<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NOVA CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[NOVA LOGO]
April 20, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
(the "Annual Meeting") of NOVA Corporation (the "Company"), to be held at the
offices of the Company, One Concourse Parkway, Suite 300, Atlanta, Georgia on
Wednesday, May 20, 1998, at 10:00 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting. In addition to the
usual matters involving the election of directors and the ratification of the
appointment of independent accountants for the Company, a proposal will be
presented to the shareholders for the authorization and approval of an
amendment to the Company's 1996 Employees Stock Incentive Plan. Executive
officers of the Company, as well as a representative from the Company's
independent accounting firm, Ernst & Young LLP, will be present to respond to
appropriate questions of shareholders.
I hope that you will be able to attend the Annual Meeting. If you plan to
attend, please mark the appropriate box on your proxy card so that we can make
appropriate arrangements for the anticipated number of guests. Whether or not
you plan to attend the Annual Meeting, please sign, date and return your proxy
card in the enclosed envelope at your earliest convenience. This will ensure
that your shares will be represented and voted at the Annual Meeting even if
you are unable to attend.
Sincerely,
[SIGNATURE OF EDWARD GRZEDZINSKI]
Edward Grzedzinski
Chairman of the Board, President
and Chief Executive Officer
Atlanta, Georgia
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IMPORTANT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE RETURN ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE THE PROXY CARD AND VOTE IN
PERSON IF YOU SO DESIRE.
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- -------------------------------------------------------------------------------
<PAGE>
NOVA CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
NOTICE HEREBY IS GIVEN that the 1998 Annual Meeting of Shareholders of NOVA
Corporation (the "Company") will be held at the offices of the Company at One
Concourse Parkway, Suite 300, Atlanta, Georgia, on Wednesday, May 20, 1998, at
10:00 a.m., local time, for the purpose of considering and voting upon:
1. A proposal to elect the directors of the Company;
2. A proposal to authorize and approve an amendment to the NOVA Corporation
1996 Employees Stock Incentive Plan, as amended;
3. A proposal to ratify the appointment of Ernst & Young LLP as independent
accountants of the Company for the fiscal year ending December 31, 1998;
and
4. Such other business as may properly come before the Annual Meeting or
any adjournments or postponements thereof. The Board of Directors is not
aware of any other business to be presented to a vote of the
shareholders at the Annual Meeting.
Information relating to the above matters is set forth in the attached Proxy
Statement. Shareholders of record at the close of business on March 25, 1998,
are entitled to receive notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof.
By Order of the Board of Directors,
[Signature of James M. Bahin appears here]
Vice Chairman, Chief Financial Officer
and Secretary
Atlanta, Georgia
April 20, 1998
<PAGE>
NOVA CORPORATION
ONE CONCOURSE PARKWAY
SUITE 300
ATLANTA, GEORGIA 30328
----------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
----------------
This Proxy Statement is furnished to the shareholders of NOVA Corporation
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the 1998 Annual Meeting of Shareholders of
the Company (the "Annual Meeting") and any adjournments or postponements
thereof. The Annual Meeting will be held at the offices of the Company, One
Concourse Parkway, Suite 300, Atlanta, Georgia on Wednesday, May 20, 1998, at
10:00 a.m., local time.
The approximate date on which this Proxy Statement and the accompanying
proxy card are first being sent or given to shareholders of the Company is
April 20, 1998.
VOTING
GENERAL
The securities that can be voted at the Annual Meeting consist of Common
Stock of the Company, $0.01 par value per share (the "Common Stock"), with
each share entitling its owner to one vote on each matter submitted to the
shareholders. The record date for determining the holders of Common Stock who
are entitled to notice of and to vote at the Annual Meeting is March 25, 1998
(the "Record Date"). On the Record Date, 29,071,428 shares of Common Stock
were outstanding and eligible to be voted at the Annual Meeting.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding shares
of Common Stock is necessary to constitute a quorum at the Annual Meeting. In
counting the votes to determine whether a quorum exists at the Annual Meeting,
the proposal receiving the greatest number of all votes cast "FOR" or
"AGAINST" and abstentions (including instructions to withhold authority to
vote) will be used.
In voting for the proposal to elect directors (Proposal 1), shareholders may
vote in favor of all nominees, withhold their votes as to all nominees or
withhold their votes as to specific nominees. The vote required to approve
Proposal 1 is governed by Georgia law and is a plurality of the votes cast by
the holders of shares entitled to vote, provided a quorum is present. As a
result, in accordance with Georgia law, abstentions will not be counted and
will have no effect. Pursuant to the Company's Articles of Incorporation, the
Company's Common Stock may be voted cumulatively in the election of directors.
When cumulative voting is in effect, the right to vote cumulatively means that
each shareholder entitled to vote in the election of directors shall be
entitled to as many votes as shall equal the number of shares of Common Stock
held by the shareholder as of the Record Date multiplied by the number of
directors to be elected and may cast all such votes for a single nominee or
may distribute them among two or more nominees. Cumulative voting will not be
in effect unless a shareholder intending to vote cumulatively gives separate
written notice to the Secretary of the Company not less than 48 hours before
the time for the Annual Meeting, stating that such shareholder intends to vote
his or her shares cumulatively, which notice will be announced at the Annual
Meeting before the voting. Instructions with respect to cumulative voting on
the proxy card do not constitute notice of an election that a shareholder
intends to vote his or her shares cumulatively. In the event cumulative voting
is in effect, the proxy solicited by the Board of Directors confers
discretionary authority on the proxies to cumulate votes so as to elect the
maximum number of nominees.
1
<PAGE>
In voting for the proposal to approve the amendment to the NOVA Corporation
1996 Employees Stock Incentive Plan, as amended (the "1996 Stock Incentive
Plan") (Proposal 2), shareholders may vote in favor of the proposal or against
the proposal or may abstain from voting. The vote required to approve Proposal
2 is the affirmative vote of the holders of a majority of the shares
represented and entitled to vote at the Annual Meeting, provided a quorum is
present. As a result, abstentions will have the effect of a vote against
Proposal 2.
In voting for the proposal to ratify the Board of Directors' appointment of
independent accountants for the Company (Proposal 3), shareholders may vote in
favor of the proposal or against the proposal or may abstain from voting. The
vote required to approve Proposal 3 is governed by Georgia law, and the votes
cast favoring such proposal must exceed the votes cast opposing such proposal,
provided a quorum is present. As a result, in accordance with Georgia law,
abstentions will not be counted and will have no effect.
Under the rules of the New York and American Stock Exchanges (the
"Exchanges") that govern most domestic stock brokerage firms, member brokerage
firms that hold shares in street name for beneficial owners may, to the extent
that such beneficial owners do not furnish voting instructions with respect to
any or all proposals submitted for stockholder action, vote in their
discretion upon proposals which are considered "discretionary" proposals under
the rules of the Exchanges. Member brokerage firms that have received no
instructions from their clients as to "non-discretionary" proposals do not
have discretion to vote on these proposals. Such "broker non-votes" will not
be considered in determining whether a quorum exists at the Annual Meeting and
will not be considered as votes cast in determining the outcome of any
proposal.
As of March 25, 1998 (the Record Date for the Annual Meeting), the directors
and executive officers of the Company owned or controlled approximately
24,063,462 shares of Common Stock of the Company, constituting approximately
81.0% of the outstanding Common Stock. The Company believes that the holders
of more than a majority of the Common Stock outstanding on the Record Date
will vote all of their shares of Common Stock in favor of each of the
proposals and, therefore, that the presence of a quorum and the approval of
each proposal is reasonably assured.
PROXIES
In voting with regard to the election of directors, shareholders may vote in
favor of all nominees, withhold their votes as to all nominees or withhold
their votes as to specific nominees. With regard to the proposals to authorize
and approve the amendment to the 1996 Stock Incentive Plan, and to ratify the
appointment of independent accountants, shareholders may vote in favor of or
against each of the proposals or may abstain from voting. Shareholders should
specify their choices on the accompanying proxy card. All properly executed
proxy cards delivered by shareholders to the Company in time to be voted at
the Annual Meeting and not revoked will be voted at the Annual Meeting in
accordance with the directions given. IF NO SPECIFIC INSTRUCTIONS ARE GIVEN
WITH REGARD TO THE MATTERS TO BE VOTED UPON, THE SHARES REPRESENTED BY A
SIGNED PROXY CARD WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES NAMED IN
PROPOSAL 1 AND "FOR" PROPOSALS 2 AND 3 AS SET FORTH ON THE PROXY CARD. In the
event cumulative voting is in effect with respect to Proposal 1, the proxy
card confers discretionary authority on the persons named as proxies to
cumulate the votes so as to elect the maximum number of nominees. If any other
matters properly come before the Annual Meeting, the persons named as proxies
will vote upon such matters according to their judgment. Any shareholder
giving a proxy has the power to revoke it at any time before it is voted by
giving written notice to the Secretary of the Company at the principal office
of the Company, by delivering a later dated proxy card or by voting in person
at the Annual Meeting.
In addition to soliciting proxies through the mail, the Company may solicit
proxies through its directors, officers and employees in person and by
telephone. Brokerage firms, nominees, custodians and fiduciaries also may be
requested to forward proxy materials to the beneficial owners of shares held
of record by them. All expenses incurred in connection with the solicitation
of proxies will be borne by the Company.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth information regarding ownership of the Company's
outstanding Common Stock on March 25, 1998, by (i) each person or entity known
by the Company to be the beneficial owner of more than 5% of the outstanding
shares of Common Stock, (ii) each director and director nominee, (iii) each
Named Executive Officer (as defined below), and (iv) all directors, director
nominees and Named Executive Officers as a group. Unless otherwise indicated,
the named owner has sole voting and investment power with respect to the
shares listed.
<TABLE>
<CAPTION>
SHARES PERCENT
NAME AND POSITION BENEFICIALLY OWNED(1) OF CLASS(2)
- ----------------- --------------------- -----------
<S> <C> <C>
Warburg, Pincus Investors, L.P. ............. 11,086,770 (3) 38.1%
Principal Shareholder
First Union Corporation...................... 9,149,209 (4) 31.5%
Principal Shareholder
WorldCom, Inc. .............................. 2,371,063 (5) 8.2%
Principal Shareholder
Edward Grzedzinski........................... 748,971 (6) 2.2%
Chairman, President and Chief Executive
Officer
James M. Bahin............................... 723,872 (7) 2.1%
Vice Chairman, Chief Financial Officer and
Secretary
Pamela A. Joseph............................. 132,999 (8) *
Executive Vice President and Chief
Information Officer
John M. Perry................................ 154,500 (9) *
Executive Vice President--Sales and
Marketing
Rebecca L. Powell............................ 102,925(10) *
Executive Vice President--Merchant Services
and Operations
Charles T. Cannada........................... 2,371,063 (5) 8.2%
Director and Principal Shareholder
Dr. James E. Carnes.......................... 3,200(11) *
Director
U. Bertram Ellis............................. 5,000(12) *
Director
Dr. Henry Kressel............................ 11,086,770 (3) 38.1%
Director and Principal Shareholder
Joseph P. Landy.............................. 11,086,770 (3) 38.1%
Director and Principal Shareholder
Maurice F. Terbrueggen, Jr. ................. 9,149,209 (4) 31.5%
Director and Principal Shareholder
Stephen E. Wall.............................. -- -- %
Director Nominee
All Named Executive Officers, directors and 24,478,509(13) 81.0%
director nominees as a group
(12 persons)................................
</TABLE>
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* Less than 1% of the outstanding Common Stock.
(1) Includes shares of Common Stock which the named shareholder has a right to
acquire upon the exercise of vested and nonvested options.
(2) Includes shares of Common Stock which the named shareholder has a right to
acquire, upon the exercise of options, within 60 days following the Record
Date, but not options that become exercisable after such date. Such shares
receivable upon the exercise of options are deemed outstanding for
purposes of completing the percentage ownership of the person holding such
shares, but are not deemed outstanding for purposes of computing the
percentage ownership of any other person shown in the table.
(3) The shares shown are owned by Warburg, Pincus Investors, L.P. ("Warburg
Investors"). The sole general partner of Warburg Investors is Warburg,
Pincus & Co., a New York general partnership ("WP"). E. M. Warburg, Pincus
& Co., LLC, a New York limited liability company ("EMW LLC"), manages
Warburg Investors. The members of EMW LLC are substantially the same as
the partners of WP. Lionel I. Pincus is the managing partner of WP and the
managing member of EMW LLC and may be deemed to control both
3
<PAGE>
WP and EMW LLC. WP, as the sole general partner of Warburg Investors, has a
20% interest in the profits of Warburg Investors. Dr. Kressel and Mr.
Landy, directors of the Company, are Managing Directors and members of EMW
LLC and general partners of WP. As such, Dr. Kressel and Mr. Landy may be
deemed to have an indirect pecuniary interest (within the meaning of Rule
16a-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) in an indeterminate portion of the shares beneficially owned by
Warburg Investors and WP. Dr. Kressel and Mr. Landy disclaim beneficial
ownership of the shares. The named persons' address is 477 Lexington
Avenue, 10th Floor, New York, New York 10017.
(4) The shares indicated are owned beneficially by indirect, wholly-owned
subsidiaries of First Union Corporation ("First Union"). Pursuant to the
terms of a voting agreement among First Union National Bank ("FUNB") and
such subsidiaries, FUNB holds the proxy for each of such subsidiaries with
respect to such shares. Accordingly, each of First Union and FUNB may be
deemed to be the beneficial owner of all such shares within the meaning of
Rule 13d-3 under the Exchange Act. Such shares also may be attributed to
Mr. Terbrueggen, a director of the Company, who serves as Senior Vice
President of First Union. Mr. Terbrueggen disclaims beneficial ownership
of the shares. First Union's and Mr. Terbrueggen's address is Two First
Union Center, 301 South College Street, Charlotte, North Carolina 28288.
(5) The shares shown are owned by WorldCom, Inc. ("WorldCom"). Mr. Cannada may
be deemed to beneficially own the shares within the meaning of Rule 13d-3
under the Exchange Act due to his affiliation with WorldCom as a Senior
Vice President. Mr. Cannada disclaims beneficial ownership of these
shares. Mr. Cannada's and WorldCom's address is 515 East Amite, Jackson,
Mississippi 39201.
(6) Includes 25,000 shares held in the name of Mr. Grzedzinski's spouse, 50
shares held by his spouse as custodian for a minor child, and 50 shares
held by Mr. Grzedzinski's daughter. Also includes 262,618 shares that Mr.
Grzedzinski may acquire, upon the exercise of options, within 60 days
following the Record Date, and 96,713 shares that Mr. Grzedzinski may
acquire upon the exercise of options which will not be exercisable within
the aforementioned 60-day period.
(7) Includes 268,859 shares that Mr. Bahin may acquire, upon the exercise of
options, within 60 days following the Record Date, and 96,713 shares that
Mr. Bahin may acquire upon the exercise of options which will not be
exercisable within the aforementioned 60-day period.
(8) Includes 19,750 shares that Ms. Joseph may acquire, upon the exercise of
options, within 60 days following the Record Date, and 64,240 shares that
Ms. Joseph may acquire upon the exercise of options which will not be
exercisable within the aforementioned 60-day period.
(9) Includes 57,375 shares that Mr. Perry may acquire, upon the exercise of
options, within 60 days following the Record Date, and 97,125 shares that
Mr. Perry may acquire upon the exercise of options which will not be
exercisable within the aforementioned 60-day period.
(10) Includes 15,625 shares that Ms. Powell may acquire, upon the exercise of
options, within 60 days following the Record Date, and 53,506 shares that
Ms. Powell may acquire upon the exercise of options which will not be
exercisable within the aforementioned 60-day period.
(11) Includes 3,000 shares that Dr. Carnes may acquire upon the exercise of
options that will not be exercisable within 60 days following the Record
Date.
(12) Includes 1,250 shares that Mr. Ellis may acquire, upon the exercise of
options, within 60 days following the Record Date, and 3,750 shares that
Mr. Ellis may acquire upon the exercise of options which will not be
exercisable within the aforementioned 60-day period.
(13) Includes 625,477 shares which may be acquired upon the exercise of
options within 60 days following the Record Date and 415,047 shares which
may be acquired upon the exercise of options that will not be exercisable
within the aforementioned 60-day period. Includes 9,149,209 shares owned
by indirect wholly-owned subsidiaries of First Union and included due to
the affiliation of Mr. Terbrueggen with First Union. Includes 11,086,770
shares owned by Warburg Investors and included due to the affiliation of
Dr. Kressel and Mr. Landy with Warburg Investors. Includes 2,371,063
shares owned by WorldCom and included due to Mr. Cannada's affiliation
with WorldCom.
4
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
NOMINEES
In accordance with the Bylaws of the Company, the Board of Directors of the
Company has fixed the number of directors at nine. Directors are elected
annually by the shareholders for a term of one year or until their respective
successors have been elected.
The Board of Directors has nominated the following persons to serve as
directors until the next Annual Meeting of Shareholders or until their
respective successors are elected. All of the nominees except Mr. Wall
presently are members of the Board of Directors. Each of the nominees has
consented to serve a one year term if elected. If any of the nominees should
be unavailable to serve for any reason (which is not anticipated), the persons
named as proxies will vote the shares represented by all valid proxy cards for
such substitute nominees, or to allow the vacancies created thereby to remain
open until filled by the Board, as the Board of Directors recommends.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO ELECT THE NINE NOMINEES NAMED BELOW AS DIRECTORS OF THE COMPANY.
Set forth below is certain information regarding each of the nominees.
Unless otherwise indicated, the information is as of April 15, 1998.
James M. Bahin. Mr. Bahin, 53, has served with the Company or its
predecessor since January 1992, most recently as a director, Vice Chairman of
the Board of Directors, Chief Financial Officer and Secretary. Prior to
joining the Company, Mr. Bahin served in various officer capacities with Fuqua
Industries, Inc., a diversified manufacturing and service company, most
recently as Senior Vice President of Operations. Mr. Bahin has over 25 years
of financial and management experience.
Charles T. Cannada. Mr. Cannada, 39, has served as a director of the Company
or its predecessor since January 1995. Mr. Cannada has served with WorldCom,
Inc. ("WorldCom"), a publicly-held long distance telecommunications firm,
since October 1989, most recently as Senior Vice President.
Dr. James E. Carnes. Dr. Carnes, 58, has served as a director of the Company
since November 1997. Dr. Carnes is the President and Chief Executive Officer
of Sarnoff Corporation, a contract research and development company in the
electronics and information technology industry, and has held this position
since 1990. He has served with Sarnoff Corporation, and its predecessor, since
1969.
U. Bertram Ellis. Mr. Ellis, 44, has served as a director of the Company
since October 1996. Mr. Ellis is the Chairman and Chief Executive Officer of
IXL Holdings, Inc., the parent company of iXL, Inc., a full-service provider
of interactive communication services, and has held this position since April
1996. Prior to joining IXL Holdings, Mr. Ellis founded and served as the
President and Chief Executive Officer of Ellis Communications, a privately-
held owner and operator of television and radio stations, from 1993 to 1996.
Prior to founding Ellis Communications, Mr. Ellis served from 1986 to 1992 in
the capacities of President, Chief Executive Officer and Chief Operating
Officer of Act III Broadcasting, a television broadcast group. From 1992 to
1993, Mr. Ellis served as the Chief Executive Officer of American Innovations,
Inc., which filed a petition for relief under Chapter 11 of the U.S.
Bankruptcy Code in 1993. Mr. Ellis is a director of OrthAlliance, a publicly-
held provider of orthodontic practice management services.
Edward Grzedzinski. Mr. Grzedzinski, 43, has served with the Company or its
predecessor since February 1991, most recently as a director, Chairman of the
Board of Directors, President and Chief Executive Officer. He co-founded the
Company's subsidiary and predecessor, NOVA Information Systems, Inc. ("NOVA
Information Systems"), as its Chief Operating Officer in 1991 and was named
Chief Executive Officer in September 1995. From October 1990 to February 1991,
Mr. Grzedzinski served as an officer of Phoenix Consulting Group, Inc., a
transaction processing consulting company. Mr. Grzedzinski has over 12 years
experience in the bankcard industry.
5
<PAGE>
Dr. Henry Kressel. Dr. Kressel, 64, has served as a director of the Company
or its predecessor since November 1991. Dr. Kressel has served with E. M.
Warburg, Pincus & Co., Inc., an investment firm, since 1983, most recently as
Managing Director. Dr. Kressel also serves as a director of Level One
Communications, Inc. and Zilog, Inc., each a publicly-held semi-conductor
company, Maxis Inc., a publicly-held software development company, Trescom
International, Inc., a publicly-held long-distance telephone company, IA
Corporation, a publicly-held software development company, and other privately
held companies.
Joseph P. Landy. Mr. Landy, 36, has served as a director of the Company or
its predecessor since August 1994. Mr. Landy has served with E. M. Warburg,
Pincus & Co., Inc. ("Warburg Investors"), an investment firm, since 1985, most
recently as Managing Director. Mr. Landy serves as a director of Level One
Communications, Inc., a publicly-held semi-conductor company, CN Biosciences,
Inc., a publicly-held manufacturer of specialty chemical reagents and
pharmaceutical raw materials, and other privately held companies.
Maurice F. Terbrueggen, Jr. Mr. Terbrueggen, 52, has served as a director of
the Company since January 1996. Mr. Terbrueggen has served with First Union
Corporation ("First Union"), a bank holding company, since July 1973, most
recently as Senior Vice President and Division Manager of the First Union
merchant acquiring business. Mr. Terbrueggen has over 29 years of management
experience in the financial services industry, including over 24 years in the
bankcard industry.
Stephen E. Wall. Mr. Wall, 56, has served with KeyCorp, a bank holding
company, since 1970, most recently as Executive Vice President. Mr. Wall
serves as a director of MasterCard International, a global payment system
comprised of financial institution members, and Electronic Payment Services,
Inc., a privately-held electronic transaction processor. Mr. Wall has over 30
years experience in the financial services industry.
DIRECTOR COMPENSATION
Directors of the Company, other than employees of the Company (or its
subsidiaries) and director nominees who are affiliates of Warburg Investors,
First Union and WorldCom, receive a retainer of $2,000 per month for service
as a director. Additionally, such directors are entitled to receive $1,000 for
attendance and participation at each Board of Directors meeting, and $500 for
attendance and participation in each committee meeting if such committee
meeting is not held on the same day as a Board of Directors meeting. Directors
receive reimbursement for their expenses incurred in connection with travel to
and from a meeting.
The NOVA Corporation 1996 Directors Stock Option Plan, as amended and
restated (the "Directors Plan"), provides for stock options to be granted to
outside directors of the Company other than the director nominees of Warburg
Investors, First Union and WorldCom, as partial compensation for their service
on the Board. The number of options to be granted to each such director is
determined as follows: (i) upon an eligible director's initial election to the
Board, an option to purchase 2,000 shares of Common Stock; and (ii) upon
beginning any term of service as a director, an option to purchase a number of
shares equal to a fraction, the numerator of which is 2,000 multiplied by the
number of full or partial months to be served in such term, and the
denominator of which shall be 12. The Board of Directors administers the
Directors Plan subject to certain limitations.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
General. The Board of Directors of the Company conducts its business through
meetings of the full Board and through two committees of the Board: an Audit
Committee and a Compensation Committee. During the fiscal year ended December
31, 1997, the Board of Directors of the Company met six times, the Audit
Committee met one time and the Compensation Committee met one time. All
directors attended at least 75% of the meetings of the Board of Directors and
the Committees on which they served in 1997.
The Board of Directors as a whole functions as the nominating committee to
select management's nominees for election as directors of the Company.
6
<PAGE>
Audit Committee. The Audit Committee is responsible for reviewing the audit
plan with the Company's independent accountants, the scope and results of
their audit engagement and the accompanying management letter; reviewing the
scope and results of the Company's internal auditing procedures; consulting
with the independent accountants and management with regard to the Company's
accounting methods and the adequacy of its internal accounting controls; and
reviewing the independence of the independent accountants. Currently, Mr.
Cannada, Dr. Carnes and Mr. Ellis are members of the Audit Committee.
Compensation Committee. The purpose of the Compensation Committee is to make
recommendations to the Board of Directors regarding all matters of
compensation, including stock options for employees of the Company. Mr. Ellis
and Dr. Kressel are members of the Compensation Committee. In addition, Fred
Martin Winkler, who resigned as a director of the Company in March 1998,
served as a member of the Compensation Committee during the fiscal year ended
December 31, 1997.
The Compensation Committee administers the NOVA Corporation 1991 Stock
Option and Stock Appreciation Rights Plan, as amended (the "1991 Option
Plan"), and the 1996 Stock Incentive Plan.
Compensation Committee Interlocks and Insider Participation. Mr. Ellis and
Dr. Kressel currently serve as members of the Compensation Committee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires that the Company's directors, executive officers and
persons who beneficially own more than 10% of the Company's Common Stock
("Reporting Persons") file certain reports concerning their beneficial
ownership of the Company's Common Stock. The Company believes that during 1997
all Reporting Persons complied with their Section 16(a) filing obligations in
a timely manner except that the Form 3 report filed on behalf of Dr. James E.
Carnes was filed after its due date.
REPORT OF THE COMPENSATION COMMITTEE
General. The Compensation Committee of the Board of Directors of the Company
(the "Committee") is responsible for evaluating the compensation of the
Company's executive officers, and establishing the guidelines of the Company's
compensation policies with respect to its executive officers. Additionally,
the Committee administers the 1991 Option Plan and the 1996 Stock Incentive
Plan, pursuant to which the Company has granted employee stock options on a
broad basis to its full time employees.
The Company's compensation policy for executive officers is based on the
following principles:
. Base salaries are competitive with other similarly situated executives
of companies of comparable size as well as companies within the same
industry.
. Annual incentive compensation is based on the Company's performance and
realization of its financial goals during the fiscal year, both on a
Company wide basis as well as within the individual executive's area of
management.
. Long term incentive compensation, in the form of stock options or
similar vehicles, will encourage and motivate the executive officers
toward the consistent achievement of financial and other operational
goals, thereby increasing shareholder value on a long term basis.
Base Salaries. Base salary is an executive officer's annual rate of pay
without regard to any other factors. With respect to Messrs. Grzedzinski,
Bahin and Perry, their base salaries are determined in accordance with the
terms of their respective employment agreements and are required to be
reviewed on an annual basis. It is the policy of the Committee to review base
salaries for executive officers on an annual basis, although there is no
7
<PAGE>
requirement for an annual increase. The Committee strives to set base salaries
at levels which are competitive with companies of comparable size, consistent
with the compensation practices of other companies within the same industry.
Annual Incentive Compensation. Annual incentive compensation is paid to the
executive officers based upon a bonus plan which is approved by the Committee
each year (the "Bonus Plan"). The Bonus Plan entitles the executive officers
to earn a percentage of their respective base salaries based upon the
achievement of financial goals of the Company, as well as achievement of
certain operational goals by the individuals. For 1997, Messrs. Grzedzinski,
Bahin and Perry were each entitled to receive up to 100% of their respective
base salaries in the form of annual incentive compensation; each of these
executive officers received incentive compensation of 52% of their respective
base salaries. For 1997, Ms. Joseph and Ms. Powell received incentive
compensation of $43,750 and $38,500, respectively (or 35% of their respective
base salaries).
Long Term Incentive Compensation. The Committee has granted employee stock
options to its executive officers to encourage and motivate these officers to
achieve, on a consistent and long term basis, financial goals that are
consistent with the interests of the shareholders of the Company. The
Committee believes this approach is a particularly good method to ensure that
the interests of the executive officers are aligned with those of the
Company's shareholders, and the longer term nature of the compensation
encourages executive officers to focus on long term goals in addition to short
term goals.
Compensation Paid in 1997 to the Chief Executive Officer. Edward Grzedzinski
has served as the Company's Chairman, President and Chief Executive Officer
since the Company's formation in December 1995, and also serves in these
capacities with respect to the Company's wholly-owned subsidiary, NOVA
Information Systems. Mr. Grzedzinski and NOVA Information Systems entered into
a written employment agreement dated October 27, 1995 (the "Employment
Agreement"). Pursuant to the terms of the Employment Agreement, Mr.
Grzedzinski receives an annual base salary, currently $354,000, which may be
adjusted on an annual basis at the discretion of the Board of Directors of
NOVA Information Systems. Mr. Grzedzinski is entitled to receive an annual
cash bonus of a percentage of his base salary, dependent upon the achievement
of certain specific financial and other goals. In 1997, the Bonus Plan
provided for Mr. Grzedzinski to earn a cash bonus of up to 100% of his base
salary. In accordance with the terms of the Bonus Plan, Mr. Grzedzinski
received $156,000 in annual incentive compensation for 1997. With respect to
long term incentive compensation, during 1997, the Committee granted to Mr.
Grzedzinski employee stock options to purchase 50,000 shares of Common Stock.
Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") generally limits the
deductibility for federal income tax purposes of annual compensation paid by a
publicly-held corporation to its chief executive officer and four other
highest paid executives for amounts in excess of $1 million, unless certain
conditions are met. Currently, none of the executive officers of the Company
are affected by this provision of the Code. However, because the Committee
seeks to maximize shareholder value, the Committee intends to take adequate
steps to ensure the deductibility of any compensation to executive officers in
excess of $1 million in the future.
The Committee believes that the executive compensation policies serve the
best interests of the shareholders and of the Company. A significant portion
of the compensation of the executive officers is directly related to and
commensurate with the performance of the Company.
NOVA CORPORATION COMPENSATION COMMITTEE
U. Bertram Ellis
Dr. Henry Kressel
8
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Common Stock over the period beginning May 8, 1996 (the completion of the
Company's initial public offering) and ending December 31, 1997, with the
cumulative total return of (i) the Standard & Poor's 500 Stock Index and (ii)
an index composed of publicly-held companies which share the same standard
industry classification as the Company.
Cumulative total return values were calculated based on an assumed
investment of $100.00 at the beginning of the period and assuming reinvestment
of dividends. The return shown for the Common Stock is not necessarily
indicative of future performance.
[GRAPH APPEARS HERE]
ASSUMES $100 INVESTED ON MAY 8, 1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1997
<TABLE>
<CAPTION>
BASE 6/28/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NOVA CORPORATION........ $100.00 $115.88 $113.30 $ 75.97 $ 54.51 $ 89.06 $ 87.34 $ 85.84
SIC CODE INDEX.......... $100.00 $103.85 $106.81 $ 95.49 $ 83.62 $ 95.99 $106.52 $108.05
S&P 500 INDEX........... $100.00 $102.97 $106.15 $115.00 $118.08 $138.70 $149.09 $153.37
</TABLE>
9
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation awarded or paid for the
fiscal years ended December 31, 1996 and 1997, to the Company's Chief
Executive Officer and the four other most highly compensated executive
officers whose total annual salary and bonus for the fiscal year ended
December 31, 1997, exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION
--------------------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) OPTIONS(#)(4) COMPENSATION
------------------ ---- --------- -------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Edward Grzedzinski...... 1997 $298,077 $156,000 $ 635 50,000 $ --
Chairman, President and 1996 249,519 125,000 190 -- --
Chief Executive Officer
James M. Bahin.......... 1997 $226,154 $116,480 $ -- 50,000 $ --
Vice Chairman, Chief 1996 200,000 102,000 -- -- --
Financial Officer and
Secretary
Pamela A. Joseph........ 1997 $127,116 $ 43,750 $ -- 50,000 $ --
Executive Vice
President 1996 100,231 34,500 17 16,500 5,126(5)
and Chief Information
Officer
John M. Perry........... 1997 $202,308 $104,000 $ 767 75,000 $ --
Executive Vice
President, 1996 121,154 90,000 -- 79,500 84,915(6)
Sales and Marketing
Rebecca L. Powell....... 1997 $110,192 $ 38,500 $ 811 50,000 $ --
Executive Vice
President, 1996 95,000 25,000 337 15,500 --
Merchant Services and
Operations
</TABLE>
- --------
(1) Amounts shown include cash compensation earned and received by the Named
Executive Officer as well as amounts earned but deferred at the election
of the officer pursuant to the NOVA Information Systems 401(k) and Profit
Sharing Plan.
(2) Amounts shown include bonus compensation attributable to the year shown,
although in certain cases such amounts were paid in the following year.
(3) Represents employer matching contributions to the Named Executive
Officer's account pursuant to the NOVA Information Systems 401(k) and
Profit Sharing Plan.
(4) Represents employee stock options granted to the Named Executive Officer
for the fiscal years ended December 31, 1996 and 1997. The Company has not
issued any stock appreciation rights.
(5) Represents the reimbursement of additional income taxes attributable to
the relocation of Ms. Joseph to Atlanta, Georgia in connection with Ms.
Joseph's joining the Company in 1994.
(6) Represents reimbursed expenses attributable to the relocation of Mr. Perry
to Atlanta, Georgia in connection with Mr. Perry's joining the Company in
1996.
10
<PAGE>
EMPLOYMENT AGREEMENTS
Messrs. Grzedzinski, Bahin and Perry each has entered into a written
employment agreement with NOVA Information Systems dated October 27, 1995
(with respect to Messrs. Grzedzinski and Bahin) and April 4, 1997 (with
respect to Mr. Perry) (collectively, the "Employment Agreements"). Pursuant to
the Employment Agreements, Mr. Grzedzinski is employed by NOVA Information
Systems as President and Chief Executive Officer and serves as Chairman of the
Board of Directors of NOVA Information Systems; Mr. Bahin is employed by NOVA
Information Systems as Chief Financial Officer and serves as Vice Chairman of
the Board of Directors of NOVA Information Systems; and Mr. Perry is employed
by NOVA Information Systems as Executive Vice President, Sales and Marketing.
Currently, Messrs. Grzedzinski, Bahin and Perry receive an annual base salary
of $354,000, $257,600 and $230,000, respectively, as may be adjusted from time
to time by the Board of Directors (with respect to Messrs. Grzedzinski and
Bahin) and the Chief Executive Officer (with respect to Mr. Perry). In
addition, Messrs. Grzedzinski, Bahin and Perry each has the opportunity to
earn a percentage of his base salary as a cash bonus tied to the performance
of NOVA Information Systems. The Employment Agreements provide that each
employee is entitled to participate in all of NOVA Information Systems'
employee benefit plans and programs, including any stock option plans adopted
by the Board of Directors of NOVA Information Systems. Each of the Employment
Agreements is for an initial two-year term and automatically renews for
successive two-year terms unless either party provides written notice to the
other party at least 180 days before renewal.
Upon termination of employment other than as a result of one of the
Termination Exclusions, as defined below, each of the Employment Agreements
provides for cash severance compensation equal to two times the employee's
annual base salary to be paid in 24 equal monthly payments. In addition, stock
options granted to the employee as of the effective date of the Employment
Agreement will become vested and immediately exercisable. Such severance
compensation is triggered by, among other things, the occurrence of a "change
in control" (as defined in the Employment Agreements), a material diminution
in the employee's duties and responsibilities, or the failure of NOVA
Information Systems to automatically renew the Employment Agreement. The
Termination Exclusions consist of termination for cause, nonrenewal by the
employee of an Employment Agreement, or voluntary termination of employment by
the employee. In return for such severance compensation, Messrs. Grzedzinski,
Bahin and Perry each has agreed, for a period of two years after termination
of employment, (i) not to use or disclose any confidential information of NOVA
Information Systems, (ii) not to solicit the customers or employees of NOVA
Information Systems, and (iii) not to become employed by, or to have a
financial interest in, any other business which will compete with NOVA
Information Systems in providing credit card and debit card transaction
processing services within the United States. In the event that the employment
of Messrs. Grzedzinski, Bahin or Perry terminates as a result of one of the
Termination Exclusions, NOVA Information Systems has the option of requiring
the employee to comply with the non-disclosure and non-competition provisions
of his Employment Agreement for a period of either one year or two years, upon
payment of an amount equal to one year's base salary or two years' base
salary, respectively.
Ms. Powell entered into a written employment agreement with NOVA Information
Systems effective November 1, 1991. Pursuant to the terms of the agreement,
Ms. Powell receives an annual base salary (currently $143,000) and has the
opportunity to earn a percentage of her base salary as a cash bonus. The
agreement provides that Ms. Powell may participate in all NOVA Information
Systems employee benefit plans and programs, including any stock option or
incentive stock plans adopted by the Board of Directors of NOVA Information
Systems. The term of the agreement extends until Ms. Powell either terminates
her employment or enters into a new employment agreement with NOVA Information
Systems. The agreement provides for termination in the event of death,
disability or retirement. The agreement also may be terminated voluntarily by
Ms. Powell or by the Company, with or without cause, and provides for, under
certain circumstances, the payment of compensation equal to up to three months
of Ms. Powell's base salary. In addition to the foregoing, in the event that
Ms. Powell is terminated without cause, she is entitled to a severance payment
equal to one week's salary multiplied by the number of full years of service
she has completed at the time of termination. Ms. Powell has agreed, during
the term of her employment and for up to six months after termination of
11
<PAGE>
employment, (i) not to become engaged in any business competitive to that of
the Company, (ii) not to solicit the customers or employees of the Company,
and (iii) not to use or disclose any confidential information of the Company.
Ms. Joseph does not presently have a written employment agreement with NOVA
Information Systems, although the Company anticipates that such an agreement
will be executed in the second quarter of 1998. Her current base salary is
$156,250.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table summarizes (i) the aggregate number of options exercised
by the Named Executive Officers during the year ended December 31, 1997, and
(ii) the aggregate number and value of options held by the Named Executive
Officers at December 31, 1997. The Company has not issued any stock
appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
VALUE REALIZED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
(MARKET PRICE AT OPTIONS AT FISCAL YEAR THE-MONEY OPTIONS AT
SHARES EXERCISE LESS END(#) FISCAL YEAR END ($)(1)
ACQUIRED ON EXERCISE ------------------------- -------------------------
NAME EXERCISE (#) PRICE)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward Grzedzinski...... -0- -0- 133,300 226,031 $3,175,206 $4,761,808
James M. Bahin.......... -0- -0- 140,979 224,593 3,358,120 4,727,555
Pamela A. Joseph........ 13,000 $224,885 35,594 97,355 774,592 1,476,974
John M. Perry........... -0- -0- 19,875 134,625 119,531 1,211,719
Rebecca L. Powell....... 17,236 383,422 750 79,197 4,688 1,057,628
</TABLE>
- --------
(1) Calculated based upon the closing sale price per share of the Common Stock
of $25.00 on the New York Stock Exchange on December 31, 1997.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
Options were granted to each of the Named Executive Officers during the
fiscal year ended December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION -------------------
NAME GRANTED(#)(1) YEAR(2) ($/SH)(3) DATE 5%($) 10%($)
---- ------------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Edward Grzedzinski...... 50,000 9.92% $13.625 3/18/2007 $428,434 $1,085,737
James M. Bahin.......... 50,000 9.92% 13.625 3/18/2007 428,434 1,085,737
Pamela A. Joseph........ 50,000 9.92% 13.625 3/18/2007 428,434 1,085,737
John M. Perry........... 75,000 14.88% 13.625 3/18/2007 642,652 1,628,600
Rebecca L. Powell....... 50,000 9.92% 13.625 3/18/2007 428,434 1,085,737
</TABLE>
- --------
(1) These options were granted pursuant to the 1996 Stock Incentive Plan "at
market" on the date of grant and first become exercisable on the first
anniversary of the grant date, with 25% of the underlying shares
12
<PAGE>
becoming exercisable at that time, an additional 25% of the option shares
becoming exercisable on each successive anniversary date, and full vesting
on the fourth anniversary date. Under the terms of the 1996 Stock Incentive
Plan, the Compensation Committee retains discretion, subject to plan
limits, to modify the terms of outstanding options and to reprice the
options.
(2) Represents the percentage of total options granted to all employees in
1997.
(3) The exercise price and tax withholding obligations, related to exercise,
may be paid by delivery of already owned shares or by offset of the
underlying shares, subject to certain conditions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH WORLDCOM, INC.
On February 28, 1996, the Company and WorldCom entered into an Agreement
(the "WorldCom Agreement"), effective as of March 1, 1996, pursuant to which
WorldCom provides long-distance and local telecommunications access, as well
as technical support, to the Company in connection with the Company's
proprietary telecommunications network. The WorldCom Agreement expires
February 28, 1999, subject to earlier termination by the Company if WorldCom
fails to meet certain agreed-upon performance obligations. The Company paid
WorldCom an aggregate of $2.7 million during the year ended December 31, 1997.
TRANSACTIONS RELATED TO THE FIRST UNION ALLIANCE
In December 1995, the Company and First Union consummated a transaction (the
"First Union Alliance"), pursuant to which First Union contributed its
transaction processing assets, including the transaction processing assets of
First Fidelity Bancorporation and its banking subsidiaries (which merged with
and into First Union effective January 1, 1996), to the Company. Concurrently,
the then current shareholders of the Company's predecessor (the "Original
Shareholders"), contributed to the Company all of the shares of capital stock
of the Company's predecessor owned by them together with all of their rights
to acquire shares of capital stock of the Company's predecessor, causing the
Company's predecessor to become a wholly-owned subsidiary of the Company. In
exchange for their respective contributions to the Company, First Union
received 9,149,209 shares of the Company's Common Stock, while the Original
Shareholders collectively received an aggregate of 2,228,911 shares of the
Company Common Stock, together with the right to acquire (through the exercise
of options and the conversion of preferred stock) an aggregate of 14,762,487
shares of Common Stock.
In connection with the First Union Alliance, the Company and First Union
entered into a Marketing Support Agreement which provides, subject to certain
exceptions, that the bank affiliates of First Union, together with and through
each of the more than 2,000 First Union branches, shall actively market the
Company's transaction processing services to merchants and shall refer
merchants that request transaction processing services exclusively to the
Company. The marketing services and assistance provided by the bank affiliates
of First Union include the distribution by each bank affiliate of First Union
of promotional and informational materials and supplies relating to the
Company's transaction processing services, and such other services and
assistance as may mutually be agreed upon by First Union and the Company. The
Marketing Support Agreement also provides that the Company will, when
feasible, assist First Union in developing new products or services relating
to transaction processing or in otherwise supporting new business ventures.
The Marketing Support Agreement also generally provides that the Company may
not, without the prior consent of First Union, enter into certain marketing
agreements with third parties generally located in specified areas where First
Union currently maintains a significant banking presence. The Marketing
Support Agreement expires January 31, 2003.
The Company and First Union also entered into a Depositary and Settlement
Agreement under which a subsidiary of First Union generally will act as the
exclusive clearing and settlement bank for transactions originating from
merchants maintaining a depository account with First Union for receipt of
payment of cleared transactions. The Depositary and Settlement Agreement
provides, however, that the Company may solicit from one or more other member
clearing banks proposals to provide clearing and settlement services to such
13
<PAGE>
merchants, although First Union will have the opportunity to match the terms
and conditions of any such third party proposal. The Depositary and Settlement
Agreement expires January 31, 2003.
Concurrently with the consummation of the First Union Alliance, the Company,
its shareholders and First Union entered into a Shareholders Agreement (the
"Shareholders Agreement") that provides, among other things, that the Company
may, at its option and subject to agreement on price and other terms, purchase
from First Union any merchant portfolios acquired by First Union through
whole-bank or other acquisitions. The Shareholders Agreement also imposes
restrictions on the Company's ability to engage in certain new business
activities or to proceed with acquisitions of entities engaged in business
activities substantially different from those currently conducted by the
Company. Accordingly, the Company may be limited in its ability to seek or
take advantage of certain business opportunities or relationships which differ
substantially from the business activities the Company currently conducts.
PROPOSAL 2--APPROVAL OF THE AMENDMENT TO THE NOVA CORPORATION 1996 EMPLOYEES
STOCK INCENTIVE PLAN
GENERAL
The shareholders are being asked to consider and approve an amendment to the
1996 Stock Incentive Plan to allow individuals employed by any subsidiary of
the Company that conducts business as a limited liability company, a limited
liability corporation or a partnership to be eligible for participation in the
1996 Stock Incentive Plan. The 1996 Stock Incentive Plan currently allows
employees of corporation subsidiaries of the Company to participate in the
plan; however, the 1996 Stock Incentive Plan does not expressly allow
employees of limited liability company, limited liability corporation or
partnership subsidiaries to participate in the plan. The Board of Directors
believes that stock ownership is an important incentive for employees to
influence the success of the Company, and that it is in the best interests of
the Company to allow individuals employed by any subsidiary or parent of the
Company, including subsidiaries that conduct business as a limited liability
company, limited liability corporation or partnership, to be eligible for
participation in the 1996 Stock Incentive Plan. The purpose of the 1996 Stock
Incentive Plan is to further the growth and development of the Company by
encouraging employees to obtain a proprietary interest in the Company by
owning or sharing in the appreciation of its stock. On February 3, 1998, the
Board of Directors approved the amendment to the 1996 Stock Incentive Plan,
subject to the approval of the amendment by the Company's shareholders at the
Annual Meeting. If approved by the shareholders, the amendment will become
effective as of February 3, 1998.
The following is a summary of the 1996 Stock Incentive Plan and the proposed
amendment thereto. A copy of the full text of the 1996 Stock Incentive Plan,
as proposed to be amended, will be furnished to any shareholder upon written
request made to the Secretary of the Company.
ELIGIBLE PARTICIPANTS; PROPOSED AMENDMENT
Under the current terms of the 1996 Stock Incentive Plan, the individuals
eligible to receive Incentive Stock Options ("ISOs"), Non-qualified Stock
Options ("NQSOs"), Stock Appreciation Rights ("SARs") and restricted stock
awards (collectively, "ESIP Stock Rights") are employees of the Company or the
Company's parent or subsidiary corporations, including such employees who are
also members of the Board of Directors of the Company or of any parent or
subsidiary corporation of the Company; provided, however, that no non-employee
director shall be eligible to receive any ESIP Stock Rights pursuant to the
1996 Stock Incentive Plan. A proposal to expand the eligibility for
participation in the 1996 Stock Incentive Plan to include individuals employed
by any subsidiary or parent of the Company that conducts business as a limited
liability company, a limited liability corporation or a partnership will be
submitted to the shareholders at the Annual Meeting. The number of eligible
participants in the 1996 Stock Incentive Plan as of December 31, 1997 was
approximately 460 persons. If the proposed amendment is approved by the
Shareholders, the number of eligible participants in the 1996 Stock Incentive
Plan will be approximately 550 persons.
14
<PAGE>
ADMINISTRATION
The 1996 Stock Incentive Plan is administered by a committee composed of two
or more disinterested outside directors of the Company (the "ESIP Committee").
The ESIP Committee has discretionary authority (i) to determine the
individuals to whom ESIP Stock Rights will be granted from among those
individuals who are eligible, as well as the terms of ESIP Stock Rights and
the number of shares of Common Stock issuable in connection with such ESIP
Stock Rights, (ii) to determine whether an Option will constitute an ISO or a
NQSO, and (iii) to interpret the provisions of, and prescribe, amend and
rescind any rules and regulations relating to, the 1996 Stock Incentive Plan.
NUMBER OF SHARES AVAILABLE
The 1996 Stock Incentive Plan currently has 2,000,000 shares of Common Stock
reserved for issuance, of which 33,054 shares have been issued pursuant to
options exercised and 961,865 shares were issuable upon exercise of options
outstanding as of December 31, 1997.
OPTION EXERCISE PRICE
The exercise price of each ISO shall not be less than 100% of the fair
market value of the Common Stock at the time of grant, except that in the case
of a grant to an employee who owns (within the meaning of Section 422(b)(6) of
the Code) 10% or more of the outstanding stock of the Company (a "10%
Shareholder"), the exercise price shall be not less than 110% of such fair
market value. The exercise price of each NQSO shall be at not less than 75% of
fair market value of the Common Stock at the time of grant.
OPTION VESTING
ISOs and NQSOs (collectively, "Options") shall vest (i.e., become
exercisable), unless otherwise agreed to or accelerated by the ESIP Committee,
25% on the first anniversary of the date of grant and 25% on each anniversary
thereafter. Options issued under the 1996 Stock Incentive Plan may not be
exercisable on or after the tenth anniversary (fifth anniversary in the case
of an ISO granted to a 10% Shareholder) of the date of grant of such Options.
RESTRICTED STOCK
Restricted stock granted under the 1996 Stock Incentive Plan will be subject
to such restrictions as the ESIP Committee shall determine and will be subject
to forfeiture by the recipient until the earlier of (i) the time such
restrictions lapse or are satisfied, or (ii) the time such shares are
forfeited. In addition to such other restrictions as may be determined by the
ESIP Committee, all restricted stock granted under the 1996 Stock Incentive
Plan shall vest (i.e., become nonforfeitable) 25% on the first anniversary of
the date of grant, and an additional 25% on each anniversary thereafter unless
accelerated by the ESIP Committee. Generally, the termination of the
recipient's employment with the Company or any subsidiary for any reason will
result in forfeiture of any restricted stock for which the restrictions have
not lapsed, although the ESIP Committee may provide otherwise.
STOCK APPRECIATION RIGHTS
A SAR entitles the holder thereof to receive, upon the surrender of the SAR
(or portion thereof), an amount payable in Common Stock, cash or a combination
of Common Stock and cash (as specified by the ESIP Committee at the time of
grant or, if not so specified, as specified by the SAR recipient at the time
of exercise) equal to the excess of the fair market value of the shares of
Common Stock subject to such SAR (or portion thereof) over the exercise price
of such shares. The exercise price of the shares of Common Stock underlying a
SAR shall be the fair market value of the Common Stock on the date the SAR is
granted, unless otherwise determined by the Committee. The Committee may grant
SARs in connection with Options granted under the 1996 Stock Incentive Plan,
or independently. SARs related to an Option are granted concurrently with the
related underlying Option. An Option related to a SAR ceases to be exercisable
to the extent of the shares with respect to which the related SAR was
exercised, and upon exercise or termination of a related Option, any related
SAR terminates to the extent of the shares with respect to which the related
Option was exercised or terminated.
15
<PAGE>
TERMINATION
The 1996 Stock Incentive Plan will terminate on the later of (a) the
complete exercise or lapse of the last outstanding Stock Right granted under
the 1996 Stock Incentive Plan, or (b) ten years following adoption of the 1996
Stock Incentive Plan, subject to the earlier termination by the Board of
Directors at any time.
CHANGE OF CONTROL
Options and restricted stock awards granted under the 1996 Stock Incentive
Plan will become fully vested upon a "change of control." For purposes of the
1996 Stock Incentive Plan, the term "change of control" is defined to mean any
one of the following events: a "change of control" is deemed to have occurred
when (i) any individual or entity, including related parties, becomes the
actual or beneficial owner of 30% or more of the Common Stock of the Company
(on a fully-diluted basis) without the prior approval of the Company's
Continuing Directors (a term defined as directors as of the date of adoption
of the 1996 Stock Incentive Plan and their duly approved successors), (ii) the
Company's Continuing Directors fail to constitute at least a majority of the
members of the Board of Directors of the Company, (iii) all or substantially
all of the assets of the Company or any "Significant Subsidiary" (as such term
is defined in Rule 1.02 of Regulation S-X promulgated by the Securities and
Exchange Commission) are sold or otherwise transferred without the approval of
the Continuing Directors, and (iv) any individual or entity has filed an
application with any regulatory authority having jurisdiction over the
ownership of the Company in connection with any transaction by such person or
entity to acquire 20% or more of the combined voting power of the Company's
then outstanding securities without the prior approval of the Company's
Continuing Directors.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief general description of the consequences under the
Code of the receipt or exercise of stock rights under the 1996 Stock Incentive
Plan:
Incentive Stock Options. An option holder has no tax consequences upon
issuance or, generally, upon exercise of an ISO. However, the excess of fair
market value of the shares transferred upon the exercise of an ISO over the
exercise price for such shares generally will constitute an item of
alternative minimum tax adjustment to the option holder for the year in which
the option is exercised, and thus may increase the federal income tax
liability of the option holder as a result of the exercise of an ISO under the
alternative minimum tax rules of the Code. An option holder will recognize
income when he sells or exchanges the shares acquired upon exercise of an ISO.
This income will be taxed at the applicable capital gains rate if the sale or
exchange occurs after the expiration of the requisite holding periods.
Generally, the requisite holding periods expire two years after the date of
grant of the ISO and one year after the date of acquisition of the Common
Stock pursuant to the exercise of the ISO.
If an option holder disposes of the Common Stock acquired pursuant to
exercise of an ISO before the expiration of the requisite holding periods, the
option holder will recognize ordinary income in an amount equal to the
difference between the option price and the lesser of (i) the fair market
value of the shares on the date of exercise and (ii) the price at which the
shares are sold. However, if the option holder is subject to suit under
Section 16(b) of the Exchange Act (the short swing profits rule), the option
holder will recognize ordinary income in an amount equal to the difference
between the option price and the lesser of (i) the fair market value of the
shares as of a later date (such later date being the earlier of (1) the
expiration of 6 months from the date of exercise, or (2) the first day on
which the disposition of such property would not subject such option holder to
suit under Section 16(b) of the Exchange Act and (ii) the price at which the
shares are sold, unless the option holder makes a timely Code Section 83(b)
election. This amount will be taxed at ordinary income rates. If the sale
price of the shares is greater than the fair market value on the date of
exercise, the difference will be recognized as gain by the option holder and
taxed at the applicable capital gains rate. If the sale price of the shares is
less than the option price, the option holder will recognize a capital loss
equal to the excess of the option price over the sale price. Such capital gain
or loss will be treated as long-term or short-term capital gain or loss
depending upon whether the holding period applicable to the long-term capital
assets is satisfied.
16
<PAGE>
For these purposes, the use of shares acquired upon exercise of an ISO to
pay the option price of another option (whether or not it is an ISO) will be
considered a disposition of the shares. If this disposition occurs before the
expiration of the requisite holding periods, the option holder will have the
same tax consequences as are described above in the preceding paragraph. If
the option holder transfers any such shares after holding them for the
requisite holding periods or transfers shares acquired pursuant to exercise of
a NQSO or on the open market, he generally will not recognize any income upon
the exercise. Whether or not the transferred shares were acquired pursuant to
an ISO and regardless of how long the option holder has held such shares, the
basis of the new shares received pursuant to the exercise will be computed in
two steps. In the first step, a number of new shares equal to the number of
older shares tendered (in payment of the option's exercise) is considered
exchanged under Code Section 1036 and the rulings thereunder; these new shares
receive the same holding period and the same basis the option holder had in
the old tendered shares, if any, plus the amount included in income from the
deemed sale of the old shares and the amount of cash or other nonstock
consideration paid for the new shares, if any. In the second step, the number
of new shares received by the option holder in excess of the old tendered
shares receives a basis of zero, and the option holder's holding period with
respect to such shares commences upon exercise.
An option holder may have tax consequences upon exercise of an ISO if the
aggregate fair market value of shares of the Common Stock subject to ISOs
which first become exercisable by an option holder in any one calendar year
exceeds $100,000. If this occurs, the excess shares will be treated as though
they are subject to a NQSO instead of an ISO. Upon exercise of an option with
respect to these shares, the option holder will have the tax consequences
described below with respect to the exercise of NQSOs.
There will be no tax consequences to the Company upon issuance or,
generally, upon exercise of an ISO. However, to the extent that an option
holder recognizes ordinary income upon exercise, as described above, the
Company generally will have a deduction in the same amount, provided the
Company satisfies applicable federal income tax reporting requirements or the
option holder actually reports such income on his or her federal income tax
return.
Nonqualified Stock Options. Neither the Company nor the option holder has
income tax consequences from the issuance of NQSOs. Generally, in the tax year
when an option holder exercises NQSOs, the option holder recognizes ordinary
income in the amount by which the fair market value of the shares at the time
of exercise exceeds the option price for such shares. However, if the option
holder is subject to suit under Section 16(b) of the Exchange Act (the short
swing profits rule), the option holder recognizes ordinary income in the
amount by which the fair market value of the shares determined as of a later
date exceeds the option price for such shares, with such later date being the
earlier of (i) the expiration of 6 months from the date of exercise, or
(ii) the first day on which the disposition of such property would not subject
such option holder to suit under Section 16(b) of the Exchange Act, unless the
option holder makes a timely Code Section 83(b) election, in which event the
fair market value of the shares will be determined on the date of exercise.
The Company generally will have a deduction in the same amount as the ordinary
income recognized by the option holder in the Company's tax year during which
the option holder recognizes ordinary income, provided the Company satisfies
applicable federal income tax reporting requirements or the option holder
actually reports such income on his or her federal income tax return.
Depending upon the period shares of Common Stock are held after exercise,
the sale or other taxable disposition of the shares acquired through the
exercise of a NQSO generally will result in a short-term or long-term capital
gain or loss equal to the difference between the amount realized on such
disposition and the fair market value of such shares when the NQSO was
exercised (or if the option holder was subject to Section 16(b) of the
Exchange Act and did not make a timely Code Section 83(b) election, the fair
market value on the delayed determination date, if applicable.
Special rules apply to an employee who exercises a NQSO by paying the
exercise price, in whole or in part, by the transfer of shares of Common Stock
to the Company. If an option holder exercises a NQSO by paying the option
price with previously acquired Common Stock, the option holder will generally
recognize
17
<PAGE>
income (relative to the new shares he is receiving) in two steps. In the first
step, a number of new shares equivalent to the number of older shares tendered
(in payment of the NQSO exercised) is considered to have been exchanged in
accordance with Code Section 1036 and the rulings thereunder, and no gain or
loss is recognized. In the second step, with respect to the number of new
shares acquired in excess of the number of old shares tendered, the option
holder will recognize income on those new shares equal to their fair market
value less any nonstock consideration tendered.
The new shares equal to the number of the older shares tendered will receive
the same basis the option holder had in the older shares and the option
holder's holding period with respect to the tendered older shares will apply
to those new shares. The excess new shares received will have a basis equal to
the amount of income recognized by the option holder by exercise, increased by
any nonstock consideration tendered. Their holding period will commence upon
the exercise of the option.
Stock Appreciation Rights. At the time a SAR is granted, a SAR holder will
recognize no taxable income, and there are no tax consequences to the Company.
The SAR holder will recognize taxable income at the time the SAR is exercised
in an amount equal to the amount of cash and the fair market value of the
shares of the Common Stock received upon such exercise. However, if the SAR
holder is subject to suit under Section 16(b) of the Exchange Act (the short
swing profits rule), the SAR holder will recognize taxable income at the time
the SAR is exercise in an amount equal to the amount of cash received upon
exercise and the fair market value (determined as of the earlier of (i) the
expiration of six months from the date of exercise, or (ii) the first day on
which the disposition of such property would not subject such SAR holder to
suit under Section 16(b) of the Exchange Act, unless the SAR holder makes a
timely Code Section 83(b) election) of the Common Stock received upon such
exercise. The income recognized on exercise of a SAR will be taxable at
ordinary income tax rates. The Company generally will be entitled to a
deduction with respect to the exercise of a SAR in an amount equal to the
amount of ordinary income recognized by the SAR holder upon such exercise,
provided the Company satisfies applicable federal income tax reporting
requirements or the SAR holder actually reports such income on his or her
federal income tax returns. Any gain or loss upon the disposition of the
Common Stock acquired pursuant to the exercise of a SAR will qualify as short-
term or long-term capital gain or loss depending on how long the SAR holder
holds the Common Stock before such disposition.
Restricted Stock. A holder of restricted stock will recognize income upon
its receipt, but generally only to the extent that it is not subject to a
substantial risk of forfeiture. If the restricted stock is subject to
restrictions that lapse in increments over a period of time, so that the
holder becomes vested in a portion of the shares as the restrictions lapse,
the holder will recognize income in any tax year only with respect to the
shares that become nonforfeitable during that year. If a holder of restricted
stock cannot sell the Common Stock without being subject to suit under Section
16(b) of the Exchange Act (the short swing profits rule), the Common Stock
will be treated as subject to a substantial risk of forfeiture. The income
recognized will be equal to the fair market value of those shares, determined
as of the time that the restrictions on those shares lapse. That income
generally will be taxable at ordinary income tax rates. The Company generally
will be entitled to a deduction in an amount equal to the amount of ordinary
income recognized by the holder of the restricted stock, provided the Company
satisfies applicable federal income tax reporting requirements or the holder
of the restricted stock actually reports such income on his or her federal
income tax return.
Alternatively, a holder of restricted stock may make a timely Code Section
83(b) election to recognize ordinary income for the taxable year in which he
receives an award of restricted stock in an amount equal to the fair market
value of all shares of restricted stock awarded to his (even if the shares are
subject to forfeiture). That income will be taxable at ordinary income tax
rates. At the time of disposition of the shares, a holder who has made such an
election will recognize gain in an amount equal to the difference between the
sales price and the fair market value of the shares at the time of the award.
Such gain will be taxable at the applicable capital gains rate. A timely Code
Section 83(b) election must be made within 30 days after the transfer of the
restricted stock to the holder. The Company will generally be entitled to a
deduction in an amount equal to the amount of ordinary income recognized by
the holder at the time of his election, provided the Company satisfies
applicable federal income tax reporting requirements or the employee actually
reports such income on his or her federal income tax returns.
18
<PAGE>
Cash dividends paid to a holder of restricted stock prior to the date the
restricted stock is no longer subject to a substantial risk of forfeiture or
is forfeited are treated as ordinary income of the holder of restricted stock
in the year received. Depending upon the period shares of Common Stock are
held after receipt by a holder of restricted stock, the sale or other taxable
disposition of such shares will result in short-term or long-term capital gain
or loss equal to the difference between the amount realized on such
disposition and the fair market value of such shares generally when the
restricted stock is no longer subject to a substantial risk of forfeiture.
Limitation on Company Deductions. Notwithstanding the preceding provisions,
no federal income tax deduction is allowed for compensation paid to a "covered
employee" in any taxable year of the Company beginning on or after January 1,
1994, to the extent that such compensation exceeds $1,000,000. For this
purpose, "covered employees" are generally the chief executive officer of the
Company and the four highest compensated officers of the Company, and the term
"compensation" generally includes amounts includable in gross income as a
result of the exercise of stock options or stock appreciation rights, or the
receipt of restricted stock. This deduction limitation does not apply to
compensation that is commission based compensation, performance based
compensation, compensation which would not be includable in an employee's
gross income, and compensation payable under a written binding contract in
existence on February 17, 1993, and not materially modified thereafter.
Regulations indicate that compensation attributable to a stock option or a
stock appreciation right will generally satisfy the limitation exception for
performance based compensation if the grant or award is made by a
"compensation committee" (a committee composed of "outside" directors), the
plan under which the option or right is granted states the maximum number of
shares with respect to which the options or rights may be granted during a
specified period to any employee, and, under the terms of the option or right,
the amount of compensation the employee could receive is based solely on an
increase in the value of the stock after the date of the grant or award.
Golden Parachute Payments. Under Code Section 280G, no federal income tax
deduction is allowed to a corporation for "excess parachute payments" made to
"disqualified individuals," and receipt of such payments subject the recipient
to a 20% excise tax under Code Section 4999. For this purpose, "disqualified
individuals" are generally officers, shareholders or highly compensated
individuals performing services for a corporation, and the term "excess
parachute payments" includes payments in the nature of compensation which are
contingent on a change in the ownership or effective control of a corporation,
to the extent that such payments (in present value) exceed three times the
payee's average annual taxable compensation form the corporation for the
previous five years. Certain payments with respect to nonpublicly traded
corporations, payments for reasonable compensation for services rendered after
a Change of Control and payments from qualified plans are generally not
included in determining "excess parachute payments."
ERISA. The Plan is not, and is not intended to be, an employee benefit plan
or tax-qualified retirement plan. The Plan is not, therefore, subject to the
Employee Retirement Income Security Act of 1974, as amended or Code Section
401(a).
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
The following table sets forth outstanding stock options granted under the
1996 Stock Incentive Plan held by the listed persons and groups as of March
31, 1998, and the value of such options, net of exercise price, calculated
based upon the closing sale price per share of the Common Stock of $30.0625 on
the New York Stock Exchange on March 31, 1998. The ESIP Committee has not yet
made any determination as to which eligible participants will be awarded
options under the 1996 Stock Incentive Plan in the future. Consequently, it is
not presently possible to determine, with respect to the persons and groups
shown in the table below, the benefits or amounts that will be received in the
future by such persons or groups pursuant to the 1996 Stock Incentive Plan.
19
<PAGE>
1996 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
TOTAL
NUMBER OF
OPTIONS DOLLAR
NAME AND POSITION OUTSTANDING VALUE ($)
----------------- ----------- ----------
<S> <C> <C>
Edward Grzedzinski.................................... 359,331 $9,756,128
James M. Bahin........................................ 365,572 9,936,383
Pamela A. Joseph...................................... 154,500 1,510,561
John M. Perry......................................... 83,990 2,113,406
Rebecca L. Powell..................................... 69,131 1,167,831
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO AMEND THE 1996 STOCK INCENTIVE PLAN.
PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP to continue as independent accountants of the
Company for the fiscal year ending December 31, 1998, and has directed that
such appointment be submitted to the shareholders of the Company for
ratification at the Annual Meeting. Ernst & Young LLP has served as
independent accountants of the Company or its predecessor since February 1991.
If the shareholders do not ratify the appointment of Ernst & Young LLP, the
Board of Directors will reconsider the appointment.
Representatives of Ernst & Young LLP will be present at the Annual Meeting.
They will have an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS OF
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1999 Annual
Meeting of Shareholders must be made in writing and received at the Company's
principal executive offices not later than December 21, 1998, to be eligible
for inclusion in the Company's proxy materials related to such meeting.
20
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Company does not intend to bring
any other matters before the Annual Meeting requiring action of the
shareholders, nor does it have any information that other matters will be
brought before the Annual Meeting. However, if any other matters requiring the
vote of the shareholders properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the proxy
in accordance with their best judgment in the interest of the Company.
By Order of the Board of Directors,
[Signature of Edward Grzedzinski appears here]
Chairman of the Board, President
and Chief Executive Officer
Atlanta, Georgia
April 20, 1998
21
<PAGE>
APPENDIX I
FIRST AMENDMENT
TO THE
NOVA CORPORATION
1996 EMPLOYEES STOCK INCENTIVE PLAN
THIS FIRST AMENDMENT to the NOVA Corporation 1996 Employees Stock Incentive
Plan (the "Plan"), made as of the day and year noted on the last page hereof,
by NOVA Corporation (the "Company"), to be effective as noted below.
W I T N E S S E T H :
WHEREAS, the Company sponsors and maintains the Plan for the benefit of its
eligible employees and their beneficiaries, and pursuant to Section 12.1
thereof, the Company has the right to amend the Plan at any time, subject to
Section 12.2 of the Plan; and
WHEREAS, the Company wishes to amend the Plan at this time, subject to
shareholder approval, for the purpose of modifying certain Plan provisions so
that individuals employed by any subsidiary or parent of the Company that
conducts business as a limited liability company, a limited liability
corporation or a partnership are eligible for participation in the Plan; and
NOW, THEREFORE, the Plan is amended to read as follows effective as of
February 3, 1998:
Section 2.6 of the Plan is amended by striking the term "Corporation" each
place it appears therein and inserting in lieu thereof the term "Company."
Section 2.10 of the Plan is amended in its entirety to read as follows:
2.10 Company shall mean NOVA Corporation, and shall also mean any parent
or subsidiary of NOVA Corporation that conducts business as a corporation,
partnership, limited liability company or limited liability corporation
unless the context clearly indicates otherwise.
Section 5.1 of the Plan is amended to read as follows:
5.1 Individuals Eligible for Grants of Stock Rights. The individuals
eligible to receive Stock Rights hereunder shall be employees of the
Company, including such employees who are also members of the Board or of
the board of directors of any parent or subsidiary corporation of the
Company; provided, no non-employee directors shall be eligible to receive
any Stock Rights pursuant to this Plan, and provided further, that only
employees of the NOVA Corporation and its "parent" or "subsidiary"
corporations within the meaning of subsections (e) and (f) of Code (S)424
shall be eligible to receive ISOs.
All other provisions of the Plan not inconsistent herewith are hereby
confirmed and ratified.
ADOPTED BY BOARD OF DIRECTORS ON FEBRUARY 3, 1998
ADOPTED BY SHAREHOLDERS AS OF ______________, 1998
22
<PAGE>
REVOCABLE PROXY
NOVA CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Carole A. Loftin and Ann T. Spalding, and
each of them, as proxies to act for and in the name of the undersigned to vote
all shares of Common Stock of NOVA Corporation (the "Company") which the
undersigned is entitled to vote at the 1998 Annual Meeting of Shareholders, to
be held at the offices of the Company, One Concourse Parkway, Suite 300,
Atlanta, Georgia 30328 on Wednesday, May 20, 1998, at 10:00 a.m., local time,
and at any and all adjournments or postponements thereof, as indicated below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
1. The election as directors of the nine nominees listed below to serve until
the 1999 Annual Meeting of Shareholders and until their successors are
elected and qualified.
[_] FOR ALL NOMINEES LISTED [_] WITHHOLD]AUTHORITY
BELOW (EXCEPT AS TO VOTE FOR ALL
INDICATED TO THE NOMINEES LISTED
CONTRARY BELOW). BELOW
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
James M. Bahin, Charles T. Cannada, Dr. James E. Carnes, U. Bertram Ellis,
Edward Grzedzinski, Dr. Henry Kressel, Joseph P. Landy, Maurice F.
Terbrueggen, Jr., Stephen E. Wall
2. The authorization and approval of the Amendment to the NOVA Corporation
1996 Employees Stock Incentive Plan as described in the Proxy Statement for
the Annual Meeting.
[_] FOR [_] AGAINST [_] ABSTAIN
3. The ratification of the appointment of Ernst & Young LLP as independent
accountants of the Company for the fiscal year ending December 31, 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business matters as properly may come before the Annual Meeting and any
adjournments thereof.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
(continued, and to be dated and signed on the reverse side).
<PAGE>
(CONTINUED FROM OTHER SIDE)
This proxy card will be voted as directed. IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF THE PROXIES "FOR" THE
ELECTION OF THE NINE NOMINEES NAMED IN PROPOSAL 1 AND "FOR" PROPOSALS 2 AND 3.
IF ANY OTHER BUSINESS MATTERS ARE PROPERLY PRESENTED AT THE ANNUAL MEETING,
THIS PROXY CARD WILL BE VOTED BY THE PROXIES IN THEIR BEST JUDGMENT. IN THE
EVENT THAT CUMULATIVE VOTING IS IN EFFECT FOR THE ELECTION OF DIRECTORS, THE
PROXIES ARE AUTHORIZED TO CUMULATE VOTES SO AS TO ELECT THE MAXIMUM NUMBER OF
NOMINEES, SUBJECT TO INSTRUCTIONS TO WITHHOLD VOTES WITH RESPECT TO ONE OR MORE
NOMINEES. At the present time, the Board of Directors knows of no other
business matters to be presented to a vote of the shareholders at the Annual
Meeting.
If the undersigned elects to withdraw this proxy card at or before the time
of the Annual Meeting or any adjournments or postponements thereof and notifies
the Secretary of the Company in writing at or prior to the vote at the Annual
Meeting of the decision of the undersigned to withdraw this proxy card, then
the power of said proxies shall be deemed terminated and of no further force
and effect. The undersigned may withdraw this proxy card in the manner
described above, or by submitting a duly executed and later dated proxy card,
or by appearing and voting in person at the Annual Meeting all shares of Common
Stock of the Company owned by the undersigned as of the record date of March
25, 1998.
The undersigned hereby revokes any previous proxies submitted with respect to
the matters covered by this proxy card.
Please mark this card on the re-
verse side and then date and sign
this proxy card below exactly as
your name appears on the
Company's stock records. When
shares are held jointly, both
holders should sign. When signing
as attorney, executor, adminis-
trator, trustee, custodian or
guardian, please give your full
title. If the holder is a corpo-
ration or partnership, the full
corporate or partnership name
should be provided and this card
executed by a duly authorized of-
ficer.
Dated: ____________________ , 1998
----------------------------------
Signature
----------------------------------
Signature, if shares held jointly
Do you plan to attend the Annual
Meeting?
[_] YES [_] NO
