Exhibit 10.13
NON-COMPETITION AND CORPORATE OPPORTUNITIES
ALLOCATION AGREEMENT
THIS NON-COMPETITION AND CORPORATE OPPORTUNITIES ALLOCATION AGREEMENT (this
"Agreement") is made as of the 3rd day of December 1996 between BANKAMERICA
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CORPORATION, a Delaware corporation ("BAC") and XX XXXXXXXX SERVICES, INC., a
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Delaware corporation ("BAMSI").
RECITALS
A. BAC. BAC is an existing corporation duly organized and in good
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standing under the laws of the State of Delaware, with its principal executive
offices located in San Francisco, California.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of
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the State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
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obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend
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to conduct their relationships hereunder on an arm's length basis.
E. BAC/BAMSI Transactions. Bank of America National Trust and
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Savings Association ("BofA") and Bank of America NW, National Association
("BANW"), each a subsidiary of BAC, currently own 100% of the outstanding common
stock of BAMSI. BofA and BANW have entered or will enter into certain
agreements with BAMSI (1) transferring the BofA United States domestic merchant
processing business and the BANW merchant processing business to BAMSI and (2)
covering the contemplated transfer of the Philippine and Thailand merchant
processing businesses of BofA to BAMSI upon the receipt of certain governmental
approvals. BAMSI is currently considering an initial public offering of shares
of its Class A common stock, $.01 par value per share.
F. Related Agreements. BAMSI has entered or will enter into (1) a
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Trademark License Agreement of even date herewith between BAC and BAMSI (the
"License Agreement"), (2) a Marketing Agreement of even date herewith among
BAMSI, BofA and Seafirst (the "Marketing Agreement"), (3) a Sponsorship and
Processing Services Agreement of even date herewith between BAMSI and BofA (the
"Sponsorship Agreement") (4) Processing Services Agreements of even date
herewith between BAMSI and other subsidiary banking institutions of BAC (the
"Affiliate Bank Processing Agreements"), (5) an Administrative Services
Agreement of even date herewith between BofA and BAMSI (the "Administrative
Services Agreement"), (6) a Registration Rights Agreement to be entered into
among BAMSI, BofA and BANW (the "Registration Rights Agreement"), and (7) a Tax
Allocation Agreement of even date herewith between BAC and BAMSI (the "Tax
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Agreement"). The License Agreement, the Marketing Agreement, the Sponsorship
Agreement, the Affiliate Bank Processing Agreements, the Administrative Services
Agreement, the Registration Rights Agreement and the Tax Agreement are herein
collectively referred to as the "Related Agreements."
G. Allocation of Opportunities. In consideration of the transactions
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contemplated by the Related Agreements and to preserve and enhance the goodwill
of the assets and business transferred to BAMSI, BAC is willing to enter into
this Agreement
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of their
mutual promises and obligations herein contained, intending to be legally bound,
the parties do hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 "Affiliate" means any person which directly or indirectly
controls, is controlled by, or is under common control with, BAC. A person is
regarded in control of another person if it owns, or directly or indirectly
controls, at least 50% of the voting stock or other ownership interest of the
other person, or if it directly or indirectly possesses the power to direct or
cause the direction of the management and policies of the other person by any
means whatsoever; provided however that, for the purposes of this Agreement,
BAMSI shall not be an Affiliate of BAC.
1.2 "BAMSI Independent Directors" means the directors of BAMSI who
are not employees of BAMSI or BAC or an Affiliate of BAC.
1.3 "Base Business" means payment processing for merchants to the
extent the payments arise from the use of credit, charge or debit cards for the
purchase of goods or services and are authorized through an electronic medium
originating at the point of sale.
1.4 "Fair Market Value" means the value determined as such by an
independent firm mutually selected by BAC and the BAMSI Independent Directors.
ARTICLE 2 - COMPETITION AND CORPORATE OPPORTUNITIES
2.1 Noncompetition by BAC or Affiliates. In consideration of the
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transactions contemplated by the Related Agreements and to preserve and enhance
the goodwill of the assets and business transferred to BAMSI, BAC agrees that
for as long as the Marketing Agreement continues in effect, neither BAC nor any
Affiliate will compete with BAMSI in the Base Business in the countries set
forth in the next succeeding sentence of this Section 2.1, subject to the
exceptions set forth in Section 2.2. BAC agrees, subject to the exceptions set
forth in Section 2.2, that the geographic scope of this covenant not to compete
shall be the United States and the following countries upon the transfer of
BAC's Base Business in
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each such country to BAMSI: Taiwan, the Philippines, Thailand, South Korea,
India, Indonesia, Vietnam and The Peoples Republic of China (each, an
"Additional Asian Country"). The parties hereto acknowledge and agree that,
notwithstanding the foregoing sentence of this Section 2.1, nothing in this
Agreement shall obligate BAC to (a) pursue any approvals in any Additional Asian
Country on other than commercially reasonable terms not involving the payment of
money, or (b) pursue, expand or develop a Base Business in any Additional Asian
Country. Without limiting the generality of the foregoing sentence, each of the
counties in the State of California shall be within the scope of this covenant
not to compete, it being the intent of the parties to comply in all respects
with the provisions of Section 16601 of the California Business & Professions
Code.
2.2 Exceptions to Noncompetition by BAC or Affiliates. The
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restrictions contained in Section 2.1 shall not apply to the Base Businesses
described in subsections (a), (b), and (c) of this Section 2.2:
(a) Subject to subsections (b), (c) and (d) of this Section 2.2, the
independent pursuit and acquisition (as opposed to the de novo commencement) by
BAC or any Affiliate of a Base Business.
(b) Any corporation, limited liability company, partnership or other
entity (or all or substantially all of the assets of such entity) conducting a
Base Business acquired directly or indirectly by BAC or an Affiliate (an
"Acquired Base Business") that has annual net merchant fee revenue of less than
10% of BAMSI's annual net merchant fee revenue. For purposes of the preceding
sentence, such annual net merchant fee revenue shall be determined with
reference to the fiscal year of each such entity most recently ended. If such
an Acquired Base Business with annual net merchant fee revenue of less than 10%
of BAMSI's annual net merchant fee revenue shall experience net revenue growth
such that its annual net merchant fee revenue shall equal or exceed 10% of
BAMSI's annual net merchant fee revenue for any year, then BAC shall cause such
Acquired Base Business to be offered to BAMSI for purchase at Fair Market Value.
If any such Acquired Base Business shall be combined with or a part of a
corporation, limited liability company, partnership or other entity conducting a
business other than a Base Business, then BAC shall be obligated only to offer
the portion of such business which conducts the Base Business to BAMSI. Any
such offer shall be made to BAMSI no later than the end of the first fiscal
quarter of the year immediately following the first fiscal year for which the
determination of such annual net merchant fee revenue shall have been made, and
BAMSI shall exercise its right to acquire such Acquired Base Business within
three months after being so offered such business or BAC or any Affiliate shall
thereafter be free to conduct such business irrespective of the terms and
provisions of this Agreement. The determination of BAMSI to acquire or not
acquire any such Acquired Base Business shall be made by the BAMSI Independent
Directors.
(c) Any other Acquired Base Business not covered by subsection (b)
where BAMSI has been offered by BAC or an Affiliate the right to acquire such
Acquired Base Business at Fair Market Value and the BAMSI Independent Directors
shall not have determined that BAMSI shall so acquire such business. BAMSI
shall be offered the right to
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so acquire such Acquired Base Business within six months after the acquisition
thereof by BAC or an Affiliate and the BAMSI Independent Directors must
determine that BAMSI shall exercise such right to acquire such business within
three months after being so offered such business or BAC or any Affiliate shall
thereafter be free to continue to conduct such business irrespective of the
provisions of this Agreement.
(d) Notwithstanding the foregoing provisions of this Section 2.2, BAC
agrees that, during the term of this Agreement, it shall not, and that it shall
cause its Affiliates to not, acquire any corporation, limited liability company,
partnership or other entity (or all or substantially all of the assets of any
such entity) conducting a Base Business, where (i) the Base Business of such
entity is conducted primarily in the United States or an Additional Asian
Country and (ii) the Base Business of such entity, for the fiscal year of such
entity most recently ended, generated more than 66 2/3% of the total revenues of
such entity determined on a consolidated basis; provided, however, that the
foregoing provisions of this subsection (d) shall not be deemed to prevent any
merger, consolidation, joint venture, partnership or other business combination
between BAMSI (or any subsidiary thereof) and any other such entity or the
acquisition of the assets of any such other entity by BAMSI.
2.3 Allocation of Corporate Opportunities. As
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to any corporate opportunity outside the scope of the Base Business which may be
presented to BAMSI or BAC or any Affiliate and which could reasonably be
expected to be related to the Base Business, BAC shall be entitled to determine
the allocation thereof based upon its evaluation of the best interests of the
BAC stockholders under the circumstances.
2.4 BAC Determination Binding. The good faith determination of BAC
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as to the scope of the Base Business or the applicability of any of the
exceptions provided for in Section 2.2 or the allocation of any corporate
opportunities by BAC pursuant to Section 2.3, shall be conclusive and binding
for all purposes.
ARTICLE 3 - TERM AND TERMINATION
3.1 Term. The term of this Agreement shall commence on the
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Effective Date and shall continue for five years thereafter, unless terminated
earlier pursuant to Section 3.2 or extended by the mutual agreement of the
parties.
3.2 Termination. BAC shall have the right to terminate this
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Agreement upon the occurrence of any of the following events:
(a) A material breach of this Agreement by BAMSI or any of its
Affiliates that is not cured within 30 days after receipt of written notice of
such breach from BAC; or
(b) A material breach of the License Agreement or the Marketing
Agreement by BAMSI which is not cured within 30 days after receipt of written
notice from BAC; or
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(c) BAC and its Affiliates beneficially own shares representing less
than a majority of the voting power of the outstanding common stock of BAMSI.
ARTICLE 4 - RESOLUTION OF DISPUTES
4.1 Arbitration. Any dispute, controversy or claim between the Bank
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and BAMSI arising out of or relating to this Agreement or any agreements or
instruments relating hereto or delivered in connection herewith, will be
resolved by arbitration conducted in San Francisco, California under the
auspices and according to the Commercial Arbitration Rules of the American
Arbitration Association. The arbitration shall be conducted in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement.
ARTICLE 5 - MISCELLANEOUS PROVISIONS
5.1 Governing Law. This Agreement shall be governed by and construed
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under the laws of the State of California without regard to principles of
conflicts of laws.
5.2 Notices. Any notice permitted or required by this Agreement
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shall be deemed given when sent by personal service, by certified or registered
mail return receipt requested, postage prepaid, by facsimile transmission or by
overnight delivery by a nationally recognized courier and addressed as follows:
if to BAC, BankAmerica Corporation, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX
00000, attention: Corporate Secretary #3018, with a copy to BankAmerica
Corporation, 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, XX 00000,
attention: General Counsel #3017; and if to BAMSI, to XX Xxxxxxxx Services,
Inc., Xxx Xxxxx Xxx Xxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, attention:
General Counsel #3710. Actual receipt of notice or other communication shall
overcome any deficiency in manner of delivery thereof.
5.3 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which, when executed by both parties to this Agreement,
shall be deemed to be an original, and all of which counterparts together shall
constitute one and the same instrument.
5.4 Entire Agreement. This Agreement constitutes the entire
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agreement of the parties with respect to its subject matter, superseding all
prior oral and written communications, proposals, negotiations, representations,
understandings, courses of dealing, agreements, contracts, and the like between
the parties.
5.5 Amendments. This Agreement may be changed, amended, modified, or
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rescinded only by an instrument in writing signed by the party against which
enforcement of such change, amendment, modification or rescission is sought.
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5.6 Waivers. The provisions of this Agreement may be waived only by
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a written instrument executed by the party so waiving. Except as expressly set
forth the failure of any party at any time or times to require performance of
any provision of this Agreement shall in no manner affect such party's right at
a later time to enforce the same. No waiver by any party of any condition, or
breach of any provision of this Agreement, in any one or more instances, shall
be deemed to be or construed as a waiver of any other condition or of the breach
of any other provision of this Agreement.
5.7 Relationship. Nothing in this Agreement shall be deemed to
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create a partnership, joint venture or agency relationship between the parties.
Both parties are independent contractors and neither party is to be considered
the agent or legal representative of the other for any purpose whatsoever.
5.8 Successors and Assigns. This Agreement shall bind and inure to
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the benefit of the parties and their respective successors and assigns, except
that no obligation under this Agreement may be delegated, nor may any rights
under this Agreement be assigned by either party, without the prior written
consent of the other party, except by operation of law. Any such purported
assignment of this Agreement by either party without the prior written consent
of the other party shall be void and without effect. Except as expressly
provided in this Agreement, the parties hereto intend that this Agreement shall
not benefit or create any right or cause of action in or on behalf of any person
other than the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BANKAMERICA CORPORATION
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Senior Vice President
XX XXXXXXXX SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President
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