EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT
(this “Agreement”) is made effective as of the
15th day of March, 2005, by and between webMethods, Inc., a Delaware corporation (the “Company”),
and Xxxxxxx Xxxxxx Muhlner (the “Executive”).
WHEREAS, the Executive is presently employed by the Company;
WHEREAS, the Board of Directors of the Company (the “Board”) recognizes that the Executive’s
contribution to the growth and success of the Company has been and continues to be substantial;
WHEREAS, the Board desires to provide for certain arrangements in the event that the
Executive’s employment with the Company is terminated under certain circumstances; and
WHEREAS, the Company and the Executive desire to enter into this Agreement on the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the promises and the respective covenants and agreements
of the parties herein contained, and of the continued employment of the Executive by the Company,
the parties hereto, intending to be legally bound, do hereby agree as follows:
Definitions. For purposes of this Agreement:
(a) “Cause” shall mean the Executive’s (i) theft, fraud, material dishonesty or gross
negligence in the conduct of the Company’s business, (ii) continuing neglect of the Executive’s
duties and responsibilities that has a material adverse effect on the Company (which neglect is not
cured within fifteen (15) days after receipt of written notice by the Executive specifying the
particulars of such neglect), or (iii) conviction of a felony (not involving an automobile). For
purposes of this Agreement, any purported termination of the Executive’s employment shall be
presumed to be other than for Cause, unless the notice of termination includes a copy of a
resolution duly adopted by the Board which finds Cause to exist and specifies the particulars
thereof in detail.
(b) “Good Reason” shall mean (i) a decrease in the Executive’s base salary, (ii) a reduction
or change in the Executive’s authorities, duties or job responsibilities, or (iii) a geographic
relocation of the Executive without the Executive’s consent more than thirty (30) miles from the
current location of the Executive’s office as of the date hereof.
(c) A “Change in Control” shall be deemed to have occurred if (A) any person (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent (50%) or more of
the combined voting power of the Company’s then outstanding securities, (B) during any period of
two (2) consecutive years during the term of this Agreement, individuals who at the beginning of
such period constitute the Board cease for any reason to
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constitute at least a majority thereof, unless the election of each director who was not a director
at the beginning of such period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the beginning of the period, (C)
the shareholders of the Company approve a merger or consolidation involving the Company that would
result in a change of ownership of a majority of the outstanding shares of capital stock of the
Company, or (D) the shareholders of the Company approve a plan of liquidation or dissolution of the
Company or the sale or disposition by the Company of all or substantially all the Company’s assets.
(d) The “Date of Termination” with respect to any purported termination of the Executive’s
employment means the date specified as such in the Notice of
Termination. In the case of
termination of the Executive’s employment (i) by the Company for Cause or (ii) by the Executive for
any reason, the Date of Termination shall be a date not less than seven (7) days from the date the
Notice of Termination is given. In the case of termination of the Executive’s employment by the
Company without Cause, the Date of Termination shall be a date not less than thirty (30) days from
the date the Notice of Termination is given.
(e) “Notice of Termination” means a written notice of termination of employment by the
terminating party, which notice shall specify a Date of Termination and the particular facts and
circumstances of such termination, including the existence of Cause or Good Reason.
2. Termination of Employment.
(a) The Executive’s employment may be terminated at any time by the Company, with or without
Cause, by delivery of a Notice of Termination to the Executive. The Executive’s employment may be
terminated at any time by the Executive, with or without Good Reason, by delivery of a Notice of
Termination to the Company.
(b) In the event the Company terminates the Executive’s employment without Cause, or in the
event the Executive terminates the Executive’s employment for Good Reason, then the Company shall
pay the Executive’s base salary through the date of such termination and shall continue to pay to
the Executive the Executive’s base salary, plus all benefits provided to the Executive immediately
prior to the date of the Notice of Termination until the first anniversary of the Date of
Termination; provided, however, that the Company’s obligations under this Section 2(b)
shall cease upon the Executive’s commencement of full-time employment with another employer.
(c) If there is a Change in Control of the Company or there has been a public announcement of
a Change in Control of the Company (provided, however, that consummation of the Change in
Control of the Company shall be a condition precedent to the effectiveness of this provision) and
at any time within one (1) year after the consummation of a Change in Control (i) the Company
terminates the Executive’s employment without Cause, or (ii) the Executive terminates the
Executive’s employment for Good Reason, then the Company shall (x) pay the Executive’s base salary
through the Date of Termination, (y) pay to the Executive, in a lump sum in cash within ten (10)
business days after the Date of Termination, an amount equal to one
and one half (1 ½) times the
sum of (A) the Executive’s base salary in effect immediately
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prior to the occurrence of the circumstance giving rise to the Notice of Termination given in
respect thereof and (B) the maximum bonus or incentive compensation amount for which the Executive
is eligible to be awarded pursuant to any bonus or incentive compensation plan, calculated based
upon the bonus period in which the Date of Termination and annualized to the extent that such bonus
period does not reflect a twelve (12) month period and (z) for an eighteen (18) month period after
the Date of Termination, administer and pay for the Executive’s life, disability, accident and
health insurance benefits substantially similar to those which Executive is receiving immediately
prior to the Notice of Termination.
(d) In the event of the death of the Executive, this Agreement shall terminate, and shall
be of no further force or effect; provided, however, that notwithstanding the foregoing,
the death of the Executive shall not in any way affect any payment obligations of the Company
pursuant to Section 2(b) or Section 2(c) hereof which exist at the time of such death.
3. Successors; Binding Agreement. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
If the Executive should die while any amounts would still be payable to the Executive hereunder if
the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other
designee or, if there be no such designee, to the Executive’s estate.
4. Notice. For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be deemed to have been
duly given when delivered by hand delivery or via reputable overnight delivery service, or (unless
otherwise specified) mailed by United States registered mail, return receipt requested, postage
prepaid, addressed, if to the Executive, to the Executive’s home address as it appears on the
records of the Company, and if to the Company, to the Company’s executive headquarters, or to such
other address as either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
5. Prior Agreement. All prior agreements between the Company and the Executive with
respect to the subject matter hereof (except for stock option agreements), including without
limitation the Executive Agreement, dated as of September 15, 1999, by and between the Company and
the Executive, are hereby superseded and terminated effective as of the date hereof and shall be
without further force or effect. This Agreement is intended to be, and shall be, a complete
integration of all prior agreements and discussions between the Company and the Executive with
respect to the subject matter hereof (except as set forth in stock option agreements between the
Company and the Executive).
6. Employment of Executive. Nothing in this Agreement shall be construed as
constituting a commitment, guarantee, agreement or understanding of any kind or nature that the
Company shall continue to employ the Executive, nor shall this Agreement affect in any way the
right of the Company to terminate the employment of the Executive at any time and for any reason.
By the Executive’s execution of this Agreement, the Executive acknowledges and agrees that the
Executive’s employment is “at will.” No change of the Executive’s duties as an
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employee of the Company shall result in, or be deemed to be, a modification of any of the terms of
this Agreement.
7. No Mitigation. The Company agrees that, if the Executive’s employment is terminated
during the term of this Agreement, the Executive is not required to seek other employment or to
attempt in any way to reduce any amounts payable to the Executive by the Company. Further, the
amount of any payment provided hereunder shall not be reduced by any compensation earned by the
Executive.
8. Miscellaneous. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and duly authorized officer of the Company. No waiver by either party hereto at any time
of any breach by the other hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed by the laws of the
Commonwealth of Virginia, without regard to provisions thereof relating to choice of law or
conflicts of law. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument. This
Agreement may be executed by facsimile signatures.
9. Validity. The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
[Signatures appear on following page.]
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IN WITNESS WHEREOF, the parties have executed this Executive Agreement on the date and year
first above written.
| WEBMETHODS, INC., a Delaware corporation |
||||
| By: | /s/ Xxxxx Xxxxxxxx | |||
| Xxxxx Xxxxxxxx, President and Chief Executive | ||||
| Officer | ||||
| EXECUTIVE | ||||
| /s/ Xxxxxxx Xxxxxx Muhlner
|
