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EXHIBIT 10.2
CERTAIN CONFIDENTIAL INFORMATION IN
THIS EXHIBIT DENOTED BY ASTERISKS
HAS BEEN REDACTED PURSUANT TO
17 C.F.R. SUBSECTION 200.80(b)(4),
200.83 AND 240.24b-2
COVENANT NOT TO COMPETE
This Covenant Not to Compete is made and given this 23rd day of July,
1999 (this "Covenant"), by First Data Corporation, a Delaware corporation
("Parent"), to infoUSA Inc., a Delaware corporation ("Purchaser").
ARTICLE I
DEFINITIONS
Except as provided below, capitalized terms not defined herein shall
have the meanings provided in the Agreement and Plan of Reorganization dated as
of May 28, 1999 (the "Agreement') by and among Purchaser, Parent, Donnelley
Marketing, Inc., a Delaware corporation (the "Company"), and certain other
parties named therein.
"Alliance" means any venture (in any form, including in corporate,
partnership or limited liability company form) or contractual alliance now or
hereafter entered into between Parent or any of its Affiliates and one or more
third Persons pursuant to which the third Person venturer has the contractual or
other legal right to block major business and/or corporate actions by such
venture.
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"Controlled Affiliate" means an Affiliate (other than an Alliance) in
which Parent, directly or indirectly, owns greater than 50% of the equity
interests and has the power to direct the business that such Affiliate may or
may not conduct.
"Merchant Acquiring Services" means the provision of any of the
following services or products, directly or indirectly, to merchants in respect
of Transaction Cards: (i) the authorization and capture of transactions, (ii)
the submission of such transactions for interchange settlement or other
settlement, (iii) the preparation of statements or reports based on such
transactions, chargebacks and other exception items (including by electronic
access), (iv) the provision of customer service or other back office services in
respect of any of such transactions, (v) the sale, lease or rental of POS
hardware relating to any of the foregoing and (vi) clearing and settlement
services.
"Restricted Activities" means the business as currently conducted by
the Company, including the provision of list services (including sale, licensing
and list rental), database marketing services (including housing, storing,
maintaining, enhancing and updating data), compilation or aggregation services,
data processing services that constitute merge/purge, address hygiene (including
the National Change of Address (or NCOA) product) and data append services and
database information services that constitute market segmentation, consumer
profiling, modeling and demographic information services.
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"Transaction Cards" means debit cards, credit cards (including private
label and retail credit cards), bank cards, oil cards, payment cards, electronic
benefit payment cards, smart cards, stored value cards or other similar cards.
ARTICLE II
COVENANT
In consideration of the transactions contemplated by the Agreement,
Parent hereby covenants and agrees as follows with Purchaser:
(a) Except as provided in paragraph (b) and (c) below, Parent
covenants and agrees that, beginning on the Closing Date and for a period ending
on the fifth anniversary of the Closing Date, neither Parent nor any of its
Controlled Affiliates will own, manage, operate or control a business engaged in
the Restricted Activities anywhere in the United States of America; provided,
however, that nothing set forth in this Covenant shall prohibit Parent or its
Affiliates from:
(i) owning not in excess of 10% in the aggregate of any class
of capital stock of any corporation (including a corporation engaged
in a Restricted Activity) if such stock is publicly traded and listed
on any national or regional stock exchange or on the Nasdaq national
market system;
(ii) except as provided in clause (iv) below, acquiring, and
following such acquisition, actively engaging in, any business that
has a subsidiary,
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division, group, franchise or segment that is engaged in any
Restricted Activity ("Competing Unit"), so long as on the date of such
acquisition not more than 25% of the consolidated revenues of such
business are derived from a Restricted Activity;
(iii) except as provided in clause (iv) below, acquiring and,
following such acquisition, actively engaging in any business that has
a Competing Unit if on the date of such purchase more than 25% of the
consolidated revenues of such business are derived from a Restricted
Activity, so long as such business divests itself of the Competing
Unit promptly after the date of such acquisition so that on the date
of such divestiture not more than 25% of the consolidated revenues of
such business are derived from a Restricted Activity; provided,
however, that with respect to any purchase intended to be accounted
for as a pooling of interests under GAAP or treated for federal income
tax purposes as a tax-free reorganization, no such divestiture shall
be required until, in the reasonable opinion of Parent, such
divestiture would no longer endanger the accounting of such
acquisition as a pooling of interests under GAAP or the treatment for
federal income tax purposes of such acquisition as a tax-free
reorganization;
(iv) acquiring and, following such acquisition, actively
engaging in any business identified on Annex A hereto that has a
Competing Unit,
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provided, however, that Parent and Purchaser shall negotiate in good
faith for a period of 45 days from the date of Parent's or its
Controlled Affiliate's acquisition of such business the purchase by
Purchaser of such Competing Unit from Parent or its Controlled
Affiliate on terms and conditions that are agreed to by Purchaser and
Parent or such Controlled Affiliate; provided, further, that if at the
end of such 45-day period no such agreement has been reached, Parent
or the Controlled Affiliate shall cause such business to divest itself
of the Competing Unit promptly thereafter; and, provided, further,
that if the purchase of such business was intended to be accounted for
as a pooling of interests under GAAP or treated for federal income tax
purposes as a tax-free reorganization, no such divestiture to
Purchaser or any third Person shall be required until, in the
reasonable opinion of Parent, such divestiture would no longer
endanger the accounting of such acquisition as a pooling of interests
under GAAP or the treatment for federal income tax purposes of such
acquisition as a tax-free reorganization;
(v) performing any services pursuant to the Data Agreements;
or
(vi) engaging in any activity or providing any services of the
type currently being performed or provided by Parent or its Affiliates
(other than the Company) or any enhancements or modifications of such
activities or services
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and new activities or services developed in support of such activities
or services to remain competitive in the applicable industry.
(b) Nothing in this Covenant, including paragraph (a) above, shall
prevent Parent or its Affiliates from providing any of the following products or
services (including any products or services supportive or ancillary to any
Restricted Activity conducted by a third Person):
(i) issuing or processing of Transaction Card transactions and
related products, services and systems (including the MarketStat
product, which is a product that is currently intended to use data
collected, assembled or obtained by Parent or its Affiliates in
connection with the operation of businesses not prohibited by this
Covenant or data provided by its customers for, among other things,
marketing purposes), loan processing services and line-of-credit
services;
(ii) issuing, processing, clearing, verification and guarantee
of checks (including electronic truncation thereof), credits, debits,
drafts, ATM transactions, ACH transactions, electronic funds
transfers, recurring payment transactions;
(iii) electronic and/or paper bill, invoice, statement or notice
presentment and payment services;
(iv) official checks and money orders services;
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(v) funds transfer services;
(vi) payment processing, including bill payment, remittance
processing, tax payment, payment instrument services and cash
management services;
(vii) in store and other off-site retail location facility
installments and related consulting services;
(viii) mutual fund shareholder recordkeeping services and
systems; mutual fund portfolio accounting services and systems and
related legal, tax, compliance, treasury and administrative functions;
third party mutual fund distributor services as a registered
broker-dealer under the Securities Exchange Act of 1934; third party
defined contribution plan recordkeeping services and systems; and
third party defined benefit plan recordkeeping services and systems;
(ix) preparation and mailing (or other form of delivery,
including electronic delivery) of bills, invoices, statements or
notices;
(x) messaging services, including the preparation, printing,
facsimile or electronic transmission and/or mailing of letters or
other communications and the preparation and telephonic delivery of
pre-recorded voice messages;
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(xi) automated voice response and call center services
(including directory assistance);
(xii) telephone check drafting or electronic funds transfer
services (including Internet and web-based transactions) and the
enrollment, authorization and confirmation services provided in
connection therewith or in connection with bill payment and
presentment;
(xiii) provision (whether by batch or transactional) of
analytic modeling products or services (including various "scoring"
products and services) relating to credit worthiness, householding,
profitability, customer services, collection effectiveness, retention,
fraud, bankruptcy, settlement, payment and related metrics regarding
transactions, accounts or business performance and the provision of
credit reports and other credit bureau services, account screening
services and other credit reporting applications and check acceptance
services;
(xiv) the business currently conducted by Hogan Information
Services Co. ("Hogan"), a Delaware company and a wholly-owned
subsidiary of Parent, including the sale, licensing or rental of
public record data, suppression, merge/purge, address hygiene and data
appending services utilizing public record data, public records
on-line, public record batch services, bankruptcy, divorce and tax
lien notification and screening, document retrieval, pre- and
post-employment screening and any other products or services utilizing
public record
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data or components thereof, until such time, if any, as Purchaser
consummates the purchase of Hogan pursuant to the Hogan Option
Agreement, dated as of the date hereof between Purchaser and Parent;
(xv) utilizing in any manner data collected, assembled or
obtained by Parent or its Affiliates in connection with the operation
of businesses not prohibited by this Covenant;
(xvi) making of outbound telephone calls and written
communications to a debtor seeking collection of amounts owed by such
debtor;
(xvii) processing of debit or credit transactions for deposit
accounts;
(xviii) employment screening, customer acquisition and address
management services; or
(xix) Merchant Acquiring Services and services offered to
merchants in connection with the establishment of Internet-based
commerce.
(c) Nothing in this Covenant, including paragraph (a) above,
shall prevent any Affiliate of Parent from engaging in the Restricted Activities
after such Affiliate ceases to be an Affiliate of Parent.
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ARTICLE III
MISCELLANEOUS
(a) In the event that Parent or any of its Controlled Affiliates
violates any of their respective obligations under this Covenant, Purchaser may
proceed against such Person in law or in equity for such damages or other relief
as a court may deem appropriate. Parent acknowledges that a violation of this
Covenant may cause Purchaser or its Affiliates irreparable harm which may not be
adequately compensated for by money damages.
(b) It is the intent and understanding of each party hereto that if,
in any action before any Governmental Entity legally empowered to enforce this
Covenant, any term, restriction, covenant or promise in this Covenant is found
to be unreasonable and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such Governmental Entity.
(c) Purchaser may transfer this Covenant (i) in connection with any
merger or consolidation of Purchaser with another corporation, provided that
Purchaser furnishes the Parent with notice of such transfer within 10 business
days after the public announcement of the same; or (ii) in connection with the
transfer or sale of substantially all of Purchaser's equity or assets, provided
that Purchaser furnishes Parent with notice of such assignment and assumption
within 10 business days prior thereto. Subject to the foregoing, all provisions
contained in this Covenant shall extend to and be binding
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upon the parties hereto and their respective permitted successors and permitted
assigns.
(d) This Covenant (i) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supercedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof, (ii) is not intended to confer upon any
other person any rights or remedies hereunder, and (iii) except as is otherwise
required by applicable law, may only be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of the
parties hereto.
(e) All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to Purchaser, to:
infoUSA Inc.
5711 South 86 Circle
Omaha, Nebraska 68127
Attention: Vinod Gupta
Telephone No.: (402) 593-4500
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Francis S. Currie, Esq.
Telephone No.: (415) 493-9300
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(ii) if to Parent, to:
First Data Corporation
6200 S. Quebec
Englewood, Colorado 80111
Attention: President
with a copy to:
First Data Corporation
6200 S. Quebec
Englewood, Colorado 80111
Attention: General Counsel - Integrated Services Division
and a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: David Zampa, Esq.
Telephone: (312) 853-4573
(f) This Covenant shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(g) This Covenant may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this Covenant to be
executed the day and year first above written.
infoUSA INC.
By
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Name
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Title
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FIRST DATA CORPORATION
By
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Name
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Title
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Annex A
Identified Competitors
[*]
[*] CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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