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EXHIBIT 2.2
FORM OF SEPARATION AGREEMENT
This SEPARATION AGREEMENT (this "Agreement"), is made and entered into
effective as of __________ __, 1999 (the "Effective Date") by and among HNC
Software Inc., a Delaware corporation ("HNC"), Retek Inc., a Delaware
corporation ("Retek") and Retek Information Systems, Inc., a Delaware
corporation ("RIS").
RECITALS
A. As of the Effective Date, Retek is a wholly-owned subsidiary of HNC,
and RIS is a wholly-owned subsidiary of HNC.
B. HNC's Board of Directors has determined that it is in the best
interests of HNC and its stockholders to separate the businesses of Retek and
RIS from HNC's other operations. In furtherance of that objective, HNC has also
determined that it is appropriate and desirable for HNC to contribute and
transfer to Retek all of the capital stock of RIS which HNC owns (so that RIS
will become a wholly-owned subsidiary of Retek) together with certain other
assets as provided herein and to cause Retek to assume the certain liabilities,
in accordance with this Agreement and the Ancillary Agreements (as defined
herein) (such contribution and transfer of assets by HNC and such assumption of
liabilities by Retek and RIS in accordance with this Agreement are collectively
hereinafter referred to as the "Separation").
C. The Board of Directors of HNC and Retek have determined that it is
appropriate and desirable, on the terms and conditions contemplated by this
Agreement, that Retek issue and sell shares of its Common Stock (as defined
herein) in an initial public offering registered under the Securities Act (the
"Initial Public Offering"), provided that the number of shares of such stock
issued and sold in the Initial Public Offering do not exceed % of Retek's
outstanding capital stock.
D. HNC's current intention is that after the closing of the Initial
Public Offering, HNC may in its sole discretion elect to distribute pro rata to
HNC's stockholders, as a dividend, the remaining shares of Common Stock of Retek
which it holds after the closing of the Initial Public Offering (the
"Distribution").
E. It is appropriate and desirable to set forth in this Agreement the
agreements of the parties regarding the Separation and the transactions required
to effect the Separation and the Initial Public Offering, and the relationship
of HNC, Retek and RIS following the Separation.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements, provisions and covenants contained in this Agreement, the
parties hereby agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used herein, the following terms have the
following meanings:
"Action" means any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental, regulatory or administrative
agency or commission, any other tribunal or other Governmental Authority, or any
arbitrator or arbitration panel.
"Affiliate" of any specified Person means any other Person that,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with such specified Person. For purposes of this
definition, the term "control" (including, with correlative meanings, the terms,
"controls" "controlled by" or "under common control with") means the possession,
directly or indirectly, of the power to vote a majority of the securities having
voting power for the election of directors (or other Persons acting in similar
capacities) of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"After Tax Basis" means a basis such that the Original Payment shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall equal the Original Payment, after taking into account all Taxes
that would result from the receipt or accrual of such payments, if legally
required, with all payments hereunder being calculated on the assumption that
the payee is subject to Tax at the highest marginal rates of Tax applicable to
such class of taxpayer.
"Ancillary Agreements" means, collectively, the Corporate Rights
Agreement, the License Agreement, the Services Agreement, and the Tax Sharing
Agreement.
"Closing Date" has the meaning assigned to such term in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the U.S. Securities and Exchange Commission.
"Common Stock" means the common stock, par value $0.01 per share, of
Retek.
"Consents" means any consents, waivers or approvals from, or
notification requirements to, any third parties.
"Covered Claims" means any claim that is of a type covered by insurance
or self insurance of HNC in effect on the Closing Date and is listed and
described as a "Covered Claim" on Schedule 3(k).
"Corporate Rights Agreement" means the Corporate Rights Agreement to be
entered into by and among HNC, Retek and RIS at the Closing in substantially the
form of Exhibit 1.
"Distribution" has the meaning assigned to such term in Recital D of
this Agreement.
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"Effective Initial Public Offering Date" means the date on which the
Registration Statement is declared effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" has the meaning assigned to such term in Section
2.1(b).
"Excluded Liabilities" has the meaning assigned to such term in Section
2.2(b).
"Governmental Authority" means any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
"HNC Group" means HNC and each Person (other than Retek and RIS) that
is an Affiliate of HNC immediately after the Closing Date.
"Liabilities" means any and all losses, claims, charges, debts,
demands, Actions, causes of Action, suits, damages, obligations, payments, costs
and expenses, accounts, bonds, indemnities and similar obligations, covenants,
contracts, agreements, promises, guarantees and other liabilities, including all
contractual obligations, whether absolute or contingent, matured or not matured,
liquidated or unliquidated, accrued or not accrued, known or unknown, whenever
arising, in each case, whether or not recorded or reflected or required to be
recorded or reflected in the books and records or financial statements of any
Person, including, without limitation, those arising under (i) any law, rule or
regulation, (ii) any Action, threatened or contemplated Action (including the
costs and expenses of demands, assessments, judgments, arbitration awards,
settlements and compromises relating thereto and attorneys' fees and any and all
costs and expenses whatsoever (including without limitation allocated costs of
in-house counsel and other personnel), reasonably incurred in investigating,
preparing or defending against any such Actions or threatened or contemplated
Actions), (iii) any order or consent decree of any Governmental Authority or any
award of any arbitrator or mediator of any kind, and (iv) any contract,
commitment or undertaking, including those arising under this Agreement or any
Ancillary Agreement.
"License Agreement" means the Technology License Agreement to be
entered into between HNC and RIS at the Closing in substantially the form of
Exhibit 2.
"Lien" means any mortgage, security interest, pledge, encumbrance or
charge upon property of a Person to secure or obtain payment of a debt or
performance of an obligation, whether arising by contract, consent or by
operation of law.
"Original Payment" means the payment received or deemed to have been
received by a Person before any adjustments made to take into account that such
payment is Taxable to the payee.
"Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability company, any other entity and any Governmental Authority.
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"Policy" has the meaning assigned to such term in Section 3.1(k).
"Prospectus" means each preliminary, final or supplemental prospectus
forming a part of the Registration Statement.
"Registration Statement" means the registration statement on Form S-1
(or other appropriate form promulgated by the Commission) filed by Retek with
the Commission to effect the registration for issuance by Retek in the Initial
Public Offering of shares of its Common Stock pursuant to the Securities Act, as
such registration statement may be amended or supplemented from time to time.
"Retek Assets" has the meaning assigned to such term in Section 2.1(a).
"Retek Business" means the business and operations of Retek and RIS,
which consist of developing, marketing, selling, and supporting enterprise
software products that provide business solutions to retailers and their
suppliers.
"Retek Bylaws" means the amended and restated bylaws of Retek.
"Retek Certificate" means the amended and restated certificate of
incorporation of Retek which will be in effect immediately prior to the closing
of the Initial Public Offering and a form of which was in the form filed as an
exhibit to the Registration Statement.
"Retek Contracts" means the following contracts and agreements, to
which HNC or any of its Affiliates is a party or by which HNC or any of its
Affiliates or and of their respective assets is bound, except for any such
contract or agreement that is contemplated to be retained by HNC or any of its
Affiliates (other than Retek or RIS) pursuant to any provision of this Agreement
or any Ancillary Agreement:
(a) the contracts or agreements listed or described on
Schedule 1.1(a) (as such Schedule may be supplemented by mutual written
agreement signed by HNC and Retek after the Effective Date and prior to
the Closing Date);
(b) any contracts or agreements entered into by HNC in the
name of, or expressly on behalf of, Retek or RIS; and
(c) any guarantee, indemnity, representation, warranty or
other Liability of Retek or HNC in respect of any other Retek Contract,
any Retek Liability or the Retek Business.
"Retek Group" means Retek, RIS and each Person (other than HNC or any
member of the HNC Group) that is an Affiliate of either of Retek or RIS
immediately after the Closing Date.
"Retek Intercompany Payables" means all accounts payable and other
intercompany amounts payable by Retek, RIS or any other member of the Retek
Group to HNC or to any other member of the HNC group as set forth in Schedule
2.5 or reflected in the books and records of the parties or otherwise documented
in writing in accordance with the parties' past practices.
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"Retek Intercompany Receivables" means all accounts receivable and
other intercompany amounts payable by HNC or by any other member of the HNC
group to Retek, RIS or any other member of the Retek Group as set forth in
Schedule 2.5 or reflected in the books and records of the parties or otherwise
documented in writing in accordance with the parties' past practices.
"Retek Liabilities" has the meaning assigned to such term in Section
2.2.
"RIS Bylaws" means the bylaws of RIS, as amended.
"RIS Certificate" means the restated certificate of incorporation of
RIS.
"RIS Common Stock" means the shares of common stock of RIS, par value
$0.001 per share.
"Securities Act" means the Securities Act of 1933, as amended.
"Separation" has the meaning assigned to such term in Recital B of this
Agreement.
"Separation Date" means the date determined by the Board of Directors
of HNC as the date on which the Separation shall be effected, which is
contemplated to occur on the date of the closing of the Initial Public Offering.
"Services Agreement" means the Services Agreement to be entered into
between HNC, Retek and RIS at the Closing in substantially the form of Exhibit
3.
"Tax," "Taxes" or "Taxable" has meaning given to such term in the Tax
Sharing Agreement.
"Tax Sharing Agreement" means the Tax Sharing Agreement to be entered
into among HNC and Retek at the Closing providing for certain tax related
matters, in substantially the form of Exhibit 4.
"Underwriting Agreement" means the agreement executed between Retek and
the managing Underwriter with regard to the Initial Public Offering.
"Underwriter" means a Person who agrees to act as an underwriter in
connection with the Initial Public Offering.
Unless otherwise specified, any reference to any "subsidiary" or
"subsidiaries" of HNC shall not include either Retek or RIS.
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ARTICLE II
TRANSFER OF ASSETS AND
ASSUMPTION OF LIABILITIES
2.1 TRANSFER OF ASSETS.
(a) Assignment of Retek Assets. Effective upon the Closing, HNC will
assign, transfer, convey and deliver to Retek as of the Closing Date, and HNC
agrees to cause each of its subsidiaries (other than Retek and RIS) to assign,
transfer, convey and deliver to Retek as of the Closing Date, and Retek will
accept from HNC and such subsidiaries as of the Closing Date, all of HNC's and
such subsidiaries' respective right, title and interest in, to or under the
following assets and properties described in the following subparagraphs of this
Section 2.1(a) (collectively, the "Retek Assets"):
(i) all shares of RIS Common Stock owned directly or beneficially
by HNC as of the Closing Date.
(ii) all of the Retek Contracts;
(iii) tangible copies of any sales, marketing and promotional
literature, and other sales-related materials owned, used, associated
with or employed by HNC relating primarily to the Retek Business.
Notwithstanding the foregoing, Retek Assets shall not in any event
include any of the Excluded Assets referred to in Section 2.1(b) below.
(b) Excluded Assets. For the purposes of this Agreement, "Excluded
Assets" shall mean all assets, properties and rights owned or held by HNC or any
member of the HNC Group that are not expressly described in any of the
subparagraphs of Section 2.1(a).
2.2 ASSUMPTION OF RETEK LIABILITIES.
(a) Assumption. Effective upon the Closing, except as may be otherwise
expressly set forth in one or more of the Ancillary Agreements, from and after
the Closing Date, Retek and RIS hereby jointly and severally assume and agree to
faithfully and timely pay, perform, fulfill and satisfy all Retek Liabilities,
in accordance with their respective terms. As used herein, the term "Retek
Liabilities" means, collectively, all Liabilities (other than Taxes based on, or
measured by reference to, net income), including any employee-related
Liabilities, primarily relating to, arising out of or resulting from: (i) the
conduct or operation of the Retek Business at any time prior to, on or after the
Closing Date (including any Liability relating to, arising out of or resulting
from any act or failure to act by any director, officer, employee, agent or
representative of Retek or RIS (whether or not such act or failure to act is or
was within such Person's authority)); (ii) the conduct or operation of any
business conducted by Retek or RIS at any time after the Closing Date (including
any Liability relating to, arising out of or resulting from any act or failure
to act by any director, officer, employee, agent or representative or Retek or
RIS (whether or not such act or failure to act is or was within such Person's
authority)); and/or (iii) any Retek Assets.
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(b) Third-Party Releases. Except as provided in any Ancillary Agreement
or with regard to any obligations of HNC under this Agreement and such Ancillary
Agreements, from and after the execution of this Agreement, HNC, Retek and RIS
will cooperate in good faith and Retek and RIS will take such reasonable steps
(at the expense of HNC) as HNC may request so that HNC may obtain from third
parties (other than Retek or RIS) the release, discharge and exoneration of
HNC's obligations or Liabilities to any such third party (whether or not such
party's Consent is required to effect the transfer of any Retek Asset or the
assumption of any Retek Liability as contemplated herein) and the discharge of
any Lien on the property of HNC or any of its subsidiaries, arising from or
related to any of the Retek Assets or Retek Liabilities or the Retek Business,
to the end that Retek and/or RIS will become the sole obligors, debtors or
responsible parties on such Liabilities (the "HNC Releases").
(c) Retek Liabilities. Retek shall be responsible for all Retek
Liabilities, regardless of when or where such Liabilities arose or arise, or
whether the facts on which they are based occurred prior to or subsequent to the
Effective Date, regardless of where or against whom such Liabilities are
asserted or determined (including any Retek Liabilities arising out of claims
made by HNC's, Retek's or RIS's respective directors, officers, employees,
agents or Affiliates) or whether asserted or determined prior to the Effective
Date, and regardless of whether arising from or alleged to arise from
negligence, recklessness, violation of law, fraud or misrepresentation by HNC,
Retek or RIS or any of their respective directors, officers, employees, agents
or Affiliates.
2.3 TRANSFERS NOT EFFECTED ON OR PRIOR TO THE CLOSING DATE. To the extent
any transfers of assets contemplated by Section 2.1 shall not have been fully
effected on or prior to the Closing Date, HNC and Retek shall cooperate to
effect such transfers as promptly as possible following the Closing Date.
Nothing herein shall be deemed to require the transfer of any assets or the
assignment or assumption of any Liabilities that by their terms or by operation
of law cannot be so transferred, assigned or assumed; provided, however, that
any such asset shall be deemed a Retek Asset for purposes of determining whether
any Liability is a Retek Liability; and provided, further, that HNC and Retek
and their respective Affiliates shall cooperate in seeking to obtain any
necessary Consents for the transfer of all assets and the assignment or
assumption of all Liabilities as contemplated by this Article II. In the event
that any transfer of assets or assignment or assumption of Liabilities
contemplated by this Article II has not been consummated effective as of the
Closing Date, (i) the parties retaining such assets shall thereafter hold such
assets in trust for the use and benefit of the party entitled thereto (at the
expense of the party entitled thereto); and (ii) the party retaining such
Liabilities shall thereafter hold such Liabilities for the account of the party
assuming such Liability or to whom such Liability is to be assigned pursuant
hereto, and in each such case shall take such other actions as may be reasonably
required in order to place the parties, insofar as reasonably possible, in the
same position as would have existed had such asset been transferred, or such
Liability been assigned or assumed as contemplated hereby. As and when any such
asset or Liability become transferable, assignable or assumable, as the case may
be, such transfer, assignment or assumption, as the case may be, shall be
effected forthwith. HNC and Retek agree that, as of the Closing Date, each party
hereto shall be deemed to have acquired complete and sole beneficial ownership
over all of the assets, together with all of the rights, powers and privileges
incidental thereto, that such party is entitled to acquire pursuant to the terms
of this Agreement.
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2.4 CLOSING MATTERS. The closing of the Separation under this Agreement
will take place at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo
Alto, California, at___ a.m. Pacific Time, concurrent with the consummation and
closing of the Initial Public Offering or at such other time and place as HNC,
Retek and RIS shall mutually agree upon in a writing signed by each of them. The
"Closing" and the date on which the Closing occurs is referred to herein as the
"Closing Date"), provided, however, that HNC's obligation to consummate the
Separation and to effect the Closing shall be subject to the satisfaction and
fulfillment of the conditions to HNC's obligations set forth in Section 3.3. At
the Closing, to the extent that they have not already done so, the parties will
take each of the following actions:
(a) HNC shall execute and deliver to Retek (or to RIS, in the case of
deliverables relevant to RIS) such bills of sale, stock powers, assignments of
contracts and other instruments or transfer, conveyance and assignment as and to
the extent necessary to evidence the transfer, conveyance and assignment of all
of HNC's or its subsidiaries' (other than Retek or RIS) right, title and
interest in and to Retek Assets to Retek or RIS, as the case may be;
(b) HNC shall execute and deliver each of the Ancillary Agreements to
Retek and RIS, as applicable;
(c) Retek shall execute and deliver to HNC (and, with regard to any
liabilities assumed for RIS, to RIS) such bills of sale, assumptions of
contracts and other instruments or assumption as may be necessary to evidence
the valid and effective assumption of Retek Liabilities by Retek and RIS;
(d) Retek shall execute and deliver each of the Ancillary Agreements to
HNC and RIS, as applicable;
(e) RIS shall execute and deliver to HNC and RIS such bills of sale,
assumptions of contracts and other instruments or assumption as may be necessary
to evidence the valid and effective assumption of any Retek Liabilities by RIS;
(f) RIS shall execute and deliver each of the Ancillary Agreements to
HNC and Retek, as applicable; and
(g) Either (i) Retek and RIS on the one hand, or (ii) HNC on the other
hand, as applicable under the provisions of Section 2.6, shall pay to the other
the amount payable by it under the provisions of Section 2.6 to settle all then
outstanding intercompany accounts in accordance with Section 2.6.
2.5 NO REPRESENTATIONS OR WARRANTIES; CONSENTS.
(a) Asset Status. Each of the parties hereto understands and agrees
that no party hereto is, in this Agreement, in any Ancillary Agreement or in any
other agreement or document contemplated by this Agreement, any Ancillary
Agreement or otherwise, making any representation or warranty whatsoever to any
other party as to the value of any assets of such party, and all such
representations and warranties are hereby disclaimed and negated. The parties
also agree and understand that there are no warranties whatsoever, whether
express or implied, given by any party
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to this Agreement, as to the condition, quality, merchantability or fitness for
a particular purpose of any of the assets, businesses or other rights
transferred or retained by the parties, as the case may be, and all such assets,
businesses and other rights shall be "as is, where is" and "with all faults"
(provided that the absence of warranties given by the parties shall not negate
the assumption of Liabilities under this Agreement and shall have no effect on
any manufacturers, sellers, or other third party warranties that are intended to
be transferred with such assets).
(b) Consents. Each party hereto understands and agrees that no party
hereto is, in this Agreement, in any Ancillary Agreement or in any other
agreement or document contemplated by this Agreement, any Ancillary Agreement or
otherwise, representing or warranting in any way that the obtaining of any
Consents, the execution and delivery of any amendatory agreements and the taking
of any filings or applications contemplated by this Agreement will satisfy the
provisions of any or all applicable laws or judgments or other instruments or
agreements relating to such assets. Notwithstanding the foregoing, the parties
shall use their reasonable good faith efforts to obtain all Consents (including
without limitation such Consents as may be required by any Governmental
Authorities), and to take all such further actions as shall be deemed reasonably
necessary to preserve for each of HNC, Retek and RIS, to the greatest extent
reasonably feasible (where the determination of feasibility shall take into
account the expense and time associated with preserving such benefits as
compared to the value of such benefits) to carry out the purposes and intent of
this Agreement. If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary or desirable action, provided that any financial cost shall be borne
by the party receiving the benefit of the action.
2.6 SETTLEMENT AND OFFSET OF INTERCOMPANY ACCOUNTS.
(a) Current Intercompany Accounts. The parties agree that, as of the
Effective Date: (i) the Retek Intercompany Payables consist entirely of those
payables designated as Retek Intercompany Payables in Part A of Schedule 2.6 in
the respective amounts set forth therein, and (ii) the Retek Intercompany
Receivables consist entirely of those accounts receivable designated as Retek
Intercompany Receivables in Part B of Schedule 2.6 in the respective amounts set
forth therein.
(b) Closing Update Certificates. At the Closing, Retek (on behalf of
itself and the Retek Group) and HNC (on behalf of itself and the HNC Group)
shall each deliver to the other a certificate (the "Intercompany Accounts
Certificate"), executed by its respective Chief Financial Officer, which shall
set forth in reasonable detail (and be accompanied by appropriate supporting
documentation): (i) a list of all Retek Intercompany Payables and Retek
Intercompany Receivables arising or accrued on and after the Effective Date and
(ii) a list of all payments of Retek Intercompany Receivables made after the
Effective Date and prior to the Closing Date.
(c) Closing Offset and Settlement Payment. At the Closing, Retek (on
behalf of itself, RIS and the Retek Group) and HNC (on behalf of itself and the
HNC Group), shall set-off, settle and pay all then outstanding Retek
Intercompany Payables and Retek Intercompany Receivables, as follows. The
parties shall examine Schedule 2.6, the HNC Intercompany Accounts Certificate
and the Retek Intercompany Accounts Certificate, and shall determine from such
documents: (i) the amount of Retek Intercompany Payables as of the Closing Date;
(ii) the amount of Retek
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Intercompany Receivables as of the Closing Date; (iii) the amount, if any, by
which the Retek Intercompany Payables as of the Closing Date exceeds the Retek
Intercompany Receivables as of the Closing Date (such excess amount if any,
being referred to as the "Net Retek Closing Payable"); and (iv) the amount, if
any, by which the total Retek Intercompany Receivables as of the Closing Date
exceed the Retek Intercompany Payables as of the Closing Date (such excess
amount, if any, being referred to as the "Net Retek Closing Receivable"). If
there is a Net Retek Closing Payable, then at the Closing Retek shall pay to HNC
an amount equal to the Net Retek Closing Payable. If there is a Net Retek
Closing Receivable, then at the Closing HNC shall pay to Retek an amount equal
to the Net Retek Closing Receivable. If there is no Net Retek Closing Payable
and no Net Retek Closing Receivable, then no payment shall be made by HNC or
Retek under this Section at the Closing. Any dispute between HNC and Retek
regarding the amount of Retek Intercompany Payables and/or Retek Intercompany
Receivables shall be resolved in accordance with Article VII.
ARTICLE III
THE SEPARATION AND THE INITIAL PUBLIC OFFERING
3.1 COOPERATION PRIOR TO THE SEPARATION. In addition to the matters set
forth in Section 3.2 concerning preparations for the Initial Public Offering and
in Article V (concerning preparations, if undertaken, for the Distribution), and
subject to the conditions set forth in Section 3.3, from and after the date of
this Agreement until the earlier of the Closing or the termination of this
Agreement pursuant to Section 8.1, HNC, Retek and RIS shall cooperate with each
other and use their diligent good faith efforts to prepare for the Separation,
including doing each of the following:
(a) Conduct Affairs in Ordinary Course. Except as set forth in this
Agreement and the Ancillary Agreements, Retek and RIS shall each continue to
conduct its affairs in the ordinary course of its business consistent with past
practices and shall operate its business for the sole benefit of HNC, its sole
stockholder; provided that Retek shall be entitled to exercise its option to
purchase certain assets and/or stock of WebTrak Limited;
(b) Equity Incentive Plans. Retek shall establish and maintain for the
benefit of its directors, officers, employees, consultants and advisors and
those of its subsidiaries, equity incentive, stock option and similar plans or
arrangements satisfactory and acceptable to HNC;
(c) Board of Directors. Each of Retek, RIS and HNC shall nominate (and
if necessary and permitted to be done by them, elect and appoint) such persons
to its Board of Directors and such officers as HNC may request in order to
effect the composition of the Board of Directors and officers of each of Retek
and RIS which must be in effect upon the Closing as provided in Section 3.3,
consistent with the provisions of the Corporate Rights Agreement, and to
establish such committees of their respective Boards as HNC may request in
preparation for the Initial Public Offering, consistent with the provisions of
the Corporate Rights Agreement;
(d) Charter Documents Amendments. HNC shall cause Retek and RIS to
adopt by all necessary board and stockholder actions any amendments to their
Certificates of Incorporation and Bylaws to effect changes necessary thereto so
that, upon the Closing, their Certificates of Incorporation and Bylaws conform,
in each case, to those required to be in effect upon the Closing as provided in
Section 3.3;
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(e) Remedial Actions. In addition to the actions set forth in the
preceding subparagraph (e), Retek and RIS shall consult with HNC in advance of
any remedial action therefor (unless delay in such consultation would create a
serious, present threat to the lives of HNC, Retek or RIS personnel or
third-parties present on their premises, or HNC's, Retek's or RIS's property)
when any event occurs which, in the judgment of Retek's or RIS's management
requires suspension or termination of any key Retek or RIS employee;
(f) Consents. Retek and RIS shall assist HNC in identifying each Retek
Asset or Retek Liability to be assigned at the Closing which requires an HNC
Release or Consent to assignment and co-operate with HNC to obtain such HNC
Releases and such Consents;
(g) Investigations. Retek and RIS shall notify HNC immediately (and in
no event more than 24 hours after the discovery thereof) of the receipt of any
correspondence or communications from any Governmental Authority revealing the
investigation of their affairs or any aspect thereof or correspondence or
communications from any Person revealing the commencement of any litigation
against either of them, and comply with HNC's reasonable requests in responding
to any such event;
(h) Material Adverse Effect. Retek and RIS shall inform HNC as promptly
as reasonably possible upon the occurrence of any other event the occurrence of
which may have a material adverse affect on the Retek Business, on the
Separation, the Initial Public Offering or the Distribution;
(i) Returns and Reports. Retek and RIS shall co-operate with HNC, in a
manner consistent with past practices, so that all tax returns filed jointly by
HNC with either or both of them shall be timely prepared and filed, any reports
(including HNC periodic reports under the Exchange Act) shall be timely prepared
and filed, and any other accounting or administrative matters between HNC and
Retek or HNC and RIS shall be handled in a reasonably prompt and prudent manner;
(j) Stock Options. Provision regarding Retek Options or HNC Options
held by Retek Personnel.
(k) Insurance Matters. HNC, Retek and RIS shall use reasonable efforts
to maintain in full force and effect at all times up to and including the
Closing Date all property and casualty insurance programs currently maintained
by HNC, Retek or RIS as of the Effective Date, including, without limitation,
primary and excess general liability, automobile, workers' compensation,
property and crime insurance policies (collectively, the "Policies" and
individually, a "Policy"). HNC and its subsidiaries shall retain, with respect
to any Covered Claims set forth on Schedule 3.1(k) relating to periods prior to
the Closing Date, all of their respective rights, benefits and privileges, if
any, under such Policies.
(i) Except to the extent otherwise expressly
provided in the Services Agreement, commencing on and as of
the Closing Date, Retek (for itself and for RIS) shall be
responsible for establishing and for maintaining its own
separate insurance programs (including, without limitation,
primary and excess general liability, automobile, workers'
compensation, property, director and officer liability, errors
and omissions, fire, crime, surety and other similar insurance
policies) for
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activities, losses and claims relating to any period on or
after the Closing Date involving Retek, RIS or any other
member of the Retek Group. Notwithstanding any other agreement
or understanding to the contrary, except as expressly
otherwise provided in the Services Agreement or in Section
3.1(k)(ii) with respect to claims administration and financial
administration of the Policies, neither HNC nor any of its
subsidiaries shall have any responsibility for or obligation
to Retek or its subsidiaries relating to liability and
casualty insurance matters for any period, whether prior to,
at or after the Closing Date;
(ii) HNC shall be responsible for the claims
administration and financial administration of all Policies
for Covered Claims relating to the assets, ownership or
operation of the Retek Business prior to the Closing Date.
Retek shall be responsible for all administrative and
financial matters relating to insurance policies established
and maintained by Retek and RIS for claims relating to any
period on or after the Closing Date involving Retek or RIS or
any other member of the Retek Group.
(iii) Retek shall promptly notify HNC of any claim
(including any Covered Claim) relating to Retek or RIS under
one or more of the Policies relating to a period prior to the
Closing Date, and Retek and RIS agree to cooperate and
coordinate with HNC concerning any strategy HNC may reasonably
elect to pursue to secure coverage and payment for such claim
by the appropriate insurance carrier. Notwithstanding anything
contained herein, in any other agreement or applicable Policy
or any understanding to the contrary, except to the extent
otherwise expressly provided in the Services Agreement, Retek
assumes responsibility for, and shall pay to the appropriate
insurance carriers or otherwise, any premiums,
retrospectively-rated premiums, defense costs, indemnity
payments, deductibles, retentions or other charges, as
appropriate (collectively, "Insurance Charges"), whenever
arising, which shall become due and payable under the terms
and conditions of any applicable Policy in respect of any
liabilities, losses, claims, actions or occurrences, whenever
arising or becoming known, involving or relating to any of the
assets, businesses, operations or liabilities of Retek or RIS
during the period after the Closing Date. To the extent that
the terms of any applicable Policy provide that HNC or a
subsidiary thereof, as appropriate, shall have an obligation
to pay or guarantee the payment of any Insurance Charges for
which Retek has assumed responsibility in the preceding
sentence, HNC or such subsidiary shall be entitled to demand
that Retek or RIS make such payment directly to the person or
entity entitled thereto. In connection with any such demand,
HNC shall submit to Retek or RIS a copy of any invoice
received by HNC or a subsidiary pertaining to such Insurance
Charges, together with appropriate supporting documentation,
if available. If Retek or its subsidiary fails to pay any such
Insurance Charges when due and payable, whether at the request
of the party entitled to payment or upon demand by HNC or a
subsidiary of HNC, HNC or a subsidiary of HNC may (but shall
not be required to) pay such Insurance Charges for and on
behalf of Retek or its subsidiary and, thereafter, Retek or
its subsidiary shall forthwith reimburse HNC or such
subsidiary of HNC for such payment; and
(l) HNC, Retek and RIS shall take any and all other steps reasonably
necessary to prepare for the Separation and to cause the satisfaction of the
closing conditions thereto.
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3.2 PREPARATIONS FOR THE INITIAL PUBLIC OFFERING.
(a) Efforts; Abandonment. Subject to the conditions specified in
Section 3.3, HNC, Retek and RIS shall use their good faith efforts to consummate
the Initial Public Offering; provided, however, that notwithstanding the
foregoing, HNC, in its sole and absolute discretion, may cause Retek to abandon
the Separation and the Initial Public Offering as provided in Section 8.1, in
which event the Separation shall not occur and Retek shall not consummate or
close the Initial Public Offering, and shall discontinue all efforts to
consummate the Initial Public Offering.
(b) Expenses. HNC and Retek shall pay the costs and expenses as
described in Section 8.2 as set forth therein.
(c) D&O Insurance. Retek shall diligently attempt to secure directors'
and officers' insurance on customary terms reasonably acceptable to HNC,
insuring the directors and officers of Retek.
(d) Proceeds of the Initial Public Offering. The Initial Public
Offering will include only a primary offering of Common Stock by Retek. Retek
will retain the net proceeds of the primary offering.
3.3 HNC BOARD ACTION; CONDITIONS PRECEDENT TO THE SEPARATION. HNC's Board
of Directors shall, in its discretion, establish any appropriate procedures, in
addition to those set forth in this Section 3, in connection with the
Separation. In no event shall the Separation occur unless each of the following
conditions, together with those established by HNC's Board of Directors, shall
have been satisfied, unless waived in writing by HNC in its sole discretion:
(a) All necessary regulatory approvals from Governmental Authorities
for the Separation, the Initial Public Offering and the performance of this
Agreement shall have been received;
(b) The Registration Statement shall have been filed with the
Commission, and Retek shall have been notified by the staff of the Commission
that it has no further comments on the Registration Statement and is prepared to
declare the Registration Statement effective upon Retek's request;
(c) All required actions and filings with regard to state securities
and blue sky laws of the United States (and any comparable laws under any
foreign jurisdictions) with respect to the Initial Public Offering shall have
been taken and no impediment other than the effectiveness of the Registration
Statement shall exist to the qualification under such securities laws of the
shares of Common Stock to be issued in the Initial Public Offering;
(d) Retek's Board of Directors and executive officers, as named in the
Registration Statement and agreed on between Retek and HNC, shall have been
elected by HNC, as sole stockholder of Retek, and the Retek Certificate and the
Retek Bylaws, in the form set forth as exhibits to the Registration Statement,
shall be in effect;
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(e) Retek shall have entered into indemnity agreements with, and for
the benefit of, each of its directors identified in subparagraph (d) of this
Section 3.3, in a form reasonably satisfactory to HNC and shall have obtained
directors' and officers' insurance covering such directors under a policy
reasonably satisfactory in substance and amount to HNC;
(f) RIS's Board of Directors, as agreed on between Retek and HNC, shall
have been elected by Retek as sole stockholder of RIS and RIS' officers, as
agreed between Retek and HNC;
(g) The RIS Certificate and the RIS Bylaws, in the form satisfactory to
HNC and Retek, shall be in effect;
(h) Retek shall have entered into an Underwriting Agreement with the
managing Underwriters for the Initial Public Offering which shall be reasonably
satisfactory to HNC;
(i) An application for quotation of the Common Stock on the National
Market System of the Nasdaq Stock Market shall have been filed in connection
with the Initial Public Offering, and Retek shall have been notified that,
subject to the effectiveness of the Registration Statement and official notice
of issuance, the Common Stock has been accepted for quotation thereon;
(j) HNC's Board of Directors, Retek's Board of Directors and RIS's
Board of Directors shall have formally approved the Separation, the Initial
Public Offering, the Ancillary Agreements and the related transactions
contemplated thereby and shall not have abandoned, deferred or modified the
Separation or the Initial Public Offering at any time prior to the Closing Date;
(k) No restraining order or injunction or other order, decree or ruling
issued by a court or by a government, regulatory or administrative agency or
commission, and no statute, rule, regulation or executive order promulgated or
enacted by any Governmental Authority shall be in effect preventing the
consummation of the Separation or the Initial Public Offering or any of the
other transactions contemplated by this Agreement or any Ancillary Agreement,
excluding the rules and regulations of such Governmental Authorities, the Nasdaq
Stock Market, the National Association of Securities Dealers and state
securities regulations which require that the Registration Statement be declared
effective before the consummation of the Initial Public Offering will be lawful;
(l) The HNC Releases shall have been obtained and HNC shall have been
released from any liabilities, guarantees or other obligations with respect to
any indebtedness or other obligations of Retek or its subsidiaries; provided,
that the satisfaction of such conditions shall not create any obligation on the
part of HNC to effect the Separation or in any way limit HNC's power of
termination set forth in Section 8.1 or alter the consequences of any such
termination from those specified in such Section;
(m) HNC shall be satisfied in its sole discretion that: (i) it will own
at least % of the outstanding Common Stock immediately following the
Initial Public Offering on a fully diluted basis (such percentage to be computed
after giving effect to the issuance of any shares of restricted stock or
employee stock options to any employees, officers, directors, consultants or
other service providers of Retek, and the possible exercise of any
over-allotment option by the Underwriters in the Initial Public Offering); and
(ii) all other conditions to permit any Distribution of the Common
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Stock held by HNC to HNC's stockholders after the closing of the Initial Public
Offering to qualify as a tax-free distribution to HNC, any member of the HNC
Group, Retek, and RIS and any member of the Retek Group and HNC's stockholders;
to the extent applicable as of the time of the Closing, can be satisfied and
there shall be no event or condition that is likely to cause any of such
conditions not to be satisfied thereafter;
(n) Retek (and/or RIS, as applicable) shall have executed and delivered
each of the Ancillary Agreements to which each is a party;
(o) Such other actions as the parties hereto may, based upon the advice
of counsel, reasonably request to be taken prior to the Separation in order to
assure the successful completion of the Separation and the Initial Public
Offering and the other transactions contemplated by this Agreement shall have
been taken; and
(p) This Agreement shall not have been terminated.
ARTICLE IV
INDEMNIFICATION
4.1 RELEASE OF CLAIMS.
(a) Release by Retek. Except as provided in Section 4.1(d), effective
as of the Closing Date, Retek does hereby, for itself and its Affiliates (other
than any member of the HNC Group), successors and assigns, and all Persons who
at any time prior to the Closing Date have been stockholders, directors,
officers, agents or employees of Retek or any of its Affiliates (other than any
member of the HNC Group) (in each case, in their respective capacities as such),
remise, release and forever discharge HNC and each member of the HNC Group,
their respective successors and assigns, and all Persons who at any time prior
to the Closing Date have been stockholders, directors, officers, agents or
employees of HNC or of any member of the HNC Group (in each case, in their
respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any facts or events occurring or failing to occur or
alleged to have occurred or to have failed to occur or any conditions existing
or alleged to have existed on or before the Closing Date, including in
connection with the transactions and all other activities to implement the
Separation and the Initial Public Offering.
(b) Release by RIS. Except as provided in Section 4.1(d), effective as
of the Closing Date, RIS does hereby, for itself and its Affiliates (other than
any member of the HNC Group), successors and assigns, and all Persons who at any
time prior to the Closing Date have been stockholders, directors, officers,
agents or employees of RIS or any of its Affiliates (other than any member of
the HNC Group) (in each case, in their respective capacities as such), remise,
release and forever discharge HNC and each member of the HNC Group, their
respective successors and assigns, and all Persons who at any time prior to the
Closing Date have been stockholders, directors, officers, agents or employees of
HNC or of any member of the HNC Group (in each case, in their respective
capacities as such), and their respective heirs, executors, administrators,
successors and
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assigns, from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any facts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Closing Date, including in connection with the transactions and all
other activities to implement the Separation and the Initial Public Offering.
(c) Release by HNC. Except as provided in Section 4.1(d), effective as
of the Closing Date, HNC does hereby, for itself and each member of the HNC
Group, HNC's successors and assigns, and all Persons who at any time prior to
the Closing Date have been stockholders, directors, officers, agents or
employees of HNC or any member of the HNC Group (in each case, in their
respective capacities as such), remise, release and forever discharge Retek and
RIS, their respective successors and assigns, and all Persons who at any time
prior to the Closing Date have been stockholders, directors, officers, agents or
employees of Retek or RIS (in each case, in their respective capacities as
such), and their respective heirs, executors, administrators, successors and
assigns, from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any facts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Closing Date, including in connection with the transactions and all
other activities to implement the Separation and the Initial Public Offering.
(d) Exclusions. Nothing contained in Section 4.1(a), 4.1(b) or 4.1(c)
shall impair any right of any Person to enforce this Agreement, any Ancillary
Agreement or any agreements, arrangements, commitments or understandings that
are specified in this Agreement as not to terminate as of the Closing Date, in
each case in accordance with its terms. In addition, nothing contained in
Section 4.1(a), 4.1(b) or 4.1(c) shall release any Person from:
(i) Any Liability provided in or resulting from any agreement
between Retek, and/or RIS, on the one hand, and any member of the HNC
Group, on the other hand, that is specified in this Agreement as not to
terminate as of the Closing Date, including but not limited to the
liability and obligation of Retek or HNC, as applicable, to make any
payment to the other required to be made by the provisions of Section
2.6;
(ii) Any Liability, contingent or otherwise, assumed, transferred
or assigned to such Person in accordance with this Agreement;
(iii) Any Liability of any Person under this Agreement (including
but not limited to indemnification obligations of such Person under
this Article IV) or under any Ancillary Agreement;
(iv) Any Liability for the sale, lease or receipt of goods,
property or services purchased, obtained or used in the ordinary course
of business by Retek or RIS from any member of the HNC Group or by any
member of the HNC Group from Retek or RIS;
(v) Any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement or any
Ancillary Agreement, including but not
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limited to indemnification or contribution for claims brought against
any of the parties by third Persons, which Liability shall be governed
by the provisions of this Article IV and, if applicable, the
appropriate provisions of the Ancillary Agreements; or
(vi) Any Liability the release of which would result in the
release of any Person other than a Person released pursuant to this
Section 4.1; provided that the parties agree not to bring suit or
permit any of their subsidiaries to bring suit against any Person with
respect to any Liability to the extent that such Person would be
released with respect to such Liability by this Section 4.1 but for the
provision of this clause (vi).
(e) Covenant Not to Make Claims on Released Matters. Retek shall not
make any claim or demand or bring or commence any Action asserting any claim or
demand, including any claim of contribution or indemnification, against HNC or
any member of the HNC Group or any other Person released pursuant to Section
4.1(a), with respect to any Liabilities released pursuant to Section 4.1(a). RIS
shall not make any claim or demand or bring or commence any Action asserting any
claim or demand, including any claim of contribution or indemnification, against
HNC or any member of the HNC Group or any other Person released pursuant to
Section 4.1(b), with respect to any Liabilities released pursuant to Section
4.1(b). HNC shall not make, and shall not permit any member of the HNC Group to
make, any claim or demand or bring or commence any Action asserting any claim or
demand, including any claim of contribution or indemnification, against Retek or
RIS or any other Person released pursuant to Section 4.1(c), with respect to any
Liabilities released pursuant to Section 4.1(c).
(f) Intent. It is the intention of each of HNC, Retek and RIS, by
virtue of the provisions of this Section 4.1, to provide for a full and complete
release and discharge of all Liabilities existing or arising from all acts and
events occurring or failing to occur or alleged to have occurred or failed to
occur and all conditions existing or alleged to have existed on or before the
Closing Date, between or among Retek or RIS or any of their Affiliates, on the
one hand, and HNC or any member of the HNC Group, on the other hand (including
any contractual agreements or arrangements existing or alleged to exist between
or among such Persons on or before the Closing Date), except as expressly set
forth in Section 4.1(d). At any time, at the request of any other party, each
party shall execute and deliver, confirmations or releases reflecting the
provisions hereof.
(g) Waiver. In connection with the releases granted by the parties
hereunder, each of Retek, RIS and HNC, on behalf of itself and each Person for
whom it granted a release pursuant to this Section 4.1, hereby expressly waives
any and all rights conferred upon it by the provisions of Section 1542 of the
California Civil Code and any similar law. Section 1542 of the California Civil
Code reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR." Each of the parties hereto hereby represents and warrants that
it has discussed the provisions of Section 1542 of the California Civil Code
with its respective counsel and has been advised of the effect of the waiver of
the provisions of that Section.
4.2 INDEMNIFICATION BY RETEK AND RIS. Except as provided in Section 4.5 and
except as otherwise expressly provided in any of the Ancillary Agreements, from
and after the Closing Date, Retek and RIS shall indemnify, defend and hold
harmless HNC, each member of the HNC Group
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and each of their respective directors, officers, agents and employees and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "HNC Indemnitees") from and against any and all Liabilities
of the HNC Indemnitees relating to, arising out of or resulting from any of the
following items (without duplication):
(a) The failure of Retek or any other Person to pay, perform or
otherwise promptly discharge any Retek Liability or Retek Contract in accordance
with their respective terms, whether prior to or after the Closing Date or the
Effective Date hereof;
(b) the Retek Business, any Retek Liability or any Retek Contract;
(c) Any breach by Retek or RIS of this Agreement or any of the
Ancillary Agreements;
(d) Any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, with respect
to all information contained in the Registration Statement or the Prospectus
provided, however, that Retek and RIS shall not be liable to any HNC Indemnitee
in any such case to the extent that any such liability arising out of or
relating to any untrue statement or allegedly untrue statement or any omission,
if such statement or omission shall have been made in reliance upon and in
conformity with information relating to the HNC Indemnitees included in such
Registration Statement or Prospectus furnished in writing to Retek or RIS by or
on behalf of such HNC Indemnitee; and
(e) any violation by Retek or RIS of (i) the Securities Act, (ii) any
other federal law, rule or regulation regarding securities or (iii) any state or
other law, rule or regulation regarding securities in connection with the
Initial Public Offering or any subsequent offering or transaction involving
securities of Retek or RIS.
4.3 INDEMNIFICATION BY HNC. Except as provided in Section 4.5 and except as
otherwise expressly provided in any of the Ancillary Agreements, from and after
the Closing Date, HNC shall indemnify, defend and hold harmless Retek and each
of its subsidiaries and each of their respective directors, officers and
employees and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "Retek Indemnitees") from and against any and all
Liabilities of Retek Indemnitees relating to, arising out of or resulting from
any of the following items (without duplication):
(a) The failure of HNC or any other member of the HNC Group or any
other Person to pay, perform or otherwise promptly discharge any Liability of
the HNC Group (other than Retek Liabilities) in accordance with its terms,
whether prior to or after the Closing Date or the date hereof;
(b) Any Liability of any member of the HNC Group other than Retek
Liabilities; and
(c) Any breach by HNC or any member of the HNC Group of this Agreement
or any of the Ancillary Agreements.
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4.4 NOTICE AND PAYMENT OF CLAIMS. If any HNC Indemnitee or Retek Indemnitee
(the "Indemnified Party") determines that it is or may be entitled to
indemnification under this Article IV (other than in connection with any Action
subject to Section 4.5), then the Indemnified Party shall deliver to the person
from whom such indemnification is sought (the "Indemnifying Party"), a written
notice (a "Claim Notice") specifying, to the extent reasonably practicable, the
basis for its claim for indemnification and the amount for which the Indemnified
Party reasonably believes it is entitled to be indemnified. After the
Indemnifying Party shall have been notified of the amount for which the
Indemnified Party seeks indemnification, the Indemnifying Party shall, within
sixty (60) days after its receipt of such written notice, either (i) pay the
Indemnified Party such amount in cash or other immediately available funds (or
reach agreement with the Indemnified Party as to a mutually agreeable
alternative payment schedule) or (ii) object to the claim for indemnification or
the amount thereof by giving the Indemnified Party written notice setting forth
the grounds therefor. Any objection shall be resolved in accordance with the
provisions of Article VII. If the Indemnifying Party does not give such notice
within such sixty (60) day period, then the Indemnifying Party shall be deemed
to have acknowledged its liability for such claim to the extent that the amount
of such liability is specifically set forth in the Claim Notice and the
Indemnified Party may exercise any and all of its rights under applicable law to
collect such amount.
4.5 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. Promptly following the
earlier of (A) receipt of written notice of the commencement by a third party of
any Action against or otherwise involving any Indemnified Party or (B) receipt
of written information from a third party alleging the existence of a claim
against an Indemnified Party, in either case, with respect to which
indemnification may be sought by an Indemnified Party pursuant to Article IV of
this Agreement (a "Third-Party Claim"), the Indemnified Party shall give the
Indemnifying Party prompt written notice thereof. Failure of the Indemnified
Party to give such written notice as provided in this Section 4.5 shall not
relieve the Indemnifying Party of its obligations under this Agreement, except
to the extent that the Indemnifying Party is prejudiced by such failure to give
notice. Such notice shall describe the Third-Party Claim in reasonable detail,
and attach any documentation received from the claimant (including, if
applicable, a copy of any complaint filed against the Indemnified Party)
asserting such Third-Party Claim.
(a) Within thirty (30) days after receipt of such notice, the
Indemnifying Party may, by giving written notice thereof to the Indemnified
Party, (i) elect to assume the defense of such Third-Party Claim at its sole
cost and expense or (ii) object to the claim of indemnification for such
Third-Party Claim setting forth the grounds for its objection. Any objection
shall be resolved in accordance with the provisions of Article VII. If the
Indemnifying Party does not within such thirty (30) day period give the
Indemnified Party such notice, then the Indemnifying Party shall be deemed to
have acknowledged its liability for such Third-Party Claim.
(b) Any defense of a Third-Party Claim as to which the Indemnifying
Party has elected to assume the defense shall be conducted by counsel employed
by the Indemnifying Party and reasonably satisfactory to HNC (in the case of HNC
Indemnitees) or Retek (in the case of Retek Indemnitees). The Indemnified Party
shall have the right to participate in such proceedings and to be represented by
counsel of its own choosing at the Indemnified Party's sole cost and expense;
provided that if the defendants or parties against which relief is sought in any
such claim include both the Indemnifying Party and one or more Indemnified
Parties and, in the reasonable judgment of HNC (in the case of HNC Indemnitees)
or Retek (in the case of Retek Indemnitees), an actual or potential
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conflict of interest between such Indemnified Parties and such Indemnifying
Party exists in respect of such claim or with regard to a defense thereto, such
Indemnified Parties shall have the right to employ one firm of counsel selected
by HNC (for HNC Indemnitees) or Retek (for Retek Indemnitees) and in that event
the reasonable fees and expenses of such separate counsel (but not more than one
separate counsel reasonably satisfactory to the Indemnifying Party) shall be
paid by such Indemnifying Party.
(c) If the Indemnifying Party assumes the defense of a Third-Party
Claim, then the Indemnifying Party may settle or compromise the claim without
the prior written consent of the Indemnified Party; provided that without the
prior written consent of HNC (in the case of HNC Indemnitees) and Retek (in the
case of Retek Indemnitees), the Indemnifying Party may not agree to any such
settlement unless as a condition to such settlement the Indemnified Party
receives a written release from any and all liability relating to such
Third-Party Claim and such settlement or compromise does not include any remedy
or relief to be applied to or against the Indemnified Party or its assets,
properties or business, other than monetary damages for which the Indemnifying
Party shall be fully responsible hereunder and which the Indemnifying Party pays
upon execution of the settlement.
(d) If the Indemnifying Party does not assume the defense of a
Third-Party Claim for which it has acknowledged liability for indemnification
under this Article IV, HNC (in the case of HNC Indemnitees) and Retek (in the
case of Retek Indemnitees) may pursue the defense of such Third-Party Claim and
choose one firm of counsel in connection therewith. The Indemnifying Party is
required to reimburse HNC or Retek, as the case may be, on a current basis for
its reasonable expenses of investigation, reasonable attorney's fees and
reasonable out-of-pocket expenses as incurred by HNC (in the case of HNC
Indemnitees) and Retek (in the case of Retek Indemnitees) in defending against
such Third-Party Claim and the Indemnifying Party shall be bound by the result
obtained with respect to such Third-Party Claim with respect to such
Indemnifying Party's indemnification obligations under this Article IV, provided
that the Indemnifying Party shall not be liable for any settlement effected
without the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, delayed or conditioned.
(e) The Indemnifying Party shall pay to the Indemnified Party in cash
the amount for which the Indemnified Party is entitled to be indemnified (if
any) no later than the later of (i) the date on which the Indemnified Party
makes any payment in satisfaction (partial or otherwise) of the Third-Party
Claim or (ii) the date on which such Indemnifying Party's objection, if any, to
its responsibility for indemnification under this Article IV has been resolved
pursuant to the provisions of Article VII or by settlement or compromise or the
final nonappealable judgment of a court of competent jurisdiction.
4.6 INSURANCE PROCEEDS. The amount that any Indemnifying Party is or may be
required to pay to any Indemnified Party pursuant to this Article IV shall be
reduced (including, without limitation, retroactively) by any insurance proceeds
or other amounts actually recovered by or on behalf of such Indemnified Parties
in reduction of the related Liability. If an Indemnified Party shall have
received the payment required by this Agreement from an Indemnifying Party in
respect of a Liability and shall subsequently actually receive insurance
proceeds, or other amounts in respect of such Liability as specified above, then
such Indemnified Party shall pay to such Indemnifying Party a sum equal to the
amount of such insurance proceeds or other amounts actually received in respect
of such Liability.
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4.7 CONTRIBUTION. If the indemnification provided for in this Article IV is
for any reason unavailable to an Indemnified Party in respect of any Liability
arising out of or related to information contained in or omitted from the
Registration Statement, then the Indemnifying Party, in lieu of indemnifying the
Indemnified Party shall contribute to the amount paid or payable by the
Indemnified Party as a result of such Liability in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party, on the one
hand, and the Indemnified Party, on the other hand, in connection with the
actions or omissions which resulted in such Liability. If the Liability in
question arises from statements or omissions that are untrue or are alleged to
be untrue, then the relative fault of the Indemnifying Party, on the one hand,
and of the Indemnified Party, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party on the one hand or the
Indemnified Party on the other hand; the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission, but not by reference to any Indemnified Party's
stock ownership in Retek. Notwithstanding the foregoing, no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
4.8 SUBROGATION. In the event of payment by an Indemnifying Party to any
Indemnified Party in connection with any Third-Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the first place of such
Indemnified Party as to any events or circumstances in respect of which such
Indemnified Party may have any right or claim relating to such Third-Party
Claim. Such Indemnified Party shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim, provided, however, that this right of
subrogation shall be construed in such a way so that it does not discharge any
insurance carrier for an Indemnifying Party for any obligation under any
insurance policy which provides coverage for such Indemnifying Party from any
loss asserted or involved in such Third-Party Claim.
4.9 NO THIRD-PARTY BENEFICIARIES. This Article IV shall inure to the
benefit of, and be enforceable by HNC, the HNC Indemnitees, Retek and Retek
Indemnitees and their respective successors and permitted assigns. The
indemnification provided for by this Article IV shall not inure to the benefit
of any other third party or parties, relieve any insurer who would otherwise be
obligated to pay any claim of the responsibility with respect thereto or, solely
by virtue of the indemnification provisions hereof or provide any subrogation
rights with respect thereto. Each party agrees to waive such subrogation rights
against the other to the fullest extent permitted.
4.10 REMEDIES CUMULATIVE. The remedies provided in this Article IV shall be
cumulative and shall not preclude assertion by any Indemnified Party of any
other rights or the seeking of any and all other remedies against an
Indemnifying Party. The procedures set forth in this Article IV, however, shall
be the exclusive procedures governing any indemnity action brought under this
Article IV or otherwise relating to Liabilities.
4.11 SURVIVAL OF INDEMNITIES. The rights and obligations of each of HNC and
Retek and their respective Indemnitees under this Article IV shall survive the
sale or other transfer by it of any assets or businesses or the assignment by it
of any Liabilities and shall, without limitation, survive the
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consummation and closing of the Separation, the Initial Public Offering and (if
it should ever occur) the Distribution.
ARTICLE V
THE DISTRIBUTION
5.1 POTENTIAL DISTRIBUTION. HNC currently intends (but HNC has not agreed
or committed that), following the consummation of the Initial Public Offering,
to complete the Distribution, subject to the satisfaction and fulfillment of
several conditions. These conditions would include, but not necessarily be
limited to, the following conditions: (a) HNC's receipt of a written ruling from
the Internal Revenue Service that the Distribution qualifies for tax-free
treatment under Section 355 of the Code such that HNC's stockholders and HNC and
its Affiliates will not recognize income for federal income tax purposes as a
result of the Distribution, (b) the approval and declaration of the Distribution
by HNC's Board of Directors, (c) the absence of any change in economic or market
conditions or other circumstances that would cause HNC's Board of Directors to
conclude that the Distribution was not in the best interests of HNC and its
stockholders, and (d) HNC being able to effect the Distribution in compliance
with applicable law and its contractual obligations. However, HNC shall not have
any obligation or commitment whatsoever so any Person (including but not limited
to Retek or RIS) to effect or consummate the Distribution. HNC shall, in its
sole and absolute discretion, determine when and whether to proceed with all or
part of the Distribution and all terms of the Distribution, including, without
limitation, the form, structure and terms of any transaction(s) and/or
offering(s) to effect the Distribution and the timing of and conditions to the
consummation of the Distribution. In addition, HNC may at any time and from time
to time until the completion of the Distribution abandon, modify or change any
or all of the terms of the Distribution, including without limitation, by
accelerating or delaying the timing of the consummation of all or part of the
Distribution. Retek shall cooperate with HNC in all commercially reasonable
respect to accomplish the Distribution (if HNC elects, in its sole and absolute
discretion, to effect the Distribution) and shall, at HNC's direction, promptly
take any and all actions necessary or desirable to effect the Distribution,
including, without limitation, the registration under the Securities Act of
Retek Common Stock on an appropriate registration form or forms to be designated
by HNC. HNC shall select any investment banker(s) and manager(s) in connection
with the Distribution, as well as any other institutions providing services in
connection with the Distribution.
5.2 CERTAIN MATTERS. If HNC elects, in its sole discretion, to effect the
Distribution, then from and after the distribution of Retek Common Stock in
connection with any transaction(s) included as part of the Distribution and
until such Retek Common Stock is duly transferred in accordance with applicable
law, Retek shall regard the Persons receiving Retek Common Stock in such
transaction(s) as record holders of Retek Common Stock in accordance with the
terms of such transaction(s) without requiring any action on the part of such
Persons. Retek agrees that, subject to any transfers of such stock, (a) each
such holder shall be entitled to receive all dividends payable on, and exercise
voting rights and all other rights and privileges with respect to, the shares of
Retek Common Stock then held by such holder and (b) each such holder shall be
entitled, without any action on the part of such holder, to receive one or more
certificates representing, or other evidence of ownership of, the shares of
Retek Common Stock then held by such holder. HNC shall cooperate, and shall
instruct the HNC stock transfer agent to cooperate, with Retek and the Retek
stock transfer agent, and Retek shall cooperate, and shall instruct the Retek
stock transfer agent to cooperate, with HNC and
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the HNC Transfer Agent, in connection with all aspects of the Distribution and
all other matters relating to the issuance and delivery of certificates
representing, or other evidence of ownership of, the shares of Retek Common
Stock distributed to the holders of HNC Common Stock in connection with any
transaction(s) included as part of the Distribution. Following the Distribution,
HNC shall promptly, but in no event no later than two business days thereafter,
instruct the HNC stock transfer agent to deliver to the Retek stock transfer
agent true, correct and complete copies of the stock and transfer records
reflecting the holders of HNC Common Stock receiving shares of Retek Common
Stock in connection with any transaction(s) included as part of the
Distribution.
5.3 FURTHER ASSURANCES REGARDING THE DISTRIBUTION.
(a) General. In addition to the actions specifically provided for
elsewhere in this Agreement, if HNC elects, in its sole discretion, to effect
the Distribution, then Retek shall, at HNC's direction, use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things commercially reasonably necessary, proper or
expeditious under applicable laws, regulations and agreements in order to
consummate and make effective the Distribution as promptly as reasonably
practicable. Without limiting the generality of the foregoing, Retek shall, at
HNC's direction, cooperate with HNC, and execute and deliver, or use all
commercially reasonable efforts to cause to have executed and delivered, all
instruments, including instruments of conveyance, assignment and transfer, and
to make all filings with, and to obtain all consents, approvals or
authorizations of, any domestic or foreign governmental or regulatory authority
requested by HNC in order to consummate and make effective the Distribution.
(b) Assistance. After the Closing Date, Retek and RIS shall co-operate
with HNC and shall take such actions as HNC may reasonably request (including
without limitation providing all information, preparing and filing all
documentation as HNC may reasonably request and, if requested by HNC,
participating in any conferences with the Internal Revenue Service to seek a
ruling as to whether the Distribution can be accomplished after the closing of
the Initial Public Offering without recognition of taxable income by any of HNC,
HNC's stockholders, any Affiliate of HNC upon the closing of the Distribution)
to assist HNC in planning or effecting the Distribution and/or in determining
whether the Distribution can be effected without recognition of taxable income
as aforesaid. If the Internal Revenue Service provides HNC with a favorable
ruling that the Distribution will be tax-free under Section 355 of the Code,
then after the Closing Date, Retek and RIS shall take such actions and refrain
from taking such actions as necessary to insure, as nearly as reasonably
possible consistent with the fiduciary duties which HNC, Retek and RIS owe to
stockholders, that the conditions announced in any such ruling to the tax-free
nature of the Distribution are satisfied.
(c) Retek shall not issue any shares of its capital stock such that,
immediately following such issuance, HNC would be unable to effect the
Distribution on a tax-free basis as described in Section 5.1 and in Section
5.3(b).
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5.4 RETEK BOARD OF DIRECTORS. HNC and Retek shall each take all actions
which may be required to elect or otherwise appoint as directors of Retek,
effective as of the date on which the Distribution occurs, such individuals as
may be designated by Retek's Board of Directors (which designation shall be
approved by the majority of Retek's directors who are at such time neither
officers nor directors of HNC) as additional or substitute members of the Board
of Directors of Retek on the Distribution Date.
5.5 CERTAIN POST-DISTRIBUTION TRANSACTIONS.
(a) Actions Inconsistent with the Rulings. In the event that stock of
Retek (or any successor thereto) is ultimately distributed to any or all of
HNC's stockholders pursuant to transactions intended to qualify under Section
355 of the Code, Retek shall not take or fail to take, and shall not permit any
Affiliate of Retek to take or fail to take, any action if such act or failure to
act would be inconsistent with any representation, covenant or information in
any ruling, including for all purposes of this Agreement any supplemental
rulings (collectively, the "Rulings") issued by the Internal Revenue Service in
connection with the Distribution or any representation, covenant or any
information included in any submission to the Internal Revenue Service in
connection with the Rulings (together with the Rulings, the "Rulings and
Submissions").
(b) Liability. Notwithstanding anything to the contrary in this
Agreement or the Tax Sharing Agreement, Retek and the Affiliates of Retek shall
be jointly and severally liable for, and shall indemnify and hold harmless HNC
and each Affiliate of HNC (other than any member of the Retek Group) from and
against on an After-Tax Basis, any and all Taxes (including interest, penalties
and additions to Tax) resulting from the Distribution to the extent such Taxes
result in whole or in part from (i) any event or transaction occurring after the
Distribution that involves the stock, assets, or business of Retek or any of its
Affiliates, whether or not such event or transaction is the result of the direct
actions of, or within the control of, Retek or any of its Affiliates, (ii) any
act or failure to act on the part of Retek or any of its Affiliates after the
Distribution, (iii) the breach of any representation, covenant or information
regarding Retek or any of its Affiliates included in the Rulings and
Submissions, or (iv) any actions contemplated by Section 5.5(c) below,
regardless of whether HNC consents to such actions pursuant to Section 5.5(d)
below.
(c) Covenants Specific to Distribution Tax Matters. Retek agrees that
during the two (2) year period immediately following completion of the
Distribution (the "Restriction Period"), Retek will not, and will not permit any
Affiliates of Retek to:
(i) sell, exchange, distribute or otherwise transfer or agree
to sell, exchange, distribute or transfer, all or a
substantial portion of its assets (within the meaning of
Rev. Proc. 77-37), or any stock or equity interest in any
Affiliate of Retek, in a single transaction or a series of
transactions;
(ii) voluntarily dissolve or liquidate or enter into any merger,
consolidation or reorganization transaction;
(iii) (A) solicit any Person or Persons to make a tender offer
for the equity securities of Retek, (B) participate in or
support any unsolicited tender offer for the equity
securities of Retek, or (C) approve any proposed business
combination or any transaction which would result in any
Person or Persons acquiring directly or
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indirectly a 50% or greater interest (within the meaning of
Section 355(e) of the Code) in Retek;
(iv) whether before or subsequent to the expiration of the
Restriction Period, engage in any action described in
clause (iii) above if it is pursuant to an arrangement
negotiated (in whole or in part) prior to or subsequent to
the Distribution, even if at the time of the Distribution
it is subject to various conditions;
(v) liquidate, dispose of or otherwise discontinue or otherwise
fail to maintain the active conduct of the trade or
business relied upon in connection with the Rulings and
Submissions;
(vi) sell or otherwise issue to any Person or Persons, or redeem
or otherwise acquire from any Person or Persons, any of its
outstanding stock (other than stock purchases meeting the
requirements of section 4.05(1)(b) of Rev. Proc. 96-30)
that in the aggregate (including shares issued and sold in
the Initial Public Offering) would result in the
acquisition of a 50% or greater interest (within the
meaning of Section 355(e) of the Code) directly or
indirectly by any Person or Persons in Retek;
(vii) issue any stock or equity interests (except pursuant to the
exercise of employee stock options) that in the aggregate
(including shares issued and sold in the Initial Public
Offering) would result in the acquisition of a 50% or
greater interest (within the meaning of Section 355(e) of
the Code) directly or indirectly by any Person or Persons
in Retek;
(viii) enter into any agreement for the sale or other disposition
of its stock or equity interests;
(ix) take any action inconsistent with the representations,
covenants or information included in the Rulings and
Submissions or that would result in the Distribution being
Taxable in whole or part to HNC or any of its Affiliates or
HNC's stockholders; or
(x) engage in any agreement, understanding, arrangement or
negotiation, directly or indirectly, with any Person or
Persons with respect to any of the restricted actions
described in clauses (i) through (x) above.
(d) Exceptions to Covenants. Notwithstanding Section 5.5(c) above,
Retek or any Affiliate of Retek may take actions inconsistent with the covenants
contained in such Section 5.5(c), if (i) HNC expressly consents in writing to
such actions, such consent to be determined by HNC in its sole discretion taking
into account solely the preservation of the tax-free status of the Distribution
under Section 355 of the Code or HNC or (ii) Retek has obtained a ruling from
the Internal Revenue Service, in form and substance reasonably satisfactory to
HNC, to the effect that such proposed transaction will not adversely affect the
tax-free status of the Distribution under Section 355 of the Code. Retek agrees
that HNC is to have no liability for any Tax resulting from any restricted
action permitted pursuant to this Section 5.5(d) and agrees to indemnify and
hold harmless HNC against any such Tax notwithstanding the giving by HNC of its
consent to such restricted actions.
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ARTICLE VI
ACCESS TO INFORMATION
6.1 PROVISION OF CERTAIN CORPORATE DOCUMENTS. Each of HNC, Retek and RIS
shall arrange as soon as practicable following the Closing Date for the
provision to the other party of the other party's existing corporate governance
documents (e.g. certificate of incorporation, by laws, minute books, stock
registers, stock certificates, etc.) in its possession relating to the other
party. Each party may make and keep copies of all such documents as it is
required to provide to any other party hereunder.
6.2 ACCESS TO INFORMATION. From and after the Closing Date, each of HNC,
Retek and RIS shall afford the other, including its accountants, counsel and
other designated representatives, reasonable access (including using reasonable
efforts to give access to persons or firms possessing information) and
duplicating rights during normal business hours to all records, books,
contracts, instruments, computer data and other data and information in such
party's possession relating to the business and affairs of the other (other than
data and information subject to an attorney/client or other privilege), insofar
as such access is reasonably required by the other party including, without
limitation, for audit, accounting and litigation purposes, as well as for
purposes of fulfilling disclosure and reporting obligations. In particular, for
so long as HNC is required to include, incorporate or reflect financial
information, financial statements or operating results of Retek and/or any other
member of the Retek Group (a) in HNC's financial statements under generally
accepted accounting principles and/or (b) in any reports or filings required to
be made by HNC under the Securities Act, the Exchange Act or other applicable
law, then Retek shall (i) provide HNC in good faith with prompt and full access
to such information, including the right to duplicate and retain copies of such
information, (ii) cooperate promptly with HNC as necessary to enable HNC to
timely prepare and file or make any such financial statements, reports or
filings and (iii) provide all time, attention and effort of Retek personnel as
may be reasonably requested by HNC to assist HNC in preparing any such financial
statements, reports or filings.
6.3 LITIGATION COOPERATION. Each of HNC, Retek and RIS shall use reasonable
efforts to make available to the other(s), upon written request, its officers,
directors, employees and agents as witnesses to the extent that such persons may
reasonably be required in connection with any legal, administrative or other
proceedings arising out of the business of the other in which the requesting
party may from time to time be involved.
6.4 REIMBURSEMENT. Each party providing witnesses under Section 6.3 to the
other shall be entitled to receive from the party for whom the witness is
provided, upon the presentation of invoices therefor, payment for all
out-of-pocket costs and expenses as may be reasonably incurred in providing such
witnesses.
6.5 CONFIDENTIALITY. Subject to Section 6.6, each party and each of its
subsidiaries shall hold and shall cause its respective directors, officers,
employees, agents, consultants and advisors to hold, in strict confidence,
unless compelled to disclose by judicial or administrative process or, in the
opinion of its counsel, by other requirements of law, all confidential, trade
secret or proprietary information (other than any such information relating
solely to the business or affairs of such party) concerning the other party
(except to the extent that such information can be shown to have been (i)
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in the public domain through no fault of such party, (ii) later lawfully
acquired on a non-confidential basis from other sources by the party to which it
was furnished, and without breach of any obligation or duty by a third-party
concerning confidentiality, (iii) independently generated without reference to
any proprietary or confidential information of the other party, or (iv)
information that may be disclosed pursuant to any Ancillary Agreement). No party
shall release or disclose any such information to any other person, except its
auditors, attorneys, financial advisors, bankers and other consultants and
advisors who shall be advised of and agree to comply with the provisions of this
Section 6.5.
6.6 PROTECTIVE ARRANGEMENTs. If any party hereto (or any of its
subsidiaries) either (a) determines on the advice of its counsel that it is
required to disclose any information pursuant to applicable law (including but
not limited to disclosure required pursuant to the Code, the Securities Act or
the Exchange Act, including the disclosure of financial and other information in
filings or reports made under the Securities Act or the Exchange Act) or (b)
receives any demand under lawful process or from any Governmental Authority, to
disclose or provide information of any other party hereto (or any of its
subsidiaries) that is subject to the confidentiality provisions hereof, such
party shall (except with respect to filings in reports under the Exchange Act
that require such disclosure) notify the other party prior to disclosing or
providing such information and shall cooperate at the expense of the requesting
party in seeking any reasonable protective arrangements requested by such other
party. Subject to the foregoing, the Person that received such request may
thereafter disclose or provide information to the extent required by such law
(as so advised by counsel) or by lawful process or such Governmental Authority.
6.7 MAIL. After the Closing Date, each of HNC, Retek and RIS may receive
mail, telegrams, packages and other communications properly belonging to the
other. Accordingly, at all times after the Closing Date, each of HNC, Retek and
RIS authorizes the other to receive and open all mail, telegrams, packages and
other communications received by it and not unambiguously addressed to or
intended for the other party or any of the other party's officers or directors
specifically in their capacities as such, and to retain the same to the extent
that they relate to the business of the receiving party or, to the extent that
they do not relate to the business of the receiving party and do relate to the
business of the other party, or to the extent that they relate to both
businesses, the receiving party shall promptly contact the other party by
telephone for delivery instructions and such mail, telegrams, packages or other
communications (or, in case the same relate to both businesses, copies thereof)
shall promptly be forwarded to the other party in accordance with its delivery
instructions. If any party receives mail, telegrams, packages and other
communications belonging to another party and unambiguously addressed to or
intended for such other party, then the party who receives such material shall
promptly contact the other party by telephone for delivery instructions and such
mail, telegrams, packages or other communications shall promptly be forwarded to
the other party in accordance with its delivery instructions. The foregoing
provisions of this Section 6.7 shall constitute full authorization to the postal
authorities, all telegraph and courier companies and all other persons to make
deliveries to HNC, Retek or RIS, as the case may be, addressed to either of them
or to any of their officers or directors specifically in their capacities as
such. The provisions of this Section 6.7 are not intended to and shall not be
deemed to constitute an authorization by either HNC, Retek or RIS to permit any
of the other to accept service of process on its behalf, and no party is or
shall be deemed to be the agent of the other for service of process purposes or
for any other purpose.
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6.8 RETENTION OF RECORDS. Except as otherwise required by law or agreed to
in writing, each party shall, and shall cause each of its respective
subsidiaries to, retain all information relating to the other party's business
in accordance with such party's written record retention policy or, if no such
policy exists, the past practice of such party. Notwithstanding the foregoing
and except as provided in any Ancillary Agreement, any party may destroy or
otherwise dispose of any such information at any time upon not less than thirty
(30) days prior written notice to the other party, specifying the information
proposed to be destroyed or disposed of; provided, however, that if the
recipient of such notice shall request in writing prior to the scheduled date
for such destruction or disposal that any of the information proposed to be
destroyed or disposed of be delivered to such requesting party, the party
proposing the destruction or disposal shall promptly arrange for the delivery of
such information as was requested at the expense of the requesting party. Except
as provided in the Tax Sharing Agreement or otherwise required by law or agreed
to in writing, either party shall have the right to destroy or otherwise dispose
of any such information at any time after the second anniversary of the
Effective Date.
ARTICLE VII
DISPUTE RESOLUTION
7.1 PROCEDURE. The parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement and shall attempt in good
faith to negotiate a settlement of any dispute pursuant to the following
process:
(a) Any party having a dispute or claim shall give the other party
written notice stating the nature of the dispute in reasonable detail. Within
twenty (20) business days after delivery of the notice, the receiving party
shall submit to the other a written response also in reasonable detail. Within
five (5) business days after delivery of the written response the Chief
Financial Officers (or other individual who has authority to settle the
controversy and who has direct responsibility for administration of the
relationships established pursuant to this Agreement) for each affected party
shall meet (in person or by telephone) at a mutually acceptable time and place
(including telephonic conference), and thereafter as often as they reasonably
deem necessary, to attempt to resolve the dispute. All reasonable requests for
information made by one party to the other shall be honored.
(b) If such matter has not been resolved within twenty (20) business
days of the referral of the dispute to the Chief Financial Officers, then the
parties may pursue litigation or, if mutually agreed, alternative dispute
resolution mechanisms; provided that a party may earlier pursue litigation if
reasonably necessary to prevent or enjoin any breach of this Agreement for which
money damages would be an inadequate remedy, or that would alter the status quo
or result in injury to such party that cannot readily be compensated for in
money damages.
ARTICLE VIII
MISCELLANEOUS
8.1 TERMINATION. This Agreement may be terminated and the Separation and
the Initial Public Offering may be deferred, modified or abandoned at any time
prior to the Closing Date by, and in the sole and absolute discretion of, the
Board of Directors of HNC without the need for any
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approval or consent of Retek or RIS. In the event of such termination, no party
hereto (or any of its respective directors or officers) shall have any liability
to any other party pursuant to this Agreement and the Initial Public Offering
shall be discontinued and terminated.
8.2. EXPENSES. Except for the fees and disbursements related to HNC's
counsel, accountants and other advisors, Retek shall pay or cause to be paid all
third party expenses relating to the IPO or any other primary offering by Retek
prior to a Distribution, including (i) the preparation, printing and filing of
the Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto or any other registration
statements, (ii) the preparation, printing and delivery to any underwriters of
any underwriting agreement, any agreement among underwriters and any other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Retek Common Stock or any other securities of Retek,
(iii) the preparation, issuance and delivery of the certificates for the Retek
Common Stock or any other securities of Retek to any underwriters or any other
purchasers, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Retek Common Stock or
any other securities of Retek to any underwriters or any other securities, (iv)
the qualification of the Retek Common Stock or any other securities of Retek
under the securities laws in accordance with any state (Blue Sky laws),
including filing fees and the reasonable fees and disbursements of counsel for
any underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (v) the printing and delivery
to any underwriters of copies of each preliminary prospectus, any term sheets
and of the final prospectus and any amendments or supplements thereto, (vi) the
preparation, printing and delivery to any underwriters of copies of the Blue Sky
Survey and any supplement thereto, (vii) the fees and expenses of any transfer
agent or registrar for the Retek Common Stock or any other securities of Retek,
(viii) the filing fees incident to, and the reasonable fees and disbursements of
counsel to any underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the Retek
Common Stock or any other securities of Retek and (ix) the fees and expenses
incurred in connection with the listing of the Retek Common Stock or any other
securities of Retek on the Nasdaq Stock Market, any national securities exchange
or any national over the counter quotation system.
8.3 NOTICES. All notices and communications under this Agreement shall be
in writing and any communication or delivery hereunder shall be deemed to have
been duly given when received addressed as follows:
If to HNC, to:
HNC Software Inc.
0000 Xxxxxxxxxxx Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Telecopy Number: (000) 000-0000
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If to Retek, to:
Retek Inc.
Midwest Plaza
000 Xxxxxxxx Xxxx, 00xx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: President
Telecopy Number: (000) 000-0000
If to RIS, to:
c/o Retek Inc.
Midwest Plaza
000 Xxxxxxxx Xxxx, 00xx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: President
Telecopy Number: (000) 000-0000
Any party may, by written notice so delivered to the other party,
change the address to which delivery of any notice shall thereafter be made.
8.4. AMENDMENT AND WAIVER. This Agreement may not be altered or amended,
nor may rights hereunder be waived, except by an instrument in writing executed
by the party or parties to be charged with such amendment or waiver. No waiver
of any terms, provision or condition of or failure to exercise or delay in
exercising any rights or remedies under this Agreement, in any one or more
instances shall be deemed to be, or construed as, a further or continuing waiver
of any such term, provision, condition, right or remedy or as a waiver of any
other term, provision or condition of this Agreement.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same Agreement. This Agreement
will become binding when one or more counterparts hereof, individually or taken
together, will bear the signatures of all the parties reflected hereon as
signatories.
8.6 GOVERNING LAW; JURISDICTION; FORUM. This Agreement shall be construed
in accordance with, and governed by, the internal laws of the State of
California, without regard to the conflicts of law rules of such state. Each
party hereto expressly submits and consents in advance to the non-exclusive
jurisdiction of the State and Federal courts sitting in the City of San Diego,
State of California, in any Action between the parties arising under this
Agreement or under any Ancillary Agreement, and hereby waives any claim that any
such state or federal court is an inconvenient or forum or improper venue.
8.7 ENTIRE AGREEMENT. This Agreement including the schedules and exhibits
hereto, together with the Ancillary Agreements, constitute the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof, superseding all negotiations, prior discussions and
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prior agreements and understandings relating to such subject matter. To the
extent that the provisions of this Agreement are inconsistent with the
provisions of any Ancillary Agreements, the provisions of such Ancillary
Agreement shall prevail.
8.8 PARTIES IN INTEREST. None of the parties hereto may assign its rights
or delegate any of its duties under this Agreement without the prior written
consent of each other party; provided, however, that the rights and obligations
of HNC may be assigned, without the consent of Retek or RIS, pursuant to a
merger, exchange, recapitalization or other reorganization to which HNC is a
party or by operation of law. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns. Nothing contained in this Agreement, express or implied, is
intended to confer any benefits, rights or remedies upon any person or entity
other than HNC and Retek, and HNC Indemnitees and Retek Indemnitees under
Article IV hereof.
8.9 FURTHER ASSURANCES AND CONSENTS. Subject to HNC's rights of termination
under Section 8.1, in addition to the actions specifically provided for
elsewhere in this Agreement, each of the parties hereto will use its reasonable
efforts to (i) execute and deliver such further instruments and documents and
take such other actions as any other party may reasonably request in order to
effectuate the purposes of this Agreement and to carry out the terms hereof and
(ii) take, or cause to be taken, all actions, and to do, or cause to be done,
all things, reasonably necessary, proper or advisable under applicable laws,
regulations and agreements or otherwise to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using its reasonable efforts to obtain any Consents and to make any filings and
applications necessary or desirable in order to consummate the transactions
contemplated by this Agreement; provided that no party hereto shall be obligated
to pay any consideration therefor (except for filing fees and other similar
charges) to any third party from whom such Consents and amendments are requested
or to take any action or omit to take any action if the taking of or the
omission to take such action would be unreasonably burdensome to the party or
its business.
8.10 EXHIBITS AND SCHEDULES. The Exhibits and Schedules shall be construed
with and as an integral part of this Agreement to the same extent as if the same
had been set forth verbatim herein.
8.11 LEGAL ENFORCEABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
enforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction. Without prejudice to any rights or
remedies otherwise available to any party hereto, each party hereto acknowledges
that damages would be an inadequate remedy for any breach of the provisions of
this Agreement and agrees that the obligations of the parties hereunder shall be
specifically enforceable.
8.12 TITLES AND HEADINGS. Titles and headings to Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
HNC Software Inc.
By:
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Name:
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Title:
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RETEK INC.
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Name:
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Title:
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RETEK INFORMATION SYSTEMS, INC.
By:
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Name:
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Title:
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