-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H62u2CJhGWnXAlZZHrA8FtibNzXm6o1uVpOZuROgCJyicBOhr2xeuRPctSCpbhH8 d4vrTavwDMfn4Sd2rN2KGg== 0000936392-99-001184.txt : 19991018 0000936392-99-001184.hdr.sgml : 19991018 ACCESSION NUMBER: 0000936392-99-001184 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19991015 EFFECTIVENESS DATE: 19991015 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HNC SOFTWARE INC/DE CENTRAL INDEX KEY: 0000945093 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 330248788 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-89165 FILM NUMBER: 99729451 BUSINESS ADDRESS: STREET 1: 5930 CORNERSTONE CT W CITY: SAN DIEGO STATE: CA ZIP: 92121-3728 BUSINESS PHONE: 6195468877 MAIL ADDRESS: STREET 1: 5930 CORNERSTONE CT WEST CITY: SAN DIEGO STATE: CA ZIP: 92121-3728 S-8 1 FORM S-8 1 As filed with the Securities and Exchange Commission on October 15, 1999 Registration No. 333-_____ - -------------------------------------------------------------------------------- U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 HNC SOFTWARE INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 33-0248788 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.)
5935 CORNERSTONE COURT WEST SAN DIEGO, CALIFORNIA 92121-3728 (Address of Principal Executive Offices) NON-QUALIFIED STOCK OPTION AGREEMENT (Full Title of the Plan) -------------------------------- RAYMOND V. THOMAS CHIEF FINANCIAL OFFICER HNC SOFTWARE INC. 5935 CORNERSTONE COURT WEST SAN DIEGO, CALIFORNIA 92121-3728 (619) 546-8877 (Name, Address and Telephone Number of Agent for Service) -------------------------------- Copies to: KENNETH A. LINHARES, ESQ. WILLIAM L. HUGHES, ESQ. FENWICK & WEST LLP TWO PALO ALTO SQUARE PALO ALTO, CALIFORNIA 94306 CALCULATION OF REGISTRATION FEE
================================================================================================================================ TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TO BE REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE OFFERING PRICE REGISTRATION FEE SHARE - -------------------------------------------------------------------------------------------------------------------------------- Common Stock, $0.001 par value 250,000 (1) $23.00 (2) $5,750,000 $1,599 (3) ================================================================================================================================
(1) Represents 250,000 shares subject to an awarded outstanding stock option. (2) Per share exercise price for such stock option determined pursuant to Rule 457(h)(1). (3) Fee calculated pursuant to Section 6(b) of the Securities Act of 1933, as amended. 2 HNC SOFTWARE INC. REGISTRATION STATEMENT ON FORM S-8 PART II: INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents filed with the Securities and Exchange Commission (the "Commission") are incorporated herein by reference: (a) The Registrant's latest annual report filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or the latest prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act") that contains audited financial statements for the Registrant's latest fiscal year for which such statements have been filed; (b) All other reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report or prospectus referred to in (a) above; and (c) The description of the Registrant's Common Stock contained in the Registrant's Registration Statement on Form 8-A filed with the Commission under Section 12 of the Exchange Act on May 26, 1995, including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such documents. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. The validity of the issuance of the shares of Common Stock offered hereby will be passed upon for the Registrant by Fenwick & West LLP, of Palo Alto, California. Members of the firm of Fenwick & West LLP own an aggregate of approximately 4,000 shares of Common Stock of the Registrant. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. As permitted by Section 145 of the Delaware General Corporation Law, the Registrant's Certificate of Incorporation includes a provision that eliminates the personal liability of its directors to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director's duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv) for any transaction from which the director derived an improper personal benefit. -2- 3 In addition, as permitted by Section 145 of the Delaware General Corporation Law, the Bylaws of the Registrant provide that: (i) the Registrant is required to indemnify its directors and officers, as well as directors and officers of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise when they are serving in such capacities at the request of the Registrant, to the fullest extent permitted by the Delaware General Corporation Law; (ii) the Registrant may, in its discretion, indemnify other officers, employees and agents as set forth in the Delaware General Corporation Law; (iii) upon receipt of an undertaking to repay such advances if indemnification is determined to be unavailable, the Registrant is required to advance expenses, as incurred, to its directors and officers to the fullest extent permitted by the Delaware General Corporation Law in connection with a proceeding (except that the Registrant is not required to advance expenses to a person against whom it brings a claim for breach of the duty of loyalty, failure to act in good faith, intentional misconduct, knowing violation of law or deriving an improper personal benefit); (iv) the rights conferred in the Bylaws are not exclusive and the Registrant is authorized to enter into indemnification agreements with its directors, officers and employees and agents; and (v) the Registrant may not retroactively amend the Bylaw provisions in a way that adversely affects the indemnification provided thereunder. The Registrant's policy is to enter into indemnity agreements with each of its directors and officers. The indemnity agreements provide that directors and officers will be indemnified and held harmless against all expenses (including attorneys' fees), judgments, fines, ERISA excise taxes or penalties and settlement amounts paid or reasonably incurred by them in any action, suit or proceeding, including any derivative action by or in the right of the Registrant, on account of their services as a director or officer of the Registrant or as directors or officers of any other corporation, partnership or enterprise when they are serving in such capacities at the request of the Registrant; except that no indemnity is provided in a derivative action in which such director or officer is finally adjudged by a court to be liable to the Company due to willful misconduct in the performance of his or her duty to the Company, unless the court determines that such director or officer is entitled to indemnification. The Registrant will not be obligated pursuant to the agreements to indemnify or advance expenses to an indemnified party with respect to proceedings or claims (i) initiated voluntarily by the indemnified party and not by way of defense, except with respect to a proceeding authorized by the Board of Directors and successful proceedings brought to enforce a right to indemnification and/or advancement of expenses under the indemnity agreements; (ii) for any amounts paid in settlement of a proceeding unless the Registrant consents to such settlement; (iii) on account of any suit in which judgment is rendered against the indemnified party for an accounting of profits made from the purchase or sale by the indemnified party of securities of the Registrant pursuant to the provisions of Section 16(b) of the Exchange Act and related laws and regulations; (iv) on account of conduct by an indemnified party that is finally adjudged to have been in bad faith or conduct that the indemnified party did not reasonably believe to be in, or not opposed to, the best interests of the Registrant; (v) on account of any criminal action or proceeding arising out of conduct that the indemnified party had reasonable cause to believe was unlawful; or (vi) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful. The indemnity agreement requires a director or officer to reimburse the Registrant for expenses advanced only if and to the extent it is ultimately determined that the director or executive officer is not entitled, under Delaware law, the Registrant's Certificate of Incorporation, the Registrant's Bylaws, his or her indemnity agreement or otherwise to be indemnified for such expenses. The indemnity agreement provides that it is not exclusive of any rights a director or executive officer may have under the Certificate of Incorporation, the Bylaws, other agreements, any majority-in-interest vote of the stockholders or vote of disinterested directors, Delaware law, or otherwise. -3- 4 The indemnification provision in the Bylaws, and the indemnity agreements entered into between the Registrant and its directors and officers, may be sufficiently broad to permit indemnification of the Registrant's directors and officers for liabilities arising under the Securities Act. The indemnity agreements require the Registrant to maintain director and officer liability insurance to the extent readily available. The Registrant currently carries a director and officer insurance policy. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. 4.01 Form of Non-Qualified Stock Option Agreement, dated March 19, 1999, between Registrant and Ward Carey. 4.02 Registrant's Restated Certificate of Incorporation filed with the Secretary of State of Delaware on June 13, 1996.(1) 4.03 Registrant's Bylaws, as amended.(2) 4.04 Form of specimen certificate for Registrant's Common Stock.(3) 5.01 Opinion of Fenwick & West LLP. 23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01). 23.02 Consent of PricewaterhouseCoopers LLP, Independent Accountants. 24.01 Power of Attorney (see page 6). - --------------------------- (1) Filed as Exhibit 3(i).04 with the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996. (2) Filed as Exhibit 3(i).01 with the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, as amended. (3) Incorporated by reference from Exhibit 4.01 to the Registrant's Registration Statement on Form S-1 (File No. 33-91932) filed on May 5, 1995, and as subsequently amended. ITEM 9. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; -4- 5 (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low and high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -5- 6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Robert L. North and Raymond V. Thomas, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement on Form S-8 (the "Registration Statement"), and to sign any registration statement for the same offering covered by the Registration Statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or it might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on the 15th day of October, 1999. HNC SOFTWARE INC. By: /s/ Raymond V. Thomas ----------------------------- Raymond V. Thomas Vice President, Finance and Administration, Chief Financial Officer and Secretary Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- PRINCIPAL EXECUTIVE OFFICER: /s/ Robert L. North President, Chief Executive Officer October 15, 1999 - ------------------------------------ and a Director Robert L. North PRINCIPAL FINANCIAL OFFICER: /s/ Raymond V. Thomas Vice President, Finance and Administration October 15, 1999 - ------------------------------------ Chief Financial Officer and Secretary Raymond V. Thomas PRINCIPAL ACCOUNTING OFFICER: /s/ Kenneth J. Saunders Vice President, Corporate Controller October 15, 1999 - ------------------------------------ Kenneth J. Saunders ADDITIONAL DIRECTORS: /s/ Edward K. Chandler Director October 13, 1999 - ------------------------------------ Edward K. Chandler /s/ Thomas F. Farb Director October 15, 1999 - ------------------------------------ Thomas F. Farb /s/ Charles H. Gaylord, Jr. Director October 15, 1999 - ------------------------------------ Charles H. Gaylord, Jr. /s/ Alex W. Hart Director October 12, 1999 - ------------------------------------ Alex W. Hart
-6- 7 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT TITLE - ------- ------------- 4.01 Form of Non-Qualified Stock Option Agreement, dated March 19, 1999, between Registrant and Ward Carey. 5.01 Opinion of Fenwick & West LLP. 23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01). 23.02 Consent of PricewaterhouseCoopers LLP, Independent Accountants. 24.01 Power of Attorney (see page 6).
-7- EX-4.01 2 EXHIBIT 4.01 1 EXHIBIT 4.01 HNC SOFTWARE INC. NON-QUALIFIED STOCK OPTION AGREEMENT This Non-Qualified Stock Option Agreement (this "AGREEMENT") is made and entered into as of March 19, 1999 (the "DATE OF GRANT") between HNC Software Inc., a Delaware corporation (the "COMPANY"), and Ward Carey, an employee of the Company ("OPTIONEE"). Capitalized terms used herein and not otherwise defined shall have the meanings given them in Exhibit A hereto. OPTIONEE: --------------------------------------------- SOCIAL SECURITY NUMBER: --------------------------------------------- OPTIONEE'S ADDRESS: --------------------------------------------- --------------------------------------------- TOTAL OPTION SHARES: --------------------------------------------- EXERCISE PRICE PER SHARE: --------------------------------------------- DATE OF GRANT: --------------------------------------------- EXPIRATION DATE: --------------------------------------------- 1. GRANT OF OPTION. The Company hereby grants to Optionee a nonqualified stock option (this "OPTION") to purchase up to 250,000 shares of the Company's Common Stock, par value $0.001 (the "COMMON STOCK"), as presently constituted, (collectively, the "SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE PRICE"), subject to all of the terms and conditions of this Agreement. 2. VESTING; EXERCISE PERIOD. Initially, this Option will not be exercisable with respect to any of the Shares. Thereafter, this Option shall become exercisable with respect to certain designated portions of the Shares as provided in this Section 2, and in Exhibit B to this Agreement. 2.1 Vesting of Right to Exercise Option. If Optionee has continuously provided services as an employee or officer (each, a "SERVICE PROVIDER") to the Company or to any Subsidiary, Parent or Affiliate of the Company from the Date of Grant through March 18, 2004 (the "FINAL VESTING DATE") and has not been Terminated on or before the Final Vesting Date, then on the Final Vesting Date, this Option shall become exercisable with respect to one hundred percent (100%) of the Shares. Notwithstanding the foregoing, this Option shall become exercisable as to portions of the Shares prior to the Final Vesting Date as follows: (a) If Optionee has continuously provided services as a Service Provider to the Company or to any Subsidiary, Parent or Affiliate of the Company from the Date of Grant through March 19, 2000 (the "FIRST ANNIVERSARY") and has not been Terminated on or before the First Anniversary, then on the First Anniversary, this Option shall become exercisable with respect to the applicable portion of the Shares specified in Section 1 of Part B of Exhibit B to this Agreement. (b) Following the First Anniversary, so long as Optionee continuously provides services as a Service Provider to the Company or to any Subsidiary, Parent or Affiliate of the Company 2 and is not Terminated, on the second (2nd) anniversary of the Date of Grant and on each successive anniversary of the Date of Grant, this Option shall become exercisable with respect to the applicable portion of the Shares specified in Section 2 of Part B of Exhibit B to this Agreement. Notwithstanding anything herein to the contrary, (i) except as otherwise provided in the first sentence of this Section 2.1, this Option shall in no event become exercisable with respect to more than thirty percent (30%) of the Shares in any twelve-month period and (ii) this Option shall in no event ever become exercisable with respect to more than one hundred percent (100%) of the Shares. 2.2 Expiration. This Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which this Option is earlier terminated in accordance with the provisions of Section 3. 3. TERMINATION. 3.1 Termination for Any Reason Except Death or Disability. If Optionee is Terminated for any reason other than Optionee's death or Disability, then this Option, to the extent (and only to the extent) that it would have been exercisable by Optionee on the date of Termination, may be exercised by Optionee no later than three (3) months after the date of Termination, but in any event no later than the Expiration Date. 3.2 Termination Because of Death or Disability. If Optionee is Terminated because of the death or Disability of Optionee, then this Option, to the extent that it is exercisable by Optionee on the date of Termination, may be exercised by Optionee (or Optionee's legal representative) no later than twelve (12) months after the date of Termination, but in any event no later than the Expiration Date. 3.3 No Obligation to Employ. Nothing in this Agreement shall confer on Optionee any right to continue in the employ of, to continue to be a Service Provider or to have or 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 Optionee's employment or other relationship (as a Service Provider or otherwise) at any time, with or without cause. 4. MANNER OF EXERCISE. 4.1 Stock Option Exercise Agreement. To exercise this Option, Optionee (or in the case of exercise after Optionee's death, Optionee's executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit C, or in such other form as may be approved by the Company from time to time (the "EXERCISE AGREEMENT"), which shall set forth, among other things, Optionee's election to exercise this Option, the number of Shares being purchased upon such exercise, any restrictions imposed on the Shares and any representations, warranties and agreements regarding Optionee's investment intent and access to information as may be required by the Company to comply with applicable securities laws. If someone other than Optionee exercises this Option, then such person must submit documentation reasonably acceptable to the Company that such person has the right to exercise this Option. 4.2 Limitations on Exercise. This Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as they are in effect on the date of exercise. This Option may not be exercised as to fewer than 100 Shares unless it is exercised as to all Shares as to which this Option is then exercisable. 2 3 4.3 Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased in cash (by check), or where permitted by law: (a) by cancellation of indebtedness of the Company to Optionee; (b) by surrender of shares of the Company's Common Stock that either: (1) have been owned by Optionee 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 Optionee in the open public market; and (3) are clear of all liens, claims, encumbrances or security interests; (c) by waiver of compensation due or accrued to Optionee for services rendered; (d) provided that a public market for the Company's stock exists: (1) through a "same day sale" commitment from Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD DEALER") whereby Optionee irrevocably elects to exercise this 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 Optionee and a NASD Dealer whereby -- Optionee irrevocably elects to exercise this Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (e) by any combination of the foregoing. 4.4 Tax Withholding. Prior to the issuance of the Shares upon each exercise of this Option, Optionee must pay or provide for any applicable federal, state or local withholding obligations of the Company arising from such exercise. If the Committee permits, Optionee may provide for payment of withholding taxes upon exercise of this Option by requesting in writing in a form acceptable to the Committee that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of Shares to Optionee by deducting the Shares retained from the Shares issuable upon exercise. 4.5 Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Optionee, Optionee's authorized assignee, or Optionee's legal representative, and shall deliver certificates representing the Shares with the appropriate legends affixed thereto. 5. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange or automated quotation system on which the Company's Common Stock may be listed at the time of such issuance or transfer. Optionee understands that the Company is under no obligation to register or qualify the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance. 3 4 6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in any manner, nor may it be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution, and this Option may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of Optionee. 7. TAX CONSEQUENCES. Set forth below is a brief summary as of the Date of Grant of some of the federal and California tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF ANY OF THE SHARES. 7.1 Exercise of Nonqualified Stock Option. There may be a regular federal and California income tax liability upon the exercise of this Option. Upon exercise of this Option, Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares purchased on the date of exercise over the Exercise Price of such Shares. Upon Optionee's exercise of this Option, the Company will be required to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise and Optionee hereby consents to such withholding. 7.2 Disposition of Shares. If the Shares are held for more than twelve (12) months after the date of the sale of such Shares pursuant to the exercise of this Option, then any gain realized on disposition of such Shares will be treated as capital gain. As of the Date of Grant, the maximum federal capital gain tax rate is twenty percent (20%) for Shares held more than twelve (12) months. 8. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not have any of the rights of a shareholder with respect to any Shares unless and until Optionee exercises this Option with respect to such Shares and pays the Exercise Price for such Shares. 9. SECURITIES LAW MATTERS. Notwithstanding any other provision in this Agreement, the Company will have no obligation to issue or deliver certificates for Shares under this Option 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 is 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. 10. CORPORATE TRANSACTIONS. 10.1 Assumption or Replacement of the Option 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 this Option is assumed, converted or replaced by the successor corporation, which assumption will be binding on Optionee), (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 4 5 such merger) cease to own their shares or other equity interests in the Company, (d) the sale of all or 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), this Option may be assumed, converted or replaced by the successor corporation (if any), which assumption, conversion or replacement will be binding on Optionee. In the alternative, the successor corporation may substitute an equivalent Option or provide substantially similar consideration to Optionee as was provided to stockholders (after taking into account the existing provisions of this Option). In the event such successor corporation (if any) refuses to assume or substitute this Option, as provided above, pursuant to a transaction described in this Subsection 10.1, this Option will expire on such transaction at such time and on such conditions as the Board will determine. 10.2 Other Treatment of the Option. Subject to any greater rights granted to Optionee under the foregoing provisions of this Section 10, in the event of the occurrence of any transaction described in Subsection 10.1, this Option will be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution, liquidation, sale of assets or other "corporate transaction." 11. ADJUSTMENT OF SHARES. In the event that the number of outstanding shares of the Company's Common Stock 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 (each a "CAPITAL ADJUSTMENT"), then the number of Shares issuable upon exercise of this Option and the Exercise Price will each be proportionately adjusted, subject to compliance with Delaware law and applicable securities laws; provided however, that fractions of a share will not be issued but will be rounded up to the nearest whole share. 12. INTERPRETATION. The Committee shall have full power and authority to construe and interpret this Agreement and the terms of this Option. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee. 13. ADMINISTRATION BY THE COMMITTEE. The Committee shall have full power and authority to grant waivers of any conditions under this Agreement, correct any defect, supply any omission or reconcile any inconsistency in this Agreement and make all other determinations necessary or advisable for the administration of this Agreement. 14. ENTIRE AGREEMENT. This Agreement and all Exhibits hereto and the Exercise Agreement constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter. 15. NOTICES. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated above or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by telecopier. 5 6 16. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee's heirs, executors, administrators, legal representatives, successors and assigns. 17. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without regard to that body of law pertaining to choice of law or conflict of law. 18. ACCEPTANCE. Optionee has read and understands the terms and provisions of this Agreement, and accepts this Option subject to all the terms and conditions of this Agreement. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that the Company has advised Optionee to consult a tax advisor prior to such exercise or disposition. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in duplicate by its duly authorized representative and Optionee has executed this Agreement in duplicate as of the Date of Grant. HNC SOFTWARE INC. OPTIONEE By: ---------------------------------- ------------------------------- Raymond V. Thomas Ward Carey Chief Financial Officer 6 7 EXHIBIT A TO NON-QUALIFIED STOCK OPTION AGREEMENT FOR WARD CAREY CERTAIN DEFINITIONS "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. "BOARD" means the Board of Directors of the Company. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMITTEE" means the committee appointed by the Board to administer the Company's equity incentive and stock option plans and arrangements, or if no such committee is appointed, the Board. "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. "EXERCISE PRICE" means the price at which a holder of this Option may purchase the Shares issuable upon exercise of this 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. "PARENT" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if at the time in question, 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. "SEC" means the Securities and Exchange Commission. "SUBSIDIARY" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time in question, each of the corporations other than 7 8 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 Agreement, that Optionee has for any reason ceased to provide services as an employee or officer 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 Optionee has ceased to provide services as provided in this definition and the effective date on which Optionee ceased to provide services (the "TERMINATION DATE"). 8 9 EXHIBIT B TO NON-QUALIFIED STOCK OPTION AGREEMENT FOR WARD CAREY VESTING SCHEDULE PART A. DEFINITIONS. As used in this Exhibit B, the following capitalized terms shall have the meanings set forth below: "YEAR" shall mean a calendar year. "20-DAY AVERAGE" for any specified year shall mean the average of the closing prices per share of the Company's Common Stock as quoted on the Nasdaq National Market (or any other stock exchange or quotation system if HNC Common Stock is then quoted on such other exchange or quotation system), and as reported in The Wall Street Journal, for the twenty (20) successive trading days immediately preceding (but not including) March 1 of such year. In the event of a Capital Adjustment, the 20-Day Average will be proportionately and equitably adjusted. "PRICE GROWTH RATE" for a specified year shall mean the percentage obtained by dividing (i) the amount equal to the 20-Day Average for such specified year minus the 20-Day Average for the year immediately preceding such specified year by (ii) the 20-Day Average for the year immediately preceding such specified year. "OPERATIONAL EPS" for a specified year shall mean the Company's diluted operational earnings per share for such specified year, as calculated in accordance with the Company's internal accounting practices. "EPS GROWTH RATE" for a specified year shall mean a percentage obtained by dividing (i) the amount equal to the Operational EPS for such specified year minus the Operational EPS for the year immediately preceding such specified year, by (ii) the Operational EPS for the year immediately preceding such specified year. In the event of a Capital Adjustment, the Operational EPS used in calculating the EPS Growth Rate will be proportionately and equitably adjusted. For example, the EPS Growth Rate for 1999 would be equal to (i) the Operational EPS for 1999 minus the Operational EPS for 1998, divided by (ii) the Operational EPS for 1998. "REVENUE GROWTH RATE" for a specified year shall mean a percentage obtained by dividing (i) the Company's total revenues for such specified year, as publicly reported by the Company minus the Company's total revenues for the year immediately preceding such specified year, as publicly reported by the Company, by (ii) the Company's total revenues for the year immediately preceding such specified year, as publicly reported by the Company. For example, the Revenue Growth Rate for 1999 would be equal to (i) the Company's total revenues for 1999 minus the Company's total revenues for 1998 divided by (ii) the Company's total revenues for 1998. "AVERAGE GROWTH RATE" for a specified year shall mean a percentage equal to the arithmetic average of the EPS Growth Rate for such specified year and the Revenue Growth Rate for such specified year. "INDEX GROWTH RATE" for a specified year shall mean a percentage obtained by dividing (i) the value of the Russell 2000 Index on December 31 of such specified year minus the value of the Russell 2000 Index on December 31 of the year immediately preceding such specified year, by (ii) the value of the Russell 2000 Index on December 31 of the year immediately preceding such specified year. The 9 10 values of the Russell 2000 Index shall be those reported in The Wall Street Journal for the specified date. For example, the Index Growth Rate for the year 2000 would be equal to the difference between the values of the Russell 2000 Index on December 31, 2000 and December 31, 1999 divided by the value of the Russell 2000 Index on December 31, 1999. "PRIOR THREE-YEAR INDEX GROWTH RATE" for a specified year shall mean the arithmetic average of the Index Growth Rates for each of the three consecutive years immediately prior to (and not inclusive of) such specified year. For example, the Three-Year Index Growth Rate for 2000 would be the average of the Index Growth Rates for years 1997, 1998 and 1999. "ADJUSTMENT RATE" for a specified year shall mean a percentage equal to the greater of (i) the Index Growth Rate for the year immediately preceding such specified year divided by the Prior Three-Year Index Growth Rate for the year immediately preceding such specified year and (ii) 50%. "TARGET FIRST YEAR PRICE" shall mean $35.00, provided that if the Index Growth Rate for 1999 is less than 80% of the Prior Three-Year Index Growth Rate for 1999, then the Target First Year Price shall be equal to (i) $21.24 plus (ii) the amount obtained by multiplying $13.76 by the Adjustment Rate for 1999. In the event of a Capital Adjustment, the Target First Year Price will be proportionately and equitably adjusted. "MINIMUM FIRST YEAR PRICE" shall mean $26.00, provided that if the Index Growth Rate for 1999 is less than 80% of the Prior Three-Year Index Growth Rate for 1999, then the Minimum First Year Price shall be equal to (i) $21.24 plus (ii) the amount obtained by multiplying $4.76 by the Adjustment Rate for 1999. In the event of a Capital Adjustment, the Minimum First Year Price will be proportionately and equitably adjusted. "TARGET PRICE GROWTH RATE" for a specified year shall mean the Average Growth Rate for the year immediately preceding such specified year, provided that if the Index Growth Rate for the year immediately preceding such specified year is less than 80% of the Prior Three-Year Index Growth Rate for such immediately preceding year, then the Target Price Growth Rate shall be equal to the Average Growth Rate for the year immediately preceding such specified year multiplied by the Adjustment Rate for such specified year. PART B. VESTING SCHEDULE 1. Vesting Upon First Anniversary (Section 2.1(a)): Subject to the terms and conditions of Section 2 of the Agreement: (i) If the 20-Day Average for 2000 is greater than or equal to the Target First Year Price, then upon the First Anniversary, this Option shall become exercisable with respect to 30% of the Shares; (ii) If the 20-Day Average for 2000 is greater than or equal to the Minimum First Year Price but is less than the Target First Year Price, then upon the First Anniversary, this Option shall become exercisable with respect to a percentage of the Shares equal to 30% multiplied by the quotient obtained by dividing (A) the 20-Day Average for 2000 minus the Minimum First Year Price, by (B) the Target First Year Price minus the Minimum First Year Price; and (iii) If the 20-Day Average for 2000 is less than the Minimum First Year Price, then upon the First Anniversary, this Option shall not become exercisable with respect to any of the Shares. 10 11 2. Vesting Upon Subsequent Anniversaries (Section 2.1(b)): Subject to the terms and conditions of Section 2 of the Agreement, upon each successive anniversary of the Date of Grant following the First Anniversary (each a "SUBSEQUENT ANNIVERSARY"): (i) If the Price Growth Rate for the year in which such Subsequent Anniversary occurs is greater than or equal to the Target Price Growth Rate for such year, then upon such Subsequent Anniversary, this Option shall become exercisable with respect to 30% of the Shares; (ii) If the Price Growth Rate for the year in which such Subsequent Anniversary occurs is greater than or equal to 80% of the Target Price Growth Rate for such year, but is less than 100% of the Target Price Growth Rate for such year, then upon such Subsequent Anniversary, this Option shall become exercisable with respect to a percentage of the Shares equal to 30% multiplied by the quotient obtained by dividing (A) the Price Growth Rate for such year, expressed as a percentage of the Target Price Growth Rate for such year, minus 80%, by (B) 20%; and (iii) If the Price Growth Rate for the year in which such Subsequent Anniversary occurs is less than 80% of the Target Price Growth Rate for such year, then upon such Subsequent Anniversary, this Option shall not become exercisable with respect to any of the Shares. 11 12 PART C. EXAMPLE OF VESTING SCHEDULES NOTE: The following assumptions do not reflect historical information or projections by the Company, but are used solely for convenience in demonstrating the operation of the vesting schedules. 1. Assumptions
Date of Grant: March 19, 1999 -------------- -------------- 20-Day Average for 2002: $48.00 20-Day Average for 2001: $39.20 20-Day Average for 2000: $32.00 20-Day Average for 1999: $25.00 Index Growth Rate for 1999: 20% Prior Three-Year Index Growth Rate for 1999: 22% (average of 1996, 1997 and 1998) Index Growth Rate for 2000: 23% Prior Three-Year Index Growth Rate for 2000: 21% (average of 1997, 1998 and 1999) Index Growth Rate for 2001: 15% Prior Three-Year Index Growth Rate for 2001: 21% (average of 1998, 1999 and 2000)
Year ended Total Revenues Operational EPS ---------- -------------- --------------- (in thousands) December 31, 2001 $ 325,000 $ 1.75 December 31, 2000 $ 250,000 $ 1.25 December 31, 1999 $ 200,000 $ 1.00 December 31, 1998 $ 150,000 $ 0.75
2. APPLICATION OF FORMULAS Vesting on March 19, 2000 (Section 2.1(a)). Based upon the foregoing assumptions, the Target First Year Price would be $35.00 (with no adjustment since the Index Growth Rate for 1999 is at least 80% of the Three-Year Index Growth Rate for 1999) and the Minimum First Year Price would be $26.00. Because the 20-Day Average for 2000 ($32.00), is greater than $26.00 and less than $35.00, the Option would become exercisable on March 19, 2000 with respect to 20% of the Shares (or 50,000 of the Shares) according to the following formula: PERCENT EXERCISABLE = 30% X [($32.00 - $26.00) / ($35.00 - $26.00)] = 20.0% Vesting on March 19, 2001 (Section 2.1(b)). Based upon the foregoing assumptions, the Price Growth Rate for 2001 would be 22.5% [ = (39.20 - 32.00) / 32.00 ], the Revenue Growth Rate for 2000 would be 25% [ = (250,000 - 200,000) / 200,000 ] and the EPS 12 13 Growth Rate for 2000 would be 25% [ = (1.25 - 1.00) / 1.00 ]. The Average Growth Rate for 2000 would be 25% [ = (25% + 25%) / 2 ] and the Target Price Growth Rate for 2001 would also be 25% (with no adjustment since the Index Growth Rate for 2000 is at least 80% of the Three-Year Index Growth Rate for 2000). Because the Price Growth Rate for 2001 (22.5%) is greater than 80% of the Target Price Growth Rate for 2001 (80% of 25% = 20%) but less than 100% of the Target Price Growth Rate for 2001 (25%), the Option would become exercisable on March 19, 2001 with respect to 15.0% of the Shares (or 37,500 of the Shares) as follows: PERCENT EXERCISABLE = 30% X [((22.5% / 25%) - 80%) / 20%] = 15.0% Vesting on March 19, 2002 (Section 2.1(b)). Based upon the foregoing assumptions, the Price Growth Rate for 2002 would be 22.4% [ = (48.00- 39.20) / 39.20 ], the Revenue Growth Rate for 2001 would be 30% [ = (325,000 - 250,000) / 250,000 ] and the EPS Growth Rate for 2001 would be 40% [ = (1.75 - 1.25) / 1.25 ]. The Average Growth Rate for 2001 would be 35% [ = (30% + 40%) / 2 ]. The Adjustment Rate for 2002 would be 71.4%, which is the greater of (i) (15% / 21%) and (ii) 50%. Because the Index Growth Rate for 2001 (15%) is less than 80% of the Three-Year Index Growth Rate for 2001 (21%), the Target Price Growth Rate for 2002 would be adjusted to 25%, which is equal to the Average Growth Rate for 2001 (35%) times the Adjustment Rate (71.4%). Because the Price Growth Rate for 2002 (22.4%) is greater than 80% of the Target Price Growth Rate for 2002 (80% of 25% = 20%) but less than 100% of the Target Price Growth Rate for 2002 (25%), the Option would become exercisable on March 19, 2002 with respect to 14.4% of the Shares (or 36,000 of the Shares) as follows: PERCENT EXERCISABLE = 30% X [((22.4% / 25%) - 80%) / 20%] = 14.4% 13 14 EXHIBIT C HNC SOFTWARE INC. STOCK OPTION EXERCISE AGREEMENT I hereby elect to purchase the number of shares of Common Stock of HNC SOFTWARE INC. (the "Company") as set forth below: Optionee __________________________________ Number of Shares Purchased:__________ Social Security Number:____________________ Purchase Price per Share:____________ Address:___________________________________ Aggregate Purchase Price:____________ ___________________________________ Date of Option Agreement:____________ Daytime Phone:_____________________________ Exact Name of Title to Shares:_______ Facsimile Number:__________________________ _____________________________________ Type of Option: Nonqualified Stock Option _____________________________________
1. DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the Aggregate Purchase Price, to the extent permitted in the Stock Option Agreement (the "Option Agreement") as follows (check as applicable and complete): [ ] in cash (by check) in the amount of $______________, receipt of which is acknowledged by the Company; [ ] by cancellation of indebtedness of the Company to Optionee in the amount of $_______________________; [ ] by delivery of ___________ fully-paid, nonassessable and vested shares of the common stock of the Company owned by Optionee for at least six (6) months prior to the date hereof (and which have been paid for within the meaning of SEC Rule 144), or obtained by Optionee in the open public market, and owned free and clear of all liens, claims, encumbrances or security interests, valued at the current Fair Market Value of $_________ per share; [ ] by the waiver hereby of compensation due or accrued to Optionee for services rendered in the amount of $______________________ (except that the par value of the Shares is tendered in cash (by check) receipt of which is acknowledged by the Company); [ ] through a "same-day-sale" or "cashless exercise" commitment, delivered herewith, from Optionee and the NASD Dealer ("Broker") named therein, in the amount of $___________________ (please register the exercised shares in the name of the broker listed in item 2 below); or [ ] through a "margin" commitment, delivered herewith from Optionee and the Broker named therein, in the amount of $_____________________. 2. DELIVERY OF SHARES. Please complete the information requested below if either of the following is applicable (if you are purchasing and "holding" the shares and you do not complete the information requested below, the shares will be delivered to you via a share certificate mailed to your home address): o You are purchasing your shares and wish to have the shares sent electronically to your brokerage account. In such case, the shares will be registered in the name of the Broker designated below. o You elect to purchase the shares through a "same-day-sale" or "cashless exercise" or "margin" commitment (the Broker will remit the exercise price and applicable withholding taxes, if any, directly to the Company). Name of Broker:__________________________ Broker Phone:_______________ Broker Account Number:___________________ Broker Fax:_________________ 3. MARKET STANDOFF AGREEMENT. Participant agrees in connection with any registration of the Company's securities that, upon the request of the Company or the underwriters managing any public offering of the Company's securities, Participant will not sell or otherwise dispose of any shares without the prior written consent of the Company or such underwriters, as the case may be, for a period of time (not to exceed 180 days) from the effective date of such registration as the Company or the underwriters may specify for employee shareholders generally. 14 15 4. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. 5. ENTIRE AGREEMENT. The Option Agreement is incorporated herein by reference. This Exercise Agreement and the Option Agreement (together with all Exhibits thereto) constitute the entire agreement and understanding of the parties and supersede in their entirety all prior understandings and agreements of the Company and Optionee with respect to the subject matter hereof, and are governed by California law except for that body of law pertaining to choice of law or conflict of law. Date:_______________________ --------------------------------------- Signature of Optionee This is to verify our receipt and acceptance of the attached Exercise Agreement and our agreement to promptly issue and deliver the shares referred to above, subject to our receipt of the Aggregate Purchase Price, and taxes due, if any. The shares, when so issued will be fully paid and nonassessable. HNC Software Inc. Date:_______________________ --------------------------------------- Signature of Optionee [SIGNATURE PAGE TO HNC SOFTWARE INC. STOCK OPTION EXERCISE AGREEMENT] 15 EX-5.01 3 EXHIBIT 5.01 1 EXHIBIT 5.01 October 15, 1999 HNC Software Inc. 5935 Cornerstone Court West San Diego, CA 92121-3728 Gentlemen/Ladies: At your request, we have examined the Registration Statement on Form S-8 (the "REGISTRATION STATEMENT") to be filed by you with the Securities and Exchange Commission (the "COMMISSION") on or about October 15, 1999, in connection with the registration under the Securities Act of 1933, as amended, of an aggregate of 250,000 shares of your Common Stock (the "STOCK"), all of the Stock is subject to issuance by you upon the exercise of a stock option granted by you outside of any of your stock option plans (the "NON-PLAN OPTION"). In rendering this opinion, we have examined the following: (1) Your registration statement on Form S-1 (Registration Number 33-91932) filed with and declared effective by the Commission on June 20, 1995, together with the Exhibits filed as a part thereof; (2) your registration statement on Form 8-A filed with the Commission on May 26, 1995, together with the order of effectiveness issued by the Commission therefor on June 20, 1995; (3) the Registration Statement, together with the Exhibits filed as a part thereof, including without limitation the Non-Qualified Stock Option Agreement between you and Mr. Ward Carey (the "NON-PLAN OPTION AGREEMENT"); (4) the prospectus prepared in connection with the Registration Statement; (5) the minutes of meetings and actions by written consent of the stockholders and Board of Directors that are contained in your minute books that are in our possession; (6) the stock records that you have provided to us (consisting of a certificate from your transfer agent of even date herewith verifying the number of your issued and outstanding shares of capital stock as of October 14, 1999, and a list of option and warrant holders respecting your capital stock and of any rights to purchase capital stock that was prepared by you and dated October 15, 1999, verifying the number of such issued and outstanding securities); (7) a Management Certificate addressed to us and dated of even date herewith executed by the Company containing certain factual and other representations; 1 2 (8) The Nasdaq National Market Listing of Additional Share Notification prepared in connection with the Registration Statement; and (9) the Restated Certificate of Incorporation of the Company filed with the Delaware Secretary of State on June 13, 1996 and the Bylaws of the Company, both as filed by the Company with its Report on Form 10-Q for the quarter ended June 30, 1996. In our examination of documents for purposes of this opinion, we have assumed, and express no opinion as to, the genuineness of all signatures on original documents, the authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies, the legal capacity of all natural persons executing the same, the lack of any undisclosed terminations, modifications, waivers or amendments to any documents reviewed by us and the due execution and delivery of all documents where due execution and delivery are prerequisites to the effectiveness thereof. As to matters of fact relevant to this opinion, we have relied solely upon our examination of the documents referred to above and have assumed the current accuracy and completeness of the information obtained from records referred to above. We have made no independent investigation or other attempt to verify the accuracy of any of such information or to determine the existence or non-existence of any other factual matters; however, we are not aware of any facts that would cause us to believe that the opinion expressed herein is not accurate. We are admitted to practice law in the State of California, and we express no opinion herein with respect to the effect of the laws of any jurisdiction other than the existing laws of the United States of America, the State of California and the State of Delaware. Based upon the foregoing, it is our opinion that the 250,000 shares of Common Stock that may be issued and sold by you upon the exercise of the Non-Plan Option, when issued and sold in accordance with the Non-Plan Option Agreement, will be validly issued, fully paid and nonassessable. We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to all references to us, if any, in the Registration Statement, the Prospectus constituting a part thereof and any amendments thereto. This opinion speaks only as of its date and we assume no obligation to update this opinion should circumstances change after the date hereof. Very truly yours, /s/ FENWICK & WEST LLP 2 EX-23.02 4 EXHIBIT 23.02 1 EXHIBIT 23.02 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated January 29,1999 relating to the financial statements and financial statement schedules, which appears in HNC Software Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998. PricewaterhouseCoopers LLP San Diego, California October 15, 1999 -----END PRIVACY-ENHANCED MESSAGE-----