<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999, OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________
Commission file number 1-14342
NOVA Corporation
----------------
(Exact name of registrant as specified in its charter)
Georgia 58-2209575
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Concourse Parkway, Suite 300, Atlanta, Georgia 30328
--------------------------------------------------------
(Address of principal executive offices)
(770) 396-1456
--------------
(Registrant's telephone number, including area code)
___________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Shares Outstanding as of May 12, 1999
- ----- -------------------------------------
Common Stock, $.01 par value 72,944,535 shares
<PAGE>
NOVA CORPORATION
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<C> <S> <C>
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets-
March 31, 1999 (unaudited) and December 31, 1998 ....................................... 3
Condensed Consolidated Statements of Operations (unaudited)
Three months ended March 31, 1999 and 1998.............................................. 4
Condensed Consolidated Statements of Cash Flows (unaudited)-
Three months ended March 31, 1999 and 1998.............................................. 5
Notes to Condensed Consolidated Financial Statements..................................... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..... 9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings......................................................................... 14
ITEM 4. Submission of Matters to a Vote of Security Holders....................................... 14
ITEM 6. Exhibits and Reports on Form 8-K.......................................................... 14
Signatures.......................................................................................... 15
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOVA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998
In thousands, except shares
<TABLE>
<CAPTION>
(Unaudited)
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents................................................ $ 47,256 $ 51,131
Trade receivables, less allowance for doubtful accounts of
$11,425 and $8,466 at March 31, 1999 and December 31, 1998, respectively. 95,261 85,245
Current portion of net investment in finance leases...................... 12,945 11,775
Inventory................................................................ 10,833 8,460
Deferred income taxes.................................................... 23,140 31,884
Other current assets..................................................... 13,598 22,638
-------- --------
Total current assets................................................... 203,033 211,133
-------- --------
Merchant and customer contracts.......................................... 281,713 263,992
Long-term portion of investment in finance leases........................ 36,558 33,910
Property and equipment, net.............................................. 69,623 65,732
Excess cost of businesses acquired....................................... 12,187 14,707
Long-term note receivable................................................ 13,781 13,781
Other non-current assets................................................. 23,409 19,278
-------- --------
$640,304 $622,533
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable......................................................... $ 36,584 $ 30,365
Accounts payable to affiliate............................................ 761 827
Settlement obligations................................................... 11,081 9,263
Accrued liabilities...................................................... 27,422 20,046
Credit and fraud loss reserve............................................ 14,720 12,777
Accrued merger and consolidation charges................................. 17,709 45,724
Long-term debt obligations due within one year........................... 33,126 31,534
-------- --------
Total current liabilities.............................................. 141,403 150,536
-------- --------
Long-term debt........................................................... 33,904 23,025
Minority interest in subsidiaries........................................ 7,099 7,754
Shareholders' Equity
Common stock, $.01 par value, 200,000,000 shares
authorized, 72,875,108 and 72,597,045 shares outstanding
at March 31, 1999 and December 31, 1998, respectively................... 729 726
Additional paid in capital............................................... 425,503 422,499
Accumulated retained earnings............................................ 31,666 17,993
-------- --------
Total shareholders' equity............................................... 457,898 441,218
-------- --------
$640,304 $622,533
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
ITEM 1. FINANCIAL STATEMENTS - CONTINUED
NOVA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In thousands, except per share amounts
<TABLE>
<CAPTION>
For the three months ended,
March 31,
---------------------------
<S> <C> <C>
1999 1998
-------- --------
Revenues....................................... $311,765 $240,542
Operating expenses:
Cost of service.............................. 238,442 183,313
Conversion costs............................. 7,521 2,587
Selling, general and administrative.......... 27,748 24,616
Depreciation and amortization................ 13,049 9,738
Merger and consolidation expenses............ - 2,459
-------- --------
Total operating expenses.................. 286,760 222,713
Operating income............................... 25,005 17,829
Other income (expense):
Interest income.............................. 538 1,240
Interest expense............................. (992) (1,874)
Minority interest in income of subsidiaries.. (2,276) (937)
-------- --------
(2,730) (1,571)
-------- --------
Income before provision for income taxes....... 22,275 16,258
Provision for income taxes..................... 8,257 5,571
-------- --------
Net income..................................... $ 14,018 $ 10,687
======== ========
Per share amounts:
Basic earnings per share....................... $ 0.19 $ 0.16
Diluted earnings per share..................... $ 0.19 $ 0.16
Shares used in per share calculations
Weighted averages shares - basic............... 72,747 66,162
Weighted averages shares - diluted............. 74,561 68,098
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
ITEM 1. FINANCIAL STATEMENTS - CONTINUED
NOVA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In thousands
<TABLE>
<CAPTION>
For the three months
ended March 31,
--------------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income......................................................................... $ 14,018 $ 10,687
Subsidiary fiscal year conversion.................................................. 2,547 -
Adjustments to reconcile net income
to net cash provided by operating activities:
Non-cash portion of merger and consolidation charges............................. - 2,000
Depreciation and amortization.................................................... 13,049 9,738
Deferred income taxes............................................................ 12,442 521
Minority interest................................................................ (655) 937
Interest on debt obligations..................................................... 895 -
Changes in assets and liabilities, net of the effects of business acquisitions:
Trade receivables............................................................... 99 (3,289)
Inventory....................................................................... (2,263) (1,746)
Other assets.................................................................... (1,831) (1,389)
Accounts payable................................................................ 8,121 (81)
Accrued liabilities............................................................. (19,605) (4,621)
-------- --------
Net cash provided by operating activities....................................... 26,817 12,757
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of merchant portfolios and customer contracts............................. (24,989) (23,771)
Amounts placed in escrow related to business purchase transactions................. (8,700) -
Purchase of property and equipment................................................. (7,649) (11,187)
Purchase of equipment for leasing.................................................. (6,976) (6,382)
Amounts received on leases......................................................... 4,322 3,588
Other.............................................................................. 0 (133)
-------- --------
Net cash used in investing activities........................................... (43,992) (37,885)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings and long-term debt, net........................ 10,503 25,532
Payments on long-term debt and capital leases...................................... (188) (8,933)
Proceeds from stock options exercised.............................................. 2,985 298
Issuance of note receivable........................................................ - (1,112)
Distributions of Subchapter S Corporations......................................... - (1,060)
Other.............................................................................. - 75
-------- --------
Net cash provided by financing activities....................................... 13,300 14,800
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS.......................................... (3,875) (10,328)
Cash and cash equivalents, beginning of period..................................... 51,131 31,643
-------- --------
Cash and cash equivalents, end of period........................................... $ 47,256 $ 21,315
======== ========
SUPPLEMENTARY INFORMATION
Income taxes paid................................................................ $ 1,189 $ 6,373
Interest paid.................................................................... $ 647 $ 1,314
Notes payable issued in connection with business acquisition..................... $ -- $ 33,758
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
NOVA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the consolidated financial
statements reflect all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position and results of
operations of NOVA Corporation ("NOVA" or "the Company") as of the end of and
for the periods indicated.
COMBINED FINANCIAL RESULTS On September 24, 1998, NOVA completed a merger
transaction with PMT Services, Inc. ("PMT"), pursuant to which PMT became a
wholly-owned subsidiary of NOVA. In addition to the PMT merger, PMT completed
various mergers prior to the merger with NOVA. These mergers were intended to
qualify as tax-free reorganizations and were accounted for as poolings of
interests. Accordingly, the consolidated historical financial statements for all
periods presented combined the financial results of NOVA and PMT. Although prior
to the merger PMT reported on the fiscal year ended July 31 basis, PMT changed
its year end to October 31 in 1998. Conforming PMT to a calendar year fiscal
year was not practicable for 1998 due to the timing and cost associated with
establishing and auditing the beginning of year balances as of January 1, 1998.
Beginning in 1999, PMT's fiscal year was changed to conform to a calendar year.
The NOVA balance sheet as of December 31, 1998, has been combined with the PMT
balance sheet as of October 31, 1998. The NOVA statement of operations and cash
flows for the three months ended March 31, 1998, has been combined with the PMT
statement of operations and cash flows for the three months ended January 31,
1998. The results of operations of PMT for the period November 1, through
December 31, 1998, was a net loss of $345,000 and is reported as a decrease in
shareholders' equity as of March 31, 1999. Revenues for this interim period were
$90.8 million and expenses, including income tax benefits, were $91.1 million.
There were no transactions between NOVA and PMT prior to the combination, and
immaterial adjustments were recorded to conform PMT's accounting policies.
Certain reclassifications were made to the PMT financial statements to conform
to NOVA's presentations.
Results of interim periods are not necessarily indicative of results to be
expected for the year as a whole. The effect of seasonal business fluctuations
and the occurrence of costs and expenses in annual cycles require certain
estimations in the determination of interim results.
These interim financial statements should be read in conjunction with NOVA's
audited financial statements included in the Annual Report on Form 10-K and Form
10-K/A No. 1 for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
NOTE 2 - BUSINESS ACQUISITIONS
On February 15, 1999, NOVA acquired the assets of American National Bancard
Company ("ANC"), an independent sales organization ("ISO"), through its wholly-
owned subsidiary PMT Services Inc. The acquisition was accounted for as a
purchase transaction, and the net assets and results of operations are included
in the condensed consolidated financial statements from the date of acquisition.
Cash disbursed to the seller at the time of the transaction totaled
approximately $11.1 million and was allocated to "Merchant and customer
contracts" on a preliminary basis based on the estimated fair market value of
the assets acquired. Additional consideration of $8.7 million has been placed in
escrow with a third party until January 31, 2000. This amount may be released
subject to achieving certain performance thresholds as set forth in the purchase
agreement. This amount was recorded as an "Other current assets" for financial
statement purposes.
-6-
<PAGE>
NOVA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
NOTE 3 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share in accordance with Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (in thousands, except per share data):
<TABLE>
<CAPTION>
For the three months
ended March 31,
------------------------
1999 1998
------------------------
<S> <C> <C>
Numerator:
Numerator for basic and diluted net income per
share-income available to common
shareholders............................................ $14,018 $10,687
Denominator:
Denominator for basic net income per share-
weighted-average shares.................................. 72,747 66,162
Effect of diluted securities:
Stock options........................................... 1,814 1,936
Dilutive potential common shares:
Denominator for diluted net income per share-adjusted
weighted-average shares and
assumed conversions..................................... 74,561 68,098
----------------------
Basic earnings per share................................. $ 0.19 $ 0.16
======================
Diluted earnings per share............................... $ 0.19 $ 0.16
======================
</TABLE>
NOTE 4 - MERGER AND CONSOLIDATION EXPENSES
As a result of NOVA's merger with PMT and other mergers completed by PMT during
1998, the Company recorded a $90.7 million charge in 1998. This charge was
primarily related to direct merger transaction costs, charges associated with
the consolidation and closure of PMT's corporate headquarters and certain
operating subsidiaries, contract termination costs related to unfavorable third-
party processing contracts, and the decision to exit certain of PMT's sales
distribution channels.
Direct merger transaction costs are primarily investment banking commissions,
professional fees, and regulatory filing expenses.
The primary costs associated with the consolidation and closure of facilities
include employee and executive severance, estimated unrecoverable future lease
obligations on vacated facilities, and the write-down of capital assets to their
net realizable value. The consolidation and closure actions result from the
elimination of overlapping functions, primarily customer service, accounting,
and administrative areas. The total number of employees terminated was
approximately 275, with 210 having received severance packages as of December
31, 1998. Of these employees, certain executives' severance will be paid out
over two years. As of March 31, 1999, all terminated employees have left the
Company. The Company began the process of consolidating PMT's corporate
headquarters from Nashville, Tennessee to other locations in December 1998, and
completed this process in the first quarter of 1999.
Consistent with past practice, management developed a plan in 1998 to convert
the front-end and back-end transaction processing of PMT's merchants to the
Company's proprietary telecommunications platform (the "NOVA Network"). In 1998,
NOVA negotiated the termination of long-term processing contracts with third
parties that resulted in early termination fees. The majority of these
terminations were finalized and the fees paid in 1998. The Company
-7-
<PAGE>
NOVA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
expects to complete the negotiation and payment of the remaining termination
fees during the first half of 1999, and the estimated costs are included in the
remaining reserve balance at March 31, 1999.
Capital asset write-downs are substantially attributable to computer software
and equipment, including PMT's management information and financial reporting
systems. Additional assets written down include telephone systems, and office
furniture and equipment that will not be redeployed for use at another NOVA
facility.
In 1998, management formulated plans to exit unique distribution channels based
upon the type of merchant business generated through these channels.
Specifically, servicing and maintaining the type of merchant generated through
these channels is not compatible with NOVA's operating philosophy and not
strategically aligned with NOVA's plan of business. The charge related to
exiting this distribution channel includes a contract termination fee and the
write-down of certain related intangible assets resulting from an analysis of
discounted future cash flows generated from the subject merchants. The majority
of these merger related costs were paid in the fourth quarter of 1998 and the
Company expects the plans associated with the remaining costs to be
substantially complete during the first half of 1999.
Details of the merger related charges are as follows:
<TABLE>
<CAPTION>
(In thousands)
- --------------------------------------------------------------------------------------------------------
Reserve
Cash/ Balance
Description Non-cash Charge Activity at 3/31/99
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Direct transaction costs Cash $15,515 $(15,515) $ --
Severance packages Cash 14,050 (5,873) 8,177
Lease abandonment Cash 4,658 (411) 4,247
Contract termination charges Cash 35,506 (32,721) 2,785
Asset write-down Non-cash 7,121 (7,121) --
Costs to exit a distribution channel Non-cash 11,370 (11,370) --
Costs to exit a distribution channel Cash 2,500 -- 2,500
-------------------------------------------------
TOTAL $90,720 $(73,011) $17,709
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 5 - RECENT PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 1999. Because of the
Company's minimal use of derivatives, management does not anticipate that the
adoption of the new Statement will have a significant effect on earnings or the
financial position of the Company.
Forward-looking Statements
In addition to historical information, this report on Form 10-Q contains
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 (the "Securities Act"), as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). When used in
this report, the words "may," "could," "should," "would," "believe,"
"anticipate," "estimate," "expect," "intend," "plan" and similar expressions or
statements regarding future periods are intended to identify forward-looking
statements. All forward-looking statements are inherently uncertain as they are
based on various expectations and assumptions concerning future events, which by
their nature involve substantial risks and uncertainties beyond NOVA's
control.
-8-
<PAGE>
Forward-looking statements may also be made in NOVA's other reports filed under
the Exchange Act, press releases, and other documents; as well as by NOVA
management in oral statements. NOVA undertakes no obligation to update or revise
any forward-looking statements for events or circumstances after the date on
which such statement is made. New factors emerge from time to time, and it is
not possible for NOVA to predict all of such factors. Further, NOVA cannot
assess the impact of each such factor on its business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's opinion as of the date of this report.
NOVA refers readers to the information set forth under the caption "Item 1.
Business--Certain Risks Associated with the Business of the Company", as well as
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" for a more complete discussion of certain risk factors contained
in the Annual Report on Form 10-K for the year ended December 31, 1998, filed
with the Securities and Exchange Commission.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the percentage of
revenues represented by certain line items in NOVA's condensed consolidated
statements of operations, as well as the percentage increase/(decrease) of such
items from period to period:
<TABLE>
<CAPTION>
Three Month Period
Ended March 31, Increase/
--------------------------------
1999 1998 (Decrease)
--------------------------------------------------
<S> <C> <C> <C>
Revenues..................................... 100.0% 100.0% 29.6%
Cost of service.............................. 76.5 76.2 30.1
Conversion costs............................. 2.4 1.1 190.7
Selling, general and administrative ......... 9.0 10.2 12.7
Depreciation and amortization................ 4.2 4.0 34.0
Merger expenses.............................. 0.0 1.0 (100.0)
Operating expenses........................... 92.0 92.5 28.8
Operating income............................. 7.9 7.5 40.2
Interest income. 0.2 0.5 (56.6)
Interest expense ........................... (0.3) (0.8) (47.1)
Minority interest ........................... (0.7) (0.4) 142.9
--------------------------------
Income before provision for income taxes..... 7.1 6.7 37.0
Provision for income taxes................... 2.6 2.3 48.2
--------------------------------
Net income................................... 4.5% 4.4% 31.2%
================================
</TABLE>
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
GENERAL
NOVA is a provider of integrated transaction processing services, related
software application products and value-added services. The Company provides
transaction processing support for all major credit and charge cards and also
provides access to debit card processing and check verification services.
REVENUES
The Company's revenues increased 29.6% to $311.8 million for the quarter ended
March 31, 1999, compared to $240.5 million for the quarter ended March 31, 1998.
The increase resulted primarily from a 25.5% increase in merchant sales volume
processed to slightly greater than $12.8 billion compared to $10.2 billion from
the same period of 1998. During the quarter ended March 31, 1999, increased
revenues of approximately $17.8 million and the related merchant sales volume
processed of approximately $750.0 million are specifically attributed to the
merchant portfolio purchased in October from CoreStates Bank, the most
significant of the merchant portfolios purchased in 1998. The principal
contributors to the remaining increase are internal growth and the incremental
effect of the pass through of higher interchange rates from the credit card
associations, which was effective March 27, 1998.
COST OF SERVICE
Cost of service increased 30.1% to $238.4 million for the quarter ended March
31, 1999, compared to $183.3 million for the quarter ended March 31, 1998. The
increase resulted from the interchange, assessment fees and other direct
operating costs associated with the higher merchant sales volume processed.
Additional cost increases related primarily to the sales volume associated with
portfolio purchases made in the later part of 1998 that have not yet been
converted to NOVA's operating platform; as such the sales volume was processed
by third party vendors at a higher cost. Another significant factor was
increased VISA and MasterCard interchange rates that went into effect on March
27, 1998, accordingly this rate increase was incremental to the first quarter of
1999 results compared to the first quarter of 1998.
CONVERSION COSTS
Conversion costs increased to $7.5 million for the quarter ended March 31, 1999,
compared to $2.6 million for the quarter ended March 31, 1998. The increase
relates to the magnitude of the conversion efforts currently underway,
particularly for the CoreStates merchant portfolio purchased in the fourth
quarter of 1998, as well as the conversion of the PMT merchants. Terminal
conversion activity increased 135% in the quarter ended March 31, 1999, over the
same period in 1998.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased 12.7% to $27.7 million
for the quarter ended March 31, 1999, compared to $24.6 million for the same
period in 1998. These increases are attributable primarily to the additional
personnel and facilities costs in connection with transitioning all operational
functions for the PMT merchant portfolios begun in October 1998, and the
incremental costs and inherent inefficiencies associated with the integration of
various administrative functions which were substantially completed in March
1999. Despite the overall cost increase, expenses as a percentage of revenues
declined to 9.0% for the three months ending March 31, 1999, compared to 10.2%
for the three months ending March 31, 1998.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased 34.0% to $13.0 million for the quarter
ended March 31, 1999, compared to $9.7 million for the same quarter ended March
31, 1998. This is due primarily to amortization expense associated with the
portfolio purchases made in the later part of 1998. Additional depreciation
expense increases are attributable to the increase in fixed assets held as of
March 31, 1999, compared to March 31, 1998, mainly for facilities and technology
infrastructures.
-10-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
MERGER AND CONSOLIDATION EXPENSES
There were no merger and consolidation expenses in the quarter ended March 31,
1999, compared to $2.5 million for the quarter ended March 31, 1998. The charges
in 1998 relate primarily to costs to terminate an unfavorable third-party
contract and expenses incurred by PMT prior to the merger with NOVA.
OPERATING INCOME
For the foregoing reasons, operating income for the quarter ended March 31,
1999, increased $7.2 million, or 40.2%, to $25.0 million from the first quarter
of 1998 results of $17.8 million.
INTEREST INCOME
Interest income decreased approximately $702,000, or 56.6%, to $538,000, for the
quarter ended March 31, 1999, compared to the quarter ended March 31, 1998. The
most significant factor relates to the income earned during 1998 from the
investment balances available. Upon maturity of these debt securities during
fiscal 1998, the proceeds were used primarily to fund merchant portfolio
purchases and other operating requirements.
INTEREST EXPENSE
Interest expense decreased approximately $882,000, or 47.1%, for the quarter
ended March 31, 1999 to $992,000, compared to the $1.9 million for quarter ended
March 31, 1998. The primary component of this decrease was the pay down of
approximately $53.0 million in debt obligations in April 1998 from a portion of
the proceeds received from the public offering of shares of NOVA common stock.
INCOME TAXES
Income tax expense of $8.3 million for the quarter ended March 31, 1999,
increased 48.2%, or $2.7 million, compared to $5.6 million for the same period
in 1998. This increase is attributable to the increase of taxable income for the
first quarter of 1999 over the same period in 1998, and also reflects the effect
of income from sub chapter S corporation income which is not subject to income
taxes in 1998.
NET INCOME
Due to the factors discussed above, net income increased 31.2% to $14.0 million,
for the quarter ended March 31, 1999, compared to $10.7 million for the quarter
ended March 31, 1998.
OTHER MATTERS
As discussed in Note 1 to the condensed consolidated financial statements, PMT
incurred a net loss of $345,000 during the two months ended December 31, 1998.
These results include approximately $4.1 million of costs associated with the
NOVA/PMT merger that were not accured for during fiscal 1998, and conversion
related costs of approximately $850,000 million. Additional factors adversely
affecting this period include operating under unfavorable third party processing
contracts that were not renewed in anticipation of conversion to the NOVA
Network and general inefficiencies resulting from consolidation plans and
efforts.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary uses of its capital resources include purchases of
merchant portfolios, capital expenditures, equipment for leasing, and working
capital.
Net cash provided by operating activities was $26.8 million for the three months
ended March 31, 1999, as compared to $12.8 million for the three months ended
March 31, 1998. Primary uses of operating cash were for accounts receivable. The
increase in accounts receivable stems primarily from the consolidation of
settlement functions from PMT locations to NOVA and the resulting temporary
inefficiencies. During the first quarter of 1999, $28.0 million was used to
satisfy certain liabilities related to the $90.7 million in merger related
charges recognized in 1998.
-11-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
Net cash used in investing activities was $44.0 million for the three months
ended March 31, 1999, as compared to $37.9 million for the three months ended
March 31, 1998. Decreases in the cash needed to fund the purchases of merchant
portfolios were offset by the use of approximately $19.9 million to acquire the
business assets of American National Bancard and establish contractual escrow
balances. Historically, NOVA has required considerable cash outlay to consummate
the portfolio purchases and this requirement is expected to continue for the
1999 fiscal year. Capital equipment purchases decreased approximately $3.5
million to $7.0 million during the three months ended March 31, 1999, compared
to the same period in 1998. Major expenditures during the first quarter of 1999
include the enhancement and improvement of technology platforms. NOVA's
projected cash requirements for capital expenditures is expected to be
approximately $30.0 million during 1999.
Net cash flow from financing activities was $13.3 million during the three
months ended March 31, 1999, compared to $14.8 million for the same period in
1998. Proceeds from short-term borrowings and other obligations of $10.5
million were used primarily to fund business acquisition activity in the first
quarter of 1999. Proceeds from the draw down of available credit facilities in
the first quarter of 1998 were used primarily to fund investment purchases and
capital expenditures.
NOVA has available a credit facility of $80.0 million, which is expandable to
$100.0 million. At March 31, 1999, $11.4 million had been drawn down against
that credit facility. In connection with the merger with PMT on September 24,
1998, and other transactions completed in the first quarter of 1999, NOVA
obtained a waiver of certain covenants under the credit facility, which is in
effect for all applicable periods.
The Company typically has relatively low working capital requirements because
discount fees charged to merchants are collected in an average of twenty days,
while normal payables are paid in an average of thirty days or longer. In
addition, increasing acquisition activity may cause variations in working
capital due to conversion-period operating costs and the transition in the
payment of expenses and the collection of receivables from the former processor,
as is the case with the consolidation of PMT, a subsidiary of the Company.
Because of the seasonality of NOVA's business, capital requirements may be
greater in certain months than others.
At March 31, 1999, the Company had cash and cash equivalents of $47.3 million.
NOVA believes its existing cash and cash equivalents, cash generated from
operations, and available borrowing facilities are sufficient to fund merchant
portfolio purchases, and capital asset investments, to meet working capital
requirements for the foreseeable future.
YEAR 2000 COMPLIANCE
The Year 2000 Issue is the result of date sensitive computer software programs
being written using two digits rather than four digits to define the applicable
year. Consequently, unless corrected, computer software programs will be unable
to read and accurately process date information on or after the year 2000. NOVA
has critical reliance on technology systems, telecommunications systems,
facilities infrastructure and embedded systems, such as heating and ventilation
systems, in conducting its business. NOVA also has business relationships with
third party providers, such as telecommunication vendors, financial
institutions, and data processors, who are highly reliant on information
technology and other systems to conduct their business.
Due to the significance of technology systems and other support systems, in 1997
NOVA launched its Year 2000 compliance efforts with a comprehensive evaluation
of its critical systems, applications, computing platforms, and merchant
terminals to ensure potential risks are identified and non-compliant information
systems upgraded or replaced. The initial phase of the project was the
identification of all technology systems and determining which were at risk.
After completion of this phase, steps were taken to remediate and test those
systems initially determined to be non-compliant.
-12-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - continued
In June 1997, VISA U.S.A. and Mastercard International certified NOVA as capable
of processing transactions for cards issued with expiration dates of 2000 and
beyond. Also completed in 1997 was the validation and correction of merchant
terminals for Year 2000 functionality. In 1998, NOVA substantially completed
the review and correction of its identified systems. As an added measure of
validation, an independent review and evaluation was initiated for the
following: building infrastructure, client/server platforms, NOVA Network,
software applications, principal and strategic vendors' products or services,
and telecommunication platforms and equipment. NOVA believes that its Year 2000
project is on schedule and expects completion by mid 1999.
Through 1998, NOVA has replaced or upgraded personal computers, client/server
applications, and certain computer software programs to be Year 2000 compliant.
The nature of NOVA's business requires continuous development of its
technologies and systems, extensively utilizing internal resources in this
effort. Accordingly, it is difficult to determine with certainty the costs that
have been incurred to date, and costs expected to be incurred in the future to
support the Year 2000 effort.
Despite NOVA's efforts, there cannot be absolute assurance that NOVA will be
completely successful in eliminating all business and operations risk. The
risks associated with the Year 2000 Issue include the possibility of a failure
of the information and non-information technology systems. System malfunction
or failure could result in incomplete or inaccurate transaction processing.
Additionally, NOVA may be adversely affected by a system malfunction or failure
of third parties that hold a business, financial or operational relationship
with NOVA; such as processing banks, telecommunication providers, and utilities.
If these third parties fail to adequately address Year 2000 issues, NOVA could
experience a negative impact on its business operations, such as business
interruption or shutdown. The consequences of interruption could cause NOVA to
suffer a material adverse impact on its financial condition and results of
operations.
NOVA has begun to develop contingency and recovery plans as a precautionary
measure targeted at ensuring the continuation and continuity of critical
business functions before and after December 31, 1999. NOVA will continue to
identify aspects of its business and that of its third-party providers and take
necessary corrective action, primarily the expedient replacement of any critical
vendor who does not provide proof of compliance. The contingency efforts
described above are expected to minimize the business risk connected to the Year
2000 Issue.
-13-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company has been involved from time to time in litigation in the normal
course of its business. While management is aware of and dealing with certain
pending or threatened litigation, management does not believe that such matters,
individually or in the aggregate, will have a material adverse affect on the
financial condition of the Company.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.13 (i) * First Amendment to Lease between Concourse I, Ltd., as landlord,
and NOVA Information Systems, as tenant
10.43* Employment Agreement, effective February 15, 1999, between the
Registrant and Pamela A. Joseph.
10.44* Employment Agreement, effective February 15, 1999, between the
Registrant and John M. Perry.
10.45* Employment Agreement, effective February 15, 1999, between the
Registrant and Rebecca L. Powell.
10.46* Employment Agreement, effective February 15, 1999, between the
Registrant and Nicholas H. Logan.
27* Financial Data Schedule
* Filed herewith
(b) Reports on Form 8-K
The Company did not file any Current Report (s) on Form 8-K during the quarter
ended March 31, 1999.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOVA Corporation
(Registrant)
By: /s/ Edward Grzedzinski
--------------------------------------
Edward Grzedzinski
May 14, 1999 Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
May 14, 1999 By: /s/ James M. Bahin
--------------------------------------
James M. Bahin
Vice Chairman, Chief Financial Officer
and Secretary
(Principal Accounting Officer)
-15-
<PAGE>
FIRST AMENDMENT TO LEASE
------------------------
THIS FIRST AMENDMENT TO LEASE (the "First Amendment"), is made this ____
day of February, 1999, by and between CONCOURSE I, LTD. (as "Landlord") and NOVA
INFORMATION SYSTEMS, INC. (as "Tenant").
W I T N E S S E T H:
-------------------
WHEREAS, Landlord and Tenant did enter into that certain Lease Agreement
(the "Original Lease"), dated as of May ___, 1996, for space (the "Premises") in
that certain building known as "Concourse Corporate Center I" (the "Building").
WHEREAS, Landlord and Tenant desire to modify and amend the Original Lease,
in the manner and for the purposes herein set forth.
NOW THEREFORE, for and in consideration of the mutual covenants contained
herein, and for Ten and No/100 dollars ($10.00) and other good and valuable
consideration, paid by the parties hereto to one another, the receipt and
sufficiency of which are acknowledged by the parties hereto, the parties hereto
hereby covenant and agree as follows:
1. Effective Date and Term. The effective date (the "Effective Date") of
-----------------------
this First Amendment shall be on or before April 1, 1999. This First Amendment
shall be binding upon Landlord and Tenant upon the due execution and delivery of
this First Amendment by all parties hereto, notwithstanding that the Effective
Date is a later date. The Term of Lease for the Additional Premises shall be
co-terminous with the Term of the Original Lease, which ends, unless sooner
terminated in accordance with the terms of the Original Lease, on February 17,
2002.
2. Additional Premises. Landlord hereby leases and rents to Tenant, and
-------------------
Tenant hereby leases and rents from Landlord, from and after the Effective Date,
four thousand eight hundred forty-five (4,845) rentable square feet, known as
Suite "745", in the area shown on Exhibit "A", attached hereto and by this
-----------
reference incorporated herein (the "Additional Premises"). From and after the
Effective Date, the Additional Premises shall be deemed to be a part of the
Premises, except as expressly set forth to the contrary herein. From and after
the Effective Date, Tenant shall have leased 43,156 rentable square feet in the
Building.
3. Rent. The Rent (including, by way of illustration but not limitation,
----
Operating Costs) due from Tenant for the Additional Premises shall be the same,
on a per rentable square foot per annum basis, as the Rent due for the Premises
under the Original Lease. Escalations of Base Rental occur on and as of October
18 of every calendar year. Such amounts of Rent shall be paid at the time and
in the manner such Rent is paid under the Original Lease.
<PAGE>
4. Tenant Improvements and Allowance. Tenant shall have a tenant fit up and
---------------------------------
finish work allowance of up to Three and 00/100 Dollars ($3.00) per rentable
square foot of Additional Premises. Any work within the Additional Premises
shall be done subject to the terms of the Original Lease, and shall be in
accordance with plans and specifications generated by Tenant and consented to by
Landlord. Tenant shall expend such funds for work in or improvements to the
Additional Premises and make request for reimbursement from Landlord for any
such work.
5. Parking. Landlord shall grant Tenant one additional reserved parking
-------
space located in the Building's parking deck during the initial term of this
First Amendment.
6. Brokerage Commission; Indemnity. HINES INTERESTS ("HINES") HAS ACTED AS
-------------------------------
AGENT FOR LANDLORD IN THIS TRANSACTION AND CB RICHARD ELLIS ("CB") HAS ACTED AS
AGENT FOR TENANT IN THIS TRANSACTION. BOTH HINES AND CB ARE TO BE PAID A
COMMISSION BY LANDLORD. Tenant warrants that, to the best of Tenant's
knowledge, there are no other claims for broker's commissions or finder's fees
in connection with its execution of this Lease. Tenant hereby indemnifies
Landlord and holds Landlord harmless from and against all loss, cost, damage or
expense, including, but not limited to, attorney's fees and court costs,
incurred by Landlord as a result of or in conjunction with a claim of any real
estate agent or broker, if made by, through or under Tenant. Landlord hereby
indemnifies Tenant and holds Tenant harmless from and against all loss, cost,
damage or expense, including, but not limited to, attorney's fees and court
costs, incurred by Tenant as a result of or in conjunction with a claim of any
real estate agent or broker, if made by, through or under Landlord.
7. Capitalized Terms. All capitalized terms used herein but not defined
-----------------
herein shall have the meanings given them in the Original Lease.
8. Ratification. As expressly modified by this First Amendment, the Original
------------
Lease (including all exhibits thereto) is hereby ratified and confirmed by
Landlord and Tenant.
9. Transferees, Successors and Assigns. This First Amendment shall be
-----------------------------------
binding upon and inure to the benefit of Landlord, Tenant and their respective
transferees, successors and assigns.
10. Georgia Law. This First Amendment shall be construed and interpreted
-----------
under and pursuant to the laws of the State of Georgia.
2
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to be
executed under seal and delivered as of the date first above written.
"LANDLORD"
Hines National Office Partners Limited Partnership,
As agent and authorized representative for Concourse I Ltd.
----------------
By: Hines Fund Management, L.L.C.,
a Delaware limited liability company,
its general partner
By: Hines Interests Limited Partnership,
a Delaware limited partnership,
its Member
By: Hines Holdings, Inc.,
a Texas corporation,
its general partner
By: /s/ Daniel MacEachron
--------------------------------
Name: Daniel MacEachron
Title: Vice President
"TENANT"
NOVA INFORMATION SYSTEMS, INC.
By: /s/ JDC Jim Cash
-------------------------------------
Its: Director, Facilities Services
Attest: /s/ Cherie M. Fuzzell
---------------------------------
Its: Senior Vice President
(CORPORATE SEAL)
3
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective this 15th
day of February, 1999 (the "Effective Date") by and between PAMELA A. JOSEPH
(hereinafter referred to as "Employee") and NOVA CORPORATION, a Georgia
corporation ("NOVA").
W I T N E S S E T H :
---------------------
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 Executive Vice President and Chief
Information Officer of NOVA pursuant to an Employment Agreement between Employee
and NOVA effective March 1, 1998 (the "Prior 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 Prior Agreement,
which termination shall be contemporaneous with the effectiveness of this
Agreement;
WHEREAS, NOVA desires 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 her 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 she
may continue to perform her 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 two (2) 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 her reasonable best
efforts to her duties under this Agreement and to perform such duties
diligently and efficiently and in accordance with the directions of
NOVA's Chief Executive Officer.
(b) During the term of Employee's Employment, Employee shall
serve as Senior Executive Vice President of NOVA. Employee shall be
responsible primarily for such duties as are assigned to her, from time
to time, by NOVA's Chief Executive Officer, which in any event shall be
such duties as are customary for an officer in those positions.
<PAGE>
(c) Employee shall devote substantially all of her 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 her
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 she may have to interfere with the
performance of her 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 her duties hereunder.
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 her
Employment shall be Two Hundred Forty Thousand and No/100 Dollars
($240,000) ("Base Salary"), with such increases (each, a "Merit
Increase") as may from time to time be deemed appropriate by NOVA's
Chief Executive Officer; provided, however, that so long as this
Agreement remains in effect, Employee's Base Salary shall be reviewed
annually by NOVA's Chief Executive Officer in each fiscal year, within a
reasonable time following the availability of NOVA's financial
statements for the preceding fiscal year. The Base Salary shall be paid
by NOVA 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 ("Bonus Compensation") in
the amount, and on the terms and conditions described in the Annual
Incentive Compensation Schedule attached as Exhibit A (the "Incentive
---------
Compensation Plan"). Upon written request and subject to the 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 under the Incentive Compensation Plan 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); provided, however, that NOVA shall
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) 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 7 hereof, NOVA shall provide to
Employee the following benefits:
(a) Medical Insurance. Employee and her dependents shall be
-----------------
entitled 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.
2
<PAGE>
(b) Life Insurance. Employee shall be entitled to
--------------
participate in any 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 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 (4) weeks of paid vacation each year and all holidays
observed by NOVA.
(e) Stock Option Plans. Employee shall be eligible for
------------------
participation in 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 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 the same basis as such 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 action (during the term of this Agreement or the "Continuation
Period," as defined in Section 7(a)) to modify the terms and provisions
of any such plan or arrangement so as to exclude only Employee and/or
her dependents, either by excluding Employee and/or her dependents
explicitly by name or by modifying provisions generally applicable to
all employees and dependents so that only Employee and/or her dependents
would be affected.
(h) Vesting of Rights. Upon the occurrence of the events set
-----------------
forth in Sections 8(e)(i)(A), 8(e)(i)(B) or 8(e)(i)(C) during the term
of this Agreement, and regardless of whether Employee terminates this
Agreement following such occurrence, 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 the occurrence of such event 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.
4. Personnel Policies. Employee shall conduct herself at all times
in a businesslike and professional manner as appropriate for a person in her
position and shall represent NOVA in all respects with good business and ethical
practices. In addition, Employee shall be subject to and abide by the 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 no less frequently than a monthly basis, for all out-of-pocket
business expenses incurred by her in the performance of her 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.
3
<PAGE>
6. 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 violation of the covenants set forth in
Section 10 or 11; (ii) Employee's willful, intentional, or grossly
negligent failure to perform her 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 decisions
or policies of NOVA; or (iv) final conviction of Employee of a felony;
provided, however, that in the event NOVA desires to terminate
-------- -------
Employee's Employment pursuant to subsections (i), (ii), or (iii) of
this Section 6(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 breaches
or deficiencies (the "Cure Period"); provided, however, that with
-------- -------
respect only to breaches that it is not possible to cure within such
thirty (30) day period, so long as Employee is diligently using her best
efforts to cure such breaches or deficiencies within such period and
thereafter, the Cure Period shall be automatically extended for an
additional period of time (not to exceed sixty (60) days) to enable
Employee to cure such breaches or deficiencies, provided, further, that
-------- -------
Employee continues to diligently use her best efforts to cure such
breaches or deficiencies. If Employee does not cure the perceived
breaches or deficiencies 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 6(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
thirty (30) 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 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 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 such that they no longer reflect duties and
responsibilities customary for an executive officer of a publicly-traded
company; provided, however, that NOVA's change to a privately-held
-------- -------
company (for example, as a result of acquisition) and the corresponding
change in Employee's duties and responsibilities shall not, by itself,
be sufficient to qualify as a "Responsibilities Breach"; (ii) Employee
is required to relocate to an office that is more than thirty-five (35)
miles from Employee's current office located at One Concourse Parkway,
Suite 300, Atlanta, Georgia 30328; (iii) there is a reduction in
Employee's Base Salary payable under Section 2, an adverse change in the
terms of the Incentive Compensation Plan, or a
4
<PAGE>
material reduction in benefits 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 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) days) to enable NOVA to cure such breaches,
provided, further, that NOVA continues to diligently use its best
-------- -------
efforts to cure such breaches. Notwithstanding anything to the contrary
in this Section 6(e), the Notice Period for any breach arising from the
failure to pay compensation shall be five (5) days.
(f) Employee may terminate this Agreement at any time,
without cause, upon thirty (30) days prior written notice to NOVA.
(g) NOVA may terminate this Agreement at any time, without
cause, upon written notice to Employee.
(h) This Agreement shall automatically renew for successive
one (1) year terms (each a "Renewal Term") unless either party hereto
gives the other party hereto written notice of its or her intent not to
renew this Agreement no later than one hundred eighty (180) 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.
7. Termination Payments.
(a) Upon termination of Employee's Employment, for whatever
reason (other than termination for "Cause" pursuant to Section 6(b),
----- ----
termination by Employee pursuant to Section 6(f), expiration of this
Agreement following notice of non-renewal by Employee pursuant to
Section 6(h), or termination because Employee otherwise "quits" or
voluntarily terminates her employment other than pursuant to Section
6(e) (each, a "Termination Exclusion") (the effective date of such
termination or expiration being referred to as the "Termination Date"),
in addition to any amounts payable to Employee hereunder (including but
not limited to accrued but unpaid Base Salary or accrued but unpaid
Bonus Compensation), and any other benefits required to be provided to
Employee and her dependents under contract and applicable law:
(i) NOVA shall pay Employee in cash an amount equal
to her "Annual Base Compensation" (as defined in Section 7(e))
multiplied by two (2) (the "Severance Payment"). The Severance
Payment shall be paid in twenty-four (24) equal monthly
payments, the first of which shall be made on the first day of
the calendar month following the calendar month in which the
Termination Date occurs; provided, however, that if Employee's
Employment is terminated (other than by reason of a Termination
Exclusion), within two (2) years after a Change in Control of
NOVA, NOVA shall pay Employee the Severance Payment in one lump
sum within thirty (30) days of the Termination Date.
(ii) NOVA shall pay Employee an amount (the
"Supplemental Payment") equal to (x) the amount of Bonus
Compensation payable to Employee for the calendar year
immediately preceding the year in which the Termination Date
occurs (the "Prior Bonus Amount") multiplied by (y) a fraction,
the numerator of which is the number of
5
<PAGE>
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. The Supplemental Payment shall
be paid to Employee concurrently with the payment of the Prior
Bonus Amount; provided, however, that if the Prior Bonus Amount
has already been paid to Employee, the Supplemental Payment
shall be paid within 30 days of the Termination Date. In the
event the Termination Date occurs in the first calendar year of
Employee's employment, then the Supplemental Payment shall equal
the pro rata percentage (determined using the fraction above) of
the Bonus Compensation Employee would have received for the
calendar year in which the Termination Date occurred had
Employee remained employed for the entire calendar year in which
the Termination Date occurred, and the Supplemental Payment
shall be paid to Employee concurrently with NOVA's payment of
Bonus Compensation generally for such calendar year.
(iii) Notwithstanding any provision to the contrary in
any other agreement or document (including but not limited to
NOVA's applicable plan documents), all stock options, restricted
stock and other similar rights that, as of the Termination Date,
have been granted to Employee shall become vested and
exercisable immediately upon notice of such termination and, as
provided under the applicable plan or agreement, Employee shall
have the continuing right to exercise any or all of such rights.
(iv) Until the earlier to occur of (x) the expiration
of the Severance Period or (y) Employee becomes an employee of
another company providing Employee and her dependents with
medical, life and disability insurance (the period from the
Termination Date until such event being referred to herein as
the "Continuation Period"), NOVA shall provide to Employee and
her dependents the coverage for the benefits described in
Sections 3(a), (b) and (c); provided, however, such coverage
shall not be provided to the extent that such coverage is
generally provided through an insurance contract with a licensed
insurance company and such insurance company will not agree to
insure for such coverage.
During the two (2) year period following the Termination Date (the
"Severance Period"), Employee shall comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below.
For purposes of this Section 7(a), any accrued but unpaid Bonus
Compensation shall be paid to Employee on the date that Bonus
Compensation would have been payable under the Incentive Compensation
Plan had termination of Employee's Employment not occurred.
(b) In the event Employee's Employment is terminated as a
result of the Termination Exclusions identified in Section 7(a),
Employee shall be paid her accrued but unpaid Base Salary and/or accrued
but unpaid Bonus Compensation through the Termination Date, and any
other benefits required to be provided to Employee and her dependents
under contract and applicable law. In the event that Employee is
entitled to receive Bonus Compensation under this Section 7(b), such
Bonus Compensation shall be paid on the date that Bonus Compensation
would have been payable under the Incentive Compensation Plan if
termination of Employee's Employment had not occurred.
(c) In the event Employee's Employment is terminated as a
result of one of the Termination Exclusions identified in Section 7(a),
NOVA, at its sole option and its sole discretion
6
<PAGE>
and at any time within thirty (30) days of the Termination Date, may
cause Employee to be obligated to comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below for a period of one (1) or two (2) years
following the Termination Date, as set forth below:
(i) By giving notice to Employee at any time within
thirty (30) days of the Termination Date of its intent to
exercise the "One Year Option" herein described, NOVA may cause
Employee to be obligated to comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below for a period of one (1) year following
the Termination Date; provided, however, that NOVA shall pay
Employee an aggregate amount in cash equal to Employee's then
Base Salary in effect immediately prior to the Termination Date
multiplied by one (1) (the "One Year Payment"). The One Year
Payment shall be paid by NOVA to Employee in twelve (12) equal
monthly payments, the first of which shall be made on the first
day of the calendar month following the calendar month in which
the Termination Date occurs. In the event NOVA exercises the One
Year Option, the one (1) year period following the Termination
Date shall be deemed the "Exclusion Period";
(ii) By giving notice to Employee any time within
thirty (30) days of the Termination Date of its intent to
exercise the "Two Year Option" herein described, NOVA may cause
Employee to be obligated to comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below for a period of two (2) years following
the Termination Date; provided, however, that NOVA shall pay
Employee an aggregate amount in cash equal to Employee's Base
Salary in effect immediately prior to the Termination Date
multiplied by two (2) (the "Two Year Payment"). The Two Year
Payment shall be paid by NOVA to Employee in twenty-four (24)
equal monthly payments, the first of which shall be made on the
first day of the calendar month following the calendar month in
which the Termination Date occurs. In the event NOVA exercises
the Two Year Option, the two (2) year period following the
Termination Date shall be deemed the "Exclusion Period".
(d) 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.
(e) 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
7
<PAGE>
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 of the sale of
all or substantially all of the assets
of NOVA; and
(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.
(i.e., either (A) and (C) or (B) and (C) must
occur in order to constitute a Change in Control
for purposes of this definition).
(ii) "Annual Base Compensation" means the greater of
(x) Employee's Base Salary in effect on the Termination Date, or
(y) the greatest Base Salary of Employee in effect during the
calendar year immediately prior to the calendar year in which
the Termination Date occurs.
(iii) "Incumbent Board" shall mean the members of the
Board of Directors of NOVA as of the Effective 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).
8. 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
her during the term of her 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 without demand all such materials to NOVA within
three (3) days after the termination of Employee's Employment. Employee further
agrees not to use such materials for any reason after said termination.
9. Arbitration.
(a) NOVA and Employee acknowledge and agree that (except as
specifically set forth in Section 9(d)), 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
8
<PAGE>
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 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 9(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 10 and 11 of this Agreement nor shall
such provisions prevent NOVA from seeking equitable relief from a court
of competent jurisdiction for violations of Sections 10 and 11 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.
9
<PAGE>
10. Nondisclosure.
(a) NOVA Confidential Information. Employee acknowledges and
-----------------------------
agrees that because of her Employment, she 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 her 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. Employee further agrees that during the
Severance Period or the Exclusion Period, as applicable, Employee shall
continue to keep NOVA Confidential Information confidential, and
Employee shall not use NOVA Confidential Information for any reason or
in any manner.
(b) Notwithstanding the foregoing, Employee shall not be
subject to the restrictions set forth in subsection (a) of this Section
10 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 her Employment or the exercise of her
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.
(c) Trade Secrets. Employee acknowledges and agrees that
-------------
because of her Employment, she will have access to "trade secrets" (as
defined in the Uniform Trade Secrets Act, O.C.G.A. section 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.
11. Covenants Not to Solicit or Compete.
Employee acknowledges and agrees that, because of her Employment, she
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 her Employment
and continuing throughout the Severance Period or the Exclusion Period, as
applicable, 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:
10
<PAGE>
(a) compete with NOVA in providing credit card and debit
card transaction processing services within the Territory or otherwise
associate with, obtain any interest in (except as a shareholder holding
less than five percent (5%) interest in a corporation traded on a
national exchange or over-the-counter), advise, consult, lend money to,
guarantee the debts or obligations of, or perform services in either a
supervisory or managerial capacity or as an advisor, consultant or
independent contractor for, or otherwise participate in the ownership,
management, or control of, any person, firm, partnership, corporation,
or unincorporated association of any kind which is providing credit card
and debit card transaction processing services within the Territory;
(b) solicit or contact, for the purpose of providing
products or services the same as or substantially similar to 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
information during the last twelve (12) months of her Employment;
(c) 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 information about such merchant, associate bank, ISO, customer
or supplier during the last twelve (12) months of her Employment; or
(d) persuade or attempt to persuade any person who (i) was
employed by NOVA as of the date of the termination of Employee's
Employment and (ii) is in a sales or management position with NOVA at
the time of such contact, to terminate or modify her employment
relationship, whether or not pursuant to a written agreement, with NOVA,
as the case may be.
12. New Developments. Any discovery, invention, process or
improvement made or discovered by Employee during the term of her 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.
13. Remedy for Breach. Employee acknowledges and agrees that her
breach of any of the covenants contained in Sections 8, 10, 11 and 12 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 the covenants contained in Sections 8, 10, 11 and 12 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
11
<PAGE>
Employee against NOVA, whether predicated upon this or any other contract, shall
not constitute a defense to the enforcement by NOVA of said covenants.
14. Reasonableness. Employee has carefully considered the nature and
extent of the restrictions upon her and the rights and remedies conferred on
NOVA under this Agreement, and Employee hereby acknowledges and agrees that:
(a) 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;
(b) the restrictions placed upon Employee hereunder are
narrowly drawn, are fair and reasonable in time and territory, will not
prevent her from earning a livelihood, and place no greater restraint
upon Employee than is reasonably necessary to secure the Business and
goodwill of NOVA;
(c) NOVA is relying upon the restrictions and covenants
contained herein in continuing to make available to Employee information
concerning the Business; and
(d) Employee's Employment places her in a position of
confidence and trust with NOVA and its employees, merchants, associate
banks, ISOs, customers, vendors and suppliers.
15. 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 the commercial arbitration rules then in effect of the American Arbitration
Association. Any such arbitration hearing will be held in Atlanta, Georgia, and
this Agreement shall be construed and enforced in accordance with the laws of
the State of Georgia, including this arbitration provision.
16. 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 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 reasonably incur 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 contest by the Employee
12
<PAGE>
about the amount of any payment pursuant to Section 7 of this Agreement), plus
in each case interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code.
17. Applicable Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Georgia.
18. 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.
19. 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 but shall
be freely assignable by NOVA.
20. 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:
Pamela A. Joseph
580 Owens Farm Road
Alpharetta, Georgia 30004
(ii) If to NOVA, to:
NOVA Corporation
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: Edward Grzedzinski
Chief Executive Officer
With a copy (which shall not constitute notice) to:
NOVA Corporation
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: Cherie Fuzzell
General Counsel
21. 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 Prior 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.
13
<PAGE>
22. 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.
23. Survival. The provisions of Sections 7, 8, 9, 10, 11, 12, 13,
14, 15, 16, 17, 20, 22 and 24 shall survive termination of Employee's Employment
and termination of this Agreement.
24. Withholding. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above shown.
"EMPLOYEE":
By: /s/ Pamela A. Joseph
---------------------------
Pamela A. Joseph
"NOVA":
NOVA CORPORATION
By: /s/ Edward Grzedzinski
---------------------------
Edward Grzedzinski
Chairman, CEO and President
14
<PAGE>
EXHIBIT A
---------
Annual Incentive Compensation Schedule
* Payment of annual incentive compensation (the "Bonus Payment") to be
based upon relative achievement of Targeted Net Income (as defined).
* Net Income is Net Income determined in accordance with GAAP as
determined from the annual audited Financial Statements, as adjusted to
exclude non-operating gains and losses.
* Targeted Net Income will be established annually by the Board of
Directors.
* The Bonus Payment will be calculated by following the steps outlined
below:
(1) Determining the percentage equivalent to a fraction, the
numerator of which is Net Income and the denominator of which is
Targeted Net Income (such percentage being referred to as the
"Actual/Targeted Ratio").
(2) Values will be calculated based on (A) through (E):
(A) For each full percentage point (up to 84%) by which the
----
Actual/Targeted Ratio equals or exceeds 80%, a value of
1% will be awarded.
(B) For each full percentage point (up to 89%) by which the
----
Actual/Targeted Ratio exceeds 84%, a value of 2% will be
awarded.
(C) For each full percentage point (up to 94%) by which the
----
Actual/Targeted Ratio exceeds 89%, a value of 3% will be
awarded.
(D) For each full percentage point (up to 99%) by which the
----
Actual/Targeted Ratio exceeds 94%, a value of 4% will be
awarded.
(E) For each full percentage point (up to 150%) by which the
----
Actual/Targeted Ratio exceeds 100%, a value of 1% will
be awarded. (note: for this purpose, no value will be
----
awarded for equaling 100%).
(3) The sum of the values calculated in (A) through (E) (the "Bonus
Percentage") shall be multiplied by Employee's then current Base
Salary to yield the Bonus Payment.
<PAGE>
Examples:
. If the Actual/Targeted Ratio is 92%, the Bonus Percentage would
be 29%. This is calculated by adding:
5% (1% for 80-84% of Actual/Targeted Ratio)
+ 15% (2% for 85-89% of Actual/Targeted Ratio)
+ 9% (3% for 90-92% of Actual/Targeted Ratio)
-------------------------------------------------
29%
Employee's Bonus Payment would be equal to Employee's
then-current Base Salary multiplied by 29%.
. If the Actual/Targeted Ratio is 112%, the Bonus Percentage would
be 62%. This is calculated by adding:
5% (1% for 80-84% of Actual/Targeted Ratio)
+ 10% (2% for 85-89% of Actual/Targeted Ratio)
+ 15% (3% for 90-94% of Actual/Targeted Ratio)
+ 20% (4% for 95-99% of Actual/Targeted Ratio)
+ 0% (0% for 100% of Actual/Targeted Ratio)
+ 12% (1% for 101-112% of Actual/Targeted Ratio)
---------------------------------------------------
62%
Employee's Bonus Payment would be equal to Employee's
then-current Base Salary multiplied by 62%.
* The foregoing notwithstanding, in order for any bonus to be payable with
respect to any calendar year, the "Revenue" (as defined below) for such
calendar year must equal or exceed 105% of the Revenue for the
immediately preceding calendar year. "Revenue" means revenue of NOVA
determined in accordance with GAAP as determined from the annual audited
Financial Statements, as adjusted to exclude non-operating items.
* Notwithstanding anything to the contrary in this Agreement, in order to
receive Bonus Compensation for any calendar year, Employee must be
employed by NOVA on the last day of such calendar year.
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective this 15th
day of February, 1999 (the "Effective Date") by and between JOHN M. PERRY
(hereinafter referred to as "Employee") and NOVA CORPORATION, a Georgia
corporation ("NOVA").
W I T N E S S E T H :
---------------------
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 Executive Vice President, Sales
and Marketing of NOVA pursuant to an Employment Agreement between Employee and
NOVA effective March 1, 1998 (the "Prior 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 Prior Agreement,
which termination shall be contemporaneous with the effectiveness of this
Agreement;
WHEREAS, NOVA desires 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 two (2) 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 Chief Executive Officer.
(b) During the term of Employee's Employment, Employee shall
serve as Senior Executive Vice President of NOVA and President and Chief
Operating Officer of NOVA Information Systems, Inc. Employee shall be
responsible primarily for such duties as are assigned to him, from time
to time, by NOVA's Chief Executive Officer, which in any event shall be
such duties as are customary for an officer in those positions.
<PAGE>
(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.
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 Three Hundred Thousand and No/100 Dollars ($300,000)
("Base Salary"), with such increases (each, a "Merit Increase") as may
from time to time be deemed appropriate by NOVA's Chief Executive
Officer; provided, however, that so long as this Agreement remains in
effect, Employee's Base Salary shall be reviewed annually by NOVA's
Chief Executive Officer in each fiscal year, within a reasonable time
following the availability of NOVA's financial statements for the
preceding fiscal year. The Base Salary shall be paid by NOVA 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 ("Bonus Compensation")
in the amount, and on the terms and conditions described in the Annual
Incentive Compensation Schedule attached as Exhibit A (the "Incentive
---------
Compensation Plan"). Upon written request and subject to the 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 under the Incentive Compensation Plan 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); provided, however, that NOVA shall
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) 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 7 hereof, NOVA shall provide to
Employee the following benefits:
(a) Medical Insurance. Employee and his dependents shall be
-----------------
entitled 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.
2
<PAGE>
(b) Life Insurance. Employee shall be entitled to
--------------
participate in any 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 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 (4) weeks of paid vacation each year and all holidays
observed by NOVA.
(e) Stock Option Plans. Employee shall be eligible for
-------------------
participation in 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 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 the same basis as such 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 action (during the term of this Agreement or the "Continuation
Period," as defined in Section 7(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 be affected.
(h) Vesting of Rights. Upon the occurrence of the events set
------------------
forth in Sections 8(e)(i)(A), 8(e)(i)(B) or 8(e)(i)(C) during the term
of this Agreement, and regardless of whether Employee terminates this
Agreement following such occurrence, 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 the occurrence of such event 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.
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 with good business and ethical
practices. In addition, Employee shall be subject to and abide by the 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 no less frequently than a 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.
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<PAGE>
6. 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 violation of the covenants set forth in
Section 10 or 11; (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 decisions
or policies of NOVA; or (iv) final conviction of Employee of a felony;
provided, however, that in the event NOVA desires to terminate
--------- -------
Employee's Employment pursuant to subsections (i), (ii), or (iii) of
this Section 6(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 breaches
or deficiencies (the "Cure Period"); provided, however, that with
--------- -------
respect only to breaches 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 breaches or deficiencies within such period and
thereafter, the Cure Period shall be automatically extended for an
additional period of time (not to exceed sixty (60) days) to enable
Employee to cure such breaches or deficiencies, provided, further, that
--------- --------
Employee continues to diligently use his best efforts to cure such
breaches or deficiencies. If Employee does not cure the perceived
breaches or deficiencies 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 6(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
thirty (30) 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 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 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 such that they no longer reflect duties and
responsibilities customary for an executive officer of a publicly-traded
company; provided, however, that NOVA's change to a privately-held
-------- -------
company (for example, as a result of acquisition) and the corresponding
change in Employee's duties and responsibilities shall not, by itself,
be sufficient to qualify as a "Responsibilities Breach"; (ii) Employee
is required to relocate to an office that is more than thirty-five (35)
miles from Employee's current office located at One Concourse Parkway,
Suite 300, Atlanta, Georgia 30328; (iii) there is a reduction in
Employee's Base Salary payable under Section 2, an adverse change in the
terms of the Incentive Compensation Plan, or a
4
<PAGE>
material reduction in benefits 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 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) days) to enable NOVA to cure such breaches,
provided, further, that NOVA continues to diligently use its best
--------- -------
efforts to cure such breaches. Notwithstanding anything to the contrary
in this Section 6(e), the Notice Period for any breach arising from the
failure to pay compensation shall be five (5) days.
(f) Employee may terminate this Agreement at any time,
without cause, upon thirty (30) days prior written notice to NOVA.
(g) NOVA may terminate this Agreement at any time, without
cause, upon written notice to Employee.
(h) This Agreement shall automatically renew for successive
one (1) 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 one hundred eighty (180) 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.
7. Termination Payments.
(a) Upon termination of Employee's Employment, for whatever
reason (other than termination for "Cause" pursuant to Section 6(b),
termination by Employee pursuant to Section 6(f), expiration of this
Agreement following notice of non-renewal by Employee pursuant to
Section 6(h), or termination because Employee otherwise "quits" or
voluntarily terminates his employment other than pursuant to Section
6(e) (each, a "Termination Exclusion") (the effective date of such
termination or expiration being referred to as the "Termination Date"),
in addition to any amounts payable to Employee hereunder (including but
not limited to accrued but unpaid Base Salary or accrued but unpaid
Bonus Compensation), and any other benefits required to be provided to
Employee and his dependents under contract and applicable law:
(i) NOVA shall pay Employee in cash an amount equal
to his "Annual Base Compensation" (as defined in Section 7(e))
multiplied by two (2) (the "Severance Payment"). The Severance
Payment shall be paid in twenty-four (24) equal monthly
payments, the first of which shall be made on the first day of
the calendar month following the calendar month in which the
Termination Date occurs; provided, however, that if Employee's
Employment is terminated (other than by reason of a Termination
Exclusion), within two (2) years after a Change in Control of
NOVA, NOVA shall pay Employee the Severance Payment in one lump
sum within thirty (30) days of the Termination Date.
(ii) NOVA shall pay Employee an amount (the
"Supplemental Payment") equal to (x) the amount of Bonus
Compensation payable to Employee for the calendar year
immediately preceding the year in which the Termination Date
occurs (the "Prior
5
<PAGE>
Bonus Amount") 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. The
Supplemental Payment shall be paid to Employee concurrently with
the payment of the Prior Bonus Amount; provided, however, that
if the Prior Bonus Amount has already been paid to Employee, the
Supplemental Payment shall be paid within 30 days of the
Termination Date. In the event the Termination Date occurs in
the first calendar year of Employee's employment, then the
Supplemental Payment shall equal the pro rata percentage
(determined using the fraction above) of the Bonus Compensation
Employee would have received for the calendar year in which the
Termination Date occurred had Employee remained employed for the
entire calendar year in which the Termination Date occurred, and
the Supplemental Payment shall be paid to Employee concurrently
with NOVA's payment of Bonus Compensation generally for such
calendar year.
(iii) Notwithstanding any provision to the contrary in
any other agreement or document (including but not limited to
NOVA's applicable plan documents), all stock options, restricted
stock and other similar rights that, as of the Termination Date,
have been granted to Employee shall become vested and
exercisable immediately upon notice of such termination and, as
provided under the applicable plan or agreement, Employee shall
have the continuing right to exercise any or all of such rights.
(iv) Until the earlier to occur of (x) the expiration
of the Severance Period or (y) Employee becomes an employee of
another company providing Employee and his dependents with
medical, life and disability insurance (the period from the
Termination Date until such event being referred to herein as
the "Continuation Period"), NOVA shall provide to Employee and
his dependents the coverage for the benefits described in
Sections 3(a), (b) and (c); provided, however, such coverage
shall not be provided to the extent that such coverage is
generally provided through an insurance contract with a licensed
insurance company and such insurance company will not agree to
insure for such coverage.
During the two (2) year period following the Termination Date (the
"Severance Period"), Employee shall comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below.
For purposes of this Section 7(a), any accrued but unpaid Bonus
Compensation shall be paid to Employee on the date that Bonus
Compensation would have been payable under the Incentive Compensation
Plan had termination of Employee's Employment not occurred.
(b) In the event Employee's Employment is terminated as a
result of the Termination Exclusions identified in Section 7(a),
Employee shall be paid his accrued but unpaid Base Salary and/or accrued
but unpaid Bonus Compensation though the Termination Date, and any other
benefits required to be provided to Employee and his dependents under
contract and applicable law. In the event that Employee is entitled to
receive Bonus Compensation under this Section 7(b), such Bonus
Compensation shall be paid on the date that Bonus Compensation would
have been payable under the Incentive Compensation Plan if termination
of Employee's Employment had not occurred.
6
<PAGE>
(c) In the event Employee's Employment is terminated as a
result of one of the Termination Exclusions identified in Section 7(a),
NOVA, at its sole option and its sole discretion and at any time within
thirty (30) days of the Termination Date, may cause Employee to be
obligated to comply with the non-disclosure obligations and covenants
not to solicit or compete set forth in Sections 10 and 11 below for a
period of one (1) or two (2) years following the Termination Date, as
set forth below:
(i) By giving notice to Employee at any time within
thirty (30) days of the Termination Date of its intent to
exercise the "One Year Option" herein described, NOVA may cause
Employee to be obligated to comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below for a period of one (1) year following
the Termination Date; provided, however, that NOVA shall pay
Employee an aggregate amount in cash equal to Employee's then
Base Salary in effect immediately prior to the Termination Date
multiplied by one (1) (the "One Year Payment"). The One Year
Payment shall be paid by NOVA to Employee in twelve (12) equal
monthly payments, the first of which shall be made on the first
day of the calendar month following the calendar month in which
the Termination Date occurs. In the event NOVA exercises the One
Year Option, the one (1) year period following the Termination
Date shall be deemed the "Exclusion Period";
(ii) By giving notice to Employee any time within
thirty (30) days of the Termination Date of its intent to
exercise the "Two Year Option" herein described, NOVA may cause
Employee to be obligated to comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below for a period of two (2) years following
the Termination Date; provided, however, that NOVA shall pay
Employee an aggregate amount in cash equal to Employee's Base
Salary in effect immediately prior to the Termination Date
multiplied by two (2) (the "Two Year Payment"). The Two Year
Payment shall be paid by NOVA to Employee in twenty-four (24)
equal monthly payments, the first of which shall be made on the
first day of the calendar month following the calendar month in
which the Termination Date occurs. In the event NOVA exercises
the Two Year Option, the two (2) year period following the
Termination Date shall be deemed the "Exclusion Period".
(d) 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.
(e) 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
7
<PAGE>
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 of the sale of
all or substantially all of the assets
of NOVA; and
(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.
(i.e., either (A) and (C) or (B) and (C) must
occur in order to constitute a Change in Control
for purposes of this definition).
(ii) "Annual Base Compensation" means the greater of
(x) Employee's Base Salary in effect on the Termination Date, or
(y) the greatest Base Salary of Employee in effect during the
calendar year immediately prior to the calendar year in which
the Termination Date occurs.
(iii) "Incumbent Board" shall mean the members of the
Board of Directors of NOVA as of the Effective 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).
8. 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 without
demand all such materials to NOVA within three (3) days after the
termination of Employee's Employment. Employee further agrees not to use
such materials for any reason after said termination.
9. Arbitration.
(a) NOVA and Employee acknowledge and agree that (except as
specifically set
8
<PAGE>
forth in Section 9(d)), 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 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 9(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 10 and 11 of this Agreement nor shall
such provisions prevent NOVA from seeking equitable relief from a court
of competent jurisdiction for violations of Sections 10 and 11 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.
9
<PAGE>
10. Nondisclosure.
(a) 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. Employee further agrees that during the
Severance Period or the Exclusion Period, as applicable, Employee shall
continue to keep NOVA Confidential Information confidential, and
Employee shall not use NOVA Confidential Information for any reason or
in any manner.
(b) Notwithstanding the foregoing, Employee shall not be
subject to the restrictions set forth in subsection (a) of this Section
10 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.
(c) 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. section 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.
11. 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 throughout the Severance Period or the Exclusion Period, as
applicable, 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:
10
<PAGE>
(a) compete with NOVA in providing credit card and debit
card transaction processing services within the Territory or otherwise
associate with, obtain any interest in (except as a shareholder holding
less than five percent (5%) interest in a corporation traded on a
national exchange or over-the-counter), advise, consult, lend money to,
guarantee the debts or obligations of, or perform services in either a
supervisory or managerial capacity or as an advisor, consultant or
independent contractor for, or otherwise participate in the ownership,
management, or control of, any person, firm, partnership, corporation,
or unincorporated association of any kind which is providing credit card
and debit card transaction processing services within the Territory;
(b) solicit or contact, for the purpose of providing
products or services the same as or substantially similar to 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
information during the last twelve (12) months of his Employment;
(c) 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 information about such merchant, associate bank, ISO, customer
or supplier during the last twelve (12) months of his Employment; or
(d) persuade or attempt to persuade any person who (i) was
employed by NOVA as of the date of the termination of Employee's
Employment and (ii) 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.
12. 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.
13. Remedy for Breach. Employee acknowledges and agrees that his
breach of any of the covenants contained in Sections 8, 10, 11 and 12 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 the covenants contained in Sections 8, 10, 11 and 12 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
11
<PAGE>
Employee against NOVA, whether predicated upon this or any other contract, shall
not constitute a defense to the enforcement by NOVA of said covenants.
14. 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:
(a) 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;
(b) 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;
(c) NOVA is relying upon the restrictions and covenants
contained herein in continuing to make available to Employee information
concerning the Business; and
(d) 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. 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 the commercial arbitration rules then in effect of the American Arbitration
Association. Any such arbitration hearing will be held in Atlanta, Georgia, and
this Agreement shall be construed and enforced in accordance with the laws of
the State of Georgia, including this arbitration provision.
16. 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 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 reasonably incur 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
12
<PAGE>
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Employee about the amount of any payment pursuant to Section 7 of
this Agreement), plus in each case interest at the applicable federal rate
provided for in Section 7872(f)(2) of the Code.
17. Applicable Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Georgia.
18. 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.
19. 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 but shall
be freely assignable by NOVA.
20. 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:
John M. Perry
7 Brookhaven Drive
Atlanta, Georgia 30319
(ii) If to NOVA, to:
NOVA Corporation
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: Edward Grzedzinski
Chief Executive Officer
With a copy (which shall not constitute notice) to:
NOVA Corporation
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: Cherie Fuzzell
General Counsel
21. 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 Prior 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
13
<PAGE>
discharge is sought.
22. 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.
23. Survival. The provisions of Sections 7, 8, 9, 10, 11, 12, 13,
14, 15, 16, 17, 20, 22 and 24 shall survive termination of Employee's Employment
and termination of this Agreement.
24. Withholding. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above shown.
"EMPLOYEE":
By:/s/ John M. Perry
---------------------------
John M. Perry
"NOVA":
NOVA CORPORATION
By:/s/ Edward Grzedzinski
---------------------------
Edward Grzedzinski
Chairman, CEO and President
14
<PAGE>
EXHIBIT A
---------
Annual Incentive Compensation Schedule
* Payment of annual incentive compensation (the "Bonus Payment") to be
based upon relative achievement of Targeted Net Income (as defined).
* Net Income is Net Income determined in accordance with GAAP as
determined from the annual audited Financial Statements, as adjusted to
exclude non-operating gains and losses.
* Targeted Net Income will be established annually by the Board of
Directors.
* The Bonus Payment will be calculated by following the steps outlined
below:
(1) Determining the percentage equivalent to a fraction, the
numerator of which is Net Income and the denominator of which is
Targeted Net Income (such percentage being referred to as the
"Actual/Targeted Ratio").
(2) Values will be calculated based on (A) through (E):
(A) For each full percentage point (up to 84%) by which the
----
Actual/Targeted Ratio equals or exceeds 80%, a value of
1% will be awarded.
(B) For each full percentage point (up to 89%) by which the
----
Actual/Targeted Ratio exceeds 84%, a value of 2% will be
awarded.
(C) For each full percentage point (up to 94%) by which the
----
Actual/Targeted Ratio exceeds 89%, a value of 3% will be
awarded.
(D) For each full percentage point (up to 99%) by which the
----
Actual/Targeted Ratio exceeds 94%, a value of 4% will be
awarded.
(E) For each full percentage point (up to 150%) by which the
----
Actual/Targeted Ratio exceeds 100%, a value of 1% will
be awarded. (note: for this purpose, no value will be
awarded for equaling 100%).
(3) The sum of the values calculated in (A) through (E) (the "Bonus
Percentage") shall be multiplied by Employee's then current Base
Salary to yield the Bonus Payment.
<PAGE>
Examples:
. If the Actual/Targeted Ratio is 92%, the Bonus Percentage would
be 29%. This is calculated by adding:
5% (1% for 80-84% of Actual/Targeted Ratio)
+ 15% (2% for 85-89% of Actual/Targeted Ratio)
+ 9% (3% for 90-92% of Actual/Targeted Ratio)
-------------------------------------------------
29%
Employee's Bonus Payment would be equal to Employee's
then-current Base Salary multiplied by 29%.
. If the Actual/Targeted Ratio is 112%, the Bonus Percentage would
be 62%. This is calculated by adding:
5% (1% for 80-84% of Actual/Targeted Ratio)
+ 10% (2% for 85-89% of Actual/Targeted Ratio)
+ 15% (3% for 90-94% of Actual/Targeted Ratio)
+ 20% (4% for 95-99% of Actual/Targeted Ratio)
+ 0% (0% for 100% of Actual/Targeted Ratio)
+ 12% (1% for 101-112% of Actual/Targeted Ratio)
--------------------------------------------------
62%
Employee's Bonus Payment would be equal to Employee's
then-current Base Salary multiplied by 62%.
* The foregoing notwithstanding, in order for any bonus to be payable with
respect to any calendar year, the "Revenue" (as defined below) for such
calendar year must equal or exceed 105% of the Revenue for the
immediately preceding calendar year. "Revenue" means revenue of NOVA
determined in accordance with GAAP as determined from the annual audited
Financial Statements, as adjusted to exclude non-operating items.
* Notwithstanding anything to the contrary in this Agreement, in order to
receive Bonus Compensation for any calendar year, Employee must be
employed by NOVA on the last day of such calendar year.
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective this 15th
day of February, 1999 (the "Effective Date") by and between REBECCA L. POWELL
(hereinafter referred to as "Employee") and NOVA CORPORATION, a Georgia
corporation ("NOVA").
W I T N E S S E T H :
-------------------
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 Executive Vice President,
Operations of NOVA pursuant to an Employment Agreement between Employee and NOVA
effective March 1, 1998 (the "Prior 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 Prior Agreement,
which termination shall be contemporaneous with the effectiveness of this
Agreement;
WHEREAS, NOVA desires 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 her 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 she
may continue to perform her 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 two (2) 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 her reasonable best
efforts to her duties under this Agreement and to perform such duties
diligently and efficiently and in accordance with the directions of
NOVA's Chief Executive Officer.
(b) During the term of Employee's Employment, Employee shall
serve as Executive Vice President of NOVA. Employee shall be responsible
primarily for such duties as are assigned to her, from time to time, by
NOVA's Chief Executive Officer, which in any event shall be such duties
as are customary for an officer in those positions.
<PAGE>
(c) Employee shall devote substantially all of her 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 her
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 she may have to interfere with the
performance of her 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 her duties hereunder.
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 her
Employment shall be One Hundred Seventy Thousand and No/100 Dollars
($170,000) ("Base Salary"), with such increases (each, a "Merit
Increase") as may from time to time be deemed appropriate by NOVA's
Chief Executive Officer; provided, however, that so long as this
Agreement remains in effect, Employee's Base Salary shall be reviewed
annually by NOVA's Chief Executive Officer in each fiscal year, within a
reasonable time following the availability of NOVA's financial
statements for the preceding fiscal year. The Base Salary shall be paid
by NOVA 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 ("Bonus Compensation") in
the amount, and on the terms and conditions described in the Annual
Incentive Compensation Schedule attached as Exhibit A (the "Incentive
---------
Compensation Plan"). Upon written request and subject to the 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 under the Incentive Compensation Plan 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); provided, however, that NOVA shall
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) 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 7 hereof, NOVA shall provide to
Employee the following benefits:
(a) Medical Insurance. Employee and her dependents shall be
-----------------
entitled 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.
<PAGE>
(b) Life Insurance. Employee shall be entitled to
--------------
participate in any 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 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 (4) weeks of paid vacation each year and all holidays
observed by NOVA.
(e) Stock Option Plans. Employee shall be eligible for
------------------
participation in 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 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 the same basis as such 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 action (during the term of this Agreement or the "Continuation
Period," as defined in Section 7(a)) to modify the terms and provisions
of any such plan or arrangement so as to exclude only Employee and/or
her dependents, either by excluding Employee and/or her dependents
explicitly by name or by modifying provisions generally applicable to
all employees and dependents so that only Employee and/or her dependents
would be affected.
(h) Vesting of Rights. Upon the occurrence of the events set
-----------------
forth in Sections 8(e)(i)(A), 8(e)(i)(B) or 8(e)(i)(C) during the term
of this Agreement, and regardless of whether Employee terminates this
Agreement following such occurrence, 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 the occurrence of such event 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.
4. Personnel Policies. Employee shall conduct herself at all times
in a businesslike and professional manner as appropriate for a person in her
position and shall represent NOVA in all respects with good business and ethical
practices. In addition, Employee shall be subject to and abide by the 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 no less frequently than a monthly basis, for all out-of-pocket
business expenses incurred by her in the performance of her 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.
<PAGE>
6. 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 violation of the covenants set forth in
Section 10 or 11; (ii) Employee's willful, intentional, or grossly
negligent failure to perform her 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 decisions
or policies of NOVA; or (iv) final conviction of Employee of a felony;
provided, however, that in the event NOVA desires to terminate
--------- -------
Employee's Employment pursuant to subsections (i), (ii), or (iii) of
this Section 6(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 breaches
or deficiencies (the "Cure Period"); provided, however, that with
--------- -------
respect only to breaches that it is not possible to cure within such
thirty (30) day period, so long as Employee is diligently using her best
efforts to cure such breaches or deficiencies within such period and
thereafter, the Cure Period shall be automatically extended for an
additional period of time (not to exceed sixty (60) days) to enable
Employee to cure such breaches or deficiencies, provided, further, that
--------- -------
Employee continues to diligently use her best efforts to cure such
breaches or deficiencies. If Employee does not cure the perceived
breaches or deficiencies 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 6(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
thirty (30) 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 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 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 such that they no longer reflect duties and
responsibilities customary for an executive officer of a publicly-traded
company; provided, however, that NOVA's change to a privately-held
--------- -------
company (for example, as a result of acquisition) and the corresponding
change in Employee's duties and responsibilities shall not, by itself,
be sufficient to qualify as a "Responsibilities Breach"; (ii) Employee
is required to relocate to an office that is more than thirty-five (35)
miles from Employee's current office located at One Concourse Parkway,
Suite 300, Atlanta, Georgia 30328; (iii) there is a reduction in
Employee's Base Salary payable under Section 2, an adverse change in the
terms of the Incentive Compensation Plan, or a material reduction in
benefits provided to Employee under Section 3 (whether occurring at once
<PAGE>
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 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) days) to enable NOVA to cure such breaches, provided,
--------
further, that NOVA continues to diligently use its best efforts to cure
-------
such breaches. Notwithstanding anything to the contrary in this Section
6(e), the Notice Period for any breach arising from the failure to pay
compensation shall be five (5) days.
(f) Employee may terminate this Agreement at any time,
without cause, upon thirty (30) days prior written notice to NOVA.
(g) NOVA may terminate this Agreement at any time, without
cause, upon written notice to Employee.
(h) This Agreement shall automatically renew for successive
one (1) year terms (each a "Renewal Term") unless either party hereto
gives the other party hereto written notice of its or her intent not to
renew this Agreement no later than one hundred eighty (180) 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.
7. Termination Payments.
(a) Upon termination of Employee's Employment, for whatever
reason (other than termination for "Cause" pursuant to Section 6(b),
termination by Employee pursuant to Section 6(f), expiration of this
Agreement following notice of non-renewal by Employee pursuant to
Section 6(h), or termination because Employee otherwise "quits" or
voluntarily terminates her employment other than pursuant to Section
6(e) (each, a "Termination Exclusion") (the effective date of such
termination or expiration being referred to as the "Termination Date"),
in addition to any amounts payable to Employee hereunder (including but
not limited to accrued but unpaid Base Salary or accrued but unpaid
Bonus Compensation), and any other benefits required to be provided to
Employee and her dependents under contract and applicable law:
(i) NOVA shall pay Employee in cash an amount equal
to her "Annual Base Compensation" (as defined in Section 7(e))
multiplied by two (2) (the "Severance Payment"). The Severance Payment
shall be paid in twenty-four (24) equal monthly payments, the first of
which shall be made on the first day of the calendar month following the
calendar month in which the Termination Date occurs; provided, however,
that if Employee's Employment is terminated (other than by reason of a
Termination Exclusion), within two (2) years after a Change in Control
of NOVA, NOVA shall pay Employee the Severance Payment in one lump sum
within thirty (30) days of the Termination Date.
(ii) NOVA shall pay Employee an amount (the
"Supplemental Payment") equal to (x) the amount of Bonus Compensation
payable to Employee for the calendar year immediately preceding the year
in which the Termination Date occurs (the "Prior Bonus Amount")
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
<PAGE>
and ending on the Termination Date, and the denominator of which is 365.
The Supplemental Payment shall be paid to Employee concurrently with the
payment of the Prior Bonus Amount; provided, however, that if the Prior
Bonus Amount has already been paid to Employee, the Supplemental Payment
shall be paid within 30 days of the Termination Date. In the event the
Termination Date occurs in the first calendar year of Employee's
employment, then the Supplemental Payment shall equal the pro rata
percentage (determined using the fraction above) of the Bonus
Compensation Employee would have received for the calendar year in which
the Termination Date occurred had Employee remained employed for the
entire calendar year in which the Termination Date occurred, and the
Supplemental Payment shall be paid to Employee concurrently with NOVA's
payment of Bonus Compensation generally for such calendar year.
(iii) Notwithstanding any provision to the contrary in
any other agreement or document (including but not limited to
NOVA's applicable plan documents), all stock options, restricted
stock and other similar rights that, as of the Termination Date,
have been granted to Employee shall become vested and
exercisable immediately upon notice of such termination and, as
provided under the applicable plan or agreement, Employee shall
have the continuing right to exercise any or all of such rights.
(iv) Until the earlier to occur of (x) the expiration
of the Severance Period or (y) Employee becomes an employee of
another company providing Employee and her dependents with
medical, life and disability insurance (the period from the
Termination Date until such event being referred to herein as
the "Continuation Period"), NOVA shall provide to Employee and
her dependents the coverage for the benefits described in
Sections 3(a), (b) and (c); provided, however, such coverage
shall not be provided to the extent that such coverage is
generally provided through an insurance contract with a licensed
insurance company and such insurance company will not agree to
insure for such coverage.
During the two (2) year period following the Termination Date (the "Severance
Period"), Employee shall comply with the non-disclosure obligations and
covenants not to solicit or compete set forth in Sections 10 and 11 below.
For purposes of this Section 7(a), any accrued but unpaid Bonus Compensation
shall be paid to Employee on the date that Bonus Compensation would have been
payable under the Incentive Compensation Plan had termination of Employee's
Employment not occurred.
(b) In the event Employee's Employment is terminated as a result of
the Termination Exclusions identified in Section 7(a), Employee shall be paid
her accrued but unpaid Base Salary and/or accrued but unpaid Bonus Compensation
through the Termination Date, and any other benefits required to be provided to
Employee and her dependents under contract and applicable law. In the event that
Employee is entitled to receive Bonus Compensation under this Section 7(b), such
Bonus Compensation shall be paid on the date that Bonus Compensation would have
been payable under the Incentive Compensation Plan if termination of Employee's
Employment had not occurred.
(c) In the event Employee's Employment is terminated as a result of
one of the Termination Exclusions identified in Section 7(a), NOVA, at its sole
option and its sole discretion and at any time within thirty (30) days of the
Termination Date, may cause Employee to
<PAGE>
be obligated to comply with the non-disclosure obligations and covenants
not to solicit or compete set forth in Sections 10 and 11 below for a
period of one (1) or two (2) years following the Termination Date, as
set forth below:
(i) By giving notice to Employee at any time within thirty
(30) days of the Termination Date of its intent to exercise the "One
Year Option" herein described, NOVA may cause Employee to be obligated
to comply with the non-disclosure obligations and covenants not to
solicit or compete set forth in Sections 10 and 11 below for a period of
one (1) year following the Termination Date; provided, however, that
NOVA shall pay Employee an aggregate amount in cash equal to Employee's
then Base Salary in effect immediately prior to the Termination Date
multiplied by one (1) (the "One Year Payment"). The One Year Payment
shall be paid by NOVA to Employee in twelve (12) equal monthly payments,
the first of which shall be made on the first day of the calendar month
following the calendar month in which the Termination Date occurs. In
the event NOVA exercises the One Year Option, the one (1) year period
following the Termination Date shall be deemed the "Exclusion Period";
(ii) By giving notice to Employee any time within thirty (30)
days of the Termination Date of its intent to exercise the "Two Year
Option" herein described, NOVA may cause Employee to be obligated to
comply with the non-disclosure obligations and covenants not to solicit
or compete set forth in Sections 10 and 11 below for a period of two (2)
years following the Termination Date; provided, however, that NOVA shall
pay Employee an aggregate amount in cash equal to Employee's Base Salary
in effect immediately prior to the Termination Date multiplied by two
(2) (the "Two Year Payment"). The Two Year Payment shall be paid by NOVA
to Employee in twenty-four (24) equal monthly payments, the first of
which shall be made on the first day of the calendar month following the
calendar month in which the Termination Date occurs. In the event NOVA
exercises the Two Year Option, the two (2) year period following the
Termination Date shall be deemed the "Exclusion Period".
(d) 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.
(e) 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
<PAGE>
(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 of the sale of all or substantially all
of the assets of NOVA; and
(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.
(i.e., either (A) and (C) or (B) and (C) must occur in
order to constitute a Change in Control for purposes of
this definition).
(ii) "Annual Base Compensation" means the greater of (x)
Employee's Base Salary in effect on the Termination Date, or (y) the
greatest Base Salary of Employee in effect during the calendar year
immediately prior to the calendar year in which the Termination Date
occurs.
(iii) "Incumbent Board" shall mean the members of the Board of
Directors of NOVA as of the Effective 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).
8. 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
her during the term of her 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 without demand all such materials to NOVA within
three (3) days after the termination of Employee's Employment. Employee further
agrees not to use such materials for any reason after said termination.
9. Arbitration.
(a) NOVA and Employee acknowledge and agree that (except as
specifically set forth in Section 9(d)), 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
<PAGE>
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 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 9(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 10 and 11 of this Agreement nor shall
such provisions prevent NOVA from seeking equitable relief from a court
of competent jurisdiction for violations of Sections 10 and 11 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.
<PAGE>
10. Nondisclosure.
(a) NOVA Confidential Information. Employee acknowledges and
-----------------------------
agrees that because of her Employment, she 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 her 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. Employee further agrees that during the
Severance Period or the Exclusion Period, as applicable, Employee shall
continue to keep NOVA Confidential Information confidential, and
Employee shall not use NOVA Confidential Information for any reason or
in any manner.
(b) Notwithstanding the foregoing, Employee shall not be
subject to the restrictions set forth in subsection (a) of this Section
10 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 her Employment or the exercise of her
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.
(c) Trade Secrets. Employee acknowledges and agrees that
-------------
because of her Employment, she will have access to "trade secrets" (as
defined in the Uniform Trade Secrets Act, O.C.G.A. section 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.
11. Covenants Not to Solicit or Compete.
Employee acknowledges and agrees that, because of her Employment, she
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 her Employment
and continuing throughout the Severance Period or the Exclusion Period, as
applicable, 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:
<PAGE>
(a) compete with NOVA in providing credit card and debit
card transaction processing services within the Territory or otherwise
associate with, obtain any interest in (except as a shareholder holding
less than five percent (5%) interest in a corporation traded on a
national exchange or over-the-counter), advise, consult, lend money to,
guarantee the debts or obligations of, or perform services in either a
supervisory or managerial capacity or as an advisor, consultant or
independent contractor for, or otherwise participate in the ownership,
management, or control of, any person, firm, partnership, corporation,
or unincorporated association of any kind which is providing credit card
and debit card transaction processing services within the Territory;
(b) solicit or contact, for the purpose of providing
products or services the same as or substantially similar to 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
information during the last twelve (12) months of her Employment;
(c) 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 information about such merchant, associate bank, ISO, customer
or supplier during the last twelve (12) months of her Employment; or
(d) persuade or attempt to persuade any person who (i) was
employed by NOVA as of the date of the termination of Employee's
Employment and (ii) is in a sales or management position with NOVA at
the time of such contact, to terminate or modify her employment
relationship, whether or not pursuant to a written agreement, with NOVA,
as the case may be.
12. New Developments. Any discovery, invention, process or
improvement made or discovered by Employee during the term of her 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.
13. Remedy for Breach. Employee acknowledges and agrees that her
breach of any of the covenants contained in Sections 8, 10, 11 and 12 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 the covenants contained in Sections 8, 10, 11 and 12 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
<PAGE>
Employee against NOVA, whether predicated upon this or any other contract, shall
not constitute a defense to the enforcement by NOVA of said covenants.
14. Reasonableness. Employee has carefully considered the nature and
extent of the restrictions upon her and the rights and remedies conferred on
NOVA under this Agreement, and Employee hereby acknowledges and agrees that:
(a) 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;
(b) the restrictions placed upon Employee hereunder are
narrowly drawn, are fair and reasonable in time and territory, will not
prevent her from earning a livelihood, and place no greater restraint
upon Employee than is reasonably necessary to secure the Business and
goodwill of NOVA;
(c) NOVA is relying upon the restrictions and covenants
contained herein in continuing to make available to Employee information
concerning the Business; and
(d) Employee's Employment places her in a position of
confidence and trust with NOVA and its employees, merchants, associate
banks, ISOs, customers, vendors and suppliers.
15. 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 the commercial arbitration rules then in effect of the American Arbitration
Association. Any such arbitration hearing will be held in Atlanta, Georgia, and
this Agreement shall be construed and enforced in accordance with the laws of
the State of Georgia, including this arbitration provision.
16. 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 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 reasonably incur 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 contest by the Employee
<PAGE>
about the amount of any payment pursuant to Section 7 of this Agreement), plus
in each case interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code.
17. Applicable Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Georgia.
18. 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.
19. 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 but shall
be freely assignable by NOVA.
20. 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:
Rebecca L. Powell
2815 Strathmore Drive
Cumming, Georgia 30041
(ii) If to NOVA, to:
NOVA Corporation
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: Edward Grzedzinski
Chief Executive Officer
With a copy (which shall not constitute notice) to:
NOVA Corporation
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: Cherie Fuzzell
General Counsel
21. 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 Prior 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.
<PAGE>
22. 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.
23. Survival. The provisions of Sections 7, 8, 9, 10, 11, 12, 13,
14, 15, 16, 17, 20, 22 and 24 shall survive termination of Employee's Employment
and termination of this Agreement.
24. Withholding. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above shown.
"EMPLOYEE":
By:/s/ Rebecca L. Powell
----------------------------
Rebecca L. Powell
"NOVA":
NOVA CORPORATION
By:/s/ Edward Grzedzinski
----------------------------
Edward Grzedzinski
Chairman, CEO and President
<PAGE>
EXHIBIT A
---------
Annual Incentive Compensation Schedule
* Payment of annual incentive compensation (the "Bonus Payment") to be
based upon relative achievement of Targeted Net Income (as defined).
* Net Income is Net Income determined in accordance with GAAP as
determined from the annual audited Financial Statements, as adjusted to
exclude non-operating gains and losses.
* Targeted Net Income will be established annually by the Board of
Directors.
* The Bonus Payment will be calculated by following the steps outlined
below:
(1) Determining the percentage equivalent to a fraction, the
numerator of which is Net Income and the denominator of which is
Targeted Net Income (such percentage being referred to as the
"Actual/Targeted Ratio").
(2) Values will be calculated based on (A) through (E):
(A) For each full percentage point (up to 84%) by which the
----
Actual/Targeted Ratio equals or exceeds 80%, a value of
1% will be awarded.
(B) For each full percentage point (up to 89%) by which the
----
Actual/Targeted Ratio exceeds 84%, a value of 2% will be
awarded.
(C) For each full percentage point (up to 94%) by which the
----
Actual/Targeted Ratio exceeds 89%, a value of 3% will be
awarded.
(D) For each full percentage point (up to 99%) by which the
----
Actual/Targeted Ratio exceeds 94%, a value of 4% will be
awarded.
(E) For each full percentage point (up to 150%) by which the
----
Actual/Targeted Ratio exceeds 100%, a value of 1% will
be awarded. (note: for this purpose, no value will be
----
awarded for equaling 100%).
(3) The sum of the values calculated in (A) through (E) (the "Bonus
Percentage") shall be multiplied by Employee's then current Base
Salary to yield the Bonus Payment.
<PAGE>
Examples:
. If the Actual/Targeted Ratio is 92%, the Bonus Percentage would
be 29%. This is calculated by adding:
5% (1% for 80-84% of Actual/Targeted Ratio)
+ 15% (2% for 85-89% of Actual/Targeted Ratio)
+ 9% (3% for 90-92% of Actual/Targeted Ratio)
--------------------------------------------------
29%
. Employee's Bonus Payment would be equal to Employee's
then-current Base Salary multiplied by 29%.
. If the Actual/Targeted Ratio is 112%, the Bonus Percentage would
be 62%. This is calculated by adding:
5% (1% for 80-84% of Actual/Targeted Ratio)
+ 10% (2% for 85-89% of Actual/Targeted Ratio)
+ 15% (3% for 90-94% of Actual/Targeted Ratio)
+ 20% (4% for 95-99% of Actual/Targeted Ratio)
+ 0% (0% for 100% of Actual/Targeted Ratio)
+ 12% (1% for 101-112% of Actual/Targeted Ratio)
----------------------------------------------------
62%
Employee's Bonus Payment would be equal to Employee's
then-current Base Salary multiplied by 62%.
* The foregoing notwithstanding, in order for any bonus to be payable with
respect to any calendar year, the "Revenue" (as defined below) for such
calendar year must equal or exceed 105% of the Revenue for the
immediately preceding calendar year. "Revenue" means revenue of NOVA
determined in accordance with GAAP as determined from the annual audited
Financial Statements, as adjusted to exclude non-operating items.
* Notwithstanding anything to the contrary in this Agreement, in order to
receive Bonus Compensation for any calendar year, Employee must be
employed by NOVA on the last day of such calendar year.
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective this 15th
day of February, 1999 (the "Effective Date") by and between NICHOLAS H. LOGAN
(hereinafter referred to as "Employee") and NOVA CORPORATION, a Georgia
corporation ("NOVA").
W I T N E S S E T H :
---------------------
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, NOVA, or its assigns, will continue to engage in the Business
throughout the United States (the "Territory");
WHEREAS, NOVA desires that Employee work for NOVA, and Employee desires
to accept said employment, all as contemplated herein;
NOW, THEREFORE, for and in consideration of his 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
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 two (2) 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 Chief Executive Officer.
(b) During the term of Employee's Employment, Employee shall
serve as Senior Executive Vice President of NOVA and President and Chief
Operating Officer of PMT Services, Inc. Employee shall be responsible
primarily for such duties as are assigned to him, from time to time, by
NOVA's Chief Executive Officer, 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
<PAGE>
hereunder.
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 Three Hundred Thousand and No/100 Dollars ($300,000)
("Base Salary"), with such increases (each, a "Merit Increase") as may
from time to time be deemed appropriate by NOVA's Chief Executive
Officer; provided, however, that so long as this Agreement remains in
effect, Employee's Base Salary shall be reviewed annually by NOVA's
Chief Executive Officer in each fiscal year, within a reasonable time
following the availability of NOVA's financial statements for the
preceding fiscal year. The Base Salary shall be paid by NOVA 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 ("Bonus Compensation") in
the amount, and on the terms and conditions described in the Annual
Incentive Compensation Schedule attached as Exhibit A (the "Incentive
---------
Compensation Plan"). Upon written request and subject to the 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 under the Incentive Compensation Plan 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); provided, however, that NOVA shall
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) 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 7 hereof, NOVA shall provide to
Employee the following benefits:
(a) Medical Insurance. Employee and his dependents shall be
-----------------
entitled 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 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 any disability insurance plans established, offered, or
adopted from time to time by NOVA for the benefit of its employees
and/or executive officers.
2
<PAGE>
(d) Vacations, Holidays. Employee shall be entitled to at
-------------------
least four (4) weeks of paid vacation each year and all holidays
observed by NOVA.
(e) Stock Option Plans. Employee shall be eligible for
------------------
participation in 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 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 the same basis as such 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 action (during the term of this Agreement or the "Continuation
Period," as defined in Section 7(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 be affected.
(h) Vesting of Rights. Upon the occurrence of the events set
-----------------
forth in Sections 8(e)(i)(A), 8(e)(i)(B) or 8(e)(i)(C) during the term
of this Agreement, and regardless of whether Employee terminates this
Agreement following such occurrence, 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 the occurrence of such event 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.
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 with good business and ethical
practices. In addition, Employee shall be subject to and abide by the 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 no less frequently than a 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. 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
3
<PAGE>
used with respect to termination by NOVA of Employee's Employment
hereunder, shall mean termination as a result of: (i) Employee's
violation of the covenants set forth in Section 10 or 11; (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 decisions or policies of NOVA; or
(iv) final conviction of Employee of a felony; provided, however, that
-----------------
in the event NOVA desires to terminate Employee's Employment pursuant to
subsections (i), (ii), or (iii) of this Section 6(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 breaches or deficiencies (the "Cure
Period"); provided, however, that with respect only to breaches 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 breaches or
deficiencies within such period and thereafter, the Cure Period shall be
automatically extended for an additional period of time (not to exceed
sixty (60) days) to enable Employee to cure such breaches or
deficiencies, provided, further, that Employee continues to diligently
-----------------
use his best efforts to cure such breaches or deficiencies. If Employee
does not cure the perceived breaches or deficiencies 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 6(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
thirty (30) 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 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 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 such that they no longer reflect duties and
responsibilities customary for an executive officer of a publicly-traded
company; provided, however, that NOVA's change to a privately-held
-----------------
company (for example, as a result of acquisition) and the corresponding
change in Employee's duties and responsibilities shall not, by itself,
be sufficient to qualify as a "Responsibilities Breach"; (ii) Employee
is required to relocate to an office that is more than thirty-five (35)
miles from Employee's current office located at One Concourse Parkway,
Suite 300, Atlanta, Georgia 30328; (iii) there is a reduction in
Employee's Base Salary payable under Section 2, an adverse change in the
terms of the Incentive Compensation Plan, or a material reduction in
benefits 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 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
4
<PAGE>
automatically extended for an additional period of time (not to exceed
sixty (60) days) to enable NOVA to cure such breaches, provided,
--------
further, that NOVA continues to diligently use its best efforts to cure
-------
such breaches. Notwithstanding anything to the contrary in this Section
6(e), the Notice Period for any breach arising from the failure to pay
compensation shall be five (5) days.
(f) Employee may terminate this Agreement at any time,
without cause, upon thirty (30) days prior written notice to NOVA.
(g) NOVA may terminate this Agreement at any time, without
cause, upon written notice to Employee.
(h) This Agreement shall automatically renew for successive
one (1) 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 one hundred eighty (180) 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.
7. Termination Payments.
(a) Upon termination of Employee's Employment, for whatever
reason (other than termination for "Cause" pursuant to Section 6(b),
termination by Employee pursuant to Section 6(f), expiration of this
Agreement following notice of non-renewal by Employee pursuant to
Section 6(h), or termination because Employee otherwise "quits" or
voluntarily terminates his employment other than pursuant to Section
6(e) (each, a "Termination Exclusion") (the effective date of such
termination or expiration being referred to as the "Termination Date"),
in addition to any amounts payable to Employee hereunder (including but
not limited to accrued but unpaid Base Salary or accrued but unpaid
Bonus Compensation), and any other benefits required to be provided to
Employee and his dependents under contract and applicable law:
(i) NOVA shall pay Employee in cash an amount equal
to his "Annual Base Compensation" (as defined in Section 7(e))
multiplied by two (2) (the "Severance Payment"). The Severance
Payment shall be paid in twenty-four (24) equal monthly
payments, the first of which shall be made on the first day of
the calendar month following the calendar month in which the
Termination Date occurs; provided, however, that if Employee's
Employment is terminated (other than by reason of a Termination
Exclusion), within two (2) years after a Change in Control of
NOVA, NOVA shall pay Employee the Severance Payment in one lump
sum within thirty (30) days of the Termination Date.
(ii) NOVA shall pay Employee an amount (the
"Supplemental Payment") equal to (x) the amount of Bonus
Compensation payable to Employee for the calendar year
immediately preceding the year in which the Termination Date
occurs (the "Prior Bonus Amount") 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. The Supplemental Payment shall be paid to
Employee concurrently with the payment of the Prior Bonus
Amount; provided, however, that if the Prior Bonus Amount has
already been paid to Employee, the Supplemental Payment shall be
paid within 30 days of the
5
<PAGE>
Termination Date. In the event the Termination Date occurs in
the first calendar year of Employee's employment, then the
Supplemental Payment shall equal the pro rata percentage
(determined using the fraction above) of the Bonus Compensation
Employee would have received for the calendar year in which the
Termination Date occurred had Employee remained employed for the
entire calendar year in which the Termination Date occurred, and
the Supplemental Payment shall be paid to Employee concurrently
with NOVA's payment of Bonus Compensation generally for such
calendar year.
(iii) Notwithstanding any provision to the contrary in
any other agreement or document (including but not limited to
NOVA's applicable plan documents), all stock options, restricted
stock and other similar rights that, as of the Termination Date,
have been granted to Employee shall become vested and
exercisable immediately upon notice of such termination and, as
provided under the applicable plan or agreement, Employee shall
have the continuing right to exercise any or all of such rights.
(iv) Until the earlier to occur of (x) the expiration
of the Severance Period or (y) Employee becomes an employee of
another company providing Employee and his dependents with
medical, life and disability insurance (the period from the
Termination Date until such event being referred to herein as
the "Continuation Period"), NOVA shall provide to Employee and
his dependents the coverage for the benefits described in
Sections 3(a), (b) and (c); provided, however, such coverage
shall not be provided to the extent that such coverage is
generally provided through an insurance contract with a licensed
insurance company and such insurance company will not agree to
insure for such coverage.
During the two (2) year period following the Termination Date (the
"Severance Period"), Employee shall comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below.
For purposes of this Section 7(a), any accrued but unpaid Bonus
Compensation shall be paid to Employee on the date that Bonus
Compensation would have been payable under the Incentive Compensation
Plan had termination of Employee's Employment not occurred.
(b) In the event Employee's Employment is terminated
as a result of the Termination Exclusions identified in Section 7(a),
Employee shall be paid his accrued but unpaid Base Salary and/or accrued
but unpaid Bonus Compensation though the Termination Date, and any other
benefits required to be provided to Employee and his dependents under
contract and applicable law. In the event that Employee is entitled to
receive Bonus Compensation under this Section 7(b), such Bonus
Compensation shall be paid on the date that Bonus Compensation would
have been payable under the Incentive Compensation Plan if termination
of Employee's Employment had not occurred.
(c) In the event Employee's Employment is terminated as a
result of one of the Termination Exclusions identified in Section 7(a),
NOVA, at its sole option and its sole discretion and at any time within
thirty (30) days of the Termination Date, may cause Employee to be
obligated to comply with the non-disclosure obligations and covenants
not to solicit or compete set forth in Sections 10 and 11 below for a
period of one (1) or two (2) years following the Termination Date, as
set forth below:
6
<PAGE>
(i) By giving notice to Employee at any time within
thirty (30) days of the Termination Date of its intent to
exercise the "One Year Option" herein described, NOVA may cause
Employee to be obligated to comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below for a period of one (1) year following
the Termination Date; provided, however, that NOVA shall pay
Employee an aggregate amount in cash equal to Employee's then
Base Salary in effect immediately prior to the Termination Date
multiplied by one (1) (the "One Year Payment"). The One Year
Payment shall be paid by NOVA to Employee in twelve (12) equal
monthly payments, the first of which shall be made on the first
day of the calendar month following the calendar month in which
the Termination Date occurs. In the event NOVA exercises the One
Year Option, the one (1) year period following the Termination
Date shall be deemed the "Exclusion Period";
(ii) By giving notice to Employee any time within
thirty (30) days of the Termination Date of its intent to
exercise the "Two Year Option" herein described, NOVA may cause
Employee to be obligated to comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 10 and 11 below for a period of two (2) years following
the Termination Date; provided, however, that NOVA shall pay
Employee an aggregate amount in cash equal to Employee's Base
Salary in effect immediately prior to the Termination Date
multiplied by two (2) (the "Two Year Payment"). The Two Year
Payment shall be paid by NOVA to Employee in twenty-four (24)
equal monthly payments, the first of which shall be made on the
first day of the calendar month following the calendar month in
which the Termination Date occurs. In the event NOVA exercises
the Two Year Option, the two (2) year period following the
Termination Date shall be deemed the "Exclusion Period".
(d) 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.
(e) 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,
7
<PAGE>
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 of the sale of
all or substantially all of the assets
of NOVA; and
(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.
(i.e., either (A) and (C) or (B) and (C) must
occur in order to constitute a Change in Control
for purposes of this definition).
(ii) "Annual Base Compensation" means the greater of
(x) Employee's Base Salary in effect on the Termination Date, or
(y) the greatest Base Salary of Employee in effect during the
calendar year immediately prior to the calendar year in which
the Termination Date occurs.
(iii) "Incumbent Board" shall mean the members of the
Board of Directors of NOVA as of the Effective 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).
8. 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 without demand all such materials to NOVA within
three (3) days after the termination of Employee's Employment. Employee further
agrees not to use such materials for any reason after said termination.
9. Arbitration.
(a) NOVA and Employee acknowledge and agree that (except as
specifically set forth in Section 9(d)), 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
8
<PAGE>
written notice of the party's 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 9(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 10 and 11 of this Agreement nor shall
such provisions prevent NOVA from seeking equitable relief from a court
of competent jurisdiction for violations of Sections 10 and 11 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.
9
<PAGE>
10. Nondisclosure.
(a) 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. Employee further agrees that during the
Severance Period or the Exclusion Period, as applicable, Employee shall
continue to keep NOVA Confidential Information confidential, and
Employee shall not use NOVA Confidential Information for any reason or
in any manner.
(b) Notwithstanding the foregoing, Employee shall not be
subject to the restrictions set forth in subsection (a) of this Section
10 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.
(c) 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. section 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.
11. 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 throughout the Severance Period or the Exclusion Period, as
applicable, 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:
10
<PAGE>
(a) compete with NOVA in providing credit card and debit
card transaction processing services within the Territory or otherwise
associate with, obtain any interest in (except as a shareholder holding
less than five percent (5%) interest in a corporation traded on a
national exchange or over-the-counter), advise, consult, lend money to,
guarantee the debts or obligations of, or perform services in either a
supervisory or managerial capacity or as an advisor, consultant or
independent contractor for, or otherwise participate in the ownership,
management, or control of, any person, firm, partnership, corporation,
or unincorporated association of any kind which is providing credit card
and debit card transaction processing services within the Territory;
(b) solicit or contact, for the purpose of providing
products or services the same as or substantially similar to 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
information during the last twelve (12) months of his Employment;
(c) 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 information about such merchant, associate bank, ISO, customer
or supplier during the last twelve (12) months of his Employment; or
(d) persuade or attempt to persuade any person who (i) was
employed by NOVA as of the date of the termination of Employee's
Employment and (ii) 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.
12. 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.
13. Remedy for Breach. Employee acknowledges and agrees that his
breach of any of the covenants contained in Sections 8, 10, 11 and 12 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 the covenants contained in Sections 8, 10, 11 and 12 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
11
<PAGE>
defense to the enforcement by NOVA of said covenants.
14. 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:
(a) 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;
(b) 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;
(c) NOVA is relying upon the restrictions and covenants
contained herein in continuing to make available to Employee information
concerning the Business; and
(d) 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. 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 the commercial arbitration rules then in effect of the American Arbitration
Association. Any such arbitration hearing will be held in Atlanta, Georgia, and
this Agreement shall be construed and enforced in accordance with the laws of
the State of Georgia, including this arbitration provision.
16. 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 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 reasonably incur 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 contest by the Employee
12
<PAGE>
about the amount of any payment pursuant to Section 7 of this Agreement), plus
in each case interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code.
17. Applicable Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Georgia.
18. 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.
19. 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 but shall
be freely assignable by NOVA.
20. 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:
Nicholas H. Logan
2395 Sandy Creek Farm Road
Alpharetta, Georgia 30004
(ii) If to NOVA, to:
NOVA Corporation
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: Edward Grzedzinski
Chief Executive Officer
With a copy (which shall not constitute notice) to:
NOVA Corporation
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: Cherie Fuzzell
General Counsel
21. 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. 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.
13
<PAGE>
22. 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.
23. Survival. The provisions of Sections 7, 8, 9, 10, 11, 12, 13,
14, 15, 16, 17, 20, 22 and 24 shall survive termination of Employee's Employment
and termination of this Agreement.
24. Withholding. 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.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above shown.
"EMPLOYEE":
By: /s/ Nicholas H. Logan
------------------------------
Nicholas H. Logan
"NOVA":
NOVA CORPORATION
By: /s/ Edward Grzedzinski
------------------------------
Edward Grzedzinski
Chairman, CEO and President
<PAGE>
EXHIBIT A
Annual Incentive Compensation Schedule
* Payment of annual incentive compensation (the "Bonus Payment") to be
based upon relative achievement of Targeted Net Income (as defined).
* Net Income is Net Income determined in accordance with GAAP as
determined from the annual audited Financial Statements, as adjusted to
exclude non-operating gains and losses.
* Targeted Net Income will be established annually by the Board of
Directors.
* The Bonus Payment will be calculated by following the steps outlined
below:
(1) Determining the percentage equivalent to a fraction, the
numerator of which is Net Income and the denominator of which is
Targeted Net Income (such percentage being referred to as the
"Actual/Targeted Ratio").
(2) Values will be calculated based on (A) through (E):
(A) For each full percentage point (up to 84%) by which the
----
Actual/Targeted Ratio equals or exceeds 80%, a value of
1% will be awarded.
(B) For each full percentage point (up to 89%) by which the
----
Actual/Targeted Ratio exceeds 84%, a value of 2% will be
awarded.
(C) For each full percentage point (up to 94%) by which the
----
Actual/Targeted Ratio exceeds 89%, a value of 3% will be
awarded.
(D) For each full percentage point (up to 99%) by which the
----
Actual/Targeted Ratio exceeds 94%, a value of 4% will be
awarded.
(E) For each full percentage point (up to 150%) by which the
----
Actual/Targeted Ratio exceeds 100%, a value of 1% will
be awarded. (note: for this purpose, no value will be
----
awarded for equaling 100%).
(3) The sum of the values calculated in (A) through (E) (the "Bonus
Percentage") shall be multiplied by Employee's then current Base
Salary to yield the Bonus Payment.
<PAGE>
Examples:
. If the Actual/Targeted Ratio is 92%, the Bonus Percentage would
be 29%. This is calculated by adding:
5% (1% for 80-84% of Actual/Targeted Ratio)
+ 15% (2% for 85-89% of Actual/Targeted Ratio)
+ 9% (3% for 90-92% of Actual/Targeted Ratio)
--------------------------------------------------
29%
Employee's Bonus Payment would be equal to Employee's
then-current Base Salary multiplied by 29%.
. If the Actual/Targeted Ratio is 112%, the Bonus Percentage would
be 62%. This is calculated by adding:
5% (1% for 80-84% of Actual/Targeted Ratio)
+ 10% (2% for 85-89% of Actual/Targeted Ratio)
+ 15% (3% for 90-94% of Actual/Targeted Ratio)
+ 20% (4% for 95-99% of Actual/Targeted Ratio)
+ 0% (0% for 100% of Actual/Targeted Ratio)
+ 12% (1% for 101-112% of Actual/Targeted Ratio)
---------------------------------------------------
62%
Employee's Bonus Payment would be equal to Employee's
then-current Base Salary multiplied by 62%.
* The foregoing notwithstanding, in order for any bonus to be payable with
respect to any calendar year, the "Revenue" (as defined below) for such
calendar year must equal or exceed 105% of the Revenue for the
immediately preceding calendar year. "Revenue" means revenue of NOVA
determined in accordance with GAAP as determined from the annual audited
Financial Statements, as adjusted to exclude non-operating items.
* Notwithstanding anything to the contrary in this Agreement, in order to
receive Bonus Compensation for any calendar year, Employee must be
employed by NOVA on the last day of such calendar year.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 47,256
<SECURITIES> 0
<RECEIVABLES> 106,686
<ALLOWANCES> 11,425
<INVENTORY> 10,833
<CURRENT-ASSETS> 203,033
<PP&E> 102,057
<DEPRECIATION> (32,434)
<TOTAL-ASSETS> 640,304
<CURRENT-LIABILITIES> 141,403
<BONDS> 0
0
0
<COMMON> 729
<OTHER-SE> 457,169
<TOTAL-LIABILITY-AND-EQUITY> 640,304
<SALES> 14,808
<TOTAL-REVENUES> 311,765
<CGS> 6,017
<TOTAL-COSTS> 238,442
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 992
<INCOME-PRETAX> 22,275
<INCOME-TAX> 8,257
<INCOME-CONTINUING> 14,018
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,018
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
