Document:

exv10w19

 

EXHIBIT 10.19

January 25, 2006

Martin W. Brauns

c/o Interwoven, Inc.

803 W. 11th Avenue

Sunnyvale, CA 94089

     Re: Terms of Separation

Dear Martin:

     This letter confirms the agreement (this “Agreement”) between you and Interwoven, Inc. (the
“Company” or “Interwoven”) concerning the terms of your separation and offers you the separation
compensation described below in exchange for a release of claims.

     1. Resignation as an Officer and Director of the Company. You are resigning from
your employment as President and Chief Executive Officer of the Company effective on March 31, 2006
(the “Separation Date”), and you will continue your current duties, and be paid at your current
cash compensation level, and assist the Company in its search for a new Chief Executive Officer
between now and your Separation Date. You are also resigning from the Company’s Board of
Directors, effective as of the Separation Date. Effective the date hereof, you will no longer
serve as Chairman of the Company’s Board of Directors.

     2. Obligations of the Company.

          a. On the Separation Date, Interwoven will pay you your unpaid wages as of such date, based on
your current base salary of $400,000 per year (the “Base Salary”), and all other unpaid
compensation, reimbursable expenses, and benefits (including accrued and unused vacation pay as
accrued through the Separation Date), all less applicable deductions and withholding; no vacation
benefits will accrue beyond the Separation Date. To the extent not previously paid, Interwoven
will pay you on the Separation Date such amounts as have been earned by you under the 2005
Executive Officer Incentive Bonus Plan as a Quarterly Bonus for Q4 2005 and as an Annual Bonus for
2005 (and any Quarterly Bonus earned under a 2006 Executive Officer Incentive Bonus Plan), all less
applicable deductions and withholding.

          b. In exchange for the release of claims and other promises set forth in this Agreement and
the attached Addendum A, Interwoven agrees to provide you with the following Separation Benefits:

               (1) Base Salary. Pay on the six month anniversary of the Separation Date, or such
earlier date to the extent such payment will not be subject to tax under Section 409A of the
Internal Revenue Code, an amount equal to your Base Salary through December 31, 2007, less
applicable deductions and withholding.

               (2) 2006 and 2007 Bonus. On the sixth month anniversary of the Separation Date, or
such earlier date to the extent such payment will not be subject to tax under

 

 

Martin W.Brauns

January 25, 2006

Page 2

Section 409A of the
Internal Revenue Code, pay you an amount equal to your target bonus for
2006 and 2007, a total of $700,000 less any bonus paid to you with respect to Q1 2006 and
applicable deductions and withholding.

               (3) Employee Benefits. To the extent permitted by the Company’s benefits plan
providers, Interwoven will provide you and your spouse with continuation of existing group employee
benefit coverage, at the Company’s expense, through December 31, 2007. To the extent not so
permitted, you will be eligible for group employee benefit coverage continuation, to the extent
previously provided by the Company’s group health plans, under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), and any applicable state laws. Provided you
timely complete the requisite forms to obtain such continued coverage, Interwoven will pay the cost
of such coverage for you and your spouse through December 31, 2007 (or such earlier time as you
obtain equivalent or superior benefits from a future employer).

               (4) Stock Options. The sale and transfer restrictions applicable to stock options
N202983 and N202966 will continue through December 31, 2007, and will lapse according to the
time-based vesting terms applicable to the options prior to effectiveness of the Company’s 2005
option acceleration program, as if you had been employed by the Company through December 31, 2007.
In the event of a Change in Control that occurs on or before December 31, 2007, the sale and
transfer restrictions will thereupon lapse in full. These stock options, as well as stock option
N991808, will remain exercisable through the close of business on December 31, 2006. You are
surrendering today stock options N991973, N991966, N991332, N9915451, N9915452, N990189, and
N990952 for cancellation and, in exchange, the Company will issue to you 80,000 shares of
restricted stock (the “Shares”). Except in the event of a Change in Control, your right to the
Shares will not vest until January 1, 2007 and none of the Shares may be sold prior to that date;
if a Change in Control occurs prior to January 1, 2007, then all of the Shares will vest
immediately prior to the closing of the Change in Control.

               (5) Fees of Counsel. The Company agrees to pay any and all of your reasonable legal
expenses in conjunction with the review and execution of this Agreement and Addendum, not to exceed
$10,000.

          c. You understand and acknowledge that you will not be entitled to any benefits or payments
from Interwoven other than those expressly set forth in this Section 2 (Obligations of the
Company). By signing below, you acknowledge that you are receiving the compensation benefits
specified in paragraph b. of this Section 2 in consideration for waiving your right to claims
referred to in this Agreement, and that you would not otherwise be entitled to them.

     3. Your Obligations. In exchange for the Separation Benefits, you agree to the
following:

          a. You agree to promptly provide Interwoven with any information you may have by virtue of the
work previously performed by you for the Company, upon reasonable notice and request from the
Company through December 31, 2006, not to exceed eight (8) hours per month.

 

 

Martin W.Brauns

January 25, 2006

Page 3

          b. You will execute and deliver the attached letter resigning from the Board of Directors
effective on the Separation Date.

          c. You will be bound by and comply with the terms of the Employee Invention Assignment and
Confidentiality Agreement (the “Confidentiality Agreement”, a copy of which is attached to this
Agreement as Exhibit A). You will return all Company property on or before the Separation Date
(unless otherwise agreed in writing), and may retain an electronic and one paper copy, which you
will maintain in confidence, of all confidential and proprietary information of the Company in your
possession on or before the Separation Date.

          d. You agree that the non-public names and addresses of Interwoven’s customers and suppliers,
and all other confidential information related to them, created or obtained by you during your
employment, constitute Interwoven’s trade secrets or proprietary or confidential information and
remain subject to the obligations under the Confidentiality Agreement.

          e. You will not solicit, initiate, or assist in any solicitation of any Interwoven employee,
or independent contractor working full time for the Company, to leave his/her employment with, or
terminate his or her services for, the Company or to commence a relationship with you or any other
person or entity through December 31, 2007. It is understood and agreed that you may, without
breach of this Section 3(e), provide employment-related recommendations and references when
requested (other than to an entity by which you are employed or working as an independent
consultant).

     4. E-mail, Telephone,Voice Mail and Computer. Except as may otherwise be mutually
agreed (in a writing or by e-mail), Interwoven agrees to continue and maintain your Interwoven
e-mail address through June 30, 2006, provided that you promptly re-direct to Interwoven all
e-mails received that are related to Interwoven’s business; all e-mails relating to Interwoven
business shall be confidential and proprietary information subject to the Confidentiality
Agreement. In addition, Interwoven agrees to arrange for calls to your Interwoven telephone number
to be automatically forwarded after the Separation Date to a telephone number that you supply in
writing. You may retain as your personal property your Interwoven-supplied laptop computer and
related manuals, materials and accessories. You may also retain your address/phone book listings
whether now kept on your laptop or elsewhere.

     5. Release. In consideration of each party’s performance of the obligations of this
Agreement, you and Interwoven agree to execute the release (the “Release”) attached to this
Agreement as “Addendum A” on the Separation Date.

     6. Arbitration. Any claim, dispute, or controversy arising out of or in any way
relating to this Agreement or the alleged breach of this Agreement will be submitted by the parties
to binding arbitration in Santa Clara County, California by JAMS or by a judge to be mutually
agreed upon. This Section 6 will not prevent either party from seeking injunctive relief (or any
other provisional remedy) from any court having jurisdiction over the parties and the subject
matter of their dispute relating to your obligations under the Invention Assignment and
Confidentiality Agreement and your obligations under Section 3 hereof.

 

 

Martin W.Brauns

January 25, 2006

Page 4

     7. Attorneys’ Fees. The prevailing party will be entitled to recover from the losing
party its attorneys’ fees and costs (including expert witness fees) incurred in any arbitration,
lawsuit or other proceeding brought to enforce any right arising out of this Agreement.

     8. Confidentiality; Non-disparagement. Except as required by law or applicable
regulation, you and the Company each agree to take every reasonable precaution, prior to the filing
of this Agreement with the Securities and Exchange Commission, to disclose any of the terms of this
Agreement (other than the fact of your resignation) only to our respective attorneys, accountants,
financial advisors, tax authorities, and your spouse. You agree to refrain from disparagement of
the Company or any of its employees, directors, products, or services to anyone, including other
employees and any past, present, or prospective customers, in any manner likely to be harmful to
them, their business, or their business or personal reputations; Interwoven also agrees to refrain
from disparagement of you, including in connection with any disclosure or reporting of your
resignation, in any manner likely to be harmful to you, your business, or your business or personal
reputation. Interwoven agrees that if it is contacted by a potential employer of yours, it will
provide a reference statement in such form as we mutually agree. All such contacts should be
directed to me on behalf of the Board of Directors.

     9. No Admission of Liability. This Agreement is not and shall not be construed or
contended by you to be an admission or evidence of any wrongdoing or liability on the part of
Interwoven, its agents, officers, directors, employees, subsidiaries, affiliates, successors or
assigns. This Agreement shall be afforded the maximum protection allowable under California
Evidence Code Section 1152 and/or any other state or federal provisions of similar effect.

     10. No Knowledge of Wrongdoing. As of the date of this Agreement, (a) you have no
knowledge of any present wrongdoing involving improper or false claims against a federal or state
governmental or regulatory agency (including listing agencies or exchanges) or any other present
such wrongdoing, breach of contract, or breach of any duty owed to the Company, its stockholders or
to any third party that involves you or other present or former Interwoven employees, officers or
directors, and (b) Interwoven and its directors and officers have no knowledge of any such
wrongdoing, breach of contract, or breach of any duty owed to the Company, its stockholders or to
any third party that involves you. You agree that you will not knowingly counsel or assist any
attorneys or their clients in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints by any third party against the Company unless under a
subpoena or other court order to do so. You agree to immediately notify the Company upon receipt
of any such subpoena or court order, and to furnish, within three (3) business days of its receipt,
a copy of such subpoena or court order to the Company. If approached by anyone for counsel or
assistance in the presentation or prosecution of any such disputes, differences, grievances,
claims, charges, or complaints against the Company, you shall state no more than that you cannot
provide counsel or assistance.

     11. Successors. In addition to you and Interwoven, the provisions of this Agreement
will extend and inure to the benefit of, and be binding upon, your heirs, personal representatives,
legal successors and assigns and those of Interwoven.

     12. Integration. This Agreement constitutes the entire Agreement between Interwoven
and you with respect to the subject matter hereof and supersedes all prior

 

 

Martin W.Brauns

January 25, 2006

Page 5

negotiations and agreements, whether written or oral, with respect to such subject matter, with the
exception of (a) your obligations under the Confidentiality Agreement (attached to this Agreement
as Exhibit A), (b) the stock option agreements and agreements related to the Company’s 2005 option
acceleration program, (c) any restricted stock or other agreement regarding restricted stock or the
exchange of certain of your stock options for restricted stock, (d) any agreement providing you
with Company sponsored benefits, and (e) any agreement or insurance providing you with rights of
indemnity, defense or similar rights, including any with respect to currently threatened or pending
disputes, claims or litigation involving you or the Company, so that the Indemnity Agreement
between you and Interwoven, and your right to defense and indemnification for acts as a director
and/or officer of Interwoven thereunder and under Interwoven’s Bylaws and Certificate of
Incorporation or applicable law, as well as under Interwoven’s director and officer insurance
coverage, will continue unaffected by this Agreement. In addition, the Indemnity Agreement between
you and Interwoven, and your right to defense and indemnification for acts as a director and
officer of Interwoven thereunder and under Interwoven’s Bylaws and Certificate of Incorporation, as
well as under Interwoven’s director and officer insurance coverage, will continue unaffected by
this Agreement.

     13. No Oral Modification. This Agreement may not be altered or amended except by a
written document executed by you and, on behalf of Interwoven, by me or my successor as Lead
Independent Director.

     14. Governing Law. This Agreement will in all respects be governed by the laws of the
State of California as applied to agreements entered into and to be performed entirely within
California between California residents.

     15. Review of Separation Agreement; Effective Date. You understand that you may take
up to twenty-one (21) days to consider this Agreement and, by signing below, affirm that you were
advised to consult with an attorney prior to signing this Agreement. You also understand that you
may revoke this Agreement within seven (7) days of signing this document and that the compensation
benefits described in Section 2(b) will only occur following that seven (7) day revocation period.
This Agreement is effective as of January 25, 2006; provided that the Release, and Interwoven’s
obligations pursuant to Section 2(b) above, shall become effective as of the Separation Date on the
later of (i) the Separation Date, and (ii) the eighth day after the Release has been signed by both
parties (the “Effective Date”), unless sooner revoked by you. If you desire to revoke the Release,
you must do so in writing and must deliver (or cause to be delivered) that written revocation to
Interwoven’s office and to my attention, prior to the Effective Date.

     16. No Representations. Neither party has relied upon any representations or
statements made by the other party hereto which are not specifically set forth in this Agreement,
except that the Company represents that the person signing this Agreement on behalf of the Company
is duly authorized and empowered to do so and that this Agreement will be binding on and
enforceable against the Company.

 

 

Martin W.Brauns

January 25, 2006

Page 6

     If the terms outlined in this Agreement are acceptable to you, please sign the attached copy
of this letter and the Release and return them to me.

	 	 	 
	 

	 	Sincerely,
	 
	 	 
	 

	 	INTERWOVEN, INC.
	 
	 	 
	 

	 	/s/ Frank J. Fanzilli, Jr.
	 

	 	 
	 

	 	By:       Frank J. Fanzilli, Jr.
	 

	 	Title:       Lead Independent Director

I have read, understand and agree to the terms set forth above:

	 	 	 	 	 
	/s/ Martin Brauns	 	 
	 	 	 
	Signature	 	 
	 
	 	 	 	 
	Date:
	 	1/25/06 
	 	 
	 

	 	 

	 	 

 

 

ADDENDUM A

     This General Release of Claims (the “Release”) is between Martin W. Brauns (“Executive”) and
Interwoven, Inc. (“Interwoven”), a Delaware corporation.

     1. Release.

          a. Except as otherwise provided in paragraph c. of this Release, Executive, on behalf of
himself (including any trust established for the benefit of Executive or any family member), his
heirs, executors, administrators, successors and assigns (collectively, the “Executive Parties”),
hereby fully and forever releases and discharges Interwoven and its current, former and future
parents, subsidiaries, affiliated companies, related entities, employee benefit plans (other than
claims related to benefits under such plans), and their fiduciaries, predecessors, successors,
agents, officers, directors, shareholders, employees and assigns (collectively, the “Company”),
from any and all claims, obligations, duties, causes of action, whether now known or unknown,
suspected or unsuspected, that any of them may possess based upon or arising out of any matter,
cause, fact, thing, act, or omission whatsoever occurring or existing at any time prior to and
including the date hereof relating to Executive’s employment at Interwoven or his service as an
officer or director of Interwoven and his separation from Interwoven (collectively, the “Released
Matters”), including without limitation:

               (1) any and all claims relating to or arising from Executive’s employment relationship with
Interwoven and the termination of such relationship;

               (2) any and all claims relating to, or arising from, Executive’s right to purchase, actual
purchase of, or ownership of, shares of stock of Interwoven, including, without limitation, any
claims of fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state
corporate law, and securities fraud under any state or federal law;

               (3) any and all claims for wrongful discharge of employment; termination in violation of
public policy; discrimination; breach of contract, both express and implied; breach of a covenant
of good faith and fair dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent
or intentional interference with contract or prospective economic advantage; unfair business
practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of
privacy; false imprisonment; and conversion;

               (4) any and all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair
Labor Standards Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and
Retraining Notification Act, Older Workers Benefit Protection Act, the California Fair Employment
and Housing Act, and the California Labor Code section 201, et. seq.;

1

 

               (5) any and all claims for violation of the federal, or any state, constitution as they relate
to the Released Matters;

               (6) any and all claims arising out of any other laws and regulations relating to employment or
employment discrimination;

               (7) any and all claims for attorneys’ fees and costs except as provided in this Release or in
the Separation Agreement; and

               (8) any and all claims that Executive may have against the Company for any acts occurring at
any time prior to the execution of this Release.

          b. Release of Executive. Except as otherwise provided in Paragraphs c and f of this
Release, Interwoven, on behalf of itself and all persons included in the Company, hereby fully and
forever releases and discharges the Executive Parties from any and all claims, obligations, duties,
causes of action, whether now known or unknown, suspected or unsuspected, that any of them may
possess based upon or arising out of any matter, cause, fact, thing, act, or omission whatsoever
occurring or existing at any time prior to and including the date hereof relating to Executive’s
employment at Interwoven or his service as an officer or director of Interwoven.

          c. Surviving Obligations and Rights. The foregoing releases do not extend to any
obligations incurred under the Separation Agreement (including those obligations described in
Section 8 of the Separation Agreement) or any other agreement not integrated into the Separation
Agreement; nor shall this release apply with respect to (i) any claims described in paragraph f
below, (ii) any agreement or insurance providing Executive with rights of indemnity, defense or
similar rights, including any with respect to currently threatened or pending disputes, claims or
litigation involving Executive or the Company, so that the Indemnity Agreement between Executive
and Interwoven, and Executive’s right to defense and indemnification for acts as a director and/or
officer of Interwoven thereunder and under Interwoven’s Bylaws and Certificate of Incorporation or
applicable law, as well as under Interwoven’s director and officer insurance cover will continue
unaffected by this Release; or (iii) nor shall this Release preclude any of the Executive Parties
from receiving their ratable portion of any payment, distribution, dividend, conversion or other
rights generally held, made or offered to or by stockholders by virtue of their ownership of shares
of the Company.

          d. No Existing Litigation. Executive and Interwoven each represents to the other that
it has no lawsuits, claims or actions pending in such party’s name, or on behalf of any other
person or entity, against the other party or any other person or entity referred to herein. Each
party also represents that such party does not currently intend to bring any such lawsuits, claims
or actions on such party’s own behalf against the other or any other person or entity referred to
herein. Each party also represents that it is not aware of any such lawsuit, claim or action
against the other, other than the claims released by this Release. Each party covenants and agrees
never, individually or with any person or in any way, to commence, aid in any way, prosecute or
cause or permit to be commenced or prosecuted against the other, any action or other proceeding
based upon any claim, demand, cause of action, obligation, damage or liability which is the subject
of this Release.

2

 

          e. General Release. Each party acknowledges that it has been advised by legal counsel
and is familiar with the provisions of Section 1542 of the Civil Code of the State of California,
which states:

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.

Each party expressly waives any right or benefit which such party has or may have under
Section 1542 of the California Civil Code or any similar provision of the statutory or
non-statutory law of any other jurisdiction, including Delaware. The parties acknowledge that in
the future they may discover claims or facts in addition to or different from those that they now
know or believe to exist with respect to the subject matter of this Release, and that they intend
to fully, finally, and forever settle all of the Released Matters in exchange for the Separation
Benefits and other mutual promises in the Separation Agreement. This Release will remain in effect
as a full and complete release notwithstanding the discovery or existence of any additional claims
or facts.

          f. No Release of Certain Claims. Company’s release of Executive does not extend
to claims arising out of any act of embezzlement, fraud, or dishonesty by Executive that resulted
in financial benefit or personal enrichment for Executive or any related person or affiliated
entity of Executive.

     2. Acknowledgment of Waiver of Claims under ADEA. Executive acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967
(“ADEA”) and that this waiver and release is knowing and voluntary. This waiver and release does
not apply to any rights or claims that may arise under ADEA after the Effective Date of this
Release, and does not prohibit Executive from exercising legal rights that are, as a matter of law,
not subject to waiver. Executive acknowledges that the consideration given for this Release is in
addition to anything of value to which he was already entitled, and that he has received, or will
receive, regardless of the execution of this Release, all wages owed to him together with any
accrued but unused vacation pay, less applicable withholding and deductions, earned through the
Separation Date. Executive further acknowledges that he has been advised by this writing that:

          a. He should consult with an attorney prior to executing this Release;

          b. He may take up twenty-one (21) days to consider this Release, although Executive may accept
the terms of this Release at any time within those 21 days;

          c. He has seven (7) days following the execution of this Release to revoke this Release; and

          d. This Release will not be effective until the revocation period has expired.

3

 

EXECUTIVE’S ACCEPTANCE OF RELEASE:

BEFORE SIGNING MY NAME TO THE RELEASE, EXECUTIVE STATES THE FOLLOWING: I HAVE READ THE RELEASE, I
UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS. I HAVE OBTAINED SUFFICIENT
INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT
WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY.

Date delivered to Executive: January 25, 2006.

Executed
this
     25th           
day of January                       , 2006.

	 	 	 
	/s/ Martin Brauns
	 	 
	Executive’s Signature
	 	 

INTERWOVEN’S ACCEPTANCE OF RELEASE:

BEFORE SIGNING THIS RELEASE, INTERWOVEN STATES THE FOLLOWING: THE PERSON SIGNING FOR INTERWOVEN
HAS READ THE RELEASE, UNDERSTANDS IT AND KNOWS THAT INTERWOVEN IS GIVING UP IMPORTANT RIGHTS.
INTERWOVEN HAS OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE ITS OWN JUDGMENT. IT HAS
BEEN ADVISED THAT IT SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND IT HAVE SIGNED THE
RELEASE KNOWINGLY AND VOLUNTARILY.

	 	 	 	 	 
	 	 	INTERWOVEN, INC
	 
	 	 	 	 
	 

	 	By:
	 	 /s/ Frank J. Fanzilli, Jr.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:
	 	 Frank J. Fanzilli, Jr.
	 
	 	 	 	 
	 

	 	Title:
	 	 Lead Independent Director

4

 

January 25, 2006

Board of Directors

Interwoven, Inc.

803 W. 11th Avenue

Sunnyvale, CA 94089

     Re: Resignation from the Board of Directors

Gentlemen:

     I hereby submit my resignation from the Board of Directors of Interwoven, Inc., effective
March 31, 2006.

	 	 	 	 	 
	 

	 	Very truly yours,	 	 
	 
	 	 	 	 
	 

	 	/s/ Martin W. Brauns	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	Martin W. Braunsexv10w21

 

Exhibit 10.21

COMPENSATORY ARRANGEMENTS WITH EXECUTIVE OFFICERS

     The current compensatory arrangements of each of the four most highly compensated executive
officers other than Martin W. Brauns who were serving as executive officers of Interwoven, Inc.
(the “Company”) at December 31, 2005 are described below.

     John E. Calonico, Jr., Senior Vice President and Chief Financial Officer. Mr. Calonico’s 2006
base salary is $255,000 and his 2006 on-target incentive pay is $125,000. All of his incentive pay
is determined under the 2006 Executive Officer Incentive Bonus Plan. In addition, Mr. Calonico
holds stock options that will immediately vest as to 50% of the number of any unvested shares
subject to such options in connection with a change in control of the Company that involves the
termination (without cause) or constructive termination of his employment within 12 months
following the change in control. As of December 31, 2005, 13,542 unvested shares, with a weighted
average exercise price of approximately $11.42 per share, were subject to stock options containing
these 50% acceleration benefits. Mr. Calonico’s employment is “at will” and may be terminated at
any time, with or without formal cause.

     Scipio M. Carnecchia, Interim President and Senior Vice President of Worldwide Sales. Mr.
Carnecchia’s 2006 base salary is $200,000 and his 2006 on-target incentive pay has not been
determined. The amount of incentive pay that Mr. Carnecchia may be paid consists of commissions
for software license bookings and professional services revenue. Those commissions are earned and
paid quarterly upon attainment of quarterly goals for software license bookings and professional
services revenue, and quarterly goals for that revenue less the cost of the sales organization to
attain that revenue. In addition, Mr. Carnecchia holds stock options that will immediately vest as
to 50% of the number of any unvested shares subject to such options in connection with a change in
control of the Company that involves the termination of his employment without cause. As of
December 31, 2005, 68,973 unvested shares, with a weighted average exercise price of approximately
$10.83 per share, were subject to stock options containing this benefit. Mr. Carnecchia’s
employment is “at will” and may be terminated at any time, with or without formal cause.

     Steven J. Martello, Senior Vice President of Client Services. Mr. Martello’s 2006 base salary
is $250,000 and his 2006 on-target incentive pay is $200,000. Of this incentive pay, $50,000 is
determined under the 2006 Executive Officer Incentive Bonus Plan; the balance consists of
commissions on revenue from professional services revenue. Those commissions are earned and paid
quarterly upon attainment of quarterly goals for professional services revenue, and quarterly goals
for that revenue less the cost to provide the professional services. In addition, Mr. Martello
holds stock options that will immediately vest as to 50% of the number of any unvested shares
subject to such options in connection with a change in control of the Company that involves the
termination of his employment without cause. As of December 31, 2005, 94,930 unvested shares, with
a weighted average exercise price of approximately $10.65 per share, were subject to stock options
containing this benefit. Mr. Martello’s employment is “at will” and may be terminated at any time,
with or without formal cause.

 

 

     David Nelson-Gal, Senior Vice President of Engineering. Mr. Nelson-Gal’s 2006 base
salary is $250,000 and his 2006 on-target incentive pay is $103,000. All of his incentive pay is
determined under the 2006 Executive Officer Incentive Bonus Plan. Mr. Nelson-Gal’s employment is
“at will” and may be terminated at any time, with or without formal cause.

     All of these officers are eligible to participate in the Company’s various benefit plans,
including its medical, dental and vision benefit plans and its 401(k) plan.

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