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EXHIBIT 8.1
April 22, 1996
National Data Corporation
National Data Corporation Plaza
1564 N.E. Expressway
Atlanta, Georgia 30329-2010
C.I.S. Technologies, Inc.
One Warren Place
6100 South Yale Avenue
Suite 1900
Tulsa, Oklahoma 74136-1903
Re: Proposed Agreement and Plan of Merger by and Between National
Data Corporation and C.I.S. Technologies, Inc.
Ladies and Gentlemen:
We have acted as counsel to National Data Corporation ("NDC"), a
corporation organized and existing under the laws of the State of Delaware, in
connection with the proposed merger of NDC Merger Corp., a wholly-owned
subsidiary of NDC ("Sub"), with and into C.I.S. Technologies, Inc. ("CIS"), a
corporation organized and existing under the laws of the State of Delaware, with
CIS as the Surviving Association (the "Merger"). The Merger will be effected
pursuant to the Agreement and Plan of Merger by and between CIS and NDC dated as
of April 15, 1996 (the "Agreement"). In our capacity as counsel to NDC, our
opinion has been requested with respect to certain of the federal income tax
consequences of the proposed Merger.
In rendering this opinion, we have examined (i) the Internal Revenue Code
of 1986, as amended (the "Code") and Treasury regulations, (ii) the legislative
history of applicable sections of the Code, and (iii) appropriate Internal
Revenue Service and court decisional authority. In addition, we have relied upon
certain information made known to us as more fully described below. All
capitalized terms used herein without definition shall have the respective
meanings specified in the Agreement, and unless otherwise specified, all section
references herein are to the Code.
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such documents
as we have deemed appropriate, including:
(1) the Agreement;
(2) the Registration Statement on Form S-4 filed by NDC with the
Securities and Exchange Commission under the Securities Act of 1933, on
April 22, 1996, including the Proxy Statement/Prospectus for the special
meeting of the stockholders of CIS;
(3) such additional documents as we have considered relevant.
In our examination of such documents, we have assumed, with your consent,
that all documents submitted to us as photocopies faithfully reproduce the
originals thereof, that such originals are authentic, that all such documents
have been or will be duly executed to the extent required, and that all
statements set forth in such documents are accurate.
We have also obtained such additional information and representations as we
have deemed relevant and necessary through consultation with various officers
and representatives of NDC and CIS and through certificates provided by the
management of NDC and the management of CIS.
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C.I.S. Technologies, Inc.
April 22, 1996
Page 2
You have advised us that the proposed transaction will give NDC a strong
presence in the markets served by CIS and enable the combined organization to
realize certain operating efficiencies. To achieve these goals, the following
will occur pursuant to the Agreement:
(1) Subject to the terms and conditions of this Agreement, at the
Effective Time, Sub shall be merged with and into CIS in accordance with
the provisions of Section 251 of the DGCL and with the effect provided in
Sections 259 and 261 of the DGCL. CIS shall be the Surviving Corporation
resulting from the Merger and shall become a wholly-owned Subsidiary of NDC
and shall continue to be governed by the Laws of the State of Delaware. The
Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the respective Boards of Directors of CIS,
Sub and NDC and by the sole stockholder of Sub.
(2) At the Effective Time, by virtue of the Merger, and without any
action on the part of NDC, CIS, Sub or the stockholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of NDC Capital Stock, including any associated NDC
Rights, issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding from and after the Effective Time.
(b) Each share of Sub Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and
exchanged for one share of CIS Common Stock.
(c) Each share of CIS Common Stock (excluding shares held by any
CIS Company or any NDC Company) issued and outstanding at the Effective
Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive .08682 shares of NDC Common Stock
(the "Common Stock Exchange Ratio").
(d) Each share of CIS Series A Preferred Stock (excluding shares
held by any CIS Company or any NDC Company, excluding shares held by
shareholders who perfect their statutory dissenters' rights as provided
in Section 3.5 of this Agreement) issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into
and exchanged for the right to receive that number of shares of NDC
Common Stock as equals the product of the Common Stock Exchange Ratio
and the number of shares of CIS Common Stock into which such share of
CIS Series A Preferred Stock, if fully convertible, would be convertible
(the "Preferred Stock Exchange Ratio").
(e) Pursuant to the NDC Rights Agreement, each share of NDC Common
Stock issued in connection with the Merger upon conversion of CIS
Capital Stock shall be accompanied by an NDC Right.
(3) In the event NDC changes the number of shares of NDC Common Stock,
issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or
the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Common Stock Exchange Ratio and the
Preferred Stock Exchange Ratio shall be proportionately adjusted.
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C.I.S. Technologies, Inc.
April 22, 1996
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(4) Each of the shares of CIS Common Stock held by any CIS Company or
by any NDC Company shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
(5) Notwithstanding any other provision of the Agreement, each holder
of shares of CIS Capital Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of NDC Common
Stock (after taking into account all certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal
to such fractional part of a share of NDC Common Stock multiplied by the
market value of one share of NDC Common Stock at the Effective Time. The
market value of one share of NDC Common Stock at the Effective Time shall
be determined pursuant to Section 3.4 of the Agreement.
(6) As provided in Section 3.5 of the Agreement, any holder of shares
of CIS Series A Preferred Stock who perfects his dissenters' rights in
accordance with and as contemplated by Section 262 of the DGCL shall be
entitled to receive the value of such shares in cash as determined pursuant
to such provision of Law; provided, that no such payment shall be made to
any dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the DGCL and surrendered to CIS
the certificate or certificates representing the shares for which payment
is being made.
(7) At the Effective Time, each option or other right to purchase
shares of CIS Common Stock pursuant to stock options or stock appreciation
rights granted by CIS under the CIS Stock Plans (collectively, "CIS
Options"), which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become Rights with respect to NDC
Common Stock, and NDC shall assume each CIS Option, in accordance with the
terms of the CIS Stock Plan and stock option agreement or other agreement
by which it is evidenced on substantially the same terms and conditions,
except as otherwise provided in Section 3.6(a) of the Agreement. As soon as
practicable after the Effective Time, NDC shall deliver to the participants
in each CIS Stock Plan an appropriate notice setting forth such
participant's rights pursuant thereto and the grants subject to such CIS
Stock Plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 3.6(a) of the Agreement
after giving effect to the Merger), and NDC shall comply with the terms of
each CIS Stock Plan to ensure, to the extent required by, and subject to
the provisions of, such CIS Stock Plan, that CIS Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. At or prior to the
Effective Time, NDC shall take all corporate action necessary to reserve
for issuance sufficient shares of NDC Common Stock for delivery upon
exercise of CIS Options assumed by it in accordance with Section 3.6 of the
Agreement.
(8) At the Effective Time, each HRS Warrant which is outstanding at
the Effective Time, whether or not exercisable, shall be converted into and
become a Right with respect to NDC Common Stock, and NDC shall assume each
HRS Warrant, in accordance with the terms of the HRS Warrant Agreement,
except as otherwise provided in Section 3.6(c) of the Agreement.
(9) At the Effective Time, each CIS Convertible Note which is
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become a Right with respect to NDC Common
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C.I.S. Technologies, Inc.
April 22, 1996
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Stock, and NDC shall assume each CIS Convertible Note, in accordance with
the terms of the CIS Convertible Note Agreement, except as otherwise
provided in Section 3.6(d) of the Agreement.
(10) At the Effective Time, each BT Warrant which is outstanding at
the Effective Time, whether or not exercisable, shall be converted into and
become a Right with respect to NDC Common Stock, and NDC shall assume each
BT Warrant, in accordance with the terms of the BT Warrant Agreement,
except as otherwise provided in Section 3.6(e) of the Agreement.
(11) All contractual restrictions or limitations on transfer with
respect to CIS Common Stock awarded under the CIS Stock Plans or any other
plan, program, Contract or arrangement of any CIS Company, to the extent
that such restrictions or limitations shall not have already lapsed, and
except as otherwise expressly provided in such plan, program, Contract or
arrangement, shall remain in full force and effect with respect to shares
of NDC Common Stock into which such restricted stock is converted pursuant
to Section 3.1 of this Agreement.
We have also assumed that the following statements are true on the date
hereof and will be true on the date on which the Merger is consummated:
(1) The fair market value of the NDC Common Stock and cash, if any,
received by each stockholder of CIS will, in each instance, be
approximately equal to the fair market value of the CIS Capital Stock
surrendered in exchange therefor.
(2) There is no plan or intention by any of the stockholders of CIS
who own five percent (5%) or more of the outstanding CIS Capital Stock, and
to the best of the knowledge of the management of CIS, there is no plan or
intention on the part of the remaining stockholders of CIS to sell,
exchange, or otherwise dispose of a number of shares of NDC Common Stock
received in the Merger that would reduce the CIS stockholders' ownership of
NDC Common Stock to a number of shares having a value, as of the date of
the Merger, of less than fifty percent (50%) of the value of all of the
formerly outstanding stock of CIS immediately prior to the Merger. For
purposes of this representation, shares of CIS Capital Stock exchanged for
cash or other property, surrendered by dissenters, or exchanged for cash in
lieu of fractional shares of NDC Common Stock will be treated as
outstanding CIS Capital Stock on the date of the Merger. Moreover, shares
of CIS Capital Stock and shares of NDC Common Stock held by CIS
stockholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the Merger will be considered in making this representation.
(3) Following the Merger, CIS will hold at least ninety percent (90%)
of the fair market value of its net assets and at least seventy percent
(70%) of the fair market value of its gross assets held immediately prior
to the Merger and at least ninety percent (90%) of the fair market value of
Sub's net assets and at least seventy percent (70%) of the fair market
value of Sub's gross assets held immediately prior to the Merger. For
purposes of this representation, amounts paid by CIS or Sub to dissenters,
amounts paid by CIS or Sub to stockholders who receive cash or other
property, amounts used by CIS or Sub to pay reorganization expenses, and
all redemptions and distributions (except for regular, normal dividends)
made by CIS will be included as assets of CIS or Sub, respectively,
immediately prior to the Merger. Also for purposes of this representation,
assets disposed of in contemplation of the Merger will be considered as
assets held by CIS immediately prior to the Merger.
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C.I.S. Technologies, Inc.
April 22, 1996
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(4) Prior to the Merger, NDC will be in control of Sub. For purposes
of this representation and those set forth below in paragraph (5), (7),
(12), and (13), "control" means ownership of eighty percent (80%) of the
total combined voting power of all classes of stock entitled to vote and at
least eighty percent (80%) of the total number of all other classes of
stock.
(5) CIS has no plan or intention to issue additional shares of its
stock that would result in NDC losing control of CIS.
(6) NDC has no plan or intention to reacquire any of its Common Stock
issued in the Merger.
(7) NDC will not liquidate CIS; merge CIS with or into another
corporation; sell or otherwise dispose of the stock of CIS except for
transfers of stock to corporations controlled by NDC; or cause CIS to sell
or otherwise dispose of any of its assets or of any of the assets acquired
from Sub, except for dispositions made in the ordinary course of business
or transfers of assets to a corporation controlled by CIS.
(8) Sub will have no liabilities assumed by CIS, and will not transfer
to CIS any assets subject to liabilities, in the Merger.
(9) Following the Merger, CIS will continue its historic business or
use a significant portion of its historic business assets in a business.
(10) NDC, Sub, CIS, and the stockholders of CIS will pay their
respective expenses, if any, incurred in connection with the Merger, except
that each of the Parties shall bear and pay one-half of the filing fees
payable in connection with the Registration Statement and the Proxy
Statement and printing costs incurred in connection with the printing of
the Registration Statement and the Proxy Statement. NDC shall pay the
filing fees payable in connection with the HSR Act filing.
(11) There is no intercorporate indebtedness existing between NDC and
CIS or between Sub and CIS that was issued, acquired, or will be settled at
a discount.
(12) Pursuant to the Merger, shares of CIS Capital Stock representing
control of CIS will be exchanged solely for voting Common Stock of NDC. For
purposes of this representation, shares of CIS Capital Stock exchanged for
cash or other property originating with NDC will be treated as outstanding
CIS Capital Stock on the date of the Agreement.
(13) At the time of the Merger, CIS will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in CIS that, if exercised
or converted, would affect NDC's acquisition or retention of control of
CIS.
(14) NDC does not own, nor has it owned during the past five years,
any shares of the stock of CIS.
(15) None of NDC, Sub nor CIS is an "investment company." For purposes
of the foregoing, an "investment company" is a corporation that is a
regulated investment company, a real estate investment trust, or a
corporation fifty percent (50%) or more of the value of whose total assets
are stock and securities and eighty percent (80%) or more of the value of
whose total assets are assets held for investment.
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April 22, 1996
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(16) On the date of the Merger, the fair market value of the assets of
CIS will exceed the sum of its liabilities, plus the amount of liabilities,
if any, to which the assets are subject.
(17) CIS is not under the jurisdiction of a court in a case under
Title 11 of the United States Code or a receivership, foreclosure or
similar proceeding in a federal or state court.
(18) The payment of cash to CIS stockholders in lieu of fractional
shares of NDC Common Stock is solely for the purpose of avoiding the
expense and inconvenience of issuing and transferring fractional shares and
does not represent separately bargained for consideration. The total cash
consideration that will be paid to CIS stockholders in lieu of fractional
shares of NDC Common Stock will not exceed one percent (1%) of the total
consideration issued in the Merger to the stockholders of CIS in exchange
for their shares of CIS Capital Stock. The fractional share interest of
each CIS stockholder will be aggregated, and no stockholder of CIS will
receive cash in an amount equal to or greater than the value of one full
share of NDC Common Stock.
(19) None of the compensation received by any stockholder-employees of
CIS will be separate consideration for, or allocable to, any of their
shares of CIS Capital Stock. None of the shares of NDC Common Stock
received by any stockholder-employees will be separate consideration for,
or allocable to, any employment agreement. Any compensation paid to a CIS
stockholder-employee who continues as an employee of NDC subsequent to the
Merger will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's-length for similar
services.
(20) At all times during the five-year period ending on the Effective
Date of the Merger, the fair market value of all of CIS' United States real
property interests was and will have been less than fifty percent (50%) of
the fair market value of the total of (a) its United States real property
interests, (b) its interests in real property located outside the United
States, and (c) its other assets used or held for use in a trade or
business. For purposes of the preceding sentence, (i) United States real
property interests include all interests (other than an interest solely as
a creditor) in real property and associated personal property (such as
movable walls and furnishings) located in the United States or the Virgin
Islands and interests in any corporation (other than a controlled
corporation) owning any United States real property interest, (ii) CIS is
treated as owning its proportionate share (based on the relative fair
market value of its ownership interest to all ownership interests) of the
assets owned by any controlled corporation or any partnership, trust, or
estate in which CIS is a partner or beneficiary, and (iii) any such entity
in turn is treated as owning its proportionate share of the assets owned by
any controlled corporation or any partnership, trust, or estate in which
the entity is a partner or beneficiary. As used in this paragraph,
"controlled corporation" means any corporation at least fifty percent (50%)
of the fair market value of the stock of which is owned by CIS, in the case
of a first-tier subsidiary of CIS or by a controlled corporation, in the
case of a lower-tier subsidiary.
(21) The management of NDC is not aware of any plan or intention to
take any action that would cause the NDC Rights to become exercisable.
(22) The Agreement represents the entire understanding of NDC, CIS,
and Sub with respect to the Merger.
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C.I.S. Technologies, Inc.
April 22, 1996
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OPINIONS
Based solely on the information submitted and the representations set forth
above, we are of the opinion that:
(1) Provided the proposed merger of Sub with and into CIS qualifies as
a statutory merger under the Delaware General Corporation Law, and since
(a) after the proposed transaction, CIS will hold substantially all of its
assets and substantially all of the assets of Sub and (b) in the
transaction, the CIS stockholders will exchange an amount of stock
constituting control of CIS solely for NDC Common Stock, the proposed
merger will constitute a reorganization within the meaning of section
368(a)(1)(A) of the Code. The reorganization will not be disqualified by
reason of the fact that NDC Common Stock is used in the transaction
(section 368(a)(2)(E)). For purposes of this opinion, "substantially all"
means at least 90 percent (90%) of the fair market value of the net assets
and at least 70 percent (70%) of the fair market value of the gross assets
of CIS held immediately prior to the proposed transaction. NDC, Sub, and
CIS will each be "a party to a reorganization" within the meaning of
section 368(b) of the Code.
(2) No gain or loss will be recognized by NDC upon the receipt of CIS
Common Stock solely in exchange for Sub Common Stock.
(3) No gain or loss will be recognized by Sub on the transfer of its
assets to CIS solely in exchange for shares of CIS Common Stock.
(4) No gain or loss will be recognized by CIS upon the receipt of the
assets of Sub in exchange for shares of CIS Common Stock.
(5) The stockholders of CIS will recognize no gain or loss upon the
receipt of NDC Common Stock solely in exchange for their CIS Capital Stock.
In addition, no gain or loss will be recognized by the stockholders of CIS
upon the receipt of the NDC Rights attached to the NDC Common Stock.
(6) The basis of the NDC Common Stock received by the CIS stockholders
in the proposed transaction will, in each instance, be the same as the
basis of the CIS Capital Stock surrendered in exchange therefor.
(7) The holding period of the NDC Common Stock received by the CIS
stockholders will, in each instance, include the period during which the
CIS Capital Stock surrendered in exchange therefor was held, provided that
the CIS Capital Stock was held as a capital asset on the date of the
exchange.
(8) The payment of cash to CIS stockholders in lieu of fractional
share interests of NDC Common Stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by NDC. These cash payments will be treated
as having been received as distributions in full payment in exchange for
the stock redeemed. Generally any gain or loss recognized upon such
exchange will be capital gain or loss, provided the fractional share would
constitute a capital asset in the hands of the exchanging stockholder.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time with
retroactive effect. In addition, our opinions are based solely on the documents
that we have examined, the additional information that we have obtained, and the
statements set
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out herein, which we have assumed are true on the date the Merger is
consummated. Our opinions cannot be relied upon if any of the facts contained in
such documents or if such additional information is, or later becomes,
inaccurate, or if any of the statements set out herein is, or later becomes,
inaccurate. Finally, our opinions are limited to the tax matters specifically
covered thereby, and we have not been asked to address, nor have we addressed,
any other tax consequences of the proposed Merger, including, but not limited
to, the tax consequences of the exchange of BTS or HRS warrants for NDC
warrants, the assumption and related changes to the CIS Convertible Note, the
recognition of deferred intercompany transactions and adjustments necessary by
reason of a change in accounting method.
This opinion is being provided solely for the use of National Data
Corporation, C.I.S. Technologies, Inc., and the stockholders of C.I.S.
Technologies, Inc.
We hereby consent to the use of this opinion and to the references made to
the firm under the captions "Summary -- The Merger -- Certain Federal Income Tax
Consequences," "The Merger -- Certain Federal Income Tax Consequences" and
"Legal Matters" in the Proxy Statement/Prospectus constituting part of the
Registration Statement on Form S-4 of NDC.
Very truly yours,
ALSTON & BIRD
By: /s/ Pinney L. Allen
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