Exhibit 10.10

 

Employment Agreement

 

This Agreement is entered into as of July 28, 2003, by and between Lloyd A.
Carney (the “Executive”) and Micromuse Inc., a Delaware corporation (the
“Company”).

 

1. Duties and Scope of Employment.

 

(a) Position. For the term of his employment under this Agreement
(“Employment”), the Company agrees to employ the Executive in the position of
Chief Executive Officer, and the Executive shall have all powers ordinarily
associated with such position. The Executive shall report to the Company’s Board
of Directors (the “Board”). The Executive shall also be appointed as a member
and Chairman of the Board when his Employment commences. The Company shall use
its best efforts to cause the Executive to be re-elected as a member of the
Board and as Chairman whenever his term as a member of the Board expires during
the term of his Employment. The Executive will not earn additional compensation
for service on the Board.

 

(b) Obligations to the Company. During the term of his Employment, the Executive
shall devote his full business efforts and time to the Company consistent with
his title and position and any other reasonable duties determined by the Board.
During the term of his Employment, without the prior written approval of the
Board (which shall not be withheld unreasonably), the Executive shall not render
services in any capacity to any other person or entity and shall not act as a
sole proprietor or partner of any other person or entity or as a shareholder or
other equity owner owning more than one percent of the stock or any profits or
voting interest of any other corporation or other entity, respectively. The
Executive will be entitled to expend a reasonable amount of time performing
civic and volunteer activities that do not interfere with his duties to the
Company.

 

(c) No Conflicting Obligations. The Executive represents and warrants to the
Company that:

 

(i) he is under no obligations or commitments, whether contractual or otherwise,
that are inconsistent with his obligations under this Agreement;

 

(ii) he will not use or disclose, in connection with his employment by the
Company, any trade secrets or other proprietary information or intellectual
property in which any former employer or other third party has any right, title
or interest and that his employment by the Company as contemplated by this
Agreement will not infringe or violate the rights of any other person; and

 

(iii) he has returned to the persons entitled thereto all property and
confidential information belonging to any prior employer.

 

(d) Commencement Date. The Executive shall commence his employment relationship
with the Company and full-time Employment as Chief Executive Officer as soon as
reasonably practicable after the date of this Agreement, but not later than July
31, 2003. The date that the Executive reports for full-time employment will be
the date of employment for purposes of computing compensation as an executive
employee.

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(e) Principal Office. The Executive’s principal office for the performance of
services under this Agreement shall be an appropriate office at the Company’s
current corporate headquarters in San Francisco, California, or other location
within the San Francisco Bay Area as may be designated by the Board in the event
the Company relocates its corporate headquarters. The Executive will also travel
for business as reasonably needed in connection with his executive duties.

 

2. Cash and Incentive Compensation.

 

(a) Salary. The Company shall pay the Executive as compensation for his services
a base salary at a gross annual rate of not less than $400,000. Such salary
shall be payable in semi-monthly increments in accordance with the Company’s
standard payroll procedures. The annual compensation specified in this
Subsection (a), together with any increases in such compensation that the Board
may grant from time to time, is referred to in this Agreement as “Base
Compensation.”

 

(b) Target Bonuses. The Executive shall be eligible to receive an annual
incentive bonus with a target amount equal to his Base Compensation. Such bonus
(if any) shall be awarded based on objective or subjective criteria reasonably
established in advance by agreement between the Executive and the Compensation
Committee of the Board. The reasonable determinations of the Board with respect
to such bonus shall be final and binding, subject to Section 10(g).

 

(c) Stock Options. The Company shall grant the Executive non-statutory stock
options covering 1,500,000 shares of the Company’s common stock, under the
Company’s 1997 Stock Option/Stock Issuance Plan, as amended (the “Plan”).

 

(i) The Compensation Committee of the Board shall grant these options to the
Executive on or within ninety (90) days after the date that the Executive
commences full-time employment with the Company under this Agreement. The
exercise price of the options shall be equal to the fair market value of the
Company’s common stock on the date of grant as determined by the Compensation
Committee under the Plan. The term of these options shall be 10 years, subject
to earlier expiration in the event of the termination of the Executive’s
Employment.

 

(ii) These options shall become exercisable and vested over a three (3) year
period as follows: 250,020 shares become exercisable and vested upon the
Executive completing his initial 6 months of full-time Employment measured from
the date of grant, and thereafter 41,666 shares become exercisable and vested
monthly upon the Executive completing each additional month of Employment over
the succeeding 30 month period commencing on the 6 month anniversary of the date
of grant.

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(iii) The grant of these options shall be evidenced by the Notice of Grant and
Stock Option Agreement attached as Exhibit A. The foregoing summary of option
terms is qualified by reference to the provisions of Exhibit A, the Plan
included in Exhibit B, and other applicable provisions of this Agreement.

 

(d) Special Payment. In addition to the compensation specified above, the
Company shall pay to the Executive the sum of two hundred thousand dollars
($200,000.00) on the date that is six (6) months after the date the Executive
commences full-time employment with the Company under Section 1 (or the next
business day if the six month date is not a business day), if and only if he is
so employed as Chief Executive Officer of the Company on that six month date.

 

3. Vacation and Executive Benefits.

 

(a) Vacation. During the term of his Employment, the Executive shall be eligible
for paid vacations for up to twenty (20) days per fiscal year (prorated for any
partial fiscal year) and otherwise in accordance with the Company’s standard
policy applicable to its executive officers, as it may be amended from time to
time. The Executive may elect to take up to ten (10) additional paid vacation
days within August 2003, which days shall not be charged against vacation days
otherwise accruing for the balance of the fiscal year ending September 30, 2003.

 

(b) Other Benefits. During the term of his Employment, the Executive shall be
eligible to participate in any benefit plans maintained by the Company in which
the Company’s executive officers are eligible to participate, subject in each
case to the generally applicable terms and conditions of the plan in question
and to the determinations of any person or committee administering such plan. To
the extent that the Executive’s eligibility for benefit coverage by his former
employer lapses in advance of his eligibility for benefit coverage under the
Company’s current plans, the Company will pay directly for COBRA coverage or
will reimburse him for amounts expended to secure continuation of benefit
coverage under COBRA.

 

4.         Business Expenses. During the term of his Employment, the Executive
shall be authorized to incur necessary and reasonable travel, entertainment and
other business expenses in connection with his duties hereunder. The Company
shall reimburse the Executive for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with the
Company’s generally applicable policies.

 

5. Term of Employment.

 

(a) Basic Rule. The Company agrees to continue the Executive’s Employment, and
the Executive agrees to remain in Employment with the Company, from the
commencement date set forth in Section 1(d) until the date when the Executive’s
Employment terminates pursuant to Subsection (b) or (c) below. The Executive’s
Employment with the Company shall be “at will.” Any contrary representations
that may have been made or implied to the Executive shall be superseded by this
Agreement. This Agreement, including Sections 6 and 7 below, shall constitute
the full and complete agreement between the Executive and the Company on the “at
will” nature of the Executive’s Employment, which may only be changed in an
express written agreement signed by the Executive and a duly authorized officer
of the Company.

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(b) Termination. The Company may terminate the Executive’s Employment at any
time and for any reason (or no reason), and with or without Cause as defined in
Section 6, by giving the Executive notice in writing. The Executive may
terminate his Employment at any time and for any reason (or no reason), and with
or without Good Reason defined in Section 6, by giving the Company notice in
writing not less than thirty (30) days prior to the intended date of
termination. The Executive’s Employment shall terminate automatically in the
event of his death.

 

(c) Permanent Disability. The Company may terminate the Executive’s active
Employment due to Permanent Disability by giving the Executive notice in
writing. For all purposes under this Agreement, “Permanent Disability” shall
mean that the Executive, at the time notice is given, has failed to perform his
duties under this Agreement for not less than 120 days during any period of 12
consecutive months as the result of his incapacity due to physical or mental
injury, disability or illness.

 

(d) Rights upon Termination. Except as expressly provided in Section 6 or 7,
upon the termination of the Executive’s Employment pursuant to this Section 5,
the Executive shall only be entitled to the compensation, benefits and
reimbursements described in Sections 2, 3 and 4 for the period through the
effective date of the termination. The Company shall pay the Executive all
accrued but unpaid salary, bonus and reimbursements owed as of the date of the
termination of his Employment, and otherwise provide the Executive COBRA and
other accrued but unpaid payments or benefits, if any, that may be required by
applicable law. The payments under this Agreement shall fully discharge all
responsibilities of the Company to the Executive.

 

(e) Termination of Agreement. This Agreement shall terminate when all
obligations of the parties hereunder have been satisfied. The termination of
this Agreement shall not limit or otherwise affect any of the Executive’s
obligations under Section 8.

 

6. Termination Benefits.

 

(a) General Release. Any other provision of this Agreement notwithstanding,
Subsections (b) and (c) below and Section 7(a) shall not apply unless the
Executive (i) has executed (and not revoked under any revocation right, if any,
allowed by law) a general release (in substantially the form attached to this
Agreement as Exhibit C) of all known and unknown claims that he may then have
against the Company or persons affiliated with the Company and (ii) has agreed
not to prosecute any legal action or other proceeding based upon any of such
claims, except that he shall not be required to release any rights he may
otherwise have under the indemnity agreement or any available insurance
described in Section 10(k), nor any vested benefits or rights under the
Company’s employee benefit plans and programs.

 

(b) Severance Pay. If, during the term of this Agreement, the Company terminates
the Executive’s Employment for any reason other than Cause or Permanent
Disability or the Executive resigns his Employment for Good Reason, then:

 

(i) the Company shall pay the Executive his Base Compensation for a period of 12
months following the termination of his Employment at the rate in effect at the
time of the termination of Employment and in accordance with the Company’s
standard payroll procedures;

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(ii) the Company shall pay the Executive the payment described in Section 2(d)
to the extent not previously paid;

 

(iii) the Company shall reimburse the Executive for COBRA costs for himself and
his eligible dependents, for identical coverage as was provided to the Executive
immediately prior to termination (to the maximum extent otherwise available
under plans maintained by the Company), for a period of 12 months following the
termination of his Employment if he timely elects to continue his medical
coverage under COBRA; and

 

(iv) the Company shall pay the Executive with respect to the period of 12 months
following the termination of his Employment an amount equal to the target bonus
(but not in excess of 100% of his Base Compensation for that period) that would
otherwise have been payable under Section 2(b) with respect to that period if he
remained employed by the Company, due at such date or dates such bonus would
otherwise have been payable.

 

With regard to payments provided under this Subsection (b) or other post
termination compensation or benefits, the Executive shall be under no duty to
mitigate his damages, and the Company shall be entitled to no offset rights in
the event the Executive secures other employment.

 

(c) Option Acceleration. If Subsection (b) above applies, then the percentage of
the options described in Section 2(c), and other options, if any, awarded to the
Executive thereafter, that is exercisable and vested shall be determined by
adding twelve (12) months to the actual length of the Executive’s Employment.

 

(d) Definition of “Cause.” For all purposes under this Agreement, “Cause” shall
mean:

 

(i) Any material breach by the Executive of this Agreement or the Proprietary
Information and Inventions Agreement between the Executive and the Company;

 

(ii) Conviction of, or a plea of “guilty” or “no contest” to, a felony under the
laws of the United States or any state thereof;

 

(iii) Material violation of the Company’s code of business conduct and/or code
of ethics as defined under SEC rules for the chief executive officer and
designated finance officers;

 

(iv) Fraud, embezzlement or misappropriation of the assets of the Company or
other deliberate acts of dishonesty at the expense of the Company; or

 

(v) Willful misconduct or gross negligence within or outside the performance of
duties assigned to the Executive under this Agreement that results in
significant harm to the

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Company or willful or grossly negligent failure to comply with securities or
other laws applicable to the Executive or for which the Executive is responsible
for assuring compliance that results in significant harm to the Company.

 

Provided that, despite the foregoing, such definitions of Cause shall not apply
to actions: (A) that are isolated and insubstantial, or inadvertent and
insubstantial, and that in each case did not occur in bad faith, or (B) that the
Executive has remedied after the Company has given reasonable written notice to
the Executive describing the proscribed action in reasonable detail.

 

(e) Definition of “Good Reason.” For all purposes under this Agreement, “Good
Reason” shall mean:

 

(i) The assignment to the Executive of any duties inconsistent in any respect
with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by this
Agreement, or any other action by the Company that results in a diminution in
such position, authority, duties or responsibilities, other than an isolated and
insubstantial or inadvertent and insubstantial action that was not taken in bad
faith, unless notice thereof is given to the Company by the Executive and the
Company fails to promptly remedy such actions;

 

(ii) Any failure by the Company to comply with any of the provisions of this
Agreement (including, but not limited to, failure to provide compensation or
benefits required by this Agreement), other than an isolated and insubstantial
or inadvertent and insubstantial failure that did not occur in bad faith, unless
notice thereof is given to the Company by the Executive and the Company fails to
remedy such failure within thirty (30) days after receiving actual notice
thereof;

 

(iii) The Company’s requiring the Executive, without his consent, to be based at
any location which increases the distance of his commute from his current
residence in Atherton, California by more than three (3) miles; or

 

(iv) The Company’s failure to use its best efforts to cause the Executive to be
elected as a member of the Board when his Employment commences and whenever his
term as a member of the Board expires during the term of his Employment.

 

7. Change in Control.

 

(a) Severance and Option Acceleration. If, during the term of this Agreement and
within twelve (12) months after the Company is subject to a Change in Control,
the Company terminates the Executive’s Employment for any reason other than
Cause or Permanent Disability or the Executive resigns his Employment for Good
Reason, then:

 

(i) (A) the Company shall pay the Executive his Base Compensation for a period
of 24 months following the termination of his Employment at the rate in effect
at the time of the termination of Employment and in accordance with the
Company’s standard payroll procedures; (B) the Company shall pay the Executive
the payment described in Section 2(d) to the extent not

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already paid; (C) the Company shall reimburse the Executive for COBRA costs for
himself and his eligible dependents, for identical coverage as was provided to
the Executive immediately prior to termination (to the maximum extent otherwise
available under plans maintained by the Company), for a period of 24 months
following the termination of his Employment if he timely elects to continue his
medical coverage under COBRA; and (D) the Company shall pay the Executive with
respect to the period of 24 months following the termination of his Employment
an amount equal to the target bonus (i.e., 200% of his Base Compensation for
that 2 year period) that would otherwise have been payable under Section 2(b)
with respect to that period if he remained employed by the Company, due at such
date or dates such bonus would otherwise have been payable;

 

(ii) Section 6(c) shall not apply to the options described in Section 2(c); and

 

(iii) The following additional provisions shall apply to the options described
in Section 2(c) and other options, if any, awarded to the Executive thereafter.
The Executive will receive immediate 100% vesting of any unvested portion of the
options if his employment ends as provided above in this Section 7(a).
Nevertheless, if the Change of Control is an acquisition of the Company (i.e., a
Corporate Transaction as defined in the Plan) and the acquiring or surviving
corporation does not elect to assume or substitute new options for the options,
the Executive shall have the right to exercise any options then held by him, in
full, including any previously unvested shares, immediately prior to the closing
of the Change of Control transaction (whether or not his employment ends as
provided in this Section 7(a)) and the options shall terminate upon that Change
of Control to the extent not assumed by the acquiring or surviving corporation.
If there is a Change of Control and the acquiring or surviving corporation
elects to assume or substitute new options for the options, then, and only then,
the Executive shall be entitled to exercise those assumed or substituted options
as they otherwise vest during the continuing term of his employment or within
one (1) year after his employment ends as provided above in this Section 7(a),
but in no event may an option be exercised after the expiration of the original
ten (10) year option term.

 

(iv) The provisions of this Section 7(a) shall supercede and govern in lieu of
any inconsistent or contrary provisions of the Plan relating to a Corporate
Transaction or Change of Control.

 

(b) Definition of “Change in Control.” For all purposes under this Agreement, a
“Change in Control” shall be deemed to have occurred if:

 

(i) Any “person” (as defined in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), excluding for this
purpose the Company or any subsidiary of the Company, or any employee benefit
plan of the Company or any subsidiary of the Company, or any person or entity
organized, appointed or established by the Company for or pursuant to the terms
of such plan that acquires beneficial ownership of voting securities of the
Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act) directly or indirectly of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding securities; provided, however, that:

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(A) No Change in Control shall be deemed to have occurred as the result of an
acquisition of securities of the Company by the Company that, by reducing the
number of voting securities outstanding, increases the direct or indirect
beneficial ownership interest of any person to 30% or more of the combined
voting power of the Company’s then outstanding securities, but any subsequent
increase in the direct or indirect beneficial ownership interest of such a
person in the Company shall be deemed a Change in Control; and

 

(B) If the Board determines in good faith that a person who has become the
beneficial owner directly or indirectly of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding securities has inadvertently reached that level of ownership
interest, and if such person divests as promptly as practicable a sufficient
amount of securities of the Company so that the person no longer has a direct or
indirect beneficial ownership interest in 30% or more of the combined voting
power of the Company’s then outstanding securities, then no Change in Control
shall be deemed to have occurred.

 

(ii) During any period of two consecutive years, individuals who on the date of
this Agreement constituted the Board and any new director or directors (except
for any director designated by a person who has entered into an agreement with
the Company to effect a transaction described in Paragraph (i) above or
Paragraph (iii) below) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office, or by a majority of the Board’s nominating
committee comprised of independent directors then still in office, in each case
who either were directors at the beginning of such two-year period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority of the Board; or

 

(iii) The consummation of one of the following transactions (a “Business
Combination”):

 

(A) A plan of complete liquidation of the Company;

 

(B) An agreement for the sale or disposition of the Company or all or
substantially all of the Company’s assets;

 

(C) A plan of merger or consolidation of the Company with any other corporation;
or

 

(D) A similar transaction or series of transactions involving the Company;

 

in each case unless after such Business Combination the stockholders of the
Company immediately prior to the Business Combination continue to own at least
63% of the voting securities of the new (or continued) entity immediately after
such Business Combination in substantially the same proportion as their
ownership of the Company immediately prior to such Business Combination.

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(c) Parachute Payments. If the Executive’s severance and other benefits provided
for in this Section 7 constitute “parachute payments” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and
final or temporary regulations thereunder, and, but for this subsection, would
be subject to the excise tax imposed by Section 4999 of the Code, then his
severance and other benefits under this Section 7 will be payable, at his
election, either in full or in such lesser amount as would result, after taking
into account the applicable federal, state and local income taxes and the excise
tax imposed by Section 4999 of the Code, in his receipt on an after-tax basis of
the greatest amount of severance and other benefits. In no event shall the
Company be obligated to gross up any payment or benefit to the Executive to
avoid the effects of the foregoing income tax laws or to pay regular or excise
taxes arising therefrom, except to the extent provided in Section 7(d). The
parties shall reasonably agree upon and sign, and not unreasonably delay, such
written elections and documents as may be reasonably requested by the Company or
the Executive to carry out the provisions of this paragraph.

 

(d) Modified Tax Gross-Up. In the event that the Executive’s “parachute
payments” (as described in Section 7 (c) above) are subject to the excise tax
imposed by Section 4999 of the Code, then the Company shall make a supplemental
payment in an amount that would equal the excise tax on the parachute payments,
plus the sum of the excise tax that would be imposed by Section 4999 of the
Code, the federal, state and local income taxes, and the federal Medicare tax on
such supplemental payment, but under no circumstances shall such supplemental
payment exceed one million dollars ($1,000,000). For the purpose of determining
the maximum amount of the supplemental payment provided for in this Section
7(d), and unless the Company and the Executive otherwise agree in writing, any
determination required under this Section 7(d) shall be made in writing by the
Company’s independent public accountants (“Accountants”), whose determination
shall be conclusive and binding upon the Executive and the Company for all
purposes. For purposes of making the calculations required by this Section, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes, including an assumption that the Executive shall be deemed to
pay federal, state, and local income taxes at the highest marginal rates in
effect on the date of termination and the calculation of federal income tax
shall take into account the deduction of any state and local income taxes, and
may rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Executive shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section. The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section.

 

8. Executive’s Restrictive Covenants.

 

(a) Non-Competition. During the period commencing on the date of this Agreement
and continuing until the date on which Executive’s Employment terminates for any
reason, the Executive shall not, directly or indirectly (other than on behalf of
the Company or with the Company’s prior written consent), commence or otherwise
engage in a Competitive Business

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Activity. The term “Competitive Business Activity” shall mean: (i) engaging in,
or managing or directing persons engaged in, the development, licensing,
leasing, sale or distribution of network management software or service
assurance or fault detection software or any other business, defined by the
Company with similar specificity, which the Company or any of the Company’s
affiliates can demonstrate that it is, at the time of such termination, actively
engaged in (“Competing Business”), whether independently or as an executive,
agent, consultant, advisor, independent contractor, proprietor, partner,
officer, director or otherwise; (ii) acquiring or having an ownership interest
in any entity that derives more than 15% of its gross revenues from any
Competing Business, except for ownership of 1% or less of any entity whose
securities are freely tradable on an established market or 15% or less if not so
tradable; or (iii) participating in the financing, operation, management or
control of any firm, partnership, corporation, entity or business described in
Paragraph (ii) above.

 

(b) Non-Solicitation. During the period commencing on the date of this Agreement
and continuing until the first (1st) anniversary of the date when the
Executive’s Employment terminates for any reason, the Executive shall not
directly or indirectly, personally or through others, solicit or attempt to
solicit (on the Executive’s own behalf or on behalf of any other person or
entity) either (i) the employment of any executive of the Company or any of the
Company’s affiliates, or (ii) the business of any customer of the Company or any
of the Company’s affiliates with whom the Executive had material contact during
his Employment, to the extent this clause (ii) is lawfully enforceable to
protect the Company’s trade secrets.

 

(c) Non-Disclosure. The Executive has entered into a Proprietary Information and
Inventions Agreement with the Company, which is incorporated herein by
reference, a copy of which is attached as Exhibit D.

 

(d) Injunctive Relief. The Executive acknowledges and agrees that his failure to
perform any of his covenants in this Section 8 would cause irreparable injury to
the Company and cause damages to the Company that would be difficult or
impossible to ascertain or quantify. Accordingly, without limiting any other
remedies that may be available with respect to any breach of this Agreement, the
Executive consents to the entry of an injunction to restrain any breach of this
Section 8.

 

(e) Survival. The covenants in this Section 8 shall survive any cancellation,
termination, rescission or expiration of this Agreement and the termination of
the Executive’s Employment with the Company for any reason.

 

9. Successors.

 

(a) Company’s Successors. This Agreement shall be binding upon any successor
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company’s business and/or assets. For all purposes under this Agreement, the
term “Company” shall include any successor to the Company’s business and/or
assets that becomes bound by this Agreement.

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(b) Executive’s Successors. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of, and be enforceable by, the Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

 

10. Miscellaneous Provisions.

 

(a) Notice. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when (i)
personally delivered, (ii) delivered to the U.S. Postal Service for delivery by
registered or certified mail or (iii) delivered to a comparable private service
offering guaranteed deliveries in the ordinary course of its business. Notice
under clauses (ii) and (iii) shall be valid only if delivery charges have been
prepaid and a return receipt will be furnished. In the case of the Executive,
notice under clauses (ii) and (iii) shall be addressed to him at the home
address that he most recently communicated to the Company in writing. In the
case of the Company, notice under clauses (ii) and (iii) shall be addressed to
its corporate headquarters and directed to the attention of its Secretary.

 

(b) Modifications and Waivers. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Executive and by an authorized officer of the
Company (other than the Executive). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.

 

(c) Whole Agreement. No other agreements, representations or understandings
(whether oral or written and whether express or implied) that are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. This Agreement and the attached Exhibits A
through D contain the entire understanding of the parties with respect to the
subject matter hereof.

 

(d) Withholding Taxes. All payments and compensatory benefits made and to be
made under this Agreement shall be subject to reduction to reflect all taxes or
other charges required to be withheld by all applicable laws.

 

(e) Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal laws of the State of California
without regard to principles of conflicts of law.

 

(f) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

 

(g) Arbitration. Subject to the rights of either party to seek injunctive or
other relief from a court relating to matters covered by Section 8 or trade
secret or proprietary information claims, any controversy or claim arising out
of or relating to this Agreement or the breach thereof, or the Executive’s
Employment or the termination thereof, shall be settled in the metropolitan area
in which the Executive’s principal office is or was most recently located, by

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arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. The Executive and
the Company expressly waive all rights to have such disputes resolved via trial
before a judge and/or jury. The decision of the arbitrator shall be final and
binding on the parties, and judgment on the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. The parties hereby agree
that the arbitrator shall be empowered to enter an equitable decree mandating
specific enforcement of the terms of this Agreement. The Company shall initially
pay all fees and expenses of the arbitrator. However, the Company or the
Executive, as the case may be, shall bear all fees and expenses of the
arbitrator and all of the reasonable legal fees and out-of-pocket expenses of
the other party if the arbitrator determines that the claim or position of the
Company or the Executive, as the case may be, was without reasonable foundation.
The Executive and the Company hereby consent to personal jurisdiction of the
state and federal courts located in the state where the Executive’s principal
office is or most recently was located for any action or proceeding arising from
or relating to this Agreement or relating to any arbitration in which the
parties are participants. The parties will be entitled to reasonable discovery
of essential matters as determined by the arbitrator. In the arbitration, the
parties will be entitled to all remedies that would have been available if the
matter were litigated in a court of law. The arbitrator shall issue a written
award that sets forth the essential findings of fact and conclusions of law on
which the award is based.

 

(h) Legal Fees. The Company shall reimburse the Executive for reasonable legal
fees not in excess of fees actually incurred by him in connection with the
review of this Agreement prior to its execution.

 

(i) No Assignment. This Agreement and all rights and obligations of the
Executive hereunder are personal to the Executive and may not be transferred or
assigned by the Executive at any time. The Company may assign its rights under
this Agreement to any entity that assumes the Company’s obligations hereunder in
connection with any sale or transfer of all or substantially all of the
Company’s assets to such entity.

 

(j) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

(k) Indemnity and Director and Officer Insurance. The Company and the Executive
shall execute an indemnity agreement that is in substance identical to
agreements entered or to be entered into with other executive officers and
members of the Board. Under such agreement the Company shall indemnify the
Executive to the extent permissible under Delaware law with respect to actions
taken in the scope and course of performing his duties under this Agreement. In
addition, the Company shall use all reasonable efforts to secure and maintain
Director and Officer indemnity insurance that it provides to its directors and
officers generally, in an amount and for premiums deemed reasonable by the
Board.

 

[the balance of this page is intentionally left blank]

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(l) Press Release. In connection with the initial employment of the Executive,
the Company and the Executive shall mutually agree upon the substance and timing
of the press release to be issued by the Company announcing his new positions
with the Company.

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

 

Micromuse Inc.  

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Lloyd A. Carney

By

 

 

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Exhibit List     

Exhibit A

  

Notice of Grant and Stock Option Agreement

Exhibit B

  

Prospectus and copy of 1997 Stock Option/Stock Issuance Plan

Exhibit C

  

Form of Release under Section 6(a)

Exhibit D

  

Proprietary Information and Inventions Agreement

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EXHIBIT A TO EMPLOYMENT AGREEMENT

 

MICROMUSE INC.

 

NOTICE OF STOCK OPTION GRANT AND STOCK OPTION AGREEMENT

 

(1,500,000 Shares)

 

Optionee:    Lloyd A. Carney Grant Date:    July 28, 2003 Vesting Commencement
Date:    Grant date specified immediately above. Exercise Price:    $7.27 Number
of Option Shares:    one million five hundred thousand (1,500,000) shares of
common stock        Expiration Date:    July 28, 2013 Type of Option:   
Non-statutory stock option Employment Agreement:    Optionee agrees that the
Option is granted subject to and in accordance with, and agrees to be bound in
respect of the Option by, the terms of the Employment Agreement dated as of July
28, 2003, between him and Micromuse Inc. (the “Employment Agreement”), and the
attached Stock Option Agreement, and except as otherwise provided in the
foregoing agreements, the Micromuse Inc. 1997 Stock Option/Stock Issuance Plan
(the “Plan”). Nothing in this Notice or the Stock Option Agreement shall confer
upon Optionee any right to continue in Service for any period of specific
duration. Dates Exercisable and Vested:    The Option shall become exercisable
and vested over a three (3) year period as follows: 250,020 shares become
exercisable and vested upon the Executive completing six (6) months of Service
from and after the grant date specified above, and thereafter 41,666 shares
become exercisable and vested monthly upon the Executive completing each
additional month of Service over the succeeding thirty (30) month period
commencing on the 6 month anniversary of the grant date specified above. Except
as expressly provided in the Employment Agreement concerning acceleration of
option vesting, in no event shall the Option become exercisable for any
additional Option Shares after the Optionee’s cessation of Service.

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EXHIBIT A TO EMPLOYMENT AGREEMENT

 

Definitions:

   Capitalized terms used but not defined in this Notice of Stock Option Grant
have the meanings given to them in the attached Stock Option Agreement.

 

The parties have signed this Notice of Stock Option Grant as of the grant date
set forth above, and their signatures to this notice also constitute signatures
to the attached Stock Option Agreement.

 

Micromuse Inc.  

 

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        Optionee Signature

By

 

 

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Print Name: Lloyd A. Carney

   

Print Name: James B. De Golia

 

Address:

  

 

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Title: Senior Vice President & Secretary

 

 

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MICROMUSE INC.

STOCK OPTION AGREEMENT

 

RECITALS

 

A. Optionee is to render valuable services to the Corporation (or a Parent or
Subsidiary) pursuant to the Employment Agreement, and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the Plan and the
Employment Agreement in connection with the Corporation’s grant of an option to
Optionee.

 

B. All capitalized terms in this Agreement shall have the meanings assigned to
them in the attached Appendix.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant
Date, an option (the “Option”) to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the Option term specified in Paragraph 2 at the Exercise Price.

 

2. Option Term. The Option shall have a term of ten (10) years measured from the
Grant Date and shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6,
or in the circumstance specified in Section 7(a)(iii) of the Employment
Agreement.

 

3. Limited Transferability. During Optionee’s lifetime, the Option shall be
exercisable only by Optionee and shall not be assignable or transferable other
than by will or by the laws of descent and distribution following Optionee’s
death, except that the Option is transferable to members of Optionee’s immediate
family or to trusts or partnerships formed for the benefit of Optionee or
members of Optionee’s immediate family.

 

4. Dates of Exercise. The Option shall become exercisable for the Option Shares
in one or more installments as specified in the Grant Notice. As the Option
becomes exercisable for such installments, those installments shall accumulate
and the Option shall remain exercisable for the accumulated installments until
the Expiration Date or sooner termination of the Option term under Paragraph 5.

 

5. Cessation of Service. The Option term specified in Paragraph 2 shall
terminate (and the Option shall cease to be outstanding) prior to the Expiration
Date should any of the following provisions become applicable:

 

(a) Should Optionee cease to remain in Service for any reason (other than death,
Disability or Cause as defined in the Employment Agreement) while the Option is
outstanding, then Optionee shall have a period of three (3) months (commencing
with the date of such cessation of Service) during which to exercise the Option,
but in no event shall the Option be exercisable at any time after the Expiration
Date.

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(b) Should Optionee die while the Option is outstanding, then the personal
representative of Optionee’s estate or the person or persons to whom the Option
is transferred pursuant to Optionee’s will or in accordance with the laws of
inheritance shall have the right to exercise the Option. Such right shall lapse,
and the Option shall cease to be outstanding, upon the earlier of (i) the
expiration of the twelve (12)-month period measured from the date of Optionee’s
death or (ii) the Expiration Date.

 

(c) Should Optionee cease Service by reason of Disability while the Option is
outstanding, then Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of Service) during which to exercise the Option.
In no event shall the Option be exercisable at any time after the Expiration
Date.

 

(d) Should Optionee’s Service be terminated for Cause as defined in the
Employment Agreement, while the Option is outstanding, then the Optionee shall
have a period of ten (10) days (commencing with the date of such cessation of
Service) during which to exercise the Option. In no event shall the Option be
exercisable at any time after the Expiration Date.

 

(e) Notwithstanding the foregoing, if and to the extent Section 7(a) of the
Employment Agreement shall apply by reason of a Change of Control as defined in
the Employment Agreement which is a Corporate Transaction and in which the
acquiring or surviving corporate elects to assume or substitute new options for
the then outstanding Option, then, pursuant to the provisions of that Section
7(a), Optionee shall have a period of one (1) year (commencing with the date of
cessation of Service) during which to exercise the Option after the Company
terminates his Service for any reason other than Cause or Permanent Disability
or Optionee resigns from his Service for Good Reason as the foregoing terms are
defined in the Employment Agreement. In no event shall the Option be exercisable
at any time after the Expiration Date.

 

(f) During the limited period of post-Service exercisability, the Option may not
be exercised in the aggregate for more than the number of Option Shares in which
Optionee is, at the time of Optionee’s cessation of Service, vested pursuant to
the Vesting Schedule specified in the Grant Notice or the special vesting
acceleration provisions of the Employment Agreement referred to in Paragraph 6
below. Upon the expiration of such limited exercise period or (if earlier) upon
the Expiration Date, the Option shall terminate and cease to be outstanding for
any vested Option Shares for which the Option has not been exercised. To the
extent Optionee is not vested in the Option Shares at the time of Optionee’s
cessation of Service, the Option shall immediately terminate and cease to be
outstanding with respect to those shares.

 

6. Accelerated Vesting. The exercisability and vesting of the Option, to the
extent outstanding but not otherwise fully exercisable, shall automatically
accelerate to the extent provided in, and pursuant to, Sections 6 and 7 of the
Employment Agreement.

 

7. Adjustment in Option Shares. Nothing in this Agreement affects the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its

 

17

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business or assets. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation’s receipt of consideration, appropriate
adjustments shall be made to (i) the total number and/or class of securities
subject to the Option and (ii) the Exercise Price in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.

 

8. Stockholder Rights. The holder of the Option shall not have any stockholder
rights with respect to the Option Shares until such person shall have exercised
the Option, paid the Exercise Price and become a holder of record of the
purchased shares.

 

9. Manner of Exercising Option.

 

(a) In order to exercise the Option with respect to all or any part of the
Option Shares for which the Option is at the time exercisable, Optionee (or any
other person or persons exercising the Option) must take the following actions:

 

(i) Execute and deliver to the Corporation a Notice of Exercise for the Option
Shares for which the Option is exercised.

 

(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of
the following forms:

 

(A) cash or check made payable to the Corporation; or

 

(B) in shares of Common Stock held by Optionee (or any other person or persons
exercising the Option) for the requisite period necessary to avoid a charge to
the Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or

 

(C) to the extent the Option is exercised for vested Option Shares, through a
special sale and remittance procedure pursuant to which Optionee (or any other
person or persons exercising the Option) shall concurrently provide irrevocable
instructions (I) to a brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all Federal, state and
local income and employment taxes required to be withheld by the Corporation by
reason of such exercise, and (II) to the Corporation to deliver the certificates
for the purchased shares directly to such brokerage firm, after sufficient funds
have been remitted to the Corporation, in order to complete the sale.

 

Except to the extent the sale and remittance procedure is utilized in connection
with the Option exercise, payment of the Exercise Price must accompany the
Notice of Exercise delivered to the Corporation in connection with the Option
exercise.

 

18

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(iii) Furnish to the Corporation appropriate documentation that the person or
persons exercising the Option (if other than Optionee) have the right to
exercise the Option.

 

(iv) Execute and deliver to the Corporation such written representations as may
be requested by the Corporation in order for it to comply with the applicable
requirements of Federal and state securities laws.

 

(v) Make appropriate arrangements with the Corporation (or Parent or Subsidiary
employing or retaining Optionee) for the satisfaction of all Federal, state and
local income and employment tax withholding requirements applicable to the
Option exercise.

 

(b) As soon as practical after the Exercise Date, the Corporation shall issue to
or on behalf of Optionee (or any other person or persons exercising the Option)
a certificate or electronic book entry for the purchased Option Shares, with the
appropriate legends affixed thereto.

 

(c) In no event may the Option be exercised for any fractional shares.

 

10. Compliance with Laws and Regulations.

 

(a) The exercise of the Option and the issuance of the Option Shares upon such
exercise shall be subject to compliance by the Corporation and Optionee with all
applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.

 

(b) The inability of the Corporation to obtain approval from any regulatory body
having authority deemed by the Corporation to be necessary to the lawful
issuance and sale of any Common Stock pursuant to the Option shall relieve the
Corporation of any liability with respect to the non-issuance or sale of the
Common Stock as to which such approval shall not have been obtained. The
Corporation, however, shall use its best efforts to obtain all such approvals.

 

11. Successors and Assigns. Except to the extent otherwise provided in Paragraph
3, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the Corporation and its successors and assigns and Optionee,
Optionee’s assigns and the legal representatives, heirs and legatees of
Optionee’s estate.

 

12. Notices. Any notice required to be given or delivered to the Corporation
under the terms of this Agreement shall be in writing and addressed to the
Corporation at its principal corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee’s signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

 

19

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13. Construction. This Agreement and the Option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to
the terms of the Plan. All decisions of the Plan Administrator with respect to
any question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in the Option.

 

14. Governing Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware without resort
to that State’s conflicts of law rules.

 

20

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APPENDIX TO STOCK OPTION AGREEMENT:

 

The following definitions shall be in effect under the Agreement:

 

Agreement shall mean this Stock Option Agreement.

 

Board shall mean the Corporation’s Board of Directors.

 

Code shall mean the Internal Revenue Code of 1986, as amended.

 

Common Stock shall mean the Corporation’s common stock.

 

Corporate Transaction shall mean either of the following stockholder-approved
transactions to which the Corporation is a party: (i) a merger or consolidation
in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation’s outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such transaction, or (ii) the sale, transfer or
other disposition of all or substantially all of the Corporation’s assets in
complete liquidation or dissolution of the Corporation.

 

Corporation shall mean Micromuse Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of
Micromuse Inc. which shall by appropriate action adopt the Plan.

 

Employee shall mean an individual who is in the employ of the Corporation (or
any Parent or Subsidiary), subject to the control and direction of the employer
entity as to both the work to be performed and the manner and method of
performance.

 

Exercise Date shall mean the date on which the Option shall have been exercised
in accordance with Paragraph 9 of the Agreement.

 

Exercise Price shall mean the exercise price payable per Option Share as
specified in the Grant Notice.

 

Expiration Date shall mean the date on which the Option expires as specified in
the Grant Notice.

 

Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

 

(i) If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing price per share of Common Stock
on the date in question, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor system. If
there is no closing price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing price on the last preceding date for
which such quotation exists.

 

21

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(ii) If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.

 

(iii) If the Common Stock is at the time neither listed on any Stock Exchange
nor traded on the Nasdaq National Market, then the Fair Market Value shall be
determined by the Plan Administrator after taking into account such factors as
the Plan Administrator shall deem appropriate.

 

Grant Date shall mean the date of grant of the Option as specified in the Grant
Notice.

 

Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of
the option evidenced hereby.

 

1934 Act shall mean the Securities Exchange Act of 1934, as amended.

 

Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.

 

Option shall have the meaning set forth in Section 1 of this Agreement.

 

Option Shares shall mean the number of shares of Common Stock subject to the
Option.

 

Optionee shall mean the person to whom the Option is granted as specified in the
Grant Notice.

 

Parent shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

 

Permanent Disability shall mean the definition of Permanent Disability contained
in the Employment Agreement.

 

Plan shall mean the Corporation’s 1997 Stock Option/Stock Issuance Plan.

 

Plan Administrator shall mean either the Board or a committee of the Board
acting in its capacity as administrator of the Plan.

 

22

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Service shall mean the Optionee’s performance of services for the Corporation
(or any Parent or Subsidiary) in the capacity of an Employee, a non-employee
member of the board of directors or an independent consultant.

 

Stock Exchange shall mean the American Stock Exchange or the New York Stock
Exchange.

 

Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

 

23

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Exhibit C to Employment Agreement

 

RELEASE AND WAIVER OF CLAIMS

 

In consideration of the severance payments and other benefits to which I have
become entitled pursuant to the Employment Agreement between Micromuse Inc., a
Delaware corporation (the “Company”), and myself dated July 28, 2003 (the
“Employment Agreement”), and in connection with the termination of my employment
on the date indicated below above my signature, I, Lloyd A. Carney, hereby
furnish the Company with the following release and waiver (the “Release”).

 

I, on behalf of myself, spouse, heirs, successors, assignees and personal
representatives, hereby release, forever discharge and promise not to sue the
Company and the Company’s past and present officers, directors, agents,
professional advisers, employees, stockholders, successors, assignees and
affiliates from and for any and all claims, liabilities, demands, causes of
action, costs, expenses, attorney fees, damages, losses, indemnities (except as
set forth below) and obligations of every kind and nature, in law, equity or
otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising from or relating to my employment and other relationships,
if any, with the Company and the termination of that employment or those
relationships, including (without limitation) claims of wrongful discharge,
emotional distress, defamation, fraud, breach of contract, breach of the
covenant of good faith and fair dealing, discrimination claims based on sex,
age, race, national origin, disability or any other basis under Title VII of the
Civil Rights Act of 1964, as amended, the California Fair Employment and Housing
Act, the Federal Age Discrimination in Employment Act of 1967, as amended
(“ADEA”), the Americans with Disability Act, contract claims, tort claims, and
wage or benefit claims, including but not limited to, claims for salary,
bonuses, commissions, stock grants, stock options, vacation pay, fringe
benefits, severance pay or any other form of compensation or benefits (other
than the payments and benefits to which I am expressly entitled under the
Employment Agreement).

 

In releasing claims unknown to me at present, I am waiving all rights and
benefits under Section 1542 of the California Civil Code, and any law or legal
principle of similar effect in any jurisdiction: “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.”

 

Notwithstanding any other provisions of this Release, this Release does not
release or otherwise pertain to (a) any rights or claims I may have under the
Company’s payment or other obligations that are expressly set forth in the
Employment Agreement and its exhibits and that apply upon or after termination
of my employment, (b) vested benefits or rights, if any, under the Company’s
employee benefit plans and programs, (c) rights or claims I may have under that
certain Amended and Restated Indemnification Agreement dated July 28, 2003
between the Company and me, (d) rights or claims I may have as a former director
or officer under any directors and officers liability insurance policy (to the
extent such policy otherwise provides coverage to me), (e) to the extent such
claims may not be validly released under ADEA, claims as to the validity of this
Release or prevailing party fee reimbursement for any such claims, or (f)
undisputed, accrued and unpaid wages owing under applicable law as of the
termination of my employment.

 

1

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Exhibit C to Employment Agreement

 

Sections 10(a), (b), (c), (d), (e), (f), (g), (i), and (j) of the Employment
Agreement apply to this Release. I agree to withdraw any claims and proceedings,
if any, I may have commenced on or prior to the date of this Release to the
extent those claims and proceedings would otherwise be within the scope of the
matters released and discharged by this Release.

 

I acknowledge that, among other rights subject to his Release, I am hereby
waiving and releasing any rights I may have under ADEA, that this release and
waiver is knowing and voluntary, and that the consideration given for this
release and waiver is in addition to anything of value to which I was already
entitled as an executive of the Company.

 

I further acknowledge that I have been advised, as required by the Older Workers
Benefit Protection Act, that:

 

(a) the Release granted herein does not relate to claims which may arise after
this release and waiver is executed;

 

(b) I have the right to consult with an attorney prior to executing this Release
(although I may choose voluntarily not to do so);

 

(c) if I am over 40 years old upon execution of this document, I have twenty-one
(21) days from the date of termination of my employment with the Company in
which to consider this Release (although I may choose voluntarily to execute
this release and waiver earlier);

 

(d) I have seven (7) days following the execution of this Release to revoke my
consent to this Release; and

 

(e) this Release shall not be effective until the seven (7)-day revocation
period has expired, and I agree that the Company may elect to defer payment of
any severance payments or severance benefits otherwise due before the expiration
of that seven (7) day period (but not undisputed, accrued and unpaid wages due
as of the date of my termination) until a date which is ten (10) days after the
date I execute this Release.

 

Date:

 

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Print Name: Lloyd A. Carney

Date of Employment Termination:

 

2