Exhibit 10.37
EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of this 7th day of
May, 2001 by and among Pamela A. Joseph (hereinafter referred to as “Employee”),
NOVA Corporation, a Georgia corporation (“NOVA Corp”), NOVA INFORMATION SYSTEMS,
INC., a Georgia corporation (“NOVA”) and U.S. Bancorp, a Delaware corporation
(“Parent”).
WITNESSETH:
     WHEREAS, NOVA Corp, through its direct and indirect subsidiaries, and
Parent are 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 and in Europe;
     WHEREAS, Employee currently serves as President of NOVA, and as Senior
Executive Vice President of NOVA Corp pursuant to an Employment Agreement
between Employee and NOVA Corp effective February 22, 2001 (the “Prior
Agreement”);
     WHEREAS, Parent and NOVA Corp have entered into the Agreement and Plan of
Merger dated as of May 7, 2001 (the “Merger Agreement”), pursuant to which NOVA
Corp will be merged with and into Parent (the “Merger”) on the terms and subject
to the conditions of the Merger Agreement;
     WHEREAS, NOVA and Parent, or their assigns, will continue to engage in the
Business throughout the United States and Europe (the “Territory”);
     WHEREAS, NOVA Corp and Employee desire to terminate the Prior Agreement,
which termination shall be contemporaneous with the effectiveness of this
Agreement;
     WHEREAS, Parent desires to retain the services of Employee on the terms and
conditions set forth in this Agreement, and Employee desires to be employed by
Parent on such terms and conditions;
     NOW, THEREFORE, for and in consideration of the Confidential Information
and Trade Secrets (as hereafter defined) furnished to Employee by NOVA and
Parent in order that she may 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. Parent hereby employs Employee for a period
beginning as of the effective date of the Merger (the “Effective Date”) and
ending two (2) years thereafter (the “Initial Term”), unless Employee’s
employment by Parent is sooner terminated or automatically renewed pursuant to
the terms of this Agreement (Employee’s employment by Parent 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.
     (c) Employee shall devote substantially all of her business time,
attention, and energies to the business and the affairs of Parent, shall act at
all times in the best interests of Parent, 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, Parent shall pay or otherwise provide to Employee the
following compensation:
     (a) Employee’s annual salary during the term of her Employment shall be
Three Hundred Sixty Thousand and No/100 Dollars ($360,000) (or such increased
base salary as approved by NOVA Corp prior to the Merger, not to exceed 115% of
such amount) (“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 Parent’s
financial statements for the preceding fiscal year. The Base Salary shall be
paid by Parent in accordance with Parent’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 or such other terms as NOVA’s Chief Executive Officer shall, prior
to the Merger and after reasonable consultation with Employee, determine (the
“Incentive Compensation Plan”), provided, however, that if Employee no longer is
working primarily in the Business, Parent shall provide Employee with a
different incentive compensation plan under which Employee will have a
substantially similar opportunity to achieve annual bonus compensation in a
substantially similar amount.
     (c) Employee will be granted on the Effective Date the option to purchase
250,000 shares of Parent common stock at a price per share equal to the closing
price of Parent common stock on the Effective Date (the “Option”). The Option
will vest in four (4) equal increments of 25%. The first increment will vest on
the first anniversary of the Effective Date. Another increment of the Option
will vest every year thereafter until 100% of the Option is vested.
     (d) Parent 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, Parent shall provide to
Employee the following benefits (or in lieu thereof for a transitional period
immediately following the Merger, benefits equivalent to those provided to
Employee by NOVA Corp immediately prior to the Merger):

2

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

 

     (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 Parent for the benefit of similarly situated
employees 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 Parent for
the benefit of its similarly situated employees.
     (c) Disability Insurance. Employee shall be entitled to participate in any
disability insurance plans established, offered, or adopted from time to time by
Parent for the benefit of its similarly situated employees.
     (d) Vacations. Holidays. Employee shall be entitled to at least four
(4) weeks of paid vacation each year and all holidays observed Parent.
     (e) Stock Option Plans. Employee shall be eligible for participation in any
stock option plan or restricted stock plan adopted by Parent’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 Parent (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 similarly
situated employees of Parent during the term of this Agreement.
     (g) Terms and Provisions of Plans. Parent 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 a “Change in Control” (as
defined in Section 7(f)) 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 Parent’s applicable plan documents), all stock options, restricted
stock, and other similar rights that have been granted to Employee and that are
not vested on the date of occurrence of such an event, as well as any
non-qualified retirement balance or deferred compensation plan balance
(collectively, the “Rights”) that are not vested on the date of occurrence of
such an event, shall become vested and exercisable immediately . As provided
under the applicable plan or agreement, Employee shall have the right to
exercise any or all of the Rights. Upon the Effective Date, the Rights of
Employee existing on the Effective Date shall be and become fully vested,
nonforfeitable and immediately exercisable.
     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 Parent in all respects with good business and ethical
practices. In addition, Employee shall be subject to and abide by the policies
and procedures of Parent applicable generally to personnel of Parent, as adopted
from time to time.

3

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

 

     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 Parent 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 Parent for “Cause.” For the purposes of this Agreement, the term
“Cause,” when used with respect to termination by Parent 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 Parent;
(iii) Employee’s willful, intentional, or grossly negligent failure to comply
with the decisions or policies of Parent; or (iv) final conviction of Employee
of a felony; provided, however, that in the event Parent desires to terminate
Employee’s Employment pursuant to subsections (i), (ii), or (iii) of this
Section 6(b), Parent 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, Parent may discharge Employee immediately upon written
notice to Employee. If Parent desires to terminate Employee’s Employment
pursuant to subsection (iv) of this Section 6(b), Parent 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 Parent
could, with reasonable accommodation and without undue hardship, continue to
employ Employee in some other capacity after such one hundred eighty (180) day
period, Parent 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 Parent (the “Notice Period”), in the event (i) there is a
material diminution in Employee’s duties and responsibilities from the duties
and responsibilities held by Employee immediately prior to the Merger, or such
greater duties and responsibilities, as may be assigned to Employee from time to
time; provided, however, that the change in Employee’s duties and
responsibilities resulting from Employee no longer being an officer of a
publicly traded company 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

4

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

 

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 or Parent materially breaches this
Agreement, (each of (i), (ii), (iii) and (iv) being referred to as a
“Responsibilities Breach”), and Parent 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
Parent 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 Parent to
cure such breaches, provided, further, that Parent 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 Parent.
     (g) Parent 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 Parent or Employee 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), and any other benefits required to
be provided to Employee and her dependents under contract and applicable law:
     (i) Parent shall pay Employee in cash an amount equal to her “Annual Base
Compensation” (as defined in Section 7(f)) multiplied by two (2) (the “Severance
Payment”). The Severance Payment shall be paid in twenty-four (24) equal monthly
installments, 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:
     (A) if Employee’s Employment is terminated (other than by reason of a
Termination Exclusion) within two (2) years after a Change in Control as defined
in Section 7(f)(i)(A), (B) or (C), Parent shall pay Employee the Severance
Payment in one lump sum within thirty (30) days of the Termination Date.

5

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

 

     (B) if, within the two-year period immediately following a Change in
Control as defined in Section 7(f)(i)(D), Employee’s Employment is terminated by
Employee pursuant to Section 6(f), because Employee “quits” or voluntarily
terminates her employment or this Agreement expires following notice of non-
renewal by Employee pursuant to Section 6(h), such a termination shall not be
deemed to be a Termination Exclusion for purposes of this Section 7.
Accordingly, Parent shall pay Employee an amount equal to her Annual Base
Compensation multiplied by two (2), and Parent shall pay Employee this Severance
Payment in one lump sum within thirty (30) days of the Termination Date;
provided, however, in such a case, (i) Employee will not be paid any
Supplemental Payment and (ii) Employee will not be entitled to her Bonus
Compensation if such a terminating event occurs prior to the date when any
accrued Bonus Compensation would be paid to Employee (even if she was employed
for the entire calendar year upon which such Bonus Compensation would be
calculated).
     (C) in the event Employee is terminated for Cause pursuant to the terms of
Section 6(b), such event shall be governed by Section 7(b) hereof even if such
Termination Date is within two (2) years after a Change in Control.
     (ii) Parent 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 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
Parent’s payment of Bonus Compensation generally for such calendar year.
     (iii) Notwithstanding any provision to the contrary in any nonqualified
deferred compensation plan of Parent or NOVA (the “Nonqualified Plan”), Employee
shall become fully vested immediately in all of her Nonqualified Plan benefits
and accounts as of the Termination Date.
     (iv) Notwithstanding any provision to the contrary in any other agreement
or document (including but not limited to Parent’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 right to exercise any
or all of such rights. Further, in the event Employee’s Employment is terminated
for whatever reason (other than termination for “Cause” pursuant to
Section 6(b)) within two (2) years after a Change in Control as-defined in
Section 7(f)(i)(D), Employee shall have the continuing right to exercise the
“Qualified

6

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

 

Options” (as defined in Section 7(f)(iv)), at any time prior to the date which
is one (1) year after the Termination Date (without regard to any provision
thereof requiring earlier expiration upon termination of employment).
     (v) 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”), Parent 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.
Except as provided in Section 7(a)(i)(B), 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 through the Termination Date, and any other
benefits required to be provided to Employee and her dependents under contract
and applicable law. Employee will not be entitled to her Bonus Compensation if
Employee’s Employment is terminated as a result of one of the Termination
Exclusions prior to the date when any earned Bonus Compensation would be paid to
Employee. In such a case, Employee shall not be entitled to any portion of her
Bonus Compensation upon such termination of employment even if she was employed
for the entire calendar year upon which such Bonus Compensation would be
calculated.
     (c) In the event Employee’s Employment is terminated as a result of one of
the Termination Exclusions identified in Section 7(a), Parent, 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, Parent 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 Parent 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 Parent 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

7

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

 

Parent 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, Parent 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 Parent 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 Parent 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 Parent exercises the Two Year Option, the two (2) year period following
the Termination Date shall be deemed the “Exclusion Period”.
Notwithstanding the foregoing, in the event Employee’s employment is terminated
within two (2) years after the Effective Date as a result of one of the
Termination Exclusions identified in Section 7(a), the provisions of Section 10
and 11 below will apply until the second anniversary of the Effective Date
without any payment by Parent. If Parent, upon Employee’s termination, elects a
One Year Option or Two Year Option, Parent shall not be obligated to make any
payments with respect to such One Year Option or Two Year Option covering the
portion of the applicable period occurring prior to the second anniversary of
the Effective Date and any such payments which would have otherwise been made to
Employee pursuant to this Section 7(c) prior to the second anniversary of the
Effective Date shall be waived.
          (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) Gross-Up Payment.
     (i) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, grant, acceleration or
distribution by or on behalf of Parent to or for the benefit of Employee as a
result of any change in control (within the meaning of Section 280 G of the
internal revenue code) or as otherwise payable under Sections 3(h), 7(a) or 16
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 7(e) (a “Payment”)) would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), or any interest or penalties are incurred by Employee with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the “Excise Tax”), then
Employee shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that, after payment by Employee of all taxes upon
the Gross-Up Payment (such taxes including, without limitation, any income taxes
and Excise Tax imposed upon the Gross-Up Payment, and any interest or penalties
imposed with respect to such taxes), Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.

8

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

 

     (ii) Subject to the provisions of Section 7(e)(iii), all determinations
required to be made under this Section 7, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized accounting firm or law firm selected by Employee and reasonably
acceptable to Parent (the “Tax Firm”); provided, however, that the Tax Firm
shall not determine that no Excise Tax is payable by Employee unless it delivers
to Employee a written opinion (the “Accounting Opinion”) that failure to pay the
Excise Tax and to report the Excise Tax and the payments potentially subject
thereto on or with Employee’s applicable federal income tax return will not
result in the imposition of an accuracy-related or other penalty on Employee.
All fees and expenses of the Tax Firm shall be borne solely by Parent. Within
fifteen (15) business days of the receipt of notice from Employee that there has
been a Payment, the Tax Firm shall make all determinations required under this
Section 7, shall provide to Parent and Employee a written report setting forth
such determinations, together with detailed supporting calculations, and, if the
Tax Firm determines that no Excise Tax is payable, shall deliver the Accounting
Opinion to Employee. Any Gross-Up Payment, as determined pursuant to this
Section 7, shall be paid by Parent to Employee within fifteen (15) days of the
receipt of the Tax Firm’s determination. Subject to the remainder of this
Section, any determination by the Tax Firm shall be binding upon Parent and
Employee; provided, however, that Employee shall only be bound to the extent
that the determinations of the Tax Firm hereunder, including the determinations
made in the Accounting Opinion, are reasonable and reasonably supported by
applicable law. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the Tax
Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by Parent should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event that it is ultimately
determined in accordance with the procedures set forth in Section 7(e)(iii) that
Employee is required to make a payment of any Excise Tax, the Tax Firm shall
reasonably determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by Parent to or for the benefit of
Employee. In determining the reasonableness of Tax Firm’s determinations
hereunder, and the effect thereof, Parent and Employee shall be provided a
reasonable opportunity to review such determinations with Tax Firm and their
respective tax counsel, if separate from the Tax Firm. Tax Firm’s determinations
hereunder, and the Accounting Opinion, shall not be deemed reasonable until
Employee’s reasonable objections and comments thereto have been satisfactorily
accommodated by Tax Firm.
     (iii) Employee shall notify Parent in writing of any claims by the Internal
Revenue Service that, if successful, would require the payment by Parent of the
Gross-Up Payment. Such notification shall be given as soon as practicable, but
no later than thirty (30) calendar days after Employee actually receives notice
in writing of such claim, and shall apprise Parent of the nature of such claim
and the date on which such claim is requested to be paid; provided, however,
that the failure of Employee to notify Parent of such claim (or to provide any
required information with respect thereto) shall not affect any rights granted
to Employee under this Section except to the extent that Parent is materially
prejudiced in the defense of such claim as a direct result of such failure.
Employee shall not pay such claim prior to the expiration of the thirty (30) day
period following the date on which she gives such notice to Parent (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If Parent

9

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

 

notifies Employee in writing prior to the expiration of such period that it
desires to contest such claim, Employee shall do all of the following:
     (A) give Parent any information reasonably requested by Parent relating to
such claim;
     (B) take such action in connection with contesting such claim as Parent
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney selected by Parent and reasonably acceptable to Employee;
     (C) cooperate with Parent in good faith in order effectively to contest
such claim;
     (D) if Parent elects not to assume and control the defense of such claim,
permit Parent to participate in any proceedings relating to such claim;
provided, however, that Parent shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 7, Parent shall have the right, at its sole option, to assume the
defense of and control all proceedings in connection with such contest, in which
case it may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may either direct Employee to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and Employee agrees to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as Parent shall
determine; provided, however, that if Parent directs Employee to pay such claim
and sue for a refund, Parent shall advance the amount of such payment to
Employee, on an interest- free basis and shall indemnify and hold Employee
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Employee with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, Parent’s right to assume the defense of and control the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and Employee shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
     (iv) If, after the receipt by Employee of an amount advanced by Parent
pursuant to this Section 7(e), Employee becomes entitled to receive any refund
with respect to such claim, Employee shall (subject to Parent’s complying with
the requirements of Section 7(e)(iii)) promptly pay to Parent the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Employee of an amount advanced by
Parent pursuant to Section 7(e)(iii), a determination is made that Employee is
not entitled to a refund with

10

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

 

respect to such claim and Parent does not notify Employee in writing of its
intent to contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall, to the extent of
such denial, be forgiven and shall not be required to be repaid and the amount
of forgiven advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
     (f) 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 Parent) 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 Parent or its subsidiaries which acquires beneficial
ownership of voting securities of Parent) 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 Parent’s stock or the combined voting
power of Parent’s then outstanding voting securities entitled to vote generally
in the election of directors; or
     (B) The consummation by Parent of a reorganization, merger, consolidation,
in each case, with respect to which the shares of Parent 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 Parent or of the sale of all or
substantially all of the assets of Parent; or
     (C) The failure for any reason of individuals who constitute the Incumbent
Board to continue to constitute at least a majority of the board of directors of
Parent; or
     (D) The sale, assignment or transfer of the Business to an unaffiliated
third party, whether by sale of all or substantially all the assets of the
Business, sale of stock or merger.
     (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 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
Parent as of the Effective Date hereof and any person becoming a member of the
Board of Directors of Parent hereafter whose election, or nomination for
election by Parent’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 Parent, as such terms are used in Rule 14a-l 1 of Regulation 14A
promulgated under the Exchange Act).

11

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

 

     (iv) “Qualified Options” shall mean all stock options, restricted stock,
and other similar rights (a) granted to Employee prior to February 22, 2001
(whether vested or unvested), that entitle Employee to acquire NOVA Corp stock
for a price per share equal to or greater than $17.92 (such options being
converted by virtue of the Merger into the right to acquire stock of Parent); or
(b) granted to Employee on or after February 22, 2001.
     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 and
affairs of NOVA or Parent, including, without limitation, all customer data,
billing information, service data, and other technical material of NOVA or
Parent is and shall be NOVA’s or Parent’s, as the case may be, property.
Employee agrees to deliver without demand all such materials to Parent 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) Parent 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. Parent 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) Parent 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. Parent 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 Parent 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 Parent
from seeking equitable relief from a court of competent

12

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

 

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 Parent further
acknowledge and agree that nothing in this Agreement shall be construed to
require arbitration of any claim for workers’ compensation or unemployment
compensation.
     10. Nondisclosure.
     (a) Confidential Information. Employee acknowledges and agrees that because
of her Employment, she will have access to proprietary information of NOVA and
Parent concerning or relative to the business of NOVA and Parent which is of a
special and unique value (collectively, “Confidential Information”) which
includes, without limitation, technical material of NOVA and Parent, 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 Parent, and any
information marked “Confidential” by NOVA or Parent. Employee acknowledges and
agrees that Confidential Information is and shall be NOVA’s or Parent’s
property, as the case may be, prior to and after the Merger. Employee recognizes
and acknowledges that this Agreement furthers Parent’s interest in connection
with entering into the Merger Agreement and the consummation of the transactions
contemplated thereby. Employee agrees that except as required by Employee’s
duties with NOVA or, following the Merger, Parent, Employee shall keep NOVA’s or
Parent’s Confidential Information confidential, and Employee shall not use
Confidential Information for any reason other than on behalf of NOVA and Parent
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 Confidential Information
confidential, and Employee shall not use 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 Parent or 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. § 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 and the anticipated Merger, she does and will
continue to have access to

13

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

 

confidential or proprietary information concerning merchants, associate banks
and ISOs of Parent 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. As an inducement to
Parent to enter into, complete and close the Merger and in consideration for
Parent’s agreement to employ Employee with the compensation and benefits
described herein, Employee agrees that from and after the Effective Date, 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:
     (a) compete with Parent 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 the Business (or any
other business of Parent in which Employee was engaged), 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) 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 Parent to terminate or modify such merchant’s,
associate bank’s, ISO’s, customer’s, or supplier’s relationship with Parent 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 was employed by Parent
or any of its subsidiaries as of the date of the termination of Employee’s
Employment, to terminate or modify her employment relationship, whether or not
pursuant to a written agreement, with Parent or any of its subsidiaries, 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 of Parent (as then carried
on or under active consideration) shall forthwith be disclosed to Parent and
shall belong to and be the absolute property of Parent; provided, however, that
this provision does not apply to_an invention for which no equipment, supplies,
facility, trade secret information of Parent 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 Parent’s actual or demonstrably anticipated research
or development; or (b) the invention results from any work performed by Employee
for Parent.
     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 Parent and that remedies at law of Parent for
any actual or threatened breach by Employee of such covenants would be
inadequate and that Parent shall be entitled to specific performance of the
covenants

14

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

 

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
Parent 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 Parent, whether predicated upon
this or any other contract, shall not constitute a defense to the enforcement by
Parent 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 Parent
under this Agreement, and Employee hereby acknowledges and agrees that:
     (a) the restrictions and covenants contained herein, and the rights and
remedies conferred upon Parent, 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 Parent;
     (c) Parent 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 Parent 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. Settlement Payments; Termination of Merger Agreement.
     (a) In consideration for Employee’s agreement to terminate the Prior
Agreement and waive the right to receive cash payments or other benefits under
the Prior Agreement upon

15

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

 

termination of employment following a change in control by reason of
consummation of the Merger, Parent shall provide on the Effective Date the
compensation described in this Section 16 (provided this Agreement is not
terminated prior to the Effective Date), and Employee shall have no other right
to receive payments or other benefits under this Agreement or the Prior
Agreement by reason of the Merger:
     (i) Parent shall pay Employee in cash an amount equal to her annual base
salary as of the date of this Agreement multiplied by three (3) (the “Cash
Settlement Payment”). The Cash Settlement Payment shall be paid in two (2) equal
installments, the first of which shall be made on the Effective Date, the second
of which shall be paid on the first anniversary of the Effective Date; provided,
however, that if Employee’s Employment is terminated, for whatever reason, prior
to the first anniversary of the Effective Date, Parent shall pay Employee an
amount equal to her annual base salary as of the date of this Agreement
multiplied by one-half (1/2) in lieu of the second installment of the Cash
Settlement Payment. In the event the second installment of the Cash Settlement
Payment is made on the first anniversary date of the Effective Date and
Employee’s employment is terminated pursuant to a Termination Exclusion prior to
the second anniversary of the Effective Date, then Employee shall reimburse
Parent an amount equal to the “Unearned Payment” (as defined below). The number
of days Employee is employed, following the first anniversary of the Effective
Date and prior to the second anniversary of the Effective Date, shall be
referred to as the “Accrued Days” and the ratio of (A) 365 minus the Accrued
Days to (B) 365 shall be referred to as the “Unearned Ratio”. The “Unearned
Payment” shall equal Employee’s annual base salary as of the date of this
Agreement multiplied by the Unearned Ratio.
     (ii) The provisions of Section 7(e) of this Agreement shall be applicable
to the payments provided for in this Section 16. All payments under Section 16
are in addition to, and not in lieu of, any payment due under this Agreement
following termination of Employee’s employment.
     (iii) At the election of Employee, with respect to up to 75% of the
aggregate number of shares subject to stock option agreements outstanding as of
the Effective Date (“Option Shares”), Employee shall be entitled to receive from
Parent in exchange for cancellation of the stock option agreements (or portion
thereof) relating to such Option Shares for which Employee elects, a cash
payment in an amount equal to (1) the Cash Consideration (as defined in the
Merger Agreement) multiplied by the aggregate number of Option Shares subject to
the option agreements (or portion thereof) to be cancelled less (2) the
aggregate exercise price set forth in the stock option agreements (or portion
thereof) being cancelled. Employee shall notify Parent no later than three
(3) business days prior to the Effective Date with respect to the number of
Option Shares subject to the stock option agreements Employee wishes to make the
election pursuant to this Section 16(a)(iii). In exchange for such cash
payments, Employee agrees to execute a cancellation agreement with respect to
the Option Shares subject to the stock option agreements (or portion thereof)
being cancelled, which cancellation agreement stall be in a form reasonably
acceptable to Parent. The remaining Option Shares subject to stock option
agreements (or portions thereof) not being cancelled hereunder shall be
converted into the right to acquire shares of Parent’s common stock in
accordance with Section 3.06 of the Merger Agreement and in the event Employee’s
Employment is terminated for whatever reason (other than termination for “Cause”
pursuant to Section 6(b)) within two (2) years after the Effective Date,
Employee shall have the continuing right to exercise such remaining Option
Shares at any time prior to the date which is one (1) year after the

16

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

 

Termination Date (without regard to any provisions thereof requiring earlier
expiration upon termination of employment).
     (b) Employee acknowledges and agrees that upon the Effective Date, the
Prior Agreement is terminated, cancelled and of no further force and effect;
provided, however, that this Agreement shall terminate upon any termination of
the Merger Agreement (and, in case of any such termination hereof, this
Agreement shall be deemed to be void ab initio and the Prior Agreement shall be
deemed to have remained in full force and effect); provided further, that the
termination of this Agreement shall only become effective if the Merger
Agreement terminates prior to the Effective Date. Until the Effective Date, the
Prior Agreement remains in full force and effect.
     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 Parent 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
Parent, its subsidiaries and affiliates, and their respective successors and
assigns. This Agreement is not assignable by Employee but shall be freely
assignable by Parent.
     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 Corp or NOVA, to:
 
       
 
      NOVA Corporation
 
      One Concourse Parkway
 
      Suite 300
 
      Atlanta, Georgia 30328
 
      Attention: Edward Grzedzinski
 
                       Chief Executive Officer
 
       
 
  (iii)   If to Parent, to:
 
       
 
      U.S. Bancorp
 
      U.S. Bank Place
 
      601 Second Avenue South
 
      Minneapolis, Minnesota 55402
 
      Attention: General Counsel

17

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

 

     21. Entire Agreement. This Agreement contains the entire agreement of the
parties, and as of the Effective Date, 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 as of the Effective Date. 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.
     22. Indemnification; Legal Expenses.
     (a) At all times during and after Employee’s Employment and the
effectiveness of this Agreement, Parent 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 Parent provide such indemnification.
     (b) Parent’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 Parent may have against Employee or others. In no event shall Employee be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Employee under any of the provisions of this
Agreement. Parent agrees to pay, to the full extent permitted by law, all legal
fees and expenses which Employee may reasonably incur as a result of any
legitimate, non-frivolous contest (regardless of the outcome thereof) by Parent
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 legitimate, non-frivolous contest by Employee about the
amount of any payment pursuant to Section 7 or Section 16 of this Agreement),
plus in each case interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code. Parent will not be bound to pay any legal fees
or expenses arising out of baseless, meritless or frivolous contests brought
hereunder by Employee or others. A contest will be deemed baseless, meritless
and/or frivolous if a court or other arbiter assesses penalties or sanctions for
bringing said contest, or a court or other arbiter dismisses said contest for
failure to state a colorable claim.
     (c) As a condition to receiving payments under Section 7(a), Employee must
execute a release in the form attached hereto as Exhibit B.
     23. Survival. The provisions of Sections 7, 8, 9, 10,11, 12, 13, 14,15, 16,
17, 20, 22, 23 and 24 shall survive termination of Employee’s Employment and
termination of this Agreement.
     24. Withholding. All payments required to be made by Parent 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. Nothing in this
Section shall be construed to reduce Employee’s right to payments described in
Section 7(e).

18

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

 

     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        NOVA Information Systems, Inc.
      By:   /s/ Edward Grzedzinski        Edward Grzedzinski        Chairman,
CEO and President        PARENT:       U.S. Bancorp       By:   /s/ Lee R.
Mitau        Name:   Lee R. Mitau        Title:   Executive Vice President and
General Counsel  

19

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

 

         

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 Chief
Executive Officer of NOVA, as approved by the Chief Executive Officer of Parent.
  *   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.

     Examples:

  n   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%    

20

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

 

      Employee’s Bonus Payment would be equal to Employee’s then-current Base
Salary multiplied by 29%.     n   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.

21