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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)
PMT SERVICES, INC. 1997 NONQUALIFIED STOCK OPTION PLAN
PMT SERVICES, INC. 1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
PMT SERVICES, INC. 1994 INCENTIVE STOCK 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 Amount to be Proposed Maximum Offering Proposed Maximum Amount of
Securities Registered (1) Price Per Share (2) Aggregate Offering Price Registration Fee
to be (3)
Registered
===========================================================================================================
<S> <C> <C> <C> <C>
Common
Stock, $.01 2,323,792 $14.8483 $34,504,360.75 $10,178.79
par value
per share
===========================================================================================================
</TABLE>
(1) The shares of Common Stock being registered include (i) 37,895 shares of
Common Stock of the Registrant (the "NOVA Common Stock"), that may be
acquired pursuant to options originally granted by PMT Services, Inc.
("PMT") under the PMT 1997 Nonqualified Stock Option Plan; (ii) 120,120
shares that may be acquired pursuant to options originally granted by PMT
under the PMT 1997 Non-Employee Director Stock Option Plan; and (iii)
2,165,777 shares of NOVA Common Stock that may be acquired pursuant to
options originally granted by PMT under the PMT 1994 Incentive Stock Plan
(collectively, the "Plans"). The Registrant assumed all options to purchase
Common Stock of PMT pursuant to an Agreement and Plan of Merger dated as of
June 17, 1998 (the "Merger Agreement"), pursuant to which PMT became a
wholly-owned subsidiary of the Registrant. Pursuant to the Merger
Agreement, each outstanding option to purchase shares of PMT Common Stock
was converted automatically into an option to purchase a number of shares
of NOVA Common Stock equal to (A) the number of shares of PMT Common Stock
issuable upon exercise of the option multiplied by (B) 0.715 (the exchange
ratio under the Merger Agreement).
(2) The exercise price for the shares varies from $1.16 per share to $15.57 per
share with a total exercise price for all options of $34,504,360.75 and an
average exercise price of $14.8483. The exercise price has been adjusted to
reflect the exchange ratio pursuant to the Merger Agreement.
(3) Calculated pursuant to Rule 457(h)(1).
<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 Plans 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).
PROSPECTUS 2,323,792 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") or PMT Services, Inc., a wholly-owned subsidiary of NOVA
("PMT"), of up to 2,323,792 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. 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 Plans. 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 or in negotiated
transactions 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, by selling the Shares only to or through 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
----
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
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(4) NOVA's Proxy Statement dated April 20, 1998, relating to its 1998 Annual
Meeting of Shareholders; and
(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.
(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 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
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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
NOVA's 1996 Employees Stock Incentive Plan to increase the number of shares of
NOVA Common Stock issuable pursuant to the 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
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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.
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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 OR PMT
AS DEFINED BY RULE 405 UNDER THE SECURITIES ACT. THE SELLING SHAREHOLDERS
ACQUIRED THE SHARES UPON EXERCISE OF OPTIONS ORIGINALLY GRANTED BY PMT PURSUANT
TO VARIOUS STOCK INCENTIVE AND STOCK OPTION PLANS OF PMT. SUCH OPTIONS WERE
CONVERTED INTO OPTIONS TO PURCHASE NOVA COMMON STOCK UPON COMPLETION OF THE
MERGER CONTEMPLATED BY THE MERGER AGREEMENT, PURSUANT TO WHICH PMT BECAME A
WHOLLY-OWNED SUBSIDIARY OF NOVA. 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 or in negotiated transactions or through a combination of such
methods of sale at market prices prevailing at the time of sale or at negotiated
prices. 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
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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, by selling the Shares only to or through
brokers or dealers. 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.
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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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
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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.
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.
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ITEM 8. EXHIBITS
--------
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 PMT Services, Inc. 1997 Nonqualified Stock Option Plan*
4.4 PMT Services, Inc. 1994 Non-Employee Director Stock Option Plan*
4.5 PMT Services, Inc. 1994 Incentive Stock Plan*
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.
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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.
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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
Edward Grzedzinski Chief Executive Officer (principal executive
officer)
/s/ James M. Bahin
- ----------------------- Vice Chairman of the Board, Chief Financial Officer
James M. Bahin and Secretary (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 PMT Services, Inc. 1997 Nonqualified Stock Option Plan*
4.4 PMT Services, Inc. 1994 Non-Employee Director Stock Option Plan*
4.5 PMT Services, Inc. 1994 Incentive Stock Plan*
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
PMT SERVICES, INC.
1997 NONQUALIFIED STOCK OPTION PLAN
EFFECTIVE APRIL 23, 1997
<PAGE>
PMT SERVICES, INC. 1997 NONQUALIFIED STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
1.1 Affiliate 1
1.2 Agreement 1
1.3 Board 1
1.4 Code 1
1.5 Committee 1
1.6 Company 1
1.7 Date of Exercise 1
1.8 Exchange Act 1
1.9 Fair Market Value 2
1.10 Option 2
1.11 Participant 2
1.12 Plan 2
1.13 Stock 2
1.14 Ten Percent Stockholder 2
ARTICLE II. PURPOSE OF PLAN
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan 2
3.2 Authority to Grant Options 3
3.3 Action of Committee 3
3.4 Persons Subject to Section 16(b) 3
ARTICLE IV. ELIGIBILITY FOR GRANTS
4.1 Participation 3
4.2 Grant of Options 3
4.3 Committee Delegate 4
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares 4
5.2 Maximum Number of Shares 4
5.3 Forfeitures 4
i
<PAGE>
ARTICLE VI. EXERCISE OF OPTIONS
6.1 Exercise Price 4
6.2 Right to Exercise 4
6.3 Maximum Exercise Period 4
6.4 Transferability 4
6.5 Service Status 4
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise 5
7.2 Payment 5
7.3 Federal Withholding Tax Requirements 5
7.4 Stockholder Rights 5
7.5 Issuance and Delivery of Shares 5
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares 5
8.2 Substitution of Options on Merger or Acquisition 6
8.3 Effect of Certain Transactions 6
8.4 No Preemptive Rights 6
8.5 Fractional Shares 6
ARTICLE IX. COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES
9.1 General 7
9.2 Representations by Participants 7
ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment 7
10.2 Unfunded Plan 7
10.3 Rules of Construction 8
10.4 Governing Law 8
10.5 Compliance With Section 16 of the Exchange Act 8
10.6 Amendment 8
10.7 Effective Date of Plan 8
ii
<PAGE>
PMT SERVICES, INC. 1997 NONQUALIFIED STOCK OPTION PLAN
PREAMBLE
WHEREAS, PMT Services, Inc. (the "Company") desires to establish a plan
through which the Company may grant options to purchase the common stock of the
Company to directors, officers, employees, and consultants of the Company and
its affiliates;
WHEREAS, the Company intends that all options granted hereunder shall not
be treated as "incentive stock options" within the meaning of section 422 of the
Code; and
WHEREAS, the Company intends that this stock option plan and the options
granted hereunder (i) not qualify as "performance-based compensation" described
in section 162(m)(4)(C) of the Code, and (ii) conform to the provisions of Rule
16b-3 of the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, the Company hereby establishes the PMT Services, Inc. 1997
Nonqualified Stock Option Plan (the "Plan"), effective April 23, 1997:
ARTICLE I. DEFINITIONS
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company.
1.2 Agreement. A written agreement (including any amendment or supplement
thereto) between the Company or Affiliate and a Participant specifying the terms
and conditions of an Option granted to such Participant.
1.3 Board. The board of directors of the Company.
1.4 Code. The Internal Revenue Code of 1986, as amended.
1.5 Committee. A committee composed of at least two individuals who are
members of the Board and are not employees of the Company or an Affiliate, and
who are designated by the Board as the "compensation committee" or are otherwise
designated to administer the Plan.
1.6 Company. PMT Services, Inc. and its successors.
1.7 Date of Exercise. The date that the Company accepts tender of the
Option exercise price.
1.8 Exchange Act. The Securities Exchange Act of 1934, as amended.
1
<PAGE>
1.9 Fair Market Value. On any given date, Fair Market Value shall be
(unless, where appropriate, the Committee determines in good faith the fair
market value of the Stock to be otherwise) the closing price of the Stock on the
Nasdaq National Market, as so published, on the trading day immediately
preceding the date as of which Fair Market Value is being determined, or the
closing price on the next preceding trading day on which such prices were
published if no Stock was traded on such trading day.
1.10 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement.
1.11 Participant. A Board member, employee, consultant or advisor of the
Company or of an Affiliate who: either satisfies the requirements of Article IV,
4.3 and is selected by the Committee to receive an Option, or receives an Option
pursuant to grant specified in this Plan.
1.12 Plan. The PMT Services, Inc. 1997 Nonqualified Stock Option Plan.
1.13 Stock. The common stock of the Company.
1.14 Ten Percent Stockholder. An individual who owns more than 10% of the
total combined voting power of all classes of stock of the Company or an
Affiliate at the time he is granted an Option. For the purpose of determining
if an individual is a Ten Percent Stockholder, he shall be deemed to own any
voting stock owned (directly or indirectly) by or for his brothers and sisters
(whether by whole or half blood), spouse, ancestors or lineal descendants and
shall be considered to own proportionately any voting stock owned (directly or
indirectly) by or for a corporation, partnership, estate or trust of which such
individual is a stockholder, partner or beneficiary.
ARTICLE II. PURPOSE OF PLAN
The purpose of the Plan is to provide a performance incentive and to
encourage stock ownership by officers, directors, consultants and advisors of
the Company and its Affiliates, and to align the interests of such individuals
with those of the Company, its Affiliates and its stockholders. It is intended
that Participants may acquire or increase their proprietary interests in the
Company and be encouraged to remain in the employ or directorship of the Company
or of its Affiliates. The proceeds received by the Company from the sale of
Stock pursuant to this Plan may be used for general corporate purposes.
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. The Plan shall be administered by the
Committee. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or action taken by the Committee to administer the Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or
2
<PAGE>
Option. The Company shall bear all expenses of Plan administration. In
addition to all other authority vested with the Committee under the Plan, the
Committee shall have complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend, and rescind rules for Plan administration; and
(e) Make all determinations it deems advisable for the administration of
this Plan.
3.2 Authority to Grant Options. The Committee shall have authority to
grant Options upon such terms as the Committee deems appropriate and that are
not inconsistent with the provisions of this Plan. Such terms may include
conditions on the exercise of all or any part of an Option. The Committee may
delegate authority to grant options to one or more officers of the Company,
provided that such delegation is approved by the Board.
3.3 Action of Committee. The Committee generally may act through any
authorized member. In addition, an action of the Committee shall be authorized
by a majority of the members present in person or by proxy for a meeting, or,
alternatively, by a majority of the members of the Board in a meeting attended
by the members of the Committee.
3.4 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the Committee, in its absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers and directors subject to section 16(b) of
the Exchange Act, without so restricting, limiting or conditioning the Plan with
respect to other Participants.
ARTICLE IV. ELIGIBILITY FOR GRANTS
4.1 Participation. The Committee may from time to time designate
employees, consultants and advisors to whom Options are to be granted and who
are eligible to become Participants. Such designation shall specify the number
of shares of Stock, if any, subject to each Option. All Options granted under
this Plan shall be evidenced by Agreements which shall be subject to applicable
provisions of this Plan or such other provisions as the Committee may adopt that
are not inconsistent with the Plan.
4.2 Grant of Options. An Option shall be deemed to be granted to a
Participant at the time that the Committee designates in a writing that is
adopted by the Committee as the grant
3
<PAGE>
of an Option, and that makes reference to the name of the Participant and the
number of shares of Stock that may be purchased under the Option.
4.3 Committee Delegate. If the Committee delegates authority to grant
Options to a delegate, in the manner described in Section 3.2, such delegate
shall have the authorities described in this Article IV.
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option, the Company shall
deliver to the Participant authorized but unissued Stock.
5.2 Maximum Number of Shares. The maximum number of shares of Stock that
may be issued pursuant to an award of Options at any time, when aggregated with
the shares subject to outstanding Options at such time, is 53,000.
5.3 Forfeitures. If any Option granted hereunder expires or terminates
for any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for issuance under this Plan.
ARTICLE VI. EXERCISE OF OPTIONS
6.1 Exercise Price. The exercise price of an Option shall be the price
determined by the Committee at the time the Option is granted. If the exercise
price of an Option is changed after the date it is granted, such change shall be
deemed to be a termination of the existing Option and the issuance of a new
Option.
6.2 Right to Exercise. An Option shall be exercisable on the date of
grant or on any other date established by the Committee or provided for in an
Agreement.
6.3 Maximum Exercise Period. The maximum period in which an Option may be
exercised shall be determined by the Committee on the date of grant. All
Options shall terminate on the date the Participant's employment with the
Company terminates, except as otherwise provided in the Agreement with respect
to termination of employment, death, disability or a "change of control" (as
defined in any change of control agreement to which the Company and any such
Participant are parties).
6.4 Transferability. Any Option granted under this Plan shall be
transferable by will or by the laws of descent and distribution only, except as
otherwise expressly provided for in an Agreement. No right or interest of a
Participant in any Option shall be liable for, or subject to, any lien,
obligation or liability of such Participant.
6.5 Service Status. The Committee shall determine the extent to which a
leave of absence for military or government service, illness, temporary
disability, or other reasons shall
4
<PAGE>
be treated as a termination or interruption of service for purposes of
determining questions of forfeiture and exercise of an Option after termination
of employment.
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise. An Option granted hereunder shall be deemed to have been
exercised on the Date of Exercise. Subject to the provisions of Articles VI and
IX, an Option may be exercised in whole or in part at such times and in
compliance with such requirements as the Committee shall determine.
7.2 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or, to the extent approved by the Committee,
Stock that was acquired prior to the exercise of the Option, other consideration
acceptable to the Committee, or a combination thereof.
7.3 Federal Withholding Tax Requirements. Upon exercise of an Option by a
Participant who is an employee of the Company or an Affiliate, the Participant
shall, upon notification of the amount due and prior to or concurrently with the
delivery of the certificates representing the shares, pay to the Company amounts
necessary to satisfy applicable federal, state and local withholding tax
requirements or shall otherwise make arrangements satisfactory to the Company
for such requirements.
7.4 Stockholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to his Option prior to the Date of
Exercise of such Option.
7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Options hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Option hereunder and executes any applicable
stockholder agreement or agreement described in Section 9.2 that the Company
requires at the time of exercise.
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares. The maximum number and kind of shares of stock
with respect to which Options hereunder may be granted and which are the subject
of outstanding Options shall be adjusted by way of increase or decrease as the
Committee determines (in its sole discretion) to be appropriate, in the event
that:
(a) the Company or an Affiliate effects one or more stock dividends, stock
splits, reverse stock splits, subdivisions, consolidations or other
similar events;
(b) the Company or an Affiliate engages in a transaction to which section
424 of the Code applies; or
5
<PAGE>
(c) there occurs any other event which in the judgment of the Committee
necessitates such action.
Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Options specified in
Section 5.2 that are proportionate to the modifications of the Stock that are on
account of such corporate changes.
8.2 Substitution of Options on Merger or Acquisition. The Committee may
grant Options in substitution for stock awards, stock options, stock
appreciation rights or similar awards held by an individual who becomes an
employee or consultant of the Company or an Affiliate in connection with a
transaction to which section 424(a) of the Code applies. The terms of such
substituted Options shall be determined by the Committee in its sole discretion,
subject only to the limitations of Article V.
8.3 Effect of Certain Transactions. Upon a merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation of
the Company, as a result of which the stockholders of the Company receive cash,
stock or other property in exchange for their shares of Stock (but not a public
offering of Stock by the Company), and the Company is not the surviving entity,
any Option granted hereunder shall terminate, provided that the Participant
shall have the right immediately prior to any such merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
exercise his Options in whole or in part whether or not the vesting requirements
set forth in any Agreement have been satisfied, unless the Committee elects to
convert all Options hereunder into options to purchase stock of an acquiring
corporation. Provided, however, that, notwithstanding the foregoing, a portion
of the acceleration of exercisability of Options shall not occur with respect to
any holder to the extent that such portion of acceleration would cause the
grantee or holder of such Option to be liable for the payment of taxes pursuant
to section 4999 of the Code. If the Committee so elects to convert the Options,
the amount and price of such converted options shall be determined by adjusting
the amount and price of the Options granted hereunder in the same proportion as
used for determining the number of shares of stock of the acquiring corporation
the holders of the Stock receive in such merger, consolidation, acquisition of
property or stock, separation or reorganization, and the vesting schedule set
forth in the Agreement shall continue to apply to the converted options.
8.4 No Preemptive Rights. The issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, for
cash or property, or for labor or services rendered, either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, outstanding Options.
8.5 Fractional Shares. Only whole shares of Stock may be acquired through
the exercise of an Option. Any amounts tendered in the exercise of an Option
remaining after the maximum number of whole shares have been purchased will be
returned to the Participant.
6
<PAGE>
ARTICLE IX. COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES
9.1 General. No Option shall be exercisable, no Stock shall be issued, no
certificates for shares of Stock shall be delivered, and no payment shall be
made under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any certificate issued to evidence shares of
Stock for which an Option is exercised may bear such legends and statements as
the Committee upon advice of counsel may deem advisable to assure compliance
with federal or state laws and regulations. No Option shall be exercisable, no
Stock shall be issued, no certificate for shares shall be delivered and no
payment shall be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from any regulatory
bodies having jurisdiction over such matters.
9.2 Representations by Participants. As a condition to the exercise of an
Option, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 9.1. At the option
of the Company, a stop transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided (concurred in by counsel for the Company) and
stating that such transfer is not in violation of any applicable law or
regulation may be stamped on the stock certificate in order to assure exemption
from registration. The Committee may also require such other action or
agreement by the Participants as may from time to time be necessary to comply
with federal or state securities laws. This provision shall not obligate the
Company or any Affiliate to undertake registration of Options or stock
hereunder.
ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.
10.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be
7
<PAGE>
created hereunder. No such obligation of the Company shall be deemed to be
secured by any pledge of, or other encumbrance on, any property of the Company.
10.3 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
10.4 Governing Law. The laws of the State of Tennessee shall apply to all
matters arising under this Plan, to the extent that federal law does not apply.
10.5 Compliance With Section 16 of the Exchange Act. With respect to
persons subject to section 16 of the Exchange Act, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act, including the minimum six-month holding
period for options granted by delegates of the Committee pursuant to Section
4.3. To the extent any provision of this Plan or action by Committee fails to
so comply, it shall be deemed null and void to the extent permitted by law and
deemed advisable by the Committee.
10.6 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on the
rights of a Participant under an outstanding Option is not valid with respect to
such Option without the Participant's consent.
10.7 Effective Date of Plan. This Plan shall be effective on the date of
its adoption by the Board, and Options may be granted hereunder at any time
after such adoption.
8
<PAGE>
EXHIBIT 4.4
PMT SERVICES, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
AMENDED AND RESTATED AS OF SEPTEMBER 10, 1997
<PAGE>
PMT SERVICES, INC. 1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
1.1 Affiliate.............................................................. 1
1.2 Agreement.............................................................. 1
1.3 Board.................................................................. 1
1.4 Code................................................................... 1
1.5 Committee.............................................................. 1
1.6 Company................................................................ 1
1.7 Date of Exercise....................................................... 1
1.8 Exchange Act........................................................... 1
1.9 Fair Market Value...................................................... 2
1.10 Option................................................................. 2
1.11 Participant............................................................ 2
1.12 Plan................................................................... 2
1.13 Stock.................................................................. 2
ARTICLE II. PURPOSE OF PLAN........................ 3
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan................................................. 3
3.2 Authority to Grant Options............................................. 3
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation.......................................................... 4
4.2 Grant of Options....................................................... 4
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares....................................................... 5
5.2 Maximum Number of Shares............................................... 5
5.3 Forfeitures............................................................ 5
i
<PAGE>
ARTICLE VI. EXERCISE OF OPTIONS
6.1 Exercise Price......................................................... 5
6.2 Maximum Exercise Period................................................ 5
6.3 Transferability........................................................ 5
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise............................................................... 5
7.2 Payment................................................................ 5
7.3 Federal Withholding Tax Requirements................................... 5
7.4 Shareholder Rights..................................................... 6
7.5 Issuance and Delivery of Shares........................................ 6
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares.................................................. 6
8.2 Substitution of Awards on Merger or Acquisition........................ 6
8.3 Effect of Certain Transactions......................................... 6
8.4 No Adjustment Upon Certain Transactions................................ 7
8.5 Fractional Shares...................................................... 7
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General................................................................ 7
9.2 Representations by Participants........................................ 8
ARTICLE X. GENERAL PROVISIONS
10.1 Unfunded Plan.......................................................... 8
10.2 Rules of Construction.................................................. 8
10.3 Governing Law.......................................................... 8
10.4 Compliance With Section 16 of the Exchange Act......................... 8
10.5 Amendment.............................................................. 9
10.6 Duration of Plan....................................................... 9
10.7 Effective Date of Plan................................................. 9
ii
<PAGE>
PMT SERVICES, INC. 1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
PREAMBLE
WHEREAS, effective May 13, 1994, PMT Services, Inc. (the "Company")
previously established the PMT Services, Inc. 1994 Non-Employee Director Stock
Option Plan (the "Plan"), in order to provide for the award of options to
purchase the common stock of the Company ("Stock") to non-employee directors of
the Company; and
WHEREAS, the Company desires to amend and restate this Plan to conform with
changes to the Securities and Exchange Commission Rule 16b-3 and to provide for
certain administrative modifications;
NOW, THEREFORE, the Company hereby amends and restates the Plan, effective
September 10, 1997.
ARTICLE I. DEFINITIONS
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company.
1.2 Agreement. A written agreement (including any amendment or supplement
thereto) between the Company or Affiliate and a Participant specifying the terms
and conditions of an Option granted to such Participant.
1.3 Board. The board of directors of the Company.
1.4 Code. The Internal Revenue Code of 1986, as amended.
1.5 Committee. A committee composed of at least two individuals (or such
number that satisfies Rule 16b-3 of the Exchange Act) who are members of the
Board and are not employees of the Company or an Affiliate, and who are
designated by the Board as the "compensation committee" or are otherwise
designated to administer the Plan. In the absence of a designation of a
Committee by the Board, the Board shall be the Committee.
1.6 Company. PMT Services, Inc. and its successors.
1.7 Date of Exercise. The date that the Company accepts tender of the
exercise price of an Option.
1.8 Exchange Act. The Securities Exchange Act of 1934, as amended.
PMT SERVICES, INC. 1994 NON-EMPLOYEE
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1.9 Fair Market Value. On any given date, Fair Market Value shall be the
applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):
(a) If the Stock is reported on the Nasdaq National Market System or
another Nasdaq automated quotation system, and market information is
published on a regular basis, then Fair Market Value shall be the
closing price of the Stock, as so published, on the trading day
immediately preceding the date as of which Fair Market Value is being
determined, or the closing price on the next preceding trading day on
which such prices were published if no Stock was traded on such
trading day.
(b) If the Stock is not traded on the Nasdaq National Market System or
another Nasdaq automated quotation system, but is traded on the New
York Stock Exchange or the American Stock Exchange, then Fair Market
Value shall be the closing price of the Stock on such exchange on
which such Stock is traded on the trading day immediately preceding
the date as of which Fair Market Value is being determined, or on the
next preceding day period on which such Stock is traded if no Stock
was traded on such trading day.
(c) If market information is not so published on a regular basis, then
Fair Market Value shall be the average of the high bid and low asked
prices of the Stock in the over-the-counter market over a period of
trading days that is reasonably representative of the normal trading
of the Stock immediately preceding the date on which Fair Market Value
is being determined, as reported by a generally accepted reporting
service.
(d) If the Stock is not publicly traded, Fair Market Value shall be the
value determined in good faith by the Committee or the Board.
However, such determination shall not take into account any
restriction on the stock, except for a restriction which by its terms
will never lapse.
1.10 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement. As used herein, an Option includes only options not
qualified under section 422 of the Code.
1.11 Participant. A person who has been granted an Option pursuant to
Section 41.
1.12 Plan. The PMT Services, Inc. 1994 Non-Employee Director Stock Option
Plan.
1.13 Stock. The common stock of the Company, $.01 par value.
PMT SERVICES, INC. 1994 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
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ARTICLE II. PURPOSE OF PLAN
The purpose of the Plan is to maintain the Company's ability to attract and
retain the services of experienced and highly-qualified non-employee directors
and to encourage stock ownership by such directors, and to align the interests
of such individuals with those of the Company, its Affiliates and its
shareholders. It is intended that Participants may acquire or increase their
proprietary interests in the Company and be encouraged to remain in the
directorship of the Company. The proceeds received by the Company from the sale
of Stock pursuant to this Plan may be used for general corporate purposes.
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. The Plan shall be administered by the
Committee. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or action taken by the Committee to administer the Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or Option. The
Company shall bear all expenses of Plan administration. In addition to all
other authority vested with the Committee under the Plan, the Committee shall
have complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend, and rescind rules for Plan administration; and
(e) Make all determinations it deems advisable for the administration of
this Plan.
3.2 Authority to Grant Options. The Committee shall have authority to
grant Options upon such terms the Committee deems appropriate and that are not
inconsistent with the provisions of this Plan. Such terms may include
conditions on the exercise of all or any part of an Option.
PMT SERVICES, INC. 1994 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
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ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation. An Option shall be granted on the date of each annual
meeting of the shareholders of the Company (as used in this Section, the "Annual
Meeting") to each individual who, immediately following the Annual Meeting, is a
member of the Board and is not an employee of the Company or of an Affiliate.
The determination of an individual's eligibility to receive an Option hereunder
will be made following the conclusion of each Annual Meeting. Each Option
granted is subject to the following terms:
(a) A one-time grant of 30,000 Options shall be made to each Participant
on August 12, 1994. At each Annual Meeting thereafter, Options shall
be granted to purchase 6,000 shares of Stock. Provided, however, that
the Committee may revoke, on or prior to such Annual Meeting, the next
automatic grant of options otherwise provided for by this Plan if no
Options have been granted since the preceding Annual Meeting to
Company employees under any other employee stock plan of the Company.
(b) An Option granted at an Annual Meeting shall become exercisable
incrementally with respect to the Stock that can be acquired
thereunder, beginning at the Annual Meeting following the date the
Option was granted (each such Annual Meeting being referred to as the
"Anniversary"), as follows: (1) 25% of the Stock subject to the
Option may be acquired on and after the first Anniversary; (2) 50% of
the Stock subject to the Option may be acquired on and after the
second Anniversary; (3) 75% of the Stock subject to the Option may be
acquired on and after the third Anniversary; and (4) 100% of the Stock
subject to the Option may be acquired on and after the fourth
Anniversary. Provided, however, that the right to exercise an Option
shall terminate as set forth in the Plan, including Sections 62 and
83, and as set forth in an Agreement.
(c) All Options granted under this Plan shall be evidenced by Agreements
which shall be subject to applicable provisions of this Plan or such
other provisions as the Committee may adopt that are not inconsistent
with the Plan.
4.2 Grant of Options. An Option shall be deemed to be granted to a
Participant at the time that the Committee designates in a writing that is
adopted by the Committee as the grant of an Option, and that makes reference to
the Participant and the number of shares of Stock that are subject to the
Option. Accordingly, an Option may be deemed to be granted prior to the
approval of this Plan by the shareholders of the Company and prior to the time
that an Agreement is executed by the Participant and the Company.
PMT SERVICES, INC. 1994 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
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ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option, the Company shall
deliver to the Participant authorized but previously unissued Stock.
5.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to the exercise of Options is 300,000, subject
to increases and adjustments as provided in Article .
5.3 Forfeitures. If any Option granted hereunder expires or terminates
for any reason without having been exercised in full, the shares of Stock
subject thereto shall again be available for issuance of an Option under this
Plan.
ARTICLE VI. EXERCISE OF OPTIONS
6.1 Exercise Price. The exercise price of an Option shall be the price
determined by the Committee at the time that such Option is granted. If the
exercise price of an Option is changed after the date it is granted, such change
shall be deemed to be a termination of the existing Option and the issuance of a
new Option.
6.2 Maximum Exercise Period. The maximum period in which an Option may be
exercised shall be 10 years after the date it is granted.
6.3 Transferability. An Option granted under this Plan may be
transferable to the extent provided in an Agreement. Provided, further, that no
right or interest of a Participant in any Option shall be liable for, or subject
to, any lien, obligation or liability of such Participant.
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise. An Option granted hereunder shall be deemed to have been
exercised on the Date of Exercise. Subject to the provisions of Articles and ,
an Option may be exercised in whole or in part at such times and in compliance
with such requirements as the Committee shall determine, but in no event sooner
than six months from the date of grant.
7.2 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or, to the extent approved by the Committee,
Stock that was acquired prior to the exercise of the Option, other consideration
acceptable to the Committee, or a combination thereof.
7.3 Federal Withholding Tax Requirements. Upon exercise of an Option, the
Participant shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to
PMT SERVICES, INC. 1994 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
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satisfy applicable federal, state and local withholding tax requirements or
shall otherwise make arrangements satisfactory to the Company for such
requirements.
7.4 Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to Options prior to the Date of
Exercise of such Option.
7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Options hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Option hereunder and executes any applicable
shareholder agreement or agreement described in Section 92 that the Company
requires at the time of exercise.
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares. The maximum number of shares of stock with
respect to which Options hereunder may be granted and which are the subject of
outstanding Options, and the exercise price thereof, shall be adjusted as the
Committee determines (in its sole discretion) to be appropriate, in the event
that:
(a) the Company or an Affiliate effects one or more stock dividends, stock
splits, reverse stock splits, subdivisions, consolidations or other
similar events;
(b) the Company or an Affiliate engages in a transaction to which section
424 of the Code applies; or
(c) there occurs any other event which in the judgment of the Committee
necessitates such action;
Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limit on Options specified in
Section 52 that are proportionate to the modifications of the Stock that are on
account of such corporate changes. Notwithstanding the foregoing, the Committee
may not modify the Plan or the terms of any Options then outstanding or to be
granted hereunder to provide for the issuance under the Plan of a different
class of stock or kind of securities.
8.2 Substitution of Awards on Merger or Acquisition. The Committee may
grant Options in substitution for stock options or similar awards held by an
individual who becomes an employee or director of the Company or an Affiliate in
connection with a transaction to which section 424(a) of the Code applies. The
terms of such substituted Awards shall be determined by the Committee in its
sole discretion, subject only to the limitations of Article .
8.3 Effect of Certain Transactions. The provisions of this Section 83
shall apply to the extent that an Agreement does not otherwise expressly address
the matters contained herein.
PMT SERVICES, INC. 1994 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
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Upon a merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for their shares of Stock (but not a public offering of Stock by the Company),
and the Company is not the surviving entity (or survives only as a subsidiary
that is controlled by another entity), any Award granted hereunder shall
terminate, provided that the Participant shall have the right immediately prior
to any such merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to exercise his Awards in whole or in part,
whether or not the vesting requirements set forth in any Agreement have been
satisfied, unless the Committee elects to convert all Awards hereunder into
stock incentive awards of an acquiring corporation. Provided, however, that,
notwithstanding the foregoing, a portion of the acceleration of exercisability
of Awards shall not occur with respect to any holder to the extent that such
portion of acceleration would cause the Participant or holder of such Award to
be liable for the payment of taxes pursuant to section 4999 of the Code. If the
Committee so elects to convert the Awards, the amount and price of such
converted options shall be determined by adjusting the amount and price of the
Awards granted hereunder in the same proportion as used for determining the
number of shares of stock of the acquiring corporation the holders of the Stock
receive in such merger, consolidation, acquisition of property or stock,
separation or reorganization, and the vesting schedule set forth in the
Agreement shall continue to apply to the converted options.
8.4 No Adjustment Upon Certain Transactions. The issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services rendered, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, outstanding Options.
8.5 Fractional Shares. Only whole shares of Stock may be acquired through
the exercise of an Option. Any amounts tendered in the exercise of an Option
remaining after the maximum number of whole shares have been purchased will be
returned to the Participant.
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General. No Option shall be exercisable, no Stock shall be issued, no
certificates for shares of Stock shall be delivered, and no payment shall be
made under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any certificate issued to evidence shares of
Stock for which an Option is exercised may bear such legends and statements as
the Committee upon advice of counsel may deem advisable to assure compliance
with federal or state laws and regulations. No Option shall be exercisable, no
Stock shall be issued, no certificate for shares shall be delivered and no
payment
PMT SERVICES, INC. 1994 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
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shall be made under this Plan until the Company has obtained such consent or
approval as the Committee may deem advisable from any regulatory bodies having
jurisdiction over such matters.
9.2 Representations by Participants. As a condition to the exercise of an
Option, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 91. At the option
of the Company, a stop transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided (concurred in by counsel for the Company) and
stating that such transfer is not in violation of any applicable law or
regulation may be stamped on the stock certificate in order to assure exemption
from registration. The Committee may also require such other action or
agreement by the Participants as may from time to time be necessary to comply
with federal or state securities laws. This provision shall not obligate the
Company or any Affiliate to undertake registration of options or stock
hereunder.
ARTICLE X. GENERAL PROVISIONS
10.1 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
10.2 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
10.3 Governing Law. The internal laws of the State of Tennessee shall
apply to all matters arising under this Plan, except to the extent that federal
law does not otherwise apply or preempt Tennessee law.
10.4 Compliance With Section 16 of the Exchange Act. Transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3
(or successor provisions) under the Exchange Act. To the extent any provision
of this Plan or action by Committee fails to so comply, it shall be deemed null
and void to the extent permitted by law and deemed advisable by the Committee.
PMT SERVICES, INC. 1994 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
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10.5 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on the
rights of a Participant under an outstanding Option is not valid with respect to
such Option without the Participant's consent; and provided, further, that the
shareholders of the Company must approve, in general meeting, before the
effective date thereof, any amendment that changes the number of shares in the
aggregate which may be issued pursuant to Options granted under the Plan.
Moreover, shareholder approval shall not be required for minor amendments to the
Plan that are intended to benefit the administration of the plan, for amendments
necessitated by changes in legislation or administrative rules governing the
Plan, or for amendments that the Board deems necessary to obtain or maintain
favorable tax, securities exchange or regulatory treatment of the Plan for
future Participants.
10.6 Duration of Plan. This Plan shall continue until it is terminated by
the Board pursuant to Section 105.
10.7 Effective Date of Plan. This Plan was first adopted by the Board on
May 13, 1994, and was thereafter approved by the shareholders of the Company.
Effective September 10, 1997, all Awards granted hereunder shall be governed by
the terms of this amended and restated Plan; provided, however, that the terms
of the Plan prior to this amendment shall apply to the extent that the terms of
this restated Plan would have a material adverse effect on the rights of a
Participant under an outstanding Award, unless the Participant has given consent
to the change.
EXECUTION
IN WITNESS WHEREOF, the undersigned officer has executed this restated and
amended Plan on this the _____ day of ____________, 1997, but to be effective as
of the dates specified in Section 107.
PMT SERVICES, INC.
By: _______________________________
Its: _______________________________
PMT SERVICES, INC. 1994 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
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EXHIBIT 4.5
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
AMENDED AND RESTATED AS OF SEPTEMBER 10, 1997
<PAGE>
PMT SERVICES, INC. 1994 INCENTIVE STOCK PLAN
AMENDED AND RESTATED AS OF SEPTEMBER 10, 1997
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
1.1 Affiliate.............................................................. 1
1.2 Agreement.............................................................. 1
1.3 Award.................................................................. 1
1.4 Board.................................................................. 1
1.5 Code................................................................... 1
1.6 Committee.............................................................. 1
1.7 Company................................................................ 2
1.8 Date of Exercise....................................................... 2
1.9 Exchange Act........................................................... 2
1.10 Fair Market Value...................................................... 2
1.11 Incentive Option....................................................... 2
1.12 Nonqualified Option.................................................... 3
1.13 Option................................................................. 3
1.14 Participant............................................................ 3
1.15 Plan................................................................... 3
1.16 SAR.................................................................... 3
1.17 Stock.................................................................. 3
1.18 Ten Percent Shareholder................................................ 3
ARTICLE II. PURPOSE OF PLAN......................... 3
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan................................................. 4
3.2 Authority to Grant Awards.............................................. 4
3.3 Persons Subject to Section 16(b)....................................... 4
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation.......................................................... 4
4.2 Grant of Awards........................................................ 5
4.3 Limitations on Grants.................................................. 5
4.4 Limitation on Incentive Options........................................ 5
4.5 Stock Appreciation Rights.............................................. 5
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
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PMT SERVICES, INC. 1994 INCENTIVE STOCK PLAN
AMENDED AND RESTATED AS OF SEPTEMBER 10, 1997
PREAMBLE
WHEREAS, effective May 13, 1994, PMT Services, Inc. (the "Company")
established the PMT Services, Inc. 1994 Incentive Stock Plan (the "Plan")
through which the Company may award options to purchase the Common Stock of the
Company ("Stock"), including options that qualify as "incentive stock options"
within the meaning of section 422 of the Internal Revenue Code, and stock
appreciation rights to officers, employees, and consultants of the Company and
its affiliates; and
WHEREAS, the Company desires to amend the Plan in order to provide for
certain administrative modifications and to permit certain officers of the
Company to grant awards hereunder to eligible individuals;
NOW, THEREFORE, the Company hereby amends and restates the PMT Services,
Inc. 1994 Incentive Stock Plan (the "Plan"), as of September 10, 1997:
ARTICLE I. DEFINITIONS
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company.
1.2 Agreement. A written agreement (including any amendment or supplement
thereto) between the Company or Affiliate and a Participant specifying the terms
and conditions of an Award granted to such Participant.
1.3 Award. A right that is granted under the Plan to a Participant by the
Company, including Options and SARs.
1.4 Board. The board of directors of the Company.
1.5 Code. The Internal Revenue Code of 1986, as amended.
1.6 Committee. A committee composed of at least two individuals (or such
number that satisfies section 162(m)(4)(C) of the Code and Rule 16b-3 of the
Exchange Act) who are members of the Board and are not employees or officers of
the Company or an Affiliate, and who are designated by the Board as the
"compensation committee" or are otherwise designated to administer the Plan. In
the absence of a designation of a Committee by the Board, the Board shall be the
Committee.
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1994 INCENTIVE STOCK PLAN
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1.7 Company. PMT Services, Inc. and its successors.
1.8 Date of Exercise. The date that the Company accepts tender of the
exercise price of an Award, if any, or accepts an election to exercise rights
under an SAR.
1.9 Exchange Act. The Securities Exchange Act of 1934, as amended.
1.10 Fair Market Value. On any given date, Fair Market Value shall be the
applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):
(a) If the Stock is reported on the Nasdaq National Market System or
another Nasdaq automated quotation system, and market information is
published on a regular basis, then Fair Market Value shall be the
closing price of the Stock, as so published, on the trading day
immediately preceding the date as of which Fair Market Value is being
determined, or the closing price on the next preceding trading day on
which such prices were published if no Stock was traded on such
trading day.
(b) If the Stock is not traded on the Nasdaq National Market System or
another Nasdaq automatic quotation system but is traded on the New
York Stock Exchange or the American Stock Exchange, Fair Market Value
shall be the closing price of the Stock on such exchange on which such
Stock is traded on the trading day immediately preceding the date as
of which Fair Market Value is being determined, or on the next
preceding day period on which such Stock is traded if no Stock was
traded on such trading day.
(c) If market information is not so published on a regular basis, then
Fair Market Value shall be the average of the high bid and low asked
prices of the Stock in the over-the-counter market over a period of
trading days that is reasonably representative of the normal trading
of the Stock immediately preceding the date on which Fair Market Value
is being determined, as reported by a generally accepted reporting
service.
(d) If the Stock is not publicly traded, Fair Market Value shall be the
value determined in good faith by the Committee or the Board.
However, such determination shall not take into account any
restriction on the stock, except for a restriction which by its terms
will never lapse.
1.11 Incentive Option. An Option that is intended to qualify as an
"incentive stock option" within the meaning of section 422 of the Code. An
Incentive Option, or a portion thereof, shall not be invalid for failure to
qualify under section 422 of the Code, but shall be treated as a Nonqualified
Option.
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
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1.12 Nonqualified Option. An Option that is not an Incentive Option.
1.13 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement. As used herein, an Option includes both Incentive
Options and Nonqualified Options.
1.14 Participant. An employee, consultant or advisor of the Company or of
an Affiliate who either satisfies the requirements of Article and is selected
by the Committee to receive an Award, or receives an Award pursuant to grant
specified in this Plan.
1.15 Plan. The PMT Services, Inc. 1994 Incentive Stock Plan.
1.16 SAR. A right to receive compensation hereunder calculated by
reference to the increase in the value of a certain number of shares of Stock
from the date of an award, as described in Section 45. An SAR is an unfunded,
unsecured promise of the Company to the Participant. Unless otherwise stated in
an Agreement, or unless the Committee in its discretion honors the exercise of
an SAR by issuing Stock, the holder of an SAR has no beneficial rights of Stock
ownership or to receive shares of stock.
1.17 Stock. The common stock of the Company, $.01 par value.
1.18 Ten Percent Shareholder. An individual who owns more than 10% of the
total combined voting power of all classes of stock of the Company or an
Affiliate at the time he is granted an Incentive Option. For the purpose of
determining if an individual is a Ten Percent Shareholder, he shall be deemed to
own any voting stock owned (directly or indirectly) by or for his brothers and
sisters (whether by whole or half blood), spouse, ancestors or lineal
descendants and shall be considered to own proportionately any voting stock
owned (directly or indirectly) by or for a corporation, partnership, estate or
trust of which such individual is a shareholder, partner or beneficiary.
ARTICLE II. PURPOSE OF PLAN
The purpose of the Plan is to provide a performance incentive and to
encourage stock ownership by officers, key employees, consultants and advisors
of the Company and its Affiliates, and to align the interests of such
individuals with those of the Company, its Affiliates and its shareholders. It
is intended that Participants may acquire or increase their proprietary
interests in the Company and be encouraged to remain in the employ of the
Company or of its Affiliates. The proceeds received by the Company from the
sale of Stock pursuant to this Plan may be used for general corporate purposes.
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
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ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. The Plan shall be administered by the
Committee. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or action taken by the Committee to administer the Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or Award. The
Company shall bear all expenses of Plan administration. In addition to all
other authority vested with the Committee under the Plan, the Committee shall
have complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend, and rescind rules for Plan administration; and
(e) Make all determinations it deems advisable for the administration of
this Plan.
3.2 Authority to Grant Awards. The Committee shall have authority to
grant Awards upon such terms the Committee deems appropriate and that are not
inconsistent with the provisions of this Plan. Such terms may include
conditions on the exercise of all or any part of an Award. The Compensation
Committee may delegate authority to key officers of the Company to grant Awards
to certain employees, consultants and advisors.
3.3 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the Committee, in its absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers subject to section 16(b) of the Exchange
Act, without so restricting, limiting or conditioning the Plan with respect to
other Participants.
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation. The Committee may from time to time designate
employees, consultants and advisors to whom Awards are to be granted and who are
eligible to become Participants. Such designation shall specify the number of
shares of Stock, if any, subject to each Award. All Awards granted under this
Plan shall be evidenced by Agreements which shall be subject to applicable
provisions of this Plan or such other provisions as the Committee may adopt that
are not inconsistent with the Plan.
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
4
<PAGE>
4.2 Grant of Awards. An Award shall be deemed to be granted to a
Participant at the time that the Committee designates in a writing that is
adopted by the Committee as the grant of an Award, and that makes reference to
the Participant and the number of shares of Stock that are subject to the Award.
Accordingly, an Award may be deemed to be granted prior to the approval of this
Plan by the shareholders of the Company and prior to the time that an Agreement
is executed by the Participant and the Company.
4.3 Limitations on Grants. A person who is not an employee of the Company
or an Affiliate is not eligible to receive an Incentive Option.
4.4 Limitation on Incentive Options. To the extent that the aggregate
Fair Market Value of Stock with respect to which Incentive Options are
exercisable for the first time by a Participant during any calendar year (under
all stock incentive plans of the Company and its Affiliates) exceeds $100,000
(or the amount specified in section 422 of the Code), determined as of the date
an Incentive Option is granted, such Options shall be treated as Nonqualified
Options. This provision shall be applied by taking Incentive Options into
account in the order in which they were granted.
4.5 Stock Appreciation Rights. The Committee may grant an SAR to a
Participant either in tandem with the grant of an Award, or as an award that is
separate from any Award granted under the Plan. Subject to the terms of an
Agreement, a Participant who receives an SAR shall have the right, upon written
request, to surrender any exercisable Award, or portion thereof, in exchange for
cash, whole shares of Stock, or a combination thereof, as determined by the
Committee, with a value equal to the excess of the Fair Market Value, as of the
date of such request, of one share of Stock over the Fair Market Value of the
Stock on the Date of Grant (or such other value specified in the Agreement),
multiplied by the number of shares covered by the SAR or portion thereof to be
surrendered. In the case of any SAR which is granted in connection with an
Incentive Option, such SAR shall be exercisable only when the Fair Market Value
of the Common Stock exceeds the price specified therefor in the SAR or portion
thereof to be surrendered. In the event of the exercise of any SAR granted
hereunder, the number of shares reserved for issuance under the Plan shall be
reduced only to the extent that shares of Stock are actually issued in
connection with the exercise of such SAR.
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option, the Company shall
deliver to the Participant authorized but previously unissued Stock.
5.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to the exercise of Awards is 4,195,000,
subject to increases and adjustments as provided in Article . The aggregate
number of SARs that may be granted shall be determined by the Committee.
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
5
<PAGE>
5.3 Forfeitures. If any Award granted hereunder expires or terminates for
any reason without having been exercised in full, the shares of Stock subject
thereto shall again be available for issuance of an Award under this Plan.
ARTICLE VI. EXERCISE OF AWARDS
6.1 Exercise Price. The exercise price of an Incentive Option shall not
be less than 100% of the Fair Market Value of a share of Stock on the date the
Incentive Option is granted. In the case of a Ten Percent Shareholder, however,
the exercise price of an Incentive Option shall not be less than 110% of the
Fair Market Value of a share of Stock on the date the Incentive Option is
granted. The exercise price of a Nonqualified Option or an SAR shall be the
price determined by the Committee at the time that such Award is granted. If
the exercise price of an Award is changed after the date it is granted, such
change shall be deemed to be a termination of the existing Award and the
issuance of a new Award.
6.2 Right to Exercise. An Award shall be exercisable on the date of grant
or on any other date established by the Committee or provided for in an
Agreement, provided, however, that Awards granted to officers subject to section
16 of the Exchange Act shall not be exercisable until at least six months after
the Award is granted. A Participant must exercise an Incentive Option while he
is an employee of the Company or an Affiliate or within the periods that may be
specified in the Agreement after termination of employment, death, disability or
a "change of control" (as defined in any change of control agreement to which
the Company and any such Participant are parties).
6.3 Maximum Exercise Period. The maximum period in which an Award may be
exercised shall be determined by the Committee on the date of grant except that
no Incentive Option shall be exercisable after the expiration of 10 years (five
years in the case of Incentive Options granted to a Ten Percent Shareholder)
from the date it was granted. The terms of any Award may provide that it is
exercisable for a shorter period. All Incentive Options shall terminate on the
date the Participant's employment with the Company terminates, except as
otherwise provided in the Agreement with respect to termination of employment,
death, disability or a "change of control" (as defined in any change of control
agreement to which the Company and any such Participant are parties).
6.4 Transferability. Generally, any Award granted under this Plan shall
not be transferable except by will or by the laws of descent and distribution,
and shall be exercisable during the lifetime of the Participant only by the
Participant. However, a Nonqualified Option or an SAR granted under this Plan
may be transferable to the extent provided in an Agreement. Provided, further,
that no right or interest of a Participant in any Award shall be liable for, or
subject to, any lien, obligation or liability of such Participant.
6.5 Employee Status. The Committee shall determine the extent to which a
leave of absence for military or government service, illness, temporary
disability, or other reasons shall
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
6
<PAGE>
be treated as a termination or interruption of employment for purposes of
determining questions of forfeiture and exercise of an Award after termination
of employment; provided, however, that if the period treated as employment with
respect to an Incentive Option exceeds three months, such Option shall be deemed
a Nonqualified Option.
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise. An Award granted hereunder shall be deemed to have been
exercised on the Date of Exercise. Subject to the provisions of Articles and ,
an Award may be exercised in whole or in part at such times and in compliance
with such requirements as the Committee shall determine.
7.2 Payment. Unless otherwise provided by the Agreement, payment of the
Award price shall be made in cash or, to the extent approved by the Committee,
Stock that was acquired prior to the exercise of the Award, other consideration
acceptable to the Committee, or a combination thereof.
7.3 Federal Withholding Tax Requirements. Upon exercise of a Nonqualified
Option or an SAR by a Participant who is an employee of the Company or an
Affiliate, the Participant shall, upon notification of the amount due and prior
to or concurrently with the delivery of the certificates representing the
shares, pay to the Company amounts necessary to satisfy applicable federal,
state and local withholding tax requirements or shall otherwise make
arrangements satisfactory to the Company for such requirements. Such
withholding requirements shall not apply to the exercise of an Incentive Option,
or to a disqualifying disposition of Stock that is acquired with an Incentive
Option, unless the Committee gives the Participant notice that withholding
described in this Section is required.
7.4 Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to Options or SARs prior to the Date
of Exercise of such Award. No Participant shall acquire rights as a stockholder
through the grant or exercise of an SAR, except to the extent which the
Committee, in its sole discretion, issues Stock to the Participant as payment
upon the exercise of the SAR.
7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Awards hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Award hereunder and executes any applicable shareholder
agreement or agreement described in Section 92 that the Company requires at the
time of exercise.
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares. The maximum number of shares of stock with
respect to which Awards hereunder may be granted and which are the subject of
outstanding Awards, and
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
7
<PAGE>
the exercise price thereof, shall be adjusted as the Committee determines (in
its sole discretion) to be appropriate, in the event that:
(a) the Company or an Affiliate effects one or more stock dividends, stock
splits, reverse stock splits, subdivisions, consolidations or other
similar events;
(b) the Company or an Affiliate engages in a transaction to which section
424 of the Code applies; or
(c) there occurs any other event which in the judgment of the Committee
necessitates such action;
Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Awards specified in
Sections 43 and 52 that are proportionate to the modifications of the Stock that
are on account of such corporate changes. Notwithstanding the foregoing, the
Committee may not modify the Plan or the terms of any Awards then outstanding or
to be granted hereunder to provide for the issuance under the Plan of a
different class of stock or kind of securities.
8.2 Substitution of Awards on Merger or Acquisition. The Committee may
grant Awards in substitution for stock awards, stock options, stock appreciation
rights or similar awards held by an individual who becomes an employee of the
Company or an Affiliate in connection with a transaction to which section 424(a)
of the Code applies. The terms of such substituted Awards shall be determined
by the Committee in its sole discretion, subject only to the limitations of
Article V.
8.3 Effect of Certain Transactions. The provisions of this Section 8.3
shall apply to the extent that an Agreement does not otherwise expressly address
the matters contemplated herein. Upon a merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation of the Company, as
a result of which the shareholders of the Company receive cash, stock or other
property in exchange for their shares of Stock (but not a public offering of
Stock by the Company), and the Company is not the surviving entity (or survives
only as a subsidiary that is controlled by another entity), any Award granted
hereunder shall terminate, provided that the Participant shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise his Awards in whole
or in part, whether or not the vesting requirements set forth in any Agreement
have been satisfied, unless the Committee elects to convert all Awards hereunder
into stock incentive awards of an acquiring corporation. Provided, however,
that, notwithstanding the foregoing, a portion of the acceleration of
exercisability of Awards shall not occur with respect to any holder to the
extent that such portion of acceleration would cause the Participant or holder
of such Award to be liable for the payment of taxes pursuant to section 4999 of
the Code. If the Committee so elects to convert the Awards, the amount and
price of such converted options shall be determined by adjusting the amount and
price of the Awards
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
8
<PAGE>
granted hereunder in the same proportion as used for determining the number of
shares of stock of the acquiring corporation the holders of the Stock receive in
such merger, consolidation, acquisition of property or stock, separation or
reorganization, and the vesting schedule set forth in the Agreement shall
continue to apply to the converted options.
8.4 No Adjustment Upon Certain Transactions. The issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services rendered, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, outstanding Awards.
8.5 Fractional Shares. Only whole shares of Stock may be acquired through
the exercise of an Award. Any amounts tendered in the exercise of an Award
remaining after the maximum number of whole shares have been purchased will be
returned to the Participant.
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General. No Award shall be exercisable, no Stock shall be issued, no
certificates for shares of Stock shall be delivered, and no payment shall be
made under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any certificate issued to evidence shares of
Stock for which an Award is exercised may bear such legends and statements as
the Committee upon advice of counsel may deem advisable to assure compliance
with federal or state laws and regulations. No Award shall be exercisable, no
Stock shall be issued, no certificate for shares shall be delivered and no
payment shall be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from any regulatory
bodies having jurisdiction over such matters.
9.2 Representations by Participants. As a condition to the exercise of an
Award, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 91. At the option
of the Company, a stop transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided (concurred in by counsel for the Company) and
stating that such transfer is not in violation of any applicable law or
regulation may be stamped on the stock certificate in order to assure exemption
from registration. The Committee may also require such other action or
agreement by the Participants
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
9
<PAGE>
as may from time to time be necessary to comply with federal or state securities
laws. This provision shall not obligate the Company or any Affiliate to
undertake registration of options or stock hereunder.
ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.
10.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
10.3 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
10.4 Governing Law. The internal laws of the State of Tennessee shall
apply to all matters arising under this Plan, to the extent that federal law
does not otherwise apply or preempt Tennessee law.
10.5 Compliance With Section 16 of the Exchange Act. With respect to
persons subject to liability under section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 (or successor provisions) under the Exchange Act. To the extent any
provision of this Plan or action by Committee fails to so comply, it shall be
deemed null and void to the extent permitted by law and deemed advisable by the
Committee.
10.6 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on the
rights of a Participant under an outstanding Award is not valid with respect to
such Award without the Participant's consent, except as necessary for Incentive
Options to maintain qualification under the Code; and provided, further, that
the shareholders of the Company must approve, in general meeting:
(a) 12 months before or after the date of adoption, any amendment that
increases the aggregate number of shares of Stock that may be issued
under Incentive Options
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
10
<PAGE>
or changes the employees (or class of employees) eligible to receive
Incentive Options;
(b) before the effective date thereof, any amendment that changes the
number of shares in the aggregate which may be issued pursuant to
Awards granted under the Plan or the maximum number of shares with
respect to which any individual may receive options in any calendar
year, except pursuant to Article ; and
(c) before the effective date thereof, any amendment that increases the
period during which Awards may be granted or exercised.
Moreover, shareholder approval shall not be required for minor amendments to the
Plan that are intended to benefit the administration of the plan, for amendments
necessitated by changes in legislation or administrative rules governing the
Plan, or for amendments that the Board deems necessary to obtain or maintain
favorable tax, securities exchange or regulatory treatment of the Plan for
future Participants.
10.7 Duration of Plan. This Plan shall continue until it is terminated by
the Board pursuant to Section 106. However, no Incentive Option may be granted
under this Plan more than 10 years after the earlier of the date that the Plan
was first adopted by the Board or the date that the Plan was approved by
shareholders as provided in Section 108. Incentive Options granted before such
date shall remain valid in accordance with their terms.
10.8 Effective Date of Plan. This Plan was first adopted by the Board on
May 13, 1994, and was thereafter approved by the shareholders of the Company in
a manner that satisfies Treasury Regulation section 1.422-5. Effective
September 10, 1997, all Awards granted hereunder shall be governed by the terms
of this amended and restated Plan; provided, however, that the terms of the Plan
prior to this amendment shall apply to the extent that the terms of this
restated Plan would have a material adverse effect on the rights of a
Participant under an outstanding Award, unless (i) the Participant has given
consent to the change, or (ii) such amendment is necessary for Incentive Options
to maintain qualification under the Code.
PMT SERVICES, INC.
1994 INCENTIVE STOCK PLAN
11
<PAGE>
EXECUTION
IN WITNESS WHEREOF, the undersigned officer has executed this restated and
amended Plan on this the _____ day of ____________, 1997, but to be effective as
of the dates specified in Section 108.
PMT SERVICES, INC.
By: ______________________________
Its: ______________________________
12
<PAGE>
Exhibit 5
[LONG ALDRIDGE & NORMAN LLP LETTERHEAD]
September 29, 1998
NOVA Corporation
One Concourse Parkway
Suite 400
Atlanta, GA 30328
Re: PMT Services, Inc. 1997 Nonqualified Stock Option Plan; 1994 Non-
Employee Director Stock Option Plan and 1994 Incentive Stock 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 2,323,792 shares (the "Shares") of common stock, par value $.01
per share of the Company (the "Company Common Stock"). The Shares represent
(i) 2,165,777 shares of Company Common Stock that may be acquired pursuant to
options originally granted by PMT Services, Inc. ("PMT") under the PMT 1994
Incentive Stock Plan; (ii) 120,120 shares that may be acquired pursuant to
options originally granted by PMT under the PMT 1994 Non-Employee Director Stock
Option Plan; and (iii) 37,895 shares that may be acquired pursuant to options
originally granted by PMT under the PMT 1997 Nonqualified Stock Option Plan
(collectively, the "Plans"). The Company assumed all options to purchase common
stock of PMT pursuant to an Agreement and Plan of Merger dated as of June 17,
1998 (the "Merger Agreement"), pursuant to which PMT became a wholly-owned
subsidiary of the Company. Pursuant to the Merger Agreement, each outstanding
option to purchase shares of common stock of PMT was converted automatically
into an option to purchase a number of shares of Company Common Stock equal to
(A) the number of shares of PMT common stock of PMT issuable upon exercise of
the option multiplied by (B) 0.715 (the exchange ratio under the Merger
Agreement).
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
<PAGE>
NOVA Corporation
September 29, 1998
Page 2
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.
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 and the Plans. 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 Plans and the applicable option agreement, as
adjusted or modified pursuant to the Merger Agreement, against payment
in full of the option exercise price therefor, will be validly issued,
fully paid and nonassessable.
<PAGE>
NOVA Corporation
September 29, 1998
Page 3
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 PMT
Services, Inc. 1997 Nonqualified Stock Option Plan, 1994 Non-Employee Director
Stock Option Plan and 1994 Incentive Stock 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
