EXECUTIVE AGREEMENT
Exhibit 10.2
THIS EXECUTIVE AGREEMENT (this “Agreement”) is made effective as of the 2nd day of January
2007, by and between webMethods, Inc., a Delaware corporation (the “Company”), and Xxxxxxx X.
Xxxxxx (the “Executive”).
(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, maximum bonus or
incentive compensation amount for which the Executive is eligible to be awarded pursuant to any
bonus or incentive compensation plan, or aggregate allowance for reimbursable commuting costs
submitted in accordance with the Company’s standard travel policies (or other mutually agreeable
arrangement), in each case as established by Employer on the date hereof, or (ii) a material
reduction or material adverse change in the Executive’s authorities, duties or job responsibilities
(which material reduction or material adverse change is not cured within fifteen (15) days after
written notice by the Executive specifying the particulars of such reduction or change in such
authorities, duties or job responsibilities, the notice of which is given to the Company within
fifteen (15) days of such reduction or change).
(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 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 its successor, 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 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.
(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, without Good Reason, by delivery of a Notice of
Termination to the Company. The Executive’s employment may be terminated by the Executive for Good
Reason, by delivery of a Notice of Termination to the Company within thirty (30) days of the later
of occurrence of the event constituting Good Reason or the termination of the Corporation’s cure
period, if any, with respect to the event constituting Good Reason.
(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,
subject to Section 7 hereof, pay the Executive’s base salary through the date of such termination
and shall continue to pay to the Executive the Executive’s monthly base salary, and shall
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, until the first anniversary of the Date of Termination; provided,
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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. In addition, in the event
the Company terminates the Executive’s employment without Cause, then the Company shall, subject to
Section 7 hereof, pay the Executive an amount equal to 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 occurs
and pro rated to the extent that such bonus period does not reflect a twelve (12) month period.
Notwithstanding the foregoing, (i) the Company’s obligations under this Section 2(b), if any, shall
be contingent upon the Executive executing a general release of all claims in favor of the Company,
and its officers, directors and affiliates, in a form provided by the Company, and (ii) in the
event Executive’s termination of employment falls within one (1) year after the consummation of a
Change in Control, the Company shall have no obligation under this Section 2(b).
(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 (x) shall pay the Executive’s base
salary through the Date of Termination, (y) shall 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
1/2) times the sum of (A) the Executive’s base salary in effect immediately 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 occurs and annualized to the extent that such bonus period does not
reflect a twelve (12) month period and (C) for an eighteen (18) month period after the Date of
Termination, the Company shall 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. The Company’s obligations under this Section 2(c),
if any, shall be contingent upon the Executive executing a general release of all claims in favor
of the Company, and its officers, directors and affiliates, in a form provided by the Company
(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.
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without limitation, other penalties and interest on such income and employment taxes) imposed
on any Gross-Up Amount payable hereunder. If no determination by the Company’s independent
auditors is made prior to the time the Executive is required to file a tax return reflecting Excise
Taxes on any portion of the Original Payment(s), the Executive will be entitled to receive a
Gross-Up Amount calculated on the basis of the Excise Tax that the Executive reports in such tax
return, within thirty (30) days after the filing of such tax return. The Executive agrees that,
for the purposes of the foregoing sentence, the Executive is not required to file a tax return
until the Executive has obtained the maximum number and length of filing extensions available, and
Executive shall have provided a copy of the relevant portions of such tax return to the Company not
less than ten (10) days prior to filing such tax return. If any tax authority finally determines
that a greater Excise Tax should be imposed upon the Original Payments or the Gross-Up Amount than
is determined by the Company’s independent auditors or reflected in the Executive’s tax returns,
the Executive shall be entitled to receive an additional Gross-Up Amount calculated on the basis of
the additional amount of Excise Tax determined to be payable by such tax authority (including
related penalties and interest) from the Company within thirty (30) days after such determination.
The Executive shall cooperate with the Company as it may reasonably request to permit the Company
(at its sole expense) to contest the determination of such taxing authority to minimize the amount
payable under this Section 7. If any tax authority finally determines the Excise Tax payable by
the Executive to be less than the amount taken into account hereunder in calculating the Gross-Up
Amount, the Executive shall repay the Company, within thirty (30) days after the Executive’s
receipt of a tax refund resulting from that determination, to the extent of such refund, the
portion of the Gross-Up Amount attributable to such reduction (including the refunded portion of
Gross-Up Amount attributable to the Excise Tax and federal, state and local income and employment
taxes imposed on the Gross-Up Amount being repaid, less any additional income tax resulting from
receipt of such refund).
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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.
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of the Code, no acceleration of payment shall be made if such acceleration of payment would
result in imposition of 409A Taxes. The Company shall have no liability to the Executive for 409A
Taxes (or any loss incident to the imposition of such taxes) in the event that Executive is
determined to be liable for 409A Taxes in connection with any payment or provision of any amount or
other benefit under this Agreement or Other Agreements.
[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: Name: |
/s/ Xxxxx Xxxxxxxx
|
|||||
| Title: | President & CEO | |||||
| EXECUTIVE: | ||||||
| /s/ Xxxxxxx X. Xxxxxx | ||||||
| Xxxxxxx X. Xxxxxx | ||||||