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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 29, 1996
HNC SOFTWARE INC.
(Exact name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-26146 33-0248788
(Commission File Number) (I.R.S. Employer Identification Number)
5930 CORNERSTONE COURT WEST, SAN DIEGO, CA 92121
(Address of Principal Executive Offices)
(619) 546-8877
(Registrant's Telephone Number, Including Area Code)
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On November 29, 1996, HNC Software Inc., a Delaware corporation ("HNC"
or the "COMPANY"), acquired all the outstanding stock of Retek Distribution
Corporation, a privately held British Virgin Islands corporation ("RETEK"),
pursuant to an exchange of HNC Common Stock and options to purchase HNC Common
Stock for all the outstanding stock and stock options of Retek (the "EXCHANGE").
The Exchange made Retek a wholly-owned subsidiary of the Company and was
effected pursuant to an Exchange Agreement dated as of October 25, 1996 (the
"EXCHANGE AGREEMENT"), among HNC, Retek, the Mulberry Trust and the Kulmor Trust
(the shareholders of Retek), and pursuant to related Option Exchange Agreements
among HNC and all the holders of outstanding options to purchase shares of
Retek. The Company intends to account for the Exchange as a "pooling of
interests" transaction for accounting purposes.
Prior to the Exchange, Retek was engaged in the business of developing
and marketing client-server based merchandise management software, focusing on
retail supply chain management. The Company currently plans to continue and
augment Retek's historical business. Retek's assets include software products
that perform merchandise management, financial controls and inventory controls
functions for large retailers. Retek's flagship product, the Merchandise
Management System, is designed to address the needs of department stores, mass
merchandisers and specialty chains in a multi-store, multi-warehouse environment
and allows for both centralized or distributed processing. Following the
Exchange, Retek will continue to operate out of its Minneapolis, Minnesota
headquarters and through its foreign subsidiaries with offices in Canada, the
United Kingdom, and Australia.
Pursuant to the Exchange, HNC issued (i) 1,367,196 shares of its Common
Stock to the shareholders of Retek in exchange for their Retek shares; and (ii)
options to purchase up to 155,864 shares of HNC Common Stock to the option
holders of Retek in exchange for their Retek stock options. The 1,367,196 shares
of HNC Common Stock that were issued in exchange for all outstanding Retek Stock
represented approximately 7.19% of HNC's outstanding stock immediately after the
closing of the Exchange. Under the Exchange Agreement, each share of Retek stock
("RETEK STOCK") that was outstanding immediately prior to the closing of the
Exchange was assigned and transferred to HNC in exchange for approximately
13,671.9670 shares of HNC Common Stock, and each option to purchase Retek Stock
that was outstanding immediately prior to the closing of the Exchange (a "RETEK
OPTION") was exchanged for an option to purchase that number of shares of HNC
Common Stock equal to the number of shares of Retek Stock subject to such Retek
Option multiplied by 13,671.9670 (the same conversion rate at which each share
of Retek Stock was converted into HNC Common Stock in the Exchange), at an
exercise price per share of HNC Common Stock equal to the exercise price per
share of Retek Stock that was in effect for such Retek Option divided by
13,671.9670. Pursuant to the Exchange Agreement, the Company, Retek, the
shareholders of Retek and an escrow agent entered into an Escrow Agreement,
pursuant to which 10% of the shares of HNC Common Stock that were issued
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in the Exchange to the Retek shareholders were placed in an escrow account to
secure and collateralize certain indemnification obligations of the former Retek
shareholders to HNC.
The shares of HNC Common Stock and the options to purchase HNC Common Stock
issued to the former Retek security holders in the Exchange have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), in
reliance upon the exemption from registration provided by Section 4(2) thereof
and/or Rule 506 promulgated under Regulation D. In January 1997, HNC intends to
register the issuance of the shares of its Common Stock that are issuable upon
the exercise of the HNC stock options that were issued to the former Retek
option holders in the Exchange on a Form S-8 Registration Statement.
In addition, the Company and the Retek shareholders have entered into a
Registration Rights Agreement, pursuant to which HNC granted these shareholders
certain registration rights on Form S-3 in connection with the resale of shares
of HNC Common Stock issued to the former Retek shareholders in the Exchange (the
"Exchange Shares"). Under the terms of the Registration Rights Agreement, during
the two (2) year period following the Company's public release of a report
including the combined financial results of HNC and Retek for a period of at
least thirty (30) days of post-Exchange combined operations, HNC is to maintain
effective a shelf registration on Form S-3 pursuant to Rule 415 under the 1933
Act covering the resale by the former Retek shareholders of Exchange Shares held
by such former Retek shareholders during specified permitted time periods.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
None required under Rule 3-05(b) of Regulation S-X.
(b) Pro Forma Financial Information.
None required under Rule 3-05(b) of Regulation S-X.
(c) Exhibits.
The following exhibits are filed herewith:
2.01 Exchange Agreement dated as of October 25, 1996 by and among
registrant, Retek Distribution Corporation and the
shareholders of Retek. Pursuant to Item 601(b)(2) of
Regulation of S-K, certain schedules have been omitted but
will be furnished supplementally to the Commission upon
request.
2.02 Form of Option Exchange Agreement between registrant and each
person who held outstanding options to purchase shares of
Retek Distribution
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Corporation on November 29, 1996. Pursuant to Item 601(b)(2)
of Regulation of S-K, certain schedules have been omitted but
will be furnished supplementally to the Commission upon
request.
4.01 Registration Rights Agreement dated as of October 25, 1996 by
and among registrant and the former shareholders of Retek
Distribution Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 12, 1996
HNC SOFTWARE INC.
By:/s/ RAYMOND V. THOMAS
---------------------------
Raymond V. Thomas,
Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
2.01 Exchange Agreement dated as of October 25, 1996 by
and among registrant, Retek Distribution Corporation and
the shareholders of Retek Distribution Corporation.
2.02 Form of Option Exchange Agreement between registrant and
each person who held outstanding options to purchase
shares of Retek Distribution Corporation on November 29,
1996.
4.01 Registration Rights Agreement dated as of October 25, 1996
by and among registrant and the former shareholders of
Retek Distribution Corporation.
</TABLE>
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Exhibit 2.01
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "AGREEMENT") is made and entered into as
of October 25, 1996 (the "AGREEMENT DATE") by and among HNC SOFTWARE INC., a
Delaware corporation ("HNC"), RETEK DISTRIBUTION CORPORATION, a British Virgin
Islands corporation ("RETEK") that is an international business company formed
under the British Virgin Islands' International Business Companies Act, and The
Mulberry Trust and The Kulmor Trust, the only members (or shareholders) of Retek
(each individually a "RETEK SHAREHOLDER" and collectively the "RETEK
SHAREHOLDERS").
RECITALS
A. The parties intend that, subject to the terms and conditions of this
Agreement, HNC will acquire 100% of the outstanding share capital of Retek from
the Retek Shareholders pursuant to the terms and conditions set forth herein in
exchange for shares of HNC Common Stock. The parties also intend for such
exchange to qualify as a "pooling of interests" transaction for accounting
purposes.
B. Upon the effectiveness of the Exchange (as defined below), all the
outstanding shares of Retek will be transferred to HNC in exchange for shares of
HNC Common Stock , and (ii) all the outstanding options to purchase shares of
Retek will be exchanged for options to purchase shares of HNC Common Stock, all
as provided in this Agreement and that certain Option Exchange Agreement (as
defined below).
C. The representations and warranties of Retek and the Retek
Shareholders herein are a material inducement to HNC to enter into this
Agreement.
D. The parties acknowledge that the Exchange will not qualify, as and
is not intended to qualify, as a reorganization under Section 368 of the U.S.
Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
will have the meanings set forth below:
1.1 "HNC ANCILLARY AGREEMENTS" means, collectively, each
agreement, certificate or document (other than this Agreement) which HNC is to
enter into as a party thereto, or is to otherwise execute and deliver, pursuant
to or in connection with this Agreement.
1.2 "HNC AVERAGE PRICE PER SHARE" means the average of the
closing prices per share of HNC Common Stock (in U.S. dollars) as quoted on the
Nasdaq National Market (or such other exchange or quotation system on which HNC
Common Stock is then traded or quoted) and reported in The Wall Street Journal
for the ten (10) trading days ending on, and
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inclusive of, November 1, 1996; provided, however, that notwithstanding the
foregoing, in no event shall the HNC Average Price Per Share, for purposes of
this Agreement, be less than $28.00 per share of HNC Common Stock, as presently
constituted.
1.3 "HNC COMMON STOCK" means the Common Stock, $0.001 par
value per share, of HNC.
1.4 "RETEK ANCILLARY AGREEMENTS" means, collectively, each
agreement, certificate or document (other than this Agreement) which Retek is to
enter into as a party thereto, or is to otherwise execute and deliver, pursuant
to or in connection with this Agreement.
1.5 "RETEK CERTIFICATES" means the share certificates
representing all the Retek Shareholders' shares of Retek Stock.
1.6 "RETEK STOCK" means the shares of Retek, U.S. $1.00 par
value per share, comprising the authorized capital of Retek, as constituted
immediately prior to the Closing.
1.7 "RETEK DERIVATIVE SECURITIES" means, collectively: (a) any
warrant, option, right or other security that entitles the holder thereof to
purchase or otherwise acquire any shares of the capital stock of Retek
(collectively, "RETEK STOCK RIGHTS"); (b) any note, evidence of indebtedness,
stock or other security of Retek that is convertible into or exchangeable for
any shares of the capital stock of Retek or any Retek Stock Rights ("RETEK
CONVERTIBLE SECURITY"); and (c) any warrant, option, right, note, evidence of
indebtedness, stock or other security that entitles the holder thereof to
purchase or otherwise acquire any Retek Stock Rights or any Retek Convertible
Security; provided, however, that the term "Retek Derivative Securities" does
not include any Retek Options (as defined below).
1.8 "RETEK FULLY DILUTED NUMBER" means that number that is
equal to the sum of: (a) the total number of shares of Retek Stock that are
issued and outstanding immediately prior to the Closing; plus (b) the total
number of shares of Retek Stock that are issuable by Retek upon the exercise of
all Retek Options that are issued and outstanding immediately prior to the
Closing; plus (c) the total number of shares of Retek Stock that, immediately
prior to the Closing, are directly or indirectly ultimately issuable by Retek
upon the exercise, conversion or exchange of all Retek Derivative Securities (if
any) that are issued and outstanding immediately prior to the Closing.
1.9 "RETEK OPTIONEES" means those persons who, immediately
prior to the Closing, hold outstanding options to purchase shares of Retek
Stock, who will consist solely of those individuals listed on EXHIBIT B hereto.
1.10 "RETEK OPTIONS" means those options to purchase shares of
Retek Stock granted by Retek to the Retek Optionees that are outstanding
immediately prior to the Closing, and are listed on EXHIBIT B hereto. Exhibit B
lists the correct total number of Retek Options held by each Retek Optionee and
the exercise price per share of each Retek Option.
1.11 "RETEK SHAREHOLDERS" means those persons who, immediately
prior to the Closing, hold the shares of Retek Stock that are outstanding
immediately prior to the Closing, who will consist solely of those entities
listed on EXHIBIT A hereto.
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1.12 "CLOSING" is defined in Section 7.1.
1.13 "CLOSING DATE" is defined in Section 7.1.
1.14 "EXCHANGE" means, collectively, the exchange of all of
the outstanding Retek Stock for the Exchange Shares and the exchange of all the
Retek Options for HNC Options contemplated by Section 2 below.
1.15 "EXCHANGE NUMBER" means the quotient obtained by dividing
(i) the Transaction Shares (as defined below) by (ii) the Retek Fully Diluted
Number.
1.16 "EXCHANGE SHARES" means the total number of shares of HNC
Common Stock, as presently constituted, that will be issued under this Agreement
in exchange for all of the shares of Retek Stock that are issued and outstanding
immediately prior to the Closing and is equal to the product obtained by
multiplying (i) the total number of shares of Retek Stock that are issued and
outstanding immediately prior to the Closing by (ii) the Exchange Number.
1.17 "OPTIONEE AGREEMENTS" means, collectively, the Optionee
Investment Representation Letter, the Option Exchange Agreement and each other
agreement, certificate or document which a Retek Optionee is to enter into as a
party thereto, or is to otherwise execute and deliver pursuant to or in
connection with this Agreement.
1.18 "SHAREHOLDER ANCILLARY AGREEMENTS" means, collectively
the Investment Representation Letter, the Escrow Agreement, the Registration
Rights Agreement, the Retek Affiliates Letter, the Stock Power, Form W-8 and
each other agreement, certificate or document (other than this Agreement) to
which a Retek Shareholder is to enter into as a party thereto, or is to
otherwise execute and deliver pursuant to or in connection with this Agreement.
1.19 "TRANSACTION SHARES" means that number of shares of HNC
Common Stock, as presently constituted, that is equal to the quotient obtained
by dividing (i) U.S. $47,329,000 by (ii) the lesser of: (A) $35.00 per share of
HNC Common Stock, as presently constituted; or (B) the HNC Average Price Per
Share.
Other capitalized terms defined elsewhere in this Agreement and not
defined in this Section 1 shall have the meanings assigned to such terms in this
Agreement.
2. THE EXCHANGE
Subject to the terms and conditions of this Agreement, at the
Closing:
(a) each of the Retek Shareholders shall irrevocably assign
and transfer to HNC all of their shares of Retek Stock, the amounts of which are
set forth beside their respective names on Exhibit A, and in exchange therefor
HNC shall issue to each Retek Shareholder the number of shares of HNC Common
Stock determined in accordance with Section 2.1 below;
(b) in addition, HNC shall pay the Retek Shareholders the
aggregate sum of U.S. $1,000 in cash in proportion to each Retek Shareholder's
respective percentage share holdings in Retek as shown on Exhibit A; and
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(c) the Retek Optionees shall irrevocably transfer and
surrender to HNC all of their Retek Options (the number of shares of Retek Stock
subject to each such option is set forth beside each Retek Optionee's respective
name on Exhibit B) and in exchange therefor HNC shall issue to each Retek
Optionee options to purchase that number of shares of HNC Common Stock
determined in accordance with Section 2.2 below.
2.1 Exchange of Shares.
2.1.1 Exchange of Retek Stock. At the Closing, each
share of Retek Stock that is issued and outstanding immediately prior to the
Closing will be exchanged for a number of shares of HNC Common Stock equal to
the Exchange Number, subject to the provisions of Section 2.1.2 regarding the
elimination of fractional shares. Subject to surrender and delivery to HNC by
each Retek Shareholder of the applicable Retek Certificates at the Closing and
an accompanying Stock Power (in a form approved by counsel to HNC and HNC's
transfer agent) and Form W-8, each Retek Shareholder shall receive a stock
certificate for its Exchange Shares (less the Escrow Shares, as defined below)
within twenty (20) business days after the Closing.
2.1.2 Fractional Shares. No fractional shares of HNC
Common Stock shall be issued in connection with the Exchange. In lieu thereof,
each Retek Shareholder who would otherwise be entitled to receive a fraction of
a share of HNC Common Stock under Section 2.1.1, after aggregating all shares of
HNC Common Stock to be received by such Retek Shareholder, shall instead receive
from HNC, within ten (10) business days after the Closing, an amount of cash
equal to the product obtained by multiplying the HNC Average Price Per Share (as
adjusted to reflect any Capital Change (as defined below) of HNC) by the
fraction of a share of HNC Common Stock to which such holder would otherwise be
entitled.
2.1.3 Registration Rights. Effective upon the
Closing, each Retek Shareholder who receives shares of HNC Common Stock in the
Exchange shall be granted registration rights under the Securities Act of 1933,
as amended (the "1933 ACT") on the terms and subject to the conditions and
limitations of the Registration Rights Agreement attached hereto as EXHIBIT
2.1.3 (the "REGISTRATION RIGHTS AGREEMENT").
2.2 Exchange of Retek Options.
2.2.1 Surrender of Retek Options; Issuance of HNC
Options. Each Retek Option that is outstanding immediately prior to the Closing
shall, by virtue of the Option Exchange Agreement (as defined below), at the
Closing be exchanged for an option (an "HNC OPTION") to purchase that number of
shares of HNC Common Stock determined by multiplying the number of shares of
Retek Stock subject to such Retek Option immediately prior to the Closing by the
Exchange Number, at an exercise price per share of HNC Common Stock equal to the
exercise price per share of Retek Stock that was in effect for such Retek Option
immediately prior to the Closing divided by the Exchange Number (and rounded up
to the nearest whole cent); provided, however, that if the foregoing calculation
would result in a Retek Option being exchanged for an HNC Option that, after
aggregating all the shares of HNC Common Stock issuable upon the exercise of
such HNC Option, would be exercisable for a fraction of a share of HNC Common
Stock, then the number of shares of HNC Common Stock subject to such HNC Option
shall be rounded up to the nearest whole number of shares of HNC Common Stock.
The terms, exercisability, vesting
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schedule, and all other terms and conditions of Retek Options (including but not
limited to the terms and conditions applicable to such Retek Options by virtue
of the applicable stock option agreement) shall (except as otherwise provided in
the terms of such Retek Options), to the extent permitted by law and otherwise
reasonably practicable, be unchanged and continue in effect after the Exchange.
Continuous employment with Retek prior to the Closing shall be credited to the
optionee for purposes of determining the vesting of the number of shares of HNC
Common Stock subject to exercise under the HNC Option issued in exchange for a
Retek Option. Subject to surrender of the applicable Retek Option at the
Closing, each Retek Optionee shall receive a replacement HNC Option (or, in lieu
of surrendering the Retek Option agreement, a memorandum supplementing the Retek
Option which details the number of shares of HNC Common Stock subject to the HNC
Option exchanged for such Retek Option and the exercise price per share of HNC
Common Stock of such HNC Option) within twenty (20) business days after the
Closing. Prior to the Closing (as defined in Section 7.1), each Retek Optionee
shall execute and deliver to HNC an Option Exchange Agreement in the form of
EXHIBIT 2.2.1 hereto (the "OPTION EXCHANGE AGREEMENT").
2.2.2 Registration. HNC shall use its best efforts to
cause the shares of HNC Common Stock that are issuable upon exercise of the HNC
Options that are issued in exchange for Retek Options under Section 2.2.1 to be
registered on a registration statement (or to be issued pursuant to a
then-effective registration statement) on Form S-8 (or successor form)
promulgated by the Securities and Exchange Commission ("SEC") under the 1933
Act, as soon as reasonably practicable after the Closing, and no later than 45
days after the Closing, and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements for so
long as such HNC Options remain outstanding and HNC Common Stock is registered
under the Securities Exchange Act of 1934, as amended (the "1934 ACT").
2.3 Adjustments for Capital Changes. Notwithstanding the
provisions of Section 2.1 or Section 2.2, if at any time after the Agreement
Date and prior to the Closing, HNC or Retek recapitalizes, either through a
subdivision (or stock split) of any of its outstanding shares into a greater
number of shares, or a combination (or reverse stock split) of any of its
outstanding shares into a lesser number of shares, or reorganizes, reclassifies
or otherwise changes its outstanding shares into the same or a different number
of shares of other classes (other than through a subdivision or combination of
shares provided for in the previous clause), or declares a dividend on its
outstanding shares payable in shares or securities convertible into shares of
HNC Common Stock (a "CAPITAL CHANGE"), then the number of shares of HNC Common
Stock for which shares of Retek Stock are to be exchanged in the Exchange, and
the number of shares of HNC Common Stock to be issued upon exercise of the HNC
Options issued in exchange for the Retek Options in the Exchange (and the
exercise price of such HNC Options), shall be appropriately, equitably and
proportionately adjusted (as agreed to by HNC and Retek if the adjustment for
such Capital Change involves something other than a mathematical adjustment) so
as to maintain the proportionate interests of the shareholders of Retek and the
shareholders of HNC contemplated hereby (and, indirectly, the holders of the
Retek Options) so as to maintain the proportional interests of the holders of
Retek Stock and Retek Options contemplated by this Agreement. The provisions of
this Section shall not apply to any transaction not permitted to be undertaken
by Retek under the provisions of this Agreement. In the event that a Capital
Change affecting HNC Common Stock occurs prior to the Closing, then all prices
per share and numbers of shares used to compute the Exchange Number
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shall be deemed to have been equitably adjusted to reflect such Capital Change
as necessary to effect the purposes and intent of this Section .
2.4 Escrow Agreement. At the Closing, HNC shall withhold ten
percent (10%) of the shares of HNC Common Stock to be issued to the Retek
Shareholders in accordance with Section 2.1, rounded down to the nearest whole
number of shares of HNC Common Stock to be issued to each Retek Shareholder (the
"ESCROW SHARES") and will deliver certificates representing such Escrow Shares
to State Street Bank and Trust Company or a similar institution, as escrow agent
(the "ESCROW AGENT"), together with related stock transfer powers, to be held by
the Escrow Agent as security for the Retek Shareholders' indemnification
obligations under Section 11 and pursuant to the provisions of an Escrow
Agreement (the "ESCROW AGREEMENT") in substantially the form of EXHIBIT 2.4. The
Escrow Shares will be represented by certificates issued in the names of the
Retek Shareholders in proportion to their respective interests therein and will
be held by the Escrow Agent during that time period (the "ESCROW PERIOD")
specified in the Escrow Agreement. The Retek Shareholders hereby consent to,
approve and agree to be personally bound by: (i) the indemnification provisions
of Section 11 of this Agreement; (ii) all of the terms, conditions and
limitations in the Escrow Agreement; and (iii) the appointment of Robert
Jennings as the representative of the Retek Shareholders (the "REPRESENTATIVE")
under the Escrow Agreement and as the attorney-in-fact and agent for and on
behalf of each Retek Shareholder as provided in the Escrow Agreement, and the
taking by the Representative of any and all actions and the making of any and
all decisions required or permitted to be taken by the Representative under the
Escrow Agreement (including, without limitation, the exercise by the
Representative of the power to: (i) authorize delivery to HNC of Escrow Shares
in satisfaction of claims by HNC or any other Indemnified Person (as defined
herein); (ii) agree to, negotiate and enter into settlements and compromises of
such claims, and demand arbitration and comply with orders of courts and awards
of arbitrators with respect to such claims; (iii) arbitrate, resolve, settle or
compromise any claim for indemnity made pursuant to Section 11; and (iv) take
all actions necessary in the judgment of the Representative for the
accomplishment of the foregoing). The Representative will have unlimited
authority and power to act on behalf of each Retek Shareholder with respect to
the Escrow Agreement and the disposition, settlement or other handling of all
claims governed by the Escrow Agreement, and all rights or obligations arising
under the Escrow Agreement so long as all Retek Shareholders are treated in the
same manner. The Retek Shareholders will be bound by all actions taken by the
Representative in connection with the Escrow Agreement, and HNC will be entitled
to rely on any action or decision of the Representative. In performing the
functions specified in this Agreement and the Escrow Agreement, the
Representative will not be liable to the Retek Shareholders in the absence of
gross negligence or willful misconduct on the part of the Representative. Any
out-of-pocket costs and expenses reasonably incurred by the Representative in
connection with actions taken pursuant to the terms of the Escrow Agreement will
be paid by the Retek Shareholders to the Representative in proportion to their
respective percentage interests in the Escrow Shares.
2.5 Further Assurances. If, at any time after the Closing, HNC
considers or is advised that any further instruments, deeds, assignments or
assurances are reasonably necessary or desirable to consummate the Exchange or
to carry out the purposes of this Agreement at or after the Closing, then HNC,
Retek and their respective officers and directors may, and each Retek
Shareholder shall, execute and deliver all such proper deeds, assignments,
instruments and
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assurances and do all other things necessary or desirable to consummate the
Exchange and to carry out the purposes and intent of this Agreement, in the name
of Retek or otherwise.
2.6 Securities Laws Issues. HNC shall issue the Exchange
Shares and the HNC Options pursuant to an exemption from registration under
Section 4(2) and/or Regulation D promulgated under the 1933 Act. Concurrently
with execution of this Agreement, each Retek Shareholder will execute and
deliver to HNC an Investment Representation Letter in the form of EXHIBIT 2.6-A
hereto (the "INVESTMENT REPRESENTATION LETTER"). Prior to the Closing and such
Retek Optionee's execution of the Option Exchange Agreement, each Retek Optionee
will execute and deliver to HNC an Optionee Investment Representation Letter in
the form of EXHIBIT 2.6-B hereto (the "OPTIONEE INVESTMENT REPRESENTATION
LETTER").
2.7 Pooling of Interests. The parties acknowledge that, as a
material inducement to HNC to enter into this Agreement and consummate the
Exchange, the Exchange is intended to qualify as a "pooling of interests" for
accounting purposes. Concurrently with the execution of this Agreement, each
Retek Shareholder, Robert Jennings, John N. Buchanan and Christopher Coats shall
execute and deliver to HNC a Retek Affiliates Agreement in the form of EXHIBIT
2.7 hereto (the "RETEK AFFILIATES AGREEMENT").
2.8 Example. EXHIBIT 2.8 hereto sets forth an illustration of
the operation of the provisions of Section 2 of this Agreement regarding the
exchange of shares of Retek Stock and Retek Options in the Exchange.
3. REPRESENTATIONS AND WARRANTIES OF RETEK AND THE RETEK SHAREHOLDERS
Retek and each of the Retek Shareholders hereby jointly and
severally represent and warrant to HNC that, except as set forth in a letter
addressed to HNC from Retek dated the Agreement Date and delivered by Retek to
HNC concurrently herewith (the "RETEK DISCLOSURE LETTER"), each of the following
representations and statements in this Section 3 are true and correct.
3.1 Organization and Good Standing. Retek is a corporation
duly organized, validly existing and in good standing under the laws of the
British Virgin Islands. Retek has the corporate power and authority to own,
operate and lease its properties and to carry on its business as now conducted
and as proposed to be conducted, and is duly qualified to transact business as a
foreign corporation in each jurisdiction in which its failure to be so qualified
would have a Material Adverse Effect. As used in this Agreement, the term
"MATERIAL ADVERSE EFFECT" when used with reference to Retek (either alone or
collectively with all Retek Subsidiaries, as defined below), means any event,
change or effect that is (or will with the passage of time be) materially
adverse to Retek's condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations or prospects.
3.2 Power, Authorization and Validity.
3.2.1 Retek has the right, power, legal capacity and
authority to enter into, execute, deliver and perform its obligations under this
Agreement and all Retek Ancillary Agreements and Retek has all requisite
corporate power and authority to consummate the Exchange.
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The execution, delivery and performance of this Agreement and each of the Retek
Ancillary Agreements by Retek have been duly and validly approved and authorized
by all necessary corporate action on the part of Retek's Board of Directors.
Each of the Retek Shareholders has the right, power, legal capacity and
authority to enter into, execute, deliver and perform such Retek Shareholder's
obligations under this Agreement and all Shareholder Ancillary Agreements and
has the requisite power and authority to consummate the Exchange. The execution,
delivery and performance of this Agreement and each of the Shareholder Ancillary
Agreements by such Retek Shareholder have been duly and validly approved and
authorized by all necessary action specified in its governing instruments or
agreement and on the part of such Retek Shareholder's trustor(s), trustee(s) and
beneficiaries, as applicable.
3.2.2 No filing, authorization, consent, approval or
order, governmental or otherwise, is necessary or required to be made or
obtained by Retek or any Retek Shareholder or Retek Optionee to enable Retek and
the Retek Shareholders or Retek Optionees to lawfully enter into, and to perform
their respective obligations under, this Agreement, the Retek Ancillary
Agreements, the Shareholder Ancillary Agreements and/or the Optionee Agreements.
3.2.3 This Agreement and the Retek Ancillary
Agreements are, or when executed by Retek will be, valid and binding obligations
of Retek enforceable in accordance with their respective terms, except as to the
effect, if any, of (a) applicable bankruptcy and other similar laws affecting
the rights of creditors generally and (b) rules of law governing specific
performance, injunctive relief and other equitable remedies. This Agreement and
the Shareholder Ancillary Agreements are, or when executed by such Retek
Shareholder will be, valid and binding obligations of such Retek Shareholder
enforceable in accordance with their respective terms, except as to the effect,
if any, of (a) applicable bankruptcy and other similar laws affecting the rights
of creditors generally and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.2.4 All representations, warranties and other
statements made by each Retek Shareholder in the Investment Representation
Letter executed and delivered to HNC by such Retek Shareholder pursuant hereto
(a) is now, and at the Closing shall be true and correct, and (b) shall be
deemed to be representations and warranties made pursuant to this Section 3 for
all purposes of this Agreement (including but not limited to Section 11 hereof)
and the Escrow Agreement. In addition, all representations, warranties and
statements made by each Retek Optionee in the Optionee Agreements executed and
delivered to HNC by such Retek Optionee pursuant hereto, is now, and at the
Closing shall be, true and correct.
3.3 Capitalization of Retek.
3.3.1 Outstanding Stock. The authorized capital stock
of Retek consists entirely of 1,000 ordinary shares, $1.00 U.S. par value per
share, of which a total of 100 shares are issued and outstanding, all of which
are now owned and held (and all of which at the Closing will be owned and held)
only by the Retek Shareholders in the respective amounts shown in Exhibit A. No
other shares of the capital stock of Retek are (or will at Closing be)
authorized, issued or outstanding. No fractional shares of Retek Stock are (or
will at Closing be) issued or outstanding. All issued and outstanding shares of
Retek Stock and all of the issued and outstanding Retek
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Options have been duly authorized and validly issued, are fully paid and
nonassessable, are not subject to any claim, lien, preemptive right, or right of
rescission, and have been offered, issued, sold and delivered by Retek (and, if
applicable, transferred) in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of all applicable securities
laws, Retek's Articles and Memorandum of Association and other charter documents
and all agreements to which Retek or any Retek Shareholder is a party. A list of
all holders of Retek Stock, and the number of shares of Retek Stock owned by
each such holder has been delivered by Retek to HNC herewith as Exhibit A.
3.3.2 No Options, Warrants or Rights. Except for
Retek Options to purchase a total of eleven and four-tenths (11.4) shares of
Retek Stock which are outstanding on the Agreement Date and held by the persons
listed on Exhibit B (who are all of the Retek Optionees), there are no options,
warrants, convertible or other securities, calls, commitments, conversion
privileges, preemptive rights or other rights or agreements outstanding to
purchase or otherwise acquire (whether directly or indirectly) any shares of
Retek's authorized but unissued capital stock or any securities convertible into
or exchangeable for any shares of Retek's capital stock or obligating Retek to
grant, issue, extend, or enter into, any such option, warrant, convertible or
other security, call, commitment, conversion privilege, preemptive right or
other right or agreement, and Retek has no liability for any dividends accrued
but unpaid. No person or entity holds or has any option, warrant or other right
to acquire any issued and outstanding shares of the capital stock of Retek from
any record or beneficial holder of shares of the capital stock of Retek. No
shares of Retek Stock are reserved for issuance under any stock purchase, stock
option or other benefit plan. Of the options for eleven and four-tenths (11.4)
shares of Retek Stock that have been granted and are outstanding on the
Agreement Date, no such options have been exercised as of the Agreement Date. A
list of all holders of Retek Options, the number of Retek Options held by each
such person, the date of grant, vesting schedule and per share exercise price of
each such Retek Option, is set forth in Exhibit B. During the two (2) year
period immediately prior to the Agreement Date, Retek has not authorized, or
taken any action to authorize, the acceleration of the time during which any
holder of any option, warrant or other right to purchase or acquire any share of
capital stock of Retek may exercise such option, warrant or right.
3.3.3 No Voting Arrangements or Registration Rights.
There are no voting agreements, voting trusts, rights of first refusal or other
restrictions (other than normal restrictions on transfer under applicable
securities laws) applicable to any of Retek's outstanding securities or to the
conversion of any shares of Retek Stock in the Exchange. Retek is not under any
obligation to register under the 1933 Act or otherwise any of its presently
outstanding securities or any securities that may be subsequently issued.
3.4 Subsidiaries.
3.4.1 Organizational Data. Retek has never been a
subsidiary of any corporation, partnership, limited liability company, joint
venture or other business entity. EXHIBIT 3.4 sets forth any interest, direct or
indirect, in any corporation, partnership, limited liability company, joint
venture or other business entity held by Retek (the "RETEK SUBSIDIARIES") and
the Retek Subsidiaries. Exhibit 3.4 lists, with respect to Retek and each of the
Retek Subsidiaries, its exact legal name; the jurisdiction of formation; date of
formation; federal employer identification
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number or equivalent; number and type of securities authorized and outstanding;
name and address of each security holder; name, address, telephone and fax
number of each officer and director or other person having authority with
respect to such entity, indicating all current titles held by each individual;
its headquarters address, telephone and facsimile numbers; its registered agent
and/or office in its jurisdiction of formation (if applicable); all foreign
jurisdictions in which it is qualified or registered to do business; the date it
was qualified or registered and its registered agent and/or office in each such
jurisdiction; all fictitious, assumed or other names of any type that are
registered or used by it or under which it has done business; and any name
changes, recapitalizations, mergers, reorganization or similar events since its
date of formation. Accurate and complete copies of articles or certificate of
incorporation, articles of association, memorandum of association, bylaws and
other charter documents, each as amended to date, of Retek and each of the Retek
Subsidiaries have been provided to Fenwick & West LLP, counsel to HNC. Exhibit
3.4 also lists, with respect to Retek and each of the Retek Subsidiaries, each
predecessor corporation, partnership, limited liability company, joint venture
or other business entity of Retek and of each Retek subsidiary.
3.4.2 Authorization. Each of the Retek Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted and as proposed to be conducted, and is qualified to transact
business as a foreign corporation in each jurisdiction in which its
qualification as such is required. Exhibit 3.4 lists the material assets,
obligations and operations of the Retek Subsidiaries.
3.4.3 Securities. All outstanding shares of stock of
the Retek Subsidiaries are validly issued, fully paid and nonassessable and not
subject to preemptive rights and are owned of record and beneficially solely by
Retek. The outstanding shares of the Retek Subsidiaries are not subject to any
claim, lien, preemptive right, or right of rescission, and have been offered,
issued, sold, transferred and delivered in compliance with all registration or
qualification requirements (or applicable exemptions therefrom) of all
applicable securities laws. There are no options, warrants, convertible or other
securities, calls, commitments, conversion privileges, preemptive rights or
other rights or agreements outstanding to purchase or otherwise acquire (whether
directly or indirectly) any shares of any of the authorized but unissued capital
stock of any of the Retek Subsidiaries or any securities convertible into or
exchangeable for any shares of capital stock of any of the Retek Subsidiaries or
obligating any of the Retek Subsidiaries to grant, issue, extend, or enter into
any such option, warrant, convertible or other security, call, commitment,
conversion privilege, preemptive right or other right or agreement. No person or
entity holds or has any option, warrant or other right to acquire any issued and
outstanding shares of the capital stock of any of the Retek Subsidiaries from
any holder of shares of the capital stock of such entity. No shares of any of
the Retek Subsidiaries are reserved for issuance under any stock purchase, stock
option or other benefit plan. There are no voting agreements, voting trusts,
rights of first refusal or other restrictions (other than normal restrictions on
transfer under applicable securities laws) applicable to any of the outstanding
securities of any of the Retek Subsidiaries.
3.4.4 Definition of "Retek". Solely for purposes of
the remainder of this Section 3 and Section 5, unless otherwise expressly
provided therein or where the context clearly otherwise requires, any reference
made to "Retek" shall be deemed to be a reference to, and to include, each of
Retek and each of the Retek Subsidiaries and the predecessors of each.
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3.5 No Violation of Existing Agreements. Neither the execution
and delivery of this Agreement or any Retek Ancillary Agreement, nor the
consummation of the Exchange or any of the other transactions contemplated
hereby, nor Retek's discussion or negotiation with HNC of the Exchange or any
other transaction contemplated hereby, will conflict with, or (with or without
notice or lapse of time, or both) result in a termination, breach, impairment or
violation of: (i) any provision of the charter documents of Retek as currently
in effect; (ii) any federal, state, local or foreign judgment, writ, decree,
order, statute, rule or regulation applicable to Retek or its assets or
properties; or (iii) any material instrument, agreement, contract, letter of
intent or commitment to which Retek is a party or by which Retek or its assets
or properties are or were bound (including but not limited to any letter of
intent or agreement with PeopleSoft, Inc.). The consummation of the Exchange by
Retek will not require the consent of any third party other than the approval of
the Retek Shareholders and Retek Optionees and no agreement to which Retek is a
party requires that any other party thereto consent to the Exchange, whether as
a condition to the assignment or transfer of such agreement, or otherwise.
3.6 Litigation. There is no action, suit, arbitration,
mediation, proceeding, claim or investigation pending against Retek (or against
any officer or director of Retek or, to the best of the knowledge of Retek and
the Retek Shareholders, against any employee or agent of Retek, in their
capacity as such or relating to their employment, services or relationship with
Retek) before any court, administrative agency or arbitrator that, if determined
adversely to Retek (or any such officer, director, employee or agent) may
reasonably be expected to have a Material Adverse Effect on Retek, nor, to the
best of Retek's knowledge, has any such action, suit, proceeding, arbitration,
mediation, claim or investigation been threatened. There is no basis for any
person, firm, corporation or other entity, to assert a claim against Retek or
HNC based upon: (a) Retek's entering into this Agreement or consummating the
Exchange; (b) any claims of ownership, rights to ownership, or options (except
for the 11.4 options described in Section 3.3.2 and set forth on Exhibit B
hereto), warrants or other rights to acquire ownership, of any shares of the
capital stock of Retek; or (c) any rights as a Retek shareholder, including any
option, warrant or preemptive rights or rights to notice or to vote. There is no
judgment, decree, injunction, rule or order of any governmental entity or
agency, court or arbitrator outstanding against Retek.
3.7 Taxes. Retek has timely filed all national, state, local
and foreign tax returns required to be filed, has timely paid all taxes required
to be paid in respect of all periods for which returns have been filed, has
established an adequate accrual or reserve for the payment of all taxes payable
in respect of the periods subsequent to the periods covered by the most recent
applicable tax returns, has made all necessary estimated tax payments, and has
no material liability for taxes in excess of the amount so paid or accruals or
reserves so established. Retek is not delinquent in the payment of any tax or in
the filing of any tax returns, and no deficiencies for any tax have been
threatened, claimed, proposed or assessed. Retek has not received any
notification that any issues have been raised (and are currently pending) by any
taxing authority (including but not limited to any franchise, sales or use tax
authority) regarding Retek and no tax return of Retek has ever been audited by
any national, state, local or foreign taxing agency or authority. No tax liens
have been filed against any assets of Retek. Retek is not a "personal holding
company" within the meaning of Section 542 of the Code. Retek is not a "U.S.
Real Property Holding Company" as defined in the Code.
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For the purposes of this Section, the terms "TAX" and "TAXES"
include all national, state, local and foreign income, alternative or add-on
minimum income, gains, franchise, excise, property, sales, use, employment,
license, payroll (including any taxes or similar payments required to be
withheld from payments of salary or other compensatory payments), ad valorem,
payroll, stamp, occupation, recording, value added or transfer taxes,
governmental charges, fees, customs duties, levies or assessments (whether
payable directly or by withholding), and, with respect to such taxes, any
estimated tax, interest and penalties or additions to tax and interest on such
penalties and additions to tax.
3.8 Retek Financial Statements. Retek was incorporated in July
1995. Retek's fiscal year ends on December 31. Retek has delivered to HNC an
unaudited draft version of the Retek Financial Statements (as defined below)
which is attached as EXHIBIT 3.8 hereto (the "UNAUDITED RETEK FINANCIALS"). The
Unaudited Retek Financials will not vary in any material respect from the Retek
Financial Statements. Prior to the Closing, and as promptly as practicable after
execution of this Agreement, Retek shall deliver to HNC (i) Retek's audited
balance sheet as of December 31, 1995 and audited consolidated statement of
operations, audited consolidated statement of cash flows and audited
consolidated statement of shareholders' equity for the year ended December 31,
1995, and (ii) Retek's audited consolidated balance sheet as of June 30, 1996
(the "BALANCE SHEET"), Retek's audited consolidated statement of operations for
the six-month period ended June 30, 1996, and Retek's audited consolidated
statements of cash flows and audited consolidated statement of shareholders'
equity for the six-month period ended June 30, 1996 (all such financial
statements of Retek are hereinafter collectively referred to as the "RETEK
FINANCIAL STATEMENTS"). The Retek Financial Statements shall (a) be in
accordance with the books and records of Retek, (b) fairly present the financial
condition of Retek at the dates therein indicated and the results of operations
for the periods therein specified and (c) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis with
prior periods. Retek has no material debt, liability or obligation of any nature
(whether intercompany or owed to third parties), whether accrued, absolute,
contingent or otherwise, and whether due or to become due, except for (i) those
shown on the unaudited June 30, 1996 balance sheet included in the Unaudited
Retek Financials (the "UNAUDITED BALANCE SHEET"), and (ii) those that may have
been incurred after June 30, 1996 (the "BALANCE SHEET DATE") in the ordinary
course of Retek's business consistent with past practice, and that are not
material in amount, either individually or collectively. All reserves
established by Retek and set forth in the Unaudited Balance Sheet are reasonably
adequate. At the Balance Sheet Date, there were no material loss contingencies
(as such term is used in United States Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March
1975) which are not adequately provided for in the Balance Sheet as required by
said Statement No. 5.
3.9 Title to Properties. Retek has good and marketable title
to all of its assets (including but not limited to those shown on the Balance
Sheet), free and clear of all liens, mortgages, security interests, claims,
charges, restrictions or encumbrances. All machinery, vehicles, equipment and
other tangible personal property included in such assets and properties are in
good condition and repair, normal wear and tear excepted, and all leases of real
or personal property to which Retek is a party are fully effective and afford
Retek peaceful and undisturbed possession of the real or personal property that
is the subject of the lease. Retek is not in violation of any zoning, building,
safety or environmental ordinance, regulation or requirement or other law
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or regulation applicable to the operation of owned or leased properties (the
violation of which would have a Material Adverse Effect on its business), nor
has Retek received any notice of violation with which it has not complied. Retek
does not own any real property.
3.10 Absence of Certain Changes. Since the Balance Sheet Date,
there has not been with respect to Retek any:
(a) material adverse change in the condition
(financial or otherwise), properties, assets, liabilities, businesses,
operations, results of operations or prospects of Retek;
(b) amendments or changes in the charter documents of
Retek;
(c) (i) incurrence, creation or assumption by Retek
of any mortgage, security interest, pledge, lien or other encumbrance on any of
the assets or properties of Retek or any material obligation or liability or any
indebtedness for borrowed money; or (ii) issuance or sale of, or change with
respect to the rights of, any debt or equity securities of Retek or any options
or other rights to acquire from Retek, directly or indirectly, any debt or
equity securities of Retek;
(d) payment or discharge of a lien or liability which
lien or liability was not either shown on the Balance Sheet or incurred in the
ordinary course of business after the Balance Sheet Date;
(e) purchase, license, sale or other disposition, or
any agreement or other arrangement for the purchase, license, sale or other
disposition, of any of the assets, properties or goodwill of Retek other than in
the ordinary course of its business consistent with its past practice;
(f) damage, destruction or loss, whether or not
covered by insurance, having (or likely with the passage of time to have) a
Material Adverse Effect on Retek;
(g) declaration, setting aside or payment of any
dividend on, or the making of any other distribution in respect of, the capital
stock of Retek, any split, combination or recapitalization of the capital stock
of Retek or any direct or indirect redemption, purchase or other acquisition of
the capital stock of Retek or any change in any rights, preferences, privileges
or restrictions of any outstanding security of Retek;
(h) change or increase in the compensation payable or
to become payable to any of the officers, employees, consultants or agents of
Retek, or any bonus or pension, insurance or other benefit payment or
arrangement (including without limitation stock awards, stock appreciation
rights or stock option grants) made to or with any of such officers, employees,
consultants or agents except in connection with normal salary or performance
reviews or otherwise in the ordinary course of business consistent with Retek's
past practice;
(i) change with respect to the management,
supervisory or other key personnel of Retek;
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(j) obligation or liability incurred by Retek to any
of its officers, directors or shareholders except normal compensation and
expense allowances payable to officers in the ordinary course of business
consistent with Retek's past practice;
(k) making of any loan, advance or capital
contribution to, or any investment in, any officer, director or record or
beneficial shareholder of Retek;
(l) entering into, amendment of, relinquishment,
termination or non-renewal by Retek of any contract, lease, transaction,
commitment or other right or obligation other than in the ordinary course of its
business consistent with its past practice or any written or oral indication or
assertion by the other party thereto of problems with Retek's services or
performance under such contract, lease, transaction, commitment or other right
or obligation or such other party's desire to so amend, relinquish, terminate or
not renew any such contract, lease, transaction, commitment or other right or
obligation;
(m) material change in the manner in which Retek
extends discounts or credits to customers or otherwise deals with its customers;
(n) entering into by Retek of any transaction,
contract or agreement or the conduct of business or operations other than in the
ordinary course of its business consistent with its past practices;
(o) transfer or grant of a right under any Retek IP
Rights (as defined in Section 3.13 below), other than those transferred or
granted in the ordinary course of Retek's business consistent with Retek's past
practice; or
(p) agreement or arrangement made by Retek to take
any action which, if taken prior to the date of this Agreement, would have made
any representation or warranty of Retek and the Retek Shareholders set forth in
this Agreement untrue or incorrect.
3.11 Contracts and Commitments. EXHIBIT 3.11 sets forth a list
of each of the following written or oral contracts, agreements, commitments or
other instruments to which Retek is a party or to which it or any of its assets
or properties is bound:
(a) consulting or similar agreement under which Retek
provides any advice or services to a customer of Retek;
(b) continuing contract for the future purchase,
sale, license, provision or manufacture of products, material, supplies,
equipment or services requiring payment to or from Retek in an amount in excess
of $25,000 per annum which is not terminable on 90 days' or less notice without
cost or other liability to Retek or in which Retek has granted or received
manufacturing rights, most favored customer pricing provisions or exclusive
marketing rights relating to any product or services, group of products or
services or territory;
(c) contract providing for the acquisition of
software by Retek, for the development of software for Retek, or the license of
software to Retek, which software is used or incorporated in any products
currently distributed by Retek or services currently provided by Retek
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or is contemplated to be used or incorporated in any products to be distributed
or services to be provided by Retek (other than software generally available to
the public at a per copy license fee of less than $1,000);
(d) joint venture or partnership contract or
agreement or other agreement which has involved or is reasonably expected to
involve a sharing of profits or losses in excess of $25,000 per annum with any
other party;
(e) contract or commitment for the employment of any
officer, employee or consultant of Retek or any other type of contract or
understanding with any officer, employee or consultant of Retek which is not
immediately terminable by Retek without cost or other liability;
(f) indenture, mortgage, trust deed, promissory note,
loan agreement, guarantee or other agreement or commitment for the borrowing of
money, for a line of credit or for a leasing transaction of a type required to
be capitalized in accordance with United States Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board;
(g) lease or other agreement under which Retek is
lessee of or holds or operates any items of tangible personal property or real
property owned by any third party and under which payments to such third party
exceed $5,000 per annum;
(h) agreement or arrangement for the sale of any
assets, properties, services or rights having a value in excess of $10,000,
other than in the ordinary course of business consistent with past practice;
(i) agreement which restricts Retek from engaging in
any aspect of its business or competing in any line of business in any
geographic area;
(j) Retek IP Rights Agreement (as defined in Section
3.13 below);
(k) agreement relating to the sale, issuance, grant,
exercise, award, purchase, repurchase or redemption of any shares of capital
stock or other securities of Retek or any options, warrants or other rights to
purchase or otherwise acquire any such shares of stock, other securities or
options, warrants or other rights therefor;
(l) contract with or commitment to any labor union;
or
(m) other agreement, contract, commitment or
instrument that is material to the business of Retek or that involves a
commitment by Retek in excess of $25,000.
A copy of each agreement or document required by this Section
to be listed on Exhibit 3.11 (collectively, the "RETEK MATERIAL AGREEMENTS") has
been delivered to Fenwick & West LLP, HNC's counsel. No consent or approval of
any third party is required to ensure that, following the Closing, any Retek
Material Agreement shall continue to be in full force and effect without any
breach or violation thereof caused by virtue of the Exchange or by any other
transaction called for by this Agreement.
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3.12 No Default. Retek is not in breach or default of, and has
not breached or been in default of, any Retek Material Agreement. Retek is not a
party to any contract, agreement or arrangement which has had, or could
reasonably be expected to have, a Material Adverse Effect on Retek. Retek does
not have any material liability for renegotiation of government contracts or
subcontracts, if any.
3.13 Intellectual Property.
3.13.1 Retek owns, or has the irrevocable right to
use, sell or license all Intellectual Property Rights (as defined below)
necessary or required for the conduct of its business as presently conducted and
as presently proposed to be conducted (such Intellectual Property Rights being
hereinafter collectively referred to as the "RETEK IP RIGHTS"), and such rights
to use, sell or license are sufficient for such conduct of its business. Retek
is the legal and beneficial owner of all rights, including all copyright and
worldwide distribution rights, to those certain computer software programs,
including all object code, source code, configurations, routines and algorithms
contained therein with annotations and related documentation, known as the Retek
Inventory Management System (formerly called the MERMAN Inventory Management
System), together with all alterations, modifications and reconfigurations
thereof in all forms of expression, including but not limited to, the source
code, object code, flowcharts, block diagrams, manuals and all other
documentation no matter how stored, transmitted, read or utilized and all
copyrights, trade secrets, patents, inventions (whether patentable or not),
proprietary rights and intellectual property rights associated therewith
(collectively the "SOFTWARE"). The term "Retek IP Rights" includes, without
limitation, the Software. Any and all rights to the Software previously owned or
held by third parties, including (but not limited to) the Retek Subsidiaries
(including those Retek Subsidiaries named below), Network Solutions Limited (a
corporation formed under the laws of the Isle of Man), Retek Information Systems
Limited (a corporation formed under the laws of the Isle of Man), The Original
R.I.S. Pty. Ltd., formerly named Retek Information Systems Pty. Ltd. (an
Australian corporation), Retek Information Systems Pty. Ltd. (an Australian
corporation), Retek Property Pty. Ltd. (an Australian corporation), R.I.S.
Property Trust (or its beneficiaries or shareholders), John N. Buchanan, Danjini
Pty. Ltd., Coats Holding Pty. Ltd., K.&C. Hillier Pty. Ltd., Christopher Newton
Coats, David Cottrell and Kent Lewis Hillier, Retek Information Systems, Inc. (a
corporation formed under the laws of the Province of British Columbia, Canada),
453158 B.C., Ltd. (a corporation formed under the laws of the Province of
British Columbia, Canada), Retek Information Systems, Inc. (a corporation formed
under the law of the State of Nevada, U.S.A.) and Retek Development, Inc. (a
corporation formed under the law of the State of Nevada, U.S.A.), have been
transferred to Retek and are owned outright, free and clear of any claims,
liens, security interest, mortgages, encumbrances or obligations, by Retek
Distribution Corporation, a British Virgin Islands corporation which is the
parent corporation of the Retek Subsidiaries. The only parties holding
distribution rights with respect to the Software are wholly owned subsidiaries
of Retek listed on Exhibit 3.4.
3.13.2 The execution, delivery and performance of
this Agreement and the consummation of the Exchange and the other transactions
contemplated hereby will not constitute a material breach of or default under
any instrument, contract, license or other agreement governing any Retek IP
Right (the "RETEK IP RIGHTS AGREEMENTS") and will not cause the forfeiture or
termination, or give rise to a right of forfeiture or termination, of any Retek
IP Right or materially
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impair the right of Retek to use, sell, license, provide or otherwise
commercially exploit any Retek IP Right or portion thereof (except where such
breach, forfeiture or termination would not have a Material Adverse Effect on
Retek ). There are no royalties, honoraria, fees or other payments payable by
Retek to any person by reason of the ownership, use, license, sale, exploitation
or disposition of the Retek IP Rights.
3.13.3 Neither the manufacture, marketing, license,
sale, furnishing or intended use of any product or service currently licensed,
utilized, sold, provided or furnished by Retek or currently under development by
Retek has violated or now violates any license or agreement between Retek and
any third party or infringes or misappropriates any Intellectual Property Right
of any other party; and there is no pending or, to the best knowledge of Retek
and the Retek Shareholders, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any Retek IP
Right nor, to the best knowledge of Retek and the Retek Shareholders, is there
any basis for any such claim, nor has Retek received any notice asserting that
any Retek IP Right or the proposed use, sale, license or disposition thereof
conflicts or will conflict with the rights of any other party, nor, to the best
knowledge of Retek and the Retek Shareholders, is there any basis for any such
assertion. To the best knowledge of Retek and the Retek Shareholders, no
employee or agent of or consultant to Retek is in violation of any term of any
employment contract, patent disclosure agreement, noncompetition agreement,
non-solicitation agreement or any other contract or agreement, or any
restrictive covenant relating to the right of any such employee, agent or
consultant to be employed thereby, or to use trade secrets or proprietary
information of others, and the employment of such employees or engagement of
such agents and consultants does not subject Retek to any liability.
3.13.4 Retek has taken reasonable and practicable
steps, in accordance with prevailing industry standards, designed to protect,
preserve and maintain the secrecy and confidentiality of all material Retek IP
Rights and all Retek's proprietary rights therein. All officers, employees,
agents and consultants of Retek having access to proprietary information have
executed and delivered to Retek an agreement regarding the protection of such
proprietary information and the assignment of inventions to Retek in the form
provided to counsel for HNC and copies of all such agreements, executed by all
such persons, have been delivered to HNC's counsel.
3.13.5 EXHIBIT 3.13 contains a list of all Retek IP
Rights and all worldwide applications, registrations, filings and other formal
actions made or taken pursuant to federal, state and foreign laws by Retek to
secure, perfect or protect its interest in Retek IP Rights, including, without
limitation, all patents, patent applications, copyrights (whether or not
registered), copyright applications, trademarks, service marks and trade names
(whether or not registered) and trademark, service mark and trade name
applications. Exhibit 3.13 lists, with respect to each item of Retek IP Rights,
the entity (Retek or one of the Retek Subsidiaries) which owns or holds such IP
Rights.
3.13.6 As used herein, the term "INTELLECTUAL
PROPERTY RIGHTS" means, collectively, all worldwide industrial and intellectual
property rights, including, without limitation, patents, patent applications,
patent rights, trademarks, trademark applications, trade dress rights, trade
names, service marks, service mark applications, copyrights, copyright
applications, mask work rights, mask work registrations, franchises, licenses,
inventions, trade secrets, know-how, customer lists, proprietary processes and
formulae, software source and object code, algorithms,
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architecture, structure, display screens, layouts, inventions, development tools
and all documentation and media constituting, describing or relating to the
above, including, without limitation, manuals, memoranda and records.
3.14 Compliance with Laws. Retek has complied, and is now and
at the Closing Date will be in compliance, in all material respects, with all
applicable national, state, local or foreign laws, ordinances, regulations, and
rules, and all orders, writs, injunctions, awards, judgments, and decrees
applicable to Retek or to Retek's assets, properties, and business. Retek holds
all permits, licenses and approvals from, and has made all filings with, third
parties, including government agencies and authorities, that are necessary in
connection with Retek's present business, except those where failure to do so
would not have a Material Adverse Effect.
3.15 Certain Transactions and Agreements. None of the
officers, directors or shareholders of Retek (nor any beneficiaries of any trust
that is a Retek Shareholder), nor any member of their immediate families, has
any direct or indirect ownership interest in Network Solutions Limited, a
corporation formed under the laws of the Isle of Man, Retek Information Systems
Ltd., a corporation formed under the laws of the Isle of Man, or in the case of
the officers and directors of Retek and members of their immediate families, in
any shareholder of Retek. None of the officers, directors or shareholders of
Retek (nor any beneficiaries of any trust that is a Retek Shareholder), nor any
member of their immediate families, has any direct or indirect ownership
interest in any firm or corporation that competes with, or does business with,
or has any contractual arrangement with Retek (except with respect to any
interest in less than one percent (1%) of the stock of any corporation whose
stock is publicly traded). None of said officers, directors, employees or
shareholders or any member of their immediate families, is directly or
indirectly interested in any contract or informal arrangement with Retek, except
for normal compensation for services as an officer, director or employee thereof
that have been disclosed to HNC and except for the grant of Retek Options
(listed in Exhibit B) to such persons. None of said officers, directors,
employees or shareholders or family members has any interest in any property,
real or personal, tangible or intangible (including but not limited to any Retek
IP Rights or any other Intellectual Property Rights) that is used in or that
pertains to the business of Retek, except for the normal rights of a
shareholder.
3.16 Employees, ERISA and Other Compliance.
3.16.1 Retek is in compliance in all material
respects with all applicable laws, agreements and contracts relating to
employment, employment practices, wages, hours, and terms and conditions of
employment, including, but not limited to, employee compensation matters in each
of the jurisdictions in which it conducts business. A list of all employees,
officers and consultants of Retek, their title, date of hire, employer entity
and current compensation is set forth on EXHIBIT 3.16.1, which has been
delivered to HNC. Retek does not have any employment contracts or consulting
agreements currently in effect that are not terminable at will (other than
agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions).
3.16.2 Retek (i) has never been and is not now
subject to a union organizing effort, (ii) is not subject to any collective
bargaining agreement with respect to any of its employees,
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(iii) is not subject to any other contract, written or oral, with any trade or
labor union, employees' association or similar organization, and (iv) does not
have any current labor disputes. Retek has good labor relations, and has no
knowledge of any facts indicating that the consummation of the transactions
contemplated hereby will have a material adverse effect on such labor relations.
Neither Retek nor any Retek Shareholder has any knowledge that any key employee
of Retek intends to leave the employ of Retek.
3.16.3 Retek does not have any "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). Retek has no pension plan which constitutes, or
has since the enactment of ERISA constituted, a "multiemployer plan" as defined
in Section 3(37) of ERISA. No Retek pension plans are subject to Title IV of
ERISA. Retek does not have any employee benefit plans that are subject to
statutory regulation under the laws of the British Virgin Islands, the United
Kingdom, Canada or Australia.
3.16.4 EXHIBIT 3.16.4 lists each employment,
severance or other similar contract, arrangement or policy, each "employee
benefit plan" as defined in Section 3(3) of ERISA (if any) and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' benefits, vacation benefits, severance
benefits, disability benefits, death benefits, hospitalization benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock purchase, phantom stock, stock appreciation or other forms of
incentive compensation or post-retirement insurance, compensation or benefits
for employees, consultants or directors which is entered into, maintained or
contributed to by Retek and covers any employee or former employee or consultant
or former consultant of Retek. Such contracts, plans and arrangements as are
described in this Section 3.16.4 are hereinafter collectively referred to as the
"RETEK BENEFIT ARRANGEMENTS." Each Retek Benefit Arrangement has been maintained
in compliance in all material respects with its terms and with the requirements
prescribed by any and all laws, statutes, orders, rules and regulations that are
applicable to such Retek Benefit Arrangement. Retek has delivered to HNC and its
counsel, Fenwick & West LLP, a complete and correct copy and summary description
of each Retek Benefit Arrangement.
3.16.5 There has been no amendment to, written
interpretation or announcement (whether or not written) by Retek relating to, or
change in employee participation or coverage under, any Retek Benefit
Arrangement that would increase materially the expense of maintaining such Retek
Benefit Arrangement above the level of the expense incurred in respect thereof
for Retek's fiscal year ended December 31, 1995.
3.16.6 The group health plans (as defined in Section
4980B(g) of the Code) that benefit employees of Retek are in compliance, in all
material respects, with the continuation coverage requirements of Section 4980B
of the Code as such requirements affect Retek and its employees. As of the
Closing Date, there will be no material outstanding, uncorrected violations
under the Consolidation Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), with respect to any of the Retek Benefit Arrangements, covered
employees, or qualified beneficiaries that could result in a Material Adverse
Effect on Retek, or in a material adverse effect on the business, operations or
financial condition of HNC as its successor. Retek has provided, or shall have
provided prior to the Closing, to individuals entitled thereto, all required
notices and coverage pursuant to Section 4980B of COBRA, with respect to any
"qualifying event" (as defined
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in Section 4980B(f)(3) of the Code) occurring prior to and including the Closing
Date, and no material amount payable on account of Section 4980B of the Code has
been incurred with respect to any current or former employees of Retek (or their
beneficiaries).
3.16.7 No benefit payable or which may become payable
by Retek pursuant to any Retek Benefit Arrangement or as a result of or arising
under this Agreement shall constitute an "excess parachute payment" (as defined
in Section 280G(b)(1) of the Code) which is subject to the imposition of an
excise tax under Section 4999 of the Code or which would not be deductible by
reason of Section 280G of the Code. Retek is not a party to any (a) agreement
(other than as described in (b) below) with any executive officer or other key
employee thereof (i) the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving Retek in
the nature of any of the transactions contemplated by this Agreement, (ii)
providing any term of employment or compensation guarantee, or (iii) providing
severance benefits or other benefits after the termination of employment of such
employee regardless of the reason for such termination of employment, or (b)
agreement or plan, including, without limitation, any stock option plan, stock
appreciation rights plan or stock purchase plan, any of the benefits of which
will be materially increased, or the vesting of benefits of which will be
materially accelerated, by the occurrence of the Exchange or any of the other
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
3.17 Corporate Documents. Retek has delivered to HNC and its
counsel for examination all documents and information listed in the Retek
Disclosure Letter or other Exhibits called for by this Agreement, including,
without limitation, the following: (a) copies of the charter documents as
currently in effect of Retek and each of the Retek Subsidiaries; (b) the Minute
Book containing all records of all proceedings, consents, actions, minutes, and
meetings of Retek and each of the Retek Subsidiaries, including (but not limited
to) actions of shareholders, board of directors and any committees thereof; (c)
the stock ledger and journal reflecting all stock issuances and transfers of
Retek and each Retek Subsidiary; (d) all permits, orders, and consents issued by
any regulatory agency with respect to Retek and each of the Retek Subsidiaries,
or any securities of Retek and each of the Retek Subsidiaries, and all
applications for such permits, orders, and consents; and (e) all agreements
required to be listed in Exhibit 3.11; and (f) all Retek Options.
3.18 No Brokers. Neither Retek, any of the Retek Shareholders
nor any affiliate of Retek is obligated for the payment of any fees or expenses
of any investment banker, broker or finder in connection with the origin,
negotiation or execution of this Agreement or in connection with the Exchange or
any other transaction contemplated hereby.
3.19 Books and Records. The books, records and accounts of
Retek (a) are in all material respects true, complete and correct, (b) have been
maintained in accordance with good business practices on a basis consistent with
prior years, (c) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of the assets of Retek, and (d)
accurately and fairly reflect the basis for the Retek Financial Statements.
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3.20 Insurance. EXHIBIT 3.20 hereto lists all fire and
casualty, general liability, business interruption, product liability, errors
and omissions, and sprinkler and water damage insurance maintained by Retek.
3.21 Environmental Matters.
3.21.1 During the period that Retek has leased or
owned its respective properties or owned or operated any facilities, there have
been no disposals, releases or threatened releases of Hazardous Materials (as
defined below) on, from or under such properties or facilities that resulted
from any act or omission of Retek or any of its employees, agents or invitees.
Retek has no knowledge of any presence, disposals, releases or threatened
releases of Hazardous Materials on, from or under any of such properties or
facilities, which may have occurred prior to Retek having taken possession of
any of such properties or facilities. For the purposes of this Agreement, the
terms "DISPOSAL," "RELEASE," and "THREATENED RELEASE" shall have the definitions
assigned thereto by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA").
For the purposes of this Agreement "HAZARDOUS MATERIALS" shall mean any
hazardous or toxic substance, material or waste which is or becomes prior to the
Closing regulated under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous materials," "toxic substance" or
"hazardous chemical" under (a) CERCLA; (b) any similar federal, state or local
law; or (c) regulations promulgated under any of the above laws or statutes.
3.21.2 None of the properties or facilities of Retek
is in violation of any federal, state or local law, ordinance, regulation or
order relating to industrial hygiene or to the environmental conditions on,
under or about such properties or facilities, including, but not limited to,
soil and ground water condition. During the time that Retek has owned or leased
its properties and facilities, neither Retek nor, to the best knowledge of Retek
and the Retek Shareholders, any third party, has used, generated, manufactured
or stored on, under or about such properties or facilities or transported to or
from such properties or facilities any Hazardous Materials, other than Retek's
lawful use of standard office supplies customarily used in office environments
that contain legally permitted amounts of Hazardous Materials that would have no
Material Adverse Effect.
3.21.3 During the time that Retek has owned or leased
its properties and facilities, there has been no litigation brought or
threatened against Retek, or, to the best knowledge of Retek and the Retek
Shareholders, against any lessor or owner of real property leased by Retek, or
any settlement reached by Retek or the Retek Shareholders with any party or
parties alleging the presence, disposal, release or threatened release of any
Hazardous Materials on, from or under any of such properties or facilities.
3.22 Disclosure. Neither this Agreement, its exhibits and
schedules, nor any of the certificates or documents to be delivered by Retek
and/or the Retek Shareholders to HNC under this Agreement, taken together,
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances under which such statements were made, not
misleading.
4. REPRESENTATIONS AND WARRANTIES OF HNC
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HNC hereby represents and warrants, that, except as set forth
in the letter from HNC that may be addressed to Retek dated the Agreement Date
and delivered by HNC to Retek concurrently herewith, if any (the "HNC DISCLOSURE
LETTER"), each of the following representations and statements in this Section 4
are true and correct:
4.1 Organization and Good Standing. HNC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to own, operate and lease
its properties and to carry on its business as now conducted and as proposed to
be conducted.
4.2 Power, Authorization and Validity.
4.2.1 HNC has the right, power and authority to enter
into, execute and perform its obligations under this Agreement and the HNC
Ancillary Agreements. The execution, delivery and performance of this Agreement
and the HNC Ancillary Agreements by HNC have been duly and validly approved and
authorized by HNC's Board of Directors.
4.2.2 No filing, authorization, consent, approval or
order, governmental or otherwise, is necessary or required to enable HNC to
enter into, and to perform its obligations under, this Agreement and the HNC
Ancillary Agreements, except for (a) any filings with the Securities and
Exchange Commission and other applicable securities authorities contemplated by
the Registration Rights Agreement attached hereto as Exhibit 2.1.3, (b) the S-8
registration statement contemplated by Section 2.2.2 hereof, (c) such filings as
may be required to comply with applicable securities laws in connection with the
Exchange itself, and (d) the consent of Silicon Valley Bank.
4.2.3 This Agreement and the HNC Ancillary Agreements
are, or when executed by HNC will be, valid and binding obligations of HNC,
enforceable in accordance with their respective terms, except as to the effect,
if any, of (a) applicable bankruptcy and other similar laws affecting the rights
of creditors generally and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies.
4.3 Capital Structure.
4.3.1 Stock. The authorized capital stock of HNC
consists of 50,000,000 shares of HNC Common Stock, $0.001 par value per share,
and 4,000,000 shares of Preferred Stock, $0.001 par value per share (the "HNC
PREFERRED STOCK"). At the close of business on October 16, 1996, 17,555,928
shares of HNC Common Stock were issued and outstanding. No shares of HNC
Preferred Stock are issued or outstanding. All outstanding shares of HNC Common
Stock are validly issued, fully paid and nonassessable and not subject to
preemptive rights.
4.3.2 Options. As of October 22, 1996: (a) a total of
3,043,774 shares of HNC Common Stock were unissued and reserved for issuance
under HNC's 1987 Stock Option Plan, HNC's 1995 Equity Incentive Plan, HNC's 1995
Directors Stock Option Plan (collectively, the "HNC OPTION PLANS") and under
stock options that were granted in connection with HNC's acquisition of Risk
Data Corporation, and (b) options to purchase a total of 2,774,145 shares of
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HNC Common Stock were outstanding. A total of 400,000 shares of HNC Common Stock
is reserved for issuance under HNC's 1995 Employee Stock Purchase Plan.
4.3.3 No Other Commitments. Except for the HNC stock
options (whether granted or ungranted) described in Section 4.3.2 above and
rights of HNC employees to subscribe for shares of HNC Common Stock under the
HNC 1995 Employee Stock Purchase Plan, as of the Agreement Date, there are no
options, warrants, convertible or other securities, calls, commitments,
conversion privileges or preemptive or other rights or agreements of any
character to which HNC is a party or by which HNC is bound obligating HNC to
issue, deliver or sell, or cause to be issued, delivered or sold, any shares of
capital stock of HNC or securities convertible into or exchangeable for shares
of capital stock of HNC, or obligating HNC to grant, extend or enter into any
such option, warrant, call, right, commitment, conversion right or agreement.
4.4 No Violation of Material Agreements. Neither the execution
and delivery of this Agreement nor any HNC Ancillary Agreement, nor the
consummation of the transactions contemplated hereby, will conflict with, or
(with or without notice or lapse of time, or both) result in: (a) a termination,
breach, impairment or violation of (i) any provision of the Certificate of
Incorporation or Bylaws of HNC, as currently in effect or (ii) any federal,
state, local or foreign judgment, writ, decree, order, statute, rule or
regulation to which HNC or its assets or properties is subject; or (b) a
termination, or a material breach, impairment or violation, of any material
instrument or contract to which HNC is a party or by which HNC or its properties
are bound. HNC is not required to obtain the consent of any third party to
consummate the Exchange, except for Silicon Valley Bank.
4.5 Disclosure. HNC has made available to Retek a disclosure
package consisting of HNC's most recent Form 10-K for its fiscal year ended
December 31, 1995, all Forms 10-Q filed by HNC with the SEC after the date of
such Form 10-K and before the Agreement Date, all Forms 8-K and 8-K/A filed by
HNC with the SEC after the date of its most recent Form 10-Q and the Proxy
Statement for HNC's annual meeting of stockholders held on May 23, 1996 (the
"HNC DISCLOSURE PACKAGE"). As of their respective filing dates, documents filed
by HNC with the SEC and included in the HNC Disclosure Package complied in all
material respects with the requirements of the 1933 Act or the 1934 Act, as the
case may be. The HNC Disclosure Package, this Agreement, the exhibits and
schedules hereto, and any certificates or documents to be delivered to Retek
pursuant to this Agreement, when taken together, do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements contained herein and therein, in light of the
circumstances under which such statements were made, not misleading.
4.6 Financial Condition. There has been no material adverse
change in the financial condition or business of HNC, taken as whole, since the
date of the most recent financial statements included in the HNC Disclosure
Package.
4.7 Validity of Shares. The shares of HNC Common Stock to be
issued pursuant to the Exchange shall, when issued: (a) be duly authorized,
validly issued, fully paid and nonassessable and free of liens and encumbrances
created by HNC, and (b) be free and clear of any transfer restrictions, liens
and encumbrances except for restrictions on transfer under applicable
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United States securities laws, including Rule 144 promulgated under the 1933
Act, under Section 16 of the 1934 Act for any Retek Shareholder (if any) who is
deemed to be an "insider" of HNC for purposes of Section 16, under applicable
securities laws (including the laws of the British Virgin Islands, Bermuda,
Delaware, California and the jurisdiction in which the Retek Shareholder who
holds such shares resides), under the Retek Affiliate Agreement to be executed
pursuant to this Agreement and under HNC's insider trading policy for any Retek
Shareholder (if any) who is deemed to be an "affiliate" or "access personnel" of
HNC.
5. COVENANTS OF RETEK AND THE RETEK SHAREHOLDERS
During the period from the Agreement Date until the earlier to
occur of (i) the Closing or (ii) the termination of this Agreement in accordance
with Section 10, Retek and each of the Retek Shareholders hereby jointly and
severally covenants and agrees with HNC as follows:
5.1 Advice of Changes. Retek or the Retek Shareholders, as the
case may be, will promptly advise HNC in writing (a) of any event occurring
subsequent to the date of this Agreement that would render any representation or
warranty of Retek and the Retek Shareholders contained in Section 3 of this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect and (b) of any material adverse
change in Retek's assets, business, results of operations, financial condition
or prospects. Retek shall deliver to HNC within thirty (30) days after the end
of each quarterly accounting period ending after the Agreement Date and before
the Closing Date, an unaudited balance sheet and statement of operations, which
financial statements shall be prepared in the ordinary course of business
consistent with Retek's past practice (except that such financial statements
shall be prepared in accordance with United States generally accepted accounting
principles), in accordance with Retek's books and records and United States
generally accepted accounting principles and shall fairly present the financial
position of Retek on a consolidated basis as of their respective dates and the
results of Retek's operations on a consolidated basis for the periods then
ended.
5.2 Maintenance of Business. Retek will carry on and preserve
its business and its relationships with customers, suppliers, employees,
consultants and others in substantially the same manner as it has prior to the
date hereof. If Retek becomes aware of a material deterioration in the
relationship with any customer, supplier, key employee, consultant or business
partner (including without limitation Arthur Andersen LLP and Arthur Andersen
Consulting), it will promptly bring such information to the attention of HNC in
writing and, if requested by HNC, will exert its best efforts to restore the
relationship.
5.3 Conduct of Business. Retek will continue to conduct its
business and maintain its business relationships in the ordinary and usual
course and will not, without the prior written consent of the President of HNC:
(a) borrow or lend any money other than advances to
employees for travel and expenses that are incurred in the ordinary course of
Retek's business consistent with Retek's past practice;
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(b) purchase or sell shares or other equity interest
in any corporation or other business or enter into any transaction or agreement
not in the ordinary course of Retek's business consistent with Retek's past
practice;
(c) encumber, or permit to be encumbered, any of its
assets;
(d) sell, transfer or dispose of any of its assets
except in the ordinary course of Retek's business consistent with Retek's past
practice;
(e) enter into any material lease or contract for the
purchase or sale of any property, whether real or personal, tangible or
intangible;
(f) pay any bonus, increased salary or special
remuneration to any officer, employee or consultant (except for normal salary
increases consistent with past practices not to exceed 5% of such officer's,
employee's or consultant's base annual compensation, except pursuant to existing
arrangements previously disclosed to and approved in writing by HNC) or enter
into any new employment or consulting agreement with any such person;
(g) change any of its accounting methods (except that
henceforth Retek will prepare its financial statements in accordance with United
States generally accepted accounting principles);
(h) declare, set aside or pay any cash or stock
dividend or other distribution in respect of any of its capital stock, redeem,
repurchase or otherwise acquire any of its capital stock or other securities,
pay or distribute any cash or property to any Retek shareholder or security
holder or make any other cash payment to any shareholder or security holder of
Retek that is unusual, extraordinary, or not made in the ordinary course of
Retek's business consistent with Retek's past practice;
(i) amend or terminate any contract, agreement or
license to which it is a party except those amended or terminated in the
ordinary course of Retek's business, consistent with Retek's past practice, and
which are not material in amount or effect;
(j) guarantee or act as a surety for any obligation
of any third party;
(k) waive or release any material right or claim
except in the ordinary course of business, consistent with past practice or
agree to any audit assessment by any tax authority or file any federal or state
income or franchise tax return unless copies of such returns have been delivered
to HNC for its review prior to filing;
(l) issue, sell, create or authorize any shares of
its capital stock of any class or series or any other of its securities, or
issue, grant or create any warrants, obligations, subscriptions, options,
convertible securities, or other commitments to issue shares of its capital
stock or securities ultimately exchangeable for, or convertible into, shares of
its capital stock; provided, however, that notwithstanding the foregoing, Retek
may issue shares of Retek Stock issuable upon the exercise of those Retek
Options that are outstanding on the Agreement Date and shown on Exhibit B in
accordance with their terms as now in effect;
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(m) subdivide or split or combine or reverse split
the outstanding shares of its capital stock of any class or enter into any
recapitalization affecting the number of outstanding shares of its capital stock
of any class or affecting any other of its securities;
(n) merge, consolidate or reorganize with, or
acquire, any entity or enter into any negotiations, discussions or agreement for
such purpose;
(o) amend its charter documents;
(p) license any of its technology or Intellectual
Property Rights except in the ordinary course of business consistent with past
practice;
(q) change any insurance coverage or issue any
certificates of insurance;
(r) modify or change the exercise or conversion
rights or exercise or purchase prices of any Retek Stock, Retek Options,
warrants or other Retek securities, or accelerate or otherwise modify (i) the
right to exercise any option, warrant or other right to purchase any Retek stock
or other securities or (ii) the vesting or release of any shares of Retek
capital stock or other securities of Retek from any repurchase options or rights
of refusal held by Retek or any other party or any other restrictions unless
such accelerations/modifications are expressly required and mandated by the
terms of a formal written agreement or plan that has been disclosed in writing
to HNC and was entered into prior to the execution of this Agreement by HNC and
Retek;
(s) purchase or otherwise acquire, or sell or
otherwise dispose of (i) any shares of HNC Common Stock or other HNC securities
or (ii) any securities whose value is derived from or determined with reference
to, in whole or in part, the value of HNC stock or other HNC securities;
(t) agree to do any of the things described in the
preceding clauses 5.3(a) through 5.3(s).
5.4 Regulatory Approvals. Retek and the Retek Shareholders
will promptly execute and file, or join in the execution and filing, of any
application or other document that may be necessary in order to obtain the
authorization, approval or consent of any governmental body, federal, state,
local or foreign, which may be reasonably required, or which HNC may reasonably
request, in connection with the consummation of the transactions contemplated by
this Agreement. Retek, its officers, directors and employees and the Retek
Shareholders will use their respective best efforts to promptly obtain, and to
cooperate with HNC to promptly obtain, all such authorizations, approvals and
consents.
5.5 Necessary Consents. Retek, its officers, directors and
employees and the Retek Shareholders will use their respective best efforts to
promptly obtain such written consents and take such other actions as may be
necessary or appropriate in addition to those set forth in Section 5.4 to allow
the consummation of the transactions contemplated hereby and to allow HNC to
carry on Retek's business after the Closing.
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5.6 Litigation. Retek will notify HNC in writing promptly
after learning of any action, suit, arbitration, mediation, proceeding or
investigation by or before any court, arbitrator or arbitration panel, board or
governmental agency, initiated by or against it, or known by it to be threatened
against it or any of its directors, officers, employees or consultant in their
capacity as such.
5.7 No Other Negotiations. From the Agreement Date until the
earlier of termination of this Agreement in accordance with Section 10 or the
consummation of the Exchange, Retek, its officers, directors and employees and
the Retek Shareholders will not, and will not authorize, encourage or permit,
any officer, director, employee, shareholder or affiliate of Retek, or any other
person, on its or their behalf to, directly or indirectly, solicit or encourage
any offer from any party or consider any inquiries or proposals received from
any other party, participate in any negotiations regarding, or furnish to any
person any information with respect to, or otherwise cooperate with, facilitate
or encourage any effort or attempt by any person (other than HNC), concerning
any agreement or transaction regarding the possible disposition of all or any
substantial portion of the business, assets or capital stock of Retek or any
Retek Subsidiary by merger, consolidation, reorganization, sale of assets, sale
of stock, exchange, tender offer or any other form of business combination
("ALTERNATIVE TRANSACTION"). Retek will promptly notify HNC orally and in
writing of any such inquiries or proposals. In addition, neither Retek, nor any
Retek Shareholder nor any Retek Subsidiary, shall execute, enter into or become
bound by (a) any letter of intent or agreement or commitment between Retek
and/or any of the Retek Shareholders and/or any Retek Subsidiary, on the one
hand, and any third party, on the other hand, that is related to an Alternative
Transaction or (b) any agreement or commitment between Retek and/or any of the
Retek Shareholders and/or any Retek Subsidiary, on the one hand, and a third
party, on the other hand, providing for an Alternative Transaction.
5.8 Access to Information. Until the Closing, Retek will allow
HNC and its agents reasonable access to the files, books, records and offices of
Retek, including, without limitation, any and all information relating to
Retek's taxes, commitments, contracts, leases, licenses, and real, personal and
intangible property and financial condition, subject to the terms of the Mutual
Nondisclosure Agreement between Retek and HNC dated as of July 10, 1996 (the
"CONFIDENTIALITY AGREEMENT"). Retek will cause its accountants to cooperate with
HNC and its agents in making available all financial and tax information
reasonably requested, including without limitation the right to examine all
working papers pertaining to all financial statements and tax returns, prepared
or audited by such accountants.
5.9 Satisfaction of Conditions Precedent. Retek, its and
directors and officers and the Retek Shareholders will use their respective best
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Section 9, and Retek, its directors and officers, and the Retek
Shareholders will use their respective best efforts to cause the transactions
contemplated by this Agreement to be consummated; and, without limiting the
generality of the foregoing, to obtain all consents and authorizations of third
parties and to make all filings with, and give all notices to, third parties
that may be necessary or reasonably required on Retek's part in order to effect
the transactions contemplated hereby. In particular, Retek will use its best
efforts to cause the Exchange to become effective in accordance with this
Agreement by November 30, 1996.
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5.10 Retek Affiliates Agreement. Concurrently with the
execution of this Agreement, Retek shall deliver to HNC a letter (the "RETEK
AFFILIATE LETTER") identifying all Retek's directors, executive officers, ten
percent or greater shareholders (and affiliates of such persons who are Retek
shareholders) and all persons or entities who are "affiliates" of Retek within
the meaning of Rule 145 or Rule 405 under the 1933 Act at the time this
Agreement is executed ("RETEK AFFILIATES"). Retek and the Retek Shareholders
shall use their best efforts to cause the Retek Shareholders, Robert Jennings,
John N. Buchanan, Christopher Coats, and any other persons required to be
identified in the Retek Affiliate Letters, to execute and deliver the Retek
Affiliate Agreement to HNC, as promptly as practicable after Retek's signing of
this Agreement. In addition, Retek shall use its best efforts to cause each
person or entity who may become a Retek Affiliate after the Agreement Date and
before the Closing to execute and deliver a Retek Affiliate Agreement to HNC
promptly after such person or entity becomes a Retek Affiliate. In addition,
each of the Retek Shareholders shall sign a Retek Affiliate Agreement.
5.11 Securities Laws. Retek and the Retek Shareholders shall
each use its best efforts to assist HNC to the extent necessary to comply with
the securities laws of all jurisdictions (U.S. and foreign) which are applicable
in connection with the Exchange.
5.12 Pooling. Following the Agreement Date, neither Retek nor
any Retek Shareholder shall take (a) any of the actions described in EXHIBIT
5.12 or (b) any other action if, prior to taking such action, Retek has been
informed by HNC or its accountants that, in the opinion of HNC's accountants,
taking such action may preclude HNC from accounting for the Exchange as a
"pooling of interests" for accounting purposes and HNC or its accountants
promptly notify Retek in reasonable detail of the action that HNC or its
accountants request Retek not to take. Retek and the Retek Shareholder shall
cooperate with HNC in good faith to cause the business combination to be
effected by the Exchange to be accounted for as a pooling of interests for
accounting purposes.
5.13 Certain Investments, Agreements. Retek and the Retek
Shareholders do not own, and shall not make any purchase or other acquisition
of, or investment in, any shares of HNC Common Stock or other securities of HNC.
Retek and the Retek Shareholders shall not enter into any agreement with any
holders of HNC shares calling for either Retek or HNC to retire or reacquire all
or part of the HNC shares to be issued pursuant to the Exchange. Retek shall not
enter into any financial arrangements for the benefit of any Retek shareholder
and the Retek Shareholders shall not enter into any agreement which, in effect,
would negate the exchange of equity securities contemplated under this
Agreement, including without limitation, any loan or other financial arrangement
at abnormally low interest rates, or any guarantee of loans secured by HNC
shares to be issued pursuant to the Exchange.
5.14 Termination of Registration and Voting Rights. All
registration rights agreements and voting agreements applicable to or affecting
any outstanding shares or other securities of Retek (if any) shall be duly
terminated and canceled by no later than the Closing.
5.15 Invention Assignment and Confidentiality Agreements.
Retek shall obtain from each employee, agent and consultant of Retek who has had
access to any software, technology or copyrightable, patentable or other
proprietary works or intellectual property owned or developed by Retek or other
Intellectual Property Rights, or to any other confidential or proprietary
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information of Retek or its clients, an invention assignment and confidentiality
agreement in substantially the form of the agreement provided to counsel to HNC,
duly executed by such employee, agent or consultant and delivered to Retek.
5.16 Non-Competition and Employment Agreements. Retek shall
use its best efforts to cause John N. Buchanan to execute and deliver to HNC at
the Closing a Non-Competition Agreement in the form attached hereto as Exhibit
9.9A (the "NON-COMPETITION AGREEMENT"). The Retek Shareholders shall also
execute and deliver to HNC the Non-Competition Agreement in the form of Exhibit
9.9B at the Closing. Retek shall use its best efforts to cause John N. Buchanan,
to execute and deliver to HNC at the Closing an Employment Agreement in the form
attached hereto as Exhibit 9.10 (the "EMPLOYMENT AGREEMENT").
5.17 Third Quarter Financials. Prior to Closing, Retek shall
deliver to HNC Retek's unaudited balance sheet as of September 30, 1996 and
Retek's unaudited consolidated statement of operations, consolidated statement
of cash flows and consolidated statement of shareholders' equity for the nine
months ended September 30, 1996 prepared in accordance with United States
generally accepted accounting principles (the "INTERIM FINANCIALS").
5.18 Closing of Exchange. Retek and the Retek Shareholders
shall not refuse to effect the Exchange if, on or before the Closing Date, all
the conditions precedent to their obligations to effect the Exchange under
Section 8 hereof have been satisfied or, in their sole discretion, been waived
by them.
5.19 Consultants to Become Employees. Retek and its officers
shall use their best efforts to cause those persons who are designated by HNC to
Retek in writing and who are currently performing services for Retek and the
Retek Subsidiaries as consultants to become employees of Retek and/or the
applicable Retek Subsidiary prior to the Closing on terms and conditions
satisfactory to HNC.
5.20 Delivery of Retek Financial Statements. Prior to the
Closing, and as soon as practicable following the execution of this Agreement,
Retek shall deliver to HNC the audited Retek Financial Statements referred to in
Section 3.8 hereof.
5.21 License Agreements. Retek shall use its best efforts to
cause Oracle Corporation to execute, deliver and enter into each of the
following agreements with Retek (in substantially the form such agreements have
been delivered to HNC's counsel) prior to the Closing and as soon as practicable
following the execution of this Agreement: (i) Business Alliance Program
Agreement; (ii) Amendment One to the Business Alliance Program Agreement; (iii)
Full Use and Deployment Sublicense Addendum; (iv) Amendment One to the Full Use
and Deployment Sublicense Addendum; (v) Application Specific Sublicense
Addendum; (vi) Amendment One to the Application Specific Sublicense Addendum;
and (vii) Runtime Sublicense Addendum.
6. HNC COVENANTS
During the period from the Agreement Date until the earlier to
occur of (i) the Closing or (ii) the termination of this Agreement in accordance
with Section 10, HNC covenants and agrees as follows:
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6.1 Advice of Changes. HNC will promptly advise Retek in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of HNC contained in this Agreement,
if made on or as of the date of such event or the Closing Date, untrue or
inaccurate in any material respect and (b) of any material adverse change in
HNC's business, results of operations or financial condition.
6.2 Regulatory Approvals. HNC will execute and file, or join
in the execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, in connection with the consummation of the transactions contemplated
by this Agreement in accordance with the terms of this Agreement. HNC will use
its best efforts to obtain all such authorizations, approvals and consents.
6.3 Satisfaction of Conditions Precedent. HNC will use its
best efforts to satisfy or cause to be satisfied all the conditions precedent
which are set forth in Section 8, and HNC will use its best efforts to cause the
transactions contemplated by this Agreement to be consummated in accordance with
the terms of this Agreement, and, without limiting the generality of the
foregoing, to obtain all consents and authorizations of third parties and to
make all filings with, and give all notices to, third parties that may be
necessary or reasonably required on its part in order to effect the transactions
contemplated hereby. In particular, HNC will use its best efforts to cause the
Exchange to become effective in accordance with this Agreement by November 30,
1996.
6.4 Securities Laws. HNC shall take such steps as may be
necessary to comply with the securities and Blue Sky laws of all jurisdictions
(U.S. or foreign) which are applicable in connection with the Exchange, with the
cooperation and assistance of Retek and the Retek Shareholders.
6.5 Nasdaq National Market Listing. HNC shall cause the shares
of HNC Common Stock issuable to the Retek shareholders in the Exchange
(including shares of HNC Common Stock issuable upon exercise of HNC Options) to
be authorized for listing on the Nasdaq National Market, subject to official
notice of issuance.
6.6 Employee Benefits. As soon as practicable after the
Agreement Date, HNC and Retek shall confer and work in good faith to agree upon
a plan under which Retek employees will be covered either by (a) HNC's employee
benefits plans or (b) Retek's employee benefit plans, with such decision to be
made no later than six (6) months following the Closing, in a manner that
results in minimal disruption to the continuing operations of Retek, and minimal
cost to HNC; provided that HNC will not be obligated to merge Retek's existing
401(k) savings plan into HNC's existing 401(k) savings plan if HNC's counsel
shall advise HNC that HNC or any fiduciaries of HNC's existing 401(k) savings
plan may incur liability for, or by reason of, such merger of Retek's existing
401(k) savings plan into HNC's existing 401(k) savings plan and provided further
that HNC may on advice of HNC's counsel require Retek to terminate Retek's
existing 401(k) savings plan prior to the Closing.
7. CLOSING MATTERS
7.1 The Closing. Subject to termination of this Agreement as
provided in Section 10 below, the closing of the transactions for consummation
of the Exchange (the "CLOSING") will
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take place at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo
Alto, California 94306 at 10:00 a.m., Pacific Standard Time on November 29, 1996
or on such other date on or before the Termination Date (as defined in Section
10.1.2) as HNC and Retek may mutually agree upon in writing after which the
satisfaction or waiver of the conditions to Closing set forth in Sections 8 and
9 hereof have been satisfied and/or waived in accordance with this Agreement
(the "CLOSING DATE").
7.2 Exchanges at the Closing.
7.2.1 At the Closing, (a) the Retek Certificates
shall be exchanged for the Exchange Shares (less the Escrow Shares) and cash for
fractional shares as provided in Section 2.1 hereof and (b) the Retek
Shareholders shall be paid $1,000 cash as provided in Section 2.
7.2.2 At the Closing, the Escrow Shares shall be
delivered to the Escrow Agent by HNC or HNC's transfer agent as provided in
Section 2.4 hereof.
7.2.3 At the Closing, the Retek Options shall be
exchanged for HNC Options as provided in Section 2.2 hereof.
7.2.4 Each Retek Shareholder understands and agrees
that stop transfer instructions will be given to HNC's transfer agent with
respect to certificates evidencing the Exchange Shares to assure compliance with
the provisions of the Retek Affiliates Agreements and Investment Representation
Letter and that there will be placed on the certificates evidencing such
Exchange Shares legends as specified in the Investment Representation Letter.
7.2.5 After the Closing there will be no further
registration of transfers on the stock transfer books of Retek or its transfer
agent of the Retek Stock that was outstanding immediately prior to the Closing.
If, after the Closing, Retek Certificates are presented for any reason, they
will be canceled.
8. CONDITIONS TO OBLIGATIONS OF RETEK AND THE RETEK SHAREHOLDERS
The obligations of Retek and the Retek Shareholders to
consummate the Exchange are subject to the fulfillment or satisfaction, on and
as of the Closing, of each of the following conditions (any one or more of which
may be waived by Retek and the Retek Shareholders in their sole discretion, but
only in a writing signed by Retek and the Retek Shareholders):
8.1 Accuracy of Representations and Warranties. The
representations and warranties of HNC set forth in Section 4 (as qualified by
the HNC Disclosure Letter, if any) shall be true and accurate in every material
respect on and as of the Closing with the same force and effect as if they had
been made at the Closing, and Retek shall have received a certificate to such
effect executed by HNC's President or Chief Financial Officer.
8.2 Covenants. HNC shall have performed and complied in all
material respects with all of its covenants contained in Section 6 on or before
the Closing, and Retek shall have received a certificate to such effect signed
by HNC's President or Chief Financial Officer.
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8.3 Compliance with Law; No Legal Restraints. There shall not
be outstanding or threatened, or enacted or adopted, any order, decree,
temporary, preliminary or permanent injunction, legislative enactment, statute,
regulation, action, proceeding or any judgment or ruling by any court,
arbitrator, governmental agency, authority or entity, or any other fact or
circumstance (other than any such matter initiated by Retek, its officers or
directors or the Retek Shareholders), that, directly or indirectly, challenges,
threatens, prohibits, enjoins, restrains, suspends, delays, conditions or
renders illegal or imposes limitations on (or is likely to result in a
challenge, threat to, or a prohibition, injunction, restraint, suspension, delay
or illegality of, or to impose limitations on): (i) the Exchange or any other
transaction contemplated by this Agreement; (ii) HNC's payment for, or
acquisition or purchase of, some or all of the shares of Retek Stock or any
material part of the assets of Retek.
8.4 Government Consents. There shall have been obtained at or
prior to the Closing Date such permits and/or authorizations, and there shall
have been taken such other action by any regulatory authority having
jurisdiction over the parties and the actions herein proposed to be taken, as
may be required to lawfully consummate the Exchange, including but not limited
to requirements under applicable U.S. and foreign securities and corporations
laws.
8.5 Opinion of HNC's Counsel. Retek shall have received from
counsel to HNC, an opinion substantially in the form of EXHIBIT 8.5.
8.6 Documents. HNC shall have executed and delivered to Retek
and/or the Retek Shareholders, as applicable, the HNC Ancillary Agreements.
Retek shall have received all written consents, assignments, waivers,
authorizations or other certificates reasonably deemed necessary by Retek's
legal counsel for Retek to lawfully consummate the transactions contemplated
hereby.
8.7 No Litigation. No litigation or proceeding (other than any
litigation or proceeding initiated by Retek, its Board of Directors,
shareholders or officers or any Retek Shareholder or Retek Optionee) shall be
threatened or pending for the purpose or with the probable effect of enjoining
or preventing the consummation of the Exchange or any of the other transactions
contemplated by this Agreement, or which could be reasonably expected to have a
material adverse effect on the present or future operations or financial
condition of HNC.
8.8 Instructions to Transfer Agent; Deliveries. HNC shall have
issued irrevocable instructions to its transfer agent to authorize the issuance
of HNC Common Stock in the Exchange consistent with Section 2 hereof. HNC shall
have made the other deliveries contemplated by Section 2 hereof.
8.9 Satisfactory Form of Legal Matters. The form, scope and
substance of all legal and accounting matters contemplated hereby and all
closing documents and other papers delivered hereunder shall be reasonably
acceptable to Retek's counsel.
9. CONDITIONS TO OBLIGATIONS OF HNC
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The obligations of HNC hereunder are subject to the
fulfillment or satisfaction, on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by HNC in its sole
discretion, but only in a writing signed by HNC):
9.1 Accuracy of Representations and Warranties. The
representations and warranties of Retek and the Retek Shareholders set forth in
Section 3 (as qualified by the Retek Disclosure Letter) and in the Investment
Representation Letters, and the representations and warranties of the Retek
Optionees in the Optionee Agreements, shall each be true and accurate in every
material respect on and as of the Closing with the same force and effect as if
they had been made at the Closing, and HNC shall have received certificates to
such effect executed by Retek's President and by the Retek Shareholders.
9.2 Covenants. Retek and the Retek Shareholders shall have
performed and complied in all material respects with all of their respective
covenants contained in Section 5 on or before the Closing, and HNC shall have
received certificates to such effect signed by Retek's President and by the
Retek Shareholders.
9.3 Compliance with Law; No Legal Restraints. There shall not
be outstanding or threatened, or enacted or adopted, any order, decree,
temporary, preliminary or permanent injunction, legislative enactment, statute,
regulation, action, proceeding or any judgment or ruling by any court,
arbitrator, governmental agency, authority or entity, or any other fact or
circumstance (other than any such matter initiated by HNC or its officers or
directors), that, directly or indirectly, challenges, threatens, prohibits,
enjoins, restrains, suspends, delays, conditions, or renders illegal or imposes
limitations on (or is likely to result in a challenge, threat to, or a
prohibition, injunction, restraint, suspension, delay or illegality of, or to
impose limitations on): (i) the Exchange or any other transaction contemplated
by this Agreement; (ii) HNC's payment for, or acquisition or purchase of, some
or all of the shares of Retek Stock or any material part of the assets of Retek
or any Retek Subsidiary or any Retek Option; (iii) the ownership or operation by
HNC or Retek of all or any material portion of the business or assets of Retek,
including (but not limited to) Retek's Intellectual Property Rights; or (iv)
HNC's ability to exercise full rights of ownership with respect to Retek, each
Retek Subsidiary, and their respective assets and shares, including but not
limited to restrictions on HNC's ability to vote all the shares of Retek or
(indirectly through ownership of Retek) any Retek Subsidiary.
9.4 Government Consents. There shall have been obtained at or
prior to the Closing Date such permits or authorizations from, and there shall
have been taken such other action, as may be required to lawfully consummate the
Exchange by, any governmental or regulatory authority having jurisdiction over
any of the parties, any Retek Optionee or any Retek Subsidiary and/or the
actions herein proposed to be taken, including but not limited to requirements
under applicable U.S. and foreign securities and corporate laws.
9.5 Opinion of Retek's Counsel. HNC shall have received from
counsels to Retek, opinions in substantially the form of EXHIBITS 9.5A, 9.5B,
9.5C, 9.5D AND 9.5E.
9.6 Documents and Consents. Retek and the Retek Shareholders
shall have executed and delivered to HNC all the Retek Ancillary Agreements and
all the Shareholder Ancillary Agreements, as applicable. The Retek Optionees
shall have executed and delivered to
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HNC all the Optionee Agreements. The Retek Shareholders shall have delivered to
HNC Retek Certificates representing 100% of the outstanding shares of Retek
together with the other deliverables specified in Section 2.1.1 hereof, and the
Retek Optionees shall have delivered to HNC Retek Options representing 100% of
the outstanding options of Retek. HNC shall have received duly executed copies
of all third-party consents, approvals, assignments, waivers, authorizations or
other certificates contemplated by this Agreement or the Retek Disclosure Letter
or reasonably deemed necessary by HNC's legal counsel to provide for the
continuation in full force and effect of any and all material contracts,
agreements and leases of Retek and the preservation of Retek's IP Rights and
other assets and properties and for HNC to consummate the transactions
contemplated hereby, in form and substance reasonably satisfactory to HNC,
except for such thereof (if any) as HNC and Retek shall have agreed in writing
need not be obtained.
9.7 No Litigation. No litigation or proceeding shall be
threatened or pending for the purpose or with the probable effect of enjoining
or preventing the consummation of the Exchange or any of the other transactions
contemplated by this Agreement, or which could be reasonably expected to have a
material adverse effect on the present or future operations or financial
condition of Retek or HNC or Retek's ownership of all shares of each Retek
Subsidiary or which asserts that Retek's or HNC's or any Retek Shareholder's
negotiations regarding this Agreement, HNC's or Retek's or any Retek
Shareholder's entering into this Agreement or Retek's or HNC's or any Retek
Shareholder's or Retek Optionee's consummation of the Exchange or other
transactions contemplated hereby, breaches or violates any law, rule, order or
judgment, or any agreement or commitment of Retek, any Retek Shareholder or any
Retek Optionee or constitutes tortious conduct on the part of HNC, Retek any
Retek Shareholder or any Retek Optionee.
9.8 Affiliate Agreements. Each Retek Shareholder and each
other Retek Affiliate shall have executed and delivered a Retek Affiliate
Agreement to HNC in accordance with Section 5.10.
9.9 Non-Competition Agreement. HNC shall have received from
John N. Buchanan and each of the Retek Shareholders, a fully executed copy of a
Non-Competition Agreement in the forms of EXHIBIT 9.9-A AND 9.9B, respectively.
9.10 Employment Agreement. HNC shall have received from John
N. Buchanan, a fully executed copy of an Employment Agreement in the form of
EXHIBIT 9.10.
9.11 Escrow Agreement. HNC shall have received a fully
executed copy of the Escrow Agreement in the form of Exhibit 2.4 executed by the
Escrow Agent, the Representative and each of the Retek Shareholders.
9.12 No HNC Shareholder Vote. The number of shares of HNC
Common Stock that HNC must issue pursuant to this Agreement shall not exceed the
number of shares of HNC Common Stock that would require HNC to seek the approval
of the Exchange by its shareholders under applicable law or the applicable
bylaws, rules or regulations of the National Association of Securities Dealers,
the Nasdaq Stock Market or any other stock exchange on which HNC Common Stock is
traded.
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9.13 Appointment of New Directors and Officers. The directors
and officers of Retek and each of the Retek Subsidiaries in office immediately
prior to the Closing of the Exchange shall have resigned effective as of the
Closing, unless otherwise directed by HNC, and Robert L. North, Raymond V.
Thomas and John N. Buchanan shall have been named as the sole directors and
officers of Retek and each of the Retek Subsidiaries prior to Closing, subject
to any requirements of applicable local law.
9.14 No Material Adverse Change. There shall not have been any
material adverse change in the financial condition, properties, assets,
liabilities, business, results of operations, operations or prospects of Retek
and the Retek Subsidiaries, taken as a whole.
9.15 Audit. Price Waterhouse LLP shall have completed an audit
of Retek, and shall have determined that audited financial statements of Retek,
prepared in accordance with U.S. generally accepted accounting principles and
Regulation S-K promulgated under the 1933 Act throughout the periods involved
and fairly presenting the financial position and results of operations of Retek
on a consolidated basis, for the years ended December 31, 1994, 1995 and 1996,
could be readily produced by Retek from its records within 75 days after the
Closing.
9.16 Pooling Opinion. HNC shall have been advised in writing,
as of the Closing, by Price Waterhouse LLP that, in accordance with generally
accepted accounting principles, the Exchange qualifies to be treated as a
"pooling of interests" for accounting purposes, and that Retek is eligible to
participate in a transaction that qualifies as a "pooling of interests" for
accounting purposes.
9.17 Acquisition of Retek Australia Shares; Australia
Representation Agreement. Retek shall have acquired good and marketable title to
and ownership of all of the issued and outstanding shares of The Original R.I.S.
Pty. Ltd., an Australian corporation formerly named Retek Information Systems
Pty. Ltd. and known as "Retek Australia" free and clear of all claims, liens and
encumbrances, on terms and conditions approved by counsel to HNC and special
counsel to HNC and the Representation Agreement in substantially the form
EXHIBIT 9.17 attached hereto (the "AUSTRALIA AGREEMENT"), shall have been
executed and delivered by each entity and individual named as a party or
signatory thereto.
9.18 Amendment of Retek IOM Agreement. The Amendment No. 1 to
Retek Software Purchase and Sale Agreement in substantially the form of EXHIBIT
9.18 attached hereto, (the "IOM AMENDMENT"), shall have been duly executed and
delivered by Retek and Retek Information Systems Limited, a company formed under
the laws of the Isle of Man ("RETEK (IOM)"), and shall have been fully
performed, it being acknowledged that if the IOM Amendment has been so executed,
then HNC shall, as of the Closing, cause all amounts payable to Retek IOM under
the IOM Amendment to be paid to Retek IOM in accordance with the terms and
conditions of the IOM Amendment, it being understood that funds of Retek and/or
Retek Subsidiaries may be used to make such payment.
9.19 Surrender of Names. The corporate name "Retek" and the
trade names and trademarks "Retek" and "Merman" shall have been assigned,
released and surrendered to Retek by each of the entities listed on EXHIBIT 9.19
hereto and each of such entities shall have changed its name to a name that does
not include "Retek" or "Merman".
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9.20 Delivery of Interim Financials. Retek shall have
delivered the Interim Financials to HNC.
9.21 Satisfactory Form of Legal and Accounting Matters. The
form, scope and substance of all legal and accounting matters contemplated
hereby and all closing documents and other papers delivered hereunder shall be
reasonably acceptable to HNC's counsel and independent public accountants.
10. TERMINATION OF AGREEMENT
10.1 Prior to or at the Closing.
10.1.1 This Agreement may be terminated at any time
prior to or at the Closing by the mutual written consent of HNC and Retek,
approved by their respective Boards of Directors.
10.1.2 This Agreement may be terminated after the
Termination Date by HNC if the conditions precedent set forth in Section 9 shall
have not been complied with, waived or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by Retek and/or the Retek Shareholders on or before
Midnight, Pacific Time on December 1, 1996 (the "TERMINATION DATE").
10.1.3 This Agreement may be terminated after the
Termination Date by Retek and the Retek Shareholders if the conditions precedent
set forth in Section 8 shall have not been complied with, waived or performed
and such noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by HNC on or before the
Termination Date.
10.1.4 HNC may terminate this Agreement at any time
prior to or at the Closing if any of the representations and warranties of Retek
and/or the Retek Shareholders in Section 3 of this Agreement were incorrect,
untrue or false in any material respect as of the Agreement Date or are
incorrect, untrue or false in any material respect as of the proposed Closing
Date or Retek and/or the Retek Shareholders have breached any of their
respective covenants under Section 5 of this Agreement, and Retek and/or the
Retek Shareholders have not cured such breach prior to the earlier of (i) the
Closing, (ii) thirty (30) days after HNC has given Retek written notice of its
intention to terminate this Agreement pursuant to this subsection or (iii) the
Termination Date.
10.1.5 Retek and the Retek Shareholders may terminate
this Agreement at any time prior to or at the Closing if any of the
representations and warranties of HNC in Section 4 of this Agreement were
incorrect, untrue or false in any material respect as of the Agreement Date or
are incorrect, untrue or false in any material respect as of the proposed
Closing Date or HNC has breached any of its covenants under Section 6 of this
Agreement, and HNC has not cured such breach prior to the earlier of (i) the
Closing, (ii) thirty (30) days after Retek and the Retek Shareholders have given
HNC written notice of their intention to terminate this Agreement pursuant to
this subsection or (iii) the Termination Date.
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Any termination of this Agreement under this Section
10 will be effective by the delivery of notice of the terminating party to the
other party hereto.
10.2 No Liability for Proper Termination. Any termination of
this Agreement in accordance with this Section 10 will be without further
obligation or liability upon any party in favor of the other party hereto or to
its stockholders, directors or officers, other than the obligations provided in
the Confidentiality Agreement; provided, however, that nothing herein will limit
the obligation of Retek, the Retek Shareholders and HNC for any willful breach
hereof or failure to use their best efforts to cause the Exchange to be
consummated, as set forth in Sections 5.9 and 6.3 hereof, respectively. In the
event of the termination of this Agreement pursuant to this Section 10, this
Agreement shall thereafter become void and have no effect and each party shall
be responsible for its own expenses incurred in connection herewith.
11. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES,
CONTINUING COVENANTS
11.1 Survival of Representations. All representations,
warranties and covenants of Retek and the Retek Shareholders contained in this
Agreement will remain operative and in full force and effect, regardless of any
investigation made by or on behalf of HNC, until that date ("ESCROW RELEASE
DATE") which is the earlier of (i) the termination of this Agreement or (ii)
twelve (12) months after the Closing Date; provided, however, that those
representations and warranties respecting matters addressed by the first audited
financial statements of the combined corporation, together with a report thereon
from HNC's independent auditors, shall not expire later than upon the date on
which such financial statements are first released to the public.
11.2 Agreement to Indemnify. The Retek Shareholders agree to
jointly and severally indemnify and hold harmless HNC and its officers,
directors, agents, shareholders and employees, and each person, if any, who
controls or may control HNC within the meaning of the 1933 Act or the 1934 Act
(each hereinafter referred to individually as an "INDEMNIFIED PERSON" and
collectively as "INDEMNIFIED PERSONS") from and against any and all claims,
demands, suits, actions, causes of actions, losses, costs, damages, liabilities
and expenses including, without limitation, reasonable attorneys' fees, other
professionals' and experts' reasonable fees and court or arbitration costs
(hereinafter collectively referred to as "DAMAGES") incurred and arising out of
any inaccuracy, misrepresentation, breach of, or default in, any of the
representations, warranties or covenants given or made by Retek and/or the Retek
Shareholders in this Agreement or in the Retek Disclosure Letter or in any
certificate delivered by or on behalf of Retek pursuant hereto (if such
inaccuracy, misrepresentation, breach or default existed at the Closing Date).
Any claim of indemnity made by an Indemnified Person under this Section 11.2
must be asserted in a writing delivered to the Escrow Agent by no later than the
Escrow Release Date.
11.3 Limitation. Notwithstanding anything herein to the
contrary, in seeking indemnification for Damages under Section 11.2, the
Indemnified Persons shall exercise their remedies with respect to the Escrow
Shares and any other assets deposited in escrow pursuant to the Escrow
Agreement. Except for fraudulent conduct or willful misconduct or breach of any
provisions of the Affiliates Agreement and except as provided in Section 11.5:
(i) no Retek Shareholder shall have any liability to an Indemnified Person under
Section 11.2 of this Agreement
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except to the extent of such Retek Shareholder's portion of the Escrow Shares
and any other assets deposited under the Escrow Agreement and (ii) the remedies
set forth in this Section 11.3 and the Escrow Agreement shall be the exclusive
remedies of HNC and the other Indemnified Persons under Section 11.2 of this
Agreement or in any cause of action based thereon (subject to the exceptions in
the last sentence of this Section 11.3) against any Retek Shareholder for any
inaccuracy, misrepresentation, breach of, or default in, any of the
representations, warranties or covenants given or made by Retek or any Retek
Shareholder in this Agreement or in any certificate, document or instrument
delivered by or on behalf of Retek pursuant hereto or in any cause of action
based thereon (subject to the exceptions in the last sentence of this Section
11.3). In addition, the indemnification provided for in Section 11.2 shall not
apply unless and until the aggregate Damages for which one or more Indemnified
Persons seeks or has sought indemnification hereunder exceeds a cumulative
aggregate of One Hundred Thousand Dollars ($100,000) (the "BASKET"), in which
event the Retek Shareholders shall, subject to the foregoing limitations, be
liable to indemnify the Indemnified Persons for all Damages in excess of the
Basket. The limitations on the indemnification obligations set forth in this
Section 11.3 shall not be applicable to Misconduct Damages (as defined below).
As used herein, "MISCONDUCT DAMAGES" means Damages resulting from fraudulent
conduct or willful misconduct or breach of any provisions of the Retek
Affiliates Agreement or the Investment Representation Letter.
11.4 Notice. Promptly after HNC becomes aware of the existence
of any potential claim by an Indemnified Person for indemnity from the Retek
Shareholders under Section 11.2, HNC will notify the Retek Shareholders of such
potential claim in accordance with the Escrow Agreement and will, to the extent
that it can reasonably do so without impairing its ability to adequately defend
and respond to any such claim, permit the Retek Shareholders to assist HNC in
the defense of such claim and will cooperate with the Retek Shareholders in
obtaining copies of any records or other information which is relevant to the
defense of such claim. Failure of HNC to give such notice shall not affect any
rights or remedies of an Indemnified Party hereunder with respect to
indemnification for Damages except to the extent the Retek Shareholders are
materially prejudiced thereby. Prior to the settlement of any claim for which
HNC seeks indemnity from a Retek Shareholder, HNC will provide the Retek
Shareholders with the terms of the proposed settlement and a reasonable
opportunity to comment on such terms in accordance with the Escrow Agreement.
Nothing in this Section is intended to preclude the Representative of the Retek
Shareholders from contesting a claim for indemnification hereunder in accordance
with the terms and conditions of the Escrow Agreement.
11.5 Title Indemnity. In addition to, and separate from, the
foregoing agreement to indemnify set forth in Section 11.2, each Retek
Shareholder agrees, severally and not jointly, to defend and indemnify HNC and
each other Indemnified Person from and against any and all claims, demands,
suits, actions, causes of actions, losses, costs, damages, liabilities and
expenses including, without limitation, reasonable attorneys' fees, other
professionals' and experts' reasonable fees and court or arbitration costs
incurred and arising out of any failure of such Retek Shareholder to have good,
valid and marketable title to any issued and outstanding shares of Retek Stock
held (or asserted to have been held) by such Retek Shareholder, free and clear
of all liens, claims and encumbrances, or to have the full right, capacity and
authority to enter into this Agreement and consummate the Exchange and any other
transactions contemplated by this Agreement, or any failure of Retek to have
good, valid and marketable title to all of the outstanding shares of each of
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<PAGE> 39
the Retek Subsidiaries and any failure of the Retek Shareholders collectively to
own, of record and beneficially, 100% of the outstanding shares of Retek. A
Retek shareholder's liability under the indemnification provided for in this
Section 11.5 shall be in addition to any liability of such Retek shareholder
under Section 11.2 and shall not be subject to the limitations on such
shareholder's liability set forth in Section 11.3 and shall not be limited to
such Retek Shareholder's Escrow Shares.
11.6 Certain Limitations. Notwithstanding anything to the
contrary herein, the liability of the St. George's Trust Company Limited (the
"TRUSTEE"), in its capacity as the trustee of the Mulberry Trust and the Kulmor
Trust (who are the Retek Shareholders) to HNC for any (i) Misconduct Damages; or
(ii) demands, suits, actions, causes of actions, losses, costs, damages,
liabilities and expenses including, without limitation, reasonable attorneys'
fees, other professionals' and experts' reasonable fees and court or arbitration
costs arising out of the matters described in Section 11.5, shall not exceed the
assets of the Mulberry Trust and the Kulmor Trust; provided, however, that no
suit, claim, action or proceeding may be asserted or brought by HNC against the
Trustee to recover from the Trustee any damages described in the foregoing
clauses (i) or (ii) of this Section 11.6 after the fourth (4th) anniversary of
the Closing Date of the Exchange. Nothing in this Section 11.6 shall limit the
liability of any person or entity other than the Trustee for any matter
described in this Section 11.6 or preclude HNC from raising the Retek Affiliates
Agreement, the Investment Representation Letter or any other agreement as an
affirmative defense to any claim.
12. MISCELLANEOUS
12.1 Governing Law. The internal laws of the State of
California, U.S.A. (irrespective of its choice of law principles) will govern
the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
12.2 Assignment; Binding Upon Successors and Assigns. Neither
party hereto may assign any of its rights or obligations hereunder without the
prior written consent of the other party hereto, except that HNC may assign its
respective rights and/or obligations to any wholly-owned subsidiary of HNC. This
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
12.3 Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
12.4 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be an original as regards any party
whose signature appears thereon and all of which together will constitute one
and the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
both parties reflected hereon as signatories.
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<PAGE> 40
12.5 Other Remedies. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy will not preclude the exercise
of any other.
12.6 Amendment and Waivers. Any term or provision of this
Agreement may be amended prior to the Closing by the written consent of HNC,
Retek and the Retek Shareholders, and, after the Closing by HNC and the Retek
Shareholders (or their successors in interest). The observance of any term,
condition or provision of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound thereby or for whose benefit such condition was
provided. The waiver by a party of any breach hereof or default in the
performance hereof will not be deemed to constitute a waiver of any other
default or any succeeding breach or default. In addition, at any time prior to
the Closing, each of the Retek Shareholders and each of Retek and HNC (by action
taken by its respective Board of Directors) may, to the extent legally allowed:
(i) extend the time for the performance of any of the obligations or other acts
of the other; (ii) waive any inaccuracies in the representations and warranties
made to it contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions for its benefit
contained herein. No such waiver or extension shall be effective unless signed
in writing by the party against whom such waiver or extension is asserted. The
failure of any party to enforce any of the provisions hereof will not be
construed to be a waiver of the right of such party thereafter to enforce such
provisions or any other provisions.
12.7 Expenses. Each party will bear its respective expenses
and legal fees incurred with respect to this Agreement, and the transactions
contemplated hereby; provided, however, that the fees Retek will pay to its
counsel and accountants on behalf of Retek and the Retek Shareholders shall not
exceed U.S. $100,000 in the aggregate without the written consent of HNC. Any
such expenses in excess of U.S. $100,000 shall be deemed to be Damages (as
defined in Section 11.2) and shall be paid by the Retek Shareholders from the
Escrow Shares, and such "Damages" shall not be subject to the Basket.
12.8 Attorneys' Fees. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party will be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including without limitation, costs,
expenses and fees on any appeal). The prevailing party will be entitled to
recover its costs of suit, regardless of whether such suit proceeds to final
judgment.
12.9 Notices. All notices and other communications required or
permitted under this Agreement will be in writing and will be either hand
delivered in person, sent by telecopier, sent by certified or registered first
class mail, postage pre-paid, or sent by nationally recognized express courier
service. Such notices and other communications will be effective upon receipt if
hand delivered or sent by telecopier, five (5) days after mailing if sent by
mail, and one (l) day after dispatch if sent by express courier, to the
following addresses, or to such other addresses or fax number as any party may
notify the other parties in accordance with this Section:
(i) If to HNC:
HNC Software Inc.
5930 Cornerstone Court West
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<PAGE> 41
San Diego, CA 92121
Attention: Robert L. North, President
with a copy to:
Fenwick & West LLP
Two Palo Alto Square, Suite 800
Palo Alto, CA 94306
Attention: Kenneth A. Linhares, Esq.
Fax Number: (415) 494-1417
(ii) If to Retek:
Retek Distribution Corporation
25 Church Street
Hamilton, Bermuda
HMLX
Attention: Robert Jennings, President
with a copy to:
Charles V. Winch, Barrister
Gourlay Spencer Slade & Winch
1455 Bellevue Avenue, Suite 205
West Vancouver, BC
Canada V7T 1C3
Fax Number: (604) 925-1304
12.10 Construction of Agreement. This Agreement has been
negotiated by the respective parties hereto and their attorneys and the language
hereof will not be construed for or against either party. A reference to a
Section or an exhibit will mean a Section in, or exhibit to, this Agreement
unless otherwise explicitly set forth. The titles and headings herein are for
reference purposes only and will not in any manner limit the construction of
this Agreement which will be considered as a whole.
12.11 No Joint Venture. Nothing contained in this Agreement
will be deemed or construed as creating a joint venture or partnership between
any of the parties hereto. No party is by virtue of this Agreement authorized as
an agent, employee or legal representative of any other party. No party will
have the power to control the activities and operations of any other party and
their status is, and at all times will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.
12.12 Further Assurances. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
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12.13 Absence of Third Party Beneficiary Rights. No provisions
of this Agreement are intended, nor will be interpreted, to provide or create
any third party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, shareholder, partner, employee, agent, consultant
or any party hereto or any other person or entity unless specifically provided
otherwise herein, and, except as so provided, all provisions hereof will be
personal solely between the parties to this Agreement.
12.14 Public Announcement. Upon execution of this Agreement,
HNC and Retek will issue a press release approved by such parties announcing the
Exchange. Thereafter, HNC may issue such press releases, and make such other
disclosures regarding the Exchange, as it determines are required under
applicable securities laws or regulatory rules, but shall first, when
practicable, consult with Retek and provide Retek with an opportunity to comment
on any such press release. Prior to the publication of the press release issued
upon execution of this Agreement (unless this Agreement has been terminated), no
party hereto shall make any public announcement relating to this Agreement or
the transactions contemplated hereby and Retek shall use its best efforts to
prevent any trading in HNC Common Stock by officers, directors, shareholders,
employees, agents and consultants of Retek and/or of any Retek Subsidiaries.
12.15 Confidentiality. Retek and HNC each confirm that they
have entered into the Confidentiality Agreement and that they are each bound by,
and will abide by, the provisions of such Confidentiality Agreement (except that
HNC will cease to be bound by the Confidentiality Agreement after the Exchange
becomes effective). If this Agreement is terminated, all copies of documents
containing confidential information of a disclosing party shall be returned by
the receiving party to the disclosing party or be destroyed, as provided in the
Confidentiality Agreement.
12.16 Entire Agreement. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto other than the
Confidentiality Agreement. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof.
12.17 U.S. Dollars. Unless otherwise expressly provided
herein, all references to amounts of money or dollars herein refer to United
States dollars.
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HNC SOFTWARE INC. RETEK DISTRIBUTION CORPORATION
By: /s/ Robert L. North By: /s/ Robert Jennings
________________________________ _________________________________
Its: President Its: President
RETEK SHAREHOLDERS
THE MULBERRY TRUST
By: St. George's Trust Company Limited
By: /s/ Jane M. Collis
_________________________________
Name: Jane M. Collis
_________________________________
Title: Managing Director
_________________________________
THE KULMOR TRUST
By: St. George's Trust Company Limited
By: /s/ Jane M. Collis
_________________________________
Name: Jane M. Collis
_________________________________
Title: Managing Director
_________________________________
[SIGNATURE PAGE TO EXCHANGE AGREEMENT]
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LIST OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A Retek Shareholders
Exhibit B Retek Optionees
Exhibit 2.1.3 Registration Rights Agreement
Exhibit 2.2.1 Option Exchange Agreement
Exhibit 2.4 Escrow Agreement
Exhibit 2.6-A Investment Representation Letter
Exhibit 2.6-B Optionee Investment Representation Letter
Exhibit 2.7 Retek Affiliates Agreement
Exhibit 2.8 Example of Application of Exchange Ratio
Exhibit 3.4 Retek Subsidiaries
Exhibit 3.8 Retek Financial Statements
Exhibit 3.11 Agreements of Retek
Exhibit 3.13 Retek IP Rights
Exhibit 3.13.4 Employee Invention and Proprietary Information Agreement
Exhibit 3.16.1 List of Retek Employees, Officers and Consultants
Exhibit 3.16.4 Retek Benefit Arrangements
Exhibit 3.20 Insurance Policies
Exhibit 5.10 Retek Affiliates Agreement
Exhibit 5.12 Actions Not to be Taken by Retek
Exhibit 8.5 Matters to be Covered in the Opinion of Fenwick & West LLP, Counsel to
HNC Software Inc.
Exhibit 9.5 A-E Matters to be Covered in the Opinions of Gourlay Spencer Slade & Winch,
Counsel for Retek and special counsel for Retek
Exhibit 9.9A Non-Competition Agreement (Buchanan)
Exhibit 9.9B Non-Competition Agreement (Retek Shareholders)
Exhibit 9.10 Employment Agreement
Exhibit 9.17 Australia Representation Agreement
Exhibit 9.18 IOM Amendment
Exhibit 9.19 Entities Releasing "Retek" and "Merman"
</TABLE>
<PAGE> 1
Exhibit 2.02
OPTION EXCHANGE AGREEMENT
THIS OPTION EXCHANGE AGREEMENT (this "Agreement") is made and entered
into as of November __, 1996 (the "Agreement Date") by and among HNC SOFTWARE
INC., a Delaware corporation ("HNC"), RETEK DISTRIBUTION CORPORATION, a British
Virgin Islands corporation ("Retek") that is an international business company
formed under the British Virgin Islands' International Business Companies Act,
and the holders of all of the outstanding options to purchase shares of Retek
(each individually a "Retek Optionee" and collectively the "Retek Optionees").
RECITALS
A. On October 25, 1996 (the "Plan Date"), Retek, the holders of 100% of
the outstanding shares of Retek and HNC entered into an Exchange Agreement (the
"Plan") providing for HNC's acquisition of all of the outstanding shares of
Retek in exchange for shares of HNC Common Stock on the terms and conditions of
the Plan. In addition, the Plan calls for all outstanding options to purchase
shares of Retek Stock to be exchanged for the issuance by HNC of options to
purchase shares of HNC Common Stock as set forth in Section 2.2 of the Plan. The
exchange of shares of Retek Stock for shares of HNC Common Stock and the
exchange of Retek Options (as defined below) for HNC Options (as defined below)
contemplated by the Plan and this Agreement are collectively referred to herein
as the "Exchange".
B. It is a condition precedent to the Exchange and the other
transactions contemplated by the Plan that each Retek Optionee exchanges his/her
Retek Options for options to purchase HNC Common Stock as provided in Section
2.2 of the Plan.
C. The parties hereto intend for the Exchange to qualify as a "pooling
of interests" transaction for accounting purposes.
D. The parties acknowledge that the Exchange will not qualify as and is
not intended to qualify as a reorganization under Section 368 of the U.S.
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
will have the meanings set forth below:
1.2 "HNC Average Price Per Share" means the average of the
closing prices per share of HNC Common Stock as quoted on the Nasdaq National
Market (or such other exchange or quotation system on which HNC Common Stock is
then traded or quoted) and reported in The Wall Street Journal for the ten (10)
trading days ending on, and including, November 1, 1996; provided, however, that
notwithstanding the
<PAGE> 2
foregoing, in no event shall the HNC Average Price Per Share, for purposes of
this Agreement, be less than $28.00 per share of HNC Common Stock, as presently
constituted.
1.3 "HNC Common Stock" means the Common Stock, $0.001 par
value per share, of HNC.
1.6 "Retek Stock" means the ordinary shares of Retek, U.S.
$1.00 par value per share, comprising the authorized capital of Retek, as
constituted immediately prior to the Closing.
1.7 "Retek Derivative Securities" means, collectively, (a) any
warrant, option, right or other security that entitles the holder thereof to
purchase or otherwise acquire any shares of the capital stock of Retek
(collectively, "Retek Stock Rights"); (b) any note, evidence of indebtedness,
stock or other security of Retek that is convertible into or exchangeable for
any shares of the capital stock of Retek or any Retek Stock Rights ("Retek
Convertible Security"); and (c) any warrant, option, right, note, evidence of
indebtedness, stock or other security that entitles the holder thereof to
purchase or otherwise acquire any Retek Stock Rights or any Retek Convertible
Security; provided, however, that the term "Retek Derivative Securities" does
not include any Retek Options (as defined below).
1.8 "Retek Fully Diluted Number" means that number that is
equal to the sum of: (a) the total number of shares of Retek Stock that are
issued and outstanding immediately prior to the Closing; plus (b) the total
number of shares of Retek Stock that are issuable by Retek upon the exercise of
all Retek Options that are issued and outstanding immediately prior to the
Closing; plus (c) the total number of shares of Retek Stock that, immediately
prior to the Closing, are directly or indirectly ultimately issuable by Retek
upon the exercise, conversion or exchange of all Retek Derivative Securities (if
any) that are issued and outstanding immediately prior to the Closing.
1.9 "Retek Optionees" means those persons who, immediately
prior to the Closing, hold outstanding options to purchase shares of Retek
Stock, who will consist solely of those individuals listed on Exhibit A hereto.
1.10 "Retek Options" means options to purchase shares of Retek
Stock granted by Retek and outstanding immediately prior to the Closing, and
which are collectively listed on the various versions of Exhibit B attached
hereto.
1.11 "Closing", as defined in Section 7.1 of the Plan, means
the closing of the transactions for consummation of the Exchange.
1.12 "Closing Date", as defined in Section 7.1 of the Plan,
means November 30, 1996 or such other date on or before the Termination Date
(December 1, 1996) that HNC and Retek mutually agree in writing.
1.13 "Exchange Number" means the quotient obtained by dividing
(i) the Transaction Shares by (ii) the Retek Fully Diluted Number.
2
<PAGE> 3
1.14 "Exchange Shares" means the total number of shares of HNC
Common Stock, as presently constituted, that will be issued under the Plan upon
the exchange of all of the shares of Retek Stock that are issued and outstanding
immediately prior to the Closing and is equal to the product obtained by
multiplying (i) the total number of shares of Retek Stock that are issued and
outstanding immediately prior to the Closing by (ii) the Exchange Number.
1.15 "Transaction Shares" means that number of shares of HNC
Common Stock, as presently constituted, that is equal to the quotient obtained
by dividing (i) $47,329,000 by (ii) the lesser of: (A) $35.00 per share of HNC
Common Stock, as presently constituted; or (B) the HNC Average Price Per Share.
Other capitalized terms not defined in this Section 1 or elsewhere in
this Agreement shall have the meanings assigned to such terms in the Plan.
2. THE EXCHANGE OF RETEK OPTIONS
2.1 Exchange of Options. Subject to the terms and conditions
of this Agreement, each Retek Optionee hereby agrees that, at the Closing of the
Exchange, each Retek Option that is held by such Retek Optionee and is
outstanding immediately prior to the Closing shall at the Closing be irrevocably
surrendered and released to HNC by such Retek Optionee and exchanged by such
Retek Optionee for an option (an "HNC Option") to purchase that number of shares
of HNC Common Stock determined by multiplying the number of shares of Retek
Stock subject to such surrendered Retek Option immediately prior to the Closing
by the Exchange Number, at an exercise price per share of HNC Common Stock equal
to the exercise price per share of Retek Stock that was in effect for such Retek
Option immediately prior to the Closing divided by the Exchange Number, rounded
up to the nearest whole cent; provided, however, that if the foregoing
calculation would result in a Retek Option being exchanged for an HNC Option
that, after aggregating all the shares of HNC Common Stock issuable upon the
exercise of such HNC Option, would be exercisable for a fraction of a share of
HNC Common Stock, then the number of shares of HNC Common Stock subject to such
HNC Option shall be rounded up to the nearest whole number of shares of HNC
Common Stock.
2.2 Terms of Option. The terms, exercisability, vesting
schedule, status as an "nonqualified stock option" and all other terms and
conditions of Retek Options (including but not limited to the terms and
conditions applicable to such options by virtue of the applicable stock option
agreement) shall (except as otherwise provided in the terms of such Retek
Options), to the extent permitted by law and otherwise reasonably practicable,
be unchanged and continue in effect after the Exchange. Continuous employment
with Retek prior to the Closing shall be credited to the Retek Optionee for
purposes of determining the vesting of the number of shares of HNC Common Stock
subject to exercise under the HNC Option issued to such Retek Optionee pursuant
to this Agreement in exchange for such Retek Optionee's Retek Option.
2.3 Replacement Option Documentation. Subject to surrender, if
so requested by HNC, of the applicable Retek Option documentation at the
Closing, each
3
<PAGE> 4
Retek Optionee shall receive a memorandum from HNC within twenty (20 ) business
days after the Closing setting forth the number of shares of HNC Common Stock
subject to such optionee's option and the exercise price per share of HNC Common
Stock.
2.4 Registration of Underlying Shares. HNC shall use its best
efforts to cause the shares of HNC Common Stock that are issuable upon exercise
of the HNC Options that are issued in exchange for Retek Options under Section
2.1 to be registered on a registration statement (or to be issued pursuant to a
then-effective registration statement) on Form S-8 (or successor form)
promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), as soon as reasonably
practicable after the Closing, and no later than 45 days after the Closing of
the Exchange, and shall use its best efforts to maintain the effectiveness of
such registration statement or registration statements for so long as such HNC
Options remain outstanding and HNC Common Stock is registered under the
Securities Exchange Act of 1934, as amended (the "1934 Act").
2.5 Adjustments for Capital Changes. Notwithstanding the
foregoing, if at any time after the Agreement Date and prior to the Closing, HNC
or Retek recapitalizes, either through a subdivision (or stock split) of any of
its outstanding shares into a greater number of shares, or a combination (or
reverse stock split) of any of its outstanding shares into a lesser number of
shares, or reorganizes, reclassifies or otherwise changes its outstanding shares
into the same or a different number of shares of other classes (other than
through a subdivision or combination of shares provided for in the previous
clause), or declares a dividend on its outstanding shares payable in shares or
securities convertible into shares of HNC Common Stock (a "Capital Change"),
then the number of shares of HNC Common Stock for which shares of Retek Stock
are to be exchanged in the Exchange, and the number of shares of HNC Common
Stock to be issued upon exercise of the HNC Options issued in exchange for the
Retek Options in the Exchange (and the exercise price of such HNC Options),
shall be appropriately, equitably and proportionately adjusted (as agreed to by
HNC and Retek if it involves something other than a mathematical adjustment) so
as to maintain the proportionate interests of the shareholders of Retek and the
shareholders of HNC contemplated hereby (and, indirectly, the holders of the
Retek Options) so as to maintain the proportional interests of the holders of
Retek Stock and Retek Options contemplated by the Plan. The provisions of this
Section shall not apply to any transaction not permitted to be undertaken by
Retek under the provisions of the Plan. In the event that a Capital Change
affecting HNC Common Stock occurs prior to the Closing, then all prices per
share and numbers of shares used to compute the Exchange Number shall be deemed
to have been equitably adjusted to reflect such Capital Change as necessary to
effect the purposes and intent of this Section.
2.6 Further Assurances. If, at any time after the Closing, HNC
considers or is advised that any further instruments, deeds, assignments or
assurances are reasonably necessary or desirable to consummate the Exchange or
to carry out the purposes of this Agreement at or after the Closing, then HNC,
Retek and their respective officers and directors may, and each Retek Optionee
shall, execute and deliver all such proper deeds,
4
<PAGE> 5
assignments, instruments and assurances and do all other things necessary or
desirable to consummate the Exchange and to carry out the purposes of this
Agreement.
2.7 Securities Laws Issues. HNC shall issue the HNC Options
pursuant to an exemption from registration under Section 4(2) and/or Regulation
D promulgated under the 1933 Act. Concurrently with execution of this Agreement,
each Retek Optionee has executed and delivered to HNC an Optionee Investment
Representation Letter in the form of Exhibit C hereto. The undersigned
acknowledges that he/she may not freely sell the HNC Common Stock subject to
his/her HNC Option until such shares have been registered on Form S-8 with the
SEC.
2.8 Example. Exhibit D hereto sets forth an illustration of
the operation of the provisions of Section 2 of this Agreement regarding the
exchange of shares of Retek Options in the Exchange.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF RETEK OPTIONEES
3.1 Equity Interest; Release. The undersigned Retek Optionee
represents and warrants to Retek and HNC that (a) the Retek Option identified on
the individual Exhibit B hereto provided to such Retek Optionee accurately
describes the undersigned's option to purchase shares of Retek Stock and the
terms thereof; (b) the undersigned Retek Optionee is the sole record and
beneficial owner of such Retek Option and no other person or entity has any
interest therein; (c) the Retek Option shown on such Retek Optionee's individual
Exhibit B is the only Retek Option or other security of Retek owned or held by
such Retek Optionee; and (d) such Retek Option is in compliance with and in full
satisfaction of all promises, offers and commitments, written or oral, of Retek
and/or its management to the undersigned Retek Optionee for an equity interest
in Retek. The undersigned Retek Optionee hereby releases and waives any claims
or rights he/she may have to any options, shares or securities of, or equity
participation in, Retek or its subsidiaries, other than his/her Retek Option
described in the individual Exhibit B hereto.
3.2 Review of Documents; Advice of Counsel. The undersigned
Retek Optionee represents and warrants that he/she has read and understands the
Optionee Investment Representation Letter, this Agreement and the Information
Statement describing the principal terms and conditions of the Plan and the
Exchange, and acknowledges that he/she has been advised by Retek and its counsel
of the desirability of consulting independent legal counsel regarding the
Exchange, this Agreement, the Optionee Investment Representation Letter, the
Plan and the Information Statement.
3.3 Surrender of Retek Options. At the Closing of the
Exchange, the undersigned Retek Optionee shall deliver and surrender his/her
Retek Option in exchange for an HNC Option, as provided herein and in the Plan.
4. MISCELLANEOUS
5
<PAGE> 6
4.1 Governing Law. The internal laws of the State of
California, U.S.A. (irrespective of its choice of law principles) will govern
the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
4.2 Assignment; Binding Upon Successors and Assigns. No party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other parties hereto, except that HNC may assign its
respective rights and/or obligations to any wholly-owned subsidiary of HNC. This
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
4.3 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
4.4 Amendment and Waivers. Any term or provision of this
Agreement may be amended only by a writing executed by HNC, Retek and each
affected Retek Optionee, and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby.
4.5 Entire Agreement. This Agreement and the exhibits hereto,
together with the Optionee Investment Representation Letter, constitute the
entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto.
4.6 Conditions Precedent. This Agreement and the Optionee
Investment Representation Letter shall not be effective unless and until the
Exchange is closed as provided under the Plan. If the Exchange is closed, this
Agreement shall be deemed effective simultaneously with such Closing.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HNC SOFTWARE INC. RETEK DISTRIBUTION CORPORATION
By: /s/ Robert L. North By: /s/ Robert Jennings
-------------------------- --------------------------
Its: President Its: President
RETEK OPTIONEES
/s/ Ron Beattie
--------------------------
Ron Beattie
/s/ Morgan Day
--------------------------
Morgan Day
/s/ Steve Fluin
--------------------------
Steve Fluin
/s/ John Goedert
--------------------------
John Goedert
/s/ Ian Johnston
--------------------------
Ian Johnston
/s/ Gordon Masson
--------------------------
Gordon Masson
/s/ Maureen McGlinn
--------------------------
Maureen McGlinn
/s/ Kurt Waltenbaugh
--------------------------
Kurt Waltenbaugh
/s/ Michael Wright
--------------------------
Michael Wright
7
<PAGE> 8
[SIGNATURE PAGE TO OPTION EXCHANGE AGREEMENT]
8
<PAGE> 9
LIST OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A Retek Optionees
Exhibit B Terms of Option (individualized for each Retek Optionee)
Exhibit C Optionee Investment Representation Letter
Exhibit D Example of Exchange Number as Applied to Retek Options
</TABLE>
<PAGE> 10
EXHIBIT A
Name of Optionees
Ron Beattie
Morgan Day
Steve Fluin
John Goedert
Ian Johnston
Gordon Masson
Maureen McGlinn
Kurt Waltenbaugh
Michael Wright
<PAGE> 11
EXHIBIT B
Terms of Option
(Name of Optionee)
No. of Options Date of Grant Period of Vesting Price per Share
- -------------- ------------- ----------------- ---------------
($US)
<PAGE> 12
EXHIBIT C
Optionee Investment Representation Letter
<PAGE> 13
EXHIBIT D
Example of Exchange Number as Applied to Retek Options
<PAGE> 1
Exhibit 4.01
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of October 25, 1996, by and between HNC SOFTWARE INC., a
Delaware corporation ("HNC"), and the persons and entities listed on Exhibit A
hereto (collectively, the "SHAREHOLDERS" and each individually, a "SHAREHOLDER")
who immediately prior to the Effective Time of the Exchange (as defined below)
are all of the shareholders of RETEK DISTRIBUTION CORPORATION, a British Virgin
Islands corporation ("RETEK").
A. Retek, HNC and the Shareholders have entered into an Exchange
Agreement dated as of October 25, 1996 (the "PLAN"), pursuant to which HNC will
acquire 100% of the outstanding shares of Retek and 100% of the outstanding
options to purchase shares of Retek in exchange for the issuance to the
Shareholders of shares of HNC Common Stock and cash and the issuance to the
holders of options to purchase shares of Retek stock of options to purchase
shares of HNC Common Stock, respectively (the "EXCHANGE").
B. As a condition precedent to the consummation of the Exchange,
Section 2.1.3 of the Plan provides that the Shareholders shall be granted Form
S-3 registration rights with respect to the shares of HNC Common Stock that are
issued to the Shareholders in the Exchange, subject to the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) 1933 Act. The term "1933 ACT" means the U.S.
Securities Act of 1933, as amended, or any successor law.
(b) 1934 Act. The term "1934 ACT" means the U.S.
Securities Exchange Act of 1934, as amended, or any successor law.
(c) Registration. The terms "REGISTER," "REGISTERED,"
and "REGISTRATION" refer to the registration effected by preparing and filing a
Form S-3 registration statement in compliance with the 1933 Act (a "registration
statement"), and the declaration or ordering of effectiveness of such
registration statement.
(d) Registrable Securities. The term "REGISTRABLE
SECURITIES" means: (i) the shares of HNC Common Stock that are issued to the
Shareholders pursuant to Section 2.1.1 of the Plan in exchange for shares of
Retek Common Stock that are issued and outstanding immediately prior to the
Closing (as defined in the Plan) and held by a Shareholder immediately prior to
such Closing; and (ii) any shares of HNC Common Stock that may be issued as a
dividend or other distribution (including shares of HNC Common Stock issued in a
subdivision and split of HNC's outstanding Common Stock) with respect to, or in
exchange for or in replacement of, all such shares of HNC Common Stock described
in clause (i) of this Section 1.1(d) that have been issued by HNC; excluding in
all cases, however, any such shares that are (x) registered under the 1933 Act;
(y) sold by a person in a transaction in which rights under this Agreement are
not
<PAGE> 2
assigned in accordance with the terms of this Agreement; or (z) sold to the
public or sold pursuant to Rule 144 promulgated under the 1933 Act. Only shares
of HNC Common Stock shall be Registrable Securities. Except as provided in
clause (ii) of the first sentence of this Section 1.1(d), the term "Registrable
Securities" does not include: (i) any shares of HNC Common Stock acquired
outside the Exchange or (ii) any shares of HNC Common Stock issued or issuable
upon the exercise of HNC Options issued upon the conversion of outstanding Retek
Options in the Exchange pursuant to Section 2.2 of the Plan or upon the exercise
of any other HNC Options issued by HNC to any Shareholder.
(e) Holder. The term "HOLDER" means the original
holder of any Registrable Securities or any assignee of record of any
Registrable Securities to whom rights under this Agreement have been duly
assigned in accordance with the provisions of this Agreement.
(f) SEC. The term "SEC" or "COMMISSION" means the
U.S. Securities and Exchange Commission.
(g) Form S-3. The term "FORM S-3" means such
registration statement form under the 1933 Act as is in effect on the date of
this Agreement or any successor registration statement form under the 1933 Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by HNC with the
SEC.
(h) Rule 415. The term "RULE 415" means Rule 415
under the 1933 Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
(i) Terms from Plan. Capitalized terms used in this
Agreement but not defined in this Section 1 or elsewhere in this Agreement shall
have the meanings given them in the Plan.
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<PAGE> 3
1.2. SHELF REGISTRATION.
(a) As promptly as reasonably practicable following
the Closing of the Exchange (but not earlier than 20 days after the Closing of
the Exchange), and consistent with the requirements of applicable law, HNC shall
prepare and file with the SEC a registration statement on Form S-3 for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Registrable Securities (the "SHELF REGISTRATION"). HNC shall use its best
efforts to have such Shelf Registration declared effective as soon as
practicable and to keep the Shelf Registration continuously effective under the
1933 Act for a continuous period of time (such period of time being hereinafter
called the "EFFECTIVENESS PERIOD") commencing on the date the Shelf Registration
is declared effective under the 1933 Act by the SEC (the "EFFECTIVENESS DATE")
and ending on the later to occur of (i) the second anniversary of the
Effectiveness Date; or (ii) the second (2nd) anniversary of the first date on
which HNC publicly releases a report including financial statements of HNC that
include at least thirty (30) days of post-Exchange combined operating results of
HNC and Retek.
(b) If the Shelf Registration or a Subsequent
Registration (as defined below) ceases to be effective for any reason at any
time during the Effectiveness Period, then HNC shall use its best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall, within 45 days of such cessation of effectiveness, file
an amendment to the Shelf Registration seeking to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional "shelf"
registration statement pursuant to Rule 415 covering all of the Registrable
Securities (a "SUBSEQUENT REGISTRATION"). If a Subsequent Registration is filed,
HNC shall use its best efforts to cause the Subsequent Registration to be
declared effective as soon as practicable after such filing and to keep such
registration statement continuously effective until the end of the Effectiveness
Period.
(c) Subject to the provisions of Section 1.2(h), HNC
shall supplement and amend the Shelf Registration if, as and when required by
the 1933 Act, the rules and regulations promulgated thereunder or the rules,
regulations or instructions applicable to the registration form used by HNC for
such Shelf Registration.
(d) Any sale of Registrable Securities pursuant to a
registration hereunder may be made only during a "Permitted Window" (as defined
below) and only in accordance with the method or methods of distribution of such
Registrable Securities as described in the registration statement for the Shelf
Registration (or Subsequent Registration, as applicable) (which methods of
distribution will be specified by the Holders in their Notice of Resale (as
defined below)). A Holder may also sell Registrable Securities in a bona fide
private offering if the selling Holder provides HNC with a written opinion of
counsel, satisfactory to counsel to HNC, that such offer and sale is an exempt
transaction under the 1933 Act and applicable state securities laws.
(e) There will be no more than three (3) Permitted
Windows during each of the first 12 months and the second 12 months of the
Effectiveness Period and there will be at least a 60-day interval between any
two Permitted Windows.
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<PAGE> 4
(f) No Shareholder will sell any Registrable
Securities, and no Permitted Window will commence, until after HNC has publicly
released a report including financial statements of HNC that include at least
thirty (30) days of post-Exchange combined operating results of HNC and Retek.
(g) During any calendar quarter during the
Effectiveness Period, the Shareholders, collectively, may not sell an amount of
Registrable Securities that, in the aggregate, exceeds three percent (3%) of the
outstanding shares of HNC Common Stock, as indicated in HNC's then most recent
published report.
(h) A "PERMITTED WINDOW" is a period of thirty (30)
consecutive calendar days commencing upon HNC's written notification to the
Shareholders in response to a Notice of Resale (as defined below) that the
prospectus contained in the registration statement is available to be used for
resales of Registrable Securities pursuant to the Shelf Registration. In order
to cause a Permitted Window to commence, a Holder or Holders of Registrable
Securities must first give written notice to HNC of its/their present intention
to sell some or all of its/their Registrable Securities pursuant to the Shelf
Registration and indicate the number of shares proposed to be sold (a "NOTICE OF
RESALE"). Upon receipt of such Notice of Resale (unless a certificate of the
President of HNC is delivered as provided in Section 1.3(b) below), HNC will
give written notice to the Holders as soon as practicable, but in no event more
than seven (7) business days after such receipt, that: (i) the prospectus
contained in the registration statement is current (it being acknowledged that
it may be necessary for HNC during this period to supplement the prospectus or
make an appropriate filing under the 1934 Act so as to cause the prospectus to
become current) and that the Permitted Window will commence on the date of such
notice by HNC; or (ii) HNC is required under the 1933 Act and the regulations
thereunder to amend the registration statement in order to cause the prospectus
to be current. In the event that HNC determines that an amendment to the
registration statement is necessary as provided above, it will file and cause
such amendment to become effective as soon as practicable; whereupon it will
notify the Shareholders that the Permitted Window will then commence. HNC shall
not be obligated to keep the registration statement current during any period
other than a Permitted Window. The provisions of this Section 1.2(h) are subject
and subordinate to the provisions of Section 1.2(i). If, pursuant to Section
1.3(b), HNC defers a Permitted Window, and the Holders withdraw their Notice of
Resale, then such withdrawal shall not count as a Permitted Window. The Holders
may elect to withdraw a request for registration pursuant to a Notice of Resale;
provided however, that if HNC has commenced preparation of any supplement or
amendment to the registration statement or any part thereof in response to such
Notice of Resale prior to receiving written notice from the Holders' of the
withdrawal of their request for registration, then the Holders will promptly
reimburse HNC for its actual costs and expenses incurred in preparing and/or
filing such supplement and/or amendment.
(i) If a Holder or any trustee or beneficiary of a
Holder is or becomes an employee of HNC or any subsidiary of HNC, then in such
event, notwithstanding any other provision of this Agreement, such Holder will
sell and dispose of Registrable Securities pursuant to the Shelf Registration or
any Subsequent Registration only during those time periods ("TRADING WINDOWS")
during which the officers and directors of HNC are permitted to make sales,
purchases or other trades in HNC's securities under HNC's then-current
securities trading policy applicable to HNC employees. When and if applicable,
HNC shall notify Holders in writing of the
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<PAGE> 5
commencement or expiration of each trading window within at least one (1)
trading day prior to the commencement or expiration of such trading window, as
applicable.
1.3 LIMITATIONS. Notwithstanding the provisions of Section 1.2
above, HNC shall not be obligated to effect any such registration, qualification
or compliance of Registrable Securities pursuant to this Agreement, or the
Holders shall not be entitled to sell Registrable Securities pursuant to the
registration statement, as applicable:
(a) if Form S-3 is not then available for
such offering by the Holders;
(b) if HNC shall furnish to the Holders a
certificate signed by the President of HNC stating that, in the good faith
judgment of the Board of Directors of HNC, it would be seriously detrimental to
HNC and its stockholders for such Permitted Window to be in effect at such time,
due, for example, to the existence of a material development or potential
material development involving HNC which HNC would be obligated to disclose in
the prospectus contained in the Shelf Registration, which disclosure would, in
the good faith judgment of the Board of Directors of HNC, be premature or
otherwise inadvisable at such time or would have a material adverse affect upon
HNC and its shareholders, in which event HNC will have the right to defer a
Permitted Window for a period of not more than sixty (60) days after receipt of
a Notice of Resale from the Holder or Holders pursuant to this Section 1.2;
provided, however, that HNC may so postpone a Permitted Window no more than two
(2) times per calendar year during each of the 1997 and 1998 calendar years (and
not more than once for each six (6) month period that the Effectiveness Period
is extended pursuant to the following proviso) and provided further, that if HNC
so postpones a Permitted Window, the Effectiveness Period of the Shelf
Registration shall be extended by a period of time equal to the period of
postponement (subject to the provisions of Sections 1.4 and 1.10 below). If HNC
defers a Permitted Window as provided herein and the Holders withdraw their
Notice of Resale, then such withdrawal shall not count as a Permitted Window.
(c) if HNC is acquired and its Common Stock
ceases to be publicly traded and in such acquisition of HNC the Holders receive,
in exchange for the Registrable Securities then held by them, cash and/or
securities that are registered under the 1933 Act or that may be traded without
restriction on transfer imposed by the 1933 Act, other than the restrictions on
transfer under paragraphs (c), (e), (f) and (g) of Rule 144 promulgated under
the 1933 Act, as such Rule is in effect on the date of this Agreement;
(d) in any particular jurisdiction in which
HNC would be required to qualify to do business or to execute a general consent
to service of process in effecting such registration, qualification or
compliance, unless HNC is already subject to service of process in such
jurisdiction; or
(e) if the SEC refuses to declare such
registration effective due to the participation of any particular Holder in such
registration (unless such Holder withdraws all such Holder's Registrable
Securities from such registration statement).
-5-
<PAGE> 6
1.4 SHARES OTHERWISE ELIGIBLE FOR RESALE. HNC shall not be
obligated to effect or continue to keep effective any such registration,
registration statement, qualification or compliance of Registrable Securities
held by any particular Holder:
(a) if HNC or its legal counsel shall have
received a "no-action" letter or similar written confirmation from the SEC that
all the Registrable Securities originally issued to such Holder in the Exchange
and still then held by such Holder may be resold by such Holder within a three
(3) month period without registration under the 1933 Act pursuant to the
provisions of Rule 144 or Rule 145(d) promulgated under the 1933 Act (or
successor provisions), or otherwise;
(b) if legal counsel to HNC shall deliver a
written opinion to HNC, its transfer agent and the Holders, in form and
substance reasonably acceptable to HNC, to the effect that all the Registrable
Securities originally issued to such Holder in the Exchange and still then held
by such Holder may be resold by such Holder within a three (3) month period
without registration under the 1933 Act pursuant to the provisions of Rule 144
or Rule 145(d) promulgated under the 1933 Act, or otherwise; or
(c) after expiration or termination of the
Effectiveness Period.
1.5 EXPENSES. HNC shall pay all expenses incurred in
connection with the Shelf Registration and any Subsequent Registration
(excluding brokers' discounts and commissions), including without limitation all
filing, registration and qualification, printers' and accounting fees.
1.6 OBLIGATIONS OF HNC. Subject to Sections 1.2, 1.3 and 1.4
above, when required to effect the registration of any Registrable Securities
under the terms of this Agreement, HNC will, as expeditiously as reasonably
possible:
(a) furnish to the Holders such number of
copies of a prospectus, including a preliminary prospectus (and amendments or
supplements thereto), in conformity with the requirements of the 1933 Act, and
such other documents as they may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by them;
(b) use its best efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as will be reasonably
requested by the Holders, provided that HNC will not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such state or jurisdiction unless
HNC is already subject to service of process in such jurisdiction; and
(c) promptly notify each Holder of
Registrable Securities covered by such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the 1933 Act, of
the happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
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<PAGE> 7
1.7 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of HNC to take any action pursuant to this Agreement that the
selling Holders will furnish to HNC such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such Registrable Securities as shall be required to timely effect the
registration of their Registrable Securities.
1.8 DELAY OF REGISTRATION. No Holder will have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
1.9 INDEMNIFICATION.
(a) By HNC. To the extent permitted by law, HNC will
indemnify and hold harmless each Holder, the trustee, partners, officers and
directors of each Holder, any underwriter (as defined in the 1933 Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the 1933 Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the 1933 Act, the l934 Act or other U.S. federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "VIOLATION"):
(i) any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement filed by HNC pursuant to this
Agreement, including any preliminary prospectus or
final prospectus contained therein or any amendments
or supplements thereto;
(ii) the omission or alleged omission to
state therein a material fact required to be stated
therein, or necessary to make the statements therein
not misleading; or
(iii) any violation or alleged violation by
HNC of the 1933 Act, the 1934 Act, any U.S. federal
or state securities law or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or any
U.S. federal or state securities law in connection
with the offering covered by such registration
statement;
and HNC will reimburse each such Holder, trustee, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably and
actually incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this subsection 1.9(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of HNC (which consent
shall not be unreasonably withheld), nor shall HNC be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such
-7-
<PAGE> 8
registration by such Holder, trustee, partner, officer, director, underwriter or
controlling person of such Holder.
(b) By Selling Holders. To the extent permitted by
law, each selling Holder will indemnify and hold harmless HNC, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls HNC within the meaning of the 1933 Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder within the meaning of the 1933 Act or the 1934
Act, against any losses, claims, damages or liabilities (joint or several) to
which HNC or any such director, officer, controlling person, underwriter or
other such Holder, trustee, partner or director, officer or controlling person
of such other Holder may become subject under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred by HNC or any such director, officer, controlling person, underwriter
or other Holder, trustee, partner, officer, director or controlling person of
such other Holder in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 1.9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the indemnifying Holder, which
consent shall not be unreasonably withheld; and provided further that the total
amounts payable in indemnity by a Holder under this subsection 1.9(b) in respect
of any Violation shall not exceed the net proceeds received by such Holder in
the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified
party under this Section 1.9 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim for
indemnification or contribution in respect thereof is to be made against any
indemnifying party under this Section 1.9, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure of an indemnified party to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.9, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.9.
(d) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of HNC and Holders are subject to the condition
that, insofar as they relate to any
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<PAGE> 9
Violation made in a preliminary prospectus but eliminated or remedied in the
amended or supplemented prospectus on file with the SEC and effective at the
time the sale of Registrable Securities under such registration statement occurs
(the "AMENDED PROSPECTUS"), such indemnity agreement shall not inure to the
benefit of any person if a copy of the Amended Prospectus was furnished to the
indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage, at or prior to the time such action is required by
the 1933 Act.
(e) Contribution. In order to provide for just and
equitable contribution to joint liability under the 1933 Act in any case in
which either (i) any Holder exercising rights under this Agreement, or any
controlling person of any such Holder, makes a claim for indemnification
pursuant to this Section 1.9 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 1.9 provides for indemnification in such case, or (ii) contribution
under the 1933 Act may be required on the part of any such selling Holder or any
such controlling person in circumstances for which indemnification is provided
under this Section 1.9; then, and in each such case, HNC and such Holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
Holder is responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by and sold under
the registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and HNC and other selling
Holders are responsible for the remaining portion; provided, however, that, in
any such case, (A) no such Holder will be required to contribute any amount in
excess of the public offering price of all such Registrable Securities offered
and sold by such Holder pursuant to such registration statement; and (B) no
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) will be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of HNC and Holders
under this Section 1.9 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
1.10 DURATION AND TERMINATION OF HNC'S OBLIGATIONS. HNC will
have no obligations pursuant to Section 1.2 of this Agreement with respect to
any Notice of Resale or other request or requests for registration (or inclusion
in a registration) made by any Holder or to maintain or continue to keep
effective any registration or registration statement pursuant hereto: (a) after
the expiration or termination of the Effectiveness Period; (b) if HNC has
already effected six (6) Permitted Windows pursuant to this Agreement; (c) if,
in the opinion of counsel to HNC, all such Registrable Securities proposed to be
sold by such Holder may be sold in a three (3) month period without registration
under the 1933 Act pursuant to Rule 144 or Rule 145(d) promulgated under the
1933 Act or otherwise; or (d) if all Registrable Securities have been registered
and sold pursuant to registrations effected pursuant to this Agreement and/or
have been transferred in transactions in which registration rights hereunder
have not been assigned in accordance with this Agreement.
1.11 ACKNOWLEDGMENT OF OTHER AGREEMENTS. The Holders
acknowledge that they have been informed by HNC that other shareholders of HNC
currently hold certain S-3 and
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<PAGE> 10
other registration rights that may enable such other shareholders to sell shares
of HNC during one or more Permitted Windows or at other times (thus potentially
adversely affecting the receptivity of the market to the sale of the Registrable
Securities pursuant to the Shelf Registration) and that certain shareholders
hold "piggyback registration rights" that may allow them to participate in a
registration effected pursuant to this Agreement. In the event that, after the
date of this Agreement and prior to expiration of the Effectiveness Period, HNC
enters into an agreement pursuant to which HNC grants registration rights to a
third party or parties that may be exercised during the Effectiveness Period,
then, within thirty (30) days after it enters into such agreement, HNC will
notify the Retek Shareholders of the grant of such registration rights and their
general terms.
2. ASSIGNMENT
Notwithstanding anything herein to the contrary, the rights of a Holder
under this Agreement may be assigned only with HNC's express prior written
consent, which may be withheld in HNC's sole discretion; provided, however, that
the rights of a Holder under this Agreement may be assigned without HNC's
express prior written consent: (a) to a Permitted Assignee (as defined below);
or (b) (if applicable) by will or by the laws of intestacy, descent or
distribution, provided that the assignee agrees in writing to be bound by all
the obligations of the Holders under this Agreement. Any attempt to assign any
rights of a Holder under this Agreement without HNC's express prior written
consent in a situation in which such consent is required by this Section shall
be null and void and without effect. Subject to the foregoing restrictions, all
rights, covenants and agreements in this Agreement by or on behalf of the
parties hereto will bind and inure to the benefit of the respective permitted
successors and assigns of the parties hereto. Each of the following parties are
"PERMITTED ASSIGNEES" for purposes of this Section : (a) any beneficiary of a
Shareholder that is a trust; and (b) the personal representative, custodian or
conservator of a Holder, in the case of the death, bankruptcy or adjudication of
incompetency of that Holder.
3. GENERAL PROVISIONS
3.1 NOTICES. Unless otherwise provided, all notices,
instructions and other communications required or permitted to be given
hereunder or necessary or convenient in connection herewith must be in writing
and shall be deemed delivered (i) when personally served or when delivered by
telex or facsimile (to the telex or facsimile number of the person to whom the
notice is given), (ii) the first business day following the date of deposit with
an overnight courier service or (iii) on the earlier of actual receipt or the
third business day following the date on which the notice is deposited in the
United States mail, first class certified, postage prepaid, addressed as
follows: (a) if to HNC, at 5930 Cornerstone Court West, San Diego, CA 92121,
Attention: President, Telecopier: (619) 452-3220; and (b) if to a Shareholder,
at such Shareholder's respective address as set forth on Exhibit A hereto. Any
party hereto (and such party's permitted assigns) may by notice so given change
its address for future notices hereunder.
3.2 ENTIRE AGREEMENT. This Agreement and the provisions of
Section 2.1.3 of the Plan constitute and contain the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties with respect to the
subject matter hereof.
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<PAGE> 11
3.3 AMENDMENT OF RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of HNC and Holders of a majority of all Registrable Securities
then outstanding. Any amendment or waiver effected in accordance with this
Section 3.3 shall be binding upon each Holder, each permitted successor or
assignee of such Holder and HNC.
3.4 GOVERNING LAW. This Agreement will be governed by and
construed exclusively in accordance with the internal laws of the State of
California, United States of America, as applied to agreements among California
residents entered into and to be performed entirely within California, excluding
that body of law relating to conflict of laws and choice of law.
3.5 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision(s) will
be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and will be enforceable in
accordance with its terms.
3.6 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended to confer upon any person, other than the
parties hereto and their successors and assigns, any rights or remedies under or
by reason of this Agreement.
3.7 CAPTIONS. The headings and captions to sections of this
Agreement have been inserted for identification and reference purposes only and
will not be used to construe or interpret this Agreement.
3.8 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
3.9 EFFECTIVENESS OF AGREEMENT. Regardless of when signed,
this Agreement will not become effective or binding unless and until the Closing
(as defined in the Plan) of the Exchange has been consummated in accordance with
the Plan.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date and year first above written.
HNC SOFTWARE INC. THE SHAREHOLDERS
THE MULBERRY TRUST
By: /s/ Robert L. North By: /s/ Jane M. Collis
---------------------------- ------------------------------------
Print Name: Robert L. North Print Name: Jane M. Collis
------------------ ---------------------------
Title: President Title: Managing Director
------------------------ ---------------------------------
Entity Name: St. George's Trust Company
---------------------------
Limited
-------
THE KULMOR TRUST
By: /s/ Jane M. Collis
-----------------------------------
Print Name: Jane M. Collis
----------------------------
Title: Managing Director
---------------------------------
Entity Name: St. George's Trust Company
--------------------------
Limited
-------
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
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<PAGE> 13
EXHIBIT A
LIST OF SHAREHOLDERS
<TABLE>
<CAPTION>
Number of Shares of HNC
Name and Address Common Stock Held
- ---------------- -----------------------
<S> <C>
The Mulberry Trust 1,162,117
St. George's Trust Company Limited
P.O. Box HM 3051
Hamilton AMX Bermuda
The Kulmor Trust 205,079
St. George's Trust Company Limited
P.O. Box HM 3051
Hamilton AMX Bermuda
</TABLE>
