Exhibit 10.8
FAIR, ISAAC AND COMPANY, INCORPORATED
1992 LONG-TERM INCENTIVE PLAN
As amended and restated effective November 16, 2001
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TABLE OF CONTENTS
Page
ARTICLE 1. INTRODUCTION..................................... 5
ARTICLE 2. ADMINISTRATION................................... 5
2.1 Committee Composition.......................... 5
2.2 Committee Responsibilities..................... 5
ARTICLE 3. SHARES AVAILABLE FOR GRANTS...................... 6
3.1 Basic Limitation............................... 6
3.2 Additional Shares.............................. 6
3.3 Dividend Equivalents........................... 6
3.4 Outside Director Option Limitations............ 6
ARTICLE 4. ELIGIBILITY...................................... 6
4.1 General Rules.................................. 6
4.2 Outside Directors.............................. 6
4.3 Ten-Percent Stockholders....................... 7
4.4 Limitation on Option Grants.................... 8
ARTICLE 5. OPTIONS.......................................... 8
5.1 Stock Option Agreement......................... 8
5.2 Awards Nontransferable......................... 8
5.3 Number of Shares............................... 8
5.4 Exercise Price................................. 8
5.5 Exercisability and Term........................ 8
5.6 Effect of Change in Control.................... 8
5.7 Modification or Assumption of Options.......... 9
ARTICLE 6. PAYMENT FOR OPTION SHARES........................ 9
6.1 General Rule................................... 9
6.2 Surrender of Stock............................. 9
6.3 Exercise/Sale.................................. 9
6.4 Exercise/Pledge................................ 9
6.5 Promissory Note................................ 9
6.6 Other Forms of Payment......................... 9
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ARTICLE 7. STOCK APPRECIATION RIGHTS........................ 10
7.1 Grant of SARs.................................. 10
7.2 Exercise of SARs............................... 10
ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS................ 10
8.1 Time, Amount and Form of Awards................ 10
8.2 Payment for Awards............................. 10
8.3 Vesting Conditions............................. 10
8.4 Form and Time of Settlement of Stock Units..... 11
8.5 Death of Recipient............................. 11
8.6 Creditors' Rights.............................. 11
ARTICLE 9. VOTING AND DIVIDEND RIGHTS....................... 11
9.1 Restricted Shares.............................. 11
9.2 Stock Units.................................... 11
ARTICLE 10. PROTECTION AGAINST DILUTION...................... 12
10.1 Adjustments.................................... 12
10.2 Reorganizations................................ 12
ARTICLE 11. LONG-TERM PERFORMANCE AWARDS..................... 12
ARTICLE 12. LIMITATION ON RIGHTS............................. 12
12.1 Retention Rights............................... 12
12.2 Stockholders' Rights........................... 12
12.3 Regulatory Requirements........................ 13
ARTICLE 13. LIMITATION ON PAYMENTS........................... 13
13.1 Basic Rule..................................... 13
13.2 Reduction of Payments.......................... 13
13.3 Overpayments and Underpayments................. 13
13.4 Related Corporations........................... 14
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ARTICLE 14. WITHHOLDING TAXES................................ 14
14.1 General........................................ 14
14.2 Share Withholding.............................. 14
ARTICLE 15. ASSIGNMENT OR TRANSFER OF AWARDS................. 14
ARTICLE 16. FUTURE OF PLAN................................... 15
16.1 Term of the Plan............................... 15
16.2 Amendment or Termination....................... 15
ARTICLE 17. DEFINITIONS...................................... 15
ARTICLE 18. EXECUTION........................................ 18
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FAIR, ISAAC AND COMPANY, INCORPORATED 1992 LONG-TERM INCENTIVE PLAN
AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 16, 2001
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board on November 23, 1992, subject to approval by
the Company's stockholders. The Plan was amended and restated by the Board on
November 21, 1995, on November 25, 1997, on November 19, 1999, on November 21,
2000 and on November 16, 2001 subject to approval by the Company's stockholders.
The Plan was also amended by the Board on December 23, 1996. All share amounts
in this restatement have been adjusted to reflect the 100% stock dividend paid
by the Company on June 26, 1995 and 50% stock dividend paid by the Company on
June 4, 2001. The purpose of the Plan is to promote the long-term success of the
Company and the creation of stockholder value by (a) encouraging Key Employees
to focus on critical long-range objectives, (b) encouraging the attraction and
retention of Key Employees with exceptional qualifications and (c) linking Key
Employees directly to stockholder interests through increased stock ownership.
The Plan seeks to achieve this purpose by providing for Awards in the form of
Restricted Shares, Stock Units, Options (which may constitute incentive stock
options or nonstatutory stock options) or stock appreciation rights.
The Plan shall be governed by, and construed in accordance with, the laws of the
State of California.
ARTICLE 2. ADMINISTRATION.
2.1 Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist of two or more Outside Directors who
shall be appointed by the Board (although Committee functions may be delegated
by the Committee to an officer or officers to the extent that the Awards relate
to persons who are not subject to the reporting requirements of Section 16 of
the Exchange Act)."
2.2 Committee Responsibilities. The Committee shall (a) unless
delegated to an officer or officers in accordance with Section 2.1, select the
Key Employees who are to receive Awards under the Plan and determine the type,
number, vesting requirements and other conditions of such Awards, (b) interpret
the Plan and (c) make all other decisions relating to the operation of the Plan.
The Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons."
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ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 Basic Limitation. Any Common Shares issued pursuant to the
Plan may be authorized but unissued shares or treasury shares. The aggregate
number of Restricted Shares, Stock Units and Options awarded under the Plan
shall not exceed 2,100,000 plus the number of Common Shares remaining available
for awards under the Company's 1987 Stock Option Plan and Stock Option Plan for
Non-employee Directors (the "Prior Plans") at the time this Plan is first
approved by the stockholders. (No additional grants shall be made under the
Prior Plans after this Plan has been approved by the stockholders.) Effective
October 1, 1997, and on each October 1 thereafter for the remaining term of the
Plan, the aggregate number of Shares which may be issued under the Plan to
individuals shall be increased by a number of Common Shares equal to 4 percent
of the total number of Common Shares outstanding at the end of the most recently
concluded fiscal year. Any Common Shares that have been reserved but not issued
as Restricted Shares, Stock Units or Options during any fiscal year shall remain
available for grant during any subsequent fiscal year. Notwithstanding the
foregoing, no more than 2,250,000 Common Shares shall be available for the grant
of ISOs for the remaining term of the Plan. The aggregate number of Common
Shares which may be issued under the Plan shall at all times be subject to
adjustment pursuant to Article 10.
3.2 Additional Shares. If any Stock Units or Options are
forfeited or if any Options terminate for any other reason before being
exercised, then such Stock Units or Options shall again become available for
Awards under the Plan. If any options under the Prior Plans are forfeited or
terminate for any other reason before being exercised, then such options shall
become available for additional Awards under this Plan. However, if Options are
surrendered upon the exercise of related SARs, then such Options shall not be
restored to the pool available for Awards.
3.3 Dividend Equivalents. Any dividend equivalents distributed
under the Plan shall not be applied against the number of Restricted Shares,
Stock Units or Options available for Awards, whether or not such dividend
equivalents are converted into Stock Units.
3.4 Outside Director Option Limitations. Notwithstanding the
limitations set forth in Section 3.1 above, effective February 1, 2000, there
shall be an additional 225,000 aggregate number of Options available for awards
under the Plan to Outside Directors as further described in Section 4.2 below.
ARTICLE 4. ELIGIBILITY.
4.1 General Rules. Only Key Employees shall be eligible for
designation as Participants by the Committee. Key Employees who are Outside
Directors shall only be eligible for the grant of the NSOs described in Section
4.2.
4.2 Outside Directors. Any other provision of the Plan
notwithstanding, the participation of Outside Directors in the Plan shall be
subject to the following restrictions:
(a) Outside Directors shall receive no Awards other than the
NSOs described in this Section 4.2.
(b)(i) Each person who first becomes an Outside Director on
or after the date of the Company's 2000 annual meeting of
stockholders shall, upon becoming an Outside Director, receive an
NSO covering 30,000 Common Shares (subject to adjustment under
Article 10), hereinafter referred to as an "Initial Grant". Such
Initial Grant shall become exercisable in increments of 6,000
shares (subject to adjustment under Article 10) on each of the
first through fifth anniversaries of the date of grant.
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(ii) Each Outside Director who was acting as an
Outside Director prior to the Company's 2000 annual meeting
of stockholders shall be entitled to receive an NSO grant
of Common Shares in an amount sufficient to increase his or
her Initial Grant to 30,000 Common Shares effective as of
the date of such annual meeting.
(iii) On the date of each annual meeting of
stockholders of the Company held on or after January 1,
2000, each Outside Director who has been an Outside
Director at least since the prior annual meeting shall
receive an NSO covering 7,500 Common Shares (subject to
adjustment under Article 10), hereinafter referred to as an
"Annual Grant." Such Annual Grants shall be exercisable in
full on the date of grant.
(iv) On the date of each annual meeting of
stockholders of the Company held on or after January 1,
2000, each Outside Director who chairs a standing committee
at the direction of the Chairman of the Board shall receive
an NSO covering an additional 1,500 Common Shares (subject
to Adjustment under Article 10) hereinafter referred to as
a "Committee Grant". Such Committee Grant shall be
exercisable in full on the date of grant.
(c) All NSOs granted to an Outside Director under this
Section 4.2 shall also become exercisable in full in the event of
the termination of such Outside Director's service for any
reason.
(d) The Exercise Price under all NSOs granted to an Outside
Director under this Section 4.2 shall be equal to 100% of the
Fair Market Value of a Common Share on the date of grant, payable
in one of the forms described in Sections 6.1, 6.2, 6.3 and 6.4.
(e) All Initial Grants granted to an Outside Director under
this Section 4.2 shall terminate on the earliest of (i) the 10th
anniversary of the date of grant, (ii) the date three months
after the termination of such Outside Director's service for any
reason other than death or total and permanent disability or
(iii) the date 12 months after the termination of such Outside
Director's service because of death or total and permanent
disability."
4.3 Ten-Percent Stockholders. A Key Employee who owns more than
10% of the total combined voting power of all classes of outstanding stock of
the Company or any of its Subsidiaries shall not be eligible for the grant of an
ISO unless the requirements set forth in section 422(c)(6) of the Code are
satisfied.
4.4 Limitation on Option Grants. No person shall receive Options
for more than 75,000 Common Shares (subject to adjustment under Article 10) in
any single fiscal year of the Company.
ARTICLE 5. OPTIONS.
5.1 Stock Option Agreement. Each grant of an Option under the
Plan shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan. The
Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The
provisions of the various Stock Option Agreements entered into under the Plan
need not be identical.
5.2 Awards Nontransferable. Except as provided in Article 15(b),
no Option granted under the Plan shall be transferable by the Optionee other
than by will, by a
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beneficiary designation executed by the Optionee and delivered to the Company or
by the laws of descent and distribution. An Option may be exercised during the
lifetime of the Optionee only by him or her or by his or her guardian or legal
representative. No Option or interest therein may be transferred, assigned,
pledged or hypothecated by the Optionee during his or her lifetime, whether by
operation of law or otherwise, or be made subject to execution, attachment or
similar process.
5.3 Number of Shares. Each Stock Option Agreement shall specify
the number of Shares subject to the Option and shall provide for the adjustment
of such number in accordance with Article 10.
5.4 Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price shall not be less than 100% of the Fair
Market Value of a Common Share on the date of grant.
5.5 Exercisability and Term. Each Stock Option Agreement shall
specify the date when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option; provided that the term of an ISO shall in no event exceed 10 years from
the date of grant. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee's service. NSOs may also be awarded in
combination with Restricted Shares or Stock Units, and such an Award may provide
that the NSOs will not be exercisable unless the related Restricted Shares or
Stock Units are forfeited.
5.6 Effect of Change in Control. The Committee may determine, at
the time of granting an Option or thereafter, that such Option (and any SARs
included therein) shall become fully exercisable as to all Common Shares subject
to such Option in the event that a Change in Control occurs with respect to the
Company. If the Committee finds that there is a reasonable possibility that,
within the succeeding six months, a Change in Control will occur with respect to
the Company, then the Committee may determine that any or all outstanding
Options (and any SARs included therein) shall become fully exercisable as to all
Common Shares subject to such Options.
5.7 Modification or Assumption of Options. Within the limitations
of the Plan, the Committee may modify, extend or assume outstanding options or
may accept the cancellation of outstanding options (whether granted by the
Company or by another issuer) in return for the grant of new options for the
same or a different number of shares and at the same or a different exercise
price. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, alter or impair his or her rights or
obligations under such Option.
ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 General Rule. The entire Exercise Price of Common Shares
issued upon exercise of Options shall be payable in cash at the time when such
Common Shares are purchased, except as follows:
(a) In the case of an ISO granted under the Plan, payment
shall be made only pursuant to the express provisions of the
applicable Stock Option Agreement. The Stock Option Agreement may
specify that payment may be made in any form(s) described in this
Article 6.
(b) In the case of an NSO, the Committee may at any time
accept payment in any form(s) described in this Article 6.
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6.2 Surrender of Stock. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made with
Common Shares which have already been owned by the Optionee for more than twelve
months. Such Common Shares shall be valued at their Fair Market Value on the
date when the new Common Shares are purchased under the Plan.
6.3 Exercise/Sale. To the extent that this Section 6.3 is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker or other party
approved by the Company to sell Common Shares and to deliver all or part of the
sales proceeds to the Company in payment of all or part of the Exercise Price
and any withholding taxes.
6.4 Exercise/Pledge. To the extent that this Section 6.4 is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Common Shares to a securities
broker or lender approved by the Company, as security for a loan, and to deliver
all or part of the loan proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
6.5 Promissory Note. To the extent that this Section 6.5 is
applicable, payment for all or any part of the Exercise Price may be made with a
full-recourse promissory note; provided that the par value of newly issued
Common Shares must be paid in lawful money of the U.S. at the time when such
Common Shares are purchased.
6.6 Other Forms of Payment. To the extent that this Section 6.6
is applicable, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.
ARTICLE 7. STOCK APPRECIATION RIGHTS.
7.1 Grant of SARs. At the discretion of the Committee, an SAR may
be included in each Option granted under the Plan, other than the NSOs granted
to Outside Directors under Section 4.2. Such SAR shall entitle the Optionee (or
any person having the right to exercise the Option after his or her death) to
surrender to the Company, unexercised, all or any part of that portion of the
Option which then is exercisable and to receive from the Company Common Shares
or cash, or a combination of Common Shares and cash, as the Committee shall
determine. If an SAR is exercised, the number of Common Shares remaining subject
to the related Option shall be reduced accordingly, and vice versa. The amount
of cash and/or the Fair Market Value of Common Shares received upon exercise of
an SAR shall, in the aggregate, be equal to the amount by which the Fair Market
value (on the date of surrender) of the Common Shares subject to the surrendered
portion of the Option exceeds the Exercise Price. In no event shall any SAR be
exercised if such Fair Market Value does not exceed the Exercise Price. An SAR
may be included in an ISO only at the time of grant but may be included in an
NSO at the time of grant or at any subsequent time, but not later than six
months before the expiration of such NSO.
7.2 Exercise of SARs. An SAR may be exercised to the extent that
the Option in which it is included is exercisable, subject to the restrictions
imposed by Rule 16b-3 (or its successor) under the Exchange Act, if applicable.
If, on the date when an Option expires, the Exercise Price under such Option is
less than the Fair Market Value on such date but any portion of such Option has
not been exercised or surrendered, then any SAR included in such Option shall
automatically be deemed to be exercised as of such date with respect to such
portion. An Option granted under the Plan may provide that it will be
exercisable as an SAR only in the event of a Change in Control.
ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS.
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8.1 Time, Amount and Form of Awards. Restricted Shares or Stock
Units with respect to an Award Year may be granted during such Award Year or at
any time thereafter. Awards under the Plan may be granted in the form of
Restricted Shares, in the form of Stock Units, or in any combination of both.
Restricted Shares or Stock Units may also be awarded in combination with NSOs,
and such an Award may provide that the Restricted Shares or Stock Units will be
forfeited in the event that the related NSOs are exercised.
8.2 Payment for Awards. To the extent that an Award is granted in
the form of newly issued Restricted Shares, the Award recipient shall be
required to pay the Company in lawful money of the U.S. an amount equal to the
par value of such Restricted Shares. To the extent that an Award is granted in
the form of Stock Units or treasury shares, no cash consideration shall be
required of Award recipients.
8.3 Vesting Conditions. Each Award of Restricted Shares or Stock
Units shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement. A Stock Award Agreement may
provide for accelerated vesting in the event of the Participant's death,
disability or retirement or other events. The Committee may determine, at the
time of making an Award or thereafter, that such Award shall become fully vested
in the event that a Change in Control occurs with respect to the Company.
8.4 Form and Time of Settlement of Stock Units. Settlement of
vested Stock Units may be made in the form of cash, in the form of Common
Shares, or in any combination of both. Methods of converting Stock Units into
cash may include (without limitation) a method based on the average Fair Market
Value of Common Shares over a series of trading days. Vested Stock Units may be
settled in a lump sum or in installments. The distribution may occur or commence
when all vesting conditions applicable to the Stock Units have been satisfied or
have lapsed, or it may be deferred to any later date. The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents.
Until an Award of Stock Units is settled, the number of such Stock Units shall
be subject to adjustment pursuant to Article 10.
8.5 Death of Recipient. Any Stock Units Award that becomes
payable after the recipient's death shall be distributed to the recipient's
beneficiary or beneficiaries. Each recipient of a Stock Units Award under the
Plan shall designate one or more beneficiaries for this purpose by filing the
prescribed form with the Company. A beneficiary designation may be changed by
filing the prescribed form with the Company at any time before the Award
recipient's death. If no beneficiary was designated or if no designated
beneficiary survives the Award recipient, then any Stock Units Award that
becomes payable after the recipient's death shall be distributed to the
recipient's estate.
8.6 Creditors' Rights. A holder of Stock Units shall have no
rights other than those of a general creditor of the Company. Stock Units
represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Stock Award Agreement.
ARTICLE 9. VOTING AND DIVIDEND RIGHTS.
9.1 Restricted Shares. The holders of Restricted Shares awarded
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders. A Stock Award Agreement, however, may require that
the holders of Restricted Shares invest any cash dividends received in
additional Restricted Shares. Such additional Restricted Shares shall be subject
to the same conditions and restrictions as the Award with respect to which the
dividends were paid. Such additional Restricted Shares shall not reduce the
number of Common Shares available under Article 3.
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9.2 Stock Units. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
shall carry with it a right to dividend equivalents. Such right entitles the
holder to be credited with an amount equal to all cash dividends paid on one
Common Share while the Stock Unit is outstanding. Dividend equivalents may be
converted into additional Stock Units. Settlement of dividend equivalents may be
made in the form of cash, in the form of Common Shares, or in a combination of
both. Prior to distribution, any dividend equivalents which are not paid shall
be subject to the same conditions and restrictions as the Stock Units to which
they attach.
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ARTICLE 10. PROTECTION AGAINST DILUTION.
10.1 Adjustments. In the event of a subdivision of the
outstanding Common Shares, a declaration of a dividend payable in Common Shares,
a declaration of a dividend payable in a form other than Common Shares in an
amount that has a material effect on the price of Common Shares, a combination
or consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, a recapitalization, a spinoff
or a similar occurrence, the Committee shall make appropriate adjustments in one
or more of (a) the number of Options, Restricted Shares and Stock Units
available for future Awards under Article 3, (b) the number of NSOs to be
granted to Outside Directors under Section 4.2, (c) the number of Stock Units
included in any prior Award which has not yet been settled, (d) the number of
Common Shares covered by each outstanding Option or (e) the Exercise Price under
each outstanding Option. Except as provided in this Article 10, a Participant
shall have no rights by reason of any issue by the Company of stock of any class
or securities convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class.
10.2 Reorganizations. In the event that the Company is a party to
a merger or other reorganization, outstanding Options, Restricted Shares and
Stock Units shall be subject to the agreement of merger or reorganization. Such
agreement may provide, without limitation, for the assumption of outstanding
Awards by the surviving corporation or its parent, for their continuation by the
Company (if the Company is a surviving corporation), for accelerated vesting or
for settlement in cash.
ARTICLE 11. LONG-TERM PERFORMANCE AWARDS.
The Company may grant long-term performance awards under other plans or
programs. Such awards may be settled in the form of Common Shares issued under
this Plan. Such Common Shares shall be treated for all purposes under the Plan
like Common Shares issued in settlement of Stock Units and shall reduce the
number of Common Shares available under Article 3.
ARTICLE 12. LIMITATION ON RIGHTS.
12.1 Retention Rights. Neither the Plan nor any award granted
under the Plan shall be deemed to give any individual a right to remain an
employee or director of the Company or a Subsidiary. The Company and its
Subsidiaries reserve the right to terminate the service of any employee or
director at any time, with or without cause, subject to applicable laws, the
Company's certificate of incorporation and by-laws and a written employment
agreement (if any).
12.2 Stockholders' Rights. A Participant shall have no dividend
rights, voting rights or other rights as a stockholder with respect to any
Common Shares covered by his or her Award prior to the issuance of a stock
certificate for such Common Shares. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date when
such certificate is issued, except as expressly provided in Articles 8, 9 and
10.
12.3 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.
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ARTICLE 13. LIMITATION ON PAYMENTS.
13.1 Basic Rule. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer by
the Company to or for the benefit of a Key Employee, whether paid or payable (or
transferred or transferable) pursuant to the terms of this Plan or otherwise (a
"Payment"), would be non-deductible by the Company for federal income tax
purposes because of the provisions concerning "excess parachute payments" in
section 280G of the Code, then the aggregate present value of all Payments shall
be reduced (but not below zero) to the Reduced Amount; provided that the
Committee, at the time of making an Award under this Plan or at any time
thereafter, may specify in writing that such Award shall not be so reduced and
shall not be subject to this Article 13. For purposes of this Article 13, the
"Reduced Amount" shall be the amount, expressed as a present value, which
maximizes the aggregate present value of the Payments without causing any
Payment to be nondeductible by the Company because of section 280G of the Code.
13.2 Reduction of Payments. If the Auditors determine that any
Payment would be nondeductible by the Company because of section 280G of the
Code, then the Company shall promptly give the Key Employee notice to that
effect and a copy of the detailed calculation thereof and of the Reduced Amount,
and the Key Employee may then elect, in his or her sole discretion, which and
how much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount)
and shall advise the Company in writing of his or her election within 10 days of
receipt of notice. If no such election is made by the Key Employee within such
10-day period, then the Company may elect which and how much of the Payments
shall be eliminated or reduced (as long as after such election the aggregate
present value of the Payments equals the Reduced Amount) and shall notify the
Key Employee promptly of such election. For purposes of this Article 13, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Article 13 shall be binding upon
the Company and the Key Employee and shall be made within 60 days of the date
when a payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Key Employee such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Key Employee in the future such amounts as become due to him
or her under the Plan.
13.3 Overpayments and Underpayments. As a result of uncertainty
in the application of section 280G of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that Payments will have
been made by the Company which should not have been made (an "Overpayment") or
that additional Payments which will not have been made by the Company could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Key Employee which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Key Employee which he or she shall repay to
the Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Key Employee to the Company if and to the extent that such
payment would not reduce the amount which is subject to taxation under section
4999 of the Code. In the event that the Auditors determine that an Underpayment
has occurred, such Underpayment shall promptly be paid or transferred by the
Company to or for the benefit of the Key Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
13.4 Related Corporations. For purposes of this Article 13, the
term "Company" shall include affiliated corporations to the extent determined by
the Auditors in accordance with section 280G(d)(5) of the Code.
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ARTICLE 14. WITHHOLDING TAXES.
14.1 General. To the extent required by applicable federal,
state, local or foreign law, the recipient of any payment or distribution under
the Plan shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise by reason of the
receipt or vesting of such payment or distribution. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.
14.2 Share Withholding. The Committee may permit a Participant to
satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold a portion of any Common Shares that otherwise would
be issued to him or her or by surrendering a portion of any Common Shares that
previously were issued to him or her. Such Common Shares shall be valued at
their Fair Market Value on the date when taxes otherwise would be withheld in
cash. Any payment of taxes by assigning Common Shares to the Company may be
subject to restrictions, including any restrictions required by rules of the
Securities and Exchange Commission.
ARTICLE 15. ASSIGNMENT OR TRANSFER OF AWARDS.
(i) Except as provided in Article 14, any Award granted under the
Plan shall not be anticipated, assigned, attached, garnished, optioned,
transferred or made subject to any creditor's process, whether voluntarily,
involuntarily or by operation of law. Any act in violation of this Article 15
shall be void. However, this Article 15 shall not preclude a Participant from
designating a beneficiary who will receive any undistributed Awards in the event
of the Participant's death, nor shall it preclude a transfer by will or by the
laws of descent and distribution. In addition, neither this Article 15 nor any
other provision of the Plan shall preclude a Participant from transferring or
assigning Restricted Shares or Stock Units to (a) the trustee of a trust that is
revocable by such Participant alone, both at the time of the transfer or
assignment and at all times thereafter prior to such Participant's death, or (b)
the trustee of any other trust to the extent approved in advance by the
Committee in writing. A transfer or assignment of Restricted Shares or Stock
Units from such trustee to any person other than such Participant shall be
permitted only to the extent approved in advance by the Committee in writing,
and Restricted Shares or Stock Units held by such trustee shall be subject to
all of the conditions and restrictions set forth in the Plan and in the
applicable Stock Award Agreement, as if such trustee were a party to such
Agreement.
(ii) Notwithstanding paragraph (i) above, an NSO or portion
thereof may be transferred by the Optionee by gift to (a) the Optionee's
immediate family, (b) a partnership consisting solely of the Optionee and/or
immediate family, or (c) to a trust established for the benefit of the Optionee
and/or one or more members of the immediate family of the Optionee (including a
charitable remainder trust whose income beneficiaries consist solely of such
persons), provided that such transfer will not be effective until notice of such
transfer is delivered to the Corporation. For purposes of this paragraph (ii)
"immediate family" means spouse, children and grandchildren. An Option or
portion thereof may also be transferred pursuant to a domestic relations order
of a court of competent jurisdiction.
ARTICLE 16. FUTURE OF THE PLAN.
16.1 Term of the Plan. The Plan, as set forth herein, shall
become effective upon approval by the Stockholders of the Company. The Plan
shall remain in effect until it is terminated under Section 16.2, except that no
ISOs shall be granted after November 24, 2007.
16.2 Amendment or Termination. The Board may, at any time and for
any reason, amend or terminate the Plan, except that the provisions of Section
4.2 relating to Outside Directors shall not be amended more than once in any
six-month period. An
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amendment of the Plan shall be subject to the approval of the Company's
stockholders only to the extent required by applicable laws, regulations or
rules. No Awards shall be granted under the Plan after the termination thereof.
The termination of the Plan, or any amendment thereof, shall not affect any
Option previously granted under the Plan.
ARTICLE 17. DEFINITIONS.
17.1 "Award" means any award of an Option (with or without a
related SAR), a Restricted Share or a Stock Unit under the Plan.
17.2 "Award Year" means a fiscal year with respect to which an
Award may be granted.
17.3 "Board" means the Company's Board of Directors, as
constituted from time to time.
17.4 "Change in Control" means the occurrence of either of the
following events:
(a) A change in the composition of the Board, as a result
of which fewer than one-half of the incumbent directors are
directors who either:
(i) Had been directors of the Company 24 months
prior to such change; or
(ii) Were elected, or nominated for election, to
the Board with the affirmative votes of at least a
majority of the directors who had been directors of the
Company 24 months prior to such change and who were still
in office at the time of the election or nomination; or
(b) Any "person" (as such term is used in sections 13(d)
and 14(d) of the Exchange Act) by the acquisition or aggregation
of securities is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's then outstanding
securities ordinarily (and apart from rights accruing under
special circumstances) having the right to vote at elections of
directors (the "Base Capital Stock"); except that any change in
the relative beneficial ownership of the Company's securities by
any person resulting solely from a reduction in the aggregate
number of outstanding shares of Base Capital Stock, and any
decrease thereafter in such person's ownership of securities,
shall be disregarded until such person increases in any manner,
directly or indirectly, such person's beneficial ownership of any
securities of the Company.
17.5 "Code" means the Internal Revenue Code of 1986, as amended.
17.6 "Committee" means a committee of the Board, as described in
Article 2.
17.7 "Common Share" means one share of the Common Stock of the
Company.
17.8 "Company" means Fair, Isaac and Company, Incorporated, a
Delaware corporation.
17.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
17.10 "Exercise Price" means the amount for which one Common
Share may be purchased upon exercise of an Option, as specified in the
applicable Stock Option Agreement.
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17.11 "Fair Market Value" means the market price of Common
Shares, determined by the Committee as follows:
(a) If the Common Shares were traded over-the-counter on
the date in question, whether or not classified as a national
market issue, then the Fair Market Value shall be equal to the
mean between the last reported bid and asked prices quoted by the
NASDAQ system for such date;
(b) If the Common Shares were traded on a stock exchange
on the date in question, then the Fair Market Value shall be
equal to the closing price reported by the applicable composite
transactions report for such date; and
(c) If none of the foregoing provisions is applicable,
then the Fair Market Value shall be determined by the Committee
in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported by the Research Section of the National
Association of Securities Dealers or in the Western Edition of The Wall Street
Journal. Such determination shall be conclusive and binding on all persons.
17.12 "ISO" means an incentive stock option described in section
422(b) of the Code.
17.13 "Key Employee" means (a) a key common-law employee of the
Company or of a Subsidiary, as determined by the Committee, or (b) an Outside
Director. Service as an Outside Director shall be considered employment for all
purposes of the Plan, except as provided in Sections 4.1 and 4.2.
17.14 "NSO" means an employee stock option not described in
sections 422 or 423 of the Code.
17.15 "Option" means an ISO or NSO granted under the Plan and
entitling the holder to purchase one Common Share.
17.16 "Optionee" means an individual or estate who holds an
Option.
17.17 "Outside Director" shall mean a member of the Board who is
not a common-law employee of the Company or of a Subsidiary.
17.18 "Participant" means an individual or estate who holds an
Award.
17.19 "Plan" means this Fair, Isaac and Company, Incorporated
1992 Long-Term Incentive Plan, as it may be amended from time to time.
17.20 "Restricted Share" means a Common Share awarded under the
Plan.
17.21 "SAR" means a stock appreciation right granted under the
Plan.
17.22 "Stock Award Agreement" means the agreement between the
Company and the recipient of a Restricted Share or Stock Unit which contains the
terms, conditions and restrictions pertaining to such Restricted Share or Stock
Unit.
17.23 "Stock Option Agreement" means the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
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17.24 "Stock Unit" means a bookkeeping entry representing the
equivalent of one Common Share and awarded under the Plan.
17.25 "Subsidiary" means any corporation, if the Company and/or
one or more other Subsidiaries own not less than 50% of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
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ARTICLE 18. EXECUTION.
To record the adoption of the amended and restated Plan by the Board, the
Company has caused its duly authorized officer to affix the corporate name and
seal hereto.
FAIR, ISAAC AND COMPANY, INCORPORATED
By /s/ Henk J. Evenhuis
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Henk J. Evenhuis
Vice President, Chief Financial
Officer and Secretary
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