<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1996
REGISTRATION NO. 333-2705
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
NATIONAL DATA CORPORATION
(Exact name of registrant as specified in its charter)
---------------------
<TABLE>
<S> <C> <C>
DELAWARE 7374 58-0977458
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of incorporation) Classification Code Number) Identification No.)
</TABLE>
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
(404) 728-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
E. MICHAEL INGRAM
GENERAL COUNSEL AND SECRETARY
NATIONAL DATA CORPORATION
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
(404) 728-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C> <C>
JOEL J. HUGHEY THOMAS G. NOULLES STEVEN K. COCHRAN
DAVID E. BROWN, JR. C.I.S. TECHNOLOGIES, INC. THOMPSON & KNIGHT
MARK F. MCELREATH ONE WARREN PLACE 1700 PACIFIC AVENUE
ALSTON & BIRD 6100 SOUTH YALE AVENUE SUITE 3300
ONE ATLANTIC CENTER SUITE 1900 DALLAS, TEXAS 75201-4693
1201 WEST PEACHTREE STREET TULSA, OKLAHOMA 74136-1903 (214) 969-1700
ATLANTA, GEORGIA 30309-3424 (918) 496-2451
(404) 881-7000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE(2)(3)
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<S> <C> <C> <C> <C>
Common Stock (including rights to purchase
shares of Series A Junior Participating
Preferred Stock)........................... 3,210,532 shares $30.12 $96,709,812 $33,349
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</TABLE>
(1) Represents the estimated maximum number of shares of Common Stock, par value
$.125 per share ("NDC Common Stock"), issuable by the Registrant upon
consummation of the merger of a subsidiary of Registrant with and into
C.I.S. Technologies, Inc. ("CIS"), assuming exercise of all rights to
purchase common stock, par value $.01 per share, of CIS ("CIS Common
Stock").
(2) Pursuant to Rules 457(f)(1) and 457(c), the registration fee was computed on
the basis of the average of the high and low prices of CIS Common Stock as
reported on The Nasdaq Stock Market's National Market on April 18, 1996
($2.625), and pursuant to Rule 457(f)(2) and 457(c) on the basis of the
aggregate book value of the Series A Participating Convertible Preferred
Stock of CIS, and based on the estimated maximum number of shares
(36,979,175) that may be exchanged for the NDC Common Stock being
registered.
(3) Previously paid.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
NATIONAL DATA CORPORATION
PART I
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION CAPTION OF LOCATION IN PROSPECTUS
----------------------------------------------------- -----------------------------------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus....... Outside front cover page; facing page
2. Inside Front and Outside Back Cover Pages of
Prospectus................................... Available Information; Incorporation of Certain
Information by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information................ Summary
4. Terms of the Transaction....................... Summary; General Information; The Merger;
Certain Differences in the Rights of NDC and
CIS Stockholders; Annex A; Annex B
5. Pro Forma Financial Information................ Summary; Pro Forma Combined Financial Data
6. Material Contacts with Company Being
Acquired..................................... Summary; The Merger
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters................................. Not applicable
8. Interests of Named Experts and Counsel......... Not applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................. Not applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants.... Available Information; Incorporation of Certain
Information by Reference; Summary; Certain
Differences in the Rights of NDC and CIS
Stockholders
11. Incorporation of Certain Information by
Reference.................................... Incorporation of Certain Information by
Reference
12. Information with Respect to S-3 or S-2
Registrants.................................. Not applicable
13. Incorporation of Certain Information by
Reference.................................... Not applicable
14. Information with Respect to Registrants Other
than S-2 or S-3 Registrants.................. Not applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies...... Not applicable
16. Information with Respect to S-2 or S-3
Companies.................................... Available Information; Incorporation of Certain
Information by Reference; Summary; Certain
Differences in the Rights of NDC and CIS
Stockholders
17. Information with Respect to Companies Other
than S-2 or S-3 Companies.................... Not applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited........... Incorporation of Certain Information by
Reference; Summary; General Information; The
Merger; Stockholder Proposals; Other Matters
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in
an Exchange Offer............................ Not Applicable
</TABLE>
<PAGE> 3
C.I.S. TECHNOLOGIES, INC.
6100 SOUTH YALE AVENUE, SUITE 1900
TULSA, OKLAHOMA 74136
May 1, 1996
Dear Stockholder:
You are cordially invited to attend the special meeting of stockholders
("Special Meeting") of C.I.S. Technologies, Inc. ("CIS") to be held at the main
office of CIS, located at 6100 South Yale Avenue, Suite 1900, Tulsa, Oklahoma,
at 10:00 a.m., local time, on May 30, 1996.
At this important meeting, you will be asked to consider and vote upon the
adoption of an Agreement and Plan of Merger, dated as of April 15, 1996 (the
"Merger Agreement"), which provides for the merger (the "Merger") of a wholly
owned subsidiary of National Data Corporation ("NDC") with and into CIS. If the
proposed Merger is consummated, CIS will become a wholly owned subsidiary of NDC
and each outstanding share of CIS capital stock will be converted into the right
to receive shares of NDC common stock on the basis set forth in the Merger
Agreement and described in the enclosed Proxy Statement/Prospectus. Adoption of
the Merger Agreement requires the affirmative vote of (i) the holders of a
majority of the outstanding shares of CIS common stock entitled to vote at the
Special Meeting and (ii) the holders of two-thirds of the outstanding shares of
CIS series A participating convertible preferred stock entitled to vote at the
Special Meeting.
Enclosed are the: (i) Notice of Special Meeting, (ii) Proxy
Statement/Prospectus, (iii) Proxy for the Special Meeting, and (iv) CIS's 1995
Annual Report to Stockholders. The Proxy Statement/Prospectus describes in more
detail the Merger Agreement and the Merger, including a description of the
conditions to consummation of the Merger and the effects of the Merger on the
rights of CIS stockholders, and, together with the 1995 Annual Report to
Stockholders, contains financial and other information about CIS. Please give
this information your careful attention.
The Board of Directors has unanimously approved and adopted the Merger
Agreement and consummation of the transactions contemplated therein, and
unanimously recommends that you vote FOR adoption of the Merger Agreement.
In view of the importance of the action to be taken, we urge you to
complete, sign, and date the enclosed Proxy and to return it promptly in the
enclosed envelope, whether or not you plan to attend the Special Meeting (if you
attend the Special Meeting, you may vote in person, even if you previously
returned your Proxy).
We look forward to seeing you at the Special Meeting.
Sincerely,
/s/ Philip D. Kurtz
Philip D. Kurtz
Chairman of the Board
<PAGE> 4
C.I.S. TECHNOLOGIES, INC.
6100 SOUTH YALE AVENUE, SUITE 1900
TULSA, OKLAHOMA 74136
---------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 A.M. ON MAY 30, 1996
May 1, 1996
To the Stockholders of C.I.S. Technologies, Inc.:
NOTICE IS HEREBY GIVEN that the special meeting of stockholders ("Special
Meeting") of C.I.S. Technologies, Inc. ("CIS") will be held at the main office
of CIS, located at 6100 South Yale Avenue, Suite 1900, Tulsa, Oklahoma, at 10:00
a.m., local time, on May 30, 1996, for the following purposes:
1. The Merger. To consider and vote upon a proposal to adopt the
Agreement and Plan of Merger, dated as of April 15, 1996 (the "Merger
Agreement"), by and among CIS, National Data Corporation ("NDC") and NDC
Merger Corp. ("Sub"), pursuant to which, among other matters, Sub will
merge with and into CIS (the "Merger"), with CIS becoming a wholly owned
subsidiary of NDC and each share of CIS capital stock being converted into
the right to receive shares of common stock of NDC, all as more fully
described in the accompanying Proxy Statement/Prospectus. A copy of the
Merger Agreement is set forth in Annex A to the accompanying Proxy
Statement/Prospectus and is hereby incorporated by reference herein.
2. Other Business. To transact such other business as may properly
come before the Special Meeting or any adjournments or postponements
thereof.
Only stockholders of record at the close of business on April 25, 1996, are
entitled to receive notice of and to vote at the Special Meeting or any
adjournments or postponements thereof. Adoption of the Merger Agreement requires
the affirmative vote of (i) the holders of a majority of the outstanding shares
of CIS common stock entitled to vote at the Special Meeting and (ii) the holders
of two-thirds of the outstanding shares of CIS series A participating
convertible preferred stock entitled to vote at the Special Meeting.
HOLDERS OF CIS SERIES A PARTICIPATING CONVERTIBLE PREFERRED STOCK WHO GIVE
WRITTEN DEMAND FOR APPRAISAL OF THEIR SHARES BEFORE TAKING OF THE VOTE ON THE
MERGER AGREEMENT, DO NOT VOTE IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT, AND
COMPLY WITH THE FURTHER PROVISIONS OF APPLICABLE DELAWARE LAW WILL BE ENTITLED
TO RECEIVE, IF THE MERGER IS CONSUMMATED, THE "FAIR VALUE" (AS DEFINED BY
DELAWARE LAW) OF THEIR CIS SERIES A PARTICIPATING PREFERRED STOCK IN CASH. A
VOTE AGAINST ADOPTION OF THE MERGER AGREEMENT WILL NOT CONSTITUTE A DEMAND FOR
APPRAISAL RIGHTS, NOR WILL A FAILURE TO VOTE AGAINST ADOPTION OF THE MERGER
AGREEMENT CONSTITUTE A WAIVER OF APPRAISAL RIGHTS. A COPY OF THE APPLICABLE
DELAWARE STATUTORY PROVISIONS IS SET FORTH IN ANNEX C TO THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND A SUMMARY OF SUCH PROVISIONS IS SET FORTH UNDER "THE
MERGER -- APPRAISAL RIGHTS."
THE BOARD OF DIRECTORS OF CIS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas G. Noulles
Secretary
<PAGE> 5
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 30, 1996
PROSPECTUS
NATIONAL DATA CORPORATION
COMMON STOCK
(PAR VALUE $.125 PER SHARE)
---------------------
PROXY STATEMENT
C.I.S. TECHNOLOGIES, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 1996
---------------------
This Proxy Statement/Prospectus is being furnished to holders of common
stock, $.01 par value ("CIS Common Stock"), and series A participating
convertible preferred stock, $.01 par value ("CIS Series A Preferred Stock"), of
C.I.S. Technologies, Inc., a Delaware corporation ("CIS"), in connection with
the solicitation of proxies by the CIS Board of Directors for use at the Special
Meeting of Stockholders to be held at 10:00 a.m., local time, on May 30, 1996,
at the main office of CIS, located at 6100 South Yale Avenue, Suite 1900, Tulsa,
Oklahoma, and at any adjournments or postponements thereof (the "Special
Meeting").
The purpose of the Special Meeting is to consider and vote upon, among
other things, a proposal to adopt an Agreement and Plan of Merger, dated as of
April 15, 1996 (the "Merger Agreement"), by and among CIS, National Data
Corporation ("NDC"), and NDC Merger Corp. ("Sub"), which provides for, among
other things, the merger of Sub with and into CIS (the "Merger"), with CIS
becoming a wholly owned subsidiary of NDC. See "SUMMARY," "THE MERGER" and ANNEX
A to this Proxy Statement/Prospectus.
Upon consummation of the Merger: (i) each outstanding share of CIS Common
Stock (excluding shares held by CIS or any of its subsidiaries or by NDC or any
of its subsidiaries) shall cease to be outstanding and shall be converted into
and exchanged for the right to receive .08682 shares of common stock, $.125 par
value (together with the NDC Rights (as hereinafter defined) attached thereto,
the "NDC Common Stock") of NDC (the "Common Stock Exchange Ratio"), and (ii)
each outstanding share of CIS Series A Preferred Stock (excluding shares held by
CIS or any of its subsidiaries or by NDC or any of its subsidiaries and
excluding shares of CIS Series A Preferred Stock as to which dissenters' rights
are perfected) shall cease to be outstanding and shall be converted into and
exchanged for the right to receive .08682 shares of NDC Common Stock (the
"Preferred Stock Exchange Ratio"). See "THE MERGER -- Exchange Ratios". Pursuant
to the NDC Rights Agreement (as hereinafter defined), each share of NDC Common
Stock issued in connection with the Merger upon conversion of CIS Common Stock
or CIS Series A Preferred Stock (together, the "CIS Capital Stock") shall be
accompanied by an NDC Right.
This Proxy Statement/Prospectus also constitutes a prospectus of NDC
relating to the approximately 2,827,968 shares of NDC Common Stock issuable to
CIS stockholders in the Merger. See "CERTAIN DIFFERENCES IN THE RIGHTS OF NDC
AND CIS STOCKHOLDERS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is May 1, 1996, and it is first
being mailed or otherwise delivered to CIS stockholders on or about May 1, 1996.
<PAGE> 6
AVAILABLE INFORMATION
NDC and CIS are each subject to the reporting and informational
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (the "Exchange Act"), and, in accordance therewith,
file reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy and information
statements, and other information filed by NDC and CIS with the Commission may
be inspected and copied at the principal office of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should be
available at the Commission's Regional Offices at 7 World Trade Center, New
York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, reports,
proxy statements and other information concerning NDC may be inspected at the
offices of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New
York, New York 10005.
This Proxy Statement/Prospectus constitutes a part of a Registration
Statement on Form S-4 (together with any amendments thereto, the "Registration
Statement"), which has been filed by NDC with the Commission under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"). This Proxy Statement/Prospectus omits certain
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement and to the exhibits thereto for further
information with respect to NDC and CIS and the securities to which this Proxy
Statement/Prospectus relates. Statements contained in this Proxy
Statement/Prospectus concerning the provisions of certain documents filed as
exhibits to the Registration Statement are necessarily brief descriptions
thereof, and are not necessarily complete, and each such statement is qualified
in its entirety by reference to the full text of such document.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
WITHOUT CHARGE UPON REQUEST FROM: NATIONAL DATA CORPORATION, NATIONAL DATA
PLAZA, ATLANTA, GEORGIA 30329-2010, ATTN: CORPORATE SECRETARY, (404) 728-2855,
AS TO NDC DOCUMENTS; AND FROM C.I.S. TECHNOLOGIES, INC., 6100 SOUTH YALE AVENUE,
SUITE 1900, TULSA, OKLAHOMA 74136, ATTN: CORPORATE SECRETARY, (918) 496-2451, AS
TO CIS DOCUMENTS. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUESTS SHOULD BE MADE AT LEAST FIVE BUSINESS DAYS PRIOR TO THE SPECIAL
MEETING.
All information contained herein with respect to NDC and its subsidiaries
has been supplied by NDC, and all information with respect to CIS and its
subsidiaries has been supplied by CIS.
No person has been authorized to give any information or to make any
representation other than those contained in this Proxy Statement/Prospectus
and, if given or made, such information or representation should not be relied
upon as having been authorized by NDC or CIS. Neither the delivery of this Proxy
Statement/Prospectus nor any distribution of the securities to which this Proxy
Statement/Prospectus relates shall, under any circumstances, create any
implication that there has been no change in the affairs of NDC, CIS, or any of
their respective subsidiaries since the date hereof or that the information
contained herein is correct as of any time subsequent to its date. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, any securities other than the securities to which it
relates or an offer to sell or a solicitation of an offer to purchase the
securities offered by this Proxy Statement/Prospectus in any jurisdiction in
which such an offer or solicitation is not lawful.
2
<PAGE> 7
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by NDC and CIS with the Commission (NDC File
No. 0-3966; CIS File No. 0-15457) under Section 13(a) or 15(d) of the Exchange
Act are hereby incorporated by reference in this Proxy Statement/Prospectus:
NDC documents:
(i) NDC's Annual Report on Form 10-K for the year ended May 31, 1995;
(ii) NDC's Quarterly Reports on Form 10-Q for the quarters ended
August 31, 1995, November 30, 1995, and February 29, 1996;
(iii) NDC's Current Reports on Form 8-K dated June 12, 1995 and April
1, 1996; and
(iv) the description of NDC Common Stock and NDC Rights set forth in
NDC's Registration Statements filed pursuant to Section 12 of the Exchange
Act, and any amendment or report filed for the purpose of updating any such
description.
CIS documents:
(i) CIS's Annual Report on Form 10-K for the year ended December 31,
1995;
(ii) CIS's 1995 Annual Report to Stockholders; and
(iii) CIS's Current Reports on Form 8-K dated April 15, 1996 and April
26, 1996.
All documents filed by NDC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Proxy Statement/Prospectus
and prior to the date of the Special Meeting are hereby incorporated by
reference in this Proxy Statement/Prospectus and shall be deemed a part hereof
from the date of filing of such document.
Any statement contained herein, in any amendment or supplement hereto or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of the Registration
Statement and this Proxy Statement/Prospectus to the extent that a statement
contained herein, in any amendment or supplement hereto or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement, this Proxy
Statement/Prospectus, or any amendment or supplement hereto.
Accompanying this Proxy Statement/Prospectus is a copy of CIS's 1995 Annual
Report to Stockholders, which includes CIS's financial statements for the year
ended December 31, 1995. The information contained in this Proxy
Statement/Prospectus should be read in conjunction with the foregoing materials.
3
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
AVAILABLE INFORMATION................................................................ 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................... 3
SUMMARY.............................................................................. 5
Parties to the Merger.............................................................. 5
Special Meeting; Record Date....................................................... 6
The Merger......................................................................... 6
Market Prices and Dividends........................................................ 11
Comparison of Certain Unaudited Per Share Data..................................... 12
Recent Financial Developments...................................................... 14
Selected Financial Data............................................................ 14
GENERAL INFORMATION.................................................................. 18
Special Meeting.................................................................... 18
Record Date, Solicitation, and Revocability of Proxies............................. 18
Votes Required..................................................................... 19
Recommendation of CIS's Board of Directors......................................... 19
THE MERGER........................................................................... 20
General............................................................................ 20
Background of the Merger........................................................... 20
Recommendation of the Board of Directors of CIS and Reasons for the Merger......... 23
Opinion of Financial Advisor for CIS............................................... 24
Exchange Ratios.................................................................... 30
Fractional Shares.................................................................. 30
Treatment of Stock Options, Warrants and Convertible Notes......................... 30
Effective Time..................................................................... 31
Distribution of NDC Certificates................................................... 32
Certain Federal Income Tax Consequences............................................ 32
Management and Operations After the Merger......................................... 33
Interests of Certain Persons in the Merger......................................... 34
Conditions to Consummation......................................................... 35
Regulatory Approvals............................................................... 36
Amendment, Waiver, and Termination................................................. 36
Conduct of Business Pending the Merger............................................. 37
Expenses and Fees.................................................................. 38
Accounting Treatment............................................................... 39
Voting Agreement................................................................... 39
Appraisal Rights................................................................... 40
Resales of NDC Common Stock........................................................ 42
PRO FORMA CONDENSED COMBINED FINANCIAL DATA.......................................... 43
CERTAIN DIFFERENCES IN THE RIGHTS OF NDC AND CIS STOCKHOLDERS........................ 46
Authorized Capital Stock........................................................... 46
Directors and Classes of Directors................................................. 48
Stockholder Meetings............................................................... 49
Anti-Takeover Provisions........................................................... 49
Stockholder Rights Plan............................................................ 50
EXPERTS.............................................................................. 51
LEGAL MATTERS........................................................................ 51
CIS STOCKHOLDER PROPOSALS............................................................ 51
OTHER MATTERS........................................................................ 52
ANNEXES:
ANNEX A -- AGREEMENT AND PLAN OF MERGER, DATED AS OF APRIL 15, 1996, BY AND AMONG
NDC, SUB AND CIS........................................................ A-1
ANNEX B -- OPINION OF DEAN WITTER REYNOLDS INC..................................... B-1
ANNEX C -- CERTAIN PROVISIONS OF DELAWARE LAW...................................... C-1
</TABLE>
4
<PAGE> 9
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. This summary is not intended to be a complete
description of the matters covered in this Proxy Statement/Prospectus and is
subject to and qualified in its entirety by reference to the more detailed
information contained elsewhere in this Proxy Statement/Prospectus, including
the Annexes hereto, and in the documents incorporated by reference in this Proxy
Statement/Prospectus. The Merger Agreement is set forth in ANNEX A to this Proxy
Statement/Prospectus and reference is made thereto for a complete description of
the terms of the Merger. Stockholders are urged to read carefully the entire
Proxy Statement/Prospectus, including the Annexes. As used in this Proxy
Statement/Prospectus, the terms "NDC" and "CIS" refer to such corporations,
respectively, and where the context requires, such corporations and their
respective subsidiaries.
PARTIES TO THE MERGER
NDC. NDC is a leading provider of high volume transaction processing
services and application systems to the health care and payment systems markets.
NDC serves a diverse customer base comprising more than 60,000 health care
providers, 350,000 merchant locations, 35,000 corporations and 200 banking
institutions, as well as federal and state government agencies. NDC markets its
services directly to merchants and health care providers and indirectly through
business alliances with a wide range of banks, insurance companies and
distributors.
NDC provides electronic claims processing and adjudication services,
practice management systems and clinical data base information for pharmacies,
dentists, physicians, hospitals, health maintenance organizations, clinics and
nursing homes, as well as other health care providers. Management believes that
NDC is the largest independent processor of real-time health care transactions.
NDC's integrated payment systems business offers transaction processing
solutions to financial institutions, merchants, health care providers,
universities and colleges and government agencies. NDC offers merchant credit
and debit card processing, including authorization, data capture and product and
customer support functions, check verification and guarantee and other services
directly to merchants and, through its newly formed subsidiary, Global Payment
Systems LLC ("GPS"), indirectly through banking institutions.
On April 1, 1996, NDC organized GPS, a Georgia limited liability company,
and contributed certain of NDC's assets to GPS, including NDC's payment services
business, payment systems point-of-sale/back-office support units, and cash
management and electronic data interchange businesses. Contemporaneously with
the organization of GPS, GPS acquired the MasterCard Automated Point-of-Sale
Program business ("MAPP") from MasterCard International Incorporated
("MasterCard") for $110 million in cash plus the granting of a 7.5% membership
interest in GPS to MasterCard (the "GPS Transaction"). With the combination of
the MAPP business and the NDC assets to form GPS, NDC has created one of the
largest independent processors of credit and debit card transactions focused on
the provision of services through financial institutions and has broadened the
range of its services and expanded its customer base in this business.
For the fiscal year ended May 31, 1995, and for the nine months ended
February 29, 1996, NDC reported total revenues of $242.0 million and $198.6
million, respectively, and net income of $15.4 million and $17.1 million,
respectively. As of February 29, 1996, NDC had total consolidated assets of
$266.8 million and consolidated stockholders' equity of $202.7 million.
NDC is continually evaluating acquisition opportunities and, as a result,
frequently engages in acquisition discussions, conducts due diligence activities
in connection with possible acquisitions, and, where appropriate, engages in
acquisition negotiations. Future acquisitions involving cash, debt or equity
securities can be expected. Such acquisitions typically involve the payment of a
premium over book and market values, and, therefore, some dilution of NDC's book
value and/or net income per common share may occur in connection with any such
acquisitions. See "Pro Forma Combined Financial Data."
NDC's principal executive offices are located at National Data Plaza,
Atlanta, Georgia 30329-2010, and its telephone number is (404)728-2000. For
additional information regarding NDC and its business, see
5
<PAGE> 10
"Available Information," "Incorporation of Certain Information by Reference,"
and "-- Selected Financial Data."
CIS. CIS develops and markets computer-based health care reimbursement
management programs and offers professional consulting and reimbursement
assistance services to over 900 clients (primarily acute-care 100+ bed hospitals
and physician practices) across the country. CIS's services are designed to
improve the cash flows and reduce the administrative costs of its health care
clients.
For the year ended December 31, 1995, CIS reported total revenues of $43.2
million and net income of $2.7 million. As of December 31, 1995, CIS had total
consolidated assets of $62.4 million and consolidated stockholders' equity of
$43.4 million.
CIS's principal executive offices are located at 6100 South Yale Avenue,
Suite 1900, Tulsa, Oklahoma 74136, and its telephone number is (918) 496-2451.
For additional information regarding CIS and its business, see "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE," "-- Recent
Financial Data," and "-- Selected Financial Data."
SPECIAL MEETING; RECORD DATE
The Special Meeting will be held at 10:00 a.m., local time on May 30, 1996,
at the main office of CIS, located at 6100 South Yale Avenue, Suite 1900, Tulsa,
Oklahoma. At the Special Meeting, CIS's stockholders will consider and vote upon
adoption of the Merger Agreement and transact such other business as may
properly come before the Special Meeting. CIS's Board of Directors fixed the
close of business on April 25, 1996, as the record date for determining the CIS
stockholders entitled to receive notice of and to vote at the Special Meeting
(the "Record Date"). As of the Record Date, there were 30,188,589 shares of CIS
Common Stock and 2,384,182 shares of CIS Series A Preferred Stock issued and
outstanding and entitled to be voted at the Special Meeting. For additional
information with respect to the Special Meeting, including the Record Date and
votes required for adoption, see "GENERAL INFORMATION."
THE MERGER
General. The Merger Agreement provides that Sub shall merge with and into
CIS, which shall be the surviving corporation of the Merger and, as a result
thereof, become a wholly owned subsidiary of NDC. At the time the Merger becomes
effective, each outstanding share of CIS Capital Stock (excluding shares held by
CIS or any of its subsidiaries or by NDC or any of its subsidiaries and
excluding shares of CIS Series A Preferred Stock as to which dissenters' rights
are perfected) shall cease to be outstanding and shall be converted into and
exchanged for the right to receive shares of NDC Common Stock. Pursuant to the
NDC Rights Agreement (as hereinafter defined), each share of NDC Common Stock
issued in connection with the Merger upon conversion of CIS Capital Stock shall
be accompanied by an NDC Right. If the Merger Agreement is adopted at the
Special Meeting, all required governmental and other consents and approvals are
obtained, and all of the other conditions to the obligations of the parties to
consummate the Merger are either satisfied or waived (as permitted), the Merger
will be consummated. A copy of the Merger Agreement is set forth in ANNEX A to
this Proxy Statement/Prospectus. See "THE MERGER."
Exchange Ratio. The Merger Agreement provides that, at the effective time
of the Merger: (i) each outstanding share of CIS Common Stock (excluding shares
held by CIS or any of its subsidiaries or by NDC or any of its subsidiaries)
shall cease to be outstanding and shall be converted into and exchanged for the
right to receive .08682 shares of NDC Common Stock (the "Common Stock Exchange
Ratio") and (ii) each outstanding share of CIS Series A Preferred Stock
(excluding shares held by CIS or any of its subsidiaries or by NDC or any of its
subsidiaries and excluding shares of CIS Series A Preferred Stock as to which
dissenters' rights are perfected) shall cease to be outstanding and shall be
converted into and exchanged for the right to receive .08682 shares of NDC
Common Stock (the number of shares of CIS Common Stock into which such CIS
Series A Preferred Stock, if fully convertible, would be convertible as of the
Effective Time multiplied by the Common Stock Exchange Ratio) (the "Preferred
Stock Exchange Ratio," and together with the Common Stock Exchange Ratio, the
"Exchange Ratios"). Based on the 30,188,589 shares of CIS Common
6
<PAGE> 11
Stock and the 2,384,182 shares of CIS Series A Preferred Stock outstanding on
the Record Date, NDC would issue a total of 2,827,968 shares of NDC Common Stock
in the Merger.
Votes Required. Adoption of the Merger Agreement and consummation of the
transactions contemplated therein requires the affirmative vote of the holders
of a majority of the outstanding shares of CIS Common Stock entitled to vote at
the Special Meeting and of the holders of two-thirds of the outstanding shares
of CIS Series A Preferred Stock entitled to vote at the Special Meeting. As of
the Record Date, CIS's directors and executive officers, and their affiliates,
held approximately 10.8% of the outstanding shares of CIS Common Stock entitled
to vote at the Special Meeting and 100% of the outstanding shares of CIS Series
A Preferred Stock entitled to vote at the Special Meeting. Pursuant to the
Voting Agreement (as defined herein), NDC and certain of its directors and
executive officers have the power to vote 100% of the outstanding shares of CIS
Series A Preferred Stock in favor of adoption of the Merger Agreement. See "THE
MERGER -- Voting Agreement." Pursuant to the Voting Agreement, the sole holder
of the outstanding shares of CIS Series A Preferred Stock has agreed to vote all
of the shares in favor of adoption of the Merger Agreement and against certain
other potential transactions. See "GENERAL INFORMATION -- Votes Required." As of
the Record Date, NDC, its directors and executive officers, and their
affiliates, held no shares of CIS Common Stock.
Recommendation of the CIS Board of Directors. The Board of Directors of
CIS believes that the Merger is in the best interests of CIS and its
stockholders and has unanimously approved the Merger Agreement and the
consummation of the transactions contemplated therein. The CIS Board of
Directors unanimously recommends that the stockholders vote FOR adoption of the
Merger Agreement. In deciding to approve the Merger Agreement and the
consummation of the transactions contemplated therein, CIS's Board of Directors
considered a number of factors, including the recommendation of the Special
Committee (as hereinafter defined), the terms of the Merger, the compatibility
of the operations of CIS and NDC, and the financial condition, results of
operations, and future prospects of CIS and NDC. See "THE MERGER -- Reasons for
the Merger."
Opinion of Financial Advisor. CIS has received written opinions of Dean
Witter Reynolds Inc. ("Dean Witter"), dated April 11, 1996, and the date of this
Proxy Statement/Prospectus, respectively, that, as of such dates, and based upon
and subject to matters stated in its opinions, the Common Stock Exchange Ratio
and the Preferred Stock Exchange Ratio to be used in the Merger are fair, from a
financial point of view, to the holders of the CIS Common Stock and the CIS
Series A Preferred Stock, respectively. The full text of Dean Witter's written
opinion dated as of the date of this Proxy Statement/Prospectus, which describes
the procedures followed, assumptions made, limitations on the review taken, and
other matters in connection with rendering such opinion, is set forth in ANNEX B
to this Proxy Statement/Prospectus and should be read in its entirety by CIS
stockholders. For additional information regarding the opinions of Dean Witter
and a discussion of the qualifications of Dean Witter, the method of its
selection, and certain relationships between Dean Witter and CIS, see "THE
MERGER -- Opinion of Financial Advisor."
Effective Time. If the Merger is adopted by the requisite votes of the CIS
stockholders, all required governmental and other consents and approvals are
obtained, and the other conditions to the obligations of the parties to
consummate the Merger are either satisfied or waived (as permitted), the Merger
will be consummated and will become effective on the date and at the time that a
Certificate of Merger, reflecting the Merger, becomes effective with the
Secretary of State of the State of Delaware (the "Effective Time"). Assuming
satisfaction of all conditions to consummation, the Merger is expected to become
effective during the second quarter of 1996. NDC and CIS each has the right,
acting unilaterally, to terminate the Merger Agreement should the Merger not be
consummated by September 30, 1996. See "THE MERGER -- Effective Time" and
"-- Amendment, Waiver, and Termination."
Delivery of NDC Certificates. Promptly after the Effective Time, each
record holder of shares of CIS Capital Stock outstanding at the Effective Time
will be mailed a transmittal letter (with instructions) to use in effecting the
surrender and cancellation of CIS Capital Stock certificates in exchange for NDC
Common Stock. NDC shall not be obligated to deliver the consideration to which
any former holder of CIS Capital Stock is entitled until such holder surrenders
such holder's certificate or certificates representing such holder's
7
<PAGE> 12
shares of CIS Capital Stock for exchange. The certificate or certificates so
surrendered shall be duly endorsed as the exchange agent may require. See "THE
MERGER -- Distribution of NDC Certificates."
Treatment of Stock Options, Warrants and Convertible Notes. Upon
consummation of the Merger: (i) all rights with respect to CIS Common Stock
pursuant to stock options ("CIS Options") granted by CIS under its existing
stock option plans (the "CIS Stock Plans"), which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into and become
rights with respect to NDC Common Stock, and NDC shall assume each CIS Option,
in accordance with the terms of the CIS Stock Plan and stock option agreement by
which it is evidenced, after giving effect to the Common Stock Exchange Ratio;
(ii) all rights with respect to CIS Common Stock or CIS Series A Preferred Stock
pursuant to warrants ("CIS Warrants") granted by CIS under various warrant
agreements (the "CIS Warrant Agreements"), which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into and become
rights with respect to NDC Common Stock, and NDC shall assume each CIS Warrant,
in accordance with the terms of the CIS Warrant Agreement, after giving effect
to the Common Stock Exchange Ratio and the Preferred Stock Exchange Ratio,
respectively; and (iii) all rights with respect to CIS Common Stock pursuant to
convertible notes ("CIS Conversion Rights") granted by CIS under its existing
convertible secured promissory notes (the "CIS Convertible Notes"), which are
outstanding at the Effective Time, shall be converted into and become rights
with respect to NDC Common Stock, and NDC shall assume the CIS Convertible
Notes, in accordance with the terms thereof, after giving effect to the Common
Stock Exchange Ratio. See "THE MERGER -- Treatment of Stock Options, Warrants
and Convertible Notes."
Certain Federal Income Tax Consequences. The Merger is intended to be a
tax-free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). Generally, no gain or loss should
be recognized for federal income tax purposes by CIS stockholders as a result of
the Merger, except that gain or loss will be recognized with respect to cash
received in lieu of fractional shares or as a result of the exercise of
appraisal rights. A condition to consummation of the Merger is the receipt by
each of NDC and CIS of an opinion of Alston & Bird, counsel to NDC, as to the
qualification of the Merger as a tax-free reorganization and certain other
federal income tax consequences of the Merger and related transactions. Tax
consequences, however, of the conversion of certain warrants and convertible
notes of CIS into equivalent instruments of NDC are not addressed by the
tax-free reorganization provisions of the Code. Holders of such instruments
should consult their tax advisors as to possible tax consequences of such
conversion. See "THE MERGER -- Certain Federal Income Tax Consequences."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER AND OTHER FACTORS, AND BECAUSE
BASED ON EXISTING AUTHORITIES, THE EXCHANGE OF WARRANTS MAY NOT BE TREATED THE
SAME AS THE EXCHANGE OF STOCK BY THE STOCKHOLDERS, EACH HOLDER OF CIS CAPITAL
STOCK AND EACH HOLDER OF CIS WARRANTS IS URGED TO CONSULT SUCH HOLDER'S OWN TAX
ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE
MERGER (INCLUDING THE APPLICATION AND EFFECT OF FOREIGN, STATE AND LOCAL INCOME
AND OTHER TAX LAWS).
Interests of Certain Persons in the Merger. Certain members of CIS's
management and the Board of Directors of CIS have interests in the Merger in
addition to their interests as stockholders of CIS generally. These include,
among other things, provisions in the Merger Agreement relating to
indemnification and eligibility for certain NDC employee benefits and provisions
in change in control agreements between CIS and certain of its executive
officers. As of April 15, 1996, the directors and officers of CIS did not
beneficially own any shares of NDC Common Stock. See "THE MERGER -- Management
and Operations After the Merger" and "-- Interests of Certain Persons in the
Merger."
Conditions to Consummation. Consummation of the Merger is subject to
various conditions, including among other matters: (i) adoption of the Merger
Agreement by the requisite votes of CIS stockholders; (ii) receipt of all
governmental and other consents and approvals necessary to permit consummation
of the Merger, including expiration or termination of the statutory waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR
Act"); (iii) receipt by NDC of letters from NDC's independent
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<PAGE> 13
auditors to the effect that the Merger will qualify for pooling-of-interests
accounting treatment and letters from CIS's independent auditors to the effect
that such auditors are not aware of any matters relating to CIS which would
preclude the Merger from qualifying for pooling-of-interests accounting
treatment; and (iv) satisfaction of certain other usual conditions, including
the receipt of the tax opinion discussed above. The foregoing are the material
conditions to the consummation of the Merger. See "THE MERGER -- Conditions to
Consummation" and "-- Amendment, Waiver, and Termination."
Regulatory Approvals. The consummation of the Merger is subject to the
expiration or termination of the statutory waiting period under the HSR Act. See
"THE MERGER -- Regulatory Approvals."
Conduct of Business Pending the Merger. CIS has agreed in the Merger
Agreement to, among other things, operate its business only in the ordinary
course and to take no action that would adversely affect its ability to perform
its covenants and agreements under the Merger Agreement. In addition, CIS has
agreed not to take certain actions relating to the operation of CIS pending
consummation of the Merger without the prior written consent of NDC, except as
otherwise permitted by the Merger Agreement, including, among other things: (i)
becoming responsible for any obligation for borrowed money in excess of an
aggregate of $100,000, except in the ordinary course of business in accordance
with past practices; (ii) repurchasing, redeeming or otherwise acquiring any
shares of CIS capital stock; (iii) subject to certain exceptions, issuing any
additional shares of its capital stock or giving any person the right to acquire
any such shares, or issuing any long-term debt; (iv) subject to certain
exceptions, granting any increase in compensation or benefits, or paying any
bonus, to any of its directors, officers or employees; or (v) modifying or
adopting any employee benefit plans, including any employment contract. See "THE
MERGER -- Conduct of Business Pending the Merger."
Termination. The Merger Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time by mutual consent of the
Boards of Directors of CIS and NDC. In addition, the Merger Agreement may be
terminated, and the Merger abandoned, prior to the Effective Time by either NDC
or CIS if (i) the other party breaches and does not timely cure any
representation, warranty, covenant or other agreement contained in the Merger
Agreement and such breach, individually or in the aggregate, has a Material
Adverse Effect, as defined in the Merger Agreement, on the non-breaching party,
(ii) any consent or approval of certain regulatory authorities is denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, (iii) the CIS
stockholders fail to adopt the Merger Agreement and the transactions
contemplated thereby at the Special Meeting, (iv) any of the conditions
precedent to the obligations of the terminating party to consummate the Merger
cannot be satisfied or fulfilled by September 30, 1996, or (v) the Merger has
not been consummated by September 30, 1996.
In addition, NDC may unilaterally terminate the Merger Agreement in the
event that: (i) without NDC's prior consent, CIS shall have authorized,
recommended, publicly proposed or publicly announced an intention to authorize,
recommend or propose, or entered into an agreement with any person (other than
NDC or an NDC subsidiary) to effect a transaction involving: (x) a merger,
consolidation or similar transaction involving CIS or any CIS subsidiary, (y)
the disposition, by sale, lease, exchange or otherwise, of 25% or more of the
consolidated assets of CIS or any CIS subsidiary, or (z) the issuance, sale or
other disposition (including by way of merger, consolidation, share exchange or
any similar transaction) of securities representing 25% or more of the voting
power of CIS or any CIS subsidiary (an "Acquisition Transaction"); (ii) any
person or group (other than NDC, any NDC subsidiary, or a group of which NDC or
an NDC subsidiary is a member) shall have acquired beneficial ownership of or
the right to acquire beneficial ownership of 25% or more of the then-outstanding
shares of CIS Common Stock; (iii) any person (other than NDC or an NDC
subsidiary) shall have commenced, or shall have filed a registration statement
with respect to, a tender offer or exchange offer to purchase any shares of CIS
Common Stock such that, upon consummation of such offer, such person would own
or control 25% or more of the then-outstanding shares of CIS Common Stock (a
"Tender Offer" and an "Exchange Offer," respectively); or (iv) the holders of
CIS Common Stock shall not have approved the Merger Agreement or the CIS Board
of Directors shall have withdrawn or modified in a manner adverse to NDC the
recommendation of CIS's Board of Directors with respect to the Merger Agreement,
in each case after any person (other than NDC or an NDC subsidiary) shall have:
(x) made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction,
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<PAGE> 14
(y) commenced a Tender Offer or filed a registration statement with respect to
an Exchange Offer, or (z) filed an application (or given a notice) seeking the
consent to an Acquisition Transaction from any federal or state governmental or
regulatory authority or agency. Furthermore, CIS may unilaterally terminate the
Merger Agreement in the event that CIS has entered into negotiations with a
third party as a result of the continuing fiduciary duties of the CIS Board of
Directors under applicable law and, pursuant to such continuing fiduciary
duties, CIS has accepted a tender offer or exchange offer or any proposal for a
merger, acquisition of all of the stock or assets of, or other business
combination involving CIS or a CIS subsidiary or the acquisition of a
substantial equity interest in, or a substantial portion of the assets of, CIS
or a CIS subsidiary. See "THE MERGER -- Amendment, Waiver, and Termination" and
"-- Expenses and Fees."
Expenses and Fees. The Merger Agreement provides that each party shall be
responsible for its own costs and expenses incurred in connection with the
negotiation and consummation of the transactions contemplated by the Merger
Agreement, except that each of NDC and CIS shall pay one-half of the filing fees
payable in connection with the Registration Statement and this Proxy
Statement/Prospectus and printing costs incurred in connection with the
Registration Statement and this Proxy Statement/Prospectus (the sum of all such
costs and expenses shall hereinafter be referred to as the "Expenses"). NDC
shall pay the filing fees payable in connection with the HSR filing. CIS shall
pay the costs incurred in soliciting proxies for the Special Meeting. If the
Merger Agreement is terminated by NDC as the result of an NDC Termination Event
(as hereinafter defined) or by CIS as the result of a CIS Termination Event (as
hereinafter defined), then CIS has agreed to pay NDC's Expenses.
If the Merger Agreement is terminated by either NDC or CIS as a result of
(i) a breach by the other party of any representation or warranty that would
have a Material Adverse Effect (as defined in the Merger Agreement) on the
non-breaching party, and which is not timely cured, or (ii) a material breach by
the other party of any representation, warranty, covenant or other agreement
contained in the Merger Agreement which is not timely cured, then the breaching
party shall pay the other party the sum of $2,000,000. Such amount shall be paid
by CIS in four equal installments, the first being payable at termination and
the remaining three at the end of three 30-day periods thereafter and shall be
paid by NDC promptly after termination.
If, within 12 months following the termination of the Merger Agreement by
NDC for the breach by CIS of a representation, warranty or covenant, as
described above, or upon the occurrence of an NDC Termination Event, or within
12 months following the termination of the Merger Agreement by CIS upon the
occurrence of a CIS Termination Event, any third party acquires, merges with,
combines with, or purchases a significant amount of the assets of, or purchases
20% or more of the voting securities of, CIS or enters into a binding agreement
to do the foregoing, then such third party (or CIS in the event that such third
party fails to pay) will be required, as a condition to the consummation of such
transaction, to pay NDC's Expenses and an additional sum equal to three percent
(3%) of the aggregate fair market value of the consideration received by the
stockholders of CIS in such a transaction, less any amounts previously paid by
CIS to NDC as a result of the termination of the Merger Agreement; provided,
however, that if the termination of the Merger Agreement was due to a breach by
CIS of a representation or warranty or was due to an NDC Termination Event or a
CIS Termination Event such payment is only required if such third party was
involved in discussions or negotiations with CIS on or before NDC terminated the
Merger Agreement.
Accounting Treatment. It is anticipated that the Merger will qualify as a
"pooling-of-interests" transaction for accounting and financial reporting
purposes. See "THE MERGER -- Accounting Treatment."
Resale of NDC Common Stock. The NDC Common Stock issued in connection with
the Merger will be freely transferable by the holders of such shares, except for
those holders who may be deemed to be "affiliates" (generally including
directors, certain executive officers, and 10% or more stockholders) of CIS or
NDC under applicable federal securities laws. See "THE MERGER -- Resale of NDC
Common Stock."
Voting Agreement. NDC and the sole holder of CIS Series A Preferred Stock
(the "Stockholder") have entered into a voting agreement (the "Voting
Agreement"). The Voting Agreement provides that the Stockholder will vote such
Stockholder's shares of CIS Series A Preferred Stock in favor of the Merger, the
execution and delivery by CIS of the Merger Agreement and the approval of the
terms thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the Merger Agreement has not been
10
<PAGE> 15
amended so as to reduce the consideration payable in the Merger to a lesser
amount of NDC Common Stock. The Voting Agreement also provides that the
Stockholder will vote such Stockholder's shares of CIS Series A Preferred Stock
against any of the following (each a "Competing Transaction"): any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by CIS or any
amendment of CIS's Certificate of Incorporation or Bylaws or other proposal or
transaction that would in any manner impede, frustrate, prevent or nullify the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement. The Stockholder has also agreed not to, and not to permit
any, of its representatives to, directly or indirectly, solicit, initiate or
encourage the submission of, any takeover proposal or participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any takeover proposal.
The Voting Agreement will terminate upon the earlier of the Effective Time
or the date upon which the Merger Agreement is terminated in accordance with its
terms if the Merger Agreement is terminated by CIS because of a breach of the
Merger Agreement by NDC. If the Merger Agreement is terminated in accordance
with its terms and such termination was not initiated by CIS because of a breach
of the Merger Agreement by NDC, then, for a period of four months following such
termination (i) the Stockholder's agreement to vote against any Competing
Transaction and the Stockholder's agreement not to facilitate any takeover
proposal will continue in effect and (ii) the Stockholder will not be permitted
to transfer any of such Stockholder's shares of CIS Series A Preferred Stock in
connection with any Competing Transaction or takeover proposal.
Appraisal Rights. Holders of CIS Common Stock are not entitled to assert
appraisal rights in connection with the Merger. Holders of CIS Series A
Preferred Stock have the right to demand appraisal of their shares of CIS Series
A Preferred Stock and, upon satisfaction of certain specified procedures, to
receive cash in respect of the "fair value" (as defined by Delaware law) of
their shares of CIS Series A Preferred Stock in accordance with applicable
Delaware law. The procedures to be followed by dissenting holders of CIS Series
A Preferred Stock are summarized under "The Merger -- Appraisal Rights" and a
copy of the applicable Delaware statutory provisions is set forth in Annex C to
this Prospectus/Proxy Statement. FAILURE TO FOLLOW SUCH PROVISIONS PRECISELY MAY
RESULT IN LOSS OF APPRAISAL RIGHTS.
In general, any dissenting holder of CIS Series A Preferred Stock who
perfects his statutory appraisal rights to be paid the "fair value" of his CIS
Series A Preferred Stock in cash will recognize gain or loss for federal income
tax purposes upon receipt of such cash. See "The Merger -- Certain Federal
Income Tax Consequences."
MARKET PRICES AND DIVIDENDS
NDC Common Stock is traded on the NYSE under the symbol "NDC" and CIS
Common Stock is included in The Nasdaq Stock Market's National Market (the
"Nasdaq National Market") under the symbol "CISI". There is no established
trading market for shares of CIS Series A Preferred Stock. The following table
sets forth the high and low sale prices per share of NDC Common Stock on the
NYSE and per share of CIS Common Stock on the Nasdaq National Market, and the
dividends declared per share of NDC Common Stock with respect to each quarterly
period since June 1, 1993. No cash dividends have been declared or paid on CIS
Common Stock or CIS Series A Preferred Stock. The historical per share
information for NDC has been adjusted to reflect the three-for-two stock split
effective March 20, 1995.
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<PAGE> 16
<TABLE>
<CAPTION>
SALES SALES
PRICES PER PRICES PER
SHARE OF SHARE OF
NDC CIS
COMMON COMMON DIVIDENDS DECLARED
STOCK STOCK PER SHARE OF
----------- ---------- NDC
HIGH LOW HIGH LOW COMMON STOCK
---- ---- ---- --- ------------------
<S> <C> <C> <C> <C> <C>
FISCAL 1994
Quarter ended August 31, 1993....................... $ 13 $ 9 1/2 $5 3/8 $4 1/2 $ .073
Quarter ended November 30, 1993..................... 12 7/8 10 5 5/8 3 3/8 .073
Quarter ended February 28, 1994..................... 14 1/8 9 3/4 4 2 1/2 .073
Quarter ended May 31, 1994.......................... 15 3/8 11 4 1/8 2 3/8 .073
FISCAL 1995
Quarter ended August 31, 1994....................... 13 1/2 10 3/8 2 7/8 1 7/8 .073
Quarter ended November 30, 1994..................... 14 5/8 12 7/8 3 1/8 2 .073
Quarter ended February 28, 1995..................... 17 1/2 13 7/8 2 7/8 2 .073
Quarter ended May 31, 1995.......................... 21 3/8 16 1/2 2 3/8 2 .075
FISCAL 1996
Quarter ended August 31, 1995....................... 26 5/8 20 1/2 4 1/4 2 .075
Quarter ended November 30, 1995..................... 28 22 4 1/2 3 1/8 .075
Quarter ended February 29, 1996..................... 35 20 4 2 1/8 .075
Quarter ending May 31, 1996 (through April 26,
1996)............................................. 37 29 7/8 2 7/8 1 7/8 .075
</TABLE>
On April 15, 1996, the last trading day prior to public announcement that
NDC and CIS had executed the Merger Agreement, the last reported sale prices per
share of NDC Common Stock on the NYSE and CIS Common Stock on the Nasdaq
National Market were $34.75 and $2.00, respectively, and the equivalent pro
forma price of NDC Common Stock per share of CIS Capital Stock (based on the
Exchange Ratio) was $3.017. On April 23, 1996, NDC declared a quarterly dividend
of $.075 per share, payable on May 31, 1996 to shareholders of record as of May
6, 1996. On April 26, 1996, the last reported sale prices per share of NDC
Common Stock on the NYSE and CIS Common Stock on the Nasdaq National Market were
$35.50 and $2.8125, respectively. CIS STOCKHOLDERS SHOULD OBTAIN CURRENT MARKET
QUOTATIONS FOR THE NDC COMMON STOCK AND CIS COMMON STOCK.
The Merger Agreement provides for the filing of a listing application with
the NYSE covering the shares of NDC Common Stock issuable pursuant to the
Merger. It is a condition to consummation of the Merger that such shares of NDC
Common Stock be authorized for listing on the NYSE effective upon official
notice of issuance. See "THE MERGER -- Conditions to Consummation."
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following summary presents selected comparative unaudited per share
data for NDC and CIS on a historical basis and on a pro forma combined and
equivalent pro forma combined basis assuming the Merger had been effective
during the periods presented using the Exchange Ratio for the Merger and
assuming the GPS Transaction had been effective as of June 1, 1994. The Merger
is reflected under the pooling-of-interests method of accounting and the GPS
Transaction is reflected under the purchase method of accounting and pro forma
data is derived accordingly. CIS's fiscal year end is December 31 of each year,
however, all financial information related to CIS as of February 29 and May 31
has been derived from financial information of CIS as of December 31 and June
30, adjusted to reflect the results of operations on a nine months and twelve
months basis, respectively, as appropriate. The information shown below should
be read in conjunction with the historical financial statements of NDC, CIS, and
MAPP including the respective notes thereto, incorporated by reference herein,
and with the unaudited pro forma financial information, including the respective
notes thereto, appearing elsewhere or incorporated by reference herein. See
"AVAILABLE INFO-
12
<PAGE> 17
RMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE," "THE
MERGER -- Accounting Treatment," "SUMMARY -- Recent Financial Developments" and
"PRO FORMA CONDENSED COMBINED FINANCIAL DATA."
<TABLE>
<CAPTION>
NINE MONTHS FISCAL YEARS ENDED MAY
ENDED 31,
FEBRUARY 29, -------------------------
1996 1995 1994 1993
------------ ----- ----- -----
<S> <C> <C> <C> <C>
NDC COMMON STOCK
Income from continuing operations per share:(1)
Historical........................................ $ 0.70 $0.75 $0.50 $0.45
Pro forma combined(2)............................. 0.68 0.70 0.54 0.41
Dividends per share:
Historical........................................ 0.225 0.30 0.29 0.29
Pro forma combined(3)............................. 0.225 0.30 0.29 0.29
Book value per share:
Historical(4)..................................... 8.80 6.36
Pro forma combined(5)............................. 9.37 7.43
CIS CAPITAL STOCK
Income from continuing operations per share(1):
Historical........................................ $ 0.06 $0.10 $0.09 $0.02
Equivalent pro forma combined(6).................. 0.06 0.06 0.05 0.04
Dividends per share:
Historical........................................ -- -- -- --
Equivalent pro forma combined(6).................. 0.02 0.03 0.03 0.03
Book value per share:
Historical(4)..................................... 1.33 1.30
Equivalent pro forma combined(6).................. 0.81 0.65
</TABLE>
- ---------------
(1) Represents income from continuing operations per share on a fully diluted
basis.
(2) Pro forma combined income from continuing operations per NDC common share
amounts represent the sum of pro forma combined amounts for NDC and CIS,
divided by pro forma combined weighted average common shares outstanding.
(3) Pro forma combined cash dividends paid per NDC common share amounts
represent historical dividends paid per share of NDC Common Stock. On an
equivalent pro forma basis, the $.075 per share dividend paid by NDC on
February 29, 1996, would equate to approximately $.00651 per share of CIS
Common Stock and CIS Series A Preferred Stock, based on the Exchange Ratio.
Future NDC and CIS dividends are dependent upon their respective earnings
and financial conditions, statutory limitations and other factors. See "THE
MERGER -- Conduct of Business Pending the Merger."
(4) Historical book value per share information for NDC and CIS as of the end of
each period presented is computed by dividing historical stockholders'
equity for each company by the number of shares of NDC Common Stock or CIS
Capital Stock, as the case may be, outstanding at the end of each period
presented, excluding stock options and warrants.
(5) Pro forma combined book value per share information as of the end of the
period presented is computed by dividing pro forma stockholders' equity by
the number of shares of NDC Common Stock outstanding on such dates and the
shares of NDC stock to be issued in the Merger.
(6) Equivalent pro forma combined amounts per share of CIS Capital Stock
represent the pro forma combined per NDC common share amounts, multiplied
by the Exchange Ratio.
13
<PAGE> 18
RECENT FINANCIAL DEVELOPMENTS
NDC. Prior to the end of its fiscal year on May 31, 1996, NDC expects to
incur one-time, non-recurring restructuring and asset impairment charges
primarily related to the formation of GPS. See " --Parties to the Merger. " NDC
expects that the estimated pre-tax charges may be as much as $45 million, and
will relate to several aspects of the GPS transaction, including expenses to be
incurred in the integration of the NDC and MAPP product lines and workforces.
The charges will also include writedowns of certain NDC assets contributed to
GPS as well as certain other NDC tangible and intangible assets. These charges
do not include any costs related to the Merger. See "PRO FORMA CONDENSED
COMBINED FINANCIAL DATA".
CIS. The following unaudited financial data for the three months ended
March 31, 1996 and 1995 include, in the opinion of management of CIS, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results of operations for such three month periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues............................................................... $ 9,963 $ 8,396
Operating income (loss)................................................ (9,473) 889
Net income (loss)...................................................... (8,214) 853
PER CAPITAL SHARE DATA:
Net income (loss)...................................................... $ (.25) $ .03
Weighted average common shares outstanding............................. 32,698 32,496
BALANCE SHEET DATA (MARCH 31, 1996):
Total assets........................................................... $56,717
Long-term obligations.................................................. 7,218
Total stockholder's equity............................................. 35,207
</TABLE>
CIS's net loss for the three months ended March 31, 1996 was attributable
in part to fewer than expected contract closings at two of CIS's recently
acquired businesses, AMSC, Inc. ("AMSC"), a clinical practice management
business, and Hospital Cost Consultants, Inc. ("HCC") a managed care contract
administration business. In addition, CIS's results of operations include
write-downs of certain assets. CIS has taken a charge against intangible assets
of $5.2 million and software, accounts receivable and other assets have been
reduced by $3.4 million. These charges, when combined with a first quarter loss
from operations of $1.2 million and a tax benefit of $1.6 million, resulted in a
net loss of $8.2 million.
CIS's results for the three months ended March 31, 1996 have precipitated
cash flow constraints. As a result, CIS obtained a deferral to May 1, 1996 of
its April 1 principal payment obligation of $614,000 on its long-term debt with
its principal lender. CIS's results for the three months ended March 31, 1996
also amount to a default under certain financial ratio covenants in the credit
agreement with its principal lender. CIS expects that it will not make the May 1
payment and will be in default under the credit agreement. However, based upon
discussions with its principal lender, CIS expects to receive an additional
deferral on payments pending consummation of the Merger.
SELECTED FINANCIAL DATA
Set forth below is certain unaudited historical consolidated selected
financial data relating to NDC and CIS, and certain unaudited pro forma combined
selected financial data, giving effect to the Merger on a pooling-of-interests
method of accounting and to the GPS Transaction on a purchase accounting basis.
See "THE MERGER -- Accounting Treatment." This information should be read in
conjunction with the historical financial statements of NDC, CIS and the MAPP
business, including the respective notes thereto, and with the unaudited pro
forma combined financial information appearing elsewhere in this Proxy
Statement/Prospectus or incorporated by reference herein. See "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE,"
"SUMMARY -- Recent Financial Developments" and "PRO FORMA CONDENSED COMBINED
FINANCIAL DATA."
14
<PAGE> 19
SELECTED FINANCIAL DATA OF NDC (HISTORICAL)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected historical financial data of NDC
and has been derived from and should be read in conjunction with NDC's Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q, which are incorporated
by reference herein. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE." Interim unaudited historical data reflect, in the
opinion of management of NDC, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such data, and
unaudited results of operations for the nine months ended February 29, 1996, are
not necessarily indicative of results which may be expected for any other
interim period or for the fiscal year as a whole.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-------------------------
FEBRUARY FEBRUARY FISCAL YEARS ENDED MAY 31,
29, 28, ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
----------- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............ $ 198,635 $ 177,936 $242,031 $206,133 $206,238 $218,017 $228,555
Operating income
(loss)........... 24,384 17,056 24,856 15,887 15,021 14,675 (21,059)
Income (loss) from
continuing
operations....... 17,054 10,449 15,389 9,710 8,489 7,419 (14,136)
PER SHARE DATA:
Income (loss) from
continuing
operations....... $ 0.70 $ 0.51 $ 0.75 $ 0.50 $ 0.45 $ 0.41 $ (0.80)
Cash dividends...... 0.225 0.219 0.30 0.29 $ 0.29 0.29 0.29
Weighted average
common shares
outstanding...... 23,045 19,251 19,152 18,708 18,213 17,841 17,696
BALANCE SHEET DATA
(AT PERIOD END):
Total assets........ $ 266,829 $ 201,739 $216,761 $184,203 $175,348 $194,882 $212,146
Long-term
obligations...... 12,603 21,549 23,058 21,287 19,688 30,081 27,377
Total stockholders'
equity........... 202,713 118,013 122,523 109,331 101,261 96,450 93,023
</TABLE>
15
<PAGE> 20
SELECTED FINANCIAL DATA OF CIS (HISTORICAL)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected historical financial data of CIS
and has been derived from and should be read in conjunction with CIS's Annual
Report on Form 10-K which is incorporated by reference herein. See "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE,"
"SUMMARY -- Recent Financial Development" and "THE MERGER -- Conduct of Business
Pending the Merger."
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
-------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues..................................... $43,227 $31,689 $33,285 $30,523 $17,767
Operating income (loss)...................... 3,893 2,337 (226) 3,098 1,239
Income from continuing operations............ 2,674 2,197 321 3,095 1,431
PER CAPITAL SHARE DATA:
Income from continuing operations............ $ 0.08 $ 0.08 $ 0.02 $ 0.12 $ 0.06
Cash dividends............................... -- -- -- -- --
Weighted average common shares outstanding..... 30,189 30,094 26,857 26,723 26,350
BALANCE SHEET DATA
(AT PERIOD END):
Total assets................................. $62,353 $49,502 $29,087 $26,521 $22,903
Long-term obligations........................ 7,851 3,677 487 614 1,247
Total stockholders' equity................... 43,424 40,269 24,240 22,673 18,460
</TABLE>
16
<PAGE> 21
SELECTED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF NDC AND CIS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected pro forma combined financial
information for the year ended May 31, 1995 and the nine months ended February
29, 1996, giving effect to the Merger using the pooling-of-interests method of
accounting and the GPS Transaction on the purchase method of accounting; and for
the years ended May 31, 1993 and 1994 giving effect to the Merger using the
pooling-of-interests method of accounting. For comparability purposes, CIS's
nine and twelve months ended December 31 and June 30, respectively, are used in
conjunction with the NDC nine and twelve months ended February 29 and May 31,
respectively. Accordingly, CIS's operating results for the three months ended
June 30, 1995 were duplicated in each of the nine months ended December 31, 1995
and the twelve months ended June 30, 1995. CIS's revenues and net income for
that period were $11,068,000 and $1,016,000, respectively. See "THE MERGER --
Accounting Treatment." The pro forma combined financial information is provided
for informational purposes only and is not necessarily indicative of actual
results that would have been achieved had the Merger been consummated at the
beginning of the periods presented or of future results. The selected pro forma
combined financial information is derived from the Pro Forma Condensed Combined
Financial Data appearing elsewhere herein. This information should be read in
conjunction with the historical financial statements of NDC, CIS and the MAPP
business, including the respective notes thereto, incorporated by reference
herein, and the unaudited pro forma financial information appearing elsewhere in
this Proxy Statement/Prospectus or incorporated by reference herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEARS ENDED MAY 31,
FEBRUARY 29, ------------------------------
1996 1995 1994 1993
----------------- -------- -------- --------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues..................................... $ 271,968 $321,932 $237,659 $239,810
Operating income............................. 31,442 30,798 18,424 14,894
Income from continuing operations............ 18,556 18,659 12,134 8,945
PER SHARE DATA:
Income from continuing operations............ $ 0.68 $ 0.70 $ 0.54 $ 0.41
Cash dividends............................... 0.23 0.30 0.29 0.29
Weighted average common shares outstanding... 27,163 26,640 22,347 21,669
BALANCE SHEET DATA (AT FEBRUARY 29, 1996):
Total assets................................. $ 359,232
Long-term obligations........................ 20,454
Total stockholders' equity................... 242,837
</TABLE>
17
<PAGE> 22
GENERAL INFORMATION
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished by CIS to its
stockholders in connection with the solicitation of proxies by the Board of
Directors of CIS from holders of the outstanding shares of CIS Capital Stock for
use at the Special Meeting of the stockholders of CIS to be held at 10:00 a.m.,
local time, on May 30, 1996, at the main office of CIS, located at 6100 South
Yale Avenue, Suite 1900, Tulsa, Oklahoma, and at any adjournments or
postponements thereof (the "Special Meeting"), to consider and vote upon a
proposal to adopt the Merger Agreement, and to transact such other business as
may properly come before the Special Meeting.
This document is also being furnished by NDC to CIS stockholders as a
prospectus in connection with the issuance by NDC of shares of NDC Common Stock
upon consummation of the Merger.
The Merger Agreement provides for a transaction whereby a wholly owned
subsidiary of NDC will merge with and into CIS, with CIS as the surviving
corporation of the Merger becoming a wholly owned subsidiary of NDC. At the
Effective Time, each share of issued and outstanding CIS Capital Stock
(excluding shares held by CIS or any of its subsidiaries or by NDC or any of its
subsidiaries and excluding shares of CIS Series A Preferred Stock as to which
dissenters' rights are perfected) shall cease to be outstanding and shall be
converted into and exchanged for the right to receive shares of NDC Common
Stock. Pursuant to the NDC Rights Agreement, each share of NDC Common Stock
issued in connection with the merger upon conversion of CIS Capital Stock shall
be accompanied by an NDC Right. See "THE MERGER -- Exchange Ratios."
If the Merger Agreement is adopted at the Special Meeting, all required
governmental and other consents and approvals are obtained, and all of the other
conditions to the obligations of the parties to consummate the Merger are either
satisfied or waived (as permitted), the Merger will be consummated. See "THE
MERGER -- Effective Time."
RECORD DATE, SOLICITATION, AND REVOCABILITY OF PROXIES
The CIS Board of Directors has fixed the close of business on April 25,
1996, as the record date for determining the CIS stockholders entitled to
receive notice of and to vote at the Special Meeting (the "Record Date"). Only
holders of record of CIS Capital Stock as of the Record Date are entitled to
notice of and to vote at the Special Meeting. As of the Record Date, there were
30,188,589 shares of CIS Common Stock issued and outstanding and held by 1,824
holders of record and 2,384,182 shares of CIS Series A Preferred Stock issued
and outstanding and held by one holder of record. Holders of CIS Common Stock
are entitled to one vote on each matter considered and voted on at the Special
Meeting for each share of CIS Common Stock held of record at the close of
business on the Record Date. Holders of CIS Series A Preferred Stock are
entitled to one vote on each matter considered and voted on at the Special
Meeting for each share of CIS Series A Preferred Stock held of record at the
close of business on the Record Date. The presence, in person or by properly
executed proxy, of the holders of a majority of the outstanding shares of CIS
Common Stock entitled to vote at the Special Meeting is necessary to constitute
a quorum of the holders of CIS Common Stock at the Special Meeting. The
presence, in person or by properly executed proxy, of the holders of a majority
of the outstanding shares of CIS Series A Preferred Stock entitled to vote at
the Special Meeting is necessary to constitute a quorum of the holders of CIS
Series A Preferred Stock at the Special Meeting. Abstentions and "broker
non-votes" (which occur when shares held by brokers or nominees for beneficial
owners are voted on some matters but not on others) will be counted as shares
present for purposes of determining the presence of a quorum. Neither
abstentions nor "broker non-votes" will be counted as votes cast for purposes of
determining whether a proposal has received sufficient votes for adoption.
Consequently, both "broker non-votes" and abstentions will have the effect of a
vote against the Merger.
Proxies in the form enclosed are solicited by CIS's Board of Directors.
Shares of CIS Capital Stock represented by properly executed proxies, if such
proxies are received in time and are not revoked, will be voted in accordance
with the instructions indicated on the proxies. IF NO INSTRUCTIONS ARE
INDICATED, SUCH
18
<PAGE> 23
PROXIES WILL BE VOTED FOR ADOPTION OF THE MERGER AGREEMENT AND AS DETERMINED BY
A MAJORITY OF THE MEMBERS OF THE CIS BOARD OF DIRECTORS AS TO ANY OTHER MATTER
THAT MAY COME BEFORE THE SPECIAL MEETING. ANY HOLDER OF CIS CAPITAL STOCK WHO
RETURNS A SIGNED PROXY BUT FAILS TO PROVIDE INSTRUCTIONS AS TO THE MANNER IN
WHICH SUCH HOLDER'S SHARES ARE TO BE VOTED WILL BE DEEMED TO HAVE VOTED FOR THE
ADOPTION OF THE MERGER AGREEMENT.
A CIS stockholder who has given a proxy may revoke it at any time prior to
its exercise at the Special Meeting or prior to the receipt by CIS of proxies
voting in favor of the Merger by all stockholders, by (i) giving written notice
of revocation to the Secretary of CIS, (ii) properly submitting to CIS a duly
executed proxy bearing a later date, or (iii) voting in person at the Special
Meeting. All written notices of revocation and other communications with respect
to revocation of proxies should be addressed to CIS as follows: C.I.S.
Technologies, Inc., 6100 South Yale Avenue, Suite 1900, Tulsa, Oklahoma, 74136,
Attention: Corporate Secretary. A proxy appointment will not be revoked by death
or supervening incapacity of the stockholder executing the proxy statement
unless, before the shares are voted, notice of such death or incapacity is filed
with CIS's Corporate Secretary or other person responsible for tabulating votes
on behalf of CIS.
The expense of soliciting proxies for the Special Meeting will be paid by
CIS, although NDC has paid one-half of the cost of filing fees and printing and
mailing this Proxy Statement/Prospectus. In addition to the solicitation of
stockholders of record by mail, telephone or personal contact, CIS will be
contacting brokers, dealers, banks or voting trustees or their nominees who can
be identified as record holders of CIS Common Stock. Such holders, after inquiry
by CIS, will provide information concerning quantity of proxy and other
materials needed to supply such materials to beneficial owners, and CIS will
reimburse them for the expense of mailing the proxy materials to such persons.
Further, CIS has retained Chemical Mellon Shareholder Services to assist in
soliciting proxies from record and beneficial owners of CIS Common Stock held by
banks, brokerage houses, and other custodians, nominees and fiduciaries. CIS
anticipates that the cost of such assistance will not exceed $8,000.
VOTES REQUIRED
Adoption of the Merger Agreement and consummation of the transactions
contemplated therein requires the presence of a quorum and the affirmative vote
of: (i) the holders of a majority of the outstanding shares of CIS Common Stock
entitled to vote thereon at the Special Meeting and (ii) the holders of
two-thirds of the outstanding shares of CIS Series A Preferred Stock entitled to
vote thereon at the Special Meeting. Both "broker non-votes" and abstentions
will have the effect of a vote against the Merger.
As of the Record Date, CIS directors and executive officers, and their
affiliates, beneficially owned approximately 10.8% of the outstanding shares of
CIS Common Stock entitled to vote at the Special Meeting and 100% of the
outstanding shares of CIS Series A Preferred Stock entitled to vote at the
Special Meeting. The sole shareholder of the outstanding shares of CIS Series A
Preferred Stock has agreed to vote all of such shares in favor of adoption of
the Merger Agreement. See "THE MERGER -- Voting Agreement." As of the Record
Date, NDC and its directors and executive officers, and their affiliates, held
no shares of CIS Common Stock and, pursuant to the Voting Agreement, had the
power to vote 100% of the outstanding shares of CIS Series A Preferred Stock in
favor of adoption of the Merger Agreement. See "THE MERGER -- Voting Agreement."
The Merger Agreement and the consummation of the transactions contemplated
therein do not require the approval of the holders of NDC Common Stock.
RECOMMENDATION OF CIS'S BOARD OF DIRECTORS
For the reasons described below, the Board of Directors of CIS has
unanimously adopted the Merger Agreement, believes the Merger is in the best
interests of CIS and its stockholders, and unanimously recommends that
stockholders of CIS vote FOR adoption of the Merger Agreement. See "THE
MERGER -- Reasons for the Merger."
19
<PAGE> 24
THE MERGER
The following information describes certain information pertaining to the
Merger. This description does not purport to be complete and is qualified in its
entirely by reference to the Annexes hereto, including the Merger Agreement, a
copy of which is set forth in ANNEX A to this Proxy Statement/Prospectus and is
incorporated herein by reference. All stockholders are urged to read the Annexes
in their entirely.
GENERAL
The Merger Agreement provides that Sub will merge with and into CIS, which
shall be the surviving corporation of the Merger and, as a result thereof,
become a wholly owned subsidiary of NDC. At the time the Merger becomes
effective, each outstanding share of CIS Capital Stock (excluding shares held by
CIS or any of its subsidiaries or by NDC or any of its subsidiaries and
excluding shares of CIS Series A Preferred Stock as to which dissenters' rights
are perfected) shall cease to be outstanding and shall be converted into and
exchanged for the right to receive shares of NDC Common Stock. Pursuant to the
NDC Rights Agreement, each share of NDC Common Stock issued in connection with
the Merger upon conversion of the CIS Capital Stock shall be accompanied by an
NDC Right. If the Merger Agreement is adopted at the Special Meeting, all
required governmental and other consents and approvals are obtained, and all
other conditions of the obligations of the parties to consummate the Merger are
either satisfied or waived (as permitted), the Merger will be consummated. A
copy of the Merger Agreement is set forth in ANNEX A of this Proxy Statement/
Prospectus. See "-- Exchange Ratios."
BACKGROUND OF THE MERGER
In early 1994, CIS management began to explore strategic options available
to CIS to allow it to expand its market and increase its business prospects. Up
to that time, CIS's primary customer base had been the hospital market. Rapid,
sweeping changes were occurring in the health care industry, including the
growth of managed care, the restriction of reimbursement by governmental and
private payment sources, and the formation of vertically-integrated medical care
providers. It became clear to CIS management that substantial opportunities
existed for future growth in this restructured health care marketplace.
Management embarked on a new strategic direction. Specifically, management
determined that CIS should expand its customer base beyond the hospital market
to include physicians and the integrated health care delivery system. Management
also determined that, with the expansion of managed care, it should be offering
managed care solutions, integrated with its EDI products, to this new market
place.
Concurrently with this refocusing effort, CIS management was exploring
options with financing sources to engage in joint venturing activities. During
October of 1994, CIS commenced a joint venture with its principal lender to
finance hospital accounts receivable. CIS also entered into a credit
relationship with its principal lender, whereby CIS could obtain funds to
finance its operations and acquire other businesses that had a strategic fit
with CIS. CIS also discussed forming a joint venture with another potential
financing source that was interested in CIS's transaction processing/electronic
data interchange business. This entity became a stockholder of CIS.
Consistent with this newly developed strategy, CIS acquired two
subsidiaries. In November of 1994, it acquired the stock of AMSC, a company
engaged in the business of selling a physician practice management software
product known as The Medical Manager(R) and related products and services, for
approximately $5,000,000 in cash, debt and CIS Common Stock. In June of 1995,
CIS acquired the stock of HCC, a company engaged in the business of developing
and marketing managed care contract administration software products, for
approximately $15,000,000 in cash and debt. The acquisition of AMSC was intended
to give CIS access to the physician market, and the acquisition of HCC was
intended to allow CIS to provide managed care solutions to its existing hospital
market. However, these acquisitions presented CIS with both financial and
strategic challenges. Financially, the acquisitions themselves and the later
losses incurred by the acquired entities consumed a large portion of CIS's cash
reserves, which contributed to recent cash constraints. Strategically, these
acquisitions challenged CIS to change the operations of AMSC and HCC from
isolated
20
<PAGE> 25
software sales to recurring software sales and services, to build up the sales
volume of both entities, and to integrate the operations and products of AMSC
and HCC with the operations of CIS.
By mid-summer of 1995, in light of the drain on CIS's cash reserves caused
by the two acquisitions, CIS management determined to investigate possible
avenues for increasing the cash available to CIS. After considering several
possible financial advisors, CIS engaged Dean Witter to advise the Board and CIS
regarding strategic and financing opportunities available to CIS. The Board
initially intended for Dean Witter to provide advice and guidance regarding the
possible private placement of CIS securities as a means of raising funds to
boost its cash reserves, to pay down the acquisition debt and to provide funds
for other acquisitions. A merger or other business combination was not initially
considered by the Board; however, within a month of Dean Witter's engagement
interest was expressed to CIS management by the management of another
corporation regarding pursuing a possible merger with or acquisition of CIS.
Management of CIS engaged in discussions with management of the other
corporation, investigating, with advice from Dean Witter, both the strategic
viability and the possible financial considerations of such a combination. These
discussions, which did not lead to a proposal for a business combination, ended
mid-October 1995.
Contemporaneously with these negotiations, Dean Witter approached a number
of other companies regarding a possible business combination; however, none
expressed a significant interest.
NDC Negotiations. In November of 1995, Philip D. Kurtz, Chief Executive
Officer of CIS, made a presentation at an industry conference. At the
conference, Mr. Kurtz was approached by Richard Cohan, Senior Vice President of
NDC's Health Care Information Network division. Mr. Cohan indicated that
management of NDC was interested in discussing possible business arrangements
between NDC and CIS.
On January 31, 1996, Robert Yellowlees, the Chairman of the Board and Chief
Executive Officer of NDC, met with Mr. Kurtz. During the meeting, Messrs.
Yellowlees and Kurtz explored the strategies and operations of the companies and
found there to be many areas of agreement. The executives determined that many
synergies existed for the combined companies; that the companies had similar
strategic vision, motivation, and styles; and that the strengths of NDC and CIS
would be complimentary in combination.
At approximately the same time, CIS announced that its fourth quarter
financial results would be substantially below analysts' expectations. On this
news, the stock price of CIS dropped approximately $.94 (or 29.4%) from $3.1875
to $2.25 over six days of trading. Shortly after this drop in stock price,
several companies contacted CIS management to express their possible interest in
combining with or acquiring CIS. During February of 1996, Mr. Kurtz had
discussions and met with four of these companies (including NDC). During a
February 8 and 9 Board meeting, Mr. Kurtz informed the Board as to the status of
such discussions and meetings. Except for NDC, none of these companies was
interested in acquiring all of CIS at a premium over its then current market
price. Several would consider acquiring only certain CIS operating units at a
premium, and those that would consider acquiring all of CIS were not willing to
pay a premium to the market price.
NDC Offer. On March 4, 1996, Mr. Kurtz met with representatives of NDC and
NDC's financial advisor at an industry conference in Atlanta, where NDC's
representatives presented the general terms for a strategic merger of NDC and
CIS. Ten days later, the financial advisors of NDC and CIS met to review the
current discussions between CIS and NDC and to discuss financial matters
relevant to any such business combination.
The following day, CIS management met with Dean Witter to review
preliminary estimates of financial results for the first quarter of 1996. Those
estimates indicated that CIS' financial results for the first quarter would
likely be substantially below analysts' expectations and the CIS projections
previously provided to NDC. Developing CIS cash flow constraints were also
discussed. A meeting was scheduled for March 19 between Mr. Kurtz, Mr.
Yellowlees, Mr. Cohan and James L. Hersma, President and Chief Operating Officer
of CIS, along with representatives of the CIS and NDC financial advisors.
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At the March 19 meeting, revised CIS projections for the first quarter were
reviewed. The CIS and NDC representatives also carefully reviewed their
respective business operations on a unit-by-unit basis, and it became clear to
all involved that a strategic fit existed between the two companies. It was
determined that NDC would make a presentation to the CIS Board on March 21, and
would offer CIS an exchange of NDC shares, with a premium approximating thirty
percent (30%).
On March 21, Mr. Yellowlees and Dean Witter each made a presentation to a
meeting of the CIS Board of Directors. Dean Witter's presentation focused on
strategic alternatives available to CIS, and Mr. Yellowlees' presentation
focused on the specifics of a strategic merger. On the basis of an exchange of
NDC stock for CIS stock at a thirty percent (30%) premium over the value of CIS
stock determined as of March 19, 1996 for both securities, the CIS Board and NDC
agreed to proceed with due diligence and the negotiation of a definitive merger
agreement.
In the meantime, in view of CIS cash flow constraints and with knowledge of
the possible merger, on March 29, CIS and its principal lender agreed to amend
the parties' credit agreement to provide for a May 1, in lieu of a April 1,
principal payment due date.
Negotiation of Merger Agreement. At the March 21 meeting, legal counsel to
CIS advised the Board of Directors regarding its fiduciary obligations and
duties in negotiating the Merger Agreement. Following this meeting, certain
members of the Board recommended that a special committee be appointed to review
the NDC proposal in detail and to ensure that the Board would meet its fiduciary
obligations to shareholders. In response, the Board appointed an independent
special committee, composed of non-employee members John Platt, Robert Simmons
and Samuel Jacob (the "Special Committee"), to deliberate the positive and
negative aspects of the proposed Merger, to negotiate the Merger Agreement, and
to make a recommendation to the Board as to whether the Merger would be in the
best interests of the stockholders. Over the next three weeks, counsel for NDC
drafted the Merger Agreement and the agreements ancillary thereto, and counsel
for NDC and counsel for the Special Committee and for CIS negotiated regarding
the content of those agreements.
On April 4, April 5, April 9 and April 10, the Special Committee met, with
counsel present, to discuss the Merger Agreement and the specific proposals
related to the transaction. NDC originally requested certain restrictive
provisions be included in the Merger Agreement. After vigorous negotiation, the
parties agreed to certain liquidated damages and a fee of three percent (3%) to
be paid by CIS in the event of a termination of the Merger Agreement under
certain circumstances including the execution of an alternative business
combination by CIS. On April 19, the Special Committee met with counsel to
consider and review this Proxy Statement/Prospectus prior to filing with the SEC
and, on April 29, it met again with counsel for a final review of the Merger and
this Proxy Statement/Prospectus. See "THE MERGER -- Expenses and Fees."
In addition to the transaction terms requested by NDC and discussed in the
preceding paragraph, NDC's proposal to CIS required BT Holdings (New York), Inc.
the holder of the CIS Series A Preferred Stock (the "Stockholder"), to enter
into the Voting Agreement, pursuant to which such Stockholder would (i) agree to
vote for the Merger and (ii) agree to vote against any other transaction during
the term of the Merger Agreement and for a period of six (6) months thereafter.
The Stockholder and its counsel joined the negotiations between CIS and NDC and
their respective counsel with respect to the Voting Agreement. The negotiations
were vigorous and NDC advised CIS and the Stockholder that such an agreement was
essential for the Merger to go forward. After further negotiation over a period
of days, the period during which the Stockholder would be required to vote
against any other transaction was then reduced to four (4) months following the
termination of the Merger Agreement, and CIS agreed to indemnify the Stockholder
against liability for damages and legal fees incurred in connection with the
Voting Agreement.
Approval of Merger Agreement. On April 11, 1996, the CIS Board of
Directors and the Special Committee met to receive further advice of counsel and
the report of Dean Witter regarding the merger offer from NDC and other
strategic alternatives available to CIS. The Board and the Special Committee
were presented with information regarding (i) their fiduciary obligations to the
shareholders of CIS, (ii) the process pursuant to which management of CIS and
Dean Witter had sought to identify parties interested in strategic business
combinations or financing opportunities with CIS, (iii) the estimated range of
values attributed to CIS and other companies with businesses similar to those of
CIS, (iv) the estimated range of
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<PAGE> 27
values attributed to NDC and other companies with businesses similar to those of
NDC, and (v) issues still being negotiated with NDC and the holder of CIS Series
A Preferred Stock. Dean Witter advised the Board that it was prepared to issue
its opinion to the effect that the Common Stock Exchange Ratio and the Preferred
Stock Exchange Ratio were fair, from a financial point of view, to the holders
of the CIS Common Stock and the CIS Series A Preferred Stock, respectively. The
meeting of the Board recessed while the Special Committee met for final
deliberations regarding the proposed Merger and Merger Agreement. After further
questioning of counsel and Dean Witter, the Special Committee approved the terms
and conditions of the Merger Agreement (subject to final negotiation of the
terms involving the Stockholder and certain other outstanding issues). The Board
then reconvened, and received the unanimous recommendation of the Special
Committee that the Merger be approved. After further discussion, the Board of
Directors unanimously approved the terms and conditions of the Merger Agreement
(subject to negotiation and resolution of the arrangements involving the
Stockholder and certain other outstanding issues), subject to changes that are
approved by the Special Committee, recommended that the Merger Agreement and the
transactions contemplated thereby be approved by the shareholders of CIS, and
authorized the members of the Special Committee and management of CIS to
finalize and execute the Merger Agreement. The Special Committee and management
of CIS concluded negotiations with NDC and the holder of CIS Series A Preferred
Stock on April 12, and finalized the terms of the Merger Agreement on April 15.
The Merger Agreement and the Voting Agreement were executed on April 15, 1996.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF CIS AND REASONS FOR THE MERGER
CIS. By unanimous vote, the Board of Directors of CIS has determined that
the Merger is in the best interest of the CIS stockholders, has approved the
Merger Agreement and the transactions contemplated thereby, and has recommended
to the CIS stockholders that they adopt such Merger Agreement and transactions.
In their meetings of March 21 and April 11, 1996, the CIS Board, with the
assistance of the Special Committee, Dean Witter, counsel to the Company and
counsel to the Special Committee, considered the terms of the Merger and
reviewed various business, financial and legal considerations relating thereto.
In determining whether to enter into and recommend approval of the Merger
Agreement, the Board considered among other things: (i) the declining earnings
and cash position of CIS; (ii) the recommendation of the Special Committee;
(iii) information with respect to the financial condition, earnings, business,
operations, assets, management and prospects of CIS and of NDC (including the
prospects of CIS if it were to continue as an independent entity) and the
historical price performance of the respective stocks of CIS and NDC; (iv) the
fact that no other party had expressed interest in pursuing a business
combination with CIS on comparable terms to the Merger Agreement, despite the
efforts by CIS management and Dean Witter to identify and approach parties
interested in such a business combination; (v) the high degree of compatibility
of the businesses of CIS and NDC that would provide CIS's stockholders with a
continuing interest in the health care information processing and payment
systems businesses; (vi) the fact that the Merger would provide the shareholders
of CIS the opportunity to exchange their shares on a tax free basis for an
ownership interest in a combined business that would have enhanced financial,
technical and marketing resources; (vii) the financial analyses with respect to
CIS and NDC presented by Dean Witter at the meeting of the Board of Directors on
April 11, 1996; and (viii)the opinion of Dean Witter as to the fairness, from a
financial point of view, of the Common Stock Exchange Ratio and the Preferred
Stock Exchange Ratio to the holders of the outstanding CIS Common Stock and
Series A Preferred Stock, respectively. See "-- Opinion of Financial Advisor for
CIS".
THE BOARD OF DIRECTORS OF CIS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" ADOPTION OF THE MERGER AGREEMENT.
NDC. NDC believes the Merger will increase NDC's market share in key
health care electronic data interchange ("EDI") areas (including physician and
hospital claims processing) and extend NDC's product line in the areas of
clinical laboratory automation, financial services for hospital business
offices, and managed care contract management/decision support.
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Additionally, NDC believes there will be significant revenue and cost
synergies resulting from the distribution of NDC core products to the CIS
customer base, as well as opportunities for consolidation of redundant
technology, platforms, processing capacity, and administrative overhead.
The Merger is part of NDC's strategy to approach the medical and hospital
markets in anticipation of the market trends toward integration of health care
delivery across all providers, and an increasingly complex managed care
environment.
OPINION OF FINANCIAL ADVISOR FOR CIS
In considering the proposed Merger and whether or not to recommend the
Merger to the CIS stockholders for approval, CIS engaged Dean Witter Reynolds
Inc. ("Dean Witter") to provide financial advisory services, which included
evaluating the fairness, from a financial point of view, to the holders of the
CIS Common Stock and to the holders of the CIS Preferred Stock of the Common
Stock Exchange Ratio and the Preferred Stock Exchange Ratio, respectively,
proposed to be used in the Merger. On April 11, 1996, in connection with the
evaluation of the Merger Agreement by the CIS Board of Directors, Dean Witter
made a presentation to the CIS Board of Directors with respect to the Merger. In
connection with this presentation, the CIS Board of Directors was provided with
written materials based on the proposed merger as it stood on April 10, 1996. At
its meeting on April 11, 1996, the CIS Board of Directors received the oral
opinion of Dean Witter to the effect that, as of such date and based upon and
subject to certain matters stated in its opinion, the Common Stock Exchange
Ratio and the Preferred Stock Exchange Ratio to be used in the Merger were fair,
from a financial point of view, to the holders of the outstanding CIS Common
Stock and to the holders of the outstanding CIS Series A Preferred Stock,
respectively. The oral opinion of Dean Witter was subsequently confirmed in
writing as of April 11, 1996, and was substantially identical to the opinion
dated the date of this Proxy Statement/Prospectus, the full text of which is
attached to this Proxy Statement/Prospectus as ANNEX B and is incorporated by
reference herein.
HOLDERS OF SHARES OF CIS COMMON STOCK AND CIS SERIES A PREFERRED STOCK ARE
URGED TO READ THE OPINION, AS SET FORTH IN ANNEX B HERETO, IN ITS ENTIRETY FOR A
DESCRIPTION OF THE FACTORS CONSIDERED AND ASSUMPTIONS MADE BY DEAN WITTER IN
RENDERING ITS OPINION. DEAN WITTER WAS NOT REQUESTED TO, AND DID NOT, MAKE ANY
RECOMMENDATIONS TO THE CIS BOARD OF DIRECTORS AS TO THE FORM OR AMOUNT OF THE
CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF SHARES OF THE OUTSTANDING CIS
COMMON STOCK OR TO BE RECEIVED BY THE HOLDERS OF THE OUTSTANDING CIS SERIES A
PREFERRED STOCK IN THE MERGER, WHICH WAS DETERMINED THROUGH ARM'S-LENGTH
NEGOTIATIONS AMONG THE PARTIES. IN ARRIVING AT ITS OPINION, DEAN WITTER DID NOT
ASCRIBE A SPECIFIC RANGE OF FAIR VALUE TO CIS, BUT MADE ITS DETERMINATIONS AS TO
THE FAIRNESS OF THE COMMON STOCK EXCHANGE RATIO AND THE PREFERRED STOCK EXCHANGE
RATIO ON THE BASIS OF THE FINANCIAL AND COMPARATIVE ANALYSIS DESCRIBED BELOW.
DEAN WITTER'S OPINION IS DIRECTED TO THE CIS BOARD OF DIRECTORS ONLY AND
DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDERS OF THE OUTSTANDING CIS
COMMON STOCK OR TO ANY HOLDERS OF THE OUTSTANDING CIS SERIES A PREFERRED STOCK
AS TO HOW SUCH HOLDERS SHOULD VOTE ON THE MERGER AT THE SPECIAL MEETING. IN
ADDITION, DEAN WITTER WAS NOT REQUESTED TO OPINE AS TO, AND ITS OPINION DOES NOT
ADDRESS, THE UNDERLYING BUSINESS DECISION OF THE CIS BOARD OF DIRECTORS TO
PROCEED WITH OR TO EFFECT THE MERGER.
In arriving at its opinion, Dean Witter, among other things, (i) reviewed
the Merger Agreement; (ii) reviewed the Annual Reports on Form 10-K and related
publicly available financial information of CIS for the three fiscal years ended
December 31, 1995, the Quarterly Reports on Form 10-Q for the three quarterly
periods ended September 30, 1995, June 30, 1995 and March 31, 1995, CIS's
definitive Proxy Statement, dated April 2, 1996, and a draft of CIS's financial
statements for the most recent fiscal quarterly period ended March 31, 1996;
(iii) reviewed the Annual Reports on Form 10-K and related publicly available
financial information of NDC for the three most recent fiscal years ended May
31, 1995, the Quarterly Report on Form 10-Q for the period ended February 29,
1996, and NDC's definitive Proxy Statement, dated August 30, 1995; (iv) reviewed
certain other information, including publicly available information, relating to
the business, earnings, cash flow, assets and prospects of CIS and NDC,
respectively; (v) reviewed an income statement forecast of CIS for the remaining
portion of the 1996 fiscal year and for the 1997 fiscal year as furnished to us
by CIS; reviewed balance sheet and cash flow forecasts of CIS for the remaining
portion of the
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1996 fiscal year and for the 1997 fiscal year as prepared on the basis of
information and assumptions furnished to us by CIS; (vi) reviewed the publicly
available income statement forecasts of NDC for the remaining portion of the
1996 fiscal year and for the fiscal year 1997 as set forth in the published
reports of recognized securities industry analysts furnished to us by NDC; (vii)
conducted discussions with members of senior management of CIS and NDC,
respectively, concerning the past and current business, operations, assets,
present financial condition and future prospects of CIS and NDC, respectively,
and discussed with senior management of CIS and of NDC their respective views of
the strategic rationale for the Merger and the benefits of the Merger to both
CIS and NDC; (viii) reviewed the historical reported market prices and trading
activity for the CIS Common Stock and the NDC Common Stock; (ix) compared
certain financial information, operating statistics and market trading
information relating to CIS with published financial information, operating
statistics and market trading information relating to selected public companies
that Dean Witter deemed to be reasonably similar to CIS; compared certain
financial information, operating statistics and market trading information
relating to NDC with published financial information, operating statistics and
market trading information relating to selected public companies that Dean
Witter deemed to be reasonably similar to NDC; (x) compared the proposed
financial terms of the Merger with the financial terms, to the extent publicly
available, of selected other recent acquisitions that Dean Witter deemed to be
relevant; and (xi) reviewed such other financial studies and analyses and
performed such other investigations and took into account such other matters as
Dean Witter deemed necessary.
In preparing its opinion, Dean Witter assumed and relied upon the accuracy
and completeness of all financial and other information supplied to it by CIS
and NDC or that was publicly available, respectively, and did not independently
verify such information. Dean Witter has also relied upon the management of CIS
as to the reasonableness and achievability of the financial forecasts of CIS
(and the assumptions and bases thereof) provided to it or prepared on the basis
of information and assumptions furnished to it, and with the CIS Board of
Directors' consent assumed that such forecasts were reasonably prepared on the
basis reflecting the best currently available estimates and judgments of such
management as to the future operating performance of CIS. In particular, in
connection with preparing its analysis for presentation to the CIS board of
directors on April 11, 1996, Dean Witter utilized management projections with
respect to the fiscal quarter ended March 31, 1996. Although management of NDC
did not make financial forecasts of NDC available to Dean Witter, Dean Witter
reviewed the financial forecasts of recognized securities industry analysts who
cover and publish on NDC, and confirmed the reasonableness and achievability of
such forecasts with NDC senior management. Furthermore, Dean Witter assumed that
the Merger would qualify (i) for pooling of interest accounting treatment and
(ii) as a reorganization with the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended. Dean Witter was not requested to make, and
Dean Witter did not make, an independent appraisal or evaluation of assets,
properties, facilities or liabilities of CIS or NDC and it was not furnished
with any such appraisal or evaluation.
Dean Witter's opinion was necessarily based upon prevailing market
conditions (including market prices for the CIS Common Stock and the NDC Common
Stock) and other circumstances and conditions as they existed and could be
evaluated as of the date of the opinion, and did not represent Dean Witter's
opinion as to what the actual value of the CIS Common Stock or the NDC Common
Stock would be after the date thereof, or the prices at which the NDC Common
Stock would trade subsequent to the Merger.
In connection with advising the CIS Board of Directors of its opinion on
April 11, 1996 and in preparing its written and oral presentations to the CIS
Board of Directors, Dean Witter performed a variety of financial and comparative
analyses including those described below. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Furthermore, in arriving at its fairness opinion, Dean
Witter did not attribute any particular weight to any particular analysis or
factor considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Accordingly, Dean Witter
believes that its analysis must be considered as a whole and that considering
any portion of such analysis and the factors considered, without considering all
analyses and factors, could create a misleading or incomplete view of the
process underlying the opinion.
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In its analysis, Dean Witter made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of CIS and NDC. Any estimates
contained in this analysis are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than as set forth therein. In addition, analyses relating to the value
of businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold.
Analysis of Selected Publicly Traded Companies. Using publicly available
information, Dean Witter compared selected qualitative data (including revenues,
earnings before interest, taxes, depreciation and amortization ("EBITDA"),
earnings before interest and taxes ("EBIT"), and earnings per share ("EPS")),
and qualitative information (including competitive position, customer base,
management, stage of technological development, stage of capital funding and
intercompany relationships) regarding CIS with similar data of selected
publicly-traded health care information systems ("HCIS") companies competing in
the financial/database systems segment ("Financial/Database Systems Companies")
and other HCIS companies engaged in businesses considered by Dean Witter to be
comparable to those of CIS (including the Financial/Database Systems Companies,
the "HCIS Universe"). Specifically, for CIS, Dean Witter included in its review
of Financial/Database Systems Companies: AMISYS Managed Care Systems, Inc.,
GMIS, Inc., Health Management Systems, Inc., Health Payment Review Inc., Health
Systems Design Corporation and Medaphis Corporation, and in the HCIS Universe, a
group of 17 additional HCIS companies, consisting of: Cerner Corporation, HBO &
Company, PHAMIS, Inc., Shared Medical Systems Corporation, CyCare Systems, Inc.,
Medic Computer Systems, Inc., Physician Computer Network, Inc., Quality Systems,
Inc., IDX Systems Corporation, HCIA Inc., Mecon Inc., Medicus Systems
Corporation, Summit Medical Systems, Inc., Enterprise Systems, Inc., Envoy
Corporation, IMNET Systems, Inc., and Pyxis Corporation.
Of these companies, the analysis relied primarily on trading multiples and
qualitative factors associated with the Financial/Database Systems Companies, as
they were deemed by Dean Witter to be the most comparable companies to CIS due
to their similar business focus. Such data and ratios included a comparison of
CIS with the Financial/Database Systems Companies assuming a valuation of the
CIS Common Stock of $3.08 per share (the effective price per share on April 10,
1996 after giving effect to the Exchange Ratio), in relation to latest 12 months
("LTM") revenues, LTM EBITDA, LTM EBIT, LTM EPS, projected 1996 calendar year
EPS and projected 1997 calendar year EPS (such projected EPS figures for the
HCIS Universe, other than for CIS, being based upon the means of publicly
available estimates made by research analysis and provided by Dean Witter
research analysts or First Call). The valuation multiples for CIS based on a
price of $3.08 per share compares with the range (and mean) of the
Financial/Database Systems Companies of: for LTM revenues, 2.6 times for CIS
versus 13.4 to 2.8 times for the Financial/Database Systems Companies (7.3 times
mean); for LTM EBITDA, 15.0 times for CIS versus 47.2 to 9.0 times for the
Financial/Database Systems Companies (30.2 times mean); for LTM EBIT, 51.2 times
for CIS versus 37.0 to 20.5 times for the Financial/Database Systems Companies
(27.0 times mean); for LTM EPS, 146.7 times for CIS versus 56.7 to 31.0 times
for the Financial/Database Systems Companies (43.6 times mean); for calendar
year 1996 projected EPS, 71.2 times for CIS versus 43.6 to 15.5 times for the
Financial/Database Systems Companies (33.6 times mean); and for calendar year
1997 projected EPS, 18.6 times for CIS versus 33.6 to 12.5 for the
Financial/Database Systems Companies (27.1 times mean).
Although Dean Witter relied primarily on trading multiples and qualitative
factors associated with Financial/Database Systems Companies, Dean Witter also
relied on trading multiples and qualitative factors associated with all
companies in the HCIS Universe. Such data and ratios included a comparison of
CIS with all the companies in the HCIS Universe in relation to the same trading
multiples as set forth above, assuming a valuation of the CIS Common Stock of
$3.08 per share. The valuation multiples for CIS based on a price of $3.08 per
share compares with the range (and mean) of the HCIS Universe of: for LTM
revenues, 2.6 times for CIS versus 19.1 to 1.1 times for the HCIS Universe (7.3
times mean); for LTM EBITDA, 15.0 times for CIS versus 47.2 to 9.0 times for the
HCIS Universe (25.5 times mean); for LTM EBIT, 51.2 times for CIS versus 44.1 to
17.5 times for the HCIS Universe (27.8 times mean); for LTM EPS, 146.7 times for
CIS versus 56.7 to 22.6 times for the HCIS Universe (40.0 times mean); for
calendar year 1996 projected EPS,
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71.2 times for CIS versus 56.7 to 15.5 times for the HCIS Universe (36.3 times
mean); and for calendar year 1997 projected EPS, 18.6 times for CIS versus 44.4
to 12.5 for the HCIS Universe (30.3 times mean).
Using publicly available information, Dean Witter compared selected
quantitative data (including revenues, EBITDA, EBIT, and EPS), and qualitative
information (including competitive position, customer base, management, stage of
technological development, stage of capital funding and market segment
competitiveness) regarding NDC with similar data of selected publicly-traded
transaction processing companies considered by Dean Witter to be comparable to
those of NDC ("Transaction Processing Companies"), and other transaction
processing companies engaged in businesses considered by recognized securities
industry analysts ("Analysts' Transaction Processing Companies"). Specifically,
for NDC, Dean Witter included in its review of Transaction Processing Companies:
Automatic Data Processing, Inc., The Bisys Group, Inc., Envoy Corporation,
Equifax Inc., First Data Corp., Fiserv, Inc., Health Management Systems, Inc.,
SPS Transaction Services, Inc., and Total System Services, Inc.; in the
Analysts' Transaction Processing Companies, a group consisting of: Concord EFS,
First Data Corp., PMT Services, Inc., SPS Transaction Services, Inc., Total
System Services, Inc., and Transaction Network Services, Inc.
Such data and ratios included a comparison of NDC with the Transaction
Processing Companies assuming a price of $35 1/2 per share of the NDC Common
Stock (the price per share on April 10, 1996), in relation to LTM revenues, LTM
EBITDA, LTM EBIT, LTM EPS, projected 1996 calendar year EPS and projected 1997
calendar year EPS (such projected EPS figures for the Transaction Processing
Companies, being based upon the means of publicly available estimates made by
research analysis and provided by Dean Witter research analysts or First Call).
The valuation multiples for NDC compares with the range (and mean) of the
Transaction Processing Companies of: for LTM revenues, 3.3 times for NDC versus
12.3 to 2.1 times for the Transaction Processing Companies (5.2 times mean); for
LTM EBITDA, 15.9 times for NDC versus 42.6 to 9.8 times for the Transaction
Processing Companies (17.0 times mean); for LTM EBIT, 26.9 times for NDC versus
22.7 to 11.4 times for the Transaction Processing Companies (17.2 times mean);
for LTM EPS, 37.8 times for NDC versus 96.8 to 18.4 times for the Transaction
Processing Companies (38.9 times mean); for calendar year 1996 projected EPS,
30.1 times for NDC versus 77.1 to 15.2 times for the Transaction Processing
Companies (29.7 times mean); and for calendar year 1997 projected EPS, 24.2
times for NDC versus 61.2 to 12.6 for the Transaction Processing Companies (26.7
times mean).
Dean Witter also relied on trading multiples and qualitative factors
associated with the Analysts' Transaction Processing Companies. Such data and
ratios included a comparison of NDC with the Analysts' Transaction Processing
Companies in relation to the same trading multiples as set forth above. The
valuation multiples for NDC compares with the range (and mean) of the Analysts'
Transaction Processing Companies of: for LTM revenues, 3.3 times for NDC versus
10.8 to 2.6 times for the Analysts' Transaction Processing Companies (6.3 times
mean); for LTM EBITDA, 15.9 times for NDC versus 42.6 to 9.8 times for the
Analysts' Transaction Processing Companies (26.1 times mean); for LTM EBIT, 26.9
times for NDC versus 42.8 to 11.4 times for the Analysts' Transaction Processing
Companies (27.6 times mean); for LTM EPS, 37.8 times for NDC versus 96.8 to 18.4
times for the Analysts' Transaction Processing Companies (56.6 times mean); for
calendar year 1996 projected EPS, 30.1 times for NDC versus 77.1 to 15.2 times
for the Analysts' Transaction Processing Companies (43.4 times mean); and for
calendar year 1997 projected EPS, 24.2 times for NDC versus 61.2 to 12.6 for the
Analysts' Transaction Processing Companies (34.6 times mean).
Because of the inherent differences between the products, operations and
other characteristics of CIS and selected public companies comprising the
Financial/Database Systems Companies and the HCIS Universe, and of NDC and the
selected public companies comprising the Transaction Processing Companies and
the Analysts' Transaction Processing Companies, Dean Witter believes that an
appropriate use of a comparable company analysis also involves qualitative
judgments concerning differences between the financial and operating
characteristics of CIS and NDC and their respective selected comparable public
companies, which affects the public trading values of CIS and NDC and their
respective comparable and the selected companies, which such judgments are
reflected in Dean Witter's opinion.
Comparable Transaction Analysis. Dean Witter reviewed with the CIS Board
of Directors the prices and multiples paid for other HCIS companies in recent
acquisitions or mergers that Dean Witter deemed
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comparable to the Merger. Dean Witter specifically reviewed the following public
transactions (the date of announcement of the transaction is set forth next to
each such transaction): HBO & Company/CliniCom Inc. (July 14, 1995), ADAC
Laboratories/Community Health Computing Corp. (January 13, 1995), GENCC Holdings
Corp./General Computing Corp. (December 5, 1994), The Thomson Corporation/The
MEDSTAT Group Inc. (November 16, 1994), Medaphis Corporation/AdvaCare, Inc.
(July 21, 1994) and HBO & Company/Serving Software, Inc. (May 13, 1994). In
addition, Dean Witter examined transactions in the HCIS industry that it deemed
comparable to the four divisions of CIS during the time period beginning in 1994
through March 1996: Electronic Data Interchange ("EDI") comparable transactions,
Financial Services ("FS") comparable transactions, Decision Support ("DS")
comparable transactions, and Physicians Practice Management ("PPM") comparable
transactions. Such analysis indicates the average of the purchase prices in the
public transactions on a basis of a multiple of revenue, EBITDA, EBIT, net
income and tangible book value was 2.8 times, 20.0 times, 32.5 times, 50.7 times
and 7.2 times, respectively, with respect to the public market transactions. The
average of the purchase prices on a basis of a multiple of revenue and EBIT for
the comparable division transactions were as follows; 1.6 times and 13.5 times
for EDI comparable transactions; 1.5 times and 13.1 times for FS comparable
transactions; 2.8 times and 20.4 times for DS comparable transactions; and 0.8
times and 47.6 times for PPM comparable transactions, respectively.
No company or transaction used as a comparison in the above analysis is
identical to CIS or the Merger, respectively. Accordingly, analysis of the
results of the foregoing is not mathematical; rather it involves complex
considerations and judgments concerning the differences in financial and
operating characteristics and terms and structure of CIS and the Merger,
respectively, and other factors that could affect the public trading values of
the companies to which CIS is being compared.
Stock Trading History. Dean Witter examined the history of the trading
prices and volume of the CIS Common Stock, the relationship between movements in
the prices of the CIS Common Stock and movements in certain stock indices, and a
relationship between movements in the prices of the CIS Common Stock and press
announcements and other public disclosures. From January 1, 1996 through April
15, 1996 (the last trading date prior to CIS's announcement that it had entered
into the Merger Agreement), the highest closing price for the CIS Common Stock
was $3 1/2, on January 8, 1996. During the same period, the lowest closing price
for the CIS Common Stock was $2.00 on March 26, March 27, and April 15, 1996. In
the month prior to the announcement of the execution of the Merger Agreement,
the CIS Common Stock traded in the $2.00 to $2 3/8 range. Following the
announcement of the execution of the Merger Agreement on April 16, 1996, CIS's
stock price traded as high as $2 7/8 during such trading day.
Dean Witter reviewed and analyzed performance of the per share market
prices and trading volume of the CIS Common Stock and the NDC Common Stock over
the period from April 12, 1995 through April 10, 1996 (the "Comparison Period")
both separately and in relation to each other and/or certain performance indices
(with respect to the CIS Common Stock, an index comprised of the
Financial/Database Systems Companies, and with respect to the NDC Common Stock,
indices comprised of the Transaction Processing Companies and the Analysts'
Transaction Processing Companies (the "Indices")). Dean Witter noted that during
the term of the Comparison Period, the CIS Common Stock had not consistently
performed as well as the Indices, and following the January 18, 1996
announcement that CIS would not meet reported analysts' expectations for its
annual earnings, the CIS Common Stock performed substantially below the Indices.
Dean Witter noted that this performance could be attributable in part to lack of
confidence in CIS's abilities to meet future analysts' earnings estimates.
Conversely, for a substantial portion of the Comparison Period, the NDC Common
Stock performance performed well in excess of the Indices. Dean Witter noted
that the February 22, 1996 announcement of the GPS Transaction greatly enhanced
the price of the NDC Common Stock, and between such date and the end of the
Comparison Period, the NDC Common Stock demonstrated superior performance in
relation to the relevant Indices.
Dean Witter commented that the recent performance of the CIS Common Stock
when compared with the Indices and recent and long-term performance of the NDC
Common Stock at levels at or above the indices described above, were all factors
to be considered by the CIS Board of Directors in evaluating the Merger.
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Contribution Analysis. Dean Witter calculated the contribution of each of
CIS and NDC to the pro forma combined entity with respect to revenues, EBITDA,
EBIT and net income. The foregoing contributions were examined for the one year
period ending March 31, 1996 for CIS, and February 28, 1996 for NDC. The
analysis produced a relative contribution of CIS to the pro forma combined
entity of (i) 14.6% of revenues, (ii) 12.4% of EBITDA, (iii) 6.6% of EBIT and
(iv) 3.1% of net income. Based on the closing prices of the CIS Common Stock and
the NDC Common Stock, the holders of the outstanding CIS Common Stock and the
holders of the outstanding CIS Series A Preferred Stock would have approximately
10.6% pro forma fully diluted equity ownership of the pro forma combined entity.
Dean Witter concluded that CIS's pro forma equity ownership generally
equaled or exceeded such contribution to the pro forma combined entity and
therefore concluded that the results of such analysis support its opinions. Dean
Witter did not compute implied exchange ratios from the contribution analysis
but prepared such analysis only for informational purposes for the CIS Board of
Directors.
Discounted Cash Flow Analysis. Using a discounted cash flow analysis, Dean
Witter estimated the present value of the future cash flow that CIS is projected
to produce over a five year period from December 1995 through December 2000,
under various assumptions, if CIS were to perform in accordance with CIS's
management's forecasts. Dean Witter estimated the terminal values of the CIS
Common Stock at the end of the five year period and discounted such terminal
values back to present values at different discount rates based upon a
consideration of a number of factors, including cost of capital, required rates
of return to investors and risks attributable to uncertainty of the projected
cash flow. The foregoing analysis resulted in a range of present values per
share for the CIS Common Stock of $2.38 to $5.02.
Dean Witter also estimated the present value of the future cash flow that
NDC is projected to produce over a two and one quarter year period from February
1996 through May 1998, under various assumptions, if NDC were to perform in
accordance with securities industry analysts' earnings estimates using the
discounted cash flow techniques similar to those performed for CIS. The analysis
resulted in a range of present values per share for the NDC Common Stock of
$34.11 to $68.00. The foregoing discounted cash flow analyses described above
are not necessarily indicative of actual values or of actual future results and
do not purport to reflect the prices at which any securities may trade at the
present time or at any time in the future.
Pro Forma Accretion/Dilution Analysis. Dean Witter developed a pro forma
analysis of the combined company, excluding any synergies that might result from
the Merger. The analysis reflected both a combination based on existing
forecasts for the remainder of the current year and for the entire 1997 NDC
fiscal year. The results of the analysis demonstrated that based on a NDC fiscal
year 1997, assuming the management forecasts for CIS, and the publicly available
income statement forecasts of NDC as set forth in the published reports of
recognized securities industry analysts, the Merger was break-even to NDC
projected fully taxed earnings per share and accretive for the 1998 fiscal year
NDC projected fully taxed earnings per share.
In addition, Dean Witter developed additional pro forma analyses of the
combined company reflecting certain synergistic assumptions, including the
repayment of CIS indebtedness, synergistic cost savings, the effects of
anticipated restructuring charges and other factors. The results of such
analyses demonstrated that based on a NDC fiscal year 1997, utilizing the
foregoing assumptions and analysis, the Merger was accretive to NDC projected
fully taxed earnings per share for both the 1997 and 1998 fiscal years.
Dean Witter is an internationally recognized investment banking firm with
substantial experience in transactions similar to the Merger and is familiar
with CIS and NDC and their respective businesses. As part of its investment
banking business, Dean Witter is regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, private placements, secondary distributions of listed
and unlisted securities, and valuations for corporate and other purposes. The
CIS Board of Directors selected Dean Witter because of its expertise, reputation
and familiarity with the HCIS industry.
As compensation for its financial advisory services in connection with the
Merger, Dean Witter will receive a fee equal to 1.25% of the aggregate value of
the transaction from CIS upon consummation of the
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Merger. Dean Witter received a fee of $250,000 upon delivery of its opinion
which will be credited against the above mentioned fee due upon the consummation
of the Merger. Whether or not the Merger is consummated CIS has agreed to
reimburse Dean Witter for reasonable expenses incurred by Dean Witter, including
fees and disbursements of counsel. CIS has also agreed to indemnify Dean Witter
and certain related persons against certain liabilities to which Dean Witter may
become subject as a result of its engagement, including liabilities under the
federal securities laws.
Dean Witter regularly publishes research reports regarding the HCIS
industry and the businesses and securities of publicly owned companies in that
industry. In the ordinary course of its business, Dean Witter trades the CIS
Common Stock and the NDC Common Stock for its own account and for the account of
its customers and may at any time hold a long or short position in such
securities.
Dean Witter does not intend to undertake any review or analysis with
respect to the Merger after the date of this Proxy Statement/Prospectus.
EXCHANGE RATIOS
The Merger Agreement provides that, at the Effective Time: (i) each issued
and outstanding share of CIS Common Stock (excluding shares held by CIS or any
of its subsidiaries or by NDC or any of its subsidiaries) shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
.08682 shares of NDC Common Stock and (ii) each issued and outstanding share of
CIS Series A Preferred Stock (excluding shares held by CIS or any of its
subsidiaries or by NDC or any of its subsidiaries and excluding shares as to
which appraisal rights are perfected) shall cease to be outstanding and shall be
converted into and exchanged for the right to receive .08682 shares of NDC
Common Stock. As of the date of this Proxy Statement/Prospectus, each share of
the CIS Series A Stock was convertible into one share of CIS Common Stock. If at
the Effective Time, each share of CIS Series A Preferred Stock is still
convertible into one share of CIS Common Stock, the Preferred Stock Exchange
Ratio will be the same as the Common Stock Exchange Ratio. All pro forma
financial information in this Proxy Statement/Prospectus assumes a Preferred
Stock Exchange Ratio of .08682. Based on the 30,188,589 shares of CIS Common
Stock and the 2,384,182 shares of CIS Series A Preferred Stock outstanding on
the Record Date, NDC would issue a total of 2,827,968 shares of NDC Common Stock
in the Merger.
In the event NDC changes the number of shares of NDC Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization with respect to NDC Common Stock and the
record date therefor (in the case of a stock dividend) or the effective date
thereof (in the case of a stock split or similar recapitalization for which a
record date is not established) shall be prior to the Effective Time, the
Exchange Ratios shall be proportionately adjusted.
FRACTIONAL SHARES
Pursuant to the terms of the Merger Agreement, each holder of shares of CIS
Capital Stock exchanged pursuant to the Merger, who would otherwise have been
entitled to receive a fraction of a share of NDC Common Stock shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of NDC Common Stock multiplied by the closing price per share of NDC
Common Stock as reported on the NYSE on the trading day immediately preceding
the Effective Time. No such holder will be entitled to dividends, voting rights,
or any other rights as a stockholder in respect of any fractional shares.
TREATMENT OF STOCK OPTIONS, WARRANTS AND CONVERTIBLE NOTES
The Merger Agreement provides that, at the Effective Time, all rights with
respect to CIS Common Stock pursuant to CIS Options granted under the CIS Stock
Plans which are outstanding at the Effective Time, whether or not exercisable,
shall be converted into and become rights with respect to NDC Common Stock, and
NDC shall assume each CIS Option, in accordance with the terms of the CIS Stock
Plan and stock option agreement by which it is evidenced. From and after the
Effective Time: (i) NDC or its Compensation Committee, as appropriate, shall be
substituted as the administrator of the CIS Stock Plan, (ii) each CIS Option
assumed by NDC may be exercised solely for shares of NDC Common Stock, (iii) the
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number of shares of NDC Common Stock subject to such CIS Option shall be equal
to the number of shares of CIS Common Stock subject to such CIS Option
immediately prior to the Effective Time multiplied by the Common Stock Exchange
Ratio, and (iv) the per share exercise price under each such CIS Option shall be
adjusted by dividing the per share exercise price under each such CIS Option by
the Common Stock Exchange Ratio and rounding up to the nearest cent. It is
intended that the foregoing assumption be undertaken in a manner that will not
prejudice the rights of any holder of a CIS Option under the terms of the CIS
Option, any CIS Stock Plan or the corresponding stock option agreement or
constitute a "modification" as defined in Section 424 of the Code, as to any
stock option which is an "incentive stock option."
The Merger Agreement provides that, at the Effective Time, all rights with
respect to CIS Common Stock or CIS Series A Preferred Stock pursuant to CIS
Warrants granted under the CIS Warrant Agreements which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into and become
rights with respect to NDC Common Stock, and NDC shall assume each CIS Warrant,
in accordance with the terms of the CIS Warrant Agreements. From and after the
Effective Time: (i) each CIS Warrant assumed by NDC may be exercised solely for
shares of NDC Common Stock; (ii) the number of shares of NDC Common Stock
subject to such CIS Warrant shall be equal to the number of shares of CIS Common
Stock subject to such CIS Warrant immediately prior to the Effective Time,
multiplied by the Common Stock Exchange Ratio or the number of shares of CIS
Series A Preferred Stock subject to such CIS Warrant immediately prior to the
Effective Time multiplied by the Preferred Stock Exchange Ratio, as the case may
be; and (iii) the per share exercise price under each CIS Warrant shall be
adjusted by dividing the per share exercise price under each CIS Warrant by the
Common Stock Exchange Ratio or the Preferred Stock Exchange Ratio, as the case
may be, and rounding up to the nearest cent.
The Merger Agreement provides that, at the Effective Time, all rights with
respect to CIS Common Stock pursuant to CIS Conversion Rights granted under the
CIS Convertible Notes which are outstanding at the Effective Time, whether or
not exercisable, shall be converted into and become rights with respect to NDC
Common Stock, and NDC shall assume each of the CIS Convertible Notes, in
accordance with the terms thereof except that from and after the Effective Time:
(i) each CIS Convertible Note assumed by NDC may be converted solely into shares
of NDC Common Stock; (ii) the number of shares of NDC Common Stock subject to
such CIS Convertible Notes shall be equal to the number of shares of CIS Common
Stock subject to such CIS Convertible Notes immediately prior to the Effective
Time multiplied by the Common Stock Exchange Ratio; and (iii) the per share
conversion price under such CIS Convertible Notes shall be adjusted by dividing
the per share conversion price under each such CIS Convertible Notes by the
Common Stock Exchange Ratio and rounding up to the nearest cent.
EFFECTIVE TIME
If the Merger Agreement is adopted by the requisite votes of CIS
stockholders, and all other required governmental and other consents and
approvals are received, and if the other conditions to the obligations of the
parties to consummate the Merger are satisfied or waived (as permitted), the
Merger will be consummated and effected on the date and at the time a
Certificate of Merger, reflecting the Merger, becomes effective with the
Secretary of State of the State of Delaware (the "Effective Time"). NDC and CIS
have mutually agreed to use their reasonable efforts to cause the Effective Time
to occur on the first business day following the last to occur of: (i) the
effective date (including expiration of any applicable waiting period) of the
last required approval or clearance of any regulatory authority having authority
over and approving or exempting the Merger, and (ii) the date on which the
stockholders of CIS approve the Merger Agreement to the extent such approval is
required by applicable law. Assuming satisfaction of all conditions to
consummation of the Merger, the Merger is expected to be made effective during
the second quarter of 1996. Either NDC or CIS may terminate the Merger Agreement
if the Merger has not been consummated by September 30, 1996. See "-- Conditions
to Consummation" and "-- Amendment, Waiver, and Termination."
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DISTRIBUTION OF NDC CERTIFICATES
Promptly after the Effective Time, NDC and CIS shall cause the exchange
agent selected by NDC to mail appropriate transmittal materials to each record
holder of CIS Capital Stock for use in effecting the surrender and cancellation
of those certificates in exchange for NDC Common Stock (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of CIS Capital Stock shall pass, only upon
proper delivery of such certificates to the exchange agent by the former
stockholders of CIS). CIS STOCKHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES
FOR EXCHANGE UNTIL THEY RECEIVE SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS.
After the Effective Time, each holder of shares of CIS Capital Stock (excluding
shares held by CIS or any of its subsidiaries or by NDC or any of its
subsidiaries and excluding shares as to which dissenters' rights are perfected)
issued and outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the exchange agent, and the
certificates thus surrendered will be canceled. Unless otherwise designated by a
CIS stockholder on the transmittal letter, certificates representing shares of
NDC Common Stock issued to CIS stockholders in connection with the Merger will
be issued and delivered to the tendering CIS stockholder at the address on
record with the CIS Capital Stock transfer agent. NDC shall not be obligated to
deliver the consideration to which any former holder of CIS Capital Stock is
entitled until such holder surrenders such holder's certificate or certificates
representing such holder's shares for exchange. The certificate or certificates
so surrendered shall be duly endorsed as the exchange agent may require. No
party shall be liable to a holder of CIS Capital Stock for any property
delivered in good faith to a public official pursuant to any applicable
abandoned property law.
After the Effective Time, holders of CIS certificates will have no rights
with respect to the shares of CIS Capital Stock represented thereby other than
the right to surrender such certificates and receive in exchange therefor the
shares of NDC Common Stock, if any, to which such holders are entitled, as
described above. In addition, no dividend or other distribution payable to
holders of record of NDC Common Stock will be paid to the holder of any CIS
certificates until such holder surrenders such certificates for exchange as
instructed. Subject to applicable law, upon surrender of the certificates, such
holder will receive the certificates representing the shares of NDC Common Stock
issuable upon the exchange or conversion of such shares of CIS Capital Stock,
all withheld dividends or other distributions (without interest), and any
withheld cash payments (without interest) to which such stockholder is entitled.
If any certificate for NDC Common Stock is to be issued in a name other
than that in which the CIS certificate surrendered for exchange is issued, the
CIS certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, and the person requesting such exchange shall affix
any requisite stock transfer tax stamps to the certificates surrendered, shall
provide funds for their purchase, or shall establish to the exchange agent's
satisfaction that such taxes are not payable.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the Merger. This discussion is based on the provisions of the
Code, the United States Department of the Treasury Regulations thereunder and
rulings and court decisions as of the date hereof, all of which are subject to
change, possibly retroactive. The discussion is included for general information
purposes only, applies only to CIS stockholders, if any, who hold their stock as
a capital asset, and may not apply to CIS stockholders, if any, who received
their stock upon the exercise of employee stock options or otherwise as
compensation. NDC and CIS have not requested a ruling from the Internal Revenue
Service (the "Service"). A condition to consummation of the Merger is the
receipt by each of NDC and CIS of an opinion of Alston & Bird, counsel to NDC,
as to the qualification of the Merger as a tax-free reorganization and certain
other federal income tax consequences of the Merger and related transactions,
including, without limitation, that no gain or loss will be recognized for
federal income tax purposes by CIS stockholders upon the exchange of their
shares of CIS Capital Stock for shares of NDC Common Stock (except to the extent
of any cash received).
NDC believes the Merger will qualify as a tax-free reorganization within
the meaning of Section 368(a) of the Code. Among other things, qualification as
a tax-free reorganization is based on CIS
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stockholders maintaining sufficient equity ownership interest in NDC after the
Merger. The Service takes the position for purposes of issuing an advance ruling
on reorganizations, that the stockholders of an acquired corporation (i.e., CIS)
must maintain a continuing equity ownership interest in the acquiring
corporation (i.e., NDC) equal, in terms of value, to at least 50% of their
interest in such acquired corporation. For this purpose, shares of CIS Capital
Stock exchanged for cash in lieu of any fractional shares of NDC Common Stock
will be treated as outstanding shares of CIS Capital Stock at the Effective
Time. Moreover, shares of CIS Capital Stock and NDC Common Stock held by CIS
stockholders and otherwise sold, redeemed or disposed of prior or subsequent to
the Effective Time are taken into account. In addition, management of NDC has no
plan or intention to cause NDC to redeem or otherwise reacquire the shares of
NDC Common Stock issued in the Merger. In addition to the foregoing requirements
certain additional matters must be true with respect to the Merger. NDC believes
that these additional factual matters will be satisfied.
Assuming the Merger is treated as a reorganization as defined in Section
368(a) of the Code, the following will be the material federal income tax
consequences to the CIS stockholders:
(i) No gain or loss will be recognized for federal income tax purposes
by CIS stockholders upon the exchange of their shares of CIS Capital Stock
for shares of NDC Common Stock.
(ii) The basis of the shares of NDC Common Stock to be received by CIS
stockholders will be the same as the basis of the CIS Capital Stock
surrendered in exchange therefor.
(iii) The holding period of the NDC Common Stock to be received by CIS
stockholders will include the period during which the shares of CIS Capital
Stock surrendered in exchange therefor had been held, provided such shares
were held by such stockholders as a capital asset at the Effective Time.
(iv) The payment of cash in lieu of fractional shares of NDC Common
Stock will be treated as if the fractional shares were issued as part of
the exchange and then redeemed by NDC. These cash payments will be treated
as having been received as distributions in full payment in exchange for
the fractional shares of NDC Common Stock redeemed as provided in Section
302(a) of the Code. Generally, any gain or loss recognized upon such
exchange will be capital gain or loss, provided the fractional share would
constitute a capital asset in the hands of the exchanging stockholder.
(v) The payment of cash in respect of shares of CIS Series A Preferred
Stock as to which appraisal rights are perfected will be treated as
distributions in full payment in exchange for the shares of CIS Series A
Preferred Stock. Generally, any gain or loss recognized upon such exchange
will be capital gain or loss, provided the shares of CIS Series A Preferred
Stock constitute a capital asset in the hands of the exchanging
stockholder.
NDC notes that tax-free reorganization status does not determine the tax
characterization of the exchange of warrants or convertible notes. Holders of
such instruments must consult their tax advisors with respect to possible tax
consequences of such exchanges.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER AND OTHER FACTORS, AND BECAUSE
BASED ON EXISTING AUTHORITIES, THE EXCHANGE OF WARRANTS MAY NOT BE TREATED THE
SAME AS THE EXCHANGE OF STOCK BY THE STOCKHOLDERS, EACH HOLDER OF CIS CAPITAL
STOCK AND EACH HOLDER OF CIS WARRANTS IS URGED TO CONSULT SUCH HOLDER'S OWN TAX
ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE
MERGER (INCLUDING THE APPLICATION AND EFFECT OF FOREIGN, STATE AND LOCAL INCOME
AND OTHER TAX LAWS).
MANAGEMENT AND OPERATIONS AFTER THE MERGER
CIS will be the surviving corporation resulting from the Merger and will
become a wholly owned subsidiary of NDC. The Merger Agreement provides that from
and after the Effective Time, the Board of Directors of CIS shall consist of the
directors of Sub immediately prior to the Effective Time. The Merger
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Agreement further provides that the officers of CIS in office immediately prior
to the Effective Time, together with such additional persons as may be elected,
shall serve as the officers of CIS from and after the Effective Time in
accordance with the bylaws of CIS. It is not expected that consummation of the
Merger will result in any change in the Board of Directors or management of NDC
or any of its other subsidiaries.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
As of April 15, 1996, the directors and executive officers of CIS did not
beneficially own any shares of NDC Common Stock. Other than as described herein,
no director or executive officer of NDC or CIS, and no associate of any such
person, has any substantial interest, direct or indirect, in the Merger, other
than an interest arising from the ownership of CIS Options to purchase such
stock or CIS Warrants or Convertible Notes, in which case the director or
officer receives no extra or special benefit not shared on a pro rata basis by
all other holders of CIS Capital Stock.
Certain members of CIS's management and Board of Directors may be deemed to
have interests in the Merger in addition to their interests as stockholders of
CIS generally. In each case, the Board of Directors of CIS either was aware of
these factors or, with respect to interests that arose subsequent to the Merger
Agreement, was aware of their potential, and considered them, among other
matters, in approving the Merger Agreement and the transactions contemplated
thereby.
Indemnification. The Merger Agreement provides that NDC shall for a period
of six years after the Effective Time indemnify the present and former directors
and officers of CIS or any of its subsidiaries to the fullest extent permitted
or required by CIS's Certificate of Incorporation and Bylaws and Delaware law,
as in effect on the date of the Merger Agreement, with respect to matters
occurring at or prior to the Effective Time. NDC shall use its reasonable
efforts to maintain CIS's existing directors' and officers' liability insurance
policy (or a policy providing at least comparable coverage) for a period of
three years after the Effective Time of the Merger; provided, that NDC shall not
be obligated to make aggregate premium payments in respect of such policy which
exceed, for the portion relating to CIS's directors and officers, 150% of the
annual premium payments on CIS's current policy.
Post-Acquisition Compensation and Benefits. The Merger Agreement provides
that, after the Effective Time, NDC will either provide generally to officers
and employees of CIS and its subsidiaries, employee benefits under employee
benefit plans (other than stock option or other plans involving the potential
issuance of NDC Common Stock), on terms and conditions that, when taken as a
whole, are substantially similar to those currently provided by NDC and its
subsidiaries to their similarly situated officers and employees or NDC will
continue to provide employee benefits to officers and employees of CIS under
CIS's current benefit and welfare plans. For purposes of participation and
vesting and benefit accrual (other than benefit accrual under NDC retirement
plans) under such employee benefit plans, service with CIS or its subsidiaries
prior to the Effective Time will be treated as service with NDC or its
subsidiaries. The Merger Agreement also provides that NDC will honor all
employment, severance, consulting and other compensation contracts previously
disclosed to NDC between CIS or any of its subsidiaries and any current or
former director, officer or employee, and all provisions for vested amounts
earned or accrued through the Effective Time under CIS's benefit plans. See
"-- Change in Control Agreements."
Change in Control Agreements. Pursuant to change in control agreements
between CIS and Philip D. Kurtz, James L. Hersma and Thomas G. Noulles, CIS must
pay each of Messrs. Kurtz, Hersma and Noulles the severance packages described
below if subsequent to a change in control of CIS (i.e., the Merger) they are
terminated or their duties or salaries are changed or the executive offices of
CIS are relocated and they resign as a result of such change or relocation.
Consummation of the Merger will be such a change in control. The severance
package for each of Messrs. Kurtz, Hersma and Noulles includes payments in cash,
beginning immediately following such resignation or termination for a period of
35 months for Messrs. Kurtz and Hersma, and 24 months for Mr. Noulles, in an
amount equal to such person's average monthly salary and car allowance from CIS
for the 36 months preceding the date of termination of employment. The change in
control agreements also provide for the payment of a bonus equal to the annual
bonus most recently paid to each of Messrs. Kurtz, Hersma and Noulles, prorated
to the date of any such resignation or termination. The
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change in control agreements also provide that, for a period of 35 months for
Messrs. Kurtz and Hersma and 24 months for Mr. Noulles following such
resignation or termination, to the extent that either of Messrs. Kurtz, Hersma
or Noulles has not obtained medical, dental, accident, life, disability and
other types of insurance coverage at levels comparable to or greater than
provided by CIS to Messrs. Kurtz, Hersma and Noulles, and their families,
Messrs. Kurtz, Hersma and Noulles shall be entitled to payments necessary to
maintain the aforementioned insurance coverage at levels comparable to those
provided prior to termination of employment. The change in control agreements
further provide, assuming such resignation or termination, for accelerated
vesting of certain stock options granted to Messrs. Kurtz, Hersma and Noulles.
Such options become exercisable for a three month period following such
resignation or termination of employment or until the expiration of such options
pursuant to their terms, whichever is shorter. Based on Messrs. Kurtz, Hersma
and Noulles' average monthly salary and car allowance and bonus for the previous
36 months and the last year in which a bonus was paid and assuming such
resignation or termination were to occur July 1, 1996, it is estimated that a
total of $742,628, $714,417 and $290,800, exclusive of insurance related
payments, would be payable to Messrs. Kurtz, Hersma and Noulles, respectively,
under their respective change in control agreements as discussed above. See
"-- Post-Acquisition Compensation and Benefits."
CONDITIONS TO CONSUMMATION
The obligations of CIS and NDC to consummate the Merger are subject to the
satisfaction or waiver (to the extent permitted) of the following conditions:
(i) the stockholders of CIS shall have adopted the Merger Agreement by the
requisite votes; (ii) the required regulatory approvals and clearances described
under "-- Regulatory Approvals" shall have been received and shall be in full
force and effect with all waiting periods required by law having expired, and no
such regulatory approval shall be conditioned or restricted in a manner which
would, in the reasonable judgment of the Board of Directors of NDC, so
materially adversely affect the economic or business benefits of the
transactions contemplated by the Merger Agreement that had NDC known of such
condition it would not have entered into the Merger Agreement; (iii) each party
shall have received any required consents of third parties; (iv) the
Registration Statement of which this Proxy Statement/Prospectus is a part shall
have been declared effective by the Commission and shall not be subject to a
stop order or any threatened stop order, and the shares of NDC Common Stock
issuable in connection with the Merger shall have been qualified, registered or
otherwise approved for exchange under the securities laws of the various states
in which such qualification, registration or approval is required; (v) the
shares of NDC Common Stock issuable pursuant to the Merger shall have been
approved for listing on the NYSE, subject to effective notice of issuance; (vi)
NDC and CIS shall have received an opinion of Alston & Bird as to certain
federal income tax matters (see "-- Certain Federal Income Tax Consequences");
(vii) NDC shall have received letters from NDC's independent auditors to the
effect that the Merger will qualify for pooling-of-interests accounting
treatment and letters from CIS's independent auditors to the effect that such
auditors are not aware of any matters relating to CIS which would preclude the
Merger from qualifying for pooling-of-interests accounting (see "-- Accounting
Treatment"); (viii) the accuracy, as of the date of the Merger Agreement and as
of the Effective Time, of the representations and warranties of the other party
as set forth in the Merger Agreement; (ix) the other party shall have performed
in all material respects all of the agreements, covenants, acts and undertakings
to be performed by it pursuant to the Merger Agreement; (x) each party shall
have received customary closing documents, including, without limitation, an
opinion of the other party's counsel, dated the closing date, as to certain
matters; (xi) NDC shall have received letters from each affiliate of CIS to the
extent necessary to assure NDC, in its reasonable judgment, that the
transactions contemplated in the Merger Agreement will qualify for
pooling-of-interests accounting treatment; and (xii) the absence of any law or
order or any action taken by any court, governmental, or regulatory authority
prohibiting, restricting, or making illegal the consummation of the Merger.
No assurances can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the appropriate
party. As of the date of this Proxy Statement/Prospectus, the parties have no
reason to believe that any of the conditions set forth above will not be
satisfied.
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The conditions to consummation of the Merger may be waived, in whole or in
part, to the extent permissible under applicable law, by the party for whose
benefit the condition has been imposed, without the approval of the CIS
stockholders. See "-- Amendment, Waiver, and Termination."
REGULATORY APPROVALS
The obligations of NDC and CIS to perform the Merger Agreement and
consummate the Merger are subject to the consent of, filings and registrations
with, and notifications to, all regulatory authorities required for consummation
of the Merger having been obtained or made and are in full force and effect and
the expiration of all waiting periods required by law. Furthermore, no consent
from any regulatory authority which is necessary to consummate the Merger shall
be conditioned or restricted in a manner which in the reasonable judgment of the
board of directors of NDC would so materially adversely impact the economic or
business benefits of the Merger that, had such condition or requirement been
known, NDC would not, in its reasonable judgment, have entered into the Merger
Agreement.
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the FTC and the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the applicable waiting period has expired or been terminated. NDC and CIS filed
notification and report forms under the HSR Act with the FTC and the Antitrust
Division on April 29, 1996. At any time before or after consummation of the
Merger, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the consummation of the Merger or seeking
divestiture of substantial assets of NDC or CIS. At any time before or after the
Effective Time, and notwithstanding that the waiting period under the HSR Act
has expired, any state could take such action under the antitrust laws as it
deems necessary or desirable in the public interest. Such action could include
seeking to enjoin the consummation for the Merger or seeking divestiture of
substantial assets of NDC or CIS. Private parties may also seek to take legal
action under the antitrust laws under certain circumstances.
Based on information available to them, NDC and CIS believe that the Merger
can be effected in compliance with Federal and state antitrust laws. However,
there can be no assurance that a challenge to the consummation of the Merger on
antitrust grounds will not be made or that, if such a challenge were made, NDC
and CIS would prevail or would not be required to accept certain adverse
conditions in order to consummate the Merger.
AMENDMENT, WAIVER, AND TERMINATION
To the extent permitted by law, CIS and NDC, with the approval of their
respective Boards of Directors, may amend the Merger Agreement by written
agreement at any time without the approval of the stockholders of CIS, provided
that after the adoption of the Merger Agreement by CIS's stockholders, no
amendment may decrease the consideration to be received by CIS stockholders
without the requisite approval of CIS stockholders.
Prior to or at the Effective Time, either CIS or NDC, acting through its
respective Board of Directors, chief executive officer or other authorized
officer, may waive any default in the performance of any term of the Merger
Agreement by the other party, may waive or extend the time for the fulfillment
by the other party of any of its obligations under the Merger Agreement, and may
waive any of the conditions precedent to the Merger Agreement, except any
condition that, if not satisfied, would result in the violation of an applicable
law or governmental regulation.
The Merger Agreement may be terminated, and the Merger abandoned, at any
time prior to the Effective Time (a) by the mutual consent of the Boards of
Directors of CIS and NDC, (b) in the event of any inaccuracy of any
representation or warranty of the other party contained in the Merger Agreement
which cannot be or has not been cured within 30 days after giving written notice
to the breaching party of such inaccuracy and which inaccuracy would provide the
terminating party the ability to refuse to consummate the Merger under the
applicable standards set forth in the Merger Agreement (provided that the
terminating
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party is not then in breach of any representation or warranty contained in the
Merger Agreement under the applicable standards set forth in the Merger
Agreement or in material breach of any covenant or other agreement contained in
the Merger Agreement), (c) in the event of a material breach by the other party
of any covenant or agreement contained in the Merger Agreement which cannot be
or has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, (d) if the Merger is not consummated by
September 30, 1996, provided that the failure to consummate is not due to the
breach by the party electing to terminate, (e) if (1) any approval of any
regulatory authority required for consummation of the Merger and the other
transactions contemplated by the Merger Agreement has been denied by final
nonappealable action, or if any action taken by such authority is not appealed
within the time limit for appeal or (2) the stockholders of CIS fail to vote
their approval of the matters submitted for the approval by such stockholders at
the Special Meeting, or (f) if any of the conditions precedent to the
obligations of such party to consummate the Merger have not been satisfied,
fulfilled, or waived by the appropriate party by September 30, 1996 (provided
that the terminating party is not then in breach of any representation or
warranty contained in the Merger Agreement under the applicable standards set
forth in the Merger Agreement or in material breach of any covenant or other
agreement contained in the Merger Agreement). See "-- Expenses and Fees."
In addition, NDC may unilaterally terminate the Merger Agreement in the
event that: (i) without NDC's prior consent, CIS shall have authorized,
recommended, publicly proposed or publicly announced an intention to authorize,
recommend or propose, or entered into an agreement with any person (other than
NDC or an NDC subsidiary) to effect a transaction involving: (x) a merger,
consolidation or similar transaction involving CIS or any CIS subsidiary, (y)
the disposition, by sale, lease, exchange or otherwise, of 25% or more of the
consolidated assets of CIS or any CIS subsidiary, or (z) the issuance, sale or
other disposition (including by way of merger, consolidation, share exchange or
any similar transaction) of securities representing 25% or more of the voting
power of CIS or any CIS subsidiary (an "Acquisition Transaction"); (ii) any
person or group (other than NDC, any NDC subsidiary, or a group of which NDC or
an NDC subsidiary is a member) shall have acquired beneficial ownership of or
the right to acquire beneficial ownership of 25% or more of the then-outstanding
shares of CIS Common Stock; (iii) any person (other than NDC or an NDC
subsidiary) shall have commenced, or shall have filed a registration statement
with respect to, a tender offer or exchange offer to purchase any shares of CIS
Common Stock such that, upon consummation of such offer, such person would own
or control 25% or more of the then-outstanding shares of CIS Common Stock (a
"Tender Offer" or an "Exchange Offer," respectively); or (iv) the holders of CIS
Common Stock shall not have adopted the Merger Agreement or the CIS board of
directors shall have withdrawn or modified in a manner adverse to NDC the
recommendation of CIS's board of directors with respect to the Merger Agreement,
in each case after any person (other than NDC or an NDC subsidiary) shall have:
(x) made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction, (y) commenced a Tender Offer or filed a registration
statement with respect to an Exchange Offer, or (z) filed an application (or
given a notice) seeking the consent to an Acquisition Transaction from any
federal or state governmental or regulatory authority or agency (the events
described in the preceding sentence shall hereinafter be referred to as an "NDC
Termination Event").
CIS may unilaterally terminate the Merger Agreement in the event that CIS
has entered into negotiations with a third party as a result of the continuing
fiduciary duties of CIS's board of directors under applicable law and, pursuant
to such continuing fiduciary duties, CIS has accepted a tender offer or exchange
offer or any proposal for a merger, acquisition of all of the stock or assets
of, or other business combination involving CIS or a CIS subsidiary or the
acquisition of a substantial equity interest in, or a substantial portion of the
assets of, CIS or a CIS subsidiary (the events described in the preceding
sentence shall hereinafter be referred to as a "CIS Termination Event").
CONDUCT OF BUSINESS PENDING THE MERGER
CIS generally has agreed in the Merger Agreement, unless the prior consent
of NDC is obtained, and except as otherwise contemplated by the Merger
Agreement, to operate its business only in the ordinary course, to preserve its
business organizations and assets and to maintain its rights and franchises and
to take no
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action that would adversely affect either the ability of either party to perform
its covenants and agreements under the Merger Agreement or the ability of either
party to obtain any consents or approvals pursuant to any contract, law, order
or permit that are required for the transactions contemplated by the Merger
Agreement. In addition, the Merger Agreement contains certain other restrictions
applicable to the conduct of the business of CIS prior to consummation of the
Merger, as described below.
CIS has agreed in the Merger Agreement not to take certain actions relating
to the operation of its business pending consummation of the Merger without the
prior approval of NDC. Those actions generally include, without limitation: (i)
amending its Certificate of Incorporation ("Certificate") or Bylaws; (ii)
becoming responsible for any obligation for borrowed money in excess of an
aggregate of $100,000, except in the ordinary course of the business of CIS's
subsidiaries consistent with past practices; (iii) acquiring or exchanging any
shares of its capital stock or paying any dividend or other distribution in
respect of its capital stock; (iv) subject to certain exceptions, issuing,
selling or pledging additional shares of any CIS capital stock, any rights to
acquire any such stock or any security convertible into such stock, except
pursuant to the exercise of outstanding stock options; (v) adjusting or
reclassifying any of its capital stock; (vi) acquiring control over any other
entity; (vii) granting any increase in compensation or benefits to its employees
or officers (except as previously disclosed to NDC or as required by law),
paying any bonus (except as previously disclosed to NDC or in accordance with
any existing program or plan), entering into or amending any severance
agreements with its officers or granting any increase in compensation or other
benefits to any of its directors (except as previously disclosed to NDC); (viii)
entering into or amending any employment contract that it does not have the
unconditional right to terminate without certain liability, except as previously
disclosed to NDC and except for any amendment required by law; (ix) adopting any
new employee benefit plan or program or materially changing any existing plan or
program; (x) making any significant changes in accounting methods, except for
any change required by law; (xi) commencing any litigation other than in
accordance with past practice or settling any litigation for material money
damages; or (xii) materially amending or terminating any material contracts.
In addition, CIS has agreed not to solicit, directly or indirectly, any
acquisition proposal from any other person or entity. CIS also has agreed not to
negotiate with respect to any such proposal, to provide information to any party
making such a proposal or to enter into any agreement with respect to any such
proposal, except in compliance with its legal obligations or the fiduciary
obligations of its Board of Directors. CIS has also agreed to cause its advisors
and other representatives not to engage in any of the foregoing activities.
Pursuant to the Merger Agreement, NDC has agreed that, prior to the
Effective Time, it will continue to conduct its business and the business of its
subsidiaries in a manner designed in its reasonable judgment to enhance the
long-term value of the NDC Common Stock and the business prospects of NDC.
EXPENSES AND FEES
The Merger Agreement provides that each party shall be responsible for its
own costs and expenses incurred in connection with the negotiation and
consummation of the transactions contemplated by the Merger Agreement, except
that each of NDC and CIS shall pay one-half of the filing fees payable in
connection with the Registration Statement and this Proxy Statement/Prospectus
and printing costs incurred in connection with the Registration Statement and
this Proxy Statement/Prospectus (the sum of all such costs and expenses shall
hereinafter be referred to as the "Expenses"). NDC shall pay the filing fees
payable in connection with the HSR Act filing. CIS shall pay the costs incurred
in soliciting proxies in connection with the Special Meeting.
If the Merger Agreement is terminated by NDC as the result of an NDC
Termination Event or by CIS as the result of a CIS Termination Event, then CIS
has agreed to pay NDC's Expenses.
If the Merger Agreement is terminated by either NDC or CIS as a result of
(i) a breach by the other party of any representation or warranty that would
have a Material Adverse Effect (as defined in the Merger Agreement) on the
non-breaching party, and which is not timely cured, or (ii) a material breach by
the other party of any representation, warranty, covenant or other agreement
contained in the Merger Agreement which is not timely cured, then the breaching
party or the party that failed to satisfy such conditions shall pay the
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other party the sum of $2,000,000. Such amount shall be paid by CIS in four
equal installments, the first being payable at termination and the remaining
three at the end of three 30-day periods thereafter and shall be paid by NDC
promptly after termination.
If, within 12 months following the termination of the Merger Agreement by
NDC for the breach by CIS of a representation, warranty or covenant, as
described above, or upon the occurrence of an NDC Termination Event, or within
12 months following the termination of the Merger Agreement by CIS upon the
occurrence of a CIS Termination Event, any third party acquires, merges with,
combines with, or purchases a significant amount of the assets of, or purchases
20% or more of the voting securities of, CIS or enters into a binding agreement
to do the foregoing, then such third party (or CIS in the event that such third
party fails to pay) will be required, as a condition to the consummation of such
transaction, to pay NDC's Expenses and an additional sum equal to three percent
(3%) of the aggregate fair market value of the consideration received by the
stockholders of CIS in such a transaction, less any amounts previously paid by
CIS to NDC as a result of the termination of the Merger Agreement; provided,
however, that if the termination of the Merger Agreement was due to a breach by
CIS of a representation or warranty or was due to an NDC Termination Event or a
CIS Termination Event such payment is only required upon consummation of a
business combination by a third party that was involved in discussions or
negotiations with CIS on or before NDC terminated the Merger Agreement.
ACCOUNTING TREATMENT
The Merger is anticipated to be accounted for on a pooling-of-interests
accounting basis. Under this method of accounting, as of the Effective Time, the
assets and liabilities of CIS would be added to those of NDC at their recorded
book values and the stockholders' equity accounts of NDC and CIS would be
combined on NDC's consolidated balance sheet. Consummation of the Merger is
conditioned on, among other things, receipt by NDC of letters from NDC's
independent auditors to the effect that the Merger will qualify for
pooling-of-interests accounting treatment and letters from CIS's independent
auditors to the effect that such firm is not aware of any matters relating to
CIS which would preclude the Merger from qualifying for pooling-of-interests
accounting treatment. See "SUMMARY" and "PRO FORMA COMBINED FINANCIAL DATA."
VOTING AGREEMENT
The following is a brief summary of certain provisions of the Voting
Agreement. The Voting Agreement provides that the Stockholder will vote such
Stockholder's shares of CIS Series A Preferred Stock in favor of the Merger, the
execution and delivery by CIS of the Merger Agreement and the adoption of the
terms thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the Merger Agreement has not been amended so as to
reduce the consideration payable in the Merger to a lesser amount of NDC Common
Stock. The Voting Agreement also provides that the Stockholder will vote such
Stockholder's shares of Stock against any of the following (each a "Competing
Transaction"); any merger agreement or merger (other than the Merger Agreement
and the Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by CIS or any amendment of CIS's Certificate of Incorporation or Bylaws or other
proposal or transaction that would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement. The Stockholder has granted an irrevocable
proxy to NDC to vote such Stockholder's shares of Series A Preferred Stock
consistent with the foregoing agreements. The Stockholder has also agreed not
to, and not to permit any, of its representatives to, directly or indirectly,
solicit, initiate or encourage the submission of, any takeover proposal or
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any takeover proposal.
The Voting Agreement will terminate upon the earlier of the Effective Time
or the date upon which the Merger Agreement is terminated in accordance with its
terms if the Merger Agreement is terminated by CIS because of a breach of the
Merger Agreement by NDC. If the Merger Agreement is terminated in accordance
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with its terms and such termination was not initiated by CIS because of a breach
of the Merger Agreement by NDC, then, for a period of four months following such
termination, (i) the Stockholder's agreement to vote against any Competing
Transaction, the irrevocable proxy granted by the Stockholder to vote against
any Competing Transaction and the Stockholder's agreement not to facilitate any
takeover proposal will continue in effect and (ii) the Stockholder will not be
permitted to transfer any of such Stockholder's shares of CIS Series A Preferred
Stock in connection with any Competing Transaction or takeover proposal.
APPRAISAL RIGHTS
The holders of CIS Common Stock will not have any appraisal rights in
connection with the Merger. The holders of CIS Series A Preferred Stock are
entitled to appraisal rights under Section 262 of the Delaware General
Corporation Law ("Section 262").
If the Merger is consummated, holders of CIS Series A Preferred Stock who
wish to exercise their appraisal rights will be entitled to have the "fair
value" of their shares of CIS Series A Preferred Stock at the Effective Time
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) judicially determined and paid to them in cash,
together with interest, if any, by complying with the provisions of Section 262.
Stockholders of record of CIS Series A Preferred Stock who desire to
exercise their appraisal rights must satisfy all of the following conditions. A
written demand for appraisal of their CIS Series A Preferred Stock must be
delivered to CIS before the taking of the vote of the CIS stockholders on
adoption of the Merger Agreement. Such demand will be sufficient if it
reasonably informs CIS of the stockholder's identity and that the stockholder
intends thereby to demand appraisal of his shares. This written demand for
appraisal of shares must be in addition to and separate from voting against,
abstaining from voting, or failing to vote on adoption of the Merger Agreement.
Voting against, abstaining from voting, or failing to vote on adoption of the
Merger Agreement will not constitute a demand for appraisal within the meaning
of Section 262.
Holders of CIS Series A Preferred Stock electing to exercise their
appraisal rights under Section 262 must not vote for adoption of the Merger
Agreement. Voting for adoption of the Merger Agreement, or delivering a proxy in
connection with the Special Meeting (unless the proxy specifies a vote against,
or abstaining from voting on, adoption of the Merger Agreement), will constitute
a waiver of a stockholder's right of appraisal and will nullify any written
demand for appraisal submitted by the stockholder.
A demand for appraisal must be executed by or for the stockholder of
record, fully and correctly, as such stockholder's name appears on such
stockholder's CIS Series A Preferred Stock certificates. If the CIS Series A
Preferred Stock is owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, such demand must be executed by the fiduciary.
If the CIS Series A Preferred Stock is owned of record by more than one person,
as in a joint tenancy in common, such demand must be executed by all joint
owners. An authorized agent, including an agent for two or more joint owners,
may execute the demand for appraisal for a stockholder of record; however, the
agent must identify the record owner and expressly disclose the fact that, in
exercising the demand, he is acting as agent for the record owner.
A record owner, such as a broker, who holds CIS Series A Preferred Stock as
a nominee for others may exercise appraisal rights with respect to the shares
held for all or less than all beneficial owners of shares as to which the holder
is the record owner. In such case, the written demand must set forth the number
of shares covered by such demand. Where the number of shares is not expressly
stated, the demand will be presumed to cover all shares of CIS Series A
Preferred Stock outstanding in the name of such record owner.
Holders of CIS Series A Preferred Stock who elect to exercise appraisal
rights should mail or deliver their written demands to: Chemical Mellon
Shareholder Services, L.L.C., 85 Challenger Road, Overpeck Centre, Ridgefield
Park, New Jersey 07660-2104. The written demand for appraisal should specify the
stockholder's name and mailing address, the number of shares of CIS Series A
Preferred Stock owned, and state that the stockholder is thereby demanding
appraisal. Within ten days after the Effective Time, CIS must provide notice of
the Effective Time to all holders of CIS Series A Preferred Stock who have
complied with Section 262 and have not voted for adoption of the Merger
Agreement.
Within 120 days after the Effective Time, either CIS or any holder of CIS
Series A Preferred Stock who has complied with the required conditions of
subsections (a) and (d) of Section 262 and who is otherwise
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entitled to appraisal rights may file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of shares of CIS Series A
Preferred Stock of the dissenting stockholders. If a petition for an appraisal
is timely filed, after a hearing on such petition, the Court of Chancery will
determine which stockholders are entitled to appraisal rights and will appraise
the shares of CIS Series A Preferred Stock owned by such stockholders,
determining the fair value of such shares, exclusive of any element of value
arising from the accomplishment or expectation of the Merger, together with a
fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. In determining fair value, the court is to take into account all
relevant factors. In Weinberger v. UOP, Inc., et al, decided February 1, 1983,
the Delaware Supreme Court expanded the considerations that could be considered
in determining fair value in an appraisal proceeding, stating that " . . . proof
of value by any techniques or methods, which are generally considered acceptable
in the financial community and otherwise admissible in court . . . " should be
considered, and that " . . . [f]air price obviously requires consideration of
all relevant factors involving the value of a company . . . ". The Delaware
Supreme Court stated that in making this determination of fair value the court
must consider " . . . market value, asset value, dividends, earnings prospects,
the nature of the enterprise and any other facts which were known or which could
be ascertained as of the date of merger and which throw any light on future
prospects of the merged corporation . . . ". The court further stated that
" . . . elements of future value, including the nature of the enterprise, which
are known or susceptible of proof as of the date of the merger and note the
product of speculation, may be considered . . . ". However, the court noted that
Section 262 provides that fair value is to be determined " . . . exclusive of
any element of value arising from the accomplishment or expectation of the
merger . . . ".
At the hearing on such petition filed in the Court of Chancery, the court
will determine the stockholders who have complied with Section 262 and who have
become entitled to appraisal rights. The court may require dissenting
stockholders to submit their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings. Failure of a
dissenting stockholder to submit his certificates may result in the dismissal of
such stockholder's appraisal proceedings.
Holders of CIS Series A Preferred Stock considering seeking appraisal
should have in mind that the fair value of their shares determined under Section
262 could be more than, the same as, or less than the consideration they are
entitled to receive pursuant to the Merger Agreement if they do not seek
appraisal of their shares and that investment banking opinions as to fairness
from a financial point of view are not necessarily opinions as to fair value
under Section 262. The cost of the appraisal proceeding may be determined by the
Court of Chancery and taxed against the parties as the court deems equitable in
the circumstances. Upon application of a dissenting stockholder, the court may
order that all or a portion of the expenses incurred by any dissenting
stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorneys' fees and the fees and expenses of experts, be
charged pro rata against the value of all shares of CIS Series A Preferred Stock
entitled to appraisal. In the absence of such a determination or assessment,
each party bears its own expenses.
Any holder of CIS Series A Preferred Stock who has duly demanded appraisal
in compliance with Section 262 will not, after the Effective Time, be entitled
to vote for any purpose the shares of CIS Series A Preferred Stock subject to
such demand or to receive payment of dividends or other distributions, if any,
on such shares, except for dividends or distributions payable to stockholders of
record as of a date prior to the Effective Time.
At any time within 60 days after the Effective Time, any former holder of
CIS Series A Preferred Stock will have the right to withdraw a demand for
appraisal and to accept the consideration offered in the Merger Agreement; after
this period, such holder may withdraw his demand for appraisal only with the
consent of NDC. If no petition for appraisal is filed with the Court of Chancery
within 120 days after the Effective Time, stockholders' rights to appraisal
shall cease and all stockholders will be entitled to receive the consideration
provided in the Merger Agreement. Inasmuch as NDC has no obligation to file such
a petition, and has no present intention to do so, any holder of CIS Series A
Preferred Stock who desires such a petition to be filed is advised to file it on
a timely basis. However, no petition timely filed in the Court of Chancery
demanding appraisal will be dismissed as to any holder of CIS Series A Preferred
Stock without the approval of the court, and such approval may be conditioned
upon such terms as the court deems just.
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Within 120 days after the Effective Time of the Merger, any holder of CIS
Series A Preferred Stock who has complied with subsections (a) and (d) of
Section 262 is entitled, upon written request, to receive from CIS a statement
setting forth the aggregate number of shares not voted in favor of the Merger
and the aggregate number of holders of shares who have demanded appraisal. Such
written statement shall be mailed to such stockholder within ten days after such
request is received by CIS or within ten days of the expiration of the period
for delivery of demand for appraisal under Section 262, whichever is later.
THE FOREGOING IS ONLY A SUMMARY OF THE RIGHTS OF A DISSENTING HOLDER OF CIS
SERIES A PREFERRED STOCK. ANY HOLDER OF CIS SERIES A PREFERRED STOCK WHO INTENDS
TO DISSENT SHOULD CAREFULLY REVIEW THE TEXT OF THE DELAWARE STATUTORY LAW SET
FORTH IN ANNEX C TO THIS PROSPECTUS/PROXY STATEMENT AND SHOULD ALSO CONSULT WITH
HIS ATTORNEY. THE FAILURE OF A HOLDER OF CIS SERIES A PREFERRED STOCK TO FOLLOW
PRECISELY THE PROCEDURES SUMMARIZED ABOVE AND SET FORTH IN ANNEX C TO THIS
PROSPECTUS/PROXY STATEMENT, MAY RESULT IN LOSS OF APPRAISAL RIGHTS. NO FURTHER
NOTICE OF THE EVENTS GIVING RISE TO APPRAISAL RIGHTS OR ANY STEPS ASSOCIATED
THEREWITH WILL BE FURNISHED TO HOLDERS OF CIS SERIES A PREFERRED STOCK, EXCEPT
AS INDICATED ABOVE OR OTHERWISE REQUIRED BY LAW.
In general, any dissenting stockholder who perfects his right to be paid
the "fair value" of his CIS Series A Preferred Stock in cash will recognize
taxable gain or loss for federal income tax purposes upon receipt of such cash.
See "-- Certain Federal Income Tax Consequences."
RESALES OF NDC COMMON STOCK
The shares of NDC Common Stock issued in connection with the Merger will be
freely transferable under the Securities Act, except for shares issued to any
stockholder who may be deemed to be an "affiliate" (generally including, without
limitation, directors, certain executive officers, and beneficial owners of 10%
or more of any class of capital stock) of CIS for purposes of Rule 145 under the
Securities Act as of the date of the Special Meeting or for purposes of
applicable interpretations regarding pooling-of-interests accounting treatment.
Such affiliates may not sell their shares of NDC Common Stock acquired in
connection with the Merger except pursuant to an effective registration
statement under the Securities Act or other applicable exemption from the
registration requirements of the Securities Act and until such time as financial
results covering at least 30 days of combined operations of NDC and CIS after
the consummation of the Merger have been published. NDC may place restrictive
legends on certificates representing NDC Common Stock issued to all persons who
are deemed to be "affiliates" of CIS under Rule 145. In addition, CIS has agreed
to use its reasonable efforts to cause each person or entity that is an
"affiliate" to enter into a written agreement in substantially the form attached
to the Merger Agreement relating to such restrictions on sale or other transfer.
This Proxy Statement/Prospectus does not cover resales of NDC Common Stock
received by any person who may be deemed to be an affiliate of CIS.
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PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following unaudited pro forma condensed combined financial statements
are based on the historical presentation of the consolidated financial
statements of NDC and CIS. The Unaudited Pro Forma Condensed Combined Statements
of Operations for the years ended May 31, 1995, 1994, and 1993 and the nine
months ended February 29, 1996 give effect to the Merger as if it had occurred
on June 1, 1992 and to pro forma adjustments related to the GPS Transaction as
if it had occurred on June 1, 1994. For comparability purposes, CIS's nine and
twelve months ended December 31 and June 30, respectively, are used in
conjunction with the NDC nine and twelve months ended February 29 and May 31,
respectively. Accordingly, CIS's operating results for the three months ended
June 30, 1995 were duplicated in each of the nine months ended December 31, 1995
and the twelve months ended June 30, 1995. CIS's revenues and net income for
that three month period were $11,068,000 and $1,016,000, respectively. The
Unaudited Pro Forma Condensed Combined Balance Sheet as of February 29, 1996
gives effect to the Merger as if it had occurred on February 29, 1996. The
Condensed Combined Financial Statements do not include the effects of certain
other acquisitions by NDC. The unaudited pro forma combined financial statements
should be read in conjunction with the historical consolidated financial
statements, including the notes thereto, of NDC, MAPP, and CIS, incorporated by
reference herein, and the pro forma financial information relating to the GPS
Transaction, incorporated by reference herein. See "AVAILABLE INFORMATION",
"INCORPORATION OF CERTAIN INFORMATION BY REFERENCE," "SUMMARY -- Recent
Financial Developments" and "THE MERGER -- Accounting Treatment."
The Merger is expected to be accounted for under the pooling-of-interests
method of accounting. The GPS Transaction has been accounted for under the
purchase method of accounting. The total purchase price of this acquisition has
been allocated to tangible and identifiable intangible assets and liabilities
based upon management's estimate of their respective fair market values with the
excess of cost over net assets acquired allocated to goodwill. The allocation of
the purchase price for the GPS transaction is subject to revision when
additional information concerning asset and liability valuation is obtained.
These pro forma statements may not be indicative of the results that
actually would have occurred if the transactions had been in effect on the dates
indicated or which may be obtained in the future. These combined pro forma
statements do not reflect any potential savings which may result from the
combined operations of NDC, GPS or CIS, nor certain Merger-related expenses as
disclosed in Note 3 to the Pro Forma Condensed Combined Balance Sheet.
The purchase acquisitions made by NDC and CIS in fiscal year 1995 exclusive
of the GPS Transaction are immaterial to the following unaudited pro forma
condensed combined balance sheet and pro forma condensed combined statements of
operations after giving effect to the Merger under the pooling-of-interests
method of accounting. Accordingly, they are excluded from the Unaudited Pro
Forma Condensed Combined Financial Statements.
43
<PAGE> 48
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
NDC AND CIS
NDC PRO FORMA
PRO FORMA(1) CIS(4) ADJUSTMENTS COMBINED
------------ ---------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 1 $ 598 $ 0 $ 599
Accounts receivable, net.................... 40,293 17,084 0 57,377
Other current assets(3)..................... 10,131 2,071 0 12,202
------------ ---------- ----------- -----------
Total current assets................ 50,425 19,753 0 70,178
------------ ---------- ----------- -----------
Property and equipment, net................... 45,900 14,991 0 60,891
Acquired intangibles and goodwill, net........ 198,510 24,738 0 223,248
Other(3)...................................... 2,244 2,871 (200) 4,915
------------ ---------- ----------- -----------
246,654 42,600 (200) 289,054
------------ ---------- ----------- -----------
Total assets........................ 297,079 62,353 (200) 359,232
========== ========= ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable(3)......................... 7,232 3,265 3,100 13,597
Line of credit payable...................... 11,500 3,738 0 15,238
Notes payable............................... 1,475 2,231 0 3,706
Mortgage payable............................ 10,978 0 0 10,978
Other current liabilities................... 31,139 1,844 0 32,983
------------ ---------- ----------- -----------
Total current liabilities........... 62,324 11,078 3,100 76,502
------------ ---------- ----------- -----------
Long-term debt................................ 1,259 7,414 0 8,673
Other long-term liabilities................... 11,344 437 0 11,781
------------ ---------- ----------- -----------
Total liabilities................... 74,927 18,929 3,100 96,956
------------ ---------- ----------- -----------
Minority interest........................... 19,439 0 0 19,439
Stockholders' equity:
Common and preferred stock(2)............... 2,881 341 12 3,234
Capital in excess of par value(2)........... 101,152 51,409 (12) 152,549
Retained earnings(3)........................ 99,698 (8,326) (3,300) 88,072
Equity adjustments.......................... (1,018) 0 0 (1,018)
------------ ---------- ----------- -----------
Total stockholders' equity.......... 202,713 43,424 (3,300) 242,837
------------ ---------- ----------- -----------
Total liabilities and stockholders'
equity............................ 297,079 62,353 (200) 359,232
========== ========= ========= ==========
</TABLE>
- ---------------
(1) Assumes consummation of the GPS Transaction as of February 29, 1996. Pro
forma financial information relating to the GPS Transaction is incorporated
by reference herein and is reflected in the NDC column. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
(2) To reflect the issuance of approximately 2,827,968 shares of NDC Common
Stock, par value $.125 per share in exchange for the outstanding shares of
CIS Capital Stock, assuming the Exchange Ratio.
(3) The pro forma condensed statements of operations do not reflect
non-recurring costs resulting from the Merger. The management of NDC
estimates that the direct out-of-pocket costs associated with the Merger
consisting primarily of investment banking and other professional fees will
approximate $3.3 million and will be charged to operations in the quarter
in which the Merger is consummated. These costs are considered capital
transactions for tax purposes and, accordingly, no tax benefit has been
reflected. The amount excludes all other costs to merge the two companies.
Following the closing of the Merger, NDC expects to take a charge for these
other Merger-related costs. This estimated expense has been charged to
retained earnings in the accompanying pro forma balance sheet.
(4) Certain CIS amounts listed in the balance sheet have been reclassified in
order to conform to NDC's presentation.
44
<PAGE> 49
NDC AND CIS
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED MAY 31,
FEBRUARY 29, ------------------------------
1996(1) 1995(1) 1994(1) 1993(1)
------------ -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenue.............................................. $271,968 $321,932 $237,659 $239,810
Operating expenses:
Cost of service(2)................................. 150,996 182,657 139,563 145,491
Sales, general and administrative(2)............... 89,530 108,477 77,172 77,925
Non-recurring charges.............................. 0 0 2,500 1,500
------------ -------- -------- --------
240,526 291,134 219,235 224,916
------------ -------- -------- --------
Operating income..................................... 31,442 30,798 18,424 14,894
Other income (expense):
Interest and other income(2)....................... 476 791 1,527 2,626
Interest and other expense(2)...................... (2,901) (3,124) (2,600) (2,971)
Minority interest.................................. (336) (416) 0 0
------------ -------- -------- --------
(2,761) (2,749) (1,073) (345)
------------ -------- -------- --------
Income from continuing operations before income
taxes.............................................. 28,681 28,049 17,351 14,549
Provision for income taxes........................... 10,125 9,390 5,217 5,604
------------ -------- -------- --------
Income from continuing operations.................... 18,556 18,659 12,134 8,945
========= ======== ======== ========
Number of common and common equivalent shares(3)..... 27,163 26,640 22,347 21,669
Income from continuing operations per share.......... 0.68 0.70 0.54 0.41
========= ======== ======== ========
</TABLE>
- ---------------
(1) Reflects consummation of the Merger as of June 1, 1992 and the GPS
Transaction as of June 1, 1994. Pro forma financial information relating to
the GPS Transaction is incorporated by reference herein. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE." The
pro forma condensed combined financial information contains no adjustments
to conform the accounting policies of the two companies because any such
adjustments have been determined to be immaterial by the management of NDC.
(2) Certain CIS amounts in preparing the unaudited pro forma condensed combined
statements of operations have been reclassified in order to conform to
NDC's presentation.
(3) Gives effect to: (i) the additional shares of NDC Common Stock to be issued
in connection with the Merger; and (ii) the additional common stock
equivalents assumed in the Merger.
45
<PAGE> 50
CERTAIN DIFFERENCES IN THE RIGHTS OF NDC AND CIS STOCKHOLDERS
At the Effective Time, CIS stockholders automatically will become
stockholders of NDC, and their rights as stockholders will be determined by
NDC's Certificate and Bylaws. The following is a summary of the material
differences in the rights of stockholders of NDC and CIS. Both NDC and CIS are
Delaware corporations governed by the Delaware General Corporation Law ("DGCL").
Accordingly, except as set forth below, there are no material differences
between the rights of an NDC stockholder under NDC's Certificate and Bylaws and
the DGCL, on the one hand, and the rights of a CIS stockholder under CIS's
Certificate and Bylaws and the DGCL, on the other hand. This summary does not
purport to be a complete discussion of, and is qualified in its entirety by
reference to, the DGCL and the Certificate and Bylaws of each corporation.
AUTHORIZED CAPITAL STOCK
NDC. The authorized capital stock of NDC consists of 60,000,000 shares of
Common Stock, par value $.125 per share, and 1,000,000 shares of preferred
stock, par value $1.00 per share ("NDC Preferred Stock"). The following
description of the capital stock is qualified in all respects by reference to
the Restated Certificate of Incorporation, as amended, and Bylaws, as amended,
of NDC, copies of which are on file at NDC's principal executive offices.
NDC Common Stock. The holders of NDC Common Stock, subject to such rights
as may be granted to the holders of NDC Preferred Stock, elect all directors and
are entitled to one vote per share. All shares of NDC Common Stock participate
equally in dividends when, as and if declared by the Board of Directors and
share ratably, subject to the rights and preferences of any NDC Preferred Stock,
in net assets on liquidation. The shares of NDC Common Stock outstanding are
duly authorized, validly issued, fully paid and nonassessable. The shares of NDC
Common Stock have no preference, conversion, exchange, preemptive or cumulative
voting rights.
Stock Purchase Rights. Pursuant to a Rights Agreement (as defined herein)
each share of NDC Common Stock is issued one NDC Right which entitles the
registered holder to purchase from NDC one one-hundredth of a share (a "Unit")
of Series A Junior Participating Preferred Stock, par value $1.00 per share (the
"Junior Preferred Stock"), at a purchase price of $45.00 per Unit, subject to
adjustment. Until the Distribution Date the NDC Rights are unexercisable and
attach to and transfer with the NDC Common Stock certificates. The Distribution
Date will occur upon the earlier of an announcement of the acquisition by a
third party of 15% or more of the NDC Common Stock, or the commencement of a
tender offer for 15% or more of the NDC Common Stock.
The NDC Rights may have certain anti-takeover effects because the NDC
Rights will cause substantial dilution to a person or group that attempts to
acquire NDC on terms not approved by the Board of Directors of NDC unless the
offer is conditioned on a substantial number of NDC Rights being acquired.
However, the NDC Rights should not interfere with any merger or other business
combination approved by a majority of the NDC directors since the NDC Rights may
be redeemed by NDC at $.01 per NDC Right at any time on or prior to a stock
acquisition. Thus, the NDC Rights are intended to encourage persons who may seek
to acquire control of the company to initiate such an acquisition through
negotiations with the Board of Directors. However, the effect of the NDC Rights
may be to discourage a third party from making a partial tender offer or
otherwise attempting to obtain a substantial equity position in the equity
securities of, or seeking to obtain control of, NDC. To the extent any potential
acquirers are deterred by the NDC Rights, the NDC Rights may have the effect of
preserving incumbent management in office.
NDC Preferred Stock. NDC is authorized to issue 1,000,000 shares of NDC
Preferred Stock, none of which is outstanding, although 300,000 shares of NDC
Preferred Stock have been reserved for issuance pursuant to the NDC Rights
described above. NDC Preferred Stock may be issued from time to time by the
Board of Directors of NDC, without stockholder approval, in such series and with
such voting powers, full or limited, and such designations, preferences and
relative, participating, optional or other special rights, qualifications,
limitations or restrictions as may be fixed by the Board of Directors. The
issuance of NDC
46
<PAGE> 51
Preferred Stock by the Board of Directors could adversely affect the rights of
holders of shares of NDC Common Stock since NDC Preferred Stock may be issued
having preference with respect to dividends and in liquidation over the NDC
Common Stock, and have voting rights, contingent or otherwise, that could dilute
the voting rights, net income per share and net book value of the NDC Common
Stock. In addition, while the Board of Directors has no current intention of
doing so, the ability of the Board of Directors to issue shares of NDC Preferred
Stock and to set the voting powers and such designations, preferences and
relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof without further stockholder action could
help to perpetuate incumbent management of NDC or prevent a business combination
involving NDC that is favored by NDC's stockholders. As of the date of this
Proxy Statement/Prospectus, other than in connection with the NDC Rights
described above, the Board of Directors has not authorized the issuance of any
shares of NDC Preferred Stock, and NDC has no agreements, arrangements or
understandings with respect to the issuance of any shares of NDC Preferred
Stock.
CIS. The authorized capital stock of CIS consists of 50,000,000 shares of
CIS Common Stock, $.01 par value, and 20,000,000 shares of preferred stock, $.01
par value ("CIS Preferred Stock"). The following description of CIS capital
stock is qualified in all respects by reference to the Certificate of
Incorporation, as amended, and Bylaws, as amended, of CIS, copies of which are
on file at CIS's principal executive offices.
CIS Common Stock. CIS is authorized to issue 50,000,000 shares of CIS
Common Stock, $.01 par value, 30,188,589 of which are outstanding. The holders
of CIS Common Stock are entitled to one vote per share on all matters submitted
to the stockholders for a vote. Subject to the preferences of the CIS Preferred
Stock, all shares of CIS Common Stock participate equally in dividends when, as
and if declared by the Board of Directors and share ratably subject to the
rights and preferences of any CIS Preferred Stock, in net assets on dissolution.
The shares of CIS Common Stock outstanding are duly authorized, validly issued,
fully paid and nonassessable. The shares of CIS Common Stock have no preference,
conversion, exchange or cumulative voting rights.
CIS Preferred Stock. CIS is authorized to issue 20,000,000 shares of CIS
Preferred Stock, 2,384,182 shares of which are outstanding. CIS Preferred Stock
may be issued from time to time by the Board of Directors of CIS, without
stockholder approval, in such series and with such voting powers, full or
limited, and such designation, powers, preferences and rights, including
conversion, redemption and other rights, qualifications, limitations or
restrictions as may be fixed by the Board of Directors of CIS. The issuance of
CIS Preferred Stock by the Board of Directors of CIS could adversely affect the
rights of holders of shares of CIS Common Stock since CIS Preferred Stock may be
issued having preference with respect to dividends and in liquidation over the
CIS Common Stock, and have voting rights, contingent or otherwise, that could
dilute the voting rights, net income per share and net book value of the CIS
Common Stock. In addition, while the Board of Directors has no current intention
of doing so, the ability of the Board of Directors to issue shares of CIS
Preferred Stock and to set the voting powers and such designations, preferences
and relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof without further stockholder action could
help to perpetuate incumbent management of CIS or prevent a business combination
involving CIS that is favored by CIS's stockholders.
CIS Series A Preferred Stock. The Board of Directors, pursuant to CIS's
Certificate of Incorporation, has designated one series, consisting of 2,384,182
shares, of CIS Preferred Stock (the "CIS Series A Preferred Stock"), of which
2,384,182 shares are outstanding. The number of shares designated as CIS Series
A Preferred Stock may be increased or decreased (but not below the number then
outstanding) by resolution of the Board of Directors. The rights of the holders
of CIS Series A Preferred Stock are prior to those of the holders of CIS Common
Stock with respect to amounts distributable to stockholders upon liquidation.
The shares of CIS Series A Preferred Stock are not redeemable.
Holders of CIS Series A Preferred Stock are entitled to share ratably in
all dividends declared and paid to the holders of CIS Common Stock. Furthermore,
no dividend may be declared, set aside, or paid to the holders of CIS Common
Stock or any other class or series of CIS Capital Stock ranking junior to the
CIS Series A Preferred Stock unless the full cumulative dividends (including the
dividend, distribution, redemp-
47
<PAGE> 52
tion, purchase or other acquisition) on all outstanding shares of CIS Series A
Preferred Stock shall have been, or shall then be, paid.
The shares of CIS Series A Preferred Stock are convertible, at the option
of the holder thereof, into an equal number of shares of CIS Common Stock (the
"Conversion Ratio"). The Conversion Ratio is automatically proportionately
adjusted in the event of a stock split, stock dividend, issuance of warrants,
issuance of convertible debt or securities, or reclassification with respect to
shares of CIS Common Stock. The Conversion Rate may also be increased by CIS as
it considers advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.
In case of any consolidation or share exchange of CIS with, or merger of
CIS into, any other person, any merger of another person into CIS (including the
Merger, but excluding any other merger which does not result in any
reclassification, conversion, exchange, or cancellation of outstanding shares of
CIS Common Stock) or any sale or transfer of all or substantially all of the
assets of CIS, the holders of shares of CIS Series A Preferred Stock are
entitled to receive the same consideration as if such holder would have received
had he converted his CIS Series A Preferred Stock into CIS Common Stock
immediately prior to such consolidation, merger, share exchange, sale or
transfer.
Except as hereinafter described and as is required by law, the CIS Series A
Preferred Stock has no voting rights. Whenever dividends payable on shares of
CIS Series A Preferred Stock or any other series of CIS Preferred Stock are in
arrears equal to two (2) full quarterly dividends thereon, the holders of the
CIS Series A Preferred Stock, together with holders of shares of any other
series of CIS Preferred Stock then outstanding which have equivalent voting
rights, voting as a single class, may elect two additional members to the Board
of Directors to serve until such time as all dividends in arrears on the CIS
Series A Preferred Stock and all such other series of CIS Preferred Stock have
been fully paid or set aside for payment. So long as any shares of CIS Series A
Preferred Stock are outstanding, the consent of the holders of two-thirds of the
outstanding shares of CIS Series A Preferred Stock, together with the holders of
shares of any other series of CIS Preferred Stock voting as a single class shall
be necessary to permit any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any provisions of the CIS certificate of
incorporation which would materially affect any right, preference, privilege or
power of the Series A Preferred Stock. In all instances in which holders of CIS
Series A Preferred Stock are entitled to vote, such holders are entitled to one
vote per share of CIS Series A Preferred Stock held.
DIRECTORS AND CLASSES OF DIRECTORS
NDC
The Board of Directors of NDC is divided into three classes as nearly equal
in number as the total number of directors permits. Directors are elected to
each class at successive annual meetings to serve three year terms. Any newly
created or eliminated directorships resulting from an increase or decrease in
the number of authorized directors are divided equally among the three classes
so as to maintain such classes as nearly equal in number as possible. Any
director or the entire Board of Directors of NDC may be removed from office only
upon the affirmative vote of at least 80% of the holders of all classes of NDC
stock, voting as a single class.
The above-mentioned provisions (the "NDC Board Provisions") with regard to
the Board of Directors of NDC may have certain anti-takeover effects by
preventing or delaying a change in the membership of the Board of Directors of
NDC. The NDC Board Provisions are intended to encourage persons who may seek to
acquire control of NDC to initiate such an acquisition through negotiations with
the Board of Directors of NDC. However, the effect of the NDC Board Provisions
may be to discourage a third party from making a partial tender offer or
otherwise attempting to obtain a substantial position in the equity securities
of, or seeking to obtain control of, NDC. To the extent any potential acquirors
are deterred by the NDC Board Provisions, the NDC Board Provisions may have the
effect of preserving incumbent management in office.
48
<PAGE> 53
CIS
The Board of Directors of CIS is divided into three classes as nearly equal
in number as the total number of directors permits. Directors are elected to
each class at successive annual meetings to serve three year terms. Any newly
created or eliminated directorships resulting from an increase or decrease in
the number of authorized directors are divided equally among the three classes
so as to maintain such classes as nearly equal in number as possible.
The above-mentioned provisions (the CIS Board Provisions") with regard to
the Board of Directors of CIS may have certain anti-takeover effects by
preventing or delaying a change in the membership of the board of Directors of
CIS. The CIS Board Provisions are intended to promote continuity and stability
of CIS's management by ensuring that approximately two-thirds of CIS's directors
at any given time will have previous experience as a CIS director. The CIS Board
Provisions are further intended to encourage persons who may seek to acquire
control of CIS to initiate such an acquisition through negotiations with the
Board of Directors of CIS. However, the effect of the CIS Board Provisions may
be to discourage a third party from making a partial tender offer or otherwise
attempting to obtain a substantial position in the equity securities of, or
seeking to obtain control of, CIS. To the extent any potential acquirors are
deterred by the CIS Board Provisions, the CIS Board Provisions may have the
effect of preserving incumbent management in office.
STOCKHOLDER MEETINGS
NDC
NDC's bylaws provide for annual meetings of stockholders to be held on the
third Thursday of October and for special meetings to be held: (i) on call of
the Chairman or President; (ii) at the request of a majority of the members of
the Board of Directors; or (iii) at the request of the holders of a majority of
the then-outstanding capital stock of NDC entitled to vote. Stockholders
entitled to vote are entitled to written notice stating the place, date, hour
and, in the case of a special meeting, the purpose of the meeting not less than
10 nor more than 50 days before the date of the meeting. The holders of a
majority of the stock issued and outstanding and entitled to vote at a meeting,
present in person or represented by proxy, constitutes a quorum. When a quorum
is present at a meeting, the vote of the holders of a majority of the stock
having voting power, present in person or by proxy, can approve any resolution
properly brought before the meeting, except for resolutions: (i) increasing the
number of authorized shares of capital stock); (ii) approving of a Business
Combination (as defined in NDC's certificate of incorporation); (iii) amending
Article Fourth of NDC's certificate of incorporation (Business Combination
provisions); (iv) removing any director or the entire Board of Directors; (v)
amending Article Eighth, Thirteenth, or Fourteenth of NDC's certificate of
incorporation (board classes, no stockholder action except at a meeting, and
board authority to alter, amend or repeal bylaws without stockholder approval);
or (vi) requiring a greater vote as provided by applicable law. The foregoing
resolutions must be approved by the affirmative vote of (i) 50%; (ii)
two-thirds; (iii) two-thirds; (iv) 80%; and (v) 80%, respectively of the
stockholders entitled to vote.
CIS
CIS's bylaws provide for annual meetings to be held on the second Tuesday
of May and for special meetings to be held (i) at the request of a majority of
the Board of Directors; or (ii) at the request of the holders of 5% of the
then-outstanding capital stock of CIS entitled to vote. Stockholders entitled to
vote are entitled to written notice stating the place, date, hour, and, in the
case of a special meeting, the purpose of the meeting not less than 10 nor more
than 60 days before the date of the meeting. The holders of 50% of the stock
issued and outstanding and entitled to vote at a meeting, present in person or
represented by proxy, constitutes a quorum. When a quorum is present at a
meting, the vote of the holders of a majority of the stock having voting power,
present in person or by proxy, can approve any resolution properly brought
before the meeting, except: (i) where such resolution relates to a merger,
consolidation, reorganization, or other action or amendment which would
materially affect any right, preference, privilege or power of the CIS Series A
Preferred Stock, in which case the affirmative vote of the holders of two-thirds
of the shares of CIS Series A Preferred Stock then outstanding is required, or
(ii) where a greater vote is required by applicable law.
49
<PAGE> 54
ANTI-TAKEOVER PROVISIONS
NDC
NDC's Certificate and Bylaws and the NDC Rights Agreement contain certain
protective provisions, which are intended to facilitate stability of leadership
and enhance the NDC Board of Directors' role in connection with attempts to
acquire control of NDC so that the Board may further and protect the interests
of NDC, its stockholders, and its other constituencies as appropriate under the
circumstances. In particular, if the Board determines that a sale of control is
in the best interests of the stockholders, these protective provisions are
designed to enhance the Board's ability to maximize the value to be received by
the stockholders upon such a sale. Although NDC management believes that the
protective provisions are beneficial to NDC's stockholders, such provisions may
also discourage certain acquisition proposals, which may deprive NDC's
stockholders of certain opportunities to sell their shares at a premium over
prevailing market prices.
Pursuant to its authority to issue different series of NDC Preferred Stock,
the Board of Directors of NDC has established the NDC Rights Agreement and has
designated the preferences and rights of the NDC Junior Preferred Stock to
include certain provisions which may have the effect of discouraging unsolicited
offers to acquire NDC. See "-- Stockholder Rights Plan."
CIS
The provision of CIS's Certificate granting the CIS Board of Directors the
authority to provide for the issuance of CIS Preferred Stock in series may
discourage certain acquisition proposals, which may deprive CIS's stockholders
of certain opportunities to sell their shares at a premium over prevailing
market prices. See "-- CIS Preferred Stock."
STOCKHOLDER RIGHTS PLAN
NDC
Each share of NDC Common Stock has attached to it one right (an "NDC
Right") issued pursuant to a Rights Agreement between NDC and Wachovia Bank of
North Carolina, N.A., as Rights Agent (the "NDC Rights Agreement"). Each NDC
Right entitles its registered holder to purchase one one-hundredth of a share of
NDC Participating Preferred Stock at a price of $45.00 (the "Purchase Price"),
as adjusted from time to time under certain circumstances, after the earlier of
(i) the tenth day following the commencement of, or first public announcement of
an intention to commence, a tender offer or exchange offer which, if successful,
would result in any person or group having beneficial ownership of 15% or more
of the outstanding NDC Common Stock (an "Acquiring Person"), and (ii) the tenth
day after the first date of a public announcement that a person or group has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding NDC Common Stock (the "Stock Acquisition Date") (in either
case, the "Separation Date").
The NDC Rights will not trade separately from the NDC Common Stock unless
and until the Separation Date occurs. Because of the nature of the dividend,
liquidation and voting rights of the shares of NDC Participating Preferred
Stock, the value of the one one-hundredth of a share of NDC Participating
Preferred Stock purchasable upon the exercise of each NDC Right should
approximate the value of one share of NDC Common Stock.
In the event that any person or group becomes an Acquiring Person, each
holder of an NDC Right, except an Acquiring Person or any affiliate or associate
thereof, will be entitled to purchase at the then-current Purchase Price shares
of NDC Common Stock with a market value of two times the Purchase Price.
In the event that NDC is acquired in a merger or other business
combination, or 30% or more of its assets or earning power is sold to any person
or group other than NDC or its wholly-owned subsidiaries, then, in each such
case, each holder of an NDC Right, except an Acquiring Person or an affiliate or
an associate thereof, will be entitled to purchase shares of stock of the other
party to the business combination with a market value of two times the Purchase
Price.
50
<PAGE> 55
Prior to the Stock Acquisition Date the NDC Rights are redeemable for one
cent per NDC Right at the option of the Board of Directors. The NDC Rights will
expire on January 18, 2001, or at an earlier date under certain circumstances.
The NDC Rights will not prevent a takeover of NDC. The NDC Rights, however,
may cause substantial dilution to a person or group that acquires 20% or more of
the NDC Common Stock unless the NDC Rights are first redeemed or terminated by
the Board of Directors of NDC. Nevertheless, the NDC Rights should not interfere
with a transaction that is in the best interests of NDC and its stockholders
because the NDC Rights can be redeemed or terminated, as hereinbefore described,
before the consummation of such a transaction.
CIS
CIS has not adopted any rights or similar plan.
EXPERTS
The consolidated financial statements of NDC at May 31, 1995 and 1994, and
for each of the three years in the period ended May 31, 1995, incorporated by
reference in the Registration Statement, have been incorporated by reference
herein in reliance upon the reports of Arthur Andersen LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The consolidated financial statements of CIS at December 31, 1995 and 1994,
and for each of the three years in the period ended December 31, 1995,
incorporated by reference in the Registration Statement, have been incorporated
by reference herein in reliance upon the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The financial statements as of December 31, 1995 and 1994 and for each of
the three years in the period ended December 31, 1995 of MasterCard Automated
Point-of-Sale Program (an organizational unit of MasterCard International
Incorporated) incorporated in this Prospectus by reference to the Current Report
on Form 8-K of NDC dated April 1, 1996, have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The legality of the shares of NDC Common Stock being offered hereby is
being passed upon for NDC by Alston & Bird, Atlanta, Georgia. Alston & Bird,
counsel for NDC, also will opine as to certain federal income tax consequences
of the Merger. See "THE MERGER -- Certain Federal Income Tax Consequences." Neil
Williams, managing partner of Alston & Bird, is a director and stockholder of
NDC.
CIS STOCKHOLDER PROPOSALS
CIS will hold a 1997 annual meeting of stockholders only if the Merger is
not consummated before the time of such meeting. In the event that such meeting
is held, any proposals of stockholders intended to be presented at the 1997
annual meeting of stockholders must be received by CIS at its principal
executive offices a reasonable time before the mailing of the proxy statement
for the 1997 annual meeting of stockholders in order to be considered for
inclusion in CIS's proxy statement for such annual meeting.
51
<PAGE> 56
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, CIS's Board of Directors
knows of no matters that will be presented for consideration at the Special
Meeting other than as described in this Proxy Statement/ Prospectus. However, if
any other matter shall come before the Special Meeting or any adjournments or
postponements thereof and shall be voted upon, the proposed proxy will be deemed
to confer authority to the individuals named as authorized therein to vote the
shares represented by such proxy as to any such matters that fall within the
purposes set forth in the Notice of Special Meeting as determined by a majority
of the Board of Directors of CIS.
52
<PAGE> 57
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
C.I.S. TECHNOLOGIES, INC.,
NDC MERGER CORP.
AND
NATIONAL DATA CORPORATION
DATED AS OF APRIL 15, 1996
<PAGE> 58
CONTENTS
<TABLE>
<S> <C> <C> <C>
PARTIES.................................................................................. A-1
PREAMBLE................................................................................. A-1
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER............................................ A-1
1.1 Merger........................................................................ A-1
1.2 Time and Place of Closing..................................................... A-1
1.3 Effective Time................................................................ A-1
ARTICLE 2 -- TERMS OF MERGER............................................................. A-2
2.1 Charter....................................................................... A-2
2.2 Bylaws........................................................................ A-2
2.3 Directors and Officers........................................................ A-2
ARTICLE 3 -- MANNER OF CONVERTING SHARES................................................. A-2
3.1 Conversion of Shares.......................................................... A-2
3.2 Anti-Dilution Provisions...................................................... A-2
3.3 Shares Held by CIS or NDC..................................................... A-2
3.4 Fractional Shares............................................................. A-3
3.5 Dissenting Shareholders....................................................... A-3
3.6 Conversion of Stock Options; Restricted Stock................................. A-3
ARTICLE 4 -- EXCHANGE OF SHARES.......................................................... A-6
4.1 Exchange Procedures........................................................... A-6
4.2 Rights of Former CIS Stockholders............................................. A-6
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF CIS....................................... A-7
5.1 Organization, Standing, and Power............................................. A-7
5.2 Authority; No Breach By Agreement............................................. A-7
5.3 Capital Stock................................................................. A-7
5.4 CIS Subsidiaries.............................................................. A-8
5.5 SEC Filings; Financial Statements............................................. A-8
5.6 Absence of Undisclosed Liabilities............................................ A-9
5.7 Absence of Certain Changes or Events.......................................... A-9
5.8 Tax Matters................................................................... A-9
5.9 Assets........................................................................ A-10
5.10 Intellectual Property......................................................... A-10
5.11 Environmental Matters......................................................... A-10
5.12 Compliance With Laws.......................................................... A-11
5.13 Labor Relations............................................................... A-11
5.14 Employee Benefit Plans........................................................ A-11
5.15 Material Contracts............................................................ A-12
5.16 Legal Proceedings............................................................. A-13
5.17 Statements True and Correct................................................... A-13
5.18 Accounting, Tax and Regulatory Matters........................................ A-13
5.19 State Takeover Laws........................................................... A-14
5.20 Charter Provisions............................................................ A-14
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF NDC....................................... A-14
6.1 Organization, Standing, and Power............................................. A-14
6.2 Authority; No Breach By Agreement............................................. A-14
6.3 Capital Stock................................................................. A-15
6.4 Authority of Sub.............................................................. A-15
6.5 SEC Filings; Financial Statements............................................. A-15
6.6 Absence of Undisclosed Liabilities............................................ A-15
6.7 Absence of Certain Changes or Events.......................................... A-16
6.8 Compliance With Laws.......................................................... A-16
6.9 Legal Proceedings............................................................. A-16
</TABLE>
A-i
<PAGE> 59
<TABLE>
<S> <C> <C> <C>
6.10 Statements True and Correct................................................... A-16
6.11 Tax and Regulatory Matters.................................................... A-17
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.................................... A-17
7.1 Affirmative Covenants of CIS.................................................. A-17
7.2 Negative Covenants of CIS..................................................... A-17
7.3 Covenants of NDC.............................................................. A-18
7.4 Adverse Changes in Condition.................................................. A-19
7.5 Reports....................................................................... A-19
ARTICLE 8 -- ADDITIONAL AGREEMENTS....................................................... A-19
8.1 Registration Statement; Proxy Statement; Stockholder Approval................. A-19
8.2 Exchange Listing.............................................................. A-19
8.3 Applications; Antitrust Notification.......................................... A-19
8.4 Filings with State Offices.................................................... A-20
8.5 Agreement as to Efforts to Consummate......................................... A-20
8.6 Investigation and Confidentiality............................................. A-20
8.7 Press Releases................................................................ A-20
8.8 Certain Actions............................................................... A-21
8.9 Tax and Accounting Treatment.................................................. A-21
8.10 State Takeover Laws........................................................... A-21
8.11 Charter Provisions............................................................ A-21
8.12 Agreements of Affiliates...................................................... A-21
8.13 Employee Benefits and Contracts............................................... A-21
8.14 Indemnification............................................................... A-22
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE........................... A-23
9.1 Conditions to Obligations of Each Party....................................... A-23
9.2 Conditions to Obligations of NDC.............................................. A-24
9.3 Conditions to Obligations of CIS.............................................. A-25
ARTICLE 10 -- TERMINATION................................................................ A-25
10.1 Termination................................................................... A-25
10.2 Effect of Termination......................................................... A-26
10.3 Non-Survival of Representations and Covenants................................. A-26
ARTICLE 11 -- MISCELLANEOUS.............................................................. A-27
11.1 Definitions................................................................... A-27
11.2 Expenses...................................................................... A-33
11.3 Brokers and Finders........................................................... A-34
11.4 Entire Agreement.............................................................. A-34
11.5 Amendments.................................................................... A-34
11.6 Waivers....................................................................... A-34
11.7 Assignment.................................................................... A-35
11.8 Notices....................................................................... A-35
11.9 Governing Law................................................................. A-36
11.10 Counterparts.................................................................. A-36
11.11 Captions; Articles and Sections............................................... A-36
11.12 Interpretations............................................................... A-36
11.13 Exclusive Remedy for Breaches of Agreement.................................... A-36
11.14 Severability.................................................................. A-36
SIGNATURES............................................................................... A-37
</TABLE>
A-ii
<PAGE> 60
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of April 15, 1996, by and among C.I.S. TECHNOLOGIES, INC. ("CIS"), a
Delaware corporation having its principal office located in Tulsa, Oklahoma; NDC
MERGER CORP. ("Sub"), a Delaware corporation having its principal office located
in Atlanta, Georgia; and NATIONAL DATA CORPORATION ("NDC"), a Delaware
corporation having its principal office located in Atlanta, Georgia.
PREAMBLE
The Boards of Directors of CIS, Sub and NDC are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective stockholders. This Agreement provides for the acquisition of CIS by
NDC pursuant to the merger of Sub with and into CIS. At the effective time of
such merger, the outstanding shares of the capital stock of CIS shall be
converted into the right to receive shares of the common stock of NDC (except as
provided herein). As a result, stockholders of CIS shall become stockholders of
NDC and CIS shall continue to conduct its business and operations as a wholly
owned subsidiary of NDC. The transactions described in this Agreement are
subject to the approvals of the stockholders of CIS, expiration of the required
waiting period under the HSR Act, and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the Merger for federal income tax purposes shall qualify as
a "reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and for accounting purposes shall qualify for treatment as a pooling of
interests.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, Sub shall be merged with and into CIS in accordance with the
provisions of Section 251 of the DGCL and with the effect provided in Sections
259 and 261 of the DGCL (the "Merger"). CIS shall be the Surviving Corporation
resulting from the Merger and shall become a wholly-owned Subsidiary of NDC and
shall continue to be governed by the Laws of the State of Delaware. The Merger
shall be consummated pursuant to the terms of this Agreement, which has been
approved and adopted by the respective Boards of Directors of CIS, Sub and NDC
and by the sole stockholder of Sub.
1.2 TIME AND PLACE OF CLOSING. The closing will take place at 9:00 A.M. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree (the "Closing").
The Closing shall be held at such place as may be mutually agreed upon by the
Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on the first business day following
the last to occur of (i) the effective date (including expiration of any
applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the date on which the stockholders of CIS approve this Agreement to the extent
such approval is required by applicable Law.
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ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Certificate of Incorporation of CIS in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of CIS in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation until otherwise amended or
repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Sub in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of CIS in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the officers of the Surviving Corporation from and after the Effective
Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of NDC, CIS, Sub or the stockholders of any of the foregoing, the shares of the
constituent corporations shall be converted as follows:
(a) Each share of NDC Capital Stock, including any associated NDC
Rights, issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding from and after the Effective Time.
(b) Each share of Sub Common Stock issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into
one share of CIS Common Stock.
(c) Each share of CIS Common Stock (excluding shares held by any CIS
Company or any NDC Company) issued and outstanding at the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for
the right to receive .08682 shares of NDC Common Stock (the "Common Stock
Exchange Ratio").
(d) Each share of CIS Series A Preferred Stock (excluding shares held
by any CIS Company or any NDC Company, excluding shares held by
shareholders who perfect their statutory dissenters' rights as provided in
Section 3.5 of this Agreement) issued and outstanding at the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for
the right to receive that number of shares of NDC Common Stock as equals
the product of the Common Stock Exchange Ratio and the number of shares of
CIS Common Stock into which such share of CIS Series A Preferred Stock, if
fully convertible, would be convertible (the "Preferred Stock Exchange
Ratio").
(e) Pursuant to the NDC Rights Agreement, each share of NDC Common
Stock issued in connection with the Merger upon conversion of CIS Capital
Stock shall be accompanied by an NDC Right.
3.2 ANTI-DILUTION PROVISIONS. In the event NDC changes the number of
shares of NDC Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Common Stock Exchange Ratio and the Preferred Stock
Exchange Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY CIS OR NDC. Each of the shares of CIS Common Stock held
by any CIS Company or by any NDC Company shall be canceled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
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<PAGE> 62
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of CIS Capital Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of NDC Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of NDC Common Stock multiplied
by the market value of one share of NDC Common Stock at the Effective Time. The
market value of one share of NDC Common Stock at the Effective Time shall be the
closing price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) on the last trading day preceding the Effective Time. No
such holder will be entitled to dividends, voting rights, or any other rights as
a stockholder in respect of any fractional shares.
3.5 DISSENTING SHAREHOLDERS. Any holder of shares of CIS Series A
Preferred Stock who perfects his dissenters' rights in accordance with and as
contemplated by Section 262 of the DGCL shall be entitled to receive the value
of such shares in cash as determined pursuant to such provision of Law;
provided, that no such payment shall be made to any dissenting shareholder
unless and until such dissenting shareholder has complied with the applicable
provisions of the DGCL and surrendered to CIS the certificate or certificates
representing the shares for which payment is being made. In the event that after
the Effective Time a dissenting holder of CIS Series A Preferred Stock fails to
perfect, or effectively withdraws or loses, his right to appraisal and of
payment for his shares, NDC shall issue and deliver the consideration to which
such holder of shares of CIS Series A Preferred Stock is entitled under this
Article 3 (without interest) upon surrender by such holder of the certificate or
certificates representing shares of CIS Series A Preferred Stock held by him. If
and to the extent required by applicable Law, Surviving Corporation will
establish (or cause to be established) an escrow account with an amount
sufficient to satisfy the maximum aggregate payment that may be required to be
paid to dissenting shareholders. Upon satisfaction of all claims of dissenting
holders of CIS Series A Preferred Stock, the remaining escrowed amount, reduced
by payment of the fees and expenses of the escrow agent, will be returned to the
Surviving Corporation.
3.6 CONVERSION OF STOCK OPTIONS AND WARRANTS; RESTRICTED STOCK.
(a) At the Effective Time, each option or other right to purchase
shares of CIS Common Stock pursuant to stock options or stock appreciation
rights granted by CIS under the CIS Stock Plans (collectively, "CIS
Options"), which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become Rights with respect to NDC
Common Stock, and NDC shall assume each CIS Option, in accordance with the
terms of the CIS Stock Plan and stock option agreement or other agreement
by which it is evidenced, except that from and after the Effective Time,
(i) NDC and its Compensation Committee shall be substituted for CIS and the
Committee of CIS's Board of Directors (including, if applicable, the entire
Board of Directors of CIS) administering any CIS Stock Plan, (ii) each CIS
Option assumed by NDC may be exercised solely for shares of NDC Common
Stock (or cash, if so provided under the terms of such CIS Option), (iii)
the number of shares of NDC Common Stock subject to such CIS Option shall
be equal to the number of shares of CIS Common Stock subject to such CIS
Option immediately prior to the Effective Time multiplied by the Common
Stock Exchange Ratio, and (iv) the per share exercise price under each such
CIS Option shall be adjusted by dividing the per share exercise price under
each such CIS Option by the Common Stock Exchange Ratio and rounding up to
the nearest cent. Notwithstanding the provisions of clause (iii) of the
preceding sentence, NDC shall not be obligated to issue any fraction of a
share of NDC Common Stock upon exercise of CIS Options and any fraction of
a share of NDC Common Stock that otherwise would be subject to a converted
CIS Option shall represent the right to receive a cash payment upon
exercise of such converted CIS Option equal to the product of such fraction
and the difference between the market value of one share of NDC Common
Stock at the time of exercise of such Option and the per share exercise
price of such Option. The market value of one share of NDC Common Stock at
the time of exercise of an Option shall be the closing price of such common
stock on the NYSE-Composite Transactions List (as reported by The Wall
Street Journal or, if not reported thereby, any other authoritative source)
on the last trading day preceding the date of exercise. In addition,
notwithstanding the clauses (iii) and (iv) of the first sentence of this
Section 3.6, each CIS Option which is an "incentive stock option" shall be
adjusted as
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required by Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension
or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. CIS and NDC agree to take all necessary steps to
effectuate the foregoing provisions of this Section 3.6, including using
their reasonable efforts to obtain from each holder of a CIS Option any
Consent or Contract that may be deemed necessary or advisable in order to
effect the transactions contemplated by this Section 3.6. Anything in this
Agreement to the contrary notwithstanding, NDC shall have the right, in its
sole discretion, not to deliver the consideration provided in this Section
3.6 to a former holder of a CIS Option who has not delivered such Consent
or Contract.
(b) As soon as practicable after the Effective Time, NDC shall deliver
to the participants in each CIS Stock Plan an appropriate notice setting
forth such participant's rights pursuant thereto and the grants subject to
such CIS Stock Plan shall continue in effect on the same terms and
conditions (subject to the adjustments required by Section 3.6(a) after
giving effect to the Merger), and NDC shall comply with the terms of each
CIS Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such CIS Stock Plan, that CIS Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. At or prior to the
Effective Time, NDC shall take all corporate action necessary to reserve
for issuance sufficient shares of NDC Common Stock for delivery upon
exercise of CIS Options assumed by it in accordance with this Section 3.6.
(c) At the Effective Time, each HRS Warrant which is outstanding at
the Effective Time, whether or not exercisable, shall be converted into and
become a Right with respect to NDC Common Stock, and NDC shall assume each
HRS Warrant, in accordance with the terms of the HRS Warrant Agreement,
except that from and after the Effective Time, (i) each HRS Warrant assumed
by NDC may be exercised solely for shares of NDC Common Stock, (ii) the
number of shares of NDC Common Stock subject to such HRS Warrant shall be
equal to the number of shares of CIS Common Stock subject to such HRS
Warrant immediately prior to the Effective Time multiplied by the Common
Stock Exchange Ratio, and (iii) the per share exercise price under each
such HRS Warrant shall be adjusted by dividing the per share exercise price
under each such HRS Warrant by the Common Stock Exchange Ratio and rounding
up to the nearest cent. Notwithstanding the provisions of clause (ii) of
the preceding sentence, NDC shall not be obligated to issue any fraction of
a share of NDC Common Stock upon exercise of HRS Warrants and any fraction
of a share of NDC Common Stock that otherwise would be subject to a
converted HRS Warrants shall represent the right to receive a cash payment
upon exercise of such converted HRS Warrants equal to the product of such
fraction and the difference between the market value of one share of NDC
Common Stock at the time of exercise of such HRS Warrant and the per share
exercise price of such HRS Warrant. The market value of one share of NDC
Common Stock at the time of exercise of an HRS Warrant shall be the closing
price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) on the last trading day preceding the date of
exercise. CIS and NDC agree to take all necessary steps to effectuate the
foregoing provisions of this Section 3.6, including using their reasonable
efforts to obtain from each holder of an HRS Warrant any Consent or
Contract that may be deemed necessary or advisable in order to effect the
transactions contemplated by this Section 3.6. Anything in this Agreement
to the contrary notwithstanding, NDC shall have the right, in its sole
discretion, not to deliver the consideration provided in this Section 3.6
to a former holder of an HRS Warrant who has not delivered such Consent or
Contract.
(d) At the Effective Time, each CIS Convertible Note which is
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become a Right with respect to NDC Common Stock, and NDC
shall assume each CIS Convertible Note, in accordance with the terms of the
CIS Convertible Note Agreement, except that from and after the Effective
Time, (i) each CIS Convertible Note assumed by NDC may be converted solely
into shares of NDC Common Stock, (ii) the number of shares of NDC Common
Stock subject to such CIS Convertible Note shall be equal to the number of
shares of CIS Common Stock subject to such CIS Convertible Note immediately
prior to the Effective Time multiplied by the Common Stock Exchange Ratio,
and (iii) the per share conversion price under
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<PAGE> 64
each such CIS Convertible Note shall be adjusted by dividing the per share
conversion price under each such CIS Convertible Note by the Common Stock
Exchange Ratio and rounding up to the nearest cent. Notwithstanding the
provisions of clause (ii) of the preceding sentence, NDC shall not be
obligated to issue any fraction of a share of NDC Common Stock upon
conversion of CIS Convertible Notes and any fraction of a share of NDC
Common Stock that otherwise would be subject to a converted CIS Convertible
Note shall represent the right to receive a cash payment upon conversion of
such converted CIS Convertible Notes equal to the product of such fraction
and the difference between the market value of one share of NDC Common
Stock at the time of conversion of such CIS Convertible Note and the per
share conversion price of such CIS Convertible Note. The market value of
one share of NDC Common Stock at the time of exercise of an CIS Convertible
Note shall be the closing price of such common stock on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source) on the last trading day
preceding the date of exercise. CIS and NDC agree to take all necessary
steps to effectuate the foregoing provisions of this Section 3.6, including
using their reasonable efforts to obtain from each holder of an CIS
Convertible Note any Consent or Contract that may be deemed necessary or
advisable in order to effect the transactions contemplated by this Section
3.6. Anything in this Agreement to the contrary notwithstanding, NDC shall
have the right, in its sole discretion, not to deliver the consideration
provided in this Section 3.6 to a former holder of an CIS Convertible Note
who has not delivered such Consent or Contract.
(e) At the Effective Time, each BT Warrant which is outstanding at the
Effective Time, whether or not exercisable, shall be converted into and
become a Right with respect to NDC Common Stock, and NDC shall assume each
BT Warrant, in accordance with the terms of the BT Warrant Agreement,
except that from and after the Effective Time, (i) each BT Warrant assumed
by NDC may be exercised solely for shares of NDC Common Stock, (ii) the
number of shares of NDC Common Stock subject to such BT Warrant shall be
equal to the number of shares of CIS Series A Preferred Stock subject to
such BT Warrant immediately prior to the Effective Time multiplied by the
Preferred Stock Exchange Ratio, and (iii) the per share exercise price
under each such BT Warrant shall be adjusted by dividing the per share
exercise price under each such BT Warrant by the Preferred Stock Exchange
Ratio and rounding up to the nearest cent. Notwithstanding the provisions
of clause (ii) of the preceding sentence, NDC shall not be obligated to
issue any fraction of a share of NDC Common Stock upon exercise of BT
Warrants and any fraction of a share of NDC Common Stock that otherwise
would be subject to a converted BT Warrants shall represent the right to
receive a cash payment upon exercise of such converted BT Warrants equal to
the product of such fraction and the difference between the market value of
one share of NDC Common Stock at the time of exercise of such BT Warrant
and the per share exercise price of such BT Warrant. The market value of
one share of NDC Common Stock at the time of exercise of an BT Warrant
shall be the closing price of such common stock on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source) on the last trading day
preceding the date of exercise. CIS and NDC agree to take all necessary
steps to effectuate the foregoing provisions of this Section 3.6, including
using their reasonable efforts to obtain from each holder of an BT Warrant
any Consent or Contract that may be deemed necessary or advisable in order
to effect the transactions contemplated by this Section 3.6. Anything in
this Agreement to the contrary notwithstanding, NDC shall have the right,
in its sole discretion, not to deliver the consideration provided in this
Section 3.6 to a former holder of an BT Warrant who has not delivered such
Consent or Contract.
(f) All contractual restrictions or limitations on transfer with
respect to CIS Common Stock awarded under the CIS Stock Plans or any other
plan, program, Contract or arrangement of any CIS Company, to the extent
that such restrictions or limitations shall not have already lapsed, and
except as otherwise expressly provided in such plan, program, Contract or
arrangement, shall remain in full force and effect with respect to shares
of NDC Common Stock into which such restricted stock is converted pursuant
to Section 3.1 of this Agreement.
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ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, NDC and CIS
shall cause the exchange agent, Wachovia Bank of North Carolina, N.A. (the
"Exchange Agent") to mail to the former stockholders of CIS appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
CIS Capital Stock shall pass, only upon proper delivery of such certificates to
the Exchange Agent). The Exchange Agent may establish reasonable and customary
rules and procedures in connection with its duties. After the Effective Time,
each holder of shares of CIS Capital Stock (other than shares to be canceled
pursuant to Section 3.3 of this Agreement or, in the case of CIS Series A
Preferred Stock, as to which statutory dissenters' rights have been perfected as
provided in Section 3.5 of this Agreement) issued and outstanding at the
Effective Time shall surrender the certificate or certificates representing such
shares to the Exchange Agent and shall promptly upon surrender thereof receive
in exchange therefor the consideration provided in Section 3.1 of this
Agreement, together with all undelivered dividends or distributions in respect
of such shares (without interest thereon) pursuant to Section 4.2 of this
Agreement. To the extent required by Section 3.4 of this Agreement, each holder
of shares of CIS Capital Stock issued and outstanding at the Effective Time also
shall receive, upon surrender of the certificate or certificates representing
such shares, cash in lieu of any fractional share of NDC Common Stock to which
such holder may be otherwise entitled (without interest). NDC shall not be
obligated to deliver the consideration to which any former holder of CIS Capital
Stock is entitled as a result of the Merger until such holder surrenders such
holder's certificate or certificates representing the shares of CIS Capital
Stock for exchange as provided in this Section 4.1. The certificate or
certificates of CIS Capital Stock so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither NDC, the Surviving Corporation nor the Exchange Agent
shall be liable to a holder of CIS Capital Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property Law. Adoption of this Agreement by the stockholders of CIS
shall constitute ratification of the appointment of the Exchange Agent.
4.2 RIGHTS OF FORMER CIS STOCKHOLDERS. At the Effective Time, the stock
transfer books of CIS shall be closed as to holders of CIS Capital Stock
immediately prior to the Effective Time and no transfer of CIS Capital Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of CIS Capital Stock (other
than shares to be canceled pursuant to Section 3.3 of this Agreement or, in the
case of CIS Series A Preferred Stock, as to which statutory dissenters' rights
have been perfected as provided in Section 3.5 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.4 of this Agreement in exchange
therefor, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by CIS in respect of such shares
of CIS Capital Stock in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time. Whenever a dividend or other distribution
is declared by NDC on the NDC Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares of NDC Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of NDC Common Stock as of any time subsequent to the Effective Time shall
be delivered to the holder of any certificate representing shares of CIS Capital
Stock issued and outstanding at the Effective Time until such holder surrenders
such certificate for exchange as provided in Section 4.1 of this Agreement.
However, upon surrender of such CIS Capital Stock certificate, both the NDC
Common Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered dividends and cash payments
payable hereunder (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CIS
CIS hereby represents and warrants to NDC, subject to the provisions of
Section 9.2(a), as follows:
5.1 ORGANIZATION, STANDING, AND POWER. CIS is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. CIS is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CIS.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) CIS has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of CIS, subject to the approval of this Agreement by the holders of a
majority of the outstanding shares of CIS Common Stock and by the holders
of two-thirds of the outstanding shares of CIS Series A Preferred Stock,
which are the only stockholder votes required for approval of this
Agreement and consummation of the Merger by CIS. Subject to such requisite
stockholder approvals, this Agreement represents a legal, valid, and
binding obligation of CIS, enforceable against CIS in accordance with its
terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by CIS, nor
the consummation by CIS of the transactions contemplated hereby, nor
compliance by CIS with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of CIS's Certificate of
Incorporation or Bylaws, or (ii) except as disclosed in Section 5.2 of the
CIS Disclosure Memorandum, constitute or result in a Material Default
under, or require any Consent pursuant to, or result in the creation of any
Material Lien on any Asset of any CIS Company under, any Contract or Permit
of any CIS Company, or, (iii) subject to receipt of the requisite Consents
referred to in Section 9.1(b) of this Agreement, violate any Law or Order
applicable to any CIS Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules
of the NASD, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation
by CIS of the Merger and the other transactions contemplated in this
Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of CIS consists of (i) 50,000,000
shares of CIS Common Stock, of which 30,188,589 shares are issued and
outstanding as of the date of this Agreement and not more than 30,188,589
shares, plus any shares issued as a result of the exercise of an option,
warrant or other conversion right existing as of the date of this
Agreement, will be issued and outstanding at the Effective Time, and (ii)
20,000,000 shares of preferred stock, par value $.01 per share, of which
2,384,182 shares of CIS Series A Preferred Stock are issued and outstanding
as of the date of this Agreement and not more than 2,384,182 shares of CIS
Series A Preferred Stock will be issued and outstanding at the Effective
Time. All of the issued and outstanding shares of capital stock of CIS are
duly and validly issued and
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outstanding and are fully paid and nonassessable under the DGCL. None of
the outstanding shares of capital stock of CIS has been issued in violation
of any preemptive rights of the current or past stockholders of CIS.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
disclosed in Section 5.3 of the CIS Disclosure Memorandum, there are no
shares of capital stock or other equity securities of CIS outstanding and
no outstanding Rights relating to the capital stock of CIS.
5.4 CIS SUBSIDIARIES. CIS has disclosed in Section 5.4 of the CIS
Disclosure Memorandum all of the CIS Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which the
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the number of shares
owned and percentage ownership interest represented by such share ownership) and
all of the Subsidiaries that are general or limited partnerships or other
non-corporate entities (identifying the law under which such entity is
organized, each jurisdiction in which the character of its Assets or the nature
or conduct of its business requires it to be qualified and/or licensed to
transact business, and the amount and nature of the ownership interest therein).
Except as disclosed in Section 5.4 of the CIS Disclosure Memorandum, CIS or one
of its wholly-owned Subsidiaries owns all of the issued and outstanding shares
of capital stock (or other equity interests) of each CIS Subsidiary. No capital
stock (or other equity interest) of any CIS Subsidiary is or may become required
to be issued (other than to another CIS Company) by reason of any Rights, and
there are no Contracts by which any CIS Subsidiary is bound to issue (other than
to another CIS Company) additional shares of its capital stock (or other equity
interests) or Rights or by which any CIS Company is or may be bound to transfer
any shares of the capital stock (or other equity interests) of any CIS
Subsidiary (other than to another CIS Company). There are no Contracts relating
to the rights of any CIS Company to vote or to dispose of any shares of the
capital stock (or other equity interests) of any CIS Subsidiary. Except as
disclosed in Section 5.4 of the CIS Disclosure Memorandum, all of the shares of
capital stock (or other equity interests) of each CIS Subsidiary held by a CIS
Company are fully paid and nonassessable under the applicable corporation Law of
the jurisdiction in which such Subsidiary is incorporated or organized and are
owned by the CIS Company free and clear of any Lien. Except as disclosed in
Section 5.4 of the CIS Disclosure Memorandum, each CIS Subsidiary is a
corporation, and each such Subsidiary is duly organized, validly existing, and
(as to corporations) in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each CIS Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CIS. The minute book and other organizational
documents for each CIS Subsidiary have been made available to NDC for its
review, and, except as disclosed in Section 5.4 of the CIS Disclosure
Memorandum, are true and complete as in effect as of the date of this Agreement
and accurately reflect all amendments thereto and all proceedings of the Board
of Directors and stockholders thereof.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Except as disclosed in Section 5.5 of the CIS Disclosure
Memorandum, CIS has timely filed and made available to NDC all SEC
Documents required to be filed by CIS since December 31, 1992 (the "CIS SEC
Reports"). The CIS SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws
and other applicable Laws and (ii) did not, at the time they were filed
(or, if amended or superseded by a filing, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in such CIS SEC Reports or necessary in order to
make the statements in such CIS SEC Reports, in light of the circumstances
under which they were made, not misleading. None of the CIS Subsidiaries is
required to file any SEC Documents.
(b) Each of the CIS Financial Statements (including, in each case, any
related notes) contained in the CIS SEC Reports, including any CIS SEC
Reports filed after the date of this Agreement until the
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Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto,
was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited interim statements,
as permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of CIS and its Subsidiaries as
at the respective dates and the consolidated results of operations and cash
flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in the
aggregate in amount or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No CIS Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on CIS, except Liabilities which are accrued or reserved against
in the consolidated balance sheet of CIS as of December 31, 1995, included in
the CIS Financial Statements delivered prior to the date of this Agreement or
reflected in the notes thereto. No CIS Company has incurred or paid any
Liability since December 31, 1995, except as disclosed in Section 5.6 of the CIS
Disclosure Memorandum, and except for such Liabilities incurred or paid in the
ordinary course of business consistent with past business practice and which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on CIS. Except as disclosed in Section 5.6 of the CIS Disclosure
Memorandum, no CIS Company is directly or indirectly liable, by guarantee,
indemnity, or otherwise, upon or with respect to, or obligated, by discount or
repurchase agreement or in any other way, to provide funds in respect to, or
obligated to guarantee or assume any Liability of any Person, other than another
CIS Company, for any amount in excess of $100,000.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1995, except
as disclosed in the CIS Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 5.7 of the CIS Disclosure Memorandum, (i)
there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on CIS, and (ii) the CIS Companies have not taken any action, or failed
to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and agreements of CIS
provided in Article 7 of this Agreement.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of the
CIS Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1995, and on or before the date of the most recent fiscal year
end immediately preceding the Effective Time, and all Tax Returns filed are
complete and accurate in all material respects. All Taxes shown on filed
Tax Returns have been paid. There is no audit examination, deficiency, or
refund Litigation with respect to any Taxes, except as disclosed in Section
5.8 of the CIS Disclosure Memorandum. All Taxes and other Liabilities due
with respect to completed and settled examinations or concluded Litigation
have been paid.
(b) None of the CIS Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination
by the Internal Revenue Service or other applicable taxing authorities)
that is currently in effect.
(c) The provision for any Taxes due or to become due for any of the
CIS Companies for the period or periods through and including the date of
the respective CIS Financial Statements that has been made and is reflected
on such CIS Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the CIS Companies have been provided for in
accordance with GAAP.
(e) Each of the CIS Companies is in compliance with, and its records
contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws,
and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code.
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(f) Except as disclosed in Section 5.8 of the CIS Disclosure
Memorandum, none of the CIS Companies has made any payments, is obligated
to make any payments, or is a party to any Contract that could obligate it
to make any payments that would be disallowed as a deduction under Section
280G or 162(m) of the Internal Revenue Code.
(g) Except with respect to the acquisition by CIS of Hospital Cost
Consultants, Inc. ("HCC"), there has not been an ownership change, as
defined in Internal Revenue Code Section 382(g), of the CIS Companies that
occurred during or after any Taxable Period in which the CIS Companies
incurred a net operating loss that carries over to any Taxable Period
ending after December 31, 1995. Except for losses attributable to HCC, none
of the CIS Companies have any losses or income tax credit carryforwards
that are subject to limitation under Section 382 of the Internal Revenue
Code.
5.9 ASSETS. Except as disclosed in Section 5.9 of the CIS Disclosure
Memorandum, the CIS Companies have indefeasible title, free and clear of all
Liens, to all of their respective owned Assets. All tangible properties used in
the businesses of the CIS Companies are in good condition, reasonable wear and
tear excepted, and are usable in the ordinary course of business consistent with
CIS's past practices. All Assets which are material to CIS's business on a
consolidated basis, held under leases or subleases by any of the CIS Companies,
are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. None of the CIS Companies has received
notice from any insurance carrier that (i) any policy of insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no claims for amounts exceeding in any individual
case $100,000 pending under such policies of insurance and no notices of claims
in excess of such amounts have been given by any CIS Company under such
policies. The Assets of the CIS Companies include all Assets required to operate
the business of the CIS Companies as presently conducted.
5.10 INTELLECTUAL PROPERTY. Each CIS Company owns or has a license to use
all of the Intellectual Property used by such CIS Company in the course of its
business. Each CIS Company is the owner of or has a license to any Intellectual
Property sold or licensed to a third party by such CIS Company in connection
with such CIS Company's business operations, and such CIS Company has the right
to convey by sale or license any Intellectual Property so conveyed. No CIS
company is in Default under any of its Intellectual Property licenses. No
proceedings have been instituted, or are pending or to the Knowledge of CIS
threatened, which challenge the rights of any CIS Company with respect to
Intellectual Property used, sold or licensed by such CIS Company in the course
of its business, nor has any person claimed or alleged any rights to such
Intellectual Property. The conduct of the business of the CIS Companies does not
infringe any Intellectual Property of any other person. Except as disclosed in
Section 5.10 of the CIS Disclosure Memorandum, no CIS Company is obligated to
pay any recurring royalties to any Person with respect to any such Intellectual
Property. Except as disclosed in Section 5.10 of the CIS Disclosure Memorandum,
every officer and director, and substantially all employees of each of the CIS
Companies is a party to a Contract which requires such officer, director or
employee to keep confidential any trade secrets, proprietary data, customer
information, or other business information of CIS. Except as disclosed in
Section 5.10 of the CIS Disclosure Memorandum, no officer, director or, to CIS's
Knowledge, any employee of any CIS Company has any agreement which restricts or
prohibits such officer, director or employee from engaging in activities
competitive with any Person other than such an agreement by and between such
officer, director or employee and a CIS Company.
5.11 ENVIRONMENTAL MATTERS.
(a) Each CIS Company, the Participation Facilities over which a CIS
Company has control, and its Operating Properties are, and have been, in
compliance with all Environmental Laws.
(b) There is no Litigation pending or to the Knowledge of CIS,
threatened before any court, governmental agency, or governmental authority
or other governmental forum in which any CIS Company or any of its
Operating Properties or Participation Facilities (or CIS in respect of such
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Operating Property or Participation Facility) has been or, with respect to
threatened Litigation, has been threatened to be named as a defendant (i)
for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of
any Hazardous Material, whether or not occurring at, on, under, adjacent
to, or affecting (or potentially affecting) a site owned, leased, or
operated by any CIS Company or any of its Operating Properties or
Participation Facilities.
(c) There have been no releases of Hazardous Material in, on, under or
affecting (or potentially affecting) any Operating Properties or
Participation Facilities. No CIS Company has released any Hazardous
Material in, on or under any property adjacent to the Participation
Facilities or its Operating Properties.
5.12 COMPLIANCE WITH LAWS. Each CIS Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. Except as disclosed in Section 5.12 of the CIS Disclosure Memorandum,
none of the CIS Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business; or
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any CIS Company is not in
compliance with any of the Laws or Orders which such governmental authority
or Regulatory Authority enforces, (ii) threatening to revoke any Permits,
or (iii) requiring any CIS Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment, or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to NDC.
5.13 LABOR RELATIONS. Except as disclosed in Section 5.13 of the CIS
Disclosure Memorandum, no CIS Company is the subject of any Litigation asserting
that it or any other CIS Company has committed an unfair labor practice (within
the meaning of the National Labor Relations Act or comparable state law) or
seeking to compel it or any other CIS Company to bargain with any labor
organization as to wages or conditions of employment, nor is any CIS Company
party to any collective bargaining agreement, nor is there any strike or other
labor dispute involving any CIS Company, pending or threatened, or to the
Knowledge of CIS, is there any activity involving any CIS Company's employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
5.14 EMPLOYEE BENEFIT PLANS.
(a) CIS has disclosed in Section 5.14 of the CIS Disclosure
Memorandum, and has delivered or made available to NDC prior to the
execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee
stock ownership, severance pay, vacation, bonus, or other incentive plan,
all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans,
and all other employee benefit plans or fringe benefit plans, including
"employee benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any CIS Company or ERISA Affiliate thereof for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "CIS Benefit
Plans"). Any of the CIS Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "CIS ERISA Plan."
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(b) Except as disclosed in Section 5.14 of the CIS Disclosure
Memorandum, all CIS Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws
the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on CIS. Except
as disclosed in Section 5.14 of the CIS Disclosure Memorandum, each CIS
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from
the Internal Revenue Service, and CIS is not aware of any circumstances
likely to result in revocation of any such favorable determination letter.
No CIS Company has engaged in a transaction with respect to any CIS Benefit
Plan that, assuming the taxable period of such transaction expired as of
the date hereof, would subject any CIS Company to a Tax imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA.
(c) No CIS ERISA Plan is also, and no CIS Company has ever maintained
or contributed to, a "defined benefit plan" (as defined in Section 414(j)
of the Internal Revenue Code). No CIS Company has provided, or is required
to provide, security to any defined benefit plan or to any single-employer
plan of any entity which is considered one employer with CIS under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") pursuant to Section
401(a)(29) of the Internal Revenue Code.
(d) No Liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by any CIS Company with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer
plan of any ERISA Affiliate. No CIS Company has incurred any withdrawal
Liability with respect to a multiemployer plan under Subtitle B of Title IV
of ERISA (regardless of whether based on contributions of an ERISA
Affiliate). No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not
been waived, has been required to be filed for any CIS ERISA Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.14 of the CIS Disclosure
Memorandum, no CIS Company has any Liability for retiree health and life
benefits under any of the CIS Benefit Plans and there are no restrictions
on the rights of such CIS Company to amend or terminate any such retiree
health or benefit Plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 5.14 of the CIS Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute,
or otherwise) becoming due to any director or any employee of any CIS
Company from any CIS Company under any CIS Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any CIS Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any
such benefit, where such payment, increase, or acceleration is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on CIS.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any CIS Company and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the CIS Financial Statements to the
extent required by and in accordance with GAAP.
5.15 MATERIAL CONTRACTS. Except as disclosed in Section 5.9, 5.14 or 5.15
of the CIS Disclosure Memorandum, none of the CIS Companies, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (ii) any Contract
relating to the borrowing of money by any CIS Company or the guarantee by any
CIS Company of any such obligation (other than (x) a guarantee by one CIS
Company of such obligation on the part of another CIS Company, and (y) Contracts
evidencing trade payables), (iii) any
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Contracts which prohibit or restrict any CIS Company from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among a CIS
Company and another CIS Company that is not wholly-owned, directly or
indirectly, by CIS, (v) any lease of real property as lessee or lessor, (vi) any
material Contract involving Intellectual Property (excluding Intellectual
Property Contracts with customers or payors entered into in the ordinary course
of CIS's business, "shrink-wrap" licenses and licenses for software that are
commercially available for $5,000.00 or less), (vii) any customer Contract
which, when considered in the aggregate with all other Contracts with the same
customer, constituted in excess of five percent (5.0%) of CIS's total revenues
for the fiscal year ended December 31, 1995, (viii) any network and
communication systems or services Contract, (ix) any capital lease, and (x) any
other Contract or amendment thereto that would be required to be filed by CIS
with the SEC pursuant to the requirements of the 1934 Act as of the date of this
Agreement, other than as have been so filed (together with all Contracts
referred to in Sections 5.9 and 5.14(a) of this Agreement, the "CIS Contracts").
CIS hereby represents that it has provided NDC with copies of each of its forms
of customer Contract, as well as a list of its substantial customers as of a
recent practicable date. With respect to each CIS Contract and except as
disclosed in Section 5.15 of the CIS Disclosure Memorandum: (i) the Contract is
in full force and effect; (ii) no CIS Company is in Default thereunder; (iii) no
CIS Company has repudiated or waived in writing any material provision of any
such Contract; and (iv) no other party to any such Contract is, to the Knowledge
of CIS, in Default in any respect or has repudiated or waived in writing any
material provision thereunder. All of the indebtedness of any CIS Company for
money borrowed is prepayable at any time by such CIS Company without penalty or
premium.
5.16 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of CIS, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any CIS Company, or against any Asset, employee
benefit plan, interest, or right of any of them, that is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on CIS, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding exclusively against any CIS Company.
Section 5.16 of the CIS Disclosure Memorandum includes a summary report of all
Litigation as of the date of this Agreement to which any CIS Company is a party
and which names a CIS Company as a defendant or cross-defendant.
5.17 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument,
or other writing furnished or to be furnished by any CIS Company or any
Affiliate thereof to NDC pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
CIS Company or any Affiliate thereof for inclusion in the Registration Statement
to be filed by NDC with the SEC will, when the Registration Statement becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any CIS Company or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to CIS's
stockholders in connection with the Stockholders' Meeting, and any other
documents to be filed by a CIS Company or any Affiliate thereof with the SEC or
any other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Proxy Statement, when first mailed to the stockholders of CIS, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Stockholders' Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the
Stockholders' Meeting. All documents that any CIS Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
5.18 ACCOUNTING, TAX AND REGULATORY MATTERS. No CIS Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the Merger
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from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section.
5.19 STATE TAKEOVER LAWS. Each CIS Company has taken all necessary action
to exempt the transactions contemplated by this Agreement from, or if necessary
to challenge the validity or applicability of, any applicable "moratorium,"
"fair price," "business combination," "control share," or other anti-takeover
Laws (collectively, "Takeover Laws"), including Section 203 of the DGCL.
5.20 CHARTER PROVISIONS. Each CIS Company has taken all action so that the
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement do not and will not result in the
grant of any rights to any Person under the Certificate of Incorporation, Bylaws
or other governing instruments of any CIS Company or restrict or impair the
ability of NDC or any of its Subsidiaries to vote, or otherwise to exercise the
rights of a stockholder with respect to, shares of any CIS Company that may be
directly or indirectly acquired or controlled by it.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF NDC
NDC hereby represents and warrants to CIS as follows:
6.1 ORGANIZATION, STANDING, AND POWER. NDC is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. NDC is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on NDC.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) NDC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of NDC. This Agreement represents a legal, valid, and binding obligation of
NDC, enforceable against NDC in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding may be
brought).
(b) Neither the execution and delivery of this Agreement by NDC, nor
the consummation by NDC of the transactions contemplated hereby, nor
compliance by NDC with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of NDC's Certificate of
Incorporation or Bylaws, or (ii) constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any NDC Company under, any Contract or Permit of any NDC
Company, or, (iii) subject to receipt of the requisite approvals referred
to in Section 9.1(b) of this Agreement, violate any Law or Order applicable
to any NDC Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and other
than notices to or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans, or
under the HSR Act, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by NDC of the Merger
and the other transactions contemplated in this Agreement.
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6.3 CAPITAL STOCK. The authorized capital stock of NDC consists of (i)
60,000,000 shares of NDC Common Stock, of which 23,106,725 shares are issued and
outstanding as of the date of this Agreement, and (ii) 1,000,000 shares of NDC
Preferred Stock, none of which are issued and outstanding as of the date of this
Agreement. All of the issued and outstanding shares of NDC Capital Stock are,
and all of the shares of NDC Common Stock to be issued in exchange for shares of
CIS Common Stock upon consummation of the Merger, when issued in accordance with
the terms of this Agreement, will be, duly and validly issued and outstanding
and fully paid and nonassessable under the DGCL. None of the outstanding shares
of NDC Capital Stock has been, and none of the shares of NDC Common Stock to be
issued in exchange for shares of CIS Common Stock upon consummation of the
Merger will be, issued in violation of any preemptive rights of the current or
past stockholders of NDC.
6.4 AUTHORITY OF SUB. Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware as a
wholly owned Subsidiary of NDC. The authorized capital stock of Sub shall
consist of 1,000 shares of Sub Common Stock, all of which is validly issued and
outstanding, fully paid and nonassessable and is owned by NDC free and clear of
any Lien. Sub has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Sub. This Agreement
represents a legal, valid, and binding obligation of Sub, enforceable against
Sub in accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought). Sub has not (i) conducted any business operations
whatsoever or (ii) entered into any Contract or agreement of any kind, acquired
any assets or incurred any Liability, except as may be specifically contemplated
by this Agreement or as the Parties may otherwise agree. NDC, as the sole
stockholder of Sub, has voted prior to the Effective Time the shares of Sub
Common Stock in favor of adoption of this Agreement.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) NDC has timely filed and made available to CIS all SEC Documents
required to be filed by NDC since May 31, 1993 (the "NDC SEC Reports"). The
NDC SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Laws and other
applicable Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in such NDC SEC Reports or necessary in order to make
the statements in such NDC SEC Reports, in light of the circumstances under
which they were made, not misleading. None of the NDC Subsidiaries is
required to file any SEC Documents.
(b) Each of the NDC Financial Statements (including, in each case, any
related notes) contained in the NDC SEC Reports, including any NDC SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by
Form 10-Q of the SEC), and fairly presented in all material respects the
consolidated financial position of NDC and its Subsidiaries as at the
respective dates and the consolidated results of operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are expected to be material in amount or effect.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No NDC Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on NDC, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of NDC as of November 30, 1995, included in
the NDC Financial Statements or reflected in the notes thereto. Except as
disclosed in Section 6.6 of the
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NDC Disclosure Memorandum, no NDC Company has incurred or paid any Liability
since November 30, 1995, except for such Liabilities incurred or paid in the
ordinary course of business consistent with past business practice and which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on NDC. NDC has provided to CIS draft consolidated balance sheets
of NDC as of February 29, 1996, which, to the Knowledge of NDC, are accurate in
all Material respects.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since November 30, 1995, except
as disclosed in NDC SEC Filings filed prior to the date of this Agreement or as
disclosed in Section 6.7 of the NDC Disclosure Memorandum, (i) there have been
no events, changes or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on NDC, and
(ii) the NDC Companies have not taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if taken after the
date of this Agreement, would represent or result in a material breach or
violation of any of the covenants and agreements of NDC provided in Article 7 of
this Agreement.
6.8 COMPLIANCE WITH LAWS. Each NDC Company has in effect all Permits
necessary for it to own, lease or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. Except as disclosed in Section 6.8 of the NDC Disclosure Memorandum, no
NDC Company:
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business; or
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any NDC Company is not in
compliance with any of the Laws or Orders which such governmental authority
or Regulatory Authority enforces, (ii) threatening to revoke any Permits,
or (iii) requiring any NDC Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business.
6.9 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of NDC, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any NDC Company, or against any Asset, employee
benefit plan, interest, or right of any of them, that is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on NDC, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any NDC Company.
6.10 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument or
other writing furnished or to be furnished by any NDC Company or any Affiliate
thereof to CIS pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by any NDC
Company or any Affiliate thereof for inclusion in the Registration Statement to
be filed by NDC with the SEC, will, when the Registration Statement becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any NDC Company or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to CIS's
stockholders in connection with the Stockholders' Meeting, and any other
documents to be filed by any NDC Company or any Affiliate thereof with the SEC
or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Proxy Statement, when first mailed to the stockholders of
CIS, be false or misleading with respect to any material fact, or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of the
Proxy Statement or any amendment thereof or supplement thereto, at the time of
the Stockholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Stockholders' Meeting. All documents that any NDC Company or any Affiliate
thereof is
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responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
6.11 TAX AND REGULATORY MATTERS.
(a) No NDC Company or any Affiliate thereof has taken any action or
has any Knowledge of any fact or circumstance that is reasonably likely to
(i) prevent the transactions contemplated hereby, including the Merger,
from qualifying as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code, or (ii) materially impede or delay receipt of
any Consents of Regulatory Authorities referred to in Section 9.1(b) of
this Agreement or result in the imposition of a condition or restriction of
the type referred to in the last sentence of such Section.
(b) All Tax Returns required to be filed by or on behalf of any NDC
Company have been timely filed or requests for extensions have been timely
filed, granted, and have not expired for periods ended on or before May 31,
1995, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and all Tax Returns filed are
complete and accurate in all material respects. All Taxes shown on filed
Tax Returns have been paid. All Taxes and other Liabilities due with
respect to completed and settled examinations or concluded Litigation have
been paid.
(c) The provision for any Taxes due or to become due for any NDC
Company for the period or periods through and including the date of the
respective NDC Financial Statements that has been made and is reflected on
such NDC Financial Statements is sufficient to cover all such Taxes.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF CIS. From the date of the Agreement until the
earlier of the Effective Time or the termination of this Agreement, unless the
prior written consent of NDC shall have been obtained, and except as otherwise
expressly contemplated herein, CIS shall and shall cause each of its
Subsidiaries to (a) operate its business only in the usual, regular, and
ordinary course, (b) preserve intact its business organization and Assets and
maintain its rights and franchises, and (c) take no action which would (i)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentence of Section
9.1(b) of this Agreement, or (ii) materially adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF CIS. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, CIS
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer, president or chief
financial officer of NDC, which consent shall not be unreasonably withheld:
(a) amend the Certificate of Incorporation, Bylaws or other governing
instruments of any CIS Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a CIS Company to another CIS
Company) in excess of an aggregate of $100,000 (for the CIS Companies on a
consolidated basis) except in the ordinary course of the business of CIS
Subsidiaries consistent with past practices, or impose, or suffer the
imposition, on any Asset of any CIS Company of any Lien or permit any such
Lien to exist (other than in connection with Liens in effect as of the date
hereof that are disclosed in the CIS Disclosure Memorandum) except in the
ordinary course of the business of CIS Subsidiaries consistent with past
practices; or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into
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any shares, of the capital stock of any CIS Company, or declare or pay any
dividend or make any other distribution in respect of CIS's capital stock;
or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof
in existence on the date hereof, or as disclosed in Section 7.2(d) of the
CIS Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of CIS Common Stock or any other capital stock of any CIS
Company, or any stock appreciation rights, or any option, warrant, or other
Right; or
(e) adjust, split, combine or reclassify any capital stock of any CIS
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of CIS Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any shares of
capital stock of any CIS Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another CIS Company) or any Asset other
than in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment,
either by purchase of stock of securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned CIS Subsidiary, or otherwise acquire direct or indirect control over
any Person; or
(g) grant any increase in compensation or benefits to the employees or
officers of any CIS Company, except in accordance with past practice
disclosed in Section 7.2(g) of the CIS Disclosure Memorandum or as required
by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of
this Agreement and disclosed in Section 7.2(g) of the CIS Disclosure
Memorandum; and enter into or amend any severance agreements with officers
of any CIS Company; grant any increase in fees or other compensation or
other benefits to directors of any CIS Company except in accordance with
past practice disclosed in Section 7.2(g) of the CIS Disclosure Memorandum;
or voluntarily accelerate the vesting of any stock options, other stock-
based compensation or employee benefits or any Rights; or
(h) enter into or amend any employment Contract between any CIS
Company and any Person (unless such amendment is required by Law) that the
CIS Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time
on or after the Effective Time;
(i) adopt any new employee benefit plan of any CIS Company or
terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any CIS Company other than any such
change that is required by Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any such
plan, or make any distributions from such employee benefit plans, except as
required by Law, the terms of such plans or consistent with past practice;
or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or GAAP; or
(k) commence any Litigation other than in accordance with past
practice or settle any Litigation involving any Liability of any CIS
Company for material money damages or restrictions upon the operations of
any CIS Company; or
(l) enter into, modify, amend or terminate any material Contract
(including any loan Contract with an unpaid balance exceeding $160,000) or
waive, release, compromise or assign any material rights or claims.
7.3 COVENANTS OF NDC. From the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement, NDC covenants and
agrees that it shall (x) continue to conduct its business and the business of
its Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the NDC Common Stock and the business prospects of the NDC
Companies, and (y) take no action
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which would (i) materially adversely affect the ability of any Party to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement, or (ii) materially adversely
affect the ability of any Party to perform its covenants and agreements under
this Agreement; provided, that the foregoing shall not prevent any NDC Company
from acquiring any Assets or other businesses or from discontinuing or disposing
of any of its Assets or business if such action is, in the reasonable judgment
of NDC, desirable in the conduct of the business of NDC and its Subsidiaries.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; STOCKHOLDER APPROVAL. NDC
shall file the Registration Statement with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under the applicable state Blue Sky
or securities Laws in connection with the issuance of the shares of NDC Common
Stock upon consummation of the Merger. CIS shall furnish all information
concerning it and the holders of its capital stock as NDC may reasonably request
in connection with such action. CIS shall call a Stockholders' Meeting, to be
held as soon as reasonably practicable after the Registration Statement is
declared effective by the SEC, for the purpose of voting upon adoption of this
Agreement and such other related matters as it deems appropriate. In connection
with the Stockholders' Meeting, (i) CIS shall prepare and file with the SEC a
Proxy Statement and mail such Proxy Statement to its stockholders, (ii) the
Parties shall furnish to each other all information concerning them that they
may reasonably request in connection with such Proxy Statement, (iii) the Board
of Directors of CIS shall recommend (subject to compliance with their fiduciary
duties under applicable Law) to its stockholders the approval of this Agreement,
and (iv) the Board of Directors and officers of CIS shall (subject to compliance
with their fiduciary duties under applicable Law) use their reasonable efforts
to obtain such stockholders' approval.
8.2 EXCHANGE LISTING. NDC shall use its reasonable efforts to list, prior
to the Effective Time, on the NYSE, subject to official notice of issuance, the
shares of NDC Common Stock to be issued to the holders of CIS Common Stock
pursuant to the Merger, and NDC shall give all notices and make all filings with
the NYSE required in connection with the transactions contemplated herein.
8.3 APPLICATIONS; ANTITRUST NOTIFICATION. NDC shall prepare and file, and
CIS shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction
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over the transactions contemplated by this Agreement seeking the requisite
Consents necessary to consummate the transactions contemplated by this
Agreement. Each of the Parties will promptly file with the United States Federal
Trade Commission and the United States Department of Justice the notification
and report form required for the transactions contemplated hereby and any
supplemental or additional information which may reasonably be requested in
connection therewith pursuant to the HSR Act and will comply in all material
respects with the requirements of the HSR Act. The Parties shall deliver to each
other copies of all filings, correspondence and orders to and from all
Regulatory Authorities in connection with the transactions contemplated hereby.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, CIS shall execute and file the Certificate of
Merger with the Secretary of State of the State of Delaware in connection with
the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, including the terms and conditions of Sections 8.1
and 8.8, each Party agrees to use, and to cause its Subsidiaries to use, its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper, or advisable under applicable
Laws to consummate and make effective, as soon as practicable after the date of
this Agreement, the transactions contemplated by this Agreement, including using
its reasonable efforts to lift or rescind any Order adversely affecting its
ability to consummate the transactions contemplated herein and to cause to be
satisfied the conditions referred to in Article 9 of this Agreement; provided,
that nothing herein shall preclude either Party from exercising its rights under
this Agreement. Each Party shall use, and shall cause each of its Subsidiaries
to use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it
and its Subsidiaries and of their respective financial and legal conditions
as the other Party reasonably requests, provided that such investigation
shall be reasonably related to the transactions contemplated hereby and
shall not interfere unnecessarily with normal operations. No investigation
by a Party shall affect the representations and warranties of the other
Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to
it by the other Party concerning its and its Subsidiaries' businesses,
operations, and financial positions and shall not use such information for
any purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Effective Time,
each Party shall promptly return or certify the destruction of all
documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) CIS shall use its reasonable efforts to exercise its rights under
confidentiality agreements entered into with Persons which were considering
an Acquisition Proposal with CIS to preserve the confidentiality of the
information relating to CIS provided to such Persons and their Affiliates
and Representatives.
(d) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of
its investigation and which represents, or is reasonably likely to
represent, either a material breach of any representation, warranty,
covenant or agreement of the other Party or which has had or is reasonably
likely to have a Material Adverse Effect on the other Party.
8.7 PRESS RELEASES. Prior to the Effective Time, CIS and NDC shall consult
with each other as to the form and substance of any press release or other
public disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 8.7 shall be deemed
to prohibit any Party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such Party's disclosure obligations
imposed by Law.
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8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no CIS Company nor any Affiliate thereof nor
any Representatives thereof (subject to the last sentence of this Section 8.8)
retained by any CIS Company shall directly or indirectly solicit any Acquisition
Proposal by any Person. Except to the extent necessary to comply with the
fiduciary duties of CIS's Board of Directors as required by applicable Law, no
CIS Company or any Affiliate or Representative thereof (subject to the last
sentence of this Section 8.8) shall furnish any non-public information that it
is not legally obligated to furnish, negotiate with respect to, or enter into
any Contract with respect to, any Acquisition Proposal, but CIS may communicate
information about such an Acquisition Proposal to its stockholders if and to the
extent that it is required to do so in order to comply with its legal
obligations as required by applicable Law. CIS shall promptly notify NDC orally
and in writing (i) in the event that it receives any inquiry or proposal
relating to any such transaction, which notice shall describe such proposal in
reasonable detail, and (ii) in the event that its Board of Directors determines
that it must take any of the actions set forth in this Section 8.8 in order to
comply with its fiduciary duties under applicable Law. CIS shall (x) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any of the
foregoing, and (y) direct and use its reasonable efforts to cause all of its
Representatives not to engage in any of the foregoing.
8.9 TAX AND ACCOUNTING TREATMENT. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not, to qualify (i) for treatment as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code for federal income tax purposes and (ii) for pooling-of-interests
accounting treatment.
8.10 STATE TAKEOVER LAWS. Each CIS Company shall take all necessary steps
to exempt the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law,
including Section 203 of the DGCL.
8.11 CHARTER PROVISIONS. Each CIS Company shall take all necessary action
to ensure that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby do not and will not result
in the grant of any rights to any Person under the Certificate of Incorporation,
Bylaws or other governing instruments of any CIS Company or restrict or impair
the ability of NDC or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a stockholder with respect to, shares of any CIS Company that may
be directly or indirectly acquired or controlled by it.
8.12 AGREEMENT OF AFFILIATES. CIS has disclosed in Section 8.12 of the CIS
Disclosure Memorandum all Persons whom it reasonably believes is an "affiliate"
of CIS for purposes of Rule 145 under the 1933 Act. CIS shall use its reasonable
efforts to cause each such Person to deliver to NDC not later than 30 days prior
to the Effective Time, a written agreement, substantially in the form of Exhibit
1, providing that such Person will not sell, pledge, transfer, or otherwise
dispose of the shares of CIS Common Stock held by such Person except as
contemplated by such agreement or by this Agreement and will not sell, pledge,
transfer, or otherwise dispose of the shares of NDC Common Stock to be received
by such Person upon consummation of the Merger except in compliance with
applicable provisions of the 1933 Act and the rules and regulations thereunder
and until such time as financial results covering at least 30 days of combined
operations of NDC and CIS have been published within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies. If the Merger
is intended to qualify for pooling-of-interests accounting treatment, shares of
NDC Common Stock issued to such affiliates of CIS in exchange for shares of CIS
Common Stock shall not be transferable until such time as financial results
covering at least 30 days of combined operations of NDC and CIS have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such affiliate has
provided the written agreement referred to in this Section 8.12 (and NDC shall
be entitled to place restrictive legends upon certificates for shares of NDC
Common Stock issued to affiliates of CIS pursuant to this Agreement to enforce
the provisions of this Section 8.12). NDC shall not be required to maintain the
effectiveness of the Registration Statement under the 1933 Act for the purposes
of resale of NDC Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time, NDC
shall either provide generally to officers and employees of the CIS Companies
employee benefits under employee benefit and
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welfare plans (other than stock option or other plans involving the potential
issuance of NDC Common Stock), on terms and conditions which when taken as a
whole are substantially similar to those currently provided by the NDC Companies
to their similarly situated officers and employees, or NDC shall continue to
provide employee benefits to officers and employees of the CIS Companies under
CIS's current employee benefit and welfare plans. For purposes of participation,
vesting and (except in the case of NDC retirement plans) benefit accrual under
such employee benefit plans, the service of the employees of the CIS Companies
prior to the Effective Time shall be treated as service with a NDC Company
participating in such employee benefit plans. NDC also shall cause the Surviving
Corporation and its Subsidiaries to honor in accordance with their terms all
employment, severance, consulting and other compensation Contracts disclosed in
Section 8.13 of the CIS Disclosure Memorandum to NDC between any CIS Company and
any current or former director, officer, or employee thereof, and all provisions
for vested benefits or other vested amounts earned or accrued through the
Effective Time under the CIS Benefit Plans.
8.14 INDEMNIFICATION.
(a) For a period of six years after the Effective Time, NDC shall, and
shall cause the Surviving Corporation to, indemnify, defend and hold
harmless the present and former directors, officers, employees and agents
of the CIS Companies (each, an "Indemnified Party") against all Liabilities
arising out of actions or omissions arising out of the Indemnified Party's
service or services as directors, officers, employees or agents of CIS or,
at CIS's request, of another corporation, partnership, joint venture, trust
or other enterprise occurring at or prior to the Effective Time (including
the transactions contemplated by this Agreement) to the fullest extent
permitted under Delaware Law and by CIS's Certificate of Incorporation and
Bylaws as in effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any Litigation and whether
or not any NDC Company is insured against any such matter. Without limiting
the foregoing, in any case in which approval by the Surviving Corporation
is required to effectuate any indemnification, NDC shall cause the
Surviving Corporation to direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent
counsel mutually agreed upon between NDC and the Indemnified Party.
(b) NDC shall, or shall cause the Surviving Corporation to, use its
reasonable efforts (and CIS shall cooperate prior to the Effective Time in
these efforts) to maintain in effect for a period of three years after the
Effective Time CIS's existing directors' and officers' liability insurance
policy (provided that NDC may substitute therefor (i) policies of at least
the same coverage and amounts containing terms and conditions which are
substantially no less advantageous or (ii) with the consent of CIS given
prior to the Effective Time, any other policy) with respect to claims
arising from facts or events which occurred prior to the Effective Time or
in connection with the transaction contemplated by this Agreement and
covering persons who are currently covered by such insurance; provided,
that neither NDC nor the Surviving Corporation shall be obligated to make
aggregate premium payments for such three-year period in respect of such
policy (or coverage replacing such policy) which exceed, for the portion
related to CIS's directors and officers, 150% of the annual premium
payments on CIS's current policy in effect as of the date of this Agreement
(the "Maximum Amount"). If the amount of the premiums necessary to maintain
or procure such insurance coverage exceeds the Maximum Amount, NDC shall
use its reasonable efforts to maintain the most advantageous policies of
directors' and officers' liability insurance obtainable for a premium equal
to the Maximum Amount.
(c) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.14, upon learning of any such Liability or
Litigation, shall promptly notify NDC thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) NDC or
the Surviving Corporation shall have the right to assume the defense
thereof and neither NDC nor the Surviving Corporation shall be liable to
such Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if NDC or the Surviving
Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between NDC or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and NDC or the Surviving Corporation shall pay all
reasonable fees and
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expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that NDC shall be obligated pursuant to
this paragraph (c) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in
the defense of any such Litigation, and (iii) NDC shall not be liable for
any settlement effected without its prior written consent; and provided
further that the Surviving Corporation shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become
final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
(d) Such officers, directors, employees and agents shall be deemed to
be third party beneficiaries under this Section 8.14, and this Section
shall be deemed to be a contract between NDC and any such person
individually.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(A) STOCKHOLDER APPROVAL. The stockholders of CIS shall have adopted
this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law, by the
provisions of any governing instruments, or by the rules of the NASD.
(B) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to
the disposition of Assets) which in the reasonable judgment of the Board of
Directors of NDC would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement that,
had such condition or requirement been known, NDC would not, in its
reasonable judgment, have entered into this Agreement.
(C) CONSENTS AND APPROVALS. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.
(D) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated by
this Agreement.
(E) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the
issuance or trading of the shares of NDC Common Stock issuable pursuant to
the Merger shall have been received.
(F) EXCHANGE LISTING. The shares of NDC Common Stock issuable
pursuant to the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance.
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(G) TAX MATTERS. Each Party shall have received a written opinion of
counsel from Alston & Bird, in form reasonably satisfactory to such Parties
(the "Tax Opinion"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) the exchange in the Merger of CIS Common Stock and CIS Preferred
Stock for NDC Common Stock will not give rise to gain or loss to the
stockholders of CIS with respect to such exchange (except to the extent of
any cash received), and (iii) none of CIS, Sub or NDC will recognize gain
or loss as a consequence of the Merger (except for amounts resulting from
any required change in accounting methods and any income and deferred gain
recognized pursuant to Treasury regulations issued under Section 1502 of
the Internal Revenue Code). In rendering such Tax Opinion, such counsel
shall be entitled to rely upon representations of officers of CIS and NDC
reasonably satisfactory in form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF NDC. The obligations of NDC to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by NDC pursuant to Section 11.6(a) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of CIS set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of CIS set forth in Section 5.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimus in amount). The
representations and warranties of CIS set forth in Sections 5.18, 5.19, and
5.20 of this Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
CIS set forth in this Agreement (including the representations and
warranties set forth in Sections 5.3, 5.18, 5.19, and 5.20) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have,
a Material Adverse Effect on CIS; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not
to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of CIS to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(C) CERTIFICATES. CIS shall have delivered to NDC (i) a certificate,
dated as of the Effective Time and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.2 of this Agreement as relates to CIS and
in Section 9.2(a) and 9.2(b) of this Agreement have been satisfied, and
(ii) certified copies of resolutions duly adopted by CIS's Board of
Directors and stockholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as NDC and its counsel shall request.
(D) OPINION OF COUNSEL. NDC shall have received an opinion of
Thompson & Knight, counsel to CIS, dated as of the Closing, in form
reasonably satisfactory to NDC, as to the matters set forth in Exhibit 2.
(E) POOLING LETTERS. NDC shall have received letters, dated as of the
date of filing of the Registration Statement with the SEC and as of the
Effective Time, addressed to NDC, in form and substance reasonably
acceptable to NDC, from Arthur Andersen LLP to the effect that the Merger
will qualify for pooling-of-interests accounting treatment. NDC also shall
have received letters, dated as of the date of filing of the Registration
Statement with the SEC and as of the Effective Time, addressed to NDC, in
form and substance reasonably acceptable to NDC, from Coopers & Lybrand
L.L.P. to the effect that such firm is not aware of any matters relating to
CIS and its Subsidiaries which would preclude the Merger from qualifying
for pooling-of-interests accounting treatment.
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(F) AFFILIATES AGREEMENTS. NDC shall have received from each
affiliate of CIS the affiliates letter referred to in Section 8.12 of this
Agreement, to the extent necessary to assure in the reasonable judgment of
NDC that the transactions contemplated hereby will qualify for
pooling-of-interests accounting treatment.
9.3 CONDITIONS TO OBLIGATIONS OF CIS. The obligations of CIS to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by CIS pursuant to Section 11.6(b) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of NDC set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of NDC set forth in Section 6.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimus in amount). The
representations and warranties of NDC set forth in Section 6.11 of this
Agreement shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of NDC set
forth in this Agreement (including the representations and warranties set
forth in Sections 6.3 and 6.11) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on NDC; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of NDC to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(C) CERTIFICATES. NDC shall have delivered to CIS (i) a certificate,
dated as of the Effective Time and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.3 of this Agreement as relates to CIS and
in Section 9.3(a) and 9.3(b) of this Agreement have been satisfied, and
(ii) certified copies of resolutions duly adopted by NDC's Board of
Directors and Sub's Board of Directors and sole stockholder evidencing the
taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as CIS and
its counsel shall request.
(D) OPINION OF COUNSEL. CIS shall have received an opinion of Alston
& Bird, counsel to NDC, dated as of the Effective Time, in form reasonably
acceptable to CIS, as to the matters set forth in Exhibit 3.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of CIS,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) By mutual consent of the Board of Directors of NDC and the Board
of Directors of CIS; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of CIS and Section 9.3(a) in
the case of NDC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such inaccuracy and which
inaccuracy would provide the terminating Party the ability to refuse to
consum-
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mate the Merger under the applicable standard set forth in Section 9.2(a)
of this Agreement in the case of CIS and Section 9.3(a) of this Agreement
in the case of NDC; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of CIS and Section 9.3(a) in
the case of NDC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of a material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot
be or has not been cured within 30 days after the giving of written notice
to the breaching Party of such breach; or
(d) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of CIS and Section 9.3(a) in
the case of NDC or in material breach of any covenant or other agreement
contained in this Agreement) in the event (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
stockholders of CIS fail to vote their adoption of this Agreement and the
transactions contemplated hereby as required by the DGCL and the rules of
the NASD at the Stockholders' Meeting where the transactions were presented
to such stockholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by September 30, 1996, if the
failure to consummate the transactions contemplated hereby on or before
such date is not caused by any willful breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of CIS and Section 9.3(a) in
the case of NDC or in material breach of any covenant or other agreement
contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Merger cannot
be satisfied or fulfilled by the date specified in Section 10.1(e) of this
Agreement; or
(g) By NDC, in the event that a Purchase Event shall have occurred or,
if a Preliminary Purchase Event shall have occurred, the Board of Directors
of CIS shall have failed to reaffirm its approval of the Merger and the
transactions contemplated by this Agreement (to the exclusion of any other
Acquisition Proposal), or shall have resolved not to reaffirm the Merger.
(h) By CIS in the event that CIS has entered into negotiations with a
third party in accordance with Sections 8.1 and 8.8 of this Agreement and,
pursuant to the continuing fiduciary duties of the CIS Board of Directors
as required by applicable Law, CIS has entered into a binding Acquisition
Proposal with a third party.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured breach of a representation,
warranty, covenant, or agreement giving rise to such termination, unless and
until such breaching Party makes the payment required by Section 11.2(b) or
11.2(c), as the case may be, in accordance with its terms.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.9, 8.12, 8.13 and 8.14 of this Agreement
shall survive the Effective Time.
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ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination
involving such Party or any of its Subsidiaries or the acquisition of a
substantial equity interest in, or a substantial portion of the assets
of, such Party or any of its Subsidiaries.
"Acquisition Transaction" shall mean (A) a merger, consolidation or
similar transaction involving CIS or any CIS Subsidiary (other than
transactions solely between CIS Subsidiaries), (B) the disposition, by
sale, lease, exchange or otherwise, of Assets of CIS or any CIS
Subsidiary representing in either case 25% or more of the consolidated
assets of CIS and the CIS Subsidiaries, or (C) the issuance, sale or
other disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities representing 25% or more
of the voting power of CIS or any of the CIS Subsidiaries (any of the
foregoing, an "Acquisition Transaction").
"Affiliate" of a Person shall mean: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person; or
(iii) any other Person for which a Person described in clause (ii) acts
in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including
the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such
Person and wherever located.
"BT Warrants" shall mean those Rights to purchase shares of CIS
Series A Preferred Stock granted by CIS pursuant to that certain Warrant
to Purchase Shares of Series A Participating Convertible Preferred
Stock, dated November 23, 1994, naming BT Holdings (New York), Inc. as
the holder thereof (the "BT Warrant Agreement").
"CIS Capital Stock" shall mean, collectively, the CIS Common Stock,
the CIS Preferred Stock and any other class or series of capital stock
of CIS.
"CIS Common Stock" shall mean the $.01 par value common stock of
CIS.
"CIS Companies" shall mean, collectively, CIS and all CIS
Subsidiaries.
"CIS Convertible Notes" shall mean those convertible promissory
notes of CIS, dated as of November 3, 1994, naming each of Wendy R.
Lewis and Randall Ray as the holder thereof.
"CIS Disclosure Memorandum" shall mean the written information
entitled "CIS Disclosure Memorandum" delivered prior to the date of this
Agreement to NDC describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure
is being made. Information disclosed with respect to one Section shall
not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
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"CIS Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of CIS as of
December 31, 1995, and as of December 31, 1995 and 1994, and the related
statements of operations, stockholders' equity, and cash flows
(including related notes and schedules, if any) for each of the three
fiscal years ended December 31, 1995, 1994 and 1993, as filed by CIS in
SEC Documents, and (ii) the consolidated balance sheets of CIS
(including related notes and schedules, if any) and related statements
of operations, stockholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to December 31, 1995.
"CIS Preferred Stock" shall mean the $.01 par value preferred stock
of CIS, and shall include the CIS Series A Preferred Stock.
"CIS Series A Preferred Stock" shall mean the Series A
Participating Convertible Preferred Stock of CIS, 2,384,182 shares of
which were issued pursuant to that certain Stock and Warrant Purchase
Agreement, dated as of November 21, 1994, between CIS and BT Holdings
(New York), Inc. (the "BT Purchase Agreement").
"CIS Stock Plans" shall mean the existing stock option and other
stock-based compensation plans of CIS designated as follows: Amended and
Restated C.I.S. Technologies, Inc. Stock Option Plan (formerly the
"Incentive Plan"), Amended and Restated C.I.S. Technologies, Inc.
Employee Stock Option Plan, C.I.S. Technologies, Inc. HCC Management
Stock Option Plan, C.I.S. Technologies, Inc. 1995 Stock Incentive Plan
and C.I.S. Technologies, Inc. 1995 Director Stock Option Plan.
"CIS Subsidiaries" shall mean the Subsidiaries of CIS, which shall
include the CIS Subsidiaries described in Section 5.4 of this Agreement
and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of CIS in the future and held as a subsidiary
by CIS at the Effective Time.
"Certificate of Merger" shall mean the Certificate of Merger to be
executed by CIS and filed with the Secretary of State of the State of
Delaware relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Confidentiality Agreement" or "Confidentiality Agreements" shall
mean those certain confidentiality agreements entered into by and
between CIS and NDC which requires each of CIS and NDC to keep
confidential any trade secrets, proprietary data, customer information
or other business information provided to such party by the other party
in connection with and in furtherance of the consummation of the
transactions contemplated by this Agreement.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"Contract" shall mean any written agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of
any kind or character, or other document to which any Person is a party
or that is binding on any Person or its capital stock, Assets or
business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract, Order
or Permit, or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a right to
terminate or revoke, change the current terms of, or renegotiate, or to
accelerate, increase, or impose any Liability under, any Contract, Order
or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
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"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) and
which are administered, interpreted or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et
seq. ("CERCLA"), the Resource Conservation and Recovery Act, as amended,
42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases or threatened releases of any Hazardous Material,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exhibits" 1 through 6, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HRS Warrants" shall mean those Rights to purchase shares of CIS
Common Stock granted by CIS pursuant to that certain Limited
Transferable Warrant to Purchase Shares of Common Stock, dated as of
February 4, 1994, naming Healthcare Research Systems, Inc. as the holder
thereof (the "HRS Warrant Agreement").
"HSR Act" shall mean Section 7A of the Clayton Act, as added by
Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor,
technology rights and licenses, computer software (including any source
or object codes therefor or documentation relating thereto), trade
secrets, franchises, know-how, inventions, and other intellectual
property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person (including references
to such Person being aware of a particular matter) shall mean those
facts that are known or should reasonably have been known after due
inquiry by the chairman, president, chief financial officer, chief
accounting officer, general counsel, any assistant or deputy general
counsel, or any vice president of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities or business, including those promulgated,
interpreted or enforced by any Regulatory Authority within the scope of
authority of such Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
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whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, and (ii) Liens which do
not materially impair the use of or title to the Assets subject to such
Lien.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including Contracts related to it), or
the transactions contemplated by this Agreement.
"Material" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question; provided
that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event, change or
occurrence which, individually or together with any other event, change
or occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of such Party and its
Subsidiaries, taken as a whole, or (ii) the ability of such Party to
perform its obligations under this Agreement or to consummate the Merger
or the other transactions contemplated by this Agreement. Material
Adverse Effect shall not include an event, change or occurrence
described in Section 11.1 of the CIS Disclosure Memorandum.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Nasdaq National Market" shall mean the National Market System of
the National Association of Securities Dealers Automated Quotations
System.
"NDC Capital Stock" shall mean, collectively, the NDC Common Stock,
the NDC Preferred Stock and any other class or series of capital stock
of NDC.
"NDC Common Stock" shall mean the $.125 par value common stock of
NDC.
"NDC Companies" shall mean, collectively, NDC and all NDC
Subsidiaries.
"NDC Disclosure Memorandum" shall mean the written information
entitled "National Data Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to CIS describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced
with respect thereto.
"NDC Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of NDC as of May
31, 1995, and as of May 31, 1995 and 1994, and the related statements of
income, changes in stockholders' equity, and cash flows (including
related notes and schedules, if any) for each of the three years ended
May 31, 1995, 1994 and 1993, as filed by NDC in SEC Documents, and (ii)
the consolidated balance sheets of NDC (including related notes and
schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to May 31, 1995.
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"NDC Preferred Stock" shall mean the $1.00 par value preferred
stock of NDC.
"NDC Rights" shall mean the preferred stock purchase rights issued
pursuant to the NDC Rights Agreement.
"NDC Rights Agreement" shall mean that certain Rights Agreement,
dated January 18, 1991, as amended between NDC and Wachovia Bank of
North Carolina, N.A., as Rights Agent.
"NDC Subsidiaries" shall mean the Subsidiaries of NDC.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Property" shall mean any property owned or used by the
Party in question or by any of its Subsidiaries.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency or Regulatory
Authority.
"Participation Facility" shall mean any facility or property in
which the Party in question or any of its Subsidiaries participates in
the management of such facility or property, but only with respect to
such facility or property.
"Party" shall mean either CIS or NDC, and "Parties" shall mean both
CIS and NDC.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability
company, trust, business association, group acting in concert, or any
person acting in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by CIS to
solicit the approval of its stockholders of the transactions
contemplated by this Agreement, which shall include the prospectus of
NDC relating to the issuance of the NDC Common Stock to holders of CIS
Common Stock.
"Purchase Event" means any of the following events subsequent to
the date of this Agreement:
(i) without NDC's prior written consent, CIS shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than NDC or any NDC Subsidiary) to
effect an Acquisition Transaction; or
(ii) any person (other than NDC or any NDC Subsidiary) shall
have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the 1934 Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined
under the 1934 Act), other than a group of which NDC or any NDC
Subsidiary is a member, shall have been formed which beneficially
owns or has the right to acquire beneficial ownership of, 25% or more
of the then-outstanding shares of CIS Common Stock.
"Preliminary Purchase Event" means any of the following events:
(i) any person (other than NDC or any NDC Subsidiary) shall have
commenced (as such term is defined in Rule 14d-2 under the 1934 Act),
or shall have filed a registration statement under the 1933 Act with
respect to, a tender offer or exchange offer to purchase any shares
of CIS Common Stock such that, upon consummation of such offer, such
person would own or control 25% or more of the then-outstanding
shares of CIS Common Stock (such an offer being referred to herein as
a "Tender Offer" or an "Exchange Offer," respectively); or
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(ii) the holders of CIS Common Stock shall not have approved
this Agreement at the meeting of such stockholders held for the
purpose of voting on this Agreement, such meeting shall not have been
held or shall have been canceled prior to termination of this
Agreement, or CIS's Board of Directors shall have withdrawn or
modified in a manner adverse to NDC the recommendation of CIS's Board
of Directors with respect to this Agreement, in each case after any
person (other than NDC or any NDC Subsidiary) shall have (A) made, or
disclosed an intention to make, a proposal to engage in an
Acquisition Transaction, (B) commenced a Tender Offer or filed a
registration statement under the 1933 Act with respect to an Exchange
Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any applicable federal or state statute or
regulation (including a notice filed under the HSR Act) seeking the
consent to an Acquisition Transaction from any federal or state
governmental or regulatory authority or agency an Acquisition
Transaction.
"Registration Statement" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
NDC under the 1933 Act with respect to the shares of NDC Common Stock to
be issued to the stockholders of CIS in connection with the transactions
contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, all state
regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, the NYSE, the NASD, and the SEC.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and
the rules and regulations of any Regulatory Authority promulgated
thereunder.
"Stockholders' Meeting" shall mean the meeting of the stockholders
of CIS to be held pursuant to Section 8.1 of this Agreement, including
any adjournment or adjournments thereof.
"Sub Common Stock" shall mean the $.01 par value common stock of
Sub.
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly or
indirectly by its parent.
"Surviving Corporation" shall mean CIS as the surviving corporation
resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other
taxes, assessments, charges, fares, or impositions, including interest,
penalties, and additions imposed thereon or with respect thereto.
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(b) The terms set forth below shall have the meanings ascribed thereto
in the referenced sections:
<TABLE>
<S> <C>
Effective Time.............................................. Section 1.3
CIS Benefit Plans........................................... Section 5.14
CIS Contracts............................................... Section 5.15
CIS ERISA Plan.............................................. Section 5.14
CIS Options................................................. Section 3.6
Closing..................................................... Section 1.2
ERISA Affiliate............................................. Section 5.14
Exchange Agent.............................................. Section 4.1
Exchange Ratio.............................................. Section 3.1(c)
Indemnified Party........................................... Section 8.14(a)
Maximum Amount.............................................. Section 8.14
Merger...................................................... Section 1.1
Takeover Laws............................................... Section 5.19
Tax Opinion................................................. Section 9.1(h)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and
fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that each of the Parties shall
bear and pay one-half of the filing fees payable in connection with the
Registration Statement and the Proxy Statement and printing costs incurred
in connection with the printing of the Registration Statement and the Proxy
Statement. NDC shall pay the filing fees payable in connection with the HSR
Act filing.
(b) Notwithstanding the foregoing,
(i) if this Agreement is terminated by NDC pursuant to either of
Sections 10.1(b) or 10.1(c), then CIS shall promptly pay NDC the sum of
$2,000,000, payable 25% at termination and 25% at the end of each of the
three (3) 30-day periods thereafter, as partial liquidated damages,
which, with the payment required by Section 11.2(d), if any, shall be
liquidated damages and shall be in complete satisfaction of CIS's
obligation under this Agreement, or
(ii) if this Agreement is terminated by NDC pursuant to Section
10.1(g), or if this Agreement is terminated by CIS pursuant to Section
10.1(h), then CIS shall promptly pay to NDC an amount equal to the
direct costs and expenses or portion thereof referred to in subsection
(a) above incurred by or on behalf of NDC in connection with the
transactions contemplated by this Agreement.
(c) Notwithstanding the foregoing, if this Agreement is terminated by
CIS pursuant to either of Sections 10.1(b) or 10.1(c), then NDC shall
promptly pay CIS the sum of $2,000,000 as liquidated damages, which shall
be in complete satisfaction of NDC's obligations under this Agreement.
(d) In addition to the foregoing, if, after the date of this Agreement
and within twelve (12) months following any termination of this Agreement
by NDC pursuant to Sections 10.1(b), 10.1(c) or 10.1(g) of this Agreement,
or any termination of this Agreement by CIS pursuant to Section 10.1(h) of
this Agreement, any third-party shall acquire, merge with, combine with,
purchase a significant amount of Assets of, or engage in any other business
combination with, or purchase any equity securities involving an
acquisition of 20% or more of the voting stock of, CIS, or enter into any
binding agreement to do any of the foregoing (collectively, a "Business
Combination"), such third-party that is a party to the Business
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Combination shall pay to NDC, as a condition of consummation of the
Business Combination, an amount in cash equal to the sum of
(i) the direct costs and expenses or portion thereof referred to in
subsection (a) above incurred by or on behalf of NDC in connection with
the transactions contemplated by this Agreement, plus
(ii) 3% of the aggregate fair market value of the consideration to
be received by the stockholders of CIS in such Business Combination,
less
(iii) any amounts previously paid by CIS to NDC pursuant to
subsection (b) of this Section 11.2,
which sum represents additional compensation for NDC's loss as the result
of the transactions contemplated by this Agreement not being consummated.
In the event such third-party shall refuse to pay such amounts within ten
days of demand therefor by NDC, the amounts shall be an obligation of CIS
and shall be paid by CIS promptly upon notice to CIS by NDC.
Notwithstanding the foregoing, in the event that NDC terminates the
Agreement pursuant to Sections 10.1(b) or Section 10.1(g), or CIS
terminates the Agreement pursuant to Section 10.1(h), the payment required
by this Section 11.2(d) will only come due if a third party that was
involved in discussions or negotiations with CIS on or before the
termination of this Agreement consummates the Business Combination.
(e) The Parties acknowledge that the loss to either Party resulting
from breach of this Agreement by the other Party or other failure of the
merger to be consummated is not susceptible of ready measurement and,
therefore, that the payments provided in this Section 11.2 are intended by
the Parties to constitute liquidated damages for any breach by a Party of
the terms of this Agreement, and not a penalty.
11.3 BROKERS AND FINDERS. Except for Dean Witter Reynolds Inc. as to CIS
and Lazard Freres & Co. LLC as to NDC, each of the Parties represents and
warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage fees, commissions,
or finders' fees in connection with this Agreement or the transactions
contemplated hereby. In the event of a claim by any broker or finder based upon
his or its representing or being retained by or allegedly representing or being
retained by CIS or NDC, each of CIS and NDC, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in respect
of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b) of this Agreement, for the Confidentiality Agreements). Nothing in this
Agreement expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, other than as
provided in Sections 8.13 and 8.14 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
stockholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of CIS Common Stock, there shall be made no
amendment that pursuant to Section 251 of the DGCL requires further approval by
such stockholders without the further approval of such stockholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, NDC, acting through its Board
of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by CIS, to waive or extend the time for the compliance or
fulfillment by CIS of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
NDC under this Agreement, except any condition which, if not satisfied,
would result in
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the violation of any Law. No such waiver shall be effective unless in
writing signed by a duly authorized officer of NDC.
(b) Prior to or at the Effective Time, CIS, acting through its Board
of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by NDC, to waive or extend the time for the compliance or
fulfillment by NDC of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
CIS under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of CIS.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or breach
or a waiver of any other condition or of the breach of any other term of
this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
<TABLE>
<S> <C>
CIS: C.I.S. Technologies, Inc.
One Warren Place
6100 South Yale Avenue
Suite 1900
Tulsa, Oklahoma 74136-1903
Telecopy Number: (918) 481-4205
Attention: Mr. Phillip D. Kurtz
Copies to Counsel: C.I.S. Technologies, Inc.
One Warren Place
6100 South Yale Avenue
Suite 1900
Tulsa, Oklahoma 74136-1903
Telecopy Number: (918) 481-4205
Attention: Mr. Thomas G. Noulles
Thompson & Knight
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201-4693
Telecopy Number (214) 969-1751
Attention: Mr. Steve Cochran
</TABLE>
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<TABLE>
<S> <C>
NDC: National Data Corporation
National Data Corporation Plaza
1564 N.E. Expressway
Atlanta, Georgia 30329-2010
Telecopy Number: (404) 728-2990
Attention: Mr. Robert A. Yellowlees
Copies to Counsel: National Data Corporation
National Data Corporation Plaza
1564 N.E. Expressway
Atlanta, Georgia 30329-2010
Telecopy Number: (404) 728-2990
Attention: Mr. E. Michael Ingram
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-7777
Attention: B. Harvey Hill, Jr.
</TABLE>
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 EXCLUSIVE REMEDY FOR BREACHES OF AGREEMENT. The Parties hereto agree
that the provisions of Section 11.2 represent the exclusive remedy of the
parties for breaches of this Agreement by the other Party and that in no event
shall the Parties or any of their Affiliates be entitled to any injunction or
other equitable remedy to prevent breaches of this Agreement or to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, regardless of whether they have an adequate
remedy at law.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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<PAGE> 96
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: C.I.S. TECHNOLOGIES, INC.
/s/ THOMAS G. NOULLES By: /s/ PHILLIP D. KURTZ
- -------------------------------------------- --------------------------------------------
Mr. Thomas G. Noulles Mr. Phillip D. Kurtz
Secretary Chairman and Chief Executive Officer
CORPORATE SEAL
ATTEST: NATIONAL DATA CORPORATION
/s/ E. MICHAEL INGRAM By: /s/ ROBERT A. YELLOWLEES
- -------------------------------------------- --------------------------------------------
Mr. E. Michael Ingram Mr. Robert A. Yellowlees
Secretary Chairman and Chief Executive Officer
CORPORATE SEAL
ATTEST: NDC MERGER CORP.
/s/ E. MICHAEL INGRAM By: /s/ ROBERT A. YELLOWLEES
- -------------------------------------------- --------------------------------------------
Mr. E. Michael Ingram Mr. Robert A. Yellowlees
Secretary President
CORPORATE SEAL
</TABLE>
A-37
<PAGE> 97
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
<C> <S> <C>
1. -- Form of agreement of affiliates of CIS. (sec.sec. 8.12, 9.2(f)).
2. -- Matters as to which Thompson & Knight will opine. (sec. 9.2(d)).
3. -- Matters as to which Alston & Bird will opine. (sec. 9.3(d)).
</TABLE>
A-38
<PAGE> 98
EXHIBIT 1
AFFILIATE AGREEMENT
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: E. Michael Ingram
General Counsel and Secretary
Gentlemen:
The undersigned is a stockholder of C.I.S. Technologies, Inc. ("CIS"), a
corporation organized and existing under the laws of the State of Delaware, and
will become a stockholder of National Data Corporation ("NDC") pursuant to the
transactions described in the Agreement and Plan of Merger, dated as of April
15, 1996 (the "Agreement"), by and among NDC, NDC Merger Corp. ("Sub") and CIS.
Under the terms of the Agreement, Sub will be merged into and with CIS (the
"Merger"), and the shares of the $.01 par value common stock of CIS ("CIS Common
Stock") and Series A Participating Convertible Preferred Stock of CIS ("CIS
Series A Preferred Stock") will be converted into and exchanged for shares of
the $.125 par value common stock of NDC ("NDC Common Stock"). This Affiliate
Agreement represents an agreement between the undersigned and NDC regarding
certain rights and obligations of the undersigned in connection with the shares
of CIS held by the undersigned and with the shares of NDC to be received by the
undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and NDC hereby agree as follows:
1. Affiliate Status. The undersigned understands that as to CIS he is
to be deemed an "affiliate" under Rule 145(c) as defined in Rule 405 of the
Rules and Regulations of the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended ("1933 Act"), and the
undersigned anticipates that he will be such an "affiliate" both at the
time the Agreement is submitted to the stockholders of CIS for their
adoption and at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees that he
will not sell, transfer, or otherwise dispose of his interests in, or
reduce his risk relative to, any of the shares of NDC Common Stock into
which his shares of CIS Common Stock or CIS Series A Preferred Stock are
converted upon consummation of the Merger until such time as NDC notifies
the undersigned that the requirements of SEC Accounting Series Release Nos.
130 and 135 ("ASR 130 and 135") have been met. The undersigned understands
that ASR 130 and 135 relate to publication of financial results of
post-Merger combined operations of NDC and CIS. NDC agrees that it will
publish such results within 45 days after the end of the first fiscal
quarter of NDC containing the required period of post-Merger combined
operations and that it will notify the undersigned promptly following such
publication.
3. Covenants and Warranties of Undersigned. The undersigned
represents, warrants and agrees that:
(a) During the 30 days immediately preceding the Effective Time of
the Merger, the undersigned has not sold, transferred, or otherwise
disposed of his interests in, or reduced his risk relative to, any of
the shares of CIS Common Stock or CIS Series A Preferred Stock
beneficially owned by the undersigned as of the record date for
determination of stockholders entitled to vote at the Stockholders'
Meeting of CIS held to approve the Merger.
(b) The NDC Common Stock received by the undersigned as a result of
the Merger will be taken for his own account and not for others,
directly or indirectly, in whole or in part.
A-39
<PAGE> 99
(c) NDC has informed the undersigned that any distribution by the
undersigned of NDC Common Stock has not been registered under the 1933
Act and that shares of NDC Common Stock received pursuant to the Merger
can only be sold by the undersigned (1) following registration under the
1933 Act, or (2) in conformity with the volume and other requirements of
Rule 145(d) promulgated by the SEC as the same now exist or may
hereafter be amended, or (3) to the extent some other exemption from
registration under the 1933 Act might be available. The undersigned
understands that NDC is under no obligation to file a registration
statement with the SEC covering the disposition of the undersigned's
shares of NDC Common Stock or to take any other action necessary to make
compliance with an exemption from such registration available.
(d) The undersigned will, and will cause each of the other parties
whose shares are deemed to be beneficially owned by the undersigned
pursuant to Section 8 hereof to, have all shares of CIS Common Stock or
CIS Series A Preferred Stock beneficially owned by the undersigned
registered in the name of the undersigned or such parties, as
applicable, prior to the effective date of the Merger and not in the
name of any bank, broker-dealer, nominee or clearinghouse.
(e) The undersigned is aware that NDC intends to treat the Merger
as a tax-free reorganization under Section 368 of the Internal Revenue
Code ("Code") for federal income tax purposes. The undersigned agrees to
treat the transaction in the same manner as NDC for federal income tax
purposes. The undersigned acknowledges that Section 1.368-1(b) of the
Income Tax Regulations requires "continuity of interest" in order for
the Merger to be treated as tax-free under Section 368 of the Code. This
requirement is satisfied if, taking into account those CIS stockholders
who receive cash in exchange for their stock, who receive cash in lieu
of fractional shares, or who dissent from the Merger, there is no plan
or intention on the part of the CIS stockholders to sell or otherwise
dispose of the NDC Common Stock to be received in the Merger that will
reduce such stockholders' ownership to a number of shares having, in the
aggregate, a value at the time of the merger of less than 80% of the
total fair market value of the CIS Common Stock and CIS Series A
Preferred Stock outstanding immediately prior to the Merger. The
undersigned has no prearrangement, plan or intention to sell or
otherwise dispose of an amount of his NDC Common Stock to be received in
the Merger which would cause the foregoing requirement not to be
satisfied.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of NDC Common
Stock received by the undersigned pursuant to the Merger will be given to
NDC's Transfer Agent and that there will be placed on the certificates for
such shares, or shares issued in substitution thereof, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of interests"
and may not be sold, nor may the owner thereof reduce his risks relative
thereto in any way, until such time as National Data Corporation ("NDC")
has published the financial results covering at least 30 days of
combined operations after the effective date of the merger through which
the business combination was effected. In addition, the shares
represented by this certificate may not be sold, transferred or
otherwise disposed of except or unless (1) covered by an effective
registration statement under the Securities Act of 1933, as amended, (2)
in accordance with (i) Rule 145(d) (in the case of shares issued to an
individual who is not an affiliate of NDC) or (ii) Rule 144 (in the case
of shares issued to an individual who is an affiliate of NDC) of the
Rules and Regulations of such Act, or (3) in accordance with a legal
opinion satisfactory to counsel for NDC that such sale or transfer is
otherwise exempt from the registration requirements of such Act."
Such legend will also be placed on any certificate representing NDC
securities issued subsequent to the original issuance of the NDC Common
Stock pursuant to the Merger as a result of any transfer of such shares or
any stock dividend, stock split, or other recapitalization as long as the
NDC Common Stock issued to the undersigned pursuant to the Merger has not
been transferred in such manner to justify the removal of the legend
therefrom. Upon the request of the undersigned, NDC shall cause the
certificates representing the shares of NDC Common Stock issued to the
undersigned in connection with the Merger
A-40
<PAGE> 100
to be reissued free of any legend relating to restrictions on transfer by
virtue of ASR 130 and 135 as soon as practicable after the requirements of
ASR 130 and 135 have been met. In addition, if the provisions of Rules 144
and 145 are amended to eliminate restrictions applicable to the NDC Common
Stock received by the undersigned pursuant to the Merger, or at the
expiration of the restrictive period set forth in Rule 145(d), NDC, upon
the request of the undersigned, will cause the certificates representing
the shares of NDC Common Stock issued to the undersigned in connection with
the Merger to be reissued free of any legend relating to the restrictions
set forth in Rules 144 and 145(d) upon receipt by NDC of an opinion of its
counsel to the effect that such legend may be removed.
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed
their requirements and impact upon his ability to sell, transfer, or
otherwise dispose of the shares of NDC Common Stock received by the
undersigned, to the extent he believes necessary, with his counsel or
counsel for CIS.
6. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of NDC Common Stock received by him in
connection with the Merger at any time during the restrictive period set
forth in Rule 145(d), the undersigned will provide the necessary
representation letter to the transfer agent for NDC Common Stock together
with such additional information as the transfer agent may reasonably
request. If NDC's counsel concludes that such proposed sale or transfer
complies with the requirements of Rule 145(d), NDC shall cause such counsel
to provide such opinions as may be necessary to NDC's Transfer Agent so
that the undersigned may complete the proposed sale or transfer.
7. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to all shares of the capital stock of CIS
and NDC that are deemed to be beneficially owned by the undersigned
pursuant to applicable federal securities laws, which the undersigned
agrees may include, without limitation, shares owned or held in the name of
(i) the undersigned's spouse, (ii) any relative of the undersigned or of
the undersigned's spouse who has the same home as the undersigned, (iii)
any trust or estate in which the undersigned, the undersigned's spouse, and
any such relative collectively own at least a 10% beneficial interest or of
which any of the foregoing serves as trustee, executor, or in any similar
capacity, and (iv) any corporation or other organization in which the
undersigned, the undersigned's spouse and any such relative collectively
own at least 10% of any class of equity securities or of the equity
interest. The undersigned further recognizes that, in the event that the
undersigned is a director or officer of NDC or becomes a director or
officer of NDC upon consummation of the Merger, among other things, any
sale of NDC Common Stock by the undersigned within a period of less than
six months following the effective time of the Mergers may subject the
undersigned to liability pursuant to Section 16(b) of the Securities
Exchange Act of 1934, as amended.
8. Miscellaneous. This Affiliate Agreement is the complete agreement
between NDC and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by
registered or certified mail, return receipt requested, using the addresses
set forth herein or such other address as shall be furnished in writing by
the parties. This Affiliate Agreement shall be governed by the laws of the
State of Delaware.
A-41
<PAGE> 101
This Affiliate Agreement is executed as of the day of ,
1996.
Very truly yours,
--------------------------------------
Signature
--------------------------------------
Print Name
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Address
[add below the signatures of all
registered owners
of shares deemed beneficially owned by
the affiliate]
--------------------------------------
Name:
--------------------------------------
Name:
--------------------------------------
Name:
AGREED TO AND ACCEPTED as of
, 1996
- ---------------------------
NATIONAL DATA CORPORATION
By:
------------------------------
A-42
<PAGE> 102
EXHIBIT 2
MATTERS AS TO WHICH THOMPSON & KNIGHT SHALL OPINE
1. C.I.S. Technologies, Inc. ("CIS") is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to carry on the business in which it is
engaged as described in the Proxy Statement and to own and use its material
Assets.
2. The execution and delivery of the Agreement and compliance with its
terms do not and will not violate or contravene any provision of the Certificate
of Incorporation or Bylaws of CIS or, to our knowledge but without any
independent investigation, any Law, Order, Permit or Contract to which CIS is a
party or by which CIS or any of its material Assets is bound.
3. The Agreement has been duly and validly executed and delivered by CIS,
and assuming valid authorization, execution and delivery by National Data
Corporation and NDC Merger Corp., constitutes a valid and binding agreement of
CIS enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or similar laws affecting
creditors' rights generally, provided, however, that we express no opinion as to
the availability of the equitable remedy of specific performance.
A-43
<PAGE> 103
EXHIBIT 3
MATTERS AS TO WHICH ALSTON & BIRD SHALL OPINE
1. National Data Corporation ("NDC") is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to carry on the business in which it is
engaged as described in the Proxy Statement and to own and use its material
Assets. NDC Merger Corp. ("Sub") is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with full
corporate power and authority to perform its obligations under the Agreement.
2. The execution and delivery of the Agreement and compliance with its
terms do not and will not violate or contravene any provision of the Certificate
of Incorporation or Bylaws of NDC or Sub or, to our knowledge but without any
independent investigation, any Law, Order or Permit to which NDC or Sub is a
party or by which NDC or Sub is bound.
3. The Agreement has been duly and validly executed and delivered by NDC
and Sub, and assuming valid authorization, execution and delivery by C.I.S.
Technologies, Inc. ("CIS"), constitutes a valid and binding agreement of each of
NDC and Sub enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, or similar laws
affecting creditors' rights generally, provided, however, that we express no
opinion as to the availability of the equitable remedy of specific performance.
4. The shares of NDC Common Stock to be issued to the stockholders of CIS
as contemplated by the Agreement have been registered under the Securities Act
of 1933, as amended, and when properly issued and delivered following
consummation of the Merger will be duly authorized, validly issued, fully paid
and non-assessable under the Delaware General Corporation Law.
5. The shares of NDC Common Stock to be issued to the stockholders of CIS
as contemplated by the Agreement have been listed on the New York Stock
Exchange, subject to notice of official issuance.
A-44
<PAGE> 104
ANNEX B
DEAN WITTER REYNOLDS INC.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 392-2222
May __, 1996
Board of Directors
C.I.S. Technologies, Inc.
6100 South Yale, Suite 1900
Tulsa, OK 74136-1903
Gentlemen:
C.I.S. Technologies, Inc., a Delaware corporation ("C.I.S." or the "Company"),
National Data Corporation, a Delaware corporation ("NDC"), and NDC Merger
Corp., a Delaware corporation and a wholly owned subsidiary of NDC ("Sub"),
intend to enter into an Agreement and Plan of Merger, dated as of April 15,
1996 (the "Agreement"), providing for the merger of the Company with and into
Sub (the "Merger"). The Agreement provides that (i) each share of common
stock, par value $.O1 per share, of the Company (the "C.I.S. Common Stock")
(excluding shares held by any C.I.S. Company or any NDC Company (each as
defined in the Agreement)) issued and outstanding at the Effective Time (as
defined in the Agreement), shall, at the Effective Time, by virtue of the
Merger and without any action on the part of NDC, C.I.S., Sub or the
stockholders of any of the foregoing, cease to be outstanding and shall be
converted into and exchanged for the right to receive .08682 shares (the
"Common Stock Exchange Ratio") of the common stock, par value $.125 per share,
of NDC (the "NDC Common Stock") and (ii) each share of Series A Participating
Convertible Preferred Stock, $.O1 par value per share, of C.I.S. (the "C.I.S.
Series A Preferred Stock," and together with the C.I.S. Common Stock, the
"C.I.S. Capital Stock") (excluding shares held by any C.I.S. Company or any NDC
Company (each as defined in the Agreement) and excluding those shares held by
shareholders who perfect their statutory dissenters' rights as provided in
Section 3.5 of the Agreement) issued and outstanding at the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for the
right to receive that number of shares of NDC Common Stock as equals the
product of the Common Stock Exchange Ratio and the number of shares of C.I.S.
Common Stock into which such share of C.I.S. Series A Preferred Stock, if fully
convertible, would be convertible (the "Preferred Stock Exchange Ratio").
You have requested our opinion, as investment bankers, as to the fairness, from
a financial point of view, to the Company of the Common Stock Exchange Ratio
and the Preferred Stock Exchange Ratio.
In arriving at the opinion set forth below, we have, among other things:
(1) reviewed the Agreement;
(2) reviewed the Annual Reports on Form 10-K and related publicly
available financial information of the Company for the three
fiscal years ended December 31, 1995, the Quarterly Reports on
Form 1O-Q for the three quarterly periods ended September
B-1
<PAGE> 105
DEAN WITTER REYNOLDS INC.
C.I.S. Technologies, Inc.
May __, 1996
Page 2
30, 1995, June 30, 1995 and March 31, 1995, the Company's
definitive Proxy Statement on Form 14A, dated April 2, 1996, and
a draft of the Company's financial statements for the most recent
fiscal quarterly period ended March 31, 1996;
(3) reviewed the Annual Reports on Form 1O-K and related publicly
available financial information of NDC for the three most recent
fiscal years ended May 31, 1995, the Quarterly Report on Form
1O-Q for the period ended February 29, 1996, and NDC's definitive
Proxy Statement on Form 14A, dated August 30, 1995;
(4) reviewed certain other information, including publicly available
information, relating to the business, earnings, cash flow,
assets and prospects of the Company and NDC, respectively;
(5) reviewed an income statement forecast of the Company for the
remaining portion of the 1996 fiscal year and for the 1997 fiscal
year as furnished to us by the Company; reviewed balance sheet
and cash flow forecasts of the Company for the remaining portion
of the 1996 fiscal year and for the 1997 fiscal year as prepared
on the basis of information and assumptions furnished to us by
the Company;
(6) reviewed the publicly available income statement forecasts of NDC
for the remaining portion of the 1996 fiscal year and for the
fiscal year 1997 as set forth in the published reports of
recognized securities industry analyst furnished to us by NDC;
(7) conducted discussions with members of senior management of the
Company and NDC, respectively, concerning the past and current
business, operations, assets, present financial condition and
future prospects of the Company and NDC, respectively, and
discussed with senior management of the Company and of NDC their
respective views of the strategic rationale for the Merger and
the benefits of the Merger to both the Company and NDC;
(8) reviewed the historical reported market prices and trading
activity for the C.I.S. Common Stock and the NDC Common Stock;
(9) compared certain financial information, operating statistics and
market trading information relating to the Company with published
financial information, operating statistics and market trading
information relating to selected public companies that we deemed
to be reasonably similar to the Company; compared certain
financial information, operating statistics and market trading
information relating to NDC with published financial information,
operating statistics and
B-2
<PAGE> 106
DEAN WITTER REYNOLDS INC.
C.I.S. Technologies, Inc.
May __, 1996
Page 3
market trading information relating to selected public companies
that we deemed to be reasonably similar to NDC;
(10) compared the proposed financial terms of the Merger with the
financial terms, to the extent publicly available, of selected
other recent acquisitions that we deemed to be relevant; and
(11) reviewed such other financial studies and analyses and performed
such other investigations and took into account such other
matters as we deemed necessary.
In preparing our opinion, we have assumed and relied upon the accuracy and
completeness of all financial and other information supplied to us by the
Company and NDC or that is publicly available, respectively, and we have not
independently verified such information. We also have relied upon the
management of the Company as to the reasonableness and achievability of the
financial forecasts of the Company (and the assumptions and bases thereof)
provided to us or prepared on the basis of information and assumptions
furnished to us, and with your consent we have assumed that such forecasts have
been reasonably prepared on the basis reflecting the best currently available
estimates and judgment of such management as to the future operating
performance of the Company. Although management of NDC did not make financial
forecasts of NDC available to us, we have reviewed the financial forecasts of
recognized securities industry analysts who cover and publish on NDC, and we
have confirmed the reasonableness and achievability of such forecasts with NDC
senior management. Furthermore, we assumed the Merger will qualify (i) for
pooling of interests accounting treatment and (ii) as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
We have not been requested to make, and we have not made, an independent
appraisal or evaluation of the assets, properties, facilities or liabilities of
the Company or NDC and we have not been furnished with any such appraisal or
evaluation.
It should be noted that this opinion necessarily is based upon prevailing
market conditions (including current market prices for the C.I.S. Common Stock
and the NDC Common Stock) and other circumstances and conditions as they exist
and can be evaluated at this time, and does not represent our opinion as to
what the actual value of the C.I.S. Common Stock or the NDC Common Stock will
be after the date hereof or the prices at which such stock will trade
subsequent to the Merger.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services, a
portion of which is contingent upon the consummation of the Merger. In
addition, in the ordinary course of our business, we actively trade the
securities of the Company and NDC for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. In addition, during the past five years, we have not acted as
financial advisor to NDC, nor have we
B-3
<PAGE> 107
DEAN WITTER REYNOLDS INC.
C.I.S. Technologies, Inc.
May __, 1996
Page 4
acted as manager of any NDC security offering, and have not received any
advisory or offering fees from NDC.
This opinion has been prepared solely for the use of the Board of Directors of
the Company and is not intended to be reproduced, quoted or published in any
manner, in whole or in part, without the prior written consent of Dean Witter,
except that this letter may be reproduced in full in the principal disclosure
document to be filed with the Securities and Exchange Commission in connection
with the Merger.
On the basis of, and subject to the foregoing and other matters that we
consider pertinent, we are of the opinion that, AS OF THE DATE HEREOF, the
Common Stock Exchange Ratio and the Preferred Stock Exchange Ratio are fair,
from a financial point of view, to the holders of the outstanding C.I.S. Common
Stock (solely in their capacity as holders of the C.I.S. Common Stock) and to
the holders of the outstanding C.I.S. Series A Preferred Stock (solely in
their capacity as holders of the C.I.S. Series A Preferred Stock),
respectively.
Very truly yours,
- -----------------------------------
DEAN WITTER REYNOLDS INC.
B-4
<PAGE> 108
ANNEX C
DELAWARE STATUTORY LAW RELATING TO APPRAISAL RIGHTS
262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with the provisions of subsection (d) of this Section and
who has neither voted in favor of the merger or consolidation nor consented
thereto in writing pursuant to sec. 228 of this chapter shall be entitled to an
appraisal by the Court of Chancery of the fair value of his shares of stock
under the circumstances described in subsections (b) and (c) of this Section. As
used in this section, the word "stockholder" means a holder of record of stock
in a stock corporation and also a member of record of a non-stock corporation;
the words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a non-stock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Sections 251, 252, 254, 257, 258, 263 or 264 of this
chapter:
(1) provided, however, that no appraisal rights under this Section
shall be available for the shares of any class or series of stock which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of Section 251 of this chapter.
(2) Notwithstanding the provisions of subsection (b) (1) of this
Section, appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement of merger or
consolidation pursuant to Sections 251, 252, 254, 257, 258, 263 and 264 of
this chapter to accept for such stock anything except: (i) shares of stock
of the corporation surviving or resulting from such merger or
consolidation, or depository receipts in respect thereof; (ii) shares of
stock of any other corporation or depository receipts in respect thereof,
which shares of stock or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc. or
held of record by more than 2,000 holders; (iii) cash in lieu of fractional
shares or fractional depository receipts described in the foregoing clauses
(i) and (ii); or (iv) any combination of the shares of stock depository
receipts and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing clauses (i), (ii) and (iii) of this
subsection.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this chapter is not owned
by the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this Section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this Section, including those set forth in subsections (d) and
(e), shall apply as nearly as is practicable.
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<PAGE> 109
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this Section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
Section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with the
provisions of this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation
has become effective; or
(2) If the merger or consolidation was approved pursuant to Section
228 or Section 253 of this chapter, the surviving or resulting corporation,
either before the effective date of the merger or consolidation or within
10 days thereafter, shall notify each of the stockholders entitled to
appraisal rights of the effective date of the merger or consolidation and
that appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
Section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with the provisions of subsections (a) and (d) hereof and who is
otherwise entitled to appraisal rights, may file a petition in the Court of
Chancery demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days after
the effective date of the merger or consolidation, any stockholder shall have
the right to withdraw his demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by one or more publications at
least one week before the day of the hearing, in a newspaper of general
circulation published in the City of
C-2
<PAGE> 110
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publications shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with the provisions of this Section and who have
become entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate in all proceedings until it is finally determined that he is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any other state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this Section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this Section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this Section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation into which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
C-3
<PAGE> 111
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Bylaws provide for indemnification of directors and
officers of the Registrant to the full extent permitted by Delaware law.
Section 145 of the General Corporation Law of the State of Delaware
provides generally that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at its request in
such capacity in another corporation or business association, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
In addition, pursuant to the authority of Delaware law, the Certificate of
Incorporation of the Registrant also eliminates the monetary liability of
directors to the fullest extent permitted by Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (See exhibit index immediately preceding the exhibits for the
page number where each exhibit can be found)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ ----------------------------------------------------------------------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, dated as of April 15, 1996, by and among NDC, CIS,
and Sub (included in Annex A to the Proxy Statement/Prospectus and incorporated by
reference herein)
3.1 -- Certificate of Incorporation, as amended (included as Exhibit 3(i) to the
Registrant's Form 10-K for the fiscal year ended May 31, 1991, previously filed
with the Commission and incorporated by reference herein)
3.2 -- Bylaws, as amended (included as Exhibit 3(ii) to the Registrant's Form 10-K for
the fiscal year ended May 31, 1991, previously filed with the Commission and
incorporated by reference herein)
3.3 -- Amendment to Bylaws (included as Exhibit 3(iii) to the Registrant's Form 10-K for
the fiscal year ended May 31, 1995, previously filed with the Commission and
incorporated by reference herein)
4.1 -- See Exhibits 3(a) and 3(b) for provisions of the Certificate of Incorporation and
Bylaws of the Registrant defining rights of holders of Common Stock of the
Registrant
4.2 -- Rights Agreement (included as Exhibit 1 to the Registrant's Form 8-A filed with
the Commission on January 22, 1991, as amended on October 5, 1993 (file No.
0-4554) and incorporated by reference herein)
*5.1 -- Opinion of Alston & Bird
*8.1 -- Opinion of Alston & Bird
</TABLE>
II-1
<PAGE> 112
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ ----------------------------------------------------------------------------------
<C> <C> <S>
13 -- CIS's Annual Report to Security Holders (included as Exhibit 13 to CIS's Form 10-K
for the fiscal year ended December 31, 1995, previously filed with the Commission
and incorporated in its entirety by reference herein)
*23.1 -- Consent of Alston & Bird (included in Exhibit 5.1 and Exhibit 8.1)
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Coopers & Lybrand L.L.P.
23.4 -- Consent of Price Waterhouse LLP
23.5 -- Consent of Dean Witter Reynolds Inc.
*24.1 -- Powers of Attorney (included on signature page hereof)
99.1 -- Form of Proxy for CIS Common Stock
99.2 -- Form of Proxy for CIS Series A Preferred Stock
</TABLE>
- ---------------
* Previously Filed
(b) Financial Statement Schedules
Schedules are omitted because they are not required or are not applicable,
or the required information is shown in the financial statements or notes
thereto.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers for 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;
(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;
(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, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective 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) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual
II-2
<PAGE> 113
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the Registrant's Certificate of Incorporation or
Bylaws, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefor, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment for 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 of 1933 and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 114
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on April 30, 1996.
NATIONAL DATA CORPORATION
By: /s/ E. MICHAEL INGRAM
------------------------------------
E. Michael Ingram
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 30, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<C> <S>
* Chairman of the Board and Chief Executive
- --------------------------------------------- Officer (principal executive officer)
Robert A. Yellowlees
* Chief Financial Officer (principal financial
- --------------------------------------------- and accounting officer)
Jerry W. Braxton
* Director
- ---------------------------------------------
Edward L. Barlow
* Director
- ---------------------------------------------
J. Veronica Biggins
* Director
- ---------------------------------------------
James B. Edwards
* Director
- ---------------------------------------------
Don W. Sands
* Director
- ---------------------------------------------
Neil Williams
* /s/ E. MICHAEL INGRAM
- ---------------------------------------------
E. Michael Ingram
Attorney-In-Fact
</TABLE>
II-4
<PAGE> 115
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------- ------------
<C> <C> <S> <C>
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Coopers & Lybrand L.L.P.
23.4 -- Consent of PRICE WATERHOUSE LLP
23.5 -- Consent of Dean Witter Reynolds Inc.
99.1 -- Form of Proxy for CIS Common Stock
99.2 -- Form of Proxy for CIS Series A Preferred Stock
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
Arthur Andersen, LLP
Atlanta, Georgia
April 25, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-4 of our report dated February 6, 1996, on our audits of the financial
statements and financial statement schedule of CIS Technologies, Inc. and
Subsidiaries. We also consent to the reference to our firm under the caption
"Experts."
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
April 29, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of National Data
Corporation of our report dated March 28, 1996 relating to the financial
statements of MasterCard Automated Point-of-Sale Program (an organizational unit
of MasterCard International Incorporated), which appears in the Current Report
on Form 8-K of National Data Corporation dated April 1, 1996. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
New York, New York
April 25, 1996
<PAGE> 1
EXHIBIT 23.5
CONSENT OF DEAN WITTER REYNOLDS INC.
We consent to the use in this Registration Statement on Form S-4 of our
letter to the Board of Directors of C.I.S. Technologies, Inc. included in Annex
B to the Proxy Statement/Prospectus that is a part of such Registration
Statement, and to the references to such letter and our firm in such Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
DEAN WITTER REYNOLDS INC.
New York, New York
April 29, 1996
<PAGE> 1
EXHIBIT 99.1
C.I.S. TECHNOLOGIES, INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Philip D. Kurtz and Thomas G. Noulles, or
either of them, each with full power of substitution, acting jointly or by
either of them if only one be present and acting, attorneys and proxies to vote
in the manner specified below (according to the number of shares which the
undersigned would be entitled to cast if then personally present), all the
shares of Common Stock of C.I.S. Technologies, Inc. ("CIS") held of record by
the undersigned on April 25, 1996, at the Special Meeting of Stockholders to be
held at 10:00 a.m., local time, on May 30, 1996, at the main office of CIS,
located at 6100 South Yale Avenue, Suite 1900, Tulsa, Oklahoma, 74136 including
any adjournments thereof.
1. To adopt the Merger Agreement and Plan of Merger, dated as of April 15, 1996
(the "Merger Agreement"), by and among CIS, National Data Corporation ("NDC")
and NDC Merger Corp. ("Sub"), pursuant to which, among other matters, (a) CIS
will merge with and into Sub (the "Merger") and (b) the shares of CIS Common
Stock will be converted into the right to receive shares of NDC Common Stock,
as described in the Proxy Statement/Prospectus dated May 1, 1996.
FOR / / AGAINST / / ABSTAIN / /
2. In their discretion, to vote upon such other business as may properly come
before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
-------------------------------
Signature of Stockholder Date
-------------------------------
Signature of Stockholder Date
PLEASE SIGN THIS PROXY EXACTLY
AS YOUR NAME OR NAMES APPEARS
HEREON. IF STOCK IS HELD
JOINTLY, SIGNATURES SHOULD
APPEAR FOR BOTH NAMES. WHEN
SIGNING AS AN ATTORNEY,
EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN OR CUSTODIAN,
PLEASE INDICATE THE CAPACITY IN
WHICH YOU ARE ACTING. IF A
CORPORATION, PARTNERSHIP OR
OTHER LEGAL ENTITY, PLEASE SIGN
IN FULL NAME OR ENTITY BY AN
AUTHORIZED OFFICER OR PERSON.
Please fill in, date and sign the proxy and return it in the enclosed postpaid
envelope.
<PAGE> 1
EXHIBIT 99.2
C.I.S. TECHNOLOGIES, INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Philip D. Kurtz and Thomas G. Noulles, or
either of them, each with full power of substitution, acting jointly or by
either of them if only one be present and acting, attorneys and proxies to vote
in the manner specified below (according to the number of shares which the
undersigned would be entitled to cast if then personally present), all the
shares of Series A Participating Convertible Preferred Stock of C.I.S.
Technologies, Inc. ("CIS") held of record by the undersigned on April 25, 1996,
at the Special Meeting of Stockholders to be held at 10:00 a.m., local time, on
May 30, 1996, at the main office of CIS, located at 6100 South Yale Avenue,
Suite 1900, Tulsa, Oklahoma, 74136 including any adjournments thereof.
1. To adopt the Merger Agreement and Plan of Merger, dated as of April 15, 1996
(the "Merger Agreement"), by and among CIS, National Data Corporation ("NDC")
and NDC Merger Corp. ("Sub"), pursuant to which, among other matters, (a) CIS
will merge with and into Sub (the "Merger") and (b) the shares of CIS Series
A Participating Convertible Preferred Stock will be converted into the right
to receive shares of NDC Common Stock, as described in the Proxy
Statement/Prospectus dated May 1, 1996.
FOR / / AGAINST / / ABSTAIN / /
2. In their discretion, to vote upon such other business as may properly come
before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
-------------------------------
Signature of Stockholder Date
-------------------------------
Signature of Stockholder Date
PLEASE SIGN THIS PROXY EXACTLY
AS YOUR NAME OR NAMES APPEARS
HEREON. IF STOCK IS HELD
JOINTLY, SIGNATURES SHOULD
APPEAR FOR BOTH NAMES. WHEN
SIGNING AS AN ATTORNEY,
EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN OR CUSTODIAN,
PLEASE INDICATE THE CAPACITY IN
WHICH YOU ARE ACTING. IF A
CORPORATION, PARTNERSHIP OR
OTHER LEGAL ENTITY, PLEASE SIGN
IN FULL NAME OF ENTITY BY AN
AUTHORIZED OFFICER OR PERSON
Please fill in, date and sign the proxy and return it in the enclosed postpaid
envelope.
