EXHIBIT 10.1

 
AGREEMENT
 
 
THIS AGREEMENT (“Agreement”), dated the 7th day of December, 2007 (“Effective
Date”), is made by and between Fair Isaac Corporation, a Delaware corporation
(the “Company”), on the one hand, and Sandell Asset Management Corp., a Cayman
Islands exempted company (“SAMC”), Castlerigg Master Investments Ltd., a British
Virgin Islands company ("Castlerigg Master Investments"), Castlerigg
International Limited, a British Virgin Islands company ("Castlerigg
International"); Castlerigg International Holdings Limited, a British Virgin
Islands company ("Castlerigg Holdings"); Castlerigg Global Select Fund Limited,
a Cayman Islands exempted company ("Castlerigg Global Select"); CGS, Ltd., a
Cayman Islands exempted company ("CGS"); and Castlerigg GS Holdings, Ltd., a
Cayman Islands exempted company (“CGSH”, and collectively with SAMC, Castlerigg
Master Investments, Castlerigg International, Castlerigg Holdings, Castlerigg
Global Select, CGS, and CGSH, the “Sandell Group”), on the other hand.
 
WHEREAS, the Sandell Group has filed a Schedule 13D with the Securities and
Exchange Commission (the “SEC”) on June 29, 2007, as amended on October 12, 2007
and as may be amended from time to time (the "Schedule 13D");
 
WHEREAS, the Company is willing to undertake changes to the composition of the
Company's Board of Directors (the "Board") as set forth herein; and
 
WHEREAS, the Company and the Sandell Group have agreed that it is in their
mutual interests to enter into this Agreement as hereinafter described.
 
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, and agreements contained herein, and other good and valuable
consideration, the parties hereto mutually agree as follows:
 
1.           Representations and Warranties of the Sandell Group. The Sandell
Group hereby represents and warrants to the Company as follows:
                 
                          (a)         The Sandell Group has beneficial ownership
of 2,874,000 shares of common stock of the Company and has full power and
authority to enter into this Agreement and to bind the entire number of shares
of the common stock of the Company which it holds, or may hold, including any
shares purchased in the future, to the terms of this Agreement.

  (b)         This Agreement constitutes a valid and binding agreement of the
Sandell Group. Except that Thomas E. Sandell may be deemed to beneficially own
shares of the Company and except as set forth in Section 1(a) hereof, no
“affiliate” or “associate” (as such terms are defined in the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) of the Sandell Group beneficially
owns any shares or rights to acquire shares of common stock of the Company.
 
2.           Representations and Warranties of the Company.  The Company hereby
represents and warrants to the Sandell Group, as follows:
 
 

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(a)           The Company has full power and authority to enter into and perform
its obligations under this Agreement, and the execution and delivery of this
Agreement by the Company has been duly authorized by the Board and requires no
further Board or stockholder action, other than amendment of the bylaws of the
Company to increase the size of the Board by two members.
 
(b)           This Agreement constitutes a valid and binding obligation of the
Company and the performance of its terms does not constitute a violation of its
certificate of incorporation or bylaws.
 
3.           Directorships.  The Company agrees that:
 
(a)           following the execution of this Agreement and prior to filing the
definitive proxy statement in connection with the Company's 2008 Annual Meeting
of Stockholders (including any adjournment or postponement thereof, the "2008
Annual Meeting"), the Board, at a duly convened meeting of directors, will take
all necessary action to increase the size of the Board by two members;
 
(b)            Nick Graziano (the "Sandell Nominee") will be nominated by the
Board as a director at the 2008 Annual Meeting;
 
(c)            Allan Loren (the "Additional Nominee" and together with the
Sandell Nominee, the "Nominees"), will be nominated by the Board as a director
at the 2008 Annual Meeting;
 
(d)           the Company's Board will recommend a vote "for" the Nominees at
the 2008 Annual Meeting, and shall solicit its stockholders to vote for such
Nominees;
 
(e)           proxies solicited by the Company's Board will be voted "for" the
Nominees at the 2008 Annual Meeting; and
 
(f)           during his term of office as a director, the Sandell Nominee and
the Additional Nominee may each be replaced by another designee of the Sandell
Group who is reasonably acceptable to the Company's Board in the event that the
Sandell Nominee or the Additional Nominee dies, is unable to perform his duties
as a director, or, in the case of the Sandell Nominee, is no longer associated
with the Sandell Group.
 
4.           Voting at Meetings of Stockholders.
 
(a)           At the 2008 Annual Meeting, the Sandell Group shall cause all of
the shares of the Company common stock beneficially owned by it to be present
for quorum purposes and to be voted:
 
(i)           For each of (A) the Nominees and (B) the other candidates
recommended by the Board in the Schedule 14A filed by the Company with the SEC
for election to the Board (the "Company Nominees"); provided that the Company
Nominees are each either current members of the Board or otherwise reasonably
acceptable to the Sandell Group; and
 
(ii)           for the ratification of the selection of the Company’s
independent auditors.
 
 

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5.           The Sandell Group's Prohibited Conduct.  During the period
commencing with the execution of this Agreement and ending on the earlier to
occur of (a) the date that is eighty (80) days prior to the date of the
Company's 2009 Annual Meeting of Stockholders (provided, however, that if the
Board takes any action to amend the Company's restated bylaws in such a manner
as to increase the time period prior to the 2009 Annual Meeting of Stockholders
by which a holder of the Company's common stock must provide timely notice to
the Company of (i) its nomination of a person or persons to the Board at a
meeting of the Company's stockholders, (ii) or of its proposal to bring business
before a meeting of the Company's stockholders (clause (i) and (ii) together,
the "Stockholder Matters"), then the Standstill Period (as defined herein) shall
expire ten (10) days prior to the date on which a stockholder must give notice
to the Company with respect to any Stockholder Matters), and (b) a material
breach by the Company of its obligations under this Agreement (the "Standstill
Period"), neither the Sandell Group nor any of its controlled affiliates shall,
without the prior written consent of the Company:
 
(a) acquire or agree to acquire, or publicly offer or propose to acquire,
directly or indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights or options to acquire any voting securities of the
Company or any subsidiary thereof, or any assets of the Company or any
subsidiary or division thereof; provided, however, that nothing herein shall
limit the ability of the Sandell Group to (i) transfer any voting securities or
direct or indirect rights or options to acquire any voting securities of the
Company to any of its controlled affiliates, so long as such any such controlled
affiliates agree to be bound by the terms of this Agreement and execute a
joinder agreement to this Agreement, in the form attached hereto as Exhibit A (a
"Joinder Agreement"), (ii) enter into any swap or other arrangement whereby it
acquires the economic consequences of ownership of the common stock without also
acquiring the voting or other rights, privileges or powers associated with the
ownership of the underlying common stock, or (iii) subject to applicable law,
including federal securities laws prohibiting insider trading, acquire up to ten
percent (10%) of the outstanding shares of Company common stock;
 
(b) other than as provided in this Agreement, seek or propose to influence or
control the management or the policies of the Company (provided that the
Nominees' actions (or those of their replacements as contemplated by Section 3)
as members of the Board shall not be deemed to violate the foregoing) or to
obtain representation on the Board (other than the nomination of the Nominees),
directly or indirectly engage in any activities in opposition to the
recommendation of the Board (including the recommendation of the Nominees and
the Company Nominees as directors to be elected at the 2008 Annual Meeting),
submit any proposal (whether pursuant to Rule 14a-8 or otherwise) or nomination
of a director or directors for stockholder action, or solicit, or encourage or
in any way participate in the solicitation of, any proxies or consents with
respect to any voting securities of the Company, provided, however, that the
foregoing shall not prohibit the Sandell Group from (i) making public statements
(including statements contemplated by Rule 14a-1(1)(2)(iv) under the Exchange
Act), or (ii) engaging in discussions with other stockholders or (iii)
soliciting, or encouraging or participating in the solicitation of, proxies or
consents with respect to voting securities of the Company (so long as such
discussions are in compliance with subsection (d) hereof (clauses (i), (ii) and
(iii), together, "Permitted Actions") with respect to any transaction that has
been publicly announced by the Company involving (1) the recapitalization of the
Company, (2)
 
 

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an acquisition, disposition or sale of assets or a business by the Company where
(A) the consideration to be received or paid in such transaction exceeds $400
million in the aggregate or (B) requires approval by the holders of common stock
of the Company, or (3) a change of control of the Company (each, a "Material
Transaction"), provided, further, that in the event that one of the Nominees
votes against an acquisition, disposition or sale of assets or a business by the
Company, which is neither a Material Transaction nor an acquisition, disposition
or sale of assets or a business by the Company where the consideration to be
received or paid in such transaction is less than $125 million in the aggregate,
at the Board meeting approving such transaction, the Company will make a public
statement that such Nominee so voted;
 
(c) make any public announcement with respect to, or publicly offer to effect,
seek or propose (with or without conditions) a merger, consolidation, business
combination or other extraordinary transaction with or involving the Company or
any of its subsidiaries or any of its or their securities or assets, provided,
however, that nothing in this subsection (c) shall restrict the Sandell Group
from taking Permitted Actions with respect to a Material Transaction;
 
(d) (i) form, join or in any way participate in a "group" as defined in Section
13(d)(3) of the Exchange Act, and the rules and regulations promulgated
thereunder, other than a "group" that includes all or some lesser number of
persons identified as members of the Sandell Group, or (ii) enter into any
negotiations, arrangements or understandings with any third parties, other than
members of the Sandell Group solely with respect to the existing members of the
Sandell Group, in connection with becoming a "group" as defined in Section
13(d)(3) of the Exchange Act;
 
(e) publicly disparage any member of the Board or management of the Company; or
 
(f) publicly seek or request permission to do any of the foregoing, request to
amend or waive any provision of this Section 5 (including, without limitation,
any of clauses (a)-(e) hereof), or make or seek permission to make any public
announcement with respect to any of the foregoing.
 
 
6.           Transfer Restrictions.  The Sandell Group agrees that, during the
Standstill Period, it shall not offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend (other than in a customary
commingled brokerage account in the ordinary course of business), or otherwise
transfer or dispose of, directly or indirectly, any shares of common stock or
any securities convertible into or exercisable or exchangeable, directly or
indirectly, for common stock, whether any such transaction described above is to
be settled by delivery of common stock or such other securities, in cash or
otherwise (any such action a "Transfer"), in each case without the prior written
consent of the Company; provided that the foregoing shall not restrict the
Sandell Group from (i) a Transfer of any shares to a controlled affiliate which
agrees to be bound by the terms of this Agreement and executes a Joinder
Agreement, (ii) subject to compliance with law, the Transfer of shares in either
(1) brokers' transactions (within the meaning of Rule 144(g) of the Securities
Act of 1933 (the "Securities Act")), but not in transactions directly with a
market maker (as defined in Section 3(a)(38) of the Exchange Act), or (2)
private Transfers (including transactions with, or indirectly through, a market
maker), in a single Transfer or series of related Transfers, so long as the
Sandell Group,
 
 

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at the time of such Transfer, does not have actual knowledge, after reasonable
inquiry, that such Transfer or series of Transfers would result in the ultimate
purchaser of such shares of common stock from the Sandell Group beneficially
owning, together with its affiliates, following such Transfer or Transfers, in
excess of five percent (5%) of the Company's common stock in the aggregate, or
(iii) Transfers made pursuant to (x) tender offers in respect of the Company's
common stock made by the Company or any third party, or (y) repurchase offers in
respect of the Company's common stock made directly with the Company.
 
7.           Resignation.  Each of the Nominees shall immediately tender his
resignation from the Board, if requested by the Board as a result of a majority
vote of the directors, other than the Nominees, in favor of such resignations
from the Board, in the event that the Sandell Group's beneficial ownership of
the Company's common stock becomes less than three percent (3%) of the
outstanding shares of common stock of the Company solely as a result of a
Transfer or series of Transfers by the Sandell Group.
 
8.           Nondisparagement.  During the Standstill Period, the Company shall
not publicly disparage the Sandell Group or any member of the management of the
Sandell Group.
 
9.           Public Announcement.  The parties shall promptly disclose the
existence of this Agreement after its execution pursuant to a joint press
release in the form attached hereto as Exhibit B; however, neither party shall
disclose the existence of this Agreement until the press release is issued.
 
10.           Remedies. The Company and the Sandell Group acknowledge and agree
that a breach or threatened breach by either party may give rise to irreparable
injury inadequately compensable in damages, and accordingly each party shall be
entitled to injunctive relief to prevent a breach of the provisions hereof and
to enforce specifically the terms and provisions hereof in any state or federal
court having jurisdiction, in addition to any other remedy to which such
aggrieved party may be entitled to at law or in equity. In the event either
party institutes any legal action to enforce such party’s rights under, or
recover damages for breach of, this Agreement, the prevailing party or parties
in such action shall be entitled to recover from the other party or parties all
costs and expenses, including but not limited to reasonable attorneys’ fees,
court costs, witness fees, disbursements and any other expenses of litigation or
negotiation incurred by such prevailing party or parties.
 
11.           Notices. All notice requirements and other communications shall be
deemed given when delivered or on the following business day after being sent by
overnight courier with a nationally recognized courier service such as Federal
Express, addressed to the Company, SAMC, Castlerigg Master Investments,
Castlerigg International, Castlerigg Holdings, Castlerigg Global Select, CGS,
CGSH and Mr. Sandell as follows:
 
The Company:
Fair Isaac Corporation
901 Marquette Avenue, Suite 3200
Minneapolis, MN 55402-3232
Facsimile:  (612) 758-6002
Attention: General Counsel
 
 

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With a copy to (which shall not constitute notice):

Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 1100
Palo Alto, California 94301
Facsimile:    (650) 470-4570
Attention:    Kenton J. King
 Celeste E. Greene

The Sandell Group:
Sandell Asset Management Corp.
40 W 57th Street, 26th Floor
New York, NY 10019
Facsimile: (212) 603-5725
Attn: General Counsel

with copies to (which shall not constitute notice):

Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Facsimile: (212) 593-5955
Attention:  Marc Weingarten
 
12.           Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements understandings, negotiations
and discussions of the parties in connection therewith not referred to herein.
 
13.           Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, and
signature pages may be delivered by facsimile, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
 
14.           Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
 
15.           Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware, without
regard to choice of law principles that would compel the application of the laws
of any other jurisdiction.
 
16.           Severability. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
 
 

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17.           Successors and Assigns. This Agreement shall not be assignable by
any of the parties to this Agreement.  This Agreement, however, shall be binding
on successors of the parties hereto.
 
18.           Survival of Representations, Warranties and Agreements. All
representations, warranties, covenants and agreements made herein shall survive
the execution and delivery of this Agreement.
 
19.           Amendments. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement
executed by all of the parties hereto.
 
20.           Further Action. Each party agrees to execute any and all
documents, and to do and perform any and all acts and things necessary or proper
to effectuate or further evidence the terms and provisions of this Agreement.
 
21.           Consent to Jurisdiction. Each of the parties hereby irrevocably
submits to the exclusive jurisdiction of any state court sitting in the State of
Delaware in any action or proceeding arising out of or relating to this
Agreement and each of the parties hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in any such
court.
 
22.           Expenses. Each party agrees to bear its own expenses in connection
with the transactions contemplated hereby.
 
 

 
 
[Signature Page Follows]
 
 

 

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The Company and the Sandell Group each indicate its agreement with the foregoing
by signing and returning one copy of this agreement, whereupon this letter
agreement will constitute their agreement with respect to the subject matter
hereof.
 

Accepted to and agreed, as of the date
first written above:

Fair Isaac Corporation

By:          /s/ Mark N. Greene                                           
Name:     Mark N. Greene                                           
Title:       CEO                                           

Sandell Asset Management Corp.

By:          /s/ Thomas E.
Sandell                                                   
Name:     Thomas E.
Sandell                                                      
Title:        Chief Executive
Officer                                                   

Castlerigg Master Investments Ltd.

By:           /s/ Thomas E.
Sandell                                                   
Name:     Thomas E.
Sandell                                                      
Title:        Chief Executive
Officer                                                   

Castlerigg International Limited

By:          /s/ Thomas E.
Sandell                                                   
Name:     Thomas E.
Sandell                                                      
Title:        Chief Executive
Officer                                                   

Castlerigg International Holdings Limited

By:          /s/ Thomas E.
Sandell                                                   
Name:     Thomas E.
Sandell                                                      
Title:        Chief Executive
Officer                                                   

Castlerigg Global Select Fund Limited

By:          /s/ Thomas E.
Sandell                                                   
Name:     Thomas E.
Sandell                                                      
Title:        Chief Executive
Officer                                                   

 

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CGS, Ltd.

By:          /s/ Thomas E.
Sandell                                                   
Name:     Thomas E.
Sandell                                                      
Title:        Chief Executive
Officer                                                   

Castlerigg GS Holdings, Ltd.

By:          /s/ Thomas E.
Sandell                                                   
Name:     Thomas E.
Sandell                                                      
Title:        Chief Executive
Officer                                                   

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EXHIBIT A

FORM OF JOINDER AGREEMENT

The undersigned hereby agrees, effective as of the date hereof, to become a
party to that certain Agreement, dated as of December 7, 2007, by and among Fair
Isaac Corporation, a Delaware corporation (the "Company"), Sandell Asset
Management Corp., a Cayman Islands exempted company (“SAMC”), Castlerigg Master
Investments Ltd., a British Virgin Islands company ("Castlerigg Master
Investments"), Castlerigg International Limited, a British Virgin Islands
company ("Castlerigg International"); Castlerigg International Holdings Limited,
a British Virgin Islands company ("Castlerigg Holdings"); Castlerigg Global
Select Fund Limited, a Cayman Islands exempted company ("Castlerigg Global
Select"); CGS, Ltd., a Cayman Islands exempted company ("CGS"); and Castlerigg
GS Holdings, Ltd., a Cayman Islands exempted company (“CGSH” and collectively
with SAMC, Castlerigg Master Investments, Castlerigg International, Castlerigg
Holdings, Castlerigg Global Select, CGS, and CGSH, the “Sandell Group”) (the
"Agreement"). By executing this joinder agreement, the undersigned hereby agrees
to be, and shall be, deemed a member of the "Sandell Group" for all purposes of
the Agreement, entitled to the rights and subject to the obligations thereunder
with respect to the voting securities of the Company acquired from the Sandell
Group.

The address and facsimile number to which notices may be sent to the undersigned
is as follows:
 

                   Facsimile No.:

 

By:     Name:      Title:      Date: