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                                                                   EXHIBIT 10.12

                             EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement"), by and between Sterling
Software, Inc. ("Sterling Software") and Jeannette P. Meier ("Meier"), is
entered into effective as of September 30, 1998.

     WHEREAS, Meier's current position as Executive Vice President, Finance and
Administration of Sterling Software is being terminated by Sterling Software as
of the date hereof;

     WHEREAS, Meier has served as an officer and employee of Sterling Software
for many years rendering long and valuable service to Sterling Software, and
Sterling Software desires to continue to employ Meier and provide certain
benefits to Meier more specifically provided below;

     WHEREAS, Sterling Software considers Meier's knowledge of Sterling
Software, its history, operations and business and the software industry to be
of great strategic value to Sterling Software;

     WHEREAS, Meier is entitled to be offered continued employment at Sterling
Software at significantly increased compensation on the date hereof pursuant to
Section 10 of that certain Severance Agreement, between Meier and Sterling
Software, dated as of February 12, 1996, as amended as of December 1, 1996 and
as of August 15, 1997 (the "Severance Agreement") and as further amended by that
certain Standstill Agreement, between Meier and Sterling Software, dated as of
May 31, 1998 (the "Standstill Agreement");

     WHEREAS, upon termination of employment, Meier is entitled to certain
valuable severance payment rights and benefits pursuant to other provisions of
the Severance Agreement;

     WHEREAS, Meier is also entitled to certain valuable severance payment
rights under that certain Change in Control Severance Agreement, by and between
Sterling Software and Meier, dated as of February 12, 1996, as amended as of
June 18, 1996 and as of December 1, 1996 (the "Change in Control Severance
Agreement");

     WHEREAS, Sterling Software wishes to retain Meier as a Special Assistant to
the President and Chief Executive Officer of Sterling Software, and Meier is
willing to accept such retention in accordance with the terms and conditions of
this Agreement;

     WHEREAS, Sterling Software wishes to impose upon Meier certain obligations
with respect to confidential information of Sterling Software and obtain from
Meier certain non-competition and related covenants; and

     WHEREAS, in consideration of such retention and the other provisions of
this Agreement, Meier and Sterling Software now wish to terminate the Severance
Agreement, the Standstill Agreement and the Change in Control Severance
Agreement and enter into this Agreement;
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     NOW, THEREFORE, in consideration of the foregoing, the premises and
covenants contained herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, and in recognition of Meier's long
and valuable service to Sterling Software, the parties hereto agree as follows:

     1.   TERMINATION AS OFFICER.  Effective as of the close of business on
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September 30, 1998, Meier's position with Sterling Software as Executive Vice
President, Finance and Administration shall cease, and Meier shall resign such
office and shall resign from all other positions or offices she then holds with
Sterling Software and any of its subsidiaries (the execution and delivery of
this Agreement being deemed to be such resignation); provided, however, that
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Meier shall continue to be employed by Sterling Software as provided in this
Agreement.

     2.   EMPLOYMENT.  Meier is hereby appointed a Special Assistant to Sterling
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L. Williams, the President and Chief Executive Officer of Sterling Software
("Williams").  Meier accepts such appointment, and Sterling Software agrees to
utilize the services of Meier on the terms and conditions contained herein.

     3.   DUTIES.  Meier shall consult with and advise Williams with respect to
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strategic and financial matters and shall act as a goodwill ambassador for
Sterling Software at Williams' request, upon reasonable notice, at such time and
times and for such duration as shall be mutually agreed upon in any instance.
It is expressly agreed that neither Williams' failure to request such services,
including a failure by reason of Williams' disability, death or resignation or
termination as President and Chief Executive Officer of Sterling Software, nor
any failure or refusal by Meier to agree to such time and times and duration
shall constitute a breach of this Agreement, whether such failures or refusals
be in a particular instance or series of instances; provided, that Meier agrees
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to provide not less than an aggregate of 500 hours of such services during the
term of this Agreement at Williams' request so long as Williams is President and
Chief Executive Officer of Sterling Software.  It is also expressly agreed that
Williams has no right under this Agreement to require Meier to report to or
spend any time at Sterling Software's offices or other facilities.  In the event
Meier becomes disabled during the term of this Agreement and as a result of such
disability is unable to perform the services provided for in this Section 3, the
payments and other benefits provided for in Sections 5 and 6 hereof shall
nonetheless continue and all other terms and conditions of this Agreement shall
remain in full force and effect.  In the event of a Change in Control (as
defined in Section 8 of this Agreement), Meier shall have no further obligation
to provide services under this Section 3, this Agreement shall immediately and
automatically, without further action by any person, become a retirement
agreement, and the payments and benefits provided for in Sections 5 and 6 hereof
shall nevertheless continue and all other terms and conditions of this Agreement
shall remain in full force and effect.

     4.   TERM AND TERMINATION.  This Agreement shall commence on October 1,
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1998 and shall continue in effect so long as Meier shall live or until
terminated by Meier in writing. This Agreement shall terminate upon Meier's
death or upon her commencement of full time salaried employment with a third
party. Sterling Software acknowledges that it is aware Meier is a consultant to
Sterling Commerce, Inc. and hereby consents to, and agrees that the preceding
sentence shall not apply to, such consultancy. Any payments paid or payable on
or prior to the

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termination of this Agreement shall be deemed to have been earned, amounts
payable shall be paid to Meier or her estate and permitted assigns or
transferees, and there shall be no repayment of sums paid or payable prior to
termination of this Agreement. It is expressly agreed that, in view of the
termination of the Severance Agreement, the Standstill Agreement and the Change
in Control Severance Agreement in Section 14 hereof and the other provisions
hereof, Sterling Software shall not have the power to terminate this Agreement
during Meier's life.

     5.   COMPENSATION.  As consideration for Meier's entering into this
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Agreement, her prior service to Sterling Software and the services to be
rendered hereunder, during the term of this Agreement, Meier shall be paid
$200,000 per year, payable in equal twice-monthly installments in accordance
with Sterling Software's standard payroll payment dates, in arrears commencing
October 1, 1998, which amount may be increased from time to time as mutually
agreed.  Sterling Software may, in its sole and complete discretion, pay annual
bonuses to Meier during the term of this Agreement.  Meier shall also be
reimbursed for all other authorized expenses (not covered by Section 6 hereof)
incurred at the direction of Sterling Software in providing services under this
Agreement.  In addition, Meier shall be entitled to the benefits and payments
provided for in Section 6 hereof.

     6.   BENEFITS.  During the term of this Agreement, Meier shall be entitled
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to the benefits and payments set forth in this Section 6.

          (a) General Benefits.  Except as otherwise specifically expressed in
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this Agreement, Meier shall continue to be eligible to participate in all
employee benefits and perquisites currently made available to the executive
officers of Sterling Software (to the extent permitted by law and the terms of
such benefits), including but not limited to those set forth among the benefits
and perquisites in the following subsection 6(b); provided, however, that if
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Sterling Software modifies such benefits and perquisites with respect to all
executive officers of Sterling Software, Meier's benefits and perquisites shall
be similarly modified (other than those expressly listed in subsections 6(b)(ii)
and 6(b)(v) and in subsections 6(c) and 6(d), which shall not be modified).
Sterling Software shall have no obligation to offer any benefits or perquisites
to Meier which are in addition to those available to the executive officers of
Sterling Software as of the date hereof ("Additional Benefits").  Meier's
eligibility to participate in any such Additional Benefits during the term of
this Agreement shall be at the sole and complete discretion of Sterling
Software.

          (b) Listed Benefits and Perquisites.  Meier shall be entitled to the
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following specific benefits and perquisites:

               (i) participation in the Sterling Software, Inc. Deferred
     Compensation Plan and the Sterling Software medical and dental plans,
     including the 4% reimbursement for medical and dental expenses not covered
     by such plans, in accordance with the terms and conditions of the Sterling
     Software, Inc. Employee Health Benefit Plan, each as amended from time to
     time;

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               (ii)   reimbursement for all costs and expenses of annual
     physical examinations of Meier and her spouse or "significant other" at the
     Mayo Clinic or a comparable medical facility located in the United States
     and selected by Meier ;

               (iii)  company paid life insurance on Meier's life in the face
     amount of the lesser of (x) seven times Meier's base annual pay in effect
     from time to time under this Agreement (currently a face amount of $1.4
     million) and (y) the cap amount in effect from time to time for life
     insurance provided to Sterling Software's employees (currently a face
     amount of $1.5 million);

               (iv)   reimbursement of up to $10,000 per year for personal
     legal, financial and tax planning assistance and services;

               (v)    provision at Meier's principal residence of a personal
     computer, printer, modem, other peripheral equipment, and all necessary
     software, and a fax capability, all of which shall be periodically updated
     and maintained by Sterling Software, a business telephone line and an ISDN
     line, so that Meier remains at all times integrally connected to Sterling
     Software's computer, e-mail and related communication network;

               (vi)   Meier shall be entitled to continued use of a car
     ("company car") provided by Sterling Software on the following terms and
     conditions: Meier shall be entitled to a new company car every three years,
     such car to have the same general level of luxury as the company car
     currently provided to Meier. For purposes of measuring the time for Meier's
     next entitlement to a new car, the parties acknowledge she has commenced
     use of a new company car in September, 1998. Sterling Software shall
     provide insurance and shall pay all expenses associated with Meier's
     company cars as currently provided and paid by Sterling Software for
     company cars, including all repairs and maintenance, gas, oil, etc. At the
     end of each three-year period applicable to a given company car, Meier
     shall have the right to purchase such car from Sterling Software at a price
     equal to the then current book value of such car, it being understood that
     "book value" in this context shall be net of all applicable depreciation.
     Upon any such purchase of a company car by Meier, Meier shall be
     responsible for the insurance and all expenses incurred after the effective
     date of such purchase; and

               (vii)  provision of, or reimbursement for, all other out-of-
     pocket costs, including first class airfare, related to requirements to
     travel on Sterling Software business or to fulfill Sterling Software
     responsibilities pursuant to Section 3 of this Agreement.

          (c) Country Club Membership.  Sterling Software shall reimburse Meier
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for the cost of her initial membership at the country club of her choice, which
country club shall be designated by Meier not later than October 15, 1998.  In
addition, during the term of this Agreement, Sterling Software shall pay, or
reimburse Meier for the payment of, monthly dues and assessments at such country
club and all expenses incurred by Meier during the use of such country club for
Sterling Software-related business use.  Meier shall be responsible, and shall
reimburse Sterling Software, for all non-business related expenses she incurs at
such club (e.g., non-business meals, clothing and equipment purchases, etc.).

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          (d) Perquisite Tax Gross Up.  In April of each year during the term of
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this Agreement (and in April of the year following termination of this
Agreement), Sterling Software shall pay to Meier (or her estate) an amount
calculated to "gross up" or reimburse Meier for all federal and other income
taxes incurred by her in the prior year and during the term of this Agreement
(i) as a result of the perquisites provided for under Section 6 (other than
participation in the Sterling Software, Inc. Deferred Compensation Plan) and
(ii) as a result of such annual "gross up" payment.

     7.   STOCK OPTIONS.  Awards, if any, of Sterling Software stock options to
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Meier during the term of this Agreement shall be at the sole and complete
discretion of Sterling Software.  All Sterling Software stock options heretofore
granted by Sterling Software to Meier shall continue to be effective in
accordance with their terms, including vesting provisions, except as set forth
in the next sentence, and nothing in this Agreement shall terminate such
options, notwithstanding any terms thereof.  In the event of a Change in Control
(as defined in Section 8 hereof), in order to preserve certain existing rights
Meier holds under agreements being terminated hereby, all outstanding unvested
Sterling Software stock options granted to Meier prior to the date of the Change
in Control shall immediately and automatically, without further action by any
person, become and remain immediately vested and exercisable throughout the
remaining stated term thereof.  In the event of such a Change in Control,
Sterling Software shall promptly notify Meier in writing of such Change in
Control.

     8.   DEFINITION OF CHANGE IN CONTROL.  "Change in Control" means the
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occurrence of any of the following events:

          (i)   Sterling Software 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 transactions are held in the aggregate by the holders of Voting Stock
of Sterling Software immediately prior to such transaction;

          (ii)  Sterling Software 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 Sterling Software 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
Sterling Software;

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          (iv)  Sterling Software 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 Sterling Software 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 Sterling
Software 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 Sterling Software's
stockholders, by a vote of at least two-thirds of the Directors of Sterling
Software (or a committee thereof) then still in office who were Directors of
Sterling Software at the beginning of any such period will be deemed to have
been a Director of Sterling Software at the beginning of such period.

     Notwithstanding the foregoing provisions of Sections 8(iii) or 8(iv),
unless otherwise determined in a specific case by majority vote of the Board of
Directors of Sterling Software, a "Change in Control" shall not be deemed to
have occurred for purposes of Section 8(iii) or 8(iv) solely because (A)
Sterling Software, (B) an entity in which Sterling Software directly or
indirectly beneficially owns 50% or more of the outstanding Voting Stock (a
"Subsidiary"), or (C) any employee stock ownership plan sponsored by Sterling
Software or any other employee benefit plan of Sterling Software or any
Subsidiary, 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 Exchange Act disclosing beneficial ownership by it of shares of Voting Stock
of Sterling Software, whether in excess of 20% or otherwise, or because Sterling
Software reports that a change in control of Sterling Software has occurred or
will occur in the future by reason of such beneficial ownership or any increase
or decrease thereof.

     9.   CERTAIN ADDITIONAL PAYMENTS BY STERLING SOFTWARE.   In order to
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preserve certain existing rights held by Meier under agreements otherwise being
terminated hereby, the parties hereto agree that:

          (a) In the event that it shall be determined (as hereafter provided)
that all or any portion of any payment or distribution by Sterling Software or
any of its affiliates to or for the benefit of Meier 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 Sterling
Software, 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 Meier shall be entitled to receive an additional payment or
payments (collectively, a "Gross-Up Payment"). The Gross-Up Payment shall be in
an amount such that, after payment by Meier of all taxes (including any interest
or penalties imposed with respect to such taxes), including any

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Excise Tax imposed upon the Gross-Up Payment, Meier retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

          (b) Subject to the provisions of Section 9(f), all determinations
required to be made under this Section 9, including whether an Excise Tax is
payable by Meier and the amount of such Excise Tax and whether a Gross-Up
Payment is required to be paid by Sterling Software to Meier and the amount of
such Gross-Up Payment, if any, shall be made by a nationally recognized
accounting firm (the "Accounting Firm") selected by Meier in her sole
discretion. Meier shall direct the Accounting Firm to submit its determination
and detailed supporting calculations to both Sterling Software and Meier within
30 calendar days after Meier is notified of a Change in Control (as defined in
Section 8 hereof), as required by Section 7 hereof, and any such other time or
times as may be requested by Sterling Software or Meier.  If the Accounting Firm
determines that any Excise Tax is payable by Meier, Sterling Software shall pay
the required Gross-Up Payment to Meier within five business days after receipt
of such determination and calculations with respect to any Gross-Up Payment to
Meier.  If the Accounting Firm determines that no Excise Tax is payable by
Meier, it shall, at the same time as it makes such determination, furnish
Sterling Software and Meier a written opinion to the effect that Meier has
substantial authority not to report any Excise Tax on her 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 Sterling
Software should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder.  In the event that Sterling Software
exhausts or fails to pursue its remedies pursuant to Section 9(f) and Meier
thereafter is required to make a payment of any Excise Tax, Meier 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 Sterling Software and Meier as promptly as possible.  Any such Underpayment
shall be promptly paid by Sterling Software to, or for the benefit of, Meier
within five business days after receipt of such determination and calculations.

          (c) Sterling Software and Meier shall each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
Sterling Software or Meier, 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 9(b).  Any determination by the Accounting Firm as to
the amount of the Gross-Up Payment shall be binding upon Sterling Software and
Meier.

          (d) The federal, state and local income or other tax returns filed by
Meier shall be prepared and filed on a consistent basis with the determination
of the Accounting Firm with respect to the Excise Tax payable by Meier. Meier
shall make proper payment of the amount of any Excise Payment, and at the
request of Sterling Software, provide to Sterling Software true and correct
copies (with any amendments) of her 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 as are reasonably requested by Sterling Software, evidencing such
payment. If prior to the filing of Meier's federal income tax return, or

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corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, Meier
shall within five business days pay to Sterling Software 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 9(b)
shall be borne by Sterling Software.  If such fees and expenses are initially
paid by Meier, Sterling Software shall reimburse Meier the full amount of such
fees and expenses within five business days after receipt from Meier of a
statement therefor and reasonable evidence of her payment thereof.

          (f) Meier shall notify Sterling Software in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by Sterling Software of a Gross-Up Payment.  Such
notification shall be given as promptly as practicable but no later than 10
business days after Meier actually receives notice of such claim and Meier shall
further apprise Sterling Software 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
Meier).  Meier shall not pay such claim prior to the earlier of (i) the
expiration of the 30-calendar-day period following the date on which she gives
such notice to Sterling Software and (ii) the date that any payment of amount
with respect to such claim is due.  If Sterling Software notifies Meier in
writing prior to the expiration of such period that it desires to contest such
claim, Meier, subject to the provisions of Section 9(h) of this Agreement,
shall:

          i.   provide Sterling Software with any written records or documents
     in her possession relating to such claim reasonably requested by Sterling
     Software;

          ii.   take such action in connection with contesting such claim as
     Sterling Software 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 Sterling Software;

          iii.  cooperate with Sterling Software in good faith in order
     effectively to contest such claim; and

          iv.   permit Sterling Software to participate in any proceedings
     relating to such claim;

provided, however, that Sterling Software shall bear and pay directly all costs
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and expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless Meier, 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 9(f),
Sterling Software shall control all proceedings taken in connection with the
contest of any claim contemplated by this Section 9(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 Meier may participate therein at her own cost and expense) and
may, at its option, either direct Meier to pay the tax claimed and sue for a
refund or

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contest the claim in any permissible manner, and Meier 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 Sterling Software
shall determine; provided further, however, that if Sterling Software directs
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Meier to pay the tax claimed and sue for a refund, Sterling Software shall
advance the amount of such payment to Meier on an interest-free basis and shall
indemnify and hold Meier 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
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extension of the statute of limitations relating to payment of taxes for the
taxable year of Meier with respect to which the contested amount is claimed to
be due is limited solely to such contested amount. Furthermore, Sterling
Software'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 Meier 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 Meier of an amount advanced by Sterling
Software pursuant to Section 9(f), Meier receives any refund with respect to
such claim, Meier shall (subject to Sterling Software's complying with the
requirements of Section 9(f)) promptly pay to Sterling Software the amount of
such refund (together with any interest paid or credited thereon after any taxes
applicable thereto).  If, after the receipt by Meier of an amount advanced by
Sterling Software pursuant to Section 9(f), a determination is made that Meier
shall not be entitled to any refund with respect to such claim and Sterling
Software does not notify Meier 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 Sterling Software to Meier pursuant
to this Section 9.

          (h) Any information provided by Meier to Sterling Software under this
Section 9 shall be treated confidentially by Sterling Software and will not be
provided by Sterling Software to any other person than Sterling Software's
professional advisors without Meier's prior written consent except as required
by law.

     10.  CONFIDENTIAL INFORMATION/NON-COMPETE.  Sterling Software designs and
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sells computer software and provides related services on a world-wide basis.  As
a senior executive officer of Sterling Software, Meier has obtained information,
not publicly known, about Sterling Software's methods, procedures, techniques,
marketing, pricing, products, business strategies, customers and potential
customers ("Confidential Information") and Sterling Software agrees to continue
to provide and afford Meier access to such Confidential Information.  Any and
all Confidential Information shall be treated as confidential by Meier and shall
not be communicated to or discussed with any party who is not an officer or
director of Sterling Software, unless Meier is specifically authorized to do so
by Sterling Software.  Meier shall not use any Confidential Information for her
personal gain, nor shall Meier act as a consultant or advisor to any other
person, partnership, corporation or other business association in the computer
software industry during the term of this Agreement without the prior written
consent of Sterling Software, such consent not to be unreasonably withheld.
Meier shall not on her own behalf or that of any other individual or entity
except Sterling Software solicit, sell, lease or otherwise provide products or
services competitive to Sterling Software's products or services and shall not
participate, directly

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or indirectly, in the business of a competitor during the term of this
Agreement. These restrictions shall apply worldwide. Sterling Software
acknowledges that it is aware Meier is a consultant to Sterling Commerce, Inc.
and hereby consents to, and agrees that this Section 10 shall not apply to, such
consultancy. Nothing contained in this Section 10 shall prohibit Meier from
purchasing and holding as an investment not more than ten percent (10%) of any
class of the issued, outstanding and publicly traded (on a recognized national
or regional securities exchange or in the over-the-counter market) capital stock
of any company which conducts a business in competition with the business of
Sterling Software.

     11.  LEGAL FEES AND EXPENSES.  It is the intent of Sterling Software that
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Meier not be required to incur legal fees and the related expenses associated
with the interpretation, enforcement or defense of Meier'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 Meier
hereunder.  Accordingly, if it should appear to Meier that Sterling Software has
failed to comply with any of its obligations under this Agreement or in the
event that Sterling Software 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,
Meier the benefits provided or intended to be provided to Meier hereunder,
Sterling Software irrevocably  authorizes Meier from time to time to retain
counsel of Meier's choice, at the expense of Sterling Software as hereafter
provided, to advise and represent Meier 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 Sterling Software or any Director, officer, stockholder or other person
affiliated with Sterling Software, in any jurisdiction.  Notwithstanding any
existing or prior attorney-client relationship between Sterling Software and
such counsel, Sterling Software irrevocably consents to Meier's entering into an
attorney-client relationship with such counsel, and in that connection Sterling
Software and Meier agree that a confidential relationship shall exist between
Meier and such counsel. Without respect to whether Meier prevails, in whole or
in part, in connection with any of the foregoing, Sterling Software will pay and
be solely financially responsible for any and all attorneys' and related fees
and expenses incurred by Meier in connection with any of the foregoing at the
time such fees and expenses are incurred.

     12.  DEFAULT INTEREST.  Without limiting the rights of Meier at law or in
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equity, if Sterling Software fails to make any payment or provide any benefit
required to be made or provided under this Agreement on a timely basis, Sterling
Software 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 or another equivalent financial publication.  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.

     13.  NO EFFECT ON PRIOR EMPLOYMENT COMPENSATION.  Nothing herein shall be
          ------------------------------------------                          
construed to affect in any way compensation amounts paid or payable to Meier,
including bonus amounts, with respect to her employment by Sterling Software
prior to the date hereof; provided, that, Meier shall receive her Fiscal Year
                          --------                                           
1998 cash incentive bonus of $150,000, payable in accordance with Sterling
Software's usual bonus procedures in October 1998.

                                       10
<PAGE>
 
     14.  TERMINATION OF CERTAIN PRIOR AGREEMENTS.  Meier and Sterling Software
          ---------------------------------------                              
hereby agree that the Severance Agreement, the Standstill Agreement and the
Change in Control Severance Agreement shall be deemed to be terminated and of no
further effect upon the execution and delivery of this Agreement.

     15.  INDEMNIFICATION BY STERLING SOFTWARE.  In consideration of Meier
          ------------------------------------                            
entering into this Agreement, Sterling Software has agreed to indemnify Meier to
the extent and in accordance with the terms and conditions of a separate
Indemnity Agreement dated the date hereof and attached as Exhibit A hereto.

     16.  SURVIVAL OF CERTAIN PROVISIONS.  Sections 4 (third sentence), 6(d), 7,
          ------------------------------                                        
8, 9, 11, 12, 13, 14, 15, 16, 17, 18 and 19 of this Agreement and the provisions
of Section 10 of this Agreement relating to treatment, communication, discussion
and use of Confidential Information by Meier shall survive the termination of
this Agreement.

     17.  SUCCESSORS AND BINDING AGREEMENT:
          -------------------------------- 

          (a) Sterling Software shall require any successor (whether direct or
indirect, by stock or assets purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of Sterling
Software, by agreement in form and substance satisfactory to Meier, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent Sterling Software would be required to perform if no such succession had
taken place.  Whether or not any such successor enters into the agreement
provided for in the preceding sentence,  this Agreement will be binding upon and
inure to the benefit of Sterling Software and any such successor to Sterling
Software, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business or assets of Sterling
Software whether by stock or assets purchase, merger, consolidation,
reorganization or otherwise, but will not otherwise be assignable, transferable
or delegable by Sterling Software.

          (b) This Agreement will inure to the benefit of and be enforceable by
Meier'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 17(a) and 17(b).  Without limiting the generality or effect
of the foregoing, Meier's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by Meier's will or by the laws
of descent and distribution and, in the event of any attempted assignment or
transfer contrary to this Section 17(c), Sterling Software shall have no
liability to pay any amount so attempted to be assigned, transferred or
delegated, except to Meier, her personal or legal representative, executors,
administrators, successors, heirs, distributees and legatees.

                                       11
<PAGE>
 
     18.  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 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 Sterling Software at Sterling Software, Inc., 300
Crescent Court, Suite 1200, Dallas, Texas 75201 (to the attention of the Senior
Vice President and General Counsel of Sterling Software) and to Meier at 5000
St. Johns Drive, Dallas, Texas 75205 or to such other address as either 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.

     19.  GOVERNING LAW.  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 as of the date first set forth above.


                                    /s/ Jeannette P. Meier
                                    --------------------------------------- 
                                    Jeannette P. Meier


                                    STERLING SOFTWARE, INC.



                                    By /s/ Sterling L. Williams
                                      -------------------------------------
                                      Sterling L. Williams
                                      President and Chief Executive Officer

                                       12
<PAGE>
 
                                                                       EXHIBIT A

                              INDEMNITY AGREEMENT


     This Indemnity Agreement (this "Agreement") is made as of the 30th day of
September, 1998, by and between Sterling Software, Inc., a Delaware corporation
(the "Corporation"), and Jeannette P. Meier (the "Indemnitee").

     WHEREAS, Indemnitee is a former executive officer of the Corporation, and
is knowledgeable about certain strategic, business, personnel, legal and other
matters involving the Corporation;

     WHEREAS, Indemnitee has agreed to become a Special Assistant to the
Corporation's President and Chief Executive Officer;

     WHEREAS, in her capacity as an officer of the Corporation, the Indemnitee
had certain rights to indemnification by the Corporation under the General
Corporation Law of the State of Delaware, the Corporation's Restated Certificate
of Incorporation and Restated Bylaws and further has rights to indemnification
by the Corporation pursuant to the Indemnity Agreement, dated as of January 5,
1987, between the Corporation and the Indemnitee;

     WHEREAS, Indemnitee is willing to act as a Special Assistant to the
Corporation's President and Chief Executive Officer, in order to make her
knowledge about strategic and financial matters available to the Corporation;
provided that the Corporation agrees to indemnify her on substantially the same
terms as to which she was entitled to be indemnified while she was an officer of
the Corporation; and

     WHEREAS, the Corporation has concluded it is in the best interests of the
Corporation for Indemnitee to be a Special Assistant to the Corporation's
President and Chief Executive Officer and, consequently, now desires to
indemnify Indemnitee as set forth herein in order to assure that Indemnitee will
enter into that certain Employment Agreement dated the date hereof, NOW
THEREFORE:

                                  WITNESSETH:

     The Corporation and Indemnitee do hereby agree as follows:

     1.   The Corporation will indemnify Indemnitee in accordance with the
following terms:

     2.   Definitions.  As used in this Agreement:
          -----------                             

          (a) The term "Proceeding" shall include any threatened, pending or
     completed investigation, claim, action, suit or proceeding, whether of a
     civil, criminal, administrative or investigative nature (including without
     limitation any action, suit or proceeding by or in the right of the
     corporation to procure a judgment in its favor), in which Indemnitee may


<PAGE>
 
     be or may have been or may be threatened to be made to become involved in
     any manner (including without limitation as a party or a witness) by reason
     of the fact that Indemnitee has advised the Corporation with respect to any
     matter, or by reason of anything actually or allegedly done or not done by
     Indemnitee in any such capacity.

          (b) The term "Expenses" includes, without limitation, attorneys' fees
     and disbursements and all other costs, expenses and obligations actually
     and reasonably incurred by Indemnitee in connection with (i) investigating,
     defending, being a witness in or otherwise participating in, or preparing
     to defend, be a witness in or participate in, any Proceeding, or (ii)
     establishing a right to indemnification under Paragraph 6 of this
     Agreement, but shall not include the amount of any judgments, fines or
     penalties entered or assessed against Indemnitee or any amounts paid or
     payable in settlement by Indemnitee.

     3.   Scope of Indemnification.  Subject to Paragraph 7 of this Agreement,
          ------------------------                                            
the Corporation shall indemnify Indemnitee in accordance with the provisions of
this Paragraph 3 if Indemnitee is or was or is threatened to be made to become
involved in any manner, including without limitation as a party or witness, in
any Proceeding (including a Proceeding by or in the right of the Corporation to
procure a judgment in its favor) against any and all Expenses and any and all
judgments, fines and penalties entered or assessed against Indemnitee, and any
and all amounts reasonably paid or payable in settlement by Indemnitee, in
connection with such Proceeding, but only if Indemnitee acted in good faith and
without gross negligence.  THIS AGREEMENT EXPRESSLY INDEMNIFIES INDEMNITEE
AGAINST HER OWN NEGLIGENCE.

     4.   Indemnification of Expenses of Successful Party; No Adverse
          -----------------------------------------------------------
Presumption. Notwithstanding any other provisions of this Agreement, to the
-----------                                                                
extent that Indemnitee has been successful on the merits or otherwise in defense
of any Proceeding or in defense of any claim, issue or matter therein, including
the dismissal of an action without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.  The termination of any
Proceeding by judgment, order of court, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a presumption
for purposes of any provision of this Agreement that Indemnitee did not act in
good faith or with gross negligence.

     5.   Advances of Expenses.  The Expenses incurred by Indemnitee in any
          --------------------                                             
Proceeding shall be paid by the Corporation in advance, promptly upon the
written request of the Indemnitee, if Indemnitee shall undertake to repay such
amount to the extent that it is ultimately determined that Indemnitee is not
entitled to indemnification.  No security for the performance of any such
undertaking shall be required and any such undertaking shall be accepted by the
Corporation without regard to the financial capacity of Indemnitee to perform
its obligations thereunder.

     6.   Right of Indemnitee to Indemnification Upon Application; Procedure
          ------------------------------------------------------------------
Upon Application.  Without limiting the obligation of the Corporation to
----------------                                                        
promptly make payments in respect of Expenses in accordance with Paragraph 5,
any indemnification under Paragraph 3 shall be made no later than 45 days after
receipt by the Corporation of the written request of Indemnitee, unless a
determination is made within said 45-day period by (1) the Board of

                                       2
<PAGE>
 
Directors of the Corporation by a majority vote of a quorum consisting of
Directors who are not and were not parties to the relevant Proceeding, or (2)
independent legal counsel in a written opinion (which counsel shall be appointed
if such a quorum is not obtainable) that the Indemnitee has not met the relevant
standards for indemnification set forth in Paragraph 3.

     The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction.  The
burden of proving that indemnification is not appropriate shall be on the
Corporation.  Indemnitee's Expenses reasonably incurred in connection with
successfully establishing her right to indemnification, in whole or in part, in
any such Proceeding shall also be indemnified by the Corporation.

     7.   Indemnification Hereunder Not Exclusive; Construction.  The
          -----------------------------------------------------      
indemnification provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may be entitled under the General Corporation
Law of the State of Delaware, the Restated Certificate of Incorporation and/or
Restated Bylaws of the Corporation, any other agreement, any vote of
stockholders or disinterested Directors, or otherwise, either as to action in
her official capacity on or prior to the date hereof or as to action in any
other capacity.  At any time during the term of this Agreement whether or not
Indemnitee is entitled to indemnification under the General Corporation Law of
the State of Delaware, the Restated Certificate of Incorporation and/or Restated
Bylaws of the Corporation, this Agreement shall be construed to indemnify
Indemnitee not less favorably than indemnification provided for the officers and
directors of the Corporation under the General Corporation Law of the State of
Delaware, the Restated Certificate of Incorporation and/or Restated Bylaws of
the Corporation as if Indemnitee were an officer or director of the Corporation.

     8.   Partial Indemnification.  In the event that Indemnitee is entitled
          -----------------------                                           
under any provision of this Agreement to indemnification by the Corporation for
a portion but less than the entire amount of any Expenses, judgments, fines,
penalties and/or amounts paid or payable in settlement, the Corporation shall
fully indemnify Indemnitee in accordance with the applicable provisions of this
Agreement for such portion of such Expenses, judgments, fines, penalties and/or
amounts paid in settlement.

     9.   Subrogation.  In the event that the Corporation provides any
          -----------                                                 
indemnification or makes any payment to Indemnitee in respect of any matter in
respect of which indemnification or the advancement of expenses is provided for
herein, the Corporation shall be subrogated to the extent of such
indemnification or other payment to all of the related rights of recovery of
Indemnitee against other persons or entities.  Indemnitee shall execute all
papers reasonably required and shall do everything that may be reasonably
necessary to secure such rights and enable the Corporation effectively to bring
suit to enforce such rights (with all of Indemnitee's reasonable costs and
expenses, including attorneys' fees and disbursements, to be reimbursed by or,
at the option of Indemnitee, advanced by the Corporation).

     10.  No Duplication of Payments.  The Corporation shall not be obligated
          --------------------------                                         
under this Agreement to provide any indemnification or make any payment to which
Indemnitee is otherwise entitled hereunder to the extent, but only to the
extent, that such indemnification or payment hereunder would be duplicative of
any amount actually received by Indemnitee pursuant to any

                                       3
<PAGE>
 
insurance policy, the General Corporation Law of the State of Delaware, the
Restated Certificate of Incorporation and/or the Restated Bylaws of the
Corporation or otherwise.

     11.  Prior Indemnity Agreement.  Nothing in this Agreement shall be deemed
          -------------------------                                            
to amend or terminate that certain Indemnity Agreement, dated as of January 5,
1987, between the Corporation and the Indemnitee, which Indemnity Agreement is
hereby expressly ratified and confirmed.

     12.  Saving Clause.  If any provision of this Agreement or the application
          -------------                                                        
of any provision hereof to any circumstance is held illegal, invalid or
otherwise unenforceable, the remainder of this Agreement and the application of
such provision to any other circumstance shall not be affected, and the
provision so held to be illegal, invalid or otherwise unenforceable shall be
reformed to the extent (but only to the extent) necessary to make it legal,
valid and enforceable.

     13.  Notice.  Indemnitee shall give to the Corporation notice in writing as
          ------                                                                
soon as practicable of any claim made against her for which indemnification will
or could be sought under this Agreement, provided, however, that any failure to
give such notice to the Corporation will relieve the Corporation from its
obligations hereunder only if, and to the extent that, such failure results in
the forfeiture of substantial rights and defenses.  Notice to the Corporation
shall be directed to the Corporation (to the attention of the President, with a
copy to the General Counsel) at its principal executive office or such other
address as the Corporation shall designate in writing to Indemnitee.  Notice
shall be deemed received when hand delivered or dispatched by electronic
facsimile transmission (with receipt thereof orally confirmed), or three
calendar days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or one business day after
having been sent for next-day delivery by a nationally recognized overnight
courier.  In addition, Indemnitee shall give the Corporation such information
and cooperation as it may reasonably require and shall be within Indemnitee's
power.

     14.  Counterparts.  This Agreement may be executed in any number of
          ------------                                                  
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute one and the same instrument.

     15.  Applicable Law.  This Agreement shall be governed by and construed in
          --------------                                                       
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.

     16.  Successors.  This Agreement shall be binding upon the Corporation and
          ----------                                                           
its successors, including without limitation any person acquiring directly or
indirectly all or substantially all of the business or assets of the Corporation
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor will thereafter be deemed the "Corporation" for purposes of this
Agreement), but will not otherwise be assignable, transferable or delegable by
the Corporation.  The Corporation shall 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 Corporation, to assume
and agree in writing to perform this Agreement, expressly for the benefit of
Indemnitee, in the same manner and to the same extent the Corporation would be
required to perform if no such succession had taken place.

                                       4
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.

                                    STERLING SOFTWARE, INC.


                                    By:
                                       -------------------------------------  
                                       Sterling L. Williams
                                       President and Chief Executive Officer



                                    ---------------------------------------- 
                                    Jeannette P. Meier

                                       5