SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HNC SOFTWARE INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
[HNC LETTERHEAD]
November 6, 1996
To Our Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders of HNC
Software Inc. (the "Company") to be held at the Embassy Suites Hotel located
at 4550 La Jolla Village Drive, San Diego, California, on Friday, December 6,
1996, at 10:00 a.m., P.S.T.
The only matter expected to be acted upon at the meeting is a proposal to
increase the number of shares of the Company's Common Stock authorized for
issuance under the Company's 1995 Equity Incentive Plan by 1,500,000 shares,
and is described in detail in the accompanying Notice of Special Meeting of
Stockholders and Proxy Statement.
Please use this opportunity to take part in the Company's affairs by voting
on the business to come before this meeting. WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE PRIOR TO THE MEETING SO THAT YOUR
SHARES WILL BE REPRESENTED AT THE MEETING. Returning the Proxy does not
deprive you of your right to attend the meeting and to vote your shares in
person.
We hope to see you at the meeting.
Sincerely,
/s/ Robert L. North
Robert L. North
President and Chief Executive
Officer
HNC SOFTWARE INC.
5930 CORNERSTONE COURT WEST
SAN DIEGO, CALIFORNIA 92121-3728
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Our Stockholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of HNC
Software Inc. (the "Company") will be held at the Embassy Suites Hotel located
at 4550 La Jolla Village Drive, San Diego, California, on Friday, December 6,
1996, at 10:00 a.m., P.S.T., for the purpose of considering a proposal to
approve an amendment to the Company's 1995 Equity Incentive Plan increasing
the number of shares of the Company's Common Stock reserved for issuance
thereunder by 1,500,000 shares.
The foregoing item of business is more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on October 28, 1996 are
entitled to notice of and to vote at the meeting or any adjournment thereof. A
complete list of stockholders entitled to vote at the meeting shall be open to
examination of any stockholder, for any purpose relevant to the meeting, at
the Company's offices at 5930 Cornerstone Court West, San Diego, California,
during the Company's ordinary business hours for 10 days prior to the meeting.
By Order of the Board of Directors
/s/ Raymond V. Thomas
Raymond V. Thomas
Vice President, Finance and
Administration,
Chief Financial Officer and
Secretary
San Diego, California
November 6, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
HNC SOFTWARE INC.
5930 CORNERSTONE COURT WEST
SAN DIEGO, CALIFORNIA 92121-3728
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PROXY STATEMENT
----------------
November 6, 1996
The accompanying proxy is solicited on behalf of the Board of Directors of
HNC Software Inc., a Delaware corporation (the "Company" or "HNC"), for use at
the Special Meeting of Stockholders of the Company to be held at the Embassy
Suites Hotel located at 4550 La Jolla Village Drive, San Diego, California, on
Friday, December 6, 1996, at 10:00 a.m., P.S.T. (the "Meeting"). This Proxy
Statement and the accompanying form of proxy were first mailed to stockholders
on or about November 6, 1996.
RECORD DATE; QUORUM
Only holders of record of the Company's Common Stock at the close of
business on October 28, 1996 (the "Record Date") will be entitled to vote at
the Meeting. A majority of the shares outstanding on the Record Date will
constitute a quorum for the transaction of business at the Meeting.
OUTSTANDING SHARES
At the close of business on the Record Date, the Company had 17,577,638
shares of Common Stock outstanding and entitled to vote held of record by
approximately 221 stockholders (though HNC has been informed that there are in
excess of 3,000 beneficial owners).
VOTING RIGHTS; REQUIRED VOTE
Holders of the Company's Common Stock are entitled to one vote for each
share held as of the Record Date. In the event that a broker, bank, custodian,
nominee or other record holder of HNC Common Stock indicates on a proxy that
it does not have discretionary authority to vote certain shares on a
particular matter (a "broker non-vote"), then those shares will not be
considered present and entitled to vote with respect to that matter, although
they will be counted in determining whether or not a quorum is present at the
Meeting.
Proposal No. 1 (a proposal to amend the Company's 1995 Equity Incentive Plan
to authorize the issuance of an additional 1,500,000 shares of Common Stock
thereunder) requires for approval the affirmative vote of a majority of the
shares of Common Stock that are present in person or represented by proxy at
the Meeting and are voted for or against the proposal. All votes will be
tabulated by the inspector of elections appointed for the Meeting who will
separately tabulate, for each proposal, affirmative and negative votes,
abstentions and broker non-votes.
VOTING OF PROXIES
The proxy accompanying this Proxy Statement is solicited on behalf of the
Board of Directors of HNC for use at the Meeting. Stockholders are requested
to complete, date and sign the accompanying proxy and promptly return it in
the enclosed envelope or otherwise mail it to HNC. All executed, returned
proxies that are not revoked will be voted in accordance with the instructions
indicated on the proxy; however, returned signed proxies that give no
instructions as to how they should be voted on a particular proposal at the
Meeting will be counted as votes "for" such proposal. So far as is known to
HNC's Board of Directors, no other matters are to be brought before the
Meeting. However, as to any other business that may properly come before the
Meeting, it is intended that proxies in the form enclosed will be voted in
accordance with the judgment of the persons holding such proxies.
In the event that sufficient votes in favor of any proposal properly brought
before the Meeting are not received by the date of the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitations of proxies. Any such adjournment would require the
affirmative vote of the majority of the outstanding shares present in person
or represented by proxy at the Meeting.
The expenses of soliciting proxies to be voted at the Meeting will be paid
by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company and/or its agents may also solicit proxies
by mail, telephone, telegraph or in person. Following the original mailing of
the proxies and other soliciting materials, the Company will request that
brokers, custodians, nominees and other record holders of the Company's Common
Stock forward copies of the proxy and other soliciting materials to persons
for whom they hold shares of Common Stock and request authority for the
exercise of proxies. In such cases, the Company, upon the request of the
record holders, will reimburse such holders for their reasonable expenses.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement has
the power to revoke it prior to the Meeting or at the Meeting prior to the
vote pursuant to the proxy. A proxy may be revoked by a writing delivered to
the Company stating that the proxy is revoked, by a subsequent proxy that is
signed by the person who signed the earlier proxy and is presented at the
Meeting, or by attendance at the Meeting and voting in person. Please note,
however, that if a stockholder's shares are held of record by a broker, bank
or other nominee and that stockholder wishes to vote at the Meeting, then the
stockholder must bring to the Meeting a letter from the broker, bank or other
nominee confirming that stockholder's beneficial ownership of the shares.
PROPOSAL NO. 1--AMENDMENT TO THE 1995 EQUITY INCENTIVE PLAN
On October 18, 1996, the Company's Board of Directors adopted, subject to
stockholder approval, an amendment to the Company's 1995 Equity Incentive Plan
(the "Incentive Plan") to increase the number of shares of Common Stock
reserved for issuance thereunder by 1,500,000 shares. The stockholders of the
Company are now being asked to approve such amendment.
The availability of additional stock and stock options will facilitate the
Company's expansion of its employee base, both through new hiring and
acquisitions. In particular, the Company's recent acquisition of Risk Data
Corporation and its pending acquisition of Retek Distribution Corporation will
substantially increase the number of employees who are eligible to receive
stock options under the Incentive Plan. Management believes that this
amendment to the Incentive Plan is in the best interests of the Company
because of the continuing need to provide stock options to attract and retain
quality employees and remain competitive in the industry.
Below is a summary of the principal provisions of the Incentive Plan
assuming approval of the proposed amendment, which summary is qualified in its
entirety by reference to the full text of the Incentive Plan.
SUMMARY OF THE 1995 EQUITY INCENTIVE PLAN
INCENTIVE PLAN HISTORY. The Board adopted the Incentive Plan in May 1995,
and it was approved by the stockholders of the Company in May 1995. The
purpose of the Incentive Plan is to offer eligible persons an opportunity to
participate in the Company's future performance through awards of stock
options, restricted stock and stock bonuses.
NUMBER OF SHARES SUBJECT TO THE INCENTIVE PLAN. The stock subject to
issuance under the Incentive Plan consists of shares of the Company's
authorized but unissued Common Stock. The number of shares of Common Stock
currently reserved for issuance under the Incentive Plan is the sum of (i)
1,300,000 shares (the "Base Shares") plus (ii) any shares that were unissued
under the Company's 1987 Stock Option Plan (the "Prior
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Plan") on the effective date of the Incentive Plan and not subject to then
outstanding options under the Prior Plan, and any shares issuable upon
exercise of options granted pursuant to the Prior Plan that expire or become
unexercisable for any reason without having been exercised in full
(collectively, "Available Prior Plan Shares"). Available Prior Plan Shares are
no longer available for distribution under the Prior Plan but are available
for distribution under the Incentive Plan. This proposal No. 1 seeks to
increase the number of Base Shares from 1,300,000 to 2,800,000 shares. If any
option granted pursuant to the Incentive Plan expires or terminates for any
reason without being exercised in whole or in part, or terminates without
being issued, then the shares released from such option will again become
available for grant and purchase under the Incentive Plan. This number of
shares is subject to proportional adjustment to reflect stock splits, stock
dividends and other similar events.
ELIGIBILITY. Employees, officers, directors, consultants, independent
contractors and advisors of the Company (and of any subsidiaries and
affiliates of the Company) are eligible to receive awards under the Incentive
Plan (the "Participants"). No Participant is eligible to receive more than
500,000 shares of Common Stock in any calendar year under the Incentive Plan,
other than new employees of the Company (including directors and officers who
are also new employees) who are eligible to receive up to a maximum of 700,000
shares of Common Stock in the calendar year in which they commence their
employment with the Company. As of October 28, 1996, approximately 316 persons
were in the class of persons who would be eligible to participate in the
Incentive Plan, 23,825 shares had been issued upon exercise of options granted
under the Incentive Plan and 1,328,175 shares were subject to outstanding
options. As of that date, 144,629 shares were available for future option
grants, after taking into account any Shares that were originally issuable
upon exercise of options granted pursuant to the Prior Plan that have expired
or become unexercisable without having been exercised in full and which have
therefore become available for distribution under the Incentive Plan. The
closing price of the Company's Common Stock on the Nasdaq National Market was
$29.00 per share as of October 28, 1996, the Record Date. In addition to the
shares reserved under the Incentive Plan, as of October 25, 1996 a combined
total of 1,442,311 shares were subject to outstanding options granted under
the Prior Plan, the Company's 1995 Directors Stock Option Plan (under which
125,000 shares were available for future option grants) and under stock
options assumed in connection with the Company's acquisition of Risk Data
Corporation.
ADMINISTRATION. The Incentive Plan is administered by the Compensation
Committee (the "Committee"), the members of which are appointed by the Board.
The Committee currently consists of Oliver D. Curme and Charles H. Gaylord
Jr., both of whom are "disinterested persons", as that term is defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and "outside
directors", as that term is defined pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
Subject to the terms of the Incentive Plan, the Committee will determine the
persons who are to receive awards, the number of shares subject to each such
award, and the terms and conditions of such awards. The Committee has
authorized Robert L. North, the Company's President and Chief Executive
Officer, to make grants to non-officer employees of options to purchase
specified ranges of shares for the position and grade level for the applicable
employee pursuant to guidelines established by the Committee. The Committee
will also have the authority to construe and interpret any of the provisions
of the Incentive Plan or any awards granted thereunder.
STOCK OPTIONS. The Incentive Plan permits the granting of options that are
intended to qualify either as Incentive Stock Options ("ISOs") or Nonqualified
Stock Options ("NQSOs"). ISOs may be granted only to employees (including
officers and directors who are also employees) of the Company or any parent or
subsidiary of the Company. The option exercise price for each ISO share must
be no less than 100% of the "fair market value" (as defined in the Incentive
Plan) of a share of Common Stock at the time the ISO is granted. In the case
of an ISO granted to a 10% stockholder, the exercise price for each such ISO
share must be no less than 110% of the fair market value of a share of Common
Stock at the time the ISO is granted. The option exercise price for each NQSO
share must be no less than 85% of the fair market value of a share of Common
Stock at the time of grant. To date, the Company has not granted options under
the Incentive Plan at less than fair market value.
The exercise price of options granted under the Incentive Plan may be paid
as approved by the Committee at the time of grant: (1) in cash (by check); (2)
by cancellation of indebtedness of the Company to the Participant;
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(3) by surrender of shares of the Company's Common Stock owned by the
Participant for at least six months and having a fair market value on the date
of surrender equal to the aggregate exercise price of the option; (4) by
tender of a full recourse promissory note; (5) by waiver of compensation due
to or accrued by the Participant for services rendered; (6) by a "same-day
sale" commitment from the Participant and a National Association of Securities
Dealers, Inc. ("NASD") broker; (7) by a "margin" commitment from the
Participant and a NASD broker; or (8) by any combination of the foregoing.
RESTRICTED STOCK AWARDS. The Committee may grant Participants restricted
stock awards to purchase stock either in addition to, or in tandem with, other
awards under the Incentive Plan, under such terms, conditions and restrictions
as the Committee may determine. The purchase price for such awards must be no
less than 85% of the fair market value of the Company's Common Stock on the
date of the award (and in the case of an award granted to a 10% stockholder,
the purchase price shall be 100% of fair market value) and can be paid for in
any of the forms of consideration listed in items (1) through (5) in "Stock
Options" above, as are approved by the Committee at the time of grant. To
date, the Company has not granted any restricted stock awards under the
Incentive Plan.
STOCK BONUS AWARDS. The Committee may grant Participants stock bonus awards
either in addition to, or in tandem with, other awards under the Incentive
Plan, under such terms, conditions and restrictions as the Committee may
determine. To date, the Company has not granted any stock bonus awards under
the Incentive Plan and does not intend to grant stock bonus awards from shares
now reserved or now proposed to be reserved under the Incentive Plan.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger,
consolidation, dissolution or liquidation of the Company, the sale of
substantially all of the assets of the Company or any other similar corporate
transaction, the successor corporation may assume, replace or substitute
equivalent awards in exchange for those granted under the Incentive Plan or
provide substantially similar consideration, shares or other property as was
provided to stockholders of the Company (after taking into account provisions
of the awards). In the event that the successor corporation does not assume or
substitute the options awarded, such options will expire upon the closing of
such transaction at the time and upon the conditions as the Board determines.
AMENDMENT OF THE INCENTIVE PLAN. The Committee may at any time terminate or
amend the Incentive Plan, including amending any form of award agreement or
instrument to be executed pursuant to the Incentive Plan. However, the Board
may not amend the Incentive Plan in any manner that requires stockholder
approval pursuant to the Code or the regulations promulgated thereunder, or
pursuant to the Exchange Act or Rule 16b-3 (or its successor) promulgated
thereunder.
TERM OF THE INCENTIVE PLAN. Unless terminated earlier as provided in the
Incentive Plan, the Incentive Plan will expire in May 2005, ten (10) years
from the date the Incentive Plan was adopted by the Board.
FEDERAL INCOME TAX INFORMATION.
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS INFORMATION
STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND
PARTICIPANTS UNDER THE INCENTIVE PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPANT WILL DEPEND UPON
HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN AND IS
ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX
CONSEQUENCES OF PARTICIPATION IN THE INCENTIVE PLAN.
Incentive Stock Options. A Participant will recognize no income upon grant
of an ISO and incur no tax on its exercise (unless the Participant is subject
to the alternative minimum tax ("AMT") as described below). If the Participant
holds shares acquired upon exercise of an ISO (the "ISO Shares") for more than
one year after the date the option was exercised and for more than two years
after the date the option was granted, the
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Participant generally will realize long-term capital gain or loss (rather than
ordinary income or loss) upon disposition of the ISO Shares. This gain or loss
will be equal to the difference between the amount realized upon such
disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration of either
of the above-described required holding periods (a "disqualifying
disposition"), any gain realized upon such disposition, up to the difference
between the fair market value of the ISO Shares on the date of exercise (or,
if less, the amount realized on a sale of such shares) and the option exercise
price, will be treated as ordinary income to the Participant. Any additional
gain will be long-term or short-term capital gain, depending upon the amount
of time the ISO Shares were held by the Participant.
Alternative Minimum Tax. The difference between the fair market value of the
ISO Shares on the date of exercise and the exercise price is an adjustment to
income for purposes of AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular income tax) is 26% of an individual taxpayer's alternative
minimum taxable income (28% in the case of alternative minimum taxable income
in excess of $175,000). Alternative minimum taxable income is determined by
adjusting regular taxable income for certain items, increasing that income by
certain tax preference items (including the difference between the fair market
value of the ISO Shares on the date of exercise and the exercise price), and
reducing this amount by the applicable exemption amount ($45,000 in case of a
joint return, subject to reduction under certain circumstances). If a
disqualifying disposition of the ISO Shares occurs in the same calendar year
as exercise of the ISO, there is no AMT adjustment with respect to those ISO
Shares. Also, upon a sale of ISO Shares that is not a disqualifying
disposition, alternative minimum taxable income is reduced in the year of sale
by the excess of the fair market value of the ISO Shares at exercise over the
amount paid for the ISO Shares.
Nonqualified Stock Options. A Participant will not recognize any taxable
income at the time an NQSO is granted. However, upon exercise of an NQSO, the
Participant must include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the Participant's exercise price. The included amount must be treated as
ordinary income by the Participant and may be subject to withholding by the
Company (either by payment in cash or withholding out of the Participant's
salary). Upon resale of the shares by the Participant, any subsequent
appreciation or depreciation in the value of the shares will be treated as
capital gain or loss.
Restricted Stock and Stock Bonus Awards. Restricted stock and stock bonus
awards will generally be subject to tax at the time of receipt, unless there
are restrictions that enable the Participant to defer tax. At the time the tax
is incurred, the tax treatment will be similar to that discussed above for
NQSOs.
Omnibus Budget Reconciliation Act of 1993. The Omnibus Budget Reconciliation
Act of 1993 provides that the maximum tax rate applicable to ordinary income
is 39.6%. Long-term capital gain will be taxed at a maximum of 28%. For this
purpose, in order to receive long-term capital gain treatment, the shares must
be held for more than one year. Capital gains may be offset by capital losses
and up to $3,000 of capital losses may be offset annually against ordinary
income.
Tax Treatment of the Company. The Company generally will be entitled to a
deduction in connection with the exercise of an NQSO by a Participant or the
receipt of restricted stock or stock bonuses by a Participant to the extent
that the Participant recognizes ordinary income and the Company withholds tax.
The Company will be entitled to a deduction in connection with the disposition
of ISO Shares only to the extent that the Participant recognizes ordinary
income on a disqualifying disposition of the ISO Shares.
ERISA. The Incentive Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") and is not qualified
under Section 401(a) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT
TO THE 1995 EQUITY INCENTIVE PLAN
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NEW PLAN BENEFITS
The amounts of future option grants under the Incentive Plan to (i) the
Company's Chief Executive Officer; (ii) the Company's four most highly
compensated executive officers (other than the Chief Executive Officer) who
were serving as executive officers at the end of fiscal 1995 (together, the
"Named Executive Officers"); (iii) all current executive officers as a group;
(iv) all current directors who are not executive officers as a group; and (v)
all employees, including all officers who are not executive officers, as a
group, are not determinable because, under the terms of the Incentive Plan,
such grants are made in the discretion of the Committee or its designees.
Future option exercise prices are not determinable because they are based upon
fair market value of the Company's Common Stock on the date of grant.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of October 28, 1996,
with respect to the beneficial ownership of the Company's Common Stock by: (i)
each stockholder known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock; (ii) each director; (iii) each executive
officer named in the Summary Compensation Table below; and (iv) all directors
and executive officers as a group.
NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF PERCENT OF OUTSTANDING
OWNER BENEFICIAL OWNERSHIP (1) COMMON STOCK (1)
- ------------------------------ ------------------------ ----------------------
Husic Capital Management (2)... 1,672,600 9.52%
Robert L. North (3)............ 479,960 2.68
Roger L. Evans (4)............. 186,495 1.06
Michael A. Thiemann (5)........ 110,167 *
Edward K. Chandler (6)......... 86,532 *
Raymond V. Thomas (7).......... 46,416 *
Charles H. Gaylord Jr. (8)..... 30,000 *
Oliver D. Curme (9)............ 19,220 *
Lee E. Martin (10)............. 11,394 *
Krishna Gopinathan (11)........ 11,250 *
Thomas F. Farb (12)............ 0 *
All executive officers and
directors as a group (15
persons) (13)................. 1,613,624 8.93%
- --------
* Less than 1%
(1) Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all
shares beneficially owned, subject to community property laws where
applicable. Shares of Common Stock subject to options that are currently
exercisable or exercisable within 60 days of October 28, 1996 are deemed
to be outstanding and to be beneficially owned by the person holding such
options for the purpose of computing the percentage ownership of such
person but are not treated as outstanding for the purpose of computing
the percentage ownership of any other person.
(2) Such stockholder's address is 555 California Street, Suite 2900, San
Francisco, California 94104. Based on a Schedule 13G filed with the
Securities and Exchange Commission, Husic Capital Management held as of
February 12, 1996 voting and dispositive power with respect to 1,672,600
shares of the Company's Common Stock.
(3) Includes 340,750 shares of Common Stock subject to options exercisable
within 60 days of October 28, 1996. Mr. North is the President and Chief
Executive Officer and a director of the Company.
(4) Represents 34,651 shares of Common Stock held of record by Mr. Evans,
141,844 shares of Common Stock held of record by the Roger and Jacqueline
Evans Family Trust and 10,000 shares of Common Stock subject to options
exercisable within 60 days of October 28, 1996. Mr. Evans, a director of
the Company, is the trustee of the trust. The address of Mr. Evans and
the trust is c/o Greylock Management Corporation, 1 Federal Street,
Boston, Massachusetts 02110.
(5) Includes 4,167 shares of Common Stock subject to options exercisable
within 60 days of October 28, 1996. Mr. Thiemann is President of Aptex
Software Inc., a partly-owned subsidiary of the Company.
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(6) Represents 35,512 shares of Common Stock held of record by Mr. Chandler,
41,020 shares of Common Stock held of record by Prairie Capital
Management and 10,000 shares of Common Stock subject to options
exercisable within 60 days of October 28, 1996. Mr. Chandler, a director
of the Company, is President of the partners of the Prairie Capital
Partnership. He disclaims beneficial ownership of the shares held by
Prairie Capital Partnership, except as to his proportionate partnership
interest therein. The address of Mr. Chandler and the limited partnership
is c/o Portage Financial Management, 1056 Gage Street, Winnetka, Illinois
60093.
(7) Includes 46,416 shares of Common Stock subject to options exercisable
within 60 days of October 28, 1996. Mr. Thomas is Vice President, Finance
and Administration, Chief Financial Officer and Secretary of the Company.
(8) Includes 10,000 shares subject to options exercisable within 60 days of
October 28, 1996. Mr. Gaylord is a director of the Company.
(9) Includes 10,000 shares of Common Stock subject to options exercisable
within 60 days of October 28, 1996. Mr. Curme is a director of the
Company.
(10) Includes 7,500 shares of Common Stock subject to options exercisable
within 60 days of October 28, 1996. Mr. Martin is Vice President, Sales
of the Company.
(11) Includes 11,250 shares of Common Stock subject to options exercisable
within 60 days of October 28, 1996. Mr. Gopinathan is the Vice President,
Payment Systems of the Company.
(12) Mr. Farb is a director of the Company.
(13) Includes 486,757 shares of Common Stock subject to options exercisable
within 60 days of October 28, 1996, including the options described in
footnotes (3) through (12).
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded, earned or paid for
services rendered in all capacities to the Company and its subsidiaries during
each of fiscal 1994 and fiscal 1995 to: (i) the Company's Chief Executive
Officer; and (ii) the Named Executive Officers. This information includes the
dollar values of base salaries, bonus awards, the number of shares subject to
stock options granted and certain other compensation, if any, whether paid or
deferred. The Company does not grant stock appreciation rights and has no
long-term compensation benefits other than the stock options.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- ------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS
--------------------------- ------ -------- -------- --------------- ------------
Robert L. North 1995 $174,428 $ 64,100 $ 1,797 100,000
President and Chief Executive 1994 155,000 39,000 6,283 --
Officer
Michael A. Thiemann 1995 111,351 202,823(3) 201 --
President, Aptex Software Inc. 1994 110,000 228,772(3) 1,872 --
Raymond V. Thomas 1995 104,389(2) 46,750 87,750(4) 110,000
Vice President, Finance and 1994 -- -- -- --
Administration, Chief Financial
Officer and Secretary
Krishna Gopinathan 1995 95,285 48,480 48 40,000
Vice President, Payment Systems 1994 80,000 23,020 29 --
Lee E. Martin 1995 74,719 236,026(3) 200 --
Vice President, Sales 1994 75,000 260,189(3) 38 10,000
7
- --------
(1) Unless otherwise indicated below, represents premiums for group term life
and disability insurance.
(2) Mr. Thomas, who joined the Company in February 1995 as its Vice President,
Finance and Administration, and Chief Financial Officer, was compensated
in fiscal 1995 at an annual salary rate of $125,000.
(3) Includes commissions.
(4) Represents premiums for group term life and disability insurance in the
amount of $360 and reimbursements for relocation expenses in the amount of
$87,390.
The following table sets forth further information regarding option grants
pursuant to the Company's 1987 Stock Option Plan or the Incentive Plan during
fiscal 1995 to each of the Named Executive Officers. In accordance with the
rules of the Securities and Exchange Commission, the table sets forth the
hypothetical gains or "option spreads" that would exist for the options at the
end of their respective ten-year terms. These gains are based on assumed rates
of annual compound stock price appreciation of 5% and 10% from the date the
option was granted to the end of the option term.
OPTION GRANTS IN FISCAL 1995
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENTAGE OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(2)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL 1995 PER SHARE DATE 5% 10%
- ---- ---------- ------------- -------------- ---------- -- ------------
Robert L. North......... 100,000(3) 11.3% $3.00 1/26/05 $ 188,688 $ 478,123
Michael A. Thiemann..... -- -- -- -- -- --
Raymond V. Thomas....... 110,000(3) 12.4 3.00 2/27/05 207,535 525,935
Krishna Gopinathan...... 40,000(4) 4.5 3.00 1/26/05 75,467 191,249
Lee E. Martin........... -- -- -- -- -- --
- --------
(1) The options shown in the table were granted at fair market value, are
incentive stock options and will expire ten years from the date of grant,
subject to earlier termination upon termination of the optionee's
employment.
(2) The 5% and 10% assumed annual compound rates of stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of future Common Stock
prices.
(3) The option becomes exercisable with respect to 2.083% of the shares for
each full month that the optionee renders services to the Company after
the date of grant.
(4) The option becomes exercisable with respect to 25% of the shares for each
full year that the optionee renders services to the Company after the date
of grant.
8
The following table sets forth certain information concerning the exercise
of options by each of the Named Executive Officers during fiscal 1995,
including the aggregate amount of gains on the date of exercise. In addition,
the table includes the number of shares covered by both exercisable and
unexercisable stock options as of December 31, 1995. Also reported are values
of "in-the-money" options that represent the positive spread between the
respective exercise prices of outstanding stock options and $24.25 per share,
which was the closing price of the Company's Common Stock as reported on the
Nasdaq National Market on December 29, 1995, the last day of trading for
fiscal 1995.
AGGREGATE OPTION EXERCISES IN FISCAL 1995 AND FISCAL YEAR-END VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END(1) AT FISCAL YEAR-END(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(1) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Robert L. North......... -- -- 424,084 93,750 $10,119,220 $2,037,187
Michael A. Thiemann..... 66,000 $896,800 200,929 16,667 4,816,517 399,167
Raymond V. Thomas....... -- -- 22,917 87,083 486,979 1,850,521
Krishna Gopinathan...... 10,100 94,626 20,000 61,250 475,000 1,354,937
Lee E. Martin........... -- -- 10,000 10,000 237,750 234,250
- --------
(1) "Value Realized" represents the fair market value of the shares of Common
Stock underlying the option on the date of exercise less the aggregate
exercise price of the option.
(2) These values, unlike the amounts set forth in the column entitled "Value
Realized", have not been, and may never be, realized and are based on the
positive spread between the respective exercise prices of outstanding
options and the closing price of the Company's Common Stock on December
29, 1995, the last day of trading for fiscal 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Curme and Gaylord. For a
description of transactions between the Company and members of the
Compensation Committee and entities affiliated with such members, see the
discussion under "Certain Relationships and Related Transactions" below.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1, 1995 to the present, there are no currently proposed
transactions in which the amount involved exceeds $60,000 to which the Company
or any of its subsidiaries was (or is to be) a party and in which any
executive officer, director, 5% beneficial owner of the Company's Common Stock
or member of the immediate family of any of the foregoing persons had (or will
have) a direct or indirect material interest, except for: (i) payments set
forth under "Executive Compensation" above; (ii) the transactions described
below under this section; and (iii) indemnification agreements entered into by
the Company with each of its directors and executive officers that provide the
maximum indemnity available to directors and executive officers under Section
145 of the Delaware General Corporation Law and the Company's Bylaws, as well
as certain additional procedural protections. Such indemnity agreements
provide generally that the Company will advance expenses incurred by directors
and executive officers in any action or proceeding as to which they may be
indemnified, and require the Company to indemnify such individuals to the
fullest extent permitted by law.
In September 1996 the Company incorporated its Text Analysis division as a
subsidiary corporation named Aptex Software Inc. ("Aptex") and purchased
8,000,000 shares of Aptex's Series A Preferred Stock in exchange for
approximately $1.6 million in cash, a technology license and the assignment of
certain contracts. Pursuant to
9
an Aptex equity incentive plan (the "Aptex Plan") under which up to 2,000,000
shares of Aptex common stock and/or stock options may be issue to employees,
officers, directors and consultants of Aptex, on September 10, 1996 Aptex
issued 1,000,000 shares of its common stock to Michael A. Thiemann, Aptex's
President and Chief Executive Officer. These shares were issued for cash, and
are subject to Aptex's right to repurchase a declining percentage of the
shares upon termination of Mr. Thiemann's employment with Aptex within certain
time periods. The agreement also provides the Company with an option,
exercisable during certain time periods, to repurchase all Mr. Thiemann's
Aptex shares for a price equal to the greater of 150% of the purchase price of
the shares or 125% of their appraised fair market value. Aptex concurrently
entered into an employment agreement with Mr. Thiemann pursuant to which he
will serve as Aptex's President and Chief Executive Officer for an initial
base salary of $150,000 per year, in addition to potential cash bonuses. Under
this agreement Mr. Thiemann may become entitled to certain severance payments
equal to six months of his then current base salary plus continued benefits if
his employment is terminated without cause.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1997
Annual Meeting of Stockholders must be received by the Company at its
principal executive offices no later than December 20, 1996 in order to be
included in the Company's Proxy Statement and form of proxy relating to that
meeting.
COMPLIANCE UNDER SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission ("SEC") and the Nasdaq National Market. Such persons are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors
of the Company, the Company believes that all Section 16(a) filing
requirements were met during fiscal 1995.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended
that proxies, in the form enclosed, will be voted in respect thereof in
accordance with the judgment of the persons voting such proxies.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING.
10
HNC SOFTWARE INC.
1995 EQUITY INCENTIVE PLAN
As Adopted May 4, 1995
1. PURPOSE. The purpose of this Plan is to provide incentives
-------
to attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in Section
23.
2. SHARES SUBJECT TO THE PLAN.
--------------------------
2.1 Number of Shares Available. Subject to Sections 2.2 and
--------------------------
18, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 2,800,000 Shares plus any Shares that are made
available for grant and issuance under this Plan pursuant to the following
sentence. Any Shares remaining unissued under the 1987 Stock Option Plan
adopted by HNC Software Inc., a California corporation that is the Company's
predecessor (the "PRIOR PLAN") on the Effective Date (as defined below) and any
Shares issuable upon exercise of options granted pursuant to the Prior Plan that
expire or become unexercisable for any reason without having been exercised in
full, will no longer be available for grant and issuance under the Prior Plan,
but will also be available for grant and issuance under this Plan. Subject to
Sections 2.2 and 18, Shares that: (a) are subject to issuance upon exercise of
an Option but cease to be subject to such Option for any reason other than
exercise of such Option; (b) are subject to an Award granted hereunder but are
forfeited or are repurchased by the Company at the original issue price; or (c)
are subject to an Award that otherwise terminates without Shares being issued;
will again be available for grant and issuance in connection with future Awards
under this Plan. At all times the Company shall reserve and keep available a
sufficient number of Shares as shall be required to satisfy the requirements of
all outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
2.2 Adjustment of Shares. In the event that the number of
--------------------
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
-------- -------
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
-----------
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. All
other Awards may be granted to employees, officers, directors, consultants,
independent contractors and advisors of the Company or any Parent, Subsidiary or
Affiliate of the Company; provided such consultants, contractors and advisors
--------
render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. No person will be eligible to
receive more than 500,000 Shares in any calendar year under this Plan pursuant
to the grant of Awards hereunder, other than new employees of the Company or of
a Parent, Subsidiary or Affiliate of the Company (including new employees who
are also officers and directors of the Company or any Parent, Subsidiary or
Affiliate of the Company) who are eligible to receive up to a maximum of 700,000
Shares in the calendar year in which they commence their employment. A person
may be granted more than one Award under this Plan.
4. ADMINISTRATION.
--------------
4.1 Committee Authority. This Plan will be administered by
-------------------
the Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan.
Without limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject
to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent,
Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the
--------------------
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate to one or more officers of the Company
the authority to grant an Award under this Plan to Participants who are not
Insiders of the Company.
4.3 Exchange Act Requirements. If two or more members of
-------------------------
the Board are Outside Directors, the Committee will be comprised of at least two
(2) members of the Board, all of whom are Outside Directors and Disinterested
Persons. During all times that the Company is subject to Section 16 of the
Exchange Act, the Company will take appropriate steps to comply with the
disinterested administration requirements of Section 16(b) of the Exchange Act,
which will consist of the appointment by the Board of a Committee consisting of
not less than two (2) members of the Board, each of whom is a Disinterested
Person.
5. OPTIONS. The Committee may grant Options to eligible persons
-------
and will determine whether such Options will be Incentive Stock Options within
the meaning of the Code ("ISOS") or Nonqualified Stock Options ("NQSOS"), the
number of Shares subject to the Option, the Exercise Price of the Option, the
period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this
--------------------
Plan will be evidenced by an Award Agreement which will expressly identify the
Option as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form
and contain such provisions (which need not be the same for each Participant) as
the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be
-------------
the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of this Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.3 Exercise Period. Options will be exercisable within the
---------------
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
-------- -------
be exercisable after the expiration of ten (10) years from the date the Option
is granted; and provided further that no ISO granted to a person who directly or
----------------
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Parent or Subsidiary of
the Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration
of five (5) years from the date the ISO is granted. The Committee also may
provide for the exercise of Options to become exercisable at one time or from
time to time, periodically or otherwise, in such number of Shares or percentage
of Shares as the Committee determines.
5.4 Exercise Price. The Exercise Price of an Option will be
--------------
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only by
------------------
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set
-----------
forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:
(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options would
have been exercisable upon the Termination Date no later than
three (3) months after the Termination Date (or such shorter or
longer time period not exceeding five (5) years as may be
determined by the Committee, with any exercise beyond three (3)
months after the Termination Date deemed to be an NQSO), but in
any event, no later than the expiration date of the Options.
(b) If the Participant is Terminated because of Participant's
death or Disability (or the Participant dies within three (3)
months after a Termination other than because of Participant's
death or disability), then Participant's Options may be exercised
only to the extent that such Options would have been exercisable
by Participant on the Termination Date and must be exercised by
Participant (or Participant's legal representative or authorized
assignee) no later than twelve (12) months after the Termination
Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any such
exercise beyond (a) three (3) months after the Termination Date
when the Termination is for any reason other than the
Participant's death or Disability, or (b) twelve (12) months
after the Termination Date when the Termination is for
Participant's
death or Disability, deemed to be an NQSO), but in
any event no later than the expiration date of the Options.
5.7 Limitations on Exercise. The Committee may specify a
-----------------------
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value
-------------------
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) will not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, then the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year will be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will
be NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of this Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISOs, such
different limit will be automatically incorporated herein and will apply to any
Options granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
----------------------------------
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
-------- -------
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.
5.10 No Disqualification. Notwithstanding any other
-------------------
provision in this Plan, no term of this Plan relating to ISOs will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by
----------------
the Company to sell to an eligible person Shares that are subject to
restrictions. The Committee will determine to whom an offer will be made, the
number of Shares the person may purchase, the price to be paid (the "PURCHASE
PRICE"), the restrictions to which the Shares will be subject, and all other
terms and conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
------------------------------
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If
such person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold
--------------
pursuant to a Restricted Stock Award will be determined by the Committee and
will be at least 85% of the Fair Market Value of the Shares on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8
of this Plan.
6.3 Restrictions. Restricted Stock Awards will be subject
------------
to such restrictions (if any) as the Committee may impose. The Committee may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or part, based on length of service,
performance or such other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
-------------
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of
-----------------------
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus
may be awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company (provided that the Participant pays the
Company the par value of the Shares awarded by such Stock Bonus in cash)
pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that will be in
such form (which need not be the same for each Participant) as the Committee
will from time to time approve, and will comply with and be subject to the terms
and conditions of this Plan. A Stock Bonus may be awarded upon satisfaction of
such performance goals as are set out in advance in the Participant's individual
Award Agreement (the "PERFORMANCE STOCK BONUS AGREEMENT") that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. Stock Bonuses may vary from Participant to Participant
and between groups of Participants, and may be based upon the achievement of the
Company, Parent, Subsidiary or Affiliate and/or individual performance factors
or upon such other criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine
----------------------
the number of Shares to be awarded to the Participant and whether such Shares
will be Restricted Stock. If the Stock Bonus is being earned upon the
satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will determine: (a) the nature, length and
starting date of any period during which performance is to be measured (the
"PERFORMANCE PERIOD") for each Stock Bonus; (b) the performance goals and
criteria to be used to measure the performance, if any; (c) the number of Shares
that may be awarded to the Participant; and (d) the extent to which such Stock
Bonuses have been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Stock Bonuses that are subject to
different Performance Periods and different performance goals and other
criteria. The number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus
---------------
may be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in the
form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the Committee
will determine.
7.4 Termination During Performance Period. If a Participant
-------------------------------------
is Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee will
determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
---------------------------
8.1 Payment. Payment for Shares purchased pursuant to this
-------
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid
for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares); or (2)
were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections 483
and 1274 of the Code; provided, however, that Partiants who are
-------- -------
not employees or directors of the Company will not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares; provided,
--------
further, that the portion of the Purchase Price equal to the par
-------
value of the Shares, if any, must be paid in cash;
(d) by waiver of compensation due or accrued to the Participant
for services rendered; provided, further, that the portion of
-------- -------
the Purchase Price equal to the par value of the Shares, if
any, must be paid in cash;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant
and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD DEALER") whereby
the Participant irrevocably elects to exercise the Option
and to sell a portion of the Shares so purchased to pay for
the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
(2) through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to
the NASD Dealer in a margin account as security for a loan
from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant
---------------
pay for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
-----------------
9.1 Withholding Generally. Whenever Shares are to be issued
---------------------
in satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
-----------------
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "TAX DATE"). All elections by a Participant to have Shares withheld for
this purpose will be made in writing in a form acceptable to the Committee and
will be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, then except as provided below, the election will be
irrevocable as to the particular Shares as to which the
election is made;
(c) all elections will be subject to the consent or disapproval of
the Committee;
(d) if the Participant is an Insider and if the Company is subject
to Section 16(b) of the Exchange Act: (1) the election may not be
made within six (6) months of the date of grant of the Award,
except as otherwise permitted by SEC Rule 16b-3(e) under the
Exchange Act, and (2) either (A) the election to use stock
withholding must be irrevocably made at least six (6) months
prior to the Tax Date (although such election may be revoked at
any time at least six (6) months prior to the Tax Date) or (B)
the exercise of the Option or election to use stock withholding
must be made in the ten (10) day period beginning on the third
day following the release of the Company's quarterly or annual
summary statement of sales or earnings; and
(e) in the event that the Tax Date is deferred until six (6)
months after the delivery of Shares under Section 83(b) of the
Code, the Participant will receive the full number of Shares with
respect to which the exercise occurs, but such Participant will
be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
-----------------------------
10.1 Voting and Dividends. No Participant will have any of
--------------------
the rights of a stockholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant will be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; provided, that if
--------
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; provided, further, that the Participant
-------- -------
will have no right to retain such stock dividends or stock distributions with
respect to Shares that are repurchased at the Participant's original Purchase
Price pursuant to Section 12.
10.2 Financial Statements. The Company will provide
--------------------
financial statements to each Participant prior to such Participant's purchase of
Shares under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
-------- -------
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any
---------------
interest therein, will not be transferable or assignable by Participant, and may
not be made subject to execution, attachment or similar process, otherwise than
by will or by the laws of descent and distribution or as consistent with the
specific Plan and Award Agreement provisions relating thereto. During the
lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award, may be made only by the
Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee,
----------------------
the Company may reserve to itself and/or its assignee(s) in the Award Agreement
(a) a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, and/or (b) a
right to repurchase a portion of or all Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after the
later of Participant's Termination Date and the date Participant purchases
Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at: (A) with respect to Shares that are "Vested" (as defined in
the Award Agreement), the higher of: (l) Participant's original Purchase Price,
or (2) the Fair Market Value of such Shares on Participant's Termination Date,
provided, that such right of repurchase (i) must be exercised as to all such
- --------
"Vested" Shares unless a Participant consents to the Company's repurchase of
only a portion of such "Vested" Shares and (ii) terminates when the Company's
securities become publicly traded; or (B) with respect to
Shares that are not "Vested" (as defined in the Award Agreement), at the
Participant's original Purchase Price, provided, that the right to repurchase at
the original Purchase Price lapses at the rate of at least 20% per year over
five (5) years from the date the Shares were purchased (or from the date of
grant of options in the case of Shares obtained pursuant to a Stock Option
Agreement and Stock Option Exercise Agreement), and if the right to repurchase
is assignable, the assignee must pay the Company, upon assignment of the right
to repurchase, cash equal to the excess of the Fair Market Value of the Shares
over the original Purchase Price.
13. CERTIFICATES. All certificates for Shares or other
------------
securities delivered under this Plan will be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed or quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
------------------------
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
-------- -------
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any
-----------------------------
time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time
buy from a Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
----------------------------------------------
will not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation system
upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
-----------------------
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit
in any way the right of the Company or any Parent, Subsidiary or Affiliate of
the Company to terminate Participant's employment or other relationship at any
time, with or without cause.
18. CORPORATE TRANSACTIONS.
----------------------
18.1 Assumption or Replacement of Awards by Successor. In
------------------------------------------------
the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
----- ----
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company (other than any stockholder
which merges (or which owns or controls another corporation which merges) with
the Company in such merger) cease to own their shares or other equity interests
in the Company, (d) the sale of substantially all of the assets of the Company,
or (e) any other transaction which qualifies as a "corporate transaction" under
Section 424(a) of the Code wherein the stockholders of the Company give up all
of their equity interest in the Company (except for the acquisition, sale or
------
transfer of all or substantially all of the outstanding shares of the Company
from or by the stockholders of the Company), any or all outstanding Awards may
be assumed, converted or replaced by the successor corporation (if any), which
assumption, conversion or replacement will be binding on all Participants. In
the alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
stockholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation (if any) refuses to assume or substitute
Options, as provided above, pursuant to a transaction described in this
Subsection 18.1, such Options will expire on such transaction at such time and
on such conditions as the Board will determine.
18.2 Other Treatment of Awards. Subject to any greater
-------------------------
rights granted to Participants under the foregoing provisions of this Section
18, in the event of the occurrence of any transaction described in Section 18.1,
any outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation, sale of assets or
other "corporate transaction."
18.3 Assumption of Awards by the Company. The Company, from
-----------------------------------
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
------
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become
---------------------------------
effective on the date on which the registration statement filed by the Company
with the SEC under the Securities Act registering the initial public offering of
the Company's Common Stock is declared effective by the SEC (the "EFFECTIVE
DATE"); provided, however, that if the Effective Date does not occur on or
-------- -------
before December 31, 1995, this Plan will terminate as of December 31, 1995
having never become effective. This Plan shall be approved by the stockholders
of the Company (excluding Shares issued pursuant to this Plan), consistent with
applicable laws, within twelve (12) months before or after the date this Plan is
adopted by the Board. Upon the Effective Date, the Board may grant Awards
pursuant to this Plan; provided, however, that: (a) no Option may be exercised
-------- -------
prior to initial stockholder approval of this Plan; (b) no Option granted
pursuant to an increase in the number of Shares subject to this Plan approved by
the Board will be exercised prior to the time such increase has been approved by
the stockholders of the Company; and (c) in the event that stockholder approval
of such increase is not obtained within the time period provided herein, all
Awards granted hereunder will be canceled, any Shares issued pursuant to any
Award will be canceled, and any purchase of Shares hereunder will be rescinded.
So long as the Company is subject to Section
16(b) of the Exchange Act, the Company will comply with the requirements of Rule
16b-3 (or its successor), as amended, with respect to stockholder approval.
20. TERM OF PLAN. Unless earlier terminated as provided herein,
------------
this Plan will terminate ten (10) years from the date this Plan is adopted by
the Board or, if earlier, the date of stockholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
--------------------------------
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
-------- -------
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or (if the Company is subject
to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to the
Exchange Act or Rule 16b-3 (or its successor), as amended, thereunder,
respectively.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this
--------------------------
Plan by the Board, the submission of this Plan to the stockholders of the
Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options and bonuses otherwise than under this
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.
23. DEFINITIONS. As used in this Plan, the following terms will
-----------
have the following meanings:
"AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
"AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer this Plan, or if no such committee is appointed, the Board.
"COMPANY" means HNC Software Inc., a corporation organized under
the laws of the State of Delaware, or any successor corporation.
"DISABILITY" means a disability, whether temporary or permanent,
partial or total, within the meaning of Section 22(e)(3) of the Code, as
determined by the Committee.
"DISINTERESTED PERSON" means a director who has not, during the
period that person is a member of the Committee and for one year prior to
commencing service as a member of the Committee, been granted or awarded equity
securities pursuant to this Plan or any other plan of the Company or any Parent,
Subsidiary or Affiliate of the Company, except in accordance with the
requirements set forth in Rule 16b-3(c)(2)(i) (and any successor regulation
thereto) as promulgated by the SEC under Section 16(b) of the Exchange Act, as
such rule is amended from time to time and as interpreted by the SEC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the
last trading day prior to the date of determination as reported
in The Wall Street Journal;
-----------------------
(b) if such Common Stock is publicly traded and is then listed on
a national securities exchange, its closing price on the last
trading day prior to the date of determination on the principal
national securities exchange on which the Common Stock is listed
or admitted to trading as reported in The Wall Street Journal;
-----------------------
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and
asked prices on the last trading day prior to the date of
determination as reported in The Wall Street Journal; or
-----------------------
(d) if none of the foregoing is applicable, by the Committee in
good faith.
"INSIDER" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"OUTSIDE DIRECTOR" means any director who is not; (a) a current
employee of the Company or any Parent, Subsidiary or Affiliate of the Company;
(b) a former employee of the Company or any Parent, Subsidiary or Affiliate of
the Company who is receiving compensation for prior services (other than
benefits under a tax-qualified pension plan); (c) a current or former officer of
the Company or any Parent, Subsidiary or Affiliate of the Company; or (d)
currently receiving compensation for personal services in any capacity, other
than as a director, from the Company or any Parent, Subsidiary or Affiliate of
the Company; provided, however, that at such time as the term "Outside
-------- -------
Director", as used in Section 162(m) of the Code is defined in regulations
promulgated under Section 162(m) of the Code, "Outside Director" will have the
meaning set forth in such regulations, as amended from time to time and as
interpreted by the Internal Revenue Service.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under this Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this
Plan.
"PLAN" means this HNC Software Inc. 1995 Equity Incentive Plan,
as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
granting of the Award, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, director, consultant, independent contractor or
advisor to the Company or a Parent, Subsidiary or Affiliate of the Company,
except in the case of sick leave, military leave, or any other leave of absence
- ------
approved by the Committee, provided that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave is
guaranteed by contract or statute. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "TERMINATION
DATE").
PROXY
DETACH HERE
HNC SOFTWARE INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
December 6, 1996
The undersigned hereby appoints Robert L. North and Raymond V. Thomas,
or either of them, as proxies, each with full power of substitution, and hereby
authorizes them to represent the undersigned at the Special Meeting of
Stockholders of HNC Software Inc. (the "Company") to be held at 10:00 a.m. on
Friday, December 6, 1996 at the Embassy Suites Hotel located at 4550 La Jolla
Village Drive, San Diego, California, and at any adjournments or postponements
thereof, and to vote, as designated on the reverse side, the number of shares
the undersigned would be entitled to vote if personally present at the meeting
on the following matter set forth on the reverse side.
(Continued and to be signed and dated on the reverse side.)
SEE REVERSE
SIDE
DETACH HERE
[X] Please mark
votes as in
this example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. WHEN NO CHOICE IS
INDICATED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL. In their discretion, the
proxy holders are authorized to vote upon such other business as may properly
come before the meeting or any adjournments or postponements thereof to the
extent authorized by Rule 14a-4(c) promulgated under the Securities Exchange Act
of 1934, as amended.
The Board of Directors recommends that you vote FOR the proposal.
FOR AGAINST ABSTAIN
1. AMENDMENT TO THE COMPANY'S 1995 EQUITY INCENTIVE [_] [_] [_]
PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON
STOCK RESERVED FOR ISSUANCE THEREUNDER BY
1,500,000 SHARES.
MARK HERE [_] MARK HERE [_]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND PROMPTLY MAIL
THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE MEETING.
Please sign exactly as your name(s)
appear(s) on your stock certificate. If
shares of stock stand of record in the
names of two or more persons or in the
name of husband and wife, whether as
joint tenants or otherwise, both or all
of such persons should sign the proxy.
If shares of stock are held of record by
a corporation, the proxy should be
executed by the president or vice
president and the secretary or assistant
secretary. Executors, administrators or
other fiduciaries who execute the above
proxy for a deceased stockholder should
give their full title. Please date the
proxy.
Signature ___________________ Date ____ Signature ___________________ Date ____