EXHIBIT 10.89

SEGUE SOFTWARE, INC.

Special Termination and Vesting Plan

1. Executives Covered. This Special Termination and Vesting Plan (the “Plan”)
shall apply to all executive employees with the title of President, Chief
Executive Officer, Chief Financial Officer, Chief Technical Officer, Senior Vice
President and Executive Vice President (each, a “Covered Executive;”
collectively, the “Covered Executives”) of Segue Software, Inc. (the “Company”)
or any of its subsidiaries or affiliates.

2. Certain Definitions. For purposes of this Plan, the following terms shall
have the following meanings:

(a) Change in Control. A “Change in Control” shall mean the occurrence of any
one of the following events:

(i) any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Act”) (other than the Company, any of its
subsidiaries, any trustee, fiduciary or other person or entity holding
securities under any employee benefit plan or trust of the Company, or any of
its subsidiaries), together with all “affiliates” and “associates” (as such
terms are defined in Rule 12b-2 under the Act) of such person, shall become the
“beneficial owner” (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 50% or more of
the then outstanding shares of Common Stock of the Company (the “Stock”) (other
than as a result of an acquisition of securities directly from the Company); or

(ii) persons who, as of the date hereof, constitute the Company’s Board of
Directors (the “Incumbent Directors”) cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that any
person becoming a director of the Company subsequent to the date hereof whose
election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director; or

(iii) the stockholders of the Company shall approve (A) any consolidation or
merger of the Company or any subsidiary of the Company where the shareholders of
the Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, shares
representing in the aggregate 50% of the voting shares of the corporation
issuing cash or securities in the consolidation or merger (or of its ultimate
parent corporation, if any). (B) any sale, lease, exchange or other

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transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Stock outstanding, increases the proportionate number of shares of Stock
beneficially owned by any person to 50% or more of the shares of Stock then
outstanding; provided, however, that if any such person shall thereafter become
the beneficial owner of any additional shares of Stock (other than pursuant to a
share split, stock dividend, or similar transaction), then a “Change in Control”
shall be deemed to have occurred for purposes of the foregoing clause (i).

(b) Terminating Event. A “Terminating Event” shall mean any of the following
events:

(i) termination by the Company of the employment of the Covered Executive with
the Company for any reason other than for Cause or the death of the Covered
Executive. “Cause” shall mean, and shall be limited to, the occurrence of any
one or more of the following events:.

(A) a willful act of dishonesty by the Covered Executive with respect to any
matter involving the Company or any subsidiary or affiliate; or

(B) conviction of the Covered Executive of a crime involving moral turpitude; or

(C) the deliberate or willful failure by the Covered Executive (other than by
reason of the Covered Executive’s physical or mental illness, incapacity or
disability) to substantially perform the Covered Executive’s duties with the
Company and the continuation of such failure for a period of 30 days after
delivery by the Company to the Covered Executive of written notice specifying
the scope and nature of such failure and its intention to terminate the Covered
Executive for Cause.

A Terminating Event shall not be deemed to have occurred pursuant to this
Section 2(b)(i) solely as a result of the Covered Executive being an employee of
any direct or indirect successor to the business or assets of the Company,
rather than continuing as an employee of the Company following a Change in
Control. For purposes of clauses (A) and (C) of this Section 2(b)(i), no act, or
failure to act, on the Covered Executive’s part shall be deemed

 

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“willful” unless done, or omitted to be done, by the Covered Executive without
reasonable belief that the Covered Executive’s act, or failure to act, was in
the best interest of the Company and its subsidiaries and affiliates; or

(ii) termination by the Covered Executive of the Covered Executive’s employment
with the Company for Good Reason. “Good Reason” shall mean the occurrence of any
of the following events:

(A) a substantial adverse change, not consented to by the Covered Executive, in
the nature or scope of the Covered Executive’s responsibilities, authorities,
powers, functions, or duties from the responsibilities, authorities, powers,
functions, or duties exercised by the Covered Executive immediately prior to the
Change in Control; or

(B) a reduction in the Covered Executive’s annual base salary as in effect on
the date of adoption of this Plan or as the same may be increased from time to
time except for across-the-board salary reductions similarly affecting all or
substantially all management employees; or

(C) the relocation of the Company’s offices at which the Covered Executive is
principally employed immediately prior to the date of a Change in Control to a
location more than fifty (50) miles from such offices, or the requirement by the
Company for the Covered Executive to be based anywhere other than the Company’s
offices at such location, except for required travel on the Company’s business
to an extent substantially consistent with the Covered Executive’s business
travel obligations immediately prior to the Change in Control; or

(D) the failure by the Company to pay to the Covered Executive any portion of
his compensation or to pay to the Covered Executive any portion of an
installment of deferred compensation under any deferred compensation program of
the Company within fifteen (15) days of the date such compensation is due
without prior written consent of the Covered Executive; or

(E) the failure by the Company to obtain an effective agreement from any
successor to assume and agree to perform this Agreement.

Any termination by the Covered Executive of such Covered Executive’s employment
with the Company for any reason other than Good Reason shall not be deemed to be
a Terminating Event hereunder.

 

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3. Special Termination Benefits. Subject to the provisions of Section 4 below,
in the event that a Terminating Event occurs with respect to a Covered Executive
within one (1) year after a Change in Control, such Covered Executive shall be
provided with the following Special Termination Benefits:

(a) the Company shall pay to the Covered Executive an amount equal to the base
salary received by the Covered Executive in the calendar year immediately prior
to the Change in Control, determined prior to any reductions for pre-tax
contributions to a cash or deferred arrangement or a cafeteria plan. Said amount
shall be paid in periodic installments in accordance with the Company’s usual
practice for its senior executives;

(b) the Company shall continue to provide health, dental, long-term disability,
and life insurance benefits to the Covered Executive, on the same terms and
conditions as though the Covered Executive had remained an active employee, for
a period of twelve (12) months; and

(c) the Company shall provide COBRA benefits to the Covered Executive following
the end of the period referred to in Section 3(b) above, such benefits to be
determined as though employment had terminated at the end of such period.

4. Adjustments in Special Termination Benefits. The Special Termination Benefits
payable pursuant to Section 3 above shall be adjusted as follows:

(a) All payments shall be reduced by the amount of any severance pay benefits
payable to any officer under any employment, change in control or special
termination agreement or severance pay benefits or notice pay to any employee
under any “tin parachute,” WARN, or similar law.

(b) In the event that the Special Termination Benefits payable to any Covered
Executive pursuant to this Plan, together with any payments to or for the
benefit of the Covered Executive under any other agreement or plan pursuant to
which the Covered Executive is entitled to receive payments or benefits, in the
aggregate exceeds the amount that may be deducted by the entity making the
payment by reason of the operation of Section 280G of the Internal Revenue Code
of 1986, as amended. the amount of the Special Termination Benefits shall be
reduced to the maximum which may be deducted by such entity.

(c) All payments will be subject to usual and customary tax withholding.

(d) Notwithstanding anything to the contrary contained herein, the Special
Termination Benefits payable pursuant to Section 3 above shall be subject to the
Covered Executive’s continued compliance with any non-compete. confidentiality
or other obligations of such Covered Executive pursuant to any written agreement
between the Company and the Covered Executive.

 

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5. Vesting of Options. In the event that a Terminating Event occurs with respect
to a Covered Executive within one (1) year after a Change in Control,
notwithstanding anything to the contrary contained in the Company’s Amended and
Restated Incentive and Non-qualified Stock Option Plan (as amended from time to
time, the “Option Plan”), any option agreement granted under the Option Plan or
any other agreement between the Company and a Covered Executive pursuant to
which options to purchase shares of Stock of the Company have been or are
granted (including, without limitation, the definition of “cause” contained
therein), upon such Terminating Event, all outstanding options held by such
Covered Executive, whether or not previously exercisable by such Covered
Executive, shall become exercisable by the Covered Executive.

6. Enforceability. If any portion or provision of this Plan shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then
the remainder of this Plan, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Plan shall be valid and enforceable to the fullest extent permitted by law.

7. Effect on Other Plans. Nothing in this Plan shall be construed to limit the
rights of the Covered Executive under the Company’s benefit plans, programs or
policies except as otherwise provided in Section 3 hereof, and except that the
Covered Executive shall have no rights to any severance benefits under any
severance pay plan.

8. Obligations of Successors. In addition to any obligations imposed by law upon
any successor to the Company, the Company will use its best efforts to require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
to expressly assume and agree to perform this Plan in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place.

9. Amendment or Termination of Plan. The Company may amend or terminate this
Plan at any time or from time to time; provided, however, that no such amendment
or termination shall, without the written consent of the Covered Executives, in
any material adverse way affect the rights of a Covered Executive with respect
to benefits earned prior to the date of amendment or termination.

10. No Contract for Continuing Services. This Plan shall not be construed as
creating any contract for continued services between the Company and any Covered
Executive and nothing herein contained shall give any Covered Executive the
right to be retained as an employee of the Company.

11. Governing Law. This Plan shall be construed, administered, and enforced in
accordance with the laws of the Commonwealth of Massachusetts.

Adopted: February 5, 1997

 

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