Exhibit 10.21

 

AMENDMENT NO. 1 TO

EXECUTIVE EMPLOYMENT CONTINUATION AGREEMENT

 

THIS AMENDMENT Number 1 to the Executive Employment Continuation Agreement by
and between Micromuse Inc., a Delaware corporation (the “Company”), and Nell
O’Donnell (the “Executive”) is made as of December 13, 2005 (the “Agreement”).

 

WHEREAS, the Company and the Executive are parties to an Executive Employment
Continuation Agreement dated as of December 13, 2002 (the “Employment
Agreement”);

 

WHEREAS, the parties desire to amend certain provisions of the Employment
Agreement.

 

NOW, THEREFORE, in consideration of the foregoing the parties hereby agree as
follows:

 

1. Amendment of Employment Agreement. Section 2 is hereby deleted in its
entirety and Sections 1 and 4 are hereby amended and restated in their entirety
to read as follows:

 

“1. Executive agrees to continue to devote Executive’s full time efforts to
promote the success of the Company. The Company or Executive may terminate
Executive’s employment at any time for any reason with or without notice. If
Executive’s employment is terminated by the Company without Cause (as defined
below) or if Executive voluntarily terminates employment for Good Reason (as
defined below), then Executive will be entitled to the compensation and benefits
described in Paragraph 4 provided that Executive executes (and does not revoke
within any statutory revocation period) the Company’s current standard form of
release agreement. Executive shall not be entitled to and the Company shall not
be obligated to provide any compensation or benefits if Executive voluntarily
terminates employment other than for Good Reason or if the Company terminates
Executive’s employment for Cause.

 

4. If the Executive’s employment is terminated by the Company without Cause or
if the Executive voluntarily terminates employment for Good Reason and the
Executive executes and does not revoke a release as described in paragraph 1 of
this Agreement, whether before or after a Change of Control, the Company or its
successor will provide the following benefits:

 

(a) A lump sum cash payment equal the sum of (i) six months of the Executive’s
base salary, (ii) the higher of (A) six months of Executive’s target
bonus/commissions or (B) the actual bonus/commission achieved during the 6
months prior to the date of termination of Executive’s employment and (iii) an

--------------------------------------------------------------------------------

amount that is reasonable to enable the Executive to purchase life and
disability insurance during the six (6) months following termination of
employment. Such payment shall be made on the date the release described in
paragraph 1 becomes effective.

 

(b) The Company shall reimburse the Executive for COBRA costs for Executive and
Executive’s 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 six (6) months
following the termination of his employment if Executive timely elects to
continue medical coverage under COBRA.

 

(c) The percentage of any outstanding stock options held by Executive that is
exercisable and vested shall be determined by adding 3 months to the actual
length of Executive’s service.

 

(d) If a Change of Control is consummated and a termination of employment which
satisfies the criteria of paragraph 1 of this Agreement occurs within 12 months
after the Change of Control, then Executive will receive the greater of:
(i) immediate vesting of 50% of any unvested portion of any outstanding stock
options, or (ii) six (6) months vesting of any unvested portion of any
outstanding stock options. Vesting under this Subsection (d) and Subsection
(c) above shall be mutually exclusive and vesting under one shall prevent
vesting under the other.

 

(e) The other provisions of this Section 4 notwithstanding, the payment under
Section 4(a) and the COBRA reimbursements under Section 4(b) shall in no event
commence prior to the earliest date permitted by section 409A(a)(2) of the Code.
If the commencement of reimbursements under Section 4(b) must be delayed, then
any deferred installments shall be paid in a lump sum on the earliest
practicable date permitted by section 409A(a)(2) of the Code.”

 

2. Effective Date. This Agreement will become effective as of the date set forth
above.

 

3. Governing Law. This Amendment to the Employment Agreement shall be governed
by, and construed in accordance with, the laws of the State of California, as
such laws are applied to contracts entered into and to be performed entirely
within the State of California.

 

4. Effect of Amendment to the Employment Agreements. Except as amended hereby,
all of the terms of the Employment Agreement shall remain and continue in full
force and effect.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Amendment to the Employment
Agreement as of the date first above written above.

 

MICROMUSE INC. By:  

/s/ Ian Halifax

--------------------------------------------------------------------------------

   

Ian Halifax, Chief Financial Officer

--------------------------------------------------------------------------------

    (print name and title) EXECUTIVE

/s/ Nell O’Donnell

--------------------------------------------------------------------------------

Nell O’Donnell