**Exhibit 10.3****Stock Option Agreement****THIS STOCK OPTION AGREEMENT**(this “Agreement”) is made as of the Option Grant Date set forthon the initial Notice of Grant attached hereto by and between (i) WEBMETHODS, INC., a Delawarecorporation (the “Corporation”), and (ii) Participant, an employee of the Corporation or anySubsidiary or Parent, named on each Notice of Grant attached hereto.The Corporation has adopted a 2006 Omnibus Stock Incentive Plan (with all amendments thereto, the“Plan”), a copy of which has been provided or made available to Participant; andIn consideration of the foregoing, of the mutual promises set forth in this Agreement and of othergood and valuable consideration, the receipt and sufficiency of which are acknowledged, theparties, intending to be legally bound, agree as follows:1. Grant of Option. Subject to the terms and conditions set forth in thisAgreement and the respective Notice of Grant, the Corporation hereby grants to Participant theright to purchase, during the period specified in Section 2, the number of shares of Common Stock(those shares of Common Stock are referred to as the “Shares”) set forth on the respective Noticeof Grant at an exercise price of per Share set forth on that Notice of Grant, in accordance withthe terms of this Agreement, that Notice of Grant and the Plan (that right is referred to as the“Option”).2. Duration of Option. The Option shall be effective during the periodcommencing as of the Option Grant Date and ending on the earliest to occur of: (a) failure ofParticipant to promptly return a signed copy of the Notice of Grant (and, if the initial Notice ofGrant, a signed copy of this Agreement) to the Corporation; (b) the date all of the Shares arepurchased pursuant to the terms of this Agreement or are surrendered to the Corporation; (c) ninety(90) days after the date Participant ceases to be employed by the Corporation or any Subsidiary orParent (except for termination due to the death of Participant); (d) the expiration of the one(1)-year period prescribed under Section 3.B; (e) at 5:00 P.M. local time at the headquarters ofthe Corporation on the termination date specified on the respective Notice of Grant; and (f) at5:00 P.M. local time at the headquarters of the Corporation on the day immediately preceding theseventh (7th) anniversary of the Option Grant Date. Upon the expiration of the Option, the Optionshall have no further force or effect, and Participant shall have no further rights in or under theOption or to the Shares which shall not have been purchased by that time pursuant to the Option.3. Exercise of Option.A. Subject to the provisions of Section 2 regarding the duration of the Option, andexcept as provided below, the Option shall vest in periodic increments commencing on the VestingStart Date as provided in the respective Notice of Grant. Notwithstanding the foregoing, vestingof the Option shall terminate immediately upon the Participant ceasing to be employed with theCorporation or a Subsidiary or Parent. The Option may be exercised only to the extent the Optionis vested.The Option may be exercised only if Participant is in compliance with all covenants in, andprovisions of, this Agreement and if compliance with all applicable securities laws can beeffected, including without limitation the existence of an effective registration statement underthe Securities Act of 1933 with respect to the exercise of the Option, and only by (i)Participant’s completion, execution and delivery (by written or electronic means) to theCorporation of a Notice and Request of Exercise in the form specified by the Corporation, (ii) thepayment to the Corporation, as provided in Section 3.C, of an amount equal to the amount obtainedby multiplying the Exercise Price by the number of Shares being purchased pursuant to suchexercise, as shall be specified by Participant in such notice of exercise and (iii) if taxwithholding applies to such exercise, the payment to the Corporation, as provided in Section 3.C,of an amount calculated by the Corporation to be sufficient to satisfy applicable Federal, state,foreign or local tax withholding requirements. Except in the event of the death of a Participant,in which event Participant’s estate, executors or administrators, or personal or legalrepresentatives may exercise the Option in accordance with the terms of Section 3.B, the Option orany of the rights thereunder may be exercised by Participant only, and may not, on an absolute orcontingent basis, be transferred or assigned, in whole or in part, whether voluntarily,involuntarily or by operation of law (including, without limitation, the laws of bankruptcy,intestacy, descent and distribution and succession).
 

 
B. In the event of the death of Participant at such time that Participant shall possessan Option pursuant to the terms of this Agreement, Participant’s estate, executors oradministrators, or personal or legal representatives shall be entitled, for a period of one (1)year following the date of Participant’s death, to exercise the Option, but only to the extent thatParticipant was entitled to exercise the Option on the date of such death. Any person so desiringto exercise Participant’s Option shall be required, as a condition to the exercise of the Option,to furnish to the Corporation such documentation as the Corporation shall deem satisfactory toevidence the exclusive authority of such person to exercise the Option on behalf of Participant.In the event of the exercise of the Option by Participant’s estate, executors or administrators, orpersonal or legal representatives, all references herein to Participant shall, to the extentapplicable, be deemed to refer to and include such estate, executors or administrators, or personalor legal representatives, as the case may be.C. Payment of the amount determined pursuant to Section 3.A shall be made (i) by cash,(ii) by good check, (iii) by delivery of shares of Common Stock owned by Participant valued attheir fair market value as determined by the Board of Directors in good faith (which shares ofCommon Stock shall have been owned by Participant at least six (6) months prior to such delivery),(iv) by the assignment of the proceeds of a sale or loan with respect to some or all of the Sharesbeing acquired upon exercise of the Option (including without limitation, through an exercisecomplying with Regulation T or rules promulgated by the Board of Governors of the Federal ReserveSystem) in accordance with such rules and procedures as the Corporation shall determine or (v) insuch other manner as shall then be acceptable to, and permitted by, the Board of Directors. Inaddition, the Participant may satisfy applicable tax withholding requirements by electing to havethe Corporation withhold from the Shares issuable upon exercise of an Option a number of wholeshares having a fair market value (determined on the date that the amount of tax to be withheld isfixed) not in excess of the aggregate minimum withholding amount required by statute.D. Upon the exercise of the Option by Participant, or as soon thereafter as ispracticable, the Corporation shall issue and deliver to Participant a certificate or certificatesevidencing such number of Shares as Participant has so elected to receive. Such certificate orcertificates shall be registered in the name of Participant and, if applicable, shall bear anappropriate investment warranty legend, any legends required by any applicable securities law, ruleor regulation, any legend referring to the restrictions provided hereunder and under the Plan andany legend required by the law of the jurisdiction of incorporation of the Corporation. Upon theexercise of the Option and the issuance and delivery of such certificate or certificates,Participant shall have all the rights of a stockholder with respect to such Shares and to receiveall dividends or other distributions paid or made with respect thereto; provided, however, thatsuch Shares shall be subject to the restrictions hereunder and in the Plan (if any).E. The Board of Directors of the Corporation may, upon such terms and conditions as itdeems appropriate, accept the surrender by Participant of Participant’s right to exercise theOption, in whole or in part, and authorize a payment in consideration therefor of an amount equalto the difference obtained by subtracting the sum of (i) the Exercise Price of the Shares which arethe subject of such surrendered Option and (ii) an amount calculated by the Corporation to besufficient to satisfy applicable Federal, state, foreign or local tax withholding requirements fromthe fair market value of the Shares which are the subject of such surrendered Option on the date ofsuch surrender (such amount not to be less than zero), such payment to be in cash.F. Notwithstanding any other provision of this Agreement, any unvested portion of theOption shall thereupon vest and the entire Option shall thereupon become immediately exercisableupon consummation of a Change of Control of the Corporation; provided, however thatParticipant shall agree not to terminate Participant’s employment with the Corporation or itssuccessor for a period of up to six months following consummation of such Change of Control for anyreason other than Good Reason, as defined in Section 1(b)(i) in Participant’s Executive Agreementof even date herewith. For purposes of this Agreement, a “Change of Control” shall be deemed tohave occurred if (A) any person (as such term is used in Sections 13(d) and 14(d) of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”), is or becomes the “beneficial owner” (asdefined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of theCorporation representing fifty percent (50%) or more of the combined voting power of theCorporation’s then outstanding securities, (B) during any period of two (2) consecutive yearsduring the term of this Agreement, individuals who at the beginning of such period constitute theBoard cease for any reason to constitute at least a majority thereof, unless the election of eachdirector who was not a director at the beginning of such period has been approved in advance bydirectors representing at least two-thirds of the directors then in office who were directors atthe beginning of the period, (C) the shareholders of the Corporation approve a merger or
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consolidation involving the Corporation that would result in a change of ownership of a majority ofthe outstanding shares of capital stock of the Corporation or its successor, or (D) theshareholders of the Corporation approve a plan of liquidation or dissolution of the Corporation orthe sale or disposition by the Corporation of all or substantially all the Corporation’s assets.4. Changes in Capital Structure of the Corporation. Subject to any requiredaction by the stockholders of the Corporation and the provisions of the applicable law of thejurisdiction of incorporation of the Corporation, the number of Shares subject to this Agreement aswell as the Exercise Price of any Shares not yet purchased by Participant shall be proportionatelyadjusted for (a) a division or combination of the shares of capital stock of the Corporation, (b) adividend payable in shares of capital stock of the Corporation or (c) a reclassification of anyshares of capital stock of the Corporation.5. Rights Prior to Exercise. Participant shall have no equity interest in theCorporation or any voting, dividend, liquidation or dissolution rights with respect to any capitalstock of the Corporation solely by reason of having an Option or having executed this Agreement orany Notice of Grant hereto. Furthermore, prior to the exercise of all or a portion of the Option,as set forth in Section 3.A, and the issuance and delivery of a certificate or certificatesevidencing the Shares purchased pursuant to the exercise of all or a portion of such Option,Participant shall have no interest in, or any voting, dividend, liquidation or dissolution rightswith respect to, the Shares.6. Treatment of Information.A. Participant covenants and agrees that Participant shall not, except with the priorwritten consent of the Corporation, or except if Participant is acting as an employee of theCorporation solely for the benefit of the Corporation in connection with the Corporation’s businessand in accordance with the Corporation’s business practices and employee policies, at any timeduring or within ten (10) years following termination of Participant’s employment by theCorporation, directly or indirectly, disclose, divulge, reveal, report, publish, transfer or use,for any purpose whatsoever, any Confidential Information in any form or format which has beenobtained by or disclosed to Participant as a result of Participant’s employment with theCorporation. “Confidential Information” shall include, without limitation: the terms and conditionsof this Agreement; trade secrets; systems; technology; computer programs, related object and sourcecode or documentation; databases and data residing therein or derived therefrom; procedures;manuals or confidential reports or analysis; the agreements with or terms of any relationship oragreement with any distributor, reseller, customer, systems integrator, business partner orstrategic partner; financial, marketing or sales information and strategy; pricing or accountingdata or methods; licenses, business arrangements or related documentation; the identity of andlists and/or electronic mail addresses relating to customers, prospective customers, systemsintegrators, business partners or strategic partners; personal information and electronic mailaddresses or telephone numbers for employees of or contractors to the Corporation or anysubsidiary; information, concepts, discoveries or ideas relating to the Corporation’s past, presentand future technology, software, services and techniques; information concerning competitiveanalysis or strategy; inventions, improvements, techniques, designs or other technical data; orother information, data or materials concerning any of the Corporation’s business methods,personnel, practices or strategies. Participant acknowledges that Participant’s obligations not touse or disclose the Corporation’s trade secrets after the term of Participant’s employment by theCorporation continue indefinitely and are not subject to the ten (10)-year limitation upon use ordisclosure of Confidential Information. Participant further acknowledges that any information andmaterials received by the Corporation from third parties in confidence (or subject to nondisclosureor similar covenants) shall be deemed to be and shall be Confidential Information within themeaning of this Section 6. The absence of any marking or statement that particular information isconfidential, proprietary or Confidential Information shall not affect its status as ConfidentialInformation.B. Disclosure of any Confidential Information shall not be prohibited if such disclosureis required by a valid and existing order of a court or other governmental body or agency withinthe United States; provided, however, that (i) Participant shall first have given prompt notice tothe Corporation of any possible or prospective order (or proceeding pursuant to which any suchorder may result) and (ii) the Corporation shall have been afforded a reasonable opportunity toprevent or limit any such disclosure. It shall not be a violation of this Agreement forParticipant to disclose to Participant’s legal counsel the provisions of this Agreement, providedthat the purpose of such disclosure is to aid in Participant’s compliance with those provisions,and that Participant’s legal counsel
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agrees in writing to maintain the provisions of this Agreement in strictest confidence. Also, itshall not be a violation of this Agreement for Participant to disclose the provisions of thisAgreement to Participant’s tax advisors, provided that such tax advisors agree in writing tomaintain the provisions of this Agreement in strictest confidence.C. For purposes of this Agreement, Participant may disclose Confidential Informationwhich (i) has been provided to Participant by a third party that is not obligated to maintainconfidentiality or to whom the Corporation owes no duty of confidentiality, (ii) is or becomespublicly available without breach of any other agreement or instrument to which the Corporation isa party or a beneficiary or (iii) is or becomes publicly available without breach of any duty owedto the Corporation by Participant or any third party. Participant acknowledges and agrees that, ifParticipant shall seek to disclose, divulge, reveal, report, publish, transfer or use, for anypurpose whatsoever, any Confidential Information within the scope of this Section 6.C, Participantshall bear the burden of proving that any such Confidential Information shall have become publiclyavailable without a breach of an agreement or instrument to which the Corporation is a party orbeneficiary or the breach of a duty to the Corporation.7. Covenant Not to Compete. Participant covenants and agrees that during theRestricted Period (as defined below) and in the Restricted Area (as defined below), Participantshall not directly, indirectly or in concert with any other person or entity, provide services thatare the same as, or substantially similar to, the services Participant performed for theCorporation at any time during Participant’s employment by the Corporation (the “RestrictedServices”), to or on behalf of a Competing Entity (as defined below).A. “Competing Entity” shall mean any person (including Participant acting on his/her ownbehalf) or entity engaged in actual competition for customers with the Corporation, in the businessof designing, developing, producing, marketing, distributing, licensing, selling, implementing,modifying, deploying, servicing or supporting any software or technology being designed, developed,produced, marketed, demonstrated, distributed, licensed, sold, implemented, modified, deployed,serviced or supported by the Corporation (the “Competing Products”) (i) during the period theRestricted Services were performed for the Corporation or (ii) as of the date of termination ofParticipant’s employment with the Corporation.B. The “Restricted Period” shall mean the period commencing with the Option Grant Dateset forth on the initial Notice of Grant and ending on the later of (i) nine (9) months afterParticipant’s employment with the Corporation ends for any reason whatsoever, including, but notlimited to, involuntary termination by the Corporation, voluntary termination by Participant, amutual decision by the Corporation and Participant, or any other reason; or (ii) nine (9) monthsafter a court of competent jurisdiction enters an order enforcing the terms of this Section 7.C. The “Restricted Area” shall mean any state, province or similar political subdivisionwhere the Corporation has employees and/or has designed, developed, produced, marketed,demonstrated, distributed, licensed, sold, implemented, modified, deployed, serviced or supportedsoftware, technology or services or has a written proposal pending to do the same. In addition tothe foregoing, given the ability of Participant to work remotely for a Competing Entity via theinternet or other technology, the Restricted Area shall include any other state, province orsimilar political subdivision where Participant is physically located while performing RestrictedServices for a Competing Entity that directly or indirectly uses Participant’s services to design,develop, demonstrate, produce, market, demonstrate, distribute, license, sell, implement, modify,deploy, service or support any Competing Product within the Restricted Area or has a writtenproposal pending to do the same.D. Notwithstanding the foregoing, Participant shall not be in violation of this Section 7if Participant is acting as an employee of the Corporation solely for the benefit of theCorporation in connection with the Corporation’s business and in accordance with the Corporation’sbusiness practices and employee policies. Also, Participant shall not be in violation of thisSection 7 if, after the termination of Participant’s employment with the Corporation, Participantprovides services to a Competing Entity in a line of business which the Corporation has abandoned.8. Customer Nonsolicitation Covenant. Participant covenants and agrees that forthe Nonsolicitation Period (as defined below), Participant will not, directly, indirectly, or inconcert with any other person or entity, solicit any Customer (as defined below) where the productsor services at issue are the same as, substantially similar to or substantially derived from thosethen available from the Corporation.
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A. “Customer” shall mean any person or entity that had purchased or utilized products orservices from the Corporation during the twelve (12) month period immediately preceding the earlierof (i) the prohibited solicitation; or (ii) the date of termination of Participant’s employmentwith the Corporation. “Customer” shall also include any person or entity who Participant is, orreasonably should be, aware that the Corporation was actively soliciting (other than by means of ageneral advertising campaign) to purchase the Corporation’s products or services during the twelve(12) month period immediately preceding the earlier of (i) the prohibited solicitation; or (ii) thedate of termination of Participant’s employment by the Corporation.B. The “Nonsolicitation Period” shall mean the period commencing with the Option GrantDate set forth on the initial Notice of Grant and ending on the later of (i) nine (9) months afterParticipant’s employment with the Corporation ends for any reason whatsoever, including, but notlimited to, involuntary termination by the Corporation, voluntary termination by Participant, amutual decision by the Corporation and Participant, or any other reason; or (ii) nine (9) monthsafter a court of competent jurisdiction enters an order enforcing the terms of this Section 8.C. Notwithstanding the foregoing, Participant shall not be in violation of this Section 8if Participant is acting as an employee of the Corporation solely for the benefit of theCorporation in connection with the Corporation’s business and in accordance with the Corporation’sbusiness practices and employee policies.9. Employee/Consultant Nonsolicitation Covenant. Participant covenants andagrees that for the period commencing with the Option Grant Date set forth on the initial Notice ofGrant and ending on the later of (a) two (2) years after Participant’s employment with theCorporation ends for any reason whatsoever, including, but not limited to, involuntary terminationby the Corporation, voluntary termination by Participant, a mutual decision by Corporation andParticipant, or any other reason whatsoever, or (b) two (2) years after a court of competentjurisdiction enters an order enforcing the terms of this Section 8, Participant shall not,directly or indirectly, Solicit (as defined below) any person or entity who was an employee,independent contractor or consultant of the Corporation during the one (1)-year period prior to thedate of termination of Participant’s employment by the Corporation (any such person or entity is a“Covered Person”), in any manner that causes any Covered Person to terminate or otherwise diminishany Covered Person’s relationship with the Corporation.A. “Solicit” shall mean the direct or indirect solicitation for hire or engagement byParticipant of a Covered Person, whether for or on behalf of Participant or for any entity in whichParticipant shall have a direct or indirect interest (or any subsidiary or affiliate of any suchentity), whether as a proprietor, partner, co-venturer, financier, investor or stockholder (otherthan *de minimis*stock holdings), director, officer, employer, employee, servant, agent,representative or otherwise. “Solicit” shall also mean Participant’s direct or indirect hiring orengagement of a Covered Individual, whether for or on behalf of Participant or for any entity inwhich Participant shall have a direct or indirect interest (or any subsidiary or affiliate of anysuch entity), whether as a proprietor, partner, co-venturer, financier, investor or stockholder,director, officer, employer, employee, servant, agent, representative or otherwise.10. Materials. All notes, data, tapes, reference items, sketches, drawings,memoranda, records and other materials in any way relating to the Corporation’s business shallbelong exclusively to the Corporation and Participant agrees to turn over to the Corporation allcopies of such materials in Participant’s possession or under Participant’s control at the requestof the Corporation or, in the absence of such a request, upon the termination of Participant’semployment with the Corporation.11. Reasonableness of Restrictions. PARTICIPANT HAS CAREFULLY READ ANDCONSIDERED THE PROVISIONS OF SECTIONS 6 THROUGH 10 HEREOF INCLUSIVE AND SECTION 15 HEREOF AND,HAVING DONE SO, AGREES THAT THE RESTRICTIONS SET FORTH IN SUCH SECTIONS ARE FAIR AND REASONABLE ANDARE REASONABLY REQUIRED TO PROTECT THE INTERESTS OF THE CORPORATION, AND ITS OFFICERS, DIRECTORS,STOCKHOLDERS AND EMPLOYEES, INCLUDING BUT NOT LIMITED TO, THE GOODWILL THE CORPORATION HASDEVELOPED WITH ITS CUSTOMERS AND THE PROTECTION OF THE CORPORATION’S CONFIDENTIAL INFORMATION ANDTRADE SECRETS.
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12. Employment of Participant. Nothing in this Agreement shall be construed asconstituting a commitment, guarantee, agreement or understanding of any kind or nature that theCorporation shall continue to employ Participant, nor shall this Agreement affect in any way theright of the Corporation to terminate the employment of Participant, at any time and for any reasonif Participant is employed in the United States. By Participant’s execution of this Agreement,Participant acknowledges and agrees that Participant’s employment, if that employment is within theUnited States, is “at will.” No change of Participant’s duties as an employee of the Corporationshall result in, or be deemed to be, a modification of any of the terms of this Agreement.13. No Prior Agreements. Participant represents that Participant’s performanceof all the terms of this Agreement and any services to be rendered as an employee of theCorporation do not and shall not breach any fiduciary or other duty or any covenant, agreement orunderstanding (including, without limitation, any agreement relating to any proprietaryinformation, knowledge or data acquired by Participant in confidence, trust or otherwise prior toParticipant’s employment by the Corporation) to which Participant is a party or by the terms ofwhich Participant may be bound.14. Burden and Benefit; Corporation. This Agreement shall be binding upon, andshall inure to the benefit of, the Corporation and Participant, and their respective heirs,personal and legal representatives, successors and assigns. As used in Sections 6 through 13inclusive, this Section 14 and Sections 15 and 21, the term the “Corporation” shall also includeany corporation or other entity which is the parent or a subsidiary of the Corporation or anycorporation or entity which is an affiliate of the Corporation by virtue of common (although notidentical) ownership, and for which Participant is providing services in any form duringParticipant’s employment with the Corporation or any such other corporation or entity. Participanthereby consents to the enforcement of any and all of the provisions of this Agreement by or for thebenefit of the Corporation and any such other corporation or entity.15. Accounting for Profits; Indemnification. Participant covenants and agreesthat, if Participant shall violate any of Participant’s covenants or agreements contained in thisAgreement, the Corporation shall be entitled to an accounting and repayment of all profits, gains,compensation, royalties, commissions, remunerations or benefits which Participant directly orindirectly shall have realized or may realize relating to, growing out of or in connection with (i)any such violation; and (ii) any grant of Options under this Agreement; such remedy shall be inaddition to and not in limitation of any injunctive relief or other rights or remedies to which theCorporation is or may be entitled at law or in equity or otherwise under this Agreement.Participant agrees that the Corporation may obtain injunctive or equitable relief without posting abond. Participant hereby agrees to defend, indemnify and hold harmless the Corporation against andin respect of: (i) any and all losses and damages resulting from, relating or incident to, orarising out of any misrepresentation or breach by Participant of any warranty, covenant oragreement made or contained in this Agreement; and (ii) any and all actions, suits, proceedings,claims, demands, judgments, costs and expenses (including reasonable attorneys’ fees) incident tothe foregoing.16. Forum Choice. Participant consents to the personal and subject matterjurisdiction and venue of the Circuit Court for Fairfax County, Virginia, USA and the U.S. DistrictCourt for the Eastern District of Virginia, USA, with respect to any and all causes of actionpertaining to this Agreement, and agrees to accept service of process made in accordance with thestatutes of Virginia and the United States. Participant and the Corporation agree that theexclusive forum for any and all causes of action pertaining to this Agreement shall be the CircuitCourt for Fairfax County, Virginia, USA and the U.S. District Court for the Eastern District ofVirginia, USA.17. Genders. The use of any gender herein shall be deemed to be or include theother genders and the use of the singular herein shall be deemed to be or include the plural (andvice versa), wherever appropriate.18. Headings. The headings and other captions contained in this Agreement arefor convenience of reference only and shall not be used in interpreting, construing or enforcingany of the provisions of this Agreement.19. Entire Agreement. This Agreement, the Notice(s) of Grant, and the Plan setforth all of the promises, agreements, conditions, understandings, warranties and representationsbetween the parties hereto with respect to the subject matter of this Agreement, and there are nopromises, agreements, conditions, understandings, warranties or representations, oral or written,express or implied, between them with respect to the Option or the Shares other than as set forthherein. This Agreement, the Notice of Grant, and the Plan are, and are intended by the parties tobe, an
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integration of any and all prior agreements or understandings, oral or written, with respect to theOption and the Shares. **The terms and conditions of this Agreement shall apply to any future grantsof Common Stock to Participant pursuant to the Plan and the term “Option Grant Date” shall refer tosuch subsequent grant date as appropriate. Any such future grants and acceptance thereof shall beevidenced by the completion, execution and attachment to this Agreement of an additional Notice ofGrant, in substantially the form of the initial Notice of Grant, or as otherwise provided by theCorporation, which shall be incorporated herein by reference**.20. Notices. Any and all notices provided for herein shall be sufficient if inwriting, and sent by hand delivery or by certified or registered mail (return receipt requested andfirst- class postage prepaid), in the case of the Corporation, to its principal office and to theattention of its General Counsel, and, in the case of Participant, to Participant’s address asshown on the Corporation’s records.21. Invalid or Unenforceable Provisions. The provisions of this Agreement shallbe deemed severable, and the invalidity or unenforceability of any one or more of the provisionshereof shall not affect the validity and enforceability of the other provisions hereof.Participant agrees that the breach or alleged breach by the Corporation of (a) any covenantcontained in another agreement (if any) between the Corporation and Participant or (b) anyobligation owed to Participant by the Corporation, shall not affect the validity or enforceabilityof the covenants and agreements of Participant set forth herein.22. Governing Law. This Agreement shall be construed and enforced in accordancewith the substantive laws of the jurisdiction of incorporation of the Corporation excludingconflicts-of-law principles.23. Modifications. 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 anyportion of the Option hereunder without the consent of Participant. The Corporation may waive,change, or modify any portion of this Agreement from time to time without the consent ofParticipant, except to the extent that such waiver, change or modification adversely affects therights of Participant, in which case such waiver, change or modification of this Agreement shall,to such extent, be in writing and signed by the parties hereto. In furtherance and not inlimitation of the foregoing, Participant and the Corporation agree that any waiver, change ormodification that may cause an Incentive Stock Option to become a Nonqualified Stock Option shallnot be treated as adversely affecting the rights of the Participant. Participant hereby covenantsand agrees to execute any amendment to this Agreement which shall be required or desirable (in theopinion of the Corporation or its counsel) in order to comply with any applicable securities law orrule or any rule or regulation promulgated or proposed under the Code by the Internal RevenueService.24. Terms and Conditions of Plan. The terms and conditions included in the Planare incorporated by reference herein, and to the extent that any conflict may exist between anyterm or provision of this Agreement and any term or provision of the Plan, such term or provisionof the Plan shall control.**[Signatures Next Page]**
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     **IN WITNESS WHEREOF**, the Corporation and Participant have executed this Agreement as of theOption Grant Date.     **CORPORATION**:       WEBMETHODS, INC., a Delaware corporation       By:       David Mitchell      Authorized Person            **PARTICIPANT**:       /s/ Kenneth A. Sexton     Kenneth A. Sexton       Address:                             
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