<PAGE> 1
As filed with the Securities and Exchange Commission on October 16, 1996
Registration No. 333-
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HNC SOFTWARE INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0248788
(State of incorporation) (I.R.S. employer
identification no.)
5930 CORNERSTONE COURT WEST
SAN DIEGO, CALIFORNIA 92121-3728
(Address of principal executive offices)
OPTIONS GRANTED BY RISK DATA CORPORATION UNDER ITS
1992 STOCK OPTION PLAN ASSUMED BY THE REGISTRANT
NON-PLAN OPTIONS GRANTED BY RISK DATA CORPORATION ASSUMED BY THE REGISTRANT
(Full title of the plans)
--------------------
RAYMOND V. THOMAS
CHIEF FINANCIAL OFFICER
HNC SOFTWARE INC.
5930 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.
TYLER R. COZZENS, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================================
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 248,504 (1) $0.4533 (2) $112,647.00 $100.00 (3)
=============================================================================================================================
</TABLE>
(1) Shares subject to assumed Risk Data Corporation options as of August
30, 1996.
(2) Weighted average per share exercise price for such outstanding options
pursuant to Rule 457(h)(1).
(3) Minimum fee pursuant to Section 6(b) of the Securities Act of 1933, as
amended. This amount is greater than 1/33 of 1% of the proposed maximum
aggregate offering price.
<PAGE> 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 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the latest prospectus filed
by the Registrant 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. These
audited financial statements should be read in conjunction
with the other reports filed since the end of the year covered
by the annual report.
(b) All other reports filed pursuant to Section 13 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.
(c) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statement filed with the
Commission under Section 12 of the Exchange Act, 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 registered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed incorporated by reference herein and to be a part hereof from the date
of the filing of such documents.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the issuance of the shares of Registrant's Common Stock
is being passed upon by Fenwick & West LLP, Palo Alto, California. Members of
the firm of Fenwick & West LLP own an aggregate of approximately 2,980 shares of
Registrant's Common Stock.
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. 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 executive officers 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
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advance expenses, as incurred, to its directors and executive officers to the
fullest extent permitted by the Delaware General Corporation Law in connection
with a proceeding (except that it is not required to advance expenses to a
person against whom the Registrant 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; (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 executive officers The indemnity agreements
provide that directors and executive officers will be indemnified and held
harmless to the fullest possible extent permitted by law including against all
expenses (including attorneys' fees), judgments, fines 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 directors, officers, employees or agents of the Registrant or as
directors, officers, employees or agents of any other company or enterprise when
they are serving in such capacities at the request of the Registrant. 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 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 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 16(b) of the Securities Exchange Act of
1934 and related laws; (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 executive officer
to reimburse the Registrant for expenses advanced only to the extent it is
ultimately determined that the director or executive officer is not entitled,
under Delaware law, the 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, Bylaws, other agreements, any majority-in-interest
vote of the stockholders or vote of disinterested directors, the Delaware law,
or otherwise.
The indemnification provision in the Bylaws, and the indemnity
agreements entered into between the Registrant and its directors and executive
officers, may be sufficiently broad to permit indemnification of the
Registrant's directors and executive officers for liabilities arising under the
Securities Act.
The indemnity agreements require the Registrant to maintain
director and official liability insurance to the extent readily available. The
Registrant currently carries a director and officer insurance policy.
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ITEM 8. EXHIBITS.
4.01 Risk Data Corporation 1992 Stock Option Plan, as amended,
and related agreements.(1)
4.02 Form of Risk Data Corporation Non-Plan Nonqualified Stock
Option Agreement and related agreements.(1)
4.03 Registrant's Restated Certificate of Incorporation filed
with the Secretary of State of Delaware on June 13,
1996.(2)
4.04 Registrant's Bylaws, as amended.(2)
4.05 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 Price Waterhouse LLP, Independent Accountants.
23.03 Consent of Ernst & Young LLP, Independent Auditors.
24.01 Power of Attorney (see page 6).
- ---------------------------
(1) Risk Data Corporation is a California corporation.
(2) Filed with the Company's Form 10-Q for the quarter ended June
30, 1996 as originally filed on August 13, 1996.
(3) Incorporated by reference to the Company'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;
(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
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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 a twenty
percent (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 Registration Statement is on Form S-3, Form S-8 or Form F-3, and
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 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions discussed in Item 6 hereof, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by
the final adjudication of such issue.
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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, 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 16th day
of October 1996.
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
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<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ Robert L. North President, Chief Executive Officer October 16, 1996
- ------------------------------------ and a Director
Robert L. North
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ Raymond V. Thomas Vice President, Finance and Administration October 16, 1996
- ------------------------------------ Chief Financial Officer and Secretary
Raymond V. Thomas
ADDITIONAL DIRECTORS:
/s/ Edward K. Chandler Director October 16, 1996
- ------------------------------------
Edward K. Chandler
/s/ Oliver D. Curme Director October 16, 1996
- ------------------------------------
Oliver D. Curme
/s/ Roger L. Evans Director October 16, 1996
- ------------------------------------
Roger L. Evans
/s/ Thomas F. Farb Director October 16, 1996
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Thomas F. Farb
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ Charles H. Gaylord, Jr. Director October 16, 1996
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Charles H. Gaylord, Jr.
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
4.01 Risk Data Corporation 1992 Stock Option Plan, as amended, and
related agreements.(1)
4.02 Form of Risk Data Corporation Non-Plan Nonqualified Stock
Option Agreement and related agreements.(1)
4.03 Registrant's Restated Certificate of Incorporation filed with the
Secretary of State of Delaware on June 13, 1996.(2)
4.04 Registrant's Bylaws, as amended.(2)
4.05 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 Price Waterhouse LLP, Independent Accountants.
23.03 Consent of Ernst & Young LLP, Independent Auditors
24.01 Power of Attorney (see page 6).
</TABLE>
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(1) Risk Data Corporation is a California corporation.
(2) Included in the Company's Form 10-Q for the quarter ended June 30, 1996 as
originally filed on August 13, 1996.
(3) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33-91932) filed on May 5, 1995, and as subsequently amended.
<PAGE> 1
Exhibit 4.01
RISK DATA CORPORATION
1992 STOCK OPTION PLAN
I. PURPOSES OF THE PLAN
This Stock Option Plan (the "Plan") is intended to promote the
interests of Risk Data Corporation, a California corporation (the "Company"), by
providing a method whereby (i) key employees (including officers and directors)
of the Company (or its parent or subsidiary corporations)
<PAGE> 2
responsible for the management, growth and financial success of the Company (or
its parent or subsidiary corporations), (ii) the non-employee members of the
Company's Board of Directors (or the board of directors of any parent or
subsidiary corporations) and (iii) consultants and independent contractors who
provide valuable services to the Company (or its parent or subsidiary
corporations) may be offered incentives and rewards which will encourage them to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Company and to continue to render services to the Company (or
its parent or subsidiary corporations).
For purposes of the Plan, the following provisions shall be applicable
in determining the parent and subsidiary corporations of the Company:
A. Any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company shall be considered to be a parent
corporation of the Company, provided each such corporation in the
unbroken chain (other than the Company) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
B. Each corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company shall be considered to be a
subsidiary of the Company, provided each such corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
II. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company. The Board, however, may at any time appoint a committee
("Committee") of three (3) or more members of the Board and delegate to such
Committee one or more of the administrative powers allocated to the Board
pursuant to the provisions of the Plan. Members of the Committee shall serve for
such period of time as the Board may determine and shall be subject to removal
by the Board at any time. The Board may also at any time terminate the functions
of the Committee and reassume all powers and authority previously delegated to
the Committee.
(b) At or prior to the time the Company has a class of equity
securities registered under Section 12 of the Exchange Act, the Board shall
appoint the Committee (if it has not already been appointed) and delegate to
such Committee all of the administrative functions allocated to the Board under
the provisions of the Plan. The Committee shall consist of no fewer than three
(3) members of the Board, each of whom shall be a "disinterested person" within
the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated
under the Exchange Act. A majority of the members of the committee shall
constitute a quorum, and the act of a majority of the members of the Committee
shall be the act of the Committee. Any member of the Committee may be removed at
any time either with or without cause by resolution adopted by the Board, and
any vacancy on the Committee may at any time be filled by resolution adopted by
the Board. Any or all of the powers and functions of the Committee may at any
time and from time to time be exercised by the Board or an executive committee
thereof, provided, however, that, with respect to the participation in the Plan
of employees who are members of the Board or of the executive committee (as the
case may be), such powers and functions of the
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Committee may be exercised by the Board or the executive committee only if, at
the time of such exercise, a majority of the members of the entire Board and a
majority of the directors acting in the particular matter, or all of the members
of the executive committee, as the case may be, are "disinterested persons"
within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Exchange Act.
(c) The Plan Administrator (either the Board or the Committee,
to the extent the Committee is at the time responsible for the administration of
the Plan) shall have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for the
proper administration of the Plan and to make such determinations under, and
issue such interpretations of, the Plan and any outstanding option as it may
deem necessary or advisable. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the Plan or any outstanding
option.
III. ELIGIBILITY FOR OPTION GRANTS
The persons eligible to receive option grants under the Plan are as
follows:
(i) key employees (including officers and directors) of the
Company (or its parent or subsidiary corporations) who render services
which contribute to the success and growth of the Company (or its
parent or subsidiary corporations) or which may reasonably be
anticipated to contribute to the future success and growth of the
Company (or its parent or subsidiary corporations);
(ii) the non-employee members of the Board or the non-employee
members of the board of directors of any parent or subsidiary
corporations; and
(iii) those consultants or independent contractors who provide
valuable services to the Company (or its parent or subsidiary
corporations).
The Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Plan, the number of
shares to be covered by each such grant, whether the granted option is to be an
incentive stock option ("Incentive Option") which satisfies the requirements of
Section 422 of the Internal Revenue Code or a non-statutory option not intended
to meet such requirements, the time or times at which each such option is to
become exercisable, and the maximum term for which the option is to be
outstanding.
IV. STOCK SUBJECT TO THE PLAN
The stock issuable under the Plan shall be shares of the Company's
authorized but unissued or reacquired Common Stock. The aggregate number of
shares which may be issued over the term of the Plan shall not exceed 250,000
shares. The total number of shares issuable under the Plan shall be subject to
adjustment from time to time in accordance with the provisions of this Section
IV.
Should an option expire or terminate for any reason prior to exercise
or surrender in full (including options cancelled in accordance with the
cancellation-regrant provisions of Section VIII of the
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Plan), the shares subject to the portion of the option not so exercised or
surrendered shall be available for subsequent option grants under the Plan.
Shares subject to any option or portion thereof surrendered in accordance with
Section IX of the Plan and shares repurchased by the Company pursuant to its
repurchase rights under the Plan shall be available for subsequent option grants
under the Plan.
In the event any change is made to the Common Stock issuable under the
Plan by reason of (i) any Corporate Transaction (as defined in Section VII) or
(ii) any stock split, stock dividend, combination of shares, exchange of shares
or other change affecting the outstanding Common Stock as a class without
receipt of consideration, then unless such change results in the termination of
all outstanding options under the Plan as a result of the Corporate Transaction,
appropriate adjustments shall be made to (I) the aggregate class and/or number
of shares issuable under the Plan and (II) the class and/or number of shares and
price per share of the Common Stock subject to each outstanding option in order
to prevent the dilution or enlargement of benefits thereunder.
V. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or non-statutory options. Individuals who are not
employees of the Company or its parent or subsidiary corporations may only be
granted non-statutory options. Each granted option shall be evidenced by one or
more instruments in the form approved by the Plan Administrator; provided,
however, that each such instrument shall comply with and incorporate the terms
and conditions specified below. Each instrument evidencing an Incentive Option
shall, in addition, be subject to the applicable provisions of Section VI.
1. OPTION PRICE.
A. THE OPTION PRICE PER SHARE SHALL BE FIXED BY THE PLAN
ADMINISTRATOR IN ITS SOLE DISCRETION.
B. IF ANY INDIVIDUAL TO WHOM AN OPTION IS TO BE GRANTED
PURSUANT TO THE PROVISIONS OF THE PLAN IS ON THE DATE OF GRANT THE
OWNER OF STOCK (AS DETERMINED UNDER SECTION 424(d) OF THE INTERNAL
REVENUE CODE) POSSESSING 10% OR MORE OF THE TOTAL COMBINED VOTING
POWER OF ALL CLASSES OF STOCK OF THE COMPANY OR ANY ONE OF ITS
PARENT OR SUBSIDIARY CORPORATIONS (SUCH PERSON TO BE HEREIN
REFERRED TO AS A 10% SHAREHOLDER), THEN THE OPTION PRICE PER SHARE
SHALL NOT BE LESS THAN ONE HUNDRED AND TEN PERCENT (110%) OF THE
FAIR MARKET VALUE OF ONE SHARE OF COMMON STOCK ON THE DATE OF
GRANT.
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<PAGE> 5
C. THE OPTION PRICE SHALL BECOME IMMEDIATELY DUE UPON
EXERCISE OF THE OPTION AND SHALL, SUBJECT TO THE PROVISIONS OF
SECTION X AND THE INSTRUMENT EVIDENCING THE GRANT, BE PAYABLE IN
ONE OF THE ALTERNATIVE FORMS SPECIFIED BELOW:
(i) FULL PAYMENT IN CASH OR CASH EQUIVALENTS; OR
(ii) FULL PAYMENT IN SHARES OF COMMON STOCK HELD BY THE
OPTIONEE FOR THE REQUISITE PERIOD NECESSARY TO AVOID A CHARGE TO
THE COMPANY'S EARNINGS FOR FINANCIAL REPORTING PURPOSES AND VALUED
AT FAIR MARKET VALUE ON THE EXERCISE DATE (AS SUCH TERM IS DEFINED
BELOW); OR
(iii) PAYMENT THROUGH A COMBINATION OF SHARES OF COMMON
STOCK HELD BY THE OPTIONEE FOR THE REQUISITE PERIOD NECESSARY TO
AVOID A CHARGE TO THE COMPANY'S EARNINGS FOR FINANCIAL REPORTING
PURPOSES AND VALUED AT FAIR MARKET VALUE ON THE EXERCISE DATE AND
CASH OR CASH EQUIVALENTS, EQUAL IN THE AGGREGATE TO THE OPTION
PRICE.
(iv) ANY OTHER FORM WHICH THE PLAN ADMINISTRATOR MAY, IN
ITS DISCRETION, APPROVE AT THE TIME OF EXERCISE.
For purposes of this subparagraph C, the Exercise Date shall
be the first date on which the Company shall have received both written notice
of the exercise of the option and payment of the option price for the purchased
shares.
D. THE FAIR MARKET VALUE OF A SHARE OF COMMON STOCK ON ANY
RELEVANT DATE UNDER SUBPARAGRAPH A, B OR C ABOVE (AND FOR ALL
OTHER VALUATION PURPOSES UNDER THE PLAN) SHALL BE DETERMINED IN
ACCORDANCE WITH THE FOLLOWING PROVISIONS:
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<PAGE> 6
(i) IF THE COMMON STOCK IS NOT AT THE TIME LISTED OR
ADMITTED TO TRADING ON ANY STOCK EXCHANGE BUT IS TRADED IN THE
OVER-THE-COUNTER MARKET, THE FAIR MARKET VALUE SHALL BE THE MEAN
BETWEEN THE HIGHEST BID AND LOWEST ASKED PRICES (OR, IF SUCH
INFORMATION IS AVAILABLE, THE CLOSING SELLING PRICE) OF ONE SHARE OF
COMMON STOCK ON THE DATE IN QUESTION IN THE OVER-THE-COUNTER MARKET, AS
SUCH PRICES ARE REPORTED BY THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS THROUGH ITS NASDAQ SYSTEM OR ANY SUCCESSOR SYSTEM. IF THERE ARE
NO REPORTED BID AND ASKED PRICES (OR CLOSING SELLING PRICE) FOR THE
COMMON STOCK ON THE DATE IN QUESTION, THEN THE MEAN BETWEEN THE HIGHEST
BID PRICE AND LOWEST ASKED PRICE (OR THE CLOSING SELLING PRICE) ON THE
LAST PRECEDING DATE FOR WHICH SUCH QUOTATIONS EXIST SHALL BE
DETERMINATIVE OF FAIR MARKET VALUE.
(ii) IF THE COMMON STOCK IS AT THE TIME LISTED OR
ADMITTED TO TRADING ON ANY STOCK EXCHANGE, THEN THE FAIR MARKET VALUE
SHALL BE THE CLOSING SELLING PRICE OF ONE SHARE OF COMMON STOCK ON THE
DATE IN QUESTION ON THE STOCK EXCHANGE DETERMINED BY THE PLAN
ADMINISTRATOR TO BE THE PRIMARY MARKET FOR THE COMMON STOCK, AS SUCH
PRICE IS OFFICIALLY QUOTED IN THE COMPOSITE TAPE OF TRANSACTIONS ON
SUCH EXCHANGE. IF THERE IS NO REPORTED SALE OF COMMON STOCK ON SUCH
EXCHANGE ON THE DATE IN QUESTION, THEN THE FAIR MARKET VALUE SHALL BE
THE CLOSING SELLING PRICE ON THE EXCHANGE ON THE LAST PRECEDING DATE
FOR WHICH SUCH QUOTATION EXISTS.
(iii) IF THE COMMON STOCK AT THE TIME IS NEITHER LISTED
NOR ADMITTED TO TRADING ON ANY STOCK EXCHANGE NOR TRADED IN THE
OVER-THE-COUNTER MARKET, THEN THE FAIR MARKET VALUE SHALL BE DETERMINED
BY THE PLAN ADMINISTRATOR AFTER TAKING INTO ACCOUNT SUCH FACTORS AS THE
PLAN ADMINISTRATOR SHALL DEEM APPROPRIATE, INCLUDING ONE OR MORE
INDEPENDENT PROFESSIONAL APPRAISALS.
2. TERM AND EXERCISE OF OPTIONS.
Each option granted under the Plan shall be exercisable at such time or
times, during such period, and for such number of shares as shall be determined
by the Plan Administrator and set forth in the instrument evidencing such
option; provided, however, that no such option shall have a maximum term in
excess of ten (10) years from the grant date and provided, further, that no such
option granted to a 10% Shareholder shall have a maximum term in excess of five
(5) years from the grant date. During the lifetime of the optionee, the option
shall be exercisable only by the optionee and shall not be assignable or
transferable by the optionee otherwise than by will or by the laws of descent
and distribution.
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3. EFFECT OF TERMINATION OF EMPLOYMENT.
A. SHOULD AN OPTIONEE CEASE TO BE A SERVICE PROVIDER
TO THE COMPANY FOR ANY REASON (INCLUDING DEATH OR PERMANENT
DISABILITY DEFINED AS A PERMANENT DISABILITY BY REASON OF ANY
MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT EXPECTED TO
RESULT IN DEATH OR TO BE OF CONTINUOUS DURATION OF NOT LESS THAN
TWELVE (12) MONTHS SO OPTIONEE IS UNABLE TO PERFORM HIS/HER USUAL
DUTIES FOR THE COMPANY) WHILE THE HOLDER OF ONE OR MORE
OUTSTANDING OPTIONS UNDER THE PLAN, THEN SUCH OPTION OR OPTIONS
SHALL NOT (EXCEPT TO THE EXTENT OTHERWISE PROVIDED PURSUANT TO
SECTION XI BELOW) REMAIN EXERCISABLE FOR MORE THAN A TWELVE (12)
MONTH PERIOD (OR SUCH SHORTER PERIOD DETERMINED BY THE PLAN
ADMINISTRATOR AND SPECIFIED IN THE INSTRUMENT EVIDENCING THE
GRANT) FOLLOWING THE DATE OF SUCH CESSATION OF SERVICE PROVIDER
STATUS; PROVIDED, HOWEVER, THAT UNDER NO CIRCUMSTANCES SHALL SUCH
OPTIONS BE EXERCISABLE AFTER THE SPECIFIED EXPIRATION DATE OF THE
OPTION TERM. EACH SUCH OPTION SHALL, DURING SUCH TWELVE (12) MONTH
OR SHORTER PERIOD, BE EXERCISABLE ONLY TO THE EXTENT OF THE NUMBER
OF SHARES (IF ANY) FOR WHICH THE OPTION IS EXERCISABLE ON THE DATE
OF SUCH CESSATION OF SERVICE PROVIDER STATUS. UPON THE EXPIRATION
OF SUCH TWELVE (12) MONTH OR SHORTER PERIOD OR (IF EARLIER) UPON
THE EXPIRATION OF THE OPTION TERM, THE OPTION SHALL TERMINATE AND
CEASE TO BE EXERCISABLE.
B. ANY OPTION GRANTED TO AN OPTIONEE UNDER THE PLAN
AND EXERCISABLE IN WHOLE OR IN PART ON THE DATE OF THE OPTIONEE'S
DEATH MAY BE SUBSEQUENTLY EXERCISED, BUT ONLY TO THE EXTENT OF THE
NUMBER OF SHARES (IF ANY) FOR WHICH THE OPTION IS EXERCISABLE ON
THE DATE OF THE OPTIONEE'S DEATH, BY THE PERSONAL REPRESENTATIVE
OF THE OPTIONEE'S ESTATE OR BY THE PERSON OR PERSONS TO WHOM THE
OPTION IS TRANSFERRED PURSUANT TO THE OPTIONEE'S WILL OR IN
ACCORDANCE WITH THE LAWS OF DESCENT AND DISTRIBUTION, PROVIDED AND
ONLY IF SUCH EXERCISE OCCURS PRIOR TO THE EARLIER OF (I) THE FIRST
ANNIVERSARY OF THE DATE OF THE OPTIONEE'S CESSATION OF SERVICE
PROVIDER STATUS OR (II) THE SPECIFIED EXPIRATION DATE OF THE
OPTION TERM. UPON THE OCCURRENCE OF THE EARLIER EVENT, THE OPTION
SHALL TERMINATE AND CEASE TO BE EXERCISABLE.
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C. IF (i) THE OPTIONEE'S STATUS AS A SERVICE PROVIDER
IS TERMINATED FOR WILLFUL MISCONDUCT, THEFT, FRAUD, EMBEZZLEMENT
OR ANY UNAUTHORIZED DISCLOSURE OR USE OF CONFIDENTIAL INFORMATION
OR TRADE SECRETS OR (ii) THE OPTIONEE MAKES OR ATTEMPTS TO MAKE
ANY UNAUTHORIZED USE OR DISCLOSURE OF CONFIDENTIAL INFORMATION OR
TRADE SECRETS OF THE COMPANY OR ITS PARENT OR SUBSIDIARY
CORPORATION, THEN IN ANY SUCH EVENT ALL OUTSTANDING UNVESTED AND
VESTED OPTIONS GRANTED TO THE OPTIONEE UNDER THE PLAN SHALL
TERMINATE AND CEASE TO BE EXERCISABLE IMMEDIATELY UPON SUCH
TERMINATION OF SERVICE PROVIDER STATUS OR UPON SUCH ATTEMPT TO
MAKE ANY UNAUTHORIZED USE OR DISCLOSURE OF CONFIDENTIAL
INFORMATION OR TRADE SECRETS.
D. NOTWITHSTANDING SUBPARAGRAPHS A AND B ABOVE, THE
PLAN ADMINISTRATOR SHALL HAVE COMPLETE DISCRETION, EXERCISABLE
EITHER AT THE TIME THE OPTION IS GRANTED OR AT THE TIME THE
OPTIONEE CEASES SERVICE PROVIDER STATUS, TO ESTABLISH AS A
PROVISION APPLICABLE TO THE EXERCISE OF ONE OR MORE OPTIONS
GRANTED UNDER THE PLAN THAT DURING THE LIMITED PERIOD OF
EXERCISABILITY FOLLOWING THE CESSATION OF SERVICE PROVIDER STATUS
AS PROVIDED IN SECTION V.3.A ABOVE OR PURSUANT TO THE INSTRUMENT
EVIDENCING THE GRANT, THE OPTION MAY BE EXERCISED NOT ONLY WITH
RESPECT TO THE NUMBER OF SHARES FOR WHICH IT IS EXERCISABLE AT THE
TIME OF THE OPTIONEE'S CESSATION OF SERVICE PROVIDER STATUS BUT
ALSO WITH RESPECT TO ONE OR MORE SUBSEQUENT INSTALLMENTS OF
PURCHASABLE SHARES FOR WHICH THE OPTION WOULD OTHERWISE HAVE
BECOME EXERCISABLE HAD SUCH CESSATION OF SERVICE PROVIDER STATUS
NOT OCCURRED.
E. FOR PURPOSES OF THE FOREGOING PROVISIONS OF THIS
SECTION V.3 (AND ALL OTHER PROVISIONS OF THE PLAN), UNLESS IT IS
EVIDENCED OTHERWISE IN THE SPECIFIC OPTION AGREEMENT EVIDENCING
THE OPTION GRANT AND/OR THE PURCHASE AGREEMENT EVIDENCING THE
PURCHASED OPTIONED SHARES, THE OPTIONEE SHALL BE DEEMED TO BE A
SERVICE PROVIDER TO THE COMPANY FOR SO LONG AS SUCH INDIVIDUAL
RENDERS SERVICES ON A PERIODIC BASIS TO THE COMPANY OR ANY PARENT
OR SUBSIDIARY CORPORATION IN THE CAPACITY OF AN EMPLOYEE, A
NONEMPLOYEE MEMBER OF THE BOARD OF DIRECTORS OR AN INDEPENDENT
CONSULTANT OR ADVISOR. THE OPTIONEE SHALL BE CONSIDERED TO BE AN
EMPLOYEE FOR SO LONG AS SUCH INDIVIDUAL REMAINS IN THE EMPLOY OF
THE COMPANY OR ONE OR MORE OF ITS PARENT OR SUBSIDIARY
CORPORATIONS.
4. SHAREHOLDER RIGHTS.
An optionee shall have none of the rights of a shareholder with
respect to any shares covered by the option until such individual shall have
exercised the option and paid the option price.
5. REPURCHASE RIGHTS.
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A. THE PLAN ADMINISTRATOR MAY IN ITS DISCRETION
DETERMINE THAT IT SHALL BE A TERM AND CONDITION OF ONE OR MORE
OPTIONS EXERCISED UNDER THE PLAN THAT THE COMPANY (OR ITS
ASSIGNEES) SHALL HAVE THE RIGHT, EXERCISABLE UPON THE OPTIONEE'S
CESSATION OF SERVICE PROVIDER STATUS WITH THE COMPANY AND ALL
PARENT AND SUBSIDIARY CORPORATIONS AND/OR CHANGE IN SERVICE
PROVIDER'S MARITAL STATUS, TO REPURCHASE ALL OR (AT THE DISCRETION
OF THE COMPANY AND WITH THE CONSENT OF THE OPTIONEE) ANY PORTION
OF THE SHARES OF COMMON STOCK PREVIOUSLY ACQUIRED BY THE OPTIONEE
UPON THE EXERCISE OF SUCH OPTION UPON THE TERMS SET FORTH IN THE
INSTRUMENT EVIDENCING SUCH RIGHT. ANY SUCH REPURCHASE RIGHT SHALL
BE EXERCISABLE BY THE COMPANY (OR ITS ASSIGNEES) UPON SUCH TERMS
AND CONDITIONS (INCLUDING THE ESTABLISHMENT OF THE APPROPRIATE
VESTING SCHEDULE AND OTHER PROVISION FOR THE EXPIRATION OF SUCH
RIGHT IN ONE OR MORE INSTALLMENTS OVER THE OPTIONEE'S PERIOD OF
SERVICE PROVIDER STATUS) AS THE PLAN ADMINISTRATOR MAY SPECIFY IN
THE INSTRUMENT EVIDENCING SUCH RIGHT.
B. THE PLAN ADMINISTRATOR MAY ASSIGN THE COMPANY'S
REPURCHASE RIGHTS UNDER SUBPARAGRAPH A. ABOVE TO ANY PERSON OR
ENTITY SELECTED BY THE PLAN ADMINISTRATOR, INCLUDING ONE OR MORE
SHAREHOLDERS OF THE COMPANY. IF THE SELECTED ASSIGNEE IS OTHER
THAN A PARENT OR SUBSIDIARY CORPORATION OF THE COMPANY, THEN THE
ASSIGNEE MUST MAKE A CASH PAYMENT TO THE COMPANY, UPON THE
ASSIGNMENT OF THE REPURCHASE RIGHTS, IN AN AMOUNT EQUAL TO THE
EXCESS (IF ANY) OF THE FAIR MARKET VALUE OF THE UNVESTED SHARES AT
THE TIME SUBJECT TO THE REPURCHASE RIGHTS AND THE AGGREGATE
REPURCHASE PRICE PAYABLE FOR SUCH UNVESTED SHARES THEREUNDER.
C. ALL OF THE COMPANY'S OUTSTANDING REPURCHASE RIGHTS
SHALL AUTOMATICALLY TERMINATE, AND ALL PURCHASED SHARES UNDER THE
PLAN SHALL IMMEDIATELY VEST IN FULL, UPON THE OCCURRENCE OF ANY
CORPORATE TRANSACTION UNDER SECTION VII; PROVIDED, HOWEVER, THAT
NO SUCH TERMINATION OF THE REPURCHASE RIGHTS OR IMMEDIATE VESTING
OF THE PURCHASED SHARES SHALL OCCUR IF (AND TO THE EXTENT) (i) THE
COMPANY'S OUTSTANDING REPURCHASE RIGHTS ARE TO BE ASSIGNED TO THE
SUCCESSOR CORPORATION (OR PARENT THEREOF) IN CONNECTION WITH THE
CORPORATE TRANSACTION OR (ii) SUCH TERMINATION OF REPURCHASE
RIGHTS AND ACCELERATION OF VESTING ARE PRECLUDED BY OTHER
LIMITATIONS IMPOSED BY THE PLAN ADMINISTRATOR AT THE TIME OF THE
OPTION GRANT.
D. THE PLAN ADMINISTRATOR MAY ALSO IN ITS DISCRETION
ESTABLISH AS A TERM AND CONDITION OF ONE OR MORE OPTIONS GRANTED
UNDER THE PLAN THAT THE COMPANY SHALL HAVE A RIGHT OF FIRST
REFUSAL WITH RESPECT TO ANY PROPOSED SALE OR OTHER DISPOSITION BY
THE OPTIONEE (OR ANY SUCCESSOR IN INTEREST BY REASON OF PURCHASE,
GIFT OR OTHER MODE OF TRANSFER) OF ANY SHARES OF COMMON STOCK
ISSUED UPON THE EXERCISE OF SUCH OPTIONS. ANY SUCH RIGHT OF FIRST
REFUSAL SHALL BE EXERCISABLE BY THE COMPANY (OR ITS ASSIGNEES) IN
ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THE
INSTRUMENT EVIDENCING SUCH RIGHT.
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VI. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Company. Options which are specifically
designated as "non-statutory" options when issued under the Plan shall not be
subject to the terms and conditions of this Section VI.
A. OPTION PRICE. THE OPTION PRICE PER SHARE OF THE
COMMON STOCK SUBJECT TO AN INCENTIVE OPTION SHALL IN NO EVENT BE
LESS THAN ONE HUNDRED PERCENT (100%) OF THE FAIR MARKET VALUE OF A
SHARE OF COMMON STOCK ON THE DATE OF GRANT.
B. DOLLAR LIMITATION. THE AGGREGATE FAIR MARKET VALUE
(DETERMINED AS OF THE RESPECTIVE DATE OR DATES OF GRANT) OF THE
COMMON STOCK FOR WHICH ONE OR MORE OPTIONS GRANTED TO ANY EMPLOYEE
UNDER THIS PLAN (OR ANY OTHER OPTION PLAN OF THE COMPANY OR ITS
PARENT OR SUBSIDIARY CORPORATIONS) MAY FOR THE FIRST TIME BECOME
EXERCISABLE AS INCENTIVE STOCK OPTIONS UNDER THE FEDERAL TAX LAWS
DURING ANY ONE CALENDAR YEAR SHALL NOT EXCEED THE SUM OF ONE
HUNDRED THOUSAND DOLLARS ($100,000). TO THE EXTENT THE EMPLOYEE
HOLDS TWO OR MORE SUCH OPTIONS WHICH BECOME EXERCISABLE FOR THE
FIRST TIME IN THE SAME CALENDAR YEAR, THE FOREGOING LIMITATION ON
THE EXERCISABILITY THEREOF AS INCENTIVE STOCK OPTIONS UNDER THE
FEDERAL TAX LAWS SHALL BE APPLIED ON THE BASIS OF THE ORDER IN
WHICH SUCH OPTIONS ARE GRANTED.
C. EFFECT OF TERMINATION OF EMPLOYMENT.
NOTWITHSTANDING THE ABILITY OF THE PLAN ADMINISTRATOR TO SET THE
PERIOD OF TIME FOR WHICH THE OPTIONS GRANTED HEREUNDER ARE
EXERCISABLE FOLLOWING TERMINATION OF SERVICE PROVIDER STATUS, FOR
INCENTIVE STOCK OPTIONS, IN NO EVENT SHALL SUCH PERIOD BE LESS
THAN: (i) ONE (1) YEAR IN THE EVENT THAT THE CESSATION OF SERVICE
PROVIDER STATUS IS DUE TO DEATH OR DISABILITY OF OPTIONEE AND (ii)
THREE (3) MONTHS IN THE EVENT THAT THE CESSATION OF SERVICE
PROVIDER STATUS IS DUE TO ANY OTHER REASON, EXCEPT THAT THE
FOREGOING SHALL NOT APPLY WITH RESPECT TO CESSATION OF SERVICE
PROVIDER STATUS DUE TO AN EVENT DESCRIBED IN SUBPARAGRAPH V.3.C
ABOVE.
Except as modified by the preceding provisions of this Section VI, all
the provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.
VII. CORPORATE TRANSACTIONS
A. IN THE EVENT OF ANY OF THE FOLLOWING TRANSACTIONS
(a "CORPORATE TRANSACTION"):
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(i) A MERGER OR CONSOLIDATION IN WHICH THE COMPANY
IS NOT THE SURVIVING ENTITY, EXCEPT FOR A TRANSACTION THE PRINCIPAL
PURPOSE OF WHICH IS TO CHANGE THE STATE IN WHICH THE COMPANY IS
INCORPORATED,
(ii) THE SALE, TRANSFER OR OTHER DISPOSITION OF ALL
OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, OR
(iii) ANY OTHER CORPORATE REORGANIZATION OR BUSINESS
COMBINATION IN WHICH FIFTY PERCENT (50%) OR MORE OF THE COMPANY'S
OUTSTANDING VOTING STOCK IS TRANSFERRED TO DIFFERENT HOLDERS IN A
SINGLE TRANSACTION OF THE COMPANY OR A SERIES OF RELATED TRANSACTIONS.
then each option outstanding under the Plan shall terminate upon the
consummation of such Corporate Transaction and cease to be exercisable, unless
assumed by the successor corporation or parent thereof.
B. IN THE EVENT OF A CORPORATE TRANSACTION DESCRIBED
IN SUBSECTION A, EACH OUTSTANDING OPTION WHICH IS NOT TO BE
ASSUMED BY THE SUCCESSOR CORPORATION OR PARENT THEREOF (OR TO BE
REPLACED WITH A COMPARABLE OPTION TO PURCHASE SHARES OF THE
CAPITAL STOCK OF SUCH SUCCESSOR CORPORATION OR PARENT) SHALL BE
AUTOMATICALLY ACCELERATED SO THAT EACH SUCH OPTION SHALL,
IMMEDIATELY PRIOR TO THE SPECIFIED EFFECTIVE DATE FOR SUCH
CORPORATE TRANSACTION, BECOME FULLY EXERCISABLE WITH RESPECT TO
THE TOTAL NUMBER OF SHARES OF COMMON STOCK PURCHASABLE UNDER SUCH
OPTION AND MAY BE EXERCISED FOR ALL OR ANY PORTION OF SUCH SHARES.
HOWEVER, NO UNASSUMED OPTION SHALL BE SO ACCELERATED IF AND TO THE
EXTENT SUCH ACCELERATION IS SUBJECT TO OTHER APPLICABLE
LIMITATIONS IMPOSED BY THE PLAN ADMINISTRATOR IN THE RELEVANT
OPTION AGREEMENT.
C. IN CONNECTION WITH ANY SUCH CORPORATE TRANSACTION,
THE EXERCISABILITY AS AN INCENTIVE STOCK OPTION UNDER THE FEDERAL
TAX LAWS OF ANY ACCELERATED OPTIONS UNDER THE PLAN SHALL REMAIN
SUBJECT TO THE APPLICABLE DOLLAR LIMITATION OF SECTION VI.B.
D. THE GRANT OF OPTIONS UNDER THIS PLAN SHALL IN NO
WAY AFFECT THE RIGHT OF THE COMPANY TO ADJUST, RECLASSIFY,
REORGANIZE OR OTHERWISE CHANGE ITS CAPITAL OR BUSINESS STRUCTURE
OR TO MERGE, CONSOLIDATE, DISSOLVE, LIQUIDATE OR SELL OR TRANSFER
ALL OR ANY PART OF ITS BUSINESS OR ASSETS.
VIII. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan
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and to grant in substitution therefor new options under the Plan covering the
same or different numbers of shares of Common Stock but having an option price
per share determined by the Plan Administrator (but not less than one hundred
percent (100%) of fair market value in the case of an Incentive Option or, in
the case of a 10% Shareholder, not less than one hundred and ten percent (110%)
of fair market value) on the new grant date.
IX. SURRENDER OF OPTIONS FOR CASH OR STOCK
A. PROVIDED AND ONLY IF THE PLAN ADMINISTRATOR DETERMINES
IN ITS DISCRETION TO IMPLEMENT THE STOCK APPRECIATION RIGHT
PROVISIONS OF THIS SECTION IX, ONE OR MORE OPTIONEES MAY BE
GRANTED THE RIGHT, EXERCISABLE UPON SUCH TERMS AND CONDITIONS AS
THE PLAN ADMINISTRATOR MAY ESTABLISH, TO SURRENDER ALL OR PART OF
AN UNEXERCISED OPTION UNDER THE PLAN IN EXCHANGE FOR A
DISTRIBUTION FROM THE COMPANY EQUAL IN AMOUNT TO THE EXCESS OF (i)
THE FAIR MARKET VALUE (AT DATE OF SURRENDER) OF THE NUMBER OF
SHARES IN WHICH THE OPTIONEE IS AT THE TIME VESTED UNDER THE
SURRENDERED OPTION (OR SURRENDERED PORTION THEREOF) OVER (ii) THE
AGGREGATE OPTION PRICE PAYABLE FOR SUCH VESTED SHARES.
B. NO SURRENDER OF AN OPTION SHALL BE EFFECTIVE HEREUNDER
UNLESS IT IS APPROVED BY THE PLAN ADMINISTRATOR. IF THE SURRENDER
IS SO APPROVED, THEN THE DISTRIBUTION TO WHICH THE OPTIONEE SHALL
ACCORDINGLY BECOME ENTITLED UNDER THIS SECTION IX MAY BE MADE IN
SHARES OF COMMON STOCK VALUED AT FAIR MARKET VALUE AT DATE OF
SURRENDER, IN CASH, OR PARTLY IN SHARES AND PARTLY IN CASH, AS THE
PLAN ADMINISTRATOR SHALL IN ITS SOLE DISCRETION DEEM APPROPRIATE.
C. IF THE SURRENDER OF AN OPTION IS REJECTED BY THE PLAN
ADMINISTRATOR, THEN THE OPTIONEE SHALL RETAIN WHATEVER RIGHTS THE
OPTIONEE HAD UNDER THE SURRENDERED OPTION (OR SURRENDERED PORTION
THEREOF) ON THE DATE OF SURRENDER AND MAY EXERCISE SUCH RIGHTS AT
ANY TIME PRIOR TO THE LATER OF (i) FIVE (5) BUSINESS DAYS AFTER
THE RECEIPT OF THE REJECTION NOTICE OR (ii) THE LAST DAY ON WHICH
THE OPTION IS OTHERWISE EXERCISABLE IN ACCORDANCE WITH THE TERMS
OF THE INSTRUMENT EVIDENCING SUCH OPTION, BUT IN NO EVENT MAY SUCH
RIGHTS BE EXERCISED AT ANY TIME AFTER TEN (10) YEARS (OR FIVE (5)
YEARS IN THE CASE OF A 10% SHAREHOLDER) AFTER THE DATE OF THE
OPTION GRANT.
D. THE FOLLOWING SPECIAL PROVISIONS SHALL BE APPLICABLE TO
ANY INCENTIVE OPTION WHICH IS SURRENDERED PURSUANT TO THE
PROVISIONS OF THIS SECTION IX:
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(i) THE RIGHT TO SURRENDER THE INCENTIVE OPTION MAY
ONLY BE TRANSFERRED OR ASSIGNED IN CONNECTION WITH A TRANSFER OR
ASSIGNMENT OF THE INCENTIVE OPTION IN COMPLIANCE WITH THE
LIMITATIONS OF SECTION V.2.
(ii) THE INCENTIVE OPTION MAY ONLY BE SURRENDERED WHEN
THERE IS A POSITIVE SPREAD BETWEEN THE FAIR MARKET VALUE OF THE
SHARES SUBJECT TO THE SURRENDERED OPTION AND THE AGGREGATE OPTION
PRICE PAYABLE FOR SUCH SHARES.
(iii) THE INCENTIVE OPTION MAY NOT BE SURRENDERED AT
ANY TIME AFTER THE EXPIRATION OR SOONER TERMINATION OF THE OPTION
TERM.
X. BONUS LOANS OR GUARANTEE OF LOANS
The Plan Administrator may assist any optionee (including any officer
or director) in the exercise of one or more options under the Plan by (a)
authorizing the extension of a loan to such optionee from the Company and/or the
payment of a bonus by the Company to optionee holding other than an Incentive
Option in an amount calculated to assist optionee in paying optionee's federal
and state tax obligations upon exercise of one or more options, (b) permitting
the optionee to pay the option price for the purchased Common Stock in
installments over a period of years or (c) authorizing a guarantee by the
Company of a third-party loan to the optionee. The terms of any loan,
installment method of payment or guarantee (including the interest rate and
terms of repayment) shall be established by the Plan Administrator in its sole
discretion. Loans, installment payments and guarantees may be granted without
security or collateral (other than to optionees who are consultants or
independent contractors, in which event the loan must be adequately secured by
collateral other than the purchased shares), but the maximum credit available to
the optionee shall not exceed the limit imposed by applicable law.
XI. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority to extend
the period of time for which the option is to remain exercisable following the
optionee's termination of Service Provider status from the twelve (12) month or
shorter period set forth in the option agreement to such greater period of time
as the Plan Administrator shall deem appropriate; provided, however, that in no
event shall such option be exercisable after the specified expiration date of
the option term.
XII. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever; provided, however,
that no such amendment or modification shall, without the consent of the
holders, adversely affect the rights and obligations with respect to options at
the time outstanding under the Plan; and provided, further that the Board shall
not, without the approval of the Company's shareholders, (i) increase the
maximum number of shares issuable under the Plan,
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<PAGE> 14
except for permissible adjustments under Section IV, (ii) materially modify the
eligibility requirements for the grant of options under the Plan or (iii)
otherwise materially increase the benefits accruing to participants under the
Plan.
XIII. EFFECTIVE DATE AND TERM OF PLAN
A. THE PLAN SHALL BECOME EFFECTIVE WHEN ADOPTED BY THE
BOARD, BUT NO OPTION GRANTED UNDER THE PLAN SHALL BECOME
EXERCISABLE UNLESS AND UNTIL THE PLAN SHALL HAVE BEEN APPROVED BY
THE COMPANY'S SHAREHOLDERS. IF SUCH SHAREHOLDER APPROVAL IS NOT
OBTAINED WITHIN TWELVE (12) MONTHS AFTER THE DATE OF THE BOARD'S
ADOPTION OF THE PLAN, THEN ALL OPTIONS PREVIOUSLY GRANTED UNDER
THE PLAN SHALL TERMINATE AND NO FURTHER OPTIONS SHALL BE GRANTED.
SUBJECT TO SUCH LIMITATION, THE PLAN ADMINISTRATOR MAY GRANT
OPTIONS UNDER THE PLAN AT ANY TIME AFTER THE EFFECTIVE DATE AND
BEFORE THE DATE FIXED HEREIN FOR TERMINATION OF THE PLAN.
B. UNLESS SOONER TERMINATED IN ACCORDANCE WITH SECTION VII,
THE PLAN SHALL TERMINATE UPON THE EARLIER OF (i) THE EXPIRATION OF
THE TEN (10) YEAR PERIOD MEASURED FROM THE DATE OF THE BOARD'S
ADOPTION OF THE PLAN OR (ii) THE DATE ON WHICH ALL SHARES
AVAILABLE FOR ISSUANCE UNDER THE PLAN SHALL HAVE BEEN ISSUED
PURSUANT TO THE EXERCISE OR SURRENDER OF OPTIONS GRANTED
HEREUNDER. IF THE DATE OF TERMINATION IS DETERMINED UNDER CLAUSE
(i) ABOVE, THEN OPTIONS OUTSTANDING ON SUCH DATE SHALL THEREAFTER
CONTINUE TO HAVE FORCE AND EFFECT IN ACCORDANCE WITH THE
PROVISIONS OF THE INSTRUMENTS EVIDENCING SUCH OPTIONS.
C. OPTIONS MAY BE GRANTED UNDER THIS PLAN TO PURCHASE
SHARES OF COMMON STOCK IN EXCESS OF THE NUMBER OF SHARES THEN
AVAILABLE FOR ISSUANCE UNDER THE PLAN, PROVIDED (i) AN AMENDMENT
TO INCREASE THE MAXIMUM NUMBER OF SHARES ISSUABLE UNDER THE PLAN
IS ADOPTED BY THE BOARD PRIOR TO THE INITIAL GRANT OF ANY SUCH
OPTION AND WITHIN ONE YEAR THEREAFTER SUCH AMENDMENT IS APPROVED
BY THE COMPANY'S SHAREHOLDERS AND (ii) EACH OPTION GRANTED IS NOT
TO BECOME EXERCISABLE, IN WHOLE OR IN PART, AT ANY TIME PRIOR TO
THE OBTAINING OF SUCH SHAREHOLDER APPROVAL.
XIV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.
XV. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder,
and the issuance of stock upon the exercise or surrender of any such option
shall be subject to the procurement by the Company of
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all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it and the stock issued pursuant to it.
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<PAGE> 16
RISK DATA CORPORATION
STOCK OPTION AGREEMENT
(Non-Qualified)
AGREEMENT made as of the ___ day of _________, 19__ by and between Risk
Data Corporation, a California corporation (hereinafter called "Company"), and
_______________ (hereinafter called "Optionee").
WITNESSETH:
RECITALS
A. THE BOARD OF DIRECTORS OF THE COMPANY HAS ADOPTED THE
COMPANY'S 1992 STOCK OPTION PLAN (THE "PLAN"), A COPY OF WHICH IS
ATTACHED HERETO AS EXHIBIT "A", FOR THE PURPOSES OF ATTRACTING AND
RETAINING THE SERVICES OF KEY EMPLOYEES (INCLUDING OFFICERS AND
DIRECTORS) AND OTHER PERSONS WHO CONTRIBUTE TO THE FINANCIAL
SUCCESS OF THE COMPANY OR ITS PARENT OR SUBSIDIARY CORPORATIONS.
B. OPTIONEE IS AN INDIVIDUAL WHO IS TO RENDER VALUABLE
SERVICES AS A KEY EMPLOYEE, NON-EMPLOYEE MEMBER OF THE COMPANY'S
BOARD OF DIRECTORS, CONSULTANT AND/OR INDEPENDENT CONTRACTOR OF
THE COMPANY.
C. THE GRANTED OPTION IS INTENDED TO BE A NON-QUALIFIED
STOCK OPTION WHICH DOES NOT SATISFY THE REQUIREMENTS OF SECTION
422 OF THE INTERNAL REVENUE CODE.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. SUBJECT TO AND UPON THE TERMS AND
CONDITIONS SET FORTH IN THIS AGREEMENT AND IN THE PLAN (A COPY OF WHICH
HAS BEEN DELIVERED TO OPTIONEE), THERE IS HEREBY GRANTED TO OPTIONEE,
AS OF THE DATE OF THIS AGREEMENT (THE "GRANT DATE"), A STOCK OPTION TO
PURCHASE UP TO ___________ SHARES OF THE COMPANY'S COMMON STOCK (THE
"OPTIONED SHARES") FROM TIME TO TIME DURING THE OPTION TERM AT THE
OPTION PRICE OF $___ PER SHARE (THE "OPTION PRICE").
<PAGE> 17
2. OPTION TERM. THIS OPTION SHALL HAVE A MAXIMUM TERM OF TEN
(10) YEARS MEASURED FROM THE GRANT DATE AND SHALL ACCORDINGLY EXPIRE AT
THE CLOSE OF BUSINESS ON _________________, ____ (THE "EXPIRATION
DATE"), UNLESS SOONER TERMINATED IN ACCORDANCE HEREWITH.
3. OPTION NONTRANSFERABLE; EXCEPTION. THIS OPTION SHALL BE
NEITHER TRANSFERABLE NOR ASSIGNABLE BY OPTIONEE OTHER THAN BY WILL OR
BY THE LAWS OF DESCENT AND DISTRIBUTION AND MAY BE EXERCISED, DURING
OPTIONEE'S LIFETIME, ONLY BY OPTIONEE.
4. DATES OF EXERCISE. THIS OPTION MAY NOT BE EXERCISED IN WHOLE
OR IN PART AT ANY TIME PRIOR TO THE TIME THE PLAN IS APPROVED BY THE
COMPANY'S SHAREHOLDERS IN ACCORDANCE WITH PARAGRAPH 20. PROVIDED SUCH
SHAREHOLDER APPROVAL IS OBTAINED, OPTIONEE MAY, WITHIN THE SPECIFIED
TERM OF THIS OPTION AND PURSUANT TO THE PROVISIONS OF THIS AGREEMENT,
PURCHASE THE OPTIONED SHARES IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:
(i) TWELVE FORTY-EIGHTHS (12/48) OR TWENTY-FIVE
PERCENT (25%) OF THE OPTIONED SHARES AT ANY TIME AFTER THE
EXPIRATION OF TWELVE (12) MONTHS MEASURED FROM THE
COMMENCEMENT DATE;
(ii) AN ADDITIONAL ONE FORTY-EIGHTH (1/48) OF THE
OPTIONED SHARES AFTER THE EXPIRATION OF EACH CALENDAR MONTH
FOLLOWING THE INITIAL TWELVE (12) MONTHS (________ SHARES
AFTER THE EXPIRATION OF EACH SUCH CALENDAR MONTH, AS ADJUSTED
PURSUANT TO SECTION 6 HEREOF);
(iii) ACCORDINGLY, OPTIONEE SHALL HAVE A FULLY VESTED
INTEREST IN ALL THE OPTIONED SHARES AFTER FORTY-EIGHT (48)
CALENDAR MONTHS MEASURED FROM THE COMMENCEMENT DATE; AND
(iv) "COMMENCEMENT DATE" SHALL MEAN ________, 19__.
5. ACCELERATED TERMINATION OF OPTION TERM. THE OPTION TERM
SPECIFIED IN PARAGRAPH 2 SHALL TERMINATE (AND THIS OPTION SHALL CEASE TO BE
EXERCISABLE) PRIOR TO THE EXPIRATION DATE SHOULD ONE OF THE FOLLOWING PROVISIONS
BECOME APPLICABLE:
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<PAGE> 18
(i) EXCEPT AS OTHERWISE PROVIDED IN SUBPARAGRAPHS
(ii), (iii) OR (iv) BELOW, SHOULD OPTIONEE CEASE TO BE A
SERVICE PROVIDER TO THE COMPANY ("SERVICE PROVIDER") AT ANY
TIME DURING THE OPTION TERM, THEN THE OPTIONEE SHALL HAVE UP
TO A THIRTY (30) DAY PERIOD COMMENCING WITH THE DATE OF SUCH
CESSATION OF SERVICE PROVIDER STATUS, IN WHICH TO EXERCISE
THIS OPTION FOR ANY OR ALL OF THE OPTIONED SHARES FOR WHICH
THIS OPTION IS AT THE TIME OF SUCH CESSATION EXERCISABLE, BUT
IN NO EVENT SHALL THIS OPTION BE EXERCISABLE AT ANY TIME AFTER
THE EXPIRATION DATE. UPON THE EXPIRATION OF SUCH THIRTY (30)
DAY PERIOD OR (IF EARLIER) UPON THE EXPIRATION DATE, THIS
OPTION SHALL TERMINATE AND CEASE TO BE OUTSTANDING.
(ii) SHOULD OPTIONEE DIE WHILE THIS OPTION IS
OUTSTANDING, THEN THE EXECUTORS OR ADMINISTRATORS OF
OPTIONEE'S ESTATE OR OPTIONEE'S HEIRS OR LEGATEES (AS THE CASE
MAY BE) SHALL HAVE THE RIGHT TO EXERCISE THIS OPTION FOR THE
NUMBER OF OPTIONED SHARES (IF ANY) FOR WHICH THE OPTION IS
EXERCISABLE ON THE DATE OF THE OPTIONEE'S DEATH. SUCH RIGHT
SHALL LAPSE AND THIS OPTION SHALL CEASE TO BE EXERCISABLE UPON
THE EARLIER OF (i) THE FIRST ANNIVERSARY OF THE DATE OF THE
OPTIONEE'S DEATH OR (ii) THE EXPIRATION DATE.
(iii) SHOULD OPTIONEE BECOME PERMANENTLY DISABLED AND
CEASE BY REASON THEREOF TO BE A SERVICE PROVIDER OF THE
COMPANY AT ANY TIME DURING THE OPTION TERM, THEN THE OPTIONEE
SHALL HAVE A PERIOD OF TWELVE (12) MONTHS (COMMENCING WITH THE
DATE OF SUCH CESSATION OF SERVICE PROVIDER STATUS) IN WHICH TO
EXERCISE THIS OPTION FOR ANY OR ALL OF THE OPTIONED SHARES FOR
WHICH THIS OPTION IS EXERCISABLE AT THE TIME OF SUCH CESSATION
OF SERVICE PROVIDER STATUS; PROVIDED, HOWEVER, THAT IN NO
EVENT SHALL THIS OPTION BE EXERCISED AT ANY TIME AFTER THE
EXPIRATION DATE. OPTIONEE SHALL BE DEEMED TO BE PERMANENTLY
DISABLED IF OPTIONEE IS, BY REASON OF ANY MEDICALLY
DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT EXPECTED TO RESULT
IN DEATH OR TO BE OF CONTINUOUS DURATION OF NOT LESS THAN
TWELVE (12) MONTHS, UNABLE TO PERFORM HIS/HER USUAL DUTIES FOR
THE COMPANY. UPON THE EXPIRATION OF SUCH LIMITED PERIOD OF
EXERCISABILITY OR (IF EARLIER) UPON THE EXPIRATION DATE, THIS
OPTION SHALL TERMINATE AND CEASE TO BE OUTSTANDING.
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<PAGE> 19
(iv) SHOULD THE OPTIONEE'S STATUS AS A SERVICE
PROVIDER BE TERMINATED FOR THEFT, FRAUD, EMBEZZLEMENT OR ANY
UNAUTHORIZED DISCLOSURE OR USE OF CONFIDENTIAL INFORMATION OR
TRADE SECRETS OR SHOULD THE OPTIONEE MAKE OR ATTEMPT TO MAKE
ANY UNAUTHORIZED USE OR DISCLOSURE OF THE CONFIDENTIAL
INFORMATION OR TRADE SECRETS OF THE COMPANY OR ANY PARENT OR
SUBSIDIARY CORPORATION, THEN IN ANY SUCH EVENT ALL OUTSTANDING
OPTIONS ISSUED PURSUANT TO THIS AGREEMENT SHALL TERMINATE AND
CEASE TO BE EXERCISABLE IMMEDIATELY UPON SUCH TERMINATION OF
SERVICE PROVIDER STATUS OR UPON SUCH ATTEMPT TO MAKE ANY
UNAUTHORIZED USE OR DISCLOSURE OF CONFIDENTIAL INFORMATION OR
TRADE SECRETS.
(v) For purposes of this Section 5 and for all other purposes
of this Agreement, the Optionee shall be deemed to be a Service Provider to the
Company for so long as the Optionee renders periodic services to the Company or
one or more of its parent or subsidiary corporations, whether as an employee,
non-employee member of the Board of Directors or an independent non-employee
consultant.
6. ADJUSTMENT IN OPTION SHARES.
(a) IN THE EVENT ANY CHANGE IS MADE TO THE COMMON STOCK
ISSUABLE UPON EXERCISE OF OPTIONED SHARES UNDER THIS AGREEMENT BY
REASON OF ANY STOCK SPLIT, STOCK DIVIDEND, COMBINATION OF SHARES,
OR OTHER CHANGE AFFECTING THE OUTSTANDING COMMON STOCK AS A CLASS
WITHOUT RECEIPT OF CONSIDERATION, THEN APPROPRIATE ADJUSTMENTS
WILL BE MADE TO (i) THE TOTAL NUMBER OF OPTIONED SHARES SUBJECT TO
THIS OPTION AND (ii) THE OPTION PRICE PAYABLE PER SHARE IN ORDER
TO REFLECT SUCH CHANGE AND THEREBY PRECLUDE A DILUTION OR
ENLARGEMENT OF BENEFITS HEREUNDER.
(b) IF THE COMPANY IS THE SURVIVING ENTITY IN ANY MERGER OR
OTHER BUSINESS COMBINATION, THEN THIS OPTION, IF OUTSTANDING
IMMEDIATELY AFTER SUCH MERGER OR OTHER BUSINESS COMBINATION, SHALL
BE APPROPRIATELY ADJUSTED TO APPLY AND PERTAIN TO THE NUMBER AND
CLASS OF SECURITIES WHICH WOULD BE ISSUABLE TO THE OPTIONEE IN THE
CONSUMMATION OF SUCH MERGER OR BUSINESS COMBINATION IF THE OPTION
WERE EXERCISED IMMEDIATELY PRIOR TO SUCH MERGER OR BUSINESS
COMBINATION, AND APPROPRIATE ADJUSTMENTS SHALL ALSO BE MADE TO THE
OPTION PRICE PAYABLE PER SHARE, PROVIDED THE AGGREGATE OPTION
PRICE PAYABLE HEREUNDER SHALL REMAIN THE SAME.
7. ACCELERATION.
(a) THIS OPTION MAY BE ACCELERATED BY THE COMPANY AS
PROVIDED IN SECTION VII OF THE PLAN.
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<PAGE> 20
(b) THIS AGREEMENT SHALL NOT IN ANY WAY AFFECT THE RIGHT OF
THE COMPANY TO ADJUST, RECLASSIFY, REORGANIZE OR OTHERWISE MAKE
CHANGES IN ITS CAPITAL OR BUSINESS STRUCTURE OR TO MERGE,
CONSOLIDATE, DISSOLVE, LIQUIDATE OR SELL OR TRANSFER ALL OR ANY
PART OF ITS BUSINESS OR ASSETS.
8. PRIVILEGE OF STOCK OWNERSHIP. THE HOLDER OF THIS OPTION
SHALL NOT HAVE ANY OF THE RIGHTS OF A SHAREHOLDER WITH RESPECT TO THE
OPTIONED SHARES UNTIL SUCH INDIVIDUAL SHALL HAVE EXERCISED THE OPTION AND
PAID THE OPTION PRICE.
9. MANNER OF EXERCISING OPTION.
(a) IN ORDER TO EXERCISE THIS OPTION WITH RESPECT TO ALL
OR ANY PART OF THE OPTIONED SHARES FOR WHICH THIS OPTION IS AT THE
TIME EXERCISABLE, OPTIONEE (OR IN THE CASE OF EXERCISE AFTER
OPTIONEE'S DEATH, THE OPTIONEE'S EXECUTOR, ADMINISTRATOR, HEIR OR
LEGATEE, AS THE CASE MAY BE) MUST TAKE THE FOLLOWING ACTIONS:
(i) EXECUTE AND DELIVER TO THE SECRETARY OF THE
COMPANY A STOCK PURCHASE AGREEMENT IN SUBSTANTIALLY THE FORM
OF EXHIBIT "B" TO THIS AGREEMENT (THE "PURCHASE AGREEMENT");
(ii) IN THE EVENT OPTIONEE WILL BENEFICIALLY OWN
MORE THAN 10,000 SHARES OF THE COMPANY'S COMMON STOCK AFTER
SUCH EXERCISE, OPTIONEE SHALL ENTER INTO A SHAREHOLDERS
AGREEMENT WITH THE COMPANY AND CERTAIN OTHER SHAREHOLDERS IN
THE FORM ATTACHED HERETO AS EXHIBIT "C".
(iii) PAY THE AGGREGATE OPTION PRICE FOR THE
PURCHASED SHARES IN ONE OR MORE OF THE FOLLOWING ALTERNATIVE
FORMS:
(A) FULL PAYMENT, IN CASH OR CASH EQUIVALENTS; OR
5
<PAGE> 21
(B) FULL PAYMENT IN SHARES OF COMMON STOCK OF THE
COMPANY HAVING A FAIR MARKET VALUE ON THE EXERCISE
DATE (AS SUCH TERMS ARE DEFINED BELOW) EQUAL TO THE
OPTION PRICE; OR
(C) FULL PAYMENT IN A COMBINATION OF SHARES OF COMMON
STOCK OF THE COMPANY VALUED AT FAIR MARKET VALUE ON
THE EXERCISE DATE AND CASH OR CASH EQUIVALENTS,
EQUAL IN THE AGGREGATE TO THE OPTION PRICE; OR
(D) ANY OTHER FORM WHICH THE PLAN ADMINISTRATOR MAY, IN
ITS DISCRETION, APPROVE AT THE TIME OF EXERCISE IN
ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT;
AND
(iv) FURNISH TO THE COMPANY APPROPRIATE
DOCUMENTATION THAT THE PERSON OR PERSONS EXERCISING THE
OPTION, IF OTHER THAN OPTIONEE, HAVE THE RIGHT TO EXERCISE
THIS OPTION.
(b) FOR PURPOSES OF PARAGRAPH 9(a) ABOVE, THE FAIR
MARKET VALUE OF A SHARE OF COMMON STOCK SHALL BE DETERMINED IN
ACCORDANCE WITH SUBPARAGRAPHS (i) THROUGH (iii) BELOW, AND THE
EXERCISE DATE SHALL BE THE FIRST DATE ON WHICH THERE SHALL HAVE
BEEN DELIVERED TO THE COMPANY BOTH (i) THE EXECUTED PURCHASE
AGREEMENT AND (ii) THE PAYMENT OF THE OPTION PRICE FOR THE
PURCHASED SHARES.
(i) IF THE COMMON STOCK IS NOT ON THE EXERCISE
DATE LISTED OR ADMITTED TO TRADING ON ANY STOCK EXCHANGE, BUT
IS TRADED IN THE OVER-THE-COUNTER MARKET, THE FAIR MARKET
VALUE SHALL BE THE MEAN BETWEEN THE HIGHEST BID AND LOWEST
ASKED PRICES (OR IF SUCH INFORMATION IS AVAILABLE, THE
CLOSING SELLING PRICE) OF ONE SHARE OF COMMON STOCK ON THE
EXERCISE DATE IN THE OVER-THE-COUNTER MARKET, AS SUCH PRICES
ARE REPORTED BY THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS THROUGH ITS NASDAQ SYSTEM OR ANY SUCCESSOR SYSTEM. IF
THERE ARE NO REPORTED BID AND ASKED PRICES (OR CLOSING
SELLING PRICE) FOR THE COMMON STOCK ON THE EXERCISE DATE,
THEN THE MEAN BETWEEN THE HIGHEST BID AND LOWEST ASKED PRICES
(OR CLOSING SELLING PRICE) ON THE LAST PRECEDING DATE FOR
WHICH SUCH QUOTATIONS EXIST SHALL BE DETERMINATIVE OF FAIR
MARKET VALUE.
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<PAGE> 22
(ii) IF THE COMMON STOCK IS ON THE EXERCISE DATE
LISTED OR ADMITTED TO TRADING ON ANY STOCK EXCHANGE, THEN THE
FAIR MARKET VALUE SHALL BE THE CLOSING SELLING PRICE OF ONE
SHARE OF COMMON STOCK ON THE EXERCISE DATE ON THE STOCK
EXCHANGE DETERMINED BY THE PLAN ADMINISTRATOR TO BE THE
PRIMARY MARKET FOR THE COMMON STOCK, AS SUCH PRICE IS
OFFICIALLY QUOTED IN THE COMPOSITE TAPE OF TRANSACTIONS ON
SUCH EXCHANGE. IF THERE IS NO REPORTED SALE OF COMMON STOCK
ON SUCH EXCHANGE ON THE EXERCISE DATE, THEN THE FAIR MARKET
VALUE SHALL BE THE CLOSING SELLING PRICE ON THE EXCHANGE ON
THE LAST PRECEDING DATE FOR WHICH SUCH QUOTATION EXISTS.
(iii) IF THE COMMON STOCK IS ON THE EXERCISE DATE
NEITHER LISTED OR ADMITTED TO TRADING ON ANY STOCK EXCHANGE
NOR TRADED IN THE OVER-THE-COUNTER MARKET, THEN THE FAIR
MARKET VALUE SHALL BE DETERMINED BY THE PLAN ADMINISTRATOR
AFTER TAKING INTO ACCOUNT SUCH FACTORS AS THE PLAN
ADMINISTRATOR SHALL DEEM APPROPRIATE, INCLUDING ONE OR MORE
INDEPENDENT PROFESSIONAL APPRAISALS.
(c) THIS OPTION SHALL BE DEEMED TO HAVE BEEN EXERCISED
WITH RESPECT TO THE NUMBER OF OPTIONED SHARES SPECIFIED IN THE
PURCHASE AGREEMENT AT SUCH TIME AS THE EXECUTED PURCHASE AGREEMENT
FOR SUCH SHARES SHALL HAVE BEEN DELIVERED TO THE COMPANY. PAYMENT
OF THE OPTION PRICE SHALL IMMEDIATELY BECOME DUE AND SHALL
ACCOMPANY THE PURCHASE AGREEMENT. AS SOON THEREAFTER AS PRACTICAL,
THE COMPANY SHALL MAIL OR DELIVER TO OPTIONEE OR TO THE OTHER
PERSON OR PERSONS EXERCISING THIS OPTION A CERTIFICATE OR
CERTIFICATES REPRESENTING THE SHARES SO PURCHASED AND PAID FOR,
WITH THE APPROPRIATE LEGENDS AFFIXED THERETO.
(d) IN NO EVENT MAY THIS OPTION BE EXERCISED FOR ANY
FRACTIONAL SHARES.
10. RIGHTS OF FIRST REFUSAL AND MARKET STAND OFF AGREEMENT.
THE OPTIONEE HEREBY AGREES THAT ALL OPTIONED SHARES ACQUIRED UPON THE
EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE
COMPANY AND ITS ASSIGNS TO REPURCHASE SUCH SHARES AND CERTAIN
LIMITATIONS ON DISPOSITION AND THE LIKE IN THE EVENT OF AN UNDERWRITTEN
PUBLIC OFFERING, IN ACCORDANCE WITH THE TERMS AND CONDITIONS SPECIFIED
IN THE PURCHASE AGREEMENT.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
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<PAGE> 23
(a) THE EXERCISE OF THIS OPTION AND THE ISSUANCE OF OPTIONED
SHARES UPON SUCH EXERCISE SHALL BE SUBJECT TO COMPLIANCE BY THE COMPANY
AND THE OPTIONEE WITH ALL APPLICABLE REQUIREMENTS OF LAW RELATING
THERETO AND WITH ALL APPLICABLE REGULATIONS OF ANY STOCK EXCHANGE ON
WHICH SHARES OF THE COMPANY'S COMMON STOCK MAY BE LISTED AT THE TIME OF
SUCH EXERCISE AND ISSUANCE.
(b) IN CONNECTION WITH THE EXERCISE OF THIS OPTION, OPTIONEE
SHALL EXECUTE AND DELIVER TO THE COMPANY SUCH REPRESENTATIONS IN
WRITING AS MAY BE REQUESTED BY THE COMPANY IN ORDER FOR IT TO COMPLY
WITH THE APPLICABLE REQUIREMENTS OF FEDERAL AND STATE SECURITIES LAWS.
12. SUCCESSORS AND ASSIGNS. EXCEPT TO THE EXTENT OTHERWISE PROVIDED
IN PARAGRAPH 3, THE PROVISIONS OF THIS AGREEMENT SHALL INURE TO THE BENEFIT OF,
AND BE BINDING UPON, THE SUCCESSORS, ADMINISTRATORS, HEIRS, LEGAL
REPRESENTATIVES AND ASSIGNS OF OPTIONEE AND THE SUCCESSORS AND ASSIGNS OF THE
COMPANY.
13. LIABILITY OF COMPANY.
(a) IF THE OPTIONED SHARES COVERED BY THIS AGREEMENT EXCEED, AS
OF THE GRANT DATE, THE NUMBER OF SHARES OF COMMON STOCK WHICH MAY
WITHOUT SHAREHOLDER APPROVAL BE ISSUED UNDER THE PLAN, THEN THIS OPTION
SHALL BE VOID WITH RESPECT TO SUCH EXCESS SHARES UNLESS SHAREHOLDER
APPROVAL OF AN AMENDMENT SUFFICIENTLY INCREASING THE NUMBER OF SHARES
OF COMMON STOCK ISSUABLE UNDER THE PLAN IS OBTAINED IN ACCORDANCE WITH
THE TERMS OF THE PLAN.
(b) THE INABILITY OF THE COMPANY TO OBTAIN APPROVAL FROM ANY
REGULATORY BODY HAVING AUTHORITY DEEMED BY THE COMPANY TO BE NECESSARY
TO THE LAWFUL ISSUANCE AND SALE OF ANY COMMON STOCK PURSUANT TO THIS
OPTION SHALL RELIEVE THE COMPANY OF ANY LIABILITY WITH RESPECT TO THE
NON-ISSUANCE OR SALE OF THE COMMON STOCK AS TO WHICH SUCH APPROVAL
SHALL NOT HAVE BEEN OBTAINED. THE COMPANY, HOWEVER, SHALL USE ITS BEST
EFFORTS TO OBTAIN ALL SUCH APPROVALS.
14. NO EMPLOYMENT OR SERVICE CONTRACT. EXCEPT TO THE EXTENT THE TERMS
OF ANY EMPLOYMENT OR SERVICE CONTRACT BETWEEN THE COMPANY AND THE OPTIONEE MAY
EXPRESSLY PROVIDE OTHERWISE, THE COMPANY (OR ANY PARENT OR SUBSIDIARY
CORPORATION OF THE COMPANY EMPLOYING OPTIONEE) SHALL BE UNDER NO OBLIGATION TO
CONTINUE OPTIONEE'S STATUS AS AN EMPLOYEE OR DIRECTOR FOR ANY PERIOD OF SPECIFIC
DURATION AND MAY TERMINATE SUCH STATUS AT ANY TIME, WITH OR WITHOUT CAUSE.
8
<PAGE> 24
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 COMPANY IN CARE OF ITS SECRETARY AT ITS CORPORATE OFFICES. ANY NOTICE
REQUIRED TO BE GIVEN OR DELIVERED TO OPTIONEE SHALL BE IN WRITING AND ADDRESSED
TO OPTIONEE AT THE ADDRESS INDICATED BELOW OPTIONEE'S SIGNATURE LINE ON THIS
AGREEMENT. ALL NOTICES SHALL BE DEEMED TO HAVE BEEN GIVEN OR DELIVERED UPON
PERSONAL DELIVERY OR UPON DEPOSIT IN THE U.S. MAIL, POSTAGE PREPAID AND PROPERLY
ADDRESSED TO THE PARTY TO BE NOTIFIED.
16. WITHHOLDING. OPTIONEE HEREBY AGREES TO MAKE APPROPRIATE
ARRANGEMENTS WITH THE COMPANY OR PARENT OR SUBSIDIARY CORPORATION EMPLOYING
OPTIONEE (IF ANY) FOR THE SATISFACTION OF ANY FEDERAL, STATE OR LOCAL INCOME TAX
WITHHOLDING REQUIREMENTS AND FEDERAL SOCIAL SECURITY EMPLOYEE TAX REQUIREMENTS
APPLICABLE TO THE EXERCISE OF THIS OPTION.
17. CONSTRUCTION. THIS AGREEMENT AND THE OPTION EVIDENCED HEREBY ARE
MADE AND GRANTED PURSUANT TO THE PLAN AND ARE IN ALL RESPECTS LIMITED BY AND
SUBJECT TO THE EXPRESS TERMS AND PROVISIONS OF THE PLAN. ALL DECISIONS OF THE
PLAN ADMINISTRATOR WITH RESPECT TO ANY QUESTION OR ISSUE ARISING UNDER THE PLAN
OR THIS AGREEMENT SHALL BE CONCLUSIVE AND BINDING ON ALL PERSONS HAVING AN
INTEREST IN THIS OPTION.
18. GOVERNING LAW. THE INTERPRETATION, PERFORMANCE, AND ENFORCEMENT OF
THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA.
19. COMPANY POWERS. THIS AGREEMENT SHALL NOT IN ANY WAY AFFECT THE
RIGHT OF THE COMPANY TO ADJUST, RECLASSIFY, REORGANIZE OR OTHERWISE MAKE CHANGES
IN ITS CAPITAL OR BUSINESS STRUCTURE OR TO MERGE, CONSOLIDATE, DISSOLVE,
LIQUIDATE OR SELL OR TRANSFER ALL OR ANY PART OF ITS BUSINESS OR ASSETS.
9
<PAGE> 25
20. SHAREHOLDER APPROVAL. THE GRANT OF THIS OPTION IS SUBJECT TO
APPROVAL OF THE PLAN BY THE COMPANY'S SHAREHOLDERS WITHIN TWELVE (12) MONTHS
AFTER THE ADOPTION OF THE PLAN BY THE BOARD OF DIRECTORS, AND THIS OPTION MAY
NOT BE EXERCISED IN WHOLE OR IN PART UNTIL SUCH SHAREHOLDER APPROVAL IS
OBTAINED. IN THE EVENT THAT SUCH SHAREHOLDER APPROVAL IS NOT OBTAINED, THEN THIS
OPTION SHALL THEREUPON TERMINATE AND THE OPTIONEE SHALL HAVE NO FURTHER RIGHTS
TO ACQUIRE ANY OPTIONED SHARES HEREUNDER.
21. COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN COUNTERPARTS, EACH
OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH TOGETHER SHALL CONSTITUTE
ONE AND THE SAME INSTRUMENT.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 26
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate on its behalf by its duly authorized officer and Optionee
has also executed this Agreement in duplicate, all as of the day and year
indicated above.
Company:
RISK DATA CORPORATION, a California corporation
By:____________________________________________
Title:_________________________________________
Address: Two Venture Plaza,
Suite 400
Irvine, CA 92718-3331
Optionee:
_______________________________________________
Name: ____________________
Address:
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
11
<PAGE> 27
RISK DATA CORPORATION
STOCK PURCHASE AGREEMENT
(Exercise of Option)
This Agreement is made as of this day of , ___, by and
among Risk Data Corporation, a California corporation ("Corporation"), ,
the holder of a stock option under the Company's 1992 Stock Option Plan
("Optionee"), and , the Optionee's spouse.
1. EXERCISE OF OPTION
1.1 EXERCISE. OPTIONEE HEREBY PURCHASES SHARES OF COMMON
STOCK OF THE CORPORATION ("PURCHASED SHARES") PURSUANT TO THAT
CERTAIN OPTION ("OPTION") GRANTED OPTIONEE ON ___________, ____
("GRANT DATE") TO PURCHASE UP TO ______________ SHARES OF THE
CORPORATION'S COMMON STOCK ("TOTAL PURCHASABLE SHARES") AT AN
OPTION PRICE OF $_____ PER SHARE ("OPTION PRICE").
1.2 PAYMENT. CONCURRENTLY WITH THE DELIVERY OF THIS AGREEMENT TO
THE SECRETARY OF THE CORPORATION, OPTIONEE SHALL PAY THE OPTION
PRICE FOR THE PURCHASED SHARES IN ACCORDANCE WITH THE PROVISIONS
OF THE AGREEMENT BETWEEN THE CORPORATION AND OPTIONEE EVIDENCING
THE OPTION ("OPTION AGREEMENT") AND SHALL DELIVER WHATEVER
ADDITIONAL DOCUMENTS MAY BE REQUIRED BY THE OPTION AGREEMENT AS A
CONDITION FOR EXERCISE.
2. INVESTMENT REPRESENTATIONS
2.1 INVESTMENT INTENT. OPTIONEE HEREBY WARRANTS AND REPRESENTS
THAT OPTIONEE IS ACQUIRING THE PURCHASED SHARES FOR OPTIONEE'S OWN
ACCOUNT AND NOT WITH A VIEW TO THEIR RESALE OR DISTRIBUTION AND
THAT OPTIONEE IS PREPARED TO HOLD THE PURCHASED SHARES FOR AN
INDEFINITE PERIOD AND HAS NO PRESENT INTENTION TO SELL, DISTRIBUTE
OR GRANT ANY PARTICIPATING INTERESTS IN THE PURCHASED SHARES.
OPTIONEE HEREBY ACKNOWLEDGES THE FACT THAT THE PURCHASED SHARES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), AND THAT THE CORPORATION IS ISSUING THE
PURCHASED SHARES TO OPTIONEE IN RELIANCE ON THE REPRESENTATIONS
MADE BY OPTIONEE HEREIN.
<PAGE> 28
2.2 RESTRICTED SECURITIES. OPTIONEE HEREBY CONFIRMS THAT OPTIONEE
HAS BEEN INFORMED THAT THE PURCHASED SHARES MAY NOT BE RESOLD OR
TRANSFERRED UNLESS THE PURCHASED SHARES ARE FIRST REGISTERED UNDER
THE FEDERAL SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. ACCORDINGLY, OPTIONEE HEREBY
ACKNOWLEDGES THAT OPTIONEE IS PREPARED TO HOLD THE PURCHASED
SHARES FOR AN INDEFINITE PERIOD AND THAT OPTIONEE IS AWARE THAT
RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION ISSUED UNDER
THE 1933 ACT IS NOT PRESENTLY AVAILABLE TO EXEMPT THE SALE OF THE
PURCHASED SHARES FROM THE REGISTRATION REQUIREMENTS OF THE 1933
ACT. SHOULD RULE 144 SUBSEQUENTLY BECOME AVAILABLE, OPTIONEE IS
AWARE THAT ANY SALE OF THE PURCHASED SHARES EFFECTED PURSUANT TO
THE RULE MAY, DEPENDING UPON THE STATUS OF OPTIONEE AS AN
"AFFILIATE" OR "NON-AFFILIATE" UNDER THE RULE, BE MADE ONLY IN
LIMITED AMOUNTS IN ACCORDANCE WITH THE PROVISIONS OF THE RULE, AND
THAT IN NO EVENT MAY ANY PURCHASED SHARES BE SOLD PURSUANT TO THE
RULE UNTIL OPTIONEE HAS HELD THE PURCHASED SHARES FOR THE
REQUISITE HOLDING PERIOD FOLLOWING PAYMENT IN CASH OF THE OPTION
PRICE FOR THE PURCHASED SHARES.
2.3 DISPOSITION OF SHARES. OPTIONEE HEREBY AGREES THAT OPTIONEE
SHALL MAKE NO DISPOSITION OF THE PURCHASED SHARES (OTHER THAN A
PERMITTED TRANSFER UNDER PARAGRAPH 3.1) UNLESS AND UNTIL:
(a) OPTIONEE SHALL HAVE NOTIFIED THE CORPORATION OF THE
PROPOSED DISPOSITION AND PROVIDED A WRITTEN SUMMARY
OF THE TERMS AND CONDITIONS OF THE PROPOSED
DISPOSITION;
(b) OPTIONEE SHALL HAVE COMPLIED WITH ALL REQUIREMENTS
OF THIS AGREEMENT APPLICABLE TO THE DISPOSITION OF
THE PURCHASED SHARES (INCLUDING, WITHOUT LIMITATION,
THE REQUIREMENTS IMPOSED UNDER ARTICLE IV AND BY
SECTION 8.7 OF THIS AGREEMENT);
(c) OPTIONEE SHALL HAVE PROVIDED THE CORPORATION WITH
WRITTEN ASSURANCES FROM THE OPTIONEE AND THE OPINION
OF THE CORPORATION'S COUNSEL (AT THE CORPORATION'S
EXPENSE), IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE CORPORATION, THAT (i) THE
PROPOSED DISPOSITION DOES NOT REQUIRE REGISTRATION
OF THE PURCHASED SHARES UNDER THE 1933 ACT OR (ii)
ALL APPROPRIATE ACTION NECESSARY FOR COMPLIANCE WITH
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT OR OF
ANY EXEMPTION FROM REGISTRATION AVAILABLE UNDER THE
1933 ACT HAS BEEN TAKEN; AND
(d) OPTIONEE SHALL HAVE PROVIDED THE CORPORATION WITH
WRITTEN ASSURANCE IN FORM AND SUBSTANCE SATISFACTORY
TO THE CORPORATION, THAT THE PROPOSED DISPOSITION
WILL NOT RESULT IN THE CONTRAVENTION OF ANY TRANSFER
RESTRICTIONS APPLICABLE TO THE PURCHASED SHARES
PURSUANT TO THE PROVISIONS OF THE COMMISSIONER'S
RULES IDENTIFIED IN SECTION 2.5.
The Corporation shall not be required (i) to transfer on its books
any Purchased Shares which have been sold or transferred in violation of the
provisions of this Article II or (ii) to treat as the
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<PAGE> 29
owner of the Purchased Shares, or otherwise to accord voting or dividend rights
to, any transferee to whom the Purchased Shares have been transferred in
contravention of this Agreement.
2.4 RESTRICTIVE LEGENDS. IN ORDER TO REFLECT THE RESTRICTIONS ON
DISPOSITION OF THE PURCHASED SHARES, THE STOCK CERTIFICATES FOR
THE PURCHASED SHARES WILL BE ENDORSED WITH RESTRICTIVE LEGENDS,
INCLUDING THE FOLLOWING LEGEND:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER SUCH ACT, (B) A 'NO ACTION' LETTER OF THE SECURITIES
AND EXCHANGE COMMISSION WITH RESPECT TO SUCH SALE OR OFFER, OR (C)
SATISFACTORY ASSURANCES TO THE CORPORATION THAT REGISTRATION UNDER
SUCH ACT IS NOT REQUIRED WITH RESPECT TO SUCH SALE OR OFFER."
2.5 SHAREHOLDERS' AGREEMENT. OPTIONEE HEREBY ACKNOWLEDGES THAT IN
CERTAIN INSTANCES HE OR SHE MAY BE REQUIRED TO EXECUTE A
SHAREHOLDERS' AGREEMENT AS A CONDITION TO THE PURCHASE OF SHARES
HEREUNDER; SUCH SHAREHOLDERS' AGREEMENT SHALL BE IN THE FORM
ATTACHED AS EXHIBIT C TO THE AGREEMENT EVIDENCING THE GRANT OF
OPTIONS TO OPTIONEE.
2.6 SHAREHOLDER RIGHTS. UNTIL SUCH TIME AS THE CORPORATION
ACTUALLY EXERCISES ITS REPURCHASE RIGHTS UNDER THIS AGREEMENT,
OPTIONEE (OR ANY SUCCESSOR IN INTEREST) SHALL HAVE ALL THE RIGHTS
OF A SHAREHOLDER (INCLUDING VOTING AND DIVIDEND RIGHTS) WITH
RESPECT TO THE PURCHASED SHARES, SUBJECT, HOWEVER, TO THE TRANSFER
RESTRICTIONS OF ARTICLE III AND SECTION 8.7.
3. TRANSFER RESTRICTIONS
3.1 RESTRICTION ON TRANSFER. OPTIONEE SHALL NOT TRANSFER, ASSIGN,
ENCUMBER OR OTHERWISE DISPOSE OF ANY OF THE PURCHASED SHARES IN
CONTRAVENTION OF THE CORPORATION'S FIRST REFUSAL RIGHT UNDER
ARTICLE IV. SUCH RESTRICTIONS ON TRANSFER, HOWEVER, SHALL NOT BE
APPLICABLE TO (i) A GRATUITOUS TRANSFER OF THE PURCHASED SHARES
MADE TO THE OPTIONEE'S SPOUSE OR ISSUE, INCLUDING ADOPTED
CHILDREN, OR TO A TRUST FOR THE EXCLUSIVE BENEFIT OF THE OPTIONEE
OR THE OPTIONEE'S SPOUSE OR ISSUE, (ii) A TRANSFER OF TITLE TO THE
PURCHASED SHARES EFFECTED PURSUANT TO THE OPTIONEE'S WILL OR THE
LAWS OF INTESTATE SUCCESSION, (iii) A TRANSFER TO THE CORPORATION
IN PLEDGE AS SECURITY FOR ANY PURCHASE-MONEY INDEBTEDNESS INCURRED
BY THE OPTIONEE IN CONNECTION WITH THE ACQUISITION OF THE
PURCHASED SHARES OR (v) MARITAL DISSOLUTION AS PROVIDED IN
ARTICLE VI.
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3.2 TRANSFEREE OBLIGATIONS. EACH PERSON (OTHER THAN THE
CORPORATION) TO WHOM THE PURCHASED SHARES ARE TRANSFERRED BY MEANS
OF ONE OF THE PERMITTED TRANSFERS SPECIFIED IN PARAGRAPH 3.1 MUST,
AS A CONDITION PRECEDENT TO THE VALIDITY OF SUCH TRANSFER,
ACKNOWLEDGE IN WRITING TO THE CORPORATION THAT SUCH PERSON IS
BOUND BY EACH AND EVERY OF THE PROVISIONS OF THIS AGREEMENT AND
THAT THE TRANSFERRED SHARES ARE SUBJECT TO THE CORPORATION'S FIRST
REFUSAL RIGHT AND PURCHASE OPTION GRANTED HEREUNDER AND THE MARKET
STAND-OFF OBLIGATIONS SET FORTH IN SECTION 8.7, TO THE SAME EXTENT
SUCH SHARES WOULD BE SO SUBJECT IF RETAINED BY THE OPTIONEE.
3.3 DEFINITION OF OWNER. FOR PURPOSES OF ARTICLE IV OF THIS
AGREEMENT, THE TERM "OWNER" SHALL INCLUDE THE OPTIONEE AND ALL
SUBSEQUENT HOLDERS OF THE PURCHASED SHARES WHO DERIVE THEIR CHAIN
OF OWNERSHIP THROUGH A PERMITTED TRANSFER FROM THE OPTIONEE IN
ACCORDANCE WITH PARAGRAPH 3.1.
4. RIGHT OF FIRST REFUSAL
4.1 GRANT. THE CORPORATION IS HEREBY GRANTED THE RIGHT OF FIRST
REFUSAL ("FIRST REFUSAL RIGHT"), EXERCISABLE IN CONNECTION WITH
ANY PROPOSED SALE OR OTHER TRANSFER OF THE PURCHASED SHARES. FOR
PURPOSES OF THIS ARTICLE IV, THE TERM "TRANSFER" SHALL INCLUDE ANY
ASSIGNMENT, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION FOR VALUE OF
THE PURCHASED SHARES INTENDED TO BE MADE BY THE OWNER, BUT SHALL
NOT INCLUDE ANY OF THE PERMITTED TRANSFERS UNDER PARAGRAPH 3.1.
4.2 NOTICE OF INTENDED DISPOSITION. IN THE EVENT THE OWNER DESIRES
TO ACCEPT A BONA FIDE THIRD-PARTY OFFER FOR ANY OR ALL OF THE
PURCHASED SHARES (THE SHARES SUBJECT TO SUCH OFFER TO BE
HEREINAFTER CALLED, SOLELY FOR THE PURPOSES OF THIS ARTICLE IV,
THE "TARGET SHARES"), OWNER SHALL PROMPTLY (i) DELIVER TO THE
SECRETARY OF THE CORPORATION WRITTEN NOTICE (THE "DISPOSITION
NOTICE") OF THE OFFER AND THE BASIC TERMS AND CONDITIONS THEREOF,
INCLUDING THE PROPOSED PURCHASE PRICE, AND (ii) PROVIDE
SATISFACTORY PROOF THAT THE DISPOSITION OF THE TARGET SHARES TO
THE THIRD-PARTY OFFEROR WOULD NOT BE IN CONTRAVENTION OF THE
REPRESENTATIONS MADE BY OPTIONEE IN ARTICLE II OF THIS AGREEMENT.
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4.3 EXERCISE OF RIGHT. THE CORPORATION (OR ITS ASSIGNEES) SHALL,
FOR A PERIOD OF THIRTY (30) DAYS FOLLOWING RECEIPT OF THE
DISPOSITION NOTICE, HAVE THE RIGHT TO REPURCHASE ANY OR ALL OF THE
TARGET SHARES SPECIFIED IN THE DISPOSITION NOTICE UPON
SUBSTANTIALLY THE SAME TERMS AND CONDITIONS SPECIFIED THEREIN.
SUCH RIGHT SHALL BE EXERCISABLE BY WRITTEN NOTICE (THE "EXERCISE
NOTICE") DELIVERED TO OWNER PRIOR TO THE EXPIRATION OF THE THIRTY
(30) DAY EXERCISE PERIOD. IF SUCH RIGHT IS EXERCISED WITH RESPECT
TO ALL THE TARGET SHARES SPECIFIED IN THE DISPOSITION NOTICE, THE
CORPORATION (OR ITS ASSIGNEES) SHALL EFFECT THE REPURCHASE OF THE
TARGET SHARES, INCLUDING PAYMENT OF THE PURCHASE PRICE, NOT MORE
THAN THIRTY (30) DAYS THEREAFTER; AND AT SUCH TIME OWNER SHALL
DELIVER TO THE CORPORATION THE CERTIFICATES REPRESENTING THE
TARGET SHARES TO BE REPURCHASED, EACH CERTIFICATE TO BE PROPERLY
ENDORSED FOR TRANSFER. THE TARGET SHARES SO PURCHASED SHALL
THEREUPON BE CANCELLED AND CEASE TO BE ISSUED AND OUTSTANDING
SHARES OF THE CORPORATION'S COMMON STOCK. HOWEVER, SHOULD THE
PURCHASE PRICE SPECIFIED IN THE NOTICE OF INTENDED DISPOSITION BE
PAYABLE IN PROPERTY OTHER THAN CASH OR EVIDENCES OF INDEBTEDNESS,
THE CORPORATION (OR ITS ASSIGNEES) SHALL HAVE THE RIGHT TO PAY THE
PURCHASE PRICE IN THE FORM OF CASH EQUAL IN AMOUNT TO THE VALUE OF
SUCH PROPERTY. IF THE OWNER AND THE CORPORATION (OR ITS ASSIGNEES)
CANNOT AGREE ON SUCH CASH VALUE WITHIN TEN (10) DAYS AFTER THE
CORPORATION'S RECEIPT OF THE DISPOSITION NOTICE, THE VALUATION
SHALL BE MADE BY AN APPRAISER OF RECOGNIZED STANDING SELECTED BY
THE OWNER AND THE CORPORATION (OR ITS ASSIGNEES) OR, IF THEY
CANNOT AGREE ON AN APPRAISER WITHIN TWENTY (20) DAYS AFTER THE
CORPORATION'S RECEIPT OF THE DISPOSITION NOTICE, EACH SHALL SELECT
AN APPRAISER OF RECOGNIZED STANDING AND THE TWO APPRAISERS SHALL
DESIGNATE A THIRD APPRAISER OF RECOGNIZED STANDING, WHOSE
APPRAISAL SHALL BE DETERMINATIVE OF SUCH VALUE. NOTWITHSTANDING
ANY OTHER PROVISION HEREOF, THE CLOSING SHALL THEN BE HELD ON THE
LATER OF (i) THE 30TH DAY FOLLOWING THE CORPORATION'S (OR ITS
ASSIGNEES') EXERCISE OF ITS REPURCHASE RIGHTS HEREUNDER OR (ii)
THE 15TH DAY AFTER SUCH CASH VALUATION SHALL HAVE BEEN MADE.
4.4 ASSIGNMENT; NON-EXERCISE OF RIGHT.
(a) Assignment to Series A Holders. In the event the Corporation
chooses not to, or is unable to, exercise its First Refusal Right, and
does not assign such right to another director or employee of the
Corporation, then the Corporation shall assign such right to the
holders of Series A Preferred Stock ("Series A Holders"), on a pro rata
basis, or any other basis agreed upon by the Corporation and the Series
A Holders, within fifteen (15) days following receipt of the
Disposition Notice.
(b) Non-Exercise of Right. In the event the Corporation (or its
assignees) does not exercise its First Refusal Right by delivery of the
Exercise Notice to Owner within thirty (30) days following the date of
the Corporation's receipt of the Disposition Notice, Owner shall have a
period of fifteen (15) days thereafter in which to sell or otherwise
dispose of the Target Shares upon terms and conditions (including the
purchase price) no more favorable to the third-party purchaser than
those specified in the Disposition Notice; provided, however, that any
such sale or disposition must not be effected in contravention of the
representations made by the Optionee in Article II of this Agreement.
The third-party purchaser shall acquire the Target Shares free and
clear of all the terms and provisions of this Agreement (including the
Corporation's First Refusal Right hereunder). In the event Owner does
not sell or otherwise dispose of the Target Shares within the specified
fifteen (15) day period, the Corporation's First Refusal Right shall
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continue to be applicable to any subsequent disposition of the Target
Shares by Owner until such right lapses in accordance with paragraph
4.7.
4.5 PARTIAL EXERCISE OF RIGHT. IN THE EVENT THE CORPORATION (OR
ITS ASSIGNEES) MAKES A TIMELY EXERCISE OF THE FIRST REFUSAL RIGHT
WITH RESPECT TO A PORTION, BUT NOT ALL, OF THE TARGET SHARES
SPECIFIED IN THE DISPOSITION NOTICE, OWNER SHALL EFFECT THE SALE
OF THE TARGET SHARES TO THE CORPORATION (OR ITS ASSIGNEES) OF THE
PORTION OF THE TARGET SHARES WHICH THE CORPORATION (OR ITS
ASSIGNEES) HAS ELECTED TO PURCHASE, SUCH SALE TO BE EFFECTED IN
SUBSTANTIAL CONFORMITY WITH THE PROVISIONS OF PARAGRAPH 4.3. THAT
PORTION OF THE TARGET SHARES NOT PURCHASED BY THE CORPORATION MAY
BE SOLD TO A THIRD-PARTY PURCHASER IN COMPLIANCE WITH THE
REQUIREMENTS OF PARAGRAPH 4.4.
4.6 RECAPITALIZATION.
(a) IN THE EVENT OF ANY STOCK DIVIDEND, STOCK SPLIT,
RECAPITALIZATION OR OTHER TRANSACTION AFFECTING THE CORPORATION'S
OUTSTANDING COMMON STOCK AS A CLASS EFFECTED WITHOUT RECEIPT OF
CONSIDERATION, THEN ANY NEW, SUBSTITUTED OR ADDITIONAL SECURITIES OR
OTHER PROPERTY WHICH IS BY REASON OF SUCH TRANSACTION DISTRIBUTED WITH
RESPECT TO THE PURCHASED SHARES SHALL BE IMMEDIATELY SUBJECT TO THE
CORPORATION'S FIRST REFUSAL RIGHT AND PURCHASE OPTION (AS DEFINED IN
ARTICLE V HEREUNDER), BUT ONLY TO THE EXTENT THE PURCHASED SHARES ARE
AT THE TIME COVERED BY SUCH RIGHTS.
(b) IN THE EVENT OF ANY OF THE FOLLOWING TRANSACTIONS
(a "CORPORATE TRANSACTION"):
(i) A MERGER OR ACQUISITION IN WHICH THE CORPORATION IS NOT
THE SURVIVING ENTITY, EXCEPT FOR A TRANSACTION THE PRINCIPAL
PURPOSE OF WHICH IS TO CHANGE THE STATE IN WHICH THE CORPORATION
IS INCORPORATED,
(ii) THE SALE, TRANSFER OR OTHER DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE CORPORATION OR
(iii) ANY OTHER CORPORATE REORGANIZATION OR BUSINESS
COMBINATION IN WHICH FIFTY PERCENT (50%) OR MORE OF THE
OUTSTANDING VOTING STOCK OF THE CORPORATION IS TRANSFERRED TO
DIFFERENT HOLDERS IN A SINGLE TRANSACTION OF THE CORPORATION OR A
SERIES OF RELATED TRANSACTIONS, THEN THE CORPORATION'S FIRST
REFUSAL RIGHT, SPECIAL REPURCHASE RIGHT AND PURCHASE OPTION SHALL,
TO THE EXTENT THE LAPSE PROVISIONS OF SECTION 4.7 ARE NOT
OTHERWISE APPLICABLE, REMAIN IN FULL FORCE AND EFFECT AND SHALL
APPLY TO THE NEW CAPITAL STOCK OR OTHER PROPERTY RECEIVED IN
EXCHANGE FOR THE PURCHASED SHARES IN CONSUMMATION OF THE CORPORATE
TRANSACTION, BUT ONLY TO THE EXTENT THE PURCHASED SHARES ARE AT
THE TIME COVERED BY SUCH RIGHTS.
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<PAGE> 33
4.7 LAPSE. THE FIRST REFUSAL RIGHT UNDER THIS ARTICLE IV AND THE
PURCHASE OPTION UNDER ARTICLE V SHALL LAPSE AND CEASE TO HAVE
EFFECT UPON THE EARLIEST OF (i) THE FIRST DATE ON WHICH SHARES OF
THE CORPORATION'S COMMON STOCK ARE HELD OF RECORD BY MORE THAN
FIVE HUNDRED (500) PERSONS, (ii) THE SALE, TRANSFER OR OTHER
DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE CORPORATION'S
ASSETS OR FIFTY PERCENT (50%) OR MORE OF THE CORPORATION'S
OUTSTANDING VOTING STOCK FOR CASH CONSIDERATION OR FREELY
TRADEABLE SECURITIES, (iii) A DETERMINATION IS MADE BY THE
CORPORATION'S BOARD OF DIRECTORS THAT A PUBLIC MARKET EXISTS FOR
THE OUTSTANDING SHARES OF THE CORPORATION'S COMMON STOCK OR (iv)
THE CLOSING OF A BONA FIDE, FIRM COMMITMENT UNDERWRITTEN PUBLIC
OFFERING OF THE COMMON STOCK OF THE CORPORATION PURSUANT TO A
REGISTRATION STATEMENT DECLARED EFFECTIVE UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, RESULTING IN AGGREGATE PROCEEDS TO THE
CORPORATION OF AT LEAST $5,000,000 AT A PUBLIC OFFERING PRICE OF
MORE THAN $5.00 PER SHARE, ADJUSTED TO REFLECT ANY STOCK DIVIDEND,
STOCK SPLIT OR OTHER RECAPITALIZATION OF THE CORPORATION EFFECTED
AFTER THE DATE OF THIS AGREEMENT.
5. PURCHASE OPTION
5.1 Corporate Option. In the event Optionee ceases to be a Service
Provider of the Corporation, the Corporation shall have a right to purchase all
or a portion of such Purchased Shares for cash at the Fair Market Value (as
defined below) of such shares (the "Purchase Option"). The Corporation shall
exercise its Purchase Option by delivery of written notice to Optionee within 30
days of the Termination Date (as defined in Section 5.4 hereunder). The payment
of the purchase price by the Corporation and the delivery of the stock
certificates by the Optionee shall occur at a time and place mutually agreed by
the parties within 15 days of the receipt of notice by Optionee of the
Corporation's exercise of its Purchase Option.
5.2 Series A Holder's Option. In the event the Corporation chooses not
to, or is unable to, exercise its Purchase Option, and does not assign such
option to another employee or director of the Corporation, then the Corporation
shall assign its Purchase Option to the Series A Holders on a pro rata basis, or
any other basis agreed upon by the Corporation and the Series A Holders, within
15 days after the Termination Date. In such event, the Series A Holders shall
have all of the rights set forth in Section 5.1 above. The Series A Holders
shall be third party beneficiaries with respect to this Article V.
5.3 Lapse of Option. The Purchase Option under this Article V shall
lapse and cease to have effect upon the earlier to occur of (i) the first date
upon which the First Refusal Right under Article IV lapses, or (ii) the
expiration of the thirty (30)-day exercise period specified in Section 5.1, to
the extent the Purchase Option is not timely exercised in accordance with such
paragraph.
5.4 Definitions. As used herein, the following terms shall be defined:
(i) "Termination Date" shall mean the date upon which Optionee
first ceases to be Service Provider of the Corporation, whether due to
termination, resignation, death, disability or any other reason; and
(ii) "Fair Market Value" shall be determined pursuant to Article
V, Section 1.D of the Corporation's 1992 Stock Option Plan.
(iii) "Series A Holders" shall mean the holders of Series A
Preferred Stock of the Corporation.
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<PAGE> 34
6. MARITAL DISSOLUTION OR LEGAL SEPARATION
6.1 Grant. In connection with the dissolution of the Optionee's
marriage or the legal separation of the Optionee and the Optionee's spouse, the
Corporation shall have the right (the "Special Purchase Right"), exercisable at
any time during the thirty (30)-day period following the Corporation's receipt
of the required Dissolution Notice under Section 6.2, to purchase from the
Optionee's spouse, in accordance with the provisions of Section 6.3, all or any
portion of the Purchased Shares (including any interest therein) which would
otherwise be awarded to such spouse in settlement of any community property or
other marital property rights such spouse may have in such shares.
6.2 Notice of Decree or Agreement. The Optionee shall promptly provide
the Secretary of the Corporation with written notice ("Dissolution Notice") of
(i) the entry of any judicial decree or order resolving the property rights of
the Optionee and the Optionee's spouse in connection with their marital
dissolution or legal separation or (ii) the execution of any contract or
agreement relating to the distribution or division of such property rights. The
Dissolution Notice shall be accompanied by a copy of the actual decree of
dissolution or settlement agreement between the Optionee and the Optionee's
spouse which provides for the award to the spouse of one or more Purchased
Shares in settlement of any community property or other marital property rights
such spouse may have in such shares.
6.3 Exercise of Special Purchase Right. The Special Purchase Right
shall be exercisable by written notice ("Purchase Notice") delivered to the
Optionee and the Optionee's spouse within thirty (30) days after the
Corporation's receipt of the Dissolution Notice. The Purchase Notice shall
indicate the number of shares to be purchased, the date the purchase is to be
effected (such date to be not less than five (5) business days, nor more than
ten (10) business days, after the date of the Purchase Notice), and the fair
market value to be paid for such Purchased Shares. The Optionee (or the
Optionee's spouse, to the extent such spouse has physical possession of the
Purchased Shares) shall, prior to the close of business on the date specified
for the purchase, deliver to the Secretary of the Corporation the certificates
representing the shares to be purchased, each certificate to be properly
endorsed for transfer. The Corporation shall, concurrently with the receipt of
such stock certificates, pay to the Optionee's spouse (in cash or cash
equivalents) an amount equal to the fair market value specified for such shares
in the Purchase Notice.
If the Optionee's spouse does not agree with the fair market value
specified for the shares in the Purchase Notice, then the spouse shall promptly
notify the Corporation in writing of such disagreement and the fair market value
of such shares shall thereupon be determined by an appraiser of recognized
standing selected by the Corporation and the spouse. If they cannot agree on an
appraiser within twenty (20) days after the date of the Purchase Notice, each
shall select an appraiser of recognized standing, and the two appraisers shall
designate a third appraiser of recognized standing whose appraisal shall be
determinative of such value. The cost of the appraisal shall be shared equally
by the Corporation and the Optionee's spouse. The closing shall then be held on
the fifth business day following the completion of such appraisal; provided,
however, that if the appraised value is more than fifteen percent (15%) greater
than the fair market value specified for the shares in the Purchase Notice, the
Corporation shall have the right, exercisable prior to the expiration of such
five (5) business-day period, to rescind the exercise of the Special Purchase
Right and thereby revoke its election to purchase the shares awarded to the
spouse.
6.4 Lapse. The Special Purchase Right under this Article VI shall
lapse and cease to have effect upon the earlier to occur of (i) the first date
on which the First Refusal Right under Article IV
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lapses or (ii) the expiration of the thirty (30)-day exercise period specified
in Section 6.3, to the extent the Special Purchase Right is not timely exercised
in accordance with such paragraph.
7. GENERAL PROVISIONS.
7.1 Assignment. Subject to the prior assignment rights of the Series A
Holders hereunder, the Corporation may assign its First Refusal Right under
Article IV and/or its Purchase Option under Article V and/or its Special
Purchase Right under Article VI to any person or entity selected by the
Corporation's Board of Directors, including (without limitation) one or more
shareholders of the Corporation.
7.2 Definitions. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) ANY CORPORATION (OTHER THAN THE CORPORATION) IN AN UNBROKEN
CHAIN OF CORPORATIONS ENDING WITH THE CORPORATION SHALL BE CONSIDERED
TO BE A PARENT CORPORATION OF THE CORPORATION, PROVIDED EACH SUCH
CORPORATION IN THE UNBROKEN CHAIN (OTHER THAN THE CORPORATION) OWNS, AT
THE TIME OF THE DETERMINATION, STOCK POSSESSING FIFTY PERCENT (50%) OR
MORE OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK IN ONE
OF THE OTHER CORPORATIONS IN SUCH CHAIN.
(ii) EACH CORPORATION (OTHER THAN THE CORPORATION) IN AN UNBROKEN
CHAIN OF CORPORATIONS BEGINNING WITH THE CORPORATION SHALL BE
CONSIDERED TO BE A SUBSIDIARY OF THE CORPORATION, PROVIDED EACH SUCH
CORPORATION (OTHER THAN THE LAST CORPORATION) IN THE UNBROKEN CHAIN
OWNS, AT THE TIME OF THE DETERMINATION, STOCK POSSESSING FIFTY PERCENT
(50%) OR MORE OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF
STOCK IN ONE OF THE OTHER CORPORATIONS IN SUCH CHAIN.
7.3 No Employment or Service Contract. Except to the extent the terms
of any written employment or service contract with the Optionee may expressly
provide otherwise, the Corporation (or any parent or subsidiary corporation
employing or retaining Optionee) is under no obligation to continue the Service
Provider status of Optionee for any period of specific duration and may
terminate such Service Provider status at any time, with or without cause. For
purposes of this Agreement, the Optionee shall be deemed to be a Service
Provider to the Corporation for so long as the Optionee renders periodic
services to the Corporation or one or more of its parent or subsidiary
corporations, whether as an employee, non-employee member of the Board of
Directors, or an independent non-employee consultant.
7.4 Notices. Any notice required in connection with (i) the First
Refusal Right, (ii) the Purchase Option, (iii) the Special Purchase Right or
(iv) the disposition of any Purchased Shares covered thereby shall be given in
writing and shall be deemed effective upon personal delivery or upon deposit in
the United States mail, registered or certified, postage prepaid and addressed
to the party entitled to such notice at the address indicated below such party's
signature line on this Agreement or at such other address as such party may
designate by 10 days advance written notice under this paragraph 7.4 to all
other parties to this Agreement.
7.5 No Waiver. The failure of the Corporation (or its assignees) in any
instance to exercise the First Refusal Right granted under Article IV, shall not
constitute a waiver of any other rights of first refusal that may subsequently
arise under the provisions of this Agreement or any other agreement between the
Corporation and the Optionee. No waiver of any breach or condition of this
Agreement
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shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
7.6 Cancellation of Shares. If the Corporation (or its assignees) shall
make available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
7.7 Legend. All certificates representing the Purchased Shares shall be
endorsed with the following legend:
"THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF EXCEPT IN
CONFORMITY WITH THE TERMS OF A WRITTEN AGREEMENT, DATED ___________, 19___, AS
AMENDED FROM TIME TO TIME, BETWEEN THE CORPORATION AND THE REGISTERED HOLDER OF
THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS
CERTAIN RIGHTS OF FIRST REFUSAL TO THE CORPORATION (OR ITS ASSIGNEES) UPON THE
SALE, ASSIGNMENT, TRANSFER, ENCUMBRANCE OR OTHER DISPOSITION OF THE
CORPORATION'S SHARES AND IMPOSES CERTAIN OTHER RESTRICTIONS ON TRANSFER. THE
CORPORATION WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE
HOLDER HEREOF WITHOUT CHARGE."
8. MISCELLANEOUS PROVISIONS.
8.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
in its judgment deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement.
8.2 Agreement is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the express terms and provisions of the
Plan.
8.3 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, as such laws are
applied to contracts entered into and performed in such State.
8.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
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8.5 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms and conditions hereof.
8.6 Power of Attorney. Optionee's spouse hereby appoints Optionee his
or her true and lawful attorney in fact, for him or her and in his or her name,
place and stead, and for his or her use and benefit, to agree to any amendment
or modification of this Agreement and to execute such further instruments and
take such further actions as may reasonably be necessary to carry out the intent
of this Agreement. Optionee's spouse further gives and grants unto Optionee as
his or her attorney in fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as he or she might or could do if personally present, with full power
of substitution and revocation, hereby ratifying and confirming all that
Optionee shall lawfully do and cause to be done by virtue of this power of
attorney.
8.7 Market Stand-Off Obligations. Notwithstanding any other provisions
hereof, in the event that the Optionee is an officer or director of the
Corporation, Optionee hereby agrees that during the period of duration specified
by the Corporation and an underwriter of common stock or other securities of the
Corporation, following the effective date of a registration statement of the
Corporation filed under the Securities Act of 1933 (the "Act"), Optionee shall
not, to the extent requested by the Corporation and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Corporation held by Optionee at any time during such period
(including the Purchased Shares) except common stock included in such
registration; provided, however that:
(a) SUCH AGREEMENT SHALL BE APPLICABLE ONLY TO THE FIRST SUCH
REGISTRATION STATEMENT OF THE CORPORATION WHICH COVERS COMMON STOCK (OR
OTHER SECURITIES) TO BE SOLD ON ITS BEHALF TO THE PUBLIC IN AN
UNDERWRITTEN OFFERING; AND
(b) ALL OFFICERS AND DIRECTORS OF THE CORPORATION ENTER INTO
SIMILAR AGREEMENTS.
In order to enforce the foregoing covenant, the Corporation may
impose stop-transfer instructions with respect to the registrable securities of
the Optionee (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first indicated above.
Company:
RISK DATA CORPORATION, a California corporation
By:____________________________________________
Title:_________________________________________
Address: Two Venture Plaza
Suite 400
Irvine, CA 92718-3331
Optionee:
_______________________________________________
Address:
Optionee's Spouse:
_______________________________________________
Address:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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<PAGE> 1
Exhibit 4.02
RISK DATA CORPORATION
STOCK OPTION AGREEMENT
AGREEMENT made as of the ____ day of _________, 19__, by and between Risk Data
Corporation, a California corporation (hereinafter called "Company"), and
__________________ (hereinafter called "Optionee").
WITNESSETH:
RECITALS
A. Optionee is an individual who is to render valuable services as a
______________ of the Company.
B. The granted option is intended to be a non-qualified stock option which
does not satisfy the requirements of Section 422A of the Internal Revenue Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set forth
in this Agreement, there is hereby granted to Optionee, as of the date of this
Agreement (the "Grant Date"), a stock option to purchase up to ________ shares
of the Company's Common Stock (the "Optioned Shares") from time to time during
the option term at the option price of $_____ per share (the "Option Price").
2. Option Term. This option shall have a maximum term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on ___________, ____ (the "Expiration Date"), unless sooner terminated
in accordance with Paragraph 5.
3. Option Nontransferable; Exception. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution and may be exercised, during Optionee's lifetime, only
by Optionee.
4. Dates of Exercise. Optionee may, within the specified term of this
option and pursuant to the provisions of this Agreement, purchase the Optioned
Shares in accordance with the following schedule:
(i) Optionee shall not have a vested interest in any of the
Optioned Shares for the first six (6) calendar months measured from the
Commencement Date (as defined below);
(ii) Upon the expiration of the sixth calendar month measured
from the Commencement Date, Optionee shall vest in _______ of the Optioned
Shares;
(iii) Upon the expiration of each calendar month following
such first six (6) calendar months measured from the Commencement Date, Optionee
shall vest in the number of shares of stock which equals one forty-eighth (1/48)
of the Stock (____ shares after the expiration of each such calendar month, as
adjusted pursuant to Section 6 hereof);
(iv) Accordingly, Optionee shall have a fully vested interest
in all the Optioned Shares after forty-eight (48) calendar months measured from
the Commencement Date; and
<PAGE> 2
(v) "Commencement Date" shall mean _____________, 19__.
5. Accelerated Termination of Option Term. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
(i) Except as otherwise provided in subparagraphs (ii), (iii)
or (iv) below, should Optionee cease to be an employee of the Company at any
time during the option term, then the Optionee shall have up to a three (3)
month period commencing with the date of such cessation of employee status, in
which to exercise this option for any or all of the Optioned Shares for which
this option is at the time of such cessation exercisable, but in no event shall
this option be exercisable at any time after the Expiration Date. Upon the
expiration of such three (3) month period or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be outstanding.
(ii) Should Optionee die while this option is outstanding,
then the executors or administrators of Optionee's estate or Optionee's heirs or
legatees (as the case may be) shall have the right to exercise this option for
the number of Optioned Shares (if any) for which the option is exercisable on
the date of the Optionee's death. Such right shall lapse and this option shall
cease to be exercisable upon the earlier of (i) the first anniversary of the
date of the Optionee's death or (ii) the Expiration Date.
(iii) Should Optionee become permanently disabled and cease by
reason thereof to be an employee of the Company at any time during the option
term, then the Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of employee status) in which to exercise this
option for any or all of the Optioned Shares for which this option is
exercisable at the time of such cessation of employee status; provided, however,
that in no event shall this option be exercised at any time after the Expiration
Date. Optionee shall be deemed to be permanently disabled if Optionee is, by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of not less than twelve (12)
months, unable to perform his/her usual duties for the Company. Upon the
expiration of such limited period of exercisability or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding.
6. Adjustment in Option Shares.
(a) In the event any change is made to the Common Stock
issuable upon exercise of Optioned Shares under this Agreement by reason of any
stock split, stock dividend, combination of shares, or other change affecting
the outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments will be made to (i) the total number of Optioned Shares
subject to this option and (ii) the Option Price payable per share in order to
reflect such change and thereby preclude a dilution or enlargement of benefits
hereunder.
(b) If the Company is the surviving entity in any merger or
other business combination, then this option, if outstanding immediately after
such merger or other business combination, shall be appropriately adjusted to
apply and pertain to the number and class of securities which would be issuable
to the Optionee in the consummation of such merger or business combination if
the option were exercised immediately prior to such merger or business
combination, and appropriate adjustments shall also be made to the Option Price
payable per share, provided the aggregate Option Price payable hereunder shall
remain the same.
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<PAGE> 3
7. Privilege of Stock Ownership. The holder of this option shall not have
any of the rights of a shareholder with respect to the Optioned Shares until
such individual shall have exercised the option and paid the Option Price.
8. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or
any part of the Optioned Shares for which this option is at the time
exercisable, Optionee (or in the case of exercise after Optionee's death, the
Optionee's executor, administrator, heir or legatee, as the case may be) must
take the following actions:
(i) Execute and deliver to the Secretary of the
Company a stock purchase agreement in substantially the form of Exhibit A to
this Agreement (the "Purchase Agreement");
(ii) In the event Optionee will beneficially own more
than 10,000 shares of the Company's Common Stock after such exercise, Optionee
shall enter into a Shareholders Agreement with the Company and certain other
shareholders in the form attached hereto as Exhibit "B".
(iii) Pay the aggregate option price for the
purchased shares in one or more of the following alternative forms:
(A) full payment, in cash or cash
equivalents; or
(B) full payment in shares of Common Stock
of the Company having a Fair Market
Value of the Exercise Date (as such
terms are defined below) equal to the
Option Price; or
(C) full payment in a combination of
shares of Common Stock of the Company
valued at Fair Market Value on the
Exercise Date and cash or cash
equivalents, equal in the aggregate to
the Option Price; or
(D) any other form which the Plan
Administrator may, in its discretion,
approve at the time of exercise in
accordance with the provisions of this
Agreement; and
(iv) Furnish to the Company appropriate documentation
that the person or persons exercising the option, if other than Optionee, have
the right to exercise this option.
(b) For purposes of Paragraph 8(a) above, the Fair Market
Value of a share of Common Stock shall be determined in accordance with
subparagraphs (i) through (iii) below, and the Exercise Date shall be the first
date on which there shall have been delivered to the Company both (I) the
executed Purchase Agreement and (II) the payment of the option price for the
purchased shares.
(i) If the Common Stock is not on the Exercise Date
listed or admitted to trading on any stock exchange, but is traded in the
over-the-counter market, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices (or if such information is available, the
closing selling price) of one share of Common Stock on the Exercise Date in the
over-the-counter market, as such prices are reported by the National Association
of Securities Dealers through its NASDAQ system or any successor system. If
there are no reported bid and asked prices (or closing selling price) for the
Common Stock on the Exercise Date, then the mean between the highest bid and
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<PAGE> 4
lowest asked prices (or closing selling price) on the last preceding date for
which such quotations exist shall be determinative of the Fair Market Value.
(ii) If the Common Stock is on the Exercise Date
listed or admitted to trading on any stock exchange, then the Fair Market Value
shall be the closing selling price of one share of Common Stock on the Exercise
Date on the stock exchange determined by the Board of Directors to be the
primary market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no reported sale of
Common Stock on such exchange on the Exercise Date, then the Fair Market Value
shall be the closing selling price on the exchange on the last preceding date
for which such quotations exists.
(iii) If the Common Stock is on the Exercise Date
neither listed or admitted to trading on any stock exchange nor traded in the
over-the-counter market, then the Fair Market Value shall be determined by the
Board of Directors after taking into account such factors as the Board of
Directors shall deem appropriate, including one or more independent professional
appraisals.
(c) This option shall be deemed to have been exercised with
respect to the number of Optioned Shares specified in the Purchase Agreement at
such time as the executed Purchase Agreement for such shares shall have been
delivered to the Company. Payment of the option price shall immediately become
due and shall accompany the Purchase Agreement. As soon thereafter as practical,
the Company shall mail or deliver to Optionee or to the other person or persons
exercising this option a certificate or certificates representing the shares so
purchased and paid for, with the appropriate legends affixed thereto.
(d) In no event may this option be exercised for any
fractional shares.
9. RIGHTS OF FIRST REFUSAL AND MARKET STAND OFF AGREEMENT. THE OPTIONEE
HEREBY AGREES THAT ALL OPTIONED SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION
SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE COMPANY AND ITS ASSIGNS TO REPURCHASE
SUCH SHARES AND CERTAIN LIMITATIONS OF DISPOSITION AND THE LIKE IN THE EVENT OF
AN UNDERWRITTEN PUBLIC OFFERING, IN ACCORDANCE WITH THE TERMS AND CONDITIONS
SPECIFIED IN THE PURCHASE AGREEMENT.
10. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of Optioned
Shares upon such exercise shall be subject to compliance by the Company and the
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which shares of the Company's
Common Stock may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee
shall execute and deliver to the Company such representations in writing as may
be requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee and the successors and assigns of the Company.
12. No Employment or Service Contract. Except to the extent the terms of
any employment or service contract between the Company and the Optionee may
expressly provide otherwise, the Company
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<PAGE> 5
(or any parent or subsidiary corporation of the Company employing Optionee)
shall be under no obligation to continue Optionee's status as an employee or
director for any period of specific duration and may terminate such status at
any time, with or without cause.
13. 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
Company in care of its Secretary at its corporate offices. Any notice required
to be given or delivered to Optionee at the address indicated below Optionee's
signature line of this Agreement. All notices shall be deemed to have been given
or delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
14. Withholding. Optionee hereby agrees to make appropriate arrangements
with the Company or parent or subsidiary corporation employing Optionee (if any)
for the satisfaction of any federal, state or local income tax withholding
requirements and federal social security employee tax requirements applicable to
the exercise of this option.
15. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of California.
16. Company Powers. This Agreement shall not in any way affect the right of
the Company to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
17. Approvals. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained. The
Company, however, shall use its best efforts to obtain all such approvals.
18. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate on its behalf by its duly authorized officer and Optionee has also
executed this Agreement in duplicate, all as of the day and year indicated
above.
Company:
RISK DATA CORPORATION, a
California corporation
By:
-------------------------------
Title:
-----------------------------
Address: 801 N. Parkcenter Drive,
Second Floor
Santa Ana, CA 92705
Optionee:
-----------------------------------
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Name:
---------------------------
Address:
---------------------------
---------------------------
---------------------------
[Signature Page To Stock Option Agreement]
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<PAGE> 7
AMENDMENT TO
RISK DATA CORPORATION
STOCK OPTION AGREEMENT
This Amendment to the Risk Data Corporation Stock Option Agreement
("Amendment"), is made and entered into as of ___________, 19__, by and among
Risk Data Corporation, a California corporation (the "Company"), and
________________ ("Optionee").
RECITALS
A. Optionee and the Company entered into the Risk Data Corporation Stock
Option Agreement dated ___________, 19__ ("Option Agreement") pursuant to which
the Company granted to Optionee options to purchase ________ shares of the
Company's common stock.
B. The Company and Optionee hereby desire to amend the Option Agreement as
set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Exhibit "A" of the Option Agreement is hereby replaced in its entirety
with the Stock Purchase Agreement attached hereto as Exhibit "A" ("Purchase
Agreement"), and the Company and Optionee hereby agree to be bound by the terms
and conditions of the Purchase Agreement upon execution thereof as provided in
the Option Agreement.
2. Section 8(a) of the Option Agreement is hereby amended to add a new
subsection 8(a)(iv) which shall read in its entirety as follows:
"(iv) In the event Optionee will beneficially own more than 10,000
shares of the Company's Common Stock after such exercise, Optionee
shall enter into a Shareholders' Agreement with the Company and certain
other shareholders in the form attached hereto as Exhibit "B"."
3. The Option Agreement is hereby amended to add a new Exhibit "B"
("Shareholders Agreement"), in the form of the Shareholders Agreement attached
hereto as Exhibit "B".
4. Except as amended in the manner described in Sections 1, 2 and 3 above,
the Option Agreement shall remain unchanged and shall remain in full force and
effect.
5. This Amendment to the Option Agreement shall be construed, in
accordance with, and the rights of the parties hereunder shall be governed by,
the laws of the State of California without regard to principles of conflict of
laws.
6. This Amendment to the Option Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7. This Amendment to the Option Agreement shall be binding upon, and inure
to the benefit of, the parties hereto, the respective successors and legal
representatives and their permitted assigns.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to the Option
Agreement to be effective as of the date first above written.
<PAGE> 8
RISK DATA CORPORATION,
a California corporation
By:
---------------------------------
Mark S. Hammond, President
---------------------------------
[OPTIONEE]
[SIGNATURE PAGE TO AMENDMENT TO
RISK DATA CORPORATION STOCK OPTION AGREEMENT]
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<PAGE> 9
RISK DATA CORPORATION
STOCK PURCHASE AGREEMENT
(Exercise of Option)
This Agreement is made as of this ____ day of ______________, ___, by
and among Risk Data Corporation, a California corporation ("Corporation"),
_______________________, the holder of a stock option pursuant to a
Non-Qualified Stock Option Agreement ("Optionee"), and _____________________,
the Optionee's spouse.
I. EXERCISE OF OPTION
1.1 Exercise. Optionee hereby purchases _____ shares of Common Stock
of the Corporation ("Purchased Shares") pursuant to that certain option
("Option") granted Optionee on ___________, ____ ("Grant Date") to purchase
up to ______________ shares of the Corporation's Common Stock ("Total
Purchasable Shares") at an option price of $_____ per share ("Option Price").
1.2 Payment. Concurrently with the delivery of this Agreement to the
Secretary of the Corporation, Optionee shall pay the Option Price for the
Purchased Shares in accordance with the provisions of the agreement between the
Corporation and Optionee evidencing the Option ("Option Agreement") and shall
deliver whatever additional documents may be required by the Option Agreement as
a condition for exercise.
II. INVESTMENT REPRESENTATIONS
2.1 Investment Intent. Optionee hereby warrants and represents that
Optionee is acquiring the Purchased Shares for Optionee's own account and not
with a view to their resale or distribution and that Optionee is prepared to
hold the Purchased Shares for an indefinite period and has no present intention
to sell, distribute or grant any participating interests in the Purchased
Shares. Optionee hereby acknowledges the fact that the Purchased Shares have not
been registered under the Securities Act of 1933, as amended (the "1933 Act"),
and that the Corporation is issuing the Purchased Shares to Optionee in reliance
on the representations made by Optionee herein.
2.2 Restricted Securities. Optionee hereby confirms that Optionee has
been informed that the Purchased Shares may not be resold or transferred unless
the Purchased Shares are first registered under the Federal securities laws or
unless an exemption from such registration is available. Accordingly, Optionee
hereby acknowledges that Optionee is prepared to hold the Purchased Shares for
an indefinite period and that Optionee is aware that Rule 144 of the Securities
and Exchange Commission issued under the 1933 Act is not presently available to
exempt the sale of the Purchased Shares from the registration requirements of
the 1933 Act. Should Rule 144 subsequently become available, Optionee is aware
that any sale of the Purchased Shares effected pursuant to the Rule may,
depending upon the status of Optionee as an "affiliate" or "non-affiliate" under
the Rule, be made only in limited amounts in accordance with the provisions of
the Rule, and that in no event may any Purchased Shares be sold pursuant to the
Rule until Optionee has held the Purchased Shares for the requisite holding
period following payment in cash of the Option Price for the Purchased Shares.
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<PAGE> 10
2.3 Disposition of Shares. Optionee hereby agrees that Optionee shall
make no disposition of the Purchased Shares (other than a permitted transfer
under paragraph 3.1) unless and until:
(a) Optionee shall have notified the Corporation of the
proposed disposition and provided a written summary of the terms and conditions
of the proposed disposition;
(b) Optionee shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares (including,
without limitation, the requirements imposed under Article IV and by Section 7.7
of this Agreement);
(c) Optionee shall have provided the Corporation with written
assurances from the Optionee and the opinion of the Corporation's counsel (at
the Corporation's expense), in form and substance reasonably satisfactory to the
Corporation, that (i) the proposed disposition does not require registration of
the Purchased Shares under the 1933 Act or (ii) all appropriate action necessary
for compliance with the registration requirements of the 1933 Act or of any
exemption from registration available under the 1933 Act has been taken.
The Corporation shall not be required (i) to transfer on its
books any Purchased Shares which have been sold or transferred in violation of
the provisions of this Article II or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Purchased Shares have been transferred in contravention of this
Agreement.
2.4 Restrictive Legends. In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with restrictive legends, including the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
(A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER SUCH ACT,
(B) A 'NO ACTION' LETTER OF THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH SALE OR OFFER, OR (C) SATISFACTORY ASSURANCES TO THE
CORPORATION THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED WITH
RESPECT TO SUCH SALE OR OFFER."
2.5 Shareholder Rights. Until such time as the Corporation actually
exercises its repurchase rights under this Agreement, Optionee (or any successor
in interest) shall have all the rights of a shareholder (including voting and
dividend rights) with respect to the Purchased Shares, subject, however, to the
transfer restrictions of Article III and Section 7.7.
III. TRANSFER RESTRICTIONS
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<PAGE> 11
3.1 Restriction on Transfer. Optionee shall not transfer, sell or
otherwise dispose of the Purchased Shares prior to the fifth anniversary of the
Grant Date. Optionee shall not transfer, assign, encumber or otherwise dispose
of any of the Purchased Shares in contravention of the Corporation's First
Refusal Right under Article IV. Such restrictions on transfer, however, shall
not be applicable to (i) a gratuitous transfer of the Purchased Shares made to
the Optionee's spouse or issue, including adopted children, or to a trust for
the exclusive benefit of the Optionee or the Optionee's spouse or issue, (ii) a
transfer of title to the Purchased Shares effected pursuant to the Optionee's
will or the laws of intestate succession, or (iii) a transfer to the Corporation
in pledge as security for any purchase-money indebtedness incurred by the
Optionee in connection with the acquisition of the Purchased Shares.
3.2 Transferee Obligations. Each person (other than the Corporation) to
whom the Purchased Shares are transferred by means of one of the permitted
transfers specified in paragraph 3.1 must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Corporation that such
person is bound by each and every of the provisions of this Agreement and that
the transferred shares are subject to the Corporation's First Refusal Right and
Purchase Option granted hereunder and the market stand-off obligations set forth
in Section 7.7, to the same extent such shares would be so subject if retained
by the Optionee.
3.3 Definition of Owner. For purposes of Article IV of this Agreement,
the term "Owner" shall include the Optionee and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a permitted
transfer from the Optionee in accordance with paragraph 3.1.
IV. RIGHT OF FIRST REFUSAL
4.1 Grant. The Corporation is hereby granted the right of first refusal
("First Refusal Right"), exercisable in connection with any proposed sale or
other transfer of the Purchased Shares. For purposes of this Article IV, the
term "transfer" shall include any assignment, pledge, encumbrance or other
disposition for value of the Purchased Shares intended to be made by the Owner,
but shall not include any of the permitted transfers under paragraph 3.1.
4.2 Notice of Intended Disposition. In the event the Owner desires to
accept a bona fide third-party offer for any or all of the Purchased Shares (the
shares subject to such offer to be hereinafter called, solely for the purposes
of this Article IV, the "Target Shares"), Owner shall promptly (i) deliver to
the Secretary of the Corporation written notice (the "Disposition Notice") of
the offer and the basic terms and conditions thereof, including the proposed
purchase price, and (ii) provide satisfactory proof that the disposition of the
Target Shares to the third-party offeror would not be in contravention of the
representations made by Optionee in Article II of this Agreement.
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4.3 Exercise of Right. The Corporation (or its assignees) shall, for a
period of thirty (30) days following receipt of the Disposition Notice, have the
right to repurchase any or all of the Target Shares specified in the Disposition
Notice upon substantially the same terms and conditions specified therein. Such
right shall be exercisable by written notice (the "Exercise Notice") delivered
to Owner prior to the expiration of the thirty (30) day exercise period. If such
right is exercised with respect to all the Target Shares specified in the
Disposition Notice, the Corporation (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than thirty (30) days thereafter; and at such time Owner shall deliver to
the Corporation the certificates representing the Target Shares to be
repurchased, each certificate to be properly endorsed for transfer. The Target
Shares so purchased shall thereupon be cancelled and cease to be issued and
outstanding shares of the Corporation's Common Stock. However, should the
purchase price specified in the notice of intended disposition be payable in
property other than cash or evidences of indebtedness, the Corporation (or its
assignees) shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If the Owner and the Corporation
(or its assignees) cannot agree on such cash value within ten (10) days after
the Corporation's receipt of the Disposition Notice, the valuation shall be made
by an appraiser of recognized standing selected by the Owner and the Corporation
(or its assignees) or, if they cannot agree on an appraiser within twenty (20)
days after the Corporation's receipt of the Disposition Notice, each shall
select an appraiser of recognized standing and the two appraisers shall
designate a third appraiser of recognized standing, whose appraisal shall be
determinative of such value. Notwithstanding any other provision hereof, the
closing shall then be held on the later of (i) the 30th day following the
Corporation's (or its assignees') exercise of its repurchase rights hereunder or
(ii) the 15th day after such cash valuation shall have been made.
4.4 Assignment; Non-Exercise of Right.
(a) Assignment to Series A Holders. In the event the
Corporation chooses not to, or is unable to, exercise its right of first refusal
hereunder, and does not assign such right to another director or employee of the
Corporation, then the Corporation shall assign such right to the holders of
Series A Preferred Stock ("Series A Holders"), on a pro rata basis, or any other
basis agreed upon by the Corporation and the Series A Holders, within fifteen
(15) days following receipt of the Disposition Notice.
(b) Non-Exercise of Right. In the event the Corporation (or
its assignees) does not exercise its right of first refusal hereunder by
delivery of the Exercise Notice to Owner within thirty (30) days following the
date of the Corporation's receipt of the Disposition Notice, Owner shall have a
period of fifteen (15) days thereafter in which to sell or otherwise dispose of
the Target Shares upon terms and conditions (including the purchase price) no
more favorable to the third-party purchaser than those specified in the
Disposition Notice; provided, however, that any such sale or disposition must
not be effected in contravention of the representations made by the Optionee in
Article II of this Agreement. The third-party purchaser shall acquire the Target
Shares free and clear of all the terms and provisions of this Agreement
(including the Corporation's First Refusal Right hereunder). In the event Owner
does not sell or otherwise dispose of the Target Shares within the specified
fifteen (15) day period, the Corporation's First Refusal Right shall continue to
be applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses in accordance with paragraph 4.7.
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<PAGE> 13
4.5 Partial Exercise of Right. In the event the Corporation (or its
assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:
(i) sale or other disposition of all the Target Shares to a
third-party purchaser in compliance with the requirements of paragraph 4.4, as
if the Corporation did not exercise the First Refusal Right hereunder; or
(ii) sale to the Corporation (or its assignees) of the portion
of the Target Shares which the Corporation (or its assignees) has elected to
purchase, such sale to be effected in substantial conformity with the provisions
of paragraph 4.3.
Failure of Owner to deliver timely notification to the
Corporation (or its assignees) under this paragraph 4.5 shall be deemed to be an
election by Owner to sell the Target Shares pursuant to alternative (i) above.
4.6 Recapitalization.
(a) In the event of any stock dividend, stock split,
recapitalization or other transaction affecting the Corporation's outstanding
Common Stock as a class effected without receipt of consideration, then any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Purchased Shares shall be
immediately subject to the Corporation's First Refusal Right and Purchase Option
hereunder, but only to the extent the Purchased Shares are at the time covered
by such rights.
(b) In the event of any of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Corporation
is not the surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Corporation is incorporated,
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation or
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<PAGE> 14
(iii) any other corporate reorganization or business
combination in which fifty percent (50%) or more of the outstanding voting stock
of the Corporation is transferred to different holders in a single transaction
of the Corporation or a series of related transactions,
then the Corporation's First Refusal Right, Purchase Option shall, to the extent
the lapse provisions of Section 4.7 are not otherwise applicable, remain in full
force and effect and shall apply to the new capital stock or other property
received in exchange for the Purchased Shares in consummation of the Corporate
Transaction, but only to the extent the Purchased Shares are at the time covered
by such rights.
4.7 Lapse. The First Refusal Right under this Article IV and the
Purchase Option under Article V shall lapse and cease to have effect upon the
earliest of (i) the first date on which shares of the Corporation's Common Stock
are held of record by more than five hundred (500) persons, (ii) the sale,
transfer or other disposition of all or substantially all of the Corporation's
assets or fifty percent (50%) or more of the Corporation's outstanding voting
stock for cash consideration or freely tradeable securities, (iii) a
determination is made by the Corporation's Board of Directors that a public
market exists for the outstanding shares of the Corporation's Common Stock or
(iv) the closing of a bona fide, firm commitment underwritten public offering of
the common stock of the Corporation pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended, resulting in
aggregate proceeds to the Corporation of at least $5,000,000 at a public
offering price of more than $5.00 per share, adjusted to reflect any stock
dividend, stock split or other recapitalization of the Corporation effected
after the date of this Agreement.
V. PURCHASE OPTION
5.1 Corporate Option. In the event Optionee ceases to be a Service
Provider of the Corporation, the Corporation shall have a right to purchase the
Purchased Shares at the Fair Market Value (as defined below) of such shares. The
Corporation shall exercise its repurchase right hereunder by delivery of written
notice to Optionee within 30 days of the Termination Date. The payment of the
purchase price by the Corporation and the delivery of the stock certificates by
the Optionee shall occur at a time and place mutually agreed by the parties
within 15 days of the receipt of notice by Optionee of the Corporation's
exercise of its Purchase Option.
5.2 Series A Holder's Option. In the event the Corporation chooses not
to, or is unable to, exercise its repurchase right hereunder, and does not
assign such option to another employee or director of the Corporation, then the
Corporation shall assign its repurchase right to the Series A Holders on a pro
rata basis, or any other basis agreed upon by the Corporation and the Series A
Holders, within 15 days after the Termination Date. In such event, the Series A
Holders shall have all of the rights set forth in Section 5.1 above.
5.3 Lapse of Option. In the event that neither the Corporation nor its
assigness, including the Series A Holders do not exercise their respective
repurchase rights within 30 days after the Termination Date, all such repurchase
rights provided hereunder shall lapse.
5.4 Definitions. As used herein, the following terms shall be defined:
(i) "Termination Date" shall mean the date upon which Optionee
first ceases to be Service Provider of the Corporation, whether due to
termination, resignation, death, disability or any other reason; and
(ii) "Fair Market Value" shall be determined by the
Corporation's Board of Directors in good faith as of the Termination Date;
provided, however, that if Optionee objects to such
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<PAGE> 15
determination, the Fair Market Value shall be determined by a qualified
independent appraiser ("Appraiser") mutually agreed upon by Optionee and the
Board of Directors. In the event the parties are unable to agree on a single
Appraiser, then either party may apply to San Diego Superior Court (pursuant to
a petition to compel arbitration) for the appointment of a single Appraiser in
accordance with the California Code of Civil Procedure. The determination of the
Appraiser shall be final and binding on the Optionee and the Corporation, and
the costs and expenses of such appraisal shall be borne equally by the
Corporation and Optionee.
VI. GENERAL PROVISIONS.
6.1 Assignment. Subject to the prior assignment rights of the Series A
Holders hereunder, the Corporation may assign its First Refusal Right under
Article IV and/or its Purchase Option rights under Article VI to any person or
entity selected by the Corporation's Board of Directors, including (without
limitation) one or more shareholders of the Corporation.
6.2 Definitions. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be considered
to be a parent corporation of the Corporation, provided each such corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a subsidiary of the Corporation, provided each such corporation
(other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
6.3 No Employment or Service Contract. Except to the extent the terms
of any written employment or service contract with the Optionee may expressly
provide otherwise, the Corporation (or any parent or subsidiary corporation
employing or retaining Optionee) is under no obligation to continue the Service
Provider status of Optionee for any period of specific duration and may
terminate such Service Provider status at any time, with or without cause. For
purposes of this Agreement, the Optionee shall be deemed to be a Service
Provider to the Corporation for so long as the Optionee renders periodic
services to the Corporation or one or more of its parent or subsidiary
corporations, whether as an employee, non-employee member of the Board of
Directors, or an independent non-employee consultant.
6.4 Notices. Any notice required in connection with (i) the First
Refusal Right or (ii) the disposition of any Purchased Shares covered thereby
shall be given in writing and shall be deemed effective upon personal delivery
or upon deposit in the United States mail, registered or certified, postage
prepaid and addressed to the party entitled to such notice at the address
indicated below such party's signature line on this Agreement or at such other
address as such party may designate by 10 days advance written notice under this
paragraph 6.4 to all other parties to this Agreement.
6.5 No Waiver. The failure of the Corporation (or its assignees) in any
instance to exercise the First Refusal Right granted under Article IV, shall not
constitute a waiver of any other rights of first refusal that may subsequently
arise under the provisions of this Agreement or any other agreement between the
Corporation and the Optionee. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
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<PAGE> 16
6.6 Cancellation of Shares. If the Corporation (or its assignees) shall
make available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
6.7 Legend. All certificates representing the Purchased Shares shall be
endorsed with the following legend:
"THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF EXCEPT
IN CONFORMITY WITH THE TERMS OF A WRITTEN AGREEMENT, DATED ___________,
19___, AS AMENDED FROM TIME TO TIME, BETWEEN THE CORPORATION AND THE
REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE
SHARES). SUCH AGREEMENT GRANTS CERTAIN RIGHTS OF FIRST REFUSAL TO THE
CORPORATION (OR ITS ASSIGNEES) UPON THE SALE, ASSIGNMENT, TRANSFER,
ENCUMBRANCE OR OTHER DISPOSITION OF THE CORPORATION'S SHARES AND
IMPOSES CERTAIN OTHER RESTRICTIONS ON TRANSFER. THE CORPORATION WILL
UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER
HEREOF WITHOUT CHARGE."
VII. MISCELLANEOUS PROVISIONS.
7.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
in its judgment deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement.
7.2 Agreement is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the express terms and provisions of the
Plan.
7.3 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, as such laws are
applied to contracts entered into and performed in such State.
7.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
7.5 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms and conditions hereof.
7.6 Power of Attorney. Optionee's spouse hereby appoints Optionee his
or her true and lawful attorney in fact, for him or her and in his or her name,
place and stead, and for his or her use and benefit, to agree to any amendment
or modification of this Agreement and to execute such further
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<PAGE> 17
instruments and take such further actions as may reasonably be necessary to
carry out the intent of this Agreement. Optionee's spouse further gives and
grants unto Optionee as his or her attorney in fact full power and authority to
do and perform every act necessary and proper to be done in the exercise of any
of the foregoing powers as fully as he or she might or could do if personally
present, with full power of substitution and revocation, hereby ratifying and
confirming all that Optionee shall lawfully do and cause to be done by virtue of
this power of attorney.
7.7 Market Stand-Off Obligations. Notwithstanding any other provisions
hereof, in the event that the Optionee is an officer or director of the
Corporation, Optionee hereby agrees that during the period of duration specified
by the Corporation and an underwriter of common stock or other securities of the
Corporation, following the effective date of a registration statement of the
Corporation filed under the Securities Act of 1933 (the "Act"), Optionee shall
not, to the extent requested by the Corporation and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Corporation held by Optionee at any time during such period
(including the Purchased Shares) except common stock included in such
registration; provided, however that:
(a) such agreement shall be applicable only to the first such
registration statement of the Corporation which covers common stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Corporation enter into
similar agreements.
In order to enforce the foregoing covenant, the Corporation
may impose stop-transfer instructions with respect to the registrable securities
of the Optionee (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first indicated above.
Company:
RISK DATA CORPORATION,
a California corporation
By:
----------------------------------------------
Title:
-------------------------------------------
Address: Two Venture Plaza
Suite 400
Irvine, CA 92718-3331
Optionee:
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<PAGE> 18
------------------------------
Address:
Optionee's Spouse:
-----------------------------
Address:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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<PAGE> 1
EXHIBIT 5.01
October 11, 1996
HNC Software Inc.
5930 Cornerstone Court West
San Diego, California 92121
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 on or about October 14, 1996 in connection with the
registration under the Securities Act of 1933, as amended, of 248,504 shares of
your Common Stock (the "Stock") which are issuable upon the exercise of options
originally granted by Risk Data Corporation and assumed by you in connection
with the merger of your wholly-owned subsidiary, HNC Merger Corp., with and into
Risk Data Corporation (the "ASSUMED OPTIONS").
In rendering this opinion, we have examined the following:
(1) the Registration Statement, together with the Exhibits filed
as a part thereof;
(2) the Prospectuses prepared in connection with the Assumed
Options and with the Registration Statement;
(3) the minutes of meetings and actions by written consent of the
Board of Directors that are contained in your minute books,
that are in our possession under which the Assumed Options
were approved for assumption by you; and
(4) the Agreement and Plan of Reorganization dated July 19, 1996,
and the Agreement of Merger and the Escrow Agreement, both
dated August 30, 1996, that were entered into in connection
with the acquistion of Risk Data Corporation, under which the
Assumed Options were assumed by you.
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 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 public
officials and records included in the documents referred to above. We have made
no independent investigations or other attempts 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 lead us to
believe that the opinion expressed herein is not accurate.
Based upon the foregoing, it is our opinion that the 248,504 shares of
Stock that may be issued and sold by you pursuant to the Assumed Options, when
issued and sold in the manner referred to in the Prospectus associated with the
Registration Statement and in accordance with the terms of the Assumed Options,
will be legally issued, fully paid and nonassessable.
<PAGE> 2
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 and any amendments thereto.
This opinion speaks only as of its date and is intended solely for the
your use as an exhibit to the Registration Statement for the purpose of the
above sale of the Stock and is not to be relied upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
<PAGE> 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 30, 1996, which appears on
page 34 of the 1995 Annual Report to Stockholders of HNC Software Inc., which is
incorporated by reference in HNC Software Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1995. We also consent to the incorporation by
reference of our report on the Financial Statement Schedule, which appears on
page 29 of such Annual Report on Form 10-K. We also consent to the incorporation
by reference in this Registration Statement on Form S-8 of our report dated
January 30, 1996, except as to the stock split which is as of April 3, 1996 and
as to the pooling of interests with Risk Data Corporation which is as of August
30, 1996 and as to the repayment of all of Risk Data Corporation's outstanding
debt which is as of September 11, 1996, appearing on page 26 of HNC Software
Inc.'s Current Report on Form 8-K/A-1 dated October 15, 1996. We also consent
to the incorporation by reference of our report on the Financial Statement
Schedule, which appears on page 57 of such Current Report on Form 8-K/A-1.
PRICE WATERHOUSE LLP
San Diego, California
October 16, 1996
<PAGE> 1
Exhibit 23.03
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of HNC Software Inc. pertaining to the Options Granted by Risk Data
Corporation under its 1992 Stock Option Plan and Non-Plan Options Granted by
Risk Data Corporation Assumed by the Registrant, of our report dated March 8,
1996, except for Note 6 as to which the date is August 30, 1996, with respect to
the financial statements of Risk Data Corporation included in the August 30,
1996 Current Report on Form 8-K/A-1 of HNC Software Inc.
Ernst & Young LLP
Orange County, California
October 14, 1996
