exv10w16



 






Exhibit 10.16




[Interwoven, Inc. Letterhead]




September 4, 2007




Scipio “Max” Carnecchia

c/o Interwoven, Inc.

803 11th Avenue

Sunnyvale, CA 94089




Dear Max:




     Since February 28, 2006 you have filled the role of President of Interwoven, Inc. (the
“Company”), first on an “interim” basis and, since September 14, 2006 on a non-interim basis.
Although your employment is “at will,” and may be terminated by you or the Company at any time,
Interwoven wishes to provide you with certain assurances regarding separation benefits as an
incentive for you to continue your employment with the Company as its President.



     1. Severance Benefits. In the event that your employment is terminated by the Company
for reasons other than Cause or is terminated by you within twelve (12) months after the occurrence
of Good Reason (in each case, other than a termination of employment in connection with a Sale of
the Company which is addressed in Section 2 below), you will be entitled to the following severance
benefits:




A. Salary. A cash payment equal to nine (9) months of your current salary (or such
higher salary as may be in effect at the time of termination).




B. Bonus. A cash payment equal to 75% of your total “on target” bonus amount in
effect for the calendar year in which termination occurs, plus any earned but unpaid
bonus for any prior fiscal year to the extent previously accrued by the Company.




C. Medical Benefits. The Company will pay, or promptly reimburse you for, COBRA
premiums (covering the medical benefit plans in which you and your dependents are enrolled
through the Company at the time of termination) for the nine (9) month period immediately
following termination of your employment with the Company (provided COBRA coverage is timely
elected by you and/or your dependents).




D. Vesting Acceleration. The vesting of each stock option and RSU awarded to you
after October 1, 2005, will be accelerated by nine
(9) months such that the total number of shares vested under such equity award will, after such acceleration, be equal to the number
of shares scheduled to be vested under such equity award as of the nine (9) month
anniversary of the date of termination of your employment with the Company had you remained
employed through such date (but treating any cliff vesting or other non-monthly vesting as
occurring in ratable increments on a monthly basis). In addition, the lapsing of the sale
and transfer restrictions applicable to the stock options held by you at October 1, 2005
will be accelerated by nine (9) months.




E. Definition of Cause and Good Reason. For purposes of this Section 1, “Cause”
means any of the following: (i) you have intentionally engaged in unfair competition with



 









 






the Company or committed an act of embezzlement, fraud or theft with respect to the property
of the Company in a manner causing material loss, damage or injury to or otherwise
materially endangering the property, reputation or employees of the Company, (ii) you have
been found guilty of or have pled nolo contendere to the commission of a felony offense or
(iii) you have willfully and continually failed to substantially perform your duties with
the Company after having received written notice specifying such failure, an opportunity to
meet with the Company’s Board of Directors to discuss such failure, and a reasonable
opportunity (of 30 days or more) to cure such failure to perform. For purposes of this
Section 1, “Good Reason” means either (a) a material diminution in your duties,
responsibilities or authority, (b) removal of you from the position of President without
your express written consent; or (c) a reduction in your annual base salary or in your
annual total OTE compensation (base salary and target bonus compensation); in each case
after (i) you have notified the Company in writing within ninety (90) days of such
occurrence, (ii) the Company has had an opportunity of not less than thirty (30) days to
cure such occurrence, and (iii) the Company has failed to cure and you have notified the
Company of such failure.



     2. Severance Upon a Sale of the Company. In the event that there is a Sale of the
Company and your employment as President is terminated by the Company or its successor without
Cause in connection with or following the Sale of the Company, you will be entitled to the
following severance benefits. For purposes of the severance benefits provided for in this
Section 2, “Sale of the Company” and “Cause” shall each have the meaning given to such terms by the
Company’s Board of Directors on July 11, 2002 and set forth in an Addendum to Stock Option
Agreement governing each stock option that you presently hold (for reference, a form of such
Addendum is attached), and a termination without Cause by the Company shall also include a
voluntary termination of employment by you within thirty (30) days after the effective date of a
reduction in your annual base salary or in your annual total OTE compensation in effect immediately
prior to the Sale of the Company:




A. Salary, Bonus and Medical Benefits: as set forth in Paragraphs A, B and C of
Section 1 above, subject to, and to commence upon completion of, the period of transitional
services, if any, referenced in paragraph C below.




B. Vesting Acceleration: Vesting of each equity award made after October 1, 2005
will be accelerated as to an additional number of shares equal to the greater of (i) 50% of
the shares that were unvested under such equity award at the closing of the Sale of the
Company, and (ii) the number of shares as to which vesting would be accelerated pursuant to
the provisions of paragraph D of Section 1 above. In addition, the lapsing of the sale and
transfer restrictions applicable to each stock option held by you at October 1, 2005 will be
released as to 50% of the shares covered by such option that are subject to such
restrictions at the closing of the Sale of the Company or, if greater, the number of shares
covered by such option that are scheduled to be released from such restrictions during the
nine (9) months immediately following the date of termination.




C. Transitional Services: As a condition to receiving severance benefits as
described in paragraph A of this Section 2 upon a Sale of the Company, if you elect to
voluntarily terminate your employment pursuant to this Section 2, you agree to render
transitional services, at your level of cash compensation (salary and pro rata “on target”
bonus) in effect immediately prior to the Sale of the Company, for such period of time of up
to three months following the Sale of the Company and on up to a full-time basis as may be



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requested by the Board of Directors of the Company or of its successor. The end of any
transitional service period shall be considered the date of termination of services and
vesting of that portion of equity awards that has not been accelerated would continue during
the transitional service period.



     3. Timing and Withholding. All cash payments payable pursuant to this letter shall be
subject to any federal, state or local withholding tax requirements. Any cash severance payments
to be made under this letter will not be paid during the six (6) month period following termination
of your employment with the Company unless the Company determines, in its reasonable and good faith
judgment, that paying such amounts during such period would not cause you to incur an additional
tax under Section 409A of the U.S. Internal Revenue Code of 1986, as amended; if no additional tax
would be incurred under Section 409A, such amounts shall be paid within 30 days of termination of
your employment with the Company. If the payment of any amounts is delayed as a result of the
previous sentence, such payments shall become payable in a lump-sum payment on the date six (6)
months and one (1) day following the date of termination of your employment with the Company.



     4. Release. Your entitlement to severance benefits under this letter is subject to
your executing and not revoking a release of claims in favor of the Company, substantially in the
form attached, and affirming in writing your continuing obligations, including non-solicitation
covenants, under your Employee Confidential Information and Inventions Agreement.



     5. Entire Agreement. This letter constitutes the sole agreement between you and the
Company regarding benefits payable in connection with a termination of employment, including
termination in connection with a Sale of the Company. You and the Company mutually agree that any
dispute regarding the interpretation or enforcement of this letter shall be fully, finally and
exclusively resolved by binding arbitration conducted by the American Arbitration Association in
Santa Clara County, California and that the provisions of that offer letter dated March 13, 2001
regarding arbitration shall apply to any such dispute. For purposes of this letter, California law
shall apply. This letter may only be modified, amended or terminated by a writing authorized by
the Board of Directors or the Compensation Committee and signed by you.




	 	 	 	 	 
	 

	 	 	 	Sincerely,
	 
	 	 	 	 
	 

	 	 	 	INTERWOVEN, INC.
	 
	 	 	 	 
	 

	 	 	 	/s/ Joseph L. Cowan
	 

	 	 	 	 
	 

	 	 	 	By: Joseph L. Cowan, Chief Executive Officer
	 
	 	 	 	 
	Acknowledged and Agreed:
	 	 	 	 
	 
	 	 	 	 
	/s/ Scipio M. Carnecchia
	 	 	 	 
	 
Scipio “Max” Carnecchia
	 	 	 	 





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ADDENDUM A




GENERAL RELEASE AND WAIVER OF CLAIMS




     This Release is given in consideration of Interwoven, Inc.’s provision of, and agreement to
provide, the cash compensation, vesting acceleration, and other benefits set forth in the
Agreement. Payment of the separation compensation shall commence on, and be subject to, the terms
and conditions set forth in the Agreement.



     1. Release and Waiver of Claims. In consideration of the separation compensation
benefits and undertakings detailed in the Agreement, to the fullest extent permitted by law, I,
individually and on behalf of my heirs, spouse and assigns, do hereby completely release and
forever discharge Interwoven, Inc., its affiliated and subsidiary corporations, and its and their
shareholders, officers and all other representatives, agents, directors, employees, successors and
assigns, from all claims, rights, demands, actions, obligations, and causes of action of any and
every kind, nature and character, known or unknown, which I may now have, or have ever had, against
them arising from or in any way connected with my employment relationship with Interwoven, and any
actions during the relationship, or the termination thereof, or my ceasing to be President of
Interwoven. This release covers all statutory, common law, constitutional and other claims,
including but not limited to, all claims for wrongful discharge in violation of public policy,
breach of contract, breach of covenant of good faith and fair dealing, misrepresentation, age
discrimination, any tort, personal injury, or violation of statute including but not limited to
Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, and the California Fair Employment and Housing Act, which I may now have, or have
ever had. This release also covers claims relating to my right to purchase, or actual purchase of,
shares of stock of Interwoven, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law.



     Interwoven and I do not intend to release claims that I may not release as a matter of law,
including but not limited to claims for indemnity under California Labor Code Section 2802, nor do
Interwoven and I intend to release any claims under my Indemnity Agreement with Interwoven, as that
agreement may be amended from time to time. To the fullest extent permitted by law, any dispute
regarding the scope of this general release shall be determined by an arbitrator under the
procedures set forth in the arbitration clause set forth in that offer letter dated March 13, 2001.



     I understand and agree that this Release extinguishes all claims, whether known or unknown,
foreseen or unforeseen, except for those claims expressly described above. I expressly waive any
rights or benefits under Section 1542 of the California Civil Code (and other analogous statutes),
which provides as follows:




“A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.”



     I fully understand that if any fact with respect to any matter covered by this Release is
found hereafter to be other than or different from the facts now believed by me to be true, I



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expressly accept and assume that this Release shall be and remain effective, notwithstanding
such difference in the facts.




     2. Covenant Not to Sue.



          a. To the fullest extent permitted by law, I agree that at no time subsequent to the execution
of this Release will I pursue, or cause or knowingly permit the prosecution, in any state, federal
or foreign court, or before any local, state, federal or foreign administrative agency, or any
other tribunal, any charge, claim or action of any kind, nature and character whatsoever, known or
unknown, which I may now have or have ever had, against Interwoven and/or any officer, director,
employee or agent of Interwoven, which is based in whole or in part on any matter covered by this
Release.



          b. Nothing in this Section 2 shall prohibit me from filing a charge or complaint with a
government agency such as, but not limited to, the Equal Employment Opportunity Commission, the
National Labor Relations Board, the Department of Labor, the California Department of Fair
Employment and Housing, or other applicable state agency.



          c. Nothing in this Section 2 shall prohibit or impair me or the Company from complying with
all applicable laws, nor shall this Release be construed to obligate either party to commit (or aid
or abet in the commission of) any unlawful act.



     I further acknowledge that I am bound by the Employee Invention Assignment and Confidentiality
Agreement that I have signed, that as a result of my employment with Interwoven, I have had access
to Interwoven’s Proprietary Information (as defined in the Employee Invention Assignment and
Confidentiality Agreement), that I will hold all Proprietary Information in strictest confidence,
and I will not make use of such Proprietary Information on behalf of anyone. I agree not to
disclose any such confidential information unless required by subpoena or court order, and that I
will first give Interwoven written notice of such subpoena or court order with reasonable advance
notice to permit Interwoven to oppose such subpoena or court order if it chooses to do so.



     No other consideration, agreements, representations, oral statements, understandings or course
of conduct, which are not expressly set forth in this Release should be implied or are binding. I
am not relying upon any other agreement, representation, statement, omission, understanding or
course of conduct which is not expressly set forth in this Release. I understand and agree that
this Release shall not be deemed or construed at any time or for any purposes as an admission of
any liability or wrongdoing by either Interwoven or myself.



     I have read this Release and understand all of its terms. Prior to execution of this Release,
I have apprised myself of sufficient relevant information in order that I might intelligently
exercise my own judgment, have had sufficient time to consult counsel, if I wish, and understand
that I may take up to twenty-one (21) days to consider this Release. Interwoven has also given me
at least seven (7) days in which to revoke this Release, if I wish. I further acknowledge and
agree that this Release is executed voluntarily and with full knowledge of its legal significance.



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EMPLOYEE’S ACCEPTANCE OF RELEASE




     I have carefully read the foregoing and understand, approve and voluntarily agree to the terms
of the Release in exchange for the additional benefits to which I would otherwise not be entitled.



	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Printed Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 





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ADDENDUM TO STOCK OPTION AGREEMENT




     THIS ADDENDUM (this “Addendum”) to the Stock Option Agreement (the “Option Agreement”)
pursuant to the Interwoven, Inc. 1999 Equity Incentive Plan by and between                      (the
“Optionee”) and Interwoven, Inc. (the “Company”) is entered into by and between Optionee and the
Company as of                     , 200___.



W I T N E S S E T H



WHEREAS, the Optionee is an officer of the Company; and



WHEREAS, the Company, as a matter of practice, provides for the acceleration, in certain cases, of
the vesting of options (“Options”) granted to certain of its officers;



NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:




     1. The Company and the Optionee are entering into this Addendum, concurrently with the
execution of the Option Agreement, in order to specify the terms and conditions of the
acceleration, in certain cases, of the vesting of Options granted to the Optionee under the Option
Agreement.



     2. Section 2.1, is hereby amended to add the following language at the end of such Section:




“Notwithstanding the provisions of the Plan, the preceding sentence or the Notice of Grant
regarding the rate at which this Option shall vest, in the event that there is a Sale of the
Company and Optionee’s employment is terminated by the Company, or its successor,
without Cause in connection with the Sale of the Company, then upon such termination the
Option will become vested as to an additional number of Unvested Shares equal to fifty
percent (50%) of the Shares that were Unvested Shares at the closing of the Sale of the
Company. For purposes of this Section 2.1, “Cause” means (i) willfully engaging in gross
misconduct that is materially and demonstrably injurious to the Company; (ii) willful act or
acts of dishonesty undertaken by Optionee and intended to result in substantial gain or
personal enrichment for Optionee at the expense of the Company; or (iii) willful and
continued failure to substantially perform Optionee’s duties with the Company or its
successor (other than incapacity due to physical or mental illness); provided that the
action or conduct described in clause (iii) above will constitute “Cause” only if such
failure continues after the Board of Directors has provided Optionee with a written demand
for substantial performance setting forth in detail the specific respects in which it
believes Optionee has willfully and not substantially performed his duties thereof and a
reasonable opportunity (to be not less than thirty (30) days) to cure the same. For such
purpose, a termination by the Company without Cause includes a termination of employment by
Optionee within thirty (30) days following any of the following events: (x) the assignment
of any duties to Optionee inconsistent with, or reflecting a materially adverse change in,
Optionee’s position, duties or responsibilities with the Company (or any successor) without
Optionee’s concurrence; or (y) the relocation of the Company’s principal executive offices,
or relocating Optionee’s principal place of business, in excess of fifty (50) miles from the
Company’s current executive offices located in Sunnyvale, California. For purposes of this
Section 2.1, the term “Sale



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of the Company” means (i) the sale or other disposition of all or substantially all of the
assets of the Company, or (ii) the acquisition of the Company by another entity by means of
consolidation, corporate reorganization or merger, or other transaction or series of related
transactions in which more than fifty percent (50%) of the outstanding voting power of the
Company is transferred.”



     3. Section 11, is hereby amended and restated in its entirety to provide the following:




     “11. Entire Agreement. The Plan is incorporated herein by reference. This
Agreement, the Notice of Grant, the Plan, the Exercise Agreement and the Addendum to Stock
Option Agreement between the Company and the Optionee dated as of the date hereof constitute
the entire agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect to such
subject matter.”



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