Document:

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                                                                    EXHIBIT 10.1

                             FAIR ISAAC CORPORATION

                      2003 EMPLOYMENT INDUCEMENT AWARD PLAN

                         As adopted on November 16, 2003

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                                TABLE OF CONTENTS

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ARTICLE       1.    INTRODUCTION................................................      1

ARTICLE       2.    ADMINISTRATION..............................................      1

            2.1       Committee Composition.....................................      1
            2.2       Committee Responsibilities................................      1

ARTICLE       3.    SHARES AVAILABLE FOR GRANTS.................................      2

            3.1       Basic Limitation..........................................      2
            3.2       Additional Shares.........................................      2
            3.3       Dividend Equivalents......................................      2

ARTICLE       4.    ELIGIBILITY.................................................      2

ARTICLE       5.      OPTIONS...................................................      2

            5.1       Stock Option Agreement....................................      2
            5.2       Awards Nontransferable....................................      2
            5.3       Number of Shares..........................................      2
            5.4       Exercise Price............................................      3
            5.5       Exercisability and Term...................................      3
            5.6       Effect of Change in Control...............................      3
            5.7       Modification or Assumption of Options.....................      3

ARTICLE       6.    PAYMENT FOR OPTION SHARES...................................      3

            6.1       General Rule..............................................      3
            6.2       Surrender of Stock........................................      3
            6.3       Exercise/Sale.............................................      3
            6.4       Exercise/Pledge...........................................      4
            6.5       Promissory Note...........................................      4
            6.6       Other Forms of Payment....................................      4

ARTICLE       7.    STOCK APPRECIATION RIGHTS...................................      4

            7.1       Grant of SARs.............................................      4
            7.2       Exercise of SARs..........................................      4
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ARTICLE       8.    RESTRICTED SHARES AND STOCK UNITS...........................      4

            8.1       Time, Amount and Form of Awards...........................      4
            8.2       Payment for Awards........................................      5
            8.3       Vesting Conditions........................................      5
            8.4       Form and Time of Settlement of Stock Units................      5
            8.5       Death of Recipient........................................      5
            8.6       Creditors' Rights.........................................      5

ARTICLE       9.    VOTING AND DIVIDEND RIGHTS..................................      5

            9.1       Restricted Shares.........................................      5
            9.2       Stock Units...............................................      6

ARTICLE      10.    PROTECTION AGAINST DILUTION.................................      6

           10.1       Adjustments...............................................      6
           10.2       Reorganizations...........................................      6

ARTICLE      11.    LIMITATION ON RIGHTS........................................      6

           11.1       Retention Rights..........................................      6
           11.2       Stockholders' Rights......................................      6
           11.3       Regulatory Requirements...................................      7

ARTICLE      12.    LIMITATION ON PAYMENTS......................................      7

           12.1       Basic Rule................................................      7
           12.2       Reduction of Payments.....................................      7
           12.3       Overpayments and Underpayments............................      8
           12.4       Related Corporations......................................      8

ARTICLE      13.    WITHHOLDING TAXES...........................................      8

           13.1       General...................................................      8
           13.2       Share Withholding.........................................      8

ARTICLE      14.    ASSIGNMENT OR TRANSFER OF AWARDS............................      8

ARTICLE      15.    FUTURE OF PLAN..............................................      9
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           15.1       Term of the Plan..........................................      9
           15.2       Amendment or Termination..................................      9

ARTICLE      16.    DEFINITIONS.................................................      9

ARTICLE      17.    EXECUTION...................................................     12
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                             FAIR ISAAC CORPORATION
                      2003 EMPLOYMENT INDUCEMENT AWARD PLAN
                         AS ADOPTED ON NOVEMBER 16, 2003

ARTICLE 1. INTRODUCTION.

The Plan was adopted by the Board on November 16, 2003 and is effective as of
such date. The purpose of the Plan is to promote the long-term success of the
Company and the creation of stockholder value by providing new Key Employees
(including Key Employees who join the Company as a result of a corporate
transaction) with an appropriate and material inducement to accept employment.
The Plan seeks to achieve this purpose by providing for Awards in the form of
Restricted Shares, Stock Units, Options (which may constitute incentive stock
options or nonstatutory stock options) or stock appreciation rights. All Awards
under the Plan are intended to qualify as "employment inducement awards" within
the meaning of Section 303A.08 of the New York Stock Exchange's Listed Company
Manual or any successor provision.

The Plan shall be governed by, and construed in accordance with, the laws of the
State of Delaware.

ARTICLE 2. ADMINISTRATION.

         2.1 COMMITTEE COMPOSITION. The Plan shall be administered by the
Committee. The Committee shall consist of three or more members who are not
common-law employees of the Company or any Subsidiary and who shall be appointed
by the Board. The Committee shall meet all of the applicable independence
requirements promulgated by the New York Stock Exchange.

         2.2 COMMITTEE RESPONSIBILITIES. The Committee shall (a) select the Key
Employees who are to receive Awards under the Plan and determine the type,
number, vesting requirements and other conditions of such Awards, (b) interpret
the Plan and (c) make all other decisions relating to the operation of the Plan.
The Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.

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ARTICLE 3. SHARES AVAILABLE FOR GRANTS.

         3.1 BASIC LIMITATION. Any Common Shares issued pursuant to the Plan may
be authorized but unissued shares or treasury shares. The aggregate number of
Restricted Shares, Stock Units and Options awarded under the Plan shall not
exceed 1,500,000. The aggregate number of Common Shares which may be issued
under the Plan shall at all times be subject to adjustment pursuant to Article
10.

         3.2 ADDITIONAL SHARES. If any Stock Units or Options are forfeited or
if any Options terminate for any other reason before being exercised, then such
Stock Units or Options shall again become available for Awards under the Plan.
However, if Options are surrendered upon the exercise of related SARs, then such
Options shall not be restored to the pool available for Awards.

         3.3 DIVIDEND EQUIVALENTS. Any dividend equivalents distributed under
the Plan shall not be applied against the number of Restricted Shares, Stock
Units or Options available for Awards, whether or not such dividend equivalents
are converted into Stock Units.

ARTICLE 4. ELIGIBILITY. Only Key Employees shall be eligible for designation as
Participants by the Committee. Awards may only be granted to a Key Employee as a
material inducement to such Key Employee being hired (including in connection
with a corporate transaction) by the Company or one of its Subsidiaries or being
rehired following a bona fide interruption of employment. Any grant of an Award
shall not become effective unless and until the Key Employees actually commences
employment with the Company or one of its Subsidiaries.

ARTICLE 5. OPTIONS.

         5.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be an NSO and shall be evidenced by a Stock Option Agreement between the
Optionee and the Company. Such Option shall be subject to all applicable terms
of the Plan and may be subject to any other terms that are not inconsistent with
the Plan. The provisions of the various Stock Option Agreements entered into
under the Plan need not be identical.

         5.2 AWARDS NONTRANSFERABLE. Except as provided in Article 14(ii), no
Option granted under the Plan shall be transferable by the Optionee other than
by will, by a beneficiary designation executed by the Optionee and delivered to
the Company or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by him or her or by his or
her guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his or her
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.

         5.3 NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares subject to the Option and shall provide for the adjustment of
such number in accordance with Article 10.

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         5.4 EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price shall not be less than 100% of the Fair
Market Value of a Common Share on the date of grant.

         5.5 EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable. The
Stock Option Agreement shall also specify the term of the Option. A Stock Option
Agreement may provide for accelerated exercisability in the event of the
Optionee's death, disability or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of the
Optionee's service. Options under the Plan may also be awarded in combination
with Restricted Shares or Stock Units, and such an Award may provide that the
Options will not be exercisable unless the related Restricted Shares or Stock
Units are forfeited.

         5.6 EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the
time of granting an Option or thereafter, that such Option (and any SARs
included therein) shall become fully exercisable as to all Common Shares subject
to such Option in the event that a Change in Control occurs with respect to the
Company. If the Committee finds that there is a reasonable possibility that,
within the succeeding six months, a Change in Control will occur with respect to
the Company, then the Committee may determine that any or all outstanding
Options (and any SARs included therein) shall become fully exercisable as to all
Common Shares subject to such Options.

         5.7 MODIFICATION OR ASSUMPTION OF OPTIONS. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.

ARTICLE 6. PAYMENT FOR OPTION SHARES.

         6.1 GENERAL RULE. The entire Exercise Price of Common Shares issued
upon exercise of Options shall be payable in cash at the time when such Common
Shares are purchased, except that the Committee may at any time accept payment
in any form(s) described in this Article 6. Notwithstanding any provision in
this Article 6 or in an Optionee's Stock Option Agreement, an Optionee, shall
not be permitted to exercise an Option in any manner which would violate
applicable state and federal laws, including, without limitation, the
Sarbanes-Oxley Act of 2002.

         6.2 SURRENDER OF STOCK. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made with
Common Shares which have already been owned by the Optionee for more than twelve
months. Such Common Shares shall be valued at their Fair Market Value on the
date when the new Common Shares are purchased under the Plan.

         6.3 EXERCISE/SALE. To the extent that this Section 6.3 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable

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direction to a securities broker or other party approved by the Company to sell
Common Shares and to deliver all or part of the sales proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.

         6.4 EXERCISE/PLEDGE. To the extent that this Section 6.4 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Common Shares to a securities broker or lender
approved by the Company, as security for a loan, and to deliver all or part of
the loan proceeds to the Company in payment of all or part of the Exercise Price
and any withholding taxes.

         6.5 PROMISSORY NOTE. To the extent that this Section 6.5 is applicable,
payment for all or any part of the Exercise Price may be made with a
full-recourse promissory note; provided that the par value of newly issued
Common Shares must be paid in lawful money of the U.S. at the time when such
Common Shares are purchased.

         6.6 OTHER FORMS OF PAYMENT. To the extent that this Section 6.6 is
applicable, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.

ARTICLE 7. STOCK APPRECIATION RIGHTS.

         7.1 GRANT OF SARs. At the discretion of the Committee, an SAR may be
included in each Option granted under the Plan. Such SAR shall entitle the
Optionee (or any person having the right to exercise the Option after his or her
death) to surrender to the Company, unexercised, all or any part of that portion
of the Option which then is exercisable and to receive from the Company Common
Shares or cash, or a combination of Common Shares and cash, as the Committee
shall determine. If an SAR is exercised, the number of Common Shares remaining
subject to the related Option shall be reduced accordingly, and vice versa. The
amount of cash and/or the Fair Market Value of Common Shares received upon
exercise of an SAR shall, in the aggregate, be equal to the amount by which the
Fair Market value (on the date of surrender) of the Common Shares subject to the
surrendered portion of the Option exceeds the Exercise Price. In no event shall
any SAR be exercised if such Fair Market Value does not exceed the Exercise
Price. An SAR may be included in an Option at the time of grant or at any
subsequent time, but not later than six months before the expiration of such
Option.

         7.2 EXERCISE OF SARs. An SAR may be exercised to the extent that the
Option in which it is included is exercisable, subject to the restrictions
imposed by Rule 16b-3 (or its successor) under the Exchange Act, if applicable.
If, on the date when an Option expires, the Exercise Price under such Option is
less than the Fair Market Value on such date but any portion of such Option has
not been exercised or surrendered, then any SAR included in such Option shall
automatically be deemed to be exercised as of such date with respect to such
portion. An Option granted under the Plan may provide that it will be
exercisable as an SAR only in the event of a Change in Control.

ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS.

         8.1 TIME, AMOUNT AND FORM OF AWARDS. Restricted Shares or Stock Units
with respect to an Award Year may be granted during such Award Year or at any
time

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thereafter. Awards under the Plan may be granted in the form of Restricted
Shares, in the form of Stock Units, or in any combination of both. Restricted
Shares or Stock Units may also be awarded in combination with Options, and such
an Award may provide that the Restricted Shares or Stock Units will be forfeited
in the event that the related Options are exercised.

         8.2 PAYMENT FOR AWARDS. To the extent that an Award is granted in the
form of newly issued Restricted Shares, the Award recipient shall be required to
pay the Company in lawful money of the U.S. an amount equal to the par value of
such Restricted Shares. To the extent that an Award is granted in the form of
Stock Units or treasury shares, no cash consideration shall be required of Award
recipients.

         8.3 VESTING CONDITIONS. Each Award of Restricted Shares or Stock Units
shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement. A Stock Award Agreement may
provide for accelerated vesting in the event of the Participant's death,
disability or retirement or other events. The Committee may determine, at the
time of making an Award or thereafter, that such Award shall become fully vested
in the event that a Change in Control occurs with respect to the Company.

         8.4 FORM AND TIME OF SETTLEMENT OF STOCK UNITS. Settlement of vested
Stock Units may be made in the form of cash, in the form of Common Shares, or in
any combination of both. Methods of converting Stock Units into cash may include
(without limitation) a method based on the average Fair Market Value of Common
Shares over a series of trading days. Vested Stock Units may be settled in a
lump sum or in installments. The distribution may occur or commence when all
vesting conditions applicable to the Stock Units have been satisfied or have
lapsed, or it may be deferred to any later date. The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents.
Until an Award of Stock Units is settled, the number of such Stock Units shall
be subject to adjustment pursuant to Article 10.

         8.5 DEATH OF RECIPIENT. Any Stock Units Award that becomes payable
after the recipient's death shall be distributed to the recipient's beneficiary
or beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient's death.
If no beneficiary was designated or if no designated beneficiary survives the
Award recipient, then any Stock Units Award that becomes payable after the
recipient's death shall be distributed to the recipient's estate.

         8.6 CREDITORS' RIGHTS. A holder of Stock Units shall have no rights
other than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Award Agreement.

ARTICLE 9. VOTING AND DIVIDEND RIGHTS.

         9.1 RESTRICTED SHARES. The holders of Restricted Shares awarded under
the Plan shall have the same voting, dividend and other rights as the Company's
other stockholders. A Stock Award Agreement, however, may require that the
holders of Restricted

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Shares invest any cash dividends received in additional Restricted Shares. Such
additional Restricted Shares shall be subject to the same conditions and
restrictions as the Award with respect to which the dividends were paid. Such
additional Restricted Shares shall not reduce the number of Common Shares
available under Article 3.

         9.2 STOCK UNITS. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
shall carry with it a right to dividend equivalents. Such right entitles the
holder to be credited with an amount equal to all cash dividends paid on one
Common Share while the Stock Unit is outstanding. Dividend equivalents may be
converted into additional Stock Units. Settlement of dividend equivalents may be
made in the form of cash, in the form of Common Shares, or in a combination of
both. Prior to distribution, any dividend equivalents which are not paid shall
be subject to the same conditions and restrictions as the Stock Units to which
they attach.

ARTICLE 10. PROTECTION AGAINST DILUTION.

         10.1 ADJUSTMENTS. In the event of a subdivision of the outstanding
Common Shares, a declaration of a dividend payable in Common Shares, a
declaration of a dividend payable in a form other than Common Shares in an
amount that has a material effect on the price of Common Shares, a combination
or consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, a recapitalization, a spinoff
or a similar occurrence, the Committee shall make appropriate adjustments in one
or more of (a) the number of Options, Restricted Shares and Stock Units
available for future Awards under Article 3, (b) the number of Stock Units
included in any prior Award which has not yet been settled, (c) the number of
Common Shares covered by each outstanding Option or (d) the Exercise Price under
each outstanding Option. Except as provided in this Article 10, a Participant
shall have no rights by reason of any issue by the Company of stock of any class
or securities convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class.

         10.2 REORGANIZATIONS. In the event that the Company is a party to a
merger or other reorganization, outstanding Options, Restricted Shares and Stock
Units shall be subject to the agreement of merger or reorganization. Such
agreement may provide, without limitation, for the assumption of outstanding
Awards by the surviving corporation or its parent, for their continuation by the
Company (if the Company is a surviving corporation), for accelerated vesting or
for settlement in cash.

ARTICLE 11. LIMITATION ON RIGHTS.

         11.1 RETENTION RIGHTS. Neither the Plan nor any award granted under the
Plan shall be deemed to give any individual a right to remain an employee or
director of the Company or a Subsidiary. The Company and its Subsidiaries
reserve the right to terminate the service of any employee or director at any
time, with or without cause, subject to applicable laws, the Company's
certificate of incorporation and by-laws and a written employment agreement (if
any).

         11.2 STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or

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her Award prior to the issuance of a stock certificate for such Common Shares.
No adjustment shall be made for cash dividends or other rights for which the
record date is prior to the date when such certificate is issued, except as
expressly provided in Articles 8, 9 and 10.

         11.3 REGULATORY REQUIREMENTS. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.

ARTICLE 12. LIMITATION ON PAYMENTS.

         12.1 BASIC RULE. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Audit Committee of the Board (the "Auditors") determine that any
payment or transfer by the Company to or for the benefit of a Key Employee,
whether paid or payable (or transferred or transferable) pursuant to the terms
of this Plan or otherwise (a "Payment"), would be non-deductible by the Company
for federal income tax purposes because of the provisions concerning "excess
parachute payments" in section 280G of the Code, then the aggregate present
value of all Payments shall be reduced (but not below zero) to the Reduced
Amount; provided that the Committee, at the time of making an Award under this
Plan or at any time thereafter, may specify in writing that such Award shall not
be so reduced and shall not be subject to this Article 12. For purposes of this
Article 12, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Company because of section 280G
of the Code.

         12.2 REDUCTION OF PAYMENTS. If the Auditors determine that any Payment
would be nondeductible by the Company because of section 280G of the Code, then
the Company shall promptly give the Key Employee notice to that effect and a
copy of the detailed calculation thereof and of the Reduced Amount, and the Key
Employee may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Key Employee within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the Key
Employee promptly of such election. For purposes of this Article 12, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Article 12 shall be binding upon
the Company and the Key Employee and shall be made within 60 days of the date
when a payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Key Employee such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Key Employee in the future such amounts as become due to him
or her under the Plan.

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         12.3 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Key Employee which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Key Employee which he or she shall repay to
the Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Key Employee to the Company if and to the extent that such
payment would not reduce the amount which is subject to taxation under section
4999 of the Code. In the event that the Auditors determine that an Underpayment
has occurred, such Underpayment shall promptly be paid or transferred by the
Company to or for the benefit of the Key Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.

         12.4 RELATED CORPORATIONS. For purposes of this Article 12, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.

ARTICLE 13. WITHHOLDING TAXES.

         13.1 GENERAL. To the extent required by applicable federal, state,
local or foreign law, the recipient of any payment or distribution under the
Plan shall make arrangements satisfactory to the Company for the satisfaction of
any withholding tax obligations that arise by reason of the receipt or vesting
of such payment or distribution. The Company shall not be required to issue any
Common Shares or make any cash payment under the Plan until such obligations are
satisfied.

         13.2 SHARE WITHHOLDING. The Committee may permit a Participant to
satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold a portion of any Common Shares that otherwise would
be issued to him or her or by surrendering a portion of any Common Shares that
previously were issued to him or her. Such Common Shares shall be valued at
their Fair Market Value on the date when taxes otherwise would be withheld in
cash. Any payment of taxes by assigning Common Shares to the Company may be
subject to restrictions, including any restrictions required by rules of the
Securities and Exchange Commission.

ARTICLE 14. ASSIGNMENT OR TRANSFER OF AWARDS.

         (i) Except as provided in Article 13, any Award granted under the Plan
shall not be anticipated, assigned, attached, garnished, optioned, transferred
or made subject to any creditor's process, whether voluntarily, involuntarily or
by operation of law. Any act in violation of this Article 14 shall be void.
However, this Article 14 shall not preclude a Participant from designating a
beneficiary who will receive any undistributed Awards in the event of the
Participant's death, nor shall it preclude a transfer by will or by the laws of
descent and distribution. In addition, neither this Article 14 nor any other
provision of the

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Plan shall preclude a Participant from transferring or assigning Restricted
Shares or Stock Units to (a) the trustee of a trust that is revocable by such
Participant alone, both at the time of the transfer or assignment and at all
times thereafter prior to such Participant's death, or (b) the trustee of any
other trust to the extent approved in advance by the Committee in writing. A
transfer or assignment of Restricted Shares or Stock Units from such trustee to
any person other than such Participant shall be permitted only to the extent
approved in advance by the Committee in writing, and Restricted Shares or Stock
Units held by such trustee shall be subject to all of the conditions and
restrictions set forth in the Plan and in the applicable Stock Award Agreement,
as if such trustee were a party to such Agreement.

         (ii) Notwithstanding paragraph (i) above, an Option or portion thereof
may be transferred by the Optionee by gift to (a) the Optionee's immediate
family, (b) a partnership or limited liability company consisting solely of the
Optionee and/or immediate family, or (c) to a trust established for the benefit
of the Optionee and/or one or more members of the immediate family of the
Optionee (including a charitable remainder trust whose income beneficiaries
consist solely of such persons), or (d) as provided in the Optionee's Stock
Option Agreement or with consent of the Board or Committee to any other person
or entity to which a transfer of compensatory securities is permitted under the
applicable rules for a Form S-8 registration statement, provided that such
transfer will not be effective until notice of such transfer is delivered to the
Corporation. For purposes of this paragraph (ii) "immediate family" means
spouse, children and grandchildren. An Option or portion thereof may also be
transferred pursuant to a domestic relations order of a court of competent
jurisdiction.

ARTICLE 15. FUTURE OF THE PLAN.

         15.1 TERM OF THE PLAN. The Plan, as set forth herein, is effective as
of November 16, 2003. The Plan shall remain in effect until terminated pursuant
to Section 15.2.

         15.2 AMENDMENT OR TERMINATION. The Board or the Committee may, at any
time and for any reason, amend or terminate the Plan. An amendment of the Plan
shall be subject to the approval of the Company's stockholders only to the
extent required by applicable laws, regulations or rules. No Awards shall be
granted under the Plan after the termination thereof. The termination of the
Plan, or any amendment thereof, shall not affect any Option previously granted
under the Plan.

ARTICLE 16. DEFINITIONS.

         16.1 "Award" means any award of an Option (with or without a related
SAR), a Restricted Share or a Stock Unit under the Plan.

         16.2 "Award Year" means a fiscal year with respect to which an Award
may be granted.

         16.3 "Board" means the Company's Board of Directors, as constituted
from time to time.

         16.4 "Change in Control" means the occurrence of either of the
following events:

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                  (a)      A change in the composition of the Board, as a result
         of which fewer than one-half of the incumbent directors are directors
         who either:

                           (i)      Had been directors of the Company 24 months
                  prior to such change; or

                           (ii)     Were elected, or nominated for election, to
                  the Board with the affirmative votes of at least a majority of
                  the directors who had been directors of the Company 24 months
                  prior to such change and who were still in office at the time
                  of the election or nomination; or

                  (b)      Any "person" (as such term is used in sections 13(d)
         and 14(d) of the Exchange Act) by the acquisition or aggregation of
         securities is or becomes the beneficial owner, directly or indirectly,
         of securities of the Company representing 50% or more of the combined
         voting power of the Company's then outstanding securities ordinarily
         (and apart from rights accruing under special circumstances) having the
         right to vote at elections of directors (the "Base Capital Stock");
         except that any change in the relative beneficial ownership of the
         Company's securities by any person resulting solely from a reduction in
         the aggregate number of outstanding shares of Base Capital Stock, and
         any decrease thereafter in such person's ownership of securities, shall
         be disregarded until such person increases in any manner, directly or
         indirectly, such person's beneficial ownership of any securities of the
         Company.

         16.5 "Code" means the Internal Revenue Code of 1986, as amended.

         16.6 "Committee" means the Compensation Committee of the Board, as
described in Article 2.

         16.7 "Common Share" means one share of the Common Stock of the Company.

         16.8 "Company" means Fair Isaac Corporation, a Delaware corporation.

         16.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         16.10 "Exercise Price" means the amount for which one Common Share may
be purchased upon exercise of an Option, as specified in the applicable Stock
Option Agreement.

         16.11 "Fair Market Value" means the market price of Common Shares,
determined by the Committee as follows:

                  (a)      If the Common Shares were traded over-the-counter on
         the date in question, whether or not classified as a national market
         issue, then the Fair Market Value shall be equal to the mean between
         the last reported bid and asked prices quoted by the NASDAQ system for
         such date;

                                       10
<PAGE>

                  (b)      If the Common Shares were traded on a stock exchange
         on the date in question, then the Fair Market Value shall be equal to
         the closing price reported by the applicable composite transactions
         report for such date; and

                  (c)      If none of the foregoing provisions is applicable,
         then the Fair Market Value shall be determined by the Committee in good
         faith on such basis as it deems appropriate.

Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported by the Research Section of the National
Association of Securities Dealers or in the Western Edition of The Wall Street
Journal. Such determination shall be conclusive and binding on all persons.

         16.12 "Key Employee" means a key common-law employee of the Company or
of a Subsidiary, as determined by the Committee.

         16.13 "NSO" means an employee stock option not described in sections
422 or 423 of the Code.

         16.14 "Option" means an NSO granted under the Plan and entitling the
holder to purchase one Common Share.

         16.15 "Optionee" means an individual or estate who holds an Option.

         16.16 "Participant" means an individual or estate who holds an Award.

         16.17 "Plan" means this Fair Isaac Corporation 2003 Employment
Inducement Award Plan, as it may be amended from time to time.

         16.18 "Restricted Share" means a Common Share awarded under the Plan.

         16.19 "SAR" means a stock appreciation right granted under the Plan.

         16.20 "Stock Award Agreement" means the agreement between the Company
and the recipient of a Restricted Share or Stock Unit which contains the terms,
conditions and restrictions pertaining to such Restricted Share or Stock Unit.

         16.21 "Stock Option Agreement" means the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.

         16.22 "Stock Unit" means a bookkeeping entry representing the
equivalent of one Common Share and awarded under the Plan.

         16.23 "Subsidiary" means any corporation, if the Company and/or one or
more other Subsidiaries own not less than 50% of the total combined voting power
of all classes of outstanding stock of such corporation. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.

                                       11
<PAGE>

ARTICLE 17. EXECUTION.

To verify that this is the Plan, the Company has caused its duly authorized
officer to affix the corporate name and seal hereto.

                                 FAIR ISAAC CORPORATION

                                 By   /s/   ANDREA M. FIKE
                                   ---------------------------------------------
                                                  Andrea M. Fike
                                   Vice President, General Counsel and Secretary

                                       12
<PAGE>

                             FAIR ISAAC CORPORATION

           TERMS AND CONDITIONS OF NONSTATUTORY STOCK OPTION AGREEMENT

              These are the terms and conditions applicable to the NONSTATUTORY
STOCK OPTION granted by Fair Isaac Corporation, a Delaware corporation ("Fair
Isaac"), to you, the optionee listed on the Notice of Grant of Stock Option
attached hereto as the cover page (the "Cover Page"), effective as of the date
of grant. The Cover Page together with these Terms and Conditions of
Nonstatutory Stock Option Agreement constitute the Nonstatutory Stock Option
Agreement (the "Option Agreement"). This Option is granted pursuant to the terms
of Fair Isaac's 2003 Employment Inducement Award Plan (the "Plan").

NONSTATUTORY      This Option is not intended to qualify as an incentive stock
                  option under Section 422 of the Internal Revenue Code.

VESTING           Your Option vests and will be exercisable on the Vesting
                  Dates, as shown on the Cover Page. In addition, your entire
                  Option vests and will be exercisable in full in the event
                  that:

                  -        your service as an employee of Fair Isaac (or any
                           subsidiary) terminates because of your Disability or
                           death, or

                  -        any written employment agreement (other than a stock
                           option agreement) between you and Fair Isaac provides
                           for acceleration of this Option upon a change in
                           control of Fair Isaac or upon any other specified
                           event or combination of events.

                  No additional shares become exercisable after your employment
                  or service with Fair Isaac has terminated for any reason.

EXERCISE PERIOD   The right to purchase shares under this Option Agreement
                  terminates at 3:00 p.m. Pacific Time on the earliest of

                  -        the Expiration Date shown on the Cover Page; or

                  -        the 90th day after the termination date of your
                           service as an employee of Fair Isaac (or any
                           subsidiary), except if your termination results from
                           Retirement, Disability or death; or

                  -        the anniversary date of your Retirement as an
                           employee of Fair Isaac (or any subsidiary); or

                  -        the anniversary date of the commencement of your
                           Disability, if you become disabled while an employee
                           of Fair Isaac (or any subsidiary) or

                  -        the anniversary date of your death, if you die while
                           an employee of Fair Isaac (or any subsidiary).

<PAGE>

LEAVES OF         For purposes of this Option, your service does not terminate
ABSENCE           when you go on a military leave, a sick leave or another bona
                  fide leave of absence, if the leave was approved by Fair Isaac
                  in writing. Unless you return to active work upon termination
                  of your approved leave, your service will be treated as
                  terminating on the later of 90 days after you went on leave or
                  the date that your right to return to active work is
                  guaranteed by law or by a contract. Fair Isaac will determine
                  which leaves count for this purpose.

RESTRICTIONS      You may not exercise this Option if the issuance of shares at
ON EXERCISE       that time would violate any law or regulation, as determined
                  by Fair Isaac. Moreover, you cannot exercise this Option
                  unless you have returned a signed copy of the Option Agreement
                  to Fair Isaac.

NOTICE OF         If you do not exercise this Option through an automated
EXERCISE          electronic exercise system approved by Fair Isaac, then you
                  must notify Fair Isaac in writing of your intent to exercise
                  this Option.

                  The notice must specify how many shares you wish to purchase
                  and must specify how your shares should be registered (i.e.,
                  in your name only, in your and your spouse's names as
                  community property, or as joint tenants with right of
                  survivorship).

                  If someone else wants to exercise this Option after your
                  death, that person must prove to Fair Isaac's satisfaction
                  that he or she is entitled to do so.

FORM OF           When you submit your notice, you must include payment of the
PAYMENT           exercise price shown on the Cover Page for the shares you are
                  purchasing. Payment may be made in one (or a combination of
                  two or more) of the following forms, as approved by Fair Isaac
                  in its sole discretion:

                  -        Your personal check, a cashier's check or a money
                           order;

                  -        Irrevocable directions to a securities broker
                           approved by Fair Isaac to sell shares underlying this
                           Option and to deliver all or a portion of the sale
                           proceeds to Fair Isaac in payment of the exercise
                           price and the balance of the sale proceeds to you; or

                  -        Certificates for shares of Fair Isaac common stock
                           that you have owned for at least 12 months, along
                           with any forms needed to effect a transfer of those
                           shares to Fair Isaac with the value of the shares,
                           determined as of the effective date of the exercise
                           of this Option, applied to the exercise price.

                                       -2-
<PAGE>

WITHHOLDING       You will not be allowed to exercise this Option unless you
TAXES             make acceptable arrangements to pay any withholding taxes that
                  may be due as a result of the exercise of this Option. These
                  arrangements must be satisfactory to Fair Isaac (in its sole
                  discretion), including whether you will be permitted to direct
                  Fair Isaac to withhold shares with a market value equal to the
                  withholding taxes due from the shares to be issued as a result
                  of your exercise of this Option.

RESTRICTIONS      By signing the Option Agreement, you agree not to sell any
ON RESALE         shares at a time when applicable laws or Fair Isaac policies
TRANSFER OF       prohibit a sale. Prior to your death, only you or a permitted
OPTION            assignee as defined herein may exercise this Option (unless
                  this Option or a portion thereof has been transferred to your
                  former spouse by a domestic relations order by a court of
                  competent jurisdiction). You may transfer this Option or a
                  portion of this Option by gift to members of your immediate
                  family, a partnership consisting solely of you and/or members
                  of your immediate family, or to a trust established for the
                  benefit of you and/or members of your immediate family
                  (including a charitable remainder trust whose income
                  beneficiaries consist solely of such persons). For purposes of
                  the foregoing, "immediate family" means your spouse, children
                  or grandchildren, including step-children or
                  step-grandchildren. Any of these persons is a "permitted
                  assignee." However, such transfer shall not be effective until
                  you have delivered to Fair Isaac notice of such transfer. You
                  cannot transfer, pledge, hypothecate, assign or otherwise
                  dispose of this Option, including using this Option as
                  security for a loan. Any attempts to do any of these things
                  contrary to the provisions of this Option, and the levy of any
                  attachment or similar process upon this Option, shall be null
                  and void. You may, however, dispose of this Option in your
                  will or by a written beneficiary designation. Such a
                  designation must be filed with Fair Isaac on the proper form.

RETENTION         Neither your Option nor the terms of this Option Agreement
RIGHTS            give you the right to continue as an employee of Fair Isaac
                  (or any subsidiaries) in any capacity. Fair Isaac (and any
                  subsidiaries) reserve the right to terminate your service at
                  any time, with or without cause, subject to the terms of any
                  written employment agreement signed by you and Fair Isaac.

                                       -3-
<PAGE>

STOCKHOLDER       You, or your assignees, estate, beneficiaries or heirs, have
RIGHTS            no rights as a stockholder of Fair Isaac until a certificate
                  for any portion of shares underlying this Option has been
                  issued. No adjustments are made for dividends or other rights
                  if the applicable record date occurs before your stock
                  certificate is issued, except as described in the Plan.

ADJUSTMENTS       In the event of any adjustments to the capital stock of Fair
                  Isaac as described in Article 10 of the Plan, the number of
                  shares covered by this Option and the exercise price per share
                  may be adjusted as Fair Isaac may determine pursuant to the
                  Plan.

APPLICABLE        This Agreement will be interpreted and enforced under the laws
LAW               of the State of Delaware (without regard to its rules on
                  choice of law).

OTHER             This Option Agreement, the Plan and any written agreement
AGREEMENTS        between you and Fair Isaac (or any subsidiaries) providing for
                  acceleration of options granted to you by Fair Isaac upon a
                  change in control of Fair Isaac constitute the entire
                  understanding between you and Fair Isaac regarding this
                  Option. Any other prior agreements, commitments or
                  negotiations concerning this Option are superseded. If there
                  is any inconsistency between the provisions of this Agreement
                  and the Plan, the provisions of the Plan shall govern. This
                  Agreement may be amended only in writing.

DEFINITIONS       "Retirement" means the date that you are eligible for normal
                  retirement or early retirement, as defined as follows:

                  -        "Normal Retirement Age" means age 65

                  -        "Early Retirement" means age 55 and completed 10
                           Years of Service. One Year of Service is the
                           completion of at least 1,000 hours of service during
                           the year.

                  "Disability" means that you are unable to engage in any
                  substantial gainful activity by reason of a medically
                  determinable, physical or mental impairment which can be
                  expected to result in death or which has lasted (or can be
                  expected to last) for a continuous period of not less than 12
                  months.

BY SIGNING THE COVER PAGE, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED ABOVE AND IN THE PLAN.

                                       -4-<PAGE>

                                                                    EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into
effective January 30, 2004 (the "Effective Date") by and between Fair Isaac
Corporation (the "Company"), a Delaware Corporation having its principal office
at 200 Smith Ranch Road, San Rafael, California 94903, and Thomas G. Grudnowski,
a resident of Minnesota ("Executive").

                  A.       The Company provides customer and operational data
management and modeling, information analysis, strategy design and software to a
variety of industries worldwide.

                  B.       Executive is the Chief Executive Officer of the
Company and a member of the Company's Board of Directors (the "Board").

                  C.       Executive is currently employed by the Company
pursuant to the terms and conditions of an Employment Agreement dated August 23,
1999, as amended by a First Amendment to Employment Agreement dated December 3,
1999 and a Second Amendment to Employment Agreement dated December 2001
(hereinafter the "Prior Employment Agreement"), which Prior Employment Agreement
expired December 1, 2003.

                  D.       Pursuant to the Prior Employment Agreement, Executive
and the Company are parties to stock option agreements (the "Prior Stock Option
Agreements") that grant to Executive certain options to purchase shares of the
Company's common stock, including but not limited to an option to purchase
420,000 shares of the Company's common stock (the "Initial Option") under
conditions specified in the Prior Employment Agreement and in a Notice of Grant
of Stock Options and Option Agreement dated effective August 23, 1999 (the
"Initial Option Agreement").

                  E.       The Company and Executive desire to consolidate the
terms and conditions of the Initial Option, as set forth in the Initial Option
Agreement and the Prior Employment Agreement, in a single Restated Nonstatutory
Stock Option Agreement, which is attached to this Agreement as Exhibit A.

                  F.       The Company desires to continue to employ Executive
and Executive desires to continue his employment, and both desire to extend the
anticipated term of Executive's employment with the Company, on the terms and
conditions set forth in this Agreement.

                  NOW, THEREFORE, in consideration of the foregoing premises and
the respective agreements of the Company and Executive set forth below, the
Company and Executive, intending to be legally bound, agree as follows:

<PAGE>

                  1.       Employment. The Company shall continue to employ
Executive as its Chief Executive Officer, and Executive shall accept such
employment and perform services for the Company, upon the terms and conditions
set forth in this Agreement.

                  2.       Term. The Company agrees to employ Executive and
Executive agrees to be employed by the Company on a full-time basis for the
period commencing on the Effective Date and ending on January 30, 2009, provided
that such period shall be automatically extended for one year and from
year-to-year thereafter until notice of termination is given by the Company or
Executive to the other party at least 60 days prior to January 30, 2009 or the
one-year extension period then in effect, as the case may be, unless Executive's
employment is sooner terminated pursuant to Section 7 hereof.

                  3.       Position and Duties.

                  (a)      Employment as Chief Executive Officer. During
Executive's employment with the Company, Executive shall be an executive officer
of the Company and Executive's title shall be Chief Executive Officer. Executive
shall report to the Board and shall perform such duties and responsibilities as
the Board shall assign to him from time to time consistent with his position.

                  (b)      Board of Directors. Executive shall continue as a
director of the Company and shall diligently perform the duties arising from
such position. After expiration of Executive's current term as director, the
Board shall thereafter, so long as Executive is the Chief Executive Officer of
the Company, nominate Executive for re-election to a position on the Board.

                  (c)      Performance of Duties and Responsibilities. Executive
shall serve the Company faithfully and to the best of his ability and shall
devote his full working time, attention and efforts to the business of the
Company during his employment with the Company. Executive hereby represents and
confirms that he is under no contractual or legal commitments that would prevent
him from fulfilling his duties and responsibilities as set forth in this
Agreement. During his employment with the Company, Executive may participate in
charitable activities and personal investment activities to a reasonable extent,
and he may serve as a director of business and civic organizations as approved
by the Board, so long as such activities and directorships do not interfere with
the performance of his duties and responsibilities hereunder.

                  4.       Compensation.

                  (a)      Base Salary. While Executive is employed by the
Company hereunder, the Company shall pay to Executive an annualized Base Salary
of $625,000, less all legally required and authorized deductions and
withholdings, which Base Salary shall be paid in accordance with the Company's
normal payroll policies and procedures. During each year of Executive's
employment hereunder, the Company shall conduct an annual performance

                                       2
<PAGE>

review of Executive and thereafter establish Executive's Base Salary in an
amount not less than the Base Salary in effect for the prior year. Executive's
Base Salary shall not be reduced unless such reduction is made as part of a
general reduction in the base salaries for all executive officers of the
Company.

                  (b)      Incentive Awards. For each full fiscal year that
Executive is employed by the Company hereunder, Executive shall be eligible for
an annual bonus ("Incentive Award") with a target amount equal to one times
Executive's Base Salary if Executive's achievements are "at plan," as determined
by the Board. The actual amount of such Incentive Award for any fiscal year may
range from $0 to two times Executive's Base Salary, based on the achievement of
certain strategic, business, and financial objectives determined by the Board in
consultation with Executive. Such Incentive Awards shall be due and payable to
Executive in full as soon as administratively practicable following the Board's
assessment of Company and Executive performance but in no case later than 60
calendar days after the end of each fiscal year. Executive's eligibility for an
Incentive Award hereunder shall be in lieu of Executive's participation in the
Company's Management Incentive Plan or any similar or successor bonus plan of
the Company. The parties acknowledge that Executive is eligible for an incentive
award for the fiscal year ended September 30, 2003, in accordance with the terms
of the Prior Employment Agreement and any applicable incentive plan.

                  (c)      Stock Options.

                           (i)      One-Time Stock Option Grant. Within five
business days after execution of this Agreement, the Company shall grant
Executive a nonstatutory option to purchase 375,000 shares of the common stock
of the Company, vesting over three years, 33% on each anniversary date following
the date of grant, subject to the terms of the Company's 1992 Long-Term
Incentive Plan (the "Plan") and a stock option agreement to be entered into by
the Company and Executive. The exercise price of the option shall be the Fair
Market Value (as defined in the Plan) of the shares as of the date of the grant.

                           (ii)     Annual Option Grants. During his employment
with the Company hereunder, Executive shall be eligible for additional option
grants after completion of each of the fiscal years ending in 2004, 2005, 2006,
and 2007. Each grant will be based on the Company's performance relative to the
average annual Total Shareholder Return for companies listed on the S&P 900
Index compounded over the three-year period ending on the last day of the
applicable fiscal year ("Compounded TSR"), and will be subject to the terms and
conditions of the Plan as then in effect and an option agreement substantially
in the form attached as Exhibit B. For purposes of this Agreement, "Total
Shareholder Return" or "TSR" shall be determined by the Company for each fiscal
year as follows:

       ((Average Market Price for 30 calendar days ending on the last day of the
       fiscal year period + Dividends Per Share + Special Dividend-Quarter 1 +
       Special Dividend-Quarter 2 + Special Dividend-Quarter 3 + Special
       Dividend-Quarter 4) / Average Market Price for 30 calendar days ending on
       the last day of the previous fiscal year) - 1.

                                       3
<PAGE>

"Compounded TSR" for any three-year period shall be determined by the Company as
follows:

       (((1 + Year one TSR) * (1 + Year two TSR) * (1 + Year three TSR)) to the
power of 1/3) - 1

The annual option grants to be made pursuant to this Section 4(c)(ii) shall be
for the following amounts (in each case, appropriately adjusted to reflect any
stock splits, stock dividends, or the like): If the Company's Compounded TSR is
at least equal to the 25th percentile of Compounded TSR for all S&P 900 Index
companies, but less than the median, the option grant to Executive for such
fiscal year shall be for 100,000 shares. If the Company's Compounded TSR is at
least equal to the median but less than the 75th percentile, the option grant to
Executive for such fiscal year shall be for 125,000 shares. If the Company's
Compounded TSR is equal to or greater than the 75th percentile, the option grant
to Executive for such fiscal year shall be for 200,000 shares. If the Company's
Compounded TSR is below the 25th percentile, no option grant will be made to
Executive for such fiscal year.

The calculations and comparisons required by this Section 4(c)(ii) shall be
determined by an executive compensation consultant retained by the Company. The
Board shall grant any options earned hereunder as soon as practicable after
completion of the fiscal year, but no later than five business days after
receipt of the calculations and comparisons from the executive compensation
consultant. The options provided for in this Section 4(c)(ii) shall be the
minimum granted to Executive during his employment hereunder and nothing in this
Agreement shall prohibit the Board from granting to Executive options for
additional shares in its sole discretion. Notwithstanding the foregoing, the
Company shall have no obligation to make grants hereunder if the Company in good
faith believes that such grants are not permitted by applicable laws or stock
exchange rules, as determined in the reasonable discretion of the Company.

                  (d)      Employee Benefits. While Executive is employed by the
Company hereunder and except as specifically provided in this Agreement,
Executive shall be entitled to participate in all employee benefit plans and
programs of the Company, including without limitation health and disability
insurance coverage, to the extent that Executive meets the eligibility
requirements for each individual plan or program. Executive acknowledges that
his participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto, and that such plans and
programs may be modified by the Company from time to time.

                  (e)      Expenses. While Executive is employed by the Company
hereunder, the Company shall reimburse Executive for all reasonable and
necessary out-of-pocket business, travel and entertainment expenses incurred by
him in the performance of his duties

                                       4
<PAGE>

and responsibilities hereunder, subject to the Company's normal policies and
procedures for expense verification and documentation.

                  (f)      Term Life Insurance. While Executive is employed by
the Company hereunder, the Company shall purchase group term life insurance for
Executive with coverage of $500,000.

                  (g)      Vacation. While Executive is employed by the Company
hereunder, Executive shall receive four weeks paid vacation time off each year.
Vacation time shall be taken at such times so as not to unduly disrupt the
operations of the Company.

                  5.       Confidentiality Agreements. Executive acknowledges
entering into the Company's Customer Information Confidentiality Agreement and
its Non-Disclosure Agreement (collectively "Confidentiality Agreements") and
hereby reaffirms his commitments and obligations under the Confidentiality
Agreements. Nothing in this Agreement is intended to modify, amend, cancel, or
supersede the Confidentiality Agreements in any manner.

                  6.       Management Agreement. At the same time as Executive
and the Company enter into this Agreement, the parties shall also enter into the
Management Agreement attached hereto as Exhibit C (the "Management Agreement").

                  7.       Termination of Employment.

                  (a)      The Executive's employment with the Company is at
will and shall terminate immediately upon:

                           (i)      Executive's receipt of written notice from
                                    the Company of the termination of his
                                    employment, other than notice that the
                                    Company elects not to extend the term of
                                    this Agreement;

                           (ii)     Executive's abandonment of his employment or
                                    his resignation, other than notice to the
                                    Company that he elects not to extend the
                                    term of this Agreement;

                           (iii)    Executive's Disability (as defined below);

                           (iv)     Executive's death; or

                           (v)      the expiration of the term of Executive's
                                    employment with the Company, after notice as
                                    specified in Section 2 hereof.

                  (b)      The date upon which Executive's termination of
employment with the Company occurs shall be the "Termination Date."

                                       5
<PAGE>

                  8.       Payments upon Termination of Employment.

                  (a)      If Executive's employment with the Company is
terminated: (A) by the Company prior to the expiration of the term or any
extension thereof for any reason other than for Cause (as defined below), (B) by
Executive prior to expiration of the term or any extension thereof for Good
Reason (as defined below), or (C) upon expiration of the term or extended term
of Executive's employment with the Company upon Executive's retirement or other
notice by either party not to renew the term or extended term, as specified in
Section 2 hereof; then, subject to Section 8(g) below, the Company shall pay to
Executive:

                           (i)      a lump sum equal to two (2) times
                                    Executive's then-current Base Salary;

                           (ii)     a lump sum equal to two (2) times the amount
                                    of the Incentive Award earned by Executive
                                    for the last full fiscal year of Executive's
                                    employment with the Company; and

                           (iii)    any earned but unpaid Base Salary, incentive
                                    compensation, benefits, and vacation or
                                    other paid time off through the Termination
                                    Date, paid in accordance with the Company's
                                    normal payroll practices and procedures.

Any amount payable to Executive hereunder shall be subject to regular payroll
deductions and withholdings. All payments required under Sections 8(a)(i) and
8(a)(ii) shall be paid to Executive within 60 days after expiration of all
consideration and rescission periods applicable to the release described in
Section 8(g).

                  (b)      If Executive's employment with the Company is
terminated by reason of:

                           (i)      Executive's abandonment of his employment or
                                    Executive's resignation (other than for Good
                                    Reason or upon expiration of the term of
                                    employment or any extension thereof after
                                    notice pursuant to Section 2 hereof);

                           (ii)     termination of Executive's employment by the
                                    Company for Cause (as defined below); or

                           (iii)    Executive's Disability or death,

the Company shall pay to Executive or his beneficiary or his estate, as the case
may be, any earned but unpaid Base Salary, incentive compensation, benefits, and
vacation or other paid

                                       6
<PAGE>

time off through the Termination Date, paid in accordance with the Company's
normal payroll practices and procedures.

                  (c)      "Cause" hereunder shall mean:

                           (i)      an act or acts of personal dishonesty taken
                                    by Executive and intended to result in
                                    substantial personal enrichment of Executive
                                    at the expense of the Company;

                           (ii)     material breach by Executive of any of his
                                    obligations under this Agreement or the
                                    Confidentiality Agreements, or Executive's
                                    repeated failure or refusal to perform or
                                    observe Executive's material duties,
                                    responsibilities and obligations as an
                                    employee or officer of the Company for
                                    reasons other than Disability, if such
                                    breach, failure, or refusal continues ten
                                    days following written notice thereof by the
                                    Company to Executive identifying the same
                                    and specifying that Executive's employment
                                    may be terminated if the same continues;

                           (iii)    the existence of any court order prohibiting
                                    Executive's continued employment with the
                                    Company;

                           (iv)     if Executive has signed or entered into a
                                    written or oral non-competition agreement,
                                    confidentiality agreement, proprietary
                                    information agreement, trade secret
                                    agreement or any other agreement which would
                                    prevent Executive from working for the
                                    Company or from performing Executive's
                                    duties at the Company; or

                           (v)      the willful engaging by Executive in illegal
                                    conduct that is materially and demonstrably
                                    injurious to the Company.

For the purposes of this Section 8(c), no act or failure to act on Executive's
part shall be considered "dishonest," "willful" or "deliberate" unless done or
omitted to be done by Executive in bad faith and without reasonable belief that
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board of Directors of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by Executive in good faith and in the best interests of the Company.

                  (d)      "Disability" hereunder shall mean the inability of
Executive to perform on a full-time basis the duties and responsibilities of his
employment with the Company by reason of his illness or other physical or mental
impairment or condition, if such inability continues for an uninterrupted period
of 180 days or more during any 360-day period. A

                                       7
<PAGE>

period of inability shall be "uninterrupted" unless and until Executive returns
to full-time work for a continuous period of at least 30 days.

                  (e)      "Good Reason" shall mean a material adverse change in
Executive's title or reporting relationship, without Executive's consent,
excluding any inadvertent change that is remedied by the Company promptly after
receipt of a written notice thereof from Executive.

                  (f)      In the event of termination of Executive's
employment, the sole obligation of the Company shall be its obligation to make
the payments called for by Section 8(a) or Section 8(b) hereof, as the case may
be, and the Company shall have no other obligation to Executive or to his
beneficiary or his estate, except as otherwise provided by law, under the terms
of any other applicable agreement between Executive and the Company or under the
terms of any employee benefit plans or programs then maintained by the Company
in which Executive participates.

                  (g)      Notwithstanding the foregoing provisions of this
Section 8, the Company shall not be obligated to make any payments to Executive
under Section 8(a)(i) or 8(a)(ii) hereof unless and until:

                           (i)      Executive shall have signed and not
                                    rescinded a release of claims in favor of
                                    the Company in a reasonable form to be
                                    prescribed by the Board (other than claims
                                    Executive may have to receive benefits under
                                    this Agreement, under other then-applicable
                                    agreements between Executive and the Company
                                    or under any employee benefit plans of the
                                    Company in which Executive is then a
                                    participant, or for indemnification under
                                    applicable law, the charter documents of the
                                    Company, any related insurance policy
                                    maintained by the Company, or any written
                                    agreement between Executive and the Company
                                    related to indemnification), all applicable
                                    consideration periods and rescission periods
                                    provided by law shall have expired and
                                    Executive is in strict compliance with the
                                    terms of this Agreement and the
                                    Confidentiality Agreements as of the dates
                                    of the payments;

                           (ii)     Executive shall have signed an agreement, in
                                    a reasonable form to be prescribed by the
                                    Board, prohibiting Executive for a period of
                                    one (1) year following the Termination Date
                                    from soliciting, recruiting or inducing, or
                                    attempting to solicit, recruit or induce,
                                    any employee of the Company to terminate
                                    such employee's employment; and

                                       8
<PAGE>

                           (iii)    in the case of payments under Section 8(a)
                                    by reason of expiration of the term or
                                    extended term of Executive's employment with
                                    the Company upon Executive's retirement or
                                    other notice by either party not to renew
                                    the term or extended term, as specified in
                                    Section 2 hereof, Executive shall have
                                    signed an agreement, in a reasonable form to
                                    be prescribed by the Board, prohibiting
                                    Executive for a period of three (3) years
                                    following the Termination Date from, (A) in
                                    North America and any other location where
                                    the Company is doing business, directly or
                                    indirectly engaging in any activity or
                                    business that competes with the Company and
                                    (B) directly or indirectly soliciting,
                                    recruiting or inducing, or attempting to
                                    solicit, recruit or induce, any employee of
                                    the Company to terminate such employee's
                                    employment.

                  (h)      Notwithstanding the foregoing provisions of this
Section 8, if Executive is eligible for payments or other benefits pursuant to
the terms and conditions of the Management Agreement, Executive shall not be
entitled to receive any compensation or benefits under Section 8(a) above.

                  9.       Return of Records and Property. Upon termination of
his employment with the Company, Executive shall promptly deliver to the Company
any and all Company records and any and all Company property in his possession
or under his control, including without limitation manuals, books, blank forms,
documents, letters, memoranda, notes, notebooks, reports, printouts, computer
disks, computer tapes, source codes, data, tables or calculations and all copies
thereof, documents that in whole or in part contain any trade secrets or
confidential, proprietary or other secret information of the Company and all
copies thereof, and keys, access cards, access codes, passwords, credit cards,
personal computers, telephones and other electronic equipment belonging to the
Company.

                  10.      Disputes. In the event of any dispute, controversy,
or claim for damages arising under or in connection with this Agreement,
including, but not limited to, claims for wages or compensation due; claims for
breach of any contract or covenant (expressed or implied); tort claims; claims
for discrimination; claims for benefits (except where an employee benefit or
profit sharing plan specifies that its claims procedures shall culminate in an
arbitration procedure) and claims for violation of any Federal, State or other
governmental law, statute, regulation, or ordinance, except claims for workers'
compensation or unemployment compensation benefits, Executive and the Company
mutually agree to in good faith consider the use of forms of alternative dispute
resolution, including, but not limited to, arbitration and/or mediation.

                                       9
<PAGE>

                  11.      Miscellaneous.

                  (a)      Governing Law. All matters relating to the
interpretation, construction, application, validity and enforcement of this
Agreement shall be governed by the laws of the State of Minnesota without giving
effect to any choice or conflict of law provision or rule, whether of the State
of Minnesota or any other jurisdiction, that would cause the application of laws
of any jurisdiction other than the State of Minnesota.

                  (b)      Jurisdiction. Executive and the Company consent to
jurisdiction of the courts of the State of Minnesota and/or the federal district
courts, District of Minnesota, for the purpose of resolving all issues of law,
equity, or fact arising out of or in connection with this Agreement. Unless
otherwise agreed in accordance with Section 10 of this Agreement, any action
involving claims of a breach of this Agreement shall be brought in such courts.
Each party consents to personal jurisdiction over such party in the state and/or
federal courts of Minnesota and hereby waives any defense of lack of personal
jurisdiction.

                  (c)      Entire Agreement. Except for any stock option
agreements between the parties, this Agreement contains the entire agreement of
the parties relating to the subject matter of this Agreement and supersedes all
prior agreements and understandings with respect to such subject matter,
including but not limited to the Prior Employment Agreement and the Initial
Option Agreement. The parties hereto have made no agreements, representations or
warranties relating to the subject matter of this Agreement that are not set
forth herein. This Agreement does not supersede, modify, or cancel the Prior
Stock Option Agreements (other than the Initial Option Agreement), the Restated
Nonstatutory Stock Option Agreement, the Management Agreement, the
Confidentiality Agreements, or any indemnification agreement between Executive
and the Company.

                  (d)      Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing and signed by the
parties hereto.

                  (e)      No Waiver. No term or condition of this Agreement
shall be deemed to have been waived, except by a statement in writing signed by
the party against whom enforcement of the waiver is sought. Any written waiver
shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.

                  (f)      Assignment. This Agreement shall not be assignable,
in whole or in part, by either party without the written consent of the other
party, except that the Company may, without the consent of Executive, assign its
rights and obligations under this Agreement to any corporation or other business
entity (i) with which the Company may merge or consolidate, or (ii) to which the
Company may sell or transfer all or substantially all of its assets or capital
stock; provided, however, that no such assignment shall relieve the Company of
its obligations hereunder in the event that the assignee shall fail to perform
the same.

                                       10
<PAGE>

                  (g)      Counterparts. This Agreement may be executed in any
number of counterparts, and such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.

                  (h)      Captions and Headings. The captions and paragraph
headings used in this Agreement are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement or any of the
provisions hereof.

                  IN WITNESS WHEREOF, Executive and the Company have executed
this Agreement as of the date set forth in the first paragraph.

                                               /s/ THOMAS G. GRUDNOWSKI
                                               ---------------------------------
                                               Thomas G. Grudnowski

                                               Fair Isaac Corporation

                                               By /s/ PHILIP G. HEASLEY
                                                  ------------------------------

                                                Its /s/ CHAIRMAN OF THE
                                                        COMPENSATION COMMITTEE
                                                    ----------------------------

                                       11
<PAGE>

                                    RESTATED
                       NONSTATUTORY STOCK OPTION AGREEMENT

                             Fair Isaac Corporation
                                 Id: 94:1499887
                              200 Smith Ranch Road
                              San Rafael, CA 94903

NOTICE OF GRANT OF STOCK OPTION

Thomas G. Grudnowski                         OPTION NUMBER: 001798
                                             PLAN:          CEO
                                             ID:

This Restated Nonstatutory Stock Option Agreement consolidates and restates the
terms and conditions of the option granted to you by Fair Isaac Corporation (the
"Company") on August 24, 1999, and which terms and conditions have previously
been contained in a Notice of Grant of Stock Option and Option Agreement and an
Employment Agreement between you and the Company dated effective August 23,
1999. Because the parties are entering into a new employment agreement which
supercedes the prior employment agreement, it is desirable to enter into this
Restated Nonstatutory Stock Option Agreement containing all of the terms and
conditions of the Option.

You have been granted a Non-Qualified Stock Option to buy 420,000 shares of
common stock of the Company at a price of $32.5000 per share (the "Option").1
The Option will expire on August 24, 2009 (the "Expiration Date").

The total option price of the shares granted (pre-split) is $13,650,000.00.

Subject to the Terms and Conditions of Nonstatutory Stock Option Agreement
attached to this Notice of Grant, the Option shall become exercisable as to the
number of shares of common stock on the dates specified below.

<TABLE>
<CAPTION>
SHARES (PRE-SPLIT)            VESTING DATE
------------------          ----------------
<S>                         <C>
     105,000                December 2, 2000
       8,750                December 31, 2000
       8,750                January 31, 2001
       8,750                February 28, 2001
       8,750                March 31, 2001
       8,750                April 30, 2001
       8,750                May 31, 2001
</TABLE>

--------

(1)      The 420,000 shares and $32.500 price per share reflect the option grant
as of its date of grant. Since the date of grant, the Company's common stock has
split and the share price for the Option has been adjusted accordingly. As of
October 1, 2003, this Option is for 945,000 shares of the Company's common stock
with an exercise price of $14.4445 per share.

                                                                       EXHIBIT A

<PAGE>

<TABLE>
<S>                         <C>
       8,750                June 30, 2001
       8,750                July 31, 2001
       8,750                August 31, 2001
       8,750                September, 30, 2001
       8,750                October 31, 2001
       8,750                November 30, 2001
       8,750                December, 31, 2001
       8,750                January 31, 2002
       8,750                February 28, 2002
       8,750                March 31, 2002
       8,750                April 30, 2002
       8,750                May 31, 2002
       8,750                June 30, 2002
       8,750                July 31, 2002
       8,750                August 31, 2002
       8,750                September, 30, 2002
       8,750                October 31, 2002
       8,750                November 30, 2002
       8,750                December, 31, 2002
       8,750                January 31, 2003
       8,750                February 28, 2003
       8,750                March 31, 2003
       8,750                April 30, 2003
       8,750                May 31, 2003
       8,750                June 30, 2003
       8,750                July 31, 2003
       8,750                August 31, 2003
       8,750                September 30, 2003
       8,750                October 31, 2003
       8,750                November 30, 2003
</TABLE>

By your signature and the Company's signature below, you and the Company agree
that this Restated Notice of Grant of Stock Option and the Terms and Conditions
of Nonstatutory Stock Option Agreement, which is attached hereto, constitute the
Nonstatutory Stock Option Agreement governing this Option.

------------------------------------              ------------------------------
Andrea M. Fike, Vice President                    Date:
Fair Isaac Corporation

------------------------------------              ------------------------------
Thomas G. Grudnowski                              Date:

                                       -2-
<PAGE>

                             FAIR ISAAC CORPORATION

           TERMS AND CONDITIONS OF NONSTATUTORY STOCK OPTION AGREEMENT

                            FOR THOMAS G. GRUDNOWSKI

                  These are the terms and conditions applicable to the
NONSTATUTORY STOCK OPTION granted by Fair Isaac Corporation, a Delaware
corporation ("Fair Isaac"), to you, the optionee listed on the Notice of Grant
of Stock Option attached hereto as the cover page (the "Notice"), effective as
of the date of grant. The Notice together with these Terms and Conditions of
Nonstatutory Stock Option Agreement constitute the Nonstatutory Stock Option
Agreement (the "Option Agreement").

NONSTATUTORY              This Option is not intended to qualify as an incentive
                          stock option under Section 422 of the Internal Revenue
                          Code.

VESTING                   Your Option vests and will be exercisable on the
                          Vesting Dates, as shown on the Notice. In addition,
                          your entire Option vests and will be exercisable in
                          full in the event that:

                          -    your service as an employee or director of Fair
                               Isaac (or any subsidiary) terminates because of
                               your Retirement, Disability or death; or

                          -    upon the occurrence of an Event while you are
                               still an employee, director, consultant or
                               advisor of Fair Isaac (or any subsidiary); or

                          -    any written employment agreement (other than an
                               option agreement) between you and Fair Isaac
                               provides for acceleration of this Option upon a
                               change in control of Fair Isaac or upon any other
                               specified event or combination of events.

                          In the event Fair Isaac terminates your employment
                          without Cause (other than as a result of death or
                          Disability), any unvested options scheduled to vest
                          within 12 months from and after the date of such
                          termination without Cause shall vest and become
                          immediately exercisable.

                          No additional shares become exercisable after your
                          employment or service with Fair Isaac has terminated
                          for any reason.

EXERCISE PERIOD           The right to purchase shares under this Option
                          Agreement terminates at 3:00 p.m. Pacific Time on the
                          earliest of

                          -    the Expiration Date shown on the Notice; or

                          -    the 90th day after the termination date of your
                               service as an employee, director, consultant or
                               advisor of Fair Isaac (or any subsidiary), except
                               if termination results from your Disability or
                               death or if termination occurs following an
                               Event; or

<PAGE>

                          -    the anniversary date of the termination of your
                               service as an employee, director, consultant or
                               advisor of Fair Isaac (or any subsidiary) because
                               of Disability; or

                          -    the anniversary date of your death, if you die
                               while an employee, director, consultant or
                               advisor of Fair Isaac (or any subsidiary).

LEAVES OF                 For purposes of this Option, your service does not
ABSENCE                   terminate when you go on a military leave, a sick
                          leave or another bona fide leave of absence, if the
                          leave was approved by Fair Isaac in writing. Unless
                          you return to active work upon termination of your
                          approved leave, your service will be treated as
                          terminating on the later of 90 days after you went on
                          leave or the date that your right to return to active
                          work is guaranteed by law or by a contract. Fair Isaac
                          will determine which leaves count for this purpose.

RESTRICTIONS              You may not exercise this Option if the issuance of
ON EXERCISE               shares at that time would violate any law or
                          regulation, as determined by Fair Isaac. Moreover, you
                          cannot exercise this Option unless you have returned a
                          signed copy of the Option Agreement to Fair Isaac.

NOTICE OF                 When you wish to exercise this Option, you must notify
EXERCISE                  Fair Isaac by filing the proper Notice of Exercise
                          form and delivering it to the address provided on the
                          Notice of Exercise before your right to purchase
                          shares under this Option Agreement terminates. If you
                          send your Notice of Exercise by facsimile
                          transmission, it will be effective only if it is
                          promptly confirmed by filing a form with an original
                          signature.

                          The Notice of Exercise must specify how many shares
                          you wish to purchase and must specify how your shares
                          should be registered (in your name only or in your and
                          your spouse's names as community property or as joint
                          tenants with right of survivorship).

                          If someone else wants to exercise this Option after
                          your death, that person must prove to Fair Isaac's
                          satisfaction that he or she is entitled to do so.

FORM OF                   When you submit your Notice of Exercise, you must
PAYMENT                   include payment of the exercise price shown on the
                          Notice for the shares you are purchasing. Payment may
                          be made in one (or a combination of two or more) of
                          the following forms as approved by Fair Isaac in its
                          sole discretion:

                          -    your personal check, a cashier's check or a money
                               order;

                                       -2-
<PAGE>

                          -    irrevocable directions to a securities broker
                               approved by Fair Isaac to sell shares underlying
                               this Option and to deliver all or a portion of
                               the sale proceeds to Fair Isaac in payment of the
                               exercise price and the balance of the sale
                               proceeds to you, all pursuant to a special
                               "Notice of Exercise" form provided by Fair Isaac;
                               or

                          -    certificates for shares of Fair Isaac common
                               stock that you have owned for at least 12 months,
                               along with any forms needed to effect a transfer
                               of those shares to Fair Isaac with the value of
                               the shares, determined as of the effective date
                               of the exercise of this Option, applied to the
                               exercise price.

WITHHOLDING               You will not be allowed to exercise this Option unless
TAXES                     you make acceptable arrangements to pay any
                          withholding taxes that may be due as a result of the
                          exercise of this Option. These arrangements must be
                          satisfactory to Fair Isaac. You may direct Fair Isaac
                          to withhold shares with a market value equal to the
                          withholding taxes due from the shares to be issued as
                          a result of your exercise of this Option.

RESTRICTIONS              By signing the Option Agreement, you agree not to sell
ON RESALE                 any shares at a time when applicable laws or Fair
                          Isaac policies prohibit a sale.

TRANSFER OF               Prior to your death, only you or a permitted assignee
OPTION                    as defined herein may exercise this Option (unless
                          this Option or a portion thereof has been transferred
                          to your former spouse by a domestic relations order by
                          a court of competent jurisdiction). You may transfer
                          this Option or a portion of this Option by gift to
                          members of your immediate family, a partnership
                          consisting solely of you and/or members of your
                          immediate family, or to a trust established for the
                          benefit of you and/or members of your immediate family
                          (including a charitable remainder trust whose income
                          beneficiaries consist solely of such persons). For
                          purposes of the foregoing, "immediate family" means
                          your spouse, children or grandchildren, including
                          step-children or step-grandchildren. Any of these
                          persons is a "permitted assignee." However, such
                          transfer shall not be effective until you have
                          delivered to Fair Isaac notice of such transfer. You
                          cannot transfer, pledge, hypothecate, assign or
                          otherwise dispose of this Option, including using this
                          Option as security for a loan. Any attempts to do any
                          of these things contrary to the provisions of this
                          Option, and the levy of any attachment or similar
                          process upon this Option, shall be null and void and
                          this Option shall immediately become invalid. You may,
                          however, dispose of this Option in your will or by a
                          written beneficiary designation. Such a designation
                          must be filed with Fair Isaac on the proper form.

RETENTION                 Neither this Option nor the terms of this Option
RIGHTS                    Agreement give you the right to continue as an
                          employee or director of Fair Isaac (or any

                                     -3-
<PAGE>

                          subsidiaries) in any capacity. Fair Isaac (and any
                          subsidiaries) reserve the right to terminate your
                          service at any time, with or without cause, subject to
                          the terms of any written employment agreement signed
                          by you and Fair Isaac.

STOCKHOLDER               You, or your assignees, estate, beneficiaries or
RIGHTS                    heirs, have no rights as a stockholder of Fair Isaac
                          until a certificate for any portion of the shares
                          underlying this Option has been issued. No adjustments
                          are made for dividends or other rights if the
                          applicable record date occurs before your stock
                          certificate is issued.

ADJUSTMENTS               In the event of a stock split, a stock dividend or a
                          similar change in Fair Isaac stock, the number of
                          shares covered by this Option and the exercise price
                          per share may be adjusted as Fair Isaac may determine.
                          In the event of a subdivision of the common stock of
                          Fair Isaac ("Common Stock") outstanding, a declaration
                          of a dividend payable in Common Stock, a declaration
                          of a dividend payable in a form other than Common
                          Stock in an amount that has a material effect on the
                          price of the Common Stock, a combination or
                          consolidation of the outstanding Common Stock (by
                          reclassification or otherwise) into a lesser number of
                          shares, a recapitalization, a spinoff or a similar
                          occurrence, Fair Isaac shall make appropriate
                          adjustments in one or more of (a) the number of shares
                          underlying this Option, or (b) the exercise price of
                          this Option.

APPLICABLE LAW            This Agreement will be interpreted and enforced under
                          the laws of the State of Delaware (without regard to
                          its rules on choice of law).

OTHER                     This Option Agreement constitutes the entire
AGREEMENTS                understanding between you and Fair Isaac regarding
                          this Option. Any other prior agreements, commitments
                          or negotiations concerning this Option are superseded.
                          This Agreement may be amended only in writing.

DEFINITIONS               "RETIREMENT" means that you have terminated your
                          employment with Fair Isaac at or after (a) reaching
                          age 65, or (b) reaching age 55 with at least 10 years
                          of service with Fair Isaac.

                          "DISABILITY" means that you are unable to engage in
                          any substantial gainful activity by reason of a
                          medically determinable, physical or mental impairment
                          which can be expected to result in death or which has
                          lasted (or can be expected to last) for a continuous
                          period of not less than 12 months.

                          "CAUSE" shall mean: (i) an act or acts of personal
                          dishonesty taken by you and intended to result in
                          substantial personal enrichment of you at the expense
                          of Fair Isaac; (ii) your repeated failure or refusal
                          to

                                      -4-
<PAGE>

                          perform or observe your duties, responsibilities and
                          obligations as an employee of Fair Isaac for reasons
                          other than disability or incapacity; (iii) the
                          existence of any court order or settlement agreement
                          prohibiting your continued employment with Fair Isaac;
                          (iv) if you have signed and/or entered into a written
                          or oral non-competition agreement, confidentiality
                          agreement, proprietary information agreement, trade
                          secret agreement or any other agreement which would
                          prevent you from working for Fair Isaac and/or from
                          performing your duties at Fair Isaac, or (v) the
                          willful engaging by you in illegal conduct that is
                          materially and demonstrably injurious to Fair Isaac.
                          No act or failure to act on your part shall be
                          considered "dishonest," "willful" or "deliberate"
                          unless done or omitted to be done by you in bad faith
                          and without reasonable belief that your action or
                          omission was in, or not opposed, to the best interests
                          of Fair Isaac. Any act, or failure to act, based upon
                          authority given pursuant to a resolution duly adopted
                          by the Board of Directors of Fair Isaac or based upon
                          the advice of counsel for Fair Isaac shall be
                          conclusively presumed to be done, or omitted to be
                          done, by you in good faith and in the best interests
                          of Fair Isaac.

                          "EVENT" shall be deemed to occur upon the occurrence
                          of BOTH (A): (i) the sale, lease, conveyance or other
                          disposition of all or substantially all of Fair
                          Isaac's assets as an entirety or substantially as an
                          entirety to any person, entity or group of persons
                          acting in concert; (ii) any "person" (as such term is
                          used in Sections 13(d) and 14(d) of the Securities
                          Exchange Act of 1934, as amended (the "Act")) becoming
                          the "beneficial owner" (as defined in Rule 13d-3 under
                          said Act), directly or indirectly, of securities of
                          Fair Isaac representing 50% or more of the total
                          voting power represented by Fair Isaac's then
                          outstanding voting securities; or (iii) a merger or
                          consolidation of Fair Isaac with any other
                          corporation, other than a merger or consolidation
                          which would result in the voting securities of Fair
                          Isaac outstanding immediately prior thereto continuing
                          to represent (either by remaining outstanding or by
                          being converted into voting securities of the
                          surviving entity) at least 50% of the total voting
                          power represented by the voting securities of Fair
                          Isaac or such surviving entity outstanding immediately
                          after such merger or consolidation; AND (B): (i) a
                          material adverse change in your position with Fair
                          Isaac which materially reduces your responsibility,
                          without Cause and without your written consent; (ii) a
                          material reduction in your compensation without your
                          written consent; or (iii) a relocation of your place
                          of employment outside of the seven (7) San Francisco
                          Bay Area counties, without your written consent.

BY SIGNING THE NOTICE, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED
ABOVE.

                                      -5-
<PAGE>

                         NOTICE OF GRANT OF STOCK OPTION

                             Fair Isaac Corporation
                                 Id: 94:1499887
                              200 Smith Ranch Road
                              San Rafael, CA 94903

Optionee

Thomas G. Grudnowski                        OPTION NUMBER: _________________
                                            PLAN:          1992 LTIP
                                            ID:            _________________

Effective ______, 20__ (the "Grant Date"), you have been granted a Non-Qualified
Stock Option to buy ______ shares of common stock of Fair Isaac Corporation
("Fair Isaac") at $______ per share (the "Option"). The Option will expire on
April 30, 2011 (the "Expiration Date"). This Option is granted pursuant to the
terms of an employment agreement between Optionee and Fair Isaac Corporation
dated effective January 30, 2004 (the "Employment Agreement") and the Fair Isaac
Corporation 1992 Long-Term Incentive Plan, as amended.

Subject to the Terms and Conditions of Nonstatutory Stock Option Agreement
attached to this Notice, the Option shall become exercisable as to one third of
the total number of shares subject to the Option on each of the first three
anniversary dates of the Grant Date (such anniversary dates referred to as the
"Vesting Dates").

By your signature and Fair Isaac's signature below, you and Fair Isaac agree
that this Notice of Grant of Stock Option and the Terms and Conditions of
Nonstatutory Stock Option Agreement, which is attached hereto constitute the
Nonstatutory Stock Option Agreement governing this Option.

_____________________________________            _______________________________
Andrea M. Fike, Vice President                   Date:
Fair Isaac Corporation

_____________________________________            _______________________________
Thomas G. Grudnowski                             Date:

                                                                       EXHIBIT B

<PAGE>

                             FAIR ISAAC CORPORATION

           TERMS AND CONDITIONS OF NONSTATUTORY STOCK OPTION AGREEMENT

                  These are the terms and conditions applicable to the
NONSTATUTORY STOCK OPTION granted by Fair Isaac Corporation, a Delaware
corporation ("Fair Isaac"), to you, the optionee listed on the Notice of Grant
of Stock Option attached hereto as the cover page (the "Cover Page"), effective
as of the date of grant. The Cover Page together with these Terms and Conditions
of Nonstatutory Stock Option Agreement constitute the Nonstatutory Stock Option
Agreement (the "Option Agreement"). This Option is granted pursuant to the terms
of Fair Isaac's 1992 Long-Term Incentive Plan (the "Plan").

NONSTATUTORY              This Option is not intended to qualify as an incentive
                          stock option under Section 422 of the Internal Revenue
                          Code.

VESTING                   Your Option vests and will be exercisable on the
                          Vesting Dates, as described on the Cover Page. In
                          addition, your entire Option vests and will be
                          exercisable in full in the event that:

                          -    your service as an employee or director of Fair
                               Isaac (or any subsidiary) terminates because of
                               your Disability or death,

                          -    any written employment agreement (other than a
                               stock option agreement) between you and Fair
                               Isaac provides for acceleration of this Option
                               upon a change in control of Fair Isaac or upon
                               any other specified event or combination of
                               events,

                          -    Fair Isaac terminates your employment prior to
                               January 30, 2009 for any reason other than Cause,
                               or

                          -    you retire or resign your employment with Fair
                               Isaac prior to January 30, 2009 for Good Reason.

                          Additional shares will continue to vest and become
                          exercisable after your employment with Fair Isaac has
                          terminated, if and only if:

                          -    your employment with Fair Isaac terminates as a
                               result of the expiration of the term of your
                               Employment Agreement, as described in Section 2
                               of your Employment Agreement,

                          -    you retire or resign your employment with Fair
                               Isaac after January 30, 2009,

                          -    your employment with Fair Isaac terminates by
                               mutual written agreement between you and Fair
                               Isaac for reasons other than for Cause, or

                          -    Fair Isaac terminates your employment after
                               January 30, 2009 for any reason other than for
                               Cause.

                          Except as specifically provided above, additional
                          shares will not continue to vest and become
                          exercisable after your employment with Fair Isaac has
                          terminated.

                                      -2-
<PAGE>

EXERCISE PERIOD           The right to purchase shares under the Option
                          Agreement terminates at 3:00 p.m. Pacific Time on the
                          date that is two years and 90 days after the
                          termination date of your service as an employee of
                          Fair Isaac, except as follows:

                          -    If your employment with Fair Isaac is terminated
                               by Fair Isaac for Cause, then the right to
                               purchase shares under this Option Agreement shall
                               terminate on the date of termination of your
                               employment.

                          -    If you retire or resign your employment with Fair
                               Isaac prior to January 30, 2009 for any reason
                               other than Good Reason, then the right to
                               purchase shares under this Option Agreement shall
                               terminate on the 90th day after the date of
                               termination of your employment with Fair Isaac.

                          In no event will the right to purchase shares continue
                          after the Expiration Date shown on the Cover Page.

LEAVES OF                 For purposes of this Option, your service does not
ABSENCE                   terminate when you go on a military leave, a sick
                          leave or another bona fide leave of absence, if the
                          leave was approved by Fair Isaac in writing. Unless
                          you return to active work upon termination of your
                          approved leave, your service will be treated as
                          terminating on the later of 90 days after you went on
                          leave or the date that your right to return to active
                          work is guaranteed by law or by a contract. Fair Isaac
                          will determine which leaves count for this purpose.

RESTRICTIONS              You may not exercise this Option if the issuance of
ON EXERCISE               shares at that time would violate any law or
                          regulation, as determined by Fair Isaac. Moreover, you
                          cannot exercise this Option unless you have returned a
                          signed copy of the Option Agreement to Fair Isaac.

NOTICE OF                 If you do not exercise this Option through an
EXERCISE                  automated electronic exercise system approved by Fair
                          Isaac, then you must notify Fair Isaac in writing of
                          your intent to exercise this Option. The notice must
                          specify how many shares you wish to purchase and must
                          specify how your shares should be registered (i.e., in
                          your name only, in your and your spouse's names as
                          community property, or as joint tenants with right of
                          survivorship). If someone else wants to exercise this
                          Option after your death, that person must prove to
                          Fair Isaac's satisfaction that he or she is entitled
                          to do so.

FORM OF                   When you submit your notice, you must include payment
PAYMENT                   of the exercise price shown on the Cover Page for the
                          shares you are purchasing. Provided payment does not
                          violate state and federal laws, including without
                          limitation, the Sarbanes-Oxley Act of 2002, payment
                          may be made in one (or a combination of two or more)
                          of the following forms, as approved by Fair Isaac in
                          its sole discretion:

                                      -3-
<PAGE>

                          -    Your personal check, a cashier's check or a money
                               order;

                          -    Irrevocable directions to a securities broker
                               approved by Fair Isaac to sell shares underlying
                               this Option and to deliver all or a portion of
                               the sale proceeds to Fair Isaac in payment of the
                               exercise price and the balance of the sale
                               proceeds to you; or

                          -    Certificates for shares of Fair Isaac common
                               stock that you have owned for at least 12 months,
                               along with any forms needed to effect a transfer
                               of those shares to Fair Isaac with the value of
                               the shares, determined as of the effective date
                               of the exercise of this Option, applied to the
                               exercise price.

WITHHOLDING               You will not be allowed to exercise this Option unless
TAXES                     you make acceptable arrangements to pay any
                          withholding taxes that may be due as a result of the
                          exercise of this Option. These arrangements must be
                          satisfactory to Fair Isaac. You may direct Fair Isaac
                          to withhold shares with a market value equal to the
                          withholding taxes due from the shares to be issued as
                          a result of your exercise of this Option.

RESTRICTIONS              By signing the Option Agreement, you agree not to sell
ON RESALE                 any shares at a time when applicable laws or Fair
TRANSFER OF               Isaac policies prohibit a sale. Prior to your death,
OPTION                    only you or a permitted assignee as defined herein may
                          exercise this Option (unless this Option or a portion
                          thereof has been transferred to your former spouse by
                          a domestic relations order by a court of competent
                          jurisdiction). You may transfer this Option or a
                          portion of this Option by gift to members of your
                          immediate family, a partnership consisting solely of
                          you and/or members of your immediate family, a limited
                          liability company consisting solely of you and/or your
                          immediate family, or to a trust established for the
                          benefit of you and/or members of your immediate family
                          (including a charitable remainder trust whose income
                          beneficiaries consist solely of such persons). For
                          purposes of the foregoing, "immediate family" means
                          your spouse, children or grandchildren, including
                          step-children.

                          You may also transfer this Option or a portion of this
                          Option to any other person or entity to which a
                          transfer of compensatory securities is permitted under
                          the applicable rules for a Securities and Exchange
                          Commission Form S-8 registration statement.

                          Any of these persons and entities to whom a transfer
                          of this Option may be made is a "permitted assignee."
                          However, such transfer shall not be effective until
                          you have delivered to Fair Isaac notice of such
                          transfer. You cannot transfer, pledge, hypothecate,
                          assign or otherwise dispose of this Option, including
                          using this Option as security for a loan. Any attempts
                          to do any of these things contrary to the provisions
                          of this Option, and the levy of any attachment or

                                      -4-
<PAGE>

                          similar process upon this Option, shall be null and
                          void. You may, however, dispose of this Option in your
                          will or by a written beneficiary designation. Such a
                          designation must be filed with Fair Isaac on the
                          proper form.

RETENTION                 Neither your Option nor the terms of this Option
RIGHTS                    Agreement give you the right to continue as an
                          employee or director of Fair Isaac (or any
                          subsidiaries) in any capacity. Fair Isaac (and any
                          subsidiaries) reserve the right to terminate your
                          service at any time, with or without cause, subject to
                          the terms of any written employment agreement signed
                          by you and Fair Isaac.

STOCKHOLDER               You, or your assignees, estate, beneficiaries or
RIGHTS                    heirs, have no rights as a stockholder of Fair Isaac
                          until a certificate for any portion of shares
                          underlying this Option has been issued. No adjustments
                          are made for dividends or other rights if the
                          applicable record date occurs before your stock
                          certificate is issued, except as described in the
                          Plan.

ADJUSTMENTS               In the event of any adjustments to the capital stock
                          of Fair Isaac as described in Article 10 of the Plan,
                          the number of shares covered by this Option and the
                          exercise price per share may be adjusted as Fair Isaac
                          may determine pursuant to the Plan.

APPLICABLE LAW            This Agreement will be interpreted and enforced under
                          the laws of the State of Delaware (without regard to
                          its rules on choice of law).

OTHER                     This Option Agreement, the Plan and any written
AGREEMENTS                agreement between you and Fair Isaac (or any
                          subsidiaries) providing for acceleration of options
                          granted to you by Fair Isaac upon a change in control
                          of Fair Isaac constitute the entire understanding
                          between you and Fair Isaac regarding this Option. Any
                          other prior agreements, commitments or negotiations
                          concerning this Option are superseded. If there is any
                          inconsistency between the provisions of this Agreement
                          and the Plan, the provisions of the Plan shall govern.
                          This Agreement may be amended only in writing.

DEFINITIONS               "Cause" shall have the meaning ascribed to it in the
                          Employment Agreement. "Disability" means that you are
                          unable to engage in any substantial gainful activity
                          by reason of a medically determinable, physical or
                          mental impairment which can be expected to result in
                          death or which has lasted (or can be expected to last)
                          for a continuous period of not less than 12 months.
                          "Good Reason" shall have the meaning ascribed to it in
                          the Employment Agreement.

BY SIGNING THE COVER PAGE, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED ABOVE AND IN THE PLAN.

                                      -5-
<PAGE>

                              MANAGEMENT AGREEMENT

                  This Management Agreement (this "Agreement") is entered into
as of January 30, 2004, by and between Fair Isaac Corporation, a Delaware
corporation (the "Company"), and Thomas G. Grudnowski ("Executive").

                  WHEREAS, Executive is a key member of the management of the
Company and has heretofore devoted substantial skill and effort to the affairs
of the Company; and

                  WHEREAS, it is desirable and in the best interests of the
Company and its shareholders to continue to obtain the benefits of Executive's
services and attention to the affairs of the Company; and

                  WHEREAS, it is desirable and in the best interests of the
Company and its shareholders to provide inducement for Executive (A) to remain
in the service of the Company in the event of any proposed or anticipated change
in control of the Company and (B) to remain in the service of the Company in
order to facilitate an orderly transition in the event of a change in control of
the Company, without regard to the effect such change in control may have on
Executive's employment with the Company; and

                  WHEREAS, it is desirable and in the best interests of the
Company and its shareholders that Executive be in a position to make judgments
and advise the Company with respect to proposed changes in control of the
Company; and

                  WHEREAS, the Executive desires to be protected in the event of
certain changes in control of the Company; and

                  WHEREAS, for the reasons set forth above, the Company and
Executive desire to enter into this Agreement.

                  NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, the Company and Executive
agree as follows:

         1.       EVENTS. No amounts or benefits shall be payable or provided
for pursuant to this Agreement unless an Event shall occur during the Term of
this Agreement.

                  (a)      For purposes of this Agreement, an "Event" shall be
deemed to have occurred if any of the following occur:

                           (i)      Any "person" (as defined in Sections 13(d)
                                    and 14(d) of the Securities Exchange Act of
                                    1934, as amended, or any successor statute
                                    thereto (the "Exchange Act")) acquires or
                                    becomes a "beneficial owner" (as defined in
                                    Rule 13d-3 or any successor rule under the
                                    Exchange Act), directly or indirectly, of
                                    securities of the Company representing 30%
                                    or more of the combined voting power

                                                                       EXHIBIT C

<PAGE>

                                    of the Company's securities entitled to vote
                                    generally in the election of directors
                                    ("Voting Securities") then outstanding or
                                    30% or more of the shares of common stock of
                                    the Company ("Common Stock") outstanding,
                                    provided, however, that the following shall
                                    not constitute an Event pursuant to this
                                    Section 1(a)(i):

                                    (A)      any acquisition or beneficial
                                             ownership by the Company or a
                                             subsidiary of the Company;

                                    (B)      any acquisition or beneficial
                                             ownership by any employee benefit
                                             plan (or related trust) sponsored
                                             or maintained by the Company or one
                                             or more of its subsidiaries;

                                    (C)      any acquisition or beneficial
                                             ownership by any corporation
                                             (including without limitation an
                                             acquisition in a transaction of the
                                             nature described in Section
                                             1(a)(ii)) with respect to which,
                                             immediately following such
                                             acquisition, more than 70%,
                                             respectively, of (x) the combined
                                             voting power of the Company's then
                                             outstanding Voting Securities and
                                             (y) the Common Stock is then
                                             beneficially owned, directly or
                                             indirectly, by all or substantially
                                             all of the persons who beneficially
                                             owned Voting Securities and Common
                                             Stock, respectively, of the Company
                                             immediately prior to such
                                             acquisition in substantially the
                                             same proportions as their ownership
                                             of such Voting Securities and
                                             Common Stock, as the case may be,
                                             immediately prior to such
                                             acquisition; or

                                    (D)      any acquisition of Voting
                                             Securities or Common Stock directly
                                             from the Company; and

                                    Continuing Directors shall not constitute a
                                    majority of the members of the Board of
                                    Directors of the Company. For purposes of
                                    this Section 1(a)(i), "Continuing Directors"
                                    shall mean: (A) individuals who, on the date
                                    hereof, are directors of the Company, (B)
                                    individuals elected as directors of the
                                    Company subsequent to the date hereof for
                                    whose election proxies shall have been
                                    solicited by the Board of Directors of the
                                    Company or (C) any individual elected or
                                    appointed by the Board of Directors of the
                                    Company to fill vacancies on the Board of
                                    Directors of the Company caused by death or
                                    resignation (but not by removal) or to fill
                                    newly-created directorships, provided that a
                                    "Continuing Director" shall not include an
                                    individual whose initial assumption of
                                    office occurs as a result of an actual or
                                    threatened election

                                      -2-
<PAGE>

                                    contest with respect to the threatened
                                    election or removal of directors (or other
                                    actual or threatened solicitation of proxies
                                    or consents) by or on behalf of any person
                                    other than the Board of Directors of the
                                    Company; or

                           (ii)     Consummation of a reorganization, merger or
                                    consolidation of the Company or a statutory
                                    exchange of outstanding Voting Securities of
                                    the Company (other than a merger or
                                    consolidation with a subsidiary of the
                                    Company), unless immediately following such
                                    reorganization, merger, consolidation or
                                    exchange, all or substantially all of the
                                    persons who were the beneficial owners,
                                    respectively, of Voting Securities and
                                    Common Stock immediately prior to such
                                    reorganization, merger, consolidation or
                                    exchange beneficially own, directly or
                                    indirectly, more than 70% of, respectively,
                                    (x) the combined voting power of the then
                                    outstanding voting securities entitled to
                                    vote generally in the election of directors
                                    of the corporation resulting from such
                                    reorganization, merger, consolidation or
                                    exchange and (y) the then outstanding shares
                                    of common stock of the corporation resulting
                                    from such reorganization, merger,
                                    consolidation or exchange in substantially
                                    the same proportions as their ownership,
                                    immediately prior to such reorganization,
                                    merger, consolidation or exchange, of the
                                    Voting Securities and Common Stock, as the
                                    case may be; or

                           (iii)    (x) Approval by the shareholders of the
                                    Company of a complete liquidation or
                                    dissolution of the Company or (y) the sale
                                    or other disposition of all or substantially
                                    all of the assets of the Company (in one or
                                    a series of transactions), other than to a
                                    corporation with respect to which,
                                    immediately following such sale or other
                                    disposition, more than 70% of, respectively,
                                    (1) the combined voting power of the then
                                    outstanding voting securities of such
                                    corporation entitled to vote generally in
                                    the election of directors and (2) the then
                                    outstanding shares of common stock of such
                                    corporation is then beneficially owned,
                                    directly or indirectly, by all or
                                    substantially all of the persons who were
                                    the beneficial owners, respectively, of the
                                    Voting Securities and Common Stock
                                    immediately prior to such sale or other
                                    disposition in substantially the same
                                    proportions as their ownership, immediately
                                    prior to such sale or other disposition, of
                                    the Voting Securities and Common Stock, as
                                    the case may be; or

                           (iv)     A majority of the members of the Board of
                                    Directors of the Company shall have declared
                                    that an Event has occurred or that an Event
                                    will occur upon satisfaction of specified
                                    conditions, in which

                                      -3-
<PAGE>

                                    case the Event shall be deemed to occur upon
                                    satisfaction of such specified conditions;
                                    or

                           (v)      The Company enters into a letter of intent,
                                    an agreement in principle or a definitive
                                    agreement relating to an Event described in
                                    Section 1(a)(i), 1(a)(ii) or 1(a)(iii)
                                    hereof that ultimately results in such an
                                    Event, or a tender or exchange offer or
                                    proxy contest is commenced which ultimately
                                    results in an Event described in Section
                                    1(a)(i) hereof; or

                           (vi)     There shall be an involuntary termination of
                                    employment of the Executive or Termination
                                    for Good Reason (as defined in Section
                                    4(c)), and the Executive reasonably
                                    demonstrates that such event (x) was
                                    requested by a party other than the Board of
                                    Directors of the Company and such party had
                                    previously taken other steps reasonably
                                    calculated to result in an Event described
                                    in Section 1(a)(i), 1(a)(ii), 1(a)(iii) or
                                    1(a)(iv) hereof and which ultimately results
                                    in an Event described in Section 1(a)(i),
                                    1(a)(ii), 1(a)(iii) or 1(a)(iv) hereof, or
                                    (y) otherwise arose in connection with or in
                                    anticipation of an Event described in
                                    Section 1(a)(i), 1(a)(ii), 1(a)(iii) or
                                    1(a)(iv) hereof that ultimately occurs.

         Notwithstanding anything stated in this Section 1(a), an Event shall
         not be deemed to occur with respect to Executive if (x) the acquisition
         or beneficial ownership of the 30% or greater interest referred to in
         Section 1(a)(i) is by Executive or by a group, acting in concert, that
         includes Executive or (y) a majority of the then combined voting power
         of the then outstanding voting securities (or voting equity interests)
         of the surviving corporation or of any corporation (or other entity)
         acquiring all or substantially all of the assets of the Company shall,
         immediately after a reorganization, merger, exchange, consolidation or
         disposition of assets referred to in Section 1(a)(ii) or 1(a)(iii), be
         beneficially owned, directly or indirectly, by Executive or by a group,
         acting in concert, that includes Executive.

                  (b)      For purposes of this Agreement, a "subsidiary" of the
         Company shall mean any entity of which securities or other ownership
         interests having general voting power to elect a majority of the board
         of directors or other persons performing similar functions are at the
         time directly or indirectly owned by the Company.

         2.       PAYMENTS AND BENEFITS. If any Event shall occur during the
Term of this Agreement, then the Executive shall be entitled to receive from the
Company or its successor (which term as used herein shall include any person
acquiring all or substantially all of the assets of the Company) a cash payment
and other benefits on the following basis (unless the Executive's employment by
the Company is terminated voluntarily or involuntarily prior to the occurrence
of the earliest Event to occur (the "First Event"), in which case Executive
shall be entitled to no payment or benefits under this Section 2):

                                      -4-
<PAGE>

                  (a)      If at the time of, or at any time after, the
         occurrence of the First Event and prior to the end of the Transition
         Period, the employment of Executive with the Company is voluntarily or
         involuntarily terminated for any reason (unless such termination is a
         voluntary termination by Executive other than for Good Reason, is on
         account of the death or Disability of the Executive or is a termination
         by the Company for Cause), subject to the limitations set forth in
         Sections 2(d) and 2(e), Executive shall be entitled to the following:

                           (i)      The Company shall pay Executive's full base
                                    salary at the rate then in effect, benefits,
                                    and vacation or other paid time off earned
                                    through the Termination Date.

                           (ii)     The Company or its successor, within 90 days
                                    after the Termination Date, shall make a
                                    cash payment to Executive in an amount equal
                                    to two (2) times the sum of (A) the annual
                                    base salary of Executive in effect
                                    immediately prior to the First Event plus
                                    (B) the cash bonus or cash incentive
                                    compensation received by the Executive from
                                    the Company for the last full fiscal year
                                    preceding the First Event.

                           (iii)    For a 24-month period after the Termination
                                    Date, the Company shall allow Executive to
                                    participate in any health, disability and
                                    life insurance plan or program in which the
                                    Executive was entitled to participate
                                    immediately prior to the First Event as if
                                    Executive were an employee of the Company
                                    during such 24-month period; provided,
                                    however, that in the event that Executive's
                                    participation in any such health, disability
                                    or life insurance plan or program of the
                                    Company is barred, the Company, at its sole
                                    cost and expense, shall arrange to provide
                                    Executive with benefits substantially
                                    similar to those which Executive would be
                                    entitled to receive under such plan or
                                    program if Executive were not barred from
                                    participation. Benefits otherwise receivable
                                    by Executive pursuant to this section
                                    2(a)(iii) shall be reduced to the extent
                                    comparable benefits are received by
                                    Executive from another employer or other
                                    third party during such 24-month period, and
                                    Executive shall promptly report receipt of
                                    any such benefits to the Company.

                           (iv)     Any outstanding and unvested stock options
                                    granted to Executive shall be accelerated
                                    and become immediately exercisable by
                                    Executive (and shall remain exercisable for
                                    the terms specified in the applicable stock
                                    option agreements) and any restricted stock
                                    awarded to Executive and subject to
                                    forfeiture shall be fully vested and shall
                                    no longer be subject to forfeiture.

                  (b)      The Company shall also pay to Executive all legal
         fees and expenses incurred by the Executive as a result of such
         termination, including, but not limited to, all

                                      -5-
<PAGE>

         such fees and expenses, if any, incurred in contesting or disputing any
         such termination or in seeking to obtain or enforce any right or
         benefit provided by this Agreement.

                  (c)      In addition to all other amounts payable to Executive
         under this Section 2, Executive shall be entitled to receive all
         benefits payable to Executive under any other plan or agreement
         relating to retirement benefits.

                  (d)      Executive shall not be required to mitigate the
         amount of any payment or other benefit provided for in Section 2 by
         seeking other employment or otherwise, nor shall the amount of any
         payment or other benefit provided for in Section 2 be reduced by any
         compensation earned by Executive as the result of employment by another
         employer after the Termination Date or otherwise, except as
         specifically provided in this Agreement.

                  (e)      Notwithstanding any other provision of this
         Agreement, the Company will not pay to Executive, and Executive will
         not be entitled to receive, any payment pursuant to Section 2(a)(ii)
         unless and until:

                           (i)      Executive executes, and there shall be
                                    effective following any statutory period for
                                    revocation or rescission, a release that
                                    irrevocably and unconditionally releases the
                                    Company, any company acquiring the Company
                                    or its assets, and their past and current
                                    shareholders, directors, officers, employees
                                    and agents from and against any and all
                                    claims, liabilities, obligations, covenants,
                                    rights and damages of any nature whatsoever,
                                    whether known or unknown, anticipated or
                                    unanticipated; provided, however, that the
                                    release shall not adversely affect
                                    Executive's rights to receive benefits to
                                    which he is entitled under this Agreement,
                                    any other then-applicable agreement between
                                    Executive and the Company, or any employee
                                    benefit plans of the Company in which
                                    Executive is then a participant, or
                                    Executive's rights to indemnification under
                                    applicable law, the charter documents of the
                                    Company, any insurance policy maintained by
                                    the Company or any written agreement between
                                    the Company and Executive; and

                           ii)      Executive executes an agreement prohibiting
                                    Executive for a period of one (1) year
                                    following the Termination Date from
                                    soliciting, recruiting or inducing, or
                                    attempting to solicit, recruit or induce,
                                    any employee of the Company or of any
                                    company acquiring the Company or its assets
                                    to terminate the employee's employment.

                  (f)      The obligations of the Company under this Section 2
         shall survive the termination of this Agreement.

                                      -6-
<PAGE>

         3.       CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.

                  (a)      Notwithstanding anything contained herein to the
         contrary, prior to the payment of any amounts pursuant to Section 2(a)
         hereof, an independent national accounting firm designated by the
         Company (the "Accounting Firm") shall compute whether there would be
         any "excess parachute payments" payable to Executive, within the
         meaning of Section 280G of the Internal Revenue Code of 1986, as
         amended (the "Code"), taking into account the total "parachute
         payments," within the meaning of Section 280G of the Code, payable to
         Executive by the Company or any successor thereto under this Agreement
         and any other plan, agreement or otherwise. If there would be any
         excess parachute payments, the Accounting Firm will compute the net
         after-tax proceeds to Executive, taking into account the excise tax
         imposed by Section 4999 of the Code, if (i) the payments hereunder were
         reduced, but not below zero, such that the total parachute payments
         payable to Executive would not exceed three (3) times the "base amount"
         as defined in Section 280G of the Code, less One Dollar ($1.00), or
         (ii) the payments hereunder were not reduced. If reducing the payments
         hereunder would result in a greater after-tax amount to Executive, such
         lesser amount shall be paid to Executive. If not reducing the payments
         hereunder would result in a greater after-tax amount to Executive, such
         payments shall not be reduced. The determination by the Accounting Firm
         shall be binding upon the Company and Executive subject to the
         application of Section 3(b) hereof.

                  (b)      As a result of uncertainty in the application of
         Sections 280G of the Code, it is possible that excess parachute
         payments will be paid when such payment would result in a lesser
         after-tax amount to Executive; this is not the intent hereof. In such
         cases, the payment of any excess parachute payments will be void ab
         initio as regards any such excess. Any excess will be treated as an
         overpayment by the Company to Executive. Executive will return the
         overpayment to the Company, within fifteen (15) business days of any
         determination by the Accounting Firm that excess parachute payments
         have been paid when not so intended, with interest at an annual rate
         equal to the rate provided in Section 1274(d) of the Code (or 120% of
         such rate if the Accounting Firm determines that such rate is necessary
         to avoid an excise tax under Section 4999 of the Code) from the date
         Executive received the excess until it is repaid to the Company.

                  (c)      All fees, costs and expenses (including, but not
         limited to, the cost of retaining experts) of the Accounting Firm shall
         be borne by the Company and the Company shall pay such fees, costs, and
         expenses as they become due. In performing the computations required
         hereunder, the Accounting Firm shall assume that taxes will be paid for
         state and federal purposes at the highest possible marginal tax rates
         which could be applicable to Executive in the year of receipt of the
         payments, unless Executive agrees otherwise.

                                      -7-
<PAGE>

         4.       DEFINITION OF CERTAIN ADDITIONAL TERMS.

                  (a)      "Cause" shall mean, and be limited to, (i) willful
         and gross neglect of duties by the Executive or (ii) an act or acts
         committed by the Executive constituting a felony and substantially
         detrimental to the Company or its reputation.

                  (b)      "Disability" shall mean Executive's absence from his
         duties with the Company on a full time basis for 180 consecutive
         business days, as a result of Executive's incapacity due to physical or
         mental illness, unless within 30 days after written notice of intent to
         terminate is given by the Company following such absence Executive
         shall have returned to the full time performance of Executive's duties.

                  (c)      "Good Reason" shall mean if, without Executive's
         express written consent, any of the following shall occur:

                           (i)      the assignment to Executive of any material
                                    duties inconsistent with Executive's status
                                    or position with the Company, or any other
                                    action by the Company that results in a
                                    substantial diminution in such status or
                                    position, excluding any isolated,
                                    insubstantial, or inadvertent action not
                                    taken in bad faith and which is remedied by
                                    the Company promptly after receipt of notice
                                    thereof from Executive; a change in title or
                                    reporting relationship alone shall be deemed
                                    to be a substantial diminution in an
                                    Executive's status or position.

                           (ii)     a material reduction by the Company in
                                    Executive's annual base salary or target
                                    incentive in effect immediately prior to the
                                    First Event;

                           (iii)    the failure by the Company to continue to
                                    provide Executive with benefits at least as
                                    favorable in the aggregate to those enjoyed
                                    by Executive under the Company's pension,
                                    life insurance, medical, health and
                                    accident, disability, deferred compensation,
                                    incentive awards, employee stock options or
                                    savings plans in which Executive was
                                    participating at the time of the First
                                    Event, the taking of any action by the
                                    Company that would directly or indirectly
                                    materially reduce any of such benefits or
                                    deprive Executive of any material fringe
                                    benefit enjoyed at the time of the First
                                    Event, or the failure by the Company to
                                    provide Executive with the number of paid
                                    vacation days to which Executive is entitled
                                    at the time of the First Event, but
                                    excluding any failure or action by the
                                    Company that is not taken in bad faith and
                                    which is remedied by the Company promptly
                                    after receipt of notice thereof from
                                    Executive; or

                           (iv)     the Company requiring Executive to relocate
                                    to any place other than a location within
                                    forty miles of the location at which
                                    Executive

                                      -8-
<PAGE>

                                    performed his primary duties immediately
                                    prior to the First Event or, if Executive is
                                    based at the Company's principal executive
                                    offices, the relocation of the Company's
                                    principal executive offices to a location
                                    more than forty miles from its location
                                    immediately prior to the First Event, except
                                    for required travel on the Company's
                                    business to an extent substantially
                                    consistent with Executive's prior business
                                    travel obligations;

                           (v)      the failure of the Company to obtain
                                    agreement from any successor to assume and
                                    agree to perform this Agreement, as
                                    contemplated in Section 5(b).

                  (d)      As used herein, other than in Section 1(a) hereof,
         the term "person" shall mean an individual, partnership, corporation,
         estate, trust or other entity.

                  (e)      "Termination Date" shall mean the date of termination
         of Executive's employment, which in the case of termination for
         Disability shall be the 30th day after notice is given as required in
         Section 4(b).

                  (f)      "Transition Period" shall mean the one-year period
         commencing on the date of the earliest to occur of an Event described
         in Section 1(a)(i), 1(a)(ii) or 1(a)(iii) hereof (or, if an Event
         described in Section 1(a)(iv) occurs and there does not occur any Event
         described in Sections 1(a)(i), 1(a)(ii) or 1(a)(iii), upon the
         satisfaction of the condition that gives rise to the Event described in
         Section 1(a)(iv)) (the "Commencement Date") and ending on the first
         anniversary of the Commencement Date.

         5.       SUCCESSORS AND ASSIGNS.

                  (a)      This Agreement shall be binding upon and inure to the
         benefit of the successors, legal representatives and assigns of the
         parties hereto; provided, however, that the Executive shall not have
         any right to assign, pledge or otherwise dispose of or transfer any
         interest in this Agreement or any payments hereunder, whether directly
         or indirectly or in whole or in part, without the written consent of
         the Company or its successor.

                  (b)      The Company will require any successor (whether
         direct or indirect, by purchase of a majority of the outstanding voting
         stock of the Company or all or substantially all of the assets of the
         Company, or by merger, consolidation or otherwise), by agreement in
         form and substance satisfactory to Executive, to assume expressly and
         agree to perform this Agreement in the same manner and to the same
         extent that the Company would be required to perform it if no such
         succession had taken place. Failure of the Company to obtain such
         agreement prior to the effectiveness of any such succession (other than
         in the case of a merger or consolidation) shall be a breach of this
         Agreement and shall entitle Executive to compensation from the Company
         in the same amount and on the same terms as Executive would be entitled
         hereunder in the event of termination by Executive for Good Reason,
         except that for purposes of implementing the foregoing, the date on
         which any such

                                      -9-
<PAGE>

         succession becomes effective shall be deemed the Termination Date. As
         used in this Agreement, "Company" shall mean the Company as
         hereinbefore defined and any successor to its business and/or assets as
         aforesaid that is required to execute and deliver the agreement as
         provided for in this Section 5(b) or that otherwise becomes bound by
         all the terms and provisions of this Agreement by operation of law.

         6.       GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Minnesota.

         7.       NOTICES. All notices, requests and demands given to or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given when delivered or mailed by United States registered or certified
mail, return receipt requested, postage pre-paid, addressed to the last known
residence address of Executive or in the case of the Company, to its principal
executive office to the attention of each of the then directors of the Company
with a copy to its Secretary, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.

         8.       REMEDIES AND CLAIM PROCESS. If Executive disputes any
determination made by the Company regarding Executive's eligibility for any
benefits under this Agreement, the amount or terms of payment of any benefits
under this Agreement, or the Company's application of any provision of this
Agreement, then Executive shall, before pursuing any other remedies that may be
available to Executive, seek to resolve such dispute by submitting a written
claim notice to the Company. The notice by Executive shall explain the specific
reasons for Executive's claim and basis therefor. The Board of Directors shall
review such claim and the Company will notify Executive in writing of its
response within 60 days of the date on which Executive's notice of claim was
given. The notice responding to Executive's claim will explain the specific
reasons for the decision. Executive shall submit a written claim hereunder
before pursuing any other process for resolution of such claim. This Section 8
does not otherwise affect any rights that Executive or the Company may have in
law or equity to seek any right or benefit under this Agreement.

         9.       SEVERABILITY. In the event that any portion of this Agreement
is held to be invalid or unenforceable for any reason, it is hereby agreed that
such invalidity or unenforceability shall not affect the other portions of this
Agreement and that the remaining covenants, terms and conditions or portions
hereof shall remain in full force and effect.

         10.      INTEGRATION. The benefits provided to Executive under this
Agreement shall be in lieu of any other severance pay or benefits available to
Executive under any other agreement, plan or program of the Company. In the
event that any payments or benefits become payable to Executive pursuant to
Section 2 of this Agreement, then this Agreement will supersede and replace any
other agreement, plan or program applicable to Executive to the extent that such
other agreement, plan or program provides for payments or benefits to Executive
arising out of the involuntary termination of Executive's employment or
termination by Executive for Good Reason. In addition, the acceleration of stock
options and lapsing of forfeiture provisions of restricted stock provided
pursuant to Section 2(a)(iv) of this Agreement shall not be subject to the
provisions of

                                      -10-
<PAGE>

Article 13 of the Company's 1992 Long-Term Incentive Plan (or similar successor
provision or plan).

         11.      MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the parties. No waiver by either party hereto at any
time of any breach by the other party to this Agreement of, or compliance with,
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior to similar time.

         12.      TERM. This Agreement shall commence on the date of this
Agreement and shall terminate, and the Term of this Agreement shall end, on the
later of (A) the expiration of the term of Executive's employment pursuant to
that certain Employment Agreement between the Company and Executive of even date
herewith, if the same is not renewed in accordance with its terms, or (B) if the
Commencement Date occurs on or prior to such expiration, the first anniversary
of the Commencement Date.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                        FAIR ISAAC CORPORATION

                                        By
                                          -------------------------------------
                                        ----------------------------------------

                                        THOMAS G. GRUDNOWSKI

                                        By
                                           -------------------------------------
                                        ----------------------------------------

                                      -11-

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