Document:

<PAGE>

                                                                   EXHIBIT 10.15

                              SEPARATION AGREEMENT
                              --------------------

     This Agreement (the "Agreement"), is entered into by Stephen C. Wise
("Executive"), an individual, and Legato Systems, Inc., a Delaware corporation
(the "Company").  In consideration of the mutual covenants and representations
contained herein, the parties agree as follows:

     1.    Effective Date.  Effective August 31, 2000 (the "Effective Date"),
           --------------
Executive's employment with the Company shall terminate.  For so long as he
remains employed by the Company, up to and through the Effective Date, Executive
shall continue to receive his current base salary and all applicable benefits
and bonuses as may be due under the Executive Bonus Plan.  As of the Effective
Date, Executive hereby resigns all of his current positions with the Company,
and any subsidiary of the Company, including any position as an officer,
director or employee of the Company, and the Company hereby accepts his
resignation.  On the Effective Date, the Company shall pay Executive all unpaid
salary and bonus compensation then due him and accrued but unused vacation time.
Executive agrees to comply with applicable Company policies and procedures at
all times during the remainder of his employment with the Company.

     2.    Payment by the Company. On the Effective Date, and in consideration
           ----------------------
for the mutual provisions and convenants contained herein, the Company will pay
Executive the gross sum of $200,000, from which sum all required withholdings
shall be deducted. The parties hereby agree that the Company will report payment
of such sum on a Form W-2.

     3.    COBRA Benefits. For the eighteen-month period following the Effective
           --------------
Date, so long as Executive is not covered by another group health plan, and upon
Executive's timely election pursuant to COBRA, the Company shall reimburse
Executive for the cost of his medical and dental benefits pursuant to COBRA.
Executive shall notify the Company in writing within five (5) days of his being
covered by another group health plan.

     4.    Stock Options. Exhibit 1 to this Agreement sets forth, as of May 31,
           -------------
2000: (i) the number of stock options that have been granted to Executive
pursuant to the Company's 1995 Stock Option/Stock Issuance Plan ("Stock Option
Plan"); (ii) the exercise price of such options; (iii) the number of options
that are vested as of May 31, 2000; and (iv) the number of stock options
pursuant to each grant that have been exercised prior to May 31, 2000.

           4.1  Vesting And Exercise. All of the stock options granted to
               --------------------
Executive by the Company, which currently are scheduled to vest on or before
August 31, 2001 (the "Stock Options"), shall immediately become vested and
exercisable as of July 28, 2000. Notwithstanding any conflicting provisions of
the Stock Option Plan or applicable stock option agreements, Executive may
exercise any vested Stock Options during the one-year period following the
Effective Date. In addition, Executive may transfer the Stock Options prior to
their exercise to his children or other members of his immediate family or to
trusts for the benefit or such family members and such transferred Stock Options
may be exercised by such family members or trusts. The Company shall reasonably
cooperate with Executive
<PAGE>

in connection with any procedures which Executive's broker (approved by the
Company) wishes to employ in connection with the exercise of the Stock Options.

         4.2    Sale of Shares. The Company represents that the Company's grant
                --------------
of the Stock Options to Executive and Executive's exercise of the Stock Options,
shall be exempt from the application of Section 16(b) of the Securities Exchange
Act of 1934, as amended. Executive agrees to refrain from selling shares
obtained through the exercise of the Stock Options while in possession of
material, non-public information regarding the Company, and to refrain from
selling such shares during the ninety-day period following the Effective Date
unless a window for the sale of Company stock opens for then-current executives
of the Company.

         4.3    Amendment and Modification. The parties agree that all
                --------------------------
appropriate Company stock option agreements and grant notices shall be deemed to
be amended to reflect the provisions of Paragraphs 4 through 4.3. Executive
hereby acknowledges that because the provisions of Paragraphs 4 through 4.3
collectively constitute a material modification of the Stock Options,
Executive's Stock Option Grant No. 870 shall no longer be treated as an
incentive stock option.

     5.    Release by Executive. For and in consideration of the terms and
           --------------------
provisions of the Agreement, except as provided in Paragraph 8 and except for
the Excluded Claims as defined herein, Executive, on behalf of himself and his
Related Entities, 1 shall, and hereby does, forever and fully release and
discharge the Company and its Related Entities from any and all claims, actions,
causes of action, obligations, demands and charges of whatever nature
(individually and collectively, the "Claims"), known or unknown, that Executive
has or may have against the Company or its Related Entities, from the beginning
of time through the date of the Agreement. This release includes Claims under
the Age Discrimination in Employment Act of 1967, 29 U.S.C. Sec. 621 et seq.
Executive has a period of at least 21 days to consider the terms of the
Agreement, though Executive understands that he can sign the Agreement at any
time during the 21-day period if Executive, in his sole discretion, decides to
do so. Executive may revoke the Agreement at any time during the 7 days
following the date Executive signs the Agreement, and the Agreement shall not
become effective or enforceable against Executive until the 8th day after
Executive signs the Agreement. Provided, however, that the parties expressly
agree that the release set forth herein is not intended to and does not release
any of Executive's claims or rights arising out of: (1) Executive's
indemnification rights, including without limitation those rights arising from
the Indemnification Agreement between Executive and the Company dated as of May
11, 2000, the Company's Bylaws, the Company's Articles of Incorporation, and all
common law and statutory rights; (2) the Stock Options; (3) the Company's 401(k)
plan; (4) any policies of insurance issued to, or in the name of, the Company;
or (5) any unpaid claims for medical or dental expenses (all, collectively, the
"Excluded Claims"). Executive reserves the right to bring and to enforce the
Excluded Claims notwithstanding the release contained herein.

----------------------
1  "Related Entities" as used herein means a party's current or former
successors, assignees, insurers, agents, officers, directors, partners,
employees, employee benefit plans, subsidiaries and affiliates.

                                      -2-
<PAGE>

     6.    Release by the Company.  For and in consideration of the terms and
           ----------------------
provisions of the Agreement, except as provided in Paragraph 8, the Company, on
behalf of itself and its Related Entities, shall, and hereby does, forever and
fully release and discharge Executive and his Related Entities from any and all
Claims, known or unknown, that the Company has or may have against Executive or
his Related Entities, from the beginning of time through the date of the
Agreement.

     7.    Waiver of Unknown Claims. In connection with the foregoing releases,
           ------------------------
the parties acknowledge that they are aware that they may later discover facts
in addition to or different from those which they currently know or believe to
be true with respect to the subject matters of the above releases, but that it
is their intention hereby fully, finally, and forever, to settle and release all
of these matters which now exist, may exist, or previously existed between them,
whether known or unknown, suspected or unsuspected. In furtherance of such
intent, the releases given herein shall be and shall remain in effect as full
and complete releases, notwithstanding the discovery or existence of such
additional or different facts. In this regard, the parties specifically waive
the benefits of the provisions of Section 1542 of the Civil Code of the State of
California and any other analogous state or federal law or regulation. Said
Section 1542 of the California Civil Code reads as follows:

     "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
     KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
     WHICH IF KNOWN BY HIS MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
     DEBTOR."

     8.    Exclusions from Releases. In addition to the Excluded Claims
           ------------------------
referenced in Paragraph 5, it is expressly understood and agreed by the parties
that none of the releases set forth herein is intended to or does release any
claims or rights arising out of the Agreement or the breach of any term,
provision, representation or warranty contained herein. The parties reserve the
right to bring any such claims notwithstanding the releases contained herein.

     9.    Proprietary Information Agreement. Executive agrees to remain bound
           ---------------------------------
by all of the terms and conditions set forth in the attached Proprietary
Information and Inventions Agreement (Exhibit 2 hereto).

     10.   Prohibition Against Defamation and Willful Disparagement. The Company
           --------------------------------------------------------
and its current directors and officers, with respect to Executive, and
Executive, with respect to the Company, will not at any time orally or in
writing defame or disparage the other party or person, except as may be required
by law. Nothing contained herein is intended or shall be construed to restrict
any person or party's truthful testimony in a legal or administrative
proceeding, or truthful responses to inquiries by any government agency or
officer.

     11.   Indemnification. All of Executive's indemnification rights remain in
           ---------------
full force and effect, including, without limitation, all such common law and
statutory rights; and all such rights arising from the Indemnification Agreement
between Executive and the Company dated as of May 11, 2000, the Company's Bylaws
and the Company's Articles of Incorporation.

                                      -3-
<PAGE>

     12.   Confidentiality. The financial terms of this Agreement are intended
           ---------------
to be confidential. Accordingly, except as may be required to satisfy the
Company's public disclosure obligations or the Company's or the Executive's
financial or accounting or regulatory requirements, if any, or except as
otherwise may be required by law, neither the Company nor Executive shall
disclose or publicize to any person or entity the terms of the Agreement without
the prior written consent of Executive, on the one hand, and the Chief Executive
Officer of the Company, on the other hand. As reasonably necessary, Executive
may discuss this Agreement with his attorneys, accountants, and immediate
family, and Company may discuss this Agreement with its attorneys, officers,
directors, and senior managers provided, however, that each agrees to be bound
by the terms of this paragraph to keep the information confidential.

     13.   Independent Legal Advice. Each party has received independent legal
           ------------------------
advice from his or its attorneys with respect to the advisability of making the
settlement provided for herein, with respect to the advisability of executing
this Agreement and with respect to the meaning of California Civil Code Section
1542.

     14.   No Other Representation. Each party represents, warrants, and agrees
           -----------------------
that in executing this Agreement he or it has relied solely on the statements
expressly set forth herein and the advice of its own counsel. Each of the
parties further represents, warrants, and agrees that in executing this
Agreement he or it has placed no reliance whatsoever on any statement,
representation, or promise of any other party, or any other person or entity,
not expressly set forth herein, or upon the failure of any other party or any
other person or entity to make any statement, representation or disclosure of
anything whatsoever. The parties have included this clause: (1) to preclude any
claim that any party was in any way fraudulently induced to execute this
Agreement; and (2) to preclude the introduction of parol evidence to vary,
interpret, supplement, or contradict the terms of this Agreement.

     15.   Authority For Settlement Agreement. Each party represents, warrants
           ----------------------------------
and agrees that such party is fully entitled and duly authorized to enter into
and deliver this Agreement. In particular, and without limiting the generality
of the foregoing, each party represents, warrants and agrees that he or it is
fully entitled to grant the releases, enter into the covenants, and undertake
the obligations set forth herein.

     16.   No Admissions. The Agreement represents a compromise and neither of
           -------------
the parties shall be deemed to have made any admissions.

     17.   Governing Law. The Agreement shall be construed under and governed by
           -------------
the laws of the State of California without regard to the conflicts of laws
provisions thereof.

     18.   Full Integration. The Agreement constitutes a single integrated
           ----------------
contract expressing the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous oral and
written agreements and discussions with respect to the subject matter hereof.
There are no other agreements, written or oral, express or implied, between the
parties hereto, concerning the subject matter hereof, except as set forth
herein. The Agreement may be amended only by an agreement in writing signed by
each party hereto. Except for: (a) this Agreement; (b) the agreements underlying
the Excluded Claims as referenced in Paragraph 5 above; and (c) the Proprietary
Information

                                      -4-
<PAGE>

and Inventions Agreement attached as Exhibit 2, any and all other agreements
between Executive and the Company, written or oral, express or implied, are
terminated and void.

     19.   Binding Effect. This Agreement is binding upon and shall inure to the
           --------------
benefit of the parties hereto, their heirs, assignees and successors in interest
(including without limitation successors in any reorganization or merger).

     20.   Survival of Warranties. All representations, warranties and
           ----------------------
agreements contained in the Agreement shall survive its execution,
effectiveness, and delivery.

     21.   No Presumption From Drafting.  Given that each party has had the
           ----------------------------
opportunity to draft, review and edit the language of the Agreement, no
presumption for or against either party arising out of drafting all or any part
of the Agreement will be applied in any action relating to, connected to, or
involving the Agreement.

     22.   Counterparts. The Agreement may be executed in counterparts. When
           ------------
each party has signed and delivered at least one such counterpart, each
counterpart shall be deemed an original, and, when taken together with other
signed counterparts, shall constitute one Agreement which shall be binding upon
and effective as to all parties. No counterpart shall be effective until all
parties hereto have executed and exchanged an executed counterpart hereof.

     23.   Arbitration.  Any and all disputes arising out of or relating to the
           -----------
Agreement shall be subject to arbitration in Santa Clara County, California, at
the request of any party hereto, in accordance with the rules and procedures of
the American Arbitration Association, the prevailing party to recover his or its
reasonable attorneys' fees and costs.

     24.   Notice. All notices required hereunder shall be in writing and shall
           ------
be deemed given upon receipt if delivered personally (receipt of which is
confirmed) or by courier service promising overnight delivery (with delivery
confirmed the next day) or three (3) business days after deposit in the U.S.
Mails, certified with return receipt requested. Notices shall be addressed as
follows:

     To Executive:    Stephen C. Wise
                      5438 Hopkins Ct.
                      Pleasanton, California 94556
                      Facsimile: (925) 426-7490

     With a copy to:  Irell & Manella LLP
                      1800 Avenue of the Stars, Suite 900
                      Los Angeles, California 90067
                      Attention:  David Siegel, Esq.
                      Facsimile:  (310) 203-7199
                      E-mail:  dsiegel@irell.com

                                      -5-
<PAGE>

     To Company:      Legato Systems, Inc.
                      2350 West El Camino Real
                      Mountain View, California 94040
                      Attention:  Andrew D. Hill, Esq.
                      Facsimile:  (650) 210-7426
                      E-mail:  ahill@legato.com

     With a copy to:  Gunderson Dettmer Stough Villeneuve
                      Franklin & Hachigian, LLP
                      155 Constitution Drive
                      Menlo Park, California 94025
                      Attention:  Gregory S. Lemmer, Esq.
                      Facsimile:  (650) 321-2800
                      E-mail:  glemmer@gunder.com

     IN WITNESS WHEREOF, the parties hereto have approved and executed the
Agreement on the dates set forth opposite their respective signatures.

     EXECUTED by the parties as follows:

Dated:  July 28, 2000        STEPHEN C. WISE

                             By: /S/ Stephen C. Wise
                                ------------------------------
                                 Stephen C. Wise

Dated:  July 28, 2000        LEGATO SYSTEMS, INC.

                             By: /s/ Louis C. Cole
                                ------------------------------
                                 Louis C. Cole
                             Its: Chief Executive Officer

APPROVED AS TO FORM:

Dated:  July 28, 2000        IRELL & MANELLA LLP

                             By: /s/ David Siegel
                                ------------------------------
                                 David Siegel
                             Attorneys for Stephen C. Wise

Dated:  August 2, 2000       GUNDERSON DETTMER STOUGH
                             VILLENUEVE FRANKLIN
                             & HACHIGIAN LLP

                             By: /s/ Gregory S. Lemmer
                                ------------------------------
                                 Gregory S. Lemmer
                             Attorneys for Legato Systems, Inc.

                                      -6-
<PAGE>

                                                      EXHIBIT 1 OF EXHIBIT 10.15

Personal Option Status

-------------------------------------------------------------------------------
            Option
Number      Date       Plan        Type        Granted          Prices
-------------------------------------------------------------------------------
000669      1/27/97    95E         NQ          332,640          $5.9380
000870      1/27/97    1995        ISQ          67,360          $5.9380
001105     10/16/97    1995        NQ          100,000          $8.2190
001850      2/17/99    1995        NQ           80,000         $20.7500
                                              --------
                                               580,000

<PAGE>
                                                       EXHIBIT 2 of EXHIBIT 10.5

               PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

          The following confirms an agreement between me and Legato Systems,
Inc. a Delaware corporation (hereafter referred to as "the Company"), which is a
material part of the consideration for my employment by the Company:

1.   I understand that the Company possesses Proprietary Information which is
     important to its business. For purposes of this Agreement, "Proprietary
     Information" is information that was developed, created, or discovered by
     the Company, or which became known by, or was conveyed to the Company,
     which has commercial value in the Company's business. "Proprietary
     Information" includes, but is not limited to, trade secrets, copyrights,
     ideas, techniques, know-how, inventions (whether patentable or not), and/or
     any other information of any type relating to designs, configurations,
     toolings, documentation, recorded data, schematics, source code, object
     code, master works, master databases, algorithms, flow charts, formulae,
     circuits, works of authorship, mechanisms, research, manufacture,
     improvements, assembly, installation, intellectual property including
     patents and patent applications, business plans, past or future financing,
     marketing, forecasts, pricing, customers, the salaries, duties,
     qualifications, performance levels, and terms of compensation of other
     employees, and/or cost or other financial data concerning any of the
     foregoing or the Company and its operations generally. I understand that my
     employment creates a relationship of confidence and trust between me and
     the Company with respect to proprietary Information.

2.   I understand that the Company possesses "Company Documents" which are
     important to its business. For purposes of this Agreement, "Company
     Documents" are documents or other media that contain Proprietary
     Information or any other information concerning the business, operations or
     plans of the Company, whether such documents have been prepared by me or by
     others. "Company Documents" include, but are not limited to, blueprints,
     drawings, photographs, charts, graphs, notebooks, customer lists, computer
     disks, tapes or printouts, sound recordings and other printed, typewritten
     or handwritten documents.

3.   In consideration of my employment by the Company and the compensation
     received by me from the Company from time to time, I hereby agree as
     follows:

     a.   All Proprietary Information and all patents, copyrights and other
          rights in connection therewith shall be the sole property of the
          Company. I hereby assign to the Company any rights I may have or
          acquire in such Proprietary Information. At all times, both during my
          employment by the Company and after its termination, I will keep in
          confidence and trust and will not use or disclose any Proprietary
          Information or anything relating to it without the prior written
          consent of an officer of the Company, except as may be necessary in
          the ordinary course of performing my duties to the Company.

     b.   I agree to make and maintain adequate and current written records, in
          a form specified by the Company, of all inventions, trade secrets and
          works of authorship

                                       1
<PAGE>
     assigned or to be assigned pursuant to this Agreement. All Company
     Documents shall be the sole property of the Company. I agree that during my
     employment by the Company, I will not remove or electronically transmit any
     Company Documents from the business premises of the Company or deliver any
     Company Documents to any person or entity outside the Company, except as I
     am required to do in connection with performing the duties of my
     employment. I further agree that, immediately upon the termination of my
     employment by me or by the Company for any reason, or during my employment
     if so requested by the Company, I will return all Company Documents,
     apparatus, equipment, and other physical property, or any reproduction of
     such property, excepting only (i) my personal copies of records relating to
     my compensation; (ii) my personal copies of any materials previously
     distributed generally to stockholders of the Company; and (iii) my copy of
     this Agreement.

     c.   I will promptly disclose in writing to my immediate supervisor, with a
     copy to the President of the Company, or to any persons designated by the
     Company, all "Inventions," which includes all improvements, inventions,
     works of authorship (including, without limitation, copyrights),
     trademarks, trade names, domain names, mask works, computer programs,
     formulae, ideas, processes, techniques, know-how, and data, whether alone
     or jointly with others, during the terms of my employment. I will also
     disclose to the President of the Company all things that would be
     Inventions if made during the term of my employment, conceived, reduced to
     practice, or developed by me within six (6) months of the termination of my
     employment with the Company. Such disclosures shall be received by the
     Company in confidence and do not extend the assignment made in Section (d)
     below. I will not disclose Inventions to any person outside the Company
     unless I am requested to do so by management personnel of the Company.

     d.   I agree that all Inventions which I make, conceive, reduce to practice
     or develop (in whole or in part, either alone or jointly with others)
     during my employment shall be the sole property of the Company to the
     maximum extent permitted by Section 2870 of the California Labor Code, a
     copy of which is attached as Exhibit A. This assignment shall not extend to
     Inventions, the assignment of which is prohibited by Labor Code Section
     2870 (or any analogous state law). The Company shall be the sole owner of
     all patents, copyrights and other intellectual property or other rights in
     connection therewith. I further acknowledge and agree that such Inventions,
     including any computer programs, programming documentation, and other works
     of authorship, are "works made for Hire" for purposes of the Company's
     rights under copyright laws. I hereby assign to the Company any rights I
     may have or acquire in such Inventions.

     e.   I agree to perform, during and after my employment, all acts deemed
     necessary or desirable by the Company to permit and assist it, at the
     Company's expense, in obtaining and enforcing patents, copyrights or other
     rights on such Inventions and improvements in any and all countries. Such
     acts may include, but are not limited to, execution of documents and
     assistance or cooperation in legal proceedings. I hereby irrevocably
     designate and appoint the Company and its duly authorized officers and
     agents, as my agents and attorney-in-fact to act for and on my behalf and
     instead of me, to execute and

                                       2

<PAGE>
     file any applications or related findings and to do all other lawfully
     permitted acts to further the prosecution and issuance of patents,
     copyrights or other rights thereon with the same legal force and effect as
     if executed by me.

     f.   I have attached as Exhibit B a complete list of all Inventions or
     improvements to which I claim ownership and that I desire to remove from
     the operation of this Agreement, and I acknowledge and agree that such list
     is complete. If no such list is attached to this Agreement, I represent
     that I have no such Inventions and improvements at the time of signing this
     Agreement.

     g.   During the term of my employment and for one (1) year thereafter, I
     will not encourage or solicit any employee of the Company to leave the
     Company for any reason. However, this obligation shall not affect any
     responsibility I may have as an employee of the Company with respect to the
     bona fide hiring and firing of Company personnel.

     h.   Prior to my submitting or disclosing for possible publication or
     dissemination outside the Company any material prepared by me that
     incorporates information that concerns the Company's business or
     anticipated research. I agree to deliver a copy of such material to an
     officer of the Company for his or her review. Within twenty (20) days of
     such submission, the Company agrees to notify me whether the Company
     believes such material contains any Proprietary Information, and I agree to
     make such deletions and revisions as are reasonably requested by the
     Company to protect its Proprietary Information. I further agree to obtain
     the consent of the Company prior to any review of such material by persons
     outside the Company.

     i.   I agree that during my employment with the Company, I will not engage
     in any employment, business, or activity that is in any way competitive
     with the business or proposed business of the Company, and I will not
     assist any other person or organization in competing with the Company or in
     preparing to engage in competition with the business or proposed business
     of the Company. The provisions of this paragraph shall apply both during
     normal working hours and at all other times including, but not limited to,
     nights, weekends, and vacation time, while I am employed by the Company.

     j.   I represent that my performance of all the terms of this Agreement and
     as an employee of the Company does not and will not breach any agreement to
     keep in confidence proprietary information, knowledge or data acquired by
     me in confidence or in trust prior to my employment by the Company, and I
     will not disclose to the Company, or induce the Company to use, any
     confidential or proprietary information or material belonging to any
     previous employers or others. I represent and warrant that I have returned
     all property and confidential information belonging to all prior employers.
     I have not entered into, and I agree I will not enter into, any agreement
     either written or oral in conflict herewith or in conflict with my
     employment with the Company. I further agree to conform to the rules and
     regulations of the Company.

4.   I agree that I am employed on an "at-will" basis. This means that I have
     the right to resign and the Company has the right to terminate my
     employment at any time for any reason, with or without cause. This is the
     complete agreement between the Company and

                                       3

<PAGE>
     me on this term of my employment. I further agree that this term can only
     be modified by an officer of the Company and he or she can only do so in a
     writing signed and dated by him or her and me.

5.   If one or more provisions of this Agreement are held to be unenforceable
     under applicable law, such provisions shall be excluded from this Agreement
     and the balance of the Agreement shall be interpreted as if such provisions
     were so excluded and shall be enforceable in accordance with its terms.

6.   This Agreement shall be effective as of the first day of my employment with
     the Company and shall be binding upon me, my heirs, executors, assigns, and
     administrators, and shall inure to the benefit of the Company, its
     subsidiaries, successors and assigns.

7.   This Agreement can only be modified by a subsequent written agreement
     executed by an officer of the Company.

8.   Although I may work for the Company outside of California or the United
     States, I understand and agree that this Agreement shall be interpreted and
     enforced in accordance with the laws of the State of California.

I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS
WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS
HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT
VOLUNTARILY AND FREELY.

          Stephen C. Wise
-----------------------------------
Employee Name (Please Print)

      /s/ Stephen C. Wise                      7-28-00
-----------------------------------         ------------
Employee Signature                          Date

                                       4
<PAGE>
                                   EXHIBIT A
                                   ---------

Section 2870. Invention on Own Time-Exemption from Agreement

(a)  Any provision in an employment agreement which provides that an employee
     shall assign, or offer to assign, any of his or her rights in an Invention
     (as defined in Section 3(c) of this Agreement) to his or her employer shall
     not apply to an Invention that the employee developed entirely on his or
     her own time without using the employer's equipment, supplies, facilities,
     or trade secret information except for those Inventions that either:

     (1)  Relate at the time of conception or reduction to practice of the
     Invention to the employer's business, or actual or demonstrably anticipated
     research or development of the employer.

     (2)  Result from any work performed by the employee for his employer.

(b)  To the extent a provision in an employment agreement purports to require an
     employee to assign an Invention otherwise excluded from being required to
     be assigned under subdivision (a), the provision is against the public of
     this state and is unenforceable.

                                       5
<PAGE>
                                  EXHIBIT B
                                  ---------

1.   The following is a complete list of all Inventions or improvements relevant
     to the subject matter of my employment by Legato Systems, Inc. ("the
     Company") that have been made or conceived or first reduced to practice
     by me or jointly with others prior to my employment by the Company that I
     desire to remove from the operation of the Company's Proprietary
     Information and Inventions Agreement:

X    No inventions or improvements.
--
__   See below: Any and all inventions regarding:

__   Additional sheets attached

2.   I propose to bring to my employment the following materials and documents
     of a former employer:

X    No materials or documents
--
__   See below:

/s/ Stephen C. Wise                                    7-28-00
--------------------------                        -----------------
Employee Signature                                       Date

                                       6
<PAGE>
                                                September 27, 2000

Louis C. Cole
Chief Executive Officer
Legato Systems, Inc.
2350 West El Camino Real
Mountain View, CA 94040

     Re:  Letter Amendment to Separation Agreement
          ----------------------------------------

Dear Mr. Cole:

     We have agreed to amend my Separation Agreement with Legato Systems, Inc.,
dated July 28, 2000 (a copy of which is attached hereto as Exhibit A), as
follows:

     Paragraph 1, Line 1 - Delete the language; "Effective August 31, 2000 (the
"Effective Date") and substitute therefor the language: "Effective September 29,
2000 (the "Effective Date" for the Agreement except Paragraph 4.1; for Paragraph
4.1, the "Effective Date" shall be August 31, 2000)".

     All other terms of the Agreement shall remain in full force and effect.

                                                Sincerely,

                                             /s/ Stephen C. Wise
                                             -----------------------------
                                             Stephen C. Wise

AGREED TO AND ACCEPTED;

LEGATO SYSTEMS, INC.

By:   /s/ Louis C. Cole                        Dated: September 29, 2000
  ---------------------------
      Louis C. Cole
 Its: Chief Executive Officer<PAGE>
                                                                   EXHIBIT 10.16

September 25, 2000

Mr. David B. Wright
17299 Deer Park Road
Los Gatos, CA  95232

Dear Dave:

I am delighted to extend to you an offer of employment with Legato Systems, Inc.
as our new President & Chief Executive Officer.  In this capacity, you will have
complete operating responsibility for the Company and all of its business
operations.  In this position, you will report to the Board of Directors and me,
as Chairman of the Board.  We will need to discuss a mutually agreeable start
date.  Other details of your offer are as follows:

Annual Base Salary - Your initial base salary will be $650,000, commencing as of
your effective start date.  You will be paid on a monthly basis and your
paycheck will be automatically deposited in the bank of your choice.

Sign-On Bonus -You will be extended a $600,000 sign-on bonus to be paid within
fifteen days of your effective start date, subject to all applicable taxes.
Your sign-on bonus will not be treated as compensation for purposes of
determining your annual incentive award.  This award is intended to provide you
funds to compensate you for your earned, but unpaid bonus at your current
company, and provide you an amount to purchase your membership at La Rinconada.

Incentive Award - You will be eligible to participate in our management
incentive plan, which provides for year-end incentive awards based on the
success of Legato Systems, Inc. in meeting annual performance objectives.  For
your position, the targeted incentive opportunity is 100% of your salary
($650,000) and that maximum award is 200% ($1,300,000) of salary.  Given the
fact that you will forfeit the remainder of your 2000 bonus at your current
company, this bonus will be guaranteed at the 100% rate, prorated for the
percentage of the year you serve with the Company in 2000 (e.g., if you join on
October 1, 2000, which equals 25% of the year, therefore a bonus of $150,000).

For 2001, performance objectives are yet to be established, but will most
probably include revenue growth, profit and effective asset utilization.
<PAGE>

Mr. David B. Wright
September 25, 2000

Equity Awards-

Stock Options/Initial and Subsequent Grants - It is our intention to tie your
-------------------------------------------
compensation program to the impact you have on overall shareholder return.  As
such, you will receive one-time stock option grant, as of your effective start
date, to purchase 2,000,000 share of Legato Systems, Inc. common stock.  The
option will be subject to terms and conditions substantially similar to those
applicable to options granted under the Company's 1995 Stock Option/Stock
Issuance Plan ("Option Plan"), as described in that Option Plan and the
applicable stock option agreement The option will become exercisable for 25% of
the options shares after 12 months of continuous service and the balance in
equal monthly installments over the next 36 months of continuous service, as
described in the applicable stock option agreement.  It is the company's
practice to review each executive's option position on an annual basis.  In
doing this, we attempt to recognize our executives' contributions to corporate
performance, reward individual performance and assure a meaningful equity
interest.  Accordingly, the Compensation Committee of Legato's Board of
Directors will review your equity position every year, beginning in the spring
of 2002, and when it deems appropriate, award you additional options to continue
to align your interests with that of our shareholder base.

Restricted Stock - In lieu of your current compensation and equity situation,
----------------
you will receive a special restricted stock grant, as of your effective start
date.  This grant will be for 100,000 shares of Legato Systems, Inc. common
stock with a purchase price equal to the par value of  $0.01 per share.  The
shares will be subject to terms and conditions substantially similar to those
applicable to shares granted under the Option Plan, as described in the Option
Plan and the applicable stock issuance agreement.  These shares will be set up
in a record account in your name with Legato's Transfer Agent and Stock
Registrar and will vest (become transferable) over a one year period.  The
vesting schedule will allow for transfer of 25,000 shares for every three months
of your employment over this first year.  You will be responsible for all
applicable withholding taxes upon vesting of the shares.  In addition, the
restricted stock will vest in full in the event that your employment is
terminated by the Company other than for "cause".

Furthermore, the Company will loan up to $500,000 collateralized against your
restricted stock upon receipt of your full-recourse promissory note.  Payment of
principal and interest on this loan will begin at the end of one year. Once
repayment has begun, you will have three years to complete the repayment
schedule.  Interest will be determined at a market rate at the time the loan is
extended.

Vacation - In recognition of your prior work experience, you will be eligible
for four weeks of paid vacation each year.

Special Severance - Should the Company terminate your employment without Cause
(as defined below), you will be entitled to continuation of your base salary for
up to 18 months or until you find suitable employment.  Cause shall mean (a)
                                                        -----
your commission of a felony or other criminal act, (b) gross misconduct, (c)
gross negligence in the performance of your duties to the Company, (d)
commission of any act of fraud with respect to the Company, or (e) material
breach of a proprietary information inventions agreement with the Company.
<PAGE>

Mr. David B. Wright
September 25, 2000

No cash severance payment shall be payable pursuant to this offer letter unless
you  (i) have executed a general release (in a form prescribed by the Company)
of all known and unknown claims that you may then have against the Company or
persons affiliated with the Company and (ii) have agreed not to prosecute any
legal action or other proceeding based upon any of such claims.

Other Benefits - Legato has an excellent and comprehensive benefit package.
Enclosed you will find a Benefit Summary outlining Legato's current programs.
More detailed information on Legato's employee benefits package will be
presented to you on your first day of employment.  Please contact Jack Landers,
Vice President of Human Resources, at (650) 210-7449 if you have any questions.
In addition, you will receive Life Insurance Coverage in the face amount of
$2,000,000 in term coverage and a $800 per month automobile allowance.

Change-of-Control - In the event of an Involuntary Termination of your
employment or a material change in your responsibilities (e.g., you are no
longer the Chief Executive of a stand-alone public company) within 18 months
following a Corporate Transaction involving the Company (as such terms are
defined in the Option Plan), the Company will provide you the following:

     -Immediate vesting for 100% of your unvested stock options,
     -Accelerated vesting for all of your restricted stock,
     -A one-time lump sum cash payment equal to your then annual base salary and
      your targeted bonus or prior year bonus, which ever amount is higher.

                                   * * * * *

Under the Immigration Reform Act all new employees are required to show proof of
citizenship or right to work status.  On the date you begin employment, you
would need to bring (i) a certified copy of your birth certificate, and driver's
license, or (ii) valid passport, or (iii) drivers license and original social
security card, or (iv) equivalent documents acceptable to the Immigration and
Naturalization Service.

Legato Systems requires that all new employees sign a Proprietary Information
and Invention Agreement and the Competitive Product Review Agreement prior to
any work being performed.  A copy of the Proprietary Information and Inventions
Agreement and Competitive Product Review Agreement is enclosed with this letter.
By signing this letter, you confirm to the Company that you are under no
contractual or other legal obligations that would prohibit you from performing
your duties for the Company.

Legato Systems is an "at will" employer.  This means that each employee is
employed with the Company at his/her own will and the Company's will.  The
Company does not provide employees with contracts of employment, express or
otherwise and the Company makes no representation as to the amount of time you
can expect to be in its employ.  Your employment with Legato will remain "at
will" unless you receive an individualized written letter addressed to you and
signed by a majority of the members of the Board of Directors of the Company.
<PAGE>

Mr. David B. Wright
September 25, 2000

This letter reflects the entire agreement regarding the terms and conditions of
your employment with Legato Systems, Inc.  Accordingly, it supersedes and
completely replaces any prior oral or written communication on this subject.
Also, this offer is contingent upon completion of full reference checks, which
are currently underway.

Dave, we are enthusiastic about the background, experience and vision you bring
to Legato Systems, Inc.  The company is positioned well in our market to be
exceedingly successful and I personally would like extend my warm invitation to
lead the organization and be part of our family.

If you have any questions concerning the details of the appointment, please free
to contact me.

Sincerely,

/s/ Louis C. Cole

Lou Cole
Chairman and Chief Executive Officer, Legato Systems, Inc.

/s/ David B. Wright                      9/27/00
-------------------------------         ----------
Agreed and Accepted                     Date
David B. Wright
<PAGE>

                       AMENDMENT TO EMPLOYMENT AGREEMENT
                       --------------------------------

     This Amendment (the "Amendment") is entered into by David B. Wright
("Wright"), an individual, and Legato Systems, Inc., a Delaware corporation
("Legato" or "the Company").  The Effective Date of this Amendment shall be the
latest date appearing next to the signatures set forth below.

     WHEREAS, Wright and the Company agreed to terms of Wright's employment with
Legato in an offer letter dated September 25, 2000 ("the Employment Agreement");
and

     WHEREAS, Wright and the Company have discussed and agreed to amendments to
that Employment Agreement;

     NOW THEREFORE, the Agreement is hereby amended by the following
modifications:

                                 Equity Awards
                                 -------------

     The initial stock option granted to Wright to purchase 2,250,000 shares of
the Company's common stock is clarified as follows:

     The Company's 1995 Stock Option/Stock Issuance Plan permits a maximum
initial grant to an individual of 1,600,000 shares in any calendar year.
Accordingly, options to purchase 1,600,000 shares of the Company's common stock
were granted on November 10, 2000 at $9.75 per share.  The remaining options to
purchase 650,000 shares of the Company's common stock will be granted on January
2, 2001 at $9.75 per share.

     An option to purchase 2,000,000 shares of the Company's common stock will
become vested and exercisable for 25% of the options shares after 12 months of
continuous service and the balance in equal monthly installments over the next
36 months of continuous service.  An additional option to purchase 250,000
shares of the Company's common stock will become vested and exercisable in equal
monthly installments over Wright's first 12 months of continuous service.  The
specific terms of each of these option grants are set forth in stock option
agreements separate from the Agreement referenced in this Amendment and separate
from this Amendment.

     Further, Wright and the Company agree that the $500,000.00 loan provided
for in the Employment Agreement will be secured by a deed of trust (which shall
be of not less than second priority) against Wright's principal residence, which
is real property located at 17299 Deer Park Road, Los Gatos, California 95030.
Wright and Company also agree that such loan shall be a "full-recourse" loan,
the terms of which will be set forth separately in a Promissory Note to be
executed as soon as is practicable.

     Except as expressly modified herein, all of the remaining terms and
conditions of the Employment Agreement shall remain in full force and effect.
Accordingly, the Employment Agreement and this Amendment together reflect the
entire agreement regarding the terms and conditions of Executive's employment
with the Company.  Accordingly, the Employment Agreement and this Amendment
together supersede and completely replaces any prior oral or written
communications on this subject.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have approved and executed the Agreement
on the dates set forth opposite their respective signatures.

EXECUTED by the parties as follows:

Dated:  December 4, 2000                DAVID B. WRIGHT

                                        By: /s/ David B. Wright
                                           ---------------------------
                                           David B. Wright

Dated:  December 4, 2000                LEGATO SYSTEMS, INC.

                                        By: /s/ Louis C. Cole
                                           ---------------------------
                                           Louis C. Cole
                                           Chairman of the Board of Directors
<PAGE>

                               PROMISSORY NOTE
                               ---------------

$500,000.00                                                     December 6, 2000
                                                       Mountain View, California

        FOR VALUE RECEIVED, the undersigned Borrower promises to pay to Legato
Systems, Inc., a Delaware corporation (the "Company" or "Legato"), at its
principal offices at 2350 West El Camino Real, Mountain View, California 94040
the principal sum of five hundred thousand dollars ($500,000.00), together
with interest from the date of this Note on the unpaid principal balance upon
the terms and conditions specified below.

        1.      Principal and Interest.  The principal balance of this Note
                ----------------------
together with interest accrued and unpaid to date shall be due and payable
three (3) years from the date of this Note, except as set forth in Paragraph 4
herein.

        2.      Rate of Interest.  Interest shall accrue under the Note on any
                ----------------
unpaid principal balance at the rate of 6.5%.

        3.      Prepayment.  Prepayment of principal and interest may be made
                -----------
at any time without penalty.

        4.      Forgiveness.  Provided Borrower is employed by the Company two
                -----------
(2) years from the date of this Note and Borrower is not in default of this
Note or payment of this Note has not been otherwise accelerated pursuant to
Section 5 of this Note, then fifty percent (50%) of the principal amount and
all accrued interest to date shall be forgiven. Provided Borrower is employed
by the Company three (3) years from the date of this Note and Borrower is not
in default of this Note or payment of this Note has not been otherwise
accelerated pursuant to Section 5 of this Note, then the entire unpaid
principal amount and all accrued interest thereon shall be forgiven. On each
date, Borrower shall promptly remit sufficient funds to the Company to pay all
applicable withholding taxes.

        5.      Events of Acceleration.  The entire unpaid principal sum and
                ----------------------
unpaid interest of this Note shall become immediately due and payable upon one
or more of the following events:

                A.      the date that Borrower shall cease to be employed by
Legato; or

                B.      the failure of the Borrower to pay when due the
principal balance and accrued interest on this Note and the continuation of
such default for more than thirty (30) days; or

                C.      the filing of a petition by or against Borrower under
any provisions of the Bankruptcy Reform Act, Title 11 of the United States
Code, as amended or recodified from time to time, or under any similar or
other law relating to bankruptcy, insolvency,

                                   Page 1
<PAGE>

reorganization or other relief for debtors; the appointment of a receiver,
trustee, custodian, or liquidator of or for any part of the assets or property
of Borrower; the execution by the Borrower of a general assignment for the
benefit of creditors; the insolvency of Borrower or Borrower is generally not
paying its debts as they become due; or any attachment or like levy on any
property of Borrower; or

                D.      the occurrence of a material event of default under any
deed of trust securing this Note; or

                E.      the failure of the Borrower to execute a deed of trust
(in form and substance satisfactory to the Company) encumbering Borrower's
principal residence in the state of California within five (5) days after a
request from the Company; or the failure of the Borrower to have removed any
deed of trust securing obligations to Borrower's prior employer and which is
encumbering Borrower's principal residence in the state of California within
five (5) days after a request from the Company; or

                F.      the sale, transfer, mortgage, assignment, encumbrance
or lease, whether voluntarily or involuntarily or by operation of law or
otherwise of Borrower's principal residence in the state of California,
including without limitation the real property described in Section 6 of this
Note, or any portion thereof or interest therein without the prior written
consent of the Company.

        6.      Security.  Borrower agrees to execute a deed of trust (which
                --------
shall be of not less than second priority) conveying to the Company a security
interest and lien in Borrower's and Borrower's spouse's interests in Borrower's
principal residence which is real property located at 17299 Deer Park Road,
Los Gatos, California 95030. Regardless of any collateral that may secure
Borrower's obligations under the Note, Borrower shall remain personally liable
for the payment in full of any indebtedness owing under this Note, and the
Company shall have recourse to any and all other assets of the Borrower, in
addition to any collateral described in any deed of trust executed in
connection herewith to satisfy Borrower's obligations hereunder.

        7.      Costs and Expenses; Attorneys' Fees.  If any action is
                -----------------------------------
instituted to collect this Note, the Borrower promises to pay all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the
Company in connection with the enforcement of the Company's rights and/or the
collection of any amounts that become due to the Company under this Note.

        8.      Waiver.  No previous waiver and no failure or delay by the
                ------
Company or Borrower in acting with respect to the terms of this Note or the
Deed of Trust shall constitute a waiver of any breach, default or failure of
condition under this Note or the Deed of Trust executed in connection herewith
or the obligations secured thereby. A waiver of any term of this Note, the
Deed of Trust or of any of the obligations secured thereby must be made in
writing and signed by a duly authorized officer of the Company and shall be
limited to the express terms of such waiver. Borrower hereby expressly waives
presentment and demand for payment at such time as any payments are due under
this Note.

    Borrower hereby expressly waives presentment and demand for payment at
such time as any payments are due under this Note.

                                   Page 2
<PAGE>

                9.  Conflicting Agreements.  In the event of any inconsistencies
                    ----------------------
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.

               10.  Governing Law. This Note shall be construed in accordance
                    -------------
with the laws of the State of California.

                                        Signature of Borrower

                                        /s/ David B. Wright
                                        ---------------------------------
                                        David B. Wright
                                        Address:  17299 Deer Park Road
                                                  Los Gatos, CA 95030

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