Document:

EX-10.1

 

Exhibit 10.1

November 22, 2004

John A. Swainson
     32
Main Street,
          Ridgefield,
CT 06877

          Re: Employment Agreement

Dear John:

     This is your Employment Agreement (the “Agreement”) with Computer
Associates International, Inc., a Delaware corporation (the “Company”). It
sets forth the terms of your employment with the Company and its affiliates
from time to time (together, the “Group”).

1. Your Position, Performance and Other Activities

     (a) Position. You will be employed in the position of President of the
Company. It is anticipated that you will be employed in the position of Chief
Executive Officer of the Company within six (6) months of your Start Date (as
defined in Section 2). You will be appointed to the Company’s Board of
Directors (the “Board”) as of your Start Date (as defined in Section 2) and the
Company will use all reasonable efforts to cause you to be nominated for
re-election each time your term expires during your employment. You agree to
serve as a member of the Board, as well as a member of any Board committee to
which you may be elected or appointed. You also agree that you will be deemed
to have resigned from the Board and each Board committee voluntarily, without
any further action by you, as of the end of your employment.

     (b) Authority, Responsibilities and Reporting. You will have the
authority, responsibilities and reporting relationships that correspond to your
position, including any particular authority, responsibilities and reporting
relationships consistent with your position that the Board may assign to you
from time to time and compliance with such policies of the Company as may be
adopted from time to time.

 

 

     (c) Performance. During your employment, you will devote substantially
all of your business time and attention to the Group and will use good faith
efforts to discharge your responsibilities under this Agreement to the best of
your ability. During your employment, your place of performance will be
Islandia, New York or such other place as the Board determines.

     (d) Other Activities. During your employment, you will not render any
business, commercial or professional services to any non-member of the Group.
However, you may (1) serve on corporate, civic or charitable boards, (2) manage
personal investments, or (3) deliver lectures, or fulfill speaking engagements
or teach at educational institutions, so long as (A) these activities do not
interfere with your performance of your responsibilities under this Agreement
and (B) any service on a corporate, civic or charitable board is approved by
the Board.

2. Term of Your Employment

Subject to your satisfactory completion of pre- and post-employment background,
reference and other checks, your employment under this Agreement will (a) begin
on November 22, 2004 (the “Start Date” of this Agreement) and (b) end at the
close of business on the earlier of (1) the end of the Compensation Period or
(2) the effective date of early termination of your employment. Your
“Compensation Period” begins on your Start Date and is initially scheduled to
end on the fifth anniversary of your Start Date. Beginning on the fifth
anniversary of your Start Date and on each following anniversary, your
Compensation Period will automatically extend for one year unless either you or
the Company gives at least 90 days’ prior notice of non-extension. In no
event, however, will your Compensation Period extend beyond the end of the
Company’s fiscal year in which your 65th birthday occurs. References in this
Agreement to “your employment” are to your employment under this Agreement.

3. Your Compensation

     (a) Salary. During your employment, you will receive an annual base
salary (as increased from time to time, your “Salary”). The starting amount of
your Salary is $1,000,000. The Company will review your Salary at least
annually and may increase it at any time for any reason. However, your Salary
may not be decreased at any time (including after any increase) without your
written consent and any increase in your Salary will not reduce or limit any
other obligation to you under this Agreement. Your Salary will be paid in
accordance with the Group’s normal practices for senior executives.

     (b) Bonus. You will be eligible to receive an annual cash bonus (your
“Bonus”) for each fiscal year of the Company ending during your employment.
The target level for your Bonus in each full fiscal year of your employment will be at
least 100% of your Salary (the “Target Annual Bonus”) and the maximum level for
your Bonus will be 200% of your Salary. You will be entitled to a minimum
Bonus of $333,334 for the Company’s fiscal year ending March 31, 2005. Your
Bonus will be paid at the same time as such bonuses are paid to other senior
executives of the Company.

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     (c) Long-Term Incentive Awards. You will be eligible to receive long-term
incentive awards (“Long-Term Incentive Awards”) as determined by the Company in
accordance with the Company’s Long-Term Incentive Plan (and any successor plan)
in which you will begin to participate for the performance period starting
April 1, 2005. The target award level under the Company’s Long-Term Incentive
Plan initially will be 2.5 times your Salary. The maximum award level under
the Company’s Long-Term Incentive Plan initially will be 3.75 times your
Salary.

     (d) Initial Incentive Awards. (1) In addition to your Salary and Bonus,
on your Start Date you will be awarded (A) stock options to purchase 350,000
shares of the Company’s common stock (your “Sign-On
Options”) and (B) 100,000
restricted shares of the Company’s common stock (your “Sign-On Stock”).

     (2) Your Sign-On Options will be granted under the Company’s 2002
Incentive Plan and will have an exercise price equal to the Start Date
Closing Price. Your Sign-On Options will vest 34%, 33% and 33% on the
first, second and third anniversaries of the Start Date.

     (3) Your Sign-On Stock will be granted under the Company’s 2002
Incentive Plan. Initially, your Sign-On Stock may not be transferred
or assigned and will be forfeited to the Company for zero (0)
consideration if your employment with the Company is terminated for any
reason prior to vesting. Your Sign-On Stock will vest in equal
installments on each of the first three one-year anniversaries of your
Start Date (such restricted stock is “vested” when it is no longer
subject to such transfer restrictions and forfeiture provisions).

     (4) Except as provided in this Agreement, your Sign-On Options and
Sign-On Stock will be subject to the terms of the Company’s 2002
Incentive Plan and to the terms of your award agreement under it (which
will contain the Group’s normal provisions for senior executives).

     (e) Relocation Benefit. In accordance with the Company’s Relocation
Policy, you will be eligible to be reimbursed for your reasonable costs
incurred in connection with your relocation to the Company’s headquarters in
Islandia, New York. In addition, you shall receive up to 12 months of
temporary corporate housing in accordance with Company policy.

     (f) Restricted Stock Units. In addition to your Sign-On Stock, on your
Start Date you will be awarded restricted stock units with respect to 100,000
shares of the Company’s common stock (your “RSUs”). Your RSUs will be granted under the Company’s 2002 Incentive Plan. Your RSUs may not be transferred
or assigned until six (6) months after the date on which your employment with
the Group terminates for any reason. Six (6) months after your date of
termination, your RSUs will fully vest, be transferable and be paid to you.
You will also receive dividend equivalent rights entitling you to be paid, at
the same time as other shareholders of the Company, any dividends declared and
paid in respect of the 100,000 shares of the Company’s common stock underlying
your RSUs.

     (g) Signing Bonus. Within 30 days of your Start Date, you will receive a
signing bonus equal to $2.5 million in cash. Additionally, you will receive
the

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present value of $2.8 million, the form and manner of such payment to be
agreed by you and the Company; provided, however, if you and the Company fail
to agree on a form and manner of this payment within 60 days of the Start Date,
the Company has the right to make the $2.8 million payment in cash.

4. Other Employee Benefits

     (a) Vacation. You will be entitled to paid annual vacation during your
employment (totaling at least four (4) weeks a year) on a basis that is at
least as favorable as that provided to other senior executives of the Group.

     (b) Business Expenses. You will be reimbursed for all business and
entertainment expenses incurred by you in performing your responsibilities
under this Agreement. However, your reimbursement will be subject to the
Group’s normal practices for senior executives.

     (c) Facilities. During your employment, you will be provided with office
space, facilities, secretarial support and other business services consistent
with your position on a basis that is at least as favorable as that provided to
other senior executives of the Group.

     (d) Indemnification. To the extent permitted by law, the Company will
indemnify you against any actual or threatened action, suit or proceeding,
whether civil, criminal, administrative or investigative, arising by reason of
your status as a director, officer, employee and/or agent of the Group during
your employment. In addition, to the extent permitted by law, the Company will
pay or reimburse any expenses, including reasonable attorney’s fees, you incur
in investigating and defending any actual or threatened action, suit or
proceeding for which you may be entitled to indemnification under this Section
4(d). However, you agree to repay any expenses paid or reimbursed by the
Company if it is ultimately determined that you are not legally entitled to be
indemnified by the Company. If the Company’s ability to make any payment
contemplated by this Section 4(d) depends on an investigation or determination
by the board of directors of any member of the Group, at your request the Company will use its best efforts to cause the investigation
to be made (at the Company’s expense) and to have the relevant board reach a
determination as soon as reasonably possible. This indemnification will be at
least as favorable as that provided to other senior executives and directors of
the Group.

     (e) Employee Benefit Plans. During your employment, you will be eligible
to participate in the Group’s employee benefit and welfare plans, including
plans providing retirement benefits, medical, dental, hospitalization, life or
disability insurance, on a basis that is at least as favorable as that provided
to other senior executives of the Group.

5. Early Termination of Your Employment

     (a) No Reason Required. You or the Company may terminate your employment
early at any time for any reason, or for no reason, subject to compliance with
Section 5(e).

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     (b) Termination by the Company for Cause.

     (1) “Cause” means any of the following:

     (A) Your continued failure, either due to willful action or
as a result of gross neglect, to substantially perform your duties
and responsibilities to the Group under this Agreement (other than
any such failure resulting from your incapacity due to physical or
mental illness) that, if capable of being cured, has not been
cured within thirty (30) days after written notice is delivered to
you by the Board, which notice specifies in reasonable detail the
manner in which the Company believes you have not substantially
performed your duties and responsibilities.

     (B) Your engagement in conduct which is demonstrably and
materially injurious to the Group, or that materially harms the
reputation or financial position of the Group, unless the conduct
in question was undertaken in good faith on an informed basis with
due care and with a rational business purpose and based upon the
honest belief that such conduct was in the best interest of the
Group.

     (C) Your indictment or conviction of, or plea of guilty or
nolo contendere to, a felony or any other crime involving
dishonesty, fraud or moral turpitude.

     (D) Your being found liable in any SEC or other civil or
criminal securities law action or entering any cease and desist
order with respect to such action (regardless of whether or not
you admit or deny liability).

     (E) Your breach of your fiduciary duties to the Group which
may reasonably be expected to have a material adverse effect on
the Group. However, to the extent the breach is curable, the
Company must give you notice and a reasonable opportunity to cure.

     (F) Your (i) obstructing or impeding, (ii) endeavoring to
influence, obstruct or impede or (iii) failing to materially
cooperate with, any investigation authorized by the Board or any
governmental or self-regulatory entity (an “Investigation”).
However, your failure to waive attorney-client privilege relating
to communications with your own attorney in connection with an
Investigation shall not constitute “Cause”.

     (G) Your removing, concealing, destroying, purposely
withholding, altering or by any other means falsifying any
material which is requested in connection with an Investigation.

     (H) Your disqualification or bar by any governmental or
self-regulatory authority from serving in the capacity
contemplated by this Agreement or your loss of any governmental or
self-regulatory license that is reasonably necessary for you to
perform your responsibilities to the Group under this Agreement,
if (i) the

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disqualification, bar or loss continues for more than 30 days and (ii) during that period the Group uses its good faith efforts
to cause the disqualification or bar to be lifted or the license
replaced. While any disqualification, bar or loss continues
during your employment, you will serve in the capacity
contemplated by this Agreement to whatever extent legally
permissible and, if your employment is not permissible, you will
be placed on leave (which will be paid to the extent legally
permissible).

     (I) Your unauthorized use or disclosure of confidential or
proprietary information, or related materials, or the violation of
any of the terms of the Company’s standard confidentiality
policies and procedures, in the case of any item identified in
this clause (I) which may reasonably be expected to have a
material adverse effect on the Group and that, if capable of being
cured, has not been cured within thirty (30) days after written
notice is delivered to you by the Company, which notice specifies
in reasonable detail the alleged unauthorized use or disclosure or
violation.

     (J) Your violation of the Group’s (i) Workplace Violence
Policy or (ii) policies on discrimination, unlawful harassment or
substance abuse.

For this definition, no act or omission by you will be “willful”
unless it is made by you in bad faith or without a reasonable belief
that your act or omission was in the best interests of the Group.

     (2) To terminate your employment “for Cause”, the Board must
determine in good faith that Cause has occurred, the Company must
comply with Section 5(e) and the Company must deliver to you a copy of
a resolution duly adopted by a majority of the entire Board (excluding
you) at a meeting of the Board called and held for such purpose (after reasonable notice to you and a reasonable opportunity for you and
your counsel to be heard) that finds that in the good faith opinion of
the Board, Cause has occurred and states the basis for that belief.

     (c) Termination by You for Good Reason.

     (1) “Good Reason” means any of the following:

     (A) Any material and adverse change in your position with the
Group (including by reason of the Company’s failure to cause you
to be nominated to the Board).

     (B) Any failure by the Company to provide you with authority,
responsibilities and reporting relationships as provided in
Section 1(b) or any material and adverse reduction in your
authority, responsibility or reporting relationships or the
assignment of any duties inconsistent in any material respect with
your position, authority, duties or responsibilities, in each case
other than any isolated, insubstantial and inadvertent failure by
the Company that is

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not in bad faith and is cured promptly on your giving the Company notice.

     (C) Any reduction by the Company in your Salary or Target
Annual Bonus, other than any such reduction agreed to by you in
writing or any insubstantial or inadvertent reduction by the
Company that is cured promptly on your giving the Company notice.

     (D) Any failure by the Company to comply with Section 3,
other than any isolated, insubstantial and inadvertent failure by
the Company that is not in bad faith and is cured promptly on your
giving the Company notice.

     (E) Any purported termination by the Company of your
employment that is in breach of this Agreement.

     (F) Any failure by the Company to comply with Section 11(c).

     (2) The Company’s placing you on paid leave for up to 90
consecutive days while it is determining whether there is a basis to
terminate your employment for Cause will not constitute Good Reason.

     (3) To terminate your employment “for Good Reason”, Good Reason
must have occurred and you must comply with Section 5(e). However, (A)
if you do not give a Termination Notice within 90 days after you have
knowledge that an event constituting Good Reason has occurred, the
event will no longer constitute Good Reason and (B) you must give the
Company notice and a 30-day period to cure the event constituting Good
Reason under Section 5(c)(1).

     (d) Termination on Disability or Death.

     (1) The term “Disability” means your absence from your
responsibilities with the Company on a full-time basis for 180 business
days in any consecutive 12 months as a result of incapacity due to
mental or physical illness or injury. If a doctor mutually acceptable
to you and the Company determines in good faith that your Disability
has occurred, the Company may give you Termination Notice. If within
30 days of the Termination Notice you do not return to full-time
performance of your responsibilities, your employment will terminate.
If you do return to full-time performance in that 30-day period, the
Termination Notice will be cancelled for all purposes of this
Agreement. Except as provided in this Section 5(d), your incapacity
due to mental or physical illness or injury will not affect the
Company’s obligations under this Agreement.

     (2) Your employment will terminate automatically on your death.
If you die before your employment starts, all the provisions of this
Agreement will also terminate and there will be no liability of any
kind under this Agreement.

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     (e) Advance Notice Generally Required.

     (1) To terminate your employment before the end of your
Compensation Period, either you or the Company must provide a
Termination Notice to the other. A “Termination Notice” is a written
notice that states the specific provision of this Agreement on which
termination is based, including, if applicable, the specific clause of
the definition of Cause or Good Reason and a reasonably detailed
description of the facts that permit termination under that clause.
(The failure to include any fact in a Termination Notice that
contributes to a showing of Cause or Good Reason does not preclude
either party from asserting that fact in enforcing its rights under
this Agreement.)

     (2) You and the Company agree to provide 90 days’ advance
Termination Notice of any early termination, unless your employment is
terminated by the Company for Cause or because of your Disability or
death. Accordingly, the effective date of early termination of your
employment will be 90 days after Termination Notice is given except
that (A) the effective date will be the date of the Company’s
Termination Notice if your employment is terminated by the Company for
Cause, although the Company may provide a later effective date in the
Termination Notice, (B) the effective date will be 30 days after Termination Notice is
given if your employment is terminated because of your Disability, and
(C) the effective date will be the time of your death if your
employment is terminated because of your death. The Company may elect
to place you on paid leave for all or part of the advance notice
period.

6. The Company’s Obligations in Connection With Your Termination

     (a) General Effect. On termination in accordance with Sections 2 and 5, your employment will
end and the Group will have no further obligations to you except as provided in
this Section 6.

     (b) With Good Reason or Without Cause. If, during your Compensation Period,
the Company terminates your employment without Cause or you terminate your
employment for Good Reason:

     (1) The Company will pay you the following as of the end of your
employment: (A) your unpaid Salary through the date of termination,
(B) your Salary for any accrued but unused vacation, (C) any accrued
expense reimbursements and other cash entitlements, (D) any unpaid but
awarded Bonus and (E) any unpaid compensation deferred by you (together
with any interest and/or earnings through the end of your employment)
other than pursuant to a tax-qualified plan (together, your “Accrued
Compensation”). In addition, the Company will timely pay you any
amounts and provide to you any benefits that are required, or to which
you are entitled, under any plan, contract or arrangement of the Group
(together, the “Other Benefits”).

     (2) The Company will pay you your Accrued Bonus. Your “Accrued
Bonus” means, to the extent not previously awarded or paid, your Target

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Annual Bonus for the fiscal year in which the Termination Notice is
given multiplied by the number of days of your employment since the
fiscal year ending before Termination Notice is given divided by 365.

     (3) The Company will pay you ratably over 24 months an amount
equal to two (2) times the sum of your (A) then current Salary and (B)
average Bonus earned over the three (3) most recently completed fiscal
years (or, if you have worked less than three (3) fiscal years, the
number of fiscal years worked) prior to the date of termination, but in
no event will this bonus amount be greater than your Target Annual
Bonus for the fiscal year in which the Termination Notice is given.
For purposes of calculating your Bonus for the Company’s 2005 fiscal
year, your Bonus will be annualized.

     (4) The unvested stock options issued by the Group to you, that,
absent the end of your employment, would have vested in the 24-month
period following your termination, will immediately vest and become
exercisable. The restricted stock and other equity-based compensation
(excluding any Long-Term Incentive Awards not yet granted for any then
outstanding performance cycles) awarded by the Group to you, that,
absent the end of your employment, would have vested in the 24-month
period following your termination, will vest and become immediately
payable.

     (5) The Company will pay you a lump-sum payment equal to your
continuation coverage cost under COBRA for 18 months. The payments in
this Section 6(b)(5) are referred to as your “Welfare Benefits”.

     (c) Company Non-Renewal of Compensation Period. If the Company elects not
to renew your Compensation Period in accordance with Section 2:

     (1) The Company will pay you your Accrued Compensation, Accrued
Bonus and your Other Benefits.

     (2) The unvested stock options issued by the Group to you, that,
absent the end of your employment, would have vested in the 12-month
period following your termination will immediately vest and become
exercisable. The restricted stock and other equity-based compensation
(excluding any Long-Term Incentive Awards not yet granted for any then
outstanding performance cycles) awarded by the Group to you, that,
absent the end of your employment, would have vested in the 12-month
period following your termination will vest and become immediately
payable. The benefits in this Section 6(c)(2) are referred to as your
“Accelerated Equity Vesting.”

     (3) The Company will pay you ratably over 12 months an amount
equal to one (1) times your then current Salary.

     (4) The Company will pay you a lump-sum payment equal to your
continuation coverage cost under COBRA for 12 months.

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     (d) For Cause or without Good Reason. If the Company terminates your
employment for Cause or you terminate your employment without Good Reason, the
Company will pay your Accrued Compensation and provide your Other Benefits.

     (e) For Your Disability or Death. If, during the Compensation Period,
your employment terminates as a result of your death or Disability, the Company
will pay your Accrued Compensation and Accrued Bonus and will provide
Accelerated Equity Vesting and your Other Benefits and Welfare Benefits.

     (f) Change in Control. If there is a “Change in Control”, as defined in
the Company’s Change in Control Severance Policy (the “CIC Severance Policy”),
and you are entitled to the payments and benefits provided in the CIC Severance
Policy they will reduce (but not below zero) the corresponding payment or
benefit provided under this Agreement. It is the intent of this provision to
pay or to provide to you the greater of the two payments or benefits but not to
duplicate them. The equity awards granted in this Agreement shall have the
benefit of the potential accelerated vesting contained in the Company’s 2002
Incentive Plan as in effect on the Start Date. Under the terms of the CIC
Severance Policy you will be considered a Schedule A participant. If the CIC
Severance Policy were to be changed during your Compensation Period, the
Company will establish change in control terms applicable to you on a basis no less favorable to you than as are set
forth in the CIC Severance Policy on the Start Date.

     (g) Condition. The Company will not be required to make the payments and
provide the benefits stated in this Section 6 unless you execute and deliver to
the Company an agreement releasing from all liability (other than the payments
and benefits contemplated by this Agreement) each member of the Group and any
of their respective past or present officers, directors, employees or agents.
This agreement will be in the form normally used by the Group senior executives
at the time.

     (h) Timing. The benefits provided in this Section 6 will begin at the end
of your employment, and unless otherwise specified, any cash payments owed you
under this Section 6 will be paid in a lump sum within 30 days following your
date of termination.

7. Proprietary Information

     (a) Definition.
“Proprietary Information” means confidential or
proprietary information, knowledge or data concerning (1) the Group’s
businesses, strategies, operations, financial affairs, organizational matters,
personnel matters, budgets, business plans, marketing plans, studies, policies,
procedures, products, ideas, processes, software systems, trade secrets and
technical know-how, (2) any other matter relating to the Group and (3) any
matter relating to clients of the Group or other third parties having
relationships with the Group. Proprietary Information includes (1) information
regarding any aspect of your tenure as an employee of the Group or the
termination of your employment, (2) the names, addresses, and phone numbers and
other information concerning clients and prospective clients of the Group, (3)
investment techniques and trading strategies used in, and the performance
records of, client accounts or other investment products, and (4) information and materials concerning the personal affairs of employees
of the

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Group. In addition, Proprietary Information may include information
furnished to you orally or in writing (whatever the form or storage medium) or
gathered by inspection, in each case before or after the date of this
Agreement. However, Proprietary Information does not include information (1)
that was or becomes generally available to the public, other than as a result
of a disclosure by you, directly or indirectly, or as a result of the violation
by a third party of the Group’s confidentiality rights, or (2) that you can
establish was independently developed by you without reference to any
Proprietary Information.

     (b) Use and Disclosure. You will obtain or create Proprietary Information
in the course of your involvement in the Group’s activities and may already
have Proprietary Information. You agree that the Proprietary Information is
the exclusive property of the Group, and that, during your employment, you will
use and disclose Proprietary Information only for the Group’s benefit and in accordance with any
restrictions placed on its use or disclosure by the Group. After your
employment, you will not use or disclose any Proprietary Information. In
addition, nothing in this Agreement will operate to weaken or waive any rights
that the Group may have under statutory or common law, or any other agreement,
to the protection of trade secrets, confidential business information and other
confidential information.

     (c) Limitations. Nothing in this Agreement prohibits you from providing
truthful testimony or information concerning the Group to governmental,
regulatory or self-regulatory authorities. Also, the parties (and their
respective employees, representatives and agents) may disclose to any and all
persons, without any limitation of any kind, the tax treatment and tax
structure of this Agreement and all materials of any kind (including opinions
and other tax analysis) that are provided to either party related to such tax
treatment and structure.

8. Ongoing Restrictions on Your Activities

     (a) General Effect. This Section 8 applies during your employment and for
the 12-month period after your employment ends. This Section uses the
following defined terms:

     “Competitive Enterprise” means any business enterprise that
either (1) engages in any material activity that competes anywhere
with any material activity in which the Group is then engaged or (2)
holds a 5% or greater equity, voting or profit participation interest
in any enterprise that engages in such a competitive activity.

     “Client” means any client or prospective client of the Group to
whom you provided services, or for whom you transacted business, or
whose identity became known to you in connection with your
relationship with or employment by the Group.

     “Solicit” means any direct or indirect communication of any kind,
regardless of who initiates it, that in any way invites, advises,
encourages or requests any person to take or refrain from taking any
action. A general employment advertisement by an entity of which you
are a part is excluded from the definition of Solicit.

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     (b) Your Importance to the Group and the Effect of this Section 8. You
acknowledge that:

     (1) In the course of your involvement in the Group’s activities,
you will have access to Proprietary Information and the Group’s client
base and will profit from the goodwill associated with the Group. On
the other hand, in view of your access to Proprietary Information and
your importance to the Group, if you compete with the Group for some
time after your employment, the Group will likely suffer significant
harm. In return for the benefits you will receive from the Group and to
induce the Group to enter into this Agreement, and in light of the
potential harm you could cause the Group, you agree to the provisions
of this Section 8. The Company would not have entered into this
Agreement if you did not agree to this Section 8.

     (2) In light of Section 8(b)(1), if you breach any provision of
this Section 8, the loss to the Company would be material but the
amount of loss would be uncertain and not readily ascertainable.

     (3) This Section 8 limits your ability to earn a livelihood in a
Competitive Enterprise and your relationships with Clients. You
acknowledge, however, that complying with this Section 8 will not
result in severe economic hardship for you or your family.

(c) Your Payment Obligations. If you fail to comply with this
Section 8 during the Compensation Period and for a 12-month period
thereafter, other than any isolated, insubstantial and inadvertent
failure that is not in bad faith, you will forfeit all (i) remaining
payments owed to you under Section 6 and (ii) restricted stock and
other equity-based compensation (without features similar to exercise)
that have been awarded by the Group and not vested at the time of
determination.

     (d) Non-Competition. During your Compensation Period and for a 12-month
period after termination of your employment, you will not directly or
indirectly:

     (1) hold a 10% or greater equity, voting or profit participation
interest in a Competitive Enterprise; or

     (2) associate (including as a director, officer, employee,
partner, consultant, agent or advisor) with a Competitive Enterprise
and in connection with your association engage, or directly or
indirectly manage or supervise personnel engaged, in any activity:

     (A) that is substantially related to any activity that you
were engaged in,

     (B) that is substantially related to any activity for which
you had direct or indirect managerial or supervisory
responsibility, or

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     (C) that calls for the application of specialized knowledge
or skills substantially related to those used by you in your
activities;

in each case, for the Group at any time during the year before the
end of your employment (or, if earlier, the year before the date of
determination).

     (e) Non-Solicitation of Clients.
During your Compensation Period and for a 12-month period after
termination of your employment, you will not attempt to:

     (1) Solicit any Client to transact business with a Competitive
Enterprise or to reduce or refrain from doing any business with the
Group (excluding any business that is not a material activity of the
Group),

     (2) transact business with any Client that would cause you to be a
Competitive Enterprise or that would cause any Client to reduce or
refrain from doing any business with the Group, or

     (3) interfere with or damage any relationship between the Group
and a Client.

     (f) Non-Solicitation of Group Employees. During your Compensation Period
and for a 12-month period after termination of your employment, you will not
attempt to Solicit anyone who is then an employee of the Group (or who was an
employee of the group within the prior three (3) months) to resign from the
Group or to apply for or accept employment with any Competitive Enterprise,
except that you may Solicit your administrative assistant.

     (g) Notice to New Employers. Before you either apply for or accept
employment with any other person or entity while any of Section 8(d), (e) or
(f) is in effect, you will provide the prospective employer with written notice
of the provisions of this Section 8 and will deliver a copy of the notice to
the Group.

9. No Public Statements or Disparagement

You agree that you will not make any public statement that would libel, slander
or disparage any member of the Group or any of their respective past or present
officers, directors, employees or agents. This Section 9 is subject to Section
7(c).

10. Effect on Other Agreements; Entire Agreement

This Agreement is the entire agreement between you and the Company with respect
to the relationship contemplated by this Agreement and supersedes any earlier
agreement, written or oral, with respect to the subject matter of this
Agreement. In entering into this Agreement, no party has relied on or made any
representation, warranty, inducement, promise or understanding that is not in
this Agreement. You hereby acknowledge that you are not subject to any
obligation which would in any way restrict the performance of your duties
hereunder.

13

 

11. Successors

     (a) Payments on Your Death.
If you die and any amounts become payable under this Agreement, we will
pay those amounts to your estate.

     (b) Assignment by You. You may not assign this Agreement without the
Company’s consent. Also, except as required by law, your right to receive
payments or benefits under this Agreement may not be subject to execution,
attachment, levy or similar process. Any attempt to effect any of the
preceding in violation of this Section 11(b), whether voluntary or involuntary,
will be void.

     (c) Assumption by any Surviving Company. Before the effectiveness of any
merger, consolidation, statutory share exchange or similar transaction
(including an exchange offer combined with a merger or consolidation) involving
the Company (a “Reorganization”) or any sale, lease or other disposition
(including by way of a series of transactions or by way of merger,
consolidation, stock sale or similar transaction involving one or more
subsidiaries) of all or substantially all of the Company’s consolidated assets
(a “Sale”), the Company will cause (1) the Surviving Company to unconditionally
assume this Agreement in writing and (2) a copy of the assumption to be
provided to you. After the Reorganization or Sale, the Surviving Company will
be treated for all purposes as the Company under this Agreement. The
“Surviving Company” means (i) in a Reorganization, the entity resulting from
the Reorganization or (ii) in a Sale, the entity that has acquired all or
substantially all of the assets of the Company.

12. Disputes

     (a) Employment Matter. This Section 12 applies to any controversy or
claim between you and the Group arising out of or relating to or concerning
this Agreement or any aspect of your employment with the Group or the Seller or
the termination of that employment (together, an “Employment Matter”).

     (b) Mandatory Arbitration. Subject to the provisions of this Section 12,
any Employment Matter will be finally settled by arbitration in the County of
New York administered by the American Arbitration Association under its
Commercial Arbitration Rules then in effect. However, the rules will be
modified in the following ways: (1) the decision must not be a compromise but
must be the adoption of the submission by one of the parties, (2) each
arbitrator will agree to treat as confidential evidence and other information
presented to the same extent as the information is required to be kept
confidential under Section 7, (3) there will be no authority to amend or modify
the terms of this Agreement except as provided in Section 13(c) (and you and
the Group agree not to request any such amendment or modification), (4) a
decision must be rendered within 10 business days of the parties’ closing
statements or submission of post-hearing briefs and
(5) the arbitration will be conducted before a panel of three arbitrators,
one selected
by you within 10 days of the commencement of arbitration, one selected by
the Company in the same period and the third selected jointly by these
arbitrators (or, if they are unable to agree on an arbitrator within 30 days of
the commencement of arbitration, the third arbitrator will be appointed by the
American Arbitration Association; provided that the arbitrator shall be a
partner or former partner at a nationally recognized law firm).

14

 

     (c) Limitation on Damages. You and the Group agree that there will be no
punitive damages payable as a result of any Employment Matter and agree not to
request punitive damages.

     (d) Injunctions and Enforcement of Arbitration Awards. You or the Group
may bring an action or special proceeding in a state or federal court of
competent jurisdiction sitting in the County of New York to enforce any
arbitration award under Section 12(b). Also, the Group may bring such an
action or proceeding, in addition to its rights under Section 12(b) and whether
or not an arbitration proceeding has been or is ever initiated, to temporarily,
preliminarily or permanently enforce any part of Sections 7 and 8. You agree
that (1) your violating any part of Sections 7 and 8 would cause damage to the
Group that cannot be measured or repaired, (2) the Group therefore is entitled
to an injunction, restraining order or other equitable relief restraining any
actual or threatened violation of those Sections, (3) no bond will need to be
posted for the Group to receive such an injunction, order or other relief, (4)
no proof will be required that monetary damages for violations of those
Sections would be difficult to calculate and that remedies at law would be
inadequate and (5) the General Counsel of the Company is irrevocably appointed
as your agent for service of process in connection with any such action or
proceeding (the General Counsel will promptly advise you of any such service of
process).

     (e) Jurisdiction and Choice of Forum. You and the Group irrevocably
submit to the exclusive jurisdiction of any state or federal court located in
the County of New York over any Employment Matter that is not otherwise
arbitrated or resolved according to Section 12(b). This includes any action or
proceeding to compel arbitration or to enforce an arbitration award. Both you
and the Group (1) acknowledge that the forum stated in this Section 12(e) has a
reasonable relation to this Agreement and to the relationship between you and
the Group and that the submission to the forum will apply even if the forum
chooses to apply non-forum law, (2) waive, to the extent permitted by law, any
objection to personal jurisdiction or to the laying of venue of any action or
proceeding covered by this Section 12(e) in the forum stated in this Section,
(3) agree not to commence any such action or proceeding in any forum other than
the forum stated in this Section 12(e) and (4) agree that, to the extent
permitted by law, a final and non-appealable judgment in any such action or
proceeding in any such court will be conclusive and binding on you and the
Group. However, nothing in this Agreement precludes you or the Group from
bringing any action or proceeding in any court for the purpose of enforcing the
provisions of Sections 12(b) and this 12(e).

     (f) Waiver of Jury Trial. To the extent permitted by law, you and the
Group waive any and all rights to a jury trial with respect to any Employment
Matter.

     (g) Governing Law. This Agreement will be governed by and construed in
accordance with the law of the State of New York applicable to contracts made
and to be performed entirely within that State.

     (h) Costs. To the extent permitted by law, the Company will reimburse any
reasonable expenses, including reasonable attorney’s fees, you incur as a
result of any Employment Matter, provided that you prevail on a material issue
in such

15

 

dispute. Additionally, the Company will reimburse your reasonable
attorney’s fees, not to exceed $40,000, incurred to negotiate this Employment
Agreement.

13. General Provisions

     (a) Construction.

     (1) References (A) to Sections are to sections of this Agreement
unless otherwise stated; (B) to any contract (including this Agreement)
are to the contract as amended, modified, supplemented or replaced from
time to time; (C) to any statute, rule or regulation are to the
statute, rule or regulation as amended, modified, supplemented or
replaced from time to time (and, in the case of statutes, include any
rules and regulations promulgated under the statute) and to any section
of any statute, rule or regulation include any successor to the
section; (D) to any governmental authority include any successor to the
governmental authority; (E) to any plan include any programs, practices
and policies; (F) to any entity include any corporation, limited
liability company, partnership, association, business trust and similar
organization and include any governmental authority; and (G) to any
affiliate of any entity are to any person or other entity directly or
indirectly controlling, controlled by or under common control with the
first entity.

     (2) The various headings in this Agreement are for convenience of
reference only and in no way define, limit or describe the scope or
intent of any provisions or Sections of this Agreement.

     (3) Unless the context requires otherwise, (A) words describing
the singular number include the plural and vice versa, (B) words
denoting any gender include all genders and (C) the words “include”,
“includes” and “including” will be deemed to be followed by the words
“without limitation.”

     (4) It is your and the Group’s intention that this Agreement not
be construed more strictly with regard to you or the Group.

     (b) Withholding. You and the Group will treat all payments to you under
this Agreement as compensation for services. Accordingly, the Group may
withhold from any payment any taxes that are required to be withheld under any
law, rule or regulation.

     (c) Severability. If any provision of this Agreement is found by any
court of competent jurisdiction (or legally empowered agency) to be illegal,
invalid or unenforceable for any reason, then (1) the provision will be amended
automatically to the minimum extent necessary to cure the illegality or
invalidity and permit enforcement and (2) the remainder of this Agreement will
not be affected. In particular, if any provision of Section 8 is so found to
violate law or be unenforceable because it applies for longer than a maximum
permitted period or to greater than a maximum permitted area, it will be
automatically amended to apply for the maximum permitted period and maximum
permitted area.

16

 

     (d) No Set-off or Mitigation. Except as provided in Section 8(c) or if your
employment is terminated by the Company for Cause, your and the Company’s
respective obligations under this Agreement will not be affected by any
set-off, counterclaim, recoupment or other right you or any member of the Group
may have against each other or anyone else. You do not need to seek other
employment or take any other action to mitigate any amounts owed to you under
this Agreement.

     (e) Notices. All notices, requests, demands and other communications under
this Agreement must be in writing and will be deemed given (1) on the business
day sent, when delivered by hand or facsimile transmission (with confirmation)
during normal business hours, (2) on the business day after the business day
sent, if delivered by a nationally recognized overnight courier or (3) on the
third business day after the business day sent if delivered by registered or
certified mail, return receipt requested, in each case to the following address
or number (or to such other addresses or numbers as may be specified by notice
that conforms to this Section 13(e)):

     If to you, to your address then on file with the Company’s payroll
department.

     If to the Company or any other member of the Group, to:

	 	 	 
	

	 	Computer Associates International, Inc.
	 

	 	World Headquarters
	

	 	One Computer Associates Plaza
	

	 	Islandia, New York 11749
	

	 	Attention: General Counsel
	

	 	Facsimile: (631) 342-4865

     (f) Consideration. This Agreement is in consideration of the mutual
covenants contained in it. You and the Group acknowledge the receipt and
sufficiency of the consideration to this Agreement and intend this Agreement to
be legally binding.

     (g) Amendments and Waivers. Any provision of this Agreement may be
amended or waived but only if the amendment or waiver is in writing and signed,
in the case of an amendment, by you and the Company or, in the case of a
waiver, by the party that would have benefited from the provision waived.
Except as this Agreement otherwise provides, no failure or delay by you or the
Group to exercise any right or remedy under this Agreement will operate as a
waiver, and no partial exercise of any right or remedy will preclude any
further exercise.

     (h) Third-Party Beneficiaries. Subject to Section 11, this Agreement will
be binding on, inure to the benefit of and be enforceable by the parties and
their respective heirs, personal representatives, successors and assigns. This
Agreement does not confer any rights, remedies, obligations or liabilities to
any entity or person other than you and the Company and your and the Company’s
permitted successors and assigns, although (1) this Agreement will inure to the
benefit of the Group and (2) Section 11(a) will inure to the benefit of the
most recent persons named in a notice under that Section.

17

 

     (i)
Counterparts. This Agreement may be executed in counterparts, each of
which will constitute an original and all of which, when taken together, will
constitute one agreement. However, this Agreement will not be effective until
the date both parties have executed this Agreement.

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	Accepted and agreed to:
	 	 
	 
	 	 
	/s/ John A. Swanson

	 	/s/ Lewis S.
Ranieri

	John A. Swainson
	 	Lewis S. Ranieri
	 
	 	Chairman
Computer Associates
International, Inc.
	November 22, 2004
	 	 

18EX-10.2

 

Exhibit 10.2

Execution Copy

EMPLOYMENT AGREEMENT

          This Agreement is entered into by and between Computer Associates
International, Inc. (the “Company”) and Jeff Clarke (“Executive”) as of
November 22, 2004. On April 23, 2004, Executive was appointed to the position
of Chief Operating Officer (the “COO Position”) of the Company. Executive
continues to serve as the Chief Financial Officer of the Company (the “CFO
Position”). In consideration of the Company offering, and Executive accepting,
the COO Position, Executive and the Company agree as follows:

     1. Work Standards. Executive will continue to (a) serve the Company (and
such of its subsidiary companies as the Company may designate) faithfully,
diligently and to the best of Executive’s ability under the direction of the
Chief Executive Officer (including any interim Chief Executive Officer) of the
Company, (b) devote his best efforts, attention and energy to the performance
of his duties to the Company and (c) not do anything inconsistent with his
duties to the Company. Executive’s employment pursuant to the terms of this
Agreement shall be effective as of April 23, 2004 and shall end on March 31,
2006, unless earlier terminated in accordance with paragraph 8 of this
Agreement or extended by mutual written agreement between the Company and
Executive.

     2. Laws; Other Agreements. Executive represents that his employment
hereunder will not violate any law or duty by which he is bound, and will not
conflict with or violate any agreement or instrument to which Executive is a
party or by which he is bound.

     3. Compensation.

          (a) In consideration of services that Executive has rendered and will
render to the Company in the future, the Company agrees to pay Executive the
sum of $650,000 per annum (less applicable withholdings) commencing on April
23, 2004, payable semi-monthly concurrent with the Company’s normal payroll
cycle. The Company will pay this amount until Executive’s employment hereunder
terminates.

          (b) (i) In addition, with respect to the fiscal year ending March 31,
2005, Executive shall be eligible to receive:

               (A) a 2005 Annual Performance Bonus (payable in cash) pursuant to Section
4.4 of the Company’s 2002 Incentive Plan, as amended (as so amended, the “2002
Plan”), with an Annual Performance Bonus target of $800,000.00, which Annual
Performance Bonus shall otherwise be subject to the terms and conditions of the
Company’s 2005 Annual Performance Bonus program set forth in the resolutions
approving the Performance Bonuses described in paragraphs 3(b)(i) and (ii)
that were adopted (the “Resolutions”) by the Compensation and Human Resource
Committee (the “Compensation Committee”) of the Board of Directors; and

               (B) a targeted Long-Term Performance Bonus of $3,050,000.00 for the period
from April 1, 2004 through March 31, 2005, which Long-Term Performance Bonus
shall otherwise be subject to the terms and conditions applicable to the fiscal
year ending March 31, 2005 under the Company’s 2005-2007 Long-Term Performance
Bonus program set forth in the Resolutions. Subject to paragraph 3(c), such
Long-Term Performance Bonus shall vest and the portion of the Performance Bonus
payable in options shall become exercisable in accordance with the terms set
forth in the Resolutions.

               (ii) In addition, with respect to the fiscal year ending March 31, 2006:

               (A) Executive shall be eligible to receive a 2006 Annual Performance Bonus
for the period from April 1, 2005 through March 31, 2006, with a target amount
and such other terms and conditions as determined by the Compensation
Committee; and

               (B) Executive shall be eligible to receive a targeted Long-Term
Performance Bonus of $3,050,000.00 for the period from April 1, 2004 through
March 31, 2006, which Long-Term Performance Bonus shall otherwise be subject to
the terms and conditions applicable to the performance period ending March 31,
2006 under the Company’s 2005-2007 Long-Term Performance Bonus program

 

 

set forth in the Resolutions. Subject to paragraph 3(c), such Long-Term
Performance Bonus shall vest and the portion of the Performance Bonus payable
in options shall become exercisable in accordance with the terms set forth in
the Resolutions.

               (c) (i) In the event that Executive (A) voluntarily resigns his COO
Position with the Company other than “for good reason” (as defined in paragraph
5(b) of this Agreement) or (B) is terminated “for cause” (as defined in
paragraph 5(a) of this Agreement), in any such case prior to March 31, 2006,
Executive shall (x) forfeit any and all rights he may have to receive any of
the benefits provided for in this paragraph 3 (other than any amounts or awards
for which all required services have been rendered and any applicable
Performance Cycle has ended but which have not yet been paid) and (y) be
obligated to repay the Company for any moving and/or relocation expenses in
accordance with the terms of the Moving & Relocation Expense Reimbursement
Agreement entered into between Executive and the Company (the “Relocation
Agreement”). All stock options and restricted stock held by Executive in the
event of the termination of Executive’s employment as described in this
paragraph 3(c)(i) shall be subject to the terms and conditions of the 2002 Plan
(and any successor plan) and any applicable resolutions.

               (ii) In the event that Executive (x) voluntarily resigns his COO Position
with the Company “for good reason” (as defined in paragraph 5(b) of this
Agreement), (y) is terminated from the COO Position other than “for cause” (as
defined in paragraph 5(a) of this Agreement), or (z) terminates his employment
on account of death or Disability (as defined in the 2002 Plan), in any such
case prior to March 31, 2006, then:

               (A) Executive shall be entitled to receive a lump sum payment (less
applicable withholding taxes) in an amount equal to $4,500,000 (which
represents the sum of (1) $650,000 plus (2) his 2005 Annual Performance Bonus
target as set forth in paragraph 3(b)(i)(A) (i.e. $800,000) and (3) his
Long-Term Performance Bonus target (i.e., $3,050,000) for the Performance Cycle
ending with the close of the fiscal year during which his termination occurs),
provided that if Executive resigns his COO Position “for good reason” (as
defined in paragraph 5(b) of this Agreement) based on a reduction of any of
Executive’s bonuses that meets the requirements of clause (iii) of the
definition of “good reason”, the $4,500,000 payment described in this clause
(A) shall be reduced by the sum of any bonuses actually paid to Executive in
respect of the period as to which such reduction took place, payable in cash
within 30 days after the end of the six month period following Executive’s
termination of employment with the Company, or earlier if the Company
determines that making such payment after termination but before the expiration
of such six month period is permitted by law;

               (B) management shall recommend that (1) the 235,000 options granted
pursuant to Executive’s March 18, 2004 offer letter and any unvested Restricted
Stock, Fair Market Value Options and Premium-Priced Options granted to
Executive pursuant to the Long-Term Performance Bonuses described in paragraphs
3(b)(i) and (ii) shall vest in full immediately upon the termination of
Executive’s employment hereunder, (2) the 235,000 options and any Fair Market
Value Options and Premium-Priced Options granted to Executive pursuant to the
Long-Term Performance Bonuses described in paragraphs 3(b)(i) and (ii) shall
remain exercisable for one year following such termination of employment, and
(3) all Restricted Stock issued, and all stock received on exercise of options
granted, to Executive pursuant to the Long-Term Performance Bonuses described
in paragraphs 3(b)(i) and (ii) shall no longer be subject to any holding period
(except as may be required by any state or federal securities laws); and

               (C) Executive shall be relieved of all obligations to repay any moving
and/or relocation expenses under the Relocation Agreement.

               (iii) For clarification purposes only, in the event that Executive resigns
or is terminated from his CFO Position for any reason or no reason at any time,
but remains in his COO Position, no benefits shall be payable under this
paragraph 3 on account of such resignation or termination but the terms and
conditions of paragraph 3 shall continue to remain in full force and effect.

               (iv) In the event that Executive continues to be employed through March
31, 2006, Executive shall be entitled to any Annual Performance Bonus and
Long-Term Performance Bonus payable under the terms of the 2002 Plan and the
Resolutions for the fiscal year ending March 31, 2006 in accordance with
paragraph 3(b)(ii), without regard to whether Executive’s employment with the
Company is subsequently terminated before any such Performance Bonuses are
paid.

2

 

               (v) Notwithstanding anything to the contrary herein, Executive shall be
entitled to the payments under this paragraph 3(c) only to the extent not
already provided under another plan or policy of the Company.

          (d) Capitalized terms used in paragraphs 3(b) and (c) and not defined are
used as defined in the 2002 Plan.

     4. Benefits and Perquisites. During the term of Executive’s employment,
Executive shall be eligible to participate in all pension, welfare and benefit
plans and perquisites generally made available to other senior executives of
the Company.

     5. Termination by Company for Cause or Executive for Good Reason.

          (a) For purposes of this Agreement, termination “for cause” shall mean
that the Company terminates Executive’s employment for any of the following
reasons:

               (i) Executive’s continued failure, either due to willful action or as a
result of gross neglect, to substantially perform his duties with the Company
(other than any such failure resulting from his incapacity due to physical or
mental illness) that, if capable of being cured, has not been cured within 30
days after written notice is delivered to Executive by or on behalf of the
Compensation Committee, which notice specifies in reasonable detail the manner
in which the Compensation Committee believes that Executive has not
substantially performed his duties,

               (ii) the engaging by Executive in conduct which is demonstrably and
materially injurious to the Company or its affiliates, monetarily or otherwise,
unless the conduct in question was undertaken in good faith, and with a
rational business purpose and based upon the reasonable belief that such
conduct was in the best interest of the Company or its affiliates, as the case
may be,

               (iii) Executive’s indictment or conviction (or plea of guilty or nolo
contedere) for any felony or any other crime (other than a petty misdemeanor)
involving dishonesty, fraud or moral turpitude,

               (iv) Executive’s breach of fiduciary duty to the Company or its affiliates
which may in the good faith determination of the Compensation Committee
reasonably be expected to have a material adverse effect on the Company or its
affiliates,

               (v) violation of the Company’s policies relating to compliance with
applicable laws which may in the good faith determination of the Compensation
Committee reasonably be expected to have a material adverse effect on the
Company or its affiliates,

               (vi) violation of the Company’s policies on discrimination, unlawful
harassment or substance abuse,

               (vii) violation of the Company’s Workplace Violence Policy, or

               (viii) unauthorized use or disclosure of confidential or proprietary
information or related materials, or the violation of any of the terms of the
Company’s standard confidentiality policies and procedures, which, in either
case, (A) may reasonably be expected to have a material adverse effect on the
Company or its affiliates and (B) if capable of being cured, has not been cured
within 30 days after written notice is delivered to Executive by or on behalf
of the Compensation Committee, which notice specifies in reasonable detail the
alleged unauthorized use or disclosure or violation.

For purposes of clause (i) of this definition, no act, or failure to act, on
Executive’s part shall be deemed “willful” unless done, or omitted to be done,
by Executive not in good faith and without reasonable belief that his act, or
failure to act, was in the best interest of the Company or its affiliates, as
the case may be.

          (b) For purposes of this Agreement, termination “for good reason” shall
mean any action or series of actions by the Company which, taken together if a
series of actions, directly or indirectly results in (i) any material and
adverse change in Executive’s position, title or equivalent title with the
Company (other than removal of Executive from the position of Chief Financial
Officer), (ii) any material and

3

 

adverse reduction in Executive’s supervisory or other authority or
responsibility other than any isolated, insubstantial and inadvertent failure
by the Company that is not in bad faith and is cured promptly on Executive’s
giving the Company notice, (iii) any reduction by the Compensation Committee in
the amount of Executive’s 2005 or 2006 Annual Performance Bonus or Executive’s
Long-Term Performance Bonus for the period ending March 31, 2005 or the period
ending March 31, 2006, as applicable, that results in the amount of any such
Performance Bonus being less than 75% of the amount determined pursuant to the
formulae specified in the Resolutions, as applicable, other than (1) any such
reduction that is consistent with reductions for all executive vice presidents
and above level officers eligible for awards under the 2005 or 2006 Annual
Performance Bonus programs or the 2005-2007 Long-Term Performance Bonus
programs, as applicable, (2) any such reduction agreed to by Executive in
writing or (3) any insubstantial or inadvertent reduction by the Compensation
Committee that is not in bad faith and is cured promptly on Executive’s giving
the Company notice, (iv) the Company’s material breach of this Agreement,
provided that no alleged action, change, reduction or breach set forth in
preceding clauses (i), (ii) or (iii) or in this clause (iv), respectively,
shall be deemed to constitute “good reason” unless such action, reduction or
breach remains uncured, as the case may be, after the expiration of thirty (30)
days following delivery to Company from Executive of a written notice, setting
forth such course of conduct deemed by Executive to constitute “good reason”,
or (v) the failure of the Company to require any purchaser of or successor to
substantially all of the assets of the Company or any enterprise with which or
into which the Company may be merged to assume the Company’s obligations under
this Agreement.

     6. Indemnification. For so long as Executive is employed by the Company
pursuant to this Agreement and at all time thereafter, the Company shall
indemnify and hold Executive harmless for acts and omissions in Executive’s
capacity as Chief Operating Officer and Chief Financial Officer, as applicable,
to the maximum extent permitted under applicable law.

     7. Authorization to Modify Restrictions. Executive acknowledges that the
restrictions contained in this Agreement are reasonable, but agrees that if a
court having proper jurisdiction holds a particular restriction unreasonable,
that restriction shall be modified to the extent necessary in the opinion of
such court to make it reasonable, and that the remaining provisions of this
Agreement shall nonetheless remain in full force and effect.

     8. No Duration of Employment. Notwithstanding anything else contained in
this Agreement to the contrary, the Company and Executive each acknowledge and
agree that Executive’s employment with the Company may be terminated by either
the Company (subject only to the provisions of paragraph 3(c) of this
Agreement) or Executive (subject only to the provisions of paragraph 3(c) of
this Agreement) at any time and for any reason, with or without cause, upon 10
days’ written notice to the other party, provided that this Agreement may be
terminated “for cause” immediately upon written notice from the Company to
Executive. In addition, this Agreement shall automatically terminate upon
Executive’s death or Disability. Upon termination of Executive’s employment
for any reason whatsoever, the Company shall have no further obligations to
Executive other than those set forth in paragraphs 3 and 6 of this Agreement.

     9. General.

          (a) Any notice required or permitted to be given under this Agreement
shall be made either:

               (i) by personal delivery to Executive or, in the case of the Company, to
the Company’s principal office (“Principal Office”) located at One Computer
Associates Plaza, Islandia, New York 11749, Attention: Senior Vice President -
Human Resources, or

               (ii) in writing and sent by registered mail, postage prepaid, to
Executive’s residence, or, in the case of the Company, to the Company’s
Principal Office.

Any provision of this Agreement calling for notice to be delivered by or on
behalf of the Compensation Committee shall be satisfied by any notice that is
executed on behalf of the Compensation Committee by any director or officer of
the Company acting pursuant to the authorization of the Compensation Committee
and otherwise delivered in accordance with this paragraph 9(a).

          (b) This Agreement shall be binding upon Executive and his heirs,
executors, assigns, and administrators and shall inure to the benefit of the
Company, its successors and assigns and any subsidiary or parent of the
Company.

4

 

          (c) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of law
principles. Any action relating to this Agreement shall be brought exclusively
in the state or federal courts of the State of New York, County of Suffolk.

          (d) This Agreement, the Relocation Agreement and the other documents
referred to herein represent the entire agreement between Executive and the
Company related to Executive’s employment and supersede any and all previous
oral or written communications, representations or agreements related thereto.
This Agreement may only be modified, in writing, jointly by Executive and a
duly authorized representative of the Company.

          (e) Without limiting the scope of paragraph 7 of this Agreement, the
provisions of this Agreement shall be severable in the event that any of the
provisions hereof (including any provision within a single paragraph or
sentence) are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable in any respect, and the validity and enforceability of
any such provision in every other respect and of the remaining provisions
hereof shall not be any way impaired and shall remain enforceable to the
fullest extent permitted by law.

CAUTION TO EXECUTIVE: This Agreement affects important rights. DO NOT sign it
unless you have read it carefully and are satisfied that you understand it
completely.

	 	 	 	 	 
	 	 	COMPUTER ASSOCIATES
	 	 	INTERNATIONAL, INC.
	 
	 	 	 	 
	/s/ Jeff Clarke

	 	By:
	 	/s/ Kenneth D. Cron
	
 

	 	 	 	
 
	Jeff Clarke	 	Name: Kenneth D. Cron
	 	 	Title: Chief Executive Officer

5

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