any material way affecting any party's rights or obligations
under the Settlement Agreement, upon appeal or otherwise; and
c. Expiration of the time for appeal, or the time to
seek permission to appeal, from the Court's approval of this Settlement
Agreement and entry of an Order and Final Judgment (as described in paragraph
25) or, if appealed, approval of this Settlement Agreement and the Order and
Final Judgment have been affirmed in their entirety by the court of last resort
to which such appeal has been taken and such affirmance has become no longer
subject to further appeal or review. However, the Settlement shall become final
with respect to MasterCard notwithstanding the actual or potential filing of any
appeal that concerns only (i) an award of attorneys' fees, costs, or expenses;
or (ii) the plan of allocation of the Settlement Fund (as distinct from the
amount of the Settlement Fund).
27
27. A modification or reversal on appeal of any award of
attorneys' fees, costs, or expenses, or of the Plan of Allocation of Settlement
Fund (as distinct from the amount of the Settlement Fund) shall not be deemed a
modification of all or a part of the terms of this Settlement Agreement or the
Order and Final Judgment.
NO FINAL SETTLEMENT APPROVAL
28. In the event there is no Final Settlement Approval, then:
a. The Gross Settlement Fund, less (i) only the costs
incurred up to $6 million in connection with Notice and administration, and (ii)
an amount sufficient for the Settlement Fund to pay taxes for which it is or
will be liable on interest earned by it, as reasonably determined by the fund
administrator as defined in paragraph 46 below, shall revert to MasterCard; and
b. This Settlement Agreement shall be canceled and
terminated, and shall become null and void. In such event, the Settlement shall
be without prejudice; the Settling Parties shall revert to their litigation
positions immediately prior to the execution of the Memorandum of Understanding
executed on April 30, 2003; and the fact and terms of this Settlement shall not
be admissible in any hearing or trial of this Action or any other civil action.
SATISFACTION OF CLAIMS
29. Plaintiffs shall look solely to the Settlement Agreement for
settlement and satisfaction against MasterCard of all claims that are released
hereunder. Except as provided by order of the Court, no Class Member shall have
any interest in the Settlement Fund or any portion thereof.
28
RELEASE
30. In addition to the effect of any Order and Final Judgment
entered in accordance with this Settlement Agreement, upon this Settlement
Agreement becoming final as to MasterCard, the Released Parties shall be
released and forever discharged from all manner of claims, demands, actions,
suits, causes of action against the Released Parties, whether class, individual,
or otherwise in nature, damages whenever incurred, liabilities of any nature
whatsoever, including costs, expenses, penalties and attorneys' fees, known or
unknown, suspected or unsuspected, in law or equity, that any Releasing Party
ever had, now has or hereafter can, shall or may have, relating in any way to
any conduct prior to January 1, 2004 concerning any claims alleged in the
Complaint or any of the complaints consolidated therein, including, without
limitation, claims which have been asserted or could have been asserted in this
litigation which arise under or relate to any federal or state antitrust, unfair
competition, unfair practices, or other law or regulation, or common law,
including, without limitation, the Sherman Act, 15 U.S.C Section 1 et seq. Each
Class Member hereby covenants and agrees that it shall not, hereafter, seek to
establish liability against any Released Party based, in whole or in part, upon
any of the Released Claims.
WAIVER OF BREACH
31. The waiver by any party of any breach of this Agreement shall
not be deemed or construed as a waiver of any other breach of this Agreement,
whether prior, subsequent or contemporaneous.
29
MOST FAVORED NATIONS CLAUSE
32. Plaintiffs agree that, effective upon the date hereof, in the
event that Plaintiffs' settlement in this Action with Visa provides for a more
favorable term or terms than the term or terms set forth herein, then MasterCard
shall be entitled to the more favorable term or terms and this Settlement
Agreement shall be amended to incorporate the more favorable term or terms.
THIS SETTLEMENT IS NOT AN ADMISSION
33. In the event that the Settlement does not become final as to
MasterCard in accordance with the terms hereof, then this Settlement Agreement
(including its exhibits) shall be of no force or effect and, in any event, the
Settling Parties agree that this Settlement Agreement, including its exhibits,
whether or not it shall become final as to MasterCard, and any and all
negotiations, documents and discussions associated with it shall be without
prejudice to the rights of any party, shall not be deemed or construed to be an
admission or evidence of any violation of any statute or law or of any liability
or wrongdoing by MasterCard or of the truth of any of the claims or allegations
contained in the Complaint or any other pleading, and evidence thereof shall not
be discoverable or used directly or indirectly, in anyway, whether in the Class
Action or in any other action or proceeding. The Settling Parties expressly
reserve all of their rights if the Settlement does not become final as to
MasterCard in accordance with the terms of this Settlement Agreement.
PROTECTION OF CONFIDENTIAL INFORMATION AND DISCOVERY MATERIALS
34. The Settling Parties and their respective counsel acknowledge
and agree that discovery in this action has involved disclosure of trade secrets
and other
30
confidential and proprietary business, technical and financial information. The
Settling Parties and their respective counsel agree that, except as otherwise
required by law, within sixty (60) days after MasterCard has complied with all
of its obligations under the Settlement Agreement, all materials produced by, or
information discovered of, or records of information discovered of, the Settling
Parties (including their past, present and former parents, subsidiaries,
divisions, affiliates, associates, successors, predecessors, trustees, member
financial institutions, attorneys, advisors, investment advisors, insurers,
co-insurers, reinsurers, foundations, stockholders, officers, directors,
employees, agents and any of their legal representatives (and the predecessors,
heirs, executors, administrators, successors and assigns of each of the
foregoing)) that contain Confidential Information or Outside Counsel Eyes Only
Information (as defined in the Protective Order governing this Action)
including, without limitation, information or data stored or recorded in the
form of electronic or magnetic media, that are in the possession of counsel for
the Settling Parties or their experts, shall be destroyed or returned to the
producing party. Upon request, counsel for each party shall provide the
producing party with a written declaration under penalties of perjury certifying
that all documents required to be returned or destroyed have been returned or
destroyed. Notwithstanding the foregoing, and pursuant to the terms of the
Protective Order and the limitations set forth therein on how Confidential and
Outside Counsel Eyes Only Information can be used, this provision does not apply
to (i) outside counsel's copies of documents filed with the Court, and (ii)
outside counsel's file copies of papers prepared in connection with this Action.
This provision also does not apply to materials that have been unsealed by the
Court.
31
BINDING EFFECT
35. This Settlement Agreement shall be binding upon, and inure to
the benefit of, the Settling Parties and their respective past, present or
future officers, directors, stockholders, member financial institutions, agents,
employees, legal representatives, trustees, parents, associates, affiliates,
subsidiaries, divisions, partners, heirs, executors, administrators, purchasers,
predecessors, successors and assigns.
REPRESENTATION AND WARRANTY
36. MasterCard represents and warrants that it has the authority
to require its member financial institutions to comply with the rules adopted by
MasterCard in compliance with the terms and conditions set forth in the
Settlement Agreement. MasterCard further represents and warrants that it will
take all reasonably necessary steps to ensure compliance by its member financial
institutions with the rules so adopted by MasterCard using no less stringent
measures of enforcement as are applied to the enforcement of other MasterCard
rules, which may include at MasterCard's option, but not be limited to,
rescinding all membership rights of any member financial institution that fails
to comply with the aformentioned rules set forth in the Settlement Agreement.
INTEGRATED AGREEMENT
37. This Settlement Agreement contains an entire, complete, and
integrated statement of each and every term and provision agreed to by and among
the Settling Parties; it is not subject to any condition not provided for
herein. This Settlement Agreement shall not be modified in any respect except by
a writing executed by all the parties hereto. All of the exhibits attached
hereto are hereby incorporated by reference as though fully set forth herein.
32
NO CONFLICT INTENDED
38. Any inconsistency between this Settlement Agreement and the
exhibits attached hereto shall be resolved in favor of this Settlement
Agreement. The headings used in this Settlement Agreement are for the
convenience of the reader only and shall not affect the meaning or
interpretation of this Settlement Agreement.
NO PARTY IS THE DRAFTER
39. None of the Settling Parties shall be considered to be the
drafter of this Settlement Agreement or any provision hereof for the purpose of
any statute, case law or rule of interpretation or construction that would or
might cause any provision to be construed against the drafter hereof.
CHOICE OF LAW
40. All terms of this Settlement Agreement and the exhibits hereto
shall be governed by and interpreted according to the substantive laws of the
State of New York without regard to its choice of law or conflict of laws
principles.
CONTINUING JURISDICTION OF THIS COURT
41. (a) The Settling Parties hereby irrevocably submit to the
exclusive jurisdiction of the United States District Court for the Eastern
District of New York for any suit, action, proceeding or dispute arising out of
or relating to this Settlement Agreement or the applicability of this Settlement
Agreement and exhibits hereto. All applications to the Court with respect to any
aspect of the Settlement shall be presented to and determined by United States
District Judge John Gleeson, or, if he is not available, any other Judge
designated by the Court. Without limiting the generality of the foregoing, it is
hereby agreed that any dispute, including but not limited to any suit,
33
action or proceeding by a Plaintiff in which the provisions of this Settlement
Agreement are asserted as a defense in whole or in part to any claim or cause of
action or otherwise raised as an objection, constitutes a suit, action or
proceeding arising out of or relating to this Settlement Agreement and exhibits
hereto.
(b) In the event that the provisions of this Settlement
Agreement are asserted by MasterCard as a defense in whole or in part to any
claim or cause of action or otherwise raised as an objection in any other suit,
action or proceeding by a Plaintiff, it is hereby agreed that MasterCard shall
be entitled to a stay of that suit, action or proceeding until the United States
District Court for the Eastern District of New York has entered a final judgment
determining any issues relating to the defense or objection based on such
provisions. Solely for purposes of such suit, action or proceeding, to the
fullest extent they may effectively do so under applicable law, the Settling
Parties irrevocably waive and agree not to assert, by way of motion, as a
defense or otherwise, any claim or objection that they are not subject to the
jurisdiction of such court, or that such court is, in any way, an improper venue
or an inconvenient forum.
42. In the event that any party does not fulfill any of its
obligations under the Settlement Agreement, Plaintiffs' Co-Lead Counsel or
MasterCard may seek from the Court any and all relief they believe appropriate.
43. In the event that MasterCard does not fulfill its obligations
relating to payments to the Settlement Fund Account as specified in paragraph 3,
both Plaintiffs' Co-Lead Counsel or any purchaser, assignee, or entity involved
with securitization or financing of the Settlement Fund as provided for in
paragraph 3(f), may seek from the Court any and all relief they believe
appropriate.
34
44. MasterCard's obligations under paragraphs 4 through 7, and 9
above, are subject to modification by the Court, upon the motion of either
MasterCard or Plaintiffs, pursuant to the processes and standards for
modification of consent decrees.
RESERVATION OF RIGHTS AND PRIVILEGES
45. Nothing in this Settlement Agreement is intended to waive the
Settling Parties' right to assert that any information or material is protected
from discovery by reason of any individual or joint defense privilege or work
product protection or other privilege, protection or immunity, or is intended to
waive the Settling Parties' right to contest any such claim of privilege,
protection or immunity.
TAX TREATMENT
46. The Settling Parties agree to treat the Settlement Fund
Account as being at all times a qualified settlement fund within the meaning of
Treasury Regulation Section 1.468B-1 for the taxable years of the Settlement
Fund Account, beginning with the date it is created. In addition, the fund
"administrator," as defined below, and, as required, MasterCard, shall jointly
and timely make such elections as are necessary or advisable to carry out the
provisions of this paragraph, including the "relation-back election" (as defined
in Treas. Reg. Section 1.468B-1(j)(2)) back to the earliest permitted date.
Provided the Court issues an Order and Final Judgment approving the Settlement
in 2003, the relation-back election must be made by no later than December 31,
2003. Such elections shall be made in compliance with the procedures and
requirements contained in such regulations. It shall be the responsibility of
Plaintiffs' Co-Lead Counsel to timely and properly prepare, and deliver the
necessary documentation for signature by all necessary parties, and thereafter
to cause the appropriate filing to occur.
35
47. For purposes of Section 468B of the Internal Revenue Code, as
amended, and the regulations promulgated thereunder, the fund administrator
shall be Plaintiffs' Co-Lead Counsel, or any person or entity that Plaintiffs'
Co-Lead Counsel may designate. Plaintiffs' Co-Lead Counsel shall timely and
properly file or cause to be filed all tax returns necessary or advisable with
respect to the Settlement Fund Account, and make or cause to be made all
required tax payments, including deposits of estimated tax payments in
accordance with Treas. Reg. Section 1.468B-2(k). Such returns (as well as the
election described in paragraph 46 hereof) shall be consistent with this
paragraph and reflect that all taxes (including any interest or penalties) on
the income earned by the Settlement Fund Account shall be paid out of the
Settlement Fund Account. MasterCard further agrees to file and furnish all
statements and take all actions required of a transferor by section 1.468B-3(e)
of the Treasury Regulations as reasonably requested by Plaintiffs' Co-Lead
Counsel.
48. All (i) taxes (including any interest or penalties) arising
with respect to the income earned by the Gross Settlement Fund, including any
taxes or tax detriments that may be imposed upon MasterCard with respect to any
income earned by the Gross Settlement Fund for any period during which the Gross
Settlement Fund does not qualify as a qualified settlement fund for Federal or
state income tax purposes ("Taxes"); and (ii) expenses and costs incurred in
connection with the operation and implementation of this paragraph (including
without limitation, expenses of tax attorneys and/or accountants and mailing and
distribution costs and expenses relating to filing (or failing to file) the
returns described in this paragraph) ("Tax Expenses"), shall be paid out of the
Gross Settlement Fund; in all events the Released Parties shall have no
liability for Taxes or the Tax
36
Expenses. Further, Taxes and Tax Expenses shall be treated as, and considered to
be, a cost of administration of the Settlement and shall be timely paid by out
of the Gross Settlement Fund without prior order from the Court. The fund
administrator shall be obligated (notwithstanding anything herein to the
contrary) to withhold from distribution to Class members any funds necessary to
pay such amounts including the establishment of adequate reserves for any Taxes
and Tax Expenses (as well as any amounts that may be required to be withheld
under Treas. Reg. Section 1.468B-2(l)(2)). The Released Parties are not
responsible and shall have no liability therefor. The Settling Parties agree to
cooperate with the fund administrator, each other, and their tax attorneys and
accountants to the extent reasonably necessary to carry out the provisions of
this paragraph.
49. Notwithstanding anything herein to the contrary, any party to
this Agreement (and any employee, representative, or other agent of any party to
this Agreement) may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the transactions contemplated by
this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure. However, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities laws, or as required by any
party to facilitate compliance with such laws.
EXECUTION IN COUNTERPARTS
50. This Settlement Agreement may be executed in counterparts,
including signatures transmitted by facsimile. Each counterpart when so executed
shall be deemed to be an original, and all such counterparts together shall
constitute the same instrument.
37
PROVISION OF NOTICE TO COUNSEL
51. All notices or materials that must be provided under this
Agreement shall be sent by (i) hand delivery, (ii) registered or certified mail,
return receipt requested, postage pre-paid, or (iii) Federal Express or similar
overnight courier, and directed as follows:
a. If to Plaintiffs' Co-Lead Counsel, then to:
Constantine & Partners, P.C.
Lloyd Constantine
477 Madison Avenue
New York, NY 10022
and
Hagens Berman LLP
George Sampson
1301 Fifth Avenue, Suite 2900
Seattle, Washington 98101
b. If to MasterCard's Counsel, then to:
Simpson Thacher & Bartlett
Kevin J. Arquit
425 Lexington Avenue
New York, NY 10017
or such other address or person as Plaintiffs' Co-Lead Counsel or MasterCard may
designate by giving notice to the Settling Parties in the manner described in
this paragraph.
38
IN WITNESS WHEREOF, the signatories have read and understood
this Settlement Agreement, have executed it, represent that the undersigned are
authorized to execute this Settlement Agreement on behalf of the represented
parties, have agreed to be bound by its terms, and have entered into this
Settlement Agreement as of June 4, 2003.
CONSTANTINE & PARTNERS, P.C.
By: /s/ LLOYD CONSTANTINE
---------------------------
Lloyd Constantine (LC-8465)
Robert L. Begleiter (RB-7052)
Matthew L. Cantor (MC-8183)
Stacey Anne Mahoney (SM-5425)
Amy N. Roth (AR-4534)
Gordon Schnell (GS-2567)
Jonathan D. Shaman (JS-8481)
Mitchell C. Shapiro (MS-1019)
Jeffrey I. Shinder (JS-5719)
Michael Spyropoulos (MS-9873)
477 Madison Avenue, 11th Floor
New York, New York 10022
(212) 350-2700 (telephone)
(212) 350-2701 (facsimile)
Counsel for Wal-Mart, Limited Brands,
Sears, Safeway, Circuit City, National Retail
Federation, Food Marketing Institute, and
International Retail Association, and
Lead Counsel for the Certified Class
HAGENS BERMAN LLP
By: /s/ GEORGE W. SAMPSON
---------------------------
George W. Sampson (GS-8973)
1301 Fifth Avenue, Suite 2900
Seattle, Washington 98101
(206) 623-7292 (telephone)
(206) 623-0594 (facsimile)
Counsel for Bernie's Army-Navy Store and
Co-Lead Counsel for the Certified Class
SIMPSON THACHER & BARTLETT
By: /s/ KEVIN J. ARQUIT
---------------------------
Kevin J. Arquit (KA-2139)
Joseph F. Tringali (JT 9575)
Aimee H. Goldstein (AG-7539)
425 Lexington Avenue
New York, NY 10017
(212) 455-2000 (telephone)
(212) 455-2502 (facsimile)
CLIFFORD CHANCE US LLP
Kenneth A. Gallo (KG-5664)
The William P. Rogers Building
2001 K Street, NW
Washington, DC 20006-1001
(202) 912-5000 (telephone)
(202) 912-6000 (facsimile)
Keila D. Ravelo (KR-8164)
200 Park Avenue
New York, NY 10166
(212) 878-8000 (telephone)
(212) 878-8375 (facsimile)
Counsel for MasterCard International, Inc.
39
Dates Referenced Herein and Documents Incorporated by Reference
4 Subsequent Filings that Reference this Filing
↑Top
Filing Submission 0000950123-03-009118 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Wed., May 15, 10:13:19.2pm ET 
