<PAGE>
As filed with the Securities and Exchange Commission on November , 1997
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
Fiserv, Inc.
(Exact name of Registrant as specified in its charter)
Wisconsin 7374 39-1506125
(State or jurisdiction (Primary standard (I.R.S. employer
of incorporation or industrial identification number)
organization) classification
code number)
255 FISERV DRIVE
BROOKFIELD, WISCONSIN 53045
(414) 879-5000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
KENNETH R. JENSEN
SENIOR EXECUTIVE VICE PRESIDENT
FISERV, INC.
255 FISERV DRIVE
BROOKFIELD, WISCONSIN 53045
(414) 879-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
Charles W. Sprague, Esq. Karen L. Barsch, Esq.
Fiserv, Inc. Otten, Johnson, Robinson,
255 Fiserv Drive Neff & Ragonetti, P.C.
Brookfield, WI 53045 1600 Colorado National Building
(414) 879-5000 950 Seventeenth Street
Fax: (414) 879-5532 Denver, CO 80202
(303) 825-8400
Fax: (303) 825-6525
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the consummation of the merger described herein.
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>
<CAPTION>
=========================================================================================
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of each class of securities to be price per offering registration
to be registered registered share(1) price fee
=========================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.01 par value } } $17,979,565(1) $5,448
=========================================================================================
</TABLE>
(1) Pursuant to Rule 457(f)(2) and Rule 457(o) promulgated under the Securities
Act of 1933, as amended, and estimated solely for purposes of calculating the
registration fee, based upon the book value of common stock of Hanifen Holdings,
Inc. ("Hanifen Holdings") computed as of the latest practicable date prior to
the date of filing of this Registration Statement on Form S-4 (decreased by the
number of such shares that are to be exchanged for cash). This Registration
Statement also relates to the resale of shares of Fiserv Common Stock pursuant
to General Instruction A.1(4).
---------------
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.
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC.
1125 Seventeenth Street, Suite 1810
Denver, CO 80202
November , 1997
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Special Meeting of Shareholders of
Hanifen, Imhoff Holdings, Inc. ("Hanifen Holdings") to be held on December __,
1997 at 9:30 a.m. local time at the Westin Hotel Tabor Center at 1672 Lawrence
Street, Denver, Colorado 80202 (the "Special Meeting").
At the Special Meeting, shareholders will be asked to consider and vote
upon (i) a proposal to adopt an Agreement and Plan of Merger (the "Merger
Agreement") among Fiserv, Inc. ("Fiserv"), Fiserv Clearing, Inc., a wholly-owned
subsidiary of Fiserv ("Fiserv Clearing"), and Hanifen Holdings, (ii) a proposal
to sell certain of the assets of Hanifen, Imhoff, Inc., a wholly-owned
subsidiary of Hanifen Holdings, and (iii) a proposal to sell certain of the
assets of Hanifen, Imhoff Investments, Inc., which is also a wholly-owned
subsidiary of Hanifen Holdings. Pursuant to the Merger Agreement, each
outstanding share of Hanifen Common Stock will be converted into shares of
Fiserv Common Stock and cash, and Hanifen Holdings will be merged with and into
Fiserv Clearing and thereby become a wholly-owned subsidiary of Fiserv.
Shareholders will receive cash in lieu of any fractional shares.
Details of the foregoing proposals and the Special Meeting are contained in
the attached Notice of Special Meeting and Proxy Statement/Prospectus. Your
vote on the Merger Agreement is important to Hanifen Holdings, so please read
this information carefully.
All shareholders are invited to attend the Special Meeting. To assure your
representation at the Special Meeting, please complete, sign, date and return
the accompanying proxy in the enclosed postage prepaid envelope, whether or not
you intend to be present at the special meeting. If you are able to attend the
Special Meeting, you may, if you wish, vote your shares in person.
After the effective time of the Merger you will receive a transmittal form
and instructions for the surrender and exchange of your shares.
Sincerely yours,
Gary J. Wilson
Chief Executive Officer
(2)
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC.
1125 Seventeenth Street, Suite 1810
Denver, Colorado 80202
--------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held December __, 1997
--------------------------
To the Shareholders of
Hanifen, Imhoff Holdings, Inc.:
A special meeting of shareholders (the "Special Meeting") of Hanifen,
Imhoff Holdings, Inc., a Colorado corporation ("Hanifen Holdings"), will be held
on December __, 1997, at 9:30 a.m., local time, at the Westin Hotel Tabor
Center, 1672 Lawrence Street, Denver, Colorado 80202 for the following purposes:
1. To consider and vote upon a proposal to adopt and approve an Agreement
and Plan of Merger dated as of September 30, 1997 (the "Merger
Agreement"), among Fiserv, Inc., a Wisconsin corporation ("Fiserv"),
Fiserv Clearing, Inc., a Delaware corporation ("Fiserv Clearing") and
a wholly-owned subsidiary of Fiserv, and Hanifen Holdings. Pursuant
to the Merger Agreement, (i) Hanifen Holdings will be merged with and
into Fiserv Clearing, with Fiserv Clearing being the surviving
corporation and remaining a wholly-owned subsidiary of Fiserv (the
"Merger"), and (ii) each share of common stock, $.01 par value per
share, of Hanifen Holdings ("Hanifen Common Stock") outstanding
immediately prior to the consummation of the Merger will be converted
into the right to receive (a) such number of shares of common stock,
$.01 par value, of Fiserv ("Fiserv Common Stock") as shall equal the
quotient of (A) the quotient of (I) 51% of the Hanifen Value (as
hereinafter defined), divided by (II) the number of shares of Hanifen
Common Stock outstanding at the effective time of the Merger (the
"Effective Date"), divided by (B) a number which is equal to the
average closing price per share for Fiserv Common Stock as reported
on the NASDAQ National Market (as reported in The Wall Street Journal)
--- ---- ------ -------
for the 20 business days ending two business days prior to the
Effective Date and (b) such amount of cash as shall equal the quotient
of (A) 49% of the Hanifen Value, divided by (B) the number of shares
of Hanifen Common Stock outstanding on the Effective Date. The
"Hanifen Value" shall mean the sum of (i) the difference (positive or
negative) between (A) the Final Stockholders' Equity (as defined in
the Merger Agreement) and (B) $30,000,000, plus (ii) $97,200,000. A
copy of the Merger Agreement is attached as Appendix A to the
accompanying Proxy Statement/Prospectus.
2. To consider and vote upon a proposal to sell certain of the assets of
Hanifen, Imhoff, Inc. ("Hanifen Brokerage"), a wholly-owned subsidiary
of Hanifen Holdings, to a new corporation formed by a group of current
employees of Hanifen Brokerage for a purchase price equal to the fair
market value determined by an independent appraiser, payable in cash
at closing, plus the assumption of certain of the liabilities of
Hanifen Brokerage. The sale of the assets of Hanifen Brokerage is a
condition to closing the Merger; therefore a vote against such sale
will be a vote against the Merger.
3. To consider and vote upon a proposal to sell certain of the assets of
Hanifen, Imhoff Investments, Inc. ("Hanifen Investments"), a wholly-
owned subsidiary of Hanifen Holdings, to an unrelated third-party
and/or one or more new entities formed by one or more groups of
current employees of Hanifen Holdings and its subsidiaries, on terms
to be negotiated by Hanifen Holdings. The sale of
1
<PAGE>
the assets of Hanifen Investments is a condition to closing the
Merger; therefore, a vote against such sale will be a vote against the
Merger.
4. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
Holders of Hanifen Common Stock are entitled to dissenters' rights in connection
with the Merger, as more fully described in the accompanying Proxy
Statement/Prospectus. If holders of more than 5% of the outstanding Hanifen
Common Stock exercise their dissenters' rights, the Merger will not be
consummated, unless Fiserv waives such condition to closing.
The Hanifen Holdings' Board of Directors knows of no business that will be
presented for consideration at the Special Meeting, other than the matters
described in the accompanying Proxy Statement/Prospectus.
UNLESS THE PROPOSALS ARE APPROVED BY THE VOTE OF THE HOLDERS OF AT LEAST A
MAJORITY OF THE OUTSTANDING COMMON STOCK OF HANIFEN HOLDINGS, THE MERGER WILL
NOT BE CONSUMMATED.
Only holders of record of shares of Hanifen Common Stock at the close of
business on November 12, 1997 are entitled to notice of and to vote at the
Special Meeting and any adjournment or postponement thereof.
Shareholders may dissent from the Merger and obtain payment for their
shares, as described in the accompanying Proxy Statement/Prospectus. A copy of
Article 113 of the Colorado Business Corporation Act, which sets forth the right
of dissenters, is attached to the Proxy Statement/Prospectus as Appendix B.
To assure that your vote will be counted, please complete, date and sign
the enclosed proxy card and return it promptly in the enclosed prepaid envelope
whether or not you plan to attend the Special Meeting. Your proxy may be revoked
in the manner described in the accompanying Proxy Statement/Prospectus at any
time before it has been voted at the Special Meeting.
By Order of the Board of Directors,
Secretary
November , 1997
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY, WHETHER OR NOT YOU
INTEND TO BE PRESENT AT THE SPECIAL MEETING.
2
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. FISERV, INC.
PROXY STATEMENT PROSPECTUS
SHARES OF COMMON STOCK
--------------------
This Proxy Statement/Prospectus is being furnished to the shareholders of
Hanifen, Imhoff Holdings, Inc., a Colorado corporation ("Hanifen Holdings"), in
connection with the solicitation of proxies from holders of outstanding shares
of Hanifen Holdings common stock, $.01 par value per share ("Hanifen Common
Stock"), for use at a special meeting of shareholders (together with any
adjournments or postponements, the "Special Meeting") of Hanifen Holdings to be
held at the Westin Hotel Tabor Center, 1672 Lawrence Street, Denver, Colorado
80202 on December , 1997, and at any adjournment or postponement thereof.
Only holders of record of shares of Hanifen Common Stock at the close of
business on November 12, 1997 (the "Record Date") are entitled to notice of and
to vote at the Special Meeting. On the Record Date, there were 1,182,845 shares
of Hanifen Common Stock outstanding. This Proxy Statement/Prospectus, the
enclosed Notice of Special Meeting, and the accompanying proxy card are first
being mailed to Hanifen Holdings shareholders on or about November , 1997.
This proxy solicitation is made by the Board of Directors of Hanifen Holdings.
At the Special Meeting, the shareholders of Hanifen Holdings will consider
and vote upon (i) a proposal to approve an Agreement and Plan of Merger dated as
of September 30, 1997 (the "Merger Agreement"), among Fiserv, Inc., a Wisconsin
corporation ("Fiserv"), Fiserv Clearing, Inc., a Delaware corporation ("Fiserv
Clearing") and a wholly-owned subsidiary of Fiserv, and Hanifen Holdings, a copy
of which is attached hereto as Appendix A, (ii) a proposal to sell certain of
the assets of Hanifen, Imhoff, Inc. ("Hanifen Brokerage"), a wholly-owned
subsidiary of Hanifen Holdings, to a new corporation formed by a group of
current employees of Hanifen Brokerage for a purchase price equal to fair market
value as determined by an independent appraiser, payable in cash at closing,
plus the assumption of certain of Hanifen Brokerage's liabilities; and (iii) a
proposal to sell certain of the assets of Hanifen, Imhoff Investments, Inc.
("Hanifen Investments"), a wholly-owned subsidiary of Hanifen Holdings, to an
unrelated third party and one or more new entities formed by one or more groups
of current employees of Hanifen Holdings and its subsidiaries, on terms to be
negotiated by Hanifen Holdings.
Pursuant to the Merger Agreement, Hanifen Holdings will be merged with and
into Fiserv Clearing, with Fiserv Clearing being the surviving corporation (the
"Surviving Corporation") and remaining a wholly-owned subsidiary of Fiserv (the
"Merger") and each share of Hanifen Common Stock outstanding immediately prior
to the consummation of the Merger will be converted into the right to receive
(i) such number of shares of common stock, $.01 par value, of Fiserv ("Fiserv
Common Stock") as shall equal the quotient of (A) the quotient of (I) 51% of the
Hanifen Value, divided by (II) the number of shares of Hanifen Common Stock
outstanding at the effective time of the Merger (the "Effective Date"), divided
by (B) a number which is equal to the average closing price per share for
Fiserv Common Stock as reported on the NASDAQ National Market (as reported in
The Wall Street Journal) for the 20 business days ending two
- --- ---- ------ -------
<PAGE>
business days prior to the Effective Date and (ii) such amount of cash as shall
equal the quotient of (A) 49% of the Hanifen Value, divided by (B) the number of
shares of Hanifen Common Stock outstanding on the Effective Date. The "Hanifen
Value" shall mean the sum of (i) the difference (positive or negative) between
(A) the Final Stockholders' Equity (as defined in the Merger Agreement) and (B)
$30,000,000, plus (ii) $97,200,000.
No fractional shares of Fiserv Common Stock will be issued in the Merger.
In lieu of any fractional shares, each holder of Hanifen Common Stock who would
otherwise be entitled to receive a fractional share of Fiserv Common Stock
pursuant to the Merger will be paid an amount in cash, without interest, rounded
to the nearest cent, determined by multiplying (i) the per share closing price
of Fiserv Common Stock as reported on the NASDAQ National Market on the
Effective Date, by (ii) the fractional interest to which such holder would
otherwise be entitled. Fiserv will make available to the Exchange Agent
(hereinafter defined) the cash necessary for this purpose. In addition, the
amount of cash payable to shareholders of Hanifen Holdings will be subject to a
holdback equal to 5% of Stockholders' Equity (the "Equity Holdback") pending
final determination of Stockholders' Equity of Hanifen Holdings, which is
expected to take approximately one month. During the period in which the Equity
Holdback is pending, such amount will accrue interest at the average Federal
Funds rate published in The Wall Street Journal for the five days prior to the
--- ---- ------ -------
Effective Date.
This Proxy Statement/Prospectus also constitutes the prospectus of Fiserv
with respect to the shares of Fiserv Common Stock to be issued to holders of
Hanifen Common Stock pursuant to the Merger and resales of such shares by those
shareholders of Hanifen Holdings ("Hanifen Affiliates") deemed to be
"affiliates" under Rule 145 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). Fiserv has filed a Registration Statement on
Form S-4 (together with any amendments thereto, the "Registration Statement") of
which this Proxy Statement/Prospectus forms a part with the Securities and
Exchange Commission (the "Commission") covering the shares of Fiserv Common
Stock to be issued in connection with the Merger and resales of such shares by
the Hanifen Affiliates.
INVESTMENT IN THE SECURITIES BEING OFFERED HEREBY INVOLVES CERTAIN RISKS.
SEE "RISK FACTORS."
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT 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 HANIFEN HOLDINGS OR FISERV. THIS PROXY STATEMENT/PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE THE
SECURITIES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A
PROXY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF THE SECURITIES OFFERED HEREBY SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FISERV OR
HANIFEN HOLDINGS SINCE THE DATE HEREOF OR THAT THE INFORMATION SET FORTH OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE. ALL INFORMATION HEREIN WITH RESPECT TO FISERV AND FISERV CLEARING HAS
BEEN FURNISHED BY FISERV, AND ALL INFORMATION HEREIN WITH RESPECT TO HANIFEN
HOLDINGS HAS BEEN FURNISHED BY HANIFEN HOLDINGS.
2
<PAGE>
THE SHARES OF FISERV COMMON STOCK TO BE ISSUED PURSUANT TO THE MERGER
AGREEMENT DESCRIBED IN THIS PROXY STATEMENT/ PROSPECTUS HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE 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 November , 1997.
3
<PAGE>
AVAILABLE INFORMATION
Fiserv is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The reports, proxy statements and other information filed by Fiserv
with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates and the Regional Offices of the
Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Shares of Fiserv Common Stock are traded on the NASDAQ National Market
("NASDAQ"). Such reports, proxy statements and other information can also be
inspected and copied at the offices of the NASDAQ National Market, 1735 K
Street, N.W., Washington, D.C. 20006.
Fiserv has filed with the Commission the Registration Statement under the
Securities Act on Form S-4 with respect to the Fiserv Common Stock to be issued
pursuant to or as contemplated by the Merger Agreement. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules of the Commission. Statements made in this
Proxy Statement/Prospectus as to the contents of any contract, agreement or
other document referred to are not necessarily complete; with respect to each
such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be qualified
in its entirety by such reference. The Registration Statement and any
amendments thereto, including exhibits filed as part thereof, are available for
inspection and copying at the Commission's offices as described above. The
Commission also maintains a website on the internet at http://www.sec.gov.
4
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fiserv (File No.
0-14948) with the Commission pursuant to the Exchange Act are incorporated by
reference in this Proxy Statement/Prospectus:
(1) Fiserv's Annual Report on Form 10-K for the year ended December 31,
1996, filed with the Commission on February 18, 1997.
(2) Fiserv's Current Report on Form 8-K dated March 3, 1997, filed with
the Commission on March 3, 1997.
(3) Fiserv's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997, filed with the Commission on April 22, 1997.
(4) Fiserv's Current Report on Form 8-K dated June 13, 1997, as amended by
Form 8 dated June 25, 1997, filed with the Commission on June 13,
1997, and June 25, 1997, respectively.
(5) Fiserv's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, filed with the Commission on July 22, 1997.
(6) Fiserv's Quarterly Report on Form 10-Q for the quarter ended September
30, 1997, filed with the Commission on October 21, 1997.
(7) Fiserv's Current Report on Form 8-K dated October 22, 1997, filed with
the Commission on October 24, 1997.
All documents and reports subsequently filed with the Commission by Fiserv
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Proxy Statement/Prospectus and prior to the date of the Special Meeting
shall be deemed to be incorporated by reference in this Proxy
Statement/Prospectus and to be a part hereof from the date of filing of such
documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Proxy Statement/Prospectus to the extent that a
statement contained herein 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 this
Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST,
WITHOUT CHARGE, DIRECTED TO FISERV, INC., 255 FISERV
5
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DRIVE, BROOKFIELD, WISCONSIN 53045 (TELEPHONE NUMBER 414-879-5000), ATTENTION:
CHARLES W. SPRAGUE, SECRETARY. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE NO LATER THAN DECEMBER , 1997, THE DATE
WHICH IS FIVE BUSINESS DAYS PRIOR TO THE DATE OF THE SPECIAL MEETING.
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT. WHEN USED
IN THIS PROXY STATEMENT/PROSPECTUS, THE WORDS "ESTIMATE," "PROJECT," "INTEND,"
"EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH
FORWARD-LOOKING STATEMENTS. FOR A DISCUSSION OF SUCH RISKS, SEE "RISK FACTORS,"
AND "HANIFEN HOLDINGS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS." READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
HEREOF. NEITHER FISERV NOR HANIFEN HOLDINGS UNDERTAKES ANY OBLIGATION TO
PUBLICLY RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
THIS PROXY STATEMENT/PROSPECTUS ALSO MAY BE USED AS A PROSPECTUS FOR THE
RESALE BY AFFILIATES OF HANIFEN HOLDINGS OF FISERV COMMON STOCK ACQUIRED IN THE
MERGER. ANY SUCH RESALES WOULD BE REFLECTED IN A SUPPLEMENT TO THIS PROXY
STATEMENT/PROSPECTUS OR A POST-EFFECTIVE AMENDMENT OF THE RELATED REGISTRATION
STATEMENT, AS APPROPRIATE.
6
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
AVAILABLE INFORMATION...................................................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 5
SUMMARY.................................................................... 9
General............................................................... 9
The Parties........................................................... 9
The Special Meeting................................................... 9
The Merger............................................................10
Comparative Share and Dividend Information and Market Prices..........15
Certain Significant Considerations....................................16
Selected Historical Financial Data....................................17
RISK FACTORS...............................................................19
Average Market Prices Will Differ From Actual Market Price............19
Termination Provisions May Have a Deterrent Effect....................19
Possible Loss of Business.............................................19
THE SPECIAL MEETING........................................................20
Matters to be Considered at the Special Meeting; Quorum and Vote
Required.............................................................20
Record Date; Stock Entitled to Vote...................................21
Voting and Revocation of Proxies......................................21
Solicitation of Proxies...............................................21
THE MERGER.................................................................22
General...............................................................22
Background and Reasons for the Merger.................................22
Management and Operations of Hanifen Holdings Following the Merger....24
The Merger Agreement..................................................25
Effective Date and Consequences of the Merger..................25
Merger Consideration...........................................25
Conversion of Hanifen Common Stock; Procedures for Issuance
of Fiserv Share Certificates..................................26
Representations, Warranties and Covenants......................27
Federal Income Tax Consequences of the Merger..............................27
Hanifen Holdings Stock Option Plan; Benefit Plans..............30
Conditions to the Merger.......................................31
Amendments and Termination.....................................31
Acquisition Proposals..........................................31
Expenses of the Merger.........................................32
Accounting Treatment..................................................32
Resale of Fiserv Common Stock by Affiliates...........................32
Certain Regulatory Matters............................................33
Rights of Hanifen Holdings Dissenting Shareholders....................33
Interests of Certain Persons in the Merger............................36
MARKET PRICES AND DIVIDENDS................................................37
FISERV SUPPLEMENTAL FINANCIAL DATA.........................................39
</TABLE>
7
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<TABLE>
<S> <C>
FISERV MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS..............................................41
Results of Operations..............................................41
Results of Operations..............................................43
Revenues...........................................................43
Cost of Revenues...................................................44
Operating Income...................................................44
Interest Expense - Net.............................................44
Income Tax provision...............................................44
Net Income.........................................................44
Liquidity and Capital Resources....................................45
BUSINESS OF FISERV........................................................45
Business...........................................................45
HANIFEN HOLDINGS SUPPLEMENTAL FINANCIAL DATA..............................47
HANIFEN HOLDINGS MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................48
BUSINESS AND PROPERTIES OF HANIFEN HOLDINGS...............................56
DESCRIPTION OF FISERV COMMON STOCK........................................63
COMPARISON OF RIGHTS OF SHAREHOLDERS OF FISERV AND HANIFEN HOLDINGS.......64
Certain Provisions of Wisconsin and Colorado Law...................64
Classified Board of Directors......................................64
Number of Directors; Cumulative Voting.............................64
Removal of Directors; Filling Vacancies on the Board of Directors..65
Limitation on Directors' Liability; Indemnification................65
Special Meetings of Shareholders...................................67
Quorum for Shareholder Meetings....................................67
Shareholder Voting Requirements Generally..........................68
Shareholder Action by Written Consent..............................68
Supermajority Provisions...........................................68
Shareholder Voting in Certain Significant Transactions;
Takeover Legislation..............................................69
Statutory Shareholder Liability....................................70
Derivative Actions.................................................70
Dissenters' Rights and Appraisal Rights............................71
Shareholder Inspection of Books and Records........................71
Loans to Directors.................................................72
Amendment or Repeal of the Articles and Bylaws.....................72
Dividend Declarations..............................................73
LEGAL MATTERS.............................................................74
EXPERTS...................................................................74
</TABLE>
APPENDIX A Agreement and Plan of Merger
APPENDIX B Article 113 of Colorado Business Corporation Act Relating to
Dissenters' Rights
APPENDIX C Financial Statements of Hanifen, Imhoff Holdings, Inc. and
Subsidiaries
8
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SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. This summary is necessarily incomplete and
selective and is qualified in its entirety by the more detailed information
contained in this Proxy Statement/Prospectus and particularly in the specific
sections of this Proxy Statement/Prospectus referred to below, the Appendices
hereto, and the documents incorporated by reference herein.
GENERAL
This Proxy Statement/Prospectus relates to the proposed Merger among
Fiserv, Fiserv Clearing and Hanifen Holdings pursuant to the Merger Agreement, a
copy of which is attached hereto as Appendix A. Pursuant to the Merger
Agreement, Hanifen Holdings' shareholders will receive Fiserv Common Stock and
cash in exchange for all of their shares of Hanifen Common Stock. See "The
Merger."
THE PARTIES
Fiserv, Inc........ Fiserv, with operations in over 75 cities, including 15
cities in Canada, England and Singapore, is a leading
independent provider of financial data processing systems
and related information management services and products
to banks, credit unions, mortgage banks, savings
institutions and other financial intermediaries. These
services and products are based primarily on proprietary
software developed by Fiserv and maintained on computers
located at data processing centers throughout the United
States. Fiserv is ranked as the nation's leading data
processing provider for banks and savings institutions in
terms of total clients served and is the nation's second
leading data processing provider for credit unions and
mortgage banks. The Fiserv securities processing group
provides a wide range of traditional processing and
related services to support all aspects of a retail
brokerage operation. Fiserv's principal executive offices
are located at 255 Fiserv Drive, Brookfield, Wisconsin
53045. Its telephone number is (414) 879-5000.
Hanifen, Imhoff
Holdings, Inc...... Hanifen Holdings is a financial services and investment
banking firm, which conducts business through its three
wholly-owned subsidiaries, Hanifen, Imhoff Clearing Corp.
("Hanifen Clearing"), Hanifen Brokerage and Hanifen
Investments. The business of Hanifen Holdings and its
subsidiaries (collectively, the "Hanifen Companies")
includes: (i) providing securities clearance services;
(ii) providing comprehensive institutional equity
research; (iii) market-making and trading in corporate
securities; (iv) trading in United States government,
government-agency, mortgage-related, asset-backed and
municipal securities; (v) underwriting and distributing
securities; (vi) arranging for the private placement of
securities; (vii) financing customer investment
activities; (viii) assisting in mergers, acquisitions,
restructurings and leveraged transactions; and (ix)
providing fiduciary and other services, such as investment
management, investment advisory, and securities research.
The Hanifen Companies provide services to a broad spectrum
of clients located throughout the United States, including
corporations, broker dealers, institutions, governments
and individual high net worth investors. Hanifen Holdings
was incorporated as a Colorado corporation in August of
1994, and its principal executive offices are located at
1125 Seventeenth Street, Suite 1810, Denver, Colorado
80202. Its telephone number is (303) 291-5300.
THE SPECIAL MEETING
9
<PAGE>
Date, Time and
Place of Special Meeting....... December __, 1997, at 9:30 a.m., local time at
the Westin Hotel Tabor Center, 1672 Lawrence
Street, Denver, Colorado 80202.
Purpose of Special Meeting..... To consider and vote upon (i) a proposal to
approve the Merger Agreement, pursuant to
which Hanifen Holdings will merge with and
into Fiserv Clearing, a wholly-owned
subsidiary of Fiserv, and Fiserv Clearing will
be the Surviving Corporation and will remain a
wholly-owned subsidiary of Fiserv (see "The
Merger"); (ii) a proposal to sell certain of
the assets of Hanifen Brokerage to a new
entity formed by a group of current employees
of Hanifen Brokerage ("New Hanifen") for a
purchase price equal to their fair market
value (as determined by an independent
appraiser), payable in cash at closing, plus
the assumption of certain of Hanifen
Brokerage's liabilities; and (iii) a proposal
to sell certain of the assets of Hanifen
Investments to an unrelated third-party and/or
one or more new entities formed by one or more
groups of current employees of the Hanifen
Companies, on terms to be negotiated by
Hanifen Holdings.
Record Date.................... On November 12, 1997, there were 1,182,845
shares of Hanifen Common Stock outstanding,
with each share of Hanifen Common Stock
entitled to cast one vote with respect to the
proposals to approve the Merger Agreement and
the sale of certain of the assets of Hanifen
Brokerage and Hanifen Investments.
Quorum; Vote Required.......... The presence, in person or by proxy, of the
holders of a majority of the outstanding
shares of Hanifen Common Stock at the Special
Meeting is necessary to constitute a quorum at
the Special Meeting. Approval of each of the
proposals requires the affirmative vote of a
majority of the outstanding shares of Hanifen
Common Stock. Directors and executive officers
of Hanifen Holdings are entitled to vote 21.9%
of the outstanding Hanifen Common Stock. Such
directors and executive officers have not
---
committed to vote for or against the
proposals. See "The Special Meeting--Matters
to be Considered at the Special Meeting;
Quorum and Vote Required."
THE MERGER
Effect of the Merger........... The Merger Agreement (attached as Appendix A to
this Proxy Statement/Prospectus) provides for
the Merger of Hanifen Holdings with and into
Fiserv Clearing, a wholly-owned subsidiary of
Fiserv. Fiserv Clearing will be the Surviving
Corporation and will remain a wholly-owned
subsidiary of Fiserv. It is presently
contemplated that the Effective Date of the
Merger will be December __, 1997 or shortly
thereafter. See "The Merger."
10
<PAGE>
Merger Consideration........... Each outstanding share of Hanifen Common Stock
will be converted into the right to receive (i)
such number of shares of common stock, $.01 par
value, of Fiserv Common Stock as shall equal
the quotient of (A) the quotient of (I) 51% of
the Hanifen Value, divided by (II) the number
of shares of Hanifen Common Stock outstanding
at the Effective Date, divided by (B) a number
which is equal to the average closing price per
share for Fiserv Common Stock as reported on
the NASDAQ National Market (as reported in The
---
Wall Street Journal) for the 20 business days
-------------------
ending two business days prior to the Effective
Date (the "Average Fiserv Stock Price"), and
(ii) such amount of cash as shall equal the
quotient of (A) 49% of the Hanifen Value,
divided by (B) the number of shares of Hanifen
Common Stock outstanding on the Effective Date.
The "Hanifen Value" shall mean the sum of (i)
the difference (positive or negative) between
(A) the Final Stockholders' Equity (as defined
in the Merger Agreement) and (B) $30,000,000,
plus (ii) $97,200,000. See "The Merger -- The
Merger Agreement -- Merger Consideration."
Fractional Shares.............. No fractional shares of Fiserv Common Stock
will be issued in the Merger. In lieu of any
fractional shares, each holder of Hanifen
Common Stock who would otherwise be entitled to
receive a fractional share of Fiserv Common
Stock pursuant to the Merger will be paid an
amount in cash, without interest, rounded to
the nearest cent, determined by multiplying (i)
the per share closing price of Fiserv Common
Stock as reported on NASDAQ on the date of the
Effective Date, by (ii) the fractional interest
to which such holder would otherwise be
entitled. Fiserv will make available to the
Exchange Agent the cash necessary for this
purpose.
Management and Operations
of Hanifen Holdings after
the Merger..................... Following the Merger, Fiserv Clearing will be
the Surviving Corporation and a wholly-owned
subsidiary of Fiserv, and Hanifen Clearing will
become a wholly-owned subsidiary of Fiserv
Clearing. George D. Dalton, Chairman of the
Board of Fiserv, is the sole director of the
Surviving Corporation. Fiserv operates the
Surviving Corporation as an independent
subsidiary, and intends to operate Hanifen
Clearing after the Merger as an independent
subsidiary with its current board of directors
and officers. Fiserv has no present intention
to move or consolidate any of the operations of
the Surviving Corporation or Hanifen Clearing.
Hanifen Holdings' other subsidiaries, Hanifen
Brokerage and Hanifen Investments, also will
continue as wholly-owned subsidiaries of Fiserv
Clearing, although certain of the assets of
those subsidiaries will be sold prior to the
Effective Date. Promptly after the Effective
Date, the name of each of the Hanifen Companies
will be changed to a name distinctively
different from "Hanifen Imhoff." See "The
11
<PAGE>
Merger--Management and Operations of Hanifen
Holdings Following the Merger."
Interests of Certain Persons
in the Merger.................. In the Merger Agreement, all outstanding
options granted under Hanifen Holdings' stock
option plans will be exercised prior to the
Effective Date and those plans will terminate.
Employees of Hanifen Clearing will continue as
employees of Hanifen Clearing and the employees
of the Hanifen Companies will be entitled to
participate in the benefit plans that Fiserv
maintains for its employees generally (except
with respect to Fiserv's sabbatical plan) on
substantially the same terms and conditions as
other employees of Fiserv. See "The Merger--The
Merger Agreement."
Walter F. Imhoff, a director and shareholder of
Hanifen Holdings, is currently negotiating with
Hanifen Holdings a consulting agreement
for the benefit of Hanifen Brokerage and New
Hanifen, which agreement is expected to be
contingent upon consummation of the Merger. In
addition, Mr. Imhoff will be the president and
chairman of the board of New Hanifen. George
Johnson, a shareholder of Hanifen Holdings and
the president and chief executive officer of
Hanifen Clearing, is currently negotiating an
employment agreement with Fiserv, the
completion of which is a condition to closing
the Merger. See "The Merger -- Interests of
Certain Persons in the Merger" and "The Merger
-- Conditions to the Merger."
Federal Income Tax
Consequences of the Merger..... The Merger Agreement provides that, for federal
income tax purposes, Hanifen Holdings and
Fiserv intend that the Merger constitute a tax-
deferred "reorganization" within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the
United States Internal Revenue Code of 1986, as
amended (the "Code"), and that, accordingly,
for federal income tax purposes: (i) no gain or
loss should be recognized by Hanifen Holdings
or Fiserv as a result of the Merger; (ii)
individual shareholders of Hanifen Holdings who
receive cash consideration (including cash in
lieu of fractional shares, if any), in exchange
for a portion of Hanifen Common Stock owned
directly by such individual shareholders should
generally recognize capital gain or loss,
provided that such shares are capital assets in
the hands of such shareholders; (iii) no gain
or loss should be recognized by shareholders of
Hanifen Common Stock on the exchange of their
shares of Hanifen Common Stock for Fiserv
Common Stock pursuant to the Merger; (iv) the
holding period of the Fiserv Common Stock
received by the Hanifen Holdings shareholders
will include the holding period of the shares
of Hanifen Common Stock provided that the
shares of Hanifen Common Stock are capital
assets
12
<PAGE>
in the hands of the Hanifen Holdings
shareholders at the time of the exchange; and
(v) the aggregate adjusted tax basis of the
Fiserv Common Stock actually received by a
shareholder (not including any fractional
shares which were paid in cash) of Hanifen
Holdings in exchange for Hanifen Common Stock
will be the same as the basis of the Hanifen
Common Stock surrendered in exchange therefor,
decreased by the amount of cash received in the
Merger (including any cash in lieu of
fractional shares) and increased by the amount
of gain recognized (including any gain
recognized with respect to the deemed
redemption of fractional shares) by the
shareholders in the Merger exchange. In the
event that certain requirements are not
satisfied, the Internal Revenue Service could
challenge the tax treatment of the Merger as a
tax-deferred reorganization. No ruling has been
requested from the Internal Revenue Service and
no tax opinion has been rendered with respect
to the Merger transaction.
THE FOREGOING SUMMARY IS NOT INTENDED, AND
SHOULD NOT BE CONSIDERED, AS TAX ADVICE.
HOLDERS OF HANIFEN COMMON STOCK ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS REGARDING THE
TAX CONSEQUENCES TO THEM UNDER APPLICABLE
FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS. For
additional information, see "The Merger--
Federal Income Tax Consequences of Merger."
Conditions to the Merger....... The obligations of Fiserv and Hanifen Holdings
to consummate the Merger are subject to the
satisfaction or waiver (to the extent waivable)
of certain conditions set forth in the Merger
Agreement, including, among other things,
closing of the sale of certain of the assets of
Hanifen Brokerage and Hanifen Investments. See
"The Merger--Conditions to the Merger."
Termination of the
Merger Agreement............... The Merger Agreement may be terminated by (i)
mutual consent of Hanifen Holdings, on the one
hand, and Fiserv and Fiserv Clearing, on the
other hand, (ii) either party, if the Merger
has not been consummated on or before December
31, 1997, and (iii) in certain other
situations. See "The Merger--Termination."
Acquisition Proposal........... In the event that Hanifen Holdings terminates
the Merger Agreement because it has received a
proposal or offer to acquire all or any
significant part of Hanifen Holdings' and
Hanifen Clearing's business and properties or
their capital stock, whether by merger,
purchase of assets, tender offer or otherwise
(a "Hanifen Acquisition Proposal") which the
Board of Directors of Hanifen Holdings
determines in good faith that it would be a
breach of its fiduciary duties if it did not
accept, Hanifen Holdings will pay Fiserv a
termination fee of $3,000,000 within 20
business days of such termination. See "The
Merger--The Merger Agreement--Acquisition
Proposal."
13
<PAGE>
Accounting Treatment........... It is anticipated that the Merger will be
accounted for as a purchase under Accounting
Principles Board Opinion No. 16. See "The
Merger--Accounting Treatment."
Exchange of Hanifen
Common Stock................... Promptly after the Effective Date, Firstar
Trust Company, Milwaukee, as exchange agent
(the "Exchange Agent"), will mail to each
holder of shares of Hanifen Common Stock a
letter of transmittal and instructions for
exchanging such holder's Hanifen Common Stock
for certificates representing the shares of
Fiserv Common Stock and cash to which such
holders are entitled. See "The Merger--The
Merger Agreement--Conversion of Hanifen Common
Stock; Procedures for Exchange of Share
Certificates."
Effect of the Merger on
Rights of Shareholders......... Fiserv is a Wisconsin corporation; Hanifen
Holdings is a Colorado corporation. For a
comparison of Wisconsin and Colorado laws and
of the charter and bylaw provisions of Fiserv
and Hanifen Holdings governing the rights of
Fiserv shareholders and Hanifen Holdings
shareholders, respectively, see "Comparison of
Rights of Shareholders of Fiserv and Hanifen
Holdings."
Dissenters' Rights............. Holders of Hanifen Common Stock are entitled to
appraisal or dissenters' rights in connection
with the Merger under Section 7-113-101 through
7-113-302 of the Colorado Business Corporation
Act. A condition to Fiserv's obligation to
close the Merger is that the holders of no more
than 5% of the Hanifen Common Stock exercise
dissenters' rights. In order to exercise
dissenters' rights, a shareholder of Hanifen
Holdings must give appropriate notice to
Hanifen Holdings and must not vote in favor of
the Merger. See "The Merger--Rights of
Dissenting Shareholders," "Comparison of Rights
of Shareholders of Fiserv and Hanifen
Holdings--Dissenters' Rights and Appraisal
Rights" and Appendix B.
Certain Regulatory Matters..... Consummation of the Merger is subject to
certain regulatory approvals, including
expiration of certain waiting periods imposed
under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act").
Fiserv and Hanifen Holdings believe that the
Merger can be effected in compliance with all
federal and state regulations. See "The
Merger--Certain Regulatory Matters."
Transferability of Fiserv
Common Stock................... All shares of Fiserv Common Stock received by
Hanifen Holdings shareholders will be freely
tradeable, except for those shares received by
the directors and executive officers of Hanifen
Holdings (whose shares will be registered upon
the closing of the Merger). See "The Merger--
Resale of Fiserv Common Stock by Affiliates."
14
<PAGE>
COMPARATIVE SHARE AND DIVIDEND INFORMATION AND MARKET PRICES
Fiserv Common Stock
Outstanding .................... 52,679,978 shares as of November 12, 1997.
Fiserv Dividends ............... No dividends on the Fiserv Common Stock have
been paid. See "Market Prices and Dividends."
Market Price Data............... The Fiserv Common Stock (NASDAQ Symbol: FISV)
is traded on NASDAQ. The following table sets
forth for the calendar periods indicated, the
closing price per share of Fiserv Common
Stock as reported by NASDAQ.
<TABLE>
<CAPTION>
Fiserv
Common Stock
-------------------
High Low
--------------------
<S> <C> <C>
1995:
First Quarter $ 27 3/4 $21
Second Quarter 28 3/8 25 3/4
Third Quarter 31 25 1/2
Fourth Quarter 30 1/8 25 1/2
1996:
First Quarter $ 32 $25 3/8
Second Quarter 33 3/8 28
Third Quarter 3811/16 1/16
Fourth Quarter 39 5/8 28 5/8
34
1997:
First Quarter $ 39 $32 3/4
Second Quarter 44 5/8 36 3/4
Third Quarter 49 1/2 43 7/8
Fourth Quarter 49 1/2 39 3/4
(through November 12, 1997)
</TABLE>
On September 30, 1997, the last full trading
day prior to the joint public announcement
that Hanifen Holdings and Fiserv had executed
the Merger Agreement, the closing price per
share of Fiserv Common Stock as reported by
NASDAQ was $43.875.
See "Market Prices and Dividends."
Shareholders of Hanifen Holdings are urged to
obtain current market quotations for shares
of Fiserv Common Stock.
Hanifen Common Stock
Outstanding ..................... 1,182,845 shares as of November 12, 1997.
Hanifen Dividends ............... For each of the years ended September 27,
1996 and September 26, 1997, Hanifen Holdings
did
15
<PAGE>
not pay any cash dividends. See "Market
Prices and Dividends."
No Trading Market for
Hanifen Common Stock ........... There is no established market for Hanifen
Common Stock, and accordingly there is no
published information with respect to market
prices for such stock.
CERTAIN SIGNIFICANT CONSIDERATIONS
In considering whether to approve the Merger Agreement, Hanifen Holdings
shareholders should consider the following: (i) the Exchange Ratio will be
determined based upon the Average Fiserv Stock Price; (ii) the price of Fiserv
Common Stock at the Effective Date can be expected to vary from the Average
Fiserv Stock Price as well as from the prices as of the date of this Proxy
Statement/Prospectus and the date on which Hanifen Holdings shareholders vote on
the Merger Agreement due to changes in the business, operations or prospects of
Fiserv, market assessments on the likelihood that the Merger will be consummated
and the time thereof, general market and economic conditions, and other factors;
and (iii) following the Merger, the market prices of the Fiserv Common Stock may
be volatile, depending on various factors, including without limitation, the
general economy, stock market conditions, announcements by Fiserv or its
competitors, and fluctuations in Fiserv's operating results. See "Summary--The
Merger," "Risk Factors" and "Market Prices and Dividends."
16
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following tables present selected historical information for Fiserv and
Hanifen Holdings derived from the historical consolidated financial statements
of Fiserv and Hanifen Holdings incorporated by reference herein.
The selected financial data presented below should be read in conjunction
with such financial statements and the notes thereto. The historical financial
data at and for each year in the five-year period ended December 31, 1996 and
the nine months ended September 30, 1997, and 1996, with respect to Fiserv and
at and for each fiscal year in the five-year period ended September 27, 1996 and
the nine months ended June 27, 1997 for Hanifen Holdings, have been extracted
from audited financial statements and reports filed with the Commission in the
case of Fiserv and from the audited financial statements of Hanifen Holdings,
and from consolidated unaudited financial statements with respect to the nine
months ended June 1996 and 1997 which have not been required to be filed with
the Commission. See "Incorporation of Certain Documents by Reference."
FISERV SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
--------------------------------------------------------- ---------------------
1992 1993 1994 1995(1) 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues $384,803 $519,996 $635,297 $769,104 $879,449 $647,907 $704,960
Income (loss) before taxes 52,597 70,832 84,098 (76,146) 134,462 100,037 112,909
Net income (loss) 32,994 43,725 51,031 (45,926) 79,708 59,300 66,616
Net income (loss) per
common and common
equivalent share $0.82 $ 96 $1.08 $(0.91) $1.53 $1.14 $1.25
Shares used in computing
net income (loss) per
share 40,243 45,575 47,364 50,298 52,046 52,016 53,265
Cash dividends declared
per common share 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 SEPTEMBER 30
----------------------------------------------------------- ------------
1992 1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets $1,480,253 $1,874,939 $2,204,832 $2,514,597 $2,698,979 $3,103,644
Long-term debt 78,683 124,624 150,599 383,416 272,864 221,301
Stockholders equity 211,611 370,740 425,389 514,866 605,898 685,097
Book value per common
share $4.79 $7.85 $9.01 $9.92 $11.72 $13.07
</TABLE>
- ----------------
(1) 1995 includes certain charges related to the acquisition of Information
Technology, Inc. ("ITI"). The charges are a pre-tax special, one-time, non-
cash charge of $173 million to expense the purchased ITI Premier II research
and development and a pre-tax charge of $9.9 million for the accelerated
amortization of the completed ITI Premier I software. The combined after
tax charge was $109.6 million ($2.18 per share). Net income and net income
per share before such charges were $63.7 million and $1.27, respectively.
17
<PAGE>
HANIFEN HOLDINGS SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
AS OF
NINE MONTHS
FISCAL YEAR ENDED SEPTEMBER ENDED JUNE
---------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total Revenues............... $30,735 $36,232 $36,326 $45,757 $58,338 $45,727 $40,923
Income before taxes.......... 5,622 6,246 4,484 12,770 17,970 15,560 9,442
Net income................... 3,926 3,956 2,836 8,057 11,158 9,635 5,925
Earnings per share........... $2.43 $2.31 $1.77 $5.55 $9.87 $8.77 $5.33
Weighted average shares
outstanding.............. 1,615 1,710 1,605 1,451 1,131 1,099 1,111
Cash dividends declared per
common share.............. $ 0 $ 0 $ .50 $ 0 $ 0 $ 0 $ 0
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED SEPTEMBER ENDED JUNE
---------------------------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996 1997
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets $41,700 $75,296 $112,121 $150,599 $171,873 $182,892 $158,613
Long-term debt............... $0 $0 $0 $0 $850,631 $0 $1,136
Stockholders' equity......... $10,583 $14,284 $14,475 $20,988 $27,577 $26,650 $32,252
Book value per common
share.................... $6.34 $8.64 $9.92 $15.74 $25.71 $24.29 $30.97
</TABLE>
18
<PAGE>
RISK FACTORS
AVERAGE MARKET PRICES WILL DIFFER FROM ACTUAL MARKET PRICE
In considering whether to approve the Merger Agreement, Hanifen Holdings
shareholders should consider the following: (i) the Exchange Ratio will be
determined based upon the Average Fiserv Stock Price; and (ii) the price of
Fiserv Common Stock at the Effective Date can be expected to vary from the
Average Fiserv Stock Price as well as from the prices as of the date of this
Proxy Statement/Prospectus and the date on which Hanifen Holdings shareholders
vote on the Merger Agreement due to changes in the business, operations or
prospects of Fiserv, market assessments on the likelihood that the Merger will
be consummated and the time thereof, general market and economic conditions, and
other factors. In addition, the market prices of the Fiserv Common Stock may be
volatile depending on various factors, including without limitation, the general
economy, stock market conditions, announcements by Fiserv or its competitors and
fluctuations in Fiserv's operating results. There is no trading market for the
Hanifen Common Stock. See "Summary--The Merger" and "Market Prices and
Dividends."
TERMINATION PROVISIONS MAY HAVE A DETERRENT EFFECT
In the event Hanifen Holdings terminates the Merger Agreement because
another person has made a Hanifen Acquisition Proposal that the Hanifen
Holdings' Board of Directors determines in good faith that the failure to accept
such Hanifen Acquisition Proposal could reasonably be deemed to cause the
members of the Board of Directors to breach their fiduciary duties under
applicable law, then Hanifen Holdings is required to pay Fiserv a termination
fee of $3,000,000 within 20 business days of such termination. This provision
in the Merger Agreement may have the effect of discouraging an attempt by a
third party to engage in certain acquisition transactions with Hanifen Holdings.
POSSIBLE LOSS OF BUSINESS
Despite the effort of both Fiserv and Hanifen Holdings, current clients of
Hanifen Clearing may not continue with Fiserv subsequent to the Merger. The loss
of a material number of clients could adversely affect the combined operations
of Fiserv and Hanifen Holdings.
19
<PAGE>
THE SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to shareholders of
Hanifen Holdings in connection with the solicitation of proxies by the Board of
Directors of Hanifen Holdings from holders of Hanifen Common Stock for use at
the Special Meeting. This Proxy Statement/Prospectus, Notice of Special Meeting
and proxy card are first being mailed to shareholders of Hanifen Holdings on or
about November , 1997.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING; QUORUM AND VOTE REQUIRED
At the Special Meeting, the shareholders of Hanifen Holdings will be asked
to consider and vote upon (i) a proposal to approve the Merger Agreement,
pursuant to which Hanifen Holdings will be merged with and into Fiserv Clearing,
Fiserv Clearing will be the Surviving Corporation and will remain a wholly-owned
subsidiary of Fiserv, and Hanifen Holdings shareholders will receive shares of
Fiserv Common Stock and cash in exchange for shares of Hanifen Common Stock they
own (see "The Merger"); (ii) a proposal to sell certain of the assets of Hanifen
Brokerage to New Hanifen for a purchase price equal to fair market value as
determined by an independent appraiser payable in cash at closing, plus the
assumption of certain of Hanifen Brokerage's liabilities; and (iii) a proposal
to sell certain of the assets of Hanifen Investments to an unrelated third party
and a new entity formed by a group of current employees of Hanifen Investments,
on terms to be negotiated by Hanifen Holdings.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Hanifen Common Stock at the Special Meeting is necessary
to constitute a quorum at the Special Meeting. Abstentions will be included in
determining the presence of a quorum, but will not count as votes cast. The
affirmative vote of a majority of the outstanding shares of Hanifen Common
Stock, either in person or by proxy, is required for approval of the Merger
Agreement and the sale of certain assets of each of Hanifen Brokerage and
Hanifen Investments. For purposes of the vote, the effect of any abstention
will be tantamount to a vote against the Merger and the sale of certain assets
of each of Hanifen Brokerage and Hanifen Investments. Further, because the sale
of assets of Hanifen Brokerage and Hanifen Investments is a condition to closing
the Merger, a vote against either such sale is also tantamount to a vote against
the Merger. Directors and executive officers of Hanifen Holdings are entitled
to vote 21.9% of the outstanding Hanifen Common Stock. Such directors and
executive officers have not committed to vote for or against the proposals.
---
If a quorum is not obtained, or if fewer shares of Hanifen Common Stock are
voted in favor of the Merger Agreement and/or the sale of certain assets of each
of Hanifen Brokerage and Hanifen Investments than the number required for
approval, it is expected that the Special Meeting will be postponed or adjourned
for the purpose of allowing additional time for obtaining additional proxies or
votes. Proxies voting in favor of the Merger Agreement will be voted in favor
of adjournment. Proxies voting against the Merger Agreement or abstaining will
be voted against or will abstain from voting on adjournment, respectively. At
any subsequent reconvening of the Special Meeting, all proxies will be voted in
the same manner as such proxies would have been voted at the original convening
of the Special Meeting (except for any proxies which have theretofore
effectively been withdrawn or revoked).
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In the event the Merger and the sale of certain of the assets of each of
Hanifen Brokerage and Hanifen Investments are not approved and adopted by the
shareholders of Hanifen Holdings, the Merger Agreement may be terminated in
accordance with its terms. See "The Merger--The Merger Agreement--Amendments
and Termination."
RECORD DATE; STOCK ENTITLED TO VOTE
Each share of Hanifen Common Stock outstanding on the Record Date is
entitled to be voted at the Special Meeting. Holders of record of Hanifen
Common Stock at the close of business on November 12, 1997, the Record Date, are
entitled to one vote per share. In addition, the trustee of the Hanifen Imhoff
Profit Sharing Plan and Trust (the "Profit Sharing Trust") has elected to allow
the beneficial owners of the shares of Hanifen Common Stock owned by the Profit
Sharing Trust to vote such shares. There were 1,182,845 shares of Hanifen
Common Stock issued and outstanding on the Record Date.
VOTING AND REVOCATION OF PROXIES
Proxies in the accompanying form, properly executed, duly returned to
Hanifen Holdings and not revoked will be voted in the manner specified thereon.
If no specification is made in a proxy returned for the Special Meeting, such
proxy will be voted FOR the adoption and approval of the Merger Agreement and
the sale of certain assets of Hanifen Brokerage and Hanifen Investments. A
shareholder who gives a proxy may revoke it at any time before it is voted by
filing with the Secretary of Hanifen Holdings a written instrument stating that
the proxy is revoked or by submitting a duly executed proxy bearing a later
date. Any shareholder who attends the Special Meeting and desires to vote in
person may revoke the proxy and vote at the Special Meeting. Presence at the
Special Meeting does not of itself revoke a proxy.
Management of Hanifen Holdings is not aware of any matters to be presented
at the Special Meeting other than the approval of the Merger Agreement and
proposals to sell certain assets of Hanifen Brokerage and Hanifen Investments.
If any other matters are properly presented at the Special Meeting (including,
without limitation, adjournment for the purpose of soliciting additional
proxies), the persons named in the accompanying proxy card will have
discretionary authority to vote thereon according to their best judgment.
SOLICITATION OF PROXIES
Solicitation of proxies for use at the Special Meeting may be made in
person or by mail, telephone, telecopy or telegram. Hanifen Holdings will bear
the cost of the solicitation of proxies from its shareholders. In addition to
solicitation by mail, the directors, officers and employees of Hanifen Holdings
may solicit proxies from shareholders of Hanifen Holdings by telephone or
telegram or in person. Such directors, officers and employees will not be
compensated for such solicitation.
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THE MERGER
GENERAL
The Merger Agreement (attached as Appendix A to this Proxy
Statement/Prospectus) provides for the Merger of Hanifen Holdings with and into
Fiserv Clearing, Fiserv's wholly-owned subsidiary. Fiserv Clearing will be the
Surviving Corporation and will carry on the business of Hanifen Holdings as a
wholly-owned subsidiary of Fiserv. As a result, Hanifen Clearing will also
carry on its business as an indirect, wholly-owned subsidiary of Fiserv. At the
Effective Date, Hanifen Clearing will change its name to Fiserv Correspondent
Services, Inc. Each outstanding share of Hanifen Common Stock will be converted
into Fiserv Common Stock at the Exchange Ratio and cash, which, assuming an
Average Fiserv Stock Price of Fiserv Common Stock of $47.9375 (the closing price
of Fiserv Common Stock on November 12, 1997, as reported on NASDAQ), will result
in the present Hanifen Holdings shareholders owning approximately 1.9% of the
outstanding Fiserv Common Stock. It is presently contemplated that the
Effective Date will be December __, 1997, or shortly thereafter.
BACKGROUND AND REASONS FOR THE MERGER
In early 1997, Hanifen Holdings received a number of unsolicited inquiries
concerning the possibility of a strategic relationship with, or a purchase of,
Hanifen Holdings. Based upon such inquiries, the Board of Directors consulted
with the corporate finance department of Hanifen Brokerage to consider strategic
options for the Hanifen Companies. During this period, certain events in the
commercial banking industry occurred which led, in June 1997, to a lowering of
the entry barriers for commercial banks in the investment banking industry.
These events, among other things, led to increased acquisition activity in the
securities industry. The volume of trades and price per share of brokerage and
clearing firm stocks, which had been stable in 1996, began to escalate in the
public marketplace. In March 1997, Fiserv agreed to acquire BHC Financial Inc.
for a valuation based on a multiple in excess of 10 times historical earnings.
During this period, the Board of Directors of Hanifen Holdings asked the
board of directors of each subsidiary to prepare strategic goals for their
respective corporations. Based upon those strategic goals, and in light of the
activity in the market for securities and clearing firms, the Board of Directors
of Hanifen Holdings evaluated various strategic options for the Hanifen
Companies, including the possibility of a public offering, a joint venture
relationship, and a merger with a much larger public entity. In the process of
that evaluation, the Board of Directors of Hanifen Holdings determined to hire
an outside investment banker to assist it in evaluating alternatives to
increase shareholder value in the changing market landscape.
In consultation with the corporate finance department of Hanifen Brokerage,
and with the consent and approval of the Board of Directors of each of the
Hanifen Companies, the Board of Directors of Hanifen Holdings hired Smith
Barney, Inc. ("Smith Barney") on May 22, 1997. Smith Barney agreed to assist
Hanifen Holdings in a review of the business and operations of the Hanifen
Companies. In addition, Smith Barney agreed to evaluate and recommend financial
and
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strategic alternatives with respect to a transaction and provide other financial
advisory and investment banking services customary for such a transaction.
In consultation with the corporate finance department of Hanifen Brokerage,
Smith Barney prepared an informal evaluation of Hanifen Holdings and outlined a
number of companies likely to be interested in, and able to consummate, a
financially attractive strategic combination with Hanifen Holdings.
The Board of Directors instructed Smith Barney to contact such companies,
which it did in the summer of 1997. Smith Barney continuously updated the Board
as to the status of the discussions with the various companies. Numerous
companies expressed an interest, including Fiserv. Smith Barney then requested
selected interested parties to submit bids. Originally, Fiserv's bid was below
Hanifen's threshold of interest and Hanifen Holdings commenced discussions with
other bidders. Fiserv, however, maintained its interest and continued to ask
Smith Barney for progress reports.
In August 1997, Hanifen and Smith Barney narrowed the bidding range and the
number of parties to two. Hanifen invited Fiserv to make a final bid, which it
did on September 4, 1997. On September 5, 1997, the Board of Directors of each
of the Hanifen Companies met, with Smith Barney conferring by telephone, to
discuss and evaluate the two bids. Following its deliberations, the Board of
Directors of each of the Hanifen Companies voted to accept the Fiserv bid and
formed a committee to negotiate an agreement with Fiserv, subject to shareholder
approval. On September 30, 1997, the Board of Directors of Hanifen Holdings
unanimously approved the Merger Agreement and directed that the Merger Agreement
be presented to its shareholders for approval.
The determination of the Board of Directors of Hanifen Holdings to approve
the Merger Agreement was based upon consideration of a number of factors. The
following list includes all material factors considered by the Board of
Directors in its evaluation of the Merger and the Merger Agreement:
1. The Board of Directors' familiarity with, among other things, the
business, operations, financial condition, competitive position and prospects of
each of the Hanifen Companies, the nature of the financial industry in which the
Hanifen Companies participate, and current industry, economic and market
conditions;
2. The fact that Smith Barney, Inc.("Smith Barney"), on behalf of Hanifen
Holdings, had solicited interest in a possible acquisition of Hanifen Holdings
from third parties and that Hanifen Holdings had not received offers or
indications of interest from other parties at prices in excess of the
consideration to be received in the Merger;
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3. The Board of Directors' review of presentations by, and discussion of
the terms and conditions of the Merger Agreement with, management of Hanifen
Holdings, the board of directors of each of Hanifen Clearing, Hanifen Brokerage
and Hanifen Investments, and representatives of Smith Barney;
4. The expected tax treatment of the Merger;
5. The strategic and financial alternatives available to Hanifen Holdings
and its subsidiaries, including remaining an independent company;
6. The recognition by the Board of Directors that the Merger would
deprive the holders of Hanifen Common Stock of the opportunity to continue their
equity interests in Hanifen Holdings as an independent entity. The Merger,
however, would permit the holders of Hanifen Common Stock to continue to hold
equity interests in and participate in the future growth of Fiserv, a much
larger company operating in a broader sector of the financial services industry,
and the shares of which are more liquid due to the public market for such
shares;
7. The Board of Directors' review of the historical market prices of
shares of Fiserv Common Stock, the historical values of shares of Hanifen
Common Stock as a privately-held concern compared to the consideration to be
received pursuant to the Merger, and the future rates of growth and price
earnings ratios which would be necessary for the values of Hanifen Common Stock
to equal or exceed the market value of the consideration to be received in the
Merger;
8. Certain publicly available information with respect to the financial
condition and results of operations of Fiserv; and
9. A provision was included in the Merger Agreement which allows Hanifen
Holdings to, among other things, consider unsolicited third-party acquisition
proposals, negotiate and discuss any such proposals, and terminate the Merger
Agreement, subject, in certain circumstances, to the payment of a $3.0 million
termination fee, if the Board of Directors of Hanifen Holdings were to
determine, in the exercise of its fiduciary duties to recommend an alternative
acquisition proposal. Therefore, to the extent a third party is prepared to pay
a higher price or make an otherwise more desirable bid for the Hanifen
Companies, Hanifen Holdings may pursue such third party offer, subject only to
payment of the termination fee, if such offer is accepted. See "-The Merger
Agreement-Acquisition Proposals."
In view of the wide variety of material factors considered in connection
with its evaluation of the Merger, the Board of Directors of Hanifen Holdings
did not find it practicable to, and did not, quantify or otherwise attempt to
assign relative weights to specific factors considered in reaching its
determination.
MANAGEMENT AND OPERATIONS OF HANIFEN HOLDINGS FOLLOWING THE MERGER
Following the Merger, George D. Dalton, Chairman of the Board of Fiserv,
who is the sole director of Fiserv Clearing, will continue as the sole director
of the Surviving Corporation. In
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addition, following the Merger, the officers of Fiserv Clearing will continue as
the officers of the Surviving Corporation.
At the Effective Date, the Certificate of Incorporation and Bylaws of the
Surviving Corporation will continue unchanged.
Subsequent to the Merger, Fiserv plans to continue to operate the Surviving
Corporation as an independent subsidiary and has no present intention to move or
consolidate any of the operations of the Surviving Corporation or its
subsidiaries. Promptly after the consummation of the Merger, the name of each
of the Hanifen Companies will be changed to a name distinctively different from
"Hanifen, Imhoff."
Each of Hanifen Brokerage and Hanifen Investments will continue as wholly-
owned subsidiaries of Fiserv Clearing. Certain of the assets of Hanifen
Brokerage and Hanifen Investments will be sold prior to consummation of the
Merger as a condition to closing the Merger. See "-Other Hanifen Holdings
Subsidiaries."
THE MERGER AGREEMENT
Reference is made to the copy of the Merger Agreement attached as Appendix
A for a complete statement of the terms of the proposed Merger. The statements
contained herein with respect to the Merger Agreement and the Merger are
qualified in their entirety by the foregoing reference.
EFFECTIVE DATE AND CONSEQUENCES OF THE MERGER
If approved by the requisite vote of the shareholders of Hanifen Holdings
and if all other conditions to the consummation of the Merger are satisfied or
waived, the Merger will become effective immediately upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
the filing of the Articles of Merger with the Secretary of State of the State of
Colorado or such other time or date thereafter as Fiserv, Fiserv Clearing and
Hanifen Holdings may agree. At the Effective Date, Hanifen Holdings will be
merged with and into Fiserv Clearing, which will be the Surviving Corporation in
the Merger, the separate existence and corporate organization of Hanifen
Holdings will cease, and Fiserv Clearing will succeed, insofar as permitted by
Delaware and Colorado law, to all rights, assets, liabilities and obligations of
Hanifen Holdings. The Merger will have no effect on Hanifen Clearing, except
that it will become a wholly-owned subsidiary of Fiserv Clearing and will
continue its business as it had been conducted prior to the Merger.
It is presently contemplated that the Effective Date will be December __,
1997.
MERGER CONSIDERATION
Each outstanding share of Hanifen Common Stock immediately prior to the
consummation of the Merger will be converted into the right to receive (i) such
number of shares of Fiserv
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Common Stock, as shall equal the quotient of (A) the quotient of (I) 51% of the
Hanifen Value, divided by (II) the number of shares of Hanifen Common Stock
outstanding at the Effective Date, divided by (B) a number which is equal to the
average closing price per share for Fiserv Common Stock as reported on the
NASDAQ National Market (as reported in The Wall Street Journal) for the 20
--- ---- ------ -------
business days ending two business days prior to the Effective Date, and
(ii) such amount of cash as shall equal the quotient of (A) 49% of the Hanifen
Value, divided by (B) the number of shares of Hanifen Common Stock outstanding
on the Effective Date. The "Hanifen Value" shall mean the sum of (i) the
difference (positive or negative) between (A) the Final Stockholders' Equity (as
defined in the Merger Agreement) and (B) $30,000,000, plus (ii) $97,200,000.
Assuming an Average Fiserv Stock Price of $47.9375 (which is the closing price
of Fiserv Common Stock as reported in The Wall Street Journal on November 12,
--- ---- ------ -------
1997), the Merger would result in the present Hanifen Holdings shareholders
owning in the aggregate approximately 1.9% of the Fiserv Common Stock.
No fractional shares of Fiserv Common Stock will be issued in the Merger.
In lieu of any fractional shares, each holder of Hanifen Common Stock who would
otherwise be entitled to receive a fractional share of Fiserv Common Stock
pursuant to the Merger will be paid an amount in cash, without interest, rounded
to the nearest cent, determined by multiplying (i) the per share closing price
of Fiserv Common Stock as reported on the NASDAQ on the date of the Effective
Date, by (ii) the fractional interest to which such holder would otherwise be
entitled. Fiserv will make available to the Exchange Agent the cash necessary
for this purpose.
CONVERSION OF HANIFEN COMMON STOCK; PROCEDURES FOR ISSUANCE OF FISERV SHARE
CERTIFICATES
As soon as practicable after the Effective Date, each holder of shares of
Hanifen Common Stock that have been converted into the right to receive Fiserv
Common Stock and cash, upon delivery of a letter of transmittal (the form of
which will be provided to the shareholders of Hanifen Holdings) to the Exchange
Agent for cancellation of such shareholders' uncertificated shares of Hanifen
Common Stock, will be entitled to receive certificates representing the number
of whole shares of Fiserv Common Stock to be issued in respect of the aggregate
number of such shares of Hanifen Common Stock previously held by such
shareholder, cash, if any, payable in lieu of the issuance of a fractional share
and cash.
Promptly after the Effective Date, the Exchange Agent will furnish the
former Hanifen Holdings shareholders a letter of transmittal for use in
converting their Hanifen Common Stock. The letter will contain instructions with
respect to the surrender of Hanifen Common Stock and the distribution of
certificates representing Fiserv Common Stock and cash.
Subject to the provisions pertaining to cash in lieu of fractional shares
in the following sentence, until documentation is received by the Exchange Agent
evidencing the surrender of the uncertificated Hanifen Common Stock, the
ownership of Hanifen Common Stock recorded on the books of Hanifen Holdings will
be deemed for all corporate purposes to evidence the ownership of the number of
full shares of Fiserv Common Stock and cash which the holder is entitled to
receive upon delivery of the letter of transmittal to the Exchange Agent. Until
they have delivered the letter of transmittal surrendering their uncertificated
shares of Hanifen Common Stock for
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exchange, Hanifen Holdings shareholders will not be entitled to receive any
payment for a fractional share interest. Any such payment will be remitted to
the Hanifen Holdings shareholder entitled thereto, without interest, at the time
that such letter of transmittal surrendering such shareholders' uncertificated
shares of Hanifen Common Stock for conversion, subject to any applicable
abandoned property, escheat or similar law.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Merger Agreement contains representations and warranties as to the
organization, operations and business and financial condition of Hanifen
Holdings and its subsidiaries and Fiserv and Fiserv Clearing. The
representations and warranties will terminate at the Effective Date. The Merger
Agreement also contains certain covenants of Hanifen Holdings, Fiserv and Fiserv
Clearing, including covenants relating to the conduct of Hanifen Holdings and
Fiserv prior to the Effective Date.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion is intended to provide a summary of certain
federal income tax consequences of the Merger.
The Merger Agreement provides that, for federal income tax purposes,
Hanifen Holdings and Fiserv intend that the Merger constitute a tax-deferred
"reorganization" within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code (a "Tax-Deferred Reorganization"). The Merger Agreement requires that
Hanifen Holdings and Fiserv treat the Merger accordingly on their respective tax
returns and not take any action that would jeopardize such treatment for federal
tax purposes. The principal federal income tax consequences of a Tax-Deferred
Reorganization, under currently applicable law, are as follows: (i) no gain or
loss should be recognized by Hanifen Holdings or Fiserv as a result of the
Merger; (ii) individual shareholders of Hanifen Holdings who receive cash
consideration (including cash in lieu of fractional shares, if any), in exchange
for a portion of Hanifen Common Stock owned directly by such individual
shareholders should generally recognize capital gain or loss, provided that such
shares are capital assets in the hands of such shareholders; (iii) no gain or
loss should be recognized by shareholders of Hanifen Common Stock on their
receipt of Fiserv Common Stock pursuant to the Merger; (iv) the holding period
of the Fiserv Common Stock received by the Hanifen Holdings shareholders should
include the holding period of the shares of Hanifen Common Stock, provided that
the Hanifen Holdings shares are capital assets in the hands of the Hanifen
Holdings shareholders at the time of the exchange; and (v) the aggregate
adjusted tax basis of the Fiserv Common Stock actually received (not including
any fractional shares which were paid in cash) by a shareholder of Hanifen
Holdings in exchange for Hanifen Common Stock should be the same as the basis of
the Hanifen Common Stock surrendered in exchange therefor, decreased by the
amount of cash received in the Merger (including any cash in lieu of fractional
shares) and increased by the amount of gain recognized (including any gain
recognized with respect to the deemed redemption of fractional shares) by the
shareholders in the Merger exchange.
A holder of Hanifen Common Stock who receives the cash portion of the
Merger Consideration is treated as having received a distribution of boot
taxable under Section 356 of the
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Code. Under Section 356 and applicable Supreme Court precedent, the Hanifen
Holdings shareholder is first deemed to have received Fiserv Common Stock equal
in value to such cash consideration followed immediately by Fiserv redeeming
that stock for the cash consideration. See Clark v. Commissioner, 489 U.S. 726
-------------------------
(1989) and Revenue Ruling 93-61, 1993-2 C.B. 118. The redemption of this stock
is then tested under the redemption rules of Section 302 of the Code to
determine whether the shareholder will recognize capital gain, capital loss or
dividend income. Under Section 302(b)(1), a redemption will be treated as a sale
of redeemed stock (thereby generating capital gain) if it is "not essentially
equivalent to a dividend." Dividend equivalence depends on all the facts and
circumstances of each case and, furthermore, constructive ownership rules must
be considered in making this determination. The Supreme Court, in United
------
States v. Davis, 397 U.S. 301, rehearing denied, 397 U.S. 1071 (1970), held that
- --------------- --------- ------
in order to avoid dividend equivalence, the redemption must result in a
"meaningful reduction of the shareholder's proportionate interest in the
corporation." As a general rule, where there is no possibility of control
participation by a shareholder with a minimal stock interest, any degree of
reduction should result in sale treatment unless the redemption is part of an
ongoing plan under which the shareholder can choose whether or not to have a
small number of shares redeemed each year. In addition, the Internal Revenue
Service recognizes that public companies often redeem shares involving minuscule
reductions in the interests of common shareholders. Generally, those reductions
do not constitute dividends, but qualify the redemptions as sales thereby
generating capital gain or loss assuming the stock qualifies as a capital asset.
Section 302(b)(2) of the Code provides a mechanical test for qualifying a
redemption for capital gains treatment. Under Section 302(b)(2), the Code
treats a "substantially disproportionate" redemption as a sale of stock rather
than a taxable dividend distribution. In order to qualify as "substantially
disproportionate," the redemption must meet three requirements: (i) immediately
after the redemption, the shareholder must own less than 50% of the total
combined voting power of all classes of outstanding stock entitled to vote;
(ii) the shareholder's percentage of the total outstanding voting stock
immediately after the redemption must be less than 80% of his percentage of
ownership of such stock immediately before the redemption; and (iii) the
shareholder's percentage of outstanding common stock (voting or non-voting)
after the redemption must be less than 80% of the shareholder's percentage of
ownership before the redemption. These tests are applied on a shareholder-by-
shareholder basis, and constructive ownership rules set forth in Section 318 of
the Code are applicable in determining whether the redemption is substantially
disproportionate under Section 302(b)(2).
Given the size of Hanifen Holdings in relation to Fiserv and the amount of
cash consideration being received in the Merger, the shareholders should receive
capital gain treatment with respect to the cash consideration received in the
Merger.
Shareholders of Hanifen Holdings who held their Hanifen Common Stock as a
capital asset and who exercise dissenters rights in the Merger and receive cash
in exchange for all of their Hanifen Common Stock, should receive capital gain
treatment under Section 302(b)(3) of the Code (dealing with a complete
redemption of stock).
Under any of the foregoing circumstances where a shareholder of Hanifen
Holdings will receive capital gain or loss, such capital gain or loss should be
long-term capital gain or loss if such Hanifen Common Stock had been held for
more than one (1) year as of the Effective Date.
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Treatment as a Tax-Deferred Reorganization is based on certain assumptions,
including without limitation, the assumptions that: (i) the representations and
warranties set forth in the Merger Agreement will be true, correct and complete
as if made at the Effective Date; (ii) there is no plan or intention on the part
of the holders of Hanifen Common Stock to dispose of a prescribed amount of
shares of Fiserv Common Stock acquired in the Merger or Hanifen Common Stock in
anticipation of the Merger (as further discussed below); (iii) no consideration
other than shares of Fiserv Common Stock, cash paid for fractional shares and
cash will be received by holders of the shares of Hanifen Common Stock for their
shares of Hanifen Common Stock; and (iv) in the Merger, Fiserv Clearing will
acquire (a) at least 90% of the fair market value of Hanifen Holdings' net
assets and at least 70% of the fair market value of Hanifen Holdings' gross
assets held immediately prior to the Merger, and (b) at least 90% of the fair
market value of Fiserv Clearings' net assets and at least 70% of the fair market
value of Fiserv Clearings' gross assets held immediately prior to the Merger.
For purposes of the assumption in (iv) above, amounts paid by Hanifen Holdings
to shareholders who receive cash or other property (including cash for
fractional shares), amounts used by Hanifen Holdings to pay reorganization
expenses, all redemptions and distributions (except for regular, normal
dividends) made by Hanifen Holdings immediately preceding the Merger, and any
assets of Hanifen Holdings disposed of in contemplation of the Merger, will be
included in the assets of Hanifen Holdings immediately prior to the Merger.
Although Fiserv and Hanifen Holdings have each made certain representations and
warranties to each other regarding their respective compliance with the
foregoing, no assurances to that effect can be given.
Under guidelines published in Revenue Procedure 77-37, 1977-2 C.B. 568 (the
"IRS Guidelines"), the Internal Revenue Service will issue a ruling that a
transaction constitutes a Tax-Deferred Reorganization if certain factual
representations can be made with respect thereto. In particular, the IRS
Guidelines require a representation that there will be a fifty percent (50%)
level of continuity of shareholder interest. Hanifen Holdings shareholders
should note, however, that the IRS Guidelines are intended to serve only as a
description of the circumstances in which the Internal Revenue Service will
issue a favorable ruling and not as a statement of the substantive law regarding
the qualification of a transaction as a Tax-Deferred Reorganization. While
continuity of shareholder interest is a requirement for Tax-Deferred
Reorganization treatment, Supreme Court precedent supports a lesser degree of
continuity than that required by the IRS Guidelines.
No advance ruling has been requested from the Internal Revenue Service and
no tax opinion been rendered as to the tax consequences of the Merger. There
cannot, therefore, be any assurance that the treatment of the Merger by Fiserv,
Hanifen Holdings or the shareholders of Hanifen Holdings as a Tax-Deferred
Reorganization will not be challenged by the Internal Revenue Service, or that
any such challenge would not be sustained.
If the Merger is not characterized as a Tax-Deferred Reorganization, the
principal federal income tax consequences, under currently applicable law, would
be as follows: (i) Hanifen Holdings would be deemed to have sold all of its
assets in a taxable asset sale to Fiserv and Hanifen Holdings would recognize
gain or loss equal to the difference between the fair market value of the
consideration received in such sale and its adjusted tax basis in the assets
sold; (ii) immediately after the sale described in (i) above, Hanifen Holdings
would be deemed to have liquidated and distributed all of its assets to its
shareholders at which point the shareholders would
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<PAGE>
be taxed on capital gain or loss (provided such shares were held as capital
assets at such time) equal to the difference between the fair market value of
the assets distributed by Hanifen Holdings in liquidation compared to the
adjusted tax basis in their Hanifen Holdings stock; (iii) the tax basis of
Fiserv Common Stock to be received by the holders of Hanifen Common Stock in the
Merger would be the fair market value of such Fiserv Common Stock as of the
Effective Date; and (iv) the holding period of Fiserv Common Stock to be
received by the holders of Hanifen Common Stock pursuant to the Merger would
begin the day after the Effective Date.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
IT DOES NOT ADDRESS EVERY ASPECT OF THE FEDERAL INCOME TAX LAWS THAT MAY BE
RELEVANT TO THE HOLDERS OF HANIFEN COMMON STOCK IN LIGHT OF THEIR PERSONAL
CIRCUMSTANCES OR TO CERTAIN TYPES OF HOLDERS SUBJECT TO SPECIAL TAX TREATMENT
AND IS GENERALLY LIMITED TO PERSONS WHO HOLD HANIFEN COMMON STOCK AS A CAPITAL
ASSET. IN ADDITION, IT DOES NOT DISCUSS ANY ALTERNATIVE MINIMUM TAX
CONSEQUENCES, STATE, LOCAL, FOREIGN OR OTHER FEDERAL TAX ASPECTS OF THE MERGER.
THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE, EXISTING
AND PROPOSED TREASURY REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS
AND COURT DECISIONS. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE RETROACTIVELY
AS WELL AS PROSPECTIVELY AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING
VALIDITY OF THIS DISCUSSION. EACH SHAREHOLDER OF HANIFEN HOLDINGS SHOULD
CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE
MERGER TO HIM OR HER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE,
LOCAL AND FOREIGN TAX LAWS.
HANIFEN HOLDINGS STOCK OPTION PLAN; BENEFIT PLANS
Hanifen Holdings maintains a non-qualified stock option plan (the "Option
Plan") for certain key employees. As a condition of the Merger, all unexercised
stock options must be exercised by the option holders. Immediately after the
exercise of such options, the stockholders receiving newly issued Hanifen Common
Stock who agree to the Merger will surrender such stock in exchange for a
portion of the Merger consideration as described in this Proxy
Statement/Prospectus. Any gain resulting from the surrender of Hanifen Common
Stock (received upon exercise of a non-qualified option) will result in short
term capital gain taxable as ordinary income. At the Effective Date the Option
Plan will be terminated.
As of November 12, 1997, Options to purchase 48,500 shares of Hanifen
Common Stock were outstanding under the Option Plan at exercise prices ranging
from $14.76 to $25.71.
Under the Merger Agreement, Fiserv has agreed that employees of Hanifen
Holdings and each subsidiary, including Hanifen Clearing, will be entitled to
participate in the benefit plans that Fiserv maintains for its employees
generally (except with respect to Fiserv's sabbatical plan or policy) on
substantially the same terms and conditions as other employees of Fiserv.
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CONDITIONS TO THE MERGER
The obligations of Fiserv and Hanifen Holdings to consummate the Merger are
subject to the fulfillment or waiver (where permissible) of certain conditions,
including: (i) obtaining the approval of the shareholders of Hanifen Holdings;
(ii) the board of directors of Hanifen Holdings and the trustees of Hanifen
Holdings' profit-sharing plan have received an opinion as to the fairness from a
financial point of view of the Merger and an opinion as to certain valuation
matters relating to the sale of assets of Hanifen Brokerage and Hanifen
Investments; (iii) Hanifen Brokerage and Hanifen Investments have sold certain
of their assets for fair and adequate consideration; (iv) New Hanifen has
entered into a clearing agreement with Fiserv Clearing, with a term of five
years for all of New Hanifen's clearing needs on terms that are consistent with
other third party arrangements; (v) Fiserv and Clearing has entered into an
employment agreement with George Johnson as president of Clearing; (vi) the
holders of no more than 5% of the Hanifen Common Stock have exercised
dissenters' rights in connection with the Merger; (vii) each member of Hanifen
Holdings' Board of Directors and Fiserv's Board of Directors have entered into a
non-compete and confidentiality agreement; (viii) the effectiveness of the
Registration Statement of which this Proxy Statement/Prospectus is a part; (ix)
no order being entered in any action or proceeding or other legal restraint or
prohibition preventing the consummation of the Merger; (x) the receipt by each
party of various legal opinions and other certificates, consents, reports and
approvals from the other parties to the Merger and from third parties; (xi) the
accuracy of the representations and warranties of each party and compliance with
all covenants and conditions by each party; and (xii) the relevant waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act") has expired.
Hanifen Holdings has waived the condition to closing which requires that an
opinion be obtained as to fairness from a financial point of view of the Merger
and as to certain valuation matters relating to the sale of assets of Hanifen
Investments.
AMENDMENTS AND TERMINATION
The Merger Agreement may be amended by a written agreement executed by
Hanifen Holdings, Fiserv and Fiserv Clearing either before or after the
shareholders of Hanifen Holdings approve the Merger. The Merger Agreement may
be terminated and the Merger abandoned at any time prior to the Effective Date
by mutual agreement of the Boards of Directors of Fiserv and Hanifen Holdings,
or by the Board of Directors of any party if any of the conditions applicable to
such party to effect the Merger is not satisfied or waived on or before the
Effective Date or if the Merger is not effective on or before December 31, 1997,
provided that the party seeking to terminate the Merger Agreement is not
responsible for the failure of the Merger to occur prior to such date.
ACQUISITION PROPOSALS
In the event Hanifen Holdings terminates the Merger Agreement because
another person has made a Hanifen Acquisition Proposal that the Hanifen
Holdings' Board of Directors determines in good faith that the failure to accept
such Hanifen Acquisition Proposal could reasonably be
31
<PAGE>
deemed to be a breach of its fiduciary duties if it did not accept, then Hanifen
Holdings will pay Fiserv a termination fee of $3,000,000 within 20 business days
of such termination.
EXPENSES OF THE MERGER
Whether or not the Merger is consummated, each party to the Merger
Agreement will pay its expenses incurred in connection with the Merger.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "purchase".
RESALE OF FISERV COMMON STOCK BY AFFILIATES
Fiserv Common Stock to be issued to shareholders of Hanifen Holdings in
connection with the Merger has not been registered for resale under the
Securities Act. Fiserv Common Stock received by the shareholders of Hanifen
Holdings upon consummation of the Merger will be freely transferable under the
Securities Act for resale except for shares issued to any person who may be
deemed an "Affiliate" (as defined below) of Hanifen Holdings within the meaning
of Rule 145 under the Securities Act. "Affiliates" are generally defined as
persons who control, are controlled by, or are under common control with Hanifen
Holdings at the time of the Special Meeting (generally, directors, certain
executive officers and major shareholders).
Affiliates of Hanifen Holdings may not sell their shares of Fiserv Common
Stock acquired in connection with the merger, except pursuant to an effective
Registration Statement under the Securities Act covering such shares or in
compliance with Rule 145 or another applicable exemption from the registration
requirements of the Securities Act. In general, under Rule 145, for one year
following the Effective Date, an Affiliate (together with certain related
persons) would be entitled to sell shares of Fiserv Common Stock acquired in
connection with the Merger only through unsolicited "broker transactions" or in
transactions directly with a "market maker," as such terms are defined in Rule
144 under the Securities Act. Additionally, the number of shares to be sold by
an Affiliate (together with certain related persons and certain persons acting
in concert) during such one-year period within any three-month period for
purposes of Rule 145 may not exceed the greater of one percent of the
outstanding shares of Fiserv Common Stock or the average weekly trading volume
of such stock during the four calendar weeks preceding such sale. Rule 145
would remain available to Affiliates only if Fiserv remained current with its
information filings with the Commission under the Exchange Act. One year after
the Effective Date, an Affiliate would be able to sell such Fiserv Common Stock
without such manner of sale or volume limitations, provided that Fiserv was
current with its Exchange Act information filings and such Affiliate was not
then an Affiliate of Fiserv. Two years after the Effective Date, an Affiliate
would be able to sell such shares of Fiserv Common Stock without any
restrictions so long as such Affiliate had not been an Affiliate of Fiserv for
at least three months prior thereto.
Fiserv has agreed to register the Affiliates of Hanifen Holdings Fiserv
Common Stock upon closing of the Merger, at which time such Fiserv Common Stock
will be freely transferable.
32
<PAGE>
CERTAIN REGULATORY MATTERS
No federal or state regulatory requirements remain to be complied with in
connection with the Merger, except for certain required notifications and
closing and post-closing filings and except that, as of the date of this Proxy
Statement/Prospectus, the waiting period under the HSR Act had not expired.
RIGHTS OF HANIFEN HOLDINGS DISSENTING SHAREHOLDERS
Set forth below is a summary of dissenters' rights available to Hanifen
Holdings shareholders, which summary is not intended to be a complete statement
of applicable Colorado law and is qualified in its entirety by reference to
Article 113 of the CBCA, set forth in its entirety as Appendix B.
FISERV HAS RESERVED THE RIGHT TO TERMINATE THE MERGER AGREEMENT AND ABANDON
THE MERGER IF HOLDERS OF MORE THAN 5% OF THE OUTSTANDING SHARES OF THE HANIFEN
COMMON STOCK DISSENT FROM THE MERGER AND SEEK PAYMENT FOR THEIR SHARES IN
ACCORDANCE WITH THE CBCA.
Right to Dissent. Shareholders of Hanifen Holdings are entitled to dissent
from the Merger and obtain payment of the fair value of their shares if and when
the Merger is effectuated. A shareholder entitled to dissent and obtain payment
for the shareholder's shares under Article 113 of the CBCA may not challenge the
corporate action (i.e., the Merger) creating the right to dissent, unless the
----
action is unlawful or fraudulent with respect to the shareholder or the
corporation.
Under Section 7-113-103, of the CBCA, a record shareholder may assert
dissenters' rights as to fewer than all the shares registered in the record
shareholder's name only if the record shareholder dissents with respect to all
shares beneficially owned by any one person and causes the corporation to
receive written notice which states such dissent and the name, address and
federal taxpayer identification number, if any, of each person on whose behalf
the record shareholder asserts.
Section 7-113-103(2) of the CBCA provides that a beneficial shareholder may
assert dissenters' rights as to the shares held on the beneficial shareholder's
behalf only if (a) the beneficial shareholder causes the corporation to receive
the record shareholder's written consent to the dissent not later than the time
the beneficial shareholder asserts dissenters' rights, and (b) the beneficial
shareholder dissents with respect to all shares beneficially owned by the
beneficial shareholder.
Hanifen Holdings will require that, when a record shareholder dissents with
respect to the shares held by any one or more beneficial shareholders, each such
beneficial shareholder must certify to Hanifen Holdings that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights.
33
<PAGE>
Procedure for Exercise of Dissenters' Rights. The notice accompanying this
Prospectus/Proxy Statement states that shareholders are entitled to assert
dissenters' rights under Article 113 of the CBCA. A Hanifen Holdings'
shareholder who wishes to assert dissenters' rights must: (a) cause Hanifen
Holdings to receive, before the vote is taken on the Merger, written notice of
the shareholder's intention to demand payment for the shareholder's shares if
the Merger is effectuated; and (b) not vote the shares in favor of the Merger.
A SHAREHOLDER WHO DOES NOT SATISFY THE FOREGOING REQUIREMENTS WILL NOT BE
ENTITLED TO DEMAND PAYMENT FOR HIS OR HER SHARES UNDER ARTICLE 113 OF THE CBCA.
If the Merger is authorized, Hanifen Holdings must give a written notice to
dissenters who are entitled to demand payment for their shares. The notice
required to be given by Hanifen Holdings must be given no later than 10 days
after the Effective Date and: (a) state that the Merger was authorized and
state the Effective Date or proposed Effective Date; (b) inform holders of
uncertificated shares to what extent transfer of the shares will be restricted
after the payment demand is received; (c) supply a form for demanding payment,
which form will request a dissenter to state an address to which payment is to
be made; (d) set the date by which Hanifen Holdings must receive the payment
demand, which date must not be less than 30 days after the date the notice is
given; (e) state that if a record shareholder dissents with respect to the
shares held by any one or more beneficial shareholders each such beneficial
shareholder must certify to Hanifen Holdings that the beneficial shareholder and
the record shareholder or record shareholders of all shares owned beneficially
by the beneficial shareholder have asserted, or will timely assert, dissenters'
rights as to all such shares as to which there is no limitation of the ability
to exercise dissenters' rights; and (f) be accompanied by a copy of Article 113
of the CBCA.
A shareholder who is given a dissenters' notice to assert dissenters'
rights and who wishes to exercise dissenters' rights must, in accordance with
the terms of the dissenters' notice, cause Hanifen Holdings to receive a payment
demand, which may be a demand form supplied by Hanifen Holdings, duly completed,
or some other acceptable writing. A shareholder who demands payment in
accordance with the foregoing retains all rights of a shareholder, except the
right to transfer the shares, until the Effective Date, and has only the right
to receive payment for the shares after the Effective Date. The demand for
payment is irrevocable, except that if the Effective Date does not occur within
60 days after the date set by Hanifen Holdings by which it must receive the
payment demand, Hanifen Holdings must release the transfer restrictions imposed
on uncertificated shares. If the Effective Date occurs more than 60 days after
the date set by Hanifen Holdings by which it must receive the payment demand,
then Hanifen Holdings must send a new dissenters' notice. A SHAREHOLDER WHO
DOES NOT DEMAND PAYMENT AS REQUIRED BY THE DATE OR DATES SET IN THE DISSENTERS'
NOTICE IS NOT ENTITLED TO PAYMENT FOR HIS OR HER SHARES AND WILL BE ENTITLED
ONLY TO EXCHANGE HIS OR HER HANIFEN COMMON STOCK FOR FISERV COMMON STOCK BASED
ON THE EXCHANGE RATIO.
At the Effective Date or upon receipt of a payment demand, whichever is
later, Hanifen Holdings will pay each dissenter who complied with the notice
requirements discussed above Hanifen Holdings' estimate of the fair value of the
dissenter's shares, plus accrued interest. Payment will be accompanied by
Hanifen Holdings' audited balance sheet as of the end of its most recent fiscal
year, an income statement for that year, an audited statement of changes in
shareholders' equity for that year and an audited statement of cash flow for
that year, as well as
34
<PAGE>
the latest available financial statements, if any, for the interim period, which
interim financial statements will not be audited. Payment will also be
accompanied by a statement of Hanifen Holdings' estimate of the fair value of
the shares and an explanation of how the interest was calculated, along with a
statement of the dissenter's right to demand payment if the dissenter is
dissatisfied with the payment and a copy of Article 113 of the CBCA.
If a dissenter is dissatisfied with the payment, the dissenter may give
notice to Hanifen Holdings in writing of the dissenter's estimate of fair value
of the dissenter's shares and of the amount of interest due and may demand
payment of such estimate, less any payment made prior to such notice, or the
dissenter may reject Hanifen Holdings' offer and demand payment of the fair
value of the shares and interest due if: (a) the dissenter believes that the
amount paid or offered is less than the fair value of the shares or that the
interest due was incorrectly calculated; (b) Hanifen Holdings fails to make
payment within 60 days after the date set by Hanifen Holdings by which it must
receive the payment demand; or (c) Hanifen Holdings does not release the
transfer restrictions imposed on uncertificated shares, then Hanifen Holdings
must send a new dissenters' notice. A DISSENTER WAIVES THE RIGHT TO DEMAND
PAYMENT UNDER THIS PARAGRAPH UNLESS THE DISSENTER CAUSES HANIFEN HOLDINGS TO
RECEIVE THE NOTICE REQUIRED WITHIN 30 DAYS AFTER HANIFEN HOLDINGS MADE OR
OFFERED PAYMENT FOR THE SHARES OF THE DISSENTER.
Judicial Appraisal of Shares. If a demand for payment made by a
dissatisfied dissenter as set forth above is unresolved, Hanifen Holdings may,
within 60 days after receiving the payment demand, commence a proceeding and
petition a court to determine the fair value of the shares and accrued interest.
If Hanifen Holdings does not commence the proceeding within the 60-day period,
it must pay to each dissenter whose demand remains unresolved the amount
demanded. Hanifen Holdings must commence the proceeding described above in the
District Court of the City and County of Denver, Colorado. Hanifen Holdings
must make all dissenters whose demands remain unresolved parties to the
proceeding as in an action against their shares, and all parties must be served
with a copy of the petition. The jurisdiction of the court in which the
proceeding is commenced is plenary and exclusive. One or more persons may be
appointed by the court as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers will have the powers
described in the court order appointing them. The parties to the proceeding
will be entitled to the same discovery rights as parties in other civil
proceedings. Each dissenter made a party to the proceeding will be entitled to
judgment for the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by Hanifen Holdings,
or for the fair value, plus interest, of a dissenter's shares for which Hanifen
Holdings elected to withhold payment.
The court in an appraisal proceeding will determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court will assess the costs against Hanifen
Holdings; except that the court may assess costs against all or some of the
dissenters, in the amount the court finds equitable, to the extent the court
finds that dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment. The court may also assess the fees and expenses of counsel
and experts for the respective parties, in amounts the courts find equitable:
(a) against Hanifen Holdings and in favor of any dissenters if the court finds
that Hanifen Holdings did not substantially comply with the procedures for the
exercise of dissenters' rights set forth above; or (b) against either Hanifen
Holdings or one or more dissenters,
35
<PAGE>
in favor of any other party, if the court finds that the party against whom the
fees and expenses are assessed acted arbitrarily, vexatiously or not in good
faith with respect to the rights provided by Article 113 of the CBCA. If the
court finds that the services of counsel for any dissenter were of substantial
benefit to the other dissenters similarly situated, and that the fees for those
services should not be assessed against Hanifen Holdings, the court may award to
said counsel reasonable fees to be paid out of the amount awarded to the
dissenters who were benefitted.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the Merger and the proposals to sell certain assets of
Hanifen Brokerage and Hanifen Investments, Hanifen Holdings' shareholders should
be aware that one director of Hanifen Holdings and the president and chief
executive officer of Hanifen Clearing have interests in such transactions that
are in addition to the interests of the Hanifen Holdings' shareholders
generally.
Walter F. Imhoff, a director of Hanifen Holdings, is negotiating a
consulting agreement with Hanifen Holdings. Pursuant to such consulting
agreement, Mr. Imhoff will receive a one-time payment of $1,000,000, which
amount is expected to be funded by Hanifen Holdings prior to the Effective Date.
It is expected that this consulting agreement will be contingent upon closing of
the transaction with New Hanifen. No definitive agreement has been finalized as
of the date of this Proxy Statement/Prospectus. In addition, Mr. Imhoff will be
the president and chairman of the board of New Hanifen.
George Johnson, currently the president and chief executive officer of
Hanifen Clearing, is negotiating an employment agreement with Fiserv, which
agreement is a condition precedent to the closing of the Merger. Such
agreement, which has not been finalized as of the date of this this Proxy
Statement/Prospectus, will have a three-year term and provide for payment of a
base salary and bonuses dependent upon results of Hanifen Clearing. Based upon
the projected performance of Hanifen Clearing, Mr. Johnson will receive annual
cash compensation of approximately $__________ during 1998. In addition, Mr.
Johnson will be granted options to purchase 35,000 shares of Fiserv Common Stock
under the Fiserv, Inc. Stock Option Plan, with an exercise price equal to the
closing market price on the Effective Date, which options will vest over a five-
year period beginning on the fourth anniversary date of the Effective Date. The
employment agreement will also include provisions governing termination for
"cause" and certain non-compete restrictions.
None of Hanifen Holdings' executive officers or directors has an agreement
for additional compensation from Hanifen Holdings, or rights which become
effective upon a change of control, such as the Merger. Certain of the
directors and executive officers of Hanifen Holdings own shares of Hanifen
Common Stock. Such shares will be converted in the Merger on the same terms and
conditions as apply to all other Hanifen Holdings' shareholders. As of the
Record Date, Hanifen Holdings' directors and executive officers, and their
affiliates, beneficially owned approximately 21.9% of all issued and outstanding
shares of Hanifen Common Stock.
OTHER HANIFEN HOLDINGS SUBSIDIARIES
Prior to the Effective Date, Hanifen Brokerage and Hanifen Investments will
sell certain of their assets. The sale of certain of the assets of Hanifen
Brokerage is currently being negotiated
36
<PAGE>
with a new corporation which has been formed by a group of current employees of
Hanifen Brokerage. No definitive agreement has been completed as of the date of
this Proxy Statement/Prospectus. The closing of such sale is a condition to
closing the Merger.
The sale of certain of the assets of Hanifen Investments is also a
condition to closing the Merger. It is currently anticipated that the assets of
Hanifen Investments will be sold to an unrelated third party and one or more new
entities formed by one or more groups of current employees of the Hanifen
Companies, on terms to be negotiated by Hanifen Holdings. Hanifen Holdings has
entered into two non-binding letters of intent related to the assets of Hanifen
Investments. The first letter of intent is for the sale to an unrelated third-
party of the general partnership interest and a 9.5% carried interest in
Hanifen, Imhoff Mezzanine Fund, L.P. (the "Mezzanine Fund") owned by Hanifen,
Imhoff Capital Partners ("Capital Partners"), a wholly-owned subsidiary of
Hanifen Investments, for a purchase price of $1,760,000.
The second letter of intent is for the sale of the assets of Hanifen,
Imhoff Investment Management Co. ("Management Co."), which is also a wholly-
owned subsidiary of Hanifen Investments, for a purchase price of $500,000 to an
entity to be formed by a group of Hanifen Investments employees.
MARKET PRICES AND DIVIDENDS
The Fiserv Common Stock (NASDAQ Symbol: FISV) trades in the over-the-
counter market and appears on NASDAQ. The following table sets forth, for the
calendar periods indicated, the closing price per share of Fiserv Common Stock
as reported by NASDAQ.
<TABLE>
<CAPTION>
Fiserv
Common Stock
------------------------------------
High Low
<S> <C> <C>
1995:
First Quarter $27 3/4 $21
Second Quarter 28 3/8 25 3/4
Third Quarter 31 25 1/2
Fourth Quarter 30 1/8 25 1/2
1996:
First Quarter $32 $25 3/8
Second Quarter 33 3/8 28 1/16
Third Quarter 38 11/16 28 5/8
Fourth Quarter 39 5/8 34
1997:
First Quarter $39 $32 3/4
Second Quarter 44 5/8 36 3/4
Third Quarter 49 1/2 43 7/8
Fourth Quarter 49 1/2 39 3/4
(through November 12, 1997)
</TABLE>
37
<PAGE>
On September 30, 1997, the last full trading day prior to the joint public
announcement that Hanifen Holdings and Fiserv had executed the Merger Agreement,
the closing price per share of Fiserv Common Stock as reported by NASDAQ was
$43.875.
Shareholders of Hanifen Holdings are urged to obtain current market
quotations for shares of Fiserv Common Stock.
As of November 12, 1997, Hanifen Holdings had approximately 129
shareholders of record. As of November 12, 1997, Fiserv had approximately
30,000 shareholders of record.
Fiserv has never declared or paid any cash dividends or made any other
distribution on the Fiserv Common Stock, and it is anticipated that in the
foreseeable future Fiserv will follow its policy of retaining any earnings for
use in its business. Any future determination as to declaration and payment of
dividends will be made at the discretion of the Board of Directors of Fiserv.
Hanifen Holdings has not declared or paid any cash dividends or made any
other distribution on the Hanifen Common Stock during the two-year period ended
September 26, 1997.
38
<PAGE>
FISERV SUPPLEMENTAL FINANCIAL DATA
The following table sets forth supplemental consolidated financial data of
Fiserv. The income statement data in the table for the three years ended
December 31, 1996, and the balance sheet data as of December 31, 1995 and 1996,
have been derived from Fiserv's consolidated financial statements incorporated
by reference herein, which have been audited by Deloitte & Touche LLP,
independent auditors. The income statement data for the two years ended
December 31, 1993 and the balance sheet data as of December 31, 1992, 1993 and
1994, have been derived from Fiserv's consolidated financial statements which
are not incorporated by reference herein. The financial data for the nine
months ended September 30, 1997 and 1996, have been derived from Fiserv's
quarterly report on Form 10-Q incorporated herein by reference.
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
------------------------------------------------------ SEPTEMBER 30, SEPTEMBER 30,
1992 1993 1994 1995(1) 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA: (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES $384,803 $519,996 $635,297 $769,104 $879,449 $647,907 $704,960
-------- -------- -------- -------- -------- -------- --------
Cost of revenues:
Salaries, commissions and
payroll related costs 184,033 239,166 298,997 351,180 394,932 291,509 328,513
Data processing
rentals and tele-
communications costs 47,033 75,689 86,953 100,908 97,721 74,725 74,339
Other operating expenses 80,036 103,185 123,086 141,100 164,003 119,655 135,067
Depreciation and amorti-
zation of property and
equipment 18,534 24,593 33,751 40,486 44,120 32,648 36,014
Purchased incomplete
software technology 172,970
Amortization of
intangible assets 6,875 9,350 11,060 26,166 21,391 16,076 10,627
Amortization capitalization
of internally generated
computer software - net (6,757) (7,185) (9,599) (6,382) 3,732 (1,768) (2,038)
------------------------------------------------------------------------------------------
Total 329,754 444,798 544,248 826,428 725,899 532,845 582,522
------------------------------------------------------------------------------------------
Operating income (loss) 55,049 75,198 91,049 (57,324) 153,550 115,062 122,438
Interest expense - net 2,452 4,366 6,951 18,822 19,088 15,025 9,529
------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAXES 52,597 70,832 84,098 (76,146) 134,462 100,037 112,909
Income tax provision (credit) 19,603 27,107 33,067 (30,220) 54,754 40,737 46,293
------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 32,994 $ 43,725 $ 51,031 $(45,926) $ 79,708 $ 59,300 $ 66,616
==========================================================================================
Net income (loss) per common
and common equivalent share $0.82 $0.96 $1.08 $(0.91) $1.53 $1.14 $1.25
==========================================================================================
Shares used in computing net
income per share 40,243 45,575 47,364 50,298 52,046 52,016 53,265
==========================================================================================
</TABLE>
- ------------------
(1) 1995 includes certain charges related to the acquisition of Information
Technology, Inc. ("ITI"). The charges are a pre-tax special, one-time, non-
cash charge of $173 million to expense the purchased ITI Premier II research
and development and a pre-tax charge of $9.9 million for the accelerated
amortization of the completed ITI Premier I software. The combined after-tax
charge was $109.6 million ($2.18 per share). Net income and net income per
share before such charges was $63.7 million and $1.27, respectively.
39
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -------------
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT BOOK VALUE PER COMMON SHARE)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets $1,480,253 $1,874,939 $2,204,832 $2,514,597 $2,698,979 $3,103,644
Long-term debt 78,683 124,624 150,599 383,416 272,864 221,301
Shareholders equity 211,611 370,740 425,389 514,866 605,898 685,097
Book value per common
share $ 4.79 $ 7.85 $ 9.01 $ 9.92 $ 11.72 $ 13.07
</TABLE>
40
<PAGE>
FISERV MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the relative
percentage which certain items in Fiserv's consolidated statements of income
bear to revenues and the percentage change in those items from period to period.
The table and the following discussion exclude certain charges to 1995
operations associated with the acquisition of Information Technology, Inc.
aggregating $182.9 million, relating to the write-off of incomplete software
technology and accelerated amortization of computer software acquired.
<TABLE>
<CAPTION>
Period to Period Percentage
Percentage of Revenues Increase (Decrease)
Year Ended December 31, 1996 vs. 1995 vs.
1996 1995 1994 1995 1994
-------------------------------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 14.3% 21.1%
--------------------------------------
Cost of revenues:
Salaries, commissions and payroll
related costs 44.9 45.7 47.1 12.5 17.5
Data processing expenses, rentals
and telecommunication costs 11.1 13.1 13.7 (3.2) 16.0
Other operating costs 18.6 18.3 19.4 16.2 14.6
Depreciation and amortization of
equipment and improvements 5.0 5.3 5.3 9.0 20.0
Amortization of intangible assets 2.4 2.1 1.7 31.7 46.9
Amortization (capitalization) of
internally generated software-
net 0.4 (0.8) (1.5) (158.5) (33.5)
-------------------------------------------------------------------
Total cost of revenues 82.4 83.7 85.7 12.8 18.2
-------------------------------------------------------------------
Operating income 17.6% 16.3% 14.3% 22.3 37.9
===================================================================
Income before income taxes 15.3% 13.9% 13.2% 26.0 26.9
===================================================================
Net income 9.1% 8.3% 8.0% 25.1 24.8
===================================================================
</TABLE>
Revenues increased $110,345,000 in 1996 and $133,807,000 in 1995. In both
years, approximately 55% of the growth resulted from the inclusion of revenues
from the date of purchase of acquired businesses and the balance in each year
from the net addition of new clients, growth in the transaction volume
experienced by existing clients and price increases.
Cost of revenues increased $82,359,000 in 1996 and $99,292,000 in 1995. As a
percentage of revenues, cost of revenues decreased 1.3% from 1995 to 1996 and
2.0% from 1994 to 1995. The make up of cost of revenues has been significantly
affected in both years by business acquisitions and by changes in the mix of
Fiserv's business as sales of software and related support activities and item
processing and electronic funds transfer operations have enjoyed an increasing
percentage of total revenues.
41
<PAGE>
A significant portion of the purchase price of Fiserv's acquisitions has been
allocated to intangible assets, such as client contracts, computer software,
non-competition agreements and goodwill, which are being amortized over time,
generally three to 40 years. Amortization of these costs increased $5,143,000
from 1995 to 1996 and $5,188,000 from 1994 to 1995. As a percentage of
revenues, these costs also increased in both years.
Capitalization of internally generated computer software is stated net of
amortization and decreased $3,217,000 in 1995 and $10,114,000 in 1996. Net
software capitalized was more than offset by amortization in 1996 due to the
accelerated amortization of software resulting from the planned consolidation of
certain product lines.
Operating income increased $27,986,000 in 1996 and $34,515,000 in 1995. As a
percentage of revenues, operating income increased 1.3% in 1996 and 2.0% in
1995.
The effective income tax rate was 41% in 1996, 40% in 1995 and 39% in 1994.
The trend to higher income tax rates results from net increases in non-
deductible permanent differences. The effective income tax rate for 1997 is
expected to remain at 41%.
Fiserv's growth has been accomplished largely through the acquisition of
entities engaged in businesses that are complementary to its operations.
Management believes that a number of acquisition candidates are available that
would further enhance Fiserv's competitive position and plans to pursue them
vigorously. Management is engaged in an ongoing program to reduce expenses
related to acquisitions by eliminating operating redundancies. Fiserv's
approach has been to move slowly in achieving this goal in order to minimize the
amount of disruption experienced by its clients and the potential loss of
clients due to this program.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes Fiserv's primary sources of funds:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
--------------------------------
(In thousands)
<S> <C> <C> <C>
Cash provided by operating activities
before changes in securities
processing receivables and payables- $173,774 $107,037 $ 76,644
net
Securities processing receivables and
payables-net (3,660) 29,935 (39,954)
--------------------------------
Cash provided by operating activities 170,114 136,972 36,690
Issuance of common stock 4,896 638 1,918
Decrease (increase) in investments 16,831 10,254 (30,398)
Increase (decrease) in net borrowings (119,640) 180,644 63,341
--------------------------------
TOTAL $ 72,201 $328,508 $ 71,551
================================
</TABLE>
The change in securities processing receivables and payables is funded
primarily through changes in short-term obligations which were ($8,700,000),
($50,600,000), and $38,520,000, for the years ended December 31, 1996, 1995, and
1994, respectively.
42
<PAGE>
Fiserv has applied a significant portion of its cash flow from operations and
proceeds of its common stock offerings to acquisitions and the reduction of
long-term debt and invests the remainder in short-term obligations until it is
needed for further acquisitions or operating purposes.
Fiserv believes that its cash flow from operations together with other
available sources of funds will be adequate to meet its funding requirements.
In the event that Fiserv makes significant future acquisitions, however, it may
raise funds through additional borrowings or issuance of securities.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO 1996
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the relative
percentage which certain items Fiserv's consolidated statements of income bear
to revenues.
<TABLE>
<CAPTION>
Nine months Ended September 30,
1997 1996
----------------------------------
<S> <C> <C>
(Percent of Revenues)
Revenues 100.00% 100.00%
----------------------------------
Salaries, commissions and payroll related 46.6 45.0
costs
Data processing expenses, rentals and 10.5 11.5
telecommunication costs
Other operating costs 19.2 18.5
Depreciation and amortization of equipment 5.1 5.0
and improvements
Amortization of intangible assets 1.5 2.5
Amortization (capitalization) of internally
generated software-net (0.3) (0.3)
----------------------------------
Total cost of revenues 82.6 82.2
----------------------------------
Operating income 17.4 17.8
==================================
</TABLE>
REVENUES
Revenues increased 8.8% from $647,907,000 in the first nine months of 1996 to
$704,960,000 in the comparable current period. Approximately 30% of the year to
date growth resulted from the inclusion of revenues from the date of purchase of
acquired companies, and approximately 70% resulted from increases in revenue
from the addition of new clients, growth in the transaction volume experienced
by existing clients, and price increases. Fiserv provides item
43
<PAGE>
processing services in the Canadian market through a joint venture with Canadian
Imperial Bank of Commerce, the revenues from which are recorded on a fee basis.
If the gross revenues from this activity were recognized, Fiserv's revenues for
the first nine months of 1997 would have increased by $151,053,000 or 23%.
COST OF REVENUES
Cost of revenues increased 9.3% from $532,845,000 in the first nine months of
1996 to $582,522,000 in the first nine months of 1997. The increase in cost of
revenues for the nine months was disproportionate to the increase in revenues
due to approximately $3,600,000 of severance payments in connection with
restructuring of the item processing contract with Chase Manhattan Bank and
merger related expenses of $3,700,000 associated with the acquisition of BHC
Financial, Inc. ("BHC"). Amortization of intangible assets decreased due to
reduced amortization of intangible assets recorded in the acquisition of
Information Technology, Inc.
OPERATING INCOME
Operating income increased 6.4% from $115,062,000 in the first nine months of
1996 to $122,438,000 in the first nine months of 1997. As a percentage of
revenues, operating margins were lower during the first nine months of 1997 when
compared to the comparable prior year period. This decrease resulted primarily
from charges related to one-time merger expenses and reduced impact of
termination fees.
INTEREST EXPENSE - NET
As a result of substantial debt reductions and slightly lower effective rates,
interest expense decreased $5.5 million for the first nine months of 1997 when
compared to the 1996 period.
INCOME TAX PROVISION
Income taxes were computed at 41% in both 1997 and 1996. The 41% rate is
expected to apply throughout the current year.
NET INCOME
Net income for the first nine months, which was reduced by $3,100,000 for
acquisition costs of BHC, increased 12% from $59,300,000 in 1996 to $66,616,000
in 1997. Net income per share for the first nine months, after merger related
expenses of $.06, increased $.11 from $1.14 in 1996 to $1.25 in 1997. Net
income per share increased $.26 in the first nine months of 1997 after the
charges associated with the acquisition of BHC, when compared with net income
per share as originally presented for 1996. The increase in net income per
share over 1996 as originally presented was consistent with management's
expectations.
44
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes Fiserv's primary sources of funds for the nine
months ended September 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
-------------------
(In thousands)
<S> <C> <C>
Cash provided by operating activities $157,494 $116,177
Issuance of common stock-net 8,592 4,834
Decrease (increase) in investments (81,726) 19,160
Increase (decrease) in net borrowings (61,588) (93,159)
-------- --------
TOTAL $ 22,772 $ 47,012
======== ========
</TABLE>
BUSINESS OF FISERV
BUSINESS
Fiserv, with operations in over 75 cities, including 15 cities in Canada,
England and Singapore, is a leading independent provider of financial data
processing systems and related information management services and products to
banks, credit unions, mortgage banks, savings institutions and other financial
intermediaries. These services and products are based primarily on proprietary
software developed by Fiserv and maintained on computers located at data
processing centers throughout the United States. Fiserv is ranked as the
nation's leading data processing provider for banks and savings institutions in
terms of total clients served and is the nation's second leading data processing
provider for credit unions and mortgage banks.
Fiserv directly supports account and transaction processing software systems
for approximately 3,383 financial institutions, maintaining approximately 50
million service bureau accounts. Fiserv delivers this account and transaction
processing in all four of the traditional delivery modes: service bureau;
facilities management; resource management; and in-house solutions. Fiserv also
provides electronic banking services, which include Automated Teller Machine
("ATM")/Electronic Funds Transfer ("EFT") services to financial institutions,
and processing approximately 200 million ATM transactions annually. Fiserv also
provides check and share draft remittance and back-office processing to
financial institutions, handling approximately over 4.1 billion prime pass items
per year through its regional item processing centers located in over 45 cities
in North America. In addition, Fiserv provides trust administration services
for IRAs and other retirement plans, and furnishes microcomputer software to
financial institutions for executive information and decision support systems.
The total client base served by Fiserv includes more than 5,000 financial
institutions. Fiserv believes that its focus on customer service and the
contractual nature of its business, combined with its historical renewal
experience, provide a high level of recurring revenues.
The Fiserv Securities Processing Group provides a wide range of traditional
processing and related services to support all aspects of a retail brokerage
operation. In addition, the Securities Processing Group provides an array of
complementary products and services, such as specialized
45
<PAGE>
processing for bank and capital markets departments, mutual fund processing for
both load and no load funds, self-directed retirement plans, equity dividend
reinvestment plans, investment management accounts, mutual fund wrap accounts,
annuity processing, and customized Internet, telephony and programming.
Fiserv was formed on July 31, 1984, through the combination of two major
regional data processing firms located in Milwaukee, Wisconsin, and Tampa,
Florida. These firms--First Data Processing of Milwaukee and Sunshine State
Systems of Tampa--began their operations in 1964 and 1971, respectively, as the
data processing operations of their parent financial institutions. Historically,
operations were expanded by developing a range of services for these parent
organizations as well as other financial institutions.
Since Fiserv's formation in 1984, it has expanded its operations through over
60 acquisitions and internally through the growth of existing clients. From
1988 to 1996, Fiserv's revenues increased from $125.0 million to $879.4 million,
its operating income increased from $15.5 million to $153.6 million, and its net
income grew from $9.2 million to $79.7 million. During this period, net income
per common and common equivalent share increased from $.33 to $1.53.
46
<PAGE>
HANIFEN HOLDINGS SELECTED FINANCIAL DATA
The following selected historical consolidated financial data as of and for
each of the five years in the period ended on the last Friday of September have
been derived from Hanifen's consolidated financial statements, which have been
audited by McGladrey & Pullen, LLP (1995, 1994, 1993, and 1992), and Baird Kurtz
and Dobson (1996), independent auditors. The selected financial data presented
as of and for the nine months ended the last Friday of June 1996 and 1997 have
been derived from consolidated unaudited financial statements. In the opinion
of management, the unaudited consolidated financial statements for such periods
include all adjustments, consisting of normal recurring adjustments, necessary
for a full presentation of the consolidated financial position and results of
operations for these periods. The following data should be read in conjunction
with the Hanifen consolidated financial statements, the related notes thereto,
and "Hanifen Holdings' Management Discussion and Analysis of Financial Condition
and Results of Operations" incorporated by reference herein.
<TABLE>
<CAPTION>
As of and for the
As of and for the years ended nine months ended
----------------------------------------------------------------------------
9/25/92 9/24/93 9/30/94 9/29/95 9/27/96 6/28/96 6/27/97
----------------------------------------------------------------------------
(In thousands, except per share data) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
REVENUES:
Clearing and customer fees $ 6,668 $ 7,495 $ 12,041 $ 19,418 $ 22,119 $ 17,250 $ 14,450
Interest 2,061 2,501 4,822 9,068 12,012 9,062 8,244
Underwriting profits 8,612 8,910 6,914 5,279 10,022 8,464 6,434
Trading 4,053 7,756 5,063 4,661 5,508 4,485 3,446
Commissions 2,345 2,917 3,146 3,965 3,945 3,080 4,485
Financial & advisory 3,674 3,604 3,510 3,217 2,933 1,746 3,156
Other revenue 3,321 3,049 830 149 1,800 1,639 707
----------------------------------------------------------------------------
Total revenue 30,735 36,232 36,326 45,757 58,338 45,727 40,923
----------------------------------------------------------------------------
EXPENSES:
Compensation & benefits 16,365 20,967 19,202 19,583 24,926 19,513 17,468
Administration expense 7,264 7,144 9,811 9,206 10,230 6,756 10,668
Interest 341 422 1,348 2,616 3,597 2,728 2,001
Floor brokerage & clearing 1,142 1,452 1,481 1,581 1,615 1,169 1,344
----------------------------------------------------------------------------
Total expenses 25,112 29,986 31,842 32,987 40,368 30,167 31,481
----------------------------------------------------------------------------
Income before income tax expense 5,622 6,246 4,484 12,770 17,970 15,560 9,442
Income tax expense 1,696 2,290 1,648 4,713 6,812 5,925 3,517
----------------------------------------------------------------------------
Net income $ 3,926 $ 3,956 $ 2,836 $ 8,057 $ 11,158 $ 9,635 $ 5,925
============================================================================
Earnings per share $2.43 $2.31 $1.77 $5.55 $9.87 $8.77 $5.33
Cash dividend per share $0.00 $0.00 $1.00 $0.00 $0.00 $0.00 $0.00
BALANCE SHEET DATA:
Customer receivables 26,799 51,606 75,160 124,142 128,010 145,236 111,753
Total assets 41,700 75,296 112,121 150,599 171,873 182,892 158,612
Notes Payable 7,135 16,458 32,085 41,960 37,662 35,857 14,190
Customer payables 10,039 23,750 36,612 56,707 68,094 72,572 64,496
Total shareholder equity 10,583 14,284 14,475 20,988 27,577 26,650 35,252
Book value per common share $6.34 $8.64 $9.92 $15.74 $25.71 $24.29 $30.97
</TABLE>
47
<PAGE>
HANIFEN HOLDINGS MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Hanifen Holdings is a financial services and investment banking firm
headquartered in the Rocky Mountain region. Hanifen Holdings, through its
subsidiaries, offers a full spectrum of investment and brokerage services to
corporations, institutions, municipalities, individuals and other broker-
dealers. Hanifen Clearing, a New York Stock Exchange, Inc. ("NYSE") electronic
access member, serves as a clearing broker for customers of correspondent
broker-dealers, including Hanifen Brokerage. The operations of Hanifen
Brokerage, a NYSE member, consist of two capital markets groups made up of
equity and fixed income products and money management. The equity capital
markets group provides equity trading, institutional equity, research and sales
and corporate finance services, while the fixed income capital markets group
provides fixed income trading, institutional municipal sales and public finance
services. Money management involves providing advisory services. Hanifen
Investments acts as the merchant banking arm of Hanifen Holdings.
Hanifen Clearing's principal sources of revenue are derived from securities
clearing services to broker-dealer firms ("correspondents") located throughout
the United States. Revenues principally include clearing fees, margin interest,
and other miscellaneous fees which are ancillary to customer securities
transactions of the correspondents. Hanifen Brokerage's principal sources of
revenue are derived from equity and fixed income capital markets and money
management. Hanifen Investments' principal source of revenue is the return on
those funds invested in the Mezzanine Fund through Capital Partners and the fee
earned on managing the Mezzanine Fund through Management Co.
The major non-interest expenses incurred by Hanifen Holding's subsidiaries
relate to employees' compensation and benefits, general administrative and other
expenses, communication expenses and other direct costs of execution and
clearing services, such as floor brokerage and clearing charges, and occupancy
and supplies costs.
Although Hanifen Holdings' business cannot be characterized as seasonal,
the retail brokerage activity of Hanifen Clearing's correspondent clients is
typically, but not always, slower in the months of June, July and August.
Reduced transaction volume generally results in reduced levels of clearing
transaction and other ancillary fees. Variations in transaction volume may
cause Hanifen Holdings' operating results to fluctuate slightly on a quarter-to-
quarter basis.
48
<PAGE>
HANIFEN CLEARING
Hanifen Clearing generally markets its services to correspondents that
typically have significant retail operations, underwriting activities and
trading of small-cap stocks in the over the counter market. (For purposes of
this Proxy Statement/Prospectus, "small-cap" means companies having a market
capitalization of between $1 million and $50 million.) Hanifen Clearing also
services and markets to broker-dealers that serve an institutional client base
in both equity and debt securities. Currently a significant portion,
approximately 80%, of Hanifen Clearing's transaction fee revenues are dependent
on approximately ten correspondent clients, approximately 6% of which is from
Hanifen Brokerage. Of those ten accounts, four have entered into clearing
arrangements that extend into the year 2000 and beyond, and the remainder of
those clearing arrangements expire in 1998. All of Hanifen Clearing's
arrangements that expire in 1998 or 1999 have provisions for automatic
extensions of up to one year at the option of Hanifen Clearing, provided the
correspondent client does not give notice 60 days prior to the expiration date
of the contract. Management of Hanifen Clearing believes that the majority of
these contracts will be automatically extended. Approximately 70% of the
customer margin account balances were introduced by six correspondent clients,
five of which also represent the majority of the transaction fee revenue.
During 1997, 1996 and 1995, business conditions for Hanifen Clearing's
correspondent clearing clients were favorably affected by stable short term
interest rates which helped increase the activity in both the equity and mutual
fund markets. Many of Hanifen Clearing's correspondent clients enjoyed
significant increases in commission and underwriting business during fiscal year
ends 1995 and 1996, which translates to increased transaction fees and interest
income to Hanifen Clearing. During calendar year 1996 and early calendar year
1997, the market for NASDAQ small-cap stocks, which is the primary market where
most of Hanifen Clearing's correspondent clients retail business is
concentrated, experienced decreased demands. This condition translated into a
decline in transaction volume, most notably in their correspondent clients'
underwriting activities of Hanifen Clearing's correspondent clients.
Hanifen Clearing attempts to mitigate the risk of loss by entering into
longer term contracts with larger clients, providing superior products and
services at "cost effective" prices and developing software and systems for
clients that meet their specific needs. Hanifen Clearing markets its services
to prospective clients on a continuing basis.
HANIFEN BROKERAGE
A substantial portion of Hanifen Brokerage's commission business involves
the execution of transactions in securities. The primary source of revenue from
equity activities is negotiated-commission revenue earned from providing
customers with liquidity, trading expertise, trade-processing capability,
research, and investment advice. Investment advice includes industry and
company analyses, overall strategic guidance and company recommendations.
Hanifen Brokerage's individual-investor sales force concentrates on
servicing individual clients that possess a high net worth and corporations that
engage in securities transactions of a size sufficient to benefit from Hanifen
Brokerage's full range of corporate services. The corporate
49
<PAGE>
services department of Hanifen Brokerage also provides liquidity for employees
of Hanifen Brokerage's corporate finance clients through the sale of restricted
securities.
HANIFEN INVESTMENTS
Hanifen Investments acts as the merchant banking arm of Hanifen Holdings.
Hanifen Investments derives its revenue from the investment in and management of
the Hanifen, Imhoff Mezzanine Fund, L.P. (the "Mezzanine Fund"). The Mezzanine
Fund is an active investor in the small mezzanine market nationally, with
approximately $60.0 million under management. The Mezzanine Fund has made
approximately 36 investments in 21 companies since its inception in August 1994.
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
Statements regarding Hanifen Holdings' expectations as to its future
operations and financial condition and certain other information presented
herein constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Although Hanifen Holdings believes
that its expectations are based on reasonable assumptions within the bounds of
its knowledge of its business and operations, there can be no assurance that
actual results will not differ materially from its expectations. Factors which
could cause actual results to differ from expectations include a general
downturn in the economy or the stock markets and the related transaction
activity, substantial changes in interest rates, the gain or loss of significant
customers, unforeseen new competition, changes in government policy or
regulation and unforeseen costs and other effects related to legal proceedings.
RESULTS OF OPERATIONS
Hanifen Holdings' clearing revenues are directly affected by the income
derived from its volume of securities clearing services. Such revenues are also
affected by the interest rate charged on customer margin debit balances. The
information in the table below should be considered when reading the discussion
and analysis of operating results that follow the table.
<TABLE>
<CAPTION>
Year Ended September, Nine Months Ended June,
1994 1995 1996 1996 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Transactions 776,903 1,094,946 1,449,892 1,141,311 975,411
Daily Average Transactions 3,011 4,311 6,019 6,038 5,160
Processed
Number of Active Accounts at End
of Period(1) 110,651 135,420 117,195 118,145 121,916
Total Customer Receivables
(in thousands) $ 75,159 $ 124,142 $ 128,010 $ 145,235 $ 111,752
Average Broker Call Rate 5.60% 7.30% 7.08% 7.11% 7.25%
</TABLE>
(1) Active accounts are generally those that have securities positions or
have had brokerage processing activity during the previous 12 months.
50
<PAGE>
NINE MONTHS ENDED JUNE 27, 1997 COMPARED TO THE NINE MONTHS ENDED JUNE 28, 1996
Consolidated income before income taxes for the nine months ended
June 27, 1997 was $9.4 million which was $6.1 million, or 39%, less than the
$15.5 million generated in the nine months ended June 28, 1996. The decrease was
the result of decreases in consolidated revenues of $4.8 million and increases
in consolidated expenses of $1.3 million. The significant revenue and expense
decreases and increases are discussed below.
Clearing fees decreased from $15.7 million for the nine months ended
June 28, 1996, to $12.9 million for the nine months ended June 27, 1997, an 18%
decrease. The decrease is due to reduced transaction volume of 15% for the
period and a decrease in the miscellaneous fees charged to correspondents.
These decreases were offset in part by a revenue per ticket increase of $.54, or
4%, for the nine months ended June 27, 1997 when compared to the same period
ended June 28, 1996. Generally, in periods where daily transaction volumes are
increasing, revenue will increase, while clearing service revenue per ticket
will remain constant. Service revenue per ticket will remain constant because,
despite the increased volume, some correspondent clients receive volume
discounts. Hanifen Holdings continues to face pressure on profit margins in the
form of general pricing pressure from increased market competition.
For the nine months ended June 27, 1997, margin interest revenue
decreased from $7.6 million for the nine months ended June 28, 1996 to $7.1
million, a 6% decrease. The decrease was due to decreases in the amount of
margin debt carried for customers of correspondents. Total receivable balances
of customers of correspondents outstanding as of the end of the period decreased
from $145.2 million at June 28, 1996 to $111.8 million at June 27, 1997, or 23
%. In addition, while the average broker call rate increased 14 basis points on
the margin debt, Hanifen Clearing split an increased amount of such customer
charges with its correspondent clients under contractual clearing agreements for
the nine months ended June 27, 1997 when compared to the same period ended
June 28, 1996. Other interest income decreased approximately $0.3 million from
$1.5 million for the nine months ended June 28, 1996 to $1.2 million for the
nine months ended June 27, 1997, a 20% decrease, due to a decrease in securities
borrowed, securities inventory and other interest bearing assets.
Revenues generated by the equity capital markets group increased from
$10.6 million during the nine months ended June 28, 1996 to $11.8 million for
the nine months ended June 27, 1997, a 11% increase. This increase was
primarily due to an increase in commissions earned on agency transactions, and
increased investment advisory fees, offset by a decrease in the revenue
recognized on the exercise of underwriters warrants. Revenues generated by the
fixed income group decreased from $5.7 million during the nine months ended
June 28, 1996 to $4.2 million for the nine months ended June 27, 1997, a 26%
decrease. The decrease was primarily due to a decrease in the number of
offerings brought to market by public finance and a corresponding decrease in
the secondary trading of fixed income instruments. Revenues generated from
money management decreased from $0.8 million during the nine months ended
June 28, 1996 to $0.3 million during the nine months ended June 27, 1997, a 59%
decrease. This decrease relates to a contractual arrangement to reduce fees for
advisory services performed for the Colorado Local Government Liquid Asset Trust
("COLOTRUST") from 4.5 basis points to 4 basis points of the total amount of
51
<PAGE>
assets under management. Management has been informed that the COLOTRUST
Investment Advisory contract will not be renewed upon its expiration on
December 31, 1997.
Management fee revenue earned by Management Co., calculated at 2% of
capital commitments and SBA funding to the Mezzanine Fund, and a potential
1 1/2% of the initial investments made by the Mezzanine Fund, increased from
$0.6 million for the nine month period ended September 28, 1996, to $0.8 million
for the nine month period ended September 27, 1997. This $0.2 million increase
is due to the increased investing activity of the Mezzanine Fund and the
increase of the fund from $45.0 million at September 1996 to $50.0 million in
1997. Investment revenue earned by Capital Partners decreased by $0.1 million
primarily due to Capital Partner's proportionate share of a $1.0 million gain
recognized by the Mezzanine Fund on the sale of warrants in December of 1995.
Expenses, including interest, increased by 4% in the nine months ended
June 27, 1997 compared to the same period in the nine months ended June 28,
1996. The increases were primarily related to the increase in general and
administration expense of $3.2 million, the most significant of which were a
$1.7 million loss on a receivable from the market making activities of a Hanifen
Clearing correspondent and the $1.0 million reserve of a subordinated loan to a
correspondent client by Hanifen Clearing. These increases were offset by a
reduction in employee compensation and interest. The decreases in
communications, floor brokerage and execution, occupancy and depreciation were
minimal.
Employees' compensation and benefits decreased from $19.5 million in
the nine months ended June 28, 1996 to $17.5 million in the nine months ended
June 27, 1997, a 10% decrease. The decrease was primarily due to a large
portion of compensation being based on gross revenues and/or firm profitability.
Average full time equivalents remained unchanged for the nine months ended June
27, 1997 when compared to the nine months ended June 28, 1996. Recurring salary
adjustments increased an average of 3% during the nine months ended June 27,
1997 compared to the nine months ended June 28, 1996.
The decreased funding requirements due to the decline of interest
bearing assets resulted in a 27% decrease in interest expense from $2.7 million
in the nine months ended June 28, 1996 to $2.0 million in the nine months ended
June 27, 1997.
Income tax expense decreased $2.4 million and the effective tax rate
was 37% in the nine months ended June 27, 1997 compared to a 38% effective tax
rate in the nine months ended June 28, 1996.
1996 COMPARED TO 1995
Consolidated income before income taxes for the year ended
September 27, 1996 ("1996") reached $18.0 million which was $5.2 million, or
41%, greater than the $12.8 million generated in the year ended September 29,
1995 ("1995"). The increase was the result of increases in consolidated revenues
of $12.6 million offset by increases in consolidated expenses of $7.4 million.
The more significant increases are as follows.
52
<PAGE>
Clearing fees increased to $19.9 million for 1996 from $17.2 million
in 1995, a 16% increase. The increase was due to increased transaction volume
of 32% for the period. The average revenue per ticket declined by $2.54, or
14%, in 1996 when compared to 1995. A portion of this decline was due to volume
discounts that a number of the larger correspondent clients enjoyed in 1996 due
to their increased volumes, and in part, it was due to the general pricing
pressure from increased market competition.
For 1996, margin interest increased to $10.1 million from $7.9 million
in 1995, a 28% increase. Total customer receivables outstanding increased $3.8
million, or 3%, for 1996 when compared to 1995. In addition, the average broker
call rate decreased 22 basis points for 1996 when compared to 1995. Other
interest income increased $0.3 million in 1996, a 37% increase, due to an
increase in securities borrowed and other interest bearing assets.
Revenues generated by the equity capital markets group increased from
$9.4 million during 1995 to $13.0 million in 1996, a 38% increase. This
increase was primarily due to an increase in trading profits earned on principal
transactions, increased underwriting and investment advisory fees, and increased
gains recognized on the exercise of underwriters warrants. Revenues generated
by the fixed income group increased from $4.7 million during 1995 to $6.8
million in 1996, a 45% increase. The increase was due primarily to an increase
in the volume of municipal underwriting by the public finance department which
in turn increased the volume of secondary trading. The increase in municipal
underwriting was caused primarily because interest rates in general decreased,
which in turn increased the volume of transactions relating to refunding of
prior bond offerings, coupled with the increased volume of original issuances of
debt finances. Revenues generated from money management decreased from $1.6
million during 1995 to $0.8 million during 1996, a 45% decrease. This decrease
relates to a contractual arrangement to reduce fees for advisory services
performed for COLOTRUST from 18 basis points to 4.5 basis points of the total
amount of assets under management.
Management fee revenue earned by Management Co. increased by $0.2
million due to increased investing activity of the Mezzanine Fund and the
increase of the fund from $33.0 million in 1995 to $45.0 million in 1996.
Investment revenue earned by Capital Partners increased by $0.1 million
primarily due to Capital Partner's proportionate share of a $1.0 million gain
recognized by the Mezzanine Fund on the sale of warrants in December of 1995.
Total expenses increased from $33.0 million in 1995 to $40.4 million
in 1996, a 22% increase. The significant increases were primarily compensation
and benefits, and interest. In addition to these increases, slight increases
were incurred in general and administration, communications, floor brokerage and
occupancy and depreciation expenses.
Employees' compensation and benefits increased from $19.6 million in
1995 to $24.9 million in 1996, a 27% increase. The increase was primarily due
to a large portion of compensation being based on gross revenues and/or firm
profitability, both of which increased significantly. Average full time
equivalents increased by 5% in 1996 when compared to 1995, and recurring salary
adjustments increased an average of 5% from 1995 to 1996.
53
<PAGE>
Interest expense increased $1.0 million from $2.6 million in 1995 to
$3.6 million in 1996, a 37% increase. A decrease in the average broker call
rate and fed funds rates of approximately 22 basis points for 1996 compared to
1995, led to a decrease in the borrowing rate. This decline in rates was more
than offset by the increased funding needed for the growth in interest bearing
assets such as stock borrow and customer margin debt, resulting in an increase
in interest expense.
Income tax expense increased $2.1 million from $4.7 million in 1995 to
$6.8 million in 1996, and the effective tax rate was 38% for 1996 and 37% for
1995.
1995 COMPARED WITH 1994
Consolidated income before income taxes for the year ended
September 29, 1995 ("1995") reached $12.8 million which was $8.3 million, or
185%, greater than the $4.5 million generated in the year ended September 30,
1994 ("1994"). The increase was the result of increases in consolidated revenues
of $9.4 million offset by increases in consolidated expenses of $1.1 million.
Clearing and customer fees increased to $19.4 million for 1995 from
$12.0 million in 1994, a 62% increase. The increase was due to increased
transaction volume of 41% for the year, and an increase in the average revenue
per ticket.
For 1995, interest revenue increased to $9.1 million from $4.8 million
in 1994, a 88% increase. Total customer receivables balances outstanding
increased $49 million, or 65%, for 1995 when compared to 1994. Additionally,
the average broker call rate increased 170 basis points for and an increase in
1995 when compared to 1994, a 30% increase.
Revenues generated by the equity capital markets group decreased from
$11.5 million during 1994 to $9.4 million in 1995, a 21% decrease. This
decrease was primarily due to a decrease in trading profits earned on principal
transactions and decreased underwriting and investment advisory fees. Revenues
generated by the fixed income groups decreased from $4.9 million during 1994 to
$4.7 million in 1995, a 4% decrease. The decrease was primarily due to a
decrease in interest earned on fixed income inventory positions and a decrease
in customer margin interest. Revenues generated from money management decreased
from $1.9 million during 1994 to $1.6 million during 1995, a 14% decrease. This
decrease relates to a contractual arrangement to reduce fees for advisory
services performed for COLOTRUST from 20 basis points to 18 basis points of the
total amount of assets under management.
Management fee revenue earned by Management Co. increased by
$0.6 million due to the increased investing activity of the Mezzanine Fund and
the increase of the fund from $0 at inception in July of 1994 to $2.9 million at
September 30, 1994 and to $45.0 million at September 29, 1995. The year ended
September 30, 1994 includes only two months of management fee revenue.
Total expenses increased from $31.9 million in 1994 to $33.0 million
in 1995, a 4% increase. The significant increases were primarily interest and
communications offset by reductions
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in general and administration and occupancy and supplies. In addition to these
changes, slight increases were incurred in compensation and benefits, floor
brokerage and depreciation.
Interest expense increased $1.3 million from $1.3 million in 1994 to
$2.6 million in 1995, a 100% increase. The increase was due to increases in
margin and other interest bearing assets which resulted in increased loans.
Total customer receivables balances outstanding increased $49 million, or 65%,
for 1995 when compared to 1994. Additionally, the average broker call rate
increased 170 basis points for 1995 when compared to 1994, a 30% increase.
Employees' compensation and benefits increased to $19.6 million in
1995 from $19.2 million in 1994, a 2% increase. The slight increase was
primarily due to an increase in the number of personnel. Average full time
equivalents increased by 34% in 1995 when compared to 1994, and recurring salary
adjustments increased an average of 7% from 1995 to 1994. This increase was
partially offset by a slight decrease in the portion of compensation based on
revenues and/or firm profitability as Hanifen Brokerage experienced a net
operating loss in 1995.
Communications costs increased $0.6 million from $1.5 million in 1994
to $2.1 million in 1995, a 34% increase. This reflects the companies'
commitment to upgrade communication related efforts to remain in line with the
current technology.
General and administration decreased $0.8 million from $6.3 million in
1994 to $5.5 million in 1995, a 12% decrease. This was primarily due to the
inclusion in 1994 of significant legal costs which did not repeat in 1995.
Additionally, occupancy and supplies decreased $0.4 million from $1.6 million to
$1.2 million, a 26% decrease, as a result of increased supplies purchased during
the last quarter of 1994 in anticipation of the October 1, 1994 reorganization.
Income tax expense increased $3.1 million from $1.6 million in 1994 to
$4.7 million in 1995, and the effective tax rate was 37% for both years.
LIQUIDITY AND CAPITAL RESOURCES
At September 27, 1996, 95% of assets consisted of cash, assets readily
convertible into cash or assets collateralized by marketable securities.
Stockholders' equity was $27.6 million at September 27, 1996, up $6.6 million,
or 31%, from September 29, 1995, which was due to earnings of $11.2 million less
net stock redemptions of $4.6 million.
Hanifen Clearing had uncommitted credit arrangements totaling $54.5
million with several banks. At September 27, 1996, Hanifen Clearing had
outstanding borrowings under these arrangements of $35.5 million. These demand
loans, which are used to finance receivables in customers' margin accounts, bear
interest at the Federal Funds rate of the respective banks, plus approximately
100 basis points, and are collateralized by securities held in customers' margin
accounts. In the opinion of management, Hanifen Clearings' existing credit
arrangements are adequate to meet Hanifen Clearing's short-term operating
capital needs.
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Hanifen Clearing and Hanifen Brokerage are subject to the broker
dealer requirements of the Commission. Hanifen Clearing and Hanifen Brokerage
are subject to the requirements of the New York Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc., relating to liquidity, minimum
net capital levels and the use of customer funds and securities. Hanifen
Clearing and Hanifen Brokerage have always operated in excess of the applicable
minimum net capital requirements. In the opinion of management, the existing
capital and lines of credit are sufficient to meet the operating capital needs
for the foreseeable future in light of known and reasonably estimated trends.
Hanifen Holdings has contacted each financial services bureau vendor
to request a status of their compliance with year 2000 issues. Each of the
service bureaus is being requested to address its schedule to become compliant.
Additionally, Hanifen Holdings is performing a detailed analysis of all internal
systems hardware and software to determine their status. Management believes
that Hanifen Holdings has taken the steps reasonably necessary to identify and
address material year 2000 issues and anticipates that Hanifen Holdings will be
in compliance for the year 2000, but there can be no assurance that
unanticipated year 2000 issues will not have a material effect on the business
or operations of Hanifen Holdings.
EFFECTS OF INFLATION
Because Hanifen Holdings' assets are, to a large extent, liquid in
nature, they are not significantly affected by inflation. However, inflation
may result in increases in Hanifen Holdings' expenses, such as employees
compensation and benefits, occupancy and equipment costs and communications
expense, which may not be readily recoverable in the price of services offered.
to the extent inflation results in rising interest rates, this may adversely
affect transaction volume, which, in turn, may adversely affect Hanifen
Holdings' results of operations.
BUSINESS AND PROPERTIES OF HANIFEN HOLDINGS
GENERAL
Hanifen Holdings is the parent of three wholly-owned subsidiaries,
Hanifen Clearing, Hanifen Brokerage and Hanifen Investments. Hanifen
Investments is the parent of two wholly-owned subsidiaries, Capital Partners and
Management Co. Hanifen Holdings, through its subsidiaries, offers a full
spectrum of investment and brokerage services to corporations, institutions,
municipalities, individuals and other broker-dealers. Hanifen Clearing, a NYSE
electronic access member, serves as a clearing broker for customers of
correspondent broker-dealers, including Hanifen Brokerage. The operations of
Hanifen Brokerage, a NYSE member, consist of two groups made up of equity and
fixed income products and money management. The equity capital markets group
provides equity trading, institutional equity sales and corporate finance while
the fixed income capital markets group provides fixed income trading,
institutional municipal sales and public finance. Money management involves
providing advisory services. A subsidiary of Capital Partners is the general
partner of the Mezzanine Fund, which is a small business investment company
funded through investments by corporations, individuals and the Small Business
Administration's SBIC program. Management Co. serves as the management
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company for the Mezzanine Fund. As discussed elsewhere in this Proxy
Statement/Prospectus, the operations of Hanifen Brokerage and Hanifen
Investments will not be a part of the ongoing operations of Hanifen Holdings if
the merger contemplated by this Proxy Statement/Prospectus is consummated.
HANIFEN CLEARING
Hanifen Brokerage was a self-clearing securities firm throughout most
of its history. In 1989, the Hanifen Companies made a strategic decision to
offer clearing services to other securities firms in order to leverage its
securities clearing expertise and diversify its revenue base. Hanifen Clearing
was formed in 1989, and now provides professional and correspondent clearing
services to approximately 50 clients located throughout the United States, in
addition to clearing and settling all of Hanifen Brokerage's customer
transactions. Hanifen Clearing currently processes approximately 110,000 trades
per month and carries approximately 120,000 active customer accounts of
introducing broker-dealers.
Correspondent clearing clients, called "fully-disclosed
correspondents," are organizations that are engaged in the retail or
institutional brokerage business and are members of the NASD. Other types of
clients, "professional clearing clients," include prime broker accounts, market-
makers and money managers. In addition to clearing trades, Hanifen Clearing
also provides other products and services to its correspondents such as
recordkeeping, trading reports, accounting, general back-office support, stock
borrow, reorganization and custody of securities.
Transaction Execution and Clearing. The execution process begins when
the correspondent accepts its customer's order for the purchase or sale of
securities and electronically transmits the order for processing to Hanifen
Clearing via Hanifen Clearing's computer network. Hanifen Clearing, in turn,
routes the order to the appropriate market for execution. A majority of the
transactions executed by Hanifen Clearing are processed automatically through
sophisticated order-matching systems which route the order to the appropriate
markets for execution. The balance of the transactions are executed by Hanifen
Clearing personnel. In the execution of some listed and over-the-counter
transactions, Hanifen Clearing receives payment for the order flow. At the time
of execution, a printed confirmation containing the details of each transaction
is automatically generated and printed at the client's location and the
transaction is recorded by Hanifen Clearing in the customer's account. This
permits the client to report the impact of the transaction on the account to the
customer promptly after receipt of the order. Customer accounts are insured by
the Securities Investor Protection Corporation ("SIPC") for up to $500,000
($100,000 in cash) and are provided with additional protection by a domestic
insurance carrier of $9,500,000 per account.
Hanifen Clearing clears all of the transactions which it executes for
its clients, as well as certain transactions which are executed by the clients.
A transaction is cleared by taking possession of the customer's cash, if
securities are being purchased, or by taking possession of the certificates, if
any, if securities are being sold. Hanifen Clearing delivers the cash or
certificates to the broker for the counterparty to the transaction generally
through a clearing corporation. Cash or certificates received by Hanifen
Clearing for an account are either held in the account or
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delivered to the customer. Hanifen Clearing maintains customer securities at
several regulatory-approved depositories.
Net Interest. Hanifen Clearing derives interest income primarily from
customer margin loans.
Margin Loans. Transactions in securities are effected on either a
cash or margin basis. In margin transactions, Hanifen Clearing extends credit
for a portion of the purchase price, which is collateralized by securities and
cash in the customer's account, and receives income from interest charged on
such extension of credit. The amount of the loan is subject to the initial
margin requirements included in Regulation T of the Federal Reserve Board and
the NYSE margin requirements. Hanifen Clearing's internal policies generally
call for stricter maintenance requirements than the NYSE requirements. Hanifen
Clearing is subject to the risk of a market decline that could reduce the value
of the collateral held in an account below the customer's indebtedness before
the collateral could be sold. Margin agreements with account holders permit
Hanifen Clearing to liquidate securities in an account with or without prior
notice in the event of an insufficient amount of margin collateral. Despite
these agreements, Hanifen Clearing may be unable to liquidate an account
holder's securities for various reasons, including the illiquidity of pledged
securities, an undue concentration of certain securities pledged or a trading
halt of pledged securities.
Interest is charged to customer accounts on the amount borrowed to
finance margin transactions at a rate determined by Hanifen Clearing. At
September 27, 1996, margin receivables were approximately $118,438,000.
The primary source of funds to finance margin account balances has
been correspondent client's clearing deposits and earned revenues, bank loans,
free credit balances in customer accounts and Hanifen Clearing's capital.
Hanifen Clearing pays interest to certain accounts and pays a fee to the
introducing brokers on most of the funds at a rate determined periodically by
Hanifen Clearing which is below the broker call rate.
Stock Borrow Activities. The securities borrowing activities of
Hanifen Clearing involve borrowing securities to cover short sales and to
complete transactions in which customers have failed to deliver securities by
the settlement date. Hanifen Clearing is an agent in these securities borrowing
transactions and may become liable for losses in the event of a failure of any
other party to honor its contractual obligations.
Other Products and Services. In addition to traditional processing
and support services, Hanifen Clearing actively seeks to expand its array of
complementary products and services to new and existing clients. Hanifen
Clearing's products and services currently include:
Money Market Funds. Hanifen Clearing offers an investment in money-
market, tax-free and government funds managed by Cash Trust Series, Inc., an
open-end management investment company. The funds are offered under the
proprietary name MoneyWORK$. This product offers customers unlimited
checkwriting and debit card access with no minimum balance
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requirement. Certain marketing material for these funds can be designed to carry
the introducing broker's name on the materials.
Central Asset Account. Hanifen Clearing provides access to the
brokerage and money fund accounts through the MoneyWORK$ plus Visa check card.
This product includes checks, as well as a debit card, and allows for ATM
access.
Consolidated Statements. Hanifen Clearing prepares and provides a
consolidated statement for its clients' customers which reflects all brokerage,
money fund and debit card activity on a monthly basis.
Dividend Reinvestment. The dividend reinvestment program of Hanifen
Clearing, referred to as "DIVWORKS," allows customers to direct cash dividend
payments to purchase additional shares of the same security.
Retirement Accounts. Hanifen Clearing makes available complete client
support and acts as custodian for its self-directed individual retirement
accounts.
Stock Options. Hanifen Clearing provides complete service in
connection with the exercise of employee stock options for cash or in connection
with a cashless exercise.
Hanifen Clearing is a member of the National Association of Securities
Dealers, Inc. ("NASD"), SIPC and other regulatory and trade organizations.
Hanifen Clearing is a member of the NYSE, all other principal United States
securities exchanges and is a licensed broker-dealer in all 50 states of the
United States, the District of Columbia and the Commonwealth of Puerto Rico.
HANIFEN BROKERAGE
Hanifen Brokerage is a full service investment banking firm
headquartered in Denver, Colorado. Hanifen Brokerage is the successor to E.A.
Hanifen & Company, which traces its origins in Denver's financial community to
1927. Hanifen Brokerage offers investment banking services to corporations,
institutions, and municipalities and is active in providing multi-tiered
financing for growth companies, particularly in a select group of industry
sectors including technology, healthcare, consumer, energy and the base
industries. Hanifen Brokerage's investment banking effort is supported by an
institutional research, sales and trading effort that is regional in focus, but
national in scope.
In addition, Hanifen Brokerage is a leader in municipal underwritings
in Colorado and has expanded to serve public finance clients nationwide. In
addition to its Denver office, Hanifen Brokerage operates public finance offices
in Orlando, Florida and Honolulu, Hawaii.
Hanifen Brokerage specializes in providing brokerage services to
institutional investors. Hanifen Brokerage's institutional clients include
institutional investors, investment advisors, mutual funds, commercial banks,
insurance companies and pension and profit-sharing
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funds. Hanifen Brokerage's client base is located throughout the United States
and includes many leading names in the investment and financial services
businesses.
A substantial portion of Hanifen Brokerage's commission business
involves the execution of transactions in securities. The primary source of
revenue from equity activities is negotiated-commission revenue earned from
providing customers with liquidity, trading expertise, trade-processing
capability, research, and investment advice. Investment advice includes
industry and company analyses, overall strategic guidance and company
recommendations.
Hanifen Brokerage's individual investor sales force concentrates on
servicing individual clients who possess a high net-worth and on corporations
that engage in securities transactions of a size sufficient to benefit from
Hanifen Brokerage's range of corporate services. Hanifen Brokerage also provides
liquidity for employees of its corporate finance clients through the sale of
restricted securities.
As a condition to closing the Merger, certain of the assets of Hanifen
Brokerage will be sold to a new corporation formed by a group of current
employees of Hanifen Brokerage. The terms of such sale are currently being
negotiated, but will include a purchase price equal to the fair market value of
the assets of Hanifen Brokerage (as determined by an independent appraiser), and
New Hanifen will assume certain of Hanifen Brokerage's liabilities, known and
unknown, and will indemnify Hanifen Brokerage against such liabilities. Upon
closing of such sale, Hanifen Brokerage will change its name to a name
distinctively different from "Hanifen, Imhoff" and New Hanifen will change its
name to Hanifen, Imhoff, Inc.
Hanifen Brokerage is a member of the NASD, SIPC and other regulatory
and trade organizations. Hanifen Brokerage is a member of the NYSE (which
membership will not be sold to New Hanifen), all other principal United States
securities exchanges and is a licensed broker-dealer in all 50 states of the
United States, the District of Columbia and the Commonwealth of Puerto Rico.
HANIFEN INVESTMENTS
Hanifen Investments acts as the merchant banking arm of Hanifen
Holdings. Hanifen Investments has two wholly-owned subsidiaries, Hanifen, Imhoff
Capital Partners, Inc. ("Capital Partners") and Hanifen, Imhoff Investment
Management Co. ("Management"). Capital Partners is a general partner of Hanifen
Imhoff Capital Partners, a Colorado general partnership, which acts as the sole
general partner of Hanifen Imhoff Mezzanine Fund, L.P. (the "Mezzanine Fund").
The Mezzanine Fund is the only mezzanine fund operating in the Rocky Mountain
region. Management serves as the investment manager of the Mezzanine Fund. The
Mezzanine Fund is an active investor in the small mezzanine market nationally,
with approximately $60 million under management. The Mezzanine Fund has made
approximately 36 investments in 21 companies since its inception in August,
1994. Hanifen Investments' primary prospects are companies with at least
$500,000 in pre-tax income in the manufacturing, distribution and service
industries that need between $1.0 and $5.0 million of sub-debt/preferred stock
for ownership change or growth. The Mezzanine Fund's geographic focus is in the
Rocky Mountain and Midwest regions of the United States.
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As a condition to closing the Merger, certain of the assets of Hanifen
Investments will be sold to an unrelated third party and/or one or more entities
formed by one or more groups of current employees of the Hanifen Companies. As
of the date of this Proxy Statement/Prospectus, no written offers for the assets
of Hanifen Investments have been received by Hanifen Holdings and no contract
negotiations for such sale have occurred.
NATURE OF THE HANIFEN COMPANIES BUSINESSES
The Hanifen Companies' businesses, by their nature, are subject to
various risks, including substantial fluctuations in volume levels of securities
transactions processed, losses from customer defaults, litigation and employee
misconduct.
Hanifen Clearing fees and commission revenues are directly related to
transaction volumes. In periods of low volume, profitability is adversely
affected because certain expenses consisting primarily of salaries, computer
hardware and software costs and occupancy expenses remain relatively fixed. In
1996, such expenses were approximately $9.1 million, or approximately 23% of
total consolidated expenses. Variations in transaction volume may cause Hanifen
Holdings' operating results to fluctuate significantly on a quarterly basis.
The risk of loss from customer defaults is generally contractually
allocated to the client for which Hanifen Clearing is acting pursuant to a
clearing agreement between Hanifen Clearing and the client (the "Clearing
Agreement"). There can be no assurance that in all instances Hanifen Clearing
will recover the full amount or any part of such loss. Hanifen Clearing would
bear losses arising out of customer defaults to the extent they could not be
collected from the client and/or the customer.
DEPENDENCE ON KEY CLIENTS
Hanifen Holdings serves a diversified client base, and for the fiscal
years 1996, 1995 and 1994, none of Hanifen Holdings' customers accounted for
more than 10% of Hanifen Holdings' total revenues.
In 1996, Hanifen Brokerage's customers accounted for approximately
57,000 trades, or 4%, of Hanifen Clearing's total transaction volume and
approximately 3% of Hanifen Clearing's total operating revenue. At
September 27, 1996, Hanifen Brokerage had approximately 2,300 accounts carried
by Hanifen Clearing. Hanifen Brokerage's margin account debit balances totaled
approximately $5.8 million. A condition to closing the Merger is that New
Hanifen has entered into an exclusive five-year clearing agreement with Hanifen
Clearing in a form satisfactory to Fiserv.
Clearing agreements with Hanifen Clearing's clients generally have a
term of one to three years. Clients of Hanifen Clearing are generally
discouraged from switching clearing firms due to the inconvenience of converting
to a new clearing system and the potential erosion of their revenues that could
result.
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COMPETITION AND RISK
The Hanifen Companies operate in highly competitive markets. Some of
the Hanifen Companies' competitors have greater capital and more resources
available to them than does Hanifen Holdings.
Hanifen Clearing. Hanifen Clearing encounters intense competition in
providing securities clearing and related services from several highly visible,
major securities firms, including Bear Stearns Corp., Pershing Correspondent
Service Corp. (Paine Webber) and Prudential Securities. In many instances,
Hanifen Clearing competes with such firms for the same clients and market share.
Hanifen Clearing believes that the main competitive factors are price, quality
of service, product availability and the technology platforms upon which
Clearing's system and services are based. While some clearing brokers may
charge lower fees for certain transactions, Hanifen Clearing believes that it
competes favorably with such firms.
Like all firms involved in the provision of securities clearing,
Hanifen Clearing is subject to the risk that a broker/dealer, bank or financial
institution may seek the services of another clearing firm.
Hanifen Brokerage. The investment banking business is intensely
competitive. Many of Hanifen Brokerage's competitors have greater capital,
financial and other resources than Hanifen Brokerage. The Hanifen Brokerage
competes for equity and debt underwritings with regional and national
competitors. In addition to competition from firms currently in the investment
banking business, domestic and international commercial banks have recently
entered the business. In addition to outright acquisitions of existing
investment banks, these large institutions have hired investment banking,
research and sales and trading professionals from several of the smaller
investment banks in the industry. Competition from the domestic and
international banks should increase as a result of recent and anticipated
legislative and regulatory initiatives in the United States to remove or relieve
certain restrictions on commercial banks from competing in the investment
banking side of the business.
Hanifen Brokerage also anticipates competition from underwriters who
attempt to effect public offerings for emerging growth companies through new
means of distribution, including transactions effected using electronic media.
Finally, issuers are now attempting to sell their securities directly to
purchasers, using the Internet. To the extent that issuers and purchasers of
securities transact business without the assistance of financial intermediaries,
as described above, Hanifen Brokerage's operating results could be adversely
affected.
Hanifen Investments. Mezzanine capital is provided from many sources,
including banks, insurance companies, private funds and other SBICs. Many of
these sources have more outreach and greater resources with which to compete
with Hanifen Investments. The main competitive factors are sources of deal
flow, responsiveness, expertise and amount of capital. Hanifen Investments
professionals have been doing this type of investing for many years and have
developed many relationships in the investment community.
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EMPLOYEES
At September 30, 1997, Hanifen Holdings had 23 full-time employees,
Hanifen Clearing had 115 full-time employees, Hanifen Brokerage had 98 full-time
employees and Hanifen Investments had four full-time employees; none of whom was
represented by a union. Hanifen Holdings believes that its relations with its
employees are good.
FACILITIES
The Hanifen Companies occupy office space of approximately 65,000
square feet at 1125 Seventeenth Street, Denver, Colorado 80202 under a lease
with an initial term that expires in November 30, 2006, with the right to extend
the term for one additional five-year period. Hanifen Brokerage's branch offices
occupy office space aggregating approximately 3,060 square feet, all of which is
leased under leases having various terms.
DESCRIPTION OF FISERV COMMON STOCK
The holders of Fiserv Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of stockholders.
Holders of Fiserv Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors of Fiserv out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up of
Fiserv, holders of Fiserv Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities. Holders of Fiserv Common Stock
have no preemptive rights to subscribe for unissued shares of capital stock of
Fiserv. There are no cumulative voting rights with respect to the Fiserv Common
Stock, with the result that holders of a majority of the Fiserv Common Stock may
elect all Fiserv's directors.
As of November 12, 1997, there were approximately 30,000 holders of
record of Fiserv Common Stock.
Fiserv has appointed Firstar Trust Company, Milwaukee, Wisconsin, as
transfer agent and registrar for the Fiserv Common Stock.
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COMPARISON OF RIGHTS OF SHAREHOLDERS OF FISERV AND
HANIFEN HOLDINGS
CERTAIN PROVISIONS OF WISCONSIN AND COLORADO LAW
Upon consummation of the Merger, the shareholders of Hanifen Holdings,
which is a Colorado corporation, will become shareholders of Fiserv, which is a
Wisconsin corporation. The rights of the Hanifen Holdings shareholders will be
governed by the Wisconsin Business Corporation Law ("WBCL"), Fiserv's Restated
Articles of Incorporation (the "Fiserv Articles") and Fiserv's Bylaws (the
"Fiserv Bylaws"), which differ in certain material respects from the Colorado
Business Corporation Act ("CBCA"), Hanifen Holdings's Articles of Incorporation
(the "Hanifen Holdings Articles"), and Hanifen Holdings's Bylaws (the "Hanifen
Holdings Bylaws").
Although it is not practical to compare all differences between
(i) Wisconsin law and the Fiserv Articles and the Fiserv Bylaws and
(ii) Colorado law and the Hanifen Holdings Articles and the Hanifen Holdings
Bylaws, set forth below is a summary of certain differences which may
significantly affect the rights of shareholders. This discussion is not intended
to be complete and is qualified in its entirety by references to the Fiserv
Articles and the Fiserv Bylaws and the Hanifen Holdings Articles and the Hanifen
Holdings Bylaws. Copies of the Hanifen Holdings Articles and the Hanifen
Holdings Bylaws and the Fiserv Articles and the Fiserv Bylaws are available for
inspection at the principal executive offices of Hanifen Holdings and copies
will be sent to shareholders of Hanifen Holdings upon request.
CLASSIFIED BOARD OF DIRECTORS
The WBCL provides for the staggering of terms of directors by dividing
the directors into two or three groups. The Fiserv Articles and the Fiserv
Bylaws divide the total number of directors into three groups, with each group
serving three-year terms. Although the CBCA permits a corporation to provide in
its articles for the division of the board of directors into two or three
groups, the terms of which expire in different years, the Hanifen Holdings
Articles provide for only one class of directors who serve a one-year term.
NUMBER OF DIRECTORS; CUMULATIVE VOTING
Under the WBCL, the authorized number of directors constituting the
Board of Directors is specified in, or fixed in accordance with, the articles of
incorporation or bylaws and may be increased or decreased by amendment to, or in
a manner provided in, the articles of incorporation or the bylaws. Under the
Fiserv Bylaws, the number of directors is determined by the Board of Directors,
but must be not less than three or more than nine. Fiserv currently has eight
directors each of whom serves for a three-year term and until his successor has
been elected and is qualified. The terms of three Fiserv directors expire in
each of 1998 and 1999 and the terms of two Fiserv directors expire in 2000.
Under the CBCA, the number of directors of a corporation may be fixed
in the articles of incorporation or the bylaws of a corporation, or the bylaws
may establish a range for the number of directors, with the Board of Directors
and the shareholders each given authority to
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fix the exact number of directors within such range. Under the Hanifen Holdings
Bylaws, the Board of Directors will consist of not less than three and not more
than fifteen directors. The Hanifen Holdings' Board of Directors currently
consists of four members, each of whom serves a one-year term and until his or
her successor is elected and qualified.
Cumulative voting, which enhances the ability of minority shareholders
to elect directors, is not available under either the WBCL or the CBCA unless
provided for in a corporation's articles of incorporation. Neither the Fiserv
Articles nor the Hanifen Holdings Articles provide for cumulative voting.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under the WBCL, a director may generally be removed by the
shareholders, with or without cause, if the number of votes cast to remove the
director exceeds the number of votes cast not to remove him or her, unless the
articles of incorporation, or bylaws adopted under authority granted in the
articles of incorporation, provide for a greater voting requirement. The Fiserv
Articles have no such provisions. Under the CBCA, a director may be removed by
the shareholders with or without cause if the number of votes cast in favor of
removal exceeds the number of votes cast against removal, unless the articles of
incorporation provide that directors may be removed only for cause. The Hanifen
Holdings Articles make no such provision.
Under the WBCL, the circuit court for the county where a corporation's
principal office or registered office is located may remove a director of the
corporation from office in a proceeding brought either by the corporation or by
its shareholders holding at least 10% of the outstanding shares of any class, if
the court finds that the director engaged in fraudulent or dishonest conduct or
gross abuse of authority or discretion with respect to the corporation and that
removal is in the best interest of the corporation. The CBCA contains a nearly
identical provision, except that a director may be removed by the district court
of the county in Colorado where the corporation's principal office is located
or, if the corporation has no principal office in Colorado, by the district
court of the county in which its registered office is located or, if the
corporation has no registered office, by the district court for the City and
County of Denver.
Under the WBCL, unless the articles of incorporation provide
otherwise, which the Fiserv Articles do not, a vacancy occurring on the board of
directors may be filled by the shareholders or by the directors remaining in
office. Under the CBCA, unless otherwise provided in the articles of
incorporation or bylaws, vacancies and newly created directorships resulting
from an increase in the authorized number of directors elected by all of the
shareholders having the right to vote as a single class may be filled by a
majority of the directors then in office or by the shareholders. The Hanifen
Holdings Articles make no specific provision with respect to the filling of
vacancies.
LIMITATION ON DIRECTORS' LIABILITY; INDEMNIFICATION
The WBCL provides that a director is not liable to the corporation,
its shareholders, or any person asserting rights on behalf of the corporation or
its shareholders for liabilities arising from a breach of, or failure to
perform, any duty resulting solely from his or her status as director,
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unless the person asserting liability proves that the breach or failure to
perform constitutes: (1) wilful failure to deal fairly with the corporation or
its shareholders in connection with a matter in which the director has a
material conflict of interest; (2) a violation of criminal law, unless the
director had reasonable cause to believe that the conduct was lawful or no
reasonable cause to believe that the conduct was unlawful; (3) a transaction
from which the director derived an improper personal profit; or (4) wilful
misconduct. The WBCL permits a corporation to limit the statutory immunity from
director liability in its articles of incorporation. The Fiserv Articles contain
no such limitation.
The WBCL provides that a corporation will indemnify a director or
officer, to the extent that he or she has been successful on the merits or
otherwise in the defense of a proceeding, for all reasonable expenses incurred
in the proceeding if the director or officer was a party because of his or her
status as a director or officer. Additionally, a corporation will indemnify a
director or officer against liability incurred by a director or officer in a
proceeding to which the director or officer was a party because he or she is a
director or officer of the corporation, unless liability was incurred because
the director or officer breached or failed to perform a duty that he or she owes
to the corporation and the breach or failure to perform constitutes any of the
conduct as enumerated above relating to liability of directors. Further, a
court of law may order that the corporation provide indemnification to a
director or officer if it finds that the director or officer is entitled to
indemnification under the applicable statutory provision or is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not such indemnification is required under the
applicable statutory provision.
The WBCL permits a corporation to provide additional rights to
indemnification under its articles of incorporation or bylaws, by written
agreement, by resolution of its board of directors or by a vote of the holders
of a majority of its outstanding shares, except that the corporation may not
indemnify a director or officer unless it is determined by or on behalf of the
corporation that the director or officer did not breach or fail to perform a
duty owed to the corporation which constitutes conduct as enumerated above
relating to liability of directors. The Fiserv Bylaws provide for
indemnification and advancement of expenses to directors and officers to the
fullest extent permitted by the WBCL. This provision is not exclusive of any
other rights to indemnification or the advancement of expenses to which a
director or officer may be entitled under any written agreement, resolution of
directors, vote of shareholders, by law or otherwise.
The CBCA provides that a corporation's articles of incorporation may
contain a provision which eliminates or limits the personal liability of a
director to the corporation or its shareholders for monetary damages for a
breach of fiduciary duty as a director, except for (1) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (2) any breach of the director's duty of loyalty to the corporation or its
shareholders, (3) an unlawful distribution, or (4) any transaction from which
the director derived an improper personal benefit. The Hanifen Holdings
Articles include such a provision eliminating and limiting the personal
liability of its directors to the full extent permitted by the CBCA.
Under the CBCA, a corporation may generally wholly indemnify its
officers, directors, employees and agents against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement of any proceedings (other
than proceedings by or in the right of the
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corporation), if they acted in good faith and in a manner they 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 their conduct was unlawful. A similar standard is applicable in
proceedings by or in the right of the corporation, except that indemnification
may be made only for expenses (including attorneys' fees) and, in the event the
person seeking indemnification has been adjudicated liable, only to the extent
an appropriate court deems the indemnification for such expenses fair and
reasonable. The CBCA provides that, except as provided in a corporation's
articles, to the extent such persons have been successful in the defense of any
proceeding to which they were a party because they were a director or officer of
the corporation, they must be indemnified by the corporation against expenses
actually and reasonably incurred in connection with such proceeding. The Hanifen
Holdings Articles provide that the legal representatives, directors, and
officers of Hanifen Holdings will be indemnified to the fullest extent permitted
by the CBCA.
SPECIAL MEETINGS OF SHAREHOLDERS
Under the WBCL, a corporation must hold a special meeting of
shareholders if (1) a special meeting is called by the board of directors or any
person authorized by the articles of incorporation or bylaws to call a special
meeting, or (2) the holders of at least 10% of all votes entitled to be cast on
any issue proposed to be considered at the proposed special meeting deliver a
written demand to the corporation describing one or more purposes for which such
meeting is to be held. The Fiserv Bylaws provide that a special meeting of
shareholders may be called by the Chairman of the Board or the President, or by
order of the Board of Directors, and that a special meeting must be called by
the President or Secretary upon written request of shareholders holding at least
10% of the votes entitled to be cast on any issue proposed to be considered at
such meeting.
The CBCA provisions regarding special meetings of shareholders are
identical to those of the WBCL. The Hanifen Holdings Bylaws provide that
special meetings of shareholders may be called by the Board of Directors, the
President (or in his absence by a Vice President), or the holders of not less
than one-third of all shares entitled to vote on the subject matter for which
the meeting is called (by notice to the President).
QUORUM FOR SHAREHOLDER MEETINGS
The WBCL provides that a majority of the votes entitled to be cast on
a matter by a voting group constitutes a quorum, unless the articles of
incorporation, bylaws adopted under authority granted in the articles of
incorporation, or the WBCL provide otherwise. Neither the Fiserv Articles nor
the Fiserv Bylaws deviate from this quorum requirement.
Under the CBCA, a corporation's articles of incorporation or bylaws
may specify the percentage of votes which constitutes a quorum at a meeting of
shareholders, but in no event may a quorum consist of less than one-third of the
shares entitled to vote. The Hanifen Holdings Articles provide that a quorum
exists if a majority of the shares issued and outstanding and entitled to vote
are present in person or by proxy at a meeting.
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SHAREHOLDER VOTING REQUIREMENTS GENERALLY
Under the WBCL, with respect to matters other than the election of
directors, unless a greater number of affirmative votes is required by the WBCL,
the articles of incorporation, or bylaws adopted under authority granted in the
articles of incorporation, if a quorum exists, action on any matter generally is
approved by the shareholders if the votes cast favoring the action exceed the
votes cast opposing the action. Unless otherwise provided in the articles of
incorporation, directors are elected by a plurality of the votes cast by the
shares entitled to vote. The Fiserv Articles and the Fiserv Bylaws contain no
provisions imposing greater voting requirements.
The CBCA contains substantially identical provisions relating to
shareholder voting requirements as those in the WBCL. The Hanifen Holdings
Articles and the Hanifen Holdings Bylaws make no reference to the matters
discussed in the section captioned "Supermajority Provisions" below. The
Hanifen Holdings Articles provide that all elections will be decided by the vote
of a majority of the shares issued, outstanding and entitled to vote on the
relevant subject matter.
SHAREHOLDER ACTION BY WRITTEN CONSENT
The WBCL permits action otherwise required to be taken at a
shareholders' meeting to be taken without a meeting (1) if written consents are
signed by all shareholders entitled to vote on the action, or (2) if the
articles of incorporation provide that action may be taken if written consents
signed by shareholders having not less than the minimum number of votes that
would be necessary to authorize the proposed action at a meeting at which all
shares entitled to vote were present and voted and such written consents are
obtained. The Fiserv Articles provide that shareholders may take actions by
written consent in lieu of a meeting as described in (2) in the preceding
sentence.
Under the CBCA, unless otherwise provided in the articles of
incorporation, any action required or which may be taken at any annual or
special meeting of shareholders may be taken without a meeting if written
consents are obtained from all of the shareholders entitled to vote on the
action. The Hanifen Holdings Articles do not limit this statutory provision.
SUPERMAJORITY PROVISIONS
Except as discussed below in"Shareholder Voting in Certain Significant
Transactions; Takeover Legislation," neither the WBCL nor the Fiserv Articles
and the Fiserv Bylaws impose "supermajority" voting requirements (i.e.,
----
requirements that more than a simple majority of shares voting be obtained for
action to be taken).
Under the CBCA, the articles of incorporation may provide for a
greater voting requirement for shareholders or voting groups. The Hanifen
Holding Articles do not impose supermajority voting requirements.
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SHAREHOLDER VOTING IN CERTAIN SIGNIFICANT TRANSACTIONS; TAKEOVER LEGISLATION
Under the WBCL, a corporation may sell, lease, exchange or otherwise
dispose of all, or substantially all, of its property, other than in the usual
and regular course of business, if such disposition is approved by a majority of
all the votes entitled to be cast on such disposition. A merger or share
exchange plan must be approved by each voting group entitled to vote separately
on the plan by a majority of all the votes entitled to be cast on the plan by
that voting group.
The WBCL contains certain provisions that, unless a corporation elects
not to be covered by such provisions (and Fiserv has not so elected), require
approval of a supermajority of shareholders for certain "business combinations"
involving persons who are "significant shareholders" before the transaction or
become "significant shareholders" after the transaction. A "significant
shareholder" is, among others, a person who is, or was within two years of the
transaction, a beneficial owner of 10% or more of the voting power of the
applicable corporation. In such a case, unless the business combination
satisfies certain "fair price" criteria, the business combination requires the
approval of 80% of the votes entitled to be cast by the outstanding voting
shares of the corporation voting as a single class and two-thirds of all such
shares excluding the shares owned by a significant shareholder.
The WBCL additionally regulates a broad range of "business
combinations" between a corporation and an "interested stockholder." "Business
combination" is defined as including a merger or a share exchange, sale of
assets, issuance of stock or rights to purchase stock and certain related party
transactions. An "interested stockholder" is a person who beneficially owns,
directly or indirectly, 10% of the outstanding voting stock of a corporation or
who is an affiliate or associate of the corporation and beneficially owned 10%
of the voting stock within the last three years. In certain cases, the WBCL
prohibits a corporation from engaging in a business combination with an
interested stockholder for a period of three years following the date on which
the person became an interested stockholder unless (i) the board of directors
approved the business combination or the acquisition of the stock prior to the
acquisition date, (ii) the business combination is approved by a majority of the
outstanding voting stock not owned by the interested stockholder, (iii) the
consideration to be received by stockholders meets certain requirements of the
statute with respect to form and amount, or (iv) the business combination is of
a type specifically excluded from the coverage of the statute.
While a takeover offer is being made, or after a takeover offer has
been publicly announced and before it is concluded, the WBCL requires the
approval of the holders of a majority of shares entitled to vote before a public
corporation may acquire more than 5% of its voting shares at a price above
market value from a person who holds more than 3% of its voting shares and has
held such shares for less than two years, unless at least an "equal" offer is
made to acquire all voting shares and all securities which may be converted into
voting shares. Similar approval is required before a public corporation may
sell or option assets which amount to at least 10% of its market value unless
the corporation has at least three directors who are not either officers or
employees of the corporation and a majority of the directors who are not either
officers or employees vote not to be governed by this provision.
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The WBCL provides that in particular circumstances the voting of
shares of an "issuing public corporation" (a Wisconsin corporation which has at
least 100 Wisconsin resident shareholders, 500 or more shareholders of record
and total assets exceeding $1 million) held by any person in excess of 20% of
the voting power is limited to 10% of the full voting power of such excess
shares. Full voting power may be restored if a majority of the voting power of
shares represented at a meeting, including those held by the party seeking
restoration, are voted in favor of such restoration.
The CBCA requires that a merger or consolidation or a sale, lease or
exchange of all or substantially all of the property and assets of a
corporation, other than in the ordinary course of business, be approved by the
holders of a majority of the outstanding shares of the corporation, voting in
the aggregate and by class, entitled to vote on any such action.
In contrast to the WBCL, Colorado law does not specifically address
transactions between significant shareholders and a corporation. As a
consequence, attempts by existing shareholders as unwelcome acquirers to gain
control of a corporation are not hindered by statutory provisions similar to
those in the WBCL.
STATUTORY SHAREHOLDER LIABILITY
The WBCL provides that the shareholders of a corporation are
personally liable up to an amount equal to the par value of shares owned by
them, and to the consideration for which shares without par value were issued,
for debts owing to employees of the corporation for services performed for such
corporation, but not exceeding six months' service in any case. The liability
imposed by the predecessor to this statute was interpreted in a trial court
decision to extend to the original issue price for shares, rather than the
stated par value. Although affirmed by the Wisconsin Supreme Court, the case
offers no precedential value due to the fact that the decision was affirmed by
an equally divided court. The CBCA contains no comparable provision.
DERIVATIVE ACTIONS
Under both the WBCL and the CBCA, a shareholder may bring a derivative
action if he or she was a shareholder at the time of the alleged wrongdoing, or
acquired the shares by operation of law from a person who was a shareholder at
such time. Under the WBCL, a shareholder may not commence a derivative action
until he makes a written demand on the corporation to take suitable action and a
period of ninety days expires, unless the shareholder is notified that the
corporation has rejected the demand or irreparable injury to the corporation
would result by waiting for the period to expire. Under Colorado law, a
corporation or the defendant in a derivative suit may make a motion to the court
for an order requiring the plaintiff shareholder to furnish a security for
payment of costs and expenses (not including attorneys' fees) which may be
incurred in its defense or in the defense of others in such action. The bond
may not be required from any plaintiff holding less than 5% of any class of
shares or whose shares, regardless of percentages, have a fair market value of
less than $25,000 on the day the action is instituted.
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DISSENTERS' RIGHTS AND APPRAISAL RIGHTS
Under the WBCL, a shareholder of a corporation is generally entitled
to receive payment of the fair value of such shareholder's stock if such
shareholder dissents from a proposed merger or stock exchange or a sale or
exchange of all or substantially all of the property and assets of the
corporation. However, except with respect to business combinations involving
significant shareholders (as such terms are described in the first paragraph
under "Shareholder Voting in Certain Significant Transactions; Takeover
Legislation" above), dissenters' rights are not available to holders of shares
that are registered on a national securities exchange or quoted on NASDAQ.
Currently, Fiserv Common Stock is quoted on NASDAQ.
Under the CBCA, a shareholder of a corporation is entitled to dissent
from corporate actions requiring a majority shareholder vote and to receive
payment of the fair value of his shares of stock. Such rights are not available
to a shareholder of a Colorado corporation if the shares are (1) listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the NASD, or (2) held of record by more
than 2,000 shareholders. Notwithstanding the foregoing, a shareholder does have
such rights with respect to such shares if the shareholder is required by the
terms of the agreement of merger or consolidation to accept anything for his
shares other than (1) shares of stock of the corporation surviving or resulting
from the merger or consolidation, (2) shares of stock of any other corporation,
which shares or receipts are so listed or designated or held of record by more
than 2,000 shareholders, (3) cash in lieu of fractional shares, or (4) any
combination of the foregoing. Neither the Hanifen Holdings Articles nor the
Hanifen Holdings Bylaws authorize dissenters' rights beyond those provided for
under the CBCA.
SHAREHOLDER INSPECTION OF BOOKS AND RECORDS
The WBCL allows a shareholder, upon giving the required notice, to
inspect and copy the corporation's bylaws during regular business hours at a
reasonable location specified by the corporation. A shareholder fulfilling
specified requirements may inspect and copy, during regular business hours at a
reasonable location specified by the corporation, excerpts of any minutes or
records that the corporation is required to keep as permanent records,
accounting records of the corporation, and the record of shareholders, except
that the corporation may provide the shareholder with a list of shareholders
compiled no earlier than the date of the shareholder's demand instead of
allowing the shareholder to inspect and copy the record of shareholders.
The CBCA allows a shareholder, upon giving 5-days' prior notice, to
inspect and copy, during regular business hours at a reasonable location
specified by the corporation, a corporation's articles, bylaws, minutes of all
shareholder's meetings and records of all action taken by shareholders without a
meeting for the past three years, all communications to shareholders as a group
within the past three years, a list of the names and business addresses of the
current directors and officers, a copy of the most current corporate report
filed with the Secretary of State, and financial statements prepared for periods
ending during the last three years. A shareholder fulfilling specified
requirements may inspect and copy, during regular business hours at a reasonable
location specified by the corporation, excerpts of any minutes and records that
the
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corporation is required to keep as permanent records, accounting records of the
corporation, and the record of shareholders.
LOANS TO DIRECTORS
Under the WBCL, unless it is an advance or is made to defray expenses
made in the ordinary course of the corporation's business or an advance of
expenses with respect to indemnification, a corporation may not make loans to or
guaranty the obligation of a director unless the particular loan or guaranty is
approved by a majority of the votes represented by the voting shares of all
classes, voting as a single group, excluding votes owned or controlled by the
benefited director, or the board of directors determines that the loan or
guaranty benefits the corporation and either approves the specific loan or
guaranty or a general plan authorizing loans or guarantees.
Under the CBCA, a corporation may make a loan to, or guarantee the
obligations of, directors or entities of which such director is a director or in
which he has a financial interest if the transaction satisfies the general test
relating to transactions between a corporation and an interested party director.
That is, the transaction will not be deemed void or voidable and may not be
enjoined solely by reason of the director's self-interest, if the transaction is
approved in good faith by the Board of Directors or the shareholders after full
disclosure, or if the transaction was fair to the corporation at the time it was
authorized.
AMENDMENT OR REPEAL OF THE ARTICLES AND BYLAWS
In general, the WBCL provides that a corporation's articles of
incorporation may be amended through a proposal submitted by the board of
directors to the shareholders for their approval. Unless articles of
incorporation or bylaws provide otherwise, or unless class voting is required,
or unless the WBCL provides otherwise, the amendment may be approved by a
majority vote of the shares entitled to vote on such amendment. Class votes are
required in certain circumstances which, in general, affect a class of stock
adversely or uniquely. In certain very limited circumstances, either specified
in the corporation's articles of incorporation or which involve certain
ministerial actions which are likely to be immaterial to the shareholders, the
WBCL permits the articles of incorporation to be amended by action of the board
of directors without shareholder approval.
In general, under Wisconsin law the bylaws of a corporation may be
amended by the board of directors, except in those instances in which the
corporation's articles of incorporation or bylaws provide otherwise. Action by
shareholders to amend or repeal amendments to the bylaws can overrule action
taken by the board of directors. The Fiserv Articles provide that they may be
altered, amended or repealed by the Board of Directors, subject to the power of
the shareholders to alter or repeal any bylaw made by the Board of Directors.
Generally, under the CBCA, upon the recommendation of the board of
directors or upon the initiative of the holder(s) of at least ten percent of the
outstanding shares, the articles may be amended in accordance with shareholder
voting requirements, i.e., a plurality of a quorum. The board may approve
without shareholder approval certain ministerial changes to the
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articles. An amendment to the articles that adds, alters, or deletes a greater
quorum or voting requirement must meet the same quorum requirement and be
adopted by the same vote and voting groups required to take action under the
quorum and voting requirements then in effect or as proposed, whichever is
greater. Except for the amendment of voting and quorum requirements, and unless
otherwise provided in the articles or the bylaws, the board may generally amend
the bylaws of a corporation. The Hanifen Holdings Articles and the Hanifen
Holdings Bylaws do not modify the provisions of the CBCA with respect to
amending articles or bylaws.
DIVIDEND DECLARATIONS
Under the WBCL, no distribution may be made if, after giving it
effect, either (1) the corporation would not be able to pay its debts as they
become due in the usual course of business, or (2) the corporation's total
assets would be less than the sum of its total liabilities plus, unless the
articles of incorporation permit otherwise, the amount that would be needed, if
the corporation were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution of shareholders whose preferential
rights are superior to those receiving the distribution. The Fiserv Articles
contain no provision with respect to distributions.
The CBCA mirrors the WBCL with respect to distributions, and the
Hanifen Holdings Articles contain no provisions with respect to distributions.
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LEGAL MATTERS
The legality of the issuance of the Fiserv Common Stock being offered
hereby will be passed upon by Charles W. Sprague, General Counsel of Fiserv.
Mr. Sprague beneficially owns 27,461 shares of Fiserv Common Stock which number
includes vested but unexercised stock options.
EXPERTS
The consolidated financial statements of Fiserv, Inc. and
subsidiaries, except BHC Financial, Inc. and subsidiaries, as of December 31,
1996 and 1995 and for each of the three years in the period ended December 31,
1996, incorporated in this Proxy Statement/Prospectus by reference from Fiserv,
Inc.'s Current Report on Form 8-K dated October 22, 1997, have been audited by
Deloitte & Touche LLP as stated in their report which is incorporated herein by
reference. The financial statements of BHC Financial, Inc. and subsidiaries
(consolidated with those of Fiserv, Inc.) have been audited by Coopers & Lybrand
L.L.P. as stated in their report on Form 10-K dated February 14, except for Note
12 of the Consolidated Financial Statements as to which the date is March 3,
1997. Such financial statements of Fiserv, Inc. and its consolidated
subsidiaries are incorporated by reference, and have been so incorporated in
reliance upon the respective reports of such firms given upon their authority as
experts in accounting and auditing.
The consolidated financial statements of Hanifen, Imhoff Holdings,
Inc. and subsidiaries as of and for the year ended September 27, 1996, have been
audited by Baird Kurtz & Dobson and, the financial statements of Hanifen, Imhoff
Holdings, Inc. and subsidiaries as of and for each of the two fiscal years in
the period ended September 29, 1995, have been audited by McGladrey & Pullen,
LLP, independent auditors, as stated in their reports with respect thereto, and
are set forth herein in reliance upon such reports given upon the authority of
said firms as experts in accounting and auditing.
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APPENDIX A
<PAGE>
================================================================================
AGREEMENT AND PLAN OF MERGER
Among
FISERV, INC.,
FISERV CLEARING, INC.,
and
HANIFEN, IMHOFF HOLDINGS, INC.
Dated as of September 30, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I MERGER...................................................................... 2
SECTION 1.01 The Merger............................................................ 2
SECTION 1.02 Articles of Merger.................................................... 2
SECTION 1.03 Stockholders' Meeting................................................. 2
SECTION 1.04 Effective Date of the Merger.......................................... 3
SECTION 1.05 Closing............................................................... 3
SECTION 1.06 Certain Intended Effects of the Merger................................ 3
ARTICLE II DIRECTORS AND OFFICERS..................................................... 4
SECTION 2.01 Directors............................................................. 4
SECTION 2.02 Officers.............................................................. 4
ARTICLE III CONVERSION OF SHARES...................................................... 4
SECTION 3.01 Conversion............................................................ 4
SECTION 3.02 Surrender and Payments................................................ 6
SECTION 3.03 No Further Transfers.................................................. 7
SECTION 3.04 Dissenting Shares..................................................... 8
SECTION 3.05 Shares Acquired Upon Payment of Appraisal Rights...................... 8
SECTION 3.06 No Fractional Shares.................................................. 8
ARTICLE IV CERTAIN EFFECTS OF MERGER.................................................. 8
SECTION 4.01 Effect of Merger...................................................... 8
SECTION 4.02 Further Assurances.................................................... 9
ARTICLE V REPRESENTATIONS AND WARRANTIES.............................................. 9
SECTION 5.01 Representations and Warranties of the Company......................... 9
SECTION 5.02 Representations and Warranties of Fiserv and Fiserv Clearing.......... 33
ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS........................................ 37
SECTION 6.01 Conduct of Business................................................... 37
SECTION 6.02 Access to Information by Fiserv and Fiserv Clearing................... 38
SECTION 6.03 Consents and Authorizations........................................... 39
SECTION 6.04 Non-Assignable Licenses, Leases and Contracts......................... 39
SECTION 6.05 Employee Matters...................................................... 40
SECTION 6.06 Tax Returns........................................................... 40
SECTION 6.07 Notifications of Exceptions........................................... 40
SECTION 6.08 Change of Name........................................................ 40
</TABLE>
A-2
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<TABLE>
<S> <C>
SECTION 6.09 Continuing Indemnity.................................................. 41
SECTION 6.10 NASDAQ Requirement.................................................... 41
SECTION 6.11 Registration Statement................................................ 42
ARTICLE VII CONDITIONS PRECEDENT...................................................... 42
SECTION 7.01 Conditions Precedent to the Obligations of
Fiserv and Fiserv Clearing...................................................... 42
SECTION 7.02 Conditions Precedent to the Obligations of the Company................ 46
ARTICLE VII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS............................................................... 50
SECTION 8.01 Representations and Warranties........................................ 50
SECTION 8.02 Covenants............................................................. 50
ARTICLE IX TERMINATION; AMENDMENT; WAIVER............................................. 50
SECTION 9.01 Termination........................................................... 50
SECTION 9.02 Effect of Termination................................................. 51
SECTION 9.03 Amendment............................................................. 52
SECTION 9.04 Extension; Waiver..................................................... 52
ARTICLE X MISCELLANEOUS............................................................... 52
SECTION 10.01 Expenses, Etc........................................................ 52
SECTION 10.02 No Solicitation...................................................... 53
SECTION 10.03 Execution in Counterparts............................................ 53
SECTION 10.04 Notices.............................................................. 53
SECTION 10.05 Entire Agreement..................................................... 55
SECTION 10.06 Applicable Law; Jurisdiction and Venue............................... 55
SECTION 10.07 Binding Effect; Benefits............................................. 55
SECTION 10.08 Assignability........................................................ 55
SECTION 10.09 Public Announcements................................................. 56
SECTION 10.10 Invalid Provisions................................................... 56
SECTION 10.11 Interpretation....................................................... 56
TESTIMONIUM........................................................................... 57
</TABLE>
A-3
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
A Delaware Certificate of Merger
B Colorado Articles of Merger
C Form of Opinion of counsel to the Company
D-1 Form of Company Tax Representation Letter
D-2 Form of FIRPTA Affidavit
D-3 Form of Fiserv Tax Representation Letter
E Consents Required for Closing
F Form of Non-Compete Agreement
G Form of Confidentiality Agreement
H Form of Opinion of counsel to Fiserv and Fiserv Clearing
INDEX TO SCHEDULES
Schedule
- --------
I Names, Addresses and Number of Shares Owned by the Stockholders
of the Company
II Disclosure Schedule
III Schedule of Outstanding Stock Options
A-4
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 30, 1997, among
FISERV, INC., a Wisconsin corporation ("Fiserv"), FISERV CLEARING, INC., a
Delaware corporation ("Fiserv Clearing") and a wholly-owned subsidiary of
Fiserv, and HANIFEN, IMHOFF HOLDINGS, INC., a Colorado corporation (the
"Company").
W I T N E S S E T H :
WHEREAS, the Company owns all of the capital stock of Hanifen Imhoff
Clearing Corp., a Colorado corporation ("Clearing"), Hanifen, Imhoff
Investments, Inc., a Colorado corporation ("Investments"), and Hanifen, Imhoff
Inc., a Colorado corporation ("Hanifen, Imhoff"; collectively, Clearing,
Investments and Hanifen, Imhoff and their respective direct and indirect
subsidiaries being referred to as the "Subsidiaries"); and
WHEREAS, Fiserv and Fiserv Clearing desire that the Company merge with
and into Fiserv Clearing (the "Merger"), and the Company also desires that the
Company merge with and into Fiserv Clearing, upon the terms and conditions set
forth in this Agreement and in accordance with the General Corporation Law of
the State of Delaware and the Colorado Business Corporation Act, and that each
outstanding share of Common Stock, $.01 par value per share, of the Company
("Company Common Stock"), excluding any such shares held in the treasury of the
Company, be converted upon such merger into the right to receive such number of
shares of Common Stock, $.01 par value, of Fiserv ("Fiserv Common Stock") and
such amount of cash as is provided in this Agreement (Fiserv Clearing and the
Company sometimes referred to in this Agreement as the "Constituent
Corporations" and Fiserv Clearing sometimes referred to in this Agreement as the
"Surviving Corporation");
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained in this Agreement,
and in order to set forth the terms of the Merger and the mode of carrying the
Merger into effect, the parties to this Agreement agree as follows:
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ARTICLE I
MERGER
SECTION 1.01 The Merger. At the Effective Date (as defined in
----------
Section 1.04), the Company will be merged with and into Fiserv Clearing on the
terms set forth in this Agreement as permitted by and in accordance with the
General Corporation Law of the State of Delaware and the Colorado Business
Corporation Act. Upon the Merger, the separate existence of the Company will
cease; Fiserv Clearing, as the Surviving Corporation, will continue to exist
under and be governed by the General Corporation Law of the State of Delaware
and the Certificate of Incorporation and By-laws of Fiserv Clearing, until
further amended in accordance with the provisions of the Certificate of
Incorporation, By-laws and applicable law.
SECTION 1.02 Articles of Merger. As soon as practicable following
------------------
fulfillment or waiver of the conditions specified in Article VII of this
Agreement, and provided that this Agreement has not been terminated and
abandoned pursuant to Article IX of this Agreement, (a) the Company and Fiserv
Clearing will cause the Certificate of Merger in substantially the form of
Exhibit A attached to this Agreement (the "Delaware Certificate of Merger") to
be executed and filed with the Secretary of State of Delaware and (b) the
Company and Fiserv Clearing will cause the Articles of Merger in substantially
the form of Exhibit B attached to this Agreement (the "Colorado Articles of
Merger") to be executed and filed with Secretary of State of the State of
Colorado as provided in the Colorado Business Corporation Act. The purpose of
the Surviving Corporation will be to engage in any and all business activities
in which a corporation is permitted to engage in accordance with the General
Corporation Law of the State of Delaware.
SECTION 1.03 Stockholders' Meeting. The Company, acting through its
---------------------
Board of Directors, shall in accordance with applicable law as soon as
practicable following the date hereof:
(i) duly call, give notice of, convene and hold an annual or special
meeting of its shareholders (the "Stockholders' Meeting") for the purpose of
considering and taking action upon this Agreement;
(ii) include in the proxy materials that will be distributed to the
Company's shareholders in connection with the Stockholders' Meeting,
including any amendments or supplements thereto (the "Proxy Statement"). The
Proxy Statement will form a part of the registration statement (the
"Registration Statement") of Fiserv under the Securities Act of 1933 (the
"Securities Act") with respect to the Fiserv Common Stock to be issued in the
Merger; and
(iii) use its commercially reasonable efforts to obtain and furnish
the information required to be included by it in the Proxy Statement and,
after consultation with Fiserv and
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Fiserv Clearing, respond promptly to any comments made by the staff of the
Securities and Exchange Commission (the "SEC") with respect to the Proxy
Statement and cause the Proxy Statement to be mailed to its Stockholders at
the earliest practicable time following the date hereof and, subject to its
fiduciary duties under applicable law, to obtain the necessary approvals of
its Stockholders of this Agreement and the transactions contemplated hereby.
SECTION 1.04 Effective Date of the Merger. The Merger will become
----------------------------
effective upon the close of business on the later of the date of filing of the
Certificate of Merger with the Secretary of State of Delaware or the date of
filing of the Articles of Merger with the Secretary of State of the State of
Colorado, or on such other date as the parties may agree. The date and time of
such effectiveness is referred to as the "Effective Date."
SECTION 1.05 Closing. Evidence of the fulfillment or waiver of the
-------
conditions set forth in Article VII hereof (the "Closing") shall be provided by
the parties hereto to each other (a) at the offices of the Company, 1125
Seventeenth Street, Suite 1700, Denver, CO 80202 at 10 a.m., local time, on the
business day next after the date on which the last of the conditions set forth
in Article VII hereof is fulfilled or waived or (b) at such other time and place
as the parties hereto may agree.
SECTION 1.06 Certain Intended Effects of the Merger. The parties
--------------------------------------
have endeavored to structure the Merger as a tax-deferred "reorganization" under
Section 368(a)(1)(A) and (a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code"). The parties represent, warrant and agree: (i) to report
the transaction in such manner; and (ii) not to take or fail to take any action
that would jeopardize such tax treatment.
ARTICLE II
DIRECTORS AND OFFICERS
SECTION 2.01 Directors. From and after the Effective Date, the
---------
members of the Board of Directors of the Surviving Corporation will consist of
the members of the Board of Directors of Fiserv Clearing (as constituted
immediately prior to the Effective Date) until changed in accordance with its
Certificate of Incorporation and By-laws and applicable law.
SECTION 2.02 Officers. From and after the Effective Date, the
--------
officers of the Surviving Corporation will consist of the officers of Fiserv
Clearing (as constituted immediately prior to the Effective Date) until changed
in accordance with its Certificate of Incorporation and By-laws and applicable
law.
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ARTICLE III
CONVERSION OF SHARES
SECTION 3.01 Conversion. (a) Upon the Effective Date, each share of
----------
Company Common Stock issued and outstanding immediately prior to the Effective
Date will, without any further action on the part of Fiserv or Fiserv Clearing,
on the one hand, or the Company, on the other hand, be converted into the right
to receive (the "Merger Consideration") directly (i) such number of shares of
Fiserv Common Stock as shall equal the quotient (the "Exchange Ratio") of (A)
the quotient of (I) 51% of the Hanifen Value (as hereinafter defined), divided
by (II) the number of shares of Company Common Stock outstanding on the
Effective Date, divided by (B) a number which is equal to the average closing
price per share for Fiserv Common Stock as reported on the National Market
System by National Association of Securities Dealers, Inc. Automated Quotations
(as reported in The Wall Street Journal) for the 20 business days ending two
--- ---- ------ -------
business days prior to the Effective Date (the "Fiserv Share Value") and (ii)
such amount of cash as shall equal the quotient of (A) 49% of the Hanifen Value,
divided by (B) the number of shares of Company Common Stock outstanding on the
Effective Date. As of the Effective Date there will be no outstanding shares of
Company Preferred Stock. All shares of Company Common Stock and Company
Preferred Stock held in the Company's treasury and, subject to Section 7.01(p),
all outstanding unexercised stock options will be canceled. The names,
addresses and number of shares of Company Common Stock owned on the date of this
Agreement by the stockholders of the Company (the "Stockholders") is set forth
on Schedule I to this Agreement.
(b) Not less than three days prior to the Effective Date the Company
shall deliver to Fiserv and Fiserv Clearing an estimated balance sheet of the
Company as of the Effective Date, which shall have been prepared in accordance
with GAAP (as hereinafter defined) (the "Estimated Balance Sheet"), setting
forth, in reasonable detail the Company's estimate of the consolidated
Stockholders' Equity for the Company and the Subsidiaries, but excluding any
accruals for or payments of Taxes arising out of or related to the transactions
contemplated hereby (other than (x) a sale of assets or capital stock of a
Subsidiary, (y) a sale of assets of the Company and (z) Taxes accrued in the
ordinary course of business of the Company or any Subsidiary) (the
"Stockholders' Equity"). As the only exception to preparation in accordance
with GAAP, with respect to the New York Stock Exchange ("NYSE") seat currently
held by Hanifen, Imhoff, Stockholders' Equity shall be calculated using the last
published sale price of the NYSE for NYSE seats with option trading rights,
rather than in accordance with GAAP. The "Hanifen Value" shall mean the sum of
(i) difference (positive or negative) between (A) the Final Stockholders' Equity
(as hereinafter defined) and (B) $30,000,000, plus (ii) $97,200,000.
(c) As promptly as practicable following the Effective Date, but in
no event later than 45 days subsequent to the Effective Date, Fiserv Clearing
shall deliver to the persons who served on the Board of Directors of the Company
immediately prior to the Effective Date (the "Representatives") a schedule (the
"Final Schedule"), which shall include the consolidated balance
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sheet of the Company and the Subsidiaries as of the Effective Date prepared in
accordance with GAAP, and Fiserv Clearing's calculation as of the Effective Date
of the amount of the Stockholders' Equity, prepared on the same basis as the
Adjusted Balance Sheet (the "Final Stockholders' Equity"). If the
Representatives dispute the correctness of the Final Schedule, they, acting
together, shall notify Fiserv and Fiserv Clearing of the objections within five
business days after delivery of the Final Schedule and shall set forth in
reasonable detail in such notice the reason for the Representatives' objections.
If the Representatives fail to deliver such notice within such time period, the
Stockholders shall be deemed to have accepted Fiserv Clearing's calculation of
the Final Stockholders' Equity. If the Representatives deliver such notice,
Fiserv, Fiserv Clearing and the Representatives shall endeavor in good faith to
resolve their dispute over the determination of the Final Stockholders' Equity
within five business days after the receipt by Fiserv and Fiserv Clearing of
such notice. If they are unable to do so within such five-business-day period,
the dispute shall be submitted to an audit partner experienced in the clearing
industry of an independent nationally-recognized accounting firm in the United
States as shall be mutually acceptable to Fiserv and Fiserv Clearing, on the one
hand, and the Representatives (an "Independent Accounting Firm") who shall act
as an expert and not as an arbitrator, and who shall resolve the dispute within
10 days of the submission of such dispute. The decision of the Independent
Accounting Firm as to the Final Stockholders' Equity shall be final and binding
upon Fiserv, Fiserv Clearing and the Stockholders. The expense of the
Independent Accounting Firm shall be borne in proportion to the difference
between the final determined amount of the Independent Accounting Firm and such
amounts proposed by Fiserv and Fiserv Clearing, on the one hand, and the
Representatives acting for the Stockholders on the other hand. The
Representatives and Fiserv and Fiserv Clearing shall cooperate with the other
party in the determination of the Final Stockholders' Equity, including without
limitation, allowing the Representatives access after the Effective Date to the
books and records of the Company and to the accounting and other representatives
and advisors of the Company and its books and records for the purposes of making
such determination. Within three business days following final determination of
the Final Stockholders' Equity, as appropriate, Fiserv shall issue shares of
Fiserv Common Stock and pay the remaining amounts of cash payable to the
Stockholders hereunder in accordance with previously received instructions of
the Stockholders or the Stockholders shall pay such amounts to Fiserv and return
such number of shares of Fiserv Common Stock (with accompanying stock powers).
SECTION 3.02 Surrender and Payments. On and after the Effective
----------------------
Date, each Stockholder which is not a Dissenting Stockholder (as hereinafter
defined) will be entitled, upon the surrender of such Stockholder's certificates
representing shares of stock of the Company that are outstanding on the
Effective Date, in compliance with the procedures determined by Fiserv's
Transfer Agent, Firstar Trust Company (including completion of a letter of
transmittal), to receive (a) a check or checks for the amount of cash into which
the shares of Company Common Stock theretofore represented by the certificate or
certificates so surrendered shall have been converted as provided in Section
3.01 above (including cash in lieu of fractional shares under Section 3.06),
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and (b) a certificate or certificates representing the number of shares of
Fiserv Common Stock into which the shares of Company Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
converted as provided in Section 3.01 above, calculating in the case of each
portion of the amount paid or number of shares issued, as the case may be, the
Hanifen Value for this purpose by using the Stockholders' Equity from the
Adjusted Balance Sheet instead of Final Stockholders' Equity, and subject to a
holdback by Fiserv of cash equal to 5% of Stockholders' Equity pending
determination of the Final Stockholders' Equity. Promptly upon said
determination, the remaining amount of cash to be paid hereunder shall be so
paid or cash previously paid in connection with this Agreement shall be paid
back to Fiserv, provided that payments relating to undisputed amounts shall be
paid out within five business days after the parties determine that no
reasonable dispute exists with respect to all or any portion of such funds. If
any payment of cash or certificate representing shares of Fiserv Common Stock is
to be paid to a person or entity, or made in a name, other than that in which
the certificate theretofore surrendered for exchange is registered, it shall be
a condition of such payment or issuance that the certificate so surrendered be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such transfer either pay to Fiserv any transfer or other taxes
required by reason of the transfer to a person other than the registered holder
of the certificate surrendered or establish to the satisfaction of Fiserv that
such tax has been paid or is not payable.
SECTION 3.03 No Further Transfers. Upon or after the date of this
--------------------
Agreement through the Effective Date, except for transfers in the ordinary
course or otherwise required by contractual commitments in effect on the date
hereof, no transfer of the shares of Company Common Stock outstanding prior to
the Effective Date will be made on the stock transfer books of the Company or
the Surviving Corporation. The Company will promptly, and in any event prior to
the Closing Date, notify Fiserv concerning any transfers of Company Common Stock
by the Stockholders, and the parties then will make an appropriate amendment to
Schedule I to this Agreement to reflect any such transfer.
SECTION 3.04 Dissenting Shares. Any shares of Company Common Stock
-----------------
held by a holder who, prior to and after the taking of the vote of the
Stockholders of the Company on this Agreement, complies with Section 7-113-101
through 7-113-302 of the Colorado Business Corporation Act (the "Statute") shall
be herein called "Dissenting Shares" and a holder thereof a "Dissenting
Stockholder". Any Dissenting Stockholder shall not after the date of written
objection to the Merger as provided in the Statute, have any rights of a
stockholder, except as otherwise provided in the Colorado Business Corporation
Act, but shall have the rights provided in the Statute.
SECTION 3.05 Shares Acquired Upon Payment of Appraisal Rights.
------------------------------------------------
Dissenting Shares, if any, acquired upon payments to Dissenting Stockholders
pursuant to the Colorado Business Corporation Act shall be canceled.
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SECTION 3.06 No Fractional Shares. No certificate or scrip
--------------------
representing fractional shares of Fiserv Common Stock shall be issued upon the
surrender for exchange of certificates, and no dividend, stock split or interest
shall relate to any such fractional shares. In lieu of any fractional share of
Fiserv Common Stock being issued, such fractional share will be rounded down to
the nearest whole share of Fiserv Common Stock and cash shall be paid to the
Stockholder in respect of such fractional share based on the Fiserv Share Value.
ARTICLE IV
CERTAIN EFFECTS OF MERGER
SECTION 4.01 Effect of Merger. Upon and after the Effective Date:
----------------
(a) the Company will merge with and into the Surviving Corporation; (b) the
separate existence of the Company will cease; (c) the shares of the Company will
be converted as provided in this Agreement; (d) the former holders of such
shares will be entitled only to the rights provided in this Agreement or to the
rights provided under Section 7-113-102 of the Colorado Business Corporation
Act; and (e) the Merger will otherwise have the effect provided under the
applicable laws of the State of Delaware (including the General Corporation Law
of the State of Delaware, Section 259) and the State of Colorado (including
Colorado Business Corporation Act, Section 7-111-106).
SECTION 4.02 Further Assurances. If at any time after the Effective
------------------
Date, the Surviving Corporation will consider or be advised that any further
deeds, assignments or assurances in law or any other acts are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, the title to any property or right of the Constituent
Corporations acquired or to be acquired by reason of, or as a result of, the
Merger, or (b) otherwise to carry out the purposes of this Agreement, the
Constituent Corporations agree that the Surviving Corporation and its proper
officers and directors will execute and deliver all such property, deeds,
assignments and assurances in law and do all acts necessary, desirable or proper
to vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement, and that
the proper officers and directors of the Constituent Corporations and the proper
officers and directors of the Surviving Corporation are fully authorized in the
name of the Constituent Corporations or otherwise to take any and all such
action.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Representations and Warranties of the Company. Except as
---------------------------------------------
otherwise set forth in the Disclosure Schedule or any non-material update
thereof which the
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Company may provide from time to time prior to Closing (the "Disclosure
Schedule") annexed to this Agreement as Schedule II, the Company represents and
warrants to, and agrees with, Fiserv and Fiserv Clearing as follows:
(a) Organization and Qualification, etc. The Company and the
-----------------------------------
Subsidiaries are each a corporation duly organized, validly existing and in
good standing under the laws of their state of incorporation, have
corporate power and authority to own all of their respective properties and
assets and to carry on their business as they are now being conducted, are
duly qualified to do business and are in good standing in each other
jurisdiction as set forth in the Disclosure Schedule, and are not required
to be qualified to do business in any other jurisdiction where the failure
to so qualify would have a Material Adverse Effect (as defined below). The
copies of the Articles of Incorporation and Bylaws of the Company and each
Subsidiary, as amended to date, which have been delivered to Fiserv are
complete and correct, and such instruments, as so amended, are in full
force and effect.
"Material Adverse Effect," for purpose of this Agreement, when
used with respect to any party, means any change in or effect on, or any
series of changes in or effects on the business, assets or prospects of
such party, as such business is currently conducted by such party, that is
materially adverse to the results of its operations, financial, or other
conditions, arising or accruing before or after giving effect to the
transactions contemplated by this Agreement, but only to the extent that
the aggregate impact of all of such changes or effects, after taking into
account both positive and adverse changes and effects (other than ordinary
operating profits) decreases the worth of the Company and Subsidiaries
taken as a whole by $4,750,000 in the aggregate. "Adverse Effect" means
any change in, or effect on, or series of changes in, or effects on, the
business, or assets, of a party, that would result in the incurrence of
damages or liability of the sum of $80,000 or more.
(b) Capital Stock. The authorized capital stock of the Company
-------------
consists of 3,000,000 shares of Company Common Stock, of which 1,232,643
shares are outstanding on a fully diluted basis and 1,000,000 shares of
Preferred Stock, $.01 par value per share ("Company Preferred Stock"), of
which no shares are outstanding; all of such outstanding shares of Company
Common Stock are validly issued, fully paid and nonassessable; all of such
outstanding shares of Company Common Stock are held of record by the
Stockholders; and no shares of Company Common Stock are held in the
treasury of the Company. The authorized capital stock of each of the
Subsidiaries consists only of the number of shares of common stock and
preferred stock set forth in the Disclosure Schedule, of which the number
of shares of common stock and preferred stock outstanding is set forth in
the Disclosure Schedule; all of such outstanding shares of Subsidiary
common stock are validly issued, fully paid and nonassessable; and all of
such
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outstanding shares of Subsidiary common stock and preferred stock are held
of record by the Company. Except as set forth in the Disclosure Schedule
and, in the case of stock options, on Schedule III hereto, neither the
Company nor any Subsidiary has any commitments to issue or sell any shares
of its capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or
acquire from the Company or any Subsidiary, any shares of its capital stock
and no securities or obligations evidencing any such rights are
outstanding.
(c) Other Subsidiaries. Neither the Company nor any Subsidiary
------------------
owns of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into capital stock of
any corporation (other than the capital stock of a Subsidiary) or (ii) any
participating interest in any partnership, joint venture, limited liability
company, or other non-corporate business enterprise.
(d) Authority Relative to Agreement. The Company has the
-------------------------------
corporate power and authority to execute and deliver this Agreement, and to
consummate the transactions contemplated on the part of the Company by this
Agreement. The execution and delivery by the Company of this Agreement
and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by its board of directors other than
approval of the Stockholders and as otherwise provided in this Agreement.
Other than approval by the Company's Stockholders, no other corporate or
institutional proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and,
assuming the due authorization of this Agreement by the Stockholders and
the due authorization, execution and delivery of this Agreement by Fiserv
and Fiserv Clearing, and assuming all required approvals by governmental
agencies and self-regulatory organizations, is a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except as such enforcement is subject to the effect of (i)
any applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting creditors' rights generally; (ii) general
principles of equity, including, without limitation, concepts of
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law); and (iii) regulatory and
self-regulatory authorities.
(e) Non-Contravention. Subject to approval of the Stockholders,
-----------------
and assuming all required approvals by governmental agencies and self-
regulatory organizations, the execution and delivery of this Agreement by
the Company do not and the consummation by the Company of the transactions
contemplated hereby will not (i) violate any provision of the Articles of
Incorporation or Bylaws of the Company or any
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Subsidiary, (ii) to the knowledge of the Company, violate, or result, with
the giving of notice or the lapse of time or both, in a violation of, any
provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both)
any obligation under, or result in the creation or imposition of any
material lien, charge, pledge, security interest or other encumbrance upon
any of the property of the Company or any Subsidiary pursuant to any
provision of, any mortgage or lien or lease, agreement, license or
instrument or any order, arbitration award, judgment or decree to which the
Company or any Subsidiary is a party or by which any assets of the Company
or any Subsidiary is bound, and do not and will not violate or conflict
with any other material restriction of any kind or character to which the
Company or any Subsidiary is subject or by which any of its assets may be
bound, and the same does not and will not constitute an event permitting
termination of any such mortgage or lien or lease, agreement, license or
instrument to which the Company or any Subsidiary is a party, or (iii)
violate any law, ordinance or regulation to which the Company or any
Subsidiary is subject.
(f) Government Approvals. To the Company's knowledge, except for
--------------------
(i) the filing of the Delaware Certificate of Merger with the Secretary of
State of Delaware and the Colorado Articles of Merger with the Secretary of
State of the State of Colorado, (ii) filings with the Federal Trade
Commission (the "Commission") and the Antitrust Division of the Department
of Justice (the "Antitrust Division") under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the termination
of the requisite waiting period thereunder, (iii) filings with and
approvals of the Securities and Exchange Commission (the "SEC"), any
applicable state regulatory authorities (the "State Commissions"), the
National Association of Securities Dealers, Inc. (the "NASD") and the New
York Stock Exchange (the "NYSE") or (iv) where the failure to obtain such
consents, authorizations or approvals or to make such filings or
registrations would not prevent the consummation of the transactions
contemplated hereby, no consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or other
regulatory body is required for the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement. The Company and the
Subsidiaries have delivered to Fiserv and Fiserv Clearing complete and
correct copies of all filings made by the Company and the Subsidiaries
since September 25, 1994 with the SEC, the State Commissions, the NASD and
the NYSE, all as set forth on the Disclosure Schedule.
(g) Financial Statements. The Company has previously furnished
--------------------
Fiserv with true and complete copies of (i) the audited statements of
financial condition of the Company (Parent only) and of each of its
Subsidiaries as of September 27, 1996, and the related audited statements
of income, stockholders' equity and cash flows for each entity for the
fiscal year then ended, certified by Baird Kurtz and Dobson the independent
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accountants of the Company (the "Audited Company Financial Statements") and
(ii) the unaudited statements of financial condition of the Company (Parent
only) and of each of its Subsidiaries as of June 27, 1997, and the related
unaudited statements of income, stockholders' equity for each entity for
the period then ended (the "Unaudited Company Financial Statements";
collectively, the "Company Financial Statements"). Such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis ("GAAP"). Except as
disclosed on the Disclosure Schedule, neither the Company nor any
Subsidiary has any obligations in connection with any acquisition of the
business or assets of any other person which is not reflected on the
Company Financial Statements.
(h) Absence of Certain Changes or Events. Since September 27,
------------------------------------
1996, except as disclosed in the Company Financial Statements, neither the
Company nor any Subsidiary has:
(i) incurred any obligation or liability (fixed or
contingent), except trade or business obligations incurred in the
ordinary course of business;
(ii) discharged or satisfied any lien, security interest
or encumbrance or paid any obligation or liability (fixed or
contingent), other than in the ordinary course of business;
(iii) other than in the ordinary course of business,
mortgaged, pledged or subjected to any lien, security interest or
other encumbrance any of its assets or properties (other than
Permitted Exceptions (as hereinafter defined));
(iv) transferred, leased or otherwise disposed of any of
its assets or properties or acquired any assets or properties, except
in the ordinary course of business;
(v) canceled or compromised any debt or claim, except in
the ordinary course of business;
(vi) waived or released, under any contract, rights of the
Company having value to the Company or any of its Subsidiaries, except
in any case in the ordinary course of business and consistent with
past practice;
(vii) except for the transactions contemplated by the Asset
Purchase Agreement, transferred or granted any rights under any
concessions, leases, licenses, agreements, patents, inventions,
trademarks, trade names, service
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marks or copyrights or with respect to any know-how, except in the
ordinary course of business and consistent with past practice;
(viii) except in the ordinary course of business, and except
as shown on the Disclosure Schedule, made or granted any wage or
salary increase applicable to any group or classification of employees
generally, paid any bonuses, entered into any employment contract with
any officer or employee or made any loan to, or entered into any
transaction of any other nature with, any officer or employee of the
Company or any Subsidiary, as the case may be;
(ix) entered into any transaction, contract or commitment,
except those listed, or which pursuant to the terms hereof are not
required to be listed, on the Disclosure Schedule, this Agreement and
the transactions contemplated hereby, and those entered into in the
ordinary course of business;
(x) except as contemplated by this Agreement, declared,
paid or made any provision for payment of any dividends or other
distribution in respect of shares of Company Common Stock, or acquired
or made any provision for acquiring any shares of Company Common Stock
or capital stock of any Subsidiary;
(xi) declared, paid or made provisions for any other
payment to the Stockholders or any other affiliate of the Stockholders
or the Company, other than from a Subsidiary to the Company;
(xii) suffered any casualty loss or damage (whether or not
such loss or damage shall have been covered by insurance) which
affects in any material respect its ability to conduct its business;
or
(xiii) to the Company's knowledge, suffered any Material
Adverse Effect.
"Permitted Exceptions" means (i) mechanic's, materialman's,
warehouseman's and carrier's liens and purchase money security interests
arising in the ordinary course of business; (ii) liens for Taxes (as
hereinafter defined) and assessments not yet payable; (iii) liens for
Taxes, assessments and charges and other claims, the validity of which the
Company or any Subsidiary is contesting in good faith under circumstances
in which the property subject to the lien, assessment, charge or other
claim is not thereby jeopardized and adequate reserves for such matters are
reflected on the Company Financial Statements; and (iv) imperfections of
title, liens, security interests, claims and other char-
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<PAGE>
ges and encumbrances the existence of which would not have in the aggregate
an Adverse Effect.
(i) Title to Properties; Absence of Liens and Encumbrances,
------------------------------------------------------
etc. The Company and each Subsidiary has good title to all of the tangible,
---
personal and mixed properties and assets owned by it and used in its
business, free and clear of any liens, charges, pledges, security interests
or other encumbrances (other than Permitted Exceptions), except as
reflected in the Company Financial Statements and the Disclosure Schedule
and except that the foregoing representation and warranty as it affects the
securities position of Clearing is made to the Company's knowledge. The
Company's and each Subsidiary's intangible properties and assets (excluding
leasehold interests and other than any intangible properties and assets
described in Section 5.01(j) and 5.01(n), which sections contain the
Company's representations and warranties with respect to such intangible
properties and assets) are to the Company's knowledge free and clear of any
liens, charges, pledges, security interests or other encumbrances (other
than Permitted Exceptions), except as reflected in the Company Financial
Statements and the Disclosure Schedule.
(j) Software. The Disclosure Schedule contains a list or
--------
description by type of all operating and applications computer programs and
data bases ("Software") which the Company or any Subsidiary, as the case
may be, uses or has available for use and plans to use, and such Software
constitutes all the Software which is used in connection with or, to the
Company's knowledge, is necessary to operate the business of the Company or
any Subsidiary, as the case may be, as currently conducted. Except as
indicated in the Disclosure Schedule, such Software is owned outright by
the Company or a Subsidiary, as the case may be. As to any Software which
is listed in the Disclosure Schedule and is not owned by the Company or a
Subsidiary, as the case may be, the Company or the Subsidiary, as the case
may be, has the right to use the same pursuant to valid leases or licenses
therefor, and, except as otherwise disclosed in the Disclosure Schedule,
all such leases and licenses are in full force and effect and there is no
default, nor any event which with notice or the lapse of time or both, will
become a default under any such lease or license by the Company or any
Subsidiary, as the case may be, or any other parties thereto. To the
knowledge of the Company, none of the Software used by or available to the
Company or any Subsidiary, as the case may be, as aforesaid, and no use
thereof, infringes upon or violates any patent, copyright, trade secret or
other proprietary right of anyone else and neither the Company nor any
Subsidiary, as the case may be, has received notice of any claim with
respect to any such infringement or violation. Either the Company or a
Subsidiary possess the original and all copies of all documentation,
including without limitation all source codes, for all Software owned
outright by it (other than such as shall have been furnished to customers
in connection with the provision of the services of the Company or a
Subsidiary, as the case may be). Upon consummation of the
A-17
<PAGE>
transactions contemplated hereby, (x) each of the Company and a Subsidiary
will continue to own all of the Software owned outright by the Company or
the Subsidiary prior to the Closing, free and clear of all claims, liens,
encumbrances, obligations and liabilities except those existing at Closing
and except for such claims, liens, encumbrances, obligations and
liabilities of the Company or the Subsidiary, as the case may be, (i)
applicable to Software licensed to third parties and (ii) as may be granted
by the Company or the Subsidiary, as the case may be, after the Closing
Date; and (y) with respect to all agreements for the lease or license of
Software which require consents or other actions (which consents or other
actions are listed in the Disclosure Schedule) as a result of the
consummation of the transactions contemplated hereby in order for the
Company or the Subsidiary, as the case may be, to continue to use and
operate such Software after the Closing Date, the Company and each
Subsidiary will endeavor to obtain such consents or take such other actions
as reasonably required.
(k) List of Properties, Contracts and Other Data. The
--------------------------------------------
Disclosure Schedule contains a list setting forth with respect to the
Company and each Subsidiary as of the date hereof the following:
(i) all real properties owned in fee simple by the
Company or any Subsidiary, as the case may be;
(ii) all leases of real or personal property to which
the Company or any Subsidiary, as the case may be, is a party, either
as lessee or lessor with a brief description of the property to which
each such lease relates, except such leases of personal property as
require payment during their remaining life aggregating less than
$80,000;
(iii) (a) all patents, trademarks and trade names,
trademark and trade name registrations, servicemark registrations,
copyrights and copyright registrations, unexpired as of the date
hereof, all applications pending on said date for patents or for
trademark, trade name, service mark or copyright registrations, all
other proprietary rights owned or held by the Company or any
Subsidiary, as the case may be, and reasonably necessary to, or used
by the Company or any Subsidiary, as the case may be, primarily in
connection with, its business and (b) all licenses granted by or to
the Company or any Subsidiary, as the case may be, and all other
agreements to which the Company or any Subsidiary, as the case may be,
is a party which relate, in whole or in part, to any items of the
categories mentioned in (a) above, other than any such license or
other agreement requiring payments during its remaining life
aggregating less than $80,000 or terminable by the Company or any
Subsidiary, as the case may be, within one year without payment of a
premium or penalty;
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<PAGE>
(iv) all collective bargaining agreements, employment
and consulting agreements (other than consulting agreements terminable
by the Company or a Subsidiary, as the case may be, within 60 days
without payment of a premium or a penalty), executive compensation
plans, bonus plans, deferred compensation agreements, employee pension
plans or retirement plans, employee profit sharing plans, employee
stock purchase and stock option plans, group life insurance,
hospitalization insurance or other plans or arrangements providing for
benefits to employees of the Company or any Subsidiary, as the case
may be;
(v) all contracts and commitments (including, without
limitation, mortgages, indentures and loan agreements) to which the
Company or any Subsidiary, as the case may be, is a party, or to which
it or any of its assets or properties are subject and which are not
specifically referred to in (i), (ii), (iii) or (iv) above; provided
--------
that there need not be listed in the Disclosure Schedule (unless
required pursuant to the preceding clauses (i), (ii), (iii) or (iv)
above) any contract or commitment incurred in the ordinary course of
business and consistent with past practice which requires payments to
or by the Company or any Subsidiary, as the case may be, during its
remaining life aggregating less than $80,000;
(vi) all clearing and execution arrangements and all
other arrangements relating to the ability of Clearing to execute and
clear trades (and the Company represents that all provisions relating
to the rights of the other party to terminate such agreements are
contained in such agreements);
(vii) the current annual compensation of all employees
of the Company and Clearing (by position or by department) as of a
recent date (a copy of which has been submitted to Fiserv and Fiserv
each Subsidiary but is not included in the Disclosure Schedule); and
(viii) all audits, examinations and reports for the last
three (3) years submitted to or by regulatory and self-regulatory
agencies with jurisdiction over the Company or any Subsidiary.
True and complete copies of all written documents, agreements or
commitments (if any) referred to in (i) through (viii) above and, to the
Company's knowledge, summaries of all oral agreements (if any) referred to
in (i) through (vi) above, have been provided to Fiserv or its counsel.
Except as set forth in the Disclosure Schedule, neither the Company nor any
Subsidiary has been notified in writing of any claim that any contract
listed in the Disclosure Schedule for this subsection (k) is not valid and
enforceable in accordance with its terms for the periods stated therein, or
that there is under any such contract any existing material default or
event of default or event which with notice or lapse of time or both
A-19
<PAGE>
would constitute such a material default. With respect to the arrangements
set forth in clause (vi), none of such arrangements will be terminated or
made subject to termination at the direction of anyone other than Clearing
nor will any of such arrangements be materially altered as a result of
consummation of the transactions contemplated hereby.
(l) Litigation. Except as set forth in the Disclosure Schedule,
----------
there are no actions, suits, investigations or proceedings with respect to
the business of the Company or any Subsidiary pending against the Company
or any Subsidiary of which the Company has knowledge, or before or by any
federal, state, municipal, foreign or other governmental department,
commission, board, bureau, agency or instrumentality, nor has either the
Company or any Subsidiary received any notice of, or any written threats
concerning the possible commencement of, any such actions, suits or
proceedings with respect to the business of the Company or any Subsidiary,
as the case may be, nor has the Company or any Subsidiary reason to know of
any potential action, suit or proceeding with respect to the business of
the Company or such Subsidiary, as the case may be, other than that
Hanifen, Imhoff is engaged in a business that often involves litigation in
which it is a defendant.
(m) Labor Controversies. Except as would not reasonably be
-------------------
expected to have in the aggregate an Adverse Effect and except as set forth
on the Disclosure Schedule:
(i) there are no controversies between the Company or any
Subsidiary, as the case may be, and any employees or any unresolved
labor union grievances or unfair labor practice or labor arbitration
proceedings pending or, to the knowledge of the Company threatened,
related to the Company or any Subsidiary and, to the knowledge of the
Company, there are not and during the last two years prior to the date
hereof there have not been any formal or informal organizing efforts
by a labor organization and/or a group of Company or any Subsidiary,
as the case may be, employees; and
(ii) neither the Company nor any Subsidiary has received
notice of any claim that it has not complied with any laws relating to
the employment of labor, including any provisions thereof relating to
wages, hours, collective bargaining, the payment of social security
and similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that it is liable for any
arrears of wages or any Taxes or penalties for failure to comply with
any of the foregoing.
(n) Patent, Trademark, etc. Claims. No person has made or, to
------------------------------
the knowledge of the Company, threatened to make any claims that the
operation of the
A-20
<PAGE>
business of the Company or any Subsidiary, as the case may be, is in
violation or infringement of any patent, patent license, trade name,
trademark, servicemark, brandmark, brand name, copyright, know-how or other
proprietary or trade rights of any third party[; and neither the Company or
Clearing knows of any non-frivolous basis for any such claims].
(o) Use of Real Property. Neither the Company nor any Subsidiary
--------------------
has received any notice of violation of any applicable zoning or building
regulation, ordinance or other law, order, regulation or requirement
relating to the operations of the Company or any Subsidiary, as the case
may be, or any notice of default under any lease, contract, commitment,
license or permit, relating to the use and operation of the owned or leased
real property listed in the Disclosure Schedule, in either case which would
have in the aggregate an Adverse Effect and, to the knowledge of the
Company, there is no such violation or default which would have in the
aggregate an Adverse Effect. Neither the Company nor any Subsidiary has
received any notice that any plant or other building which is owned or
covered by a lease set forth in the Disclosure Schedule hereto does not
substantially conform with all applicable ordinances, codes, regulations
and requirements, and neither the Company nor any Subsidiary has received
notice that any law or regulation presently in effect or condition
precludes or restricts continuation of the present use of such properties
by the Company or such Subsidiaries, as the case may be.
(p) Compliance with Law.
-------------------
(i) Neither the Company nor any Subsidiary has been
notified that it is in violation of any laws (including but not
limited to orders, judgments or rulings of any court, governmental
authority or arbitration board or tribunal), ordinances, governmental
rules or regulations to which it is subject or has failed to obtain
any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its assets and properties or to the
conduct of its business. The Company and each Subsidiary to their
knowledge have conducted their operations in compliance with
applicable laws and rules and regulations (including those of non-
governmental, quasi-governmental, or self-regulatory organizations)
relating to broker dealers, investment managers and clearing brokers,
except for such instances of noncompliance which in the aggregate
would not have an Adverse Effect.
(ii) Clearing has not received notice that there has
occurred any act or default on the part of Clearing which would
adversely affect the status of Clearing as a broker/dealer engaged in
providing various execution and clearing services under federal or
state law, would constitute a violation of federal or state law by
Clearing or would otherwise have an Adverse Effect.
A-21
<PAGE>
(iii) To the extent set forth on the Disclosure Schedule,
the Company has continually maintained a surety bond insuring it and
each of its Subsidiaries against acts of dishonesty by its and its
Subsidiaries' employees in such amounts as is customary, usual and
prudent for a corporation of its size. Except as set forth on the
Disclosure Schedule, no claims in excess of the deductible limits of
the surety bond have been made under such bond, and to the knowledge
of the Company, there are no facts, circumstances or conditions
existing that could reasonably be expected to result in the occurrence
of any claim that would have an Adverse Effect.
(iv) Except as set forth on the Disclosure Schedule and
to the knowledge of the Company, the Company and each Subsidiary has
filed all applicable reports, returns and filing information data with
federal securities authorities, State Commissions and other regulatory
agencies as are required by federal or state law and regulations, the
failure of which would result in an Adverse Effect.
(v) Except as set forth on the Disclosure Schedule or the
Financial Statements, no officer or director of the Company or any
Subsidiary, no beneficial owner of 10% or more of the outstanding
common stock of the Company (a "principal stockholder"), no member of
the immediate family of any such officer, director, or principal
stockholder, and no entity in which any of such person owns any
beneficial interest, has any loan agreement, note or borrowing
arrangement or any other agreement with the Company or any Subsidiary
(other than normal employment arrangements complying with all
applicable laws and regulations) or any interest in any property,
real, personal or mixed, tangible or intangible, used and/or
pertaining to the business of the Company or any Subsidiary. For
purposes of this paragraph, the members of the immediate family of any
officer, director, or principal shareholder will consist of the
spouse, parents, children, siblings, mothers and fathers-in-law, sons
and daughters-in-law, and brothers and sisters-in-law of such officer,
director or principal stockholder.
(vi) The Company has on file a valid Form I-9 for each
employee hired by the Company or any Subsidiary on or after November
7, 1986 and continuously employed after November 6, 1986 or the
applicable date of hire. To the knowledge of the Company, all
employees of the Company and each Subsidiary are (A) United States
citizens, or lawful permanent residents of the United States, (B)
aliens whose right to work in the United States allows them to work
for the Company or Clearing, as the case may be, (C) aliens who have
valid, unexpired work authorization issued by the Attorney General of
the United States (Immigration and Naturalization Service) or (D)
aliens who have been continually
A-22
<PAGE>
employed by the Company or a Subsidiary since November 6, 1986 or the
applicable date of hire. To the Company's knowledge, the Company has
not been the subject of an immigration compliance or employment visit
from, nor has the Company been assessed any fine or penalty by, or
been the subject of any order or directive of, the United States
Department of Labor or the Attorney General of the United States
(Immigration and Naturalization Service).
(q) Employee Benefits.
-----------------
(i) The Disclosure Schedule sets forth a list identifying
each "employee benefit plan" as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including any "multiemployer plan, "as defined in Section 3(37) of
ERISA, (the "Pension Plans") and a list identifying each "employee
welfare benefit plan," as defined in Section 3(1) of ERISA, (the
"Welfare Plans") that, in either case, are maintained, administered or
contributed to by the Company and its Subsidiaries, or which cover
any employee or former employee of the Company or a Subsidiary.
Collectively, the Pension Plans and Welfare Plans are hereinafter
referred to as the "Employee Plans". Except as otherwise identified on
the Disclosure Schedule (A) no Employee Plan is maintained,
administered or contributed to by any entity other than the Company,
and (B) no Employee Plan is maintained under any trust arrangement
which covers any employee benefit arrangement which is not an Employee
Plan.
(ii) The Company has delivered or has caused to be delivered
to Fiserv true and complete copies of (A) the Employee Plans
(including related trust agreements, custodial agreements, insurance
contracts, investment contracts and other funding arrangements, if
any, and adoption agreements, if any), (B) any amendments to Employee
Plans, if any, (C) written interpretations of the Employee Plans, (D)
material employee written communications by the plan administrator of
any Employee Plan (including, but not limited to, summary plan
descriptions and summaries of material modifications, as defined under
ERISA), (E) the three most recent annual reports (e.g., the complete
Form 5500 series) prepared in connection with each Employee Plan (if
any such report was required), including all attachments (including
without limitation the audited financial statements, if any) and (F)
the three most recent actuarial valuation reports prepared in
connection with each Employee Plan (if any such report was required).
(iii) There has been no amendment to, written interpretation
or announcement (whether or not written) by the Company relating to,
or change in employee participation or coverage under any Employee
Plan that would increase materially the expense of maintaining such
Employee Plan above the level of
A-23
<PAGE>
expense incurred in respect of such Employee Plan for the most recent
plan year with respect to Employee Plans. The execution of this
Agreement and the consummation of the transactions contemplated hereby
do not and will not constitute an event under any Employee Plan, which
either alone or upon the occurrence of a subsequent event will or may
result in any payment, acceleration, vesting or increase in benefits
to any employee, former employee or director of the Company.
(iv) Each Employee Plan has been maintained in substantial
compliance with its terms and the requirements prescribed by any and
all statutes, orders, rules and regulations, including but not limited
to, ERISA and the Code, which are applicable to such Employee Plan.
(v) To the Company's knowledge, each Pension Plan is
"qualified" within the meaning of Section 401(a) of the Code, and has
been qualified during the period from the date of its adoption to the
date of this Agreement, and each trust created thereunder is tax-
exempt under Section 501(a) of the Code. The Company has delivered or
caused to be delivered to Fiserv the latest determination letters of
the Internal Revenue Service relating to each Pension Plan. To the
Company's knowledge, such determination letters have not been revoked.
Furthermore, there are no pending proceedings or, to the knowledge of
the Company, threatened proceedings in which the "qualified" status of
any Pension Plan is at issue and in which revocation of the
determination letter has been threatened. To the Company's knowledge
each such Pension Plan has not been amended or operated, since the
receipt of the most recent determination letter, in a manner that
would adversely affect the "qualified" status of the Plan. To the
Company's knowledge, no distributions have been made from any of the
Pension Plans that would violate in any respect the restrictions under
Treas. Reg. Section 1.401(a)(4)-5(b), and none will have been made by
the Effective Date.
(vi) There are no pending or, to the knowledge of the
Company, threatened (A) claims, suits or other proceedings by any
employees, former employees or plan participants or the beneficiaries,
spouses or representatives of any of them, other than ordinary and
usual claims for benefits by participants or beneficiaries, or (B)
suits, investigations or other proceedings by any federal, state,
local or other governmental agency or authority, of or against any
Employee Plan, the assets held thereunder, the trustee of any such
assets or the Company relating to any of the Employee Plans. If any of
the actions described in this subsection are initiated prior to the
Effective Date, the Company shall notify Fiserv of such action prior
to the Effective Date.
A-24
<PAGE>
(vii) To the Company's knowledge, neither the Company nor any
Subsidiary has engaged (A) in any transaction or acted or failed to
act in a manner that violates the fiduciary requirements of Section
404 of ERISA, or (B) in any "prohibited transaction" within the
meaning of Section 406(a) or 406(b) of ERISA, or of Section 4975(c) of
the Code, with respect to any Employee Plans, and will not so engage,
act or fail to act prior to the Effective Date. Furthermore, to the
knowledge of the Company, no other "party in interest," as defined in
Section 3(14) of ERISA, or "disqualified person," as defined in
Section 4975(e)(2) of the Code, has engaged in any such "prohibited
transaction".
(viii) To the Company's knowledge, no liability has been
incurred by the Company or by a trade or business, whether or not
incorporated, which is deemed to be under common control or affiliated
with the Company within the meaning of Section 4001 of ERISA or
Section 414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate") for
any tax, penalty or other liability with respect to any Employee Plan
and, to the knowledge of the Company, such Plans do not expect to
incur any such liability prior to the Effective Date.
(ix) The Company has made all required contributions under
each Pension Plan on a timely basis or, if not yet due, adequate
accruals therefor have been provided for in the financial statements.
No Pension Plan has incurred any "accumulated funding deficiency"
within the meaning of Section 302 of ERISA or Section 412 of the Code
and no Pension Plan has applied for or received a waiver of the
minimum funding standards imposed by Section 412 of the Code.
(x) Except for required premium payments, no liability to
the Pension Benefit Guaranty Corporation (the "PBGC") has been
incurred by the Company with respect to any Pension Plan that has not
been satisfied in full, and no event has occurred and, to the
Company's knowledge, there exists no condition or set of circumstances
that could result in the imposition of any such liability. The Company
has complied, or will comply, with all requirements for premium
payments, including any interest and penalty charges for late payment,
due to PBGC on or before the Effective Date with respect to each
Pension Plan for which any premiums are required. No proceedings to
terminate, pursuant to Section 4042 of ERISA, have been instituted or,
to the knowledge of the Company, are threatened by the PBGC with
respect to any Pension Plan (or any Pension Plan maintained by an
ERISA Affiliate). There has been no termination or partial
termination, as defined in Section 411(d) of the Code and the
regulations thereunder, of any Pension Plan. No reportable event,
within the meaning of Section 4043 of ERISA, has occurred with respect
to any Pension Plan.
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<PAGE>
(xi) As of the date of this Agreement, with respect to each
Pension Plan which is covered by Title IV of ERISA and which is not a
multiemployer plan, the current value of the accumulated benefit
obligations (based on the actuarial assumptions that would be utilized
upon termination of such Pension Plan) do not exceed the current fair
value of the assets of such Pension Plan. Except as listed in the
Disclosure Schedule, there has been (A) no material adverse change in
the financial condition of any such Pension Plan, (B) no change in
actuarial assumptions with respect to any such Pension Plan and (C) no
increase in benefits under any such Pension Plan as a result of plan
amendment, written interpretations, announcements, change in
applicable law or otherwise which, individually or in the aggregate,
would result in the value of any such Pension Plan's accrued benefits
exceeding the current value of such Pension Plan's assets.
(xii) Neither the Company nor any ERISA Affiliate has ever
maintained, adopted or established, contributed or been required to
contribute to, or otherwise participated or been required to
participate in, nor will they become obligated to do so through the
Effective Time, any "multiemployer plan" (as defined in Section 3(37)
of ERISA). No amount is due from, or owed by, the Company or any
ERISA Affiliate on account of a "multiemployer plan" (as defined in
Section 3(37) of ERISA) or on account of any withdrawal therefrom.
(xiii) To the Company's knowledge, no Employee Plan provides
benefits, including without limitation, any severance or other post-
employment benefit, salary continuation, termination, death,
disability, or health or medical benefits (whether or not insured),
life insurance or similar benefit with respect to current or former
employees (or their spouses or dependents) of the Company beyond their
retirement or other termination of service other than (A) coverage
mandated by applicable law, (B) death, disability or retirement
benefits under any Pension Plan, (C) deferred compensation benefits
accrued as liabilities on the financial statements of the Company or
(D) benefits, the full cost of which is borne by the current or
former employee (or his or her beneficiary).
(xiv) To the Company's knowledge, the Company has complied
with, and satisfied, the requirements of Part 6 of Subtitle B of Title
I of ERISA and Section 4980(B) of the Code, and all regulations
thereunder ("COBRA") with respect to each Employee Plan that is
subject to the requirements of COBRA. To the Company's knowledge,
each Employee Plan which is a group health plan, within the meaning of
Section 9805(a) of the Code, has complied with and satisfied the
applicable requirements of Section 9801 and 9802 of the Code.
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<PAGE>
(r) Insurance. The Disclosure Schedule accurately summarizes the
---------
amount and kinds of all policies of insurance covering the directors,
employees, assets or operations of the Company or any Subsidiary in effect
on the date of this Agreement (referred to as "Current Policies"). The
Company has delivered to Fiserv a true and complete copy of each insurance
policy described in the preceding sentence. To the Company's knowledge,
all Current Policies are in full force and effect except as set forth in
the Disclosure Schedule. No notice of cancellation or termination of any
Current Policies has been given to the Company or any Subsidiary by the
carrier of any such policy. To the Company's knowledge, no application
filed for a Current Policy contains any material misstatement of fact or
fails to state any material fact which may materially and adversely affect
the insurance coverage provided.
(s) Bank Accounts. The Disclosure Schedule lists all bank, money
-------------
market, savings and similar accounts and safe deposit boxes of the Company
and each Subsidiary specifying the account numbers and the authorized
signatories of persons having access to them.
(t) Taxes.
-----
(i) Each of the Company and the Subsidiaries has (a) duly
and timely filed all Tax Returns (as defined below) required to be
filed for all periods ending on or prior to the Effective Date, which
Tax Returns are true, correct and complete in all material respects
and (b) timely paid all Taxes (as defined below) shown as due and
payable on such Tax Returns in respect of all periods up to and
including the Effective Date and has properly accrued on its financial
statements all Taxes not yet payable in respect of all periods up to
and including the Effective Date. Prior to the Closing Date, the
Company shall provide Fiserv with a schedule which sets forth each
Taxing jurisdiction in which the Company or any Subsidiary has filed
or is required to file Tax Returns and whether such Tax Return was
filed on a consolidated, combined, unitary or separate basis and a
copy of such Tax Returns as have been requested by Fiserv. To the
Company's knowledge, the Company and each Subsidiary has timely and
properly withheld or collected, paid over and reported all Taxes
required to be withheld or collected by the Company or any Subsidiary
on or before the Effective Date. Except for Tax Returns which cover
only the Company and the Subsidiaries, none of the Company or the
Subsidiaries have filed consolidated, combined or unitary Tax Returns
with any other entities.
(ii) Except as set forth in the Disclosure Schedule, (a)
no Taxing authority has asserted any adjustment that could result in
an additional Tax
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<PAGE>
for which the Company or any Subsidiary is or may be liable, (b) there
is no pending audit, examination, investigation, dispute, proceeding
or claim (collectively, "Proceeding") relating to any Tax for which
the Company or any Subsidiary is or may be liable and, to the
knowledge of the Company, no Taxing authority is contemplating such a
Proceeding and, to the Company's knowledge, there is no basis for any
such Proceeding, (c) no statute of limitations with respect to any Tax
for which the Company or any Subsidiary is or may be liable has been
waived or extended, (d) there is no outstanding power of attorney
authorizing anyone to act on behalf of the Company or any Subsidiary
in connection with any Tax, Tax Return or Proceeding relating to any
Tax, (e) there is no outstanding closing agreement, ruling request,
request to consent to change a method of accounting, subpoena or
request for information with or by any Taxing Authority with respect
to the Company or any Subsidiary, any of their income, assets or
business, or any Tax for which the Company or any Subsidiary is or may
be liable and (f) neither the Company nor any Subsidiary is a party to
any Tax sharing or Tax allocation agreement, arrangement or
understanding. The Company and each Subsidiary have duly and timely
paid all Taxes asserted by any Taxing authority to be payable unless
such Tax is being contested by the Company or Subsidiary diligently
and in good faith.
(iii) Neither the Company nor any Subsidiary is a party
to any agreement, contract or arrangement that would result,
individually or in the aggregate, in the payment of any amount that
would not be deductible by reason of Section 162, 280G or 404 of the
Code. Neither the Company nor any Subsidiary is a "consenting
corporation" within the meaning of Section 341(f) of the Code. Neither
the Company nor any Subsidiary has any "tax-exempt use property"
within the meaning of Section 168(h) of the Code. None of the assets
of the Company or any Subsidiary is required to be treated as being
owned by any other person pursuant to the "safe harbor" leasing
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954,
as in effect prior to the repeal of said leasing provisions. None of
the Company nor any Subsidiary has ever made, or been required to
make, an election under Section 338 of the Code.
(iv) For purposes of this Agreement, "Taxes" shall mean
all federal, state, local and foreign taxes, charges, fees, levies,
deficiencies or other assessments of whatever kind or nature
(including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, estimated,
severance, stamp, occupation, property, minimum, environmental,
windfall profits or other taxes, customs, duties, fees, assessments or
charges of any kind whatsoever), including any liability therefor as a
transferee (including under Section 6901 of the
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<PAGE>
Code or any similar provision under applicable law, as a result of
Treasury Regulation Section 1.1502-6 or any similar provision under
applicable law), or as a result of any Tax sharing or similar
agreement, together with any interest, penalties, additions to tax or
additional amounts imposed by any Taxing authority (domestic or
foreign).
(v) As used herein, "Tax Return" includes any return,
declaration, report, information return or statement, and any
amendment thereto, including without limitation any consolidated,
combined or unitary return or other document (including any related or
supporting information or schedule), filed or required to be filed
with any federal, state, local or foreign governmental entity or
agency in connection with the determination, assessment, collection or
payment of Taxes or the administration of any laws, regulations or
administrative requirements relating to Taxes or ERISA.
(u) Correspondent Agreements. Set forth on Section 5.01(u) of
------------------------
the Disclosure Schedule are true and complete copies of Clearing's standard
fully disclosed correspondent agreement and corresponding ancillary
documents. The correspondent agreements and corresponding ancillary
documents actually entered into by Clearing with its various clients are
substantially similar to the copies attached hereto.
(v) Books and Records. To the Company's knowledge, the books and
-----------------
records of the Company and each Subsidiary are complete and accurate in all
material respects.
(w) Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by the Company and
the Stockholders directly with Fiserv, without the intervention of any
other person on behalf of the Company or any Stockholder in such manner as
to give rise to any valid claim by any other person against the Company or
any Stockholder for a finder's fee, brokerage commissions or similar
payment, except for a fee payable to Smith Barney Inc., which fee will be
paid in full, or fully accrued on the Company's financial records, prior to
the Effective Date.
(x) Limitation on Representations and Warranties. The Company
--------------------------------------------
shall not be deemed to have made to Fiserv or Fiserv Clearing any
representation or warranty, other than those as expressly made by the
Company in Section 5.01 hereof. Without limiting the generality of the
foregoing, and notwithstanding any other express representations and
warranties made by the Company in Section 5.01, the Company makes no
representation or warranty to Fiserv or Fiserv Clearing with respect to:
(i) any projections, estimates or budgets heretofore delivered to or made
available to Fiserv of
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<PAGE>
future revenues, expenses or expenditures, future results of operations,
etc.; or (ii) any other information or documents made available to Fiserv,
Fiserv Clearing or their counsel, accountants or advisors, except as
expressly covered by representations and warranties contained in Section
5.01 hereof. Fiserv and Fiserv Clearing each acknowledge that: (i) it is a
sophisticated investor capable of making all investment decisions regarding
acquisition of the Company; (ii) it has conducted extensive due diligence
regarding the Company, its Subsidiaries and their business activities and
is fully familiar with the business and prospects of the Company and
Clearing; and (iii) it has not relied on any representations or warranties
regarding the Company, Clearing or their businesses except those set forth
in Section 5.01 hereof.
(y) Limitation on Breaches of Representations and Warranties.
--------------------------------------------------------
Notwithstanding any provision in this Section 5.01 to the contrary, no
breach of a representation or warranty by the Company will be deemed to
have occurred unless the sum of all losses exceeds $4,750,000.
SECTION 5.02 Representations and Warranties of Fiserv and Fiserv
---------------------------------------------------
Clearing. Fiserv and Fiserv Clearing, jointly and severally, represent and
- ---------
warrant to, and agree with, the Company as follows:
(a) Organization and Qualification, etc. Fiserv and Fiserv Clearing
-----------------------------------
are corporations duly organized, validly existing and in good standing
under the laws of the State of Wisconsin and the State of Delaware,
respectively, and each has corporate power and authority to own its
properties and assets and to carry on its business as it is now being
conducted. Each of Fiserv and Fiserv Clearing is duly qualified to do
business and is in good standing in each jurisdiction where the failure to
be so qualified would have a Material Adverse Effect.
(b) Authority Relative to Agreement. Each of Fiserv and Fiserv
-------------------------------
Clearing has the corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated on its part
hereby. The execution and delivery of this Agreement by Fiserv and Fiserv
Clearing and the consummation by each of them of the transactions
contemplated on its part by this Agreement have been duly authorized by
their respective board of directors and, in the case of Fiserv Clearing,
its sole stockholder. No other corporate proceedings on the part of Fiserv
or Fiserv Clearing are necessary to authorize the execution and delivery of
this Agreement. This Agreement have been duly executed and delivered by
Fiserv and Fiserv Clearing and, assuming the due authorization, execution
and delivery of this Agreement by the Company, is a valid and binding
agreement, enforceable against Fiserv and Fiserv Clearing, in accordance
with its terms, except as such enforcement is subject to the effect of (i)
any applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting creditors' rights
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<PAGE>
generally and (ii) general principles of equity, including, without
limitation, concepts of reasonableness, good faith and fair dealing, and
other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity or at
law).
(c) Non-Contravention. The execution and delivery of this Agreement
-----------------
by Fiserv and Fiserv Clearing, do not, and the consummation by Fiserv and
Fiserv Clearing of the transactions contemplated by this Agreement will not
(i) violate any provision of the Articles of Incorporation or By-laws of
Fiserv or the Certificate of Incorporation or By-laws of Fiserv Clearing,
or (ii) violate, or result, with the giving of notice or the lapse of time
or both, in a violation of, any provision of, or result in the acceleration
of or entitle any party to accelerate (whether after the giving of notice
or lapse of time or both) any obligation under, or result in the creation
or imposition of any material lien, charge, pledge, security interest or
other encumbrance upon any of the property of Fiserv or Fiserv Clearing
pursuant to any provision of any mortgage or lien or lease, agreement,
license or instrument or any order, arbitration award, judgment or decree
to which Fiserv or Fiserv Clearing is a party or by which any of their
respective assets is bound and do not and will not violate or conflict with
any other material restriction of any kind or character to which Fiserv or
Fiserv Clearing is subject or by which any of its respective assets may be
bound, and the same does not and will not constitute an event permitting
termination of any such mortgage or lien or lease, agreement, license or
instrument to which Fiserv or Fiserv Clearing is a party or (iii) violate
in any material respect any law, ordinance or regulation to which Fiserv or
Fiserv Clearing is subject.
(d) Government Approvals. Except for (i) the filing of the Delaware
--------------------
Certificate of Merger with the Secretary of State of Delaware and the
Colorado Articles of Merger with the Secretary of State of the State of
Colorado, (ii) the filings with the Commission and the Antitrust Division
under the HSR Act, and the termination of the requisite waiting period
thereunder, (iii) as may be necessary as a result of any facts or
circumstances relating solely to the Company or its Subsidiaries or (iv)
where the failure to obtain such consents, authorizations or approvals or
to make such filings or registrations would not prevent the consummation of
the transactions contemplated hereby, no consent, authorization, order or
approval of, or filing or registration with, any governmental commission,
board or other regulatory body is required for or in connection with the
execution and delivery of this Agreement by Fiserv and Fiserv Clearing, and
the consum mation by Fiserv and Fiserv Clearing of the transactions
contemplated by this Agreement.
(e) SEC Reports. Fiserv has provided the Company with all required
-----------
forms, reports and documents which it has been required to file with the
SEC since January 1, 1996 (collectively, the "Fiserv SEC Reports"), each of
which has complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act. As
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<PAGE>
of their respective dates, the Fiserv SEC Reports, including, without
limitation, any financial statements or schedules included therein, did 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, except, in the case of any Fiserv SEC Report, any
statement or omission therein that has been corrected or otherwise
disclosed in a subsequent Fiserv SEC Report. The audited financial
statements and unaudited interim financial statements of Fiserv included in
its Annual Report on Form 10-K for the fiscal year ended December 31, 1995
and in its Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996, in its Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 and in its
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 1997
and June 30, 1997 present, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), fairly present the consolidated financial position of the
Fiserv and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for
the periods then ended (subject to normal year-end adjustments and the
absence of certain footnote disclosures in the case of any unaudited
interim financial statements).
(f) Capitalization of Fiserv. The authorized capital stock of Fiserv
------------------------
consists of 150,000,000 shares of Fiserv Common Stock and 25,000,000 shares
of Preferred Stock, of which no shares of Preferred Stock and 52,426,181
shares of Fiserv Common Stock are validly issued and outstanding, fully
paid and nonassessable. Except as set forth on Schedule 5.02(f), as of the
date hereof, Fiserv has no commitments to issue or sell any of its capital
stock or any securities or obligations convertible into or exchangeable
for, or giving any person any right to subscribe for or acquire from
Fiserv, any shares of its capital stock and no securities or obligations
evidencing such rights are outstanding.
(g) Capitalization of Fiserv Clearing. Fiserv Clearing has
----------------------------------
authorized common stock, par value $.001 per share ("Fiserv Clearing Common
Stock"), of which 7,500 shares are validly issued and outstanding, fully
paid and nonassessable and all of which are owned by Fiserv. Fiserv
Clearing has no commitments to issue or sell any of its capital stock or
any securities or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire from Fiserv
Clearing, any shares of its capital stock and no securities or obligations
evidencing such rights are outstanding.
(h) Fiserv Common Stock Issued to Stockholders. The shares of Fiserv
------------------------------------------
Common Stock to be issued to the Stockholders of the Company as Merger
Consideration in accordance with Section 3.01 hereof shall, upon
consummation of the Merger, be validly issued and outstanding, fully paid
and nonassessable shares of Fiserv Common Stock.
A-32
<PAGE>
(i) Absence of Material Adverse Effect. Since December 31, 1996,
----------------------------------
Fiserv has not experienced any change which could have a Material Adverse
Effect.
(j) Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated by this Agreement have been carried out by Fiserv
and Fiserv Clearing directly with the Stockholders and the Company, without
the intervention of any person on behalf of Fiserv or Fiserv Clearing in
such manner as to give rise to any valid claim by any person against Fiserv
or Fiserv Clearing for a finder's fee, brokerage commission, or similar
payment.
(k) Proxy Statement/Prospectus. On the date on which Fiserv files
--------------------------
its Registration Statement with the Commission, on the date of
effectiveness thereof, on the date on which the Proxy Statement/Prospectus
is mailed to the holders of Company common Stock, on the date the
Stockholders' Meeting is held and at Closing, such Registration Statement
and the Proxy Statement/Prospectus will comply in all material respects
with the requirements of the Securities Act, the rules and regulations of
the Commission thereunder and all other applicable requirements, 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 to make the
statements therein not misleading in light of the circumstances under which
they were made; provided, however, that the foregoing representation and
-------- -------
warranty shall not apply to information concerning the Company and the
Subsidiaries furnished by the Company in writing expressly for use in such
Registration Statement or in the Proxy Statement/Prospectus.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 6.01 Conduct of Business.
-------------------
(a) During the period from the date of this Agreement to the
Effective Date, except as otherwise contemplated by this Agreement, the
Company will conduct and will cause each Subsidiary to conduct, its
respective operations according to its ordinary and usual course of
business, and the Company will, and will cause each Subsidiary to, use its
commercially reasonable efforts to preserve substantially intact its
respective business organization, keep available the services of its
officers and employees, and maintain its respective present relationships
with licensors, suppliers, distributors, customers and others having
significant business relationships with it, including without limitation
Knight Securities, and endeavor to maintain all clearing or execution
arrangements and not alter in any material respect those arrangements.
Representatives of the Company and each Subsidiary will confer with
representatives of Fiserv and Fiserv Clearing to keep them in-
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<PAGE>
formed with respect to the general status of the on-going operations of the
business of the Company and each Subsidiary.
(b) From the date of this Agreement through the Effective Date,
except as otherwise contemplated by this Agreement, the Company will, and
will cause each of the Subsidiaries, not to (i) pay any dividends or make
any other distribution on its stock or purchase or otherwise acquire
capital stock of any Subsidiary, (ii) acquire or dispose of any substantial
assets, or acquire any assets which would make completion of the Merger
impossible or a violation of applicable laws, rules or regulations, or
(iii) enter into any other material transaction or incur any material
obligation that is not in the ordinary course of business or is not
consistent with past practice.
SECTION 6.02 Access to Information by Fiserv and Fiserv Clearing.
----------------------------------------------------
Fiserv and Fiserv Clearing may prior to the Effective Date have access to the
business and properties of the Company and Clearing and information concerning
their respective financial and legal condition, as Fiserv and Fiserv Clearing
deem necessary or advisable in connection with the consummation of the
transactions contemplated by this Agreement, provided that such access will be
during normal business hours and will not interfere with normal operations of
the Company or any Subsidiary. The Company agrees to permit Fiserv and Fiserv
Clearing and their authorized representatives, including Sherman & Howard L.L.C.
and Deloitte & Touche LLP, or cause any of them to be permitted to have, after
the date of this Agreement and until the Effective Date, full access to the
premises, books and records of the Company and each Subsidiary during normal
business hours, and the officers of the Company and each Subsidiary will furnish
Fiserv and Fiserv Clearing with such financial and operating data and other
information with respect to the business and properties of the Company and each
Subsidiary as Fiserv and Fiserv Clearing from time to time reasonably request.
If Fiserv has discovered or discovers, prior to the Closing, a fact,
circumstance or condition and Fiserv has actual knowledge that such fact,
circumstance or condition constitutes a breach of a representation and warranty
by the Company, then Fiserv will promptly provide notice to the Company
describing in general terms the fact, circumstance or condition and, if the
Closing occurs, then the existence of such fact, circumstance or condition will
not form the basis for any liability by reason of the breach of such
representation and warranty.
SECTION 6.03 Consents and Authorizations. As soon as practicable,
---------------------------
each of the parties to this Agreement will commence to take all reasonable
action to obtain all authorizations, consents, orders and approvals of all third
parties and of all federal, state and local regulatory bodies and officials
which may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and will cooperate
fully with the other parties in promptly seeking to obtain all such
authorizations, consents, orders and approvals. In addition, after the
Effective Date, the Stockholders will cooperate with the Company, Clearing and
Fiserv in the preparation of any audited financial statements of the Company or
Clearing required
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<PAGE>
for filing by Fiserv with the SEC under the Securities Exchange Act of 1934, as
amended, or otherwise.
SECTION 6.04 Non-Assignable Licenses, Leases and Contracts. The
---------------------------------------------
Company will use its commercially reasonable efforts to obtain and deliver to
Fiserv or Fiserv Clearing at or prior to the Effective Date such consents or
waivers as are required in order that any contract listed on the Disclosure
Schedule which would be breached or violated, or would give any other party the
right to cancel the same, as a result of the occurrence of the Merger under this
Agreement, will not be so breached or violated or result in such right of
cancellation. The Company will use its commercially reasonable efforts to
obtain and deliver to Fiserv or Fiserv Clearing at or prior to the Effective
Date such consents or waivers as will be reasonably requested by Fiserv or
Fiserv Clearing for any contracts not required to be listed on the Disclosure
Schedule which, as a result of the occurrence of the Merger under this
Agreement, would be breached or violated or would give any other party the right
to cancel the same, in order that such contracts will not be so breached or
violated or result in such right of cancellation.
SECTION 6.05 Employee Matters. It is intended that the employees of
----------------
Clearing will remain employees of Clearing following the Merger, and such
employment will be employment at will or in accordance with contracts in effect
at the Effective Date. Thereafter, for so long as they are employed by
Clearing, they will be paid, depending on their duties and responsibilities, in
accordance with the compensation policies of Fiserv with respect to its
employees generally. In addition, after the Effective Date and the employees of
the Company and each Subsidiary will be entitled to participate in the benefit
plans that Fiserv maintains for its employees generally (except with respect to
Fiserv's sabbatical plan or policy) on substantially the same terms and
conditions as other employees of Fiserv. For this purpose, each "year of
service" with the Company and each Subsidiary will be treated as a "year of
service" with Fiserv.
SECTION 6.06 Tax Returns. The Company will file and the Company will
-----------
cause each Subsidiary to file, on a timely basis, all Tax Returns required to be
filed by the Company or any Subsidiary with respect to any period ending on or
prior to the Effective Date and to timely pay all Taxes required to be paid.
Such Tax Returns will be prepared on a basis consistent with prior Tax Returns
filed by them and will not make, amend or terminate any election by the Company
or any Subsidiary without Fiserv's prior written consent. The Company will give
Fiserv a copy of each such Tax Return for its review with sufficient time for
comments prior to filing.
SECTION 6.07 Notifications of Exceptions. The Company will notify
---------------------------
Fiserv and Fiserv Clearing, within two business days after the Company or any
Stockholder has become aware of such matters (and in any event prior to the
Effective Date), concerning any exception to any of the representations and
warranties set forth in Section 5.01, to the extent any such exception arises,
or the Company otherwise becomes aware of such exception, from the date of this
Agreement through the Effective Date. Such notice will include a description in
reasonable detail
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<PAGE>
of the facts and circumstances that cause there to be an exception to such
representations and warranties.
SECTION 6.08 Change of Name. Promptly after the Effective Date,
--------------
Fiserv will cause the business and legal name of Clearing and any associated
trademarks to be changed to maintain a distinction from the names of Investments
and Hanifen, Imhoff.
SECTION 6.09 Continuing Indemnity. Fiserv and Fiserv Clearing each
--------------------
agree that after the Effective Date it will not alter the rights of any person
who has a right to indemnification (the "Indemnitees") from the Company or
Clearing pursuant to the Articles of Incorporation and/or Bylaws of the Company
or Clearing, as applicable, in effect on the date of this Agreement. In
addition, Fiserv and Fiserv Clearing shall be bound by all determinations made
by the Board of Directors of both the Company and Clearing prior to the Closing
(including, but not limited to, determinations of whether officers and/or
directors acted in good faith); subject, however, to the terms and provisions of
the Articles of Incorporation and/or By-laws of the Company or Clearing
regarding indemnification. Fiserv Clearing shall assume the obligations of the
Company to provide indemnification to the Indemnitees of the Company as if such
persons were directors of Fiserv Clearing. Fiserv and Fiserv Clearing each
covenant that they will not take or permit any action that would impair in any
material respect the ability or obligation of Fiserv and Fiserv Clearing to
comply with this Section 6.09. Fiserv and Fiserv Clearing shall, if reasonably
possible, obtain coverage for such Indemnitees under their D&O insurance policy
or policies. In the event either Fiserv Clearing or Clearing is or are disposed
of, sold or reorganized (regardless of the method or structure of such
disposition, sale or reorganization), as a condition precedent to such
disposition, sale or reorganization, Fiserv Clearing or Clearing (or their
parent company) shall either: (i) continue to provide substantially the same
coverage for the Indemnitees as required hereby; or (ii) require the acquiring
entity with which they are dealing to assume and continue their obligations
under this Section 6.09. If the scope of indemnity to which the Indemnitees are
entitled under the Articles of Incorporation and/or Bylaws of the Company or
Clearing is more beneficial than the right of indemnification provided by Fiserv
Clearing, the indemnification obligation of Fiserv Clearing hereunder shall be
automatically expanded to provide the Indemnitees with the maximum
indemnification rights provided by the Articles of Incorporation and/or Bylaws
of the Company or Clearing.
SECTION 6.10 NASDAQ Requirement. Fiserv shall provide timely notice
------------------
to NASDAQ of its intent to issue additional shares of Fiserv Common Stock to
holders of Company Common Stock pursuant to the Merger and will comply in full
with any and all requirements of NASDAQ's National Market System applicable to
the issuance of such shares or the trading of such shares subsequent to the
Merger.
SECTION 6.11 Registration Statement. As soon as practicable after
----------------------
the execution of this Agreement, Fiserv shall file with the Commission the
Registration Statement to register the
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<PAGE>
shares of Fiserv Common Stock to be issued pursuant to the Merger and the resale
thereof by persons who may be deemed to be underwriters under Rule 145 of the
Securities Act, shall use its commercially reasonable efforts to have the
Commission declare the Registration Statement effective as soon as practicable
and shall maintain the effectiveness of the Registration Statement for a period
of two years following the Effective Date. To the extent the original
Registration Statement ceases for any reason to be effective during such two-
year period, Fiserv shall immediately use its commercially reasonable efforts to
prepare and file a registration statement on Form S-3 for the benefit of Company
Shareholders who have received Fiserv Common Stock in the Merger, such
registration statement to remain effective for the duration of such two-year
period.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01 Conditions Precedent to the Obligations of Fiserv and
-----------------------------------------------------
Fiserv Clearing. The obligations of Fiserv and Fiserv Clearing to consummate
- ----------------
the Merger under this Agreement are subject to the satisfaction in all material
respects or waiver by Fiserv and Fiserv Clearing prior to or on the Effective
Date of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been adopted by
--------------------
the affirmative vote of the Stockholders of the Company at the
Stockholders' Meeting (or any proper adjournment thereof) by the requisite
vote in accordance with the Articles of Incorporation of the Company and
the Colorado Business Corporation Law.
(b) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have become effective and no stop order suspending such
effectiveness shall have been issued or proceedings for such purpose shall
have been instituted or threatened.
(c) Regulatory Approvals. All permits and consents required by state
--------------------
securities laws for the consummation of the Merger shall have been
obtained.
(d) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Company contained in this Agreement, in the
Disclosure Schedule (or in any update thereof submitted by the Company
provided such changes are not material) or in any closing certificate or
document delivered to Fiserv and Fiserv Clearing pursuant to this Agreement
are true and correct at and as of the Effective Date as though made at and
as of that time, other than such representations and warranties as are
specifically made as of another date (which representations and warranties
are true and correct at and as of the date made), and the Company has
delivered to Fiserv and Fiserv Clearing a certificate to that effect.
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<PAGE>
(e) Compliance with Covenants. The Company has performed and
-------------------------
complied in all respects with all covenants of this Agreement to be
performed or complied with or by it at or prior to the Effective Date
(except where such non-compliance would not have an Adverse Effect on the
Company or prevent it from consummating the transactions contemplated
hereby), and the Company has delivered to Fiserv and Fiserv Clearing a
certificate to that effect.
(f) All Proceedings to be Satisfactory. The Delaware Certificate of
----------------------------------
Merger and the Colorado Articles of Merger have been filed and accepted by
the Secretary of State of Delaware and the Colorado Secretary of State,
respectively. Fiserv and Fiserv Clearing and their counsel also must have
received certified or other copies or control over or possession of all
material documents relating to the Company incident to the transactions
contemplated by this Agreement as Fiserv, Fiserv Clearing or said counsel
may reasonably request and such documents are reasonably satisfactory in
form and substance to Fiserv, Fiserv Clearing and said counsel.
(g) Opinion of Counsel for the Company. Fiserv has received the
----------------------------------
favorable opinions of Otten, Johnson, Robinson, Neff & Ragonetti, P.C.,
counsel to the Company, dated the Effective Date, substantially in the form
and to the effect set forth in Exhibit C.
(h) Legal Actions or Proceedings. No legal action or proceeding has
----------------------------
been instituted after the date of this Agreement against the Company, or
against Fiserv or Fiserv Clearing, arising by reason of the Merger pursuant
to this Agreement, which is reasonably likely (i) to restrain, prohibit or
invalidate the consummation of the transactions contemplated by this
Agreement or (ii) to have a Material Adverse Effect on the Company, any
Subsidiary, Fiserv or Fiserv Clearing.
(i) Clearing Agreement. Clearing and New LLC (as hereinafter
------------------
defined) shall have entered into a clearing agreement with a term of five
years for all of New LLC's clearing needs on terms that are consistent with
other third party arrangements and which are acceptable to Fiserv and
Fiserv Clearing.
(j) Johnson Employment Agreement. Fiserv and Clearing shall have
----------------------------
entered into an Employment Agreement with George Johnson as president of
Clearing.
(k) HSR Act Waiting Period. The requisite waiting period under the
----------------------
HSR Act shall have expired.
(l) Tax Representation Letter; FIRPTA Affidavit. The Company shall
-------------------------------------------
have delivered to Fiserv and Fiserv Clearing a signed Tax Representation
Letter substantially in the form of Exhibit D-1 attached hereto. The
Company and each Subsidiary shall have
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<PAGE>
delivered to Fiserv a FIRPTA affidavit, signed under penalties of perjury,
substantially in the form of Exhibit D-2 attached hereto. The parties
understand that such affidavits will be retained by Fiserv and will be made
available to the Internal Revenue Service upon request.
(m) Contractual Consents. The Company has delivered to Fiserv
--------------------
consents from all parties to all material contracts with the Company or any
Subsidiary, including without limitation those contracts listed on Exhibit
E attached hereto, which, as a result of the transactions contemplated by
this Agreement, are required to be obtained in order for such contracts to
remain in full force and effect, such contracts to be on the same terms and
conditions as though the transactions contemplated hereby had not taken
place.
(n) Business Operations. The Company, Hanifen, Imhoff and/or
-------------------
Investments shall have sold certain of their assets (which assets shall be
subject to the reasonable approval of Fiserv and Fiserv Clearing) as set
forth in a closing schedule for fair and adequate consideration to a
limited liability company treated as a partnership for federal income Tax
purposes ("New LLC").
(o) Governmental Approvals. All consents and approvals described in
----------------------
Section 5.01(f) have been obtained, in form and substance satisfactory to
Fiserv in its sole discretion.
(p) Exercise of Stock Options; Dissenters' Rights. The holders of
---------------------------------------------
the stock options of the Company listed on Schedule IV hereto shall have
exercised such options in the amounts indicated on Schedule IV. The owners
of no more than 5% of the Company Common Stock shall have exercised
Dissenters' Rights in connection with the transactions contemplated hereby.
(q) Non-Compete Agreement. Each member of the Board of Directors of
---------------------
the Company, on the one hand, and Fiserv, on the other hand, shall have
entered into a Non-Compete Agreement substantially in the form of Exhibit
F.
(r) Confidentiality Agreements. Each Member of the Board of
--------------------------
Directors of the Company, on the one hand, and Fiserv, on the other hand,
shall have entered into a Confidentiality Agreement substantially in the
form of Exhibit G.
(s) Resignations of Directors. The directors of the Company and each
-------------------------
Subsidiary (other than Clearing) shall have resigned.
(t) Supporting Documents. On or prior to the Effective Date, Fiserv,
--------------------
Fiserv Clearing and their counsel have received copies of the following
supporting documents:
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<PAGE>
(i) copies of Articles of Incorporation and By-laws of the
Company and each Subsidiary, and all amendments to such documents,
certified as of a recent date by the Secretary of State of the
pertinent state of incorporation or formation of such entity and (2) a
certificate of said Secretary dated as of a recent date as to the due
incorporation or formation and good standing of the Company and each
Subsidiary and listing all documents of the Company and each
Subsidiary on file with said Secretary; and
(ii) certificates of the Secretary or an Assistant Secretary
of the Company and each Subsidiary dated the Effective Date and
certifying substantially to the effect (1) that attached to such
Certificate is a true and complete copy of the By-laws of the Company
and each Subsidiary, respectively, as in effect on the date of such
certification and at all times since September 27, 1996; (2) that
attached to such Certificate is a true and complete copy of
resolutions adopted by the board of directors and stockholders of the
Company, authorizing the execution, delivery and performance of the
Transaction Agreements and that all such resolutions are still in full
force and effect and are all the resolutions adopted in connection
with the transactions contemplated by the Transaction Agreements; (3)
that the Articles of Incorporation of the Company and of each
Subsidiary, respectively, have not been amended since the date of the
last amendment referred to in the certificate (if any) delivered
pursuant to clause (i)(2) above; and (4) as to the incumbency and
speci men signature of each officer of the Company executing the
Transaction Agree ments and any certificate or instrument furnished
pursuant to the Transaction Agreements, and a certificate by another
officer of the Company as to the incumbency and signature of the
officer signing the certificate referred to in this paragraph (ii).
All such documents will be reasonably satisfactory in form and substance to
Fiserv, Fiserv Clearing and their counsel (except where this Agreement
provides that such documents must be satisfactory to Fiserv in its sole
discretion).
SECTION 7.02 Conditions Precedent to the Obligations of the Company.
------------------------------------------------------
The obligations of the Company to consummate the Merger under this Agreement are
subject to the satisfaction in all material respects or waiver by the Company
prior to or on the Effective Date of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been adopted by
--------------------
the affirmative vote of the Stockholders of the Company at the Stockholders
Meeting (or any proper adjournment thereof) by the requisite vote in
accordance with the Articles of Incorporation of the Company and the
Colorado Business Corporation Law.
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<PAGE>
(b) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have become effective and no stop order suspending such
effectiveness shall have been issued or proceedings for such purpose shall
have been instituted or threatened.
(c) Regulatory Approvals. All permits and consents required by state
--------------------
securities laws for the consummation of the Merger shall have been
obtained.
(d) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Fiserv and Fiserv Clearing contained in this Agreement or
in any closing certificate or document delivered to the Company pursuant to
this Agreement are true and correct on and as of the Effective Date as
though made at and as of that date, other than such representations and
warranties as are specifically made as of another date (which
representations and warranties are true and correct at and as of the date
made), and Fiserv and Fiserv Clearing have delivered to the Company a
certificate to that effect.
(e) Compliance with Covenants. Fiserv and Fiserv Clearing have
-------------------------
performed and complied with all covenants of this Agreement to be performed
or complied with by Fiserv and/or Fiserv Clearing on or prior to the
Effective Date (except where such non-compliance would not have a Material
Adverse Effect on Fiserv or Fiserv Clearing), and Fiserv and Fiserv
Clearing have delivered to the Company a certificate to such effect.
(f) All Proceedings to be Satisfactory. The Company and the
----------------------------------
Company's counsel have received all such counterpart originals or certified
or other copies of all documents relating to Fiserv and Fiserv Clearing
incident to the transactions contemplated by the Transaction Agreements as
the Company or said counsel may reasonably request and such documents are
reasonably satisfactory in form and substance to the Company, and said
counsel.
(g) Opinion of Counsel for Fiserv and Fiserv Clearing. The Company
--------------------------------------------------
has received the favorable opinion of Charles W. Sprague, General Counsel
of Fiserv, dated the Effective Date, substantially in the forms and to the
effects set forth in Exhibit H.
(h) Legal Actions or Proceedings. No legal action or proceeding has
----------------------------
been instituted against the Company or Fiserv or Fiserv Clearing that is
reasonably likely to (i) restrain, prohibit, violate or otherwise affect
the consummation of the transactions contemplated by this Agreement or (ii)
have a Material Adverse Effect on Fiserv or Fiserv Clearing.
(i) Clearing Agreement. Clearing and New LLC shall have entered into
------------------
the clearing agreement referred to in Section 7.01(i) above.
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<PAGE>
(j) Johnson Employment Agreement. Fiserv and Clearing shall have
----------------------------
entered into an employment agreement with George Johnson as President of
Clearing.
(k) HSR Act Waiting Period. The requisite waiting period under the
----------------------
HSR Act shall have expired.
(l) Fairness Opinion. The Board of Directors of the Company and the
----------------
trustees of the Profit-Sharing Plan shall have received (i) an opinion as
to the fairness from a financial point of view of the transactions
contemplated hereby and (ii) from Ehrhardt, Keefe, Steiner & Hottman, P.C.
an opinion as to certain valuation matters relating to the sale of certain
assets to New LLC. This condition shall also be deemed to have been
satisfied if no such opinion shall have been delivered with respect to
clause (i) no later than October 15, 1997 and with respect to clause (ii)
no later than the date of the Proxy Statement.
(m) Approval of Merger Shares for Listing. The Merger Shares shall
-------------------------------------
have been approved for listing on NASDAQ upon notice of issuance.
(n) Tax Representation Letter. Fiserv shall have delivered to the
-------------------------
Company a signed Tax Representation Letter substantially in the form of
Exhibit D-3 attached hereto.
(o) Contractual Consents. Fiserv has delivered to the Company
--------------------
consents from all parties to all material contracts with Fiserv, if any,
which, as a result of the transactions contemplated by this Agreement, are
required to be obtained in order for such contracts to remain in full force
and effect, such contracts to be on the same terms and conditions as though
the transactions contemplated hereby had not taken place.
(p) Governmental Approvals. All consents and approvals required of
----------------------
Fiserv with respect to this transaction have been obtained, in form and
substance satisfactory to the Company in its sole discretion.
(q) Supporting Documents. On or prior to the Effective Date, the
--------------------
Company and its counsel have received copies of the following supporting
documents:
(i) (1) copies of the Articles of Incorporation of Fiserv and
the Certificate of Incorporation of Fiserv Clearing, and all
amendments to such Articles or Certificate, certified as of a recent
date by the Secretary of State of the State of Wisconsin, in the case
of Fiserv, or by the Secretary of State of Delaware, in the case of
Fiserv Clearing, and (2) a certificate of said Secretaries dated as of
a recent date as to the due incorporation and good standing of Fiserv
or Fiserv Clearing, as the case may be, and listing all documents of
the relevant company on file with said Secretary; and
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<PAGE>
(ii) a certificate of the Secretary or an Assistant Secretary
of each of Fiserv and Fiserv Clearing dated the Effective Date and
certifying substantially to the effect (1) that attached to such
certificate is a true and complete copy of the By-laws of the
particular company as in effect on the date of such certification and
at all times since December 31, 1996; (2) that attached to such
certificate is a true and complete copy of resolutions adopted by the
board of directors of the particular company authorizing the
execution, delivery and performance of this Agreement, and that all
such resolutions are still in full force and effect and are all the
resolu tions adopted in connection with the transactions contemplated
by this Agreement; (3) that the articles of incorporation of the
particular corporation have not been amended since the date of the
last amendment referred to in the certificate (if any) delivered
pursuant to clause (i)(2) above; and (4) as to the incumbency and
specimen signature of each officer of the particular company executing
this Agreement and a certification by another officer of such company
as to the incumbency and signature of the officer signing the
certificate referred to in this paragraph (ii).
All such documents will be reasonably satisfactory in form and
substance to the Company and its counsel.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 8.01 Representations and Warranties. The representations
------------------------------
and warranties of the parties contained in this Agreement will not survive the
Effective Date.
SECTION 8.02 Covenants. All covenants contained in Article VI that
---------
relate to periods, activities and obligations subsequent to the Effective Date
shall survive the Effective Date.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Date:
(a) by mutual written consent of Fiserv and Fiserv Clearing, on the
one hand, and the Company, on the other hand;
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<PAGE>
(b) by either Fiserv and Fiserv Clearing, on the one hand, or the
Company, on the other hand, if (x) the Effective Date has not occurred on
or before December 31, 1997 (provided that the right to terminate this
Agreement under this Section 9.01(b) will not be available to any party
whose failure to fulfill, or cause to be fulfilled, any obligation under
this Agreement has been the cause of or resulted in the failure of the
Effective Date to occur on or before such date) or (y) any court of
competent jurisdiction or other govern mental body will have issued an
order, decree or ruling or taken any other action (which order, decree or
ruling the parties will use their commercially reasonable efforts to lift
or reverse) permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action will have become
final and nonappealable;
(c) by the Company, if there has been a material breach on the part of
Fiserv or Fiserv Clearing of the covenants of Fiserv or Fiserv Clearing set
forth herein, or any material failure on the part of Fiserv, Fiserv
Clearing or any of their respective affiliates to perform its obligations
hereunder (provided that the terminating party shall have performed and
complied with, in all material respects, all agreements and covenants
required by this Agreement to have been performed or complied with by such
terminating party) prior to such time;
(d) by the Company, if the Company has received an Acquisition
Proposal (as hereinafter defined) which the Board of Directors of the
Company determines in good faith that it would be in breach of its
fiduciary duties if it did not accept such proposal. In the event that the
Company terminates this Agreement because it has received an Acquisition
Proposal which the Board of Directors of the Company determines in good
faith that it would be in breach of its fiduciary duties if it did not
accept, the Company agrees to pay Fiserv a termination fee of $3,000,000
within 20 business days of such termination. For purposes of this Section
9.01(d), an Acquisition Proposal shall mean any proposal or offer to
acquire all or any significant part of the Company's and Clearing's
business and properties or their capital stock, whether by merger, purchase
of assets, tender offer or otherwise.
(e) by Fiserv or the Company under the provisions of Section 7.01
(o)(Government approvals).
SECTION 9.02 Effect of Termination. In the event of the termination
---------------------
and abandonment of this Agreement pursuant to Section 9.01, this Agreement will
become void and have no effect, without any liability on the part or any party
or its affiliates, directors, officers or stockholders, other than the
provisions of this Section 9.02. Nothing contained in this Section 9.02 will
relieve any party from liability for any breach of this Agreement.
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<PAGE>
SECTION 9.03 Amendment. This Agreement may not be amended except by
---------
an instrument in writing signed on behalf of all the parties to this Agreement.
SECTION 9.04 Extension; Waiver. At any time prior to the Effective
-----------------
Date, Fiserv and Fiserv Clearing, on the one hand, or the Company, on the other
hand, may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any
document, certificate or writing delivered pursuant to this Agreement, or (c) to
the extent permitted by applicable laws, waive compliance by the other party
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of any party to any such extension or waiver will be valid
only if set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Expenses, Etc. If the transactions contemplated by
--------------
this Agreement are not consummated, none of the parties will have any obligation
to pay any of the fees and expenses of the other parties incident to the
negotiation, preparation and execution of this Agreement, including the fees and
expenses of counsel, accountants and other experts; provided, that if the
--------
transactions contemplated by this Agreement are not consummated due to the
breach of this Agreement by a party, such party will be liable for any damages
to any other party resulting from such breach. If the transactions contemplated
by this Agreement are consummated, Fiserv and Fiserv Clearing, will indemnify
the Company and hold the Company harmless from and against, any claims for
finders' fees or brokerage commissions in relation to or in connection with such
transactions as a result of any agreement or understanding between such
indemnifying party and any third party. If the transactions contemplated by
this Agreement are consummated, the Stockholders will indemnify Fiserv, Fiserv
Clearing and the Surviving Corporation, and hold them harmless from and against,
any claims for finders' fees or brokerage commissions in relation to or in
connection with such transactions as a result of any agreement or understanding
between the Stockholders, the Company, or any Subsidiary and any third party.
The Stockholders shall be responsible for payment of any transfer taxes in
connection with the transactions contemplated hereby.
SECTION 10.02 No Solicitation. The Company will not, and the
---------------
Company will cause each Subsidiary not to solicit, entertain or discuss offers
from any other party for the acquisition of the outstanding common or preferred
stock of the Company or any Subsidiary or the assets or the business of the
Company or any Subsidiary, and the Company and each Subsidiary will not engage
in any discussions or negotiations with, or provide any information to, any
other party with respect to such transaction.
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<PAGE>
SECTION 10.03 Execution in Counterparts. For the convenience of the
-------------------------
parties, this Agreement may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
SECTION 10.04 Notices. All notices which are required or may be
-------
given pursuant to the terms of this Agreement will be in writing and will be
sufficient in all respects if given in writing and delivered or mailed by
registered or certified mail postage prepaid, or sent by telex, telecopier,
facsimile transmission or telegraph as follows:
If to the Company to:
If to the Company, to:
Hanifen, Imhoff Holdings, Inc.
1125 Seventeenth Street, Suite 1700
Denver, CO 80202
Attention: President
With a copy to:
Neil M. Goff, Esq.
Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
950 Seventeenth Street, 16th Floor
Denver, CO 80202
FAX 303-825-6525
If to Fiserv or Fiserv Clearing, to:
255 Fiserv Drive
Brookfield, WI 53045
or
P.O. Box 979
Brookfield, WI 53008-0979
FAX (414) 879-5245
Attention: Kenneth R. Jensen
A-46
<PAGE>
with a copy to:
Charles W. Sprague
Fiserv, Inc.
255 Fiserv Drive
Brookfield, WI 53045
or
P.O. Box 979
Brookfield, WI 53008-0979
FAX (414) 879-5532
or such other address or addresses as any party will have designated by notice
in writing to the other parties. Any notice or other communication pursuant to
this Agreement will be deemed to have been duly given or made and to have become
effective when delivered in hand to the party to which directed or, if sent by
first-class mail postage prepaid or by telex, telecopier, facsimile transmission
or telegraph and properly addressed as set forth above, at the time when
received by the addressee.
SECTION 10.05 Entire Agreement. This Agreement, its Exhibits and
----------------
Schedules, the Non-Compete Agreements among Fiserv, Fiserv Clearing, Clearing
and the former directors of the Company, the Tax Representation Letter and the
Confidentiality Agreement among Fiserv, Fiserv Clearing, Clearing and the former
directors of the Company executed in connection with this Agreement, constitute
the entire agreement among the parties with respect to the subject matter of
this Agreement and supersede all prior agreements and understandings, oral and
written, among the parties to this Agreement with respect to the subject matter
of this Agreement. No representation, warranty, promise, inducement or
statement of intention has been made by any party to this Agreement which is not
embodied in this Agreement, and no party will be bound by, or be liable for, any
alleged representation, warranty, promise, inducement or statement of intention
not embodied in this Agreement.
SECTION 10.06 Applicable Law; Jurisdiction and Venue. This Agreement
--------------------------------------
will be governed by and construed in accordance with the laws of the State of
Colorado, without regard to conflict of law provisions. Each party hereto
irrevocably agrees that the state and federal courts of Colorado, located in the
city and county of Denver shall have sole and exclusive jurisdiction over any
suit or other proceeding arising out of or based upon this Agreement, and each
party hereto hereby waives any claim that it or he is not subject personally to
the jurisdiction of said courts or that any such suit or proceeding is brought
in an inconvenient forum or improper venue.
A-47
<PAGE>
Each party irrevocably agrees that service of process in any such suit or other
proceeding shall be properly made if delivered to the address shown in Section
10.04 hereof.
SECTION 10.07 Binding Effect; Benefits. This Agreement will inure to
------------------------
the benefit of and be binding upon the parties and their respective successors
and assigns. Notwith standing anything contained in this Agreement to the
contrary, nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 10.08 Assignability. Neither this Agreement nor any of the
-------------
parties' rights under this Agreement will be assignable by any party without the
prior written consent of the other parties to this Agreement.
SECTION 10.09 Public Announcements. Fiserv and Fiserv Clearing, on
--------------------
the one hand, and the Company, on the other hand, will consult with each other
before issuing any press release or otherwise making any public statement with
respect to the transactions contemplated in this Agreement and will not issue
any such press release or make any such public statement without the approval of
the others, unless, after a party proposing to issue such a release or statement
has consulted with the other and such other party has not approved such release
within a reasonable time in the circumstances, counsel to the issuing party has
advised such party that such release or other public statement must be issued
immediately and the issuing party has not been able, despite its good faith
efforts, to secure the prior approval of the other parties.
SECTION 10.10 Invalid Provisions. If any provision of this Agreement
------------------
is held to be illegal, invalid or unenforceable under any present or future law,
rule or regulation, such provision will be fully severable and this Agreement
will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement. The remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
SECTION 10.11 Interpretation. Time is of the essence of this
--------------
Agreement. Unless otherwise qualified, references in this Agreement to
"Article", "article", "Section" or "section" are to provisions of this Agreement
and a reference to any of the foregoing includes any subparts. The Table of
Contents, and the descriptive headings of the articles and sections, of or in
the Exhibits and Schedules, are inserted for convenience only and are not a part
of this Agreement. As used in this Agreement, the singular includes the plural,
the plural includes the singular, and
A-48
<PAGE>
words in one gender include the others. As used in this Agreement the "include",
"including" and similar terms are not words of limitation.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
FISERV, INC.
By: /s/ Kenneth R. Jensen
-----------------------------
Title: Senior Executive Vice
President
FISERV CLEARING, INC.
By: /s/ Kenneth R. Jensen
-----------------------------
Title: Vice President
A-49
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC.
By: /s/ Gary J. Wilson
-----------------------------
Title: President and Chief
Executive Officer
A-50
<PAGE>
APPENDIX B
<PAGE>
Article 113 of Colorado Business Corporation Act Relating to Dissenters' Rights
(S) 7-113-101. DEFINITIONS
For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at the legal rate as
specified in section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section 7-107-
204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
(S) 7-113-102. RIGHT TO DISSENT
(1) A shareholder, whether or not entitled to vote, is entitled to dissent
and obtain payment of the fair value of the shareholder's shares in the event of
any of the following corporate actions:
B-1
<PAGE>
(a) Consummation of a plan of merger to which the corporation is a party
if:
(I) Approval by the shareholders of that corporation is required for the
merger by section 7-111-103 or 7-111-104 or by the articles of incorporation;
or
(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of the corporation for which a shareholder
vote is required under section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of an entity controlled by the corporation
if the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to section 7-112-102(2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended,
[FN1] or on the national market system of the national association of securities
dealers automated quotation system, or were held of record by more than two
thousand shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine shareholders
entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section
shall not apply if the shareholder will receive for the shareholder's shares,
pursuant to the corporate action, anything except:
B-2
<PAGE>
(a) Shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) Shares of any other corporation which at the effective date of the plan
of merger or share exchange either will be listed on a national securities
exchange registered under the federal "Securities Exchange Act of 1934", as
amended, [FN1] or on the national market system of the national association of
securities dealers automated quotation system, or will be held of record by more
than two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) Deleted by Laws 1996, H.B.96-1285, s 30, eff. June 1, 1996.
(2.5) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of a reverse split that reduces the number of shares owned by the
shareholder to a fraction of a share or to scrip if the fractional share or
scrip so created is to be acquired for cash or the scrip is to be voided under
section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
(S) 7-113-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of different
shareholders.
B-3
<PAGE>
(2) A beneficial shareholder may assert dissenters' rights as to the shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
such beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
(S) 7-113-201. NOTICE OF DISSENTERS' RIGHTS
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is submitted to a vote at a shareholders' meeting, the notice
of the meeting shall be given to all shareholders, whether or not entitled to
vote. The notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this subsection (1)
shall not affect any action taken at the shareholders' meeting for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202(1).
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection
(2) shall not affect any action taken pursuant to section 7-107-104 for which
the notice was to have been given, but any shareholder who was entitled to
dissent
B-4
<PAGE>
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202(2).
(S) 7-113-202. NOTICE OF INTENT TO DEMAND PAYMENT
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is submitted to a vote at a shareholders' meeting and if
notice of dissenters' rights has been given to such shareholder in connection
with the action pursuant to section 7-113-201(1), a shareholder who wishes to
assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the shareholder's
shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104 and if notice of dissenters' rights has been given to such
shareholder in connection with the action pursuant to section 7-113-201(2) a
shareholder who wishes to assert dissenters' rights shall not execute a writing
consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1)
or (2) of this section is not entitled to demand payment for the shareholder's
shares under this article.
(S) 7-113-203. DISSENTERS' NOTICE
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to demand payment for
their shares under this article.
(2) The dissenters' notice required by subsection (1) of this section shall
be given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the effective
date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands
and the address of a place where certificates for certificated shares must be
deposited;
B-5
<PAGE>
(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment demand
and certificates for certificated shares, which date shall not be less than
thirty days after the date the notice required by subsection (1) of this section
is given;
(f) State the requirement contemplated in section 7-113-103(3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
(S) 7-113-204. PROCEDURE TO DEMAND PAYMENT
(1) A shareholder who is given a dissenters' notice pursuant to section 7-
113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in section 7-113-203(2)(d), duly completed, or
may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of
this section retains all rights of a shareholder, except the right to transfer
the shares, until the effective date of the proposed corporate action giving
rise to the shareholder's exercise of dissenters' rights and has only the right
to receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209(1)(b), the demand
for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
(S) 7-113-205. UNCERTIFICATED SHARES
B-6
<PAGE>
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
(S) 7-113-206. PAYMENT
(1) Except as provided in section 7-113-208, upon the effective date of the
corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent fiscal
year or, if that is not available, the corporation's balance sheet as of the end
of a fiscal year ending not more than sixteen months before the date of payment,
an income statement for that year, and, if the corporation customarily provides
such statements to shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section 7-
113-209; and
(e) A copy of this article.
(S) 7-113-207. FAILURE TO TAKE ACTION
(1) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 does not occur within sixty days after the date
set by the corporation by which the
B-7
<PAGE>
corporation must receive the payment demand as provided in section 7-113-203,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(2) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice, as provided in section 7-113-203, and the provisions of sections 7-113-
204 to 7-113-209 shall again be applicable.
(S) 7-113-208. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION
(1) The corporation may, in or with the dissenters' notice given pursuant
to section 7-113-203, state the date of the first announcement to news media or
to shareholders of the terms of the proposed corporate action creating
dissenters' rights under section 7-113-102 and state that the dissenter shall
certify in writing, in or with the dissenter's payment demand under section 7-
113-204, whether or not the dissenter (or the person on whose behalf dissenters'
rights are asserted) acquired beneficial ownership of the shares before that
date. With respect to any dissenter who does not so certify in writing, in or
with the payment demand, that the dissenter or the person on whose behalf the
dissenter asserts dissenters' rights acquired beneficial ownership of the shares
before such date, the corporation may, in lieu of making the payment provided in
section 7-113-206, offer to make such payment if the dissenter agrees to accept
it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206(2).
(S) 7-113-209. PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR OFFER
(1) A dissenter may give notice to the corporation in writing of the
dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any payment
made under section 7-113-206, or reject the corporation's offer under section 7-
113-208 and demand payment of the fair value of the shares and interest due, if:
(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
B-8
<PAGE>
(b) The corporation fails to make payment under section 7-113-206 within
sixty days after the date set by the corporation by which the corporation must
receive the payment demand; or
(c) The corporation does not return the deposited certificates or release
the transfer restrictions imposed on uncertificated shares as required by
section 7-113-207(1).
(2) A dissenter waives the right to demand payment under this section
unless the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
(S) 7-113-301. COURT ACTION
(1) If a demand for payment under section 7-113-209 remains unresolved, the
corporation may, within sixty days after receiving the payment demand, commence
a proceeding and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay to each dissenter whose demand remains
unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection
(1) of this section in the district court of the county in this state where the
corporation's principal office is located or, if the corporation has no
principal office in this state, in the district court of the county in which its
registered office is located. If the corporation is a foreign corporation
without a registered office, it shall commence the proceeding in the county
where the registered office of the domestic corporation merged into, or whose
shares were acquired by, the foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unresolved parties to the proceeding commenced
under subsection (2) of this section as in an action against their shares, and
all parties shall be served with a copy of the petition. Service on each
dissenter shall be by registered or certified mail, to the address stated in
such dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers
described in the order appointing them, or in any amendment to such order. The
parties to the proceeding are entitled to the same discovery rights as parties
in other civil proceedings.
B-9
<PAGE>
(5) Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
(S) 7-113-302. COURT COSTS AND COUNSEL FEES
(1) The court in an appraisal proceeding commenced under section 7-113-301
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation; except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the court
finds the corporation did not substantially comply with the requirements of part
2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to said counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefitted.
B-10
<PAGE>
APPENDIX C
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT ACCOUNTANTS' REPORTS C-2-3
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition C-4-5
Consolidated Statements of Income C-6
Consolidated Statements of Stockholders' Equity C-7
Consolidated Statements of Cash Flows C-8-9
Notes To Consolidated Financial Statements C-10-27
</TABLE>
C-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
To the Board of Directors
Hanifen, Imhoff Holdings, Inc.
Denver, Colorado
We have audited the accompanying consolidated statement of financial condition
of Hanifen, Imhoff Holdings, Inc. and subsidiaries as of September 29, 1995, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the two years in the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hanifen, Imhoff Holdings, Inc. and subsidiaries as of September 29, 1995, and
the results of their operations and their cash flows for each of the two years
in the period then ended, in conformity with generally accepted accounting
principles.
McGladrey & Pullen, LLP
Denver, Colorado
November 3, 1995
C-2
<PAGE>
Independent Accountants' Report
-------------------------------
Board of Directors
Hanifen, Imhoff Holdings, Inc.
Denver, Colorado
We have audited the accompanying consolidated statement of financial condition
of HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES as of September 27, 1996, and
the related consolidated statements of income, stockholders' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
presents fairly, in all material respects, the consolidated financial position
of HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES as of September 27, 1996, and
the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
Baird, Kurtz & Dobson
Denver, Colorado
November 8, 1996
C-3
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
September 29, September 27, June 27, 1997
ASSETS 1995 1996 (unaudited)
------ ------------- ------------- --------------
<S> <C> <C> <C>
Cash and cash equivalents $ 2,431,851 $ 573,747 $ 2,073,885
Accounts receivable:
Customers 124,142,384 128,010,111 111,752,752
Securities borrowed 5,321,100 18,310,700 19,398,000
Correspondent brokers and dealers 1,981,259 3,182,192 5,530,335
Brokers and dealers fails to deliver 1,432,119 2,941,823 1,909,094
Clearing organizations - - 2,584,789
Trade date basis securities transactions 787,160 - 709,715
Officers and directors 291,488 210,212 270,973
Other 1,098,584 946,101 740,030
Securities owned, at market value 6,559,642 7,657,191 4,688,974
Furniture, equipment, and leasehold improvements, at cost,
net of accumulated depreciation and amortization of $1,988,848,
$2,542,869 and $3,050,880 (unaudited), at 1995, 1996 and 1997,
respectively 880,086 1,618,353 1,823,474
Exchange memberships, at cost 68,515 68,515 68,515
Investments 1,360,686 793,687 861,379
Deposits with clearing organizations 2,172,375 2,664,269 3,129,944
Deferred income taxes 1,292,018 1,654,317 1,964,930
Other assets 779,419 3,241,800 1,105,794
------------ ------------ ------------
$150,598,686 $171,873,018 $158,612,583
============ ============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
C-4
<PAGE>
<TABLE>
<CAPTION>
September 29, September 27, June 27, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1996 (unaudited)
------------------------------------ -------------- ------------- -------------
<S> <C> <C> <C>
LIABILITIES
Notes payable $ 41,960,000 $ 37,661,865 $ 4,189,822
Payables:
Customers, including free credit balances of $35,603,428,
$28,246,754 and $24,285,890 (unaudited), in 1995, 1996
and 1997, respectively 56,707,491 68,094,034 64,495,663
Clearing organizations 274,060 170,649 -
Correspondent brokers and dealers 20,770,902 27,387,434 35,697,548
Brokers and dealers fails to receive 1,686,511 1,351,898 1,355,011
Income taxes payable 787,446 - -
Accounts payable and accrued liabilities 6,841,849 8,953,137 7,026,503
Trade date basis securities transactions - 106,129 -
Securities sold but not yet purchased, at market value 356,566 570,555 596,404
Repurchase agreement 225,50 - -
------------ ------------ ------------
129,610,325 144,295,701 123,360,951
------------ ------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock of $.01 par value per share;
authorized 1,000,000 shares; no shares issued or outstanding - - -
Common stock of $.01 par value per share;
authorized 3,000,000 shares; issued 1,396,000 shares in 1995,
1,072,500 shares in 1996, and 1,138,329 shares (unaudited)
in 1997 13,961 10,725 11,383
Capital in excess of par value 107,051 - 1,748,547
Retained earnings 22,524,384 27,566,592 33,491,702
------------ ------------ ------------
22,645,396 27,577,317 35,251,632
Treasury stock, at cost, 62,918 shares in 1995 (1,657,035) - -
------------ ------------ ------------
20,988,361 27,577,317 35,251,632
------------ ------------ ------------
$150,598,686 $171,873,018 $158,612,583
============ ============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
C-5
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited)
Years Ended Nine Months Ended
--------------------------------------------- --------------------------------
September 30, September 29, September 27, June 28, June 27,
1994 1995 1996 1996 1997
-------------- ------------- -------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Clearing fees $10,704,986 $17,173,632 $19,919,235 $15,672,955 $12,870,675
Interest 4,821,544 9,068,454 12,012,084 9,062,184 8,244,289
Underwriting profits 6,913,908 5,278,926 10,021,513 8,464,286 6,433,923
Trading:
Commission on principal
transactions 4,097,766 3,458,913 3,929,069 3,267,701 2,874,100
Trading profits 965,527 1,201,687 1,578,519 1,217,434 571,995
Commissions 3,146,182 3,965,309 3,944,879 3,080,326 4,485,471
Financial and advisory fees 3,509,889 3,216,524 2,932,625 1,746,023 3,155,894
Customer fees 1,335,798 2,243,986 2,200,247 1,576,703 1,579,114
Other revenues 830,206 149,180 1,800,145 1,639,164 707,414
----------- ----------- ----------- ----------- -----------
36,325,806 45,756,611 58,338,316 45,726,776 40,922,875
----------- ----------- ----------- ----------- -----------
EXPENSES:
Compensation and benefits 19,202,248 19,582,510 24,925,626 19,513,222 17,468,043
General, administrative and other
Operating expenses 6,303,307 5,548,793 6,174,220 3,847,714 7,085,357
Interest 1,347,718 2,616,348 3,597,195 2,728,207 2,001,139
Communications 1,546,460 2,066,215 2,230,710 1,612,495 1,858,117
Floor brokerage and clearing 1,480,523 1,581,266 1,614,995 1,169,113 1,344,123
Occupancy and supplies 1,610,410 1,195,343 1,254,263 933,796 1,215,746
Depreciation and amortization 351,157 396,123 571,014 362,083 508,690
----------- ----------- ----------- ----------- -----------
31,841,823 32,986,598 40,368,023 30,166,630 31,481,215
----------- ----------- ----------- ----------- -----------
Income before income taxes 4,483,983 12,770,013 17,970,293 15,560,146 9,441,660
----------- ----------- ----------- ----------- -----------
INCOME TAX EXPENSE (BENEFIT):
Current 2,019,989 4,247,446 7,174,640 6,068,668 3,827,163
Deferred (372,053) 466,018 (362,299) (143,708) (310,613)
----------- ----------- ----------- ----------- -----------
1,647,936 4,713,464 6,812,341 5,924,960 3,516,550
----------- ----------- ----------- ----------- -----------
Net income $ 2,836,047 $ 8,056,549 $11,157,952 $ 9,635,186 $ 5,925,110
=========== =========== =========== =========== ===========
NET INCOME PER SHARE $1.77 $5.55 $9.87 $8.77 $5.33
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE SHARES 1,604,170 1,450,918 1,130,653 1,098,552 1,111,134
=========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
C-6
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in
Common Excess of Retained Treasury
Stock Par Value Earnings Stock Total
---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCES, SEPTEMBER 24, 1993 $ 941,890 $ 3,605,770 $13,000,058 $(3,263,728) $14,283,990
Purchase of treasury stock - - - (2,776,481) (2,776,481)
Sale of treasury stock - (539,975) - 1,442,165 902,190
Cash dividend - - (770,616) - (770,616)
Net income - - 2,836,047 - 2,836,047
--------- ----------- ----------- ----------- -----------
BALANCES, SEPTEMBER 30, 1994 941,890 3,065,795 15,065,489 (4,598,044) 14,475,130
Common stock retired in reorganization,
net of issuance of common stock (934,595) (3,065,795) (597,654) 4,598,044 -
Purchase of treasury stock - - - (2,077,903) (2,077,903)
Sale of treasury stock - 113,717 - 420,868 534,585
Stock split effected in the form of a dividend 6,666 (6,666) - - -
Net income - - 8,056,549 - 8,056,549
--------- ----------- ----------- ----------- -----------
BALANCES, SEPTEMBER 29, 1995 13,961 107,051 22,524,384 (1,657,035) 20,988,361
Purchase of treasury stock - - - (8,180,789) (8,180,789)
Sale of treasury stock - 49,639 - 3,562,154 3,611,793
Retirement of treasury stock (3,236) (156,690) (6,115,744) 6,275,670 -
Net income - - 11,157,952 - 11,157,952
--------- ----------- ----------- ----------- -----------
BALANCES, SEPTEMBER 27, 1996 10,725 - 27,566,592 - 27,577,317
Common stock sold (unaudited) 1,104 2,916,682 - - 2,917,786
Common stock reacquired and retired
(unaudited) (446) (1,168,135) - - (1,168,581)
Net income (unaudited) - - 5,925,110 - 5,925,110
--------- ----------- ----------- ----------- -----------
BALANCES, JUNE 27, 1997 (UNAUDITED) $ 11,383 $ 1,748,547 $33,491,702 $ - $35,251,632
========= =========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
C-7
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Years Ended Nine Months Ended
---------------------------------------------- ----------------------------
September 30, September 29, September 27, June 28, June 27,
1994 1995 1996 1996 1997
-------------- -------------- -------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income $ 2,836,047 $ 8,056,549 $ 11,157,952 $ 9,635,186 $ 5,925,110
Adjustment to reconcile net income to net
cash used in operating activities:
Depreciation and amortization of furniture,
equipment and leasehold improvements 351,157 396,123 571,014 362,083 508,690
Realized and unrealized (gains) losses on
investments 209,901 - (780,113) (780,113) -
Deferred taxes (372,053) 466,018 (362,299) (143,708) (310,613)
Write-down of fixed asset - 17,700 - - 3,641
(Increase) decrease in assets:
Receivables:
Customers (23,554,067) (48,982,452) (3,867,727) (21,093,238) 16,257,359
Clearing organizations (739,330) 739,330 - (880,284) (2,584,789)
Correspondent broker and dealers (344,669) 999,081 (1,200,933) (41,071) (2,348,143)
Brokers and dealers fails to deliver 694,758 (178,290) (1,509,704) 666,178 1,032,729
Securities borrowed (4,148,650) 5,999,450 (12,989,600) (9,743,050) (1,087,300)
Officers and directors (235,446) 62,634 81,276 55,972 (60,761)
Trade date basis securities transactions (3,147,912) 3,346,548 - 787,160 (709,715)
Other (1,339,933) 661,245 152,483 214,338 206,071
Securities owned, at market value 189,835 (1,064,747) (1,097,549) (1,766,192) 2,968,217
Deposits (70,084) (1,077,431) (491,894) 366,378 (465,675)
Other assets (408,390) 399,737 (2,462,381) (1,312,614) 2,136,006
Increase (decrease) in liabilities:
Payables:
Customers 12,861,582 20,095,436 11,386,543 15,864,985 (3,598,371)
Clearing organizations (1,264,540) 155,763 (103,411) (274,060) (170,649)
Correspondent brokers and dealers 8,924,731 3,432,471 6,616,532 15,544,586 8,310,114
Brokers and dealers fails to receive 2,727,182 (1,830,707) (334,613) 479,368 3,113
Income taxes (394,102) 466,008 (787,446) (787,446) -
Accounts payable and accrued liabilities (2,079,397) (295,154) 2,111,288 1,038,727 (1,926,634)
Trade date basis securities transactions - - 893,289 718,574 (106,129)
Securities sold, but not yet purchased 231,261 (159,682) 213,989 375,188 25,849
Repurchase agreement - 225,500 (225,500) (225,500) -
------------ ------------ ------------ ------------ -----------
Net cash provided by (used in)
operating activities $ (9,072,119) $ (8,068,870) $ 6,971,196 $ 9,061,447 $24,008,120
------------ ------------ ------------ ------------ -----------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
C-8
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
(Unaudited)
Years Ended Nine Months Ended
---------------------------------------------- ---------------------------------
September 30, September 29, September 27, June 28, June 27,
1994 1995 1996 1996 1997
-------------- -------------- -------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
INVESTING ACTIVITIES
Proceeds from sales of investments $ - $ - $ 1,000,000 $ 1,000,000 $ -
Increase in investments (778,509) (594,022) (483,531) (483,531) (71,500)
Purchase of furniture, equipment and
leasehold improvements (497,594) (547,403) (1,309,281) (1,191,581) (717,452)
Distributions from investments 17,963 - 133,222 133,222 3,808
Redemption of cash surrender value of
officers' life insurance - - 697,421 587,378 -
----------- ----------- ----------- ------------ ------------
Net cash provided by (used in)
investing activities (1,258,140) (1,141,425) 37,831 45,488 (785,144)
----------- ----------- ----------- ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Increase (decrease) in notes payable, net 15,626,700 9,875,000 (4,298,135) (6,103,148) (23,472,043)
Purchase of treasury stock (2,776,481) (2,077,903) (8,180,789) (6,936,675) (1,168,581)
Sale of stock 902,190 534,585 3,611,793 2,963,365 2,917,786
Dividends paid (770,616) - - - -
----------- ----------- ----------- ------------ ------------
Net cash provided by (used in)
Financing activities 12,981,793 8,331,682 (8,867,131) (10,076,458) (21,722,838)
----------- ----------- ----------- ------------ ------------
Increase (decrease) in cash and cash
equivalents 2,651,534 (878,613) (1,858,104) (969,523) 1,500,138
Cash and cash equivalents, beginning
of period 658,930 3,310,464 2,431,851 2,431,851 573,747
----------- ----------- ----------- ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,310,464 $ 2,431,851 $ 573,747 $ 1,462,328 $ 2,073,885
=========== =========== =========== ============ ============
Supplemental Disclosures of Cash Flow
Information:
Interest paid during the period $ 1,129,706 $ 2,438,014 $ 2,881,408 $ 2,317,482 $ 1,755,959
=========== =========== =========== ============ ============
Income tax payments $ 1,700,000 $ 3,460,000 $ 7,395,000 $ 6,829,458 $ 3,028,774
=========== =========== =========== ============ ============
Supplemental Disclosures of Noncash
Financing Activities:
Stock split effected in the form of a
dividend $ - $ 6,666 $ - $ - $ -
=========== =========== =========== ============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
C-9
<PAGE>
HANIFEN, IMHOFF, HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
- --------------------
Hanifen, Imhoff Holdings, Inc. ("Holdings") was formed on August 10, 1994, and
was inactive until October 1, 1994. Through a reorganization as of that date,
Holdings became the parent company and sole stockholder of Hanifen, Imhoff Inc.
("HII"), Hanifen, Imhoff Clearing Corp. ("Clearing") and Hanifen, Imhoff
Investments, Inc. ("Investments"). Investments is the parent company of two
wholly-owned subsidiaries, Hanifen, Imhoff Capital Partners, Inc. ("Capital
Partners") and Hanifen, Imhoff Investment Management Co. ("Management"). Prior
to the reorganization, HII was the parent company of Clearing and Investments.
Holdings, through its subsidiaries (collectively referred to as the
"Company"), offers a full spectrum of investment and brokerage services to
corporations, institutions, municipalities, individuals, and other broker-
dealers. The operations of HII, a New York Stock Exchange, Inc. member, consist
of corporate and municipal finance, trading, institutional sales, and investment
advisor for the Colorado Local Government Liquid Asset Trust (the "Trust").
Clearing, a New York Stock Exchange, Inc. electronic access member, serves as a
clearing broker for customers of correspondent broker-dealers, including HII. A
subsidiary of Capital Partners is the general partner of Hanifen, Imhoff
Mezzanine Fund, L.P. ("Mezzanine"). Mezzanine is a small business investment
company funded through investments by corporations and individuals and through
the Small Business Administration's SBIC program. Management serves as the
management company for Mezzanine.
PRINCIPLES OF CONSOLIDATION
- ---------------------------
The consolidated statements of financial condition include the accounts of
Holdings and its aforementioned wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
FISCAL YEAR-END
- ---------------
The Company's fiscal year ends on the last Friday of September and the years
ended September 30, 1994, September 29, 1995, and September 27, 1996, each
contained 52 weeks. The periods ended June 28, 1996, and June 27, 1997, each
contained 39 weeks.
C-10
<PAGE>
HANIFEN, IMHOFF, HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
REVENUE RECOGNITION AND TRADE DATE BASIS SECURITIES TRANSACTIONS
- ----------------------------------------------------------------
Customers' securities transactions are recorded on a settlement-date basis
with related commission revenue and expense recorded on a trade-date basis.
Securities transactions of the Company are recorded on a trade-date basis.
Receivables or payables for trade-date basis securities transactions represent
net amounts due to or due from customers and other broker-dealers for
transactions executed but not yet settled. Securities owned and securities sold,
but not yet purchased are valued at market.
SECURITIES BORROWED
- -------------------
Securities borrowed are recorded at the amount of cash collateral advanced.
The Company monitors the market value of securities borrowed with collateral
refunded when necessary.
USE OF ESTIMATES
- ----------------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
EXCHANGE MEMBERSHIPS
- --------------------
Exchange memberships are carried at cost. The market value of exchange
memberships at September 29, 1995, September 27, 1996, and June 27, 1997
(unaudited), based on the average of bid and ask prices, was approximately
$947,250, $1,342,800 and $1,226,000, respectively.
PROPERTY AND EQUIPMENT
- ----------------------
The Company provides for depreciation and amortization of furniture, equipment
and leasehold improvements utilizing the straight-line and accelerated methods
to apportion costs over the estimated useful lives of three to ten years.
C-11
<PAGE>
HANIFEN, IMHOFF, HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
INCOME TAXES
- ------------
Deferred tax liabilities and assets are recognized for the tax effect of
differences between the financial statements and tax bases of assets and
liabilities. A valuation allowance is established to reduce deferred tax assets
if it is more likely than not that a deferred tax asset will not be realized.
CASH EQUIVALENTS
- ----------------
For purposes of the statement of cash flows, the Company has defined cash
equivalents as short-term, highly liquid investments (other than those held for
sale in the ordinary course of business) with a maturity date of 90 days or less
from date of acquisition. Cash and securities segregated under Federal and other
regulations are not considered as a cash equivalent for purposes of the
statement of cash flows because such assets would be segregated for the benefit
of customers only. At September 29, 1995, September 27, 1996, and June 27, 1997,
no amounts were required to be segregated pursuant to Federal and other
regulations.
NET INCOME PER SHARE OF COMMON STOCK
- ------------------------------------
Net income per share of common stock is based on the weighted average shares
outstanding in each period, adjusted for the stock split which occurred in 1995.
Common stock equivalents relating to common shares subject to stock options have
been excluded, as the effect would be insignificant. Accordingly, primary and
fully-diluted net income per share is the same for each period presented.
NOTE 2: CUSTOMERS' RECEIVABLES AND PAYABLES
The amounts receivable from and payable to customers represent balances
resulting from normal cash and margin account transactions. Securities owned by
customers and held by the Company as collateral for these customer accounts are
not reflected in the consolidated financial statements.
C-12
<PAGE>
HANIFEN, IMHOFF, HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 3: SECURITIES OWNED AND SECURITIES SOLD, BUT NOT YET PURCHASED
Securities owned by the company are summarized as follows:
<TABLE>
<CAPTION>
September 29, September 27, (Unaudited)
1995 1996 June 27, 1997
------------- ------------- -------------
<S> <C> <C> <C>
State and municipal obligations $5,515,490 $4,413,770 $3,803,032
Corporate stock and mutual funds 1,044,152 3,243,421 885,942
---------- ---------- ----------
$6,559,642 $7,657,191 $4,688,974
========== ========== ==========
</TABLE>
These securities have been, or are available to be, pledged as collateral on
Company notes payable.
Securities sold but not yet purchased consist primarily of corporate stocks.
C-13
<PAGE>
HANIFEN, IMHOFF, HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 4: NOTES PAYABLE
The following is a summary of outstanding notes payable:
<TABLE>
<CAPTION>
September 29, September 27, (Unaudited)
1995 1996 June 27, 1997
------------- ------------- -------------
<S> <C> <C> <C>
Banks, collateralized by marketable securities held as
collateral for customer margin accounts, bearing interest at
approximately the Banks' broker call rate (7.5% at
September 29, 1995, ranging from 6.2% to 7.25% at
September 27, 1996, and ranging from 6.52% to 6.69%
at June 27, 1997) due on demand. $40,210,000 $32,750,000 $9,900,000
Bank, collateralized by marketable securities held as
collateral for correspondent broker accounts, bearing
interest at approximately the Bank's broker call rate
(7.5% at September 29, 1995, 7.0% at September
27, 1996, and 7.0% at June 27, 1997) due on demand. 1,750,000 2,800,000 2,500,000
Bank, due September 27, 2001, pro rata monthly principal
and interest payments due at 8.75%, secured by all furniture
and equipment. - 1,000,000 876,319
Bank, due September 27, 2002, bearing interest at 9.0%
payable monthly, secured by all furniture and equipment. - - 500,000
Promissory non-negotiable, non-recourse unsecured notes
due to individuals, due dates ranging from June 15, 1997
to October 15, 1997, bearing interest of 8.25%. - 1,111,865 413,503
------------- ------------- -------------
$ 41,960,000 $ 37,661,865 $ 14,189,822
============= ============= =============
</TABLE>
C-14
<PAGE>
HANIFEN, IMHOFF, HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 4: NOTES PAYABLE (continued)
Aggregate annual maturities of the notes payable are as follows:
<TABLE>
<CAPTION>
September 29, September 27, (Unaudited)
1995 1996 June 27, 1997
------------- ------------- -------------
<S> <C> <C> <C>
1996 $ 41,960,000
1997 - $ 36,811,234
1998 - 202,133 $ 13,054,236
1999 - 198,650 283,292
2000 - 215,674 308,288
2001 - 234,174 315,648
2002 - - 228,358
------------- ------------- ------------
$ 41,960,000 $ 37,661,865 $ 14,189,822
============= ============= ============
</TABLE>
Additional information concerning the short-term borrowings, is as follows:
<TABLE>
<CAPTION>
(Unaudited)
September June
--------------------------------------------- ----------------------------
1994 1995 1996 1996 1997
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Maximum borrowings
outstanding $ 32,085,000 $ 41,960,000 $ 44,850,000 $ 36,385,000 $ 38,775,000
Average borrowings
outstanding $ 22,927,417 $ 34,149,708 $ 30,091,250 $ 32,132,778 $ 23,133,333
Average interest rate 5.60% 7.14% 6.63% 6.66% 6.61%
</TABLE>
At September 29, 1995, September 27, 1996, and June 27, 1997 (unaudited), the
Company had unused lines-of-credit available with banks providing for additional
borrowings of up to $78,040,000, $54,450,000, and $102,600,000, respectively, on
a collateralized basis bearing interest at the broker call rate.
C-15
<PAGE>
HANIFEN, IMHOFF, HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 5: TRANSACTIONS WITH AFFILIATES
Receivables from officers and directors represent amounts due on regular
securities transactions.
As of September 27, 1996, and June 27, 1997, HII has two unused revolving cash
subordination agreements in the amount of $1,000,000 each, one with Holdings and
one with Clearing. Borrowings by HII and Clearing, if any, are covered by an
agreement approved by the NYSE and thus would be available in computing net
capital of HII and Clearing. To the extent that any borrowings are required for
HII and Clearing's continued compliance with net capital requirements the
borrowings could not be repaid.
NOTE 6: INCOME TAXES
The approximate tax effects of temporary differences related to deferred taxes
shown on the statements of financial condition were:
<TABLE>
<CAPTION>
September 29, September 27, (Unaudited)
1995 1996 June 27, 1997
------------- ------------- -------------
<S> <C> <C> <C>
Provision for uncollectible accounts and losses not
deductible for tax purposes $1,021,000 $1,584,000 $1,851,000
Losses on investments not deductible for tax purposes 78,000 49,000 46,500
Depreciation 53,000 68,000 68,000
Other 140,018 (46,683) (570)
---------- ---------- ----------
Net deferred tax asset $1,292,018 $1,654,317 $1,964,930
========== ========== ==========
</TABLE>
No valuation allowance for deferred tax assets was considered necessary.
For each period presented, total income tax expense differed from amounts
computed by applying the federal income tax rate to income before income tax
primarily as a result of state income taxes, net of federal income tax benefit.
C-16
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 7: EMPLOYEE PROFIT-SHARING PLAN
The Company has a profit-sharing plan covering all eligible employees. The
Company's contributions are made on a voluntary basis at the discretion of the
Board of Directors. Contributions by the Company are limited to 15% of the
aggregate compensation of all eligible participants in the Plan. Voluntary
contributions by participants are vested immediately whereas contributions by
the Company vest over a two to six year period of service.
Plan expense included in the statement of operations is as follows:
<TABLE>
<S> <C>
September 30, 1994 $1,500,000
September 29, 1995 $1,300,000
September 27, 1996 $1,010,000
June 28, 1996 (unaudited) $ 435,000
June 27, 1997 (unaudited) $ 300,000
</TABLE>
The amount of plan expense for each fiscal year-end is not determined by the
Board of Directors until the results of operations have been determined at or
near year-end. Accordingly, no amounts are accrued for periods prior to year-
end. Thus, no amounts are reflected as profit sharing plan expense for the
period ended June 28, 1996, and June 27, 1997. However, subsequent to June 28,
1996, and June 27, 1997, Management accrued contributions to the plan of
$575,000 and $500,000, respectively. The amount accrued subsequent to June 27,
1997, is subject to final approval of the Board of Directors.
C-17
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 8: CAPITAL STOCK AND MINIMUM NET CAPITAL REQUIREMENTS
COMMON STOCK
- ------------
In certain circumstances, the purchase, sale or encumbrance of presently
outstanding common stock of HII and Clearing must be approved in writing by the
NYSE.
Except under certain specified conditions, the Holdings' articles or
incorporation provide that Holdings shall purchase all shares offered by a
selling shareholder, at a price specified by the articles, unless Holdings is
prevented from doing so by state of Federal laws, by any national securities
exchange or other self-regulating authority. Otherwise, a selling shareholder
may sell shares to another shareholder of Holdings and may be prohibited from
disposing of his or her shares to any person or entity who is not a shareholder.
During the year ended September 27, 1996, Holdings retired all treasury stock.
PREFERRED STOCK
- ---------------
The Company has not established preferences with respect to its authorized but
unissued $.01 par value preferred stock.
STOCK OPTION PLAN
- -----------------
Options granted become exercisable at dates as determined by the Committee and
if not exercised, existing outstanding options will expire in periods ranging
from June of 1997 through March of 2000.
The Company has a stock option plan (the 1994 Plan) pursuant to which 150,000
shares, after adjusting for a 100% stock dividend in September of 1995, of its
common stock have been reserved for issuance under the 1994 Plan. The options
are generally exercisable at a price equal to the fair value determined as of
the grant date, and are exercisable over a 60 month period. Options are granted
at the discretion of the Compensation Committee of the Board of Directors.
C-18
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 8: CAPITAL STOCK AND MINIMUM NET CAPITAL REQUIREMENTS
(continued)
STOCK OPTION PLAN (continued)
- -----------------
Under a previous plan (the 1991 Plan) 50,000 shares of the Company's common
stock were reserved for issuance under the 1991 Plan. The options were
exercisable at a price equal to the fair market value (110% for owners of more
than 10% of the Company's common stock) determined at the date of grant and were
exercisable over a two year period. Options were granted at the discretion of
the Executive Committee of the Board of Directors.
Information regarding the Company's stock option plans is as follows:
<TABLE>
<CAPTION>
1991 1994
Stock Option Stock Option
Plan Plan
------------- -------------
<S> <C> <C>
Outstanding, September 24, 1993 22,192
Granted at $18.93 3,000
Exercised at $7.97 to $9.36 (15,192)
------------
Outstanding, September 30, 1994 10,000
Granted at $14.08 to $19.10 - 25,500
Exercised at $12.67 to $19.10 (8,250) (5,000)
Effect of Stock Dividend 1,750 12,500
------------ ------------
Outstanding, September 29, 1995 3,500 33,000
Granted at $11.67 to $23.77 - 30,500
Exercised at $18.93 to $24.40 - (14,000)
Canceled or expired (1,000) (1,000)
------------ ------------
Outstanding, June 28, 1996 2,500 48,500
Granted at $14.76 to $17.19 - 25,500
Canceled or Expired (2,500) (11,000)
------------ ------------
Outstanding, September 27, 1996 - 63,000
Granted at $25.25 to $25.71 (unaudited) - 51,027
Exercised at $12.60 (unaudited) - (12,000)
Canceled or Expired (unaudited) - (664)
------------ ------------
Outstanding, June 27, 1997 (unaudited) - 101,363
------------ ------------
Options Available for Grant at June 27, 1997 (unaudited) - 5,637
============ ============
</TABLE>
C-19
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 8: CAPITAL STOCK AND MINIMUM NET CAPITAL REQUIREMENTS
(continued)
Minimum Net Capital Requirement
- -------------------------------
Holdings' subsidiaries, HII and Clearing, are subject to the NYSE and
Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which
requires the maintenance of a minimum amount of net capital as defined by the
Rule. The net capital rule also provides that equity capital may not be
withdrawn or dividends paid if the resulting net capital would be less than the
minimum net capital required. At September 27, 1996, September 29, 1995, and
June 27, 1997 (unaudited), the approximate net capital positions of HII and
Clearing were as follows:
<TABLE>
<CAPTION>
(Unaudited)
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
HII Net Capital $ 1,986,000 $ 4,054,000 $ 4,448,000
HII Minimum Net Capital required 250,000 250,000 250,000
Clearing Net Capital 10,902,000 17,353,000 26,387,000
Clearing Minimum Net Capital required 2,629,000 3,018,000 2,655,000
</TABLE>
Operating lease rent totaled $932,354, $787,416, and $1,158,148 during 1996,
1995, and 1994, respectively.
NOTE 9: COMMITMENTS
At September 27, 1996, aggregate minimum rental commitments under operating
leases having initial or remaining terms of more than one year are as follows:
<TABLE>
<CAPTION>
Office
Fiscal year ending Facilities Equipment Total
------------------ ---------- --------- -----
<S> <C> <C> <C>
1997 $ 905,752 $153,598 $ 1,059,350
1998 972,370 26,637 999,007
1999 979,441 14,663 994,104
2000 1,011,902 6,508 1,018,410
2001 (and later years) 6,940,812 - 6,940,812
----------- -------- -----------
$10,810,277 $201,406 $11,011,683
=========== ======== ===========
</TABLE>
C-20
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 9: COMMITMENTS (continued)
Escalating rent payments are accounted for under a straight-line method in
accordance with generally accepted accounting principles.
The Company has letters of credit issued by a financial institution to
clearing organizations. At September 27, 1996 and September 29, 1995, the
letters of credit, in the amount of $4,750,000 and $3,700,000, respectively,
were collateralized by marketable securities held as collateral for customer
margin accounts ($6,000,000 as of June 27, 1997 (unaudited)). No amounts have
been drawn against the letters of credit.
NOTE 10: CONTINGENCIES
There are a number of lawsuits and claims pending against the Company some of
which involve claims for unspecified and potentially substantial amounts.
Although the ultimate outcome of these matters cannot be ascertained at this
time and additional liabilities may or may not result from these actions, it is
the opinion of management that the resolution of these lawsuits and claims will
not have a material adverse effect on the financial condition of the Company.
C-21
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 11: FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, the Company's customer and correspondent
clearing activities involve the execution, settlement, and financing of
customers' securities transactions. These activities may result in off-balance-
sheet-credit risk in the event the customer is unable to fulfill its contracted
obligations. Customer securities transactions are transacted on either a cash
or margin basis and, in the case of the latter, credit is extended to customers
subject to various regulatory and internal rules concerning the maintenance of
adequate collateral by the customer. In connection with these activities, the
Company executes and clears customer transactions involving the sale of
securities not yet purchased. These transactions may expose the Company to off-
balance-sheet risk in the event margin requirements are not sufficient to fully
cover losses which customers may incur. Should the customer be unable to
satisfy its obligations, the Company may be required to purchase or sell
financial instruments at prevailing market prices in order to fulfill the
customers' obligations. Customers' securities transactions are recorded on a
settlement date basis (generally the third business day after the date a
transaction is executed) in accordance with industry practice. The risk of loss
associated with transactions executed but not yet settled is similar to settled
transactions in that it relates to customers' and brokers' inability to meet the
terms of their contracts.
The Company seeks to control this risk by monitoring collateral value on a
daily basis and requiring additional collateral or the reduction of securities
positions when necessary, and establishing credit limits. Additionally, the
risk of loss is mitigated through agreements with correspondent brokers wherein
any such losses related to their customers are absorbed by the correspondent
broker.
Borrowings occur periodically wherein customer securities held as collateral
for their margin account balances are pledged as collateral for such borrowings.
Should the bank be unable to return the customers' securities when required, the
Company may be required to purchase such securities in the open market.
Included in payables to brokers and dealers, and clearing organizations are
amounts due upon the receipt of securities. Should the broker or clearing
organization fail to deliver the securities to the Company, the Company may be
required to purchase identical securities on the open market at prices different
from contract value. The Company monitors the credit standing of each broker
and clearing organization with which it conducts business and requires deposits
and additional collateral when necessary.
C-22
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 27, 1997
NOTE 11: FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
(continued)
A substantial majority of the state and municipal securities owned consist of
obligations of the State of Colorado and political subdivisions thereof.
Approximately 50% of corporate stocks owned are securities for which trading
volume is limited.
Securities sold but not purchased are a part of the Company's normal
activities as a broker and dealer in securities and are subject to off-balance-
sheet market risk of loss should the Company be unable to acquire the securities
for delivery to the purchaser at prices equal to or less than the current
recorded amounts.
Securities borrowed are recorded at the amount of cash collateral advanced to
the lender. The Company monitors the market value of securities borrowed and
requests refunds of collateral when appropriate.
NOTE 12: INDUSTRY AND SEGMENT INFORMATION
Holding's major operations are in three areas as defined by the formation and
operation of its subsidiaries, Clearing, HII, and Investments. In addition to
operations of these three subsidiaries, Holdings operates as the holding
company, provides administration services for its subsidiaries, and manages the
capital assets of the group. Clearing's principal sources of revenues are
derived from securities clearing services to broker-dealer firms located
throughout the United States and interest charged on such broker-dealer's
customers' margin account balances. HII's principal sources of revenues are
derived from trading profits, corporate and municipal finance fees, commissions,
and underwriting profits. Investment's principal source of revenues, through
its subsidiary Management, are derived from fees earned on the management and
investing of funds raised through Mezzanine.
C-23
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 1997
NOTE 12: INDUSTRY AND SEGMENT INFORMATION (continued)
Revenue, operating income, depreciation and amortization, identifiable assets,
and capital expenditures pertaining to the industries in which Holding's
operates are presented below:
<TABLE>
<CAPTION>
(Unaudited)
--------------------------
September 30, September 29, September 27, June 28, June 27,
1994 1995 1996 1996 1997
-------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Holdings $ - $ 1,822,283 $ 2,712,470 $ 2,199,260 $ 2,236,842
Clearing 17,285,425 30,178,842 36,054,184 27,817,470 24,328,302
HII 18,984,204 15,723,306 21,257,268 17,087,290 16,277,332
Investments 56,177 662,110 897,771 727,395 788,735
Intercompany eliminations - (2,629,930) (2,583,377) (2,104,639) (2,708,336)
----------- ----------- ----------- ----------- -----------
$36,325,806 $45,756,611 $58,338,316 $45,726,776 $40,922,875
=========== =========== =========== =========== ===========
OPERATING INCOME:
Holdings $ - $(1,588,548) $(2,467,396) $ (711,264) $ (920,170)
Clearing 7,724,842 14,811,897 18,650,993 14,733,261 9,652,175
HII (2,791,025) (429,591) 1,809,836 1,622,825 606,756
Investments (449,834) (23,745) (23,140) (84,676) 102,899
----------- ----------- ----------- ----------- -----------
$4,483,983 $12,770,013 $17,970,293 $15,560,146 $ 9,441,660
=========== =========== =========== =========== ===========
DEPRECIATION AND
AMORTIZATION:
Holdings $ - $ 34,022 $ 212,946 $ 113,089 $ 82,189
Clearing 212,373 232,556 184,220 138,165 277,642
HII 138,784 122,885 162,863 101,740 143,186
Investments - 6,660 10,985 9,089 5,673
----------- ----------- ----------- ----------- -----------
$ 351,157 $ 396,123 $ 571,014 $ 362,083 $ 508,690
=========== =========== =========== =========== ===========
</TABLE>
C-24
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 1997
NOTE 12: INDUSTRY AND SEGMENT INFORMATION (continued)
<TABLE>
<CAPTION>
(Unaudited)
---------------------------
September 29, September 27, June 28, June 27,
1995 1996 1996 1997
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
IDENTIFIABLE ASSETS:
Holdings $ 4,797,826 $ 1,764,251 $ 1,389,852 $ 2,003,824
Clearing 138,234,622 161,242,034 171,449,133 149,075,287
HII 13,220,989 13,369,241 13,693,351 12,489,581
Investments 432,906 564,833 633,157 837,344
Intercompany eliminations (6,087,657) (5,067,341) (4,273,656) (5,793,453)
------------ ------------ ------------ ------------
$150,598,686 $171,873,018 $182,891,837 $158,612,583
============ ============ ============ ============
CAPITAL EXPENDITURES:
Holdings $ 48,692 $ 73,875 $ 43,325 $ 160,907
Clearing 280,378 889,969 830,984 205,110
HII 211,689 338,241 310,076 336,944
Investments 6,644 7,196 7,196 14,491
------------ ------------ ------------ ------------
$ 547,403 $ 1,309,281 $ 1,191,581 $ 717,452
============ ============ ============ ============
</TABLE>
Hanifen, Imhoff Holdings Corp. was formed on October 3, 1994, and therefore
the amounts for September 30, 1994, do not include an allocation of corporate
and general items. Intercompany revenues eliminated relate to the
administrative fees earned by Holdings and charged to the subsidiaries in
addition to the clearing revenue earned by Clearing on the services performed
for HII. Effective October 3, 1994, depreciation on fixed assets were initially
charged to Holdings and subsequently passed through to the subsidiary segments
based on the utilization of such assets. The depreciation and capital
expenditure for these fixed assets are reflected in the appropriate segment that
benefits from their use, and additionally, while the asset is recorded on the
books of Holdings, they are reflected in the appropriate segment in the schedule
of identifiable assets. The intercompany eliminations regarding identifiable
assets represent eliminations for intercompany receivables and payables and
intercompany accounts between Clearing and HII relating to their relationship as
Clearing agent and broker dealer. To provide a more accurate disclosure, the
identifiable assets of holdings do not include its investment in the
subsidiaries and therefore, the elimination for this investment is not
necessary.
C-25
<PAGE>
HANIFEN, IMHOFF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 27, 1997 AND THE NINE
MONTHS ENDED JUNE 28, 1996, AND JUNE 1997
NOTE 13: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The financial instruments of the Company are reported in the statements of
financial condition at market or fair value, or at carrying amounts that
approximate fair value because of the short maturity of the instruments or
because they bear a market interest rate.
NOTE 14: PROPOSED DISCONTINUED OPERATIONS - UNAUDITED, SUBSEQUENT TO DATE OF
INDEPENDENT ACCOUNTANTS' REPORTS
Subsequent to the periods presented, and as a condition of the proposed
merger, management plans to discontinue operations of Hanifen, Imhoff Inc. and
Hanifen, Imhoff Investments Inc. and sell certain assets, subject to certain
liabilities, of the entities. The effect that the discontinuance of these
operations would have had on the financial information presented is not
determinable. However, the total revenues and expenses, exclusive of income
tax, for the discontinued entities are as below. Included in the expenses below
are those expenses incurred by Holdings' and charged to HII and Investments as
general and administration expense. It is unknown what effect the
discontinuance of these operations may have on these expenses.
<TABLE>
<CAPTION>
September 30, September 29, September 27, June 28, June 27,
1994 1995 1996 1996 1997
------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue $19,040,381 $16,385,416 $22,155,039 $17,814,685 $17,066,067
Expense $22,281,240 $15,838,752 $20,368,343 $16,276,536 $16,446,412
</TABLE>
The sale of certain assets, subject to certain liabilities, will be made a
fair value. The exact assets to be sold and liabilities to be assumed have not
yet been determined, however it is expected that no loss will be recognized on
the sale.
C-26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In general, the Wisconsin Business Corporation Law provides that a
corporation shall indemnify directors and officers for all reasonable expenses
incurred in connection with the successful defense of actions arising in
connection with their service as directors and officers of the corporation. In
other cases, the Wisconsin statute provides that the corporation shall indemnify
a director or officer against liability unless the director or officer breached
or failed to perform a duty owed to the corporation and such breach or failure
meets certain specified criteria constituting, in general, some act of
misconduct. In addition, the corporation may reimburse a director or officer
for his expenses in defending against actions as they are incurred upon the
director's or officer's written request accompanied by a written affirmation of
his good faith belief that he has not breached or failed to perform his duties
to the corporation and a written undertaking to repay amounts advanced if it is
ultimately determined that indemnification is not required under the Wisconsin
Business Corporation Law. A court of law may order that the corporation provide
indemnification to a director or officer if it finds that the director or
officer is entitled thereto under the applicable statutory provision or is
fairly and reasonably entitled thereto in view of all the relevant
circumstances, whether or not such indemnification is required under the
applicable statutory provision.
The Wisconsin Business Corporation Law specifies various procedures
pursuant to which a director or officer may establish his right to
indemnification.
Provided that it is not determined by or on behalf of the corporation
that the director or officer breached or failed to perform a duty owed to the
corporation and such breach or failure meets certain specified criteria
constituting, in general, some act of misconduct, its articles of incorporation
or bylaws, by written agreement, by resolution of its board of directors or by a
vote of the holders of a majority of its outstanding shares.
The Registrant's Bylaws provide for indemnification and advancement of
expenses of directors and officers to the fullest extent provided by the
Wisconsin Business Corporation Law. This provision is not exclusive of any other
rights to indemnification or the advancement of expenses to which a director or
officer may be entitled to under any written agreement, resolution of directors,
vote of stockholders, by law or otherwise.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit Description
- --------------------------------------------------------------------------------
2. Agreement and Plan of Merger dated as of September 30, 1997 among
Fiserv, Inc, Fiserv Clearing, Inc. and Hanifen, Imhoff Holdings, Inc.
(Attached as Appendix A to the Proxy Statement/Prospectus included in
this Registration Statement.)(Schedules to such agreement are not
being filed herewith, but will be provided to the Commission upon its
request, pursuant to Item 604(b)(2) of Regulation S-X.)
3.1 Restated Articles of Incorporation (filed as Exhibit 3.1 to Fiserv's
Registration Statement on Form S-4, File No. 333-23349, and
incorporated herein by reference).
3.2 By-laws, (filed as Exhibit 3.2 to Fiserv's Registration Statement on
Form S-4, File No. 33-62870, and incorporated herein by reference).
4.1 Credit Agreement dated as of May 17, 1995 among Fiserv, Inc., the
Lenders Party Thereto, First Bank National Association, as Co-Agent,
and The Bank of New York, as Agent. (Not being filed herewith, but
will be provided to the Commission upon its request, pursuant to Item
601(b) (4) (iii) (A) of Regulation S-K.)
4.2 Note Purchase Agreement dated as of March 15, 1991, as amended, among
Fiserv, Inc., Aid Association for Lutherans, Northwestern National
Life Insurance Company, Northern Life Insurance Company and the North
Atlantic Life Insurance Company of America. (Not being filed herewith,
but will be provided to the Commission upon its request, pursuant to
Item 601(b) (4) (iii) (A) of Regulation S-K.)
4.3 Note Purchase Agreement dated as of April 30, 1990, as amended, among
Fiserv, Inc. and Teachers Insurance and Annuity Association of
America. (Not being filed herewith, but will be provided to the
Commission upon its request, pursuant to Item 601(b) (4) (iii) (A) of
Regulation S-K.)
4.4 Note Purchase Agreement dated as of May 17, 1995 among Fiserv, Inc.,
Teachers Insurance Annuity Association of America, Massachusetts
Mutual Life Insurance Company and Aid Association for Lutherans. (Not
being filed herewith, but will be provided to the Commission upon its
request, pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.)
5. Opinion of Charles W. Sprague.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of McGladrey & Pullen LLP
23.3 Consent of Baird Kurtz and Dobson
II-2
<PAGE>
23.4 Consent of Coopers & Lybrand LLC
23.5 Consent of Charles W. Sprague (included in Exhibit 5 hereto).
24. Powers of Attorney.
99. Proxy Card
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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, represented 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;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
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 foregoing provision, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, 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 through the date of
responding to the request.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Brookfield, State of
Wisconsin, on the 12th day of November, 1997.
FISERV, INC.
By /s/ Kenneth R. Jensen x
----------------------------------------
Kenneth R. Jensen,
Senior Executive Vice President
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
* Chairman of the Board and Director November 12, 1997
- ------------------------- (Principal Executive Officer)
(George D. Dalton)
* Vice Chairman, President and Director November 12, 1997
- -------------------------
(Leslie M. Muma)
* Senior Executive Vice President, Treasurer November 12, 1997
- ------------------------- and Director (Principal Financial and
(Kenneth R. Jensen) Accounting Officer)
* Vice Chairman, President - November 12, 1997
- ------------------------- Information Technology, Inc. and
(Donald F. Dillon) Director
* Director November 12, 1997
- -------------------------
(Gerald J. Levy)
* Director November 12, 1997
- -------------------------
(L. William Seidman)
* Director November 12 , 1997
- -------------------------
(Thekla R. Shackelford)
* Director November 12 , 1997
- -------------------------
(Roland D. Sullivan)
</TABLE>
*By:/s/ Kenneth R. Jensen
--------------------------
(Kenneth R. Jensen, individually
and as attorney-in-fact for the
persons indicated)
II-5
<PAGE>
Exhibits Index
Exhibit Description
Number
-----------------------------------
2. Agreement and Plan of Merger dated as of September 30, 1997 among Fiserv,
Inc., Fiserv Clearing, Inc. and Hanifen, Imhoff Holdings, Inc. (Attached
as Appendix A to the Proxy Statement/Prospectus included in this
Registration Statement.)(Schedules to such agreement are not being filed
herewith, but will be provided to the Commission upon its request,
pursuant to Item 604(b)(2) of Regulation S-X.)
3.1 Restated Articles of Incorporation (filed as Exhibit 3.1 to Fiserv's
Registration Statement on Form S-4, File No. 333-23349, and incorporated
herein by reference).
3.2 By-laws, (filed as Exhibit 3.2 to Fiserv's Registration Statement on Form
S-4, File No. 33-62870, and incorporated herein by reference).
4.1 Credit Agreement dated as of May 17, 1995 among Fiserv, Inc., the Lenders
Party Thereto, First Bank National Association, as Co-Agent, and The Bank
of New York, as Agent. (Not being filed herewith, but will be provided
to the Commission upon its request, pursuant to Item 601(b) (4) (iii) (A)
of Regulation S-K.)
4.2 Note Purchase Agreement dated as of March 15, 1991, as amended, among
Fiserv, Inc., Aid Association for Lutherans, Northwestern National Life
Insurance Company, Northern Life Insurance Company and the North Atlantic
Life Insurance Company of America. (Not being filed herewith, but will
be provided to the Commission upon its request, pursuant to Item 601(b)
(4) (iii) (A) of Regulation S-K.)
4.3 Note Purchase Agreement dated as of April 30, 1990, as amended, among
Fiserv, Inc. and Teachers Insurance and Annuity Association of America.
(Not being filed herewith, but will be provided to the Commission upon
its request, pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.)
4.4 Note Purchase Agreement dated as of May 17, 1995 among Fiserv, Inc.,
Teachers Insurance Annuity Association of America, Massachusetts Mutual
Life Insurance Company and Aid Association for Lutherans. (Not being
filed herewith, but will be provided to the Commission upon its request,
pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.)
5. Opinion of Charles W. Sprague.
II-6
<PAGE>
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of McGladrey & Pullen, LLP
23.3 Consent of Baird Kurtz and Dobson
23.4 Consent of Coopers & Lybrand L.L.P.
23.5 Consent of Charles W. Sprague (included in Exhibit 5 hereto).
24. Powers of Attorney.
99. Proxy Card
II-7
<PAGE>
Exhibit 5
Opinion of Charles W. Sprague
November 12, 1997
Fiserv, Inc.
255 Fiserv Drive
Brookfield, Wisconsin 53045
Re: Fiserv, Inc. Registration Statement on Form S-4
-----------------------------------------------
Dear Sirs:
I have acted as counsel to Fiserv, Inc., a Wisconsin corporation (the
"Company"), in connection with its Registration Statement on Form S-4 (the
"Registration Statement"), filed under the Securities Act of 1933 (the "Act"),
relating to the proposed issuance pursuant to the Agreement and Plan of Merger
dated as of September 30, 1997 among Fiserv, Inc., Fiserv Clearing, Inc. and
Hanifen, Imhoff Holdings, Inc. of shares of its Common Stock, $.01 par value
(the "Shares"), of the Company.
In that connection, I have examined originals, or copies certified or
otherwise identified to my satisfaction of such documents, corporate records and
other instruments as I have deemed necessary or appropriate for purposes of this
opinion, including the Restated Articles of Incorporation and By-Laws, as
amended, of the Company.
Based upon the foregoing, I am of the opinion that:
I. The Company has been duly organized and is validly existing as a
corporation under the laws of the State of Wisconsin.
II. The Shares have been duly authorized, validly issued, fully paid
and nonassessable.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to me under "Legal Matters" in the
Prospectus comprising a part of the Registration Statement. By giving the
foregoing consent, I do not admit that I come within the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
Charles W. Sprague
Executive Vice President,
General Counsel and Secretary
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
Fiserv, Inc. on Form S-4 of our report dated October 16, 1997, appearing in the
current report on Form 8-K dated October 22, 1997. We also consent to the
reference to us under the heading "Experts" in the Prospectus, which is part
of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
November 12, 1997
<PAGE>
Exhibit 23.2
To the Board of Directors
Hanifen, Imhoff Holdings, Inc.
Denver, Colorado
We hereby consent to the use in this Registration Statement on Form S-4 of our
report, dated November 3, 1995, relating to the consolidated financial
statements of Hanifen, Imhoff Holdings, Inc. and subsidiaries as of September
29, 1995 and for each of the two years in the period then ended. We also
consent to the reference to our Firm under the captions "Experts" and "Hanifen
Holdings Selected Financial Data" in the Prospectus.
McGladrey & Pullen, LLP
Denver, Colorado
November 17, 1997
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this S-4 Registration of Fiserv, Inc.
of our Independent Accountants' Report dated November 8, 1996, with respect to
our audit of the consolidated financial statements of Hanifen, Imhoff Holdings,
Inc. and Subsidiaries as of and for the year ended September 27, 1996. We also
consent to the reference in the aforementioned registration statement to our
firm under the caption "Experts" and "Hanifen Holdings Selected Financial Data."
Baird, Kurtz & Dobson
Denver, Colorado
November 17, 1997
<PAGE>
Exhibit 2.3.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to us in this Registration Statement of Fiserv, Inc.
on Form S-4 under the heading "Experts" in the Prospectus, which is part of this
registration statement.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 13, 1997
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Kenneth R. Jensen as his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement on Form S-4 covering
Common Stock of Fiserv, Inc., any or all amendments or post-effective amendments
to such Registration Statement, and to file the same, with all exhibits thereto,
and other documents therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 29th day of September, 1997.
/s/ GEORGE D. DALTON
- --------------------
George D. Dalton
<PAGE>
Exhibit 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Kenneth R. Jensen as his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement on Form S-4 covering
Common Stock of Fiserv, Inc., any or all amendments or post-effective amendments
to such Registration Statement, and to file the same, with all exhibits thereto,
and other documents therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 29th day of September, 1997.
/s/ LESLIE M. MUMA
- -------------------
Leslie M. Muma
<PAGE>
Exhibit 24.3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Kenneth R. Jensen as his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement on Form S-4 covering
Common Stock of Fiserv, Inc., any or all amendments or post-effective amendments
to such Registration Statement, and to file the same, with all exhibits thereto,
and other documents therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 29th day of September, 1997.
/s/ DONALD F. DILLON
- ------------------------
Donald F. Dillon
<PAGE>
Exhibit 24.4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Kenneth R. Jensen as his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement on Form S-4 covering
Common Stock of Fiserv, Inc., any or all amendments or post-effective amendments
to such Registration Statement, and to file the same, with all exhibits thereto,
and other documents therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 29th day of September, 1997.
/s/ GERALD J. LEVY
- --------------------
Gerald J. Levy
<PAGE>
Exhibit 24.5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Kenneth R. Jensen as his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement on Form S-4 covering
Common Stock of Fiserv, Inc., any or all amendments or post-effective amendments
to such Registration Statement, and to file the same, with all exhibits thereto,
and other documents therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 29th day of September, 1997.
/s/ L. WILLIAM SEIDMAN
- -------------------------
L. William Seidman
<PAGE>
Exhibit 24.6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Kenneth R. Jensen as his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement on Form S-4 covering
Common Stock of Fiserv, Inc., any or all amendments or post-effective amendments
to such Registration Statement, and to file the same, with all exhibits thereto,
and other documents therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the day 29th of September, 1997.
/s/ THEKLA R. SHACKELFORD
- -----------------------------
Thekla R. Shackelford
<PAGE>
Exhibit 24.7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Kenneth R. Jensen as his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement on Form S-4 covering
Common Stock of Fiserv, Inc., any or all amendments or post-effective amendments
to such Registration Statement, and to file the same, with all exhibits thereto,
and other documents therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the day 29th of September, 1997.
/s/ ROLAND D. SULLIVAN
- -----------------------------
Roland D. Sullivan
<PAGE>
Exhibit 99
HANIFEN, IMHOFF HOLDINGS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER __, 1997
The undersigned shareholder(s) of Hanifen, Imhoff Holdings, Inc., a
Colorado corporation ("Hanifen Holdings"), revoking all previous proxies, hereby
appoints Gary J. Wilson and Donald Salcito, and each of them acting
individually, as the attorneys and proxies of the undersigned, with full power
of substitution, to cast all votes for all shares of Common Stock, $.01 par
value per share ("Hanifen Common Stock"), which the undersigned would be
entitled to cast if personally present at the Special Meeting of Shareholders of
Hanifen Holdings to be held at the Westin Hotel Tabor Center, 1672 Lawrence
Street, Denver, Colorado 80202, on ________, December __, 1997 at 9:30 a.m.,
local time, and any and all adjournments or postponements thereof. Said proxies
are authorized and directed to vote as indicated with respect to the following
matters:
1. To adopt an Agreement and Plan of Merger (the "Merger Agreement")
among Fiserv, Inc. ("Fiserv"), Fiserv Clearing, Inc. ("Fiserv Clearing"), a
wholly-owned subsidiary of Fiserv, and Hanifen Holdings, pursuant to which
Hanifen Holdings will merge with and into Fiserv Clearing and Fiserv Clearing
will remain a wholly-owned subsidiary of Fiserv and shares of outstanding
Hanifen Common Stock will be converted into shares of common stock, $.01 par
value, of Fiserv and cash, all as described and subject to the terms and
conditions set forth in the accompanying proxy statement/prospectus (the
"Merger").
FOR AGAINST ABSTAIN
----- ----- -----
2. To sell certain of the assets of Hanifen, Imhoff, Inc. ("Hanifen
Brokerage"), a wholly-owned subsidiary of Hanifen Holdings, to a new corporation
formed by a group of current employees of Hanifen Brokerage for a purchase price
equal to the fair market value determined by an independent appraiser, payable
in cash at closing, plus the assumption of certain of the liabilities of Hanifen
Brokerage.
FOR AGAINST ABSTAIN
----- ----- -----
3. To sell certain of the assets of Hanifen, Imhoff Investments, Inc.
("Hanifen Investments"), a wholly-owned subsidiary of Hanifen Holdings, to a
new entity formed by a group of current employees of Hanifen Investments, on
terms to be negotiated by Hanifen Holdings.
<PAGE>
FOR AGAINST ABSTAIN
----- ----- -----
4. To vote on such other business as may properly come before the
Special Meeting of Shareholders and any and all adjournments or postponements
thereof.
FOR AGAINST ABSTAIN
----- ----- -----
(Please date and sign on reverse side)
THE SALE OF THE ASSETS OF HANIFEN BROKERAGE AND HANIFEN INVESTMENTS ARE
CONDITIONS TO CLOSING THE MERGER. THEREFORE, A VOTE AGAINST OR TO ABSTAIN FROM
VOTING WITH RESPECT TO PROPOSALS 2 AND 3 ABOVE WILL BE EFFECTIVELY A VOTE
AGAINST THE MERGER.
<PAGE>
(continued from reverse side)
This Proxy is solicited on behalf of the Board of Directors of Hanifen
Holdings. Unless otherwise specified, the shares will be voted "FOR" approval of
the Merger and the sale of certain assets of Hanifen, Imhoff, Inc., and Hanifen,
Imhoff Investments, Inc. This Proxy also delegates discretionary authority to
vote with respect to any other business which may properly come before the
Special Meeting of Shareholders.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING AND THE PROXY STATEMENT.
NOTE: Please sign this Proxy exactly as the Dated: , 1997
name(s) appears hereon. When signing as ----------
attorney-in-fact, executor, administrator, trustee
or guardian, please add your title as such.
Proxies executed in the name of a corporation -------------------------
should be signed on behalf of the corporation by Signature of Shareholder
a duly authorized officer. Where shares are
owned in the name of two or more persons, all
such persons should sign this Proxy.
-------------------------
Signature of Shareholder
PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE PAID ENVELOPE.
