1
Exhibit 2.02
OPTION EXCHANGE AGREEMENT
THIS OPTION EXCHANGE AGREEMENT (this "Agreement") is made and entered
into as of November __, 1996 (the "Agreement Date") by and among HNC SOFTWARE
INC., a Delaware corporation ("HNC"), RETEK DISTRIBUTION CORPORATION, a British
Virgin Islands corporation ("Retek") that is an international business company
formed under the British Virgin Islands' International Business Companies Act,
and the holders of all of the outstanding options to purchase shares of Retek
(each individually a "Retek Optionee" and collectively the "Retek Optionees").
RECITALS
A. On October 25, 1996 (the "Plan Date"), Retek, the holders of 100% of
the outstanding shares of Retek and HNC entered into an Exchange Agreement (the
"Plan") providing for HNC's acquisition of all of the outstanding shares of
Retek in exchange for shares of HNC Common Stock on the terms and conditions of
the Plan. In addition, the Plan calls for all outstanding options to purchase
shares of Retek Stock to be exchanged for the issuance by HNC of options to
purchase shares of HNC Common Stock as set forth in Section 2.2 of the Plan. The
exchange of shares of Retek Stock for shares of HNC Common Stock and the
exchange of Retek Options (as defined below) for HNC Options (as defined below)
contemplated by the Plan and this Agreement are collectively referred to herein
as the "Exchange".
B. It is a condition precedent to the Exchange and the other
transactions contemplated by the Plan that each Retek Optionee exchanges his/her
Retek Options for options to purchase HNC Common Stock as provided in Section
2.2 of the Plan.
C. The parties hereto intend for the Exchange to qualify as a "pooling
of interests" transaction for accounting purposes.
D. The parties acknowledge that the Exchange will not qualify as and is
not intended to qualify as a reorganization under Section 368 of the U.S.
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
will have the meanings set forth below:
1.2 "HNC Average Price Per Share" means the average of the
closing prices per share of HNC Common Stock as quoted on the Nasdaq National
Market (or such other exchange or quotation system on which HNC Common Stock is
then traded or quoted) and reported in The Wall Street Journal for the ten (10)
trading days ending on, and including, November 1, 1996; provided, however, that
notwithstanding the
2
foregoing, in no event shall the HNC Average Price Per Share, for purposes of
this Agreement, be less than $28.00 per share of HNC Common Stock, as presently
constituted.
1.3 "HNC Common Stock" means the Common Stock, $0.001 par
value per share, of HNC.
1.6 "Retek Stock" means the ordinary shares of Retek, U.S.
$1.00 par value per share, comprising the authorized capital of Retek, as
constituted immediately prior to the Closing.
1.7 "Retek Derivative Securities" means, collectively, (a) any
warrant, option, right or other security that entitles the holder thereof to
purchase or otherwise acquire any shares of the capital stock of Retek
(collectively, "Retek Stock Rights"); (b) any note, evidence of indebtedness,
stock or other security of Retek that is convertible into or exchangeable for
any shares of the capital stock of Retek or any Retek Stock Rights ("Retek
Convertible Security"); and (c) any warrant, option, right, note, evidence of
indebtedness, stock or other security that entitles the holder thereof to
purchase or otherwise acquire any Retek Stock Rights or any Retek Convertible
Security; provided, however, that the term "Retek Derivative Securities" does
not include any Retek Options (as defined below).
1.8 "Retek Fully Diluted Number" means that number that is
equal to the sum of: (a) the total number of shares of Retek Stock that are
issued and outstanding immediately prior to the Closing; plus (b) the total
number of shares of Retek Stock that are issuable by Retek upon the exercise of
all Retek Options that are issued and outstanding immediately prior to the
Closing; plus (c) the total number of shares of Retek Stock that, immediately
prior to the Closing, are directly or indirectly ultimately issuable by Retek
upon the exercise, conversion or exchange of all Retek Derivative Securities (if
any) that are issued and outstanding immediately prior to the Closing.
1.9 "Retek Optionees" means those persons who, immediately
prior to the Closing, hold outstanding options to purchase shares of Retek
Stock, who will consist solely of those individuals listed on Exhibit A hereto.
1.10 "Retek Options" means options to purchase shares of Retek
Stock granted by Retek and outstanding immediately prior to the Closing, and
which are collectively listed on the various versions of Exhibit B attached
hereto.
1.11 "Closing", as defined in Section 7.1 of the Plan, means
the closing of the transactions for consummation of the Exchange.
1.12 "Closing Date", as defined in Section 7.1 of the Plan,
means November 30, 1996 or such other date on or before the Termination Date
(December 1, 1996) that HNC and Retek mutually agree in writing.
1.13 "Exchange Number" means the quotient obtained by dividing
(i) the Transaction Shares by (ii) the Retek Fully Diluted Number.
2
3
1.14 "Exchange Shares" means the total number of shares of HNC
Common Stock, as presently constituted, that will be issued under the Plan upon
the exchange of all of the shares of Retek Stock that are issued and outstanding
immediately prior to the Closing and is equal to the product obtained by
multiplying (i) the total number of shares of Retek Stock that are issued and
outstanding immediately prior to the Closing by (ii) the Exchange Number.
1.15 "Transaction Shares" means that number of shares of HNC
Common Stock, as presently constituted, that is equal to the quotient obtained
by dividing (i) $47,329,000 by (ii) the lesser of: (A) $35.00 per share of HNC
Common Stock, as presently constituted; or (B) the HNC Average Price Per Share.
Other capitalized terms not defined in this Section 1 or elsewhere in
this Agreement shall have the meanings assigned to such terms in the Plan.
2. THE EXCHANGE OF RETEK OPTIONS
2.1 Exchange of Options. Subject to the terms and conditions
of this Agreement, each Retek Optionee hereby agrees that, at the Closing of the
Exchange, each Retek Option that is held by such Retek Optionee and is
outstanding immediately prior to the Closing shall at the Closing be irrevocably
surrendered and released to HNC by such Retek Optionee and exchanged by such
Retek Optionee for an option (an "HNC Option") to purchase that number of shares
of HNC Common Stock determined by multiplying the number of shares of Retek
Stock subject to such surrendered Retek Option immediately prior to the Closing
by the Exchange Number, at an exercise price per share of HNC Common Stock equal
to the exercise price per share of Retek Stock that was in effect for such Retek
Option immediately prior to the Closing divided by the Exchange Number, rounded
up to the nearest whole cent; provided, however, that if the foregoing
calculation would result in a Retek Option being exchanged for an HNC Option
that, after aggregating all the shares of HNC Common Stock issuable upon the
exercise of such HNC Option, would be exercisable for a fraction of a share of
HNC Common Stock, then the number of shares of HNC Common Stock subject to such
HNC Option shall be rounded up to the nearest whole number of shares of HNC
Common Stock.
2.2 Terms of Option. The terms, exercisability, vesting
schedule, status as an "nonqualified stock option" and all other terms and
conditions of Retek Options (including but not limited to the terms and
conditions applicable to such options by virtue of the applicable stock option
agreement) shall (except as otherwise provided in the terms of such Retek
Options), to the extent permitted by law and otherwise reasonably practicable,
be unchanged and continue in effect after the Exchange. Continuous employment
with Retek prior to the Closing shall be credited to the Retek Optionee for
purposes of determining the vesting of the number of shares of HNC Common Stock
subject to exercise under the HNC Option issued to such Retek Optionee pursuant
to this Agreement in exchange for such Retek Optionee's Retek Option.
2.3 Replacement Option Documentation. Subject to surrender, if
so requested by HNC, of the applicable Retek Option documentation at the
Closing, each
3
4
Retek Optionee shall receive a memorandum from HNC within twenty (20 ) business
days after the Closing setting forth the number of shares of HNC Common Stock
subject to such optionee's option and the exercise price per share of HNC Common
Stock.
2.4 Registration of Underlying Shares. HNC shall use its best
efforts to cause the shares of HNC Common Stock that are issuable upon exercise
of the HNC Options that are issued in exchange for Retek Options under Section
2.1 to be registered on a registration statement (or to be issued pursuant to a
then-effective registration statement) on Form S-8 (or successor form)
promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), as soon as reasonably
practicable after the Closing, and no later than 45 days after the Closing of
the Exchange, and shall use its best efforts to maintain the effectiveness of
such registration statement or registration statements for so long as such HNC
Options remain outstanding and HNC Common Stock is registered under the
Securities Exchange Act of 1934, as amended (the "1934 Act").
2.5 Adjustments for Capital Changes. Notwithstanding the
foregoing, if at any time after the Agreement Date and prior to the Closing, HNC
or Retek recapitalizes, either through a subdivision (or stock split) of any of
its outstanding shares into a greater number of shares, or a combination (or
reverse stock split) of any of its outstanding shares into a lesser number of
shares, or reorganizes, reclassifies or otherwise changes its outstanding shares
into the same or a different number of shares of other classes (other than
through a subdivision or combination of shares provided for in the previous
clause), or declares a dividend on its outstanding shares payable in shares or
securities convertible into shares of HNC Common Stock (a "Capital Change"),
then the number of shares of HNC Common Stock for which shares of Retek Stock
are to be exchanged in the Exchange, and the number of shares of HNC Common
Stock to be issued upon exercise of the HNC Options issued in exchange for the
Retek Options in the Exchange (and the exercise price of such HNC Options),
shall be appropriately, equitably and proportionately adjusted (as agreed to by
HNC and Retek if it involves something other than a mathematical adjustment) so
as to maintain the proportionate interests of the shareholders of Retek and the
shareholders of HNC contemplated hereby (and, indirectly, the holders of the
Retek Options) so as to maintain the proportional interests of the holders of
Retek Stock and Retek Options contemplated by the Plan. The provisions of this
Section shall not apply to any transaction not permitted to be undertaken by
Retek under the provisions of the Plan. In the event that a Capital Change
affecting HNC Common Stock occurs prior to the Closing, then all prices per
share and numbers of shares used to compute the Exchange Number shall be deemed
to have been equitably adjusted to reflect such Capital Change as necessary to
effect the purposes and intent of this Section.
2.6 Further Assurances. If, at any time after the Closing, HNC
considers or is advised that any further instruments, deeds, assignments or
assurances are reasonably necessary or desirable to consummate the Exchange or
to carry out the purposes of this Agreement at or after the Closing, then HNC,
Retek and their respective officers and directors may, and each Retek Optionee
shall, execute and deliver all such proper deeds,
4
5
assignments, instruments and assurances and do all other things necessary or
desirable to consummate the Exchange and to carry out the purposes of this
Agreement.
2.7 Securities Laws Issues. HNC shall issue the HNC Options
pursuant to an exemption from registration under Section 4(2) and/or Regulation
D promulgated under the 1933 Act. Concurrently with execution of this Agreement,
each Retek Optionee has executed and delivered to HNC an Optionee Investment
Representation Letter in the form of Exhibit C hereto. The undersigned
acknowledges that he/she may not freely sell the HNC Common Stock subject to
his/her HNC Option until such shares have been registered on Form S-8 with the
SEC.
2.8 Example. Exhibit D hereto sets forth an illustration of
the operation of the provisions of Section 2 of this Agreement regarding the
exchange of shares of Retek Options in the Exchange.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF RETEK OPTIONEES
3.1 Equity Interest; Release. The undersigned Retek Optionee
represents and warrants to Retek and HNC that (a) the Retek Option identified on
the individual Exhibit B hereto provided to such Retek Optionee accurately
describes the undersigned's option to purchase shares of Retek Stock and the
terms thereof; (b) the undersigned Retek Optionee is the sole record and
beneficial owner of such Retek Option and no other person or entity has any
interest therein; (c) the Retek Option shown on such Retek Optionee's individual
Exhibit B is the only Retek Option or other security of Retek owned or held by
such Retek Optionee; and (d) such Retek Option is in compliance with and in full
satisfaction of all promises, offers and commitments, written or oral, of Retek
and/or its management to the undersigned Retek Optionee for an equity interest
in Retek. The undersigned Retek Optionee hereby releases and waives any claims
or rights he/she may have to any options, shares or securities of, or equity
participation in, Retek or its subsidiaries, other than his/her Retek Option
described in the individual Exhibit B hereto.
3.2 Review of Documents; Advice of Counsel. The undersigned
Retek Optionee represents and warrants that he/she has read and understands the
Optionee Investment Representation Letter, this Agreement and the Information
Statement describing the principal terms and conditions of the Plan and the
Exchange, and acknowledges that he/she has been advised by Retek and its counsel
of the desirability of consulting independent legal counsel regarding the
Exchange, this Agreement, the Optionee Investment Representation Letter, the
Plan and the Information Statement.
3.3 Surrender of Retek Options. At the Closing of the
Exchange, the undersigned Retek Optionee shall deliver and surrender his/her
Retek Option in exchange for an HNC Option, as provided herein and in the Plan.
4. MISCELLANEOUS
5
6
4.1 Governing Law. The internal laws of the State of
California, U.S.A. (irrespective of its choice of law principles) will govern
the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
4.2 Assignment; Binding Upon Successors and Assigns. No party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other parties hereto, except that HNC may assign its
respective rights and/or obligations to any wholly-owned subsidiary of HNC. This
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
4.3 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
4.4 Amendment and Waivers. Any term or provision of this
Agreement may be amended only by a writing executed by HNC, Retek and each
affected Retek Optionee, and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby.
4.5 Entire Agreement. This Agreement and the exhibits hereto,
together with the Optionee Investment Representation Letter, constitute the
entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto.
4.6 Conditions Precedent. This Agreement and the Optionee
Investment Representation Letter shall not be effective unless and until the
Exchange is closed as provided under the Plan. If the Exchange is closed, this
Agreement shall be deemed effective simultaneously with such Closing.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
6
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HNC SOFTWARE INC. RETEK DISTRIBUTION CORPORATION
By: /s/ Xxxxxx X. North By: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Its: President Its: President
RETEK OPTIONEES
/s/ Xxx Xxxxxxx
--------------------------
Xxx Xxxxxxx
/s/ Xxxxxx Day
--------------------------
Xxxxxx Day
/s/ Xxxxx Xxxxx
--------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxxx
--------------------------
Xxxx Xxxxxxx
/s/ Xxx Xxxxxxxx
--------------------------
Xxx Xxxxxxxx
/s/ Xxxxxx Xxxxxx
--------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx XxXxxxx
--------------------------
Xxxxxxx XxXxxxx
/s/ Xxxx Xxxxxxxxxxx
--------------------------
Xxxx Xxxxxxxxxxx
/s/ Xxxxxxx Xxxxxx
--------------------------
Xxxxxxx Xxxxxx
7
8
[SIGNATURE PAGE TO OPTION EXCHANGE AGREEMENT]
8
9
LIST OF EXHIBITS
Exhibit A Retek Optionees
Exhibit B Terms of Option (individualized for each Retek Optionee)
Exhibit C Optionee Investment Representation Letter
Exhibit D Example of Exchange Number as Applied to Retek Options
10
EXHIBIT A
Name of Optionees
Xxx Xxxxxxx
Xxxxxx Day
Xxxxx Xxxxx
Xxxx Xxxxxxx
Xxx Xxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx XxXxxxx
Xxxx Xxxxxxxxxxx
Xxxxxxx Xxxxxx
11
EXHIBIT B
Terms of Option
(Name of Optionee)
No. of Options Date of Grant Period of Vesting Price per Share
-------------- ------------- ----------------- ---------------
($US)
12
EXHIBIT C
Optionee Investment Representation Letter
13
EXHIBIT D
Example of Exchange Number as Applied to Retek Options
