EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT(this “Agreement”) is made effective as of the 2nd day of April 2007, by and between webMethods, Inc., a Delaware corporation (the “Company”), and Michael L. Krone (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 orgross negligence in the conduct of the Company’s business, (ii) continuing neglect of theExecutive’s duties and responsibilities that has a material adverse effect on the Company (whichneglect is not cured within fifteen (15) days after receipt of written notice by the Executivespecifying the particulars of such neglect), or (iii) conviction of a felony (not involving anautomobile). For purposes of this Agreement, any purported termination of the Executive’semployment shall be presumed to be other than for Cause, unless the Notice of Terminationincludes a copy of a resolution duly adopted by the Board which finds Cause to exist andspecifies the particulars thereof in detail.
(b) “Good Reason” shall mean (i) a decrease in the Executive’s base salary,(ii) a material reduction or material adverse change in the Executive’s authorities, duties or jobresponsibilities (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 orchange in such authorities, duties or job responsibilities, the notice of which is given to theCompany within fifteen (15) days of such reduction or change), or (iii) a geographic relocationof the Executive without the Executive’s consent more than thirty (30) miles from the currentlocation 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, asamended (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 (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 ofthe Executive’s employment means the date specified as such in the Notice of Termination. Inthe case of termination of the Executive’s employment (i) by the Company for Cause or (ii) bythe Executive for any reason, the Date of Termination shall be a date not less than seven (7) daysfrom the date the Notice of Termination is given. In the case of termination of the Executive’semployment by the Company without Cause, the Date of Termination shall be a date not lessthan thirty (30) days from the date the Notice of Termination is given.
(e) “Notice of Termination” means a written notice of termination ofemployment by the terminating party, which notice shall specify a Date of Termination and theparticular facts and circumstances of such termination, including the existence of Cause or GoodReason.
2. Termination of Employment.
(a) The Executive’s employment may be terminated at any time by theCompany, with or without Cause, by delivery of a Notice of Termination to the Executive. TheExecutive’s employment may be terminated at any time by the Executive without Good Reasonby delivery of a Notice of Termination to the Company. The Executive’s employment may beterminated by the Executive for Good Reason by delivery of a Notice of Termination to theCompany within thirty (30) days of the later occurrence of the event constituting Good Reasonor the termination of the Company’s cure period, if any, with respect to the event constitutingGood Reason.
(b) In the event the Company terminates the Executive’s employment withoutCause, 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 andshall continue to pay to the Executive the Executive’s base salary, plus all benefits provided tothe Executive immediately prior to the date of the Notice of Termination until the firstanniversary of the Date of Termination;provided, however, that the Company’s obligationsunder this Section 2(b) shall cease upon the Executive’s commencement of full-timeemployment with another employer; andprovided, further that should the Company be unable toprovide for any such benefits under the terms of the benefit plans, or by law, the Company shallpay the Executive an amount equal to the premiums the Company would have paid for such
- 2 -
benefits under such plans. 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.
(c) If there is a Change in Control of the Company or there has been a publicannouncement of a Change in Control of the Company (provided,however, that consummationof the Change in Control of the Company shall be a condition precedent to the effectiveness ofthis provision) and at any time within one (1) year after the consummation of a Change inControl (i) the Company terminates the Executive’s employment without Cause, or (ii) theExecutive 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, ina lump sum in cash within ten (10) business days after the Date of Termination, an amount equalto one (1) times the sum of (A) the Executive’s base salary in effect immediately prior to theoccurrence of the circumstance giving rise to the Notice of Termination given in respect thereofand (B) the maximum bonus or incentive compensation amount for which the Executive iseligible to be awarded pursuant to any bonus or incentive compensation plan, calculated basedupon the bonus period in which the Date of Termination and annualized to the extent that suchbonus period does not reflect a twelve (12) month period and (C) for a twelve (12) month periodafter 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 Executiveis receiving immediately prior to the Notice of Termination;provided, however, that should theCompany be unable to provide for any such benefits under the terms of the benefit plans, or bylaw, the Company shall pay the Executive an amount equal to the premiums the Company wouldhave paid for such benefits under such plans. The Company’s obligations under this Section2(c), if any, shall be contingent upon the Executive executing a general release of all claims infavor of the Company, and its officers, directors and affiliates, in a form provided by theCompany.
(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 Companypursuant to Section 2(b) or Section 2(c) hereof which exist at the time of such death.
3. Successors; Binding Agreement. This Agreement shall be binding upon the partieshereto and their respective successors and assigns. In furtherance of the foregoing, thisAgreement and all rights of the Executive hereunder shall inure to the benefit of and beenforceable by the Executive’s personal or legal representatives, executors, administrators,successors, heirs, distributees, devisees and legatees. If the Executive should die while anyamounts 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 ofthis Agreement to the Executive’s devisee, legatee, or other designee or, if there be no suchdesignee, to the Executive’s estate.
4. Notice. For the purposes of this Agreement, notices, demands and all othercommunications provided for in this Agreement shall be in writing and shall be deemed to havebeen 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,
- 3 -
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 withrespect to the subject matter hereof (except for stock option agreements) are hereby supersededand terminated effective as of the date hereof and shall be without further force or effect. ThisAgreement is intended to be, and shall be, a complete integration of all prior agreements anddiscussions 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 asconstituting a commitment, guarantee, agreement or understanding of any kind or nature that theCompany shall continue to employ the Executive, nor shall this Agreement affect in any way theright of the Company to terminate the employment of the Executive at any time and for anyreason. By the Executive’s execution of this Agreement, the Executive acknowledges and agreesthat the Executive’s employment is “at will.” No change of the Executive’s duties as anemployee of the Company shall result in, or be deemed to be, a modification of any of the termsof this Agreement.
7. No Mitigation. The Company agrees that, if the Executive’s employment isterminated during the term of this Agreement, the Executive is not required to seek otheremployment or to attempt in any way to reduce any amounts payable to the Executive by theCompany. Further, the amount of any payment provided hereunder shall not be reduced by anycompensation earned by the Executive.
8. Miscellaneous. No provisions of this Agreement may be modified, waived ordischarged unless such waiver, modification or discharge is agreed to in writing signed by theExecutive and a duly authorized officer of the Company. No waiver by either party hereto at anytime of any breach by the other hereto of, or compliance with, any condition or provision of thisAgreement to be performed by such other party shall be deemed a waiver of similar or dissimilarprovisions or conditions at the same or at any prior or subsequent time. No agreements orrepresentations, oral or otherwise, express or implied, with respect to the subject matter hereofhave been made by either party which are not set forth expressly in this Agreement. Thevalidity, interpretation, construction and performance of this Agreement shall be governed by thelaws of the Commonwealth of Virginia, without regard to provisions thereof relating to choice oflaw or conflicts of law. This Agreement may be executed in two or more counterparts, each ofwhich shall be deemed an original, but all of which together shall constitute one and the sameinstrument. This Agreement may be executed by facsimile signatures.
9. Validity. The invalidity or unenforceability of any provision or provisions of thisAgreement shall not affect the validity or enforceability of any other provision of thisAgreement, which shall remain in full force and effect.
[Signatures appear on following page.]
- 4 -
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/ David Mitchell | | |
| | | Name: | | David Mitchell | | |
| | | Title: | | CEO | | |
| | | | | | | |
| | | EXECUTIVE: | | |
| | | | | | | |
| | | /s/ Michael L. Krone | | |
| | | | | |
| | | Michael L. Krone | | |
