exv10w5



 





EXHIBIT 10.5




Stock Option Agreement



THIS STOCK OPTION AGREEMENT (this “Agreement”) is made as of the Option Grant
Date set forth on the initial Notice of Grant attached hereto by and between
(i) WEBMETHODS, INC., a Delaware corporation (the “Corporation”), and (ii)
Participant, an employee of the Corporation or any Subsidiary or Parent, named
on each Notice of Grant attached hereto.



The Corporation has adopted an Amended and Restated Stock Option Plan (with all
amendments thereto, the “Plan”), a copy of which has been provided or made
available to Participant.



In consideration of the foregoing, of the mutual promises set forth in this
Agreement and of other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties, intending to be legally
bound, agree as follows:



1. Grant of Option. Subject to the terms and conditions set forth in
this Agreement and each respective Notice of Grant, the Corporation hereby
grants to Participant the right to purchase, during the period specified in
Section 2, the number of shares of Incentive Stock (those shares of Incentive
Stock are referred to as the “Shares”) set forth on the respective Notice of
Grant at an exercise price of per Share set forth on that Notice of Grant, in
accordance with the 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 period
commencing as of the Option Grant Date and ending on the earliest to occur of:
(a) failure of Participant to return a signed copy of the Notice of Grant (and,
if the initial Notice of Grant, a signed copy of this Agreement) to the
Corporation by the Return Date indicated in such Notice of Grant; (b) the date
all of the Shares are purchased 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 or Parent (except
for termination due to the death of Participant); (d) the expiration of the one
(1)-year period prescribed under Section 3.B; and (e) at 5:00 P.M. local time
at the headquarters of the Corporation on the day immediately preceding the
tenth (10th) anniversary of the Option Grant Date. Upon the expiration of the
Option, the Option shall have no further force or effect, and Participant shall
have no further rights in or under the Option or to the Shares that 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,
and except as provided below, the Option shall vest in periodic increments
commencing on the Vesting Start Date as provided in the respective Notice of
Grant. Notwithstanding the foregoing, vesting of the Option shall terminate
immediately upon the Participant ceasing to be employed with the Corporation or
a Subsidiary or Parent. The Option may be exercised only to the extent the
Option is vested.



The Option may be exercised only if Participant is in compliance with all
covenants in, and provisions of, this Agreement and if compliance with all
applicable securities laws can be effected and only by (i) Participant’s
completion, execution and delivery (by written or electronic means) to the
Corporation of a Notice and Request of Exercise in the form specified by the
Corporation, (ii) the payment to the Corporation, as provided in Section 3.C,
of an amount equal to the amount obtained by multiplying the Exercise Price by
the number of Shares being purchased pursuant to such exercise, as shall be
specified by Participant in such notice of exercise and (iii) if tax
withholding 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 legal representatives may exercise the Option in accordance with the terms
of Section 3.B, the Option or any of the rights thereunder may be exercised by
Participant only, and may not, on an absolute or contingent 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
possess an Option pursuant to the terms of this Agreement, Participant’s
estate, executors or administrators, 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 that Participant was
entitled to exercise the Option on the date of such death. Any person so
desiring to 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 to evidence 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, or personal or legal representatives, all references herein to
Participant shall, to the extent applicable, be deemed to refer to and include
such estate, executors or administrators, or personal or 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 at their fair market value as determined by the Board of
Directors in good faith (which shares of Common 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
Shares being acquired upon exercise of the Option (including without
limitation, through an exercise complying with Regulation T or rules
promulgated by the Board of Governors of the Federal Reserve System) in
accordance with such rules and procedures as the Corporation shall determine or
(v) in such other manner as shall then be acceptable to, and permitted by, the
Board of Directors. In addition, the Participant may satisfy applicable tax
withholding requirements by electing to have the Corporation withhold from the
Shares issuable upon exercise of an Option a number of whole shares having a
fair market value (determined on the date that the amount of tax to be withheld
is fixed) 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 is
practicable, the Corporation shall issue and deliver to Participant a
certificate or certificates evidencing such number of Shares as Participant has
so elected to receive. Such certificate or certificates shall be registered in
the name of Participant and, if applicable, shall bear an appropriate
investment warranty legend, any legends required by any applicable securities
law, rule or regulation, any legend referring to the restrictions provided
hereunder and under the Plan and any legend required by the law of the
jurisdiction of incorporation of the Corporation. Upon the exercise 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 receive all dividends or other distributions paid or made with
respect thereto; provided, however, that such 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 it deems appropriate, accept the surrender by Participant of
Participant’s right to exercise the Option, in whole or in part, and authorize
a payment in consideration therefor of an amount equal to the difference
obtained by subtracting the sum of (i) the Exercise Price of the Shares which
are the subject of such surrendered Option and (ii) an amount calculated by the
Corporation to be sufficient to satisfy applicable Federal, state, foreign or
local tax withholding requirements from the fair market value of the Shares
which are the subject of such surrendered Option on the date of such 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 the Option shall thereupon vest and the entire Option shall thereupon become
immediately exercisable if, within one (1) year after a Change of Control of
the Corporation, there is (i) a termination of Participant’s employment by the
Corporation or a Subsidiary or Parent other than for Cause (as defined below)
or (ii) a voluntary termination by Participant of Participant’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) Participant’s conviction of a
felony, or any other crime involving moral turpitude, or (iii) a violation of a
written agreement between Participant and the Corporation or a Subsidiary or
Parent, including but not limited to Sections 6, 7, 8, 9, or 10 of this
Agreement, 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 Participant’s
base salary, (ii) a material reduction in Participant’s duties without
Participant’s consent, or (iii) a relocation of Participant’s regular place of
work to any location outside a thirty (30) mile radius of the location from
which Participant served the Corporation or a Subsidiary or Parent thirty (30)
days prior to the date of such Change of Control of the Corporation without
Participant’s consent. For purposes of this Agreement, a “Change of Control”
of the Corporation shall be deemed to have occurred if (i) any person or group
acquires, directly or indirectly (including, without limitation, by way of a
tender offer or an exchange offer or a two-step




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transaction involving a tender
offer followed with reasonable promptness by a merger involving the
Corporation), ownership of not less than a majority of the then outstanding
voting securities of the Corporation, (ii) the stockholders of the Corporation
approve a merger or consolidation involving the Corporation and resulting in a
change of ownership of a majority of the then outstanding shares of voting
securities of the Corporation, or (iii) the stockholders 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 of the Corporation’s
assets.



4. Changes in Capital Structure of the Corporation. Subject to any
required action by the stockholders of the Corporation and the provisions of
the applicable law of the jurisdiction of incorporation of the Corporation, the
number of Shares subject to this Agreement as well as the Exercise Price of any
Shares not yet purchased by Participant shall be proportionately adjusted for
(a) a division or combination of the shares of capital stock of the
Corporation, (b) a dividend payable in shares of capital stock of the
Corporation or (c) a reclassification of any shares of capital stock of the
Corporation.



5. Rights Prior to Exercise. Participant shall have no equity interest
in the Corporation or any voting, dividend, liquidation or dissolution rights
with respect to any capital stock of the Corporation solely by reason of having
an Option or having executed this Agreement or any 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
certificates evidencing 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 rights with respect to, the Shares.



6. Treatment of Information.



A. Participant covenants and agrees that Participant shall not, except with the
prior written consent of the Corporation, or except if Participant is acting as
an employee of the Corporation solely for the benefit of the Corporation in
connection with the Corporation’s business and in accordance with the
Corporation’s business practices and employee policies, at any time during or
within ten (10) years following termination of Participant’s employment by the
Corporation, 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 been obtained by or disclosed to
Participant as a result of Participant’s employment with the Corporation.
“Confidential Information” shall include, without limitation: the terms and
conditions of this Agreement; trade secrets; systems; technology; computer
programs, related object and source code 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 or
agreement with any distributor, reseller, customer, systems integrator,
business partner or strategic partner; financial, marketing or sales
information and strategy; pricing or accounting data or methods; licenses,
business arrangements or related documentation; the identity of and lists
and/or electronic mail addresses relating to customers, prospective customers,
systems integrators, business partners or strategic partners; personal
information and electronic mail addresses or telephone numbers for employees of
or contractors to the Corporation or any subsidiary; information, concepts,
discoveries or ideas relating to the Corporation’s past, present and future
technology, software, services and techniques; information concerning
competitive analysis or strategy; inventions, improvements, techniques, designs
or other technical data; or other information, data or materials concerning any
of the Corporation’s business methods, personnel, practices or strategies.
Participant acknowledges that Participant’s obligations not to use or disclose
the Corporation’s trade secrets after the term of Participant’s employment by
the Corporation continue indefinitely and are not subject to the ten (10)-year
limitation upon use or disclosure of Confidential Information. Participant
further acknowledges that any information and materials received by the
Corporation from third parties in confidence (or subject to nondisclosure or
similar covenants) shall be deemed to be and shall be Confidential Information
within the meaning of this Section 6. The absence of any marking or statement
that particular information is confidential, proprietary or Confidential
Information shall not affect its status as Confidential Information.



B. Disclosure of any Confidential Information shall not be prohibited if such
disclosure is required by a valid and existing order of a court or other
governmental body or agency within the United States; provided, however, that
(i) Participant shall first have given prompt notice to the Corporation of any
possible or prospective order (or proceeding pursuant to which any such order
may result) and (ii)




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the Corporation shall have been afforded a reasonable
opportunity to prevent or limit any such disclosure. It shall not be a
violation of this Agreement for Participant to disclose to Participant’s legal
counsel the provisions of this Agreement, provided that the purpose of such
disclosure is to aid in Participant’s compliance with those provisions, and
that Participant’s legal counsel agrees in writing to maintain the provisions
of this Agreement in strictest confidence. Also, it shall not be a violation
of this Agreement for Participant to disclose the provisions of this Agreement
to Participant’s tax advisors, provided that such tax advisors agree in writing
to maintain the provisions of this Agreement in strictest confidence.



C. For purposes of this Agreement, Participant may disclose Confidential
Information which (i) has been provided to Participant by a third party that is
not obligated to maintain confidentiality or to whom the Corporation owes no
duty of confidentiality, (ii) is or becomes publicly available without breach
of any other agreement or instrument to which the Corporation is a party or a
beneficiary or (iii) is or becomes publicly available without breach of any
duty owed to the Corporation by Participant or any third party. Participant
acknowledges and agrees that, if Participant shall seek to disclose, divulge,
reveal, report, publish, transfer or use, for any purpose whatsoever, any
Confidential Information within the scope of this Section 6.C, Participant
shall bear the burden of proving that any such Confidential Information shall
have become publicly available without a breach of an agreement or instrument
to which the Corporation is a party or beneficiary or the breach of a duty to
the Corporation.



7. Covenant Not to Compete. Participant covenants and agrees that during
the Restricted Period (as defined below) and in the Restricted Area (as defined
below), Participant shall not directly, indirectly or in concert with any other
person or entity, provide services that are the same as, or substantially
similar to, the services Participant performed for the Corporation at any time
during Participant’s employment by the Corporation (the “Restricted Services”),
to or on behalf of a Competing Entity (as defined below).



A. “Competing Entity” shall mean any person (including Participant acting on
his/her own behalf) or entity engaged in actual competition for customers with
the Corporation, in the business of 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 the Restricted Services were
performed for the Corporation or (ii) as of the date of termination of
Participant’s employment with the Corporation.



B. The “Restricted Period” shall mean the period commencing with the Option
Grant Date set forth on the initial Notice of Grant and ending on the later of
(i) nine (9) months after Participant’s employment with the Corporation ends
for any reason whatsoever, including, but not limited to, involuntary
termination by the Corporation, voluntary termination by Participant, a mutual
decision by the Corporation and Participant, or any other reason; or (ii) nine
(9) months after 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
subdivision where the Corporation has employees and/or has designed, developed,
produced, marketed, demonstrated, distributed, licensed, sold, implemented,
modified, deployed, serviced or supported software, technology or services or
has a written proposal pending to do the same. In addition to the foregoing,
given the ability of Participant to work remotely for a Competing Entity via
the internet or other technology, the Restricted Area shall include any other
state, province or similar political subdivision where Participant is
physically located while performing Restricted Services 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 written proposal pending to do the same.



D. Notwithstanding the foregoing, Participant shall not be in violation of this
Section 7 if Participant is acting as an employee of the Corporation solely for
the benefit of the Corporation in connection with the Corporation’s business
and in accordance with the Corporation’s business practices and employee
policies. Also, Participant shall not be in violation of this Section 7 if,
after the termination of Participant’s employment with the Corporation,
Participant provides services to a Competing Entity in a line of business which
the Corporation has abandoned.




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8. Customer Nonsolicitation Covenant. Participant covenants and agrees
that for the Nonsolicitation Period (as defined below), Participant will not,
directly, indirectly, or in concert with any other person or entity, solicit
any Customer (as defined below) where the products or services at issue are the
same as, substantially similar to or substantially derived from those then
available from the Corporation.



A. “Customer” shall mean any person or entity that had purchased or utilized
products or services from the Corporation during the twelve (12) month period
immediately preceding the earlier of (i) the prohibited solicitation; or (ii)
the date of termination of Participant’s employment with the Corporation.
“Customer” shall also include any person or entity who Participant is, or
reasonably should be, aware that the Corporation was actively soliciting (other
than by means of a general 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) the date of termination
of Participant’s employment by the Corporation.



B. The “Nonsolicitation Period” shall mean the period commencing with the
Option Grant Date set forth on the initial Notice of Grant and ending on the
later of (i) nine (9) months after Participant’s employment with the
Corporation ends for any reason whatsoever, including, but not limited to,
involuntary termination by the Corporation, voluntary termination by
Participant, a mutual decision by the Corporation and Participant, or any other
reason; or (ii) nine (9) months after 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 8 if Participant is acting as an employee of the Corporation solely for
the benefit of the Corporation in connection with the Corporation’s business
and in accordance with the Corporation’s business practices and employee
policies.



9. Employee/Consultant Nonsolicitation Covenant. Participant covenants
and agrees that for the period commencing with the Option Grant Date set forth
on the initial Notice of Grant and ending on the later of (a) two (2) years
after Participant’s employment with the Corporation ends for any reason
whatsoever, including, but not limited to, involuntary termination by the
Corporation, voluntary termination by Participant, a mutual decision by Corporation and
Participant, or any other reason whatsoever, or (b) two (2) years after a court
of competent jurisdiction 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 the date 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 diminish any Covered Person’s relationship with the
Corporation.



A. “Solicit” shall mean the direct or indirect solicitation for hire or
engagement by Participant of a Covered Person, whether for or on behalf of
Participant or for any entity in which Participant shall have a direct or
indirect interest (or any subsidiary or affiliate of any such entity), whether
as a proprietor, partner, co-venturer, financier, investor or stockholder
(other than de minimis stock holdings), director, officer, employer, employee,
servant, agent, representative or otherwise. “Solicit” shall also mean
Participant’s direct or indirect hiring or engagement of a Covered Individual,
whether for or on behalf of Participant or for any entity in which Participant
shall have a direct or indirect interest (or any subsidiary or affiliate of any
such 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 shall belong exclusively to the Corporation and
Participant agrees to turn over to the Corporation all copies of such materials
in Participant’s possession or under Participant’s control at the request of
the Corporation or, in the absence of such a request, upon the termination of
Participant’s employment with the Corporation.



11. Reasonableness of Restrictions. PARTICIPANT HAS CAREFULLY READ AND
CONSIDERED 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 AND ARE REASONABLY REQUIRED TO PROTECT THE
INTERESTS OF THE CORPORATION, AND ITS OFFICERS, DIRECTORS,




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STOCKHOLDERS AND
EMPLOYEES, INCLUDING BUT NOT LIMITED TO, THE GOODWILL THE CORPORATION HAS
DEVELOPED WITH ITS CUSTOMERS AND THE PROTECTION OF THE CORPORATION’S
CONFIDENTIAL INFORMATION AND TRADE SECRETS.



12. Employment of Participant. 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
Participant, nor shall this Agreement affect in any way the right of the
Corporation to terminate the employment of Participant, at any time and for any
reason if 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 the United States, is
“at will.” No change of Participant’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.



13. No Prior Agreements. Participant represents that Participant’s
performance of all the terms of this Agreement and any services to be rendered
as an employee of the Corporation do not and shall not breach any fiduciary or
other duty or any covenant, agreement or understanding (including, without
limitation, any agreement relating to any proprietary information, knowledge or
data acquired by Participant in confidence, trust or otherwise prior to
Participant’s employment by the Corporation) to which Participant is a party or
by the terms of which Participant may be bound.



14. Burden and Benefit; Corporation. This Agreement shall be binding
upon, and shall 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 13 inclusive, this Section 14 and
Sections 15 and 21, the term the “Corporation” shall also include any
corporation or other entity which is the parent or a subsidiary of the
Corporation or any corporation or entity which is an affiliate of the
Corporation by virtue of common (although not identical) ownership, and for
which Participant is providing services in any form during Participant’s
employment with the Corporation or any such other corporation or entity.
Participant hereby consents to the enforcement of any and all of the provisions
of this Agreement by or for the benefit of the Corporation and any such other
corporation or entity.



15. Accounting for Profits; Indemnification. Participant covenants and
agrees that, if Participant shall violate any of Participant’s covenants or
agreements contained in this Agreement, the Corporation shall be entitled to an
accounting and repayment of all profits, gains, compensation, royalties,
commissions, remunerations or benefits which Participant directly or indirectly
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 in addition to and not in limitation of any
injunctive relief or other rights or remedies to which the Corporation 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 a bond. Participant hereby agrees to defend, indemnify
and hold harmless the Corporation against and in respect of: (i) any and all
losses and damages resulting from, relating or incident to, or arising out of
any misrepresentation or breach by Participant of any warranty, covenant or
agreement 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 to the foregoing.



16. Forum Choice. Participant consents to the personal and subject
matter jurisdiction and venue of the Circuit Court for Fairfax County,
Virginia, USA and the U.S. District Court for the Eastern District of Virginia,
USA, with respect to any and all causes of action pertaining to this Agreement,
and agrees to accept service of process made in accordance with the statutes of
Virginia and the United States. Participant and the Corporation agree that the
exclusive forum for any and all causes of action pertaining to this Agreement
shall be the Circuit Court for Fairfax County, Virginia, USA and the U.S.
District Court for the Eastern District of Virginia, USA.



17. Genders. The use of any gender herein shall be deemed to be or
include the other genders and the use of the singular herein shall be deemed to
be or include the plural (and vice versa), wherever appropriate.



18. Headings. The headings and other captions contained in this
Agreement are for convenience of reference only and shall not be used in
interpreting,




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construing or enforcing any of the provisions of this Agreement.



19. Entire Agreement. This Agreement, the Notice(s) of Grant, and the
Plan set forth all of the promises, agreements, conditions, understandings,
warranties and representations between the parties hereto with respect to the
subject matter of this Agreement, and there are no promises, 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 forth herein. This Agreement, the Notice of Grant, and the Plan
are, and are intended by the parties to be, an integration of any and all prior
agreements or understandings, oral or written, with respect to the Option and
the Shares. The terms and conditions of this Agreement shall apply to any
future grants of Incentive Stock to Participant pursuant to the Plan and the
term “Option Grant Date” shall refer to such subsequent grant date as
appropriate. Any such future grants and acceptance thereof shall be evidenced
by the completion, execution and attachment to this Agreement of an additional
Notice of Grant, in the form of the initial Notice of Grant attached hereto, or
as otherwise provided by the Corporation, which shall be incorporated herein by
reference.



20. 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), in
the case of the Corporation, to its principal office and to the attention of
its General Counsel, and, in the case of Participant, to Participant’s address
as shown on the Corporation’s records.



21. 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 validity and
enforceability of the other provisions hereof. Participant agrees that the
breach or alleged breach by the Corporation of (a) any covenant contained in
another agreement (if any) between the Corporation and Participant or (b) any
obligation owed to Participant by the Corporation, shall not affect the
validity or enforceability of the covenants and agreements of Participant set
forth herein.



22. Governing Law. This Agreement shall be construed and enforced in
accordance with the substantive laws of the jurisdiction of incorporation of
the Corporation excluding conflicts-of-law principles.



23. Modifications. No change or modification of this Agreement shall be
valid unless the same is in writing and signed by the parties hereto; provided,
however, that Participant hereby covenants and agrees to execute any amendment
to this Agreement which shall be required or desirable (in the opinion of the
Corporation or its counsel) in order to comply with any applicable securities
law or rule or any rule or regulation promulgated or proposed under the Code by
the Internal Revenue Service.



24. 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.



IN WITNESS WHEREOF, the Corporation and Participant have executed this
Agreement as of the Option Grant Date.




CORPORATION:




WEBMETHODS, INC., a Delaware corporation




	 	 	 
	By:
	 	 
	

	 	

	

	 	     Authorized Person







PARTICIPANT:




	 	 	 
	

	Print name:

	 	

	 
	 	 
	Address:

	 	

	

	 	

	

	 	









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