<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 2
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended December 31, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-14342
------------------------------
NOVA CORPORATION
(Exact name of registrant as specified in its charter)
GEORGIA 58-2209575
(State or Other Jurisdiction (IRS Employer
of Incorporation of Organization) Identification No.)
ONE CONCOURSE PARKWAY, SUITE 300, 30328
ATLANTA, GEORGIA (Zip Code)
(Address of Principal Executive Offices)
(770) 396-1456
Registrant's telephone number, including area code
--------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
Common Stock, $0.01 par value per share registered New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
----------------------------------------------------------------
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
As of March 29, 1999, the aggregate market value of the common stock of NOVA
held by non-affiliates of the Registrant was approximately $1,516,636,817 based
upon the closing price of $25.750 per share on the New York Stock Exchange on
such date. Non-affiliate ownership is calculated by excluding all shares that
may be deemed to be beneficially owned by executive officers, directors and
other control persons, without conceding that all such persons are "affiliates"
for purposes of the federal securities laws. As of March 29, 1999, there were
72,819,789 shares of the Registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the Registrant's Proxy Statement for the 1999
Annual Meeting of Shareholders to be held on May 26, 1999, is incorporated
herein by reference in Part III of this Annual Report on Form 10-K. Pursuant to
General Instruction G(3) of Form 10-K, the Registrant will file the definitive
Proxy Statement with the Securities and Exchange Commission no later than April
30, 1999.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT
3. EXHIBITS
The following exhibits are incorporated by reference or filed herewith:
1
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
2.1 Agreement and Plan of Merger dated as of June 17, 1998, among the
Registrant, Church Merger Corp. and PMT Services, Inc.(8)
3.1 Articles of Incorporation of the Registrant, as amended(1)
3.2 Bylaws of the Registrant, as amended(2)
4.1 Specimen Common Stock certificate(1)
4.2 See Articles of Incorporation of the Registrant and Bylaws of the
Registrant, filed as Exhibits 3.1 and 3.2, respectively
4.6 Registration Rights Agreement, dated as of June 17, 1998, by and
among the Registrant, Richardson M. Roberts and Gregory S. Daily(8)
4.7 Registration Rights Agreement dated January 31, 1996, among the
Registrant (formerly NOVA Holdings, Inc.), Warburg, Pincus
Investors, L.P., WorldCom, Inc., and First Union Corporation(1)
10.1 Shareholders Agreement, incorporated by reference to Exhibit 4.3(1)
10.2 Shareholder Agreement, incorporated by reference to Exhibit 4.4(8)
10.3 Shareholder Agreement, incorporated by reference to Exhibit 4.5(8)
10.4 Registration Rights Agreement, incorporated by reference to Exhibit
4.6(8)
10.5 Registration Rights Agreement, incorporated by reference to Exhibit
4.7(1)
10.6 PMT Services, Inc. 1997 Nonqualified Stock Option Plan(9)
10.7 PMT Services, Inc. 1994 Non-Employee Director Stock Option Plan(9)
10.8 PMT Services, Inc. 1994 Incentive Stock Plan(9)
10.9 1991 Employees Stock Option and Stock Appreciation Rights Plan as
amended (1)
10.10 1996 Employees Stock Incentive Plan, as amended by the First
Amendment (1), the Second Amendment (8) and the Third Amendment (10)
10.11 1996 Directors Stock Option Plan, as amended and restated(10)
10.12 Contribution Agreement, dated October 30, 1995, among the Registrant
(formerly NOVA Holdings, Inc.), NOVA Information Systems, Inc., the
then-current shareholders of NOVA Information Systems, Inc., First
Union Corporation, the First Union Banks, and First Fidelity
Bancorporation and its banking subsidiaries(1)
10.13 Lease Agreement dated May 31, 1996, by and between NOVA Information
Systems and Concourse I, LTD.(3)
10.14 Sublease, dated April 1, 1991, between Inter-Banc, Inc. and The
Baptist Health System of East Tennessee, Inc.(1)
<PAGE>
10.15 Credit Agreement, dated October 27, 1997, among NOVA Information
Systems, the Lenders named therein, First Union National Bank as
Documentation Agent and Bank of America National Trust and Savings
Association, as Agent(6)
10.16 Service Agreement dated July 2, 1998, between NOVA Information
Systems and WorldCom Technologies, Inc.(11)
10.17 Processing Services Agreement, dated July 1, 1998, between NOVA
Information Systems and Vital Processing Services, L.L.C.(11)
*10.18 Marketing Agreement, dated June 30, 1994, between NOVA Information
Systems and Kessler Financial Services, L.P.(1), and Addendum to
Marketing Agreement dated July 24, 1997, effective January 1, 1997,
between NOVA Information Systems and Kessler Financial Services,
L.P.(6)
*10.19 Agreement Regarding Merchant Processing Services and Other Matters,
dated May 5, 1995, among NOVA Information Systems, First Alabama
Bank and Regions Financial Corp.(1)
*10.20 Agreement dated June 3, 1992, as amended December 9, 1992, and
November 2, 1994, between NOVA Information Systems and Mellon Bank,
together with the Letter Agreement dated June 3, 1992, between NOVA
Information Systems and Mellon Bank relating to fees, as amended
December 10, 1992, and June 10, 1997(1), both as amended by Letter
Agreement June 10, 1997(6)
10.21 Depositary and Processing Agreement, dated September 30, 1993,
between NOVA Information Systems and Bank of the West(1) 10.22
Merchant Business Purchase Agreement, dated October 18, 1994, as
amended November 30, 1994, and December 9, 1994, among NOVA
Information Systems, Inc., the Bank of Boulder, Bolder
Bancorporation and NOVA Newco, Inc.(1)
10.23 Marketing Agreement, dated October 1, 1992, between NOVA Information
Systems and MBNA America Bank, N.A.(1)
10.24 Agreement Not to Compete, dated October 1, 1992, between NOVA
Information Systems and MBNA America Bank, N.A.(1)
10.25 Depositary and Settlement Agreement, dated January 31, 1996, among
the Registrant (formerly NOVA Holdings, Inc.), NOVA Information
Systems and FUNB(1)
10.26 Marketing Support Agreement, dated January 31, 1996, among the
Registrant (formerly NOVA Holdings, Inc.), NOVA Information Systems
and the First Union Banks(1)
10.27 Merchant Asset Purchase Agreement, dated May 29, 1997, between NOVA
Information Systems and Crestar Bank(4)
10.28 Agreement Respecting a Limited Liability Company, dated October 7,
1997, by and among NOVA Information Systems, Firstar Bank U.S.A.,
N.A. d/b/a Elan Financial Services and Firstar Bank Milwaukee,
N.A.(5)
*10.29 Agreement Respecting a Limited Liability Company, dated December 12,
1997, by and among the Registrant, NOVA Information Systems and Key
Bank National Association(6)
*10.30 Merchant Asset Purchase Agreement, dated December 30, 1997, by and
between NOVA Information Systems and MBNA American Bank, N.A.(6)
10.31 Merchant Asset Purchase Agreement, dated October 8, 1998, among the
Registrant, Core States Bank of Delaware, N.A., First Union National
Bank and NOVA Information Systems, Inc. (12)
10.32 Stock Option Agreement dated June 17, 1998, between the Registrant
(as issuer) and PMT Services, Inc.
<PAGE>
10.33 Stock Option Agreement dated June 17, 1998, between PMT Services,
Inc. (as issuer) and the Registrant
10.34 Employment Agreement, dated June 17, 1998, by and between Richardson
M. Roberts and the Registrant(8)
10.35 Employment Agreement, dated June 17, 1998, by and between Gregory S.
Daily and the Registrant(8)
10.36 Employment Agreement, dated July 31, 1998, effective March 1, 1998,
between the Registrant and Rebecca L. Powell(11)
10.37 Employment Agreement, dated July 31, 1998, effective March 1, 1998
between the Registrant and Pamela A. Joseph(11)
10.38 Employment Agreement, dated July 31, 1998, effective March 31, 1998,
between the Registrant and John Perry(11)
10.39 Employment Agreement, dated October 27, 1995, effective January 31,
1996, between NOVA Information Systems and Edward Grzedzinski(1)
10.40 Employment Agreement, dated October 27, 1995, effective January 31,
1996, between NOVA Information Systems and James M. Bahin(1)
10.41** Severance Agreement, dated December 31, 1998, effective December 31,
1998, between Gregory S. Daily and the Registrant
10.42** Severance Agreement, dated December 31, 1998, effective December 31,
1998, between Richardson M. Roberts and the Registrant
13.1 Consolidated Financial Statements
21 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP.
23.2 Consent of PricewaterhouseCoopers LLP relating to the audited
financial statements of PMT Services, Inc.**
24 Powers of Attorney (included on the signature page of this Annual
Report on Form 10-K/A, as amended).
27 Financial Data Schedule
- ------
* Confidential treatment pursuant to 17 CFR ((S)(S)) 200.80 and 230.406 has
been requested regarding certain portions of the indicated Exhibit, which
portions have been filed separately with the Commission.
** Filed herewith.
(1) Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-3287), and incorporated herein by reference.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, Commission File No. 1-14342, and
incorporated herein by reference.
(3) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, Commission File No. 1-14342, and
incorporated herein by reference.
(4) Filed as an exhibit to the Company's Current Report on Form 8-K, Commission
File No. 1-14342, and incorporated herein by reference.
<PAGE>
(5) Filed as an exhibit to the Company's Current Report on Form 8-K, Commission
File No. 1-14342, and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, Commission File No. 1-14342, and
incorporated herein by reference.
(7) Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-45997), and incorporated herein by reference.
(8) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, Commission file No. 1-14342, and incorporated
herein by reference.
(9) Filed as an exhibit to the Company's Registration Statement on Form S-8
(Registration No. 333-64681), and incorporated herein by reference.
(10) Filed as an exhibit to the Company's Registration Statement on Form S-8
(Registration No. 333-64683), and incorporated herein by reference.
(11) Filed as an exhibit to the Company's Registration Statement on Form S-4
(Registration No. 333-61867), and incorporated herein by reference.
(12) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, Commission file No. 1-14342, and
incorporated herein by reference.
(B) REPORTS ON FORM 8-K
Report on Form 8-K/A filed on December 12, 1998, Commission file number
1-14342 in connection with the PMT Merger (financial statements included).
Report on Form 8-K filed on October 9, 1998, Commission file number 1-14342
in connection with the PMT Merger.
(C) INDEX ON EXHIBITS
Exhibit
Number Description
- ------- -----------
10.41** Severance Agreement, dated December 31, 1998, effective December 31,
1998, between Gregory S. Daily and the Registrant
10.42** Severance Agreement, dated December 31, 1998, effective December 31,
1998, between Richardson M. Roberts and the Registrant
** Filed herewith
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, NOVA has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 10th day of May,
1999.
By: /s/ Edward Grzedzinski
------------------
Edward Grzedzinski
Chairman of the Board,
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Amendment No. 2 to the Annual Report on Form 10-K has been signed
by the following persons on behalf of NOVA and in the capacities indicated on
May 10, 1999.
Signature Title
--------- -----
/s/ Edward Grzedzinski Director, Chairman of the Board,
----------------------- President and Chief Executive
Edward Grzedzinski Officer (Principal Executive Officer)
/s/ James M. Bahin Director, Vice Chairman of the Board,
----------------------- Chief Financial Officer and Secretary
James M. Bahin (Principal Financial and Accounting Officer)
/s/ Richardson M. Roberts * Vice Chairman of the Board
-----------------------
Richardson M. Roberts
/s/ Gregory S. Daily * Vice Chairman of the Board
-----------------------
Gregory S. Daily
/s/ Charles T. Cannada * Director
-----------------------
Charles T. Cannada
/s/ Stephen D. Kane * Director
-----------------------
Stephen D. Kane
/s/ Dr. Henry Kressel * Director
-----------------------
Dr. Henry Kressel
/s/ George M. Miller, II * Director
-----------------------
George M. Miller, II
/s/ Stephen E. Wall * Director
-----------------------
Stephen E. Wall
* By: /s/ James M. Bahin
-------------------
James M. Bahin, as
Attorney-in-Fact
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
2.1 Agreement and Plan of Merger dated as of June 17, 1998, among the
Registrant, Church Merger Corp. and PMT Services, Inc.(8)
3.1 Articles of Incorporation of the Registrant, as amended(1)
3.2 Bylaws of the Registrant, as amended(2)
4.1 Specimen Common Stock certificate(1)
4.2 See Articles of Incorporation of the Registrant and Bylaws of the
Registrant, filed as Exhibits 3.1 and 3.2, respectively
4.6 Registration Rights Agreement, dated as of June 17, 1998, by and
among the Registrant, Richardson M. Roberts and Gregory S. Daily(8)
4.7 Registration Rights Agreement dated January 31, 1996, among the
Registrant (formerly NOVA Holdings, Inc.), Warburg, Pincus
Investors, L.P., WorldCom, Inc., and First Union Corporation(1)
10.1 Shareholders Agreement, incorporated by reference to Exhibit 4.3(1)
10.2 Shareholder Agreement, incorporated by reference to Exhibit 4.4(8)
10.3 Shareholder Agreement, incorporated by reference to Exhibit 4.5(8)
10.4 Registration Rights Agreement, incorporated by reference to Exhibit
4.6(8)
10.5 Registration Rights Agreement, incorporated by reference to Exhibit
4.7(1)
10.6 PMT Services, Inc. 1997 Nonqualified Stock Option Plan(9)
10.7 PMT Services, Inc. 1994 Non-Employee Director Stock Option Plan(9)
10.8 PMT Services, Inc. 1994 Incentive Stock Plan(9)
10.9 1991 Employees Stock Option and Stock Appreciation Rights Plan as
amended (1)
10.10 1996 Employees Stock Incentive Plan, as amended by the First
Amendment (1), the Second Amendment (8) and the Third Amendment (10)
10.11 1996 Directors Stock Option Plan, as amended and restated(10)
10.12 Contribution Agreement, dated October 30, 1995, among the Registrant
(formerly NOVA Holdings, Inc.), NOVA Information Systems, Inc., the
then-current shareholders of NOVA Information Systems, Inc., First
Union Corporation, the First Union Banks, and First Fidelity
Bancorporation and its banking subsidiaries(1)
10.13 Lease Agreement dated May 31, 1996, by and between NOVA Information
Systems and Concourse I, LTD.(3)
10.14 Sublease, dated April 1, 1991, between Inter-Banc, Inc. and The
Baptist Health System of East Tennessee, Inc.(1)
<PAGE>
10.15 Credit Agreement, dated October 27, 1997, among NOVA Information
Systems, the Lenders named therein, First Union National Bank as
Documentation Agent and Bank of America National Trust and Savings
Association, as Agent(6)
10.16 Service Agreement dated July 2, 1998, between NOVA Information
Systems and WorldCom Technologies, Inc.(11)
10.17 Processing Services Agreement, dated July 1, 1998, between NOVA
Information Systems and Vital Processing Services, L.L.C.(11)
*10.18 Marketing Agreement, dated June 30, 1994, between NOVA Information
Systems and Kessler Financial Services, L.P.(1), and Addendum to
Marketing Agreement dated July 24, 1997, effective January 1, 1997,
between NOVA Information Systems and Kessler Financial Services,
L.P.(6)
*10.19 Agreement Regarding Merchant Processing Services and Other Matters,
dated May 5, 1995, among NOVA Information Systems, First Alabama
Bank and Regions Financial Corp.(1)
*10.20 Agreement dated June 3, 1992, as amended December 9, 1992, and
November 2, 1994, between NOVA Information Systems and Mellon Bank,
together with the Letter Agreement dated June 3, 1992, between NOVA
Information Systems and Mellon Bank relating to fees, as amended
December 10, 1992, and June 10, 1997(1), both as amended by Letter
Agreement June 10, 1997(6)
10.21 Depositary and Processing Agreement, dated September 30, 1993,
between NOVA Information Systems and Bank of the West(1) 10.22
Merchant Business Purchase Agreement, dated October 18, 1994, as
amended November 30, 1994, and December 9, 1994, among NOVA
Information Systems, Inc., the Bank of Boulder, Bolder
Bancorporation and NOVA Newco, Inc.(1)
10.23 Marketing Agreement, dated October 1, 1992, between NOVA Information
Systems and MBNA America Bank, N.A.(1)
10.24 Agreement Not to Compete, dated October 1, 1992, between NOVA
Information Systems and MBNA America Bank, N.A.(1)
10.25 Depositary and Settlement Agreement, dated January 31, 1996, among
the Registrant (formerly NOVA Holdings, Inc.), NOVA Information
Systems and FUNB(1)
10.26 Marketing Support Agreement, dated January 31, 1996, among the
Registrant (formerly NOVA Holdings, Inc.), NOVA Information Systems
and the First Union Banks(1)
10.27 Merchant Asset Purchase Agreement, dated May 29, 1997, between NOVA
Information Systems and Crestar Bank(4)
10.28 Agreement Respecting a Limited Liability Company, dated October 7,
1997, by and among NOVA Information Systems, Firstar Bank U.S.A.,
N.A. d/b/a Elan Financial Services and Firstar Bank Milwaukee,
N.A.(5)
*10.29 Agreement Respecting a Limited Liability Company, dated December 12,
1997, by and among the Registrant, NOVA Information Systems and Key
Bank National Association(6)
*10.30 Merchant Asset Purchase Agreement, dated December 30, 1997, by and
between NOVA Information Systems and MBNA American Bank, N.A.(6)
10.31 Merchant Asset Purchase Agreement, dated October 8, 1998, among the
Registrant, Core States Bank of Delaware, N.A., First Union National
Bank and NOVA Information Systems, Inc. (12)
10.32 Stock Option Agreement dated June 17, 1998, between the Registrant
(as issuer) and PMT Services, Inc.
<PAGE>
10.33 Stock Option Agreement dated June 17, 1998, between PMT Services,
Inc. (as issuer) and the Registrant
10.34 Employment Agreement, dated June 17, 1998, by and between Richardson
M. Roberts and the Registrant(8)
10.35 Employment Agreement, dated June 17, 1998, by and between Gregory S.
Daily and the Registrant(8)
10.36 Employment Agreement, dated July 31, 1998, effective March 1, 1998,
between the Registrant and Rebecca L. Powell(11)
10.37 Employment Agreement, dated July 31, 1998, effective March 1, 1998
between the Registrant and Pamela A. Joseph(11)
10.38 Employment Agreement, dated July 31, 1998, effective March 31, 1998,
between the Registrant and John Perry(11)
10.39 Employment Agreement, dated October 27, 1995, effective January 31,
1996, between NOVA Information Systems and Edward Grzedzinski(1)
10.40 Employment Agreement, dated October 27, 1995, effective January 31,
1996, between NOVA Information Systems and James M. Bahin(1)
10.41** Severance Agreement, dated December 31, 1998, effective December 31,
1998, between Gregory S. Daily and the Registrant
10.42** Severance Agreement, dated December 31, 1998, effective December 31,
1998, between Richardson M. Roberts and the Registrant
13.1 Consolidated Financial Statements
21 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP.
23.2 Consent of PricewaterhouseCoopers LLP relating to the audited
financial statements of PMT Services, Inc.**
24 Powers of Attorney (included on the signature page of this Annual
Report on Form 10-K/A, as amended).
27 Financial Data Schedule
- ------
* Confidential treatment pursuant to 17 CFR ((S)(S)) 200.80 and 230.406 has
been requested regarding certain portions of the indicated Exhibit, which
portions have been filed separately with the Commission.
** Filed herewith.
(1) Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-3287), and incorporated herein by reference.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, Commission File No. 1-14342, and
incorporated herein by reference.
(3) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, Commission File No. 1-14342, and
incorporated herein by reference.
(4) Filed as an exhibit to the Company's Current Report on Form 8-K, Commission
File No. 1-14342, and incorporated herein by reference.
<PAGE>
(5) Filed as an exhibit to the Company's Current Report on Form 8-K, Commission
File No. 1-14342, and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, Commission File No. 1-14342, and
incorporated herein by reference.
(7) Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-45997), and incorporated herein by reference.
(8) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, Commission file No. 1-14342, and incorporated
herein by reference.
(9) Filed as an exhibit to the Company's Registration Statement on Form S-8
(Registration No. 333-64681), and incorporated herein by reference.
(10) Filed as an exhibit to the Company's Registration Statement on Form S-8
(Registration No. 333-64683), and incorporated herein by reference.
(11) Filed as an exhibit to the Company's Registration Statement on Form S-4
(Registration No. 333-61867), and incorporated herein by reference.
(12) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, Commission file No. 1-14342, and
incorporated herein by reference.
(B) REPORTS ON FORM 8-K
Report on Form 8-K/A filed on December 12, 1998, Commission file number
1-14342 in connection with the PMT Merger (financial statements included).
Report on Form 8-K filed on October 9, 1998, Commission file number 1-14342
in connection with the PMT Merger.
(C) INDEX ON EXHIBITS
Exhibit
Number Description
- ------- -----------
10.41** Severance Agreement, dated December 31, 1998, effective December 31,
1998, between Gregory S. Daily and the Registrant
10.42** Severance Agreement, dated December 31, 1998, effective December 31,
1998, between Richardson M. Roberts and the Registrant
** Filed herewith
<PAGE>
EXHIBIT 10.41
- --------------------------------------------------------------------------------
YOU ARE STRONGLY ENCOURAGED TO READ THIS DOCUMENT CAREFULLY AND TO CONSULT WITH
AN ATTORNEY BEFORE EXECUTING THIS DOCUMENT.
- --------------------------------------------------------------------------------
SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is entered into by and between
Gregory S. Daily ("Employee"), and NOVA Corporation, a Georgia corporation
("NOVA"), on behalf of itself and its affiliated and related entities,
directors, officers and employees, representatives, agents, attorneys,
accountants, employee benefit plans, and employee welfare plans.
W I T N E S S E T H:
WHEREAS, Employee is employed by NOVA pursuant to an Employment Agreement
dated June 17, 1998, by and between Employee and NOVA (the "Employment
Agreement"); and
WHEREAS, Employee and NOVA have mutually agreed to the terms and conditions
by which Employee's employment with NOVA will terminate and the date on which
such employment shall terminate (December 31, 1998), and wish to set out those
terms and conditions specifically in writing; and
WHEREAS, Employee will continue to perform services for NOVA as a member of
the NOVA Board of Directors; and
WHEREAS, the parties intend that this Agreement shall supersede and render
null and void the Employment Agreement entered into between the parties;
NOW, THEREFORE, for the consideration outlined herein and other agreements
contained herein, Employee and NOVA agree as follows:
I.
Definitions
For all purposes of this Agreement, the following definitions shall be
applicable:
A. The term "Agreement" shall mean this Separation Agreement between the
parties hereto.
B. The phrase "Effective Date" shall mean the date on which this Agreement
shall become effective, which shall be December 31, 1998.
C. The term "Employee" shall mean Gregory S. Daily.
<PAGE>
D. The term "Employment Agreement" shall mean the Employment Agreement by and
between Employee and Employer dated June 17, 1998.
E. The term "Employer" shall mean NOVA Corporation.
F. The phrase "Employer's related employers" shall mean and include any parent,
subsidiaries and related corporations or entities, predecessors, successors and
assigns of Employer.
G. The phrase "Employment Termination Date" shall mean December 31, 1998.
H. The phrase "Execution Date" shall mean the date on which this Agreement is
executed (as noted in writing on the last page hereof).
I. The phrase "General Release and Covenant Not to Sue Agreement" shall mean
the document, the form of which is attached hereto as Exhibit B, which must be
effectively and irrevocably executed by Employee in order to receive the
remuneration set forth in Article III hereof.
J. The term "Plan(s)" shall mean, when referenced as Plan(s) of a particular
entity, individual or other person, all employee benefit plans (within the
meaning ERISA (S)3(3)) sponsored by, contributed to, or maintained by such
entity, individual or other person.
II.
Termination of Employee's Employment
Employee and Employer agree and acknowledge that Employee's employment with
Employer will be voluntarily terminated as of the Employment Termination Date,
and, accordingly, that such Employment Termination Date shall be used to
determine Employee's entitlement to any benefits generally available to
employees of Employer under a Plan of Employer, as well as the amount thereof,
subject to Article III hereof. Employee and Employer agree this Agreement shall
not interfere with Employee's performance of services for Employer as a member
of Employer's Board of Directors, and Employee may continue to perform services
as a member of Employer's Board of Directors during his current term on such
Board and any successor term (if applicable). Employer and Employee agree that
the Employment Agreement is, and becomes, null and void as of the Employment
Termination Date, and is of no further force and effect, and is superseded
entirely by this Agreement as of such date.
2
<PAGE>
III.
Payments to Employee and Continuation of Benefits
Payments and Continuation of Benefits. In addition to the general
compensation and benefits to which Employee would be entitled based upon his
employment with Employer through the Employment Termination Date, Employee and
Employer hereby agree that Employee shall receive the following remuneration
only if Employee complies with his agreement in Article V below to execute a
General Release and Covenant Not to Sue Agreement within one-hundred fifty (150)
days following his Employment Termination Date and such agreement becomes valid,
irrevocable, enforceable and binding:
Annual Lump Sum Cash Payments. Employee shall receive three lump sum
cash payments in the amounts noted below for each of the calendar years
noted below:
- -------------------------------------------------------------------------------
CALENDAR YEAR: LUMP SUM PAYMENT AMOUNT:
- -------------------------------------------------------------------------------
1999 $600,000.00
- -------------------------------------------------------------------------------
2000 $810,000.00
- -------------------------------------------------------------------------------
2001 $810,000.00
- -------------------------------------------------------------------------------
with each such payment to Employee in the form of a check drawn on an
account of Employer and given by hand to Employee or sent to Employee by
first class mail, postage prepaid on or prior to December 31 of the
applicable calendar year.
Vesting of Stock Options. Notwithstanding any provision in the
Incentive Stock Option Agreements dated July 16, 1996 and March 4, 1998,
and the Non-Qualified Option Agreements dated August 12, 1994 and December
12, 1995, by and between PMT Services, Inc. and Employee and the Stock
Option Agreement dated October 30, 1998, by and between Employer and
Employee (collectively, the "Option Agreements"), the stock options granted
to Employee in the Option Agreements shall continue to vest according to
the schedule set forth in Exhibit A attached hereto, so long as Employee
remains a member of Employer's Board of Directors. If, for any reason,
Employee resigns from Employer's Board of Directors, Employer shall, at its
option and in its discretion, (i) cause any stock options granted to
Employee which are unvested to vest immediately upon Employee's resignation
from Employer's Board of Directors, or (ii) execute or cause to be executed
a Consulting Agreement or Employment Agreement between Employer and
Employee on terms and conditions mutually agreeable to Employer and
Employee, material provisions of which shall be that any unvested options
granted to Employee shall continue to vest according to the schedule
attached hereto as Exhibit A and that Employee shall enter into an
appropriate non-competition covenant. Any vested stock options granted to
Employee under the Option Agreements shall expire on the date that is
ninety (90) days after Employee's service as a member of Employer's Board
of Directors (or service as a consultant or employee thereafter, as
provided in the preceding sentence) terminates. The Option Agreements are
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hereby amended to reflect the provisions of this paragraph. Employer shall
take such action as is necessary under the terms and provisions of such
options and any applicable plans under which such options were issued to
ensure the vesting of such options and the continuance of such options in
accordance with the preceding sentence.
Payment of COBRA Continuation Coverage Premiums. For any period of
time during which Employee and any of his dependents could elect to
continue their coverage under any Plan of Employer which is a group health
plan subject to the provisions of part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended and/or Section 4980B of
the Internal Revenue Code of 1986, as amended, pursuant to such legal
provisions, Employer shall reimburse Employee monthly for the applicable
premiums for any such COBRA continuation coverage available under any such
Plan of Employer for Employee and/or any of his dependents; provided,
however, in no event shall Employer reimburse the applicable premiums for
any such COBRA continuation coverage for a period extending beyond the
second anniversary of the Employment Termination Date. This reimbursement
of premiums by Employer is not intended to alter in any way the provisions
of any Plan of Employer, and all time limits, effects of subsequent
coverage and all other relevant provisions of any such Plan remain
unchanged and shall control Employee's (and his dependents') entitlement to
coverage or benefits under any such Plan.
Gross Up Payments. With respect to any amount of tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (and any
interest and penalties imposed with respect thereto), upon any amount paid
to Employee pursuant to this Agreement or the General Release and Covenant
Not to Sue Agreement, Employee shall additionally receive a lump sum cash
payment amount (the "Gross-Up Payment") such that, after payment by
Employee of (1) all federal and state income taxes (and any interest and
penalties imposed with respect thereto) imposed with respect to such Gross-
Up Payment and (2) all excise taxes imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (and any interest and penalties imposed
with respect thereto) with respect to such Gross-Up Payment (collectively,
the "Excise Tax"), Employee retains an amount of such Gross-Up Payment
equal to such Excise Tax upon such amount paid to Employee pursuant to this
Agreement. Gross-Up Payments shall be subject to the provisions of Article
VI herein.
The parties agree that the above additional remuneration shall be subject to any
applicable federal, state and/or local income tax withholding, FICA tax, or
other tax requirements, and is completely and entirely contingent upon the
execution of a valid, enforceable, binding and irrevocable General Release and
Covenant Not to Sue Agreement in accordance with Article V herein. Furthermore,
notwithstanding any provision above, none of the above additional remuneration
shall be paid until the date (the "GRCNSA Effective Date") on which there is a
valid, enforceable, binding and irrevocable General Release and Covenant Not to
Sue Agreement executed by Employee, and to the extent that any of the above
additional remuneration would be payable prior to such GRCNSA Effective Date, it
shall instead be paid on or before the fifth (5th) day after the GRCNSA
Effective Date.
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IV.
Restrictive Covenants
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 during the
term of his service with Employer concerning or relative to Employer's business
of providing credit and debit card transaction processing and settlement
services (including the related products and services of automated teller
machines and check guarantee services) to merchants, financial institutions,
independent sales organizations and other similar customers (the "Employer
Business"), including without limitation, all customer data, billing
information, service data, and other technical material of Employer and
Employer's related employers (collectively, the "Employer Entities") is and
shall be the property of the appropriate Employer Entities. Employees agrees to
deliver without demand all such materials to the appropriate Employer Entities
within thirty (30) days after the termination of Employee's service with
Employer as a member of its Board of Directors. Employee further agrees not to
use materials for any reason after said termination.
Nondisclosure. (a) Employee acknowledges and agrees that because of his
employment and service with Employer, he has had, and will continue to have,
access to proprietary information of the Employer Entities concerning or
relative to the Employer Business (collectively, "Confidential Information")
which includes, without limitation, technical material of the Employer Entities,
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 the Employer Entities, and any
information marked "Confidential" by the Employer Entities. Employee
acknowledges and agrees that the Confidential Information is and shall be the
property of the appropriate Employer Entities. Provided that Employer complies
with its obligations set forth in Article III, Employee agrees that during the
term of his employment with Employer, during his service as a member of
Employer's Board of Directors and during the 2-year period immediately following
the termination of such service, Employee shall not use his Confidential
Information for any reason other than on behalf of the Employer Entities.
(b) Notwithstanding the foregoing, Employee shall not be subject to the
restrictions set forth in subsection (a) immediately above 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 service with Employer, provided such source lawfully
obtained such information and is not bound by a confidentiality agreement
with any of the Employer Entities; or
(iii) is required by law to be disclosed.
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(c) Employee acknowledges and agrees that because of his employment with
Employer, he has had and will have access to "trade secrets" (as defined in the
Uniform Trade Secrets Act, O.C.G.A. (S) 10-1-769, et seq. (the "Uniform Trade
Secrets Act") of the Employer Entities ("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.
Covenants Not to Solicit or Compete. Employee acknowledges and agrees
that, because of his employment with Employer, he has and will continue to have
access to confidential or proprietary information concerning merchants,
associate banks and independent sales organizations ("ISO") of the Employer
Entities and establish 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 within the United States. In consideration
for the benefits and compensation Employee is receiving hereunder, and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Employee agrees that during the 2-year period immediately
following the Employment Termination Date, he 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) (i) compete with any of the Employer Entities in providing credit card
and debit card transaction processing services within the United States, or (ii)
otherwise obtain any interest in (except as a stockholder holding less than five
percent (5%) interest in a corporation which is traded on a national exchange or
over-the-counter), 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 United States.
(b) solicit or contact, for the purpose of providing products or services
the same as or substantially similar to those provided by any of the Employer
Entities in connection with the Employer Entities' Business, any person or
entity that during the term of Employee's employment with Employer was a
merchant, associate bank, ISO or customer (including any actively-sought
prospective merchant, associate bank, ISO or customer) of any of the Employer
Entities and with whom Employee had material contact or about which Employee
learned material information during the last twelve months of his service as a
member of Employer's Board of Directors.
(c) persuade or attempt to persuade any merchant, associate bank, ISO,
customer, or supplier of any of the Employer Entities to terminate or modify
such merchant's, associate bank's, ISO's, customer's, or supplier's relationship
with any of the Employer Entities 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 service as a member of
Employer's Board of Directors; or
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(d) persuade or attempt to persuade any person who (i) was employed by any
of the Employer Entities as of the date of the termination of Employee's
employment, and (ii) is in a sales or management position with any of the
Employer Entities at the time of such termination, to terminate or modify his
employment relationship, whether or not pursuant to a written agreement, with
any of the Employer Entities, as the case may be.
New Developments. Any discovery, invention, process or improvement made or
discovered by Employee during the term of his employment in connection with or
any way affecting or relating to the Employer Business (as then carried on or
under active consideration) shall forthwith be disclosed to Employer and shall
belong to and be the absolute property of the appropriate Employer Entity;
provided, however, that this provision does not apply to an invention for which
no equipment, supplies, facility, trade secret information of the Employer
Entities was used and which was developed entirely on Employee's own time,
unless (a) the invention relates (i) directly to the Employer Business or (ii)
to the actual or demonstrably anticipated research or development of any of the
Employer Entities; or (b) the invention results from any work performed by
Employee for any of the Employer Entities.
Reasonableness. Employee has carefully considered the nature and extent of
the restrictions upon him and the rights and remedies conferred on Employer
under this Agreement, and Employee hereby acknowledges and agrees that:
(a) the restrictions and covenants contained herein, and the rights and
remedies conferred upon Employer, are necessary to protect the goodwill and
other value of the Employer 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 Employer Business and goodwill of Employer;
(c) Employer is relying upon the restrictions and covenants contained
herein in continuing to make available to Employee information concerning the
Employer Business; and
(d) Employee's employment hereunder places him in a position of confidence
and trust with Employer and its employees, merchants, associate banks, ISOs,
customers, vendors and suppliers.
Remedy for Breach. Employee acknowledges and agrees that a breach of any
of the covenants contained in this Article of this Agreement would cause
irreparable injury to Employer and that remedies at law available to Employer
for any actual or threatened breach of such covenants will be inadequate and
that Employer shall be entitled to specific performance of the covenants in this
Article or injunctive relief against activities in violation of this Article by
temporary or permanent injunction or other appropriate judicial remedy, writ or
order, without the necessity or proving actual damages. This provision with
respect to injunctive relief shall not diminish the right of Employer to claim
and recover monetary damages against Employee for any breach of this Agreement,
in
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addition to injunctive relief. Employee acknowledges and agrees that he will
be responsible for all legal expenses, including attorney's fees, which Employer
incurs in pursuing remedies, whether legal or equitable, for any actual or
threatened breach of this Agreement. Employee acknowledges and agrees that the
covenants contained in this Article 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
Employer, whether predicated upon this or any other contract, shall not
constitute a defense to the enforcement by Employer of said covenants.
V.
General Release by Employee and Covenant Not to Sue
In order to receive the additional remuneration set forth in Article III of
this Agreement, Employee acknowledges and understands that he must execute an
irrevocable, enforceable, valid and binding General Release and Covenant Not to
Sue Agreement in substantially the form as shown in the attached Exhibit B
within one hundred fifty (150) days following his Employment Termination Date.
VI.
Limitation of Release by Employee
Notwithstanding the previous Article, it is understood and agreed that the
release of benefits and claims, and covenants not to sue, under the General
Release and Covenant Not to Sue Agreement will not include a release of the
right to payment of cash payments or continuation of benefits to which Employee
may be entitled under the terms and provisions of Article III of this Agreement,
and will not include a release of the right to payment of any cash payments or
benefits accrued as of the Employment Termination Date to which Employee may be
entitled under the terms and provisions of any Plan of Employer and will not
include a release of the right to reimbursement of any expenses of Employee
incurred in the performance of his duties and services as an Employee or a
director of Employer in accordance with Employer's policies and procedures
generally applicable to employees and directors. Employee hereby acknowledges
that he is only entitled to the additional remuneration set forth in Article III
of this Agreement contingent upon his execution of a valid, irrevocable, binding
and enforceable General Release and Covenant Not to Sue Agreement in accordance
with Article V above, and that under such agreement, all other claims for any
other benefits or compensation will be waived, except those expressly stated in
the preceding sentence.
VII.
Gross-Up Payment Provisions
General Payment and Determination Procedures. All determinations with
respect to a Gross-Up Payment shall be made by a nationally recognized
accounting firm or law firm selected by Employee and reasonably acceptable to
Employer (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
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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 Employer. Within 15 business
days of the receipt of notice from Employee that there has been a payment under
this Article III, the Tax Firm shall make all determinations required under this
paragraph, shall provide to Employer 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
Article III, shall be paid by Employer to Employee within fifteen days of the
receipt of the Tax Firm's determination. Subject to the remainder of this
paragraph, any determination by the Tax Firm shall be binding upon Employer 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 Employer 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 below 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 Employer to or for the benefit of
Employee. In determining the reasonableness of Tax Firm's determinations
hereunder, and the effect thereof, Employer 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.
Internal Revenue Service Assessments. Employee shall notify Employer in
writing of any claims by the Internal Revenue Service that, if successful, would
require the payment by Employer of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than 30 calendar days after
Employee actually receives notice in writing of such claim and shall apprize
Employer 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
Employer of such claim (or to provide any required information with respect
thereto) shall not affect any rights granted to Employee under this paragraph
except to the extent that Employer 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 30-day period following the date on which
he gives such notice to Employer (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If Employer 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 Employer any information reasonably requested by Employer relating
to such claim;
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(b) Take such action in connection with contesting such claim as Employer
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 Employer and reasonably acceptable to Employee;
(c) Cooperate with Employer in good faith in order effectively to contest
such claim;
If Employer elects not to assume and control the defense of such claim, permit
Employer to participate in any proceedings relating to such claim; provided,
however, that Employer 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 paragraph, Employer
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 Employer shall determine;
provided, however, that if Employer directs Employee to pay such claim and sue
for a refund, Employer 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,
Employer'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.
Overpayments by Employer. If, after the receipt by Employee of an amount
advanced by Employer pursuant to this paragraph, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Employer's complying with the requirements of this paragraph) promptly pay to
Employer 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 Employer pursuant to this paragraph, a determination is
made that Employee is not entitled to a refund with respect to such claim and
Employer does not notify Employee in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall, to the extent of such denial, be forgiven and shall not
be required to be repaid and the amount of forgiven advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
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VIII.
Knowing and Voluntary Waiver of Rights by Employee
Employee agrees and acknowledges that he has carefully reviewed, studied
and thought over the terms of this Agreement, and that all questions concerning
this Agreement have been answered to his satisfaction. Employee does further
acknowledge and agree that he has had the opportunity to consider and reflect
upon the terms of this Agreement before signing it, that he knowingly and
voluntarily entered into and signed this Agreement after deliberate
consideration and review of all of its terms and provisions, that he was not
coerced, pressured or forced in any way by Employer or anyone else to accept the
terms of this Agreement, that the decision to accept the terms of this Agreement
was entirely his own, that he was advised in writing to consult with an attorney
prior to executing this Agreement and prior to the Execution Date of this
Agreement, and that he had the opportunity to consult with an attorney
throughout the negotiations concerning this Agreement, during which time
proposals and counter proposals were or could have been presented, discussed
and, in some instances, made a part of the final version of this Agreement.
Employee also acknowledges that no promises or inducements to enter into and
execute this Agreement have been offered or made except those which are
specifically set out in this Agreement.
IX.
Entire Agreement Between Parties
This Agreement constitutes the entire agreement between Employee and
Employer pertaining to the subjects contained in it and supersedes any and all
prior and/or contemporaneous agreements, representations, or understandings,
written or oral, except that the Employment Agreement shall continue in effect
until the Employment Termination Date as provided in Article II. It is
expressly understood and agreed that this Agreement may not be altered, amended,
modified or otherwise changed in any respect or particular whatsoever except in
writing duly executed by Employee and an authorized representative of Employer
acting on behalf of Employer.
X.
Miscellaneous Provisions
This Agreement shall be binding upon both Employee and Employee's related
entities and individuals, and upon Employer and Employer's related employers.
All signatories to this Agreement hereby warrant, covenant, and represent that
prior to the Effective Date, they have not conveyed, transferred, pledged,
hypothecated, or in any manner whatsoever assigned or encumbered any of the
rights, demands, claims, suits, actions, or causes of action released herein,
and all signatories to this Agreement also hereby warrant, covenant and
represent that, prior to the Effective Date, they have not filed a lawsuit or
asked the assistance of any governmental agency to enforce rights or to seek
remedies for any claim which is waived pursuant to the terms and provisions of
this Agreement. Each party hereto agrees, understands, and acknowledges that
each party is responsible for their own attorneys' fees, costs and all other
expenses arising from, or in any
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way related to claims released herein. In any subsequent litigation or other
proceeding to enforce the terms of this Agreement, whether initiated by Employee
or Employer, the prevailing party shall be entitled to recover its reasonable
attorneys' fees and costs, expert witness fees and costs, and court costs, from
the other party. The undersigned parties, acting through their duly authorized
officers or individually, as the case may be, do hereby warrant that the
signatories hereto have express authority and have the legal capacity to enter
into this Agreement. This Agreement is to be construed in accordance with the
laws of the State of Georgia.
IN WITNESS WHEREOF, the undersigned has executed this agreement to be
effective as of December 31, 1998.
EMPLOYEE: EMPLOYER:
NOVA CORPORATION
/s/ Gregory S. Daily
- ------------------------------------- /s/ Edward Grzedzinski
Gregory S. Daily ------------------------------
By:
Chairman and Chief Executive
Officer
------------------------------
Title:
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EXHIBIT A
STOCK OPTIONS HELD BY EMPLOYEE
See Attached Description
<PAGE>
EXHIBIT 10.42
- --------------------------------------------------------------------------------
YOU ARE STRONGLY ENCOURAGED TO READ THIS DOCUMENT CAREFULLY AND TO CONSULT WITH
AN ATTORNEY BEFORE EXECUTING THIS DOCUMENT.
- --------------------------------------------------------------------------------
SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is entered into by and between
Richardson M. Roberts ("Employee"), and NOVA Corporation, a Georgia corporation
("NOVA"), on behalf of itself and its affiliated and related entities,
directors, officers and employees, representatives, agents, attorneys,
accountants, employee benefit plans, and employee welfare plans.
W I T N E S S E T H:
WHEREAS, Employee is employed by NOVA pursuant to an Employment Agreement
dated June 17, 1998, by and between Employee and NOVA (the "Employment
Agreement"); and
WHEREAS, Employee and NOVA have mutually agreed to the terms and conditions
by which Employee's employment with NOVA will terminate and the date on which
such employment shall terminate (December 31, 1998), and wish to set out those
terms and conditions specifically in writing; and
WHEREAS, Employee will continue to perform services for NOVA as a member of
the NOVA Board of Directors; and
WHEREAS, the parties intend that this Agreement shall supersede and render
null and void the Employment Agreement entered into between the parties;
NOW, THEREFORE, for the consideration outlined herein and other agreements
contained herein, Employee and NOVA agree as follows:
I.
Definitions
For all purposes of this Agreement, the following definitions shall be
applicable:
A. The term "Agreement" shall mean this Separation Agreement between the
parties hereto.
B. The phrase "Effective Date" shall mean the date on which this Agreement
shall become effective, which shall be December 31, 1998.
C. The term "Employee" shall mean Richardson M. Roberts.
<PAGE>
D. The term "Employment Agreement" shall mean the Employment Agreement by and
between Employee and Employer dated June 17, 1998.
E. The term "Employer" shall mean NOVA Corporation.
F. The phrase "Employer's related employers" shall mean and include any parent,
subsidiaries and related corporations or entities, predecessors, successors and
assigns of Employer.
G. The phrase "Employment Termination Date" shall mean December 31, 1998.
H. The phrase "Execution Date" shall mean the date on which this Agreement is
executed (as noted in writing on the last page hereof).
I. The phrase "General Release and Covenant Not to Sue Agreement" shall mean
the document, the form of which is attached hereto as Exhibit B, which must be
effectively and irrevocably executed by Employee in order to receive the
remuneration set forth in Article III hereof.
J. The term "Plan(s)" shall mean, when referenced as Plan(s) of a particular
entity, individual or other person, all employee benefit plans (within the
meaning ERISA (S)3(3)) sponsored by, contributed to, or maintained by such
entity, individual or other person.
II.
Termination of Employee's Employment
Employee and Employer agree and acknowledge that Employee's employment with
Employer will be voluntarily terminated as of the Employment Termination Date,
and, accordingly, that such Employment Termination Date shall be used to
determine Employee's entitlement to any benefits generally available to
employees of Employer under a Plan of Employer, as well as the amount thereof,
subject to Article III hereof. Employee and Employer agree this Agreement shall
not interfere with Employee's performance of services for Employer as a member
of Employer's Board of Directors, and Employee may continue to perform services
as a member of Employer's Board of Directors during his current term on such
Board and any successor term (if applicable). Employer and Employee agree that
the Employment Agreement is, and becomes, null and void as of the Employment
Termination Date, and is of no further force and effect, and is superseded
entirely by this Agreement as of such date.
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III.
Payments to Employee and Continuation of Benefits
Payments and Continuation of Benefits. In addition to the general
compensation and benefits to which Employee would be entitled based upon his
employment with Employer through the Employment Termination Date, Employee and
Employer hereby agree that Employee shall receive the following remuneration
only if Employee complies with his agreement in Article V below to execute a
General Release and Covenant Not to Sue Agreement within one-hundred fifty (150)
days following his Employment Termination Date and such agreement becomes valid,
irrevocable, enforceable and binding:
Annual Lump Sum Cash Payments. Employee shall receive three lump sum
cash payments in the amounts noted below for each of the calendar years
noted below:
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CALENDAR YEAR: LUMP SUM PAYMENT AMOUNT:
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1999 $600,000.00
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2000 $810,000.00
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2001 $810,000.00
- -------------------------------------------------------------------------------
with each such payment to Employee in the form of a check drawn on an
account of Employer and given by hand to Employee or sent to Employee by
first class mail, postage prepaid on or prior to December 31 of the
applicable calendar year.
Vesting of Stock Options. Notwithstanding any provision in the
Incentive Stock Option Agreements dated July 16, 1996 and March 4, 1998,
and the Non-Qualified Option Agreements dated August 12, 1994 and December
12, 1995, by and between PMT Services, Inc. and Employee and the Stock
Option Agreement dated October 30, 1998 by and between Employer and
Employee (collectively, the "Option Agreements"), the stock options granted
to Employee in the Option Agreements shall continue to vest according to
the schedule set forth in Exhibit A attached hereto, so long as Employee
remains a member of Employer's Board of Directors. If, for any reason,
Employee resigns from Employer's Board of Directors, Employer shall, at its
option and in its discretion, (i) cause any stock options granted to
Employee which are unvested to vest immediately upon Employee's resignation
from Employer's Board of Directors, or (ii) execute or cause to be executed
a Consulting Agreement or Employment Agreement between Employer and
Employee on terms and conditions mutually agreeable to Employer and
Employee, material provisions of which shall be that any unvested options
granted to Employee shall continue to vest according to the schedule
attached hereto as Exhibit A and that Employee shall enter into an
appropriate non-competition covenant. Any vested stock options granted to
Employee under the Option Agreements shall expire on the date which is
ninety (90) days after Employee's service as a member of Employer's Board
of Directors (or service as a consultant or employee thereafter, as
provided in the preceding sentence) terminates. The Option
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Agreements are hereby amended to reflect the provisions of this paragraph.
Employer shall take such action as is necessary under the terms and
provisions of such options and any applicable plans under which such
options were issued to ensure the vesting of such options and the
continuance of such options in accordance with the preceding sentence.
Payment of COBRA Continuation Coverage Premiums. For any period of
time during which Employee and any of his dependents could elect to
continue their coverage under any Plan of Employer which is a group health
plan subject to the provisions of part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended and/or Section 4980B of
the Internal Revenue Code of 1986, as amended, pursuant to such legal
provisions, Employer shall reimburse Employee monthly for the applicable
premiums for any such COBRA continuation coverage available under any such
Plan of Employer for Employee and/or any of his dependents; provided,
however, in no event shall Employer reimburse the applicable premiums for
any such COBRA continuation coverage for a period extending beyond the
second anniversary of the Employment Termination Date. This reimbursement
of premiums by Employer is not intended to alter in any way the provisions
of any Plan of Employer, and all time limits, effects of subsequent
coverage and all other relevant provisions of any such Plan remain
unchanged and shall control Employee's (and his dependents') entitlement to
coverage or benefits under any such Plan.
Gross Up Payments. With respect to any amount of tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (and any
interest and penalties imposed with respect thereto), upon any amount paid
to Employee pursuant to this Agreement or the General Release and Covenant
Not to Sue Agreement, Employee shall additionally receive a lump sum cash
payment amount (the "Gross-Up Payment") such that, after payment by
Employee of (1) all federal and state income taxes (and any interest and
penalties imposed with respect thereto) imposed with respect to such Gross-
Up Payment and (2) all excise taxes imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (and any interest and penalties imposed
with respect thereto) with respect to such Gross-Up Payment (collectively,
the "Excise Tax"), Employee retains an amount of such Gross-Up Payment
equal to such Excise Tax upon such amount paid to Employee pursuant to this
Agreement. Gross-Up Payments shall be subject to the provisions of Article
VI herein.
Split Dollar Life Insurance. Employer agrees that it will, upon the
request of Employee made during the period during which any lump sum
payment as described in Article III remains unpaid, negotiate in good faith
with Employee to apply some or all of the proceeds of any such lump sum
payment to purchase a split dollar life insurance policy insuring the life
of Employee. It is anticipated that any such insurance plan would contain
a deferred compensation aspect such that any premiums reimbursed or
assigned to Employer with respect to any such policy will be payable to
Employee. Notwithstanding the foregoing, Employer shall not be obligated
to participate in any split dollar life insurance arrangement that could
result in any expense or adverse tax or accounting consequence to Employer.
The parties agree that the above additional remuneration shall be subject to any
applicable federal, state and/or local income tax withholding, FICA tax, or
other tax requirements, and is completely
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and entirely contingent upon the execution of a valid, enforceable, binding and
irrevocable General Release and Covenant Not to Sue Agreement in accordance with
Article V herein. Furthermore, notwithstanding any provision above, none of the
above additional remuneration shall be paid until the date (the "GRCNSA
Effective Date") on which there is a valid, enforceable, binding and irrevocable
General Release and Covenant Not to Sue Agreement executed by Employee, and to
the extent that any of the above additional remuneration would be payable prior
to such GRCNSA Effective Date, it shall instead be paid on or before the fifth
(5th) day after the GRCNSA Effective Date.
IV.
Restrictive Covenants
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 during the
term of his service with Employer concerning or relative to Employer's business
of providing credit and debit card transaction processing and settlement
services (including the related products and services of automated teller
machines and check guarantee services) to merchants, financial institutions,
independent sales organizations and other similar customers (the "Employer
Business"), including without limitation, all customer data, billing
information, service data, and other technical material of Employer and
Employer's related employers (collectively, the "Employer Entities") is and
shall be the property of the appropriate Employer Entities. Employees agrees to
deliver without demand all such materials to the appropriate Employer Entities
within thirty (30) days after the termination of Employee's service with
Employer as a member of its Board of Directors. Employee further agrees not to
use materials for any reason after said termination.
Nondisclosure. (a) Employee acknowledges and agrees that because of his
employment and service with Employer, he has had, and will continue to have,
access to proprietary information of the Employer Entities concerning or
relative to Employer Business (collectively, "Confidential Information") which
includes, without limitation, technical material of the Employer Entities, 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 the Employer Entities, and any
information marked "Confidential" by the Employer Entities. Employee
acknowledges and agrees that the Confidential Information is and shall be the
property of the appropriate Employer Entities. Provided that Employer complies
with its obligations set forth in Article III, Employee agrees that during the
term of his employment with Employer, during his service as a member of
Employer's Board of Directors and during the 2-year period immediately following
the termination of such service, Employee shall not use his Confidential
Information for any reason other than on behalf of the Employer Entities.
(b) Notwithstanding the foregoing, Employee shall not be subject to the
restrictions set forth in subsection (a) immediately above with respect to
information which:
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(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 service with Employer, provided such source lawfully
obtained such information and is not bound by a confidentiality agreement
with any of the Employer Entities; or
(iii) is required by law to be disclosed.
(c) Employee acknowledges and agrees that because of his employment with
Employer, he has had and will have access to "trade secrets" (as defined in the
Uniform Trade Secrets Act, O.C.G.A. (S) 10-1-769, et seq. (the "Uniform Trade
Secrets Act") of the Employer Entities ("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.
Covenants Not to Solicit or Compete. Employee acknowledges and agrees
that, because of his employment with Employer, he has and will continue to have
access to confidential or proprietary information concerning merchants,
associate banks and independent sales organizations ("ISO") of the Employer
Entities and establish 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 within the United States. In consideration
for the benefits and compensation Employee is receiving hereunder, and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Employee agrees that during the 2-year period immediately
following the Employment Termination Date, he 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) (i) compete with any of the Employer Entities in providing credit card
and debit card transaction processing services within the United States, or (ii)
otherwise obtain any interest in (except as a stockholder holding less than five
percent (5%) interest in a corporation which is traded on a national exchange or
over-the-counter), 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 United States.
(b) solicit or contact, for the purpose of providing products or services
the same as or substantially similar to those provided by any of the Employer
Entities in connection with the Employer Entities' Business, any person or
entity that during the term of Employee's employment with Employer was a
merchant, associate bank, ISO or customer (including any actively-sought
prospective merchant, associate bank, ISO or customer) of any of the Employer
Entities and with
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whom Employee had material contact or about which Employee learned material
information during the last twelve months of his service as a member of
Employer's Board of Directors.
(c) persuade or attempt to persuade any merchant, associate bank, ISO,
customer, or supplier of any of the Employer Entities to terminate or modify
such merchant's, associate bank's, ISO's, customer's, or supplier's relationship
with any of the Employer Entities 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 service as a member of
Employer's Board of Directors; or
(d) persuade or attempt to persuade any person who (i) was employed by any
of the Employer Entities as of the date of the termination of Employee's
employment, and (ii) is in a sales or management position with any of the
Employer Entities at the time of such termination, to terminate or modify his
employment relationship, whether or not pursuant to a written agreement, with
any of the Employer Entities, as the case may be.
New Developments. Any discovery, invention, process or improvement made or
discovered by Employee during the term of his employment in connection with or
any way affecting or relating to Employer Business (as then carried on or under
active consideration) shall forthwith be disclosed to Employer and shall belong
to and be the absolute property of the appropriate Employer Entity; provided,
however, that this provision does not apply to an invention for which no
equipment, supplies, facility, trade secret information of the Employer Entities
was used and which was developed entirely on Employee's own time, unless (a) the
invention relates (i) directly to Employer Business or (ii) to the actual or
demonstrably anticipated research or development of any of the Employer
Entities; or (b) the invention results from any work performed by Employee for
any of the Employer Entities.
Reasonableness. Employee has carefully considered the nature and extent of
the restrictions upon him and the rights and remedies conferred on Employer
under this Agreement, and Employee hereby acknowledges and agrees that:
(a) the restrictions and covenants contained herein, and the rights and
remedies conferred upon Employer, are necessary to protect the goodwill and
other value of Employer 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 Employer Business and goodwill of Employer;
(c) Employer is relying upon the restrictions and covenants contained
herein in continuing to make available to Employee information concerning
Employer Business; and
(d) Employee's employment hereunder places him in a position of confidence
and trust with Employer and its employees, merchants, associate banks, ISOs,
customers, vendors and suppliers.
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Remedy for Breach. Employee acknowledges and agrees that a breach of any
of the covenants contained in this Article of this Agreement would cause
irreparable injury to Employer and that remedies at law available to Employer
for any actual or threatened breach of such covenants will be inadequate and
that Employer shall be entitled to specific performance of the covenants in this
Article or injunctive relief against activities in violation of this Article by
temporary or permanent injunction or other appropriate judicial remedy, writ or
order, without the necessity or proving actual damages. This provision with
respect to injunctive relief shall not diminish the right of Employer to claim
and recover monetary damages against Employee for any breach of this Agreement,
in addition to injunctive relief. Employee acknowledges and agrees that he will
be responsible for all legal expenses, including attorney's fees, which Employer
incurs in pursuing remedies, whether legal or equitable, for any actual or
threatened breach of this Agreement. Employee acknowledges and agrees that the
covenants contained in this Article 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
Employer, whether predicated upon this or any other contract, shall not
constitute a defense to the enforcement by Employer of said covenants.
V.
General Release by Employee and Covenant Not to Sue
In order to receive the additional remuneration set forth in Article III of
this Agreement, Employee acknowledges and understands that he must execute an
irrevocable, enforceable, valid and binding General Release and Covenant Not to
Sue Agreement in substantially the form as shown in the attached Exhibit B
within one hundred fifty (150) days following his Employment Termination Date.
VI.
Limitation of Release by Employee
Notwithstanding the previous Article, it is understood and agreed that
the release of benefits and claims, and covenants not to sue, under the General
Release and Covenant Not to Sue Agreement will not include a release of the
right to payment of cash payments or continuation of benefits to which Employee
may be entitled under the terms and provisions of Article III of this Agreement,
and will not include a release of the right to payment of any cash payments or
benefits accrued as of the Employment Termination Date to which Employee may be
entitled under the terms and provisions of any Plan of Employer and will not
include a release of the right to reimbursement of any expenses of Employee
incurred in the performance of his duties and services as an Employee or a
director of Employer in accordance with Employer's policies and procedures
generally applicable to employees and directors. Employee hereby acknowledges
that he is only entitled to the additional remuneration set forth in Article III
of this Agreement contingent upon his execution of a valid, irrevocable, binding
and enforceable General Release and Covenant Not to Sue Agreement in accordance
with Article V above, and that under such agreement, all other claims for any
other benefits or compensation will be waived, except those expressly stated in
the preceding sentence.
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VII.
Gross-Up Payment Provisions
General Payment and Determination Procedures. All determinations with
respect to a Gross-Up Payment shall be made by a nationally recognized
accounting firm or law firm selected by Employee and reasonably acceptable to
Employer (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 Employer. Within
15 business days of the receipt of notice from Employee that there has been a
payment under this Article III, the Tax Firm shall make all determinations
required under this paragraph, shall provide to Employer 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 Article III, shall be paid by Employer to Employee
within fifteen days of the receipt of the Tax Firm's determination. Subject to
the remainder of this paragraph, any determination by the Tax Firm shall be
binding upon Employer 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 Employer 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 below 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 Employer to or for the benefit of
Employee. In determining the reasonableness of Tax Firm's determinations
hereunder, and the effect thereof, Employer 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.
Internal Revenue Service Assessments. Employee shall notify Employer in
writing of any claims by the Internal Revenue Service that, if successful, would
require the payment by Employer of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than 30 calendar days after
Employee actually receives notice in writing of such claim and shall apprize
Employer 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
Employer of such claim (or to provide any required information with respect
thereto) shall not affect any rights granted to Employee under this paragraph
except to the extent that Employer 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 30-day period following the date on which
he gives such notice to Employer (or
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such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If Employer 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 Employer any information reasonably requested by Employer
relating to such claim;
(b) Take such action in connection with contesting such claim as Employer
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 Employer and reasonably
acceptable to Employee;
(c) Cooperate with Employer in good faith in order effectively to contest
such claim;
If Employer elects not to assume and control the defense of such claim, permit
Employer to participate in any proceedings relating to such claim; provided,
however, that Employer 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 paragraph, Employer
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 Employer shall determine;
provided, however, that if Employer directs Employee to pay such claim and sue
for a refund, Employer 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,
Employer'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.
Overpayments by Employer. If, after the receipt by Employee of an amount
advanced by Employer pursuant to this paragraph, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Employer's complying with the requirements of this paragraph) promptly pay to
Employer 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 Employer pursuant to this paragraph, a determination is
made that Employee is not
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entitled to a refund with respect to such claim and Employer does not notify
Employee in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall, to the
extent of such denial, be forgiven and shall not be required to be repaid and
the amount of forgiven advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
VIII.
Knowing and Voluntary Waiver of Rights by Employee
Employee agrees and acknowledges that he has carefully reviewed, studied
and thought over the terms of this Agreement, and that all questions concerning
this Agreement have been answered to his satisfaction. Employee does further
acknowledge and agree that he has had the opportunity to consider and reflect
upon the terms of this Agreement before signing it, that he knowingly and
voluntarily entered into and signed this Agreement after deliberate
consideration and review of all of its terms and provisions, that he was not
coerced, pressured or forced in any way by Employer or anyone else to accept the
terms of this Agreement, that the decision to accept the terms of this Agreement
was entirely his own, that he was advised in writing to consult with an attorney
prior to executing this Agreement and prior to the Execution Date of this
Agreement, and that he had the opportunity to consult with an attorney
throughout the negotiations concerning this Agreement, during which time
proposals and counter proposals were or could have been presented, discussed
and, in some instances, made a part of the final version of this Agreement.
Employee also acknowledges that no promises or inducements to enter into and
execute this Agreement have been offered or made except those which are
specifically set out in this Agreement.
IX.
Entire Agreement Between Parties
This Agreement constitutes the entire agreement between Employee and
Employer pertaining to the subjects contained in it and supersedes any and all
prior and/or contemporaneous agreements, representations, or understandings,
written or oral, except that the Employment Agreement shall continue in effect
until the Employment Termination Date as provided in Article II. It is
expressly understood and agreed that this Agreement may not be altered, amended,
modified or otherwise changed in any respect or particular whatsoever except in
writing duly executed by Employee and an authorized representative of Employer
acting on behalf of Employer.
X.
Miscellaneous Provisions
This Agreement shall be binding upon both Employee and Employee's related
entities and individuals, and upon Employer and Employer's related employers.
All signatories to this Agreement hereby warrant, covenant, and represent that
prior to the Effective Date, they have not conveyed, transferred, pledged,
hypothecated, or in any manner whatsoever assigned or encumbered any of the
rights, demands, claims, suits, actions, or causes of action released herein,
and all signatories to this Agreement also hereby warrant, covenant and
represent that, prior to the Effective Date, they have not filed a lawsuit or
asked the assistance of any governmental agency to
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enforce rights or to seek remedies for any claim which is waived pursuant to the
terms and provisions of this Agreement. Each party hereto agrees, understands,
and acknowledges that each party is responsible for their own attorneys' fees,
costs and all other expenses arising from, or in any way related to claims
released herein. In any subsequent litigation or other proceeding to enforce the
terms of this Agreement, whether initiated by Employee or Employer, the
prevailing party shall be entitled to recover its reasonable attorneys' fees and
costs, expert witness fees and costs, and court costs, from the other party. The
undersigned parties, acting through their duly authorized officers or
individually, as the case may be, do hereby warrant that the signatories hereto
have express authority and have the legal capacity to enter into this Agreement.
This Agreement is to be construed in accordance with the laws of the State of
Georgia.
IN WITNESS WHEREOF, the undersigned has executed this Agreement to be
effective as of December 31, 1998.
EMPLOYEE: EMPLOYER:
NOVA CORPORATION
/s/ Richardson M. Roberts
- ------------------------------------- /s/ Edward Grzedzinski
Richardson M. Roberts ------------------------------
By:
Chairman and Chief Executive
Officer
------------------------------
Title:
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EXHIBIT A
STOCK OPTIONS HELD BY EMPLOYEE
See Attached Description
