<PAGE>
Filing Pursuant to Rule 424(b)(3)
Registration No. 333-47199
NETWORK DATA PROCESSING CORPORATION
200 FIFTH AVENUE, S.E.
CEDAR RAPIDS, IA 52401
March 12, 1998
TO OUR STOCKHOLDERS:
You are cordially invited to attend a Special Meeting of the stockholders
("NDP Stockholders") of Network Data Processing Corporation ("NDP") to be held
on April 14, 1998 at 10:00 a.m. local time at NDP's offices at 200 Fifth Avenue
S.E., Cedar Rapids, Iowa 52401 (the "Special Meeting").
At the Special Meeting, the NDP Stockholders will be asked to consider and
vote upon a proposal to adopt an Agreement and Plan of Merger ("Merger
Agreement") among NDP, Fiserv, Inc. ("Fiserv") and Fiserv Solutions, Inc.
("Fiserv Solutions"), a wholly owned subsidiary of Fiserv. Pursuant to the
Merger Agreement, each outstanding share of common stock, par value $100 per
share, of NDP will be converted into shares of Fiserv common stock, par value
$0.01 per share, and NDP will be merged into Fiserv Solutions ("Merger"). The
NDP Stockholders will receive cash in lieu of any fractional shares. Details of
the foregoing proposal and the Special Meeting are contained in the attached
Notice of the Special Meeting of Stockholders and Proxy Statement/Prospectus.
Your vote on the Merger Agreement is important, so please read this information
carefully.
THE BOARD OF DIRECTORS OF NDP HAS CAREFULLY REVIEWED AND CONSIDERED THE
TERMS AND CONDITIONS OF THE PROPOSED MERGER. THE BOARD OF DIRECTORS OF NDP
BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF NDP AND THE NDP
STOCKHOLDERS AND, ACCORDINGLY, HAS UNANIMOUSLY APPROVED THE MERGER. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR ADOPTION AND APPROVAL OF THE MERGER
AGREEMENT.
Each of the NDP Stockholders is 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. If
you are able to attend the Special Meeting, you may, if you wish, vote your
shares in person.
Please do not send in your share certificates with your proxy card. 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,
/s/ Howard Arner
Howard Arner
President and Chief Executive Officer
<PAGE>
NETWORK DATA PROCESSING CORPORATION
200 FIFTH AVENUE, S.E.
CEDAR RAPIDS, IA 52401
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 14, 1998
To the Stockholders of Network Data Processing Corporation:
A special meeting (the "Special Meeting") of the stockholders ("NDP
Stockholders") of Network Data Processing Corporation, an Iowa corporation
("NDP"), will be held on April 14, 1998, at 10:00 a.m., local time, at NDP's
offices at 200 Fifth Avenue S.E., Cedar Rapids, Iowa 52401 for the following
purposes:
1. Consider and vote upon a single proposal to adopt and approve an Agreement
and Plan of Merger dated as of January 20, 1998 ("Merger Agreement"), among
NDP, Fiserv, Inc., a Wisconsin corporation ("Fiserv"), and Fiserv
Solutions, Inc., a Wisconsin corporation ("Fiserv Solutions"). Pursuant to
the Merger Agreement, (i) NDP will be merged with and into Fiserv
Solutions, with Fiserv Solutions being the surviving corporation and
continuing to exist as a wholly owned subsidiary of Fiserv ("Merger"), and
(ii) the shares of common stock, par value $100 per share, of NDP ("NDP
Common Stock") outstanding immediately prior to the consummation of the
Merger will be exchanged for shares of common stock, $.01 par value, of
Fiserv ("Fiserv Common Stock") having a market value of $22,500,000
(measured by the average closing price of Fiserv Common Stock on the Nasdaq
National Market as reported in The Wall Street Journal for the 20 trading
days ending on the second trading day prior to the effective time) less NDP
merger costs (estimated at approximately $750,000), or approximately $2,226
per share. The exact exchange ratio for shares of NDP Common Stock will be
determined by a formula which is set forth in detail in the accompanying
Proxy Statement/Prospectus. The average closing price of Fiserv Common
Stock for the 20 trading days ended two days prior to the mailing of this
Proxy Statement/Prospectus was $55.38 per share. A copy of the Merger
Agreement is attached as Appendix A to the accompanying Proxy
Statement/Prospectus.
2. Transact such other business as may properly come before the Special
Meeting or any adjournments or postponements thereof.
Holders of NDP Common Stock are entitled to dissenters' rights in
connection with the Merger. The NDP 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.
Only holders of record of shares of NDP Common Stock at the close of
business on March 9, 1998 are entitled to notice of and to vote at the Special
Meeting and any adjournment or postponement thereof. The Board of Directors of
NDP unanimously recommends a vote FOR the proposal to approve the Merger
Agreement. Unless the proposal is approved by the requisite vote of NDP
stockholders, the merger will not be consummated.
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,
/s/ David R. Antin
David R. Antin
Vice President and Secretary
March 12, 1998
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY, WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE SPECIAL MEETING. INSTRUCTIONS FOR EXCHANGING YOUR
CERTIFICATES WILL BE SENT TO YOU FOLLOWING APPROVAL OF THE MERGER. PLEASE DO NOT
SEND IN ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<PAGE>
NETWORK DATA PROCESSING CORPORATION
PROXY STATEMENT
FISERV, INC.
PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the holders of shares
of common stock, par value $100 per share ("NDP Common Stock"), of Network Data
Processing Corporation, an Iowa corporation ("NDP"), in connection with the
solicitation of proxies from NDP stockholders ("NDP Stockholders"), for use at a
special meeting of NDP Stockholders (together with any adjournments or
postponements, the "Special Meeting") to be held at NDP's offices at 200 Fifth
Avenue S.E., Cedar Rapids, Iowa 52401 on April 14, 1998, at 10:00 a.m. local
time and at any adjournments or postponements thereof.
Only holders of record of shares of NDP Common Stock at the close of
business on March 9, 1998 ("Record Date") are entitled to notice of and to vote
at the Special Meeting. On the Record Date there were 9,768 shares of NDP Common
Stock outstanding. This Proxy Statement/Prospectus, the enclosed Notice of
Special Meeting and accompanying proxy card are first being mailed to NDP
Stockholders on or about March 12, 1998. This proxy solicitation is made by the
Board of Directors of NDP.
At the Special Meeting, the NDP Stockholders will consider and vote upon a
proposal to approve an Agreement and Plan of Merger dated as of January 20, 1998
("Merger Agreement"), among NDP, Fiserv, Inc., a Wisconsin corporation
("Fiserv"), and Fiserv Solutions, Inc., a Wisconsin corporation ("Fiserv
Solutions"), which is wholly owned by Fiserv. Pursuant to the Merger Agreement,
(i) NDP will be merged with and into Fiserv Solutions, with Fiserv Solutions
being the surviving corporation ("Surviving Corporation") and continuing to
exist as a wholly owned subsidiary of Fiserv ("Merger"), and (ii) each share of
NDP Common Stock outstanding immediately prior to the consummation of the Merger
will be converted into the right to receive such number of shares of common
stock, $.01 par value, of Fiserv ("Fiserv Common Stock") as shall equal the
quotient of (x) the quotient of (i) NDP Stock Value (as defined below) divided
by (ii) the sum of the number of shares of NDP Common Stock and the number of
shares of NDP Common Stock covered by options to purchase NDP Common Stock
outstanding at the effective time of the Merger, divided by (y) an amount equal
to the average closing price of Fiserv Common Stock as reported on the Nasdaq
National Market (as reported in The Wall Street Journal) for the 20 trading days
ending on the second trading day prior to the effective time of the Merger. The
term "NDP Stock Value" shall mean $22,500,000 (which represents a negotiated
valuation), minus NDP Merger Costs (as hereinafter defined). The term "NDP
Merger Costs" shall mean the aggregate of all accounting (which shall not
include regular audit fees), legal, printing, filing, financial advisory and
other fees and expenses of NDP and Taxes (as defined in the Merger Agreement)
assessed in connection with the transactions contemplated hereby, in each case
incurred or anticipated to be incurred in connection with the Merger, all
estimated and agreed to by the parties two business days prior to the Effective
Time. NDP anticipates that the NDP Merger costs will be approximately $750,000.
Fiserv will bear its own expenses in connection with the Merger. The NDP Stock
Value is expected to be approximately $2,226 per share. The average closing
price of Fiserv Common Stock for the 20 trading days ended two days prior to the
mailing of this Proxy Statement/Prospectus was $55.38 per share. A copy of the
Merger Agreement is attached as Appendix A to the accompanying Proxy
Statement/Prospectus.
No fractional shares of Fiserv Common Stock will be issued in the Merger.
In lieu of any fractional shares, each holder of NDP 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 Time,
by (ii) the fractional interest to which such holder would otherwise be
entitled. Fiserv will make available to Firstar Trust Company, Milwaukee
("Exchange Agent") the cash necessary for this purpose.
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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 NDP
Common Stock pursuant to the Merger. 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 ("Commission") covering the shares of Fiserv
Common Stock to be issued in connection with the Merger.
See "Risk Factors" beginning on page 10 for a discussion of certain factors
which should be considered in connection with the acquisition of Fiserv Common
Stock.
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 NDP 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
NDP 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 SOLUTIONS HAS BEEN
FURNISHED BY FISERV, AND ALL INFORMATION HEREIN WITH RESPECT TO NDP HAS BEEN
FURNISHED BY NDP.
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.
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The date of this Proxy Statement/Prospectus is March 12, 1998.
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AVAILABLE INFORMATION
Fiserv is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended ("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 NASDAQ. The reports, proxy
statements and other information filed by Fiserv can also be inspected and
copied at the offices of the Nasdaq National Market, 1735 K Street, N.W.,
Washington, D.C. 20006.
NDP is not subject to the information and reporting requirements of the
Exchange Act.
Fiserv has filed with the Commission a Registration Statement under the
Securities Act of 1933, as amended ("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 which contains reports, proxy and
information statements and other information regarding Fiserv.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fiserv (File No. 0-
14948) 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,
1997, filed with the Commission on February 20, 1998.
(2) Fiserv's Current Report on Form 8-K dated February 23, 1998, filed with
the Commission on February 24, 1998.
(3) The description of certain Rights to purchase Series A Junior
Participating Preferred Stock, which description is contained in
Fiserv's Registration Statement on Form 8-A, under Section 12(b) of the
Exchange Act, dated February 23, 1998.
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, IN THE CASE OF DOCUMENTS RELATING TO FISERV, DIRECTED TO FISERV,
INC., 255 FISERV DRIVE, BROOKFIELD, WISCONSIN 53045 (TELEPHONE NUMBER 414-879-
5000), ATTENTION: CHARLES W. SPRAGUE, SECRETARY.
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 "NDP 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 NDP 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.
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TABLE OF CONTENTS
<TABLE>
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AVAILABLE INFORMATION............................................................... iii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..................................... iv
SUMMARY............................................................................. 1
General........................................................................ 1
The Parties.................................................................... 1
The Special Meeting............................................................ 2
The Merger..................................................................... 2
Comparative Share and Dividend Information and Market Prices................... 6
Certain Significant Considerations............................................. 6
Selected Historical Financial Data............................................. 7
Comparative Per Share Data of Fiserv and NDP................................... 9
RISK FACTORS........................................................................ 10
Average Market Prices Will Differ From Actual Market Price..................... 10
Non-Solicitation Provisions May Have a Deterrent Effect........................ 10
Fluction of Market Price of Fiserv Common Stock................................ 10
THE SPECIAL MEETING................................................................. 11
Matters to be Considered at the Special Meeting; Quorum and Vote Required...... 11
Record Date; Stock Entitled to Vote............................................ 11
Voting and Revocation of Proxies............................................... 11
Solicitation of Proxies........................................................ 11
THE MERGER.......................................................................... 12
General........................................................................ 12
Background and Reasons for the Merger.......................................... 12
Recommendation of the Board of Directors of NDP................................ 13
Management and Operations of NDP Following the Merger.......................... 14
The Merger Agreement........................................................... 14
Effective Time and Consequences of the Merger.................................. 14
Merger Consideration........................................................... 14
Conversion of NDP Common Stock; Procedures for Exchange of Share Certificates.. 15
Representations, Warranties and Covenants...................................... 15
Federal Income Tax Consequences of the Merger.................................. 15
Conditions to the Merger....................................................... 16
Amendments and Termination..................................................... 17
No Solicitation................................................................ 17
Expenses of the Merger......................................................... 17
Accounting Treatment........................................................... 17
Resale of Fiserv Common Stock by Affiliates.................................... 17
Rights of Dissenting Stockholders.............................................. 18
COMPARATIVE MARKET PRICES AND DIVIDENDS............................................. 19
FISERV SUPPLEMENTAL FINANCIAL DATA.................................................. 19
</TABLE>
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FISERV MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................................... 21
Years Ended December 31, 1997, 1996 and 1995......................................... 21
BUSINESS OF FISERV........................................................................ 24
NDP SELECTED CONSOLIDATED FINANCIAL DATA.................................................. 25
NDP MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................................... 26
General.............................................................................. 26
Nine Months Ended December 31, 1997 Compared to Nine Months Ended December 31, 1996.. 26
Fiscal Year Ended March 31, 1997 Compared to Fiscal Year Ended March 31, 1996........ 27
Fiscal Year Ended March 31, 1996 Compared to Fiscal Year Ended March 31, 1995........ 27
Liquidity and Capital Resources...................................................... 27
Effects of Inflation................................................................. 28
NDP'S BUSINESS............................................................................ 28
LEGAL PROCEEDINGS......................................................................... 30
NDP VOTING SECURITIES AND THE PRINCIPAL HOLDERS THEREOF................................... 30
DESCRIPTION OF FISERV COMMON STOCK........................................................ 31
COMPARISON OF RIGHTS OF STOCKHOLDERS OF FISERV AND NDP.................................... 32
General.............................................................................. 32
Board of Directors................................................................... 32
Removal of Directors................................................................. 33
Limitation on Directors' Liability................................................... 33
Indemnification of Directors and Officers............................................ 33
Rights of Dissenting Stockholders.................................................... 34
Special Meetings of Stockholders..................................................... 34
Action Without a Stockholder Meeting................................................. 35
Preemptive Rights.................................................................... 35
Merger, Consolidation and Sales of Assets............................................ 35
Shareholder Rights Agreement......................................................... 36
LEGAL MATTERS............................................................................. 36
EXPERTS................................................................................... 36
STOCKHOLDER PROPOSALS FOR NDP 1998 ANNUAL MEETING......................................... 36
CONSOLIDATED FINANCIAL STATEMENTS......................................................... F-1
APPENDIX A Agreement and Plan of Merger
APPENDIX B Dissenters' Rights - Section 490.1300 et.seq. of the Iowa Business Corporation Act
</TABLE>
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<PAGE>
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 NDP,
Fiserv and Fiserv Solutions pursuant to the Merger Agreement, a copy of which is
attached hereto as Appendix A. Pursuant to the Merger Agreement, NDP
Stockholders will receive Fiserv Common Stock in exchange for all of their
shares of NDP 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 support
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. See "Business and Properties of
Fiserv."
Network Data Processing
Corporation................ NDP is a software and services firm headquartered
in Cedar Rapids, Iowa. NDP provides administrative
software, processing and consulting services to
the life insurance industry. NDP's proprietary
software product is the ID/3/ System, which
provides the life, health and annuity insurance
industry all the administrative systems required
to conduct insurance operations from the
origination of new business through payment of
claims. NDP is also involved in the sale,
installation and maintenance of the ID/3/ System,
and also provides post installation consulting,
implementation, training and education. NDP's
executive offices are located at 200 Fifth Avenue
S.E., Cedar Rapids, Iowa 54201. Its telephone
number is (319) 398-1800. See "NDP's Business".
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THE SPECIAL MEETING
Date, Time and Place of
Special Meeting............ April 14, 1998 at 10:00 a.m., local time at NDP's
offices at 200 Fifth Avenue S.E., Cedar Rapids,
Iowa 52401
Purpose of Special Meeting. To consider and vote upon a proposal to approve
the Merger Agreement, pursuant to which NDP will
merge into Fiserv Solutions, a wholly owned
subsidiary of Fiserv, and Fiserv Solutions will be
the Surviving Corporation and will continue to
exist as a wholly owned subsidiary of Fiserv. See
"The Merger."
Record Date................ NDP Stockholders of record on March 9, 1998 will
be entitled to vote at the Special Meeting. On
March 9, 1998, there were 9,768 shares of NDP
Common Stock outstanding with each share of NDP
Common Stock entitled to cast one vote with
respect to the proposal to approve the Merger
Agreement.
Quorum; Vote Required...... The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of
NDP Common Stock at the Special Meeting is
necessary to constitute a quorum at the Special
Meeting. Approval of the Merger Agreement requires
the affirmative vote of a majority of the issued
and outstanding shares of NDP Common Stock. 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 NDP with and into Fiserv Solutions, a
wholly owned subsidiary of Fiserv, with Fiserv
Solutions as the Surviving Corporation which will
continue to exist as a wholly owned subsidiary of
Fiserv. It is presently contemplated that the
effective time of the Merger will be April 14,
1998 or such other date as the parties may agree
("Effective Time"). See "The Merger."
Merger Consideration....... Each outstanding share of NDP Common Stock will be
converted into the right to receive such number of
shares of Fiserv Common Stock as shall equal the
Conversion Ratio, which is defined as the quotient
of (x) the quotient of (i) the NDP Stock Value
which, as previously stated, is the negotiated
amount of $22,500,000 less the NDP Merger Costs
(estimated to be approximately $750,000) divided
by (ii) the sum of the number of shares of NDP
Common Stock and options to purchase shares of NDP
Common Stock outstanding at the Effective Time,
divided by (y) an amount equal to the average
closing price of Fiserv Common Stock as reported
on NASDAQ (as reported in The Wall Street Journal)
for the 20 trading days ending on the second
trading day prior to the Effective Time ("Average
Fiserv Stock Price"). The NDP Stock Value is
expected to be approximately $2,226 per share. The
average closing price of Fiserv Common Stock for
the 20 trading days ending two days prior to the
mailing of this Proxy Statement/Prospectus was
$55.38.
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See "The Merger--The Merger Agreement" and "The
Merger--Merger Consideration." No fractional
shares of Fiserv Common Stock will be issued in
the Merger. In lieu of any fractional shares, each
holder of NDP 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
Time, 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.
Set forth below are examples of the conversion of
NDP Common Stock into Fiserv Common Stock based
upon varying assumptions:
(i) based on the above-referenced average
closing price of Fiserv Common Stock of
$55.38 per share, Fiserv would issue 40.2
shares of Fiserv Common Stock in exchange
for one share of NDP Common Stock;
(ii) based on an average closing price of Fiserv
Common Stock of $65 per share, Fiserv would
issue 34.3 shares of Fiserv Common Stock for
one share of NDP Common Stock; and
(iii) based on an average closing price of Fiserv
Common Stock of $45 per share, Fiserv would
issue 49.5 shares of Fiserv Common Stock for
one share of NDP Common Stock.
Recommendation of NDP's Board
of Directors.............. The Board of Directors of NDP believes that the
Merger is desirable and in the best interests of
NDP Stockholders and, accordingly, unanimously
recommends that the NDP Stockholders vote in favor
of the approval of the Merger Agreement. The Board
of Directors' recommendation is based upon a
number of factors discussed in this Proxy
Statement/ Prospectus. See "The Merger--Background
and Reasons for the Merger" and "The Merger--
Recommendation of the Board of Directors of NDP."
Management and Operations of
NDP after the Merger....... Following the Merger, NDP will be merged with and
into Fiserv Solutions, a wholly owned subsidiary
of Fiserv, which will be the Surviving
Corporation. George D. Dalton, Chairman of the
Board of Fiserv, Leslie M. Muma, Vice Chairman and
President of Fiserv, Donald F. Dillon, Vice
Chairman of Fiserv, and Kenneth R. Jensen, Senior
Executive Vice President and Chief Financial
Officer of Fiserv, will remain the directors of
the Surviving Corporation. All current officers of
the Surviving Corporation will remain the same.
Information about such persons is incorporated by
reference to Fiserv's Annual Report on Form 10-K
for the year ended December 31, 1997. Fiserv
intends to operate the Surviving Corporation as an
independent subsidiary after the Merger and has no
present intention to move or consolidate any of
the operations of the Surviving Corporation or its
subsidiaries or to change the name of any of its
subsidiaries. See "The Merger--Management and
Operations of NDP Following the Merger."
-3-
<PAGE>
Federal Income Tax
Consequences............... The Merger Agreement provides that, for federal
income tax purposes, NDP and Fiserv intend that
the Merger constitute a tax-free "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 ("Code"). NDP and Fiserv
intend to treat the Merger as a tax-free
reorganization in their federal income tax
returns. In the event that certain guidelines of
the Internal Revenue Service are not satisfied, it
is possible the Internal Revenue Service could
challenge the tax treatment of the Merger as a
tax-free reorganization. No ruling has been
requested from the Internal Revenue Service. If
the Merger cannot be accounted for as a "pooling
of interests" for accounting purposes, then Fiserv
and Fiserv Solutions may opt to terminate the
Merger or to proceed, in which case the Merger
would be accounted for under the purchase method
of accounting.
THE FOREGOING SUMMARY IS NOT INTENDED, AND SHOULD
NOT BE CONSIDERED, AS TAX ADVICE. HOLDERS OF NDP
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 the
Merger."
Conditions to the Merger... The obligations of Fiserv and NDP to consummate
the Merger are subject to the satisfaction or
waiver (to the extent available) of certain
conditions set forth in the Merger Agreement
including, but not limited to, (i) the affirmative
vote of the NDP Stockholders, (ii) the termination
of all outstanding employment agreements between
NDP and its employees, and (iii) the exercise of
all options to purchase shares of NDP common
stock. See "The Merger--The Merger Agreement."
Termination of Merger
Agreement.................. The Merger Agreement may be terminated by (i) the
mutual consent of NDP and Fiserv Solutions, (ii)
either party if the Effective Time shall not have
occurred on or before April 30, 1998, and (iii) in
certain other situations. See "The Merger--
Termination."
No Solicitation............ NDP has agreed that from the execution of the
definitive agreement until February 28, 1998,
subject to its fiduciary obligations, it will not
solicit, directly or indirectly, any proposal or
offer to acquire all or any significant part of
its business and properties or its capital stock.
See "The Merger--The Merger Agreement" and "The
Merger--No Solicitation."
Accounting Treatment....... It is anticipated that the Merger will be
accounted for as a "pooling of interests" under
Accounting Principles Board Opinion No. 16. If the
Merger cannot be accounted for as a "pooling of
interests" for accounting purposes, then Fiserv
and Fiserv Solutions may opt to terminate the
Merger or to proceed, in which case the Merger
would be accounted for under the purchase method
of accounting. See "The Merger--Accounting
Treatment."
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Exchange of NDP Stock Certificates.... Promptly after the Effective Time, Firstar
Trust Company, Milwaukee, as exchange agent
("Exchange Agent"), will mail to each NDP
Stockholder a letter of transmittal and
instructions for exchanging such holder's
certificates to certificates representing the
shares of Fiserv Common Stock to which such
holders are entitled. NDP Stockholders should not
send their certificates to the Exchange Agent
until they receive such instructions. See "The
Merger--The Merger Agreement" and "The Merger--
Conversion of NDP Common Stock; Procedures for
Exchange of Share Certificates."
Effect of the Merger on
Rights of Stockholders................ Fiserv is a Wisconsin corporation; NDP is an Iowa
corporation. For a comparison of Wisconsin and
Iowa laws and of the charter and bylaw provisions
of Fiserv and NDP governing the rights of Fiserv
shareholders and NDP stockholders, respectively,
see "Comparison of Rights of Stockholders of
Fiserv and NDP."
Dissenters' Rights.................... The NDP Stockholders shall have dissenters' and appraisal
rights to the extent granted by Iowa law. The
obligation of Fiserv to consummate the merger is
subject to the satisfaction or waiver of a
condition requiring that holders of no more than
five percent of the NDP Common Stock shall have
exercised dissenters' rights in connection with
the Merger. See "The Merger--Rights of Dissenting
Stockholders" and "Comparison of Rights of
Stockholders of Fiserv and NDP."
Resale Restrictions................... All shares of Fiserv Common Stock received by NDP
Stockholders will be freely tradeable, except the
Fiserv Common Stock received by persons who are
deemed to be "affiliates" (as such term is defined
in the Securities Act) of NDP or Fiserv at the
time of the Special Meeting may be resold by them
only in certain permitted circumstances under the
Securities Act, other applicable securities laws
and rules related to pooling of interests
accounting treatment. See "The Merger--Resale of
Fiserv Common Stock by Affiliates."
</TABLE>
-5-
<PAGE>
COMPARATIVE SHARE AND DIVIDEND INFORMATION
AND MARKET PRICES
Fiserv Common Stock Outstanding 53,669,044 shares as of March 6, 1998.
Fiserv Dividends No dividends on the Fiserv Common Stock have
been paid. See "Comparative Market Prices and
Dividends."
NDP Common Stock Outstanding 9,768 shares as of March 9, 1998.
NDP Dividends No dividends on the NDP Common Stock have
been paid. See "Comparative Market Prices and
Dividends."
Market Price Data The Fiserv Common Stock (Nasdaq Symbol: FISV)
is traded on NASDAQ. There is no public
market for shares of NDP Common Stock. 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
------------
<S> <C> <C>
High Low
---- ---
1996:
Quarter Ended March 31 $32 $25 3/8
Quarter Ended June 30 33 3/8 28 1/16
Quarter Ended September 30 38 11/16 28 5/8
Quarter Ended December 31 39 5/8 34
1997:
Quarter Ended March 31 $39 $32 3/4
Quarter Ended June 30 44 5/8 36 3/4
Quarter Ended September 30 49 1/2 43 7/8
Quarter Ended December 31 50 1/8 39 3/4
1998:
Quarter Ended March 31 $60 11/16 $46 1/2
(through March 6, 1998)
</TABLE>
On January 20, 1998, the last full trading day prior to the joint public
announcement that NDP and Fiserv had executed the Merger Agreement, the closing
price per share of Fiserv Common Stock as reported by NASDAQ was $52 1/8. On
March 6, 1998, the closing price per share of Fiserv Common Stock as reported by
NASDAQ was $60 11/16. See "Comparative Market Prices and Dividends." NDP
Stockholders are urged to obtain current market quotations for shares of Fiserv
Common Stock.
CERTAIN SIGNIFICANT CONSIDERATIONS
In considering whether to approve the Merger Agreement, NDP Stockholders
should consider the following: (i) the Conversion Ratio will be determined based
upon the Average Fiserv Stock Price; and (ii) the price of Fiserv Common Stock
at the Effective Time 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 NDP Stockholders vote on the Merger
Agreement due to changes in the business, operations or prospects of Fiserv,
market assessments of the likelihood that the Merger will be consummated and the
time thereof, general market and economic conditions, and other factors. See
"Summary--The Merger," "Comparative Market Prices and Dividends" and "Risk
Factors."
-6-
<PAGE>
Selected Historical Financial Data
The following tables present selected historical information for Fiserv and
NDP derived from the historical consolidated financial statements of NDP and of
Fiserv, which in the case of Fiserv, are 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, 1997, have
been extracted from Fiserv's audited financial statements and reports filed with
the Commission. See "Incorporation of Certain Documents by Reference." The
selected consolidated historical financial data at and for each year in the five
year period ended March 31, 1997 have been extracted from NDP's consolidated
financial statements which have been audited by independent public accountants.
The unaudited selected consolidated historical financial data at and for nine
months ended December 31, 1996 and 1997 have been extracted from NDP's unaudited
consolidated financial statements.
<TABLE>
<CAPTION>
Fiserv Selected Historical Consolidated Financial Data
(In thousands, except per share amounts)
As of and for the Year Ended December 31,
-------------------------------------------------------------
1993 1994 1995(1) 1996 1997
---------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues..................... $ 519,996 $ 635,297 $ 769,104 $ 879,449 $ 974,432
Income (loss) before taxes... 70,832 84,098 (76,146) 134,462 153,899
Net income (loss)............ 43,725 51,031 (45,926) 79,708 90,800
Net income (loss) per
common share:
Basic....................... $ 0.98 $ 1.10 $ (0.93) $ 1.56 $ 1.75
Diluted..................... 0.96 1.08 (0.93) 1.53 1.70
Common shares used in
computing net income
(loss) per share:
Basic....................... 44,749 46,583 49,348 50,993 52,009
Diluted..................... 45,575 47,364 49,348 52,046 53,528
Cash dividends declared per
common share.............. -- -- -- -- --
Balance Sheet Data:
Total assets................. $1,874,939 $2,204,832 $2,514,597 $2,698,979 $3,636,491
Long-term debt............... 124,624 150,599 383,416 272,864 252,031
Shareholders' equity......... 370,740 425,389 514,866 605,898 769,255
Book value per common
share...................... $ 7.85 $ 9.01 $ 9.92 $ 11.72 $ 14.26
- ---------------------
</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 charges 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-diluted).
Net income and net income per share-diluted before such charges were $63.7
million and $1.27, respectively.
-7-
<PAGE>
NDP Selected Historical Consolidated Financial Data
(In thousands, except shares and per share amounts)
<TABLE>
<CAPTION>
As of and for the
nine months ended
As of and for the year ended March 31, December 31,
------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1996 1997
------- --------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited)
Statement of Operations Data:
Net Revenue.......................... $ 5,830 $ 5,099 $ 9,570 $ 9,647 $11,232 $7,934 $ 9,508
Net income (loss).................... 659 (1,259) 838 767 1,328 675 1,168
Net income (loss) per common share:
Basic............................. 110.35 (203.18) 128.83 109.64 173.30 88.47 144.75
Diluted........................... 109.75 (203.18) 125.18 103.79 165.44 84.28 136.81
Weighted average shares
outstanding:
Basic............................. 5,970 6,196 6,504 6,996 7,665 7,633 8,067
Diluted........................... 6,003 6,196 6,694 7,390 8,029 8,012 8,535
Cash dividends per common share...... -- -- -- -- -- -- --
Balance Sheet Data:
Total assets......................... $ 5,718 $ 5,658 $ 5,913 $ 6,836 $ 9,197 $7,710 $ 9,825
Long-term obligations................ 960 1,241 808 550 271 326 171
Redeemable common stock............. 255 260 366 474 713 529 776
Stockholders' equity................. 1,970 727 1,724 2,675 3,841 3,317 5,312
Book value per common share.......... 319 117 255 365 490 428 621
Shares of NDP common stock
outstanding....................... 6,185 6,239 6,768 7,335 7,837 7,753 8,557
</TABLE>
-8-
<PAGE>
Comparative Per Share Data of Fiserv and NDP
Presented below is historical comparative per share data of Fiserv and NDP
for earnings from continuing operations, cash dividends and net book value. Also
presented below are the equivalent per share amounts for NDP which adjust the
historical Fiserv amounts to reflect the exchange ratio of Fiserv shares for NDP
shares contemplated in the Merger. For the purposes of the comparison below, the
exchange ratio was assumed to be 40.2 shares of Fiserv Common Stock for each
share of NDP Common Stock. Pro forma amounts for Fiserv have been omitted
because the effects of the Merger on Fiserv's earnings from continuing
operations and net book value per share are not significant.
Fiserv, Inc.
<TABLE>
<CAPTION>
As of and for the
Year Ended December 31,
-----------------------------
1995(1) 1996 1997
------ ------ ------
<S> <C> <C> <C>
Per share data:
Net income (loss) - diluted.... $(0.93) $ 1.53 $ 1.70
Cash dividends................. 0 0 0
Book value..................... $ 9.92 $11.72 $14.26
</TABLE>
Network Data Processing Corporation
<TABLE>
<CAPTION>
As of and for the
As of and for the nine months ended
Year ended March 31, December 31,
--------------------------- -----------------
1995 1996 1997 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
(unaudited)
Per share data:
Earnings from continuing operations-diluted... $125.18 $103.79 $165.44 $136.81
Earnings adjusted for the exchange ratio-
diluted (2).................................. 43.42 (37.39) 61.51 68.34
Cash dividends................................ -- -- -- --
Cash dividends adjusted for
exchange ratio (2).......................... -- -- -- --
Book value per common share................... 255 365 490 621
Book value per common share adjusted for the
exchange ratio (2).......................... -- -- 471 573
</TABLE>
- ---------------------
(1) The per share values for Fiserv as of and for the year ended December 31,
1995 include 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.
(2) Fiserv amounts (years ended December 31, 1994, 1995, 1996 and 1997,
respectively) multiplied by 40.2, the assumed exchange ratio using a Fiserv
share value of $55.38. The actual exchange ratio may be different, as it
will be determined using the Average Fiserv Stock Value.
-9-
<PAGE>
RISK FACTORS
The following factors should be considered carefully by NDP Stockholders in
connection with voting on the Merger and the receipt of Fiserv Common Stock by
NDP Stockholders as a result thereof. These factors should be considered in
conjunction with the other information included or incorporated by reference in
this Proxy Statement/Prospectus.
Average Market Prices will Differ from Actual Market Price
In considering whether to approve the Merger Agreement, NDP Stockholders
should consider the following: (i) the Conversion Ratio will be determined based
upon the Average Fiserv Stock Price; (ii) the price of Fiserv Common Stock at
the Effective Time 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 NDP Stockholders 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) the price of Fiserv
Common Stock after the Effective Time can be expected to vary due to changes in
the business, operations or prospects of Fiserv, market assessments of the
Merger, general market and economic conditions, and other factors. See
"Summary--The Merger" and "Comparative Market Prices and Dividends."
Non-Solicitation Provisions may have a Deterrent Effect
NDP agreed that from the execution of the definitive agreement until
February 28, 1998, subject to its fiduciary obligations, it will not solicit,
directly or indirectly, any proposal or offer to acquire all or any significant
part of its business and properties or its capital stock (a "NDP Acquisition
Proposal"). These provisions in the Merger Agreement may have the effect of
discouraging an attempt by a third party to engage in certain acquisition
transactions with NDP. See "The Merger--The Merger Agreement" and "The Merger--
No Solicitation."
Fluctuation of Market Price of Fiserv Common Stock
As noted in "Summary--Comparative Share and Dividend Information and Market
Prices," the Market Value of Fiserv Common Stock has varied between $46 1/2 and
$60 11/16 per share since January 1, 1998. To the extent the Average Fiserv
Stock Price increases prior to the Effective Time, NDP Stockholders will receive
fewer shares of Fiserv Common Stock pursuant to the Conversion Ratio.
Conversely, to the extent the Average Fiserv Stock Price decreases prior to the
Effective Time, NDP Stockholders will receive a greater number of shares of
Fiserv Common Stock pursuant to the Conversion Ratio. See "The Merger--Merger
Consideration."
-10-
<PAGE>
THE SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to NDP Stockholders in
connection with the solicitation of proxies by the Board of Directors of NDP
from holders of NDP Common Stock for use at the Special Meeting. This Proxy
Statement/Prospectus, Notice of Special Meeting and proxy card are first being
mailed to NDP Stockholders on or about March 12, 1998.
Matters to be Considered at the Special Meeting; Quorum and Vote Required
At the Special Meeting, the NDP Stockholders will be asked to consider and
vote upon a proposal to approve the Merger Agreement, pursuant to which NDP will
be merged with and into Fiserv Solutions. Fiserv Solutions will be the
Surviving Corporation and will continue to exist as a wholly owned subsidiary of
Fiserv, and NDP Stockholders will receive shares of Fiserv Common Stock in
exchange for shares of NDP Common Stock they own. See "The Merger." The
presence, in person or by proxy, of the holders of a majority of the outstanding
shares of NDP Common Stock at the Special Meeting is necessary to constitute a
quorum at the Special Meeting. Abstentions and broker non-votes 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 NDP
Common Stock, either in person or by proxy, is required for approval of the
Merger Agreement. For purposes of the vote, the effect of any abstention or
broker non-votes will be tantamount to a vote against the Merger Agreement.
Record Date; Stock Entitled to Vote
Each share of NDP Common Stock outstanding on the Record Date is entitled
to be voted at the Special Meeting. Holders of record of NDP Common Stock at the
close of business on March 9, 1998, the Record Date, are entitled to one vote
per share. There were 9,768 shares of NDP Common Stock issued and outstanding on
the Record Date.
Voting and Revocation of Proxies
Proxies in the accompanying form, properly executed, duly returned to NDP
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. An NDP
Stockholder who gives a proxy may revoke it at any time before it is voted by
filing with the Secretary of NDP a written instrument stating that the proxy is
revoked or by submitting a duly executed proxy bearing a later date. Any NDP
Stockholder 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. The management of NDP is not aware of
any matters to be presented at the Special Meeting other than the approval of
the Merger Agreement. If any other matters are properly presented at the Special
Meeting, 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. NDP will bear the cost of
the solicitation of proxies from its Stockholders. In addition to solicitation
by mail, the directors, officers and employees of NDP may solicit proxies from
NDP stockholders by telephone or telegram or in person. Such directors, officers
and employees will not be compensated for such solicitation. NDP has requested
that banking institutions, brokerage firms, custodians, trustees, nominees and
fiduciaries forward solicitation materials to the beneficial owners of NDP
Common Stock held of record by such entities, and NDP will, upon the request of
such record holders, reimburse reasonable forwarding expenses.
NDP STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES REPRESENTING SHARES OF
NDP COMMON STOCK WITH THEIR PROXY CARDS.
-11-
<PAGE>
THE MERGER
General
The Merger Agreement (attached as Appendix A to this Proxy
Statement/Prospectus) provides for the Merger of NDP with and into Fiserv
Solutions. Fiserv Solutions will be the Surviving Corporation and will carry on
the business of NDP as a wholly owned subsidiary of Fiserv. Each outstanding
share of NDP Common Stock will be converted into Fiserv Common Stock at the
Conversion Ratio, which, assuming an Average Fiserv Stock Price of Fiserv Common
Stock of $55.38 (the average closing price of Fiserv Common Stock, as reported
on NASDAQ for the 20 trading days ended March 6, 1998), will result in the
present NDP Stockholders owning approximately less than one percent of the
outstanding Fiserv Common Stock. It is presently contemplated that the
Effective Time of the Merger will be April 14, 1998 or such other date as the
parties may agree.
Background and Reasons for Merger
Over the past two years NDP's board of directors concluded that NDP faced
at least two major challenges in continuing to operate as an independent
company. First, when approaching potential customers, NDP's competitors
frequently referred to NDP's relatively limited financial resources and raised
the question of whether NDP would continue in its business and be able to
support its products. Second, NDP's ability to grow and expand is directly
related to having the financial resources necessary (i) to continue to refine
and improve NDP's products and services and (ii) to hire sufficient sales and
marketing personnel to adequately market NDP's products and services. In the
Spring of 1997, NDP entered into a letter of intent with another entity which
had offered to acquire all of the NDP Stock in a tax-free merger. Negotiations
broke down, and the transaction was never completed.
As a result of its concern over the issues described above and the earlier
failed negotiations, NDP's board of directors interviewed GS/2/ Securities, Inc.
("GS/2/") and discussed GS/2/'s qualifications to make inquiries to entities
which either would make an acquisition of NDP's stock or assets or which would
be an appropriate merger partner. Based on its investigation, the NDP board of
directors was of the opinion that GS/2/ had the appropriate expertise and
contacts in the industry to be able to appropriately represent the interests of
NDP and its shareholders, and engaged GS/2/ in July 1997.
Representatives of Fiserv and NDP first met in July 1997 at NDP's corporate
offices in Cedar Rapids, Iowa, to perform on-site due diligence and discuss the
possibility of a business combination between the two companies.
Thereafter, the parties began to exchange information regarding the nature
of NDP's business and how it might fit into the range of business services
offered by Fiserv. Additional due diligence information was exchanged and on
several occasions thereafter, representatives of NDP met with representatives of
Fiserv to continue to exchange information about their respective companies.
During the Fall of 1997, GS/2/ continued their efforts to solicit offers from
the other companies.
At a Board of Directors meeting of NDP held in October 1997, the Board of
Directors of NDP heard a status report on the discussions with Fiserv and
reports on expressions of interest from other companies contacted by GS/2/. The
Board of Directors of NDP noted the increasing difficulty of competing as an
independent and the ongoing need for capital to support product development and
marketing efforts.
In early December 1997, a draft letter of intent for the purchase of NDP by
Fiserv Solutions was circulated for review. The parties had determined that the
transaction should be structured as a pooling of interests and contacted their
respective accountants to request a determination as to whether pooling of
interest treatment would be appropriate. NDP's management continued to keep the
Board of Directors informed of the status of negotiations with Fiserv and to
discuss the other alternatives for maximizing shareholder value. The Board of
Directors also noted that efforts of GS/2/ to obtain something more than an
expression of interest from other qualified strategic partners had been
unsuccessful. Negotiations with Fiserv continued to progress and a draft of the
Merger Agreement was reviewed with counsel. Near the middle of January 1998,
management reported to the Board that virtually all of the major issues relating
to the definitive agreement had been agreed upon by the parties.
-12-
<PAGE>
On January 12, 1998, it was determined that all significant issues had been
negotiated. At a special meeting of the Board of Directors on January 19, 1998,
the Board of Directors reviewed, among other things, the history of the
transaction, a nearly final draft of the Merger Agreement and the alternatives
to the strategic combination. After such deliberations, the Board of Directors
determined that the Merger was fair to and in the best interests of NDP and its
stockholders and unanimously approved the Merger Agreement.
Recommendation of the Board of Directors of NDP
At a meeting of the Board of Directors on January 19, 1998, the Board of
Directors determined that the Merger was fair to and in the best interests of
NDP and the NDP Stockholders and unanimously approved the Merger Agreement. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE NDP STOCKHOLDERS VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The determination of the Board of Directors to approve the Merger Agreement
was based upon a 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:
- The Board of Directors' familiarity with, among other things, the
business, operations, financial condition, competitive position and
prospects of NDP, the nature of the financial industry in which NDP
participates, and current industry, economic and market conditions;
- The fact that NDP had solicited interest in a possible acquisition of
NDP from third parties and had received indications of interest but no
offers from other parties, other than an offer made several months ago
which would have resulted in NDP Stockholders receiving significantly
less value than that currently offered by Fiserv;
- The conclusion of the Board of Directors that a transaction with
Fiserv could achieve synergistic benefits;
- The expected accounting treatment of the transaction as a "pooling of
interests;"
- The expected tax-free treatment of the Merger;
- The strategic and financial alternatives available to NDP, including
remaining an independent company;
- The recognition by the Board of Directors that the Merger would
deprive the NDP Stockholders of the opportunity to continue their
equity interests in NDP as an independent entity. However, the Merger
would permit the holders of NDP Common Stock to continue to hold an
equity interest in Fiserv, a much larger, more liquid company
operating in a broader sector of the financial services industry, and
to participate in the future growth of Fiserv; the Board of Directors
also determined that the Merger was consistent with enhancing
stockholder value;
- The Board of Directors' review of the historical market prices of
shares of Fiserv Common Stock, the historical market prices of shares
of NDP Common Stock 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 market price of NDP
Common Stock to equal or exceed the market value of the consideration
to be received in the Merger;
- Certain publicly available information with respect to the financial
condition and results of operations of Fiserv; and
-13-
<PAGE>
- Because NDP did not consider specific strategic combinations or
mergers with third parties other than certain entities contacted by
representatives of NDP's Board of Directors which did not result in
any alternative acquisition proposals, NDP's Board of Directors
insisted upon provisions being included in the Merger Agreement which
would allow the Board to consider unsolicited third-party acquisition
proposals and to negotiate and discuss any such proposals in the
exercise of their fiduciary duties. See "--The Merger Agreement" and
"-- No Solicitation."
In view of the wide variety of material factors considered in connection
with its evaluation of the Merger, the Board of Directors 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 NDP Following the Merger
The Merger Agreement provides that following the Merger, George D. Dalton,
Chairman of the Board of Fiserv, Leslie M. Muma, Vice Chairman and President of
Fiserv, Donald F. Dillon, Vice Chairman of Fiserv, and Kenneth R. Jensen, Senior
Executive Vice President and Chief Financial Officer of Fiserv, who are the
directors of Fiserv Solutions, will continue to be the directors of the
Surviving Corporation. The officers of Fiserv Solutions, who also are officers
of Fiserv, will remain as the officers of the Surviving Corporation.
Information about such persons is incorporated by reference to Fiserv's Annual
Report on Form 10-K for the year ended December 31, 1997. At the Effective
Time, the Certificate of Incorporation and Bylaws of the Surviving Corporation
will remain in effect.
Subsequent to the Merger, Fiserv plans to continue to operate NDP as a
separate division and the Surviving Corporation as an independent subsidiary and
has no present intention to move or consolidate any of the operations of NDP or
the Surviving Corporation or its subsidiaries or to change the name of any of
its 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 Time and Consequences of the Merger
If approved by the requisite vote of the NDP Stockholders 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 Department of Financial Institutions of the State of Wisconsin and the
Secretary of State of Iowa or such other time or date thereafter as Fiserv,
Fiserv Solutions and NDP may agree. At the Effective Time, NDP shall be merged
with and into Fiserv Solutions, which shall be the Surviving Corporation in the
Merger, the separate existence and corporate organization of NDP shall cease,
and Fiserv Solutions shall succeed, insofar as permitted by Iowa law, to all
rights, assets, liabilities and obligations of NDP.
It is presently contemplated that the Effective Time will be April 14, 1998
or such other date as the parties may agree.
Merger Consideration
In the Merger, each outstanding share of NDP Common Stock will be converted
into the right to receive such number of shares of Fiserv Common Stock as shall
equal the Conversion Ratio, which is defined as the quotient of (x) the quotient
of (i) the NDP Stock Value which, as previously stated, is the negotiated amount
of $22,500,000 less the NDP Merger Costs (estimated to be approximately
$750,000) divided by (ii) the sum of the number of shares of NDP Common Stock
and the number of shares of NDP Common Stock covered by options to purchase NDP
Common Stock outstanding at the Effective Time, divided by (y) the Average
Fiserv Stock Price. The NDP Stock Value is expected to be approximately $2,226
per share. Assuming an Average Fiserv Stock Price of $55.38 (which is the
average closing price of Fiserv Common Stock as reported on NASDAQ for the 20
trading days ended March 6, 1998), the Merger would result in the present NDP
Stockholders owning approximately less than one percent of the Fiserv Common
Stock.
-14-
<PAGE>
No fractional shares of Fiserv Common Stock will be issued in the Merger.
In lieu of any fractional shares, each holder of NDP 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
Time, 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 NDP Common Stock; Procedures for Exchange of Share Certificates
As soon as practicable after the Effective Time, each holder of shares of
NDP Common Stock that have been converted into the right to receive Fiserv
Common Stock, upon surrender to the Exchange Agent for cancellation of one or
more certificates for such shares of NDP 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 Fiserv
Common Stock previously represented by the stock certificates surrendered and
cash, if any, payable in lieu of the issuance of a fractional share.
Promptly after the Effective Time, the Exchange Agent will furnish the
former NDP Stockholders a letter of transmittal for use in converting their NDP
Common Stock certificates. The letter will contain instructions with respect to
the surrender of certificates representing shares of NDP Common Stock and the
distribution of certificates representing Fiserv Common Stock and/or cash, as
the case may be.
Subject to the provisions pertaining to cash in lieu of fractional shares
in the following sentence, until surrendered for exchange each certificate
nominally representing NDP Common Stock shall be deemed for all corporate
purposes to evidence the ownership of the number of full shares of Fiserv Common
Stock which the holder is entitled to receive upon surrender of said
certificates to the Exchange Agent. Until they have surrendered their
certificates representing shares of NDP Common Stock for exchange, NDP
Stockholders will not be entitled to receive any payment for a fractional share
interest. Any such payment will be remitted to the NDP Stockholder entitled
thereto, without interest, at the time that such certificates representing
shares of NDP Common Stock are surrendered 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, operation, business and financial condition of NDP and its
subsidiaries and Fiserv and Fiserv Solutions. Generally, representations and
warranties will terminate at the Effective Time. The Merger Agreement also
contains certain covenants of NDP, Fiserv and Fiserv Solutions, including
covenants relating to the conduct of NDP and Fiserv prior to the Effective Time.
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, NDP
and Fiserv intend that the Merger constitute a tax-free "reorganization" within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code (a "Tax-Free
Reorganization"). NDP and Fiserv intend to treat the Merger as a Tax-Free
Reorganization in their federal income tax returns. The principal federal
income tax consequences of a Tax-Free Reorganization, under currently applicable
law, are as follows: (i) no gain or loss would be recognized by NDP or Fiserv as
a result of the Merger; (ii) no gain or loss would be recognized by the NDP
Stockholders on the exchange of their shares of NDP Common Stock solely for
shares of Fiserv Common Stock pursuant to the Merger (except in respect of cash
received in lieu of fractional shares as described below); (iii) the basis of
the shares of Fiserv Common Stock received by a former NDP Stockholder pursuant
to the Merger would be the same as the tax basis for the shares of NDP Common
Stock exchanged therefor (reduced by any basis allocated to fractional shares to
which an NDP Stockholder would otherwise be entitled and for which cash is
received); and (iv) the holding period of shares of Fiserv Common Stock received
by a former NDP Stockholder pursuant to the Merger would include the period
during which the NDP Stockholder held such shares of NDP Common Stock.
-15-
<PAGE>
A holder of NDP Common Stock who receives cash in lieu of a fractional
share of Fiserv Common Stock issued in a Tax-Free Reorganization would be
treated as first having received such fractional share and then as having
received cash in redemption thereof. If such redemption were treated as not
essentially equivalent to a dividend within the meaning of Section 302(b) of the
Code, such Stockholder would recognize capital gain or capital loss equal to the
difference between the cash received and the tax basis allocated to his
fractional share. Such capital gain or loss would be long-term capital gain or
loss if such NDP Common Stock has been held for more than eighteen months as of
the Effective Time and mid-term capital gain or loss if held for more than
twelve months but less than eighteen months.
Tax-Free Reorganization treatment is based on certain assumptions,
including without limitation 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 Time; (ii) the requisite continuity of interest is
met; (iii) no consideration other than shares of Fiserv Common Stock and cash
paid for fractional shares will be received by holders of the shares of NDP
Common Stock for their shares of NDP Common Stock; and (iv) following the
Merger, Fiserv Solutions will hold (a) at least 90% of the fair market value of
NDP's net assets and at least 70% of the fair market value of NDP's gross assets
held immediately prior to the Merger, and (b) at least 90% of the fair market
value of Fiserv Solutions' net assets and at least 70% of the fair market value
of Fiserv Solutions' gross assets held immediately prior to the Merger (for
purposes of this assumption, amounts paid by NDP or Fiserv Solutions to
Stockholders who receive cash or other property (including cash for fractional
shares), amounts used by NDP or Fiserv Solutions to pay reorganization expenses,
and all redemptions and distributions (except for regular, normal dividends)
made by NDP will be included in the assets of NDP or Fiserv Solutions,
respectively, immediately prior to the Merger). Although Fiserv and NDP believe
the foregoing assumptions are and will be correct, no assurances to that effect
can be given.
Under guidelines published in Revenue Procedure 77-37, 1977-2 C.B. 568
("IRS Guidelines"), the Internal Revenue Service will issue a ruling that a
transaction constitutes a Tax-Free Reorganization if certain factual
representations can be made with respect thereto. In particular, the IRS
Guidelines require a representation that there will be a 50% level of continuity
of shareholder interest. NDP Stockholders 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-Free Reorganization. While continuity of shareholder interest is a
requirement for Tax-Free Reorganization treatment, Supreme Court precedent
supports a lesser degree of continuity than that required by the IRS Guidelines.
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 NDP 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 NDP COMMON STOCK AS A CAPITAL
ASSET. IN ADDITION, IT DOES NOT DISCUSS ANY STATE, LOCAL OR 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 NDP
STOCKHOLDER 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 AND ANY CHANGES.
Conditions to the Merger
The obligations of Fiserv and NDP to consummate the Merger are subject to
the fulfillment or waiver (where permissible) of certain conditions, including:
(i) obtaining the approval of the NDP Stockholders; (ii) the effectiveness of
the Registration Statement of which this Proxy Statement/Prospectus is a part;
(iii) no order being entered in any action or proceeding or other legal
restraint or prohibition preventing the consummation of the Merger; (iv) 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; (v) the accuracy of the representations and warranties of each
-16-
<PAGE>
party and compliance with or the waiver of all covenants and conditions by each
party; (vi) the termination of all outstanding employment agreements between NDP
and employees of NDP; (vii) the exercise of all options to purchase shares of
NDP Common Stock; and (ix) the owners of no more than five percent of the NDP
Common Stock shall have exercised dissenters' rights in connection with the
transaction contemplated by the Merger Agreement.
Amendments and Termination
The Merger Agreement may be amended by a written agreement executed by NDP,
Fiserv and Fiserv Solutions either before or after the NDP Stockholders approve
the Merger. The Merger Agreement may be terminated and the Merger abandoned at
any time prior to the Effective Time by mutual agreement of the Boards of
Directors of Fiserv and NDP, 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 Time or if the Merger is not effective on or
before April 30, 1998, 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.
No Solicitation
NDP has agreed, that subject to its fiduciary duties, so long as the
parties are negotiating in good faith with respect to the Merger, it will not
solicit or initiate, directly or indirectly, any inquiries or proposals from, or
participate in any discussions or negotiations with, any person or entity (other
than Fiserv and its representatives or agents) concerning any acquisition,
business combination or purchase of all or any significant portion of the assets
or equity interest in NDP presented from the date on which the Merger Agreement
was executed until February 28, 1998.
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 "pooling-of-
interests." The "pooling- of-interests" method of accounting assumes that the
combining companies have been merged from inception, and in most cases the
historical financial statements for periods prior to consummation of the Merger
are restated as though the companies had been combined from inception. However,
because NDP's financial statements are not material to Fiserv's financial
statements, Fiserv's financial statements have not been restated. If the Merger
cannot be accounted for as a "pooling-of-interests" for accounting purposes,
then Fiserv and Fiserv Solutions may, at their option, terminate the Merger or
proceed with the Merger, in which case it will be accounted for under the
purchase method of accounting. See "--The Merger Agreement," "--Federal Income
Tax Consequences of the Merger," and "--Merger Consideration."
Resale of Fiserv Common Stock by Affiliates
Fiserv Common Stock to be issued to NDP Stockholders in connection with the
Merger has been registered under the Securities Act. Fiserv Common Stock
received by the NDP Stockholders upon consummation of the Merger will be freely
transferable under the Securities Act, except for shares issued to any person
who may be deemed an "Affiliate" (as defined below) of NDP within the meaning of
Rule 145 under the Securities Act ("Rule 145"). "Affiliates" are generally
defined as persons who control, are controlled by, or are under common control
with NDP or Fiserv, as the case may be, at the time of the Special Meeting
(generally, directors, certain executive officers and major stockholders).
Affiliates of NDP 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 Time, an Affiliate of NDP (together with certain related persons)
would be entitled to sell shares of Fiserv Common Stock acquired in
-17-
<PAGE>
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 of NDP (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 1% 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 of NDP only if Fiserv remained current with its information filings
with the Commission under the Exchange Act. One year after the Effective Time,
an Affiliate of NDP 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 Time, an Affiliate of NDP would be able
to sell such shares of Fiserv Common Stock without any restrictions provided
such Affiliate has not been an Affiliate of Fiserv for at least three months
prior thereto.
Rights of Dissenting Stockholders
NDP Stockholders who oppose the proposed Merger will have the right to
receive payment for the value of their shares as set forth in Sections 490.1300
et. seq. of the Iowa Business Corporations Act attached as Appendix B. Such
dissenters' rights will be available only to NDP Stockholders who (i) timely
notify NDP in writing of their intention to demand payment for their shares of
NDP Common Stock and (ii) refrain from voting in favor of the Merger. Voting
against the Merger will not constitute notifying NDP of the intention to demand
payment if the Merger is effectuated.
An NDP Stockholder must exercise dissenters' rights for all of the shares
that he or she owns of record. An NDP Stockholder who holds shares
beneficially, and not of record, may assert dissenter's rights for the
beneficially owned shares only by submitting a written consent of the
stockholder of record along with the written notice of dissent. An NDP
Stockholder exercising dissenter's rights with respect to shares that he or she
owns beneficially may not exercise dissenter's rights for fewer than all the
shares held by the stockholder.
Since the vote to authorize the Merger will take place at the Special
Meeting, NDP will be required to notify by mail those NDP Stockholders who, by
virtue of a timely notice of their intention to demand payment and having
refrained from voting in favor of the Merger, are entitled to payment for their
shares ("Dissenters Notices"). Dissenters Notices must be sent no later than
ten days after the Special Meeting. The notice must: (i) state where demand
for payment must be sent; (ii) state when certificates must be deposited; (iii)
state the restrictions on transfer of shares that are not evidenced by a
certificate once demand has been made; (iv) supply a form on which to demand
payment; (v) set a date by which demand must be received; and (vi) include a
copy of the relevant portions of the Iowa Law.
Unless an NDP Stockholder acquired his or her shares after NDP sends the
Dissenters' Notices, NDP must calculate the fair market value of the shares plus
interest, and upon the later of the Effective Time of the Merger or the date NDP
receives the demand, pay this amount to any NDP Stockholder who has properly
exercised dissenters' rights and deposited certificates representing all of such
stockholder's shares of NDP Common Stock with NDP. The payment must be
accompanied by: (i) NDP's balance sheet as of the end of its most recent fiscal
year, an income statement and statement of changes in shareholders' equity for
that year and the latest available interim financial statements, if any; (ii) a
statement of NDP's estimate of the fair market value of the NDP Common Stock
subject to the demand; (iii) an explanation of how the interest was calculated;
(iv) a statement of dissenters' right to demand payment; and (v) a copy of the
relevant portions of the Iowa Law.
Within 30 days of the date NDP pays a dissenting stockholder for his or her
shares, the NDP Stockholder may challenge NDP's calculation of the fair market
value of the shares and interest due and must state the amount that he or she
believes to represent the true fair market value and interest on the shares.
It is a condition to the Fiserv's obligation to complete the Merger that
beneficial owners of no more than five percent of the issued and outstanding
shares of NDP Common Stock exercise their dissenters' rights. See "--The Merger
Agreement" and "--Conditions to the Merger."
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<PAGE>
COMPARATIVE MARKET PRICES AND DIVIDENDS
<TABLE>
<CAPTION>
Fiserv
Common Stock
------------------------
1996: High Low
----------- ---------
<S> <C> <C>
Quarter Ended March 31, $ 32 $ 25 3/8
Quarter Ended June 30, 33 3/8 28 1/16
Quarter Ended September 30, 38 11/16 28 5/8
Quarter Ended December 31, 39 5/8 34
1997:
Quarter Ended March 31, $ 39 $ 32 3/4
Quarter Ended June 30, 44 5/8 36 3/4
Quarter Ended September 30, 49 1/2 43 7/8
Quarter Ended December 31, 50 1/8 39 3/4
1998:
Quarter Ended March 31,
(through March 6, 1998) $ 60 11/16 $ 46 1/2
</TABLE>
On January 20, 1998, the last full trading day prior to the joint public
announcement that NDP and Fiserv had executed the Merger Agreement, the closing
price per share of Fiserv Common Stock as reported by NASDAQ was $52 1/8. On
March 6, 1998, the closing price per share of Fiserv Common Stock as reported by
NASDAQ was $60 11/16. NDP Stockholders are urged to obtain current market
quotations for shares of Fiserv Common Stock. As of March 6, 1998, Fiserv had
approximately 1,960 stockholders of record.
There is no public market for shares of NDP Common Stock. As of March 9,
1998 NDP had approximately 250 Stockholders 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.
NDP has not declared or paid any cash dividends or made any other
distribution on the NDP Common Stock since the fiscal year ended March 31, 1978,
and it is anticipated until the closing, NDP 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 NDP.
FISERV SUPPLEMENTAL FINANCIAL DATA
The following table sets forth supplemental consolidated financial data of
Fiserv. The income statement data in the table for the four years ended
December 31, 1997 and the balance sheet data as of December 31, 1995, 1996 and
1997, 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 year ended
December 31, 1993 and the balance sheet data as of December 31, 1993 and 1994,
have been derived from Fiserv's consolidated financial statements which are not
incorporated by reference herein.
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<PAGE>
FISERV, INC.
<TABLE>
<CAPTION>
As of and for the Year Ended December 31,
------------------------------------------------------------------
1993 1994 1995(1) 1996 1997
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(In thousands, except per share data)
Statement of Operations Data:
Revenues................................................. $ 519,996 $ 635,297 $ 769,104 $ 879,449 $ 974,432
---------- ---------- ---------- ---------- ----------
Cost of revenues:
Salaries, commissions and
payroll related costs.................................. 239,166 298,997 351,180 394,932 454,850
Data processing rentals and
telecommunication costs................................ 75,689 86,953 100,908 97,721 100,601
Other operating expenses................................. 103,185 123,086 141,100 164,003 189,982
Depreciation and amortization of
property and equipment................................. 24,593 33,751 40,486 44,120 49,119
Purchased incomplete
software technology.................................... -- -- 172,970 -- --
Amortization of intangible assets........................ 9,350 11,060 26,166 21,391 14,067
Amortization (capitalization) of
internally generated computer
software - net......................................... (7,185) (9,599) (6,382) 3,732 36
---------- ---------- ---------- ---------- ----------
Total.................................................... 444,798 544,248 826,428 725,899 808,655
---------- ---------- ---------- ---------- ----------
Operating income (loss).................................. 75,198 91,049 (57,324) 153,550 165,777
Interest expense - net.................................. 4,366 6,951 18,822 19,088 11,878
---------- ---------- ---------- ---------- ----------
Income (loss) before income
taxes.................................................. 70,832 84,098 (76,146) 134,462 153,899
Income tax provision (credit)............................ 27,107 33,067 (30,220) 54,754 63,099
---------- ---------- ---------- ---------- ----------
Net income (loss)........................................ $ 43,725 $ 51,031 $ (45,926) $ 79,708 $ 90,800
========== ========== ========== ========== ==========
Net income (loss) per common
and common equivalent share:
Basic.................................................. $0.98 $1.10 $(0.93) $1.56 $1.75
========== ========== ========== ========== ==========
Diluted................................................ $0.96 $1.08 $(0.93) $1.53 $1.70
========== ========== ========== ========== ==========
Shares used in computing net
income per share:
Basic.................................................. 44,749 46,583 49,348 50,993 52,009
========== ========== ========== ========== ==========
Diluted................................................ 45,575 47,364 49,348 52,046 53,528
========== ========== ========== ========== ==========
As of December 31,
------------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
(In thousands, except book value per common share)
BALANCE SHEET DATA:
Total assets............................................. $1,874,939 $2,204,832 $2,514,597 $2,698,979 $3,636,491
Long-term debt........................................... 124,624 150,599 383,416 272,864 252,031
Shareholders' equity..................................... 370,740 425,389 514,866 605,898 769,255
Book value per common....................................
share................................................... $7.85 $9.01 $9.92 $11.72 $14.26
- ---------------
</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 - diluted). Net income and
net income per share-diluted before such charges was $63.7 million and
$1.27, respectively.
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<PAGE>
FISERV MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Years Ended December 31, 1997, 1996 and 1995
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 1997 vs
1995 1996 1997 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues................................... 100.0% 100.0% 100.0% 14.3% 10.8%
----- ----- ----- ------ -----
Cost of revenues:
Salaries, commissions
and payroll............................... 45.7 44.9 46.7 12.5 15.2
Data processing expenses,
rentals and telecommunication
costs..................................... 13.1 11.1 10.3 (3.2) 2.9
Other operating costs...................... 18.3 18.6 19.5 16.2 15.8
Depreciation and amortization
of equipment and
improvements.............................. 5.3 5.0 5.0 9.0 11.3
Amortization of intangible
assets.................................... 2.1 2.4 1.5 31.7 (34.2)
Amortization (capitalization)
of internally generated
software-net.............................. (0.8) 0.4 -- (158.5) (99.0)
----- ----- ----- ------ -----
Total costs of revenues.................... 83.7% 82.4% 83.0% 12.8% 11.4%
----- ----- ----- ------ -----
Operating income........................... 16.3% 17.6% 17.0% 22.3% 8.0%
----- ----- ----- ------ -----
Income before income
taxes..................................... 13.9% 15.3% 15.8% 26.0% 14.5%
----- ----- ----- ------ -----
Net income................................. 8.3% 9.1% 9.3% 25.1% 13.9%
===== ===== ===== ====== =====
</TABLE>
Revenues increased $95.0 million in 1997 and $110.3 million in 1996. In
both years, approximately half 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. Fiserv provides item
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, revenues for the
current year would have been increased by approximately $205 million or 23
percent.
-21-
<PAGE>
Cost of revenues increased $82.8 million in 1997 and $82.4 million in 1996.
As a percentage of revenues, cost of revenues increased 0.6 percent from 1996 to
1997 and decreased 1.3 percent from 1995 to 1996. 1996 revenues included a
significant amount of termination fees with no related costs incurred. The make
up of cost of revenues also 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, securities processing, item processing
and electronic funds transfer operations have enjoyed an increasing percentage
of total revenues.
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 decreased
$7.3 million from 1996 to 1997 and increased $5.1 million from 1995 to 1996. The
change from an increase in 1996 to a decrease in 1997 resulted primarily from
accelerated amortization applied to completed software acquired in the
acquisition of ITI.
Capitalization of internally generated computer software is stated net of
amortization and decreased $3.7 million in 1997 and $10.1 million in 1996. Net
software capitalized approximated related amortization in 1997 and was more than
offset by amortization in 1996 due to the accelerated amortization of software
in both years resulting from the planned consolidation of certain product lines.
Operating income increased $12.2 million in 1997 and $28.0 million in 1996.
As a percentage of revenues, operating income decreased 0.6 percent in 1997 and
increased 1.3 percent in 1996.
The effective income tax rate was 41 percent in 1997 and 1996 and 40
percent in 1995. The effective income tax rate for 1998 is expected to remain at
41 percent.
Fiserv believes that it has an effective plan to address the Year 2000
issue and expects to incur charges approximating $15 million a year in each of
the next two years related to this issue. It is not anticipated that operating
income as a percentage of revenues will be materially impacted by these charges.
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.
-22-
<PAGE>
Liquidity and Capital Resources
The following table summarizes Fiserv's primary sources of funds:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1995 1996 1997
-------- --------- --------
<S> <C> <C> <C>
(in thousands)
Cash provided by operating activities
before changes in securities processing
receivables and payables-net............. $107,037 $ 173,774 $175,506
Securities processing receivables
and payables-net......................... 29,935 (3,660) (5,948)
-------- --------- --------
Cash provided by operating activities.... 136,972 170,114 169,558
Issuance of common stock-net............. 638 4,896 10,040
Decrease (increase) in investments....... 10,254 16,831 (55,625)
Increase (decrease) in net borrowings.... 180,644 (119,640) (31,096)
-------- --------- --------
TOTAL................................... $328,508 $ 72,201 $ 92,877
======== ========= ========
</TABLE>
Fiserv has applied a significant portion of its cash flow from operations
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.
-23-
<PAGE>
BUSINESS OF FISERV
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 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 1997, Fiserv's revenues increased from $125.0 million to $974.4 million,
its operating income increased from $15.5 million to $165.8 million, and its net
income grew from $9.2 million to $90.8 million. During this period, net income
per common and common equivalent share-diluted increased from $.33 to $1.70.
Additional information concerning Fiserv is included in Fiserv's Annual
Report on Form 10-K for the year ended December 31, 1997, and other Fiserv
documents filed with the Commission that are incorporated by reference herein.
See "Incorporation of Certain Documents by Reference."
-24-
<PAGE>
NDP SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of NDP.
The selected consolidated historical financial data at and for each year in the
five year period ended March 31, 1997 have been extracted from NDP's
consolidated financial statement which have been audited by independent
certified public accountants. The unaudited selected consolidated historical
financial data at and for nine months ended December 30, 1996 and 1997 have been
extracted from NDP's unaudited consolidated financial statements.
NDP Selected Historical Consolidated Financial Data
(In thousands, except shares and per share amounts)
<TABLE>
<CAPTION>
As of and for the
nine months ended
As of and for the year ended March 31, December 31,
----------------------------------------------- -----------------
1993 1994 1995 1996 1997 1996 1997
------- --------- ------- -------- ------- ------ -------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net Revenue.......................... $ 5,830 $ 5,099 $ 9,570 $ 9,647 $11,232 $7,934 $ 9,508
Net income (loss).................... 659 (1,259) 838 767 1,328 675 1,168
Net income (loss) per common share:
Basic.............................. 110.35 (203.18) 128.83 109.64 173.30 88.47 144.75
Diluted............................ 109.75 (203.18) 125.18 103.79 165.44 84.28 136.81
Cash dividends per common share...... -- -- -- -- -- -- --
Weighted average shares
outstanding:
Basic.............................. 5,970 6,196 6,504 6,996 7,665 7,633 8,067
Diluted............................ 6,003 6,196 6,694 7,390 8,029 8,012 8,535
Balance Sheet Data:
Total assets......................... $ 5,718 $ 5,658 $ 5,913 $ 6,836 $ 9,197 $7,710 $ 9,825
Long term obligations................ 960 1,241 808 550 271 326 171
Redeemable common stock.............. 255 260 366 474 713 529 776
Stockholders' equity................. 1,970 727 1,724 2,675 3,841 3,317 5,312
Book value per common share.......... 319 117 255 365 490 428 621
Shares of NDP common stock
outstanding......................... 6,185 6,239 6,768 7,335 7,837 7,753 8,557
</TABLE>
-25-
<PAGE>
NDP MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
NDP is a software and services firm headquartered in Cedar Rapids, Iowa.
NDP provides administrative software, processing and consulting services to the
life insurance industry. NDP's proprietary software product is the ID/3/ System,
which provides the life, health and annuity insurance industry all the
administrative systems required to conduct insurance operations from new
business through payment of claims. NDP derives its revenues principally from
the sale of software licenses to life insurance companies, the installation of
software, maintenance of software and post installation services in the form of
consulting, implementation, training and education. NDP also derives revenues
from fees charged licensed clients for the maintenance and enhancement of the
ID/3/ System. In addition to these two sources of revenue, NDP, through its
service bureau, gains additional revenues from clients who do not wish to
operate their own data processing systems. Such clients typically own the
software used in the service bureau and purchase maintenance and software
modification service from NDP. NDP secures additional revenue from these clients
for the daily operation of their systems on a per policy basis.
The major expenses incurred by NDP relate to employee compensation and
benefits, general administrative and other expenses, commissions paid on license
sales to sales personnel, computer hardware and communications expenses in
conjunction with the service bureau operation, travel and related sales
expenses.
NDP's business is not characterized as seasonal, but has been positively
impacted by the realization by life insurance companies of the Year 2000 or
millennium problem.
Nine Months Ended December 31, 1997 Compared to Nine Months Ended December 31,
1996.
Revenue for the period ended December 31, 1997 was $9.1 million or 25%
greater than the $7.3 million for the period ended December 31, 1996. The
overall revenue increase was due to the increased demand for consulting and
implementation services in 1997 compared to 1996.
Revenues for data services were $1.2 million for the period ending December
1996 compared to $.8 million for December 31, 1997. The decrease was due
predominantly to the loss of Shelby Life Insurance Company as a customer when it
was acquired by another non-NDP customer. In addition, two other service bureau
accounts were renegotiated on long-term leases for a slight discount over the
previous year. As volumes increase this revenue is expected to return and
surpass its former level.
Two new accounts, Union Fidelity Life Insurance Company and Standard of
Oregon are expected to increase data services in the next two years. Revenues
from software services for the period ended December 31, 1996 were $6.0 million
compared to $8.2 million in December 31, 1997. These figures include license
fees for both periods. The license fees for the period ended December 31, 1996
were $920,000; and for the period December 31, 1997 were $775,000. Consulting
revenue has increased to the point where NDP is now realizing approximately a
million dollars per month in consulting revenues. The net revenue derived by NDP
from the sale of IBM computer hardware and software was $84,924 in 1997 compared
to $119,177 in 1996. Decreases in hardware and software pricing by the IBM
Corporation and smaller machines needed for the new clientele account for the
decrease in net difference between computer hardware revenue and cost of sales
in computer hardware.
Operating expenses in the area of salaries and wages increased
proportionately from $3.1 million in the period ended December 31, 1996 compared
to $3.8 million in the period ended December 31, 1997. Expenses for salaries and
wages are directly proportional to consulting revenues as fees are charged to
NDP's clients per hour of time spent on the clients' business. In addition, some
outside subcontractor work, which was needed in order to satisfy certain client
requirements, ordinarily comes at a higher expense ratio than employees of NDP.
Computer expenses for the period and other expenses remain relatively flat
during the two periods with some increase due to the opening of the Austin
branch office operation.
-26-
<PAGE>
Fiscal Year Ended March 31, 1997 Compared to Fiscal Year Ended March 31, 1996
Operating income for the fiscal year ended March 31, 1996 was $1.3 million
compared to the fiscal year ended March 31, 1997 in which operating revenue was
$1.8 million. This 31% increase in operating income was due predominantly to the
increase in revenue in the software services area as new employees were added to
the highly margined consulting area to satisfy demand.
Revenue for the year ended March 31, 1997 was $10.6 million compared to
$9.0 million for the year ended on March 31, 1996, an increase of $1.6 million.
Revenue from software services was $8.8 million compared to $7.2 million, or an
increase of $1.6 million. License sales for the year ended March 31, 1997 were
$1,761,000 compared to $650,000 for the year ended March 31, 1996. There were
five new sales during the fiscal year ended March 31, 1997. Two of the larger
sales were to National Health Insurance Company of Dallas and Teacher's
Insurance and Annuity Association of America ("TIAA-CREF"). TIAA-CREF is the
third largest asset-based life insurance company in the United States. Both of
these contracts are expected to yield significant revenue in the next two fiscal
years.
Increases in expenses for the comparable years were predominantly in
salaries and wages as new employees were added to accommodate consulting
requirements. In addition, to supplement the lack of employees with
subcontractors accounted for a slightly inordinate increase in expenses for the
year ended March 31, 1997. The Sales and Marketing was separated from the
software services area in 1997. This resulted in an increase in expenses as
management layers were added to accommodate the increased effort in the sales
area.
Fiscal Year Ended March 31, 1996 Compared to Fiscal Year Ended March 31, 1995
Revenues in the fiscal year ended March 31, 1995 were $8.4 million compared
to revenues in the fiscal year ended March 31, 1996 of $9.0 million, an increase
of $.6 million. Revenues from software services increased from $6.8 million to
$7.2 million for the same period. Revenues from Data services increased from
$1.3 million to $1.7 million, an increase of $.4 million due to the addition of
one new service bureau account - Shelby Life Insurance Company. Detracting from
the revenue was a reduction in computer hardware and software sales from $1.4
million to $.7 million, a decrease in $.7 million, due predominantly to one
large computer sale in 1996 which was highly discounted. Income before income
tax was $1.0 million compared to $1.3 million for an increase of $.3 million,
but there was an increase in shareholder's equity from $1.7 million to $2.7
million, an increase of $1.0 million.
A license sale was made to Aetna International for the use of the ID/3/
System in its Far East Markets. While the license was limited, it did provide
NDP with its first truly international exposure. In addition, a seven-year
outsourcing agreement was signed with Standard of Oregon, which was the largest
outsourcing agreement for NDP at that time.
A consistent trend in the three years ended March 31, 1996 is that the
software services area continues to rise in direct proportion to new sales and
to new demands for consulting services. Equipment hardware and software sales
remain fairly constant as new license sales increased only slightly during this
same period.
Liquidity and Capital Resources
At December 31, 1997, NDP had assets of $9.8 million, with stockholder's
equity of $5.3 million, up 61% from $3.3 million on December 31, 1996. This was
due primarily to an increase from $1.1 million in operating income to $1.8
million and an increase in the cash position as of that same period. At December
31, 1997 NDP had a single item of long-term debt on its balance sheet, to
Winthrop Leasing of Wisconsin in the amount of $171,350 for an operating lease
on an AS/400 computer which will expire in December, 1998. NDP, in essence, has
no long-term debt, and has a line of credit with Firstar Bank, Iowa, N.A., which
is adequate to meet NDP's short-term operating capital needs. In the opinion of
management, the cash on hand and the existing lines of credit are sufficient to
meet the operating capital needs for the foreseeable future.
On January 1, 2000, information technology experts believe that many data
processing application systems may fail as a result of erroneous calculations
and data integrity problems. The situation largely known now as the Year 2000
issue, may occur because many application software systems cannot process date
information beyond December 31, 1999.
-27-
<PAGE>
NDP, as a vendor of the ID/3 /System has long recognized the potential
impact of the Year 2000 issue. NDP addressed the issue and published a
compliance statement to its clients. The ID/3/ System was designed with 4-digit
year capability since its inception in 1990. Extensive tests of the base ID/3/
System and critical corollary software were conducted throughout 1997. Test
results demonstrated no discernible impact on the ID/3/ System as a result of
the transition to a new millenium. The clients have been publicly notified of
the status of the ID/3/ System and their obligations regarding compliance during
the Network User Group meeting in September, 1997.
NDP has further tested ID/3/ in conjunction with critical vendor software
(IBM and Synon, Inc.) products. Test results have demonstrated no impact on base
ID/3/ due to interaction with software from these vendors. Clients have been
notified of the appropriate release levels of each critical software system.
NDP's management concludes that no significant financial or operational
impact will be experienced as a result of the Year 2000 issues.
Effects of Inflation
Because NDP's assets are, to a large extent, liquid in nature they are not
significantly effected by inflation. However, inflation may result in increases
in NDP's operating expenses such as employee compensation and benefits,
occupancy and equivalent costs and communication expenses which can be readily
recoverable in the price of services offered.
NDP'S BUSINESS
General
NDP is a software and services company that derives its revenue from three
main sources: software licenses, consulting and client services and outsourcing
or service bureau operations.
Software license sales have historically accounted for between 15% and 25%
of total revenues for NDP. These are license agreements for the ID/3 /System
paid by clients to secure a perpetual license to use the ID/3/ System. In
addition, NDP is a Value Added Reseller to the IBM Corporation. They act as the
sales agent in selling the equipment and software necessary to operate the ID/3/
System at the client's location.
NDP's second source of revenue is consulting, or client services, and is
derived from consulting services during the implementation and post-
implementation of the ID/3/ System at the client's location. Consulting fees are
paid by the clients to NDP for services performed by individuals who are
knowledgeable of the ID/3/ product; who assist the client in converting historic
data to the ID/3/ System, who educate clients and who train clients in the use
of the ID/3/ System. This is a substantial source of revenue to NDP and
currently, is running approximately $1 million per month. Also included under
software services, is Product Support which is the fees paid by contracted
clients for the maintenance and enhancement of the ID/3/ System. These fees are
usually 15-20% of the license contracted fee and will surpass $1 million per
year in 1998.
The third major source of revenue to NDP is the data services operation or
the service bureau operation. NDP contracts to provide total data processing
services to its clients which includes the use of the ID/3/ System and the
hardware, software and actual operation of the system for the client. As more
clients decide to "out-source" in the future, this is anticipated to be a
growing area for NDP.
Nature of the NDP Business
The NDP business, by its very nature, is subject to various risks including
fluctuations in volumes of license sales and correspondingly volumes in software
services revenue.
-28-
<PAGE>
NDP is solely dependent on ongoing license sales not only to derive a
portion of its income but to precipitate the ongoing revenue derived from the
software services area. These new sales account for new consulting
opportunities, implementation, integration opportunities, education, training
and ongoing data conversion consulting. A downturn in sales would adversely
affect the growth of the business as income from operational clients greatly
diminishes after these clients are in full production with the ID/3/ System.
Dependence on Key Clients
Clients who newly license the ID/3/ System will expend the major portion of
their payments to NDP during the first two years after the signing of the
license agreement. If these clients are large, they have a tendency to be more
complex with more complex insurance portfolio products. Services revenue for
these clients is larger in the first two years than the smaller clients. As of
December 31, 1997 NDP is supporting six installing customers who are converting
their old insurance portfolios to the ID/3/ System as well as modifying the
system to handle any unusual methods of operation. The three largest customers
accounted for over 30% of total revenue for the first nine months of fiscal
1998.
Competition and Risk
NDP operates in a highly competitive market. Some of the competitors of NDP
have greater capital and more resources available to them than does NDP.
NDP encounters intense competition when it approaches the larger accounts
and expends more revenue in competing with the two competitors who constantly
seek those accounts. These competitors are: Cybertek, and the Continuum Company,
a Division of Computer Sciences Corporation. These two companies, in essence,
operate their businesses very much like NDP and attempt to secure the same type
of services and revenues from clients larger than those customarily approached
by NDP. These competitors normally do not approach clients under the top 50 in
the life insurance industry based on assets. NDP is very selective in competing
with these two entities but has on occasion competed and won.
More often, the main competitors to NDP are the Genelco Corporation and the
PDM Corporation, now a division of IBM. These two companies have historically
attempted to secure the mid range life insurance market in the United States and
both usually have appeared as finalists with NDP on selection lists when the
client has reduced such a list to the final three to five service providers.
Genelco presents a known competitive risk and has been successfully countered in
many sales situations. However, there is a growing risk with the PDM company
since it is now owned by IBM with all its vast resources.
Employees
As of December 31, 1997 NDP had 108 full time employees. A small number of
these employees are located in other states and either travel to the client
destinations or produce their work through telecommunications into the NDP
facilities. There is no union activity at NDP and management feels its relations
with its employees are good.
Properties
NDP currently leases 25,000 square feet from 2005, Inc., of Cedar Rapids,
Iowa at $15,000 per month through March, 2000. NDP also leases 1,652 square feet
of office space in Austin, Texas for several non-resident consulting
subcontractors and two employees for $2,615 per month for a period of three
years. NDP has recently leased additional office space in Des Moines, Iowa at
the current rate of $4,301 per year for five years.
-29-
<PAGE>
LEGAL PROCEEDINGS
NDP is involved in certain legal matters in the ordinary course of
business. In the opinion of management and legal counsel, such matters will not
have a material effect on the financial position or results of operations of the
Company.
NDP VOTING SECURITIES AND THE PRINCIPAL HOLDERS THEREOF
The following table sets forth the number of shares of NDP Common Stock,
held of record or beneficially by each person who held of record or was known by
NDP to own beneficially, more than five percent of NDP Common Stock, and the
name and shareholdings of each officer and director and of all officers and
directors as a group. All percentages are based on the 9,768 shares of NDP
Common Stock issued and outstanding.
<TABLE>
<CAPTION>
Number of Shares
Name Beneficially Owned(1) Percent of Class
- -------------------------------------- --------------------- ------------------
<S> <C> <C>
Robert H. Taylor...................... 2,422 24.8%
Howard F. Arner....................... 999 10.2
Allen Taylor.......................... 385 3.9
William R. Choromanski................ 621 6.4
John D. Millard....................... 323 3.3
Marian T. Antin....................... 273 2.8
Connie J. Michel...................... 21 *
Donald H. Sievers..................... 20 *
Edwin L. Arkema....................... 37 *
David R. Antin........................ 93 *
All Executive Officers and Directors
as a Group (11 persons)............ 5,194 53.2%
</TABLE>
- --------------------------------
* Indicates less than 1% ownership of the total shares of NDP Common Stock
outstanding.
(1) Except as otherwise noted, to the best knowledge of NDP, all stock is owned
beneficially and of record by the indicated owner, and each stockholder has
sole voting and investment power over the stock. Unless otherwise
indicated, includes shares of Common Stock held directly by the individuals
as well as by members of such individuals' immediate family who share the
same household, shares held in trust and other indirect forms of ownership
over which shares the individuals effectively exercise sole or shared
voting and/or investment power.
-30-
<PAGE>
DESCRIPTION OF FISERV COMMON STOCK
General
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 March 6, 1998, there were approximately 1,960 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.
Stockholder Rights Plan
On February 23, 1998, Fiserv, Inc. entered into a Shareholder Rights
Agreement with Firstar Trust Co., as Rights Agent (the "Rights Agreement") and
the Board of Directors of Fiserv, Inc. declared a dividend of one preferred
stock purchase right (a "Right") for each outstanding share of Fiserv Common
Stock. Such dividend is payable on March 9, 1998 to the holders of record of
Fiserv Common Stock on such date. Certificates for shares of Fiserv Common Stock
delivered by or on behalf of Fiserv, Inc. after March 9 and prior to the
occurrence of certain events outlined in the Rights Agreement will contain a
notation incorporating the Rights Agreement by reference. Consequently, each
share of Fiserv Common Stock offered hereby has one Right attached. The Rights
will expire on February 23, 2008, unless previously exercised or redeemed at the
option of the Board of Directors.
Generally, under the terms of the Rights Agreement, the Rights will be
exercisable if a person or group has acquired, commenced or announced its
intention to commence a tender or exchange offer to acquire 15% or more of the
Fiserv Common Stock. The Rights will also be exercisable if the majority of
disinterested directors who are not also officers of Fiserv, Inc. determine that
a person or group beneficially owning 10% or more of the Fiserv Common Stock is
likely to (i) seek short-term financial gain to the detriment of the best long-
term interests of Fiserv, Inc. or its shareholders, or (ii) materially and
adversely affect the business or prospects of Fiserv, Inc.
Initially, each Right will entitle its holder to buy one one-hundredths of
a share of Series A Junior Participating Preferred Stock, at an exercise price
of $250, subject to adjustment. If the Rights become exercisable, holders of
each Right, other than the acquiring or adverse person, will have the right,
upon payment of the exercise price, to purchase the number of shares of Fiserv
Common Stock (in lieu of the preferred stock) which, at that time, have a market
value of two times the exercise price of a Right. If the Rights become
exercisable, the Fiserv Board of Directors may also exchange Rights, other than
those held by the acquiring person or adverse person, in whole or in part, at an
exchange ratio of one share of Fiserv common stock per Right. At any time after
a person or group acquires 15% or more of Fiserv common stock, if Fiserv is
acquired in a merger or other business combination or 50% or more of its
consolidated assets or earning power are sold, Rights holders other than the
acquiring person or group will have the right, upon payment of the exercise
price, to purchase that number of shares of common stock of the acquiring
company (in lieu of preferred shares) which, at the time of the transaction,
have a market value equal to two times the exercise price of a Right.
The Rights Agreement is filed as an exhibit to a Registration Statement on
Form 8-A dated February 24, 1998 that has been filed by Fiserv with the
Commission The Rights Agreement is incorporated by reference in this Proxy
Statement/Prospectus, and reference is made to it for the complete terms fo the
Rights Agreement and Rights. The foregoing description of the Rights Agreement
is qualified in its entirety by reference to the Rights Agreement and such
exhibits thereto.
-31-
<PAGE>
COMPARISON OF RIGHTS OF STOCKHOLDERS OF FISERV AND NDP
General
NDP is incorporated under the laws of the State of Iowa. Accordingly, the
rights of NDP stockholders are governed by NDP's Articles of Incorporation, as
amended ("NDP Articles"), its Bylaws ("NDP Bylaws") and Iowa law. Fiserv is
incorporated under the laws of the State of Wisconsin and, accordingly, the
rights of Fiserv Stockholders are governed by Fiserv's Articles of Incorporation
("Fiserv Articles"), its Bylaws ("Fiserv Bylaws") and Wisconsin law. The Iowa
and Wisconsin corporation laws differ in a number or respects, as do the
respective Articles and Bylaws of NDP and Fiserv.
Upon consummation of the Merger, NDP stockholders will become stockholders
of Fiserv and, as such, all of their rights will be governed by the Fiserv
Articles, Fiserv Bylaws and Wisconsin law.
The following summary of the material differences that may affect the
rights and interests of NDP Stockholders is not intended to be an all-inclusive
discussion of such differences.
Board of Directors
Iowa law provides that the articles of incorporation may provide for
staggering of terms of directors into two or three groups with each group
consisting of as near to one-half or one-third the total number of directors as
possible, respectively. In addition, the authorized number of directors
constituting the Board of Directors is specified in, or fixed in accordance
with, the articles of incorporation or bylaws. If the board has the power to
fix or change the number of directors, the board may increase or decrease by 30%
or less the number of directors last approved by the stockholders. Only the
stockholders may increase or decrease by more than 30% the number of directors
last approved by the stockholders. The articles or bylaws may establish a
variable range for the size of the board. If a variable range is established,
the stockholders or the board of directors may fix or change the number of
directors. However, after shares are issued, only the stockholders may change
the range or change from a fixed to a variable-range size board or vice versa.
Wisconsin law provides that a board of directors shall consist of one or
more natural persons, with the number specified in or fixed in accordance with
the articles of incorporation or bylaws. The number of directors may be
increased or decreased from time to time by amendment to, or in the manner
provided in, the articles of incorporation or bylaws. Directors may be divided
into two or three groups with the term for each group staggered accordingly.
The NDP Articles and NDP Bylaws do not provide for staggered terms of
directors. The NDP Bylaws provide that there should be ten directors. The NDP
board of directors currently consists of eight members as there are two
vacancies which have not been filled. At each annual meeting of NDP
Stockholders, directors are elected by a majority of the votes cast, assuming a
quorum is present.
The Fiserv Articles provide for a board of directors divided into three
groups, with the term of one group expiring each year. The Fiserv Bylaws state
that directors shall be elected by a plurality of the votes cast by stockholders
at an annual meeting at which a quorum is present. The Fiserv Articles require
that the Fiserv board of directors consist of between three and nine directors.
The Fiserv board of directors currently consists of nine members divided into
three groups of three directors. At each annual meeting of Fiserv's
stockholders, the successors to the class of directors whose term expires at the
time of such meeting are elected by a plurality of the votes cast, assuming a
quorum is present. A director of Fiserv may be removed, with or without cause,
by the affirmative vote of the holders of a majority of the then issued and
outstanding stock of Fiserv cast at a special meeting of stockholders called for
that purpose.
-32-
<PAGE>
Removal of Directors
Under Iowa law, stockholders may remove a director, with or without cause,
unless the articles of incorporation provide that the director may be removed
only for cause. A director may be removed by the stockholders at a meeting
called for the purpose of removing the director or by written consent obtained
from the holders of all the outstanding shares of the corporation entitled to
vote on the removal of the director. The NDP Articles do not provide that a
director may be removed only for cause. Under the NDP Bylaws, a director shall
be subject to removal at a special meeting of the stockholders by the vote of a
majority of the voting shares then outstanding.
Under Wisconsin law, any director or the entire board of directors may be
removed with or without cause by stockholders representing a majority of the
shares entitled to vote at an election of directors, unless the corporation's
articles of incorporation or bylaws provide that directors may be removed only
for cause. Under the Fiserv Bylaws, a director may be removed from office only
for cause by the affirmative vote of the holders of 80% of the then issued and
outstanding stock of Fiserv cast at a special meeting of stockholders called for
that purpose.
Limitation on Directors' Liability
Iowa law allows a corporation, through its articles of incorporation, to
limit or eliminate the personal liability of directors to the corporation and
its stockholders for monetary damages for breach of fiduciary duty. However,
Iowa law excludes any limitation on liability for (a) breach of duty of loyalty
to the corporation or its stockholders, (b) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (c) a
transaction from which the director derives an improper personal benefit, or (d)
an unlawful distribution. The NDP Articles do not limit or eliminate personal
liability of the directors to the corporation or its stockholders.
Wisconsin law provides that directors are not liable to the corporation, it
stockholders, or any person asserting rights on behalf of the corporation or its
stockholders, for damages, settlements, fees, fines, penalties or other monetary
liabilities arising from a breach of, or a failure to perform, any duty
resulting solely from his or her status as a director, unless the person
asserting the liability proves that the breach or failure to perform constitutes
either (a) a willful failure to deal fairly with the corporation or its
stockholders in connection with a matter in which the director has a material
conflict of interest; (b) a violation of criminal law, unless the director had
reasonable cause to believe that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was unlawful; (c) a transaction from
which the director derived an improper personal profit; or (d) willful
misconduct. A Wisconsin corporation may limit this immunity in its articles of
incorporation, but the Fiserv Articles do not do so.
Indemnification of Directors and Officers
Iowa law provides that (unless the duty to indemnify is limited by the
articles of incorporation), a corporation must indemnify a director who was
wholly successful on the merits or otherwise in the defense of any proceeding
for all reasonable expenses incurred in the proceeding if the director was a
party because the director is or was a director of the corporation. Generally,
a corporation may indemnify an individual made a party to a proceeding because
he or she was or is a director against liability incurred in the proceeding if
he or she acted in good faith, reasonably believed that conduct done in the
individual's official capacity was in the corporation's best interest and/or
that in all other cases, the individuals's conduct was not opposed to the
corporation's best interest, and (in the case of a criminal proceeding) had no
reasonable cause to believe the individual's conduct was unlawful. In a
proceeding by or in the right of the corporation, a corporation generally may
not indemnify a director who was adjudged liable to the corporation.
Furthermore, in a proceeding by or in the right of the corporation,
indemnification is generally limited to reasonable expenses. Iowa law also
provides that unless the articles of incorporation provide otherwise, a court
may order that the corporation provide indemnification to a director if it finds
that the director is entitled to mandatory indemnification or is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances. A corporation is permitted to provide additional rights to
indemnification under its articles of incorporation or bylaws, by agreements, or
by vote of stockholders or disinterested directors, except that the corporation
may not indemnify a director for: (i) breach of a director's duty of loyalty to
the corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or knowing violation of the law;
(iii) for a transaction from which the person seeking indemnification derives an
-33-
<PAGE>
improper personal benefit; or (iv) liability for unlawful distribution. In
addition, an officer (who is not a director) is entitled to mandatory
indemnification and entitled to seek court-ordered indemnification to the same
extent as a director. In addition, a corporation may indemnify an officer to
the extent that may be provided by the articles of incorporation, bylaws,
general or specific action of the board of directors, or contract.
Wisconsin law requires that a corporation shall indemnify a director or
officer, to the extent 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 he or she is a
director or officer of the corporation. In cases where a director or officer
has not been successful on the merits or otherwise in the defense of such a
proceeding, Wisconsin law requires a corporation to indemnify the director or
officer 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 (a) a willful failure to deal fairly
with the corporation or its stockholders in connection with a matter in which
the director or officer has a material conflict of interest; (b) a violation of
the criminal law, unless the director or officer had reasonable cause to believe
that his or her conduct was lawful or no reasonable cause to believe that his or
her conduct was unlawful; (c) a transaction from which the director or officer
derived an improper personal profit; or (d) willful misconduct. Such
indemnification is not required to the extent limited by the articles of
incorporation of the corporation. Expenses incurred by an officer or director
in defending civil or criminal proceedings may be paid by the corporation in
advance of the final disposition of such proceeding upon the receipt by the
corporation of (a) a written affirmation of his or her good faith belief that he
or she has not breached or failed to perform his or her duties to the
corporation; and (b) a written undertaking to repay the allowance and, if
required by the corporation, to pay reasonable interest on the allowance to the
extent that it is ultimately determined that indemnification is not required
under Wisconsin law and not ordered by a court.
The NDP Articles provide that each director and officer of the corporation
shall be indemnified by the corporation against personal liability reasonably
incurred by him or her in connection with any proceeding against him or her by
reason of his or her having been a director or officer of NDP, except as to
which he or she shall have been adjudged derelict in the performance of his or
her duty as such director or officer. Fiserv is required, pursuant to Fiserv
Bylaws, to indemnify all persons who may be indemnified under Wisconsin law to
the fullest extent permitted thereunder.
Rights of Dissenting Stockholders
Iowa law provides that a stockholder is generally entitled to receive
payment of the fair value of such stockholder's stock if such stockholder
dissents from a proposed merger or stock exchange. In addition, a stockholder
is generally entitled to receive payment of the fair value of such stockholder's
stock if such stockholder dissents from a sale or exchange of all or
substantially all of the property of the corporation other than in the usual and
regular course of business if the shareholder is entitled to vote on the sale or
exchange.
Wisconsin law provides that a stockholder of a corporation is generally
entitled to receive payment of the fair value of such stockholder's stock if
such stockholder dissents from a proposed merger or stock exchange of all or
substantially all of the property of the corporation other than in the usual and
regular course of business. However, except with respect to "business
combinations" (defined generally as transactions with significant stockholders),
generally dissenters' rights are not available to holders of shares that are
registered on a national securities exchange or quoted on NASDAQ. Fiserv Common
Stock is currently quoted on NASDAQ.
Special Meetings of Stockholders
The NDP Bylaws provide that a special meeting of stockholders may be called
by the Chairman of the Board of Directors, or the Chief Executive Officer, and
shall be called by the Chairman of the Board of Directors, or the Chief
Executive Officer, and shall be called by the Chairman of the Board, Chief
Executive Officer or Secretary at the written request of the holders of not less
than one-tenth of all the outstanding shares of the corporation entitled to vote
at the meeting.
-34-
<PAGE>
The Fiserv Bylaws state that a special meeting of the stockholders, or of
any class thereof entitled to vote, for any purpose or purposes, may be called
at any time by the Chairman of the Board, if any, or the President or by order
of the board of directors and shall be called by the President or the Secretary
upon the written request of stockholders holding of record at least 10% of all
the votes entitled to be cast on any issue proposed to be considered at such
meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
Action Without a Stockholder Meeting
Iowa law provides that unless otherwise provided in the articles of
incorporation, any action required or permitted to be taken at a stockholders'
meeting may be taken without a meeting or vote if written consents describing
the action are signed by the holders of outstanding shares having at least
ninety percent of the votes entitled to be cast at a meeting at which all shares
entitled to vote were present and voted and are delivered to the corporation.
The NDP Bylaws provide that any action required or permitted by law, the
articles of incorporation, or the bylaws to be taken at a meeting of the
stockholders may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by all of the stockholders entitled to vote
with respect to the subject matter thereof.
Wisconsin law also provides for actions that would be taken at an annual or
special stockholder meeting to be taken without a meeting. Such an action may
be taken, without action by the board of directors, by written consent of all of
the stockholders entitled to vote on the action. If the articles of
incorporation so provide, such action may also be taken by written consent of
those stockholders representing the voting power to cast not less than the
minimum number or, in the case of voting by voting groups, numbers of votes that
would be necessary to authorize or take the action at a meeting at which all
shares entitled to vote were present and voted, except action may not be taken
in this manner with respect to an election of directors for which stockholders
may vote cumulatively. If action is taken by written consent of fewer than all
of the stockholders, the corporation shall give notice of the action to the
stockholders who were entitled to vote on the action but whose shares were not
represented on the written consent.
The Fiserv Articles provide that any action required to be taken at any
annual or special meeting of stockholders or any action which may be taken at
any annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing setting forth
the action so taken shall be signed by the holders of outstanding stock having
not less than the minimum number of votes necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
Preemptive Rights
Unless provided for in the articles of incorporation, shareholders of an
Iowa corporation do not have pre-emptive rights. NDP's Articles do not
currently provide for pre-emptive rights, nor have they provided for pre-emptive
rights at any time in the past.
Wisconsin law provides preemptive rights for holders of common stock from a
"preexisting class," defined under Wisconsin law as shares of a class for which
shares were authorized before January 1, 1991, whether the shares were issued
before, on or after January 1, 1991. Wisconsin law permits the designation of
preemptive rights in a corporation's articles of incorporation for any shares
that are not from a preexisting class. The Fiserv Articles do not provide
holders of common stock preemptive rights to acquire any securities of Fiserv.
Merger, Consolidation and Sales of Assets
Both Wisconsin and Iowa law require that certain extraordinary corporate
actions, such as most mergers, consolidations, dissolutions or sales of
substantially all of a corporation's assets, be approved by the vote of a
majority of the corporation's outstanding shares and by a majority of each class
entitled to vote thereon unless a higher percentage is required by the
corporation's articles of incorporation. Neither the NDP Articles nor the
Fiserv Articles require approval of greater than the majority of each
corporation's outstanding shares and by a majority of each class entitled to
vote thereon required by the state statutes of each respective company.
-35-
<PAGE>
Shareholder Rights Agreement
On February 23, 1998, the Fiserv Board of Directors declared a dividend of
one preferred stock purchase right for each outstanding share of Fiserv Common
Stock to shareholders of record at the close of business on March 9, 1998. For
a description of the Fiserv Rights and the related Rights Agreement, together
with a discussion of the effects of the Fiserv Rights, see "Incorporation of
Certain Documents by Reference."
The NDP Board of Directors has not adopted a shareholder rights agreement.
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 owns 27,461 shares of Fiserv Common Stock which number includes
vested but unexercised stock options.
EXPERTS
The consolidated financial statements and related financial statement
schedules of Fiserv, Inc. and subsidiaries, except BHC Financial, Inc. and
subsidiaries, as of December 31, 1997 and 1996 and for each of the three years
in the period ended December 31, 1997, incorporated in this Proxy
Statement/Prospectus by reference from Fiserv's Annual Report on Form 10-K for
the year ended December 31, 1997, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports 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 dated February 14, 1997, except for Note 12 of
the Consolidated Financial Statements as to which the date is March 3, 1997,
which report is included in Fiserv's Annual Report on Form 10-K for the year
ended December 31, 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 balance sheets of NDP as of March 31, 1997 and 1996 and the statements
of income, stockholders' equity and cash flows for each of the three years in
the three-year period ended March 31, 1997 have been included herein in reliance
upon the reports of McGladrey & Pullen, LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
STOCKHOLDER PROPOSALS FOR NDP 1998 ANNUAL MEETING
NDP does not intend to hold an Annual Meeting of Stockholders in 1998
unless the Merger is not consummated. In the event that the Merger is not
consummated, stockholder proposals which are intended to be presented at NDP's
1998 Annual Meeting of Stockholders must be received at the principal executive
offices of NDP, located at 200 Fifth Avenue S.E., Cedar Rapids, Iowa 52401, a
reasonable period prior to the mailing of proxy materials for such meeting in
order to be included in such proxy materials.
-36-
<PAGE>
NETWORK DATA PROCESSING CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Network Data Processing Corporation
Cedar Rapids, Iowa
We have audited the accompanying balance sheets of Network Data Processing
Corporation as of March 31, 1996 and 1997, and the related statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended March 31, 1997. 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 audits.
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 financial statements referred to above present fairly, in
all material respects, the financial position of Network Data Processing
Corporation as of March 31, 1996 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended March 31, 1997 in
conformity with generally accepted accounting principles.
McGLADREY & PULLEN, LLP
Cedar Rapids, Iowa
April 22, 1997, except for Note 13,
as to which the date is January 30, 1998
F1
<PAGE>
NETWORK DATA PROCESSING CORPORATION
<TABLE>
<CAPTION>
BALANCE SHEETS
March 31,
----------------------------- December 31,
ASSETS (Note 4) 1996 1997 1997
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 212,807 $ 519,780 $ 918,350
Trade receivables, less allowance for doubtful accounts 1996 $118,000;
March 31, 1997 $20,000; December 31, 1997 $30,000 (unaudited)
(Notes 2 and 11) 1,049,977 1,937,814 2,904,463
Current maturities of long-term receivables (Note 3) 284,589 1,852,505 481,007
Income tax refund receivable 19,430 - -
Prepaid expenses 446,916 49,196 195,827
Deferred income taxes (Note 5) 92,000 80,800 80,800
----------------------------------------------
Total current assets 2,105,719 4,440,095 4,580,447
----------------------------------------------
Long-Term Receivables, Software Costs and Investment
Long-term receivables, installment contracts (Note 3) 443,057 351,255 275,771
Software costs, net of accumulated amortization 1996 $2,235,748;
March 31, 1997 $3,053,553; December 31, 1997 $3,818,010 (unaudited) 3,272,140 3,276,081 3,532,480
Investment in affiliate - 83,444 73,076
----------------------------------------------
3,715,197 3,710,780 3,881,327
----------------------------------------------
Equipment
Equipment 2,348,144 2,452,032 3,144,330
Leasehold interest in equipment 772,880 515,070 464,860
----------------------------------------------
3,121,024 2,967,102 3,609,190
Less accumulated depreciation, including amounts applicable to assets
acquired under capital leases 1996 $265,824; March 31, 1997 $241,445;
December 31, 1997 $350,795 (unaudited) 2,106,307 1,921,352 2,245,984
----------------------------------------------
1,014,717 1,045,750 1,363,206
----------------------------------------------
$ 6,835,633 $ 9,196,625 $ 9,824,980
==============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
Current Liabilities
Notes payable (Note 4) $ 847,500 $ - $ -
Current maturities of long-term debt (Note 4) 274,095 166,631 148,640
Accounts payable 402,508 294,322 878,798
Payroll taxes 15,114 28,018 133,599
Accrued bonuses 201,832 369,787 -
Other accrued expenses 151,622 196,536 198,167
Deferred revenue 361,250 1,910,258 894,567
Income taxes payable - 282,049 169,674
----------------------------------------------
Total current liabilities 2,253,921 3,247,601 2,423,445
----------------------------------------------
Long-Term Debt (Note 4) 276,032 104,100 22,710
----------------------------------------------
Stock Appreciation Rights (Note 6) 76,355 118,333 118,333
----------------------------------------------
Deferred Income Taxes (Note 5) 1,080,200 1,172,900 1,172,900
----------------------------------------------
Commitments (Notes 9 and 10)
Redeemable Common Stock Held by the 401(k) Profit-Sharing Plan (Note 10) 474,074 712,819 775,714
----------------------------------------------
Stockholders' Equity (Notes 7 and 8)
Capital stock, common, $100 par value; authorized 100,000 shares; issued
1996 7,335 shares; March 31, 1997 7,837 shares; December 31, 1997 8,557
shares (unaudited) 733,500 783,700 855,700
Additional paid-in capital 721,912 942,800 1,237,022
Retained earnings (Note 4) 1,693,713 2,827,191 3,994,870
----------------------------------------------
3,149,125 4,553,691 6,087,592
Less maximum cash obligation related to 401(k) profit-sharing plan shares
(Note 10) 474,074 712,819 775,714
----------------------------------------------
2,675,051 3,840,872 5,311,878
----------------------------------------------
$ 6,835,633 $ 9,196,625 $ 9,824,980
==============================================
</TABLE>
See Notes to Financial Statements.
F2
<PAGE>
NETWORK DATA PROCESSING CORPORATION
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Nine Months Ended
Years Ended March 31, December 31,
----------------------------------------------------------------------------------
1995 1996 1997 1996 1997
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Operating revenues (Notes 2 and 11):
Data services $ 1,340,270 $ 1,706,965 $ 1,648,091 $ 1,169,886 $ 822,437
Software services 6,831,841 7,233,910 8,825,453 6,005,900 8,190,069
Computer hardware 1,397,548 705,698 757,993 757,993 505,687
----------------------------------------------------------------------------------
9,569,659 9,646,573 11,231,537 7,933,779 9,518,193
Cost of sales, computer hardware 1,181,144 608,508 638,816 638,816 420,763
----------------------------------------------------------------------------------
8,388,515 9,038,065 10,592,721 7,294,963 9,097,430
----------------------------------------------------------------------------------
Operating expenses:
Salaries and wages 2,939,333 3,522,469 4,571,072 3,080,975 3,821,910
Computer equipment expenses 455,579 462,238 491,475 454,118 415,041
Other 3,754,946 3,703,767 3,759,021 2,674,425 3,030,226
----------------------------------------------------------------------------------
7,149,858 7,688,474 8,821,568 6,209,518 7,267,177
----------------------------------------------------------------------------------
Operating income 1,238,657 1,349,591 1,771,153 1,085,445 1,830,253
Other income (expense):
Interest income 37,632 92,434 68,565 48,386 54,933
Equity in net (income) loss of affiliate (11,556) 11,945 (10,368)
Interest expense (228,649) (142,743) (93,398) (75,394) (78,388)
----------------------------------------------------------------------------------
Income before income taxes 1,047,640 1,299,282 1,734,764 1,070,382 1,796,430
Federal and state income taxes (Note 5) 209,705 532,247 406,442 395,128 628,751
----------------------------------------------------------------------------------
Net income $ 837,935 $ 767,035 $ 1,328,322 $ 675,254 $ 1,167,679
==================================================================================
Earnings per common share (Note 12):
Basic $ 128.83 $ 109.64 $ 173.30 $ 88.47 $ 144.75
==================================================================================
Diluted $ 125.18 $ 103.79 $ 165.44 $ 84.28 $ 136.81
==================================================================================
</TABLE>
See Notes to Financial Statements.
F3
<PAGE>
NETWORK DATA PROCESSING CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended March 31, 1995, 1996 and 1997 and
Nine Months Ended December 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Less
Maximum
Cash
Obligation
Related To
Capital Additional Retained 401(k)
Stock, Paid-In Earnings Profit-Sharing
Common Capital (Note 4) Plan Shares Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1994 $623,900 $ 274,208 $ 88,743 $ (259,618) $ 727,233
Net income -- -- 837,935 -- 837,935
Issuance of 500 shares of common stock 50,000 200,000 -- -- 250,000
Common stock issued to 401(k)
profit-sharing plan, 29 shares 2,900 12,395 -- (15,295) --
Change related to 401(k) profit-sharing
plan shares -- -- -- (91,142) (91,142)
------------------------------------------------------------------
Balance, March 31, 1995 676,800 486,603 926,678 (366,055) 1,724,026
Net income -- -- 767,035 -- 767,035
Purchase of 53 shares of common
stock for retirement (5,300) (10,706) -- -- (16,006)
Issuance of 500 shares of common stock 50,000 200,000 -- -- 250,000
Common stock issued to 401(k)
profit-sharing plan, 120 shares 12,000 46,015 -- (58,015) --
Change related to 401(k) profit-sharing
plan shares -- -- -- (50,004) (50,004)
------------------------------------------------------------------
Balance, March 31, 1996 733,500 721,912 1,693,713 (474,074) 2,675,051
Net income -- -- 1,328,322 -- 1,328,322
Issuance of 338 shares of common stock 33,800 127,168 -- -- 160,968
Common stock issued to 401(k)
profit-sharing plan, 164 shares 16,400 93,720 -- (110,120) --
Change related to 401(k) profit-sharing
plan shares -- -- -- (128,625) (128,625)
Cancellation of stock purchase warrants
(Note 7) -- -- (194,844) -- (194,844)
------------------------------------------------------------------
Balance, March 31, 1997 783,700 942,800 2,827,191 (712,819) 3,840,872
Net income (unaudited) -- -- 1,167,679 -- 1,167,679
Issuance of 645 shares of common stock 64,500 246,941 -- -- 311,441
Common stock issued to 401(k)
profit-sharing plan, 75 shares 7,500 47,281 -- (54,781) --
Change related to 401(k) profit-sharing
plan shares -- -- -- (8,114) (8,114)
------------------------------------------------------------------
Balance, December 31, 1997 (unaudited) $855,700 $1,237,022 $3,994,870 $ (775,714) $5,311,878
==================================================================
</TABLE>
See Notes to Financial Statements.
F4
<PAGE>
NETWORK DATA PROCESSING CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended March 31, December 31,
---------------------------------------------------------------------------
1995 1996 1997 1996 1997
- --------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net income $ 837,935 $ 767,035 $ 1,328,322 $ 675,254 $1,167,679
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 214,894 222,163 270,260 480,381 418,415
Amortization of software costs 572,273 700,411 817,804 598,759 764,458
(Gain) loss on sale of equipment (61) (1,315) 94,240 16,242 --
Deferred income taxes 197,700 516,800 103,900 -- --
Deferred revenue related to cancella-
tion of stock purchase warrants
(Note 7) -- -- (35,000) (35,000) --
Increase (decrease) in stock
appreciation rights (22,140) 18,496 41,978 12,249 --
Provision for doubtful accounts 87,500 126,455 208,434 178,179 30,000
Equity in net (income) loss of 11,556 (11,945) 10,368
affiliate
Change in assets and liabilities:
(Increase) decrease in trade
receivables (675,350) 100,940 (1,096,271) (1,018,713) (996,649)
(Increase) decrease in income
tax refund receivables 18,383 (19,430) 19,430 19,430 --
(Increase) decrease in
installment receivables 177,443 (215,663) (1,476,114) (282,485) 1,446,982
(Increase) decrease in prepaids 4,463 (410,448) 397,720 374,086 (146,631)
Increase (decrease) in accounts
payable and accrued expenses 64,066 (751,347) 208,554 (292,759) 633,343
Increase (decrease) in income
taxes payable 8,898 (8,898) 282,049 374,634 (112,375)
Increase (decrease) in deferred
revenue (226,266) 198,875 1,389,165 985,969 (1,015,691)
--------------------------------------------------------------------
Net cash provided by
operating activities 1,259,738 1,244,074 2,566,027 2,074,281 2,199,899
--------------------------------------------------------------------
Cash Flows from Investing Activities
Purchase of equipment (123,234) (631,757) (533,363) (496,046) (642,088)
Capitalized software costs (519,673) (830,998) (703,201) (637,205) (1,114,641)
Proceeds from sale of equipment 100 1,375 19,286 -- --
Purchase of investment in affiliate -- (25,000) (25,000) --
--------------------------------------------------------------------
Net cash (used in)
investing activities (642,807) (1,461,380) (1,242,278) (1,158,251) (1,756,729)
--------------------------------------------------------------------
</TABLE>
(Continued)
F5
<PAGE>
NETWORK DATA PROCESSING CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended March 31, December 31,
---------------------------------------------------------------------
1995 1996 1997 1996 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Unaudited)
Cash Flows from Financing Activities
Proceeds from current notes payable $ 588,343 $ 1,977,500 $ 822,500 $ 425,000 $ 575,000
Repayments of current notes payable (1,058,000) (1,630,000) (1,670,000) (1,172,500) (575,000)
Proceeds from long-term debt 25,645 342,195 - - -
Repayment of long-term debt (509,231) (599,723) (279,396) (224,023) (99,381)
Proceeds from issuance of common stock 265,295 308,015 110,120 55,289 54,781
Purchase of common stock for retirement - (16,006) - - -
---------------------------------------------------------------------
Net cash provided by (used in) financing
activities (687,948) 381,981 (1,016,776) (916,234) (44,600)
---------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents (71,017) 164,675 306,973 (204) 398,570
Cash and cash equivalents:
Beginning 119,149 48,132 212,807 212,807 519,780
---------------------------------------------------------------------
Ending $ 48,132 $ 212,807 $ 519,780 $ 212,603 $ 918,350
=====================================================================
Supplemental Disclosures of Cash Flow
Information
Cash paid during the year for:
Interest, net of capitalized interest
1995 $35,236; 1996 $24,842; 1997 $9,495 $ 221,870 $ 152,239 $ 100,606 $ 75,394 $ 80,059
Income taxes (refunds) (15,275) 43,775 104,636 1,064 741,126
</TABLE>
(Continued)
F6
<PAGE>
NETWORK DATA PROCESSING CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended March 31, December 31,
---------------------------------------------------------------------
1995 1996 1997 1996 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Supplemental Schedule of Noncash
Investing and Financing Activities
Capital lease obligations incurred
for use of equipment $ 50,210 $ 342,195 $ - $ - $ -
Depreciation capitalized as software
production cost 86,496 74,133 118,543 90,196 93,784
Issuance of common stock for
compensation - - 90,968 90,968 311,441
Exchange of common stock for
investment in affiliate - - 70,000 70,000 -
Cancellation of stock purchase
warrants for future revenue
(Note 7) - - 194,843 194,843 -
</TABLE>
See Notes to Financial Statements.
F7
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of business: The Company's operations consist primarily of providing
data processing services for the insurance industry. Services provided include
computer software licensing agreements, system implementation and conversion,
and repetitive and special processing. The Company is also a reseller of certain
computer hardware.
Accounting estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A summary of the Company's significant accounting policies follows:
Revenue recognition: The installment contracts receivable result primarily from
license agreements for the use of programmed data processing systems designed by
the Company for life and health insurance companies. Upon delivery of the
system, the Company recognizes the minimum amount due from the contract as
income. Long-term contracts are discounted at 10%.
Operating revenues applicable to data processing conversion and implementation
contracts are recognized as work on the contracts progresses.
Operating revenues applicable to maintenance contracts are recognized ratably
over the period covered by the contract.
Cash and cash equivalents: For purposes of reporting cash flows, the Company
considers all highly liquid investments with maturities of three months or less
to be cash equivalents.
Software costs: Costs incurred to develop software products are charged to
expense as research and development costs until technological feasibility for
the product is established. Thereafter, software production costs are
capitalized and, once the product is available for sale, are amortized by the
greater of (a) the ratio that current gross revenues for a product bear to the
total current and anticipated future gross revenues for that product (b) the
straight-line method over the remaining estimated economic life of the product
including the period being reported on. If management's estimate of the future
gross revenues or the remaining economic life on the product are reduced
significantly, the carrying amount of software costs would be affected.
Investment in affiliate: The Company is accounting for its investment in
Network Microdesigns Corporation, a 33% owned affiliate, by the equity method of
accounting under which the Company's share of the net income (loss) of the
affiliate is recognized as income (loss) in the Company's income statement and
added (subtracted from) to the investment account, and dividends received from
the affiliate are treated as a reduction of the investment account.
F8
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies (Continued)
Equipment and depreciation: Equipment is stated at cost. Depreciation is
computed by the straight-line method over the estimated useful lives of the
assets. The amortization expense on assets acquired under capital leases is
included with depreciation expense on owned assets.
Deferred revenue: Deferred revenue represents payments received in advance for
product support and data processing fees.
Income taxes: Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
Stock options: Compensation expense for stock issued through stock option plans
is accounted for using the intrinsic value based method of accounting prescribed
by APB Opinion No. 25, Accounting for Stock Issued to Employees. Under this
method, compensation is measured as the difference between the fair value of the
stock at the date of award less the amount required to be paid for the stock.
The compensation is charged to expense over the periods of service. The
estimated market value used for the stock options granted is determined by an
independent appraisal.
Common stock held by 401(k) profit-sharing plan: The Company's maximum cash
obligation related to these shares is classified outside stockholders' equity
because the shares are not readily traded and could be put to the Company for
cash.
Earnings per share: The FASB has issued Statement No. 128, Earnings Per Share,
which supersedes APB Opinion No. 15. Statement No. 128 requires the presentation
of basic earnings per share which is computed by dividing net income by the
weighted-average number of common shares outstanding and diluted earnings per
share. Diluted per-share amounts assume the conversion, exercise of issuance of
all potential common stock instruments unless the effect is to reduce the loss
or increase the income per common share.
The Company initially applied Statement No. 128 for the nine months ended
December 31, 1997 and as required by the Statement, has restated all per share
information for the prior periods to conform to the Statement. See Note 12 for
information about the computation of the earnings per share data.
F9
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies (Continued)
Fair value of financial instruments: The carrying amount of long-term
receivables, current notes payable and long-term debt approximates fair value
because these obligations bear interest at current rates.
Interim financial information (unaudited): The financial statements and notes
related thereto as of December 31, 1997, and for the nine-month periods ended
December 31, 1996 and 1997, are unaudited, but in the opinion of management
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial position and results of
operations. The operating results for the interim periods are not indicative of
the operating results to be expected for a full year or for other interim
periods. Not all disclosures required by generally accepted accounting
principles necessary for a complete presentation have been included.
Note 2. Major Customers
Operating revenues for the years ended March 31, 1995, 1996 and 1997 include
amounts from the following major customers (in excess of 10% of total operating
revenues). Operating revenues and the trade receivables from these customers are
as follows:
<TABLE>
<CAPTION>
Operating Revenues For The
Years Ended March 31,
----------------------------------------
Customer 1995 1996 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
A $ * $ * $1,631,724
B 1,085,288 * 1,265,628
C * 1,050,679 *
Trade Receivables Balance
March 31,
-------------------------
Customer 1996 1997
-------------------------
A $ * $ 256,533
B * 416,732
C 97,228 *
</TABLE>
* Did not meet the guidelines for major customers status in this year.
F10
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 3. Contracts
Installment contracts receivable related to license agreements and data
processing are as follows:
<TABLE>
<CAPTION>
March 31,
------------------------
1996 1997
------------------------
<S> <C> <C>
Installment contracts receivable $ 932,767 $2,411,856
------------------------
Less:
Unamortized discount 183,121 133,096
Allowance for losses 22,000 75,000
------------------------
205,121 208,096
------------------------
727,646 2,203,760
Less current maturities, net of unamortized discount 284,589 1,852,505
------------------------
Long-term portion, net $ 443,057 $ 351,255
========================
</TABLE>
Note 4. Pledged Assets, Current Notes Payable and Long-Term Debt
Current notes playable at March 31, 1996 and 1997 consisted of the following:
<TABLE>
<CAPTION>
1996 1997
-----------------------
<S> <C> <C>
The Company has a revolving credit loan agreement $ 500,000 $ -
with a bank which allows the Company to borrow an
amount equal to 75% of certain contracts receivable
up to a maximum amount of $1,000,000. The total
amount available at March 31,1997 was $1,000,000.
Borrowings under this agreement will be collateralized
by substantially all of the Company's assets and will
bear interest at 1% over the prime commercial loan
rate of the Firstar Bank Cedar Rapids, N.A. At March 31,
1997, the effective annual interest rate was 9.50%.
The agreement will expire on October 16, 1997, and
contains certain restrictive covenants including, among
others, ones relating to the incurrence of other debt,
mergers, leases, capital expenditures, and the payment
of any cash dividends. At March 31, 1997 the Company was
in compliance or had obtained waivers for noncompliance
with the restrictive covenants. The Company renewed the
revolving credit loan agreement on October 15, 1997.
The new agreement allows the Company to borrow an amount
equal to 80% of certain contracts receivable up to a
maximum amount of $2,000,000. Borrowings under this
agreement will bear interest at the prime commercial loan
rate of Firstar Bank of Cedar Rapids, NA.
Note payable, Firstar Bank Cedar Rapids, N.A., unsecured, 347,500 -
due April 29, 1996 plus interest at 9.25%.
-----------------------
$ 847,500 $ -
=======================
</TABLE>
F11
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 4. Pledged Assets, Current Notes Payable and Long-Term Debt (Continued)
Long-term debt at March 31, 1996 and 1997 consisted of the following:
<TABLE>
<CAPTION>
1996 1997
--------------------------
<S> <C> <C>
Contract payable, IBM Credit Corporation, unsecured, due in monthly installments $ 108,359 $ 29,429
of $7,621, including interest at 17.09%, to July 1997.
Capital lease, IBM Credit Corporation, due in monthly installments of $1,508, 20,249 2,897
including interest at 6%, to July 1997. The lease is collateralized by
equipment with a March 31, 1997 depreciated cost of $23,431.
Note payable, Firstar Bank Cedar Rapids, N.A., due in monthly installments of 19,043 --
$525, including interest at 8.25%, to September 1999. The note is
collateralized by an automobile with a depreciated cost of $17,097.
Capital lease, Winthrop Resources, due in monthly installments of $14,747, 96,840 --
including interest at 19.48%, to December 1996. The note is collateralized by
equipment with a March 31, 1996 depreciated cost of $150,445.
Capital lease, Winthrop Resources, due in various monthly installments of 305,636 238,405
$13,922, including interest at 18.31%, to December 1998. The note is
collateralized by equipment with a March 31, 1997 depreciated cost of $218,014.
-----------------------------
550,127 270,731
Less current maturities 274,095 166,631
-----------------------------
$276,032 $104,100
=============================
</TABLE>
The following is a schedule by years of the future minimum lease payments under
the capital leases and the maturities of the other long-term debt at March 31,
1997:
<TABLE>
<CAPTION>
Future Less
Minimum Amount Other
Lease Representing Long-Term
Payments Interest Net Debt Total
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Years ended March 31:
1998 $169,910 $32,708 $137,202 $29,429 $166,631
1999 111,376 7,276 104,100 -- 104,100
-----------------------------------------------------------------------
$281,286 $39,984 $241,302 $29,429 $270,731
=======================================================================
</TABLE>
F12
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 5. Income Tax Matters
Net deferred tax liabilities consist of the following components as of March
31,1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
---------------------------------
<S> <C> <C>
Deferred tax liabilities:
Equipment and software costs $1,247,400 $1,246,000
Contracts receivable 308,800 266,300
Other -- 3,000
---------------------------------
1,556,200 1,515,300
---------------------------------
Deferred tax assets:
General business credit carryforward $ 448,400 $ 300,000
Net operating loss carryforward 186,700 --
Accrued expenses 105,100 89,000
Allowance for doubtful accounts and other 67,800 34,200
---------------------------------
808,000 423,200
Valuation allowance (240,000) --
---------------------------------
568,000 423,200
---------------------------------
Net deferred tax liabilities $ 988,200 $1,092,100
---------------------------------
</TABLE>
The deferred tax amounts mentioned in the previous two tables have been
classified on the accompanying balance sheets as of March 31, 1996 and 1997 as
follows:
<TABLE>
<CAPTION>
1996 1997
----------------------------------
<S> <C> <C>
Current assets $ 92,000 $ 80,800
Noncurrent liabilities (1,080,200) (1,172,900)
----------------------------------
$ (988,200) $ (1,092,100)
==================================
</TABLE>
The provision for income taxes charged to operations for the years ended March
31, 1995, 1996 and 1997 consists of the following:
<TABLE>
<CAPTION>
1995 1996 1997
------------------------------------------------------------
<S> <C> <C> <C>
Current tax payable $ 12,005 $ 15,447 $302,542
Deferred income taxes 197,700 516,800 103,900
------------------------------------------------------------
$209,705 $532,247 $406,442
============================================================
</TABLE>
F13
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 5. Income Tax Matters (Continued)
The provisions for income taxes differs from the statutory rate, as summarized
below:
<TABLE>
<CAPTION>
1995 1996 1997
-------------------------------------------------
<S> <C> <C> <C>
Expected income tax expense $366,674 $454,749 $607,167
State income tax expense, net of federal tax benefit (16,501) 26,975 13,340
Nondeductible items 20,654 12,500 10,000
Valuation allowance (133,800) 13,800 (240,000)
Other (27,322) 24,223 15,935
-------------------------------------------------
$209,705 $532,247 $406,442
=================================================
</TABLE>
For income tax purposes, under provisions of the Internal Revenue Code, the
Company has approximately $245,000 of income tax credit carryforwards which may
be used to reduce federal income taxes. These carryforwards expire in varying
amounts between March 31, 2007 and 2012. The Company also has approximately
$55,000 of alternative minimum tax credit carryforwards which do not expire.
Note 6. Stock Appreciation Rights
In November 1991, the Company adopted a plan whereby the Company may grant, at
the Company's discretion, common stock appreciation rights to key employees.
The rights vest over a five-year period. The employees may elect at any time to
redeem their vested rights for cash at a price equaling the most recent
valuation of the Company's Employee Stock Ownership Plan. There were no stock
appreciation rights exercised during the years ended March 31, 1996 and 1997.
Note 7. Stock Purchase Warrant
On July 15, 1991, the Company entered into a note payable with Catholic Family
Life Insurance. As part of this agreement, the Company issued a stock purchase
warrant enabling the holder to purchase 248 shares of common stock at an
exercise price of $302 per share, the fair value of the minority shares of the
Company's stock at that time as determined by an independent appraisal company
for the Company's Employee Stock Ownership Plan.
On July 30, 1996, the Company entered into an agreement to provide future
product support to Catholic Family Life Insurance upon the cancellation of the
stock purchase warrants. The total operating revenue and interest income
recognized by the Company during fiscal 1997 was $35,000. The discounted amount
of the total revenue to be recognized under this agreement was approximately
$182,000 at July 30, 1996.
F14
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 8. Stock Option Plan
During the year ended March 31, 1994, the Company adopted an incentive employee
stock option plan which provides for the issuance of up to 1,200 shares of
common stock to key employees which are vested at the date of grant. The
options are priced at the fair market value of the common stock at the date of
grant and must be exercised on or before July 2004.
The Financial Accounting Standards Board has issued Statement No. 123,
Accounting for Stock Based Compensation, which allows but does not require, a
minimum value method for measuring the cost of stock options issued. Had the
Company elected to measure compensation based on the grant date minimum value
awards granted (the method described in FASB Statement No. 123), reported net
income and basic earnings per share for the year ended March 31, 1997 would have
been approximately $156,000 and $20.00 less, respectively.
The fair value of each grant is estimated at the grant date using the Black
Scholes option-pricing model with the assumptions that the risk-free interest
rate was 5.60%, expected lives of 4 years and with no expected dividends.
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Shares Price
---------------------------
<S> <C> <C>
Outstanding and exercisable at March 31, 1994 350 $349
Granted, at fair value per share 400 500
---------------------------
Outstanding and exercisable at March 31, 1995 and 1996 750 430
Granted, at fair value per share 410 646
---------------------------
Outstanding and exercisable at March 31, 1997 and December 31, 1997 1,160 $506
---------------------------
</TABLE>
The exercise price on all shares range from $349 to $646 per share. The
weighted average fair value per option of options granted during the year ended
March 31, 1997 was $646 with a remaining contractual life of 6.3 years.
Note 9. Lease Commitments and Rental Expense
The Company has leased its Cedar Rapids office facility under a noncancellable
lease agreement from a partnership of which a major stockholder of the Company
is a partner. This agreement, which expires in March 2000, requires minimum
annual rentals of $180,000 plus the payment of all normal maintenance. The
Company has subleased a portion of the facility to a company owned by the other
two partners in the partnership under a noncancellable agreement which also
expires March 2000.
The total minimum rental commitment at March 31, 1997 under the lease mentioned
in the first paragraph is $540,000, which is due $180,000 per year through March
31, 2000. This amount has not been reduced by the minimum rental income
totaling $162,000, which is to be received in the future under the sublease
mentioned in the first paragraph.
The Company also leases various computer equipment under short-term lease
obligations.
F15
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 9. Lease Commitments and Rental Expense (Continued)
The net rental expense for the years ended March 31, 1995, 1996 and 1997 totaled
$161,704, $160,551 and $156,648, respectively, after deducting rental income
from subleases of $33,912, $55,674 and $54,000, respectively.
Note 10. Retirement Plans
The Company has an employee stock ownership plan covering substantially all of
its employees. The plan provides for contributions in such amounts as the Board
of Directors may annually determine. There were no amounts contributed for the
years ended March 31, 1995, 1996 and 1997.
The Company has a savings and retirement plan covering all full-time employees
who have completed one year of service and who are 21 years of age. The
Company's contribution is discretionary, but is limited to certain percentages
of the amount contributed by participants. The Company's contribution was
$88,379, $107,503 and $122,995 for the years ended March 31, 1995, 1996 and
1997, respectively. In the event a terminated plan participant desires to sell
his or her shares of the Company stock, or if certain employees elect to
diversify their account balances, the Company may be required to purchase the
shares from the participant at their fair market value. To the extent that
shares of common stock held by the 401(k) profit-sharing plan are not readily
traded, a sponsor must reflect the maximum cash obligation related to those
securities outside of stockholders' equity. As of December 31, 1997, 925 shares
held by the 401(k) profit-sharing plan, at a fair value of $838.61 per share,
have been reclassified from stockholders' equity to liabilities.
Note 11. Related Party Transactions
The Company had operating revenue from two affiliates totaling $491,591,
$197,745 and $61,717 during the years ended March 31, 1995, 1996 and 1997,
respectively. The total related trade receivables balance were $43,870 and
$27,904 at March 31, 1996 and 1997, respectively.
F16
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 12. Earnings Per Share Data
Following is information about the computation of the earnings per share data
for the years ended March 31, 1995, 1996 and 1997 and for the nine months ended
December 31, 1996 and 1997:
<TABLE>
<CAPTION>
Year Ended March 31, 1995 Year Ended March 31, 1996
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 837,935 $ 767,035
---------- ----------
Basic earnings per share, income
available to common stockholders 837,935 6,504 $128.83 767,035 6,996 $109.64
======= =======
Effect of dilutive securities:
Stock options -- 97 -- 262
Warrants -- 93 -- 132
--------------------- ---------------------
Diluted earnings per share, income
available to common stockholders $ 837,935 6,694 $125.18 $ 767,035 7,390 $103.79
==========================================================================
Year Ended March 31, 1997
----------------------------------
Net income $1,328,322
----------
Basic earnings per share, income
available to common stockholders 1,328,322 7,665 $173.30
=======
Effect of dilutive securities:
Stock options -- 318
Warrants -- 46
---------------------
Diluted earnings per share, income
available to common stockholders $1,328,322 8,029 $165.44
==================================
Nine Months Ended December 31,
--------------------------------------------------------------------------
1996 1997
--------------------------------------------------------------------------
Net income $ 675,254 $1,167,679
---------- ----------
Basic earnings per share, income
available to common stockholders 675,254 7,633 $ 88.47 1,167,679 8,067 $144.75
======= =======
Effect of dilutive securities:
Stock options -- 317 -- 468
Warrants -- 62 -- --
---------------------------------- ----------------------------------
Diluted earnings per share, income
available to common stockholders $ 675,254 8,012 $ 84.28 $1,167,679 8,535 $136.81
==========================================================================
</TABLE>
F17
<PAGE>
NETWORK DATA PROCESSING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Information as and for the nine months ended December 31, 1996 and 1997 is
unaudited.)
- --------------------------------------------------------------------------------
Note 13. Reorganization of Company and Subsequent Event
On January 20, 1998, the Company entered into an Agreement and Plan of Merger
with Fiserv, Inc. ("Fiserv") and Fiserv Solutions, Inc. ("Fiserv Solutions").
Under the agreement, the Company will be merged with and into Fiserv Solutions,
with Fiserv Solutions being the surviving corporation and continuing to exist as
a wholly-owned subsidiary of Fiserv. Immediately after the merger each share of
the Company will be converted into the right to receive Fiserv common stock.
The acquisition will result in a total purchase price of approximately
$22,500,000 minus merger costs. Prior to the acquisition, all stock options
discussed in Note 8 were exercised. In connection with the exercise of the
stock options, the Company guaranteed employee borrowings of approximately
$550,000. Upon completion of the sale, the stockholder loans will be
collateralized by the shares of Fiserv that these stockholders receive and the
Company's guarantee will be removed.
F18
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
<PAGE>
TABLE OF CONTENTS
ARTICLE I MERGER......................................................... A-1
SECTION 1.01 The Merger............................................ A-1
SECTION 1.02 Shareholders' Meeting................................. A-1
SECTION 1.03 Articles of Merger.................................... A-2
SECTION 1.04 Effective Time of the Merger.......................... A-2
SECTION 1.05 Closing............................................... A-2
SECTION 1.06 Certain Intended Effects of the Merger................ A-2
ARTICLE II DIRECTORS AND OFFICERS........................................ A-2
SECTION 2.01 Directors............................................. A-2
SECTION 2.02 Officers.............................................. A-2
ARTICLE III CONVERSION OF SHARES AND OPTIONS............................. A-3
SECTION 3.01 Conversion............................................ A-3
SECTION 3.02 Surrender and Payment................................. A-3
SECTION 3.03 No Further Transfers.................................. A-3
SECTION 3.04 No Fractional Shares.................................. A-3
SECTION 3.05 Dissenting Shares..................................... A-4
ARTICLE IV CERTAIN EFFECTS OF MERGER..................................... A-4
SECTION 4.01 Effect of Merger...................................... A-4
SECTION 4.02 Further Assurances.................................... A-4
ARTICLE V REPRESENTATIONS AND WARRANTIES................................. A-4
SECTION 5.01 Representations and Warranties of the Company......... A-4
SECTION 5.02 Representations and Warranties of Fiserv and
Fiserv Solutions...................................... A-15
ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS........................... A-17
SECTION 6.01 Conduct of Business................................... A-17
SECTION 6.02 Access to Information................................. A-17
SECTION 6.03 Confidentiality....................................... A-18
SECTION 6.04 Commercially Reasonable Efforts....................... A-18
SECTION 6.05 Consents and Authorizations........................... A-19
SECTION 6.06 Non-Assignable Licenses, Leases and Contracts......... A-19
SECTION 6.07 Public Announcements.................................. A-19
SECTION 6.08 Notification of Certain Matters....................... A-19
SECTION 6.09 Acquisition Proposals................................. A-19
SECTION 6.10 Tax Returns........................................... A-19
ARTICLE VII CONDITIONS PRECEDENT......................................... A-20
SECTION 7.01 Conditions Precedent to Each Party's Obligation to
Effect the Merger..................................... A-20
SECTION 7.02 Conditions Precedent to the Obligations of Fiserv
and Fiserv Solutions to Effect the Merger............. A-20
SECTION 7.03 Conditions Precedent to the Obligations of the
Company to Effect the Merger.......................... A-22
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ARTICLE VIII SURVIVAL OF REPRESENTATIONS................................. A-23
SECTION 8.01 Survival.............................................. A-23
ARTICLE IX TERMINATION; AMENDMENT; WAIVER................................ A-23
SECTION 9.01 Termination........................................... A-23
SECTION 9.02 Effect of Termination................................. A-23
SECTION 9.03 Amendment............................................. A-23
SECTION 9.04 Extension; Waiver..................................... A-23
ARTICLE X MISCELLANEOUS.................................................. A-23
SECTION 10.01 Expenses, Etc......................................... A-23
SECTION 10.02 Execution in Counterparts............................. A-24
SECTION 10.03 Notices............................................... A-24
SECTION 10.04 Entire Agreement...................................... A-25
SECTION 10.05 Applicable Law........................................ A-25
SECTION 10.06 Binding Effect; Benefits.............................. A-25
SECTION 10.07 Assignability......................................... A-25
SECTION 10.08 Invalid Provisions.................................... A-25
ii
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INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
A Wisconsin Articles of Merger
B Iowa Articles of Merger
C Form of Opinion of Counsel to the Company
D Consents that are Conditions to Closing
E-1 Form of Company Representation Letter
E-2 Form of Shareholder Representation Letter
E-3 Form of Company FIRPTA Affidavit
E-4 Form of Shareholder FIRPTA Affidavit
F Form of Company Options
G Form of Opinion of Counsel to Fiserv and Fiserv Solutions
INDEX TO SCHEDULES
Schedule
- --------
I Disclosure Schedule
5.02(g) Fiserv Commitments to Issue Capital Stock
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 4, 1997 among FISERV,
INC., a Wisconsin corporation ("Fiserv"), FISERV SOLUTIONS, INC., a Wisconsin
corporation ("Fiserv Solutions") and a wholly-owned subsidiary of Fiserv, and
NETWORK DATA PROCESSING CORPORATION, an Iowa corporation (the "Company").
W I T N E S S E T H :
WHEREAS, Fiserv and Fiserv Solutions desire that the Company merge with and
into Fiserv Solutions and the Company also desires that it merge with and into
Fiserv Solutions upon the terms and conditions set forth herein and in
accordance with the Business Corporation Law of the State of Wisconsin and the
Business Corporation Act of the State of Iowa, and that the outstanding shares
of Common Stock, $100 par value ("Company Common Stock"), of the Company,
excluding any such shares held in the treasury of the Company and shares as to
which dissenters' rights have been properly exercised, be converted upon such
merger (the "Merger") into the right to receive such number of shares of Common
Stock, $.01 par value ("Fiserv Common Stock"), of Fiserv as is provided herein
(Fiserv Solutions and the Company being hereinafter sometimes referred to as the
"Constituent Corporations" and Fiserv Solutions being hereinafter sometimes
referred to as the "Surviving Corporation");
WHEREAS, the Board of Directors of the Company has, in light of and subject
to the terms and conditions set forth herein and subject to their fiduciary
duties under applicable law, approved this Agreement and the transactions
contemplated hereby and agreed to recommend approval and adoption of this
Agreement by the shareholders of the Company;
WHEREAS, the following holders of five percent or more of the outstanding
Company Common Stock have given Fiserv an irrevocable proxy to vote such shares
in favor of approval and adoption of this Agreement:
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements and conditions contained herein, and in order to set forth
the terms and conditions of the Merger and the mode of carrying the same into
effect, the parties hereto hereby agree as follows:
ARTICLE I
MERGER
SECTION 1.01 The Merger. At the Effective Time (as hereinafter defined)
of the Merger, the Company shall be merged with and into Fiserv Solutions on the
terms and conditions hereinafter set forth as permitted by and in accordance
with the Wisconsin Business Corporation Law and the Iowa Business Corporation
Law. Thereupon, the separate existence of the Company shall cease, and Fiserv
Solutions, as the Surviving Corporation, shall continue to exist under and be
governed by the Wisconsin Business Corporation Law, and its Articles of
Incorporation and By-laws as in effect at the Effective Time shall remain
unchanged until further amended in accordance with the provisions thereof and
applicable law.
SECTION 1.02 Shareholders' Meeting. The Company, acting through its Board
of Directors, shall in accordance with applicable law as soon as practicable
following the date hereof:
(i) call, give notice of, convene and hold an annual or special
meeting of its shareholders (the "Shareholders' 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 Shareholders'
Meeting, including any amendments or supplements thereto (the
"Proxy Statement"), and that will form a part of the
registration statement (the "Registration Statement") of Fiserv
under the Securities Act of 1933 (the "Securities
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Act") with respect to the Fiserv Common Stock to be issued in
the Merger, the recommendation of the Board of Directors of the
Company that the shareholders of the Company vote in favor of
the approval and adoption of this Agreement and the
transactions contemplated hereby; 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 Fiserv
Solutions, 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 shareholders 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
shareholders of this Agreement and the transactions
contemplated hereby.
SECTION 1.03 Articles of Merger. As soon as practicable following
fulfillment or waiver of the conditions specified in Article VII hereof, and
provided that this Agreement has not been terminated and abandoned pursuant to
Article IX hereof, (a) the Company and Fiserv Solutions will cause the Articles
of Merger in substantially the form of Exhibit A attached hereto (the "Wisconsin
Articles of Merger") to be executed and filed with the Secretary of State of the
State of Wisconsin as provided in the Wisconsin Business Corporation Law and (b)
the Company and Fiserv Solutions will cause the Articles of Merger in
substantially the form of Exhibit B attached hereto (the "Iowa Articles of
Merger"; collectively with the Wisconsin Articles of Merger, the "Articles of
Merger") to be executed and filed with the Secretary of State of State of Iowa
as provided in the Iowa Business Corporation Act. The purpose of the Surviving
Corporation shall be to engage in any and all business activities in which a
corporation is permitted to engage in accordance with the Wisconsin Business
Corporation Law.
SECTION 1.04 Effective Time of the Merger. The Merger shall become
effective immediately upon the later of the filing of the Wisconsin Articles of
Merger with the Secretary of State of the State of Wisconsin and the filing of
the Iowa Articles of Merger with the Secretary of State of the State of Iowa or
on such other time or date thereafter as the parties hereto may agree. The time
and date of such effectiveness is herein sometimes referred to as the "Effective
Time".
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 Fiserv, Inc., 255 Fiserv
Drive, Brookfield, WI 53045 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 hereto
have endeavored to structure the Merger as a tax-free "reorganization" under
Section 368(a)(1)(A) and (a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code"), and to have the Merger qualify as a "pooling of interests"
under Accounting Principles Board Opinion Number 16, as modified and amended.
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 a
"pooling of interests" or such tax treatment.
ARTICLE II
DIRECTORS AND OFFICERS
SECTION 2.01 Directors. From and after the Effective Time, the members of
the Board of Directors of the Surviving Corporation shall consist of the members
of the Board of Directors of Fiserv Solutions (as constituted immediately prior
to the Effective Time).
SECTION 2.02 Officers. From and after the Effective Time, the officers of
the Surviving Corporation shall consist of the officers of Fiserv Solutions (as
constituted immediately prior to the Effective Time). Officers of the Company
shall retain their titles as officers of the NDPC Division of Fiserv Solutions,
such Division to be renamed by mutual agreement of the Company, Fiserv and
Fiserv Solutions. Such officers shall retain the authority to execute contracts
for the NDPC Division.
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ARTICLE III
CONVERSION OF SHARES AND OPTIONS
SECTION 3.01 Conversion.
(b) Conversion Formula. Upon the Effective Time, each share of Company
Common Stock issued and outstanding immediately prior to the Effective
Time, except shares held in the treasury of the Company, which shall
be cancelled, and shares as to which dissenters' rights have been
properly exercised, shall, without any further action on the part of
Fiserv or Fiserv Solutions, on the one hand, or the Company, on the
other hand, be converted into the right to receive such number of
shares of Fiserv Common Stock as shall equal the quotient (the
"Exchange Ratio") of (i) the quotient of (A) the Company Stock Value
(as hereinafter defined) divided by (B) the sum of (I) the number of
shares of Company Common Stock outstanding at the Effective Time and
(II) the number of shares of Company Common Stock covered by options
("Options") to purchase Company Common Stock outstanding at the
Effective Time, divided by (ii) an amount equal to the average closing
price of Fiserv Common Stock as reported on the National Market System
by NASDAQ (as reported in The Wall Street Journal) for the 20 business
days ending on the second business day prior to the Effective Time.
(c) "Company Stock Value" Defined. The term "Company Stock Value" shall
mean the difference of (i) the sum of (A) $22,500,000, minus (B) the
Company Merger Costs (as hereinafter defined). The term "Company
Merger Costs" shall mean the aggregate of all accounting (which shall
not include regular audit fees), legal, printing, filing, financial
advisory and other fees and expenses of the Company and Taxes (as
hereinafter defined) assessed in connection with the transactions
contemplated hereby, in each case incurred or anticipated to be
incurred in connection with the Merger, all estimated and agreed to by
the parties two business days prior to the Effective Time.
SECTION 3.02 Surrender and Payment.
(a) At any time after the Effective Time, each shareholder shall be
entitled, upon surrender of any certificate or certificates which
formerly represented shares of Company Common Stock outstanding on the
Effective Time to Firstar Trust Company, Milwaukee, Wisconsin, the
Exchange Agent appointed by Fiserv, to receive 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. If any certificate
representing shares of Fiserv Common Stock is to be made in a name
other than that in which the certificate theretofore surrendered for
exchange is registered, it shall be a condition of such exchange 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 and after the Effective Time, no
transfer of the shares of Company Common Stock outstanding prior to the
Effective Time shall be made on the stock transfer books of the Surviving
Corporation.
SECTION 3.04 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 shareholder in
respect of such fractional share.
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SECTION 3.05 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such Shares in accordance with the Iowa Business Corporation Act
("Dissenting Shares") shall not be converted into the right to receive the
Merger consideration unless such holder fails to perfect or withdraws or
otherwise loses his right to appraisal. If, after the Effective Time, such
holder fails to perfect or withdraws or loses his right to appraisal, such
Dissenting Shares shall be treated as if they had been converted as of the
Effective Time into the right to receive the Merger consideration without
interest thereon. The Company shall give Fiserv prompt notice of any demands
received by the Company for appraisal of shares of Company Common Stock, and,
prior to the Effective Time, Fiserv shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with prior written consent of
Fiserv, make any payment with respect to, settle or offer to settle any such
demands.
ARTICLE IV
CERTAIN EFFECTS OF MERGER
SECTION 4.01 Effect of Merger. Upon and after the Effective Time, the
separate existence of the Company shall cease and the Surviving Corporation
shall possess all the rights, privileges, immunities and franchises, of a public
as well as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account,
including subscriptions to shares, and all other choices in action, and every
other interest of or belonging to or due to each of the Constituent Corporations
shall be taken and deemed to be transferred to and vested in the Surviving
Corporation without further act or deed; and the title to any real estate, or
any interest therein, vested in either of the Constituent Corporations shall not
revert or be in any way impaired by reason of the Merger. The Surviving
Corporation shall be responsible and liable for all the liabilities and
obligations of each of the Constituent Corporations and any claims existing or
action or proceeding pending by or against either of the Constituent
Corporations may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger.
SECTION 4.02 Further Assurances. If at any time after the Effective Time,
the Surviving Corporation shall 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 shall and 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 (the "Disclosure Schedule")
annexed hereto, the Company represents and warrants to, and agrees with, Fiserv
and Fiserv Solutions as follows:
(a) Organization and Qualification, etc. The Company is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Iowa, has corporate power and authority to own all of
its properties and assets and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good
standing in each other jurisdiction as set forth in the Disclosure
Schedule where the failure to so qualify would have a Material
A-4
<PAGE>
Adverse Effect (as hereinafter defined). The copies of the Company's
Articles of Incorporation and By-Laws, as amended to date, which have
been delivered to Fiserv and Fiserv Solutions are complete and
correct, and such instruments, as so amended, are in full force and
effect at the date hereof.
"Material Adverse Effect" for purposes of this Agreement when used
with respect to any party means any change in, or effect on, or series
of changes in, or effects on, the business of such party as currently
conducted by such party that is materially adverse to the results of
the operations or financial or other condition of such party and its
subsidiaries considered as a whole before giving effect to the
transactions contemplated by this Agreement.
(b) Capital Stock. The authorized capital stock of the Company consists
of 100,000 shares of Company Common Stock, of which as of the date
hereof 9,768 shares of Company Common Stock are validly issued and
outstanding, fully paid and nonassessable, and no shares of Company
Common Stock are in the treasury of the Company. As of the date
hereof, other than as listed in Exhibit C, the Company has no
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, any shares of its capital stock and no securities or
obligations evidencing any such rights are outstanding.
(c) Subsidiaries. The Company does not own of record or beneficially,
directly or indirectly, (i) any shares of outstanding capital stock or
securities convertible into capital stock of any other corporation, 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 hereby. 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. Except for
approval of this Agreement by the shareholders of the Company, 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, execution and delivery of this Agreement by Fiserv and
Fiserv Solutions, 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 and (ii) general principles of
equity, including, without limitation, concepts of materiality,
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).
(e) Non-Contravention. 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 By-Laws of the Company, 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 material 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 pursuant to any provision of, any material
mortgage, lien, lease, agreement, license, instrument, order,
arbitration award, judgment or decree to which the Company is a party
or by which any of its assets 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 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 material mortgage, lien, lease,
agreement, license or instrument to which the Company is a party or
(iii) violate any law, ordinance or regulation to which the Company is
subject.
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(f) Government Approvals. Except for the filing of the Wisconsin Articles
of Merger with the Secretary of State of the State of Wisconsin, the
filing of the Iowa Articles of Merger with the Secretary of State of
the State of Iowa, compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), compliance with
the requirements of the Securities Act and the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), and compliance with all
applicable state securities laws, 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 hereby,
except (i) as may be necessary as a result of any facts or
circumstances relating solely to Fiserv or Fiserv Solutions, as the
case may be, or (ii) 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.
(g) Financial Statements. The Company has previously furnished Fiserv and
Fiserv Solutions with true and complete copies of (i) the audited
balance sheets of the Company as of March 31, 1996 and 1997, and the
related audited statements of income, retained earnings and cash flows
for the periods then ended, certified by McGladrey & Pullen, LLP, the
certified public accounting firm retained by the Company, and (ii) the
unaudited balance sheets of the Company as of September 30, 1996 and
1997, and the related statements of income and cash flows for the
quarterly periods then ended, certified by the chief financial officer
of the Company (collectively the "Company Financial Statements").
Such financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") consistently applied
and present fairly the financial position and results of operations of
the Company as of and for the respective periods then ended, subject
in the case of the interim financial statements to the absence of
typical footnote disclosures and to normal year-end adjustments.
(h) Absence of Certain Changes or Events. Since March 31, 1997, except as
disclosed in the Company Financial Statements, the Company has not:
(i) incurred any obligation or liability (fixed or contingent),
except normal trade or business obligations incurred in the
ordinary course of business and consistent with past practice;
(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 and
consistent with past practice;
(iii) 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
any case in the ordinary course of business and consistent with
past practice;
(v) cancelled or compromised any debt or claim, except in the
ordinary course of business and consistent with past practice;
(vi) waived or released, under any contract, rights of the Company
having value to the Company, except in any case in the ordinary
course of business and consistent with past practice;
(vii) transferred or granted any rights under any concessions,
leases, licenses, agreements, patents, inventions, trademarks,
trade names, service marks or copyrights or with respect to any
know-how, except in the ordinary course of business and
consistent with past practice;
A-6
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(viii) except in the ordinary course of business and consistent with
past practice, 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;
(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 and consistent
with past practice;
(x) 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;
(xi) declared, paid or made provisions for any other payment to the
shareholders of the Company or any other affiliate of 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) suffered any Material Adverse Effect.
For purposes of this Agreement, "Permitted Exceptions" shall mean (i)
mechanic's, materialman's, warehouseman's, landlord'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 is contesting in good faith; (iv)
liens for worker's compensation, unemployment insurance or other types of
social security incurred in the ordinary course of business; and (v)
imperfections of title, easements, rights of way, liens, security
interests, claims and other charges and encumbrances the existence of which
would not have in the aggregate an Adverse Effect.
For purposes of this Agreement, "Adverse Effect" means any change in,
or effect on, or series of changes in, or effects on, the business of the
Company as currently conducted that would result in the incurrence of
damages or liability of the sum of $50,000 or more.
(i) Title to Properties; Absence of Liens and Encumbrances, etc. The
Company has good and marketable title to all of the real, 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. The
Company's intangible properties and assets (excluding leasehold
interests and other than any intangible properties and assets
described in Sections 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 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. Upon consummation of the Merger, the Surviving
Corporation will have full right, title and interest in and to all the
Company's trademarks, tradenames, servicemarks and service names, and
all registrations therefor, with the full right and power to transfer
such rights.
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(j) Software. To the knowledge of the Company, the Disclosure Schedule
contains a list or description by type of all operating and
applications computer programs and data bases ("Software") which the
Company uses or has available for use and plans to use, and such
Software constitutes all the Software which is used in connection with
or is necessary to operate the business of the Company as currently
conducted. Except as indicated in the Disclosure Schedule, such
Software is owned outright by the Company. As to any Software which
is listed in the Disclosure Schedule and is not owned by the Company,
to the knowledge of the Company, the Company has the right to use
and/or distribute the same pursuant to valid leases, licenses or other
commercial arrangements therefor, and, except as otherwise disclosed
in the Disclosure Schedule, to the knowledge of the Company, all such
leases, licenses and commercial arrangements 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 other parties thereto except for any
default not reasonably expected to result in an Adverse Effect. To
the knowledge of the Company, none of the Software used by or
available to the Company as aforesaid, and no use thereof, infringes
upon or violates any patent, copyright, trade secret or other
proprietary right of anyone else and the Company has received no
notice of any claim with respect to any such infringement or
violation. The Company possesses 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). Upon consummation of the transactions
contemplated hereby, (x) the Company will continue to own all of the
Software owned outright by the Company prior to the Closing, free and
clear of all claims, liens, encumbrances, obligations and liabilities
except Permitted Exceptions and those liens existing at Closing and
except for such claims, liens, encumbrances, obligations and
liabilities of the Company (i) applicable to Software licensed to
third parties and (ii) as may be granted by the Company 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 to continue to use and operate such Software
after the Closing Date, the Company will endeavor to obtain such
consents or take such other actions as required.
(k) List of Properties, Contracts and Other Data. The Disclosure Schedule
contains a list setting forth with respect to the Company as of the
date hereof the following:
(i) all real properties owned in fee simple by the Company;
(ii) all leases of real or personal property to which the Company 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 $50,000;
(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 and
reasonably necessary to, or used by the Company primarily in
connection with, its business and (B) all licenses granted by
or to the Company and all other agreements to which the Company
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 $25,000 or terminable by
the Company within one year without payment of a premium or
penalty;
(iv) all collective bargaining agreements, employment and consulting
agreements (other than consulting agreements terminable by the
Company within 60 days without payment of a premium or a
penalty), Employee Plans, as defined in Section 5.01(r),
including, but not
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limited to, 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;
(v) all contracts and commitments (including, without limitation,
mortgages, indentures and loan agreements) to which the Company
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 during its remaining life
aggregating less than $50,000; and
(vi) the current annual compensation of all employees of the Company
(by position or by department) as of a recent date (a copy of
which has been submitted to Fiserv but is not included in the
Disclosure Schedule).
True and complete copies of all documents and descriptions complete in all
material respects of all oral agreements or commitments (if any) referred
to in (i) through (v) above (other than insurance plans which have been
summarized) have been provided or made available to Fiserv or its counsel.
The Company has not 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 default or event of
default or event which with notice or lapse of time or both would
constitute such a default, except for any such claim which would not have
in the aggregate an Adverse Effect.
(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 pending against the Company of which the
Company is aware at law or in equity, or before or by any federal,
state, municipal, foreign or other governmental department,
commission, board, bureau, agency or instrumentality, nor, to the
knowledge of the Company, are there any such actions, suits,
investigations or proceedings with respect to the business of the
Company threatened or pending against the Company.
(m) Labor Controversies. Except as would not reasonably be expected to
have in the aggregate an Adverse Effect:
(i) there are no controversies known to the Company between the
Company 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 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 employees; and
(ii) the Company has not 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.
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(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 business of the Company 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 the Company knows
of no non-frivolous basis for any such claims except as would not
reasonably be expected to result in an Adverse Effect.
(o) Use of Real Property. The Company has not received any written 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 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. The Company has not received any written 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
the Company has not received written 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.
(p) Accounts Receivable. The accounts receivable reflected on the balance
sheet of the Company as of September 30, 1997 and all accounts
receivable arising between September 30, 1997 and the date hereof,
arose from bona fide transactions in the ordinary course of business;
except as contemplated by the relevant contract, the services involved
have been provided to the account obligor and no further services are
required to be provided in order to complete the sales and to entitle
the Company or its assignees to collect the accounts receivable in
full. No such account has been assigned or pledged to any other
person, firm or corporation.
(q) Compliance with Law.
(i) The Company is not in default with respect to any order of any
court, governmental authority or arbitration board or tribunal
to which it is a party or, to the knowledge of the Company, to
which the Company is subject and which applies to its business,
and, to the knowledge of the Company, the Company has not been
notified that it is in violation of any laws, ordinances,
governmental rules or regulations to which it is subject or
that it 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.
(ii) The Company has on file a valid Form I-9 for each employee
hired by the Company 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 are (A) United States citizens, or lawful permanent
residents of the United States, (B) aliens whose right to work
in the United States is unrestricted, (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 employed by
the Company since November 6, 1986 or the applicable date of
hire. 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).
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(r) 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, or which cover any employee or former employee of the
Company. 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, (C) written interpretations of
the Employee Plans, (D) material employee 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 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 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 Internal Revenue Code of 1986, as amended, (the
"Code"), which are applicable to such Employee Plan.
(v) 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. 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. 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. 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 Time.
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(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 Time, the Company shall notify Fiserv of such action
prior to the Effective Time.
(vii) The Company has not 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 Time. 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) 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 Time.
(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
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 Time 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.
(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
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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) 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) 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. 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.
(s) Insurance. The Disclosure Schedule summarizes the amount and kinds of
insurance as to which the Company has insurance policies or contracts
relating the business or operations of the Company. All such
insurance policies and contracts are in full force and effect. No
notice of cancellation or termination of any such insurance policies
or contracts has been given to the Company by the carrier of any such
policy.
(t) Bank Accounts. The Disclosure Schedule lists all bank, money market,
savings and similar accounts and safe deposit boxes of the Company
specifying the account numbers and the authorized signatories of
persons having access to them.
(u) Taxes.
(i) The Company 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 Time, which Tax Returns are true,
correct and complete and (B) timely paid all Taxes (as defined
below) due and payable in respect of all periods up to and
including the Effective Time and has properly accrued on the
Company Financial Statements all Taxes not yet payable in
respect of all periods up to and including the Effective Date.
Prior to the Effective Time, the Company shall provide Fiserv
with a schedule which sets forth each Taxing jurisdiction in
which the Company has filed or is required to file Tax Returns
and whether the Company has filed consolidated, combined,
unitary or separate income or franchise Tax Returns with
respect to each such jurisdiction and a copy of such Tax
Returns as have been requested by Fiserv. The Company has
timely and properly withheld or collected, paid over and
reported all Taxes required to be withheld or collected by the
Company on or before the date hereof.
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<PAGE>
(ii) Except as set forth in the Disclosure Schedule, (A) no Taxing
authority has asserted any adjustment that could result in an
additional Tax for which the Company 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 is or may be liable and to the
knowledge of the Company, no Taxing authority is contemplating
such a Proceeding and there is no basis for any such
Proceeding, (C) no statute of limitations with respect to any
Tax for which the Company 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 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, its income, assets or
business, or any Tax for which the Company is or may be liable,
(F) the Company is not a party to any Tax sharing or Tax
allocation agreement, arrangement or understanding and (G) the
Company has not and has never been included in any
consolidated, combined or unitary Tax Return.
(iii) The Company is not 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.
The Company is not a "consenting corporation" within the
meaning of Section 341(f) of the Code. The Company does not
have any "tax-exempt use property" or "tax-exempt bond financed
property" within the meaning of Section 168 (g) and (h),
respectively of the Code. None of the assets of the Company 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. The Company has
never made or been required to make an election under Section
338 of the Code.
(iv) For any period for which the Company incurred a net operating
loss, the Company has adequate books and records supporting
such loss.
(v) 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,
unemployment, excise, estimated, severance, stamp, occupation,
real property, personal property, intangible 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 under Section
6901 of the Code, as a result of Treasury Regulation Section
1.1502-6, or in each case, 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).
(vi) 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.
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(v) Proxy Statement; Registration Statement. None of the information
supplied by the Company in writing for inclusion in the Proxy
Statement, the Registration Statement or any other SEC filing will at
the respective times that the Proxy Statement, the Registration
Statement, any other SEC filing or any amendments or supplements
thereto are filed with the SEC or at the time that it or any amendment
or supplement thereto is mailed to the Company's shareholders, at the
time of the Shareholders' Meeting or at the Effective Date contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
(w) Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Company
directly with Fiserv, without the intervention of any other person on
behalf of the Company in such manner as to give rise to any valid
claim by any other person against the Company for a finder's fee,
brokerage commissions or similar payment.
SECTION 5.02 Representations and Warranties of Fiserv and Fiserv
Solutions. Fiserv and Fiserv Solutions, jointly and severally, represent and
warrant to, and agree with, the Company as follows:
(b) Organization and Qualification, etc. Fiserv and Fiserv Solutions are
corporations duly organized, validly existing and in good standing
under the laws of the States of Wisconsin, 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
Solutions 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.
(c) Authority Relative to Agreement. Each of Fiserv and Fiserv Solutions
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 by Fiserv and Fiserv Solutions of
this Agreement and the consummation by each of them of the
transactions contemplated on its part hereby have been duly authorized
by their respective Board of Directors and, in the case of Fiserv
Solutions, its sole shareholder. No other corporate proceedings on
the part of Fiserv or Fiserv Solutions are necessary to authorize the
execution and delivery of this Agreement by Fiserv or Fiserv Solutions
or the consummation by Fiserv or Fiserv Solutions of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Fiserv and Fiserv Solutions and, assuming the due
authorization, execution and delivery of the Agreement by the Company,
is their valid and binding agreement, enforceable against Fiserv or
Fiserv Solutions, as the case may be, 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 and (ii) general
principles of equity, including, without limitation, concepts of
materiality, 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).
(d) Non-Contravention. The execution and delivery of this Agreement by
Fiserv and Fiserv Solutions do not and the consummation by Fiserv and
Fiserv Solutions of the transactions contemplated hereby will not (i)
violate any provision of the Articles of Incorporation or By-Laws of
Fiserv or Fiserv Solutions, as the case may be, 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
Solutions pursuant to any provision of, any mortgage or lien or
material lease, agreement, license or instrument or any order,
arbitration award, judgment or decree to which Fiserv or Fiserv
Solutions 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 Solutions is subject or by which any of its assets may be
bound, and the same does not and will not constitute an event
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permitting termination of any such mortgage or lien or material lease,
agreement, license or instrument to which Fiserv or Fiserv Solutions
is a party or (iii) violate in any material respect any law, ordinance
or regulation to which Fiserv or Fiserv Solutions is subject.
(e) Government Approvals. Except for the filing of the Wisconsin Articles
of Merger with the Department of Financial Institutions of the State
of Wisconsin, the filing of the Iowa Articles of Merger with the
Secretary of State of the State of Iowa, compliance with the HSR Act,
compliance with the requirements of the Securities Act and the
Exchange Act and compliance with all applicable state securities laws,
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 Solutions and the
consummation by Fiserv and Fiserv Solutions of the transactions
contemplated hereby and thereby.
(f) SEC Reports. Fiserv has provided the Company with all required forms,
reports and documents which it has been required to file with the
Securities and Exchange Commission 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 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, June 30, 1997 and September 30,
1997 and in its Current Report on Form 8-K dated October 22, 1997
fairly 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).
(g) Capitalization of Fiserv Solutions. The authorized capital stock of
Fiserv Solutions consists of 1,000 shares of common stock, $.01 par
value, of which 100 shares are validly issued and outstanding, fully
paid and nonassessable and all of which are owned by Fiserv. As of
the date hereof, Fiserv Solutions 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 Solutions, any shares of its capital stock
and no securities or obligations evidencing such rights are
outstanding.
(h) 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
53,930,172 shares of Fiserv Common Stock are validly issued and
outstanding, fully paid and nonassessable. Except pursuant to an
Agreement and Plan of Merger dated as of November 4, 1997 among
Fiserv, Fiserv Solutions and CUSA Technologies, Inc. providing for the
merger of CUSA Technologies, Inc. with and into Fiserv Solutions and
the issuance by Fiserv of approximately 500,000 shares of Fiserv
Common Stock in connection therewith, 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.
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(i) Fiserv Common Stock Issued to Shareholders. The shares of Fiserv
Common Stock to be issued to the shareholders 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 covered by the
Registration Statement, which shall be effective as of the Effective
Time under the Securities Act.
(j) Absence of Material Adverse Effect. Since December 31, 1996, Fiserv
has not experienced any change which could have a Material Adverse
Effect.
(k) Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Fiserv and
Fiserv Solutions directly with the Company, without the intervention
of any person on behalf of Fiserv or Fiserv Solutions in such manner
as to give rise to any valid claim by any person against Fiserv or
Fiserv Solutions for a finder's fee, brokerage commission, or similar
payment, except for a fee payable to John W. Stodder.
(l) Proxy Statement; Registration Statement. None of the information
supplied by Fiserv or Fiserv Solutions in writing for inclusion in the
Proxy Statement, the Registration Statement or any other SEC filing
will at the respective times that the Proxy Statement, the
Registration Statement, any other SEC filing or any amendments or
supplements thereto are filed with the SEC or at the time that it or
any amendment or supplement thereto is mailed to the Company's
shareholders, at the time of the Shareholders' Meeting or at the
Effective Time contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 6.01 Conduct of Business.
(b) During the period from the date hereof to the Effective Time, except
as otherwise contemplated by this Agreement, the Company shall conduct
its operations according to its ordinary and usual course of business
and the Company shall use its commercially reasonable efforts to
preserve substantially intact its business organization, keep
available the services of its officers and employees, and maintain its
present relationships with licensors, suppliers, distributors,
customers and others having significant business relationships with
it. Representatives of the Company will confer with representatives
of Fiserv and Fiserv Solutions to keep them informed with respect to
the general status of the on-going operations of the business of the
Company.
(c) During the period from the date hereof to the Effective Time, except
as contemplated by this Agreement and except as may relate to any
merger and acquisition activity, Fiserv and Fiserv Solutions shall
each conduct its operations according to its ordinary and usual course
of business.
SECTION 6.02 Access to Information.
(a) Fiserv and Fiserv Solutions may prior to the Effective Time have
access to the business and properties of the Company and information
concerning its financial and legal condition as Fiserv and Fiserv
Solutions deem necessary or advisable in connection with the
consummation of the transactions contemplated hereby, provided that
such access shall be during normal business hours and shall not
interfere with normal operations of the Company. The Company agrees
to permit Fiserv and Fiserv Solutions and their authorized
representatives, including Deloitte & Touche LLP, or cause them to be
permitted to have, after the date hereof and until the Effective Time,
full access to the premises, books and records of the Company during
normal business hours, and the officers of the Company will furnish
Fiserv and Fiserv Solutions with such financial and operating data and
other information with respect to the business and properties of the
Company as Fiserv and Fiserv Solutions shall from time to time
reasonably request.
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(b) The Company may prior to the Effective Time have access to the
business and properties of Fiserv and information concerning its
financial and legal condition as the Company deems necessary or
advisable in connection with the consummation of the transactions
contemplated hereby, provided that such access shall be during normal
business hours and shall not interfere with normal operations of
Fiserv. Fiserv agrees to permit the Company and its authorized
representatives, or cause them to be permitted to have, after the date
hereof and until the Effective Time, full access to the premises,
books and records of Fiserv during normal business hours, and the
officers of Fiserv will furnish the Company with such financial and
operating data and other information with respect to the business and
properties of Fiserv as the Company shall from time to time reasonably
request.
SECTION 6.03 Confidentiality.
(a) The Company covenants and agrees on behalf of itself and its officers,
directors and shareholders that, for a period of four years following
the Effective Time, it will hold all information concerning the
Company, and all information concerning Fiserv and Fiserv Solutions
received by it or such officers, directors or shareholders from Fiserv
and Fiserv Solutions (other than any information which (i) becomes
generally available to the public, (ii) was available to the Company
or such shareholders on a non-confidential basis prior to its
disclosure by Fiserv or Fiserv Solutions or (iii) becomes available to
such shareholders or, prior to the Effective Time, the Company on a
non-confidential basis from a source other than Fiserv or Fiserv
Solutions that is not prohibited from disclosing such information to
such persons by a contractual, legal or fiduciary obligation) on a
confidential basis, not use themselves or voluntarily disclose to
others any such information, promptly return every document furnished
by Fiserv or Fiserv Solutions in connection herewith and return or
destroy any copies thereof it may have made and to destroy any
summaries, compilations or similar documents it may have made or
derived from such material, and have its representatives promptly
return such documents, return or destroy such copies and destroy such
summaries, compilations or similar documents. The Company further
covenants and agrees for itself and its principal shareholders that
each will keep confidential and not use trade secrets of the Company
or Fiserv.
(b) In the event the transactions contemplated hereby shall not be
consummated, Fiserv and Fiserv Solutions each covenant and agree on
behalf of itself and its affiliates that, for a period of four years
following the Effective Date, it will hold all information concerning
the Company received by it from the Company (other than any
information which (i) becomes generally available to the public, (ii)
was available to Fiserv or Fiserv Solutions, as the case may be, on a
non-confidential basis prior to its disclosure by the Company or (iii)
becomes available to Fiserv or Fiserv Solutions on a non-confidential
basis from a source other than the Company that is not prohibited from
disclosing such information to such persons by a contractual, legal or
fiduciary obligation) on a confidential basis, not use themselves or
voluntarily disclose to others any such information, promptly return
every document furnished by the Company in connection herewith and
return or destroy any copies thereof it may have made and to destroy
any summaries, compilations or similar documents it may have made or
derived from such material, and have its representatives promptly
return such documents, return or destroy such copies and destroy such
summaries, compilations or similar documents. Each of Fiserv and
Fiserv Solutions further covenants and agrees for itself and its
affiliates that each will keep confidential and not use trade secrets
of the Company.
SECTION 6.04 Commercially Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperation in the preparation and filing with the SEC of any required materials
and any necessary amendments thereto; (ii) cooperation in the preparation and
filing with the SEC as promptly as practicable following the date hereof of the
Proxy Statement and Registration Statement; (iii) such actions as may reasonably
be required
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to have the Registration Statement declared effective under the Securities Act;
(iv) such actions as may be reasonably required to have the Proxy Statement
cleared by the SEC as promptly as practicable after filing; (v) such actions as
may reasonably be required to be taken under applicable state securities laws in
connection with the issuance of the Fiserv Common Stock upon consummation of the
Merger; (vi) best efforts to lift or rescind or otherwise diligently pursue any
injunction or restraining order or other order relating to the Merger; (vii)
cooperation in the preparation and filing of all items required to be filed
under the HSR Act; and (viii) the execution of any additional instruments
necessary to consummate the transactions contemplated hereby. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party hereto shall take all such necessary action.
SECTION 6.05 Consents and Authorizations. As soon as practicable, each of
the parties hereto 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.
SECTION 6.06 Non-Assignable Licenses, Leases and Contracts. The Company
shall use its commercially reasonable efforts to obtain and deliver to Fiserv or
Fiserv Solutions at or prior to the Effective Time such consents or waivers as
shall be reasonably requested by Fiserv or Fiserv Solutions for any contracts
which, as a result of the occurrence of the Merger hereunder, would be breached
or violated or would give any other party the right to cancel the same, in order
that such contracts shall not be so breached or violated or result in such right
of cancellation.
SECTION 6.07 Public Announcements. Fiserv and Fiserv Solutions, 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 statements with
respect to the transactions contemplated by this Agreement and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law or by obligations
under any listing agreement with any national securities exchange.
SECTION 6.08 Notification of Certain Matters. The Company shall give
prompt notice to Fiserv and Fiserv Solutions, and Fiserv and Fiserv Solutions
shall give prompt notice to the Company, of (i) the occurrence or nonoccurrence
of any event the occurrence or nonoccurrence of which would cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Date and (ii)
any material failure of the Company, Fiserv or Fiserv Solutions, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
SECTION 6.09 Acquisition Proposals. Subject to the fiduciary obligations
of the parties, so long as the parties are negotiating in good faith with
respect to this transaction, from the date hereof until February 28, 1998,
neither the Company nor any of its affiliates, or any of their respective
directors, officers, employees, representatives or agents shall, directly or
indirectly, solicit or initiate inquiries or proposals from, or participate in
any discussions or negotiations with, any person or entity (other than Fiserv
and its affiliates and their respective directors, officers, employees,
representatives and agents) concerning any acquisition, business combination or
purchase of all or any significant portion of the assets of, or any equity
interest in, the Company.
SECTION 6.10 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 Time 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. Fiserv's receipt of such Tax Return, review and
comments thereon shall not waive any right Fiserv, Fiserv Solutions or their
affiliates may have under this Agreement.
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ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01 Conditions Precedent to Each Party's Obligation to Effect the
Merger. The obligation of each party hereto to effect the Merger is subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement shall have been adopted by the
affirmative vote of the shareholders of the Company at the
Shareholders' Meeting (or any proper adjournment thereof) by the
requisite vote in accordance with the Articles of Incorporation of the
Company and the Iowa Business Corporation Act.
(b) Legal Actions or Proceedings. No statute, rule, regulation, executive
order, decree, ruling or injunction or other order shall have been
enacted, entered, promulgated, or enforced by any court or
governmental authority (which order, decree, ruling, injunction or
other order the parties shall use their best efforts to lift or
reverse), that prohibits, restrains, enjoins or restricts the
consummation of the Merger.
(c) HSR Act. Any waiting period applicable to the Merger under the HSR
Act shall have terminated or expired.
(d) 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.
(e) Regulatory Approvals. All permits and consents required by state
securities laws for the consummation of the Merger shall have been
obtained.
SECTION 7.02 Conditions Precedent to the Obligations of Fiserv and Fiserv
Solutions to Effect the Merger. The obligations of Fiserv and Fiserv Solutions
to consummate the Merger under this Agreement are subject to the satisfaction in
all material respects or waiver by Fiserv and Fiserv Solutions prior to or at
the Effective Time of each of the following conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of the Company contained in this Agreement, in the
Disclosure Schedule or in any closing certificate or document
delivered to Fiserv and Fiserv Solutions pursuant hereto shall be true
and correct at and as of the Effective Time as though made at and as
of that time other than such representations and warranties as are
specifically made as of another date, and the Company shall have
delivered to Fiserv and Fiserv Solutions a certificate to that effect.
(b) Compliance with Covenants. The Company shall have performed and
complied with all covenants of this Agreement to be performed or
complied with by them at or prior to the Effective Time, and the
Company shall have delivered to Fiserv and Fiserv Solutions a
certificate to that effect.
(c) All Proceedings to be Satisfactory. Fiserv and Fiserv Solutions and
their counsel shall have received certified or other copies of all
documents relating to the Company incident to the transactions
contemplated hereby as Fiserv, Fiserv Solutions or said counsel may
reasonably request and such documents shall be reasonably satisfactory
in form and substance to Fiserv, Fiserv Solutions and said counsel.
(d) Opinion of Counsel for the Company. Fiserv shall have received the
favorable opinion of James Arrowsmith, General Counsel of the Company,
dated the Effective Time, substantially in the form and to the effect
set forth in Exhibit C hereto.
(e) Consents. The Company shall have received all consents to the Merger
listed in Exhibit D hereto.
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(f) Employment Agreements. All outstanding employment agreements between
the Company and employees of the Company shall have been terminated
without liability to the Company.
(g) Tax Matters. The Company and each of its shareholders holding five
percent or more of the outstanding Company Common Stock shall have
delivered to Fiserv and Fiserv Solutions a Tax Representation Letter
substantially in the respective forms of Exhibits E-1 and E-2 attached
hereto. The Company and each of such shareholders shall have
delivered to Fiserv and Fiserv Solutions an affidavits of non-foreign
status with respect to each such shareholder and the Company, in the
form required by Section 1445 of the Code and the regulations
thereunder, signed under penalties of perjury in substantially the
form of Exhibits E-3 and E-4 attached hereto. The Company understands
that such affidavits will be retained by Fiserv and Fiserv Solutions
and will be made available to the Internal Revenue Service upon
request.
(h) Certificates; Pooling. The Company shall have received from each
holder of five percent or more of the Company Common Stock a
certificate to the effect that such holder has no plan or intention to
sell, exchange or otherwise dispose of the shares of Fiserv Common
Stock it receives in the Merger. Fiserv and Fiserv Solutions shall
have received a letter from the Company's independent public
accountants to the effect that from the standpoint of the Company, the
Merger may be accounted for as a "pooling of interests."
(i) Exercise of Stock Options; Dissenters' Rights. The holders of stock
options of the Company listed on Exhibit F hereto shall have exercised
such options in the amounts indicated on Exhibit F. The owners of no
more than five percent of the Company Common Stock shall have
exercised Dissenters' Rights in connection with the transactions
contemplated hereby.
(j) Supporting Documents. On or prior to the Effective Time Fiserv,
Fiserv Solutions and their counsel shall have received copies of the
following supporting documents:
(i) (1) copies of the Articles of Incorporation of the Company, and
all amendments thereto, certified as of a recent date by the
Secretary of State of the State of Iowa and (2) a certificate
of said Secretary dated as of a recent date as to the due
incorporation and good standing of the Company and listing all
documents of the Company on file with said Secretary; and
(ii) certificates of the Secretary or an Assistant Secretary of the
Company, dated the Effective Time and certifying substantially
to the effect (1) that attached thereto is a true and complete
copy of the By-laws of the Company as in effect on the date of
such certification and at all times since December 31, 1996;
(2) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors and the
shareholders of the 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 resolutions
adopted in connection with the transactions contemplated by
this Agreement; (3) that the Articles of Incorporation of the
Company have not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to
clause (i)(2) above; and (4) as to the incumbency and specimen
signature of each officer of the Company executing this
Agreement and any certificate or instrument furnished pursuant
hereto, 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 shall be reasonably satisfactory in form and substance
to Fiserv, Fiserv Solutions and their counsel.
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SECTION 7.03 Conditions Precedent to the Obligations of the Company to
Effect the Merger. 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 at the Effective Time of each of the following
conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Fiserv and Fiserv Solutions contained in this Agreement
or in any closing certificate or document delivered to the Company
pursuant hereto shall be true and correct on and as of the Effective
Time as though made at and as of that time, other than such
representations and warranties as are specifically made as of another
time, and Fiserv and Fiserv Solutions shall have delivered the Company
a certificate to that effect.
(b) Compliance with Covenants. Fiserv and Fiserv Solutions shall have
performed and complied with all covenants of this Agreement to be
performed or complied with by Fiserv and/or Fiserv Solutions on or
prior to the Effective Time, and Fiserv and Fiserv Solutions shall
have delivered to the Company a certificate to such effect.
(c) All Proceedings to be Satisfactory. The Company and its counsel shall
have received all such counterpart originals or certified or other
copies of all documents relating to Fiserv and Fiserv Solutions
incident to the transactions contemplated hereby as the Company or
said counsel may reasonably request and such documents shall be
reasonably satisfactory in form and substance to the Company and said
counsel.
(d) Opinion of Counsel for Fiserv and Fiserv Solutions. The Company shall
have received the favorable opinion of Charles W. Sprague, Executive
Vice President and General Counsel of Fiserv, dated the Effective
Time, substantially in the form and to the effect set forth in Exhibit
G hereto.
(e) Supporting Documents. On or prior to the Effective Time, the Company
and its counsel shall have received copies of the following supporting
documents:
(i) (1) copies of the Articles of Incorporation of Fiserv and
Fiserv Solutions, and all amendments thereto, certified as of a
recent date by the Secretary of State of the State of
Wisconsin, and (2) certificates of said Secretary dated as of a
recent date as to the due incorporation and good standing of
Fiserv or Fiserv Solutions, as the case may be, and listing all
documents of the relevant company on file with said Secretary;
and
(ii) a certificate of the Secretary or an Assistant Secretary of
each of Fiserv and Fiserv Solutions dated the Effective Time
and certifying substantially to the effect (1) that attached
thereto 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 time since December 31, 1997; (2) that
attached thereto 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 resolutions adopted in connection
with the transactions contemplated by this Agreement; (3) that
the Articles of Incorporation of the particular corporation has
not been amended since the date of the last amendment referred
to in the certificate 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 shall be reasonably satisfactory in form and substance
to the Company and its counsel.
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ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
SECTION 8.01 Survival. The representations and warranties of the parties
hereto contained herein shall not survive the Effective Time.
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 Time:
(a) by mutual written consent of Fiserv and Fiserv Solutions, on the
one hand, and the Company, on the other hand; or
(b) by either Fiserv and Fiserv Solutions, on the one hand, or the
Company, on the other hand, if (x) the Effective Time shall not
have occurred on or before December 31, 1997, (provided that the
right to terminate this Agreement under this Section 9.01(b)
shall not be available to any party whose failure to fulfill, or
to cause to be fulfilled, any obligation under this Agreement has
been the cause of or resulted in the failure of the Effective
Time to occur on or before such date) or (y) any court of
competent jurisdiction or other governmental body shall have
issued an order, decree or ruling or taken any other action
(which order, decree or ruling the parties shall use their best
efforts to lift or reverse) permanently restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable.
SECTION 9.02 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.01, this Agreement shall
forthwith become void and have no effect, without any liability, on the part of
any party hereto or its affiliates, directors, officers or shareholders, other
than the provisions of this Section 9.02. Nothing contained in this Section
9.02 shall relieve any party from liability for any breach of this Agreement.
SECTION 9.03 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
SECTION 9.04 Extension; Waiver. At any time prior to the Effective Time,
Fiserv and Fiserv Solutions, on the one hand, and the Company, on the other
hand, may (i) extend the time for the performance of any of the obligations or
other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto or (iii) to the
extent permitted by applicable laws, waive compliance by the other party with
any of the agreements or conditions contained herein. Any agreement on the part
of any party hereto to any such extension or waiver shall 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. Whether or not the transactions contemplated
by this Agreement are consummated, none of the parties hereto shall 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. Each of Fiserv and
Fiserv Solutions, on the one hand, and the Company, on the other hand, will
indemnify the other parties, and hold them harmless from and against any claims
for finders'
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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.
SECTION 10.02 Execution in Counterparts. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 10.03 Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall 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:
Network Data Processing Corporation
200 Fifth Avenue, SE
Cedar Rapids, IA 52401
FAX 319-398-0569
Attention: Howard Arner
with a copy to:
Shuttleworth & Ingersoll, P.C.
500 Firstar Bank Building
P.O. Box 2107
Cedar Rapids, IA 52406-2107
Attn: Gary J. Streit, Esq.
If to Fiserv or Fiserv Solutions to:
Fiserv, Inc.
255 Fiserv Drive
Brookfield, WI 53045
or
P.O. Box 979
Brookfield, WI 53008-0979
FAX (414) 879-5245
Attention: Kenneth R. Jensen
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 hereto shall have designated by
notice in writing to the other parties hereto. Any notice or other
communication pursuant to this Agreement shall 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.
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SECTION 10.04 Entire Agreement. This Agreement and its Exhibits and
Schedules constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof. No representation, warranty, promise, inducement or
statement of intention has been made by any party hereto which is not embodied
in this Agreement or such other documents, and no party hereto shall be bound
by, or be liable for, any alleged representation, warranty, promise, inducement
or statement of intention not embodied herein or therein.
SECTION 10.05 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Iowa, without reference to
provisions regarding conflicts of law.
SECTION 10.06 Binding Effect; Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding 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 hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
SECTION 10.07 Assignability. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto.
SECTION 10.08 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 shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof. The remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
FISERV, INC.
By: /s/ Kenneth R. Jensen
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Senior Executive Vice President
FISERV SOLUTIONS, INC.
By: /s/ Kenneth R. Jensen
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Title: Senior Executive Vice President
NETWORK DATA PROCESSING CORPORATION
By: /s/ Howard F. Arner
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Title:
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APPENDIX B
SECTION 490.1300 ET. SEQ. OF THE IOWA BUSINESS CORPORATION ACT
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DIVISION XIII
DISSENTERS' RIGHTS
PART A
490.1301 Definitions for division XIII.
In this division:
1. "Beneficial shareholder" means the person who is a beneficial owner of
shares held 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 corporation
by merger or share exchange of that issuer.
3. "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 490.1302 and who exercises that right
when and in the manner required by sections 490.1320 through 490.1328.
4. "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless 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 a rate
that is fair and equitable under all the circumstances.
6. "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on
file with a corporation.
7. "Shareholder" means the record shareholder or the beneficial
shareholder.
490.1302 Shareholders' right to dissent.
1. A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of, any of the
following corporate actions:
a. Consummation of a plan of merger to which the corporation is a
party if either of the following apply:
(1) Shareholder approval is required for the merger by section
490.1103 or the articles of incorporation and the
shareholder is entitled to vote on the merger.
(2) The corporation is a subsidiary that is merged with its
parent under section 490.1104.
b. Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if
the shareholder is entitled to vote on the plan.
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c. Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and
regular course of business, if the shareholder is entitled to
vote on the sale or exchange, including a sale in dissolution,
but not including a sale pursuant to court order or a sale for
cash pursuant to a plan by which all or substantially all of the
net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale.
d. An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares
because it does any or all of the following:
(1) Alters or abolishes a preferential right of the shares.
(2) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund
for the redemption or repurchase, of the shares.
(3) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities.
(4) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by
dilution through issuance of shares or other securities with
similar voting rights.
(5) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to
be acquired for cash under section 490.604.
(6) Extends, for the first time after being governed by this
chapter, the period of duration of a corporation organized
under chapter 491 or 496A* and existing for a period of
years on the day preceding the date the corporation is first
governed by this chapter.
e. Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of
the board of directors provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for their
shares.
2. A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter is not entitled to challenge
the corporate action creating the shareholder's entitlement unless the
action is unlawful or fraudulent with respect to the shareholder or
the corporation.
490.1303 Dissent by nominees and beneficial owners.
1. A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in that shareholder's name only if the
shareholder dissents with respect to all shares beneficially owned by
any one person and notifies the corporation in writing of the name and
address of each person on whose behalf the shareholder asserts
dissenters' rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which the shareholder
dissents and the shareholder's other shares were registered in the
names of different shareholders.
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2. A beneficial shareholder may assert dissenters' rights as to shares
held on the shareholder's behalf only if the shareholder does both of
the following:
a. Submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights.
b. Does so with respect to all shares of which the shareholder is
the beneficial shareholder or over which that beneficial
shareholder has power to direct the vote.
490.1304 through 490.1319 Reserved.
PART B
490.1320 Notice of dissenters' rights.
1. If proposed corporate action creating dissenters' rights under section
490.1302 is submitted to a vote at a shareholders' meeting, the
meeting notice must state that shareholders are or may be entitled to
assert dissenters' rights under this part and be accompanied by a copy
of this part.
2. If corporate action creating dissenters' rights under section 490.1302
is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that
the action was taken and send them the dissenters' notice described in
section 490.1322.
490.1321 Notice of intent to demand payment.
1. If proposed corporate action creating dissenters' rights under section
490.1302 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights must do all of the
following:
a. Deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment for the
shareholder's shares if the proposed action is effectuated.
b. Not vote the dissenting shareholder's shares in favor of the
proposed action.
2. A shareholder who does not satisfy the requirements of subsection 1,
is not entitled to payment for the shareholder's shares under this
part.
490.1322 Dissenters' notice.
1. If proposed corporate action creating dissenters' rights under section
490.1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who
satisfied the requirements of section 490.1321.
2. The dissenters' notice must be sent no later than ten days after the
proposed corporate action is authorized at a shareholders' meeting,
or, if the corporate action is taken without a vote of the
shareholders, no later than ten days after the corporate action is
taken, and must do all of the following:
a. State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited.
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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 that includes the date of the
first announcement to news media or to shareholders of the terms
of the proposed corporate action and requires that the person
asserting dissenters' rights certify whether or not the person
acquired beneficial ownership of the shares before that date.
d. Set a date by which the corporation must receive the payment
demand, which date shall not be fewer than thirty nor more than
sixty days after the date the dissenters' notice is delivered.
e. Be accompanied by a copy of this division.
490.1323 Duty to demand payment.
1. A shareholder sent a dissenters' notice described in section 490.1322
must demand payment, certify whether the shareholder acquired
beneficial ownership of the shares before the date required to be set
forth in the dissenters' notice pursuant to section 490.1322,
subsection 2, paragraph "c", and deposit the shareholder's
certificates in accordance with the terms of the notice.
2. The shareholder who demands payment and deposits the shareholder's
shares under subsection 1 retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the
proposed corporate action.
3. A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for the shareholder's
shares under this division.
490.1324 Share restrictions.
1. The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the
proposed corporate action is taken or the restrictions released under
section 490.1326.
2. The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until
these rights are canceled or modified by the taking of the proposed
corporate action.
490.1325 Payment.
1. Except as provided in section 490.1327, at the time the proposed
corporate action is taken, or upon receipt of a payment demand,
whichever occurs later, the corporation shall pay each dissenter who
complied with section 490.1323 the amount the corporation estimates to
be the fair value of the dissenter's shares, plus accrued interest.
2. The payment must be accompanied by all of the following:
a. 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, a statement of changes in
shareholders' equity for that year, and the latest available
interim financial statements, if any.
b. A statement of the corporation's estimate of the fair value of
the shares.
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c. An explanation of how the interest was calculated.
d. A statement of the dissenter's right to demand payment under
section
e. A copy of this division.
490.1326 Failure to take action.
1. If the corporation does not take the proposed action within one
hundred eighty days after the date set for demanding payment and
depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed
on uncertificated shares.
2. If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send
a new dissenters' notice under section 490.1322 as if the corporate
action was taken without a vote of the shareholders and repeat the
payment demand procedure.
490.1327 After-acquired shares.
1. A corporation may elect to withhold payment required by section
490.1325 from a dissenter unless the dissenter was the beneficial
owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action.
2. To the extent the corporation elects to withhold payment under
subsection 1, after taking the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and
shall pay this amount to each dissenter who agrees to accept it in
full satisfaction of the dissenter's demand. The corporation shall
send with its offer a statement of its estimate of the fair value of
the shares, an explanation of how the interest was calculated, and a
statement of the dissenter's right to demand payment under section
490.1328.
490.1328 Procedure if shareholder dissatisfied with payment or offer.
1. A dissenter may notify the corporation in writing of the dissenter's
own estimate of the fair value of the dissenter's shares and amount of
interest due, and demand payment of the dissenter's estimate, less any
payment under section 490.1325, or reject the corporation's offer
under section 490.1327 and demand payment of the fair value of the
dissenter's shares and interest due, if any of the following apply:
a. The dissenter believes that the amount paid under section
490.1325 or offered under section 490.1327 is less than the fair
value of the dissenter's shares or that the interest due is
incorrectly calculated.
b. The corporation fails to make payment under section 490.1325
within sixty days after the date set for demanding payment.
c. The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within sixty days
after the date set for demanding payment.
2. A dissenter waives the dissenter's right to demand payment under this
section unless the dissenter notifies the corporation of the
dissenter's demand in writing under subsection 1 within thirty days
after the corporation made or offered payment for the dissenter's
shares.
490.1329 Reserved.
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