EXHIBIT 10.47
XXXXXX XXXXXXXXXXX
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective this 16th
day of June, 1999 (the "Effective Date") by and between Xxxxxx Xxxxxxxxxxx
(hereinafter referred to as "Employee") and NOVA Corporation, a Georgia
corporation ("NOVA").
W I T N E S S E T H :
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WHEREAS, NOVA, through its direct and indirect subsidiaries, is in the
business of providing credit card and debit card transaction processing services
and settlement services (including the related products and services of
automated teller machines and check guarantee services) to merchants, financial
institutions, independent sales organizations ("ISOs"), and other similar
customers (collectively, the "Business") throughout the United States;
WHEREAS, Employee currently serves as Chairman of the Board of Directors,
President and Chief Executive Officer of NOVA pursuant to an Employment
Agreement between Employee and NOVA dated October 27, 1995 (the "1995
Agreement");
WHEREAS, NOVA, or its assigns, will continue to engage in the Business
throughout the United States (the "Territory");
WHEREAS, NOVA and Employee desire to terminate the 1995 Agreement, which
termination shall be contemporaneous with the effectiveness of this Agreement;
WHEREAS, NOVA and Employee mutually desire that Employee continue to work
for NOVA, and Employee desires to continue said employment, all as contemplated
herein;
NOW, THEREFORE, for and in consideration of his continued employment by
NOVA pursuant to this Agreement, the NOVA Confidential Information and Trade
Secrets (as hereafter defined) furnished to Employee by NOVA in order that he
may continue to perform his duties under this Agreement, the mutual covenants
and agreements herein contained, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Employment of Employee. NOVA hereby employs Employee for a period
beginning as of the Effective Date and ending three (3) years thereafter (the
"Initial Term"), unless Employee's employment by NOVA is sooner terminated or
automatically renewed pursuant to the terms of this Agreement (Employee's
employment by NOVA pursuant to the terms of this Agreement shall hereinafter be
referred to as "Employment").
(a) Employee agrees to such Employment on the terms and conditions
herein set forth and agrees to devote his reasonable best efforts to his
duties under this Agreement and to perform such duties diligently and
efficiently and in accordance with the directions of NOVA's Board of
Directors.
(b) During the term of Employee's Employment, Employee shall serve as
Chairman of the Board of Directors, and be employed as President and Chief
Executive Officer of NOVA. Employee shall be responsible primarily for
such duties as are assigned to him from time to time by NOVA's Board of
Directors, which in any event shall be such duties as are customary for an
officer in those positions.
(c) Employee shall devote substantially all of his business time,
attention, and energies to NOVA's Business, shall act at all times in the
best interests of NOVA, and shall not during the term of his Employment be
engaged in any other business activity, whether or not such business is
pursued for gain, profit, or other pecuniary advantage, or permit such
personal interests as he may have to interfere with the performance of his
duties hereunder. Notwithstanding the foregoing, Employee may participate
in industry, civic and charitable activities so long as such activities do
not materially interfere with the performance of his duties hereunder.
Further, Employee may engage in passive investments so long as the same are
passive, are not inconsistent with Employee's duties hereunder and do not
involve the development, ownership, management or provision of credit and
debit card processing and settlement services, including the related
products and services of automatic teller machines and check guarantee
services. Employee's rights to make certain investments hereunder are in
addition to and not in degradation of investments of less than 5% in a
corporation as described in Section 12(a).
2. Compensation. During the term of Employee's Employment and in
accordance with the terms hereof, NOVA shall pay or otherwise provide to
Employee the following compensation:
(a) Employee's annual salary during the term of his Employment shall be
Five Hundred Forty Thousand and No/100 Dollars ($540,000) ("Base Salary"),
with such increases (each, a "Merit Increase") as may from time to time be
deemed appropriate by the Compensation Committee of NOVA's Board of
Directors (the "Compensation Committee"); provided, however, that so long
as this Agreement remains in effect, Employee's Base Salary shall be
reviewed annually by the Compensation Committee at the beginning of each
fiscal year. The Base Salary shall be paid by NOVA monthly in arrears or
in accordance with NOVA's regular payroll practice. As used herein, the
term "Base Salary" shall be deemed to include any Merit Increases granted
to Employee.
(b) In addition to the Base Salary, Employee shall be eligible to
receive annual bonus compensation pursuant to the schedule set forth as
Exhibit A ("Bonus Compensation"). Upon written request and subject to the
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terms and conditions set forth in this Section 2(b), Employee shall be
entitled to elect to receive all or part of any Bonus Compensation payable
to Employee in shares of NOVA common stock, par value $.01 per share ("NOVA
Stock"), valued on the basis of the closing price of NOVA Stock on the New
York Stock Exchange on the date of Employee's request (or if such date is
not a trading day, on the immediately preceding trading day), and any such
grant shall be granted as restricted stock under the 1996 Plan (or any
successor plan) without restriction; provided, however, that NOVA shall
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not be obligated to comply with Employee's request if (i) NOVA does not
have shares of NOVA Stock available for issuance or (ii) the issuance of
NOVA Stock to Employee would be impracticable or impede, in any respect,
NOVA's ongoing business operations.
(c) Employee shall be eligible annually to receive restricted stock
awards of shares of NOVA Common Stock or stock options under the NOVA
Corporation 1996 Employees Stock Incentive Plan (the "1996 Plan") or any
successor plan. The amount of shares of restricted stock or options to be
granted each year shall be determined by the Compensation Committee.
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(d) NOVA may withhold from any benefits payable under this Agreement
all federal, state, city or other taxes as shall be required pursuant to
any law or governmental regulation or ruling.
3. Benefits. During the term of Employee's employment, and for such time
thereafter as may be required by Section 8 hereof, NOVA shall provide to
Employee the following benefits:
(a) Medical Insurance. Employee and his dependents shall be entitled
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to participate in such medical, dental, vision, prescription drug,
wellness, or other health care or medical coverage plans as may be
established, offered or adopted from time to time by NOVA for the benefit
of its employees and/or executive officers, pursuant to the terms set forth
in such plans.
(b) Life Insurance. Employee shall be entitled to participate in any
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life insurance plans established, offered, or adopted from time to time by
NOVA for the benefit of its employees and/or executive officers.
(c) Disability Insurance. Employee shall be entitled to participate in
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any disability insurance plans established, offered, or adopted from time
to time by NOVA for the benefit of its employees and/or executive officers.
(d) Vacations, Holidays. Employee shall be entitled to at least four
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(4) weeks of paid vacation each year and all holidays observed by NOVA.
(e) Stock Option Plans. Employee shall be eligible for participation in
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any stock option plan or restricted stock plan adopted by NOVA's Board of
Directors or the Compensation Committee.
(f) Other Benefits. In addition to and not in any way in limitation of
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the benefits set forth in this Section 3, Employee shall be eligible to
participate in all additional employee benefits provided by NOVA
(including, without limitation, all tax-qualified retirement plans, non-
qualified retirement and/or deferred compensation plans, incentive plans,
other stock option or purchase plans, and fringe benefits) on terms at
least as favorable as the terms of any benefits that are afforded to other
executive officers of NOVA during the term of this Agreement.
(g) Terms and Provisions of Plans. NOVA agrees that it shall not take
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action (during the term of this Agreement or the "Election Period," as
defined in Section 8(a)) to modify the terms and provisions of any such
plan or arrangement so as to exclude only Employee and/or his dependents,
either by excluding Employee and/or his dependents explicitly by name or by
modifying provisions generally applicable to all employees and dependents
so that only Employee and/or his dependents would ever possibly be
affected.
(h) Vesting of Rights Upon Change In Control. Upon the occurrence of a
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"Change in Control" (as defined in Section 8(h)) during the term of this
Agreement, and regardless of whether Employee terminates this Agreement
following such Change in Control, and notwithstanding any provision to the
contrary in any other agreement or document (including NOVA's applicable
plan documents), all stock options, restricted stock, and other similar
rights that have been granted to Employee and are not vested on the date of
such Change in Control shall become vested and exercisable immediately
(collectively, the "Vested Rights") and as provided under the applicable
plan or agreement, Employee shall have the continuing right to exercise any
or all of the Vested Rights until such rights expire in accordance with
their original terms (without regard to any provision thereof requiring
earlier expiration upon termination of employment).
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4. Personnel Policies. Employee shall conduct himself at all times in a
businesslike and professional manner as appropriate for a person in his
position and shall represent NOVA in all respects as complies with good
business and ethical practices. In addition, Employee shall be subject to
and abide by the good faith policies and procedures of NOVA applicable
generally to personnel of NOVA, as adopted from time to time.
5. Reimbursement for Business Expenses. Employee shall be reimbursed, on
a no less frequently than monthly basis, for all out-of-pocket business
expenses incurred by him in the performance of his duties hereunder,
provided that Employee shall first document and substantiate said business
expenses in the manner generally required by NOVA under its policies and
procedures.
6. Service on the Board of Directors. During the term of Employee's
Employment, Employee shall serve as Chairman of NOVA's Board of Directors.
7. Term and Termination of Employment.
(a) This Agreement shall be effective as of the Effective Date.
(b) Employee's Employment shall terminate immediately upon the
discharge of Employee by NOVA for "Cause." For the purposes of this
Agreement, the term "Cause," when used with respect to termination by NOVA
of Employee's Employment hereunder, shall mean termination as a result of:
(i) Employee's material violation of the covenants set forth in Section 11
or 12, (ii) Employee's willful, intentional, or grossly negligent failure
to perform his duties under this Agreement diligently and in accordance
with the directions of NOVA; (iii) Employee's willful, intentional, or
grossly negligent failure to comply with the good faith decisions or
policies of NOVA; or (iv) final conviction of Employee of a felony
materially adversely affecting NOVA; provided, however, that in the event
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NOVA desires to terminate Employee's Employment pursuant to subsections
(i), (ii), or (iii) of this Section 7(b), NOVA shall first give Employee
written notice of such intent, detailed and specific description of the
reasons and basis therefor, and thirty (30) days to remedy or cure such
perceived breach or deficiency (the "Cure Period"); provided, however, that
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with respect only to a breach that it is not possible to cure within such
thirty (30) day period, so long as Employee is diligently using his best
efforts to cure such breach or deficiency within such period and
thereafter, the Cure Period shall be automatically extended for an
additional period of time (not to exceed sixty (60) additional days) to
enable Employee to cure such breach or deficiency, provided, further, that
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Employee continues to diligently use his best efforts to cure such breach
or deficiency. If Employee does not cure the perceived breach or
deficiency within the Cure Period, NOVA may discharge Employee immediately
upon written notice to Employee. If NOVA desires to terminate Employee's
Employment pursuant to subsection (iv) of this Section 7(b), NOVA shall
first give Employee three (3) days prior written notice of such intent.
(c) Employee's Employment shall terminate immediately upon the death of
Employee.
(d) Employee's Employment shall terminate immediately upon ninety (90)
days prior written notice to Employee if Employee shall at any time be
incapacitated by reason of physical or mental illness or otherwise become
incapable of performing the duties under this Agreement for a continuous
period of one hundred eighty (180) consecutive days; provided, however, to
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the extent NOVA could, with reasonable accommodation and without undue
hardship, continue to employ Employee in some other capacity after such one
hundred eighty (180) day period, NOVA shall, to
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the extent required by the Americans With Disabilities Act, offer to do so,
and, if such offer is accepted by Employee, Employee shall be compensated
accordingly.
(e) Employee may terminate this Agreement, upon thirty (30) days prior
written notice to NOVA (the "Notice Period"), in the event (i) there is a
material diminution in Employee's duties and responsibilities, or such
duties and responsibilities are otherwise diminished such that they no
longer reflect duties and responsibilities customary for a Chairman,
President and Chief Executive Officer of a publicly-traded company; (ii)
Employee is required to relocate to an office that is more than thirty-five
(35) miles from Employee's current office located at Xxx Xxxxxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000; (iii) there is a reduction in Employee's
Base Salary payable under Section 2, a materially adverse change in the
terms of Exhibit A attached hereto or a material reduction in benefits
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provided to Employee under Section 3 (whether occurring at once or over a
period of time); or (iv) NOVA materially breaches this Agreement, (each of
(i), (ii), (iii) and (iv) being referred to as a "Responsibilities
Breach"), and NOVA fails to cure said Responsibilities Breach within the
Notice Period; provided, however, that with respect only to breaches that
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it is not possible to cure within the Notice Period, so long as NOVA is
diligently using its best efforts to cure such breaches within such Notice
Period, the Notice Period shall be automatically extended for an additional
period of time (not to exceed sixty (60) additional days) to enable NOVA to
cure such breaches, provided, further, that NOVA continues to diligently
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use its best efforts to cure such breaches. Notwithstanding anything to
the contrary in this Section 7(e), the Notice Period for failure to pay
compensation shall be five (5) days.
(f) This Agreement shall automatically renew for successive three (3)
year terms (each a "Renewal Term") unless either party hereto gives the
other party hereto written notice of its or his intent not to renew this
Agreement no later than ninety (90) days prior to the date the Initial
Term, or the then-current Renewal Term, is scheduled to expire. Employee's
Employment shall terminate upon termination or expiration of this
Agreement.
(g) NOVA may terminate this Agreement at any time, without cause, upon
ninety (90) days prior written notice to Employee.
(h) Employee may terminate this Agreement at any time, without cause,
upon ninety (90) days prior written notice to NOVA.
(i) Other than as specifically provided in and in strict compliance
with this Section 7, this Agreement and/or Employee's Employment may not be
terminated.
8. Termination Payments.
(a) Upon (1) the termination of Employee's Employment by Employer
pursuant to Section 7(g) or (2) the termination or expiration of this
Agreement, for whatever reason, provided that in the case of this
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subsection (2), the earlier of (x) such termination or expiration or (y)
notice of such termination or non-renewal occurs within three years after a
Change in Control (the effective date of such termination or expiration
being referred to as the "Termination Date"), Employee shall receive the
payments and benefits set forth below.
(i) NOVA shall pay Employee accrued but unpaid Base Salary through
the Termination Date, Bonus Compensation due and owing to Employee (as
further set forth in Section 8(d)) and any other benefits required to
be provided to Employee and his dependents under contract and
applicable law.
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(ii) NOVA shall pay Employee in cash an amount equal to his "Annual
Compensation" (as defined in Section 8(h)(ii)) multiplied by three (3),
which amount will be paid in one lump sum within fifteen (15) days of
the Termination Date.
(iii) All stock options, restricted stock, and other similar rights
that have been granted to Employee shall become vested and exercisable
immediately, and as provided under the applicable plan or agreement,
Employee shall have the continuing right to exercise such rights until
such rights expire in accordance with their original terms (without
regard to any provision thereof requiring earlier expiration upon
termination of employment).
(iv) Until the earlier to occur of: (x) the date which is three (3)
years after the Termination Date, or (y) Employee's accepting
employment with another employer or otherwise obtaining coverage (the
"Election Period"), NOVA shall use commercially reasonable efforts to
provide to Employee and his dependents the coverage for the benefits
described in Sections 3(a), (b) and (c).
(v) To the extent required, NOVA shall pay to Employee the "Gross-Up
Payment" as set forth in Section 8(g).
(b) Upon termination of Employee's Employment or the termination or
expiration of this Agreement, which termination or expiration occurs: (1)
as a result of Employee terminating this Agreement pursuant to Section
7(e), (2) this Agreement being terminated pursuant to Section 7(c) or 7(d),
or (3) this Agreement not being renewed by NOVA, and which termination or
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expiration is not covered by Section 8(a) hereof (the effective date of
such termination or expiration being referred to herein as the "Termination
Date"), Employee shall receive the payments and benefits set forth below.
(i) NOVA shall pay Employee accrued but unpaid Base Salary through
the Termination Date, Bonus Compensation due and owing to Employee (as
further set forth in Section 8(d)) and any other benefits required to
be provided to Employee and his dependents under contract and
applicable law.
(ii) NOVA shall pay Employee in cash an amount equal to his Annual
Compensation multiplied by three (3), which amount will be paid in
twenty-four (24) equal monthly installments beginning on the first day
of the calendar month following the calendar month in which the
Termination Date occurs.
(iii) All stock options, restricted stock, and other similar rights
that have been granted to Employee shall become vested and exercisable
immediately, and as provided under the applicable plan or agreement,
Employee shall have the continuing right to exercise such rights until
such rights expire in accordance with their original terms (without
regard to any provision thereof requiring earlier expiration upon
termination of employment).
(iv) For the duration of the Election Period, NOVA shall use
commercially reasonable efforts to provide to Employee and his
dependents the coverage for the benefits described in Sections 3(a),
(b) and (c).
(c) Upon termination of Employee's Employment or the termination or
expiration of this Agreement, which termination or expiration occurs: (1)
as a result of NOVA terminating this
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Agreement pursuant to Section 7(b), (2) as a result of this Agreement not
being renewed by Employee, or (3) as a result of Employee terminating this
Agreement pursuant to Section 7(h), and which termination or expiration is
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not covered by Sections 8(a) or 8(b)(the effective date of such
termination or expiration being referred to herein as the "Termination
Date"), Employee shall receive the payments and benefits set forth below.
(i) NOVA shall pay Employee accrued but unpaid Base Salary through
the Termination Date, Bonus Compensation due and owing to Employee (as
further set forth in Section 8(d)) and any other benefits required to
be provided to Employee and his dependents under contract and
applicable law.
(ii) NOVA shall pay Employee in cash an amount equal to his
"Termination Base Salary" (as defined herein) in twelve (12) equal
monthly installments beginning on the first day of the calendar month
following the calendar month in which the Termination Date occurs.
"Termination Base Salary" shall be the greater of the Employee's Base
Salary in effect on the Termination Date or the greatest Base Salary in
effect during the calendar year immediately prior to the calendar year
in which the Termination Date occurs.
(iii) To the extent that Employee and/or any of his dependents is
eligible to, and timely elects to, receive continuation coverage under
any group health plan providing medical, dental, vision, prescription
drug, wellness or other health care or medical coverage which is
subject to the provisions of part 6 of Title I of ERISA ("COBRA"), NOVA
shall timely pay any premiums required for such coverage. This payment
of premiums by NOVA is not intended to alter in any way the provisions
of any group health plan of NOVA, and all time limits, effects of
subsequent coverage and all other relevant provisions of any such plan
remain unchanged and shall control Employee's (and his dependents')
entitlement to coverage or benefits under such plan.
(d) For purposes of payments to be made under this Section 8:
(i) Any accrued but unpaid Base Salary shall be paid to Employee
within five (5) business days of the Termination Date.
(ii) For purposes of calculating Bonus Compensation due and owing to
Employee:
(A) Regardless of the reason for termination or expiration of
this Agreement, in the event that Bonus Compensation for the
calendar year preceding the calendar year in which the Termination
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Date occurs has not been paid by the Termination Date, such Bonus
Compensation shall be paid to Employee concurrently with NOVA's
payment of Bonus Compensation generally for such calendar year.
(B) In the case of a termination or expiration of this Agreement
governed by Sections 8(a) or 8(b) hereof, Employee shall receive an
amount of Bonus Compensation for the calendar year in which the
Termination Date occurs equal to (x) the amount of Bonus
Compensation which Employee would have been entitled to receive had
termination or expiration not occurred in such calendar year
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multiplied by (y) a fraction, the numerator of which is the number
of days beginning on January 1st of the calendar year in which the
Termination Date occurs and ending on the Termination Date, and the
denominator of which is 365. This payment shall be paid to Employee
concurrently with NOVA's payment of Bonus Compensation generally for
such calendar year.
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(C) In the case of a termination or expiration of this Agreement
governed by Section 8(c) hereof, Employee shall not receive any
Bonus Compensation for the calendar year in which the Termination
Date occurs.
(iii) For purposes of calculating the amount of payments made using
the Annual Compensation formula, NOVA shall initially compute the
Annual Compensation under Section 8(h)(ii)(B) using the Prior Bonus
Amount. However, in the event the Current Bonus Amount, when awarded,
exceeds the Prior Bonus Amount, then NOVA will pay the difference to
Employee, either in equal amounts over the remainder of the term over
which such payments are to be made, or in one lump sum, as the case may
be.
(e) Following the termination or expiration of this Agreement, Employee
shall be bound by the covenants not to solicit or compete set forth in
Section 12 hereof as set forth below.
(i) In the event of a termination or expiration of this Agreement
which is governed by Sections 8(a) or 8(b) hereof, Employee shall
comply with the covenants not to solicit or compete set forth in
Section 12 hereof for a period of two (2) years immediately following
the Termination Date.
(ii) In the event of a termination or expiration of this Agreement
which is governed by Section 8(c) hereof, Employee shall comply with
the covenants not to solicit or compete set forth in Section 12 hereof
for a period of one (1) year immediately following the Termination
Date; provided, however, that if within ninety (90) days after the
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Termination Date, NOVA provides Employee with written notice of such
election (the "Extension Notice"), Employee shall comply with the
covenants not to solicit or compete set forth in Section 12 below for a
period of two (2) years immediately following the Termination Date. In
the event that NOVA provides Employee with the Extension Notice in the
time provided, and in addition to the payment to be made pursuant to
Section 8(c)(ii) hereof, NOVA shall pay Employee in cash an amount
equal to his Annual Compensation, which shall be paid in twelve (12)
equal monthly installments beginning on the first day of the calendar
month following the calendar month of the final payment to be made
pursuant to Section 8(c)(ii), above.
(f) In the event of the death of Employee, all benefits and
compensation hereunder shall, unless otherwise specified by Employee,
be payable to, or exercisable by, Employee's estate.
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(g) Gross-Up Payment.
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(i) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by or
on behalf of NOVA to or for the benefit of Employee as a result of a
"Change in Control" or as otherwise payable under Sections 3(h) or 8(a)
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard
to any additional payments required under this Section 8(g) (a
"Payment")) would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties are incurred by Employee with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Employee shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that, after payment by
Employee of all taxes upon the Gross-Up Payment (such taxes including,
without limitation, any income taxes and Excise Tax imposed upon the
Gross-Up Payment, and any interest or penalties imposed with respect to
such taxes), Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
(ii) Subject to the provisions of Section 8(g)(iii), all
determinations required to be made under this Section 8, including
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm
or law firm selected by Employee and reasonably acceptable to NOVA (the
"Tax Firm"); provided, however, that the Tax Firm shall not determine
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that no Excise Tax is payable by Employee unless it delivers to
Employee a written opinion (the "Accounting Opinion") that failure to
pay the Excise Tax and to report the Excise Tax and the payments
potentially subject thereto on or with Employee's applicable federal
income tax return will not result in the imposition of an accuracy-
related or other penalty on Employee. All fees and expenses of the Tax
Firm shall be borne solely by NOVA. Within 15 business days of the
receipt of notice from Employee that there has been a Payment, the Tax
Firm shall make all determinations required under this Section 8, shall
provide to NOVA and Employee a written report setting forth such
determinations, together with detailed supporting calculations, and, if
the Tax Firm determines that no Excise Tax is payable, shall deliver
the Accounting Opinion to Employee. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by NOVA to
Employee within fifteen days of the receipt of the Tax Firm's
determination. Subject to the remainder of this Section, any
determination by the Tax Firm shall be binding upon NOVA and Employee;
provided, however, that Employee shall only be bound to the extent that
the determinations of the Tax Firm hereunder, including the
determinations made in the Accounting Opinion, are reasonable and
reasonably supported by applicable law. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the
initial determination by the Tax Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by NOVA should have
been made ("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that it is ultimately determined in
accordance with the procedures set forth in Section 8(g)(iii) that
Employee is required to make a payment of any Excise Tax, the Tax Firm
shall reasonably determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by NOVA to or
for the benefit of Employee. In determining the reasonableness of Tax
Firm's determinations hereunder, and the effect thereof, NOVA and
Employee shall be provided a reasonable opportunity to review such
determinations with Tax Firm and their respective tax counsel, if
separate from the Tax Firm. Tax Firm's determinations hereunder, and
the
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Accounting Opinion, shall not be deemed reasonable until Employee's
reasonable objections and comments thereto have been satisfactorily
accommodated by Tax Firm.
(iii) Employee shall notify NOVA in writing of any claims by the
Internal Revenue Service that, if successful, would require the payment
by NOVA of the Gross-Up Payment. Such notification shall be given as
soon as practicable, but no later than 30 calendar days after Employee
actually receives notice in writing of such claim, and shall apprise
NOVA of the nature of such claim and the date on which such claim is
requested to be paid; provided, however, that the failure of Employee
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to notify NOVA of such claim (or to provide any required information
with respect thereto) shall not affect any rights granted to Employee
under this Section except to the extent that NOVA is materially
prejudiced in the defense of such claim as a direct result of such
failure. Employee shall not pay such claim prior to the expiration of
the thirty (30) day period following the date on which he gives such
notice to NOVA (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If NOVA notifies
Employee in writing prior to the expiration of such period that it
desires to contest such claim, Employee shall do all of the following:
(A) give NOVA any information reasonably requested by NOVA
relating to such claim;
(B) take such action in connection with contesting such claim as
NOVA shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by NOVA
and reasonably acceptable to Employee;
(C) cooperate with NOVA in good faith in order effectively to
contest such claim;
(D) if NOVA elects not to assume and control the defense of such
claim, permit NOVA to participate in any proceedings relating
to such claim; provided, however, that NOVA shall bear and
pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this
Section 8, NOVA shall have the right, at its sole option, to
assume the defense of and control all proceedings in
connection with such contest, in which case it may pursue or
forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect
of such claim and may either direct Employee to pay the tax
claimed and xxx for a refund or contest the claim in any
permissible manner, and Employee agrees to prosecute such
contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as NOVA shall determine; provided,
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however, that if NOVA directs Employee to pay such claim and
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xxx for a refund, NOVA shall advance the amount of such
payment to Employee, on an interest-free basis and shall
indemnify and hold Employee harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the
statute of limitations relating to
10
payment of taxes for the taxable year of Employee with
respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore,
NOVA's right to assume the defense of and control the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and Employee shall be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other
taxing authority.
(iv) If, after the receipt by Employee of an amount advanced by
NOVA pursuant to this Section 8(g), Employee becomes entitled to
receive any refund with respect to such claim, Employee shall
(subject to NOVA's complying with the requirements of Section
8(g)(iii)) promptly pay to NOVA the amount of such refund (together
with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by Employee of an amount advanced
by NOVA pursuant to Section 8(g)(iii), a determination is made that
Employee is not entitled to a refund with respect to such claim and
NOVA does not notify Employee in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall, to the extent of such
denial, be forgiven and shall not be required to be repaid and the
amount of forgiven advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
(h) For purposes of this Agreement, the following terms shall be
defined as follows:
(i) "Change in Control" shall mean:
(A) The acquisition (other than from NOVA) by any person,
entity or "group", within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act") (excluding, for this purpose, any
employee benefit plan of NOVA or its subsidiaries which
acquires beneficial ownership of voting securities of
NOVA) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or more
of either the then outstanding shares of NOVA Stock or
the combined voting power of NOVA's then outstanding
voting securities entitled to vote generally in the
election of directors; or
(B) The consummation by NOVA of a reorganization, merger,
consolidation, in each case, with respect to which the
shares of NOVA voting stock outstanding immediately prior
to such reorganization, merger or consolidation do not
constitute or become exchanged for or converted into more
than 50% of the combined voting power entitled to vote
generally in the election of directors of the
reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or
dissolution of NOVA or the sale of all or substantially
all of the assets of NOVA; or
(C) The failure for any reason of individuals who constitute
the Incumbent Board to continue to constitute at least a
majority of the Board of Directors of NOVA.
11
(ii) "Annual Compensation" means the sum of the following
amounts:
(A) the greater of Employee's Base Salary in effect on the
Termination Date, or the greatest Base Salary in effect
during the calendar year immediately prior to the
calendar year in which the Termination Date occurs; and
(B) the greater of the Bonus Compensation which Employee
would have received for the calendar year in which the
Termination Date occurs had Employee's Employment not
been terminated (the "Current Bonus Amount"), or such
Bonus Compensation for the calendar year immediately
prior to the calendar year in which the Termination Date
occurs (the "Prior Bonus Amount"). For purposes of
calculating Employee's Annual Compensation only, (x)
Employee shall be deemed to have met all conditions,
including employment conditions, necessary for the
receipt of the Current Bonus Amount, and (y) regardless
of the amount of Bonus Compensation actually paid to
Employee for the 1998 calendar year, Employee's Bonus
Compensation for the 1998 calendar year shall be deemed
to be Four Hundred Twenty Thousand and No/100 Dollars
($420,000).
(iii) "Incumbent Board" shall mean the members of the Board of
Directors of NOVA as of the date hereof and any person
becoming a member of the Board of Directors of NOVA
hereafter whose election, or nomination for election by
NOVA's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an
actual or threatened election contest relating to the
election of the directors of NOVA, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act).
9. Products, Notes, Records and Software. Employee acknowledges and
agrees that all memoranda, notes, records and other documents and computer
software created, developed, compiled, or used by Employee or made
available to him during the term of his Employment concerning or relative
to the Business, including, without limitation, all customer data, billing
information, service data, and other technical material of NOVA is and
shall be NOVA's property. Employee agrees to deliver all such materials to
NOVA thirty (30) days after Employee receives a written request therefor
from NOVA. Employee further agrees not to use such materials for any
reason after said termination.
10. Arbitration.
(a) NOVA and Employee acknowledge and agree (except as specifically
set forth in Section 10(d)) that any claim or controversy arising out of or
relating to this Agreement shall be settled by binding arbitration in
Atlanta, Georgia, in accordance with the National Rules of the American
Arbitration Association for the Resolution of Employment Disputes in effect
on the date of the event giving rise to the claim or controversy. NOVA
and Employee further acknowledge and agree that either party must request
arbitration of any claim or controversy within one (1) year of the date of
the event giving rise to the claim or controversy by giving written notice
of the party's
12
request for arbitration. Failure to give notice of any claim or controversy
within one (1) year of the event giving rise to the claim or controversy
shall constitute waiver of the claim or controversy.
(b) All claims or controversies subject to arbitration pursuant to
Section 10(a) above shall be submitted to arbitration within six (6) months
from the date that a written notice of request for arbitration is
effective. All claims or controversies shall be resolved by a panel of
three arbitrators who are licensed to practice law in the State of Georgia
and who are experienced in the arbitration of labor and employment
disputes. These arbitrators shall be selected in accordance with the
National Rules of the American Arbitration Association for the Resolution
of Employment Disputes in effect at the time the claim or controversy
arises. Either party may request that the arbitration proceeding be
stenographically recorded by a Certified Shorthand Reporter. The
arbitrators shall issue a written decision with respect to all claims or
controversies within thirty (30) days from the date the claims or
controversies are submitted to arbitration. The parties shall be entitled
to be represented by legal counsel at any arbitration proceedings.
(c) NOVA and Employee acknowledge and agree that the arbitration
provisions in this Agreement may be specifically enforced by either party,
and that submission to arbitration proceedings may be compelled by any
court of competent jurisdiction. NOVA and Employee further acknowledge and
agree that the decision of the arbitrators may be specifically enforced by
either party in any court of competent jurisdiction.
(d) Notwithstanding the arbitration provisions set forth herein,
Employee and NOVA acknowledge and agree that nothing in this Agreement
shall be construed to require the arbitration of any claim or controversy
arising under Sections 11 and 12 of this Agreement, nor shall such
provisions prevent NOVA from seeking equitable relief from a court of
competent jurisdiction for violations of Sections 11 and 12 of this
Agreement. These provisions shall be enforceable by any court of competent
jurisdiction and shall not be subject to arbitration except by mutual
written consent of the parties signed after the dispute arises, any such
consent, and the terms and conditions thereof, then becoming binding on the
parties. Employee and NOVA further acknowledge and agree that nothing in
this Agreement shall be construed to require arbitration of any claim for
workers' compensation or unemployment compensation.
11. Nondisclosure.
(e) NOVA Confidential Information. Employee acknowledges and agrees
-----------------------------
that because of his Employment, he will have access to proprietary
information of NOVA concerning or relative to the Business (collectively,
"NOVA Confidential Information") which includes, without limitation,
technical material of NOVA, sales and marketing information, customer
account records, billing information, training and operations information,
materials and memoranda, personnel records, pricing and financial
information relating to the business, accounts, customers, prospective
customers, employees and affairs of NOVA, and any information marked
"Confidential" by NOVA. Employee acknowledges and agrees that NOVA
Confidential Information is and shall be NOVA's property. Employee agrees
that during the term of his Employment, Employee shall keep NOVA
Confidential Information confidential, and Employee shall not use NOVA
Confidential Information for any reason other than on behalf of NOVA
pursuant to, and in strict compliance with, the terms of this Agreement.
Provided that NOVA complies with its obligations set forth in Section 8,
Employee further agrees that, for a period beginning on the Termination
Date and ending two (2) years thereafter, Employee shall continue to keep
NOVA Confidential Information confidential, and Employee shall not use NOVA
Confidential Information for any reason or in any manner.
13
(f) Notwithstanding the foregoing, Employee shall not be subject to the
restrictions set forth in subsection (a) of this Section 11 with respect to
information which:
(i) becomes generally available to the public other than as a result
of disclosure by Employee or the breach of Employee's obligations under
this Agreement;
(ii) becomes available to Employee from a source which is unrelated
to his Employment or the exercise of his duties under this Agreement,
provided that such source lawfully obtained such information and is not
bound by a confidentiality agreement with NOVA; or
(iii) is required by law to be disclosed.
(g) Trade Secrets. Employee acknowledges and agrees that because of
-------------
his Employment, he will have access to "trade secrets" (as defined in the
Uniform Trade Secrets Act, O.C.G.A. (S) 10-1-760, et seq. (the "Uniform
-- ---
Trade Secrets Act")) of NOVA ("Trade Secrets"). Nothing in this Agreement
is intended to alter the applicable law and remedies with respect to
information meeting the definition of "trade secrets" under the Uniform
Trade Secrets Act, which law and remedies shall be in addition to the
obligations and rights of the parties hereunder.
12. Covenants Not to Solicit or Compete. Employee acknowledges and agrees
that, because of his Employment, he does and will continue to have access to
confidential or proprietary information concerning merchants, associate banks
and ISOs of NOVA and shall have established relationships with such merchants,
associate banks and ISOs as well as with the vendors, consultants, and suppliers
used to service such merchants, associate banks and ISOs. Employee agrees that
during the term of his Employment and continuing thereafter for the period
specified in Section 8(e) (provided NOVA complies with its obligations set forth
in Section 8 hereof), except as permitted or contemplated by this Agreement,
Employee shall not, directly or indirectly, either individually, in partnership,
jointly, or in conjunction with, or on behalf of, any person, firm, partnership,
corporation, or unincorporated association or entity of any kind:
(h) obtain any interest (except as a shareholder holding less than
five percent (5%) interest in a corporation) in any person, firm,
partnership, corporation, or unincorporated association of any kind which
provides credit card or debit card transaction processing services within
the Territory;
(i) provide managerial, executive, advisory, consulting, sales or
marketing services relating to credit card or debit card transaction
processing to any person, firm, partnership, corporation, or unincorporated
association of any kind which provides credit card or debit card
transaction processing services within the Territory;
(j) solicit or contact, for the purpose of providing products or
services competing with those provided by NOVA in connection with the
Business, any person or entity that during the term of Employee's
Employment was a merchant, associate bank, ISO or customer (including any
actively-sought prospective merchant, associate bank, ISO or customer) of
NOVA and with whom Employee had material contact or about whom Employee
learned material confidential information during the last twelve (12)
months of his Employment;
(k) persuade or attempt to persuade any merchant, associate bank, ISO,
customer, or supplier of NOVA to terminate or modify such merchant's,
associate bank's, ISO's, customer's, or supplier's relationship with NOVA
if Employee had material contact with or learned material confidential
14
information about such merchant, associate bank, ISO, customer or supplier
during the last twelve (12) months of his Employment; or
(l) persuade or attempt to persuade any person who (aa) was employed
by NOVA as of the date of the termination of Employee's Employment and (bb)
is in a sales or management position with NOVA at the time of such contact,
to terminate or modify his employment relationship, whether or not pursuant
to a written agreement, with NOVA, as the case may be.
13. New Developments. Any discovery, invention, process or improvement
made or discovered by Employee during the term of his Employment in connection
with or in any way affecting or relating to the Business (as then carried on or
under active consideration) shall forthwith be disclosed to NOVA and shall
belong to and be the absolute property of NOVA; provided, however, that this
provision does not apply to an invention for which no equipment, supplies,
facility, trade secret information of NOVA was used and which was developed
entirely on Employee's own time, unless (a) the invention relates (i) directly
to the Business or (ii) to NOVA's actual or demonstrably anticipated research or
development; or (b) the invention results from any work performed by Employee
for NOVA.
14. Remedy for Breach. Employee acknowledges and agrees that his breach
of any of the covenants contained in Sections 9, 11, 12 and 13 of this Agreement
would cause irreparable injury to NOVA and that remedies at law of NOVA for any
actual or threatened breach by Employee of such covenants would be inadequate
and that NOVA shall be entitled to specific performance of the covenants in such
sections or injunctive relief against activities in violation of such sections,
or both, by temporary or permanent injunction or other appropriate judicial
remedy, writ or order, without the necessity of proving actual damages. This
provision with respect to injunctive relief shall not diminish the right of NOVA
to claim and recover damages against Employee for any breach of this Agreement
in addition to injunctive relief. Employee acknowledges and agrees that,
subject to NOVA's compliance with the provisions of Section 8 hereof, the
covenants contained in Sections 9, 11, 12 and 13 of this Agreement shall be
construed as agreements independent of any other provision of this or any other
contract between the parties hereto, and that the existence of any claim or
cause of action by Employee against NOVA, whether predicated upon this or any
other contract, shall not constitute a defense to the enforcement by NOVA of
said covenants.
15. Reasonableness. Employee has carefully considered the nature and
extent of the restrictions upon him and the rights and remedies conferred on
NOVA under this Agreement, and Employee hereby acknowledges and agrees that:
(m) the restrictions and covenants contained herein, and the rights and
remedies conferred upon NOVA, are necessary to protect the goodwill and
other value of the Business;
(n) the restrictions placed upon Employee hereunder are narrowly drawn,
are fair and reasonable in time and territory, will not prevent him from
earning a livelihood, and place no greater restraint upon Employee than is
reasonably necessary to secure the Business and goodwill of NOVA;
(o) NOVA is relying upon the restrictions and covenants contained
herein in continuing to make available to Employee information concerning
the Business; and
(p) Employee's Employment places him in a position of confidence and
trust with NOVA and its employees, merchants, associate banks, ISOs,
customers, vendors and suppliers.
15
16. Invalidity of Any Provision. It is the intention of the parties
hereto that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies of each state and
jurisdiction in which such enforcement is sought, but that the unenforceability
(or the modification to conform with such laws or public policies) of any
provision hereof shall not render unenforceable or impair the remainder of this
Agreement which shall be deemed amended to delete or modify, as necessary, the
invalid or unenforceable provisions. The parties further agree to alter the
balance of this Agreement in order to render the same valid and enforceable.
The terms of the non-competition provisions of this Agreement shall be deemed
modified to the extent necessary to be enforceable and, specifically, without
limiting the foregoing, if the term of the non-competition is too long to be
enforceable, it shall be modified to encompass the longest term which is
enforceable and, if the scope of the geographic area of non-competition is too
great to be enforceable, it shall be modified to encompass the greatest area
that is enforceable. The parties further agree to submit any issues regarding
such modification to a court of competent jurisdiction if they are unable to
agree and further agree that if said court declines to so amend or modify this
Agreement, the parties will submit the issue of amendment or modification of the
non-competition covenants in this Agreement to binding arbitration in accordance
with Section 10 hereof.
17. Full Settlement and Legal Expenses. NOVA's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counter-claim, recoupment,
defense or other claim, right or action which NOVA may have, or claim to have,
against the Employee or others. In no event shall the Employee be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this Agreement.
NOVA agrees to pay, to the full extent permitted by law, all legal fees and
expenses which the Employee may incur as a result of Employee's instituting
legal action to enforce his rights hereunder, or as a result of any contest
(regardless of the outcome thereof) by NOVA or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any dispute by the
Employee concerning the amount of any payment pursuant to Section 8 of this
Agreement), plus in each case interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code.
18. Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia.
19. Waiver of Breach. The waiver by NOVA of a breach of any provision of
this Agreement by Employee shall not operate or be construed as a waiver of any
subsequent breach by Employee.
20. Successors and Assigns. This Agreement shall inure to the benefit of
NOVA, its subsidiaries and affiliates, and their respective successors and
assigns. This Agreement is not assignable by Employee or by NOVA, except that
NOVA may assign its rights (but not its obligations) under this Agreement to any
affiliated or subsidiary corporation, and NOVA may assign this Agreement to any
successor to NOVA in any reorganization, merger or consolidation, or transfer of
all or substantially all of NOVA's business or properties.
21. Notices. All notices, demands and other communications hereunder
shall be in writing and shall be delivered in person or deposited in the United
States mail, certified or registered, with return receipt requested, as follows:
(i) If to Employee, to:
Xxxxxx Xxxxxxxxxxx
Chief Executive Officer
16
NOVA Corporation
Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
With a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxxxxx
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
And a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxxx LLP
0000 XxxxxxxXxxx Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, III, Esq.
(ii) If to NOVA, to:
NOVA Corporation
Xxx Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
General Counsel
With a copy (which shall not constitute notice) to:
Long Xxxxxxxx & Xxxxxx LLP
SunTrust Plaza
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
22. Entire Agreement. This Agreement contains the entire agreement of the
parties, and supersedes all other prior negotiations, commitments, agreements
and understandings (written or oral) between the parties with respect to the
subject matter hereof, including but not limited to the 1995 Agreement, which is
hereby terminated. It may not be changed orally but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.
23. Indemnification. At all times during and after Employee's Employment
and the effectiveness of this Agreement, NOVA shall indemnify Employee (as a
director, officer, employee and otherwise) to the fullest extent permitted by
law and shall at all times maintain appropriate provisions in its Articles of
Incorporation and Bylaws which mandate that NOVA provide such indemnification.
24. Survival. The provisions of Sections 8, 9, 10, 11, 12, 13, 14, 15,
16, 17, 18, 21 and 23 shall survive termination of Employee's Employment and
termination of this Agreement.
17
25. Withholding; No Offset. All payments required to be made by NOVA
under this Agreement will be subject to the withholding of such amounts, if any,
relating to federal, state and local taxes as may be required by law. No
payment under this Agreement will be subject to offset or reduction attributable
to any amount Employee may owe to NOVA or any other person, as permitted by law.
Nothing in this Section shall be construed to reduce Employee's right to the
payments described in Section 8(g).
(Signatures Begin on Next Page)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above shown.
"EMPLOYEE":
By: /s/ Xxxxxx Xxxxxxxxxxx
----------------------
Xxxxxx Xxxxxxxxxxx
"NOVA":
NOVA Corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxxx
-------------------
Title: Chief Financial Officer
------------------------------------
[corporate seal]
19
EXHIBIT A
---------
Annual Incentive Compensation Schedule
. The "Target Amount" for each calendar year's Bonus Compensation shall be
equal to Employee's Base Salary for such calendar year.
. The amount of Bonus Compensation paid to Employee for any calendar year
shall range from 50% - 150% of the "Target Amount," based upon NOVA's
achievement of specific net income objectives and other financial and non-
financial objectives mutually agreed upon by Employee and the Compensation
Committee with respect to such calendar year; provided, however, that if
-------- -------
NOVA's performance in such calendar year is extraordinarily above
expectations, the Compensation Committee may award more than 150% of the
Target Amount for such calendar year; similarly, if NOVA's performance in
such year is extraordinarily below expectations, the Compensation
Committee may award less than 50% of the Target Amount for such calendar
year.
E-1
