Table of Contents

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q

 	 	 	
[X]	 	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934	
 	 	 	
	 	For the quarterly period ended June 30, 2004	
Or

[   ]	 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934	
 	 	 	
	 	For the transition period from             to	
Commission file number: 000-50250
MasterCard Incorporated
(Exact name of registrant as specified in its charter)
 	 	 	
Delaware
(State or other jurisdiction of
incorporation or organization)	 	13-4172551
(IRS Employer
Identification Number)	
 	 	 	
2000 Purchase Street
Purchase, NY
(Address of principal executive offices)	 	10577
(Zip Code)	
(914) 249-2000
(Registrant’s telephone number, including area code)
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [   ]
     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No [X]
     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 

Class	 	Outstanding at July 29, 2004	

 	
Class A redeemable common stock,
par value $.01 per share
Class B convertible common stock,
par value $.01 per share	 	
84,000,000

16,000,000	

Table of Contents

MASTERCARD INCORPORATED
FORM 10-Q
TABLE OF CONTENTS

 	 	Page	
 	 	No.
	
PART I — FINANCIAL INFORMATION	 	 	 	 	
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	 	 	 	 	
Consolidated Balance Sheets — June 30, 2004 and December 31, 2003	 	 	3	 	
Consolidated Statements of Operations — Three and Six Months Ended June 30, 2004 and 2003	 	 	4	 	
Consolidated Statements of Cash Flows — Six Months Ended June 30, 2004 and 2003	 	 	5	 	
Consolidated Statement of Changes in Stockholders’ Equity — Six Months Ended June 30, 2004	 	 	6	 	
Consolidated Condensed Statements of Comprehensive Income (Loss) — Three and Six Months Ended June 30, 2004 and 2003	 	 	6	 	
Notes to Consolidated Financial Statements	 	 	7	 	
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	 	 	20	 	
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	 	 	29	 	
ITEM 4. CONTROLS AND PROCEDURES	 	 	29	 	
Report of Independent Registered Public Accounting Firm	 	 	30	 	
PART II — OTHER INFORMATION	 	 	 	 	
ITEM 1. LEGAL PROCEEDINGS	 	 	31	 	
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	 	 	31	 	
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K	 	 	31	 	
SIGNATURES	 	 	32	 	
  $1,950,000,000 CREDIT AGREEMENT	
  AGREEMENT	
  CERTIFICATION	
  CERTIFICATION	
  CERTIFICATION	
  CERTIFICATION	
2

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MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 	 	 	 	 	 	 	 	 	
 	 	June 30,	 	December 31,	
 	 	2004
	 	2003
	
 	 	(In thousands, except share data)	
ASSETS	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	441,928	 	 	$	374,169	 	
Investment securities, at fair value:	 	 	 	 	 	 	 	 	
Trading	 	 	28,494	 	 	 	30,761	 	
Available-for-sale	 	 	506,909	 	 	 	505,580	 	
Accounts receivable	 	 	253,303	 	 	 	259,429	 	
Settlement due from members	 	 	192,695	 	 	 	210,014	 	
Restricted security deposits held for members	 	 	85,759	 	 	 	60,524	 	
Prepaid expenses	 	 	80,176	 	 	 	92,189	 	
Other current assets	 	 	76,176	 	 	 	77,184	 	

 	 	
Total Current Assets	 	 	1,665,440	 	 	 	1,609,850	 	
Property, plant and equipment, at cost (less accumulated depreciation of $309,794 and $288,259)	 	 	237,130	 	 	 	258,520	 	
Deferred income taxes	 	 	225,828	 	 	 	223,908	 	
Goodwill	 	 	203,790	 	 	 	187,881	 	
Other intangible assets (less accumulated amortization of $212,748 and $179,817)	 	 	316,766	 	 	 	327,630	 	
Municipal bonds held-to-maturity	 	 	195,723	 	 	 	196,141	 	
Other assets	 	 	100,476	 	 	 	96,975	 	

 	 	
Total Assets	 	$	2,945,153	 	 	$	2,900,905	 	

 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
Accounts payable	 	$	129,996	 	 	$	202,604	 	
Settlement due to members	 	 	156,278	 	 	 	176,144	 	
Restricted security deposits held for members	 	 	85,759	 	 	 	60,524	 	
Obligations under U.S. merchant lawsuit and other legal settlements — current (Note 11)	 	 	147,687	 	 	 	155,780	 	
Accrued expenses	 	 	515,969	 	 	 	555,165	 	
Other current liabilities	 	 	65,098	 	 	 	38,641	 	

 	 	
Total Current Liabilities	 	 	1,100,787	 	 	 	1,188,858	 	
Deferred income taxes	 	 	58,038	 	 	 	64,125	 	
Obligations under U.S. merchant lawsuit (Note 11)	 	 	542,420	 	 	 	516,686	 	
Long-term debt	 	 	229,515	 	 	 	229,574	 	
Other liabilities	 	 	188,845	 	 	 	198,321	 	

 	 	
Total Liabilities	 	 	2,119,605	 	 	 	2,197,564	 	
Commitments and Contingent Liabilities (Notes 10 and 13)	 	 	 	 	 	 	 	 	
Minority interest	 	 	4,620	 	 	 	4,620	 	
Stockholders’ Equity	 	 	 	 	 	 	 	 	
Class A redeemable common stock, $.01 par value; authorized 275,000,000 shares, issued and outstanding 84,000,000 shares	 	 	840	 	 	 	840	 	
Class B convertible common stock, $.01 par value; authorized 25,000,000 shares, issued and outstanding 16,000,000 shares	 	 	160	 	 	 	160	 	
Additional paid-in capital	 	 	967,368	 	 	 	967,368	 	
Retained earnings (accumulated deficit)	 	 	(219,989	)	 	 	(359,264	)	
Accumulated other comprehensive income, net of tax:	 	 	 	 	 	 	 	 	
Cumulative foreign currency translation adjustments	 	 	72,604	 	 	 	83,210	 	
Net unrealized gain on investment securities available-for-sale	 	 	1,459	 	 	 	9,476	 	
Net unrealized loss on derivatives accounted for as hedges	 	 	(1,514	)	 	 	(3,069	)	

 	 	
Total accumulated other comprehensive income, net of tax	 	 	72,549	 	 	 	89,617	 	

 	 	
Total Stockholders’ Equity	 	 	820,928	 	 	 	698,721	 	

 	 	
Total Liabilities and Stockholders’ Equity	 	$	2,945,153	 	 	$	2,900,905	 	

 	 	
The accompanying notes are an integral part of these consolidated financial statements.
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MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months	 	Six Months	
 	 	Ended June 30,
	 	Ended June 30,
	
 	 	2004
	 	2003
	 	2004
	 	2003
	
 	 	(In thousands, except per share data)	
Revenue	 	$	647,275	 	 	$	556,893	 	 	$	1,241,585	 	 	$	1,069,108	 	
Operating Expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
General and administrative	 	 	284,660	 	 	 	280,955	 	 	 	561,494	 	 	 	557,847	 	
Advertising and market development	 	 	228,824	 	 	 	195,400	 	 	 	396,320	 	 	 	347,694	 	
U.S. merchant lawsuit and other legal settlements	 	 	3,896	 	 	 	—	 	 	 	3,896	 	 	 	721,000	 	
Depreciation	 	 	13,076	 	 	 	13,706	 	 	 	26,437	 	 	 	26,647	 	
Amortization	 	 	18,358	 	 	 	16,887	 	 	 	36,505	 	 	 	33,735	 	

 	 	 	 	

Total operating expenses	 	 	548,814	 	 	 	506,948	 	 	 	1,024,652	 	 	 	1,686,923	 	

 	 	 	 	

Operating income (loss)	 	 	98,461	 	 	 	49,945	 	 	 	216,933	 	 	 	(617,815	)	

 	 	 	 	

Other Income (Expense)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investment income, net	 	 	9,290	 	 	 	18,758	 	 	 	21,609	 	 	 	27,738	 	
Interest expense	 	 	(16,684	)	 	 	(18,748	)	 	 	(34,413	)	 	 	(24,092	)	
Minority interest in (earnings) losses of subsidiaries	 	 	(27	)	 	 	81	 	 	 	17	 	 	 	22	 	
Other (expense) income, net	 	 	(865	)	 	 	(54	)	 	 	(191	)	 	 	(1,139	)	

 	 	 	 	

Total other (expense) income	 	 	(8,286	)	 	 	37	 	 	 	(12,978	)	 	 	2,529	 	

 	 	 	 	

Income (loss) before income taxes	 	 	90,175	 	 	 	49,982	 	 	 	203,955	 	 	 	(615,286	)	
Income tax expense (benefit)	 	 	24,468	 	 	 	17,655	 	 	 	64,680	 	 	 	(217,273	)	

 	 	 	 	

Income (loss) before cumulative effect of accounting change	 	 	65,707	 	 	 	32,327	 	 	 	139,275	 	 	 	(398,013	)	
Cumulative effect of accounting change, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4,949	 	

 	 	 	 	

Net Income (Loss)	 	$	65,707	 	 	$	32,327	 	 	$	139,275	 	 	$	(393,064	)	

 	 	 	 	

Net Income (Loss) per Share (Basic and Diluted):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before cumulative effect of accounting change	 	$	.66	 	 	$	.32	 	 	$	1.39	 	 	$	(3.98	)	
Cumulative effect of accounting change, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	.05	 	

 	 	 	 	

Net Income (Loss) per Share (Basic and Diluted)	 	$	.66	 	 	$	.32	 	 	$	1.39	 	 	$	(3.93	)	

 	 	 	 	

The accompanying notes are an integral part of these consolidated financial statements.
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MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 	 	 	 	 	 	 	 	 	
 	 	Six Months	
 	 	Ended June 30,
	
 	 	2004
	 	2003
	
 	 	(In thousands)	
Operating Activities	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	139,275	 	 	$	(393,064	)	
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	26,437	 	 	 	26,647	 	
Amortization	 	 	36,505	 	 	 	33,735	 	
Deferred income taxes	 	 	1,513	 	 	 	(212,012	)	
Other	 	 	2,061	 	 	 	150	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	
Trading securities	 	 	2,267	 	 	 	(4,657	)	
Accounts receivable	 	 	9,152	 	 	 	(7,460	)	
Settlement due from members	 	 	12,720	 	 	 	(3,073	)	
Prepaid expenses and other current assets	 	 	11,146	 	 	 	(19,598	)	
Accounts payable	 	 	(72,439	)	 	 	(28,657	)	
Settlement due to members	 	 	(16,248	)	 	 	4,555	 	
Legal settlement accruals, including accretion of imputed interest	 	 	17,641	 	 	 	735,079	 	
Accrued expenses	 	 	(40,169	)	 	 	(76,556	)	
Net change in other assets and liabilities	 	 	15,068	 	 	 	(7,819	)	

 	 	
Net cash provided by operating activities	 	 	144,929	 	 	 	47,270	 	

 	 	
Investing Activities	 	 	 	 	 	 	 	 	
Purchases of property, plant and equipment	 	 	(5,681	)	 	 	(50,531	)	
Capitalized software	 	 	(16,609	)	 	 	(37,166	)	
Purchases of investment securities available-for-sale	 	 	(99,717	)	 	 	(109,795	)	
Proceeds from sales of investment securities available-for-sale	 	 	84,334	 	 	 	116,255	 	
Acquisition of businesses, net of cash acquired	 	 	(29,861	)	 	 	—	 	
Other investing activities	 	 	(7,814	)	 	 	(972	)	

 	 	
Net cash used in investing activities	 	 	(75,348	)	 	 	(82,209	)	

 	 	
Financing Activities	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	 	 	—	 	 	 	—	 	

 	 	
Effect of exchange rate changes on cash and cash equivalents	 	 	(1,822	)	 	 	3,476	 	

 	 	
Net increase (decrease) in cash and cash equivalents	 	 	67,759	 	 	 	(31,463	)	
Cash and cash equivalents — beginning of period	 	 	374,169	 	 	 	336,474	 	

 	 	
Cash and cash equivalents — end of period	 	$	441,928	 	 	$	305,011	 	

 	 	
The accompanying notes are an integral part of these consolidated financial statements.
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MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 	
 	 	 	 	 	 	Retained	 	Other	 	 	 	 	
 	 	 	 	 	 	Earnings	 	Comprehensive	 	Common Shares	 	Additional	
 	 	 	 	 	 	(Accumulated	 	Income,	 		 	Paid-in	
 	 	Total
	 	Deficit)
	 	Net of Tax
	 	Class A
	 	Class B
	 	Capital
	
 	 	(In thousands)	
Balance at January 1, 2004	 	$	698,721	 	 	$	(359,264	)	 	$	89,617	 	 	$	840	 	 	$	160	 	 	$	967,368	 	
Net income	 	 	139,275	 	 	 	139,275	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Other comprehensive loss, net of tax	 	 	(17,068	)	 	 	—	 	 	 	(17,068	)	 	 	—	 	 	 	—	 	 	 	—	 	

 	 	 	 	

 	 	 	 	
 	 	
Balance at June 30, 2004	 	$	820,928	 	 	$	(219,989	)	 	$	72,549	 	 	$	840	 	 	$	160	 	 	$	967,368	 	

 	 	 	 	

 	 	 	 	
 	 	
MASTERCARD INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

 	 	Three Months	 	Six Months	
 	 	Ended June 30,
	 	Ended June 30,
	
 	 	2004
	 	2003
	 	2004
	 	2003
	
 	 	(In thousands)	
Net Income (Loss)	 	$	65,707	 	 	$	32,327	 	 	$	139,275	 	 	$	(393,064	)	
Other comprehensive income (loss), net of tax:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency translation adjustments	 	 	1,242	 	 	 	20,761	 	 	 	(10,606	)	 	 	27,292	 	
Net unrealized gain (loss) on investment securities available-for-sale	 	 	(7,494	)	 	 	243	 	 	 	(8,017	)	 	 	(1,434	)	
Net unrealized gain (loss) on derivatives accounted for as hedges	 	 	(681	)	 	 	(1,529	)	 	 	1,555	 	 	 	(5,369	)	

 	 	 	 	

Other comprehensive income (loss) , net of tax	 	 	(6,933	)	 	 	19,475	 	 	 	(17,068	)	 	 	20,489	 	

 	 	 	 	

Comprehensive Income (Loss)	 	$	58,774	 	 	$	51,802	 	 	$	122,207	 	 	$	(372,575	)	

 	 	 	 	

The accompanying notes are an integral part of these consolidated financial statements.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
Note 1. Summary of Significant Accounting Policies
      Organization — MasterCard Incorporated and its consolidated subsidiaries, including MasterCard International Incorporated (“MasterCard International”) and MasterCard Europe sprl (“MasterCard Europe”) (together, “MasterCard” or the “Company”), provide transaction processing and related services to customers principally in support of their credit, deposit access (debit), electronic cash and Automated Teller Machine (“ATM”) payment programs, and travelers cheque programs.
      Consolidation and basis of presentation — The Company follows accounting principles generally accepted in the United States of America. Certain prior period amounts have been reclassified to conform to 2004 classifications. The consolidated financial statements include the accounts of MasterCard and its majority-owned or controlled entities. Intercompany transactions are eliminated in consolidation.
     The Company consolidates majority-owned or controlled entities, including variable interest entities. Minority interest is recorded for consolidated entities in which the Company owns less than 100% of the interest. Minority interest represents the equity interest not owned by the Company.
     The consolidated financial statements for the three and six months ended June 30, 2004 and 2003 and as of June 30, 2004 are unaudited, and in the opinion of management include all adjustments (consisting only of normal recurring adjustments) that are necessary to present fairly the results for interim periods. Due to seasonal fluctuations and other factors, the results of operations for the three and six months ended June 30, 2004 are not necessarily indicative of the results to be expected for the full year.
     The accompanying unaudited consolidated financial statements are presented in accordance with the requirements of Quarterly Reports on Form 10-Q and, consequently, do not include all of the disclosures required by generally accepted accounting principles in the United States of America. Reference should be made to the Company’s 2003 Annual Report on Form 10-K for additional disclosures, including a summary of the Company’s significant accounting policies. 
Note 2. Supplemental Cash Flows
     The following table includes supplemental cash flow disclosures for the periods:

 	 	Six Months	
 	 	Ended June 30,
	
 	 	2004
	 	2003
	
Cash paid for income taxes	 	$	27,014	 	 	$	991	 	
Cash paid for interest	 	 	8,517	 	 	 	8,363	 	
Non-cash investing and financing activities:	 	 	 	 	 	 	 	 	
Consolidation of variable interest entity:	 	 	 	 	 	 	 	 	
Municipal bonds held-to-maturity	 	 	—	 	 	 	(154,000	)	
Long-term debt	 	 	—	 	 	 	149,380	 	
Minority interest	 	 	—	 	 	 	4,620	 	
Sale-leaseback transaction:	 	 	 	 	 	 	 	 	
Capital lease obligation	 	 	—	 	 	 	32,627	 	
Bonds held-to-maturity	 	 	—	 	 	 	(32,627	)	
     On January 1, 2003, the Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation Number No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”) and consolidated the MasterCard International O’Fallon 1999 Trust (the “Trust”) on the Company’s consolidated balance sheet, which resulted in recording $154,000 in municipal bonds held by the Trust, $149,380 in long-term debt and $4,620 of minority interest relating to the equity in the Trust held by a third party. The Trust financed the Company’s global technology and operations facility located in O’Fallon, Missouri, named Winghaven, through a combination of a third party equity investment and the issuance of 7.36 percent Series A Senior Secured Notes (the “Secured Notes”) in the amount of $149,380 due September 1, 2009. The redemption value of the minority interest approximates its carrying value. The minority interest will be redeemed by the minority interest holders upon the maturity of the Secured Notes. MasterCard
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
International has a guarantee of 85.15 percent for the Secured Notes outstanding totaling $127,197 at June 30, 2004. Additionally, upon the occurrence of specific events of default, MasterCard International guarantees repayment of the total outstanding principal and interest on the Secured Notes and would hold ownership of the facility. 
Note 3. Net Income (Loss) Per Share
     The following table sets forth the computation of net income (loss) per share (basic and diluted):

 	 	Three Months	 	Six Months	
 	 	Ended June 30,
	 	Ended June 30,
	
 	 	2004
	 	2003
	 	2004
	 	2003
	
Numerator for net income (loss) per share (basic and diluted):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before cumulative effect of accounting change	 	$	65,707	 	 	$	32,327	 	 	$	139,275	 	 	$	(398,013	)	
Cumulative effect of accounting change, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4,949	 	

 	 	 	 	

Net income (loss)	 	$	65,707	 	 	$	32,327	 	 	$	139,275	 	 	$	(393,064	)	

 	 	 	 	

Denominator for net income (loss) per share (basic and diluted):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding	 	 	100,000	 	 	 	100,000	 	 	 	100,000	 	 	 	100,000	 	

 	 	 	 	

Income (loss) per share before cumulative effect of accounting change	 	$	.66	 	 	$	.32	 	 	$	1.39	 	 	$	(3.98	)	
Cumulative effect of accounting change per share, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	.05	 	

 	 	 	 	

Net income (loss) per share (basic and diluted)	 	$	.66	 	 	$	.32	 	 	$	1.39	 	 	$	(3.93	)	

 	 	 	 	

Note 4. Acquisition of Europay International (“EPI”)
     On June 28, 2002, MasterCard Incorporated issued 23,760 shares of its common stock to the shareholders of EPI and MasterCard Europay U.K. Limited (“MEPUK”), in return for directly and indirectly acquiring 100% of the shares of EPI not previously owned by MasterCard International. However, of the 23,760 shares issued, only 17,610 were considered to be issued unconditionally. The purchase price for EPI was based on the estimated value of the unconditional shares only, and this estimated value was determined on the basis of an independent valuation. Considering this valuation and the 17,610 unconditional shares issued, the purchase price of EPI was $267,856, excluding estimated acquisition costs of $10,486 that were incurred by the Company.
     In calculating the purchase price of EPI, the Company considered only the unconditional shares issued to the former shareholders of EPI and MEPUK because the agreement relating to the EPI acquisition provides that the number of shares allocated to these shareholders will potentially increase or decrease at the end of a three-year transition period as a result of the application of a global proxy formula for the third year of the transition period. Of the 23,760 shares attributable to the exchange of EPI and MEPUK shares, 6,150 shares are conditional shares subject to reallocation at the end of the transition period. EPI and MEPUK shareholders therefore received 17,610 unconditional shares at closing.
     Since former EPI and MEPUK shareholders would retain or receive additional shares of MasterCard Incorporated at the end of the transition period without remitting any additional consideration, any shares retained or received by them that are above their minimum allocation at that time would constitute a part of the purchase price. Any such additional shares will be valued at that time based upon the fair value of the stock of MasterCard Incorporated. Any such reallocation of shares to former EPI and MEPUK shareholders will increase the purchase price for EPI and, accordingly, the amount of goodwill and additional paid-in capital recorded.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
     Included in the liabilities assumed in the acquisition was a liability for exit costs relating to the integration of the Company and EPI (now MasterCard Europe). The changes in the liability for exit costs are summarized as follows:

 	 	 	 	 	 	Redundant	 	 	 	 	
 	 	Europay	 	Computer	 	 	 	 	
 	 	Brand/Logo	 	Systems/Technology	 	Workforce	 	 	
 	 	Elimination
	 	Elimination
	 	Reduction
	 	Total
	
Balance as of December 31, 2003	 	$	10,452	 	 	$	9,810	 	 	$	1,042	 	 	$	21,304	 	
Utilization	 	 	(9,452	)	 	 	(3,174	)	 	 	(21	)	 	 	(12,647	)	
Change in estimate	 	 	—	 	 	 	—	 	 	 	(159	)	 	 	(159	)	
Change due to currency translation	 	 	(215	)	 	 	(82	)	 	 	(62	)	 	 	(359	)	

 	 	 	 	

Balance as of June 30, 2004	 	$	785	 	 	$	6,554	 	 	$	800	 	 	$	8,139	 	

 	 	 	 	

Note 5. Goodwill
     The changes in the carrying amount of goodwill since December 31, 2003 are as follows:

Balance as of December 31, 2003	 	$	187,881	 	
Acquisition of businesses, net of tax	 	 	20,225	 	
Foreign currency translation	 	 	(4,211	)	
Other	 	 	(105	)	

Balance as of June 30, 2004	 	$	203,790	 	

     In February 2004, the Company acquired a research and advisory firm focused exclusively on the global financial services industry. In May 2004, the Company acquired a consulting firm specializing in the optimization of customer relationships. These acquisitions did not have a material impact on the Company’s operating results for the three and six months ended June 30, 2004. 
Note 6. Other Intangible Assets
     The following table sets forth gross and net intangible assets, other than goodwill:

 	 	June 30, 2004
	 	December 31, 2003
	
 	 	Gross	 	 	 	 	 	Net	 	Gross	 	 	 	 	 	Net	
 	 	Carrying	 	Accumulated	 	Carrying	 	Carrying	 	Accumulated	 	Carrying	
 	 	Amount
	 	Amortization
	 	Amount
	 	Amount
	 	Amortization
	 	Amount
	
Amortizable intangible assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capitalized software	 	$	299,628	 	 	$	(177,254	)	 	$	122,374	 	 	$	283,217	 	 	$	(148,408	)	 	$	134,809	 	
Trademarks and tradenames	 	 	22,537	 	 	 	(12,922	)	 	 	9,615	 	 	 	20,204	 	 	 	(9,802	)	 	 	10,402	 	
Other	 	 	8,276	 	 	 	(1,693	)	 	 	6,583	 	 	 	728	 	 	 	(728	)	 	 	—	 	

 	 	 	 	

 	 	 	 	
 	 	
Total amortizable intangible assets	 	 	330,441	 	 	 	(191,869	)	 	 	138,572	 	 	 	304,149	 	 	 	(158,938	)	 	 	145,211	 	
Unamortizable intangible assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Customer relationships	 	 	178,194	 	 	 	—	 	 	 	178,194	 	 	 	182,419	 	 	 	—	 	 	 	182,419	 	

 	 	 	 	

 	 	 	 	
 	 	
Total	 	$	508,635	 	 	$	(191,869	)	 	$	316,766	 	 	$	486,568	 	 	$	(158,938	)	 	$	327,630	 	

 	 	 	 	

 	 	 	 	
 	 	
     Additions to capitalized software primarily relate to internal projects associated with system enhancements or infrastructure improvements offset by the translation of capitalized software denominated in foreign currency. MasterCard’s acquisitions during the first six months of 2004 discussed in Note 5 herein resulted in an increase in trademarks and tradenames in the amount of $2,650 and other amortizable intangible assets, including covenants not to compete, customer lists and a research library, in the amount of $7,548. Amortizable trademarks and tradenames and unamortizable customer relationships include assets which are denominated in foreign currency. As such, a component of the net change in these intangible assets is attributable to foreign currency translation. In particular, customer relationships assumed in the acquisition of EPI on June 28, 2002 decreased by $4,225 during the first six months of 2004.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
     Amortization expense on the assets above was $18,358 and $16,887 for the three months ended June 30, 2004 and 2003, respectively, and $36,505 and $33,735 for the six months ended June 30, 2004 and 2003, respectively. Impairment losses on capitalized software were nominal in both periods.
     The following table sets forth the estimated future amortization expense on amortizable intangible assets: 

For the six months ending December 31, 2004	 	$	36,527	 	
For the year ending December 31, 2005	 	 	51,853	 	
For the year ending December 31, 2006	 	 	33,121	 	
For the year ending December 31, 2007	 	 	12,118	 	
For the year ending December 31, 2008	 	 	2,642	 	
For the year ending December 31, 2009 and thereafter	 	 	2,311	 	
Note 7. Pension Plans
     The Company maintains a noncontributory defined benefit pension plan with a cash balance feature covering substantially all of its U.S. employees. Additionally, the Company has an unfunded nonqualified supplemental executive retirement plan that provides certain key employees with supplemental retirement benefits in excess of limits imposed on qualified plans by U.S. tax laws.
     Net periodic pension cost is as follows:

  	 	Three Months	 	Six Months	
 	 	Ended June 30,
	 	Ended June 30,
	
 	 	2004
	 	2003
	 	2004
	 	2003
	
Service cost	 	$	4,038	 	 	$	4,214	 	 	$	8,076	 	 	$	8,428	 	
Interest cost	 	 	2,449	 	 	 	2,119	 	 	 	4,898	 	 	 	4,238	 	
Expected return on plan assets	 	 	(2,580	)	 	 	(2,165	)	 	 	(5,160	)	 	 	(4,330	)	
Amortization of prior service credit	 	 	(79	)	 	 	(79	)	 	 	(158	)	 	 	(158	)	
Recognized actuarial loss	 	 	318	 	 	 	890	 	 	 	636	 	 	 	1,780	 	

 	 	 	 	

Net periodic pension cost	 	$	4,146	 	 	$	4,979	 	 	$	8,292	 	 	$	9,958	 	

 	 	 	 	

     The funded status of the qualified plan exceeds minimum funding requirements. The Company does not expect to make any significant contributions to its pension plans in 2004.
Note 8. Postretirement Health and Life Insurance Benefits
     The Company maintains a postretirement plan providing health coverage and life insurance benefits for substantially all of its U.S. employees and retirees.
     In May 2004, the FASB issued FASB Staff Position No. FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP 106-2”). FSP 106-2 requires (a) that the effects of the federal subsidy be considered an actuarial gain and recognized in the same manner as other actuarial gains and losses and (b) certain disclosures for employers that sponsor postretirement benefit plans that provide prescription drug benefits. The Company has determined that the enactment of the Medicare Modernization Act was not a significant event with respect to its plans, and accordingly, as required by FSP 106-2, the effects of the Act will be incorporated into our December 31, 2004 measurement of the plan’s benefit obligations.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
     Net periodic postretirement benefit cost is as follows:

 	 	Three Months	 	Six Months	
 	 	Ended June 30,
	 	Ended June 30,
	
 	 	2004
	 	2003
	 	2004
	 	2003
	
Service cost	 	$	774	 	 	$	644	 	 	$	1,548	 	 	$	1,288	 	
Interest cost	 	 	741	 	 	 	557	 	 	 	1,482	 	 	 	1,114	 	
Amortization of prior service cost	 	 	17	 	 	 	17	 	 	 	34	 	 	 	34	 	
Amortization of transition obligation	 	 	145	 	 	 	145	 	 	 	290	 	 	 	290	 	
Recognized actuarial gain	 	 	—	 	 	 	(38	)	 	 	—	 	 	 	(76	)	

 	 	 	 	

Net periodic postretirement benefit cost	 	$	1,677	 	 	$	1,325	 	 	$	3,354	 	 	$	2,650	 	

 	 	 	 	

     The Company does not expect to make any contributions to its postretirement plan in 2004. The Company funds its postretirement benefits as payments are required through cash flows from operations.
Note 9. Credit Facility
     On June 18, 2004, the Company entered into a committed unsecured $1,950,000 revolving credit facility (the “Credit Facility”) with certain financial institutions, which expires on June 17, 2005. Borrowings under the facility are available to provide liquidity in the event of one or more settlement failures by MasterCard International members and, subject to a limit of $300,000, for general corporate purposes. The Credit Facility replaced MasterCard Incorporated’s prior $1,200,000 credit facility which expired on June 18, 2004. Interest on borrowings under the Credit Facility is charged at the London Interbank Offered Rate (“LIBOR”) plus 28 basis points. An additional 10 basis points would be applied if the aggregate borrowings under the Credit Facility were to exceed 33% of the commitments. MasterCard agreed to pay a facility fee which varies based on MasterCard’s credit rating and is currently equal to 7 basis points on the total commitment. MasterCard was in compliance with the Credit Facility covenants as of June 30, 2004. There were no borrowings under the Credit Facility at June 30, 2004. The majority of Credit Facility lenders are members or affiliates of members of MasterCard International.
     MasterCard Europe has cancelled an uncommitted credit agreement totaling 30,000 euros as of June 30, 2004. 
Note 10. Commitments and Contingent Liabilities
     The future minimum payments under non-cancelable operating or capital leases for office buildings and equipment, sponsorships and licensing and other agreements at June 30, 2004 are as follows:

 	 	 	 	 	 	 	 	 	 	 	 	 	 	Sponsorships,	
 	 	 	 	 	 	Capital	 	Operating	 	Licensing &	
 	 	Total
	 	Leases
	 	Leases
	 	Other
	
The remainder of 2004	 	$	160,685	 	 	$	4,195	 	 	$	21,637	 	 	$	134,853	 	
2005	 	 	214,574	 	 	 	6,509	 	 	 	29,423	 	 	 	178,642	 	
2006	 	 	150,858	 	 	 	3,780	 	 	 	23,500	 	 	 	123,578	 	
2007	 	 	78,069	 	 	 	3,034	 	 	 	19,871	 	 	 	55,164	 	
2008	 	 	51,519	 	 	 	2,269	 	 	 	15,917	 	 	 	33,333	 	
Thereafter	 	 	70,379	 	 	 	43,969	 	 	 	15,294	 	 	 	11,116	 	

 	 	 	 	

Total	 	$	726,084	 	 	$	63,756	 	 	$	125,642	 	 	$	536,686	 	

 	 	 	 	

     Included in the table above are capital leases with imputed interest expense of $17,267 and a net present value of minimum lease payments of $46,489. In addition, at June 30, 2004, $25,956 of the future minimum payments in the table above for operating leases, sponsorships and licensing and other agreements was accrued.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
     Consolidated rental expense for the Company’s office space was approximately $8,042 and $7,157, respectively, for the three months ended June 30, 2004 and 2003 and $15,917 and $14,321 for the six months ended June 30, 2004 and 2003, respectively. Consolidated lease expense for automobiles, computer equipment and office equipment was $2,722 and $2,286 for the three months ended June 30, 2004 and 2003, respectively, and $5,266 and $4,605, respectively, for the six months ended June 30, 2004 and 2003, respectively.
     MasterCard licenses certain software to its customers. The license agreements contain guarantees under which the Company indemnifies licensees from any adverse judgments arising from claims of intellectual property infringement by third parties. The terms of the guarantees are equal to the terms of the license to which they relate. The amount of the guarantees are limited to damages, losses, costs, expenses or other liabilities incurred by the licensee as a result of any intellectual property rights claims. The Company does not generate significant revenues from software licensing. The fair value of the guarantees is estimated to be negligible.
Note 11. U.S. Merchant Lawsuit and Other Legal Settlements
     During 2003, MasterCard settled the U.S. merchant lawsuit described in Note 13 herein and contract disputes with certain customers. MasterCard International signed a Memorandum of Understanding (“MOU”) with plaintiffs in the U.S. merchant lawsuit on April 30, 2003. On June 4, 2003, MasterCard International and plaintiffs signed a settlement agreement (the “Settlement Agreement”) embodying the terms originally set forth in the MOU. The Settlement Agreement required the Company to pay $125,000 in 2003 and requires it to pay $100,000 annually in December from 2004 through 2012. In addition, the Company adopted rules which permit U.S. merchants to elect not to accept MasterCard branded debit (or credit) cards, implemented programs to allow merchants to identify debit cards, provide signage to merchants and established a separate debit interchange rate for a required period. For a description of interchange, see the text under the heading “Global Interchange Proceedings” in Note 13.
     For the year ended December 31, 2003, the total pre-tax charge recorded for the U.S. merchant lawsuit and other legal settlements was $763,460. The primary component of this charge was made in connection with the signing of the MOU, for which MasterCard recorded a pre-tax charge of $721,000 ($469,000 after-tax) in the six months ended June 30, 2003, consisting of (i) the monetary amount of the U.S. merchant lawsuit settlement (discounted at 8 percent over the payment term), (ii) certain additional costs in connection with, and in order to comply with, other requirements of the U.S. merchant lawsuit settlement, and (iii) costs to address the merchants who opted not to participate in the plaintiff class in the U.S. merchant lawsuit. This amount was an estimate, which was revised during the three months ended December 31, 2003 based on approval of the Settlement Agreement by the court and other factors. The Company continued to review these estimates and made an additional charge of $3,896 during the three months ended June 30, 2004. If necessary, future refinements to the charge will also be made. Payments relating to these settlements and costs of $5,250 and $11,351 were made during the three and six months ended June 30, 2004, respectively. Included in interest expense is imputed interest on the U.S. merchant lawsuit settlement of $12,674 and $14,079 for the three months ended June 30, 2004 and 2003, respectively, and $25,096 and $14,079 for the six months ended June 30, 2004 and 2003, respectively.
     As noted above and described further in Note 13, several lawsuits have been commenced by merchants who have opted not to participate in the plaintiff class in the U.S. merchant lawsuit. The “opt out” merchant lawsuits are not covered by the terms of the Settlement Agreement.
Note 12. Income Tax
     The effective tax rate for the three and six months ended June 30, 2004 was 27.1% and 31.7%, respectively, compared to 35.3% in each of the three and six months ended June 30, 2003. The decrease in the rate in 2004 is primarily attributable to discrete items that occurred in the second quarter. The primary discrete items were the favorable settlement and reassessment of various tax controversies and the filing and recognition of refund claims, partially offset by an increase in the valuation allowance for the future realization of a benefit from a capital loss carryover. Absent the discrete items our effective tax rate for the three and six months ended June 30, 2004 would have been 36.9% and 36.0%, respectively. The increase in the three and six months ended June 30, 2004 before discrete items is primarily attributable to a change in the geographic distribution of pretax income from taxable jurisdictions with lower rates to those with higher rates.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
Note 13. Legal Proceedings
     MasterCard is a party to legal proceedings with respect to a variety of matters in the ordinary course of business. Except as described below, MasterCard does not believe that any legal proceedings to which it is a party would have a material impact on its results of operations, financial position, or cash flows.
Department of Justice Antitrust Litigation
     In October 1998, the United States Department of Justice (“DOJ”) filed suit against MasterCard International, Visa U.S.A., Inc. and Visa International Corp. in the U.S. District Court for the Southern District of New York alleging that both MasterCard’s and Visa’s governance structure and policies violated U.S. federal antitrust laws. First, the DOJ claimed that “dual governance” — the situation where a financial institution has a representative on the board of directors of MasterCard or Visa while a portion of its card portfolio is issued under the brand of the other association — was anti-competitive and acted to limit innovation within the payment card industry. At the same time, the DOJ conceded that “dual issuance” — a term describing the structure of the bank card industry in the United States in which a single financial institution can issue both MasterCard and Visa-branded cards — was pro-competitive. Second, the DOJ challenged MasterCard’s Competitive Programs Policy (“CPP”) and a Visa bylaw provision that prohibit financial institutions participating in the respective associations from issuing competing proprietary payment cards (such as American Express or Discover). The DOJ alleged that MasterCard’s CPP and Visa’s bylaw provision acted to restrain competition.
     MasterCard denied the DOJ’s allegations. MasterCard believes that both “dual governance” and the CPP are pro-competitive and fully consistent with U.S. federal antitrust law.
     A bench trial concerning the DOJ’s allegations was concluded on August 22, 2000. On October 9, 2001, the District Court judge issued an opinion upholding the legality and pro-competitive nature of dual governance. In so doing, the judge specifically found that MasterCard and Visa have competed vigorously over the years, that prices to consumers have dropped dramatically, and that MasterCard has fostered rapid innovations in systems, product offerings and services.
     However, the judge also held that MasterCard’s CPP and the Visa bylaw constitute unlawful restraints of trade under the federal antitrust laws. The judge found that the CPP and Visa bylaw weakened competition and harmed consumers by preventing competing proprietary payment card networks such as American Express and Discover from entering into agreements with banks to issue cards on their networks. In reaching this decision, the judge found that two distinct markets — a credit and charge card issuing market and a network services market — existed in the United States, and that both MasterCard and Visa had market power in the network market. MasterCard strongly disputes these findings and believes that the DOJ failed, among other things, to demonstrate that U.S. consumers have been harmed by the CPP.
     On November 26, 2001, the judge issued a final judgment that orders MasterCard to repeal the CPP insofar as it applies to issuers and enjoins MasterCard from enacting or enforcing any bylaw, rule, policy or practice that prohibits its issuers from issuing general purpose credit or debit cards in the United States on any other general purpose card network. The judge also concluded that during the period in which the CPP was in effect, MasterCard was able to “lock up” certain members by entering into long-term agreements with them pursuant to which the members committed to maintain a certain percentage of their general purpose card volume, new card issuance or total number of cards in force in the United States on MasterCard’s network. Accordingly, the final judgment provides that there will be a period (commencing on the effective date of the judgment and ending on the later of two years from that date or two years from the resolution of any final appeal) during which MasterCard will be required to permit any issuer with which it entered into such an agreement prior to the effective date of the final judgment to terminate that agreement without penalty, provided that the reason for the termination is to permit the issuer to enter into an agreement with American Express or Discover. MasterCard would be free to apply to the District Court to recover funds paid but not yet earned under any terminated agreement. The final judgment imposes parallel requirements on Visa. The judge explicitly provided that MasterCard and Visa would be free to enter into new partnership or member business agreements in the future.
     MasterCard appealed the judge’s ruling with respect to the CPP and on February 6, 2002, the judge issued an order granting MasterCard’s and Visa’s motion to stay the final judgment pending appeal. On September 17, 2003 a three-judge panel of the Second Circuit issued its decision upholding the District Court’s decision. On January 9, 2004, the Second Circuit denied MasterCard’s petition for a rehearing en banc. On May 10, 2004, MasterCard filed a petition for certiorari with the Supreme Court. The District Court’s final judgment remains stayed pending a decision on MasterCard’s petition for a writ of certiorari to the Supreme Court.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
     In addition, on September 18, 2003, MasterCard filed a motion before the District Court judge in this case seeking to enjoin Visa, pending completion of the appellate process, from enforcing a newly-enacted bylaw requiring Visa’s 100 largest issuers of debit cards in the United States to pay a so-called “settlement service” fee if they reduce their Visa debit volume by more than 10%. This bylaw was later modified to clarify that the settlement service fee would only be imposed if an issuer shifted its portfolio of debit cards to MasterCard. Visa implemented this bylaw provision following the settlement of the U.S. merchant lawsuit described under the heading “U.S. Merchant Opt Out and Consumer Litigations” below. MasterCard believes that this bylaw is punitive and inconsistent with the status quo that the District Court judge in the DOJ case sought to preserve in her decision to stay her final judgment pending appeal, and would be inconsistent with the final judgment if it is preserved on appeal. On December 8, 2003, the District Court judge ruled that the District Court lacked jurisdiction to issue an injunction, but held that the court would have the authority to rescind contracts entered into by issuers with Visa during the time that the settlement service fee was in effect if the court’s final judgment is upheld on appeal and the court finds that the settlement service fee violates the final judgment. At this time it is not possible to determine the ultimate resolution of this matter.
Currency Conversion Litigations
     MasterCard International, together with Visa U.S.A., Inc. and Visa International Corp., are defendants in a state court lawsuit in California. The lawsuit alleges that MasterCard and Visa wrongfully imposed an asserted one percent currency conversion “fee” on every credit card transaction by U.S. MasterCard and Visa cardholders involving the purchase of goods or services in a foreign country, and that such alleged “fee” is unlawful. This action, titled Schwartz v. Visa Int’l Corp., et al., was brought in the Superior Court of California in February 2000, purportedly on behalf of the general public. Trial of the Schwartz matter commenced on May 20, 2002 and concluded on November 27, 2002. The Schwartz action claims that the alleged “fee” grossly exceeds any costs the defendants might incur in connection with currency conversions relating to credit card purchase transactions made in foreign countries and is not properly disclosed to cardholders. Plaintiffs seek to prevent defendants from continuing to engage in, use or employ the alleged practice of charging and collecting the asserted one percent currency conversion “fee” and from charging any type of purported currency conversion “fee” without providing a clear, obvious and comprehensive notice that a fee will be charged. Plaintiffs also request an order (1) requiring defendants to fund a corrective advertising campaign; and (2) awarding restitution of the monies allegedly wrongfully acquired by imposing the purported currency conversion “fee”. MasterCard denies these allegations.
     On April 8, 2003, the trial court judge issued a final decision in the Schwartz matter. In his decision, the trial judge found that MasterCard’s currency conversion process does not violate the Truth in Lending Act or regulations, nor is it unconscionably priced under California law. However, the judge found that the practice is deceptive under California state law, and ordered that MasterCard mandate that members disclose the currency conversion process to cardholders in cardholder agreements, applications, solicitations and monthly billing statements. As to MasterCard, the judge also ordered restitution to California cardholders. The judge issued a decision on restitution on September 19, 2003, which requires a traditional notice and claims process in which consumers have approximately six months to submit their claims. The court issued its final judgment on October 31, 2003 and on December 29, 2003, MasterCard appealed the judgment. MasterCard’s appeal brief was filed on July 28, 2004. The final judgment and restitution process have been stayed pending MasterCard’s appeal. With respect to restitution, MasterCard believes that it is likely to prevail on such appeal.
     In addition, MasterCard has been served with complaints in state courts in New York, Arizona, Texas, Florida, Arkansas, Kentucky, Illinois and Tennessee seeking to, in effect, extend the judge’s decision in the Schwartz matter to MasterCard cardholders outside of California. Some of these cases have been transferred to the U.S. District Court for the Southern District of New York and combined with the federal complaints in MDL No. 1409 discussed below. In other state court cases, MasterCard has moved to dismiss the claims. On December 12, 2003, the action in Kentucky was dismissed. On July 28, 2004, a New York state action was dismissed without prejudice.
     MasterCard International, Visa U.S.A., Inc., Visa International Corp., several member banks including Citibank (South Dakota), N.A., Citibank (Nevada), N.A., Chase Manhattan Bank USA, N.A., Bank of America, N.A. (USA), MBNA, and Diners Club are also defendants in a number of federal putative class actions that allege, among other things, violations of federal antitrust laws based on the asserted one percent currency conversion “fee”. Pursuant to an order of the Judicial Panel on Multidistrict Litigation, the federal complaints have been consolidated in MDL No. 1409 before Judge William H. Pauley III in the U.S. District Court for the Southern District of New York. In January 2002, the federal plaintiffs filed a Consolidated Amended Complaint (“MDL Complaint”) adding MBNA Corporation and MBNA America Bank, N.A. as defendants. This pleading asserts two theories of antitrust conspiracy under Section 1 of the Sherman Act, 15 U.S.C. §1: (i) an alleged “inter-association” conspiracy among MasterCard (together with its
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
members), Visa (together with its members) and Diners Club to fix currency conversion “fees” allegedly charged to cardholders of “no less than 1% of the transaction amount and frequently more;” and (ii) two alleged “intra-association” conspiracies, whereby each of Visa and MasterCard is claimed separately to have conspired with its members to fix currency conversion “fees” allegedly charged to cardholders of “no less than 1% of the transaction amount” and “to facilitate and encourage institution — and collection — of second tier currency conversion surcharges.” The MDL Complaint also asserts that the alleged currency conversion “fees” have not been disclosed as required by the Truth in Lending Act and Regulation Z.
     Defendants have moved to dismiss the MDL Complaint. On July 3, 2003, Judge Pauley issued a decision granting MasterCard’s motion to dismiss in part. Judge Pauley dismissed the Truth in Lending claims in their entirety as against MasterCard, Visa and several of the member bank defendants. Judge Pauley did not dismiss the antitrust claims. Discovery in this matter is expected to continue. On November 12, 2003 plaintiffs filed a motion for class certification. A trial date has been set for October 10, 2005. At this time, it is not possible to determine the ultimate resolution of this matter.
     For the reasons set forth above, no provision for losses has been provided in connection with these currency conversion litigations.
Merchant Chargeback-Related Litigations
     On May 12, 2003, a complaint alleging violations of federal and state antitrust laws, breach of contract, fraud and other theories was filed in the U.S. District Court for the Central District of California (Los Angeles) against MasterCard by a merchant aggregator whose customers include businesses selling adult entertainment content over the Internet. The complaint’s allegations focused on MasterCard’s past and potential future assessments on the plaintiff’s merchant bank (acquirer) for exceeding excessive chargeback standards in connection with the plaintiff’s transaction activity as well as the effect of MasterCard’s chargeback rules on “card-not-present” merchants. Chargebacks refer to a situation where a transaction is returned, or charged back to an acquirer by an issuer at the request of cardholders or for other reasons. Prior to MasterCard filing any motion or responsive pleading, the plaintiff filed a voluntary notice of dismissal without prejudice on December 5, 2003. On the same date, the plaintiff filed a complaint in the U.S. District Court for the Eastern District of New York making similar allegations to those made in its initial California complaint. MasterCard moved to dismiss all of the claims in the complaint for failure to state a cause of action. The Court has yet to schedule oral argument on the motion.
     In addition, on June 6, 2003, an action titled California Law Institute v. Visa U.S.A, et al. was initiated against MasterCard and Visa U.S.A., Inc. in the Superior Court of California, purportedly on behalf of the general public. Plaintiffs seek disgorgement, restitution and injunctive relief for unlawful and unfair business practices in violation of California Unfair Trade Practices Act Section 17200, et. seq. Plaintiffs purportedly allege that MasterCard’s (and Visa’s) chargeback fees are unfair and punitive in nature. Plaintiffs seek injunctive relief preventing MasterCard from continuing to engage in its chargeback practices and requiring MasterCard to provide restitution and/or disgorgement for monies improperly obtained by virtue of them. On August 13, 2003, MasterCard made motions seeking to dismiss the complaint in its entirety or, in the alternative, to narrow the scope of the proceeding and add necessary parties. Oral argument on the motions was held on October 27, 2003. The Court denied the motions. Initial, but limited, discovery is now proceeding in this matter.
     At this time it is not possible to determine the outcome of the merchant chargeback-related litigations. For reasons set forth above, no provision for losses has been provided in connection with these litigations.
U.S. Merchant Opt Out and Consumer Litigations
     Commencing in October 1996, several class action suits were brought by a number of U.S. merchants against MasterCard International and Visa U.S.A., Inc. challenging certain aspects of the payment card industry under U.S. federal antitrust law. Those suits were later consolidated in the U.S. District Court for the Eastern District of New York. The plaintiffs challenged MasterCard’s “Honor All Cards” rule (and a similar Visa rule), which requires merchants who accept MasterCard cards to accept for payment every validly presented MasterCard card. Plaintiffs claimed that MasterCard and Visa unlawfully tied acceptance of debit cards to acceptance of credit cards. In essence, the merchants desired the ability to reject off-line, signature-based debit transactions (for example, MasterCard card transactions) in favor of other payment forms including on-line, PIN-based debit transactions (for example, Maestro or regional ATM network transactions) which generally impose lower transaction costs for merchants. The plaintiffs also claimed that MasterCard and Visa conspired to monopolize what they characterized as the point-of-sale debit card market, thereby
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
suppressing the growth of regional networks such as ATM payment systems. Plaintiffs alleged that the plaintiff class had been forced to pay unlawfully high prices for debit and credit card transactions as a result of the alleged tying arrangement and monopolization practices. On June 4, 2003, MasterCard International signed the Settlement Agreement to settle the claims brought by the plaintiffs in this matter, which the Court approved on December 19, 2003. A number of class members have appealed the district court’s approval of the settlement to the Second Circuit Court of Appeals. These appeals are largely focused on the court’s attorneys’ fees award as well on the court’s ruling on the scope of the release. The Second Circuit has scheduled oral argument on these appeals for August 25, 2004. For a further description of the U.S. merchant lawsuit settlement, see Note 11.
     Several lawsuits have been commenced by merchants who have opted not to participate in the plaintiff class in the U.S. merchant lawsuit, including Best Buy Stores, CVS, Giant Eagle, Home Depot, Toys “R” Us and Darden Restaurants. The majority of these cases were filed in the U.S. District Court for the Eastern District of New York and we expect that all of these cases will be tried in that Court for, at minimum, pretrial issues. On December 31, 2003, MasterCard entered into an agreement to settle claims brought by an “opt out” merchant. On March 19, 2004, the opt out merchants amended their complaints to include allegations, among other things: (i) that MasterCard’s (and Visa’s) interchange fees contravene the Sherman Act and (ii) that the opt out merchants were harmed by MasterCard’s CPP. MasterCard filed its response to the amended complaints on April 21, 2004. On July 1, 2004, MasterCard and CVS entered into a settlement and release resolving CVS’s claims against MasterCard. On July 9, 2004, the District Court entered an order dismissing with prejudice CVS’s complaint against MasterCard. MasterCard continues to be involved in court-ordered mediation with the remaining opt out merchant plaintiffs while discovery continues to proceed.
     In addition, there are currently related actions against MasterCard International in 19 different state courts and the District of Columbia. In a number of state courts there are multiple complaints against MasterCard International brought under state unfair competition statutes on behalf of putative classes of consumers. The claims in these actions mirror the allegations made in the U.S. merchant lawsuit and assert that merchants, faced with excessive merchant discount fees, have passed these overcharges to consumers in the form of higher prices on goods and services sold. While these actions are in their early stages, MasterCard has filed motions to dismiss the complaints in a number of state courts for failure to state a cause of action. The Supreme Court in the State of New York and the Circuit Court for the State of Michigan have granted MasterCard’s motion to dismiss with prejudice. On June 21, 2004, the plaintiffs in the New York case filed a notice of appeal. The plaintiffs’ time in which to file an appeal of the Michigan court’s ruling is currently running. MasterCard is awaiting decisions on its motions to dismiss in the other state courts. At this time, it is not possible to determine the outcome of these consumer cases. Neither the consumer class actions nor the “opt out” merchant litigations are covered by the terms of the Settlement Agreement in the U.S. merchant lawsuit.
Global Interchange Proceedings
     Interchange fees represent a sharing of payment system costs among the financial institutions participating in a four-party payment card system such as MasterCard’s. Generally, interchange fees are paid by the merchant bank (the “acquirer”) to the cardholder bank (the “issuer”) in connection with transactions initiated with the payment system’s cards. These fees reimburse the issuer for a portion of the costs incurred by it in providing services which are of benefit to all participants in the system, including acquirers and merchants. MasterCard establishes a multilateral interchange fee (“MIF”) in certain circumstances as a default fee that applies when there is no other interchange fee arrangement between the issuer and the acquirer. MasterCard establishes a variety of MIF rates depending on such considerations as the location and the type of transaction, and collects the MIF on behalf of the institutions entitled to receive it. As described more fully below, MIFs are subject to regulatory or legal review and/or challenges in a number of jurisdictions.
      European Union. In September 2000, the European Commission issued a “Statement of Objections” challenging Visa International’s cross-border MIF under European Community competition rules. On July 24, 2002, the European Commission announced its decision to exempt the Visa MIF from these rules based on certain changes proposed by Visa to its MIF. Among other things, in connection with the exemption order, Visa agreed to adopt a cost-based methodology for calculating its MIF similar to the methodology employed by MasterCard, which considers the costs of certain specified services provided by issuers, and to reduce its MIF rates for debit and credit transactions to amounts at or below certain specified levels.
     On September 25, 2003, the European Commission issued a Statement of Objections challenging MasterCard Europe’s cross-border MIF. MasterCard Europe filed its response to this Statement of Objections on January 5, 2004. MasterCard Europe is engaged in discussions with the European Commission in order to determine under what conditions, if any, the European Commission would issue a favorable ruling regarding MasterCard Europe’s MIF. If MasterCard is unsuccessful in obtaining a favorable ruling, the
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
European Commission could issue a prohibition decision ordering MasterCard to change the manner in which it calculates its cross-border MIF. MasterCard could appeal such a decision to the European Court of Justice. Because the cross-border MIF constitutes an essential element of MasterCard Europe’s operations, changes to it could significantly impact MasterCard International’s European members and the MasterCard business in Europe. At this time, it is not possible to determine the ultimate resolution of this matter.
      United Kingdom Office of Fair Trading. On September 25, 2001, the Office of Fair Trading of the United Kingdom (“OFT”) issued a Rule 14 Notice under the U.K. Competition Act 1998 challenging the MasterCard MIF, the fee paid by acquirers to issuers in connection with point of sale transactions, and multilateral service fee (“MSF”), the fee paid by issuers to acquirers when a customer uses a MasterCard-branded card in the United Kingdom either at an ATM or over the counter to obtain a cash advance. The MIF and MSF are established by MasterCard U.K. Members Forum Limited (formerly MEPUK) (“MMF”) for domestic credit card transactions in the United Kingdom. The notice contained preliminary conclusions to the effect that the MasterCard U.K. MIF and MSF may infringe U.K. competition law and do not qualify for an exemption in their present forms. In January 2002, MasterCard, MEPUK and several MasterCard U.K. members responded to the notice. On February 11, 2003, the OFT issued a supplemental notice, which also contained preliminary conclusions challenging MasterCard’s U.K. MIF under the Competition Act. On May 2, 2003, MasterCard and MMF responded to the supplemental notice.
     MasterCard Europe and MMF are engaged in discussions with the OFT in order to determine under what conditions, if any, the OFT would issue a favorable ruling regarding the MasterCard U.K. MIF. If MasterCard and MMF are unsuccessful in obtaining a favorable ruling, the OFT could issue a prohibition decision ordering MasterCard to change the manner in which it calculates its U.K. MIF. Because the MIF constitutes an essential element of MasterCard’s U.K. operations, a negative decision by the OFT could have a significant adverse impact on MasterCard’s U.K. members and on MasterCard’s competitive position and overall business in the U.K. In the event of a negative decision by the OFT, MasterCard intends to appeal to the Competition Appeals Tribunal and to seek interim relief. At this time, it is not possible to determine the ultimate resolution of this matter.
      United States. In July 2002, a purported class action lawsuit was filed by a group of merchants in the U.S. District Court for the Northern District of California against MasterCard International, Visa U.S.A., Inc., Visa International Corp. and several member banks in California alleging, among other things, that MasterCard’s and Visa’s interchange fees contravene the Sherman Act. The suit seeks treble damages in an unspecified amount, attorney’s fees and injunctive relief, including the divestiture of bank ownership of MasterCard and Visa, and the elimination of MasterCard and Visa marketing activities. On March 4, 2004, the court dismissed the lawsuit with prejudice in reliance upon the approval of the Settlement Agreement in the U.S. merchant lawsuit by the U.S. District Court for the Eastern District of New York, which held that the settlement and release in that case extinguished the claims brought by the merchant group in the present case. The plaintiffs have appealed the U.S. District Court for the Eastern District of New York’s approval of the U.S. merchant settlement and release to the Second Circuit Court of Appeals and have also appealed the U.S. District Court for the Northern District of California’s dismissal of the present lawsuit to the Ninth Circuit Court of Appeals. At this time it is not possible to determine the outcome of this proceeding.
      Other Jurisdictions. MasterCard is aware that regulatory authorities in certain other jurisdictions, including Poland, Spain, New Zealand, Portugal and Switzerland are reviewing MasterCard’s and/or its members’ interchange fees and/or related practices and may seek to regulate the establishment of such fees and/or such practices. At this time it is not possible to determine the outcome of these proceedings.
Note 14. Settlement and Travelers Cheque Risk Management
     Settlement risk is the legal exposure due to the difference in timing between the payment transaction date and subsequent settlement. Settlement risk is estimated using the average daily card charges during the quarter multiplied by the estimated number of days to settle. The Company has global risk management policies and procedures, which include risk standards to provide a framework for managing the Company’s settlement exposure. MasterCard International’s rules generally guarantee the payment of MasterCard transactions and certain Cirrus and Maestro transactions between principal members. The term and amount of the guarantee are unlimited. Member-reported transaction data and the transaction clearing data underlying the settlement risk exposure calculation may be revised in subsequent reporting periods.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
     In the event that MasterCard International effects a payment on behalf of a failed member, MasterCard International may seek an assignment of the underlying receivables. Subject to approval by the Board of Directors, members may be assessed for the amount of any settlement loss.
     MasterCard requires certain members that are not in compliance with the Company’s risk standards to post collateral, typically in the form of letters of credit and bank guarantees. This requirement is based on management review of the individual risk circumstances for each member that is out of compliance. In addition to these amounts, MasterCard holds collateral to cover: variability and future growth in member programs; the possibility that it may choose to pay merchants to protect brand integrity in the event of merchant bank (acquirer) failure, although it is not contractually obligated to do so; and Cirrus and Maestro related risk. MasterCard monitors its credit risk portfolio on a regular basis to estimate potential concentration risks and the adequacy of collateral on hand.
     Estimated settlement exposure, and the portion of the Company’s uncollateralized settlement exposure for MasterCard-branded transactions that relates to members that are deemed not to be in compliance with, or that are under review in connection with, the Company’s risk management standards, at June 30, 2004 and December 31, 2003 was as follows:

  	 	June 30,	 	December 31,	
 	 	2004
	 	2003
	
MasterCard-branded transactions:	 	 	 	 	 	 	 	 	
Gross legal settlement exposure	 	$	12,204,020	 	 	$	11,880,152	 	
Collateral held for legal settlement exposure	 	 	(1,440,816	)	 	 	(1,344,621	)	

 	 	
Net uncollateralized settlement exposure	 	$	10,763,204	 	 	$	10,535,531	 	

 	 	
Uncollateralized settlement exposure attributable to non-compliant members	 	$	317,500	 	 	$	250,984	 	

 	 	
Cirrus and Maestro transactions:	 	 	 	 	 	 	 	 	
Gross legal settlement exposure	 	$	678,089	 	 	$	591,317	 	

 	 	
     Although MasterCard holds collateral at the member level, the Cirrus and Maestro estimated settlement exposures are calculated at the regional level. Therefore, these settlement exposures are reported on a gross basis, rather than net of collateral.
     MasterCard’s estimated settlement exposure under the MasterCard brand, net of collateral, had concentrations of 57% and 58% in North America and 22% and 22% in Europe at June 30, 2004 and December 31, 2003, respectively.
     A significant portion of the uncollateralized settlement exposure attributable to non-compliant members is concentrated in five members ($233,895) and three members ($157,955) at June 30, 2004 and December 31, 2003, respectively. The increase in total uncollateralized exposure for all non-compliant members is mainly attributable to new risk standards that were established on January 1, 2004.
     MasterCard guarantees the payment of MasterCard-branded travelers cheques in the event of issuer default. The guarantee estimate is based on all outstanding MasterCard-branded travelers cheques, reduced by an actuarial determination of cheques that are not anticipated to be presented for payment. The term and amount of the guarantee are unlimited. MasterCard calculated its MasterCard-branded travelers cheques exposure under this guarantee as $1,228,658 and $1,205,921 at June 30, 2004 and December 31, 2003, respectively.
     A significant portion of the Company’s credit risk is concentrated in one MasterCard travelers cheque issuer. MasterCard has obtained an unlimited guarantee estimated at $1,021,614 and $996,927 at June 30, 2004 and December 31, 2003, respectively, from a financial institution that is a member, to cover all of the exposure of outstanding travelers cheques with respect to that issuer. In addition, MasterCard has obtained guarantees estimated at $33,390 and $32,101 at June 30, 2004 and December 31, 2003, respectively, from financial institutions that are members in order to cover the exposure of outstanding travelers cheques with respect to another issuer. These guarantee amounts have also been reduced by an actuarial determination of cheques that are not anticipated to be presented for payment.
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share and percent data)
     Based on the Company’s ability to assess its members for settlement and travelers cheque losses, the effectiveness of the Company’s global risk management policies and procedures, and the historically low level of losses that the Company has experienced, management believes the probability of future payments for settlement and travelers cheque losses in excess of existing reserves is negligible. However, if circumstances in the future change, they may require the Company to reassess whether it would be necessary to record an obligation for the fair value of some or all of its settlement and travelers cheque guarantees.
Note 15. Foreign Exchange Risk Management
     The Company enters into foreign exchange contracts to minimize risk associated with anticipated receipts and disbursements denominated in foreign currencies. We also enter into contracts to offset possible changes in value due to foreign exchange fluctuations of assets and liabilities denominated in foreign currencies. MasterCard’s forward contracts are classified by functional currency and summarized below: 
U.S. Dollar Functional Currency

 	 	June 30, 2004
	 	December 31, 2003
	
 	 	 	 	 	 	Estimated	 	 	 	 	 	Estimated	
Forward Contracts
	 	Notional
	 	Fair Value
	 	Notional
	 	Fair Value
	
Commitments to purchase foreign currency	 	$	47,753	 	 	$	(647	)	 	$	64,147	 	 	$	595	 	
Commitments to sell foreign currency	 	 	51,436	 	 	 	(299	)	 	 	60,162	 	 	 	(46	)	
Euro Functional Currency

 	 	June 30, 2004
	 	December 31, 2003
	
 	 	 	 	 	 	Estimated	 	 	 	 	 	Estimated	
Forward Contracts
	 	Notional
	 	Fair Value
	 	Notional
	 	Fair Value
	
Commitments to purchase foreign currency	 	$	110,279	 	 	$	(1,599	)	 	$	178,030	 	 	$	(5,112	)	
     The currencies underlying the foreign currency forward contracts consist primarily of euro, Canadian dollar, Japanese yen, U.K. pounds sterling, Swiss franc, and Mexican peso. The fair value of the foreign currency forward contracts generally reflects the estimated amounts that the Company would receive or (pay) to terminate the contracts at the reporting date based on broker quotes for the same or similar instruments. The terms of the foreign currency forward contracts are generally less than 18 months. The Company has deferred $1,514 and $3,069 of net losses in accumulated other comprehensive income as of June 30, 2004 and December 31, 2003, respectively, all of which are expected to be reclassified to earnings within the next six months to provide an economic offset to the earnings impact of the anticipated cash flows hedged.
     The Company’s derivative financial instruments are subject to both credit and market risk. Credit risk is the risk of loss due to failure of a counterparty to perform its obligations in accordance with contractual terms. Market risk is the potential change in an investment’s value caused by fluctuations in interest and currency exchange rates, credit spreads or other variables. Credit and market risk related to derivative instruments were not material at June 30, 2004 and December 31, 2003.
     Generally, the Company does not obtain collateral related to forward contracts because of the high credit ratings of the counter-parties that are members. The amount of accounting loss the Company would incur if the counterparties failed to perform according to the terms of the contracts is not considered material.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
      The following discussion should be read in conjunction with the consolidated financial statements and notes of MasterCard Incorporated and its consolidated subsidiaries, including MasterCard International Incorporated (“MasterCard International”) and MasterCard Europe sprl (“MasterCard Europe”)(together, “MasterCard” or the “Company”) included elsewhere in this report. References to “we”, “our” and similar terms in the following discussion are references to the Company.
Forward-Looking Statements
     This Report on Form 10-Q contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this Report, the words “believe,” “expect,” “could,” “may,” “will” and similar words are intended to identify forward-looking statements. These statements relate to our future prospects, developments and business strategies. Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by MasterCard or on its behalf. We believe there are certain risk factors that are important to our business, and these could cause actual results to differ from our expectations. Please see a complete discussion of these risk factors under the caption “Risk Factors” in Item 1 — Business of the Annual Report on Form 10-K of MasterCard for the year ended December 31, 2003.
Overview
     Revenues increased 16% in the second quarter of 2004 and for the six months ended June 30, 2004 from the comparable periods in 2003. Of this increase, 1% and 2%, respectively, was due to the weakening of the U.S. dollar against the euro in 2004 versus the comparable periods in 2003, which created a favorable foreign currency translation. Revenues are growing due to increases in the number of transactions processed and related volumes. We continue to experience favorable transaction and volume growth on cards carrying our brands due to consumers’ increasing preference for making electronic payments globally and as a result of our strategy to win incremental business from our key customers. In addition, the conflict in Iraq, the threat of terrorism and SARS negatively impacted cross border travel in the beginning of 2003. In 2004, our cross border transactions have increased significantly as international travel returns to more normal levels.
     We continue to focus on cost containment. Accordingly, operating expenses declined as a percentage of total revenues during 2004 from the comparable periods in 2003. We have focused our cost management efforts on our general and administrative expenses resulting in only a 1% increase from 2003. Excluding the impact of the U.S. merchant lawsuit and other legal settlements, our operating expenses increased 8% in the second quarter of 2004 and 6% for the six months ended June 30, 2004 from the comparable periods in 2003, of which 1% and 2%, respectively, was due to the weakening of the U.S. dollar against the euro creating an unfavorable currency translation. We realize the importance of building brand recognition, promoting brand acceptance, and enhancing the development of our programs and services. Therefore, advertising and marketing spending continue to increase.
     The payments industry is undergoing changes due to increased competition, consolidation and globalization. We are, and will continue to be, significantly dependent on our relationships with our issuers and acquirers and their further relationships with cardholders and merchants to support our programs and services. Most of our relationships with our customers are not exclusive and may be terminated at the convenience of our customers. The consolidation or merger of one or more of our customers with financial institutions aligned with our competitors could have a material adverse impact on our revenues.
     Our consolidated balance sheets reflect significant amounts of goodwill and intangible assets related to acquisitions we have made. Impairment charges could be incurred if operating results of these acquired entities do not meet our expectations.
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      Legal and Regulatory Impact on our Business
     Our financial results have been and will continue to be significantly influenced by the legal and regulatory environment in which we operate our business. MasterCard is a party to several legal and regulatory proceedings, as discussed in Note 13 to the Consolidated Financial Statements included herein, which could have a material adverse impact on our business. In particular, any of the following outcomes to our legal and regulatory proceedings could adversely affect our results of operations and liquidity:

•	 	if regulatory challenges to interchange fees, which we set for our customers under certain circumstances, are successful, our customers could reduce their use of payment programs carrying our brands, thereby negatively impacting our future revenues;	

•	 	if we ultimately are unsuccessful in our litigation with the U.S. Department of Justice concerning our Competitive Programs Policy, some of our customers may choose to do business with American Express or Discover, which could reduce our revenues;	

•	 	if we are unsuccessful in our state and federal lawsuits regarding our currency conversion practices, we could be required to change these practices, pay damages or provide other equitable relief, which could have an adverse impact on our results of operations;	

•	 	if we do not prevail in the lawsuits brought by merchants who have opted not to participate in the plaintiff class in the U.S. merchant lawsuit or in the related consumer cases, then we could be subject to damages, which could adversely impact our results of operations; and	

•	 	if we are unsuccessful in our litigations related to our chargeback rules, we could be forced to change our chargeback rules and pay damages, which could adversely affect our results of operations.	
     See Note 13 to the Consolidated Financial Statements included herein for a discussion of these and other legal and regulatory proceedings to which we are a party.
     We earn a portion of our revenues in connection with MasterCard-branded offline debit cards issued in the United States. Following the settlement of the U.S. merchant lawsuit in 2003, Visa U.S.A., Inc. implemented a bylaw requiring Visa’s 100 largest issuers of debit cards in the United States to pay a fee if they reduce their debit volume by more than 10%. If Visa is permitted to enforce this bylaw, it would penalize Visa members seeking to do debit business with MasterCard and effectively prevent them from converting their debit cards to the MasterCard brand. MasterCard has challenged the validity of this bylaw provision. In addition, under the Settlement Agreement in the U.S. merchant lawsuit, merchants have the right to reject MasterCard-branded debit cards in the United States, while still accepting other MasterCard-branded cards and vice versa. These scenarios may be detrimental to MasterCard’s ability to maintain and grow its debit card business in the United States.
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Results of Operations
     Key selected financial and operating data for the three and six months ended June 30, 2004 and 2003 is included in the table below:

 	 	Three Months	 	Percent	 	Six Months	 	Percent	
 	 	Ended June 30,
	 	Increase (Decrease)
	 	Ended June 30,
	 	Increase (Decrease)
	
 	 	2004
	 	2003
	 	2004 vs. 2003
	 	2004
	 	2003
	 	2004 vs. 2003
	
 	 	 	 	 	 	 	 	 	 	(in millions, except per share amounts and percentages)	 	 	 	 	
Operations fees	 	$	397	 	 	$	353	 	 	 	13	%	 	$	769	 	 	$	668	 	 	 	15	%	
Assessments	 	 	250	 	 	 	204	 	 	 	23	%	 	 	473	 	 	 	401	 	 	 	18	%	

 	 	 	 	 	 	 	 	

Revenue	 	 	647	 	 	 	557	 	 	 	16	%	 	 	1,242	 	 	 	1,069	 	 	 	16	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
General and administrative	 	 	285	 	 	 	281	 	 	 	1	%	 	 	562	 	 	 	558	 	 	 	1	%	
Advertising and market development	 	 	229	 	 	 	195	 	 	 	17	%	 	 	396	 	 	 	348	 	 	 	14	%	
U.S. merchant lawsuit and other legal settlements	 	 	4	 	 	 	—	 	 	 	—	 	 	 	4	 	 	 	721	 	 	 	(99	%)	
Depreciation and amortization	 	 	31	 	 	 	31	 	 	 	—	 	 	 	63	 	 	 	60	 	 	 	5	%	

 	 	 	 	 	 	 	 	

Total operating expenses	 	 	549	 	 	 	507	 	 	 	8	%	 	 	1,025	 	 	 	1,687	 	 	 	(39	%)	

 	 	 	 	 	 	 	 	

Operating income (loss)	 	 	98	 	 	 	50	 	 	 	96	%	 	 	217	 	 	 	(618	)	 	 	135	%	
Total other income (expense)	 	 	(8	)	 	 	—	 	 	 	—	 	 	 	(13	)	 	 	3	 	 	 	(533	%)	

 	 	 	 	 	 	 	 	

Income (loss) before income tax expense (benefit) and cumulative effect of accounting change	 	 	90	 	 	 	50	 	 	 	80	%	 	 	204	 	 	 	(615	)	 	 	133	%	
Income tax expense (benefit)	 	 	24	 	 	 	18	 	 	 	33	%	 	 	65	 	 	 	(217	)	 	 	130	%	
Cumulative effect of accounting change, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	5	 	 	 	(100	%)	

 	 	 	 	 	 	 	 	

Net income (loss)	 	$	66	 	 	$	32	 	 	 	106	%	 	$	139	 	 	$	(393	)	 	 	135	%	

 	 	 	 	 	 	 	 	

Net income (loss) per share (basic and diluted)	 	$	.66	 	 	$	.32	 	 	 	106	%	 	$	1.39	 	 	$	(3.93	)	 	 	135	%	
Weighted average shares outstanding (basic and diluted)	 	 	100	 	 	 	100	 	 	 	—	 	 	 	100	 	 	 	100	 	 	 	—	 	
Effective tax rate	 	 	27.1	%	 	 	35.3	%	 	 	 	 	 	 	31.7	%	 	 	35.3	%	 	 	 	 	
Gross dollar volume on a U.S. dollar converted basis (in billions)	 	$	349	 	 	$	312	 	 	 	12	%	 	$	681	 	 	$	603	 	 	 	13	%	
Processed transactions	 	 	2,691	 	 	 	2,406	 	 	 	12	%	 	 	5,157	 	 	 	4,601	 	 	 	12	%	
     Our functional currency is primarily the U.S. dollar except for MasterCard Europe, whose functional currency is the euro. Accordingly, our results of operations have been impacted by movements of the euro against the U.S. dollar. As the euro strengthened against the U.S. dollar during the three and six months ended June 30, 2004 compared to the same periods in 2003, MasterCard Europe’s revenue and expenses increased as a result of translation into U.S. dollar amounts. In addition, we assess our members for foreign currency denominated transactions based on the equivalent U.S. dollar volume of their card programs. Since the U.S. dollar devalued against most major currencies, our revenues increased accordingly.
Revenues
     Our revenues are generated from the fees that we charge our customers for providing transaction processing and other payment services, and from assessments calculated on the dollar volume of activity on cards carrying our brands. We establish standards and procedures for the acceptance and settlement of our customers’ transactions on a global basis. We do not issue cards, set fees, or determine the interest rates consumers will be charged on MasterCard-branded cards. Our issuing customers have the responsibility
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for determining these and most other competitive card features. Our revenues are based upon transactional information accumulated by our systems and/or reported by our customers. Certain revenues are estimated based upon aggregate transaction information and historical and projected customer performance.
     The U.S. market remains our largest geographic market based on revenues, however, international revenues are growing at a faster rate than U.S. revenues for the three and six months ended June 30, 2004. Revenue generated in the U.S. accounted for approximately 59% and 64% of our total revenue for the three months ended June 30, 2004 and 2003, respectively, and was 58% and 64% of our total revenue for the six months ended June 30, 2004 and 2003, respectively. 
      Operations Fees
     Operations fees primarily represent user fees for authorization, settlement and other payment services that facilitate transaction and information management among our customers on a global basis. Operations fees increased $44 million or 13% and $101 million or 15% in the three and six months ended June 30, 2004, respectively, compared to the same periods in 2003. The significant changes in operations fees were as follows:

 	 	Dollar Change Increase (Decrease)
	
 	 	(in millions)	
 	 	Three Months Ended	 	Six Months Ended	
 	 	June 30,	 	June 30,	
 	 	2004 vs. 2003
	 	2004 vs. 2003
	
Authorization, settlement and switch	 	$	31	 	 	$	69	 	
Currency conversion	 	 	15	 	 	 	25	 	
Warning bulletins	 	 	(1	)	 	 	(4	)	
Incentives and rebates	 	 	(6	)	 	 	(11	)	
Excessive chargebacks	 	 	(9	)	 	 	(9	)	
Other operations fees	 	 	14	 	 	 	31	 	

 	 	
 	 	$	44	 	 	$	101	 	

 	 	

•	 	Authorization, settlement and switch revenues increased primarily due to increased transactions processed through our systems of 12% in the three and six months ended June 30, 2004, as a result of economic recovery in various regions in which we do business. A portion of the increase in transactions is attributable to the acquisition of the Switch brand in the U.K. and Redeshop brand in Brazil. In addition, volatility of exchange rates in 2004 contributed to increased trading settlement revenue versus prior periods.	

•	 	Currency conversion revenues increased as a result of greater cross border transactions in 2004 by cardholders in all regions. These revenues fluctuate with cross border travel. The conflict in Iraq, the threat of terrorism and SARS negatively impacted cross border travel in the beginning of 2003, which began to return to more normal levels in 2004.	

•	 	Fees for warning bulletins, which are listings of restricted cards, decreased primarily due to issuers of MasterCard-branded cards shifting from a paper-based version of restricted card listings to lower priced electronic versions.	

•	 	Our pricing structure rewards our customers with lower prices in exchange for certain volume, share and other commitments. We offer tiered pricing for our services, therefore as our customers grow and merge, they move into lower relative pricing for the same level of services. In addition to tiered pricing, incentives and rebates to certain customers continue to increase and are recorded as a reduction of revenue. Rebates and incentives are primarily based on transactions and volumes and accordingly increase with increases in these variables.	

•	 	Excessive chargeback fees are applied to acquiring banks that acquire transactions from merchants that experience a high level of disputed claims from their customers. In the second quarter 2003, an acquiring bank conducted business with these types of merchants and therefore, in accordance with MasterCard rules, was charged this fee.	
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•	 	Other operations fees represent various revenue streams that relate to our transaction processing services. These revenues increased due to an overall increase in the demand for our programs and services. However, the change in any individual revenue line was not considered material. Examples of these revenues are fees for acceptance development, consulting and holograms.	
Assessments
     Assessments are based primarily on our customers’ gross dollar volume (“GDV”) of MasterCard transactions. GDV represents gross usage (purchase and cash disbursements) on MasterCard-branded cards for goods and services including balance transfers and convenience checks. In the three and six months ended June 30, 2004, assessments revenue grew $46 million, or 23%, and $72 million, or 18%, respectively, over the same periods in 2003. GDV growth was 9% when measured in local currency terms in each of the three and six months ended June 30, 2004 over the same periods in 2003 and 12% and 13%, respectively, when measured on a U.S. dollar converted basis.
     In addition to the increase in GDV, assessments growth in 2004 was also due to the following factors:

•	 	The expansion of new and existing market development programs in Europe and Latin America accounted for assessments growth of $11 million or 5% for the quarter and $17 million or 4% year to date. In these countries, customers are charged a fee based on volume, which MasterCard then reinvests in the country to promote the MasterCard brand.	

•	 	The assessment rates vary based on the nature of transactions which generate the volumes. In 2004, there was stronger growth in international volumes and purchase volumes, which are assessed at higher rates than domestic volumes and cash volumes, respectively.	

•	 	Rebates and incentives provided to customers reduce revenue and moderate assessments growth. These rebates and incentives generally are based on card generated volume as well as a fixed component for the issuance of new cards or launch of new programs. In the three and six months ended June 30, 2004, these rebates and incentives increased $6 million and $23 million, respectively, compared to the same periods in 2003. However, rebates and incentives as a percentage of assessments declined 3% for the quarter from the comparable period in 2003, which had a positive impact on assessments growth in the quarter.	
Operating Expenses
     Our operating expenses are comprised of general and administrative, advertising and market development, the U.S. merchant lawsuit and other legal settlements, and depreciation and amortization expenses. In the three months ended June 30, 2004, there was an increase in operating expenses of $42 million or 8% over the same period in 2003 primarily due to advertising and marketing. In the six months ended June 30, 2004, there was a decrease in operating expenses of $662 million or 39% over the same period in 2003, an increase of $59 million or 6% excluding the $721 million resulting from the charge to earnings related to the U.S. merchant lawsuit occurring in 2003.
General and Administrative
     General and administrative expenses consist primarily of personnel, professional fees, data processing, telecommunications and travel. These activities accounted for approximately 44% and 50% of total revenue in the three months ended June 30, 2004 and 2003, respectively, and 45% and 52% of total revenues in the six months ended June 30, 2004 and 2003, respectively. General and administrative expenses for the quarter and year to date remained substantially the same in 2004 versus 2003 as a result of our strategy to limit expense growth; however the components of general and administrative expenses changed between the periods as follows:

•	 	Professional fees increased $10 million and $6 million in the quarter and year to date, respectively, over the same periods in 2003. The increase is due to higher legal fees and accounting services related to compliance with the Sarbanes-Oxley Act.	

•	 	Telecommunications expense decreased $6 million and $10 million in the quarter and year to date, respectively, over the same periods in 2003 due to the ongoing evaluation of our telecommunication needs, including the renegotiation of certain contracts with service providers.	
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      Advertising and Market Development
     Advertising and market development consists of expenses associated with advertising, marketing, promotions and sponsorships, which promote our brands and assist our customers to achieve their goals by raising consumer awareness and usage of cards carrying our brand. The activities accounted for approximately 35% of total revenue in the second quarter of 2004 and 2003, respectively, and 32% and 33% of total revenue in the six months ended June 30, 2004 and 2003, respectively. Advertising and market development expenses increased $34 million or 17% and $48 million or 14% in the three and six months ended June 30, 2004, respectively, over the same periods in 2003.
     Our advertising and market development expenses increased as a result of a number of key initiatives in 2004. In 2002, MasterCard implemented a four-year plan to accelerate our profitable growth and to enhance the global position of MasterCard and its customers by significantly expanding its spending in advertising and market development. For the three months ended June 30, 2004 and 2003, we spent $44 million and $45 million, respectively, and in the six months ended June 30, 2004 and 2003, we spent $79 million and $66 million, respectively, on advertising and marketing relating to this plan. The primary focus of these initiatives is to build brand recognition, promote brand acceptance, and enhance the development of our programs and services in certain markets. We will continue to evaluate the extent of these initiatives in light of changing market conditions. The major advertising and market development activities increased as follows during the three and six months ended June 30, 2004:

•	 	Advertising increased $30 million in the quarter and $52 million year to date over the same periods in 2003. Our Priceless campaign continues to be successful in 96 countries and 47 languages and we plan to continue to invest significantly in this campaign. In addition to the four-year plan mentioned above, MasterCard has an agreement to promote brand migration from Eurocard to MasterCard in Germany. MasterCard advertising expense under this agreement increased $6 million and $10 million during the quarter and year to date, respectively, over the same periods in 2003.	

•	 	Promotions increased $6 million in the quarter and decreased $5 million year to date over the same periods in 2003. Promotional expenses vary based on the timing of the programs undertaken during the relevant period. Promotions which began during the first half of 2004 include Priceless Edge and the MasterCard “Weekend Matters” Sweepstakes.	

•	 	Sponsorships decreased $3 million in the quarter and increased $2 million year to date over the same periods in 2003. Sponsorship expenses vary based on the timing of the specific events covered by the sponsorship agreements. We are sponsors of the World Cup, UEFA Champions League, certain NFL teams, Major League Baseball, the Professional Golf Association and Universal Studios, among others.	
     The MasterCard family of brands, principally MasterCard, is a valuable strategic asset which conveys a symbol that can be readily identified by our customers, as well as our cardholders, creating value for our business. Our advertising and marketing efforts are focused on ensuring that our services are identified, communicated and marketed in a clear, efficient and consistent manner, not only on a local level, but also on a global scale. We are committed to maintaining and enhancing our MasterCard brand reputation, image and ultimate value.
      Merchant Lawsuit
     For the six months ended June 30, 2003, the total pre-tax charge recorded for the U.S. merchant lawsuit was $721 million. The primary components of this charge were (i) the monetary amount of the U.S. merchant settlement (discounted at 8 percent over the payment term), (ii) certain additional costs in connection with, and in order to comply with, other requirements of the U.S. merchant settlement, and (iii) costs to address certain merchants who opted not to participate in the U.S. merchant lawsuit. This amount was an estimate, which was revised during the three months ended December 31, 2003 based on approval of the Settlement Agreement by the court, and other factors. The Company reviewed these estimates and made an additional charge of $4 million in the three months ended June 30, 2004. If necessary, future refinements will also be made. Relating to these settlements, payments of $5 million and $11 million were made during the three and six months ended June 30, 2004, respectively.
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      Depreciation and Amortization
     Depreciation and amortization expenses were relatively consistent in the three and six months ended June 30, 2004, compared to the same periods in 2003. Our business is dependent on the technology that we use to process transactions, which is continuously updated and improved. Therefore, our investments in capitalized software and related amortization also continue to increase.
      Other Income and Expense
     Other income (expense) is comprised primarily of investment income and interest expense. Investment income decreased $9 million and $6 million in the three and six months ended June 30, 2004, respectively, over the same periods in 2003 resulting from a decline in the market value of the trading securities portfolio which had significant appreciation in the comparable periods in 2003. Interest expense decreased $2 million and increased $10 million in the three and six months ended June 30, 2004, respectively, primarily due to changes in imputed interest on the U.S. merchant lawsuit settlement obligation.
      Income Taxes
     The effective tax rate for the three and six months ended June 30, 2004 was 27.1% and 31.7%, respectively, compared to 35.3% in each of the three and six months ended June 30, 2003. The decrease in the rate in 2004 is primarily attributable to discrete items that occurred in the second quarter. The primary discrete items were the favorable settlement and reassessment of various tax controversies and the filing and recognition of refund claims, partially offset by an increase in the valuation allowance for the future realization of a benefit from a capital loss carryover. Absent the discrete items our effective tax rate for the three and six months ended June 30, 2004 would have been 36.9% and 36.0%, respectively. The increase in the three and six months ended June 30, 2004 before discrete items is primarily attributable to a change in the geographic distribution of pretax income from taxable jurisdictions with lower rates to those with higher rates.
Liquidity
     We believe our ability to generate cash from our operations to reinvest in our business is one of our fundamental financial strengths. We need capital resources and liquidity to fund our global development, to provide for settlement risk, to finance capital expenditures and any future acquisitions and to service the payments of principal and interest on our outstanding debt and the settlement of the U.S. merchant lawsuit. At June 30, 2004, we had $949 million of liquid investments with which to manage operations, compared to $880 million at December 31, 2003. We expect that cash and cash equivalents, cash generated from operations and our borrowing capacity will be sufficient to meet our operating, working capital and capital needs in 2004 and beyond. In addition, we believe that our resources are sufficient to fund our initiatives to accelerate our profitable growth and to enhance the global position of MasterCard in 2004 and beyond. 

 	 	Six Months Ended	 	 	
 	 	June 30,
	 	 	
 	 	 	 	 	 	 	 	 	 	Percent Change	
 	 	2004
	 	2003
	 	2004 vs. 2003
	
 	 	(in millions, except percentages)	
Cash flow data:	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	$	145	 	 	$	47	 	 	 	209	%	
Net cash used in investing activities	 	 	(75	)	 	 	(82	)	 	 	9	%	
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 	 	 	 	 	 	 	 	 	 	Percent Change	
 	 	June 30, 2004
	 	December 31, 2003
	 	2004 vs. 2003
	
 	 	(in millions, except ratios)	
Balance sheet data:	 	 	 	 	 	 	 	 	 	 	 	 	
Current assets	 	$	1,665	 	 	$	1,610	 	 	 	3	%	
Current liabilities	 	 	1,101	 	 	 	1,189	 	 	 	(7	%)	
Long-term liabilities	 	 	1,019	 	 	 	1,009	 	 	 	1	%	
Stockholders’ equity	 	 	821	 	 	 	699	 	 	 	17	%	
Working capital ratio	 	 	1.51	 	 	 	1.35	 	 	 	12	%	
     Net cash provided by operating activities in 2004 was generated principally by current period earnings exclusive of non-cash charges for depreciation and amortization, offset by the payment of accounts payable and accrued balances that had increased at December 31, 2003 due to heavy fourth quarter 2003 advertising and market development activity and payment of 2003 accrued incentive compensation during the first six months of 2004.
     The utilization of cash by investing activities in 2004 was primarily due to the acquisition of certain businesses as described in Note 5 to the Consolidated Financial Statements included herein, and the purchase of, or cost of internally developed, capitalized software. Our capitalized software is essential to providing payment card transaction processing to our customers through our proprietary global computer and telecommunications system.
     In addition to our liquid investments, we provide for liquidity through a committed $1.95 billion revolving credit facility (the “Credit Facility”) with certain financial institutions which expires on June 17, 2005. The Credit Facility replaced MasterCard Incorporated’s prior $1.2 billion credit facility which expired on June 18, 2004. Borrowings under the facility are available to provide liquidity in the event of one or more settlement failures by MasterCard International members and, subject to a limit of $300 million, for general corporate purposes. Interest on borrowings under the Credit Facility is charged at the London Interbank Offered Rate (“LIBOR”) plus 28 basis points. An additional 10 basis points would be applied if the aggregate borrowings under the Credit Facility exceed 33% of the commitments. MasterCard agreed to pay a facility fee which varies based on MasterCard’s credit rating and is currently equal to 7 basis points on the total commitment. MasterCard was in compliance with the Credit Facility covenants as of June 30, 2004. There were no borrowings under the Credit Facility at June 30, 2004. The majority of Credit Facility lenders are members or affiliates of members of MasterCard International.
     In addition, as of June 30, 2004, MasterCard Europe cancelled an uncommitted credit agreement totaling 30 million euros. 
Future Obligations
     The following table summarizes our obligations as of June 30, 2004 that are expected to impact liquidity and cash flows in future periods. We believe that we will be able to fund these obligations through cash generated from operations and our existing cash balances.

 	 	Payments Due by Period
	
 	 	 	 	 	 	1 Year	 	 	 	 	 	 	 	 	 	More Than	
 	 	Total
	 	or Less
	 	2-3 Years
	 	4-5 Years
	 	5 Years
	
 	 	(in millions)	
Capital leases (a)	 	$	64	 	 	$	4	 	 	$	10	 	 	$	5	 	 	$	45	 	
Operating leases (b)	 	 	126	 	 	 	22	 	 	 	53	 	 	 	36	 	 	 	15	 	
Sponsorship, licensing & other (c)	 	 	536	 	 	 	135	 	 	 	302	 	 	 	89	 	 	 	10	 	
U.S. merchant lawsuit and other legal settlements (d)	 	 	948	 	 	 	148	 	 	 	200	 	 	 	200	 	 	 	400	 	
Debt (e)	 	 	250	 	 	 	5	 	 	 	11	 	 	 	85	 	 	 	149	 	

 	 	 	 	

 	 	
Total	 	$	1,924	 	 	$	314	 	 	$	576	 	 	$	415	 	 	$	619	 	

 	 	 	 	

 	 	
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(a)	 	Most capital leases relate to certain property, plant and equipment used in our business. Our largest capital lease relates to our Kansas City, Missouri co-processing facility.	
 		
(b)	 	We enter into operating leases in the normal course of business. Substantially all lease agreements have fixed payment terms based on the passage of time. Some lease agreements provide us with the option to renew the lease or purchase the leased property. Our future operating lease obligations would change if we exercised these renewal options and if we entered into additional lease agreements.	
 		
(c)	 	Amounts primarily relate to alliances we have with certain organizations to promote the MasterCard brand. The amounts included are fixed and non-cancelable. In addition, these amounts include purchase obligations.	
 		
(d)	 	Amounts due in accordance with legal settlements entered into during 2003 and refined in 2004, including the Settlement Agreement in the U.S. merchant lawsuit.	
 		
(e)	 	Debt represents principal and interest owed on our subordinated notes due June 2008 and Secured Notes due September 2009. We also have various credit facilities for which there were no outstanding balances at June 30, 2004 that, among other things, would provide liquidity in the event of settlement failures by our members. Our debt obligations would change if one or more of our members failed and we needed these credit facilities to settle on our members’ behalf or if we borrowed under these facilities for other reasons.	
Recent Accounting Pronouncements
     In May 2004, the FASB issued FASB Staff Position No. FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP 106-2”). FSP 106-2 requires (a) that the effects of the federal subsidy be considered an actuarial gain and recognized in the same manner as other actuarial gains and losses and (b) certain disclosures for employers that sponsor postretirement benefit plans that provide prescription drug benefits. The Company has determined that the enactment of the Medicare Modernization Act was not a significant event with respect to its plans, and accordingly, as required by FSP 106-2, the effects of the Act will be incorporated into our December 31, 2004 measurement of the plan’s benefit obligations.
     In March 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 03-01, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” (“EITF 03-01”). EITF 03-01 addresses determining the meaning of other-than-temporary impairment and its application to investments classified as either available-for-sale or held-to-maturity under Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Investments” (“SFAS 115”) and investments accounted for under the cost method or the equity method. The EITF reached a consensus on a model for determining whether an investment within the scope of EITF 03-01 is other-than-temporarily impaired and reached a consensus that investors should provide certain disclosures related to investments that are within the scope of EITF 03-01. The consensus for evaluating whether an investment is other-than-temporarily impaired should be applied to evaluations made in reporting periods beginning after June 15, 2004. The consensus on additional disclosures for cost method investments is effective for fiscal years ending after June 15, 2004. The adoption of EITF 03-01 is not expected to have an impact on our financial position or results of operations.
     In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”). FIN 46 clarifies that companies may need to consolidate certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 applied immediately to variable interest entities created or in which an enterprise obtained an interest after January 31, 2003. The Company adopted FIN 46 on January 1, 2003 and therefore consolidated its variable interest entity as described in Note 1 and 2 to the Consolidated Financial Statements included herein. In December 2003, FIN 46 was revised. The adoption of the revisions to FIN 46 did not have an impact on our financial position or results of operations.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
     Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in market factors such as interest rates, foreign currency exchange rates, and equity price risk. We have limited exposure to market risk from changes in interest rates, foreign exchange rates and equity price risk. Management establishes and oversees the implementation of policies, which have been approved by the Board of Directors, governing our funding, investments, and use of derivative financial instruments. We monitor aggregate risk exposures on an ongoing basis. There have been no material changes in our market risk exposures at June 30, 2004 as compared to December 31, 2003.
Item 4. Controls and Procedures
     MasterCard Incorporated’s management, including the President and Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the Company’s disclosure controls and procedures (as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on that evaluation, the Company’s President and Chief Executive Officer and Chief Financial Officer concluded that MasterCard Incorporated had effective controls and procedures for (i) recording, processing, summarizing and reporting information that is required to be disclosed in its reports under the Securities Exchange Act of 1934, as amended, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) ensuring that information required to be disclosed in such reports is accumulated and communicated to MasterCard Incorporated’s management, including its President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.
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[PRICEWATERHOUSECOOPERS LETTERHEAD]
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
Of MasterCard Incorporated:
We have reviewed the accompanying consolidated balance sheet of MasterCard Incorporated and its subsidiaries as of June 30, 2004, and the related consolidated statements of operations and consolidated condensed statements of comprehensive income (loss) for each of the three- and six-month periods ended June 30, 2004 and 2003 and the consolidated statement of cash flows for the six-month period ended June 30, 2004 and 2003 and the consolidated statement of changes in stockholders’ equity for the six-month period ended June 30, 2004. These interim financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2003, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’/members’ equity, and cash flows for the year then ended (not presented herein), and in our report dated March 4, 2004 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2003, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
New York, NY
August 5, 2004
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MASTERCARD INCORPORATED
FORM 10-Q
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
     Refer to Notes 11 and 13 to the Consolidated Financial Statements included herein.
Item 4. Submission of Matters to a Vote of Security Holders
     The annual meeting of stockholders of MasterCard Incorporated was held on May 10, 2004. A total of 77,087,716 shares of common stock were represented by proxy at the meeting. The sole item on the agenda for the annual meeting was the election of directors. The names of the nominees elected as directors and the number of votes for or withheld for each nominee is listed below: 

Director
	 	For
	 	Withheld
	
William F. Aldinger	 	 	76,987,105	 	 	 	100,611	 	
Silvio Barzi	 	 	76,987,105	 	 	 	100,611	 	
Augusto M. Escalante	 	 	76,987,105	 	 	 	100,611	 	
Richard D. Fairbank	 	 	76,987,105	 	 	 	100,611	 	
Baldomero Falcones Jaquotot	 	 	76,987,105	 	 	 	100,611	 	
Bernd M. Fieseler	 	 	76,987,105	 	 	 	100,611	 	
Iwao Iijima	 	 	76,987,105	 	 	 	100,611	 	
Donald H. Layton	 	 	76,987,105	 	 	 	100,611	 	
Michel Lucas	 	 	76,987,105	 	 	 	100,611	 	
Norman C. McLuskie	 	 	76,987,105	 	 	 	100,611	 	
Robert W. Pearce	 	 	76,987,105	 	 	 	100,611	 	
Michael T. Pratt	 	 	76,987,105	 	 	 	100,611	 	
Robert W. Selander	 	 	76,987,105	 	 	 	100,611	 	
Dato’ Tan Teong Hean	 	 	76,987,105	 	 	 	100,611	 	
Jac Verhaegen	 	 	76,987,105	 	 	 	100,611	 	
Lance L. Weaver	 	 	76,987,105	 	 	 	100,611	 	
Robert B. Willumstad	 	 	76,987,105	 	 	 	100,611	 	
Mark H. Wright	 	 	76,991,973	 	 	 	95,743	 	
     There were no abstentions or broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
     (a) Exhibits
     Refer to the Exhibit Index herein.
     (b) Reports filed on Form 8-K:
     On May 3, 2004, the Company filed a Current Report on Form 8-K announcing the performance results for the Company’s MasterCard-branded payment programs for the three months ended March 31, 2004.
31

Table of Contents
SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	 	MASTERCARD INCORPORATED	
Date: August 5, 2004	 	(Registrant)	
 	 	 	
	 	By: /s/ ROBERT W. SELANDER	
Date: August 5, 2004	 	Robert W. Selander	
	 	President and Chief Executive Officer	
	 	(Principal Executive Officer)	
 	 	 	
Date: August 5, 2004	 	By: /s/ CHRIS A. MCWILTON	
	 	Chris A. McWilton	
	 	Chief Financial Officer	
	 	(Principal Financial Officer)	
 	 	 	
Date: August 5, 2004	 	By: /s/ LISA WAGNER	
	 	Lisa Wagner	
	 	Senior Vice President and Controller	
	 	(Principal Accounting Officer)	
32

Table of Contents

EXHIBIT INDEX 

Exhibit	 	 	
Number
	 	Exhibit Description
	
3.1(a)	 	Amended and Restated Certificate of Incorporation of MasterCard Incorporated (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated June 28, 2002 and filed July 12, 2002 (No. 333-67544)).	
 	 	 	
3.1(b)	 	Amended and Restated Bylaws of MasterCard Incorporated (incorporated by reference to Exhibit 3.1(b) to the Company’s Annual Report on Form 10-K filed March 7, 2003 (No. 333-67544)).	
 	 	 	
3.2(a)	 	Amended and Restated Certificate of Incorporation of MasterCard International Incorporated (incorporated by reference to Exhibit 3.2(a) to the Company’s Quarterly Report on Form 10-Q filed August 14, 2002 (No. 333-67544)).	
 	 	 	
3.2(b)	 	Amended and Restated Bylaws of MasterCard International Incorporated (incorporated by reference to Exhibit 3.2(b) to the Company’s Quarterly Report on Form 10-Q filed August 14, 2002 (No. 333-67544)).	
 	 	 	
10.1	 	$1,950,000,000 Credit Agreement dated as of June 18, 2004, among MasterCard Incorporated, MasterCard International Incorporated, the several lenders, Citigroup Global Markets Inc., as sole lead arranger, Citibank, N.A. as co-administrative agent, JPMorgan Chase Bank, as co-administrative agent, and J.P. Morgan Securities, Inc., as co-arranger.	
 	 	 	
*10.2	 	Agreement, dated as of January 1, 2004, by and among MasterCard International Incorporated, Citibank, N.A., et al.	
 	 	 	
31.1	 	Certification of Robert W. Selander, President and Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 	 	 	
31.2	 	Certification of Chris A. McWilton, Chief Financial Officer, pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 	 	 	
32.1	 	Certification of Robert W. Selander, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
 	 	 	
32.2	 	Certification of Chris A. McWilton, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
* The registrant has applied for confidential treatment of portions of this exhibit. Accordingly, portions have been omitted and filed separately with the Securities and Exchange Commission.
33
 
Exhibit 10.1
EXECUTION COPY

$1,950,000,000
CREDIT AGREEMENT
AMONG
MASTERCARD INCORPORATED,
AS BORROWER
MASTERCARD INTERNATIONAL INCORPORATED,
AS GUARANTOR
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO
CITIGROUP GLOBAL MARKETS INC.,
AS SOLE LEAD ARRANGER AND
SOLE BOOK MANAGER
AND
CITIBANK, N.A.,
AS CO-ADMINISTRATIVE AGENT
JPMORGAN CHASE BANK,
AS CO-ADMINISTRATIVE AGENT
J.P. MORGAN SECURITIES, INC.,
AS CO-ARRANGER
HSBC BANK USA,
LLOYDS TSB BANK PLC, AND
ROYAL BANK OF SCOTLAND,
AS CO-SYNDICATION AGENTS
DATED AS OF JUNE 18, 2004

TABLE OF CONTENTS

                                                                                                                        PAGE
                                                                                                                        ----
SECTION 1.  DEFINITIONS..........................................................................................         1
         1.1      Defined Terms..................................................................................         1
         1.2      Other Definitional Provisions..................................................................        15

SECTION 2.  AMOUNT AND TERMS OF LOANS............................................................................        16
         2.1      Revolving Credit Commitments...................................................................        16
         2.2      Procedure for Revolving Credit Borrowing.......................................................        16
         2.3      Term Loans.....................................................................................        16
         2.4      Procedure for Term Loan Borrowing..............................................................        16
         2.5      Facility Fee...................................................................................        17
         2.6      Termination or Reduction of Commitments........................................................        17
         2.7      Repayment of Revolving Credit Loans and Term Loans;  Evidence of Debt..........................        17
         2.8      Optional Prepayments...........................................................................        18
         2.9      Conversion and Continuation Options............................................................        18
         2.10     CAF Advances...................................................................................        19
         2.11     Procedure for CAF Advance Borrowing............................................................        19
         2.12     CAF Advance Payments...........................................................................        22
         2.13     Evidence of Debt...............................................................................        22
         2.14     Certain Restrictions...........................................................................        23
         2.15     Minimum Amounts of Tranches....................................................................        23
         2.16     Interest Rates and Payment Dates...............................................................        23
         2.17     Computation of Interest and Fees...............................................................        23
         2.18     Inability to Determine Interest Rate...........................................................        24
         2.19     Pro Rata Treatment and Payments................................................................        24
         2.20     Swing Line Commitment..........................................................................        25
         2.21     Illegality.....................................................................................        27
         2.22     Requirements of Law............................................................................        27
         2.23     Taxes..........................................................................................        28
         2.24     Indemnity......................................................................................        29
         2.25     Commitment Increases...........................................................................        30
         2.26     Commitment Extensions..........................................................................        31

SECTION 3.  REPRESENTATIONS AND WARRANTIES.......................................................................        32
         3.1      Financial Condition............................................................................        32
         3.2      No Change......................................................................................        32
         3.3      Existence; Compliance with Law.................................................................        32
         3.4      Corporate Power; Authorization; Enforceable Obligations........................................        33
         3.5      No Legal Bar...................................................................................        33
         3.6      No Material Litigation.........................................................................        33
         3.7      No Default.....................................................................................        33
         3.8      Ownership of Property; Liens...................................................................        33
         3.9      Intellectual Property..........................................................................        34
         3.10     No Burdensome Restrictions.....................................................................        34	

i

                                                                                                                        PAGE
                                                                                                                        ----
         3.11     Taxes..........................................................................................        34
         3.12     Federal Margin Regulations.....................................................................        34
         3.13     ERISA..........................................................................................        34
         3.14     Investment Company Act; Other Regulations......................................................        35
         3.15     Subsidiaries...................................................................................        35
         3.16     Purpose of Loans...............................................................................        35
         3.17     Environmental Matters..........................................................................        35
         3.18     Solvency.......................................................................................        36

SECTION 4.  CONDITIONS PRECEDENT.................................................................................        36
         4.1      Conditions to Initial Loan.....................................................................        36
         4.2      Conditions to Each Loan........................................................................        37
         4.3      Conditions to Use for Certain Purposes.........................................................        38

SECTION 5.  AFFIRMATIVE COVENANTS................................................................................        38
         5.1      Financial Statements...........................................................................        38
         5.2      Certificates; Other Information................................................................        39
         5.3      Payment of Obligations.........................................................................        40
         5.4      Conduct of Business and Maintenance of Existence...............................................        40
         5.5      Maintenance of Property; Insurance.............................................................        40
         5.6      Inspection of Property; Books and Records; Discussions.........................................        40
         5.7      Notices........................................................................................        40
         5.8      Environmental Laws.............................................................................        41

SECTION 6.  NEGATIVE COVENANTS...................................................................................        42
         6.1      Maintenance of Net Worth.......................................................................        42
         6.2      Limitation on Liens............................................................................        42
         6.3      Limitation on Fundamental Changes..............................................................        43
         6.4      Limitation on Transfer or Disposition of Assets................................................        43
         6.5      Limitation on Dividends........................................................................        44
         6.6      Limitation on Investments......................................................................        44
         6.7      Limitation on Transactions with Affiliates.....................................................        44
         6.8      Limitation on Changes in Fiscal Year...........................................................        44
         6.9      Limitation on Lines of Business................................................................        45
         6.10     Upstreaming....................................................................................        45

SECTION 7.  EVENTS OF DEFAULT....................................................................................        45

SECTION 8.  THE ADMINISTRATIVE AGENT.............................................................................        47
         8.1      Appointment....................................................................................        47
         8.2      Delegation of Duties...........................................................................        47
         8.3      Exculpatory Provisions.........................................................................        47
         8.4      Reliance by Administrative Agent...............................................................        48
         8.5      Notice of Default..............................................................................        48
         8.6      Non-Reliance on Administrative Agent and Other Lenders.........................................        48
         8.7      Indemnification................................................................................        49	

ii

                                                                                                                        PAGE
                                                                                                                        ----
         8.8      Administrative Agent in Its Individual Capacity................................................        49
         8.9      Successor Administrative Agent.................................................................        49
         8.10     Substitute Administrative Agent................................................................        50
         8.11     Arrangers, Etc.................................................................................        50

SECTION 9.  GUARANTEE............................................................................................        50

SECTION 10.  MISCELLANEOUS.......................................................................................        54
         10.1     Amendments and Waivers.........................................................................        54
         10.2     Notices........................................................................................        55
         10.3     No Waiver; Cumulative Remedies.................................................................        57
         10.4     Survival of Representations and Warranties.....................................................        57
         10.5     Payment of Expenses and Taxes..................................................................        57
         10.6     Successors and Assigns; Participations and Assignments.........................................        58
         10.7     Adjustments; Set-off...........................................................................        61
         10.8     Counterparts...................................................................................        62
         10.9     Severability...................................................................................        62
         10.10    Integration....................................................................................        62
         10.11    Termination of Commitments and Swing Line Commitments..........................................        62
         10.12    GOVERNING LAW..................................................................................        62
         10.13    Submission To Jurisdiction; Waivers............................................................        62
         10.14    Acknowledgements...............................................................................        63
         10.15    WAIVERS OF JURY TRIAL..........................................................................        63
         10.16    Confidentiality................................................................................        63
         10.17    USA PATRIOT Act................................................................................        63	

SCHEDULES

1.1(a)   -        Cash Equivalents
1.1(b)   -        Permitted Investments
1.2      -        Commitments
3.1      -        Interest Rate and Currency Protection
3.6      -        Material Litigation
3.15     -        Subsidiaries
6.2(f)   -        Liens
6.10     -        Dividend Blocks
10.7(b)  -        Fiduciary Accounts	

EXHIBITS

A        Form of Revolving Credit Note
B        Form of Term Note
C        Form of Swing Line Note
D-1      Form of CAF Advance Request
D-2      Form of CAF Advance Offer
D-3      Form of CAF Advance Confirmation	

iii

                                                                                                                        PAGE
                                                                                                                        ----
D-4      Form of CAF Advance Assignment
E        Form of Swing Line Loan Participation Certificate
F-1      Form of Opinion of General Counsel of Borrower and International
F-2      Form of Opinion of Special New York Counsel to the Administrative Agent
G        Form of Borrowing Notice
H        Form of Assignment and Acceptance
I        Form of Closing Certificate
J        Form of Compliance Certificate
K-1      Form of New Lender Supplement
K-2      Form of Commitment Increase Supplement	

iv
CREDIT AGREEMENT, dated as of June 18, 2004 among MASTERCARD INCORPORATED, a Delaware corporation (the "Borrower"), MASTERCARD INTERNATIONAL INCORPORATED, a Delaware corporation ("International" or the "Guarantor"), the several banks and other financial institutions from time to time parties to this Agreement (the "Lenders"), and CITIBANK, N.A. ("Citibank"), as administrative agent for the Lenders hereunder (in such capacity, the "Administrative Agent"), and JPMORGAN CHASE BANK, as back-up administrative agent for the Lenders hereunder (in such capacity, the "Backup Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
"ABR": a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:
(i) the rate of interest announced publicly by Citibank in New York City from time to time as Citibank's base rate; and
(ii) 1.00% per annum above the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publications shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, in either case adjusted to the nearest 0.25%, or if there is no nearest 0.25%, to the next higher 0.25%; and
(iii) for any day, 0.50% per annum above the Federal Funds Rate in effect on such day;
plus for each Term Loan, 0.25% per annum.
Each change in any interest rate provided for herein based upon the ABR resulting from a change in the ABR shall take effect at the time of such change in the ABR.
"ABR Loans": Revolving Credit Loans and Term Loans hereunder the rate of interest applicable to which is based upon the ABR.
"Administrative Agent": as defined in the preamble hereof.
"Administrative Questionnaire": an Administrative Questionnaire in a form supplied by the Administrative Agent.
CREDIT AGREEMENT
2
"Affiliate": as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 25% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
"Agreement": this Credit Agreement, as amended, supplemented or otherwise modified from time to time.
"Applicable Facility Fee Rate": for any Rating Level Period, the rate per annum set forth below opposite the reference to such Rating Level Period:

 Rating Level Period                 Applicable Facility Fee Rate
 -------------------                 ----------------------------
Rating Level 1 Period                           0.060%
Rating Level 2 Period                           0.070%
Rating Level 3 Period                           0.080%
Rating Level 4 Period                           0.100%
Rating Level 5 Period                           0.150%	

Each change in the Applicable Facility Fee Rate resulting from a Rating Level Change shall be effective on the effective date of such Rating Level Change.
"Applicable Margin": for each LIBOR Loan and for any Rating Level Period, the rate per annum set forth below opposite the reference to such Rating Level Period:

 Rating Level Period                       Applicable Margin
 -------------------                       -----------------
Rating Level 1 Period                           0.190%
Rating Level 2 Period                           0.280%
Rating Level 3 Period                           0.420%
Rating Level 4 Period                           0.525%
Rating Level 5 Period                           0.725%	

plus (i) the Applicable Utilization Fee Rate for such Rating Level Period, plus (ii) for each Term Loan, 0.25% per annum. Each change in the Applicable Margin resulting from a Rating Level Change shall be effective on the effective date of such Rating Level Change.
"Applicable Utilization Fee Rate": for each day on which the drawn portion of the aggregate amount of the Commitments (including Swing Line Loans, CAF Advances
CREDIT AGREEMENT
3
and Term Loans) exceeds 33% of the aggregate amount of Commitments as in effect on the Closing Date, for any Rating Level Period, the rate per annum set forth below opposite the reference to such Rating Level Period:

 Rating Level Period                Applicable Utilization Fee Rate
 -------------------                -------------------------------
Rating Level 1 Period                           0.100%
Rating Level 2 Period                           0.100%
Rating Level 3 Period                           0.100%
Rating Level 4 Period                           0.125%
Rating Level 5 Period                           0.125%	

Each change in the Applicable Utilization Fee Rate resulting from a Rating Level Change shall be effective on the effective date of such Rating Level Change.
"Assignee": as defined in subsection 10.6(c).
"Available Commitment": as to any Lender on any day, an amount equal to the excess, if any, of (a) the amount of such Lender's Commitment over
(b) the aggregate of (i) the aggregate principal amount of all Revolving Credit Loans and Term Loans made by such Lender then outstanding and (ii) an amount equal to such Lender's Commitment Percentage of the aggregate principal amount of all Swing Line Loans then outstanding (after giving effect to any repayment of Swing Line Loans on such day).
"Backup Agent": as defined in the preamble hereof.
"Board": the Board of Governors of the Federal Reserve System of the United States (or any successor).
"Borrower": as defined in the preamble hereof.
"Borrowing Date": any Business Day specified in a notice pursuant to Sections 2.2, 2.4, 2.11 or 2.20 as a date on which the Borrower requests the Lenders or the Swing Line Lender, as the case may be, to make Loans hereunder.
"Business": as defined in subsection 3.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided that when such term is used to describe a day on which a borrowing, payment or interest rate determination is to be made in respect of a LIBOR Loan or a LIBOR CAF Advance, such day shall also be a day on which dealings in foreign currencies and exchange between banks may be carried on in London, England.
"CAF Advance": each CAF Advance made pursuant to Section 2.10.
CREDIT AGREEMENT
4
"CAF Advance Availability Period": the period from and including the Closing Date to and including the date which is 7 days prior to the Revolving Credit Termination Date.
"CAF Advance Confirmation": each confirmation by the Borrower of its acceptance of CAF Advance Offers, which confirmation shall be substantially in the form of Exhibit D-3 and shall be delivered to the Administrative Agent by facsimile transmission.
"CAF Advance Interest Payment Date": as to each CAF Advance, each interest payment date specified by the Borrower for such CAF Advance in the related CAF Advance Request.
"CAF Advance Maturity Date": as to any CAF Advance, the date specified by the Borrower pursuant to subsection 2.11(a) in its acceptance of the related CAF Advance Offer.
"CAF Advance Offer": each offer by a Lender to make CAF Advances pursuant to a CAF Advance Request, which offer shall contain the information specified in Exhibit D-2 and shall be delivered to the Administrative Agent by telephone, immediately confirmed by facsimile transmission.
"CAF Advance Request": each request by the Borrower for Lenders to submit bids to make CAF Advances, which request shall contain the information in respect of such requested CAF Advances specified in Exhibit D-1 and shall be delivered to the Administrative Agent in writing, by facsimile transmission, or by telephone, immediately confirmed by facsimile transmission.
"Capital Lease": as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is, or is required to be, accounted for as a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations": all obligations under Capital Leases of any Person, in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person other than a corporation and any and all warrants or options to purchase any of the foregoing.
"Cash Equivalents": (i) cash equivalents in existence on March 31, 2004 as set forth on Schedule 1.1(a) (and, in the case of any such cash equivalents described on Schedule 1.1(a), any replacement of any such cash equivalents with substantially the same Investment), (ii) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (iii) Dollar denominated time deposits, certificates of deposit and bankers acceptances of any Lender or any bank whose short-
CREDIT AGREEMENT
5
term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's Investors Service, Inc. is at least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), with maturities of not more than one year from the date of acquisition, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the type described in clause (ii) entered into with an Approved Bank, (v) commercial paper issued by, or guaranteed by, any Approved Bank or by the parent company of any Approved Bank or commercial paper issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or issued by, or guaranteed by, any industrial or financial company with a long term unsecured debt rating of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, respectively, and in each case maturing within one year after the date of acquisition and (vi) any fund or funds making substantially all of their Investments in Investments of the type described in clauses (i) through (v) above.
"C/D Assessment Rate": for any day as applied to any loan the interest rate applicable to which is based upon the ABR, the annual assessment rate in effect on such day which is payable by a member of the Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation (the "FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. Section 327.4 (or any successor provision) to the FDIC (or any successor) for the FDIC's (or such successor's) insuring time deposits at offices of such institution in the United States.
"C/D Reserve Percentage": for any day as applied to any loan the interest rate applicable to which is based upon the ABR, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board, for determining the maximum reserve requirement for a Depositary Institution (as defined in Regulation D of the Board) in respect of new non-personal time deposits in Dollars having a maturity of 30 days or more.
"Citibank": as defined in the preamble hereof.
"Closing Date": the date on which the conditions precedent set forth in Section 4.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Commitment": as to any Lender, the obligation of such Lender to make Revolving Credit Loans and Term Loans to the Borrower hereunder in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 1.2, as such amount may be reduced or increased from time to time in accordance with the provisions of this Agreement.
"Commitment Increase Offer": as defined in subsection 2.25(a).
"Commitment Increase Supplement": as defined in subsection 2.25(c).
CREDIT AGREEMENT
6
"Commitment Percentage": as to any Lender at any time, the percentage which such Lender's Commitment then constitutes of the aggregate Commitments (or, at any time after the Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender's Revolving Credit Loans and Term Loans then outstanding constitutes of the aggregate principal amount of the Revolving Credit Loans and Term Loans then outstanding).
"Commitment Period": the period from and including the date hereof to but not including the Revolving Credit Termination Date or such earlier date on which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 of the Code.
"Confidential Information": non-public information that the Borrower or any of its Subsidiaries (or any of their representatives) furnishes to the Administrative Agent or any Lender, but does not include any such information that is or becomes generally available to the public (other than as a result of a breach of this Agreement) or that was available to the Administrative Agent or such Lender on a non-confidential basis prior to its being furnished by the Borrower or any of its Subsidiaries (other than as a result of a breach of this Agreement or to the extent obtained from a source known to the Administrative Agent or such Lender to be bound by a confidentiality agreement with the Borrower or any of its Subsidiaries and to be in breach of such confidentiality agreement).
"Consolidated Net Income": as at date for determination thereof, consolidated net income of the Borrower and its Subsidiaries, determined in accordance with GAAP.
"Consolidated Net Worth": for any Person and as at any date of determination, the members' or stockholders' equity of such Person, as the case may be, as determined in accordance with GAAP and as would be reflected on a consolidated balance sheet of such Person prepared as of such date.
"Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is legally bound.
"Declined Amount": as defined in subsection 2.25(a).
"Declining Lender": as defined in subsection 2.25(a).
"Default": any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States.
CREDIT AGREEMENT
7
"Domestic Subsidiary": any Subsidiary organized under the laws of any jurisdiction within the United States of America.
"Environmental Laws": any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a LIBOR Loan or a LIBOR CAF Advance, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member bank of such system.
"Event of Default": any of the events specified in Section 7, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.
"Executive Incentive Compensation Plan": as described in the annual report of the Borrower.
"Federal Funds Rate": for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average of the quotations received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent.
"Fixed Rate CAF Advance": any CAF Advance made pursuant to a Fixed Rate CAF Advance Request.
"Fixed Rate CAF Advance Request": any CAF Advance Request requesting the Lenders to offer to make CAF Advances at a fixed rate of interest (as opposed to a rate composed of the London Interbank Offered Rate plus (or minus) a margin).
"Foreign Subsidiary": as to any Person, any Subsidiary of such Person organized under the laws of any jurisdiction outside the United States.
CREDIT AGREEMENT
8
"GAAP": generally accepted accounting principles in the United States in effect from time to time.
"Governmental Authority": any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee shall not include endorsements of instruments for deposit or collection in the ordinary course of business or obligations of any Obligor or its Subsidiaries in respect of settlement failures by one or more of its members. The amount of any Guarantee of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.
"Guaranteed Obligations": as defined in Section 9.
"Guarantor": as defined in the preamble hereof.
"Indebtedness": as to any Person, (a) all indebtedness of such Person for borrowed money, (b) the deferred purchase price of assets or services which in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (c) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (d) all Indebtedness of a second Person secured by any Lien on any property owned by such first Person, whether or not such Indebtedness has been assumed, (e) all Capitalized Lease Obligations of such Person, (f) all obligations of such Person to pay a specified purchase price for goods or services whether or not delivered or accepted, e.g., take-or-pay and similar obligations, (g) all obligations of such Person under Interest Rate Agreements, and (h) without
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duplication, all Guarantees of such Person of Indebtedness of others, provided that Indebtedness shall not include trade payables and accrued expenses relating to employees, in each case arising in the ordinary course of business.
"Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Loan the rate of interest applicable to which is based upon the ABR, the last day of each March, June, September and December, on the Revolving Credit Termination Date and on the Termination Date, (b) as to any LIBOR Loan or LIBOR CAF Advance having an Interest Period of three months or less, or any Fixed Rate CAF Advance having an Interest Period of 90 days or less, the last day of such Interest Period and (c) as to any LIBOR Loan or any Fixed Rate CAF Advance having an Interest Period longer than three months or 90 days, respectively, each day which is three months or 90 days, respectively, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period.
"Interest Period": (a) with respect to any LIBOR Loan:
(i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such LIBOR Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such LIBOR Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto;
(b) with respect to any CAF Advance, the period specified in the CAF Advance Confirmation with respect to such CAF Advance;
provided that all of the foregoing provisions relating to Interest Periods are subject to the following:
(A) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of LIBOR Loans or LIBOR CAF Advances, the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;
(B) any Interest Period that would otherwise extend beyond the Revolving Credit Termination Date or beyond the date final payment is due on the Term Loans shall end on the Revolving Credit Termination Date or such date of final payment, as the case may be; and
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(C) any Interest Period pertaining to a LIBOR Loan or a LIBOR CAF Advance that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.
"Interest Rate Agreement": any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate futures contract, interest rate option contract or other similar agreement or arrangement designed to protect any Person against fluctuations in interest rates.
"International": as defined in the preamble hereof.
"Investments": as defined in Section 6.6.
"LIBOR CAF Advance": any CAF Advance made pursuant to a LIBOR CAF Advance Request.
"LIBOR CAF Advance Request": any CAF Advance Request requesting the Lenders to offer to make CAF Advances at an interest rate equal to the London Interbank Offered Rate plus (or minus) a margin.
"LIBOR Loans": Revolving Credit Loans and Term Loans hereunder the rate of interest applicable to which is based upon the London Interbank Offered Rate.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing).
"Loan": any Revolving Credit Loan, Term Loan, CAF Advance or Swing Line Loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement and any Notes issued hereunder.
"London Interbank Offered Base Rate": with respect to each day during each Interest Period pertaining to a LIBOR Loan or a LIBOR CAF Advance, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 A.M., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "London Interbank Offered Base Rate" with respect to such LIBOR Loan or LIBOR CAF Advance for such Interest Period shall be the rate at which Dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of Citibank in immediately available funds in the London
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interbank market at approximately 11:00 A.M., London time, two Business Days prior to the commencement of such Interest Period.
"London Interbank Offered Rate": with respect to each day during each Interest Period pertaining to a LIBOR Loan or a LIBOR CAF Advance, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):
London Interbank Offered Base Rate

1.00 - Eurocurrency Reserve Requirements
"Margin Stock": margin stock within the meaning of Regulation U.
"MasterCard Europe": MasterCard Europe Sprl, a Belgian corporation.
"Material Adverse Effect": a material adverse effect on (a) the business, assets, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole (it being understood that a settlement failure by one or more members of International shall not constitute an event, development or circumstance that has a "Material Adverse Effect") or (b) the validity or enforceability of any of the Loan Documents or the material rights or remedies of the Administrative Agent or the Lenders thereunder.
"Material Subsidiary" means, at any time, any Subsidiary (i) accounting, during the immediately preceding fiscal quarter of the Borrower, for more than 5% of the total revenues of the Borrower and its Subsidiaries on a consolidated basis or (ii) having, as at the last day of such fiscal quarter, more than 5% of the total assets of the Borrower and its Subsidiaries on a consolidated basis, all determined in accordance with GAAP.
"Materials of Environmental Concern": any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001 (a)(3) of ERISA.
"New Lender": as defined in subsection 2.25(b).
"New Lender Supplement": as defined in subsection 2.25(b).
"Non-Excluded Taxes": as defined in Section 2.23.
"Notes": the collective reference to the Revolving Credit Notes, the Term Notes and the Swing Line Note.
"Obligors": the collective reference to the Borrower and the Guarantor.
"Participant": as defined in subsection 10.6(b).
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"PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Investments": (a) Investments in Cash Equivalents; (b) Investments in existence on the date of this Agreement and disclosed in the financial statements previously delivered to the Administrative Agent and the Lenders and as set forth on Schedule 1.1(b) (and, in the case of any Investments described on Schedule 1.1(b), any replacement of any such Investment with substantially the same Investment in no greater amounts);
(c) Investments in any Subsidiary by the Borrower or by any Subsidiary (including Guarantees in respect of hedging or foreign exchange transactions entered into in the ordinary course of business and governed by ISDA documentation, subject to the limitations set forth in the proviso to this definition, including any Investment made to acquire such Subsidiary); (d) Investments in the Borrower by any existing or future Subsidiary of the Borrower; (e) sales of goods or services on trade credit terms in the ordinary course of business; (f) loans and advances to employees in the ordinary course of business; (g) loans or advances to vendors or contractors of the Borrower in the ordinary course of business;
(h) lease, utility and other similar deposits in the ordinary course of business; (i) stock, obligations or securities received in the ordinary course of business in settlement of debts owing to the Borrower or a Subsidiary as a result of foreclosure, perfection or enforcement of any Lien, or in connection with good faith settlement of delinquent obligations owing to the Borrower or a Subsidiary; (j) Investments in partnerships or joint ventures engaged in a business related to that engaged in by the Borrower on the date of this Agreement and Investments in other entities engaged in the development or production of new technologies directly related to the businesses engaged in by the Borrower and its Subsidiaries on the date of this Agreement, which Investments do not exceed an aggregate amount at any time outstanding of 25% of the total assets of the Borrower and its consolidated Subsidiaries; (k) Investments by the Borrower pursuant to the Executive Incentive Compensation Plan in an aggregate amount not to exceed at any time outstanding not more than 15% of the total assets of the Borrower and its consolidated Subsidiaries;
(l) Investments or assumed Indebtedness under Interest Rate Agreements and currency exchange and protection agreements entered into in the ordinary course of business; and (m) in addition to Permitted Investments described in the foregoing clauses (a) through (l), Investments in an aggregate amount not to exceed an amount equal to 20% of the total assets of the Borrower and its consolidated Subsidiaries at any one time outstanding; provided that the aggregate amount of Investments by International and its Subsidiaries in Subsidiaries of the Borrower that are not also Subsidiaries of International shall not exceed an amount equal to 30% of the total assets of International and its consolidated Subsidiaries at any one time outstanding; and provided, further, that a Guarantee of obligations of MasterCard Europe in respect of hedging or foreign exchange transactions entered into in the ordinary course of business with one or more Lenders (or Affiliates thereof) and governed by ISDA documentation shall not be considered an Investment for purposes of the immediately preceding proviso.
"Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
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"Plan": at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Properties": as defined in Section 3.17.
"Rating Level Change": a change in the S&P Rating (other than as a result of a change in the rating system of S&P) that results in the change from one Rating Level Period to another, which Rating Level Change shall be effective on the date on which the relevant change in the S&P Rating is first announced by S&P.
"Rating Level Period": a Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3 Period, a Rating Level 4 Period or a Rating Level 5 Period; provided that:
(i) "Rating Level 1 Period" means a period during which the S&P Rating is A+ or better;
(ii) "Rating Level 2 Period" means a period that is not a Rating Level 1 Period during which the S&P Rating is A - or better;
(iii) "Rating Level 3 Period" means a period that is not a Rating Level 1 Period or a Rating Level 2 Period during which the S&P Rating is BBB+;
(iv) "Rating Level 4 Period" means a period that is not a Rating Level 1 Period, a Rating Level 2 Period or a Rating Level 3 Period during which the S&P Rating is BBB; and
(v) "Rating Level 5 Period" means a period other than a Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3 Period or a Rating Level 4 Period, and shall include each period during which there is no S&P Rating in effect.
"Register": as defined in subsection 10.6(e).
"Regulation U": Regulation U of the Board as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under PBGC Reg. Section 4043.
"Required Lenders": at any time, Lenders the Commitment Percentages of which aggregate more than 50%.
"Requirement of Law": as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental
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Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
"Responsible Officer": the president and chief executive officer and the chief operating officer of the Borrower and, with respect to financial matters, the chief financial officer or the treasurer of the Borrower.
"Revolving Credit Loans": as defined in Section 2.1.
"Revolving Credit Note": as defined in subsection 2.7(e).
"Revolving Credit Termination Date": June 17, 2005, as extended from time to time pursuant to Section 2.26, or such earlier date as the Commitments shall terminate pursuant to the terms hereof; provided that if the Revolving Credit Termination Date would otherwise fall on a day that is not a Business Day, the Revolving Credit Termination Date shall be the immediately preceding Business Day.
"S&P": Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
"S&P Rating": at any time, the counterparty rating of the Borrower then most recently announced by S&P.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person on a particular date, means that (i) the fair value of the property of such Person is greater than the total amount of the liabilities, including, without limitation, contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they mature, and (iv) such Person is not engaged in business, and is not about to engage in business, for which such Person's property would constitute unreasonably small capital.
"Subsidiary": as to any Person, a corporation, partnership or other entity of which a majority of the Voting Shares are at the time owned, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Swing Line Commitment": the Swing Line Lender's obligation to make Swing Line Loans pursuant to Section 2.20.
"Swing Line Lender": Citibank in its capacity as provider of the Swing Line Loans.
"Swing Line Loan Participation Certificate": a certificate in substantially the form of Exhibit E.
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"Swing Line Loans": as defined in subsection 2.20(a).
"Swing Line Note": as defined in subsection 2.20(b).
"Term Loans": as defined in Section 2.3.
"Term Note": as defined in subsection 2.7(e).
"Termination Date": the date that is the first anniversary of the Revolving Credit Termination Date (or, if such day is not a Business Day, the immediately preceding Business Day).
"Tranche": the collective reference to LIBOR Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such loans shall originally have been made on the same day); Tranches may be identified as "LIBOR Tranches".
"Transferee": as defined in subsection 10.6(g).
"Type": as to any Revolving Credit Loan or Term Loan, its nature as an ABR Loan or a LIBOR Loan.
"United States": the United States of America.
"Voting Shares": as to any Person, shares of stock of or other ownership interests in such Person having ordinary voting power (other than such stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors (or similar managers) of such Person.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any Notes or any certificate or other document made or delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Borrower and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
(e) The words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
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SECTION 2. AMOUNT AND TERMS OF LOANS
2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans ("Revolving Credit Loans") to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding, when added to such Lender's Commitment Percentage of all outstanding Swing Line Loans, not to exceed the amount of such Lender's Commitment, provided that the aggregate principal amount of all Loans outstanding at any time shall not exceed the aggregate amount of the Commitments at such time. During the Commitment Period the Borrower may use the Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be LIBOR Loans, ABR Loans, or a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.9.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may borrow under the Commitments during the Commitment Period on any Business Day, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 1:00 P.M., New York City time, (a) three Business Days prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be initially LIBOR Loans, or (b) on the same Business Day of the requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of LIBOR Loans, ABR Loans, or a combination thereof and (iv) if the borrowing is to be entirely or partly of LIBOR Loans, the respective amounts of each such Type of Revolving Credit Loan and the respective lengths of the initial Interest Periods therefor. Each borrowing under the Commitments shall be in an amount equal to at least $10,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then aggregate Available Commitments are less than $10,000,000, such lesser amount). Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Lender thereof. Except as contemplated by subsection 2.20(c), each Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in Section 10.2 prior to 2:00 P.M., New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent.
2.3 Term Loans. The Revolving Credit Loans outstanding at the close of business New York City time on the Revolving Credit Termination Date shall, at the option of the Borrower, subject to Section 4.2, be converted on such date into term loans (the "Term Loans") to the Borrower. The Term Loans may from time to time be (a) LIBOR Loans, (b) ABR Loans or (c) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.4 and 2.9.
2.4 Procedure for Term Loan Borrowing. The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, (a) three Business Days prior to the Revolving
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Credit Termination Date, if all or any part of the Term Loans are to be initially LIBOR Loans or (b) on the Revolving Credit Termination Date, otherwise) if the Borrower intends to convert Revolving Credit Loans to Term Loans pursuant to Section 2.3 and specifying (i) whether the resulting Term Loans are to be initially LIBOR Loans, ABR Loans or a combination thereof, and
(ii) if the Term Loans are to be entirely or partly LIBOR Loans the respective lengths of the initial Interest Periods therefor. Upon receipt of such notice the Administrative Agent shall promptly notify each Lender thereof. The aggregate principal amount of the Term Loans shall be equal to the aggregate principal amount of the Revolving Credit Loans outstanding at the close of business New York City time on the Revolving Credit Termination Date and the Term Loans shall be deemed to have been made at such time without any payments being made by the Lenders. Promptly after the making of its Term Loan each Lender shall mark any Revolving Credit Note held by it "cancelled" and deliver the same to the Borrower.
2.5 Facility Fee. The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee for the period from and including the first day of the Commitment Period to the Termination Date, computed at a rate per annum equal to the Applicable Facility Fee Rate on (i) the average daily Commitment of such Lender, whether or not utilized, from and including the first day of the Commitment Period until the Revolving Credit Termination Date, and on (ii) the outstanding principal amount of the Term Loans of such Lender, if any, thereafter. Such facility fee shall be payable quarterly in arrears on the last day of each March, June, September and December, on the Revolving Credit Termination Date or the Termination Date, as applicable, or such earlier date as the Commitments shall terminate as provided herein, commencing on the first of such dates to occur after the date hereof.
2.6 Termination or Reduction of Commitments. The Borrower shall have the right, upon not less than one Business Day's notice to the Administrative Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments, provided that after giving effect to such termination or reduction, the aggregate outstanding principal amount of the Loans shall not exceed the aggregate Commitments. Any such reduction shall be in an amount equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently the Commitments then in effect. Termination or reduction of the Commitments shall also terminate or reduce, as the case may be, the obligation of the Lenders to make the Term Loans.
2.7 Repayment of Revolving Credit Loans and Term Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender (i) subject to Section 2.3, the then unpaid principal amount of each Revolving Credit Loan of such Lender on the Revolving Credit Termination Date (or such earlier date on which the Revolving Credit Loans become due and payable pursuant to Section 7), and (ii) the principal amount of the Term Loan of such Lender on the Termination Date (or the then unpaid principal amount of such Term Loan, on the date that the Term Loans become due and payable pursuant to Section 7). The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Revolving Credit Loans and Term Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in
Section 2.16.
(b) Each Lender shall maintain in accordance with its usual practice appropriate records evidencing indebtedness of the Borrower to such Lender resulting from each Revolving Credit
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Loan and Term Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to subsection 10.6(e), and a record therein for each Lender, in which shall be recorded (i) the amount of each Revolving Credit Loan and Term Loan made hereunder, the Type thereof and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the records of each Lender maintained pursuant to subsection 2.7(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such record, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Revolving Credit Loans and Term Loans made to such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will execute and deliver to such Lender (i) a promissory note of the Borrower evidencing the Revolving Credit Loans of such Lender, substantially in the form of Exhibit A with appropriate insertions as to date and principal amount (a "Revolving Credit Note"), and/or (ii) a promissory note of the Borrower evidencing the Term Loan of such Lender, substantially in the form of Exhibit B with appropriate insertions as to date and principal amount (a "Term Note").
2.8 Optional Prepayments. The Borrower may at any time and from time to time prepay the Revolving Credit Loans or the Term Loans, in whole or in part, without premium or penalty (subject to Section 2.24), upon at least two Business Days' irrevocable notice to the Administrative Agent, if such prepayment is to be applied in whole or in part to LIBOR Loans, and upon same day notice otherwise (which notices shall be made on the relevant day not later than 10:00 A.M., New York City time), specifying the date and amount of prepayment and whether the prepayment is of LIBOR Loans, or a combination of LIBOR and ABR Loans, and, if of a combination thereof, the amount allocable to each; in the case of ABR Loans, notice shall be same day. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with any accrued interest to such date on the amount prepaid and any other amounts payable pursuant to
Section 2.24. Amounts prepaid on account of the Term Loans may not be reborrowed. Partial prepayments shall be in an aggregate principal amount of $10,000,000 or a whole multiple of $1,000,000 in excess thereof. The Borrower shall not have the right to prepay any principal amount of any CAF Advance except as provided in subsection 2.12(a). Prepayments of any Swing Line Loan shall be as provided in subsection 2.20(a).
2.9 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert LIBOR Loans to ABR Loans, by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election, provided that any such conversion of LIBOR Loans may only be made on the last day of an Interest Period with respect thereto.
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The Borrower may elect from time to time to convert ABR Loans to LIBOR Loans by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election. Any such notice of conversion to LIBOR Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. All or any part of outstanding LIBOR Loans and ABR Loans may be converted as provided herein, provided that (i) no Revolving Credit Loan or Term Loan may be converted into a LIBOR Loan when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined that such a conversion is not appropriate, and (ii) no Swing Line Loan may be converted into a loan that bears interest at any rate other than the ABR.
(b) Any LIBOR Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving notice to the Administrative Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Revolving Credit Loans, provided that no LIBOR Loan may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined that such a continuation is not appropriate; and provided, further, that if the Borrower shall fail to give such notice or if such continuation is not permitted such Revolving Credit Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period.
2.10 CAF Advances. Subject to the terms and conditions of this Agreement, the Borrower may borrow CAF Advances from time to time on any Business Day during the CAF Advance Availability Period. CAF Advances may be borrowed in amounts such that the aggregate principal amount of all Loans outstanding at any time shall not exceed the aggregate amount of the Commitments at such time. Within the limits and on the conditions hereinafter set forth with respect to CAF Advances, the Borrower may from time to time borrow, repay and reborrow CAF Advances.
2.11 Procedure for CAF Advance Borrowing. (a) The Borrower shall request CAF Advances by delivering a CAF Advance Request to the Administrative Agent, not later than 1:00 P.M. (New York City time), four Business Days prior to the proposed Borrowing Date (in the case of a LIBOR CAF Advance Request), and not later than 11:00 A.M. (New York City time), one Business Day prior to the proposed Borrowing Date (in the case of a Fixed Rate CAF Advance Request). Each CAF Advance Request in respect of any Borrowing Date may solicit bids for CAF Advances on such Borrowing Date in an aggregate principal amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and having not more than three alternative CAF Advance Maturity Dates. The CAF Advance Maturity Date for each CAF Advance shall be the date set forth therefor in the relevant CAF Advance Request, which date shall be (i) not less than 7 days nor more than 60 days after the Borrowing Date therefor, in the case of a Fixed Rate CAF Advance,
(ii) one or two months after the Borrowing Date therefor, in the case of a LIBOR CAF Advance and (iii) not later than the Revolving Credit Termination Date, in the case of any CAF Advance. The Administrative Agent shall notify each Lender promptly by facsimile transmission of the contents of each CAF Advance Request received by the Administrative Agent.
(b) In the case of a LIBOR CAF Advance Request, upon receipt of notice from the Administrative Agent of the contents of such CAF Advance Request, each Lender may elect, in its sole discretion, to offer irrevocably to make one or more CAF Advances at the applicable
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London Interbank Offered Rate plus (or minus) a margin determined by such Lender in its sole discretion for each such CAF Advance. Any such irrevocable offer shall be made by delivering a CAF Advance Offer to the Administrative Agent, before 10:30 A.M., New York City time, on the day that is three Business Days before the proposed Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each CAF Advance Maturity Date and the aggregate maximum amount of CAF Advances for all CAF Advance Maturity Dates which such Lender would be willing to make (which amounts may, subject to Section 2.10, exceed such Lender's Commitment); and
(ii) the margin above or below the applicable London Interbank Offered Rate at which such Lender is willing to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 11:00 A.M., New York City time, on the date which is three Business Days before the proposed Borrowing Date of the contents of each such CAF Advance Offer received by it. If the Administrative Agent, in its capacity as a Lender, shall elect, in its sole discretion, to make any such CAF Advance Offer, it shall advise the Borrower of the contents of its CAF Advance Offer before 10:15 A.M., New York City time, on the date which is three Business Days before the proposed Borrowing Date.
(c) In the case of a Fixed Rate CAF Advance Request, upon receipt of notice from the Administrative Agent of the contents of such CAF Advance Request, each Lender may elect, in its sole discretion, to offer irrevocably to make one or more CAF Advances at a rate of interest determined by such Lender in its sole discretion for each such CAF Advance. Any such irrevocable offer shall be made by delivering a CAF Advance Offer to the Administrative Agent before 9:30 A.M., New York City time, on the proposed Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each CAF Advance Maturity Date, and the aggregate maximum amount for all CAF Advance Maturity Dates, which such Lender would be willing to make (which amounts may, subject to
Section 2.10, exceed such Lender's Commitment); and
(ii) the rate of interest at which such Leader is willing to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 10:00 A.M., New York City time, on the proposed Borrowing Date of the contents of each such CAF Advance Offer received by it. If the Administrative Agent, in its capacity as a Lender, shall elect, in its sole discretion, to make any such CAF Advance Offer, it shall advise the Borrower of the contents of its CAF Advance Offer before 9:15 A.M., New York City time, on the proposed Borrowing Date.
(d) Before 11:30 A.M., New York City time, three Business Days before the proposed Borrowing Date (in the case of CAF Advances requested by a LIBOR CAF Advance Request) and before 10:30 A.M., New York City time, on the proposed Borrowing Date (in the case of CAF Advances requested by a Fixed Rate CAF Advance Request), the Borrower, in its absolute discretion, shall:
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(i) cancel such CAF Advance Request by giving the Administrative Agent telephone notice to that effect, or
(ii) by giving telephone notice to the Administrative Agent (immediately confirmed by delivery to the Administrative Agent of a CAF Advance Confirmation by facsimile transmission) (A) subject to the provisions of subsection 2.11(e), accept one or more of the offers made by any Lender or Lenders pursuant to subsection 2.11(b) or subsection 2.11(c), as the case may be, and (B) reject any remaining offers made by Lenders pursuant to subsection 2.11(b) or subsection 2.11(c), as the case may be.
(e) The Borrower's acceptance of CAF Advances in response to any CAF Advance Offers shall be subject to the following limitations:
(i) the amount of CAF Advances accepted for each CAF Advance Maturity Date specified by any Lender in its CAF Advance Offer shall not exceed the maximum amount for such CAF Advance Maturity Date specified in such CAF Advance Offer;
(ii) the aggregate amount of CAF Advances accepted for all CAF Advance Maturity Dates specified by any Lender in its CAF Advance Offer shall not exceed the aggregate maximum amount specified in such CAF Advance Offer for all such CAF Advance Maturity Dates;
(iii) the Borrower may not accept offers for CAF Advances for any CAF Advance Maturity Date in an aggregate principal amount in excess of the maximum principal amount requested in the related CAF Advance Request; and
(iv) if the Borrower accepts any of such offers, it must accept offers based solely upon pricing for each relevant CAF Advance Maturity Date and upon no other criteria whatsoever, and if two or more Lenders submit offers for any CAF Advance Maturity Date at identical pricing and the Borrower accepts any of such offers but does not wish to (or, by reason of the limitations set forth in Section 2.10, cannot) borrow the total amount offered by such Lenders with such identical pricing, the Borrower shall accept offers from all of such Lenders in amounts allocated among them pro rata according to the amounts offered by such Lenders (with appropriate rounding, in the sole discretion of the Borrower, to assure that each accepted CAF Advance is an integral multiple of $1,000,000); provided that if the number of Lenders that submit offers for any CAF Advance Maturity Date at identical pricing is such that, after the Borrower accepts such offers pro rata in accordance with the foregoing provisions of this paragraph, the CAF Advance to be made by any such Lender would be less than $5,000,000 principal amount, the number of such Lenders shall be reduced by the Administrative Agent by lot until the CAF Advances to be made by each such remaining Lender would be in a principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.
(f) If the Borrower notifies the Administrative Agent that a CAF Advance Request is cancelled pursuant to subsection 2.11(d)(i), the Administrative Agent shall give prompt telephone notice thereof to the Lenders.
(g) If the Borrower accepts pursuant to subsection 2.11(d)(ii) one or more of the offers made by any Lender or Lenders, the Administrative Agent promptly shall notify each Lender
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which has made such an offer of (i) the aggregate amount of such CAF Advances to be made on such Borrowing Date for each CAF Advance Maturity Date and (ii) the acceptance or rejection of any offers to make such CAF Advances made by such Lender. Before 12:00 Noon (New York City time) on the Borrowing Date specified in the applicable CAF Advance Request, each Lender whose CAF Advance Offer has been accepted shall make available to the Administrative Agent at its office set forth in Section 10.2 the amount of CAF Advances to be made by such Lender, in immediately available funds. The Administrative Agent will make such funds available to the Borrower as soon as practicable on such date at such office of the Administrative Agent. As soon as practicable after each Borrowing Date, the Administrative Agent shall notify each Lender of the aggregate amount of CAF Advances advanced on such Borrowing Date and the respective CAF Advance Maturity Dates thereof.
2.12 CAF Advance Payments. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent, for the account of each Lender which has made a CAF Advance, on the applicable CAF Advance Maturity Date, the then unpaid principal amount of such CAF Advance. The Borrower shall not have the right to prepay any principal amount of any CAF Advance without the consent of the Lender to which such CAF Advance is owed.
(b) The Borrower hereby further agrees to pay interest on the unpaid principal amount of each CAF Advance from the Borrowing Date of such CAF Advance to the applicable CAF Advance Maturity Date at the rate of interest specified in the CAF Advance Offer accepted by the Borrower in connection with such CAF Advance (calculated on the basis of a 360-day year for actual days elapsed), payable on each applicable CAF Advance Interest Payment Date.
(c) If any principal of, or interest on, any CAF Advance shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such CAF Advance shall, without limiting any rights of any Lender under this Agreement, bear interest from the date on which such payment was due at a rate per annum which is 2% per annum above the rate which would otherwise be applicable to such CAF Advance until the stated CAF Advance Maturity Date of such CAF Advance, and for each day thereafter at a rate per annum which is 2% per annum above the ABR, in each case until paid in full (as well after as before judgment). Interest accruing pursuant to this paragraph (c) shall be payable from time to time on demand.
2.13 Evidence of Debt. Each Lender shall maintain in accordance with its usual practice appropriate records evidencing indebtedness of the Borrower to such Lender resulting from each CAF Advance of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time in respect of such CAF Advance. The Administrative Agent shall maintain the Register pursuant to subsection 10.6(e), and a record therein for each Lender, in which shall be recorded (i) the amount of each CAF Advance made by such Lender, the CAF Advance Maturity Date thereof, the interest rate applicable thereto and each CAF Advance Interest Payment Date applicable thereto, and (ii) the amount of any sum received by the Administrative Agent hereunder from the Borrower on account of such CAF Advance. The entries made in the Register and the records of each Lender maintained pursuant to this Section shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such record, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the CAF Advances made by such Lender in accordance with the terms of this Agreement.
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2.14 Certain Restrictions. A CAF Advance Request may request offers for CAF Advances to be made on not more than one Borrowing Date and to mature on not more than three CAF Advance Maturity Dates. No CAF Advance Request may be submitted earlier than five Business Days after submission of any other CAF Advance Request.
2.15 Minimum Amounts of Tranches. All borrowings, conversions and continuations of Revolving Credit Loans and Term Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Revolving Credit Loans and Term Loans comprising each LIBOR Tranche shall be equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event shall there be more than five LIBOR Tranches outstanding at any time.
2.16 Interest Rates and Payment Dates. (a) Each LIBOR Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the London Interbank Offered Rate for such Interest Period plus the Applicable Margin.
(b) Each ABR Loan and Swing Line Loan shall bear interest at a rate per annum equal to the ABR. Each CAF Advance shall bear interest as provided in
Section 2.10.
(c) If all or a portion of (i) any principal of any Revolving Credit Loan, Term Loan or Swing Line Loan, (ii) any interest payable thereon, (iii) any facility fee or (iv) any other amount payable hereunder (other than overdue CAF payments provided for in subsection 2.12(c)) shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), the principal of the Revolving Credit Loans, Term-Loans and the Swing Line Loans and any such overdue interest, facility fee or other amount shall bear interest at a rate per annum which is (x) in the case of principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% per annum or (y) in the case of any such overdue interest, facility fee or other amount, the rate applicable to ABR Loans pursuant to subsection 2.16(b) plus 2% per annum, in each case from the date of such non-payment until such overdue principal, interest, facility fee or other amount is paid in full (as well after as before judgment).
(d) Interest on Revolving Credit Loans, Term Loans and Swing Line Loans shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.
2.17 Computation of Interest and Fees. (a) Whenever it is calculated on the basis of the ABR, interest shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed; and, otherwise, interest and the facility fee shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a London Interbank Offered Rate. Any change in the interest rate on a Loan resulting from a change in the ABR, the Eurocurrency Reserve Requirements, the C/D Assessment Rate or the C/D Reserve Percentage shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change in interest rate.
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(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 2.16(a) or 2.9(b).
2.18 Inability to Determine Interest Rate. If prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the London Interbank Offered Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the Required Lenders that the London Interbank Offered Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (x) any LIBOR Loans requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to LIBOR Loans, shall be converted to or continued as ABR Loans and (z) any outstanding LIBOR Loans shall be converted, on the first day of such Interest Period, to ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no further LIBOR Loans shall be made or continued as such, nor shall the Borrower have the right to convert Loans to LIBOR Loans, as the case may be.
2.19 Pro Rata Treatment and Payments. (a) Each borrowing of Revolving Credit Loans and Term Loans by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any facility fee hereunder and any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Commitment Percentages of the Lenders. Each payment (including each prepayment) by the Borrower on account of principal of and interest on any Loans shall be made pro rata according to the respective outstanding principal amounts of such Loans then held by the Lenders. All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set-off or counterclaim and shall be made prior to 2:00 P.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Administrative Agent's office specified in Section 10.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its allocable share of such borrowing available to the Administrative Agent, the Administrative
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Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error. If such Lender's Commitment Percentage of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans hereunder, on demand, from the Borrower.
2.20 Swing Line Commitment. (a) Subject to the terms and conditions hereof, the Swing Line Lender agrees to make swing line loans ("Swing Line Loans") to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed $200,000,000, provided that the aggregate principal amount of all Loans outstanding at any one time shall not exceed the aggregate amount of the Commitments at such time. During the Commitment Period, the Borrower may use the Swing Line Commitment by borrowing, prepaying the Swing Line Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. All Swing Line Loans shall bear interest based upon the ABR and shall not be entitled to be converted into loans that bear interest at any other rate. The Borrower shall give the Swing Line Lender irrevocable notice (which notice must be received by the Swing Line Lender prior to 3:00 P.M., New York City time, on the requested Borrowing Date specifying the amount of the requested Swing Line Loan which shall be in a minimum amount of $100,000 or a whole multiple of $50,000 in excess thereof). The proceeds of the Swing Line Loan will be made available by the Swing Line Lender to the Borrower at the office of the Swing Line Lender by 4:00 P.M., New York City time, on the Borrowing Date by crediting the account of the Borrower at such office with such proceeds. The Borrower may, at any time and from time to time, prepay the Swing Line Loans, in whole or in part, without premium or penalty, by notifying the Swing Line Lender prior to 3:00 P.M., New York City time, on any Business Day of the date and amount of prepayment. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein. Partial prepayments shall be in an aggregate principal amount of $100,000 or a whole multiple of $50,000 in excess thereof.
(b) The Swing Line Loans shall, at the request of the Swing Line Lender, be evidenced by and repayable with interest in accordance with a promissory note of the Borrower substantially in the form of Exhibit C to this Agreement, with appropriate insertions (the "Swing Line Note"), payable to the order of the Swing Line Lender and representing the obligation of the Borrower to pay the amount of the Swing Line Commitment or, if less, the unpaid principal amount of the Swing Line Loans, with interest thereon as prescribed in Section 2.16. The Swing Line Lender is hereby authorized to record the Borrowing Date, the amount of each Swing Line Loan and the date and amount of each payment or prepayment of principal thereof, on the schedule annexed to and constituting a part of the Swing Line Note and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by the Swing Line Lender to make any such recordation shall not affect any of the obligations of the Borrower under such Swing Line Note or this Agreement. The Swing Line
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Note shall (a) be dated the Closing Date, (b) be stated to mature on the Revolving Credit Termination Date and (c) bear interest for the period from the date thereof until paid in full on the unpaid principal amount thereof from time to time outstanding at the applicable interest rate per annum determined as provided in, and payable as specified in, Section 2.16.
(c) The Swing Line Lender at any time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender to act on its behalf) request each Lender, including the Swing Line Lender, to make a Revolving Credit Loan that shall be initially an ABR Loan in an amount equal to such Lender's Commitment Percentage of the amount of the Swing Line Loans outstanding on the date such notice is given (the "Outstanding Swing Line Loans"). Unless any of the events described in paragraph (f) of
Section 7 shall have occurred with respect to the Borrower (in which event the procedures of paragraph (e) of this Section shall apply) each Lender shall make the proceeds of its Revolving Credit Loan available to the Administrative Agent for the account of the Swing Line Lender at the office of the Administrative Agent specified in Section 10.2 prior to 12:00 Noon (New York City time) in funds immediately available on the Business Day next succeeding the date such notice is given. The proceeds of such Revolving Credit Loans shall be immediately applied to repay the Outstanding Swing Line Loans. Effective on the day such Revolving Credit Loans are made, the portion of the Swing Line Loans so paid shall no longer be outstanding as Swing Line Loans, shall no longer be due under the Swing Line Note and shall be evidenced as provided in subsection
2.7(b). The Borrower authorizes the Swing Line Lender to charge the Borrower's accounts with the Administrative Agent (up to the amount available in each such account) in order to immediately pay the amount of such Outstanding Swing Line Loans to the extent amounts received from the Lenders are not sufficient to repay in full such Outstanding Swing Line Loans.
(d) Notwithstanding anything herein to the contrary, the Swing Line Lender shall not be obligated to make any Swing Line Loans if the conditions set forth in Section 4.2 have not been satisfied.
(e) If prior to the making of a Revolving Credit Loan pursuant to subsection 2.20(c) one of the events described in paragraph (f) of Section 7 shall have occurred and be continuing with respect to the Borrower, each Lender will, on the date such Revolving Credit Loan was to have been made pursuant to the notice in subsection 2.20(c), purchase an undivided participating interest in the Outstanding Swing Line Loan in an amount equal to (i) its Commitment Percentage times (ii) the aggregate principal amount of Swing Line Loans then outstanding. Each Lender will immediately transfer to the Swing Line Lender, in immediately available funds, the amount of its participation, and upon receipt thereof the Swing Line Lender will deliver to such Lender a Swing Line Loan Participation Certificate dated the date of receipt of such funds and in such amount.
(f) Whenever, at any time after any Lender has purchased a participating interest in a Swing Line Loan, the Swing Line Lender receives any payment on account thereof, the Swing Line Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); provided, however, that in the event that such payment received by the Swing Line Lender is required to be returned, such Lender will return to the Swing Line Lender any portion thereof previously distributed by the Swing Line Lender to it.
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(g) Each Lender's obligation to make the Revolving Credit Loans referred to in subsection 2.20(c) and to purchase participating interests pursuant to subsection 2.20(e) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any set-off, counterclaim, recoupment, defense or other right which such Lender or the Borrower may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default; (iii) any adverse change in the condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement or any other Loan Document by the Borrower, any Subsidiary or any other Lender; or
(v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.
2.21 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain LIBOR Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make LIBOR Loans, continue LIBOR Loans as such and convert ABR Loans to LIBOR Loans shall forthwith be cancelled and (b) such Lender's Loans then outstanding as LIBOR Loans, if any, shall be converted automatically to ABR Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a LIBOR Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 2.22.
2.22 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Note or any LIBOR Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 2.23 and changes in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the London Interbank Offered Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining LIBOR Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or
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compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, the Borrower shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts pursuant to paragraphs (a) or (b) of this Section 2.22, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled and of the basis for the calculation of such additional amounts; provided that the Borrower shall not be required to compensate a Lender pursuant to such paragraph for any increased costs incurred more than 180 days prior to the date that such Lender notifies the Borrower of the change giving rise to such increased costs and of such Lender's intention to claim compensation therefor; provided, further that, if the change giving rise to such increased costs is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. A certificate as to any additional amounts payable pursuant to this Section submitted by such Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
2.23 Taxes. (a) All payments made by the Borrower under this Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded Taxes" ) are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder or under any Note, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this Section. Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other
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required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United States or a state thereof shall:
(i) deliver to the Borrower and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8 BEN or W-8 ECI, or successor applicable form, as the case may be;
(ii) deliver to the Borrower and the Administrative Agent two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Administrative Agent;
unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrower and the Administrative Agent. Such Lender shall certify that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes. Each Person that shall become a Lender or a Participant pursuant to Section 10.6 shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this Section, provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased.
2.24 Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in making either (i) a borrowing of LIBOR Loans (including without limitation Term Loans) or LIBOR CAF Advances or (ii) a conversion into or continuation of LIBOR Loans, in each case after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement (in the case of a borrowing of LIBOR CAF Advances, so long as the Borrower shall have accepted a CAF Advance offered in connection with any such notice), (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of either (i) a prepayment of LIBOR Loans, LIBOR CAF Advances or Fixed Rate CAF Advances or (ii) a conversion of LIBOR Loans, in each case on a day which is not the last day of an Interest Period with respect thereto. Such indemnification shall constitute an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest
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Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein
(excluding, however, the Applicable Margin included therein, if any) over (ii)
the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
2.25 Commitment Increases. (a) In the event that Borrower wishes to increase the aggregate Commitments, it shall notify the Lenders (through the Administrative Agent) of the amount of such proposed increase (such notice, a "Commitment Increase Offer"). Each Commitment Increase Offer shall offer the Lenders the opportunity to participate in the increased Commitments ratably in accordance with their respective Commitment Percentages. In the event that any Lender (each, a "Declining Lender") shall fail to accept in writing a Commitment Increase Offer within 10 Business Days after receiving notice thereof, all or any portion of the proposed increase in the Commitments offered to the Declining Lenders (the aggregate of such offered amounts, the "Declined Amount") may instead be allocated to any one or more additional banks, financial institutions or other entities pursuant to paragraph (b) below and/or to any one or more existing Lenders pursuant to paragraph (c)(ii) below.
(b) Any additional bank, financial institution or other entity (herein called a "New Lender") which, with the consent of the Borrower and the Administrative Agent, elects to become a party to this Agreement and obtain a Commitment in an amount equal to all or any portion of a Declined Amount shall execute a New Lender Supplement (each, a "New Lender Supplement") with the Borrower and the Administrative Agent, substantially in the form of Exhibit K-1, whereupon such New Lender shall become a Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and Schedule 1.2 shall be deemed to be amended to add the name and Commitment of such New Lender.
(c) Any Lender which (i) accepts a Commitment Increase Offer pursuant to subsection 2.25(a) or (ii) with the consent of the Borrower, elects to increase its Commitment by an amount equal to all or any portion of a Declined Amount shall, in each case, execute a Commitment Increase Supplement (each, a "Commitment Increase Supplement") with the Borrower and the Administrative Agent, substantially in the form of Exhibit K-2, whereupon such Lender shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule 1.2 shall be deemed to be amended to so increase the Commitment of such Lender.
(d) If on the date upon which a bank, financial institution or other entity becomes a New Lender pursuant to subsection 2.25(b) or upon which a Lender's Commitment is increased pursuant to subsection 2.25(c) there is an unpaid principal amount of Revolving Credit Loans, the Borrower shall borrow Revolving Credit Loans from the Lenders and/or (subject to compliance by the Borrower with Section 2.24) prepay Revolving Credit Loans of the Lenders such that, after giving effect thereto, the Revolving Credit Loans (including, without limitation, the Types thereof and Interest Periods with respect thereto) shall be held by the Lenders (including for such purposes the New Lenders) pro rata according to their respective Commitment Percentages.
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(e) Notwithstanding anything to the contrary in this Section, (i) in no event shall any transaction effected pursuant to this Section cause (x) the aggregate Commitments to exceed $2,000,000,000 or (y) an increase in the aggregate Commitments of an amount less than $100,000,000, (ii) the aggregate amount of any increase in Commitments pursuant to subsection 2.25(b) and (c)(ii) shall be limited to the relevant Declined Amount and (iii) no Lender shall have any obligation to increase its Commitment unless it agrees to do so in its sole discretion.
2.26 Commitment Extensions. (a) The Borrower may, not earlier than 60 days and not later than 45 days before the Revolving Credit Termination Date, by notice to the Administrative Agent request that the Revolving Credit Termination Date then in effect (the "Existing Revolving Credit Termination Date") be extended to the date 364 days after the Existing Commitment Termination Date. The Administrative Agent shall promptly notify the Lenders of such request.
(b) Each Lender, in its sole discretion, shall advise the Administrative Agent whether or not such Lender agrees to such extension. If a Lender agrees to renew its Commitment (an "Extending Lender"), it shall notify the Administrative Agent, in writing, of its decision to do so not earlier than 45 days and not later than 30 days prior to the Existing Revolving Credit Termination Date. A Lender that determines not to so extend its Commitment shall so notify the Administrative Agent promptly after making such determination and is herein called a "Non-Extending Lender". If a Lender does not give timely notice to the Administrative Agent of whether or not such Lender agrees to such extension, it shall be deemed to be a Non-Extending Lender.
(c) The Administrative Agent shall notify the Borrower of each Lender's determination not earlier than 30 days and not later than 20 days prior to the Existing Revolving Credit Termination Date.
(d) The Borrower shall have the right to accept Commitments from New Lenders, each of which shall be acceptable to the Administrative Agent, in an aggregate amount equal to the amount of the Commitments of any Non-Extending Lender, provided that the Extending Lenders shall have the right to increase their Commitments up to the aggregate amount of the Non-Extending Lenders' Commitments before the Borrower shall be permitted to substitute any New Lenders for Non-Extending Lenders.
(e) If and only if (i) more than 50% of the total of the Commitments is extended or otherwise committed to by Extending Lenders and any New Lenders, and
(ii) immediately prior to the Existing Revolving Credit Termination Date no Default has occurred and is continuing and the representations and warranties of the Borrower set forth in Section 3 shall be true and correct in all material respects on and as of the Existing Revolving Credit Termination Date as though made on and as of such date, and subject to each New Lender having executed a New Lender Supplement (on the effective date of which such New Lender shall become a Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement), then effective on the Existing Revolving Credit Termination Date the Revolving Credit Termination Date shall be extended to the date 364 days after the Existing Revolving Credit Termination Date (or, if such day is not a Business Day, the immediately preceding Business Day) which date shall thereafter be the Revolving Credit Termination Date, provided that the Commitment of each Non-Extending Lender shall in any event terminate on the Existing Revolving Credit Termination Date and the Borrower shall pay
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in full on the Existing Revolving Credit Termination Date all amounts payable to each Non-Extending Lender hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans, the Borrower and, in the case of Sections 3.3, 3.4, 3.5 and 3.14, each Obligor with respect to itself, hereby represents and warrants to the Administrative Agent and each Lender that:
3.1 Financial Condition. The consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at December 31, 2003 and the related consolidated statements of income and of cash flows for the fiscal year ended on such date, reported on by PricewaterhouseCoopers LLP, copies of which have heretofore been furnished to each Lender, are complete and correct in all material respects and present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. The unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at March 31, 2004 and the related unaudited consolidated statements of income and of cash flows for the three-month period ended on such date, certified by a Responsible Officer, copies of which have heretofore been furnished to each Lender, are complete and correct in all material respects and present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the three-month period then ended (subject to normal year-end audit adjustments). All such financial statements have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). Neither the Borrower nor any of its consolidated Subsidiaries had, at the date of the most recent balance sheet referred to above, any material Guarantee outside the ordinary course of business, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment which in the aggregate may reasonably be expected to have a Material Adverse Effect, including, without limitation, any interest rate or foreign currency swap or exchange transaction (except as listed on Schedule 3.1 attached hereto), which is not reflected in the foregoing statements or in the notes thereto.
3.2 No Change. Since December 31, 2003 there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect.
3.3 Existence; Compliance with Law. Each Obligor and its Subsidiaries (a) is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization (provided, that no representation is made under this clause (a) with respect to any Subsidiary that is neither an Obligor nor a Material Subsidiary of an Obligor if the failure of such Subsidiary to be duly organized, validly existing or in good standing as aforesaid could not reasonably be expected to have a Material Adverse Effect), (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction (other than that of its organization) where its ownership, lease or operation of property or the conduct of its business requires such
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qualification and (d) is in compliance with all Requirements of Law, except in the case of clause (c) or (d) above, to the extent that the failure to qualify as a foreign entity or to be in good standing or to comply with any Requirement of Law could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. Each Obligor has the corporate power and authority, and the legal right, to make, deliver, and perform the Loan Documents to which it is a party and to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of this Agreement and any Notes and to authorize the execution, delivery and performance of the Loan Documents to which it is a party. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Loan Documents to which either Obligor is a party. This Agreement has been, and each other Loan Document to which it is a party will be, duly executed and delivered on behalf of each Obligor. This Agreement constitutes, and each other Loan Document to which it is a party when executed and delivered will constitute, a legal, valid and binding obligation of each Obligor enforceable against such Obligor in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
3.5 No Legal Bar. The execution, delivery and performance of the Loan Documents to which each Obligor is a party, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or Contractual Obligation of such Obligor and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. Except as listed on Schedule 3.6 or as previously disclosed in any public filing made by the Borrower prior to the date hereof, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its Subsidiaries or against any of its or their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries has good record and marketable title in fee simple to, or a valid leasehold interest in, all its real property material to the business of the Borrower and its Subsidiaries, taken as a whole, and good title to, or a valid leasehold interest in, all its other property material to the business of the
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Borrower and its Subsidiaries, taken as a whole, and none of such property is subject to any Lien except as permitted by Section 6.2.
3.9 Intellectual Property. The Borrower and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect (the "Intellectual Property"). No claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does International know of any valid basis for any such claim, except for such claims that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The use of such Intellectual Property by the Borrower and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of Law or Contractual Obligation of the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.
3.11 Taxes. Each of the Borrower and its Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of the Borrower, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, except (a) any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Subsidiaries, as the case may be or (b) to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect; no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge other than any Lien permitted under Section 6.2(a).
3.12 Federal Margin Regulations. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose (whether immediate, incidental or ultimate) of buying or carrying Margin Stock. No part of the proceeds of any Loans will be used directly or indirectly for the purpose (whether immediate, incidental or ultimate) of buying or carrying Margin Stock or for any purpose that violates the provisions of the regulations of the Board. If requested by any Lender or the Administrative Agent, the Borrower will furnish to each Lender and the Administrative Agent a statement in conformity with the requirements of Federal Reserve Form FR U-1 or FR G-3, as appropriate, referred to in Regulation U, to demonstrate the compliance of any borrowing hereunder with Regulation U.
3.13 ERISA. Neither a Reportable Event nor an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Single Employer Plan that could reasonably be expected to have a Material Adverse Effect, and each Plan has complied with the applicable provisions of ERISA and the Code to the extent that the failure to comply could not reasonably be expected to have a Material Adverse Effect. No termination of a Single Employer Plan has occurred (other
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than via a "standard termination" as defined in Section 4041(b) of ERISA), and no Lien in favor of the PBGC or a Single Employer Plan has arisen, during such five-year period that could reasonably be expected to have a Material Adverse Effect. The excess, if any, of the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans), as of the last annual valuation date prior to the date on which this representation is made or deemed made, over the value of the assets of such Plan allocable to such accrued benefits could not reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that could reasonably be expected to have a Material Adverse Effect, and neither the Borrower nor any Commonly Controlled Entity would become subject to any liability under ERISA that could reasonably be expected to have a Material Adverse Effect if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. To the best knowledge of the Borrower, no such Multiemployer Plan is in Reorganization or Insolvent. The excess, if any, of the present value (determined using actuarial and other assumptions which are reasonable in respect of the benefits provided and the employees participating) of the liability of the Borrower for post retirement benefits to be provided to their current and former employees under Plans which are welfare benefit plans (as defined in Section 3(l) of ERISA) over the assets under all such Plans allocable to such benefits could not reasonably be expected to have a Material Adverse Effect.
3.14 Investment Company Act; Other Regulations. Neither of the Obligors is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. Neither of the Obligors is subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Board) which limits its ability to incur Indebtedness.
3.15 Subsidiaries. As of the Closing Date, Schedule 3.15 lists each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein), in each case existing on March 31, 2004.
3.16 Purpose of Loans. The proceeds of the Loans shall be used by the Borrower and its Subsidiaries solely (i) to ensure the integrity of the MasterCard payment system in the event of settlement failure by one or more of its members, including failure by one or more of its members to meet merchant payment obligations, and (ii) to refinance outstanding loans, if any, under the agreement referred to in Section 4.1(i); provided, that up to $300,000,000 of the proceeds of the Loans may, subject to the provisions of Section 4.3, be used for general corporate purposes of the Borrower and its Subsidiaries.
3.17 Environmental Matters. Except to the extent any of the following could not reasonably be expected to have a Material Adverse Effect:
(a) To the best knowledge of the Borrower, the facilities and properties owned, leased or operated by the Borrower or any of its Subsidiaries (the "Properties") do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations which (i) constitute or constituted a violation of, or (ii) could reasonably be expected to give rise to liability under, any Environmental Law.
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(b) The Properties and all operations at the Properties are in compliance in all material respects with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the business operated by the Borrower or any of its Subsidiaries (the "Business") which could materially interfere with the continued operation of the Properties or materially impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the Business, nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened.
(d) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which the Borrower or any Subsidiary is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business.
3.18 Solvency. The Borrower is, and after giving effect to each borrowing hereunder will be, Solvent.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loan. The agreement of each Lender to make the initial Loan requested to be made by it is subject to the satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of each Obligor, with a counterpart for each Lender, and (ii) for the account of the Swing Line Lender, the Swing Line Note conforming to the requirements hereof and for the account of any Lender that requested a Revolving Credit Note, such Revolving Credit Note, conforming to the requirements hereof, each executed by a duly authorized officer of the Borrower.
(b) Related Agreements. The Administrative Agent shall have received, with a copy for each Lender, true and correct copies, certified as to authenticity by the Borrower, of such other documents or instruments as may be reasonably requested by the Administrative Agent on or prior to the Closing Date, including, without limitation, a copy of any debt instrument, security agreement or other material contract to which the Borrower or its Subsidiaries may be a party.
(c) Closing Certificate. The Administrative Agent shall have received, with a copy for each Lender, a closing certificate of each Obligor, dated the Closing Date, substantially in the form of Exhibit I, with appropriate insertions and attachments, satisfactory in form and substance to the Administrative Agent, executed by the President or his designee or any Vice President and the Secretary or any Assistant Secretary of each Obligor.
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(d) Corporate Proceedings. The Administrative Agent shall have received, with a copy for each Lender, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of each Obligor authorizing, subject to Section 4.3, (i) the execution, delivery and performance by such Obligor of this Agreement and the other Loan Documents to which it is a party and (ii) in the case of the Borrower, the making of the borrowings contemplated hereunder and, in the case of International, the guarantee thereof as provided herein, certified by its Secretary or an Assistant Secretary as of the Closing Date, which certificate shall be in form and substance satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded.
(e) Incumbency Certificate. The Administrative Agent shall have received, with a copy for each Lender, a certificate of each Obligor, dated the Closing Date, as to the incumbency and signature of its officers executing any Loan Document, satisfactory in form and substance to the Administrative Agent, executed by its President or any Vice President and its Secretary or any Assistant Secretary.
(f) Corporate Documents. The Administrative Agent shall have received, with a copy for each Lender, true and complete copies of the certificate of incorporation and by-laws of each Obligor, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of such Obligor.
(g) Fees. The Administrative Agent shall have received the fees to be received on the Closing Date.
(h) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Lender, (i) the executed legal opinion of Noah J. Hanft, General Counsel and Secretary of the Borrower and International, substantially in the form of Exhibit F-1, and (ii) the executed legal opinion of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to the Administrative Agent, substantially in the form of Exhibit F-2, each dated the Closing Date and covering such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.
(i) Existing Agreement. The Administrative Agent shall have received evidence satisfactory to it that the commitments under the existing $1,200,000,000 Credit Agreement, dated as of June 20, 2003 among the Borrower, International, certain financial institutions, Citibank, N.A. as Administrative Agent and JPMorgan Chase Bank, as Backup Agent (the "Existing Credit Agreement"), shall have been canceled and all amounts outstanding thereunder shall have been repaid as of the Closing Date (and each Lender which is a party to the Existing Credit Agreement hereby waives compliance with the requirement under Section 2.6 of the Existing Credit Agreement for the giving of five Business Days' prior written notice for termination of the commitments thereunder).
4.2 Conditions to Each Loan. The agreement of each Lender to make any Loan requested to be made by it on any date (including, without limitation, its initial Loan and its Term Loan) is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and warranties made by the Obligors in or pursuant to this Agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date (immediately before and immediately after
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giving effect to such Loan and to the application of the proceeds therefrom) except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties were true and correct as of such earlier date.
(b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loans requested to be made on such date.
Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date thereof that the conditions contained in this Section have been satisfied.
4.3 Conditions to Use for Certain Purposes. The entitlement of the Borrower to use the proceeds of Loans for use for general corporate purposes of the Borrower and its Subsidiaries, as set forth in Section 3.16, is subject to the satisfaction of the following conditions precedent:
(a) Corporate Proceedings. The Administrative Agent shall have received, with a copy for each Lender, a certificate of the Borrower and International, confirming that the making of borrowings hereunder for the general corporate purposes of the Borrower and its Subsidiaries and, in the case of International, the guarantee of Loans made for such purposes have been duly authorized by all necessary corporate action, and attaching a true copy of the resolutions of the Borrower and International containing such authorizations, which certificate and resolutions shall be in form and substance satisfactory to the Administrative Agent; and
(b) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Lender, the executed legal opinion of the General Counsel and Secretary of the Borrower and International, to the effect that borrowings for said general corporate purposes and the guarantee thereof under this Agreement have been duly authorized by all necessary corporate action, which legal opinion shall be in form and substance satisfactory to the Administrative Agent.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in effect or any amount is owing to any Lender or the Administrative Agent hereunder or under any other Loan Document, the Borrower shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to:
5.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 120 days after the end of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 60 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated
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balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings of such quarter and of cash flows of the Borrower and its consolidated Subsidiaries for the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year or, in the case of such consolidated balance sheet, for the last day of the prior fiscal year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). Information required to be delivered pursuant to this
Section 5.1 shall be deemed to have been delivered to the Lenders on the date on which the Borrower provides written notice to the Lenders that such information has been posted on the Borrower's website on the Internet at http://www.mastercardintl.com or is available on the website of the Securities and Exchange Commission or any successor at http://www.sec.gov (to the extent such information has been posted or is available as described in such notice).
5.2 Certificates; Other Information. Furnish to the Administrative Agent:
(a) concurrently with the delivery of the financial statements referred to in subsection 5.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any failure by the Borrower to comply with Section 6.1, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred to in subsections 5.1(a) and (b), a certificate of a Responsible Officer, substantially in the form of Exhibit J, stating that, to the best of such Responsible Officer's knowledge, during such period the Borrower has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate;
(c) within five days after the same are sent, copies of all financial statements and reports which the Borrower sends to shareholders generally, and within five days after the same are filed, copies of all financial statements and reports which the Borrower may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; provided, that any such financial statement or report shall be deemed to have been delivered on the date that the Borrower notifies the Administrative Agent that such financial statement or report is available on "EDGAR", the Electronic Data Gathering, Analysis and Retrieval system of the Securities and Exchange Commission, or "http://www.sec.gov/edgar.shtml"); and
(d) promptly, such additional financial and other information (other than any non-public information or materials pertaining to the Borrower's proprietary new products, systems or services, proprietary marketing programs, strategies or plans, or any member specific billing, contractual or other arrangements) as the Administrative Agent or any Lender through the Administrative Agent may from time to time reasonably request.
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5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except (i) where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be or (ii) to the extent that failure to comply therewith could not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
5.4 Conduct of Business and Maintenance of Existence. Continue to engage in business of the same general type as now conducted by it and preserve, renew and keep in full force and effect its existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except as otherwise permitted pursuant to
Section 6.3 or 6.9 unless the failure to do so could not reasonably be expected to have a Material Adverse Effect; and comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance. Keep all property material to the business of the Borrower and its Subsidiaries taken as a whole in good working order and condition ordinary wear and tear excepted; maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks as are, to the Borrower's knowledge, usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to each Lender, upon written request, full information as to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. Keep proper books of records and account in which full, true and correct entries in conformity with GAAP (or such other commonly accepted accounting practice which has been previously disclosed to the Administrative Agent) and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of any Lender (coordinated through the Administrative Agent) to, upon reasonable notice, visit and inspect any of its properties (not more than one time in any fiscal year) and examine and make abstracts from any of its books and records (other than any non-public information or materials pertaining to (i) its proprietary new products, systems or services, (ii) its proprietary marketing programs, strategies or plans, or
(iii) any member specific billing, contractual or other arrangements) at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants; provided that if a Default or Event of Default shall have occurred and be continuing, such visits and inspections (coordinated through the Administrative Agent) may be conducted at any time upon reasonable notice.
5.7 Notices. Promptly give notice to the Administrative Agent for distribution to the Lenders of:
(a) the occurrence of any Default or Event of Default;
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(b) if the Borrower ceases to be a public reporting company under the Securities Exchange Act of 1934, as amended, any (i) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or
(ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, which in either case, could reasonably be expected to have a Material Adverse Effect;
(c) if the Borrower ceases to be a public reporting company under the Securities Exchange Act of 1934, as amended, any litigation or proceeding affecting the Borrower or any of its Subsidiaries as to which the Borrower determines that there is a reasonable probability of an adverse judgment and in which the amount involved is $50,000,000 or more and not covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within 30 days after the Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to any "pension plan" (as defined in Section 3(2) of ERISA), the creation of any Lien in favor of the PBGC or a Plan, in each case that could reasonably be expected to result in a liability or Lien in excess of $10,000,000 or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Multiemployer Plan, except where the termination, Reorganization or Insolvency of any Multiemployer Plan could not reasonably be expected to result in a liability in excess of $10,000,000; and
(e) any material adverse change in the business, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole.
Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto. Notices and other communications to the Lenders required pursuant to paragraphs
(b), (c), (d) and (e) of this Section 5.7 may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent.
5.8 Environmental Laws. (a) Comply with, and ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws except to the extent that failure to do so could not be reasonably expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
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SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in effect or any amount is owing to any Lender or the Administrative Agent hereunder or under any other Loan Document, the Borrower shall not and shall not permit any of its Subsidiaries to, directly or indirectly:
6.1 Maintenance of Net Worth. Permit Consolidated Net Worth of the Borrower at any time to be less than the sum of (i) $525,000,000 plus (ii) an amount equal to 50% of the sum of Consolidated Net Income (if positive) of the Borrower for each fiscal quarter commencing with and including the first fiscal quarter of 2004.
6.2 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar encumbrances which, in the aggregate, do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
(f) Liens in existence on the date hereof listed on Schedule 6.2(f), provided that no such Lien is spread to cover any additional property after the Closing Date and that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries incurred to finance the acquisition of fixed or capital assets, provided that
(i) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets and (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness;
(h) bankers' liens arising by operation of law;
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(i) Liens on the property or assets of a corporation which becomes a Subsidiary on or after the date hereof securing Indebtedness of such corporation, provided that (i) such Liens existed at the time such corporation became a Subsidiary and were not created in anticipation thereof and (ii) any such Lien is not spread to cover any property or assets of such corporation after the time such corporation becomes a Subsidiary;
(j) Liens arising out of judgments or awards (x) which are bonded or (y) with respect to which an appeal or a proceeding for review is being prosecuted in good faith and adequate reserves have been provided for the payment of such judgment or award;
(k) Liens in favor of the Borrower which secure the obligation of any Subsidiary to the Borrower; and
(1) Liens (not otherwise permitted hereunder) which secure obligations not exceeding (as to the Borrower and all Subsidiaries) $20,000,000 in aggregate amount at any time outstanding.
6.3 Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, or make any material change in its present method of conducting business (taking the Borrower and its Subsidiaries as a whole), except:
(a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower or International (provided that the Borrower or International, as the case may be, shall be the continuing or surviving corporation) or with or into any one or more wholly owned Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or Subsidiaries shall be the continuing or surviving corporation);
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or International or any other wholly owned Subsidiary of the Borrower, subject, however, to the limitations set forth in Sections 6.4(c) and 6.6 below; and
(c) as permitted by Section 6.4 or Section 6.6 (including any Investment consisting of an acquisition or disposition of assets, in each case by way of merger, that is otherwise permitted under Section 6.4 or Section 6.6).
6.4 Limitation on Transfer or Disposition of Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any Person other than the Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in the ordinary course of business;
(b) the sale of Cash Equivalents in the ordinary course of business in connection with cash management activities or the use of proceeds thereof;
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(c) the sale or other disposition of any property; provided that (i) the aggregate book value of all assets so sold or disposed of pursuant to this clause (b) in any period of twelve consecutive months shall not exceed an amount equal to 20% of consolidated total assets of the Borrower and its Subsidiaries as at the beginning of such twelve-month period; and (ii) the aggregate book value of all assets so sold or disposed of pursuant to this clause (b) to Subsidiaries of the Borrower that are not also Subsidiaries of International by the Borrower and its Subsidiaries (other than by Subsidiaries of the Borrower that are not also Subsidiaries of International) during any period of twelve consecutive calendar months commencing with and including May, 2004 shall not exceed an amount equal to 30% of consolidated total assets of International and its Subsidiaries as at the beginning of such twelve-month period;
(d) the sale or disposition of the headquarters of the Borrower located at 2000 Purchase Street, Purchase, New York 10577-2509;
(e) the sale of inventory in the ordinary course of business;
(f) the sale or discount without recourse of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof; and
(g) as permitted by subsection 6.3(b).
6.5 Limitation on Dividends. Declare or pay dividends exceeding 40% of Consolidated Net Income in any fiscal year (other than dividends payable solely in common stock of the Borrower) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of the Borrower or any warrants or options to purchase any such Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary. The provisions hereunder shall in no way limit the ability of any Subsidiary to make dividend payments to the Borrower or any other shareholder of such Subsidiary.
6.6 Limitation on Investments. Make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person (collectively, "Investments"), except Permitted Investments.
6.7 Limitation on Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate (other than any transaction permitted by the terms of this Agreement and any transaction between the Borrower and its consolidated Subsidiaries) unless such transaction is upon fair and reasonable terms.
6.8 Limitation on Changes in Fiscal Year. Permit the fiscal year of the Borrower to end on a day other than December 31; provided that the Borrower may change its fiscal year with the consent of the Administrative Agent, which consent shall not unreasonably be withheld.
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6.9 Limitation on Lines of Business. Enter into any business, either directly or through any Subsidiary, except for businesses (a) in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or (b) which, after giving effect to such new business, would not result in a change in the primary business of the Borrower and its Subsidiaries, taken as a whole, on the date hereof.
6.10 Upstreaming. Permit any of its Domestic Subsidiaries to enter into, create or assume or suffer to exist any indenture, agreement or other contractual arrangement that prohibits any such Subsidiary from declaring or paying dividends or other distributions on any class of stock or membership interest of such Subsidiary other than restrictions existing on the date of this Agreement contained in agreements or arrangements listed on Schedule 6.10 or otherwise disclosed to the Lenders prior to such date (including restrictions in any amendment or replacement of any such agreements or arrangements), and restrictions in future agreements or arrangements substantially similar to such restrictions, it being agreed that customary financial covenants and other agreements affecting maintenance or retention of assets or capital by a Subsidiary shall not be deemed to be restrictions limited by this Section 6.10.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by either Obligor herein or in any other Loan Document or which is contained in any certificate furnished by it at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of any agreement contained in Section 6; or
(d) Either Obligor shall default in the observance or performance of any other term, covenant or agreement contained in this Agreement (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice to the Borrower by the Administrative Agent or the Required Lenders; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any payment of principal of or interest of any Indebtedness (other than the Loans) in excess of $10,000,000 individually or $25,000,000 in the aggregate, beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness was created, or (ii) fail to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which failure or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness to
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become due prior to its stated maturity (provided that failure to observe or perform any such agreement or condition referred to in this clause (ii) shall not be deemed to be an Event of Default until the grace period provided for in such instrument or agreement with respect to such agreement or condition has elapsed or, if no grace period is specified, such failure has continued for five Business Days); or
(f) (i) The Borrower or any of its Material Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Material Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Material Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 90 days; or (iii) there shall be commenced against the Borrower or any of its Material Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any of its Material Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Material Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Single Employer Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of any Obligor, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) any Obligor or any Commonly Controlled Entity shall incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving a liability (to the extent not paid or fully covered by insurance) of $10,000,000 or more in the case of any one such judgment or $25,000,000 or more in the aggregate for all such judgments and decrees, and all such judgments or decrees shall not have been vacated, discharged, satisfied, stayed or bonded pending appeal within 90 days from the entry thereof; or
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(i) Any Person or "group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) (i) shall have acquired beneficial ownership of 20% or more of any outstanding class of Capital Stock having ordinary voting power in the election of directors of the Borrower or
(ii) shall obtain the power (whether or not exercised) to elect a majority of the Borrower's directors; or the Borrower shall cease to own, beneficially and of record, the sole Class B membership interest in International or shall cease to have power to elect a majority of International's directors;
then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of this Section with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the Notes shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the Notes to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.
8.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this
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Agreement or any other Loan Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by either Obligor or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of either Obligor to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of either Obligor or any of its Subsidiaries.
8.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to either Obligor), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or such other Lenders as may be required hereunder) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or such other Lenders as may be required hereunder), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.
8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default (other than an Event of Default consisting of failure of the Borrower to pay when due any principal of or interest on a Loan) hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it
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and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Obligors and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under the Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Obligors or any of their Subsidiaries. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of either Obligor or any of their Subsidiaries which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Administrative Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of, the Commitments, this Agreement, (including, without limitation, enforcement of the Administrative Agent's rights under this Section) any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.
8.8 Administrative Agent in Its Individual Capacity. The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Obligors as though the Administrative Agent were not the Administrative Agent hereunder and under the other Loan Documents. With respect to the Loans made by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity.
8.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 10 days' notice to the Lenders, and the Administrative Agent may be
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removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent (provided that it shall have been approved by the Borrower (such approval not to be unreasonably withheld)), shall succeed to the rights, powers and duties of the Administrative Agent hereunder. Effective upon such appointment and approval, the term "Administrative Agent" shall mean such successor agent, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. After any retiring Administrative Agent's resignation or removal as Administrative Agent, the provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.
8.10 Substitute Administrative Agent. If at any time Citibank or the Borrower reasonably determines that Citibank is prevented from carrying out its functions as Administrative Agent hereunder as contemplated hereby, Citibank or the Borrower, as the case may be, shall forthwith so notify the Borrower or Citibank, as the case may be, and the Backup Agent (and Citibank shall promptly so notify the Lenders), and the Backup Agent shall thereupon automatically assume and perform all of the functions of the Administrative Agent and shall be entitled to all of the rights and benefits of the Administrative Agent hereunder, until and only until such time as Citibank and the Borrower determine, and notify the Backup Agent (which shall promptly notify the Lenders) that Citibank is no longer prevented from carrying out its functions as Administrative Agent hereunder as contemplated hereby, whereupon Citibank shall automatically resume and perform all of the functions of the Administrative Agent hereunder. Each Lender agrees to the foregoing and authorizes the Backup Agent to assume and perform the functions of the Administrative Agent under the circumstances set forth above.
8.11 Arrangers, Etc. The parties designated on the cover page hereof as "Sole Lead Arranger and Sole Book Manager", "Co-Arranger" and "Co-Syndication Agents" shall have, in their capacities as such, no responsibilities or liabilities under or in connection with this Agreement.
SECTION 9. GUARANTEE
The Guarantor agrees, to induce the other parties to enter into this Agreement and for other valuable consideration, receipt of which is hereby acknowledged as follows:
(a) Guarantee. The Guarantor hereby guarantees to the Lenders and the Administrative Agent the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of and interest on the Loans and the Notes and all other amounts whatsoever now or hereafter payable or becoming payable by the Borrower under the Loan Documents, in each case strictly in accordance with the terms thereof (collectively, the "Guaranteed Obligations"). The Guarantor hereby further agrees that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantor will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of
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the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. This subsection 9(a) is a continuing guaranty and is a guaranty of payment and is not merely a guaranty of collection and shall apply to all Guaranteed Obligations whenever arising.
(b) Acknowledgments, Waivers and Consents. The Guarantor agrees that its obligations under clause (a) above shall, to the fullest extent permitted by applicable law, be primary, absolute, irrevocable and unconditional under any and all circumstances and that the guaranty therein is made with respect to any Guaranteed Obligations now existing or in the future arising. Without limiting the foregoing, the Guarantor agrees that:
(i) The occurrence of any one or more of the following shall not affect the enforceability or effectiveness of this Section 9 in accordance with its terms or affect, limit, reduce, discharge or terminate the liability of the Guarantor, or the rights, remedies, powers and privileges of the Administrative Agent or any Lender, under this subection 9(b):
(A) any modification or amendment (including without limitation by way of amendment, extension, renewal or waiver), or any acceleration or other change in the time for payment or performance of the terms of all or any part of the Guaranteed Obligations or any Loan Document, or any other agreement or instrument whatsoever relating thereto, or any modification of the Commitments;
(B) any release, termination, waiver, abandonment, lapse or expiration, subordination or enforcement of the liability of any other guarantee of all or any part of the Guaranteed Obligations;
(C) any application of the proceeds of any other guarantee (including without limitation the obligations of any other guarantor of all or any part of the Guaranteed Obligations) to all or any part of the Guaranteed Obligations in any such manner and to such extent as the Administrative Agent may determine;
(D) any release of any other Person (including without limitation any other guarantor with respect to all or any part of the Guaranteed Obligations) from any personal liability with respect to all or any part of the Guaranteed Obligations;
(E) any settlement, compromise, release, liquidation or enforcement, upon such terms and in such manner as the Administrative Agent may determine or as applicable law may dictate, of all or any part of the Guaranteed Obligations or any other guarantee of (including without limitation any letter of credit issued with respect to) all or any part of the Guaranteed Obligations;
(F) the giving of any consent to the merger or consolidation of, the sale of substantial assets by, or other restructuring or termination of the corporate existence of the Borrower or any other Person or any disposition of any shares of the Guarantor;
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(G) any proceeding against the Borrower or any other guarantor of all or any part of the Guaranteed Obligations or any collateral provided by any other Person or the exercise of any rights, remedies, powers and privileges of the Administrative Agent and the Lenders under the Loan Documents or otherwise in such order and such manner as the Administrative Agent may determine, regardless of whether the Administrative Agent or the Lenders shall have proceeded against or exhausted any collateral, right, remedy, power or privilege before proceeding to call upon or otherwise enforce this
Section 9;
(H) the entering into such other transactions or business dealings with the Borrower, any Subsidiary or Affiliate of the Borrower or any other guarantor of all or any part of the Guaranteed Obligations as the Administrative Agent or any Lender may desire; or
(I) all or any combination of any of the actions set forth in this subsection 9(b)(i).
(ii) The enforceability and effectiveness of this Section 9 and the liability of the Guarantor, and the rights, remedies, powers and privileges of the Administrative Agent and the Lenders under this Section 9 shall not be affected, limited, reduced, discharged or terminated, and the Guarantor hereby expressly waives to the fullest extent permitted by law any defense now or in the future arising, by reason of:
(A) the illegality, invalidity or unenforceability of all or any part of the Guaranteed Obligations, any Loan Document or any other agreement or instrument whatsoever relating to all or any part of the Guaranteed Obligations;
(B) any disability or other defense with respect to all or any part of the Guaranteed Obligations, including the effect of any statute of limitations that may bar the enforcement of all or any part of the Guaranteed Obligations or the obligations of any such other guarantor;
(C) the illegality, invalidity or unenforceability of any security for or other guarantee (including without limitation any letter of credit) of all or any part of the Guaranteed Obligations or the lack of perfection or continuing perfection or failure of the priority of any Lien on any collateral for all or any part of the Guaranteed Obligations;
(D) the cessation, for any cause whatsoever, of the liability of the Borrower or any other guarantor with respect to all or any part of the Guaranteed Obligations (other than, subject to subsection 9(c), by reason of the full payment of all Guaranteed Obligations);
(E) any failure of the Administrative Agent or any Lender to marshal assets in favor of the Borrower or any other Person (including any other guarantor of all or any part of the Guaranteed Obligations), to exhaust any collateral for all or any part of the Guaranteed Obligations, to pursue or exhaust any right, remedy, power or privilege it may have against the Borrower or any other guarantor of all or any part of the Guaranteed Obligations or any other Person or to take any
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action whatsoever to mitigate or reduce such or any other Person's liability, the Administrative Agent and the Lenders being under no obligation to take any such action notwithstanding the fact that all or any part of the Guaranteed Obligations may be due and payable and that the Borrower may be in default of its obligations under any Loan Document;
(F) any counterclaim, set-off or other claim which the Borrower or any other guarantor of all or any part of the Guaranteed Obligations has or claims with respect to all or any part of the Guaranteed Obligations;
(G) any failure of the Administrative Agent or any Lender or any other Person to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person;
(H) any bankruptcy, insolvency, reorganization, winding-up or adjustment of debts, or appointment of a custodian, liquidator or the like of it, or similar proceedings commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or any part of the Guaranteed Obligations (or any interest on all or any part of the Guaranteed Obligations) in or as a result of any such proceeding;
(I) any action taken by the Administrative Agent or any Lender that is authorized by this subsection 9(b) or otherwise in this
Section 9 or by any other provision of any Loan Document or any omission to take any such action; or
(J) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.
(iii) To the fullest extent permitted by law, the Guarantor expressly waives, for the benefit of the Administrative Agent and the Lenders, all diligence, presentment, demand for payment or performance, notices of nonpayment or nonperformance, protest, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever, and any requirement that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against the Borrower under any Loan Document or other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations, and all notices of acceptance of this Section 9 or of the existence, creation, incurring or assumption of new or additional Guaranteed Obligations.
(c) Reinstatement. The obligations of the Guarantor under this Section 9 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower in respect of the Guaranteed Obligations is rescinded or must otherwise be restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.
(d) Subrogation. The Guarantor hereby agrees that, until the final payment in full of all Guaranteed Obligations and the expiration or termination of the Commitments under this Agreement, it shall not exercise any right or remedy arising by reason of any performance by it of its guarantee in subsection 9(a), whether by subrogation, reimbursement, contribution or
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otherwise, against the Borrower or any other guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations.
(e) Remedies. The Guarantor agrees that, as between the Guarantor and the Administrative Agent and the Lenders, the obligations of the Borrower under this Agreement, the Notes or any other Loan Documents may be declared to be forthwith due and payable as provided in Section 7 (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 7) for purposes of subsection 9(a), notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by such Guarantor for purposes of said subsection 9(a).
(f) Payments. All payments by the Guarantor under this Section 9 shall be made in Dollars, without deduction, set-off or counterclaim at the place specified in Section 2.19 and free and clear of any and all present and future Non-Excluded Taxes.
(g) Solvency. The Guarantor represents and warrants to the Administrative Agent and the Lenders that after giving effect to each borrowing hereunder it will be Solvent.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section. The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from time to time, (a) enter into with the Borrower and the Guarantor written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower or the Guarantor hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) reduce the amount or extend the scheduled date of maturity of any Loan (provided, that for the purposes of this clause (i) the making of the Term Loans shall not be considered an extension of the scheduled date of maturity), or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Lender's Commitment, in each case without the written consent of each Lender affected thereby, or (ii) amend, modify or waive any provision of this Section or subsection 10.6(a) or reduce the percentage specified in the definition of Required Lenders, or consent to the assignment or transfer by any Obligor of any of its rights and obligations under this Agreement and the other Loan Documents, in each case without the written consent of all the Lenders, or (iii) release the obligations of the Guarantor under subsection 9(a) without the written consent of all the Lenders, or (iv) amend, modify or waive any provision of
Section 8 without the written consent of the then Administrative Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon
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the Borrower, the Guarantor, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, the Borrower, the Guarantor, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.
10.2 Notices. (a) All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (i) in the case of delivery by hand, when delivered, (ii) in the case of delivery by mail, three Business Days after being deposited in the mails, certified or registered postage prepaid, or (iii) in the case of delivery by facsimile transmission, when sent and receipt has been confirmed, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth in an Administrative Questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

Borrower:             MasterCard Incorporated
                      2000 Purchase Street
                      Purchase, New York 10577-2509
                      Attention: Andrea Robertson, Senior Vice President,
                         Treasurer
                      Fax: 914-249-4205
                      Telephone: 914-249-5994

Guarantor:            MasterCard International Incorporated
                      2000 Purchase Street
                      Purchase, New York 10577-2509
                      Attention: Andrea Robertson, Senior Vice President,
                         Treasurer
                      Fax: 914-249-4205
                      Telephone: 914-249-5994

The Administrative
Agent or the
Swing Line Lender:    Citibank, N.A.
                      2 Penns Way, Suite 200
                      New Castle, Delaware  19720
                      Attention: Lisa Rodriguez
                      Fax: 212-994-0961
                      Telephone: 302-894-6070	

provided that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to Section 2.2, 2.4, 2.6, 2.8, 2.9, 2.11, 2.19 or 2.20 shall not be effective until received.
(b) Each Obligor hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but
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excluding any such communication that (i) requests, or converts or continues under Section 2.9 hereof, a borrowing or relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor,
(ii) provides notice of any Default or Event of Default under this Agreement,
(iii) is required to be delivered to satisfy any condition precedent to the occurrence of the Closing Date and/or any borrowing, or (iv) initiates or responds to legal process (all such non-excluded communications being referred to herein collectively as "Communications"), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to oploanswebadmin@citigroup.com. In addition, each Obligor agrees to continue to provide the Communications to the Administrative Agent in the manner specified in the Loan Documents but only to the extent requested by the Administrative Agent.
(c) Each Obligor further agrees that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on Intralinks or a substantially similar electronic transmission system (the "Platform"). THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE". THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE "AGENT PARTIES") HAVE ANY LIABILITY TO ANY OBLIGOR, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF SUCH OBLIGOR'S OR THE ADMINISTRATIVE AGENT'S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(d) The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to provide to the Administrative Agent in writing (including by electronic communication), promptly after the date of this Agreement, an e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.
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(e) Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the Administrative Agent for all reasonable fees, charges and disbursements of counsel incurred in connection with this Agreement and the other Loan Documents or the amendment, modification or waiver thereof and all reasonable and documented out-of-pocket expenses of the Administrative Agent incurred in connection with any amendment, modification or waiver with respect to this Agreement and the other Loan Documents, (b) to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement (including, without limitation, this Section), the other Loan Documents and any such other documents, including, without limitation, the reasonable fees and disbursements of counsel (including, without limitation, the non-duplicative documented allocated cost of in-house counsel) to each Lender and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold harmless each Lender, the Administrative Agent, their respective affiliates and their respective officers, directors, employees, agents and advisors (each, an "Indemnitee") from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold harmless each Indemnitee from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, reasonable legal fees) with respect to the execution, delivery, enforcement, performance and administration of this Agreement (including, without limitation, this Section), the other Loan Documents and any such other documents, including, without limitation, any investigative, administrative or judicial proceeding relating to the foregoing or any of the foregoing relating to any actual or proposed use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of either Obligor, any of their Subsidiaries or any of the Properties or arising out of the Commitments (all the foregoing in this clause (d), collectively, the "indemnified liabilities"), provided that the Borrower shall have no obligation hereunder to any Indemnitee with respect to indemnified liabilities arising from the gross negligence or willful misconduct of such Indemnitee. The Borrower waives, to the
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maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages. The agreements in this Section shall survive repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither Obligor may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender, any Commitment or Swing Line Commitment of such Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other Loan Documents, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents. No Lender shall be entitled to create in favor of any Participant, in the participation agreement pursuant to which such Participants participating interest shall be created or otherwise, any right to vote on, consent to or approve any matter relating to this Agreement or any other Loan Document except for those specified in clauses (i), (ii) and (iii) of the proviso to Section 10.1. The Borrower agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement, provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in subsection 10.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.19, 2.20, 2.22 and 2.23 with respect to its participation in the Commitments, Swing Line Commitments and the Loans outstanding from time to time as if it was a Lender; provided that, in the case of Section 2.23, such Participant shall have complied with the requirements of said Section and provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such Section than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred.
(c) Subject to the provisions of subsection 10.6(d) relating to the assignment of CAF Advances, any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time and from time to time assign to one or more banks or other financial institutions, including a finance company or fund (whether a corporation, partnership or other entity) which is engaged in making, purchasing or otherwise investing in
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59
commercial loans in the ordinary course of its business, and having total assets in excess of $500,000,000, (such bank or financial institution, an "Assignee") all or any part of its rights and obligations under this Agreement and the other Loan Documents; provided, however, that
(i) except in the case of an assignment (A) to a Lender or subject to giving prior written notice thereof to the Borrower and the Administrative Agent, an Affiliate of a Lender which is a bank or financial institution or (B) of CAF Advances, each of the Administrative Agent and (except when a Default or Event of Default shall have occurred and be continuing) the Borrower must give its consent to such assignment (which in each case shall not be unreasonably withheld or delayed);
(ii) the Swing Line Lender may not transfer any portion of the Swing Line Commitment without the consent of the Borrower (such consent not to be unreasonably withheld or delayed);
(iii) in the case of any assignment to any Assignee that is not a Lender or an Affiliate thereof, the sum of the aggregate principal amount of the Loans and the aggregate amount of the Commitments and Swing Line Commitments being assigned and, if such assignment is of less than all of the rights and obligations of the assigning Lender, the sum of the aggregate principal amount of the Loans and the aggregate amount of the Commitments and Swing Line Commitments remaining with the assigning Lender are each not less than $5,000,000 (or such lesser amount as may be agreed to by the Borrower and the Administrative Agent); and
(iv) such assignment shall be evidenced by an Assignment and Acceptance, substantially in the form of Exhibit H, executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Lender or an Affiliate thereof, by the Borrower and the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register.
Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment or Swing Line Commitment as set forth therein, and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement such assigning Lender shall cease to be a party hereto). Notwithstanding any provision of this paragraph (c) and paragraph (f) of this Section, the consent of the Borrower shall not be required, and, unless requested by the Assignee and/or the assigning Lender, new Notes shall not be required to be executed and delivered by the Borrower, for any assignment which occurs at any time when any of the events described in Section 7(f) shall have occurred and be continuing.
(d) Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time and from time to time assign to one or more banks, financial institutions or other entities ("CAF Advance Assignees") any CAF Advance owing to such Lender, pursuant to a CAF Advance Assignment, substantially in the form of Exhibit D-4 attached hereto, executed by the assignor Lender and the CAF Advance Assignee. Upon such
CREDIT AGREEMENT
60
execution, from and after the date of such CAF Advance Assignment, the CAF Advance Assignee shall, to the extent of the assignment provided for in such CAF Advance Assignment, be deemed to have the same rights and benefits of payment and enforcement with respect to such CAF Advance and the same rights of set-off and obligation to share pursuant to Section 10.7 as it would have had if it were a Lender hereunder; provided that unless such CAF Advance Assignment shall otherwise specify and a copy of such CAF Advance Assignment shall have been delivered to the Administrative Agent for its acceptance and recording in the Register in accordance with subsection 10.6(e), the assignor thereunder shall act as collection agent for the CAF Advance Assignee thereunder, and the Administrative Agent shall pay all amounts received from the Borrower which are allocable to the assigned CAF Advance directly to such assignor without any further liability to such CAF Advance Assignee. A CAF Advance Assignee under a CAF Advance Assignment shall not, by virtue of such CAF Advance Assignment, become a party to this Agreement or have any rights to consent to or refrain from consenting to any amendment, waiver or other modification of any provision of this Agreement or any related document; provided that (x) the assignor under such CAF Advance Assignment and such CAF Advance Assignee may, in their discretion, agree between themselves upon the manner in which such assignor will exercise its rights under this Agreement and any related document except no Lender shall sell any CAF Advance pursuant to which the CAF Advance Assignee shall have rights to approve any amendment or waiver to this Agreement except to the extent such amendment or waiver would (i) reduce the principal amount of any CAF Advance which has been assigned to such CAF Advance Assignee, (ii) reduce the rate of interest on any such CAF Advance or any fees payable in connection with such CAF Advance or (iii) extend the time of payment of principal or, or interest on, any such CAF Advance or any other amount owing under this Agreement and in connection with such CAF Advance, and (y) if a copy of such CAF Advance Assignment shall have been delivered to the Administrative Agent for its acceptance and recording in the Register in accordance with subsection 10.6(e), neither the principal amount of, the interest rate on, nor the maturity date of, any CAF Advance assigned to such CAF Advance Assignee thereunder will be modified without the written consent of such CAF Advance Assignee. If a CAF Advance Assignee has caused a CAF Advance Assignment to be recorded in the Register in accordance with subsection 10.6(e), such CAF Advance Assignee may thereafter, in the ordinary course of its business and in accordance with applicable law, assign the CAF Advance assigned to it to any Lender, to any affiliate or subsidiary of such CAF Advance Assignee or to any other financial institution with the consent of the Borrower (which shall not be unreasonably withheld), and the foregoing provisions of this paragraph (c) shall apply, mutatis mutandis, to any such assignment by a CAF Advance Assignee. Except in accordance with the preceding sentence, CAF Advances may not be further assigned by a CAF Advance Assignee, subject to any legal or regulatory requirement that the CAF Advance Assignee's assets must remain under its control.
(e) The Administrative Agent, on behalf of the Borrower, shall maintain at the address of the Administrative Agent referred to in Section 10.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may (and, in the case of any Loan or other obligation hereunder not evidenced by a Note, shall) treat each Person whose name is recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Loan Documents, notwithstanding any
CREDIT AGREEMENT
61
notice to the contrary. Any assignment of any Loan or other obligation hereunder not evidenced by a Note shall be effective only upon appropriate entries with respect thereto being made in the Register. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Borrower and the Administrative Agent) together with payment to the Administrative Agent of a registration and processing fee of $3,500 and (if the Assignee is not a Lender) delivery to the Administrative Agent of such Assignee's Administrative Questionnaire, the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower.
(g) The Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee any and all financial information in such Lender's possession concerning the Borrower and its Subsidiaries and Affiliates which has been delivered to such Lender by or on behalf of the Borrower or any of its Subsidiaries pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower or any of its Subsidiaries in connection with such Lender's credit evaluation of the Borrower and its Subsidiaries and Affiliates prior to becoming a party to this Agreement.
(h) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this Section concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender") shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loan, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to either Obligor, any such notice being expressly waived by each of them to the extent permitted by applicable law, upon any amount becoming due and payable by either Obligor hereunder (whether at stated maturity, by acceleration or otherwise) to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or
CREDIT AGREEMENT
62
contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of such Obligor; provided that no such set-off and application may be made against deposits in the accounts listed on Schedule 10.7(b) attached hereto. Each Lender agrees promptly to notify such Obligor and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with International and the Administrative Agent.
10.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents represent the entire agreement of the Obligors, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.
10.11 Termination of Commitments and Swing Line Commitments. The Commitments and Swing Line Commitments shall terminate if the conditions to closing set forth in Section 4.1 (subject to Section 4.3) shall not be satisfied on or before June 30, 2004.
10.12 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.13 Submission To Jurisdiction; Waivers. Each Obligor hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
CREDIT AGREEMENT
63
(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address set forth in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
10.14 Acknowledgements. Each Obligor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to it arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Obligors, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Obligors and the Lenders.
10.15 WAIVERS OF JURY TRIAL. EACH OBLIGOR, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.16 Confidentiality. Neither the Administrative Agent nor any Lender shall disclose any Confidential Information to any Person without the consent of the Borrower, other than (a) to the Administrative Agent's or such Lender's Affiliates and their respective officers, directors, employees, agents and advisors and, subject to the execution of an agreement for the benefit of the Borrower to comply with the provisions of this Section, to actual or prospective assignees and participants, (b) to the extent required by any applicable law, rule or regulation or judicial process, (c) to any rating agency when required by it, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder and (f) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking.
10.17 USA PATRIOT Act. Each Lender hereby notifies each Obligor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies each Obligor, which information includes the name and address of such Obligor and other information that will allow such Lender to identify each Obligor in accordance with the Act.
CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
MASTERCARD INCORPORATED

By:   /s/ Andrea Robertson
    ---------------------------------------
    Name: Andrea Robertson
    Title: Treasurer	

MASTERCARD INTERNATIONAL INCORPORATED

By:   /s/ Andrea Robertson
    ---------------------------------------
    Name: Andrea Robertson
    Title: SVP, Treasurer	

CITIBANK, N.A.
as Administrative Agent and as Lender

By:   /s/ Christine M. Alcruz
    ---------------------------------------
    Name: Christine M. Alcruz
    Title: Vice President	

JPMORGAN CHASE BANK,
as Backup Agent and as Lender

By:   /s/ Christine Herrick
    ---------------------------------------
    Name: Christine Herrick
    Title: Vice President	

HSBC BANK USA

By:   /s/ Johan Sorensson
    ---------------------------------------
    Name: Johan Sorensson
    Title: Senior Vice President	

LLOYDS TSB BANK PLC

By:   /s/ Paul D. Briamonte
    ---------------------------------------
    Name: Paul D. Briamonte
    Title: Director-Project Finance (USA)

By:   /s/ Candice Beato
    ---------------------------------------
    Name: Candice Beato
    Title: Assistant Vice President,
    Financial Institutions	

ROYAL BANK OF SCOTLAND PLC

By:   /s/ Diane Ferguson
    ---------------------------------------
    Name: Diane Ferguson
    Title: Managing Director	

HARRIS NESBITT FINANCING, INC.

By:   /s/ Pamela E. Schwartz
    ---------------------------------------
    Name: Pamela E. Schwartz
    Title: Vice President	

COMMONWEALTH BANK OF AUSTRALIA,
NEW YORK BRANCH

By:   /s/ K. Murray Regan
    ---------------------------------------
    Name: K. Murray Regan
    Title: Financial Controller	

BAYERISCHE HYPO- UND VEREINSBANK AG

By:   /s/ Craig Pinsly
    ---------------------------------------
    Name: Craig Pinsly
    Title: Director

By:   /s/ Michael Davis
    ---------------------------------------
    Name: Michael Davis
    Title: Director	

SUMITOMO MITSUI BANKING CORPORATION

By:   /s/ Yasuhiko Imai
    ---------------------------------------
    Name: Yasuhiko Imai
    Title: Senior Vice President	

DEUTSCHE BANK LUXEMBOURG S.A.

By:   /s/ Astrid Schneider
    ---------------------------------------
    Name: Astrid Schneider
    Title: Vice President

By:   /s/ Stephanie Schreiner
    ---------------------------------------
    Name: Stephanie Schreiner
    Title: Assistant Vice President	

FIFTH THIRD BANK

By:   /s/ John Chapman
    ---------------------------------------
    Name: John Chapman
    Title: AVP	

ING BANK N.V.

By:   /s/ Corinna Pattijn
    ---------------------------------------
    Name: Corinna Pattijn
    Title: Director

By:   /s/ Caroline Claessens
    ---------------------------------------
    Name: Caroline Claessens
    Title: Vice President	

PNC BANK, NATIONAL ASSOCIATION

By:   /s/ Timothy J. Hornickle
    ---------------------------------------
    Name: Timothy J. Hornickle
    Title: Vice President	

U.S. BANK, N.A.

By:   /s/ Michael P. Dickman
    ---------------------------------------
    Name: Michael P. Dickman
    Title: Assistant Vice President	

WESTPAC BANKING CORPORATION

By:   /s/ Tony Smith
    ---------------------------------------
    Name: Tony Smith
    Title: Head of Relationship
    Management	

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:   /s/ Roy H. Roberts
    ---------------------------------------
    Name: Roy Roberts
    Title: Vice President	

ROYAL BANK OF CANADA

By:   /s/ Stephanie Babich-Allegra
    ---------------------------------------
    Name:  Stephanie Babich-Allegra
    Title:  Authorized Signatory	

SCHEDULE 1.1(a)
MASTERCARD INTERNATIONAL
PERMITTED INVESTMENTS
CASH EQUIVALENTS @ 03/31/04

FUND MANAGERS
MBIA CAPITAL MANAGEMENT INC                     $    103,239
WEISS, PECK & GREER                                  710,828
BANC ONE INVESTMENTS ADVISORS CORPORATION            983,346
HSBC ASSET MANAGEMENT INC.                         1,028,949
FLEET INVESTMENTS ADVISORS                         1,623,092
SALOMON SMITH BARNEY                               2,321,517
MILESTONE CAPITAL                                  7,128,666
FEDERATED                                         35,918,328
FIDELITY INVESTMENTS                              36,169,377
BLACKROCK PROVIDENT                               37,843,791
                                                ------------
                                                $123,831,134
                                                ============

MASTERCARD INTERNATIONAL INCORPORATED MANAGED
GRANDVIEW                                       $  3,750,000
MONTANA HEALTH                                     3,200,000
CHELA FINANCIAL                                    5,008,989
GEORGETOWN UNIV                                    8,500,000
CITY OF FORT WORTH                                 4,200,000
BURLINGTON                                         4,700,131
SOUTH TEXAS HIGHER ED                              8,413,440
BRAZOS HIGHER                                      7,017,543
BRAZOS HIGHER                                      2,403,679
VERMONT                                            5,000,000
                                                ------------
                                                $ 52,193,781
                                                ============	

SCHEDULE 1.1(b)
MASTERCARD INCORPORATED
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 3/31/04
SCHEDULE 1.1(b)
1 of 7
MASTERCARD INTERNATIONAL
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 03/31/04
MASTERCARD INTERNATIONAL PORTFOLIO

                                                                        MATURITY      STATED
                     MUNICIPAL BONDS                    PAR AMOUNT        DATE         RATE
                     ---------------                    -----------    ----------     ------
COBB CNTY & MARIETTA GA W                                   250,000    11/01/2009      5.00
MUNICIPAL ASSISTANCE CORP                                   250,000    07/01/2007      6.25
INDIANAPOLIS IND LOC PUB                                    260,000    01/15/2007      2.50
METROPOLITAN TRANSN AUTH                                    275,000    11/15/2011      5.00
MUNICIPAL ASSISTANCE CORP                                   300,000    07/01/2006      4.00
WASHINGTON ST SER A                                         300,000    09/01/2004      7.00
OHIO ST BLDG AUTH RFDG-ST                                   300,000    04/01/2006      4.00
FAIRFAX CNTY VA                                             350,000    06/01/2006      4.50
MARYLAND ST RFDG-ST & LOC                                   350,000    02/01/2007      5.00
TEXAS WTR DEV BRD REV ST REVOLVINGFD-SR                     350,000    07/15/2006      5.50
NEW YORK NY CITY TRANSITIONAL FIN AUTH R                    400,000    02/01/2006      5.25
KANSAS ST DEV FIN AUTH REV                                  425,000    11/01/2005      5.00
TUCSON ARIZ STR & HWY USE                                   430,000    07/01/2006      4.50
PHILADELPHIA PA SER A                                       450,000    02/15/2008      5.00
INDIANA BD BK REV                                           455,000    02/01/2008      5.00
READING PA SCH DIST NTS-SER A                               460,000    01/15/2006      0.00
DISTRICT COLUMBIA TAX                                       495,000    07/01/2008      5.00
COLORADO DEPT TRANSN REV                                    500,000    06/15/2011      5.00
GLOUCESTER CNTY N J RFDG                                    500,000    07/15/2006      4.00
NY ST DORM AUTH REVS                                        500,000    07/01/2007      5.00
NY ST DORM AUTH REVS                                        500,000    07/01/2011      5.00
ILLINOIS HEALTH FACS AUTH                                   500,000    08/15/2005      4.00
FLAGLER CNTY FLA SCH DIST                                   500,000    09/01/2006      6.00
MICHIGAN MUNBD AUTH REV DRINKING WATER                      500,000    10/01/2005      5.00
DUNCANVILLE TEX INDPT SCH                                   500,000    02/15/2008      4.50
NEW YORK ST DORM AUTH REV                                   500,000    07/01/2007      5.37
KENTUCKY ST PPTY & BLDGS                                    500,000    02/01/2008      5.38
MASSACHUSETTS ST RFDG-SER                                   500,000    08/01/2011      5.00
COLORADO SPRINGS COLO UTILS REV                             500,000    11/15/2005      5.00
PENNSYLVANIA HSG FIN AGY SINGLE                             500,000    10/01/2004      5.10
MISSISSIPPI ST HWY REV RF                                   535,000    06/01/2007      5.25
INDIANA BD BK COMMON SCH FD                                 550,000    02/01/2008      5.00
MICHIGAN ST COMPREHENSIVE                                   550,000    05/15/2007      5.00
MECKLINBURG CNTY NC                                         550,000    04/01/2010      5.00
OHIO ST HIGHER ED CAP FACS-SER B                            550,000    05/01/2005      5.25
OAK RIDGE TENN RFDG                                         555,000    04/01/2006      4.25
ALASKA MUN BOND BANK AUTH                                   565,000    06/01/2006      5.00
MASSACHUSETTS ST WTR POLL                                   570,000    08/01/2006      5.00
PIERRE S D SCH DIST NO 32-2                                 580,000    08/01/2005      4.70
SCHAUMBURG ILL                                              585,000    01/01/2007      5.00
MINNESOTA ST                                                600,000    08/01/2006      5.00
DISTRICT COLUMBIA REV GEORGE WASHINGTON                     630,000    09/15/2007      5.00
MONTGOMERY CNTY MD RFDG-C                                   650,000    11/01/2011      5.25
CHESAPEAKE VA                                               650,000    05/01/2004      7.00
MASSACHUSETTS ST HEALTH &                                   675,000    05/15/2007      5.00
NEW YORK ST DORM AUTH REVS NYSARC                           705,000    07/01/2006      4.55
VIRGINIA ST PUB SCH AUTH                                    750,000    08/01/2010      5.00
HIGHLAND N Y CENT SCH DIS                                   750,000    06/15/2007      3.00
WISCONSIN ST HEALTH & EDL                                   750,000    02/15/2007      5.00
ARAPAHOE CNTY COLO CAP IM                                   750,000    08/31/2005      7.00
GRAND RVR DAM RE                                            750,000    06/01/2007      5.88
MINNESOTA ST                                                800,000    10/01/2004      5.60
NEW JERSEY ST TPK AUTH TP                                   835,000    01/01/2006      5.50
NEW YORK ST DORM AUTH REVS NYSARC INC-SE                    840,000    07/01/2007      4.60	

SCHEDULE 1.1(b)
2 of 7
MASTERCARD INTERNATIONAL
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 03/31/04
MASTERCARD INTERNATIONAL PORTFOLIO

                                                                        MATURITY      STATED
                     MUNICIPAL BONDS                    PAR AMOUNT        DATE         RATE
                     ---------------                    -----------    ----------     ------
INDIANA BD BK REV                                           870,000    02/01/2008      5.00
TUCSON ARIZ STR & HWY USE                                   870,000    07/01/2009      4.50
ILLINOIS ST FIRST SER                                       900,000    06/01/2006      5.75
SCOTTSDALE ARIZ RFDG                                        905,000    07/01/2005      3.00
CHESAPEAKE VA                                               950,000    05/01/2004      7.00
ILLINOIS DEV FIN AUTH REV                                 1,000,000    09/01/2008      5.00
WILSON PA SCH DIST SECOND                                 1,000,000    05/15/2008      5.00
FLORIDA ST DIV BD FIN DEPT GENL SVCS REV                  1,000,000    07/01/2004      5.75
UNIVERSITY ARIZ UNIV REVS                                 1,000,000    06/01/2006      5.00
DETROIT MICH CAP IMPT-SER                                 1,000,000    04/01/2007      5.00
HOWARD CNTY MD RFDG-CONS                                  1,000,000    08/15/2008      5.00
FLORIDA ST ED SYS UNIV SY                                 1,000,000    07/01/2008      5.00
CLARK CNTY NEV WTR                                        1,000,000    07/01/2009      5.00
METROPOLITAN ATLANTA RAPI                                 1,000,000    07/01/2009      5.00
MICHIGAN MUN BD AUTH REV                                  1,000,000    10/01/2009      5.75
PUERTO RICO COMWLTH RFDG-                                 1,000,000    07/01/2012      6.50
PIKE TWP IND SCH BLDG CORP                                1,000,000    01/15/2006      5.00
OKLAHOMA CNTY OKLA INDPT                                  1,000,000    02/01/2007      5.00
METROPOLITAN COUNCIL MINN                                 1,000,000    02/01/2007      5.00
ARIZONA ST 5.24 1/1/2007                                  1,000,000    01/01/2007      5.25
HOUSTON TEX RFDG-PUB                                      1,000,000    03/01/2008      5.00
METROPOLITAN PIER & EXPOS                                 1,000,000    06/15/2008      5.25
SCHAUMBURG ILL                                            1,000,000    01/01/2007      5.00
PENNSYLVANIA ST HIGHER ED                                 1,000,000    06/15/2007      5.00
MAINE ST TPK AUTH TPK REV                                 1,000,000    07/01/2004      6.00
WISCONSIN ST TRANSN REV SER B                             1,000,000    07/01/2005      4.25
HOUSTON TEX ARPTS SYS REV SUB                             1,000,000    07/01/2005      5.00
LOUISVILLE & JEFFERSON CNTY KY                            1,000,000    07/01/2005      5.00
SEATTLE WASH MUN LT & PWR REV SER B                       1,000,000    06/01/2005      4.75
HAWAII ST ARPTS SYS REV AMT-RFDG                          1,000,000    07/01/2005      5.50
MEMPHIS-SHELBY CNTY TENN ARPT AUTH ARPT                   1,000,000    03/01/2006      5.00
HAWAII ST RFDG-SER                                        1,000,000    04/01/2005      5.25
DELAWARE ST SER A                                         1,000,000    04/01/2005      5.25
PLANO TEX PLANO TEX                                       1,000,000    09/01/2007      4.00
CORPUS CHRISTI TEX INDPT SCH DIST RFDG                    1,000,000    08/15/2005      6.00
SAINT LOUIS CNTY MO CROSSOVER                             1,000,000    02/01/2006      5.00
CLARK CNTY NEV SCH DIST                                   1,000,000    06/15/2005      6.00
RANDOLPH CNTY N C CTFS PA                                 1,000,000    06/01/2007      4.00
UNIVERSITY ILL CTFS                                       1,000,000    08/15/2008      4.00
OHIO  ST BLDG AUTH RFDG-ST                                1,000,000    10/01/2005      5.00
FLORIDA ST                                                1,000,000    07/01/2005      5.80
PENNSYLVANIA ST TPK COMMN                                 1,000,000    12/01/2007      4.00
LOUISIANA ST OFFICE FACS                                  1,000,000    11/01/2007      4.00
ALLEGHENY CNTY PA REF-SER C-49                            1,000,000    04/01/2006      5.00
METROPOLITAN PIER & EXPOSITION RFDG-MCCO                  1,000,000    12/15/2005      6.00
GEORGIA STATE SER D                                       1,000,000    11/01/2005      5.80
TRINITY RIVER AUTH TEX RE                                 1,000,000    08/01/2007      5.00
WARREN MICH CONS SCH DIST                                 1,000,000    05/01/2008      4.50
NEW YORK ST DORM AUTH LEASE REV                           1,000,000    01/15/2008      5.00
HOUSTON TEX RFDG-PUB IMPT                                 1,000,000    03/01/2012      5.00
NORTH HARRIS MONTGOMERY C                                 1,000,000    02/15/2012      5.00
LEE CNTY FLA ARPT REV RFD                                 1,000,000    10/01/2007      5.00
MICHIGAN ST BLDG AUTH REV                                 1,000,000    10/15/2007      5.00
NY ST LOC GOVT ASSISTANCE                                 1,000,000    04/01/2007      5.50	

SCHEDULE 1.1(b)
3 of 7
MASTERCARD INTERNATIONAL
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 03/31/04
MASTERCARD INTERNATIONAL PORTFOLIO

                                                                        MATURITY      STATED
                     MUNICIPAL BONDS                    PAR AMOUNT        DATE         RATE
                     ---------------                    -----------    ----------     ------
BRIGHTON MICH AREA SCH DIST                               1,000,000    05/01/2008      5.13
UNIVERSITY ILL CTFS PARTN                                 1,000,000    10/01/2013      5.00
BROADWAY OFFICE PPTYS WAS                                 1,000,000    12/01/2012      5.25
MICHIGAN ST BLDG AUTH REV                                 1,000,000    10/15/2012      5.25
MASSACHUSETTS ST WTR RES AUTH                             1,000,000    08/01/2011      5.50
WISCONSIN SER B                                           1,000,000    05/01/2004      5.50
TEXAS MUN PWR AGY REV SUB                                 1,000,000    09/01/2005      4.00
OHIO ST HWY CAP IMPT-SER C                                1,000,000    05/01/2005      4.75
DC REF SER B-3                                            1,000,000    06/01/2005      5.30
WEST VIRGINIA ST HOSP FIN                                 1,000,000    06/01/2006      4.50
MICHIGAN MUN BD AUTH REV                                  1,000,000    10/01/2005      5.00
MINNESOTA ST                                              1,000,000    08/01/2006      5.00
CAMDEN CNTY N J IMPT AUTH                                 1,000,000    09/01/2007      5.00
ST PETERSBURG FLA EXCISE                                  1,000,000    10/01/2007      4.75
NASSAU CNTY N Y INTERIM F                                 1,000,000    11/15/2007      5.00
MICHIGAN ST BLDG AUTH REV                                 1,000,000    10/15/2007      5.00
LOUISIANA ST SER A                                        1,000,000    11/15/2007      5.50
NEW JERSEY BLDG AUTH ST B                                 1,000,000    12/15/2011      5.25
MAINE ST GEN PURP                                         1,000,000    06/15/2007      4.00
NEW YORK NYC TRANSITIONAL                                 1,000,000    11/01/2007      5.00
COLORADO SPRINGS COLO UTI                                 1,000,000    11/15/2008      5.00
RICHMOND REF                                              1,000,000    07/15/2011      5.50
COOK CNTY ILL SCH DIST NO 122 OAK LAWN C                  1,000,000    12/01/2005      0.00
ROCKFORD ILL SCH DIST NO 205                              1,000,000    02/01/2006      3.75
IOWA STUDENT LN LIQUIDITY CORP                            1,000,000    12/01/2005      4.90
NORTH SLOPE BORO ALASKA                                   1,000,000    06/30/2006      0.00
WILL CNTY ILL SCH DIST NO 086 JOLIET                      1,000,000    11/01/2005      0.00
PORTSMOUTH VA REDEV & HSG                                 1,000,000    12/01/2004      6.05
DISTRICT COLUMBIA RFDG-SER                                1,000,000    06/01/2005      5.88
VIRGINIA ST PUB SCH AUTH                                  1,000,000    02/01/2006      4.00
ANOKA-HENNEPIN MINN INDPT                                 1,000,000    02/01/2008      5.00
SALT RIVER PROJ ARIZ AGRIC IMPT & PWR DI                  1,000,000    01/01/2006      5.25
PENNSYLVANIA ST RFDG-SECO                                 1,000,000    07/01/2006      5.00
ARIZONA ST TRANS BRD HWY                                  1,000,000    07/01/2007      5.00
JACKSONVILLE FLA ELEC AUT                                 1,000,000    10/01/2006      5.50
ALBANY ORE WTR REV RFDG                                   1,005,000    08/01/2008      5.00
CLEVELAND OHIO CITY SCH D                                 1,020,000    06/01/2007      5.75
SEDGWICK CNTY KANS UNI SC                                 1,025,000    09/01/2007      3.50
UT BLDG LSE MAST                                          1,025,000    05/15/2006      5.00
WASHINGTON ST RFDG-SER R-93A                              1,045,000    09/01/2005      5.63
PRIVATE COLLEGES & UNIVS AUTH GA                          1,050,000    09/01/2006      5.00
FOX VY TECHNICAL COLLEGE DIST WIS                         1,050,000    06/01/2006      4.00
OKLAHOMA ST CAP IMPT AUTH                                 1,060,000    06/01/2007      5.00
HARTFORD CNTY CONN MET DI                                 1,085,000    11/01/2006      4.00
GEORGIA ST SER D                                          1,100,000    08/01/2009      5.25
NEW MEXICO ST  SERVERANCE TAX SER B                       1,130,000    07/01/2004      5.00
NEW JERSEY ST TPK AUTH TP                                 1,135,000    01/01/2006      5.50
MARICOPA CNTY ARIZ HOSP R                                 1,135,000    07/01/2004      7.63
CONNECTICUT ST SER C                                      1,160,000    05/01/2011      5.00
OHIO ST HIGHER ED-SER B                                   1,190,000    11/01/2006      5.00
FORSYTH CNTY N C PUB IMPT                                 1,200,000    03/01/2006      5.00
VIRGINIA COMWLTH TRANSN                                   1,250,000    10/01/2006      5.50
FL ST DEPT ENVIR 5.25                                     1,265,000    07/01/2008      5.25
PERRY TWP IND MULTI SCH B                                 1,270,000    01/10/2008      4.00	

SCHEDULE 1.1(b)
4 of 7
MASTERCARD INTERNATIONAL
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 03/31/04
MASTERCARD INTERNATIONAL PORTFOLIO

                                                                        MATURITY      STATED
                     MUNICIPAL BONDS                    PAR AMOUNT        DATE         RATE
                     ---------------                    -----------    ----------     ------
MIAMI FLA RFDG                                            1,280,000    07/01/2011      5.00
ILLINOIS FIRST SER                                        1,295,000    04/01/2012      5.50
NEW JERSEY ST TRANSN TR F                                 1,300,000    12/15/2006      5.00
BEAUFORT CNTY                                             1,305,000    02/01/2007      5.00
NEW YORK ST DORM AUTH                                     1,305,000    07/01/2007      4.00
AVON IND CMTY SCH BLDG                                    1,320,000    01/10/2009      5.00
BELLEVUE WASH RFDG-SER A                                  1,340,000    01/01/2007      5.00
BEXAR CNTY TEX RFDG                                       1,350,000    06/15/2007      5.00
HOUSTON TEX AREA WTR CORP                                 1,365,000    03/01/2006      5.00
COLORADO WTR RES & PWR DEV AUTH WASTEW                    1,375,000    09/01/2006      5.00
COLUMBIA S C CTFS PARTN T                                 1,375,000    06/01/2006      4.00
TACOMA WASH ELEC SYS REV                                  1,380,000    01/01/2008      5.50
HAMILTON SOUTHEATERN IND                                  1,395,000    01/15/2010      5.00
ILLINOIS ST RFDG-FIRST SE                                 1,400,000    08/01/2012      5.25
MASSACHUSETTS ST PORT AUT                                 1,400,000    07/01/2008      5.00
MILWAUKEE WIS SER F                                       1,405,000    11/15/2004      6.00
COOK CNTY ILL SCH DIST135 CAP                             1,410,000    12/01/2004      0.00
DURHAM CNTY N C ENTERPRIS                                 1,425,000    06/01/2008      5.00
VIRGINIA COMWLTH TRANSN BRD TRANSN REV N                  1,455,000    05/15/2006      5.00
HOUSTON TEX RFDG-PUB                                      1,500,000    03/01/2008      5.00
PHOENIX ARIZ CIVIC IMPT C                                 1,500,000    07/01/2009      5.00
CONNECTICUT ST SER                                        1,500,000    06/15/2008      5.25
PUERTO RICO ELEC PWR AUTH                                 1,500,000    07/01/2011      5.25
MINNESOTA ST                                              1,500,000    06/01/2005      5.50
MARYLAND ST ST & LOC FACS LN- 2ND                         1,500,000    08/01/2006      5.00
PLANO TEX INDPT SCH DIST                                  1,500,000    02/15/2007      5.00
MINNESOTA ST                                              1,500,000    10/01/2006      5.00
OREGON ST DEPT TRANSN HWY                                 1,500,000    11/15/2011      5.50
THURSTON CNTY WASH SCH DI                                 1,500,000    12/01/2011      4.00
PUERTO RICO MUN FIN AGY S                                 1,500,000    08/01/2006      4.00
WISCONSIN ST TRANSN REV SER A                             1,500,000    07/01/2005      6.00
HAWAII ST RFDG                                            1,500,000    02/01/2011      5.50
NORTH SLOPE-CABS                                          1,500,000    06/30/2008      0.00
DEL MAR TEX COLLEGE DIST REF                              1,505,000    08/15/2006      4.00
UNIVERSITY N C SYS POOL REV                               1,520,000    10/01/2006      5.50
NORTH CAROLINA ST PUB IMPT-SER A                          1,525,000    09/01/2005      5.00
FREMONT CALIF CTFS PARTN                                  1,540,000    08/01/2005      1.70
CLARK CNTY WASH PUB UTIL                                  1,540,000    01/01/2007      4.00
RHODE IS ST & PROVIDENCE                                  1,565,000    11/01/2010      5.25
UTAH ST RFDG-SER B                                        1,600,000    07/01/2006      4.50
NEW ORLEANS LA EXHIB HALL AUTH                            1,625,000    07/15/2006      0.00
NEW YORK ST DORM AUTH REV                                 1,640,000    10/01/2007      5.00
MC HENRY CNTY ILL CMNTY HIGH SCH                          1,640,000    01/01/2008      0.00
CLARK CNTY NEV SCH DIST                                   1,650,000    06/15/2006      5.00
SOUTHWEST ALLEN IND MULTI SCH BLDGCORP F                  1,680,000    01/15/2006      4.00
UNIVERSITY CALIF REVS SER                                 1,700,000    05/15/2010      4.50
PENNSYLVANIA ST RFDG                                      1,700,000    11/15/2004      5.38
FREDERICK REF-FA                                          1,725,000    07/01/2006      5.00
NJ TRN CAP GRANT                                          1,750,000    04/01/2004      5.13
PIKE TWP IND SCH BLDG CORP                                1,750,000    01/15/2006      5.00
GEORGIA ST SER A                                          1,780,000    03/01/2005      5.80
KENTUCKY ST PPTY & BLDGS                                  1,790,000    08/01/2008      5.50
MICHIGAN MUN BD AUTH REV                                  1,795,000    05/01/2010      5.00
LA GRANGE GA WTR & SEW RE                                 1,800,000    01/01/2009      4.00	

SCHEDULE 1.1(b)
5 of 7
MASTERCARD INTERNATIONAL
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 03/31/04
MASTERCARD INTERNATIONAL PORTFOLIO

                                                                        MATURITY      STATED
                     MUNICIPAL BONDS                    PAR AMOUNT        DATE         RATE
                     ---------------                    -----------    ----------     ------
DEL MAR TEX COLLEGE DIST RFDG                             1,850,000    08/15/2007      4.00
UTAH ST MUN PWR AGY ELEC                                  1,865,000    07/01/2007      5.00
ALASKA STUDENT LN                                         1,870,000    07/01/2010      4.00
CARTHAGE MO WTRWKS & WASTEWTR TREATMENT                   1,895,000    07/01/2004      6.30
MINNESOTA ST RFDG                                         1,900,000    08/01/2008      5.00
HOUSTON TEX ARPT SYS REV                                  1,945,000    07/01/2004      6.75
PITTSBURGH PA SCH DIST                                    1,970,000    09/01/2006      4.25
CHEROKEE CNTY GA SCH SYS                                  1,975,000    06/01/2007      5.00
MICHIGAN ST UNDERGROUND STORAGE TANK F                    2,000,000    05/01/2005      6.00
LOWER COLO RIV AUTH TEX REV JR                            2,000,000    01/01/2006      5.50
NEW JERSEY ST CTFS PARTN                                  2,000,000    06/15/2007      5.25
DETROIT MICH CITY SCH DIS                                 2,000,000    05/01/2007      5.00
METROPOLITAN ATLANTA RAPID TRAN                           2,000,000    07/01/2006      6.10
LOWER COLO RIV AUTH TEX R                                 2,000,000    05/15/2008      5.00
PLATTE RIV PWR AUTH COLO                                  2,000,000    06/01/2009      5.25
AUSTIN TX REF                                             2,000,000    09/01/2005      5.60
KANSAS CITY MO SCH DIST                                   2,000,000    02/01/2007      5.00
MECKLENBURG CNTY N C PUB                                  2,000,000    02/01/2009      4.00
HOUSTON TEX INDPT SCH DIST                                2,000,000    07/15/2006      5.00
BIRDVILLE TEX INDPT SCH D                                 2,000,000    02/15/2009      4.38
IVY TECH ST COLLEGE IND                                   2,000,000    07/01/2007      5.00
HOUSTON TEX RFDG-PUB IMPT                                 2,000,000    03/01/2009      5.00
MICHIGAN ST COMPREHENSIVE                                 2,000,000    05/15/2007      5.25
PENNSYLVANIA ST INDL DEV                                  2,000,000    01/01/2008      5.80
SAN ANTONIO TEX ELEC & GAS                                2,000,000    02/01/2006      5.00
PIMA CNTY ARIZ UNI SCH                                    2,000,000    07/01/2008      3.00
CLARK COUNTY NEV SCH                                      2,000,000    06/15/2010      4.00
RICHARDSON TEX RFDG & IMP                                 2,000,000    02/15/2012      4.75
WISCONSIN ST TRANSN REV S                                 2,000,000    07/01/2013      5.00
OKLAHOMA ST CAP IMPT AUTH                                 2,000,000    12/01/2011      5.00
KANSAS CITY MO SCH DIST B                                 2,000,000    02/01/2007      5.00
CALIFORNIA ST DEPT WTR                                    2,000,000    05/01/2007      5.25
MICHIGAN MUN BD AUTH REV                                  2,000,000    05/01/2008      5.00
GEORGIA ST SER C                                          2,000,000    09/01/2008      5.75
TEXAS ST RFDG-PUB FIN AUTH-SER A                          2,000,000    04/01/2005      5.90
SAN ANTONIO TEX ELEC & GA                                 2,000,000    02/01/2007      0.00
GEORGIA ST                                                2,000,000    03/01/2007      6.30
HARRIS CNTY TEX RFDG-PERM                                 2,000,000    10/01/2007      5.00
FAIRFAX CNTY VA SER B                                     2,015,000    12/01/2005      5.00
CLARK CNTY NEV BD BK                                      2,020,000    07/01/2005      5.50
OHIO ST COMMON SCHS-CAP F                                 2,035,000    06/15/2007      5.00
SPRINGFIELD TENN HEALTH & EDL FACS BRD H                  2,065,000    04/01/2006      8.25
MISSOURI ST RFDG-THIRD                                    2,100,000    08/01/2007      5.00
CINCINNATI OHIO WTR SYS REV                               2,100,000    12/01/2005      5.00
WASHOE CO CAB IM                                          2,100,000    07/01/2006      0.00
CONNECTICUT ST CLEAN WTR                                  2,115,000    03/01/2007      5.75
CHICAGO ILL PROJ & RFDG-S                                 2,150,000    01/01/2008      5.50
WESTFIELD IND HIGH SCH BLDG CORP  FIRST                   2,170,000    07/15/2005      5.80
FAIRFAX CNTY VA RFDG & PU                                 2,195,000    06/01/2008      5.00
BIRMINGHAM ALA RFDG-SER A                                 2,195,000    04/01/2009      5.25
DU PAGE WTR COMMN ILL RFD                                 2,200,000    03/01/2010      5.25
PENNSYLVANIA ST TPK COMMN                                 2,230,000    07/15/2006      5.00
DUVAL CNTY FLA SCH DIST                                   2,250,000    08/01/2007      6.30
KENTUCKY STATE PROPERTY &                                 2,250,000    02/01/2011      5.38	

SCHEDULE 1.1(b)
6 of 7
MASTERCARD INTERNATIONAL
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 03/31/04
MASTERCARD INTERNATIONAL PORTFOLIO

                                                                        MATURITY      STATED
                     MUNICIPAL BONDS                    PAR AMOUNT        DATE         RATE
                     ---------------                    -----------    ----------     ------
HOWARD CNTY MD RFDG-CONS                                  2,365,000    08/15/2010      5.00
MINNESOTA ST RFDG-VARIOUS PURP                            2,370,000    06/01/2008      5.00
REGIONAL TRANSN AUTH ILL SER A                            2,445,000    07/01/2006      5.00
GEORGIA ST SER C                                          2,500,000    07/01/2005      6.00
MARICOPA CNTY ARIZ SCH                                    2,500,000    07/01/2008      5.00
NEW YORK CITY TRANSITIONA                                 2,500,000    05/01/2006      5.00
MICHIGAN ST BLDG AUTH REV FACS PROG-S                     2,500,000    10/15/2006      5.00
ORLANDO FLA UTILS COMMN WTR & ELEC REV R                  2,500,000    10/01/2006      5.00
WASHINGTON ST MOTOR VEHIC                                 2,500,000    07/01/2008      5.00
RHODE IS ST ECONOMIC DEV                                  2,500,000    06/15/2006      3.00
DISTRICT COLUMBIA CTFS                                    2,500,000    01/01/2007      5.00
WASHINGTON ST RFDG-SER                                    2,500,000    01/01/2009      4.00
AUSTIN TEX WTR & WASTEWATER SYS   REV RF                  2,500,000    11/15/2005      5.00
CLARK CNTY NEV SCH DIST SER A                             2,500,000    06/15/2005      5.60
GEORGIA ST SER B                                          2,510,000    07/01/2005      5.00
VIRGINIA COMWLTH TRANSN BRD TRANSN REV U                  2,535,000    05/15/2006      5.00
TEMPE ARIZ UN HIGH SCH DI                                 2,550,000    07/01/2007      2.00
OKLAHOMA ST CAP IMPT AUTH                                 2,560,000    06/01/2008      5.00
COLORADO DEPT TRANS REV                                   2,625,000    06/15/2010      6.00
FLORIDA ST DEPT ENVIRON                                   2,650,000    07/01/2009      5.00
SOUTH CAROLINA ST ST SCH FACS-SER A                       2,670,000    01/01/2010      5.00
MASSACHUSETTS ST                                          2,700,000    08/01/2009      5.75
OHIO ST BLDG AUTH RFDG-ST FACS-DAS                        2,775,000    10/01/2004      5.70
NEW JERSEY ECONOMIC DEV AUTH REV                          2,790,000    09/15/2006      5.00
COLUMBUS OHIO REF-SER B                                   2,795,000    05/15/2007      5.25
MOBILE ALA RFDG-WTS                                       2,925,000    02/15/2006      5.00
MINNESOTA ST                                              3,000,000    11/01/2004      5.25
METROPOLITAN COUNCIL MINN                                 3,000,000    03/01/2010      5.00
DENVER COLO CITY & CNTY B                                 3,000,000    09/01/2007      5.00
LAS VEGAS-CLARK CNTY NEV LIBR DIST RFDG                   3,000,000    02/01/2006      4.00
NORTH CAROLINA ST HWY-SER A                               3,000,000    05/01/2007      4.60
CONNECTICUT ST SPL TAX OBLIG REV RFDG-TR                  3,000,000    10/01/2005      5.00
KANSAS ST DEPT TRANSN HWY REV RFDG                        3,000,000    09/01/2006      5.50
PENNSYLVANIA ST SECOND SER                                3,000,000    09/15/2005      5.00
MET GOVT NASHVILLE & DAVI                                 3,000,000    10/15/2006      5.25
UTAH ST RFDG - SER B                                      3,000,000    07/01/2009      4.50
MICHIGAN ST BLDG AUTH REV                                 3,000,000    10/01/2004      6.00
MILWAUKEE WIS MET SEW DIST SEW SYS-SE                     3,000,000    10/01/2006      5.00
PENNSYLVANIA ST                                           3,300,000    02/01/2011      5.25
ALBUQUERQUE N M MUN SCH DIST                              3,435,000    08/01/2006      5.00
DADE CNTY FLA SCH DIST RM                                 3,475,000    08/01/2008      5.00
HILLSBOROUGH CNTY FLA UTIL                                3,500,000    08/01/2006      5.00
MOBILE CNTY ALA RFDG                                      3,980,000    02/01/2010      5.00
AUSTIN TEX WTR & WASTEWTR                                 4,300,000    05/15/2007      6.00
NORTH CAROLINA EASTN MUN                                  4,700,000    01/01/2009      6.13
TEXAS ST PUB FIN AUTH REV                                 5,000,000    06/15/2008      5.00
SOUTH CAROLINA ST CAP                                     5,300,000    01/01/2009      4.00
                                                        -----------
              TOTAL                                     468,935,000
                                                        ===========	

SCHEDULE 1.1(b)
7 of 7
MASTERCARD INTERNATIONAL
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 03/31/04
INVESTMENT IN AFFILIATES

                  NAME OF COMPANY                 INVESTMENT TYPE    AMOUNT INVESTED    % OWNED
                  ---------------                -----------------   ---------------    -------
                                                                         (000'S)
MONDEX ASIA PTE LTD.                             CONSOLIDATED **         $ 12,440        51.00%
KOREA CYBER PAYMENT, INC.                        COST INVESTMENT               90         2.30%
REDECARD S.A.                                    COST INVESTMENT           12,856         4.17%
XIGN CORPORATION                                 COST INVESTMENT            3,970        10.00%
EMVCO, LLC                                       EQUITY INVESTMENT            700        50.00%
ADVENT/DIGITAL MEDIA & Communications III-C LP   Equity Investment          5,800         2.90%
Mondex USA Services, LLC                         Equity Investment            750        15.00%
JNS Corporation Kabushiki Kaisha                 Equity Investment          2,110        17.25%
MPact Technology Services (f/k/a Mascon-MC GTS
  Holdings Private Ltd.)                         Equity Investment             49        49.00%
Secure Electronic Transactions, LLC              Equity Investment          4,640        50.00%
                                                                        ---------
                                                                        $  43,405
                                                                        =========	

SCHEDULE 1.2
COMMITMENTS

                    LENDER                                          COMMITMENT
Citibank, N.A.                                                    $  215,000,000
JPMorgan Chase Bank                                               $  200,000,000
HSBC Bank USA                                                     $  200,000,000
Lloyds TSB Bank plc                                               $  200,000,000
Royal Bank of Scotland plc                                        $  200,000,000
Harris Nesbitt Financing, Inc.                                    $  150,000,000
Commonwealth Bank of Australia, New York Branch                   $  150,000,000
Bayerische Hypo- Und Vereinsbank AG                               $  125,000,000
Sumitomo Mitsui Banking Corporation                               $  125,000,000
Deutsche Bank Luxembourg S.A.                                     $   75,000,000
Fifth Third Bank                                                  $   50,000,000
ING Bank N.V.                                                     $   50,000,000
PNC Bank, National Association                                    $   50,000,000
U.S. Bank, N.A.                                                   $   50,000,000
Westpac Banking Corporation                                       $   50,000,000
Wells Fargo Bank, National Association                            $   35,000,000
Royal Bank of Canada                                              $   25,000,000

                                    TOTAL                         $1,950,000,000	

SCHEDULE 3.1
MASTERCARD INCORPORATED
INTEREST RATE PROTECTION
INTEREST RATE SWAP @ 3/31/04
NONE
CURRENCY PROTECTION
UNHEDGED POSITIONS @ 3/31/04
NONE
SCHEDULE 3.6
MATERIAL LITIGATION
NONE
 
SCHEDULE 3.15
MASTERCARD INCORPORATED AND SUBSIDIARIES

                    NAME                                           PERCENT OWNED**
                    ----                                           -------------
MasterCard Incorporated                                                 NA

Cirrus Systems, LLC                                                     100%

MasterCard Europe Sprl                                                  100%
European Payment System Services S.A.                                   100%
Euro Travellers Cheque International S.A.                               100%
Europay U.S. Inc                                                        100%
Eurocard Limited                                                        100%
Eurocard U.S.A., Inc.                                                   100%
MasterCard/Europay U.K. Limited                                         100%

Maestro International Incorporated                                      100%
Maestro Asia/Pacific Ltd.                                               100%
Maestro Canada, Inc.                                                    100%
Maestro Latin America, Inc.                                             100%
Maestro Middle East/Africa, Inc.                                        100%
Maestro U.S.A., Inc.                                                    100%

MasterCard International Incorporated                                   100%
MasterCard (India) Private Limited                                      100%
MasterCard Advisors, LLC                                                100%
MasterCard A/P Payment Services Inc.                                    100%
MasterCard Asia/Pacific Pte Ltd.                                        100%
MasterCard Australia Ltd.                                               100%	

MasterCard Brasil S/C Ltda.                                             100%
MasterCard Brasil Solucoes de Pagamento Ltda.                           100%
MasterCard Canada, Inc.                                                 100%
MasterCard Cardholder Solutions, Inc.                                   100%
MasterCard Chip Standards Holdings, Inc.                                100%
MasterCard Colombia, Inc.                                               100%
MasterCard EMEA, Inc.                                                   100%
MasterCard Financing Solutions LLC                                      100%
MasterCard Foreign Sales Corporation                                    100%
MasterCard Global Holding LLC                                           100%
MasterCard Global Key Centre Limited                                    100%
MasterCard Global Promotions & Sponsorships Annex, Inc.                 100%
MasterCard Holding Incorporated                                         100%
MasterCard Hong Kong Ltd.                                               100%
MasterCard International Far East Ltd.                                  100%
MasterCard International Global Maatschap                               100%
MasterCard International Holding LLC                                    100%
MasterCard International Japan Inc.                                     100%
MasterCard International Korea Ltd.                                     100%
MasterCard International Philippines, Inc.                              100%
MasterCard International Services, Inc.                                 100%
MasterCard International, LLC                                           100%
MasterCard Korea Ltd.                                                   100%
MasterCard Mercosur, Inc.                                               100%
MasterCard Middle East, Inc                                             100%
MasterCard Originator SPC, Inc.                                         100%
MasterCard Peru, Inc.                                                   100%
MasterCard Services SPC, Inc.                                           100%
MasterCard Singapore Ltd.                                               100%
MasterCard Southern Africa, Inc.                                        100%
MasterCard Taiwan Ltd.                                                  100%
MasterCard Travelers Cheque, Inc.                                       100%
MasterCard UK, Inc.                                                     100%	

MasterCard UK Inc. Pension Trustees Limited                             100%
MasterCard UK Management Services Limited                               100%
MasterCard Uruguay Limitada                                             100%
MasterCard Venezuela, Inc.                                              100%
MC Indonesia, Inc.                                                      100%

Mondex International Limited                                            100%
MAOSCO, Ltd.                                                            100%
Mondex International Americas, Inc.                                     100%
Mondex Asia Pte. Ltd.                                                    51%
Mondex China Pte. Ltd.                                                   51%
Mondex India Pte. Ltd.                                                   51%
Mondex International (Australia) Pty Ltd.                               100%
MXI Management Limited                                                  100%

Bright Skies LLC                                                        100%
Clear Skies LLC                                                         100%
CSI Holdings Inc.                                                       100%
EMVCo, LLC                                                               50%
GVP Risk Management Insurance Incorporated                              100%
GVP Holding Incorporated                                                100%
JNS Corporation Yugen Kaisha                                            100%
MasterCard GTS Holdings Private Limited (Mauritius)                      49%
Mastermanager LLC                                                       100%
MasterCard Beneficiary Trust                                            100%
MTS Holdings, Inc.                                                      100%
Purchase Street Research, LLC                                           100%
SET Secure Electronic Transaction LLC                                    50%
Tower Group Holding Corp.                                               100%
The Tower Group, Inc.                                                   100%
Towergroup Europe Limited                                               100%
Transactional Data Solutions LLC                                        100%	

** Percentages reflect direct ownership and indirect ownership through intermediate companies.
 
SCHEDULE 6.2(f)
LIENS

COMPANY              STATE             UCC#              HOLDER                 COLLATERAL DESCRIPTION
--------------------------------------------------------------------------------------------------------------
MasterCard            DE        File No. 10827126     IBM Credit           Computer, information processing
International                                         Corporation          and other peripheral equipment and
Incorporated                                                               goods
--------------------------------------------------------------------------------------------------------------
MasterCard            DE        File No. 20749550     IBM Credit           Computer, information processing
International                                         Corporation          and other peripheral equipment and
Incorporated                                                               goods
--------------------------------------------------------------------------------------------------------------
MasterCard            DE        File No. 22016537     IBM Credit           Computer equipment and software
International                                         Corporation
Incorporated
--------------------------------------------------------------------------------------------------------------
MasterCard            DE        File No. 22985814     Ameritech Credit     Controllers, modems, computers and
International                                         Corporation          other data transmission devices,
Incorporated                                                               cable and wiring
--------------------------------------------------------------------------------------------------------------
MasterCard            DE        File No. 30062896     Bank One, NA         Computer equipment
International
Incorporated
--------------------------------------------------------------------------------------------------------------
MasterCard            DE        File No. 31941866     IBM Credit LLC       Computer equipment and software
International,
LLC
--------------------------------------------------------------------------------------------------------------
MasterCard            DE        File No. 33247841     Ameritech Credit     Right, title and interest in and to
International                                         Corporation          the Master Software License and
Incorporated                                                               Maintenance Agreement for 3 year
                                                                           central site maintenance
--------------------------------------------------------------------------------------------------------------
MasterCard            MO        File Nos.             MCI O'Fallon         Winghaven Facility in O'Fallon, MO
International                   3071447               1999 Trust
Incorporated                    01387	

SCHEDULE 6.10
DIVIDEND BLOCKS
MasterCard International Incorporated is subject to minimum net worth covenants pursuant to the following agreements, which are filed as exhibits to the Borrower's filings with the U.S. Securities and Exchange Commission identified in parentheses below:
- Form of MasterCard International Incorporated Note Purchase Agreement, dated as of June 30, 1998, regarding $80,000,000 of 6.67% Subordinated Notes due June 30, 2008 (see Exhibit 4 to Pre-Effective Amendment No. 2 to the Borrower's Registration Statement on Form S-4 filed November 9, 2001 (No. 333-67544)).
- Guarantee, dated as of August 31, 1999, made by MasterCard International Incorporated in favor of State Street Bank and Trust Company of Missouri, N.A., as Indenture Trustee for the Noteholders under the Indenture, dated as of August 31, 1999 between MasterCard International O'Fallon 1999 Trust and the Indenture Trustee (see Exhibit 10.4 to Pre-Effective Amendment No. 2 to the Borrower's Registration Statement on Form S-4 filed November 9, 2001 (No. 333-67544)).
 
SCHEDULE 10.7(b)
1 of 2
MASTERCARD INCORPORATED
FIDUCIARY ACCOUNTS WITH BANKS PARTICIPATING IN THIS SYNDICATION
 @ 03/31/2004

ACCOUNT NUMBER                                   CURRENCY
--------------                                   --------
                   JP MORGAN CHASE BANK

00010019311                                        AUD
00010019303                                        AUD
00010019338                                        AUD
00010019477                                        AUD
0731753500                                         CAD
20397201                                           EUR
11139342                                           GBP
11139334                                           GBP
6839254304                                         HKD
6650260711                                         IDR
0110442612                                         JPY
6870791925                                         MYR
3212700557                                         PHP
0111867175                                         SGD
6580116538                                         THB
014 053 007                                        USD
323 120 431                                        USD
323 120 342                                        USD
323 120 407                                        USD
323 120 369                                        USD
323 120 393                                        USD
323 120 377                                        USD
323 120 458                                        USD
014056830                                          USD
014056865                                          USD
114013063                                          USD
400314738                                          USD
22105909                                           ZAR

                        CITIBANK

4108396                                            BSD

                          HSBC

000123285                                          USD
000122742                                          USD
40051537549940                                     ATS
40051537549959                                     BEF
40051537549967                                     CHF
40051537549975                                     CYP
40051537549983                                     DEM
40051537549991                                     DKK
40051537550001                                     ESP	

SCHEDULE 10.7(b)
2 of 2
MASTERCARD INCORPORATED
FIDUCIARY ACCOUNTS WITH BANKS PARTICIPATING IN THIS SYNDICATION
 @ 03/31/2004

ACCOUNT NUMBER                                   CURRENCY
--------------                                   --------
                       HSBC (CONT.)

40051537550028                                     FIM
40051537550036                                     FRF
40051537550602                                     GBP
40051537550610                                     GRD
40051537550629                                     IEP
40051537550637                                     ISK
40051537550645                                     ITL
40051537550653                                     MTL
40051537550661                                     NLG
40051537550688                                     NOK
40051537550696                                     PTE
40051537550704                                     SEK
40051537550712                                     USD
40051537560119                                     EUR
40051537561319                                     EUR
40051537561630                                     JPY
40051537562798                                     GBP
40051557117303                                     ISK
40051557117354                                     ZAR
40051557117362                                     CAD
40051557118157                                     NZD
40051537818047                                     USD	

EXHIBIT A
[FORM OF REVOLVING CREDIT NOTE]
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE (OTHER THAN PLEDGES OR ASSIGNMENTS HEREOF TO ANY FEDERAL RESERVE BANK) MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
REVOLVING CREDIT NOTE
$____________ New York, New York June 18, 2004
FOR VALUE RECEIVED, the undersigned, MASTERCARD INCORPORATED, a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of _________ (the "Lender") at the office of Citibank, N.A., located at 2 Penns Way, Suite 200, New Castle, Delaware, 19720, in lawful money of the United States and in immediately available funds, on the Revolving Credit Termination Date the principal amount of _________ DOLLARS ($__________), or, if less, the aggregate unpaid principal amount of all Revolving Credit Loans made by the Lender to the Borrower pursuant to Section 2.1 of the Credit Agreement (as defined below). The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount of Revolving Credit Loans made by the Lender from time to time outstanding at the rates and on the dates specified in the Credit Agreement.
The holder of this Note is authorized to record on Schedule A annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type and amount of each Revolving Credit Loan made by the Lender and the date and amount of each payment or prepayment of principal thereof, each conversion of all or a portion thereof to another Type, each continuation of all or a portion thereof as the same Type and, in the case of LIBOR Loans, the length of each Interest Period and the London Interbank Offered Rate with respect thereto. Each such recordation shall, to the extent permitted by applicable law, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure to make any such recordation shall not affect the obligation of the Borrower to repay (with applicable interest) Revolving Credit Loans made by the Lender pursuant to the Credit Agreement.
This Note (a) is one of the Revolving Credit Notes referred to in the Credit Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, MasterCard International Incorporated, a Delaware corporation, the Lender, the other banks and financial institutions from time to time parties thereto, JPMorgan Chase Bank, as Backup Agent and Citibank, N.A., as Administrative Agent, (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement.
2
Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
MASTERCARD INCORPORATED
By: _________________________________
Name: ___________________________
Title: __________________________
 
SCHEDULE A
TO REVOLVING CREDIT NOTE
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF LIBOR LOANS

                              Amount
                            Converted
                              to or      Interest Period and                         Amount of
                            Continued      London Interbank         Amount of       LIBOR Loans   Unpaid Principal
             Amount of       as LIBOR     Offered Rate with    Principal of LIBOR   Converted to  Balance of LIBOR   Notation Made
Date        LIBOR Loans       Loans        Respect Thereto        Loans Repaid       ABR Loans         Loans               By
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------	

2
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF LIBOR LOANS

                              Amount
                            Converted
                              to or      Interest Period and                         Amount of
                            Continued      London Interbank         Amount of       LIBOR Loans   Unpaid Principal
             Amount of       as LIBOR     Offered Rate with    Principal of LIBOR   Converted to  Balance of LIBOR   Notation Made
Date        LIBOR Loans       Loans        Respect Thereto        Loans Repaid       ABR Loans         Loans               By
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------	

EXHIBIT B
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE (OTHER THAN PLEDGES OR ASSIGNMENTS HEREOF TO ANY FEDERAL RESERVE BANK) MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
TERM LOAN NOTE

$___________                                                  New York, New York
                                                             ____________, 200__

            FOR VALUE RECEIVED, the undersigned, MASTERCARD INCORPORATED, a	

Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of ________________ (the "Lender") at the office of Citibank, N.A., located at 2 Penns Way, Suite 200, New Castle, Delaware, 19720, in lawful money of the United States of America and in immediately available funds, on the Termination Date the principal amount of _______________ DOLLARS ($________), or, if less, the aggregate unpaid principal amount of the Lender's interest in the Term Loan made to the Borrower pursuant to Section 2.3 of the Credit Agreement (as defined below). The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount of the Term Loan made by the Lender from time to time outstanding at the rates and on the dates specified in the Credit Agreement.
The holder of this Note is authorized to record on Schedule A annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type and amount of the Term Loan made by the Lender and the date and amount of each payment or prepayment of principal thereof, each conversion of all or a portion thereof, each continuation thereof each conversion of all or a portion thereof to another Type and, in the case of LIBOR Loans, the length of each Interest Period and the London Interbank Offered Rate with respect thereto. Each such recordation shall, to the extent permitted by applicable law, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure to make any such recordation shall not affect the obligation of the Borrower to repay (with applicable interest) the Term Loan made by the Lender pursuant to the Credit Agreement.
This Note (a) is one of the Term Loan Notes referred to in the Credit Agreement, dated as of June 18, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, MasterCard International Incorporated, a Delaware corporation, the Lender, the other banks and financial institutions from time to time parties thereto, JPMorgan Chase Bank, as Backup Agent and Citibank, N.A., as Administrative Agent, (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.
2
All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment demand, protest and all other notices of any kind.
Unless otherwise defined herein terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
MASTERCARD INCORPORATED
By: __________________________________
Name: ____________________________
Title: ___________________________
3
SCHEDULE A
TO TERM LOAN NOTE
CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF TERM LOAN

                                            Interest Period
                                               and London                                               Unpaid
                              Amount       Interbank Offered       Amount of        Amount of the      Principal
          Amount of the    Continued as    Rate with Respect   Principal of Term      Term Loan     Balance of the    Notation
Date        Term Loan       Term Loan           Thereto           Loan Repaid         Converted        Term Loan       Made By
------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------	

4
CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF TERM LOAN

                                            Interest Period
                                               and London                                               Unpaid
                              Amount       Interbank Offered       Amount of        Amount of the      Principal
          Amount of the    Continued as    Rate with Respect   Principal of Term      Term Loan     Balance of the    Notation
Date        Term Loan       Term Loan           Thereto           Loan Repaid         Converted        Term Loan       Made By
------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------	

EXHIBIT C
[FORM OF SWING LINE NOTE]
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE (OTHER THAN PLEDGES OR ASSIGNMENTS HEREOF TO ANY FEDERAL RESERVE BANK) MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
SWING LINE NOTE
$_____________ New York, New York June 18, 2004
FOR VALUE RECEIVED, the undersigned, MASTERCARD INCORPORATED, a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of CITIBANK, N.A. (the "Swing Line Lender"), at its office located at 2 Penns Way, Suite 200, New Castle, Delaware, 19720, in lawful money of the United States and in immediately available funds, on the Revolving Credit Termination Date, the principal amount of _________ DOLLARS ($____) or, if less, the aggregate unpaid principal amount of the Swing Line Loans made by the Swing Line Lender to the Borrower pursuant to Section 2.20 of the Credit Agreement (as defined below). The Borrower further agrees to pay interest in like money at said office on the unpaid principal amount of Swing Line Loans from time to time outstanding at the rates and on the dates specified in the Credit Agreement.
The Swing Line Lender is authorized to record the date and the amount of each Swing Line Loan made by the Swing Line Lender to the Borrower pursuant to Section 2.20 of the Credit Agreement and the date and amount of each payment or prepayment of principal thereof on Schedule A annexed hereto and made a part hereof and any such recordation shall, to the extent permitted by applicable law, constitute prima facie evidence of the accuracy of the information so recorded, provided that any failure by the Swing Line Lender to make such recordation shall not affect the obligation of the Borrower to repay (with applicable interest) the Swing Line Loans made by the Swing Line Lender pursuant to the Credit Agreement.
This Note (a) is the Swing Line Note referred to in the Credit Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, MasterCard International Incorporated, a Delaware corporation, the Swing Line Lender, the other banks and financial institutions from time to time parties thereto, JPMorgan Chase Bank, as Backup Agent and Citibank, N.A., as Administrative Agent, (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.
2
All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
MASTERCARD INCORPORATED
By: _________________________________
Name: ___________________________
Title: __________________________
3
SCHEDULE A TO
SWING LINE NOTE
LOANS AND REPAYMENTS

                                                             Unpaid
                                    Amount of               Principal
             Amount of              Swing Line             Balance of
            Swing Line                Loans                Swing Line            Notation Made
Date        Loans Made               Repaid                  Loans                    By
----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

==============================================================================================	

EXHIBIT D-1
FORM OF
CAF ADVANCE REQUEST
_____________, 200__
Citibank, N.A., as Administrative Agent
2 Penns Way, Suite 200
New Castle, Delaware 19720
JPMorgan Chase Bank, as Backup Agent
[ ]
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of June 18, 2004, among the MasterCard Incorporated, a Delaware corporation, MasterCard International Incorporated, a Delaware corporation, the Lenders named therein, JPMorgan Chase Bank, as Backup Agent, and Citibank, N.A., as Administrative Agent (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
This is a [Fixed Rate] [LIBOR] CAF Advance Request pursuant to
Section 2.11 of the Credit Agreement requesting offers for the following CAF Advances:
[NOTE: Pursuant to the Credit Agreement, a CAF Advance Request shall be transmitted in writing, by facsimile transmission, or by telephone, immediately confirmed by facsimile transmission. In any case, a CAF Advance Request shall contain the information specified in the second paragraph of this form.]

                                               Loan 1       Loan 2       Loan 3
-------------------------------------------------------------------------------
Aggregate Principal Amount                     $            $            $
-------------------------------------------------------------------------------
Borrowing Date
-------------------------------------------------------------------------------
CAF Advance Maturity Date
-------------------------------------------------------------------------------
CAF Advance Interest Payment Dates
-------------------------------------------------------------------------------	

2
Very truly yours,
MASTERCARD INCORPORATED
By: _________________________________
Name:
Title:
EXHIBIT D-2
FORM OF
CAF ADVANCE OFFER
_____, 200__
Citibank, N.A., as Administrative Agent
2 Penns Way, Suite 200
New Castle, Delaware 19720
JPMorgan Chase Bank, as Backup Agent
[ ]
Dear Sirs:
Reference is made to the Credit Agreement, dated as of June 18, 2004, among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the Lenders named therein, JPMorgan Chase Bank, as Backup Agent for such Lenders, and Citibank, N.A., as Administrative Agent for such Lenders (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein as therein defined.
In accordance with Sections 2.10 and 2.11 of the Credit Agreement, the undersigned Lender offers to make CAF Advances thereunder to the Borrower in the following amounts with the following maturity dates:

Borrowing Date: ________, 200__                              Aggregate Maximum Amount: $_________

Maturity Date 1:                                             Maximum Amount: $_______
           ____________, 200__                               $_______ offered at ________*
                                                             $_______ offered at ________*

Maturity Date 2:                                             Maximum Amount: $_______
           ____________, 200__                               $_______ offered at ________*
                                                             $_______ offered at ________*

Maturity Date 3:                                             Maximum Amount: $_______
           ____________, 200__                               $_______ offered at ________*
                                                             $_______ offered at ________*	

[NOTE: Insert the interest rate offered for the specified CAF Advance where indicated by an asterisk (*). In the case of LIBOR CAF Advances, insert a margin bid. In the case of Fixed Rate CAF Advances, insert a fixed rate bid.]
2
Very truly yours,
[NAME OF LENDER]
By: _____________________________________
Name:
Title:
Telephone No.:
Telecopy No.:
EXHIBIT D-3
FORM OF
CAF ADVANCE CONFIRMATION
________ __, 200__
Citibank, N.A.,
as Administrative Agent
2 Penns Way, Suite 200
New Castle, Delaware 19720
JPMorgan Chase Bank,
as Backup Agent
[ ]
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of June 18, 2004, among the undersigned, MasterCard International Incorporated, the Lenders named therein, JPMorgan Chase Bank, as Backup Agent, and Citibank, N.A., as Administrative Agent (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
In accordance with Section 2.11 of the Credit Agreement, the undersigned accepts and confirms the offers by the CAF Advance Lender(s) to make CAF Advances to the undersigned on _____, 200__ under Section 2.11 in the (respective) amount(s) set forth on the attached list of CAF Advances offered.
Very truly yours,
MASTERCARD INCORPORATED
By: _____________________________________
Name:
Title:
[Borrower to attach CAF Advance offer list prepared by the Administrative Agent with accepted amount entered by the Borrower to the right of each CAF Advance Offer].
Schedule to CAF Advance Assignment
EXHIBIT D-4
FORM OF
CAF ADVANCE ASSIGNMENT
CAF Advance ASSIGNMENT, dated as of the date set forth in Item 1 of Schedule I hereto, among the Assignor Lender set forth in Item 2 of Schedule I hereto (the "Assignor Lender"), the CAF Advance Assignee set forth in Item 3 of Schedule I hereto (the "CAF Advance Assignee"), and CITIBANK, N.A., as Administrative Agent for the Lenders under the Credit Agreement described below (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, this CAF Advance Assignment is being executed and delivered in accordance with subsection 10.6(c) of the Credit Agreement, dated as of June 18, 2004, among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the Assignor Lender and the other Lenders parties thereto, JPMorgan Chase Bank, as Backup Agent for the Lenders, and the Administrative Agent (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the "Credit Agreement"; unless otherwise defined herein, terms defined therein being used herein as therein defined); and
WHEREAS, the Assignor Lender has advanced to the Borrower the CAF Advance described in Item 5 of Schedule I hereto (the "CAF Advance"), and the Assignor Lender is assigning the CAF Advance to the CAF Advance Assignee pursuant to this CAF Advance Assignment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Assignor Lender acknowledges receipt from the CAF Advance Assignee of an amount equal to the purchase price, as agreed between the Assignor Lender and the CAF Advance Assignee, of the outstanding principal amount of, and accrued interest on, the CAF Advance. The Assignor Lender hereby irrevocably sells, assigns and transfers to the CAF Advance Assignee without recourse, representation or warranty, except as set forth in subsection 4(i) hereof and the CAF Advance Assignee hereby irrevocably purchases, takes and acquires from the Assignor Lender, the CAF Advance, together with all instruments and documents pertaining thereto.
2. (a) From and after the date set forth in Item 4 of Schedule I hereto (the "Transfer Effective Date"), principal and interest that would otherwise be payable to or for the account of the Assignor Lender pursuant to the CAF Advance shall, instead, be payable to or for the account of the CAF Advance Assignee, whether such amounts have accrued prior to the Transfer Effective Date or accrue subsequent to the Transfer Effective Date.
(b) If Item 6 of Schedule I hereto contains payment instructions for the CAF Advance Assignee and if the CAF Advance Assignee delivers a copy of this CAF Advance Assignment to the Administrative Agent in accordance with subsection 10.6(f) of the Credit Agreement at least 5 Business Days prior to the due date of any payment to the CAF Advance
2
Assignee, the CAF Advance Assignee hereby instructs the Administrative Agent to pay all such amounts payable to it pursuant to the provision of subparagraph (a) of this paragraph 2, in accordance with such payment instructions. If Item 6 of Schedule I hereto does not contain payment instructions for the CAF Advance Assignee (or a copy hereof is not delivered to the Administrative Agent as aforesaid), the Assignor Lender and the CAF Advance Assignee agree that, notwithstanding the provisions of subparagraph (a) of this paragraph 2, the Assignor Lender is hereby appointed by the CAF Advance Assignee as its collection agent to receive from the Administrative Agent, for and on behalf of and for the account of the CAF Advance Assignee, all amounts payable to or for the account of the CAF Advance Assignee under the CAF Advance; the Assignor Lender will immediately pay over to the CAF Advance Assignee any such amounts received by it, in like funds as received.
3. Each of the parties to this CAF Advance Assignment agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this CAF Advance Assignment.
4. By executing and delivering this CAF Advance Assignment, the Assignor Lender and the CAF Advance Assignee confirm to and agree with each other and the Administrative Agent and the Lenders as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim and has the corporate power and authority, and the legal right to sell, assign and transfer the CAF Advance to the CAF Advance Assignee, the Assignor Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other instrument or document furnished pursuant thereto or with respect to the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or such other instrument or document furnished pursuant thereto; (ii) the Assignor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; (iii) the CAF Advance Assignee confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 3.1, the financial statements delivered pursuant to Section 5.1, if any, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this CAF Advance Assignment; (iv) the CAF Advance Assignee will, independently and without reliance upon the Administrative Agent the Assignor Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in respect of the Credit Agreement; and (v) the CAF Advance Assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with Section 8 of the Credit Agreement.
5. Each party hereto represents and warrants to and agrees with the Administrative Agent that it is aware of and will comply with the provisions of
Section 10.6 of the Credit Agreement.
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6. THIS CAF ADVANCE ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this CAF Advance Assignment to be executed by their respective duly authorized officers on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
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Item 1 (Date of CAF Advance [Insert date of CAF Advance Assignment]
Assignment):
Item 2 (Assignor Lender): [Insert name of Assignor Lender]
Item 3 (CAF Advance Assignee): [Insert name, address and telephone
 numbers and name of contact party of CAF Advance Assignee]
Item 4 (Transfer Effective Date): [Insert Transfer Effective Date] [To be
 a date not less than five business days after date of CAF Advance Assignment]
Item 5 (Description of CAF Advance):
a. Date:
b. Principal Amount:
Item 6 (Payment Instructions): [Complete only if payments are to be
 made by Administrative Agent to CAF Advance Assignee rather than to Assignor Lender as collection agent for CAF Advance Assignee; leave blank if Assignor Lender is to act as such collection agent]
Item 7 (Signatures):
_________________________________,
as Assignor Lender
By: _____________________________
Name:
Title:
_________________________________,
as Bid Loan Assignee
By: _____________________________
Name:
Title:
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ACCEPTED FOR RECORDATION
IN REGISTER:
CITIBANK, N.A.,
as Administrative Agent
By: ________________________
Name:
Title:
EXHIBIT E
SWING LINE LOAN PARTICIPATION CERTIFICATE
___________ __, 200__
[Name of Lender]

Ladies and Gentlemen:
Pursuant to subsection 2.20(e) of the Credit Agreement, dated as of June 18, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined), among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent for the Lenders thereunder (in such capacity, the "Backup Agent") and Citibank, N.A., as administrative agent for the Lenders thereunder (in such capacity, the "Administrative Agent"), the undersigned, as Swing Line Lender under the Credit Agreement, hereby acknowledges receipt from you on the date hereof of ___________ DOLLARS ($____) as payment for a participating interest in the following Swing Line Loan:

Date of Swing Line Loan:                        ______________

Principal Amount of Swing Line Loan
  Participating Interest:                       $_____________

                                            Very truly yours,

                                            CITIBANK, N.A.

                                            By: ________________________________
                                                Name:
                                                Title:	

EXHIBIT F-1
[FORM OF OPINION OF GENERAL COUNSEL TO THE BORROWER AND
INTERNATIONAL]
June 18, 2004
To (a) the several banks and other financial institutions parties on the date hereof to the Agreement referred to below, (b) JPMorgan Chase Bank, as Backup Agent under said Agreement and (c) Citibank, N.A., as
Administrative Agent under said Agreement.
Dear Sirs:
I am General Counsel of MasterCard Incorporated, a Delaware corporation (the "Borrower") and MasterCard International Incorporated, a Delaware corporation ("International" and together with the Borrower, the "Obligors"), and am familiar with the Credit Agreement, dated as of June 18, 2004 (the "Agreement"), among the Borrower, MasterCard International, the banks and other financial institutions parties thereto (the "Lenders"), JPMorgan Chase Bank, as Backup Agent for the Lenders (in such capacity, the "Backup Agent"), and Citibank, N.A., as Administrative Agent for the Lenders (in such capacity, the "Administrative Agent"). This opinion is delivered to you pursuant to subsection 4.1(h)(i) of the Agreement. Terms used herein which are defined in the Agreement shall have the respective meanings set forth in the Agreement, unless otherwise defined herein.
In connection with this opinion, I have examined an executed copy of the Agreement, and such corporate documents and records of each Obligor and its Subsidiaries and certificates of public officials and officers of each Obligor and its Subsidiaries, and such other documents, as I have deemed necessary or appropriate for the purposes of this opinion. For the purposes of this opinion, I have assumed (i) the genuineness of all signatures of, and the authority of, Persons signing the Agreement on behalf of parties thereto other than the Obligors, (ii) the authenticity of all documents submitted to me as originals and (iii) the conformity to authentic original documents of all documents submitted to me as certified, conformed or photostatic copies.
Based upon the foregoing, I am of the opinion that:
i. Each Obligor and its Subsidiaries (a) is an entity duly organized, validly existing and in good standing (to the extent applicable) under the laws of the jurisdiction of its incorporation, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged and (c) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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ii. The execution, delivery and performance by each Obligor of the Agreement are within the corporate powers of such Obligor, have been duly authorized by all necessary corporate action (including any necessary shareholder approval), require no governmental approval, and do not contravene any law or regulation applicable to, including, without limitation, Regulation T, U or X of the Board, or any contractual restriction binding on, each Obligor.
iii. The Agreement has been duly executed and delivered by each Obligor and constitutes a legal, valid and binding obligation of each Obligor, enforceable against it in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). No consent or authorization of, filing with, notice to or other act by or in respect of any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance or validity of the Agreement other than those expressly required by the terms of the Agreement.
iv. To the best of my knowledge after due inquiry, except to the extent set forth in Schedule 3.6 attached to the Agreement or as previously disclosed in any public filings made by the Borrower, there are no pending or threatened actions or proceedings affecting either Obligor or any of its Subsidiaries which, if determined adversely to either Obligor or such Subsidiary, would have a Material Adverse Effect.
v. Neither Obligor is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. Neither Obligor is a "Holding Company" or a "Subsidiary Company" of a "Holding Company" or an "Affiliate" of a "Holding Company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended.
I am a member of the Bar of the State of New York and express no opinion on any laws other than the laws of the State of New York, the Delaware Corporation Law and the federal laws of the United States.
Very truly yours,
EXHIBIT F-2
[FORM OF OPINION OF SPECIAL NEW YORK COUNSEL TO THE
ADMINISTRATIVE AGENT]
June 18, 2004
To each of the Lenders,
the Backup Agent, and
the Administrative Agent party to the
Credit Agreement referred to below
Ladies and Gentlemen:
We have acted as special New York counsel to Citibank, N.A., as administrative agent (in such capacity, the "Administrative Agent") in connection with the Credit Agreement dated as of June 18, 2004 (the "Credit Agreement"), among MasterCard Incorporated (the "Borrower"), MasterCard International Incorporated (the "Guarantor" and, together with the Borrower, the "Credit Parties"), the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent (in such capacity, the "Backup Agent") and the Administrative Agent.
This opinion is furnished to you pursuant to Section 4.1(h)(ii) of the Credit Agreement. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined.
In arriving at the opinions expressed below, we have examined and relied on the Credit Agreement and we have made such investigations of law as we have deemed appropriate for purposes of this opinion.
In our examination, we have assumed the authenticity of all documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. When relevant facts were not independently established, we have relied upon representations made in or pursuant to the Credit Agreement.
In rendering the opinions expressed below, we have assumed, with respect to the Credit Agreement, that:
(i) the Credit Agreement has been duly authorized by, has been duly executed and delivered by, and (except to the extent set forth in the opinions below as to the Credit Parties) constitutes the legal, valid, binding and enforceable obligation of, all of the parties thereto;
(ii) all signatories to the Credit Agreement have been duly authorized;
(iii) all of the parties to the Credit Agreement are duly organized and validly existing under the laws of their respective jurisdictions of incorporation and have the power and authority (corporate or other) to execute, deliver and perform the Credit Agreement.
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Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that the Credit Agreement constitutes the legal, valid and binding obligation of each of the Credit Parties party thereto, enforceable against such Credit Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws relating to or affecting the rights of creditors generally and except as the enforceability thereof is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and qualifications:
(A) The enforceability of Section 10.5 of the Credit Agreement may be limited by (i) laws rendering unenforceable indemnification contrary to Federal or state securities laws and the public policy underlying such laws and
(ii) laws limiting the enforceability of provisions releasing, exculpating or exempting a party, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves gross negligence, recklessness, wilful misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Agreement to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any jurisdiction in which any Lender is located (other than the State of New York) that limit the interest, fees or other charges such Lender may impose, (ii)
Section 10.7(b) of the Credit Agreement to the extent it purports to grant a right of set-off, (iii) Section 10.13(a) of the Credit Agreement, insofar as it relates to the subject matter jurisdiction of any court of the United States of America sitting in the Southern District of New York to adjudicate any controversy related to the Credit Agreement, (iv) Section 10.13(b) of the Credit Agreement insofar as it relates to inconvenient forum with respect to any Federal court and (v) Section 10.9 of the Credit Agreement.
(D) We express no opinion as to the applicability to the obligations of the Guarantor under Section 9 of the Credit Agreement, (or the enforceability of such obligations under) Section 548 of the Bankruptcy Code, Article 10 of the New York Debtor and Creditor Law or any other provision of law relating to fraudulent conveyances, transfers or obligations, or the provisions of the law of the jurisdiction of incorporation of the Guarantor restricting dividends, loans or other distributions by a corporation for the benefit of its stockholders.
The foregoing opinions are limited to matters involving the Federal laws of the United States of America and the law of the State of New York, and we do not express any opinion as to the laws of any other jurisdiction.
This opinion letter is, pursuant to Section 4.1(h)(ii) of the Credit Agreement, provided to you by us in our capacity as special New York counsel to the Agent and may not be
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relied upon by any Person for any purpose other than in connection with the transactions contemplated by the Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
WFC/RMG
EXHIBIT G
FORM OF
BORROWING NOTICE
Citibank, N.A.,
as Administrative Agent
2 Penns Way, Suite 200
New Castle, Delaware 19720
Attention: Agency Department
JPMorgan Chase Bank,
as Backup Agent
[ ]
Dear Sirs:
This Borrowing Notice is delivered to you by the undersigned (the "Borrower") in connection with Section 2.2 of the Credit Agreement, dated as of June 18, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, MasterCard International Incorporated, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as Backup Agent for the Lenders, and Citibank, N.A., as Administrative Agent for the Lenders. Unless otherwise defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that Loans be made in the aggregate principal amount of $_________ on __________, 200__ (the "Borrowing Date"). The Borrower requests that such Loans be made as(1) [LIBOR Loans in a principal amount of $______ having an initial Interest Period of _____ months] [ABR Loans in a principal amount of $____________]. The Borrower requests that the Loans requested be paid into account at [bank].
The Borrower hereby certifies that the representations and warranties contained in Section 3 of the Credit Agreement will be true and correct in all material respects on and as of the Borrowing Date with the same effect as if made on and as of such date both before and after giving effect to the Loans to be made on the Borrowing Date and that no event has occurred or will be continuing on the Borrowing Date, or will result from the making of the Loans to be made on the Borrowing Date, which constitutes a Default or an Event of Default.

(1) Insert appropriate interest rate option, and, if applicable, number of months. If Loans are to be a combination of LIBOR and ABR Loans, specify the respective amounts of each type.
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IN WITNESS WHEREOF, the Borrower has caused this request and certificate to be executed and delivered by its duly authorized officer this ________ day of _________, 200__.
MasterCard Incorporated
By: _____________________________________
Name:
Title:
EXHIBIT H
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of June 18, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent for the Lenders (in such capacity, the "Backup Agent"), and Citibank, N.A., as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
__________ (the "Assignor") and _______ (the "Assignee") agree as follows:
i. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date (as defined below) (but not prior to the registration of the information contained herein in the Register pursuant to subsection 10.6(e) of the Credit Agreement), an interest (the "Assigned Interest") in and to the Assignor's rights and obligations under the Credit Agreement with respect to those credit facilities contained in the Credit Agreement as are set forth on Schedule 1 (individually, an "Assigned Facility"; collectively, the "Assigned Facilities"), in a principal amount for each Assigned Facility as set forth on Schedule 1.
ii. The Assignor (a) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto, or with respect to the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto, other than that the Assignor has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any such adverse claim; (b) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower, any of its Subsidiaries or any other obligor or the performance or observance by the Borrower, any of its Subsidiaries or any other obligor of any of their respective obligations under the Credit Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto; and (c) (i) requests that the Administrative Agent, upon request by the Assignee, (a) exchange any attached Notes for a new Note or Notes payable to the Assignee or, (b) if the Assignor does not hold any Notes, issue a new Note or Notes payable to the Assignee if so requested and (ii) if (A) the Assignor has retained any interest in the Assigned Facility and (B) the Assignor holds any Notes, requests that the Administrative Agent exchange the attached Notes for a new Note or Notes payable to the Assignor, in each case in amounts which reflect the assignment being made hereby (and after giving effect to any other assignments which have become effective on the Effective Date).
iii. The Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (b) confirms that, to the extent it has so required, it
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has received a copy of the Credit Agreement, together with copies of the financial statements referred to in or delivered pursuant to Sections 3.1 and 5.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) agrees that it will, independently and without reliance upon the Assignor, the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that, with respect to the Assigned Interest, it will be a party to and bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, if it is organized under the laws of a jurisdiction outside the United States, its obligations pursuant to subsection 2.23(b) of the Credit Agreement.
iv. The effective date of this Assignment and Acceptance shall be ____ , 200_ (the "Effective Date"). Following the execution of this Assignment and Acceptance and the consent hereto by the Borrower to the extent required under the Credit Agreement, it will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to the Credit Agreement, effective as of the Effective Date (which shall not, unless otherwise agreed to by the Administrative Agent, be earlier than five Business Days after the date of such acceptance and recording by the Administrative Agent).
v. Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor and Assignee. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.
vi. From and after the Effective Date, (a) the Assignee shall, with respect to the Assigned Interest, be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the other Loan Documents and shall be bound by the provisions thereof and (b) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights (except pursuant to Sections 2.21, 2.22 and 10.5 of the Credit Agreement) and be released from its obligations under the Credit Agreement.
vii. This Assignment and Acceptance shall be governed by and construed in accordance with the law of the State of New York.
viii. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed as of the date first above written by their respective duly authorized officers on Schedule 1 hereto.
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Schedule 1
to Assignment and Acceptance
Re: Assignment and Acceptance relating to the Credit Agreement, dated as of June 18, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent for the Lenders (in such capacity, the "Backup Agent"), and Citibank, N.A., as administrative agent for the Lenders (in such capacity, the "Administrative Agent" ).
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:

      Credit                                Principal
Facility Assigned                        Amount Assigned
-----------------                        ---------------
Revolving Credit                            $_______	

The terms set forth above are hereby agreed to by:

[NAME OF ASSIGNEE]                                 [NAME OF ASSIGNOR]

By___________________________                      By___________________________
Name:                                              Name:
Title:                                             Title:

Accepted:                                          Consented To:

CITIBANK, N.A., as                                 MASTERCARD INCORPORATED
Administrative Agent

By___________________________                      By___________________________
Name:                                              Name:
Title:                                             Title:	

EXHIBIT I
[FORM OF CLOSING CERTIFICATE]
CLOSING CERTIFICATE
Pursuant to subsections 4.1 (c), 4.1(d), 4.1(e) and 4.1(f) of the Credit Agreement, dated as of June 18, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation ("the "Borrower"), MasterCard International Incorporated, a Delaware corporation ("International"), the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as Backup Agent for the Lenders, and Citibank, N.A., as Administrative Agent for the Lenders, the undersigned, ________ of [Borrower]
[International] ______________, hereby certifies as follows:
1. The representations and warranties of [Borrower] [International] set forth in the Credit Agreement and each of the other Loan Documents to which it is a party are true and correct on and as of the date hereof as if made on and as of the date hereof;
2. No Default or Event of Default has occurred and is continuing as of the date hereof or will occur after giving effect to the making of the Loans on the date hereof or the consummation of each of the transactions contemplated by the Loan Documents; and
3. ____________ is and at all times since _______ __, _____, has been the duly elected and qualified [Assistant] Secretary of [Borrower]
[International] and the signature set forth on the signature line for such officer below is such officer's true and genuine signature;
and the undersigned [Assistant] Secretary of [Borrower]
[International] hereby certifies as follows:
4. There are no liquidation or dissolution proceedings pending or to my knowledge threatened against [Borrower] [International] or any of its Subsidiaries, nor has any other event occurred affecting or threatening the corporate existence of [Borrower] [International] or any of its Subsidiaries;
5. [Borrower] [International] is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware;
6. (i) Attached hereto as Exhibit A is a true and complete copy of resolutions duly adopted by the Board of Directors of [Borrower]
[International] on __________ __, _____; such resolutions have not in any way been amended, modified, revoked or rescinded and have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect; such resolutions are the only corporate proceedings of [Borrower] [International] now in force relating to or affecting the matters referred to therein;
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(ii) attached hereto as Exhibit B is a true and complete copy of the by-laws of [Borrower] [International] as in effect at all times since ______ __, _____, to and including the date hereof, and
(iii) attached hereto as Exhibit C is a true and complete copy of the certificate of incorporation of [Borrower] [International], as amended or restated on or prior to the date hereof and as in effect at all times since _______ __, _____, to and including the date hereof; and
7. The following persons are now duly elected and qualified officers of [Borrower] [International], holding the offices indicated next to their respective names below, and such officers have held such offices with
[Borrower] [International] at all times since _______ __, _____, to and including the date hereof, and the signatures appearing opposite their respective names below are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of [Borrower] [International], the Credit Agreement and the other Loan Documents to which it is a party and any certificate or other document to be delivered by [Borrower] [International] pursuant to the Credit Agreement or any such Loan Document:

Name                        Office                  Signature
----                        ------                  ---------
[  ]                   [  ] _________

[  ]                   [  ] _________	

Unless otherwise defined herein, capitalized terms which are defined in the Credit Agreement and used herein are so used as so defined.
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IN WITNESS WHEREOF, the undersigned have hereunto set our names and affixed the corporate seal.

MASTERCARD INCORPORATED                    MASTERCARD INTERNATIONAL INCORPORATED

By: _______________________________        By: _________________________________
    Name:                                      Name:
    Title:  Treasurer                          Title:  Treasurer

By: _______________________________        By: _________________________________
    Name:                                      Name:
    Title: [Assistant] Secretary               Title: [Assistant] Secretary

Date:  __________, 2004	

EXHIBIT J
[FORM OF COMPLIANCE CERTIFICATE]
Pursuant to subsection 5.2(b) of the Credit Agreement, dated as of June 18, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as Backup Agent for the Lenders, and Citibank, N.A., as Administrative Agent for the Lenders, the undersigned, ______________ of the Borrower, hereby certifies that during the period
[_______] to [_________], except as set forth on Schedule I hereto:
1. The representations and warranties of the Borrower set forth in the Credit Agreement and each of the other Loan Documents or which are contained in any certificate, document or financial or other statement furnished pursuant to or in connection with the Credit Agreement were true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties were true and correct as of such earlier date;
2. The negative covenant set forth in Section 6.1 of the Credit Agreement regarding the Maintenance of Net Worth has been calculated as follows:
$525,000,000
+ 50% of [$________] Consolidated Net Income (if positive)] of the Borrower for each fiscal quarter commencing with and including the fiscal quarter ending on [_______], 2004
= TOTAL [$_____]
[$__________] [Consolidated Net Worth] must be greater than or equal to
TOTAL [$_____];
3. No Default or Event of Default has occurred and is continuing as of the date hereof.
Unless otherwise defined herein, capitalized terms which are defined in the Credit Agreement and used herein are so used as so defined.
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IN WITNESS WHEREOF, the undersigned has hereunto set his or her name and affixed the corporate seal.
MASTERCARD INCORPORATED
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Date: __________ __, 200__
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Schedule I to
Compliance Certificate
[DISCLOSURE]
EXHIBIT K-1
[FORM OF NEW LENDER SUPPLEMENT]
SUPPLEMENT, dated ___________, to the Credit Agreement dated as of June 18, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MASTERCARD INCORPORATED, a Delaware corporation (the "Borrower"), MASTERCARD INTERNATIONAL INCORPORATED, a Delaware corporation, the several banks and other financial institutions parties thereto (the "Lenders"), JPMORGAN CHASE BANK, as back-up administrative agent (in such capacity, the "Backup Agent") and CITIBANK, N.A., as administrative agent (in such capacity, the "Administrative Agent") for the Lenders.
W I T N E S S E T H :
WHEREAS, the Credit Agreement provides in subsection 2.25(b) thereof that any bank, financial institution or other entity, although not originally a party thereto, may become a party to the Credit Agreement with the consent of the Borrower and the Administrative Agent by executing and delivering to the Borrower and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned was not an original party to the Credit Agreement but now desires to become a party thereto;
NOW, THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees to be bound by the provisions of the Credit Agreement, and agrees that it shall, on the date this Supplement is accepted by the Borrower and the Administrative Agent, become a Lender for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $____.
2. The undersigned (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 3.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it has made and will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, without limitation, if it is organized under the laws of a
2
jurisdiction outside the United States, its obligation pursuant to subsection 2.23(b) of the Credit Agreement.
3. The undersigned's address for notices for the purposes of the Credit Agreement is as follows:
4. Terms defined in the Credit Agreement shall have their defined meanings when used herein.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.
[INSERT NAME OF LENDER]
By _______________________________
Name:
Title:
Accepted this _____ day of
____________, _______.
MASTERCARD INCORPORATED
By _______________________________
Name:
Title:
Accepted this _____ day of
____________, _______.
CITIBANK, N.A., as Administrative Agent
By _______________________________
Name:
Title:
EXHIBIT K-2
[FORM OF COMMITMENT INCREASE SUPPLEMENT]
SUPPLEMENT, dated ____________, to the Credit Agreement dated as of June 18, 2004 (as amended, supplemented otherwise modified from time to time, the "Credit Agreement"), among MASTERCARD INCORPORATED, a Delaware corporation (the "Borrower"), MASTERCARD INTERNATIONAL INCORPORATED, a Delaware corporation, the several banks and other financial institutions parties thereto (the "Lenders"), JPMORGAN CHASE BANK, as back-up agent (in such capacity, the "Backup Agent") and CITIBANK, N.A., as administrative administrative agent (in such capacity, the "Administrative Agent") for the Lenders.
W I T N E S S E T H :
WHEREAS, the Credit Agreement provides in subsection 2.25(c) thereof that any Lender with (when applicable) the consent of the Borrower may increase the amount of its Commitment by executing and delivering to the Borrower and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned now desires to increase the amount of its Commitment under the Credit Agreement;
NOW THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees, subject to the terms and conditions of the Credit Agreement, that on the date this Supplement is accepted by the Borrower and the Administrative Agent it shall have its Commitment increased by $ ________, thereby making the amount of its Commitment $________.
2. Terms defined in the Credit Agreement shall have their defined meanings when used herein.
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IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.
[INSERT NAME OF LENDER]
By ______________________________
Name:
Title:
Accepted this ________ day of
____________, _______.
MASTERCARD INCORPORATED
By _______________________________
Name:
Title:
Accepted this ________ day of
____________, _______.
CITIBANK, N.A., as Administrative Agent
By _______________________________
Name:
Title:

EXHIBIT 10.2
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.
CITIBANK — MASTERCARD AGREEMENT
This Agreement, dated as of the Effective Date (as defined below), and made by and between Citibank, N.A., a national banking association, having its principal place of business at 399 Park Avenue, New York, NY 10043; Citibank (South Dakota), N.A., a national banking association having its principal place of business at 701 East 60th Street North, Sioux Falls, SD 57117; Citibank Canada, a Canadian chartered bank, having its principal place of business at 123 Front Street, Toronto, Ontario, M5C 2V6 Canada; Citibank USA, N.A., a national banking association having its principal place of business at 701 East 60th Street North, Sioux Falls, SD 57117; Citibank International, an Edge Act Bank chartered under the laws of the United States, having its principal place of business at 201 South Biscayne Blvd, Suite 3300, Miami, FL 33131; Citibank, F.S.B., a federal savings bank, having its principal place of business at 11800 Spectrum Center Drive, Reston, Virginia 20190; Citibank (West), FSB, a federal savings bank, having its principal place of business at One Sansome Street, San Francisco, California 94101 (the foregoing entities being individually and collectively referred to herein as “Citibank”) and MasterCard International Incorporated, a Delaware corporation having its principal place of business at 2000 Purchase Street, Purchase, New York 10557 (“MasterCard”);
WITNESSETH:
      WHEREAS, Citibank is licensed to issue Citibank MasterCard Cards (as defined below) in the United States of America (“U.S.”), Canada, Puerto Rico, and the United States Virgin Islands; and
      WHEREAS , MasterCard and Citibank (each a “Party” and together the “Parties”) intend to enter into an arrangement regarding Citibank MasterCard Cards;
      NOW, THEREFORE, in consideration of the mutual covenants and promises herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 	 	SECTION I. DEFINED TERMS. The following terms shall have the following meanings:	

 	A.	 	“Account” means the record, maintained by Citibank, of activity with respect to any Card, without regard to the number of Cards issued to Persons for use in making charges billed to the Card Account.	
 	
 	B.	 	“Acquired Card Inclusion Agreement” has the meaning set forth in Section VII.D.	
 	
 	C.	 	“Affiliate” shall mean, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. The term “control” (including, with its correlative meanings, “controlled by” or “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management	
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 	 	 	or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).	
 	
 	D.	 	“Agent Bank” shall mean a Card issuer or other entity engaged in an agent banking relationship with Citibank.	
 	
 	E.	 	“Agreement” means this Citibank-MasterCard Agreement, including any exhibits that are or may be appended hereto, as it may, from time to time, be amended in accordance with Section VII.M hereof.	
 	
 	F.	 	“Applicable Law” means, with respect to any Person, any law (including common law), ordinance, judgment, order, decree, injunction, permit, statue, treaty, rule or regulation, regulatory bulletin or guidance, regulatory examination, order or recommendation, or determination of (or agreement with) an arbitrator or a Governmental Authority, applicable to such Person.	
 	
 	G.	 	“Area of Use” means the U.S., Canada, Puerto Rico and the United States Virgin Islands.	
 	
 	H.	 	“Card” means a Credit Card or Debit Card, any stored value card or any other general purpose card (including a combined Credit Card and Debit Card) issued by Citibank and branded by MasterCard or a Competing Brand, and includes the Account number and all alternative modes of access thereto (e.g., a convenience check or a virtual card). “Card” shall also include a card issued by Citibank in the U.S. or Canada that contains both the Diners Club brand and the MasterCard brand on the front of such card. “Card” shall not include any Enabled International Cards as defined in and issued pursuant to the Diners Agreement.	
 	
 	I.	 	“Cardholder” means a Person obligated on a Card Account.	
 	
 	J.	 	“Citibank” has the meaning set forth in the preamble.	
 	
 	K.	 	“Citibank Active Account” means an Account for which there has been a Cardholder purchase, cash advance, or other spending activity within the three months prior to the date of measurement.	
 	
 	L.	 	“Citibank MasterCard Account” means an Account to which a Citibank MasterCard Card has been issued.	
 	
 	M.	 	“Citibank MasterCard Active Account” means a Citibank MasterCard Account for which there has been a Cardholder purchase, cash advance, or other spending activity within the three months prior to the date of measurement.	
 	
 	N.	 	“Citibank MasterCard Active Account Share” means, for any period of calculation, the ratio of Citibank MasterCard Active Accounts for such period of calculation to all Citibank Active Accounts for such period of calculation, expressed as a percentage.	
 	
 	O.	 	“Citibank MasterCard Card” means a Card bearing one or more names, logos, holograms, or service marks of MasterCard.	
 	
 	P.	 	“Citibank MasterCard Card GDV” means, for any period of calculation, the aggregate amount of all GDV on all Citibank MasterCard Cards issued in or to residents of the Area of Use, as reported for such applicable period of calculation.	
 	
 	Q.	 	“Co-branded Card” means a Card that is issued pursuant to an agreement between Citibank and any third party, which Card is issued by Citibank under an affinity Card program that employs the trademark, trade name, logotype, good will, good name, or reputation of such third party and that provides a value proposition to the Cardholder(s) via such affinity or branding relationship.	
2

 

 	R.	 	“Competing Brand” shall mean any brand owned or licensed by VISA, American Express, Discover, JCB, or any other brand that the Parties reasonably and mutually determine to be in competition with MasterCard.	
 	
 	S.	 	“Confidential Information” has the meaning set forth in Section IV.A.	
 	
 	T.	 	“Core Services” shall consist of those services ****.	
 	
 	U.	 	“Credit Card” means a general purpose credit device, including a charge card, a consumer credit card or a commercial credit card, that can be used to access a line of credit, either to make purchases or to effect cash advances, and that is maintained on behalf of the cardholder by an issuer. “Credit Card” shall not include any Debit Card.	
 	
 	V.	 	“Debit Card” means a general purpose debit device that can be used to access a checking, savings, NOW, current, sight deposit or share draft account or other prepaid deposit account which is maintained by or on behalf of a cardholder with an issuer. “Debit Card” shall not include any Credit Card or any on-line PIN-based debit card (e.g. which does not require the signature of the cardholder and there is an immediate deduction from the account of the amount accessed effected by a single interbank message).	
 	
 	W.	 	“Defaulting Party” has the meaning set forth in Section VI.B.2.	
 	
 	X.	 	“Diners Agreement” means that certain agreement entered into by and among MasterCard, Citibank USA, N.A. and certain Affiliates of Citibank USA, N.A. named therein, dated March 31, 2004.	
 	
 	Y.	 	“Disclosing Party” has the meaning set forth in Section IV.A.	
 	
 	Z.	 	“Dispute” has the meaning set forth in Section VII.L.	
 	
 	AA.	 	“Effective Date” has the meaning set forth in Section VI.A.	
 	
 	BB.	 	“GDV” means, for any period of calculation, ****. Any activity denominated in a currency other than U.S. dollars shall be converted to U.S. dollars for purposes of GDV calculations in accordance with MasterCard’s standard methodology, in effect from time to time.	
 	
 	CC.	 	“Governmental Authority” means any of the following with due jurisdiction over this Agreement or either Party: (1) nation, state, county, city, town, borough, village, district or other jurisdiction; (2) federal, state, local, municipal, foreign or other government; (3) governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal or other entity exercising due governmental powers); (4) multinational organization or body; (5) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; or (6) official of any of the foregoing.	
 	
 	DD.	 	“Includes” or “including” means without limitation.	
 	
 	EE.	 	“Indemnified Parties” has the meaning set forth in Section VII.K.	
 	
 	FF.	 	“Indemnifying Party” has the meaning set forth in Section VII.K.	
 	
 	GG.	 	“Initial Instance Quarter” has the meaning set forth in Section II.A.5.a.	
 	
 	HH.	 	“Issuer Fees” means all fees and assessments that MasterCard imposes on its Members from time to time, in respect of the gross dollar volume on, and transactions using, MasterCard Debit Cards or Credit Cards issued by such Members that are located in the Area of Use. The term includes fees and assessments imposed in respect of counterfeit cards, but does not include cross border or merchant investment fees that are required to be collected at the time of, or in connection with, interchange	
3

 

 	 	 	revenue received by an issuer. “Issuer Fees” do not include any component of foreign exchange calculations or revenues.	
 	
 	II.	 	“MasterCard” has the meaning set forth in the preamble.	
 	
 	JJ.	 	“MasterCard Rules” means the MasterCard Bylaws and Rules, dated April 2004, and such other bylaws, rules, policies, procedures, bulletins, memoranda, board of directors actions and other directives as may be adopted, modified, supplemented, changed or rescinded by MasterCard from time to time, to the extent the foregoing apply in the Area of Use.	
 	
 	KK.	 	“MasterCard Standard Pricing” means, for any period of calculation, the aggregate Issuer Fees for Core Services that, but for this Agreement, would apply to Citibank in respect of Citibank MasterCard Cards issued in or to residents of the Area of Use.	
 	
 	LL.	 	“MCBS” means the MasterCard Consolidated Billing System.	
 	
 	MM.	 	“Measurement Period” means each twelve (12) month period during the Term that begins on the            Effective Date.	
 	
 	NN.	 	“Member” has the meaning ascribed to it in the MasterCard Rules.	
 	
 	OO.	 	“Party” and “Parties” have the meanings set forth in the recitals.	
 	
 	PP.	 	“Person” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity.	
 	
 	QQ.	 	“Quarterly Member Report” means the quarterly report required to be filed by Members under the MasterCard Rules.	
 	
 	RR.	 	“Rebate” has the meaning set forth in Section II.A.6.	
 	
 	SS.	 	“Receiving Party” has the meaning set forth in Section IV.A.	
 	
 	TT.	 	“SEC” has the meaning set forth in Section IV.J.	
 	
 	UU.	 	“Target Percentage” has the meaning set forth in Section II.B.2.a.	
 	
 	VV.	 	“Term” has the meaning set forth in Section VI.A.	
 	
 	WW.	 	“True-Up Amount” has the meaning set forth in Section II.B.3.	
 	
 	XX.	 	“User-Pay Services” means all optional Member-specific, customized, user-based or similarly optional services offered or provided by MasterCard to a Member in respect of MasterCard Cards, the costs of which services are charged to specific participating Members, other than Core Services. “User-Pay Services” also includes any services that MasterCard offers or provides in replacement for any of the foregoing.	
 	
 	YY.	 	“VISA” means VISA U.S.A., Inc., VISA International, Inc. and any Affiliate of VISA International, Inc., or their successors, that authorize issuance in the Area of Use.	

 	 	SECTION II. BENEFITS. In consideration of Citibank’s full and timely performance of its commitments and other obligations under this Agreement, MasterCard will provide benefits to Citibank as follows:	
4

 

 	A.	 	Quarterly Pricing Procedure. For each calendar quarter during the Term, subject to the provisions of this Agreement, Issuer Fees for Core Services for Citibank MasterCard Card GDV during such calendar quarter shall be subject to the following ****:	

 	1.	 	If, for such calendar quarter, the Citibank MasterCard Card GDV was greater than or equal to **** but less than ****, then Citibank’s Issuer Fees for Core Services for such calendar quarter shall be calculated as **** basis points ( ****) times all Citibank MasterCard Card GDV for such calendar quarter.	
 	
 	2.	 	If, for such calendar quarter, the Citibank MasterCard Card GDV was greater than or equal to **** but less than ****, then:	

 	a.	 	Citibank’s Issuer Fees for Core Services for the first **** of Citibank MasterCard Card GDV for such calendar quarter shall be calculated as **** basis points ( ****) times such **** in Citibank MasterCard Card GDV; and	
 	
 	b.	 	Citibank’s Issuer Fees for Core Services for the incremental Citibank MasterCard Card GDV in excess of **** for such calendar quarter shall be calculated as **** basis points ( ****) times such incremental Citibank MasterCard Card GDV.	

 	3.	 	If, for such calendar quarter, the Citibank MasterCard Card GDV was greater than or equal to ****, then Citibank’s Issuer Fees for Core Services for such calendar quarter shall be calculated as **** basis points ( ****) times all Citibank MasterCard Card GDV for such calendar quarter.	
 	
 	4.	 	If, for such calendar quarter, the Citibank MasterCard Card GDV was greater than or equal to **** but less than ****, then Citibank’s Issuer Fees for Core Services for such calendar quarter shall be calculated in accordance with the following:	

 	a.	 	Calculation of applicable rate in basis points (R) = ****÷ (x ÷ ****)	
 	
 	 	 	where “x” represents the actual Citibank MasterCard Card GDV for such calendar quarter.	
 	
 	b.	 	Then Citibank’s Issuer Fees for Core Services for such calendar quarter shall be calculated as (R) (determined in accordance with Section II.A.4.a) times all Citibank MasterCard Card GDV for such calendar quarter.	
 	
 	c.	 	For example, if for such calendar quarter the Citibank MasterCard Card GDV was equal to **** then (i) the applicable rate would be **** basis points (****), calculated as (****÷ (**** ÷ ****)) and (ii) Citibank’s Issuer Fees for Core Services for such calendar quarter would be calculated as **** times ****.	

 	5.	 	If, for such calendar quarter, the Citibank MasterCard Card GDV was less than ****, then Citibank’s Issuer Fees for Core Services for such calendar quarter shall be calculated in accordance with the following:	

 	a.	 	The first time during the Term that the Citibank MasterCard Card GDV for a calendar quarter is less than **** (the “Initial Instance Quarter”) Citibank’s Issuer Fees for Core Services for such calendar quarter shall be calculated in accordance with Sections II.A.4.a and II.A.4.b above.	
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 	b.	 	After the Initial Instance Quarter, for any ensuing calendar quarter during the Term that the Citibank MasterCard Card GDV for such calendar quarter is less than ****, then Citibank’s Issuer Fees for Core Services for such calendar quarter shall be mutually agreed to by the Parties, provided, that if the Parties cannot reach an agreement as to the alternative rate within seven (7) days after MasterCard has received all reports required by Section V for such calendar quarter then the Issuer Fees for Core Services for such quarter shall be calculated in accordance with MasterCard Standard Pricing.	

 	6.	 	Notwithstanding the above, Citibank shall pay MasterCard Standard Pricing on Citibank MasterCard GDV in accordance with the MasterCard Rules; the applicable alternative rates described above will be reflected in a rebate (the “Rebate”) computed by MasterCard using the information provided by Citibank pursuant to Section V. Within thirty (30) days after MasterCard has received all reports required by Section V for a calendar quarter, the Parties will promptly arrange for such payments as are necessary to reflect the application of the appropriate alternative rate, if any, to the actual Citibank MasterCard Card GDV for such calendar quarter. MasterCard shall make portions of each Rebate payment to Citibank USA, N.A. and Citibank Canada by one of the following means, as designated by Citibank: crediting the Citibank USA, N.A. and Citibank Canada accounts in MCBS; wire transfer to an account designated by Citibank; or such other payment method as is reasonably requested by Citibank. The portion of the Rebate payment to Citibank Canada shall be calculated based on the equivalent portion of the GDV that is attributable to Citibank MasterCard Cards issued by Citibank Canada. The remaining Rebate payment shall be paid to Citibank USA, N.A. which shall distribute all or a portion of such remaining amounts to the other Citibank entities that are Parties as it may determine in its reasonable discretion (and shall allocate to such Citibank entities responsibility for any payments owed to MasterCard pursuant to this Agreement in its reasonable discretion). The procedures described in the previous three sentences shall also be used for payments owed to Citibank pursuant to Section II.B.3 below.	
 	
 	7.	 	Notwithstanding the above, ****.	

 	B.	 	Yearly True-Up Procedure. At the conclusion of each Measurement Period, subject to the provisions of this Agreement, the Parties shall review the Citibank MasterCard Card GDV during such Measurement Period for the following purposes:	

 	1.	 	If, for such Measurement Period, the Citibank MasterCard Card GDV was greater than or equal to ****, then the Parties shall reconcile the Issuer Fees for Core Services paid by Citibank for the four calendar quarters of such Measurement Period pursuant to Section II.A above (including any Rebate paid by MasterCard to Citibank) in accordance with the following:	

 	a.	 	If, for such Measurement Period, the Citibank MasterCard Card GDV was greater than or equal to **** but less than ****, then Citibank’s Issuer Fees for Core Services for such Measurement Period shall be calculated as **** basis points (****) times all Citibank MasterCard Card GDV for such Measurement Period.	
 	
 	b.	 	If, for such Measurement Period, the Citibank MasterCard Card GDV was greater than or equal to **** but less than ****, then:	

 	(i)	 	Citibank’s Issuer Fees for Core Services for the first **** of Citibank MasterCard Card GDV for such Measurement Period shall be calculated as ****basis points (****) times such **** in Citibank MasterCard Card GDV; and	
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 	(ii)	 	Citibank’s Issuer Fees for Core Services for the incremental Citibank MasterCard Card GDV in excess of **** for such Measurement Period shall be calculated as **** basis points (****) times such incremental Citibank MasterCard Card GDV.	

 	c.	 	If, for such Measurement Period, the Citibank MasterCard Card GDV was greater than or equal to ****, then Citibank’s Issuer Fees for Core Services for such Measurement Period shall be calculated as ****basis points (****) times all Citibank MasterCard Card GDV for such Measurement Period.	

 	2.	 	If, for such Measurement Period, the Citibank MasterCard Card GDV was less than ****, then the Parties shall reconcile the Issuer Fees for Core Services paid by Citibank for the four calendar quarters of such Measurement Period pursuant to Section II.A above (including any Rebate paid by MasterCard to Citibank) in accordance with the following:	

 	a.	 	If, for such Measurement Period, the Citibank MasterCard Card GDV was greater than or equal to **** but less than **** and during such Measurement Period the Citibank MasterCard Active Account Share equaled or exceeded **** (****%) (the “Target Percentage”), then Citibank’s Issuer Fees for Core Services for such Measurement Period shall be calculated as follows:	

 	(i)	 	Calculation of applicable rate in basis points (R) = **** ÷ (x ÷ ****)	
 	
 	 	 	where “x” represents the actual Citibank MasterCard Card GDV for such Measurement Period.	
 	
 	(ii)	 	Then Citibank’s Issuer Fees for Core Services for such calendar quarter shall be calculated as (R) (determined in accordance with Section II.B.2.a.(i)) times all Citibank MasterCard Card GDV for such Measurement Period.	
 	
 	(iii)	 	For example, if for such Measurement Period the Citibank MasterCard Card GDV was equal to **** then (i) the applicable rate would be **** basis points (****), calculated as (**** ÷ (**** ÷ ****)) and (ii) Citibank’s Issuer Fees for Core Services for such Measurement Period would be calculated as ****times ****.	

 	b.	 	If, for such Measurement Period, the Citibank MasterCard Card GDV was greater than or equal to **** but less than **** and during such Measurement Period Citibank did not satisfy the Target Percentage, then Citibank’s Issuer Fees for Core Services for such Measurement Period shall be calculated as follows:	

 	(i)	 	Calculation of applicable rate in basis points (R) = [(**** ÷ (x ÷ ****)) + ****]	
 	
 	 	 	where “x” represents the actual Citibank MasterCard Card GDV for such Measurement Period.	
 	
 	(ii)	 	Then Citibank’s Issuer Fees for Core Services for such calendar quarter shall be calculated as (R) (determined in accordance with Section II.B.2.b.(i)) times all Citibank MasterCard Card GDV for such Measurement	
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 	 	 	Period.	
 	
 	(iii)	 	For example, if for such Measurement Period the Citibank MasterCard Card GDV was equal to **** and the Target Percentage was not satisfied then (i) the applicable rate would be **** basis points (****), calculated as [(**** ÷ (**** ÷ ****)) + ****] and (ii) Citibank’s Issuer Fees for Core Services for such Measurement Period would be calculated as **** times ****.	

 	c.	 	If, for such Measurement Period, the Citibank MasterCard Card GDV was less than ****, then Citibank’s Issuer Fees for Core Services for such Measurement Period shall be mutually agreed to by the Parties, provided, that if the Parties cannot reach an agreement as to the alternative rate within seven (7) days after MasterCard has received all reports required by Section V for such Measurement Period then the Issuer Fees for Core Services for such Measurement Period shall be calculated in accordance with MasterCard Standard Pricing.	

 	3.	 	Notwithstanding the above, during each calendar quarter of such Measurement Period Citibank shall pay Issuer Fees for Core Services on Citibank MasterCard GDV in accordance with Section II.A; the applicable alternative rates described in this Section II.B will be reflected in an annual rebate to Citibank or annual payment to MasterCard, as applicable (the “True-Up Amount”) computed by MasterCard using the information provided by Citibank pursuant to Section V. Within thirty (30)) days after MasterCard has received all reports required by Section V for such Measurement Period, the Parties will promptly arrange for payment of the True-Up Amount to reflect the application of the appropriate alternative rate, if any, provided in this Section II.B to the actual Citibank MasterCard Card GDV for such Measurement Period.	

 	 	SECTION III. COMMITMENTS. In consideration of MasterCard’s obligation to provide benefits as provided in this Agreement, Citibank agrees to observe the following commitments:	

 	A.	 	****.	
 	
 	B.	 	****.	
 	
 	C.	 	****.	

 	 	SECTION IV. CONFIDENTIALITY.	

 	A.	 	In General. The terms of this Agreement and all information provided pursuant to or in connection with either Party’s performance under this Agreement (“Confidential Information”) is confidential and proprietary to the Party providing the Confidential Information (“Disclosing Party”) to the other Party (“Receiving Party”). Notwithstanding the foregoing, Confidential Information shall not include information which: (i) is or hereafter becomes part of the public domain through no fault of the Receiving Party; (ii) is received from or furnished to a third party without similar restriction on the third party’s rights; (iii) is independently developed by the Receiving Party; or (iv) is disclosed pursuant to a requirement of Applicable Law. If the Receiving Party asserts that any exception set out in the preceding sentence allows the disclosure of any Confidential Information, it shall promptly	
8

 

 	 	 	submit to the Disclosing Party written documentation demonstrating the applicability of the claimed exception.	
 	
 	B.	 	Use. The Receiving Party shall not use any Confidential Information provided by the Disclosing Party for any purposes other than as permitted or required under this Agreement or the MasterCard Rules.	
 	
 	C.	 	Disclosure. Without the express written consent of the Disclosing Party, the Receiving Party shall not disclose or provide access to any Confidential Information to any Person, with the exception of disclosure to any Affiliate, agent, representative, servant, contractor and employee that has a need to know, for the purposes of complying with its obligations hereunder, the specific Confidential Information, and that has agreed to keep confidential such Confidential Information.	
 	
 	D.	 	Data Protection. The Receiving Party shall take reasonable measures, using the same care taken by such Party to safeguard its own confidential and proprietary information, to prevent disclosure by its Affiliates, agents, representatives, servants, contractors and employees of any Confidential Information.	
 	
 	E.	 	Post-Termination Obligations. Upon the conclusion of the Term, the Receiving Party shall, upon reasonable request from the Disclosing Party, return or destroy all Confidential Information provided by the Disclosing Party, including any summaries thereof, and all copies and duplicates thereof (in whatever form maintained), except as may be otherwise required by Applicable Law.	
 	
 	F.	 	Remedies. The Parties acknowledge that the Confidential Information provided by the Disclosing Party constitutes confidential and proprietary information of the Disclosing Party and that use or disclosure thereof by the Receiving Party or any Affiliates, agents, representatives, servants, contractors or employees of such Receiving Party, other than in accordance with the express terms of this Agreement or as otherwise authorized in writing by a senior officer of the Disclosing Party, constitutes a material breach of the Agreement or, after the Term, of such Disclosing Party’s continuing rights. In such event, the Parties acknowledge that such Disclosing Party may be immediately and irreparably harmed, that money damages may not provide full and appropriate relief, and that, notwithstanding any other provision hereof, such Disclosing Party may therefore immediately seek to terminate this Agreement and obtain an order for appropriate injunctive relief.	
 	
 	G.	 	Notice. Each Party shall notify the other immediately of any loss or unauthorized disclosure or use of Confidential Information that comes to such Party’s attention.	
 	
 	H.	 	Subpoenas, Etc. In the event that either Party receives a subpoena, court order or other similar process purporting to require it to disclose Confidential Information, it shall provide the other Party with written notice and documentation thereof as soon as practicable, and shall cooperate with the other Party in the event that such other Party determines to seek a protective order or other remedy with regard to such disclosure.	
 	
 	I.	 	No Public Announcement. Neither Party shall issue any public announcements or make any published statements regarding this Agreement or the subject matter hereof, without the prior written consent of the other Party; provided however that the Parties shall work together in good faith to develop mutually-agreed upon responses to media inquiries concerning this Agreement.	
 	
 	J.	 	Confidential Treatment. If MasterCard or Citibank is required to file this Agreement as an exhibit to any report or other filing with the Securities and Exchange Commission (the “SEC”), such Party shall file with the Secretary of the SEC an application requesting confidential treatment of the Agreement pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, at or about the time of such filing, provided that no such filing shall be deemed to violate this Section IV.	
9

 

 	 	SECTION V. REPORTING AND AUDIT.	

 	A.	 	Citibank Reporting. Within fifteen (15) days following the close of each calendar quarter during a Measurement Period and within fifteen (15) days following the close of each Measurement Period, Citibank will report information in accordance with the MasterCard Rules in the Quarterly Member Report or such other reports as are required by the MasterCard Rules. Citibank shall provide information to MasterCard concerning Citibank Active Accounts on an as-needed basis as required to effectuate this Agreement or under the MasterCard Rules.	
 	
 	B.	 	MasterCard Audit Rights. MasterCard and its designated auditors shall have the right to audit Citibank’s books and records to verify all information supplied by Citibank pursuant to Section V.A. MasterCard shall give Citibank not less than thirty (30) days prior notice of the scope and nature of any such audit. Each audit shall be conducted at MasterCard’s expense and shall be conducted at all times so as to not unreasonably interfere with the normal business and operations of Citibank. Subject to the foregoing, Citibank shall cooperate, and cause the cooperation of its independent auditors and other necessary personnel, in the conduct of each audit. If an audit reveals that a Party has overpaid or underpaid any sum owing hereunder, the Parties shall promptly arrange for such payments as are necessary to correct the overpayment or underpayment (exclusive of the time value of money).	
 	
 	C.	 	MasterCard Reporting. Each payment by MasterCard hereunder shall be accompanied by adequate supporting documentation. If Citibank reasonably requests additional supporting documentation, MasterCard shall promptly fulfill such request.	

 	 	SECTION VI. TERM AND TERMINATION.	

 	A.	 	Term. Unless terminated earlier in accordance with the terms hereof, the term of this Agreement will begin on January 1, 2004 (the “Effective Date”) and shall continue through December 31, 2013 (the “Term”).	
 	
 	B.	 	Termination. Either Party shall have the right to terminate this Agreement immediately upon written notice to the other Party if:	

 	1.	 	The other Party fails to observe or perform any of its material obligations under this Agreement, which failure is not cured within thirty (30) days after notice of the failure, or if cure cannot be effected in such time, then within such additional time as is necessary to cure using commercially reasonable efforts.	
 	
 	2.	 	The other Party (“Defaulting Party”): (a) admits in writing its inability to pay its debts generally as they become due; (b) becomes insolvent (whether by balance sheet insolvency or a failure to meet its obligations in the ordinary course); (c) makes an assignment for the benefit of its creditors; (d) calls a meeting of creditors; (e) files any voluntary petition in bankruptcy under the U.S. Bankruptcy Code, under the laws of Puerto Rico or Canada, or under any similar state, provincial or local bankruptcy or insolvency laws, as in effect from time to time; (f) has an involuntary petition in bankruptcy filed against it under any such law and such petition is not discharged within sixty (60) days from the date of filing; (g) consents to the appointment of a receiver for all or a substantial portion of its property; and/or (h) becomes subject to an order of a court of competent jurisdiction assuming custody, attaching or sequestering all or a material portion of the Defaulting Party’s property	
10

 

 	 	 	or assets, which order is not suspended or terminated within sixty (60) days from the inception thereof.	

 	 	SECTION VII. OTHER TERMS AND CONDITIONS.	

 	A.	 	Taxes. All payments, consideration and the value of services made by the Parties under this Agreement shall be deemed inclusive of all sales, use, excise, occupancy, income and similar taxes, the sole obligation for reporting and remittance of which shall be that of the Party to which the payment is made. For tax purposes, the Parties agree to treat the Rebate as an adjustment to the Issuer Fees payable to MasterCard under this Agreement, any similar agreement or otherwise payable to MasterCard pursuant to MasterCard Rules.	
 	
 	B.	 	MasterCard Assessments and Fees.	

 	1.	 	****.	
 	
 	2.	 	****.	

 	C.	 	Notices. Any notice, advice or other written information, documentation or statement required or permitted to be given under the Agreement shall be deemed duly given to a Party upon hand delivery, upon receipt if sent by an international courier delivery service of general commercial use and acceptance to the following addresses or such other address as may hereafter be designated by notice given by such Party, or upon delivery by e-mail or facsimile transmission, so long as receipt of such delivery is evidenced in writing:	

 	 	 	If to Citibank:	
 	
 	 	 	Address:	
 	
 	 	 	Chairman and CEO
Citicorp Credit Services, Inc.
One Court Square, Forty-First Floor
Long Island City, New York 11120	
 	
 	 	 	With a copy to:	
 	
 	 	 	Director, Association Management
Citicorp Credit Services, Inc.
One Court Square, Forty-First Floor
Long Island City, New York 11120	
 	
 	 	 	If to MasterCard:	
 	
 	 	 	Address:	
 	
 	 	 	Executive Vice President, Global Key Accounts
MasterCard International Incorporated
2000 Purchase Street
Purchase, NY 10577-2509	
11

 

 	 	 	With a copy to:	
 	
 	 	 	General Counsel
MasterCard International Incorporated
2000 Purchase Street
Purchase, NY 10577-2509	
 	
 	D.	 	Entire Agreement. This Agreement evidences the entire agreement and understanding between the Parties with respect to the transactions contemplated hereby in the Area of Use and supersedes the following agreements as to the subject matter hereof: (i) the agreement entered into among Citibank (South Dakota), N.A., MasterCard and certain other parties as of March 1, 1999 (the “Prior Agreement”), (ii) the incentive agreement relating to Puerto Rico entered into by Citibank International, MasterCard and certain other parties as of December 18, 2003 and (iii) the incentive agreement relating to Canada entered into by Citibank Canada and MasterCard as of January 1, 2001. In addition, the Parties do not intend for this Agreement, in any way, to supersede the agreement entered into by MasterCard and Citibank USA, N.A. as of November 3, 2003 (the “Acquired Card Inclusion Agreement”). The Parties intend for such Acquired Card Inclusion Agreement to remain effective in accordance with its terms for the stated duration therein. However, upon the conclusion of the term thereof, any cards subject to such Acquired Card Inclusion Agreement will be included in this Agreement for the duration of the Term, subject to all the terms and conditions contained herein.	
 	
 	E.	 	Release. The Parties acknowledge that as of the Effective Date the Prior Agreement is terminated in its entirety and is of no further force or effect whatsoever. Each Party hereby agrees and acknowledges that as of the date of execution of this Agreement it has received all payments and services due to it from the other Party under the Prior Agreement pursuant to the terms thereof up to the date of execution of this Agreement and that such payments and services represent the full and complete satisfaction of any liabilities that such Party may have with respect to such Prior Agreement. In consideration of the execution of this Agreement and the full and timely performance of each Party’s obligations hereunder, MasterCard, Citibank and each of their respective Affiliates, jointly and severally, release and forever discharge each other and each other’s Affiliates from and against any and all manner of actions, causes, causes of actions, claims, suits, debts, controversies, damages, judgments, liabilities, executions and demands whatsoever, whether asserted or unasserted, suspected or unsuspected, known or unknown, foreseen or unforeseen, actual or contingent, liquidated or unliquidated, in law or in equity, which either Citibank, MasterCard or any of their respective Affiliates may have against the other Party or any of the other Party’s Affiliates, that arise out of, or are related in any way to, the Prior Agreement (including under the MasterCard Rules with respect to the Prior Agreement).	
 	
 	F.	 	Express Waiver. Neither MasterCard nor Citibank believe that the relief provided in the decision and final judgment in United States v. VISA U.S.A., et al., 98 Civ. 7076 (BSJ) would permit Citibank to terminate its obligations under this Agreement. However, in the event that a court of competent jurisdiction determines otherwise, Citibank hereby explicitly waives any such right. In the event that such waiver is not recognized by a court of competent jurisdiction and Citibank rescinds its obligations under this Agreement pursuant to such relief, Citibank hereby agrees to repay to MasterCard all amounts received by it from MasterCard under this Agreement prior to such rescission.	
 	
 	G.	 	Survival. Except as otherwise provided herein, the obligations in Sections II and V shall survive for forty-five (45) days after the conclusion of the Term; the obligations in Section VII.A shall survive for the applicable statute of limitations period, plus thirty (30) days; the rights and obligations in Section VII.B shall survive through the payment of any Rebates or True-Up Amounts required	
12

 

 	 	 	thereby; and the obligations in Section IV and Sections VII.C through VII.M shall survive any termination of this Agreement for a period of five (5) years.	
 	
 	H.	 	Assignment. No Party may assign or otherwise convey this Agreement, or any of its rights and obligations hereunder, to any third party without the prior written consent of MasterCard and Citibank, which may be withheld in such Party’s sole discretion, and any such attempted assignment without consent shall be void; provided, however, that, upon thirty (30) days prior written notice to the other Party, any Party may assign or transfer this Agreement in whole or in part to an Affiliate with reasonably sufficient or comparable resources to perform the assigned provisions hereof. If any Person acquires any interest in this Agreement or the subject matter hereof in any manner, whether by voluntary or involuntary transfer, operation of Applicable Law or otherwise, such interest shall be held subject to all of the terms of the Agreement and by taking or holding such interest, such Person shall be conclusively deemed to have agreed to be bound by, and to comply with, all of the terms and obligations of the Agreement, and the Parties shall use commercially reasonable efforts to cause such Person to execute any applicable documents to reflect the rights and obligations obtained by such Person. All rights, remedies and obligations of the Parties shall accrue or apply solely thereto or to their permitted successors or assigns, and there is no intent to benefit or obligate any other Person hereby.	
 	
 	I.	 	No Violation. Notwithstanding anything else contained in this Agreement, neither MasterCard nor Citibank (nor any of their respective Affiliates) shall, and none of them shall be obligated to, take any action that such entity believes in good faith would violate, or would cause any of them to violate, Applicable Law.	
 	
 	J.	 	Representations, Warranties and Covenants.	

 	1.	 	Each Party covenants, represents and warrants to the other that on a continuing basis during the Term, and for such additional period after the Term during which such Party has not completed full performance of its obligations hereunder, that: (i) it is duly organized, validly existing and in good standing under Applicable Law and (ii) it has full corporate power and authority to execute, deliver, and perform this Agreement according to its terms, it possesses all licenses, consents, and approvals required to do so, and the execution, delivery, and performance of this Agreement have been duly authorized by it.	
 	
 	2.	 	Each Party represents and warrants to the other that as of the Effective Date there are no actions, suits, or proceedings existing or pending against or affecting it before any Governmental Authority which would have a material adverse effect on its ability to perform its obligations hereunder except for proceedings which it is contesting and challenging in good faith and which it does not reasonably believe will result in a final order or decree materially affecting its ability to perform this Agreement.	
 	
 	3.	 	Citibank covenants, represents and warrants to MasterCard on a continuing basis during the Term, and for such additional period after the Term during which Citibank has not completed full performance of its obligations hereunder, that Citibank shall cause all Affiliates of Citibank that issue Cards in the Area of Use to become Parties hereto.	
 	
 	4.	 	MasterCard covenants, represents and warrants to Citibank on a continuing basis during the Term, and for such additional period after the Term during which MasterCard has not completed full performance of its obligations hereunder, that in the event that Citibank causes an Affiliate of Citibank to become a Party hereto pursuant to Section VII.J.3, then MasterCard, subject to all the terms and conditions contained in this Agreement, shall make available to such Affiliate the enumerated benefits hereunder.	
13

 

 	K.	 	Indemnification. Each Party (the “Indemnifying Party”) agrees, at its own expense, to defend, protect, indemnify, and hold the other Party and its Affiliates, and any of their directors, officers, employees and agents (the “Indemnified Parties”) harmless from and against any action or threatened action, suit, claim or proceeding (including regulatory actions), whether or not well grounded, arising out of any alleged act or omission of the Indemnifying Party, its employees, agents, and subcontractors relating to the subject matter of this Agreement and against any and all expenses (including reasonable attorney’s fees), judgments, fines, costs, amounts paid in settlement or any loss or damage incurred by any of the Indemnified Parties relating thereto. Each Party shall give prompt notice to the other Party of any event or circumstances that it believes gives rise to an obligation of indemnity, and the Parties shall cooperate with each other in the defense and resolution thereof.	
 	
 	L.	 	Dispute Resolution. The Parties will endeavor in good faith to promptly settle any disputes relating to this Agreement (each a “Dispute”). If the appropriate members of each Party’s management team cannot promptly settle a Dispute, senior executives from each Party will try to resolve the dispute. If no resolution is reached then either Party may submit the Dispute to the American Arbitration Association for binding arbitration. The Party prevailing in such arbitration shall be entitled to a recovery of its costs and attorneys fees from the non-prevailing Party. Subject to Section IV.F, the procedures included in this Section VII.L will be the exclusive procedures for resolution of any and all Disputes.	
 	
 	M.	 	Miscellaneous. A failure or delay of either Party to enforce any provision of or exercise any right under this Agreement shall not be construed to be a waiver. No waiver by a Party shall be effective unless expressly made in writing. If any provision of this Agreement is held by a court (pursuant to Section IV.F) or an arbitrator to be unenforceable or invalid in any respect, such unenforceability or invalidity shall not affect any other provision of this Agreement, and this Agreement shall then be construed as if such unenforceable or invalid provisions had never been a part of this Agreement and the Parties shall immediately commence negotiations in good faith to reform this Agreement to make alternative provisions herein that reflect the intentions and purposes of the severed provisions in a manner that does not run afoul of the basis for such unenforceability or invalidity. The captions in this Agreement are included for convenience only and shall not affect the meaning or interpretation of this Agreement. This Agreement may be amended or modified only in a written agreement signed by all Parties. This Agreement shall be binding upon, and inure to the benefit of, each Party’s respective successors and assigns. This Agreement and the respective rights and obligations of the Parties shall be governed by the laws of the State of New York without reference to its conflict-of-laws or similar provisions that would mandate or permit application of the substantive Applicable Law of any other jurisdiction. This Agreement may be executed in one or more counterparts, each of which, taken together, shall constitute but one original document. Citibank’s obligations under this Agreement supplement (and do not replace) Citibank’s obligations under the MasterCard Rules.	
( one signature page follows )
14

 

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on this     day of May, 2004.

MASTERCARD INTERNATIONAL INCORPORATED	 	CITIBANK (SOUTH DAKOTA), N.A.	
/s/ Alan Heurer	 	/s/ Douglas C. Morrison	
	 		
By: Alan Heurer	 	By: Douglas C. Morrison	
Title:	 	Title: Chief Financial Officer/O&T	
Date:	 	Date:	
 	 	 	
CITIBANK, N.A.	 	CITIBANK USA, N.A.	
/s/ Maryanne Mayner	 	/s/ Douglas C. Morrison	
	 		
By: Maryanne Mayner	 	By: Douglas C. Morrison	
Title:	 	Title: Chief Financial Officer/O&T	
Date:	 	Date:	
 	 	 	
CITIBANK CANADA	 	CITIBANK INTERNATIONAL	
/s/ Martin Johansson	 	/s/ Miguel A. Cervoni, CFA	
	 		
By: Martin Johansson	 	By: Miguel A. Cervoni	
Title: Chief Executive Officer	 	Title: President	
Date:	 	Date:	
 	 	 	
CITIBANK, F.S.B.	 	CITIBANK (WEST), FSB	
/s/ Paul D. Burner	 	/s/ Michael Washington	
	 		
By: Paul D. Burner	 	By: Michael Washington	
Title: CFO-CBNA	 	Title:	
Date:	 	Date:	
15

EXHIBIT 31.1 
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Robert W. Selander, certify that:
     1. I have reviewed this quarterly report on Form 10-Q of MasterCard Incorporated;
     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
      a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
      b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
      c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
      a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
      b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	 	Date:	 	August 5, 2004	
 	 	 	 	 	
	 	By:	 	/s/ ROBERT W. SELANDER
	
	 	 	 	Robert W. Selander	
	 	 	 	President and Chief Executive Officer	

 

EXHIBIT 31.2 
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Chris A. McWilton, certify that:
     1. I have reviewed this quarterly report on Form 10-Q of MasterCard Incorporated;
     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
      a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
      b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
      c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
      a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
      b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	 	Date:	 	August 5, 2004	
 	 	 	 	 	
	 	By:	 	/s/ CHRIS A. MCWILTON	
	 	 	 		
	 	 	 	Chris A. McWilton
Chief Financial Officer	

 

EXHIBIT 32.1 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of MasterCard Incorporated (the “Company”) on Form 10-Q for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert W. Selander, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
     1. The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
     2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ ROBERT W. SELANDER

Robert W. Selander
President and Chief Executive Officer
August 5, 2004

 

EXHIBIT 32.2 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of MasterCard Incorporated (the “Company”) on Form 10-Q for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chris A. McWilton, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
     1. The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
     2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ CHRIS A. MCWILTON

Chris A. McWilton
Chief Financial Officer
August 5, 2004