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EXHIBIT 2.02
Agreement of Merger dated as of August 30, 1996 by and between
HNC Merger Corp. and Risk Data Corporation
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AGREEMENT OF MERGER
OF
HNC MERGER CORP.
AND
RISK DATA CORPORATION
This Agreement of Merger (this "AGREEMENT") is entered into as of August
30, 1996 by and between HNC Merger Corp., a Delaware corporation ("SUB") that is
a wholly-owned subsidiary of HNC Software Inc. a Delaware corporation ("HNC"),
and Risk Data Corporation ("RDC"), a California corporation.
R E C I T A L S
A. HNC, Sub and RDC have entered into an Agreement and Plan of
Reorganization, dated as of July 19, 1996, as amended (the "PLAN"), providing
for certain representations, warranties and agreements in connection with the
transactions contemplated hereby, and for the merger of Sub with and into RDC in
accordance with the Delaware General Corporation Law (the "DELAWARE LAW") and
the General Corporation Law of California (the "CALIFORNIA LAW").
B. The Boards of Directors of HNC, Sub and RDC, respectively, have
determined it to be advisable and in the respective interests of HNC, Sub and
RDC and their respective stockholders that Sub be merged with and into RDC in
accordance with the Plan (the "MERGER") so that RDC will be the surviving
corporation of the Merger.
C. The Plan, this Agreement and the Merger have been approved by HNC as
the sole stockholder of Sub and by the stockholders of RDC.
NOW, THEREFORE, Sub and RDC hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms will have the meanings set forth below:
1.1 The "EFFECTIVE TIME" means the date on which the Merger becomes
legally effective under the laws of the States of California and Delaware as a
result of the filing with the Delaware Secretary of State of this Agreement or,
in lieu thereof at HNC's option, a Certificate of Merger (the "CERTIFICATE OF
MERGER"), conforming to the requirements of Section 252 of the Delaware General
Corporation Law, and the filing with the California Secretary of State of the
Agreement of Merger (and related officers' certificates).
1.2 "HNC COMMON STOCK" means HNC's Common Stock, $0.001 par value
per share.
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1.3 "HNC PRICE PER SHARE" means $35.631 per share of HNC Common
Stock.
1.4 "HNC CLOSING AVERAGE PRICE PER SHARE" means the average of the
closing prices per share of HNC Common Stock as quoted on the Nasdaq National
Market (or such other exchange or quotation system on which HNC Common Stock is
then traded or quoted) and reported in The Wall Street Journal for the ten (10)
trading days immediately preceding (but not including) the date of this
Agreement; provided, however, that notwithstanding the foregoing, the HNC
Closing Average Price Per Share shall in no event be greater than the HNC Price
Per Share nor less than eighty percent (80%) of the HNC Price Per Share.
1.5 "RDC COMMON STOCK" means RDC's Common Stock, no par value per
share. "RDC SERIES A PREFERRED STOCK" means RDC's Series A Preferred Stock, no
par value per share. "RDC SERIES B PREFERRED STOCK" means RDC's Series B
Preferred Stock, no par value per share. "RDC PREFERRED STOCK" means the RDC
Series A Preferred Stock and RDC Series B Preferred Stock, collectively. "RDC
STOCK" means RDC Common Stock and RDC Preferred Stock, collectively.
1.6 "RDC OPTIONS" means, collectively: (i) options to purchase RDC
Common Stock granted by RDC to RDC employees under RDC's 1992 Stock Option Plan
(the "RDC OPTION PLAN"); and (ii) options to purchase an aggregate of 247,000
shares of RDC Common Stock granted to certain employees and/or consultants of
RDC in March 1990.
1.7 "RDC DERIVATIVE SECURITIES" means, collectively: (a) any
warrant, option, right or other security that entitles the holder thereof to
purchase or otherwise acquire any shares of the capital stock of RDC
(collectively, "RDC STOCK RIGHTS"); (b) any note, evidence of indebtedness,
stock or other security of RDC that is convertible into or exchangeable for any
shares of the capital stock of RDC or any RDC Stock Rights ("RDC CONVERTIBLE
SECURITY"); and (c) any warrant, option, right, note, evidence of indebtedness,
stock or other security that entitles the holder thereof to purchase or
otherwise acquire any RDC Stock Rights or any RDC Convertible Security;
provided, however, that the term "RDC Derivative Securities" does not include
any RDC Options, any outstanding shares of RDC Series A Preferred Stock or any
outstanding shares of RDC Series B Preferred Stock.
1.8 "RDC FULLY DILUTED NUMBER" means that number of shares of RDC
Common Stock that is equal to the sum of: (a) the total number of shares of RDC
Common Stock that are issued and outstanding immediately prior to the Effective
Time; plus (b) the total number of shares of RDC Common Stock, if any, that as
of immediately prior to the Effective Time are issuable upon the conversion of
all shares of RDC Series A Preferred Stock and all shares of RDC Series B
Preferred Stock that are issued and outstanding immediately prior to the
Effective Time; plus (c) the total number of shares of RDC Common Stock that,
immediately prior to the Effective Time, are directly or indirectly ultimately
issuable by RDC upon the exercise, conversion or exchange of all RDC Derivative
Securities (if any) that are issued and outstanding immediately prior to the
Effective Time. The number of shares of RDC Common Stock subject
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to RDC Options that are issued and outstanding immediately prior to the
Effective Time shall not be included in the RDC Fully Diluted Number.
1.9 "RDC STOCKHOLDERS" means those persons who, immediately prior to
the Effective Time, hold the shares of RDC Stock that are outstanding
immediately prior to the Effective Time; provided, however, that for purposes of
Section 2.4 of this Agreement, the term "RDC Stockholders" means only those RDC
Stockholders (as defined above in this Section 1.9) who are issued shares of HNC
Common Stock in the Merger.
1.10 "RDC DISSENTING SHARES" means any shares of RDC Stock that are
outstanding immediately prior to the Effective Time which qualify fully as
"dissenting shares" within the meaning of Section 1300(b) of the California
Corporations Code and with respect to which dissenter's rights to require the
purchase of such dissenting shares for cash at their fair market value in
accordance with Chapter 13 of the California Corporations Code have (in
connection with the Merger) been duly and properly exercised and perfected.
1.11 "SERIES A PREFERENCE AMOUNT" means the dollar amount equal to
the product obtained by multiplying (a) $1.66 by (b) the number of shares of RDC
Series A Preferred Stock that are issued and outstanding immediately prior to
the Effective Time.
1.12 "SERIES B PREFERENCE AMOUNT" means the dollar amount equal to
the product obtained by multiplying (a) $8.72 by (b) the number of shares of RDC
Series B Preferred Stock that are issued and outstanding immediately prior to
the Effective Time.
1.13 "COMMON AMOUNT" means the dollar amount equal to the product
obtained by multiplying (a) $0.55 by (b) the number of shares of RDC Common
Stock that are issued and outstanding immediately prior to the Effective Time.
1.14 "REMAINDER AMOUNT" means the dollar amount (if positive) equal
to Sixty-One Million Dollars ($61,000,000) minus the sum of the sum of the
Series A Preference Amount, the Series B Preference Amount and the Common
Amount.
1.15 "OPTION AMOUNT" means the dollar amount equal to "X" in the
following formula, where for purposes of such formula: (a) "O" is the total
number of shares of RDC Common Stock that are subject to all RDC Options that
are issued and outstanding immediately prior to the Effective Time (without
regard to whether the right to exercise such RDC Options has or has not vested);
(b) "R" is the Remainder Amount; and (c) "S" is the RDC Fully Diluted Number:
O (R + 0.55S)
X = --------------
O + S
1.16 "PARTICIPATION AMOUNT" means the dollar amount equal to the
Remainder Amount minus the Option Amount. The "PARTICIPATION SHARES" means the
number of shares of HNC Common Stock obtained by dividing the Participation
Amount by the HNC Closing Average Price Per Share. The "PARTICIPATION NUMBER"
means the number of shares of HNC Common Stock obtained by dividing the
Participation Shares by the RDC Fully Diluted Number.
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1.17 "HNC MERGER SHARES" means that number of shares of HNC Common
Stock, as presently constituted, that will be issued under this Agreement upon
the conversion of the shares of RDC Common Stock, RDC Series A Preferred Stock
and RDC Series B Preferred Stock that are issued and outstanding immediately
prior to the Effective Time and is equal to the quotient obtained by dividing
(i) the sum of the Series A Preference Amount, the Series B Preference Amount,
the Common Amount and the Participation Amount by (ii) the HNC Closing Average
Price Per Share; provided, however, that the number of HNC Merger Shares shall
not exceed the number of shares of HNC Common Stock equal to the quotient
obtained by dividing (a) Sixty-One Million Dollars ($61,000,000) minus the
Option Amount, by (b) the HNC Closing Average Price Per Share.
1.18 "SERIES A CONVERSION NUMBER" means the number of shares of HNC
Common Stock equal to the sum of (a) $1.66 divided by the HNC Closing Average
Price Per Share, plus (b) the product obtained by multiplying the Participation
Number by the number of shares of RDC Common Stock into which one (1) share of
RDC Series A Preferred Stock is convertible immediately prior to the Effective
Time (currently one (1) share of RDC Common Stock).
1.19 "SERIES B CONVERSION NUMBER" means the number of shares of HNC
Common Stock equal to the sum of (a) $8.72 divided by the HNC Closing Average
Price Per Share, plus (b) the product obtained by multiplying the Participation
Number by the number of shares of RDC Common Stock into which one (1) share of
RDC Series B Preferred Stock is convertible immediately prior to the Effective
Time (currently 1.00154 shares of RDC Common Stock).
1.20 "COMMON CONVERSION NUMBER" means the number of shares of HNC
Common Stock equal to the sum of (a) $0.55 divided by the HNC Closing Average
Price Per Share, plus (b) the Participation Number.
1.21 "OPTION CONVERSION NUMBER" means the number of shares of HNC
Common Stock obtained by dividing the Option Pool Shares (as defined below) by
the total number of shares of RDC Common Stock that are subject to all RDC
Options that are issued and outstanding immediately prior to the Effective Time
(without regard to whether the right to exercise such RDC Options has or has not
vested). "OPTION POOL SHARES" means the number of shares of HNC Common Stock
equal to the quotient obtained by dividing (a) the Option Amount, by (b) the HNC
Closing Average Price Per Share.
2. THE MERGER
2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Sub will be merged with and into RDC pursuant
to the Plan and this Agreement and in accordance with applicable provisions of
the laws of the State of California and the State of Delaware as follows:
2.1.1 Conversion of Sub Stock. At the Effective Time, each
share of Common Stock of Sub that is issued and outstanding immediately prior to
the Effective Time
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shall, by virtue of the Merger and without the need for any further action on
the part of the holder thereof, be converted into and become one (1) share of
RDC Common Stock that is issued and outstanding immediately after the Effective
Time, and the shares of RDC Common Stock into which the shares of Sub Common
Stock are so converted shall be the only shares of RDC Stock that are issued and
outstanding immediately after the Effective Time.
2.1.2 Conversion of RDC Stock. At the Effective Time, each
share of RDC Common Stock, each share of RDC Series A Preferred Stock and each
share of RDC Series B Preferred Stock that is issued and outstanding immediately
prior to the Effective Time (other than any RDC Dissenting Shares as provided in
Section 2.1.3 of this Agreement) will, by virtue of the Merger, and without the
need for any further action on the part of the holder thereof, be converted as
follows:
(a) RDC Common Stock. Each share of RDC Common
Stock that is issued and outstanding immediately prior to the Effective Time
shall be converted into a number of shares of HNC Common Stock equal to the
Common Conversion Number, subject to the provisions of Section 2.1.4 of this
Agreement regarding the elimination of fractional shares;
(b) RDC Series A Preferred Stock. Each share of
RDC Series A Preferred Stock that is issued and outstanding immediately prior to
the Effective Time shall be converted into a number of shares of HNC Common
Stock equal to the Series A Conversion Number, subject to the provisions of
Section 2.1.4 of this Agreement regarding the elimination of fractional shares;
and
(c) RDC Series B Preferred Stock. Each share of
RDC Series B Preferred Stock that is issued and outstanding immediately prior to
the Effective Time shall be converted into a number of shares of HNC Common
Stock equal to the Series B Conversion Number, subject to the provisions of
Section 2.1.4 of this Agreement regarding the elimination of fractional shares.
2.1.3 RDC Dissenting Shares. Holders of RDC Dissenting Shares
(if any) shall be entitled to their appraisal rights under Chapter 13 of the
California Corporations Code with respect to such RDC Dissenting Shares and such
RDC Dissenting Shares shall not be converted into shares of HNC Common Stock in
the Merger; provided, however, that nothing in this Section 2.1.3 is intended to
remove, waive, alter or affect Sections 9.8 and 9.9 of the Plan, or any
provision of the Plan relating to RDC Dissenting Shares. Shares of RDC Stock as
to which dissenting shareholders' rights of appraisal under the California
Corporations Code have not been properly perfected shall, when such dissenting
shareholders' rights can no longer be legally exercised under the California
Corporations Code, be converted into HNC Common Stock as provided in Section
2.1.2.
2.1.4 Fractional Shares. No fractional shares of HNC Common
Stock shall be issued in connection with the Merger. In lieu thereof, each
holder of RDC Stock who would otherwise be entitled to receive a fraction of a
share of HNC Common Stock under Section 2.1.2 of this Agreement, after
aggregating all shares of HNC Common Stock to be received by such holder, shall
instead receive from HNC, within twenty (20) business days after
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the Effective Time, an amount of cash equal to the HNC Closing Average Price Per
Share (as adjusted to reflect any Capital Change (as defined below) of HNC)
multiplied by the fraction of a share of HNC Common Stock to which such holder
would otherwise be entitled to receive.
2.2 Assumption and Conversion of RDC Options. Each RDC Option that
is outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and at the Effective Time and without the need for any further action on
the part of any holder thereof, be assumed by HNC and converted into an option
(an "HNC OPTION") to purchase that number of shares of HNC Common Stock
determined by multiplying the number of shares of RDC Common Stock subject to
such RDC Option immediately prior to the Effective Time by the Option Conversion
Number, at an exercise price per share of HNC Common Stock equal to the exercise
price per share of RDC Common Stock that was in effect for such RDC Option
immediately prior to the Effective Time divided by the Option Conversion Number;
provided, however, that if the foregoing calculation would result in an assumed
and converted RDC Option being converted into an HNC Option that, after
aggregating all the shares of HNC Common Stock issuable upon the exercise of
such HNC Option, would be exercisable for a fraction of a share of HNC Common
Stock, then the number of shares of HNC Common Stock subject to such HNC Option
shall be rounded down to the nearest whole number of shares of HNC Common Stock.
The terms, exercisability, vesting schedule, status as an "incentive stock
option" under Section 422 of the Internal Revenue Code of 1986, as amended (if
applicable) or a nonqualified stock option, and all other terms and conditions
of RDC Options (including but not limited to the terms and conditions applicable
to options granted under the RDC Option Plan by virtue of the RDC Option Plan)
shall (except as otherwise provided in the terms of such RDC Options), to the
extent permitted by law and otherwise reasonably practicable, be unchanged and
continue in effect after the Merger. Continuous employment with RDC shall be
credited to the optionee for purposes of determining the vesting of the number
of shares of an HNC Common Stock subject to exercise under the HNC Option issued
upon conversion of an RDC Option.
2.3 Adjustments for Capital Changes. Notwithstanding the provisions
of Section 2.1.2 or Section 2.2 of this Agreement, if at any time prior to the
Effective Time, HNC or RDC recapitalizes, either through a subdivision (or stock
split) of any of its outstanding shares into a greater number of shares, or a
combination (or reverse stock split) of any of its outstanding shares into a
lesser number of shares, or reorganizes, reclassifies or otherwise changes its
outstanding shares into the same or a different number of shares of other
classes (other than through a subdivision or combination of shares provided for
in the previous clause), or declares a dividend on its outstanding shares
payable in shares or securities convertible into shares of HNC Common Stock (a
"CAPITAL CHANGE"), then the HNC Price Per Share, the HNC Closing Average Price
Per Share, the Common Conversion Number, the Series A Conversion Number, the
Series B Conversion Number and the Option Conversion Number and the number of
shares of HNC Common Stock constituting the HNC Merger Shares will be adjusted
appropriately so as to maintain the proportionate interests of the stockholders
of RDC and the stockholders of HNC contemplated hereby (and, indirectly, the
holders of the RDC Options) so as to maintain the proportional interests of the
holders of RDC Stock and RDC Options contemplated by this Agreement.
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2.4 Escrow Agreement. HNC shall withhold eight and three-quarters
percent (8.75%) of the shares of HNC Common Stock to be issued to the RDC
Stockholders in accordance with Section 2.1.2 of this Agreement (rounded down to
the nearest whole number of shares to be issued to each RDC Stockholder) (the
"ESCROW SHARES") and will deliver certificates representing such Escrow Shares
to State Street Bank and Trust Company or a similar institution, as escrow agent
(the "ESCROW AGENT"), to be held by the Escrow Agent as security for the RDC
Stockholders' indemnification obligations under Section 11 of the Plan and
pursuant to the provisions of an escrow agreement (the "ESCROW AGREEMENT"). The
Escrow Shares will be represented by a certificate or certificates issued in the
names of the RDC Stockholders in proportion to their respective interests
therein and will be held by the Escrow Agent during that time period (the
"ESCROW PERIOD") beginning on the Closing Date (as defined in Section 7.1 of the
Plan) and ending on the earlier to occur of (a) the date on which HNC has first
received final audited financial statements together with a report thereon from
HNC's independent auditors covering the combined results of HNC and RDC or (b)
twelve (12) months after the Closing Date (as that term is defined in Section
7.1 of the Plan).
2.5 Effects of the Merger. At and upon the Effective Time: (a) the
separate existence of Sub will cease and Sub will be merged with and into RDC,
and RDC will be the surviving corporation of the Merger (the "SURVIVING
CORPORATION") pursuant to the terms of this Agreement; (b) the Restated Articles
of Incorporation of RDC shall be amended to read as set forth in Exhibit A
attached hereto and shall be the Articles of Incorporation of the Surviving
Corporation; (c) each share of RDC Stock that is outstanding immediately prior
to the Effective Time and each RDC Option that is outstanding immediately prior
to the Effective Time shall be converted into HNC Common Stock or an HNC Option,
respectively, as provided in this Section 2; (d) each share of Sub Common Stock
that is outstanding immediately prior to the Effective Time shall be converted
into one (1) share of RDC Common Stock as provided in Section 2.1.1 hereof; (e)
the officers of the Surviving Corporation shall be those persons who are the
officers of RDC immediately prior to the Effective Time; and (f) the Merger
shall, from and after the Effective Time, have all of the effects provided by
applicable law.
3. EXCHANGE OF CERTIFICATES
3.1 At or before the Effective Time, each holder of shares of RDC
Stock will surrender the certificate(s) for such shares (each an "RDC
CERTIFICATE"), duly endorsed as requested by HNC, to HNC for cancellation.
Promptly after the Effective Time and receipt of such RDC Certificates, HNC will
issue to each tendering holder of an RDC Certificate a certificate for the
number of shares of HNC Common Stock to which such holder is entitled pursuant
to Section 2.1.2 hereof (less the Escrow Shares to be placed in escrow pursuant
to Section 2.4 hereof and the Escrow Agreement) and will pay by check to each
tendering holder cash in lieu of fractional shares in the amount payable to such
holder in accordance with Section 2.1.4 hereof. At the Closing (as defined in
the Plan), HNC will deliver the certificates representing the Escrow Shares to
the Escrow Agent pursuant to the Escrow Agreement.
3.2 No dividends or distributions payable to holders of record of
HNC Common Stock after the Effective Time, or cash payable in lieu of fractional
shares, will be paid to the holder of any unsurrendered RDC
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Certificate until the holder of such unsurrendered RDC Certificate surrenders
such RDC Certificate to HNC as provided above. Subject to the effect, if any, of
applicable escheat and other laws, following surrender of any RDC Certificate,
there will be delivered to the person entitled thereto, without interest, the
amount of any dividends and distributions therefor paid with respect to HNC
Common Stock so withheld as of any date subsequent to the Effective Time and
prior to such date of delivery.
3.3 After the Effective Time, there will be no further registration
of transfers on the stock transfer books of RDC or its transfer agent of the RDC
Stock that was outstanding immediately prior to the Effective Time. If, after
the Effective Time, RDC Certificates are presented for any reason, they will be
canceled and exchanged as provided in this Section 3.
3.4 Until RDC Certificates representing RDC Stock outstanding prior
to the Merger are surrendered pursuant to Section 3.1 above, such RDC
Certificates will be deemed, for all purposes, to evidence ownership of the
number of shares of HNC Common Stock into which the RDC Stock will have been
converted pursuant to Section 2.1.2 of this Agreement.
4. TERMINATION AND AMENDMENT
4.1 Agreement Subject to Termination by Mutual Consent.
Notwithstanding the approval of this Agreement by the stockholders of Sub and
RDC, this Agreement may be terminated at any time prior to the Effective Time by
the mutual written agreement of Sub and RDC.
4.2 Agreement Subject to Termination on Termination of Plan.
Notwithstanding the approval of this Agreement by the stockholders of Sub and
RDC, this Agreement will terminate forthwith in the event that the Plan is
terminated in accordance with its terms prior to the Effective Time.
4.3 Effect of Termination. In the event of the termination of this
Agreement as provided above, this Agreement will forthwith become void and there
will be no liability on the part of either Sub or RDC or their respective
officers and directors, except as otherwise provided in the Plan.
4.4 Amendment. This Agreement may be amended by the parties hereto
at any time before or after approval by the stockholders of either Sub or RDC,
but, after such approval, no amendment will be made which by applicable law
requires the further approval of stockholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of Sub and RDC.
5. MISCELLANEOUS
5.1 Plan. The Plan and this Agreement are intended to be
construed together in order to effectuate their purposes.
5.2 Assignment; Binding Upon Successors and Assigns. Neither party
hereto may assign or delegate any of its rights or obligations under this
Agreement without the prior
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written consent of the other party hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
5.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
(irrespective of its choice of law principles).
5.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
RISK DATA CORPORATION HNC MERGER CORP.
By: /s/ Mark S. Hammond By: /s/ Robert L. North
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President and Chief Executive President and Chief Executive
Officer Officer
By: /s/ Ken Saunders By: /s/ Raymond V. Thomas
-------------------------------- -------------------------------
Chief Financial Officer Chief Financial Officer and
Secretary
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EXHIBIT A
RESTATED ARTICLES OF INCORPORATION
ARTICLE I
The name of the corporation is Risk Data Corporation.
ARTICLE II
The purpose of the corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
Unless applicable law otherwise provides, any amendment, repeal or modification
of this Article III shall not adversely affect any right of any director under
this Article III that existed at or prior to the time of such amendment, repeal
or modification.
ARTICLE IV
The corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, by agreements with agents, vote of shareholders or disinterested
directors or otherwise, in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to the applicable
limits on such excess indemnification set forth in Section 204 of the California
Corporations Code. Unless applicable law otherwise provides, any amendment,
repeal or modification of any provision of this Article IV shall not adversely
affect any contract or other right to indemnification of any agent of the
corporation that existed at or prior to the time of such amendment, repeal or
modification.
ARTICLE V
The corporation is authorized to issue only one class of shares of stock,
which shall be designated "Common Stock" and which shall have no par value. The
total number of shares of Common Stock the corporation is authorized to issue is
1,000.