Document:

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                                                                    EXHIBIT 10.1

                            STERLING SOFTWARE, INC.

                          DEFERRED COMPENSATION PLAN

                (Amended & Restated Effective January 3, 2000)
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                               TABLE OF CONTENTS

Section                                                                    Page
-------                                                                    ----

                                  ARTICLE I.
                             TITLE AND DEFINITIONS

1.1   Title................................................................  2
1.2   Definitions..........................................................  2

                                  ARTICLE II.
                                 PARTICIPATION

2.1   Participation........................................................  6

                                  ARTICLE III.
                               DEFERRAL ELECTIONS

3.1   Elections to Defer Compensation......................................  6
3.2   Investment Elections.................................................  7
3.3   Match Funding........................................................  8

                                   ARTICLE IV.
                                    ACCOUNTS

4.1   Participant Accounts.................................................  8
4.2   Quarterly Statements.................................................  9

                                   ARTICLE V.
                                     VESTING

5.1   Account..............................................................  9

                                   ARTICLE VI.
                                  DISTRIBUTIONS

6.1   At or After Termination of Employment................................  9
6.2   Death Benefits....................................................... 11
6.3   Unscheduled Early Distributions...................................... 11
6.4   Scheduled Early Distributions........................................ 12

                                      (i)
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6.5   Special Withdrawals.................................................. 12
6.6   Financial Hardship Withdrawals....................................... 13
6.7   Inability To Locate Participant...................................... 13
6.8   Directors and Consultants............................................ 14
6.9   Claims Procedure..................................................... 14

                                  ARTICLE VII.
                                 ADMINISTRATION

7.1   Committee............................................................ 15
7.2   Committee Action..................................................... 15
7.3   Powers and Duties of the Committee................................... 15
7.4   Construction and Interpretation...................................... 16
7.5   Information.......................................................... 17
7.6   Compensation, Expenses and Indemnity................................. 17

                                  ARTICLE VIII.
                                  MISCELLANEOUS

8.1   Unsecured General Creditor........................................... 17
8.2   Restriction Against Assignment....................................... 18
8.3   Withholding.......................................................... 18
8.4   Amendment, Modification, Suspension or Termination................... 18
8.5   Governing Law........................................................ 19
8.6   Receipt or Release................................................... 19
8.7   Payments on Behalf of Persons Under Incapacity....................... 20
8.8   Successors and Assigns............................................... 20
8.9   No Employment Rights................................................. 20
8.10  Headings, etc. Not Part of Agreement................................. 20

                                     (ii)
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                            STERLING SOFTWARE, INC.

                          DEFERRED COMPENSATION PLAN

         Sterling Software, Inc., a Delaware corporation (the "Company") acting
on behalf of itself and its designated subsidiaries, hereby adopts the
provisions of this amended and restated plan document to govern the operation
and administration of the Sterling Software, Inc. Deferred Compensation Plan
(the "Plan"), effective as of January 3, 2000.

                                   RECITALS

         1. Effective as of February 1, 1997, the Plan was adopted and
established by the Company, acting on behalf of itself and its designated
subsidiaries, as an unfunded supplemental retirement plan for the benefit of
selected highly compensated employees, directors and consultants and their
respective beneficiaries. Benefits under the Plan are to paid by the Company
from its general assets or from the assets of the trust hereinafter described.

         2. Concurrently with the adoption and establishment of the Plan, the
Company entered into a trust agreement with First American Trust Company, as
trustee, and established a trust (the "Trust") to hold and manage certain assets
contributed by the Company in connection with the Plan. The Trust is intended to
qualify as a "grantor trust" under the Internal Revenue Code of 1986, as
amended, with the principal and income of the Trust to be treated as assets and
income of the Company for federal and state income tax purposes.

         3. The assets of the Plan held in the Trust will at all times be
subject to the claims of the general creditors of the Company.

         4. Effective as of October 27, 1997, the Plan was amended in certain
respects by the First Amendment thereto dated such date (the "First Amendment").
Effective as of December 21, 1998, the Plan was further amended in certain
respects by the Second Amendment thereto dated such date (the "Second
Amendment").

         5. Effective as of December 21, 1998, the Plan was restated solely for
purposes of incorporating therein the amendments to the Plan effected by the
First Amendment and the Second Amendment.

         6. Effective as of January 3, 2000, the Plan was further amended and
restated to read in its entirety as set forth below.

                                       1
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                                  ARTICLE I.
                             TITLE AND DEFINITIONS

1.1      Title.
         -----

         This Plan shall be known as the Sterling Software, Inc. Deferred
Compensation Plan.

1.2      Definitions.
         -----------

         Whenever the following words and phrases are used in this Plan, with
the first letter capitalized, they shall have the meanings specified below.

         (a)   "Account" means for each Participant the bookkeeping account
                -------
maintained by the Committee on the books of the Company that is credited with
amounts equal to (i) the portion of the Participant's Compensation that he or
she elects to defer, and (ii) the deemed earnings on such deferred Compensation
that are credited pursuant to Section 4.1(ii).

         (b)   "Beneficiary" or "Beneficiaries" means the beneficiary or
                -----------      -------------
beneficiaries last designated in writing by a Participant, in accordance with
procedures established by the Committee, to receive benefits under the Plan in
the event of the Participant's death. No beneficiary designation shall become
effective unless and until it is filed with the Committee during the
Participant's lifetime.

         (c)   "Board of Directors" or "Board" means the Board of Directors of
                ------------------      -----
Sterling Software, Inc. Any determination or other action specified in this Plan
to be made, taken or effectuated by the Board may be made, taken or effectuated
by the Executive Committee of the Board.

         (d)   "Change in Control" means the occurrence of any of the following
                -----------------
events:

               (i)    the Company is merged, consolidated or reorganized into or
         with another corporation or other legal person, and as a result of such
         merger, consolidation or reorganization less than two-thirds of the
         combined voting power of the then-outstanding securities entitled to
         vote generally in the election of directors ("Voting Stock") of such
         corporation or person immediately after such transaction are held in
         the aggregate by the holders of Voting Stock of the Company immediately
         prior to such transaction;

               (ii)   the Company sells or otherwise transfers all or
         substantially all of its assets to another corporation or other legal
         person, and as a result of such sale or transfer less than two-thirds
         of the combined voting power of the then-outstanding Voting Stock of
         such corporation or person immediately after such sale or transfer is
         held in the aggregate by the holders of Voting Stock of the Company
         immediately prior to such sale or transfer;

               (iii)  there is a report filed on Schedule 13D or Schedule
         14D-1 (or any successor schedule, form or report), each as promulgated
         pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"),
         disclosing that any person (as the term

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         "person" is used in Section 13(d)(3) or Section 14(d)(2) of the
         Exchange Act) has become the beneficial owner (as the term "beneficial
         owner" is defined under Rule 13d-3 or any successor rule or regulation
         promulgated under the Exchange Act) of securities representing 20% or
         more of the combined voting power of the then-outstanding Voting Stock
         of the Company;

               (iv)   the Company files a report or proxy statement with the
         Securities and Exchange Commission pursuant to the Exchange Act
         disclosing in response to Form 8-K or Schedule 14A (or any successor
         schedule, form or report or item therein) that a change in control of
         the Company has occurred or will occur in the future pursuant to any
         then-existing contract or transaction; or

               (v)    if, during any period of two consecutive years,
         individuals who at the beginning of any such period constitute the
         directors of the Company cease for any reason to constitute at least a
         majority thereof; provided, however, that for purposes of this clause
         (v) each director who is first elected, or first nominated for election
         by the Company's stockholders, by a vote of at least two-thirds of the
         directors of the Company (or a committee thereof) then still in office
         who were directors of the Company at the beginning of any such period
         will be deemed to have been a director of the Company at the beginning
         of such period.

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

         (e)   "Code" means the Internal Revenue Code of 1986, as amended.
                ----

         (f)   "Committee" means the Administrative Committee appointed to
                ---------
administer the Plan in accordance with Article VII.

         (g)   "Company" means Sterling Software, Inc., a Delaware corporation,
                -------
any successor corporation to Sterling Software, Inc. satisfying the requirements
of Section 8.8 and any entity that is directly or indirectly controlled by
Sterling Software, Inc. or in which Sterling Software, Inc. has a significant
equity or investment interest, as determined by the Board.

         (h)   "Compensation" means (a) the following items of remuneration
                ------------
payable to an Eligible Individual for services rendered to the Company during a
calendar year: Salary, Incentive Bonus, annual retainer and meeting fees payable
to members of the Board and fees

                                       3
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payable to consultants, and (b) any Post Employment Payments payable to an
Eligible Individual. An Eligible Individual's Compensation shall be computed
before giving effect to the Eligible Individual's salary reduction elections
under Code Sections 125 or 401(k) and the Eligible Individual's deferral
election under Section 3.1 of this Plan.

         (i)   "Distributable Amount" means the balance of a Participant's
                --------------------
Account at any given time.

         (j)   "Effective Date" means February 1, 1997.
                --------------

         (k)   "Eligible Individual" for a Plan Year means (i) a common law
                -------------------
employee of the Company whose Compensation is paid on a United States payroll in
United States dollars and (A) whose Compensation equaled or exceeded the
Threshold Amount in the prior calendar year (or, in the case of an employee
employed only during a portion of such prior calendar year, whose annualized
Compensation would have equaled or exceeded the Threshold Amount), or (B) who
satisfied any alternative eligibility criteria established by the Committee
pursuant to Section 7.3(iv) of the Plan; (ii) a member of the Board of Directors
who is not a common law employee of the Company; (iii) a consultant who is not a
common law employee of the Company and who is specifically designated by the
Committee as eligible to participate in the Plan, or (iv) any former employee,
board member or consultant entitled to any Post Employment Payments from the
Company, who had immediately prior to receiving notice of termination or actual
termination of employment, Board membership or consultancy relationship, been a
Participant. An individual's status as an Eligible Individual for a Plan Year
shall be determined prior to the first day of such Plan Year; provided, however,
that in the case of individuals described in clause (iv) above, status as an
Eligible Individual for one or more Plan Years shall be irrevocably established
upon the earlier of receipt of notice of termination or actual termination of
employment, Board membership or consultancy relationship. For purposes of this
Section 1.1(k) and Section 1.1(s) below, "termination of employment" shall be
deemed to have occurred when the Participant ceases to actively work for or
provide services to the Company on a regular basis, regardless of whether the
Participant continues on the payroll of the Company during any severance period,
pay-in-lieu-of-notice period, paid leave of absence not coupled with a planned
return to active service or any similar period. Notwithstanding the foregoing,
the Committee may in its discretion (I) determine in writing that an otherwise
Eligible Individual may not participate in this Plan for one or more Plan Years,
and (II) determine to admit a newly hired employee (whether hired through an
acquisition or otherwise) into the Plan on a date other than the first day of a
Plan Year and to establish criteria for the admission of such newly hired
employees in addition to or in lieu of those set forth above, provided that such
criteria are consistent with the purpose of the Plan to provide benefits for a
select group of management or highly compensated employees. An individual who is
classified by the Company as an independent contractor whose compensation for
services is reported by the Company on a form other than Form W-2 (or any
successor form for reporting wages paid to employees) will not be an Eligible
Individual unless the Committee specifically designates such individual by name
as an Eligible Individual pursuant to clause (iii) above.

         (l)   "Fund" or "Funds" means one or more of the investment funds or
                ----      -----
contracts selected by the Committee pursuant to Section 7.3(i).

                                       4
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         (m)   "Incentive Bonus" means any cash incentive compensation payable
                ---------------
to a Participant in addition to the Participant's Salary.

         (n)   "Initial Election Period" for an Eligible Individual means the
                -----------------------
30-day period ending January 31, 1997.

         (o)   "Interest Rate" means, for any Fund and for any month, an amount
                -------------
expressed as a percentage equal to the net rate of gain or loss on the assets of
such Fund during such month.

         (p)   "Participant" means any Eligible Individual who elects to defer
                -----------
Compensation in accordance with Section 3.1.

         (q)   "Plan" means the Sterling Software, Inc. Deferred Compensation
                ----
Plan set forth herein, as amended from time to time in accordance with Section
8.4.

         (r)   "Plan Year" means the 12-consecutive month period beginning
                ---------
January 1 and ending December 31 of each year, provided that the first Plan Year
shall be a short year beginning February 1, 1997 and ending December 31, 1997.

         (s)   "Post Employment Payments" means any payments which are made to
                ------------------------
an Eligible Individual following receipt of notice of termination or actual
termination of employment, Board membership or consultancy relationship in
respect of such Eligible Individual's former employment, consultancy or Board
membership with the Company, including payment in lieu of vacation, payment in
lieu of notice or any severance payments (which may be in the form of a lump sum
payment or salary or bonus continuation), payable by the Company pursuant to any
Company plan, agreement or policy which provides for such payments (including
without limitation, any payments pursuant to severance agreements or change in
control agreements). Notwithstanding the foregoing, the term "Post Employment
Payments" shall not include payments in respect of any excise tax imposed by
Section 4999 of the Code (or any successor provision thereto), any similar tax
imposed by state or local law, any interest or penalties with respect to any
such tax, or any gross-up or similar payments with respect to any of the
foregoing.

         (t)   "Salary" means for any calendar year (i) in the case of an
                ------
employee of the Company whose compensation from the Company does not include
commission income, the employee's base salary during the calendar year and (ii)
in the case of an employee of the Company whose compensation from the Company
includes commission income, the total of the employee's base salary plus
commissions during the calendar year. Salary excludes any other form of
compensation such as Incentive Bonuses, restricted stock, income from stock
options or stock appreciation rights, severance payments, moving expenses, car
or other special allowances, reimbursements for taxes or any other remuneration
for personal services included in an Eligible Individual's taxable income.

         (u)   "Threshold Amount" means, for the first Plan Year, the sum of
                ----------------
$120,000 and, for any subsequent Plan Year, such other amount as may be
determined by the Committee pursuant to Section 7.3.

         (v)   "Trust" means the trust established by the Trust Agreement.
                -----

                                       5
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         (w)   "Trust Agreement" means the Sterling Software, Inc. Deferred
                ---------------
Compensation Plan Trust Agreement dated as of February 1, 1997, by and between
the Company and First American Trust Company, as Trustee.

         (x)   "Trustee" means First American Trust Company or any successor
                -------
trustee appointed pursuant to the Trust Agreement.

                                  ARTICLE II.
                                 PARTICIPATION

2.1      Participation.
         -------------

         An Eligible Individual shall become a Participant in the Plan for a
Plan Year by electing to defer all or a portion of his or her Compensation for
such Plan Year in accordance with Section 3.1, by completing all required
applications for life insurance (as determined by the Committee in its
discretion), and by complying with any applicable medical underwriting
requirements of the issuer of any policy of insurance on the life of the
Eligible Individual.

                                 ARTICLE III.
                              DEFERRAL ELECTIONS

3.1      Elections to Defer Compensation.
         -------------------------------

         (a)   Elections. For the first Plan Year, each Eligible Individual may
               ---------
elect to defer Compensation by filing with the Committee an election that
conforms to the requirements of this Section 3.1, on a form provided by the
Committee (an "Election Form"), no later than the last day of the Initial
Election Period. For each subsequent Plan Year, an Eligible Individual may make
an election to defer Compensation by filing an Election Form with the Committee
on or before the December 31 preceding the Plan Year for which the election is
to be effective or, in the case of a newly hired employee who is admitted into
the Plan on a date other than the first day of a Plan Year, on or before the
date such employee receives his first payroll distribution from the Company. An
Eligible Individual who does not elect to defer Compensation for a Plan Year may
become a Participant with respect to a subsequent Plan Year by filing an
Election Form with the Committee on or before the December 31 preceding the Plan
Year for which the election is to be effective.

         (b)   General Rule. Subject to the limitations set forth in subsection
               ------------
(c) below, an Eligible Individual may elect to defer any whole percentage of his
or her Compensation up to 100%; provided, however, that if an Eligible
Individual's deferral election would reduce the Compensation paid to the
Eligible Individual to an amount that is less than (i) the amount necessary to
satisfy the Eligible Individual's portion of applicable employment taxes for the
Plan Year, (ii) amounts necessary to satisfy any other benefit plan elections or
loan repayments for the Plan Year under any other plan sponsored by the Company
and (iii) any income taxes payable with respect to taxable compensation that is
not eligible for deferral, then the Participant must

                                       6
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remit to the Company, at the time or times requested by the Company, any amounts
necessary to permit the Company to satisfy its obligation to withhold such
taxes, implement such benefit plan elections or deduct such loan repayments. In
addition, a deferral election made by an Eligible Individual will not be
effective unless and until the Eligible Individual completes all required
applications for life insurance (as determined by the Committee in its
discretion).

         (c)   Minimum Deferrals. For each Plan Year during which an Eligible
               -----------------
Individual is a Participant, the minimum dollar amount of Compensation that may
be deferred by the Eligible Individual under the Plan is $5,000. To the extent
that a Participant's actual deferrals in a Plan Year are less than $5,000, such
deferrals, together with earnings or loss thereon through the last day of such
Plan Year, will be refunded as promptly as practicable after the end of such
Plan Year.

         (d)   Duration of Compensation Deferral Election. Any deferral election
               ------------------------------------------
made under this Section 3.1 shall be irrevocable and shall apply only to the
Compensation paid or payable during the Plan Year for which the election is
made. Without limiting the generality of the foregoing, such election shall be
effective (i) with respect to Salary or consulting fees paid or payable during
the Plan Year for which the election is made, (ii) with respect to director fees
paid or payable during the Plan Year for which the election is made, (iii) with
respect to Incentive Bonuses paid or payable during the Plan Year for which the
election is made; and (iv) with respect to any Post Employment Payments paid or
payable after receipt of notice of termination or actual termination of
employment, Board membership or consultancy relationship that occurs during the
Plan Year for which the election is made.

3.2      Investment Elections.
         --------------------

         (a)   The Committee shall provide each Participant with a list of
multiple Funds available for hypothetical investment and each Participant may
designate, on a form provided by the Committee, one or more of such Funds in
which his or her Account will be deemed to be invested for purposes of
determining the amount of earnings to be credited to such Account. The list
shall consist of at least five Funds, collectively offering a wide range of
investment options (domestic and international) with a spectrum of risk and
return potential (from conservative, low risk/low return potential to
aggressive, high risk/high return potential), comparable as a whole to the
initial list of Funds attached hereto as Exhibit A. The Committee may in its
discretion change from time to time the Funds available for hypothetical
investment, provided Participants are given at least 90 days' prior written
notice of the effective date of the deletion of any Fund (including, without
limitation, the deletion of a Fund in connection with the substitution of a new
Fund in its place); it being understood, however, that where the deletion of a
Fund is beyond the control of the Committee (e.g., where the provider of a
Matching Investment unilaterally effects such a deletion), the Committee's
obligation shall be to give Participants written notice of the effective date of
such deletion as promptly as practicable after the Committee obtains knowledge
thereof. The Committee may in its discretion add new Funds at any time and
Participants shall be given written notice of such additions as promptly as
practicable after the Committee decides to add a new Fund. The Interest Rate of
each Fund shall be used to determine the amount of earnings to be credited to
Participant's Accounts under Section 4.1(ii).

                                       7
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         (b)   In making the investment designation pursuant to this Section
3.2, the Participant may specify that all, or any whole percentage, of his or
her Account will be deemed to be invested in one or more of the Funds designated
by the Committee (with a minimum of 5% of the Account balance deemed to be
invested in any one Fund and all such designations in the aggregate not to
exceed 100% of the Participant's Account balance). Effective as of the beginning
of any calendar month, a Participant may change the Fund designations made under
this Section 3.2 by filing a new designation, on a form provided by the
Committee, at least five days prior to the end of the immediately preceding
calendar month (or such other period prior to the end of the immediately
preceding month as the Committee may from time to time prescribe).

         (c)   If a Participant fails to elect a Fund under this Section 3.2, or
if the Participant's investment designation is less than 100% of his or her
Account balance, for any portion of the Account balance for which no investment
designation has been made he or she shall be deemed to have designated the Fund
that the Committee determines in its sole judgment to have the least risk of
loss of principal.

3.3      Match Funding.
         -------------

         To the extent authorized by the Committee in its discretion, and in
such case to the fullest extent practicable, the Company shall match fund (in
terms of both timing and amount) all of its obligations to Participants under
the Plan by acquiring and contributing to the Trust, or by causing the Trustee
to acquire or maintain on behalf of the Trust, life insurance investments
("Matching Investments") corresponding as closely as possible to amounts from
time to time allocated to the Investment Fund Subaccounts (as hereinafter
defined) of all Participants. To the extent that the Company wishes to prefund
Matching Investments for a given Plan Year, such Matching Investments shall be
maintained in the Fund offering the least risk of loss of principal, or a
conservative money market fund, until such Matching Investments are periodically
allocated to investment options corresponding to the periodic deferral amounts
of the Participants. Notwithstanding the foregoing, the Company and the Trustee
may maintain cash reserves in an amount reasonably necessary to pay benefits
under and administer this Plan.

         While the Plan is in existence the Company shall at all times comply
with its duties and obligations under the Trust Agreement, and all Participants
and their beneficiaries are expressly acknowledged by the Company to be bona
fide third party beneficiaries under the Trust Agreement.

                                  ARTICLE IV.
                                   ACCOUNTS

4.1      Participant Accounts.
         --------------------

         The Committee shall establish and maintain an Account for each
Participant under the Plan. Each Participant's Account shall be further divided
into separate subaccounts ("Investment Fund Subaccounts"), each of which
corresponds to a Fund elected by the Participant pursuant to Section 3.2. A
Participant's Account shall be debited and credited as follows:

                                       8
<PAGE>

                  (i)   As of the last day of each month, the Committee shall
         credit the Investment Fund Subaccounts of the Participant's Account
         with an amount equal to any Compensation deferred by the Participant
         during all pay periods ending in that month in accordance with the
         Participant's election; that is, the portion of the Participant's
         deferred Compensation that the Participant has elected to be deferred
         and deemed to be invested in a certain Fund shall be credited to the
         Investment Fund Subaccount corresponding to that Fund.

                  (ii)  As of the last day of each month, each Investment Fund
         Subaccount of a Participant's Account shall be credited with earnings
         in an amount determined by multiplying the balance credited to such
         Investment Fund Subaccount as of the last day of the preceding month by
         the Interest Rate for the corresponding Fund for the then current
         month. To the extent any such Interest Rate is negative in any month
         (due to a net loss in the applicable Fund), the applicable Investment
         Fund Subaccount will be debited in the same manner.

                  (iii) As of the first day of each calendar month, each
         Investment Fund Subaccount will be debited or credited to appropriately
         reflect any change in Fund designations made by Participants pursuant
         to Section 3.2.

4.2      Quarterly Statements.
         --------------------

         Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Account on a quarterly
basis.

                                  ARTICLE V.
                                    VESTING

5.1      Account.
         -------

         A Participant's interest in his or her Account shall be 100% vested at
all times.

                                   ARTICLE VI.
                                  DISTRIBUTIONS

6.1      At or After Termination of Employment.
         -------------------------------------

         (a) Forms of Payment. A Participant's Distributable Amount with respect
             ----------------
to each Plan Year will be paid, in accordance with the Participant's election,
either in a lump sum payment or in quarterly installments over a period of 5,
10, 15 or 20 years. Such lump sum payment shall be made or such quarterly
installments shall commence, as applicable, either upon termination of the
Participant's employment or at a later date elected by the Participant in
accordance with Section 6.1(b). If a Participant fails to make an election, he
will be deemed to

                                       9
<PAGE>

have elected to receive his Distributable Amount in a lump sum
payment upon termination of employment.

         (b) Payment Election. Each Participant shall elect, at the time of his
             ----------------
or her election to defer Compensation under the Plan for a Plan Year, to have
that portion of his or her Distributable Amount attributable to such Plan Year
paid in installments or in a lump sum payment, as described in subsection (a)
above, and shall elect the installment payment commencement date or the lump sum
payment date, as applicable, which may be the date of termination of the
Participant's employment or any later date specified by the Participant.

         (c) Payment Commencement Date. Unless a Participant receives an early
             -------------------------
distribution with respect to the Distributable Amount for a Plan Year pursuant
to Section 6.3, Section 6.4, Section 6.5 or Section 6.6, such Distributable
Amount (or remaining portion thereof) will be paid after the Participant
terminates employment with the Company. Payments will be paid in accordance with
the Participant's election. If a Participant elected to receive a lump sum
payment upon termination of employment, such payment shall be made as soon as
practicable following the Participant's termination of employment, but in no
event later than 90 days after the date of such termination. If a Participant
elected to receive a lump sum payment on a specified date occurring after the
Participant's termination of employment, such payment shall be made as soon as
practicable following the specified date, but in no event later than 90 days
after such specified date. Quarterly installment payments will begin as soon as
administratively practicable following the applicable payment commencement date
elected by the Participant and shall continue quarterly thereafter until the
applicable portion of the Distributable Amount has been fully distributed. Each
quarterly installment payment will be made pro rata from the Participant's
Investment Fund Subaccounts according to the balances in such Subaccounts.
During the period preceding any lump sum distribution date and during the period
in which quarterly installment payments are being made, the Participant's
Account will continue to be credited monthly with earnings pursuant to Section
4.1(ii) of the Plan and the Participant may continue to change Fund designations
pursuant to Section 3.2 of the Plan. Quarterly installment payments will be
adjusted annually to reflect earnings, gains and losses until all amounts
credited to a Participant's Account under the Plan have been distributed. To the
fullest extent practicable, but subject to such annual adjustments, quarterly
installment payments shall be comparable in amount over the entire distribution
period. Once a Participant's Distributable Amount declines to a level below the
sum of $25,000, such Distributable Amount may be distributed in a lump sum
payment and quarterly installment payments shall cease.

         (d) Change in Distribution Election. Subject to the limitations and
             -------------------------------
requirements specified below, a Participant (whether or not such Participant has
terminated employment with the Company) may change (i) his or her previously
elected form of payment (i.e., lump sum payment versus quarterly installment
payments) to the other payment form permitted by the Plan, (ii) a previously
elected payment commencement date to a different payment commencement date, or
(iii) an election to receive a distribution upon termination of employment or a
date subsequent thereto pursuant to Section 6.1 to a scheduled early
distribution pursuant to Section 6.4, or vice versa, with respect to that
portion of his or her Distributable Amount attributable to one or more Plan
Years. A Participant must file a written election with the Committee to effect
any such change at least six months prior to the date that payment of such
portion of his or her Distributable Amount would otherwise be made. Except as
provided in Sections 6.3 or 6.5(b)

                                       10
<PAGE>

hereof, if payment of such portion is to commence (or actually commences because
of the Participant's termination of employment) less than six months prior to
the effective date of such written election, such written election shall be void
and the immediately preceding valid written election shall control. If there is
no previous written election on file, then distributions shall be governed by
the default provisions of Section 6.1(a). A Participant's election concerning
(i) form of payment, (ii) payment commencement date or (iii) payment upon or
after termination of employment versus scheduled early distribution pursuant to
Section 6.4 with respect to a given Plan Year may not be changed after payment
of that portion of the Distributable Amount attributable to such Plan Year has
been made or has begun.

         (e) Exception for Small Balances. Notwithstanding the foregoing
             ----------------------------
provisions of this Section 6.1 or of Section 6.2, if at the time that any
Participant becomes entitled to receive payment of all or any portion of his
Distributable Amount, such Participant's entire Distributable Amount does not
exceed the sum of $25,000, such portion of his Distributable Amount shall
automatically be distributed in the form of a lump sum payment.

6.2      Death Benefits. If a Participant dies while employed by the Company, or
         --------------
after termination of employment, the Participant's Distributable Amount shall be
paid to the Participant's Beneficiary in the same form and in accordance with
the same payment schedule under which the Distributable Amount was being or
would have been paid to the Participant. All references in this Plan to rights,
options or other attributes of a Participant shall be deemed to refer equally to
a Beneficiary, unless the context clearly requires otherwise.

6.3      Unscheduled Early Distributions. Subject to paragraph (vi) below,
         -------------------------------
Participants shall be permitted to request to withdraw amounts from their
Accounts at any time ("Early Distributions"). Upon receiving a withdrawal
request, the Committee shall determine, in its sole discretion, whether to
permit any such withdrawal and the amount, if any, to be withdrawn, subject to
the following restrictions:

                  (i)   The election to take an Early Distribution shall be made
         by filing a form provided by and filed with the Committee.

                  (ii)  The maximum amount payable to a Participant in
         connection with an Early Distribution shall in all cases equal 90% of
         the amount requested by the Participant (which requested amount must be
         not less than $10,000 or the Participant's entire Distributable Amount
         if less than $10,000); provided, however, that the maximum amount
         payable to a Participant in connection with an Early Distribution shall
         be 90% of the Distributable Amount as of the end of the calendar month
         in which the Early Distribution request is received by the Committee.

                  (iii) The amount described in paragraph (ii) above shall be
         paid in a single lump sum by the end of the calendar month next
         following the calendar month in which the Early Distribution request is
         received by the Committee. A distribution pursuant to this Section 6.3
         of less than the Participant's entire interest in the Plan will be made
         pro rata from his or her Investment Fund Subaccounts according to the
         balances in such Subaccounts.

                                       11
<PAGE>

                  (iv) If a Participant receives an Early Distribution, the
         remaining portion of the requested or approved amount, as applicable,
         in excess of the amount payable under paragraph (ii) above (i.e., 10%
                                                                     ---
         of such amount), shall be permanently forfeited and the Company shall
         have no obligation to the Participant or his or her Beneficiary with
         respect to such forfeited amount.

                  (v)  If a Participant receives an Early Distribution, the
         Participant shall be ineligible to make any additional deferrals under
         the Plan for the balance of the Plan Year in which the Early
         Distribution occurs and for the immediately following Plan Year.

                  (vi) A Participant shall be limited to a maximum of two Early
         Distributions during all of his or her periods of Plan participation.

6.4      Scheduled Early Distributions. Participants may elect to have payments
         -----------------------------
in respect of Compensation deferred during a given Plan Year be made in a lump
sum amount on a future date while still employed, provided the payment date is
at least 2 years after the date such Plan Year commences. This election shall
apply to the Compensation deferred for the Plan Year specified by the
Participant on his or her election form and the earnings credited thereto until
the payment date. A Participant may elect a different payment date for the
Compensation deferred for each Plan Year. In addition, payment dates elected
pursuant to this Section 6.4 may be deferred by not less than six months, by
filing with the Committee written notice not less than six months prior to the
payment date to be deferred. A distribution pursuant to this Section 6.4 of less
than the Participant's entire interest in the Plan shall be made pro rata from
his or her Investment Fund Subaccounts according to the balances in such
Subaccounts. Notwithstanding the foregoing, if a Participant terminates
employment with the Company for any reason prior to the date on which a payment
is scheduled to be made pursuant to this Section 6.4, the Participant's entire
Distributable Amount will be paid pursuant to the provisions of Section 6.1. In
the event of any conflict between the provisions of Section 6.1(d) and the
provisions of this Section 6.4, the provisions of this Section 6.4 shall
control.

6.5      Special Withdrawals.
         -------------------

                  (a) Change in Control. Following a Change in Control, a
                      -----------------
Participant may elect in writing at any time to commence the distribution of the
Participant's entire Distributable Amount without penalty and without regard to
whether the Participant has terminated employment with the Company or whether
installment payments have commenced, provided that such election shall be
effective and such commencement of payment(s) shall begin on a date not sooner
than six months following the date such election is made. The requested
distribution will be made in a lump sum payment or in quarterly installments
over 5, 10, 15 or 20 years, as elected by the Participant. A Participant's
election pursuant to this Section 6.5(a) will supersede any prior payment
election made under the Plan. A Participant who elects to receive the
distribution of his or her Distributable Amount under this Section 6.5(a) will,
upon receipt of the Participant's election by the Committee, cease to be
eligible to defer additional amounts under the Plan for the balance of the Plan
Year in which such receipt occurs.

                  (b) Early Post-Termination Distributions. Following
                      ------------------------------------
termination of a Participant's employment, a Participant may elect in writing at
any time to receive a payment of

                                       12
<PAGE>

the Participant's entire Distributable Amount, without regard to whether
installment payments have commenced. Notwithstanding the preceding sentence, if
the requested payment date of any such election is less than six months
following the date of such election, then the maximum amount payable to a
Participant in connection with such election shall in all cases equal 90% of the
Participant's Distributable Amount. The remaining 10% of such Participant's
Distributable Amount shall be permanently forfeited and the Company shall have
no obligation to the Participant or his or her Beneficiary with respect to such
forfeited amount. All payments made pursuant to this Section 6.5(b) shall be in
a single lump sum.

6.6      Financial Hardship Withdrawals. The Committee may, pursuant to rules or
         ------------------------------
policies from time to time adopted by it and applied in a consistent manner,
accelerate the date of distribution of all or any portion of a Participant's
Account balance because of a financial hardship. A financial hardship means an
unforeseeable, severe financial emergency resulting from (a) a sudden and
unexpected illness or accident of the Participant or his or her dependents (as
defined in Section 152(a) of the Code); (b) loss of the Participant's property
due to casualty; or (c) other similar extraordinary and unforeseeable
circumstances arising out of events beyond the control of the Participant, which
may not be relieved through other available resources of the Participant, as
determined by the Committee in accordance with such rules and policies. A
distribution pursuant to this Section 6.6 of less than the Participant's entire
interest in the Plan shall be made pro rata from his or her Investment Fund
Subaccounts according to the balances in such Subaccounts. Subject to the
foregoing, payment of any amount with respect to which a Participant has filed a
request under this Section 6.6 shall be made as soon as practicable after
approval of such request by the Committee. Distributions made pursuant to this
Section 6.6 shall be without penalty.

6.7      Inability To Locate Participant.
         -------------------------------

         (a) Forfeiture of Account. In the event that the Committee is unable to
             ---------------------
locate a Participant or, with respect to a Participant who has died, any
Beneficiary within two years following the date on which any payment of the
Participant's Distributable Amount is scheduled to be made or begin, the amount
allocated to the Participant's Account shall be forfeited. Following the date of
forfeiture, the Participant's Account which is forfeited shall be invested in
the Fund offering the least risk of loss of principal or conservative money
market funds. If, after such forfeiture and prior to the escheat of the
Participant's Account as provided in Section 6.7(b), the Participant or
Beneficiary later claims such benefit and establishes to the reasonable
satisfaction of the Committee such Participant's or Beneficiary's right to
receive same, such Account shall be reinstated at its balance at the date of
forfeiture without additional interest, earnings, gains or losses from the date
of forfeiture through the date of reinstatement. The Participant's restored
Account balance will be invested in the manner that the Participant or
Beneficiary elects pursuant to Section 3.2 and will be distributed to the
Participant or Beneficiary in accordance with the Participant's payment
elections made pursuant to this Article VI. In addition, any installment
payments that were scheduled to have been made during the period in which the
Participant or Beneficiary could not be located will be made to the Participant
or Beneficiary in a lump sum catch-up payment as soon as administratively
practicable.

         (b) Escheat of Account. The Committee, in its discretion, may escheat,
             ------------------
or may cause the Trustee to escheat, to the state of Texas (or such other state
as the Committee, in its

                                       13
<PAGE>

discretion, determines is appropriate) any Participant's Account which was
forfeited if either (i) the Committee has been unable to locate the Participant
or Beneficiary for a period of five years following the date on which any
payment of the Participant's Distributable Amount is scheduled to be made or
begin or (ii) the Plan is terminated and the Committee has been unable to locate
the Participant or Beneficiary for a period of two years following the date on
which any payment of the Participant's Distributable Amount is scheduled to be
made or begin. Upon the escheat of the Participant's Account, the Participant or
Beneficiary shall have no further right to any benefits or payments under the
Plan, and neither the Company, the Committee nor the Trustee shall have any
liability to such Participant or Beneficiary for the amount of the Participant's
Account.

6.8      Directors and Consultants. For purposes of the preceding sections of
         -------------------------
this Article VI, a Participant who is a member of the Board or a consultant, but
who is not an employee of the Company, will be deemed to be employed by the
Company as long as he or she is a director or is engaged as a consultant and
will be deemed to have terminated employment when he or she is no longer a
director or is no longer engaged as a consultant and is not then an employee of
the Company.

6.9      Claims Procedure.
         ----------------

         (a) Claim for Benefits. If a Participant or Beneficiary does not
             ------------------
receive the benefits which the Participant or Beneficiary believes he or she is
entitled to receive under the Plan, the Participant or Beneficiary may file a
claim for benefits with the Committee. All claims shall be made in writing and
shall be signed by the claimant. If the claimant does not furnish sufficient
information to enable the Committee to process the claim, the Committee will
indicate to the claimant any additional information which is required.

         (b) Notification by the Committee. Each claim will be approved or
             -----------------------------
disapproved by the Committee within 90 days following the receipt of the
information necessary to process the claim. In the event the Committee denies a
claim for benefits in whole or in part, the Committee will notify the claimant
in writing of the denial of the claim. Such notice by the Committee will also
set forth, in a manner calculated to be understood by the claimant, the specific
reason for such denial, the specific Plan provisions on which the denial is
based, a description of any additional material or information necessary for the
claim to be approved, if possible, with an explanation of why such material or
information is necessary, and an explanation of the Plan's claim review
procedure as set forth in subsection (c). If no action is taken by the Committee
on a claim within such 90 day period, the claim will be deemed to be denied for
purposes of the review procedure.

         (c) Review Procedure. A claimant may appeal a denial of his or her
             ----------------
claim by requesting a review of the decision by the Committee or a person
designated by the Committee. An appeal must be submitted in writing within 60
days after receipt by the claimant of written notification of the denial and
must (i) request a review of the claim for benefits under the Plan, (ii) set
forth all of the grounds upon which the claimant's request for review is based
and any facts in support thereof, and (iii) set forth any issues or comments
which the claimant deems pertinent to the appeal. The Committee or the person
designated by the Committee will make a full and fair review of each appeal and
any written materials submitted in connection with the

                                       14
<PAGE>

appeal. The Committee or the person designated by the Committee will act upon
each appeal within 60 days after receipt thereof unless special circumstances
require an extension of the time for processing, in which case a decision will
be rendered as soon as possible but not later than 120 days after the appeal is
received. The claimant will be given the opportunity to review documents or
materials directly pertinent to the appeal upon submission of a reasonable
written request to the Committee or person designated by the Committee, provided
the Committee or person designated by the Committee in its reasonable judgment
finds the requested documents or materials are directly pertinent to the appeal.
On the basis of its review, the Committee or person designated by the Committee
will make an independent determination of the claimant's eligibility for
benefits under the Plan. The decision of the Committee or person designated by
the Committee on any claim for benefits will be final and conclusive upon all
parties thereto. In the event the Committee or person designated by the
Committee denies an appeal in whole or in part, it will give written notice of
the decision to the claimant, which notice will set forth in a manner calculated
to be understood by the claimant the specific reasons for such denial and which
will make specific reference to the pertinent Plan provisions on which the
decision was based.

                                 ARTICLE VII.
                                ADMINISTRATION

7.1      Committee.
         ---------

         The Committee for the Plan shall be appointed by, and serve at the
pleasure of, the Board. The number of members comprising the Committee shall be
determined by the Board which may from time to time vary the number of members.
A member of the Committee may resign by delivering a written notice of
resignation to the Board. The Board may remove any member with or without cause
by delivering a certified copy of its resolution of removal to such member.
Vacancies in the membership of the Committee shall be filled as soon as
practicable by the Board.

7.2      Committee Action.
         ----------------

         The Committee shall act at meetings by affirmative vote of a majority
of the members of the Committee. Any action permitted to be taken at a meeting
may be taken without a meeting if, prior to such action, a written consent to
the action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself
or herself as a Participant. Any two members of the Committee may execute any
certificate or other written direction on behalf of the Committee.

7.3      Powers and Duties of the Committee.
         ----------------------------------

         The Committee shall administer the Plan in accordance with its terms
and shall have all powers, authority and discretion necessary to accomplish its
purposes, including, but not by way of limitation, the authority and discretion
to:

                                       15
<PAGE>

                  (i)    select the Funds and change the Funds from time to time
         pursuant to Section 3.2;

                  (ii)   appoint a plan administrator or any other agent, and
         delegate to them such powers and duties in connection with the
         administration of the Plan as the Committee may from time to time
         prescribe;

                  (iii)  resolve all questions relating to the eligibility of
         employees, directors and consultants to be or become Eligible
         Individuals or Participants;

                  (iv)   determine the Threshold Amount applicable to any Plan
         Year after the first Plan Year and establish alternative criteria,
         consistent with the purpose of the Plan to provide benefits to a select
         group of management or highly compensated employees, for what shall
         constitute an employee of the Company an Eligible Individual with
         respect to any given Plan Year, in addition to or in lieu of the
         eligibility criteria set forth in Section 1.2(k) of the Plan;

                  (v)    determine the amount of benefits payable to
         Participants or their Beneficiaries under this Plan, and determine the
         time and manner in which such benefits are to be paid;

                  (vi)   authorize and direct all disbursements by the Trustee
         from the Trust;

                  (vii)  engage any administrative, legal, accounting, clerical,
         or other services it deems appropriate in administering the Plan or the
         Trust Agreement;

                  (viii) construe and interpret this Plan and the Trust
         Agreement, supply omissions from, correct deficiencies in, and resolve
         ambiguities in the language of this Plan and the Trust Agreement, and
         adopt rules for the administration of this Plan and the Trust Agreement
         that are not inconsistent with the terms of such documents;

                  (ix)   compile and maintain all records it determines to be
         necessary, appropriate or convenient in connection with the
         administration of this Plan and of benefit payments hereunder;

                  (x)    determine the disposition of assets in the Trust in the
         event this Plan is terminated;

                  (xi)   review the performance of the Trustee with respect to
         the Trustee's administrative duties, responsibilities and obligations
         under this Plan and the Trust Agreement, report to the Board regarding
         such administrative performance of the Trustee, and recommend to the
         Board, if necessary, the removal of the Trustee and the appointment of
         a successor Trustee; and

                  (xii)  resolve all questions relating to any matter for which
         it has administrative responsibility.

                                       16
<PAGE>

7.4      Construction and Interpretation.
         -------------------------------

         The Committee shall have full authority and discretion to construe and
interpret the terms and provisions of this Plan, which interpretation or
construction shall be final and binding on all parties, including but not
limited to the Company and any Eligible Individual, Participant or Beneficiary.
The Committee shall administer the Plan in a consistent and nondiscriminatory
manner and in full accordance with any and all laws applicable to the Plan.

7.5      Information.
         -----------

         To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters relating to
the Compensation of all Participants, their death or other cause of termination,
and such other pertinent facts as the Committee may reasonably require.

7.6      Compensation, Expenses and Indemnity.
         ------------------------------------

         (a) Expenses. The members of the Committee shall serve without
             --------
compensation for their services hereunder. All expenses and fees incurred in
connection with the administration of the Plan and the Trust shall be paid by
the Company.

         (b) Indemnification. To the fullest extent permitted by applicable law,
             ---------------
the Company shall indemnify and save harmless the Committee and each member
thereof, the Board and any delegate of the Committee who is an employee of the
Company against any and all expenses, liabilities and claims, including legal
fees to defend against such liabilities and claims, arising out of their
discharge in good faith of responsibilities under or incident to the Plan, other
than expenses and liabilities arising out of willful misconduct. Without
limiting the generality of the foregoing, the Company shall, promptly upon
request, advance funds to persons entitled to indemnification hereunder to the
extent necessary to defray legal and other expenses incurred in the defense of
such liabilities and claims, as and when incurred. This indemnity shall not
preclude such further indemnities as may be available under insurance purchased
by the Company or provided by the Company under any bylaw, agreement or
otherwise.

                                 ARTICLE VIII.
                                 MISCELLANEOUS

8.1      Unsecured General Creditor.
         --------------------------

         Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interests in any Matching
Investments or in any other property or assets of the Company or the Trust. No
assets of the Company shall be held as collateral security for the obligations
of the Company under this Plan. Any and all assets of the Trust shall be and
shall remain unpledged and unencumbered. The Company's obligation under the Plan
shall be merely that of an unfunded and unsecured promise of the Company to pay
money in the future, and the rights of the Participants and Beneficiaries shall
be no greater than those of unsecured general creditors. The Company shall
maintain the Trust at all times during the term of the Plan.

                                       17
<PAGE>

All assets of the Company and the Trust shall be subject to the claims of the
Company's creditors.

8.2      Restriction Against Assignment.
         ------------------------------

         The Company or the Trustee shall pay all amounts payable hereunder only
to the person or persons designated pursuant to the Plan and not to any other
person or entity. No part of a Participant's Account shall be liable for the
debts, contracts, or engagements of any Participant, his or her Beneficiary, or
successors in interest, nor shall a Participant's Account be subject to
execution by levy, attachment, or garnishment or by any other legal or equitable
proceeding, nor shall any such person have any right to alienate, anticipate,
commute, pledge, encumber, or assign any benefits or payments hereunder in any
manner whatsoever, without the prior written consent of the Committee, which may
be withheld in its sole discretion. If any Participant, Beneficiary or successor
in interest is adjudicated bankrupt or purports to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any distribution or payment from
the Plan, voluntarily or involuntarily, the Committee, in its discretion, may
cancel such distribution or payment (or any part thereof) to or for the benefit
of such Participant, Beneficiary or successor in interest in such manner as the
Committee shall direct.

8.3      Withholding.
         -----------

         There shall be deducted from each payment made under the Plan all taxes
which are required to be withheld by the Company in respect to such payment.

8.4      Amendment, Modification, Suspension or Termination.
         --------------------------------------------------

         (a) The Committee may amend, modify, suspend or terminate the Plan in
whole or in part, provided that (i) no amendment, modification, suspension or
termination shall have any retroactive effect that would directly or indirectly
reduce any amounts allocated to a Participant's Account or otherwise deprive any
Participant of any benefits already vested under the Plan; (ii) any amendment,
modification, suspension or termination of the Plan that will significantly
increase costs to the Company shall be approved by the Board; (iii) no
amendment, modification, suspension or termination of the Plan shall have the
effect of causing any Participant's Account to be distributed earlier than the
time contemplated by the Plan and the Participant's elections without the prior
written consent of the Participant; (iv) no amendment or modification shall
materially and adversely affect the interests of Participants without the prior
written consent of at least 75% of the Participants (such percentage to be
determined by the number of Participants and not by their percentage interest in
all Account balances); and (v) for a period of two years following a Change in
Control, the Plan may not be amended, modified, suspended or terminated without
the prior written consent of at least 75% of the Participants (such percentage
to be determined by the number of Participants and not by their percentage
interest in all Account balances).

         (b) Without limiting the generality of Section 8.4(a)(iv) above, any
amendment or modification which directly or indirectly has any of the following
effects shall be deemed to materially and adversely affect the interests of
Participants: (i) any amendment or modification to the defined term "Change in
Control" or any amendment or modification of the consequences

                                       18
<PAGE>

under the Plan resulting from a Change in Control; (ii) any amendment or
modification that would eliminate or reduce the Company's obligations under
Sections 3.2 or 3.3; (iii) any amendment or modification that would adversely
affect the timing or circumstances under which Participants may receive vested
benefits under the Plan; or (iv) any amendment or modification of this Section
8.4.

         (c) Notwithstanding clauses (iii) and (iv) of Section 8.4(a) above, the
Company shall have the right (i) to unilaterally amend, modify or suspend the
Plan in the event that the Company determines in good faith that such action is
required in order to maintain or qualify the Trust as a grantor trust under
Section 671 of the Code or to maintain or qualify the Plan as an unfunded plan
maintained primarily to provide deferred compensation for a select group of
management or highly compensated employees as described in Section 201(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), provided,
however, that the Company shall amend, modify or suspend the Plan in such manner
as will have the least onerous overall effect on the vested interests of the
Participants; and (ii) to unilaterally terminate the Plan in the event that the
Company determines in good faith that continued compliance with the Code and
ERISA, as generally contemplated in clause (i) above, is not practicable or, if
practicable, would have a material adverse effect on the Participants.

         (d) Notwithstanding anything to the contrary in this Section 8.4, the
Company may unilaterally amend the Plan at any time to cause the cessation of
deferrals of Compensation by the Participants in any future Plan Year or to
change the manner or terms of future deferrals in any such future Plan Year;
provided, however, that no such amendment under this Section 8.4(d) may be
effected for a period of two years following any Change in Control.

         (e) As a condition precedent to the effectiveness of any amendment,
modification, suspension or termination of this Plan, the Trustee and the
Committee shall have received a written opinion of counsel (which counsel and
which opinion shall be satisfactory to each) to the effect that such action is
being validly and properly effected in accordance with the requirements of this
Section 8.4.

         (f) In the event that this Plan is terminated in accordance with this
Section 8.4, the balance of each Participant's Account shall be distributed to
the Participant (or, in the event of the death of the Participant, to the
Participant's Beneficiary) in a lump sum payment as soon as administratively
feasible and in any event within 90 days of such termination.

8.5      Governing Law.
         -------------

         The Plan will be construed and governed in all respects in accordance
with applicable federal law and, to the extent not preempted by such federal
law, in accordance with the laws of the State of Texas, including without
limitation, the Texas statute of limitations, but without giving effect to the
principles of conflicts of laws of such State.

                                       19
<PAGE>

8.6      Receipt or Release.
         ------------------

         Any payment to a Participant or the Participant's Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee and the Company with
respect to the amount paid. The Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and
release to such effect.

8.7      Payments on Behalf of Persons Under Incapacity.
         ----------------------------------------------

         In the event that any amount becomes payable under the Plan to a person
who, in the sole judgment of the Committee, is considered by reason of physical
or mental condition to be unable to give a valid receipt therefor, the Committee
may direct that such payment be made to any person found by the Committee, in
its sole judgment, to have assumed the care of such person. Any payment made
pursuant to such determination shall, to the extent thereof, constitute a full
release and discharge of the Committee and the Company with respect to the
amount paid.

8.8      Successors and Assigns.
         ----------------------

         The Company may not assign its obligations under this Plan, whether by
contract, merger, operation of law or otherwise, unless the assignment is to an
assignee or successor entity (in either case, hereafter called a "Successor")
that has stockholders' equity or the closest equivalent thereto (as measured by
the most recent audited financial statements of such Successor) equal to or
greater than the stockholders' equity of the Company (as measured immediately
prior to the event that causes such entity to become a Successor to the
Company). The provisions of this Section 8.8 shall be binding upon each and
every Successor to the Company.

8.9      No Employment Rights.
         --------------------

         Participation in this Plan shall not confer upon any person any right
to be employed by the Company nor any other right not expressly provided
hereunder.

8.10     Headings, etc. Not Part of Agreement.
         ------------------------------------

         Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.

                                       20
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this document to be executed
by its duly authorized officer as of the 3rd day of January, 2000.

                               STERLING SOFTWARE, INC.

                               By:
                                   ------------------------------
                               Name:  Don J. McDermett, Jr.
                               Title: Senior Vice President and General Counsel

                                       21
<PAGE>

                                   EXHIBIT A

                          LN Money Market Fund, Inc.
                     Janus Apsen Series Balanced Portfolio
                            Maverick Fund USA, Ltd.
                           BT Equity 500 Index Fund
                          LN Equity-Income Fund, Ltd.
                  Fidelity VIP Growth Portfolio-Service Class
                           Baron Capital Asset Fund
                 Janus Aspen Series Worldwide Growth Portfolio<PAGE>

                                                                    EXHIBIT 10.2

                            STERLING SOFTWARE, INC.

        AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II
        --------------------------------------------------------------

                                   PREAMBLE
                                   --------

The purpose of this Amended and Restated Supplemental Executive Retirement Plan
II (this "Plan") is to continue the benefits accrued by Geno P. Tolari under the
Informatics General Corporation Supplemental Executive Retirement Plan II (the
"Previous Plan"). This Plan amends and supersedes, effective as of January 1,
1990, the Previous Plan in its entirety with respect to the Previous Plan
benefits of Geno P. Tolari.

                                   SECTION I
                                   ---------
                                  Definitions
                                  -----------

1.1      "Basic Plan Benefit" has the meaning set forth in Section 3.1.

1.2      "Change in Control" has the meaning set forth in Section 6.7.

1.3      "Code" means the Internal Revenue Code of 1986, as may be amended from
         time to time.

1.4      "Committee" means the Executive Committee of the Board of Directors of
         the Company (excluding, however, the Participant), which has been given
         authority by the Board of Directors to administer this Plan.

1.5      "Company" means Sterling Software, Inc.

1.6      "CPI" means the Consumer Price Index or appropriate equivalent index as
         determined by the Committee.

1.7      "Earnings" means base salary payable plus cash incentive compensation
         payable for a calendar year, but excluding all incentive cash
         compensation in excess of 50% of base salary in the calendar year in
         which such incentive awards are received by the Participant or, if the
         Participant elects to defer receipt of all or part of such incentive
         awards pursuant to the Company's Deferred Compensation Plan or
         otherwise, in the calendar year in which such incentive awards first
         would have been received by the Participant, averaged over the highest
         consecutive three years of Service. Notwithstanding any provision
         contained herein, the limitation for recognition of incentive cash
         compensation as "Earnings" contained in the previous sentence shall be
         applied to the Participant's base salary for his last full calendar
         year of Service in determining such limitation with respect to the
         Participant's incentive compensation for his last full calendar year of
         Service. Salary deferred by the election of the Participant pursuant to
         the Company's Deferred Compensation Plan or otherwise shall be included
         in Earnings in the calendar year for which such salary relates (i.e.,
         the year in which the related services are performed), cash incentive
         compensation so deferred shall be included in Earnings in the calendar
         year in
<PAGE>

         which, but for such deferral, such incentive compensation first would
         have been received, and deferred compensation (both salary and
         incentive compensation) that is included in Earnings pursuant to this
         sentence shall not be included in Earnings when it is later actually
         received by the Participant. For example, annual incentive cash
         compensation is earned in calendar year 1995 in the amount of $80,000
         and is paid in calendar year 1996. The $80,000 paid in 1996 is compared
         to a $120,000 1996 base salary. Since $80,000 is greater than $60,000
         (50% of 1996 base salary) only $60,000 of the award will be used
         towards Earnings for 1995 under the Plan. The Earnings for 1995 would
         be the same even if the Participant deferred receipt of all or a
         portion of the $80,000 or $120,000 until some time after 1996. "Monthly
         Earnings" means Earnings divided by twelve.

1.8      "Informatics Plan" means the Informatics General Corporation Retirement
         Plan, a terminated money purchase pension plan.

1.9      "Participant" means Geno P. Tolari.

1.10     "Plan" means the Sterling Software, Inc. Amended and Restated
         Supplemental Executive Retirement Plan II.

1.11     "Retirement" means the termination of the Participant's employment with
         the Company on one of the retirement dates specified in Section 2.1.

1.12     "Service" means the Participant's months of service from October 5,
         1970, his date of hire by Informatics General Corporation, to
         Retirement. Such service will include without duplication periods of
         employment with Informatics General Corporation; the Company; and any
         of their subsidiaries, affiliates, or successors. If the Participant
         becomes disabled and is receiving long-term disability benefits from
         the Company's Long-Term Disability Plan, such period shall be
         considered Service under this Plan.

1.13     "Severance Agreement" means either or both of the Severance Agreement
         dated November 15, 1999 and/or the Change in Control Severance
         Agreement dated November 15, 1999 (the latter agreement referred to
         herein as the "Change in Control Agreement"), both between the Company
         and the Participant, as well as any amendments made to such agreements.

1.14     "Surviving Spouse" means the Participant's spouse married to him for at
         least one year prior to the earlier of the Participant's death or
         Retirement.

1.15     The singular may include the plural, unless the context clearly
         indicates the contrary.

                                  SECTION II
                                  ----------
                           Eligibility for Benefits
                           ------------------------

2.1      Subject to Section IV of this Plan, the Participant is eligible to
         retire and receive a benefit under this Plan beginning on one of the
         following dates.

                                       2
<PAGE>

         (a)      "Normal Retirement Date," which is the first day of the month
                  following the month in which the Participant reaches age 65.

         (b)      "Early Retirement Date," which is the first day of any month
                  before the Normal Retirement Date or Disability Retirement
                  Date, following the month in which the Participant reaches age
                  55 and has 15 or more years of Service.

         (c)      "Postponed Retirement Date," with the Committee's consent,
                  which is the first day of the month following the
                  Participant's Normal Retirement Date in which the Participant
                  terminates employment with the Company.

         (d)      "Disability Retirement Date," which is the first day of the
                  month in which the Participant begins receiving a long-term
                  disability benefit from the Company's Long-Term Disability
                  Plan.

                                  SECTION III
                                  -----------
                               Amount of Benefit
                               -----------------

3.1      The monthly retirement benefit payable to the Participant if he retires
         at his Normal Retirement Date or his Postponed Retirement Date under
         the Plan will equal the lessor of (i) or (ii), where

         (i)      is equal to 1/6 of 1% times months of Service times Monthly
                  Earnings; and

         (ii)     is equal to 50% of Monthly Earnings less the Basic Plan
                  Benefit (as hereinafter defined).

         For purposes of the Plan, the term "Basic Plan Benefit" means the
         monthly annuity payment (as hereinafter determined), payable (x) in the
         form of a 50% joint and survivor annuity to the Participant if he has a
         Surviving Spouse at the Normal Retirement Date or Postponed Retirement
         Date; or (y) if the Participant does not have a Surviving Spouse at
         such time, in the form of a single life annuity, that could be provided
         by the accumulation with interest of 3% of Compensation for each
         calendar year of the Participant's Service beginning with the calendar
         year in which he first participated in the Informatics Plan and ending
         on the later of the Participant's Normal Retirement Date or his
         Postponed Retirement Date.

         For purposes of this Section, (1) the term "Applicable Rate" means an
         annual rate of interest equal to:

         (a)      for periods prior to January 1, 1990, the rate credited to
                  contributions under the Informatics Plan for such years, and

                                       3
<PAGE>

         (b)      for periods after December 31, 1989, the average rate of
                  return credited for each completed calendar year under the
                  fixed income investment option of the Sterling Software, Inc.
                  Savings and Security (401k) Plan with the highest quality
                  rating (excluding cash equivalents or money marked options).
                  The Applicable Rate for the calendar year in which retirement
                  occurs shall be the annual rate of interest on 30-year
                  Treasury securities for the month of November preceding such
                  calendar year.

         (2) the term "Compensation" means the Participant's taxable wages as
         reported on Form W-2 up to any limit under Section 401(a)(17) of the
         Code or any successor provision; and (3) all annuity amounts will be
         determined by using the annual rate of interest on 30-year Treasury
         securities for the month of November preceding the calendar year in
         which benefit payments begin and the applicable mortality table as
         prescribed by the Secretary of the Treasury under Section 417(e)(3) of
         the Code or any successor provision.

3.2      The monthly benefit payable to the Participant if he retires on an
         Early Retirement Date will equal the benefit determined in Section 3.1,
         except that the 50% multiplier described in Section 3.1(ii) will be
         multiplied by a fraction, the numerator of which is Service (as may be
         adjusted pursuant to Section 3.8 (a)) as of his Early Retirement Date
         and the denominator of which is his Service projected to his Normal
         Retirement Date. For example, if the Participant was 35 when hired and
         retired early at age 55, his annual benefit would be determined as the
         lesser of (i) or (ii), where

         (i)      is equal to 1/6 of 1% times months of Service at Early
                  Retirement Date times Monthly Earnings at Early Retirement
                  Date; and

         (ii)     is equal to 33-1/3% of Monthly Earnings less the Basic Plan
                  Benefit;

         where 33-1/3% is equal to 50% multiplied by the fraction 240/360; and
         where 240 is his Service to age 55 and 360 is the service he would have
         had if he had continued to work to age 65, his Normal Retirement Date.
         The monthly benefit determined under this Section 3.2 will become
         payable on the Participant's Normal Retirement Date. For purposes of
         determining the Basic Plan Benefit under this section, all amounts to
         be determined under paragraphs (a), (b) and (c) of Section 3.1 shall be
         determined as of the Participant's Early Retirement Date. At the
         Committee's discretion, or, following a Change in Control (as that term
         is defined below), at the Participant's election, payments may begin
         any time after the Participant's Early Retirement Date and prior to his
         Normal Retirement Date and such monthly benefit shall be actuarially
         reduced based on the interest and mortality assumptions contained in
         clause (3) of the last sentence of Section 3.1; and such monthly
         benefit shall be further reduced by 10% (which 10% shall be forfeited)
         if such payment commencement date is at the Participant's election and
         is less than six months following the date of such election.

                                       4
<PAGE>

3.3      The monthly benefit payable at a Postponed Retirement Date will be
         equal to the monthly benefit determined in accordance with Section 3.1
         based on Service, Earnings, and the Participant's Basic Plan Benefit,
         as of the Participant's Postponed Retirement Date.

3.4      If the Participant becomes disabled and if he receives long-term
         disability benefits from the Company's Long-Term Disability Plan, the
         monthly benefit payable at Normal Retirement Date to the Participant
         under this Plan will be equal to the monthly benefit determined in
         accordance with Section 3.1 based on Service to Normal Retirement Date
         and Earnings and the Participant's Basic Plan Benefit as of the
         Participant's date of disability.

3.5      The monthly benefit payable at a Disability Retirement Date will be
         equal to 66-2/3% of the Participant's Monthly Earnings as of his
         Disability Retirement Date, in excess of $7,500. Such benefit, payable
         monthly, shall commence on the date the Participant begins receiving a
         long-term disability benefit from the Company's Long-Term Disability
         Plan and will be payable as long as the Participant continues to
         receive a long-term disability benefit from such plan. Benefits from
         this Plan, payable as a result of a disability, will stop when benefits
         from the Long-Term Disability Plan cease. At age 65, benefits will
         commence in accordance with Section 3.4.

3.6      The benefits payable under the Plan, as determined in accordance with
         the appropriate preceding section of this Section III, except those
         determined in accordance with Section 3.5, will be payable in equal
         monthly installments, adjusted if appropriate as provided in Section
         3.7, during the Participant's lifetime with benefits ceasing upon the
         Participant's death; however, if, at the time of the Participant's
         death, he has a Surviving Spouse, such Surviving Spouse shall receive a
         benefit equal to 50% of the Participant's benefit as so adjusted,
         commencing on the first day of the month following the later of the
         month in which the surviving Spouse reaches age 55 or the month in
         which the Participant dies with such payments continuing to the death
         of the Surviving Spouse.

3.7      Any benefits payable hereunder, except those determined in Section 3.5,
         shall be adjusted upward annually, effective each March 1, beginning
         with the March 1 occurring at least 12 months after entitlement to
         benefit payments first occurs, to the extent that the CPI for the
         preceding calendar year exceeds a 5% increase from the next preceding
         calendar year. Any benefits payable hereunder shall be adjusted
         downward annually, effective each March 1, beginning with the March 1
         occurring at least 12 months after entitlement to benefit payments
         first occurs, to the extent that any decrease in the CPI for the
         preceding calendar year over the CPI for the next preceding calendar
         year exceeds 5%; provided, however, that, in no event shall the
         Participant's monthly benefit be less than the monthly benefit paid to
         him during the first month after entitlement to benefit payments first
         occurs.

3.8      To the extent that the Participant's employment is terminated in a
         manner that entitles him to severance benefits under the provisions of
         the Severance Agreement, (a) his benefit under this Plan shall be
         calculated by (i) giving the Participant credit as Service for the

                                       5
<PAGE>

         number of months for which the Participant is entitled to severance
         benefits pursuant to the terms of the Severance Agreement; (ii) deeming
         the date of his retirement to be the later date determined by adding to
         his actual retirement date the number of months for which the
         Participant is entitled to severance benefits pursuant to the terms of
         the Severance Agreement and (iii) deeming the Participant's Earnings
         with respect to each additional twelve month period referenced in
         subparagraph (i) above to equal the sum of base salary and incentive
         cash compensation, such components to be determined in the manner that
         Base Pay and Incentive Pay (as defined in the Change in Control
         Agreement), respectively, are determined under Section 4(a)(i) of the
         Change in Control Agreement, except that incentive cash compensation
         shall in no case exceed 50% of base salary for this purpose; and (b)
         any severance benefits to which the Participant is entitled pursuant to
         the terms of the Severance Agreement shall not be included in the
         calculation of "Earnings."

                                  SECTION IV
                                  ----------
                        Payment of Retirement Benefits
                        ------------------------------

4.1      Benefits payable in accordance with Section III, except Section 3.5,
         will commence on the Participant's Normal or Postponed Retirement Date
         or upon a date determined in accordance with Section 3.2. The last
         payment will be on the first day of the month in which the Participant
         dies unless he has a Surviving Spouse in accordance with Section 3.6.

                                   SECTION V
                                   ---------
                            Death Benefits Payable
                            ----------------------

5.1      If the Participant dies before Retirement, excluding Disability
         Retirement, his Surviving Spouse will receive a monthly benefit equal
         to 50% of the amount of the Participant's monthly benefit determined in
         accordance with Section 3.1 as if the Participant had retired and
         commenced receiving a benefit on the first day of the month following
         the date of his death.

5.2      A surviving Spouse's benefits will be payable monthly, and will
         commence on the first day of the month following the later of the month
         in which the Surviving Spouse reaches age 55 or the month in which the
         Participant dies. The last payment will be on the first day of the
         month in which the Surviving Spouse dies. Cost of living adjustments
         determined as described in Section 3.7 will apply to a Surviving
         Spouse's benefits.

                                  SECTION VI
                                  ----------
                                 Miscellaneous
                                 -------------

6.1      Nothing contained herein will confer upon the Participant the right to
         be retained in the service of the Company, nor will it interfere with
         the right of the Company to discharge or otherwise deal with the
         Participant without regard to the existence of this Plan.

                                       6
<PAGE>

6.2      This Plan is unfunded, and the Company will make Plan benefit payments
         solely on a current disbursement basis.

6.3      To the maximum extent permitted by law, no benefit under this Plan
         shall be assignable or subject in any manner to alienation, sale,
         transfer, claims of creditors, pledge, attachment, or encumbrance of
         any kind.

6.4      The Committee may adopt rules and regulations to assist it in the
         administration of the Plan.

6.5      The Participant shall receive a copy of this Plan.

6.6      The Plan will be construed and governed in all respects in accordance
         with applicable federal law and, to the extent not preempted by such
         federal law, in accordance with the laws of the State of Texas,
         including without limitation, the Texas statute of limitations, but
         without giving effect to the principles of conflicts of laws of such
         State.

6.7      Subject to the following provisions of this Section 6.7, this Plan may
         be terminated or from time to time amended by the Committee in its
         discretion. Notwithstanding the preceding sentence or any other
         provision herein to the contrary, (a) this Plan may not be terminated
         or amended if such termination or amendment would reduce or adversely
         affect benefits previously accrued hereunder, and (b) from and after
         the date of a Change in Control, this Plan may not be terminated or
         amended in any manner that could reasonably be expected to have an
         adverse effect on the Participant or his Surviving Spouse, without the
         prior written consent of the Participant or such Surviving Spouse. As
         used herein, the term "Change in Control" shall mean the occurrence of
         any of the following events:

                           (i)   The Company is merged, consolidated or
            reorganized into or with another corporation or other legal person,
            and as a result of such merger, consolidation or reorganization less
            than two-thirds of the combined voting power of the then-outstanding
            securities entitled to vote generally in the election of directors
            ("Voting Stock") of such corporation or person immediately after
            such transaction are held in the aggregate by the holders of Voting
            Stock of the Company immediately prior to such transaction;

                           (ii)  The Company sells or otherwise transfers all or
            substantially all of its assets to another corporation or other
            legal person, and less than two-thirds of the combined voting power
            of the then-outstanding Voting Stock of such corporation or person
            is held in the aggregate by the holders of Voting Stock of the
            Company immediately prior to such sale or transfer;

                           (iii) There is a report filed on Schedule 13D or
            Schedule 14D-1 (or any successor schedule, form or report), each as
            promulgated pursuant to the Securities Exchange Act of 1934, as
            amended (the "Exchange Act"), disclosing that any person (as the
            term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the
            Exchange Act) has become the beneficial owner (as the term
            "beneficial owner" is defined under Rule 13d-3 or any

                                       7
<PAGE>

                  successor rule or regulation promulgated under the Exchange
                  Act) of securities representing 20% or more of the combined
                  voting power of the then-outstanding Voting Stock of the
                  Company;

                        (iv) The Company files a report or proxy statement
                  with the Securities and Exchange Commission pursuant to the
                  Exchange Act disclosing in response to Form 8-K or Schedule
                  14A (or any successor schedule, form or report or item
                  therein) that a change in control of the Company has occurred
                  or will occur in the future pursuant to any then-existing
                  contract or transaction; or

                        (v) If, at any time during any period of two
                  consecutive years, individuals who at the beginning of any
                  such period constitute the directors of the Company cease for
                  any reason to constitute at least a majority thereof;
                  provided, however, that for purposes of this clause (v) each
                  director (other than a director whose initial assumption of
                  office is in connection with an actual or threatened election
                  contest) who is first elected, or first nominated for election
                  by the Company's stockholders, by a vote of at least
                  two-thirds of the directors of the Company (or a committee
                  thereof) then still in office who were directors of the
                  Company at the beginning of any such period will be deemed to
                  have been a director of the Company at the beginning of such
                  period.

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

                                          STERLING SOFTWARE, INC.

                                          By:  /s/ Don J. McDermett, Jr.
                                              ---------------------------
                                                Don J. McDermett, Jr.
                                                Senior Vice President & General
                                                Counsel

                                       8

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