AMENDMENT TO
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT (this "Amendment"),
dated as of February 14, 2000, by and among Sterling Software, Inc., a
Delaware corporation (the "Company"), Computer Associates International,
Inc., a Delaware corporation (the "Parent") and Xxx X. XxXxxxxxx, Xx. (the
"Executive").
WITNESSETH:
WHEREAS, the Company and the Executive are parties to a Change in
Control Severance Agreement, dated as of November 15, 1999 (the "Agreement");
and
WHEREAS, the Company, the Parent and the Executive desire to amend the
Agreement as set forth in this Amendment;
NOW THEREFORE, the Company, the Parent and the Executive agree as
follows:
1. This Amendment shall be of no force and effect if the Offer
(as defined in the Agreement and Plan of Merger, dated as of
February 14, 2000, by and among the Parent, Silversmith
Acquisition Corp. and the Company) is not consummated.
2. The Agreement is hereby amended by replacing every occurrence
of the term "Employee Benefits" with the term "Medical
Benefits" and by the addition of a definition of Medical
Benefits as follows:
(c) "Medical Benefits" means the medical, dental, health,
hospital, disability and vision benefits provided under any
and all benefit policies, plans, programs or arrangements of
the Company that may now exist or any successor policies,
plans, programs or arrangements that may be adopted hereafter
by the Company in which the Executive is entitled to
participate or in which the Executive becomes entitled to
participate.
3. Section 4(a)(i) is hereby amended to read as follows:
(i) pay to the Executive, within five (5) business days after the
Termination Date, a lump sum payment in an amount equal to
$2,142,053 as satisfaction in full for Executive's severance
pay and loss of certain perquisites and benefits that would
otherwise have been enjoyed by the Executive and for the
execution of the Executive's non-competition covenant in
Section 10 hereof. The parties agree that twenty-five (25)
percent of the lump sum payment shall be allocable to, and
deemed as consideration for, the Executive's non-competition
covenant in Section 10 hereof.
4. Section 4(a)(ii) is hereby amended in its entirety to read as
follows:
(ii) for 48 months following the Termination Date, arrange at its
sole expense, to provide the Executive with Medical Benefits
that are substantially similar to the better of (when
considered in the aggregate) (x) those Medical Benefits which
the Executive was receiving or entitled to receive immediately
prior to the Change in Control, or (y) those Medical Benefits
which the Executive was receiving or entitled to receive
immediately prior to the Termination Date. If and to the
extent that any Medical Benefit described above in this
Section 4(a)(ii) cannot be provided under any applicable law
or regulation or under any policy, plan, program or
arrangement of the Company, then the Company will take all
action necessary to ensure that such Medical Benefit is
provided through other means to the Executive, his dependents
and beneficiaries, as applicable.
5. The Company shall give the Executive the right to purchase
(such right to remain open until the expiration of thirty (30)
days from the Termination Date) at current book value, the
Company vehicle which was customarily provided to the
Executive as of immediately prior to the Executive's Date of
Termination.
6. The Agreement is hereby amended by the addition of a new
Section 10 (and amended as necessary in respect of required
renumbering):
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10. NON-COMPETITION; CONFIDENTIALITY: (a) Executive agrees and acknowledges that
reasonable limits on his ability to engage in activities which are competitive
with the Company are warranted in order to protect the Company's trade secrets
and proprietary information and are warranted in order to protect the Company in
developing and maintaining its reputation, good will and status in the
marketplace. In that regard, during the 24 months following the Termination Date
(the "Continuation Period"), the Executive will not directly or indirectly, on
Executive's own behalf or in the service of or on behalf of any other individual
or entity, either as a proprietor, employee, agent, independent contractor,
consultant, director, officer, partner or stockholder (other than a stockholder
of a corporation listed on a national securities exchange or whose stock is
regularly traded in the over-the-counter market, provided that the Executive at
no time owns, directly or indirectly, in excess of 5% of the outstanding stock
of any class of any such corporation):
(i) participate or engage in any activities or business developing,
manufacturing, marketing or distributing any products or services offered by the
Company as of the Effective Time (as defined in the Agreement and Plan of
Merger, dated as of February 14, 2000, by and among the Parent, Silversmith
Acquisition Corp. and the Company), or any products or services offered by the
Company subsequent to the Effective Time and in which the Executive actively
participated, recognizing that the Company offers products and services globally
("Competitive Activities"), including, without limitation, (A) selling goods or
rendering services of the type (or similar to the type) sold or rendered by the
Company, whether by means of electronic, traditional or other form of commerce;
(B) soliciting any person or entity that is a current or prospective customer or
has been a customer, in each case, of the Company, while the Executive has been
employed by the Company (provided that it shall not be deemed a breach of this
Agreement if the Executive solicits such customers for goods or services
unrelated to the Competitive Activities) and (C) assisting any person in any way
to do, or attempt to do, anything prohibited by clauses (A) or (B) above; or
(ii) solicit (other than pursuant to general, non-targeted
advertisements) any employee of the Company, who was an employee at or prior to
the Effective Time, to leave the employment of the Company.
(b) Notwithstanding anything to the contrary herein, Executive may
remain a director at those companies for which Executive is a director as of the
Effective Time, and may engage in any activities or businesses for which the
Company has given permission in writing, which shall not be unreasonably
withheld
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(or delayed) following the expiration of one year from the date the
Offer is consummated, provided Executive's engaging in such activities or
business would not have a material adverse impact on any of the Company's lines
of businesses. The Company and Parent expressly agree that the Executive shall
not be in breach of Section 10(a) hereof if the Executive renders legal services
as outside counsel to any business, individual or entity.
(c) (i) The Executive shall not, without the written consent of the
Company, disclose to any other person or use, whether directly or indirectly,
any Confidential Information (as hereinafter defined) relating to or used by the
Company, whether in written, oral or other form. "Confidential Information"
shall mean information about the Company, and its clients and customers that is
not disclosed by the Company for financial reporting purposes and that was
learned by the Executive in the course of employment with the Company, including
(without limitation) any proprietary knowledge, product and service designs,
trade secrets, manuals, technical information and plans, contracts, systems,
procedures, databases, electronic files, disks and printouts, correspondence,
internal reports, personnel files, information about Company employees relating
to their education, experience, skills, abilities, compensation and benefits,
and inter-personal relationships with suppliers to and customers of Company,
sales and advertising material, business plans, marketing plans, financial data
(including without limitation the revenues, costs or profits associated with
services), customer and industry lists, customer information, customer lists
coupled with product or service pricing, customer contracts, supplier contacts
and other contact information, pricing policies, supplies, agents, risk
analyses, engineering information and computer screen designs and computer input
and output specifications, inclusive of any pertinent documentation, techniques,
processes, technical information and know how. The Executive acknowledges that
such Confidential Information is specialized, unique in nature and of great
value to the Company, and that such information gives the Company a competitive
advantage. The Executive's obligations under this Section 10(c) shall survive
the termination of the Continuation Period.
(ii) Confidential Information does not include information
which (A) is or becomes part of the public domain other than as a result of the
Executive's disclosure; or (B) becomes available to the Executive on a
non-confidential basis from a source other than the Company, provided that
source is not bound with respect to that information by a confidentiality
agreement with the Company or otherwise prohibited from transmitting that
information by a contractual, legal or other obligation.
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(iii) If the Executive is requested or (in the opinion of
Executive's counsel) required by law or judicial order to disclose any
Confidential Information, the Executive shall provide the Company with prompt
notice of any such request or requirement so that the Company may seek an
appropriate protective order or waiver of the Executive's compliance with the
provisions of this Section 10(c). The Executive will not oppose any reasonable
action by, and will cooperate with, the Company to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Confidential Information. If, failing the entry of a protective
order or the receipt of a waiver hereunder, the Executive is, in the opinion of
Executive's counsel, compelled by law to disclose a portion of the Confidential
Information, the Executive may disclose to the relevant tribunal without
liability hereunder that portion of the Confidential Information which counsel
advises the Executive he is legally required to disclose, and each of the
parties hereto agrees to exercise such party's best efforts to obtain assurance
that confidential treatment will be accorded such Confidential Information.
(d) If an award by a court or arbitration panel declares that any term
or provision of this Section 10 is excessive in duration or scope or is
unreasonable or unenforceable, the parties agree that the court or arbitration
panel making such determination shall have the power to reduce the scope,
duration or area or the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is a valid and enforceable term or provision, and this Section 10
shall be enforceable as so modified.
(e) In the event of a breach or threatened breach by the Executive of
the provisions of this Section 10, the Company's remedies in respect of such
breach or threatened breach shall be limited to injunctive relief (and the
Executive acknowledges that the Company may not have an adequate remedy at law
and may seek injunctive relief without the requirement of posting security) and
the recovery of actual damages suffered by the Company as a result of a breach
of this Section 10 by the Executive. Notwithstanding the foregoing, in no case
shall any portion of the lump sum payment set forth in Section 4(a)(i) or any
Gross Up Payment hereunder (or any other payments made hereunder) be recoverable
by the Parent or the Company (or subject to any set-off, counterclaim or
recoupment) in respect of damages resulting from a breach of this Section 10.
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(f) For the purposes of this Section 10, the term "Company" includes
not only Sterling Software, Inc., but also any subsidiary or affiliated
corporation of Sterling Software, Inc.
7. Parent shall guarantee the Company's obligations pursuant to
the Agreement, including without limitation, Sections 5 and 7
thereof. The Parent and the Company hereby acknowledge that
the obligations set forth in such Sections will survive any
termination or expiration of this Agreement or termination of
Executive's employment for any reason. Each party will notify
the other in writing of any claim by the Internal Revenue
Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after
such party is informed in writing of such a claim and such
party shall apprise the other party of the nature of such
claim and the date on which such claim is requested to be
paid. The Parent and the Company shall bear and pay directly
all costs and expenses (including legal fees and any interest
and penalties) incurred in connection with any such claim or
proceeding, and shall indemnify and hold the Executive
harmless, on an after-tax basis, as provided in Section 5(a),
for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. The Company
and the Parent also shall pay to the Executive all legal fees
and expenses incurred by the Executive in connection with any
tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made within
five (5) business days after delivery of the Executive's
written requests for payment accompanied with evidence of fees
and expenses incurred. The Company's and Parent's obligation
with respect to a Gross-Up Payment and reimbursement of
related legal fees and expenses shall be absolute and
unconditional and shall not be affected by any circumstances,
including, without limitation, any setoff, counterclaim,
recoupment, defense or other right which the Company or the
Parent may have against the Executive or anyone else. Except
where provided herein to the contrary, all amounts payable by
the Company or the Parent hereunder shall be paid without
notice or demand. Each and every payment made hereunder by the
Company or the Parent
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shall be final, and the Company and the Parent will not
seek to recover all or any part of such payment from the
Executive, or from whomsoever may be entitled thereto, for any
reason whatsoever.
8. The Executive agrees as consideration for the Company's and
the Parent's entry into this Amendment that, effective upon
consummation of the Offer, the Executive shall be deemed to
have waived all rights the Executive may have pursuant to the
Executive's Severance Agreement with the Company dated
November 15, 1999 and that such agreement shall be terminated
as of the date of the consummation of the Offer.
9. Except as amended hereby, all other provisions of the
Agreement shall remain in full force and effect.
10. The validity, interpretation, construction and performance of
this Amendment will be governed by and construed in accordance
with the substantive laws of Delaware, without giving effect
to the conflict of laws principles of such State.
11. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of
which together will constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered as of the first date first written above.
STERLING SOFTWARE, INC.
By /s/ R. Xxxxx Xxxx
-----------------------------------
Name: R. Xxxxx Xxxx
Title: Senior Vice President and
Chief Financial Officer
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
By /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President &
General Counsel
/s/ Xxx X. XxXxxxxxx, Xx.
--------------------------------------
Xxx X. XxXxxxxxx, Xx.
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