<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997, OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission file number 1-14342
NOVA Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2209575
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Concourse Parkway, Suite 300, Atlanta, Georgia 30328
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(770) 396-1456
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
--- ---
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 28,885,055 shares of common
stock outstanding as of August 6, 1997.
<PAGE>
NOVA CORPORATION
FORM 10-Q
QUARTER ENDED JUNE 30, 1997
TABLE OF CONTENTS
PAGE NUMBER
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets-
June 30, 1997 (unaudited) and December 31, 1996................... 3
Condensed Consolidated Statements of Income (unaudited)-
Three and six months ended June 30, 1997 and 1996................. 4
Condensed Consolidated Statements of Cash Flows
(unaudited)-Six months ended June 30, 1997 and 1996............... 5
Notes to Condensed Consolidated Financial Statements................ 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 7
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders................. 9
ITEM 6. Exhibits and Reports on Form 8-K.................................... 9
Signatures.......................................................... 10
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NOVA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
A S S E T S (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................ $ 40,326 $ 20,288
Trade receivables, less allowance for doubtful accounts
of $2,707 and $3,707, respectively................... 16,147 25,281
Inventory................................................ 857 897
Deferred tax asset and other current assets.............. 3,160 3,983
-------- --------
Total current assets................................. 60,490 50,449
Merchant and customer contracts.......................... 21,868 42,283
Property and equipment, net.............................. 10,212 14,133
Excess cost of businesses acquired....................... 13,301 13,053
Deferred tax asset and other non-current assets.......... 1,834 1,943
-------- --------
Total Assets......................................... $107,705 $121,861
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable............................................. $ 4,810 $ 8,146
Accounts payable to affiliate................................ 1,534 756
Accrued compensation and related costs....................... 1,416 1,132
Settlement obligations....................................... 7,691 7,615
Other accrued liabilities.................................... 5,157 9,774
Long-term debt obligations due within one year............... 507 365
-------- --------
Total current liabilities................................ 21,115 27,788
Deferred tax liability................................... 849 538
Long-term debt obligations................................... 859 832
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, 50,000,000 shares authorized,
28,721,000 and 28,876,000 shares issued, respectively.... $ 288 $ 289
Additional paid in capital................................... 99,299 99,555
Accumulated deficit.......................................... (14,705) (7,141)
-------- --------
Total Stockholders' Equity................................... 84,882 92,703
-------- --------
Total Liabilities and Stockholders' Equity................... $107,705 $121,861
======== ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
NOVA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
1996 1997 1996 1997
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
REVENUE..................................................... $ 67,568 $ 78,044 $ 127,768 $ 144,569
OPERATING COST
Cost of Service.......................................... 52,624 59,595 99,256 111,666
Conversion Cost.......................................... 2,034 499 3,608 990
Selling, General and Administrative...................... 8,736 8,590 16,769 15,948
Depreciation and Amortization............................ 1,715 2,375 3,391 4,251
----------- ----------- ----------- -----------
TOTAL OPERATING COST........................................ 65,109 71,059 123,024 132,855
OPERATING INCOME............................................ 2,459 6,985 4,744 11,714
Interest expense (income), net........................... 48 (299) 539 (641)
----------- ----------- ----------- -----------
INCOME BEFORE PROVISION FOR INCOME
TAXES.................................................... 2,411 7,284 4,205 12,355
Provision for Income Taxes............................... 972 2,868 1,651 4,794
----------- ----------- ----------- -----------
NET INCOME.................................................. $ 1,439 $ 4,416 $ 2,554 $ 7,561
=========== =========== =========== ===========
Shares used in per share calculation outstanding............ 28,556,538 29,989,971 27,273,930 30,065,626
=========== =========== =========== ===========
Primary and Fully Diluted Earnings
Per share (Pro forma prior to May 7, 1996 - see Note 2).. $0.05 $0.15 $0.09 $0.25
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
NOVA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
For the six months ended
June 30,
1996 1997
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................................ $ 2,554 $ 7,561
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................................... 3,391 4,251
Changes in assets and liabilities, net of the effects of
business acquisitions:
Trade receivables................................................. 1,009 (9,131)
Inventory......................................................... (10) (40)
Other assets...................................................... 1,180 (1,176)
Accounts payable.................................................. (1,770) 2,274
Accrued liabilities............................................... 2,422 4,088
-------- --------
Net cash provided by operating activities........................... 8,776 7,827
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of merchant and customer contracts.......................... (476) (22,288)
Additions to property and equipment................................... (1,897) (5,807)
-------- --------
Net cash used in investing activities............................... (2,373) (28,095)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit and notes payable........................ 5,600 --
Payment of long-term debt and capital leases.......................... (26,555) (27)
Proceeds from stock issued and
stock options exercised.............................................. 67,053 257
Payment of accrued dividends.......................................... (11,689) ---
Redemption of preferred stock......................................... (5,000) ---
-------- --------
Net cash provided by financing activities........................... 29,409 230
-------- --------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS........................................................... 35,812 (20,038)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......................... 630 40,326
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD............................... $ 36,442 $ 20,288
======== ========
Supplemental Cash Flow Information
Supplemental cash flow disclosures, including non-cash investing and
financing activities, are: For the Six Months Ended
June 30
1996 1997
---------- ---------
Interest Paid.......................................................... $ 842 $ 115
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
NOVA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. These financial statements should be read in conjunction
with the Company's audited financial statements included in the Company's Annual
Report on Form 10-k for the fiscal year ended December 31, 1997 filed with the
Securities and Exchange Commission (Commission File No. 1-14342). The results
for the six months ended or the quarter ended June 30, 1997 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997.
NOTE 2 - EARNINGS PER SHARE
Earnings per share and shares used in the per share calculation for periods
prior to May 7, 1996, the date of the Company's initial public offering, have
been presented on the consolidated statements of income as if the conversion of
the Company's preferred stock had occurred at the later of the beginning of the
period or the issuance date.
Primary and fully diluted earnings per share is computed using the weighted
average number of shares of Common Stock and dilutive common stock equivalents
outstanding during the period. Common stock equivalents are computed for the
Company's outstanding options using the treasury stock method. Pursuant to the
Securities and Exchange Commission Staff Accounting Bulletins, common stock
equivalents also include amounts computed on options issued during the twelve
months immediately preceding the date of the initial filing of the Company's
Registration Statement on Form S-1 relating to the Company's initial public
offering as if they were outstanding for all periods prior to the closing on May
7, 1996 using the treasury stock method.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of primary earnings per share for these quarters is not expected to be material.
The Company has not yet determined what the impact of Statement 128 will be on
the calculation of fully diluted earnings per share.
NOTE 3 - CONTINGENCIES
The Company is from time to time subject to claims and suits arising in the
ordinary course of its business. In the opinion of management, the ultimate
resolution of any such currently pending matters will not have a material effect
on the Company's financial position and results of operations.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the percentage of
revenues represented by certain line items in the Company's consolidated
statement of income:
<TABLE>
<CAPTION>
Three Month Period %/Increase Six Month Period %/Increase
Ended June 30, (Decrease) Ended June 30, (Decrease)
------------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 1997 1996 1997
----- ----- ----- -----
Revenues........................ 100.0% 100.0% 15.5% 100.0% 100.0% 13.1%
Cost of service................. 77.9 76.4 13.2 77.7 77.3 12.5
Conversion cost................. 3.0 0.6 (75.5) 2.8 0.7 (72.6)
Selling, general and
administrative expenses......... 12.9 11.0 (1.7) 13.1 11.0 (4.9)
Depreciation and amortization... 2.5 3.0 38.5 2.7 2.9 25.4
----- ----- ----- ----- ----- -----
96.3 91.0 9.1 96.3 91.9 8.0
Operating income................ 3.6 9.0 184.1 3.7 8.1 146.9
Interest expense (income), net.. 0.1 (0.3) ---- .4 (.4) ---
----- ----- ----- ----- ----- -----
Income before provision
for income taxes............. 3.5 9.3 202.1 3.3 8.5 193.8
Provision for income taxes...... 1.4 3.7 195.1 1.3 3.3 190.4
----- ----- ----- ----- ----- -----
Net Income...................... 2.1% 5.6% 206.9 2.0% 5.2% 196.0
===== ===== ===== ===== ===== =====
</TABLE>
REVENUES
Revenue increased 15.5% to $78.0 million for the quarter ended June 30, 1997,
compared with $67.6 million for the same period in 1996. For the first six
months of 1997, the Company reported revenues of $144.6 million, 13.1% higher
than revenues of $127.8 for the same period last year. These increases resulted
from a 14.1% and a 11.4% increase to $3.4 billion and $6.4 billion in merchant
sales volume processed for the three months and six months of 1997,
respectively, compared to $3.0 billion and $5.8 billion, respectively, for the
same periods in 1996. This increased sales volume was primarily attributable to
the Company's acquisition of the merchant portfolio of Crestar Bank as well as
internal growth. During the quarter the Company completed the acquisition of
Crestar Bank's merchant portfolio and formed an exclusive marketing alliance
with Crestar Bank.
COST OF SERVICE
Cost of service increased 13.2% to $59.6 million for the quarter ended June 30,
1997, compared with $52.6 million for the same period in 1996. For the six month
period ended June 30, 1997, cost of service increased 12.5% to $111.7 million
from $99.3 million for the same six month period in 1996. These increases
resulted from additional interchange and assessment fees and other processing
costs associated with the higher volume of merchant sales. Cost of service as a
percent of revenues declined from 77.9% to 76.4% for the quarter and from 77.7%
to 77.2% for the six months ended June 30, 1997, reflecting continuing cost
efficiencies realized from the consolidation of the operations relating to the
acquisition of the First Union Corporation merchant portfolio beginning in
December 1995, and the additional processing volume.
CONVERSION COST
Conversion cost decreased 75.5% to $500,000 for the quarter ended June 30, 1997,
compared with $2.0 million for the same period in 1996. For the six month period
ended June 30, 1997, conversion cost decreased 72.6% to $1.0 million as compared
with $3.6 million for the same six month period in 1996. The decrease resulted
primarily from the completion of the First Union portfolio conversion. The
First Union portfolio was acquired in December 1995.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses decreased 1.7% to $8.6 million for
the quarter ended June 30, 1997, compared with $8.7 million for the same period
in 1996. For the first six months of 1997, selling, general and administrative
expenses decreased 4.9% to $15.9 million from $16.8 million for the same period
in 1996. Selling, general and administrative expenses declined to 11.0% of
revenues for both the quarter and six months ended June 30, 1997 compared with
12.9% and 13.1%, respectively, for the same periods in 1996, reflecting
operational efficiencies. Lower expenses in 1997 resulted from the completion of
the First Union portfolio consolidation.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased 38.5% to $2.4 million for the quarter
ended June 30, 1997 compared with $1.7 million for the same period in 1996. For
the first six months of 1997, depreciation and amortization increased 25.4% to
$4.3 million from $3.4 million for
7
<PAGE>
the same period in 1996. The increase was principally due to greater
depreciation for Point-of-Sale ("POS") terminals and additional systems hardware
and software purchases to enhance the Company's transaction processing system,
as well as operational equipment needed to support the Company's growth. To a
lesser extent this expense increased due to additional amortization of certain
intangible assets related to the acquisition of merchant portfolios.
OPERATING INCOME
For the foregoing reasons, operating income for the quarter ended June 30, 1997
increased by 184.1% to $7.0 million from $2.5 million for the same period in
1996. For the six months ended June 30, 1997, operating income increased 146.9%
to $11.7 million from $4.7 million for the same period in 1996.
INTEREST EXPENSE (INCOME) - NET
Net interest expense decreased $347,000 for the quarter ended June 30, 1997,
resulting in net interest income of $299,000 compared to net interest expense
of $48,000 for the same period in 1996. The decrease in net interest expense
resulted from the repayment of bank debt and purchase note obligations with the
net proceeds received from the Company's initial public offering. The increase
in interest income resulted from the investment of the remaining net proceeds
received from the Company's initial public offering, as well as the investment
of cash provided from operations of the Company.
INCOME TAXES
Income tax expense reflects an effective tax rate of 39% for the quarters and
six months ended June 30, 1997 and June 30, 1996.
NET INCOME
Net income increased 206.9% to $4.4 million from $1.4 million for the quarter
ended June 30, 1997, compared to the same period in 1996. For the six months
ended June 30, 1997, net income increased 196.0% to $7.6 million from $2.6
million compared to the same period in 1996, due to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary uses of its capital resources include acquisitions of
merchant portfolios, capital expenditures and working capital.
The Company entered into a credit agreement in 1994, which was amended on
January 31, 1996, and May 1, 1996, for aggregate loans of up to $36,083,000.
Term loans of $11,083,000 and a combination of revolving loans, letters of
credit and acquisition loans aggregating $25,000,000 ($10,000,000 on June 30,
1997) are available under the agreement. As of June 30, 1997, no borrowings
exist under this agreement.
Net cash provided by operating activities was $7.8 million for the first six
months of 1997 as compared to net cash provided by operating activities of $8.8
million for the same period in 1996.
Net cash used in investing activities was $28.0 million for the six month period
ended June 30, 1997, compared to $2.4 million for the same period in 1996. The
Company's capital expenditure requirements included POS terminals that are
leased to merchants and computer hardware and software necessary to support the
NOVA Network and the systems at the Company's operation center. For the six
months ended June 30, 1997 and June 30, 1996, the Company's capital expenditures
totaled approximately $5.8 million and $1.9 million, respectively. In addition
to capital expenditures, the Company purchased various merchant processing
portfolios totaling $22.3 million and $500,000 for the six months ended June 30,
1997 and June 30, 1996, respectively.
Net cash provided by financing activities was minimal for the six months ended
June 30, 1997, compared to cash provided by financing activities of $29.4
million for the same period in 1996. This change is due primarily to the
proceeds received from the Company's initial public offering in May of last year
and the reduction of long-term debt that resulted.
The Company typically has relatively low working capital requirements because
discount fees charged to merchants are collected in an average of 15 days, while
normal payables are paid in 30 days (or longer in the case of POS terminal
purchases). In addition, increasing acquisition activity may cause variations in
working capital due to conversion-period operating costs. Because of the
seasonality of the Company's business, capital requirements may be greater in
certain months.
The Company expects that cash generated from operations will be the principal
source of funds for its cash requirements. The Company intends to use its
existing cash and cash equivalents, cash generated from operations and available
credit facilities to fund future merchant portfolio acquisitions and working
capital requirements.
8
<PAGE>
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company has been involved from time to time in litigation in the
normal course of its business. While management is aware of and dealing
with certain pending or threatened litigation, management does not believe that
such matters, individually or in the aggregate, will have a material adverse
effect on the financial condition of the Company.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on May 14, 1997 for
the purpose of (i) electing directors of the Company (Proposal 1), (ii)
considering and voting upon a proposal to authorize and approve the NOVA
Corporation 1996 Directors Stock Option Plan, as amended and restated (Proposal
2), and (iii) ratifying the appointment of Ernst & Young LLP as independent
accountants of the Company for the fiscal year ending December 31, 1997
(Proposal 3). At the meeting, the following persons were elected directors based
upon the voting results set forth opposite their respective names:
Votes For Votes Withheld
---------- --------------
James M. Bahin 26,426,749 998
Charles T. Cannada 26,426,749 998
U. Bertram Ellis 26,416,509 11,238
Edward Grzedzinski 26,386,164 41,583
Dr. Henry Kressel 26,426,914 833
Joseph P. Landy 26,426,749 998
Maurice F. Terbrueggen 26,426,749 998
Fred Martin Winkler 26,426,749 998
The shareholders of the Company authorized and approved the NOVA
Corporation 1996 Directors Stock Option Plan, as amended and restated (Proposal
2), with 25,626,441 votes FOR Proposal 2, 798,956 votes AGAINST Proposal 2, and
2,350 shares ABSTAINING.
The shareholders of the Company ratified the appointment of Ernst &
Young LLP as independent accountants of the Company for the fiscal year ending
December 31, 1997 (Proposal 3) with 26,416,407 shares voted FOR Proposal 3, 700
shares voted AGAINST Proposal 3 and 10,640 shares ABSTAINING.
ITEM 6 - EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) Exhibits
11.1 Statement regarding Computation of Pro Forma Earnings Per Share
11.2 Statement regarding Computation of Historical Earnings Per Share
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed the following Current Report(s) on Form 8-K
during the quarter ended June 30, 1997:
Form 8-K dated May 29, 1997 with respect to the consummation of the
transactions contemplated by the Merchant Asset Purchase Agreement
dated May 29, 1997 between NOVA Information Systems, Inc. and Crestar
Bank.
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOVA Corporation
(Registrant)
Date:August 12, 1997
By: /s/ Edward Grzedzinski
-----------------------------------------
Edward Grzedzinski
Date:August 12, 1997 Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
By: /s/ James M. Bahin
-----------------------------------------
James M. Bahin
Vice Chairman, Chief Financial Officer
and Secretary
(Principal Accounting Officer)
10
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<TABLE>
<CAPTION>
Exhibit
Number Description Page
<S> <C> <C>
10.1 Employment Agreement dated April 4, 1997 by and among John M. Perry and
NOVA Information Systems, Inc.
11.1 Statement regarding Computation of Pro Forma Earnings Per Share 12
11.2 Statement regarding Computation of Historical Earnings Per Share 13
27. Financial Data Schedule (intentionally omitted
from reprinted version)
</TABLE>
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made this 4th day of April
1997 by and among John M. Perry (hereinafter referred to as "Employee") and NOVA
INFORMATION SYSTEMS, INC., a Georgia corporation ("NOVA")
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, NOVA is in the business of providing credit and debit card
transaction processing services (and related products and services) to
merchants, financial institutions, independent sales organizations ("ISOs"), and
other similar customers (the "Business") throughout the United States;
WHEREAS, Employee currently serves as Executive Vice President, Sales and
Marketing of NOVA;
WHEREAS, NOVA, or its assigns, will continue to engage in the Business
throughout the United States (the "Territory);
WHEREAS, NOVA desires for Employee to continue to work for NOVA and
Employee desires to continue said employment, all as contemplated herein;
NOW, THEREFORE, for and in consideration of his continued employment by
NOVA pursuant to this Agreement, NOVA Confidential Information and Trade Secrets
(as hereafter defined) furnished to Employee by NOVA in order that he may
continue to perform his duties under this Agreement, the mutual covenants and
agreements herein contained, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT OF EMPLOYEE. NOVA hereby employs Employee for a period
beginning as of the date hereof (the "Employment Commencement Date") and ending
two (2) years thereafter (the "Initial Term"), unless Employee's employment by
NOVA is sooner terminated or automatically renewed pursuant to the terms of this
Agreement (Employee's employment by NOVA pursuant to the terms of this Agreement
shall hereinafter be referred to as "Employment").
(a) Employee agrees to such Employment on the terms and conditions herein
set forth and agrees to devote his reasonable best efforts to his
duties under this Agreement and to perform such duties diligently and
efficiently and in accordance with the directions of NOVA's Board of
Directors.
(b) During the term of Employee's Employment, Employee shall be employed as
Executive Vice President, Sales and Marketing of NOVA. Employee shall
be responsible primarily for such duties as are assigned to him, from
time to time, by NOVA's Chief Executive Officer which in any event
shall be such duties as are customary for an officer in those
positions.
<PAGE>
(c) Employee shall devote substantially all of his business time,
attention, and energies to NOVA's Business, shall act at all times in
the best interest of NOVA, and shall not during the term of his
Employment be engaged in any other business activity, whether or not
such business is pursued for gain, profit, or other pecuniary
advantage, or permit such personal interests as he may have to
interfere with the performance of his duties hereunder. Notwithstanding
the foregoing, Employee may participate in industry, civic and
charitable activities so long as such activities do not materially
interfere with the performance of his duties hereunder.
2. COMPENSATION. During the term of Employee's Employment and in accordance
with the terms hereof, NOVA shall pay or otherwise provide to Employee the
following compensation:
(a) Employee's annual salary during the term of his Employment shall be Two
Hundred Thousand Dollars ($200,000)("Base Salary"), with such increases
as may from time to time be deemed appropriate by NOVA's Chief
Executive Officer (subject to approval by the Compensation Committee of
NOVA Corporation) (a "Merit Increase"); provided, however, that so long
as this Agreement remains in effect, Employee's Base Salary shall be
reviewed annually by NOVA's Chief Executive Officer.
(b) Employee's Base Salary shall be paid by NOVA monthly in arrears or in
accordance with NOVA's regular payroll practice.
(c) In addition to the Base Salary, Employee may annually receive bonus
compensation pursuant to the schedule set forth as Exhibit A ("Bonus
---------
Compensation"). Employee may also receive such other bonus or
incentive compensation as may be awarded Employee from time to time by
the Board of Directors of NOVA.
(d) NOVA may withhold from any benefits payable under this Agreement all
federal, state, city or other taxes as shall be required pursuant to
any law or governmental regulation or ruling.
3. BENEFITS. During the term of Employee's employment, and for such time
thereafter as may be required by Section 7 hereof, NOVA shall provide Employee
the following benefits:
(a) Medical Insurance. Employee and his dependents shall be entitled to
------------------
participate in such medical, dental, vision, prescription drug,
wellness, or other health care or medical coverage plans as may be
established, offered or adopted form time to time by NOVA for the
benefit of its employees and/or executive officers, at no cost to
Employee.
(b) Life Insurance. Employee shall be entitled to participate in any life
---------------
insurance plans established, offered, or adopted from time to time by
NOVA for the benefit of its employees and/or executive officers.
2
<PAGE>
(c) Disability Insurance. Employee shall be entitled to participate in
---------------------
any disability insurance plans established, offered, or adopted from
time to time by NOVA for the benefit of its employees and/or executive
officers.
(d) Vacations, Holidays. Employee shall be entitled to at least four (4)
--------------------
weeks of paid vacation each year and all holidays observed by NOVA.
(e) Stock Option Plans. Employee shall be eligible for participation in
-------------------
any Stock Option Plan adopted by NOVA's Board of Directors.
(f) Other Benefits. In addition to and not in any way in limitation of
---------------
the benefits set forth in this Section 3, Employee shall be eligible to
participate in all additional employee benefits provided by NOVA
(including, without limitation, all tax-qualified retirement plans,
non-qualified retirement and/or deferred compensation plans, incentive
plans, other stock option or purchase plans, and fringe benefits) on
the same basis as such are afforded to other executive officers of NOVA
during the term of this Agreement.
(g) Terms and Provisions of Plans Control. Notwithstanding any provisions
--------------------------------------
of this Section 3 to the contrary, Employee and his dependents shall
only be entitled to participate in plans or arrangements of NOVA to the
extent generally allowed for similarly situated employees and/or
executive officers by the terms and provisions of such plans or
arrangements. NOVA agrees that it shall not take action (during the
term of this Agreement or the Severance Period) to modify the terms and
provisions of any such plan or arrangement so as to exclude only
Employee and/or his dependents either by excluding Employee and/or his
dependents explicitly by name or by modifying provisions generally
applicable to all employees and dependents so that only Employee and/or
his dependents would ever possibly be effected.
4. PERSONNEL POLICIES. Employee shall conduct himself at all times in a
businesslike and professional manner as appropriate for a person in his position
and shall represent NOVA in all respects as complies with good business and
ethical practices. In addition, Employee shall be subject to and abide by the
policies and procedures of NOVA applicable to personnel of NOVA, as adopted from
time to time.
5. REIMBURSEMENT FOR BUSINESS EXPENSES. Employee shall be reimbursed, on a
monthly basis, for all out-of-pocket business expenses incurred by him in the
performance of his duties hereunder, provided that Employee shall first document
and substantiate said business expenses in the manner generally required by NOVA
under its policies and procedures.
6. TERM AND TERMINATION OF EMPLOYMENT.
(a) This Agreement shall be effective as of the Effective Date.
(b) Employee's Employment shall terminate immediately upon the discharge of
Employee for "Cause." For the purpose of this Agreement, the term
"Cause," when
3
<PAGE>
used with respect to termination by NOVA of Employee's Employment
hereunder, shall mean termination as a result of: (i) Employee's
competition with the Business of NOVA either directly or indirectly,
(ii) Employee's willful, intentional, or grossly negligent failure to
perform his duties under this Agreement diligently and in accordance
wit the directions of NOVA; (iii) Employee's willful, intentional, or
grossly negligent failure to comply with the decisions or policies of
NOVA; (iv) Employee's failure to discharge Employee's duty of loyalty
to NOVA; or (v) final conviction of Employee of a felony; provided,
however, that in the event NOVA desires to terminate Employee's
Employment pursuant to subsections (i), (ii), (iii), or (iv) of this
Section 6 (b), NOVA shall first give Employee written notice of such
intent, detailed and specific description of the reasons and basis
therefor, and thirty (30) days to remedy or cure such perceived
breaches or deficiencies by Employee (the "Cure Period"). If Employee
does not cure the perceived breaches or deficiencies within the Cure
Period, NOVA may discharge Employee immediately upon written notice to
Employee. If NOVA desires to terminate Employee's Employment pursuant
to subsection (v) of this Section 6(b), NOVA shall first give Employee
three (3) days prior written notice of such intent.
(c) Employee's Employment shall terminate immediately upon the death of
Employee.
(d) Employee's Employment shall terminate immediately upon thirty (30)
days prior written notice to Employee if Employee shall at any time be
incapacitated by reason of physical or mental illness or otherwise
incapable of performing the duties under this Agreement for a
continuous period of one hundred eighty (180) consecutive days;
provided, however, to the extent NOVA could, with reasonable
accommodation and without undue hardship, continue to employ Employee
in some other capacity after such one hundred eighty (180) day period,
NOVA shall, to the extent required by the Americans With Disabilities
Act, offer to do so, and, if such offer is accepted by Employee,
Employee shall be compensated accordingly.
(e) Employee may terminate this Agreement, upon thirty (30) days prior
written notice to NOVA (the "Notice Period"), in the event (i) there is
a material diminution in Employee's duties and responsibilities, or
such duties and responsibilities are otherwise diminished such that
they no longer reflect duties and responsibilities customary for an
Executive Vice President, Sales and Marketing, or (ii) Employee is
required to relocate to an office that is more than fifty (50) miles
from Employee's current office located at One Concourse Parkway, Suite
300, Atlanta, Georgia 30328 (each of (i) and (ii) being referred to as
a "Responsibilities Breach"), and NOVA fails to cure said
Responsibilities Breach, to the reasonable satisfaction of Employee,
within the Notice Period.
(f) Employee may, at his sole option and his sole discretion, give notice
of his intent to terminate his Employment hereunder at any time within
ninety (90) days after a "Change in Control" (as defined below) has
occurred, and may thereafter terminate his employment hereunder
pursuant to the terms of this Section 6(f). Employee may exercise this
right by giving NOVA one hundred eighty (180) days written notice of
such intent at any time within such ninety (90) day period, and
Employee's Employment hereunder shall terminate as of the expiration of
such one hundred
4
<PAGE>
eighty (180) day period. For the purposes of this Agreement, "Change in
Control" means (i) the acquisition, directly or indirectly, by any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), within any 12 month
period, of securities of the corporation representing an aggregate of
twenty-five percent (25%) or more of the combined voting power of
NOVA's outstanding securities (an "Acquisition"), and during the period
of 18 months following such Acquisition, individuals who at the
beginning of such period constitute NOVA's board of directors, case for
any reason constitute at least a majority thereof, unless the election
of new director was approved in advance by a vote of at least a
majority of the directors then still in office who were directors at
the beginning of the period, or (ii) the sale of all or substantially
all of NOVA's assets.
(g) This Agreement shall automatically renew for successive two (2) year
terms (each a "Renewal Term") unless either party hereto gives the
other party hereto written notice of its or his intent not to renew
this agreement no later than one hundred eighty (180) days prior to the
date the Initial Term, or any Renewal Term, is scheduled to expire.
(h) Other than as specifically provided in this Section 6, and then only
in strict compliance with the terms hereof, this Agreement and/or
Employee's Employment may not be terminated.
7. THE SEVERANCE PERIOD.
(a) Upon termination of Employee's Employment, for whatever reason (other
than termination for "Cause" pursuant to Section 6(b), termination
because this Agreement has not been automatically renewed by Employee
after the Initial Term or any Renewal Term, or termination because
Employee "quits" or otherwise voluntarily terminates his Employment
other than as specifically contemplated herein) (each, a "Termination
Exclusion"), but including termination because this Agreement has not
been automatically renewed by NOVA (the effective date of such
termination being referred to as the "Termination Date"), in addition
to any amounts payable to Employee hereunder (including but not limited
to accrued but unpaid Base Salary or Bonus Compensation), and any other
benefits required to be provided to Employee and his dependents under
contract and applicable law:
(i) NOVA shall pay Employee an aggregate amount in cash equal to two
times his then Base Salary (the "Severance Payment"). The
Severance Payment shall be paid by NOVA to Employee in twenty-
four (24) equal monthly payments, the first of which shall be
made on the first day of the calendar month following the
calendar month in which the Termination Date occurs; provided,
however, that if Employee terminates his Employment after a
Change in Control of NOVA pursuant to the terms of Section
6(f) hereof, NOVA shall pay Employee the Severance Payment in one
lump sum within fifteen (15) days of the Termination Date;
(ii) Not later than ninety (90) days after the end of the fiscal year
during which the Termination Date occurs, NOVA shall pay employee
a pro rata (relative to the
5
<PAGE>
Termination Date) portion of the Bonus Compensation employee
would have been eligible for had he remained in the employ of the
Company until the end of such fiscal year;
(iii) Notwithstanding any provision to the contrary in any other
agreement or document (including but not limited to NOVA's stock
option plans), all stock options that, as of the Effective Date,
have been granted to Employee shall become vested and exercisable
immediately upon notice of such termination (whether given by
NOVA or Employee, and including notice by NOVA pursuant to
Section 6(g) that it does not intend to renew this Agreement)
(collectively, the "Vested Options"), and until the later of the
Termination Date or such later date as provided under the
applicable stock option plan or stock option agreement, Employee
shall have the continuing right to exercise any or all of the
Vested Options;
(iv) To the extent that Employee and/or any of his dependents is
eligible to, and timely elects to, receive continuation coverage
under any group health plan providing medical, dental, vision,
prescription drug, wellness or other health care or medical
coverage which is subject to the provisions of part 6 of Title I
of ERISA ("COBRA"), NOVA shall timely pay any premiums required
for such coverage for the duration of the Severance Period (or,
at the election of NOVA, pay Employee a lump sum as reimbursement
for such COBRA expenses). This payment of premiums by NOVA is not
intended to alter in any way the provisions of any group health
plan of NOVA, and all time limits, effects of subsequent coverage
and all other relevant provisions of any group health plan of
NOVA, and all time limits, effects of subsequent coverage and all
other relevant provisions of any such plan remain unchanged and
shall control Employee's (and his dependent's) entitlement to
coverage or benefits under such plan.
(v) For the duration of the Severance Period (or until Employee
becomes an employee of another company providing Employee and his
dependents with medical, life and disability insurance), NOVA
shall provide to Employee and his dependents the coverage for the
benefits described in SECTIONS 3(B) AND (C); provided, however,
such coverage shall not be provided to the extent that such
coverage is generally provided through an insurance contract with
a licensed insurance company and such insurance company will not
agree to insure for such coverage.
(b) During the two (2) year period following the Termination Date (the
"Severance Period"), Employee shall comply with the non-disclosure
obligations and covenants not to solicit or compete set forth in
Sections 9 and 10 below.
(c) In the event of the death of Employee, all benefits and compensation
hereunder shall, unless otherwise specified by Employee, be payable to,
exercisable by, Employee's estate.
6
<PAGE>
(d) In the event Employee's Employment is terminated as a result of one of
the Termination Exclusions identified in Section 7(a), NOVA, at its
sole option and its sole discretion and at any time within fifteen (15)
days of the Termination Date, may cause Employee to be obligated to
comply with the non-disclosure obligations and covenants not to solicit
or compete set forth in Sections 9 and 10 below for a period of one (1)
or two (2) years following the Termination Date, as set forth below:
(i) By giving notice to Employee at any time within fifteen (15) days
of the Termination Date of its intent to exercise the "One Year
Option" herein described, NOVA may cause Employee to be obligated
to comply with the non-disclosure obligations and covenants not to
solicit or compete set forth in Sections 9 and 10 below for a
period of one (1) year following the Termination Date; provided,
however, that NOVA shall pay Employee an aggregate amount in cash
equal to Employee's then current Base Salary multiplied by one (1)
(the "One Year Payment"). The One Year Payment shall be paid by
NOVA to Employee in twelve (12) equal monthly payments, the first
of which shall be made on the first day of the calendar month
following the calendar month in which the Termite Date occurs. In
the event NOVA exercises the One Year Option, the one (1) year
period following the Termination Date shall be deemed the
"Exclusion Period";
(ii) By giving notice to Employee any time within fifteen (15) days of
the Termination Date of its intent to exercise the "Two Year
Option" herein described, NOVA may cause Employee to be obligated
to comply with the non-disclosure obligations and covenants not to
solicit or compete set forth in Sections 9 and 10 below for a
period of two (2) years following the Termination Date; provided,
however, that NOVA shall pay Employee an aggregate amount in cash
equal to Employee's then current Base Salary multiplied by two (2)
(the "Two Year Payment"). The Two Year Payment shall be paid by
NOVA to Employee in twenty-four (24) equal monthly payments, the
first of which shall be made on the first day of the calendar
month following the calendar month in which the Termination Date
occurs. In the event NOVA exercises the Two Year Option, the two
year period following the Termination Date shall be deemed the
"Exclusion Period".
8. PRODUCTS, NOTES, RECORDS AND SOFTWARE. Employee acknowledges and agrees
that all memoranda, notes, records and other documents and computer software
created, developed, compiled, or used by Employee or made available to him
during the term of his Employment concerning or relative to the Business of
NOVA, including, without limitation, all customer data, billing information,
service data, and other technical material of NOVA is and shall be NOVA's
property. Employee agrees to deliver without demand all such materials to NOVA
within three (3) days after the termination of Employee's Employment. Employee
further agrees not to use materials for any reason after said termination.
7
<PAGE>
9. NONDISCLOSURE.
(a) NOVA Confidential Information. Employee acknowledges and agrees that
------------------------------
because of his Employment, he will have access to proprietary
information of NOVA concerning or relative to the Business of NOVA
(collectively, "NOVA Confidential Information") which includes, without
limitation, technical material of NOVA, sales and marketing
information, customer account records, billing information, training
and operations information, materials and memoranda, personnel records,
pricing and financial information relating to the business, accounts,
customers, prospective customers, employees and affairs of NOVA, and
any information marked "Confidential" by NOVA. Employee acknowledges
and agrees that NOVA Confidential Information is and shall be NOVA's
property. Employee agrees that during the term of his Employment,
Employee shall keep NOVA Confidential Information confidential, and
Employee shall not use NOVA Confidential Information for any reason
other than on behalf of NOVA pursuant to, and in strict compliance
with, the terms of this Agreement. Employment further agrees that
during the Severance Period of the Exclusion Period, as applicable (as
defined above), Employee shall continue to keep NOVA Confidential
Information confidential, and Employee shall not use NOVA Confidential
Information for any reason or in any manner.
(b) Notwithstanding the foregoing, Employee shall not be subject to the
restrictions set forth in subsection (a) of this Section 9 with respect
to information which:
(i) becomes generally available to the public other than as a result
of disclosure by Employee or the breach of Employee's obligations
under this Agreement;
(ii) becomes available to Employee from a source which is unrelated to
his Employment or the exercise of his duties under this
Agreement, provided that such source lawfully obtained such
information and is not bound by a confidentiality agreement with
NOVA; or
(iii) is required by law to be disclosed.
(c) Trade Secrets. Employee acknowledges and agrees that because of his
--------------
Employment, he will have access to "trade secrets" (as defined in the
Uniform Trade Secrets Act, O.C.G.A. (S) 10-1-760, et seq. (the Uniform
Trade Secrets Act") of NOVA ("Trade Secrets"). Nothing in this
Agreement is intended to alter the applicable law and remedies with
respect to information meeting the definition of "trade secrets" under
the Uniform Trade Secrets Act, which law and remedies shall be in
addition to the obligations and rights of the parties hereunder.
10. COVENANTS NOT TO SOLICIT OR COMPETE.
(a) Employee acknowledges and agrees that, because of his Employment, he
does and will continue to have access to confidential or proprietary
information concerning merchants, associate banks and ISOs of NOVA and
establish relationships with such merchants, associate banks and ISOs
as well as with the vendors, consultants,
8
<PAGE>
and suppliers used to service such merchants, associate banks and ISOs.
Employee agrees that during the term of his Employment and continuing
throughout the Severance Period of the Exclusion Period, as applicable
(provided NOVA complies with its obligations set forth in Section 7
hereof), Employee shall not, directly or indirectly, either
individually, in partnership, jointly, or in conjunction with, or on
behalf of, any person, firm, partnership, corporation, or
unincorporated association or entity of any kind:
(i) (aa) compete with NOVA in providing credit card and debit card
transaction processing services within the Territory or (bb)
otherwise advise, consult, or perform services in either a
supervisory or managerial capacity or as an advisor, consultant or
independent contractor for, or otherwise participate in the
management or control of, any person, firm, partnership,
corporation, or unincorporated association of any kind which is
providing credit card and debit card transaction processing
services within the Territory;
(ii) solicit or contact, for the purpose of providing products or
services the same as or substantially similar to those provided by
NOVA in connection with the Business, any person or entity that
during the term of Employee's Employment was a merchant, associate
bank, ISO or customer (including any actively-sought perspective
merchant, associate bank, ISO or customer) of NOVA and with whom
Employee had contact during his Employment;
(iii) persuade or attempt to persuade any merchant, associate bank, ISO,
customer, or supplier of NOVA to terminate or modify such
merchant's, associate bank's, ISO's customer's, or supplier's
relationship with NOVA if Employee had contact with such merchant,
associate bank, ISO, customer or associate during his Employment;
or
(iv) persuade or attempt to persuade any person who (aa) was employed
by NOVA as of the date of the termination of Employee's Employment
and (bb) is in a sales or management position with NOVA at the
time of such contact, to terminate or modify his employment
relationship, whether or not pursuant to a written agreement, with
NOVA, as the case may be.
11. NEW DEVELOPMENTS. Any discovery, invention, process or improvement made
or discovered by Employee during the term of his Employment in connection with
or in any way affecting or relating to the Business of NOVA (as then carried on
or under active consideration) shall forthwith be disclosed to NOVA and shall
belong to and be the absolute property of NOVA; provided, however, that this
provision does not apply to an invention for which no equipment, supplies,
facility, trade secret information of NOVA was used and which was developed
entirely on Employee's own time, unless (a) the invention relates (i) directly
to the Business of NOVA or (ii) to NOVA's actual or demonstrably anticipated
research or development; or (b) the invention results from any work performed by
Employee for NOVA.
12. REMEDY FOR BREACH. Employee acknowledges and agrees that his breach of
any of the covenants contained in Sections 8, 9 and 10 of this Agreement would
cause irreparable injury to NOVA and that remedies at law of NOVA for any actual
or threatened breach by
9
<PAGE>
Employee of such covenants would be inadequate and that NOVA shall be entitled
to specific performance of the covenants in such sections or injunctive relief
against activities in violation of such sections, or both, by temporary or
permanent injunction or other appropriate judicial remedy, writ or order,
without the necessity of proving actual damages. This provision with respect to
injunctive relief shall not diminish the right of NOVA to claim and recover
damages against Employee for any breach of this Agreement in addition to
injunctive relief. Employee acknowledges and agrees that he will be responsible
for all legal expenses, including attorney's fees, which NOVA incurs in pursuing
remedies, whether legal or equitable, for any actual or threatened breach of
this Agreement by Employee. Employee acknowledges and agrees that, subject to
NOVA's compliance with the provisions of Section 7 hereof, the covenants
contained in Sections 8, 9 and 10 of this Agreement shall be construed as
agreements independent of any other provision of this or any other contract
between the parties hereto, and that the existence of any claim or cause of
action by Employee against NOVA, whether predicated upon this or any other
contract, shall not constitute a defense to the enforcement by NOVA of said
covenants.
13. REASONABLENESS. Employee has carefully considered the nature and extent
of the restrictions upon him and the rights and remedies conferred on NOVA under
this Agreement, and Employee hereby acknowledges and agrees that:
(a) the restrictions and covenants contained herein, and the rights and
remedies conferred upon NOVA, are necessary to protect the goodwill and
other value of the Business of NOVA;
(b) the restrictions placed upon Employee hereunder are narrowly drawn,
are fair and reasonable in time and territory, will not prevent him
from earning a livelihood, and place no greater restraint upon Employee
than is reasonably necessary to secure the Business and goodwill of
NOVA;
(c) NOVA is relying upon the restrictions and covenants contained herein
in continuing to make available to Employee information concerning the
Business of NOVA; and
(d) Employee's Employment places him in a position of confidence and trust
with NOVA and its employees, merchants, associate banks, ISOs,
customers, vendors and suppliers.
14. INVALIDITY OF ANY PROVISION. It is the intention of the parties hereto
that the provisions of this Agreement shall be enforced to the fullest
permissible under the laws and public policies of each state and jurisdiction in
which such enforcement sought, but that the unenforceability (or the
modification to conform with such laws or public policies) of any provision
hereof shall not render unenforceable or impair the remainder of this Agreement
which shall be deemed amended to delete or modify, as necessary, the invalid or
unenforceable provisions. The parties further agree to alter the balance of this
Agreement in order to render the same valid and enforceable. The terms of the
non-competition provisions of this Agreement shall be deemed modified to the
extent necessary to be enforceable, it shall be modified to encompass the
longest term which is enforceable and, if the scope of the geographic area of
non-competition is too great to be enforceable, it shall be modified to
10
<PAGE>
encompass the greatest area that is enforceable. The parties further agree to
submit any issues regarding such modification to a court of competent
jurisdiction if they are unable to agree and further agree that if said court
declines to so amend or modify this Agreement, the parties will submit the issue
of amendment or modification of the non-arbitration rules then in effect of
American Arbitration Association. Any such arbitration hearing will be held in
Atlanta, Georgia, and this Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia, including this arbitration
provision.
15. APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia.
16. WAIVER OF BREACH. The waiver by NOVA of a breach of any provision of
this Agreement by Employee shall not operate or be construed as a waiver of any
subsequent breach by Employee.
17. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
NOVA, its respective subsidiaries and affiliates, and their respective
successors and assigns. This Agreement is not assignable by Employee but shall
be freely assignable by NOVA.
18. NOTICES. All notices, demands and other communications hereunder shall
be in writing and shall be delivered in person or deposited in the United States
mail, certified or registered, with return receipt requested, as follows:
(i) If to Employee, to:
John M Perry
_______________________________
_______________________________
_______________________________
(ii) If to NOVA, to:
NOVA Information Systems, Inc.
One Concourse Parkway
Suite 300
Atlanta, Georgia 30328
Attention: James M. Bahin
Chief Financial Officer
Telephone No.: (770) 396-1456
19. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof. It may not be changed orally
but only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification, extension, or discharge is sought.
20. INDEMNIFICATION. At all times during and after Employee's Employment
and the effectiveness of this Agreement, NOVA shall indemnify Employee (as a
director, officer, employee and otherwise) to the fullest extent permitted by
law and shall at all times maintain
11
<PAGE>
appropriate provisions in its Articles of Incorporation and Bylaws which mandate
that NOVA provide such indemnification.
21. SURVIVAL. The provisions of Sections 7, 8, 9, 10, 11, 12, 14 and 20
shall survive termination of Employee's Employment and termination of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above shown.
"EMPLOYEE":
BY:__________________________________
"NOVA":
NOVA INFORMATION SYSTEMS, INC.
By:__________________________________
James M. Bahin
Chief Financial Officer
12
<PAGE>
EXHIBIT 11.1
NOVA CORPORATION
COMPUTATION OF PRO FORMA EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1996 1996
------------------ ----------------
<S> <C> <C>
Weighted average Common Stock outstanding during
the period 22,104,131 16,821,959
Cheap Stock (1) 11,717 19,843
Conversion of Preferred Stock into Common Stock 4,959,303 8,398,657
Dilutive effect of common stock equivalents 1,481,387 2,033,471
----------- -----------
Total 28,556,538 27,273,930
=========== ===========
Net income $ 1,439,000 $ 2,554,000
Less: Preferred Stock dividends 75,082 229,677
----------- -----------
Net income available for Common Stock and
common stock equivalents $ 1,363,918 $ 2,324,323
=========== ===========
Per share amount $0.05 $0.09
=========== ===========
</TABLE>
__________
(1) Pursuant to Securities and Exchange Commission Accounting Bulletin No. 83,
common stock and common stock equivalents issued at prices below the assumed
initial public offering price per share ("Cheap Stock") during the twelve
months immediately preceding the initial filing date of the Company's
Registration Statement for its public offering have been included as
outstanding for all periods presented.
<PAGE>
EXHIBIT 11.2
NOVA CORPORATION
COMPUTATION OF HISTORICAL EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average Common Stock outstanding during
the period 22,104,131 28,844,430 16,821,959 28,797,268
Cheap Stock (1) 11,717 0 19,843 0
Dilutive effect of common stock equivalents 1,481,387 1,145,541 2,033,471 1,268,358
----------- ----------- ----------- -----------
Total 23,597,235 29,989,971 18,875,273 30,065,626
=========== =========== =========== ===========
Net income $ 1,439,000 $ 4,416,000 $ 2,554,000 $ 7,561,000
Less: Preferred Stock dividends 485,201 0 1,485,591 0
----------- ----------- ----------- -----------
Net income available for Common Stock
and common stock equivalents $ 953,799 $ 4,416,000 $ 1,068,409 7,561,000
=========== =========== =========== ===========
Per share amount $0.04 $0.15 $0.06 $0.25
=========== =========== =========== ===========
FULLY DILUTED
Weighted average Common Stock outstanding during
the period 22,104,131 28,844,430 16,821,959 28,797,268
Cheap Stock (1) 11,717 0 19,843 0
Dilutive effect of common stock equivalents 1,481,387 1,386,464 2,033,471 1,457,553
----------- ----------- ----------- -----------
Total 23,597,235 30,230,894 18,875,273 30,254,821
=========== =========== =========== ===========
Net income $ 1,439,000 $ 4,416,000 $ 2,554,000 $ 7,561,000
Less: Preferred Stock dividends 485,201 0 1,485,591 0
----------- ----------- ----------- -----------
Net income available for Common Stock
and common stock equivalents $ 953,799 $ 4,416,000 $ 1,068,409 $ 7,561,000
=========== =========== =========== ===========
Per share amount $0.04 $0.15 $0.06 $0.25
=========== =========== =========== ===========
</TABLE>
__________
(1) Pursuant to Securities and Exchange Commission Accounting Bulletin No. 83,
common stock and common stock equivalents issued at prices below the
assumed initial public offering price per share ("Cheap Stock") during the
twelve months immediately preceding the initial filing date of the
Company's Registration Statement for its public offering have been included
as outstanding for all periods presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 20,288,000
<SECURITIES> 0
<RECEIVABLES> 25,281,000
<ALLOWANCES> 3,707,000
<INVENTORY> 897,000
<CURRENT-ASSETS> 50,449,000
<PP&E> 14,133,000
<DEPRECIATION> 1,004,000
<TOTAL-ASSETS> 121,861,000
<CURRENT-LIABILITIES> 27,788,000
<BONDS> 0
0
0
<COMMON> 289,000
<OTHER-SE> 92,414,000
<TOTAL-LIABILITY-AND-EQUITY> 121,861,000
<SALES> 78,044,000
<TOTAL-REVENUES> 78,044,000
<CGS> 59,595,000
<TOTAL-COSTS> 59,595,000
<OTHER-EXPENSES> 11,464,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,284,000
<INCOME-TAX> 2,868,000
<INCOME-CONTINUING> 4,416,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,416,000
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
