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 Kenneth A.
Sexton (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:
1.
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, 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.
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, 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
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