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As filed with the Securities and Exchange Commission on September 29, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
NOVA CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 58-2209575
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
ONE CONCOURSE PARKWAY, SUITE 300, ATLANTA, GEORGIA, 30328
(Address of principal executive offices, including zip code)
NOVA CORPORATION 1996 EMPLOYEES STOCK INCENTIVE PLAN
NOVA CORPORATION 1996 DIRECTORS STOCK OPTION PLAN
(Full title of the plans)
--------------------------
COPIES TO:
JAMES M. BAHIN DAVID M. CALHOUN, ESQ.
NOVA CORPORATION LONG ALDRIDGE & NORMAN LLP
ONE CONCOURSE PARKWAY 303 PEACHTREE STREET
SUITE 300 SUITE 5300
ATLANTA, GEORGIA 30328 ATLANTA, GEORGIA 30308
(Name and address of agent for service) (404) 527-4000
(770) 396-1456
(Telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Title of Securities Amount to be Proposed Maximum Offering Proposed Maximum Amount of
to be Registered Registered Price Per Share (2) Aggregate Offering Price (2) Registration Fee (2)
=================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.01
par value per share
1996 Employees
Stock Incentive Plan 4,000,000(1) $29.656 $118,624,000.00 $34,994.08
1996 Directors
Stock Option Plan 134,250(2) $29.656 $ 3,981,318.00 $ 1,174.49
15,750 $30.3631 $ 478,218.83 $ 141.08
Total 4,150,000 $123,083,536.83 $36,309.65
=================================================================================================================================
</TABLE>
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(1) The shares consist of additional shares of Common Stock of the Registrant
("NOVA Common Stock") that may be acquired pursuant to options or awards
that may be granted in the future pursuant to the NOVA Corporation 1996
Employees Stock Incentive Plan, as amended (the "Stock Incentive Plan").
The initial 2,000,000 shares of NOVA Common Stock reserved for issuance
under the Stock Incentive Plan were registered under a Registration
Statement (Commission File No. 333-04351) that became effective on May 23,
1996. An undetermined number of additional shares may be issued, or the
shares registered hereunder may be combined into an undetermined lesser
number of shares, if the antidilution provisions of the Stock Incentive
Plan become operative.
(2) The shares represent (i) 15,750 shares of NOVA Common Stock which may be
acquired pursuant to options outstanding under the NOVA Corporation 1996
Directors Stock Option Plan (the "Directors Plan") and (ii) 134,250 shares
of NOVA Common Stock which may be acquired pursuant to options available
for grant in the future under the Directors Plan.
(3) The offering price for the 15,750 shares subject to currently outstanding
options under the Directors Plan are the applicable option exercise prices
for each currently outstanding option. The exercise price for such options
varies from $18.125 per share to $32.00 per share with an average exercise
price of $30.3631 per share and a total exercise price for all options of
$478,218.83. The offering price of the 134,250 shares which may be acquired
pursuant to options available for grant in the future under the Directors
Plan and the 4,000,000 shares which may be acquired pursuant to options
available for grant in the future under the Stock Incentive Plan is not
presently determinable. The offering price for such shares is estimated
pursuant to Rule 457(c) and (h)(1) solely for the purpose of calculating
the registration fee, and is based upon the average of the high and low
prices of the NOVA Common Stock on September 23, 1998, as quoted on the New
York Stock Exchange.
INCORPORATION BY REFERENCE OF EARLIER REGISTRATION STATEMENT
This Registration Statement relates, in part, to the amendment of the Stock
Incentive Plan to increase the number of shares of NOVA Common Stock authorized
to be issued under the Plan from 2,000,000 to 6,000,000. An earlier
Registration Statement filed on Form S-8 (Commission File No. 333-04351)
covering 2,000,000 shares of NOVA Common Stock issuable under the Stock
Incentive Plan is effective. Pursuant to General Instruction E to Form S-8, the
contents of the earlier Registration Statement are incorporated herein by
reference.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in the instructions to
Part I of the Registration Statement on Form S-8 will be sent or given to
participants in the Stock Incentive Plan and the Directors Plan as required by
Rule 428(b)(1) of the rules promulgated under the Securities Act of 1933, as
amended. As permitted by the instructions to Part I of the Registration
Statement on Form S-8, such documents are not filed with this Registration
Statement.
<PAGE>
EXPLANATORY NOTE: PURSUANT TO GENERAL INSTRUCTION C TO REGISTRATION STATEMENT
ON FORM S-8, THE FOLLOWING "REOFFER PROSPECTUS" MAY BE USED FOR REOFFERS AND
RESALES OF "CONTROL SECURITIES" OR "RESTRICTED SECURITIES" (EACH AS DEFINED IN
GENERAL INSTRUCTION C) GRANTED OR ISSUED UNDER THE NOVA CORPORATION 1996
EMPLOYEES STOCK INCENTIVE PLAN.
PROSPECTUS 6,000,000 SHARES
NOVA CORPORATION
COMMON STOCK
---------------
This Prospectus relates to reoffers and resales by certain employees,
former employees, affiliates or former affiliates (the "Selling Shareholders")
of NOVA Corporation ("NOVA"), of up to 6,000,000 shares (the "Shares") of NOVA
Common Stock, $.01 par value per share (the "NOVA Common Stock"), that have been
or may in the future be issued as restricted stock or acquired upon the exercise
of options to purchase NOVA Common Stock pursuant to the NOVA Corporation 1996
Employees Stock Incentive Plan (the "Stock Incentive Plan"). The number of
shares offered hereby may be adjusted as a result of events such as stock
splits, stock dividends or similar transactions pursuant to the terms of the
Stock Incentive Plan. NOVA will not receive any proceeds from the sale of the
Shares.
The sale of the Shares offered hereby may be effected from time to time in
transactions on the New York Stock Exchange or such other national securities
exchange or automated interdealer quotation system on which the shares of NOVA
Common Stock are then listed, in the over-the-counter market, in negotiated
transactions, through put or call options transactions relating to the Shares,
through short sales of Shares, or through a combination of such methods of sale,
at prevailing market prices or at negotiated prices. The Selling Shareholders
must effect such transactions by notifying NOVA in advance of any intended
transaction in order for NOVA to determine compliance with applicable federal
and state securities laws, and then upon receipt of notice from NOVA that such
transaction may proceed. Such transactions may or may not involve brokers or
dealers. Such brokers or dealers may receive compensation in the form of
commissions or otherwise in such amounts as may be negotiated by them. As of the
date of this Prospectus, no agreements have been reached for the sale of the
Shares or the amount of any compensation to be paid to brokers or dealers in
connection therewith. NOVA will bear all expenses in connection with the
registration and sale of the Shares being offered by the Selling Shareholders,
other than commissions, concessions or discounts to brokers or dealers and fees
and expenses of counsel or other advisors to the Selling Shareholders. See "Plan
of Distribution."
The NOVA Common Stock is listed on the New York Stock Exchange under the
trading symbol "NIS." On September 28, 1998, the last reported sale price for
the shares of NOVA Common Stock on the New York Stock Exchange was $31.1875 per
share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF
THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 29, 1998.
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN CONTEMPLATED AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY NOVA OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF NOVA SINCE THE DATE
HEREOF OR THAT ANY INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
2
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TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION.................................................. 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................ 4
THE COMPANY............................................................ 6
RISK FACTORS........................................................... 7
SELLING SHAREHOLDERS................................................... 16
PLAN OF DISTRIBUTION................................................... 16
EXPERTS................................................................ 17
LEGAL MATTERS.......................................................... 17
3
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AVAILABLE INFORMATION
NOVA is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements,
reports and other information concerning NOVA can be inspected and copied at
prescribed rates at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the regional
offices of the Commission at Seven World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. In addition, the reports, proxy statements and other
information can be obtained from the Commission's website at http://www.sec.gov.
The NOVA Common Stock is listed on the New York Stock Exchange. Reports, proxy
statements and other information concerning NOVA also can be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
NOVA has filed with the Commission a Registration Statement on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of NOVA Common Stock offered
hereby. This Prospectus, which is a part of the Registration Statement, does
not contain all the information set forth in, or annexed as exhibits to, the
Registration Statement, certain portions of which have been omitted pursuant to
the rules and regulations of the Commission. For further information with
respect to NOVA and the Shares offered hereby, reference is made to the
Registration Statement, including the exhibits thereto. Copies of the
Registration Statement, including exhibits, may be obtained from the
aforementioned public reference facilities of the Commission upon payment of the
prescribed fees or may be examined without charge at such facilities.
Statements contained herein concerning any document filed as an exhibit are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference.
NOVA will provide without charge to each person to whom a copy of this
Prospectus is delivered, including any beneficial owner of the Shares, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that the Prospectus incorporates). Requests should be directed to: James M.
Bahin, Corporate Secretary, NOVA Corporation, One Concourse Parkway, Suite 300,
Atlanta, Georgia 30328, telephone number (770) 396-1456.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by NOVA with the Commission are
hereby incorporated herein by reference as of their respective dates.
(1) NOVA's Annual Report on Form 10-K for the fiscal year ended December
31, 1997;
(2) NOVA's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
(3) NOVA's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998;
(4) NOVA's Proxy Statement dated April 20, 1998, relating to its 1998
Annual Meeting of Shareholders;
4
<PAGE>
(5) The description of NOVA Common Stock as contained in Item 1 of NOVA's
Registration Statement on Form 8-A (Registration No. 1-14342), as
filed with the Commission on May 7, 1996; and
(6) The Joint Proxy Statement/Prospectus dated August 20, 1998, included
in NOVA's Registration Statement on Form S-4 (Registration No. 333-
61867).
All reports and documents filed by NOVA pursuant to Section 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference herein and made a part hereof
from the date of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
5
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THE COMPANY
GENERAL
NOVA is a Georgia corporation with its principal executive offices at One
Concourse Parkway, Suite 300, Atlanta, Georgia 30328. Its telephone number is
(770) 396-1456.
The Shares offered hereby have been issued to the Selling Shareholders upon
the exercise of options to purchase NOVA Common Stock.
RECENT TRANSACTION WITH PMT
Effective September 24,1998, NOVA and Services, Inc. ("PMT") completed the
merger transactions contemplated by the Agreement and Plan of Merger dated June
17, 1998 (the "Merger Agreement"), between NOVA , Church Merger Corp., a wholly-
owned subsidiary of NOVA ("Mergerco") and PMT. The shareholders of NOVA and
PMT approved the Merger Agreement and the transactions contemplated thereby at
separate special meetings of shareholders held on September 24, 1998. PMT is an
independent service organization that markets and services electronic credit
card authorization and payment systems to merchants located throughout the
United States. PMT's operating and growth strategies focus on expanding PMT's
customer base of small- to medium-sized merchants through trade and other
association affiliations, telemarketing, acquiring subsidiary sales forces,
merchant portfolio purchases and the provision of high levels of customer
service. PMT will continue to operate its business as a wholly-owned subsidiary
of NOVA.
Pursuant to the Merger Agreement, Mergerco merged (the "Merger") with and
into PMT, with PMT surviving the Merger as a wholly-owned subsidiary of NOVA.
Upon consummation of the Merger, each outstanding share of Common Stock of PMT
("PMT Stock") ceased to be outstanding and was converted into and exchanged for
0.715 shares of NOVA Common Stock. Additionally, each option or warrant to
purchase PMT Stock outstanding at the effective time of the Merger, whether or
not then exercisable, was converted automatically into an option or warrant to
purchase a number of shares of NOVA Common Stock equal to (A) the number of
shares of PMT Stock issuable upon exercise of the option or warrant multiplied
by (B) 0.715 (the exchange ratio in the Merger). The number of shares of NOVA
Common Stock issuable upon exercise of the options and warrants will be rounded
to the nearest whole number of shares of NOVA Common Stock. The exercise price
per share of NOVA Common Stock issuable upon exercise of the options and
warrants will be equal to (A) the exercise price per share of PMT Stock set
forth in the applicable option or warrant agreement divided by (B) 0.715 and
rounded to the nearest cent. Pursuant to the terms of the PMT stock option
plans pursuant to which PMT granted the options, all options granted under the
plans which are outstanding at the effective time of the Merger became fully
vested at the effective time of the Merger. The other terms and conditions of
the options and warrants will be substantially the same as the terms and
conditions of the options immediately prior to the effective time. The terms of
the Merger Agreement, including the consideration payable by NOVA, was
determined through arms-length negotiations between NOVA and PMT.
As of the effective time of the Merger, 52,658,644 shares of PMT Stock were
issued and outstanding and approximately 3,260,058 shares of PMT Stock were
issuable upon exercise of outstanding options and warrants to purchase PMT
Stock. As a result, NOVA will issue an aggregate of approximately 37,650,930
shares of NOVA Common Stock in the Merger and has reserved 2,330,941 shares of
NOVA Common Stock for issuance upon exercise of the options and warrants to
purchase PMT Stock. NOVA will issue only whole
6
<PAGE>
shares of NOVA Common Stock in the Merger and will pay to former PMT
shareholders cash in lieu of fractional shares of NOVA Common Stock to which
they otherwise are entitled.
Pursuant to the Merger Agreement, NOVA agreed that at the effective time of
the Merger the Board of Directors of NOVA would consist of 11 directors,
comprised of five directors designated by NOVA (the "NOVA Designated
Directors"), five directors designated by PMT (the "PMT Designated Directors"),
and one other director nominated by NOVA and approved by PMT (the "Nominated
Director"). As a result, the Board of Directors now consists of Edward
Grzedzinski, James M. Bahin, Dr. Henry Kressel, Maurice F. Terbrueggen, Stephen
E. Wall (NOVA Designated Directors), Charles T. Cannada (the Nominated
Director), Richardson M. Roberts, Gregory S. Daily, Stephen D. Kane, Harold L.
Siebert and George M. Miller II (the PMT Designated Directors). Each of the NOVA
Designated Directors and the Nominated Director were directors of NOVA prior to
the Merger and each of the PMT Designated Directors were directors of PMT prior
to the Merger. In order to facilitate the change in composition of the Board
contemplated by the Merger Agreement, at the effective time of the Merger, three
directors of NOVA , Dr. James E. Carnes, U. Bertram Ellis and Joseph P. Landy,
resigned as directors.
Edward Grzedzinski, the Chairman of the Board, President and Chief
Executive Officer of NOVA prior to the Merger, and James M. Bahin, the Vice
Chairman, Chief Financial Officer and Secretary of NOVA prior to the Merger,
retained their positions with NOVA . Richardson M. Roberts, the Chairman and
Chief Executive Officer of PMT prior to the Merger, was elected as a Vice
Chairman of NOVA's Board of Directors and continues as Chief Executive Officer
of PMT. Gregory S. Daily, the President of PMT prior to the Merger, was elected
as a Vice Chairman of NOVA's Board of Directors and continues as President of
PMT.
The terms and conditions of the Merger Agreement and the transactions
contemplated thereby, including certain pro forma combined condensed financial
data, are set forth in the Joint Proxy Statement/Prospectus dated August 20,
1998, included in NOVA's Registration Statement on Form S-4 (Registration No.
333-61867), which is incorporated herein by reference.
In connection with the Merger, NOVA amended its Articles of Incorporation
to increase the number of authorized shares of NOVA Common Stock from 50,000,000
shares to 200,000,000 shares. The shareholders of NOVA approved the amendment
to the Articles of Incorporation at the special meeting of NOVA's shareholders
held on September 24, 1998. The shareholders also approved an amendment to the
Stock Incentive Plan to increase the number of shares of NOVA Common Stock
issuable pursuant to the Stock Incentive Plan from 2,000,000 shares to 6,000,000
shares.
RISK FACTORS
In addition to the other information included or incorporated by reference
in this Prospectus, the following risk factors should be considered carefully in
evaluating an investment in NOVA Common Stock.
This Prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 20A of the Exchange Act, which
represent NOVA's expectations or beliefs, including, but not limited to,
statements concerning transaction volume and the impact of acquisitions, joint
ventures and alliances. When used in this Prospectus, the words "may," "could,"
"should," "would," "believe," "anticipate," "estimate," "expect," "intend,"
"plan" and similar terms and/or expressions are intended to identify forward-
looking statements. These statements by their nature involve substantial risks
and uncertainties, certain of which are beyond NOVA's control. NOVA cautions
that various factors, including the factors described under the
7
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caption "Risk Factors" and those discussed in NOVA's filings with the
Commission, as well as general economic conditions and industry trends could
cause actual results or outcomes to differ materially from those expressed in
any forward-looking statements of NOVA. Any forward-looking statement speaks
only as of the date of this Prospectus, and NOVA undertakes no obligation to
update any forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of an unanticipated event. New factors emerge from time to time, and
it is not possible for NOVA to predict all of such factors. Further, NOVA cannot
assess the impact of each such factor on its business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
VISA AND MASTERCARD REGISTRATION TERMINATION
NOVA, along with all other nonbank transaction processors, must be
sponsored by a financial institution that is a principal member of the VISA and
MasterCard credit card associations in order to process bankcard transactions.
Through each of Regions Bank, Bank of the West, Mellon Bank, N.A. ("Mellon
Bank"), Firstar Bank U.S.A., N.A. ("Firstar"), KeyBank National Association
("KeyBank") and FUNB, a subsidiary of First Union Corporation, which serve as
member clearing banks for NOVA, NOVA is registered with VISA and MasterCard as a
certified processor and member service provider. PMT is registered as a member
service provider with many of the clearing banks that currently provide
processing services on behalf of PMT. NOVA's designation with VISA and
MasterCard as a certified processor and NOVA's and PMT's status as a member
service provider are dependent upon NOVA's and PMT's continuing adherence to the
standards of the VISA and MasterCard credit card associations. These standards
are set by the respective member financial institutions of VISA and MasterCard,
some of which are competitors of NOVA and PMT. In the event NOVA or PMT fails to
comply with these standards, NOVA's designation as a certified processor or
NOVA's or PMT's status as a member service provider could be suspended or
terminated. There can be no assurance that VISA and MasterCard will maintain
NOVA's and PMT's registrations or that the current VISA and MasterCard rules
allowing NOVA, PMT and other nonbank transaction processors to market and
provide transaction processing services will remain in effect.
The termination of NOVA's or PMT's member service provider registrations or
NOVA's status as a certified processor, or any changes in the VISA or MasterCard
rules that prevent NOVA's or PMT's registration or otherwise limit NOVA's or
PMT's ability to provide transaction processing and marketing services for VISA
or MasterCard, would have a material adverse effect on NOVA's and PMT's
financial condition and results of operations.
CONVERSION OF PMT MERCHANT PORTFOLIO
In order to fully realize the anticipated cost savings and synergies
resulting from the Merger, NOVA intends to convert (the "PMT Conversion") a
substantial portion of PMT's merchant portfolio to the processing systems of
NOVA, as well as to NOVA's proprietary telecommunications network (the "NOVA
Network"). However, because PMT, in a manner similar in many respects to NOVA,
utilizes the services of third party processors and third party clearing and
settlement banks, the cooperation of such third parties is critical to a
successful PMT Conversion. Further, such third parties may claim an ownership
interest in certain of the PMT merchant relationships to which they are party,
and those claims, if successful, could impede the PMT Conversion and,
correspondingly, reduce the cost savings and synergies anticipated to be gained
by virtue of the Merger. In the event such third party claims arise or such
third parties refuse or fail to cooperate in the PMT Conversion, the resulting
inability to achieve anticipated cost savings and synergies from the Merger
could have a material adverse effect on NOVA.
8
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RISKS ASSOCIATED WITH THE MERGER AND ACQUISITION STRATEGY
Increased Consolidation in the Marketplace. A material element of NOVA's
growth strategy is the purchase of additional merchant portfolios and
acquisition of operating businesses and transaction processing assets in order
to facilitate growth, expand NOVA's distribution channels and create greater
economies of scale. NOVA faces significant competition from other transaction
processors and independent service organizations ("ISOs") for available
acquisition, joint venture and alliance opportunities. This competition has an
impact on the price and availability of acquisitions, joint ventures and
alliances. In addition, community and regional banks, whose transaction
processing businesses have been NOVA's primary source of acquisition
opportunities, in recent years have been undergoing extensive consolidation
reflective of underlying trends in the financial institutions industry and
unrelated to their transaction processing businesses. As a result, smaller banks
that may have sought to divest themselves of their transaction processing
businesses may be acquired by banks that compete with NOVA or banks that have a
relationship or alliance with one or more competitors of NOVA, thus potentially
depriving NOVA of acquisition opportunities. There can be no assurance that the
historical or current level of acquisition opportunities will continue to exist,
that NOVA will be able to acquire merchant portfolios, operating businesses and
transaction processing assets that satisfy NOVA's criteria, or that any such
acquisition will be on terms favorable to NOVA.
Complexity of Risk Analysis of Acquisition Targets. In evaluating any
potential purchase of a merchant portfolio, joint venture or business
combination (including the Merger), NOVA conducts a due diligence review of the
related merchant portfolio. The review process includes analyzing the
composition of the merchant portfolio, applying uniform standards and
underwriting guidelines developed by NOVA to the merchant portfolio and
attempting to identify high-risk merchants contained in the merchant portfolio.
Notwithstanding these due diligence efforts, however, there can be no assurance
that NOVA will properly assess the risk attributes associated with a purchased
portfolio or otherwise identify high-risk merchants. Incorrect risk assessments
may result in excessive losses from chargebacks or merchant fraud in connection
with any portfolio purchased or otherwise acquired by NOVA.
Conversion of Merchant Portfolios. At the time of consummation of merchant
portfolio purchases, business combinations (including the Merger) or joint
ventures, merchants in a purchased portfolio typically are not operating on the
NOVA Network and may not use the merchant accounting processors used by NOVA.
Until NOVA converts each newly-purchased merchant to the NOVA Network and NOVA's
merchant accounting processors, NOVA has little, if any, control over the
performance of such other networks and processors and typically is unable to
apply fully its risk management and fraud avoidance practices to such merchants.
NOVA also must continue to pay third parties for processing services until the
purchased portfolio is fully converted to the NOVA Network, reducing the
economic benefits to NOVA during such time. Moreover, the merchant customers
that comprise a purchased portfolio may have been sold transaction processing
services by ISOs and financial institutions sponsored by a principal member of
the VISA and MasterCard credit card associations. ISOs are independent agents
that typically market and sell the full range of transaction processing services
to merchants, with such services primarily being outsourced on a non-exclusive
basis. Further, the conversion of merchants may require that merchants learn new
operating procedures and could result in problems, causing merchants to seek
verbal authorization of credit and debit card transactions. As a condition to
conversion, merchants also may seek to negotiate lower fees.
As a result of the Merger, the magnitude, scope, timing, duration and
expense of the PMT Conversion, and the ongoing conversion of the merchant
portfolio associated with NOVA's joint venture transaction with
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KeyBank will, in the aggregate, be greater than any conversion previously
undertaken by NOVA, and there can be no assurance that NOVA can successfully
complete these conversions in a timely manner, either concurrently or in series.
Failure to complete these conversions in accordance with management plans could
have a material adverse effect on NOVA's financial condition and results of
operations.
NOVA's acquisition strategy and the resulting growth of NOVA from that
strategy will require that NOVA continue to attract and retain qualified
personnel, while concurrently expanding its managerial and operational
infrastructure. Further, the success of the PMT Conversion and the success of
the operations of PMT following the Merger also will depend on NOVA's ability to
retain a significant number of PMT's current key operations personnel following
the Merger. There can be no assurance that NOVA will be able to hire and retain
qualified personnel or that NOVA will be able to expand successfully its
infrastructure as appropriate to accommodate future acquisitions or growth.
NOVA's acquisitions may involve the hiring by NOVA of certain management and
sales personnel affiliated with the purchased portfolio, and the failure to
integrate successfully such personnel into NOVA's operations and business
culture may adversely affect the conversion process. As a result of any of these
factors and considerations, NOVA may not realize the expected economic benefits
associated with its acquisitions, which may have a material adverse effect on
NOVA's financial condition and results of operations.
There can be no assurance that future acquisitions will not have an adverse
effect upon NOVA's operating results, particularly in the fiscal quarters
immediately following the completion of such transactions, while the operations
of the acquired entities are converted and integrated into NOVA's operations.
NOVA's acquisition strategy will require substantial capital resources, and is
likely to result in NOVA incurring additional indebtedness. There can be no
assurance that financing for future acquisitions will be available or will be
obtained on terms favorable to NOVA.
Risks Associated with Joint Venture Alliances. The recently consummated
joint venture alliances with each of Firstar and KeyBank (each a "Joint
Venture," and collectively, the "Joint Ventures") present certain risks to NOVA
in addition to the risks normally associated with portfolio acquisitions which
have been, and continue to be, a material element of NOVA's growth strategy.
Because each of the Joint Ventures involved the creation of a newly-formed
limited liability company jointly owned, managed and serviced by NOVA and
Firstar or KeyBank, as the case may be, continued cooperation with each of
Firstar and KeyBank is important to the success of the Joint Ventures. There can
be no assurance that NOVA's relationships with each of Firstar and KeyBank will
continue to be cooperative and, accordingly, there can be no assurance that NOVA
will realize the anticipated economic benefits from the Joint Ventures. Further,
in the event of a change in control of NOVA's partners in the Joint Ventures,
there can be no assurance that the resulting entity will support the Joint
Ventures in the same manner and to the same degree as its predecessor. For
instance, Firstar Corporation, the parent of Firstar, recently announced that it
had agreed to merge with Star Banc Corporation. There can be no assurance that
the resulting entity in this merger will support the Firstar Joint Venture in
the same manner and to the same degree as Firstar. Further, the management and
provision of processing services to each of Elan Merchant Services, LLC ("Elan
Merchant Services") and Key Merchant Services, LLC ("Key Merchant Services")
(collectively, the "Limited Liability Companies") imposes increased
administrative, managerial and technological demands on NOVA's infrastructure
and related systems, and there can be no assurance that NOVA will meet
successfully such material demands and requirements.
Each of the Joint Ventures has been formed for a definitive term (subject
in each case to renewal provisions), but is subject to earlier termination by
NOVA or Firstar or KeyBank, as the case may be, under a variety of
circumstances. In the event of earlier termination, or upon termination of
either Joint Venture upon
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expiration of its term in the absence of renewal, the then-current assets and
merchant portfolio of such Joint Venture are subject to "repurchase rights" by
either NOVA or Firstar or KeyBank, as the case may be, depending on the
circumstances of termination. For example, each of the Joint Ventures imposes
upon NOVA certain standards with respect to the performance of its processing
services. In the event such standards are breached and not appropriately
remedied by NOVA, Firstar or KeyBank, as the case may be, would have the right
to purchase NOVA's interest in Elan Merchant Services or Key Merchant Services,
respectively. Any such purchase would likely result in a significant decrease in
the number of merchant locations served and the aggregate sales volume processed
by NOVA, which may have a material adverse effect on NOVA's financial condition
and results of operations. Further, in valuing the Joint Ventures, and
establishing a purchase price in connection therewith, NOVA assumes the
continuance of each of the Joint Ventures for a minimum term. Earlier
termination may result in NOVA not realizing the anticipated economic and
marketing benefits from the Joint Ventures, which may have a material adverse
effect on NOVA's financial condition and results of operations.
COMPETITION AND CONSOLIDATION
The market for credit, charge and debit card transaction processing
services is highly competitive. The level of competition has increased
significantly in recent years and this trend is expected to continue. According
to industry sources, the ten largest bankcard processors accounted for
approximately 85% of the total charge volume processed in 1997. Several of
NOVA's competitors and potential competitors have greater financial,
technological, marketing and personnel resources than NOVA, and there can be no
assurance that NOVA will continue to be able to compete successfully with such
entities. In addition, the competitive pricing pressures that would result from
any increase in competition would adversely affect NOVA's margins and may have a
material adverse effect on NOVA's financial condition and results of operations.
NOVA and, to a lesser extent, PMT, market their services through several
different marketing channels, including through banks. In the event that there
is continued significant consolidation in the banking industry, banks that
market NOVA's services through joint ventures, alliance relationships, and
otherwise may be acquired by banks that compete with NOVA or by banks that have
a relationship or alliance with one or more competitors of NOVA, thus
potentially depriving NOVA of a distribution channel. For instance, each of
Firstar (one of NOVA's joint venture partners) and Crestar (a bank with whom
NOVA maintains an alliance relationship) recently announced that they had agreed
to engage in business combination transactions with third party financial
institutions. While management does not believe that such business combinations,
if consummated, will have a material adverse effect on NOVA's relationship with
either Firstar or Crestar, there can be no assurance that the resulting entities
in such business combinations will support their respective relationships with
NOVA in the same manner and to the same degree as their predecessors.
MERCHANT ATTRITION
NOVA experiences attrition of its merchant base in the ordinary course of
business resulting from several factors, including business closures, losses to
competitors and conversion-related losses. In addition, substantially all of
NOVA's contracts with its merchants may be terminated by either party upon prior
notice of 30 days or less. Increased merchant attrition may have a material
adverse effect on NOVA's financial condition and results of operations. There
can be no assurance that NOVA will not experience higher rates of attrition in
the future, particularly in connection with purchased merchant portfolios
generally, and the PMT Conversion specifically.
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DEPENDENCE ON MERCHANT ACCOUNTING RELATIONSHIPS
NOVA outsources certain merchant accounting services to Vital Processing
Services L.L.C. (formerly Total System Services, Inc.) ("Vital Processing
Services") and Mellon Bank. These services consist of reorganizing and
accumulating daily transaction data on a merchant-by-merchant and card issuer-
by-card issuer basis, and forwarding this data to the credit card associations
for ultimate payment. The failure of Vital Processing Services and Mellon Bank
to continue to perform these services efficiently and effectively may adversely
affect NOVA's relationships with its merchant customers and may result in the
termination by merchants of their agreements with NOVA. The agreement with Vital
Processing Services expires July 1, 2001, and the agreement with Mellon Bank
expires June 30, 1999. NOVA currently is developing internal systems to provide
its own merchant accounting services. Termination of either agreement would
require NOVA to seek alternative outsourcing arrangements prior to NOVA's
implementation of NOVA's internal system to provide these merchant accounting
services. Although management believes that in the event of termination of
either or both of these agreements, NOVA could locate alternative outsourcing
arrangements or develop internal systems to perform these services, there can be
no assurance that such arrangements will be available on terms as favorable to
NOVA as the existing contracts or that NOVA could develop internal systems on a
timely or cost effective basis. Accordingly, termination of either agreement
could have a material adverse effect on NOVA's financial condition and results
of operations.
ANNOUNCED INTERCHANGE RATE INCREASES
Historically, VISA and MasterCard have increased their respective
interchange rates each year. These increases affect all transaction processing
industry competitors. While NOVA and PMT historically have reflected these
increases in their pricing to merchants, there can be no assurance that
merchants will continue to assume the entire impact of the future changes or
that transaction processing volumes and merchant attrition will not be adversely
affected by the changes.
CHARGEBACK RISK
When a billing dispute between a cardholder and a merchant is not resolved
in favor of the merchant, the transaction is "charged back" to the merchant and
the amount of the transaction is credited to the cardholder. Reasons for billing
disputes include, among others: (i) nonreceipt of merchandise or services; (ii)
unauthorized use of a credit card; and (iii) general disputes between a customer
and a merchant as to the quality of the goods sold or the services rendered by
that merchant. Some of NOVA's merchant customers, including certain merchants
that generate high transaction processing volume, require full or partial
payment from debit and credit cardholders for products or services to be
delivered or rendered in the future. If NOVA or its clearing banks are unable
to collect chargeback amounts from a merchant's account, and if the merchant
refuses or is unable due to bankruptcy or other reasons to reimburse NOVA for
the chargeback, NOVA bears the loss for the amount of the refund paid to the
cardholder. NOVA attempts to reduce their exposure to such losses by performing
periodic credit reviews on their merchant customers and adjusting rates based,
in part, on the merchant's credit risk, business or industry. There can be no
assurance that NOVA will not experience significant losses from chargebacks in
the future. Increases in chargebacks not paid by merchants may have a material
adverse effect on NOVA's financial condition and results of operations.
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MERCHANT FRAUD
NOVA bears the risk of losses caused by fraudulent credit card transactions
initiated by its merchant customers. Examples of merchant fraud include
inputting false sales transactions or false credits. NOVA monitors merchant
transactions against a series of standards that it and PMT have developed to
detect merchant fraud. Notwithstanding these measures, however, there can be no
assurance that NOVA will not experience significant amounts of merchant fraud in
the future, which may have a material adverse effect on NOVA's financial
condition and results of operations.
TELECOMMUNICATIONS SERVICES PROVIDED BY WORLDCOM
NOVA has developed a proprietary telecommunications network, the NOVA
Network, and maintains an operating relationship with WorldCom. Pursuant to its
agreement with NOVA, WorldCom provides long-distance and local
telecommunications access, as well as technical support, to NOVA in connection
with the NOVA Network. This agreement was renegotiated recently and expires July
1, 2001, subject to earlier termination by NOVA in the event of quality
deficiencies in WorldCom's service. If the WorldCom agreement is terminated or
not renewed, NOVA would be required to utilize the long-distance and local
telecommunications access of another long-distance provider, which may increase
NOVA's expenses for network services, resulting in a material adverse effect on
the financial condition and results of operations of NOVA. WorldCom owns
approximately 5.5% of the outstanding NOVA Common Stock and has a representative
on NOVA's Board of Directors. There can be no assurance that conflicts of
interests between WorldCom and NOVA will not arise or that any such conflicts
will be resolved in a manner favorable to NOVA.
CERTAIN STATE TAX ISSUES
Transaction processing companies like NOVA may be subject to state taxation
of certain portions of their fees charged to merchants for their services.
Application of this tax is an emerging issue in the transaction processing
industry and the states have not yet adopted uniform guidelines implementing
these regulations. If NOVA is required to pay such taxes and is unable to pass
this tax expense through to its merchant customers, the financial condition and
results of operations of NOVA could be adversely affected.
DEVELOPMENT AND MARKET ACCEPTANCE OF NEW PRODUCTS
Because the transaction processing industry and the software application
products and value-added services of the type offered by NOVA has been
characterized by rapidly changing technology and the development of new products
and services, management of NOVA believes that the future success of NOVA will
depend, in part, on NOVA's ability to continue to improve its products and
services and to offer its merchant customers new products and services. There
can be no assurance that NOVA will continue to develop successful new products
and services or that NOVA's newly-developed products and services will perform
satisfactorily or be widely accepted in the marketplace.
FLUCTUATION IN QUARTERLY OPERATING RESULTS
NOVA has experienced and expects to continue to experience significant
seasonality in its business. NOVA typically realizes higher revenues in the
third calendar quarter and lower revenues in the first calendar quarter,
reflecting increased transaction volumes during the summer months and a
significant decrease in transaction volume during the period immediately
following the holiday season. Quarterly results also are affected
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by the timing of purchases of merchant portfolios and joint ventures and the
timing and magnitude of expenses for merchant portfolio conversions.
Fluctuations in operating results may result in volatility in the price of the
NOVA Common Stock.
DEPENDENCE ON KEY MANAGEMENT
The development of NOVA's and PMT's business and operations has been
materially dependent upon the active participation of their respective executive
officers and other key employees. The loss of one or more of NOVA's executive
officers or other key employees may have a material adverse effect on NOVA's
financial condition and results of operations, as the case may be.
SIGNIFICANT INTANGIBLE ASSETS
A substantial portion of NOVA's assets are intangible assets related to
purchased merchant portfolios or business operations. In the event of a material
decline in revenues generated from any of such merchant portfolios or business
operations which would not be recovered from future cash flows, the fair value
and, as a result, the carrying value of the related intangible asset will be
reduced. Additionally, changes in accounting policies or rules that affect the
way in which such intangible assets are reflected in NOVA's financial
statements, or the way in which they are treated for tax purposes, could have a
material adverse effect on NOVA's financial condition.
BANKING AND TERRITORIAL RESTRICTIONS
To facilitate First Union's compliance with applicable banking laws,
regulations and orders (collectively, the "Banking Laws"), and to allow First
Union to obtain any required consents or approvals, NOVA has agreed to notify,
and obtain approval from, First Union before NOVA enters into any business
activities substantially different from the business activities NOVA currently
conducts. As of the date hereof, First Union beneficially owned approximately
9.5% of the outstanding NOVA Common Stock and currently has one representative
on NOVA's Board of Directors. Pursuant to the Joint Ventures and to the extent
required by the Banking Laws, NOVA may be required to take certain measures in
the event either NOVA or the Limited Liability Companies enter into or acquire
any other entity which is engaged in a business that is substantially different
from the business activities NOVA, or either Limited Liability Company,
currently conducts. Such measures may include applying for any required
regulatory consents, or assisting either KeyBank, Firstar, or the Limited
Liability Companies, as the case may be, to prepare such applications. If the
required consents and approvals are not received, NOVA may not engage in the new
business activity (such restrictions, including the restrictions relating to
First Union, being collectively referred to herein as the "Banking
Restrictions").
In connection with a December 1995 transaction between NOVA and First Union
(the "First Union Alliance"), the purchase of the merchant portfolio of Crestar
Bank ("Crestar"), NOVA's joint venture transaction with Firstar (the "Firstar
Joint Venture"), and the KeyBank Joint Venture, NOVA agreed that it would not,
without the prior consent of the affected entity, enter into certain marketing
or, in certain instances, acquisition agreements with third parties located in
specified areas where, as of the date of such transactions, any of First Union,
Crestar, Firstar or KeyBank maintain a significant banking presence (such
restrictions being collectively referred to herein as the "Territorial
Restrictions"). The effect of the Banking Restrictions and the Territorial
Restrictions is to limit in certain respects NOVA's ability to directly seek or
take advantage of certain business or marketing opportunities other than through
a venture with NOVA's regional bank partners. The agreements generally do not
prohibit NOVA from pursuing transactions indirectly through the respective
alliance or joint venture.
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CERTAIN ANTI-TAKEOVER PROVISIONS
NOVA's Articles of Incorporation authorize NOVA to issue up to 5,000,000
shares of Preferred Stock with such designations, powers, preferences and rights
as may be fixed by the Board of Directors of NOVA, without any further vote or
action by the NOVA shareholders. The issuance of Preferred Stock could have the
effect of delaying, deferring or preventing a change in control of NOVA.
POSSIBLE VOLATILITY OF STOCK PRICE
Since NOVA's initial public offering in May 1996, there has been and may
continue to be significant volatility in the market for the NOVA Common Stock,
and there can be no assurance that an active market for the NOVA Common Stock
can be sustained. Factors such as changes in quarterly operating results, the
gain or loss of significant contracts, the entry of new competitors into NOVA's
markets, changes in management, announcements of technological innovations or
new products by NOVA or its competitors, and general events and circumstances
beyond NOVA's control could have a significant impact on the future market
prices of the NOVA Common Stock and the relative volatility of such market
prices.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of NOVA Common Stock in the public
market following the Merger could adversely affect the prevailing market price
of the NOVA Common Stock and could impair NOVA's ability to raise additional
equity capital. Following the Merger, NOVA has or will have outstanding
approximately 71,938,780 shares of NOVA Common Stock. Of these shares, the
approximately 37,648,930 shares issued or to be issued in the Merger and the
currently outstanding shares will be freely tradeable without restriction or
further registration under the Securities Act, unless held by "affiliates" of
NOVA or PMT as that term is defined in Rule 144 and Rule 145 under the
Securities Act. In addition, the holders of a total of approximately 17,600,000
shares of NOVA Common Stock have the right under certain circumstances to
require NOVA to register under the Securities Act their shares for resale to the
public. An additional 9,051,081 shares of NOVA Common Stock that may be issued
in the future upon exercise of options granted and to be granted under NOVA's
and PMT's stock option plans have been registered under the Securities Act and
therefore will be freely tradeable when issued (subject to the volume and
certain other conditions of Rule 144 in the case of shares to be sold by
affiliates of NOVA). Options and warrants for the purchase of approximately
4,924,899 shares of NOVA Common Stock were outstanding as of September 28,
1998, of which options and warrants for 3,154,200 shares were exercisable.
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SELLING SHAREHOLDERS
Reoffers and resales of the securities offered hereby may be effected from
time to time by certain shareholders of NOVA who are affiliates of NOVA as
defined by Rule 405 under the Securities Act. The Selling Shareholders acquired
the Shares upon exercise of options originally granted by NOVA pursuant to the
Stock Incentive Plan. As the names of the Selling Shareholders and the number of
Shares to be sold by such Selling Shareholders become known NOVA will supplement
this Prospectus with such information.
PLAN OF DISTRIBUTION
The sale of the Shares offered hereby by the Selling Shareholders may be
effected from time to time on the New York Stock Exchange or such other national
securities exchange or automated interdealer quotation system on which the
shares of NOVA Common Stock are then listed, in transactions in the over-the-
counter market, in negotiated transactions, through put or call options
transactions relating to the Shares, through short sales of Shares, or through a
combination of such methods of sale at market prices prevailing at the time of
sale or at negotiated prices. Such transactions may or may not involve brokers
or dealers. The Shares may be sold by one or more of the following: (a) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) a block trade in which
the broker or dealer so engaged will attempt to sell the Shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (d) an exchange distribution in accordance with the rules of such
exchange; and (e) through the writing of options on the Shares. The Selling
Shareholders must effect such transactions by notifying NOVA in advance of any
intended transaction in order for NOVA to determine compliance with applicable
federal and state securities laws, and then upon receipt of notice from NOVA
that such transaction may proceed. If necessary, a supplemental prospectus which
describes the method of sale in greater detail may be filed by NOVA with the
Commission pursuant to a post-effective amendment to this Registration Statement
or pursuant to Rule 424 under the Securities Act under certain circumstances. In
effecting sales, brokers or dealers engaged by the Selling Shareholders and/or
the purchasers of the Shares may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions, concessions or
discounts from the Selling Shareholders and/or the purchasers of the Shares in
amounts to be negotiated prior to the sale. In addition, any Shares covered by
this Prospectus which qualify for sale pursuant to Rule 144 under the Securities
Act may be sold under Rule 144 rather than pursuant to this Prospectus. The
number of Shares to be reoffered or resold by means of this Prospectus, by each
Selling Shareholder, and any other person with whom the Selling Shareholder is
acting in concert for the purpose of selling securities of NOVA, may not exceed,
during any three month period, the amount specified by Rule 144(e) under the
Securities Act.
NOVA will bear all expenses in connection with the registration and sale of
the Shares, other than commissions, concessions or discounts to brokers or
dealers and fees and expenses of counsel or other advisors to the Selling
Shareholders.
The Selling Shareholders and any broker or dealer who acts in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, and any compensation
received by them and any profit on any resale of the Shares as principals might
be deemed to be underwriting discounts and commissions under the Securities Act.
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EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this prospectus by reference from NOVA's Annual
Report on Form 10-K for each of the three years in the period ended December 31,
1997, have been audited by Ernst & Young LLP, independent auditors, as stated in
their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for NOVA by
Long Aldridge & Norman LLP, Atlanta, Georgia 30308.
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EXPLANATORY NOTE: PURSUANT TO GENERAL INSTRUCTION C TO REGISTRATION STATEMENT
ON FORM S-8, THE FOLLOWING "REOFFER PROSPECTUS" MAY BE USED FOR REOFFERS AND
RESALES OF "CONTROL SECURITIES" OR "RESTRICTED SECURITIES" (EACH AS DEFINED IN
GENERAL INSTRUCTION C) GRANTED UNDER THE 1996 DIRECTORS STOCK OPTION PLAN.
PROSPECTUS 150,000 SHARES
NOVA CORPORATION
COMMON STOCK
--------------
This Prospectus relates to reoffers and resales by certain affiliates or
former affiliates (the "Selling Shareholders") of NOVA Corporation ("NOVA"), of
up to 150,000 shares (the "Shares") of NOVA Common Stock, $.01 par value per
share (the "NOVA Common Stock"), that have been issued as restricted stock or
acquired upon the exercise of options to purchase NOVA Common Stock pursuant to
the NOVA Corporation 1996 Directors Stock Option Plan (the "Directors Plan").
The number of shares offered hereby may be adjusted as a result of events such
as stock splits, stock dividends or similar transactions pursuant to the terms
of the Directors Plan. NOVA will not receive any proceeds from the sale of the
Shares.
The sale of the Shares offered hereby may be effected from time to time in
transactions on the New York Stock Exchange or such other national securities
exchange or automated interdealer quotation system on which the shares of NOVA
Common Stock are then listed, in the over-the-counter market, in negotiated
transactions, through put or call options transactions relating to the Shares,
through short sales of Shares, or through a combination of such methods of sale,
at prevailing market prices or at negotiated prices. The Selling Shareholders
must effect such transactions by notifying NOVA in advance of any intended
transaction in order for NOVA to determine compliance with applicable federal
and state securities laws, and then upon receipt of notice from NOVA that such
transaction may proceed. Such transactions may or may not involve brokers or
dealers. Such brokers or dealers may receive compensation in the form of
commissions or otherwise in such amounts as may be negotiated by them. As of the
date of this Prospectus, no agreements have been reached for the sale of the
Shares or the amount of any compensation to be paid to brokers or dealers in
connection therewith. NOVA will bear all expenses in connection with the
registration and sale of the Shares being offered by the Selling Shareholders,
other than commissions, concessions or discounts to brokers or dealers and fees
and expenses of counsel or other advisors to the Selling Shareholders. See "Plan
of Distribution."
The NOVA Common Stock is listed on the New York Stock Exchange under the
trading symbol "NIS." On September 28, 1998, the last reported sale price for
the shares of NOVA Common Stock on the New York Stock Exchange was $31.1875 per
share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF
THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 29, 1998.
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN CONTEMPLATED AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY NOVA OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF NOVA SINCE THE DATE
HEREOF OR THAT ANY INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
Page
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AVAILABLE INFORMATION................................................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................... 4
THE COMPANY............................................................. 6
RISK FACTORS............................................................ 7
SELLING SHAREHOLDERS.................................................... 16
PLAN OF DISTRIBUTION.................................................... 16
EXPERTS................................................................. 17
LEGAL MATTERS........................................................... 17
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AVAILABLE INFORMATION
NOVA is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements,
reports and other information concerning NOVA can be inspected and copied at
prescribed rates at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the regional
offices of the Commission at Seven World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. In addition, the reports, proxy statements and other
information can be obtained from the Commission's website at http://www.sec.gov.
The NOVA Common Stock is listed on the New York Stock Exchange. Reports, proxy
statements and other information concerning NOVA also can be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
NOVA has filed with the Commission a Registration Statement on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of NOVA Common Stock offered
hereby. This Prospectus, which is a part of the Registration Statement, does
not contain all the information set forth in, or annexed as exhibits to, the
Registration Statement, certain portions of which have been omitted pursuant to
the rules and regulations of the Commission. For further information with
respect to NOVA and the Shares offered hereby, reference is made to the
Registration Statement, including the exhibits thereto. Copies of the
Registration Statement, including exhibits, may be obtained from the
aforementioned public reference facilities of the Commission upon payment of the
prescribed fees or may be examined without charge at such facilities.
Statements contained herein concerning any document filed as an exhibit are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference.
NOVA will provide without charge to each person to whom a copy of this
Prospectus is delivered, including any beneficial owner of the Shares, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that the Prospectus incorporates). Requests should be directed to: James M.
Bahin, Corporate Secretary, NOVA Corporation, One Concourse Parkway, Suite 300,
Atlanta, Georgia 30328, telephone number (770) 396-1456.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by NOVA with the Commission are
hereby incorporated herein by reference as of their respective dates.
(1) NOVA's Annual Report on Form 10-K for the fiscal year ended December
31, 1997;
(2) NOVA's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
(3) NOVA's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998;
(4) NOVA's Proxy Statement dated April 20, 1998, relating to its 1998
Annual Meeting of Shareholders;
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(5) The description of NOVA Common Stock as contained in Item 1 of NOVA's
Registration Statement on Form 8-A (Registration No. 1-14342), as
filed with the Commission on May 7, 1996; and
(6) The Joint Proxy Statement/Prospectus dated August 20, 1998, included
in NOVA's Registration Statement on Form S-4 (Registration No. 333-
61867).
All reports and documents filed by NOVA pursuant to Section 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference herein and made a part hereof
from the date of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
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THE COMPANY
GENERAL
NOVA is a Georgia corporation with its principal executive offices at One
Concourse Parkway, Suite 300, Atlanta, Georgia 30328. Its telephone number is
(770) 396-1456.
The Shares offered hereby have been issued to the Selling Shareholders upon
the exercise of options to purchase NOVA Common Stock.
RECENT TRANSACTION WITH PMT
Effective September 24,1998, NOVA and PMT Services, Inc. ("PMT") completed
the merger transactions contemplated by the Agreement and Plan of Merger dated
June 17, 1998 (the "Merger Agreement"), between NOVA, Church Merger Corp., a
wholly-owned subsidiary of NOVA ("Mergerco") and PMT. The shareholders of NOVA
and PMT approved the Merger Agreement and the transactions contemplated thereby
at separate special meetings of shareholders held on September 24, 1998. PMT is
an independent service organization that markets and services electronic credit
card authorization and payment systems to merchants located throughout the
United States. PMT's operating and growth strategies focus on expanding PMT's
customer base of small- to medium-sized merchants through trade and other
association affiliations, telemarketing, acquiring subsidiary sales forces,
merchant portfolio purchases and the provision of high levels of customer
service. PMT will continue to operate its business as a wholly-owned subsidiary
of NOVA.
Pursuant to the Merger Agreement, Mergerco merged (the "Merger") with and
into PMT, with PMT surviving the Merger as a wholly-owned subsidiary of NOVA.
Upon consummation of the Merger, each outstanding share of Common Stock of PMT
("PMT Stock") ceased to be outstanding and was converted into and exchanged for
0.715 shares of NOVA Common Stock. Additionally, each option or warrant to
purchase PMT Stock outstanding at the effective time of the Merger, whether or
not then exercisable, was converted automatically into an option or warrant to
purchase a number of shares of NOVA Common Stock equal to (A) the number of
shares of PMT Stock issuable upon exercise of the option or warrant multiplied
by (B) 0.715 (the exchange ratio in the Merger). The number of shares of NOVA
Common Stock issuable upon exercise of the options and warrants will be rounded
to the nearest whole number of shares of NOVA Common Stock. The exercise price
per share of NOVA Common Stock issuable upon exercise of the options and
warrants will be equal to (A) the exercise price per share of PMT Stock set
forth in the applicable option or warrant agreement divided by (B) 0.715 and
rounded to the nearest cent. Pursuant to the terms of the PMT stock option
plans pursuant to which PMT granted the options, all options granted under the
plans which are outstanding at the effective time of the Merger became fully
vested at the effective time of the Merger. The other terms and conditions of
the options and warrants will be substantially the same as the terms and
conditions of the options immediately prior to the effective time. The terms of
the Merger Agreement, including the consideration payable by NOVA, was
determined through arms-length negotiations between NOVA and PMT.
As of the effective time of the Merger, 52,658,644 shares of PMT Stock were
issued and outstanding and approximately 3,260,058 shares of PMT Stock were
issuable upon exercise of outstanding options and warrants to purchase PMT
Stock. As a result, NOVA will issue an aggregate of approximately 37,650,930
shares of NOVA Common Stock in the Merger and has reserved 2,330,941 shares of
NOVA Common Stock for issuance upon exercise of the options and warrants to
purchase PMT Stock. NOVA will issue only whole shares of NOVA Common Stock in
the Merger and will pay to former PMT shareholders cash in lieu of fractional
shares of NOVA Common Stock to which they otherwise are entitled.
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Pursuant to the Merger Agreement, NOVA agreed that at the effective time
of the Merger the Board of Directors of NOVA would consist of 11 directors,
comprised of five directors designated by NOVA (the "NOVA Designated
Directors"), five directors designated by PMT (the "PMT Designated Directors"),
and one other director nominated by NOVA and approved by PMT (the "Nominated
Director"). As a result, the Board of Directors now consists of Edward
Grzedzinski, James M. Bahin, Dr. Henry Kressel, Maurice F. Terbrueggen, Stephen
E. Wall (NOVA Designated Directors), Charles T. Cannada (the Nominated
Director), Richardson M. Roberts, Gregory S. Daily, Stephen D. Kane, Harold L.
Siebert and George M. Miller II (the PMT Designated Directors). Each of the
NOVA Designated Directors and the Nominated Director were directors of NOVA
prior to the Merger and each of the PMT Designated Directors were directors of
PMT prior to the Merger. In order to facilitate the change in composition of
the Board contemplated by the Merger Agreement, at the effective time of the
Merger, three directors of NOVA , Dr. James E. Carnes, U. Bertram Ellis and
Joseph P. Landy, resigned as directors.
Edward Grzedzinski, the Chairman of the Board, President and Chief
Executive Officer of NOVA prior to the Merger, and James M. Bahin, the Vice
Chairman, Chief Financial Officer and Secretary of NOVA prior to the Merger,
retained their positions with NOVA. Richardson M. Roberts, the Chairman and
Chief Executive Officer of PMT prior to the Merger, was elected as a Vice
Chairman of NOVA's Board of Directors and continues as Chief Executive Officer
of PMT. Gregory S. Daily, the President of PMT prior to the Merger, was elected
as a Vice Chairman of NOVA's Board of Directors and continues as President of
PMT.
The terms and conditions of the Merger Agreement and the transactions
contemplated thereby, including certain pro forma combined condensed financial
data, are set forth in the Joint Proxy Statement/Prospectus dated August 20,
1998, included in NOVA's Registration Statement on Form S-4 (Registration No.
333-61867), which is incorporated herein by reference.
In connection with the Merger, NOVA amended its Articles of Incorporation
to increase the number of authorized shares of NOVA Common Stock from 50,000,000
shares to 200,000,000 shares. The shareholders of NOVA approved the amendment
to the Articles of Incorporation at the special meeting of NOVA's shareholders
held on September 24, 1998. The shareholders also approved an amendment to
NOVA's 1996 Employees Stock Incentive Plan to increase the number of shares of
NOVA Common Stock issuable pursuant to NOVA's 1996 Employees Stock Incentive
Plan from 2,000,000 shares to 6,000,000 shares.
RISK FACTORS
In addition to the other information included or incorporated by reference
in this Prospectus, the following risk factors should be considered carefully in
evaluating an investment in NOVA Common Stock.
This Prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 20A of the Exchange Act, which
represent NOVA's expectations or beliefs, including, but not limited to,
statements concerning transaction volume and the impact of acquisitions, joint
ventures and alliances. When used in this Prospectus, the words "may," "could,"
"should," "would," "believe," "anticipate," "estimate," "expect," "intend,"
"plan" and similar terms and/or expressions are intended to identify forward-
looking statements. These statements by their nature involve substantial risks
and uncertainties, certain of which are beyond NOVA's control. NOVA cautions
that various factors, including the factors described under the caption "Risk
Factors" and those discussed in NOVA's filings with the Commission, as well as
general economic conditions and industry trends could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements of NOVA. Any forward-looking statement speaks only as of the date of
this Prospectus, and NOVA undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of an
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unanticipated event. New factors emerge from time to time, and it is not
possible for NOVA to predict all of such factors. Further, NOVA cannot assess
the impact of each such factor on its business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
VISA AND MASTERCARD REGISTRATION TERMINATION
NOVA, along with all other nonbank transaction processors, must be
sponsored by a financial institution that is a principal member of the VISA and
MasterCard credit card associations in order to process bankcard transactions.
Through each of Regions Bank, Bank of the West, Mellon Bank, N.A. ("Mellon
Bank"), Firstar Bank U.S.A., N.A. ("Firstar"), KeyBank National Association
("KeyBank") and FUNB, a subsidiary of First Union Corporation, which serve as
member clearing banks for NOVA, NOVA is registered with VISA and MasterCard as a
certified processor and member service provider. PMT is registered as a member
service provider with many of the clearing banks that currently provide
processing services on behalf of PMT. NOVA's designation with VISA and
MasterCard as a certified processor and NOVA's and PMT's status as a member
service provider are dependent upon NOVA's and PMT's continuing adherence to the
standards of the VISA and MasterCard credit card associations. These standards
are set by the respective member financial institutions of VISA and MasterCard,
some of which are competitors of NOVA and PMT. In the event NOVA or PMT fails to
comply with these standards, NOVA's designation as a certified processor or
NOVA's or PMT's status as a member service provider could be suspended or
terminated. There can be no assurance that VISA and MasterCard will maintain
NOVA's and PMT's registrations or that the current VISA and MasterCard rules
allowing NOVA, PMT and other nonbank transaction processors to market and
provide transaction processing services will remain in effect.
The termination of NOVA's or PMT's member service provider registrations or
NOVA's status as a certified processor, or any changes in the VISA or MasterCard
rules that prevent NOVA's or PMT's registration or otherwise limit NOVA's or
PMT's ability to provide transaction processing and marketing services for VISA
or MasterCard, would have a material adverse effect on NOVA's and PMT's
financial condition and results of operations.
CONVERSION OF PMT MERCHANT PORTFOLIO
In order to fully realize the anticipated cost savings and synergies
resulting from the Merger, NOVA intends to convert (the "PMT Conversion") a
substantial portion of PMT's merchant portfolio to the processing systems of
NOVA, as well as to NOVA's proprietary telecommunications network (the "NOVA
Network"). However, because PMT, in a manner similar in many respects to NOVA,
utilizes the services of third party processors and third party clearing and
settlement banks, the cooperation of such third parties is critical to a
successful PMT Conversion. Further, such third parties may claim an ownership
interest in certain of the PMT merchant relationships to which they are party,
and those claims, if successful, could impede the PMT Conversion and,
correspondingly, reduce the cost savings and synergies anticipated to be gained
by virtue of the Merger. In the event such third party claims arise or such
third parties refuse or fail to cooperate in the PMT Conversion, the resulting
inability to achieve anticipated cost savings and synergies from the Merger
could have a material adverse effect on NOVA.
RISKS ASSOCIATED WITH THE MERGER AND ACQUISITION STRATEGY
Increased Consolidation in the Marketplace. A material element of NOVA's
growth strategy is the purchase of additional merchant portfolios and
acquisition of operating businesses and transaction processing assets in order
to facilitate growth, expand NOVA's distribution channels and create greater
economies of scale. NOVA faces significant competition from other transaction
processors and independent service organizations
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("ISOs") for available acquisition, joint venture and alliance opportunities.
This competition has an impact on the price and availability of acquisitions,
joint ventures and alliances. In addition, community and regional banks, whose
transaction processing businesses have been NOVA's primary source of acquisition
opportunities, in recent years have been undergoing extensive consolidation
reflective of underlying trends in the financial institutions industry and
unrelated to their transaction processing businesses. As a result, smaller banks
that may have sought to divest themselves of their transaction processing
businesses may be acquired by banks that compete with NOVA or banks that have a
relationship or alliance with one or more competitors of NOVA, thus potentially
depriving NOVA of acquisition opportunities. There can be no assurance that the
historical or current level of acquisition opportunities will continue to exist,
that NOVA will be able to acquire merchant portfolios, operating businesses and
transaction processing assets that satisfy NOVA's criteria, or that any such
acquisition will be on terms favorable to NOVA.
Complexity of Risk Analysis of Acquisition Targets. In evaluating any
potential purchase of a merchant portfolio, joint venture or business
combination (including the Merger), NOVA conducts a due diligence review of the
related merchant portfolio. The review process includes analyzing the
composition of the merchant portfolio, applying uniform standards and
underwriting guidelines developed by NOVA to the merchant portfolio and
attempting to identify high-risk merchants contained in the merchant portfolio.
Notwithstanding these due diligence efforts, however, there can be no assurance
that NOVA will properly assess the risk attributes associated with a purchased
portfolio or otherwise identify high-risk merchants. Incorrect risk assessments
may result in excessive losses from chargebacks or merchant fraud in connection
with any portfolio purchased or otherwise acquired by NOVA.
Conversion of Merchant Portfolios. At the time of consummation of merchant
portfolio purchases, business combinations (including the Merger) or joint
ventures, merchants in a purchased portfolio typically are not operating on the
NOVA Network and may not use the merchant accounting processors used by NOVA.
Until NOVA converts each newly-purchased merchant to the NOVA Network and NOVA's
merchant accounting processors, NOVA has little, if any, control over the
performance of such other networks and processors and typically is unable to
apply fully its risk management and fraud avoidance practices to such merchants.
NOVA also must continue to pay third parties for processing services until the
purchased portfolio is fully converted to the NOVA Network, reducing the
economic benefits to NOVA during such time. Moreover, the merchant customers
that comprise a purchased portfolio may have been sold transaction processing
services by ISOs and financial institutions sponsored by a principal member of
the VISA and MasterCard credit card associations. ISOs are independent agents
that typically market and sell the full range of transaction processing services
to merchants, with such services primarily being outsourced on a non-exclusive
basis. Further, the conversion of merchants may require that merchants learn new
operating procedures and could result in problems, causing merchants to seek
verbal authorization of credit and debit card transactions. As a condition to
conversion, merchants also may seek to negotiate lower fees.
As a result of the Merger, the magnitude, scope, timing, duration and
expense of the PMT Conversion, and the ongoing conversion of the merchant
portfolio associated with NOVA's joint venture transaction with KeyBank will, in
the aggregate, be greater than any conversion previously undertaken by NOVA, and
there can be no assurance that NOVA can successfully complete these conversions
in a timely manner, either concurrently or in series. Failure to complete these
conversions in accordance with management plans could have a material adverse
effect on NOVA's financial condition and results of operations.
NOVA's acquisition strategy and the resulting growth of NOVA from that
strategy will require that NOVA continue to attract and retain qualified
personnel, while concurrently expanding its managerial and operational
infrastructure. Further, the success of the PMT Conversion and the success of
the operations of PMT following the Merger also will depend on NOVA's ability to
retain a significant number of PMT's current key
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operations personnel following the Merger. There can be no assurance that NOVA
will be able to hire and retain qualified personnel or that NOVA will be able to
expand successfully its infrastructure as appropriate to accommodate future
acquisitions or growth. NOVA's acquisitions may involve the hiring by NOVA of
certain management and sales personnel affiliated with the purchased portfolio,
and the failure to integrate successfully such personnel into NOVA's operations
and business culture may adversely affect the conversion process. As a result of
any of these factors and considerations, NOVA may not realize the expected
economic benefits associated with its acquisitions, which may have a material
adverse effect on NOVA's financial condition and results of operations.
There can be no assurance that future acquisitions will not have an adverse
effect upon NOVA's operating results, particularly in the fiscal quarters
immediately following the completion of such transactions, while the operations
of the acquired entities are converted and integrated into NOVA's operations.
NOVA's acquisition strategy will require substantial capital resources, and is
likely to result in NOVA incurring additional indebtedness. There can be no
assurance that financing for future acquisitions will be available or will be
obtained on terms favorable to NOVA.
Risks Associated with Joint Venture Alliances. The recently consummated
joint venture alliances with each of Firstar and KeyBank (each a "Joint
Venture," and collectively, the "Joint Ventures") present certain risks to NOVA
in addition to the risks normally associated with portfolio acquisitions which
have been, and continue to be, a material element of NOVA's growth strategy.
Because each of the Joint Ventures involved the creation of a newly-formed
limited liability company jointly owned, managed and serviced by NOVA and
Firstar or KeyBank, as the case may be, continued cooperation with each of
Firstar and KeyBank is important to the success of the Joint Ventures. There can
be no assurance that NOVA's relationships with each of Firstar and KeyBank will
continue to be cooperative and, accordingly, there can be no assurance that NOVA
will realize the anticipated economic benefits from the Joint Ventures. Further,
in the event of a change in control of NOVA's partners in the Joint Ventures,
there can be no assurance that the resulting entity will support the Joint
Ventures in the same manner and to the same degree as its predecessor. For
instance, Firstar Corporation, the parent of Firstar, recently announced that it
had agreed to merge with Star Banc Corporation. There can be no assurance that
the resulting entity in this merger will support the Firstar Joint Venture in
the same manner and to the same degree as Firstar. Further, the management and
provision of processing services to each of Elan Merchant Services, LLC ("Elan
Merchant Services") and Key Merchant Services, LLC ("Key Merchant Services")
(collectively, the "Limited Liability Companies") imposes increased
administrative, managerial and technological demands on NOVA's infrastructure
and related systems, and there can be no assurance that NOVA will meet
successfully such material demands and requirements.
Each of the Joint Ventures has been formed for a definitive term (subject
in each case to renewal provisions), but is subject to earlier termination by
NOVA or Firstar or KeyBank, as the case may be, under a variety of
circumstances. In the event of earlier termination, or upon termination of
either Joint Venture upon expiration of its term in the absence of renewal, the
then-current assets and merchant portfolio of such Joint Venture are subject to
"repurchase rights" by either NOVA or Firstar or KeyBank, as the case may be,
depending on the circumstances of termination. For example, each of the Joint
Ventures imposes upon NOVA certain standards with respect to the performance of
its processing services. In the event such standards are breached and not
appropriately remedied by NOVA, Firstar or KeyBank, as the case may be, would
have the right to purchase NOVA's interest in Elan Merchant Services or Key
Merchant Services, respectively. Any such purchase would likely result in a
significant decrease in the number of merchant locations served and the
aggregate sales volume processed by NOVA, which may have a material adverse
effect on NOVA's financial condition and results of operations. Further, in
valuing the Joint Ventures, and establishing a purchase price in connection
therewith, NOVA assumes the continuance of each of the Joint Ventures for a
minimum term. Earlier termination may result
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in NOVA not realizing the anticipated economic and marketing benefits from the
Joint Ventures, which may have a material adverse effect on NOVA's financial
condition and results of operations.
COMPETITION AND CONSOLIDATION
The market for credit, charge and debit card transaction processing
services is highly competitive. The level of competition has increased
significantly in recent years and this trend is expected to continue. According
to industry sources, the ten largest bankcard processors accounted for
approximately 85% of the total charge volume processed in 1997. Several of
NOVA's competitors and potential competitors have greater financial,
technological, marketing and personnel resources than NOVA, and there can be no
assurance that NOVA will continue to be able to compete successfully with such
entities. In addition, the competitive pricing pressures that would result from
any increase in competition would adversely affect NOVA's margins and may have a
material adverse effect on NOVA's financial condition and results of operations.
NOVA and, to a lesser extent, PMT, market their services through several
different marketing channels, including through banks. In the event that there
is continued significant consolidation in the banking industry, banks that
market NOVA's services through joint ventures, alliance relationships, and
otherwise may be acquired by banks that compete with NOVA or by banks that have
a relationship or alliance with one or more competitors of NOVA, thus
potentially depriving NOVA of a distribution channel. For instance, each of
Firstar (one of NOVA's joint venture partners) and Crestar (a bank with whom
NOVA maintains an alliance relationship) recently announced that they had agreed
to engage in business combination transactions with third party financial
institutions. While management does not believe that such business combinations,
if consummated, will have a material adverse effect on NOVA's relationship with
either Firstar or Crestar, there can be no assurance that the resulting entities
in such business combinations will support their respective relationships with
NOVA in the same manner and to the same degree as their predecessors.
MERCHANT ATTRITION
NOVA experiences attrition of its merchant base in the ordinary course of
business resulting from several factors, including business closures, losses to
competitors and conversion-related losses. In addition, substantially all of
NOVA's contracts with its merchants may be terminated by either party upon prior
notice of 30 days or less. Increased merchant attrition may have a material
adverse effect on NOVA's financial condition and results of operations. There
can be no assurance that NOVA will not experience higher rates of attrition in
the future, particularly in connection with purchased merchant portfolios
generally, and the PMT Conversion specifically.
DEPENDENCE ON MERCHANT ACCOUNTING RELATIONSHIPS
NOVA outsources certain merchant accounting services to Vital Processing
Services L.L.C. (formerly Total System Services, Inc.) ("Vital Processing
Services") and Mellon Bank. These services consist of reorganizing and
accumulating daily transaction data on a merchant-by-merchant and card issuer-
by-card issuer basis, and forwarding this data to the credit card associations
for ultimate payment. The failure of Vital Processing Services and Mellon Bank
to continue to perform these services efficiently and effectively may adversely
affect NOVA's relationships with its merchant customers and may result in the
termination by merchants of their agreements with NOVA. The agreement with Vital
Processing Services expires July 1, 2001, and the agreement with Mellon Bank
expires June 30, 1999. NOVA currently is developing internal systems to provide
its own merchant accounting services. Termination of either agreement would
require NOVA to seek alternative outsourcing arrangements prior to NOVA's
implementation of NOVA's internal system to provide these merchant accounting
services. Although management believes that in the event of termination of
either or both of these agreements, NOVA could locate alternative outsourcing
arrangements or develop internal systems to perform these services, there can be
no assurance that such arrangements will be available on terms as favorable to
NOVA
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as the existing contracts or that NOVA could develop internal systems on a
timely or cost effective basis. Accordingly, termination of either agreement
could have a material adverse effect on NOVA's financial condition and results
of operations.
ANNOUNCED INTERCHANGE RATE INCREASES
Historically, VISA and MasterCard have increased their respective
interchange rates each year. These increases affect all transaction processing
industry competitors. While NOVA and PMT historically have reflected these
increases in their pricing to merchants, there can be no assurance that
merchants will continue to assume the entire impact of the future changes or
that transaction processing volumes and merchant attrition will not be adversely
affected by the changes.
CHARGEBACK RISK
When a billing dispute between a cardholder and a merchant is not resolved
in favor of the merchant, the transaction is "charged back" to the merchant and
the amount of the transaction is credited to the cardholder. Reasons for billing
disputes include, among others: (i) nonreceipt of merchandise or services; (ii)
unauthorized use of a credit card; and (iii) general disputes between a customer
and a merchant as to the quality of the goods sold or the services rendered by
that merchant. Some of NOVA's merchant customers, including certain merchants
that generate high transaction processing volume, require full or partial
payment from debit and credit cardholders for products or services to be
delivered or rendered in the future. If NOVA or its clearing banks are unable
to collect chargeback amounts from a merchant's account, and if the merchant
refuses or is unable due to bankruptcy or other reasons to reimburse NOVA for
the chargeback, NOVA bears the loss for the amount of the refund paid to the
cardholder. NOVA attempts to reduce their exposure to such losses by performing
periodic credit reviews on their merchant customers and adjusting rates based,
in part, on the merchant's credit risk, business or industry. There can be no
assurance that NOVA will not experience significant losses from chargebacks in
the future. Increases in chargebacks not paid by merchants may have a material
adverse effect on NOVA's financial condition and results of operations.
MERCHANT FRAUD
NOVA bears the risk of losses caused by fraudulent credit card transactions
initiated by its merchant customers. Examples of merchant fraud include
inputting false sales transactions or false credits. NOVA monitors merchant
transactions against a series of standards that it and PMT have developed to
detect merchant fraud. Notwithstanding these measures, however, there can be no
assurance that NOVA will not experience significant amounts of merchant fraud in
the future, which may have a material adverse effect on NOVA's financial
condition and results of operations.
TELECOMMUNICATIONS SERVICES PROVIDED BY WORLDCOM
NOVA has developed a proprietary telecommunications network, the NOVA
Network, and maintains an operating relationship with WorldCom. Pursuant to its
agreement with NOVA, WorldCom provides long-distance and local
telecommunications access, as well as technical support, to NOVA in connection
with the NOVA Network. This agreement was renegotiated recently and expires July
1, 2001, subject to earlier termination by NOVA in the event of quality
deficiencies in WorldCom's service. If the WorldCom agreement is terminated or
not renewed, NOVA would be required to utilize the long-distance and local
telecommunications access of another long-distance provider, which may increase
NOVA's expenses for network services, resulting in a material adverse effect on
the financial condition and results of operations of NOVA. WorldCom owns
approximately 5.5% of the outstanding NOVA Common Stock and has a representative
on NOVA's Board of Directors. There
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can be no assurance that conflicts of interests between WorldCom and NOVA will
not arise or that any such conflicts will be resolved in a manner favorable to
NOVA.
CERTAIN STATE TAX ISSUES
Transaction processing companies like NOVA may be subject to state taxation
of certain portions of their fees charged to merchants for their services.
Application of this tax is an emerging issue in the transaction processing
industry and the states have not yet adopted uniform guidelines implementing
these regulations. If NOVA is required to pay such taxes and is unable to pass
this tax expense through to its merchant customers, the financial condition and
results of operations of NOVA could be adversely affected.
DEVELOPMENT AND MARKET ACCEPTANCE OF NEW PRODUCTS
Because the transaction processing industry and the software application
products and value-added services of the type offered by NOVA has been
characterized by rapidly changing technology and the development of new products
and services, management of NOVA believes that the future success of NOVA will
depend, in part, on NOVA's ability to continue to improve its products and
services and to offer its merchant customers new products and services. There
can be no assurance that NOVA will continue to develop successful new products
and services or that NOVA's newly-developed products and services will perform
satisfactorily or be widely accepted in the marketplace.
FLUCTUATION IN QUARTERLY OPERATING RESULTS
NOVA has experienced and expects to continue to experience significant
seasonality in its business. NOVA typically realizes higher revenues in the
third calendar quarter and lower revenues in the first calendar quarter,
reflecting increased transaction volumes during the summer months and a
significant decrease in transaction volume during the period immediately
following the holiday season. Quarterly results also are affected by the timing
of purchases of merchant portfolios and joint ventures and the timing and
magnitude of expenses for merchant portfolio conversions. Fluctuations in
operating results may result in volatility in the price of the NOVA Common
Stock.
DEPENDENCE ON KEY MANAGEMENT
The development of NOVA's and PMT's business and operations has been
materially dependent upon the active participation of their respective executive
officers and other key employees. The loss of one or more of NOVA's executive
officers or other key employees may have a material adverse effect on NOVA's
financial condition and results of operations, as the case may be.
SIGNIFICANT INTANGIBLE ASSETS
A substantial portion of NOVA's assets are intangible assets related to
purchased merchant portfolios or business operations. In the event of a material
decline in revenues generated from any of such merchant portfolios or business
operations which would not be recovered from future cash flows, the fair value
and, as a result, the carrying value of the related intangible asset will be
reduced. Additionally, changes in accounting policies or rules that affect the
way in which such intangible assets are reflected in NOVA's financial
statements, or the way in which they are treated for tax purposes, could have a
material adverse effect on NOVA's financial condition.
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BANKING AND TERRITORIAL RESTRICTIONS
To facilitate First Union's compliance with applicable banking laws,
regulations and orders (collectively, the "Banking Laws"), and to allow First
Union to obtain any required consents or approvals, NOVA has agreed to notify,
and obtain approval from, First Union before NOVA enters into any business
activities substantially different from the business activities NOVA currently
conducts. As of the date hereof, First Union beneficially owned approximately
9.5% of the outstanding NOVA Common Stock and currently has one representative
on NOVA's Board of Directors. Pursuant to the Joint Ventures and to the extent
required by the Banking Laws, NOVA may be required to take certain measures in
the event either NOVA or the Limited Liability Companies enter into or acquire
any other entity which is engaged in a business that is substantially different
from the business activities NOVA, or either Limited Liability Company,
currently conducts. Such measures may include applying for any required
regulatory consents, or assisting either KeyBank, Firstar, or the Limited
Liability Companies, as the case may be, to prepare such applications. If the
required consents and approvals are not received, NOVA may not engage in the new
business activity (such restrictions, including the restrictions relating to
First Union, being collectively referred to herein as the "Banking
Restrictions").
In connection with a December 1995 transaction between NOVA and First Union
(the "First Union Alliance"), the purchase of the merchant portfolio of Crestar
Bank ("Crestar"), NOVA's joint venture transaction with Firstar (the "Firstar
Joint Venture"), and the KeyBank Joint Venture, NOVA agreed that it would not,
without the prior consent of the affected entity, enter into certain marketing
or, in certain instances, acquisition agreements with third parties located in
specified areas where, as of the date of such transactions, any of First Union,
Crestar, Firstar or KeyBank maintain a significant banking presence (such
restrictions being collectively referred to herein as the "Territorial
Restrictions"). The effect of the Banking Restrictions and the Territorial
Restrictions is to limit in certain respects NOVA's ability to directly seek or
take advantage of certain business or marketing opportunities other than through
a venture with NOVA's regional bank partners. The agreements generally do not
prohibit NOVA from pursuing transactions indirectly through the respective
alliance or joint venture.
CERTAIN ANTI-TAKEOVER PROVISIONS
NOVA's Articles of Incorporation authorize NOVA to issue up to 5,000,000
shares of Preferred Stock with such designations, powers, preferences and rights
as may be fixed by the Board of Directors of NOVA, without any further vote or
action by the NOVA shareholders. The issuance of Preferred Stock could have the
effect of delaying, deferring or preventing a change in control of NOVA.
POSSIBLE VOLATILITY OF STOCK PRICE
Since NOVA's initial public offering in May 1996, there has been and may
continue to be significant volatility in the market for the NOVA Common Stock,
and there can be no assurance that an active market for the NOVA Common Stock
can be sustained. Factors such as changes in quarterly operating results, the
gain or loss of significant contracts, the entry of new competitors into NOVA's
markets, changes in management, announcements of technological innovations or
new products by NOVA or its competitors, and general events
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and circumstances beyond NOVA's control could have a significant impact on the
future market prices of the NOVA Common Stock and the relative volatility of
such market prices.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of NOVA Common Stock in the public
market following the Merger could adversely affect the prevailing market price
of the NOVA Common Stock and could impair NOVA's ability to raise additional
equity capital. Following the Merger, NOVA has or will have outstanding
approximately 71,938,780 shares of NOVA Common Stock. Of these shares, the
approximately 37,648,930 shares issued or to be issued in the Merger and the
currently outstanding shares will be freely tradeable without restriction or
further registration under the Securities Act, unless held by "affiliates" of
NOVA or PMT as that term is defined in Rule 144 and Rule 145 under the
Securities Act. In addition, the holders of a total of approximately 17,600,000
shares of NOVA Common Stock have the right under certain circumstances to
require NOVA to register under the Securities Act their shares for resale to the
public. An additional 9,051,081 shares of NOVA Common Stock that may be issued
in the future upon exercise of options granted and to be granted under NOVA's
and PMT's stock option plans have been registered under the Securities Act and
therefore will be freely tradeable when issued (subject to the volume and
certain other conditions of Rule 144 in the case of shares to be sold by
affiliates of NOVA). Options and warrants for the purchase of approximately
4,924,899 shares of NOVA Common Stock were outstanding as of September 28, 1998,
of which options and warrants for 3,154,200 shares were exercisable.
15
<PAGE>
SELLING SHAREHOLDERS
The Shares offered hereby are owned and offered for the account of the
Selling Shareholders and represent shares of NOVA Common Stock acquired or to be
acquired by the Selling Shareholders in connection with the exercise of options
originally granted by NOVA under the Directors Plan. The table below sets forth
the name of each Selling Shareholder, the Selling Shareholder's position with
NOVA , and information with respect to all shares of NOVA Common Stock
beneficially owned by the Selling Shareholder. Information with respect to
ownership has been determined from NOVA's records. UPON COMPLETION OF THIS
OFFERING, ASSUMING ALL THE SHARES BEING OFFERED HEREBY ARE SOLD AND THAT NO
OTHER CHANGES IN THE SELLING SHAREHOLDERS' BENEFICIAL OWNERSHIP OCCUR PRIOR TO
COMPLETION OF THIS OFFERING, NONE OF THE SELLING SHAREHOLDERS WILL BENEFICIALLY
OWN MORE THAN ONE PERCENT OF NOVA'S OUTSTANDING SHARES OF NOVA COMMON STOCK.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
POSITION NUMBER OF SHARES NUMBER OF UPON COMPLETION OF
NAME WITH NOVA BENEFICIALLY OWNED (%) SHARES OFFERED THE OFFERING (%)
- ---- ------------- ---------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
U. BERTRAM ELLIS, JR. DIRECTOR 1,250 1,250 0
STEPHEN D. KANE DIRECTOR 3,678 3,500 178
GEORGE M. MILLER II DIRECTOR 96,238 3,500 92,738
HAROLD L. SIEBERT DIRECTOR 50,320 3,500 46,820
STEPHEN E. WALL DIRECTOR 5,000 4,000 1,000
</TABLE>
PLAN OF DISTRIBUTION
The sale of the Shares offered hereby by the Selling Shareholders may be
effected from time to time on the New York Stock Exchange or such other national
securities exchange or automated interdealer quotation system on which the
shares of NOVA Common Stock are then listed, in transactions in the over-the-
counter market, in negotiated transactions, through put or call options
transactions relating to the Shares, through short sales of Shares, or through a
combination of such methods of sale at market prices prevailing at the time of
sale or at negotiated prices. Such transactions may or may not involve brokers
or dealers. The Shares may be sold by one or more of the following: (a) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) a block trade in which
the broker or dealer so engaged will attempt to sell the Shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (d) an exchange distribution in accordance with the rules of such
exchange; and (e) through the writing of options on the Shares. The Selling
Shareholders must effect such transactions by notifying NOVA in advance of any
intended transaction in order for NOVA to determine compliance with applicable
federal and state securities laws, and then upon receipt of notice from NOVA
that such transaction may proceed. If necessary, a supplemental prospectus which
describes the method of sale in greater detail may be filed by NOVA with the
Commission pursuant to a post-effective amendment to this Registration Statement
or pursuant to Rule 424 under the Securities Act under certain circumstances. In
effecting sales, brokers or dealers engaged by the Selling Shareholders and/or
the purchasers of the Shares may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions, concessions or
discounts from the Selling Shareholders and/or the purchasers of the Shares in
amounts to be negotiated prior to the sale. In addition, any Shares covered by
this Prospectus which qualify for sale pursuant to Rule 144 under the Securities
Act may be sold under Rule 144 rather than pursuant to this Prospectus. The
number of Shares to be reoffered or resold by means of this Prospectus, by each
16
<PAGE>
Selling Shareholder, and any other person with whom the Selling Shareholder is
acting in concert for the purpose of selling securities of NOVA , may not
exceed, during any three month period, the amount specified by Rule 144(e) under
the Securities Act.
NOVA will bear all expenses in connection with the registration and sale of
the Shares, other than commissions, concessions or discounts to brokers or
dealers and fees and expenses of counsel or other advisors to the Selling
Shareholders.
The Selling Shareholders and any broker or dealer who acts in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, and any compensation
received by them and any profit on any resale of the Shares as principals might
be deemed to be underwriting discounts and commissions under the Securities Act.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this prospectus by reference from NOVA's Annual
Report on Form 10-K for each of the three years in the period ended December 31,
1997, have been audited by Ernst & Young LLP, independent auditors, as stated in
their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for NOVA by
Long Aldridge & Norman LLP, Atlanta, Georgia 30308.
17
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
---------------------------------------
The following documents heretofore filed by the Registrant with the
Commission are hereby incorporated herein by reference as of their respective
dates.
(1) The Registrant's Annual Report on Form 10-K as amended on Form 10-K/A
for the fiscal year ended December 31, 1997;
(2) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(3) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998;
(4) The Registrant's Proxy Statement dated April 20, 1998, relating to its
1998 Annual Meeting of Shareholders;
(5) The description of the Registrant's Common Stock as contained in Item
1 of the Registrant's Registration Statement on Form 8-A (Registration
No. 1-7088), as filed with the Commission on May 7, 1996; and
(6) The Joint Proxy Statement/Prospectus dated August 20, 1998, included
in the Registrant's Registration Statement on Form S-4 (Registration
No. 333-61867).
In addition, all reports and documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended, subsequent to the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and made a part hereof from the
date of the filing of such documents.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
Section 14-2-202(b)(4) of the Georgia Business Corporation Code (the
"Georgia Code") provides that a corporation's Articles of Incorporation may
include a provision that eliminates or limits the personal liability of
directors for monetary damages to the corporation or its shareholders for breach
of their duty of care and other duties as directors; provided, however, that the
Section does not permit a corporation to eliminate or limit the liability of a
director for appropriating, in violation of his duties, any business opportunity
of the corporation, engaging in intentional misconduct or a knowing violation of
law, obtaining an improper personal benefit, or voting for or assenting to an
unlawful distribution (whether as a dividend, stock repurchase or redemption or
otherwise) as provided in Section 14-2-832 of the Georgia Code. Section 14-2-
202(b)(4) also does not eliminate or limit the rights of a corporation or any
shareholder to seek an injunction or other non-monetary relief in the event of a
breach of a director's fiduciary duty. In addition, Section 14-2-202(b)(4)
applies only to claims against a director arising out of his role as a director
and does not relieve a director from liability arising from his role as an
officer or in any other capacity. The provisions of Article VII of the
Registrant's Articles of Incorporation (the "Articles") are similar in all
substantive respects to those contained in Section 14-2-202(b)(4) of the Georgia
Code outlined above, and provides that the liability of directors of the
Registrant shall be limited to the fullest extent permitted by amendments to
Georgia law.
II-1
<PAGE>
Sections 14-2-850 to 14-2-859, inclusive, of the Georgia Code govern the
indemnification of directors, officers, employees and agents. Section 14-2-851
of the Georgia Code provides for indemnification of a director of the Registrant
for liability incurred by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including civil actions brought as derivative actions by or in
the right of the Registrant) in which he may become involved by reason of being
a director of the Registrant. Section 14-2-851 also provides such indemnity for
directors who, at the request of the Registrant, act as directors, officers,
partners, trustees, employees or agents of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or another
enterprise. The Section permits indemnification if the director acted in a
manner he believed in good faith to be in or not opposed to the best interest of
the Registrant and, in addition, in criminal proceedings, if he had no
reasonable cause to believe his conduct was unlawful. If the required standard
of conduct is met, indemnification may include judgments, settlements,
penalties, fines or reasonable expenses (including attorneys' fees) incurred
with respect to a proceeding. However, if the director is adjudged liable to
the Registrant in a derivative action or on the basis that personal benefit was
improperly received by him, the director will only be entitled to such
indemnification for reasonable expenses as a court finds to be proper in
accordance with the provisions of Section 14-2-854.
Section 14-2-852 of the Georgia Code provides that directors who are
successful with respect to any claim brought against them, which claim is
brought because they are or were directors of the Registrant, are entitled to
indemnification against reasonable expenses as of right. Conversely, if the
charges made in any action are sustained, the determination of whether the
required standard of conduct has been met will be made, in accordance with the
provisions of Section 14-2-855 of the Georgia Code, as follows: (i) by the
majority vote of a quorum of the disinterested members of the board of
directors; (ii) if a quorum cannot be obtained, by a committee thereof duly
designated by the board of directors, consisting of two or more disinterested
directors; (iii) by special legal counsel; or (iv) by the shareholders, but, in
such event, the shares owned by or voted under the control of directors seeking
indemnification may not be voted.
Section 14-2-857 of the Georgia Code provides that an officer of the
Registrant (but not an employee or agent generally) who is not a director has
the mandatory right of indemnification granted to directors under Section 14-2-
852, as described above. In addition, the Registrant may, as provided by its
Articles, Bylaws, general or specific actions by its Board of Directors, or by
contract, indemnify and advance expenses to an officer, employee or agent who is
not a director to the extent that such indemnification is consistent with public
policy.
The provisions of Article IX of the Registrant's Bylaws provide for
indemnification by the Registrant to the full extent permitted by, the foregoing
provisions of the Georgia Code outlined above.
Officers and directors of the Registrant are presently covered by insurance
which (with certain exceptions and within certain limitations) indemnifies them
against any losses or liabilities arising from any alleged "wrongful act"
including any alleged breach of duty, neglect, error, misstatement, misleading
statement, omissions or other act done or wrongfully attempted. The cost of
such insurance is borne by the Registrant as permitted by the Bylaws of the
Registrant and the laws of the State of Georgia.
ITEM 8. EXHIBITS
--------
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4.1(a) Articles of Incorporation of the Registrant, as amended (1)
II-2
<PAGE>
4.1(b) Articles of Amendment to the Articles of Incorporation
of the Registrant*
4.2 Amended and Restated Bylaws of the Registrant (2)
4.3 The Registrant's 1996 Employees Stock Incentive Plan, as amended
by the First Amendment (1), the Second Amendment, and the Third
Amendment.*
4.4 The Registrant's 1996 Directors Stock Option Plan, as amended and
restated.*
5 Opinion of Long Aldridge & Norman LLP*
23.1 Consent of Ernst & Young LLP*
23.2 Consent of Long Aldridge & Norman LLP (included in Exhibit 5)
24 Powers of Attorney (included on the Signature Page to this
Registration Statement)
- ------------
* Filed herewith.
(1) Filed as an Exhibit to the Registrant's Registration Statement on Form S-1
(Registration No. 333-3287), and incorporated herein by reference.
(2) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, and incorporated herein by reference.
II-3
<PAGE>
ITEM 9. UNDERTAKINGS
------------
A. Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, because this registration statement is on Form S-8,
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. SUBSEQUENT DOCUMENTS INCORPORATED BY REFERENCE.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
C. INDEMNIFICATION OF OFFICERS, DIRECTORS AND CONTROLLING PERSONS.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described under Item 6 above, or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on September 29, 1998.
NOVA CORPORATION
(Registrant)
By: /s/ Edward Grzedzinski
----------------------
Edward Grzedzinski
Chairman of the Board, President
and Chief Executive Officer
(principal executive officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Edward Grzedzinski, James M. Bahin and Carole A. Loftin, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign this Registration Statement and to sign any and all
amendments (including post-effective amendments) thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated as of September 29, 1998.
Signatures Title
- ---------- -----
/s/ Edward Grzedzinski Chairman of the Board, President and
- ------------------------------- Chief Executive Officer (principal executive
Edward Grzedzinski officer)
/s/ James M. Bahin Vice Chairman of the Board, Chief
- ------------------------------- Financial Officer and Secretary
James M. Bahin (principal 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
II-6
<PAGE>
/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/ Harold L. Siebert Director
- -------------------------------
Harold L. Siebert
Director
- -------------------------------
Maurice F. Terbrueggen, Jr.
/s/ Stephen E. Wall Director
- -------------------------------
Stephen E. Wall
*By:
--------------------------
As Attorney-in-Fact
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1(a) Articles of Incorporation of the Registrant, as amended (1)
4.1(b) Articles of Amendment to the Articles of Incorporation of
the Registrant*
4.2 Amended and Restated Bylaws of the Registrant. (2)
4.3 The Registrant's 1996 Employees Stock Incentive Plan, as
amended by the First Amendment (1), the Second Amendment, and
the Third Amendment*
4.4 The Registrant's 1996 Directors Stock Option Plan, as amended
and restated*
5 Opinion of Long Aldridge & Norman LLP*
23.1 Consent of Ernst & Young LLP*
23.2 Consent of Long Aldridge & Norman LLP (included in Exhibit 5)
24 Powers of Attorney (included on the Signature Page to this
Registration Statement)
- ------------
* Filed herewith.
(1) Filed as an Exhibit to the Registrant's Registration Statement on Form
S-1 (Registration No. 333-3287), and incorporated herein by reference.
(2) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996, and incorporated herein by
reference.
<PAGE>
EXHIBIT 4.1(b)
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
NOVA CORPORATION
Pursuant to Section 14-2-1006 of the Georgia Business Corporation Code, the
undersigned corporation hereby submits these Articles of Amendment for the
purpose of amending its Articles of Incorporation.
I.
AMENDMENT
The Articles of Incorporation of NOVA Corporation are hereby amended by
removing Section IV.A and IV.A(a) in their entirety and substituting in lieu
thereof the following:
"IV.
A. The corporation has authority to issue not more than Two Hundred
and Five Million (205,000,000) shares of capital stock, which shares shall
be divided into the following classes:
(a) Two Hundred Million (200,000,000) shares of common stock
designated "Common Stock" having a par value of $.01 per share, and"
All other provisions of the Articles of Incorporation remain unchanged.
II.
ADOPTION OF AMENDMENT
In accordance with the provisions of Section 14-2-1003 of the Code, this
Amendment to the Articles of Incorporation was recommended to the shareholders
of NOVA Corporation by the Board of Directors of NOVA Corporation on June 17,
1998, and was duly approved by the shareholders of NOVA Corporation on September
24, 1998, at a special meeting of the shareholders of NOVA Corporation.
IN WITNESS WHEREOF, NOVA Corporation has caused these Articles of Amendment
to the Articles of Incorporation to be duly executed by its authorized officer
as of the 24th day of September 1998.
/s/ Edward Grzedzinski
-----------------------------------------
Edward Grzedzinski
Chief Executive Officer
<PAGE>
EXHIBIT 4.3
NOVA HOLDINGS, INC.
1996 EMPLOYEES STOCK INCENTIVE PLAN
<PAGE>
NOVA HOLDINGS, INC.
1996 EMPLOYEES STOCK INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1 General Purpose. The purpose of this Plan is to further the growth
and development of the Company by encouraging employees to obtain a proprietary
interest in the Company by owning or sharing in the appreciation of its stock.
The Company intends that the Plan will provide such persons with an added
incentive to continue in the employ of the Company and will stimulate their
efforts in promoting the growth, efficiency and profitability of the Company.
The Company also intends that the Plan will afford the Company a means of
attracting to its service persons of outstanding quality.
1.2 Intended Tax Effects of Stock Rights. It is intended that part of the
Plan qualify as an ISO (as hereinafter defined) plan and that any option granted
in accordance with such portion of the Plan qualify as an ISO, all within the
meaning of Code (S)422. The tax effects of any NQSO (as hereinafter defined),
Stock Appreciation Rights or Restricted Stock granted hereunder should be
determined under Code (S)83.
ARTICLE 2
DEFINITIONS
The following words and phrases as used in this Plan shall have the
meanings set forth in this Article unless a different meaning is clearly
required by the context:
2.1 1933 Act shall mean the Securities Act of 1933, as amended.
2.2 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
2.3 Beneficiary shall mean, with respect to an Optionee, Restricted Stock
Recipient or SAR Recipient, the individual or individuals to whom the Optionee's
Options, Restricted Stock Recipient's Restricted Stock or the SAR Recipient's
Stock Appreciation Rights shall be transferred upon the Optionee's, Restricted
Stock Recipient's or SAR Recipient's death (i.e., the Optionee's, Restricted
Stock Recipient's or SAR Recipient's Beneficiary).
(a) Designation of Beneficiary. An Optionee's, Restricted Stock
Recipient's or SAR Recipient's Beneficiary shall be the individual who is
last designated in writing by the Optionee, Restricted Stock Recipient or
SAR Recipient as such Optionee's, Restricted Stock Recipient's or SAR
Recipient's Beneficiary hereunder. An Optionee, Restricted Stock Recipient
or SAR Recipient shall designate his or her original Beneficiary in writing
on his or her Option Agreement, Restricted Stock Agreement or SAR
Agreement. Any subsequent modification of the Optionee's, Restricted Stock
Recipient's or SAR Recipient's Beneficiary shall be in a written executed
and notarized letter addressed to the Company and shall be effective when
it is received and accepted by the Committee, determined in the Committee's
sole discretion.
(b) No Designated Beneficiary. If, at any time, no Beneficiary has
been validly designated by an Optionee, Restricted Stock Recipient or SAR
Recipient, or the Beneficiary designated by the Optionee, Restricted Stock
Recipient or SAR Recipient is no longer living at the time of the
Optionee's, Restricted Stock Recipient's or SAR Recipient's death, then the
Optionee's, Restricted Stock Recipient's or SAR Recipient's Beneficiary
shall be deemed to be the individual or individuals in the first of the
following classes of individuals with one or members of such class
surviving or in existence as of the Optionee's, Restricted Stock
Recipient's or SAR Recipient's death, and in the absence thereof, the
Optionee's, Restricted Stock Recipient's or SAR Recipient's estate: (A) the
Page 1
<PAGE>
Optionee's, Restricted Stock Recipient's or SAR Recipient's surviving
spouse; or (B) the Optionee's, Restricted Stock Recipient's or SAR
Recipient's then living lineal descendants, per stirpes.
(c) Designation of Multiple Beneficiaries. An Optionee, Restricted
Stock Recipient or SAR Recipient may not designate more than one individual
as a Beneficiary. To the extent that a designation purports to designate
more than one individual as a Beneficiary, the designation shall be null
and void.
(d) Contingent Beneficiaries. An Optionee, Restricted Stock Recipient
or SAR Recipient may designate a contingent Beneficiary to receive the
Optionee's Option, Restricted Stock Recipient's Restricted Stock or SAR
Recipient's Stock Appreciation Right in the event that the Optionee's,
Restricted Stock Recipient's or SAR Recipient's original Beneficiary should
predecease the Optionee, Restricted Stock Recipient or SAR Recipient;
otherwise, in the event a Beneficiary predeceases the Optionee, Restricted
Stock Recipient or SAR Recipient, then the individual or individuals
specified in subsection (b) above shall be the Optionee's, Restricted Stock
Recipient's or SAR Recipient's Beneficiary.
2.4 Board shall mean the Board of Directors of the Company.
2.5 Cause shall mean an act or acts by an individual involving personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, breach of contract or violation of Company policy, intentional
failure to perform stated duties or willful violation of any law, rule or
regulation (other than traffic violations or similar offenses), and the unlawful
trading in the securities of the Company or of another corporation based on
information gained as a result of the performance of services for the Company.
2.6 Change of Control shall mean the occurrence of any one of the
following events:
(a) Acquisition By Person of Substantial Percentage. The acquisition
by any individual or entity (including "affiliates" and "associates" of
such individual or entity, but excluding the Corporation, any "parent" or
"subsidiary" of the Corporation, or any employee benefit plan of the
Corporation or of any "parent" or "subsidiary" of the Corporation) of a
sufficient number of shares of the Common Stock, or securities convertible
into the Common Stock, and whether through direct acquisition of shares or
by merger, consolidation, share exchange, reclassification of securities or
recapitalization of or involving the Corporation or any "parent" or
"subsidiary" of the Corporation, to constitute the individual or entity the
actual or beneficial owner (within the meaning of that term as it is used
in Section 13(d) of the 1934 Act and the rules promulgated thereunder) of
30% or more of the Common Stock, but only if such acquisition occurs
without the prior approval of the Corporation's Continuing Directors;
(b) Substantial Change of Board Members. The Corporation's Continuing
Directors fail to constitute at least a majority of the members of the
Board of Directors of the Corporation;
(c) Disposition of Assets. Any sale or other transfer of all or
substantially all of the assets of the Corporation or any "significant
subsidiary" (as such term is defined in Rule 1.02 of the Regulation S-X
promulgated under the 1934 Act) without the approval of the Corporation's
Continuing Directors; or
(d) Transactions Requiring Regulatory Approval. The filing by an
individual or entity of an application with any regulatory authority having
jurisdiction over the ownership of the Corporation in connection with any
transaction by such individual or entity to acquire 20% or more of the
combined voting power of the Corporation's then outstanding securities
without the prior approval of the Corporation's Continuing Directors.
For purposes of this subsection (2.6), the terms "affiliate," "associate,"
"parent" and "subsidiary" shall have the respective meanings ascribed to such
terms in Rule 12b-2 under Section 12 of the 1934 Act, and the term "1934 Act"
shall mean the Securities Exchange Act of 1934, as amended. Furthermore,
notwithstanding the foregoing, the transactions contemplated under the
Contribution Agreement dated October 30, 1995 by and among NOVA Information
Systems, Inc., the Company, certain shareholders of NOVA Information Systems,
Inc., identified therein, First Union Corporation, First Fidelity BanCorporation
and various banking subsidiaries of First Union and First Fidelity shall not
constitute a change of control.
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2.7 Code shall mean the Internal Revenue Code of 1986, as amended.
2.8 Committee shall mean the committee appointed by the Board to
administer and interpret the Plan in accordance with Article 3 below.
2.9 Common Stock shall mean the common stock, par value $0.01 per share,
of the Company.
2.10 Company shall mean NOVA Holdings, Inc., and shall also mean any
parent or subsidiary corporation of NOVA Holdings, Inc. unless the context
clearly indicates otherwise.
2.11 Continuing Director shall mean a Director (i) who was a Director as
of the Effective Date, or (ii) who becomes a Director subsequent to the
Effective Date and whose election or nomination for election by the Board was
Duly Approved by Directors at the time of such election or nomination who were
Directors as of the Effective Date, either by a specific vote or by approval of
the proxy statement issued by the Company on behalf of the Board of Directors.
2.12 Director shall mean individuals who are serving as a member of the
Board (i.e., a director of the Company) or who are serving as a member of the
board of directors of a parent or subsidiary corporation of the Company.
2.13 Disability shall mean, with respect to an individual, the total and
permanent disability of such individual as determined by the Committee in its
sole discretion.
2.14 Duly Approved shall mean approved by the vote of at least a majority
of the Continuing Directors then on the Board; provided, however, if the votes
of such Continuing Directors in favor of an act would be insufficient to
constitute an act of the entire Board as if a vote of all of its members had
been taken, or if the number of persons constituting the Continuing Directors
shall be equal to or less than three, then the term Duly Approved shall mean
approved by the unanimous vote of the Continuing Directors then on the Board.
2.15 Effective Date shall mean the date on which this Plan is adopted by
the Board, subject to shareholder approval. See Article 11 herein.
2.16 Exercise Price shall mean, with respect to a Stock Appreciation
Right, a specified "price" for shares of Common Stock used as a base in
determining the amount of appreciation in the share price.
2.17 Fair Market Value of the Common Stock as of a date of determination
shall mean the following:
(a) Stock Listed and Shares Traded. If the Common Stock is listed and
traded on a national securities exchange (as such term is defined by the
1934 Act) or on the NASDAQ National Market System on the date of
determination, the Fair Market Value per share shall be the closing price
of a share of the Common Stock on said national securities exchange or
National Market System on the date of determination. If the Common Stock
is traded in the over-the-counter market, the Fair Market Value per share
shall be the average of the closing bid and asked prices on the date of
determination.
(b) Stock Listed But No Shares Traded. If the Common Stock is listed
on a national securities exchange or on the National Market System but no
shares of the Common Stock are traded on the date of determination but
there were shares traded on dates within a reasonable period before the
date of determination, the Fair Market Value shall be the closing price of
the Common Stock on the most recent date before the date of determination.
If the Common Stock is regularly traded in the over-the-counter market but
no shares of the Common Stock are traded on the date of determination (or
if records of such trades are unavailable or burdensome to obtain) but
there were shares traded on dates within a reasonable period before the
date of determination, the Fair Market Value shall be the average of the
closing bid and asked prices of the Common Stock on the most recent date
before the date of determination.
(c) Stock Not Listed. If the Common Stock is not listed on a national
securities exchange or on the National Market System and is not regularly
traded in the over-the-counter market, then the Committee shall determine
the Fair Market Value of the Common Stock from all relevant available
facts, which may include the average of the closing bid and ask prices
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reflected in the over-the-counter market on a date within a reasonable
period either before or after the date of determination or opinions of
independent experts as to value and may take into account any recent sales
and purchases of such Common Stock to the extent they are representative.
The Committee's determination of Fair Market Value, which shall be made pursuant
to the foregoing provisions, shall be final and binding for all purposes of this
Plan.
2.18 ISO shall mean an incentive stock option within the meaning of Code
(S)422(b).
2.19 NQSO shall mean an option to which Code (S)421 (relating generally to
certain ISO and other options) does not apply.
2.20 Option shall mean ISO's or NQSO's, as applicable, granted to
individuals pursuant to the terms and provisions of this Plan.
2.21 Option Agreement shall mean a written agreement, executed and dated
by the Company and an Optionee, evidencing an Option granted under the terms and
provisions of this Plan, setting forth the terms and conditions of such Option,
and specifying the name of the Optionee and the number of shares of stock
subject to such Option.
2.22 Option Price shall mean the purchase price of the shares of Common
Stock underlying an Option.
2.23 Optionee shall mean an individual who is granted an Option pursuant
to the terms and provisions of this Plan.
2.24 Person shall mean any individual, organization, corporation,
partnership or other entity.
2.25 Plan shall mean this NOVA Holdings, Inc. 1996 Employees Stock
Incentive Plan.
2.26 Restricted Stock shall mean Common Stock subject to a Restriction
Agreement between the Restricted Stock Recipient and the Company, whereby the
Restricted Stock Recipient has immediate rights of ownership in the shares of
Common Stock underlying the award but such shares are subject to restrictions in
accordance with the terms and provisions of this Plan and the Restriction
Agreement and are subject to forfeiture by the Restricted Stock Recipient until
the earlier of (a) the time such restrictions lapse or are satisfied, or (b) the
time such shares are forfeited.
2.27 Restricted Stock Recipient shall mean an individual who is granted
Restricted Stock pursuant to the terms and provisions of this Plan.
2.28 Restriction Agreement shall mean a written agreement, executed and
dated by the Company and a Restricted Stock Recipient, evidencing restrictions
placed on the ownership of Restricted Stock by a Restricted Stock Recipient.
2.29 SAR Agreement shall mean a written agreement, executed and dated by
the Company and a SAR Recipient, evidencing a grant of Stock Appreciation Rights
under the terms and provisions of this Plan, and setting forth the terms and
conditions of such Stock Appreciation Rights and specifying the name of the SAR
Recipient and the number of shares of stock subject to such Stock Appreciation
Rights. For Stock Appreciation Rights related to an Option, the term
"Exercise Price" shall equal the purchase price of the shares of Common Stock
underlying the Option. For Stock Appreciation Rights related to an Option,
the Option Agreement may contain the aforementioned terms and conditions and be
the SAR Agreement.
2.30 SAR Recipient shall mean an individual who is granted Stock
Appreciation Rights pursuant to the terms and provisions of this Plan.
2.31 Stock Appreciation Right shall mean a right granted to an Optionee
with respect to an Option granted pursuant to the terms and provisions of this
Plan pursuant to which the Optionee, without payment to the Company (except for
any applicable withholding taxes), receives cash, shares of Common Stock, or a
combination thereof in an amount equal to the excess of the Fair Market Value
per share on the date on which the Stock Appreciation Right is exercised over
the Option price per share as provided in the related underlying Option.
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2.32 Stock Rights shall mean Options and/or Restricted Stock and/or Stock
Appreciation Rights.
ARTICLE 3
ADMINISTRATION
3.1 General Administration. The Plan shall be administered and
interpreted by the Committee. Subject to the express provisions of the Plan,
the Committee shall have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to the Plan, to determine the terms
and provisions of the Option Agreements, SAR Agreements or Restriction
Agreements (as applicable) by which Stock Rights shall be evidenced (which shall
not be inconsistent with the terms of the Plan), and to make all other
determinations necessary or advisable for the administration of the Plan, all of
which determinations shall be final, binding and conclusive.
3.2 Appointment. The Board shall appoint the Committee from among its
members to serve at the pleasure of the Board. The Board from time to time may
remove members from, or add members to, the Committee and shall fill all
vacancies thereon. The Committee at all times shall be composed of two or more
directors who shall meet the following requirements:
(a) Disinterested Administration Rule. During the period any director
is serving on the Committee and during the 1-year period immediately
preceding the commencement of such service, he shall not be or have been
granted or awarded any Option or other equity securities of the Company
under the Plan (or any other discretionary stock plan of the Company or any
Company affiliate as defined by Rule 144(a)(1) of the 1933 Act).
Notwithstanding the preceding sentence, a member of the Committee may
participate during such period in (A) a formula plan, (B) an ongoing
securities acquisition program with broad-based employee participation,
and/or (C) a program to elect to receive all or part of his annual retainer
in equity securities of the Company, all as defined and limited by Rule
16b-3 promulgated under Section 16 of the 1934 Act. The requirements of
this subsection are intended to comply with the "disinterested
administration rule" of Rule 16b-3 under Section 16 of the 1934 Act or any
successor rule or regulation, and shall be interpreted and construed in a
manner which assures compliance with said Rule. To the extent said Rule
16b-3 is modified to reduce or increase the restrictions on who may serve
on the Committee, the Plan shall be deemed modified in a similar manner.
(b) Outside Director Rule. No director serving on the Committee may
be a current employee of the Company or a former employee of the Company
(or any corporation affiliated with the Company under Code (S)1504)
receiving compensation for prior services (other than benefits under a tax-
qualified retirement plan) during each taxable year during which the
director serves on the Committee. Furthermore, no director serving on the
Committee shall be or have ever been an officer of the Company (or any Code
(S)1504 affiliated corporation), or shall be receiving remuneration
(directly or indirectly) from such a corporation in any capacity other than
as a director. The requirements of this subsection are intended to comply
with the "outside director" requirements of Prop. Treas. Reg. (S)1.162-
27(e)(3) or any successor regulation, and shall be interpreted and
construed in a manner which assures compliance with the "outside" director
requirement of Code (S)162(m)(4)(C)(i). A director who meets the
requirements of subsection (a) above shall be treated as meeting the
requirements of this subsection (b) until the first meeting of shareholders
at which directors are to be elected occurring on or after January 1, 1995.
3.3 Organization. The Committee may select one of its members as its
chairman and shall hold its meetings at such times and at such places as it
shall deem advisable. A majority of the Committee shall constitute a quorum,
and such majority shall determine its actions. The Committee shall keep minutes
of its proceedings and shall report the same to the Board at the meeting next
succeeding.
3.4 Indemnification. In addition to such other rights of indemnification
as they have as directors or as members of the Committee, the members of the
Committee, to the extent permitted by applicable law, shall be indemnified by
the Company against reasonable expenses (including, without limitation,
attorneys' fees) actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Stock Rights granted
hereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved to the extent required by and in the manner provided
by the articles or certificate of incorporation or the bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he or they
reasonably believed to be in or not opposed to the best interest of the Company.
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ARTICLE 4
STOCK
The stock subject to the Stock Rights and other provisions of the Plan
shall be authorized but unissued or reacquired shares of Common Stock. Subject
to readjustment in accordance with the provisions of Article 10, the total
number of shares of Common Stock which may be granted to, or for which Options
may be granted to, persons participating in the Plan shall not exceed in the
aggregate 600,000 shares of Common Stock. Notwithstanding the foregoing, shares
of Common Stock allocable to the unexercised portion of any expired or
terminated Option or Stock Appreciation Right or shares of Restricted Stock
returned to the Company by forfeiture again may become subject to Stock Rights
under the Plan.
ARTICLE 5
ELIGIBILITY TO RECEIVE AND GRANT OF STOCK RIGHTS
5.1 Individuals Eligible for Grants of Stock Rights. The individuals
eligible to receive Stock Rights hereunder shall be employees of the Company,
including such employees who are also members of the Board or of the board of
directors of any parent or subsidiary corporation of the Company; provided, no
non-employee director shall be eligible to receive any Stock Rights pursuant to
this Plan, and provided further, that only employees of the Company and its
"parent" or "subsidiary" corporations within the meaning of subsections (e) and
(f) of Code (S)424 shall be eligible to receive ISO's.
5.2 Grants of Stock Rights. Subject to the provisions of the Plan, the
Committee shall have the authority and sole discretion to determine and
designate, from time to time, those individuals (from among the individuals
eligible for a grant of Stock Rights under the Plan pursuant to Section 5.1
above) to whom Stock Rights will actually be granted, the Option Price of the
shares covered by any Options granted, the Exercise Price of the shares of any
Stock Appreciation Rights granted, the manner in and conditions under which
Options and Stock Appreciation Rights are exercisable (including, without
limitation, any limitations or restrictions thereon), and the manner in and
conditions under which shares of Restricted Stock shall vest and the time or
times at which Stock Rights shall be granted. In making such determinations,
the Committee may take into account the nature of the services rendered by the
respective employees to whom Stock Rights may be granted, their present and
potential contributions to the Company's success and such other factors as the
Committee, in its sole discretion, shall deem relevant. In its authorization of
the granting of an Option hereunder, the Committee shall specify the name of the
Optionee, the number of shares of stock subject to such Option and whether such
Option is an ISO or a NQSO. In its authorization of the granting of Stock
Appreciation Rights hereunder, the Committee shall specify the name of the SAR
Recipient, the number of shares for which Stock Appreciation Rights are granted,
and whether upon exercise, such Stock Appreciation Rights shall be paid in cash,
shares of Common Stock, or a combination thereof. In its authorization of an
award of Restricted Stock hereunder, the Committee shall specify the name of the
Restricted Stock Recipient, the number of shares of Restricted Stock to be
awarded and the restrictions to which such Restricted Stock shall be subject.
The Committee may grant, at any time, new Stock Rights to an Optionee, a SAR
Recipient or a Restricted Stock Recipient who previously has received Stock
Rights, whether such Stock Rights include prior Stock Rights that still are
outstanding, previously have been exercised in whole or in part, have expired or
are canceled in connection with the issuance of new Stock Rights. No individual
shall have any claim or right to be granted Stock Rights under the Plan.
5.3 Limitation on Exercisability of ISO's. Notwithstanding anything
herein to the contrary, the aggregate Fair Market Value of ISO's which are
granted to any employee under the Plan or any other stock option plan adopted by
the Company that are first exercisable in any one calendar year shall not exceed
$100,000. The Committee shall interpret and administer the limitations set
forth in this Section in accordance with Code (S)422(d).
5.4 Restriction on Grant of Stock Options and Stock Appreciation Rights.
No more than 200,000 shares of Common Stock may be made subject to the aggregate
Options or Stock Appreciation Rights granted during a calendar year to any one
individual.
ARTICLE 6
TERMS AND CONDITIONS OF OPTIONS
Options granted hereunder and Option Agreements shall comply with and be
subject to the following terms and conditions:
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6.1 Requirement of Option Agreement. Upon the grant of an Option
hereunder, the Committee shall prepare (or cause to be prepared) an Option
Agreement. The Committee shall present such Option Agreement to the Optionee.
Upon execution of such Option Agreement by the Optionee, such Option shall be
deemed to have been granted effective as of the date of grant. The failure of
the Optionee to execute the Option Agreement within 30 days after the date of
the receipt of same shall render the Option Agreement and the underlying Option
null and void ab initio.
6.2 Optionee and Number of Shares. Each Option Agreement shall state the
name of the Optionee and the total number of shares of the Common Stock to which
it pertains, the Option Price, the Beneficiary of the Optionee and the date as
of which the Option was granted under this Plan.
6.3 Vesting. Each Option shall first become exercisable (i.e., vested)
with respect to such portions of the shares subject to such Option as are
specified in the schedule set forth hereinbelow:
(a) Commencing as of the first anniversary of the date the Option is
granted, the Optionee shall have the right to exercise the Option with
respect to, and to thereby purchase, 25% of the shares subject to such
Option. Prior to said date, the Option shall be unexercisable in its
entirety.
(b) Commencing as of the second anniversary of the date the Option is
granted, the Optionee shall have the right to exercise the Option with
respect to, and to thereby purchase, an additional 25% of the shares
subject to the Option.
(c) Commencing as of the third anniversary of the date the Option is
granted, the Optionee shall have the right to exercise the Option with
respect to, and to thereby purchase, an additional 25% of the shares
subject to the Option.
(d) Commencing as of the fourth anniversary of the date the Option is
granted, the Optionee shall have the right to exercise the Option with
respect to, and to thereby purchase, the remainder of the shares subject to
such Option.
(e) Notwithstanding subsections (a) through (d) above, any Options
previously granted to an Optionee shall become immediately vested and
exercisable for 100% of the number of shares subject to the Options upon
the Optionee's becoming Disabled or upon his death or upon a Change in
Control.
Other than as provided above, if an Optionee ceases to be an employee of the
Company, his rights with regard to all non-vested Options shall cease
immediately.
6.4 Option Price. The Option Price of the shares of Common Stock
underlying each Option shall be the Fair Market Value of the Common Stock on the
date the Option is granted, unless otherwise determined by the Committee;
provided, in no event shall the Option Price of any ISO be less than 100% (110%
in the case of ISO's of Optionees who own more than ten percent of the voting
power of all classes of stock of either the Company or any "parent" or
"subsidiary" corporation of the Company (within the meaning of subsections (e)
and (f) of Code (S)424)) of the Fair Market Value of the Common Stock on the
date the Option is granted; and provided, further, in no event shall the Option
Price of any NQSO be less than 75% of the Fair Market Value of the Common Stock
on the date the Option is granted. Upon execution of an Option Agreement by both
the Company and Optionee, the date as of which the Committee granted the Option
as specified in the Option Agreement shall be considered the date on which such
Option is granted.
6.5 Terms of Options. Terms of Options granted under the Plan shall
commence on the date of grant and shall expire on such date as the Committee may
determine for each Option; provided, in no event shall any Option be exercisable
after ten years (five years in the case of ISO's granted to Optionees who own
more than ten percent of the voting power of all classes of stock of either the
Company or any parent or subsidiary) from the date the Option is granted. No
Option shall be granted hereunder after ten years from the earlier of (a) the
date the Plan is approved by the shareholders, or (b) the date the Plan is
adopted by the Board.
6.6 Terms of Exercise. The exercise of an Option may be for less than the
full number of shares of Common Stock subject to such Option, but such exercise
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shall not be made for less than (i) 50 shares or (ii) the total remaining shares
subject to the Option, if such total is less than 50 shares. Subject to the
other restrictions on exercise set forth herein, the unexercised portion of an
Option may be exercised at a later date by the Optionee.
6.7 Method of Exercise. All Options granted hereunder shall be exercised
by written notice directed to the Secretary of the Company at its principal
place of business or to such other person as the Committee may direct. Each
notice of exercise shall identify the Option which the Optionee is exercising
(in whole or in part) and shall be accompanied by payment of the Option Price
for the number of shares specified in such notice and by any documents required
by Section 10.1. The Company shall make delivery of such shares within a
reasonable period of time; provided, if any law or regulation requires the
Company to take any action (including, but not limited to, the filing of a
registration statement under the 1933 Act and causing such registration
statement to become effective) with respect to the shares specified in such
notice before the issuance thereof, then the date of delivery of such shares
shall be extended for the period necessary to take such action.
6.8 Medium and Time of Payment.
(a) The Option Price shall be payable upon the exercise of the Option
in an amount equal to the number of shares then being purchased times the
per share Option Price. Payment, at the election of the Optionee (or his
Beneficiary as provided in subsection (c) of Section 6.9), shall be (A) in
cash; (B) by delivery to the Company of a certificate or certificates for
shares of the Common Stock duly endorsed for transfer to the Company with
signature guaranteed by a member firm of a national stock exchange or by a
national or state bank or a federally chartered thrift institution (or
guaranteed or notarized in such other manner as the Committee may require)
or by instructing the Company to retain shares of Common Stock upon the
exercise of the Option with a Fair Market Value equal to the exercise price
as payment; or (C) by a combination of (A) and (B).
(b) If all or part of the Option Price is paid by delivery of shares
of the Common Stock, on the date of such payment, the Optionee must have
held such shares for at least six months from (i) the date of acquisition,
in the case of shares acquired other than through a stock option or other
stock award plan, or (ii) the date of grant or award in the case of shares
acquired through such a plan; and the value of such Common Stock (which
shall be the Fair Market Value of such Common Stock on the date of
exercise) shall be less than or equal to the total Option Price payment.
If the Optionee delivers Common Stock with a value that is less than the
total Option Price, then such Optionee shall pay the balance of the total
Option Price in cash, other property or services, as provided in subsection
(a) above.
(c) In addition to the payment of the purchase price of the shares
then being purchased, an Optionee also shall pay in cash (or have withheld
from his normal pay) an amount equal to, or by instructing the Company to
retain Common Stock upon the exercise of the Option with a Fair Market
Value equal to, the amount, if any, which the Company at the time of
exercise is required to withhold under the income tax or Federal Insurance
Contributions Act tax withholding provisions of the Code, of the income tax
laws of the state of the Optionee's residence, and of any other applicable
law.
6.9 Effect of Termination of Employment, Disability or Death. Except as
provided in subsections (a), (b) and (c) below, no Option shall be exercisable
unless the Optionee thereof shall have been an employee of the Company from the
date of the granting of the Option until the date of exercise; provided, the
Committee, in its sole discretion, may waive the application of this Section
with respect to any NQSO's granted hereunder and, instead, may provide a
different expiration date or dates in a NQSO Option Agreement.
(a) Termination of Employment. In the event an Optionee ceases to be
an employee of the Company for any reason other than death or Disability,
any Option or unexercised portion thereof granted to him shall terminate on
and shall not be exercisable after the earliest to occur of (i) the
expiration date of the Option, (ii) three months after termination of
employment or (iii) the date on which the Company gives notice to such
Optionee of termination of employment if employment is terminated by the
Company for Cause (an Optionee's resignation in anticipation of termination
of employment by the Company for Cause shall constitute a notice of
termination by the Company); provided, the Committee may provide in the
Option Agreement that such Option or any unexercised portion thereof shall
terminate sooner. Notwithstanding the foregoing, in the event that an
Optionee's employment terminates for a reason other than death or
Disability at any time after a Change of Control, the term of all Options
of that Optionee shall be extended through the end of the three-month
period immediately following the date of such termination; provided, this
extension shall apply to ISO's only to the extent it does not cause the
term of such ISO's to exceed the maximum term permitted under Code (S)422
or does not cause such ISO's to lose their status as ISO's. Prior to the
earlier of the dates specified in the preceding sentences of this
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subsection (a), the Option shall be exercisable only in accordance with its
terms and only for the number of shares exercisable on the date of
termination of employment. The question of whether an authorized leave of
absence or absence for military or government service or for any other
reason shall constitute a termination of employment for purposes of the
Plan shall be determined by the Committee, which determination shall be
final and conclusive.
(b) Disability. Upon the termination of an Optionee's employment due
to Disability, any Option or unexercised portion thereof granted to him
which is otherwise exercisable shall terminate on and shall not be
exercisable after the earlier to occur of (i) the expiration date of such
Option, or (ii) one year after the date on which such Optionee ceases to be
an employee of the Company due to Disability; provided, the Committee may
provide in the Option Agreement that such Option or any unexercised portion
thereof shall terminate sooner. Prior to the earlier of such date, such
Option shall be exercisable only in accordance with its terms and only for
the number of shares exercisable on the date such Optionee's employment
ceases due to Disability.
(c) Death. In the event of the death of the Optionee (i) while he is
an employee of the Company, (ii) within three months after the date on
which such Optionee's employment terminated (for a reason other than Cause)
as provided in subsection (a) above, or (iii) within one year after the
date on which such Optionee's employment terminated due to his Disability
as provided in subsection (b), any Option or unexercised portion thereof
granted to him which is otherwise exercisable may be exercised by his
Beneficiary at any time prior to the expiration of one year from the date
of death of such Optionee, but in no event later than the date of
expiration of the option period; provided, the Committee may provide in the
Option Agreement that such Option or any unexercised portion thereof shall
terminate sooner. Such exercise shall be effected pursuant to the terms of
this Section as if such Beneficiary is the named Optionee.
6.10 Restrictions on Transfer and Exercise of Options. No Option shall be
assignable or transferable by the Optionee except (i) by transfer to a
Beneficiary upon the death of the Optionee, or (ii) by transfer from the
Optionee to a spouse, lineal ascendant or lineal descendant of the Optionee or a
spouse of a lineal ascendant or descendant of the Optionee (but only to the
extent that such transfer is not restricted for grants of securities under this
Plan to be exempt from the provisions of Section 16 of the 1934 Act in
accordance with Rule 16b-3(a)(2) or the corresponding provisions, if any, of
subsequent regulations under Section 16 of the 1934 Act), and any purported
transfer (other than as excepted above) shall be null and void. After the death
of an Optionee and upon the death of the Optionee's Beneficiary, an Option shall
be transferred only by will or by the laws of descent and distribution. During
the lifetime of an Optionee, the Option shall be exercisable only by him;
provided, however, that in the event the Optionee is incapacitated and unable to
exercise Options, such Options may be exercised by such Optionee's legal
guardian, legal representative, fiduciary or other representative whom the
Committee deems appropriate based on applicable facts and circumstances.
6.11 Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to shares covered by his Option until date of the
issuance of the shares to him and only after the Option Price of such shares is
fully paid. Unless specified in Article 9, no adjustment will be made for
dividends or other rights for which the record date is prior to the date of such
issuance.
6.12 No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
6.13 Acceleration. The Committee shall at all times have the power to
accelerate the vesting date of Options previously granted under this Plan.
6.14 Designation of Option as ISO or NQSO. Subject to the provisions of
this Article, each Option granted under the Plan shall be designated either as
an ISO or a NQSO. An Option Agreement evidencing both an ISO and a NQSO shall
identify clearly the status and terms of each Option.
6.15 ISO's Converted to NQSO's. In the event any part or all of an Option
granted under the Plan which is intended to be an ISO at any time fails to
satisfy all of the requirements of an ISO, then such ISO shall be split into an
ISO and NQSO so that the portion of the Option, if any, that still qualifies as
an ISO shall remain an ISO and the portion that does not qualify as an ISO shall
become a NQSO. Such split of an Option into an ISO portion and a NQSO portion
shall be evidenced by one or more Option Agreements, as long as each Option is
identified clearly as to its status as an ISO or NQSO.
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ARTICLE 7
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
Stock Appreciation Rights granted hereunder and SAR Agreements shall comply
with and be subject to the following terms and conditions:
7.1 General Provisions Applicable to Stock Appreciation Rights. Stock
Appreciation Rights granted under this Plan shall either be related to an Option
or granted independently of any Option as follows:
(a) Stock Appreciation Rights Related to Option. Stock Appreciation
Rights which are granted under this Plan with respect to an Option shall be
granted simultaneously with, and shall only pertain to, such related
underlying Option. Stock Appreciation Rights related to an Option shall be
exercised only to the extent that the related Option is exercisable, shall
be forfeited to the extent that the related Option is forfeited, and shall
be subject to the same terms and conditions of Article 6 as are applicable
to the related Option (e.g., vesting, number of shares, expiration terms,
method of exercise, effect of termination of employment, Disability or
death, restrictions on transfer and exercise, rights as shareholders,
acceleration, etc.). Stock Appreciation Rights which are granted under
this Plan with respect to an Option granted under this Plan shall be
specified in the SAR Agreement. If the related Option is an ISO, the
related Stock Appreciation Right shall satisfy all the restrictions and
limitations of Article 6 hereof as if such related Stock Appreciation Right
were an ISO.
(b) Independent Stock Appreciation Rights. Stock Appreciation Rights
which are granted under this Plan independent of any Option granted under
this Plan shall be subject to such terms and provisions as the Committee
may, in its discretion, specify in writing in a SAR Agreement; provided,
however, such terms and provisions with respect to independent Stock
Appreciation Rights shall provide for a definite period of time of less
than ten years from the date of grant for the exercise of the Stock
Appreciation Rights and shall not defer income until the SAR Recipient's
retirement date or termination of employment.
The Exercise Price of the shares of Common Stock underlying any Stock
Appreciation Right granted under this Plan shall be the Fair Market Value of the
Common Stock on the date the Stock Appreciation Right is granted, unless
otherwise determined by the Committee; provided, however, for Stock Appreciation
Rights related to an Option, the Exercise Price shall be equal to the Option
Price.
7.2 Requirement of SAR Agreement. Upon the grant of Stock Appreciation
Rights hereunder, the Committee shall prepare (or cause to be prepared) a SAR
Agreement. The Committee shall present such SAR Agreement to the SAR Recipient.
Upon execution of such SAR Agreement by the SAR Recipient, such Stock
Appreciation Rights shall be deemed to have been granted effective as of the
date of grant. The failure of the SAR Recipient to execute the SAR Agreement
within 30 days after the date of the receipt of same shall render the SAR
Agreement and the underlying Stock Appreciation Rights null and void ab initio.
7.3 SAR Recipient and Number of Shares. Each SAR Agreement shall state
the name of the SAR Recipient and the total number of shares of the Common Stock
to which it pertains, the Exercise Price, the Beneficiary of the SAR Recipient
and the date as of which the Stock Appreciation Right was granted under this
Plan.
7.4 Exercise of Stock Appreciation Right. A Stock Appreciation Right
shall, upon its exercise, entitle the SAR Recipient to whom such Stock
Appreciation Right was granted to receive a number of shares of Common Stock or
cash or a combination thereof (as specified at the time of grant, or, if not so
specified, as specified by the SAR Recipient as of the time of exercise), the
aggregate value of which (i.e., the sum of the amount of cash and/or the Fair
Market Value of such shares of Common Stock on the date of exercise) shall equal
(as nearly as possible, it being understood that the Company shall not issue any
fractional shares) the amount by which the Fair Market Value per share on the
date of such exercise shall exceed the Exercise Price per share under the
related SAR Agreement, multiplied by the number of shares of Common Stock with
respect to which Stock Appreciation Rights have been granted which are being
exercised by the SAR Recipient. In the case of Stock Appreciation Rights
related to an Option, such related Option shall cease to be exercisable to the
extent of the shares with respect to which the related Stock Appreciation Right
was exercised, and upon the exercise or termination of a related Option, any
related Stock Appreciation Right shall terminate to the extent of the shares
with respect to which the related Option was exercised or terminated. A SAR
Recipient shall pay in cash (or have withheld from the payment attributable to
the exercise of all or a part of his Stock Appreciation Right) an amount equal
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to the amount, if any, which the Company is required at any time to withhold
under the income tax or Federal Insurance Contributions Act tax withholding
provisions of the Code, of the income tax laws of the state of the SAR
Recipient's residence, and any other applicable law.
7.5 Method of Exercise. All Stock Appreciation Rights granted hereunder
shall be exercised by written notice directed to the Committee. Each notice of
exercise shall identify the Stock Appreciation Right which the SAR Recipient is
exercising (in whole or in part) and by any documents required by Section 10.1.
The Company shall make payment the corresponding payment of cash or delivery of
shares within a reasonable period of time; provided, if any law or regulation
requires the Company to take any action (including, but not limited to, the
filing of a registration statement under the 1933 Act and causing such
registration statement to become effective) with respect to any shares to be
issued to the SAR Recipient before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to take such
action.
7.6 Restrictions on Stock Appreciation Rights. No Stock Appreciation
Rights shall be sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of except by transfer to a Beneficiary upon the death of the SAR
Recipient, and any purported transfer shall be null and void. After the death
of a SAR Recipient and upon the death of the SAR Recipient's Beneficiary, a
Stock Appreciation Right shall be transferred only by will or by the laws of
descent and distribution. During the lifetime of a SAR Recipient, the SAR
Recipient shall be exercisable only by him; provided, however, that in the event
the SAR Recipient is incapacitated and unable to exercise Stock Appreciation
Rights, such Stock Appreciation Rights may be exercised by such SAR Recipient's
legal guardian, legal representative, fiduciary or other representative whom the
Committee deems appropriate based on applicable facts and circumstances.
7.7 Restrictions on Grants. No Stock Appreciation Rights shall be granted
hereunder after ten years from the earlier of (a) the date the Plan is approved
by the shareholders, or (b) the date the Plan is adopted by the Board.
7.8 Rights as a SAR Recipient. A SAR Recipient shall have no rights as a
shareholder with respect to shares covered by his Stock Appreciation Right at
any time, either before of after exercise of the Stock Appreciation Right.
7.9 No Obligation to Exercise Stock Appreciation Right. The granting of a
Stock Appreciation Right shall impose no obligation upon the SAR Recipient to
exercise such Stock Appreciation Right.
7.10 Acceleration. The Committee shall at all times have the power to
reduce (but not increase) any restrictions or limitations applicable to a Stock
Appreciation Right granted under this Plan.
ARTICLE 8
TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
Restriction Agreements and the Restricted Stock awarded under this Plan
shall comply with and be subject to the following terms and conditions:
8.1 Requirement of Restriction Agreement. Upon the grant of Restricted
Stock hereunder, the Committee shall prepare (or cause to be prepared) a
Restriction Agreement and shall present such Restriction Agreement to the
Restricted Stock Recipient. The failure of the Restricted Stock Recipient to
execute the Restriction Agreement within 30 days after the date of the receipt
of same shall render the Restriction Agreement and the underlying award of
Restricted Stock null and void ab initio.
8.2 Effect of Grant of Restricted Stock. An award of Restricted Stock
granted under the Plan shall provide the Restricted Stock Recipient with
immediate rights of ownership in the shares of Common Stock underlying the
award, but such shares shall be subject to such restrictions as the Committee
shall specify and shall be subject to forfeiture by the Restricted Stock
Recipient until the earlier of (i) the time such restrictions lapse or are
satisfied, or (ii) the time such shares are forfeited.
8.3 Restricted Stock Recipient and Number of Shares. Each Restriction
Agreement shall state the name of the Restricted Stock Recipient and the total
number of shares of the Common Stock to which it pertains, the Beneficiary of
the Restricted Stock Recipient and the date as of which the Restricted Stock was
granted under this Plan.
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8.4 Restrictions on Stock.
(a) The vesting of complete ownership rights in any Restricted Stock
awarded under this Plan shall be subject to such terms and conditions as
the Committee may determine in its sole discretion; provided, no Restricted
Stock Recipient shall be required to pay any consideration in the form of
cash or other property as a condition to acquiring the Restricted Stock. A
Restricted Stock Recipient shall vest and obtain a nonforfeitable interest
in the Restricted Stock as of the date that the last of such terms and
conditions is satisfied; provided, if such terms and conditions are not
satisfied by the deadline, if any, designated by the Committee and
specified in the Restriction Agreement, the portion of Restricted Stock
still subject to such terms and conditions shall be forfeited and returned
to the Company. The Committee, in its sole discretion, may provide for the
lapse of the terms and conditions to which Restricted Stock is subject in
installments and may provide for different terms and conditions and/or a
different restriction period with respect to each award, or any portion of
an award, of Restricted Stock.
(b) In addition to such terms and conditions as the Committee may
determine with respect to the vesting of any shares of Restricted Stock,
all Restricted Stock shall vest with respect to such portion of each grant
of Restricted Stock as is specified in the schedule set forth hereinbelow,
except as may otherwise be specified by the Committee.
(i) Commencing as of the first anniversary of the date the
Restricted Stock is granted, complete ownership rights shall vest
(subject to such other terms and conditions as the Committee may
determine) in 25% of the Restricted Stock so granted. Prior to said
date, none of such Restricted Stock shall be vested.
(ii) Commencing as of the second anniversary of the date the
Restricted Stock is granted, complete ownership rights shall vest
(subject to such other terms and conditions as the Committee may
determine) in an additional 25% of the Restricted Stock so granted.
(iii) Commencing as of the third anniversary of the date the
Restricted Stock is granted, complete ownership rights shall vest
(subject to such other terms and conditions as the Committee may
determine) in an additional 25% of the Restricted Stock so granted.
(iv) Commencing as of the fourth anniversary of the date the
Restricted Stock is granted, complete ownership rights shall vest
(subject to such other terms and conditions as the Committee may
determine) in the remainder of the Restricted Stock so granted.
Notwithstanding the above, 100% of the shares of Restricted Stock
previously granted to a Restricted Stock Recipient shall become immediately
vested upon a Change of Control or upon a Restricted Stock Recipient's
becoming Disabled or upon his death.
8.5 Delivery of Restricted Stock.
(a) The Company shall make delivery of the shares of Restricted Stock
within a reasonable period of time after execution of a Restriction
Agreement; provided, if any law or regulation requires the Company to take
any action (including, but not limited to, the filing of a registration
statement under the 1933 Act and causing such registration statement to
become effective) with respect to such shares before the issuance thereof,
then the date of delivery of such shares shall be extended for the period
necessary to take such action.
(b) Unless the certificates representing shares of the Restricted
Stock are deposited with a custodian pursuant to subsection (c) of this
Section, each such certificate shall bear the following legend (in addition
to any other restrictive legend required pursuant to Article 10):
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture and restrictions against transfer)
contained in the NOVA Holdings, Inc. 1996 Employees Stock Incentive
Plan and a Restriction Agreement, dated ___________, ______, between
________________________ and NOVA Holdings, Inc.. The Plan and
Restriction Agreement are on file in the office of the Secretary of
NOVA Holdings, Inc.
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Such legend shall be removed from any certificate evidencing such shares of
Restricted Stock as of the date that such shares become nonforfeitable.
(c) As an alternative to delivering a stock certificate to the
Restricted Stock Recipient pursuant to subsection (b) of this Section, any
certificate evidencing Restricted Stock may be deposited by the Company
with a custodian to be designated by the Committee. The Company shall
cause the custodian to issue to the Restricted Stock Recipient a receipt
for any Restricted Stock deposited with it in accordance with this
subsection. Such custodian shall hold the deposited certificates and
deliver the same to the Restricted Stock Recipient in whose name the shares
of Restricted Stock evidenced thereby are registered only after such shares
become nonforfeitable.
(d) A Restricted Stock Recipient shall pay in cash (or have withheld
from his normal pay) an amount equal to, or by instructing the Company to
retain Common Stock upon the grant of the Restricted Stock with a Fair
Market Value equal to, the amount, if any, which the Company is required at
any time to withhold under the income tax or Federal Insurance
Contributions Act tax withholding provisions of the Code, of the income tax
laws of the state of the Restricted Stock Recipient's residence, and any
other applicable law.
8.6 Termination of Employment. Except as otherwise determined by the
Committee and set forth in a Restriction Agreement, in the event that the
employment of a Restricted Stock Recipient to whom Restricted Stock has been
granted is terminated for any reason other than a Change of Control or death or
Disability before satisfaction of the terms and conditions to which the
Restricted Stock is subject, all shares of Restricted Stock still subject to
restriction shall be forfeited and shall be forfeited back to the Company.
8.7 Restrictions on Transfer of Restricted Stock. No shares of Restricted
Stock shall be sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of while such shares are still subject to restriction, and any
purported sale, exchange, transfer, pledge, hypothecation or other disposition
of shares of Restricted Stock while such shares are still subject to restriction
shall be null and void, except that (i) subject to Sections 8.6 and 8.8, such
Restricted Stock may be transferred to a Beneficiary upon the death of the
Restricted Stock Recipient, and (ii) Restricted Stock may be transferred from
the Restricted Stock Recipient to a spouse, lineal ascendant or lineal
descendant of the Restricted Stock Recipient or a spouse of a lineal ascendant
or descendant of the Restricted Stock Recipient (but only to the extent that
such transfer is not restricted for grants of securities under this Plan to be
exempt from the provisions of Section 16 of the 1934 Act in accordance with Rule
16b-3(a)(2) or the corresponding provisions, if any, of subsequent regulations
under Section 16 of the 1934 Act). After the death of a Restricted Stock
Recipient and upon the death of the Restricted Stock Recipient's Beneficiary,
Restricted Stock shall be transferred only by will or by the laws of descent and
distribution.
8.8 Waiver of Restrictions. If the Committee determines that, in cases of
retirement or other circumstances determined by the Committee, a waiver of any
or all remaining restrictions with respect to a Restricted Stock Recipient's
Restricted Stock would be desirable, it may elect in its sole discretion to
waive such remaining restrictions.
8.9 Rights as a Shareholder. Upon delivery of Restricted Stock to the
Restricted Stock Recipient (or the custodian, if any), the Restricted Stock
Recipient shall, except as otherwise set forth in this Article and in the
Restriction Agreement, have all of the rights of a shareholder with respect to
the Restricted Stock, including the right to vote the shares of Restricted Stock
and receive all dividends or other distributions paid or made with respect to
the Restricted Stock. Until such delivery, the Restricted Stock Recipient shall
have no rights as a shareholder.
8.10 Acceleration. The Committee shall at all times have the power to
accelerate the vesting date of Restricted Stock previously granted under this
Plan.
8.11 Restrictions on Grants. No Restricted Stock shall be granted
hereunder after ten years from the earlier of (a) the date the Plan is approved
by the shareholders, or (b) the date the Plan is adopted by the Board.
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ARTICLE 9
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
9.1 Recapitalization. In the event that the outstanding shares of the
Common Stock of the Company are hereafter increased or decreased or changed into
or exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, reclassification, stock split,
combination of shares or dividend payable in shares of the Common Stock, the
following rules shall apply:
(a) The Committee shall make an appropriate adjustment in the number
and kind of shares available for the granting of Stock Rights under the
Plan.
(b) The Committee also shall make an appropriate adjustment in the
number and kind of shares as to which outstanding Options and Stock
Appreciation Rights, or portions thereof then unexercised, shall be
exercisable; any such adjustment in any outstanding Options and Stock
Appreciation Rights shall be made without change in the total price
applicable to the unexercised portion of such Option or Stock Appreciation
Rights and with a corresponding adjustment in the Option Price or Exercise
Price per share. No fractional shares shall be issued or optioned in
making the foregoing adjustments, and the number of shares available under
the Plan or the number of shares subject to any outstanding Options and
Stock Appreciation Rights shall be the next lower number of shares,
rounding all fractions downward.
(c) Any adjustment to or assumption of ISO's under this Section shall
be made in accordance with Code (S)424(a) and the regulations promulgated
thereunder so as to preserve the status of such Options and Stock
Appreciation Rights as ISO's under Code (S)422.
(d) If any rights or warrants to subscribe for additional shares are
given pro rata to holders of outstanding shares of the class or classes of
stock then set aside for the Plan, each Optionee shall be entitled to the
same rights or warrants on the same basis as holders of the outstanding
shares with respect to such portion of his Option as is exercised on or
prior to the record date for determining shareholders entitled to receive
or exercise such rights or warrants.
9.2 Reorganization. Subject to any required action by the shareholders, if
the Company shall be a party to any reorganization involving merger,
consolidation, acquisition of the stock or acquisition of the assets of the
Company which does not constitute a Change of Control, the Committee, in its
discretion, may declare that:
(a) any Option or Stock Appreciation Right granted but not yet
exercised shall pertain to and apply, with appropriate adjustment as
determined by the Committee, to the securities of the resulting corporation
to which a holder of the number of shares of the Common Stock subject to
such Option or Stock Appreciation Right would have been entitled;
(b) any or all outstanding Stock Rights granted hereunder shall become
immediately nonforfeitable and fully exercisable or vested (to the extent
permitted under federal or state securities laws); and/or
(c) any or all Stock Rights granted hereunder shall become immediately
nonforfeitable and fully exercisable or vested (to the extent permitted
under federal or state securities laws) and are to be terminated after
giving at least 30 days' notice to the Optionees, SAR Recipients and/or
Restricted Stock Recipients to whom such Stock Rights have been granted.
9.3 Dissolution and Liquidation. If the Board adopts a plan of
dissolution and liquidation that is approved by the shareholders of the Company,
the Committee shall give each Optionee, SAR Recipient and Restricted Stock
Recipient written notice of such event at least ten days prior to its effective
date, and the rights of all Optionees, SAR Recipients and Restricted Stock
Recipients shall become immediately nonforfeitable and fully exercisable or
vested (to the extent permitted under federal or state securities laws).
9.4 Limits on Adjustments. Any issuance by the Company of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of the Common Stock subject to any Option, except as
specifically provided otherwise in this Article. The grant of Stock Rights
pursuant to the Plan shall not affect in any way the right or power of the
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Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge, consolidate or dissolve, or to
liquidate, sell or transfer all or any part of its business or assets. All
adjustments the Committee makes under this Article shall be conclusive.
ARTICLE 10
AGREEMENT BY OPTIONEE, SAR RECIPIENT OR
RESTRICTED STOCK RECIPIENT AND SECURITIES REGISTRATION
10.1 Agreement. If, in the opinion of counsel to the Company, such action
is necessary or desirable, no Stock Rights shall be granted to any Optionee, SAR
Recipient or Restricted Stock Recipient, and no Option or Stock Appreciation
Right shall be exercisable, unless, at the time of grant or exercise, as
applicable, such Optionee, SAR Recipient or Restricted Stock Recipient (i)
represents and warrants that he will acquire the Common Stock for investment
only and not for purposes of resale or distribution, and (ii) makes such further
representations and warranties as are deemed necessary or desirable by counsel
to the Company with regard to holding and resale of the Common Stock. The
Optionee, SAR Recipient or Restricted Stock Recipient shall, upon the request of
the Committee, execute and deliver to the Company an agreement or affidavit to
such effect. Should the Committee have reasonable cause to believe that such
Optionee, SAR Recipient or Restricted Stock Recipient did not execute such
agreement or affidavit in good faith, the Company shall not be bound by the
grant of the Option, Stock Appreciation Right or Restricted Stock or by the
exercise of the Option or the Stock Appreciation Right. All certificates
representing shares of Common Stock issued pursuant to the Plan shall be marked
with the following restrictive legend or similar legend, if such marking, in the
opinion of counsel to the Company, is necessary or desirable:
The shares represented by this certificate [have not been registered under
the Securities Act of 1933, as amended, or the securities laws of any
state] [and] [are held by an "affiliate" (as such term is defined in Rule
144 promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended) of the Corporation]. Accordingly,
these shares may not be sold, hypothecated, pledged or otherwise
transferred except (i) pursuant to an effective registration statement
under the Securities Act of 1933, as amended, and any applicable securities
laws or regulations of any state with respect to such shares, (ii) in
accordance with Securities and Exchange Commission Rule 144, or (iii) upon
the issuance to the Corporation of a favorable opinion of counsel or the
submission to the Corporation of such other evidence as may be satisfactory
to the Corporation that such proposed sale, assignment, encumbrance or
other transfer will not be in violation of the Securities Act of 1933, as
amended, or any applicable securities laws of any state or any rules or
regulations thereunder. Any attempted transfer of this certificate or the
shares represented hereby which is in violation of the preceding
restrictions will not be recognized by the Corporation, nor will any
transferee be recognized as the owner thereof by the Corporation.
If the Common Stock is (A) held by an Optionee, SAR Recipient or Restricted
Stock Recipient who is not an "affiliate," as that term is defined in Rule 144
of the 1933 Act, or who ceases to be an "affiliate," or (B) registered under the
1933 Act and all applicable state securities laws and regulations as provided in
Section 10.2, the Committee, in its discretion and with the advice of counsel,
may dispense with or authorize the removal of the restrictive legend set forth
above or the portion thereof which is inapplicable.
10.2 Registration. In the event that the Company in its sole discretion
shall deem it necessary or advisable to register, under the 1933 Act or any
state securities laws or regulations, any shares with respect to which Stock
Rights have been granted hereunder, then the Company shall take such action at
its own expense before delivery of the certificates representing such shares to
an Optionee, SAR Recipient or Restricted Stock Recipient. In such event, and if
the shares of Common Stock of the Company shall be listed on any national
securities exchange or on NASDAQ at the time of the exercise of any Option or
the vesting of any shares of Restricted Stock, the Company shall make prompt
application at its own expense for the listing on such stock exchange or NASDAQ
of the shares of Common Stock to be issued.
ARTICLE 11
EFFECTIVE DATE
The Plan shall be effective as of the Effective Date, and no Stock Rights
shall be granted hereunder prior to said date. Adoption of the Plan shall be
approved by the shareholders of the Company at the earlier of (i) the annual
meeting of the shareholders of the Company which immediately follows the date of
the first grant or award of Stock Rights hereunder, or (ii) 12 months after the
adoption of the Plan by the Board, but in no event earlier than 12 months prior
to the adoption of the Plan by the Board. Shareholder approval shall be made by
a majority of the votes cast at a duly held meeting at which a quorum
representing a majority of all outstanding voting stock is, either in person or
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by proxy, present and voting on the Plan, or by the written consent in lieu of a
meeting of the holders of a majority of the outstanding voting stock or such
greater number of shares of voting stock as may be required by the Company's
articles or certificate of incorporation and bylaws and by applicable law;
provided, however, such shareholder approval, whether by vote or by written
consent in lieu of a meeting, must be solicited substantially in accordance with
the rules and regulations in effect under Section 14(a) of the 1934 Act.
Failure to obtain such approval shall render the Plan and any Stock Rights
granted hereunder null and void ab initio.
ARTICLE 12
AMENDMENT AND TERMINATION
12.1 Amendment and Termination By the Board. Subject to Section 12.2
below, the Board shall have the power at any time to add to, amend, modify or
repeal any of the provisions of the Plan, to suspend the operation of the entire
Plan or any of its provisions for any period or periods or to terminate the Plan
in whole or in part. In the event of any such action, the Committee shall
prepare written procedures which, when approved by the Board, shall govern the
administration of the Plan resulting from such addition, amendment,
modification, repeal, suspension or termination.
12.2 Restrictions on Amendment and Termination. Notwithstanding the
provisions of Section 12.1 above, the following restrictions shall apply to the
Board's authority under Section 12.1 above:
(a) Prohibition Against Adverse Affects on Outstanding Stock Rights.
No addition, amendment, modification, repeal, suspension or termination
shall adversely affect, in any way, the rights of the Optionees, SAR
Recipients or Restricted Stock Recipients who have outstanding Stock Rights
without the consent of such Optionees, SAR Recipients or Restricted Stock
Recipients; and
(b) Shareholder Approval Required for Certain Modifications. No
modification or amendment of the Plan may be made without the prior
approval of the shareholders of the Company if (i) such modification or
amendment would cause the applicable portions of the Plan to fail to
qualify as an ISO plan pursuant to Code (S)422, (ii) such modification or
amendment would materially increase the benefits accruing to participants
under the Plan, (iii) such modification or amendment would materially
increase the number of securities which may be issued under the Plan, or
(iv) such modification or amendment would materially modify the
requirements as to eligibility for participation in the Plan, or (v) such
modification or amendment would modify the material terms of the Plan
within the meaning of Prop. Treas. Reg. (S)1.162-27(e)(4). Clauses (ii),
(iii) and (iv) of the preceding sentence shall be interpreted in accordance
with the provisions of paragraph (b)(2) of Rule 16b-3 of the 1934 Act.
Shareholder approval shall be made by a majority of the votes cast at a
duly held meeting at which a quorum representing a majority of all
outstanding voting stock is, either in person or by proxy, present and
voting, or by the written consent in lieu of a meeting of the holders of a
majority of the outstanding voting stock or such greater number of shares
of voting stock as may be required by the Company's articles or certificate
of incorporation and bylaws and by applicable law; provided, however, that
for modifications described in clauses (ii), (iii) and (iv) above, such
shareholder approval, whether by vote or by written consent in lieu of a
meeting, must be solicited substantially in accordance with the rules and
regulations in effect under Section 14(a) of the 1934 Act as required by
paragraph (b)(2) of Rule 16b-3 of the 1934 Act.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Application of Funds. The proceeds received by the Company from the
sale of the Common Stock subject to the Stock Rights granted hereunder will be
used for general corporate purposes.
13.2 Notices. All notices or other communications by an Optionee, SAR
Recipient or Restricted Stock Recipient to the Committee pursuant to or in
connection with the Plan shall be deemed to have been duly given when received
in the form specified by the Committee at the location, or by the person,
designated by the Committee for the receipt thereof.
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13.3 Term of Plan. Subject to the terms of Article 12, the Plan shall
terminate upon the later of (i) the complete exercise or lapse of the last
outstanding Stock Right, or (ii) the last date upon which Options may be granted
hereunder.
13.4 Compliance with Rule 16b-3. This Plan is intended to be in
compliance with the requirements of Rule 16b-3 as promulgated under Section 16
of the 1934 Act.
13.5 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Georgia.
13.6 Additional Provisions By Committee. The Option Agreements authorized
under the Plan may contain such other provisions, including, without limitation,
restrictions upon the exercise of an Option, as the Committee shall deem
advisable. The SAR Agreements authorized under the Plan may contain such other
provisions, including, without limitation, restrictions upon the exercise of a
Stock Appreciation Right, as the Committee shall deem advisable. The
Restriction Agreements authorized under the Plan may contain such other
provisions, including, without limitation, restrictions upon the complete
ownership of Restricted Stock, as the Committee shall deem advisable.
13.7 Plan Document Controls. In the event of any conflict between the
provisions of an Option Agreement and the Plan, between a SAR Agreement and the
Plan, or between a Restriction Agreement and the Plan, the Plan shall control.
13.8 Gender and Number. Wherever applicable, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
13.9 Headings. The titles in this Plan are inserted for convenience of
reference; they constitute no part of the Plan and are not to be considered in
the construction hereof.
13.10 Legal References. Any references in this Plan to a provision of law
which is, subsequent to the Effective Date of this Plan, revised, modified,
finalized or redesignated, shall automatically be deemed a reference to such
revised, modified, finalized or redesignated provision of law.
13.11 No Rights to Employment. Nothing contained in the Plan, or any
modification thereof, shall be construed to give any individual any rights to
employment with the Company or any parent or subsidiary corporation of the
Company.
13.12 Unfunded Arrangement. The Plan shall not be funded, and except for
reserving a sufficient number of authorized shares to the extent required by law
to meet the requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any grant under the Plan.
ADOPTED BY BOARD OF DIRECTORS ON _______________, 1995
APPROVED BY SHAREHOLDERS AS OF _______________, 1996
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INCENTIVE STOCK OPTION NO. ________
NOVA HOLDINGS, INC.
1996 EMPLOYEES STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (the "Agreement") is entered into as
of the ____ day of ________________, _______, by and between NOVA Holdings,
Inc. (the "Company") and ______________________________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, the Company (which term as used herein shall include any parent or
subsidiary of the Company) has adopted the NOVA Holdings, Inc. 1996 Employees
Stock Incentive Plan (the "Plan") which is administered by a committee appointed
by the Company's Board of Directors (the "Committee"); and
WHEREAS, effective as of ________________, ________, the Committee
granted to Optionee an incentive stock option under, and in accordance with, the
terms of the Plan to reward Optionee for his efforts on behalf of the Company
and to encourage his continued loyalty and diligence; and
WHEREAS, to comply with the terms of the Plan and to further the interests
of the Company and Optionee, the parties hereto have set forth the terms of such
option in writing in this Agreement;
NOW, THEREFORE, for and in consideration of the premises and mutual
promises herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. Grant of Option. Effective as of _________________, ________, the
Committee granted Optionee an incentive stock option. Under that option and
subject to the terms and conditions set forth herein, Optionee shall have the
right to purchase ________ shares of the common stock of the Company (the
"Common Stock"); such _________ shares hereinafter are referred to as the
"Optioned Shares," and this option hereinafter is referred to as the "Option".
The Option is intended to be an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Option Price. The price per share for each of the Optioned Shares
shall be $________________ (the "Option Price"), which is not less than 100%
(110% if the Optionee owns more than 10% of the voting power of all classes of
stock of either the Company or any parent or subsidiary corporation of the
Company) of the per share Fair Market Value of the Optioned Shares on
_________________, ________, the date of grant specified above.
3. Exercise of Option.
(a) General. The Option may be exercised by Optionee's delivery to
the Secretary of the Company of a written notice of exercise executed by
Optionee (the "Notice of Exercise"). The Notice of Exercise shall be
substantially in the form set forth as Exhibit A, attached hereto and made a
part hereof, and shall identify the Option and the number of Optioned Shares
that are being exercised.
(b) Beginning of Exercise Period. The Option first shall become
exercisable (i.e., vested) according to the following schedule; provided, if
Optionee ceases to be an employee of the Company, his rights with regard to all
non-vested Options under this schedule shall cease immediately:
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(i) As of the first anniversary of the date of grant of the
Option, Optionee shall have the right to exercise 25% of the Optioned
Shares;
(ii) As of the second anniversary of the date of grant of the
Option, Optionee shall have the right to exercise an additional 25% of the
Optioned Shares;
(iii) As of the third anniversary of the date of grant of the
Option, Optionee shall have the right to exercise an additional 25% of the
Optioned Shares; and
(iv) As of the fourth anniversary of the date of grant of the
Option, Optionee shall have the right to exercise the remainder of the
Optioned Shares.
Notwithstanding the foregoing, the Option shall become 100% vested immediately
upon the death or Disability of Optionee or upon a Change of Control.
(c) Partial Exercise. Optionee may exercise the Option for less than
the full number of exercisable Optioned Shares, but such exercise may not be
made for less than 50 shares or the total remaining shares subject to the
Option, if less than 50 shares.
4. Termination of Option. Notwithstanding any provisions to the contrary
herein, the Option shall not be exercisable either in whole or in part after the
earliest of:
(a) Ten years from the date of grant;
(b) The date that is immediately prior to the first anniversary of the
date on which Optionee dies (i) while employed by the Company, (ii) within the
three-month period that begins on the date on which Optionee ceases to be an
employee of the Company for any reason other than death or Disability or (iii)
within the one-year period that begins on the date on which Optionee ceases to
be an employee of the Company due to Disability;
(c) The date of expiration of the one-year period that begins on the
date on which Optionee ceases to be an employee of the Company due to
Disability; provided, if Optionee dies during such one-year period, the terms of
subsection (b) shall control;
(d) The date of expiration of the three-month period that begins on
the date on which Optionee ceases to be an employee of the Company for any
reason other than death or Disability; provided, if Optionee dies during such
one-year period, the terms of subsection (b) shall control;
(e) The date on which the Company gives notice (or is deemed to have
given notice) to Optionee of his termination of employment for Cause, all as
described in Section 6.9(a) of the Plan; or
(f) Such other earlier date as may be required under the terms of the
Plan.
5. Option Non-Transferable. The Option shall not be transferable by
Optionee other than (i) by transfer to a Beneficiary upon the death of the
Optionee, or (ii) by transfer from the Optionee to a spouse, lineal ascendant or
lineal descendant of the Optionee or a spouse of a lineal ascendant or
descendant of the Optionee (but only to the extent that such transfer is not
restricted for grants of securities under this Plan to be exempt from the
provisions of Section 16 of the 1934 Act in accordance with Rule 16b-3(a)(2) or
the corresponding provisions, if any, of subsequent regulations under Section 16
of the 1934 Act), and any purported transfer (other than as excepted above)
shall be null and void; provided, however, this sentence shall only be
applicable to the extent required for grants of securities under the Plan to be
exempt from the provisions of Section 16 of the 1934 Act (in accordance with
Rule 16b-3(a)(2) or the corresponding provisions, if any, of subsequent
regulations under Section 16 of the 1934 Act. After the death of the Optionee
and upon the death of the Optionee's Beneficiary, the Option may be transferred
by will or by the laws of descent and distribution. During the lifetime of
Optionee, the Option shall be exercisable only by Optionee (or, if he becomes
disabled or otherwise incapacitated, by the guardian of his property or his duly
appointed attorney-in-fact), and shall not be assignable or transferable by
Optionee and, subject to Section 6 hereof, no other person shall acquire any
rights in the Option.
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<PAGE>
6. Death of Optionee and Transfer of Option. In the event of the death of
Optionee while in the employ of the Company, within a period of one year after
the termination of his employment with the Company due to Disability, or within
a three-month period after the employee ceases to be an employee of the Company
for any reason other than for Cause, all or any of the unexercised portion of
the Option owned by the deceased Optionee may be exercised by Optionee's
Beneficiary at any time prior to the first anniversary of the date of the death
of Optionee, but in no event later than the date as of which such Option expires
pursuant to Section 4 hereof. Such exercise shall be effected in accordance
with the terms hereof as if such Beneficiary was Optionee herein. The Optionee
agrees that the following individual shall initially be his Beneficiary:
Name:_______________________________________
Address: ________________________________
________________________________
________________________________
Any subsequent modification of the Optionee's Beneficiary shall be made pursuant
to the terms and provisions of the Plan.
7. Medium and Time of Payment of Option Price.
(a) General. The Option Price shall be payable by Optionee (or his
Beneficiary in accordance with Section 6 hereof) upon exercise of the Option and
shall be paid in cash, in shares of the Common Stock (or by instructing the
Company to retain shares of Common Stock as payment), in other property or
services acceptable to the Committee and allowed under the terms of the Plan and
applicable law, or any combination thereof.
(b) Payment in Shares of the Common Stock. If Optionee pays all or
part of the Option Price with shares of the Common Stock, the following
conditions shall apply:
(i) Optionee shall deliver to the Secretary of the Company a
certificate or certificates for shares of the Common Stock duly endorsed
for transfer to the Company with signature guaranteed by a member firm of a
national stock exchange or by a national or state bank (or guaranteed or
notarized in such other manner as the Committee may require);
(ii) Optionee must have held any shares of the Common Stock used
to pay the Option Price for at least six months prior to the date such
payment is made;
(iii) Such shares shall be valued on the basis of the Fair
Market Value of the Common Stock on the date of exercise pursuant to the
terms of the Plan; and
(iv) The value of such Common Stock shall be less than or equal
to the Option Price. If Optionee delivers Common Stock with a value that
is less than the Option Price, then Optionee shall pay the balance of the
Option Price in a form allowed under subsection (a) above.
In addition to the payment of the Option Price, Optionee also shall pay in cash
(or have withheld from his normal pay) an amount equal to, or by instructing the
Company to retain Common Stock upon the exercise of the Option with a Fair
Market Value equal to, the amount, if any, which the Company at the time of
exercise is required to withhold under the income tax and FICA withholding
provisions of the Code and of the income tax laws of the state of Optionee's
residence.
8. Agreement of Optionee. Optionee acknowledges that he has read Section
9 of the Plan and understands that certain restrictions may apply with respect
to shares of the Common Stock acquired by him pursuant to his exercise of the
Option (including restrictions on resale applicable to "affiliates" under Rule
144 of the Securities Act of 1933, as amended, and restrictions on resale
applicable to shares of the Common Stock that have not been registered under the
Securities Act of 1933, as amended, and applicable state securities laws).
Optionee hereby agrees to execute such documents and take such actions as the
Company may require with respect to state and federal securities laws and any
restrictions on the resale of such shares which may pertain.
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<PAGE>
9. Delivery of Stock Certificates. As promptly as practical after the
date of exercise of the Option and the receipt by the Company of full payment
therefor, the Company shall deliver to Optionee a stock certificate representing
the shares of the Common Stock acquired by Optionee pursuant to his exercise of
the Option.
10. Notices. All notices or other communications hereunder shall be in
writing and shall be effective (i) when personally delivered by courier
(including overnight carriers) or otherwise to the party to be given such notice
or other communication or (ii) on the third business day following the date
deposited in the United States mail if such notice or other communication is
sent by certified or registered mail with return receipt requested and postage
thereon fully prepaid. The addresses for such notices shall be as follows:
If to the Company:
NOVA Holdings, Inc.
Attention: Corporate Secretary
Five Concourse Parkway
Suite 700
Atlanta, Georgia 30328
If to Optionee:
__________________________
__________________________
__________________________
__________________________
Any party hereto, by notice of the other party hereunder, may change its address
for receipt of notices hereunder.
11. Other Terms and Conditions. In addition to the terms and conditions
set forth herein, the Option is subject to and governed by the other terms and
conditions set forth in the Plan, which is hereby incorporated by reference. In
the event of any conflict between the provisions of this Agreement and the Plan,
the Plan shall control.
12. Miscellaneous.
(a) The granting of the Option and the execution of this Agreement
shall not give Optionee any rights to similar grants in future years or any
right to be retained in the employ of the Company or to interfere in any way
with the right of the Company to terminate Optionee's employment at any time.
(b) Unless and except as otherwise specifically provided in this
Agreement, Optionee shall have no rights of a shareholder with respect to any
shares covered by the Option until the date of issuance of a stock certificate
to him for such shares.
(c) If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Agreement shall remain
in full force and effect, and shall in no way be affected, impaired or
invalidated. If for any reason such court or regulatory agency determines that
this Agreement will not permit Optionee to acquire the full number of Optioned
Shares as provided in Section 1 hereof, it is the express intention of the
Company to allow Optionee to acquire such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) This Agreement shall be construed and enforced in accordance with
the laws of Georgia.
(e) This Agreement, together with the Plan, contains the entire
understanding among the parties and supersedes any prior understanding and
agreements between them representing the subject matter hereof. There are no
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<PAGE>
representations, agreements, arrangements or understandings, oral or written,
between and among the parties hereto relating to the subject matter hereof which
are not fully expressed herein and in the Plan.
(f) Section and other headings contained in this Agreement are for
reference purposes only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision
hereof.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall constitute one
agreement, and the signatures of any party or any counterpart shall be deemed to
be a signature to, and may be appended to, any other counterpart.
(h) All capitalized terms in this Agreement shall be construed in
accordance with their defined terms under the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the first date written above.
NOVA HOLDINGS, INC.
By: ___________________________________
Title: ________________________________
OPTIONEE:
_______________________________________
Signature
_______________________________________
Print or type name
Page 5
<PAGE>
EXHIBIT A
NOVA HOLDINGS, INC.
1996 EMPLOYEES STOCK INCENTIVE PLAN
NOTICE OF EXERCISE FOR INCENTIVE STOCK OPTION AGREEMENT
This Notice of Exercise is given pursuant to the terms of the Incentive
Stock Option Agreement, dated _________________, _______, between NOVA
Holdings, Inc. (the "Company") and the undersigned Optionee (the "Agreement"),
which Agreement represents Incentive Stock Option No. _______ and which is made
a part hereof and incorporated herein by reference.
EXERCISE OF OPTION. Optionee hereby exercises his option to purchase
_______ of his Optioned Shares. Optionee hereby delivers, together with this
written statement of exercise, the full Option Price with respect to the
exercised Optioned Shares, which consists of: [COMPLETE ONLY ONE]
[ ] cash in the total amount of $_________________.
[ ] _________ shares of the Company's Common Stock.
[ ] cash in the total amount of $__________________ and
_________ shares of the Company's Common Stock.
[ ] other (specify): _____________________________________
ACKNOWLEDGMENT. Optionee hereby acknowledges that, to the extent he is an
"affiliate" of the Company (as that term is defined in Rule 144 promulgated
under the Securities Act of 1933, as amended) or to the extent that the Optioned
Shares have not been registered under the Securities Act of 1933, as amended, or
applicable state securities laws, any shares of the Company's Common Stock
acquired by him as a result of his exercise of the Option pursuant to this
Notice are subject to, and the certificates representing such shares shall be
legended to reflect, certain trading restrictions under applicable securities
laws (including particularly the Securities and Exchange Commission's Rule 144),
all as described in Section 9 of the Plan, and Optionee hereby agrees to comply
with all such restrictions and to execute such documents or take such other
actions as the Company may require in connection with such restrictions.
Executed this ______ day of __________________, ________.
OPTIONEE:
_______________________________________
Signature
_______________________________________
Print or Type Name
NOVA Holdings, Inc. hereby acknowledges receipt of this Notice of Exercise
and receipt of payment in the form and amount indicated above, all on this
______ day of __________________, ________.
NOVA HOLDINGS, INC.
By: ___________________________________
Title: ________________________________
Page 6
<PAGE>
NONQUALIFIED STOCK OPTION NO. ________
NOVA HOLDINGS, INC.
1996 EMPLOYEES STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement") is entered into
as of the ____ day of ___________________, ________, by and between NOVA
Holdings, Inc. (the "Company") and
_______________________________________________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, the Company (which term as used herein shall include any parent or
subsidiary of the Company) has adopted the NOVA Holdings, Inc. 1996 Employees
Stock Incentive Plan (the "Plan") which is administered by a committee appointed
by the Company's Board of Directors (the "Committee"); and
WHEREAS, effective as of _________________, ________, the Committee
granted to Optionee a non-incentive stock option under, and in accordance with,
the terms of the Plan to reward Optionee for his efforts on behalf of the
Company and to encourage his continued loyalty and diligence; and
WHEREAS, to comply with the terms of the Plan and to further the interests
of the Company and Optionee, the parties hereto have set forth the terms of such
option in writing in this Agreement;
NOW, THEREFORE, for and in consideration of the premises and mutual
promises herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. Grant of Option. Effective as of _________________, ________, the
Committee granted Optionee a non-incentive stock option under the Plan. Under
that option and subject to the terms and conditions set forth herein, Optionee
shall have the right to purchase ________ shares of the common stock of the
Company (the "Common Stock"); such ________ shares hereinafter are referred to
as the "Optioned Shares", and this option hereinafter is referred to as the
"Option". The Option is intended to be a nonqualified option.
2. Option Price. The price per share for each of the Optioned Shares
shall be $________________ (the "Option Price"), which is not less than 75% of
the per share Fair Market Value of the Optioned Shares on the date of grant
specified above.
3. Exercise of Option.
(a) General. The Option may be exercised by Optionee's delivery to
the Secretary of the Company of a written notice of exercise executed by
Optionee (the "Notice of Exercise"). The Notice of Exercise shall be
substantially in the form set forth as Exhibit A, attached hereto and made a
part hereof, and shall identify the Option and the number of Optioned Shares
that are being exercised.
(b) Beginning of Exercise Period. The Option first shall become
exercisable (i.e., vested) according to the following schedule; provided, if
Optionee ceases to be an employee of the Company, his rights with regard to all
non-vested Options under this schedule shall cease immediately:
(i) As of the first anniversary of the date of grant of the
Option, Optionee shall have the right to exercise 25% of the Optioned
Shares;
(ii) As of the second anniversary of the date of grant of the
Option, Optionee shall have the right to exercise an additional 25% of the
Optioned Shares;
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<PAGE>
(iii) As of the third anniversary of the date of grant of the
Option, Optionee shall have the right to exercise an additional 25% of the
Optioned Shares; and
(iv) As of the fourth anniversary of the date of grant of the
Option, Optionee shall have the right to exercise the remainder of the
Optioned Shares.
Notwithstanding the foregoing, the Option shall become 100% vested immediately
upon the death or Disability of Optionee or upon a Change of Control.
(c) Partial Exercise. Optionee may exercise the Option for less than
the full number of exercisable Optioned Shares, but such exercise may not be
made for less than 50 shares or the total remaining shares subject to the
Option, if less than 50 shares.
4. Termination of Option. Notwithstanding any provisions to the
contrary herein, and except as otherwise specified in Attachment I (if any)
hereto, the Option shall not be exercisable either in whole or in part after the
earliest of:
(a) Ten years from the date of grant;
(b) The date that is immediately prior to the first anniversary of the
date on which Optionee dies (i) while employed by the Company, (ii) within the
three-month period that begins on the date on which Optionee ceases to be an
employee of the Company for any reason other than death or Disability or (iii)
within the one-year period that begins on the date on which Optionee ceases to
be an employee of the Company due to Disability;
(c) The date of expiration of the one-year period that begins on the
date on which Optionee ceases to be an employee of the Company due to
Disability; provided, if Optionee dies during such one-year period, the terms of
subsection (b) shall control;
(d) The date of expiration of the three-month period that begins on
the date on which Optionee ceases to be an employee of the Company for any
reason other than death or Disability; provided, if Optionee dies during such
one-year period, the terms of subsection (b) shall control;
(e) The date on which the Company gives notice (or is deemed to have
given notice) to Optionee of his termination of employment for Cause, all as
described in Section 6.9(a) of the Plan; or
(f) Such other earlier date as may be required under the terms of the
Plan.
5. Option Non-Transferable. The Option shall not be transferable by
Optionee other than by will or by the laws of descent and distribution except
(i) by transfer to a Beneficiary upon the death of the Optionee, or (ii) by
transfer from the Optionee to a spouse, lineal ascendant or lineal descendant of
the Optionee or a spouse of a lineal ascendant or descendant of the Optionee
(but only to the extent that such transfer is not restricted for grants of
securities under this Plan to be exempt from the provisions of Section 16 of the
1934 Act in accordance with Rule 16b-3(a)(2) or the corresponding provisions, if
any, of subsequent regulations under Section 16 of the 1934 Act), and any
purported transfer (other than as excepted above) shall be null and void. After
the death of the Optionee and upon the death of the Optionee's Beneficiary, the
Option may be transferred by will or by the laws of descent and distribution.
During the lifetime of Optionee, the Option shall be exercisable only by
Optionee (or, if he becomes disabled or otherwise incapacitated, by the guardian
of his property or his duly appointed attorney-in-fact), and shall not be
assignable or transferable by Optionee and, subject to Section 6 hereof, no
other person shall acquire any rights in the Option.
6. Death of Optionee and Transfer of Option. Except as otherwise
specified in Attachment I (if any) hereto, in the event of the death of Optionee
while in the employ of the Company, within a period of one year after the
termination of his employment with the Company due to Disability, or within a
three-month period after the employee ceases to be an employee of the Company
for any reason other than for Cause, all or any of the unexercised portion of
the Option owned by the deceased Optionee may be exercised by Optionee's
Beneficiary at any time prior to the first anniversary of the date of the death
of Optionee, but in no event later than the date as of which such Option expires
pursuant to Section 4 hereof. Such exercise shall be effected in accordance
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<PAGE>
with the terms hereof as if such Beneficiary was Optionee herein. The Optionee
agrees that the following individual shall initially be his Beneficiary:
Name:_________________________________________
Address: _________________________________
_________________________________
_________________________________
Any subsequent modification of the Optionee's Beneficiary shall be made pursuant
to the terms and provisions of the Plan.
7. Medium and Time of Payment of Option Price.
(a) General. The Option Price shall be payable by Optionee (or his
Beneficiary in accordance with Section 6 hereof) upon exercise of the Option and
shall be paid in cash, in shares of the Common Stock (or by instructing the
Company to retain shares of Common Stock as payment), in other property or
services acceptable to the Committee and allowed under the terms of the Plan and
applicable law, or any combination thereof.
(b) Payment in Shares of the Common Stock. If Optionee pays all or
part of the Option Price with shares of the Common Stock, the following
conditions shall apply:
(i) Optionee shall deliver to the Secretary of the Company a
certificate or certificates for shares of the Common Stock duly endorsed
for transfer to the Company with signature guaranteed by a member firm of a
national stock exchange or by a national or state bank (or guaranteed or
notarized in such other manner as the Committee may require);
(ii) Optionee must have held any shares of the Common Stock used
to pay the Option Price for at least six months prior to the date such
payment is made;
(iii) Such shares shall be valued on the basis of the Fair
Market Value of the Common Stock on the date of exercise pursuant to the
terms of the Plan; and
(iv) The value of such Common Stock shall be less than or equal
to the Option Price. If Optionee delivers Common Stock with a value that
is less than the Option Price, then Optionee shall pay the balance of the
Option Price in a form allowed under subsection (a) above.
In addition to the payment of the Option Price, Optionee also shall pay in cash
(or have withheld from his normal pay) an amount equal to, or by instructing the
Company to retain Common Stock upon the exercise of the Option with a Fair
Market Value equal to, the amount, if any, which the Company at the time of
exercise is required to withhold under the income tax and FICA withholding
provisions of the Internal Revenue Code of 1986, as amended, and of the income
tax laws of the state of Optionee's residence.
8. Agreement of Optionee. Optionee acknowledges that he has read Section
9 of the Plan and understands that certain restrictions may apply with respect
to shares of the Common Stock acquired by him pursuant to his exercise of the
Option (including restrictions on resale applicable to "affiliates" under Rule
144 of the Securities Act of 1933, as amended, and restrictions on resale
applicable to shares of the Common Stock that have not been registered under the
Securities Act of 1933, as amended, and applicable state securities laws).
Optionee hereby agrees to execute such documents and take such actions as the
Company may require with respect to state and federal securities laws and any
restrictions on the resale of such shares which may pertain.
9. Delivery of Stock Certificates. As promptly as practical after the
date of exercise of the Option and the receipt by the Company of full payment
therefor, the Company shall deliver to Optionee a stock certificate representing
the shares of the Common Stock acquired by Optionee pursuant to his exercise of
the Option.
10. Notices. All notices or other communications hereunder shall be in
writing and shall be effective (i) when personally delivered by courier
(including overnight carriers) or otherwise to the party to be given such notice
or other communication or (ii) on the third business day following the date
deposited in the United States mail if such notice or other communication is
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<PAGE>
sent by certified or registered mail with return receipt requested and postage
thereon fully prepaid. The addresses for such notices shall be as follows:
If to the Company:
NOVA Holdings, Inc.
Attention: Corporate Secretary
Five Concourse Parkway
Suite 700
Atlanta, Georgia 30328
If to Optionee:
__________________________
__________________________
__________________________
__________________________
Any party hereto, by notice of the other party hereunder, may change its address
for receipt of notices hereunder.
11. Other Terms and Conditions. In addition to the terms and conditions
set forth herein, the Option is subject to and governed by the other terms and
conditions set forth in the Plan and in any Attachment I attached hereto, each
of which is hereby incorporated by reference. In the event of any conflict
between the provisions of this Agreement and the Plan, the Plan shall control.
12. Miscellaneous.
(a) The granting of the Option and the execution of this Agreement
shall not give Optionee any rights to similar grants in future years or any
right to be retained in the employ of the Company or to interfere in any way
with the right of the Company to terminate Optionee's employment at any time.
(b) Unless and except as otherwise specifically provided in this
Agreement or in any Attachment I attached hereto, Optionee shall have no rights
of a shareholder with respect to any shares covered by the Option until the date
of issuance of a stock certificate to him for such shares.
(c) If any term, provision, covenant or restriction contained in this
Agreement or in any Attachment I attached hereto is held by a court or a federal
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement or in such Attachment I shall remain in
full force and effect, and shall in no way be affected, impaired or invalidated.
If for any reason such court or regulatory agency determines that this Agreement
or any Attachment I will not permit Optionee to acquire the full number of
Optioned Shares as provided in Section 1 hereof, it is the express intention of
the Company to allow Optionee to acquire such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) This Agreement shall be construed and enforced in accordance with
the laws of Georgia.
(e) This Agreement, together with the Plan and any Attachment I
attached hereto, contains the entire understanding among the parties and
supersedes any prior understanding and agreements between them representing the
subject matter hereof. There are no representations, agreements, arrangements
or understandings, oral or written, between and among the parties hereto
relating to the subject matter hereof which are not fully expressed herein, in
the Plan and in any Attachment I attached hereto.
(f) Section and other headings contained in this Agreement are for
reference purposes only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision
hereof.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall constitute one
agreement, and the signatures of any party or any counterpart shall be deemed to
be a signature to, and may be appended to, any other counterpart.
(h) All capitalized terms in this Agreement shall be construed in
accordance with their defined terms under the Plan.
Page 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the first date written above.
NOVA HOLDINGS, INC.
By: ___________________________________
Title: ________________________________
OPTIONEE:
_______________________________________
Signature
_______________________________________
Print or type name
Page 5
<PAGE>
NONQUALIFIED STOCK OPTION NO. __________
NOVA HOLDINGS, INC.
1996 EMPLOYEES STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
ATTACHMENT I
ADDITIONAL TERMS AND PROVISIONS REGARDING OPTION
Page 6
<PAGE>
EXHIBIT A
NOVA HOLDINGS, INC.
1996 EMPLOYEES STOCK INCENTIVE PLAN
NOTICE OF EXERCISE FOR NONQUALIFIED STOCK OPTION AGREEMENT
This Notice of Exercise is given pursuant to the terms of the Nonqualified
Stock Option Agreement, dated __________________, _______, between NOVA
Holdings, Inc. (the "Company") and the undersigned Optionee (the "Agreement"),
which Agreement represents Nonqualified Stock Option No. ________ and which is
made a part hereof and incorporated herein by reference.
EXERCISE OF OPTION. Optionee hereby exercises his option to purchase
_______ of his Optioned Shares. Optionee hereby delivers, together with this
written statement of exercise, the full Option Price with respect to the
exercised Optioned Shares, which consists of: [COMPLETE ONLY ONE]
[ ] cash in the total amount of $________________.
[ ] ________ shares of the Company's Common Stock.
[ ] cash in the total amount of $_________________ and
_________ shares of the Company's Common Stock.
[ ] other (specify): _____________________________________
ACKNOWLEDGMENT. Optionee hereby acknowledges that, to the extent he is an
"affiliate" of the Company (as that term is defined in Rule 144 promulgated
under the Securities Act of 1933, as amended) or to the extent that the Optioned
Shares have not been registered under the Securities Act of 1933, as amended, or
applicable state securities laws, any shares of the Company's Common Stock
acquired by him as a result of his exercise of the Option pursuant to this
Notice are subject to, and the certificates representing such shares shall be
legended to reflect, certain trading restrictions under applicable securities
laws (including particularly the Securities and Exchange Commission's Rule 144),
all as described in Section 9 of the Plan, and Optionee hereby agrees to comply
with all such restrictions and to execute such documents or take such other
actions as the Company may require in connection with such restrictions.
Executed this ______ day of _________________, _________.
OPTIONEE:
_______________________________________
Signature
_______________________________________
Print or Type Name
NOVA Holdings, Inc. hereby acknowledges receipt of this Notice of Exercise
and receipt of payment in the form and amount indicated above, all on this
______ day of ____________________, ________.
NOVA HOLDINGS, INC.
By: ___________________________________
Title: ________________________________
Page 7
<PAGE>
SECOND AMENDMENT
TO THE
NOVA CORPORATION
1996 EMPLOYEES STOCK INCENTIVE PLAN
THIS SECOND AMENDMENT to the NOVA Corporation 1996 Employees Stock
Incentive Plan (the "Plan"), made as of the day and year noted on the last page
hereof, by NOVA Corporation (the "Company"), to be effective as noted below.
W I T N E S S E T H:
WHEREAS, the Company sponsors and maintains the Plan for the exclusive
benefit of its eligible employees and their beneficiaries, and pursuant to
Section 12.1 thereof, the Company has the right to amend the Plan at any time,
subject to Section 12.2 of the Plan; and
WHEREAS, the Company wishes to amend the Plan at this time for the purpose
of allowing more discretion to the Committee in the calculation of fair market
value of the Company Stock, and for other purposes;
NOW, THEREFORE, the Plan is hereby amended as follows effective as of
April 20, 1998:
1.
Section 2.17 of the Plan is amended by adding a new subsection (d) to read
as follows:
(d) Good Faith Determination. Notwithstanding the preceding
provisions of this Section to the contrary, a method of determining
Fair Market Value different from those specified above may be used by
the Committee to determine Fair Market Value for purposes of pricing a
Stock Right if the Committee determines that such different method of
determining Fair Market Value is reasonable, based on all pertinent
facts and circumstances, and any such determination to use such
differing method is made in good faith by the Committee.
2.
All other provisions of the Plan not inconsistent herewith are hereby
confirmed and ratified.
ADOPTED BY THE BOARD OF DIRECTORS ON ______________________, 1998
<PAGE>
THIRD AMENDMENT
TO THE
NOVA CORPORATION
1996 EMPLOYEES STOCK INCENTIVE PLAN
THIS THIRD AMENDMENT to the NOVA Corporation 1996 Employees Stock Incentive
Plan (the "Plan"), made as of the day and year noted below, by NOVA Corporation
(the "Company"), to be effective as noted below.
W I T N E S S E T H:
WHEREAS, the Company sponsors and maintains the Plan for the exclusive
benefit of its eligible employees and their beneficiaries, and pursuant to
Section 12.1 thereof, the Company has the right to amend the Plan at any time,
subject to Section 12.2 of the Plan; and
WHEREAS, the Company amended the Plan on February 27, 1996, for the purpose
of increasing the aggregate number of shares of common stock of the Company
which could be granted to, or for which stock options may be granted to, persons
participating in the Plan from 600,000 to 2,000,000; and
WHEREAS, the Company wishes to further amend the Plan at this time for the
purpose of increasing the aggregate number of shares of common stock of the
Company which may be granted to, or for which stock options may be granted to,
persons participating in the Plan from 2,000,000 to 6,000,000;
NOW, THEREFORE, the Plan is hereby amended as follows effective as of
September 24, 1998:
1.
Article 4 of the Plan, as amended by that certain Amendment, dated February
27, 1996, is hereby further amended by deleting the phrase "2,000,000 shares of
Common Stock" and inserting in lieu thereof the phrase "6,000,000 shares of
Common Stock."
2.
All other provisions of the Plan not inconsistent herewith are hereby
confirmed and ratified.
ADOPTED BY THE BOARD OF DIRECTORS ON AUGUST 4, 1998
APPROVED BY THE SHAREHOLDERS AS OF SEPTEMBER 24, 1998
<PAGE>
EXHIBIT 4.4
NOVA CORPORATION
1996 DIRECTORS STOCK OPTION PLAN
<PAGE>
NOVA CORPORATION
1996 DIRECTORS STOCK OPTION PLAN
ARTICLE 1
PURPOSE
1.1 General Purpose. The purpose of this Plan is to further the growth
and development of the Company by encouraging Directors who are not employees of
the Company to obtain a proprietary interest in the Company by owning its stock.
The Company intends that the Plan will provide such persons with an added
incentive to continue to serve as Directors and will stimulate their efforts in
promoting the growth, efficiency and profitability of the Company. The Company
also intends that the Plan will afford the Company a means of attracting persons
of outstanding quality to service on the Board and on the board of directors of
parent and subsidiary corporations of the Company.
1.2 Intended Tax Effects of Options. It is intended that the tax effects
of any NQSO granted hereunder should be determined under Code (S)83.
ARTICLE 2
DEFINITIONS
The following words and phrases as used in this Plan shall have the
meanings set forth in this Article unless a different meaning is clearly
required by the context:
2.1 1933 Act shall mean the Securities Act of 1933, as amended.
2.2 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
2.3 Beneficiary shall mean, with respect to an Optionee, the individual or
individuals to whom the Optionee's Options shall be transferred upon the
Optionee's death (i.e., the Optionee's Beneficiary).
(a) Designation of Beneficiary. An Optionee's Beneficiary shall be the
individual who is last designated in writing by the Optionee as such Optionee's
Beneficiary hereunder. An Optionee shall designate his or her original
Beneficiary in writing on his or her Option Agreement. Any subsequent
modification of the Optionee's Beneficiary shall be in a written executed and
notarized letter addressed to the Company and shall be effective when it is
received and accepted by the Committee, determined in the Committee's sole
discretion.
(b) No Designated Beneficiary. If, at any time, no Beneficiary has been
validly designated by an Optionee, or the Beneficiary designated by the Optionee
is no longer living at the time of the Optionee's death, then the Optionee's
Beneficiary shall be deemed to be the individual or individuals in the first of
the following classes of individuals with one or members of such class
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surviving or in existence as of the Optionee's death, and in the absence
thereof, the Optionee's estate: (A) the Optionee's surviving spouse; or (B) the
Optionee's then living lineal descendants, per stirpes.
(c) Designation of Multiple Beneficiaries. An Optionee may, consistent
with subsection (a) above, designate more than one Person as a Beneficiary if,
for each such Beneficiary, the Optionee also designates a percentage of the
Optionee's Options to be transferred to such Beneficiary upon the Optionee's
death. Unless otherwise specified by the Optionee, any designation by the
Optionee of multiple Beneficiaries shall be interpreted as a designation by the
Optionee that each such Beneficiary should be entitled to an equal percentage of
the Optionee's Options. Each Beneficiary shall have complete and non-joint
rights with respect to the portion of an Optionee's Options to be transferred to
such Beneficiary upon the Optionee's death.
(d) Contingent Beneficiaries. An Optionee may designate a contingent
Beneficiary to receive a Beneficiary's Option in the event that such Beneficiary
should predecease the Optionee; otherwise, in the event a Beneficiary
predeceases the Optionee, then the individual or individuals specified in
subsection (b) above shall be the Optionee's Beneficiary.
2.4 Board shall mean the Board of Directors of the Company.
2.5 Cause shall mean an act or acts by an individual involving personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, breach of contract or violation of Company policy, intentional
failure to perform stated duties or willful violation of any law, rule or
regulation (other than traffic violations or similar offenses), and the unlawful
trading in the securities of the Company or of another corporation based on
information gained as a result of the performance of services for the Company.
2.6 Change of Control shall mean the occurrence of any one of the
following events:
(a) Acquisition By Person of Substantial Percentage. The acquisition by
any individual or entity (including "affiliates" and "associates" of such
individual or entity, but excluding the Company, any "parent" or "subsidiary" of
the Company, or any employee benefit plan of the Company or of any "parent" or
"subsidiary" of the Company) of a sufficient number of shares of the Common
Stock, or securities convertible into the Common Stock, and whether through
direct acquisition of shares or by merger, consolidation, share exchange,
reclassification of securities or recapitalization of or involving the Company
or any "parent" or "subsidiary" of the Company, to constitute the individual or
entity the actual or beneficial owner (within the meaning of that term as it is
used in Section 13(d) of the 1934 Act and the rules promulgated thereunder) of
20% or more of the Common Stock, but only if such acquisition occurs without the
prior approval of the Company's Continuing Directors;
(b) Substantial Change of Board Members. The Company's Continuing
Directors fail to constitute at least a majority of the members of the Board of
Directors of the Corporation;
(c) Disposition of Assets. Any sale or other transfer of all or
substantially all of the assets of the Company or of any "significant
subsidiary" (as that term is defined in Rule 1.02 of the Regulation S-X
promulgated under the 1934 Act) of the Company without the approval of the
Corporation's Continuing Directors; or
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<PAGE>
(d) Transactions Requiring Regulatory Approval. The filing by an
individual or entity of an application with any regulatory authority having
jurisdiction over the ownership of the Company in connection with any
transaction by such individual or entity to acquire 20% or more of the combined
voting power of the Company's then outstanding securities without the prior
approval of the Company's Continuing Directors.
For purposes of this Section, the terms "affiliate," "associate," "parent" and
"subsidiary" shall have the respective meanings ascribed to such terms in Rule
12b-2 under Section 12 of the 1934 Act.
2.7 Code shall mean the Internal Revenue Code of 1986, as amended.
2.8 Committee shall mean the Board which shall administer and interpret
the Plan in accordance with Article 3 below.
2.9 Common Stock shall mean the common stock of the Company.
2.10 Company shall mean NOVA Corporation, and shall also mean any parent
or subsidiary corporation of NOVA Corporation unless the context clearly
indicates otherwise.
2.11 Continuing Director shall mean a Director (i) who was a Director as
of the Effective Date, or (ii) who becomes a Director subsequent to the
Effective Date and whose election or nomination for election by the Board was
duly approved by Directors at the time of such election or nomination who were
Directors as of the Effective Date, whether by a specific vote or by approval of
the proxy statement issued by the Company on behalf of the Board.
2.12 Director shall mean an individual who is serving as a member of the
Board (i.e., a director of the Company) or who is serving as a member of the
board of directors of a parent or subsidiary corporation of the Company.
2.13 Disability shall mean, with respect to an individual, the total and
permanent disability of such individual as determined by the Committee in its
sole discretion.
2.14 Effective Date shall mean October 17, 1996, the date on which this
Plan was originally adopted by the Board, subject to shareholder approval. See
Article 9 herein.
2.15 Fair Market Value of the Common Stock as of a date of determination
shall mean the following:
(a) Stock Listed and Shares Traded. If the Common Stock is listed and
traded on a national securities exchange (as such term is defined by the 1934
Act) or on the Nasdaq National Market System on the date of determination, the
Fair Market Value per share shall be the closing price of a share of the Common
Stock on said national securities exchange or National Market System on the date
of determination. If the Common Stock is traded in the over-the-counter market,
the Fair Market Value per share shall be the average of the closing bid and
asked prices on the date of determination.
(b) Stock Listed But No Shares Traded. If the Common Stock is listed on a
national securities exchange or on the National Market System but no shares of
the Common Stock are traded
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<PAGE>
on the date of determination but there were shares traded on dates within a
reasonable period before the date of determination, the Fair Market Value shall
be the closing price of the Common Stock on the most recent date before the date
of determination. If the Common Stock is regularly traded in the over-the-
counter market but no shares of the Common Stock are traded on the date of
determination (or if records of such trades are unavailable or burdensome to
obtain) but there were shares traded on dates within a reasonable period before
the date of determination, the Fair Market Value shall be the average of the
closing bid and asked prices of the Common Stock on the most recent date before
the date of determination.
(c) Stock Not Listed. If the Common Stock is not listed on a national
securities exchange or on the National Market System and is not regularly traded
in the over-the-counter market, then the Committee shall determine the Fair
Market Value of the Common Stock from all relevant available facts, which may
include the average of the closing bid and asked prices reflected in the over-
the-counter market on a date within a reasonable period either before or after
the date of determination or opinions of independent experts as to value and may
take into account any recent sales and purchases of such Common Stock to the
extent they are representative.
The Committee's determination of Fair Market Value, which shall be made pursuant
to the foregoing provisions, shall be final and binding for all purposes of this
Plan.
2.16 NQSO shall mean an option to which Code (S)422 (relating generally to
certain incentive stock options and other options) does not apply.
2.17 Option shall mean NQSO's granted to individuals pursuant to the terms
and provisions of this Plan.
2.18 Option Agreement shall mean a written agreement, executed and dated
by the Company and an Optionee, evidencing an Option granted under the terms and
provisions of this Plan, setting forth the terms and conditions of such Option,
and specifying the name of the Optionee and the number of shares of stock
subject to such Option.
2.19 Option Price shall mean the purchase price of the shares of Common
Stock underlying an Option.
2.20 Optionee shall mean an individual who is granted an Option pursuant
to the terms and provisions of this Plan.
2.21 Person shall mean any individual, organization, corporation,
partnership or other entity.
2.22 Plan shall mean this NOVA Corporation 1996 Directors Stock Option
Plan, which was amended and restated as of March 25, 1997.
ARTICLE 3
ADMINISTRATION
3.1 General Administration. The Plan shall be administered and
interpreted by the Committee. Subject to the express provisions of the Plan, the
Committee shall have authority to interpret the Plan, to
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<PAGE>
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the Option Agreements by which Options
shall be evidenced (which shall not be inconsistent with the terms of the Plan),
and to make all other determinations necessary or advisable for the
administration of the Plan, all of which determinations shall be final, binding
and conclusive; provided, however, no individual who is a member of the
Committee shall administer or interpret any Option granted to such individual or
participate in any decision made pursuant to Section 5.2(e) concerning the
exchange of Options granted to such individual.
3.2 Organization. The Committee may select one of its members as its
chairman and shall hold its meetings at such times and at such places as it
shall deem advisable. A majority of the Committee shall constitute a quorum,
and such majority shall determine its actions. The Committee shall keep minutes
of its proceedings and shall report the same to the Board at the meeting next
succeeding.
3.3 Indemnification. In addition to such other rights of indemnification
as they have as directors or as members of the Committee, the members of the
Committee, to the extent permitted by applicable law, shall be indemnified by
the Company against reasonable expenses (including, without limitation,
attorneys' fees) actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Options granted
hereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved to the extent required by and in the manner provided
by the articles or certificate of incorporation or the bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he or they
reasonably believed to be in or not opposed to the best interest of the Company.
ARTICLE 4
STOCK
The stock subject to the Options and other provisions of the Plan shall be
authorized but unissued or reacquired shares of Common Stock. Subject to
readjustment in accordance with the provisions of Article 7, the total number of
shares of Common Stock which may be granted to, or for which Options may be
granted to, persons participating in the Plan shall not exceed in the aggregate
150,000 shares of Common Stock. Notwithstanding the foregoing, shares of Common
Stock allocable to the unexercised portion of any expired or terminated Option
again may become subject to Options under the Plan.
ARTICLE 5
ELIGIBILITY TO RECEIVE AND GRANT OF OPTIONS
5.1 Individuals Eligible for Grants of Options. The individuals eligible
to receive Options hereunder shall be solely those individuals who are Directors
and who are not employees of the Company or any parent or subsidiary corporation
of the Company and who are not designated by 5% or more shareholders of the
Company. Such Directors shall receive Options hereunder in accordance with the
provisions of Section 5.2 below.
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5.2 Grant of Options. Upon the approval of the Committee, Options shall
be granted to those Directors who are eligible under Section 5.1 above in
accordance with the following formulas:
(a) Option Upon Initially Becoming a Director. Upon initially becoming a
Director, an individual shall, subject to subsection (d) below, be granted an
Option to purchase 2,000 shares of Common Stock. Options granted under this
subsection shall be subject to the provisions of Article 6 below and evidenced
by the Option Agreement shown in Exhibit A. The Options granted under this
subsection (a) shall not be granted to a Director who has previously served as a
Director and who is again becoming a Director, but shall only be granted upon an
individual's initially becoming a Director.
(b) Option Upon Commencement of Term. Upon beginning any term of service
as a Director, an individual shall, subject to subsection (d) below, be granted
an Option to purchase a number of shares of Common Stock, where such number of
shares subject to the Option is equal to a fraction, the numerator of which
shall be 2,000 multiplied by the number of full calendar months to be served in
such Director's initial term, and the denominator of which shall be 12. Partial
calendar months to be served shall be counted as full months for the purposes of
this subsection only. Options granted under this subsection shall be subject to
the provisions of Article 6 below and evidenced by the Option Agreement shown in
Exhibit A.
(c) Transitional Provisions. Except as provided in this subsection (c), no
individual who is serving as a Director as of the Effective Date of this Plan
shall be entitled to any Options under this Plan until the expiration of his
current term:
(A) Initial Options. Each Director as of the Effective Date shall, subject
to subsection (d) below, be granted Options under the terms and provisions of
subsection (a) above as of the Effective Date as if such Director had initially
become a Director on the Effective Date. Options granted under this subsection
(A) shall be evidenced by the Option Agreement shown in Exhibit A.
(B) Term Options. Each Director as of the Effective Date shall, subject to
subsection (d) below, be granted Options under the terms and provisions of
subsection (b) above as of the Effective Date as if such Director had begun a
new term as a Director on the Effective Date, with such new term to begin on the
Effective Date and ending as of the date on which the Director's current term
would otherwise have ended. Options granted under this subsection (B) shall be
evidenced by the Option Agreement shown in Exhibit A.
(d) Rules Against Double Granting of Options for Simultaneous Service.
Notwithstanding any provision of this Section to the contrary, an individual who
becomes a Director by virtue of simultaneously becoming a member of the Board
and a member of the board of directors of a parent or subsidiary corporation of
the Company, or who continues as a Director by virtue of simultaneously being
elected or appointed to a new term on the Board and on the board of directors of
a parent or subsidiary corporation of the Company, shall only be granted Options
pursuant to the preceding subsections (a), (b) or (c) of this Section by virtue
of such individual's service on the Board, and not by virtue of such
individuals's service on the board of directors of a parent or subsidiary
corporation of the Company.
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(e) Exchange of Options. The Committee in its sole discretion may grant
new Options to purchase shares of Common Stock to a Director in exchange for the
voluntary surrender by such Director of Options previously granted to such
Director under the terms and provisions of subsections (a) through (d) of this
Section 5.2, where such new Options shall contain exercise periods, expiration
dates, vesting periods, number of shares subject to option, and other terms and
provisions which are exactly identical to the exercise periods, expiration
dates, vesting periods, number of shares subject to option, and other terms and
provisions of the Options surrendered, with the sole exception that the Option
Price under the new Options granted shall be the Fair Market Value of the Common
Stock on the date the new Options are granted rather than on the date the
surrendered Options were granted. For purposes of interpreting the preceding
sentence, it is intended that any new Options granted in lieu of surrendered
Options would be exactly identical to the surrendered Options if such
surrendered Options had originally specified an Option Price equal to the Fair
Market Value of the Common Stock on the date the new Options are granted rather
than on the date the surrendered Options were granted. Thus, for example, the
Optionee will vest in such newly granted Options on the same date and in the
same manner as he would have vested in the surrendered Options, the Optionee
will be able to exercise the newly granted Options on the same date and in the
same manner as he would have vested in the surrendered Options, and the
Optionee's newly granted Options shall expire on the same date and in the same
manner as would his surrendered Options.
ARTICLE 6
TERMS AND CONDITIONS OF OPTIONS
Options granted hereunder and Option Agreements shall comply with and be
subject to the following terms and conditions:
6.1 Requirement of Option Agreement. Upon the grant of an Option
hereunder, the Committee shall prepare (or cause to be prepared) an Option
Agreement. The Committee shall present such Option Agreement to the Optionee.
Upon execution of such Option Agreement by the Optionee, such Option shall be
deemed to have been granted effective as of the date of grant. The failure of
the Optionee to execute the Option Agreement within 30 days after the date of
the receipt of same shall render the Option Agreement and the underlying Option
null and void ab initio.
6.2 Optionee and Number of Shares. Each Option Agreement shall state the
name of the Optionee and the total number of shares of the Common Stock to which
it pertains, the Option Price, the Beneficiary of the Optionee, and the date as
of which the Option was granted under this Plan.
6.3 Vesting. Each Option shall first become exercisable (i.e., vested)
with respect to such portions of the shares subject to such Option as are
specified in the schedule set forth hereinbelow:
(a) Commencing as of the first anniversary of the date the Option is
granted, the Optionee shall have the right to exercise the Option with respect
to, and to thereby purchase, 25% of the shares subject to such Option. Prior to
said date, the Option shall be unexercisable in its entirety.
(b) Commencing as of the second anniversary of the date the Option is
granted, the Optionee shall have the right to exercise the Option with respect
to, and to thereby purchase, an additional 25% of the shares subject to the
Option.
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(c) Commencing as of the third anniversary of the date the Option is
granted, the Optionee shall have the right to exercise the Option with respect
to, and to thereby purchase, an additional 25% of the shares subject to the
Option.
(d) Commencing as of the fourth anniversary of the date the Option is
granted, the Optionee shall have the right to exercise the Option with respect
to, and to thereby purchase, the remainder of the shares subject to such Option.
(e) Notwithstanding subsections (a) through (d) above, any Options
previously granted to an Optionee shall become immediately vested and
exercisable for 100% of the number of shares subject to the Options upon the
Optionee's becoming Disabled or upon his death or upon a Change in Control.
Other than as provided above, if an Optionee ceases to be a Director of the
Company, his rights with regard to all non-vested Options shall cease
immediately.
6.4 Option Price. The Option Price of the shares of Common Stock
underlying each Option shall be the Fair Market Value of the Common Stock on the
date the Option is granted. Upon execution of an Option Agreement by both the
Company and Optionee, the date as of which the Option was granted under this
Plan as noted in the Option Agreement shall be considered the date on which such
Option is granted.
6.5 Terms of Options. Terms of Options granted under the Plan shall
commence on the date of grant and shall expire on such date as the Committee may
determine for each Option; provided, in no event shall any Option be exercisable
after ten years from the date the Option is granted. No Option shall be granted
hereunder after ten years from the earlier of (a) the date the Plan is approved
by the shareholders, or (b) the date the Plan is adopted by the Board.
6.6 Terms of Exercise. The exercise of an Option may be for less than the
full number of shares of Common Stock subject to such Option, but such exercise
shall not be made for less than (i) 100 shares or (ii) the total remaining
shares subject to the Option, if such total is less than 100 shares. Subject to
the other restrictions on exercise set forth herein, the unexercised portion of
an Option may be exercised at a later date by the Optionee.
6.7 Method of Exercise. All Options granted hereunder shall be exercised
by written notice directed to the Secretary of the Company at its principal
place of business or to such other person as the Committee or the Secretary of
the Company may direct. Each notice of exercise shall identify the Option which
the Optionee is exercising (in whole or in part) and shall be accompanied by
payment of the Option Price for the number of shares specified in such notice
and by any documents required by Section 8.1. The Company shall make delivery
of such shares within a reasonable period of time; provided, if any law or
regulation requires the Company to take any action (including, but not limited
to, the filing of a registration statement under the 1933 Act and causing such
registration statement to become effective) with respect to the shares specified
in such notice before the issuance thereof, then the date of delivery of such
shares shall be extended for the period necessary to take such action.
6.8 Medium and Time of Payment.
(a) The Option Price shall be payable upon the exercise of the Option in an
amount equal to the number of shares then being purchased times the per share
Option Price. Payment, at the
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election of the Optionee (or his Beneficiary as provided in subsection (c) of
Section 6.9), shall be (A) in cash; (B) by delivery to the Company of a
certificate or certificates for shares of the Common Stock duly endorsed for
transfer to the Company with signature guaranteed by a member firm of a national
stock exchange or by a national or state bank or a federally chartered thrift
institution (or guaranteed or notarized in such other manner as the Committee
may require); (C) by instructing the Company to retain shares of Common Stock
upon the exercise of the Option with a Fair Market Value equal to the exercise
price as payment; or (D) by a combination of (A), (B) and (C).
(b) If all or part of the Option Price is paid by delivery or withholding
of shares of the Common Stock, on the date of such payment, the Optionee must
have held such shares for at least six months from (i) the date of acquisition,
in the case of shares acquired other than through a stock option or other stock
award plan, or (ii) the date of grant or award in the case of shares acquired
through such a plan; and the value of such Common Stock (which shall be the Fair
Market Value of such Common Stock on the date of exercise) shall be less than or
equal to the total Option Price payment. If the Optionee delivers Common Stock
with a value that is less than the total Option Price, then such Optionee shall
pay the balance of the total Option Price in cash.
(c) In addition to the payment of the purchase price of the shares then
being purchased, an Optionee also shall pay in cash (or have withheld from his
normal pay) an amount equal to, or by instructing the Company to retain Common
Stock upon the exercise of the Option with a Fair Market Value equal to, the
amount, if any, which the Company at the time of exercise is required to
withhold under the income tax or Federal Insurance Contributions Act tax
withholding provisions of the Code, of the income tax laws of the state of the
Optionee's residence, and of any other applicable law.
6.9 Effect of Termination of Service, Disability or Death. Except as
provided in subsections (a), (b) and (c) below, no Option shall be exercisable
unless the Optionee thereof shall have been a Director from the date of the
granting of the Option until the date of exercise; provided, the Committee, in
its sole discretion, may waive the application of this Section and, instead, may
provide a different expiration date or dates in an Option Agreement.
(a) Termination of Service. In the event an Optionee ceases to be a
Director for any reason other than death or Disability, any Option or
unexercised portion thereof granted to him shall terminate on and shall not be
exercisable after the earliest to occur of (i) the expiration date of the
Option, (ii) three months after the date the Optionee ceases to be a Director or
(iii) the date on which the Company gives notice to such Optionee of termination
of his service as a Director if service is terminated by the Company or by its
shareholders for Cause (an Optionee's resignation in anticipation of termination
of service by the Company or by its shareholders for Cause shall constitute a
notice of termination by the Company); provided, the Committee may provide in
the Option Agreement that such Option or any unexercised portion thereof shall
terminate sooner. Notwithstanding the foregoing, in the event that an Optionee's
service as a Director terminates for a reason other than death or Disability at
any time after a Change of Control, the term of all Options of that Optionee
shall be extended through the end of the three-month period immediately
following the date of such termination of service. Prior to the earlier of the
dates specified in the preceding sentences of this subsection (a), the Option
shall be exercisable only in accordance with its terms and only for the number
of shares exercisable on the date of termination of service as a Director. The
question of whether an authorized leave of absence or absence for military or
government service or for any other reason shall constitute a termination of
service as a Director for purposes of the Plan shall be determined by the
Committee, which determination shall be final and conclusive.
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(b) Disability. Upon the termination of an Optionee's service as a
Director due to Disability, any Option or unexercised portion thereof granted to
him which is otherwise exercisable shall terminate on and shall not be
exercisable after the earlier to occur of (i) the expiration date of such
Option, or (ii) one year after the date on which such Optionee ceases to be a
Director due to Disability; provided, the Committee may provide in the Option
Agreement that such Option or any unexercised portion thereof shall terminate
sooner. Prior to the earlier of such date, such Option shall be exercisable
only in accordance with its terms and only for the number of shares exercisable
on the date such Optionee's service as a Director ceases due to Disability.
(c) Death. In the event of the death of the Optionee (i) while he is a
Director, (ii) within three months after the date on which such Optionee's
service as a Director is terminated (for a reason other than Cause) as provided
in subsection (a) above, or (iii) within one year after the date on which such
Optionee's service as a Director terminated due to his Disability, any Option or
unexercised portion thereof granted to him which is otherwise exercisable may be
exercised by the Optionee's Beneficiary at any time prior to the expiration of
one year from the date of death of such Optionee, but in no event later than the
date of expiration of the option period; provided, the Committee may provide in
the Option Agreement that such Option or any unexercised portion thereof shall
terminate sooner. Such exercise shall be effected pursuant to the terms of this
Section as if such Beneficiary is the named Optionee.
6.10 Restrictions on Transfer and Exercise of Options. No Option shall be
assignable or transferable by the Optionee except (i) by transfer to a
Beneficiary upon the death of the Optionee, or (ii) by transfer from the
Optionee to a spouse, lineal ascendant or lineal descendant of the Optionee or a
spouse of a lineal ascendant or descendant of the Optionee, and any purported
transfer (other than as excepted above) shall be null and void. After the death
of an Optionee and upon the death of the Optionee's Beneficiary, an Option shall
be transferred only by will or by the laws of descent and distribution. During
the lifetime of an Optionee, the Option shall be exercisable only by him;
provided, however, that in the event the Optionee is incapacitated and unable to
exercise Options, such Options may be exercised by such Optionee's legal
guardian, legal representative, fiduciary or other representative whom the
Committee deems appropriate based on applicable facts and circumstances.
6.11 Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to shares covered by his Option until date of the
issuance of the shares to him and only after the Option Price of such shares is
fully paid. Unless specified in Article 7, no adjustment will be made for
dividends or other rights for which the record date is prior to the date of such
issuance.
6.12 No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
6.13 Acceleration. The Committee shall at all times have the power to
accelerate the vesting date of Options previously granted under this Plan.
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ARTICLE 7
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
7.1 Recapitalization. In the event that the outstanding shares of
the Common Stock of the Company are hereafter increased or decreased or changed
into or exchanged for a different number or kind of shares or other securities
of the Company by reason of a recapitalization, reclassification, stock split,
combination of shares or dividend payable in shares of the Common Stock, the
following rules shall apply:
(a) The Committee shall make an appropriate adjustment in the number
and kind of shares available for the granting of Options under the Plan.
(b) The Committee also shall make an appropriate adjustment in the
number and kind of shares as to which outstanding Options, or portions thereof
then unexercised, shall be exercisable; any such adjustment in any outstanding
Options shall be made without change in the total price applicable to the
unexercised portion of such Option and with a corresponding adjustment in the
Option Price per share. No fractional shares shall be issued or optioned in
making the foregoing adjustments, and the number of shares available under the
Plan or the number of shares subject to any outstanding Options shall be the
next lower number of shares, rounding all fractions downward.
(c) If any rights or warrants to subscribe for additional shares are
given pro rata to holders of outstanding shares of the class or classes of stock
then set aside for the Plan, each Optionee shall be entitled to the same rights
or warrants on the same basis as holders of the outstanding shares with respect
to such portion of his Option as is exercised on or prior to the record date for
determining shareholders entitled to receive or exercise such rights or
warrants.
7.2 Reorganization. Subject to any required action by the
shareholders, if the Company shall be a party to any reorganization involving
merger, consolidation, acquisition of the stock or acquisition of the assets of
the Company which does not constitute a Change of Control, the Committee, in its
discretion, may declare that:
(a) any Option granted but not yet exercised shall pertain to and
apply, with appropriate adjustment as determined by the Committee, to the
securities of the resulting corporation to which a holder of the number of
shares of the Common Stock subject to such Option would have been entitled;
(b) any or all outstanding Options granted hereunder shall become
immediately nonforfeitable and fully exercisable or vested (to the extent
permitted under federal or state securities laws); and/or
(c) any or all Options granted hereunder shall become immediately
nonforfeitable and fully exercisable or vested (to the extent permitted under
federal or state securities laws) and are to be terminated after giving at least
30 days' notice to the Optionees to whom such Options have been granted.
7.3 Dissolution and Liquidation. If the Board adopts a plan of
dissolution and liquidation that is approved by the shareholders of the Company,
the Committee shall give each Optionee written notice of such event at least ten
days prior to its effective date, and the rights of all Optionees shall become
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immediately nonforfeitable and fully exercisable or vested (to the extent
permitted under federal or state securities laws).
7.4 Limits on Adjustments. Any issuance by the Company of stock of
any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of the Common Stock subject to any Option, except
as specifically provided otherwise in this Article. The grant of Options
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge, consolidate or dissolve, or to
liquidate, sell or transfer all or any part of its business or assets. All
adjustments the Committee makes under this Article shall be conclusive.
ARTICLE 8
AGREEMENT BY OPTIONEE AND SECURITIES REGISTRATION
8.1 Agreement. If, in the opinion of counsel to the Company, such
action is necessary or desirable, no Options shall be granted to any Optionee,
and no Option shall be exercisable, unless, at the time of grant or exercise, as
applicable, such Optionee (i) represents and warrants that he will acquire the
Common Stock for investment only and not for purposes of resale or distribution,
and (ii) makes such further representations and warranties as are deemed
necessary or desirable by counsel to the Company with regard to holding and
resale of the Common Stock. The Optionee shall, upon the request of the
Committee, execute and deliver to the Company an agreement or affidavit to such
effect. Should the Committee have reasonable cause to believe that such
Optionee did not execute such agreement or affidavit in good faith, the Company
shall not be bound by the grant of the Option or by the exercise of the Option.
All certificates representing shares of Common Stock issued pursuant to the Plan
shall be marked with the following restrictive legend or similar legend, if such
marking, in the opinion of counsel to the Company, is necessary or desirable:
The shares represented by this certificate [have not been registered under
the Securities Act of 1933, as amended, or the securities laws of any state
and] are held by an "affiliate" (as such term is defined in Rule 144
promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended) of the Corporation. Accordingly, these shares may
not be sold, hypothecated, pledged or otherwise transferred except (i)
pursuant to an effective registration statement under the Securities Act of
1933, as amended, and any applicable securities laws or regulations of any
state with respect to such shares, (ii) in accordance with Securities and
Exchange Commission Rule 144, or (iii) upon the issuance to the Corporation
of a favorable opinion of counsel or the submission to the Corporation of
such other evidence as may be satisfactory to the Corporation that such
proposed sale, assignment, encumbrance or other transfer will not be in
violation of the Securities Act of 1933, as amended, or any applicable
securities laws of any state or any rules or regulations thereunder. Any
attempted transfer of this certificate or the shares represented hereby
which is in violation of the preceding restrictions will not be recognized
by the Corporation, nor will any transferee be recognized as the owner
thereof by the Corporation.
If the Common Stock is (A) held by an Optionee who ceases to be an "affiliate,"
as that term is defined in Rule 144 of the 1933 Act, or (B) registered under the
1933 Act and all applicable state securities laws and regulations as provided in
Section 8.2, the Committee, in its discretion and with the advice of counsel,
may dispense with or authorize the removal of the restrictive legend set forth
above or the portion thereof which is inapplicable.
8.2 Registration. In the event that the Company in its sole
discretion shall deem it necessary or advisable to register, under the 1933 Act
or any state securities laws or regulations, any shares with respect to
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which Options have been granted hereunder, then the Company shall take such
action at its own expense before delivery of the certificates representing such
shares to an Optionee. In such event, and if the shares of Common Stock of the
Company shall be listed on any national securities exchange or on Nasdaq at the
time of the exercise of any Option, the Company shall make prompt application at
its own expense for the listing on such stock exchange or Nasdaq of the shares
of Common Stock to be issued.
ARTICLE 9
EFFECTIVE DATE
The Plan shall be effective as of the Effective Date, and no Options
shall be granted hereunder prior to said date. Adoption of the Plan shall be
approved by the shareholders of the Company at the earlier of (i) the annual
meeting of the shareholders of the Company which immediately follows the date of
the first grant or award of Options hereunder, or (ii) 12 months after the
adoption of the Plan by the Board. Shareholder approval shall be made by a
majority of the votes cast at a duly held meeting at which a quorum representing
a majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the Plan, or by the written consent in lieu of a meeting
of the holders of a majority of the outstanding voting stock or such greater
number of shares of voting stock as may be required by the Company's articles or
certificate of incorporation and bylaws and by applicable law; provided,
however, such shareholder approval, whether by vote or by written consent in
lieu of a meeting, must be solicited substantially in accordance with the rules
and regulations in effect under Section 14(a) of the 1934 Act. Failure to
obtain such approval shall render the Plan and any Options granted hereunder
null and void ab initio.
ARTICLE 10
AMENDMENT AND TERMINATION
10.1 Amendment and Termination By the Board. Subject to Section 10.2
below, the Board shall have the power at any time to add to, amend, modify or
repeal any of the provisions of the Plan, to suspend the operation of the entire
Plan or any of its provisions for any period or periods or to terminate the Plan
in whole or in part. In the event of any such action, the Board shall prepare
written procedures which shall govern the administration of the Plan resulting
from such addition, amendment, modification, repeal, suspension or termination.
10.2 Restrictions on Amendment and Termination. Notwithstanding the
provisions of Section 10.1 above, no addition, amendment, modification, repeal,
suspension or termination shall adversely affect, in any way, the rights of the
Optionees who have outstanding Options without the consent of such Optionees.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Application of Funds. The proceeds received by the Company from
the sale of the Common Stock subject to the Options granted hereunder will be
used for general corporate purposes.
11.2 Notices. All notices or other communications by an Optionee to
the Committee pursuant to or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Committee at the
location, or by the person, designated by the Committee for the receipt thereof.
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11.3 Term of Plan. Subject to the terms of Article 10, the Plan
shall terminate upon the later of (i) the complete exercise or lapse of the last
outstanding Option, or (ii) the last date upon which Options may be granted
hereunder.
11.4 Compliance with Rule 16b-3. This Plan is intended to be
administered and operated in compliance with the requirements of Rule 16b-3 as
promulgated under Section 16 of the 1934 Act.
11.5 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Georgia.
11.6 Additional Provisions By Committee. The Option Agreements
authorized under the Plan may contain such other provisions, including, without
limitation, restrictions upon the exercise of an Option, as the Committee shall
deem advisable.
11.7 Plan Document Controls. In the event of any conflict between
the provisions of an Option Agreement and the Plan, the Plan shall control.
11.8 Gender and Number. Wherever applicable, the masculine pronoun
shall include the feminine pronoun, and the singular shall include the plural.
11.9 Headings. The titles in this Plan are inserted for convenience
of reference; they constitute no part of the Plan and are not to be considered
in the construction hereof.
11.10 Legal References. Any references in this Plan to a provision
of law which is, subsequent to the Effective Date of this Plan, revised,
modified, finalized or redesignated, shall automatically be deemed a reference
to such revised, modified, finalized or redesignated provision of law.
11.11 No Rights to Perform Services. Nothing contained in the Plan,
or any modification thereof, shall be construed to give any individual any
rights to perform services for the Company or any parent or subsidiary
corporation of the Company.
11.12 Unfunded Arrangement. The Plan shall not be funded, and except
for reserving a sufficient number of authorized shares to the extent required by
law to meet the requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any grant under the Plan.
ADOPTED BY BOARD OF DIRECTORS ON __________ ___ , 1997
APPROVED BY SHAREHOLDERS AS OF ____________ ___, 1997
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EXHIBIT A
NONQUALIFIED STOCK OPTION NO. __________
NOVA CORPORATION
1996 DIRECTORS STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement") is entered
into as of the ____ day of ___________________, ________, by and between NOVA
Corporation (the "Company") and
_______________________________________________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, the Company (which term as used herein shall include any
parent or subsidiary of the Company) has adopted the NOVA Corporation 1996
Directors Stock Option Plan (the "Plan") which is administered by the Company's
Board of Directors (the "Committee"); and
WHEREAS, effective as of _________________, _______, the Committee
granted to Optionee a nonqualified stock option under, and in accordance with,
the terms of the Plan to reward Optionee for his efforts on behalf of the
Company and to encourage his continued loyalty and diligence; and
WHEREAS, to comply with the terms of the Plan and to further the
interests of the Company and Optionee, the parties hereto have set forth the
terms of such option in writing in this Agreement;
NOW, THEREFORE, for and in consideration of the premises and mutual
promises herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. Grant of Option. Effective as of _________________, ________,
the Optionee was granted a nonqualified stock option under the Plan. Under that
option and subject to the terms and conditions set forth herein, Optionee shall
have the right to purchase _______ shares of the common stock of the Company
(the "Common Stock"); such _______ shares hereinafter are referred to as the
"Optioned Shares", and this option hereinafter is referred to as the "Option".
The Option is intended to be a nonqualified stock option.
2. Option Price. The price per share for each of the Optioned Shares
shall be $________________ (the "Option Price"), which is 100% of the per
share Fair Market Value of the Optioned Shares on the date of grant specified
above.
3. Exercise of Option.
(a) General. The Option may be exercised by Optionee's delivery to
the Secretary of the Company of a written notice of exercise executed by
Optionee (the "Notice of Exercise"). The Notice of Exercise shall be
substantially in the form set forth as Appendix A, attached hereto and made a
part hereof, and shall identify the Option and the number of Optioned Shares
that are being exercised.
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(b) Beginning of Exercise Period. The Option first shall become
exercisable (i.e., vested) according to the following schedule; provided, if
Optionee ceases to be a director of the Company, his rights with regard to all
non-vested Options under this schedule shall cease immediately; and further
provided, Optionee's rights with regard to all non-vested Options shall cease at
such time and upon such terms and conditions, if any, as are set forth in
Attachment I attached hereto and made a part hereof:
(i) As of the first anniversary of the date of grant of the Option,
Optionee shall have the right to exercise 25% of the Optioned Shares;
(ii) As of the second anniversary of the date of grant of the Option,
Optionee shall have the right to exercise an additional 25% of the Optioned
Shares;
(iii) As of the third anniversary of the date of grant of the Option,
Optionee shall have the right to exercise an additional 25% of the Optioned
Shares; and
(iv) As of the fourth anniversary of the date of grant of the Option,
Optionee shall have the right to exercise the remainder of the Optioned Shares.
Notwithstanding the foregoing, the Option shall become 100% vested immediately
upon the death or Disability of Optionee or upon a Change of Control of the
Company.
(c) Partial Exercise. Optionee may exercise the Option for less than
the full number of exercisable Optioned Shares, but such exercise may not be
made for less than 100 shares or the total remaining shares subject to the
Option, if less than 100 shares.
4. Termination of Option. Notwithstanding any provisions to the
contrary herein, and except as otherwise specified in Attachment I (if any)
hereto, the Option shall not be exercisable either in whole or in part after the
earliest of:
(a) Ten years from the date of grant;
(b) The date that is immediately prior to the first anniversary of the
date on which Optionee dies (i) while a director of the Company, (ii) within the
three-month period that begins on the date on which Optionee ceases to be a
director of the Company for any reason other than death or Disability or (iii)
within the one-year period that begins on the date on which Optionee ceases to
be a director of the Company due to Disability;
(c) The date of expiration of the one-year period that begins on the
date on which Optionee ceases to be a director of the Company due to Disability;
provided, if Optionee dies during such one-year period, the terms of subsection
(b) shall control;
(d) The date of expiration of the three-month period that begins on
the date on which Optionee ceases to be a director of the Company for any reason
other than death or Disability; provided, if Optionee dies during such three-
month period, the terms of subsection (b) shall control;
(e) The date on which the Company gives notice (or is deemed to have
given notice) to Optionee of his termination of service as a director for Cause,
all as described in Section 6.9(a) of the Plan; or
(f) Such other earlier date as may be required
under the terms of the Plan or set forth in Attachment I hereto.
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5. Option Non-Transferable. The Option shall not be transferable by
Optionee other than by (i) by transfer to a Beneficiary upon the death of the
Optionee, or (ii) by transfer from the Optionee to a spouse, lineal ascendant or
lineal descendant of the Optionee or a spouse of a lineal ascendant or
descendant of the Optionee, and any purported transfer (other than as excepted
above) shall be null and void. After the death of the Optionee and upon the
death of the Optionee's Beneficiary, the Option may be transferred by will or by
the laws of descent and distribution. During the lifetime of Optionee, the
Option shall be exercisable only by Optionee (or, if he becomes disabled or
otherwise incapacitated, by the guardian of his property or his duly appointed
attorney-in-fact), and shall not be assignable or transferable by Optionee and,
subject to Section 6 hereof, no other person shall acquire any rights in the
Option.
6. Death of Optionee and Transfer of Option. Except as otherwise
specified in Attachment I (if any) hereto, in the event of the death of Optionee
while a director of the Company, within a period of one year after the
termination of his service as a director of the Company due to Disability, or
within a three-month period after the director ceases to be a director of the
Company for any reason other than for Cause, all or any of the unexercised
portion of the Option owned by the deceased Optionee may be exercised by
Optionee's Beneficiary at any time prior to the first anniversary of the date of
the death of Optionee, but in no event later than the date as of which such
Option expires pursuant to Section 4 hereof. Such exercise shall be effected in
accordance with the terms hereof as if such Beneficiary was Optionee herein.
The Optionee agrees that the following individual shall initially be his
Beneficiary:
Name: ________________________________
Address: ________________________________
________________________________
________________________________
Any subsequent modification of the Optionee's Beneficiary shall be made pursuant
to the terms and provisions of the Plan.
7. Medium and Time of Payment of Option Price.
(a) General. The Option Price shall be payable by Optionee (or his
Beneficiary in accordance with Section 6 hereof) upon exercise of the Option and
shall be paid in cash, in shares of the Common Stock or by instructing the
Company to retain shares of Common Stock as payment, or any combination thereof.
(b) Payment in Shares of the Common Stock. If Optionee pays all or
part of the Option Price with shares of the Common Stock, the following
conditions shall apply:
(i) Optionee shall deliver to the Secretary of the Company a
certificate or certificates for shares of the Common Stock duly endorsed for
transfer to the Company with signature guaranteed by a member firm of a national
stock exchange or by a national or state bank (or guaranteed or notarized in
such other manner as the Committee may require);
(ii) Optionee must have held any shares of the Common Stock used to
pay the Option Price for at least six months prior to the date such payment is
made;
(iii) Such shares shall be valued on the basis of the fair market
value of the Common Stock on the date of exercise pursuant to the terms of the
Plan; and
(iv) The value of such Common Stock shall be less than or equal to the
Option Price. If Optionee delivers Common Stock with a value that is less than
the Option Price, then Optionee shall pay the balance of the Option Price in a
form allowed under subsection (a) above.
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In addition to the payment of the Option Price, Optionee also shall pay in cash
(or have withheld from his normal pay) an amount equal to, or by instructing the
Company to retain Common Stock upon the exercise of the Option with a Fair
Market Value equal to, the amount, if any, which the Company at the time of
exercise is required to withhold under the income tax and FICA withholding
provisions of the Code and of the income tax laws of the state of Optionee's
residence.
8. Agreement of Optionee. Optionee acknowledges that he has read
Article 8 of the Plan and understands that certain restrictions may apply with
respect to shares of the Common Stock acquired by him pursuant to his exercise
of the Option (including restrictions on resale applicable to "affiliates" under
Rule 144 of the Securities Act of 1933, as amended, and restrictions on resale
applicable to shares of the Common Stock that have not been registered under the
Securities Act of 1933, as amended, and applicable state securities laws).
Optionee hereby agrees to execute such documents and take such actions as the
Company may require with respect to state and federal securities laws and any
restrictions on the resale of such shares which may pertain.
9. Delivery of Stock Certificates. As promptly as practical after
the date of exercise of the Option and the receipt by the Company of full
payment therefor, the Company shall deliver to Optionee a stock certificate
representing the shares of the Common Stock acquired by Optionee pursuant to his
exercise of the Option.
10. Notices. All notices or other communications hereunder shall be
in writing and shall be effective (i) when personally delivered by courier
(including overnight carriers) or otherwise to the party to be given such notice
or other communication or (ii) on the third business day following the date
deposited in the United States mail if such notice or other communication is
sent by certified or registered mail with return receipt requested and postage
thereon fully prepaid. The addresses for such notices shall be as follows:
If to the Company:
NOVA Corporation
Attention: General Counsel
Five Concourse Parkway
Suite 700
Atlanta, Georgia 30328
If to Optionee:
__________________________
__________________________
__________________________
__________________________
Any party hereto, by notice of the other party hereunder, may change its address
for receipt of notices hereunder.
11. Other Terms and Conditions. In addition to the terms and
conditions set forth herein, the Option is subject to and governed by the other
terms and conditions set forth in the Plan which is hereby incorporated by
reference. In the event of any conflict between the provisions of this
Agreement and the Plan, the Plan shall control. In the event of any conflict
between the provisions of this Agreement and Attachment I, Attachment I shall
control.
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12. Miscellaneous.
(a) The granting of the Option and the execution of this Agreement
shall not give Optionee any rights to similar grants in future years or any
right to be retained in the service of the Company or to interfere in any way
with the right of the Company to terminate Optionee's services at any time.
(b) Unless and except as otherwise specifically provided in this
Agreement, Optionee shall have no rights of a stockholder with respect to any
shares covered by the Option until the date of issuance of a stock certificate
to him for such shares.
(c) If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Agreement shall remain
in full force and effect, and shall in no way be affected, impaired or
invalidated. If for any reason such court or regulatory agency determines that
this Agreement will not permit Optionee to acquire the full number of Optioned
Shares as provided in Section 1 hereof, it is the express intention of the
Company to allow Optionee to acquire such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) This Agreement shall be construed and enforced in accordance with
the laws of the State of Georgia.
(e) This Agreement, together with the Plan, contains the entire
understanding among the parties and supersedes any prior understanding and
agreements between them representing the subject matter hereof. There are no
representations, agreements, arrangements or understandings, oral or written,
between and among the parties hereto relating to the subject matter hereof which
are not fully expressed herein, or in the Plan.
(f) Section and other headings contained in this Agreement are for
reference purposes only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision
hereof.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall constitute one
agreement, and the signatures of any party or any counterpart shall be deemed to
be a signature to, and may be appended to, any other counterpart.
(h) All capitalized terms in this Agreement shall be construed in
accordance with their defined terms under the Plan.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the first date written above.
NOVA CORPORATION
By:__________________________________________
Title: ________________________________________
OPTIONEE:
_____________________________________________
Signature
_____________________________________________
Print or type name
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NONQUALIFIED STOCK OPTION NO. __________
NOVA CORPORATION
1996 DIRECTORS STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
ATTACHMENT I
ADDITIONAL TERMS AND PROVISIONS REGARDING OPTION
<PAGE>
APPENDIX A
NOVA CORPORATION
1996 DIRECTORS STOCK OPTION PLAN
NOTICE OF EXERCISE FOR NONQUALIFIED STOCK OPTION AGREEMENT
This Notice of Exercise is given pursuant to the terms of the
Nonqualified Stock Option Agreement, dated __________________, ________,
between NOVA Corporation (the "Company") and the undersigned Optionee (the
"Agreement"), which Agreement represents Nonqualified Stock Option No. ________
and which is made a part hereof and incorporated herein by reference.
EXERCISE OF OPTION. Optionee hereby exercises his option to purchase
_______ of his Optioned Shares. Optionee hereby delivers, or has instructed the
Company to retain, as the case may be, together with this written statement of
exercise, the full Option Price with respect to the exercised Optioned Shares,
which consists of: [COMPLETE ONLY ONE]
[_] cash in the total amount of $________________.
[_] ________ shares of the Company's Common Stock delivered to
the Company.
[_] ________ shares of the Company's Common Stock retained by
the Company.
[_] cash in the total amount of $_________________ and
_________ shares of the Company's Common Stock, delivered or
retained.
ACKNOWLEDGMENT. Optionee hereby acknowledges that, to the extent he
is an "affiliate" of the Company (as that term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended) or to the extent that
the Optioned Shares have not been registered under the Securities Act of 1933,
as amended, or applicable state securities laws, any shares of the Company's
Common Stock acquired by him as a result of his exercise of the Option pursuant
to this Notice are subject to, and the certificates representing such shares
shall be legended to reflect, certain trading restrictions under applicable
securities laws (including particularly the Securities and Exchange Commission's
Rule 144), all as described in Article 8 of the Plan, and Optionee hereby agrees
to comply with all such restrictions and to execute such documents or take such
other actions as the Company may require in connection with such restrictions.
Executed this ______ day of _________________, ________.
OPTIONEE:
_____________________________________________
Signature
_____________________________________________
Print or Type Name
NOVA Corporation hereby acknowledges receipt of this Notice of
Exercise and receipt of payment in the form and amount indicated above, all on
this ______ day of ____________________, ________.
NOVA CORPORATION
By:
__________________________________________
Title:
_______________________________________
<PAGE>
PROPOSAL ___ - APPROVAL OF NOVA CORPORATION 1996 DIRECTORS
STOCK OPTION PLAN
GENERAL
Effective October 17, 1996, the Board of Directors of the Company (the
"Board") adopted the NOVA Corporation 1996 Directors Stock Option Plan (the
"Directors Plan"), subject to approval by the stockholders. The Directors Plan
was amended and restated by the Board retroactively effective as of October 17,
1996, on March __, 1997. The Directors Plan is intended to further the growth
and development of the Company by encouraging directors of the Company (or any
parent or subsidiary corporation of the Company) who are not employees of the
Company (or any parent or subsidiary corporation of the Company) and not
designated by a 5% or more shareholder of the Company to obtain a proprietary
interest in the Company through the purchase of the Company's Common Stock. The
Company believes that the Directors Plan will afford the Company a means of
attracting individuals of outstanding quality to serve on the Board and on the
board of directors of parent and subsidiary corporations of the Company. The
Company also believes that the Directors Plan will provide those individuals
with an added incentive to continue to serve as directors of the Company or
parent or subsidiary corporation of the Company and will stimulate their efforts
in promoting growth, efficiency and profitability of the Company. If the
Directors Plan is approved by the stockholders, the Directors Plan will become
effective as of October 17, 1996. See "Anticipated Options Which Will Be
Granted" below.
The following summary of the principal features and effects of the
Directors Plan does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the text of the Directors Plan which is set
forth in Exhibit ___.
TYPES OF AWARDS
Only nonqualified stock options may be granted under the Directors Plan.
ADMINISTRATION
The Directors Plan will be administered and interpreted by the Board. The
Board will have authority (i) to determine the terms and provisions of
agreements evidencing Options granted under the Directors Plan (which will not
be inconsistent with the terms of the Plan), (ii) to interpret the provisions of
and prescribe, amend and rescind any rules and regulations relating to the
Directors Plan, and (iii) to make all determinations necessary or advisable for
the administration of the Directors Plan, all of which determinations will be
final, binding and conclusive; provided, however, no member of the Board shall
administer or interpret any Option granted to such director or participate in
any decision relating to the exchange of Options granted to such director.
<PAGE>
ELIGIBILITY AND GRANTS OF OPTIONS
Under the terms of the Directors Plan, only directors of the Company or
directors of a parent or subsidiary corporation of the Company who are not
employees of the Company or any parent or subsidiary corporation of the Company
and who were not appointed by a 5% or more shareholder of the Company are
eligible to receive Options. As of October 17, 1996, there were four
directors eligible for the granting of Options and each of these persons
would be granted an Option effective October 17, 1996 upon approval of the
Directors Plan by the stockholders. See "Anticipated Options Which Will Be
Granted" below.
Under the terms of the Directors Plan, subject to the approval of the
Board, an eligible director will be granted Options as follows: (i) upon an
eligible director's initial election to the Board, the eligible director will
receive an Option to purchase 2,000 shares of Common Stock; (ii) upon beginning
any term of service as a director, the eligible director will receive an Option
to purchase a number of shares of Common Stock equal to a fraction, the
numerator of which is 2,000 multiplied by the number of full or partial calendar
months to be served in such eligible director's initial term, and the
denominator of which shall be 12.
Each eligible director serving as a director as of October 17, 1996 will,
subject to the approval of the Board, receive an Option under (i) above as if
such eligible director had initially become a director on October 17, 1996 and
shall also receive an Option under (ii) above as if such eligible director had
begun a new term on October 17, 1996, with such new term to end as of the date
on which the eligible director's current term would have otherwise ended.
Notwithstanding the above provision to the contrary, an individual who
becomes an eligible director by virtue of simultaneously becoming a member of
the Board and a member of the board of directors of a parent or subsidiary
corporation of the Company, or who continues as an eligible director by virtue
of simultaneously being elected or appointed to a new term on the Board and on
the board of directors of a parent or subsidiary corporation of the Company,
shall only be granted an Option by virtue of such eligible director's service on
the Board, and not by virtue of such eligible director's service on the board of
directors of a parent or subsidiary corporation of the Company.
Under the terms of the Directors Plan, the Board in its sole discretion may
grant new Options to purchase shares of Common Stock to a Director in exchange
for the voluntary surrender by such Director of Options previously granted to
such Director under the terms and provisions outlined above, where such new
Options shall contain exercise periods, expiration dates, vesting periods,
number of shares subject to option, and other terms and provisions which are
exactly identical to the exercise periods, expiration dates, vesting periods,
number of shares subject to option, and other terms and provisions of the
Options surrendered, with the sole exception that the Option Price under the new
Options granted shall be the Fair Market Value of the Common Stock on the date
the new Options are granted rather than on the date the surrendered Options were
granted. For purposes of interpreting the preceding sentence, it is intended
that any new Options granted in lieu of surrendered Options would be exactly
identical to the surrendered Options if such surrendered Options had originally
specified an Option Price equal to the Fair Market Value of the Common Stock on
the date the new Options are granted rather than on the date the surrendered
Options were granted. Thus, for example, the Optionee will vest in such newly
granted Options on the same date and in the same manner as he would have vested
in the surrendered Options, the Optionee will be able to exercise the newly
granted Options on the same date and in the same manner as he would have vested
in the surrendered Options, and the Optionee's newly granted Options shall
expire on the same date and in the same manner as would his surrendered Options.
<PAGE>
SHARES AVAILABLE
The stock underlying the Options is the Common Stock of the Company.
Subject to readjustment as provided in the Director's Plan, up to 150,000 shares
of Common Stock, in the aggregate, may be granted or purchased under the
Directors Plan, and the unexercised portion of shares of Common Stock allocable
to expired or terminated options under the Directors Plan may again become
subject to Options under the Directors Plan. As of March __, 1997, the market
value of the Common Stock was $_______ per share.
TERMS OF OPTIONS
OPTION PRICE. The purchase price of the Common Stock underlying each
Option granted under the Directors Plan will be the fair market value (as
determined under the Directors Plan) of the Common Stock on the date the Option
is granted.
VESTING. Each Option granted under the Directors Plan will become
exercisable (i.e., vested) in the following manner: (i) as of the first
anniversary of the grant date, the optionee shall have the right to exercise the
Option with respect to 25% of the shares subject to such Option; (ii) as of the
second anniversary of the grant date, the optionee shall have the right to
exercise the Option with respect to an additional 25% of the shares subject to
such Option; (iii) as of the third anniversary of the grant date, the optionee
shall have the right to exercise the Option with respect to an additional 25% of
the shares subject to such Option, and (iv) as of the fourth anniversary of the
grant date, the optionee shall have the right to exercise the Option with
respect to the remainder of the shares subject to such Option. However, all
non-vested Options, or portions thereof, previously granted to an optionee
immediately vest upon the optionee becoming "Disabled" (as defined in the
Directors Plan), or upon his death or upon a "Change of Control" of the Company.
See "Change of Control" below. Other than as provided above, if an optionee
ceases to be a director of the Company, his rights with regard to the non-vested
portion of each Option shall cease immediately.
TERM AND EXERCISE OF OPTIONS. The term of any Option will commence on the
date the Option is granted and shall expire following the tenth anniversary of
the grant date. No Option may be granted under the Directors Plan ten years
from the date the Directors Plan is adopted by the Board. An Option granted
under the Directors Plan may be exercised for less than the full number of
shares of Common Stock subject to such Option, provided that no Option may be
exercised for less than (i) 100 shares or (ii) the total remaining shares
subject to the Option, if less than 100 shares. Upon exercise of an Option, an
optionee must pay for the Common Stock subject to the exercise. Payment may be
made in cash, in Common Stock (including the retention by the Company of
optioned shares of Company Common Stock with a fair market value equal to the
exercise price), or by a combination of the foregoing.
TRANSFERS. The Directors Plan does not permit an optionee to sell, assign
or otherwise transfer Options except by transfer to a "Beneficiary" at the death
of the optionee or transfer from the optionee to a spouse or lineal ascendant or
lineal descendent of the optionee or a spouse of such a person, and any other
purported transfer is null and void; Options are exercisable during the
optionee's life only by the optionee (except as provided above or unless
optionee is incapacitated and unable to exercise the Options).
TERMINATION OF SERVICE AS DIRECTOR. Vested Options generally must be
exercised by the earlier of: (i) three months after the optionee ceases to be in
the service of the Company or any parent or subsidiary
<PAGE>
as a director for any reason other than death, "disability" (as defined in the
Directors Plan) or for "cause" (as defined in the Directors Plan) unless the
optionee dies within this three month period; (ii) the expiration date of the
Option; (iii) immediately upon the removal of the optionee as a director of the
Company or a parent or subsidiary for "cause"; (iv) one year after the date on
which the optionee ceases to be a director due to "disability" unless the
optionee dies within this one year period; or (v) one year after the death of an
optionee who dies (a) while he is a director, (b) within three months after the
date on which the optionee's service as a director is terminated (other than for
"cause" as defined in the Directors Plan) or (c) within one year after the date
on which such optionee's service as a director is terminated due to
"disability."
AMENDMENT AND TERMINATION
The Board has the power at any time to add to, amend, modify or repeal any
of the provisions of the Directors Plan, to suspend the operation of the entire
Directors Plan or any of its provisions for any period or periods or to
terminate the Directors Plan in whole or in part. In the event of any such
action, the Board shall prepare written procedures which shall govern the
administration of the Plan resulting from such addition, amendment,
modification, repeal, suspension or termination. Notwithstanding any provision
to the contrary above, no addition, amendment, modification, repeal, suspension
or termination shall adversely affect, in any way, the rights of the optionees
who have outstanding Options without the consent of such optionees.
The Directors Plan will terminate on the later of (a) the complete exercise
or lapse of the last outstanding Option granted under the Directors Plan or (b)
the last date upon which Options may be granted under the Directors Plan (which
may not be later than ten years from the earlier of the date on which the
Directors Plan is approved by the stockholders or is adopted by the Board),
subject to its earlier termination by the Board at any time.
CHANGE OF CONTROL
For purposes of the Directors Plan, the term "Change of Control" is defined
to mean any one of the following events:
(1) The acquisition by a Person (including "affiliates" and "associates"
of such Person, but excluding the Company, any "parent" or "subsidiary" of the
Company, or any employee benefit plan of the Company or of any "parent" or
"subsidiary" of the Company) of a sufficient number of shares of the Common
Stock, or securities convertible into the Common Stock, whether through direct
acquisition of shares or by merger, consolidation, share exchange,
reclassification of securities or recapitalization of or involving the Company
or any "parent" or "subsidiary" of the Company, to constitute the Person the
actual or beneficial owner of greater than 20% of the Common Stock, but only if
such acquisition occurs without prior approval by the directors of the Company
specified in subsection (2) below; or
(2) The Company's directors who were either (i) directors as of October
17, 1996 or (ii) who became directors subsequent to October 17, 1996 but whose
election to the Board was approved by directors who were directors of the
Company as of October 17, 1996 fail to constitute at least a majority of the
members of the Board of Directors of the Company; or
(3) Any sale, or other transfer, of all or substantially all of the assets
of the Company or of any "significant subsidiary" (as defined in Rule 1.02 of
the Regulation S-X promulgated under the 1934 Act) of the Company to a Person
described in subsection (1) above, but only if such transaction occurs without
the approval of the directors of the Company specified in subsection (2) above;
or
<PAGE>
(4) The filing by an individual or entity of an application with any
regulatory authority having jurisdiction over the ownership of the Company in
connection with any transaction by such individual or entity to acquire 20% or
more of the combined voting power of the Company's then outstanding securities
without the prior approval of the Company's directors specified in subsection
(2) above.
ADJUSTMENTS
In the event of changes in the number of outstanding shares of Common
Stock by reason of a recapitalization, reclassification, stock dividend or
split, an appropriate and equitable adjustment will be made by the Board to the
number and kind of shares subject to Options, to the formula pursuant to which
Options are granted and to the number and kind of shares remaining available for
issuance pursuant to Options granted under the Directors Plan.
Additionally, in the event that the Company is involved in a reorganization
involving a merger, consolidation, acquisition of the stock or acquisition of
the assets of the Company that does not constitute a Change of Control, the
Board in its discretion may declare that outstanding Options shall apply to the
securities of the resulting corporation and that outstanding Options are
nonforfeitable and fully exercisable or vested and are to be terminated after
giving at least 30 days notice to all optionees. If the Company is dissolved,
all of the rights of all optionees will become immediately nonforfeitable and
exercisable through the date of dissolution.
FEDERAL INCOME TAX CONSEQUENCES
The Company intends that the tax effects of any stock option granted under
the Directors Plan should be determined under Section 83 of the Code. The
following is a brief description of the consequences under the Code of the
receipt or exercise of nonqualified Options.
NONQUALIFIED OPTIONS. Neither the Company nor the optionee has income tax
consequences from the initial issuance of nonqualified Options. Generally, in
the tax year when an optionee exercises nonqualified Options, the optionee
recognizes ordinary income in the amount by which the fair market value of the
shares at the time of exercise exceeds the option price for such shares. The
Company will have a deduction in the same amount as the ordinary income
recognized by the optionee in the Company's tax year in which or with which the
optionee's tax year (of exercise) ends.
If an optionee exercises a nonqualified Option by paying the option price
with previously acquired Company Common Stock, the optionee will recognize
income (relative to the new shares he is receiving) in two steps. In the first
step, a number of new shares equivalent to the number of older shares tendered
(in payment of the nonqualified Option exercised) is considered to have been
exchanged in accordance with Section 1036 of the Code and the rulings
thereunder, and no gain or loss is recognized. In the second step, with respect
to the number of new shares acquired in excess of the number of old shares
tendered, the optionee will recognize income on those new shares equal to their
fair market value less any non-stock consideration tendered.
The new shares equal to the number of the older shares tendered will
receive the same basis the optionee had in the older shares, and the optionee's
holding period with respect to the tendered older shares will apply to those new
shares. The excess new shares received will have a basis equal to the amount of
income recognized by the optionee by exercise, increased by any non stock
consideration tendered. Their holding period will commence upon the exercise of
the option.
<PAGE>
ERISA. The Directors Plan is not, and is not intended to be, an employee
benefit plan or qualified retirement plan. The Directors Plan is not,
therefore, subject to the Employee Retirement Income Security Act of 1974, as
amended, nor is it subject to Section 401(a) of the Code.
EFFECTIVE DATE OF DIRECTORS PLAN
The Directors Plan will become effective as of October 17, 1996, subject to
approval by the stockholders.
ANTICIPATED OPTIONS WHICH WILL BE GRANTED
The table set forth below shows the grants of Options that are
automatically made by the Directors Plan effective as of October 17, 1996,
subject to approval by the stockholders of the Directors Plan:
NEW PLAN BENEFITS
NOVA CORPORATION 1996 DIRECTORS STOCK OPTION PLAN
<TABLE>
<CAPTION>
============================================================================
Dollar Number of
Name and Position Value($) Shares
- ----------------------------------------------------------------------------
<S> <C> <C>
Non-Employee Director Group (1)
============================================================================
</TABLE>
(1) The Non-Employee Director Group is composed of the four current
outside directors of the Company. See "Proposal 1 - Election of
Directors."
(2) The dollar value of the Options represents the positive spread between the
exercise price of the Options (which will be the closing sale price of the
Common Stock on the New York Stock Exchange on October 17, 1996) and the
closing sale price on December ___, 1996.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO ADOPT THE NOVA CORPORATION 1996 DIRECTORS STOCK OPTION PLAN.
<PAGE>
Exhibit 5
[LONG ALDRIDGE & NORMAN LLP LETTERHEAD]
September 29, 1998
NOVA Corporation
One Concourse Parkway
Atlanta, GA 30328
Re: NOVA Corporation 1996 Employees Stock Incentive Plan and 1996
Directors Stock Option Plan -- Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to NOVA Corporation, a Georgia corporation (the
"Company"), in connection with the preparation of a Registration Statement on
Form S-8 (the "Registration Statement") and the filing thereof with the
Securities and Exchange Commission. Pursuant to the Registration Statement, the
Company intends to register under the Securities Act of 1933, as amended, an
aggregate of 4,150,000 shares (the "Shares") of common stock, par value $.01 per
share of the Company (the "Common Stock"). The Shares represent (i) 4,000,000
shares of Common Stock that may be acquired upon the exercise of options which
may be granted in the future under the Company's 1996 Employees Stock Incentive
Plan (the "Stock Incentive Plan") and (ii) 150,000 shares of Common Stock that
may be acquired upon the exercise of options outstanding or which may be granted
in the future under the Company's 1996 Directors Stock Option Plan (the
"Directors Plan").
The opinion hereinafter set forth is given to the Company pursuant to Item
8 of Form S-8 and Item 601(b)(5) of Regulation S-K. The only opinion rendered
by this firm consists of the matter set forth in numbered paragraph (1) below
(our "Opinion"), and no other opinion is implied or to be inferred beyond such
matters. Additionally, our Opinion is based upon and subject to the
qualifications, limitations and exceptions set forth in this letter.
Our Opinion is furnished for the benefit of the Company solely with regard
to the Registration Statement, may be relied upon by the Company only in
connection with the Registration Statement and may not otherwise be relied upon,
used, quoted or referred to by or filed with any other person or entity without
our prior written permission.
<PAGE>
NOVA Corporation
September 29, 1998
Page 2
In rendering our Opinion, we have examined such agreements, documents,
instruments and records as we deemed necessary or appropriate under the
circumstances for us to express our Opinion, including, without limitation, the
record of corporate proceedings, the Stock Incentive Plan and the Directors
Plan. In making all of our examinations, we assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to the original documents of all documents submitted to us as copies,
and the due execution and delivery of all documents by any persons or entities
other than the Company where due execution and delivery by such persons or
entities is a prerequisite to the effectiveness of such documents.
As to various factual matters that are material to our Opinion, we have
relied upon the factual statements set forth in a certificate of officers of the
Company and originals or copies of certificates of various public officials. We
have not independently verified or investigated, nor do we assume any
responsibility for, the factual accuracy or completeness of such factual
statements.
Members of this firm are admitted to the Bar of the State of Georgia and
are duly qualified to practice law in that state. We do not herein express any
opinion concerning any matter respecting or affected by any laws of any other
state. The Opinion hereinafter set forth is based upon pertinent laws and facts
in existence as of the date hereof, and we expressly disclaim any obligation to
advise you of changes to such pertinent laws or facts that hereafter may come to
our attention.
Based upon and subject to the foregoing, we are of the following opinion:
(1) The Shares, when issued upon the exercise of options, in accordance
with the terms of the applicable option agreement and the Stock
Incentive Plan or the Directors Plan, as applicable, against payment
in full of the option exercise price therefor, will be validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this Opinion as an exhibit to the
Registration Statement.
Very truly yours,
LONG ALDRIDGE & NORMAN LLP
By: /s/ David M. Calhoun
---------------------------------------
David M. Calhoun
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8 No. 33-_________) pertaining to the NOVA
Corporation 1996 Employees Stock Incentive Plan and the 1996 Directors Stock
Option Plan and to the incorporation by reference therein of our report dated
February 17, 1998 with respect to the consolidated financial statements and
schedule of NOVA Corporation included or incorporated by reference in NOVA's
Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Atlanta, Georgia
September 29, 1998
