EMPLOYMENT AGREEMENT

Exhibit 10.40

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is entered into as of June 4, 2004 , by and between Visual Networks Operations, Inc., a company organized under the laws of Delaware (“Visual” or the “Employer”), and Donald E. Clarke, an individual (hereafter the “Executive”).

WITNESSETH:

WHEREAS, VISUAL desires to employ the Executive, and the Executive desires to accept such employment, on the terms and conditions set forth herein;

WHEREAS, VISUAL and the Executive shall enter into a Confidentiality, Non-Disclosure, And Non-Solicitation Agreement (the “Non-Solicitation Agreement”), attached hereto as Exhibit A;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, VISUAL and Executive hereby agree as follows:

ARTICLE 1

POSITION OF EMPLOYMENT

ARTICLE 2

DUTIES, AUTHORITY AND PERFORMANCE

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2.2.1  Executive shall render to the very best of his ability, on behalf of VISUAL, and shall undertake diligently, all duties assigned to him by the CEO.

2.2.2  In the performance of the Executive’s duties hereunder, he must comply in each and every respect with applicable laws, rules and regulations applicable to VISUAL.

2.2.3  As Executive Vice President and Chief Financial Officer of VISUAL, and in support of the duties assigned to him by the CEO, Executive is responsible for strategic direction, structure and effective management of the financial operations of VISUAL and for providing functional leadership and direction in the areas of accounting, reporting, treasury, cash management, planning/forecasting, capital spending, risk management, investor relations, human resources, and legal. Executive must also effectively manage and administer the day-to-day execution of these areas.

2.2.4  The Executive acknowledges that he may have to travel to different locations for business reasons from time to time as is reasonably necessary or advisable for the performance of his duties hereunder.

ARTICLE 3

COMPENSATION AND BENEFITS

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Details of VISUAL’s insurance plans, including benefit amounts, limitations and restrictions are described in the summary plan descriptions provided to the Executive. If there is any difference between the summary plan descriptions and the information set forth in this Agreement, then the information contained in the summary plan descriptions takes precedence.

ARTICLE 4

TERMINATION OF EMPLOYMENT

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4.2.1  Executive’s Right to Terminate without Good Reason. The Executive has the right to terminate his employment under this Agreement at any time during the course of this Agreement by giving forty five (45) days notice in writing to the Board (the “Notice Period”). The Notice Period may be shortened by mutual agreement of the parties. During the Notice Period, Executive must fulfill all his duties and responsibilities set forth in this Agreement, and use his best efforts to train and support his replacement, if any. Executive’s salary and benefits will remain unchanged during the Notice Period.

4.2.2  Executive’s Right to Terminate for Good Reason. The Executive may resign his employment for “Good Reason” by giving Notice as described in paragraph 4.2.1 above. For purposes of this Agreement, “Good Reason” is defined as follows: (i) forced relocation of the Executive’s position by VISUAL to a location that is outside of a 25 mile radius of Visual’s offices in Rockville, Maryland; (ii) willful failure by the Company to provide the Executive the base salary and benefits in accordance with the terms of this Agreement; or (iii) material reduction in the Executive’s job title or responsibilities, without the Executive’s consent, that would constitute a material demotion or diminution of responsibility. In each such event listed in (i) through (iii) above, the Executive shall give the Company notice thereof which shall specify in reasonable detail the circumstances constituting Good Reason, and there shall be no Good Reason with respect to any such circumstances if cured by the Company within thirty (30) days after such notice.

4.3.1 Executive’s death; or

4.3.2 Executive’s “Disability”, which for purposes of this Agreement means the Executive’s incapacitation by accident, sickness or other circumstances which, in the reasonable good faith determination of the Board, renders Executive mentally or physically incapable of performing the duties and services required of him hereunder in substantially the same manner and to the extent required hereunder prior to the commencement of such Disability, either with or without reasonable accommodation, on a full-time basis for a period of at least 90 consecutive days or for a period of six (6) non-consecutive months of the preceding eighteen (18) month period; or

4.3.3 For “Cause”, which for purposes of this Agreement shall mean:

4.3.3.1 The Executive has engaged in conduct which: (A) resulted in a conviction of or plea of guilty or no contest to a misdemeanor involving moral turpitude or involving the property of VISUAL; or (B) resulted in a conviction of or plea of guilty or no contest to a felony under the laws of the United States or any state or political subdivision thereof; or

4.3.3.2 The Executive: (A) commits a breach of his fiduciary duty to VISUAL or any of its affiliates; or (B) commits an act of gross negligence; or (C) engages in willful misconduct; or (D) engages in any transaction which the Executive knows or should have known would constitute self-dealing or a conflict of interest between the Executive and VISUAL and in which the Executive does or would receive any direct or indirect economic or pecuniary benefit without prior disclosure of such transaction to VISUAL; or

4.3.3.3. The Executive violates the internal procedures or policies of VISUAL in a manner which has a material adverse effect on the reputation, business or prospects of VISUAL, such as “but not limited to”, conduct constituting employment discrimination or sexual harassment; or

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4.3.3.4 Material default or other material breach by Executive of his obligations hereunder; or

4.3.3.5 Failure by to perform diligently and competently his duties hereunder after written notice from VISUAL of such failure and thirty (30) days to remedy the deficiency described in such notice.

4.4.1 Termination by VISUAL Without Cause, Upon Change of Control, or Upon Visual’s Non-Renewal of this Agreement, or Upon Resignation by Executive for Good Reason. If Executive’s employment hereunder shall be terminated by the Employer without Cause, upon a Change of Control (as defined in Section 6(a)(ii) of the Visual Networks, Inc. 2003 Stock Incentive Plan), or upon Visual’s non-renewal of this Agreement under Section 4.1 above, or by the Executive for Good Reason, VISUAL agrees to provide Executive with severance pay, payable according to normal payroll practice, amounting to twelve (12) months of the Executive’s then applicable Base Salary, less applicable withholdings (the “Severance Pay”). In the event that Executive breaches any of the provisions of this Agreement (including but not limited to Executive’s obligation to cooperate during the Notice Period and/or the Non-Solicitation Agreement incorporated herein), all compensation and benefits hereunder shall cease immediately, Executive’s termination shall be treated as if it had been a termination for Cause, and Executive shall be required to repay VISUAL any Severance Pay received hereunder.

4.4.2 Termination by Executive’s Resignation without Good Reason or by Employer for Cause or Death. If Executive’s employment is terminated by Executive by a voluntary resignation (other than for Good Reason), or for death, or Cause (as that term is defined in section 4.3.3 herein), all compensation and benefits payable hereunder shall terminate contemporaneously with the date of the Executive’s termination of employment.

4.4.3 Termination by Employer for Disability. If Executive’s employment is terminated by VISUAL due to the Disability of the Executive (as defined in section 4.3.2 herein) VISUAL agrees to provide Executive with Severance Pay (as defined in section 4.4.1) provided, however, that VISUAL shall reduce the amount of Severance Pay paid to Executive on each payroll pay period by the amount of long term disability paid to Executive for that pay period under the then-applicable Visual long term disability plan, subject to the terms of such plan as may be amended. . Amounts paid to Executive by VISUAL under this section 4.4.3 shall in no way reduce the amount of long term disability benefits to which Executive would otherwise be entitled.

ARTICLE 5

GENERAL PROVISIONS

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The parties hereto agree that any disputes shall be resolved by the District Court of Maryland for Montgomery County, the Circuit Court of Maryland for Montgomery County, or the United States District Court for the District of Maryland, as may be appropriate.

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IN WITNESS WHEREOF, VISUAL and Executive have signed this Agreement.

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Confidentiality, Non-Disclosure, And Non-Solicitation

In consideration of your employment with Visual Networks Operations, Inc. (the “Company”):

The terms of this agreement supersede and negate all prior agreements between the Employee and the Company that are otherwise inconsistent with this agreement.

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