<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from __________ to __________
COMMISSION FILE NO. 1-14196
STERLING COMMERCE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2623341
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8080 NORTH CENTRAL EXPRESSWAY, SUITE 1100
DALLAS, TEXAS 75206
(Address of principal executive offices, including zip code)
(214) 891-8600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [_] No [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Title Shares Outstanding as of May 8, 1996
----- ------------------------------------
<S> <C>
Common Stock, $.01 par value 75,000,000
</TABLE>
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Index to Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
Sterling Commerce, Inc. Consolidated Balance Sheets at March 31, 1996 and
September 30, 1995................................................................. 3
Sterling Commerce, Inc. Consolidated Statements of Operations for the Three and Six
Months Ended March 31, 1996 and 1995............................................... 4
Sterling Commerce, Inc. Consolidated Statements of Stockholders' Equity for the Six
Months Ended March 31, 1996 and 1995............................................... 5
Sterling Commerce, Inc. Consolidated Statements of Cash Flows for the Six Months
Ended March 31, 1996 and 1995...................................................... 6
Sterling Commerce, Inc. Notes to Consolidated Financial Statements................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................................ 15
</TABLE>
2
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STERLING COMMERCE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
A S S E T S
<TABLE>
<CAPTION>
MARCH 31 SEPTEMBER 30
1996 1995
-------- ------------
(UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents................................................... $ 41,485 $ 395
Accounts and notes receivable, net.......................................... 51,147 49,155
Amounts due from Sterling Software.......................................... 1,192
Deferred income taxes....................................................... 2,943 3,463
Prepaid expenses and other current assets................................... 5,990 3,041
-------- --------
Total current assets....................................................... 102,757 56,054
Property and equipment, net of accumulated depreciation of $23,993 at
March 31, 1996 and $18,943 at September 30, 1995............................ 33,907 25,838
Computer software, net of accumulated amortization of $38,594 at
March 31, 1996 and $34,112 at September 30, 1995............................ 32,859 32,263
Excess cost over net assets acquired, net of accumulated amortization of
$3,302 at March 31, 1996 and $3,087 at September 30, 1995................... 10,044 10,259
Other assets................................................................. 4,223 4,564
-------- --------
$183,790 $128,978
======== ========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
Current liabilities:
Accounts payable and accrued liabilities.................................... $ 22,466 $ 21,442
Deferred revenue............................................................ 34,480 30,920
-------- --------
Total current liabilities.................................................. 56,946 52,362
Deferred income taxes........................................................ 18,994 17,749
Other noncurrent liabilities................................................. 6,840 5,680
Stockholders' equity:
Preferred stock, $.01 par value; 50,000,000 shares authorized...............
Common stock, $.01 par value; 150,000,000 shares authorized; 75,000,000
shares issued and outstanding at March 31, 1996............................. 750
Additional paid-in capital.................................................. 93,971
Retained earnings........................................................... 6,289
Stockholder's net investment................................................ 53,187
-------- --------
Total stockholders' equity................................................ 101,010 53,187
-------- --------
$183,790 $128,978
======== ========
</TABLE>
See accompanying notes.
3
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STERLING COMMERCE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED MARCH 31 ENDED MARCH 31
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Products............................... $20,508 $15,047 $ 37,911 $30,366
Product support........................ 13,784 11,367 27,261 21,833
Services............................... 23,100 17,664 44,887 34,701
Royalties from affiliated company...... 4,684 2,197 8,167 4,471
------- ------- -------- -------
62,076 46,275 118,226 91,371
Costs and expenses:
Cost of sales:
Products and product support.......... 7,838 5,909 15,059 11,764
Services.............................. 5,498 3,739 10,193 7,476
------- ------- -------- -------
13,336 9,648 25,252 19,240
Product development and enhancement.... 3,777 4,032 7,065 7,631
Selling, general and administrative.... 22,904 16,535 43,159 33,838
------- ------- -------- -------
40,017 30,215 75,476 60,709
------- ------- -------- -------
Income before other expense and income
taxes.................................. 22,059 16,060 42,750 30,662
Other expense........................... 113 210 172
------- -------- -------
113 210 172
------- -------- -------
Income before income taxes.............. 22,059 15,947 42,540 30,490
Provision for income taxes.............. 8,824 6,379 17,016 12,196
------- ------- -------- -------
Net income.............................. $13,235 $ 9,568 $ 25,524 $18,294
------- ------- -------- -------
Income per common share:
Net income:
Pro forma............................. $.13 $.25
------- -------
Primary............................... $.18 $.34
======= ========
Fully diluted......................... $.18 $.34
======= ========
Average common shares outstanding....... 73,734 73,200 73,466 73,200
======= ======= ======== =======
</TABLE>
See accompanying notes.
4
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STERLING COMMERCE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------- SHAREHOLDERS' TOTAL
NUMBER OF ADDITIONAL RETAINED NET STOCKHOLDERS'
SHARES PAR VALUE PAID-IN CAPITAL EARNINGS INVESTMENT EQUITY
--------- --------- --------------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1994........... $ 43,051 $ 43,051
Net income............................. 18,294 18,294
Net cash distributed to Sterling
Software.............................. (15,835) (15,835)
Other.................................. (932) (932)
-------- --------
Balance at March 31, 1995............... $ 44,578 $ 44,578
======== ========
Balance at September 30, 1995........... $ 53,187 $ 53,187
Formation transactions (Note 3)........ 73,200 $732 $53,871 (54,603)
Net proceeds from initial public
offering.............................. 1,800 18 40,100 40,118
Net cash distributed to Sterling Software (17,819) (17,819)
Net income............................. 6,289 19,235 25,524
====== ==== ======= ====== ======== ========
Balance at March 31, 1996............... 75,000 $750 $93,971 $6,289 $101,010
====== ==== ======= ====== ======== ========
</TABLE>
See accompanying notes.
5
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STERLING COMMERCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED MARCH 31
-------------------
1996 1995
-------- --------
<S> <C> <C>
Operating activities:
Net income............................. $ 25,524 $ 18,294
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 10,282 7,944
Provision for losses on accounts
receivable.......................... 499 245
Provision for deferred income taxes.. 1,765 2,266
Changes in operating assets and
liabilities, net of effect of
business acquisitions:
Increase in accounts and notes
receivable....................... (2,964) (4,546)
Increase in amounts due from
Sterling Software................ (1,192)
Increase in prepaids and other
assets........................... (3,612) (666)
Increase in accounts payable and
accrued liabilities.............. 749 3,165
Increase in deferred revenue...... 3,560 4,745
Other............................. 335 (327)
-------- --------
Net cash provided by operating
activities...................... 34,946 31,120
Investing activities:
Purchases of property and equipment.... (10,599) (6,963)
Purchases and capitalized cost of
development of computer software...... (5,742) (4,717)
Business acquisitions, net of cash
acquired.............................. (185) (3,990)
Other................................ 192
-------- --------
Net cash used in investing
activities...................... (16,526) (15,478)
Financing activities:
Net proceeds from stock issuance....... 40,118
Proceeds from the sale of installment
receivables........................... 768 556
Other.................................. (397) (527)
-------- --------
Net cash provided by financing
activities...................... 40,489 29
Net cash distributed to Sterling
Software............................... (17,819) (15,835)
-------- --------
Increase (decrease) in cash and cash
equivalents............................ 41,090 (164)
Cash and cash equivalents at beginning
of period.............................. 395 379
-------- --------
Cash and cash equivalents at end of
period................................. $ 41,485 $ 215
======== ========
</TABLE>
See accompanying notes.
6
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STERLING COMMERCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Sterling
Commerce, Inc. and its wholly owned subsidiaries (the "Company") after
elimination of all significant intercompany balances and transactions. The
Company's quarterly financial data should be read in conjunction with the
consolidated financial statements of the Company for the year ended September
30, 1995 (including the notes thereto), set forth in the Company's Registration
Statement on Form S-1 (No. 33-80595). The financial statements were prepared in
conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results may differ from
the assumptions used by management in preparation of the financial statements.
Revenue
Revenue from license fees for software products is recognized when the
software is delivered, provided no significant future vendor obligations exist
and collection is probable. If software product transactions include the right
to receive future products, a portion of the software product revenue is
deferred and recognized as products are delivered. Services revenue and revenue
from products involving installation or other services are recognized as the
services are performed. Services revenue earned but not invoiced at the end of a
month is recognized as revenue in such month and recorded as unbilled accounts
receivable until invoiced in the following month. Royalties from affiliated
company represent royalties earned from Sterling Software, Inc. ("Sterling
Software") and certain of its subsidiaries acting as international distributors
of certain of the Company's products outside of the United States and Canada.
Product support contracts entitle the customer to telephone support,
bug fixing and the right to receive software updates as they are released.
Revenue from product support contracts, including product support included in
initial license fees, is recognized ratably over the contract period. All
significant costs and expenses associated with product support contracts are
expensed as incurred, which approximates ratable expenses over the contract
period.
When products, product support and services are billed prior to the
time the related revenue is recognized, deferred revenue is recorded and related
costs paid in advance are deferred.
Income Taxes
The Company has entered into a tax allocation agreement with Sterling
Software covering the period of time the Company has been and continues to be
included in Sterling Software's consolidated tax returns. (See Note 3
"Initial Public Offering, Formation Transactions and Proposed Distribution.")
The Company's
7
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operations have historically been included in income tax returns filed by
Sterling Software as part of its corporate group. Income tax expense in the
accompanying financial statements has been computed assuming the Company filed
returns separately from the Sterling Software group of companies. Deferred taxes
result primarily from the use of accelerated depreciation for tax purposes,
expensing of development costs and the timing of deductions for expenses under
certain employee benefit plans and accrued expenses.
Earnings Per Share
Pro forma net income per common share is calculated as though there
were 73,200,000 shares outstanding throughout the periods presented. Net income
per common share is calculated as though there were 73,200,000 shares
outstanding, together with the weighted average of additional shares and common
stock equivalents resulting from the Offering (as defined below).
Transactions with Affiliated Companies
Amounts payable and receivable from Sterling Software arise as a
result of various transactions between the Company and Sterling Software,
including the Company's participation in Sterling Software's central cash
management program, royalties paid to the Company as a result of Sterling
Software and certain of its subsidiaries acting as international distributors
of certain of the Company's products, tax expense charged to the Company and
other expenses incurred on behalf of the Company.
2. UNAUDITED INTERIM FINANCIAL STATEMENTS
The interim consolidated financial information contained herein is
unaudited but, in the opinion of management, includes all adjustments, which are
of a normal recurring nature, necessary for a fair presentation of the financial
position and results of operations for the periods presented. Results of
operations for the periods presented herein are not necessarily indicative of
results of operations for the entire year.
3. INITIAL PUBLIC OFFERING, FORMATION TRANSACTIONS AND PROPOSED DISTRIBUTION
Sterling Software incorporated the Company in Delaware as a wholly
owned subsidiary in December 1995. The Company completed its initial public
offering (the "Offering") of 13,800,000 shares of common stock, par value $.01
per share ("Common Stock"), on March 13, 1996. Pursuant to the Offering,
Sterling Software sold to the public 12,000,000 of the 73,200,000 shares of
Common Stock then owned by it and the Company sold 1,800,000 previously unissued
shares of Common Stock. The Offering price was $24 per share of Common Stock
resulting in net proceeds to Sterling Software of approximately $267,458,000
after deducting underwriting discounts and commissions and Sterling Software's
pro rata share of Offering expenses. The Offering resulted in net proceeds to
the Company of approximately $40,118,000 after deducting underwriting discounts
and commissions and the Company's pro rata share of Offering expenses.
8
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In contemplation of the Offering, among other things, (i) Sterling
Software caused to be transferred to or merged into the Company all of the
subsidiaries previously comprising Sterling Software's Electronic Commerce
Group, (ii) Sterling Software caused to be transferred to the Company certain
assets relating to the electronic commerce business previously conducted by
Sterling Software's International Group and certain assets relating to the
electronic commerce business previously conducted by Sterling Software's
Federal Systems Group, and (iii) the Company entered into the contractual
arrangements described below.
Ownership of Common Stock
Sterling Software currently owns 61,200,000 shares of Common Stock, constituting
81.6% of the total number of shares of Common Stock outstanding. The Company
and Sterling Software have entered into a Stock Registration and Option
Agreement pursuant to which Sterling Software, during the period between the
completion of the Offering and the completion of the proposed Distribution (as
defined below), will have an option to purchase from the Company in one or more
transactions at then-current market prices such number of shares of Common Stock
as Sterling Software may determine to be necessary to allow Sterling Software to
continue to include the Company in Sterling Software's consolidated federal
income tax return or to ensure the tax-free nature of the Distribution. In
addition, Sterling Software may engage in open-market purchases of Common Stock.
So long as Sterling Software beneficially owns a majority of the
outstanding Common Stock, it will have the ability to elect all of the members
of the Board of Directors of the Company and otherwise control the management
and affairs of the Company. In addition, certain directors and executive
officers of the Company are also directors and executive officers of Sterling
Software. Certain provisions of the Company's Certificate of Incorporation and
Bylaws and of applicable law will also facilitate Sterling Software's ability to
exercise control of the Company.
Proposed Distribution
Sterling Software has announced that it intends to distribute pro rata
to its stockholders as a dividend all or substantially all of its remaining
shares of Common Stock by means of a tax-free distribution (the "Distribution").
The Distribution will be subject to certain conditions, including approval by
Sterling Software's stockholders of both the Distribution and a new Sterling
Software stock option plan and the declaration by Sterling Software's Board of
Directors of a dividend of the shares of Common Stock then owned by Sterling
Software. Sterling Software has advised the Company that such declaration will
be conditioned upon the receipt of a favorable ruling from the Internal Revenue
Service ("IRS") as to the tax-free nature of the Distribution and the absence of
any change in market conditions or other circumstances that would cause the
Board of Directors of Sterling Software to conclude that the Distribution is not
in the best interests of the stockholders of Sterling Software. Sterling
Software has informed the Company that it has applied to the IRS for a ruling as
to the tax-free nature of the Distribution, and that Sterling Software presently
anticipates that the Distribution will occur prior to September 30, 1996.
Sterling Software has advised the Company that Sterling Software has not
determined what action, if any, it would take if it were not to receive the
favorable tax ruling or
9
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the applicable stockholder approvals. No assurance can be given that the
favorable tax ruling or applicable stockholder approvals will be obtained or
that, in any event, the Distribution will occur, or that, if it does not receive
the favorable tax ruling or applicable stockholder approvals, Sterling Software
will not sell its shares of Common Stock to reduce its investment in the
Company. Sterling Software's stockholder meeting for the purpose of considering
and acting upon the Distribution and the adoption of Sterling Software's new
stock option plan will be held on May 29, 1996.
The actual number of shares of Common Stock to be distributed with
respect to each outstanding share of Sterling Software common stock ("Software
Stock") will depend upon the number of shares of Software Stock outstanding on
the record date established by the Sterling Software Board, the number of shares
of Common Stock owned by Sterling Software on such record date and the number of
shares of Common Stock, if any, which may be required to be retained by Sterling
Software to honor certain warrant obligations, if such warrants are not
exercised prior to such record date. In any event, in excess of 99% of the
shares of Common Stock owned by Sterling Software will be included in the
Distribution.
Contractual Arrangements with Sterling Software
In anticipation of the Offering, and in view of Sterling Software's
intention to undertake the Distribution, the Company and Sterling Software
entered into a number of agreements. These agreements, which became effective
upon the completion of the Offering, include a Services Agreement, a Space
Sharing Agreement, a Data Processing Agreement, a Tax Allocation Agreement, an
International Marketing Agreement, a Master Software License Agreement, an
Indemnification Agreement and a Stock Registration and Option Agreement. As a
result of Sterling Software's ownership interest in the Company, the terms of
such agreements were not, and the terms of any future amendments to those
agreements may not be, the result of arm's-length negotiation. The Company has
been advised by Sterling Software that it intends that, for as long as Sterling
Software beneficially owns a majority of the outstanding Common Stock, the terms
of any future transactions and agreements between the Company and Sterling
Software or its affiliates will be at least as favorable to the Company as could
be obtained from third parties.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Total revenue increased $15,801,000, or 34%, in the second quarter of
1996 over the same period of 1995 due to a 36% increase in the products revenue,
a 21% increase in product support revenue, a 31% increase in services revenue
and a 113% increase in royalties from Sterling Software's International Group.
The increase in products revenue is primarily the result of increased sales of
communications and interchange software products. For the three months ended
March 31, 1996, 35% of the Company's software product revenue was for products
that run on hardware platforms other than mainframe hardware. This compares to
32% for the same period in 1995. Product support revenue increased primarily as
a result of an increase in the installed customer base across all product
lines. The increase in services revenue is due to an increase in the customer
base, primarily in the grocery, hardlines and retail vertical markets, and
increases in the processing volume for existing customers. The increase in
royalties revenue is the result of an increase in product sales and product
support outside of the United States and Canada.
Total costs and expenses increased $9,802,000, or 32%, on revenue
growth of 34%, primarily due to an increase in cost of goods sold and an
increase in selling, general and administrative expense. Cost of goods sold
increased $3,688,000, or 38%, when compared with the same period of last year
due to increases in depreciation and amortization. These increases are the
result of an increase in property and equipment purchases as well as the
amortization associated with the release of new software products. In addition,
cost of sales increased commensurately with higher levels of products, product
support and services revenue.
Product development and enhancement expense of $3,777,000 for the
second quarter of 1996 is net of $2,807,000 of capitalized software development
costs. This compares to product development and enhancement expense of
$4,032,000 for the second quarter of 1995, which is net of $2,514,000 of
capitalized software development costs for the same period. Total software
development costs capitalized during the second quarter of 1996 and 1995
represent 43% and 38% of total product development and enhancement expense for
the quarter ended March 31, 1996 and 1995, respectively. Software amortization
expense is $2,601,000 and $2,176,000 for the second quarter of 1996 and 1995,
respectively.
Selling, general and administrative expense increased $6,369,000, or
39%, primarily due to an increase in sales, marketing and customer support
activities needed to support the revenue growth.
SIX MONTHS ENDED MARCH 31, 1996 AND 1995
Total revenue increased $26,855,000, or 29%, in the first six months
of 1996 over the same period of 1995 due to a 25% increase in the products
revenue, a 25% increase in product
11
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support revenue, a 29% increase in services revenue and an 83% increase in
royalties from Sterling Software's International Group. The increase in products
revenue is primarily the result of increased sales of communications and
interchange software products. For the six months ended March 31, 1996, 43% of
the Company's software product revenue was for products that run on hardware
platforms other than mainframe hardware. This compares to 34% for the same
period in 1995. Product support revenue increased primarily as a result of an
increase in the installed customer base across all product lines. The increase
in services revenue is due to an increase in the customer base, primarily in the
grocery, hardlines and retail vertical markets, and increases in the processing
volume for existing customers. The increase in royalties revenue is the result
of an increase in product sales and product support outside of the United States
and Canada.
Total costs and expenses increased $14,767,000, or 24%, on revenue
growth of 29%, primarily due to an increase in cost of goods sold and an
increase in selling, general and administrative expense. Cost of goods sold
increased $6,012,000, or 31%, when compared with the same period of last year
due to increases in depreciation and amortization. These increases are the
result of an increase in property and equipment purchases as well as the
amortization associated with the release of new software products. In addition,
cost of sales increased commensurately with higher levels of products, product
support and services revenue.
Product development and enhancement expense of $7,065,000 for the
first six months of 1996 is net of $5,742,000 of capitalized software
development costs. This compares to product development and enhancement expense
of $7,631,000 for the first six months of 1995, which is net of $4,428,000 of
capitalized software development costs for the same period. Total software
development costs capitalized during the second quarter of 1996 and 1995
represent 45% and 37% of total product development and enhancement expense for
the six months ended March 31, 1996 and 1995, respectively. Software
amortization expense is $4,902,000 and $4,257,000 for the first six months of
1996 and 1995, respectively.
Selling, general and administrative expense increased $9,321,000, or
28%, primarily due to an increase in sales, marketing and customer support
activities needed to support the revenue growth.
LIQUIDITY AND CAPITAL RESOURCES
On March 13, 1996, the Company issued and sold 1,800,000 shares of Common
Stock in the Offering for net proceeds, after deducting underwriting discounts
and commissions and the Company's pro rata share of offering expenses, of
$40,118,000. Prior to the completion of the Offering, all cash in excess of the
Company's daily cash requirements was transferred to Sterling Software pursuant
to Sterling Software's centralized cash management system, which was terminated
as to the Company as of the close of business on March 12, 1996. Sterling
Software continues to provide cash management services to the Company on an
interim basis pursuant to the services agreement ("the Services Agreement")
(which will automatically terminate on the occurrence of the Distribution and is
otherwise terminable by either party on or after September 30, 1996). The
Services Agreement provides, among other things, for (i) Sterling Software to
advance to the Company funds sufficient to meet its daily cash requirements and
(ii) the
12
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Company to advance to Sterling Software all cash generated by the Company (other
than the net proceeds of the Offering) in excess of the Company's daily cash
requirements. At March 31, 1996, outstanding net advances by the Company to
Sterling Software under the Services Agreement totaled $1,192,000.
The Company had $45,811,000 of working capital at March 31, 1996, including
$41,485,000 of cash and cash equivalents. Approximately $40,118,000 of the cash
and cash equivalents resulted from the net proceeds of the Offering. Days sales
outstanding, measured on a quarterly basis, dropped from 83 days for the quarter
ended December 31, 1995 to 80 days for the quarter ended March 31, 1996. Net
cash flows from operations increased $3,826,000 to $34,946,000 in the first six
months of 1996 as compared to the first six months of 1995, primarily due to
higher operating profits and higher non-cash charges. Cash flows from
operations, to the extent not distributed to Sterling Software, were used to
fund operations and capital expenditures, including capitalized software.
Property and equipment purchases of $10,599,000 in the first six months of 1996
include purchases made for equipment upgrades for network processing systems and
computer equipment purchases to support the continuing growth in revenue.
At March 31, 1996, the Company's capital resource commitments consisted of
commitments under lease arrangements for office space and equipment. The
Company intends to meet such obligations from internally generated funds and
available cash balances. No significant commitments exist for future capital
expenditures. The Company believes available balances of cash and cash
equivalents combined with cash flows from operations are sufficient to meet the
Company's cash requirements for the foreseeable future.
The Company's business strategy includes the selective acquisition of
products and businesses to facilitate the expansion of its operations. Such
acquisitions, if any, are expected to be funded from cash on hand, cash from
operations, issuance of Company securities, bank borrowings or other capital
markets transactions or a combination of one or more of the foregoing.
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OTHER MATTERS
Demand for many of the Company's products tends to improve with increased
inflation as customers strive to increase employee productivity and reduce
costs. However, the effect of inflation on the Company's relatively labor
intensive cost structure could adversely affect its results of operations to the
extent the Company might not be able to recover increased operating costs
through increased product licensing and prices.
The assets and liabilities of non-U.S. operations are translated into U.S.
dollars at exchange rates in effect as of the respective balance sheet dates,
and revenue and expense accounts of these operations are translated at average
exchange rates during the month the transactions occur. Translation gains and
losses are included as an adjustment to retained earnings.
The Company's acquisition strategy contributes in part to the Company's
growth in revenue and operating profit. The impact of future acquisitions on
continued growth in revenue and operating profit cannot presently be determined.
This report and other reports and statements filed by the Company from time
to time with the Securities and Exchange Commission (collectively, "SEC
Filings") contain or may contain certain forward-looking statements that are
based on information available to the Company's management and various
estimates, assumptions and predictions made by the Company's management. When
used in SEC Filings, the words "anticipate," "contemplate," "estimate,"
"expect," "future," "intend," "plan" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to inherent
uncertainties, including, in addition to any uncertainties specifically
identified in the text surrounding such statements, the uncertainties described
under the caption "Risk Factors" or elsewhere in the Company's Registration
Statement on Form S-1 (No. 33-80595). Such statements are also subject to
various uncertainties with respect to changes or developments in social,
economic, business, industry, market, legal and regulatory circumstances and
conditions and actions taken or omitted to be taken by third parties, including
the Company's stockholders, customers, suppliers, business partners and
competitors, and legislative, regulatory, judicial and other governmental
authorities and officials. Consequently, actual events, circumstances,
consequences, effects and results may vary significantly from those described in
or contemplated by such forward looking statements.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this Quarterly Report on Form
10-Q:
3(a) --Third Amended and Restated Certificate of Incorporation of the
Company filed March 4, 1996 (1)
3(b) --Amended and Restated Bylaws of the Company as of February 12,
1996 (1)
10(a) --Services Agreement dated March 4, 1996 by and between the
Company and Sterling Software (1)
10(b) --Space Sharing Agreement dated March 4, 1996 by and between the
Company and Sterling Software (1)
10(c) --Data Processing Agreement dated March 13, 1996 by and between
the Company and Sterling Software (1)
10(d) --Tax Allocation Agreement dated March 4, 1996 by and between the
Company and Sterling Software (1)
10(e) --Indemnification Agreement dated March 4, 1996 by and between the
Company and Sterling Software (2)
10(f) --International Marketing Agreement dated March 4, 1996 by and
between the Sterling Commerce International, Inc. and Sterling
Software International, Inc. (2)
10(g) --Stock Registration and Option Agreement dated March 4, 1996 by
and between the Company and Sterling Software (1)
10(h) --Form of Indemnification Agreement dated March 4, 1996 between
the Company and each of its officers and directors (1)
10(i) --Form of CEO Agreement dated February 12, 1996 between the
Company and Sterling L. Williams (2)
10(j) --Form of Change-in-Control Severance Agreement dated as of
February 12, 1996 between the Company and each of its executive
officers (2)
10(k) --Forms of Severance Agreements dated as of February 12, 1996
between the Company and each of its executive officers (other
than Sterling L. Williams) (2)
10(l) --Master Software License Agreement dated March 4, 1996 among the
Company, Sterling Software and their respective subsidiaries
parties thereto (2)
10(m) --Form of 1996 Stock Option Plan dated February 12, 1996 (2)
10(n) --Forms of Stock Option Agreements (2)
10(o) --Supplemental Executive Retirement Plan II (1)
10(p) --Form of Supplemental Executive Retirement Plan II Agreement (1)
10(q) --Form of Amendment to Supplemental Executive Retirement Plan II
Agreement (1)
11 --Computation of Earnings Per Share (2)
15
<PAGE>
27 --Financial Data Schedule (2)
(b) The Company did not file any reports on Form 8-K during the three
months ended March 31, 1996.
_______________
(1) Previously filed as an exhibit to the Company's Registration Statement No.
33-80595 on Form S-1 and incorporated herein by reference.
(2) Filed herewith.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STERLING COMMERCE, INC.
Date: May 9, 1996 /s/ Sterling L. Williams
---------------------------
Sterling L. Williams
Chief Executive Officer
and Director
(Principal Executive Officer)
Date: May 9, 1996 /s/ George H. Ellis
---------------------------
George H. Ellis
Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer)
17
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ----------- -------------
<S> <C> <C>
3(a) - Third Amended and Restated
Certificate of Incorporation of the
Company filed March 4, 1996 (1)
3(b) - Amended and Restated Bylaws of the
Company as of February 12, 1996 (1)
10(a) - Services Agreement dated March 4,
1996 by and between the Company and
Sterling Software (1)
10(b) - Space Sharing Agreement dated March
4, 1996 by and between the Company
and Sterling Software (1)
10(c) - Data Processing Agreement dated March
13, 1996 by and between the Company
and Sterling Software (1)
10(d) - Tax Allocation Agreement dated March
4, 1996 by and between the Company
and Sterling Software (1)
10(e) - Indemnification Agreement dated March
4, 1996 by and between the Company
and Sterling Software (2)
10(f) - International Marketing Agreement
dated March 4, 1996 by and between
Sterling Commerce International, Inc.
and Sterling Software International,
Inc. (2)
10(g) - Stock Registration and Option
Agreement dated March 4, 1996 by and
between the Company and Sterling
Software (1)
10(h) - Form of Indemnification Agreement
dated March 4, 1996 between the
Company and each of its officers and
directors (1)
10(i) - Form of CEO Agreement dated February
12, 1996 between the Company and
Sterling L. Williams (2)
10(j) - Form of Change-in-Control Severance
Agreement dated as of February 12,
1996 between the Company and each of
its executive officers (2)
10(k) - Forms of Severance Agreements dated
as of February 12, 1996 between the
Company and each of its executive
officers (other than Sterling L.
Williams) (2)
10(l) - Master Software License Agreement
dated March 4, 1996 among the
Company, Sterling Software and their
respective subsidiaries parties
thereto (2)
10(m) - Form of 1996 Stock Option Plan dated
February 12, 1996 (2)
10(n) - Forms of Stock Option Agreements (2)
10(o) - Supplemental Executive Retirement
Plan II (1)
10(p) - Form of Supplemental Executive
Retirement Plan II Agreement (1)
10(q) - Form of Amendment to Supplemental
Executive Retirement Plan II
Agreement (1)
11 - Computation of Earnings Per Share (2)
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
27 - Financial Data Schedule (2)
</TABLE>
_______________
(1) Previously filed as an exhibit to the Company's Registration Statement No.
33-80595 on Form S-1 and incorporated herein by reference.
(2) Filed herewith.
19
<PAGE>
EXHIBIT 10(e)
INDEMNIFICATION AGREEMENT
-------------------------
This Indemnification Agreement (this "Agreement") is made and entered into
as of March 4, 1996, by and between Sterling Software, Inc., a Delaware
corporation ("SSW"), and Sterling Commerce, Inc., a Delaware corporation
("SCI").
RECITALS
--------
A. Upon the completion of an initial public offering of up to 13,800,000
shares of common stock of SCI (the "Offering"), SCI will cease to be a wholly
owned subsidiary of SSW. Thereafter, SSW intends, subject to certain
conditions, including but not limited to the receipt of a favorable ruling from
the Internal Revenue Service and certain other conditions, to distribute pro
rata to its stockholders as a dividend its remaining shares of common stock of
SCI (the "Distribution").
B. In connection with the Offering, SCI has filed a registration
statement with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "1933 Act"), and distributed a prospectus, and SSW or
SCI may file a registration statement or distribute a prospectus or proxy or
information statement in connection with the Distribution.
C. Each of SSW and SCI desires to indemnify the other, and to be
indemnified by the other, against certain liabilities relating to, arising out
of or resulting from their respective businesses, operations and assets or the
above-mentioned registration statement, prospectus or proxy or information
statement, in each case on the terms set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
-----------
have the following meanings:
(a) The term "Business Day" shall mean a day of the year on which
banks are not required or authorized to close in New York City or Texas.
(b) The term "Closing" shall mean the consummation of the first
purchase and sale of shares of common stock of SCI pursuant to the Offering.
(c) The term "Closing Date" shall mean the date on which the Closing
occurs.
(d) The term "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) The term "Distribution Tax Liability" shall mean any liability for
Taxes (and all costs and expenses, including
<PAGE>
reasonable fees and disbursements of counsel, incurred in determining or
contesting the existence or amount of such liability for Taxes), but only to the
extent resulting from or arising out of (i) the inaccuracy of any factual
information provided by SCI in connection with the request for a ruling from the
Internal Revenue Service as to the tax-free nature of the Distribution or (ii)
any act taken or omitted to be taken by SCI or its directors, officers,
employees, agents or representatives (other than any act taken or omitted to be
taken at the direction or with the consent of SSW) in connection with such
request for a ruling; provided, however, that the term "Distribution Tax
Liability" shall not include any liability for Taxes attributable to an "excess
loss account" (as such term is defined in the Treasury Regulations issued under
Section 1502 of the Code) with respect to the stock of SCI that arises despite
the fact that the Distribution is otherwise tax free.
(f) The term "Excluded Employees" shall mean all persons who as of the
Closing Date are employees of both (i) any SCI Company and (ii) any SSW Company.
(g) The term "Liabilities" shall mean all liabilities and obligations,
actual or contingent, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever and however arising, including all costs and expenses
(including reasonable fees and disbursements of counsel) relating thereto, and
including without limitation liabilities and obligations arising in connection
with any actual or threatened claim, action, suit or proceeding by or before any
court or regulatory or administrative agency or commission or any arbitration
panel.
(h) The term "Registration Rights Agreement" shall mean the Stock
Registration and Option Agreement between SSW and SCI dated as of the date
hereof.
(i) The term "SCI Companies" shall mean Sterling Commerce, Inc. and
each of its direct and indirect subsidiaries at the time of, or at any time
after, the Closing.
(j) The term "SCI Employees" shall mean all employees or former
employees of any of the SCI Companies other than any person who as of the
Closing Date is an employee of any of the SSW Companies.
(k) The term "SCI Guarantee" shall mean any guarantee, surety or
performance bond, letter of credit or other contractual arrangement in effect as
of the Closing pursuant to which any SCI Company has guaranteed or secured or
caused a third party to guarantee or secure any liability or obligation of any
SSW Company.
(l) The term "SCI Liabilities" shall mean (i) all Liabilities (other
than Liabilities for Taxes that are allocated pursuant to the Tax Allocation
Agreement) relating to, resulting
-2-
<PAGE>
from or arising out of the businesses, operations or assets conducted or owned
or formerly conducted or owned by any of the SCI Companies, (ii) any liability
of SSW to its stockholders, including all costs and expenses (including
reasonable fees and disbursements of counsel) relating thereto, resulting from
or arising out of the Distribution as a result of an inaccuracy, act or omission
described in clause (i) or (ii) of the definition of "Distribution Tax
Liability." "SCI Liabilities" shall also include all liabilities for any
benefits due and payable in respect of SCI Employees under any "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), maintained or formerly maintained by any of the
SCI Companies or any of the SSW Companies in which any SCI Employee has at any
time participated, as well as any taxes, penalties, interest or other charges
imposed by any governmental agency with respect to the maintenance and
administration of any such plan, whether by any of the SSW Companies or any of
the SCI Companies; provided, however, that any such liability for taxes,
penalties, interest or other charges imposed by any governmental agency with
respect to an employee benefit plan maintained or formerly maintained by any of
the SSW Companies shall be limited to that portion of the tax, penalty, interest
or other charge which bears the same relationship to the whole as the benefit
liabilities under such plan attributable to SCI Employees bears to all benefit
liabilities under such plan, except that "SCI Liabilities" shall include all
taxes, penalties, interest and other charges imposed solely in relation to the
participation of SCI Employees and shall not include any taxes, penalties,
interest or other charges imposed solely in relation to the participation of SSW
Employees.
(m) The term "SCI Securities Liabilities" shall mean any Liability
under the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), or any other federal or state securities law or regulation resulting from
or arising out of the Offering or the Distribution, including without
limitation any such Liability arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement filed under federal or state securities laws in
connection with the Offering or the Distribution, or in any amendment or
supplement thereto (a "Registration Statement"), or in any prospectus relating
to the Offering or the Distribution or in any amendment or supplement thereto (a
"Prospectus") or in any proxy or information statement filed under the 1934 Act
or distributed in connection with the Distribution, or in any amendment or
supplement thereto (an "Information Statement"), or (ii) the omission or alleged
omission to state in a Registration Statement, Prospectus or Information
Statement a material fact required to be stated therein or necessary to make the
statements made therein not misleading; provided, however, that the foregoing
indemnity shall not extend or apply to any Liability arising out of or based
upon any such untrue statement or alleged untrue statement or any such omission
or alleged omission (i) in the case of the Registration
-3-
<PAGE>
Statement and Prospectus relating to the Offering, concerning the businesses and
operations of any of the SSW Companies, and (ii) in the case of any other
Registration Statement, Prospectus or Information Statement, based upon
information furnished in writing by SSW expressly for use therein.
(n) The term "SSW Companies" shall mean (unless otherwise expressly
provided) Sterling Software, Inc. and each of its direct and indirect
subsidiaries at the time of, or at any time after, the Closing, other than SCI
and its subsidiaries.
(o) The term "SSW Employees" shall mean all employees or former
employees of any of the SSW Companies other than the SCI Employees and the
Excluded Employees.
(p) The term "SSW Guarantee" shall mean any guarantee, surety or
performance bond, letter of credit or other contractual arrangement in effect as
of the Closing pursuant to which any SSW Company has guaranteed or secured or
caused a third party to guarantee or secure any liability or obligation of any
SCI Company.
(q) The term "SSW Liabilities" shall mean all Liabilities (other than
Liabilities for Taxes that are allocated pursuant to the Tax Allocation
Agreement) relating to, resulting from or arising out of the businesses,
operations or assets conducted or owned or formerly conducted or owned by any of
the SSW Companies, other than SCI Liabilities. "SSW Liabilities" shall also
include all liabilities for any benefits due and payable in respect of SSW
Employees under any "employee benefit plan," as defined in Section 3(3) of
ERISA, maintained or formerly maintained by any of the SSW Companies in which no
SCI Employee has at any time participated or such a plan maintained or formerly
maintained by any of the SSW Companies or, in respect of periods prior to the
Closing Date, any of the SCI Companies in which any SSW Employee has at any time
participated, as well as any taxes, penalties, interest or other charges imposed
by any governmental agency with respect to the maintenance and administration of
any such plan, whether by any of the SSW Companies or any of the SCI Companies;
provided, however, that any such liability for taxes, penalties, interest or
other charges imposed by any governmental agency with respect to any such
employee benefit plan shall be limited to that portion of the tax, penalty,
interest or other charge which bears the same relationship to the whole as the
benefit liabilities under such plan attributable to SSW Employees bears to all
benefit liabilities under such plan, except that "SSW Liabilities" shall include
all taxes, penalties, interest and other charges imposed solely in relation to
the participation of SSW Employees and shall not include any taxes, penalties,
interest or other charges imposed solely in relation to the participation of SCI
Employees.
(r) The term "SSW Securities Liabilities" shall mean any Liability
under the 1933 Act, the 1934 Act or any other
-4-
<PAGE>
federal or state securities law or regulation resulting from or arising out of
the Offering or the Distribution and arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus or Information Statement or the omission or
alleged omission to state in a Registration Statement, Prospectus or Information
Statement a material fact required to be stated therein or necessary to make the
statements made therein not misleading, but only to the extent that such
Liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission (i) in the case of the
Registration Statement and Prospectus relating to the Offering, concerning the
business and operations of any of the SSW Companies, and (ii) in the case of any
other Registration Statement, Prospectus or Information Statement, contained in
material furnished in writing by SSW expressly for use therein.
(s) The term "Tax Allocation Agreement" shall mean the Tax Allocation
Agreement between SSW and SCI dated as of the date hereof.
(t) The term "Taxes" shall mean any and all taxes (including interest,
penalties and additions to tax), fees and charges (including sales, use, excise,
value added, personal property and other taxes) imposed by any federal, state or
local or government tax authority in the United States of America or by any
foreign government or taxing authority.
2. Indemnification by SCI. SCI shall indemnify, defend and hold harmless
----------------------
the SSW Companies and the respective past, present and future directors,
officers, employees, agents and representatives thereof (regardless in each case
of whether any such person serves in one or more similar capacities for SCI and
its subsidiaries) from and against any and all losses, claims, damages,
liabilities, demands, suits and actions, including all reasonable attorneys'
fees and disbursements and other costs and expenses incurred in connection
therewith (collectively, "Indemnifiable Losses"), relating to, resulting from or
arising out of (a) any SCI Liabilities, (b) any SCI Securities Liabilities, (c)
any Distribution Tax Liability, or (d) any material breach by SCI of any
covenant of SCI contained in this Agreement or any other agreement executed by
SCI in connection with the Offering or the Distribution.
3. Indemnification by SSW. SSW shall indemnify, defend and hold harmless
----------------------
the SCI Companies and the respective past, present and future directors,
officers, employees, agents and representatives thereof (regardless in each case
of whether any such person serves in one or more similar capacities for SSW and
its subsidiaries) from and against any and all Indemnifiable Losses relating to,
resulting from or arising out of (a) any SSW Liabilities, (b) any SSW Securities
Liabilities, or (c) any material breach by SSW of any covenant of SSW contained
in this
-5-
<PAGE>
Agreement or any other agreement executed by SSW in connection with the Offering
or the Distribution.
4. Guarantees, Etc. (a) SCI shall use reasonable efforts to obtain
----------------
promptly the release of each of the SSW Companies from all of their respective
obligations under or in respect of all material SSW Guarantees, and SSW shall
cooperate with SCI in obtaining such releases, provided that neither party shall
be required to incur any non-de minimis liability or unreimbursed expense in
doing so. SCI shall indemnify, defend and hold harmless the SSW Companies, and
their respective directors, officers, employees, agents and representatives,
from and against any Indemnifiable Losses relating to, resulting from, or
arising out of, any SSW Guarantee. SSW shall not unilaterally terminate or
withdraw any SSW Guarantee and shall abide by the terms of the SSW Guarantees.
SCI shall reimburse each SSW Company for its direct costs (or, in the case of an
SSW Guaranty that relates to both liabilities or obligations of both one or more
SCI Companies and one or more third parties, a pro rata share of such direct
costs), if any, of maintaining the SSW Guarantees pending the procurement of the
releases contemplated hereby.
(b) SSW shall use reasonable efforts to obtain promptly the release of
each of the SCI Companies from all of their respective obligations under or in
respect of all material SCI Guarantees, and SCI shall cooperate with SSW in
obtaining such releases, provided that neither party shall be required to incur
any non-de minimis liability or unreimbursed expense in doing so. SSW shall
indemnify, defend and hold harmless SCI and its subsidiaries, and their
respective directors, officers, employees, agents and representatives, from and
against any Indemnifiable Losses relating to, resulting from, or arising out of,
any SCI Guarantee. SCI shall not unilaterally terminate or withdraw any SCI
Guarantee and shall abide by the terms of the SCI Guarantees. SSW shall
reimburse each SCI Company for its direct costs (or, in the case of an SCI
Guaranty that relates to both liabilities or obligations of both one or more SSW
Companies and one or more third parties, a pro rata share of such direct costs),
if any, of maintaining the SCI Guarantees pending the procurement of the
releases contemplated hereby.
5. Third Party Claims. (a) If any person entitled to indemnification
------------------
under this Agreement (an "Indemnitee") receives notice of the assertion of any
claim or of the commencement of any action or proceeding by any person that is
not a party to this Agreement or a subsidiary of any such party (a "Third Party
Claim") against such Indemnitee, the Indemnitee shall promptly provide written
notice thereof (including a description of the Third Party Claim and an estimate
of any Indemnifiable Losses (which estimate shall not be conclusive as to the
final amount of such Indemnifiable Losses) to the party required to provide
indemnification under this Agreement (the "Indemnifying Party") within 10
Business Days after the Indemnitee's receipt of notice of such Third Party
Claim. Any delay by the Indemnitee in
-6-
<PAGE>
providing such written notice shall not relieve the Indemnifying Party of any
liability for indemnification hereunder except to the extent that the rights of
the Indemnifying Party are materially prejudiced by such delay.
(b) The Indemnifying Party shall have the right to participate in or,
by giving written notice to the Indemnitee, to assume the defense of any Third
Party Claim at such Indemnifying Party's expense and by such Indemnifying
Party's own counsel (which shall be reasonably satisfactory to the Indemnitee),
and the Indemnitee will cooperate in good faith in such defense. The
Indemnifying Party shall not be liable for any legal expenses incurred by the
Indemnitee after the Indemnitee has received notice of the Indemnifying Party's
intent to assume the defense of a Third Party Claim; provided, however, that if
the Indemnifying Party fails to take steps reasonably necessary to diligently
pursue the defense of such Third Party Claim within 10 Business Days of receipt
of notice from the Indemnitee that such steps are not being taken, the
Indemnitee may assume its own defense and the Indemnifying Party shall be liable
for the reasonable costs thereof.
(c) The Indemnifying Party may settle any Third Party Claim which it
has elected to defend so long as the written consent of the Indemnitee to such
settlement is first obtained (which consent shall not be unreasonably withheld).
The Indemnified Party shall not settle any Third Party Claim without the written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld).
(d) In the event that a Third Party Claim involves a proceeding as to
which both SSW and SCI may be Indemnifying Parties, the parties hereto agree to
cooperate in good faith in a joint defense of such Third Party Claim.
6. Contribution. If the indemnification provided for in this Agreement
------------
with respect to SCI Securities Liabilities or SSW Securities Liabilities is for
any reason held by a court or other tribunal to be unavailable on policy grounds
or otherwise, SSW and SCI shall contribute to any Indemnifiable Losses relating
to, resulting from or arising out of the SCI Securities Liabilities or the SSW
Securities Liabilities in such proportion as to reflect each party's relative
fault in connection with such Indemnifiable Losses. The relative fault of the
parties shall be determined by reference to, among other things, whether the
conduct or information giving rise to the Indemnifiable Losses is attributable
to SSW or SCI and each party's relative intent, access to information and
opportunity to prevent or correct the Indemnifiable Losses. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who is not guilty of
fraudulent misrepresentation.
-7-
<PAGE>
7. Allocations Relating to Excluded Employees. Liabilities for any
------------------------------------------
benefits due and payable in respect of Excluded Employees under any "employee
benefit plan," as defined in Section 3(3) of ERISA, maintained or formerly
maintained by any of the SCI Companies or any of the SSW Companies in which any
Excluded Employee has at any time participated shall be allocated as between the
SCI Companies, on the one hand, and the SSW Companies, on the other hand as
follows: (a) to the extent such liabilities are directly attributable to periods
prior to the Closing Date, they shall be allocated entirely to the SSW
Companies; (b) to the extent such liabilities are directly attributable to
periods on or after the Closing Date and are directly attributable to an
Excluded Employee's service to one or more SCI Companies on the one hand or one
or more SSW Companies on the other hand, they shall be allocated entirely to the
SCI Companies or the SSW Companies, respectively; and (c) in all other events,
such liabilities shall be allocated in a manner as nearly proportionate to the
services rendered by such Excluded Employee to the SCI Companies and the SSW
Companies, respectively, as may be practicable under the circumstances or as
otherwise mutually agreed by SCI and SSW. Liabilities allocated to the SCI
Companies pursuant to this Section 7 shall be deemed to be SCI Liabilities for
all purposes of this Agreement, and liabilities allocated to the SSW Companies
pursuant to this Section 7 shall be deemed to be SSW Liabilities for all
purposes of this Agreement.
8. Cooperation. So long as any books, records and files retained after
-----------
the Closing Date by SSW (or any of the other SSW Companies), on the one hand, or
SCI (or any of the other SCI Companies), on the other hand, relating to the
businesses, operations or assets of the other party and its subsidiaries
(including any books, records and files retained by the SCI Companies relating
to the conduct of their businesses or operations or the ownership of their
assets prior to the Closing) remain in existence and available, such other party
shall have the right upon prior written notice to inspect and copy the same at
any time during business hours for any proper purpose, provided that such right
will not extend to any books, records or files the disclosure of which in
accordance herewith would result in a waiver of the attorney-client, work
product or other privileges which permit non-disclosure of otherwise relevant
material in litigation or other proceedings, or which are subject on the date
hereof and at the time inspection is requested to a non-disclosure agreement
with a third party and a waiver cannot reasonably be obtained. SSW and SCI
agree that neither they nor any of their subsidiaries shall destroy any such
books, records or files without reasonable notice to the other party or if such
party receives within 10 Business Days of such notice any reasonable objection
from the other party to such destruction. Except in the case of dispute between
the parties hereto, SSW and SCI shall cooperate with one another in a timely
manner in any administrative or judicial proceeding involving any matter
affecting the actual or potential liability of either party
-8-
<PAGE>
hereunder. Such cooperation shall include, without limitation, making available
to the other party during normal business hours all books, records and
information, and officers and employees (without substantial disruption of
operations or employment) necessary or useful in connection with any inquiry,
audit, investigation or dispute, any litigation or any other matter requiring
any such books, records, information, officers or employees for any reasonable
business purpose. The party requesting or otherwise entitled to any books,
records, information, officers or employees pursuant to this Section 7 shall
bear all reasonable out-of-pocket costs and expenses (except for salaries,
employee benefits and general overhead) incurred in connection with providing
such books, records, information, officers or employees.
9. Use of SSW Name. SCI will and will cause the other SCI Companies to
---------------
cease using the name "Sterling Software," including any logo, trademark or
design containing such name (collectively, the "Marks"), as soon as practicable
after the Distribution; provided, however, that nothing contained in this
Section 8 shall (a) require any of the SCI Companies to remove any of the Marks
from any software or other materials in existence on the date hereof, (b) affect
their right to provide regular and continued maintenance or support of any
software or other products bearing the Marks, or (c) prohibit any of the SCI
Companies from satisfying previously accepted orders for software or other
products bearing the Marks.
10. Effectiveness. This Agreement shall become effective on the Closing
-------------
Date.
11. Successors and Assigns. This Agreement shall be binding upon the
----------------------
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by either party hereto to
any other person except that either party may assign this Agreement to any of
its affiliates.
12. No Third-Party Beneficiaries. Except for the persons entitled to
----------------------------
indemnification pursuant to Section 2 or 3 hereof, each of whom is an intended
third-party beneficiary hereunder, nothing expressed or implied in this
Agreement shall be construed to give any person or entity other than the parties
hereto any legal or equitable rights hereunder.
13. Entire Agreement. This Agreement constitutes the entire agreement
----------------
among the parties with respect to the subject matter hereof.
14. Amendment. This Agreement may not be amended except by an instrument
---------
signed by the parties hereto.
-9-
<PAGE>
15. Waivers. Either party hereto may (i) extend the time for the
-------
performance of any of the obligations or other act of the other party, (ii)
waive any inaccuracies in the representations and warranties contained herein,
or (iii) waive compliance with any of the agreements contained herein. No
waiver of any term shall be construed as a waiver of the same term, or a waiver
of any other term, of this Agreement. The failure of any party to assert any of
its rights hereunder will not constitute a waiver of any such rights.
16. Severability. If any provision of this Agreement is invalid, illegal
------------
or incapable of being enforced by any rule of law or public policy, such
provision shall be deemed severable and all other provisions of this Agreement
shall nevertheless remain in full force and effect.
17. Headings. Section headings in this Agreement are included herein for
--------
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
18. Notices. All notices given in connection with this Agreement shall be
-------
in writing. Service of such notices shall be deemed complete (i) if hand
delivered, on the date of delivery, (ii) if by mail, on the fourth business day
following the day of deposit in the United States mail, by certified or
registered mail, first-class postage prepaid, or (iii) if sent by FedEx or
equivalent courier service, on the next business day. Such notices shall be
addressed to the parties at the following addresses or at such other address for
a party as shall be specified by like notice (except that notices of change of
address shall be effective upon receipt):
If to SSW: Sterling Software, Inc.
8080 North Central Expressway
Suite 1100
Dallas, TX 75206
Attn: President
Telecopy No.: (214) 739-0535
If to SCI: Sterling Commerce, Inc.
8080 North Central Expressway
Suite 1100
Dallas, TX 75206
Attn: President
Telecopy No.: (214) 739-0535
19. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the law of the State of Delaware, without giving
effect to the principles of conflict of laws of such State.
20. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be an original, but all of which together shall constitute
but one and the same instrument.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
STERLING SOFTWARE, INC.
By: /s/ Jeannette P. Meier
----------------------------
Jeannette P. Meier,
Executive Vice President
STERLING COMMERCE, INC.
By: /s/ Albert K. Hoover
----------------------------
Albert K. Hoover,
Vice President, Legal
-11-
<PAGE>
EXHIBIT 10(f)
INTERNATIONAL DISTRIBUTOR AGREEMENT
between
STERLING COMMERCE INTERNATIONAL, INC.
and
STERLING SOFTWARE INTERNATIONAL, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
1. APPOINTMENT................................................ 1
2. DISTRIBUTOR'S OBLIGATIONS.................................. 2
3. SCII'S OBLIGATIONS......................................... 5
4. ORDERS AND DELIVERY........................................ 7
5. LICENSING PROCEDURES....................................... 7
6. PAYMENTS TO SCII........................................... 8
7. LIMITED WARRANTIES......................................... 10
8. INDEMNITY.................................................. 11
9. NO CONSEQUENTIAL DAMAGES................................... 13
10. INFORMATION................................................ 13
11. MARKS...................................................... 15
12. TERM AND TERMINATION....................................... 16
13. CONSEQUENCES OF TERMINATION................................ 17
14. INSPECTION................................................. 18
15. U.S. EXPORT RESTRICTIONS................................... 18
16. COMPLIANCE WITH LAWS....................................... 18
17. INDEPENDENT PARTIES; SEVERAL OBLIGATIONS................... 19
18. FORCE MAJEURE.............................................. 19
19. NOTICES.................................................... 20
20. ASSIGNMENT................................................. 20
21. WAIVER, AMENDMENT, MODIFICATION............................ 21
22. SEVERABILITY............................................... 21
23. INTERPRETATION............................................. 21
24. GOVERNING LAW.............................................. 21
25. ENTIRE AGREEMENT........................................... 21
</TABLE>
<PAGE>
INTERNATIONAL DISTRIBUTOR AGREEMENT
This Agreement is made as of March 4, 1996, between Sterling Commerce
International, Inc., a Delaware corporation ("SCII") and wholly owned subsidiary
of Sterling Commerce, Inc. ("SCI"), and Sterling Software International, Inc., a
Delaware corporation ("Distributor") and wholly owned subsidiary of Sterling
Software, Inc. ("SSW").
WHEREAS, SCI (as successor by merger to Sterling Software (North America), Inc.)
and Sterling Commerce (Mid America), Inc., a wholly owned subsidiary of SCI
(collectively, the "SCI Companies"), market, license, install, maintain and
support certain computer software products, including the Products (as defined
below);
WHEREAS, the SCI Companies have granted to SCII the exclusive right to market,
sublicense, install, maintain and support the Products within the Territory (as
defined below), either directly or through arrangements with third parties such
as those contemplated by this Agreement;
WHEREAS, Distributor desires to market, sublicense, install, maintain and
support the Products within the Territory, either directly or through affiliated
and unaffiliated third parties or both, on the terms and subject to the
conditions specified below;
WHEREAS, SCII is willing to grant Distributor the exclusive right to market,
sublicense, install, maintain and support the Products in the Territory, either
directly or through affiliated and unaffiliated third parties or both, on the
terms and subject to the conditions specified below;
NOW, THEREFORE, the parties hereto agree as follows:
1. APPOINTMENT
a. General. SCII hereby grants to Distributor, and Distributor hereby
-------
accepts from SCII, the exclusive right to market, sublicense, install, maintain
and support the Products within the Territory, either directly or through such
wholly owned subsidiaries of SSW (collectively, "SSW Subdistributors") and
unaffiliated third parties (collectively, "Third-Party Subdistributors" and,
together with SSW Subdistributors, "Subdistributors") as may be appointed by
Distributor in accordance with this Section 1(a) or both. Distributor shall not
appoint or otherwise authorize any person or entity to market, sublicense,
install, maintain or support any of the Products, and no such purported
appointment or authorization shall be effective, unless (i) such person or
entity shall have agreed pursuant to a written instrument in form and substance
reasonably satisfactory to SCII to be bound by the provisions of this Agreement
that by their terms are applicable to Subdistributors as though such person or
entity were a party hereto and such provisions were enforceable against such
person or entity in accordance with their terms and (ii) in the case of any
person or entity that is not a wholly owned subsidiary of SSW, SCII shall have
consented thereto in writing (such consent not to be unreasonably withheld).
Without the
<PAGE>
prior written consent of SCII, no such appointment or authorization shall extend
beyond the term of this Agreement. No Subdistributor shall appoint or otherwise
authorize any person or entity to market, sublicense, install, maintain or
support any of the Products.
b. Products. "Products" means (i) the machine-readable object code
--------
version of the software described in Exhibit A that SCII makes available to
Distributor, whether embedded on disc, tape, chip or other media, for use on the
computer platform(s) specified in Exhibit A (the "Software"), (ii) the published
user manuals and documentation that SCII makes generally available for the
Software (the "Documentation"), (iii) the updates or revisions of the Software
or Documentation that SCII may release from time to time (the "Updates"), and
(iv) all copies of the Software, Documentation or Updates. SCII may add new
Products to or delete existing Products from Exhibit A, subject to any written
and binding commitment outside of this Agreement that SCII may hereafter make to
Distributor.
c. Territory. "Territory" means everywhere in the world except the
---------
United States of America, its territories and Canada. Neither Distributor nor
any Subdistributor shall promote or solicit orders for the Products or related
services outside of the Territory. Distributor and each Subdistributor shall
immediately notify SCII if Distributor or such Subdistributor receives an
inquiry or order (i) from any customer located outside of the Territory for
Products to be installed inside of the Territory, (ii) from any customer located
inside of the Territory for Products to be installed outside of the Territory,
or (iii) from any customer that uses or intends to use the Products both inside
and outside of the Territory. All such orders shall be processed in accordance
with the transborder rules set forth in Exhibit B (the "Transborder Rules").
Distributor and each Subdistributor will also immediately notify SCII if
Distributor or such Subdistributor receives an inquiry or order from any
customer located outside of the Territory for Products to be installed outside
of the Territory.
2. DISTRIBUTOR'S OBLIGATIONS
-------------------------
a. General. Distributor and each Subdistributor will (i) promote,
-------
solicit and obtain orders for the Products, (ii) perform its installation,
maintenance and support services in a timely and professional manner, and (iii)
develop the goodwill and reputation of SCII, using in each case no lesser degree
of effort and diligence (including without limitation commitment to comparable
quotas) than that which it uses in the normal and ordinary course in performing
such functions in respect of the products and services of (A) in the case of
Distributor, each SSW Subdistributor and each Third-Party Distributor
distributing products and services of subsidiaries of SSW (other than SCI and
its subsidiaries), such subsidiaries of SSW and (B) in the case of each Third-
Party Subdistributor not distributing products and services of subsidiaries of
SSW (other than SCI and its subsidiaries), its most significant and valued
suppliers of software products and services (including without limitation
commitment to comparable quotes) or, if it offers no other third party's
products or services, such effort and diligence as shall be agreed to by SCII.
Distributor and each Subdistributor represents that it possesses the experience,
skills and resources required to carry out the foregoing functions. Distributor
and each Subdistributor acknowledges and agrees that all goodwill created or
otherwise associated with its performance of or pursuant to this Agreement shall
accrue directly to the benefit of SCII.
-2-
<PAGE>
b. Facilities and Staff. Distributor and each Subdistributor represents
--------------------
that it has and will possess and maintain facilities and staff sufficiently
trained to market, sublicense and service the Products effectively during the
term of this Agreement. Distributor and each Subdistributor also agrees to send
such staff to participate in training programs and in the distributor meetings
which SCII may hold from time to time. All persons that Distributor or any
Subdistributor uses to market, sublicense and service the Products will be
employees of either Distributor or a Subdistributor unless otherwise consented
to in writing by SCII.
c. Business Plan. Upon entering into this Agreement and at least 90 days
-------------
before September 30 of each year during the term hereof, Distributor and each
Subdistributor shall submit to SCII a business plan (the "Business Plan")
setting forth in detail Distributor's or such Subdistributor's annual Business
Plan for the current fiscal year (in the case of the initial Business Plan) or
next succeeding fiscal year (in the case of each subsequent Business Plan) for
Product sublicensing, including without limitation projected revenues and
expenses, marketing and other efforts planned and personnel to be assigned
throughout that year in support of Distributor's or such Subdistributor's
obligations under this Agreement. The Business Plan shall include the
information set out in Exhibit C hereto, and shall be updated by Distributor or
such Subdistributor promptly following the conclusion of each calendar quarter
(with each such update to be promptly provided to SCII).
d. Promotional Literature. Distributor and each Subdistributor will use
----------------------
the brochures and other promotional literature describing the Products in the
English language that SCII may provide to Distributor (the "Promotional
Literature"). Subject to Section 11, Distributor and each Subdistributor may
translate the Promotional Literature into the language(s) spoken within the
Territory and reproduce such translations for distribution within the Territory,
if applicable. SCII will own any such translation. Distributor and each
Subdistributor will affix SCII's copyright notice to all such translations and
reproductions thereof. Distributor or the applicable Subdistributor will bear
all translation and reproduction costs.
e. Product Use Contract. Distributor and each Subdistributor will
--------------------
promote, solicit, sublicense and obtain orders for the object code version of
the Products and the maintenance thereof using the Agreement attached as Exhibit
D (the "Product Use Contract") in accordance with the licensing procedures
detailed under Section 5 below. SCII may modify or replace the Product Use
Contract at any time, in whole or in part, subject to any written and binding
commitment that SCII may hereafter make outside of this Agreement to Distributor
or that Distributor or any Subdistributor has made to a customer with the prior
written consent of SCII. Distributor and each Subdistributor may, at its own
expense, translate the Product Use Contract into the languages spoken within the
Territory. If Distributor or any Subdistributor translates the Product Use
Contract, Distributor or such Subdistributor will deliver the proposed
translation to SCII for approval prior to use. Neither Distributor nor any
Subdistributor will modify or amend the terms and conditions of the Product Use
Contract without SCII's prior written approval on a case-by-case basis. A list
of the person or persons to whom Distributor or any Subdistributor should direct
any such request for approval in respect of a Product Use Contract relating to
any particular Product is attached as Exhibit E. Distributor and each
Subdistributor will include all installation details of the Products in the
Product Use Contract. Distributor and
-3-
<PAGE>
each Subdistributor will execute three copies of the Product Use Contract with
the customer and will forward to SCII one of these copies as more specifically
set out in Section 5(b).
f. Support Services. Distributor and each Subdistributor will offer
----------------
installation and support services to all customers of the Products within the
Territory under then current maintenance agreements. Distributor and each
Subdistributor will have sole responsibility for providing "First Level"
technical assistance and support to customers, and Distributor and each
Subdistributor agree to provide promptly to each customer all Product fixes,
bypasses and releases provided to Distributor by SCII from time to time.
Distributor and each Subdistributor will comply with SCII's guidelines regarding
use of SCII's automated support system(s).
g. Prices. The list prices for the Products and related installation,
------
maintenance and support and professional services within the Territory (the
"List Prices"), together with the minimum prices at which the Products and
related installation, maintenance and support and professional services may be
sold or provided within the Territory (the "Minimum Prices") are specified in
Exhibit A. Distributor or any Subdistributor may increase the prices for the
Products and related installation, maintenance, support and professional
services on a case-by-case basis, but may not sell any Product or any such
related service at a price less than the applicable Minimum Price without SCII's
prior written consent; provided, however, that if the foregoing restriction on
selling prices shall be unlawful in any jurisdiction within the Territory it
shall not apply to any transaction subject to the laws of such jurisdiction and,
in lieu thereof, the amount of the royalty payable in respect of such
transaction pursuant to Sections 6(a), 6(b) or 6(c) hereof shall be increased,
if necessary, so that it shall be at least equal to the royalty that would have
been payable had the foregoing restriction on selling prices applied to such
transaction and been complied with. If Distributor or any Subdistributor
determines that the prices for a Product or Products may be uniformly increased
within the Territory it will notify SCII of such proposed increase. Distributor
and each Subdistributor will be responsible for the collection of payments for
the Products from its customers.
h. Records and Inspections. Distributor and each Subdistributor will
-----------------------
maintain accurate records of its marketing and service activities under this
Agreement, including (i) a current list of customers of the Products and (ii)
copies of all Product Use Contracts executed with customers. Distributor and
each Subdistributor will survey the customers under such Product Use Contracts
at reasonably regular intervals (at least once a year) to ensure the correct use
and installation of the Product(s) licensed thereunder.
i. Reports. Distributor and each Subdistributor will provide SCII with a
-------
Monthly Billing Report including the information set forth in Exhibit F hereto
and as set forth in more detail in SCII's Monthly Billing Procedures and
Guidelines as amended from time to time and notified to Distributor. At the
beginning of July of each year, Distributor and each Subdistributor will provide
SCII with details of Maintenance/Renewal Fees forecasting for the period from
October 1st of that year to the following September 30th. Details of all of
SCII's reporting requirements are contained in the Distributor Handbook and such
updates thereto as may be issued to Distributor by SCII from time to time.
Distributor and each Subdistributor will provide such further reports that SCII
may reasonably request, such as (i) a description of
-4-
<PAGE>
Distributor's or such Subdistributor's facilities and staff and (ii) a summary
of the activities of competitors within the Territory.
j. Surveys. At the reasonable request of SCII, Distributor and each
-------
Subdistributor will assist SCII in any business related survey which it may
conduct from time to time in relation to the Territory. Distributor and each
Subdistributor hereby acknowledges that SCII is entitled to contact customers in
connection with such surveys.
k. Enforcement. Distributor and each Subdistributor will effectively
-----------
enforce against all of its customers the provisions of the Product Use Contract
that affect SCII's proprietary or confidentiality rights in the Products. If
Distributor or any Subdistributor learns that any customer has breached any such
provision, Distributor or such Subdistributor will immediately notify SCII and
take, at Distributor's or such Subdistributor's expense, all reasonable steps
that may be available to enforce the Product Use Contract, including availing
itself of actions for seizure or injunctive relief. If Distributor or any
Subdistributor fails to take these steps in a timely and adequate manner, SCII
may take them in its own or Distributor's or such Subdistributor's name and at
Distributor's or such Subdistributor's expense.
3. SCII'S OBLIGATIONS
------------------
a. Demonstration Products. SCII will provide Distributor and each
----------------------
Subdistributor, at no charge, with a sufficient number of demonstration copies
and/or trial tapes of the Products as SCII deems appropriate for Distributor or
such Subdistributor to market the Products within the Territory (the
"Demonstration Products"). Subject to Sections 10 and 11 of this Agreement,
SCII grants Distributor and each Subdistributor a non-exclusive and non-
transferable license to use the Demonstration Products on the designated
hardware system specified in Exhibit A exclusively to conduct customer
demonstrations, training and technical support. Neither Distributor nor any
Subdistributor will sublicense, assign or otherwise transfer the Demonstration
Products to any person without SCII's prior written approval.
b. Marketing Materials. SCII will provide Distributor and each
-------------------
Subdistributor, at no charge, with the initial quantity of marketing materials
that SCII deems appropriate for Distributor or such Subdistributor to promote
and solicit orders for the Products within the Territory. At Distributor's or
such Subdistributor's reasonable request, SCII will provide Distributor or such
Subdistributor with additional quantities of such marketing materials, subject
to availability.
c. Technical Materials. SCII will periodically provide Distributor and
-------------------
each Subdistributor, at no charge, with the data, diagrams and other technical
materials that SCII deems appropriate for Distributor or such Subdistributor to
install and support the Products within the Territory. SCII may limit the
number of copies of such technical materials that Distributor or such
Subdistributor will be authorized to make, if any. Distributor or such
Subdistributor will (i) consecutively number each such copy, (ii) maintain a
current logbook that records the number of copies that have been made, and (iii)
reproduce all confidentiality and proprietary notices on each copy.
-5-
<PAGE>
d. Basic Training. SCII will provide Distributor and each Subdistributor
--------------
with basic training to market and service the Products within the Territory.
Unless otherwise agreed by SCII on a case-by-case basis, the training will be
offered during SCII's regularly scheduled training sessions at such facility as
SCII may designate. Distributor or such Subdistributor will bear all travel and
out-of-pocket expenses that its trainees may incur in attending these sessions.
If more than basic training becomes necessary as agreed to by SCII and
Distributor, SCII may charge Distributor or such Subdistributor for such
additional training at SCII's then-current standard rates.
e. Remote/Second-Level Support. For customers then currently entitled to
---------------------------
maintenance in accordance with the terms and conditions of the Product Use
Contract, SCII will provide Distributor and each Subdistributor, at no charge,
with "Second-Level Support," including access to SCII's technicians for advice,
consultation and assistance to diagnose and resolve the problems that such
customers may encounter in using the Products ("Second-Level Support"). All
such Second-Level Support will be offered during regular business hours from
such facility as SCII may designate. SCII may provide such Second-Level Support
by (i) telephone or other forms of communication or (ii) visits by SCII's
personnel to a Distributor or Subdistributor facility or a customer facility, at
SCII's expense, as SCII deems appropriate. SCII will pay all telephone, travel
and other out-of-pocket expenses that Distributor or such Subdistributor may
incur in connection with such Second-Level Support.
f. On-Site Visits. SCII may periodically send to Distributor's or any
--------------
Subdistributor's facilities, at no charge, certain of SCII's marketing and
service personnel to advise, consult and assist Distributor or such
Subdistributor in marketing and servicing the Products. SCII and Distributor or
such Subdistributor will schedule such on-site visits for mutually acceptable
times, subject to availability of appropriate SCII personnel. SCII will pay the
travel and out-of-pocket expenses that its personnel may incur in connection
with regularly scheduled on-site visits. At Distributor's or such
Subdistributor's request, SCII may provide unscheduled on-site support to
Distributor or such Subdistributor. On a case-by-case basis, SCII and
Distributor or such Subdistributor shall determine which party shall be
responsible for payment of all travel and out-of-pocket expenses that SCII's
personnel may incur in connection with such unscheduled on-site visits.
g. Updates. SCII may periodically provide Distributor and each
-------
Subdistributor with updates for the Products that are installed within the
Territory. Unless otherwise agreed on a case-by-case basis, Distributor and
each Subdistributor will import the updates only as required for distribution to
customers that have contracted for maintenance of the Products in accordance
with the terms and conditions of the Product Use Contract. This Section will
not be interpreted to require SCII to (i) develop and release updates or (ii)
customize the updates to satisfy the particular requirements of customers within
the Territory. The updates will not include any new Software that SCII decides,
in its sole discretion, to make generally available as a separately-priced
upgrade or option. SCII may add such upgrades or options to this Agreement as
new Products in accordance with Section 1(b).
-6-
<PAGE>
4. ORDERS AND DELIVERY
-------------------
a. Placement. Distributor and each Subdistributor will place orders for
---------
the Products directly with SCII through such automated product ordering system
as may be designated by SCII from time to time, unless otherwise agreed on a
case-by-case basis. All orders will be substantially in the form set out in
Exhibit G hereto, as may be changed by SCII from time to time. Each order will
specify (i) the identity and location of the customer, (ii) the type and
quantity of Products ordered, (iii) the requested shipment date(s), (iv) the
configuration of the proposed installation, if applicable, and (v) the number of
concurrent users authorized to use the Products.
b. Acceptance. SCII may accept or reject at its discretion any non-
----------
standard order or non-standard Product Use Contract modified without the prior
consent of SCII, subject to any written and binding commitment that SCII may
hereafter make to Distributor outside of this Agreement. SCII reserves the
right to reject any such order. SCII will use its reasonable efforts to respond
to each order within 15 days after its receipt thereof. Any order that SCII
accepts will be subject to the terms and conditions of this Agreement, unless
otherwise agreed on a case-by-case basis.
c. Shipment. SCII will ship the Products from its distribution centers
--------
in the United States of America, subject to delays beyond SCII's control. SCII
will select the method of shipment to Distributor or any Subdistributor and will
obtain all licenses required to export the Products from the country of origin.
Distributor or such Subdistributor will (i) obtain all licenses required to
import the Products into the Territory, (ii) clear the Products through local
customs promptly upon their arrival at the Territory, and (iii) pay all customs
duties and other charges assessed on such importations in the Territory, if
applicable.
d. Delivery. SCII will deliver the Products to Distributor or the
--------
applicable Subdistributor upon arrival at the port of entry in the Territory (EX
SHIP or equivalent term). Risk of loss will pass to Distributor or the
applicable Subdistributor upon delivery.
e. Inspection. Distributor or the applicable Subdistributor will inspect
----------
the Products upon arrival in the Territory and will immediately notify SCII of
any breakage, tampering, shortage or other discrepancy between the Products and
shipping documents. Distributor or the applicable Subdistributor will retain
any broken or tampered Products in their original packaging for inspection by
SCII or the insurer. SCII shall not be responsible for any insurable claim not
reported to SCII within 15 days after arrival.
f. Costs. SCII will bear the costs of shipping the Product to
-----
Distributor or the applicable Subdistributor.
5. LICENSING PROCEDURES.
--------------------
a. Form of Agreement. Distributor and each Subdistributor shall
-----------------
sublicense the Products only under the form of Product Use Contract as set out
in Section 2(e) above. In the
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<PAGE>
event that the applicable law in the Territory may render any provision of the
Product Use Contract invalid or unenforceable, Distributor or such
Subdistributor shall promptly so notify SCII and shall cooperate fully in taking
such actions to modify the provisions of the Product Use Contract as SCII may
direct.
b. Delivery. Distributor and each Subdistributor shall attach a copy of
--------
the signature page, pricing and installation details of each Product Use
Contract executed with a customer to its Monthly Report to SCII together with
any agreed changes to the Product Use Contract and, where appropriate, an
English translation of such changes. Distributor and each Subdistributor shall
deliver to SCII a complete original copy of each Product Use Contract to the
address indicated by SCII no later than four weeks after the execution thereof.
c. Product Use. Neither Distributor nor any Subdistributor shall make
-----------
any Product available to a customer for installation, use, duplication or any
other purpose unless such customer shall have executed a Product Use Contract,
in the form supplied by or previously agreed to by SCII such as, where
appropriate, an evaluation agreement.
d. Enforcement of Product Use Contracts. Distributor and each
------------------------------------
Subdistributor shall use all commercially reasonable efforts to enforce each
Product Use Contract to the full extent of applicable law and to safeguard all
of SCII's rights (proprietary or otherwise) and interests in the Products.
6. PAYMENTS TO SCII
----------------
a. Product Use Charges. For each Product that Distributor or any
-------------------
Subdistributor licenses to a customer, Distributor will pay SCII a royalty equal
to (i) in all cases involving Products marketed directly by Distributor or
through an SSW Subdistributor, unless otherwise agreed to by SCII on a case-by-
case basis, the greater of (A) fifty percent (50%) of the Minimum Price for the
Product and (B) fifty percent (50%) of the actual amount invoiced to the
customer for the Product, and (ii) in all cases involving Products marketed
through a Third-Party Subdistributor, unless otherwise agreed to by SCII on a
case-by-case basis, fifty percent (50%) of the amount payable by such Third-
Party Subdistributor to Distributor in respect of such sublicense.
b. Upgrade Fees. If, after having executed a Product Use Contract,
------------
Distributor or any Subdistributor authorizes a customer to increase their CPU
Group size or, under a network or other multi-user license, to increase the
number of concurrent users of the Product(s), Distributor will pay SCII a
royalty equal to (i) in all cases involving Products marketed directly by
Distributor or through an SSW Subdistributor, unless otherwise agreed to by SCII
on a case-by-case basis, the greater of (A) fifty percent (50%) of the Minimum
Price for such increased use capacity (the "Upgrade") and (B) fifty percent
(50%) of the actual amount invoiced to the customer for the Upgrade, and (ii) in
all cases involving Products marketed through a Third-Party Subdistributor,
unless otherwise agreed to by SCII on a case-by-case basis, fifty percent (50%)
of the amount payable by such Third-Party Subdistributor to Distributor in
respect of such Upgrade.
-8-
<PAGE>
c. Renewal/Maintenance Fees. Distributor will pay SCII a royalty equal
------------------------
to (i) in all cases involving Products marketed directly by Distributor or
through an SSW Subdistributor, unless otherwise agreed to by SCII on a case-by-
case basis, the greater of (A) fifty percent (50%) of the Minimum Price for
Renewal/Maintenance Fees and (B) fifty percent (50%) of the actual amount
invoiced to the customer for the Renewal/Maintenance, and (ii) in all cases
involving Products marketed through a Third-Party Subdistributor, unless
otherwise agreed to by SCII on a case-by-case basis, fifty percent (50%) of the
amount payable by such Third-Party Subdistributor to Distributor in respect of
such Renewal/Maintenance Fees.
d. Currency and Place. Distributor will pay all amounts due to SCII
------------------
pursuant to this Agreement in the currency in which the related amounts due to
Distributor from the applicable Subdistributor or customer are payable or in
such other currency to which the parties may agree on a case-by-case basis, at
SCII's bank account in the United States, or such other place that SCII may
designate. Any late payment will accrue interest at the lesser of (i) the LIBOR
rate quoted on the date that the payment became past due, plus 5%, or (ii) the
maximum interest allowable under the laws of the State of Ohio. Distributor
will pay any late payment charge upon remitting the principal amount to SCII.
e. Method and Time. Unless otherwise agreed on a case-by-case basis,
---------------
Distributor will make payment of all amounts due to SCII pursuant to this
Agreement either (i) by certified or cashier's check or wire transfer or (ii) by
irrevocable letter of credit against shipment of the Products as SCII deems
appropriate. All payments by Distributor by certified or cashier's check or
wire transfer shall be made to SCII (i) in the case of all royalties payable
pursuant to Sections 6(a), 6(b) or 6(c), within 30 days after the end of the
calendar month in which Distributor or any Subdistributor recognizes the revenue
for the applicable Product license, Upgrade or Renewal/Maintenance Fees, as the
case may be, in accordance with SCI's Revenue Recognition Policy attached hereto
as Exhibit H and (ii) in all other cases, within 30 days of receipt of the
corresponding invoice from SCII. If Distributor fails to make payment within
such period, SCII may, at its sole election and option, require that customers
remit payment directly to SCII and any amount due to Distributor as the net
amount less fifty percent (50%) will be paid to Distributor. The foregoing does
not negate SCII's rights under Section 12 of this Agreement. Distributor will
bear all banking and similar charges incurred in connection with any of these
payments. All letters of credit must (i) be issued on terms acceptable to SCII,
(ii) be confirmed at least 15 days before the initial scheduled shipment date by
the bank that SCII may designate, and (iii) be payable at such bank by sight
draft to SCII's order.
f. Certain Adjustments. In the event that, after using all commercially
-------------------
reasonable efforts to collect such revenue, Distributor is unable to collect any
portion of the revenue recognized by Distributor which formed the basis (or
which, but for the fact that the applicable Minimum Price exceeded the
applicable amount invoiced, would have formed the basis) for any payment
pursuant to Sections 6(a), 6(b) or 6(c) and a reversal of recorded revenue
results, an amount equal to such reversal of revenue shall be offset against the
next succeeding payment due to SCII. The royalties payable pursuant to Sections
6(a), 6(b) and 6(c) shall in all events be subject to the proviso to the second
sentence of Section 2(g).
-9-
<PAGE>
g. Taxes. All amounts payable by Distributor to SCII under this
-----
Agreement are exclusive of any tax, levy or similar governmental charge that may
be assessed by any jurisdiction, whether based on gross revenue, the delivery,
possession or use of the Products, the execution or performance of this
Agreement or otherwise, except for withholding taxes with respect to the payment
of royalties to SCII pursuant to Sections 6(a), 6(b) or 6(c). If, under the
laws of any jurisdiction within the Territory, Distributor is required to
withhold any tax on the payment of such amounts, then such payments shall be net
of any such withholding taxes. Distributor will promptly furnish SCII with the
official receipt of payment of any such withholding taxes to the appropriate
taxing authority.
h. Payment Audit. SCII may periodically carry out an audit of the
-------------
payments made by Distributor to SCII pursuant to this Agreement. Distributor
and each Subdistributor will reasonably cooperate with SCII in such an exercise
and provide SCII with reasonable access to its books and records. SCII shall
make all reasonable efforts not to disrupt Distributor's or such
Subdistributor's normal business activities and for the audit to be carried out
in a professional manner. Any sums found to be due to SCII shall immediately be
paid by Distributor. SCII shall bear the cost of the audit, except that, where
a discrepancy of more than 5% is found between monies paid and sums due to SCII,
Distributor shall bear the cost of the audit.
i. Distributor's Sole Consideration. Distributor acknowledges that its
--------------------------------
sole and exclusive consideration for performing this Agreement shall consist of
the difference between the charges payable by customers to Distributor pursuant
to Product Use Contracts and the payments from Distributor to SCII pursuant to
Sections 6(a), 6(b) and 6(c).
j. Revenue Recognition Policy. Distributor acknowledges that SCI's
--------------------------
Revenue Recognition Policy applies to all revenue generated by Distributor under
this Agreement or by Subdistributors with respect to the Products and related
services. Such Revenue Recognition Policy is attached hereto as Exhibit H.
7. LIMITED WARRANTIES
------------------
a. Warranty. SCII warrants that the Products will (i) conform to SCII's
--------
published product specifications in effect on the date of delivery and (ii)
perform substantially as described in the accompanying documentation after
delivery for the applicable warranty period specified in Exhibit A. Distributor
and each Subdistributor acknowledges that (i) the Products may not satisfy all
the customer's requirements and (ii) the use of the Products may not be
uninterrupted or error-free. Distributor and each Subdistributor further
acknowledges that (i) the prices and other charges contemplated under this
Agreement are based on the limited warranty, disclaimer and limitation of
liability specified in this Section 7 and Sections 8 and 9 and (ii) such charges
would be substantially higher if any of these provisions were unenforceable.
b. Remedies. In case of breach of warranty or any other duty related to
--------
the quality of the Products, SCII will, at its option, correct or replace the
defective Product. If SCII determines that a defective Product cannot be
corrected or replaced within a reasonable period of time, Distributor may return
the Product to SCII in exchange for a refund of (i) the royalties
-10-
<PAGE>
that Distributor actually paid to SCII in respect of the Product (including any
Upgrade with respect thereto), less depreciation on the value represented by
such royalties based on a 3-year straight-line depreciation schedule, and (ii) a
pro rata share of the royalties in respect of the renewal/maintenance fees that
Distributor actually paid to SCII for the renewal/maintenance period in which
such Product was not usable.
c. Limitation. The warranties and remedies specified in this Section
----------
will not apply if the Product malfunctions are due to extrinsic causes, such as
(i) natural disasters, including fire, smoke, water, earthquakes or lightning,
(ii) electrical power fluctuations or failures, (iii) the neglect or misuse of
the Product or other failure to comply with the instructions set forth in the
Documentation, (iv) a correction or modification of the Product not provided by
SCII , (v) the failure to promptly install any Product update provided to
Distributor by SCII, (vi) a malfunction of the customer's hardware equipment, or
(vii) the combination of the Product with other software not provided by SCII.
d. Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION AND SECTION
----------
8, ALL WARRANTIES, CONDITIONS, REPRESENTATIONS, INDEMNITIES AND GUARANTEES WITH
RESPECT TO THE PRODUCTS, WHETHER EXPRESS OR IMPLIED, ARISING BY LAW, CUSTOM,
PRIOR ORAL OR WRITTEN STATEMENTS BY SCII OR OTHERWISE (INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE)
ARE HEREBY OVERRIDDEN, EXCLUDED AND DISCLAIMED.
8. INDEMNITY
---------
a. Indemnification by SCII. SCII shall, on the terms and subject to the
-----------------------
exclusions and limitations set forth in Sections 8 and 9, indemnify, defend and
hold harmless Distributor and each Subdistributor and its respective directors,
officers, employees, agents and representatives from and against any and all
losses, claims, damages, liabilities, demands, suits and actions, including all
reasonable attorneys' fees and disbursements and other costs and expenses
incurred in connection therewith (collectively, "Indemnifiable Losses"),
relating to, resulting from or arising out of any actual or alleged infringement
by a Product of any patent or copyright within the Territory; provided, however,
that SCII, at its option and expense, may, in lieu of so indemnifying, defending
or holding harmless Distributor, any Subdistributor or any other person, (i)
procure on behalf of Distributor or the applicable Subdistributor the right to
continue using the Product, (ii) replace or modify the Product to eliminate the
alleged infringement while providing functionally equivalent performance, or
(iii) take back the Product in exchange for a refund of the royalties that
Distributor actually paid to SCII in respect of the Product (including any
Upgrade with respect thereto), less depreciation on the value represented by
such royalties based on a 3-year straight-line depreciation schedule, and a pro
rata share of the royalties in respect of the renewal/maintenance fees that
Distributor actually paid to SCII for the renewal/maintenance period in which
the alleged infringement shall have arisen; and provided further that SCII will
have no obligation to indemnify, defend or hold harmless Distributor, any
Subdistributor or any other person if the alleged infringement results from (i)
a correction or modification of the Product not provided by SCII, (ii) the
failure to promptly
-11-
<PAGE>
install any Product update provided to Distributor by SCII, or (iii) the
combination of the Product with other software not provided by SCII.
b. Indemnification by Distributor. Distributor and each Subdistributor
------------------------------
shall, on the terms and subject to the exclusions and limitations set forth in
Sections 8 and 9, indemnify, defend and hold harmless SCII, the SCI Companies
and their respective directors, officers, employees, agents and representatives
from and against any and all Indemnifiable Losses relating to, resulting from or
arising out of (i) any negligent act or omission by, or willful misconduct of,
Distributor's or such Subdistributor's employees or agents, (ii) any
modification or amendment of prescribed terms of the Product Use Contract to
which Distributor or such Subdistributor is a party that shall not have been
specifically approved by SCII, (iii) any warranty, condition, representation,
indemnity or guarantee made or granted by Distributor or such Subdistributor or
provided by law with respect to the Products licensed by Distributor or such
Subdistributor in addition to or in lieu of the limited warranties specified in
Section 7(c) of this Agreement, (iv) any omission or inaccuracy in Distributor's
or such Subdistributor's advertisements and promotional materials that relate to
the Products, (v) any modification of or addition to the Products by Distributor
or such Subdistributor not provided or approved by SCII or (vi) Distributor's or
such Subdistributor's breach of any provision of this Agreement, including
without limitation Distributor's or such Subdistributor's failure to comply with
Section 15 or 16 of this Agreement.
c. Notice of Claims. If any person entitled to indemnification under
----------------
this Agreement (an "Indemnitee") receives notice of the assertion of any claim
or of the commencement of any action or proceeding by any person that is not a
party to this Agreement or a subsidiary of any such party (a "Third Party
Claim") against such Indemnitee, the Indemnitee shall promptly provide written
notice thereof (including a description of the Third Party Claim and an estimate
of any Indemnifiable Losses (which estimate shall not be conclusive as to the
final amount of such Indemnifiable Losses) to the party required to provide
indemnification under this Agreement (the "Indemnifying Party") within 10
business days after the Indemnitee's receipt of notice of such Third Party
Claim. Any delay by the Indemnitee in providing such written notice shall not
relieve the Indemnifying Party of any liability for indemnification hereunder
except to the extent that the rights of the Indemnifying Party are materially
prejudiced by such delay.
d. Defense of Claim. The Indemnifying Party shall have the right to
----------------
participate in or, by giving written notice to the Indemnitee, to assume the
defense of any Third Party Claim at such Indemnifying Party's expense and by
such Indemnifying Party's own counsel (which shall be reasonably satisfactory to
the Indemnitee), and the Indemnitee will cooperate in good faith in such
defense. The Indemnifying Party shall not be liable for any legal expenses
incurred by the Indemnitee after the Indemnitee has received notice of the
Indemnifying Party's intent to assume the defense of a Third Party Claim;
provided, however, that if the Indemnifying Party fails to take steps reasonably
necessary to diligently pursue the defense of such Third Party Claim within 10
business days of receipt of notice from the Indemnitee that such steps are not
being taken, the Indemnitee may assume its own defense and the Indemnifying
Party shall be liable for the reasonable costs thereof.
-12-
<PAGE>
e. Settlement of Claim. The Indemnifying Party may settle any Third
-------------------
Party Claim which it has elected to defend so long as the written consent of the
Indemnitee to such settlement is first obtained (which consent shall not be
unreasonably withheld). The Indemnified Party shall not settle any Third Party
Claim without the written consent of the Indemnifying Party (which consent shall
not be unreasonably withheld).
f. Cooperation. In the event that a Third Party Claim involves a
-----------
proceeding as to which both SCII and Distributor may be Indemnifying Parties,
the parties hereto agree to cooperate in good faith in a joint defense of such
Third Party Claim.
9. NO CONSEQUENTIAL DAMAGES
------------------------
EXCEPT AS PROVIDED IN THE LAST SENTENCE OF THIS SECTION 9, UNDER NO
CIRCUMSTANCES WILL SCII, DISTRIBUTOR OR ANY SUBDISTRIBUTOR BE LIABLE (UNDER
SECTION 8 OF THIS AGREEMENT OR OTHERWISE), FOR ANY CONSEQUENTIAL, INDIRECT,
SPECIAL, PUNITIVE OR INCIDENTAL DAMAGES OR LOST PROFITS, WHETHER FORESEEABLE OR
UNFORESEEABLE, INCLUDING WITHOUT LIMITATION SUCH DAMAGES OR PROFITS BASED ON
CLAIMS OF DISTRIBUTOR, ANY SUBDISTRIBUTOR OR ANY CUSTOMER THEREOF ARISING OUT OF
ANY BREACH OR FAILURE OF EXPRESS OR IMPLIED WARRANTY, BREACH OF CONTRACT,
MISREPRESENTATION, NEGLIGENCE, STRICT LIABILITY IN TORT OR OTHERWISE (EXCEPT
ONLY IN THE CASE OF DEATH OR PERSONAL INJURY WHERE AND TO THE EXTENT THAT
APPLICABLE LAW REQUIRES SUCH LIABILITY) IN CONNECTION WITH THIS AGREEMENT, THE
TRANSACTIONS AND OTHER MATTERS CONTEMPLATED HEREBY OR OTHERWISE. IN NO EVENT
WILL THE AGGREGATE LIABILITY THAT EACH OF SCII, DISTRIBUTOR OR ANY
SUBDISTRIBUTOR MAY INCUR FOR DAMAGES (EXCLUSIVE OF ALL ROYALTIES OR SIMILAR
PAYMENTS PROVIDED FOR HEREIN AND ACTUAL DAMAGES IN RESPECT THEREOF) IN
CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS AND OTHER MATTERS
CONTEMPLATED HEREBY (UNDER SECTION 8 OF THIS AGREEMENT OR OTHERWISE) EXCEED THE
TOTAL AMOUNT OF REVENUE DERIVED BY SUCH PARTY FROM THIS AGREEMENT OR THE
TRANSACTIONS OR OTHER MATTERS CONTEMPLATED HEREBY. THE PROVISIONS OF THIS
SECTION 9 SHALL NOT APPLY TO ANY BREACH BY DISTRIBUTOR OR ANY SUBDISTRIBUTOR OF
ANY OF THE PROVISIONS OF SECTION 10 OF THIS AGREEMENT.
10. INFORMATION
-----------
a. Confidentiality. Distributor and each Subdistributor acknowledge that
---------------
the Products incorporate confidential and proprietary information developed or
acquired by or licensed to SCII (the "Information"). Distributor and each
Subdistributor will take all reasonable precautions necessary to safeguard the
confidentiality of the Information, including without limitation (i) those taken
by Distributor or such Subdistributor to protect its own confidential
information and (ii) those which SCII may reasonably request from time to time.
Neither
-13-
<PAGE>
Distributor nor any Subdistributor will allow the removal or defacement of any
confidentiality or proprietary notice placed on the Products or other items of
information. The placement of copyright notices on these items will not
constitute publication or otherwise impair their confidential nature.
b. Ownership. All patents, copyrights, trademarks, circuit layouts,
---------
trade secrets and other proprietary rights in or related to the Products are and
will remain the exclusive property of SCII or its licensors, whether or not
specifically recognized or perfected under the laws of the Territory. Neither
Distributor nor any Subdistributor will take any action that jeopardizes SCII's
or its licensors' proprietary rights or acquire any right in the Products or
Information, except the limited use rights specified in Section 10(c). SCII or
its licensor will own all rights in any copy, translation, modification,
adaptation or derivation of the Products or other items of Information,
including any improvement or development thereof. Distributor and each
Subdistributor will obtain, at SCII's request, the execution of any instrument
that may be appropriate to assign these rights to SCII or its licensor or to
perfect these rights in SCII's or its licensor's name.
c. Use. Distributor and each Subdistributor will use the Products and
---
other items of Information exclusively to perform its marketing and service
activities pursuant to this Agreement. Except as specifically contemplated in
Sections 2(d), 3(c) and 3(g), neither Distributor nor any Subdistributor will
copy the Products or other items of Information without SCII's approval.
Distributor and each Subdistributor will reproduce SCII's or its licensors'
confidentiality and proprietary notices on all such copies. Neither Distributor
nor any Subdistributor will translate, modify, adapt, decompile, disassemble or
reverse engineer the Products, except as and to the extent specifically
authorized by this Agreement or another written agreement executed between SCII
and Distributor or such Subdistributor or required to be permitted by applicable
law. Distributor and each Subdistributor will promptly notify SCII if
Distributor or such Subdistributor is contemplating the creation of any shell or
supplemental software, or acquisition of any third party software products, that
will be combined with the Products. At SCII's request, Distributor or such
Subdistributor will provide SCII with the specifications, flow charts, source
and object code and other documentation for such programs.
d. Disclosure. Neither Distributor nor any Subdistributor will disclose,
----------
in whole or in part, the source or object code of the Products or any other item
that SCII designates as confidential to any person, except to (i) customers, as
and to the extent contemplated under an executed Product Use Contract, and (ii)
those of Distributor's or such Subdistributor's directors, officers and
employees who require access to perform its obligations under this Agreement.
Distributor and each Subdistributor shall take such steps as may be necessary
and/or as required by SCII to ensure that customers and Distributor's or such
Subdistributor's directors, officers and employees at all times are complying
with the confidentiality and use restrictions of this Agreement and/or the
applicable Product Use Contracts including, but not limited to the execution by
Distributor's or such Subdistributor's directors, officers and employees of a
Confidentiality Agreement in the form set out in Exhibit I hereto (as amended by
SCII from time to time) or any other agreement which contains terms and
conditions substantially the same as those set forth in such Confidentiality
Agreement. SCII may request copies of all agreements executed pursuant to this
Section 10(d).
-14-
<PAGE>
e. Unauthorized Use or Disclosure. Distributor and each Subdistributor
------------------------------
acknowledge that any unauthorized use or disclosure of the Products or any other
item of information may cause irreparable damage to SCII or its licensors. If
an unauthorized use or disclosure occurs, Distributor or such Subdistributor
will promptly notify SCII and take, at Distributor's or such Subdistributor's
expense, all steps which are necessary to recover the Product or Information and
to prevent its subsequent unauthorized use or dissemination, including availing
itself of actions for seizure and injunctive relief. If Distributor or such
Subdistributor fails to takes these steps in a timely and adequate manner, SCII
may take them in its own or Distributor's or such Subdistributor's name and at
Distributor's or such Subdistributor's expense.
f. Limitation. Neither Distributor nor any Subdistributor will have any
----------
confidentiality obligation with respect to any portion of the Information that
(i) Distributor or such Subdistributor independently knew or developed before
receiving the Products or Information from SCII, or (ii) Distributor or such
Subdistributor lawfully obtained from a third party under no obligation of
confidentiality. Under these circumstances Distributor or such Subdistributor
will notify SCII at least 30 days before disclosing such portion of the
Information to any other person.
11. MARKS
-----
a. Ownership. All trademarks, service marks, trade names, logos or other
---------
words or symbols identifying the Products or SCII's business (the "Marks") are
and will remain the exclusive property of SCII or its licensors, whether or not
specifically recognized or perfected under the laws of the Territory. Neither
Distributor nor any Subdistributor will take any action that jeopardizes SCII's
or its licensors, proprietary rights or acquire any right in the Marks, except
the limited use rights specified in Section 11(b). Neither Distributor nor any
Subdistributor will register, directly or indirectly, any trademark, service
mark, trade name, copyright, company name or other proprietary or commercial
right which is identical or confusingly similar to the Marks or which constitute
translations thereof into the language(s) spoken within the Territory. Upon
SCII's request and at its expense, Distributor and each Subdistributor will
execute the instruments that may be appropriate to register, maintain or renew
the registration of the marks in SCII's or its licensor's name within the
Territory.
b. Use. Distributor and each Subdistributor will use the Marks
---
exclusively to advertise and promote the Products within the Territory. All
advertisement and promotional materials will (i) clearly identify SCII or its
licensors as the owner of the Marks, (ii) conform to SCII's then-current
trademark and logo guidelines, and (iii) otherwise comply with any local notice
or marking requirement contemplated under the laws of the Territory. Before
publishing or disseminating any advertisement or promotional materials bearing a
Mark, Distributor and each Subdistributor will deliver a sample of the
advertisement or promotional materials to SCII for prior approval. If SCII
notifies Distributor or such Subdistributor that the use of the Mark is
inappropriate, Distributor or such Subdistributor will not publish or otherwise
disseminate the advertisement or promotional materials until they have been
modified to SCII's satisfaction.
-15-
<PAGE>
c. Infringement. Distributor and each Subdistributor will immediately
------------
notify SCII if Distributor learns (i) of any potential infringement of the Marks
by a third party or (ii) that the use of the Marks within the Territory may
infringe the proprietary rights of a third party. SCII will determine the steps
to be taken under these circumstances. Distributor and each Subdistributor will
(i) provide to SCII, at SCII's sole cost and expense, such assistance as SCII
may reasonably request and (ii) take no steps in such regard without SCII's
prior approval.
12. TERM AND TERMINATION
--------------------
a. Term. This Agreement will become effective on the date (the
----
"Effective Date") on which the closing of the purchase and sale of shares of
common stock of SCI pursuant to SCI's initial public offering of such shares
first occurs. This Agreement will remain in effect thereafter until the third
anniversary of the date thereof unless earlier terminated under Sections 12(b)
or 12(c).
b. Termination by SCII. SCII will have just cause to terminate this
-------------------
Agreement immediately upon notice to Distributor, without judicial or
administrative notice or resolution, upon the occurrence of any termination
event specified below or elsewhere in this Agreement.
(1) Breach. Distributor fails to pay SCII any amounts due pursuant
------
to Section 6 of this Agreement or breaches any other material
obligation under this Agreement and, in any such case, fails to cure
such failure or breach to SCII's satisfaction within 30 days after
SCII demands its cure.
(2) Normal Business. Distributor or its permitted assignee ceases to
---------------
conduct business in the normal course.
c. Termination by Distributor. Distributor will have just cause to
--------------------------
terminate this Agreement immediately upon notice to SCII, without judicial or
administrative notice or resolution, upon the occurrence of any termination
event specified below or elsewhere in this Agreement.
(1) Breach. SCII or any of its employees breaches any material
------
obligation under this Agreement and fails to cure the breach to
Distributor's satisfaction within 30 days after Distributor demands
its cure.
(2) Normal Business. SCII ceases to conduct its business in the
---------------
normal course, unless SCII has previously assigned its rights and
obligations herein pursuant to Section 20 of this Agreement.
d. Notwithstanding any termination of this Agreement, the rights and
obligations of any customers pursuant to a Product Use Contract shall survive
the termination of this Agreement and remain in full force and effect.
-16-
<PAGE>
13. CONSEQUENCES OF TERMINATION
---------------------------
a. Termination Obligations. Upon the expiration or termination of this
-----------------------
Agreement, all rights granted to Distributor and each Subdistributor hereunder
will immediately cease, and Distributor and each Subdistributor, as applicable,
will (i) promptly comply with the termination obligations specified below and
(ii) otherwise cooperate with SCII to terminate relations in an orderly manner.
(1) Payments. Distributor will pay SCII all due and outstanding
--------
amounts. Any unexpired portion of revenue generated by rental,
renewal, maintenance or other Product Use Contracts extending beyond
termination shall be assigned to SCII or SCII's nominee.
(2) Products. Distributor and each Subdistributor will purge from
--------
its computer systems, storage media and other files and, at SCII's
option, destroy or deliver to SCII or its designee all Products within
Distributor's or such Subdistributor's possession or control including
the Demonstration Products and, if any, all source codes of the
Products.
(3) Materials. Distributor and each Subdistributor will, at SCII's
---------
option, destroy or deliver to SCII or its designee all items within
Distributor's or such Subdistributor's possession or control that
contain any Information or bear a Mark, except as otherwise
contemplated under Section 13(b).
(4) Product Use Contracts. Distributor and each Subdistributor will,
---------------------
at SCII's request, assign or effect the assignment of all Product Use
Contracts executed with customers to SCII or its designee and will
notify such customers of such assignment; provided, however, nothing
in this Section shall require SCII to assume any non-standard Product
Use Contract.
(5) Customer Information. Distributor and each Subdistributor will
--------------------
immediately deliver details of its customer records and billing
procedures.
(6) Affidavit. Distributor and each Subdistributor will deliver to
---------
SCII a notarized affidavit which certifies that Distributor or such
Subdistributor has complied with all of its termination obligations
contemplated under this Agreement.
b. Disclaimer. Upon the expiration of this Agreement or its termination
----------
in accordance with Section 12, neither Distributor nor any Subdistributor will
be entitled under local law or otherwise to receive any payment from SCII,
whether for actual, consequential, indirect or incidental damages, costs or
expenses, whether foreseeable or unforeseeable (including, but not limited to,
labor claims and loss of profits, investments or goodwill), any right to which
Distributor and each Subdistributor hereby waive and disclaim.
-17-
<PAGE>
c. Survival. The provisions of Sections 7, 8, 9, 10, 11, 12, 13, 14, 15,
--------
16, 24 and 25 will survive the expiration or termination of this Agreement.
14. INSPECTION
----------
During the term of this Agreement and for one year after its expiration or
termination, SCII or its representatives may, upon prior notice to Distributor
or any Subdistributor, inspect the agreements, business records, computer
processors, equipment and facilities of Distributor or such Subdistributor
during normal working hours to verify Distributor's or such Subdistributor's
compliance with this Agreement. While conducting these inspections, SCII and
its representatives will be entitled to copy any item that Distributor or such
Subdistributor may possess pertaining to this Agreement or Distributor's or such
Subdistributor's obligations hereunder.
15. U.S. EXPORT RESTRICTIONS
------------------------
Distributor and each Subdistributor acknowledge that the Products and all
related technical information, documents and materials are subject to export
controls under the U.S. Export Administration Regulations. Distributor and each
Subdistributor will (i) comply strictly with all legal requirements under these
controls, (ii) cooperate fully with SCII in any official or unofficial audit or
inspection that relates to these controls, and (iii) not export, re-export,
divert, transfer or disclose, directly or indirectly, any Product or related
technical information, document or material or direct products thereof to any
country outside of the Territory, unless Distributor or such Subdistributor has
obtained the prior written authorization of SCII and the U.S. Commerce
Department and any relevant local governmental authority. A list of the current
restricted countries is set out in Exhibit J hereto. Upon notice to Distributor
and each Subdistributor, SCII may modify this list to conform to changes in the
U.S. Export Control Regulations.
16. COMPLIANCE WITH LAWS
--------------------
a. General. Notwithstanding anything to the contrary herein contained,
-------
(i) none of SCII, Distributor or any Subdistributor will take, or will be
required to take, any action that would be in contravention of any applicable
law and (ii) without limiting the generality of the foregoing, none of SCII,
Distributor or any Subdistributor will take, or will be required to take, any
action that requires the consent or approval of any governmental authority
unless and until such consent or approval is obtained.
b. Local Compliance. Distributor and each Subdistributor will, at its
----------------
expense, obtain and maintain the governmental authorizations, registrations and
filings that may be required under the laws of any jurisdiction within the
Territory to execute or perform this Agreement. Distributor and each
Subdistributor will otherwise comply with all laws, regulations and other legal
requirements within the Territory that apply to this Agreement, including tax
and foreign exchange legislation. Distributor and each Subdistributor will
promptly notify SCII of any
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<PAGE>
change in these laws, regulations or other legal requirements that may affect
the importation of the Products or Distributor's or such Subdistributor's
performance of this Agreement.
c. Unlawful Payments. Neither Distributor nor any Subdistributor will
-----------------
use any payment or other benefit derived from SCII to offer, promise or pay any
money, gift or any other thing of value to any person for the purpose of
influencing official actions or decisions affecting this Agreement, while
knowing or having reason to know that any portion of this money, gift or thing
will, directly or indirectly, be given, offered or promised to (i) an employee,
officer or other person acting in an official capacity for any government or its
instrumentalities or (ii) any political party, party official or candidate for
political office.
d. Assurances. Distributor and each Subdistributor will provide SCII
----------
with the assurances and official documents that SCII periodically may request to
verify Distributor's or such Subdistributor's compliance with this Section.
17. INDEPENDENT PARTIES; SEVERAL OBLIGATIONS
----------------------------------------
SCII and Distributor and each Subdistributor are independent parties.
Nothing in this Agreement will be construed to make Distributor or any
Subdistributor an agent, employee, franchisee, joint venturer, partner or legal
representative of SCII. Except as otherwise provided in this Agreement,
Distributor and each Subdistributor will neither have nor represent itself to
have any authority to act on SCII's behalf. Notwithstanding anything to the
contrary herein contained, (i) the obligations hereunder of Distributor consist
solely of actions to be taken or omitted to be taken by Distributor, (ii) the
obligations hereunder of any Subdistributor consist solely of actions to be
taken or omitted to be taken by that particular Subdistributor, (iii) no
Subdistributor shall have any liability in respect of the nonperformance or
breach by Distributor or any other Subdistributor or its obligations hereunder
or any provision hereof, (iv) Distributor shall have no liability in respect of
the nonperformance or breach by any Subdistributor of its obligations hereunder
or any provision hereof, and (v) the obligations hereunder of Distributor and
each Subdistributor are in all cases several and not joint.
18. FORCE MAJEURE
-------------
Neither party will be liable for any failure or delay in performing an
obligation under this Agreement (excluding payments) that is due to causes
beyond its reasonable control, such as natural catastrophes, government acts or
omissions, laws or regulations, labor strikes or difficulties, transportation,
stoppages or slowdowns or the inability to procure parts or materials. These
causes will not excuse Distributor from paying accrued amounts due to SCII
through any available lawful means acceptable to SCII. If any of these causes
continue to prevent or delay performance for more than 90 days, SCII may
terminate this Agreement, effective immediately, upon notice to Distributor.
-19-
<PAGE>
19. NOTICES
-------
For all purposes of this Agreement, all communications, including without
limitation notices, consents, requests or approvals, required or permitted to be
given hereunder will be in writing and will be deemed to have been duly given
when hand delivered or dispatched by electronic facsimile transmission (with
receipt thereof orally confirmed), or ten business days after having been mailed
by registered or certified air mail, return receipt requested, postage prepaid,
or five business days after having been sent by an internationally recognized
overnight courier service such as Federal Express, UPS, or Purolator.
If to SCII:
STERLING COMMERCE INTERNATIONAL, INC.
4600 Lakehurst Court
P.O. Box 7160
Dublin, Ohio 43017-0760
Attention: President
Telephone: 1-614-793-7000
Telefax: 1-614-793-7221
If to Distributor:
STERLING SOFTWARE INTERNATIONAL, INC.
8080 North Central Expressway, Suite 1100-LB53
Dallas, Texas 75206
U.S.A.
Attention: President
Telephone: 1-214-891-8600
Telefax: 1-214-750-0905
20. ASSIGNMENT
----------
Except as specifically provided in Section 1(a), Distributor may not
assign, delegate, sub-contract or otherwise transfer this Agreement or any of
its rights or obligations to any person or entity, unless such person or entity
is an affiliate of Distributor, and any attempt to do so without SCII's written
approval will be void. SCII may assign this Agreement or any of its rights or
obligations (i) to an affiliate of SCII or (ii) to an unaffiliated third party
in connection with a sale, merger or other business combination of or involving
SCII or any of its operating divisions. Notwithstanding anything to the
contrary herein contained, upon the occurrence of a change in control of SSII
without SCII's prior written consent (which shall not be unreasonably withheld),
SCII shall have the right to terminate this Agreement immediately upon giving
SSII written notice to such effect. For purposes of this Agreement, a change in
control of SSII shall be deemed to have occurred if (i) SSW shall cease to own,
directly or indirectly, all of the
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outstanding capital stock of SSII, (ii) any person or group of persons acting in
concert shall acquire beneficial ownership of more than 50% of the then-
outstanding securities of SSW entitled to vote generally in the election of
directors of SSW, or (iii) if, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the Directors of
SSW cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by SSW's stockholders, of each Director
of SSW first elected during such period was approved by a vote of at least two-
thirds of the Directors of SSW then still in office who were Directors of SSW at
the beginning of any such period.
21. WAIVER, AMENDMENT, MODIFICATION
-------------------------------
Except as otherwise provided above, any waiver, amendment or other
modification of this Agreement will not be effective unless in writing and
signed by the party against whom enforcement is sought.
22. SEVERABILITY
------------
If any provision of this Agreement is held to be unenforceable, in whole or
in part, such holding will not affect the validity of the other provisions of
this Agreement, unless SCII deems the unenforceable provision to be essential to
this Agreement, in which case SCII may terminate this Agreement, effective
immediately, upon notice to Distributor.
23. INTERPRETATION
--------------
The terms that are defined in this Agreement may be used in the singular or
the plural, as the context requires. "Days" means calendar days, unless
otherwise specified. "Agreement" means this Agreement and all of its Exhibits
and any and all amendments thereto. Headings are intended only for reference
purposes.
24. GOVERNING LAW
-------------
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Ohio, USA, excluding its conflict of law principles. The
United Nations Convention on Contracts for the International Sale of Goods shall
be excluded from this Agreement and from any transaction between them that may
be implemented in connection with this Agreement.
25. ENTIRE AGREEMENT
----------------
This Agreement and its Exhibits constitute the complete and entire
statement of all terms, conditions and representations of the agreement between
SCII and Distributor with respect to its subject matter.
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IN WITNESS WHEREOF, SCII and Distributor cause this Agreement to be
executed by their duly authorized representatives identified below.
STERLING COMMERCE STERLING SOFTWARE
INTERNATIONAL, INC. INTERNATIONAL, INC.
By: /s/ ALBERT K. HOOVER By: /s/ JEANNETTE P. MEIER
-------------------------------- ------------------------------
Name: Albert K. Hoover Name: Jeannette P. Meier
------------------------------ ----------------------------
Title: Vice President Title: Vice President
----------------------------- ---------------------------
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EXHIBIT LIST
Exhibit A: Products, List Prices and Minimum Prices
Exhibit B: Transborder Rules
Exhibit C: Business Plan
Exhibit D: Product Use Contract
Exhibit E: List of Persons to Contact for Approval of
Amendments to Product Use Contracts
Exhibit F: Monthly Report
Exhibit G: Product Order Form
Exhibit H: Revenue Recognition Policy
Exhibit I: Confidentiality Agreement
Exhibit J: Countries of Restricted Export
<PAGE>
EXHIBIT A
PRODUCTS, LIST PRICES AND MINIMUM PRICES
The Products covered by the Agreement shall be the Products SCII makes
generally available for third-party distribution, and the list and minimum
prices of the Products (including upgrades, renewals and maintenance relating
thereto) shall be the list and minimum prices in effect from time to time on the
current international price lists of SCII, as amended and provided by SCII from
time to time or as otherwise agreed by SCII and Distributor. The warranty
period for Products shall be as specified by SCII from time to time for the
Products.
<PAGE>
EXHIBIT B
TRANSBORDER RULES
1. General. Distributor and each Subdistributor acknowledge that the
-------
global marketing and support of the Products in its various localized versions
requires a substantial degree of co-ordination among SCII and its various
affiliates and distributors throughout the world. Distributor and each
Subdistributor further acknowledge that certain customers will install and use
the Products, directly or through related persons, in multiple jurisdictions
(the "Multinational Customers"). These Transborder Order Rules are intended to
ensure that such Multinational Customers receive the Products and related
services in a prompt and effective manner.
2. Multinational Customer. "Multinational Customer" means any potential
----------------------
or existing customer, whether domiciled inside or outside of the Territory, that
has used or installed, or desires to install and use, the Products, directly or
through related persons, inside and outside of the Territory. From time to
time, and in any event on a quarterly basis, SCII on the one hand and
Distributor and each Subdistributor on the other hand shall provide each other
with a list of its Multinational Customer accounts. The absence of a
Multinational Customer from any such list shall not affect the other rights or
obligations of the parties hereunder.
3. Allocation. Upon receiving a new inquiry or order from any potential
----------
or existing Multinational Customer, Distributor or any Subdistributor on the one
hand or SCII on the other hand, will promptly notify the other. Such notice
will include (i) the name and address of the Multinational Customer; (ii) the
location of any existing and proposed installations; (iii) the anticipated
number of Products to be ordered; and (iv) the additional information that SCII
may periodically request. SCII on the one hand and Distributor or such
Subdistributor on the other hand will in good faith determine how to respond to
any such inquiry or order to best satisfy the particular Multinational
Customer's requirements and how to allocate between SCII on the one hand and
Distributor or such Subdistributor on the other hand any consideration received
from such customer. Such allocation shall be determined in accordance with the
historical practices of SSII and the subsidiaries of SSW, with due weight given
to the domicile of such Multinational Customer, the percent of the order inside
and outside of the Territory and the respective efforts of the parties and their
respective affiliates in obtaining such order.
4. Services. Distributor and each Subdistributor will, at SCII's
--------
specific written request, provide Multinational Customers of SCII with the
installation, training, customization, maintenance and support services that may
be required within the Territory. Distributor and each Subdistributor will
provide such services, in whole or in part, under a service agreement executed
directly with the Multinational Customer or its local related person or as a
sub-contractor of SCII or its other distributor, as SCII deems appropriate.
Distributor and each Subdistributor will offer direct services at prices and
under terms no less favorable than those that Distributor or such Subdistributor
offers to its own customers; alternatively, SCII and Distributor or such
Subdistributor will establish Distributor's sub-contracting fee by prior
agreement.
<PAGE>
EXHIBIT C
BUSINESS PLAN
Distributor and each Subdistributor shall submit a Business Plan as set forth in
2(c) which shall include the following:
DISTRIBUTOR PROFILE
- Staffing plans, including numbers of management, sales and technical
personnel who will be dedicated specifically to SCII Products;
- A profile of Distributor's or such Subdistributor's staff and training
plans for sales and technical personnel (including numbers anticipated
to attend SCII training);
- Company financials by business line and profile of all businesses
performed by Distributor or such Subdistributor. Future financials
both with and without SCII Product representation;
- 3-year unit and revenue recognition projections for each SCII Product
that Distributor or such Subdistributor is proposing to represent.
MARKET SIZE (to the extent reasonably available or obtainable):
1. Number of IBM and plug-compatible mainframes by operating system (MVS,
VM, VSE);
2. Number of PCs and workstations by operating system (DOS, Windows,
OS/2, Mac);
3. Number of SNA networks and LAN networks by operating system;
4. Number of major subsystems in production (IBM CICS, IMS, SMS, VTAM,
JES, etc.)
5. Number of mini-computers by vendor and operating system (AS/400,
Tandem, DEC, Stratus, etc.).
Major IS and economic trends within the Territory today and projected over the
next 5 years. Projected economic and computer industry growth
<PAGE>
Competition:
1. Names of other software or hardware vendors Distributor or such
Subdistributor represents;
2. Other major distributors within the Territory and the vendors they
represent;
3. Number of competitive products installed;
4. Plans and sales strategies to overcome competition.
Prospects:
1. Top prospects listed by industry;
2. Major computer applications and subsystems used by prospects and why
they would buy SCII Products;
3. Prospect identification.
Marketing:
1. Marketing mix used to sell SCII Products, including seminars and
advertising;
2. Marketing and sales programs;
3. Communications plan for Distributor's or such Subdistributor's and
SCII's company name and Products;
4. Plan for use of marketing materials to sell SCII Products;
5. Sales tools required to sell SCII Products.
Plan to support Customers of SCII Products
Detailed expectations of support
THE REQUIREMENTS DETAILED ABOVE MAY BE MODIFIED BY SCII FROM TIME TO TIME
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<PAGE>
EXHIBIT D
Date:
Product Use Contract No.
Customer No.:
PRODUCT USE CONTRACT
This Product Use Contract (hereinafter "Contract") is made by and between
and
Registered Address: Registered Address:
(hereinafter "Licensor") (hereinafter "Customer")
and shall, as and where applicable, consist of:
i) the attached PART I - LICENSE AGREEMENT and
ii) the attached PART II - SCHEDULE(S) and
iii) the attached PART III - LOCAL PROVISIONS ADDENDUM
and the terms and conditions contained therein.
________________________________________________________________________________
PART I - LICENSE AGREEMENT
WHEREAS Sterling Software International, Inc. (hereinafter "Principal"), whose
head office is located at 8080 North Central Expressway, Suite 1100, Dallas,
Texas 75206, U.S.A., has received the rights to license certain computer
software products from Sterling Commerce International, Inc. ("SCII"); and
WHEREAS, Licensor has the right to license certain of such computer software
products to end users; and
WHEREAS, Customer desires to acquire a license to use one or more of such
computer software products (including systems programs, available options and
documentation);
NOW, THEREFORE, for and in consideration of the covenants and promises specified
herein, the parties hereto understand and agree as follows:
<PAGE>
1.0 DEFINITIONS
1.1 The term "Schedule" shall mean and refer to any schedule(s), in the form of
the Schedule attached hereto, executed by Licensor and Customer and
attached to and expressly made a part of this Contract.
1.2 The term "Local Provisions Addendum" shall mean and refer to any document
and the contents thereof which may alter, amend, add to or in any other way
change the provisions of this Contract, in its entirety or in relation to
any specified Schedule(s) and/or the terms of a License Agreement
corresponding thereto, in the form of the Local Provisions Addendum
attached hereto, executed by Licensor and Customer and attached to and
expressly made a part of this Contract.
1.3 The term "Software" shall mean and refer to the proprietary computer
software products specified in any Schedule and the manuals, documentation
and other materials supplied therewith.
1.4 The term "Computer Installation" shall mean and refer to the designated
hardware and software systems at the designated site specified on the
Schedule for the Software.
2.0 GRANT AND USE OF SOFTWARE
2.1 In consideration of the payment by Customer of the Product Use Charge(s) as
provided for in this Contract and more specifically defined in the Schedule
and subject to the terms and conditions set forth in this Contract,
Licensor hereby grants to Customer a personal, non-transferable and non-
exclusive right to use the Software. The Software may be used only at its
designated Computer Installation, specified in the Schedule.
2.2 Customer may use the Software only for its own internal operations in
strict accordance with this Contract. Customer is specifically prohibited
from (a) permitting any third party to use the Software; (b) using the
Software to process data for any third party or in the operation of a
service bureau, with or without compensation; or (c) using the Software to
provide, with or without compensation, time-sharing, remote job entry,, or
other services to any third party. For purposes of this Paragraph 2.2
"third party" shall include, without limitation, subsidiaries or affiliates
of Customer.
2.3 Customer may transfer the Software to a different Computer Installation
only with the prior written approval of Licensor, which approval shall not
be unreasonably withheld and may be conditioned upon payment of an
additional charge or an upgrade fee as detailed in Paragraph 2.4 below, or
as otherwise determined by Licensor in accordance with the prevailing
pricing policy of Licensor. Upon implementing any such authorized
transfer, Customer shall immediately execute and deliver to Licensor a
written certificate verifying that all copies of the Software installed at
the prior Computer Installation have been destroyed or transferred to the
new Computer Installation. Customer may only use
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<PAGE>
the Software at any additional Computer Installation where such use is in
accordance with the terms and conditions of a separate license executed by
Customer and Licensor.
2.4 Licensor may (i) make available the option to migrate the Software to a
system other than the Designated System specified in the Schedule,
including, without limitation, specifications which may differ from the
Model Number, Model Group or CPU Identification specified in the Schedule
and as options are generally made available by Licensor for the Software;
or (ii) make generally available an altered or new version of the Software,
or any element thereof, otherwise supplied in accordance with Section 7.0
herein (collectively, the "Upgrades"). Should Customer wish to take up the
option of an Upgrade, Customer will be required to make payment to Licensor
for the Upgrade in accordance with the prevailing upgrade fee specified by
Licensor in respect of the Upgrade and may be required to enter into a new
Schedule for the Upgrade as generally required by Licensor.
2.5 Customer shall be entitled to make one (1) back-up copy of the Software to
be used only for archival and disaster recovery purposes. Customer may use
the Software on a back-up computer installation (the "Back-Up
Installation") while the designated Computer Installation or any associated
unit is temporarily inoperable. When the designated Computer Installation
is again operable, Customer will ensure that all copies of the Software
installed at the Back-Up Installation have been removed therefrom.
2.6 Customer shall, at all times during the term of this Contract, comply with
the requirements or restrictions which may be applicable to the Software
under the export controls of the United States of America, Canada,
[Australia] and/or any other country of origin of the Software and the
country of the Computer Installation (the "Installation Country"). Not by
way of limitation, Customer shall not re-export or divert the Software or
any related technical information, document or material, or direct product
thereof to any location outside of the Installation Country.
2.7 Licensor, or its designee, may, upon prior written notice and during normal
working hours, inspect the Computer Installation at which Customer uses the
Software, or any other site of Customer, for the purpose of verifying
Customer's compliance with the terms and conditions of this Contract.
3.0 TITLE AND CONFIDENTIALITY
3.1 Customer acknowledges that the terms and conditions contained in this
Contract create a license for use of the Software and do not create an
agreement for sale of the Software. Principal or SCII, as appropriate,
continues to own any copy of the Software licensed by this Contract and all
copies of the Software made by Customer in accordance with the terms and
conditions contained herein. All copyright, patent, title, trade secret,
and intellectual property protection rights in and to the Software are and
shall remain the proprietary rights of Principal or SCII.
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3.2 Customer acknowledges that the Software and related manuals, documentation
and other materials, as well as all amendments, updates and new releases
thereof, contain proprietary, confidential and trade secret information
developed or acquired by Licensor, Principal or SCII, which is not in the
public domain ("Confidential Information"). Customer acknowledges that the
source code of the Software is not being provided and that Principal or
SCII retains all trade secrets rights thereto. Customer shall not remove
any confidentiality, copyright or other legend which may be affixed to or
incorporated into the Software or related manuals, documentation or other
materials, or any amendments, updates or new releases thereof.
3.3 Customer shall use the Software strictly in accordance with the provisions
of Section 2.0 above. Customer shall disclose the Confidential Information
only to its employees as and to the extent that such disclosure is
reasonably required to effect such use of the Software as is authorized by
the provisions of Section 2.0 above. Customer shall take adequate
safeguards to maintain the confidentiality of the Software or Confidential
Information and to prevent the unauthorized use, disclosure or reproduction
of the Software or Confidential Information by or to any other corporation,
individual, firm or organization, including, but not limited to, such
reasonable precautions as would be taken by Customer to protect its own
confidential information, such specific safeguards as may be set forth in
the Software or Confidential Information itself or as Licensor, Principal
or SCII may request from time to time.
3.4 Customer shall not copy, translate, decompile, disassemble, reverse
engineer or otherwise reproduce or modify, add to or otherwise change the
Software or reverse assemble, compile or otherwise develop software which
incorporates or otherwise uses elements of the Software or the Confidential
Information without the specific written authorization of Licensor and
either Principal or SCII as appropriate, except as and to the extent
required to be permitted under applicable law. Customer agrees that any
such copy, translation, or other reproduction or modification shall be the
exclusive property of Principal or SCII and Customer shall, upon request of
Licensor or SCII or Principal as appropriate, execute such legal
instruments as may be required to vest or assign said ownership in
Principal or SCII.
3.5 Customer shall not assign, license, rent, lease, pledge or otherwise
transfer or encumber, voluntarily or involuntarily, the rights granted to
Customer hereunder in or to the Software or the Confidential Information
without the prior written authorization of Licensor. Any such prohibited
transfer or encumbrance shall be null and void.
3.6 The provisions of this Section 3.0 shall survive the expiration or
termination of this Contract.
4.0 PRICE, PAYMENT, TAXES AND DUTIES
4.1 Customer shall pay to Licensor the Product Use Charge(s), as well as any
other fees, for the Software, specified in the Schedule or elsewhere in
this Contract. Unless otherwise indicated, Product Use Charge(s), as well
as any other fees, shall be paid in full on the
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Due Date(s) indicated in the Schedule. Should any Due Date be a day which
is not a business day (a business day being a day on which the bank
specified by the Licensor for the purposes of invoicing in accordance with
the terms and conditions of this Contract is open for business, or as
otherwise specified by the Licensor, at the sole discretion of the
Licensor) then the payment shall be made on the last business day
immediately prior to the Due Date.
4.2 Customer will pay all amounts due to Licensor pursuant to this Contract in
[the currency of the Installation Country] or such other currency as
Licensor may specify and at such bank account as Licensor may designate
from time to time.
4.3 Unless agreed otherwise by the parties, Customer shall make payment of all
amounts due to Licensor pursuant to this Contract by certified cashier's
check or wire transfer.
4.4 Customer shall bear all financing and banking charges related to payments
under this Contract including, but not limited to, late-payment interest
charges and fees associated with telegraphic or wire transfers.
4.5 A service charge at the rate of 1.5% per month will be charged on Product
Use Charge(s) or any other fees or charges due hereunder not received on
the applicable Due Date. Should any payment(s) remain due but unpaid after
30 (thirty) days all Outstanding Charges, as specified in Paragraph 4.6
below, shall become immediately due and payable. The foregoing does not
affect the Termination rights of Licensor under Paragraph 6.2 of this
Contract.
4.6 For the purposes of this Contract, accrued Outstanding Charges shall be
comprised of the following amounts: (a) where the Term of this Contract,
as established in accordance with the provisions of Paragraph 6.1 of this
License Agreement, is for a period not exceeding 12 (twelve) months,
beginning with the applicable Effective Date, all amounts that Customer is
required to pay to Licensor in order to fulfill all obligations of Customer
arising under the terms and conditions of this Contract in respect of the
entire Term; (b) where the same Term as previously specified in Paragraph
4.6(a) is for a period exceeding 12 (twelve) months, beginning with the
applicable Effective Date, such amount as Customer shall be required to pay
to Licensor in order to fulfill the obligations of Customer arising under
the terms and conditions of this Contract until and including the date upon
which payment is actually received by Licensor.
4.7 Customer shall pay all Product Use Charge(s), fees and other amounts due
hereunder to Licensor in full, together with any sales, value-added or
other tax, however designated, applicable thereto. Customer shall not
withhold or deduct any tax, charge or other amount from said payments,
unless such withholding or deduction is required by the laws of the
Installation Country and Customer immediately furnishes Licensor with an
official receipt evidencing payment of said amount to the appropriate
authorities. If, under the laws of the Installation Country, Customer is
required to withhold any tax, charge or other amount from such payments,
Licensor may require that the amount of the payment will be automatically
increased to totally offset such tax, charge or other amount, so that
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the amount actually remitted to Licensor, net of all taxes, charges or
other relevant amounts equals the amount invoiced or otherwise due.
4.8 Unless otherwise agreed by Licensor in writing, Customer shall bear and pay
for all customs duties, sales or value-added tax or other tax or charge
which may be levied upon the importation of the Software into the
Installation Country.
5.0 WARRANTY AND LIABILITY
5.1 Licensor warrants that: (i) the Software shall, upon the Effective Date
for such Software and for the Warranty Period specified in the Schedule,
conform to the specifications set forth in the accompanying manuals,
documentation and other materials delivered with the Software, and (ii) the
Software does not infringe upon any patent, copyright or other proprietary
right of a third party within the Installation Country; provided that the
sole remedy for any breach of the foregoing warranties is set forth in this
Section 5.0.
5.2 In the event of a breach or alleged breach of the warranty specified in
Paragraph 5.1 (i), Customer shall notify Licensor in writing within 30
(thirty) days of such breach or alleged breach, except in the event of such
breach or alleged breach first occurring within the final 23 (twenty three)
days of the Warranty Period, where Customer shall notify Licensor in
writing within no more than seven (7) days after the expiration of such
Warranty Period. Licensor shall not be liable for any breach or alleged
breach not reported to Licensor within the appropriate period. In the
event of a breach of said warranty, Licensor shall, at its option, repair
or replace the Software as may be required to remedy such breach. Licensor
shall perform, or cause to be performed, such warranty services without
charge unless such repair or replacement has been necessitated by: (i)
modifications or errors made by Customer; or (ii) failures in the hardware
system of Customer; or (iii) use of the Software by Customer not in
accordance with Licensor's instructions or (iv) other causes not inherent
in the Software or attributable to Licensor, SCII or any relevant local
service agent of SCII. Where repair or replacement is provided by Licensor
in circumstances where, in accordance with this Paragraph 5.2 or any other
provision contained in this Contract, such repair or replacement is not
provided free of charge, Licensor shall be entitled to charge Customer for
such repair or replacement at an additional cost to Customer. Licensor
shall make such charge at Licensor's then current rates. In the event
Licensor fails or is unable for any reason to cure such breach of warranty,
it may, in its sole discretion and as its sole obligation and liability,
terminate the license and the rights granted hereunder with respect to the
affected Software and refund to Customer the applicable Product Use Charge
upon return of the affected Software, decreased by an amount equal to 33%
(thirty-three per cent) of such Product Use Charge for each twelve (12)
month period or part thereof since the Effective Date for such Software (a
straight line depreciation over three (3) years).
5.3 If, as a result of any claim of infringement referenced in Paragraph 5.1
(ii) above, Customer is enjoined from using the Software, or if Licensor
believes that the Software is likely to become the subject of such a claim
of infringement, Licensor shall, at its option, either: (i) modify or
replace the Software to eliminate the infringement; or (ii)
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procure from the third party the right to continue to use the Software
despite the infringement; or (iii) if Licensor determines that neither of
these options is commercially reasonable, as its sole obligation and
liability, terminate the license and rights granted hereunder with respect
to the affected Software and refund to Customer the applicable Product Use
Charge, decreased by an amount equal to 33% (thirty-three percent) of such
Product Use Charge for each twelve (12) month period or part thereof since
the Effective Date for such Software (a straight line depreciation over
three (3) years). The warranty contained in Paragraph 5.1 (ii) above is
conditioned upon: (a) Customer ensuring that Licensor is notified by
Customer, in writing, of any claim or potential claim, within 14 days of
such claim being, by any means, formally made or within 14 days of such
claim or potential claim being reasonably expected, by Licensor, to have
become known to Customer; (b) Licensor having sole control of the defense
and all related settlement negotiation; and (c) at Licensors's request and
expense, Customer providing Licensor with all reasonably necessary
assistance, information, and authority. Licensor shall have no liability
for any claim for infringement based on: (a) use of a superseded release
or an altered release of the Software not approved by Licensor if such
infringement would have been avoided by use of the current release or an
unaltered release of the Software; or (b) the combination or use of the
Software with materials (including either software or hardware) not
approved by Licensor, if such infringement would have been avoided if no
such combination had occurred.
5.4 THE WARRANTIES AND REMEDIES SPECIFIED IN THIS SECTION 5.0 STATE THE ENTIRE
LIABILITY IN RESPECT OF THE MATTERS CONTEMPLATED BY THIS SECTION 5.0 AND
ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES OR CONDITIONS, EXPRESS OR
IMPLIED (INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR PARTICULAR PURPOSE OR CONSEQUENTIAL, INDIRECT, SPECIAL OR
INCIDENTAL DAMAGES OR LOST PROFITS) CONTEMPLATED UNDER LOCAL LAW OR
OTHERWISE, ANY RIGHT TO WHICH CUSTOMER HEREBY SPECIFICALLY DISCLAIMS.
5.5 NEITHER LICENSOR, PRINCIPAL NOR SCII SHALL BE LIABLE FOR ANY LOSS OR DAMAGE
ARISING IN CONNECTION WITH THIS CONTRACT, EXCEPT AS EXPRESSLY PROVIDED IN
PARAGRAPHS 5.2 AND 5.3 ABOVE, AND IN NO EVENT SHALL THEY BE LIABLE FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL OR EXEMPLARY DAMAGES OR
LOST PROFITS UNDER ANY CIRCUMSTANCES, AND IN NO EVENT SHALL THEIR LIABILITY
EVER EXCEED AN AMOUNT EQUAL TO THE INITIAL PRODUCT USE CHARGE(S) PAID BY
CUSTOMER TO LICENSOR HEREUNDER.
6.0 TERM AND TERMINATION
6.1 Subject to the provisions of this Section 6.0, this Contract shall become
effective with respect to the Software as of the Effective Date set forth
in the Schedule and shall remain in effect with respect to such Software as
stipulated in the Schedule (the "Term").
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6.2 Licensor may terminate this Contract at any time, effective immediately
upon written notice to Customer, if: (i) Customer fails to pay to
Licensor any charge(s) due and outstanding for more than 60 (sixty) days
after the due date specified in the corresponding invoice; or (ii)
Customer otherwise breaches this Contract; or (iii) Customer becomes
insolvent or bankrupt, subject to suspension of payments, moratorium or
reorganization, makes an assignment for the benefit of its creditors, has a
receiver, manager or similar officer appointed over the whole or any part
of its assets or business or there is an order or resolution made for its
dissolution or liquidation (other than for the purpose of amalgamation or
reconstruction); or (iv) the direct or indirect ownership or control of
Customer that exists on the Effective Date of this Contract changes in a
manner that, in the reasonable judgment of Licensor, Principal or SCII, may
adversely affect the rights of Licensor, Principal, or SCII.
6.3 Upon termination of this Contract for any reason Customer shall promptly
return the Software and any associated materials and Confidential
Information (as defined in Paragraph 3.2 above) to Licensor and shall
warrant in writing to Licensor that all copies or translations thereof have
been destroyed and that all other obligations of Customer arising in
relation to termination of this Contract, whether under the provisions of
this Paragraph 7.3 or elsewhere, have been complied with.
6.4 Except as provided in Paragraph 5.2 and 5.3, the termination of this
Contract shall not excuse Customer from paying any outstanding Product Use
Charge(s) or any other charge(s) accrued hereunder or under any Schedule
before the effective date of termination.
6.5 The limitations on liability and on warranties of Section 5.0 and the
obligations under Paragraph 2.6 and Section 4.0 shall survive the
termination of this Contract.
7.0 MAINTENANCE AND SUPPORT SERVICES
7.1 MAINTENANCE AND SUPPORT TEAM
The Maintenance and Support Services ("MSS") set forth in Paragraph 7.2
below will be provided to the extent set forth in the Schedule for such
Software and to the extent MSS is then generally being made available by
Licensor for such Software. This MSS for the Software shall automatically
cease upon termination of this Contract or the license for such Software
for any reason and, upon such termination, Customer shall pay all
Outstanding Charges accrued hereunder with respect to such Software up to
and until the effective date of termination.
7.2 SERVICES
MSS services provided for the Software are as described below:
(i) Amendments, new releases and updates of the Software, unless priced
separately by Licensor and generally not included in the Software at
the time of licensing, as generally made available for such
Software;
-8-
<PAGE>
(ii) Periodic general error analysis report processing, as generally made
available for such Software;
(iii) Off-site support, as generally made available for such Software.
All amendments, updates and new releases of the Software delivered to
Customer set out heretofore, as well as all related brochures,
documentation and other materials, shall apply equally to said amendments,
updates and new releases and related brochures, documentation and other
materials. MSS shall be for the then current release and immediately
preceding release of the Software, provided that Licensor may cancel MSS
for any preceding releases at any time.
8.0 MISCELLANEOUS PROVISIONS
8.1 This Contract shall be governed by the laws of the State of Ohio, U.S.A.
and the parties hereto shall submit to the exclusive jurisdiction of the
Ohio courts.
8.2 Subject to the provisions of Paragraph 8.1 above, if a court of competent
jurisdiction holds any provision of this Contract to be illegal, invalid or
in any way unenforceable, in whole or in part, such provision will be
automatically severed from this Contract. Any such holding shall not
affect the legality or validity of the remaining provisions of this
Contract, unless, in the reasonable opinion of Licensor, Principal or SCII,
the unenforceable provision is deemed to be essential to this Contract, in
which event Licensor may terminate this Contract, effective immediately
upon notice to Customer.
8.3 Subject to the provisions of Paragraph 8.1 above, if a legal action is
commenced in connection with this Contract, the losing party shall
reimburse the prevailing party for the reasonable attorney's fees and
expenses which the prevailing party may incur in such action, whether or
not such action is prosecuted to a final and non-appealable judgment. In
the event that neither party to this Contract may reasonably be deemed to
have prevailed or lost in relation to any action commenced in connection
with this Contract, regardless of whether such action is actually continued
to conclusion by means of judicial decision or any alternative method of
dispute resolution, each party shall reimburse the other for any expenses
reasonably incurred by the party making such claim for reimbursement as a
result of the unreasonable actions of the other party.
8.4 If a party to this Contract fails to give notice or enforce any right under
this Contract, such failure shall not constitute a waiver of such right,
unless such waiver is reduced to writing and signed by the waiving party.
The specific temporary or limited waiver by a party to this Contract of any
right derived by the waiving party under the provisions of this Contract or
by other operation of law shall not constitute a waiver of any other right
or of the same right in any subsequent instance.
8.5 The parties to this Contract shall be excused for failures or delays in
performing any obligation under this Contract (other than the making of
payments when due) if such failure or delay is caused by force majeure.
-9-
<PAGE>
8.6 All notices required or permitted under this Contract shall be given in
writing and shall be personally delivered or sent by telex, telefax or
registered mail, postage prepaid, to the address of the receiving party as
indicated in this Contract. The parties may change their address from time
to time upon written notice to the other party. Any notice delivered
personally shall be deemed to have been received when delivered. Any
notice delivered by telex or telefax shall be deemed to have been received
on the day it is sent. Any notice sent by registered, prepaid mail shall
be deemed to have been received on the seventh (7th) business day after its
posting.
8.7 This Contract contains all the terms agreed by the parties regarding the
subject matter of this Contract and supersedes any prior agreement,
understanding or arrangement between them whether oral or in writing, and
no representation, understanding or promise shall be taken to have been
given or implied from anything said or written in negotiations between the
parties prior to the execution of this Contract or any Schedule except as
expressly incorporated in this Contract. Except as otherwise provided
above, this Contract may be amended only with the consent of both parties
expressed in writing and signed by a duly authorized representative of each
party.
8.8 If the Schedule licensed hereunder contains access to Network Control
Language ("NCL"), Customer shall be permitted to use NCL to develop code
and further applications in accordance with the technical manuals supplied
to Customer with the Software. However, any applications or code developed
by Customer using NCL shall not have the benefit of any warranty,
conditions, maintenance or indemnity provision contained herein and any
terms, conditions, warranties or indemnities specifically that might
otherwise be implied in relation to them are excluded. Licensor, Principal
and/or SCII shall have no liability or responsibility arising in relation
to NCL applications developed by Customer. Software may also include ways
Customer may use NCL ("Samples"). Customer may use such Samples in
accordance with this Contract; however, Samples shall not be subject to any
warranty, condition, maintenance or indemnity provisions herein, express or
implied, and neither Licensor, Principal nor SCII shall have any liability
with respect to Customer's use of such Samples. Customer understands that
it is receiving Samples "as is," and that any use of Samples is at
Customer's own risk.
8.9 Customer may not assign, delegate, sub-contract or otherwise transfer this
Contract or any of the rights or obligations of Customer arising hereunder
without the prior written approval of Licensor. Any attempt to do so
without the prior written approval of Licensor will be void. Licensor may
in its sole discretion assign, delegate, sub-contract or otherwise transfer
this Contract or any of the rights or obligations of Licensor arising
hereunder to any party.
-10-
<PAGE>
Signed by a duly authorized representative of each party:
("Licensor") ("Customer")
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
-11-
<PAGE>
PART II - SCHEDULE
PRODUCT USE CONTRACT SCHEDULE - TERM RENEWAL PLAN
This schedule is made part of and incorporates
all of the terms of the Product Use Contract
between Licensor and Customer (the "Contract") Date:
Product Use Contract
No.:
EFFECTIVE DATE: SCHEDULE NO.:
I.0 COMPUTER INSTALLATION
<TABLE>
<CAPTION>
==========================================================================================================================
SITE ADDRESS:
------------
DESIGNATED SYSTEM:
-----------------
- --------------------------------------------------------------------------------------------------------------------------
MANUFACTURER MODEL NUMBER MODEL GROUP OPERATING SYSTEM CPU IDENTIFICATION
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
==========================================================================================================================
</TABLE>
II.0 TYPE OF LICENSE
Subject to the terms and conditions of the Contract, the right of Customer to
use the Software shall become effective on the Effective Date specified above
and shall remain in effect for the License Term stipulated overleaf.
Upon expiration of the License Term, the right of Customer to use the Software
in accordance with the terms and conditions of the Contract shall renew
automatically for the Software for successive periods of one (1) year for so
long as the Customer pays the annual renewal charge(s) for the Software
specified by Licensor ("Annual Renewal Charge") and unless terminated by
Licensor in accordance with the terms and conditions set forth in Section 5.0 or
6.0 of the License Agreement.
-12-
<PAGE>
The Annual Renewal Charge is due upon each anniversary of the Effective Date and
is currently twenty percent (20%) of the prevailing Product Use Charge(s) for
the Software. Payment of the Product Use Charge(s) for the Software and each
Annual Renewal Charge for such Software entitles Customer to Maintenance and
Support Services ("MSS") for such Software for the ensuing year in accordance
with Section 7.0 of the License Agreement to the extent such MSS is then
generally being made available by Licensor for such Software.
Cancellation of the Contract by Customer is only effective upon Customer giving
Licensor at least 60 (sixty) days written notice prior to the next anniversary
of the Effective Date.
Signed by a duly authorized representative of each party in acceptance of the
terms, conditions and other details specified herein and overleaf:
("Licensor") ("Customer")
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
SEE OVERLEAF FOR SOFTWARE, TERM, WARRANTY PERIOD AND CHARGES
-13-
<PAGE>
PART II - SCHEDULE
PRODUCT USE CONTRACT - TERM RENEWAL PLAN (CONTINUED FROM OVERLEAF)
III.0 SOFTWARE, TERM, WARRANTY PERIOD AND CHARGES
<TABLE>
<CAPTION>
===========================================================================================================================
PAYMENT SCHEDULE/
SOFTWARE LICENSE TERM WARRANTY PERIOD SYSTEM NO. PRODUCT USE CHARGE DUE DATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
</TABLE>
SEE OVERLEAF FOR TYPE OF LICENSE AND SIGNATURE
-14-
<PAGE>
PART II - SCHEDULE
PRODUCT USE CONTRACT SCHEDULE - PERMANENT LICENSE PLAN
This schedule is made part of and incorporates all
of the terms of the Product Use Contract between
Licensor and Customer (the "Contract") Date:
Product Use Contract No.:
EFFECTIVE DATE: SCHEDULE NO.:
I.0 COMPUTER INSTALLATION
<TABLE>
<CAPTION>
==========================================================================================================================
SITE ADDRESS:
------------
DESIGNATED SYSTEM:
-----------------
- --------------------------------------------------------------------------------------------------------------------------
MANUFACTURER MODEL NUMBER MODEL GROUP OPERATING SYSTEM CPU IDENTIFICATION
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
==========================================================================================================================
</TABLE>
II.0 TYPE OF LICENSE
Subject to the terms and conditions of the Contract, the right of Customer to
use the Software granted under the Contract shall be perpetual.
Maintenance and Support Services ("MSS") for the Software is chargeable upon
expiration of the Warranty Period specified above and thereafter is payable
annually upon each anniversary of such expiration date as determined by
Licensor. The fee is currently twenty percent (20%) of the prevailing Product
Use Charge(s) for the Software. Payment of the Product Use Charge(s) for the
Software and each annual renewal charge for the Software specified by Licensor
("Annual Renewal Charge") entitles Customer to MSS for such software for the
ensuing year in accordance with Section 7.0 of the License Agreement to the
extent such MSS is then generally being made available by Licensor for such
Software or unless terminated by Licensor in accordance with the terms and
conditions set forth in Section 5.0 or 6.0 of the License Agreement.
Cancellation of MSS by Customer is only effective upon Customer giving Licensor
at least 60 (sixty) days written notice prior to the next anniversary of the
Effective Date.
-15-
<PAGE>
Signed by a duly authorized representative of each party in acceptance of the
terms, conditions and other details specified herein and overleaf:
("Licensor") ("Customer")
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
SEE OVERLEAF FOR SOFTWARE, WARRANTY PERIOD AND CHARGES
-16-
<PAGE>
PART II - SCHEDULE
PRODUCT USE CONTRACT SCHEDULE - PERMANENT LICENSE PLAN (CONTINUED FROM OVERLEAF)
III. SOFTWARE, WARRANTY PERIOD AND CHARGES
<TABLE>
<CAPTION>
=================================================================================================================
SOFTWARE WARRANTY PERIOD SYSTEM NO. PRODUCT USE CHARGE PAYMENT SCHEDULE/DUE DATE
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
================================================================================================================
</TABLE>
SEE OVERLEAF FOR TYPE OF LICENSE AND SIGNATURE
-17-
<PAGE>
PART III - LOCAL PROVISIONS ADDENDUM
This Local Provisions Addendum is made part of and incorporates all of the terms
of the Product Use Contract between Licensor and Customer
Date:
Product Use Contract No.:
(the "Contract")
The parties agree that the following Provisions are made part of the Contract
and that, in respect of the Schedule(s) specified below, the Contract shall be
construed at all times in such manner as shall give effect to these provisions:
SCHEDULE NO(S).:
PROVISIONS:
Signed by a duly authorized representative of each party:
("Licensor") ("Customer")
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
-18-
<PAGE>
EXHIBIT E
LIST OF PERSONS TO CONTACT FOR APPROVAL OF
AMENDMENTS TO PRODUCT USE CONTRACTS
CONNECT products -
Vice President of Finance, Communications Software Group
5215 North O'Connor Boulevard
Suite 1500
Irving, TX 75039-3771
(214) 868-5000 phone
(214) 868-5152 fax
GENTRAN products -
Vice President of Finance, Interchange Software Group
4600 Lakehurst Court
P.O. Box 7160
Dublin, OH 43017
(614) 793-7000 phone
(614) 793-7221 fax
<PAGE>
EXHIBIT F
MONTHLY REPORT
. Detailed Monthly Billing Report guidelines are issued by SCI Corporate
Finance Department and include details on how and when Product Use
Contracts and, therefore, revenue can be recognized. These guidelines may
be updated from time to time.
. Attached is the form of Monthly Report required.
. SCII'S financial year is October 1 to September 30
. Monthly Reports shall be due on the 25th day after the end of each calendar
month and the revenue recognition cut-off date shall be the last day of the
month.
. Product Use Contract Submission:
(i) First Page, Signature Page and Schedule(s)/Order Form to be
attached to Monthly Billing Report;
(ii) Where not shown on Product Use Contract include with Monthly
Billing Report details in English language of:
Payment Date, Date of Signature, Products, Delivery Date,
Rights of Return, Duration, Renewal Terms
(iii) Variations of Product Use Contract to be pre-approved and submitted
with Monthly Billing Report;
(iv) Full, original Product Use Contract to be sent to SCII within four
weeks.
<PAGE>
EXHIBIT G
INTERNATIONAL ORDER REQUEST
Requestor: Phone Number:
Fax Number:
Customer Name:
Address:
Sales Value: (U.S.D.)
(Must be provided for declared value on ALL International Shipments including
evaluations and internal copies)
ORDER/REQUEST TYPE
[_] New Software Order [_] Documentation Evaluation
[_] Software Evaluation [_] Upgrade (chargeable)
Start: [_] Additional Documentation
Stop: No. of Sets:
[_] Maintenance/Upgrade Tape [_] Fix/PUTT Tape
[_] Internal Use [_] Consultancy/Training
[_] Other:
PLATFORM
[_] MVS [_] DEC/VAX [_] RS6000 [_] HP3000
[_] DOS/VSE [_] AS/400 [_] HP9000 [_] SCO UNIX 2.2
[_] T*400 [_] T*36 [_] T*38 [_] PC DOS
[_] Windows [_] Windows NT [_] AT&T GIS [_] DIRECTOR
(NCR)
[_] SUN SPARC
[_] 4.1.2.
[_] Solaris 2.2
PRODUCT DETAILS
[_] GENTRAN:Basic
[_] GENTRAN:Plus [_] SNA [_] BSC [_] Combo [_] Mailbox
[_] CONNECT:Supertracs SNA SPC
[_] GENTRAN:Realtime
[_] GENTRAN:Interactive
[_] GENTRAN:Interactive Combo
[_] GENTRAN:Control
[_] GENTRAN:Viewpoint [_] EM [_] EM/TM
[_] GENTRAN:Structure [_] Base only [_] Base & RTE [_] RTE Only
[_] GENTRAN:Examiner
[_] GENTRAN:Client
[_] GENTRAN:Viewpoint for AS/400
<PAGE>
[_] Communication Keys for AS/400 [_] Async [_] LU 6.2 [_] COMPQ
CPU Model: Version: Serial Number:
[_] Maps & Interfaces [_] SAP [_] JDE [_] SAP IDOC
Specify Maps: [_] Inbound: [_] Outbound:
[_] GENTRAN:Excel [_] OFTP [_] OFTP+
[_] GENTRAN:Mentor [_] OFTP [_] OFTP+
[_] GENTRAN:Basic for DOS (PC) [_] w/Toolkit Module
[_] GENTRAN:Director (Windows) [_] Mapper
[_] Forms
[_] Cleo Products: Model: Operating System:
Part No.:
[_] Term Model: Operating System:
MEDIA TYPES
Cartridges: [_] 3480 (MVS/VSE/400-1/2")
[_] 8MM (400/RS6000/SUN/EXCEL)
[_] 4MM (DEC/HP9000/HP3000/EXCEL)
[_] 9346* (400/RS6000/SUN/T*36/EXCEL-1/4")
[_] TK-50 (DEC)
[_] Other
Tapes: [_] 6250 bpi (n/a for DEC/VAX) [_] 1600 bpi
Diskette Size: [_] 3.5" (Client/SPC/EXCEL/PC/COMMERCE) [_] 8" (T*36)
*Also can be referred to as a DC6150 and QIC.
Existing Customer [_] Yes [_] No
Present Version: Requested Version:
Present Products: Basic [_] Yes [_] No
(if mainframe) Plus [_] Yes [_] No
Realtime (RTE) [_] Yes [_] No
DOCUMENTATION
[_] All, otherwise please specify below:
COMMENTS/SPECIAL INSTRUCTIONS:
<PAGE>
EXHIBIT H
REVENUE RECOGNITION POLICY
INTRODUCTION:
The purpose of this policy is to indicate the guidelines under which the
revenues reported to Sterling Commerce by distributors and agents are recognized
and accepted.
Revenue recognition must be reported in a manner that complies with the
requirements of the United States Financial Accounting Standards Board.
IN GENERAL TERMS: SOFTWARE OR SERVICES MUST BE DELIVERED, A CONTRACT MUST BE
SIGNED AND PAYMENT BE EXPECTED IN ORDER FOR REVENUE TO BE RECOGNIZED.
POLICY
- ------
Revenue is recognized by consideration of three elements: 1) Contract; 2)
Delivery; and 3) Payment Terms as set out below.
1. CONTRACT
a. (i) Mainframe and Mid-Range Products
--------------------------------
There must be a signed contract from the customer for the products.
The contract should also be dated within the period for which the sale
is to be recognized. An irrevocable purchase order referencing and
accepting compliance with an existing signed contract will also be
accepted.
(ii) PC Products
-----------
An irrevocable purchase order referencing and complying with the terms
and conditions of the Shrink Wrap license or a signed PC-product
license will be accepted for revenue recognition.
(iii) Maintenance and Services
------------------------
Post-contract customer support ("PCS"), or software maintenance,
including revenue that is bundled with an initial licensing fee,
should be recognized ratably over the period of the software
maintenance agreement. The amount of software maintenance that is
bundled with an initial licensing fee is determined by multiplying the
ratio of the separate maintenance and list price by the contract
amount, net of discounts.
<PAGE>
(iv) Education, Consulting, On-Site Installation and Training Fees
-------------------------------------------------------------
Revenue for education, consulting, on-site installation and training
fees is recognized in the month that the services are performed.
b. ACCEPTANCE PERIODS: revenue cannot be recognized if the software or
services are subject to any contingency such as an acceptance or trial
period; i.e., where there is an option of the customer not to accept.
c. PAYMENT TERMS must be specified with due dates under the rules in
paragraph 3 below.
2. DELIVERY
All products included in the contract must be delivered prior to revenue
recognition. If a product is included on the contract which has not been
delivered ("future product"), then the value of this future product cannot
be recognized and must be deferred. The value of any future products to be
deferred must be reasonable when compared to other Sterling Commerce
products that are commercially available (e.g., not a nominal or zero fee).
a. Delivery of a product occurs when it has been turned over to a third
party deliverer (e.g., Federal Express).
b. If an order does not require delivery (e.g., an upgrade of an existing
license) or if a temporary license is on-site (i.e., a trial license
to be converted to a perpetual or an annual license), the proper
paperwork (i.e., Purchaser order or order form, referencing an
existing valued license agreement) must still be processed before it
can be booked as revenue.
c. (i) Permanent License
-----------------
If the contract is for a perpetual license, and the customer has
rights to future products, and the value of such products cannot be
---------
estimated, the revenue can only be recognized upon the delivery of
---------
such future products.
(ii) Rental/Stopped Payments/Fixed Term
----------------------------------
If the contract is for a fixed term, and the customer has the right to
----------
future products, and the value of those future products cannot be
---------
estimated, the revenue will be recognized on a monthly basis over the
--------- -------
period of the contract.
-2-
<PAGE>
3. PAYMENT TERMS
a. Payment must be reasonably certain. If there is a likelihood that
payment may be withheld by the customer, then the revenue should not
be recognized until the cash is received.
b. Payment due dates are specified in your contract with Sterling
Commerce. If you wish to alter payment terms in excess of this, you
may seek approval from the appropriate Sterling Commerce Group
President and Group Vice President of Finance. Such approval will not
be granted automatically.
c. Contracts with any payment due beyond 12 months of initial contract
date will be treated as an installment contract and are subject to
special revenue recognition terms.
(i) For quota purposes: if a payment plan is for 12 months or less,
the entire value of the deal is booked as revenue up front. If
the deal has payment terms extending beyond 12 months, then
only the value of what is collectible in the first 12 months is
booked up front, with remaining revenue being deferred.
The payments associated with deferred revenue can be recognized
as current revenue when they are collectible within 12 months.
For example, with a 20-month payment plan sold September 1995,
12 months are booked up front in September, with 8 months being
deferred. Commencing in October 1995, one month's worth of the
deferred revenue is taken into current revenue, until May 1996,
at which time all 20 months would have been recognized as
income.
(ii) Upon termination or expiration of a distributor agreement (or
equivalent), rental agreements are transferred to the new
distributor.
d. Preferred Customer Programs ("PCPs") are subject to special acceptance
criteria and should be approved in advance by the appropriate Sterling
Commerce Group President and Vice President of Finance.
-3-
<PAGE>
EXHIBIT I
CONFIDENTIALITY AGREEMENT
1. I understand that as an employee of ____________________________
("Distributor"), I may have access to proprietary and confidential
information developed or acquired by or licensed to Sterling Commerce
International, Inc. ("SCII") for SCII'S software products (collectively the
"Information"). I acknowledge that the information incorporates trade
secrets and that any unauthorized use or disclosure of the information may
result in significant damage to SCII or its licensors.
2. As consideration for my continued employment with Distributor, I agree to
use all information to which I may have access only in performing my
obligations to Distributor and in carrying out the International
Distributor Agreement under which Distributor received the Information. I
will maintain the Information in strict confidence, I will not remove or
deface any confidentiality or proprietary notice placed on items of
Information. I will not copy, translate or modify any items containing
Information without Distributor's authorization. I will not disclose the
Information to any person, other than employees of Distributor who have
executed a confidentiality agreement substantially identical to this
agreement. I will abide by all other restrictions on the use and
disclosure of the information that Distributor may establish from time to
time.
3. I acknowledge that all patents, copyrights, trade secrets and other
proprietary rights in or related to the Information are and will remain the
exclusive property of SCII or its licensors, whether or not specifically
recognized or perfected under the laws of the country where the Information
is located. I will not take any action that jeopardizes SCII's or its
licensors' proprietary rights to acquire any right in the information,
except the limited use right specified in Section 2. I hereby acknowledge
that SCII and its licensor will own all rights in any copy, translation,
modification, adaptation or derivation of the Information that I may
create, including any improvement or development thereof. If, by operation
of law, I am deemed to possess any rights and, if such waiver is deemed
invalid, I hereby assign such rights to SCII and its licensors. To the
extent that my rights are inalienable under applicable law, I hereby waive
such rights and, if such waiver is deemed invalid, grant SCII, its
licensors and their designees the exclusive, perpetual, irrevocable, world-
wide and royalty-free right to use, market and modify such items without
identifying me or seeking my prior consent. Upon Distributor's or SCII's
request, I will execute any instrument that is appropriate to give full
legal effect to the provisions of this Section.
4. When my employment with Distributor ceases, I will promptly return to
Distributor all notes, documents or media that contain the Information. I
acknowledge that my obligations under this agreement will survive the
termination of my employment with Distributor. I further acknowledge that
either SCII or Distributor may enforce this
<PAGE>
agreement against me and that Distributor executes this Agreement as
principal on its own behalf and, exclusively to accept or otherwise perfect
SCII's rights against me, as agent on behalf of SCII.
IN WITNESS WHEREOF, the undersigned has signed and delivered this Agreement
on the date written below.
By: ________________________
Name: ______________________
Date: ______________________
-2-
<PAGE>
EXHIBIT J
COUNTRIES EMBARGOED under the U.S. EXPORT ADMINISTRATION REGULATIONS
Cuba, Libya, North Korea
COUNTRIES subject to PARTIAL RESTRICTIONS under the U.S. EXPORT ADMINISTRATION
REGULATIONS
Afghanistan, Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia,
Estonia, Iran, Kazakhastan, Kyrgyzstan, Laos, Latvia, Lithuania, Moldova,
Mongolia, People's Republic of China, Romania, Russia, Syria, Tajikistan,
Turkmenistan, Ukraine, Uzbekistan, Vietnam
COUNTRIES EMBARGOED pursuant to U.N. RESOLUTIONS
Haiti, Iraq, Federal Republic of Yugoslavia (Serbia, Montenegro, UN
Protected Areas of Croatia and of Bosnia-Herzegovina)
-3-
<PAGE>
EXHIBIT 10(i)
CEO AGREEMENT
THIS CEO AGREEMENT ("Agreement") is made and entered into as of the 12th
day of February, 1996 by and between Sterling Commerce, Inc., a Delaware
corporation ("Sterling Commerce"), and Sterling L. Williams, an individual
("Williams").
RECITALS:
WHEREAS, Sterling Commerce acquires, develops, markets and supports a broad
range of products and services; and
WHEREAS, Sterling Commerce desires to retain Williams as its Chairman of
the Board and Chief Executive Officer; and
WHEREAS, Williams is willing to accept such responsibilities;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
AGREEMENTS:
1. Employment. Williams agrees to render such managerial services as are
----------
customarily required of the Chairman of the Board and Chief Executive
Officer, and Sterling Commerce agrees to utilize such services on the
terms and conditions contained herein. Sterling Commerce acknowledges
that Williams is also employed as President and Chief Executive
Officer at Sterling Software, Inc. ("Sterling Software"). Sterling
Commerce agrees that such employment is not inconsistent with this
Agreement, the level of Executive's compensation at Sterling Commerce
having been determined by Sterling Commerce with knowledge of
Williams' employment by Sterling Software and the demands on Williams'
time and attention required by such employment.
2. Compensation. As consideration for Williams' agreement to enter into
------------
this Agreement and the services to be performed hereunder, Williams
shall be paid an annual salary of $500,000, plus such annual increases
as shall be mutually agreeable. Williams shall also be entitled to
earn additional compensation in the nature of bonuses, deferred
compensation and other incentive compensation as mutually agreed.
Williams shall be entitled to such personal benefits as may be
mutually agreed. All compensation and personal benefits described in
the preceding three sentences shall be paid by Sterling Software
(Northern America), Inc., which is to become a wholly-owned subsidiary
of Sterling Commerce, and thereafter be renamed Sterling Commerce
(Northern America), Inc.). In addition, Mr. Williams shall be entitled
to
<PAGE>
participate in Sterling Commerce's Stock Option Plan, Employee Stock
Ownership Plan and/or 401(k) Plan, and, as mutually agreed, such other
plans as are currently, or from time to time made, available to
Sterling Commerce's executive officers.
3. Term. This Agreement shall commence on the date on which the purchase
----
and sale of shares of common stock of Sterling Commerce pursuant to
its initial public offering of common stock first occurs and shall
continue in effect until such time as this Agreement is automatically
converted into a consulting agreement pursuant to subparagraph 5(i)
hereof; thereafter, the consulting agreement shall continue for a
period of five years.
4. Termination of Employment. The parties acknowledge that Williams is
-------------------------
employed "at will" and may be terminated by Sterling Commerce at any
time with or without cause. Notwithstanding anything in this
Agreement to the contrary, in the event Williams is terminated, with
or without cause, or Williams terminates his employment pursuant to
Section 5(i)(b) of this Agreement and Sterling Software offers to
Williams, and Williams accepts, an increase in compensation and
benefits as President and Chief Executive Officer of Sterling Software
such that Williams' compensation and benefits at Sterling Software
following such termination are reasonably equivalent to the combined
compensation and benefits Williams was entitled to at both Sterling
Commerce and Sterling Software prior to such termination, this
Agreement shall not be converted into a consulting agreement pursuant
to Section 5(i) of this Agreement and Williams shall not be entitled
to the consideration provided for in Section 5(v) of this Agreement.
5. Consulting Agreement.
--------------------
(i) This Agreement shall be automatically converted into a
consulting agreement in the event that (a) Sterling Commerce
terminates Williams' employment with or without cause or (b)
Williams terminates his employment as a result of a reduction
in Williams' salary, other compensation or perquisites below
the level in effect for the immediately preceding twelve month
period; or as a result of Williams' determination, in his sole
judgment, that there has been a significant reduction in the
nature or scope of Williams' authorities or duties.
(ii) The consulting agreement may be terminated by Williams in
writing at any time, but any compensation which has been paid
as of the date of termination shall be deemed to have been
earned and there shall be no repayment of any sums previously
paid. In addition, Williams shall have the right to terminate
the consulting agreement
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<PAGE>
in accordance with paragraph 6 hereof. Sterling Commerce may
terminate the consulting agreement upon Williams' death.
(iii) During the term of the consulting agreement, Williams shall
serve in an advisory capacity to the Executive Committee of the
Board of Directors of Sterling Commerce, reporting directly to
the Executive Committee for the purpose of making operational,
strategic and financial recommendations affecting the general
welfare of Sterling Commerce. Williams shall make himself
available for a reasonable amount of such consulting and
advisory services during normal business hours and upon
reasonable notice, at such times and places as shall be
mutually agreed upon. In no event shall Williams expend in
excess of thirty (30) days per year performing such services
for Sterling Commerce.
(iv) Any and all confidential information of Sterling Commerce to
which Williams may become privy in the performance of his
consulting services shall be treated as confidential by him and
shall not be communicated to or discussed with any party who is
not an officer or director of Sterling Commerce, unless
Williams is specifically authorized to do so by the Executive
Committee of the Board of Sterling Commerce. Williams shall
not use any information delivered to him by Sterling Commerce
for his personal gain, nor shall Williams act as a financial
consultant or advisor to any other person, partnership,
corporation or other business association in the computer
industry (software, hardware or services) during the term of
the consulting agreement without the prior written consent of
Sterling Commerce, such consent not to be unreasonably
withheld.
(v) As consideration for his advisory and consulting services,
Williams shall be entitled to receive all amounts and to
participate in all programs (or the cash equivalent thereof)
described in paragraph 2 hereof; provided, however, that in no
-------- -------
event will Sterling Commerce be required to make any new grants
of options to Williams under Sterling Commerce's Option Plan
after conversion of this Agreement into a consulting agreement.
In the event Williams terminates his employment pursuant to
subsection (i)(b) hereof, the level of his compensation shall
be the greater of the compensation and benefits of the type
described in paragraph 2 hereof in effect on the date of his
termination or the compensation and benefits of the type
described in paragraph 2 hereof in effect twelve (12) months
prior to the date of termination. This compensation shall be
paid during the term of the consulting agreement without regard
to whether Sterling Commerce utilizes the services of Williams
for the maximum thirty (30) days per year specified in
subsection (iii) hereof, or does not avail itself of his
services at any time during the
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<PAGE>
term hereof. In addition, Williams shall be reimbursed for all
other authorized expenses such as food and first class travel
and lodging which are incurred at the direction of Sterling
Commerce consistent with the terms hereof. Sterling Commerce
shall make available to Williams all office facilities of
Sterling Commerce, including secretarial, telephone and office
space, or reimburse Williams for the cost of obtaining
comparable facilities from third parties.
6. Change-in-Control. Sterling Commerce and Williams are parties to a
-----------------
Change-in-Control Severance Agreement, dated the date hereof (as such
agreement may be amended from time to time, the "Change-in-Control
Agreement"). Notwithstanding anything contained in this Agreement to
the contrary, in the event William's employment with Sterling Commerce
is terminated under circumstances in which this Agreement would
automatically be converted into a consulting agreement and Williams
would otherwise be entitled to receive payments and benefits under
both this Agreement and the Change-in-Control Agreement, Williams
shall have the right to elect to have this Agreement converted into a
consulting agreement pursuant to the terms hereof or to receive
payments and benefits under the Change-in-Control Agreement, but not
both. Within five business days following the termination of
William's employment with Sterling Commerce under circumstances in
which this Section 6 would apply, Sterling Commerce shall provide
Williams, in writing, a reasonably detailed determination of the
payments and other benefits under each of such consulting agreement
and the Change-in-Control Agreement. Williams shall make the election
provided for in this paragraph of this Section 6 within thirty
calendar days after William's receipt of the written determination
referred to in the preceding sentence; provided, however, that if such
election is not so made within such 30-day period, Williams shall be
irrevocably deemed to have elected to receive payments and benefits
under the Change-in-Control Agreement. Prior to the date on which
Williams makes or is deemed to have made the election referred to
above, he shall receive all benefits provided for in Section 5(v) of
this Agreement as if it had been converted to a consulting agreement.
In the event of a Change-in-Control following the conversion of this
Agreement into a consulting agreement, Williams shall have the option
of terminating the consulting agreement in writing at any time
following such Change-in-Control. Upon such termination of the
consulting agreement, Williams shall be entitled to receive in one
lump sum the aggregate of all unpaid amounts pursuant to paragraph
5(v) through the unexpired portion of the five (5) year consulting
agreement. Such lump sum shall be payable within ninety (90) days
following Williams' notice of termination of the consulting agreement.
Upon such termination by Williams, Williams shall have no further
obligations pursuant to paragraph 5(iii).
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<PAGE>
7. Full-time Employment. Sterling Commerce agrees that, if Williams'
--------------------
employment at Sterling Software is terminated, with or without cause
(including but not limited to a termination by Williams pursuant to
(i) Section 3(b) of that certain Change-in-Control Severance Agreement
between Sterling Software and Williams, dated the date hereof, or (ii)
pursuant to Section 5(i)(b) of that certain CEO Agreement between
Williams and Sterling Software, dated the date hereof) and Williams is
willing and able to devote his full-time efforts to Sterling Commerce,
Sterling Commerce shall promptly offer to increase Williams'
compensation and benefits under this Agreement to a level reasonably
equivalent to the combined compensation and benefits Williams was
entitled to at both Sterling Commerce and Sterling Software
immediately prior to such termination.
8. Miscellaneous.
-------------
(i) Notices, demands, payments, reports and correspondence shall be
addressed to the parties hereto at the address for such party
set forth below or such other places as may from time to time
be designated in writing to the other party. Notices hereunder
shall be deemed to be given on the date such notices are
actually received.
If to Sterling Commerce, to: 8080 N. Central Expressway
Suite 1100
Dallas, Texas 75206
Attention: President
If to Williams, to: Sterling Commerce, Inc.
8080 N. Central Expressway
Suite 1100
Dallas, Texas 75206
Attention: Mr. Sterling L.
Williams
(ii) This Agreement shall be binding upon Sterling Commerce and
Williams and their respective successors, assigns, heirs and
personal representatives.
(iii) The substantive laws of the State of Texas shall govern the
validity, construction, enforcement and interpretation of the
provisions of this Agreement.
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<PAGE>
Executed by the parties hereto as of the date first set forth above.
/s/ STERLING L. WILLIAMS
________________________________________
Sterling L. Williams
STERLING COMMERCE, INC.
By: /s/ JEANNETTE P. MEIER
___________________________________
Name: Jeannette P. Meier
____________________________
Title: Executive Vice President
____________________________
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<PAGE>
EXHIBIT 10(j)
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this "Agreement"), dated as of
February 12, 1996, by and between Sterling Commerce, Inc., a Delaware
corporation (the "Company"), and ______________________________ (the
"Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company and has made
and is expected to continue to make major contributions to the profitability,
growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case of most companies, the
possibility of a Change in Control exists;
WHEREAS, the Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum severance
benefits for certain of its senior executives, including the Executive,
applicable in the event of a Change in Control; and
WHEREAS, the Company desires to provide additional inducement for the
Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms: In addition to terms defined elsewhere herein,
---------------------
the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "Base Pay" means the Executive's annual base salary at a rate
not less than the Executive's annual fixed or base compensation as in
effect for the Executive immediately prior to the occurrence of a Change in
Control or such higher rate as may be determined from time to time by the
Board of Directors of the Company (the "Board") or a committee thereof.
(b) "Change in Control" means the occurrence during the Term of any
of the following events:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of
such merger, consolidation or reorganization less than two-thirds of
the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors ("Voting Stock") of
such corporation or person
<PAGE>
immediately after such transaction are held in the aggregate by the
holders of Voting Stock of the Company immediately prior to such
transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal
person, and as a result of such sale or transfer less than two-thirds
of the combined voting power of the then-outstanding Voting Stock of
such corporation or person immediately after such sale or transfer is
held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-
1 (or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person (as the term "person" is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of securities representing 20% or more of the
combined voting power of the then-outstanding Voting Stock of the
Company;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction; or
(v) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Directors of the Company cease for any reason to constitute at least a
majority thereof; provided, however, that for purposes of this clause
(v) each Director who is first elected, or first nominated for
election by the Company's stockholders, by a vote of at least two-
thirds of the Directors of the Company (or a committee thereof) then
still in office who were Directors of the Company at the beginning of
any such period will be deemed to have been a Director of the Company
at the beginning of such period.
Notwithstanding the foregoing provisions of Sections 1(b)(iii) or 1(b)(iv),
unless otherwise determined in a specific case by majority vote of the
Board, a "Change in Control" shall not be deemed to have occurred for
purposes of Section 1(b)(iii) or 1(b)(iv) solely because (A) the Company,
(B) an entity in which the Company directly or indirectly beneficially owns
50% or more of the outstanding Voting Stock (a "Subsidiary"), (C) any
Company-Sponsored employee stock ownership plan or any other employee
benefit plan of the Company or any Subsidiary, or (D) Sterling Software,
Inc. or any of its wholly owned subsidiaries (collectively, "SSW") either
files or becomes obligated to file a report or a proxy statement under or
in response to
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<PAGE>
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock of the Company,
whether in excess of 20% or otherwise, or because the Company reports that
a change in control of the Company has occurred or will occur in the future
by reason of such beneficial ownership or any increase or decrease thereof;
provided however, that the exception contained in clause (D) above with
respect to the beneficial ownership of Voting Stock of the Company by SSW
shall expire, without further action, effective as of the date on which SSW
no longer beneficially owns more than 10% of the outstanding Voting Stock
of the Company.
(c) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement
income and welfare benefit policies, plans, programs or arrangements in
which Executive is entitled to participate, including without limitation
any stock option, stock purchase, stock appreciation, savings, pension,
401(k), employee stock ownership (ESOP), supplemental executive retirement,
or other retirement income or welfare benefit, deferred compensation,
incentive compensation, group or other life, health, medical/hospital or
other insurance (whether funded by actual insurance or self-insured by the
Company), disability, salary continuation, expense reimbursement, executive
automobile, tax and financial planning, club memberships, incentive travel,
tax reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies,
plans, programs or arrangements that may be adopted hereafter by the
Company, providing perquisites, benefits and service credit for benefits at
least as great in the aggregate as are payable thereunder prior to a Change
in Control.
(d) "Incentive Pay" means (i), if calculated at any time commencing
one year after the effectiveness of this Agreement pursuant to Section 1(f)
below, an annual amount equal to not less than the highest aggregate annual
bonus, incentive or other payments of cash compensation, in addition to
Base Pay, made or to be made in regard to services rendered in any calendar
year during the three calendar years immediately preceding the year in
which the Change in Control occurred pursuant to any bonus, incentive,
profit-sharing, performance, discretionary pay or similar agreement,
policy, plan, program or arrangement (whether or not funded) of the Company
or any successor thereto, providing benefits at least as great as the
benefits payable thereunder prior to a Change in Control and (ii), if
calculated at any time prior to one year after the effectiveness of this
Agreement pursuant to Section 1(f) below, an amount equal to 100% of the
aggregate of the budgeted annual bonus, incentive or other budgeted
payments of cash compensation, in addition to Base Pay, at plan for such
Executive.
(e) "Severance Period" means the period of time commencing on the
date of the first occurrence of a Change in Control and continuing until
the earliest of (i) the _____ anniversary of the occurrence of the Change
in Control, or (ii) the Executive's death; provided, however, that
commencing on each anniversary of the
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<PAGE>
Change in Control, the Severance Period will automatically be extended for
an additional year unless, not later than 90 calendar days prior to such
anniversary date, either the Company or the Executive shall have given
written notice to the other that the Severance Period is not to be so
extended.
(f) "Term" means the period commencing as of the date on which the
purchase and sale of shares of common stock of the Company pursuant to its
initial public offering of common stock first occurs and expiring as of the
later of (i) the close of business on December 31, 2000, or (ii) the
expiration of the Severance Period; provided, however, that (A) commencing
on January 1, 1997 and each January 1 thereafter, the term of this
Agreement will automatically be extended for an additional year unless, not
later than September 30 of the immediately preceding year, the Company or
the Executive shall have given notice that it or the Executive, as the case
may be, does not wish to have the Term extended and (B) subject to the last
sentence of Section 8, if, prior to a Change in Control, the Executive
ceases for any reason to be an employee of the Company or any Subsidiary,
thereupon without further action the Term shall be deemed to have expired
and this Agreement will immediately terminate and be of no further effect.
2. Operation of Agreement: This Agreement will be effective and binding
----------------------
immediately upon its execution, but, anything in this Agreement to the contrary
notwithstanding, this Agreement will not be operative unless and until a Change
in Control occurs. Upon the occurrence of a Change in Control at any time
during the Term, without further action, this Agreement shall become immediately
operative.
3. Termination Following a Change in Control: (a) In the event of the
-----------------------------------------
occurrence of a Change in Control, the Executive's employment may be terminated
by the Company during the Severance Period. If, during the Severance Period,
the Executive's employment is terminated by the Company or any Subsidiary other
than as a result of the Executive's death, the Executive will be entitled to the
benefits provided by Section 4 hereof.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate his or her employment with the Company during the
Severance Period with the right to severance compensation as provided in Section
4 upon the occurrence of one or more of the following events (regardless of
whether any other reason for such termination exists or has occurred, including
without limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office of the Company which the Executive held immediately
prior to a Change in Control, or the removal of the Executive as a Director
of the Company (or any successor thereto) if the Executive shall have been
a Director of the Company immediately prior to the Change in Control;
(ii) (A) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to the
position which
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<PAGE>
the Executive held immediately prior to the Change in Control, (B) a
reduction in the aggregate amount of the Executive's Base Pay and Incentive
Pay, or (C) the termination or denial of the Executive's rights to Employee
Benefits or a reduction in the scope or value thereof, any of which is not
remedied by the Company within 10 calendar days after receipt by the
Company of written notice from the Executive of such change, reduction or
termination, as the case may be;
(iii) A determination by the Executive (which determination will be
conclusive and binding upon the parties hereto provided it has been made in
good faith and in all events will be presumed to have been made in good
faith unless otherwise shown by the Company by clear and convincing
evidence) that a change in circumstances has occurred following a Change in
Control, including, without limitation, a change in the scope of the
business or other activities for which the Executive was responsible
immediately prior to the Change in Control, which has rendered the
Executive substantially unable to carry out, has substantially hindered
Executive's performance of, or has caused Executive to suffer a substantial
reduction in, any of the authorities, powers, functions, responsibilities
or duties attached to the position held by the Executive immediately prior
to the Change in Control, which situation is not remedied within 10
calendar days after written notice to the Company from the Executive of
such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all of
its business and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization, transfer or otherwise)
to which all or substantially all of its business and/or assets have been
transferred (directly or by operation of law) assumed all duties and
obligations of the Company under this Agreement pursuant to Section 10(a);
(v) The Company relocates its principal executive offices, or
requires the Executive to have his principal location of work changed, to
any location which is in excess of 25 miles from the location thereof
immediately prior to the Change in Control, or requires the Executive to
travel away from his office in the course of discharging his
responsibilities or duties hereunder at least 20% more (in terms of
aggregate days in any calendar year or in any calendar quarter when
annualized for purposes of comparison to any prior year) than was required
of Executive in any of the three full years immediately prior to the Change
in Control without, in either case, his prior written consent; or
(vi) Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company or any successor thereto.
(c) A termination by the Company pursuant to Section 3(a) or by the
Executive pursuant to Section 3(b) will not affect any rights which the
Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company providing Employee Benefits, which rights shall be
governed by the terms thereof. The Company and the Executive are parties to a
Severance Agreement, dated the date hereof (as such
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<PAGE>
agreement may be amended from time to time, the "Severance Agreement"). Notwith
standing anything contained in this Agreement to the contrary, in the event the
Executive's employment with the Company is terminated under circumstances in
which the Executive would otherwise be entitled to receive payments and benefits
under both this Agreement and the Severance Agreement, the Executive shall have
the right to elect to receive payments and benefits under either this Agreement
or the Severance Agreement, but not both (except that the Executive may in all
events receive all payments and benefits to which he or she is entitled under
the Severance Agreement during the period between the Termination Date and the
Election Date (as such terms are defined below)). Within five business days
following the date of the termination of the Executive's employment with the
Company under the circumstances described in the preceding sentence (the
"Termination Date"), which shall be the effective date of such termination if
the termination is pursuant to Section 3(a) or such other date that may be
specified by the Executive if the termination is pursuant to Section 3(b), the
Company shall provide the Executive, in writing, a reasonably detailed
determination of the payments and other benefits under each of this Agreement
and the Severance Agreement. Executive shall make the election provided for in
this Section 3(c) by providing the Company written notice thereof within 30 days
after the Executive's receipt of the written determination referred to in the
preceding sentence; provided, however, that if such election is not so made
within such 30-day period, the Executive shall be irrevocably deemed to have
elected to receive payments and benefits under this Agreement (the date on which
such election is so made or deemed to have been made being the "Election Date").
4. Severance Compensation: (a) If, following the occurrence of a Change
----------------------
in Control, the Company terminates the Executive's employment during the
Severance Period pursuant to Section 3(a) (other than as a result of the
Executive's death), or if the Executive terminates his employment during the
Severance Period pursuant to Section 3(b), the Company will:
(i) pay to the Executive, within five business days after the
Termination Date (or, in the event that the circumstance described in
Section 3(c) hereof is applicable, within five business days after the
Election Date), a lump sum payment (the "Severance Payment") in an amount
equal to _____ times the sum of (A) Base Pay (at the highest rate in effect
for any period prior to the Termination Date), plus (B) Incentive Pay
(determined in accordance with the standard set forth in Section 1(d));
provided however, that Severance Payment shall be reduced by the aggregate
amount of all cash payments, if any, previously received by the Executive
pursuant to his or her Severance Agreement prior to the Election Date.
(ii) (A) for _____ months following the Termination Date (the
"Continuation Period"), arrange at its sole expense, to provide the
Executive with Employee Benefits that are benefits under welfare plans (as
that term is used in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) substantially similar to those which the Executive
was receiving or entitled to receive immediately prior to the Termination
Date, and (B) such Continuation Period will be considered service with the
Company for the purpose of determining service
-6-
<PAGE>
credits and benefits due and payable to the Executive under the Company's
retirement income, supplemental executive retirement and other benefit
plans of the Company applicable to the Executive, his dependents or his
beneficiaries immediately prior to the Termination Date. If and to the
extent that any benefit described in subsection (A) or (B) of this Section
4(a)(ii) is not or cannot be paid or provided under ERISA or any other
applicable law or regulation or under any policy, plan, program or
arrangement of the Company, then the Company will itself pay or provide for
the payment to the Executive, his dependents and beneficiaries, of such
Employee Benefits. Without otherwise limiting the purposes or effect of
Section 5, Employee Benefits otherwise receivable by the Executive pursuant
to subsection (A) of this Section 4(a)(ii) will be reduced to the extent
comparable welfare benefits are actually received by the Executive from
another employer during the Continuation Period following the Executive's
Termination Date, and any such benefits actually received by the Executive
shall be reported by the Executive to the Company. Notwithstanding the
preceding sentence, in the event that the Executive is required to pay any
amounts in connection with the receipt of such welfare benefits, the
Company will be obligated to promptly reimburse the Executive for the
amounts paid by the Executive to receive such benefits.
(b) Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment or provide any benefit required to be
made or provided hereunder on a timely basis, the Company will pay interest on
the amount or value thereof at an annualized rate of interest equal to the so-
called composite "prime rate" as quoted from time to time during the relevant
period in the Southwest Edition of The Wall Street Journal. Such interest will
-----------------------
be payable as it accrues on demand. Any change in such prime rate will be
effective on and as of the date of such change.
(c) Notwithstanding any other provision of this Agreement to the
contrary, the parties' respective rights and obligations under this Section 4
and under Sections 5 and 7 will survive any termination or expiration of this
Agreement or the termination of the Executive's employment following a Change in
Control for any reason whatsoever.
5. Certain Additional Payments by the Company: (a) Anything in this
------------------------------------------
Agreement to the contrary notwithstanding, in the event that this Agreement
shall become operative and it shall be determined (as hereafter provided) that
all or any portion of any payment or distribution by the Company or any of its
affiliates to or for the benefit of the Executive pursuant to the terms of this
Agreement or otherwise, including under any stock option or other agreement,
plan, policy, program or arrangement (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor provision thereto), by reason of being
considered "contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto), or to any similar tax imposed by state or local law, or any interest
or penalties with respect to such tax (such tax or taxes, together with any
such interest and penalties, being hereafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment or payments (collectively, a "Gross-Up Payment"); provided, however,
that no Gross-Up
-7-
<PAGE>
Payment shall be made with respect to the Excise Tax, if any, attributable to
(i) any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement, or (ii) any stock appreciation
or similar right, whether or not limited, granted in tandem with an ISO
described in clause (i). The Gross-Up Payment shall be in an amount such that,
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 5(f), all determinations
required to be made under this Section 5, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a Gross-
Up Payment is required to be paid by the Company to the Executive and the amount
of such Gross-Up Payment, if any, shall be made by a nationally recognized
accounting firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and the
Executive within 30 calendar days after the Termination Date, if applicable, and
any such other time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by
the Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Company and the Executive
a written opinion to the effect that the Executive has substantial authority not
to report any Excise Tax on his federal, state or local income or other tax
return. As a result of the uncertainty in the application of Section 4999 of
the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts or fails to pursue its remedies pursuant
to Section 5(f) and the Executive thereafter is required to make a payment of
any Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Section 5(b). Any determination by the Accounting Firm as to
the amount of the Gross-Up Payment shall be binding upon the Company and the
Executive.
-8-
<PAGE>
(d) The federal, state and local income or other tax returns filed by
the Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Payment, and at the request of the Company, provide to the Company true
and correct copies (with any amendments) of his federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section 5(b)
shall be borne by the Company. If such fees and expenses are initially paid by
the Executive, the Company shall reimburse the Executive the full amount of such
fees and expenses within five business days after receipt from the Executive of
a statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company 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 promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Executive). The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period following the date
on which he gives such notice to the Company and (ii) the date that any payment
of amount with respect to such claim is due. If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive, subject to the provisions of Section 5(h) of
this Agreement, shall:
(i) provide the Company with any written records or documents in his
possession relating to such claim reasonably requested by the Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect to
such claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively
to contest such claim; and
(iv) permit the Company to participate in any proceedings relating
to such claim;
-9-
<PAGE>
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against 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. Without limiting the foregoing provisions of
this Section 5(f), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 5(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested
claim shall be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and the Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 5(f), the Executive receives any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 5(f)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(f), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of any such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid by the Company to
the Executive pursuant to this Section 5.
(h) Any information provided by Executive to the Company under this
Section 5 shall be treated confidentially by the Company and will not be
provided by the Company to any other person than the Company's professional
advisors without Executive's prior written consent except as required by law.
-10-
<PAGE>
6. No Mitigation Obligation: The Company hereby acknowledges that it
------------------------
will be difficult and may be impossible for the Executive to find reasonably
comparable employment within a reasonable time period following the Termination
Date. In addition, the Company acknowledges that its severance pay plans and
policies applicable in general to its salaried employees typically do not
provide for mitigation, offset or reduction of any severance payments received
thereunder. Accordingly, the payment of the severance compensation by the
Company to the Executive in accordance with the terms of this Agreement is
hereby acknowledged by the Company to be reasonable, and the Executive will not
be required to mitigate the amount of any payment provided for in this Agreement
by seeking other employment or otherwise, nor will any profits, income, earnings
or other benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive hereunder or
otherwise, except as expressly provided in the last two sentences of Section
4(a)(ii).
7. Legal Fees and Expenses. It is the intent of the Company that the
-----------------------
Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to whether
the Executive prevails, in whole or in part, in connection with any of the
foregoing, the Company will pay and be solely financially responsible for any
and all attorneys' and related fees and expenses incurred by the Executive in
connection with any of the foregoing.
8. Employment Rights: Nothing expressed or implied in this Agreement
-----------------
will create any right or duty on the part of the Company or the Executive to
have the Executive remain in the employment of the Company or any Subsidiary
prior to or following any Change in Control. Any event or occurrence described
in Section 3(b)(i), (ii), (v) or (vi) hereof following the commencement of a
discussion with a third person that ultimately results in a Change in Control
shall be deemed to have occurred after a Change in Control for the purposes of
this Agreement.
-11-
<PAGE>
9. Withholding of Taxes: The Company may withhold from any amounts
--------------------
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any law or government regulation or
ruling.
10. Successors and Binding Agreement: (a) The Company will require any
--------------------------------
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Company would be required to perform if no
such succession had taken place. This Agreement will be binding upon and inure
to the benefit of the Company and any successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by purchase,
merger, consolidation, reorganization or otherwise (and such successor shall
thereafter be deemed the "Company" for the purposes of this Agreement), but will
not otherwise be assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Sections 10(a) and 10(b). Without limiting the generality or effect
of the foregoing, the Executive's right to receive payments hereunder will not
be assignable, transferable or delegable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Executive's will or
by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 10(c), the Company shall have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.
11. Notices: For all purposes of this Agreement (except as otherwise
-------
expressly provided in this Agreement with respect to notice periods), all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof orally confirmed), or
ten business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or five business days
after having been sent by a nationally recognized overnight courier service such
as Federal Express, UPS, or Purolator, addressed to the Company at 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206 (to the attention of the
President of the Company) and to the Executive at the Company's address, with a
copy to the Executive at his or her principal residence, or to such other
address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
-12-
<PAGE>
12. Governing Law: The validity, interpretation, construction and
-------------
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State.
13. Validity: If any provision of this Agreement or the application of
--------
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
14. Miscellaneous: No provision of this Agreement may be modified, waived
-------------
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
15. Counterparts: 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
STERLING COMMERCE, INC.
By________________________________
Sterling L. Williams
Chairman of the Board &
Chief Executive Officer
__________________________________
[Executive]
-13-
<PAGE>
EXHIBIT 10(k)
FORM: SCI NON-DUAL EMPLOYEE
---------------------
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into as of the
12th day of February, 1996 by and between Sterling Commerce, Inc., a Delaware
corporation ("Sterling Commerce"), and ____________________, an individual
("Executive").
RECITALS:
WHEREAS, Sterling Commerce acquires, develops, markets and supports a broad
range of products and services; and
WHEREAS, Sterling Commerce desires to retain Executive as its
____________________; and
WHEREAS, Executive is willing to accept such responsibilities;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
AGREEMENTS:
1. Employment. Executive agrees to render such managerial services as
----------
are customarily required of the ____________________, and Sterling
Commerce agrees to utilize such services on the terms and conditions
contained herein.
2. Term. This Agreement shall commence on the date on which the purchase
----
and sale of shares of common stock of Sterling Commerce pursuant to
its initial public offering of common stock first occurs and shall
continue in effect for _____ (__) months after the "Notice Date" as
defined in paragraph 3 hereof.
3. Termination of Employment. The parties acknowledge that Executive is
-------------------------
employed "at will" and may be terminated by Sterling Commerce at any
time with or without cause. The Executive shall be entitled to
termination pay calculated in accordance with Section 4 hereof upon
termination of Executive's employment by Sterling Commerce, with or
without cause.
The date on which a notice of termination is given to Executive by
Sterling Commerce shall be deemed the "Notice Date" with the
termination to be
<PAGE>
effective _____ (__) months following the Notice Date. On the Notice
Date, Executive shall be deemed to have been assigned "no duties,"
shall vacate his or her office and shall resign as an officer of
Sterling Commerce and its subsidiaries. Since Executive will be
assigned "no duties" with Sterling Commerce, Executive shall be free
to pursue other employment or consulting opportunities during the
_____ month period in which Executive receives termination pay.
4. Termination Pay. For purposes of this Agreement, if Executive's
---------------
employment is terminated (or deemed to be terminated) pursuant to
Section 3, upon receipt from Executive (or Executive's estate or
personal representative) of a fully executed release in form
reasonably acceptable to counsel for Sterling Commerce, Sterling
Commerce shall cause Sterling Software (Northern America), Inc., which
is to become a wholly-owned subsidiary of Sterling Commerce and
thereafter be renamed Sterling Commerce (Northern America), Inc., to
pay to Executive as termination pay:
(a) an amount equal to _____ hundred percent of Executive's aggregate
monthly salary for the twelve (12) months immediately preceding
the Notice Date (or, if Executive shall not have been employed
for such twelve month period, an amount equal to _____ hundred
percent of Executive's annual salary rate in effect immediately
prior to the Notice Date); and
(b) an amount equivalent to the product of _____ times:
(i) if Executive shall have completed at least twelve months
employment with Sterling Commerce prior to the Notice Date,
the amount of Executive's aggregate bonuses during the
twelve months immediately prior to the Notice Date (the
"Last Bonus"), after deducting from such product one hundred
percent (100%) of the accrued but unpaid bonus amount
Executive is entitled to receive on the Notice Date,
pursuant to any bonus or incentive compensation plan of
Sterling Commerce, for periods of service after the period
for which Executive received or was entitled to receive the
Last Bonus or
(ii) if Executive shall not have completed at least twelve months
employment with Sterling Commerce prior to the Notice Date,
an amount equal to the greater of
(x) the amount of the Last Bonus, if any, or
-2-
<PAGE>
(y) 100% of the aggregate of the budgeted annual bonus,
incentive or other budgeted payments of cash
compensation, in addition to Base Pay, at plan for such
Executive in effect immediately prior to the Notice
Date,
after deducting from such product under this clause (ii) one
hundred percent (100%) of the accrued but unpaid bonus
amount Executive is entitled to receive on the Notice Date,
pursuant to any bonus or incentive plan of Sterling
Commerce, for periods of service after the period for which
Executive received or was entitled to receive the Last
Bonus, if any.
In the event of Executive's death or disability following the Notice
Date, Executive, Executive's estate or Executive's personal
representative, as the case may be, shall continue to receive the
termination payments provided for in this Section 4.
5. Disbursement of Termination Pay. The aggregate amount of all
-------------------------------
termination payments that are payable to Executive as provided in
Section 4 hereof shall be determined in good faith by Sterling
Commerce within 15 days following the Notice Date, and such
termination payments shall be distributed by Sterling Commerce to
Executive in _____ (__) equal bi-monthly installments beginning thirty
(30) days following the Notice Date and continuing bi-monthly
thereafter.
6. Continuation of Medical and Health Benefits. For a period of _____
-------------------------------------------
(__) months following the Notice Date, Sterling Commerce shall arrange
to provide Executive, at no additional charge to Executive, with life,
medical, dental, health, accident and disability insurance benefits
substantially similar to those that Executive is receiving or is
entitled to receive immediately prior to the Notice Date, which
benefits shall in no event be less than those benefits in effect
immediately prior to the Notice Date.
7. Continued Participation in Employee Plans. For a period of _____ (__)
-----------------------------------------
months following the Notice Date, the Executive shall continue to
participate in Sterling Commerce's Employee Stock Ownership Plan
and/or 401(k) Plan and any other such plans as may be adopted in the
future for the benefit and retention of Sterling Commerce's executive
officers. In no event will Sterling Commerce be required to make any
new grants of options to such Executive under Sterling Commerce's
Stock Option Plan after the Notice Date.
8. Change-in-Control. Sterling Commerce and the Executive are parties to
-----------------
a Change-in-Control Severance Agreement, dated the date hereof (as
such
-3-
<PAGE>
agreement may be amended from time to time, the "Change-in-Control
Agreement"). Notwithstanding anything contained in this Agreement to
the contrary, in the event the Notice Date occurs under circumstances
in which the Executive would otherwise be entitled to receive payments
and benefits under both this Agreement and the Change-in-Control
Agreement, the Executive shall have the right to elect to receive
payments and benefits under either this Agreement or the Change-in-
Control Agreement, but not both. Within five business days following
the Notice Date under circumstances in which this Section 8 would
apply, Sterling Commerce shall provide the Executive, in writing, a
reasonably detailed determination of the payments and other benefits
under each of this Agreement and the Change-in-Control Agreement. The
Executive shall make the election provided for in this Section 8
within thirty calendar days after Executive's receipt of the written
determination referred to in the preceding sentence; provided,
however, that if such election is not so made within such 30-day
period, the Executive shall be irrevocably deemed to have elected to
receive payments and benefits under the Change-in-Control Agreement.
Prior to the date on which Executive makes or is deemed to have made
the election referred to above, he shall receive all benefits under
Sections 4, 5, 6 and 7 of this Agreement as if the Executive had made
the election to receive benefits and payments under this Agreement.
9. Miscellaneous.
-------------
(i) Notices, demands, payments, reports and correspondence shall be
addressed to the parties hereto at the address for such party
set forth below or such other places as may from time to time
be designated in writing to the other party. Notices hereunder
shall be deemed to be given on the date such notices are
actually received.
-4-
<PAGE>
If to Sterling Commerce, to: 8080 N. Central Expressway
Suite 1100
Dallas, Texas 75206
Attention: President
If to Executive, to:
(ii) This Agreement shall be binding upon Sterling Commerce and
Executive and their respective successors, assigns, heirs and
personal representatives.
(iii) The substantive laws of the State of Texas shall govern the
validity, construction, enforcement and interpretation of the
provisions of this Agreement.
Executed by the parties hereto on the date first set forth above.
EXECUTIVE
___________________________________
Name: _____________________________
STERLING COMMERCE, INC.
By: _________________________________
Sterling L. Williams
Chairman of the Board and Chief
Executive Officer
-5-
<PAGE>
FORM: SCI DUAL EMPLOYEE
-----------------
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into as of the
12th day of February, 1996 by and between Sterling Commerce, Inc., a Delaware
corporation ("Sterling Commerce"), and ____________________, an individual
("Executive").
RECITALS:
WHEREAS, Sterling Commerce acquires, develops, markets and supports a broad
range of products and services; and
WHEREAS, Sterling Commerce desires to retain Executive as its
____________________; and
WHEREAS, Executive is willing to accept such responsibilities;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
AGREEMENTS:
1. Employment. Executive agrees to render such managerial services as
----------
are customarily required of the ____________________, and Sterling
Commerce agrees to utilize such services on the terms and conditions
contained herein. Sterling Commerce acknowledges that Executive is
also employed as a senior executive at Sterling Software, Inc.
("Sterling Software"). Sterling Commerce agrees that such employment
is not inconsistent with this Agreement, the level of Executive's
compensation at Sterling Commerce having been determined by Sterling
Commerce with knowledge of Executive's employment by Sterling Software
and the demands on Executive's time and attention required by such
employment.
2. Term. This Agreement shall commence on the date on which the purchase
----
and sale of shares of common stock of Sterling Commerce pursuant to
its initial public offering of common stock first occurs and shall
continue in effect for _____ (__) months after the "Notice Date" as
defined in paragraph 3 hereof.
3. Termination of Employment. The parties acknowledge that Executive is
-------------------------
employed "at will" and may be terminated by Sterling Commerce at any
<PAGE>
time with or without cause. The Executive shall be entitled to
termination pay calculated in accordance with Section 4 hereof upon
termination of Executive's employment by Sterling Commerce, with or
without cause.
The date on which a notice of termination is given to Executive by
Sterling Commerce shall be deemed the "Notice Date" with the
termination to be effective _____ (__) months following the Notice
Date. On the Notice Date, Executive shall be deemed to have been
assigned "no duties," shall vacate his or her office and shall resign
as an officer of Sterling Commerce and its subsidiaries. Since
Executive will be assigned "no duties" with Sterling Commerce,
Executive shall be free to pursue other employment or consulting
opportunities during the _____ month period in which Executive
receives termination pay.
4. Termination Pay. For purposes of this Agreement, if Executive's
---------------
employment is terminated (or deemed to be terminated) pursuant to
Section 3, upon receipt from Executive (or Executive's estate or
personal representative) of a fully executed release in form
reasonably acceptable to counsel for Sterling Commerce, Sterling
Commerce shall cause Sterling Software (Northern America), Inc., which
is to become a wholly-owned subsidiary of Sterling Commerce and
thereafter be renamed Sterling Commerce (Northern America), Inc., to
pay to Executive as termination pay:
(a) an amount equal to _____ hundred percent of Executive's aggregate
monthly salary for the twelve (12) months immediately preceding
the Notice Date (or, if Executive shall not have been employed
for such twelve month period, an amount equal to ________
hundred percent of Executive's annual salary rate in effect
immediately prior to the Notice Date); and
(b) an amount equivalent to the product of _____ times:
(i) if Executive shall have completed at least twelve months
employment with Sterling Commerce prior to the Notice
Date, the amount of Executive's aggregate bonuses during
the twelve months immediately prior to the Notice Date
(the "Last Bonus"), after deducting from such product one
hundred percent (100%) of the accrued but unpaid bonus
amount Executive is entitled to receive on the Notice
Date, pursuant to any bonus or incentive compensation plan
of Sterling Commerce, for periods of service after the
period for which Executive received or was entitled to
receive the Last Bonus or
-2-
<PAGE>
(ii) if Executive shall not have completed at least twelve
months employment with Sterling Commerce prior to the
Notice Date, an amount equal to the greater of
(x) the amount of the Last Bonus, if any, or
(y) 100% of the aggregate of the budgeted annual bonus,
incentive or other budgeted payments of cash
compensation, in addition to Base Pay, at plan for
such Executive in effect immediately prior to the
Notice Date,
after deducting from such product under this clause (ii)
one hundred percent (100%) of the accrued but unpaid bonus
amount Executive is entitled to receive on the Notice
Date, pursuant to any bonus or incentive plan of Sterling
Commerce, for periods of service after the period for
which Executive received or was entitled to receive the
Last Bonus, if any.
In the event of Executive's death or disability following the Notice
Date, Executive, Executive's estate or Executive's personal
representative, as the case may be, shall continue to receive the
termination payments provided for in this Section 4.
5. Disbursement of Termination Pay. The aggregate amount of all
-------------------------------
termination payments that are payable to Executive as provided in
Section 4 hereof shall be determined in good faith by Sterling
Commerce within 15 days following the Notice Date, and such
termination payments shall be distributed by Sterling Commerce to
Executive in _____ (__) equal bi-monthly installments beginning thirty
(30) days following the Notice Date and continuing bi-monthly
thereafter.
6. Continuation of Medical and Health Benefits. For a period of _____
-------------------------------------------
(__) months following the Notice Date, Sterling Commerce shall arrange
to provide Executive, at no additional charge to Executive, with life,
medical, dental, health, accident and disability insurance benefits
substantially similar to those that Executive is receiving or is
entitled to receive immediately prior to the Notice Date, which
benefits shall in no event be less than those benefits in effect
immediately prior to the Notice Date.
7. Continued Participation in Employee Plans. For a period of _____ (__)
-----------------------------------------
months following the Notice Date, the Executive shall continue to
participate in Sterling Commerce's Employee Stock Ownership Plan
and/or 401(k) Plan and any other such plans as may be adopted in the
future for the benefit and retention of Sterling Commerce's executive
officers. In no
-3-
<PAGE>
event will Sterling Commerce be required to make any new grants of
options to such Executive under Sterling Commerce's Stock Option Plan
after the Notice Date.
8. Change-in-Control. Sterling Commerce and the Executive are parties to
-----------------
a Change-in-Control Severance Agreement, dated the date hereof (as
such agreement may be amended from time to time, the "Change-in-
Control Agreement"). Notwithstanding anything contained in this
Agreement to the contrary, in the event the Notice Date occurs under
circumstances in which the Executive would otherwise be entitled to
receive payments and benefits under both this Agreement and the
Change-in-Control Agreement, the Executive shall have the right to
elect to receive payments and benefits under either this Agreement or
the Change-in-Control Agreement, but not both. Within five business
days following the Notice Date under circumstances in which this
Section 8 would apply, Sterling Commerce shall provide the Executive,
in writing, a reasonably detailed determination of the payments and
other benefits under each of this Agreement and the Change-in-Control
Agreement. The Executive shall make the election provided for in this
Section 8 within thirty calendar days after Executive's receipt of the
written determination referred to in the preceding sentence; provided,
however, that if such election is not so made within such 30-day
period, the Executive shall be irrevocably deemed to have elected to
receive payments and benefits under the Change-in-Control Agreement.
Prior to the date on which Executive makes or is deemed to have made
the election referred to above, he shall receive all benefits under
Sections 4, 5, 6 and 7 of this Agreement as if the Executive had made
the election to receive benefits and payments under this Agreement.
9. Termination of Employment Under Certain Circumstances. In the event
-----------------------------------------------------
the Notice Date occurs and Sterling Software offers to Executive, and
Executive accepts, an increase in compensation and benefits as a
senior executive of Sterling Software such that Executive's
compensation and benefits at Sterling Software following the Notice
Date are reasonably equivalent to the combined compensation and
benefits Executive was entitled to at both Sterling Commerce and
Sterling Software prior to the Notice Date, Executive shall not be
entitled to the benefits provided for in Sections 4, 5, 6 and 7 of
this Agreement, notwithstanding anything in this Agreement to the
contrary.
10. Full-time Employment. Sterling Commerce agrees that, if Executive's
--------------------
employment at Sterling Software is terminated, with or without cause
(including but not limited to a termination by the Executive pursuant
to Section 3(b) of that certain Change-in-Control Severance Agreement
between Sterling Software and Executive, dated the date hereof) or
Executive has received from Sterling Software the notice of
termination contemplated in Section 3 of that certain Severance
Agreement between
-4-
<PAGE>
Executive and Sterling Software, dated the date hereof, and in either
event Executive is willing and able to devote his or her full-time
efforts to Sterling Commerce, Sterling Commerce shall promptly offer
to increase Executive's compensation and benefits under this Agreement
to a level reasonably equivalent to the combined compensation and
benefits Executive was entitled to at both Sterling Commerce and
Sterling Software immediately prior to such termination or notice of
termination, as the case may be.
11. Miscellaneous.
-------------
(i) Notices, demands, payments, reports and correspondence shall be
addressed to the parties hereto at the address for such party
set forth below or such other places as may from time to time
be designated in writing to the other party. Notices hereunder
shall be deemed to be given on the date such notices are
actually received.
If to Sterling Commerce, to: 8080 N. Central Expressway
Suite 1100
Dallas, Texas 75206
Attention: President
If to Executive, to:
(ii) This Agreement shall be binding upon Sterling Commerce and
Executive and their respective successors, assigns, heirs and
personal representatives.
(iii) The substantive laws of the State of Texas shall govern the
validity, construction, enforcement and interpretation of the
provisions of this Agreement.
-5-
<PAGE>
Executed by the parties hereto on the date first set forth above.
EXECUTIVE
____________________________________
Name: ______________________________
STERLING COMMERCE, INC.
By: ________________________________
Sterling L. Williams
Chairman of the Board and Chief
Executive Officer
-6-
<PAGE>
EXHIBIT 10(l)
MASTER SOFTWARE LICENSE AGREEMENT
---------------------------------
This Master Software License Agreement (this "Agreement") is made and
entered into as of March 4, 1996, by and between Sterling Commerce, Inc., a
Delaware corporation ("SCI"), and the subsidiaries thereof listed on the
signature pages hereto under the caption the "SCI Companies" (collectively the
"SCI Companies") and Sterling Software, Inc., a Delaware corporation ("SSW"),
and the subsidiaries thereof listed on the signature pages hereto under the
caption the "SSW Companies" (collectively the "SSW Companies").
RECITALS
--------
A. Each of the SCI Companies (1) owns or is a licensee of certain
computer software in respect of which it desires to confirm the terms upon which
it has heretofore licensed the same to one or more of the SSW Companies and/or
(2) desires to confirm the terms upon which one or more of the SSW Companies has
heretofore licensed to it certain computer software owned by or licensed to the
SSW Companies.
B. Each of the SSW Companies (1) owns or is a licensee of certain
computer software in respect of which it desires to confirm the terms upon which
it has heretofore licensed the same to one or more of the SCI Companies and/or
(2) desires to confirm the terms upon which one or more of the SCI Companies has
heretofore licensed to it certain computer software owned by or licensed to the
SCI Companies.
NOW THEREFORE, the parties hereto agree as follows.
1. Definitions. As used in this Agreement, the following terms shall
-----------
have the following meanings:
(a) The term "SCI Software" shall mean all of the computer software
owned by or licensed to the SCI Companies on the date thereof which immediately
prior to the date hereof was being made available by any SCI Company to any SSW
Company for its use, including without limitation the software listed or
described on Schedule 1.1(a). Each item of SCI Software is owned by or licensed
to the SCI Company under the name of which such item of SCI Software is listed
or described on Schedule 1.1(a), which SCI Company is the licensor of such item
of SCI Software hereunder. Unless otherwise indicated all references to an item
of SCI Software also shall refer to and include the applicable user
documentation for that item of SCI Software.
(b) The term "SSW Software" shall mean all of the computer software
owned by or licensed to the SSW Companies on the date hereof which immediately
prior to the date hereof was being made available by any SSW Company to any SCI
Company for its use, including without limitation the software listed or
<PAGE>
described on Schedule 1.1(b). Each item of SSW Software is owned by or
licensed to the SSW Company under the name of which such item of SSW Software
is listed or described on Schedule 1.1(b), which SSW Company is the licensor of
such item of SSW Software hereunder. Unless otherwise indicated all references
to an item of SSW Software also shall refer to and include the applicable user
documentation for that item of SSW Software.
2. Licenses to Use SCI Software.
----------------------------
(a) Each SCI Company hereby confirms that it has previously granted
to each SSW Company identified on Schedule 1.1(a) as a licensee of one or more
items of SCI Software a nonexclusive, perpetual and royalty-free license to use
each such item of SCI Software. Each license confirmed under this Section 2 (a)
with respect to an item of SCI software includes (i) the right of the licensee
thereunder to use such number of copies of such item of SCI Software, and/or to
permit such number of employees of such licensee to use such item of SCI
Software concurrently with one another, as is specified in respect of such item
of SCI Software on Section 1.1(a) and (ii) with respect to any item of SCI
Software residing on a mainframe computer, the right of the licensee thereunder
to move or transfer such item to a different level CPU without any upgrade or
transfer fees or charges, provided that the licensee shall promptly notify the
licensor of any such move or transfer. Nothwithstanding the foregoing, to the
extent that any SCI Company was required to pay, and prior to the effectiveness
of this Agreement had not yet paid, any incremental royalty to any third party
as the result of having granted a license to any SSW Company under this Section
2(a), such SSW Company shall promptly reimburse such SCI Company for such
incremental royalty.
(b) Each license confirmed under Section 2(a) with respect to an item
of SCI Software shall in all respects be subject to and governed by the
provisions of the standard form of agreement identified as being applicable
thereto on Schedule 1.1(a) (or, if no such standard form of agreement is so
identified, the standard form of agreement used by the applicable SCI Company to
license such item of SCI Software to new third-party customers as of the date
hereof), which provisions are incorporated herein by reference, and each of the
SCI Company that is a party to such license as licensor and the SSW Company that
is a party to such license as licensee shall be deemed to have made in favor of
the other all of the representations, warranties and covenants of the licensor
and licensee, respectively, contained in such standard form of agreement as
though such representations, warranties and covenants were expressly set forth
herein. In the event of any conflict between the provisions of this
Agreement expressly set forth herein and the provisions of any standard form of
agreement incorporated herein by reference, the provisions of this Agreement
expressly set forth herein (including without limitation the provisions
2
<PAGE>
hereof as to the royalty-free nature and perpetual duration of the licenses
granted hereunder) shall control.
3. Licenses to Use SSW Software.
----------------------------
(a) Each SSW Company hereby confirms that it has previously granted
to each SCI Company identified on Schedule 1.1(b) as a licensee of one or more
items of SCI Software a nonexclusive, perpetual and royalty-free license to use
each such item of SSW Software. Each license confirmed under this Section 3(a)
with respect to an item of SSW Software includes (i) the right of the licensee
thereunder to use such number of copies of such item of SSW Software, and/or to
permit such number of employees of such licensee to use such item of SSW
Software concurrently with one another, as is specified in respect of such item
of SSW Software on Schedule 1.1(b) and (ii) with respect to any item of SSW
Software residing on a mainframe computer, the right of the licensee thereunder
to move or transfer such item to a different level CPU without any upgrade or
transfer fees or charges, provided that the licensee shall promptly notify the
licensor of any such move or transfer. Nothwithstanding the foregoing, to the
extent that any SSW Company was required to pay, and prior to the effectiveness
of this Agreement had not yet paid, any incremental royalty to any third party
as the result of having granted a license to any SCI Company under this Section
3(a), such SCI Company shall promptly reimburse such SSW Company for such
incremental royalty.
(b) Each license confirmed under Section 3(a) with respect to an item
of SSW Software shall in all respects be subject to and governed by the
provisions of the standard form of agreement identified as being applicable
thereto on Schedule 1.1(b) (or, if no such standard form of agreement is so
identified, the standard form of agreement used by the applicable SSW Company to
license such item of SSW Software to new third-party customers as of the date
hereof), which provisions are incorporated herein by reference, and the SSW
Company that is a party to such license as licensor and the SCI Company that is
a party to such license as licensee shall be deemed to have made in favor of the
other all of the representations, warranties and covenants of the licensor and
licensee, respectively, contained in such standard form of agreement as though
such representations, warranties and covenants were expressly set forth herein.
In the event of any conflict between the provisions of this Agreement expressly
set forth herein and the provisions of any standard form of agreement
incorporated herein by reference, the provisions of this Agreement expressly set
forth herein (including without limitation the provisions hereof as to the
royalty-free nature and perpetual duration of the licenses granted hereunder)
shall control.
(c) Nothwithstanding anything to the contrary herein contained in the
applicable standard form of agreement referred to in Section 3(b), each license
confirmed under Section 3(a)
3
<PAGE>
with respect to an item of SSW Software under which Sterling Commerce (America),
Inc. (formerly known as Sterling Software (America), Inc.) is the licensee
shall permit the use of such item of SSW Software by such licensee in its data
processing item of SSW Software by such licensee in its data processing
center(s) in connection with the processing of information for the account of
such licensee, its affiliates or its customers.
4. Maintenance and Support Services. The maintenance and support services
--------------------------------
in respect of any item of SCI Software or SSW Software provided for in the
standard form of agreement identified as being applicable thereto on Schedule
1.1(a) or 1.1(b) (or, if no such standard form of agreement is so identified,
the standard form of agreement used by the applicable SCI Company or SSW Company
to license such item of SCI Software or SSW Software to new third-party
customers as of the date hereof) shall, to the extent requested by the
applicable licensee, be provided by the applicable licensor to the applicable
licensee on the terms specified in such standard form of agreement; provided,
however, that (a) no licensee shall be required or obligated to acquire and
accept maintenance and (b) the fee charged therefor by the applicable licensor
(i) shall not exceed the lowest fee then being charged by such licensor for the
provision of comparable maintenance and support of such item of SCI Software or
SSW Software to any unrelated third party who is a licensee of a comparable
number of copies thereof and/or is authorized to permit the concurrent use
thereof by comparable number of persons or (ii) in any particular case may be as
otherwise mutually agreed by the applicable licensee and licensor.
5. Usage by Wholly Owned Subsidiaries; Further Assurances.
-------------------------------------------------------
(a) Each licensee of any SCI Software of SSW Software may, for so
long as it remains a wholly owned subsidiary of SCI or SSW, as the case may be,
assign the license for one or more copies of such software to another wholly
owned subsidiary of SCI or SSW, as the case may be. SCI or SSW, as the case may
be, shall cause each such assignee to comply with the provisions of this
Agreement (including the provisions of the applicable standard form of agreement
incorporated herein by reference) in respect of each such item of software.
(b) Each of the parties shall, from time to time, upon the request of
the other party hereto, take all actions and do all things (including without
limitation executing, acknowledging and delivering any additional agreements
instruments and documents) as may be reasonably necessary to consummate
transactions contemplated hereby or to effectuate the intentions and purposes
hereof (including with limitation the transactions contemplated by, and the
intentions and purposes of, Section 5(a) hereof).
4
<PAGE>
6. Miscellaneous.
-------------
(a) Term. This Agreement shall become effective on the date on which
----
the purchase and sale of shares of common stock of SCI pursuant to its initial
public offering of common stock first occurs and shall continue in effect
thereafter in perpetuity.
(b) Successors and Assigns. This Agreement shall be binding upon the
----------------------
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by either party hereto to
any other person except that either pary may assign this Agreement to any of its
affiliates.
(c) No Third-Party Beneficiaries. Nothwithstanding expressed or
----------------------------
implied in this Agreement shall be construed to give any person or entity other
than the parties hereto any legal or equitable rights hereunder.
(d) Entire Agreement. This Agreement constitutes the entire
----------------
agreement among the parties with respect to the subject matter hereof.
(e) Amendment. This Agreement may not be amended except by an
---------
instrument signed by the parties hereto.
(f) Waivers. Either party hereto may (i) extend the time for the
-------
performance of any of the obligations or other act of the other party, (ii)
waive any inaccuracies in the representations and warranties contained herein,
or (iii) waive compliance with any of the agreements contained herein. No waiver
of any term shall be construed as a waiver of the same term, or a waiver of any
other term, of this Agreement. The failure of any party to assert any of its
rights hereunder will not constitute a waiver of any such rights.
(g) Severability. If any provision of this Agreement is invalid,
------------
illegal or incapable of being enforced by any rule of law or public policy, such
provision shall be deemed severable and all other provisions of this Agreement
shall nevertheless remain in full force and effect.
(h) Headings. Section headings in this Agreement are included herein
--------
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
(i) Notices. All notices given in connection with this Agreement
-------
shall be in writing. Service of such notices shall be deemed complete (i) if
hand delivered, on the date of delivery, (ii) if by mail, on the fourth business
day following the day of deposit in the United States mail, by certified or
registered mail, first-class postage prepaid, or (iii) if sent by
5
<PAGE>
FedEx or equivalent courier service, on the next business day. Such notices
shall be addressed to the parties at the following addresses or at such other
address for a party as shall be specified by like notice (except that notices of
change of address shall be effective upon receipt):
If to any SCI Company: c/o Sterling Commerce, Inc.
8080 N. Central, Suite 1100
Dallas, Texas 75206
Attention: President
If to any SSW Company: c/o Sterling Software, Inc.
8080 N. Central, Suite 1100
Dallas,Texas 75206
Attention: President
(j) Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the law of the State of Delaware, without giving
effect to the principles of conflict or laws of such State.
(k) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be an original, but all of which together shall constitute
but one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first above written.
THE SCI COMPANIES THE SSW COMPANIES
- ----------------- -----------------
STERLING COMMERCE, INC. STERLING SOFTWARE, INC.
By: /s/ Albert K. Hoover By: /s/ Jeannette P. Meier
-------------------------- ----------------------------
Albert K. Hoover, Jeannette P. Meier,
Vice President Executive Vice President
STERLING COMMERCE (NORTHERN STERLING SOFTWARE (U.S. OF
AMERICA), INC. AMERICA), INC.
By: /s/ Albert K. Hoover By: /s/ Jeannette P. Meier
-------------------------- ----------------------------
Albert K. Hoover, Jeannette P. Meier,
Vice President Vice President
STERLING COMMERCE (AMERICA), STERLING SOFTWARE (U.S.A.),
INC. INC.
By: /s/ Albert K. Hoover By: /s/ Jeannette P. Meier
-------------------------- ----------------------------
Albert K. Hoover, Jeannette P. Meier,
Vice President Vice President
STERLING SOFTWARE (MID STERLING SOFTWARE (SOUTHERN),
AMERICA), INC. (to be renamed INC.
Sterling Commerce (Mid
America), Inc.)
By: /s/ Jeannette P. Meier
----------------------------
Jeannette P. Meier,
By: /s/ Albert K. Hoover Vice President
--------------------------
Albert K. Hoover,
Vice President
STERLING SOFTWARE (U.S.) OF INC.
By: /s/ Jeannette P. Meier
----------------------------
Jeannette P. Meier,
Vice President
7
<PAGE>
STERLING SOFTWARE
INTERNATIONAL, INC.
By: /s/ Jeannette P. Meier
----------------------------
Jeannette P. Meier,
Vice President
8
<PAGE>
Schedule 1.1(a)
SCI Software
A. SCI Software of Sterling Commerce, Inc./1/
Form of Agreement No. of Concurrent
Name of Software Applicable Standard Licensee(s) Users/No. of Copies
- ------------------- ------------------- ----------------- -----------------
1. CONNECT:Firewall Exhibit A to this Sterling Software, 25 Copies
Schedule 1.1(a) Inc./2/
2. CONNECT:Direct Exhibit A to this Sterling Software 1 Copy
Schedule 1.1(a) (U.S. of America),
Inc.
______________________
1. Successor by merger to Sterling Software (North America), Inc.
2. Successor by merger to Sterling Software (United States of America), Inc.
<PAGE>
================================================================================
Exhibit A
[LOGO OF STERLING SOFTWARE APPEARS HERE]
SOFTWARE LICENSE AGREEMENT
between
Sterling Software (North America), Inc.
and
___________________________________________
(Customer)
___________________________________________
(Address)
___________________________________________
(City) (State) (Zip)
THIS AGREEMENT sets forth the terms and conditions under which the parties agree
- --------------
that Sterling Software (North America), Inc. ("Sterling Software"), a wholly
owned subsidiary of Sterling Software, Inc., shall grant Customer a license to
use certain software and related documentation (the "Software") as specifically
identified in one or more separately executed schedules hereto (the
"Schedules"). In the event of a conflict between the terms and conditions of
this Agreement and a Schedule, the terms and conditions of the Schedule shall
prevail.
LICENSE GRANT Sterling Software hereby grants to Customer a nontransferable,
- -------------
nonexclusive and perpetual license to use the object code form of each item of
Software licensed hereunder and two (2) copies of related documentation in
accordance with the terms and conditions of this Agreement. Each license granted
hereunder permits Customer to execute one (1) copy of the applicable Software
only at the address specified in the applicable Schedule therefor (the
"Designated Location") and only on the specific CPU (the "Designated CPU") for
which it was licensed as specified on such Schedule.
Customer may use the Software (i) to transmit information to and receive
information from those companies who routinely trade or transmit business with
Customer as a normal course of business, (ii) for internal use in connection
with its own business requirements, and (iii) in connection with any services it
is providing to its parent corporation or to wholly owned subsidiaries of
Customer or its parent. Customer shall not charge, or allow others to charge,
any such party for use of the Software and shall not use the Software in the
operation of a service bureau or otherwise use the Software, either directly or
indirectly, for any revenue generation purpose, except where internal cost
transfers are made in connection with corporate processing services provided to
its parent corporation or to wholly owned subsidiaries of Customer or its parent
corporation.
CONTENT AND ENTIRE AGREEMENT This Agreement and any Schedule or amendment hereto
- ----------------------------
is subject to final review and acceptance at Sterling Software's headquarters
location. This Agreement includes the General Terms and Conditions on the
reverse side and each Schedule hereto. The parties agree that this Agreement
constitutes the complete and exclusive statement of the terms and conditions
between the parties covering the performance hereof and cannot be altered,
amended, or modified except in writing which is signed by an authorized
representative of each party. The terms and conditions of any purchase order or
other instrument issued by Customer in connection with this Agreement which are
in addition to or inconsistent with the terms and conditions of this Agreement
are null and void and shall not be binding on Sterling Software. This Agreement
shall be construed and enforced in accordance with the laws of the State of
Texas.
All terms and conditions of this Agreement are agreed to by:
STERLING SOFTWARE (NORTH AMERICA), INC.
COMMUNICATIONS SOFTWARE DIVISION _______________________________
Customer
By: ____________________________________ By: _______________________________
Signature Signature
Name: __________________________________ Name: _____________________________
(Type or Print) (Type or Print)
Title: _________________________________ Title: ____________________________
Date: __________________________________ Date: _____________________________
================================================================================
<PAGE>
================================================================================
GENERAL TERMS AND CONDITIONS
1. DESIGNATED LOCATION AND CPU
---------------------------
1.1 Customer may install the Software on another CPU of the same operating
system at the same or another Customer location for backup purposes on an
emergency basis. If Customer's Designated CPU is temporarily inoperative,
the license granted hereunder shall be automatically extended without
charge or prior consent to permit use of the Software on such backup CPU
on an interim basis. When the Designated CPU becomes operational,
Customer shall promptly return the Software to the Designated CPU at the
Designated Location and the aforementioned temporary extension of this
license shall be revoked.
1.2 Provided Customer is current on all License and Maintenance fees payable.
Customer may permanently transfer the Software if the Designated Location
is relocated to another Customer location and use of the Software is
discontinued at the Designated Location. Such right is granted on the
condition that the Software is used on the same CPU or a CPU of the same
classification as based on Sterling Software's then current price list.
Customer shall give Sterling Software written notice no less than thirty
(30) days prior to such relocation and register with Sterling Software
the address of the new location and the make, model and serial number of
the CPU on which the Software is installed and shall further certify to
Sterling Software that use of the Software has been discontinued at the
prior location. Such new location and CPU shall be the new Designated
Location and the new Designated CPU.
1.3 Use of the Software on a higher classification of CPU than licensed under
the Schedule, as based on Sterling Software's then current price list
and/or use of a workstation version of the Software for a greater number
of workstations than licensed under the Schedule shall require the
payment of an upgrade fee in accordance with Sterling Software's then
current terms and fees, which payment shall be due and payable on the
applicable date on which the upgrade first occurred.
2. CHARGES, FEES, PAYMENT AND INVOICING
------------------------------------
2.1 Software License fees are specified on the applicable Schedule and
Extended Maintenance fees shall be as specified in Section 3 hereof.
Payment of all fees and charges shall be due within thirty (30) days from
receipt of Sterling Software's applicable invoice. All past due amounts
are subject to a late charge equal to one and one-half percent (1 1/2%)
per month.
2.2 Any services if requested by Customer and rendered by Sterling Software,
which are not part of the services Sterling Software has agreed to
perform as a part of this Agreement will be charged to Customer at
Sterling Software's standard rates then in effect. Customer shall also
reimburse Sterling Software for all reasonable out-of-pocket expenses,
including all transportation, lodging, meals and other expenditures
related to services provided by Sterling Software under this Agreement.
2.3 The prices and charges hereunder do not include any amount for taxes or
duties. If any duty, sales, use, excise, property or other tax, penalties
or interest, is, or should ultimately be, assessed against or is required
to be collected by Sterling Software or by any taxing authority in
connection with their performance required hereunder, Customer agrees to
pay any and all such charges. This Section 2.3 does not apply to Sterling
Software's income or franchise taxes or to taxes for which Customer
provides Sterling Software with a valid tax exemption certificate.
3. SOFTWARE MAINTENANCE
--------------------
3.1 For an initial period ending six (6) months from the License Effective
Date on the applicable Schedule (the "Initial Maintenance Period"),
Sterling Software will provide maintenance services to the Designated
Location at no additional charge to Customer. Maintenance shall include
(i) reasonable telephone support, (ii) correction of errors to keep the
Software in conformance with the user documentation, and (iii) releases,
modifications, refinements and enhancements made to the Software which
are provided to Sterling Software's general client base at no additional
charge.
3.2 Continuation of Maintenance beyond the Initial Maintenance Period is
defined as "Extended Maintenance". For as long as Sterling Software is
offering maintenance services for the Software, Extended Maintenance
shall automatically be provided and renewed in increments of twelve (12)
months each, commencing on expiration of the Initial Maintenance Period.
The charge for Extended Maintenance shall be Sterling Software's standard
annual maintenance charge then in effect at the time of such renewal.
Customer may elect to discontinue Extended Maintenance service upon
giving Sterling Software written notice no less than thirty (30) days
prior to the commencement of any Extended Maintenance period. Such
discontinuance shall not affect Customer's right to use the Software or
void the license rights granted under the license for the Software.
Should Customer later decide to reinstate maintenance for the Software,
Customer shall pay Sterling Software's then current reinstatement fee in
effect at the time of the reinstatement.
4. PROPRIETARY DATA
----------------
4.1 The Software and related information and materials (the "Proprietary
Information") constitute trade secrets and proprietary data of Sterling
Software and any third party from whom Sterling Software has received
marketing rights (the "Third Party Licensor") and nothing in this
Agreement shall be construed to convey any title or ownership rights to
Customer. Customer agrees to receive and hold in confidence and not
disclose in any manner to any third parties (other than consultants under
contract with Customer who have agreed in writing to be bound by the
terms of this Section 4) the Software, user documentation or any other
materials delivered to it or information disclosed to it (collectively
the "Proprietary Information") by Sterling Software. Customer shall not
encumber, furnish, sell, give, assign, distribute, or otherwise make
available the Proprietary Information to any other person, firm, or
corporation without the prior written consent of Sterling Software and
shall use best efforts to ensure that no improper or unauthorized use or
disclosure of any Proprietary
================================================================================
<PAGE>
================================================================================
Information is made by any party. Customer shall not reverse engineer,
decompile, disassemble or apply any process, technique, procedure or make
any attempt to ascertain or derive the source code to the Software.
4.2 Customer shall provide reasonable assistance to Sterling Software in the
prosecution of any third parties who violate any of Sterling Software's
rights under this Agreement or rights provided by law with respect to any
Software licensed hereunder to Customer. Sterling Software shall bear any
associated cost and expense, provided that such violation is not the
result of a breach by Customer of its obligations hereunder.
4.3 The provisions of this Section 4 shall apply to the Software as delivered
by Sterling Software or as modified or otherwise enhanced by either party
and to any Proprietary Information which has been given to Customer prior
to the date of this Agreement.
4.4 To protect any and all of the proprietary rights of Sterling Software
and/or each Third Party Licensor under this Agreement, Customer agrees to
allow Sterling Software, with reasonable prior notice, to enter
Customer's premises during regular business hours to audit the number of
copies made and Customer's compliance with the provisions of this
Agreement. Customer acknowledges that Sterling Software and each Third
Party Licensor shall have the right to take all reasonable steps to
protect their proprietary interests, including, but not limited to
injunctive relief and any other remedies as may be available at law or in
equity in the event Customer does not fulfill its obligations under this
Section 4.
4.5 CERTAIN SOFTWARE MAY HAVE ASSET PROTECTION DEVICES WHICH RESTRICT THE
INSTALLATION OF THE SOFTWARE IF IT IS USED OR MOVED IN AN UNAUTHORIZED
MANNER. SUCH DEVICES SHALL NOT DISABLE OR DESTROY THE SOFTWARE OR
OTHERWISE AFFECT THE USE OF THE SOFTWARE IN THE MANNER AUTHORIZED UNDER
THIS AGREEMENT.
5. SOFTWARE WARRANTY
-----------------
5.1 If at any time within the period ending six (6) months from the License
Effective Date the Software licensed hereunder substantially fails to
perform the functions described in the applicable Software user
documentation, Customer shall promptly notify Sterling Software in
writing of such alleged nonconformance. To the extent such deficiency
exists in a current unaltered release of the Software, Sterling Software
shall, at its own cost and expense and within thirty (30) days of receipt
of such written notification, either correct such deficiency or provide
Customer with a plan acceptable to Customer for correcting the deficiency
within a reasonable period of time. Should Sterling Software fail to do
either, Customer may, as its sole remedy, upon giving Sterling Software
written notice within five (5) days of such failure, either: (i)
terminate the License to the Software and receive a refund of all license
fees paid by Customer for the Software, or (ii) defer further payments
for the Software until Sterling Software has corrected the deficiency,
however if Sterling Software fails to correct such deficiency within a
reasonable period of time, Customer shall have the option to terminate
the license to such Software as provided in (i) above.
6. IMPLEMENTATION AND ALTERATION BY CUSTOMER
-----------------------------------------
6.1 Customer understands and agrees that failure to (i) implement all
solutions, corrections, modifications, refinements, enhancements and new
releases supplied by Sterling Software as a part of either Initial or
Extended maintenance (the "Refinements") or (ii) any attempts by Customer
to alter any Software licensed to Customer on its own and without
Sterling Software's written direction or consent, shall be at Customer's
sole risk and may render the Software unusable or nonconforming to
Software documentation.
6.2 In no event shall Sterling Software have any obligation to support or
maintain any altered Software or any Software for which Refinements have
not been applied. Sterling Software shall not be responsible in any
regard and shall incur no liability for infringement claims or any
nonperformance. Software errors or any nonconformance to Software
documentation, which occur as a result of any alteration made by
Customer or for Customer's failure to implement any Refinements.
7. INFRINGEMENT INDEMNIFICATION
----------------------------
7.1 Sterling Software warrants and represents that it has the right to enter
into this Agreement and to grant to Customer the rights granted
hereunder. Sterling Software will indemnify, defend and hold Customer
harmless from any action brought against Customer that is based on a
claim that Sterling Software did not have the right to enter into this
Agreement or that any Software, when used within the scope of this
Agreement (and not in combination with any non-Sterling Software programs
or data), infringes a United States patent, copyright, or trade secret.
In such event, Customer shall give Sterling Software prompt written
notice of any claim and Sterling Software shall have sole control of the
defense, settlement or compromise of any such claim. Customer may elect
to participate in any such action with an attorney of its own choice and
at its own expense.
7.2 Should the Software become, or in Sterling Software's opinion is likely
to become, the subject of a claim of infringement, Sterling Software may
(i) procure for Customer the right to continue using the Software, or
(ii) replace or modify the Software to make it non-infringing, or (iii)
terminate the license for the Software. Upon termination of the license
and return of the Software and all related documentation, Sterling
Software will refund to Customer, as Customer's sole remedy, all license
fees paid by Customer for the terminated license, less an amount equal to
one sixtieth (1/60th) of such license fees for each month or any portion
thereof which has elapsed since the effective date of the applicable
License. The foregoing states the entire liability of Sterling Software
with respect to any claim of infringement regarding the Software.
8. TERMINATION
-----------
8.1 In addition to the termination rights granted under Sections 5.1 and 7.2,
this Agreement or any license created hereunder may
================================================================================
<PAGE>
be terminated as follows
8.1.1 By Customer, on or before the License Effective Date, provided
Customer notifies Sterling Software in writing twenty four (24)
business hours prior to the License Effective Date.
8.1.2 By either Sterling Software or Customer by notice in writing,
provided the basis for such termination is a material failure by
the other party to perform its responsibilities and obligations
under this Agreement and such material failure is not corrected
within thirty (30) days from the date such notice is received.
8.1.3 Upon termination or expiration of this Agreement, Customer shall
promptly discontinue use of the affected Software and return all
copies of the Software and all related documentation and
materials in its possession or control to Sterling Software. The
provisions of Section 4 shall survive expiration or termination
of this Agreement or any license created hereunder.
9. DISCLAIMER OF ADDITIONAL WARRANTIES
-----------------------------------
9.1 EXCEPT AS TO THE EXPRESS WARRANTIES CONTAINED IN SECTIONS 5 AND 7, STERLING
SOFTWARE MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, IN
FACT OR IN LAW, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
10. LIMITATION OF LIABILITY
-----------------------
10.1 EXCEPT WITH RESPECT TO STERLING SOFTWARE'S OBLIGATIONS UNDER SECTION 7, AND
NOTWITHSTANDING THE FORM (E.G., CONTRACT, NEGLIGENCE OR OTHERWISE) IN WHICH
ANY LEGAL OR EQUITABLE ACTION MAY BE BROUGHT AGAINST STERLING SOFTWARE.
STERLING SOFTWARE SHALL IN NO EVENT BE LIABLE HEREUNDER FOR DAMAGES WHICH
EXCEED THE AMOUNT OF THE LICENSE OR SERVICE FEES PAID BY CUSTOMER FOR THE
SOFTWARE OR SERVICE WHICH GAVE RISE TO SUCH DAMAGES, OR IF NOT SOFTWARE
RELATED, TO THE AMOUNT OF LICENSE FEES PAID IN THE ONE (1) YEAR PRIOR TO
THE DATE ON WHICH THE EVENT GIVING RISE TO SUCH DAMAGES OCCURRED. IN NO
EVENT SHALL STERLING SOFTWARE BE LIABLE FOR LOSS OF PROFIT OR FOR SPECIAL
OR CONSEQUENTIAL DAMAGES OR FOR ANY OTHER INDIRECT DAMAGES SUCH AS, BUT NOT
LIMITED TO, EXEMPLARY OR PUNITIVE DAMAGES, EVEN IF IT HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
10.2 Sterling Software shall not be liable for any delay, nonperformance or
related damages if such delay or nonperformance was due to causes beyond
its reasonable control, including, but not limited to acts of God,
electrical power failure, loss of communications or the delay of Customer
or third parties.
11. CONFIDENTIALITY OF CUSTOMER DATA
--------------------------------
11.1 Sterling Software agrees to maintain the confidentiality of certain
materials and data relating to Customer's business which are made available
to Sterling Software under the scope of this Agreement and which are not
publicly known or available from other sources and which Customer indicates
in writing are confidential. Sterling Software shall use reasonable efforts
to confine knowledge of such materials and data to only their employees who
require such knowledge and use in the ordinary course and scope of their
employment by Sterling Software.
12. GENERAL
-------
12.1 Customer may not assign its rights under this Agreement or any license
created hereunder, by contract or operation of law or otherwise, without
Sterling Software's prior written consent and any unauthorized assignment
shall be void and of no effect. Assignment, if authorized, will be
subject to payment of the applicable fee then in effect. Customer may
however, assign this Agreement or any Software license hereunder to its
parent corporation or to a wholly owned subsidiary of Customer or its
parent corporation, provided (i) such parties do not directly or indirectly
compete with Sterling Software, (ii) Customer and any such assignee are
current in all license and maintenance fee payments to Sterling Software,
and (iii) Sterling Software is given no less than thirty (30) days prior
written notification of such assignment.
12.2 If any provision of this Agreement is determined to be invalid or
unenforceable, such provision shall be deemed to be severed from this
Agreement and shall not cause the remainder of this Agreement to be invalid
or unenforceable.
12.3 The waiver of any rights or election of any remedy shall not constitute a
waiver of such right or right to employ such remedy at a later time. A
waiver shall be effective only if made in writing and signed by an officer
of the party making such waiver.
<PAGE>
================================================================================
[LOGO OF STERLING SOFTWARE APPEARS HERE]
SCHEDULE TO SOFTWARE LICENSE AGREEMENT
This Schedule supplements and amends the Software License Agreement referenced
herein (the "Agreement") by and between Sterling Software (North America), Inc.,
a wholly owned subsidiary of Sterling Software, Inc. ("Sterling Software") and
the party identified in the signature block set forth below ("Customer") to
license the Software listed below for the following Designated Location:
Designated Location: License Agreement Dated:
Offer Expiration Date:
Customer hereby represents that it has the right and authority to amend the
Agreement and execute this Schedule and agrees to be bound by the terms and
conditions of the Agreement and this Schedule.
________________________________________________________________________________
Designated License
CPU Model Designated Effective License
Software License Type Qty. & Group # CPU Serial # Date Fee
________________________________________________________________________________
________________________________________________________________________________
Sterling Software (North America), Inc.
Communications Software Division _______________________________
Customer
By: ____________________________________ By: _______________________________
Signature Signature
Name: __________________________________ Name: _____________________________
(Type or Print) (Type or Print)
Title: _________________________________ Title: ____________________________
Date: __________________________________ Date: _____________________________
Page 1 of 2
================================================================================
<PAGE>
================================================================================
ADDITIONAL TERMS AND CONDITIONS
1 General: This Schedule amends the Agreement referenced on the face page
hereof to add the specified Software and to incorporate the changes set
forth below for the Software licensed herein. Any references to "Product",
"Program","Licensed Product or Program", or "Software" in the Agreement
shall be deemed to include the Software licensed under this Schedule. All
terms and conditions of the Agreement which are unchanged by this Schedule
shall remain in full force and effect.
2 License Effective Date: Notwithstanding anything to the contrary set forth
in the Agreement, there shall be no trial period or acceptance period
applicable to the Software licensed herein and the effective date of such
license shall be as set forth on the face of this Schedule.
3 Payment: Payment of fees for the Software shall be made within thirty (30)
days from receipt of Sterling Software's applicable invoice, unless
otherwise specified. All past due amounts are subject to a late charge
equal to one and one-half percent (1 1/2%) per month.
4 License: The license granted hereunder is nonexclusive, nontransferable
and perpetual and permits Customer to execute one copy of the object code
version of the Software on the Designated CPU at the Designated Location
specified on the face of this Schedule. Customer may use the Software (i)
to transmit information to and receive information from those companies who
routinely trade or transmit business with Customer as a normal course of
business, (ii) for internal use in connection with its own business
requirements, and (iii) in connection with any services it is providing to
its parent corporation or to wholly owned subsidiaries of Customer or its
parent. Customer shall not charge, or allow others to charge, any such
party for use of the Software and shall not use the Software in the
operation of a service bureau or otherwise use the Software, either
directly or indirectly, for any revenue generation purpose, except where
internal cost transfers are made in connection with corporate processing
services provided to its parent corporation or to wholly owned subsidiaries
of Customer or its parent corporation. Installation and execution of the
Software shall be limited to the United States.
Notwithstanding the foregoing, a Workstation License may be available for
the Software provided Sterling Software makes such Workstation License
available to Sterling Software's general client base. A Workstation License
shall allow installation and use of one copy of the Software on a single
Workstation unless otherwise indicated on the face of this schedule.
5 Asset Protection Devices: Certain Software may have asset protection
devices which restrict installation of the Software if it is used or moved
in an unauthorized manner. Such devices shall not disable or destroy the
Software or otherwise affect the use of the Software in the manner
authorized under the Agreement.
6 Upgrades: Use of the Software on a higher classification of CPU, as based
on Sterling Software's price list, and/or use of a Workstation version of
the Software for a greater number of Workstations shall require the payment
of an upgrade fee in accordance with Sterling Software's then current terms
and fees which payment shall be due and payable on the applicable date on
which the upgrade first occurred in the event of a CPU upgrade. Customer
shall discontinue use of the Software on the previously licensed CPU within
thirty (30) days after execution of this Schedule.
7 Maintenance: For an initial period ending (i) three (3) months from the
effective date of the License for PC software, and (ii) six (6) months from
the effective date of the License for all other software products (the
"Initial Maintenance Period"), Sterling Software will provide maintenance
services to the Designated Location for the Software licensed thereon at no
additional charge to Customer. Continuation of maintenance beyond the
Initial Maintenance Period is defined as "Extended Maintenance." For as
long as Sterling Software is offering maintenance services for the
Software, Extended Maintenance shall automatically be provided and renewed
in increments of twelve (12) months each, commencing on expiration of the
Initial Maintenance Period. The charge for Extended Maintenance shall be
Sterling Software's standard annual maintenance charge then in effect at
the time of such renewal. Customer may elect to discontinue Extended
Maintenance service upon giving Sterling Software written notice no less
than thirty (30) days prior to the commencement of any Extended Maintenance
Period. Should Customer later decide to reinstate maintenance for the
Software, Customer shall pay Sterling Software's then current reinstatement
fee in effect at the time of the reinstatement. Exceptions to the foregoing
are as follows:
CPU Upgrades - The maintenance renewal date for the Software shall not
------------
change and Maintenance fees shall not increase until expiration of the
current maintenance period. Thereafter, Maintenance shall renew pursuant to
the terms and conditions of the Applicable License.
Workstation License - Maintenance shall be provided as set forth above;
-------------------
however, maintenance shall be provided only for the number of Workstations
set forth on the face of this Schedule.
8. Assignment: Customer may not assign its rights under this Agreement or any
license created hereunder, by contract or operation of law or otherwise,
without Sterling Software's prior written consent and any unauthorized
assignment shall be void and of no effect. Assignment, if authorized, will
be subject to payment of the applicable fee then in effect. Customer may
however, assign this Agreement or any Software license hereunder to its
parent corporation or to a wholly owned subsidiary of Customer or its
parent corporation, provided (i) such parties do not directly or indirectly
compete with Sterling Software, (ii) Customer and any such assignee are
current in all license and maintenance fee payments to Sterling Software,
and (iii) Sterling Software is given no less than thirty (30) days prior
written notification of such assignment.
Page 2 of 2
================================================================================
<PAGE>
[LOGO OF STERLING SOFTWARE APPEARS HERE]
LICENSE AGREEMENT
This License Agreement is between Sterling Software (North America), Inc. and
____________________________________________________________________________
____________________________________________________________________________
hereinafter referred to as "Customer".
THIS AGREEMENT sets forth the terms and conditions under which the parties agree
- --------------
that Sterling Software (North America), Inc. ("Sterling Software"), a wholly
owned subsidiary of Sterling Software, Inc., shall grant Customer a license to
use the software specifically identified in one or more separately executed
schedules hereto (the "Schedules"), one (1) copy of the applicable user
documentation, and subject to Section 5 hereof, all releases, modifications,
enhancements and refinements (collectively the "Software").
This Agreement and the applicable Schedules constitute the entire Agreement
between Sterling Software and Customer and shall be construed and enforced in
accordance with the laws of the State of Texas. This Agreement supersedes all
other agreements, proposals, purchase orders, representations and other
understandings regarding the Software, whether oral or written, between the
parties. No alterations or modifications of this Agreement will be valid unless
made in writing and signed by both parties. This Agreement and any Schedule
attached hereto are not effective until signed by Sterling Software.
1. LICENSE GRANT
-------------
Sterling Software grants to Customer a nontransferable, nonassignable,
nonexclusive and perpetual license to execute one (1) copy of the object code
form of the Software at the specific address (the "Designated Location") and on
the specific CPU (the "Designated CPU") specified on the applicable Schedule.
Customer's right to use the Software is limited to Customer's internal use and
Customer shall not use the Software for the processing of data of other parties
or in connection with the operation of a service bureau.
Customer may make one (1) copy of the Software for disaster recovery backup
purposes and may install the Software on another CPU of the same operating
system at the same or another Customer location in an emergency situation.
The Software shall be delivered to Customer in the US version only which version
(i) is subject to US export laws; (ii) cannot be exported outside of the US
without a valid export license; and (iii) cannot be exported outside of the
United States without Sterling Software's prior written consent.
2. CHARGES, FEES, PAYMENT AND INVOICING
------------------------------------
All fees and charges shall be due within thirty (30) days from receipt of
Sterling Software's applicable invoice. Customer agrees to pay any and all
duties, sales, use, excise, property or other taxes, penalties or interest, that
may be imposed by any taxing authority in connection with Customer's performance
hereunder. All past due amounts are subject to a late charge equal to one and
one-half percent (1 1/2%) per month.
Any services, if requested by Customer and rendered by Sterling Software, which
are not part of the services Sterling Software has agreed to perform as a part
of this Agreement will be charged to Customer at Sterling Software's standard
rates then in effect. Customer shall also reimburse Sterling Software for all
reasonable out-of-pocket expenses, including all transportation, lodging, meals
and other expenditures related to such services.
3. SOFTWARE WARRANTY
-----------------
Should the Software substantially fail to perform the functions described in the
applicable Software user documentation at any time during the period ending six
(6) months from the effective date of the License. Customer shall promptly
notify Sterling Software in writing of such alleged nonconformance, providing
complete details. If Sterling Software is unable to either correct such
deficiency within thirty (30) days after receipt of such notification or provide
Customer with a plan acceptable to Customer for correcting the deficiency,
Customer may, as its sole remedy, upon written notice thereof within five (5)
days thereafter, terminate the license to the Software and receive a refund of
all License fees paid by Customer for the Software, EXCEPT AS TO THE EXPRESS
WARRANTIES CONTAINED IN THIS SECTION, STERLING SOFTWARE MAKES NO WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, IN FACT OR IN LAW, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
4. PROPRIETARY DATA
----------------
The Software and related information and materials (the "Proprietary
Information") constitute trade secrets and proprietary data of Sterling Software
and any third party from whom Sterling Software has received marketing rights
(the "Third Party Licensor") and nothing in this Agreement shall be construed to
convey any title or ownership rights to Customer. Customer agrees to receive and
hold in confidence and not disclose in any manner to any third parties the
Software, user documentation or any other materials delivered to it or
information disclosed to it (collectively the "Proprietary Information") by
Sterling Software. Customer shall not encumber, furnish, sell, give, assign,
distribute, or otherwise make available the Proprietary Information to any other
person, firm, or corporation without the prior written consent of Sterling
Software. Customer shall not reverse engineer, decompile, disassemble or apply
any process, technique, procedure or make any attempt to ascertain or derive the
source code to the Software.
Sterling Software reserves the right, upon reasonable prior notice, to enter
Customer's premises during regular business hours to audit Customer's compliance
with the provisions of the Agreement. Customer acknowledges that Sterling
Software and its Third Party Licensor shall have the right to take all
reasonable steps to protect their proprietary interests in the Software,
including, but not limited to, injunctive relief and any other remedies as may
be available at law or in equity in the event Customer does not fulfill its
obligations under this Section.
<PAGE>
5. SOFTWARE MAINTENANCE
--------------------
For an initial period ending six (6) months from the effective date of the
License (the "Initial Maintenance Period"), Sterling Software shall provide
Maintenance for the Software at no additional charge to Customer. Maintenance
shall include (i) reasonable telephone support, (ii) correction of errors to
keep the Software in conformance with the user documentation, and (iii)
releases, modifications, refinements and enhancements made to the Software which
are provided to Sterling Software's general client base at no additional charge
(the "Refinements").
Continuation of Maintenance beyond the Initial Maintenance Period is defined as
"Extended Maintenance". For as long as Sterling Software is offering Maintenance
for the Software, Extended Maintenance shall automatically be provided and
renewed in increments of twelve (12) months each, commencing upon expiration of
the Initial Maintenance Period. The Charge for Extended Maintenance shall be
Sterling Software's standard Extended Maintenance charge in effect at the time
of renewal.
6. IMPLEMENTATION AND ALTERATION BY CUSTOMER
-----------------------------------------
Customer understands and agrees that failure to (i) implement all Refinements
supplied by Sterling Software as a part of Maintenance or (ii) any attempts by
Customer to alter any Software licensed to Customer on its own and without
Sterling Software's written direction or consent, shall be at Customer's sole
risk and may render the Software unusable or nonconforming to Software
documentation. Sterling Software shall have no obligation to support or maintain
any such Software, and shall have no liability for infringement claims. Software
errors or any nonconformance to Software documentation, which occur as a result
of any alteration made by Customer or for Customer's failure to implement any
Refinements.
7. INFRINGEMENT INDEMNIFICATION
----------------------------
Subject to the second paragraph of this section, Sterling Software will
indemnify, defend and hold Customer harmless from any action brought against
Customer that is based on a claim that Sterling Software did not have the right
to enter into this Agreement or that any Software, when used within the scope of
this Agreement (and not in combination with any non-Sterling Software software
programs or data), infringes a United States patent, copyright, or trade secret.
In such event, Customer shall give Sterling Software prompt written notice of
any claim and Sterling Software shall have sole control of the defense,
settlement or compromise of any such claim. Customer may elect to participate in
any such action with an attorney of its own choice and at its own expense.
Should any Software become, or in Sterling Software's opinion is likely to
become, the subject of a claim of infringement, Sterling may at its option (i)
procure for Customer the right to continue using the Software, or (ii) replace
or modify the Software to make it non-infringing, or (iii) terminate the
license for the Software. Upon termination of the license and return of the
Software and all related documentation, as its sole liability and Customer's
sole remedy, Sterling Software will refund to Customer, all license fees paid by
Customer for the terminated license, less an amount equal to one sixtieth
(1/60th) of such license fees for each month or any portion thereof which has
elapsed since the effective date of the applicable License. The foregoing states
the entire liability of Sterling Software with respect to any claim of
infringement regarding the Software.
8. TERMINATION
-----------
In addition to the termination rights granted under Section 3, this Agreement or
any license created hereunder may be terminated by either Sterling Software or
Customer by notice in writing, provided the basis for such termination is a
material failure by the other party to perform its responsibilities and
obligations under this Agreement and such material failure is not corrected
within thirty (30) days from the date such notice is received. Upon any such
termination, Customer shall promptly discontinue use of the Software and return
all copies of the Software and all related documentation and materials in its
possession or control to Sterling Software. The provisions of Section 4 shall
survive expiration or termination of this Agreement or any license created
hereunder.
9. LIMITATION OF LIABILITY
-----------------------
IN NO EVENT SHALL STERLING SOFTWARE BE LIABLE FOR LOSS OF PROFIT OR FOR SPECIAL
OR CONSEQUENTIAL DAMAGES OR FOR ANY OTHER INDIRECT DAMAGES SUCH AS, BUT NOT
LIMITED TO, EXEMPLARY OR PUNITIVE DAMAGES, REGARDLESS OF THE FORM (E.G.,
CONTRACT, NEGLIGENCE OR OTHERWISE) IN WHICH ANY LEGAL OR EQUITABLE ACTION MAY
BE BROUGHT AGAINST STERLING SOFTWARE, EVEN IF IT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. EXCEPT WITH RESPECT TO STERLING SOFTWARE'S
OBLIGATIONS UNDER SECTION 7, STERLING SOFTWARE SHALL IN NO EVENT BE LIABLE
HEREUNDER FOR DIRECT DAMAGES WHICH EXCEED THE AMOUNT OF THE LICENSE FEES PAID BY
CUSTOMER FOR THE SOFTWARE.
All terms and conditions of this Agreement are agreed to by:
STERLING SOFTWARE (NORTH AMERICA), INC.
BY:___________________________________
NAME:_________________________________
TITLE:________________________________
DATE:_________________________________
CUSTOMER:_____________________________
BY:___________________________________
NAME:_________________________________
TITLE:________________________________
DATE:_________________________________
ADDRESS:______________________________
______________________________________
<PAGE>
================================================================================
[LOGO OF STERLING SOFTWARE APPEARS HERE]
SCHEDULE TO LICENSE AGREEMENT
This Schedule supplements and amends the License Agreement referenced herein
(the "Agreement") by and between Sterling Software (North America), Inc., a
wholly owned subsidiary of Sterling Software, Inc. ("Sterling Software") and the
party identified in the signature block set forth below ("Customer") to license
the Software listed below for the following Designated Location:
Designated Location: License Agreement Dated:
Offer Expiration Date:
CUSTOMER HEREBY REPRESENTS THAT IT HAS THE RIGHT AND AUTHORITY TO AMEND THE
AGREEMENT AND EXECUTE THIS SCHEDULE AND AGREES TO BE BOUND BY THE TERMS AND
CONDITIONS OF THE AGREEMENT AND THIS SCHEDULE.
_______________________________________________________________________________
Designated
CPU Model Designated License
Software License Type Qty. & Group# CPU Serial# Fee
_______________________________________________________________________________
_______________________________________________________________________________
STERLING SOFTWARE (NORTH AMERICA), INC. _____________________________
Customer
By: _____________________________________ By: _____________________________
Signature Signature
Name: ___________________________________ Name: ___________________________
(Type or Print) (Type or Print)
Title: __________________________________ Title: __________________________
Date: ___________________________________ Date: ___________________________
Page 1 of 1
================================================================================
<PAGE>
Schedule 1.1(b)
SSW Software
A. SSW Software of Sterling Software (Southern), Inc.
<TABLE>
<CAPTION>
Form of Agreement No. of Concurrent
Name of Software Applicable Standard Licensee(s) Users/No. of Copies
- ------------------- ------------------- ----------------- -------------------
<S> <C> <C> <C>
1. ANSWER:Comparex Exhibit A to this Sterling Commerce 1 Copy
Schedule 1.1(b) (America), Inc./1/
Sterling Commerce 1 Copy
(Mid America),
Inc./2/
Sterling Commerce 1 Copy
(Northern America),
Inc./3/
2. ANSWER:Zim Exhibit A to this Sterling Commerce 10 Copies
Schedule 1.1(b) (America), Inc./1/
3. VISION:Builder Exhibit A to this Sterling Commerce 30 Copies
Schedule 1.1(b) (America), Inc./1/
4. VISION:Report Exhibit A to this Sterling Commerce 200 Copies
Schedule 1.1(b) (America), Inc./1/
5. VISION:Results Exhibit A to this Sterling Commerce 200 Copies
Schedule 1.1(b) (America), Inc./1/
6. VISION:Inquiry Exhibit A to this Sterling Commerce 30 Copies
Schedule 1.1(b) (America), Inc./1/
</TABLE>
____________________
1. Formerly known as Sterling Software (America), Inc.
2. Formerly known as Sterling Software (Mid America), Inc.
3. Formerly known as Sterling Software (Northern America), Inc.
4. Successor by merger to Sterling Software (North America), Inc.
<PAGE>
Form of Agreement No. of Concurrent
Name of Software Applicable Standard Licensee(s) Users/No. of Copies
- ------------------- ------------------- ----------------- -----------------
7. VISION:Journey Exhibit A to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (Northern America),
Inc./3/
8. VISION:Testpro Exhibit A to this Sterling Commerce, 15 Copies
Schedule 1.1(b) (America), Inc./1/
Sterling Commerce, 1 Copy/5 Users
(Northern America),
Inc./3/
9. VISION:Interface Exhibit A to this Sterling Commerce, 200 Copies
for SQL Schedule 1.1(b) (America), Inc./1/
10. VISION:Online Exhibit A to this Sterling Commerce, 1 Copy
TSO Schedule 1.1(b) (America), Inc./1/
11. VISION:Excel Exhibit A to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
12. VISION:Inform Exhibit A to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
13. VISION:Data Exhibit A to this Sterling Commerce, 500 Copies
Schedule 1.1(b) (America), Inc./1/
14. VISION:Manage Exhibit A to this Sterling Commerce, 5 Copies
Schedule 1.1(b) (America), Inc./1/
15. Key:Suite for Exhibit B to this Sterling Commerce, 10 Copies
Workgroups Schedule 1.1(b) (America), Inc./1/
____________________
1. Formerly known as Sterling Software (America), Inc.
2. Formerly known as Sterling Software (Mid America), Inc.
3. Formerly known as Sterling Software (Northern America), Inc.
4. Successor by merger to Sterling Software (North America), Inc.
2
<PAGE>
Form of Agreement No. of Concurrent
Name of Software Applicable Standard Licensee(s) Users/No. of Copies
- ------------------- ------------------- ----------------- -------------------
16. KEY:Design Exhibit B to this Sterling Commerce, 30 Copies
Schedule 1.1(b) (America), Inc./1/
17. KEY:Analyze Exhibit B to this Sterling Commerce, 30 Copies
Schedule 1.1(b) (America), Inc./1/
18. CLEAR:Access Exhibit C to this Sterling Commerce, 30 Copies
Schedule 1.1(b) (America), Inc./1/
19. STAR:Flashpoint Exhibit D to this Sterling Commerce, 5 Copies
Schedule 1.1(b) (America), Inc./1/
Sterling Commerce, 1 Copy
(Northern America),
Inc./3/
____________________
1. Formerly known as Sterling Software (America), Inc.
2. Formerly known as Sterling Software (Mid America), Inc.
3. Formerly known as Sterling Software (Northern America), Inc.
4. Successor by merger to Sterling Software (North America), Inc.
3
<PAGE>
B. SSW Software of Sterling Software (U.S.A.), Inc.
Form of Agreement No. of Concurrent
Name of Software Applicable Standard Licensee(s) Users/No. of Copies
- ------------------- ------------------- ----------------- -------------------
1. SAMS:Compress Exhibit E to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
2. SAMS:Defrag Exhibit E to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
3. SAMS:Save Exhibit E to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
4. SAMS:Allocate Exhibit E to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
5. SAMS:Expert Exhibit E to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
6. SAMS:Disk Exhibit E to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
7. SAMS:Vantage Exhibit E to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (America), Inc./1/
8. DMS:PC Exhibit E to this Sterling Commerce, 250 Copies
Schedule 1.1(b) (America), Inc./1/
9. INSYNCH Exhibit E to this Sterling Commerce, 1 Copy
Schedule 1.1(b) (Mid America), Inc./2/
____________________
1. Formerly known as Sterling Software (America), Inc.
2. Formerly known as Sterling Software (Mid America), Inc.
3. Formerly known as Sterling Software (Northern America), Inc.
4. Successor by merger to Sterling Software (North America), Inc.
4
<PAGE>
C. SSW Software of Sterling Software (U.S. of America), Inc.
Form of Agreement No. of Concurrent
Name of Software Applicable Standard Licensee(s) Users/No. of Copies
- ------------------- ------------------- ----------------- -------------------
1. SOLVE:Netmaster Exhibit F to this Sterling Commerce, 3 Copies
Schedule 1.1(b) Inc./4/
Sterling Commerce, 1 Copy
(Northern America),
Inc./3/
2. SOLVE:Central Exhibit F to this Sterling Commerce, 10 Copies
Schedule 1.1(b) (America), Inc./1/
3. SOLVE:For System Exhibit F to this Sterling Commerce, 10 Copies
Administration Schedule 1.1(b) (America), Inc./1/
____________________
1. Formerly known as Sterling Software (America), Inc.
2. Formerly known as Sterling Software (Mid America), Inc.
3. Formerly known as Sterling Software (Northern America), Inc.
4. Successor by merger to Sterling Software (North America), Inc.
5
<PAGE>
Exhibit A
[LOGO OF STERLING SOFTWARE APPEARS HERE] [LETTERHEAD APPEARS HERE]
NON-EXCLUSIVE PERPETUAL LICENSE AGREEMENT
Applications Management Division
DATE OF AGREEMENT ______________________________________________________________
AGREEMENT NUMBER ______________________________________________________________
1. LICENSE GRANT:
Sterling Software United States) Inc., a wholly-owned subsidiary of Sterling
Software, Inc., by its acceptance thereof and subject to all of the terms and
conditions of this Agreement hereby grants to:
________________________________________________________________________________
("Customer") a non-exclusive perpetual license, to use a designated copy in
object code of and related user documentation for:
________________________________________________________________________________
(collectively, "System") on the designated central processing unit ("CPU") at
the location(s) set forth below for a non-exclusive perpetual license fee
("License Fee") of:
________________________________________________________________________________
NOTE: this quote, non-exclusive perpetual License Fee is valid until:
________________________________________________________________________________
2. CPU IDENTIFICATION AND INSTALLATION LOCATION(S)
CPU: ________________________________ CPU MODEL: _____________________________
CPU Serial Number: _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3. ADDITIONAL LICENSES: Additional CPU's or System(s) may be licensed by
Customer pursuant to this Agreement by (i) Customer's issuance and Sterling
Software's acceptance of Customer's purchase order(s) specifically incorporating
the terms and conditions of this Agreement by reference or (ii) by execution by
Customer and acceptance by Sterling Software of a formal amendment to this
Agreement.
4. PAYMENT:
(a) All payments shall be made in full, without discount or set off, within
thirty (30) days of invoice.
(b) In addition to all charges invoiced hereunder, Customer shall pay to
Sterling Software all taxes, customs and duties that are applicable to this
Agreement or are measured directly by payment made under it and are
required to be collected by Sterling Software or paid by Sterling Software.
This provision includes sales, use, excise, and personal property taxes but
does not include Sterling Software's franchise taxes, taxes based on
Sterling Software's net income or taxes for which the Customer has
furnished Sterling Software a bone fide tax exemption certificate.
(c) Until paid in full, all past due amounts shall bear an additional charge at
one and one-half percent per month, less the sum, if any in excess of
applicable state law. Fees and payments are stated and due in U.S. dollars
unless otherwise indicated.
5. TITLE
(a) Title and ownership rights to the original System(s) licensed under this
Agreement and all rights to license to and otherwise convey the use of any
copies of same shall remain with and are hereby retained by Sterling
Software. Sterling Software represents and Customer acknowledges and agrees
that the System(s) is the proprietary information and trade secret of
Sterling Software, whether or not copyrighted in whole or in part.
(b) Customer's right to System(s), as a result of this Agreement, may not be
assigned, sublicensed, copied, or otherwise transferred voluntarily, by
operation of law or otherwise without Sterling Software's prior written
consent. Sterling Software's written consent may include additional charges
then currently assessed by Sterling Software. Any unauthorized transfer
shall be deemed void.
6. USE OF THE SYSTEM:
(a) The System may be used only by employees of the Customer for, by or on
behalf of the Customer of the designated CPU(s) at the designated
location(s) set forth in this Agreement. All data processed by the System
shall be the property of the Customer.
(b) By mutual amendment to this Agreement, and subject to payment by Customer
of additional charges then currently assessed by Sterling Software, the
System(s) may be transferred to or utilized by Customer (i) on another CPU
of the Customer; or (ii) to another CPU of third party, provided that the
License remains with Customer and the third party signs Sterling Software's
then current confidentiality and restriction agreement; or (iii) on the
then current designated CPU which is subsequently upgraded or altered.
(c) Customer may utilize the System(s) from a terminal at another location,
provided such use is available only to employees of the Customer. Such use
is subject to all terms and conditions of this Agreement.
(d) The System(s) may be used on a disaster recovery CPU, for limited testing
of Customer's disaster recovery plan, and in a production mode temporarily
only in the event that a disaster rendered Customer's production CPU
inoperative. Customer shall promptly provide written notice to Sterling
Software of the disaster recovery CPU identification, location and vendor,
when and if the System(s) are utilized on such disaster CPU. At the time
the designated computer becomes operative, Customer shall promptly remove
the System(s) from the disaster recovery CPU and the temporary extension
shall be revoked.
(e) Customer shall not make any copies or duplicate the System(s) or any
component thereof by any means for any purpose whatsoever, except as is
required for back up security storage and disaster recovery testing,
without prior written consent of Sterling Software.
(f) Customer shall not alter, decompile, disassemble, or otherwise permit
alteration of the System(s).
7. NON-DISCLOSURE: Customer shall take all reasonable steps necessary to
ensure that the System(s) or any portion thereof, whether or not on Customer's
magnetic tape, disk or in any other medium, are not made available or disclosed
by the Customer or by any of Customer's employees to any person or entity not
specifically licensed by this Agreement.
8. SYSTEM SUPPORT:
(a) During the initial annual term ("Initial Term") of this Agreement and while
Customer is currently entitled to extended annual system support ("Annual
System Support") Sterling Software agrees to use reasonable efforts in
maintaining the then current release of the System(s) in order that such
System(s) substantially perform in accordance with the applicable user
documentation. The initial Term of annual system support shall be at no
charge to customer.
(b) Annual System Support shall automatically commence at the end of the
initial Term and renew on an annual basis thereafter at Sterling Software's
then current Annual System Support fee unless such support is terminated
by either party by written notice at least thirty (30) days prior to the
renewal date. The Annual System Support fee and any other support terms are
subject to change by Sterling Software at the end of each Annual System
Support with reasonable prior written notice. Customer agrees to pay the
Annual System Support fee on or before the anniversary date. The Annual
System Support fee shall commence on the first (1st) anniversary date of
this Agreement.
(c) Sterling Software will provide support services and System(s) Documentation
for each System(s) in accordance with Sterling Software's standard policies
for that System(s). Specifically, such support shall include:
(i) Error correction along with all operational and support assistance
necessary to cause the System(s) to perform in accordance with the user
documentation. Sterling Software will also provide remedial support
designated to provide a by-pass to a reported defect until the reported
defect can be permanently corrected.
(ii) All upgrades, modifications, improvements, enhancements, including
updates to the System(s) necessary to cause the System(s) to operate under
new versions or releases of the System(s)'s current operating system which
are generally made available to other Customers of Sterling Software at no
charge.
(iii) Twenty-four (24) hour telephone hotline support.
(iv) Revisions to the existing System(s) user documentation developed for
the System(s) as necessary to reflect all corrections, improvements and
updates.
(d) Sterling Software's sole obligation under this Section 8, shall be to
correct the System(s) so that it shall so perform, or refund the prorata
portion of the license fee upon return of all System(s) materials if the
System(s) cannot be corrected.
(e) Customer agrees to keep the System(s) current by installing new releases of
the System(s) within four (4) months of receipt. For protection against
unauthorized use, old releases of the System(s) may time out and cease to
operate six (6) months after a new release is distributed. After the
System(s) has been installed, the magnetic tape or any other medium
belonging to Sterling Software shall be returned to Sterling Software at
Customer's sole expense.
9. WARRANTY: Sterling Software warrants that it owns the System(s) or is
otherwise entitled to grant this License to use the System(s) to the extent
stated in this Agreement. Sterling Software shall hold harmless and defend the
Customer against suits, proceedings, and any claim that the use of the System(s)
infringes on any existing patent or other proprietary rights provided (i)
Customer shall immediately notify Sterling Software in writing of any such
claim, suit or proceeding upon receipt by Customer; and (ii) Sterling Software
shall have the right to control the defense of all such claims, lawsuits or
other proceedings. In no event shall Customer settle any such claim, lawsuit and
other proceedings without Sterling Software's prior written consent.
- --------------------------------------------------------------------------------
NO OTHER WARRANTY IS EXPRESSED AND NONE SHALL BE IMPLIED, INCLUDING
WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR USE OR FOR A
PARTICULAR PURPOSE.
- --------------------------------------------------------------------------------
10. LIMITATION OF LIABILITY:
(a) Except to the extent stated in Section 9, Sterling Software shall have no
liability to Customer or any other party for any general, special,
incidental or consequential damages resulting from the failure of the
System(s) to perform or arising from any other default by Sterling Software
of its obligations or warranties under this Agreement. Notwithstanding the
foregoing, Sterling Software's liability shall not exceed the license fees
paid by Customer pursuant to this Agreement.
(b) Sterling Software shall have no liability to Customer or any other party
because of the failure of such System(s) to so perform and Customer hereby
releases Sterling Software from any liability for any loss or damage to
Customer's software and hardware originating from the use of the System(s).
11. TERMINATION:
(a) Either party may terminate this Agreement in the event of any breach by the
other party which breach is not cured to the nondefaulting party's
reasonable satisfaction within thirty (30) days after receipt of written
notice of such breach, except as otherwise provided under this Agreement.
The foregoing notwithstanding, Sterling Software may terminate this
Agreement in the event of nonpayment by Customer if such breach is not
cured within ten (10) days after receipt of written notice of such breach.
Upon any termination of this Agreement, Customer shall destroy or return
all copies of the System(s) to Sterling Software and delete the System(s)
from its library or executable programs. Completion of Customer's
obligations herein shall also be certified in writing by Customer.
(b) Customer's obligations under Section 4, (Payment), Section 6, (Title), and
Section 7, (Non-Disclosure) above shall survive any termination or
expiration of this Agreement.
12. RIGHT TO AUDIT:
(a) To confirm Customer's compliance with the terms of this Agreement Customer
shall, upon request by Sterling Software, provide Sterling Software with a
log containing the System(s) locations and the operating System(s) for
those System(s) licensed hereunder. Such log shall also contain the
applicable CPU Number, CPU Model Number and CPU Serial Number for those
System(s) licensed hereunder. Sterling Software may not request any such
logs more than twice in any twelve (12) month period.
(b) Sterling Software may conduct inquiries and inspections including but not
limited to audits of Customer's facility, to ensure Customer's compliance
with this Agreement. If it is determined that Customer is in breach of its
obligations under this Agreement, Customer shall reimburse Sterling
Software for all costs connected with the inspection. Licensee shall permit
such inspection and reasonably cooperate with same.
13. GENERAL:
(a) Titles and paragraph headings are for convenient reference and are not a
part of this Agreement. The terms and conditions of this Agreement
supersede those of any prior discussions and agreements, oral or written,
between the parties with respect to this transaction. The preprinted terms
and conditions of any purchase order or other ordering document issued by
Customer in connection with this Agreement which are in addition to or
inconsistent with the terms and conditions of this Agreement shall not be
binding on Sterling Software and shall not be deemed to modify this
Agreement.
(b) This Agreement shall be governed by the laws of the State of California and
constitutes the entire agreement between Customer and Sterling Software
with respect to the licensing and support of the System(s).
(c) Sterling Software shall not be liable for delays in any of its performance
hereunder due to causes beyond its reasonable control, including, but not
limited to acts of God. A waiver of any breach of any provision of this
Agreement shall not constitute a waiver of any subsequent breach of the
same or any other provisions hereof and a waiver shall not be effective
unless made in writing. In the event that any provision of this Agreement
shall be illegal or otherwise unenforceable, such provision shall be
severed and the balance of this Agreement shall not fail on account thereof
and shall continue in full force and effect.
(d) All notices which either party hereto is require to or may desire to give
the other party hereunder shall be given in writing and sent postage
prepaid, or by telecopy, cable or telex. Such notices shall be deemed given
on the date of receipt (or refusal) of delivery if mailed, or twenty-four
(24) hours after telexing or after prepaid receipt of the message from a
communication facility if telecopied, telexed or cabled.
THIS AGREEMENT SHALL NOT BE BINDING UNTIL SIGNED BY AN AUTHORIZED REPRESENTATIVE
OF STERLING SOFTWARE.
ACCEPTED BY:
_______________________________________________________________________________
TITLE ________________________________ DATE ___________________________________
ACCEPTED BY: STERLING SOFTWARE (UNITED STATES) INC., A WHOLLY OWNED
SUBSIDIARY OF STERLING SOFTWARE, INC.
________________________________________________________________________________
TITLE ________________________________ DATE ____________________________________
<PAGE>
Exhibit B
[LOGO OF STERLING SOFTWARE APPEARS HERE]
SOFTWARE LICENSE and
Applications Development Division SERVICES AGREEMENT
================================================================================
Customer: ________________________________ Agreement No. __________
Business Address: ________________________________
________________________________
________________________________
The below stated terms and conditions of this Agreement are agreed to by the
parties hereto:
1.1 Sterling Software (Southern), Inc. ("Sterling Software"), a Georgia
corporation, and a subsidiary of Sterling Software, Inc., and Customer agree to
the general terms and conditions stated in this Software License and Services
Agreement ("Agreement") with respect to the licensing of certain Sterling
Software offered software products ("Software") for use in the country
originally licensed, and the performance by Sterling Software of related
Software maintenance services ("Maintenance Services") and Software consulting
services ("Consulting Services"). Software includes (i) computer programs, (ii)
user documentation ("Documentation"), and (iii) all revisions, modifications,
improvements, enhancements and upgrades ("Updates"), unless the context
indicates otherwise.
1.2 The licensing of Software and the contracting for Maintenance Services and
Consulting Services shall be implemented by the acceptance of both parties from
time to time of schedules ("Schedules") to this Agreement, unless otherwise
agreed to in writing by the parties.
1.3 This Agreement and any and all Schedules commence on the date such document
is accepted by Sterling Software at its offices located in Atlanta, Georgia. If
required by Customer, Customer shall contemporaneously provide any necessary
purchase order and/or payment authorization numbers with the execution of this
Agreement and with each applicable Schedule.
2. License Grant; Use
For each Software license grant ("License(s)"), except as otherwise stated in
the pertinent Schedule(s):
2.1 Sterling Software grants to Customer a nonexclusive perpetual license to
use the Software for its own internal purposes. The Software shall only be used
(i) to perform such tasks as described in the provided Documentation, whether
printed or electronic, (ii) by the designated number of employees of Customer
solely for the benefit of Customer, (iii) on the authorized number and
designated serialized computers, if applicable, if the Software is installed on
a mainframe, mid-range computer or other non-personal computer ("Designated
CPU"), at the designated location(s) ("Designated Locations"), as stated in the
applicable Schedule(s), and (iv) to only process data which is the property of
Customer or as provided by Sterling Software.
2.2 (a) Unless otherwise stated in this Agreement or the pertinent Schedule,
(i) Software for installation on other than a personal computer must remain
resident on said Designated CPU, and (ii) Software for installation on a
personal computer is limited for use on an equal number of personal computers as
there are license grants at any time; and (iii) use of personal computer based
Software ("PC Software") is limited to use of one copy of the Software on a
single personal computer at a time on the operating system specified in the
documentation provided with the Software.
(b) For PC Software, the Software is "in use" on a computer when it is
loaded into temporary memory (RAM) or installed into permanent memory (hard
disk, CD-ROM, or other storage device) of that computer, except that a copy
installed on a network server for the sole purpose of distribution to other
companies is not "in use".
(c) Unless Customer has obtained a LAN license from Sterling Software,
Customer may use the Software on any computer, provided that it is used only
on one computer at any one time and that the Software is stored on the hard
disk of only one computer at any one time. Customer may not transfer the
Software from one computer to another over a network or by other means of
electronic communications. If Customer elects to use the Software on more than
one computer at one time, Customer must either license another copy of the
Software, or obtain a LAN license from Sterling Software.
2.3 Sterling Software will deliver one (1) set of the Software, in object code,
including the applicable documentation.
2.4 Customer is entitled to change the Designated Location to another location
and/or substitute the Designated CPU with another computer and/or utilize the
Software on an upgraded Designated CPU with Sterling Software's prior written
approval, which shall not be unreasonably withheld, provided that the then
current transfer or upgrade fee, is paid by Customer. In the event the
Designated CPU is inoperable because of either malfunction or maintenance
reasons, Customer may, upon prompt written notice to Sterling Software,
temporarily use the Software on a nondesignated CPU located in the same country
that the Software is originally licensed for use.
1
<PAGE>
[LOGO OF STERLING SOFTWARE APPEARS HERE]
SOFTWARE LICENSE and
Applications Development Division SERVICES AGREEMENT
================================================================================
2.5 Customer shall not copy the Software, in whole or in part except for (i)
backup purposes, and (ii) disaster recovery testing, without the prior written
approval of Sterling Software. Customer must maintain all proprietary notices in
the Software, including all copies, as imposed by Sterling Software.
2.6 Customer shall not decompile, disassemble or otherwise alter the Software.
2.7 Customer is responsible for (i) the installation and implementation of the
Software, and (ii) the training of its employees, unless otherwise specified in
the Schedule(s).
2.8 Sterling Software is permitted to audit Customer's facilities, computers
and relevant Customer records to ascertain Customer's compliance with the
provisions of this Agreement and Schedules, provided that no less than five (5)
days prior written notice is given to Customer and such audit is conducted
during Customer's normal business hours.
3. Consulting Services
3.1 Sterling Software agrees to provide the Consulting Services to the extent
stated in each Schedule, supplemented by and subject to the terms of the
Consulting Services Appendix, which is attached hereto and made a part hereof by
reference, if applicable.
4. Payment
4.1 All payments shall be made in full, without discount or set-off, within
thirty (30) days of invoice. Customer shall also be responsible for all customs
and duties, shipping and handling charges, and sales, use, excise, personal
property, value added, and royalty withholding taxes, except for taxes for which
Customer has furnished Sterling Software a qualified tax exemption certificate.
All prices and payments are in U.S. or Canadian dollars, as specified in the
applicable Schedule. Until paid in full, all past due amounts shall bear a late
charge of no more than 1 1/2 percent per month.
5. Title: Nondisclosure
5.1 Title to and ownership of the Software, and all copies, partial copies,
including any and all revisions, modifications, derivative works and updates
thereto (collectively, "Updates"), shall remain with Sterling Software and/or
with the respective manufacturer or author. All rights to patents, copyrights,
trademarks and trade secrets in the Software and all Updates shall remain with
Sterling Software and/or with the respective manufacturer or author.
5.2 Customer shall take all reasonable steps necessary to maintain the
Software, in confidence and shall not, nor shall it permit its employees to
sell, transfer, disclose, display or otherwise make accessible the Software, or
any copies thereof, in whole or in part, to any third party. Customer further
agrees that it will not use the Software for creating or aiding the creation of
a competitive software package, nor will it disclose same to anyone for the
purpose of aiding in the design or creation of a competitive software package.
As used herein, competitive software package means any computer program or
programs created to serve substantially the same function as is served by the
Software whether or not the competitive software package is for use by Customer,
by other parties, or for resale by any party.
5.3 Breach of any provision of this Section 5 shall be the basis for immediate
termination by Sterling Software of this Agreement and the license(s) granted
herein.
6. Limited Warranty
6.1 Sterling Software warrants for a period of sixty (60) days from the date of
delivery of the Software that: (a) the media and documentation will be free from
defects in materials or workmanship, in normal use and service; and (b) the
Software will operate substantially in conformances with the documentation.
However, Sterling Software does not warrant that the contents of the
documentation or the operation of the Software will be error free, or that
Sterling Software will correct all Software errors. Sterling Software's sole
obligation under this Section shall be to obtain the necessary authority to
correct the Software, or, at Sterling Software's option, to refund the license
fee paid by Customer upon return of the Software, and any copies thereof.
6.2 Sterling Software warrants that it has the right to authorize the use of
the Software by Customer under this Agreement. Sterling Software shall hold
harmless and defend Customer against suits based on any claim that the delivered
Software under this Agreement infringes on any copyright or trademark provided
that Customer gives Sterling Software prompt written notice of such suits and
permits Sterling Software to control the defense and the settlement thereof. In
the event, as a result of any such claim of infringement, Customer is enjoined
from using the Software, or if Sterling Software believes that the Software is
likely to become the subject of a claim of infringement, Sterling Software at
its option and expense may procure the right for Customer to continue to use the
Software, or replace or modify the Software so as to make it noninfringing,
provided that the performance thereof is not adversely affected in a material
manner. If Sterling Software, in its sole discretion, determines that neither of
these options is commercially reasonable, Sterling Software may terminate the
license granted herein with respect to the affected Software and, as its sole
liability, refund to Customer the applicable license fee to the extent then paid
by Customer upon return of the affected Software, less an amount equal to ten
(10) percent of such license fee for each twelve (12) month period or part
thereof since the effective date of the license grant.
2
<PAGE>
[LOGO OF STERLING SOFTWARE APPEARS HERE]
SOFTWARE LICENSE and
Applications Development Division SERVICES AGREEMENT
================================================================================
6.3 STERLING SOFTWARE HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND
IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS
FOR USE OR FOR A PARTICULAR PURPOSE. THE WARRANTIES SET FORTH IN THIS SECTION 6
SHALL CONSTITUTE STERLING SOFTWARE'S SOLE AND EXCLUSIVE LIABILITY AND THE
REMEDIES SET FORTH IN THIS SECTION 6 SHALL CONSTITUTE CUSTOMER'S SOLE AND
EXCLUSIVE REMEDIES FOR ANY ACTION, WHETHER BASED IN CONTRACT OR IN TORT.
7. Software Maintenance Services
7.1 Maintenance Services, if available for the Software Products licensed, may
be purchased at the time of Software order. During the period for which the
Customer has purchased Maintenance Services ("Annual Maintenance Services"),
Sterling Software agrees to use reasonable efforts in supporting the then
current release of the Software in order that such Software substantially
performs in accordance with the applicable user documentation.
7.2 Maintenance Services automatically renew on an annual basis after the
initial Annual Maintenance Services term at Sterling Software's then current
Annual Maintenance Services rate and terms, unless such maintenance is
terminated by either party by written notice no later than thirty (30) days
prior to expiration of the then current term.
7.3 Sterling Software will provide Maintenance Services in accordance with
Sterling Software's standard policies for the Software. Specifically, such
support shall include:
(i) Use reasonable efforts to correct any Software error, and provide to
Customer at no additional cost, any error corrections;
(ii) Updates to the Software which are generally made available to other
Maintenance Services entitled Customers of Sterling Software at no
additional charge;
(iii) make available to Customer reasonable telephone consultation during
Sterling Software's prescribed support hours, as is then currently in
effect.
7.4 Sterling Software will have no responsibility or liability under this
Section 7 if Customer modifies the Software without Sterling Software's written
consent, or fails to incorporate in Software any Updates which Sterling Software
has provided to Customer or if Customer is not using the then current version of
the Software.
8. Limitation of Liability
8.1 STERLING SOFTWARE SHALL HAVE NO LIABILITY WHATSOEVER FOR SPECIAL, INDIRECT,
CONSEQUENTIAL, INCIDENTAL OR EXEMPLARY DAMAGES UNDER ANY CIRCUMSTANCES, WHETHER
BASED IN TORT OR BREACH OF CONTRACT CLAIMS OR ON ANY OTHER BASIS, EVEN IF IT HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL STERLING
SOFTWARE'S LIABILITY, EXCEPT AS OTHERWISE STATED IN THIS AGREEMENT, EXCEED THE
APPLICABLE LICENSE FEES OR SUPPORT SERVICES OR CONSULTING SERVICES FEES PAID BY
CUSTOMER TO STERLING SOFTWARE.
9. Termination
9.1 The initial term of this Agreement shall be for a period of three (3) years
commencing on the Agreement Date, and shall continue thereafter unless either
party terminates this Agreement, with or without cause, by giving the other
party no less than thirty (30) days prior written notice, or as otherwise stated
in this Agreement. In the event of expiration or termination of this Agreement,
without cause, this Agreement shall remain in full force and effect for any
Schedule then in effect.
9.2 Either party may terminate this Agreement or any Schedule in the event of
any breach by the other party which breach is not cured within thirty (30) days
after receipt of written notice of such breach, except as otherwise provided in
Section 5.3. Sterling Software may also terminate this Agreement or any
specified Schedule in the event of nonpayment by Customer if such breach is not
cured within ten (10) days after receipt of written notice.
9.3 Upon any termination of this Agreement or Schedule, with cause, Customer
shall within five (5) days return the Software to Sterling Software or, at
Sterling Software's direction, destroy the Software, including Documentation,
and shall also warrant in writing that all copies and partial copies have been
returned to Sterling Software or destroyed.
9.4 The applicable sections of this Agreement, including Sections 2, 4 and 5,
shall survive any expiration or termination of this Agreement or Schedule.
10. General
10.1 (a) This Agreement, including appendices and all Schedules, supersedes in
full all prior discussions and agreements, oral and written, between the parties
relating to the Software and the Consulting Services and constitute the entire
agreement between the parties relating to such subject matters. This Agreement
including appendices, Schedules, and accepted Customer purchase orders may be
modified or supplemented only in writing signed by an authorized representative
of each party.
3
<PAGE>
[LOGO OF STERLING SOFTWARE APPEARS HERE]
SOFTWARE LICENSE and
Applications Development Division SERVICES AGREEMENT
================================================================================
(b) Subject to the terms and conditions of this Agreement, additional
license grants of the Software may be implemented by acceptance of Sterling
Software of correct Customer purchase orders referencing this Agreement. The
foregoing notwithstanding, the terms and conditions of any purchase order or
other ordering document issued by Customer in connection with this Agreement
which are in addition to or inconsistent with the terms and conditions of this
Agreement shall not be binding on Sterling Software and shall not be deemed to
modify this Agreement, unless otherwise specifically accepted in writing by
Sterling Software.
10.2 Should a shrinkwrap license agreement accompany the Software as delivered,
the terms of this Agreement shall supersede such shrinkwrap license agreement in
its entirety.
10.3 Neither party shall be liable for delays in any of its performance
hereunder due to causes beyond its reasonable control, including, but not
limited to, acts of God, strikes or inability to obtain labor or materials on
time.
10.4 If any provision of this Agreement shall be deemed illegal or otherwise
unenforceable, that provision shall be severed and the remainder of this
Agreement shall remain in full force and effect. A waiver shall be effective
only if made in writing and signed by an authorized representative of both
parties. The waiver of any right or election of any remedy in one instance shall
not affect any rights or remedies in another instance.
10.5 All required notices under this Agreement shall be sent to the recipient
party's address stated in this Agreement, unless otherwise changed in writing by
the respective party. All notices shall be given by personal delivery, overnight
carrier, telecopier, or certified or registered mail, return receipt requested.
All notices shall be deemed given on the date of receipt (or refusal) of
delivery of said notice.
10.6 Customer shall not transfer, assign or sublicense, by operation of law or
otherwise, its rights or obligations under this Agreement or any Schedule to any
other party, in whole or in part without the prior written consent of Sterling
Software, any such prohibited assignment shall be void.
10.7 Use, duplication, or disclosure by the United States Government is subject
to Restricted Rights restrictions as set forth in subparagraph (c)(1)(ii) of
the Rights in Technical Data and Computer Software clause at DFARS 252.227-7013
or (c)(i) and (2) of the Commercial Computer Software - Restricted Rights at 48
CFR 52.227-19 as applicable. Contractor/manufacturer is Sterling Software
(Southern), Inc, at 3340 Peachtree Road, NE, Atlanta, Georgia 30326.
10.8 This Agreement shall be governed by the laws of the State of Georgia
excluding principles of conflict of laws.
Accepted By: Accepted By:
Sterling Software (Southern), Inc.,
a subsidiary of Sterling Software, Inc. ______________________________________
("Sterling Software") ("Customer")
______________________________________ ______________________________________
Authorized Signature Authorized Signature
______________________________________ ______________________________________
Name (printed) Name (printed)
______________________________________ ______________________________________
Title Title
______________________________________ ______________________________________
Date Date
4
<PAGE>
[LOGO FOR STERLING SOFTWARE]
KEY PRODUCT LINE SCHEDULE to
Applications Development Division SOFTWARE LICENSE and SERVICES AGREEMENT
================================================================================
KEY PRODUCT LINE SCHEDULE ____ to
SOFTWARE LICENSE and SERVICES AGREEMENT NUMBER ______________
between
STERLING SOFTWARE (SOUTHERN), INC. ("STERLING SOFTWARE") and
__________________________________________("CUSTOMER")
1. Sterling Software shall provide Customer with the following Software and
Services pursuant to the terms and conditions of the Software License and
Services Agreement referenced above and to the extent amended herein.
A. Insert the Software products being ordered in the spaces below.
Available Software products are: KEY:Team, KEY:Coordinate, KEY:
Insight, KEY:Utilities and KEY:Expert.
<TABLE>
<CAPTION>
Unit Total
Quantity Software Product License Fee License Fee
-------- ---------------- ----------- -----------
<S> <C> <C> <C>
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
Subtotal License Fees: ___________________
</TABLE>
B. Notwithstanding Section 2.5 of the Agreement, the following Software
products are licensed under these additional terms.
The Software products identified herein are licensed by the purchase
of a License Pack. "License Pack" is defined as a package containing a
shrinkwrap license agreement and a serialized license number which
grants the Customer one Software product license and the right to make
one copy of the Software product and documentation.
Insert the Software products being ordered in the spaces below.
Available Software products are: KEY:Advise, KEY:Plan, KEY:Analyze,
KEY:Design, KEY:Construct for MVS, KEY:Construct for AS/400,
KEY:Construct for GUI, KEY:Rapid, and KEY:Document.
Software Products:
<TABLE>
<CAPTION>
Unit Total
Quantity Software Product License Fee License Fee
-------- ---------------- ----------- -----------
<S> <C> <C> <C>
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
______________ _____________________________ ________________ ___________________
Subtotal License Fees: ___________________
</TABLE>
1
<PAGE>
[LOGO OF STERLING SOFTWARE APPEARS HERE]
KEY PRODUCT LINE SCHEDULE to
Applications Development Division SOFTWARE LICENSE and SERVICES AGREEMENT
================================================================================
C. Notwithstanding Section 2.5 of the Agreement, the KEY: Guide product
is licensed under these additional terms.
KEY:Guide consists of the following product components:
One copy of the Guide Methodology
One copy of KEY:Plan
One copy of KEY:Analyze
Designated Hypermedia Distribution Rights
In all licensing situations, the Guide Methodology, the copy of
KEY:Plan and the copy of KEY:Analyze are single use licenses to be
utilized by a single designated Customer employee solely in
conjunction with the designated employee's use of the methodology for
Customer's benefit and for no other productive purpose.
The Hypermedia Distribution Rights are licensed to Customer on either
a use right for a designated number of employee users on a concurrent
use basis or on a site license or an enterprise license basis. Under a
designated number of users license, the licensed number of employee
users may utilize the Hypermedia component simultaneously but may not
exceed the licensed number of users at any time. Under a Site license,
a site is defined as a single physical building location of the
Customer and Customer may utilize an unlimited number of copies of the
Hypermedia component for use by its employees within the Site. Under
the Enterprise license, the use of the Hypermedia component by the
Customer's employees is unlimited in the Customer locations within the
country in which the Customer has licensed the software. For the
purposes of this license, Customer means the specific legal entity
identified on the face page of this Agreement and does not include
subsidiaries and affiliates of Customer.
<TABLE>
<CAPTION>
Software # of Licensed Unit Total
Quantity Product Term Users License Fee License Fee
-------- --------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
---------- Team Project License --------------- ---------------- -------------------
---------- Site License N/A ---------------- -------------------
---------- Enterprise License N/A ---------------- -------------------
Subtotal License Fees: -------------------
</TABLE>
D. The following Software products herein referred to collectively as
"KEY:Workgroup" are license under these additional terms. Key:
Workgroup Software products include KEY:Model, KEY:Assemble,
KEY:Components, KEY:Empower for PowerBuilder and KEY:Advise for
Workgroup.
Type of License Purchased. The manner in which Customer is allowed to
use the Software is determined by the type of license purchased by
Customer. All Software licenses granted to Customer under this
Schedule will be Single Use Licenses, subject to the terms of the
Agreement, unless otherwise stated herein. Other license types granted
to Customer will be stated in this Schedule and on the Sterling
Software invoice sent to Customer.
Single Use License. If Customer is granted a Single Use License,
Customer may use the Software on any computer, provided that it is
used only on one computer at any one time and that the Software is
stored on the hard disk(s) of only one computer at any one time.
Customer may not transfer the Software from one computer to another
over a network or by other means of electronic communications. If
Customer wishes to use the Software on more than one computer at one
time, Customer must either purchase another Single Use License for the
Software, or obtain a Client/Server License from Sterling Software.
Client/Server Licenses. If Customer is granted a Client License or a
Server License, Customer may use the Software in the following manner.
The Server License is for use on a single computer. If Customer wishes
to install the Server Software on additional computers, Customer must
purchase a license for each additional computer. The Client License
allows Customer to use the Client Software on a Local Area Network
(LAN) and allows Customer's users to use the Client Software so long
as the total number of Client users does not exceed the total number
of Client Licenses purchased by Customer.
2
<PAGE>
[LOGO OF STERLING SOFTWARE APPEARS HERE]
KEY PRODUCT LINE SCHEDULE to
Applications Development Division SOFTWARE LICENSE and SERVICES AGREEMENT
================================================================================
For KEY:Assemble Software product only. The KEY:Assemble Software
product is licensed under the following additional terms: The "Runtime
Modules" are those files in the Software that are identified in the
accompanying written materials as required during the execution of an
end user application developed by the Customer using the Software
("End User Application"). The Runtime Modules are limited to runtime
files, install files and ISAM and REBUILD files. Customer has a
royalty free right to reproduce and distribute the Runtime Modules of
the Software provided that:
1) Customer distributes the Runtime Modules only in conjunction with
and as part of its End User Application;
2) Customer does not use Sterling Software's name, logo, or
trademark to market its End User Application;
3) Such End User Application does not allow the user of the
Application to programmatically manipulate the API of the
Software which may be contained in the Runtime Module;
4) Customer includes Sterling Software's copyright notice on
Customer's End User Applications; and
5) Customer indemnifies, holds harmless, and defends Sterling
Software and its licensors from and against any claims or
lawsuits, including attorneys' fees, that arise or result from
the use or distribution of the End User Applications.
For KEY:Assemble and KEY:Model Software Products only. The
KEY:Assemble and KEY:Model Software products are licensed under the
following additional terms: A portion of the CLEAR:Access product is
included with KEY:Assemble and KEY:Model Software products which may
only be used in conjunction with KEY:Model and KEY:Assemble and not
with any other application. Customer also has the right to distribute
those components of CLEAR:Access needed to run the KEY:Assemble
reports created as part of the End User Application developed with the
KEY:Assemble product.
Insert the KEY:Workgroup Software products and license types being
ordered in the spaces below.
<TABLE>
<CAPTION>
Software License Unit Total
Quantity Product Type* License Fee License Fee
-------- ------- ----- ----------- -----------
<S> <C> <C> <C> <C>
_________ ______________ _________ ____________ ___________
_________ ______________ _________ ____________ ___________
_________ ______________ _________ ____________ ___________
_________ ______________ _________ ____________ ___________
_________ ______________ _________ ____________ ___________
_________ ______________ _________ ____________ ___________
</TABLE>
*SU=Single User License, CL=Client License, SR=Server License
Subtotal License Fees: ___________
E. Maintenance Services
<TABLE>
<CAPTION>
Unit Total
Quantity Software Product Maintenance Fee Maintenance Fee
-------- ---------------- --------------- ---------------
<S> <C> <C> <C>
_________ ____________________ _______________ _______________
_________ ____________________ _______________ _______________
_________ ____________________ _______________ _______________
_________ ____________________ _______________ _______________
_________ ____________________ _______________ _______________
_________ ____________________ _______________ _______________
_________ ____________________ _______________ _______________
</TABLE>
Subtotal Maintenance Services Fees: _______________
3
<PAGE>
[LOGO FOR STERLING SOFTWARE]
KEY PRODUCT LINE SCHEDULE to
Applications Development Division SOFTWARE LICENSE and SERVICES AGREEMENT
================================================================================
Total Schedule License Fees: ______________________
Total Schedule Maintenance Services Fees: ______________________
All fees are in U.S. dollars unless stated on the Schedule as Canadian
dollars ($ CDN).
2. The prices quoted on this Schedule expire on__________________.
3. A purchase order is attached (check one): [_]No [_]Yes -
(P.O.#__________________).
4. Addresses:
Bill To: __________________________ Ship To: __________________________
__________________________ __________________________
__________________________ __________________________
Attn: Attn:
-------------------------- --------------------------
Telephone No: Telephone No:
-------------------------- --------------------------
Install Location: Designated CPU(s):
__________________________ __________________________
__________________________ __________________________
__________________________ __________________________
Agreed To and Accepted By:
Sterling Software (Southern), Inc.,
a subsidiary of Sterling Software, Inc. ______________________________
("Sterling Software") ("Customer")
______________________________ ______________________________
Authorized Signature Authorized Signature
______________________________ ______________________________
Name Name
______________________________ ______________________________
Title Title
______________________________ ______________________________
Date Date
4
<PAGE>
Order Form:
Data Access Division SOFTWARE LICENSE AGREEMENT ("Agreement")
================================================================================
Agreement No.:_________
Customer _______________________
Business Address: _______________________
_______________________
_______________________
SOFTWARE and/or SERVICES UNIT PRICE UNITS ORDERED PRICE
- ------------------------ ---------- ------------- ---------
TOTAL PRICE ___________
================================================================================
Sterling Software (Southern), Inc. ("Sterling Software"), a Georgia corporation,
and a subsidiary of Sterling Software, Inc., by its acceptance of this Agreement
grants to Customer a nonexclusive perpetual CPU or single user license to use
the software products listed above (the "Software") and, if specified, agrees to
provide the related consulting services ("Services") at the prices specified,
and in implementation of this license will deliver to Customer the number of
copies of the Software indicated above, unless Customer is permitted by Sterling
Software to make the authorized number of copies.
Prices are exclusive of taxes, including sales, use, value-added, royalty
withholding taxes, customs and duties, and shipping charges, which Customer will
be responsible to pay, and which may be invoiced separately. Payment shall be
made in full within thirty (30) days after the date of invoice. A charge of no
more than 1 1/2% per month will be assessed on late payments. All prices and
payments are in U.S. dollars unless otherwise indicated.
THE PROVISIONS OF THIS AGREEMENT PRINTED ON THE REVERSE ARE INCORPORATED INTO
AND MADE A PART OF THIS ORDER FORM. Customer warrants that Customer has read
these such provisions, and understands and accepts them. Customer will inform
all persons permitted to use the Software of the license provisions, and will
require that they comply with them. In this Agreement, all references to "You"
shall mean "Customer" as defined in this Agreement.
The provisions of this Agreement, shall apply to all additional copies of the
Software ordered by Customer at a later date, and shall supersede and replace
any software license agreement that may be shrink wrapped, or otherwise included
with any microcomputer software products ordered and delivered under this
Agreement, unless otherwise advised by Sterling Software. The preprinted terms
and conditions of any purchase order or other ordering document issued by
Customer in connection with this Agreement that are in addition to or
inconsistent with the provisions of this Agreement, or of the applicable license
agreement, shall not be binding on Sterling Software, and shall not be deemed
to modify this Agreement or this Agreement, unless otherwise specifically
agreed to in writing by Sterling Software.
If required by Customer, Customer shall contemporaneously provide any necessary
purchase order and/or payment authorization numbers with the execution of this
Agreement, and of any subsequent order(s).
Accepted By: Accepted By:
Sterling Software (Southern), Inc.,
subsidiary of Sterling Software, Inc. ("Customer")
"Sterling Software")
Signature________________________ Signature________________________
Name_____________________________ Name_____________________________
Title____________________________ Title____________________________
Date_____________________________ Date_____________________________
<PAGE>
ORDER FORM
DATA ACCESS DIVISION SOFTWARE LICENSE AGREEMENT ("AGREEMENT")
================================================================================
1. GRANT OF LICENSE. Sterling Software hereby grants to You and You accept a
nonexclusive license to use the Software delivered with this Agreement. You
agree that You will not assign, transfer, rent, or sublicense Your rights under
this Agreement without the prior written consent of Sterling Software, and any
attempt to do so is void.
2. CONSULTING SERVICES. The Consulting Services, if You are entitled to such
services, shall consist of the services stated in the accompanying Consulting
Services Schedule, and shall also be subject to the Consulting Services
Appendix.
3. TERM. This Agreement is effective from the date You ordered the Software
and Consulting Services, and continues until terminated. Sterling Software may
terminate this Agreement if you fail to comply with any term or condition of
this Agreement. You agree upon any termination to destroy the Software together
with all copies in any form, and certify the destruction in writing. Your
confidentiality obligations shall survive any termination of this Agreement.
4. TITLE AND OWNERSHIP RIGHTS. You acknowledge that the Software is the sole
and exclusive property of Sterling Software, and that title and full ownership
rights to the Software furnished under this Agreement remain with Sterling
Software and/or the respective manufacturer or author. You agree to treat the
Software as Sterling Software's proprietary information, intellectual property,
and trade secrets, whether or not any portion thereof is or may be validly
copyrighted or patented.
5. USE OF THE SOFTWARE. You agree to observe the following provisions in
using the Software. Unless You have obtained a LAN license from Sterling
Software, you may use the Software on any computer, provided that it is used
only on one computer at any one time and that the Programs are stored on the
hard disk(s) of only one computer at any one time. You may not transfer the
Software from one computer to another over a network or by other means of
electronic communications. If You wish to use the Software on more that one
computer at one time, you must either license another copy of the Software, or
obtain a LAN license from Sterling Software. The Software shall only be used for
Customer's internal business purposes, and to process data which is the property
of Customer, or provided by Sterling Software.
The Software is not to be copied, in whole or in part, except for backup or
archival purposes, unless Sterling Software consents in writing. You agree not
to modify, obscure, or delete any Programs, Documentation, or Media, and You
agree to include all proprietary notices on any copies made by You. You will
take all reasonable steps to protect the Software from unauthorized
reproduction, publication, disclosure or distribution. You may not modify the
Software or merge the Software into any other computer programs or software. You
may not reverse assemble or reverse compile the Software, in whole or in part.
You further agree that You will not use the Software for creating or aiding the
creation of a competitive software package, nor will You disclose same to anyone
for the purpose of aiding in the design or creation of a competitive software
package. The Software may include, as part of the Software, software products
owned by third parties. Such third party products are not to be used
independently of the Software unless otherwise permitted in writing by Sterling
Software.
6. LIMITED WARRANTY. Sterling Software warrants that it has the right to
authorize the use of the Software by You under this Agreement. Sterling Software
also warrants that for a period of ninety (90) days from the date of delivery of
the Software: (a) the enclosed Media and documentation (the "Materials") to be
free from defects in materials or workmanship, in normal use and service, for a
period of ninety (90) days from the effective date of this Agreement; and (b)
the Programs will operate substantially in conformance with the Documentation.
However, Sterling Software does not warrant that the contents of the
documentation or the operation of the Programs will be error free, or that
Sterling Software will correct all Program errors. Sterling Software's sole
obligation under this Section shall be to obtain the necessary authority,
correct the Programs, or, at Sterling Software's option refund the license fee
paid by You upon return of the Software, and any copies thereof.
Sterling Software will hold You harmless and defend You against suits and
demands based on any claim that Your use of the Software under this Agreement
infringes on any copyright or trademark, provided that You give Sterling
Software prompt written notice of such claim and You permit Sterling Software to
control the defense and settlement thereof.
THESE LIMITED WARRANTIES GIVE YOU SPECIFIC LEGAL RIGHTS, AND YOU MAY ALSO HAVE
OTHER RIGHTS WHICH VARY FROM STATE TO STATE, EXCEPT FOR THE WARRANTIES DESCRIBED
IN THIS SECTION, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
7. LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE STATED IN THIS AGREEMENT,
NEITHER STERLING SOFTWARE NOR ANYONE ELSE WHO HAS BEEN INVOLVED IN THE CREATION,
PRODUCTION, OR DELIVERY OF THE SOFTWARE SHALL BE LIABLE TO YOU OR ANY OTHER
PARTY FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, SUCH AS, BUT NOT
LIMITED TO, LOSS OF ANTICIPATED PROFITS OR BENEFITS, RESULTING FROM THE USE OR
PERFORMANCE OF THE SOFTWARE, OR ARISING OUT OF ANY BREACH OF ANY WARRANTY, OR
ARISING FROM THE PERFORMANCE OF THE CONSULTING SERVICES. IN NO CASE SHALL
STERLING SOFTWARE NOR SUCH THIRD PARTIES BE RESPONSIBLE FOR ANY AMOUNTS IN
EXCESS OF THE LICENSE FEE PAID BY YOU. SOME STATES DO NOT ALLOW THE EXCLUSION OR
LIMITATION OF INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, SO THE ABOVE
LIMITATION MAY NOT APPLY TO YOU.
8. MAINTENANCE SERVICES. Maintenance services and Updates to the Software, if
any, will be provided at no additional cost for a period of ninety (90) days
following delivery of the software. Maintenance services ("Maintenance
Services") shall consist of error corrections, telephone support, and Updates
generally offered at no additional charge by Sterling Software. If made
available by Sterling Software, such Maintenance Services shall automatically
renew on an annual basis at Sterling Software's then current rates and terms,
unless either party gives no less than thirty (30) days prior written notice of
nonrenewal before expiration of the then current Maintenance Services term.
9. GOVERNING LAW. This Agreement is to be governed by and interpreted in
accordance with the laws of the State of Georgia, excluding principles of
conflict of laws. You agree not to export the Software outside the country in
which it was originally licensed without Sterling Software's prior written
consent, and will abide by all applicable export laws. If any provision of this
Agreement shall be declared invalid or unenforceable, such provision shall be
deemed to be deleted, and it shall not affect the validity of any other term or
provision of this Agreement.
10. USE OF SOFTWARE BY UNITED STATES GOVERNMENT. Use, duplication or disclosure
by the United States Government is subject to Restricted Rights restrictions as
set forth in subparagraph (c)(1)(ii) of the Rights in Technical Data and
Computer Software clause at DFARS 252.227-7013 or (c)(1) and (2) of the
Commercial Computer Software-Restricted Rights at 48 CFR 52.227-19 as
applicable. Contractor/manufacturer is Sterling Software (Southern), Inc.,
Concoures Corporate Center V. Five Concourse Pkwy., Suite 2500, Atlanta, Georgia
30328-5350.
11. WHOLE AGREEMENT. This Agreement, including all schedules, is the complete
and exclusive statement of agreement, and supersedes any proposed agreement,
oral or written, and any other communications between us relating to the subject
matter of this Agreement, and may be modified or supplemented only be a document
signed by both parties to this Agreement.
<PAGE>
Exhibit D
Order Number: LK013196A
SOFTWARE LICENSE AGREEMENT
================================================================================
GRANT OF LICENSE. Sterling Software hereby grants to You and You accept a
nonexclusive license to use the Software delivered with this Agreement. You
agree that You will not assign, transfer, rent, or subliscense our rights under
this Agreement without the prior written consent of Sterling software, and any
attempt to do so is void.
CONSULTING SERVICES. The Consulting Services, if You are entitled to such
services, shall consist of the services stated in the accompanying consulting
Services Schedule, and shall also be subject to the Consulting Services
Appendix.
TERM. This Agreement is effective from the date You ordered the Software and
Consulting Services, and continues until terminated. Sterling Software may
terminate this Agreement if You fail to comply with any term or condition of
this Agreement. You agree upon any termination to destroy the Software together
with all copies in any form, and certify the destruction in writing. Your
confidentiality obligations shall survive any termination of this Agreement.
TITLE AND OWNERSHIP RIGHTS. You acknowledge that the Software is the sole and
exclusive property of Sterling Software, and that title and full ownership
rights to the Software furnished under this Agreement remain with Sterling
Software and/or the respective manufacturer or author. You agree to treat the
Software as Sterling Software's proprietary information, intellectual property
and trade secrets, whether or not any portion thereof is or may be strictly
copyrighted or patented.
USE OF THE SOFTWARE. You agree to observe the following provisions in using the
Software: Unless You have obtained a LAN license from Sterling Software, You may
use the Software on any computer, provided that it is used only on one computer
at any one time and that the Programs are stored on the hard disk(s) of only one
computer at any one time. You may not transfer the Software from one computer to
another over a network or by other means of electronic communications. If You
wish to use the Software on more than one computer at one time, You must either
license another copy of the Software, or obtain a LAN license from Sterling
Software. The Software shall only be used for Customer's Internal business
purposes, and to process data which is the property of Customer, or provided by
Sterling Software.
The Software is not to be copied, in whole or in part, except for backup or
archival purposes, unless Sterling Software consents in writing. You agree not
to modify, obscure, or delete any Programs, Documentation, or Media, and You
agree to include all proprietary notices on any copies made by You. You will
take all reasonable steps to protect the Software from unauthorized production,
publication, disclosure or distribution. You may not modify the Software or
merge the Software into any other computer programs or software. You may not
reverse assemble or reverse compile the Software, in whole or in part.
You further agree that You will not use the Software for creating or aiding the
creation of a competitive software package, nor will You disclose same to anyone
for the purpose of aiding in the design or creation of a competitive software
package. The Software may include, as part of the Software, software products
owned by third parties. Such third party products are not to be used
independently of the Software unless otherwise permitted in writing by Sterling
Software.
LIMITED WARRANTY. Sterling Software warrants that it has the right to authorize
the use of the Software by You under this Agreement. Sterling Software also
warrants that for a period of ninety (90) days from the date of delivery of the
Software: (a) the enclosed Media and Documentation (the "Materials") to be free
from defects in materials or workmanship, in normal use and service, for a
period of ninety (90) days from the effective date of this Agreement; and (b)
the Programs will operate substantially in conformance with the Documentation.
However, Sterling Software does not warrant that the contents of the
Documentation or the operation of the Programs will be error free, or that
Sterling Software will correct all Program errors. Sterling Software's sole
obligation under this Section shall be to obtain the necessary authority,
correct the Programs, or, at Sterling Software's option, to refund the license
fee paid by You upon return of the Software, and any copies thereof.
Sterling Software will hold You harmless and defend You against suits or demands
based on any claim that Your use of the Software under this Agreement infringes
on any copyright or trademark, provided that You give Sterling Software prompt
written notice of such claim and You permit Sterling Software to control the
defense and settlement thereof.
THESE LIMITED WARRANTIES GIVE YOU SPECIFIC LEGAL RIGHTS, AND YOU MAY ALSO HAVE
OTHER RIGHTS WHICH VARY FROM STATE TO STATE. EXCEPT FOR THE WARRANTIES DESCRIBED
IN THIS SECTION, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
7. LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE STATED IN THIS AGREEMENT,
NEITHER STERLING SOFTWARE NOR ANYONE ELSE WHO HAS BEEN INVOLVED IN THE CREATION,
PRODUCTION, OR DELIVERY OF THE SOFTWARE SHALL BE LIABLE TO YOU OR ANY OTHER
PARTY FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, SUCH AS, BUT NOT
LIMITED TO, LOSS OF ANTICIPATED PROFITS FOR BENEFITS, RESULTING FROM THE USE OR
PERFORMANCE OF THE SOFTWARE OR ARISING OUT OF ANY BREACH OF ANY WARRANTY, OR
ARISING FROM THE PERFORMANCE OF THE CONSULTING SERVICE. IN NO CASE SHALL
STERLING SOFTWARE NOR SUCH THIRD PARTY BE RESPONSIBLE FOR ANY AMOUNTS IN EXCESS
OF THE LICENSE FEE PAID BY YOU. SOME STATES DO NOT ALLOW THE EXCLUSION
LIMITATION OF INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, SO THE ABOVE
LIMITATION MAY NOT APPLY TO YOU.
8. WARRANTY SUPPORT SERVICES. Warranty support services and updates to the
Software, if any, will be provided at no additional cost for a period of ninety
(90) days following delivery of the software. Support services shall consist of
error corrections, telephone support, and Updates generally offered at no
additional charge by Sterling Software. If made available by Sterling Software,
such support services shall automatically renew on an annual basis at Sterling
Software's then current rates and terms, unless either party gives no less than
thirty (30) days prior written notice of nonrenewal before expiration of the
then current support term.
9. GOVERNING LAW. This Agreement is to be governed by and interpreted in
accordance with the laws of the State of Georgia, excluding principles of
conflict of laws. You agree not to export the Software outside the United
States or Canada without Sterling Software's prior written consent, and will
abide by all applicable export laws. If any provision of this Agreement shall
be declared invalid or unenforceable, such provision shall be deemed to be
deleted, and it shall not affect the validity of any other term or provision
this Agreement.
10. USE OF SOFTWARE BY UNITED STATES GOVERNMENT. Use, duplication, or
disclosure by the United States Government is subject to Restricted Rights
restrictions as set forth in subparagraph (c)(l)(ii) of the Rights in Technical
Data and Computer Software clause at DFARS 252.277-7013 or (c)(1) and (2) of the
Commercial Computer Software - Restricted Rights at 48 CFR252.277-19 as
applicable. Contractor/manufacturer is Sterling Software (Southern), Inc., 3340
Peachtree Road, N.E., Atlanta, Georgia 30326.
11. WHOLE AGREEMENT. This Agreement, including all schedules, is the complete
and exclusive statement of agreement, and supersedes any proposed agreement,
oral or written, and any other communications between us relating to the subject
matter of this Agreement, and may be modified or supplemented only by a document
signed by both parties to this Agreement.
<PAGE>
[LOGO OF STERLING SOFTWARE APPEARS HERE]
Exhibit E
MASTER LICENSE AGREEMENT
Storage Management Division
MASTER LICENSE AGREEMENT by and between STERLING SOFTWARE (U.S.A.), INC.
(hereinafter referred to as "Sterling"), a California corporation and
wholly-owned subsidiary of STERLING SOFTWARE, INC., having its principal office
at 11050 White Rock Road, Suite 100, Rancho Cordova, California 95670-6095 and
____________________________________________________________ (hereinafter known
as "Licensee") a _________________________________________ of the State of
____________________________________________ having an office at
____________________________________________________________________ made and
entered into effective as of the _______________ day of _______________________,
19 ________.
WHEREAS, Sterling is an authorized marketing representative for licensing
certain proprietary computer software systems, as defined below ("Software");
and
WHEREAS, the parties hereto desire to enter into this Master License Agreement
("Agreement") for the purpose of facilitating the licensing of Software, subject
to the terms and conditions of this Agreement.
NOW, THEREFORE, for and in consideration of the terms and conditions hereinafter
stated, it is agreed and understood as follows:
1. GRANT AND USE OF SOFTWARE
1.1 Sterling hereby grants to Licensee a non-exclusive object code only
licensed to use those software products and related user documentation
("Software") described on each schedule or other order form executed by Sterling
and Licensee, substantially in the form of Exhibit A hereto ("Schedule"), based
on the then current Sterling prices and any additional terms and conditions
stated in each Schedule. Each Schedule will state the term of the license,
whether it is a site license or a CPU license, and the CPU type(s) and serial
number(s) on which the Software will be used.
1.2 The Software may be used only for, by and on behalf of Licensee. All data
processed by the Software must be and remain the property of Licensee. Licensee
shall not reverse engineer or decompile the Software in whole or in part.
1.2.1 For purposes of this Agreement, "site" is defined as a computer
facility of Licensee located in a single building, operated by a single
administrative staff, and which has common computer system libraries and shared
DASD available to multiple CPUs. Each site license grants Licensee the right to
use the Software on the designated CPU(s) located at the installation site of
Licensee stated on the Schedule, except that if more than one computer room at
Licensee's site is being used for the processing of data for different agencies,
departments or subsidiaries of Licensee, then Licensee must obtain a separate
site license for each site where the Software is used. Licensee shall notify
Sterling promptly in writing of any changes in the CPU information required
under Section 1.1.
1.2.2 Each CPU license grants Licensee the right to use the Software
only on a single CPU designated by type, serial number, and site address. A
separate CPU license is required for each CPU on which the Software will be
used.
1.3 Licensee may temporarily use the Software at other than the designated site
or on the designated CPU during emergency situations, disaster recovery, or
disaster recovery tests. Temporary use is granted subject to the following:
1.3.1 Use of the Software will be only at the alternate designated site
or on the alternate CPU at any given time during the emergency situation,
disaster recovery, or disaster recovery test. Immediately following any period
of emergency use or test, all production copies of the Software at the emergency
use site will be destroyed or returned to the authorized site or backup archival
center.
1.3.2 Copies of the Software may be stored offsite for backup security
purposes only provided that all persons having access to the Software are made
subject to Licensee's obligations under this Agreement and that Licensee takes
any other reasonable steps required to fulfill these obligations.
1.4 If a licensed site closes, Licensee may transfer the Software and
supporting material to another designated site for operation. If a licensed CPU
is no longer operational, Licensee may transfer the Software and supporting
material to another CPU at the same licensed site. If any of the above transfers
take place, such transfers may be subject to an upgrade fee as referenced in
Section 1.5. In addition, any transfer of the Software will be subject to
Sterling's then current terms and fees. In the event of one of the above
transfers, Licensee must notify Sterling in writing no more than thirty (30)
days after such transfer, provide Sterling with the new installation site
address, if applicable, and the CPU type(s) and serial number(s) where the
Software will be in operation, and warrant to Sterling in writing that all
copies of the Software at the previous site or CPU have been destroyed or
transferred.
1.5 Any change in CPU designation which constitutes an upgrade based on
Sterling's definition of CPU group level shall be subject to Sterling's then
current terms and fees.
1.6 The Software shall be deemed accepted by Licensee upon execution of the
applicable Schedule.
2. TITLE
2.1 Title and full ownership rights to the Software furnished under this
Agreement shall remain with Sterling and the respective owners, as applicable.
Sterling represents and Licensee acknowledges and agrees that the Software
contains proprietary information, intellectual property, and trade secrets of
Sterling and the respective owners, whether or not any portion thereof is or may
be validly copyrighted or patented.
2.2 Licensee's rights in and to the Software as a result of this Agreement
shall not be transferred, assigned, licensed, pledged, or otherwise transferred
without the prior written consent of Sterling, and any such prohibited
assignment shall be null and void.
3. PAYMENT; PRICES
3.1 Except as otherwise provided in the Schedule, upon delivery of the
Software, Sterling may invoice Licensee for the license fee, and such invoice
shall be payable in full by Licensee upon receipt. Until paid in full, all
amounts which are more than thirty (30) days past due shall bear an additional
charge of one and one-half percent (1-1/2%) per month, less the sum, if any, in
excess of applicable state law. In the event Licensee becomes more than sixty
(60) days in arrears on any monthly payment due under installment payment terms,
the entire principal balance plus interest owing shall immediately be due and
payable.
3.2 In addition to all charges invoiced hereunder, Licensee shall pay to
Sterling all taxes that are applicable to this Agreement or are measured
directly by payment made under it. However, Licensee shall be responsible for
reporting and paying all property taxes for the Software. All other taxes on the
Software are Licensee's responsibility unless required to be collected by
Sterling or paid by Sterling to tax authorities. This provision excludes
Sterling's franchise taxes, taxes based on Sterling's net income or taxes for
which the Licensee has furnished Sterling a bona fide tax exemption certificate.
4. LIMITED WARRANTY; INDEMNIFICATION
4.1 Sterling warrants that for a period of one (1) year commencing on the
effective date of the applicable Schedule, and during any term thereafter in
which Licensee is entitled to maintenance and enhancement in accordance with
Section 6, the Software will substantially perform in accordance with the
applicable user documentation. Sterling's sole obligation and liability under
this Section, however, shall be to replace or correct the Software so that it
will so perform, in such manner or method as determined by Sterling, at
Sterling's own cost and expense, or, if the Software cannot be corrected, upon
return of all Software materials, to refund a pro-rata portion of the license
fee paid based on a five (5) year term commencing on the effective date of the
applicable Schedule.
4.2 The warranty specified in Section 4.1 shall not be effective and Sterling
shall have no obligation or liability to Licensee if (i) the Software is not
used in accordance with Sterling's specified user documentation for the
Software; (ii) the Software has been altered, modified or revised by Licensee
without the written approval of Sterling; (iii) Licensee's computer hardware
malfunctions; or (iv) for any other cause within the control of Licensee,
resulting in the Software not performing in accordance with the user
documentation.
4.3 Except to the extent provided in this Section, Sterling shall have no
liability under this Agreement to Licensee or any other party for any loss or
damage including, without limiting the generality of the foregoing, any direct,
general, incidental, indirect, special or consequential damages, resulting from
<PAGE>
the failure of the Software to perform, the use or possession of the Software by
Licensee, or for any other reason, or resulting from acts or omission by
Sterling.
4.4 Sterling warrants that it is authorized to grant the license to use the
Software and shall indemnify and hold harmless and defend Licensee against suits
based on any claim that the use of the Software by Licensee under this Agreement
infringes on any United States patent right, copyright, trade secret or other
proprietary right of a third party, provided Sterling is promptly notified in
writing of any suit or claim against Licensee, and further provided that
Licensee permits Sterling to defend, compromise or settle the same and gives
Sterling all available information, reasonable assistance and authority to
enable Sterling to do so. In no event shall Licensee settle any such claim,
lawsuit or proceedings without Sterling's prior written consent. The indemnity
under this Section 4.4 shall not apply to any infringement arising out of (i)
use of the Software in combination with non-Sterling computer software; (ii) use
of the Software which is not authorized herein or not used in accordance with
the applicable user documentation; or (iii) the Software having been altered,
modified or revised by Licensee.
4.5 NO OTHER WARRANTY IS EXPRESSED AND NONE SHALL BE IMPLIED, INCLUDING
WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR USE OR FOR A PARTICULAR
PURPOSE.
5. NON-DISCLOSURE; DUPLICATION
5.1 Licensee agrees to maintain all information and data contained in the
Software in strict confidence for Sterling. Licensee agrees not to disclose or
duplicate, nor allow to be disclosed or duplicated, any Software, in whole or in
part, except as otherwise provided in this Agreement. Licensee shall take all
reasonable steps necessary to ensure that the Software is not made available or
disclosed by Licensee or by its employees to any other person, firm or
corporation. Licensee agrees that all authorized persons having access to the
Software shall observe and perform this non-disclosure covenant.
5.2 Licensee may reproduce Sterling's user documentation for internal use only.
Any such reproduction shall include any copyright or similar proprietary notices
contained therein. Sterling reserves the right to withdraw permission to
reproduce copyrighted and proprietary material, at its discretion, if the above
instructions are not being followed properly to protect its copyright and
proprietary rights. No permission is granted to use trademarks and service marks
of the owners apart from the incidental appearance of such marks in the titles,
text, and illustrations of the named publications.
6. MAINTENANCE AND ENHANCEMENT PLAN
6.1 The Maintenance and Enhancement Plan ("Plan"), if then currently and
generally available, shall commence on the effective date of the applicable
Schedule for the Software and shall continue in force on an annual basis until
Licensee cancels the Plan in writing, fails to pay the fee, or otherwise
breaches this Agreement. The Plan is furnished during the first year at no
charge. Thereafter, the maintenance and enhancement fee is billed annually at
Sterling's then current terms and fees.
6.2 Throughout the duration of the Plan, Licensee will receive from Sterling
one (1) copy of any new release of the Software, including all error
corrections, modifications, enhancements (unless priced separately by Sterling
and generally not included in the Software at time of licensing), and the
revised user documentation.
6.3 If Licensee cancels the Plan, Licensee may, at a later date, subscribe to
and receive the benefits of the Plan, if available, subject to the then current
policies of Sterling.
6.4 All Software releases will be maintained for a period of at least six (6)
months after the availability date of a new release or for a period of twelve
(12) months after the delivery date of the Software, whichever is later.
7. TERMINATION
7.1 The term of each license of the Software shall be stated in the Schedule
unless earlier terminated pursuant to the Schedule or this Agreement. Sterling
shall have the right to terminate a license for any Software in the event of
breach of any Schedule or this Agreement provided such breach remains uncured
thirty (30) days after written notice by Sterling to Licensee. Upon termination,
Licensee shall return the Software with written certification that the Software
has been deleted from all computer systems and all related documentation has
been destroyed. Sections 2, 3, 4.3, 4.4 and 5.1 shall survive termination or
expiration of each Schedule and this Agreement.
7.2 Subject to Section 7.1, an ongoing or guaranteed rental license for
Software shall automatically renew for additional monthly periods, unless either
party gives the other party thirty (30) days prior written notice of
termination. If such license for the Software is automatically renewed pursuant
to this Section 7.2, all of the terms and conditions of the Schedule shall
remain in full force and effect except any changes noticed by Sterling to
Licensee not less than thirty (30) days prior to the end of the term as
specified in the applicable Schedule.
8. GENERAL
8.1 Titles and paragraph headings are for convenient reference and are not a
part of this Agreement. This Agreement supersedes in full all previous
agreements and understandings of any nature whatsoever, oral or written, between
the parties relating to the Software and constitutes the entire agreement
between the parties relating to the Software. This Agreement shall have no force
and effect until executed by an authorized representative of each party and may
only be modified or supplemented by a written document executed by an authorized
representative of each party. The preprinted terms and conditions of any
purchase order or other ordering document issued by Licensee in connection with
this Agreement shall not be binding on Sterling and shall not be deemed to
modify this Agreement.
8.2 Sterling shall not be liable for delays in any of its performance hereunder
due to causes beyond its reasonable control, including, but not limited to,
acts of God, strikes or inability to obtain labor or materials on time.
8.3 If any provision of this Agreement shall be illegal or otherwise
unenforceable, that provision shall be severed and the remainder of the
Agreement shall remain in full force and effect. The waiver of any rights or
election of any remedy in one instance shall not affect any rights or remedies
in another instance. A waiver shall be effective only if made in writing and
signed by an authorized representative of each party.
8.4 All notices and other written communications permitted or required under
this Agreement shall be deemed given on the date of deposit in the United States
mail, first class, postage pre-paid, addressed to the party to be notified at
the address shown on this Agreement. A change of address for notice purposes may
be made by the same notice procedure.
8.5 This Agreement shall be governed by and construed under the laws of the
State of California, excluding principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the day and year first above written.
ACCEPTED:
STERLING SOFTWARE (U.S.A.), INC.,
("Sterling")
A wholly-owned subsidiary of Sterling Software, Inc.
By:_____________________________________________________________________________
Printed Name
and Title:______________________________________________________________________
Date:___________________________________________________________________________
ACCEPTED:
________________________________________________________________________________
("Licensee")
By:_____________________________________________________________________________
Printed Name
and Title:______________________________________________________________________
Date:___________________________________________________________________________
<PAGE>
EXHIBIT F
No.________
STERLING SOFTWARE (U.S. OF AMERICA), INC.
SOFTWARE LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT ("License Agreement"), entered into this _____
day of _______________, 199__ (the "Effective Date"), by and between
_________________________ ("Licensee"), a __________ corporation conducting
business at _________________________, and Sterling Software (U.S. of America),
Inc. ("Sterling"), with its principal place of business at 1800 Alexander Bell
Drive, Reston, Virginia 22091;
WITNESSETH:
WHEREAS, Sterling is the sole owner of all tangible and intangible rights and
title to, or has the rights to license, certain software products; and
WHEREAS, Licensee desires to obtain a license to use one or more computer
software products which Sterling has the rights to license (including programs,
available options and documentation);
NOW, THEREFORE, in consideration of the covenants and promises specified herein,
the parties hereto understand and agree as follows:
1. DEFINITIONS
A. The term "PRODUCT" shall mean and refer to any computer software
product or products of Sterling described on any Schedule and any attendant
documentation provided hereunder, and any new release or enhanced or modified
version of such PRODUCT(S) provided to Licensee by Sterling pursuant to Section
12 of this License Agreement.
B. The term "Product Schedule" shall mean and refer to the list of
licensed PRODUCTS and other related data attached hereto, executed by Sterling
and Licensee, and expressly made a part of this License Agreement.
C. The term "Computer System" shall mean and refer to a designated
Central Processing Unit (CPU) identified by its serial number, or as otherwise
designated, on the Product Schedule.
2. GRANT. Sterling hereby grants to Licensee a non-transferable and
non-exclusive license to use the PRODUCT for Licensee's internal business use
only, subject to the terms and conditions specified herein and the applicable
Product Schedule incorporated herein. Licensee shall not: (a) permit any third
party to use the PRODUCT, (b) use the PRODUCT in the operation of a service
bureau or (c) use the PRODUCT to process data for the benefit of any third
party. For purposes of this Section, "third party" shall include, without
limitation, subsidiaries and affiliates of Licensee. Conflicts in terms between
the Product Schedule and this License Agreement shall be resolved in favor of
the Product Schedule.
3. TERM. PRODUCT is licensed for the Term specified in the Product Schedule
subject to Licensee's payment of the fees set forth therein and Licensee's
strict compliance with the terms of this License Agreement.
4. SCOPE OF USE
A. Computer System. One copy of the PRODUCT must be licensed for each
---------------
Computer System upon which the PRODUCT is installed, regardless of the number of
Computer Systems installed at a physical location. Licensee shall be responsible
for installation of the PRODUCT on its Computer System(s).
B.1. Upgrades and Transfers. The PRODUCT shall be used only on the Computer
----------------------
System designated on the Product Schedule. Licensee may change or upgrade the
Computer System on which the PRODUCT is installed by (i) providing Sterling
prior written notice specifying the model and serial number of the Computer
System on which the PRODUCT is installed and the model and serial number of the
intended replacement computer system or upgrade; (ii) obtaining the prior
written approval of Sterling regarding the requested transfer or upgrade; and
(iii) providing Sterling prior written confirmation that it will remit the
prevailing upgrade fees as set forth below in Section B.2., if applicable. Upon
the transfer of the PRODUCT to such replacement Computer System, Licensee shall
immediately cease use of the PRODUCT on the computer system on which the PRODUCT
was installed prior to such transfer.
B.2. Upgrade and Transfer Fees. Any transfer of the PRODUCT from the
-------------------------
Computer System to another computer
<PAGE>
Sterling Software License Agreement Page 2
- --------------------------------------------------------------------------------
system or upgrade of the Computer System will be subject to Sterling's
prevailing terms and fees for transfers, and if such transfer constitutes an
upgrade based on Sterling's definition of CPU group level, it shall be
conditioned upon the payment of Sterling's prevailing upgrade fees.
C. Backup. If the Computer System(s) on which Customer has installed
------
PRODUCT(s) are temporarily inoperable, Licensee may transfer the use of the
PRODUCT to a backup computer system until operability is restored to the
licensed Computer System(s). Licensee may make a copy of the software portion of
the PRODUCT strictly for backup purposes.
5. PAYMENT. Licensee's payment for fees hereunder shall be due and payable Net
Thirty (30) Days. Until paid in full, all amounts which are more than thirty
(30) days past due shall bear an additional charge of 1 1/2 percent per month,
less the sum, if any, in excess of applicable state law. In the event Licensee
becomes more than sixty (60) days in arrears on any payment due under
installment payment terms, the entire principal balance plus interest owing
shall immediately be due and payable. Sterling reserves the right to cancel any
license for non-payment.
6. TAXES. Licensee shall pay, or upon receipt of an invoice from Sterling,
shall reimburse Sterling for all sales, use, property, customs, excise or other
taxes (however designated and whether foreign or domestic) imposed on Licensee,
or required to be collected by Sterling, or imposed on the PRODUCT or the use
thereof, irrespective of whether included in any invoice sent to Licensee at any
time by Sterling; provided, however, that Licensee shall not be responsible for
any corporate income taxes or franchise fees imposed on Sterling. If Licensee is
a tax exempt organization, Licensee shall provide proof of such status to
Sterling, in a form acceptable to Sterling.
7. TITLE AND NON-ASSIGNABILITY. Title to the PRODUCT, all proprietary rights
therein and all materials supplied to Licensee under this Licensee Agreement
shall remain the sole property of Sterling and/or the party which has granted
marketing and licensing rights to Sterling for such PRODUCT. The license to use
the PRODUCT hereunder is personal to Licensee and Licensee shall not transfer,
sublicense, assign, rent, lease, or deliver the PRODUCT (or any copy of the
PRODUCT) or such license to any third party or other entity without the prior
written consent of Sterling. For purposes of this Section, "third party" shall
include, without limitation, subsidiaries and affiliates of Licensee. Any
assignment consented to by Sterling shall not release Licensee from its
obligations hereunder (except the prohibition against assignment) and, as a
condition precedent to such assignment, Licensee shall comply with the
provisions of Section 4 above, to the extent applicable, and the assignee shall
agree in writing to be bound by all the provisions of this License Agreement as
a Licensee and shall provide an executed copy of such agreement to Sterling in
the form supplied by Sterling.
8. NON-DISCLOSURE AND NON-REPRODUCTION OF PRODUCT INFORMATION. Licensee
understands and agrees that Sterling considers the PRODUCT and related
documentation (collectively "STERLING INFORMATION") to be the proprietary and
confidential information of Sterling and/or a third party which has granted
marketing and licensing rights to Sterling. Licensee agrees to maintain the
STERLING INFORMATION in strict confidence and, except for the right of Licensee
to make one (1) copy of the PRODUCT for backup purposes pursuant to Section 4.C
above, Licensee agrees not to disclose, duplicate or otherwise reproduce,
directly or indirectly, the STERLING INFORMATION in whole or in part. Licensee
agrees not to disassemble, reverse engineer, or reverse compile the PRODUCT in
whole or in part. Licensee agrees to take all reasonable steps to ensure that no
unauthorized persons shall have access to the STERLING INFORMATION and that all
authorized persons having access to the STERLING INFORMATION shall refrain from
any such disclosure, duplication or reproduction. Licensee agrees not to remove
any copyright notice or other proprietary markings from the STERLING
INFORMATION, and any copy thereof made by Licensee for backup purposes shall
contain the same copyright notice and proprietary markings contained on the copy
of the PRODUCT furnished by Sterling to Licensee hereunder. If the STERLING
INFORMATION will be provided or made available to the U.S. Government, any use,
duplication, or disclosure by the U.S. Government of the STERLING INFORMATION
shall be subject to the restrictions applicable to proprietary commercial
computer software set forth in subparagraph (c)(1)(ii) of The Rights in
Technical Data and Computer Software clause at DFARS 252.227-7013 or
subparagraphs (c)(1) and (2) of the Commercial Computer Software - Restricted
Rights clause at 48 CFR 252.227-19, as applicable. Licensee acknowledges that
the STERLING INFORMATION is unique and that Licensee's failure to comply with
the provisions of this Section 8 shall result in irreparable harm to Sterling
and/or any third party from whom Sterling has received marketing and licensing
rights, and that in the event of the breach or threatened breach by Licensee of
its obligations under this Section, Sterling shall be entitled to equitable
relief in the form of specific performance and/or an injuction for any such
actual or threatened breach, in addition to the exercise of any other remedies
at law and in equity. In the event that Licensee shall breach the terms of this
Section, and any such breach shall remain uncured for a period of five (5) days
after the receipt by Licensee of written notice from Sterling of such breach,
Sterling may, at its option, terminate all licenses granted to Licensee
hereunder, in which event Licensee shall have no further right to use any copies
of such PRODUCT. In the event of any such termination or cancellation, Licensee
shall, within ten (10) days after the effective date of any such termination or
cancellation, certify in writing to Sterling that such PRODUCT
<PAGE>
Sterling Software License Agreement Page 3
- --------------------------------------------------------------------------------
and all materials relating thereto in the possession of Licensee have been
destroyed.
9. INDEMNITY. Sterling shall indemnify and hold Licensee harmless from any
award of costs and damages against Licensee in any suit based on any claim that
the use of the PRODUCT by Licensee infringes any U.S. trademark, patent right,
copyright or trade secret, provided Sterling is promptly notified in writing of
any such suit or claim against Licensee and is given complete authority to
defend, compromise or settle same, and Licensee gives Sterling all available
information, reasonable assistance and authority to enable Sterling to do so.
If, as the result of any such claim of infringement, Licensee is enjoined from
using the PRODUCT, or if Sterling reasonably believes that the PRODUCT is likely
to become the subject of a claim of infringement, Sterling, at its option and
expense, may procure the right for Licensee to continue to use the PRODUCT, or
replace or modify the PRODUCT so as to make it non-infringing. If neither of
these two options is deemed reasonably practicable by Sterling, Sterling may
discontinue the license granted herein for such PRODUCT upon thirty (30) days'
written notice and refund to Licensee the unamortized portion of the Software
Support fee paid by Licensee plus (i) in the case of a term license, the
unamortized portion of the annual license fee paid by Licensee, or (ii) in the
case of a perpetual license, the unamortized portion of the license fee paid by
Licensee as amortized on a straight-line basis for a five-year period from the
Installation of the affected PRODUCT. Sterling shall have no liability for any
claim of infringement based upon the use of the PRODUCT supplied by Sterling
when such claim is based upon use of the PRODUCT in combination with other
programs or data not supplied by Sterling.
THE FOREGOING STATES LICENSEE'S SOLE REMEDY AND THE ENTIRE LIABILITY OF STERLING
WITH RESPECT TO INFRINGEMENTS OF ANY TRADEMARKS, COPYRIGHTS, PATENTS OR TRADE
SECRETS BY THE PRODUCT OR ANY PART THEREOF.
10. LIABILITY. EXCEPT AS EXPRESSLY SPECIFIED IN THIS SECTION OR ELSEWHERE IN
THIS LICENSE AGREEMENT, NEITHER STERLING NOR ANY THIRD PARTY FROM WHOM STERLING
RECEIVED MARKETING AND LICENSING RIGHTS SHALL BE LIABLE FOR ANY LOSS OR DAMAGE
THAT MAY ARISE IN CONNECTION WITH THE FURNISHING OF OR ANY THIRD PARTY FROM WHOM
STERLING, PERFORMANCE OF OR USE BY LICENSEE OF THE PRODUCT. IN NO EVENT SHALL
STERLING OR ANY THIRD PARTY FROM WHOM STERLING RECEIVES MARKETING AND LICENSING
RIGHTS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
IN NO EVENT SHALL LICENSEE BE ENTITLED TO ANY MONETARY DAMAGES AGAINST STERLING,
OR ANY THIRD PARTY FROM WHOM STERLING RECEIVED MARKETING AND LICENSING RIGHTS,
IN EXCESS OF THE LICENSE FEES PAID TO STERLING BY LICENSEE HEREUNDER FOR THE
PRODUCT TO WHICH LICENSEE'S CLAIM RELATES.
11. WARRANTY. Sterling warrants that for a period of one (1) year following
the Effective Date, the PRODUCT shall function in substantial accordance with
the applicable technical manuals supplied to Licensee. Sterling's sole
obligation and liability under this warranty shall be to use reasonable efforts
to correct, bypass, or replace, as soon as practicable, any defective item(s) in
the copy of the most current release of the PRODUCT distributed under this
License Agreement, at Sterling's own cost and expense, provided written notice
of such defective item(s) is given to Sterling by Licensee during the warranty
period. This warranty shall not apply if: (a) the PRODUCT has not been used in
accordance with Sterling's instructions; (b) the PRODUCT has been altered,
modified or converted by Licensee without the prior written approval of
Sterling; (c) Licensee's operating system has been altered, modified or
converted without the prior written approval of Sterling; (d) any of Licensee's
equipment has malfunctioned; or (e) the PRODUCT, or a portion thereof, has
become inoperative due to any other causes within the control of Licensee. THE
FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
12. SOFTWARE SUPPORT. Provided Licensee has paid the license fees set forth in
the Product Schedule, Licensee shall receive Software Support for the PRODUCT at
no cost for a period of one (1) year following the Effective Date ("Initial
Support Period"). Unless Software Support is canceled pursuant to Section 12.B.,
Software Support shall automatically renew for successive annual terms ("Annual
Support Period"). Sterling shall notify Licensee of any change in the fee for
the succeeding Annual Support Period at least sixty (60) days prior to the
expiration of the Initial Support Period or Annual Support Period, as
applicable.
A. Software Support for the PRODUCT shall include the following:
(i) PRODUCT updates which may result in new releases of the PRODUCT to the
extent any such releases are not priced separately by Sterling and are
generally included in the PRODUCT at the time of initial licensing.
Sterling shall provide to Licensee one (1) copy of such new release
<PAGE>
Sterling Software License Agreement Page 4
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of the PRODUCT for each one (1) copy of the PRODUCT licensed, including
documentation.
(ii) Reasonable technical telephone consultation concerning the use of the
PRODUCT provided by Sterling during its regular working hours.
(iii) Sterling's reasonable efforts to correct or bypass any material error
reported by the Licensee for which Licensee provides an adequate written
description and documentation and which is determined by Sterling to be in
a portion of the PRODUCT unmodified by Licensee. Should Sterling find that
a reported error is not in the PRODUCT or that a reported error is the
result of Licensee's negligence or modification or improper use of the
PRODUCT, Licensee shall pay to Sterling reasonable costs incurred by
Sterling at the charges specified on the Sterling Fee Schedule in effect on
the date Sterling incurs such expense.
B. Software Support may be canceled effective upon the expiration of the
Initial Support Period or Annual Support Period, as applicable, by providing
written notice to cancel Software Support no later than thirty (30) days prior
to such date. If Licensee cancels Software Support for the PRODUCT, it may at a
later time renew its subscription and receive the benefits of Software Support
if then currently and generally being made available by Sterling for such
PRODUCT, subject to the prevailing policies and reinstatement fees of Sterling.
C. Software Support is available for the then-current release and the
immediately preceding release of the PRODUCT. However, Sterling reserves the
right to cancel Software Support for the immediately preceding release of the
PRODUCT upon providing the Licensee with no less than sixty (60) days' written
notice.
13. IMPLEMENTATION ASSISTANCE. Sterling may make available to Licensee
reasonable implementation assistance services for the PRODUCT. Implementation
assistance services by Sterling employees, consultants or agents shall be at the
charges specified on the Sterling Fee Schedule in effect on the date Licensee
orders implementation assistance.
14. AUDIT. Upon reasonable notice, Sterling shall have the right to enter
Licensee's facilities for the sole purpose of confirming the number of copies of
the PRODUCT installed and the computer system group size upon which the PRODUCT
is installed.
15. NCL AND SAMPLES. If the PRODUCT license hereunder contains access to
Network Control Language ("NCL"), Licensee shall be permitted, for its internal
purposes only, to use NCL to develop code and further applications in accordance
with the technical manuals supplied to Licensee with the PRODUCT. However, any
applications or code developed by Licensee using NCL shall not have the benefit
of any Sterling warranty, maintenance, support or indemnity provisions contained
herein, and any other terms, conditions, warranties or indemnities that might
otherwise be implied in relation to them are excluded. Sterling shall have no
liability or responsibility arising out of or related to NCL code written by
Licensee or NCL applications developed by Licensee PRODUCT tapes may also
include examples of ways Licensee may use NCL ("Sample"). Licensee may use such
Samples in accordance with this License Agreement; however, Samples shall not be
subject to any Sterling warranty, maintenance, support or indemnity provisions,
expressed or implied, and Sterling shall have no liability with respect to
Licensee's use of such Samples. License understands that it is receiving Samples
"AS IS", and any use of Samples is at Licensee's own risk. Except as provided in
this Section, NCL and Samples shall be part of the PRODUCT for purposes of this
License Agreement.
16. GENERAL
A. This License Agreement and the Schedule(s) referred to herein contain
the entire understandings and agreements of Sterling and Licensee and supersede
all prior agreements or understandings, oral or written, relating to the subject
matter hereof. The terms of this License Agreement may not be altered by any
course of dealings between the parties. This License Agreement may be amended
only by a written instrument executed by Sterling and Licensee.
B. This License Agreement shall be construed and enforced in accordance
with the laws of the Commonwealth of Virginia, without giving effect to its
provisions governing conflicts of law.
C. Sterling shall be entitled to recover its costs and reasonable
attorney fees in the event any proceeding or lawsuit is brought by Sterling
against Licensee to collect amounts past due under this Agreement. In the event
a dispute arising under this Agreement results in litigation, the non-prevailing
party shall pay the court costs and reasonable attorneys' fees of the prevailing
party.
D. The covenants and agreements of Licensee under Sections 5 (PAYMENT),
6 (TAXES), 8 (NON-DISCLOSURE AND NON-REPRODUCTION OF PRODUCT INFORMATION), 9
(INDEMNITY), 10 (LIABILITY), 15 (NCL AND SAMPLES) and 16 (GENERAL) hereof shall
continue in full force and effect irrespective of the expiration of the warranty
period specified herein or any termination, cancellation or expiration of this
License Agreement or any Schedule.
<PAGE>
Sterling Software License Agreement Page 5
- --------------------------------------------------------------------------------
E. The remedies of Sterling set forth herein shall be in addition to, and
not in limitation of, any other rights or remedies to which Sterling is or may
be entitled at law or in equity.
F. All notices, requests and other communications hereunder shall be in
writing and shall be deemed to have been duly given if transmitted by facsimile
or mailed with postage thereon prepaid, addressed to the party for whom it is
intended in its respective address set forth in the first paragraph of this
Agreement. Such address may be changed by written notice to the other party.
G. This License Agreement shall not be deemed accepted by or binding upon
Sterling until executed by an authorized representative of Sterling.
H. The determination that any provision of this License Agreement is
invalid shall cause it to be deemed severed from the remainder of this License
Agreement and shall not cause the remainder of this License Agreement to be
invalid or unenforceable.
I. The waiver of any right or election of any remedy in one instance shall
not affect any rights or remedies in any other instance. A waiver shall be
effective only if stated in writing and signed by an authorized representative
of the waiving party.
J. Except for Licensee's payment obligations as set forth in this License
Agreement, neither party shall be liable for delays in any of its performance
hereunder due to causes beyond its reasonable control, including, but not
limited to, acts of God, strikes, or inability to timely obtain labor or
materials.
K. Sterling may assign this License Agreement or assign or subcontract any
of its rights and responsibilities under this License Agreement.
L. The parties hereto do not intend the term "license" to convey any
ownership, title or other similar rights to Licensee. In the event that any
court of law or government law or regulation interprets the term "license" with
regard to software use as conveying to Licensee any ownership, title or right to
the PRODUCTS, other than the right to use in accordance with this License
Agreement, then the term license, as used herein, shall be defined as rental for
a fixed period of time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by duly authorized parties as of the date first above written:
STERLING SOFTWARE ___________________________
(U.S. OF AMERICA), INC. "Licensee"
By _______________________________ By _______________________________
(Authorized Signature) (Authorized Signature)
__________________________________ __________________________________
Name (print or type) Name (print or type)
Title ____________________________ Title ____________________________
Date Signed ______________________ Date Signed ______________________
<PAGE>
EXHIBIT 10(m)
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
----------------------
Sterling Commerce, Inc., a Delaware corporation (the "Company"), hereby
establishes the Sterling Commerce, Inc. 1996 Stock Option Plan (the "Plan"),
effective as of February 12, 1996.
1. Purpose. The purpose of the Plan is to attract and retain the best
-------
available talent and encourage the highest level of performance by executive
officers, key employees, directors, advisors and consultants, and to provide
them with incentives to put forth maximum efforts for the success of the
Company's business, in order to serve the best interests of the Company and its
shareholders. All options granted under the Plan are intended to be
nonstatutory stock options.
2. Definitions. The following terms, when used in the Plan with initial
-----------
capital letters, will have the following meanings:
(a) "Act" means the Securities Exchange Act of 1934, as in effect from
time to time.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time.
(d) "Common Stock" means the common stock, par value $.01 per share,
of the Company or any security into which such common stock may be changed
by reason of any transaction or event of the type described in Paragraph 9.
(e) "Date of Grant" means (i) with respect to Participants, the date
specified by the Stock Option Committee or the Special Stock Option
Committee, as applicable, on which a grant of Stock Options will become
effective (which date will not be earlier than the date on which such
committee takes action with respect thereto) and (ii) with respect to
Nonemployee Directors, the applicable date specified in Paragraph 7.
(f) "Market Value per Share" means (i) for Stock Options granted prior
to the Company's underwritten initial public offering of the Common Stock
("IPO"), the price per share to the public of the shares of Common Stock
offered and sold by the Company in the IPO and (ii) for Stock Options
granted after the IPO (A) the fair market value per share of the Common
Stock on the Date of Grant as determined by the Stock Option Committee or
the Special Stock Option
1
<PAGE>
Committee, as applicable, with respect to Stock Options granted to
Participants, and (B) with respect to Stock Options granted to Nonemployee
Directors pursuant to Paragraph 7, the average of the high and low closing
sale prices as reported on any national securities exchange on which the
Common Stock is listed on the Date of Grant if such date is a trading day
and, if such date is not a trading day, on the immediately preceding date
which is a trading day.
(g) "Nonemployee Director" means a member of the Board who is not an
employee of the Company or any Subsidiary, who qualifies as a
"disinterested person" within the meaning of Rule 16b-3 and who is a member
of the Special Stock Option Committee.
(h) "Option Price" means the purchase price per share payable on
exercise of a Stock Option.
(i) "Participant" means a person who is selected by the Stock Option
Committee or the Special Stock Option Committee, as applicable, to receive
Stock Options under Paragraph 5 or Paragraph 6 of the Plan and who is at
that time (i) an executive officer or other key employee of the Company or
any Subsidiary, (ii) an advisor or consultant to the Company or any
Subsidiary, or (iii) a member of the Board other than a Nonemployee
Director.
(j) "Rule 16b-3" means Rule 16b-3 under Section 16 of the Act, as such
Rule is in effect from time to time.
(k) "Special Stock Option Committee" means (i) prior to the close of
the initial public offering of the Common Stock, a committee that at all
times consists of at least two nonemployee directors of Sterling Software,
Inc. who qualify as "disinterested persons" within the meaning of Rule 16b-
3 and all of whose members qualify as "outside directors" within the
meaning of Section 162(m) of the Code, and (ii) from and after the close of
such initial public offering, a committee of the Board that at all times
consists of at least two nonemployee directors who qualify as
"disinterested persons" within the meaning of Rule 16b-3 and all of whose
members qualify as "outside directors" within the meaning of Section 162(m)
of the Code.
(l) "Stock Option" means the right to purchase a share of Common Stock
upon exercise of an option granted pursuant to Paragraph 5, Paragraph 6 or
Paragraph 7.
(m) "Stock Option Committee" means (i) prior to the close of the
initial public offering of the Common Stock, the Special Stock Option
Committee as defined in Paragraph 2(k)(i) above, and (ii) from and after
the close
2
<PAGE>
of such initial public offering, the Stock Option Committee appointed by
the Board.
(n) "Subsidiary" means any corporation, partnership, joint venture or
other entity in which the Company owns or controls, directly or indirectly,
not less than 50% of the total combined voting power or equity interests
represented by all classes of stock issued by such corporation,
partnership, joint venture or other entity.
3. Shares Available Under Plan. The shares of Common Stock which may be
---------------------------
issued under the Plan will not exceed in the aggregate 15,000,000 shares,
subject to adjustment as provided in this Paragraph 3. Such shares may be
shares of original issuance or treasury shares or a combination of the
foregoing.
(a) Any shares of Common Stock which are subject to Stock Options that
are terminated, unexercised, forfeited or surrendered or that expire for
any reason will again be available for issuance under the Plan.
(b) If, as of the close of business on the last day of each fiscal
quarter of the Company following the initial public offering of the Common
Stock, the sum of (i) the total number of shares of Common Stock previously
issued upon the exercise of Stock Options, (ii) the total number of shares
of Common Stock then subject to outstanding Stock Options, and (iii) the
total number of shares of Common Stock then remaining available for future
Stock Option grants under the Plan (such sum being the "Plan Shares") is
less than 20% of the total number of shares of Common Stock then
outstanding computed on a fully diluted basis (such total number being the
"Outstanding Shares"), the number of shares of Common Stock available for
issuance under the Plan will be increased (but not decreased) so that the
number of Plan Shares will be equal to 20% of the number of Outstanding
Shares. For purposes of the foregoing adjustment, all outstanding Stock
Options will be treated as fully exercised in computing the number of
outstanding shares of Common Stock on a fully diluted basis, without regard
to whether the Stock Options are then fully exercisable.
(c) The shares available for issuance under the Plan will be also
subject to adjustment as provided in Paragraph 9.
4. Individual Limitation on Stock Options. The maximum aggregate number
--------------------------------------
of shares of Common Stock with respect to which Stock Options may be granted to
any Participant during the term of the Plan will not exceed 10,000,000 shares.
5. Stock Options for Participants - Nonexempt Grants. The Stock Option
-------------------------------------------------
Committee or the Special Stock Option Committee may
3
<PAGE>
from time to time authorize grants to any Participant of options to purchase
shares of Common Stock upon such terms and conditions as such committee may
determine in accordance with the provisions set forth below. Grants made by the
Stock Option Committee or the Special Stock Option Committee pursuant to this
Paragraph 5 are not intended to comply with or otherwise satisfy the
requirements of Rule 16b-3.
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify the Option Price, which will not be less
than 100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify whether the Option Price will be payable
(i) in cash or by check acceptable to the Company, (ii) by the transfer to
the Company of shares of Common Stock owned by the Participant for at least
six months (or, with the consent of the Stock Option Committee or the
Special Stock Option Committee, as applicable, for less than six months)
having an aggregate fair market value per share at the date of exercise
equal to the aggregate Option Price, (iii) with the consent of the Stock
Option Committee or the Special Stock Option Committee, as applicable, by
authorizing the Company to withhold a number of shares of Common Stock
otherwise issuable to the Participant having an aggregate fair market value
per share on the date of exercise equal to the aggregate Option Price or
(iv) by a combination of such methods of payment; provided, however, that
the payment methods described in clauses (ii) and (iii) will not be
available at any time that the Company is prohibited from purchasing or
acquiring such shares of Common Stock. Any grant may provide for deferred
payment of the Option Price from the proceeds of sale through a bank or
broker of some or all of the shares to which such exercise relates.
(d) Successive grants may be made to the same Participant whether or
not any Stock Options previously granted to such Participant remain
unexercised.
(e) Each grant will specify the required period or periods (if any) of
continuous service by the Participant with the Company or any Subsidiary
and/or any other conditions to be satisfied before the Stock Options or
installments thereof will become exercisable, and any grant may provide, or
may be amended to provide, for the earlier exercise of the Stock Options in
the event of a change in control of the Company (as defined in the stock
option agreement evidencing such grant or in any agreement referred to in
such stock option agreement) or in the event of any other similar
transaction or event.
4
<PAGE>
(f) Each Stock Option granted pursuant to this Paragraph 5 will be
subject to the transfer restrictions set forth in Paragraph 8.
(g) Each grant will be evidenced by a stock option agreement executed
on behalf of the Company by the Chief Executive Officer (or another officer
designated by the Stock Option Committee or the Special Stock Option
Committee, as applicable) and delivered to the Participant and containing
such further terms and provisions, consistent with the Plan, as such
committee may approve.
6. Stock Options for Participants - Exempt Grants. The Special Stock
----------------------------------------------
Option Committee may from time to time authorize grants to any Participant of
options to purchase shares of Common Stock upon such terms and conditions as it
may determine in accordance with the provisions set forth below. Grants made by
the Special Stock Option Committee pursuant to this Paragraph 6 are intended to
comply with and otherwise satisfy the requirements of Rule 16b-3.
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify the Option Price, which will not be less
than 100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify whether the Option Price will be payable
(i) in cash or by check acceptable to the Company, (ii) by the transfer to
the Company of shares of Common Stock owned by the Participant for at least
six months (or, with the consent of the Special Stock Option Committee, for
less than six months) having an aggregate fair market value per share at
the date of exercise equal to the aggregate Option Price, (iii) with the
consent of the Special Stock Option Committee, by authorizing the Company
to withhold a number of shares of Common Stock otherwise issuable to the
Participant having an aggregate fair market value per share on the date of
exercise equal to the aggregate Option Price or (iv) by a combination of
such methods of payment; provided, however, that the payment methods
described in clauses (ii) and (iii) will not be available at any time that
the Company is prohibited from purchasing or acquiring such shares of
Common Stock. Any grant may provide for deferred payment of the Option
Price from the proceeds of sale through a bank or broker of some or all of
the shares to which such exercise relates.
(d) Successive grants may be made to the same Participant whether or
not any Stock Options previously granted to such Participant remain
unexercised.
5
<PAGE>
(e) Each grant will specify the required period or periods (if any) of
continuous service by the Participant with the Company or any Subsidiary
and/or any other conditions to be satisfied before the Stock Options or
installments thereof will become exercisable, and any grant may provide, or
may be amended to provide, for the earlier exercise of the Stock Options in
the event of a change in control of the Company (as defined in the stock
option agreement evidencing such grant or in any agreement referred to in
such stock option agreement) or in the event of any other similar
transaction or event.
(f) Each Stock Option granted pursuant to this Paragraph 6 will be
subject to the transfer restrictions set forth in Paragraph 8.
(g) Each grant will be evidenced by a stock option agreement executed
on behalf of the Company by the Chief Executive Officer (or another officer
designated by the Special Stock Option Committee) and delivered to the
Participant and containing such further terms and provisions, consistent
with the Plan, as the Special Stock Option Committee may approve.
7. Stock Options for Nonemployee Directors. Each Nonemployee Director
---------------------------------------
will be granted an option on his or her initial election or other appointment to
the Board to purchase 100,000 shares of Common Stock. Each Nonemployee Director
will also be granted an additional option to purchase 100,000 shares of Common
Stock every five years on the anniversary date of his or her initial election or
other appointment to the Board, beginning on the fifth anniversary of such
initial election or appointment, provided that such individual has served
continually as a Nonemployee Director through the close of business on such
anniversary date. All Stock Options granted pursuant to this Paragraph 7 will
contain the terms and conditions set forth below. Stock Options granted
pursuant to this Paragraph 7 are intended to comply with and otherwise satisfy
the requirements of Rule 16b-3. To the extent any provision of the Plan
applicable to a Stock Option granted pursuant to this Paragraph 7 or any act of
the Board, the Stock Option Committee or the Special Stock Option Committee
would cause such Stock Option to fail to satisfy or comply with any requirement
of Rule 16b-3, such provision or act will be deemed null and void for purposes
of such Stock Option.
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify the Option Price, which will be 100% of
the Market Value per Share on the Date of Grant.
6
<PAGE>
(c) Each grant will specify that the Option Price will be payable (i)
in cash or by check acceptable to the Company, (ii) by the transfer to the
Company of shares of Common Stock owned by the Nonemployee Director for at
least six months (or, with the consent of the Special Stock Option
Committee, for less than six months) having an aggregate fair market value
per share at the date of exercise equal to the aggregate Option Price,
(iii) with the consent of the Special Stock Option Committee, by
authorizing the Company to withhold a number of shares of Common Stock
otherwise issuable to the Nonemployee Director having an aggregate fair
market value per share on the date of exercise equal to the aggregate
Option Price or (iv) by a combination of such methods of payment; provided,
however, that the payment methods described in clauses (ii) and (iii) will
not be available at any time that the Company is prohibited from purchasing
or acquiring such shares of Common Stock. Each grant will also provide for
deferred payment of the Option Price from the proceeds of sale through a
bank or broker of some or all of the shares to which such exercise relates.
(d) Stock Options for Nonemployee Directors will become exercisable in
cumulative annual installments of one-fourth of the shares subject to the
Stock Options, beginning one year after the Date of Grant and will expire
on the fifth anniversary of the Date of Grant. Such Stock Options will
also provide for immediate exercise in the event of a Change in Control, as
hereinafter defined.
(e) Each Stock Option granted pursuant to this Paragraph 7 will be
subject to the transfer restrictions set forth in Paragraph 8.
(f) Each grant will be evidenced by a stock option agreement executed
on behalf of the Company by the Chief Executive Officer (or another officer
designated by the Special Stock Option Committee) and delivered to the
Nonemployee Director and containing such terms and provisions, consistent
with the Plan and Rule 16b-3, as the Special Stock Option Committee may
approve.
For purposes of this Paragraph 7, a "Change in Control" means the
occurrence, prior to the expiration of a Stock Option granted to a Nonemployee
Director, of any of the following events:
(i) the Company is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than two-thirds of the combined voting
power of the then-outstanding securities entitled to vote generally in the
election of directors ("Voting Stock") of such corporation or person
immediately after such transaction are
7
<PAGE>
held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such transaction;
(ii) the Company sells or otherwise transfers all or substantially
all of its assets to another corporation or other legal person, and as a
result of such sale or transfer less than two-thirds of the combined voting
power of the then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the aggregate by the
holders of Voting Stock of the Company immediately prior to such sale or
transfer;
(iii) there is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to
the Act, disclosing that any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Act) has become the beneficial
owner (as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Act) of securities
representing 20% or more of the combined voting power of the then-
outstanding Voting Stock of the Company;
(iv) the Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) that a change in control of the Company has
occurred or will occur in the future pursuant to any then-existing contract
or transaction; or
(v) if, during any period of two consecutive years, individuals who
at the beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof; provided,
however, that for purposes of this clause (v) each director who is first
elected, or first nominated for election by the Company's stockholders, by
a vote of at least two-thirds of the directors of the Company (or a
committee thereof) then still in office who were directors of the Company
at the beginning of any such period will be deemed to have been a director
of the Company at the beginning of such period.
Notwithstanding the foregoing provisions of clauses (iii) or (iv) above, unless
otherwise determined in a specific case by majority vote of the Board, a "Change
in Control" will not be deemed to have occurred for purposes of clause (iii) or
clause (iv) above solely because (A) the Company, (B) a Subsidiary, (C) any
Company-sponsored employee stock ownership plan or any other employee benefit
plan of the Company or any Subsidiary or (D) Sterling Software, Inc. or any of
its wholly owned subsidiaries (collectively, "SSW") either files or becomes
obligated to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-1, Form 8-K or
8
<PAGE>
Schedule 14A (or any successor schedule, form or report or item therein) under
the Act disclosing beneficial ownership by it of shares of Voting Stock of the
Company, whether in excess of 20% or otherwise, or because the Company reports
that a change in control of the Company has occurred or will occur in the future
by reason of such beneficial ownership or any increase or decrease thereof;
provided, however, that the exception contained in clause (D) above with respect
to the beneficial ownership of Voting Stock of the Company by SSW will expire,
without further action, effective as of the date on which SSW no longer
beneficially owns more than 10% of the outstanding Voting Stock of the Company.
8. Transferability. Except as otherwise expressly provided in the
---------------
agreement evidencing a Stock Option granted pursuant to Paragraph 5 or Paragraph
6, or in any amendment to such agreement, no Stock Option will be transferable
by a Participant or Nonemployee Director other than (i) by will or the laws of
descent and distribution or (ii) pursuant to a qualified domestic relations
order, as that term is defined under the Code or the Employee Retirement Income
Security Act of 1974, as amended.
9. Adjustments. The Stock Option Committee, with respect to Stock
-----------
Options granted under Paragraph 5, and the Special Stock Option Committee, with
respect to all other Stock Options, may make or provide for such adjustments in
the maximum number of shares specified in Paragraph 3, in the number of shares
of Common Stock covered by outstanding Stock Options granted hereunder, in the
Option Price applicable to any such Stock Options, and/or in the kind of shares
covered thereby (including shares of another issuer), as such Committee in its
sole discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants and Nonemployee
Directors that otherwise would result from any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, merger, consolidation, spin-off, reorganization, partial or
complete liquidation, issuance of rights or warrants to purchase securities or
any other corporate transaction or event having an effect similar to any of the
foregoing. Any fractional shares resulting from the foregoing adjustments will
be eliminated.
10. Withholding of Taxes. To the extent that the Company is required to
--------------------
withhold federal, state, local or foreign taxes in connection with any benefit
realized by an optionee under the Plan, or is requested by an optionee to
withhold additional amounts with respect to such taxes, and the amounts
available to the Company for such withholding are insufficient, it will be a
condition to the realization of such benefit that the optionee make arrangements
satisfactory to the Company for payment of the balance of such taxes required or
requested to be withheld. In addition, if permitted by the Stock Option
Committee, with
9
<PAGE>
respect to Stock Options granted under Paragraph 5, or by the Special Stock
Option Committee, with respect to all other Stock Options, an optionee may elect
to have any withholding obligation of the Company satisfied with shares of
Common Stock that would otherwise be transferred to the optionee on exercise of
the Stock Option.
11. Administration of the Plan. (a) The Plan will be administered by the
--------------------------
Stock Option Committee or the Special Stock Option Committee with respect to
Stock Options granted under Paragraph 5 and by the Special Stock Option
Committee with respect to all other Stock Options. For purposes of any action
taken by the Stock Option Committee or the Special Stock Option Committee,
whichever is applicable, a majority of the members will constitute a quorum, and
the action of the members present at any meeting at which a quorum is present,
or acts unanimously approved in writing, will be the acts of the Stock Option
Committee or the Special Stock Option Committee.
(b) Subject to the allocation of administrative responsibilities set
forth in Paragraph 11(a), the Stock Option Committee and the Special Stock
Option Committee have the full authority and discretion to administer the Plan
and to take any action that is necessary or advisable in connection with the
administration of the Plan, including without limitation the authority and
discretion to interpret and construe any provision of the Plan or of any
agreement, notification or document evidencing the grant of a Stock Option. The
interpretation and construction by the Stock Option Committee or the Special
Stock Option Committee, as applicable, of any such provision and any
determination by the Stock Option Committee or the Special Stock Option
Committee pursuant to any provision of the Plan or of any such agreement,
notification or document will be final and conclusive. No member of the Stock
Option Committee or the Special Stock Option Committee will be liable for any
such action or determination made in good faith.
(c) Notwithstanding the provisions of Paragraph 11(b), if any
authority, discretion or responsibility granted to the Special Stock Option
Committee under the Plan would, if exercised or discharged by the Special Stock
Option Committee, cause the provisions of Paragraph 7 or any Stock Option
granted under Paragraph 7 to fail to satisfy the requirements of Rule 16b-3,
such authority, discretion or responsibility may be exercised by the Board to
the same extent and with the same effect as if exercised by the Special Stock
Option Committee, provided such act of the Board will not cause the provisions
of Paragraph 7 or any Stock Option granted under Paragraph 7 to fail to satisfy
the requirements of Rule 16b-3 or cause any member of the Special Stock Option
Committee to cease to be a disinterested administrator for purposes of Rule 16b-
3.
12. Amendments, Etc. (a) The Stock Option Committee or the Special Stock
----------------
Option Committee, as applicable, may, without
10
<PAGE>
the consent of the optionee, amend any agreement evidencing a Stock Option
granted under the Plan, or otherwise take action, to accelerate the time or
times at which the Stock Option may be exercised, to extend the expiration date
of the Stock Option, to waive any other condition or restriction applicable to
such Stock Option or to the exercise of such Stock Option, to reduce the
exercise price of such Stock Option, to amend the definition of a change in
control of the Company (if such a definition is contained in such agreement) to
expand the events that would result in a change in control of the Company and to
add a change in control provision to such agreement (if such provision is not
contained in such agreement) and may amend any such agreement in any other
respect with the consent of the optionee. Notwithstanding the foregoing, no
amendment will be made to an agreement evidencing a Stock Option granted to a
Nonemployee Director pursuant to Paragraph 7 if such amendment would cause such
Nonemployee Director to cease to qualify as a "disinterested person" within the
meaning of Rule 16b-3.
(b) The Plan may be amended from time to time by the Stock Option
Committee or the Board but may not be amended without further approval by the
shareholders of the Company if such Plan amendment would result in any grant or
other transaction with respect to Stock Options under Paragraph 6 or Paragraph 7
no longer satisfying the requirements of Rule 16b-3. Notwithstanding the
foregoing, the provisions of Paragraph 7 that designate Nonemployee Directors
eligible to receive Stock Options and specify the amount, Option Price and
timing of Stock Option grants may be amended only by the Board and may be
amended not more than once every six months except to comply with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules and regulations thereunder. In the event any law, or any rule or
regulation issued or promulgated by the Internal Revenue Service, the Securities
and Exchange Commission, the National Association of Securities Dealers, Inc.,
any stock exchange upon which the Common Stock is listed for trading, or any
other governmental or quasi-governmental agency having jurisdiction over the
Company, the Common Stock or the Plan, requires the Plan to be amended, or in
the event Rule 16b-3 is amended or supplemented (e.g., by addition of
----
alternative rules) or any of the rules under Section 16 of the Act are amended
or supplemented, in either event to permit the Company to remove or lessen any
restrictions on or with respect to Stock Options, the Stock Option Committee and
the Board each reserves the right to amend the Plan to the extent of any such
requirement, amendment or supplement, and all Stock Options then outstanding
will be subject to such amendment.
(c) The Plan may be terminated at any time by action of the Board.
The termination of the Plan will not adversely affect the terms of any
outstanding Stock Option.
(d) The Plan will not confer upon any Participant or Nonemployee
Director any right with respect to continuance of
11
<PAGE>
employment or other service with the Company or any Subsidiary, nor will it
interfere in any way with any right the Company or any Subsidiary would
otherwise have to terminate a Participant's employment or other service at any
time.
STERLING COMMERCE, INC.
By /s/ Sterling L. Williams
---------------------------
Name: Sterling L. Williams
Title: Chairman and Chief
Executive Officer
12
<PAGE>
EXHIBIT 10(n)
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Participant"). The Company and the
Participant agree as follows:
1. Grant of Stock Option. Pursuant to a duly adopted resolution of
---------------------
the Special Stock Option Committee on ____________, (the "Date of Grant"), the
Company hereby grants to the Participant, upon the terms and conditions set
forth below and subject to the terms and conditions of the Company's 1996 Stock
Option Plan (the "Plan"), an option (the "Stock Option") to purchase from the
Company a total of __________ shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), at an exercise price per share equal to
$__________ (the "Option Price"). Any terms, when used in this Agreement with
initial capital letters but not defined herein, have the same meanings as in the
Plan, the provisions of which are incorporated into this Agreement by reference.
The Participant acknowledges receipt of a copy of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or in
----------------
part, according to the following schedule:
<TABLE>
<CAPTION>
Percentage
Exercisable Periods
----------- -------
<C> <S>
0% Immediately
25% On the first anniversary of
the Date of Grant
50% On the second anniversary of
the Date of Grant
75% On the third anniversary of
the Date of Grant
100% On the fourth anniversary of
the Date of Grant
</TABLE>
Notwithstanding the foregoing schedule, in the event of a Change in
Control (as hereinafter defined) or a threatened Change in Control, all of the
unexercised portion of this Stock Option will become immediately exercisable.
Whether a Change in Control is threatened will be determined solely by the
Board.
<PAGE>
The unexercised portion of the Stock Option from one annual period may
be carried over to a subsequent annual period or periods, and the right of the
Participant to exercise the Stock Option as to such unexercised portion will
continue for the entire term described in Section 3 below, without regard to
whether the Partipant is an employee of the Company or any Subsidiary at the
time of exercise. In no event may the Stock Option be exercised in whole or in
part, however, after the expiration of such term.
For purposes of this Agreement, a "Change in Control" means the occurrence
of any of the following events:
(a) the Company is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than two-thirds of the combined voting
power of the then-outstanding securities entitled to vote generally in the
election of directors ("Voting Stock") of such corporation or person
immediately after such transaction are held in the aggregate by the holders
of Voting Stock of the Company immediately prior to such transaction;
(b) the Company sells or otherwise transfers all or substantially all
of its assets to another corporation or other legal person, and as a result
of such sale or transfer less than two-thirds of the combined voting power
of the then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the aggregate by the
holders of Voting Stock of the Company immediately prior to such sale or
transfer;
(c) there is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated pursuant to the
Act, disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Act) has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Act) of securities
representing 20% or more of the combined voting power of the then-
outstanding Voting Stock of the Company;
(d) the Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Act disclosing in response to Form
8-K or Schedule 14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has occurred or will occur
in the future pursuant to any then-existing contract or transaction; or
-2-
<PAGE>
(e) if, during any period of two consecutive years, individuals who at
the beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof; provided,
however, that for purposes of this clause (e) each director who is first
elected, or first nominated for election by the Company's stockholders, by
a vote of at least two-thirds of the directors of the Company (or a
committee thereof) then still in office who were directors of the Company
at the beginning of any such period will be deemed to have been a director
of the Company at the beginning of such period.
Notwithstanding the foregoing provisions of clauses (c) or (d) above, unless
otherwise determined in a specific case by majority vote of the Board, a "Change
in Control" will not be deemed to have occurred for purposes of clause (c) or
clause (d) above solely because (A) the Company, (B) a Subsidiary, (C) any
Company-sponsored employee stock ownership plan or any other employee benefit
plan of the Company or any Subsidiary or (D) Sterling Software, Inc. or any of
its wholly owned subsidiaries (collectively, "SSW") either files or becomes
obligated to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) under the Act disclosing beneficial ownership by it
of shares of Voting Stock of the Company, whether in excess of 20% or otherwise,
or because the Company reports that a change in control of the Company has
occurred or will occur in the future by reason of such beneficial ownership or
any increase or decrease thereof; provided, however, that the exception
contained in clause (D) above with respect to the beneficial ownership of Voting
Stock of the Company by SSW will expire, without further action, effective as of
the date on which SSW no longer beneficially owns more than 10% of the
outstanding Voting Stock of the Company.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the fifth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any
-3-
<PAGE>
governmental authority of any kind having jurisdiction over the exercise of
the Stock Option, or issuance of securities upon such exercise, has not
been obtained or secured.
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Participant for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
6. Transferability of Stock Options. This Stock Option may be
--------------------------------
transferred by the Participant on five days prior written notice to the Company.
7. Rights as Stockholder. Neither the Participant nor any of the
---------------------
Participant's beneficiaries will be deemed to have any rights as a stockholder
with respect to any shares covered by the Stock Option until the issuance of a
certificate to the Participant for such shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Rights in Event of Death or Termination of Employment as a Result of
--------------------------------------------------------------------
Disability of Participant. If the Participant dies or terminates employment as
- -------------------------
a result of disability prior to termination of the Participant's rights to
exercise the Stock Option, any unexercised portion of the Stock Option will
become immediately exercisable and may be exercised, subject to all conditions
of the Plan and this Agreement, until the expiration of the term set forth in
Section 3. In the event of the death of the Participant, the Stock Option may
be exercised by the Participant's estate or a person who acquired the right to
-4-
<PAGE>
exercise the Stock Option by bequest or inheritance or by reason of the death of
the Participant. For purposes of this section, the Executive Committee of the
Board will have sole discretion to determine whether termination of a
Participant's employment has occurred "as a result of disability." In no event
may the Stock Option be exercised after the expiration date set forth in Section
3.
10. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Participant, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Participant and the
Participant's transferees that all shares of Common Stock purchased upon the
exercise of the Stock Option will be acquired for investment and not for resale
or distribution, and that upon each exercise of any portion of the Stock Option,
the person entitled to exercise the same will furnish evidence satisfactory to
the Company (including a written and signed representation) to the effect that
the shares are being acquired in good faith for investment and not for resale or
distribution. The Participant agrees to furnish or execute such documents as
the Company in its discretion deems necessary to (a) evidence such exercise of
the Stock Option, (b) determine whether registration is then required under the
Securities Act of 1933, as then in effect, and (c) comply with or satisfy the
requirements of the Securities Act of 1933, or any other federal, state or local
law, as then in effect.
11. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the
Secretary. Each notice to the Participant or other person or persons then
entitled to exercise the Stock Option will be addressed to the Participant or
such other person or persons at the Participant's address specified below.
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
12. Employment. This Agreement does not confer upon the Participant any
----------
right to be employed or to continue in the employ of the Company or any
Subsidiary, nor does it in any way interfere with the right of the Company or
any Subsidiary to terminate the employment of the Participant at any time.
13. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Participant to exercise the Stock Option.
-5-
<PAGE>
14. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Participant, amend this Agreement, or otherwise take action, to
accelerate the time or times at which the Stock Option may be exercised, to
extend the term described in Section 3 above, to waive any other condition or
restriction applicable to the Stock Option or to the exercise of the Stock
Option, to reduce the Option Price and to make any other change permitted to be
made under the Plan without the consent of the Participant; and may amend the
Agreement in any other respect with the consent of the Participant.
15. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE, EXCEPT AS TO MATTERS OF CORPORATE LAW, WHICH
WILL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the _____ day of _________________, 199__.
STERLING COMMERCE, INC.
By:___________________________________
Sterling L. Williams
Chairman and Chief Executive Officer
PARTICIPANT:
______________________________________
Signature
_______________________________________
Print Name
Social Security Number_________________
Address for Notice:
_______________________________________
_______________________________________
-6-
<PAGE>
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Participant"). The Company and the
Participant agree as follows:
1. Grant of Stock Option. Pursuant to a duly adopted resolution of
---------------------
the Special Stock Option Committee on ____________, (the "Date of Grant"), the
Company hereby grants to the Participant, upon the terms and conditions set
forth below and subject to the terms and conditions of the Company's 1996 Stock
Option Plan (the "Plan"), an option (the "Stock Option") to purchase from the
Company a total of __________ shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), at an exercise price per share equal to
$__________ (the "Option Price"). Any terms, when used in this Agreement with
initial capital letters but not defined herein, have the same meanings as in the
Plan, the provisions of which are incorporated into this Agreement by reference.
The Participant acknowledges receipt of a copy of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or in
----------------
part, according to the following schedule:
<TABLE>
<CAPTION>
Percentage
Exercisable Periods
----------- -------
<C> <S>
0% Immediately
25% On the first anniversary of
the Date of Grant
50% On the second anniversary of
the Date of Grant
75% On the third anniversary of
the Date of Grant
100% On the fourth anniversary of
the Date of Grant
</TABLE>
The unexercised portion of the Stock Option from one annual period may
be carried over to a subsequent annual period or periods, and the right of the
Participant to exercise the Stock Option as to such unexercised portion will
continue for the entire term described in Section 3 below, subject to the
provisions of Sections 9 and 10 below. In no event may the Stock
<PAGE>
Option be exercised in whole or in part, however, after the expiration of such
term.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the fifth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Stock Option, or issuance of
securities upon such exercise, has not been obtained or secured.
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Participant for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
6. Non-Transferability of Stock Options. This Stock Option is not
------------------------------------
assignable or transferable by the Participant other than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986, as amended, or the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder.
7. Rights as Stockholder. Neither the Participant nor any of the
---------------------
Participant's beneficiaries will be deemed to have any rights as a stockholder
with respect to any shares covered by the
-2-
<PAGE>
Stock Option until the issuance of a certificate to the Participant for such
shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Rights in Event of Death or Termination of Employment as a Result of
--------------------------------------------------------------------
Disability of Participant. If the Participant dies or terminates employment as
- -------------------------
a result of disability prior to termination of the Participant's rights to
exercise the Stock Option, any unexercised portion of the Stock Option will
continue to vest in accordance with Section 2 and will be exercisable, subject
to all conditions of the Plan and this Agreement, for a period of one year from
the date of the Participant's death or termination of employment as a result of
disability. In the event of the death of the Participant, the Stock Option may
be exercised by the Participant's estate or a person who acquired the right to
exercise the Stock Option by bequest or inheritance or by reason of the death of
the Participant. For purposes of this section, the Executive Committee of the
Board will have sole discretion to determine whether termination of a
Participant's employment has occurred "as a result of disability." In no event
may the Stock Option be exercised after the expiration date set forth in Section
3.
10. Rights in Event of Termination of Employment Other Than as a Result of
----------------------------------------------------------------------
Death or Disability. With respect to a Participant who is an employee of the
- -------------------
Company or any Subsidiary on the Date of Grant, if the Participant ceases to be
employed by the Company and all Subsidiaries, other than as a result of death or
disability, prior to the termination of the Participant's rights to exercise the
Stock Option, any unexercised portion of the Stock Option will continue to vest
in accordance with Section 2 and will be exercisable through the 90th day
following the last day on which the Participant is entitled to receive any
compensation, including but not limited to severance or termination payments,
from the Company. In no event may the Stock Option be exercised after the
expiration date set forth in Section 3.
11. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Participant, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Participant and the
Participant's transferees that all shares of Common Stock
-3-
<PAGE>
purchased upon the exercise of the Stock Option will be acquired for investment
and not for resale or distribution, and that upon each exercise of any portion
of the Stock Option, the person entitled to exercise the same will furnish
evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares are being acquired in good faith
for investment and not for resale or distribution. The Participant agrees to
furnish or execute such documents as the Company in its discretion deems
necessary to (a) evidence such exercise of the Stock Option, (b) determine
whether registration is then required under the Securities Act of 1933, as then
in effect, and (c) comply with or satisfy the requirements of the Securities Act
of 1933, or any other federal, state or local law, as then in effect.
12. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the Secretary.
Each notice to the Participant or other person or persons then entitled to
exercise the Stock Option will be addressed to the Participant or such other
person or persons at the Participant's address specified below. Anyone to whom
a notice may be given under this Agreement may designate a new address by notice
to that effect.
13. Employment. This Agreement does not confer upon the Participant any
----------
right to be employed or to continue in the employ of the Company or any
Subsidiary, nor does it in any way interfere with the right of the Company or
any Subsidiary to terminate the employment of the Participant at any time.
14. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Participant to exercise the Stock Option.
15. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Participant, amend this Agreement, or otherwise take action, to
accelerate the time or times at which the Stock Option may be exercised, to
extend the term described in Section 3 above, to waive any other condition or
restriction applicable to the Stock Option or to the exercise of the Stock
Option, to reduce the Option Price and to make any other change permitted to be
made under the Plan without the consent of the Participant; and may amend the
Agreement in any other respect with the consent of the Participant.
16. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND
-4-
<PAGE>
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE, EXCEPT AS TO
MATTERS OF CORPORATE LAW, WHICH WILL BE GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the _____ day of _________________, 199_.
STERLING COMMERCE, INC.
By:___________________________________
Sterling L. Williams
Chairman and Chief Executive Officer
PARTICIPANT:
______________________________________
Signature
_______________________________________
Print Name
Social Security Number_________________
Address for Notice
_______________________________________
_______________________________________
-5-
<PAGE>
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Participant"). The Company and the
Participant agree as follows:
1. Grant of Stock Option. Pursuant to a duly adopted resolution of
---------------------
the Special Stock Option Committee on ____________, (the "Date of Grant"), the
Company hereby grants to the Participant, upon the terms and conditions set
forth below and subject to the terms and conditions of the Company's 1996 Stock
Option Plan (the "Plan"), an option (the "Stock Option") to purchase from the
Company a total of __________ shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), at an exercise price per share equal to
$__________ (the "Option Price"). Any terms, when used in this Agreement with
initial capital letters but not defined herein, have the same meanings as in the
Plan, the provisions of which are incorporated into this Agreement by reference.
The Participant acknowledges receipt of a copy of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or in
-----------------
part, according to the following schedule:
<TABLE>
<CAPTION>
Percentage
Exercisable Periods
----------- -------
<C> <S>
0% Immediately
25% On the first anniversary of
the Date of Grant
50% On the second anniversary of
the Date of Grant
75% On the third anniversary of
the Date of Grant
100% On the fourth anniversary of
the Date of Grant
</TABLE>
Notwithstanding the foregoing schedule, in the event of a Change in
Control (as defined in Section 1(c) of the Change-in-Control Severance Agreement
dated _______________________ between the Participant and the Company and any
amendments thereto) or a threatened Change in Control, all of the unexercised
portion of this Stock Option will become immediately exercisable, and the right
of the Participant to exercise the Stock Option as to such
<PAGE>
unexercised portion will continue for the entire term described in Section 3
below, regardless of whether the Participant's employment with the Company or
any Subsidiary terminates before the expiration of such term. Whether a Change
in Control is threatened will be determined solely by the Board.
The unexercised portion of the Stock Option from one annual period may
be carried over to a subsequent annual period or periods, and the right of the
Participant to exercise the Stock Option as to such unexercised portion will
continue for the entire term described in Section 3 below, subject to the
provisions of Sections 9 and 10 below. In no event may the Stock Option be
exercised in whole or in part, however, after the expiration of such term.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the fifth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Stock Option, or issuance of
securities upon such exercise, has not been obtained or secured.
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Participant for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
-2-
<PAGE>
6. Non-Transferability of Stock Options. This Stock Option is not
------------------------------------
assignable or transferable by the Participant other than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986, as amended, or the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder.
7. Rights as Stockholder. Neither the Participant nor any of the
---------------------
Participant's beneficiaries will be deemed to have any rights as a stockholder
with respect to any shares covered by the Stock Option until the issuance of a
certificate to the Participant for such shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Rights in Event of Death or Termination of Employment as a Result of
--------------------------------------------------------------------
Disability of Participant. If the Participant dies or terminates employment as
- -------------------------
a result of disability prior to termination of the Participant's rights to
exercise the Stock Option, any unexercised portion of the Stock Option will
continue to vest in accordance with Section 2 and will be exercisable, subject
to all conditions of the Plan and this Agreement, for a period of one year from
the date of the Participant's death or termination of employment as a result of
disability. In the event of the death of the Participant, the Stock Option may
be exercised by the Participant's estate or a person who acquired the right to
exercise the Stock Option by bequest or inheritance or by reason of the death of
the Participant. For purposes of this section, the Executive Committee of the
Board will have sole discretion to determine whether termination of a
Participant's employment has occurred "as a result of disability." In no event
may the Stock Option be exercised after the expiration date set forth in Section
3.
10. Rights in Event of Termination of Employment Other Than as a Result of
----------------------------------------------------------------------
Death or Disability. With respect to a Participant who is an employee of the
- -------------------
Company or any Subsidiary on the Date of Grant, if the Participant ceases to be
employed by the Company and all Subsidiaries, other than as a result of death or
disability, prior to the termination of the Participant's rights to exercise the
Stock Option, any unexercised portion of the Stock Option will continue to vest
in accordance with Section 2 and will be exercisable through the 90th day
following the last day on which the Participant is entitled to receive any
-3-
<PAGE>
compensation, including but not limited to severance or termination payments,
from the Company. In no event may the Stock Option be exercised after the
expiration date set forth in Section 3.
11. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Participant, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Participant and the
Participant's transferees that all shares of Common Stock purchased upon the
exercise of the Stock Option will be acquired for investment and not for resale
or distribution, and that upon each exercise of any portion of the Stock Option,
the person entitled to exercise the same will furnish evidence satisfactory to
the Company (including a written and signed representation) to the effect that
the shares are being acquired in good faith for investment and not for resale or
distribution. The Participant agrees to furnish or execute such documents as
the Company in its discretion deems necessary to (a) evidence such exercise of
the Stock Option, (b) determine whether registration is then required under the
Securities Act of 1933, as then in effect, and (c) comply with or satisfy the
requirements of the Securities Act of 1933, or any other federal, state or local
law, as then in effect.
12. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the
Secretary. Each notice to the Participant or other person or persons then
entitled to exercise the Stock Option will be addressed to the Participant or
such other person or persons at the Participant's address specified below.
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
13. Employment. This Agreement does not confer upon the Participant any
----------
right to be employed or to continue in the employ of the Company or any
Subsidiary, nor does it in any way interfere with the right of the Company or
any Subsidiary to terminate the employment of the Participant at any time.
14. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Participant to exercise the Stock Option.
15. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Participant, amend this Agreement, or
-4-
<PAGE>
otherwise take action, to accelerate the time or times at which the Stock Option
may be exercised, to extend the term described in Section 3 above, to waive any
other condition or restriction applicable to the Stock Option or to the exercise
of the Stock Option, to reduce the Option Price and to make any other change
permitted to be made under the Plan without the consent of the Participant; and
may amend the Agreement in any other respect with the consent of the
Participant.
16. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE, EXCEPT AS TO MATTERS OF CORPORATE LAW, WHICH
WILL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the _____ day of _________________, 199__.
STERLING COMMERCE, INC.
By:___________________________________
Sterling L. Williams
Chairman and Chief Executive Officer
PARTICIPANT:
______________________________________
Signature
_______________________________________
Print Name
Social Security Number_________________
Address for Notice:
_______________________________________
_______________________________________
-5-
<PAGE>
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Participant"). The Company and the
Participant agree as follows:
1. Grant of Stock Option. Pursuant to a duly adopted resolution of
---------------------
the Special Stock Option Committee on ____________, (the "Date of Grant"), the
Company hereby grants to the Participant, upon the terms and conditions set
forth below and subject to the terms and conditions of the Company's 1996 Stock
Option Plan (the "Plan"), an option (the "Stock Option") to purchase from the
Company a total of __________ shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), at an exercise price per share equal to
$__________ (the "Option Price"). Any terms, when used in this Agreement with
initial capital letters but not defined herein, have the same meanings as in the
Plan, the provisions of which are incorporated into this Agreement by reference.
The Participant acknowledges receipt of a copy of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or
----------------
in part, at any time on or after the date on which this Stock Option becomes
effective, as provided in Section 1, without regard to whether the Participant
is an employee of the Company or any Subsidiary at the time of exercise. In no
event may the Stock Option be exercised in whole or in part, however, after the
expiration of the term described in Section 3 below.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the tenth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Stock Option, or issuance of
securities upon such exercise, has not been obtained or secured.
<PAGE>
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Participant for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
6. Transferability of Stock Options. This Stock Option may be
--------------------------------
transferred by the Participant on five days prior written notice to the Company.
7. Rights as Stockholder. Neither the Participant nor any of the
---------------------
Participant's beneficiaries will be deemed to have any rights as a stockholder
with respect to any shares covered by the Stock Option until the issuance of a
certificate to the Participant for such shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Rights in Event of Death of Participant. In the event of the death of
---------------------------------------
the Participant, the Stock Option may be exercised by the Participant's estate
or a person who acquired the right to exercise the Stock Option by bequest or
inheritance or by reason of the death of the Participant. In no event may the
Stock Option be exercised after the expiration date set forth in Section 3.
10. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Participant, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Participant and the
Participant's transferees that all shares of Common Stock
-2-
<PAGE>
purchased upon the exercise of the Stock Option will be acquired for investment
and not for resale or distribution, and that upon each exercise of any portion
of the Stock Option, the person entitled to exercise the same will furnish
evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares are being acquired in good faith
for investment and not for resale or distribution. The Participant agrees to
furnish or execute such documents as the Company in its discretion deems
necessary to (a) evidence such exercise of the Stock Option, (b) determine
whether registration is then required under the Securities Act of 1933, as then
in effect, and (c) comply with or satisfy the requirements of the Securities Act
of 1933, or any other federal, state or local law, as then in effect.
11. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the
Secretary. Each notice to the Participant or other person or persons then
entitled to exercise the Stock Option will be addressed to the Participant or
such other person or persons at the Participant's address specified below.
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
12. Employment. This Agreement does not confer upon the Participant any
----------
right to be employed or to continue in the employ of the Company or any
Subsidiary, nor does it in any way interfere with the right of the Company or
any Subsidiary to terminate the employment of the Participant at any time.
13. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Participant to exercise the Stock Option.
14. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Participant, amend this Agreement, or otherwise take action, to
extend the term described in Section 3 above, to waive any other condition or
restriction applicable to the Stock Option or to the exercise of the Stock
Option, to reduce the Option Price and to make any other change permitted to be
made under the Plan without the consent of the Participant; and may amend the
Agreement in any other respect with the consent of the Participant.
15. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH
-3-
<PAGE>
STATE, EXCEPT AS TO MATTERS OF CORPORATE LAW, WHICH WILL BE GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the _____ day of _________________, 199__.
STERLING COMMERCE, INC.
By:___________________________________
Title:________________________________
PARTICIPANT:
______________________________________
Signature
_______________________________________
Print Name
Social Security Number_________________
Address for Notice:
_______________________________________
_______________________________________
-4-
<PAGE>
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Participant"). The Company and the
Participant agree as follows:
1. Grant of Stock Option. Pursuant to a duly adopted resolution of
---------------------
the Special Stock Option Committee on ____________, (the "Date of Grant"), the
Company hereby grants to the Participant, upon the terms and conditions set
forth below and subject to the terms and conditions of the Company's 1996 Stock
Option Plan (the "Plan"), an option (the "Stock Option") to purchase from the
Company a total of __________ shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), at an exercise price per share equal to
$__________ (the "Option Price"). Any terms, when used in this Agreement with
initial capital letters but not defined herein, have the same meanings as in the
Plan, the provisions of which are incorporated into this Agreement by reference.
The Participant acknowledges receipt of a copy of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or in
----------------
part, according to the following schedule:
<TABLE>
<CAPTION>
Percentage
Exercisable Periods
----------- -------
<C> <S>
0% Immediately
25% On the first anniversary of
the Date of Grant
50% On the second anniversary of
the Date of Grant
75% On the third anniversary of
the Date of Grant
100% On the fourth anniversary of
the Date of Grant
</TABLE>
Notwithstanding the foregoing schedule, in the event of a Change in
Control (as defined in Section 1(c) of the Change-in-Control Severance Agreement
dated _______________________ between the Participant and the Company and any
amendments thereto) or a threatened Change in Control, all of the unexercised
portion of this Stock Option will become immediately exercisable, and the right
of the Participant to exercise the Stock Option as to such
<PAGE>
unexercised portion will continue for the entire term described in Section 3
below, regardless of whether the Participant's employment with the Company or
any Subsidiary terminates before the expiration of such term. Whether a Change
in Control is threatened will be determined solely by the Board.
The unexercised portion of the Stock Option from one annual period may
be carried over to a subsequent annual period or periods, and the right of the
Participant to exercise the Stock Option as to such unexercised portion will
continue for the entire term described in Section 3 below, subject to the
provisions of Section 9 and 10 below. In no event may the Stock Option be
exercised in whole or in part, however, after the expiration of such term.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the tenth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Stock Option, or issuance of
securities upon such exercise, has not been obtained or secured.
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Participant for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
-2-
<PAGE>
6. Transferability of Stock Options. This Stock Option may be transferred
--------------------------------
by the Participant on five days prior written notice to the Company.
7. Rights as Stockholder. Neither the Participant nor any of the
---------------------
Participant's beneficiaries will be deemed to have any rights as a stockholder
with respect to any shares covered by the Stock Option until the issuance of a
certificate to the Participant for such shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Rights in Event of Death or Termination of Employment as a Result of
--------------------------------------------------------------------
Disability of Participant. If the Participant dies or terminates employment as
- -------------------------
a result of disability prior to termination of the Participant's rights to
exercise the Stock Option, any unexercised portion of the Stock Option will
become immediately exercisable and may be exercised, subject to all conditions
of the Plan and this Agreement, until the expiration of the term set forth in
Section 3. In the event of the death of the Participant, the Stock Option may
be exercised by the Participant's estate or a person who acquired the right to
exercise the Stock Option by bequest or inheritance or by reason of the death of
the Participant. For purposes of this section, the Executive Committee of the
Board will have sole discretion to determine whether termination of a
Participant's employment has occurred "as a result of disability." In no event
may the Stock Option be exercised after the expiration date set forth in Section
3.
10. Rights in Event of Termination of Employment Other Than as a Result of
----------------------------------------------------------------------
Death or Disability. With respect to a Participant who is an employee of the
- -------------------
Company or any Subsidiary on the Date of Grant, if the Participant ceases to be
employed by the Company and all Subsidiaries, other than as a result of death or
disability, prior to the termination of the Participant's rights to exercise the
Stock Option, any unexercised portion of the Stock Option will continue to vest
in accordance with Section 2 and will be exercisable through the 90th day
following the last day on which the Participant is entitled to receive any
compensation, including but not limited to severance or termination payments
("Compensation"), from the Company. With respect to a Participant who is an
employee of the Company or any Subsidiary on the Date of Grant and who
subsequently ceases to be employed by the Company and all Subsidiaries due to
"retirement,"
-3-
<PAGE>
the Stock Option will continue to vest in accordance with Section 2 and will be
exercisable until the expiration of the term set forth in Section 3 unless,
within 60 days after the date of the Participant's "retirement," the Executive
Committee of the Board, in its sole discretion, takes action to disapprove of
such "retirement". In the event of such disapproval, the Stock Option will be
exercisable through the 90th day following the last day on which the Participant
is entitled to receive any Compensation. For purposes of this Agreement,
"retirement" will mean termination of employment as a result of a voluntary
resignation by the Participant on or after the date on which the Participant has
been employed by the Company or any Subsidiary for ten years or more. In no
event may the Stock Option be exercised after the expiration date set forth in
Section 3.
11. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Participant, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Participant and the
Participant's transferees that all shares of Common Stock purchased upon the
exercise of the Stock Option will be acquired for investment and not for resale
or distribution, and that upon each exercise of any portion of the Stock Option,
the person entitled to exercise the same will furnish evidence satisfactory to
the Company (including a written and signed representation) to the effect that
the shares are being acquired in good faith for investment and not for resale or
distribution. The Participant agrees to furnish or execute such documents as
the Company in its discretion deems necessary to (a) evidence such exercise of
the Stock Option, (b) determine whether registration is then required under the
Securities Act of 1933, as then in effect, and (c) comply with or satisfy the
requirements of the Securities Act of 1933, or any other federal, state or local
law, as then in effect.
12. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the
Secretary. Each notice to the Participant or other person or persons then
entitled to exercise the Stock Option will be addressed to the Participant or
such other person or persons at the Participant's address specified below.
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
13. Employment. This Agreement does not confer upon the Participant any
----------
right to be employed or to continue in the employ
-4-
<PAGE>
of the Company or any Subsidiary, nor does it in any way interfere with the
right of the Company or any Subsidiary to terminate the employment of the
Participant at any time.
14. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Participant to exercise the Stock Option.
15. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Participant, amend this Agreement, or otherwise take action, to
accelerate the time or times at which the Stock Option may be exercised, to
extend the term described in Section 3 above, to waive any other condition or
restriction applicable to the Stock Option or to the exercise of the Stock
Option, to reduce the Option Price and to make any other change permitted to be
made under the Plan without the consent of the Participant; and may amend the
Agreement in any other respect with the consent of the Participant.
16. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE, EXCEPT AS TO MATTERS OF CORPORATE LAW, WHICH
WILL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the _____ day of _________________, 199__.
STERLING COMMERCE, INC.
By:___________________________________
Sterling L. Williams
Chairman and Chief Executive Officer
PARTICIPANT:
______________________________________
Signature
_______________________________________
Print Name
Social Security Number_________________
Address for Notice:
_______________________________________
_______________________________________
-5-
<PAGE>
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Director"). The Company and the Director
agree as follows:
1. Grant of Stock Option. The Company hereby grants to the Director
---------------------
effective as of March 13, 1996 (the "Date of Grant"), upon the terms and
conditions set forth below and subject to the terms and conditions of the
Company's 1996 Stock Option Plan (the "Plan"), an option (the "Stock Option") to
purchase from the Company a total of 100,000 shares of the Company's common
stock, par value $0.01 per share (the "Common Stock"), at an exercise price per
share equal to $______ (the "Option Price"), which is the price per share to the
public of the shares of Common Stock offered and sold by the Company on the Date
of Grant in the underwritten initial offering of the Common Stock. Any terms,
when used in this Agreement with initial capital letters but not defined herein,
have the same meanings as in the Plan, the provisions of which are incorporated
into this Agreement by reference. The Director acknowledges receipt of a copy
of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or in
----------------
part, according to the following schedule:
<TABLE>
<CAPTION>
Percentage
Exercisable Periods
----------- -------
<C> <S>
0% Immediately
25% On the first anniversary of
the Date of Grant
50% On the second anniversary of
the Date of Grant
75% On the third anniversary of
the Date of Grant
100% On the fourth anniversary of
the Date of Grant
</TABLE>
Notwithstanding the foregoing schedule, in the event of a Change in
Control, all of the unexercised portion of this Stock Option will become
immediately exercisable.
The unexercised portion of the Stock Option from one annual period may
be carried over to a subsequent annual period
<PAGE>
or periods, and the right of the Director to exercise the Stock Option as to
such unexercised portion will continue for the entire term described in Section
3 below. In no event may the Stock Option be exercised in whole or in part,
however, after the expiration of such term.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the fifth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares, and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Stock Option, or issuance of
securities upon such exercise, has not been obtained or secured.
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Director for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
6. Non-Transferability of Stock Options. This Stock Option is not
------------------------------------
assignable or transferable by the Director other than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986, as amended, or the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder.
-2-
<PAGE>
7. Rights as Stockholder. Neither the Director nor any of the Director's
---------------------
beneficiaries will be deemed to have any rights as a stockholder with respect to
any shares covered by the Stock Option until the issuance of a certificate to
the Director for such shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Continuing Rights. If the Director dies or ceases to serve on the
-----------------
Board prior to termination of the Director's rights to exercise the Stock
Option, any unexercised portion of the Stock Option will continue to vest in
accordance with Section 2 and will be exercisable, subject to all conditions of
the Plan and this Agreement, until the expiration date set forth in Section 3.
In the event of the death of the Director, the Stock Option may be exercised by
the Director's estate or a person who acquired the right to exercise the Stock
Option by bequest or inheritance or by reason of the death of the Director.
10. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Director, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Director and the
Director's transferees that all shares of Common Stock purchased upon the
exercise of the Stock Option will be acquired for investment and not for resale
or distribution, and that upon each exercise of any portion of the Stock Option,
the person entitled to exercise the same will furnish evidence satisfactory to
the Company (including a written and signed representation) to the effect that
the shares are being acquired in good faith for investment and not for resale or
distribution. The Director agrees to furnish or execute such documents as the
Company in its discretion deems necessary to (a) evidence exercise of the Stock
Option, (b) determine whether registration is then required under the Securities
Act of 1933, as then in effect, and (c) comply with or satisfy the requirements
of the Securities Act of 1933, or any other federal, state or local law, as then
in effect.
11. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the
-3-
<PAGE>
Secretary. Each notice to the Director or other person or persons then entitled
to exercise the Stock Option will be addressed to the Director or such other
person or persons at the Director's address specified below. Anyone to whom a
notice may be given under this Agreement may designate a new address by notice
to that effect.
12. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Director to exercise the Stock Option.
13. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Director, amend this Agreement, or otherwise take action, to
accelerate the time or times at which the Stock Option may be exercised, to
extend the term described in Section 3 above, to waive any other condition or
restriction applicable to the Stock Option or to the exercise of the Stock
Option, to reduce the Option Price and to make any other change permitted to be
made under the Plan without the consent of the Director; and may amend the
Agreement in any other respect with the consent of the Director.
14. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE, EXCEPT AS TO MATTERS OF CORPORATE LAW, WHICH
WILL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
IN WITNESS WHEREOF, the Company and the Director have executed this
Agreement as of the 13th day of March, 1996.
STERLING COMMERCE, INC.
By:___________________________________
Sterling L. Williams
Chairman and Chief Executive Officer
DIRECTOR:
______________________________________
[Name of Director]
Social Security Number_________________
Address for Notice
_______________________________________
_______________________________________
-4-
<PAGE>
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Participant"). The Company and the
Participant agree as follows:
1. Grant of Stock Option. Pursuant to a duly adopted resolution of
---------------------
the Special Stock Option Committee on ____________, (the "Date of Grant"), the
Company hereby grants to the Participant, upon the terms and conditions set
forth below and subject to the terms and conditions of the Company's 1996 Stock
Option Plan (the "Plan"), an option (the "Stock Option") to purchase from the
Company a total of __________ shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), at an exercise price per share equal to
$__________ (the "Option Price"). Any terms, when used in this Agreement with
initial capital letters but not defined herein, have the same meanings as in the
Plan, the provisions of which are incorporated into this Agreement by reference.
The Participant acknowledges receipt of a copy of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or in
----------------
part, according to the following schedule:
<TABLE>
<CAPTION>
Percentage
Exercisable Periods
----------- -------
<C> <S>
0% Immediately
25% On the first anniversary of
the Date of Grant
50% On the second anniversary of
the Date of Grant
75% On the third anniversary of
the Date of Grant
100% On the fourth anniversary of
the Date of Grant
</TABLE>
Notwithstanding the foregoing schedule, in the event of a Change in
Control (as defined in Section 1(c) of the Change-in-Control Severance Agreement
dated _______________________ between the Participant and the Company and any
amendments thereto) or a threatened Change in Control, all of the unexercised
portion of this Stock Option will become immediately exercisable. Whether a
<PAGE>
Change in Control is threatened will be determined solely by the Board.
The unexercised portion of the Stock Option from one annual period may
be carried over to a subsequent annual period or periods, and the right of the
Participant to exercise the Stock Option as to such unexercised portion will
continue for the entire term described in Section 3 below, without regard to
whether the Partipant is an employee of the Company or any Subsidiary at the
time of exercise. In no event may the Stock Option be exercised in whole or in
part, however, after the expiration of such term.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the tenth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Stock Option, or issuance of
securities upon such exercise, has not been obtained or secured.
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Participant for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
-2-
<PAGE>
6. Transferability of Stock Options. This Stock Option may be
--------------------------------
transferred by the Participant on five days prior written notice to the Company.
7. Rights as Stockholder. Neither the Participant nor any of the
---------------------
Participant's beneficiaries will be deemed to have any rights as a stockholder
with respect to any shares covered by the Stock Option until the issuance of a
certificate to the Participant for such shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Rights in Event of Death or Termination of Employment as a Result of
--------------------------------------------------------------------
Disability of Participant. If the Participant dies or terminates employment as
- -------------------------
a result of disability prior to termination of the Participant's rights to
exercise the Stock Option, any unexercised portion of the Stock Option will
become immediately exercisable and may be exercised, subject to all conditions
of the Plan and this Agreement, until the expiration of the term set forth in
Section 3. In the event of the death of the Participant, the Stock Option may
be exercised by the Participant's estate or a person who acquired the right to
exercise the Stock Option by bequest or inheritance or by reason of the death of
the Participant. For purposes of this section, the Executive Committee of the
Board will have sole discretion to determine whether termination of a
Participant's employment has occurred "as a result of disability." In no event
may the Stock Option be exercised after the expiration date set forth in Section
3.
10. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Participant, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Participant and the
Participant's transferees that all shares of Common Stock purchased upon the
exercise of the Stock Option will be acquired for investment and not for resale
or distribution, and that upon each exercise of any portion of the Stock Option,
the person entitled to exercise the same will furnish evidence satisfactory to
the Company (including a written and signed representation) to the effect that
the shares are being acquired in good faith for investment and not for resale or
distribution. The Participant agrees to furnish or execute such documents as
the Company in its discretion deems necessary to (a) evidence such exercise of
the
-3-
<PAGE>
Stock Option, (b) determine whether registration is then required under the
Securities Act of 1933, as then in effect, and (c) comply with or satisfy the
requirements of the Securities Act of 1933, or any other federal, state or local
law, as then in effect.
11. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the
Secretary. Each notice to the Participant or other person or persons then
entitled to exercise the Stock Option will be addressed to the Participant or
such other person or persons at the Participant's address specified below.
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
12. Employment. This Agreement does not confer upon the Participant any
----------
right to be employed or to continue in the employ of the Company or any
Subsidiary, nor does it in any way interfere with the right of the Company or
any Subsidiary to terminate the employment of the Participant at any time.
13. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Participant to exercise the Stock Option.
14. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Participant, amend this Agreement, or otherwise take action, to
accelerate the time or times at which the Stock Option may be exercised, to
extend the term described in Section 3 above, to waive any other condition or
restriction applicable to the Stock Option or to the exercise of the Stock
Option, to reduce the Option Price and to make any other change permitted to be
made under the Plan without the consent of the Participant; and may amend the
Agreement in any other respect with the consent of the Participant.
15. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE, EXCEPT AS TO MATTERS OF CORPORATE LAW, WHICH
WILL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
-4-
<PAGE>
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the _____ day of _________________, 199__.
STERLING COMMERCE, INC.
By:___________________________________
Sterling L. Williams
Chairman and Chief Executive Officer
PARTICIPANT:
______________________________________
Signature
_______________________________________
Print Name
Social Security Number_________________
Address for Notice:
_______________________________________
_______________________________________
-5-
<PAGE>
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Participant"). The Company and the
Participant agree as follows:
1. Grant of Stock Option. Pursuant to a duly adopted resolution of
---------------------
the Special Stock Option Committee on ____________, (the "Date of Grant"), the
Company hereby grants to the Participant, upon the terms and conditions set
forth below and subject to the terms and conditions of the Company's 1996 Stock
Option Plan (the "Plan"), an option (the "Stock Option") to purchase from the
Company a total of __________ shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), at an exercise price per share equal to
$__________ (the "Option Price"). Any terms, when used in this Agreement with
initial capital letters but not defined herein, have the same meanings as in the
Plan, the provisions of which are incorporated into this Agreement by reference.
The Participant acknowledges receipt of a copy of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or in
----------------
part, according to the following schedule:
<TABLE>
<CAPTION>
Percentage
Exercisable Periods
----------- -------
<C> <S>
0% Immediately
25% On the first anniversary of
the Date of Grant
50% On the second anniversary of
the Date of Grant
75% On the third anniversary of
the Date of Grant
100% On the fourth anniversary of
the Date of Grant
</TABLE>
Notwithstanding the foregoing schedule, in the event of a Change in
Control (as defined in Section 1(c) of the Change-in-Control Severance Agreement
dated _______________________ between the Participant and the Company and any
amendments thereto) or a threatened Change in Control, all of the unexercised
portion of this Stock Option will become immediately exercisable. Whether a
<PAGE>
Change in Control is threatened will be determined solely by the Board.
The unexercised portion of the Stock Option from one annual period may
be carried over to a subsequent annual period or periods, and the right of the
Participant to exercise the Stock Option as to such unexercised portion will
continue for the entire term described in Section 3 below, without regard to
whether the Partipant is an employee of the Company or any Subsidiary at the
time of exercise. In no event may the Stock Option be exercised in whole or in
part, however, after the expiration of such term.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the tenth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Stock Option, or issuance of
securities upon such exercise, has not been obtained or secured.
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Participant for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
-2-
<PAGE>
6. Non-Transferability of Stock Options. This Stock Option is not
------------------------------------
assignable or transferable by the Participant other than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986, as amended, or the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder.
7. Rights as Stockholder. Neither the Participant nor any of the
---------------------
Participant's beneficiaries will be deemed to have any rights as a stockholder
with respect to any shares covered by the Stock Option until the issuance of a
certificate to the Participant for such shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Rights in Event of Death or Termination of Employment as a Result of
--------------------------------------------------------------------
Disability of Participant. If the Participant dies or terminates employment as
- -------------------------
a result of disability prior to termination of the Participant's rights to
exercise the Stock Option, any unexercised portion of the Stock Option will
become immediately exercisable and may be exercised, subject to all conditions
of the Plan and this Agreement, until the expiration of the term set forth in
Section 3. In the event of the death of the Participant, the Stock Option may
be exercised by the Participant's estate or a person who acquired the right to
exercise the Stock Option by bequest or inheritance or by reason of the death of
the Participant. For purposes of this section, the Executive Committee of the
Board will have sole discretion to determine whether termination of a
Participant's employment has occurred "as a result of disability." In no event
may the Stock Option be exercised after the expiration date set forth in Section
3.
10. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Participant, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Participant and the
Participant's transferees that all shares of Common Stock purchased upon the
exercise of the Stock Option will be acquired for investment and not for resale
or distribution, and that upon each exercise of any portion of the Stock Option,
the person entitled to exercise the same will furnish evidence satisfactory to
the Company (including a written and signed representation) to
-3-
<PAGE>
the effect that the shares are being acquired in good faith for investment and
not for resale or distribution. The Participant agrees to furnish or execute
such documents as the Company in its discretion deems necessary to (a) evidence
such exercise of the Stock Option, (b) determine whether registration is then
required under the Securities Act of 1933, as then in effect, and (c) comply
with or satisfy the requirements of the Securities Act of 1933, or any other
federal, state or local law, as then in effect.
11. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the
Secretary. Each notice to the Participant or other person or persons then
entitled to exercise the Stock Option will be addressed to the Participant or
such other person or persons at the Participant's address specified below.
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
12. Employment. This Agreement does not confer upon the Participant any
----------
right to be employed or to continue in the employ of the Company or any
Subsidiary, nor does it in any way interfere with the right of the Company or
any Subsidiary to terminate the employment of the Participant at any time.
13. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Participant to exercise the Stock Option.
14. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Participant, amend this Agreement, or otherwise take action, to
accelerate the time or times at which the Stock Option may be exercised, to
extend the term described in Section 3 above, to waive any other condition or
restriction applicable to the Stock Option or to the exercise of the Stock
Option, to reduce the Option Price and to make any other change permitted to be
made under the Plan without the consent of the Participant; and may amend the
Agreement in any other respect with the consent of the Participant.
15. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE, EXCEPT AS TO MATTERS OF CORPORATE LAW, WHICH
WILL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
-4-
<PAGE>
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the _____ day of _________________, 199__.
STERLING COMMERCE, INC.
By:___________________________________
Sterling L. Williams
Chairman and Chief Executive Officer
PARTICIPANT:
______________________________________
Signature
_______________________________________
Print Name
Social Security Number_________________
Address for Notice:
_______________________________________
_______________________________________
-5-
<PAGE>
STERLING COMMERCE, INC.
1996 STOCK OPTION PLAN
Stock Option Agreement
----------------------
This Stock Option Agreement (the "Agreement") is entered into by and
between Sterling Commerce, Inc., a Delaware corporation (the "Company"), and
_______________________________ (the "Participant"). The Company and the
Participant agree as follows:
1. Grant of Stock Option. Pursuant to a duly adopted resolution of
---------------------
the Special Stock Option Committee on ____________, (the "Date of Grant"), the
Company hereby grants to the Participant, upon the terms and conditions set
forth below and subject to the terms and conditions of the Company's 1996 Stock
Option Plan (the "Plan"), an option (the "Stock Option") to purchase from the
Company a total of __________ shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), at an exercise price per share equal to
$__________ (the "Option Price"). Any terms, when used in this Agreement with
initial capital letters but not defined herein, have the same meanings as in the
Plan, the provisions of which are incorporated into this Agreement by reference.
The Participant acknowledges receipt of a copy of the Plan.
2. Time of Exercise. The Stock Option may be exercised, in whole or
----------------
in part, at any time on or after the date on which this Stock Option becomes
effective, as provided in Section 1, without regard to whether the Participant
is an employee of the Company or any Subsidiary at the time of exercise. In no
event may the Stock Option be exercised in whole or in part, however, after the
expiration of the term described in Section 3 below.
3. Term. The Stock Option will expire and all rights under this
----
Agreement will terminate on the tenth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Stock Option:
------------------------
(a) may be exercised only with respect to full shares and no
fractional shares of Common Stock will be issued upon exercise of the Stock
Option; and
(b) may be exercised in whole or in part, but no certificates
representing shares subject to the Stock Option will be delivered if any
requisite registration with, clearance by, or consent, approval or
authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Stock Option, or issuance of
securities upon such exercise, has not been obtained or secured.
<PAGE>
5. Manner of Exercise. The Stock Option may be exercised by written
------------------
notice to the Company of the number of shares being purchased and the Option
Price to be paid, accompanied by full payment of the Option Price (a) in cash or
by check acceptable to the Company, (b) by the transfer to the Company of shares
of Common Stock owned by the Participant for at least six months and having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price (provided that the payment method described in this
clause (b) will not be available at any time that the Company is prohibited from
purchasing or acquiring such shares of Common Stock), or (c) by a combination of
any of the foregoing, provided that payment of the Option Price may also be made
by deferred payment from the proceeds of sale through a bank or broker of some
or all of the shares to which the exercise relates. Any federal, state or local
taxes required to be paid or withheld at the time of exercise will be paid or
withheld in full prior to any delivery of shares upon exercise.
6. Transferability of Stock Options. This Stock Option may be
--------------------------------
transferred by the Participant on five days prior written notice to the Company.
7. Rights as Stockholder. Neither the Participant nor any of the
---------------------
Participant's beneficiaries will be deemed to have any rights as a stockholder
with respect to any shares covered by the Stock Option until the issuance of a
certificate to the Participant for such shares.
8. Adjustments. The number of shares of Common Stock covered by the
-----------
Stock Option evidenced by this Agreement, and the Option Price thereof, will be
subject to adjustment as provided in the Plan. No adjustment will be made for
dividends or other rights for which the record date is prior to the issuance of
the certificate or certificates representing shares issued pursuant to the Stock
Option.
9. Rights in Event of Death of Participant. In the event of the death of
---------------------------------------
the Participant, the Stock Option may be exercised by the Participant's estate
or a person who acquired the right to exercise the Stock Option by bequest or
inheritance or by reason of the death of the Participant. In no event may the
Stock Option be exercised after the expiration date set forth in Section 3.
10. Stock Purchased for Investment. Unless the shares are covered by a
------------------------------
then current and effective registration statement under the Securities Act of
1933, as then in effect, the Participant, by accepting the Stock Option,
represents, warrants, covenants and agrees on behalf of the Participant and the
Participant's transferees that all shares of Common Stock
-2-
<PAGE>
purchased upon the exercise of the Stock Option will be acquired for investment
and not for resale or distribution, and that upon each exercise of any portion
of the Stock Option, the person entitled to exercise the same will furnish
evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares are being acquired in good faith
for investment and not for resale or distribution. The Participant agrees to
furnish or execute such documents as the Company in its discretion deems
necessary to (a) evidence such exercise of the Stock Option, (b) determine
whether registration is then required under the Securities Act of 1933, as then
in effect, and (c) comply with or satisfy the requirements of the Securities Act
of 1933, or any other federal, state or local law, as then in effect.
11. Notices. Each notice relating to this Agreement will be in writing
-------
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, now 8080 North
Central Expressway, Suite 1100, Dallas, Texas 75206, attention of the
Secretary. Each notice to the Participant or other person or persons then
entitled to exercise the Stock Option will be addressed to the Participant or
such other person or persons at the Participant's address specified below.
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
12. Employment. This Agreement does not confer upon the Participant any
----------
right to be employed or to continue in the employ of the Company or any
Subsidiary, nor does it in any way interfere with the right of the Company or
any Subsidiary to terminate the employment of the Participant at any time.
13. No Obligation to Exercise Stock Option. This Agreement does not
--------------------------------------
impose any obligation upon the Participant to exercise the Stock Option.
14. Amendments. The Special Stock Option Committee may, without the
----------
consent of the Participant, amend this Agreement, or otherwise take action, to
accelerate the time or times at which the Stock Option may be exercised, to
extend the term described in Section 3 above, to waive any other condition or
restriction applicable to the Stock Option or to the exercise of the Stock
Option, to reduce the Option Price and to make any other change permitted to be
made under the Plan without the consent of the Participant; and may amend the
Agreement in any other respect with the consent of the Participant.
15. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO BE PERFORMED IN THE
-------------
STATE OF TEXAS AND WILL BE CONSTRUED AND
-3-
<PAGE>
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE, EXCEPT AS TO
MATTERS OF CORPORATE LAW, WHICH WILL BE GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the _____ day of _________________, 199__.
STERLING COMMERCE, INC.
By:___________________________________
Sterling L. Williams
Chairman and Chief Executive Officer
PARTICIPANT:
______________________________________
Signature
_______________________________________
Print Name
Social Security Number_________________
Address for Notice:
_______________________________________
_______________________________________
-4-
<PAGE>
STERLING COMMERCE, INC. EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED MARCH 31, 1996 ENDED MARCH 31, 1996
-------------------- --------------------
<S> <C> <C>
Primary:
Average shares outstanding.............. 73,734 73,466
Net effect of dilutive stock
options-based on the treasury stock
method using average market price...... 1,250 621
------- -------
Total................................... 74,984 74,087
======= =======
Net income.............................. $13,235 $25,524
======= =======
Per share amount........................ $ .18 $ .34
======= =======
Fully diluted:
Average shares outstanding.............. 73,734 73,466
Net effect of dilutive stock
options-based on the treasury stock
method using quarter-end market price.. 1,389 691
------- -------
Total................................... 75,123 74,157
======= =======
Net income.............................. $13,235 $25,524
======= =======
Per share amount........................ $ .18 $ .34
======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 41,485
<SECURITIES> 0
<RECEIVABLES> 51,147
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 102,757
<PP&E> 57,900
<DEPRECIATION> 23,993
<TOTAL-ASSETS> 183,790
<CURRENT-LIABILITIES> 56,946
<BONDS> 0
750
0
<COMMON> 0
<OTHER-SE> 100,260
<TOTAL-LIABILITY-AND-EQUITY> 183,790
<SALES> 118,226
<TOTAL-REVENUES> 118,226
<CGS> 25,252
<TOTAL-COSTS> 75,476
<OTHER-EXPENSES> 210
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 42,540
<INCOME-TAX> 17,016
<INCOME-CONTINUING> 25,524
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,524
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
</TABLE>
