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:
[ ] CONFIDENTIAL, FOR USE OF THE
[ ] Preliminary proxy Statement COMMISSION ONLY (AS PERMITTED BY RULE
[X] Definitive proxy Statement 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)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:

- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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[HNC SOFTWARE LOGO]

April 18, 2001

To Our Stockholders:

You are cordially invited to attend the 2001 Annual Meeting of Stockholders of
HNC Software Inc. to be held at HNC's worldwide headquarters located at 5935
Cornerstone Court West, San Diego, California, on Monday, May 21, 2001, at 10:00
a.m., local time.

The matters on the agenda for the meeting are described in detail in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

Charles H. Gaylord, Jr. will leave our board of directors after the meeting. We
want to express our appreciation to Charley for his six years of valued service
as a director of HNC.

Please use this opportunity to take part in HNC'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 BEFORE 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/ John Mutch

John Mutch
President and Chief Executive Officer

HNC SOFTWARE INC.
5935 CORNERSTONE COURT WEST
SAN DIEGO, CALIFORNIA 92121

------------------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

------------------------------------

To our stockholders:

The 2001 annual meeting of stockholders of HNC Software Inc. will be held at our
worldwide headquarters at 5935 Cornerstone Court West, San Diego, California, on
Monday, May 21, 2001, at 10:00 a.m., local time.

At the meeting, you will be asked to consider and vote upon the following
matters:

1. The election of five directors, each to serve until the next annual
meeting of stockholders and until his successor has been elected and qualified
or until his earlier resignation, death or removal. At the meeting, our board of
directors intends to present the following nominees for election as directors:

Edward K. Chandler David Y. Chen
Thomas F. Farb John Mutch
Alex W. Hart

2. A proposal to approve our 2001 Equity Incentive Plan covering 1,400,000
shares of common stock.

3. A proposal to ratify the selection of PricewaterhouseCoopers LLP as our
independent accountants for 2001.

4. Any other business that may properly come before the meeting or any
adjournment or postponement of the meeting.

These items of business are more fully described in the attached proxy
statement. Only stockholders of record at the close of business on April 2, 2001
are entitled to notice of and to vote at the meeting or any adjournment or
postponement of the meeting.

By Order of the Board of Directors

/s/ Kenneth J. Saunders

Kenneth J. Saunders
Chief Financial Officer and Secretary
San Diego, California
April 18, 2001

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT
YOUR SHARES WILL BE REPRESENTED AT THE MEETING.

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HNC SOFTWARE INC.
5935 CORNERSTONE COURT WEST
SAN DIEGO, CALIFORNIA 92121-3728

PROXY STATEMENT

------------------------------------

APRIL 18, 2001

The accompanying proxy is solicited on behalf of the board of directors of HNC
Software Inc., a Delaware corporation, for use at the 2001 annual meeting of
stockholders to be held at our worldwide headquarters at 5935 Cornerstone Court
West, San Diego, California, on Monday, May 21, 2001, at 10:00 a.m., local time.
This proxy statement and the accompanying form of proxy were first mailed to
stockholders on or about April 18, 2001. An annual report for 2000 is enclosed
with this proxy statement.

RECORD DATE; QUORUM

Only holders of record of common stock at the close of business on April 2, 2001
will be entitled to vote at the meeting. At the close of business on the record
date, we had 34,589,606 shares of common stock outstanding and entitled to vote.

The presence at the meeting, in person or by proxy, of a majority of the shares
outstanding on the record date will constitute a quorum for the transaction of
business. Broker non-votes will be counted in determining whether or not a
quorum is present at the meeting.

VOTING RIGHTS; REQUIRED VOTE

Stockholders are entitled to one vote for each share held as of the record date.
Directors are elected by a plurality of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. Approval of each of proposals number 2 and number 3 requires the
affirmative vote of the holders of a majority of the shares entitled to vote
that are present in person or represented by proxy at the meeting and are voted
for or against the proposal. Abstentions and broker non-votes will not affect
the outcome of the vote on those proposals. Negative votes will not affect the
outcome of the election of directors. The inspector of elections appointed for
the meeting will separately tabulate affirmative and negative votes, abstentions
and broker non-votes for each proposal.

VOTING OF PROXIES

The proxy sent with this proxy statement is solicited on behalf of the board of
directors. We ask all stockholders to complete, date and sign the proxy and
promptly return it in the enclosed envelope. All signed, returned proxies that
are not revoked will be voted in accordance with the instructions you designate
in the proxy. Returned signed proxies that give no instructions as to how they
should be voted on a particular proposal will be counted as votes "for" that
proposal. In the case of the election of directors, proxies that give no
instructions as to how they should be voted will be counted as voted "for"
election to the board of all the nominees presented by the board.

If we do not receive sufficient votes in favor of the proposals 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 adjournment would
require the affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting. The proxy holders would be entitled to vote
shares represented by signed proxies in favor of adjournment.

HNC will pay the expenses of soliciting the proxies for the meeting. After the
original mailing of the proxies and other soliciting materials, we and/or our
agents may also solicit proxies by mail, telephone, telegraph or in person.
After the original mailing of the proxies and other soliciting materials, we
will request that brokers, custodians, nominees and other record holders of our
common stock forward copies of the proxy and other soliciting materials to
persons for whom they hold shares and request authority for the exercise of
proxies. We reimburse those record holders for their reasonable expenses if they
ask us

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to do so. We have retained Georgeson Shareholder Communications, an independent
proxy solicitation firm, to assist in soliciting proxies at an estimated fee of
$6,000 plus reimbursement of reasonable expenses.

REVOCABILITY OF PROXIES

A stockholder may revoke a proxy at any time before it is voted. A proxy may be
revoked by signing and returning a proxy with a later date, by delivering a
written notice of revocation to HNC stating that the proxy is revoked or by
attending 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, the stockholder must bring to
the meeting a letter from the broker, bank or other nominee confirming the
stockholder's beneficial ownership of the shares and that the broker, bank or
other nominee is not voting the shares at the meeting.

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ELECTION OF DIRECTORS

At the meeting, stockholders will elect directors to hold office until the next
annual meeting of stockholders and until their respective successors have been
duly elected and qualified or until the director's earlier resignation, death or
removal. The board currently consists of six directors, five of whom are
nominated for reelection at the meeting. Charles H. Gaylord, Jr. is not standing
for reelection. The board amended the bylaws to reduce the authorized number of
directors to five, effective upon the expiration of Mr. Gaylord's term as a
director. However, HNC is considering the addition of one or more new outside
directors later in 2001. Although we have identified potential candidates, we
have not concluded our search. If new directors are selected, the board will
amend the bylaws to increase the authorized number of directors and appoint the
new directors to fill the resulting vacancies.

Shares represented by the accompanying proxy will be voted "for" the election of
the five nominees recommended by the board unless the proxy is marked to
withhold authority to vote. If any nominee for any reason is unable to serve or
for good cause will not serve, the proxies may be voted for a substitute nominee
as the proxy holder may determine. We are not aware of any nominee who will be
unable to or for good cause will not serve as a director.

DIRECTORS/NOMINEES

The table below presents information about the nominees for director.

DIRECTOR
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION SINCE
- ---------------- --- -------------------- ---------

John Mutch ................... 44 President and Chief Executive Officer, HNC Software Inc. 1999
Edward K. Chandler(1) ........ 43 Managing Director, Graystone Venture Partners, LLC 1991
Alex W. Hart(2) .............. 60 Independent Consultant to the financial services industry 1998
Thomas F. Farb(1) ............ 44 General Partner and Chief Financial Officer, Summit Partners 1987
David Y. Chen ................ 41 Chief Executive Officer, GeoTrust, Inc. 2000

- -----
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.

John Mutch has been a director of HNC since December 1999. He was appointed
President and Chief Executive Officer during December 1999. Mutch joined us in
July 1997, serving initially as Vice President, Marketing until September 1998,
then as President of HNC Insurance Solutions from September 1998 to October 1999
and as President and Chief Operating Officer from October 1999 to January 2000.
He was a founder of MVenture Holdings, Inc., a private equity fund that invests
in start-up technology companies, and served as a general partner from June 1994
to July 1997. From December 1986 to June 1997, Mutch held a variety of executive
marketing positions with Microsoft Corporation, including Director of
Organization Marketing. He holds a bachelor's of science degree in applied
economics from Cornell University and a master's degree in business
administration from the University of Chicago.

Edward K. Chandler has been a director of HNC since August 1991. Since August
1991, he has been a principal of Prairie Capital Partnership, a venture capital
firm. Since July 1996, Chandler has also been a managing director of Graystone
Venture Partners, LLC, a venture capital firm. Since August 1999, he has been a
managing director of Portage Venture Partners, LLC, a venture capital firm. He
holds a bachelor's of arts degree in economics from Yale University and a
master's degree in business administration from Harvard University.

Alex W. Hart has been a director of HNC since October 1998. Since November 1997,
he has been an independent consultant to the financial services industry. From
August 1995 to November 1997, Hart served as Chief Executive Officer of Advanta
Corporation, a consumer lending company. From March 1994 to August 1996, Hart
served as Executive Vice Chairman of Advanta Corporation. From November 1988 to
March 1994, he served as President and Chief Executive Officer of MasterCard
International. He also serves as a director of Sanchez Computer Associates Inc.,
a provider of enterprise banking software, and Global Payments, Inc., a payment
services company. He was a director of Retek from November 1999 to December
2000. He holds a bachelor's of arts degree in psychology from Harvard University
and

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has completed studies at the Graduate School of Bank Marketing at the University
of Colorado and the Graduate Program for Data Processing Management at Harvard
Business School.

Thomas F. Farb has been a director of HNC since November 1987. Since September
1998, he has served as a general partner and the Chief Financial Officer of
Summit Partners, L.P., a private investment and management firm. From April 1994
to August 1998, he served as Senior Vice President and Chief Financial Officer
of Interneuron Pharmaceuticals, Inc., a publicly-held diversified pharmaceutical
company, and as an officer of several of its subsidiaries. From October 1992 to
March 1994, Farb served as Vice President of Corporate Development, Chief
Financial Officer and Controller of Cytyc Corporation, a medical device and
diagnostics company. He also serves as a director of privately-held companies
and Redwood Trust, Inc., a California-based publicly-held Real Estate Investment
Trust. Farb holds a bachelor's of arts degree in sociology from Harvard
University.

David Y. Chen has been a director of HNC since May 2000. Since January 1999, he
has served as Chairman and Chief Executive Officer of GeoTrust, Inc., an
information services company. Since May 2000, Chen has also been a partner of
OVP Venture Partners, a venture capital firm. From December 1993 to January
2000, he served as managing member of The Ascent Group, LLC, a strategic
planning and management consulting firm. He also serves as a director of a
number of privately-held companies. Chen holds a bachelor's of art degree in
biology from the University of California, Berkeley and a master's degree in
finance from Northwestern University, Kellogg Graduate School of Management.

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

BOARD OF DIRECTORS. During 2000, the Board met 22 times, including telephone
conference meetings. No director attended fewer than 75% of the total number of
meetings of the board held while he was a director and the total number of
meetings held by all committees of the board on which the director served during
the time he served. Standing committees of the board include an audit committee,
a compensation committee and a nominating committee.

AUDIT COMMITTEE. Chandler and Farb are the current members of the audit
committee. The audit committee met four times during 2000. The audit committee
meets with our independent accountants to review the adequacy of our internal
control systems and financial reporting procedures; reviews the general scope of
our annual audit and the fees charged by our independent accountants; reviews
and monitors the performance of non-audit services by our auditors; and reviews
the fairness of any proposed transaction between HNC and any officer, director
or other affiliate of HNC (other than transactions subject to the review of the
compensation committee), and after review, makes recommendations to the full
board. The audit committee also performs further functions as may be required by
any stock exchange or over-the-counter market upon which the HNC common stock
may be listed.

COMPENSATION COMMITTEE. Gaylord and Hart are the current members of the
compensation committee. During 2000, the compensation committee met eight times.
The compensation committee determines compensation for our executive officers
other than the Chief Executive Officer, and makes recommendations to the board
with respect to the compensation of the Chief Executive Officer. The
compensation committee also grants (or delegates authority to grant) options and
stock awards under our employee benefit plans, reviews and recommends adoption
of stock option and employee benefit plans and amendments of those plans and
reviews and determines our general compensation policies.

NOMINATING COMMITTEE. Farb and Hart are the current members of the nominating
committee. The nominating committee was appointed in April 2001 and has not met
separately from the board. The nominating committee will consider stockholder
recommendations for director sent to the nominating committee c/o Kenneth J.
Saunders, at HNC's worldwide headquarters.

DIRECTOR COMPENSATION

We reimburse board members for reasonable expenses associated with their
attendance at board meetings. We pay Farb a fee of $1,000 for each board meeting
he attends. We pay Chen a fee of $2,000 for each board meeting he attends. None
of the other board members receives a fee for attending board meetings. Members
of the board who are not employees of HNC, or any parent, subsidiary or
affiliate of HNC, are eligible to participate in our 1995 Directors Stock Option
Plan. Under our directors plan, each

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eligible director is automatically granted an option for 25,000 shares when the
director first joins the board and an option for 10,000 shares annually
thereafter as long as the director remains on the board. The option exercise
price is set at the fair market value of our common stock on the grant date.
During 2000, Chen was granted an option under this plan to purchase 25,000
shares of common stock at a price of $39.25, which was adjusted to an exercise
price of $7.64 per share after the spin-off of our former Retek subsidiary. Also
during 2000, Chandler, Farb and Gaylord were each granted an option under this
plan to purchase 10,000 shares of common stock at a price of $49.625 per share,
which was adjusted to an exercise price of $9.66 per share after the spin-off of
our former Retek subsidiary. During 2000, Hart was granted an option under this
plan to purchase 10,000 shares of common stock at a price of $19.0625 per share.
In 2000, we paid a one-time cash bonus to our directors as partial compensation
for the change in the intrinsic value of unvested HNC stock options as a result
of the Retek spin-off, as follows: Chandler, Farb and Gaylord each received a
bonus of $121,219; Hart received a bonus of $110,186; and Chen received a bonus
of $164,247.

THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE.

APPROVAL OF THE 2001 EQUITY INCENTIVE PLAN

In April 2001, the board adopted, subject to stockholder approval, our 2001
Equity Incentive Plan and reserved a total of 1,400,000 shares of common stock
for issuance under the plan. We are now asking the stockholders to approve the
plan.

The board believes that the incentive plan is in the best interests of HNC
because of our continuing need to provide stock options to attract and retain
quality employees in order to remain competitive in the industry. The granting
of equity incentives under the incentive plan will play an important role in our
efforts to attract and retain employees of outstanding ability. Competition for
skilled engineers and other key employees in the software industry is intense
and the use of significant stock options for retention and motivation of
personnel is pervasive in high technology industries. The board believes that
the incentive plan will provide us with adequate flexibility to ensure that we
can continue to meet those goals and facilitate expansion of our employee base.

Below is a summary of the principal provisions of the incentive plan. The
summary is qualified in its entirety by reference to the full text of the
incentive plan, which may be obtained from HNC. The incentive plan is also on
file with the Securities and Exchange Commission and is available at the SEC's
website at www.sec.gov.

PURPOSE OF THE INCENTIVE PLAN. The purpose of the incentive plan is to offer
employees and other eligible persons an opportunity to participate in HNC's
future performance through awards of stock options, restricted stock and stock
bonuses.

SHARES SUBJECT TO THE INCENTIVE PLAN. The stock subject to issuance under the
incentive plan consists of 1,400,000 shares of authorized but unissued common
stock. This number of shares is subject to proportionate adjustment to reflect
stock splits, stock dividends, spin-offs and other similar events. We also have
shares available for grant under other equity plans. We have reserved a total of
9,337,838 shares of common stock for issuance under our 1995 Equity Incentive
Plan from inception of the plan to December 31, 2000, including 237,838 shares
that were transferred from our 1987 Stock Option Plan during 1999. At December
31, 2000, a total of 3,637,904 shares had been issued upon the exercise of
options granted under the 1995 Equity Incentive Plan, 4,528,148 shares were
subject to outstanding options and 1,171,786 shares were available for future
grant. We have also reserved a total of 2,980,000 shares of common stock for
issuance under our 1998 Stock Option Plan from inception of the plan to December
31, 2000. At December 31, 2000, 764,546 shares had been issued upon the exercise
of options granted under the 1998 Stock Option Plan, 1,067,066 shares were
subject to outstanding options and 1,148,388 shares were available for future
grant. In addition, at December 31, 2000, options to purchase a total of 244,765
shares of common stock were outstanding under option plans that HNC has assumed
in connection with acquisitions through December 31, 2000. HNC also has
repurchased shares of its common stock during the last two years to minimize
stockholder dilution. HNC repurchased a total of 2,266,100 shares of common
stock in 1999 and an additional 250,000 shares in April 2000.

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ELIGIBILITY. Employees, officers, directors, consultants, independent
contractors and advisors of HNC (and of any of its subsidiaries and affiliates)
are eligible to receive awards under the incentive plan. 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 HNC (including
directors and officers who are also new employees) who are eligible to receive
up to a maximum of 700,000 shares in the calendar year in which they start their
employment with HNC. As of December 31, 2000, approximately 1,121 persons would
have been eligible to participate in the incentive plan.

ADMINISTRATION. The compensation committee of the board administers the
incentive plan. The members of the committee are appointed by the board and are
"non-employee directors," as defined in Rule 16b-3 under the Securities Exchange
Act and "outside directors," as defined for purposes of Section 162(m) of the
Internal Revenue Code. The compensation committee currently consists of Charles
H. Gaylord, Jr. and Alex W. Hart.

Subject to the terms of the incentive plan, the compensation committee
determines the persons who are to receive options under the incentive plan, the
number of shares subject to each option and the terms and conditions of options.
The compensation committee has authorized HNC's President and Chief Executive
Officer to make option grants to non-officer employees within specified ranges
of shares based on the position and grade level for the employee and guidelines
established by the compensation committee. The compensation committee also has
the authority to construe and interpret any of the provisions of the incentive
plan or any awards granted under the incentive plan.

STOCK OPTIONS. The incentive plan permits grants of options that are intended to
qualify either as incentive options or nonqualified options. Incentive options
may be granted only to employees (including officers and directors who are also
employees) of HNC or any parent or subsidiary of HNC. The per share exercise
price for each option must be no less than the "fair market value" (as defined
in the incentive plan) of a share of our common stock at the time the option is
granted. In the case of an incentive option granted to a 10% stockholder, the
per share exercise price must be no less than 110% of the fair market value of a
share of our common stock at the time the option is granted. Options granted
under the incentive plan will have a term of up to ten years. The closing price
of HNC common stock on the Nasdaq National Stock Market was $17.125 per share on
April 2, 2001.

Participants may pay the exercise price of options granted under the incentive
plan as approved by the compensation committee at the time of grant: (1) in cash
(by check); (2) by cancellation of indebtedness we owe to the participant; (3)
by surrender of shares of HNC common stock, as long as the participant has owned
the shares for at least six months and the shares surrendered have a fair market
value on the date of surrender equal to the total 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. broker; (7) by a "margin" commitment from the participant and an
NASD broker; or (8) by any combination of the foregoing.

RESTRICTED STOCK AND STOCK BONUS AWARDS. The compensation committee may grant
awards to purchase restricted stock or award stock bonuses to eligible
participants, either in addition to, or in tandem with, other awards under the
incentive plan. The compensation committee determines the terms, conditions and
restrictions of the awards. The purchase price for restricted stock awards must
be no less than the fair market value of our common stock on the date of the
award, 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 compensation
committee at the time of grant. The total number of shares of common stock
issuable pursuant to restricted stock and stock bonus awards under the incentive
plan is limited to 10% of the total number of shares reserved for issuance under
the incentive plan.

MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger,
consolidation, dissolution or liquidation of HNC, the sale of substantially all
of the assets of HNC or any other similar corporate transaction, the successor
corporation may assume, replace or substitute equivalent options in exchange for
those granted under the incentive plan or provide substantially similar
consideration, shares or other property as was provided to stockholders of HNC
in the transaction (after taking into account the provisions of the options). If
the successor corporation does not assume or substitute the options, the options
will expire upon the closing of the transaction at the time and upon the
conditions as the board determines.

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AMENDMENT OF THE INCENTIVE PLAN. The board or the compensation committee may at
any time terminate or amend the incentive plan, including amending any form of
award agreement or other document to be signed under the incentive plan.
Amendments to the incentive plan are not required to be submitted for
stockholder approval except as required by applicable law.

TERM OF THE INCENTIVE PLAN. Unless terminated earlier as provided in the
incentive plan, the incentive plan will expire in April 2011, ten years after it
was adopted by the board.

FEDERAL INCOME TAX INFORMATION. THE FOLLOWING IS A GENERAL SUMMARY AS OF THE
DATE OF THIS PROXY STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO HNC 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
THE PARTICIPANT'S 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
incentive option and will incur no tax on its exercise, unless the participant
is subject to the alternative minimum tax as described below. If the participant
holds shares acquired upon exercise of an incentive option for more than one
year after the date the incentive option was exercised and for more than two
years after the date it was granted, the participant generally will realize
capital gain or loss (rather than ordinary income or loss) upon disposition of
the shares. The amount of this gain or loss will be equal to the difference
between the amount realized upon the disposition of the shares and the option
exercise price. If the participant disposes of shares acquired upon exercise of
an incentive option before the expiration of either required holding period, a
"disqualifying disposition," then the gain realized upon the disposition, up to
the difference between the fair market value of the shares on the date of
exercise (or, if less, the amount realized on a sale of the shares) and the
option exercise price, will be treated as ordinary income. Any additional gain
will be capital gain.

Alternative Minimum Tax. The difference between the fair market value of the
shares acquired upon exercise of an incentive option on the date of exercise and
the exercise price for the shares is an adjustment to income for purposes of the
alternative minimum tax. Taxpayers must pay alternative minimum tax if the
amount of the alternative minimum tax is more than their regular income tax. The
amount of the alternative minimum tax is 26% of an individual taxpayer's
alternative minimum taxable income (28% of alternative minimum taxable income
over $175,000). For alternative minimum taxable income that would otherwise be
taxable as net capital gain, the maximum alternative minimum tax rate is 20%.
Alternative minimum taxable income is determined by adjusting regular taxable
income for certain items, increasing that income by specified tax preference
items and reducing this amount by the applicable exemption amount ($45,000 in
case of a joint return, subject to reduction under certain circumstances). The
difference between the fair market value of shares acquired upon the exercise of
an incentive option on the date of exercise and the exercise price is a tax
preference item for this purpose. If the taxpayer disposes of the shares before
the expiration of either required holding period, but the disposition occurs in
the same calendar year as exercise of the incentive option, there is no
alternative minimum tax adjustment for those shares. Also, upon a sale of 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 shares
at exercise over the amount paid for the shares.

Nonqualified Stock Options. A participant will not recognize any taxable income
at the time a nonqualified option is granted. However, upon exercise of a
nonqualified option, the participant must include the spread in income as
compensation. The spread is the difference between the fair market value of the
purchased shares on the date of exercise and the exercise price of the shares.
The participant must treat the included amount as ordinary income. The included
amount may be subject to withholding by HNC, either by payment in cash or
withholding out of the participant's salary. When the participant sells the
shares, 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
nonqualified options.

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Maximum Tax Rates. The maximum tax rate applicable to ordinary income is 39.6%.
Long-term capital gain is taxed at a maximum of 20%. For this purpose, in order
to receive long-term capital gain treatment, the shares must be held for more
than twelve months. 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 HNC. HNC generally will be entitled to a deduction in
connection with the exercise of a nonqualified option or the receipt of
restricted stock or stock bonuses by a participant to the extent that the
participant recognizes ordinary income, provided that HNC timely reports the
income to the Internal Revenue Service. HNC will be entitled to a deduction in
connection with the disposition of shares acquired upon the exercise of an
incentive option only to the extent that the participant recognizes ordinary
income on a disqualifying disposition of the shares.

THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2001 EQUITY
INCENTIVE PLAN.

RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS

We have selected PricewaterhouseCoopers LLP as the independent accountants to
perform the audit of our financial statements for 2001, and the stockholders are
being asked to ratify our selection. We have engaged PricewaterhouseCoopers LLP
as our independent accountants since 1989. Representatives of
PricewaterhouseCoopers LLP will be present at the meeting, will have the
opportunity to make a statement at the meeting if they desire to do so, and will
be available to respond to appropriate questions.

AUDIT FEES

Audit fees billed to HNC by PricewaterhouseCoopers LLP for the 2000 audit were
$192,500. Audit fees PricewaterhouseCoopers LLP billed to our former Retek
subsidiary for the first three quarters of 2000 were $31,290.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

Financial information systems design and implementation fees billed to HNC by
PricewaterhouseCoopers LLP for services rendered in 2000 were $134,878.

ALL OTHER FEES

All other fees billed to HNC by PricewaterhouseCoopers LLP for services rendered
in 2000 were $1,794,572, including fees related to the spin-off of our Retek
subsidiary and the six acquisitions that HNC completed during 2000. All other
fees PricewaterhouseCoopers LLP billed to our former Retek subsidiary for the
first three quarters of 2000 were $325,532.

THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP.

REPORT OF THE AUDIT COMMITTEE

The following is the report of the audit committee with respect to HNC's audited
financial statements for 2000. The material in this report is not "soliciting
material," is not deemed filed with the Securities and Exchange Commission and
is not to be incorporated by reference in any of our filings under the
Securities Act of 1933 or the Securities Exchange Act of 1934, whether made
before or after the date of this proxy statement and irrespective of any general
incorporation language in any filings.

The audit committee's purpose is to assist the board of directors in its
oversight of HNC's financial accounting, reporting and controls. The board of
directors, in its business judgment, has determined that all members of the
committee are "independent" as required by listing standards of the Nasdaq
National Market. The committee operates under a charter approved by the board of
directors in May 2000. A copy of the current charter is in the Appendix to this
proxy statement.

Management is responsible for the preparation, presentation and integrity of
HNC's financial statements, including setting the accounting and financial
reporting principles and establishing the internal controls and

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procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent auditors,
PricewaterhouseCoopers LLP, are responsible for performing an independent audit
of the consolidated financial statements in accordance with generally accepted
auditing standards. The audit committee discussed with our independent auditors
the overall scope and plans for the audit. The audit committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of HNC's internal controls and
the overall quality of HNC's financial reporting.

In performing its oversight role, the audit committee considered and discussed
the audited financial statements with management and the independent auditors.
The committee also discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61, Communication with
Audit Committees. The committee received the written disclosures and the letter
from the independent auditors required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees. The committee also
considered whether the provision of non-audit services by the independent
auditors is compatible with maintaining the auditors' independence and has
discussed with the auditors the auditors' independence. Based on the reports and
discussions described in this report, and subject to the limitations on the role
and responsibilities of the committee referred to below and in its charter, the
audit committee recommended to the board of directors that the audited financial
statements be included in the Annual Report on Form 10-K for 2000. The audit
committee and the board of directors also recommended, subject to stockholder
approval, the selection of PricewaterhouseCoopers LLP as independent auditors.

The members of the audit committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including in respect of auditor independence. Members of
the committee rely without independent verification on the information provided
to them and on the representations made by management and the independent
auditors. Accordingly, the audit committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal controls
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the audit committee's
considerations and discussions referred to above do not assure that the audit of
HNC's financial statements has been carried out in accordance with generally
accepted auditing standards, that the financial statements are presented in
accordance with generally accepted accounting principles or that
PricewaterhouseCoopers LLP is in fact "independent" as required by the Nasdaq
National Market.

AUDIT COMMITTEE:

Edward K. Chandler
Thomas F. Farb

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows information about the beneficial ownership of our
common stock as of April 2, 2001 by:

- each stockholder known by us to be the beneficial owner of more than 5%
of our common stock;

- each director and nominee;

- each executive officer named in the Summary Compensation Table below;
and

- all directors and executive officers as a group.

The percentage of beneficial ownership for the table is based on 34,589,606
shares of common stock outstanding as of April 2, 2001. Unless otherwise
indicated below, the persons and entities named in the table have sole voting
and sole investment power over their shares of our common stock, except to the
extent that individuals may share authority with their spouses under community
property laws. Unless otherwise indicated, each entity or person listed below
maintains a mailing address of c/o HNC Software Inc., 5935 Cornerstone Court
West, San Diego, California 92121.

The number of shares beneficially owned by each stockholder is determined under
the rules of the Securities and Exchange Commission and is not necessarily
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial ownership includes those shares over which the stockholder has sole
or shared voting or investment power. It also includes shares of common stock
that the stockholder has the right to acquire within 60 days after April 2, 2001
through the exercise of any option. The percentage ownership of the common
stock, however, is based on the assumption, required by the rules of the
Securities and Exchange Commission, that only the person or entity whose
ownership is being reported has converted options into shares of our common
stock.

SHARES BENEFICIALLY OWNED
------------------------------------------------------
OPTIONS
EXERCISABLE
COMMON WITHIN 60
NAME OF BENEFICIAL OWNER STOCK DAYS TOTAL PERCENT
--------- --------- --------- ---------

Capital Research and Management Company(1) ............ 3,922,000 -- 3,922,000 11.3%
The TCW Group, Inc.(2) ................................ 3,286,057 -- 3,286,057 9.5%
Franklin Resources, Inc.(3) ........................... 2,475,900 -- 2,475,900 7.2%
Kopp Investment Advisors, Inc.(4) ..................... 1,721,430 -- 1,721,430 5.0%
John Mutch ............................................ 47,166 147,152 194,318 *
Edward K. Chandler .................................... 97,430 204 97,634 *
Charles H. Gaylord, Jr.(5) ............................ 83,646 204 83,850 *
Kenneth J. Saunders ................................... 3,833 19,713 23,546 *
Sean M. Downs ......................................... -- 20,863 20,863 *
Bruce E. Hansen ....................................... 474 18,751 19,225 *
Alex W. Hart .......................................... 8,000 5,829 13,829 *
David Y. Chen ......................................... 8,750 4,688 13,438 *
Thomas F. Farb ........................................ 8,000 204 8,204 *
J. Anthony Patterson .................................. -- 3,126 3,126 *
All current executive officers and directors
as a group (11 persons) ............................... 257,299 220,734 478,033 1.4%

- -----------
*Less than 1% ownership.

(1) Based upon an amendment to Schedule 13G dated February 9, 2001, indicating
that Capital Research and Management Company ("CRMC") has sole dispositive
power with respect to 3,922,000 shares. Includes 1,746,000 shares held by
SMALLCAP World Fund, Inc. The address of CRMC is 333 South Hope Street, Los
Angeles, California 90071.

(2) Based upon an amendment to Schedule 13G dated February 12, 2001, indicating
that The TCW Group, Inc. and Robert Day share voting and dispositive power
with respect to these shares. The

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address of The TCW Group, Inc. and Robert Day is 865 South Figueroa Street,
Los Angeles, California 90017.

(3) Based upon an amendment to Schedule 13G dated February 2, 2001, indicating
that these shares are beneficially owned by accounts advised and managed by
direct and indirect investment advisory subsidiaries of Franklin Resources,
Inc. Franklin Advisors Inc. reported sole voting power and sole dispositive
power as to these shares. The address of Franklin is 777 Mariners Island
Boulevard, San Mateo, California 94404.

(4) Based upon a Schedule 13G dated February 2, 2001. Kopp Investment Advisors,
Inc. reported sole voting power as to 720,400 shares, sole dispositive
power as to 635,000 shares and shared dispositive power as to 1,086,430
shares. Of these shares, 1,711,430 shares are held in a fiduciary or
representative capacity. The address of Kopp Investment Advisors, Inc. is
7701 France Avenue South, Suite 500, Edina, Minnesota 55435.

(5) Shares of common stock are held of record by the Gaylord Family Trust UTD
12/30/93, Charles H. Gaylord, Jr. and Lynn M. Gaylord trustees.

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EXECUTIVE OFFICERS

The following table sets forth the names, offices, and ages of each of our
executive officers, as of March 31, 2000:

NAME AGE POSITION
- ---- --- --------

John Mutch ........................ 44 President.and Chief Executive Officer
Kenneth J. Saunders ............... 39 Chief.Financial Officer and Secretary
Russell C. Clark .................. 32 Vice President, Corporate Finance and Assistant Secretary
Bruce E. Hansen ................... 41 President, HNC Financial Solutions
Sean M. Downs ..................... 40 President, HNC Insurance Solutions
J. Anthony Patterson .............. 44 President, HNC Telecom Solutions

Kenneth J. Saunders was appointed Chief Financial Officer during December 1999,
and Secretary in January 2000. Saunders joined us in January 1997, where he
initially served as Treasurer until June 1998, as Corporate Controller from June
1998 to January 1999, and then as Vice President, Corporate Finance and
Corporate Controller from January 1999 to December 1999. From January 1992 to
December 1996, Saunders was employed with Risk Data Corporation, where he served
most recently as Chief Financial Officer. In August 1996, HNC acquired Risk Data
Corporation. From January 1991 to January 1992, he was Vice President of Finance
and Administration for A-Mark Financial Corporation. Saunders was with Arthur
Andersen from 1984 to 1987. He holds a bachelor's of accountancy from Widener
University and is a Certified Public Accountant.

Russell C. Clark joined us as Vice President, Corporate Finance during January
2000. From August 1990 to January 2000, Clark held various positions with
PricewaterhouseCoopers LLP's Technology Industry Group, most recently as a
senior manager in the audit and business advisory services group. He holds a
bachelor's degree in business administration with an emphasis in accounting from
the University of Iowa, and is a Certified Public Accountant.

Bruce E. Hansen joined us as President, HNC Financial Solutions in February
2000. He served as President and Chief Executive Officer of CASA, a privately
held advanced analytical solutions company that specializes in one-to-one
marketing and strategic risk management solutions, from April 1998 until
February 2000. In March 2000, HNC acquired CASA. He served as Vice President,
Marketing and Business Development at Summit Medical Systems from June 1997 to
April 1998, as Senior Vice President and General Manager, Medical Division of
MEDE America Corporation from March 1996 to June 1997 and Vice President,
Marketing of National Electronics Corporation from April 1995 to March 1996.
Hansen also served as Vice President, Corporate Development at The Chase
Manhattan Bank from April 1994 to April 1995. He holds a bachelor's of arts
degree in economics from Harvard University, and a master's degree in business
administration, economics from the University of Chicago.

Sean M. Downs was appointed President, HNC Insurance Solutions during June 2000.
Downs joined us in April 1998, and initially served within our HNC Insurance
Solutions segment as President, Workers Compensation until September 1998, as
Senior Vice President, Predictive Software Solutions from September 1998 until
August 1999, and then as Senior Vice President, Strategic Development from
September 1999 until May 2000. From February 1990 to March 1998, Downs was
employed with Risk Data Corporation, where he served most recently as Senior
Vice President, Sales and Marketing. In August 1996, HNC acquired Risk Data
Corporation. From July 1984 to February 1990, Downs held various senior
management positions with Republic Health Corporation and Assured Health Care
Inc. He holds a bachelor's of science degree in business administration, finance
from San Diego State University.

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J. Anthony Patterson became President of HNC Telecommunications Solutions in
August 1999. From March 1998 to August 1999, he served as special advisor to
Metromedia Company, a private venture capital firm. From September 1996 to March
1998, Patterson was Chief Executive Officer of Muze Inc., a business-to-business
Internet content affiliate of Metromedia Company. Patterson served as Vice
President and General Manager of the Entertainment Group of Trade Service
Corporation, a retail and business-to-business content provider, from March 1995
to September 1996. He co-founded Summit Associates, Inc., a bank consulting and
software development firm, where he also served as Chief Operating Officer and
Executive Vice President from January 1992 to March 1995. Patterson also held
senior management and marketing positions with the Bank of America Corporation
from May 1988 to January 1992. He holds a bachelor's of science degree and a
master's degree in business administration, management from Pepperdine
University.

EXECUTIVE COMPENSATION

EFFECT OF THE RETEK SPIN-OFF ON EXECUTIVE COMPENSATION

In September 2000, we completed the spin-off to our stockholders of all of our
shares in Retek, Inc. The spin-off was accomplished through payment of a
dividend of 1.243 shares of Retek Inc. common stock on each share of HNC common
stock outstanding. In connection with this dividend, we adjusted the exercise
price of all HNC stock options that were outstanding immediately following
payment of the dividend. The adjusted stock option exercise prices were
calculated by multiplying the pre-dividend option exercise price by the market
price of HNC common stock immediately after payment of the dividend, and
dividing that product by the market price of HNC common stock immediately before
payment of the dividend.

These proportionate adjustments to the option exercise prices did not fully make
up for the change in the intrinsic value of unvested HNC stock options that
resulted from the Retek spin-off. Accordingly, we paid cash bonuses to holders
of unvested stock options as of the record date for the Retek dividend, to
compensate them in part for this loss in intrinsic value. These bonuses are
included under the "Bonus" column in the Summary Compensation Table below and
are further described in the footnotes to the Summary Compensation Table.

As a result of these proportionate adjustments to the option exercise prices,
certain outstanding options became variable options in accordance with Financial
Accounting Standards Board Interpretation No. 44. As a result, we repurchased
these options for cash during 2000. These cash payments are included under the
"Other Annual Compensation" column in the Summary Compensation Table below and
are further described in the footnotes to the Summary Compensation Table.

To enable our option holders to participate in the Retek dividend, we
accelerated the vesting of 25% of the HNC stock options that would have been
outstanding at the September 15, 2000 record date for the dividend. We also
offered option holders the opportunity to exercise a portion of their vested
options before the record date through loans evidenced by full recourse,
interest bearing promissory notes payable to HNC. These notes provide that they
are to be secured by the shares purchased or other shares of our stock or Retek
stock. See "Related Party Transactions" for more information regarding these
notes.

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SUMMARY COMPENSATION TABLE

The following table shows all compensation awarded, earned or paid for services
rendered in all capacities to HNC and its subsidiaries during each of 2000, 1999
and 1998 to (i) HNC's Chief Executive Officer and (ii) HNC's four other most
highly compensated executive officers as of December 31, 2000 whose salary and
bonus for 2000 exceeded $100,000. HNC does not grant stock appreciation rights
and has no long-term compensation benefits other than stock options.

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------------------------------------------------
BASE OTHER ANNUAL ALL OTHER SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) COMPENSATION(3) UNDERLYING OPTIONS
- --------------------------- ---- -------- ---------------- --------------- --------------- ------------------

John Mutch 2000 $396,875 $2,404,111(4) $417 $2,626 --
President and 1999 140,292 205,000(5) 356 2,400 240,000
Chief Executive Officer 1998 176,731 30,000 10,782(6) 800 145,000

Sean M. Downs 2000 212,500 819,046(7) 722,201(8) -- 90,000
President, 1999 176,041 114,773(9) -- 2,400 10,271
Insurance Solutions 1998 163,808 101,785(10) -- 800 85,000

Bruce E. Hansen(11) 2000 262,631 1,012,538(12) 438,637(13) 3,597 170,000
President, 1999 -- -- -- -- --
Financial Solutions 1998 -- -- -- -- --

J. Anthony Patterson(14) 2000 225,000 829,373(15) 310,519(16) 1,031 100,000
President, 1999 70,514 20,835 160,576(17) 800 50,000
Telecommunications Solutions 1998 -- -- -- -- --

Kenneth J. Saunders 2000 242,917 883,321(18) 752(19) 2,626 45,000
Chief Financial Officer 1999 129,167 45,500 96 2,400 101,238
1998 113,654 37,600 83 800 10,000

- ----------

(1) Includes performance bonuses earned. Also includes Retek bonuses in 2000,
representing cash bonuses paid to partially compensate for the decrease in
the intrinsic value of stock options due to the Retek spin-off.

(2) Includes premiums for group term life and disability insurance. If
indicated below, also includes reimbursement of relocation expenses and
cash paid for the repurchase of stock options in 2000.

(3) Represents matching contribution to HNC 401(k) plan.

(4) Includes Retek cash bonus of $2,212,111.

(5) Includes signing bonus of $25,000.

(6) Includes relocation expenses of $9,811.

(7) Includes Retek cash bonus of $781,547.

(8) Includes $722,000 for the repurchase of stock options.

(9) Includes commissions of $3,073.

(10) Includes commissions of $100,130.

(11) Joined HNC in February 2000.

(12) Includes Retek cash bonus of $945,663.

(13) Includes $128,123 in relocation expenses and $310,313 for the repurchase of
stock options.

(14) Joined HNC in August 1999.

(15) Includes Retek cash bonus of $779,369.

(16) Includes $310,312 for the repurchase of stock options.

(17) Includes relocation expenses of $160,508.

(18) Includes Retek cash bonus of $763,321.

(19) Includes relocation expenses of $543.

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OPTION GRANTS IN 2000

The following table shows information about options granted during 2000 to the
executive officers named in the Summary Compensation Table. For options granted
before September 2000, the exercise price per share shown in the table is
adjusted for the Retek spin-off.

OPTION GRANTS IN 2000

PERCENTAGE OF
NUMBER OF TOTAL HNC
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE POTENTIAL REALIZABLE VALUE AT ASSUMED
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ANNUAL RATES OF STOCK PRICE
NAME GRANTED 2000 SHARE DATE APPRECIATION FOR OPTION TERM
- ------------------- ----------- ------------- ---------- ------------ -------------------------------------
5% 10%
----------------- ------------------

John Mutch -- -- -- -- -- --

Sean M. Downs 15,000 0.3% $18.10(1) 02/11/2007 $ 110,528 $ 257,577
50,000(2) 1.0% 9.74(3) 06/19/2007 198,189 461,864
25,000 0.5% 18.10 10/02/2007 119,135 339,166
--------- ---------- ---------- ----------
90,000 1.8% 427,852 1,058,607

Bruce E. Hansen 100,000 2.0% 16.41(4) 02/22/2007 667,893 1,556,475
25,000(5) 0.5% 7.53(6) 05/10/2007 76,674 178,684
45,000 0.9% 16.41 10/02/2007 290,492 686,549
--------- ---------- ---------- ----------
170,000 3.5% 1,035,059 2,421,708

J. Anthony Patterson 50,000 1.0% 20.03(7) 01/20/2007 407,772 950,282
25,000(5) 0.5% 7.53(6) 05/10/2007 76,674 178,684
25,000 0.5% 20.03 10/02/2007 70,885 290,916
--------- ---------- ---------- ----------
100,000 2.0% 555,331 1,419,882

Kenneth J. Saunders 45,000 0.9% 17.04 10/02/2007 262,142 658,199

(1) The exercise price of this option was $92.94 before the adjustment for the
Retek spin-off.
(2) HNC repurchased these options and they were cancelled.
(3) The exercise price of this option was $50.00 before the adjustment for the
Retek spin-off.
(4) The exercise price of this option was $84.25 before the adjustment for the
Retek spin-off.
(5) HNC repurchased options to purchase 18,750 of these shares. The repurchased
options were cancelled.
(6) The exercise price of this option was $38.69 before the adjustment for the
Retek spin-off.
(7) The exercise price of this option was $102.88 before the adjustment for the
Retek spin-off.

During 2000, we granted to our employees options to purchase a total of
4,921,652 shares of common stock. The options shown in the table were granted at
fair market value, except for the options that expire on October 2, 2007. These
options were granted on October 2, 2000, on which date the fair market value of
our common stock was $16.25. Options granted to officers are incentive stock
options (to the extent permitted under the Internal Revenue Code) and will
expire seven years from the date of grant. Options are subject to earlier
cancellation upon termination of the option holder's employment. The options
generally become exercisable over four years, ratably at 25% on each of the four
anniversaries following the grant date.

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Potential realizable values are calculated by:

- - multiplying the number of shares of common stock subject to a given option
by the market price per share of our common stock on the date of grant;

- - assuming that the amount derived from that calculation compounds at the
annual 5% or 10% rates shown in the table for the entire term of the
option; and

- - subtracting from that result the total option exercise price.

The 5% and 10% assumed annual rates of stock price appreciation are required by
the rules of the Securities and Exchange Commission and do not reflect our
estimate or projection of future common stock prices.

On January 28, 2001, the board granted Mutch an option to purchase 400,000
shares at a price of $23.3125 per share, of which 70,000 shares vested
immediately upon grant and 82,500 shares vest on each anniversary of the date of
grant over the next four years. In addition, the option provides that vesting
will be accelerated if the market price of HNC's common stock remains for 20
consecutive trading days at certain prices, as follows: if that price is $39.00
per share before February 28, 2002, then vesting of 82,500 shares will
accelerate; if that price is $53.00 per share before February 28, 2003, then
vesting of a second allocation of 82,500 shares will accelerate; if that price
is $71.00 per share before February 28, 2004, then vesting of a third allocation
of 82,500 shares will accelerate; and if that price is $96.00 per share before
February 28, 2005, then vesting of a fourth allocation of 82,500 shares will
accelerate. The option will expire seven years from the grant date and is
subject to earlier expiration if Mutch's employment were to be terminated.

OPTION EXERCISES IN 2000 AND YEAR-END VALUES

The following table shows the number of shares acquired and the value realized
upon exercise of stock options during 2000 by the executive officers named in
the Summary Compensation Table. The table includes the number of shares covered
by both exercisable and unexercisable stock options as of December 31, 2000.
Also reported are values of "in-the-money" options that represent the positive
difference between the exercise price of the outstanding stock option and the
fair market value of the shares subject to the option at year-end. The fair
market value is based on $29.6875 per share, which was the closing price of
HNC's common stock as reported on the Nasdaq National Market on December 29,
2000, the last day of trading for 2000. These values, unlike the amounts in the
column entitled "Value Realized," have not been, and may never be, realized.

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AGGREGATED OPTION EXERCISES IN 2000 AND YEAR-END VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES ACQUIRED VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME ON EXERCISE REALIZED(1) OPTIONS AT YEAR-END(2)(3) AT YEAR-END(2)(3)
- --------------------- --------------- ----------- --------------------------------- --------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- -------------- -------------- --------------

John Mutch 196,257 $4,657,956 47,090 214,099 $ 687,499 $ 4,407,411
Sean M. Downs 42,125 1,011,094 3,869 74,277 45,719 1,298,319
Bruce E. Hansen 38,974 1,245,266 25,000 120,000 332,034 1,593,589
J. Anthony Patterson 30,949 724,057 12,801 87,500 127,770 1,192,319
Kenneth J. Saunders 21,797 844,759 33,288 107,240 424,049 1,583,775

- -------------
(1) "Value Realized" represents the fair market value of the shares of common
stock underlying the option on the date of exercise less the total exercise
price of the option.

(2) In connection with the Retek spin-off, 25% of all unvested options as of
September 15, 2000, were accelerated to vest on August 8, 2000.

(3) Includes options to purchase shares of eHNC common stock granted in 1999
and assumed by HNC upon the merger of eHNC into HNC in 2000. John Mutch
held options to purchase 75,000 shares of eHNC common stock at a price of
$2.98 per share that were converted into options to purchase 4,064 shares
of HNC common stock at a price of $10.71 per share. Sean M. Downs held
options to purchase 5,000 shares of eHNC common stock at a price of $2.98
per share that were converted into options to purchase 271 shares of HNC
common stock at a price of $10.71 per share. Kenneth J. Saunders held
options to purchase 20,000 shares of eHNC common stock at a price of $2.98
per share that were converted into options to purchase 1,084 shares of HNC
common stock at a price of $10.71 per share.

EMPLOYMENT AGREEMENT

On December 13, 1999, HNC entered into an employment agreement with John Mutch
in connection with his appointment as President and Chief Executive Officer of
HNC, which was effective on January 15, 2000. The agreement was for a term of
one year. It provided that Mutch would be paid a salary of $400,000 per year,
and would be eligible for a target bonus of $240,000, based on attainment of
bonus objectives determined by the board of directors. Under the agreement, in
December 1999 Mutch was granted an option to purchase 100,000 shares of HNC
common stock that vests and becomes exercisable in 48 equal monthly
installments, beginning with February 2000. The vesting of the option will
accelerate and the option will be exercisable in full if Mutch is terminated by
HNC without cause or if Mutch's employment is terminated because of his death or
disability. In addition, the agreement provided that if Mutch is terminated
without cause, he would be entitled to a severance payment equal to his salary
for the remainder of the term of the agreement, payable in a lump sum, plus the
pro rata portion of any earned bonus. The agreement expired in January 2001.

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee currently consists of Mr. Gaylord and Mr. Hart,
neither of whom has any interlocking relationships as defined by the SEC.

REPORT ON EXECUTIVE COMPENSATION

This report on executive compensation is required by the Securities and Exchange
Commission. The material in this report is not "soliciting material," is not
deemed filed with the Securities and Exchange Commission and is not to be
incorporated by reference in any of our filings under the Securities Act of 1933
or the Securities Exchange Act of 1934, whether made before or after the date of
this proxy statement and irrespective of any general incorporation language in
any filings.

The compensation committee of the board makes decisions regarding executive
compensation and stock option grants to executives. The committee is composed of
two independent non-employee directors, neither of whom has any interlocking
relationships as defined by the Securities and Exchange Commission. Although the
Chief Executive Officer and the Chief Financial Officer attend some of the
meetings of the committee, they do not participate in deliberations that relate
to their own compensation.

GENERAL COMPENSATION POLICY

The committee acts on behalf of the board to establish our general compensation
policy for all of our employees. The committee typically reviews base salary
levels and target bonuses for the Chief Executive Officer and other executive
officers and employees at or about the beginning of each year. The committee
administers our incentive and equity plans, including the 1995 Equity Incentive
Plan, 1998 Option Plan and the Employee Stock Purchase Plan.

The committee's philosophy in compensating executive officers, including the
CEO, is to relate compensation directly to corporate performance. Thus, our
compensation policy, which applies to executive officers and our other key
employees, relates a portion of each individual's total compensation to our
revenue and profit objectives as well as individual objectives set at the
beginning of the year. Consistent with this policy, a designated portion of the
compensation of our executive officers is contingent on corporate performance
and, in the case of certain executive officers, is also based on the individual
officer's performance, as determined by the committee in its discretion.
Long-term equity incentives for executive officers are effected through the
grant of stock options. Stock options have value for the executive only if the
price of our common stock increases above the fair market value on the grant
date and the executive remains in our employ for the time required for the
options to vest.

The committee determines base salaries, incentive compensation and stock option
grants of the executive officers and makes a recommendation to the board as to
the compensation and stock option grants of the CEO. The committee bases its
determinations and recommendations in part on its review of the Radford
Executive Compensation Report (the "Radford Study"), the Culpepper Executive
Compensation Survey and other surveys of prevailing compensation practices among
high-technology companies with whom HNC competes for executive talent, and on
its evaluation of this information in connection with our corporate goals. These
surveys are nationally known for their databases of high technology company
compensation practices. The Radford Survey itself includes over 500 high
technology companies. To this end, the committee attempts to compare the
compensation of our executive officers with comparable survey positions and the
compensation practices of comparable companies to determine or recommend base
salary, target bonuses and target total cash compensation. In addition to their
base salaries, our executive officers, including the CEO, are each eligible to
receive cash bonuses and option grants.

In preparing the performance graph for this proxy statement, we used the JP
Morgan H&Q Technology Index as our published line of business index. The
companies in the Radford Survey are substantially similar to the companies
contained in the JP Morgan H&Q index. Nevertheless, certain of the companies in
the JP Morgan H&Q index were not included in the Radford Survey and our other
salary surveys because they were not determined to be competitive with us for
executive talent or because compensation information was not available.

This competitive market information is reviewed by the committee with the CEO
for each executive level position and within the committee as to the CEO. In
addition, the committee reviews each executive

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officer's performance for the last year and objectives for the next year,
together with the executive officer's responsibility level and our fiscal
performance versus objectives and potential performance targets for the next
year.

2000 EXECUTIVE COMPENSATION

BASE COMPENSATION. The foregoing information was presented to the committee on
January 14, 2000. The committee reviewed the recommendations and performance and
market data outlined above and established a base salary level to be effective
February 1, 2000 for each executive officer other than the CEO.

INCENTIVE COMPENSATION. Cash bonuses are awarded to the extent that an executive
officer has achieved predetermined individual objectives and we have met
predetermined revenue and profit objectives set by the board at the beginning of
the year. The CEO's subjective judgment of executives' performance (other than
his own) is taken into account in determining whether those individual
objectives have been satisfied. Performance is measured at the end of the year.
For 2000, the basis of target incentive compensation for executive officers were
our revenues and profits, ranging from approximately 60% to 100% of an
individual's target incentive compensation, with the balance, if any, based on
individual objectives, depending on the individual executive. The targets and
actual bonus payments are determined by the committee, in its discretion.

STOCK OPTIONS. Stock options are an essential element of our executive
compensation package. The committee believes that equity-based compensation in
the form of stock options links the interests of management and stockholders by
focusing employees and management on increasing stockholder value. The actual
value of the equity-based compensation depends entirely on appreciation of our
common stock. Approximately 100% of our full-time employees are granted employee
stock options.

In 1999, we granted stock options to executive officers to aid in the retention
of executive officers and to align their interests with those of the
stockholders. See "Executive Compensation--Option Grants in 2000." Stock options
typically have been granted to executive officers when the executive first joins
us, in connection with a significant change in responsibilities and,
occasionally, to achieve equity within a peer group. The committee may, however,
grant additional stock options to executives for other reasons. The number of
shares subject to each stock option granted is within the discretion of the
committee and is based on anticipated future contribution and ability to impact
corporate and/or business unit results, past performance or consistency within
the executive's peer group. In the discretion of the committee, executive
officers may also be granted stock options to provide greater incentives to
continue their employment with us and to strive to increase the value of our
common stock. In 2000, as part of an annual review of the stock options held by
executive officers and managers, the committee considered these factors, as well
as the number of options held by executive officers as of the date of grant that
remained unvested. The stock options generally become exercisable over a
four-year period and are granted at a price that is equal to the fair market
value of our common stock on the date of grant.

For 2001, the committee will be considering whether to grant future options to
executive officers based on the factors described above, with particular
attention to company-wide management objectives and the executive officers'
success in obtaining specific individual financial and operational objectives
established or to be established for 2001, to our revenue and profit
expectations and to the number of options currently held by the executive
officers that remain unvested.

COMPANY PERFORMANCE AND CEO COMPENSATION. Mutch was promoted from President and
Chief Operating Officer of HNC to President and CEO of HNC effective January
2000. In connection with his promotion, his base salary increased to $400,000
and he became eligible for a target bonus of up to $240,000 for fiscal year
2000. In addition, in December 1999, Mutch was granted a stock option to
purchase up to 100,000 shares of common stock in connection with his promotion.
The shares subject to the option vest and become exercisable in 48 equal monthly
installments from February 2000. Mutch was awarded incentive compensation for
2000 of $192,000. This bonus figure represents approximately 80% of the target
bonus for Mutch for 2000. All of Mutch's incentive compensation was based upon
obtaining and surpassing corporate operating revenue and profit objectives and
performance relative to individual goals.

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Mutch was not granted a stock option during 2000. In January 2001, the board
approved the grant to Mutch of a stock option to purchase 400,000 shares of
common stock at a price of $23.3125 per share, of which 70,000 shares vest
immediately upon grant and 82,500 shares vest on each anniversary of the date of
grant over the next four years. In addition, the option provides that vesting
will be accelerated if the market price of HNC's common stock remains for 20
consecutive trading days at certain prices, as follows: if that price is $39.00
per share before February 28, 2002, then vesting of 82,500 shares will
accelerate; if that price is $53.00 per share before February 28, 2003, then
vesting of a second allocation of 82,500 shares will accelerate; if that price
is $71.00 per share before February 28, 2004, then vesting of a third allocation
of 82,500 shares will accelerate; and if that price is $96.00 per share before
February 28, 2005, then vesting of a fourth allocation of 82,500 shares will
accelerate. In recommending the grant of the stock option to Mutch, the
committee reviewed his prior outstanding option grants, the number of options
that remained unexercisable, the number of shares he already owned as of the
date the option was granted and HNC's performance in 2000. The committee
believes that this grant was appropriate because it provides the proper
incentive to Mutch and takes account of his prior option grants.

COMPLIANCE WITH SECTION 162(m) OF THE CODE. We intend to comply with the
requirements of Section 162(m) of the Internal Revenue Code for 2001. The 1995
Equity Incentive Plan is already in compliance with Section 162(m) by limiting
stock awards to named executive officers. We do not expect cash compensation for
2001 to any of our executive officers to be more than $1,000,000 or consequently
affected by the requirements of Section 162(m).

COMPENSATION COMMITTEE

CHARLES H. GAYLORD, JR.
DIRECTOR

ALEX W. HART
DIRECTOR

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24

COMPANY STOCK PRICE PERFORMANCE

The stock price performance graph below is required by the Securities and
Exchange Commission. It is not "soliciting material," is not deemed filed with
the Securities and Exchange Commission and is not to be incorporated by
reference in any of our filings under the Securities Act of 1933 or the
Securities Exchange Act of 1934, whether made before or after the date of this
proxy statement and irrespective of any general incorporation language in any
filings.

The graph below compares the cumulative total stockholder return on our common
stock with the cumulative total return on the Nasdaq Stock Market--U.S. Index
and the JP Morgan H&Q Technology Index. The graph assumes the investment of $100
in our common stock, the Nasdaq Stock Market--U.S. Index and the JP Morgan H&Q
Technology Index on the last trading day of 1995 and calculates the annual
return through December 31, 2000, assuming reinvestment of all cash dividends.
The stock price performance shown in the graph is based on historical data and
does not necessarily indicate future stock price performance.

The stock prices are reported by Nasdaq and give retroactive effect to the Retek
spin-off by adjusting the historical prices of our common stock by the Retek
distribution ratio.

[GRAPH]

NASDAQ STOCK H&Q TECHNOLOGY
HNC SOFTWARE INC. MARKET--U.S. INDEX INDEX
----------------- ------------------ -----
MARKET INVESTMENT INVESTMENT INVESTMENT
PRICE VALUE INDEX VALUE INDEX VALUE
----- ----- ----- ----- ----- -----

12/31/95 ...... $ 4.633 $100.00 345.9 $100.00 325.5 $100.00
12/31/96 ...... 6.064 130.89 425.4 123.04 404.5 124.29
12/31/97 ...... 8.344 180.10 522.1 150.69 474.2 145.71
12/31/98 ...... 7.846 169.37 735.7 212.51 737.6 226.64
12/31/99 ...... 20.520 442.93 1,364.8 394.92 1,647.4 506.17
12/31/00 ...... 29.688 640.84 821.2 237.62 1,065.0 327.22

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RELATED PARTY TRANSACTIONS

Other than the compensation arrangements described in "Director Compensation"
and "Executive Compensation" and the transactions described below, since January
1, 2000, there has not been, nor is there currently proposed, any transaction or
series of similar transactions to which we were or will be a party in which the
amount involved exceeds $60,000 and in which any executive officer, director,
beneficial owner of more than 5% of our common stock had or will have a direct
or indirect material interest.

In October 2000, HNC entered into a Strategic Partnership Agreement with
GeoTrust, Inc. David Y. Chen, a director of HNC, is the chairman and chief
executive officer of GeoTrust and beneficially owns more than 10% of the stock
of GeoTrust outstanding. Under the terms of this agreement, HNC agreed to
perform services for GeoTrust related to the installation and integration of HNC
products at GeoTrust. HNC agreed to perform these services at a discounted rate
for a period of one year. GeoTrust agreed to issue to HNC on a quarterly basis
during that year, a warrant to purchase shares of GeoTrust common stock at an
exercise price equal to the then fair market value of GeoTrust common stock. The
number of shares subject to the warrant is proportional to the price discount on
services HNC provides to GeoTrust. The agreement calls for GeoTrust to pay a
monthly license fee to HNC for the products in the amount of $20,000 per month
for the first year, $30,000 per month for the second year and $40,000 per month
in years three through five. In addition, GeoTrust agreed to pay HNC a
revenue-based license fee. GeoTrust also agreed to pay HNC a maintenance fee of
$10,000 per month during the first year of the agreement, $9,000 per month
during the second year and $8,000 per month in years three through five. During
2000, GeoTrust paid HNC a total of $33,263 under this agreement.

To enable our option holders to participate in the dividend of Retek common
stock, we offered them the opportunity to exercise a portion of their vested
options before the dividend record date through loans evidenced by full recourse
promissory notes payable to HNC and secured by the shares purchased and by the
shares of Retek common stock paid in the dividend on those shares. Each note was
due December 31, 2000 and bore interest at the rate of 9.0% per annum. A total
of 60 option holders borrowed a total of $11,857,490 to exercise options to
purchase a total of 327,884 shares. The executive officers and directors who
borrowed funds from HNC under this program and the largest amount of
indebtedness outstanding during 2000 for each of them, was as follows:
$4,898,679 for Mutch; $307,467 for Patterson; $1,411,270 for Chandler; $514,846
for Farb; and $909,152 for Gaylord. Patterson repaid his loan in full as of
December 31, 2000. The total amount of this debt outstanding for all employees
as of December 31, 2000 was $9,049,343. Effective January 2, 2001, the maturity
date of the then outstanding loans was extended to September 14, 2001 for
eligible employees and directors. The interest rate on the extended loans is
10.0% per annum. The loans provide for a pledge of the shares purchased or other
shares of our stock or Retek stock. The loans to Mutch, Chandler, Farb and
Gaylord were extended to September 2001. As of April 10, 2001, Mutch had repaid
$3,172,389 of his loan and the balance outstanding was $1,824,805.

In June 2000, HNC loaned $600,000 to Bruce E. Hansen, the President of HNC
Financial Solutions, to assist in his purchase of a home in connection with his
relocation from New Mexico. The loan is secured by a second mortgage on the
home. The loan bears interest at the rate of 8.5% per annum. The principal
amount and all accrued interest are due in June 2005. The largest amount of
indebtedness outstanding under this loan during 2000 was $629,750.

In May 2000, HNC loaned $600,000 to John Mutch, the President and Chief
Executive Officer, to assist in his purchase of a second home. Mutch agreed to
secure the loan with all shares of HNC that Mutch acquires upon the exercise of
stock options, unless he sells the shares and remits the sale proceeds to HNC to
pay indebtedness to HNC. The loan bears interest at the rate of 8.25% per annum.
The principal amount and all accrued interest are due in May 2005. The loan is
due earlier as follows: (a) the first date on which Mutch receives cumulative
total gross proceeds of $500,000 from sales of HNC common stock; (b) the first
date on which the market price of HNC common stock exceeds $109.00 per share; or
(c) 90 days after termination of Mutch's employment with HNC. The largest amount
of indebtedness outstanding under this loan during 2000 was $628,875. Mutch
repaid this loan in full in April 2001.

In August 1999, HNC loaned $200,000 to J. Anthony Patterson, the President of
HNC Telecommunications Solutions, to assist in his purchase of a home. The loan
is secured by a third mortgage on the home. The loan is due in full in August
2004 and bears interest at the rate of 5.19% compounded monthly. Interest
payments are due semi-monthly. The largest amount of indebtedness outstanding
under this loan during 2000 was $200,000.

STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be presented at our annual meeting of
stockholders in 2002 must be received at our principal executive offices no
later than December 19, 2001 to be included in our proxy statement and form of
proxy for that meeting. Stockholders wishing to bring a proposal before our 2002
annual meeting of stockholders (but not include it in our proxy materials) must
provide written notice of the proposal to the Secretary of HNC at our principal
executive offices by March 22, 2002. In addition, stockholders must comply with
the procedural requirements in our bylaws. Under our bylaws, notice must be
delivered to the Secretary of HNC at our principal executive offices no less
than 60 days and no more than 90 days before the first anniversary of the 2001
annual meeting. If the annual meeting in 2002 is more than 30 days before or
more than 60 days after the first anniversary of the 2001 annual meeting, then
stockholders must give us notice of any proposal no more than 90 days and no
less than 60 days before the meeting or 10 days after we publicly announce the
date of the meeting. The stockholder's notice must specify, as to each proposed
matter: (a) a description of the business and reason for conducting the business
at the meeting; (b) the name and address as they appear on our books of the
stockholder proposing the business, or the name of the beneficial holder or
other party on whose behalf the proposal is made; (c) the class and number of
shares of our common stock owned by the stockholder or beneficial holder or
other party on whose behalf the proposal is made; and (d) any material interest
in the matter of the stockholder or beneficial holder or other party on whose
behalf the proposal is made. Stockholders can obtain a copy of our bylaws from
us. The bylaws are also on file with the Securities and Exchange Commission. The
proxy holders will vote all proxies received for the annual meeting in 2002
according to their judgment on all stockholder proposals that we receive after
March 22, 2002.

COMPLIANCE UNDER SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16 of the Securities Exchange Act requires our directors and officers,
and persons who own more than 10% of a registered class of our equity
securities, to file initial reports of ownership and reports of changes in
ownership with the SEC. The SEC regulations also require these persons to
furnish us with a copy of all Section 16(a) forms they file. Based solely on our
review of the copies of the forms furnished to us and written representations
from our executive officers and directors, we believe that all Section 16(a)
filing requirements were met during 2000, except that Sean M. Downs filed one
late Form 4 reporting the exercise of options to purchase 21,250 shares and the
sale of those shares, and Kenneth J. Saunders filed one late Form 4 reporting
the exercise of options to purchase 8,984 shares and the sale of 6,541 of those
shares.

OTHER BUSINESS

The board does not 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 accordance with the judgment of the proxy
holders. A matter is considered properly brought before the 2001 annual meeting
if it we receive notice of the matter in the manner provided in our bylaws.
Under our bylaws, notice must be delivered to the Secretary of HNC at our
principal executive offices no later than March 26, 2001.

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.

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APPENDIX

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF
HNC SOFTWARE INC.

I. PURPOSE

The purpose of the Audit Committee (the "COMMITTEE") of the Board of
Directors (the "BOARD") of HNC Software Inc. (the "COMPANY") is to assist the
Board in fulfilling its statutory and fiduciary oversight responsibilities
relating to the Company's financial accounting, reporting and controls. The
Committee's principal functions are to:

- monitor the periodic reviews of the adequacy of the accounting
and financial reporting processes and systems of internal
control that are conducted by the Company's independent
auditors, and the Company's financial and senior management;

- review and evaluate the independence and performance of the
Company's independent auditors; and

- facilitate communication among the Company's independent
auditors, the Company's financial and senior management, and the
Board.

The Committee will fulfill these functions primarily by carrying out the
activities enumerated in Part IV of this charter. In order to serve these
functions, the Committee shall have unrestricted access to Company personnel and
documents, and shall have authority to direct and supervise an investigation
into any matters within the scope of its duties, including the power to retain
outside counsel in connection with any such investigation.

While the Audit Committee has the responsibilities and powers set forth
in this charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the Company's independent auditors.
Nor is it the duty of the Committee to conduct investigations, to resolve
disagreements, if any, between management and its independent auditors or to
assure compliance with laws and regulations and the Company's policies and
procedures.

II. MEMBERSHIP

All members of the Committee will be appointed by, and shall serve at
the discretion of, the Board. Unless a Chair of the Committee is elected by the
full Board, the members of the Committee may designate a Chair by majority vote
of the Committee membership.

As of the date this charter is adopted and until June 13, 2001, the
Committee shall consist of at least two (2) members of the Board. At least a
majority of the members shall be persons who are not officers or employees of
the Company or any subsidiary and who do not have any other relationship which,
in the opinion of the Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. As of
June 14, 2001, the Committee shall consist of three (3) or more members of the
Board, with the exact number being determined by the Board. Each member of the
Committee shall be "INDEPENDENT" as defined by the rules of The Nasdaq Stock
Market, as they may be amended from time to time (the "RULES"), except as
otherwise permitted by such Rules. Each member of the Committee shall have the
ability to read and understand fundamental financial statements (or become able
to do so within a reasonable time after joining the Committee) and at least one
member shall have prior experience in accounting, financial management or
financial oversight, as required by the Rules.

III. MEETINGS

Meetings of the Committee shall be held from time to time as determined
by the Board and/or the members of the Committee and the Committee shall
generally attempt to meet at least once during each quarter, usually shortly
prior to the public announcement of the Company's financial results for the
preceding quarter. The Committee should periodically meet with the independent
auditors out of the presence of management about internal controls, the fullness
and accuracy of the Company's financial statements and any other matters that
the Committee or these groups believe should be discussed privately with the
Committee. The Committee members, or the Chair of the Committee on behalf of all
of the Committee members, should communicate with management and the independent
auditors on a quarterly basis in connection with their review of the Company's
financial statements.

IV. RESPONSIBILITIES AND DUTIES

The following shall be the principal recurring processes of the
Committee in carrying out its oversight responsibilities. These processes are
set forth as a guide with the understanding that the Committee may supplement
and modify them as appropriate and may establish policies and procedures from
time to time that it deems necessary or advisable in fulfilling its
responsibilities.

1. Review the Company's quarterly financial information attached to each of
its quarterly earnings press releases and review the Company's annual financial
statements, including any report or opinion by the independent auditors, prior
to distribution to the public or filing with the Securities and Exchange
Commission.

2. In connection with the Committee's review of the annual financial
statements:

- Discuss with the independent auditors and management the
financial statements and the results of the independent
auditors' audit of the financial statements.

- Discuss any items required to be communicated by the independent
auditors in accordance with SAS 61, as amended. These
discussions should include the independent auditors' judgments
about the quality and appropriateness of the Company's
accounting principles, the reasonableness of significant
judgments, the clarity of the disclosures in the Company's
financial statements and any significant difficulties
encountered during the course of the audit, including any
restrictions on the scope of work or access to required
information.

3. In connection with the Committee's review of the quarterly financial
statements, the Committee will:

- Discuss with the independent auditors and management the results
of the independent auditors' SAS 71 review of the quarterly
financial statements.

- Discuss significant issues, events and transactions and any
significant changes regarding accounting principles, practices,
judgments or estimates with management and the independent
auditors, including any significant disagreements among
management and the independent auditors.

- Discuss any review by the independent auditors of contracts
entered into during the quarter in question.

4. Discuss any comments or recommendations of the independent auditors
outlined in their annual management letter. Approve a schedule for implementing
any recommended changes and monitor compliance with the schedule.

5. Discuss with the independent auditors and management their periodic
reviews of the adequacy of the Company's accounting and financial reporting
processes and systems of internal control, including the adequacy of the systems
of reporting to the audit committee by each group.

6. At least once each fiscal year, consult with the independent auditors
out of the presence of

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management about internal controls, the fullness and accuracy of the Company's
financial statements and any other matters that the Committee or these groups
believe should be discussed privately with the Committee.

7. Review the independence and performance of the independent auditors.
Recommend to the Board of Directors the appointment or discharge of the
independent auditors.

8. Communicate with the Company's independent auditors about the Company's
expectations regarding its relationship with the auditors, including the
following: (i) the independent auditors' ultimate accountability to the Board
and the Committee, as representatives of the Company's stockholders; and (ii)
the ultimate authority and responsibility of the Board and the Committee to
select, evaluate and, where appropriate, replace the independent auditors.

9. Review and approve processes and procedures to ensure the continuing
independence of the Company's independent auditors. These processes shall
include obtaining and reviewing, on an annual basis, a letter from the
independent auditors describing all relationships between the independent
auditors and the Company required to be disclosed by Independence Standards
Board Standard No. 1, reviewing the nature and scope of such relationships and
discontinuing any relationships that the Committee believes could compromise the
independence of the auditors.

10. Review the independent auditors' audit plan.

11. Approve the fees and other significant compensation to be paid to the
independent auditors.

12. Review the status of any legal matters that could have a significant
impact on the Company's financial statements in connection with the Committee's
quarterly review of the Company's financial statements.

13. Annually prepare a report to the Company's stockholders for inclusion in
the Company's annual proxy statement as required by the rules and regulations of
the Securities and Exchange Commission, as they may be amended from time to
time.

14. Maintain minutes of meetings of the Committee and periodically report to
the Board of Directors on significant matters related to the Committee's
responsibilities.

15. Review and reassess the adequacy of the Committee's charter at least
annually. Submit the charter to the Company's Board of Directors for review and
include a copy of the charter as an appendix to the Company's proxy statement as
required by the rules and regulations of the Securities and Exchange Commission,
as they may be amended from time to time (currently, once every three years).

16. Perform any other activities required by applicable law, rules or
regulations, including the rules of the Securities and Exchange Commission and
any stock exchange or market on which the Company's Common Stock is listed, and
perform other activities that are consistent with this charter, the Company's
Bylaws and governing laws, as the Committee or the Board deems necessary or
appropriate.

17. Review the fairness of any proposed material transaction between the
Company and any officer, director or other member of management of the Company
(or any business known to the Committee to be significantly owned or controlled
by any officer, director or other member of management of the Company),
excluding transactions that are subject to review by the Compensation Committee
of the Board, and make recommendations regarding such transactions to the Board.

18. Review the Company's code of ethical conduct and any reports that
summarize the Company's monitoring of compliance with its code of ethical
conduct.

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HNC SOFTWARE INC.

2001 EQUITY INCENTIVE PLAN

AS ADOPTED APRIL 10, 2001

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 1,400,000 Shares plus Shares that are subject to:
(a) issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option; (b) an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price; or (c) 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, or
in the event of a change in the corporate structure, capitalization or a
dividend of property affecting the value of the Company's Shares, then
appropriate adjustments may be made by the Board in (a) the number of Shares
reserved for issuance under this Plan, (b) the number of Shares that may be
granted pursuant to Section 3 below, (c) the Exercise Prices of and number of
Shares subject to outstanding Options, and (d) the number of Shares subject to
other outstanding Awards will be proportionately adjusted in 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

-1-

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 or any Award;

(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.

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32

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. The Committee will be comprised of
at least two (2) members of the Board, all of whom are Outside Directors.

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
100% of the Fair Market Value of the Shares on the date of grant; provided that:
the Exercise Price of any ISO granted to a Ten Percent Shareholder 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.

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33

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

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34

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. Subject to the provisions
of Section 21, 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.

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 100% of the Fair Market Value of the Shares on the date the Restricted
Stock Award is granted. 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

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35

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. The total amount of Shares subject
to combined Restricted Stock Awards under this Section 6 and Stock Bonus Awards
under Section 7 shall not exceed 10% of the total Shares approved for award
under this Plan.

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

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36

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 adverse accounting consequences and imputation
of income under Sections 483 and 1274 of the Code.

(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

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37

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 accordance with the requirements established by the
Committee and be in writing in a form acceptable to the Committee.

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.

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;

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38

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.

11.1 Except as otherwise provided in this Section 11, 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 determined by the Committee and set forth in the Award
Agreement with respect to Awards that are not ISOs.

11.2 All Awards other than NQSOs. All Awards other than NQSOs shall
be exercisable: (i) during the Participant's lifetime, only by (A) the
Participant, or (B) the Participant's guardian or legal representative; and (ii)
after Participant's death, by the legal representative of the Participant's
heirs or legatees.

11.3 NQSOs. Unless otherwise restricted by the Committee, an NQSO
shall be exercisable: (i) during the Participant's lifetime only by (A) the
Participant; (B) the Participant's guardian or legal representative, (C) a
Family Member of the Participant who has acquired the NQSO by "permitted
transfer;" and (ii) after Participant's death, by the legal representative of
the Participant's heirs or legatees. "Permitted transfer" means, as authorized
by this Plan and the Committee in an NQSO, any transfer effected by the
Participant during the Participant's lifetime of an interest in such NQSO but
only such transfers which are by gift or domestic relations order. A permitted
transfer does not include any transfer for value and neither of the following
are transfers for value: (a) a transfer of under a domestic relations order in
settlement of marital property rights or (b) a transfer to an entity in which
more than fifty percent of the voting interests are owned by Family Members or
the Participant in exchange for an interest in that entity.

12. 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.

13. 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

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39

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.

14. 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.

15. 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.

16. 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.

17. CORPORATE TRANSACTIONS.

17.1 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

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40

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.

17.2 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."

17.3 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.

18. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective
on the date the Plan is adopted by the Board (the "Effective Date"). 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 Committee may grant Awards

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41

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.

19. TERM OF PLAN/GOVERNING LAW. 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. The Plan
and all agreements thereunder shall be governed by and construed in accordance
with the laws of the State of California.

20. 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.

21. 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.

22. 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.

-12-
42

"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.

"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 date of
determination (if such day is a trading day) as reported in The Wall
Street Journal, and, if such date of determination is not a trading
day, then on the last trading day prior to the date of
determination;

(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 both a "non-employee
director" as defined in Rule 16b-3 under the Exchange Act and an "outside
director" for purposes of Code Section 162(m).

-13-
43

"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").

44
DETACH HERE

PROXY

HNC SOFTWARE INC.

Annual Meeting of Stockholders - May 21, 2001

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints John Mutch and Kenneth J. Saunders, or
either of them, as proxies each with full power to appoint his substitute, and
hereby authorizes them to represent and to vote all shares of stock of HNC
Software Inc. which the undersigned is entitled to vote, as specified on the
reverse side of this card at the Annual Meeting of Stockholders of HNC Software
Inc. (the "Meeting") to be held on Monday, May 21, 2001 at 10:00 a.m. local
time, at the Company's world-wide headquarters located at 5935 Cornerstone Court
West, San Diego, California and at any adjournment or postponement thereof.

WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES TO WHICH THIS PROXY
RELATES WILL BE VOTED AS SPECIFIED AND, IF NO SPECIFICATION IS MADE, WILL BE
VOTED FOR ALL NOMINEES FOR DIRECTORS IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3,
AND THIS PROXY AUTHORIZES THE ABOVE DESIGNATED PROXIES TO VOTE IN THEIR
DISCRETION ON 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.

- ----------- -----------
SEE REVERSE (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SEE REVERSE
SIDE SIDE
- ----------- -----------

HNC SOFTWARE INC.
C/O EQUISERVE
P.O. BOX 9398
BOSTON, MA 02205-9398

DETACH HERE

PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.

1. The election of five directors, each to serve FOR AGAINST ABSTAIN
until the next annual meeting of stockholders and 2. To approve our 2001 Option plan [ ] [ ] [ ]
until his successor has been elected and qualified covering 1,400,000 shares of
or until his earlier resignation, death or common stock.
removal. At the meeting, our board of directors
intends to present the following nominees for FOR AGAINST ABSTAIN
election as directors: 3. To ratify the selection of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as our
independent accountants for 2001.

Nominees: (01) Edward K. Chandler, (02) Thomas F. Farb, 4. To transact any other business that may
(03) Alex W. Hart, (04) David Y. Chen and properly come before the meeting or any
(05) John Mutch adjournment or postponement of the meeting.

FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES

[ ]
------------------------------------------------------ MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
(Instruction: to withhold authority to vote for any
individual nominee write that nominee's name on the space
provided above.)

These items of business are more fully described
in the attached proxy statement. Only stockholders
of record at the close of business on April 2,
2001 are entitled to notice of and to vote at the
meeting or any adjournment or postponement of the
meeting.

Please sign exactly as your name(s) appear(s) on
this Proxy. 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
this Proxy. If shares of stock are held of record
by a corporation, this Proxy should be executed by
the president or vice president and the secretary
or assistant secretary. Executors, administrators
or other fiduciaries who execute this Proxy for a
deceased stockholder should give their full title.
Please date this Proxy.

Signature: Date: Signature: Date:
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