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EXHIBIT 2.01
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made and
entered into as of July 14, 1997 (the "AGREEMENT DATE") by and among HNC
SOFTWARE INC., a Delaware corporation ("HNC"), FW1 ACQUISITION CORP., a Delaware
corporation that is a wholly-owned subsidiary of HNC ("SUB"), CompReview, Inc.,
a California corporation (the "COMPANY") and Robert L. Kaaren, M.D. and Mishel
E. Munnayer a.k.a Michael E. Munayyer, Trustee of the Michael Munayyer Trust
dated August 11, 1995, who are the only stockholders of the Company (each being
hereinafter individually referred to as a "CR STOCKHOLDER" and collectively
referred to as the "CR STOCKHOLDERS").
RECITALS
A. The parties intend that, subject to the terms and conditions of this
Agreement, Sub will be merged with and into the Company in a reverse triangular
merger, with the Company to be the surviving corporation of such merger, all
pursuant to the terms and conditions of this Agreement and applicable law. The
parties also intend for such merger to qualify as a "pooling of interests"
transaction for accounting and financial reporting purposes and to be treated as
a "reorganization" under Section 368(a)(1)(A) of the Internal Revenue Code of
1986, as amended, by virtue of the provisions of Section 368(a)(2)(E) of such
Code.
B. Upon the effectiveness of such merger, the capital stock of the
Company that is outstanding immediately prior to the effectiveness of the merger
will be converted into shares of the common stock of HNC (plus cash for any
eliminated fractional shares), the employee stock options to purchase shares of
the Company's common stock granted under the Company's 1995 Stock Option Plan
that are outstanding immediately prior to the effectiveness of the Merger will
be assumed by HNC and converted into options to purchase shares of HNC common
stock and Sub will be merged with and into the Company, all as provided in this
Agreement.
NOW, THEREFORE, in consideration of the above-recited facts and the
mutual promises, covenants and conditions contained herein, the parties hereby
agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms will have the meanings
set forth below:
1.1 The "MERGER" means the statutory merger of Sub with and into the
Company to be effected pursuant to the terms and conditions of this Agreement.
1.2 The "EFFECTIVE TIME" means the time and date on which the Merger
first becomes legally effective under the laws of the States of California and
Delaware as a result of: (i) the filing with the California Secretary of State
of an Agreement of Merger between Sub and the Company in substantially the form
of Exhibit A (the "AGREEMENT OF MERGER") and any required officers'
certificates; and (ii) the filing with the Delaware Secretary of State of the
Agreement of Merger and any required officers' certificates or, in lieu thereof
at HNC's option, a Certificate of
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Merger (the "CERTIFICATE OF MERGER"), conforming to the requirements of Section
252 of the Delaware General Corporation Law.
1.3 "HNC COMMON STOCK" means HNC's Common Stock, $0.001 par value per
share.
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 the New York Stock Exchange or the American Stock Exchange if HNC
Common Stock is then traded or quoted on either such exchange) and reported in
The Wall Street Journal for the twenty (20) trading days immediately preceding
(but not including) the Closing Date (as defined in Section 7.1).
1.5 "COMPANY COMMON STOCK" means the Company's Common Stock.
1.6 "COMPANY OPTIONS" means, collectively, options to purchase shares
of Company Common Stock granted by the Company to Company employees under the
Company's 1995 Stock Option Plan (the "COMPANY OPTION PLAN").
1.7 "COMPANY 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 the Company
(collectively, "COMPANY STOCK RIGHTS"); (b) any note, evidence of indebtedness,
stock or other security of the Company that is convertible into or exchangeable
for any shares of the capital stock of the Company or any Company Stock Rights
("COMPANY 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 Company Stock Rights or any Company
Convertible Security; provided, however, that the term "Company Derivative
Securities" does not include any of the Company Options.
1.8 "NUMBER OF COMPANY FULLY DILUTED SHARES" means that number of
shares of Company Common Stock that is equal to the sum of: (a) the total number
of shares of Company Common Stock that are issued and outstanding immediately
prior to the Effective Time; plus (b) the total number of shares of Company
Common Stock subject to or issuable under all Company Options that are issued
and outstanding immediately prior to the Effective Time; plus (c) the total
number of shares of Company Common Stock that, immediately prior to the
Effective Time, are, directly or indirectly, ultimately or potentially issuable
by the Company upon the exercise, conversion or exchange of all Company
Derivative Securities (if any) that are issued and outstanding immediately prior
to the Effective Time.
1.9 "COMPANY STOCKHOLDERS" means those persons (each being
individually referred to herein as a "COMPANY STOCKHOLDER") who, immediately
prior to the Effective Time, hold the shares of the Company Stock that are
outstanding immediately prior to the Effective Time; provided, however, that for
purposes of Section 2.4 and Section 11 of this Agreement, the term "Company
Stockholders" means only those Company Stockholders (as defined above in this
Section) who are issued shares of HNC Common Stock in the Merger.
1.10 "COMPANY DISSENTING SHARES" means any shares of any capital stock
of the Company that (i) are outstanding immediately prior to the Effective Time
and qualify fully as "dissenting shares" within the meaning of Section 1300(b)
of the California Corporations Code and (ii) with respect to which dissenter's
rights to require the purchase of such dissenting shares for
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cash at their fair market value in accordance with Chapter 13 of the California
Corporations Code have been duly and properly exercised and perfected in
connection with the Merger.
1.11 "HNC MERGER SHARES" means a number of shares of HNC Common Stock
equal to the sum of (i) Five Million (5,000,000) shares of HNC Common Stock, as
presently constituted, plus (ii) the Additional Shares.
1.12 "ADDITIONAL SHARES" means that number of shares of HNC Common
Stock (as constituted immediately prior to the Effective Time) obtained by
dividing (i) the Retained Earnings (as defined below) by (ii) the HNC Closing
Average Price Per Share. As used herein, the "RETAINED EARNINGS" means the
retained earnings of the Company as of the last day of the last full calendar
month ended prior to the Closing Date, computed in accordance with generally
accepted accounting principles, consistently applied.
1.13 "CONVERSION RATIO" means the quotient obtained by (a) dividing
the number of shares of HNC Common Stock constituting the HNC Merger Shares by
(b) the Number of Company Fully Diluted Shares.
1.14 "HNC ANCILLARY AGREEMENTS" means, collectively, each agreement,
certificate or document (other than this Agreement) to which HNC is to enter
into as a party thereto, or otherwise is to execute and deliver, pursuant to or
in connection with this Agreement. "SUB ANCILLARY AGREEMENTS" means,
collectively, the Agreement of Merger and each other agreement, certificate or
document (other than this Agreement) to which Sub is to enter into as a party
thereto, or otherwise is to execute and deliver, pursuant to or in connection
with this Agreement. "COMPANY ANCILLARY AGREEMENTS" means, collectively, the
Agreement of Merger and each other agreement, certificate or document (other
than this Agreement) to which the Company is to enter into as a party thereto,
or otherwise is to execute and deliver, pursuant to or in connection with this
Agreement. "CR STOCKHOLDER ANCILLARY AGREEMENTS" means, collectively, each
agreement, certificate or document (other than this Agreement) that a CR
Stockholder is to enter into as a party thereto, or otherwise is to execute and
deliver, pursuant to or in connection with this Agreement, and includes, without
limitation, each of the following agreements to be entered into and executed by
each CR Stockholder hereunder: the Escrow Agreement, the Investment
Representation Letter, the Registration Rights Agreement, the Company
Stockholder Agreement, the Company Affiliate Agreement, the Non-Competition
Agreement and the Employment Agreement (each as hereafter defined).
1.15 "KNOWLEDGE," when used with reference to the Company or the CR
Stockholders, means the collective actual knowledge of the CR Stockholders, the
President and/or Chief Executive Officer of the Company, the Chief Financial
Officer of the Company and/or any Vice President of the Company.
1.16 "PROXY STATEMENT" means the proxy statement that HNC distributes
and sends to its stockholders in connection with the special meeting of HNC's
stockholders to be called and held by HNC in order to seek HNC's stockholders'
approval of the issuance of shares of HNC Common Stock and HNC Options to
securityholders of the Company pursuant to the Merger, this Agreement and the
Agreement of Merger.
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Other capitalized terms defined elsewhere in this Agreement and not
defined in this Article I will have the meanings assigned to such terms in this
Agreement.
ARTICLE 2
PLAN OF REORGANIZATION
2.1 Conversion of Shares.
2.1.1 Conversion of Sub Stock. At the Effective Time, each share
of the Common Stock of Sub that is issued and outstanding immediately prior to
the Effective Time will, 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 Company Common Stock that is issued and outstanding immediately
after the Effective Time, and the shares of Company Common Stock into which the
shares of Sub Common Stock are so converted in the Merger will be the only
shares of capital stock of the Company that are issued and outstanding
immediately after the Effective Time.
2.1.2 Conversion of Company Stock. At the Effective Time, each
share of Company Common Stock that is issued and outstanding immediately prior
to the Effective Time (other than any Company Dissenting Shares as provided in
Section 2.1.3) will, by virtue of the Merger, and without the need for any
further action on the part of the holder thereof, be converted into a number of
shares of HNC Common Stock that is equal to the Conversion Ratio, subject to the
provisions of Section 2.1.4 regarding the elimination of fractional shares.
2.1.3 Company Dissenting Shares. Holders of Company Dissenting
Shares (if any) will be entitled to their appraisal rights under Chapter 13 of
the California Corporations Code with respect to such Company Dissenting Shares
and such Company Dissenting Shares will 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, release, waive, alter or affect any of the
conditions to HNC's and Sub's obligations to consummate the Merger set forth in
Section 9.8 and Section 9.9, or any other provision of this Agreement relating
to the Company Dissenting Shares. Shares of the capital stock of the Company
that are outstanding immediately prior to the Effective Time of the Merger and
with respect to which dissenting shareholders' rights of appraisal under the
California Corporations Code have not been properly perfected will, 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
will be issued in connection with the Merger. In lieu thereof, each holder of
Company Common Stock who would otherwise be entitled to receive a fraction of a
share of HNC Common Stock pursuant to Section 2.1.2, after aggregating all
shares of HNC Common Stock to be received by such holder pursuant to Section
2.1.2, will instead receive from HNC, within three (3) business days after the
Effective Time, an amount of cash equal to product obtained by multiplying (i)
the HNC Closing Average Price Per Share (as adjusted to reflect any Capital
Change (as defined below) of HNC) by (ii) the fraction of a share of HNC Common
Stock that such holder would otherwise be entitled to receive.
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2.2 Assumption and Conversion of Company Options.
2.2.1 Assumption by HNC. Each Company Option that is outstanding
immediately prior to the Effective Time will, 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 Company Common Stock subject to such Company Option
immediately prior to the Effective Time by the Conversion Ratio, at an exercise
price per share of HNC Common Stock equal to the exercise price per share of
Company Common Stock that was in effect for such Company Option immediately
prior to the Effective Time divided by the Conversion Ratio; provided, however,
that if the foregoing calculation would result in an assumed and converted
Company 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 will 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 Code (if applicable) or as a nonqualified stock option, and
all other terms and conditions of each Company Option (including but not limited
to the provisions of the Company Option Plan that form part of the terms and
conditions of such Company Option) that is converted into an HNC Option in the
Merger will (except as otherwise provided in the terms of such Company Options),
to the extent permitted by law and otherwise reasonably practicable, be
unchanged and continue in effect after the Merger. Pre-Merger employment service
with the Company will be credited to each holder of a Company Option for
purposes of applying any vesting schedule contained in a Company Option to
determine the number of shares of HNC Common Stock that are exercisable under
the HNC Option into which such Company Option is converted in the Merger.
2.2.2 Registration. HNC will use its best efforts (with the
cooperation and assistance of the Company) to cause the shares of HNC Common
Stock that are subject to the HNC Options that are issued upon the conversion of
the Company Options under Section 2.2.1 to be registered on a registration
statement (or to be issued pursuant to a then-effective registration statement)
on Form S-8 (or successor form) promulgated by the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended (the "1933
ACT"), as soon as reasonably practicable after the Effective Time, and will use
its best efforts to maintain the effectiveness of such Form S-8 registration
statement or registration statements for so long as such HNC Options remain
outstanding and HNC Common Stock is registered under the Securities Exchange Act
of 1934, as amended (the "1934 ACT"). HNC will use its best efforts to file a
Form S-8 registration statement covering the shares of HNC Common Stock that are
subject to the HNC Options referred to above within five (5) business days after
the Effective Time.
2.3 Adjustments for Capital Changes. Notwithstanding the provisions of
Section 2.1 or Section 2.2, if at any time after the Agreement Date and prior to
the Effective Time, HNC 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
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on its outstanding shares payable in shares of HNC Common Stock or in shares or
securities convertible into shares of HNC Common Stock (each, a "CAPITAL
CHANGE"), then the HNC Closing Average Price Per Share, the number of shares of
HNC Common Stock constituting the HNC Merger Shares and the Conversion Ratio
will each be appropriately adjusted so as to maintain the proportionate
interests of the stockholders and optionholders of HNC and the Company in the
outstanding equity of HNC immediately following the Merger as contemplated by
this Agreement.
2.4 Escrow Agreement. At the Closing (as that term is defined in
Section 7.1) of the Merger, HNC will withhold ten percent (10%) of the shares of
HNC Common Stock to be issued to the Company Stockholders in the Merger pursuant
to Section 2.1.2, rounded down to the nearest whole number of shares to be
issued to each Company 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"), together
with related stock transfer powers, to be held by the Escrow Agent as security
for the Company Stockholders' indemnification obligations under Section 11 and
pursuant to the provisions of an escrow agreement in substantially the form of
Exhibit B to be entered into at the Closing by HNC, the Escrow Agent, the
Company Stockholders and the Representative (as defined below) (the "ESCROW
AGREEMENT"). The Escrow Shares will be represented by a certificate or
certificates issued in the names of the Company Stockholders in proportion to
their respective interests therein and will be held by the Escrow Agent during
that time period specified in the Escrow Agreement (the "ESCROW PERIOD"). By
their approval of the Merger, the Company Stockholders will be conclusively
deemed to have consented to, approved and agreed to be personally bound by: (i)
the indemnification provisions of Section 11; (ii) the Escrow Agreement; and
(iii) the appointment of Robert L. Kaaren, M.D. and Michael E. Munayyer as the
representatives of the Company Stockholders (together, the "REPRESENTATIVE")
under the Escrow Agreement and as the attorneys-in-fact and agents for and on
behalf of each Company Stockholder as provided in the Escrow Agreement; and (iv)
the taking by the Representative of any and all actions and the making of any
decisions required or permitted to be taken by the Representative under the
Escrow Agreement, including, without limitation, the exercise of the power to:
(a) authorize delivery to HNC of Escrow Shares in satisfaction of indemnity
claims by HNC or any other Indemnified Person (as defined herein) pursuant to
Section 11 hereof and/or the Escrow Agreement; (b) agree to, negotiate, enter
into settlements and compromises of, demand arbitration of, and comply with
orders of courts and awards of arbitrators with respect to, such claims; (c)
arbitrate, resolve, settle or compromise any claim for indemnity made pursuant
to Section 11; and (d) take all actions necessary in the judgment of the
Representative for the accomplishment of the foregoing. The Representative will
have unlimited authority and power to act on behalf of each Company Stockholder
with respect to the Escrow Agreement and the disposition, settlement or other
handling of all claims governed by the Escrow Agreement, and all rights or
obligations arising under the Escrow Agreement so long as all Company
Stockholders are treated in the same manner. The Company Stockholders will be
bound by all actions taken by the Representative in connection with the Escrow
Agreement, and HNC will be entitled to rely on any action or decision of the
Representative. In performing the functions specified in this Agreement and the
Escrow Agreement, the Representative will not be liable to any Company
Stockholder in the absence of gross negligence or willful misconduct. Any
out-of-pocket costs and expenses reasonably incurred by the Representative in
connection with actions taken pursuant to the terms of the Escrow Agreement will
be paid by the Company Stockholders to
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the Representative pro rata in proportion to their respective percentage
interests in the Escrow Shares.
2.5 Effects of the Merger. At and upon the Effective Time of the
Merger:
(a) the separate existence of Sub will cease and Sub will be
merged with and into the Company, and the Company will be the surviving
corporation of the Merger (the "SURVIVING CORPORATION") pursuant to the terms of
this Agreement and the Agreement of Merger;
(b) the Articles of Incorporation of the Company will be amended
to read as set forth in Exhibit C attached hereto and will be the Articles of
Incorporation of the Surviving Corporation;
(c) the Bylaws of the Company attached as Exhibit D hereto will
be the Bylaws of the Surviving Corporation, and such Bylaws shall authorize a
Board of Directors consisting of exactly five (5) directors;
(d) each share of Company Common Stock that is outstanding
immediately prior to the Effective Time and each Company Option that is
outstanding immediately prior to the Effective Time will be converted into HNC
Common Stock or an HNC Option, respectively, as provided in this Article 2 and
the Agreement of Merger;
(e) each share of Sub Common Stock that is outstanding
immediately prior to the Effective Time will be converted into one (1) share of
Company Common Stock as provided in Section 2.1.1 and in the Agreement of
Merger;
(f) the officers of the Surviving Corporation (and their
respective offices) will be: Robert L. Kaaren, M.D. - Chairman and Chief
Executive Officer; Michael E. Munayyer - Chief Technical Officer; Michelle T.
DeLizio - President; Robert M. Acosta - Vice President of Sales and Marketing;
Matthew P. Schults - Vice President of Information Systems; and Raymond V.
Thomas - Chief Financial Officer and Secretary;
(g) the directors of the Surviving Corporation will be Robert L.
North, Raymond V. Thomas, Mark Hammond, Robert L. Kaaren, M.D. and Michael E.
Munayyer; and
(h) the Merger will, from and after the Effective Time, have all
of the effects provided by applicable law.
2.6 Further Assurances. The Company and each of the Company
Stockholders agree that if, at any time before or after the Effective Time, HNC
believes or is advised that any further instruments, deeds, assignments or
assurances are reasonably necessary or desirable to consummate the Merger or to
carry out the purposes and intent of this Agreement at or after the Effective
Time, then HNC, the Surviving Corporation and their respective officers and
directors may, and each the Company Stockholder will, execute and deliver all
such proper deeds, assignments, instruments and assurances and do all other
things necessary or desirable to consummate the Merger and to carry out the
purposes of this Agreement, in the name of the Company or otherwise.
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2.7 Securities Laws Issues. HNC shall issue the shares of HNC Common
Stock to be issued in the Merger pursuant to Section 2.1.2 of this Agreement and
the HNC Options to be issued in the Merger pursuant to an exemption from
registration under Section 4(2) and/or Regulation D promulgated under the 1933
Act and the exemption from qualification under Section 25120 of the California
Corporations Code (the "CCC") provided by Section 25100(o) of the CCC.
Concurrently with execution of this Agreement (or as soon thereafter as
possible): (a) each CR Stockholder shall execute and deliver to HNC an
Investment Representation Letter in the form of Exhibit E hereto (the
"INVESTMENT REPRESENTATION LETTER"); and (b) each holder of an outstanding
Company Option shall execute and deliver to HNC an Optionee Investment
Representation Letter in the form of Exhibit F hereto (the "OPTIONEE INVESTMENT
REPRESENTATION LETTER").
2.8 S-3 Registration Rights. Effective upon the Effective Time, each
Company Stockholder who receives shares of HNC Common Stock in the Merger
pursuant to Section 2.1.2 will be granted the registration rights on Form S-3
under the 1933 Act on the terms, and subject to the conditions and limitations,
of the Registration Rights Agreement attached hereto as Exhibit G upon such
Company Stockholder's execution and delivery of such Registration Rights
Agreement to HNC.
2.9 Tax-Free Reorganization. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the provisions of Section 368(a)(1)(A) of the Internal Revenue
Code of 1986, as amended (the "CODE") by virtue of the provisions of Section
368(a)(2)(E) of the Code. The parties believe that the value of the shares of
HNC Common Stock to be issued to the Company Stockholders in the Merger is equal
to the value of the shares of Company Common Stock to be surrendered in exchange
therefor. Except for cash to be paid in lieu of fractional shares, no
consideration that could constitute "other property" within the meaning of
Section 356 of the Code is being paid by HNC for the outstanding shares of
Company Common Stock in the Merger. In addition, HNC represents now, and as of
the Closing Date, that it presently intends to continue the Company's historic
business or use a significant portion of the Company's business assets in a
business. At the Closing (as that term is defined in Section 7.1), officers of
the Company and HNC will execute and deliver an officers' tax representation
certificate in the form of Exhibit H. The provisions and representations
contained or referred to in this Section 2.9 and Exhibit H will survive until
the expiration of the applicable statute of limitations. Notwithstanding
anything to the contrary set forth herein, HNC makes no representations or
warranty to the Company or to any stockholder of the Company regarding the tax
treatment of the Merger or whether the Merger will qualify as a tax-free plan of
reorganization under the Code.
2.10 Pooling of Interests. The parties acknowledge that, as a material
inducement to HNC to enter into this Agreement and consummate the Merger, the
Merger is intended to qualify as a "pooling of interests" for accounting and
financial reporting purposes. Accordingly, concurrently with the execution of
this Agreement, each CR Stockholder shall execute and deliver to HNC (a) a
Company Affiliate Agreement in the form of Exhibit I hereto (the "COMPANY
AFFILIATE AGREEMENT") and (b) a Stockholder Agreement in the form of Exhibit J
hereto (the "COMPANY STOCKHOLDER AGREEMENT").
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE CR STOCKHOLDERS
The Company and the CR Stockholders hereby jointly and severally
represent and warrant to HNC that, except as set forth in the letter addressed
to HNC from the Company and dated as of the Agreement Date (including all
schedules thereto) which has been delivered to HNC by the Company concurrently
herewith (the "COMPANY DISCLOSURE LETTER"), each of the following
representations, warranties and statements in this Article 3 are true and
correct.
3.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, has the corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified to transact business as a foreign corporation in
each jurisdiction in which its failure to be so qualified would have a Material
Adverse Effect. As used in this Agreement, the term "MATERIAL ADVERSE EFFECT"
when used with reference to the Company, means any event, change or effect that
is (or will with the passage of time be) materially adverse to the Company's
condition (financial or otherwise), properties, assets, liabilities, business,
operations, results of operations or prospects.
3.2 Power, Authorization and Validity.
3.2.1 The Company has the right, power, legal capacity, and
authority to enter into, execute, deliver, and perform its obligations under
this Agreement and all the Company Ancillary Agreements, and the Company has all
requisite corporate power and authority to consummate the Merger. This
Agreement, the Agreement of Merger, the Merger, and all of the principal terms
of each of the foregoing have been duly and validly approved by the stockholders
of the Company in compliance with applicable law (including without limitation
the California Corporations Code) and the Articles of Incorporation and Bylaws
of the Company, both as amended. The execution, delivery and performance by the
Company of this Agreement and each of the Company Ancillary Agreements have been
duly and validly approved and authorized by all necessary corporate action on
the part of the Company's Board of Directors. Each of the CR Stockholders has
the right, power, legal capacity and authority to enter into, execute, deliver,
and perform his respective obligations under this Agreement and each of the CR
Stockholder Ancillary Agreements to be executed and delivered by such CR
Stockholder.
3.2.2 No filing, authorization, consent, approval or order,
governmental or otherwise, is necessary or required to be made or obtained by
the Company or any CR Stockholder to enable the Company or such CR Stockholder
to lawfully enter into, and to perform its or his obligations under, this
Agreement, each of the Company Ancillary Agreements and each of the CR
Stockholder Ancillary Agreements, except for (a) the filing of the Agreement of
Merger (or the Certificate of Merger) with the Delaware Secretary of State and
any such further documents as may be required under the Delaware General
Corporation Law to effect the Merger; (b) the filing of the Agreement of Merger
(and related officers' certificates) with the California Secretary of State and
any such further documents as may be required under the California Corporations
Code to effect the Merger; and (c) such filings and notifications as may be
required to be made by the Company and/or any CR Stockholder in connection with
the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT").
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3.2.3 This Agreement and each of the Company Ancillary Agreements
are, or when executed by the Company will be, valid and binding obligations of
the Company, enforceable against the Company in accordance with their respective
terms, subject only to the effect of (a) applicable bankruptcy and other similar
laws affecting the rights of creditors generally and (b) rules of law and equity
governing specific performance, injunctive relief and other equitable remedies.
This Agreement and each of the CR Stockholder Ancillary Agreements are, or when
executed by a CR Stockholder will be, a valid and binding obligation of such CR
Stockholder, enforceable against such CR Stockholder in accordance with their
respective terms, subject only to the effect of (a) applicable bankruptcy and
other similar laws affecting the rights of creditors generally and (b) rules of
law and equity governing specific performance, injunctive relief and other
equitable remedies.
3.3 Capitalization of the Company.
3.3.1 Outstanding Stock. The authorized capital stock of the
Company consists entirely of (i) 20,000,000 shares of Common Stock, of which a
total of 10,000,000 shares are issued and outstanding and no other shares of any
capital stock of the Company are authorized, issued or outstanding. No
fractional shares of Common Stock of the Company are issued or outstanding. All
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued, are fully paid and nonassessable, are not subject
to any claim, lien, preemptive right, right of first refusal, right of first
offer or right of rescission, and have been offered, issued, sold and delivered
by the Company in compliance with all registration or qualification requirements
(or applicable exemptions therefrom) of all applicable federal and state
securities laws. A list of all holders of the Company's outstanding capital
stock, and the total number of shares of Company Common Stock owned by each such
holder in set forth in Schedule 3.3.1 to the Company Disclosure Letter. The
Company has no stockholders other than the CR Stockholders. During the two (2)
year period immediately prior to the Agreement Date, the Company has not
redeemed, repurchased or otherwise reacquired any shares of its capital stock
from any stockholder of the Company.
3.3.2 No Options, Warrants or Rights. Except for Company Options
to purchase an aggregate total of 400,000 shares of Company Common Stock that
are outstanding on the Agreement Date (all of which Company Options were granted
under the Company Option Plan), there are no options, warrants, convertible
securities or other securities, calls, commitments, conversion privileges,
preemptive rights, rights of first refusal, rights of first offer or other
rights or agreements outstanding to purchase or otherwise acquire (whether
directly or indirectly) any shares of the Company's authorized but unissued
capital stock or any securities convertible into or exchangeable for any shares
of the Company's capital stock or obligating the Company to grant, issue,
extend, or enter into any such option, warrant, convertible security or other
security, call, commitment, conversion privilege, preemptive right, right of
first refusal, right of first offer or other right or agreement, and the Company
has no liability for any dividends accrued but unpaid. No person or entity holds
or has any option, warrant or other right to acquire any issued and outstanding
shares of the capital stock of the Company from any holder of shares of the
capital stock of the Company. A total of 600,000 shares of Company Common Stock
are reserved for issuance under the Company Option Plan, and no shares of
Company Common Stock have been issued under the Company Option Plan. A total of
400,000 shares of Company Common Stock are issuable upon the exercise of options
granted under the Company Option Plan that are
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outstanding on the Agreement Date and 200,000 shares of Company Common Stock are
reserved for future issuance under the Company Option Plan but have not been
issued and are not reserved for issuance upon the exercise of any outstanding
options. A list of all holders of the Company Options, the number of the Company
Options held by each such person and the exercise price and vesting schedule of
each Company Option held by each such person is set forth in Schedule 3.3.2 to
the Company Disclosure Letter. During the two (2) year period immediately prior
to the Agreement Date, except as may be expressly required by the terms of the
Company Option Plan, the Company has not authorized, or taken any action to
authorize, the acceleration of the time during which any holder of any option,
warrant or other right to purchase or acquire any share of capital stock of the
Company may exercise such option, warrant or right. The Company Option Plan has
been duly and validly approved by the Company's Board of Directors and
stockholders.
3.3.3 No Voting Arrangements or Registration Rights. There are no
voting agreements, voting trusts, preemptive rights, rights of first refusal,
rights of first offer or other restrictions (other than normal restrictions on
transfer under applicable federal and state securities laws) applicable to any
of the Company's outstanding securities or to the conversion of any shares of
the Company's capital stock in the Merger. The Company is not under any
obligation to register under the 1933 Act any of its presently outstanding stock
or other securities or any stock or other securities that may be subsequently
issued.
3.4 Subsidiaries. The Company does not have any subsidiaries or any
interest, direct or indirect, in any corporation, partnership, limited liability
company, joint venture or other business entity.
3.5 No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement nor any the Company Ancillary Agreement, nor the
consummation of the transactions contemplated hereby or thereby, will conflict
with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of: (i) any provision of the
Articles of Incorporation or Bylaws of the Company as currently in effect; (ii)
any federal, state, local or foreign judgment, writ, decree, order, statute,
rule or regulation applicable to the Company or any of its assets or properties;
or (iii) any material instrument, agreement, contract, undertaking,
understanding, letter of intent, memorandum of understanding or commitment
(whether verbal or in writing) to which the Company is a party or by which the
Company or any of its assets or properties are bound. The consummation of the
Merger by the Company will not require the consent of any third party other than
the approval of the Company's stockholders.
3.6 Litigation. There is no action, claim, suit, arbitration,
mediation, proceeding, claim or investigation pending against the Company (or
against any officer, director, employee or agent of the Company in their
capacity as such or relating to their employment, services or relationship with
the Company) before any court, administrative agency or arbitrator that, if
determined adversely to the Company (or any such officer, director, employee or
agent) may have a Material Adverse Effect on the Company, nor, to the Company's
knowledge, has any such action, suit, proceeding, arbitration, mediation, claim
or investigation been threatened. There is no basis for any person, firm,
corporation or other entity, to assert a claim against the Company or HNC based
upon: (a) the Company's entering into this Agreement or any Company Ancillary
Agreement or consummating the Merger or any of the transactions contemplated by
this Agreement or any Company Ancillary Agreement; (b) ownership, rights to
ownership, or options, warrants or other
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rights to acquire ownership, of any shares of the capital stock of the Company;
or (c) any rights as a Company stockholder, including any option, warrant or
preemptive rights or rights to notice or to vote. There is no judgment, decree,
injunction, rule or order of any governmental entity or agency, court or
arbitrator outstanding against the Company.
3.7 Taxes.
(a) The Company has timely filed all federal, state, local and
foreign tax returns required to be filed by it, has timely paid all taxes
required to be paid by it in respect of all periods for which returns have been
filed, has established an adequate accrual or reserve for the payment of all
taxes payable in respect of the periods subsequent to the periods covered by the
most recent applicable tax returns, has made all necessary estimated tax
payments, and has no material liability for taxes in excess of the amount so
paid or accruals or reserves so established. The Company is not delinquent in
the payment of any tax or in the filing of any tax returns, and no deficiencies
for any tax have been threatened, claimed, proposed or assessed against the
Company or any of its officers, employees or agents. The Company has not
received any notification that any material issues have been raised by (or are
currently pending) before the Internal Revenue Service or any other taxing
authority (including but not limited to any sales or use tax authority)
regarding the Company and no tax return of the Company has ever been audited by
the Internal Revenue Service or any state or local taxing agency or authority.
No tax liens have been filed against any assets of the Company.
(b) The Company and/or its stockholders have made an effective
election (acknowledged by the Internal Revenue Service) to be treated as a
subchapter S corporation for the Company's taxable year beginning January 1,
1992 (which was the Company's first taxable year as a subchapter S corporation)
pursuant to the provisions of the Code, and have not taken (and, at all times
from the Agreement Date until the earlier of (i) the Effective Time or (ii) the
termination of this Agreement in accordance with its terms, will not take) any
actions inconsistent with the requirements for subchapter S corporations, and
such election has not been rescinded, revoked, or terminated (and will not be
rescinded, revoked, or terminated at any time prior to the earlier of (i) the
Effective Time or (ii) the termination of this Agreement in accordance with its
terms). Each of the CR Stockholders is an individual who is a resident citizen
of the United States of America, and the Company has never authorized or issued
any stock other than Company Common Stock. Neither of the CR Stockholders has
taken, caused or permitted, nor will, at any time prior to the earlier of (i)
the Effective Time or (ii) the termination of this Agreement in accordance with
its terms, take, cause or permit any action inconsistent with the requirements
for subchapter S corporations. The Company and/or its stockholders have validly
and timely filed all elections and notices with the California Franchise Tax
Board and with any other taxing authorities of any other state or jurisdiction
having jurisdiction over the Company for income tax purposes that are required
by the laws of California or any such other jurisdiction to be filed in order to
enable the Company to be taxed as a subchapter S corporation under such tax laws
for all tax periods for which the Company has prepared its tax returns on the
basis that it was a subchapter S corporation within the meaning of the Code. The
Company is not a "personal holding company" within the meaning of Section 542 of
the Code.
(c) For the purposes of this Section, the terms "TAX" and "TAXES"
include all federal, state, local and foreign income, alternative or add-on
minimum income, gains, franchise,
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excise, property, property transfer, sales, use, employment, license, payroll,
ad valorem, payroll, documentary, stamp, occupation, recording, value added or
transfer taxes, governmental charges, fees, customs duties, levies or
assessments (whether payable directly or by withholding), and, with respect to
any such taxes, any estimated tax, interest, fines and penalties or additions to
tax and interest on such fines, penalties and additions to tax.
3.8 Company Financial Statements. The Company has delivered to HNC as
Exhibit K: (i) the Company's audited consolidated balance sheets as of December
31, 1994, 1995 and 1996 and the Company's audited consolidated statements of
income, statements of cash flows and statements of stockholders' equity for each
of the years ended December 31, 1994, 1995 and 1996, and (ii) the Company's
unaudited consolidated balance sheet as of May 31, 1997 (the "BALANCE SHEET"),
and the Company's unaudited consolidated statement of operations for the five
(5) month period ended May 31, 1997 (all such financial statements of the
Company and the notes thereto are hereinafter collectively referred to as the
"COMPANY Financial Statements"). The Company Financial Statements (a) are
derived from and in accordance with the books and records of the Company, (b)
fairly present the financial condition of the Company at the dates therein
indicated and the results of operations for the periods therein specified and
(c) have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods. the Company has no
material debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, except for (i) those
shown on the Balance Sheet, and (ii) those that may have been incurred after May
31, 1997, the date of the Balance Sheet (the "BALANCE SHEET DATE") in the
ordinary course of the Company's business consistent with its past practice, and
that are not material in amount, either individually or collectively. All
reserves established by the Company and set forth in the Balance Sheet are
reasonably adequate. At the Balance Sheet Date, there were no material loss
contingencies (as such term is used in Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March
1975) which are not adequately provided for in the Balance Sheet as required by
said Statement No. 5.
3.9 Title to Properties. The Company has good and marketable title to
all of its assets and properties (including but not limited to those shown on
the Balance Sheet), free and clear of all mortgages, deeds of trust, security
interests, pledges, liens, title retention devices, collateral assignments,
claims, charges, restrictions or other encumbrances of any kind. All machinery,
vehicles, equipment and other tangible personal property owned by the Company or
used in its business are in good condition and repair, normal wear and tear
excepted, and all leases of real or personal property to which the Company is a
party are fully effective and afford the Company peaceful and undisturbed
leasehold possession of the real or personal property that is the subject of the
lease. The Company is not in violation of any zoning, building, safety or
environmental ordinance, regulation or requirement or other law or regulation
applicable to the operation of its owned or leased properties (the violation of
which would result in a Material Adverse Effect on the Company), nor has the
Company received any notice of violation of law with which it has not complied.
The Company does not own any real property.
3.10 Absence of Certain Changes. Since the Balance Sheet Date, there
has not been with respect to the Company any:
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(a) material adverse change in the condition (financial or
otherwise), properties, assets, liabilities, businesses, operations, results of
operations or prospects of the Company;
(b) amendment or change in the Articles of Incorporation or
Bylaws of the Company;
(c) incurrence, creation or assumption by the Company of (i) any
mortgage, deed of trust, security interest, pledge, lien, title retention
device, collateral assignment, claim, charge, restriction or other encumbrance
of any kind on any of the assets or properties of the Company; or (ii) any
material obligation or liability or any indebtedness for borrowed money;
(d) issuance or sale of any debt or equity securities of the
Company or any options or other rights to acquire from the Company, directly or
indirectly, any debt or equity securities of the Company;
(e) payment or discharge of any mortgage, deed of trust,
security interest, pledge, lien, title retention device, collateral assignment,
claim, charge, restriction or other encumbrance of any kind or any liability,
which lien or liability was not either shown on the Balance Sheet or incurred in
the ordinary course of the Company's business after the Balance Sheet Date;
(f) purchase, license, sale, assignment or other disposition or
transfer, or any agreement or other arrangement for the purchase, license, sale,
assignment or other disposition or transfer, of any of the assets, properties or
goodwill of the Company other than in the ordinary course of the Company's
business;
(g) damage, destruction or loss, whether or not covered by
insurance, having (or likely with the passage of time to have) a Material
Adverse Effect on the Company;
(h) declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, the capital stock of the
Company, any split, combination or recapitalization of the capital stock of the
Company or any direct or indirect redemption, purchase or other acquisition of
the capital stock of the Company or any change in any rights, preferences,
privileges or restrictions of any outstanding security of the Company;
(i) change or increase in the compensation payable or to become
payable to any of the officers or employees of the Company, or any bonus or
pension, insurance or other benefit payment or arrangement (including without
limitation stock awards, stock appreciation rights or stock option grants) made
to or with any of such officers, employees or agents except in connection with
normal employee salary or performance reviews or otherwise in the ordinary
course of business consistent with the Company's past practice;
(j) change with respect to the management, supervisory or other
key personnel of the Company;
(k) obligation or liability incurred by the Company to any of
its officers, directors or stockholders except normal compensation and expense
allowances payable to officers in the ordinary course of business consistent
with the Company's past practice;
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(l) making of any loan, advance or capital contribution to, or
any investment in, any officer, director or stockholder of the Company or any
firm or business enterprise in which any such person had a direct or indirect
material interest at the time of such loan, advance, capital contribution or
investment;
(m) entering into, amendment of, relinquishment, termination or
non-renewal by the Company of any contract, lease, transaction, commitment or
other right or obligation other than in the ordinary course of its business or
any written or oral indication or assertion by the other party thereto of
problems with the Company's services or performance under such contract, lease,
transaction, commitment or other right or obligation or its desire to so amend,
relinquish, terminate or not renew any such contract, lease, transaction,
commitment or other right or obligation;
(n) material change in the manner in which the Company extends
discounts or credits to customers or otherwise deals with its customers;
(o) entering into by the Company of any transaction, contract or
agreement or the conduct of business or operations other than in the ordinary
course of its business consistent with past practices;
(p) any transfer or grant of a right under any Company IP Rights
(as defined in Section 3.13 below), other than those transferred or granted in
the ordinary course of the Company's business consistent with the Company's past
practice; or
(q) any agreement or arrangement made by the Company to take any
action which, if taken prior to the date of this Agreement, would have made any
representation or warranty of the Company set forth in this Agreement untrue or
incorrect as of the date when made.
3.11 Contracts and Commitments. Schedule 3.11 to the Company
Disclosure Letter sets forth a list of each of the following written or oral
contracts, agreements, commitments or other instruments to which the Company is
a party or to which the Company or any of its assets or properties is bound:
(a) consulting or similar agreement under which the Company
provides any advice or services to a customer of the Company for an annual
compensation to the Company of $5,000 per year or more;
(b) continuing contract for the future purchase, sale, license,
provision or manufacture of products, material, supplies, equipment or services
requiring payment to or from the Company in an amount in excess of $35,000 per
annum which is not terminable on ninety (90) days' or less notice without cost
or other liability to the Company or in which the Company has granted or
received manufacturing rights, most favored customer pricing provisions or
exclusive marketing rights relating to any product or services, group of
products or services or territory;
(c) contract providing for the development of software for the
Company, or the license of software to the Company, which software is used or
incorporated in any products currently distributed by the Company or to provide
any services currently provided by the Company or is contemplated to be used or
incorporated in any products to be distributed or
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services to be provided by the Company (other than software generally available
to the public at a per copy license fee of less than $1,000 per copy);
(d) joint venture or partnership contract or agreement or other
agreement which has involved or is reasonably expected to involve a sharing of
profits or losses in excess of $25,000 per annum with any other party;
(e) contract or commitment for the employment of any officer,
employee or consultant of the Company or any other type of contract or
understanding with any officer, employee or consultant of the Company that is
not immediately terminable by the Company without cost or other liability;
(f) indenture, mortgage, trust deed, promissory note, loan
agreement, guarantee or other agreement or commitment for the borrowing of
money, for a line of credit or for a leasing transaction of a type required to
be capitalized in accordance with Statement of Financial Accounting Standards
No. 13 of the Financial Accounting Standards Board;
(g) lease or other agreement under which the Company is lessee
of or holds or operates any items of tangible personal property or real property
owned by any third party and under which payments to such third party exceed
$10,000 per annum;
(h) agreement or arrangement for the sale of any assets,
properties, services or rights having a value in excess of $10,000, other than
in the ordinary course of the Company's business consistent with its past
practice;
(i) agreement that restricts the Company from engaging in any
aspect of its business, from participating or competing in any line of business
or that restricts the Company from engaging in any business in any geographic
area;
(j) Company IP Rights Agreement (as defined in Section 3.13);
(k) any agreement relating to the sale, issuance, grant,
exercise, award, purchase, repurchase or redemption of any shares of capital
stock or other securities of the Company or any options, warrants or other
rights to purchase or otherwise acquire any such shares of stock, other
securities or options, warrants or other rights therefor; or
(l) contract with or commitment to any labor union;
(m) any other agreement, contract, commitment or instrument that
is material to the business of the Company or that involves a commitment by the
Company in excess of $50,000.
A copy of each agreement or document required by this Section to
be listed on Schedule 3.11 to the Company Disclosure Letter (collectively, the
"COMPANY MATERIAL AGREEMENTS") has been delivered to HNC's counsel. No consent
or approval of any third party is required to ensure that, following the
Effective Time, any Company Material Agreement will continue to be in full force
and effect without any breach or violation thereof caused by virtue of the
Merger or by any other transaction called for by this Agreement or any Company
Ancillary Agreement.
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3.12 No Default. The Company is not in breach or default under any
Company Material Agreement. The Company is not a party to any contract,
agreement or arrangement which has had, or could reasonably be expected to have,
a Material Adverse Effect on the Company. The Company does not have any material
liability for renegotiation of government contracts or subcontracts, if any.
3.13 Intellectual Property.
3.13.1 The Company owns, or has the right to use, sell or license
all Intellectual Property Rights (as defined below) necessary or required for
the conduct of its business as presently conducted and as presently proposed to
be conducted (such Intellectual Property Rights being hereinafter collectively
referred to as the "COMPANY IP RIGHTS"), and such rights to use, sell or license
are sufficient for such conduct of its business.
3.13.2 The execution, delivery and performance of this Agreement,
the Agreement of Merger and the consummation of the Merger and the other
transactions contemplated hereby and/or by the Company Ancillary Agreements
and/or the CR Stockholder Ancillary Agreements will not constitute a material
breach of or default under any instrument, contract, license or other agreement
governing any Company IP Right (the "COMPANY IP RIGHTS AGREEMENTS"), will not
cause the forfeiture or termination or give rise to a right of forfeiture or
termination, of any Company IP Right or materially impair the right of the
Company or the Surviving Corporation to use, sell or license any Company IP
Right or portion thereof (except where such breach, forfeiture or termination
would not have a Material Adverse Effect on the Company or the Surviving
Corporation). There are no royalties, honoraria, fees or other payments payable
by the Company to any person by reason of the ownership, use, license, sale or
disposition of the Company IP Rights.
3.13.3 Neither the manufacture, marketing, license, sale,
furnishing or intended use of any product or service currently licensed,
utilized, sold, provided or furnished by the Company or currently under
development by the Company violates any license or agreement between the Company
and any third party or infringes any Intellectual Property Right of any other
party; and there is no pending or, to the knowledge of the Company, threatened
claim or litigation contesting the validity, ownership or right to use, sell,
license or dispose of any Company IP Right nor, to the knowledge of the Company,
is there any basis for any such claim, nor has the Company received any notice
asserting that any Company IP Right or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party, nor, to the knowledge of the Company, is there any basis for any such
assertion. To the knowledge of the Company, no employee of the Company is in
violation of any term of any employment contract, patent disclosure agreement,
noncompetition agreement, non-solicitation agreement or any other contract or
agreement, or any restrictive covenant relating to the right of any such
employee to be employed thereby, or to use trade secrets or proprietary
information of others, and the employment of such employees does not subject the
Company to any liability.
3.13.4 The Company has taken reasonable and practicable steps
designed to protect, preserve and maintain the secrecy and confidentiality of
the Company IP Rights and all the Company's proprietary rights therein. All
officers, employees and consultants of the Company having access to proprietary
information have executed and delivered to the Company an agreement regarding
the protection of such proprietary information and the assignment of
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inventions to the Company; and copies of the form of all such agreements have
been delivered to HNC's counsel.
3.13.5 Schedule 3.13 to the Company Disclosure Letter contains a
list of all Company IP Rights and all worldwide applications, registrations,
filings and other formal actions made or taken pursuant to federal, state and
foreign laws by the Company to secure, perfect or protect its interest in the
Company IP Rights, including, without limitation, all patents, patent
applications, copyrights (whether or not registered), copyright applications,
trademarks and service marks (whether or not registered) and trademark and
service mark applications.
3.13.6 As used herein, the term "INTELLECTUAL PROPERTY RIGHTS"
means, collectively, all worldwide industrial and intellectual property rights,
including, without limitation, patents, patent applications, patent rights,
trademarks, trademark registrations and applications therefor, trade dress
rights, trade names, service marks, service mark registrations and applications
therefor, copyrights, copyright registrations and applications therefor, mask
work rights, mask work registrations and applications therefor, franchises,
licenses, inventions, trade secrets, know-how, customer lists, supplier lists,
proprietary processes and formulae, software source and object code, algorithms,
architectures, structures, screen displays, layouts, inventions, development
tools, designs, blueprints, specifications, technical drawings and all
documentation and media constituting, describing or relating to the above,
including, without limitation, manuals, programmers' notes, memoranda and
records.
3.13.7 The Company has not agreed to indemnify any person for any
infringement of any Intellectual Property Rights of any third party by any
product or service that has been sold, licensed, leased, supplied or provided by
the Company.
3.14 Compliance with Laws. The Company has complied, and is now and at
the Closing Date will be in compliance, in all material respects, with all
applicable federal, state, local or foreign laws, ordinances, regulations, and
rules, and all orders, writs, injunctions, awards, judgments, and decrees
applicable to it or to its assets, properties, and business. The Company holds
all permits, licenses and approvals from, and has made all filings with, third
parties, including government agencies and authorities, that are necessary in
connection with its present business.
3.15 Certain Transactions and Agreements. None of the officers,
directors, employees or stockholders of the Company, nor any member of their
immediate families, has any direct or indirect ownership interest in any firm or
corporation that competes with, or does business with, or has any contractual
arrangement with, the Company (except with respect to any interest in less than
one percent (1%) of the stock of any corporation whose stock is publicly
traded). None of said officers, directors, employees or stockholders or any
member of their immediate families, is directly or indirectly interested in any
contract or informal arrangement with the Company, except for normal
compensation for services as an officer, director or employee thereof that have
been disclosed to HNC and except for agreements related to the purchase of the
stock of the Company by, or the grant of Company Options to, such persons. None
of said officers, directors, employees or stockholders or family members has any
interest in any property, real or personal, tangible or intangible (including
but not limited to any the Company IP Rights or any other Intellectual Property
Rights) that is used in or that pertains to the business of the Company, except
for the normal rights of a stockholder.
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3.16 Employees, ERISA and Other Compliance.
3.16.1 The Company is in compliance in all material respects with
all applicable laws, agreements and contracts relating to employment, employment
practices, wages, hours, and terms and conditions of employment, including, but
not limited to, employee compensation matters. A list of all employees, officers
and consultants of the Company and their current compensation is set forth on
Schedule 3.16.1 to the Company Disclosure Letter. The Company does not have any
employment contracts or consulting agreements currently in effect that are not
terminable at will (other than agreements with the sole purpose of providing for
the confidentiality of proprietary information or assignment of inventions).
3.16.2 The Company (i) has never been and is not now subject to a
union organizing effort, (ii) is not subject to any collective bargaining
agreement with respect to any of its employees, (iii) is not subject to any
other contract, written or oral, with any trade or labor union, employees'
association or similar organization and (iv) does not have any current labor
disputes. The Company has good labor relations, and has no knowledge of any
facts indicating that the consummation of the transactions contemplated hereby
will have a material adverse effect on such labor relations, and has no
knowledge that any of its key employees intends to leave its employ.
3.16.3 The Company has no pension plan which constitutes, or has
since the enactment of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") constituted, a "multiemployer plan" as defined in Section
3(37) of ERISA. No Company pension plans are subject to Title IV of ERISA.
3.16.4 Schedule 3.16.4 to the Company Disclosure Letter lists
each employment, severance or other similar contract, arrangement or policy,
each "employee benefit plan" as defined in Section 3(3) of ERISA and each plan
or arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' benefits, vacation benefits, severance
benefits, disability benefits, death benefits, hospitalization benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock purchase, phantom stock, stock appreciation or other forms of
incentive compensation or post-retirement insurance, compensation or benefits
for employees, consultants or directors which is entered into, maintained or
contributed to by the Company and covers any employee or former employee of the
Company. Such contracts, plans and arrangements as are described in this Section
3.16.4 are hereinafter collectively referred to as COMPANY BENEFIT
Arrangements." Each Company Benefit Arrangement has been maintained in
compliance in all material respects with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations that are
applicable to such Company Benefit Arrangement. The Company has delivered to HNC
or its counsel a complete and correct copy or description of each Company
Benefit Arrangement.
3.16.5 There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company relating to, or change in
employee participation or coverage under, any Company Benefit Arrangement that
would increase materially the expense of maintaining such Company Benefit
Arrangement above the level of the expense incurred in respect thereof for the
Company's fiscal year ended December 31, 1996.
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3.16.6 The group health plans (as defined in Section 4980B(g) of
the Code) that benefit employees of the Company are in compliance, in all
material respects, with the continuation coverage requirements of Section 4980B
of the Code as such requirements affect the Company and its employees. As of the
Closing Date, there will be no material outstanding, uncorrected violations
under the Consolidation Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), with respect to any of the Company Benefit Arrangements, covered
employees, or qualified beneficiaries that could result in a Material Adverse
Effect on the Company, or in a material adverse effect on the business,
operations or financial condition of HNC.
3.16.7 No benefit payable or which may become payable by the
Company pursuant to any Company Benefit Arrangement or as a result of or arising
under this Agreement or the Agreement of Merger will constitute an "excess
parachute payment" (as defined in Section 280G(b)(1) of the Code) which is
subject to the imposition of an excise Tax under Section 4999 of the Code or
which would not be deductible by reason of Section 280G of the Code. the Company
is not a party to any: (a) agreement (other than as described in (b) below) with
any executive officer or other key employee thereof (i) the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company in the nature of any of the
transactions contemplated by this Agreement, the Agreement of Merger or any
Company Ancillary Agreement, (ii) providing any term of employment or
compensation guarantee, or (iii) providing severance benefits or other benefits
after the termination of employment of such employee regardless of the reason
for such termination of employment, or (b) agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be materially increased, or the
vesting of benefits of which will be materially accelerated, by the occurrence
of any of the transactions contemplated by this Agreement, the Agreement of
Merger or any Company Ancillary Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement, the Agreement of Merger or any Company Ancillary Agreement.
3.17 Corporate Documents. The Company has made available to HNC for
examination all documents and information listed in the Company Disclosure
Letter or in any schedule thereto or in any other exhibit or schedule called for
by this Agreement which have been requested by HNC's legal counsel, including,
without limitation, the following: (a) copies of the Company's Articles of
Incorporation and Bylaws as currently in effect; (b) the Company's Minute Book
containing all records of all proceedings, consents, actions, and meetings of
the Company's stockholders, board of directors and any committees thereof; (c)
the Company's stock ledger and journal reflecting all stock issuances and
transfers; (d) all permits, orders, and consents issued by any regulatory agency
with respect to the Company, or any securities of the Company, and all
applications for such permits, orders, and consents; and (e) all agreements of
the Company required to be listed in Schedule 3.11 to the Company Disclosure
Letter.
3.18 No Brokers. Neither the Company nor any affiliate of the Company
is obligated for the payment of any fees or expenses of any investment banker,
broker, finder or similar party in connection with the origin, negotiation or
execution of this Agreement or the Agreement of Merger or in connection with any
transaction contemplated hereby or thereby, and HNC will incur not liability to
any such investment banker, broker, finder or similar party as a result of any
act or
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omission of the Company, any of its employees, officers, directors,
stockholders, agents or affiliates.
3.19 Books and Records.
3.19.1 The books, records and accounts of the Company (a) are in
all material respects true, complete and correct, (b) have been maintained in
accordance with good business practices on a basis consistent with prior years,
(c) are stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of the Company, and (d) accurately
and fairly reflect the basis for the Company Financial Statements.
3.19.2 The Company has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that: (a)
transactions are executed in accordance with management's general or specific
authorization; (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements, and
(ii) to maintain accountability for assets; and (c) the amount recorded for
assets on the books and records of the Company is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
3.20 Insurance. During the prior three years, the Company has
maintained, and the Company now maintains, fire and casualty, general liability,
business interruption, product liability, errors and omissions, and sprinkler
and water damage insurance with respective insurers, and in the respective
amounts, set forth in Schedule 3.20 to the Company Disclosure Letter.
3.21 Environmental Matters.
3.21.1 Definitions. The following capitalized terms shall have
the meanings set forth below:
(a) "ENVIRONMENTAL LAWS" means all federal, state,
local and foreign laws and regulations relating to pollution or protection of
human health or the environment (including without limitation ambient air,
surface water, ground water, land surface or subsurface strata), including
without limitation laws and regulations relating to emissions, discharges,
releases or threatened releases of Hazardous Substances (as defined below), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
(b) "HAZARDOUS MATERIALS" means (i) any pollutant,
contaminant, chemical, industrial, toxic, hazardous or noxious substance or
waste which is regulated by the laws of any state, local, federal or other
governmental authority or jurisdiction, including but no limited to the State of
California and the United States Government, and includes but is not limited to
(a) any oil or petroleum compounds, flammable substances, explosives,
radioactive materials, or any other materials or pollutants which pose a hazard
to persons or cause any real property to be in violation of any Environmental
Laws, (b) to the extent so regulated, asbestos or any asbestos-containing
material of any kind or character, (c) polychlorinated biphenyls, as regulated
by the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., (d) any
materials or substances designated as "hazardous substances" pursuant to Section
311 of the Clean Water Act, 33 U.S.C.
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section. 1251 et seq., (e) "economic poison," as defined in the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 135 et seq., (f)
"chemical substance," "new chemical substance," or "hazardous chemical substance
or mixture" pursuant to Sections 3, 6 and 7 of the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq., (g) "hazardous substances" pursuant to Section
101 of the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601 et seq., and (h) "hazardous waste" pursuant to
Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901
et seq., and (ii) as of any date of determination, any additional substances or
materials which now or hereafter may be incorporated in or added to the
definition of "economic poison," "chemical substance," "new chemical substance,"
"hazardous chemical substance or mixture," "hazardous waste," "hazardous
substance" or "toxic substance" or similar substance for purposes of any
Environmental Law.
3.21.2 Environmental Obligations. Each facility or site at which
the Company or any of its predecessors-in-interest conducts any business or has
previously conducted any business (each a "FACILITY", collectively, the
"FACILITIES") is not (and with respect to each such previously owned, used or
operated Facility was not, when the Company or its predecessors left such
Facility) in violation of any Environmental Laws, including any laws or
regulations relating to industrial hygiene, disposal of Hazardous Substances or
the environmental conditions on or under such properties or facilities,
including but not limited to, soil and groundwater conditions. During the time
that the Company or any of its predecessors-in-interest have owned, leased or
occupied any Facility, the Company or its predecessors have not used, generated,
manufactured or stored on or under any part of any such Facility, or transported
to or from any part of any Facility, any Hazardous Substances in violation of
any Environmental Laws. There has been no presence, disposal, release or
threatened release of any Hazardous Substances on, from or under any part of the
Facility and no Hazardous Substances are currently present in, on, under or
about any of the Facilities or their groundwater or soil.
3.21.3 Environmental Obligations. The Company is conducting, and
at all times has conducted, its business and operations, and has occupied and
used the Facilities in accordance with and in compliance with all Environmental
Laws so as not to give rise to liability under any Environmental Laws. To the
Company's knowledge (including without limitation the knowledge of any officer
or manager of the Company responsible for environmental compliance issues (as
well as senior management), there is no reasonable basis to believe or suspect
that the Company's business has been conducted or is being conducted in
violation of any Environmental Laws, and the Company does not have any knowledge
of pending or proposed changes to any Environmental Laws which would require any
changes in any of the Company's Facilities, equipment, operations or procedures
or affect such business or the cost to the Company of conducting its business as
now conducted.
3.21.4 Compliance, Disclosure of Environmental Conditions. No
conditions, circumstances or activities have existed or currently exist with
respect to the Facilities or the business or property of the Company, or
property which could reasonably be expected to result in recovery by any
governmental authority or other person of any remedial or removal costs,
response costs, natural resource damages or other costs, expenses or damages
arising from or relating to any alleged injury or threat of injury or harm to
public health, safety or the environment. No conditions, circumstances or
activities have existed or currently exist with respect to the Company's
business or property (including without limitation the Facilities) that could
reasonably
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be expected to subject the Company or HNC to any administrative, civil or
criminal liability, injunctive relief, penalty or obligation, whether under
common law, equitable theory, or pursuant to Environmental Laws, or which in the
future could reasonably be expected to result in or may have in the past
resulted in actual or threatened damage, harm, or impairment of, or a threat to,
public health, safety or the environment.
3.21.5 No Outstanding Orders or Actions. There are no outstanding
orders, injunctions or decrees against the Company, nor are there any pending or
threatened investigations of any kind against the Company, concerning any
environmental, public health, safety or land use matters or other Environmental
Laws, including, but not limited to, the emission, discharge or release of
hazardous or toxic substances or wastes, pollutants, or contaminants into the
environment or work place, or the management of hazardous or toxic substances or
wastes, pollutants or contaminants. There are no actions, suits or
administrative, arbitral or other proceedings alleged, claimed, pending,
affecting or, to the Company's knowledge threatened against the Company at law
or in equity with respect to any environmental, public health, safety or land
use matters or other Environmental Laws, and to the Company's knowledge, there
are no existing grounds on which any such action, suit or proceedings might be
commenced.
3.21.6 No Waste Disposal. Any chemicals and chemical products
that are used for the conduct of Company's business have not been processed,
have not been and are not intended to be discarded, and are not waste or waste
materials. All Hazardous Substances and waste materials generated, used,
transported, treated, stored or disposed of in connection with the Company's
business are handled, stored, treated and disposed of in accordance with
applicable Environmental Laws. Schedule 3.21 of the Company Disclosure Letter
describes all Hazardous Materials present on properties leased or owned by
Company or which has been treated, stored or disposed of in connection with the
business of the Company on such properties. At no time has any radioactive waste
been treated on any properties leased or owned by Company.
3.22 Disclosure. Neither this Agreement, its exhibits and schedules,
nor any of the certificates or documents to be delivered by the Company to HNC
under this Agreement, or any other documents delivered by the Company to HNC
regarding the Company's business (including without limitation any information
regarding the Company to be contained in the Proxy Statement, or used to prepare
the Proxy Statement), taken together, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which such statements were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HNC AND SUB
HNC and Sub hereby represent and warrant that, except as set forth in
the letter addressed to the Company from HNC and dated as of the Agreement Date
which has been delivered by HNC to the Company concurrently herewith (the "HNC
DISCLOSURE LETTER"), each of the following representations, warranties and
statements in this Article 4 are true and correct:
4.1 Organization and Good Standing. HNC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has the corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted
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and as proposed to be conducted. Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the corporate power and authority to own, operate and lease its properties and
to carry on its business as proposed to be conducted.
4.2 Power, Authorization and Validity.
4.2.1 HNC has the right, power and authority to enter into,
execute and perform its obligations under this Agreement and the HNC Ancillary
Agreements. The execution, delivery and performance of this Agreement and the
HNC Ancillary Agreements by HNC have been duly and validly approved and
authorized by HNC's Board of Directors. The issuance of the shares of HNC Common
Stock to be issued in the Merger requires the approval of HNC's stockholders.
Sub has the right, power and authority to execute, deliver and perform its
obligations under this Agreement, and upon approval of the Merger and the
Agreement of Merger by Sub's sole stockholder, Sub will have the right, power
and authority to execute, deliver and perform the Agreement of Merger and all
other Sub Ancillary Agreements. The execution, delivery and performance of this
Agreement, the Agreement of Merger and all other Sub Ancillary Agreements by Sub
have been duly and validly approved and authorized by Sub's Board of Directors.
4.2.2 No filing, authorization, consent, approval or order,
governmental or otherwise, is necessary or required to enable HNC or Sub to
enter into, and to perform its obligations under, this Agreement, the HNC
Ancillary Agreements or the Sub Ancillary Agreements, respectively, except for
(a) the filing with the SEC of the Proxy Statement relating to the meeting of
the stockholders of HNC to be held with respect to the issuance of shares of HNC
Common Stock and the HNC Options in connection with the Merger and the SEC's
approval of such Proxy Statement (or failure to respond or object to the
distribution of such Proxy Statement within the time required by applicable law
and regulations), (b) the filing by the Company of such reports and information
with the SEC under the 1934 Act and the rules and regulations promulgated by the
SEC thereunder, as may be required in connection with this Agreement, the Merger
and the transactions contemplated hereby; (c) the filing with the SEC of a Form
D, if so elected by HNC; (d) the filing of the Agreement of Merger (or the
Certificate of Merger) with the Delaware Secretary of State and any such further
documents as may be required under the Delaware General Corporation Law to
effect the Merger; (e) the filing of the Agreement of Merger (and related
officers' certificates) with the California Secretary of State and any such
further documents as may be required under the California Corporations Code to
effect the Merger; (f) such filings and notifications as may be necessary under
the HSR Act and the expiration of applicable waiting periods under the HSR Act;
(g) such other filings as may be required by the Nasdaq National Market System
with respect to the HNC Merger Shares to be issued in the Merger and the Company
Options to be assumed by HNC in the Merger; (h) the approval of the issuance of
shares of HNC Common Stock in the Merger by the stockholders of HNC in
accordance with applicable law, HNC's Certificate of Incorporation and Bylaws,
and the approval of this Agreement, the Agreement of Merger and the Merger by
the stockholder of Sub; and (i) such other filings, if any, as may be required
to comply with federal and state securities laws.
4.2.3 This Agreement and the HNC Ancillary Agreements are, or
when executed by HNC will be, valid and binding obligations of HNC, enforceable
in accordance with their respective terms, except as to the effect, if any, of
(a) applicable bankruptcy and other similar laws affecting the rights of
creditors generally and (b) rules of law and equity governing specific
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performance, injunctive relief and other equitable remedies. This Agreement and
the Sub Ancillary Agreements are, or when executed by Sub will be, valid and
binding obligations of Sub, enforceable in accordance with their respective
terms, except as to the effect, if any, of (a) applicable bankruptcy and other
similar laws affecting the rights of creditors generally and (b) rules of law
and equity governing specific performance, injunctive relief and other equitable
remedies.
4.3 Capital Structure.
4.3.1 Stock. The authorized capital stock of HNC consists of
50,000,000 shares of HNC Common Stock, $0.001 par value per share, and 4,000,000
shares of Preferred Stock, $0.001 par value per share (the "HNC PREFERRED
STOCK"). At the close of business on June 30, 1997, 19,420,732 shares of HNC
Common Stock were issued and outstanding. No shares of HNC Preferred Stock are
issued or outstanding. All outstanding shares of HNC Common Stock are validly
issued, fully paid and nonassessable and not subject to preemptive rights. As of
the date hereof, the authorized capital stock of Sub consists of 100 shares of
Common Stock, $0.001 par value per share, of which 100 shares are validly
issued, fully paid and nonassessable, all of which are owned by HNC.
4.3.2 Options. As of the Agreement Date, options to purchase an
aggregate of approximately 3,635,131 shares of HNC Common Stock are outstanding
under all stock option and equity incentive plans of HNC.
4.3.3 No Other Options, Etc. Except for the HNC stock options
described in Section 4.3.2 above, options to be potentially granted to new
employees pursuant to outstanding employment offer letters, and rights of HNC
employees to subscribe for shares of HNC Common Stock under the HNC 1995
Employee Stock Purchase Plan, as of the Agreement Date, there are no outstanding
options, warrants, convertible or other securities of HNC entitling any party to
purchase or acquire shares of HNC Common Stock.
4.4 No Violation of Material Agreements. Neither the execution and
delivery of this Agreement nor any HNC Ancillary Agreement, nor the consummation
of the transactions contemplated by this Agreement or any HNC Ancillary
Agreement, will conflict with, or (with or without notice or lapse of time, or
both) result in: (a) a termination, breach, impairment or violation of (i) any
provision of the Certificate of Incorporation or Bylaws of HNC, as currently in
effect or (ii) any federal, state, local or foreign judgment, writ, decree,
order, statute, rule or regulation to which HNC or its assets or properties is
subject; or (b) a termination, or a material breach, impairment or violation, of
any material instrument or contract to which HNC is a party or by which HNC or
its properties are bound.
4.5 Disclosure. HNC has made available to the Company a disclosure
package consisting of (i) HNC's annual report on Form 10-K (as subsequently
amended on Form 10-K/A) for HNC's fiscal year ended December 31, 1996; (ii) all
Form 10-Q's that have been filed by HNC with the SEC prior to the Agreement Date
with respect to any fiscal quarter of the Company's fiscal year ending December
31, 1997; (iii) the Company's Proxy Statement for its annual meeting of
stockholders held on May 22, 1997; and (iv) the Company's Registration Statement
on Form S-3 dated March 4, 1997 (collectively, the "HNC DISCLOSURE PACKAGE"). As
of their respective filing dates, documents filed by HNC with the SEC and
included in the HNC Disclosure Package
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complied in all material respects with the requirements of the 1933 Act or the
1934 Act, as the case may be. The HNC Disclosure Package, this Agreement, the
exhibits and schedules hereto, and any certificates or documents to be delivered
to the Company pursuant to this Agreement, when taken together, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements contained herein and therein, in light
of the circumstances under which such statements were made, not misleading in
any material respect.
4.6 Validity of Shares. The shares of HNC Common Stock to be issued
pursuant to the Merger will, when issued: (a) be duly authorized, validly
issued, fully paid and nonassessable and free of liens and encumbrances created
by HNC, and (b) will be free and clear of any liens and encumbrances except for
applicable securities law restrictions on transfer, including those imposed by
Regulation D or Section 4(2) of the 1933 Act and Rule 144 promulgated under the
1933 Act, under applicable "blue sky" state securities laws and under any
Company Affiliate Agreement to be executed pursuant to this Agreement.
4.7 No Brokers. HNC is not obligated for the payment of any fees or
expenses of any investment banker, broker, finder or similar party in connection
with the origin, negotiation or execution of this Agreement or the Agreement of
Merger or in connection with any transaction contemplated hereby or thereby for
which the Company or either of the CR Stockholders will incur any liability.
4.8 No Material Adverse Change. Since the date of HNC's Report on
Form 10-Q for its fiscal quarter ended March 31, 1996, there has been no
material adverse change in the business, operations or financial condition of
HNC and its subsidiaries, taken as a whole.
4.9 No Violation of Existing Agreements. HNC has not received notice
from any third party that it is or would, with the passage of time, be (i) in
material violation of any provision of the Certificate of Incorporation or
Bylaws of HNC; or (ii) in default or violation of any material term, condition
or provision of (a) any material judgment, decree, order, injunction or
stipulation applicable to HNC or (b) any currently effective material agreement,
note, mortgage, indenture, contract, lease or instrument, permit, concession,
franchise or license, which default or violation would have a material adverse
effect on the business, operations or financial condition of HNC and its
subsidiaries, taken as a whole.
4.10 Litigation. There is no action, claim, suit, arbitration,
proceeding, claim or investigation pending against HNC before any court,
administrative agency or arbitrator that, if determined adversely to HNC, is
likely to have a material adverse effect on HNC's financial condition or results
of operation, nor, to HNC's knowledge, has any such action, suit, proceeding,
arbitration, claim or investigation been threatened.
4.11 Customer Relationship. As of the Agreement Date, HNC has not
received notification from any Significant Customer (as defined below) that such
Significant Customer intends to terminate any agreement or contract that such
Significant Customer has with HNC or any of HNC's subsidiaries, where such
termination would have a material adverse effect on the business, operations or
financial condition of HNC and its subsidiaries, taken as a whole. As used
herein, a "SIGNIFICANT CUSTOMER" means any of the customers of HNC or any of its
subsidiaries during HNC's fiscal year ended December 31, 1996 ("FISCAL 1996")
who is among the top five
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customers of HNC and its subsidiaries in Fiscal 1996 in terms of the revenue
derived per customer that is reflected on HNC's income statement for Fiscal
1996.
ARTICLE 5
PRE-CLOSING COVENANTS OF THE COMPANY
AND THE CR STOCKHOLDERS
During the period from the Agreement Date until the earlier to occur of
(i) the Effective Time or (ii) the termination of this Agreement in accordance
with Section 10, the Company and the CR Stockholders covenant and agree with HNC
as follows:
5.1 Advice of Changes. The Company will promptly advise HNC in
writing (a) of any event occurring subsequent to the Agreement Date that would
render any representation or warranty of the Company contained in Section 3 of
this Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect and (b) of any material adverse
change in the Company's business, results of operations or financial condition.
The Company will deliver to HNC within fifteen (15) days after the end of each
monthly accounting period ending after the Agreement Date and before the Closing
Date, an unaudited balance sheet and statement of operations, which financial
statements will be prepared in the ordinary course of its business, consistent
with its past practice in accordance with the Company's books and records and
generally accepted accounting principles and will fairly present the financial
position of the Company as of their respective dates and the results of the
Company's operations for the periods then ended.
5.2 Maintenance of Business. The Company will carry on and preserve
its business and its relationships with customers, suppliers, employees and
others in substantially the same manner as it has prior to the date hereof. If
the Company becomes aware of a material deterioration in the relationship with
any key customer, key supplier or key employee, it will promptly bring such
information to the attention of HNC in writing and, if requested by HNC, will
exert reasonable commercial efforts to promptly restore the relationship.
5.3 Conduct of Business. The Company will continue to conduct its
business and maintain its business relationships in the ordinary and usual
course and will not, without the prior written consent and approval (which may
be given verbally to be promptly followed by written confirmation) of the
President or Chief Financial Officer of HNC:
(a) borrow or lend any money other than advances to employees for
travel and expenses that are incurred in the ordinary course of the Company's
business consistent with the Company's past practice;
(b) enter into any transaction or agreement not in the ordinary
course of the Company's business consistent with the Company's past practice;
(c) encumber or permit to be encumbered any of its assets;
(d) sell, transfer or dispose of any of its assets except in the
ordinary course of the Company's business consistent with the Company's past
practice;
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(e) enter into any material lease or contract for the purchase or
sale of any property, whether real or personal, tangible or intangible except
for the lease of offices at the Millennium Center in Irving, Texas for an
approximately five (5) year term, a draft of which lease has been previously
delivered to HNC;
(f) pay any bonus, increased salary or special remuneration to
any officer, employee or consultant (except for normal salary increases
consistent with the Company's past practices not to exceed 5% of such officer's,
employee's or consultant's base annual compensation, and except pursuant to
existing arrangements previously disclosed to and approved in writing by HNC) or
enter into any new employment or consulting agreement with any such person;
(g) change any of its accounting methods;
(h) declare, set aside or pay any cash or stock dividend or other
distribution in respect of its capital stock, redeem, repurchase or otherwise
acquire any of its capital stock or other securities pay or distribute any cash
or property to any Company stockholder or securityholder or make any other cash
payment to any shareholder or securityholders of the Company that is unusual,
extraordinary, or not made in the ordinary course of the Company's business
consistent with its past practice;
(i) amend or terminate any contract, agreement or license to
which it is a party except those amended or terminated in the ordinary course of
the Company's business, consistent with its past practice, and which are not
material in amount or effect;
(j) guarantee or act as a surety for any obligation of any third
party;
(k) waive or release any material right or claim except in the
ordinary course of its any mortgage, deeds of trust, security interest, pledge,
lien, title retention device, collateral assignment, claim, charge, restriction
or other encumbrance of any kind, consistent with the Company's past practice;
(l) issue, sell, create or authorize any shares of its capital
stock of any class or series or any other of its securities, or issue, grant or
create any warrants, obligations, subscriptions, options, convertible
securities, or other commitments to issue shares of its capital stock or
securities ultimately exchangeable for, or convertible into, shares of its
capital stock; provided, however, that notwithstanding the foregoing, the
Company may issue shares of Company Common Stock issuable upon the exercise of
the Company Options that are outstanding on the Agreement Date in accordance
with their terms as now in effect;
(m) subdivide or split or combine or reverse split the
outstanding shares of its capital stock of any class or enter into any
recapitalization affecting the number of outstanding shares of its capital stock
of any class or affecting any other of its securities;
(n) merge, consolidate or reorganize with, or acquire, any
corporation, partnership, limited liability company or any other entity or enter
into any negotiations, discussions or agreement for such purpose;
(o) amend its Articles of Incorporation or Bylaws;
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(p) license any of its technology or intellectual property except
in the ordinary course of its business consistent with past practice;
(q) change any insurance coverage or issue any certificates of
insurance;
(r) agree to any audit assessment by any tax authority or file
any federal or state income or franchise tax return unless copies of such
returns have first been delivered to HNC for its review prior to filing;
(s) modify or change the exercise or conversion rights or
exercise or purchase prices of any capital stock of the Company, any Company
stock options, warrants or other Company securities, or accelerate or otherwise
modify (i) the right to exercise any option, warrant or other right to purchase
any capital stock or other securities of the Company or (ii) the vesting or
release of any shares of capital stock or other securities of the Company from
any repurchase options or rights of refusal held by the Company or any other
party or any other restrictions unless such accelerations/modifications are
expressly required and mandated by the terms of a formal written agreement or
plan that was entered into prior to the execution of the Plan by HNC and the
Company; or
(t) purchase or otherwise acquire, or sell or otherwise dispose
of: (i) any shares of HNC Common Stock or other HNC securities or (ii) any
securities whose value is derived from or determined with reference to, in whole
or in part, the value of HNC stock or other HNC securities.
(u) agree to do any of the things described in the preceding
clauses 5.3(a) through 5.3(t).
5.4 Company Stockholder Approval; Stockholder Agreements. The Company
has obtained the unanimous written consent of its stockholders, in compliance
with applicable law and the Company's Articles of Incorporation and Bylaws, both
as amended, approving this Agreement, the Agreement of Merger, the Merger, and
related matters (such Company stockholders' written consent is hereinafter
referred to as the "COMPANY STOCKHOLDER VOTE"). The Company's Board of Directors
and the CR Stockholders will not take any action whatsoever to revoke, modify,
invalidate, or withdraw the Company Stockholder Vote. Concurrently with the
execution of this Agreement, each of the CR Stockholders has executed and
delivered to HNC a Company Stockholder Agreement in the form attached hereto as
Exhibit I agreeing, among other things, to vote in favor of the Merger and
against any competing proposals.
5.5 Letter of the Company's Accountants. The Company will use its
best efforts to cause to be delivered to HNC a letter of Deloitte & Touche LLP,
the Company's independent accountants, addressed to HNC and dated as of a date
within two (2) business days before the date on which (i) HNC's Proxy Statement
is filed with the SEC and within two (2) business days before the date on which
HNC (or its agent) mails the Proxy Statement to HNC's stockholders, in form and
substance reasonably satisfactory to HNC and customary in scope and substance
for letters delivered by independent accountants in connection with registration
statements.
5.6 Assistance With Proxy Statement. The Company will promptly
provide all information relating to its business or operations necessary for
inclusion in the Proxy Statement to
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satisfy all requirement of applicable federal and state securities laws. The
Company will be solely responsible for any statement, information or omission in
the Proxy Statement relating to the Company or its affiliates that is based upon
(and accurately reflects) written information provided by the Company.
5.7 Regulatory Approvals. The Company will promptly execute and file,
or join in the execution and filing, of any application, notification (including
without limitation any notification or provision of information, if any, that
may be required under the HSR Act) or any other document that may be necessary
in order to obtain the authorization, approval or consent of any governmental
body, federal, state, local or foreign, which may be reasonably required, or
which HNC may reasonably request, in connection with the consummation of the
Merger or any other transactions contemplated by this Agreement, any Company
Ancillary Agreement or any CR Stockholder Ancillary Agreement. The Company will
use its best efforts to obtain, and to cooperate with HNC to promptly obtain,
all such authorizations, approvals and consents.
5.8 Necessary Consents. The Company will use its best efforts to
obtain such written consents and take such other actions as may be necessary or
appropriate in addition to those set forth in the foregoing Sections of this
Article 5 to allow the consummation of the transactions contemplated hereby and
to allow HNC to carry on the Company's business after the Effective Time.
5.9 Litigation. The Company will notify HNC in writing promptly after
learning of any material claim, action, suit, arbitration, mediation, proceeding
or investigation by or before any court, arbitrator or arbitration panel, board
or governmental agency, initiated by or against it, or known by it to be
threatened against it.
5.10 No Other Negotiations. From the Agreement Date until the earlier
of termination of this Agreement in accordance with Section 10 or consummation
of the Merger, neither the Company nor any CR Stockholder will, nor will the
Company or any CR Stockholder authorize, encourage or permit any officer,
director, employee, stockholder or affiliate of the Company or any other person,
on its or their behalf to, directly or indirectly, solicit or encourage any
offer from any party or consider any inquiries or proposals received from any
party, participate in any negotiations regarding, or furnish to any person any
information with respect to, or otherwise cooperate with, facilitate or
encourage any effort or attempt by any person (other than HNC), concerning any
agreement or transaction regarding the possible disposition of all or any
substantial portion of the Company's business, assets or capital stock by
merger, consolidation, sale of assets, sale of stock, tender offer or any other
form of business combination ("ALTERNATIVE TRANSACTION"). The Company will
promptly notify HNC orally and in writing of any such inquiries or proposals. In
addition, neither the Company nor any CR Stockholder will execute, enter into or
become bound by (a) any letter of intent or agreement or commitment between the
Company and any third party that is related to an Alternative Transaction or (b)
any agreement or commitment between the Company and a third party providing for
an Alternative Transaction.
5.11 Access to Information. Until the Closing, the Company will allow
HNC and its agents reasonable access to the files, books, records and offices of
the Company, including, without limitation, any and all information relating to
the Company's taxes, commitments, contracts, leases, licenses, and real,
personal and intangible property and financial condition, subject to the terms
of the Confidentiality Agreement between the Company and HNC dated as of
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June 15, 1997 (the "CONFIDENTIALITY AGREEMENT"). The Company will cause its
accountants to cooperate with HNC and its agents in making available all
financial information reasonably requested by HNC, including without limitation
the right to examine all working papers pertaining to all financial statements
prepared or audited by such accountants.
5.12 Satisfaction of Conditions Precedent. The Company and the CR
Stockholders will use their best efforts to satisfy or cause to be satisfied all
the conditions precedent which are set forth in Articles 8 and 9, and the
Company and the CR Stockholders will use their best efforts to cause the
transactions contemplated by this Agreement to be consummated; and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the Merger and all other transactions contemplated by
this Agreement and the Company Ancillary Agreements. In particular, the Company
and the CR Stockholders will use their best efforts to cause the Merger to
become effective in accordance with this Agreement by December 31, 1997.
5.13 Company Affiliate Agreements. Concurrently with the execution of
this Agreement, the Company will deliver to HNC a letter identifying all the
Company's directors, executive officers, ten percent (10%) or greater
shareholders (and affiliates of such persons who are the Company stockholders)
and all persons or entities who are "affiliates" of the Company within the
meaning of Rule 144 or Rule 405 under the 1933 Act at the time this Agreement is
executed ("COMPANY AFFILIATES"). The Company will use its best efforts to cause
each Company Affiliate to execute and deliver to HNC, as promptly as practicable
after the Company's signing of this Agreement, an Affiliate Agreement in
substantially the form of Exhibit J (the "COMPANY AFFILIATE AGREEMENT") and each
CR Stockholder shall execute and deliver a Company Affiliate Agreement to HNC
concurrently with the execution of this Agreement. In addition, the Company will
use its best efforts to cause each person or entity who may become a Company
Affiliate after the Agreement Date and before the Effective Time to execute and
deliver a Company Affiliate Agreement to HNC promptly after such person or
entity becomes a Company Affiliate.
5.14 Blue Sky Laws. The Company will use its best efforts to assist
HNC to the extent necessary to comply with the securities and Blue Sky laws of
all jurisdictions which are applicable in connection with the Merger.
5.15 Pooling. The Company will cooperate with HNC to cause the
business combination to be effected by the Merger to be accounted for as a
pooling of interests for accounting and financial reporting purposes. Following
the Agreement Date, the Company will not take any action if, prior to taking
such action, the Company has been informed by HNC or its accountants that, in
the opinion of HNC's accountants, taking such action may preclude HNC from
accounting for the Merger as a "pooling of interests" for accounting and
financial reporting purposes and HNC or its accountants promptly give the
Company a writing that states in reasonable detail the action(s) that HNC or its
accountants request the Company not to take.
5.16 Certain Investments; Agreements. The Company does not own, and
will not make any purchase or other acquisition of, or investment in, any shares
of HNC Common Stock or other securities of HNC. The Company will not enter into
any agreement with any holders of HNC shares calling for either the Company or
HNC to retire or reacquire all or part of the HNC shares to be issued pursuant
to the Merger. The Company will not enter into any financial arrangements
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for the benefit of any Company stockholder which, in effect, would negate the
exchange of equity securities contemplated under this Agreement and the Merger,
including without limitation any loan or other financial arrangement at
abnormally low interest rates, or any guarantee of loans secured by HNC shares
to be issued pursuant to the Merger.
5.17 Company Dissenting Shares. As promptly as practicable after the
date of the Company Stockholder Vote and prior to the Closing Date, the Company
will furnish HNC with the name and address of each holder (or potential holder)
of any Company Dissenting Shares (if any) and the number of Company Dissenting
Shares (or potential Company Dissenting Shares) owned by each such holder.
5.18 Termination of Registration and Voting Rights. All registration
rights agreements and voting agreements applicable to or affecting any
outstanding shares or other securities of the Company will be duly terminated
and canceled by no later immediately prior to the Effective Time.
5.19 Invention Assignment and Confidentiality Agreements. The Company
will use its best efforts to obtain from each employee and consultant of the
Company who has had access to any software, technology or copyrightable,
patentable or other proprietary works owned or developed by the Company, or to
any other confidential or proprietary information of the Company or its clients,
an invention assignment and confidentiality agreement in a form reasonably
acceptable to HNC, duly executed by such employee or consultant and delivered to
the Company.
5.20 Non-Competition and Employment Agreements. Each of the CR
Stockholders shall execute and deliver to HNC at the Closing a Non-Competition
Agreement in the form attached hereto as Exhibit L (the "NON-COMPETITION
AGREEMENT") and an Employment Agreement in the form attached hereto as Exhibit M
(the "EMPLOYMENT AGREEMENT"), respectively.
5.21 Closing of Merger. Neither the Company nor the CR Stockholders
will refuse to effect the Merger if, on or before the Closing Date, all the
conditions precedent to the Company's obligations to effect the Merger under
Article 8 hereof have been satisfied or waived by the Company.
ARTICLE 6
HNC COVENANTS
During the period from the Agreement Date until the earlier to occur of
(i) the Effective Time or (ii) the termination of this Agreement in accordance
with Section 10, HNC covenants and agrees as follows:
6.1 Advice of Changes. HNC will promptly advise the Company in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of HNC contained in this Agreement,
if made on or as of the date of such event or the Closing Date, to be untrue or
inaccurate in any material respect and (b) of any material adverse change in
HNC's business, results of operations or financial condition.
6.2 Regulatory Approvals. HNC will execute and file, or join in the
execution and filing, of any application, notification (including without
limitation any notification or provision of
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information, if any, that may be required under the HSR Act) or other document
that may be necessary in order to obtain the authorization, approval or consent
of any governmental body, federal, state, local or foreign, which may be
reasonably required, or which the Company may reasonably request, in connection
with the consummation of the Merger and the other transactions contemplated by
this Agreement and the HNC Ancillary Agreements in accordance with the terms of
this Agreement. HNC will use its best efforts to obtain all such authorizations,
approvals and consents.
6.3 Satisfaction of Conditions Precedent. HNC will use its best
efforts to satisfy or cause to be satisfied all of the conditions precedent
which are set forth in Article 8, and HNC will use its best efforts to cause the
transactions contemplated by this Agreement to be consummated in accordance with
the terms of this Agreement, and, without limiting the generality of the
foregoing, to obtain all consents and authorizations of third parties and to
make all filings with, and give all notices to, third parties that may be
necessary or reasonably required on its part in order to effect the transactions
contemplated hereby. In particular, HNC will use its best efforts to cause the
Merger to become effective in accordance with this Agreement by December 31,
1997.
6.4 HNC Stockholder Approval. HNC will call and hold a special
meeting of its stockholders as promptly as is reasonably practicable to submit
for the vote, consideration and approval of HNC's stockholders a proposal to
approve the issuance of shares of HNC Common Stock and the issuance of HNC
Options in the Merger (such vote of HNC stockholders is hereinafter referred to
as the "HNC STOCKHOLDER VOTE"). Such approval will be recommended by HNC's Board
of Directors and management. Such HNC Stockholders' meeting will be called, held
and conducted, and any proxies or written consents will be solicited, in
compliance with HNC's Certificate of Incorporation and Bylaws and applicable
law. In connection with such special stockholders' meeting, HNC will mail to its
stockholders (after obtaining necessary approval or clearance from the SEC), for
the purpose of soliciting the HNC Stockholder Vote, the Proxy Statement
complying with the proxy regulations promulgated under the 1934 Act. HNC will be
solely responsible for any statement, information or omission in the Proxy
Statement relating to HNC or its affiliates.
6.5 Blue Sky Laws. HNC will take such steps as may be necessary to
comply with the securities and Blue Sky laws of all jurisdictions which are
applicable in connection with the Merger.
6.6 Listing of Additional Shares. HNC will file with the Nasdaq
National Market a Notification Form for Listing of Additional Shares with
respect to the shares of HNC Common Stock issuable upon conversion of the
Company Common Stock in the Merger and upon exercise of the HNC Options to be
issued in the Merger upon the conversion of outstanding Company Options.
ARTICLE 7
CLOSING MATTERS
7.1 The Closing. Subject to termination of this Agreement as provided
in Section 10 below, the closing of the transactions to consummate the Merger
(the "CLOSING") will take place at the offices of Fenwick & West LLP, Two Palo
Alto Square, Palo Alto, California 94306 at 10:00 a.m., Pacific Standard Time on
the first business day after all of the conditions to Closing set
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forth in Sections 8 and 9 hereof have been satisfied and/or waived in accordance
with this Agreement, or on such later day as HNC and the Company may mutually
agree on (the "CLOSING DATE"). Concurrently with the Closing, the Agreement of
Merger (or a Certificate of Merger) will be filed with the Delaware Secretary of
State, and the Agreement of Merger (and related officers' certificates) will be
filed with the California Secretary of State.
7.2 Exchange of Certificates.
7.2.1 At the Closing, each holder of shares of Company Stock will
surrender the certificate(s) for such shares (each a "COMPANY CERTIFICATE"),
duly endorsed to HNC for cancellation as of the Effective Time. Promptly after
the Effective Time and receipt of such Company Certificates, HNC or its transfer
agent will issue to each tendering holder of a Company Certificate a certificate
for the number of shares of HNC Common Stock to which such holder is entitled
pursuant to Section 2.1.2 (less the Escrow Shares to be placed in escrow
pursuant to Section 2.4 and the Escrow Agreement) and HNC or its transfer agent
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. At the
Closing, HNC will deliver the certificates representing the Escrow Shares to the
Escrow Agent pursuant to the Escrow Agreement.
7.2.2 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 Company
Certificate until the holder of such unsurrendered Company Certificate
surrenders such Company Certificate to HNC as provided above. Subject to the
effect, if any, of applicable escheat and other laws, following surrender of any
Company Certificate, there will be delivered to the person entitled thereto,
without interest, the amount of any dividends and distributions theretofore 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.
7.2.3 After the Effective Time there will be no further
registration of transfers on the stock transfer books of the Company or its
transfer agent of the Company Stock that was outstanding immediately prior to
the Effective Time. If, after the Effective Time, Company Certificates are
presented for any reason, they will be canceled and exchanged as provided in
this Section 7.2.
7.2.4 Until Company Certificates representing shares of Company
Common Stock outstanding immediately prior to the Effective Time are surrendered
pursuant to Section 7.2.1 above, such Company Certificates will be deemed, for
all purposes, to evidence ownership of the number of shares of HNC Common Stock
into which such shares of Company Common Stock will have been converted pursuant
to Section 2.1.2 and the Agreement of Merger.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The Company's obligations hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by the Company, but only in a writing signed
by the Company):
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8.1 Accuracy of Representations and Warranties. The representations
and warranties of HNC set forth in Section 4 (as qualified by the HNC Disclosure
Letter) will be true and accurate in every material respect on and as of the
Closing with the same force and effect as if they had been made at the Closing,
and the Company will have received a certificate to such effect executed by
HNC's President or Chief Financial Officer.
8.2 Covenants. HNC will have performed and complied in all material
respects with all of its covenants contained in Section 6 on or before the
Closing, and the Company will have received a certificate to such effect signed
by HNC's President or Chief Financial Officer.
8.3 Requisite Approvals. The principal terms of this Agreement and
the Agreement of Merger will have been duly and validly approved and adopted by
HNC's Board of Directors in accordance with applicable law and HNC's Certificate
of Incorporation and Bylaws and the issuance of shares of HNC Common Stock in
the Merger and the grant of HNC Options upon conversion of Company Options in
the Merger will have been duly and validly approved and adopted by HNC's
stockholders in accordance with applicable law and HNC's Certificate of
Incorporation and Bylaws. The principal terms of the Agreement of Merger will
have been approved and adopted by Sub's Board of Directors and sole stockholder
in accordance with applicable law and Sub's Certificate of Incorporation and
Bylaws.
8.4 Compliance with Law; No Legal Restraints; No Litigation. No
litigation or proceeding will be threatened or pending for the purpose or with
the probable effect of enjoining or preventing the consummation of the Merger or
any of the other material transactions contemplated by this Agreement, or which
could be reasonably expected to have a material adverse effect on the present or
future operations or financial condition of HNC. There will not be any
outstanding or threatened, or enacted or adopted, any order, decree, temporary,
preliminary or permanent injunction, legislative enactment, statute, regulation,
action, proceeding or any judgment or ruling by any court, arbitrator,
governmental agency, authority or entity, or any other fact or circumstance,
that, directly or indirectly, challenges, threatens, prohibits, enjoins,
restrains, suspends, delays, conditions or renders illegal or imposes
limitations on (or is likely to result in a challenge, threat to, or a
prohibition, injunction, restraint, suspension, delay or illegality of, or to
impose limitations on) the Merger or any other material transaction contemplated
by this Agreement.
8.5 Government Consents; HSR Act Compliance. There will have been
obtained at or prior to the Closing Date such permits or authorizations, and
there will have been taken all such other actions by any regulatory authority
having jurisdiction over the parties and the actions herein proposed to be
taken, as may be required to lawfully consummate the Merger, including but not
limited to requirements under applicable federal and state securities laws. All
applicable waiting periods under the HSR Act shall have expired or early
termination of such waiting periods shall have been granted by both the Federal
Trade Commission and the United States Department of Justice without any
condition or requirement requiring or calling for the disposition or divestiture
of any product or other asset of the Company by HNC or the Company.
8.6 Opinion of HNC's Counsel. the Company will have received from
counsel to HNC, an opinion substantially in the form of Exhibit N.
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8.7 Nasdaq National Market Listing. The shares of HNC Common Stock
issuable to the Company Stockholders in the Merger pursuant to Section 2.1.2
hereof, and the shares of HNC Common Stock issuable upon the exercise of HNC
Options issued upon the assumption of Company Options in the Merger pursuant to
Section 2.2 hereof, shall be authorized for listing on the Nasdaq National
Market, subject to official notice of issuance.
8.8 Tax Status. The Company shall not have been advised in writing by
Deloitte & Touche, LLP, the Company's accountants, that, by reason of any act or
omission on the part of HNC, the Merger will not be eligible to be treated as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Code by
virtue of the provisions of Section 368(a)(2)(E) of the Code.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF HNC
The obligations of HNC hereunder are subject to the fulfillment or
satisfaction on, and as of the Closing, of each of the following conditions (any
one or more of which may be waived by HNC, but only in a writing signed by HNC):
9.1 Accuracy of Representations and Warranties. The representations
and warranties of the Company set forth in Section 3 (as qualified by the
Company Disclosure Letter) will be true and accurate in every material respect
on and as of the Closing with the same force and effect as if they had been made
at the Closing, and HNC will have received a certificate to such effect executed
by the Company's President and Chief Financial Officer.
9.2 Covenants. The Company will have performed and complied in all
material respects with all of its covenants contained in Section 5 on or before
the Closing, and HNC will have received a certificate to such effect signed by
the Company's President and Chief Financial Officer.
9.3 No Material Adverse Change. There will not have been any material
adverse change in the financial condition, properties, assets, liabilities,
business, results of operations or operations of the Company and its
subsidiaries, taken as a whole, and HNC will have received a certificate to such
effect signed by the Company's President and Chief Financial Officer.
9.4 Compliance with Law; No Legal Restraints; No Litigation. There
will not be any outstanding or threatened, or enacted or adopted, any order,
decree, temporary, preliminary or permanent injunction, legislative enactment,
statute, regulation, action, proceeding or any judgment or ruling by any court,
arbitrator, governmental agency, authority or entity, or any other fact or
circumstance, that, directly or indirectly, challenges, threatens, prohibits,
enjoins, restrains, suspends, delays, conditions, or renders illegal or imposes
limitations on (or is likely to result in a challenge, threat to, or a
prohibition, injunction, restraint, suspension, delay or illegality of, or to
impose limitations on): (i) the Merger or any other material transaction
contemplated by this Agreement or any Company Ancillary Agreement; (ii) HNC's
payment for, or acquisition or purchase of, some or all of the shares of Company
Common Stock or any material part of the assets of the Company; (iii) HNC's
direct or indirect ownership or operation of all or any material portion of the
business or assets of the Company; or (iv) HNC's ability to exercise full rights
of ownership with respect to the Surviving Corporation or its shares, including
but not limited to any restrictions on HNC's ability to vote the shares of the
Surviving Corporation. No litigation or
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proceeding will be threatened or pending for the purpose or with the probable
effect of enjoining or preventing the consummation of any of the transactions
contemplated by this Agreement, or which could be reasonably expected to have a
material adverse effect on the present or future operations or financial
condition of the Company or which asserts that the Company's or HNC's
negotiations regarding this Agreement, HNC's or the Company's entering into this
Agreement or the Company's or HNC's consummation of the Merger or any other
material transaction contemplated by this Agreement or any Company Ancillary
Agreement or any CR Stockholder Ancillary Agreement, breaches or violates any
agreement or commitment of the Company or constitutes tortious conduct on the
part of HNC or the Company.
9.5 Government Consents; HSR Act Compliance. There will have been
obtained at or prior to the Closing Date such permits or authorizations, and
there will have been taken all such other actions, as may be required to
consummate the Merger by any governmental or regulatory authority having
jurisdiction over the parties and the actions herein proposed to be taken,
including but not limited to requirements under applicable federal and state
securities laws. All applicable waiting periods under the HSR Act shall have
expired or early termination of such waiting periods shall have been granted by
both the Federal Trade Commission and the United States Department of Justice
without any condition or requirement requiring or calling for the disposition or
divestiture of any product or other asset of the Company by HNC or the Company.
9.6 Opinion of Company's Counsel. HNC will have received from
Phillips & Haddan, counsel to the Company, an opinion substantially in the form
of Exhibit O.
9.7 Consents. HNC will have received duly executed copies of all
material third-party consents, approvals, assignments, waivers, authorizations
or other certificates contemplated by this Agreement or the Company Disclosure
Letter or reasonably deemed necessary by HNC's legal counsel to provide for the
continuation in full force and effect of any and all material contracts,
agreements and leases of the Company after the Merger and the preservation of
the Company's IP Rights and other assets and properties after the Merger and for
HNC to consummate the Merger and the other transactions contemplated by this
Agreement, the Company Ancillary Agreements and the CR Stockholder Ancillary
Agreements and in form and substance reasonably satisfactory to HNC.
9.8 Requisite Approvals. The principal terms of this Agreement and
the Agreement of Merger, the Merger and the Company Ancillary Agreements will
have been duly and validly approved and adopted, as required by applicable law
and the Company's Articles of Incorporation and Bylaws, by (a) the Company's
Board of Directors and (b) the valid and affirmative vote of outstanding shares
of Company Common Stock (and any other Company securities (if any) entitled to
vote thereon) representing not less than one hundred percent (100%) of the
voting power of all issued and outstanding Company Common Stock and all other
Company voting securities (if any).
9.9 HNC Stockholder Approval. The issuance of the shares of HNC
Common Stock to be issued in the Merger and the grant of HNC Options upon
conversion of Company Options in the Merger will have been duly and validly
approved and adopted by HNC's stockholders in accordance with applicable law and
HNC's Certificate of Incorporation and Bylaws.
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9.10 No Dissenting Shares. No shares of the capital stock of the
Company will be eligible to exercise or perfect any statutory appraisal rights
of dissenting shareholders under applicable law.
9.11 Affiliate Agreements. Each CR Stockholder and each Company
Affiliate who is to receive HNC Common Stock in the Merger will have executed
and delivered to HNC a Company Affiliate Agreement in the form of Exhibit J.
9.12 Non-Competition Agreement. HNC will have received from each of
the CR Stockholders a fully executed copy of a Non-Competition Agreement in the
form of Exhibit L.
9.13 Employment Agreement. HNC will have received from each of the CR
Stockholders a fully executed copy of an Employment Agreement in the form of
Exhibit M.
9.14 Escrow Agreement. HNC will have received a fully executed copy of
the Escrow Agreement in the form of Exhibit B executed by the Escrow Agent, the
Representative and each of the Company Stockholders.
9.15 Fairness Opinion. HNC's Board of Directors shall have received a
written opinion, addressed to HNC's Board of Directors, from Robertson, Stephens
& Company, that the Merger is fair to HNC and its stockholders from a financial
point of view.
9.16 Resignation of Directors. The directors of the Company in office
immediately prior to the Effective Time of the Merger (other than any such
director who is designated in Section 2.5(g) to be a director of the Company
immediately after the Effective Time) will have resigned as directors of the
Surviving Corporation effective as of the Effective Time.
9.17 Pooling Opinions. HNC will have been advised in writing, as of
the Effective Time, by Price Waterhouse LLP that, in accordance with generally
accepted accounting principles, the Merger qualifies to be treated as a "pooling
of interests" for accounting purposes, and the Company will have been advised in
writing, as of the Effective Time, by Deloitte & Touche LLP that, in accordance
with generally accepted accounting principles, the Company is eligible to
participate in a transaction that qualifies as a "pooling of interests" for
accounting purposes.
9.18 No Derivative Securities. All Company Derivative Securities, if
any will have been exercised in full and thereby converted into shares of
Company Common Stock in accordance with their current terms and conditions, so
that no the Company Derivative Securities will be outstanding immediately prior
to the Effective Time.
9.19 Tax Allocation Agreement. HNC, the Company, and the CR
Stockholders shall have entered into a Tax Allocation Agreement in form and
substance reasonably satisfactory allocating items of tax significance (such as
income, deductions and credits, etc.) between the short tax year of the Company
ended at the Effective Time and the remaining tax year of the Company commencing
immediately after the Effective Time.
9.20 Bylaw Amendment. The authorized number of directors of the
Company shall be a total of exactly five (5) directors, and the Company's Bylaws
shall have been duly amended to authorize a total of exactly five (5) directors.
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9.21 Investment Letters Executed. Each of the CR Stockholders shall
have executed and delivered to HNC an Investment Representation Letter and each
holder of an outstanding Company Option shall have executed and delivered to HNC
an Optionee Investment Representation Letter.
9.22 No Impediment from Buy-Sell Agreement. Nothing in that certain
Stock Buy-Sell Agreement dated as of April 30, 1992 among the Company and the CR
Stockholders shall adversely affect HNC's ownerhip interest in the shares of the
Company immediately following the Effective Time.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 Prior to Closing.
10.1.1 This Agreement may be terminated at any time prior to the
Effective Time by the mutual written consent of HNC and the Company.
10.1.2 Unless otherwise agreed by the parties hereto, this
Agreement will be automatically terminated at any time prior to the Effective
Time without the need for action by any party hereto if all conditions to the
parties' obligation to effect the Closing set forth in Sections 8 and 9 have not
been satisfied or waived by the appropriate party on or before December 31, 1997
(the "TERMINATION DATE").
10.1.3 Either party may terminate this Agreement at any time
prior to the Closing if the other party has committed a material breach of (a)
any of its representations and warranties under Section 3 or 4 of this
Agreement, as applicable; or (b) any of its covenants under Sections 5 or 6 of
this Agreement, as applicable, and has not cured such material breach prior to
the earlier of (i) the Closing or (ii) thirty (30) days after the party seeking
to terminate this Agreement has given the other party written notice of its
intention to terminate this Agreement pursuant to this Section 10.1.3.
10.2 At the Closing. At the Closing, this Agreement may be terminated
and abandoned:
10.2.1 By HNC, if any of the conditions precedent to HNC's
obligations set forth in Article 9 above have not been fulfilled or waived on or
prior to the Termination Date;
10.2.2 By the Company, if any of the conditions precedent to the
Company's obligations set forth in Article 8 above have not been fulfilled or
waived on or prior to the Termination Date;
10.2.3 By the Company, if the HNC Closing Average Price Per Share
is less than $26.00 per share, as presently constituted; provided that if the
Company does not affirmatively exercise this right of termination at the
Closing, then this Agreement will remain in effect, and the parties will be
obligated to complete the Closing and consummate the Merger.
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Any termination of this Agreement under this Section 10.2 will be
effective by the delivery of notice of the terminating party to the other party
hereto.
10.3 No Liability. Any termination of this Agreement in accordance
with this Section 10 will be without further obligation or liability upon any
party in favor of the other party hereto other than the obligations provided in
the Confidentiality Agreement; provided, however, that nothing herein will limit
the obligation of the Company, the CR Stockholders and HNC to use their best
efforts to cause the Merger to be consummated, as set forth in Sections 5.12 and
6.3 hereof, respectively.
ARTICLE 11
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION
AND REMEDIES, CONTINUING COVENANTS
11.1 Survival of Representations. All representations, warranties and
covenants of the Company and the Company Stockholders contained in this
Agreement will remain operative and in full force and effect, regardless of any
investigation made by or on behalf of HNC, until that date (the "ESCROW RELEASE
DATE") which is the earlier of (i) the termination of this Agreement or (ii) the
first (1st) anniversary of the Closing Date; provided, however, that those
representations and warranties respecting matters addressed by the first audited
financial statements of the combined corporation, together with a report thereon
from HNC's independent auditors, shall not expire later than upon the date on
which such financial statements are first released to the public.
11.2 Agreement to Indemnify. The Company Stockholders will jointly and
severally indemnify and hold harmless HNC and the Surviving Corporation and
their respective officers, directors, agents, stockholders and employees, and
each person, if any, who controls or may control HNC or the Surviving
Corporation within the meaning of the Securities Act (each hereinafter referred
to individually as an "INDEMNIFIED PERSON" and collectively as "INDEMNIFIED
PERSONS") from and against any and all claims, demands, suits, actions, causes
of actions, losses, costs, demonstrable damages, liabilities and expenses
including, without limitation, reasonable attorneys' fees, other professionals'
and experts' reasonable fees and court or arbitration costs (hereinafter
collectively referred to as "DAMAGES") incurred and arising out of any
inaccuracy, misrepresentation, breach of, or default in, any of the
representations, warranties or covenants given or made by the Company in this
Agreement or in the Company Disclosure Letter or any certificate delivered by or
on behalf of the Company pursuant hereto, (if such inaccuracy,
misrepresentation, breach or default existed at the Closing Date). Any claim of
indemnity made by an Indemnified Person under this Section 11.2 must be raised
in a writing delivered to the Escrow Agent by no later than the Escrow Release
Date. As used herein, the term "Damages" will not include any overhead costs of
HNC personnel and the amount of Damages incurred by any Indemnified Person will
be reduced by the amount of any insurance proceeds actually received by such
Indemnified Person on account of such Damages and the amount of any direct tax
savings actually recognized by such Indemnified Person that are directly
attributable to such Damages, but will include any reasonable costs or expenses
incurred by such Indemnified Person to recover such insurance proceeds or to
obtain such tax savings. The Indemnified Persons will use reasonable efforts to
mitigate their Damages.
11.3 Limitation. Notwithstanding anything herein to the contrary, in
seeking indemnification for Damages under Section 11.2, the Indemnified Persons
will exercise their
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remedies with respect to the Escrow Shares and any other assets deposited in
escrow pursuant to the Escrow Agreement. Except for intentional fraudulent
conduct or other willful misconduct: (i) no Company Stockholder will have any
liability to an Indemnified Person under Section 11.2 of this Agreement except
to the extent of such Company Stockholder's portion of the Escrow Shares and any
other assets deposited under the Escrow Agreement and (ii) the remedies set
forth in this Section 11.3 will be the exclusive remedies of HNC and the other
Indemnified Persons under Section 11.2 of this Agreement against any Company
Stockholder for any inaccuracy, misrepresentation, breach of, or default in, any
of the representations, warranties or covenants given or made by the Company in
this Agreement or in any certificate, document or instrument delivered by or on
behalf of the Company pursuant hereto. In addition, the indemnification provided
for in Section 11.2 shall not apply unless and until the aggregate Damages for
which one or more Indemnified Persons seeks or has sought indemnification
hereunder exceeds a cumulative aggregate of Two Hundred Fifty Thousand Dollars
($250,000) (the "BASKET"), in which event the Company Stockholders shall,
subject to the foregoing limitations, be liable to indemnify the Indemnified
Persons for all Damages. The limitations on the indemnification obligations set
forth in this Section 11.3 shall not be applicable to Misconduct Damages (as
defined below). As used herein, "MISCONDUCT DAMAGES" means Damages resulting
from intentional fraudulent conduct or other willful misconduct or breach of any
provisions of the Company Affiliate Agreement or the Investment Representation
Letters.
11.4 Notice. Promptly after HNC becomes aware of the existence of any
potential claim by an Indemnified Person for indemnity from the Company
Stockholders under Section 11.2, HNC will notify the Company Stockholders of
such potential claim in accordance with the Escrow Agreement. Failure of HNC to
give such notice will not affect any rights or remedies of an Indemnified Party
hereunder with respect to indemnification for Damages except to the extent the
Company Stockholders are materially prejudiced thereby. Prior to the settlement
of any claim for which HNC seeks indemnity from a Company Stockholder, HNC will
provide the Company Stockholders with the terms of the proposed settlement and a
reasonable opportunity to comment on such terms in accordance with the Escrow
Agreement.
11.5 Title Indemnity. In addition to, and separate from, the foregoing
agreement to indemnify set forth in Section 11.2, each Company Stockholder
agrees, severally and not jointly, to defend and indemnify HNC and each other
Indemnified Person from and against any and all claims, demands, suits, actions,
causes of actions, losses, costs, damages, liabilities and expenses including,
without limitation, reasonable attorneys' fees, other professionals' and
experts' reasonable fees and court or arbitration costs incurred and arising out
of any failure of such Company Stockholder to have good, valid and marketable
title to any issued and outstanding shares of Company Common Stock held (or
asserted to have been held) by such Company Stockholder, free and clear of all
liens, claims and encumbrances, or to have the full right, capacity and
authority to enter into this Agreement (in the case of a CR Stockholder) and to
vote such person's shares of Company Stock in favor of the Merger and any other
transactions contemplated by this Agreement. A Company Stockholder's liability
under the indemnification provided for in this Section 11.5 shall be in addition
to any liability of such Company Stockholder under Section 11.2 and shall not be
subject to the limitations on such Company Stockholder's liability set forth in
Section 11.3 and shall not be limited to such Company Stockholder's Escrow
Shares.
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ARTICLE 12
MISCELLANEOUS
12.1 Governing Law. The internal laws of the State of California
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto.
12.2 Assignment; Binding Upon Successors and Assigns. Neither party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other party hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
12.3 Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
12.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
both parties reflected hereon as signatories.
12.5 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
12.6 Amendment and Waivers. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. The Agreement may be amended by the parties hereto at any
time before or after approval of the stockholders of the Company, but, after
such approval, no amendment will be made which by applicable law requires the
further approval of the stockholders of the Company without obtaining such
further approval. At any time prior to the Effective Time, each of the Company
and HNC, by action taken by its Board of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other; (ii) waive any inaccuracies in the representations and
warranties made to it contained herein or in any document delivered pursuant
hereto; and (iii) waive compliance with any of the agreements or conditions for
its benefit contained herein. No such waiver or extension will be effective
unless signed in writing by the party against whom such waiver or extension is
asserted. The failure of any party to enforce any of the provisions hereof will
not be construed to be a waiver of the right of such party thereafter to enforce
such provisions.
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12.7 Expenses. Each party will bear its respective expenses and legal
fees incurred with respect to this Agreement, and the transactions contemplated
hereby.
12.8 Attorneys' Fees. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including without limitation, costs, expenses and fees
on any appeal). The prevailing party will be entitled to recover its costs of
suit, regardless of whether such suit proceeds to final judgment.
12.9 Notices. All notices and other communications required or
permitted under this Agreement will be in writing and will be either hand
delivered in person, sent by telecopier, sent by certified or registered first
class mail, postage pre-paid, or sent by nationally recognized express courier
service. Such notices and other communications will be effective upon receipt if
hand delivered or sent by telecopier, five (5) days after mailing if sent by
mail, and one (l) day after dispatch if sent by express courier, to the
following addresses, or such other addresses as any party may notify the other
parties in accordance with this Section:
If to HNC:
HNC Software Inc.
5930 Cornerstone Court West
San Diego, CA 92121
Attention: President
Fax Number: (619) 452-3220
with a copy to:
Fenwick & West, LLP
Two Palo Alto Square, Suite 800
Palo Alto, CA 94306
Attention: Kenneth A. Linhares
Fax Number: (415) 857-0361
If to the Company:
CompReview, Inc.
4000 MacArthur Boulevard, Suite 800
Newport Beach, CA 92660
Attention: President
Fax Number: (714) 833-5947
with a copy to:
Phillips & Haddan
4675 MacArthur Court, Suite 710
Newport Beach, CA 92660
Attention: Jon Haddan, Esq.
Fax Number (714) 752-6161
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or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 12.9.
12.10 Construction of Agreement. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof will
not be construed for or against either party. A reference to a Section or an
exhibit will mean a Section in, or exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for reference purposes
only and will not in any manner limit the construction of this Agreement which
will be considered as a whole.
12.11 No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other and their status
is, and at all times will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other. No party will hold itself out as having any authority or
relationship in contravention of this Section.
12.12 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
12.13 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner or any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.
12.14 Public Announcement. Upon execution of this Agreement, HNC and
the Company will issue a press release approved by both parties announcing the
Merger. Thereafter, HNC may issue such press releases, and make such other
disclosures regarding the Merger, as it determines are required under applicable
securities laws or regulatory rules. Prior to the publication of such press
release (unless this Agreement has been terminated, neither party will make any
public announcement relating to this Agreement or the transactions contemplated
hereby and the Company will use its reasonable efforts to prevent any trading in
HNC Common Stock by its officers, directors, employees, stockholders and agents.
12.15 Confidentiality. the Company and HNC each confirm that they have
entered into the Confidentiality Agreement and that they are each bound by, and
will abide by, the provisions of such Confidentiality Agreement (except that HNC
will cease to be bound by the Confidentiality
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Agreement after the Merger becomes effective). If this Agreement is terminated,
all copies of documents containing confidential information of a disclosing
party will be returned by the receiving party to the disclosing party or be
destroyed, as provided in the Confidentiality Agreement.
[The Remainder of This Page Has Intentionally Been Left Blank]
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12.16 Entire Agreement. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto other than the
Confidentiality Agreement. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HNC SOFTWARE INC. COMPREVIEW, INC.
By: /s/ Robert L. North By: /s/ Robert L. Kaaren
----------------------------- --------------------------
Robert L. North, President Robert L. Kaaren, M.D.,
Chief Executive Officer
and Chairman
FW1 ACQUISITION CORP. CR STOCKHOLDERS
By: /s/ Robert L. North /s/ Robert L. Kaaren
----------------------------- --------------------------
Robert L. North, President Robert L. Kaaren, M.D.
/s/ Mishel E. Munayyer
--------------------------
Mishel E. Munnayer a.k.a
Michael E. Munayyer, Trustee of
the Michael Munayyer Trust
dated August 11, 1995
[Signature Page to Agreement and Plan of Reorganization]
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LIST OF EXHIBITS
Exhibit A Agreement of Merger
Exhibit B Escrow Agreement
Exhibit C Restated Articles of Incorporation of Surviving Corporation
Exhibit D Bylaws of Surviving Corporation
Exhibit E Investment Representation Letter
Exhibit F Optionee Investment Representation Letter
Exhibit G Registration Rights Agreement
Exhibit H Tax Representation Certificate of the Company
Exhibit I Company Stockholder Agreement
Exhibit J Company Affiliate Agreement
Exhibit K Company Financial Statements
Exhibit L Non-Competition Agreement
Exhibit M Employment Agreement
Exhibit N Matters to be Covered in the Opinion of Fenwick & West, LLP
Exhibit O Matters to be Covered in the Opinion of Phillips & Haddan