compensation other than as provided by this Agreement and the payment of accrued but unpaidwages, as required by law, and any unreimbursed reimbursable expenses.     3. Change of Control Payment. In the event of a Change of Control, and subject toExecutive’s continued employment with the Company through the effective date of such Change ofControl, Executive will receive a lump sum payment in an amount equal to twelve (12) months ofExecutive’s annual base salary as in effect immediately prior to the Change of Control (the “Changeof Control Payment”). The Change of Control Payment will be paid within ten (10) days of theeffective date of such Change of Control. The Change of Control Payment to be paid pursuant tothis Section 3 will be in addition to any other payments Executive may otherwise be entitled toreceive under Section 4.     4. Severance Benefits.          (a) Termination without Cause or Resignation for Good Reason in Connection with a Changeof Control. If the Company terminates Executive’s employment with the Company without Cause orif Executive resigns from such employment for Good Reason, and such termination occurs on or withintwelve (12) months after a Change of Control, and Executive signs and does not revoke a release ofclaims with the Company (in a form reasonably acceptable to the Company) that is effective no laterthan March 15 of the year following the year in which the termination occurs, then Executive willreceive the following from the Company:               (i) Accrued Compensation. The Company will pay Executive all accrued but unpaidvacation, expense reimbursements, wages, and other benefits due to Executive under anyCompany-provided plans, policies, and arrangements.               (ii) Severance Payment. Executive will receive a lump sum payment of severance equalto 100% of Executive’s annual base salary as in effect immediately prior to Executive’s terminationdate or (if greater) at the level in effect immediately prior to the Change of Control.               (iii) Equity Awards. All outstanding equity awards will vest in full as to 100% ofthe unvested portion of the award. Executive will have six (6) months following the date of his orher termination in which to exercise any outstanding stock options or other similar rights toacquire Company common stock; provided, however, that such post-termination exercise period willnot extend beyond the original maximum term of the stock option or other similar right to acquireCompany common stock and an equity award will not extend beyond a Change of Control in the event itis not assumed or substituted for as contemplated by the stock plan under which it was granted.               (iv) Continued Employee Benefits. If Executive elects continuation coverage pursuantto the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for Executiveand Executive’s eligible dependents, within the time period prescribed pursuant to COBRA, theCompany will reimburse Executive for the COBRA premiums for such coverage (at the coverage levelsin effect immediately prior to Executive’s termination) until the earlier of (A) a period ofeighteen (18) months from the last date of employment of the Executive with the Company, or (B) thedate upon which Executive and/or Executive’s eligible dependents becomes covered under similarplans. COBRA reimbursements will be made by the Company to Executive consistent with the Company’snormal expense reimbursement policy.
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          (b) Timing of Severance Payments. Unless otherwise required by Section 4(g), theCompany will pay any severance payments in a lump sum as soon as practicable following Executive’stermination date; provided, however, that no severance or other benefits will be paid or provideduntil the release of claims discussed in Section 4(a) becomes effective, and any severance amountsor benefits otherwise payable between Executive’s termination date and the date such releasebecomes effective will be paid on the effective date of such release. If Executive should diebefore all of the severance amounts have been paid, such unpaid amounts will be paid in a lump-sumpayment promptly following such event to Executive’s designated beneficiary, if living, orotherwise to the personal representative of Executive’s estate.          (c) Voluntary Resignation; Termination for Cause. If Executive’s employment with theCompany terminates (i) voluntarily by Executive (other than for Good Reason during the period thatis on or within twelve (12) months after a Change of Control) or (ii) for Cause by the Company,then Executive will not be entitled to receive severance or other benefits except for those (ifany) as may then be established under the Company’s then existing severance and benefits plans andpractices or pursuant to other written agreements with the Company.          (d) Disability; Death. If the Company terminates Executive’s employment as a resultof Executive’s Disability, or Executive’s employment terminates due to his or her death, thenExecutive will not be entitled to receive severance or other benefits except for those (if any) asmay then be established under the Company’s then existing written severance and benefits plans andpractices or pursuant to other written agreements with the Company.          (e) Termination not in Connection with a Change of Control. In the event Executive’semployment is terminated for any reason other than as provided in Section 4(a), then Executive willbe entitled to receive severance and any other benefits only as may then be established under theCompany’s existing written severance and benefits plans and practices or pursuant to other writtenagreements with the Company.          (f) Exclusive Remedy. In the event of a Change of Control as set forth in Section 3of this Agreement, or a termination of Executive’s employment as set forth in Section 4(a) of thisAgreement, the provisions of Section 3 and Section 4, as applicable, are intended to be and areexclusive and in lieu of any other rights or remedies to which Executive or the Company mayotherwise be entitled, whether at law, tort or contract, in equity, or under this Agreement (otherthan the payment of accrued but unpaid wages, as required by law, and any unreimbursed reimbursableexpenses). Executive will be entitled to no benefits, compensation or other payments or rightsupon a Change of Control or a termination of employment following a Change of Control other thanthose benefits expressly set forth in Section 3 or Section 4 of this Agreement.          (g) Section 409A.               (i) Notwithstanding anything to the contrary in this Agreement, if Executive is a “specifiedemployee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the“Code”) and the final regulations and any guidance promulgated thereunder (“Section 409A”) at thetime of Executive’s termination (other than due to death), then the severance payable to Executive,if any, pursuant to this Agreement, when considered together with any other severance payments orseparation benefits that are considered deferred compensation under Section 409A (together, the“Deferred Compensation Separation Benefits”) that are payable within the first six (6) monthsfollowing Executive’s termination of employment, will become
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payable on the first payroll date that occurs on or after the date six (6) months and one (1)day following the date of Executive’s termination of employment. All subsequent DeferredCompensation Separation Benefits, if any, will be payable in accordance with the payment scheduleapplicable to each payment or benefit. Notwithstanding anything herein to the contrary, ifExecutive dies following his or her termination but prior to the six (6) month anniversary of hisor her termination, then any payments delayed in accordance with this paragraph will be payable ina lump sum as soon as administratively practicable after the date of Executive’s death and allother Deferred Compensation Separation Benefits will be payable in accordance with the paymentschedule applicable to each payment or benefit. Each payment and benefit payable under thisAgreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of theTreasury Regulations.               (ii) Any amount paid under this Agreement that satisfies the requirements of the “short-termdeferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations shall not constituteDeferred Compensation Separation Benefits for purposes of clause (i) above.               (iii) Any amount paid under this Agreement that qualifies as a payment made as a result of aninvoluntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the TreasuryRegulations that do not exceed the Section 409A Limit shall not constitute Deferred CompensationSeparation Benefits for purposes of clause (i) above.               (iv) The foregoing provisions are intended to comply with the requirements of Section 409A sothat none of the severance payments and benefits to be provided hereunder will be subject to theadditional tax imposed under Section 409A, and any ambiguities herein will be interpreted to socomply. The Company and Executive agree to work together in good faith to consider amendments tothis Agreement and to take such reasonable actions which are necessary, appropriate or desirable toavoid imposition of any additional tax or income recognition prior to actual payment to Executiveunder Section 409A.     5. Limitation on Payments. In the event that the severance and other benefitsprovided for in this Agreement or otherwise payable to Executive (i) constitute “parachutepayments” within the meaning of Section 280G of the Code, and (ii) but for this Section 5, would besubject to the excise tax imposed by Section 4999 of the Code, then Executive’s Change of ControlPayment and severance benefits under Section 3 and Section 4(a)(i) respectively will be either:          (a) delivered in full, or          (b) delivered as to such lesser extent which would result in noportion of such benefits being subject to excise tax under Section 4999 of theCode,whichever of the foregoing amounts, taking into account the applicable federal, state and localincome taxes and the excise tax imposed by Section 4999, results in the receipt by Executive on anafter-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion ofsuch benefits may be taxable under Section 4999 of the Code. If a reduction in severance and otherbenefits constituting “parachute payments” is necessary so that benefits are delivered to a lesserextent, reduction will occur in the following order: reduction of cash payments; cancellation ofaccelerated vesting of equity awards; reduction of employee benefits. In the event thatacceleration of vesting of equity award compensation is to be reduced, such acceleration of vestingwill be cancelled in the reverse order of the date of grant of Executive’s equity awards.
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     Unless the Company and Executive otherwise agree in writing, any determination required underthis Section 5 will be made in writing by the Company’s independent public accountants immediatelyprior to a Change of Control or such other person or entity to which the parties mutually agree(the “Accountants”), whose determination will be conclusive and binding upon Executive and theCompany for all purposes. For purposes of making the calculations required by this Section 5, theAccountants may make reasonable assumptions and approximations concerning applicable taxes and mayrely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999of the Code. The Company and Executive will furnish to the Accountants such information anddocuments as the Accountants may reasonably request in order to make a determination under thisSection. The Company will bear all costs the Accountants may incur in connection with anycalculations contemplated by this Section 5.     6. Definition of Terms. The following terms referred to in this Agreement will havethe following meanings:          (a) Cause. “Cause” will mean:               (i) Executive’s continued intentional and demonstrable failure to perform his or her dutiescustomarily associated with Executive’s position as an employee of the Company or its respectivesuccessors or assigns, as applicable (other than any such failure resulting from Executive’s mentalor physical Disability) after Executive has received a written demand of performance from theCompany with specifically sets forth the factual basis for the Company’s belief that Executive hasnot devoted sufficient time and effort to the performance of his or her duties and has failed tocure such non-performance within thirty (30) days after receiving such notice (it being understoodthat if Executive is in good-faith performing his or her duties, but is not achieving results theCompany deems satisfactory for Executive’s position, it will not be considered to be grounds fortermination of Executive for “Cause”);               (ii) Executive’s conviction of, or plea of nolo contendere to, a felony that the Board ofDirectors of the Company (the “Board”) reasonably believes has had or will have a materialdetrimental effect on the Company’s reputation or business; or               (iii) Executive’s commission of an act of fraud, embezzlement, misappropriation, willfulmisconduct, or breach of fiduciary duty against, and causing material harm to, the Company or itsrespective successors or assigns, as applicable.          Executive will receive notice and an opportunity to be heard before the Board with Executive’sown attorney before any termination for Cause is deemed effective. Notwithstanding anything to thecontrary, the Board may immediately place Executive on administrative leave (with full pay andbenefits to the extent legally permissible) but will allow reasonable access to Companyinformation, employees and business should Executive wish to avail himself and prepare for his orher opportunity to be heard before the Board prior to the Board’s termination for Cause. IfExecutive avails himself of his or her opportunity to be heard before the Board, and then fails tomake himself or herself available to the Board within thirty (30) days of such request to be heard,the Board may thereafter cancel the administrative leave and terminate Executive for Cause.Likewise, if the Board fails to make itself available to Executive and his or her counsel withinthirty (30) days of Executive’s request to be heard, Executive will be entitled to terminate his orher employment with the Company and such termination will be treated as a resignation by Executivefor Good Reason.
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          (b) Change of Control. “Change of Control” will mean the occurrence of any of thefollowing events:               (i) Change in Ownership of the Company. A change in the ownership of the Companywhich occurs on the date that any one person, or more than one person acting as a group (“Person”),acquires ownership of the stock of the Company that, together with the stock held by such Person,constitutes more than 50% of the total voting power of the stock of the Company, except that anychange in the ownership of the stock of the Company as a result of a private financing of theCompany that is approved by the Board will not be considered a Change of Control; or               (ii) Change in Effective Control of the Company. A change in the effective control ofthe Company which occurs on the date that a majority of members of the Board is replaced during anytwelve (12) month period by directors whose appointment or election is not endorsed by a majorityof the members of the Board prior to the date of the appointment or election. For purposes of thisclause (ii), if any Person is considered to be in effective control of the Company, the acquisitionof additional control of the Company by the same Person will not be considered a Change of Control;or               (iii) Change in Ownership of a Substantial Portion of the Company’s Assets. A changein the ownership of a substantial portion of the Company’s assets which occurs on the date that anyPerson acquires (or has acquired during the twelve (12) month period ending on the date of the mostrecent acquisition by such person or persons) assets from the Company that have a total gross fairmarket value equal to or more than 50% of the total gross fair market value of all of the assets ofthe Company immediately prior to such acquisition or acquisitions. For purposes of this subsection(iii), gross fair market value means the value of the assets of the Company, or the value of theassets being disposed of, determined without regard to any liabilities associated with such assets.          For these purposes, persons will be considered to be acting as a group if they are owners of acorporation that enters into a merger, consolidation, purchase or acquisition of stock, or similarbusiness transaction with the Company.          Notwithstanding the foregoing provisions of this definition, a transaction will not be deemeda Change of Control unless the transaction qualifies as a change in control event within themeaning of Section 409A.          (c) Disability. “Disability” will mean that Executive has been unable to perform hisor her Company duties as the result of his or her incapacity due to physical or mental illness, andsuch inability, at least twenty-six (26) weeks after its commencement or 180 days in anyconsecutive twelve (12) month period, is determined to be total and permanent by a physicianselected by the Company or its insurers and acceptable to Executive or Executive’s legalrepresentative (such agreement as to acceptability not to be unreasonably withheld). Terminationresulting from Disability may only be effected after at least thirty (30) days’ written notice bythe Company of its intention to terminate Executive’s employment. In the event that Executiveresumes the performance of substantially all of his or her duties hereunder before the terminationof his or her employment becomes effective, the notice of intent to terminate will automatically bedeemed to have been revoked.
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          (d) Good Reason. “Good Reason” will mean Executive’s termination of employment withinninety (90) days following the expiration of any cure period (discussed below) following theoccurrence of one or more of the following, without Executive’s consent:               (i) The assignment to Executive of any duties, or the reduction of Executive’s duties, eitherof which results in a material diminution of Executive’s authority, duties, or responsibilitieswith the Company in effect immediately prior to such assignment, or the removal of Executive fromsuch position and responsibilities; provided, however, that a reduction in duties, position orresponsibilities solely by virtue of the Company being acquired and made part of a larger entity,whether as a subsidiary, business unit or otherwise (as, for example, when the Chief ExecutiveOfficer of the Company remains the Chief Executive Officer of the Company following a Change ofControl where the Company becomes a wholly owned subsidiary of the acquiror, but is not made theChief Executive Officer of the acquiring corporation) will not constitute “Good Reason;”               (ii) A material reduction in Executive’s base salary as in effect immediately prior to suchreduction, unless the Company (or Executive’s employer or the parent corporation in a group ofcontrolled corporations following a Change of Control) also similarly reduces the base salary ofall other employees of the Company (or Executive’s employer or the parent corporation in a group ofcontrolled corporations following a Change of Control) with positions, duties and responsibilitiescomparable to Executive’s;               (iii) A material change in the geographic location at which Executive must perform services(in other words, the relocation of Executive to a facility that is more than thirty-five (35) milesfrom Executive’s current location);               (iv) Any purported termination of the Executive’s employment for “Cause” without firstsatisfying the procedural protections, as applicable, required by the definition of “Cause” setforth in that definition; or               (v) The failure of the Company to obtain the assumption of the Agreement by a successor and/oracquirer.          The notification and placement of Executive on administrative leave pending a potentialdetermination by the Board that Executive may be terminated for Cause will not constitute GoodReason.          Executive will not resign for Good Reason without first providing the Company with writtennotice within sixty (60) days of the event that Executive believes constitutes “Good Reason”specifically identifying the acts or omissions constituting the grounds for Good Reason and areasonable cure period of not less than thirty (30) days following the date of such notice.          (e) Section 409A Limit. “Section 409A Limit” will mean the lesser of two (2) times:(i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive duringthe Executive’s taxable year preceding the Executive’s taxable year of Executive’s termination ofemployment as determined under, and with such adjustments as are set forth in, Treasury Regulation1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or(ii) the maximum amount that may be taken into account under a qualified
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plan pursuant to Section 401(a)(17) of the Code for the year in which Executive’s employmentis terminated.     7. Successors.          (a) The Company’s Successors. Any successor to the Company (whether direct orindirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all orsubstantially all of the Company’s business and/or assets will assume the obligations under thisAgreement and agree expressly to perform the obligations under this Agreement in the same mannerand to the same extent as the Company would be required to perform such obligations in the absenceof a succession. For all purposes under this Agreement, the term “Company” will include anysuccessor to the Company’s business and/or assets which executes and delivers the assumptionagreement described in this Section 7(a) or which becomes bound by the terms of this Agreement byoperation of law.          (b) Executive’s Successors. The terms of this Agreement and all rights of Executivehereunder will inure to the benefit of, and be enforceable by, Executive’s personal or legalrepresentatives, executors, administrators, successors, heirs, distributees, devisees and legatees.     8. Arbitration.           (a) The Company and Executive each agree that any and all disputes arising out of the terms ofthis Agreement, Executive’s employment by the Company, Executive’s service as an officer ordirector of the Company, or Executive’s compensation and benefits, their interpretation and any ofthe matters herein released, will be subject to binding arbitration under the arbitration rulesset forth in California Code of Civil Procedure Sections 1280 through 1294.2, including Section1281.8 (the “Act”), and pursuant to California law. Disputes that the Company and Executive agreeto arbitrate, and thereby agree to waive any right to a trial by jury, include any statutory claimsunder local, state, or federal law, including, but not limited to, claims under Title VII of theCivil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination inEmployment Act of 1967, the Older Workers Benefit Protection Act, the Sarbanes-Oxley Act, theWorker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act,the Family and Medical Leave Act, the California Family Rights Act, the California Labor Code,claims of harassment, discrimination, and wrongful termination, and any statutory or common lawclaims. The Company and Executive further understand that this agreement to arbitrate also appliesto any disputes that the Company may have with Executive.          (b) Procedure. The Company and Executive agree that any arbitration will beadministered by Judicial Arbitration & Mediation Services, Inc. (“JAMS”), pursuant to itsEmployment Arbitration Rules & Procedures (the “JAMS Rules”). The Arbitrator will have the powerto decide any motions brought by any party to the arbitration, including motions for summaryjudgment and/or adjudication, motions to dismiss and demurrers, and motions for classcertification, prior to any arbitration hearing. The Arbitrator will have the power to award anyremedies available under applicable law, and the Arbitrator will award attorneys’ fees and costs tothe prevailing party, except as prohibited by law. The Company will pay for any administrative orhearing fees charged by the Arbitrator or JAMS except that Executive will pay any filing feesassociated with any arbitration that Executive initiates, but only so much of the filing fees asExecutive would have instead paid had he or she filed a complaint in a court of law. TheArbitrator will administer and conduct any arbitration in accordance with California law, includingthe California Code of Civil
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Procedure, and the Arbitrator will apply substantive and procedural California law to anydispute or claim, without reference to rules of conflict of law. To the extent that the JAMS Rulesconflict with California law, California law will take precedence. The decision of the Arbitratorwill be in writing. Any arbitration under this Agreement will be conducted in Santa Clara County,California.          (c) Remedy. Except as provided by the Act and this Agreement, arbitration will be thesole, exclusive, and final remedy for any dispute between Executive and the Company. Accordingly,except as provided for by the Act and this Agreement, neither Executive nor the Company will bepermitted to pursue court action regarding claims that are subject to arbitration.          (d) Administrative Relief. Executive understand that this Agreement does not prohibithim or her from pursuing any administrative claim with a local, state, or federal administrativebody or government agency that is authorized to enforce or administer laws related to employment,including, but not limited to, the Department of Fair Employment and Housing, the Equal EmploymentOpportunity Commission, the National Labor Relations Board, or the Workers’ Compensation Board.This Agreement does, however, preclude Executive from pursuing court action regarding any suchclaim, except as permitted by law.          (e) Voluntary Nature of Agreement. Each of the Company and Executive acknowledges andagrees that such party is executing this Agreement voluntarily and without any duress or undueinfluence by anyone. Executive further acknowledges and agrees that he or she has carefully readthis Agreement and has asked any questions needed for him or her to understand the terms,consequences, and binding effect of this Agreement and fully understand it, including that***Executive is waiving his or her right to a jury trial***. Finally, Executive agrees that he or shehas been provided an opportunity to seek the advice of an attorney of his or her choice beforesigning this Agreement.     9. Notice.          (a) General. Notices and all other communications contemplated by this Agreement willbe in writing and will be deemed to have been duly given when personally delivered or when mailedby U.S. registered or certified mail, return receipt requested and postage prepaid. In the case ofExecutive, mailed notices will be addressed to him or her at the home address which he or she mostrecently communicated to the Company in writing. In the case of the Company, mailed notices willbe addressed to its corporate headquarters, and all notices will be directed to the attention ofits President.          (b) Notice of Termination. Any termination by the Company for Cause or by Executivefor Good Reason will be communicated by a notice of termination to the other party hereto given inaccordance with Section 9(a) of this Agreement. Such notice will indicate the specific terminationprovision in this Agreement relied upon, will set forth in reasonable detail the facts andcircumstances claimed to provide a basis for termination under the provision so indicated, and willspecify the termination date (which will be not more than thirty (30) days after the giving of suchnotice). The failure by Executive to include in the notice any fact or circumstance whichcontributes to a showing of Good Reason will not waive any right of Executive hereunder or precludeExecutive from asserting such fact or circumstance in enforcing his or her rights hereunder.
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     10. Miscellaneous Provisions.          (a) No Duty to Mitigate. Executive will not be required to mitigate the amount of anypayment contemplated by this Agreement, nor will any such payment be reduced by any earnings thatExecutive may receive from any other source.          (b) Other Requirements. Executive’s receipt of any payments or benefits under Section3 and/or Section 4 will be subject to Executive continuing to comply with the terms of anyconfidential information agreement executed by Executive in favor of the Company and the provisionsof this Agreement.          (c) Waiver. No provision of this Agreement will be modified, waived or dischargedunless the modification, waiver or discharge is agreed to in writing and signed by Executive and byan authorized officer of the Company (other than Executive). No waiver by either party of anybreach of, or of compliance with, any condition or provision of this Agreement by the other partywill be considered a waiver of any other condition or provision or of the same condition orprovision at another time.          (d) Headings. All captions and section headings used in this Agreement are forconvenient reference only and do not form a part of this Agreement.          (e) Entire Agreement. This Agreement constitutes the entire agreement of the partieshereto and supersedes in their entirety all prior representations, understandings, undertakings oragreements (whether oral or written and whether expressed or implied) of the parties with respectto the subject matter hereof. No waiver, alteration, or modification of any of the provisions ofthis Agreement will be binding unless in writing and signed by duly authorized representatives ofthe parties hereto and which specifically mention this Agreement.          (f) Choice of Law. The validity, interpretation, construction and performance of thisAgreement will be governed by the laws of the State of California (with the exception of itsconflict of laws provisions). Any claims or legal actions by one party against the other arisingout of the relationship between the parties contemplated herein (whether or not arising under thisAgreement) will be commenced or maintained in any state or federal court located in thejurisdiction where Executive resides, and Executive and the Company hereby submit to thejurisdiction and venue of any such court.          (g) Severability. The invalidity or unenforceability of any provision or provisionsof this Agreement will not affect the validity or enforceability of any other provision hereof,which will remain in full force and effect.          (h) Withholding. All payments made pursuant to this Agreement will be subject towithholding of applicable income, employment and other taxes.          (i) Counterparts. This Agreement may be executed in counterparts, each of which willbe deemed an original, but all of which together will constitute one and the same instrument.***[Signature Page to Follow]***
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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of theCompany by its duly authorized officer, as of the day and year set forth below.         COMPANY   CATAPULT COMMUNICATIONS CORPORATION               By: /s/ Christopher A. Stephenson                        Title: Vice President, Chief Financial Officer andSecretary               Date: June 13, 2008           EXECUTIVE     /s/ Richard A. Karp                        Title: Chief Executive Officer & Chairman of the Board               Date: June 13, 2008  
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