Sample Business Contracts

Severance Agreement - HNC Software Inc. and Robert L. North

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December 14, 1999

Mr. Robert L. North


Dear Mr. North:

This letter agreement (this "AGREEMENT") confirms the terms of the termination
of your employment with HNC Software Inc. ("HNC"). This Agreement is also
intended to address your continuing position as a member of HNC's Board of
Directors, to delineate the scope of the consulting services which you may
hereafter provide to HNC and its subsidiary eHNC, Inc. ("EHNC"), and to
permanently resolve any and all potential disputes which may arise concerning
your employment with HNC, or the termination of your employment with HNC.

1.       EMPLOYMENT TERMINATION DATE: You agree that your employment with HNC
will be terminated effective on January 15, 2000 (the "TERMINATION DATE"). You
also agree to resign as an officer of eHNC and to resign from the Board of
Directors of eHNC immediately, if at any time after the Termination Date HNC or
eHNC requests you to do so.

2.       PAYMENT OF WAGES: On or before the Termination Date, HNC shall deliver
to you a final paycheck which shall include all accrued wages, salary, bonuses,
reimbursable expenses, accrued but unused vacation pay and any similar payments
due and owing to you from HNC as of the Termination Date. We will deduct all
normal tax withholdings and other required deductions from these payments.


         (a) STATUS OF YOUR HNC AND EHNC OPTIONS. You have previously been
granted options to purchase up to 757,834 shares of HNC's Common Stock at
purchase prices of between $0.20 and $32.6875 per share. As of the date of this
Agreement, you have exercised 417,834 of these options. Assuming no additional
exercise of these options by you prior to the Termination Date, and assuming
your continuous employment with HNC through the Termination Date, on the
Termination Date you will have vested and unexercised interests in options to
purchase up to 214,162 shares of HNC Common Stock and you will have 125,838
unvested HNC stock options. In addition, you have been granted options to
purchase up to 100,000 shares of the Common Stock of eHNC under the eHNC Stock
Option Plan. On your date of termination, none of these eHNC options will be

         (b) CONTINUED STOCK OPTION VESTING. In accordance with the terms of
your current HNC and eHNC stock options, both your HNC stock options and your
eHNC stock options will continue to vest so long as you are a member of the
Board of Directors of HNC or continue to serve as a consultant to HNC and eHNC
as provided in paragraph 4 of this Agreement.

understand and agree that any and all HNC options you hold that are Incentive
Stock Options ("ISOS") shall become non-qualified stock options effective ninety
(90) days after the Termination Date, and that this conversion


will have certain tax ramifications for you. You understand and agree that it is
your responsibility to confer with your own personal tax advisor concerning the
conversion of your stock options.

         (d) ACCELERATION OF STOCK OPTION VESTING. HNC and eHNC agree that, on
the Service Termination Date (as defined in subparagraph (e) below), your right
to exercise all then unvested HNC stock options and all then unvested eHNC stock
options then held by you will accelerate and vest in full, so that all such
stock options may then be exercised in full by you.

         (e) SERVICE TERMINATION DATE. As used herein, the term "SERVICE
TERMINATION DATE" means the earlier of: (i) the first date on which you cease to
be a member of HNC's Board of Directors due to (A) your death or disability, (B)
your resignation from the HNC Board of Directors for any reason, (C) your
failure to be re-elected to HNC's Board of Directors, or (D) your removal from
HNC's Board of Directors for any reason; or (ii) December 31, 2000, if you have
complied with your obligations under the first sentence of paragraph 4 below
through that date.

         (f) ADJUSTMENT. If HNC's Board of Directors elects to generally adjust
HNC stock options to reflect any extraordinary transaction, such as a
distribution of HNC's shares of Retek Inc., your HNC options, if then still in
effect, would be likewise adjusted.

         (g) HNC DIRECTORS' OPTION PLAN. As you know, HNC maintains a 1995
Directors Stock Option Plan ("DIRECTOR PLAN") under which options to purchase
shares of HNC Common Stock are granted to outside members of HNC's Board of
Directors who are not employees of HNC or certain of its affiliates. The terms
of the Director Plan currently provide, among other things, that: (1) new HNC
directors are granted an "Initial Grant" of an option to purchase 25,000 shares
of HNC Common Stock upon their election to the HNC Board; and (2) if, on a
succeeding anniversary of such Initial Grant, the director remains a member of
the HNC Board and has continuously served as a member of HNC's Board since his
election to the Board, then on the anniversary of the date of the Initial Grant,
the director will automatically be granted an additional option to purchase
10,000 shares of HNC common stock (a "SUCCEEDING GRANT"). In consideration of
the agreements made herein, you hereby agree with HNC that, notwithstanding
anything to the contrary in this Agreement or the Director Plan: (1) you will
not be granted any options to purchase shares of HNC common stock under the
Director Plan unless and until you are elected to HNC's Board of Directors at
HNC's annual stockholder meeting held in calendar year 2001 (the "2001
STOCKHOLDERS MEETING"); and (2) if you are elected to HNC's Board of Directors
at the 2001 Stockholders Meeting you will not be granted an Initial Grant, but
will be granted a nonqualified stock option under the Director Plan that is a
"Succeeding Grant" as now defined under Section 6.3 of the Director Plan on the
terms of the Director Plan, as such are then in effect.

4.       CONSULTING AND SERVICE: You agree that from the Termination Date
through December 31, 2000, you will make yourself available to provide, and
will, as an independent contractor, provide advice and counsel to the Company
and eHNC for up to twenty (20) hours per month. It is agreed by us that your
provision of advice and counsel to HNC and eHNC shall constitute "providing
services" to HNC and eHNC within the meaning of their respective stock option
plans. You will have no right to continue to provide services to HNC or eHNC as
a contractor pursuant to this paragraph 4 after December 31, 2000 unless HNC or
eHNC, as applicable, agree to retain your services after that date.

5.       SALARY CONTINUATION: In consideration for your execution of this
Agreement, your agreement to provide advice and counsel to HNC and the general
release given by you herein, HNC agrees to pay you a monthly severance benefit
in the form of salary continuation, which you are not otherwise entitled to
receive. If you execute this Agreement and do not revoke it as specified in
paragraph 24 of this Agreement, you will receive monthly salary continuation in
an amount equal to your current monthly base salary, until the earlier of the
following: (i) December 31, 2000, or (ii) such time as you violate


either your obligations under the first sentence of paragraph 4 above, or under
the provisions of paragraph 9 or paragraph 10 of this Agreement. You agree with
HNC that HNC may make tax and other withholding deductions that it determines in
good faith are required under applicable law with respect to any payments made
by HNC under this paragraph 5.

6.       GROUP HEALTH BENEFITS: HNC will continue to maintain and pay for your
and your spouse's participation in its group medical, dental, and vision
insurance plans, until the earlier of the following: (i) December 31, 2000, or
(ii) such time as you may violate either paragraph 9 or paragraph 10 of this
Agreement. You will be eligible to continue coverage under COBRA thereafter.

7.       RETURN OF HNC PROPERTY: During the period in which you are receiving
salary continuation, you will be allowed to retain the computer system currently
in your possession and will continue to have access to HNC's voice mail and
electronic mail systems. You agree, however, that at the time that salary
continuation terminates (as described in paragraph 5 hereof), you will promptly
return the computer to HNC, and your access to HNC's voice mail and electronic
mail systems will terminate unless other agreements are reached with HNC. You
represent that, as of the Termination Date, you will have returned to HNC all
other HNC property or data that was in your possession or control.

8.       OTHER ACTIVITIES: It is agreed that while you are receiving salary
continuation under paragraph 5 of this Agreement, you may accept and engage in
other employment and/or consulting, and may provide service (including but not
limited to sitting as a member of another company's board of directors) to other
persons or companies, PROVIDED that such employment, consulting work or service
provision is not for any person or entity which competes in any way with the
business of HNC or any of its subsidiaries.

9.       NON-COMPETITION: It is specifically understood and agreed that during
any period of time in which you are receiving salary continuation from HNC under
paragraph 5 hereof, you shall not provide services or advice to any person or
entity which competes in any way with the business of HNC or any of its business
units or subsidiaries, regardless of whether you receive compensation from such
person or entity.

10.      NON-SOLICITATION: It is specifically understood and agreed that during
any period of time in which you are receiving salary continuation from HNC under
paragraph 5 hereof, you shall not, directly or indirectly, solicit or induce any
of the employees, independent contractors or agents of HNC or any of its
subsidiaries to end or reduce their relationships with or services to HNC or any
of its subsidiaries, nor shall you solicit, recruit or otherwise induce any such
person to perform services for you or for any other person or entity. The
foregoing non-solicitation obligation extends to all employees, independent
contractors and agents of HNC and all HNC's subsidiaries, business units and/or
divisions. It is understood and agreed by you and the Company that if you are a
member of another company's board of directors and that company is soliciting or
recruiting employees of HNC or any of its subsidiaries, independent contractors
or agents, it shall not be presumed that you have violated this paragraph 10,
and any such claim shall be subject to proof thereof.

11.      CONFIDENTIAL INFORMATION: You acknowledge that you are bound by your
attached Invention Assignment and Proprietary Information Agreement with HNC
dated April 22, 1987, that as a result of your employment with HNC you have had
access to HNC's Confidential Information (as defined in such agreement), that
you will hold all Confidential Information in strictest confidence and that you
may not use such Confidential Information on behalf of any third party. You
confirm that you have delivered to HNC all documents and data containing or
pertaining to Confidential Information and that you have not taken with you any
such documents or data or any reproduction thereof (except as such are contained
in the computer and electronic systems referenced in paragraph 7).


12.      GENERAL RELEASE: As of the date of execution of this Agreement, you,
for yourself, your heirs, executors, administrators, assigns and successors,
fully and forever release and discharge HNC and each of its current, former and
future parents, subsidiaries, related entities, employee benefit plans and their
fiduciaries, predecessors, successors, officers, directors, shareholders,
agents, employees and assigns (collectively, "RELEASEES"), with respect to any
and all claims, liabilities and causes of action, of every nature, kind and
description, in law, equity or otherwise, which have arisen, occurred or existed
at any time prior to the signing of this Agreement, including, without
limitation, any and all claims, liabilities and causes of action arising out of
or relating to your employment with HNC or the termination of your employment
with HNC.

13.      KNOWING WAIVER OF EMPLOYMENT-RELATED CLAIMS: You understand and agree
that, with the exception of potential employment-related claims identified
below, you are waiving any and all rights you may have had, now have, or in the
future may have, to pursue against any of the Releasees any and all remedies
available to you under any employment-related causes of action, including
without limitation, claims of wrongful discharge, breach of contract, breach of
the covenant of good faith and fair dealing, fraud, violation of public policy,
breach of privacy rights, defamation, discrimination, personal injury, physical
injury, emotional distress, claims under Title VII of the Civil Rights Act of
1964, as amended, the Age Discrimination in Employment Act, the Older Workers
Benefit Protection Act, the Americans With Disabilities Act, the Federal
Rehabilitation Act, the Family and Medical Leave Act, the California Fair
Employment and Housing Act, the California Family Rights Act, the Equal Pay Act
of 1963, the provisions of the California Labor Code and any other federal,
state or local laws and regulations relating to employment, conditions of
employment (including wage and hour laws) and/or employment discrimination.
Claims not covered by the release provisions of this Agreement are (i) claims
for unemployment insurance benefits, and (ii) claims under the California
Workers' Compensation Act.

14.      WAIVER OF CIVIL CODE Section 1542: You expressly waive any and all
rights and benefits conferred upon you by Section 1542 of the Civil Code of
the State of California, which states as follows:


You agree and understand that the Release given by you pursuant to this
Agreement applies to all unknown, unsuspected and unanticipated claims,
liabilities and causes of action which you may have against HNC or any of the
other Releasees.

15.      SEVERABILITY OF RELEASE PROVISIONS: You agree that if any provision of
the release given by you under this Agreement is found to be unenforceable, it
will not affect the enforceability of the remaining provisions and any court of
competent jurisdiction may enforce all remaining provisions to the extent
permitted by law.

16.      NONDISPARAGEMENT: You agree that you will not disparage, in writing or
orally, HNC, any of its subsidiaries, or any of their products, services,
representatives, directors, officers, attorneys, successors or assigns, or any
person acting by, through, under or in concert with any of them. HNC agrees that
it will take reasonable steps to ensure that persons affiliated with HNC do not
disparage you, in writing or orally.

17.      LEGAL AND EQUITABLE REMEDIES: You agree that HNC will have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable remedies


without prejudice to any other rights or remedies HNC may have at law or in
equity for breach of this Agreement.

18.      ATTORNEY'S FEES: If any action at law or in equity is brought to
enforce the terms of this Agreement, the prevailing party will be entitled to
recover its reasonable attorneys' fees, costs and expenses from the other party,
in addition to any other relief to which such prevailing party may be entitled.

19.      CONFIDENTIALITY: You agree to keep the contents, terms and conditions
of this Agreement confidential and will not disclose any information related to
this Agreement to anyone except your attorney or pursuant to a subpoena or court
order. Any breach of this confidentiality provision will be deemed to be a
material breach of this Agreement. However, HNC shall be entitled to disclose
the contents, terms and conditions of this Agreement to the extent that it has
been advised by counsel that it is required to do so under applicable law or the
rules or regulations of any securities exchange or stock quotation system on
which HNC's stock or other securities are traded or quoted.

20.      NO ADMISSION OF LIABILITY: This Agreement is not, and you may not
construe or contend it to be, an admission or evidence of wrongdoing or
liability on the part of HNC, its representatives, attorneys, agents, officers,
shareholders, directors, employees, subsidiaries, successors or assigns. This
Agreement will be given the maximum protection allowable under California
Evidence Code Section 1152 and/or any other state or Federal provisions of
similar effect.

21.      ENTIRE AGREEMENT: This Agreement constitutes the entire agreement
between you and HNC with respect to the subject matter of this document. It
supersedes all prior negotiations and agreements, written or oral, relating to
this subject matter. You acknowledge that neither HNC nor its agents or
attorneys, have promised or represented, either expressly or impliedly, in
writing or orally, anything not contained in this Agreement for the purpose of
inducing you to execute this Agreement. You acknowledge that you have signed
this Agreement relying only on the promises, representations and warranties
contained in this document.

22.      MODIFICATION: This Agreement may not be amended or modified in any
respect except by another written agreement that specifically refers to this
Agreement, executed by an authorized representative of each of the parties.

23.      PERIOD TO REVIEW AGREEMENT: You acknowledge that this Agreement was
presented to you on December 14, 1999, and that you are entitled to have up to
twenty-one (21) days within which to review its terms. You acknowledge that you
have been advised to consult with an attorney prior to executing this Agreement.
You further represent that if you sign this Agreement before the expiration of
the twenty-one (21) day period, you voluntarily waive any remaining time period
to review and consider this Agreement.

24.      REVOCATION OF AGREEMENT: You understand that you may revoke your
agreement within seven (7) days of your execution of this document. Any such
revocation must be in writing, and must be received by HNC within such seven (7)
day period. Any written revocation should be delivered to: President, HNC
Software Inc. 5935 Cornerstone Court West, San Diego, CA 92121. You understand
that the benefits to be provided to you under this Agreement will be provided
only after the revocation period has expired and you have not revoked this

25.      SECTION 16 COMPLIANCE: You acknowledge that you alone are responsible
for your compliance with Section 16 under the Securities Exchange Act of 1934,
as amended, and all regulations thereunder.


If you agree to the terms of this Agreement, please sign the attached copy and
return it to me on or before January 5, 2000. PLEASE REVIEW THIS AGREEMENT

Very truly yours,

HNC SOFTWARE INC.                                            As to paragraphs 1, 3 and 4 only
                                                             eHNC, INC.

By:                                                          By:
  ------------------------------------------                     -----------------------------------------
     Charlie Gaylord, Member, HNC Board of                       Charlie Gaylord, Member, HNC Board of
     Compensation Committee                                      Directors Compensation Committee

HNC SOFTWARE INC.                                            As to paragraphs 1, 3 and 4 only
                                                             eHNC, INC.

By:                                                          By:
   -----------------------------------------                    -----------------------------------------
   John Mutch, President                                         John Mutch, President


Robert L. North