Exhibit 10.1
WEBMETHODS, INC.
2006 OMNIBUS STOCK INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
     This Restricted Stock Award Agreement (this “Agreement”) is between
                    (the “Employee”) and webMethods, Inc., a Delaware
corporation (the “Corporation”). This Agreement governs an award made to
Employee pursuant to the Corporation’s 2006 Omnibus Stock Incentive Plan (the
“Plan”). The Corporation and Employee agree as follows:
     1. Grant. Effective as of                      (the “Grant Date”), the
Compensation Committee of the Board of Directors of the Corporation awarded the
Employee                      shares of the Corporation’s Common Stock subject
to the vesting and other restrictions provided in this Agreement (the
“Restricted Stock”). Except as may otherwise be required by law, no payment by
the Employee is required for the Restricted Stock. Shares of Restricted Stock
may not be sold, pledged, assigned, transferred, or otherwise encumbered or
disposed of for any reason until vesting restrictions on such shares are removed
in accordance with this Agreement. Any attempt to dispose of unvested shares of
Restricted Stock or any interest in such shares in a manner contrary to the
restrictions set forth in this Agreement shall be void and of no effect.
     2. Vesting Generally. The award will vest in four (4) equal annual
installments of twenty-five percent (25%) of the shares covered by the award
beginning on the first annual anniversary of the Grant Date and subsequently on
the second, third and fourth annual anniversary of the Grant Date. Each
installment shall vest and thereby all vesting restrictions shall be removed on
the installment so long as the Employee has remained employed by the Corporation
or a Subsidiary (as defined in the Plan) through the day on which the
installment is scheduled to vest. Except as provided in Section 3 below, shares
of Restricted Stock which have not vested as of such date of termination shall
be forfeited and returned to the Corporation upon such termination.
     3. Vesting Following Change of Control. For purposes of this Agreement, a
“Change of 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 Corporation representing fifty percent (50%) or more of the
combined voting power of the Corporation’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
of Directors of the Corporation 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
Corporation approve a merger or consolidation involving the Corporation that
would result in a change of ownership of a majority of the outstanding shares of
capital stock of the Corporation or its successor, or (D) the shareholders of
the Corporation approve a plan of liquidation or dissolution of the Corporation
or the sale or disposition by the Corporation of all or substantially all the
Corporation’s assets. Notwithstanding any other provision of this Agreement to
the contrary, any unvested portion of the Restricted Stock shall thereupon vest
if, within one (1) year after a Change of Control of the Corporation, there is
(i) a termination of Employee’s employment by the Corporation or a Subsidiary or
Parent other than for Cause (as defined below) or (ii) a voluntary termination
by Employee of Employee’s employment with the Corporation or a Subsidiary or
Parent within ninety (90) days after Good Reason (as defined below) shall first
exist. For purposes of this Agreement, “Cause” shall mean (i) embezzlement,
theft, fraud, or any other act of dishonesty involving the Corporation or a
Subsidiary or Parent or any of their customers, suppliers or business partners,
(ii) Employee’s conviction of a felony, or any other crime involving moral
turpitude, or (iii) a violation of a written agreement between Employee and the
Corporation or a Subsidiary or Parent, including but not limited to Sections 6,
7, 8, 9, or 10 of Employee’s stock option agreement with the Corporation, that
certain Proprietary Information and Assignment of Inventions Agreement or that
certain letter agreement providing for nondisclosure of “Protected Information”
and assignment of inventions. For purposes of this Agreement, “Good Reason”
shall mean (i) a material reduction in Employee’s base salary, (ii) a material
reduction in Employee’s duties without Employee’s consent, or (iii) a relocation
of Employee’s regular place of work to any location outside a thirty (30) mile
radius of the location from which Employee served the Corporation or a
Subsidiary or Parent thirty (30) days prior to the date of such Change of
Control of the Corporation without Employee’s consent.

 

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     4. Stock Certificates and Restrictions. Subject to the provisions of this
Section 4, the full number of shares of Restricted Stock have been or shall
promptly be deposited in an account for the Employee at the Corporation’s
transfer agent. The Corporation reserves the right at its sole discretion to
change the financial institution or agent in which the shares are deposited or
the certificates for shares are held. These shares are nontransferable and are
otherwise subject to the Plan and this Agreement until the vesting restrictions
are removed or the shares are returned to the Corporation. The Corporation may
place such legends on any certificates for Restricted Stock as it deems
appropriate, including a legend (“Restrictive Legend”) in substantially the
following form:
The ownership and transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the webMethods, Inc. 2006 Omnibus Stock Incentive Plan (the
“Plan”) and a Restricted Stock Award Agreement (the “Agreement”) entered into
between the registered owner and webMethods, Inc. Copies of such Plan and
Agreement are on file in the executive offices of webMethods, Inc.
In addition, the stock certificate or certificates for the Restricted Stock
shall be subject to such stop-transfer orders and other restrictions as the
Corporation may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange or
securities association upon which the Common Stock of the Corporation is then
listed, and any applicable federal or state securities law. The Employee has the
right to vote the full number of shares and to receive any declared dividends or
other distributions associated with the shares. On or before the issuance of the
certificate or certificates representing the Restricted Stock, the Employee
shall deliver to the Corporation stock powers endorsed in blank relating to the
Restricted Stock, in a form provided by the Corporation. Employee hereby
irrevocably appoints the Corporation and each of its officers, employees and
agents as his true and lawful attorneys with power (i) to sign in Employee’s
name and on Employee’s behalf stock certificates and stock powers covering the
Restricted Stock and such other documents and instruments as the Corporation
deems necessary or desirable to carry out the terms of this Agreement and
(ii) to take such other action as the Corporation deems necessary or desirable
to effectuate the terms of this Agreement. This power, being coupled with an
interest, is irrevocable. As soon as administratively practicable following the
applicable vesting date of the Restricted Stock, and upon the satisfaction of
all other applicable conditions as to such vested percentage of Restricted
Stock, including, but not limited to, the payment by the Employee of all
applicable withholding taxes, the Corporation shall deliver or cause to be
delivered to the Employee a certificate or certificates for the applicable
shares of Restricted Stock which shall not bear the Restrictive Legend.
     5. Corporate Event. In the event of the declaration of a stock dividend,
the declaration of an extraordinary dividend payable in a form other than stock,
a spin-off, a stock split, a recapitalization, a merger or a similar transaction
affecting the Corporation’s outstanding securities without receipt of
consideration, any new, substituted or additional securities or other property
(including money paid other than as an ordinary cash dividend) which are
distributed to the Employee with respect to shares of Restricted Stock which
have not already vested shall immediately be subject to the vesting and other
restrictions of this Agreement to the same extent as the shares of Restricted
Stock to which such distributed property relates.
     6. Taxation. Employee acknowledges that Section 83(a) of the Internal
Revenue Code of 1986, as amended (the “Code”), taxes as ordinary compensation
income the fair market value of shares of Restricted Stock on the date as of
which Employee’s rights to retain each such share of Restricted Stock vests.
Thus, shares of Restricted Stock will vest and be taxable in increments on the
four annual anniversary dates of such transfer. Accelerated vesting of the
Restricted Stock will also accelerate the date of taxation. Employee
acknowledges that Employee may elect to be taxed on the fair market value of
some or all of the Restricted Stock at the time such shares are transferred to
Employee, rather than at those times when Employee’s right to retain the
Restricted Stock vest, by filing an election under Section 83(b) of the Code (a
“Section 83(b) Election”) with the Internal Revenue Service within 30 days from
the date of the transfer of the Restricted Stock to Employee. Employee
acknowledges that failure to file such an election in a timely manner results in
the inability to file such election. Employee further acknowledges that an
additional copy of such election form should be filed with Employee’s federal
income tax return for the calendar year to which such election applies. Employee
acknowledges and agrees that the foregoing is only a summary of the effects of
United States federal income taxation with respect to the Restricted Stock and
does not purport to be complete. Employee further acknowledges and agrees that
the Corporation has directed Employee to seek independent professional advice
regarding the tax consequences of receipt of the Restricted Stock under

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federal, state and local law. Employee acknowledges and agrees that if the
Employee decides to file a Section 83(b) Election it is Employee’s sole
responsibility, and not the Corporation’s or its affiliate’s, to file a timely
election, even if Employee requests the Corporation, its affiliate or its
representatives to make the filing on Employee’s behalf.
     7. Withholding Taxes. Employee acknowledges that upon occurrence of the
taxable event with respect to the Restricted Stock, Employee will be responsible
for payment of taxes due. The Corporation shall have the power and the right to
deduct or withhold, or require the Employee to remit to the Corporation, an
amount sufficient to satisfy federal, state, and local taxes (including the
Employee’s FICA obligation), domestic or foreign, required by law to be withheld
with respect to any exercise of the Employee’s rights under this Agreement as
well as upon the vesting of the Restricted Stock. Unless the Employee has made
alternative arrangements acceptable to the Corporation, the Employee may, in the
Corporation’s sole discretion, pay applicable minimum required withholding taxes
due by having the Corporation withhold shares that would otherwise be released
from vesting restrictions, in which case such withheld shares shall be
transferred back to the Corporation. The Corporation shall be authorized, in its
sole discretion, to establish such rules and procedures relating to the use of
shares of Common Stock of the Corporation to satisfy tax withholding obligations
as it deems necessary or appropriate to facilitate and promote the conformity of
the Employee’s transactions under the Plan and this Agreement with Rule 16b-3
under the Securities Exchange Act of 1934, as amended, if such Rule is
applicable to a transaction by the Employee.
     8. Construction of “Employee”. Wherever the word “Employee” is used in any
provision of this Agreement under circumstances where the provision should
logically be construed to apply to the executors, the administrators, or the
person or persons to whom the Restricted Stock may be transferred by will or the
laws of descent and distribution, the word “Employee” shall be deemed to include
such person or persons.
     9. Entire Agreement; Amendment. This Agreement represents the full and
complete understanding between Employee and the Corporation with respect to the
subject matter hereof. The Corporation may waive, amend, cancel, extend, renew,
accept the surrender of, modify or accelerate the vesting of or lapse of
restrictions on all or any portion of the Restricted Stock hereunder without the
consent of Employee. The Corporation may waive, change, or modify any portion of
this Agreement from time to time without the consent of Employee, including,
without limitation, as the Corporation shall deem necessary or advisable in
order to comply with Section 409A of the Code; provided, however, that to the
extent that any such waiver, change or modification adversely affects the rights
of Employee, such waiver, change or modification of this Agreement shall, to
such extent, be in writing and executed by the parties hereto.
     10. Terms and Conditions of Plan. The terms and conditions included in the
Plan are incorporated by reference herein, and to the extent that any conflict
may exist between any term or provision of this Agreement and any term or
provision of the Plan, such term or provision of the Plan shall control.
     11. Choice of Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Delaware without regard to
its conflict of law principles.
     12. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any entity with which or into which the Corporation may be merged or
which may succeed to its assets or business or any entity to which the
Corporation may assign its rights and obligations under this Agreement.
     13. Employment of Employee. Nothing in this Agreement shall be construed as
constituting a commitment, guarantee, agreement or understanding of any kind or
nature that the Corporation shall continue to employ Employee, nor shall this
Agreement affect in any way the right of the Corporation to terminate the
employment of Employee, at any time and for any reason. By Employee’s execution
of this Agreement, Employee acknowledges and agrees that Employee’s employment
is “at will.” No change of Employee’s duties as an employee of the Corporation
shall result in, or be deemed to be, a modification of any of the terms of this
Agreement.
     14. Invalid or Unenforceable Provisions. The provisions of this Agreement
shall be deemed severable, and the invalidity or unenforceability of any one or
more of the provisions hereof shall not affect the

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validity and enforceability of the other provisions hereof. Employee agrees that
the breach or alleged breach by the Corporation of (a) any covenant contained in
another agreement (if any) between the Corporation and Employee or (b) any
obligation owed to Employee by the Corporation, shall not affect the validity or
enforceability of the covenants and agreements of Employee set forth herein.
     15. Notices. Any and all notices provided for herein shall be sufficient if
in writing, and sent by hand delivery or by certified or registered mail (return
receipt requested and first- class postage prepaid) or by reputable overnight
courier service, in the case of the Corporation, to its principal office and to
the attention of its General Counsel, and, in the case of Employee, to
Employee’s address as shown on the Corporation’s records.
     16. Further Assurances. Employee agrees, upon demand of the Corporation, to
do all acts and execute, deliver and perform all additional documents,
instruments and agreements (including, without limitation, stock powers with
respect to shares of common stock of the Corporation issued as a dividend or
distribution on Restricted Stock) which may be reasonably required by the
Corporation, to implement the provisions and purposes of this Agreement and the
Plan.
     17. Headings. The headings and other captions contained in this Agreement
are for convenience of reference only and shall not be used in interpreting,
construing or enforcing any of the provisions of this Agreement.
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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the Grant Date.

                  WEBMETHODS, INC.    
 
           
 
  By:        
 
  Name:  
 
   
 
           
 
  Title:        
 
           
 
           
 
  EMPLOYEE    
 
                     

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