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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 30, 1996
HNC SOFTWARE INC.
(Exact name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-26146 33-0248788
(Commission File Number) (I.R.S. Employer Identification Number)
5930 Cornerstone Court West, San Diego, CA 92121
(Address of Principal Executive Offices)
(619) 546-8877
(Registrant's Telephone Number, Including Area Code)
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS.
On August 30, 1996, HNC Software Inc., a Delaware corporation (the
"Company" or "HNC"), acquired control of all of the stock of Risk Data
Corporation, a California corporation ("RDC"), pursuant to the merger (the
"Merger") of HNC Merger Corp., a Delaware corporation that was a wholly-owned
subsidiary of the Company ("Sub") with and into RDC, with RDC surviving the
Merger and becoming a wholly-owned subsidiary of the Company. The Merger was
effected pursuant to an Agreement of Merger dated as of August 30, 1996 between
Sub and RDC and an Agreement and Plan of Reorganization dated as of July 19,
1996 (the "Plan") by and among HNC, Sub and RDC. The Company intends to account
for the Merger as a "pooling of interests" transaction for accounting purposes
and the Merger was structured to be a "tax-free" reorganization for federal
income tax purposes. Although most of the directors of RDC were replaced as a
result of the Merger by persons affiliated with HNC, the executive officers of
RDC were not changed as a result of the Merger.
Prior to consummation of the Merger, RDC, a privately held, insurance
information technology services firm based in Irvine, California, was engaged in
the business of developing and marketing analytical benchmarking and risk
management software products primarily for insurance carriers, state insurance
funds and third party administrators ("TPAs"). The Company currently plans to
continue and augment RDC's historical business. RDC's assets include software
products that employ statistical modeling techniques to assist its customers in
analyzing data and making business decisions. RDC's flagship product, MIRA, is a
software product that includes an insurance history claims database that assists
insurance companies, TPAs and state workers' compensation funds in estimating
future loss reserves for workers' compensation insurance claims. RDC's
"CompCompare" product enables insurance companies to compare their claims
history to industry averages comprised of many other insurers contained in a
claims history database, and RDC's "ProviderCompare" product enables insurers
and insurance administrators to quickly compare the relative cost of various
healthcare providers. Following the Merger, RDC will continue to operate out of
its Irvine, California headquarters.
Pursuant to the terms of the Plan, each share of RDC Common Stock ("RDC
Common Stock") that was issued and outstanding immediately prior to the
effective time of the Merger was exchanged for approximately 0.57999 shares of
the Company's Common Stock, each share of RDC Series A Preferred Stock ("RDC
Series A Stock") that was issued and outstanding immediately prior to the
effective time of the Merger was exchanged for approximately 0.61893 shares of
the Company's Common Stock and each share of RDC Series B Preferred Stock ("RDC
Series B Stock") that was issued and outstanding immediately prior to the
effective time of the Merger was exchanged for approximately 0.86747 shares of
the Company's Common Stock. In addition, upon consummation of the Merger, each
issued and outstanding option to purchase shares of RDC Common Stock that was
outstanding immediately prior to the effectiveness of the Merger (an "RDC
Option") was assumed by the Company and converted into an option to purchase
that number of shares of the Company's Common Stock determined by multiplying
the number of shares of RDC Common Stock subject to such RDC Option immediately
prior to the effectiveness of the Merger by 0.57999 (the same conversion rate at
which each share of RDC Common Stock was converted into HNC Common Stock in the
Merger), at an exercise price per share of the Company's Common Stock equal to
the exercise price per share of RDC Common
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Stock that was in effect for such RDC Option immediately prior to the
effectiveness of the Merger divided by 0.57999. Pursuant to these exchange
ratios, in the Merger a total of 1,891,456 shares of the Company's Common Stock
were issued in exchange for all the issued and outstanding shares of RDC's
capital stock and options to purchase a total of 248,504 shares of the Company's
Common Stock were issued by the Company upon its assumption of all the issued
and outstanding RDC Options. The principal RDC shareholders from whom the
Company acquired RDC's stock included Mark S. Hammond, RDC's founder and
President, and two venture capital investment firms (and their affiliated
companies) who had representatives on RDC's Board of Directors.
The above exchange ratios were determined on the basis of: (i) the
assumed value of RDC, as determined by the Company's management following its
review of RDC's business and financial position and discussions with RDC's
management; (ii) the relative merger preference rights of the RDC Common Stock,
RDC Series A Preferred Stock and RDC Series B Preferred Stock set forth in RDC's
Restated Articles of Incorporation; (iii) other information provided to the
Company's management by certain investment banking firms; (iv) a comparison of
of certain financial and stock market information for the Company and RDC with
similar types of information for certain other companies in businesses
comparable to those of the Company and RDC.
The shares of the Company's Common Stock received by the former RDC
shareholders and the options to purchase HNC Common Stock issued to the former
RDC stock option holders have not been registered under the Securities Act of
1933, as amended (the "1933 Act"), in reliance upon the exemption from
registration provided by Section 3(a)(10) thereof. The Company intends to
register the issuance of the shares of the Company's Common Stock issuable upon
the exercise of such stock options on a Form S-8 registration statement on or
before October 30, 1996. In order to comply with the requirements for pooling
accounting treatment, the affiliates of the Company and the former affiliates of
RDC have agreed not to sell or transfer their shares of the Company's stock
until the Company has publicly released a report including the combined
financial results of the Company and RDC covering a period of at least thirty
(30) days of post-Merger combined operations of the Company and RDC.
Furthermore, the officers, directors, ten percent shareholders and other
"affiliates" of RDC (within the meaning of Rule 145 or Rule 405 of the
Securities Act) have each entered into an affiliates agreement, primarily to
enforce certain legal restrictions on the transfer of the shares of the
Company's Common Stock issued to the RDC shareholders in the Merger that are
imposed by Rule 145(d) under the 1933 Act and, if applicable, Rule 144 under the
1933 Act, and to help assure the tax-free treatment of the Merger.
Pursuant to the terms of the Plan, the Company, RDC, the shareholders
of RDC and an escrow agent entered into an escrow agreement, pursuant to which
eight and three-quarters percent (8.75%) of the shares of HNC Common Stock that
were issued in the Merger to the RDC shareholders were placed in an escrow
account to secure and collateralize certain indemnification obligations of RDC
to HNC and Sub.
In addition, the Company and the former RDC shareholders have entered
into a Registration Rights Agreement, pursuant to which HNC granted certain
registration rights on Form S-3 in connection with the resale of shares of the
Company's Common Stock issued in the Merger. Under the terms of the Registration
Rights Agreement, at any time (a) after such time as the Company has publicly
released a report including the combined financial results of HNC and RDC
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for a period of at least thirty (30) days of post-Merger combined operations of
HNC and RDC and (b) before the second anniversary of the Effective Time, the
holders of at least thirty percent (30%) of the then outstanding shares of the
Company's Common Stock issued to former RDC shareholders in the Merger may
request HNC in writing to effect a registration on Form S-3 under the 1933 Act
covering the resale by such holders of any or all of such shares of the
Company's Common Stock at an aggregate price to the public of at least
$2,000,000, and any related qualification or compliance with respect to all or a
part of such shares that are issued and outstanding and then owned by such
holders.
Contemporaneously with the Merger, Mark S. Hammond, who was the
President, a director and principal shareholder of RDC immediately prior to the
effective time of the Merger, also entered into: (i) a three-year Employment
Agreement with RDC, as the surviving corporation in the Merger, providing for,
among other things, certain terms of employment at a specified minimum salary;
and (ii) a Noncompetition Agreement with the Company providing, among other
things, that Mr. Hammond will not engage in certain activities that the Company
views as competitive to its interests for a period of up to three years.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
It is impracticable for the Company to currently provide the required
financial statements for RDC called for by this Item. Pursuant to paragraph (a)
(4) of Item 7, the financial statements required to be filed under paragraph (a)
of this Item 7 will be filed as soon as practicable, but not later than November
13, 1996.
(b) Pro Forma Financial Information.
It is impracticable for the Company to currently provide the required
financial statements for RDC called for by this Item. Pursuant to paragraph (b)
(2) and (a) (4) of Item 7, the pro forma financial statements required to be
filed under paragraph (b) of this Item 7 will be filed as soon as practicable,
but not later than November 13, 1996.
(c) Exhibits.
The following exhibits are filed herewith:
2.01 Agreement and Plan of Reorganization dated as of July 19, 1996
by and among the Company, HNC Merger Corp. and Risk Data
Corporation, as amended. Pursuant to Item 601(b)(2) of
Regulation S-K, certain schedules have been omitted but will
be furnished supplementally to the Commission upon request.
2.02 Agreement of Merger dated as of August 30, 1996 by and between
HNC Merger Corp. and Risk Data Corporation.
4.01 Registration Rights Agreement dated as of August 30, 1996 by
and among the Company and the former shareholders of Risk Data
Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: September 13, 1996
HNC SOFTWARE INC.
By: /s/ RAYMOND V. THOMAS
________________________________
Raymond V. Thomas
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
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2.01 Agreement and Plan of Reorganization dated as of July 19, 1996 by and among the
Company, HNC Merger Corp. and Risk Data Corporation, as amended
2.02 Agreement of Merger dated as of August 30, 1996 by and between HNC Merger Corp. and
Risk Data Corporation
4.01 Registration Rights Agreement dated as of August 30, 1996 by and among the Company
and the former shareholders of Risk Data Corporation.