BERMAN DEVALERIO PEASE TABACCO BURT & PUCILL O

ATTORNEYS AT LA W

ONE LIBERTY SQUARE

BOSTON, MA 02109

TEL : (617) 642-8300

FAX : (617) 542-1194

425 CALIFORNIA STREET, SUITE 2025

SAN FRANCISCO, CA 9410 4

TEL: (415) 433-3200

FAX: (415 ) 433-638 2

WWW .BERMANESO .COM

LAW@BERMANESQ .COM

515 NORTH FLAGLER DRIVE . SUITE 1701

WEST PALM BEACH, FL 3340 1

TEL: (661) 635-9400

FAX: (561) 636-032 2

September 6, 2005

VIA HAND DELIVERY

The Honorable Bernard ZimmermanUnited States Magistrate Judge450 Golden Gate AvenueSan Francisco, C A

Re : In Re Micromuse Inc . Securities Litigation, No. C-04-0136 BZ

Dear Judge Zimmerman :

In connection with the hearing on preliminary approval of the settlement scheduled fortomorrow morning, September 7, 2005, I am enclosing a Second Revised (Proposed) SettlementNotice that supersedes the prior forms of proposed notice submitted to the Court . In addition, Iwanted to take this opportunity to address several matters including those raised by the Court atthe last Status Conference .

(1) Second Revised (Proposed) Class Notic e

Attached hereto as Exhibit A is a redlined version of a Second Revised (Proposed) ClassNotice. The proposed Second Revised Class Notice makes the following two changes :

(a) Under the section entitled "Statement of Attorneys' Fees and Costs Sought," onpage 4, the following sentence is now added : "This estimated average of $0 .003per damaged share does not include expenses that have been, or will be, incurredfor the cost of notice, claims administration and tax expense associated withadministering the Settlement Fund."

(b) Under the section entitled "Proposed Plan of Allocation of Net Settlement FundAmong Class Members," at pp . 14-15, we have lowered the payment thresholdfrom $10 to $3 .

BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLO

The Honorable Bernard Zimmerma nSeptember 6, 2005Page 2

(2) The Number of Shares Traded During the Class Perio d

In response to questions raised by the Court during the last Status Conference concerningthe number of shares that experienced a loss during the Class Period, we are submitting theAffidavit of R . Alan Miller on Tuesday, September 6, 2005, in support of the motion forpreliminary approval (attached as Exhibit B to the Supplemental Declaration of Christopher T.Heffelfinger) . Mr. Miller estimates that approximately 202,000,000 shares of Micromuse, Inc .common stock which were bought in the Class Period were sold at a loss or, if not sold by theend of the Class Period, were purchased at a price higher than the 90-day average price (PSLRAlimitation) after the end of the Class Period. According to Mr . Miller, based on a net settlementfund of $2,625,000 this yields an average recovery of $0 .013 per share if all 202,000,000 (loss)shares claimed. Further, Mr. Miller states in his Affidavit that "[b]ased on a far more likelyfigure of perhaps 50,000,000 shares filing claims, the average recovery would be approximately$0.052 per share . "

(3) The Cost of Claims Administration

The cost breakdown of the Notice and Claims Administration provided by A .B. Data, ourclaims administrator, is described in Exhibit B . The first category of expense consisting ofPrinting and Mailing Notice assumes a 16 page notice and Proof of Claim with a mailing of95,000 copies at an estimated cost of $81,700 .00. This cost and the postage category is expectedto be higher if the Federal Derivative settlement is approved as a separate notice would beincluded with the mailing of the securities notice. As the Court will note, the total expense is anopen item that depends on such variables as the cost of postage for the full package, and thequantity of claims actually submitted . In addition, this quotation does not include the costassociated with publishing notice in Investors' Business Daily.

(4) Approval by Lead Plaintiff Massachusetts Laborers' Pension Fund

At the Status Conference, the Court stated that there was only a representation bycounsel, based on information and belief, that Lead Plaintiff had approved the settlement . Weare also submitting the a Declaration of Darren Corrente on behalf of Lead Plaintiff approvingthe settlement (attached as Exhibit A to the Supplemental Declaration of Christopher T .Heffelfinger in Support of Preliminary Approval) .

(6) Schedule of Events

Lead Plaintiff repeats its earlier request for the same schedule of events set forth in itsmemorandum in support of preliminary approval and in a subsequent letter to Judge Armstrong,dated June 24, 2005 (Docket No . 123) set forth as follows :

,n

BERMAN DEVALERIO PEASE TABACCO BURT & PUCILL O

The Honorable Bernard ZimmermanSeptember 6, 2005Page 3

Event TimeMailing of Notice to Class 30 days after the Order Preliminarily

Approving Settlement is signed (the ter m"Notice Date" means the date the Order i sactually signed)

Publication of Summary Notice Publication to occur within 10 days o fmailing of Notice to Clas s

Last Day for Class Members to Opt-Out No later than 21 days prior to Hearing Dat eor Object to the Settlement

Deadline for filing of papers in Support No later than 14 days prior to Hearing Dateof Settlement, Plan of Allocation andRequest for Attorneys' Fees andReimbursement of Expenses

Final Settlement Hearing 65 days from Notice Date, or first availabl edate thereafter

Deadline for Filing Proof of Claim by 90 dv+s after Notice Date, or next court daytClass Members if 90 day falls on a weekend or federa l

holiday

(6) Submission By Defendants In Support of Preliminary Approval Motion

At the last Status Conference, the Court made an inquiry concerning whether defendantssupported the Motion for Preliminary Approval . We note that defendants have now filed aMemorandum In Support of Lead Plaintiff's Motion for Preliminary Approval of Settlement(Docket No . 138) .

(7) Filings In Support of Pre liminary Approva l

In recognition that there have been some recent filings and modifications of previousfilings in support of the Motion for Preliminary Approval of the Class Action Case in this case,and in an effort to avoid confusion, I have attempted to identify the full range of documents filedin support of preliminary approval motion and to indicate which documents, or exhibits tocertain documents, have been superseded by more recent submissions so that the Court need notdevote unnecessary time to these superseded submissions .

Docket No . Date Filed Document Status (Current or Superseded)121 06/24/05 Notice of Motion And Current

Motion of Lead PlaintiffFor Preliminary

11-ADO-

BERMAN DEVALERIO PEASE TABACCO BURT & PUCILL O

The Honorable Bernard ZimmermanSeptember 6, 200 5Page 4

Approval of Propose dClass Action Se ttlement

122 06/24/05 Declaration of Joseph J . The Stipulation of Settlement ,Tabacco, Jr . In Support attached as Exhibit 1 to th eof Preliminary Approval Tabacco Declaration, has beenof Class Action superseded by the AmendedSettlement ; Proposed Stipulation at Docket No. 129. InPlan of Allocation ; addition, the Proposed Form ofProposed Form of Settlement Notice Attached asSettlement Notice ; And Exhibit A-1 to the Stipulation o ffor Award of Attorneys' Settlement which, in turn, i sFees and Reimbursement attached as Exhibit 1 to theof Expenses (the Tabacco Declaration has been"Tabacco Declaration") superseded, and replaced with a

second revised propose dsettlement notice under cover ofthis letter from Christopher T.Heffelfinger to Magistrate JudgeBernard Zimmerman, date dSeptember 6, 2005.

123 06/24/05 Letter from Christopher Proposed schedule in letterT . Heffelfinger remains current .

124 06/24/05 Proposed Order Re Curren tMotion for Sett lement

125 06/29/05 Letter From Michael W . This revised notice in the Stocke rStocker to Judge Letter has been superseded, andArmstrong with Revised replaced with a second revisedNotice of Proposed proposed settlement notice unde rSettlement ("Stocker cover of this letter fromLetter") Christopher T . Heffelfinger t o

Magistrate Judge BernardZimmerman, dated September 6 ,2005. The changes mentioned inthe Stocker letter remain the sam ein the second revised notic e

129 07/27/05 Amended Stipulation of The Amended Stipulation ofSettlement Settlement is Current, but the

current version of Proposed Formof Settlement Notice attached asExhibit A-1 to the AmendedStipulation of Settlement has beensuperseded, and replaced with a

Awo-

BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLO

The Honorable Bernard ZimmermanSeptember 6, 200 5Page 5

second revised proposedse tt lement notice under cover ofthis letter from Christopher T .Heffelfinger to Magistrate Judg eBernard Zimmerman, datedSeptember 6, 2005 .

130 07/26/05 Declaration of See Supplemental Declaration ofChristopher T . Ch ristopher T. Heffelfinger InHeffelfinger In Support Support of Preliminary Approvalof Preliminary Approval Filed (to be filed on September 6 ,

2005) that includes thedeclaration of counsel for LeadPlaintiff approving the se ttlementand an expert affidavit of R. AlanMiller .

133 08 /09/05 Re-Notice of Motion of Superseded by Magistrate JudgeLead Plaintiff For Zimmerman ' s Order ApprovingPreliminary Approval for Stipulation Se tting Hearing fo rhearing on 9/21/05 September 7, 2005, at Docket No.

137.138 08 /31/05 Memorandum (filed by Current

Defendants ) In Supportof Lead Plaintiff'sMotion for PreliminaryApproval of Class ActionSettlement

-- 09/06/05 Supplemental CurrentDeclaration ofChristopher T .Heffelfinger (attachingDeclaration of FundManager Suppo rtingPreliminary Approval ,and Affidavit of Expert)

-- 09/06/05 Letter from Chris Responding to Cou rt's InquiriesHeffelfinger To Court from Status Conference And

Setting Forth Schedule .

BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLo

The Honorable Bernard ZimmermanSeptember 6, 200 5Page 6

We appreciate the Court's consideration of these papers and apologize that we could notprovide these supplemental materials earlier to the Court.

Sincerely,

Christopher T. Hefeltinger

cc: Dale Barnes, Esq . (via hand delivery)Robert Green (via hand delivery)William Federnan, Esq. (via overnight mail)

EXHIBIT A

UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF CALIFORNI A

IN RE : Case No . C-04-0136 SB A

MICROMUSE INC. SECURITIESLITIGATION

This document relates to ALLACTIONS .

,NOTICE OF PROPOSED SETTLEMENT,----------------- ------------ -FINAL APPROVAL HEARING AND

RIGHT TO SHARE IN SETTLEMENTFUND

Date :Place :Magistrate udge : Hon . Bernard Zimmerman.

NOTICE OF PENDENCY OF CLASS ACTION AND PROPOSED SETTLEMENT,MOTION FOR ATTORNEYS' FEES AND SETTLEMENT FAIRNESS HEARING

If you purchased or otherwise acquired the common stock of Micromuse Inc .("Micromuse" or "the Company") during the time period from and including January 18,2001 through and including May 17, 2004, inclusive, you may be entitled to a paymentfrom a class action settlement.

A federal court authorized this notice . This is not a solicitation from a lawyer.

• The settlement will provide a $2 .625 million settlement fund for the benefit ofinvestors who purchased or otherwise acquired Micromuse common stockduring the pe riod from and including January 18, 2001, through and includingMay 17, 2004, inclusive (the "Class Period") .

• The settlement resolves a lawsuit alleging that Micromuse and certain ofMicromuse's officers and directors misled investors about Micromuse'sfinancial condition and future earnings .

• For purposes of the settlement described in this Notice, the Court has certifiedthis action to proceed as a class action.

• Your legal rights are affected whether you act, or do not act . Read this Noticecarefully .

YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT :

SUBMIT A CLAIM YOURSELF The only way to get a payment.

EXCLUDE YOURSELF Get no payment. This is the only option that allow syou to ever be a part of any other lawsuit agains tMicromuse and/or the other Defendants or to assertany Released Claims against any of the Release dpersons .

Deleted : AMENDED

Deleted : Saundra R . ArsFrons

OBJECT/GO TO HEARING Write to the Court, or appear at the Hearing to te lthe Court about why you do not like the settlement.

DO NOTHING Get no payment . Give u pr i g h t s .

These rights and options - and the deadlines to exercise them - areexplained in this Notice .

SUMMARY NOTICE

Statement of Plaintiff Recovery

Pursuant to the Settlement described herein, a Settlement Fund consisting of $2,625,000in cash, has been established and deposited in an interest-bearing escrow account . Cpunsel forLead Plaintiff Massachusetts Laborers' Pension Fund ("Lead Plaintiff' or "Mass Laborers") hasestimated that there were approximately 00,000,000 shares of Micromuse common stock--------------------- - - --------------traded during the Class Period that_may_havebeen damaged . Based on this estimate by counselfor Lead Plaintiff of the number of shares that may be entitled to participate in the settlementth verage recovery _ _per allegedly damaged share of Micromuseommon stock under the

--- - ---Settlement is $ .013 per share before deduction of Court-awarded attorneys' fees and expenses .An individual Class Member may receive more or less than this average amount . The amount aClass Member receives depends on the number of claims submitted, when a Class Memberpurchased his, her, or its shares of Micromuse common stock, whether those shares were held atthe end of the Class Period (January 18, 2001 through and including May 17, 2004) or soldduring the Class Period, and if sold, when they were sold .

Concurrently with this settlement, a federal derivative lawsuit is being settled as wellThe derivative action alleges that current and former officers and directors of Micromusebreached their fiduciary duties to Micromuse by causing Micromuse to improperly misrepresentmaterial facts as alle =ed in the derivative Complaint on file in that action . separate-Notice ofProposed Settlement of the derivative suit is included in this mailing, ,to Microtnuseshareholders.

STATEMENT OF POTENTIAL OUTCOME OF CAS E

The parties in the class action disagree on both liability and damages and do not agreeon the average amount of damages per share that would be recoverable if Lead Plaintiffs wereto have prevailed on each claim alleged . The issues on which the parties disagree include :(a) whether defendant Micromuse and individual defendants Gregory Q . Brown, Lloyd Carney,Stephen A. Allott, Michael L . Luetkemeyer, David A . Wise and Brendan Kelly (collectively,Brown, Carney, Allott, Luetkemeyer, Wise and Kelly are referred to herein as "IndividualDefendants") made misrepresentations that included false or misleading statements of materialfact or that omitted to state material facts necessary to make the statements made notmisleading ; (b) whether any statements allegedly made or facts allegedly omitted were materialand otherwise actionable under the federal securities laws; (c) the appropriate economic modelfor determining the amount by which Micromuse common stock was allegedly artificiallyinflated (if at all) during the Class Period; (d) the amount by which Micromuse common stockwas allegedly artificially inflated (if at all) during the Class Period ; (e) the effect of variousmarket forces influencing the trading price of Micromuse common stock at various times duringthe Class Period; (f) the extent to which external factors, such as general market and industryconditions, influenced the trading price of Micromuse common stock at various times during theClass Period; (g) the extent to which the various matters that Lead Plaintiffs alleged werematerially false or misleading influenced (if at all) the trading price of Micromuse commonstock at various times during the Class Period ; and (h) the extent to which the various allegedlyadverse material facts that Lead Plaintiffs alleged were omitted influenced (if at all) the tradingprice of Micromuse common stock at various times during the Class Period .

Formatted : Indent: First line : 0 "

Deleted: Based upon the estimate of

Deleted : c

Deleted : of

`Deleted : tha t

~ Deleted : are subject to the sett lement

Deleted : are entitled to participate inthe settlement, the

Deleted : , Inc . ("Micromuse" or "theCompany" )

Deleted ., J

c Deleted: and a

`Deleted : n

Deleted: -

Deleted-

Deleted : will be issue d

} Deleted : rela ti ng to that proceeding

Statement of Attorneys' Fees and Costs Sought

Lead Plaintiff's Counsel intend to apply for fees of up 20% of the Gross SettlementFund in the approximate amount of $525,000, and for reimbursement of expenses in an amountnot to exceed $90,000 . The requestedfees and expenses would amount to an average of $0.03per damaged share of Micromuse common stock, in total for fees and expenses . Accordingly,the-average recovery per allegedly damaged share of Micromuse common stock under theSettlement would be $ .01 per share after the deduction of Court-awarded attorneys' fees andreimbursement of expenses tothe attorneys .- This estimated average of $0 .003 per damagedshare does not include expenses that have been, or will be, incurred for the cost of notice, claimsadministration and tax expense associated with administering the Settlement Fund, LeadPlaintiffs Counsel have expended considerable time and effort in the prosecution of thislitigation . Lead Plaintiffs Counsel have worked wholly on a contingent fee basis, and haveadvanced the expenses of the litigation, in the expectation that if they were successful inobtaining a recovery for the Class they would be paid from such recovery . In this type oflitigation, it is customary for counsel to be awarded a percentage of the common fund recoveryas their attorneys' fees and reimbursement of expenses .

Further Information

Further information regarding the Action and this Notice may be obtained by contacting theClaims Administrator : A.B. Data, Ltd ., P .O . Box 170500, Milwaukee, Wisconsin, 53217-8041,telephone : 1 (800) 918-9012 .

Reasons for the Settlement

As discussed below, the principal reason for the Settlement is the benefit to be provided to theClass now. This benefit must be compared to the obstacles to recovery by the Class, especiallygiven that the Supreme Court has issued a decision that may cast doubt upon Lead Plaintiff'scalculation of damages .

Deleted : 0

Deleted : Based upon the estimate ofYYcounsel for Lead Plaintiff of 200,000,000shares are subject to the se tt lement, theaverage recovery per allegedly damage d

I share of Micromuse common stock unde rthe Se ttlement is 5.01 t per share afterdeduction of Court-awarded attorneys'fees and expenses .

SEND OF COVER PAGE]

IWHAT THIS NOTICE CONTAIN S

Table of Content s

BASIC INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 7

1 . Why did I get this Notice package? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .72. What is this lawsuit about ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .73 . Why is this a class action? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74. Why is there a se ttlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

WHO IS IN THE SETTLEMENT? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 8

5 . How do I know if I am part of the settlement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86. Are there exceptions to being included? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87. 1 am still not sure if I am included? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

THE SETTLEMENT BENEFITS-----WHAT YOU GET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

8 . What does the settlement provide? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89. How much will my payment be? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

HOW YOU GET A PAYMENT-SUBMI TT ING A CLAIM FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

10 . How can I get a payment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .911 . When would I get my payment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .912 . What am I giving up to get a payment and stay in the Class? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

EXCLUDING YOURSELF FROM THE SETTEMENT . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 1

13 . How do I get out of the proposed settlement? . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1114 . If I do not exclude myself, can I sue Defendants or any of the Released persons

for the same thing later? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1115 . If I exclude myself, can I get money from the proposed settlement? . . . . . . . . . . . . . . . . . . . . . .1 2

THE LAWYERS REPRESENTING YOU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 2

16 . Do I have a lawyer in this case? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1217 . How will the lawyers be paid? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 2

OBJECTING TO THE SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 2

18 . How do I tell the Cou rt that I do not like the proposed sett lement? . . . . . . . . . . . . . . . . . . . . . . . . 1219 . What is the difference between objecting and excluding? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3

THE COURT'S FAIRNESS HEARING . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

20 . When and where will the Court decide whether to approve the proposedsettlement? . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 3

21 . Do I have to come to the hearing ? . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1322. May I speak at the hearing? . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4

IF YOU DO NOTHING . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 1 4

5

23. What happens if I do nothing? . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .1 4

GETTING MORE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .1 4

24. Are there more details about the proposed sett lement ? . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .1425. How do I get more information? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .1 4

PROPOSED PLAN OF ALLOCATION OF NET SETTLEMENT FUN DAMONG CLASS MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4

SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES . . . . . . . . . . . . . . . . . . . . . .17

BASIC INFORMATION

1. Why did I get this Notice package?

You or someone else in your family may have purchased or otherwise acquired Micromusecommon stock during the period from and including January 18, 2001 through and includingMay 17,2004 .

The Court directed that this Notice be sent to Class Members because they have a right to knowabout a proposed settlement of a class action lawsuit , and about all of their options, before theCourt decides whether to approve the settlement . If the Court approves it and after objectionsand appeals are resolved , an administrator appointed by the Court will make the payments thatthe settlement allows to Class Members who submit acceptable Proof of Claim forms .

This package explains the lawsuit, the settlement, your legal rights, what benefits are available,who is eligible for them, and how to get them .

The Court in charge of the case is the United States District Court for the Northern District ofCalifornia, and the case is known as In re Micromuse, Inc. Securities Litigation, Master File No .C-04-0136 SBA . This case was assigned to United States District Judge Saundra B . Armstrong.The people who sued are called Plaintiffs, and the individuals and entities they sued(Micromuse, Inc., Gregory Q . Brown, Lloyd Carney, Stephen A . Allott, Michael L .Luetkemeyer, David A. Wise and Brendan Kelly) are called the Defendants .

2. What is this lawsuit about?

The lawsuit claims that Micromuse and certain of its officers and directors misled investors byartificially inflating the price of Micromuse common stock and "smoothing" earnings in order tomeet Wall Street's earnings expectations for the Company . The term "smoothing" refers to thepractice of making earnings appear level and not out of line with the earnings expectations ofWall Street . The Defendants deny any wrongdoing .

3 . Why is this a class action ?

The Court has certified this action to proceed as a class action for the purposes of the settlement .In a class action, one or more people called Class Representatives (in this case the Lead Plaintiffis the Massachusetts Laborers' Pension Fund) sue on behalf of people who have similar claims .All these people are a Class or Class Members . One court resolves the issues for all ClassMembers, except for those who exclude themselves from the Class .

4. Why is there a settlement?

The Court did not decide in favor of Plaintiffs or Defendants . Instead, both sides agreed to asettlement . That way, they avoid the risks and cost of a trial, and the people allegedly affectedwill get compensation . The Class Representatives and the attorneys think the settlement is bestfor all Class Members .

WHO IS IN THE SETTLEMENT

To see if you will get money from this settlement, you first have to decide if you are a ClassMember.

5 . How do I know if I am part of the settlement ?

The Court directed that everyone who fits this description is a Class Member : All persons whopurchased or otherwise acquired the common stock of Micromuse, Inc. during the time periodbetween January 18, 2001 through and including May 17, 2004, inclusive .

6 . Are there exceptions to being included ?

Excluded from the Class are Defendants, any entities in which any defendant or Micromuse hasor had a controlling interest, the past or present officers and directors of Micromuse, andmembers of the immediate families of such persons, any individual Defendant's immediatefamily, and the legal representatives, heirs, successors, or assigns of any excluded party .

If one of your mutual funds own shares of Micromuse .common stock, that alone does not makeyou a Class Member . You are a Class Member only if you purchased or otherwise acquired theMicromuse common stock yourself. Contract your broker to see if you purchased or otherwiseacquired Micromuse common stock.

If you sold Micromuse common stock during the period from and including January 18, 2001through and including May 17, 2004, inclusive, that alone does not make you a Class Member.You area Class Member only if you purchased or otherwise acquired Micromuse common stockduring the period from January 18, 2001 through and including May 17, 2004, inclusive .

7. I am still not sure if I am included ?

If you are still not sure whether you are included, you can ask for free help . You can call the tollfree telephone number 1-800-918-9012 for more information . Or you can fill out and return theclaim form described on page 8 in question 10, to see if you qualify .

THE SETTLEMENT BENEFITS - WHAT YOU GET

8 . What does the settlement provide ?

Micromuse has agreed to create a $2 .625 million fund for the benefit of all Class Members whosend in valid Proof of Claim forms .

19 . How much will my payment be?

Your share of the fund will depend on the total amount of Recognized Claims represented by thevalid Proof of Claim forms that Class Members send in, how many shares of Micromusecommon stock you bought, and when and at what prices you bought and sold them . Theproposed Plan of Allocation is set forth at the end of this Notice .

By following the instructions on page 5 of this Notice, you can calculate what is called yourRecognized Claim. It's unlikely that you will get a payment-for-all of your Recognized Claim .After all Class Members have sent in their Proof of Claim forms, the payment you get will be apart of the Net Settlement Fund equal to your Recognized Claim divided by the total o feveryone's Recognized Claims . See the instructions on page 15- for more information on yourRecognized Claim.

HOW YOU GET A PAYMENT - SUBMITTING A CLAIM FOR M

10. How can I get a payment?

To qualify for a payment , you must send in a valid Proof of Claim form . A Proof of Claim formis being circulated with this Notice . You may also call 1-800-918 -9012 to request a Proof ofClaim form . Read the instructions carefully, fill out the form, include all the documents the formasks for, sign it, and mail it postmarked no later than 12005 .

I11 . When would I get my payment?

The Court will hold a hearing on , 2005, to decide whether to approvethe proposed settlement . If the Court approves the settlement after that, there may be appeals .It's always uncertain whether these appeals can be resolved, and resolving them can take time,perhaps more than a year. Even if there are no appeals, it will take a significant amount of timeto process the Proof of Claim forms submitted by the Class Members . Please be patient .

12 . What am I giving up to get a payment and stay in the Class ?

Unless you exclude yourself, you are staying in the Class, and that means that, if the settlement isapproved, you will release all "Released Claims" (as defined below) against the "Releasedpersons" (as defined below) .

"Released Claims" means all claims (including "Unknown Claims" as defined below),demands, rights, liabilities , and causes of action of every nature and description whatsoever,known or unknown, whether or not concealed or hidden, asserted or that might have beenasserted, including, without limitation, claims for negligence, gross negligence, breach of duty ofcare and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or violations of any state orfederal statutes, rules or regulations, by any Lead Plaintiff or any Class Member againstDefendants and Related Parties (collectively the "Released persons" as defined below) arisingout of, based upon, or related in any way to any purchase or other acquisition of the commonstock of Micromuse by any Class Member during the Class Period or the facts, transactions,events, occurrences, acts, disclosures, statements, omissions, or failure(s) to act which have been

9

i Deleted :

! Deleted: -

or could have been alleged in the Action . The term "Released Claims" shall include any and allclaims arising out of, relating to, or in connection with the settlement of the Action .

"Released Persons" means each and all of the Defendants and their Related Parties .

"Related Parties" means Micromuse and each of Micromuse's past and present directors,officers, employees, partners, principals, agents, underwriters, insurers, co-insurer, reinsurers,attorneys, accountants or auditors, banks or investment banks, associates, personal or legalrepresentatives, predecessors, successors, joint ventures, assigns, spouses, heirs, any entity inwhich a Defendant has a controlling interest, any members of their immediate families, or anytrust of which any Defendant is the settlor or which is for the benefit of any Defendant and/ormember(s) of his family .

"Unknown Claims" means any Released Claims which any Lead Plaintiff or any ClassMember does not know or suspects to exist in his, her, or its favor at the time of the release ofthe Released Persons which, if known by him, her, or it, might have affected his, her, or itssettlement with and release of the Released Persons, or might have affected his, her, or itsdecision not to object to this Settlement or not to exclude himself, herself or itself from theClass . With respect to any and all Released Claims, Lead Plaintiffs stipulate and agree thatLead Plaintiffs shall expressly waive, and each of the Class Members shall be deemed to have,and by operation of the Judgment shall have, expressly waived the provisions, rights, andbenefits of California Civil Code § 1542, which provides :

A general release does not extend to claims which the creditor does notknow or suspect to exist in his favor at the time of executing therelease, which if known by him must have materially affected hissettlement with the debtor .

Lead Plaintiff and each of the Class Members shall be deemed to have, and by operationof the Judgment shall have, expressly waived any and all provisions, rights, and benefitsconferred by any law of any state or territory of the United States, or principle of common law,which is similar, comparable, or equivalent to California Civil Code § 1542 . Lead Plaintiff andClass Members may hereafter discover facts in addition to or different from those which theynow know or believe to be true with respect to the subject matter of the Released Claims, butshall be deemed to have, and by operation of the Judgment shall have, fully, finally, and foreversettled and released any and all Released Claims, known or unknown, suspected or unsuspected,contingent or non-contingent, whether or not concealed or hidden, which now exist, orheretofore have existed upon any theory of law or equity now existing or coming into existencein the future, including, but not limited to, conduct which is negligent, intentional, with orwithout malice, or a breach of any duty, law, or rule, without regard to the subsequent discoveryor existence of such different or additional facts . Lead Plaintiff acknowledges, and the ClassMembers shall be deemed by operation of the Judgment to have acknowledged, that theforegoing waiver was separately bargained for and a key element of the settlement of which thisrelease is a part .

If you remain a member of the Class, all of the Court's orders will apply to you and legally bindyou .

10

EXCLUDING YOURSELF FROM THE SETTLEMEN T

If you do not want a payment from this settlement, but you want to keep the right to sue orcontinue to sue the Defendants or to assert any Released Claims against any of the Releasedpersons on your own, then you must take steps to get out of the Class . This is called excludingyourself- or is sometimes referred to as "opting out" of the Class. Defendants may withdrawfrom and terminate the settlement if in excess of a certain amount of claimants excludethemselves from the Class .

13 . How do I get out of the proposed settlement ?

To exclude yourself from the settlement Class, you must send a letter by mail stating that yourequest exclusion from the Class in In re Micrornuse, Inc . Securities Litig., Case No . C-04-0136SBA . Such request for exclusion shall clearly indicate the name, address and telephone numberof the person seeking exclusion, that the sender requests to be excluded from the Class in the Inre Micromuse, Inc . Securities Litigation, and must be signed by such person . Such personsrequesting exclusion are also directed to state: the date(s), price(s), and number(s) of shares of allpurchases and sales of Micromuse Inc . common stock during the Class Period . The request forexclusion shall not be effective unless it provides the required information and is made withinthe time stated above, or the exclusion is otherwise accepted by the Court. A Class Memberwishing to request exclusion shall mail the request in written form by first class mail postmarkedno later than , 2005 to (i) the Office of the Clerk, United States District Court, 1301Clay Street, 3` Floor, Oakland, California 94612, (ii) Joseph J . Tabacco, Jr., Christopher T .Heffelfnger, Berman DeValerio Pease Tabacco Burt & Pucillo, 425 California Street, Suite2025, San Francisco, California 94104 on behalf of plaintiffs ; (iii) Dale Barnes BinghamMcCutchen LLP, Three Embarcadero Center, 18`h Floor, San Francisco, California 94111 .

You cannot exclude yourself on the phone or by e-mail, If you ask to be excluded, you will notget any settlement payment, and you cannot object to the settlement . Also, if you ask to beexcluded, you will not be legally bound by anything that happens in this lawsuit, and you may beable to sue (or continue to sue) Defendants in the future .

14. If I do not exclude myself, can I sue Defendants or any of the Released persons for thesame thing later ?

No. Unless you exclude yourself, you give up any rights to sue Defendants and the otherReleased persons for any and all Released Claims . If you have a pending lawsuit or you arecontemplating some other lawsuit, speak to your lawyer in that case immediately . You mustexclude yourself from this Class to continue your own lawsuit . Remember, the exclusiondeadline is , 2005.

1 15 . If I exclude myself, can I get money from the proposed settlement ?

No. If you exclude yourself, do not send in a Proof of Claim to ask for any money . But you maysue, continue to sue, or be part of a different lawsuit against Defendants and the other Releasedpersons .

THE LAWYERS REPRESENTING YO U

116. Do I have a lawyer in this case ?

The Court ordered that the law firm of Berman DeValerio Pease Tabacco Burt & Pucillo, in SanFrancisco, California will represent you and the other Class Members . These lawyers are calledPlaintiffs' Lead Counsel . You will not be charged for these lawyers . If you want to b erepresented by your own lawyer, you may hire one at your own expense .

17 . How will the lawyers be paid ?

Lead Plaintiffs' Counsel intend to apply for fees of up to twenty percent (20%) of the GrossSettlement Fund in the approximate amount of $525,000, and for reimbursement of expenses inan amount not to exceed 90 000 . Lead Plaintiffs' Counsel, without further notice to the Class,may subsequently apply to the Court for fees and expenses incurred in connection with theadministration and distribution of the settlement proceeds to the members of the Class and anyproceedings subsequent to the Settlement Fairness Hearing . The Lead Plaintiff will also seek torecover expenses it incurred in supervising the work of its attorneys .I -------------- ----- ---------------------- . . . . .----- -------------------------

-OBJECTING TO THE SETTLEMEN T

You can tell the Court that you do not agree with the proposed settlement or some part of it .

8 . How do I tell the Court that I do not like the proposed settlement ?

If you are a Class Member, you can object to the proposed settlement if you do not like any partof it. You can give reasons why you think the Court should not approve it . The Court willconsider your views . You may appear in person at the Hearing to express your views . Tosubmit a written objection you may send a signed letter saying that you object to the proposedsettlement in In re Micromuse, Inc . Securities Litig ., Case No . C -04-0136 SBA. Writtenobjections must include your name, address and telephone number ; must list all of yourpurchases and sales of Micromuse common stock during the Class Period, and must includeproof of those transactions and state the reasons you object to the proposed settlement . Mail theobjection to each of the following addresses, postmarked no later tha n2005 :

Deleted : xx

Deleted : After the fees and expenses ofLead Plainliff qAfter the fees and expenses of LeadPlaintiff are deducted f

12

COURT PLAINTIFFS ' COUNSEL DEFENSE COUNSEL

Clerk of the Court Joseph J . Tabacco, Jr . Dale BarnesUnited States District Court Christopher T. Heffelfinger BINGHA Mfor the No rthern District of BERMAN DeVALERIO McCUTCHEN, LL PCalifornia PEASE TABACCO BURT & 3 Embarcadero Cente rUnited States Cou rthouse PUCILLO 18`s Floo r3rd Floor 425 California Street San Francisco , CA 9411 11301 Clay Street Suite 210 0Oakland , , CA 94612 San Francisco , CA 9410 4

Persons who intend to object to the Settlement , the Plan of Allocation, and/or counsel'sapplication for award of attorneys' fees and expenses and desire to present evidence at theSettlement Fairness Hearing are encouraged to include in their written objections the identity ofany witnesses they may call to testify and exhibits they intend to introduce into evidence at theSett lement Fairness Hearing .

1 19. What is the difference between objecting and excluding ?

Objecting is simply telling the Court that you do not like something about the proposedsettlement . You can object only if you stay in the Class . Excluding yourself is telling the Courtthat you do not want to be part of the Class . If you exclude yourself, you have no basis to objectbecause the case no longer affects you.

THE COURT'S FAIRNESS HEARIN G

The Court will hold a hearing to decide whether to approve the proposed settlement . You mayattend and you may ask to speak, but you do not have to .

120. When and where will the Court decide whether to approve the proposed settlement ?

The Court will hold a Fairness Hearing at on , 2005 at theUnited States District Court for the Northern District of California, United States Courthouse,3rd Floor, 1301 Clay Street, Oakland, California 94612 . At this hearing the Court will considerwhether the proposed settlement is fair, reasonable and adequate . If there are objections, theCourt will consider them . The Court will listen to people who ask to speak at the hearing . TheCourt will also consider written objections . After the hearing, the Court will decide whether toapprove the settlement, and, if the settlement is approved, how much to pay to Plaintiffs'Counsel . We do not know how long these decisions will take .

1 21 . Do I have to come to the hearing ?

No. Lead Plaintiffs Counsel will answer questions the Court may have . But, you are welcometo come at your own expense. If you send a written objection, you do not have to come to the

13

Court to talk about it . As long as you mailed your written objection on time, the Court willconsider it . You may also pay your own lawyer to attend, but it is not necessary . ClassMembers do not need to appear at the hearing or take any other action to indicate their approval .

L22. May I speak at the hearing?

Any Class Member who wishes to be heard at the hearing , regardless of whether he, she or it hasfiled a written objection , will be given that opportunity .

IF YOU DO NOTHIN G

1 23 . What happens if I do nothing?

If you do nothing, you will get no money from this settlement . But, if the settlement is approved,unless you exclude yourself, you will not be able to start a lawsuit, continue a lawsuit, be part ofany other lawsuit or assert any Released Claims against any of the Released persons ever again .

GETTING MORE INFORMATION

24. Are there more details about the proposed settlement ?

This Notice summarizes the proposed settlement . More details are in the Stipulation ofSettlement dated , 2005 (the "Stipulation of Settlement") . You can get acopy of the Stipulation of Settlement by writing to Joseph J . Tabacco, Jr ., BERMANDeVALERIO PEASE TABACCO BURT & PUCILLO, 425 California Street, Suite 2100, SanFrancisco, CA 94104 .

You also can call the Claims Administrator toll-free at 1-800-918-9012, or write ClaimsAdministrator, In re Micromuse, Inc. Securities Litigation, c/o A .B. Data, Ltd ., P .O . Box170500, Milwaukee, Wisconsin, 53217-8041 .

25. How do I get more information ?

For even more detailed information concerning the matters involved in this Action, reference ismade to the pleadings, to the Stipulation of Settlement, to the Orders entered by the Court and tothe other papers filed in the Action, which may be inspected at the Clerk's Office of the UnitedStates District Court for the Northern District of California, United States Courthouse, 3rd Floor,1301 Clay Street, Oakland, California 94612, during regular business hours .

PROPOSED PLAN OF ALLOCATION OF NET SETTLEMENT FUNDAMONG CLASS MEMBER S

The $2,625,000 Cash Settlement Amount and the interest earned thereon shall be the GrossSettlement Fund. The Gross Sett lement Fund, less all taxes , approved costs, fees and expenses(the "Net Settlement Fund") shall be distributed to members of the Class who submit acceptable

14

Proofs of Claim ("Authorized Claimants" )

The Claims Administrator shall determine each Authorized Claimant's pro rata share of the NetSettlement Fund based upon each Authorized Claimant's "Recognized Claim ." The RecognizedClaim formula is not intended to be an estimate of the amount that a Class Member might havebeen able to recover after a trial ; nor is it an estimate of the amount that will be paid t oAuthorized Claimants pursuant to the Settlement . The Recognized Claim formula is the basisupon which the Net Settlement Fund will be proportionately allocated to the AuthorizedClaimants .

As discussed below, this Plan of Allocation takes into account differences in likelihood ofrecovery for Retention and In and Out Shares . Thus, your recovery is based on when during theClass Period you purchased and/or sold your Micromuse shares .

The Net Settlement Fund shall be distributed to Class Members who submit valid and timelyProof of Claim forms (Authorized Claimants) under the Plan of Allocation . The Plan ofAllocation provides that a Class Member is eligible to participate in the Net Settlement Fundonly if that person has a recognized loss under this Plan of Allocation . Losses shall becalculated on the basis of losses incurred for each share held by a Claimant as follows : withrespect to shares purchased in the Class Period, the Recognized Claims shall consist of thepurchase price including commissions less the sale price including commissions if sold on orbefore May 17, 2004 or purchase price including commissions less V_ if sold after May 17,2004 . Purchases prior to the Class Period (and not sold before start of the Class Period) andpurchases during the Class Period will be matched against sales during the Class Period on achronological basis. All profits on transactions in Micromuse, Inc . common stock during theClass Period shall be subtracted from all losses to determine the net Claim of each ClassMember . If the Class Member made a net profit, the value of his, her or its Claim shall be zero ,

sales .

The Net Settlement Fund will be distributed on a pro rata basis based on the followingformula:

Claimant's Recognized Losses Payment to

. . .. . ... .. . ... . .. . . . . . . . . .. ... ... .. . .. ... x Net Settlement Fund = Claimant

Total Class Recognized Losse s

No payment will be made for any Micromuse shares that were purchased to cover shor t

No payment will be made from the Net Settlement Fund on any claims where the potentialdistribution would be less than $3x but such Class Members shall be bound by the final judgmen t

-----------------------entered by the Court . Defendants and Defendants' Counsel take no position with respect to thePlan of Allocation and shall have no responsibility, obligation or liability to the Class for itsprovisions, terms or implementation . The Plan of Allocation may be altered or amended byorder of the Court for good cause shown . In the event that an appeal is taken or a motion is filedrelating to the Court's approval of the proposed Settlement, or Plan of Allocation, no distributionwill be made until such time as any motions or appeals are finally resolved so as to permi t

15

Deleted : 6

Deleted : 07 _. ._

f Deleted : 10

consummation of the Settlement in accordance with the Stipulation .

ANY CLASS MEMBER WHO FAILS TO SUBMIT A VALID AND TIMELY PROOF OFCLAIM AND RELEASE FORM WILL BE FOREVER BARRED FROM SHARING IN THEDISTRIBUTION OF THE PROCEEDS OF THE SETTLEMENT, BUT WIL LNONETHELESS BE BOUND BY THE COURT'S JUDGMENT .

Each Authorized Claimant shall be allocated a pro rata share of the Net Settlement Fund basedon his, her or its Recognized Claim as compared to the total Recognized Claims of allAuthorized Claimants .

Class Members who do not submit acceptable Proofs of Claim will not share in the settlementproceeds . Class Members who do not either submit a request for exclusion or submit anacceptable Proof of Claim will nevertheless be bound by the Settlement and the Order and FinalJudgment of the Court dismissing this Action .

Checks will be distributed to Authorized Claimants after all claims have been processed and afterthe Court has finally approved the Settlement . If the funds remaining in the Settlement Fundfollowing pro rata distribution(s) to all Authorized Claimants do not exceed $10,000, then suchremaining funds, after payment of any further claims administration/tax expense, shall becontributed to the Boy's and Girl's Clubs of the Peninsula . If the funds remaining in theSettlement Fund exceed $10,000, then such remaining funds, after payment of any further claimsadministration/tax expense including any projected claims administration/tax expense, shall bedistributed to all Authorized Claimants on a pro rata basis, but excluding any AuthorizedClaimant whose recognized loss is below a dollar threshold that Plaintiff's Lead Counseldetermines at such time, in consultation with the Claims Administrator, would not allow for afinal efficient distribution of the remaining funds in the Settlement Fund.

16

SPECIAL NOTICE TOSECURITIES BROKERS AND OTHER NOMINEE S

If you purchased the common stock of Micromuse, Inc . during the Class Period for the beneficialinterest of a person or organization other than yourself, the Court has directed that, within ten(10) days of your receipt of this Notice, you either (a) provide to the Claims Administrator thename and last known address of each person or organization for whom or which you purchasedsuch stock during such time period or (b) request additional copies of this Notice and the Proofof Claim form, which will be provided to you free of charge, and within ten (10) days mail theNotice and Proof of Claim form directly to the beneficial owners of the securities referred toherein . If you choose to follow alternative procedure (b), the Court has directed that, upon suchmailing, you send a statement to the Claims Administrator confirming that the mailing was madeas directed . Regardless of whether you choose to complete the mailing yourself or elect to havethe mailing performed for you, you are entitled to reimbursement from the Settlement Fund ofyour reasonable expenses actually incurred in connection with the foregoing, includingreimbursement of postage expense and the cost of ascertaining the names and addresses ofbeneficial owners . Those expenses will be paid upon request and submission of appropriatesupporting documentation . All communications concerning the foregoing should be addressed tothe Claims Administrator :

Claims AdministratorIn re Micromuse, Inc . Securities Litigation

c/o A .B. Data, Ltd.P .O. Box 170500

Milwaukee, Wisconsin 53217-80411-800-918-901 2

Dated: '_'2005 By Order of the Cou rtSan Francisco , California CLERK OF THE COURT

17

EXHIBIT B

NOTICE AD MINISTRATION Per jtem Quanti Tota lPrint and Mail of the Notice & Claim For m

(assuming 16 page Notice and Proof of Clai m95,000 copies) : Includes data processing ; data

entry ; creation on master mailing list ; list oflargest brokers and nominees ; cover letter to

nominees ; addressupdate and standardization ;proofreading, and formatting . $0.86 95,000 $81,700 .00

Postage for the Notice Mailing . Assumes presortFirst Class Mail TBD 95,000 TBD

Media notice costs in Investment Business Daily .Net Cost Estimated at $2,500

Fulfillment : includes processing fulfillmentrequests from nominees ; and reimbursin gbrokers and nominees for their expenses . From $2,500 to $5,00 0

Administration: Includes processing of out outs ;programming and system support ; projectmanagement; quality assurance ; mediaplacement fees, affidavits and reporting . $10,000 .00

From $10,000 t oBrokers Fees . $35,000

Telephony . Includes automated voice responsemail system and live operators during Notice ,

Claims and Fund Administration $5,500Subtotal $112,200 to $139,7 0

CL.AI.MS ADMINISTRATION Per Item Quantl Tota llaims Administration : Includes database, data $13.8 Under TBntry, claims processing, correspondence, 5,00orrection of deficient claims, postage, refun dalculation ; affidavits and reporting (3,500 clai m

min .$11 .8 Ove TB

5,00

•FUND ADMINISTRATIONChecks. Layout ; data processing ; stock ;envelopes; laser ; lettershop ; and return mai lprocessing .

$0 .6 TB TBIDJPostage . Assumes presort First Class Mail . TBD TBD TBD

Settlement Fund tax filing . Includes electronic $3,500 . 0filing of 1099s with appropriate state and federa lagencies as well as filing a tax return for th eSettlement Fund .1099s . Includes issuing appropriate forms 1099 ; $0.5 TBD TBDstock; envelopes ; laser; lettershop; and returnmail processing .Postage . Assumes presort First Class Mail . TB TI BID

Administration : Includes set up and maintenance $2,500 . 0of the Settlement Fund ; account reconciliation fo r18 months ; calculations ; re-issue checks ;affidavits and reporting .

Subtotal $6,000.0