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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 2000
REGISTRATION NO. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HNC SOFTWARE INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 7372 33-0248788
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. employer
incorporation or organization) Classification Code Number) identification no.)
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5935 CORNERSTONE COURT WEST
SAN DIEGO, CALIFORNIA 92121-3278
(858) 546-8877
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
KENNETH J. SAUNDERS
CHIEF FINANCIAL OFFICER
HNC SOFTWARE INC.
5935 CORNERSTONE COURT WEST
SAN DIEGO, CALIFORNIA 92121-3278
(858) 546-8877
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
KENNETH A. LINHARES, ESQ.
KATHERINE TALLMAN SCHUDA, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
(650) 494-0600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement and until the close
of business on March 17, 2001 or until the earlier sale of all shares registered
hereunder.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED (1) REGISTERED (1) PRICE PER SHARE (2) PRICE (2) REGISTRATION FEE
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Common Stock, par value $0.001 237,552 $58.1875 $13,822,557 $3,649.16
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(1) The shares of Common Stock set forth in the Calculation of Registration Fee
Table, and which may be offered pursuant to this Registration Statement,
include, pursuant to Rule 416 of the Securities Act of 1933, as amended,
such additional number of shares of the Registrant's Common Stock as may
become issuable as a result of any stock split, stock dividend or similar
event on the shares listed or on such additional shares.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(c) under the Securities Act, based on
the average of the high and low prices of the common stock on the Nasdaq
National Market on April 12, 2000.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
237,552 SHARES
HNC SOFTWARE INC.
COMMON STOCK
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All of the 237,552 shares of common stock of HNC Software Inc. are
being sold by stockholders of HNC. HNC will not receive any proceeds from the
sale of shares offered by the selling stockholders. See "Selling Stockholders"
and "Plan of Distribution."
The common stock is listed on the Nasdaq National Market under the
symbol "HNCS." The shares of common stock offered will be sold as described
under "Plan of Distribution."
On April __, 2000, the closing price per share of the common stock on
the Nasdaq National Market was $____.
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THE COMMON STOCK OFFERED INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THE
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS APRIL __, 2000
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HNC, THE
SELLING STOCKHOLDERS OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SUCH
SECURITIES BY ANYONE IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
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PAGE
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HNC Software Inc.............................................................2
Risk Factors.................................................................3
Cautionary Note on Forward-Looking Statements...............................11
Use of Proceeds.............................................................11
Selling Stockholders........................................................11
Plan of Distribution........................................................13
Legal Matters...............................................................15
Experts.....................................................................15
Documents Incorporated by Reference in this Prospectus......................15
Where You Can Find More Information.........................................15
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HNC SOFTWARE INC.
HNC is a business-to-business software company that develops, markets,
licenses and supports predictive software solutions for various service
industries, including companies in the insurance, financial services,
telecommunications, e-commerce and retail industries. Our predictive software
solutions help service industry companies manage and optimize their customer
relationships. Our products improve the decision-making process in functions
such as credit card fraud detection, credit application processing and insurance
claim review. By analyzing high volumes of customer transactions in real-time,
our predictive solutions help companies shift the decision-making process from a
retrospective to a prospective basis.
HNC was founded in 1986 under the laws of California and was
reincorporated under the laws of Delaware in June 1995. We completed our initial
public stock offering in June 1995. We are headquartered in San Diego,
California. Our principal executive offices are located at 5935 Cornerstone
Court, West, San Diego, California 92121-3728. Our telephone number is (858)
546-8877.
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RISK FACTORS
This offering of shares of common stock is risky. Anyone who may
receive common stock under this prospectus should carefully consider the
following risk factors in addition to the other information presented in or
incorporated by reference into this prospectus and any prospectus supplement.
We may encounter additional risks in the future, some of which may be
referred to in subsequent reports and filings that are incorporated in this
prospectus by reference. These documents should be read carefully, as they may
modify and supplement the risks referred to below.
FLUCTUATIONS IN OUR QUARTERLY RESULTS COULD CAUSE THE MARKET PRICE OF OUR COMMON
STOCK TO DECLINE
Our revenues and operating results have varied significantly in the
past. We expect these fluctuations to continue. Consequently, we believe that
period-to-period comparisons of our financial results should not be relied upon
as an indication of future performance. It is possible that in some future
periods our revenues and operating results may fall below the expectations of
market analysts and investors, and in this event the market price of our common
stock would likely fall. Factors that affect our revenues and operating results
include the following:
- Failure of our target markets and customers to accept our products;
- Delays in large orders from customers;
- Decrease in recurring revenues;
- The lengthy sales cycle of most of our products;
- Our ability to successfully and timely develop, introduce and market
new products and product enhancements;
- The timing of our new product announcements and introductions in
comparison with our competitors;
- Changes in the mix of our distribution channels;
- Changes in the level of our operating expenses;
- Our ability to achieve progress and fulfill our obligations under
percentage-of-completion contracts;
- Our success in completing pilot product installations within contracted
fee budgets;
- Competitive conditions in the industries we serve, including the
ability of certain Internet competitors to spend larger amounts to
market their product and service offerings;
- Domestic and international economic conditions;
- Market conditions in our targeted markets;
- Changes in prevailing technologies;
- Acquisition-related expenses and charges;
- Increased operating expenses related to the development of products for
the Internet;
- Our ability to recognize revenues in accordance with generally accepted
accounting principles; and
- Factors unique to our product lines.
All of these factors are difficult to forecast.
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BECAUSE OUR PRODUCTS' SALES CYCLE IS LENGTHY AND UNPREDICTABLE, OUR SALES AND
MARKETING COSTS MAY INCREASE, AND IT IS DIFFICULT TO DETERMINE WHEN SALES WILL
OCCUR
We cannot predict the timing of the recognition of our revenues
accurately because of the length of our sales cycles. If sales forecasted from
specific customers are not realized, we may be unable to compensate for the
resulting revenue shortfall, and our operating results would be harmed. The
sales cycle to license our products can typically range from 60 days to 18
months. Customers are often cautious in making decisions to acquire our
products, because purchasing our products typically involves a significant
commitment of capital and may involve shifts by the customer to a new software
and/or hardware platform. Delays in completing sales can arise while customers
complete their internal procedures to approve large capital expenditures and
test and consider our applications. We may incur substantial sales and marketing
expenses and expend significant management effort while potential customers are
evaluating our products and before they place an order with us. If orders for
our products are not received as anticipated, our operating results could be
harmed.
WE MAY FAIL TO INTEGRATE ACQUIRED COMPANIES EFFECTIVELY, AND THE ACQUISITIONS
MAY DISRUPT OUR BUSINESS AND ADVERSELY AFFECT OUR OPERATIONS
We have acquired a number of businesses and product lines. From
mid-February to mid-April 2000, we acquired four companies, Advanced Information
Management Solutions, Inc., ONYX Technologies, Inc., The Center for Adaptive
Systems Applications, Inc. and Celerity Technologies, Inc., and we are likely to
have future acquisitions. Acquisition of these companies and other companies may
in the future result in unforeseen operating difficulties and expenditures and
other risks, including the following:
- The process of integrating acquired businesses into our own business
may absorb significant management attention that would otherwise be
available for the development of our core business;
- We might not realize the anticipated benefits of our acquisitions;
- Acquisitions could result in potentially dilutive issuances of equity
securities, the incurrence of debt and contingent liabilities;
- We might encounter difficulties in attempting to assimilate the
operations, technologies and products of companies we acquire;
- We might not be able to successfully manage and integrate diverse
geographic operations resulting from acquisitions;
- We might not be able to coordinate the diverse operating structures,
policies and practices of the acquired companies and to successfully
integrate their employees into our organization and culture;
- We might lose key employees of the acquired companies;
- We might not be able to acquire businesses on favorable terms;
- In the future, we might face increased competition for acquisition
opportunities, which might inhibit our ability to complete suitable
acquisitions, might increase the costs of completing acquisitions and
might preclude us from obtaining needed technologies and employees;
- We will often be entering markets in which we have limited or no prior
experience, and we might not be able to successfully develop and market
products for new industries or for markets with which we might not be
familiar;
- Despite due diligence reviews, acquired businesses might bring with
them unanticipated liabilities or risks that could adversely affect our
results of operations or business; and
- The accounting treatment of acquisitions can also adversely affect our
reported results of operations, since acquisitions generate substantial
costs as well as accounting charges and amortization of goodwill and
other intangible assets, all of which may reduce our earnings.
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GROWTH PLACES A SIGNIFICANT STRAIN ON OUR BUSINESS, AND OUR FAILURE TO
SUCCESSFULLY MANAGE OUR GROWTH COULD DISRUPT OUR CORPORATE ORGANIZATION, DIVERT
US FROM OTHER OBJECTIVES AND HURT OUR BUSINESS
In recent years, we have experienced changes in our operations that
have placed significant demands on our administrative, operational and financial
resources. These demands are expected to continue to challenge our management
and operations, and include the following:
- Growth and diversification of our customer base;
- Expansion of our product functionality and the number of products we
market and support;
- Our acquisition of other businesses and their employees;
- Expansion of our product line into new markets and technology mediums;
and
- Growth of our sales, marketing, customer support, research and
development and finance and administrative operations.
These demands highlight the following risks:
- Our future performance will depend in part on our ability to
successfully manage change and growth, both in our domestic and
international operations;
- We will need to adapt our operational and financial control systems, if
necessary, to respond to changes in the size and diversification of our
business; and
- We will need to be able to successfully integrate acquired businesses
with our operations.
OUR NEW PRODUCTS MIGHT NOT ACHIEVE MARKET ACCEPTANCE
The market for predictive software solutions is still emerging. The
rate at which businesses have adopted our products has varied significantly by
market and by product within each market, and we expect to continue to
experience variations in the degree to which our products are accepted. Although
some businesses in our target markets have recognized the advantages of using
predictive software solutions to automate the decision-making process, many
prospective customers have developed decision automation systems internally
rather than licensing them from outside vendors. Our ability to grow will depend
on the extent to which our potential customers accept our products. This
acceptance may be limited by:
- The failure of prospective customers to conclude that predictive
software solutions are valuable and should be acquired and used;
- The reluctance of our prospective customers to replace their existing
solutions with our products;
- Marketing efforts of our competitors; and
- The emergence of new technologies that could cause our products to be
less competitive or obsolete.
Because the market for predictive software solutions is still in a
relatively early stage of development, we cannot assess the size of the market
accurately, and we have limited insight into trends that may emerge and affect
our business. For example, we may have difficulty in predicting customer needs,
in developing products that could address those needs and in establishing a
distribution strategy for these products. We may also have difficulties in
predicting the competitive environment that will develop.
WE WILL NOT BE ABLE TO COMPETE SUCCESSFULLY UNLESS WE ARE ABLE TO KEEP PACE WITH
RAPIDLY CHANGING TECHNOLOGIES
In our markets, technology changes rapidly, and there are continuous
technological improvements. Our success will depend upon our ability to continue
to develop and maintain competitive technologies, enhance our current
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products and develop, in a timely and cost-effective manner, new products that
meet changing market conditions. We must respond to evolving customer needs, new
competitive product offerings, emerging industry standards and changing
technology. The rapid growth of the Internet environment creates new
opportunities, risks and uncertainties for businesses, such as ours, which
develop software solutions that must also be designed to operate in Internet,
intranet and other online environments. We have previously experienced
significant delays in the development and introduction of new products and
product enhancements, primarily due to difficulties with model development,
which has in the past required multiple iterations, as well as difficulties with
acquiring data and adapting to particular operating environments. The length of
these delays has varied depending upon the size and scope of the project and the
nature of the problems encountered. In the future, we may not be able to develop
and market product enhancements or new products that respond to changing
technologies.
WE ARE SUBSTANTIALLY DEPENDENT UPON THE SUCCESS OF A LIMITED NUMBER OF PRODUCTS
OR PRODUCT LINES, EACH OF WHICH FACES UNCERTAINTIES AND FUTURE CHALLENGES
We currently have one product or product line in each of our target
markets that account for a majority of our total revenues from that market.
These products accounted for 46.5% of our total revenues in 1999, 49.2% of our
total revenues in 1998 and 57.9% of our total revenues in 1997. In the insurance
market, our CompAdvisor (formerly CRLink) product accounted for 20.9% of total
revenues in 1999, 21.5% of total revenues in 1998 and 23.0% of total revenues in
1997, and we expect that we will continue to depend upon CompAdvisor for a
substantial portion of our total revenues for the foreseeable future. Revenues
from Falcon, our credit card fraud detection product line, accounted for 15.4%
of total revenues in 1999, 14.5% of total revenues in 1998 and 16.0% of total
revenues in 1997, and we expect that we will continue to depend upon Falcon
products for a substantial portion of our total revenues for the foreseeable
future. Each of these products and product lines face substantial risks,
including the following:
- Any failure to timely introduce future product enhancements may
adversely affect the continued market acceptance of CompAdvisor and the
Falcon product line, and such market acceptance may also be adversely
affected by product introductions of our competitors;
- Demand for, or use of, CompAdvisor could decline as a result of
competition, simplification of state workers' compensation fee
schedules, changes in the overall payment system or regulatory
structure for workers' compensation claims, technological change, our
inability to obtain or use state fee schedule or claims data,
saturation of market demand, industry consolidation or other factors;
- Demand for, or use of, our Falcon product line could decline as a
result of competition, technological change, changing patterns of
credit card fraud that the Falcon product line might not detect and
other methods of credit card fraud prevention that might reduce
customers' needs for the Falcon product line; demand could also be
adversely affected by fluctuations in interest rates, reduction in
capital spending or other factors;
- Due to increasing saturation of market demand for the Falcon product
line, we may also need to rely increasingly on international sales to
maintain or increase Falcon revenue levels;
- As many Falcon customers are banks and related financial institutions,
our future success depends upon the capital expenditure budgets of
these customers, their economic health and their continued demand for
Falcon products;
- The financial services industry tends to be cyclical, which may result
in reductions in demand for our products;
- Consolidation in the financial services industry has reduced the
customer base for our financial solutions products, and this may lead
to reduced demand for our products; and
- Industry consolidation also could adversely affect our base of
recurring revenues on transaction-based contracts and, if our customers
consolidate their contracts with us, could result in lower payments to
us than we would receive under a larger number of contracts.
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WE DEPEND ON THIRD PARTY DATA TO UPDATE OUR STATISTICAL MODELS. AND FAILURE TO
OBTAIN THIS DATA ON A TIMELY BASIS COULD HARM THE PERFORMANCE OF OUR PRODUCTS
The development, installation and support of our products requires us
to periodically update our statistical models for applications such as credit
card fraud control and profitability management, loan underwriting and
insurance. In order to accomplish this updating, we must continually have access
to large quantities of current and statistically relevant data that are reliable
and available on a timely basis. We might not be able to continue to have timely
access to sufficient quantities of statistically relevant data in the required
formats or on reasonable terms and conditions. This risk is heightened by a
number of factors, including the following:
- Much of the data we require are not owned or controlled by us and are
collected privately and maintained in proprietary databases;
- Our customers agree to provide us the data we need to analyze
transactions, report results and build new fraud detection and
profitability models; if we fail to maintain good relationships with
our customers, we could lose access to this required data;
- CompAdvisor also uses data from state workers' compensation fee
schedules adopted by state regulatory agencies; in most cases, these
data must be periodically updated and refreshed to enable our
predictive software products to continue to work effectively; third
parties have previously asserted copyright interests in this type of
data; such an assertion in the future could threaten the continued
availability of such data.
OUR MARKETS ARE HIGHLY COMPETITIVE
The market for predictive software solutions is intensely competitive
and is constantly changing. We encounter competition from a number of sources,
including:
- Other application software companies, including enterprise software
vendors;
- Management information systems departments of customers and potential
customers, including financial institutions, insurance companies and
retailers;
- Third-party professional services organizations, including consulting
divisions of public accounting firms;
- Internet start-up companies;
- Hardware suppliers that bundle or develop complementary software;
- Network and service providers that seek to enhance their value-added
services;
- Neural-network tool suppliers; and
- Insurers and third party administrators.
We expect to face increasing competition and pricing pressures from both our
current competitors and new market entrants, as well as from other technologies.
- Our Falcon and eFalcon products compete against other methods of
preventing credit card fraud, such as credit card activation programs,
smart cards, using credit cards that contain the cardholders'
photographs and other card authorization techniques;
- Increased competition, whether from other products or new technologies,
could result in price reductions, fewer customer orders, reduced gross
margins and loss of market share, any of which could adversely affect
our business, financial condition and results of operations;
- Price competition could adversely affect our ability to obtain new
long-term contracts and renewals of existing long-term contracts on
favorable terms. Any reduction of our prices could adversely affect our
margins, business, financial condition and results of operations;
- Some of our current competitors, and many of our potential competitors,
have broader integrated product lines and significantly greater
financial, technical, marketing and other resources than we do. As a
result, they may have competitive advantages over us, including:
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-- The ability to respond more quickly to new or emerging
technologies and changes in customer requirements;
-- The ability to devote greater resources to the development,
promotion and sale of their products; and
-- The ability to sell products competitive to ours at lower prices
as part of integrated suites of related products that are vital to
the customer's computing infrastructure;
- Current and potential competitors have established or may establish
cooperative relationships to increase the ability of their products to
address the needs of our prospective customers;
- New competitors or alliances among competitors may emerge and rapidly
gain significant market share;
- We rely upon our customers to provide data, expertise and other support
for the ongoing updating of our statistical models; our customers may
compete with us in the future or otherwise discontinue their support;
- We may not be able to compete successfully against current and future
competitors, and this may adversely affect our business, financial
condition and results of operations.
IF WE DO NOT RECRUIT AND RETAIN QUALIFIED PERSONNEL, OUR BUSINESS COULD BE
HARMED
Our success depends to a significant degree upon the continued service
of members of our senior management and our key research, development, sales and
marketing personnel. Our dependence on key personnel creates risks for our
business. We have employment agreements with only a small number of employees,
and these agreements may not result in the retention of these employees for any
significant period of time. We could lose members of the management teams or key
employees of the businesses we acquire before we are able to familiarize
ourselves with the operating details of those businesses or provide suitable
replacements. We have historically had difficulty in recruiting a sufficient
number of qualified sales and technical employees. In addition, competitors and
other businesses may be successful in attempts to recruit our key employees.
Many of our employees possess unique skills and are not easily replaceable, and
their loss could adversely affect our business. We may not be successful in
attracting, assimilating and retaining personnel.
A SUBSTANTIAL PORTION OF OUR SALES ARE MADE TO INTERNATIONAL CUSTOMERS, AND
INTERNATIONAL SALES POSE UNIQUE RISKS
International operations and export sales, including sales in Canada,
represented 23.2% of our total revenues in 1999, 23.1% of our total revenues in
1998 and 18.9% of our total revenues in 1997. We intend to continue to expand
our operations outside the United States and to enter additional international
markets, which will require significant management attention and financial
resources. For more mature products, like Falcon, we may need to increase our
international sales in order to continue to expand the product's customer base.
We have committed and continue to commit significant time and development
resources to customizing our products for selected international markets, and to
developing international sales and support channels. These international
marketing efforts require us to incur increased sales, marketing and support
expenses. If these efforts are not successful in generating additional
international sales on a timely basis, our margins and earnings will be
adversely affected. In addition, we typically experience slower payment cycles
from our international customers, which adversely affects our cash flows.
International sales are more likely to be subject to other risks as well,
including: adverse changes in regulatory requirements; import and export
restrictions and tariffs; difficulties in staffing and managing foreign
operations; burdens of complying with foreign laws; greater difficulty or delay
in accounts receivable collection; potentially adverse tax consequences; reduced
protection of intellectual property rights; and political and economic
instability. Our international sales are currently denominated predominately in
United States dollars, and a small portion are denominated in the currencies of
Western Europe, Canada and Australia. An increase in the value of the United
States dollar relative to foreign currencies could make our products more
expensive, and therefore potentially less competitive, in foreign markets. In
the future, to the extent that our international sales are denominated in local
currencies, foreign currency translations may contribute to significant
fluctuations in our business, financial condition and results of operations. If
for any reason, exchange or price controls or other restrictions on foreign
currencies are imposed, our business, financial condition and results of
operations could be adversely affected.
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IF OUR PRODUCTS FAIL TO COMPLY WITH GOVERNMENT REGULATIONS AND INDUSTRY
STANDARDS, WE COULD BE EXPOSED TO LIABILITY OR THE PRODUCTS COULD BECOME
OBSOLETE
Many of our customers must comply with a number of government
regulations and industry standards. As a result, many of our key products must
comply as well. For example: our financial services products are affected by
Regulation B under the Equal Credit Opportunity Act, by regulations governing
the extension of credit to consumers and by Regulation E under the Electronic
Fund Transfers Act governing the transfer of funds from and to consumer deposit
accounts, as well as VISA and MasterCard electronic payment standards. Our
products in the mortgage services market are affected by regulations from Fannie
Mae and Freddie Mac for conforming loans, among others. This failure of our
products to comply with regulations and standards could result in legal action
against us or our customers by regulatory authorities or by third parties,
including actions seeking civil or criminal penalties, injunctions against our
use of data or civil damages. We may also be liable to our customers for failure
of our products to comply with regulatory requirements. The adoption of
insurance-related regulations could adversely affect our insurance products.
Simplification of state-mandated workers' compensation laws or regulations or
state workers' compensation fee schedules could diminish the need for, and the
benefit provided by, our CompAdvisor product. In many states, including
California, there have been periodic legislative efforts to reform workers'
compensation laws in order to reduce the cost of workers' compensation insurance
and to curb abuses of the workers' compensation system. Changes in workers'
compensation laws or regulations could adversely affect our insurance products
by making them obsolete, or by requiring extensive changes in these products to
reflect new workers' compensation rules. To the extent that we sell new products
targeted to markets that include regulated industries and businesses, our
products will need to comply with these additional regulations.
OUR INTELLECTUAL PROPERTY MIGHT NOT BE PROTECTIBLE, AND, IF WE FAIL TO PROTECT
AND PRESERVE OUR INTELLECTUAL PROPERTY, WE MAY LOSE AN IMPORTANT COMPETITIVE
ADVANTAGE
We believe our intellectual property affords us a competitive
advantage. Any loss or invalidity of our intellectual property, or any failure
to protect our intellectual property, could adversely affect our competitive
position, and ultimately, our business. Despite the measures we take to protect
our intellectual property, it may be possible for third parties to copy or
otherwise to obtain and use our products or technology without authorization, or
to develop similar technology independently. There is a risk that our pending or
future patent applications may not be granted, or that our patents may not be
upheld as valid or may not prevent the development of competitive products. To
ensure that customers will not be harmed by an interruption in our business, we
often place software source code for our products into escrow, which may
increase the likelihood of misappropriation or other misuse of our intellectual
property. Effective protection of intellectual property rights may be
unavailable or limited in foreign countries in which we do business. We have
developed technologies under research projects conducted under agreements with
various United States Government agencies or subcontractors. Although we have
acquired commercial rights to these technologies, the United States Government
typically retains ownership of intellectual property rights and licenses in the
technologies developed by us under these contracts, and in some cases can
terminate our rights in these technologies if we fail to commercialize them on a
timely basis. Under our contracts with the United States Government, the results
of our research may be made public by the Government, which could limit our
competitive advantage with respect to future products based on our research.
WE ARE AT RISK OF CLAIMS THAT OUR PRODUCTS OR SERVICES INFRINGE THE PROPRIETARY
RIGHTS OF OTHERS
In November 1998, Nestor, Inc. filed a complaint against us alleging that we
infringed a United States patent issued to Nestor and seeking a declaration that
a United States patent issued to us is invalid and seeking damages and
injunctive relief. The complaint also seeks treble compensatory damages,
punitive damages and injunctive relief for alleged violations of the Sherman
Antitrust Act and the Rhode Island Antitrust Act. Although Nestor has dismissed
its claim that we infringe Nestor's patent, there is a risk that this litigation
will be resolved against us. Given our ongoing efforts to develop and market new
technologies and products, we may from time to time be served with claims from
other third parties asserting that our products or technologies infringe their
intellectual property rights. If, as a result of any claims, we were precluded
from using technologies or intellectual property rights, licenses to the
disputed third-party technology or intellectual property rights might not be
available on reasonable commercial terms, or at all. We may initiate claims or
litigation against third parties for infringement of our proprietary rights or
to establish the validity of our proprietary rights. Litigation, either as
plaintiff or defendant, could result in significant expense and divert the
efforts of our technical and management personnel from productive tasks, whether
or not litigation is resolved in our favor. An adverse ruling in any litigation
might require us to pay substantial damages, to discontinue our use and sale
9
<PAGE> 11
of infringing products and to expend significant resources in order to develop
non-infringing technology or obtain licenses to infringing technology. A court
might also invalidate our patents, trademarks or other proprietary rights. A
successful claim against us, coupled with our failure to develop or license a
substitute technology, could cause our business, financial condition and results
of operations to be adversely affected. As the number of software products
increases and the functionality of these products further overlaps, we believe
that our risk of infringement claims will increase.
BECAUSE OUR PRODUCTS AND SERVICES ARE COMPLEX AND PERFORM MISSION-CRITICAL
FUNCTIONS, WE ARE VULNERABLE TO PRODUCT DEFECT AND PRODUCT LIABILITY CLAIMS
Our software products are complex and perform critical functions for
our customers, factors which increase the risk of product defects and product
liability claims. Our software products may contain undetected errors or
failures when first introduced or as new versions are released. To the extent
that we may have to develop new products that operate in new environments, the
possibility for program errors and failures may increase, particularly where new
technologies are involved and where there is a need for extremely rapid product
deployment, as in the case of products designed for the Internet. Since our
products are used in business-critical applications, any product errors or
failures may give rise to substantial product liability claims. Although our
license agreements with our customers typically contain provisions designed to
limit our exposure to potential product liability claims, it is possible that
limitation of our liability provisions may not be effective as a result of
existing or future laws or judicial decisions.
THE PRICE OF OUR COMMON STOCK HAS BEEN VOLATILE
Investment in our common stock has inherent risks. Our common stock has
had significant price volatility, which has increased since the November 1999
initial public offering of our subsidiary Retek's common stock, and this
volatility may be expected to continue in the future. The price of our common
stock may be affected by many factors, including announcements of the
introduction of new products by us or our competitors, acquisitions of
businesses or products by us, quarter-to-quarter variations in our operating
results, the gain or loss of significant orders, market conditions in the
technology and emerging growth company sectors, and other factors. The stock
market itself has been extremely volatile, particularly with respect to the
securities of technology companies. The market's volatility has often been
unrelated or disproportionate to the operating performance of the affected
companies. Market fluctuations may adversely affect the price of our common
stock.
IF WE SPIN-OFF OUR THE STOCK OF OUR RETEK SUBSIDIARY, OUR STOCKHOLDERS MAY
SUFFER DILUTION IN THE OWNERSHIP OF OUR STOCK
In March 1998, we issued $100 million in principal face amount of 4.75%
convertible notes due 2003. These notes are currently convertible into our
common stock at a price of $44.85 per share. If we spin-off our Retek subsidiary
to our stockholders, then, in accordance with the terms of the trust indenture
governing these notes, the conversion price of the notes would be reduced, which
would increase the number of shares of our common stock that are issuable upon
conversion of the notes. The reduction in the conversion price of the notes
could be substantial, depending on the ratio of the market prices of our and our
Retek subsidiary's common stock, and would result in dilution to the equity
interest of our stockholders and a reduction in our earnings per share.
OUR BOARD OF DIRECTORS CAN, WITHOUT STOCKHOLDER APPROVAL, CAUSE PREFERRED STOCK
TO BE ISSUED ON TERMS THAT ADVERSELY AFFECT COMMON STOCKHOLDERS
Under our certificate of incorporation, our board of directors is
authorized to issue up to 4,000,000 shares of preferred stock and to determine
the price, rights, preferences, privileges and restrictions, including voting
rights, of those shares without any further vote or action by our stockholders.
If the board causes any preferred stock to be issued, the rights of the holders
of our common stock would be adversely affected. The board's ability to
determine the terms of preferred stock and to cause its issuance, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of our outstanding voting stock. We have no
current plans to issue shares of preferred stock. In addition, Section 203 of
the Delaware General Corporation Law restricts business combinations with any
"interested stockholder" as defined by the statute. The statute may have the
effect of delaying, deferring or preventing a change in control of our company.
10
<PAGE> 12
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus (including the documents incorporated in this
prospectus by reference) contains forward-looking statements regarding HNC's
plans, expectations, estimates and beliefs. These statements involve risks and
uncertainties, and actual results could differ materially from those reflected
in the forward-looking statements. Forward-looking statements in this prospectus
are typically identified by words such as "may," "will," "should," "expects,"
"intends" "plans," "believes," "estimates," "anticipates," and other similar
expressions, or the negative of such terms. In addition, any statements that
refer to expectations, projections or other characterizations of future events
or circumstances are forward-looking statements. Readers of this prospectus are
cautioned that such forward-looking statements are subject to many known and
unknown risks and uncertainties that may cause actual results, events,
developments, achievements or performance to be materially different from the
results, events, developments or performance expressed, implied or contemplated
by the forward-looking statements. HNC will not necessarily update the
information in this prospectus if and when any forward-looking statement later
turns out to be inaccurate. Some of the important risks and uncertainties that
may affect HNC's future results and performance are described in "Risk Factors,"
above. Additional information about factors that could affect HNC's future
results and events is included in HNC's reports filed with the SEC and
incorporated by reference in this prospectus.
USE OF PROCEEDS
HNC will not receive any of the proceeds from the sale of shares by the
selling stockholders.
SELLING STOCKHOLDERS
The following table sets forth certain information known to HNC with
respect to the beneficial ownership of the common stock by the selling
stockholders as of April 1, 2000. The selling stockholders are the former
stockholders of ONYX Technologies, Inc. or The Center for Adaptive Systems
Applications, Inc., two corporations which HNC acquired in March 2000. The
selling stockholders have not had any position, office or other material
relationship with HNC within the three years ending on the dates of the
acquisitions. Following the acquisition of The Center for Adaptive Systems
Applications, Inc., Bruce E. Hansen, an officer of the acquired company, became
an officer of HNC with the title President, HNC Financial Solutions. Mr. Hansen
has entered into a noncompetition agreement with HNC.
The table assumes that the selling stockholders sell all of the shares
offered by them in this offering. However, we are unable to determine the exact
number of shares that will actually be sold or when or if such sales will occur.
This table also assumes that the selling stockholders do not acquire any other
shares of our common stock pending the offering.
Assignees of selling stockholders, if any, who acquire shares of our
common stock from selling stockholders and satisfy certain conditions are
entitled to the same registration rights as the selling stockholders. If any
assignee who meets these conditions notifies us that the assignee wishes to sell
shares under this prospectus, we will amend or supplement the prospectus to name
the assignee as a selling stockholder.
The selling stockholders have advised us that they are the beneficial
owners of the shares being offered under this prospectus.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BEING SHARES BENEFICIALLY
OWNED BEFORE OFFERING OFFERED OWNED AFTER OFFERING
--------------------- ------------ ---------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT NUMBER NUMBER PERCENT
- --------------------------- -------- --------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
Former Stockholders of ONYX:
James Kell Canty(1) 118,308 * 30,000 88,308 *
Jeffrey A. Collins(1) 117,608 * 30,000 87,608 *
Peter C. Hoeve(1) 117,308 * 30,000 87,308 *
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BEING SHARES BENEFICIALLY
OWNED BEFORE OFFERING OFFERED OWNED AFTER OFFERING
--------------------- ------------ ---------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT NUMBER NUMBER PERCENT
- --------------------------- -------- --------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
Former Stockholders of The Center for Adaptive
Systems Applications:
Stephen V. Coggeshall(2)(8) 32,724 * 32,724 -- *
John R. Davies 32,724 * 32,724 -- *
Camilo C. Gomez(2)(8) 32,724 * 32,724 -- *
Roger Jones 14,316 * 14,316 -- *
Jerry and Vardina Wind 8,726 * 8,726 -- *
Robert F. Stellingwerf 6,817 * 6,817 -- *
Colin Crook (3)(8) 10,361 * 5,408 4,953 *
Citibank, N.A.(4) 5,681 * 5,681 -- *
C. Wade Tambor (5)(8) 6,543 * 5,044 1,499 *
PS Capital, LLC 1,090 * 1,090 -- *
Guowei Wu 332 * 332 -- *
Jose Hernandez 270 * 270 -- *
Leann Griesinger 218 * 218 -- *
Csilla and Eric Tambor 436 * 436 -- *
Mary and Patrick Tambor 436 * 436 -- *
Marvin Alme 218 * 218 -- *
June Durnall 193 * 193 -- *
Xiaozhong Li (2)(6) 138 * 96 42 *
Kevin Rygg 78 * 78 -- *
Shanji Xiong (2)(7) 1,664 * 21 1,643 *
------- --- ------- ------- ---
TOTALS: 508,913 1.9% 237,552 271,361 1.0%
======= ======= =======
</TABLE>
- ---------------
* Less than 1%
(1) An employee of ONYX Technologies, Inc. Mr. Canty's shares include 1,000
shares subject to a call option expiring April 22, 2000.
(2) An employee of The Center for Adaptive Systems Applications, Inc.
(3) Includes options that are currently exercisable to purchase up to 4,953
shares.
(4) Represents shares subject to issuance upon the exercise of warrants.
(5) Includes options that are currently exercisable to purchase up to 1,499
shares.
(6) Includes options that are currently exercisable or are exercisable within
60 days to purchase up to 42 shares.
(7) Includes options that are currently exercisable or are exercisable within
60 days after April 1, 2000 to purchase up to 1,643 shares.
(8) Former director of The Center for Adaptive Systems Applications, Inc.
The shares that are beneficially owned by the former stockholders of
The Center for Adaptive Systems Applications, Inc. include 5,681 shares subject
to issuance upon the exercise of warrants. They also include approximately
38,100 shares held in escrow under an escrow agreement that was entered into in
connection with our acquisition of The Center for Adaptive Systems Applications,
Inc. The escrow is intended to secure any claims we may make based on the
representations and covenants that were made to us in the applicable acquisition
agreement. The escrow agreement continues until March 2001, except that the
escrow will not fully terminate until any claims we might make against the
12
<PAGE> 14
escrow shares are resolved. As long as the escrow continues, none of the shares
held in escrow may be sold without our consent.
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling stockholders
pursuant to registration rights agreements we entered into with the former
stockholders of ONYX Technologies, Inc. and The Center for Adaptive
Applications, Inc. The registration statement of which this prospectus is a part
has been filed pursuant to those registration rights agreements. To our
knowledge, no selling stockholder has entered into any agreement, arrangement or
understanding with any particular broker or market maker with respect to the
sale of the shares covered by this prospectus.
The selling stockholders may offer and sell shares of common stock from
time to time. In addition, a selling stockholder's donees, pledgees, transferees
and other successors in interest may sell shares received from a named selling
stockholder after the date of this prospectus. The selling stockholders will act
independently of HNC in making decisions with respect to the timing, manner and
size of each sale. Sales may be made over the Nasdaq National Market or
otherwise, at then prevailing market prices, at prices related to prevailing
market prices or at negotiated prices. The shares may be sold in various ways,
including but not limited to the following:
- one or more block trades in which the broker-dealer engaged by a
selling stockholder will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to
facilitate the transaction;
- purchases by the broker-dealer as principal and resale by the
broker or dealer for its account pursuant to this prospectus; and
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers.
The selling stockholders have advised HNC that they have not, as of the
date of this prospectus, entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers for the sale of shares, nor
is there an underwriter or coordinating broker acting in connection with the
proposed sale of shares by the selling stockholders.
Transactions under this prospectus may or may not involve brokers or
dealers. The selling stockholders may sell shares directly to purchasers or to
or through broker-dealers, who may act as agents or principals. Broker-dealers
engaged by the selling stockholders may arrange for other broker-dealers to
participate in selling shares. Broker-dealers or agents may receive compensation
in the form of commissions, discounts or concessions from the selling
stockholders in amounts to be negotiated in connection with the sale.
Broker-dealers or agents may also receive compensation in the form of discounts,
concessions or commissions from the purchasers of shares for whom the
broker-dealers may act as agents or to whom they sell as principal, or both.
This compensation as to a particular broker-dealer might exceed customary
commissions.
The selling stockholders and any participating broker-dealers may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with sales of shares covered by this prospectus. Any commission,
discount or concession received by a broker-dealer and any profit on the resale
of shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. Because selling
stockholders may be deemed to be underwriters within the meaning of the
Securities Act, the selling stockholders will be subject to the prospectus
delivery requirements of the Securities Act.
HNC has informed the selling stockholders that the anti-manipulation
rules under the Exchange Act apply to sales of shares in the market and to the
activities of the selling stockholders and their affiliates. The selling
stockholders have advised HNC that during the time they may be engaged in the
attempt to sell registered shares, they will:
- not engage in any stabilization activity in connection with any of
HNC's securities;
13
<PAGE> 15
- not bid for or purchase any of HNC's securities or any rights to
acquire HNC's securities, or attempt to induce any person to
purchase any of HNC's securities or rights to acquire HNC's
securities, other than, in each case, as permitted under the
Exchange Act;
- not sell or distribute the shares until after the prospectus has
been appropriately amended or supplemented, if required, to set
forth the terms of sale or distribution; and
- make all sales of shares in broker's transactions through
broker-dealers acting as agents, in transactions directly with
market makers or in privately negotiated transactions where no
broker or other third party (other than the purchaser) is
involved.
The selling stockholders have agreed with HNC in the registration
rights agreements not to sell any of the shares pursuant to this prospectus in
an underwritten offering without HNC's prior written consent. In addition, any
securities covered by this prospectus that qualify for sale under Rule 144 of
the Securities Act may be sold under that rule rather than under this
prospectus.
The registration rights agreements require the selling stockholders to
offer and sell shares under this prospectus only during certain permitted
"windows." Under the registration rights agreement for the acquisition of ONYX
Technologies, the ONYX selling stockholders' permitted window commences on or,
within no more than four business days after, the effective date of the
registration statement of which this prospectus is a part, and continues for 30
calendar days, except that, in certain circumstances, HNC may postpone the
permitted window before it commences or may suspend the permitted window after
it has commenced. This could happen if HNC determines in good faith that it
would be seriously detrimental to HNC and its securityholders for the permitted
window to be in effect or if a material development occurs which HNC believes
should be disclosed in this prospectus. The postponement or suspension may not
exceed 45 days. After any postponement or suspension, the permitted window will
commence, or recommence, until it has included a full 30 days.
Under the registration rights agreement for the acquisition of The
Center for Adaptive Systems Applications, there may be up to three permitted
windows for the sale of shares under this prospectus by the former stockholders
of that company, and there must be at least 30-day intervals between these
permitted windows. Each permitted window will be for a period of 30 calendar
days, and will commence after holders of at least one-third of the shares then
subject to the registration rights agreement give HNC a notice of resale stating
that they intend to sell shares during the permitted window and indicating their
intended plan of distribution. As soon as practicable after receipt of that
notice (but in any event within four business days), HNC will give notice to all
holders of shares subject to that registration rights agreement that the
permitted window will commence, or that the registration statement of which this
prospectus is a part must be amended (in which case, HNC will file the
amendment, and attempt to cause it to become effective, as soon as practicable).
As in the case of the ONYX registration rights agreement, HNC may postpone or
suspend any permitted window for the sale of shares by the former stockholders
of The Center of Adaptive Systems Applications, under certain circumstances and
for periods not exceeding 45 days. If a permitted window is postponed before it
commences, the selling stockholders may withdraw their notice of resale so that
the permitted window will not be triggered until they decide to give a new
notice. If a permitted window is suspended after it has commenced, the suspended
portion of the 30-day window can be used by the selling stockholders after they
give a new notice of resale.
The registration rights agreement for The Center for Adaptive Systems
Applications provides that HNC will use diligent efforts to cause the
registration statement to remain effective until March 17, 2001. HNC may
terminate the registration statement, and this offering will terminate, on the
earlier of (i) March 17, 2001, (ii) when HNC has already effected all required
permitted windows, (iii) with respect to any former stockholder of The Center of
Adaptive Systems Applications, the date on which, in the opinion of counsel for
HNC, all shares subject to the registration rights agreement may be sold in a
three month period without registration under the Securities Act pursuant to
Rule 144 or otherwise or (iv) when all the shares covered by this prospectus
have been sold.
Upon the occurrence of certain events, the selling stockholders may not
offer or sell shares under this prospectus unless and until the prospectus has
been supplemented or amended to include additional disclosures, as follows: (a)
to the extent the shares are sold at a fixed price or at a price other than the
prevailing market price, such price must be set forth in the prospectus, (b) if
the shares are sold in block transactions and the purchaser acting in the
capacity of an underwriter wishes to resell, such arrangements must be described
in the prospectus, (c) if a selling stockholder sells to a broker-dealer acting
in the capacity as an underwriter, the broker-dealer must be identified in the
14
<PAGE> 16
prospectus, (d) if the compensation paid to broker-dealers is other than usual
and customary discounts, concessions or commissions, disclosure of the terms of
the transaction must be included in the Prospectus and (e) if a donee or pledgee
of a selling stockholder intends to sell more than 500 shares, the prospectus
must so indicate.
HNC has agreed to pay the expenses of registering the shares under the
Securities Act, including registration and filing fees, printing expenses,
administrative expenses and certain legal and accounting fees. The selling
stockholders will bear all discounts, commissions or other amounts payable to
underwriters, dealers or agents as well as fees and disbursements for legal
counsel retained by any selling stockholder.
HNC and the selling stockholders have agreed to indemnify each other
and other related parties against specified liabilities, including liabilities
arising under the Securities Act. The selling stockholders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of shares against liabilities, including liabilities arising
under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for HNC by Fenwick & West LLP, Palo Alto, California.
DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS
The SEC allows HNC to "incorporate by reference" in this prospectus the
information that HNC files with the SEC. This means that HNC can disclose
important information by referring the reader to those SEC filings. The
information incorporated by reference is considered to be part of this
prospectus, and later information HNC files with the SEC will update and
supersede this information. HNC incorporates by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934 until termination of the
offering:
- Annual report on Form 10-K for the fiscal year ended December 31,
1999, as amended.
- Current report on Form 8-K filed March 27, 2000.
- The description of HNC's common stock contained in HNC's
registration statement on Form 8-A, and any amendment or report
filed for the purpose of updating such description.
SOME OF THE INFORMATION ABOUT HNC THAT MAY BE IMPORTANT TO AN
INVESTMENT DECISION IS NOT PHYSICALLY INCLUDED IN THIS PROSPECTUS. INSTEAD, THE
INFORMATION IS "INCORPORATED" INTO THIS PROSPECTUS BY REFERENCE TO ONE OR MORE
DOCUMENTS THAT HNC FILED WITH THE SEC. THESE DOCUMENTS (INCLUDING ANY EXHIBITS
THAT ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THIS
PROSPECTUS INCORPORATES) ARE AVAILABLE UPON REQUEST WITHOUT CHARGE FROM INVESTOR
RELATIONS, HNC SOFTWARE INC., 5935 CORNERSTONE COURT WEST, SAN DIEGO, CALIFORNIA
92121-3728 (TELEPHONE NUMBER (858) 546-8877). RECIPIENTS SHOULD MAKE ALL
REQUESTS FOR DOCUMENTS BY THE FIFTH BUSINESS DAY BEFORE THEY MAKE THEIR FINAL
INVESTMENT DECISION, TO BE SURE THE DOCUMENTS ARRIVE ON TIME. INFORMATION THAT
HAS BEEN INCORPORATED BY REFERENCE IS CONSIDERED PART OF THIS PROSPECTUS AND
DISCLOSED TO INVESTORS, WHETHER OR NOT INVESTORS OBTAIN A COPY OF THE DOCUMENT
CONTAINING THE INFORMATION.
This prospectus may contain information that updates, modifies or is
contrary to information in one or more of the documents incorporated by
reference in this prospectus. Reports HNC files with the SEC after the date of
this prospectus may also contain information that updates, modifies or is
contrary to information in this prospectus or in documents incorporated by
reference in this prospectus. Investors should review these reports as they may
disclose a change in the business, prospects, financial condition or other
affairs of HNC after the date of this prospectus.
15
<PAGE> 17
WHERE YOU CAN FIND MORE INFORMATION
The documents incorporated by reference into this prospectus are
available from us upon request. We will provide a copy of any and all of the
information that is incorporated by reference in this prospectus, not including
exhibits to the information unless those exhibits are specifically incorporated
by reference into this proxy statement prospectus, to any person, without
charge, upon written or oral request.
Requests for documents should be directed to Investor Relations, HNC
Software Inc., 5935 Cornerstone Court West, San Diego, California 92121-3728
(telephone number (858) 546-8877).
We file reports, proxy statements and other information with the
Securities and Exchange Commission. Copies of our reports, proxy statements and
other information may be inspected and copied at the public reference facilities
maintained by the SEC:
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 5000 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
Copies of these materials can also be obtained by mail at prescribed
rates from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC
maintains a Website that contains reports, proxy statements and other
information regarding each of us. The address of the SEC Website is
http://www.sec.gov.
HNC has filed a registration statement under the Securities Act with
the Securities and Exchange Commission with respect to the shares to be sold by
the selling stockholders. This prospectus has been filed as part of the
registration statement. This prospectus does not contain all of the information
set forth in the registration statement because certain parts of the
registration statement are omitted in accordance with the rules and regulations
of the SEC. The registration statement is available for inspection and copying
as set forth above.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS IN ANY
JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES
PURSUANT TO THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH OR
INCORPORATED HEREIN BY REFERENCE OR IN OUR AFFAIRS SINCE THE DATE OF THIS
PROSPECTUS.
16
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The aggregate estimated expenses to be paid by the Registrant in
connection with this offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.................. $ 3,649
Accounting fees and expenses*........................................ 5,000
Legal fees and expenses*............................................. 10,000
Miscellaneous*....................................................... 16,351
---------
Total........................................................... $ 35,000
========
</TABLE>
- ----------------
* Estimate
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 145 of the Delaware General Corporation Law,
the Registrant's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability: (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders; (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law;
(iii) under Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit. In
addition, as permitted by Section 145 of the Delaware General Corporation Law,
the Bylaws of the Registrant provide that: (i) the Registrant is required to
indemnify its directors and officers, as well as directors and officers of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise when they are serving in such capacities at the request of the
Registrant, to the fullest extent permitted by the Delaware General Corporation
Law; (ii) the Registrant may, in its discretion, indemnify other officers,
employees and agents as set forth in the Delaware General Corporation Law; (iii)
upon receipt of an undertaking to repay such advances if indemnification is
determined to be unavailable, the Registrant is required to advance expenses, as
incurred, to its directors and officers to the fullest extent permitted by the
Delaware General Corporation Law in connection with a proceeding (except that
the Registrant is not required to advance expenses to a person against whom it
brings a claim for breach of the duty of loyalty, failure to act in good faith,
intentional misconduct, knowing violation of law or deriving an improper
personal benefit); (iv) the rights conferred in the Bylaws are not exclusive and
the Registrant is authorized to enter into indemnification agreements with its
directors, officers and employees and agents; (v) the Registrant may not
retroactively amend the Bylaw provisions in a way that adversely affects the
indemnification provided thereunder.
The Registrant's policy is to enter into indemnity agreements with each
of its directors and officers. The indemnity agreements provide that directors
and officers will be indemnified and held harmless against all expenses
(including attorneys' fees), judgments, fines, ERISA excise taxes or penalties
and settlement amounts paid or reasonably incurred by them in any action, suit
or proceeding, including any derivative action by or in the right of the
Registrant, on account of their services as a director or officer of the
Registrant or as directors or officers of any other corporation, partnership or
enterprise when they are serving in such capacities at the request of the
Registrant; except that no indemnity is provided in a derivative action in which
such director or officer is finally adjudged by a court to be liable to the
Registrant due to willful misconduct in the performance of his or her duty to
the Registrant, unless the court determines that such director or officer is
entitled to indemnification. The Registrant will not be obligated pursuant to
the agreements to indemnify or advance expenses to an indemnified party with
respect to proceedings or claims (i) initiated voluntarily by the indemnified
party and not by way of defense, except with respect to a proceeding authorized
by the Board of Directors and successful proceedings brought to enforce a right
to indemnification and/or advancement of expenses under the indemnity
agreements; (ii) for any amounts paid in settlement of a proceeding unless the
Registrant consents to such settlement; (iii) on account of any suit in which
judgment is rendered against the indemnified party for an accounting of profits
made from the purchase or sale by the indemnified party of securities of the
Registrant pursuant to the provisions of Section 16(b) of the Exchange Act and
related laws and regulations; (iv) on account of conduct by an indemnified party
that is finally adjudged to have been in bad faith or conduct that the
II-1
<PAGE> 19
indemnified party did not reasonably believe to be in, or not opposed to, the
best interests of the Registrant; (v) on account of any criminal action or
proceeding arising out of conduct that the indemnified party had reasonable
cause to believe was unlawful; or (vi) if a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.
The indemnity agreement requires a director or officer to reimburse the
Registrant for expenses advanced only if and to the extent it is ultimately
determined that the director or executive officer is not entitled, under
Delaware law, the Registrant's Certificate of Incorporation, the Registrant's
Bylaws, his or her indemnity agreement or otherwise to be indemnified for such
expenses. The indemnity agreement provides that it is not exclusive of any
rights a director or executive officer may have under the Certificate of
Incorporation, the Bylaws, other agreements, any majority-in-interest vote of
the stockholders or vote of disinterested directors, Delaware law, or otherwise.
The indemnification provision in the Bylaws, and the indemnity
agreements entered into between the Registrant and its directors and officers,
may be sufficiently broad to permit indemnification of the Registrant's
directors and officers for liabilities arising under the Securities Act.
The indemnity agreements require the Registrant to maintain director
and officer liability insurance to the extent readily available. The Registrant
currently carries a director and officer insurance policy.
ITEM 16. EXHIBITS.
The following exhibits are filed herewith or incorporated by reference herein:
EXHIBIT TITLE
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
----------------------- --------------------------------------------------
<S> <C>
4.01 Registration Rights Agreement dated as of March 9,
2000 by and among the Registrant and the former
stockholders of Onyx Technologies, Inc.
(Incorporated by reference to Exhibit Number 4.01
to the Report on Form 8-K filed March 27, 2000.)
4.02* Registration Rights Agreement dated as of March
17, 2000 by and among the Registrant and the
former stockholders of The Center for Adaptive
Systems Applications, Inc.
5.01* Opinion of Fenwick & West LLP
23.01* Consent of Fenwick & West LLP (included in Exhibit
5.01)
23.02* Consent of PricewaterhouseCoopers LLP, Independent
Accountants
23.03* Consent of PricewaterhouseCoopers LLP, Independent
Accountants
24.01* Power of Attorney (see page II-4)
</TABLE>
- -------------------
* Filed herewith
II-2
<PAGE> 20
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made pursuant to this Registration Statement, a post-effective amendment
to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement (notwithstanding the foregoing, any increase or
decrease in volume or securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement); and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement; provided, however,
that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective
amendment by paragraphs (1)(i) or (1)(ii) is contained in any
periodic report filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on April 14, 2000.
HNC SOFTWARE, INC.
By: /s/ Kenneth J. Saunders
-------------------------------------
Kenneth J. Saunders
Chief Financial Officer and Secretary
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints John Mutch, Kenneth J. Saunders and Russell C.
Clark, and each of them, his or her attorneys-in-fact and agents, each with the
power of substitution, for him or her and in his or her name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to sign any
registration statement for the same offering covered by this registration
statement that is to be effective upon filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, and all post-effective amendments
thereto, and to file the same, with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ John Mutch President, Chief Executive Officer April 14, 2000
- ----------------------------------- and Director
John Mutch
PRINCIPAL FINANCIAL OFFICER:
/s/ Kenneth J. Saunders Chief Financial Officer and Secretary April 14, 2000
- -----------------------------------
Kenneth J. Saunders
PRINCIPAL ACCOUNTING OFFICER:
/s/ Russell C. Clark Vice President, Corporate Finance April 14, 2000
- ----------------------------------- and Assistant Secretary
Russell C. Clark
ADDITIONAL DIRECTORS:
/s/ Robert L. North Chairman of the Board of Directors April 14, 2000
- -----------------------------------
Robert L. North
/s/ Edward K. Chandler Director April 14, 2000
- -----------------------------------
Edward K. Chandler
/s/ Thomas F. Farb Director April 14, 2000
- -----------------------------------
Thomas F. Farb
/s/ Charles H. Gaylord, Jr. Director April 14, 2000
- -----------------------------------
Charles H. Gaylord, Jr.
/s/ Alex W. Hart Director April 14, 2000
- -----------------------------------
Alex W. Hart
</TABLE>
II-4
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT TITLE
- --------------------- -----------------------------------------------------
<S> <C>
4.01 Registration Rights Agreement dated as of March 9,
2000 by and among the Registrant and the former
stockholders of Onyx Technologies, Inc. (Incorporated
by reference to Exhibit Number 4.01 to the Report on
Form 8-K filed March 27, 2000.)
4.02 Registration Rights Agreement dated as of March 17,
2000 by and among the Registrant and the former
stockholders of The Center for Adaptive Systems
Applications, Inc.
5.01 Opinion of Fenwick & West, LLP
23.01 Consent of Fenwick & West (included in Exhibit 5.01)
23.02 Consent of PricewaterhouseCoopers LLP, Independent
Accountants
23.03 Consent of PricewaterhouseCoopers LLP, Independent
Accountants
24.01 Power of Attorney (see Page II-4 of this Registration
Statement)
</TABLE>
<PAGE> 1
EXHIBIT 4.02
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of March 17, 2000 (the "EFFECTIVE Date") by and between HNC
SOFTWARE INC., a Delaware corporation ("HNC"), on the one hand, and the
undersigned persons and entities listed on Exhibit A hereto (collectively, the
"SECURITY HOLDERS" and each individually, a "SECURITY HOLDER") who have executed
and delivered to HNC a counterpart signature page to this Agreement. The
Security Holders were, immediately prior to the Effective Time of the Merger (as
defined below) all of the stockholders and warrant holders of The Center for
Adaptive Systems Applications, Inc., a Delaware corporation ("CASA").
Notwithstanding the fact that a Security Holder's name may be listed in Exhibit
A hereto, no Security Holder will be a party to this Agreement, nor have any
rights hereunder, unless and until such Security Holder executes and delivers to
HNC a counterpart signature page to this Agreement.
R E C I T A L S
A. CASA, HNC and CASA Merger Corp., a Delaware corporation that is a
wholly-owned subsidiary of HNC ("SUB"), have entered into an Agreement and Plan
of Reorganization dated as of February 11, 2000, as amended by Amendment No. 1
thereto dated as of March 1, 2000 (the "PLAN"). Pursuant to the Plan, Sub is to
be merged with and into CASA in a statutory merger (the "MERGER"), with CASA to
be the surviving corporation of the Merger and thus to become a wholly-owned
subsidiary of HNC. The date on which the Merger becomes effective shall be the
Effective Date of this Agreement.
B. As a condition precedent to the consummation of the Merger, the Plan
provides that if shares of HNC Common Stock and HNC Warrants are issued in the
Merger pursuant to a private placement as set forth in Section 2.10.1 of the
Plan, then pursuant to Section 2.10.3 of the Plan the Security Holders who
execute and deliver counterpart signature pages to this Agreement to HNC shall
be granted certain Form S-3 registration rights with respect to the shares of
HNC Common Stock that are issued to them in connection with the Merger pursuant
to Section 2.1.2 of the Plan, and the shares of HNC Common Stock that are
issuable upon the exercise of HNC Warrants that are issued to them in connection
with the Merger pursuant to Section 2.5 of the Plan, all subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the facts stated in 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) Securities Act. The term "SECURITIES ACT" means the U.S.
Securities Act of 1933, as amended, or any successor law.
<PAGE> 2
(b) Exchange Act. The term "EXCHANGE 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 a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, 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 (other than Escrow Shares) that are
issued to the Security Holders in the Merger pursuant to Section 2.1.2 of the
Plan upon the conversion in the Merger of the outstanding shares of CASA Common
Stock that are owned and held by Security Holders immediately prior to the
Effective Time; (ii) the shares of HNC Common Stock that are issued or issuable
to Security Holders upon the exercise of any HNC Warrants that are issued to
Security Holders in the Merger pursuant to Section 2.5 of the Plan upon the
conversion in the Merger of CASA Warrants that are outstanding and owned and
held by Security Holders immediately prior to the Effective Time; and (iii) any
shares of HNC Common Stock that may be issued as a dividend or other
distribution (including without limitation 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, shares of HNC Common Stock described in
clause (i) or clause (ii) of this Section 1.1(d) or in this clause (iii);
provided, however, that notwithstanding the foregoing, the term "Registrable
Securities" shall not include any such shares described in clauses (i), (ii)
and/or (iii) above that are: (v) Escrow Shares; (w) registered under the
Securities Act other than pursuant to a registration statement filed pursuant to
this Agreement; (x) sold by a person in a transaction in which rights under this
Agreement with respect to such shares are not assigned in accordance with the
terms of this Agreement; (y) sold pursuant to a registration statement filed
pursuant to this Agreement; or (z) sold pursuant to Rule 144 promulgated under
the Securities Act or otherwise sold to the public. Only shares of HNC Common
Stock shall be Registrable Securities. Except as provided in clause (iii) of the
first sentence of this Section 1.1(d), without limitation, the term "Registrable
Securities" does not include any shares of HNC Common Stock that were not issued
in connection with the Merger.
(e) Holder. The term "HOLDER" means: (i) a Security Holder who
has executed and delivered to HNC a counterpart signature page to this Agreement
and is the original holder of any Registrable Securities; (ii) any assignee of
record of Registrable Securities that were originally held by a Security Holder
meeting the conditions described in clause (i) of this Section 1.1(e) and to
whom rights under this Agreement have been duly assigned in accordance with the
provisions of this Agreement.
(f) SEC. The term "SEC" or the term "COMMISSION" means the
U.S. Securities and Exchange Commission.
(g) Form S-3. The term "FORM S-3" means a registration
statement filed under Form S-3 under the Securities Act, as such is in effect on
the Effective Date, or any successor form of registration statement under the
Securities Act subsequently adopted by the
-2-
<PAGE> 3
SEC which permits inclusion or incorporation of a substantial amount of
information by reference to other documents filed by HNC with the SEC.
(h) Rule 415. The term "RULE 415" means Rule 415 promulgated
under the Securities Act, as such Rule may be amended from time to time, or any
similar or successor rule or regulation hereafter adopted by the SEC.
(i) Defined Terms from Plan. Capitalized terms used in this
Agreement but not defined in this Section 1 or elsewhere in this Agreement shall
have the same meanings given to such terms in the Plan.
1.2 FORM S-3 SHELF REGISTRATION.
(a) Filing and Registration Period. Subject to the terms and
conditions of this Agreement, as promptly as reasonably practicable following
the Effective Time of the Merger, 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 then outstanding Registrable Securities (the "SHELF
REGISTRATION"). HNC shall use its diligent efforts to have such Shelf
Registration declared effective as soon as reasonably practicable after its
filing and to keep the Shelf Registration continuously effective under the
Securities Act for a continuous period of time (such period of time being
hereinafter called the "REGISTRATION PERIOD") commencing on the date the Shelf
Registration is declared effective under the Securities Act by the SEC (the
"DATE OF EFFECTIVENESS") and ending on the date that is the first (1st)
anniversary of the Effective Time of the Merger. HNC shall have no duty or
obligation to keep the Shelf Registration (or any Subsequent Registration, as
defined below) effective after the expiration of the Registration Period.
Accordingly, the Security Holders acknowledge that the Registrable Securities
will not be registered under the Securities Act (and that the Shelf Registration
will be cancelled and withdrawn) beginning one (1) year after the Effective Time
of the Merger.
(b) Limitations. Notwithstanding the provisions of Section
1.2(a) above, HNC shall not be obligated to effect any registration,
qualification or compliance of Registrable Securities pursuant to Section 1.2 of
this Agreement, and the Holders shall not be entitled to sell Registrable
Securities pursuant to any registration statement filed under Section 1.2 of
this Agreement, as applicable:
(i) if HNC ceases to be eligible to use Form S-3 for
such offering by the Holders; provided that HNC will use commercially reasonable
diligent efforts to continue its eligibility to use Form S-3 during the
Registration Period;
(ii) if Form S-3 does not then permit the
registration on such form of registration statement of an offering by the
Holders of the type contemplated by this Agreement;
-3-
<PAGE> 4
(iii) if HNC is acquired and its Common Stock ceases
to be publicly traded;
(iv) 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;
(v) 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); or
(vi) if the manner in which any Registrable
Securities are disposed of pursuant to the Shelf Registration (or Subsequent
Registration, as applicable) is not included within the plan of distribution set
forth in the prospectus for the Shelf Registration (or Subsequent Registration,
as applicable); provided that the plan of distribution in the Shelf Registration
(or Subsequent Registration as applicable) shall be in standard and customary
form for non-underwritten re-sale offerings pursuant to registration statements
on Form S-3.
(c) Subsequent Registration. If the Shelf Registration becomes
effective under the Securities Act, and the Shelf Registration or a Subsequent
Registration (as defined below) thereafter ceases to be effective for any reason
at any time during the Registration Period, then HNC shall use its diligent
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall, within thirty (30) 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 then outstanding Registrable Securities (a "SUBSEQUENT
REGISTRATION"). If a Subsequent Registration is filed, HNC shall use its
diligent 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 Registration Period.
(d) Supplements and Amendments. Subject to the provisions of
Section 1.2(h) and Section 1.3, during the Registration Period HNC shall
supplement and amend the Shelf Registration if, as and when required by the
Securities 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.
(e) Timing and Manner of Sales. No sale of Registrable
Securities pursuant to a Shelf Registration or a Subsequent Registration under
this Section 1.2 may be made except during a "Permitted Window" (as defined in
Section 1.2(h) below). In addition, any sale of Registrable Securities pursuant
to a Shelf Registration or a Subsequent Registration under this Section 1.2 may
only be made in accordance with the method or methods of distribution of such
Registrable Securities that are described in the registration statement (which
methods of distribution shall be in standard and customary form for
non-underwritten re-sale offerings
-4-
<PAGE> 5
pursuant to registration statement on Form S-3) for the Shelf Registration (or
Subsequent Registration, as applicable) and permitted by such form of
registration statement, 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 Securities Act and
applicable state securities laws, complies with all requirements for such
exemption(s) and is not made with use of the prospectus for the Shelf
Registration (or Subsequent Registration, if applicable).
(f) No Underwritings. No sale of Registrable Securities under
any Shelf Registration (or Subsequent Registration) effected pursuant to this
Section 1.2 may be effected pursuant to any underwritten offering without HNC's
prior written consent, which may be withheld in HNC's sole and absolute
discretion.
(g) Notice of Resale. Before any Holder may make any sale,
transfer or other disposition of any Registrable Securities under the Shelf
Registration (or a Subsequent Registration) during the Registration Period, a
Holder or Holders who own at least a one-third (1/3) of the Registrable
Securities then outstanding must first give written notice to HNC (a "NOTICE OF
RESALE") of such Holder's or Holders' present intention to so sell, transfer or
otherwise dispose of some or all of such Holder's or Holders' Registrable
Securities, and the number of Registrable Securities such Holder or Holders
propose(s) to so sell, transfer or otherwise dispose of. In addition, a Notice
of Resale shall contain the information required to be included therein under
Section 1.2(h). No Notice of Resale may be given to HNC earlier than sixty (60)
days after the last date on which a Notice of Resale was given to HNC.
(h) Permitted Window; Sale Procedures.
(i) A "PERMITTED WINDOW" is a period of thirty (30)
consecutive calendar days commencing upon HNC's written notification to the
Security Holders in response to a Notice of Resale that the prospectus contained
in the Form S-3 registration statement filed pursuant to Section 1.2 of this
Agreement is available to be used for resales of Registrable Securities pursuant
to the Shelf Registration (or a Subsequent Registration, as applicable).
(ii) Before a Holder can make a sale of any
Registrable Securities pursuant to the Shelf Registration (or a Subsequent
Registration), and in order to cause a Permitted Window to commence, such Holder
must first give HNC a Notice of Resale indicating such Holder's intention to
sell Registrable Securities pursuant to the Shelf Registration (or Subsequent
Registration, as applicable) and such Holder's intended plan of distribution of
such Registrable Securities (which must conform to the plan of distribution
contained in the prospectus for the Shelf Registration (or Subsequent
Registration, as applicable)).
(iii) Upon receipt of such Notice of Resale (unless a
Section 1.3 Certificate of HNC is delivered as provided in Section 1.3), HNC
will give written notice to all Holders as soon as practicable, but in no event
more than four (4) business days after HNC's
-5-
<PAGE> 6
receipt of such Notice of Resale that either: (A) the prospectus contained in
the registration statement for the Shelf Registration (or Subsequent
Registration, if applicable) 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 Exchange 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 (B) HNC is required under the Securities Act and the
regulations thereunder to amend the registration statement for the Shelf
Registration (or Subsequent Registration, as applicable) 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 Holders that the Permitted Window will then commence.
(iv) Subject to the provisions of clause (vi) and
Section 1.3(b) below, there will be no more than a maximum of three (3)
Permitted Windows during the Registration Period and (unless HNC consents
thereto in a writing signed by HNC) there will be at least a thirty (30) day
interval between the end of any Permitted Window and the commencement of the
next Permitted Window. HNC shall not be obligated to keep the registration
statement for the Shelf Registration (or any Subsequent Registration) current
during any period other than a Permitted Window.
(v) If, pursuant to Section 1.3(a), HNC postpones a
Permitted Window that has not commenced, and the Holders withdraw their Notice
of Resale, then such withdrawal shall not count as a Permitted Window.
(vi) If pursuant to Section 1.3(b), HNC terminates a
Permitted Window after such Permitted Window has already commenced, then the
Holders shall be entitled to an additional Permitted Window for the number of
days as provided in Section 1.3(b).
(vii) 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 who originally gave HNC such Notice of Resale
will promptly reimburse HNC for its actual costs and expenses incurred in
preparing and/or filing such supplement and/or amendment.
(i) Trading Window Compliance. The Holders acknowledge that
HNC maintains an Insider Trading Compliance Program and an Insider Trading
Policy, as such may be amended (the "HNC TRADING POLICY") and that the HNC
Trading Policy requires that those directors, officers, employees and other
persons whom HNC determines to be "Insiders" or "Access Personnel" or otherwise
subject to the "trading window" and pre-clearance requirements of the HNC
Trading Policy (and members of their immediate families and households) are
permitted to effect trades in HNC securities: (i) only during those specified
time periods ("TRADING WINDOWS") in which such persons are permitted to make
sales, purchases or other
-6-
<PAGE> 7
trades in HNC's securities under the "trading window" provisions of the HNC
Trading Policy; and (ii) only after pre-clearance of such sales, purchases or
other trades with HNC's Insider Trading Compliance Officer. If a Holder who is
an employee of HNC or an affiliate of HNC is or becomes subject to the "trading
window" and/or "pre-clearance" provisions of the HNC Trading Policy described
above, then, notwithstanding anything herein to the contrary, such Holder may
sell, transfer and dispose of Registrable Securities only during those trading
windows during which such HNC "Insiders" or "Access Personnel" are permitted to
effect trades in HNC stock under the HNC Trading Policy and only after
pre-clearing such trades with HNC's Insider Trading Compliance Officer as
provided in the HNC Trading Policy.
1.3 POSTPONEMENT OR TERMINATION OF PERMITTED WINDOWS. If following
HNC's receipt of a Notice of Resale pursuant to Section 1.2(g), HNC shall give
to the Holders, a certificate (a "SECTION 1.3 CERTIFICATE") signed by the Chief
Executive Officer or the Chief Financial Officer 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 security holders for the Permitted Window to be in
effect at such time (due, for example, and without limitation, 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 (or Subsequent Registration, as applicable), 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 security holders), then:
(a) if a Permitted Window has not yet commenced as a result of
such Notice of Resale, HNC will have the right to postpone the commencement of
any Permitted Window for a period of up to forty-five (45) days after HNC's
receipt of such Notice of Resale from the Holder or Holders, and if HNC so
postpones a Permitted Window, and the Holders withdraw their Notice of Resale,
such withdrawal shall not count as a Permitted Window; and
(b) if a Permitted Window has already commenced as a result of
such Notice of Resale, HNC will have the right to terminate such Permitted
Window, in which event (i) no new Notice of Resale may be given to HNC without
HNC's written consent for a period of forty-five (45) days after HNC's receipt
of such Notice of Resale from the Holder or Holders, and (ii) the Holders will
be granted (for each Permitted Window terminated under this Section 1.3(b)) an
additional Permitted Window for that number of days that is equal to thirty (30)
days minus the number of days that the terminated Permitted Window was in effect
before HNC gave a Section 1.3 Certificate notifying the Holders of termination
of such Permitted Window pursuant to this Section 1.3(b).
HNC may not exercise its rights of postponement or of
termination of a Permitted Window more than an aggregate total of four (4) times
during the Registration Period. All Holders shall be bound by HNC's postponement
or termination of a Permitted Window.
1.4 SHARES OTHERWISE ELIGIBLE FOR RESALE. Notwithstanding anything
herein to the contrary, HNC shall not be obligated to effect or continue to keep
effective any such registration,
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<PAGE> 8
registration statement, qualification or compliance with respect to the
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 then held by such Holder may be resold by such Holder
within a three (3) month period without registration under the Securities Act
pursuant to the provisions of Rule 144 promulgated under the Securities 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 then held
by such Holder may be resold by such Holder within a three (3) month period
without registration under the Securities Act pursuant to the provisions of Rule
144 promulgated under the Securities Act, or otherwise; or
(c) after expiration or termination of the Registration
Period.
1.5 EXPENSES. HNC shall pay all expenses incurred in connection with
any registration effected by HNC pursuant to this Agreement (excluding brokers'
discounts and commissions), including without limitation all filing,
registration and qualification, printers', legal 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 the
prospectus for the Shelf Registration (or Subsequent Registration, as
applicable), including a preliminary prospectus (and amendments or supplements
thereto), in conformity with the requirements of the Securities 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 diligent 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 so
qualified or subject to service of process, respectively, in such jurisdiction;
and
(c) promptly notify each Holder of Registrable Securities
covered by such registration statement, at any time during a Permitted Window
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event known to HNC's Chief Executive
Officer 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
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<PAGE> 9
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and the
Holders shall hold all such information in strict confidence until it is made
publicly available;
(d) cause all such Registrable Securities to be listed on each
securities exchange or National Association of Securities Dealers, Inc.
Automated Quotation System on which HNC's Common Stock is then listed;
(e) for so long as the Shelf Registration (or Subsequent
Registration, as applicable) remains effective, promptly prepare, file and
furnish to the Holders a reasonable number of copies of any supplement to or an
amendment of such prospectus prepared by HNC and filed with the SEC as may be
necessary so that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus shall not, during any Permitted Window, include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;
(f) notify the Holders promptly after HNC shall receive notice
thereof, of the date and time on which the Shelf Registration (or Subsequent
Registration, as applicable) and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of such Shelf
Registration (or Subsequent Registration, as applicable) has been filed;
(g) notify the Holders promptly of any request by the SEC for
the amending or supplementing of the Shelf Registration (or Subsequent
Registration, as applicable) or the prospectus contained therein or for any
material additional information; and
(h) advise the Holders promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of the Shelf Registration (or Subsequent
Registration, as applicable) or the initiation or threatening of any proceeding
for that purpose and promptly use commercially reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued.
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 and
plan of distribution 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 registration that is
the subject of this Agreement as the result of any controversy that might arise
with respect to the interpretation or implementation of this Agreement.
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<PAGE> 10
1.9 INDEMNIFICATION.
(a) By HNC. To the extent permitted by law, HNC will
indemnify, defend and hold harmless each Holder against any losses, claims,
damages, or liabilities (joint or several) to which such Holder may become
subject under the Securities Act, the Exchange 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 pursuant to which Registrable Securities are sold, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto;
(ii) the omission or alleged omission to state in
such registration statement, preliminary prospectus or final prospectus or any
amendments or supplements thereto, 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 Securities Act, the Exchange Act, any U.S. federal or state securities law
or any rule or regulation promulgated under the Securities Act, the Exchange Act
or any U.S. federal or state securities law in connection with the offering of
Registrable Securities covered by such registration statement;
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 written
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 registration by 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 Securities Act, any underwriter and
any other Holder selling securities under such registration statement, 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
may become subject under the Securities Act, the Exchange 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 indemnify and reimburse HNC or any such director, officer, controlling
person, underwriter or other Holder for any
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<PAGE> 11
reasonable attorneys' fees and other expenses reasonably incurred by HNC or any
such director, officer, controlling person, underwriter or other Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action, as incurred; 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) against such indemnified party, 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, if the
indemnifying party is HNC, HNC shall have the right and obligation to control
the defense of such action, and if HNC fails to defend such action it shall
indemnify and reimburse the Selling Holders for any reasonable attorneys' fees
and other expenses reasonably incurred by them in connection with investigating
or defending such action; provided, however, that: (i) HNC shall also have the
right, at its option, to assume and control the defense of any action with
respect to which HNC or any person entitled to be indemnified by the Selling
Holders under Section 1.9(b) is entitled to indemnification from the Selling
Holders; (ii) the indemnified party or parties shall have the right to
participate at its own expense in the defense of such action and (but only to
the extent agreed in writing with HNC and any other indemnifying party similarly
noticed) to assume the defense thereof with counsel mutually satisfactory to the
parties; and (iii) an indemnified party shall have the right to retain its own
counsel, with the fees and expenses of such counsel 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 an 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 materially
prejudicial to the ability of the indemnifying party 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 the indemnifying party 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 the Holders are subject to the condition that,
insofar as they relate to any 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
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<PAGE> 12
Prospectus was furnished to the indemnified party and was not furnished to the
person asserting the loss, liability, claim or damage in the action giving rise
to indemnity claims under this Section 1.9, at or prior to the time such action
is required by the Securities Act.
(e) 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 pursuant to this Agreement, 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 Registration Period; (b) if HNC has already
effected Permitted Windows pursuant to this Agreement for an aggregate period of
ninety (90) days; (c) with respect to a particular Holder 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
Securities Act pursuant to Rule 144 promulgated under the Securities Act or
otherwise; or (d) if all Registrable Securities have been registered and sold
pursuant to a registration 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
certain security holders hold "piggyback registration rights" that may allow
them to participate in a registration effected pursuant to this Agreement. If
after the date of this Agreement and prior to expiration of the Registration
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 Registration
Period, then, within thirty (30) days after it enters into such agreement, HNC
will notify the Holders 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 and only to a person who
executes and delivers to HNC a writing reasonably satisfactory in form and
substance to HNC in which such person agrees to be bound by all the obligations
of the Holders under this Agreement; 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, in
each case, the assignee executes and delivers to HNC a writing reasonably
satisfactory in form and substance to HNC in which such assignee agrees 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
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<PAGE> 13
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 2: (a) a trust whose beneficiaries consist solely of a
Holder and such Holder's immediate family; (b) the personal representative (such
as an executor of a Holder's will), custodian or conservator of a Holder, in the
case of the death, bankruptcy or adjudication of incompetency of that Holder; or
(c) immediate family members of a Holder.
3. GENERAL PROVISIONS
3.1 NOTICES. Unless otherwise provided herein, 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 to have been given (a) when personally served or when
delivered by facsimile (to the facsimile number of the person to whom the notice
is given), (b) the first business day following the date of deposit with a
nationally recognized overnight courier service or (c) on the earlier of actual
receipt or the third (3rd) business day following the date on which the notice
is deposited in the United States mail, via first class certified or registered
mail, postage prepaid, addressed as follows:
(i) if to HNC, at 5935 Cornerstone Court West, San Diego,
California 92121, Attention: President; Fax Number: (619) 799-1501; and
(ii) if to a Holder, at such Holder's respective address or
fax number as set forth on Exhibit A hereto.
Any party hereto (and such party's permitted assigns) may by
notice so given change its address and fax number for future notices hereunder.
3.2 ENTIRE AGREEMENT. This Agreement constitutes and contains 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.
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 who have executed this Agreement and own a majority
of all the 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 each 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 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.
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<PAGE> 14
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 permitted 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 Effective
Time of the Merger.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Effective Date.
HNC SOFTWARE INC. SECURITY HOLDERS
BY: /S/ Kenneth J. Saunders NAME: *
------------------------------- -----------------------------
NAME: Kenneth J. Saunders BY:
----------------------------- -------------------------------
TITLE: Chief Financial Officer TITLE: __________________________
----------------------------
* The following CASA stockholders:
Stephen V. Coggeshall
John R. Davies
Camilo C. Gomez
Roger Jones
Jerry and Vardina Wind
Robert F. Stellingwerf
Colin Crook
C. Wade Tambor
PS Capital, LLC
Guowei Wu
Jose Hernandez
Leann Griesinger
Csilla and Eric Tambor
Mary and Patrick Tambor
Marvin Alme
June Durnall
Xiaozhong Li
Kevin Rygg
Shanji Xiong
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
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<PAGE> 1
EXHIBIT 5.01
April 14, 2000
HNC Software Inc.
5935 Cornerstone Court West
San Diego, California 92121-3728
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form
S-3 (the "Registration Statement") to be filed by you with the Securities and
Exchange Commission (the "Commission") on or about April 14, 2000 in connection
with the registration under the Securities Act of 1933, as amended, of an
aggregate of 237,552 shares of the Common Stock (the "Common Stock") of HNC
Software Inc., a Delaware corporation (the "Company"), all of which shares are
presently issued and outstanding and will be sold by certain selling
stockholders named in the Registration Statement (the "Selling Stockholders").
The Selling Stockholders are the former stockholders of ONYX Technologies, Inc.,
a Georgia corporation ("ONYX"), and The Center for Adaptive Systems
Applications, Inc., a Delaware corporation ("CASA").
In rendering this opinion, we have examined the following:
(1) your registration statement on Form S-1 (File Number 33-91932)
filed with and declared effective by the Commission on June
20, 1995, together with the Exhibits filed as a part thereof;
(2) your registration statement on Form 8-A filed with the
Commission on May 26, 1995, together with the order of
effectiveness issued by the Commission therefor on June 20,
1995;
(3) the Registration Statement, together with the exhibits filed
as a part thereof or incorporated therein by reference;
(4) the prospectus prepared in connection with the Registration
Statement;
(5) the Restated Certificate of Incorporation of the Company filed
with the Delaware Secretary of State on June 13, 1996, as
certified by the Delaware Secretary of State on June 13, 1996;
(6) the Bylaws of the Company, as amended, filed as an Exhibit
with the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996 filed with the Commission on
August 13, 1996;
(7) the minutes of meetings of, and actions by the unanimous
written consent of, the Board of Directors of the Company
contained in the copies of the minutes books of the Company in
our possession, including without limitation: (a) the minutes
of the special meeting of the Company's Board of Directors
held on March 9, 2000 approving the Company's acquisition of
ONYX and the issuance of shares of the Company's Common Stock
to ONYX shareholders as partial consideration for the
Company's acquisition of ONYX; and (b) the minutes of the
regular meeting of the Company's Board of Directors held on
January 20, 2000 and the minutes of the special meeting of the
Company's Board of Directors held on January 31, 2000
approving the Company's acquisition of CASA and the issuance
of shares of the Company's Common Stock to CASA's shareholders
as consideration for the Company's acquisition of CASA;
<PAGE> 2
(8) the Agreement and Plan of Reorganization dated as of March 9,
2000 among the Company, ONYX and a wholly owned subsidiary of
the Company and the Registration Rights Agreement entered into
pursuant thereto;
(9) the Certificate of Merger dated as of March 10, 2000 executed
by ONYX and filed with and certified by the Delaware Secretary
of State, and the Articles of Merger dated as of March 10,
2000 executed by ONYX and filed with and certified by the
Georgia Secretary of State;
(10) the Agreement and Plan of Reorganization dated as of February
11, 2000 among the Company, CASA and a wholly owned subsidiary
of the Company, as amended by Amendment No. 1 thereto dated as
of March 1, 2000 and the Escrow Agreement and Registrations
Rights Agreement entered into pursuant thereto;
(11) the Certificate of Merger dated as of March 17, 2000 executed
by CASA and filed with and certified by the Delaware Secretary
of State; and
(12) the management certificates you delivered to us in connection
with your acquisition of ONYX and CASA, addressed to us and
dated March 10, 2000 and March 17, 2000, respectively, and a
management certificate of even date herewith, each of which
has been executed by you and contains certain representations.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity and completeness of all documents submitted
to us as originals, the conformity to originals and completeness of all
documents submitted to us as copies, the legal capacity of all natural persons
executing the documents, the lack of any undisclosed termination, modification,
waiver or amendment to any document reviewed by us and the due execution and
delivery of all documents where due execution and delivery are prerequisites to
the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the documents referred to above and have assumed the
current accuracy and completeness of the information obtained from records
included in the documents referred to above. We have made no independent
investigation or other attempt to verify the accuracy of any of such information
or to determine the existence or non-existence of any other factual matters;
however, we are not aware of any facts that would cause us to believe that the
opinion expressed herein is not accurate.
We are admitted to practice law in the State of California, and our
opinion herein is limited to the existing laws of the United States of America,
the State of California and, with respect to the validity of your corporate
actions and the requirements for the issuance of stock, the State of Delaware.
Based upon the foregoing, it is our opinion that the 237,552 shares of
Common Stock to be sold by the Selling Stockholders pursuant to the Registration
Statement are validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for the your use as an exhibit to the Registration
Statement for the purpose of the above sale of stock and is not to be relied
upon for any other purpose.
Very truly yours,
/s/ FENWICK & WEST LLP
------------------------------
FENWICK & WEST LLP
<PAGE> 1
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated January 26, 2000, except
as to Note 17, to which the date is March 17, 2000, relating to the financial
statements of HNC Software Inc., which appear in HNC Software Inc.'s Annual
Report on Form 10-K/A for the year ended December 31, 1999.
/s/ PricewaterhouseCoopers LLP
San Diego, California
April 13, 2000
<PAGE> 1
EXHIBIT 23.03
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated January 25, 2000 relating
to the financial statements of Retek Inc., which appear in HNC Software Inc.'s
Annual Report on Form 10-K/A for the year ended December 31, 1999.
/s/ PricewaterhouseCoopers LLP
Minneapolis, Minnesota
April 13, 2000
