FAIR, ISAAC AND COMPANY, INCORPORATED
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE.
The Plan is intended to provide incentive to the Non-Employee Directors
of the Corporation, to align such individuals' interests with those of the
Corporation's stockholders, to encourage such individuals to remain in the
service of the Corporation and to attract new Non-Employee Directors with
outstanding qualifications.
2. DEFINITIONS.
(a) "Board" shall mean the Board of Directors of the Corporation, as
constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the committee appointed by the Board in
accordance with Section 4.
(d) "Corporation" shall mean Fair, Isaac and Company, Incorporated, a
Delaware corporation.
(e) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as determined by the Committee in
accordance with the Plan.
(f) "Fair Market Value" shall mean the market price of Stock,
determined by the Committee as follows:
(i) If Stock was traded over-the-counter on the date in
question but was not classified as a national market issue, then the
Fair Market Value shall be equal to the mean between the last reported
representative bid and asked prices quoted by the NASDAQ system for
such date;
(ii) If Stock was traded over-the-counter on the date in
question and was classified as a national market issue, then the Fair
Market Value shall be equal to the last-transaction price quoted by the
NASDAQ system for such date;
(iii) If Stock was 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
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Exhibit 10.6
(iv) 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.
In all cases, the determination of Fair Market Value by the Committee
shall be conclusive and binding on all persons.
(g) "Non-Employee Director" shall mean a member of the Board who is not
a common-law employee of the Corporation or of a Subsidiary.
(h) "Nonstatutory Stock Option" shall mean an option not described in
sections 422(b), 422A(b), 423(b) or 424(b) of the Code.
(i) "Option" shall mean a Nonstatutory Stock Option granted pursuant to
the Plan and entitling the holder to purchase Shares.
(j) "Optionee" shall mean an individual who holds an Option.
(k) "Plan" shall mean this Fair, Isaac and Company, Incorporated Stock
Option Plan for Non-Employee Directors, as it may be amended from time to time.
(l) "Purchase Price" shall mean the Exercise Price multiplied by the
number of Shares with respect to which an Option is exercised.
(m) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 9 (if applicable).
(n) "Stock" shall mean the Common Stock of the Corporation.
(o) "Subsidiary" shall mean any corporation, if the Corporation and/or
one or more other Subsidiaries own at least 50% of the total combined voting
power of all classes of outstanding stock in 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.
3. EFFECTIVE DATE.
The Plan was adopted by the Board on February 1, 1988. The Plan remains
subject to the approval of the Corporation's stockholders pursuant to Section
13.
4. ADMINISTRATION.
(a) Committee Membership.
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The Plan shall be administered by the Committee. The Committee shall be
appointed by the Board and shall consist only of three or more disinterested
directors. The Board may from time to time remove members from, or add members
to, the Committee. Vacancies on the Committee, however caused, shall be filled
by the Board. The Committee shall hold meetings at such times and places as it
may determine. Acts of a majority of the Committee at which a quorum is present,
or acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee.
(b) Committee Responsibilities.
The Committee shall construe the Plan and carry out its provisions.
However, the Committee shall have no discretion in selecting the Optionees or in
awarding Options. The interpretation and construction by the Committee of any
provision of the Plan or of any Option granted thereunder shall be final. No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted thereunder.
(c) Disinterested Directors.
A member of the Board shall be deemed to be "disinterested" for the
purposes of this Plan only if he or she, at all times required for purposes of
Rule 16b-3 of the Securities and Exchange Commission or any successor rule, was
not eligible for the grant of rights or options to purchase stock under this
Plan. A Non-Employee Director shall not fail to qualify as "disinterested" for
the purpose of administering any other stock option plan of the Company solely
because he or she is eligible for the grant of Options under this Plan.
5. STOCK.
The aggregate number of Shares which may be issued upon exercise of
Options under the Plan shall not exceed 40,000. The number of Shares subject to
Options outstanding at any time shall not exceed the number of Shares then
remaining available for issuance under the Plan. In the event that any
outstanding Option for any reason expires or is terminated, the Shares allocable
to the unexercised portion of such Option may again be made subject to Options.
The limitation established by this Section 5 shall be subject to adjustment in
the manner provided in Section 9 upon the occurrence of an event specified
therein.
6. ELIGIBILITY AND GRANT OF OPTIONS.
Each Non-Employee Director shall receive a single Option covering 8,000
Shares (subject to adjustment under Section 9). Such Option shall be considered
a Nonstatutory Stock Option for tax purposes. Such Option shall automatically be
granted as of the later of (a) February 1, 1988, or (b) the date on which the
Non-Employee Director completes
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his or her sixth month of continuous service as a Non-Employee Director. No
individuals other than Non-Employee Directors shall be eligible to participate
in the Plan.
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreements.
Options shall be evidenced by written stock option agreements in such
form as the Committee shall from time to time determine. Such agreements shall
comply with, and be subject to, the terms and conditions set forth in the Plan.
(b) Exercise Price.
Each Option shall specify the Exercise Price, which shall be equal to
100% of the Fair Market Value on the date of grant.
(c) Medium and Time of Payment.
The Purchase Price shall be payable in full in United States dollars
upon the exercise of the Option, except that all or part of the Purchase Price
may be paid by the surrender of Shares in good form for transfer, owned for 12
months or more by the person exercising the Option and having a Fair Market
Value on the date of exercise equal to that portion of the Purchase Price which
is being paid with Shares.
(d) Withholding Taxes.
As a condition to the exercise of an Option or the disposition of
Shares acquired under the Plan, the Optionee shall make such arrangements as
applicable law may require for the satisfaction of any federal, state or local
withholding tax obligations that may arise in connection with such exercise or
disposition.
(e) Exercisability, Term and Nontransferability.
Each Option shall become exercisable six months after the date of
grant, subject to Section 13. The Option shall terminate on the day before the
10th anniversary of the date of grant, except as otherwise provided in (f) or
(g) below.
During the lifetime of the Optionee, the Option shall be exercisable
only by the Optionee and shall not be assignable or transferable. In the event
of the Optionee's death, the Option shall not be transferable other than by will
or by the laws of descent and distribution.
(f) Termination of Board Membership
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If an Optionee ceases to be a member of the Board for any reason other
than his or her death, then the Optionee shall have the right to exercise an
Option (to the extent exercisable but not previously exercised and not expired)
at any time within 90 days after the date when he or she ceases to be a member
of the Board.
For purposes of this Subsection (f), status as a member of the Board
shall be deemed to continue while the Optionee is on military leave, sick leave
or other bona fide leave of absence.
Options already granted pursuant to this Plan to a Non-Employee
Director shall not be affected by reason of the Optionee thereafter becoming an
employee of the Corporation or a Subsidiary so long as he or she remains a
member of the Board.
(g) Death of Optionee.
If an Optionee dies while he or she is a member of the Board and has
not fully exercised an Option, then such Option (to the extent not previously
exercised and not expired) may be exercised in full at any time within 12 months
after the Optionee's death by the executors or administrators of his or her
estate or by any person or persons who have acquired such Option directly from
the Optionee by bequest or inheritance.
(h) Rights as a Stockholder.
An Optionee, or a transferee of an Optionee, shall have no rights as a
stockholder with respect to any Shares covered by his or her Option until the
date of the issuance of a stock certificate for such Shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date when such stock certificate is issued, except as provided in
Section 9.
8. TERM OF PLAN.
Options may be granted pursuant to the Plan until January 31, 1998, or
until such earlier date as the Board may determine at its sole discretion.
9. RECAPITALIZATIONS.
Subject to any required action by stockholders, the number of Shares
covered by the Plan as provided in Section 5, the number of Shares covered by
each outstanding Option and the Exercise Price thereof shall be adjusted
proportionately for any increase or decrease in the number of issued Shares
resulting from a subdivision or consolidation of Shares or the payment of a
stock dividend or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Corporation.
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Subject to any required action by stockholders, if the Corporation is
the surviving corporation in any merger or consolidation, each outstanding
Option shall pertain to the securities to which a holder of the number of Shares
subject to the Option would have been entitled. A dissolution or liquidation of
the Corporation or a merger or consolidation in which the Corporation is not the
surviving corporation shall cause each outstanding Option to terminate, unless
the agreement or merger or consolidation provides for the assumption thereof by
the surviving corporation.
To the extent that the foregoing adjustments relate to securities of
the Corporation, such adjustments shall be made by the Committee, whose
determination shall be conclusive and binding on all persons.
Except as expressly provided in this Section 9, the Optionee shall have
no rights by reason of 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 or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of another
corporation, and any issue by the Corporation of shares of stock of any class,
or securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option.
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
10. SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance.
No Shares shall be issued upon the exercise of any Option unless and
until the Corporation has determined that (i) it and the Optionee have taken all
actions required to register the Shares under the Securities Act of 1933, as
amended (the "Act"), or to perfect an exemption from the registration
requirements thereof; (ii) any applicable listing requirement of any stock
exchange on which Stock is listed has been satisfied; and (iii) any other
applicable provision of state or federal law has been satisfied.
(b) Restrictions on Transfer; Representations of Optionee.
Regardless of whether the offering and sale of Shares under the Plan
have been registered under the Act or have been registered or qualified under
the securities laws of any state, the Corporation may impose restrictions upon
the sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of the
Corporation and its counsel, such restrictions are necessary or desirable in
order to achieve compliance with the provisions of the Act, the securities
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laws of any state or any other law. In the event that the sale of Shares under
the Plan is not registered under the Act but an exemption is available which
requires an investment representation or other representation, each Optionee
shall be required to represent that such Shares are being acquired for
investment, and not with a view to the sale or distribution thereof, and to make
such other representations as are deemed necessary or appropriate by the
Corporation and its counsel. Stock certificates evidencing Shares acquired under
the Plan pursuant to an unregistered transaction shall bear an appropriate
restrictive legend.
Any determination by the Corporation and its counsel in connection with
any of the matters set forth in this Section 10 shall be conclusive and binding
on all persons.
(c) Registration or Qualification of Securities.
The Corporation may, but shall not be obligated to, register or qualify
the sale of Shares under the Act or any other applicable law. The Corporation
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under the Plan to comply with any law.
(d) Removal of Legends.
If, in the opinion of the Corporation and its counsel, any legend
placed on a stock certificate representing Shares issued under the Plan is no
longer required, the holder of such certificate shall be entitled to exchange
such certificate for a certificate representing the same number of Shares but
lacking such legend.
11. AMENDMENT OF THE PLAN.
The Board may from time to time, with respect to any Shares at the time
not subject to Options, suspend or discontinue the Plan or revise or amend it in
any respect whatsoever except that, without the approval of the Corporation's
stockholders, no such revision or amendment shall:
(a) Materially increase the benefits accruing to Optionees under the
Plan;
(b) Materially increase the number of Shares subject to the Plan,
except as provided in Section 9;
(c) Materially change the designation in Section 6 with respect to the
class of individuals eligible to receive Options; or
(d) Amend this Section 11 to defeat its purpose.
12. APPLICATION OF FUNDS.
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The proceeds received by the Corporation from the sale of Stock
pursuant to the exercise of an Option will be used for general corporate
purposes.
13. APPROVAL OF STOCKHOLDERS.
The adoption of the Plan and any amendment described in Section 11
shall be subject to approval by the affirmative vote of the holders of a
majority of the outstanding shares of the Corporation entitled to vote or by the
unanimous written consent of all holders of the outstanding shares of
the-Corporation entitled to vote. In the event that the Plan is not approved by
stockholders at or before the first annual meeting of stockholders held after
its adoption by the Board, any Option theretofore granted shall be null and
void. Any other provision of the Plan notwithstanding, no Option shall be
exercisable until the Corporation's stockholders have approved the Plan.
14. EXECUTION.
To record the adoption of the Plan by the Board, effective as of
February 1, 1988, the Corporation has caused its authorized officers to affix
the corporate name hereto.
FAIR, ISAAC AND COMPANY, INCORPORATED
By ______________________________________
President and CEO
By ______________________________________
Vice President and Secretary
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