Employment Agreement - HNC Software Inc. and John Mutch
April 1, 2002
John Mutch
Dear John:
This letter agreement between you and HNC Software Inc. ("HNC") sets
forth and confirms the current terms and conditions of your employment with HNC
effective as of April 1, 2002 (the "EFFECTIVE DATE"), including certain
modifications that will supersede and replace any surviving provisions of your
prior employment agreements dated as of October 13, 1999 and December 13, 1999.
The provisions of this letter agreement have been approved by the Compensation
Committee (the "COMPENSATION COMMITTEE") of HNC's Board of Directors (the "HNC
BOARD").
1. Title. HNC is employing you as its Chief Executive Officer, and as
such you will report to HNC's Board of Directors. you agree to perform the
duties requested of you by the HNC Board or any committee of the HNC Board.
2. Salary. Your base salary will remain at its current annual rate of
$445,000 per year. Your base salary may be increased in the discretion of the
HNC Board or the Compensation Committee.
3. 2002 Bonus Plan. You will continue to be eligible to potentially
receive a target bonus of up to a maximum of 60% of your current annual base
salary under HNC's Incentive Compensation Plan for fiscal 2002 (the "2002 BONUS
PLAN"), depending on the extent to which you achieve your bonus objectives under
the 2002 Bonus Plan as previously determined by the HNC Board. Nothing in this
agreement is intended to modify or change in any respect any of the provisions,
terms or conditions of the 2002 Bonus Plan or any of your bonus objectives under
the 2002 Bonus Plan.
4. At-Will Employment. Your employment with HNC will continue to be on
an "at-will" basis, meaning that your employment with HNC may be terminated by
you or by HNC at any time and for any reason whatsoever, with or without cause
or advance notice. This at-will employment relationship cannot be changed except
as may be expressly set forth in a written instrument that has been authorized
by the HNC Board or the Compensation Committee and has been signed on behalf of
HNC by an authorized officer of HNC (other than yourself).
5. Certain Defined Terms. As used in this agreement, the following terms
will have the meanings provided below:
"CAUSE" will mean: (i) your repeated and continued failure to
perform your duties and responsibilities as an HNC employee (including but not
limited to your compliance with any written policy of HNC) in good faith to the
best of your ability after written notice to that effect from HNC; (ii) your
material breach of your Employee Invention Assignment and Confidentiality
Agreement with HNC then in effect (your "HNC INVENTION ASSIGNMENT/
CONFIDENTIALITY AGREEMENT") that is not susceptible to cure or that is not cured
within five (5) business days after you are given notice of such breach by the
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HNC Board or any committee of the HNC Board; (iii) your commission of (or your
being convicted of or pleading guilty to) a felony (provided, that for purposes
of this paragraph, the term "felony" will not include traffic violations which
do not involve your willful infliction of death or serious injury to others);
or (iv) your commission of an act of fraud or your misappropriation of property
of the Company or any of its affiliates, subsidiaries or successors.
"CHANGE IN CONTROL" will mean: (i) a merger or consolidation of HNC with
or into another corporation or other entity that is consummated after the
Effective Date, where the stockholders of HNC immediately prior to the
consummation of such merger or consolidation do not hold, immediately after the
consummation of such merger or consolidation, stock possessing at least a
majority of the total voting power of all the outstanding stock of the
corporation or other entity that is the survivor of such merger or consolidation
(or of survivor's parent); (ii) a transaction or series of related transactions
occurring after the Effective Date that results in the sale of the beneficial
ownership of more than fifty percent (50%) of the then outstanding voting stock
of HNC to a single party (or to a group of affiliated parties or a group of
parties acting in concert); or (iii) a sale or other disposition by HNC after
the Effective Date of all or substantially all its assets and properties, where
the stockholders of HNC immediately prior to the consummation of such sale or
other disposition do not hold, immediately after the consummation of such sale
or other disposition, stock possessing at least a majority of the total voting
power of all the outstanding stock of the purchaser of HNC's assets and
properties in such sale or disposition.
"COBRA" means the provisions of Section 4980B of the Internal Revenue
Code of 1986, as amended (the "CODE"), adopted as part of the Consolidated
Omnibus Budget Reconciliation Act, which allow former employees of an employer
to continue to receive health and medical insurance benefits, at their expense,
for a specified time period.
"DEEMED TERMINATION" OR "DEEMED TERMINATED" will mean: (i) a significant
reduction of your duties, title, position or responsibilities relative to your
duties, position or responsibilities in effect immediately prior to such
reduction (including a material change in your reporting structure, which shall
include, but not be limited to, your no longer reporting to the HNC Board) that
is effected without your consent or agreement; (ii) a substantial reduction,
without good business reasons, of the facilities and perquisites available to
you immediately prior to such reduction if such reduction is effected without
your consent or agreement; (iii) a reduction of your base salary and target
bonus as in effect immediately prior to such reduction if such reduction is
effected without your consent or agreement (other than any such reduction that
is effected on substantially a company-wide basis in order to reduce HNC's
operating expenses); or (iv) the relocation of your primary office at HNC to a
facility or location that is more than fifty (50) miles away from your primary
office location immediately prior to such relocation, if such relocation is
effected without your consent or agreement. "DEEMED TERMINATION DATE" means the
date on which the Deemed Termination occurs.
Your "TARGET BONUS" for a specified HNC fiscal year means the percentage
of your annual base salary rate that is designated by the HNC Board or by the
Compensation Committee as a target bonus for HNC employees at your then-current
salary grade level for that HNC fiscal year.
"TERMINATION FOR CAUSE" or "TERMINATED FOR CAUSE" means a termination of
your employment by HNC where the HNC Board or any committee of the HNC Board
terminates your employment after determining that Cause exists.
"TERMINATION WITHOUT CAUSE" or "TERMINATED WITHOUT CAUSE" means a
termination of your employment by HNC without a determination by the HNC Board
or a committee of the HNC Board that Cause exists for such termination.
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A "TERMINATION FOR DEATH OR DISABILITY" will occur, and your employment
with HNC will automatically terminate, upon your death or upon your Disability
(as defined below) as determined by the HNC Board or the Compensation Committee.
"DISABILITY" will mean your complete inability to perform your job
responsibilities for HNC for a period of 180 consecutive days, or 180 days in
the aggregate during any twelve (12) month period, due to your mental or
physical injury or disability.
"TERMINATION DATE" will mean the first date after the Effective Date on
which you cease to be employed by HNC (or an affiliate or subsidiary of HNC) for
any reason.
6. Benefits Under Certain Circumstances Prior to a Change of Control. In
the event that, prior to consummation of a Change of Control, you are (i)
Terminated Without Cause, (ii) Deemed Terminated or (iii) there occurs a
Termination for Death or Disability, then the following provisions will apply
(and the provisions of Section 7 of this Agreement will not apply or ever be
applicable):
(a) Cash Payment. Within thirty (30) days after the Termination Date (or
within thirty (30) days after the Deemed Termination Date, in the case of a
Deemed Termination) you will be paid by HNC a one-time cash severance payment in
an amount equal to the sum of (i) two (2) times your annual base salary rate in
effect on the Termination Date (or, in the case of a Deemed Termination, as in
effect immediately prior to the Deemed Termination Date) plus (ii) two (2)
times your Target Bonus in effect on the date on which you are Terminated
Without Cause, are Deemed Terminated or on which there occurs a Termination for
Death Disability, less all applicable payroll and tax deductions and
withholdings.
(b) Acceleration of Option Vesting. On the Termination Date (i) the
vesting of your right to exercise all then outstanding HNC common stock options
then held by you (collectively your "OPTIONS") that are then unvested will
accelerate so that your Options will then be vested and exercisable to the same
extent that they would have been vested and exercisable (under the provisions of
the Options that provide vesting based solely on your continuous employment) if
you had remained continuously employed by HNC until one (1) year after the
Termination Date, and (ii) all your Options will continue to be exercisable by
you for a period ending upon the earlier of (A) one (1) year after the
Termination Date or (B) the date on which your Options would otherwise expire
(other than an expiration due solely to termination of your employment) in
accordance with their respective original terms; provided, however, that if the
operation of this Section 6 is triggered by a Deemed Termination, then all
references in this Section 6(b) (other than the reference to the "Termination
Date" in clause (ii) above) will, solely for purposes of this Section 6(b),
refer to and mean the Deemed Termination Date rather than the Termination Date.
The foregoing provisions of this Section 6(b) amend the current terms of your
Options but will not adversely affect or change the vesting acceleration
provisions now contained in your currently outstanding Option to purchase up to
400,000 shares that was granted to you in January 2001, which provide for
accelerated vesting if the trading price of HNC's common stock reaches certain
levels for certain periods of time.
(c) COBRA Reimbursement. HNC will reimburse you for any verified
payments that you actually make pursuant to your rights under COBRA in order to
continue your coverage under HNC's health and medical insurance benefit plans
during the Continuation Period (as defined below). As used herein, the
"CONTINUATION PERIOD" means that time period beginning on the Termination Date
and ending upon the earlier to occur of (i) eighteen (18) months after the
Termination Date, (ii) the first date on or after the Termination Date on which
you commence employment with any other employer who provides you with health
and medical insurance benefits or (iii) the first date on which you cease to be
eligible under COBRA to continue your coverage under HNC's health and medical
insurance benefit plans.
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(d) Continuation of Life Insurance. During (and only during) the
Continuation Period, HNC will, at its expense continue your coverage under any
life insurance benefits in which you are participating in your capacity as an
HNC employee immediately prior to the Termination Date (if any), to the extent
permitted under any such life insurance benefit plan(s) or policy(ies) or
pursuant to any riders thereto that HNC may obtain using commercially reasonable
efforts and without increasing HNC's cost to maintain such plan(s) or
policy(ies) by more than thirty percent (30%).
(e) Scope of this Section. The provisions of this Section 6 shall not
apply to any termination of your employment other than a Termination Without
Cause, a Deemed Termination or a Termination for Death or Disability.
7. Effect of Change of Control. In the event that you are employed by
HNC immediately prior to the consummation of the first Change of Control to
occur after the Effective Date (the "TRIGGER CHANGE OF CONTROL"), then the
following provisions will apply:
(a) Cash Payment. Subject to the provisions of this Section 7(a), upon
the consummation of the Trigger Change of Control, you will become entitled to
be paid by HNC (or its successor) a cash payment (the "CHANGE OF CONTROL
PAYMENT") in an amount equal to the sum of (i) three (3) times your then-current
annual base salary rate plus (ii) three (3) times your Target Bonus in effect on
the date on which the Trigger Change of Control is consummated (less all
applicable payroll and tax deductions and withholdings), on the following terms
and conditions. The Change of Control Payment shall be payable to you in
installments as follows: (i) eighty percent (80%) of such Change of Control
Payment will be paid to you upon the date of the consummation of the Trigger
Change of Control and (ii) the remaining twenty percent (20%) of such Change of
Control Payment (the "REMAINING PAYMENT") will be paid to you upon the earliest
to occur of (A) a Termination Without Cause occurring after consummation of the
Trigger Change of Control, (B) a Deemed Termination occurring after the
consummation of the Trigger Change of Control, (C) three (3) months after
consummation of the Trigger Change of Control, or (D) your death or your
Disability (as defined in Section 5 above) occurring after the consummation of
the Target Change of Control; provided, however, that if you breach your
obligations under Section 9 below at any time prior to your receipt of the
Remaining Payment, then you will forfeit, and will have no right to receive, the
Remaining Payment or any part thereof.
(b) Acceleration of Option Vesting. Immediately prior to the
consummation of the Trigger Change of Control, the vesting of your right to
exercise all then outstanding HNC common stock options then held by you
(collectively your "OPTIONS") that are then unvested will accelerate in full so
that all your Options will then be fully vested and exercisable in full, and all
your Options will continue to be exercisable by you until the later of (i) one
(1) year after the date of the consummation of the Trigger Change of Control or
(ii) the date on which your Options would otherwise terminate or expire in
accordance with their original terms. The foregoing provisions of this Section
7(b) amend the current terms of your Options but will not adversely affect or
change the vesting acceleration provisions now contained in your currently
outstanding Option to purchase up to 400,000 shares that was granted to you in
January 2001, which provide for accelerated vesting if the trading price of
HNC's common stock reaches certain levels for certain periods of time.
(c) COBRA Reimbursement. If you are Terminated Without Cause or are
Deemed Terminated on, or within three (3) months after, the date of the
consummation of the Trigger Change of Control, then HNC or its successor will
reimburse you for any verified payments that you actually make pursuant to your
rights under COBRA in order to continue your coverage under HNC's health and
medical insurance benefit plans during the COC Continuation Period (as defined
below). As used herein, the "COC CONTINUATION PERIOD" means that time period
beginning on the Termination Date and ending upon the earlier to occur of (i)
eighteen (18) months after the Termination Date, (ii) the first date on or after
the Termination Date on which you commence employment with any other employer
who provides
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you with health and medical insurance benefits, or (iii) the first date on which
you cease to be eligible under COBRA to continue your coverage under HNC's
health and medical insurance benefit plans.
(d) Continuation of Life Insurance. During (and only during)
the COC Continuation Period, HNC will, at its expense continue your coverage
under any life insurance benefits in which you are participating in your
capacity as an HNC employee immediately prior to the Termination Date (if any),
to the extent permitted under any such life insurance benefit plan(s) or
policy(ies) or pursuant to any riders thereto that HNC may obtain using
commercially reasonable efforts and without increasing HNC's cost to maintain
such plan(s) or policy(ies) by more than thirty percent (30%).
(e) 280G Payment.
(i) In the event that a Trigger Change of Control
occurs and is consummated on or before April 1, 2003 and, on or after the
consummation of such Trigger Change of Control, the benefits provided for in
this Agreement or any other benefits approved at any time by the HNC Board or
the Compensation Committee and otherwise payable to you (including stock
options) constitute "parachute payments" within the meaning of Section 280G of
the Code and will be subject to the excise tax imposed by Section 4999 of the
Code, then, subject to the provisions of Section 7(g) below, you shall receive
from HNC (A) a cash payment sufficient to pay such excise tax, and (B) an
additional payment sufficient to pay the excise tax and federal and state income
and employment taxes arising from the payments made by HNC to you pursuant to
this sentence; provided, however, that notwithstanding the foregoing, the total
aggregate amount of all of the payments to be made to you under this Section
7(e) shall in no event exceed an amount equal to the greater of (1) the amount
that would be payable to you under the preceding clauses (A) and (B) of this
sentence if the Per Share Return (as defined in Section 7(f) below) is exactly
$25.00 or (2) your Pro Rata Share (as defined below) of 0.30% of the Total
Return (as defined below) if the Per Share Return is greater than $25.00 (where
the foregoing references to such $25.00 per share amount will each be subject to
proportionate and equitable adjustment to reflect any subdivisions or splits of
HNC's common stock, any combinations or reverse stock splits of HNC's common
stock or any dividends of HNC common stock that occur after the Effective Date).
(ii) Unless HNC and you otherwise agree in writing,
the determination of your excise tax liability and the amount required to be
paid to you by HNC under this Section 7(e) shall be made in writing by HNC's
independent accountants (the "ACCOUNTANTS"), and the amounts to be paid to you
by HNC under this Section 7(e) will be paid to you within thirty (30) days after
the Accountants have finally determined that amount as provided herein (or such
shorter time after the Accountants have finally determined that amount as may be
necessary in order for you to timely pay any withholding or estimated tax
obligations arising from your receipt of any payment under this Section 7(e)).
For purposes of making the calculations required by this Section 7(e), the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. HNC and you
shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section 7(e). HNC shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Section 7(e).
(iii) In the event that the Internal Revenue Service
("IRS") determines that the amount of excise tax payable by you as described
above in this Section 7(e) is different than the amount of such excise tax as
determined by the Accountants as provided above, then: (A) if the amount of such
excise tax payable by you as determined by the IRS is less than the amount of
such excise tax as computed by the Accountants, you will reimburse HNC for all
excess amounts actually paid to you by HNC under this Section 7(e) due to the
over-calculation of such excise tax by the Accountants within five (5) business
days after you receive either a refund from the IRS due to such over-calculation
or you
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receive an economic benefit from the IRS (such as a credit against tax payable)
on account of such over-calculation, provided you reported and paid all your
excise and income tax liabilities resulting from the operation of this Section
7(e) consistent with the amounts you were actually paid hereunder; and (B) if
the amount of such excise tax payable by you as determined by the IRS is greater
than the amount of such excise tax as computed by the Accountants, then HNC will
promptly reimburse you for the amounts that HNC underpaid you under this Section
7(e) due to the under-calculation of such excise tax by the Accountants within
five (5) business days after it receives either a refund from the IRS due to
such over-calculation or it receives an economic benefit from the IRS (such as a
credit against tax payable) on account of such under-calculation.
(iv) The foregoing provisions of this Section 7(e) shall not
apply with respect to any Trigger Change of Control that is consummated after
April 1, 2003 and HNC will have no obligation to make any payment to you under
this Section 7(e) with respect to any Trigger Change of Control that is
consummated after April 1, 2003.
(f) As used in Section 7(e) above:
(i) The term "PER SHARE RETURN" means the dollar value
(determined as provided below) of the consideration that is paid with respect to
one (1) share of outstanding HNC common stock in the Trigger Change of Control
("CHANGE OF CONTROL CONSIDERATION"), with the value of such Change of Control
Consideration to be determined as follows: (A) to the extent that the Change of
Control Consideration consists of stock or other securities for which there is a
trading market, the value of such stock or other securities will be deemed to be
the closing price of such stock or other securities on the date on which the
Trigger Change of Control is consummated; (B) to the extent that the Change of
Control Consideration consists of stock or other securities for which there is
no trading market, the value of such stock or securities shall be determined in
good faith by HNC's Board of Directors as of the date on which such Trigger
Change of Control is consummated; and (C) to the extent that the Change of
Control Consideration consists of cash, the amount of such cash.
(ii) The term "PRO RATA SHARE" will mean the percentage obtained
by dividing (A) the amount (if any) that would be payable to you under
subsection 7(e)(i) if the proviso in subsection 7(e)(i) was not included in such
sentence, by (B) the total aggregate amount that would be payable to the
Designated Officers (as defined below) with respect to the Trigger Change of
Control under a provision of any employment or similar agreement they may have
with HNC which is similar in purpose or intent to the provisions of subsection
7(e)(i) of this Agreement without regard to any proviso such as is contained in
subsection 7(e)(i). As used herein, the term "DESIGNATED OFFICERS" means you and
Mary Burnside, Michael Chiappetta, Charles Nicholls and Kenneth Saunders.
(iii) The term "TOTAL RETURN" will mean the dollar amount equal
to the product obtained by multiplying the Per Share Return by the total number
of shares of HNC common stock that are issued and outstanding (excluding
treasury shares) immediately prior to the consummation of the Target Change of
Control.
(g) Election of Employee Regarding Parachute Payments. If a Trigger
Change of Control occurs and is consummated and, on or after the consummation of
such Trigger Change of Control, the benefits provided for in this Agreement or
any other benefits approved at any time by the HNC Board or the Compensation
Committee and otherwise payable to you (including stock options) constitute
"parachute payments" within the meaning of Section 280G of the Code and will be
subject to the excise tax imposed by Section 4999 of the Code, then you may, at
your sole option and discretion, elect to waive, not receive and/or reduce such
benefits to such lesser extent as will result in no portion of such benefits
being subject to the excise tax imposed by Section 4999 of the Code, and in that
case
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HNC's obligation to make a payment to you pursuant to the provisions of Section
7(e) will be correspondingly reduced.
(h) Scope of this Section. The foregoing provisions of this
Section 7 shall only apply with respect to, and shall only be triggered by, the
Trigger Change of Control and the provisions of Section 7(e)(i) will apply only
in the event that a Trigger Change of Control is consummated on or before April
1, 2003.
8. Release Required. Notwithstanding anything herein to the contrary,
you agree that the provisions of Sections 6 and/or 7 above (as applicable) will
not apply unless and until (i) you have executed a general release agreement in
substantially the form of Exhibit "A" attached hereto of all known and unknown
claims that you may then have against HNC and/or persons or entities affiliated
with HNC due to your termination of employment or any Deemed Termination (the
"RELEASE AGREEMENT") and (ii) you have agreed not to prosecute or bring any
legal action or other proceeding based upon any of such claims. Upon your
execution and delivery of such Release Agreement, HNC will enter into a Limited
Release Agreement with you in the form of Exhibit "B" attached hereto.
9. Obligation to Provide Transition Services After Change of Control.
Whether or not you are then employed by HNC, you agree that, during the three
(3) month period immediately following the consummation of the Trigger Change
of Control (the "TRANSITION PERIOD"), so long as HNC or its successor agrees to
pay you a monthly gross cash compensation that (prior to any applicable payroll
and tax deductions and withholding), is not less than your monthly base salary
rate as in effect immediately prior to the consummation of the Trigger Change
of Control (the "REQUIRED COMPENSATION"), you will, at your election, (i)
continue your active employment with HNC or its successor in good faith or (ii)
provide services to HNC and/or its successor in good faith as an independent
contractor and consultant within your areas of prior experience at HNC, in each
case as and when reasonably requested by HNC or its successor. You further
agree that, during the Transition Period, for so long as HNC or its successor
agrees to pay you the Required Compensation you will keep yourself available to
perform the services described in the preceding sentence for HNC or its
successor at the physical location at which your primary office with HNC was
located immediately prior to the consummation of the Trigger Change of Control.
You will not be deemed to be in breach of this Section 9 by reason of your
death or any illness or physical disability that prevents you from performing
your obligations under this Section 9.
10. Non-Solicitation. You agree that during your employment with HNC,
and for a period of one (1) year after termination of your employment with HNC,
you will not for any reason, whether directly or indirectly: (a) solicit,
recruit, take away or attempt to take away, any employee or consultant of HNC
or any of its affiliates, or induce (or attempt to induce) any employee or
consultant of HNC or any of its affiliates to terminate his or its employment
or services with HNC or any of HNC's affiliates; or (b) use any confidential or
proprietary information of HNC or any of it is affiliates to, directly or
indirectly, solicit any customer of HNC or any of its affiliates or induce any
customer of HNC or its affiliates to terminate its relationship with HNC or any
HNC affiliate; provided, however, that this non-solicitation provision shall
not prevent you from hiring any employee of consultant of HNC or any of its
affiliates that you can demonstrate either (i) approached you independently
without any prior direct or indirect solicitation or encouragement by you or on
your part, or (ii) replied to a solicitation made to the general public without
any direct or indirect solicitation or encouragement by you or on your part.
You and HNC agree that the foregoing provisions of this Section 10 will
entirely supersede and replace any directly conflicting or contrary provisions
contained in your currently existing HNC Invention Assignment/Confidentiality
Agreement.
11. Acknowledgement. By signing this letter you acknowledge and agree
that, if the time during which you are permitted to exercise your Options after
termination of your employment is in fact
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extended as provided above in Section 6(b) or Section 7(b), then you may be
unable to treat any of your Options as "incentive stock options" within the
meaning of the Code for federal income tax purposes, and that you are willing
to assume that risk.
12. Governing Law. This agreement will be governed by the internal
laws of the State of California without reference to its conflict of laws
provisions.
13. Arbitration. We agree that, except as otherwise provided by law, any
dispute or claim (whether based on contract, tort or otherwise), relating to or
arising out of this agreement, your employment with HNC, your termination of
employment with HNC or otherwise pertaining to the workplace (including but not
limited to claims for compensation, discrimination or harassment claims, or
claims for wrongful termination), shall be subject to mandatory and binding
arbitration conducted through the American Arbitration Association ("AAA") in
San Diego, California before a single arbitrator in accordance with the National
Rules for the Resolution of Employment Disputes of the AAA in effect at that
time, and that judgment upon the determination or award rendered by the
arbitrator may be entered in any court having jurisdiction over the parties;
provided, however, that notwithstanding the foregoing, you and HNC acknowledge
and agree that you and HNC will retain the right to, and will not be prohibited
or restricted from, seeking or obtaining equitable relief (including injunctive
relief) from a court having jurisdiction.
14. Successors and Assigns. This agreement will be binding upon you (and
your successors, heirs and assigns) and any successor (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of HNC's business and/or assets. For all
purposes of this agreement, the term "HNC" shall include any successor to HNC's
business and/or asserts which becomes bound by this agreement.
15. Entire Agreement. This agreement and your HNC Invention
Assignment/Confidentiality Agreement contain the entire agreement and
understanding of the parties with respect to the subject matter hereof. You
hereby confirm and agree that, subject to the provisions of Section 10, you will
continue to be bound by and subject to all the terms and conditions of your HNC
Invention Assignment/Confidentiality Agreement. This agreement will supersede in
its entirety, and will terminate any surviving provisions of your prior
agreements with HNC of October 13, 1999 and December 13, 1999.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
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16. Counterparts. This agreement may be executed in counterparts.
We look forward to your continued contributions as part of the HNC
team. Please indicate your acceptance and agreement to the terms of this
agreement by signing this letter at the space indicated below.
Sincerely yours,
HNC SOFTWARE INC.
By /s/ MARY BURNSIDE
-----------------------------
Mary Burnside, Chief
Operating Officer
By signing this letter, I hereby accept and agree to this agreement and all
the provisions set forth above.
/s/ JOHN MUTCH
-------------------------------
John Mutch
Dated: April 2, 2002
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EXHIBIT "A"
SETTLEMENT AGREEMENT AND GENERAL RELEASE
THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE is made and entered into by
and between JOHN MUTCH (hereinafter referred to as "EMPLOYEE") and HNC SOFTWARE
INC., a Delaware corporation (hereinafter referred to as the "COMPANY"), for
and on behalf of the Company and its subsidiaries and affiliated entities.
Whereas, pursuant to a letter agreement dated as of April 1, 2002 between
Employee and the Company, Employee has agreed to enter into this Settlement
Agreement and General Release in order to fully and finally settle all
differences between Employee and the Company and to grant the Company a general
release of claims, including, but not limited to, any differences or claims
that might arise out of Employee's employment with the Company, and the
termination of Employee's employment with the Company;
NOW THEREFORE, in consideration of the premises and the mutual promises
contained in this Agreement, the parties hereby agree as follows:
1. Employee releases and discharges the Company, its successors and
assigns, subsidiaries, affiliates, and the past and present employees, officers,
directors, stockholders, agents, attorneys and representatives of the Company
and its subsidiaries and affiliates (the Company, together with its successors,
subsidiaries, affiliates, and such employees, officers, directors, stockholders,
agents, attorneys and representatives being collectively referred to as the
"COMPANY RELEASEES") from all claims, liabilities, demands and causes of action
known or unknown, fixed or contingent, which Employee has or may hereafter have
arising out of or in any way connected with his employment with the Company, or
the termination of Employee's employment with the Company; provided, however,
that the foregoing release and discharge will not release or discharge the
Company from any of its unperformed express obligations to Employee under (i)
that certain letter agreement between the Company and Employee dated as of April
1, 2002 which sets forth and amends terms of Employee's employment with the
Company (the "LETTER AGREEMENT"); or (ii) this Agreement.
2. This Settlement and General Release shall not in any way be construed
as an admission by the Company or any Company Releasee that it has acted
wrongfully with respect to the Employee or any other person, that the Employee
has acted wrongfully, or that the Employee has any rights whatsoever against the
Company or any Company Releasee. The Company specifically disclaims any
liability to Employee or any wrongful acts against Employee or any other person,
on the part of itself, its employees, agents and all Company Releasees. Rather,
the parties have entered into this settlement and release in order to lend
greater certainty to the existing state of affairs in exchange for the promises
and considerations herein.
3. Employee represents, understands and agrees that Employee's
employment with the Company terminated on ________, 20__.
4. Employee understands that various federal, state and local laws
prohibit age, sex, race or other forms of discrimination and that these laws are
enforced through the U.S. Equal Employment Opportunity Commission, and state and
local human rights agencies. Employee understands that if Employee believed that
Employee's treatment by the Company or any Company Releasee has been
discriminatory, Employee has had the right to consult with these agencies and to
file a charge with them.
<PAGE>
Employee has decided voluntarily to enter into this Settlement Agreement and
General Release, and waive the right to recover any amounts to which Employee
may have been entitled under such laws.
5. Employee represents and agrees that Employee will keep the terms and
amount of this Settlement Agreement and General Release completely confidential,
and that Employee will not disclose any information concerning this Settlement
Agreement and General Release to anyone, other than Employee's spouse and tax
preparer, if any, or as required by legal process or applicable law; provided
however, that Employee will first notify the Company if such disclosure is
sought, allowing the Company the opportunity to object to such disclosure. In
addition, Employee may disclose any information contained in this Settlement
Agreement and General Release which the Company has previously made public
disclosure of.
6. It is agreed that the benefits contained in this Settlement Agreement
and General Release which flow to Employee from the Company are subject to
termination, reduction or cancellation in the event that Employee takes any
action or engages in any conduct in material violation of this Agreement.
7. Employee represents and agrees that this Settlement Agreement and
General Release is binding upon himself, his estate, heirs, successors and
assigns.
8. Employee represents and agrees that the Company has advised Employee
to consult with an attorney regarding aspects of this Settlement Agreement and
General Release and that to the extent, if any, that Employee desired, Employee
has availed himself of this right, that Employee has carefully read and fully
understands all of the provisions of this Settlement Agreement and General
Release, and that Employee is voluntarily entering into this Settlement
Agreement and General Release.
9. Employee agrees not to engage in conduct or undertake speech
derogatory about, disparaging of or detrimental to the Company or any Company
Releasee or its reputation, its board of directors, officers, management,
practices of procedures, or business operations.
10. Employee agrees further that if any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable as a result of a
claim, demand or cause of action Employee has brought prior to the date on which
Employee has executed this Agreement, then the Company, at its option, will be
entitled to recover payments made to Employee, or on Employee's behalf, pursuant
to the Letter Agreement. Any such legal action by the Company shall not be
considered retaliatory.
11. Employee represents and acknowledges that Employee has carefully
read and fully understands all of the provisions of this Agreement, which sets
forth the entire agreement between the parties. Except for the Letter Agreement,
and the Employee Invention Assignment and Confidentiality Agreement of Employee
with the Company dated _______________, ____ [AS SUCH HAS BEEN AMENDED AND
PARTIALLY SUPERSEDED BY THE LETTER AGREEMENT.], this Settlement Agreement and
General Release supersedes any and all prior agreements or understandings
between the parties and all corporate policies, practices or procedures
pertaining to the subject matter of this Agreement.
12. Employee understands that various federal, state and local laws
prohibit age, sex, race, disability, benefits, pension, health and other forms
of discrimination and that these laws can be enforced through the U.S. Equal
Employment Opportunity Commission, California state and local human rights
agencies and federal and state courts. Employee understands that if Employee
believes Employee's treatment by the Company or any Company Releasee was
discriminatory, Employee has had the right to consult with these agencies and to
file a charge with them or file a lawsuit. Employee has decided voluntarily to
enter into this Agreement, and waive the right to recover any amounts to which
Employee may have been entitled under such laws, including, but not limited to:
the Age Discrimination in
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<PAGE>
Employment Act, 29 U.S.C. Section 621 et seq. (as amended by the Older Workers'
Benefit Protection Act, 29 U.S.C. Section 626(f); the California Fair Employment
and Housing Act, California Government Code Section 12900 et seq.; the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. Section 1001 et seq.; Title
VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e et seq.; the
Americans with Disabilities Act, and 42 U.S.C. Section 1981. In addition, this
release covers all statutory, common law, constitutional and other claims,
including but not limited to, all claims for wrongful discharge in violation of
public policy, breach of contract, express or implied, breach of covenant of
good faith and fair dealing, intentional or negligent misrepresentation, any
tort, personal injury, or violation of law which Employee may now have, or has
ever had. The parties agree that any past or future claims for money damages,
loss of wages, earnings and benefits, both past and future, medical expenses,
attorneys' fees and costs, reinstatement and other equitable relief, are all
released by this Agreement. Accordingly, to the fullest extent permitted by law,
at no time subsequent to the execution of this Agreement will Employee pursue,
or cause or knowingly permit the prosecution, in any state, federal or foreign
court, or before any local, state, federal or foreign administrative agency, or
any other tribunal, any charge, claim or action of any kind, nature and
character whatsoever, known or unknown, which Employee may now have, has ever
had, or may in the future have against the Company and/or any officer, director,
employee or agent of the Company, which is based in whole or in part on any
matter covered by this Agreement.
13. Employee expressly waives any right or benefit available to him in
any capacity under the provisions of Section 1542 of the Civil Code of
California which provides:
"A RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
14. Employee represents and acknowledges that Employee has not relied upon
any representations or statements, written or oral, not set forth in this
document.
15. Employee understands that Employee has twenty-one (21) days in which
to consider whether Employee should sign this Agreement; and that Employee
further understands that if Employee signs this Agreement, Employee will be
given seven (7) days following the date on which Employee signs this Agreement
to revoke it and that this Agreement will not be effective until after this
seven (7) day period had lapsed.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
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<PAGE>
16. This Settlement Agreement and General Release shall become effective on
the eighth (8th) day following the date it is signed by Employee. It is
understood that Employee may revoke Employee's approval of this Agreement in the
seven (7) day period following the date Employee signs this Agreement.
PLEASE READ CAREFULLY. THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
Executed at ______________, California, this ____ day of _____________, 20__.
----------------------------------------
John Mutch
Executed at ______________, California, this ____ day of _________, 20__.
HNC SOFTWARE INC.
By:
------------------------------------
[name]
[title]
[SIGNATURE PAGE TO SETTLEMENT AGREEMENT AND GENERAL RELEASE]
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<PAGE>
EXHIBIT "B"
LIMITED RELEASE
______, 20__
John Mutch
[Officer's Address]
Re: Limited Release
Dear John:
HNC Software Inc. ("HNC") is executing and delivering this letter agreement
and limited release to you, John Mutch ("YOU") pursuant to the provisions
of Section 8 of that certain letter agreement between You and HNC dated as of
April 1, 2002 concerning terms of your employment with HNC (the "EMPLOYMENT
LETTER AGREEMENT"). This letter is the "Limited Release" referred to in the
Letter Agreement. HNC hereby agrees with You as follows
1. Subject to the terms and conditions of this letter, HNC releases and
discharges You and your heirs and successors (collectively referred to as the
"EMPLOYEE'S RELEASEES") from all claims, liabilities, demands and causes of
action known or unknown, fixed or contingent, which HNC has or may hereafter
have against You arising out of or in any way connected with Your employment
with HNC or the termination of Your employment with HNC; PROVIDED, HOWEVER, THAT
NOTWITHSTANDING THE FOREGOING, THE FOREGOING RELEASE AND DISCHARGE WILL NOT
RELEASE OR DISCHARGE YOU FROM ANY OF YOUR OBLIGATIONS, DEBTS, DUTIES OR
LIABILITIES TO HNC OR ANY OF ITS SUBSIDIARIES OR AFFILIATES OR THEIR SUCCESSORS
UNDER, OR ARISING FROM:
(a) the Employment Letter Agreement,
(b) Your Employee Invention Assignment and Confidentiality Agreement
with HNC, which You entered into upon becoming an HNC employee, as such was
amended by the Letter Agreement;
(c) the Settlement Agreement and General Release being entered into by
You and HNC concurrently herewith;
(d) any act or omission by You that constitutes or involves (i) Your
fraud or criminal conduct with respect to HNC or any of its subsidiaries,
affiliates or successors (or any of their respective assets); (iii) Your
malfeasance or breach of fiduciary duty with respect to HNC or any of its
subsidiaries, affiliates or successors; (iv) wrongful disclosure, misuse or
misappropriation of, or Your infringement of, any confidential or
proprietary information, technology, intellectual property or any other
asset or property of HNC or any of its subsidiaries or affiliates.
<PAGE>
2. This Settlement and General Release shall not in any way be construed as
an admission by You or by any Employee Releasee that You have acted wrongfully
with respect to HNC or any other person, that HNC has acted wrongfully, or that
HNC has any rights whatsoever against You or any Employee Releasee. Rather, the
parties have entered into this release in order to lend greater certainty to the
existing state of affairs in exchange for the promises and considerations
herein.
Executed at ______________, California, this ____ day of _________, 20__.
By:
------------------------------------
John Mutch
Executed at ______________, California, this ____ day of _________, 20__.
HNC SOFTWARE INC.
By:
------------------------------------
[name]
[title]
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