CONSULTING AGREEMENT

EXHIBIT 10.10

CONSULTING AGREEMENT

     THIS CONSULTING AGREEMENT (this “Agreement”) is made effective for all purposes and in all respects as of the date set forth below, by and between (i) webMethods, Inc., a Delaware corporation (the “Corporation”) and (ii) Phillip Merrick (“Consultant”).

     WHEREAS, the Corporation desires to engage Consultant to perform certain duties as shall be assigned to Consultant by the Corporation from time to time;

WHEREAS, Consultant desires to be so engaged by the Corporation;

     WHEREAS, the Corporation and Consultant desire to set forth in writing the terms and conditions of their agreements and understandings; and

     NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, hereby agree as follows:

     1. Duties of Consultant. Consultant shall undertake and assume the responsibility of performing for and on behalf of the Corporation such duties as shall be assigned to Consultant by the Chief Executive Officer of the Corporation, subject to the availability of Consultant and the other limitations set forth herein; provided, that Consultant shall make himself available for at least twenty (20) hours per month. Consultant covenants and agrees that, at all times during the term of this Agreement, Consultant shall devote such amount of Consultant’s time as shall be required for Consultant to perform promptly, efficiently and professionally the duties assigned to Consultant by the Corporation hereunder. Consultant covenants and agrees that Consultant shall not, directly or indirectly, engage or participate in any activities at any time during the term of this Agreement in conflict with the best interests of the Corporation. Consultant shall not be required to render any written reports to the Corporation, unless, in his sole discretion, Consultant deems written reports to be necessary.

     2. Term of Engagement. The term of Consultant’s engagement hereunder (the “Term”) shall commence as of the date hereof and shall continue for a term of one year thereafter (unless prior to such date either the Corporation or Consultant shall provide written notice to the other of its desire to terminate such engagement as the result of material breach hereof by the other party to this Agreement). Notwithstanding the foregoing, the termination of Consultant’s engagement for any reason shall not terminate or in any way affect Consultant’s covenants and obligations set forth in Sections 5 through 11 hereof.

     3. Compensation. As and for compensation for the services to be rendered to or on behalf of the Corporation by Consultant hereunder, and subject to compliance by Consultant with all of Consultant’s representations, covenants and agreements set forth in this Agreement, the Corporation shall pay Consultant during the Term Thirty Thousand Dollars ($30,000) monthly on the last date each month on which the Corporation normally is scheduled to pay consultants. During the Term, the Corporation shall pay premiums so that Consultant shall continue to participate in the medical, dental and vision insurance plans that the Corporation provides to its

then-current U.S. employees. During the Term hereof, the Corporation will provide to Consultant the services of Consultant’s former executive assistant, or similar support in the event that the former executive assistant leaves the employment of the Corporation.

     4. Expenses Incurred. During the Term, the Corporation shall pay or promptly reimburse Consultant for all reasonable travel, telephone and other business expenses paid or incurred by Consultant in connection with the performance of Consultant’s duties hereunder (which expenses must be pre-approved by the Corporation), upon presentation of expense statements, vouchers or other evidence of expenses.

     5. Treatment of Information.

          5.1 Consultant acknowledges that, in and as a result of Consultant’s engagement by the Corporation, Consultant shall or may be making use of, acquiring and adding to confidential information of a special and unique nature and value relating to such matters as the Corporation’s trade secrets; business plans and strategies; acquisition plans, proposals and prospects; procedures; manuals; confidential reports and communications; and lists of and information relating to contacts and clients. Consultant further acknowledges that any information and materials received by the Corporation from third parties (including, without limitation, business partners, customers and prospective customers of the Corporation) in confidence (or subject to non-disclosure or similar covenants) shall be deemed to be and shall be confidential information within the meaning of this Section 5. As a material inducement to the Corporation to engage (or to continue to engage) Consultant and to pay to Consultant compensation for such services to be rendered to the Corporation by Consultant (it being understood and agreed by the parties hereto that such compensation shall also be paid and received in consideration hereof), Consultant covenants and agrees that Consultant shall not, except with the prior written consent of the Corporation, or except if Consultant is acting on behalf or as a consultant of the Corporation solely for the benefit of the Corporation in connection with the Corporation’s business and in accordance with the Corporation’s business practices and policies, at any time during or following the term of Consultant’s engagement by the Corporation, directly or indirectly, disclose, divulge, reveal, report, publish, transfer or use, for any purpose whatsoever, any of such information which has been obtained by or disclosed to Consultant as a result of Consultant’s engagement by the Corporation, including any of the information referred to in Section 6 hereof.

          5.2 Disclosure of any such information of the Corporation shall not be prohibited if such disclosure is directly pursuant to a valid and existing order of a court or other governmental body or agency within the United States; provided, however, that (i) Consultant shall first have given prompt notice to the Corporation of any such possible or prospective order (or proceeding pursuant to which any such order may result) and (ii) the Corporation shall have been afforded a reasonable opportunity to prevent or limit any such disclosure.

     6. Definition of Protected Information.

          6.1 For purposes of this Agreement, the term “Protected Information” shall mean all of the information referred to in Section 5 hereof and all of the materials and information of the Corporation (whether or not reduced to writing and whether or not patentable

or protectable by copyright) which Consultant receives, receives access to, conceives, creates or develops or has received, received access to, conceived, created or developed, in whole or in part, directly or indirectly, in connection with Consultant’s engagement by the Corporation or in the course of Consultant’s engagement by the Corporation (in any capacity whatsoever) or through the use of any of the Corporation’