Confidential Subject to Fed. R. Evid. 408

Exhibit 10.1

Release and Settlement Agreement

1. Definitions.

1.1 “Affiliate” means an entity’s current direct or indirect parents,
subsidiaries, predecessors, and successors together with their past and current
officers, directors, employees, agents, and attorneys.

1.2 “Applicable Interest” means 59% of the actual interest that has been paid to
Visa as a result of the investment by Visa of the Visa Settlement Fund in an
investment vehicle mutually agreed upon by Visa and Discover.

1.3 “Claim” means any and all manner of claims, demands, actions, causes of
action, suits, damages, punitive or exemplary damages, liabilities, judgments,
debts, injunctive relief, claims over, accounts, warranties, liens, attorneys’
fees, costs or expenses, whether based in contract law, tort law, equity,
statute, regulation, or otherwise, whether state, federal, or local, known or
unknown or asserted or unasserted.

1.4 “Control” or “Controlled” means possessing directly or indirectly the power
to vote five percent (5%) or more of any class of voting capital stock of a
Person or to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting capital stock, by contract or
otherwise.

1.5 “Dedication Agreement” means any agreement between Visa or MasterCard, on
the one hand, and a counterparty, on the other hand, under which the
counterparty to the agreement with Visa or MasterCard receives valuable
consideration in exchange for (i) volume on its Visa or MasterCard Payment
Cards, or (ii) branding a certain portion or amount of its Payment Cards as
MasterCard or Visa cards.

1.6 “Discover” means Discover Financial Services, DFS Services, LLC, Discover
Bank, and their subsidiaries and Affiliates.

1.7 “Discover Financial Services Volume” means the total combined transaction
volume from Discover Payment Cards.

1.8 “Discover Mark” means any Mark now or in the future owned or licensed by
Discover, its Affiliates or their successors and assigns.

1.9 “Discover Network” means the Payment Card network owned or Controlled by
Discover on which Discover Network-branded Payment Cards are processed.

1.10 “Discover Payment Cards” means Payment Cards that are issued by Discover
(including its successors and assigns), that bear a Discover Mark, or that are
transacted on (i) the Discover Network or any other Payment Card network owned
or Controlled by Discover (including its successors and assigns), or (ii) any
Payment Card network into which the foregoing networks are merged, consolidated,
or otherwise rendered interoperable.

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

Confidential Subject to Fed. R. Evid. 408

1.11 “Discover Released Claim” means any and all Claims that Discover asserted
or could have asserted in the Litigation based in whole or in part on the
alleged illegality or tortious or otherwise actionable effect of the Visa Rules,
the MasterCard Rules or any Visa and/or MasterCard act, omission or occurrence
from the beginning of time through the Effective Date, including but not limited
to any alleged future losses, harms, or damages arising from the existence or
operation of such Rules, act, omission, or occurrence through the Effective
Date. With respect to Claims arising out of Dedication Agreements that are
currently in effect (or have expired or been terminated), “Released Claim”
includes, without limitation, any Claim for alleged harm or damage arising out
of the past, present, or future operation of such a Dedication Agreement through
and including the date of its natural expiration (i.e., its original date of
expiration without regard to any extension or renewal of the Dedication
Agreement that is entered into after the Effective Date). Notwithstanding the
foregoing, except as provided in the immediately preceding sentence with respect
to Dedication Agreements, Discover Released Claims shall not include (i) any
Claim subsequent to the Effective Date for injunctive relief; (ii) any Claim for
damages incurred after the Effective Date against any Visa Released Entity or
MasterCard Released Entity arising from (X) the existence or operation of any
conduct, contract, MasterCard Rule or Visa Rule put into effect after the
Effective Date or (Y) any act or conduct applicable to a contract, MasterCard
Rule or Visa Rule that was in existence prior to the Effective Date that is
inconsistent with Visa’s or MasterCard’s respective practice prior to the
Effective Date; (iii) any Claim for damages incurred after the Effective Date
against any MasterCard Released Entity arising from the existence or operation
of any MasterCard Rule that would prohibit MasterCard-branded debit cards from
participating in PULSE in the United States, or the PULSE Mark from appearing on
the back of such cards after the Effective Date; or (iv) any Party’s Claim
regardless of the legal theory upon which it is based, against any other Party
for the alleged breach of or to seek the enforcement of this Release and
Settlement Agreement.

1.12 “Effective Date” means the latest of (i) the date that this Release and
Settlement Agreement has been duly executed by the Parties shown on the
signature lines at the end of this Release and Settlement Agreement, (ii) the
date on which Visa’s Class B shareholders approve this Release and Settlement
Agreement by a two-thirds vote, (iii) the date on which the Release and
Settlement Agreement is approved by Visa’s Boards of Directors, (iv) the date on
which the Release and Settlement Agreement is approved by MasterCard’s Board of
Directors, or (v) the date on which the Release and Settlement Agreement is
approved by Discover’s Board of Directors.

1.13 “Execution Date” means the date that this Release and Settlement Agreement
has been executed by the Parties shown on the signature lines at the end of this
Release and Settlement Agreement.

1.14 “Litigation” means Discover Financial Services, et al. v. Visa U.S.A. Inc.,
et al., Case No. 04-CV-07844 (S.D.N.Y.).

1.15 “Mark” means a word, name, design, symbol, or other device, or any
combination thereof, which any entity adopts to identify its goods or services.

1.16 “MasterCard” means MasterCard Incorporated and MasterCard International
Incorporated and their Affiliates.

 

2

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

Confidential Subject to Fed. R. Evid. 408

1.17 “MasterCard Released Entities” means MasterCard and any entity that is or
at the time of any of the events alleged in the Litigation was an issuer of
MasterCard Payment Cards or an acquirer for MasterCard, or otherwise admitted as
a member of MasterCard.

1.18 “MasterCard Rules” means (i) any limitation or restriction on the ability
of a MasterCard issuer to issue Payment Cards on any network owned, Controlled
or operated by Discover or a MasterCard acquirer to act as an acquirer for any
network owned, Controlled or operated by Discover, including but not limited to
MasterCard’s Competitive Programs Policy and (ii) any other of MasterCard’s
by-laws, operating regulations, rules, policies, practices, procedures,
Dedication Agreements, or other agreements.

1.19 “Payment Cards” means credit cards, debit cards, charge cards, prepaid
cards, stored value cards, commercial cards, virtual cards, and other payment
transaction products or devices (including those that do not utilize a tangible
card).

1.20 “Party” means each signatory to this Release and Settlement Agreement.

1.21 “Performance Period” means each of the performance periods set forth in
Schedule A attached hereto and incorporated herein.

1.22 “Person” means an individual, corporation, partnership, limited liability
company, estate, trust, common or collective fund, association, private
foundation, joint stock company or other entity.

1.23 “Visa” means Visa Inc. and its Affiliates and predecessors including Visa
U.S.A. Inc. and Visa International Service Association.

1.24 “Visa Released Entities” means Visa, Visa Europe and any entity that is or
at the time of any of the events alleged in the Litigation was an issuer of Visa
or Visa Europe Payment Cards, an acquirer for Visa or Visa Europe, or otherwise
admitted as a member of Visa.

1.25 “Visa Rules” means (i) any limitation or restriction on the ability of a
Visa issuer to issue Payment Cards on any network owned, Controlled or operated
by Discover or a Visa acquirer to act as an acquirer for any network owned,
Controlled or operated by Discover, including but not limited to By-Law 2.10(e)
and (ii) any other of Visa’s by-laws, operating regulations, rules, policies,
practices, procedures, Dedication Agreements, or other agreements.

1.26 “Visa Settlement Fund” means the amount of $1,887,500,000.

2. Release.

2.1 Discover represents and warrants that as of the date of this Release and
Settlement Agreement (i) it is not aware of any Claims against the Released
Parties other than the Claims released by this Release and Settlement Agreement
and (ii) it has no present intention to make any Claim against Visa or
MasterCard.

 

3

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

Confidential Subject to Fed. R. Evid. 408

2.2 Visa represents and warrants that as of the date of this Release and
Settlement Agreement (i) it is not aware of any Claims against Discover and
(ii) it has no present intention to make any Claim against Discover.

2.3 MasterCard represents and warrants that as of the date of this Release and
Settlement Agreement (i) it is not aware of any Claims against Discover and
(ii) it has no present intention to make any Claim against Discover.

2.4 In consideration of Visa’s and MasterCard’s obligations herein, including as
set forth in paragraph 3 below, Discover hereby totally releases and discharges
the Visa Released Entities and the MasterCard Released Entities from any and all
Discover Released Claims.

2.5 The Parties hereby warrant and represent that they are familiar with the
provisions of California Civil Code Section 1542, and knowingly, voluntarily,
intentionally and expressly waive any and all rights and benefits conferred by
California Civil Code Section 1542 and any law of any state or territory of the
United States or any foreign country or principle of common law that is similar
to Section 1542. Section 1542 states:

A general release does not extend to claims which the creditor does not know or
suspect exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor.

3. Payments.

3.1 In consideration for the foregoing releases in paragraph 2, MasterCard will
pay to Discover $862.5 million on or before November 14, 2008.

3.2 In consideration for the foregoing release, Visa shall pay to Discover as
follows: Four (4) payments as set forth herein, contingent on the performance of
Discover Financial Services Volume. The amount of each of the first 3 payments
will be 5% of the Discover Financial Services Volume for the Performance Period
in which the payment is due up to the maximum amount for such Performance Period
as set forth in Schedule A, provided however that if the payment for any of the
first 3 Performance Periods is less than the applicable maximum payment for such
Performance Period, the maximum payment for a future Performance Period or
Periods shall be increased by the difference between the applicable maximum
payment and such lesser amount as was actually due. The amount of the fourth
payment will be 21% of the Discover Financial Services Volume for the final
Performance Period set forth in Schedule A up to the maximum amount set forth in
Schedule A (subject to adjustment in accordance with the preceding sentence)
(plus Applicable Interest on the balance of the Visa Settlement Fund for the
period between November 14 and the date of final payment) minus an amount equal
to the difference, if any, between $1,415,625,000 and the actual amounts earned
based on the performance of the Discover Financial Services Volume for each of
the first three Performance Periods. Notwithstanding anything herein to the
contrary, the maximum amount of the four (4) payments due from Visa is
$1,887,500,000 plus Applicable Interest thereon for the period from November 14,
2008 through the date of final payment.

3.3 All such payments shall be made by wire transfer to the account designated
by Discover in accordance with the notice provision herein.

 

4

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

Confidential Subject to Fed. R. Evid. 408

3.4 If the amounts required to be paid pursuant to paragraph 3 of this Release
and Settlement Agreement above are not paid as required, Discover may, at its
option, commence an arbitration to collect such payments or declare a default of
this Release and Settlement Agreement by the Party that has failed to make the
required payment (the “Defaulting Party”). The Defaulting Party will have 30
days from receipt of any notice of default to cure such default by making the
required payment. If the Defaulting Party fails to cure any default in the time
provided, Discover, at its sole election, may declare this Release and
Settlement Agreement null and void with respect to the Defaulting Party and,
upon returning all settlement payments previously received from the Defaulting
Party, Discover shall be entitled to reassert the Released Claims against the
Visa Released Entities (if Visa is the Defaulting Party) or against the
MasterCard Released Entities (if MasterCard is the Defaulting Party) to the full
extent that such Released Claims could have been pursued in the absence of this
Release and Settlement Agreement and any statute of limitations defense arising
as a result of this Release and Settlement Agreement or its implementation is
waived. For the avoidance of doubt, in the event of such termination, the Visa
Released Entities and the MasterCard Released Entities reserve the right to
assert all statute of limitations defenses against Released Claims that they
would have been able to assert in the absence of this Release and Settlement
Agreement or its implementation, except that the applicable statutes of
limitations shall be tolled for a period from the Effective Date until 90 days
following Discover’s declaration of a default of this Release and Settlement
Agreement.

4. Other Provisions.

4.1 The Parties hereto shall use their best efforts to obtain all necessary
approvals of this Release and Settlement Agreement, and to transmit copies of
all such approvals to counsel for the signatories hereto, within 30 days of the
Execution Date. This Release and Settlement Agreement shall take effect on the
Effective Date.

4.2 Within seven days after the Effective Date, Discover shall dismiss the
Litigation without prejudice, except that such dismissal shall have the effect
of dismissal with prejudice with respect to any Party upon Discover’s receipt of
all settlement payments due from such Party pursuant to paragraph 3 of this
Release and Settlement Agreement.

4.3 The Visa Released Entities and MasterCard Released Entities who do not
appear on the signature lines below are acknowledged and agreed to be
third-party beneficiaries of this Release and Settlement Agreement and have the
same rights to enforce this Release and Settlement Agreement as the signatories
hereto.

4.4 Except as expressly provided in this Release and Settlement Agreement, this
Release and Settlement Agreement is not intended to create, and does not create,
any third-party beneficiary rights.

4.5 Any question or dispute arising from or relating to this Release and
Settlement Agreement shall be exclusively resolved by binding arbitration
pursuant to the rules of the International Chamber of Commerce. Any such
arbitration shall be governed by the law of the State of New York, without
regard to its choice of law rules, and shall take place in New York, New York,
Chicago, Illinois, or San Francisco, California, with the venue to be selected
by the Party responding to the arbitration proceeding.

 

5

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

Confidential Subject to Fed. R. Evid. 408

4.6 For a period of five years from the Effective Date, all disputes between
Discover on the one hand and Visa or MasterCard on the other not arising from or
relating to this Release and Settlement Agreement shall be subject to a dispute
resolution format that includes: (i) written notice and an opportunity to cure;
and (ii) a designation by the Parties of one or more Senior Executives or their
CEOs to make good faith efforts promptly to resolve all such disputes, prior to
any Party instituting litigation against the other.

4.7 The Parties acknowledge and agree that, except for any agreements to which
Discover is not a Party, this Release and Settlement Agreement constitutes the
sole and only agreement between the Parties with respect to the subject matter
hereof and that it correctly sets forth the rights, duties, and obligations of
each Party to each other Party as of the Effective Date.

4.8 This Release and Settlement Agreement may be executed in counterparts with
the same force and effect as if executed in one complete and original document.

4.9 This Release and Settlement Agreement may be amended or superseded only by a
written agreement duly executed by all of the signatories hereto, and such
amendments and superseding agreements, if any, may not affect or prejudice the
rights and/or benefits accruing to the Visa Released Entities or MasterCard
Released Entities.

4.10 The Parties agree to work in good faith to coordinate the timing of any
public announcement regarding the existence or terms of this Release and
Settlement Agreement. In any public statements regarding the Release and
Settlement Agreement or the Claims asserted in the Litigation, no Party will
discuss the merits of such Claims or disparage any other Party, provided that
the foregoing is not intended to restrict discussion of the nature of such
Claims, of facts already in the public domain, of existing published legal
decisions or any disclosure required by law.

4.11 Notices

All notices to be provided under this Release and Settlement Agreement must be
in writing and addressed as follows:

If to Discover:

DFS Services, LLC

Attn: General Counsel

Law and Compliance Department

2500 Lake Cook Road

Riverwoods, IL 60015 Facsimile: (224) 405-4244

Email: kellymcnamaracorley@discover.com

 

6

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

Confidential Subject to Fed. R. Evid. 408

If to Visa:

Visa Inc.

Attn: General Counsel

P.O. Box 8999

San Francisco, CA 94128-8999

Facsimile: (650) 432-7436

Email: jfloum@visa.com

If to MasterCard:

Noah J. Hanft

MasterCard Worldwide

General Counsel, Chief Franchise Officer and Corporate Secretary

2000 Purchase Street

Purchase, NY 10577-2509

Email: noah_hanft@mastercard.com

Facsimile: (914) 249-4262

IN WITNESS WHEREOF, the Parties hereto have duly executed this Release and
Settlement Agreement as of the 27th day of

October, 2008.

 

Discover             Visa                By:   

/s/ David W. Nelms

       By:   

/s/ Joshua R. Floum

          Title:   

Chief Executive Officer

       Title:    General Counsel           Date:   

October 27, 2008

       Date:    October 27, 2008                       MasterCard             
          By:    /s/ Noah J. Hanft                       Title:    General
Counsel and Chief Franchise Officer                       Date:    October 27,
2008                                   

 

7

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

Confidential Subject to Fed. R. Evid. 408

Settlement Communication Subject to Fed. R. Evid. 408

SCHEDULE A

 

Payment Date

 

Maximum Payment

 

Performance Period

 

Target

(% of Discover

Financial Services Volume)

12/15/2008

  471,875,000   12/1/2008 - 2/28/2009   5%

3/13/2009

  471,875,000   3/1/2009 - 5/31/2009   5%

6/15/2009

  471,875,000   6/1/2009 - 8/31/2009   5%

9/28/2009

  471,875,000   9/1/2009 - 9/21/2009   21%

 

8