ESCROW AGREEMENT     This Escrow Agreement is entered into as of February 28, 2006, by and among Blackboard Inc., aDelaware corporation (the “Buyer”), Dennis Beckingham and Marc Poirier (the “IndemnificationRepresentatives”) and American Stock Transfer & Trust Company (the “Escrow Agent”).     WHEREAS, the Buyer and WebCT, Inc. (the “Company”) have entered into an Agreement and Plan ofMerger dated October 12, 2005 (the “Merger Agreement”) by and among the Company, the Buyer and asubsidiary of the Buyer, pursuant to which such subsidiary will be merged (the “Merger”) into theCompany which, as the surviving corporation (the “Surviving Corporation”), will become awholly-owned subsidiary of the Buyer;     WHEREAS, the Merger Agreement provides that an escrow fund will be established to secure theindemnification obligations of the stockholders of the Company receiving consideration pursuant toSection 1.5 of the Merger Agreement (collectively, the “Indemnifying Stockholders”) to the Buyer;and     WHEREAS, the parties hereto desire to establish the terms and conditions pursuant to whichsuch escrow fund will be established and maintained;     NOW, THEREFORE, the parties hereto hereby agree as follows:     1. Consent of Indemnifying Stockholders. The Indemnifying Stockholders have, by virtueof their approval of the Merger Agreement, consented to: (a) the establishment of this escrow tosecure the Indemnifying Stockholders’ indemnification obligations under Article VI of the MergerAgreement in the manner set forth herein, (b) the appointment of the IndemnificationRepresentatives as their representatives for purposes of this Agreement and as attorneys-in-factand agents for and on behalf of each Indemnifying Stockholder, and the taking by theIndemnification Representatives of any and all actions and the making of any decisions required orpermitted to be taken or made by them under this Agreement and (c) all of the other terms,conditions and limitations in this Agreement.     2. Escrow and Indemnification.          (a) Escrow Fund. Simultaneously with the execution of this Agreement, the Buyer orthe Transitory Subsidiary shall deposit with the Escrow Agent, by wire transfer or delivery of acheck of the Buyer payable to the Escrow Agent, the sum of $18,000,000, as determined pursuant toSection 1.9 of the Merger Agreement. The Escrow Agent hereby acknowledges receipt of such sum.Such sum, together with any further sums deposited by the Buyer or the Surviving Corporationpursuant to the final sentence of Section 1.6(a) of the Merger Agreement and any interest earnedthereon, is referred to herein as the “Escrow Fund.” The Escrow Fund shall be held as a trust fundand shall not be subject to any lien, attachment, trustee process or any other judicial process ofany creditor of any party hereto. The Escrow Fund shall be invested in accordance with Section 4.The Escrow Agent agrees to hold the Escrow Fund in an escrow account subject to the terms andconditions of this Agreement.
 

 
          (b) Indemnification. The Indemnifying Stockholders have agreed in Article VI of theMerger Agreement, to indemnify and hold harmless the Buyer from and against specified Damages (asdefined in the Merger Agreement), in accordance with and subject to the terms thereof. The EscrowFund shall be security for such indemnity obligation of the Indemnifying Stockholders, subject tothe limitations, and in the manner provided, in this Agreement and the Merger Agreement.          (c) Transferability. The respective interests of the Indemnifying Stockholders in theEscrow Fund shall not be assignable or transferable, other than by operation of law. Notice of anysuch assignment or transfer by operation of law shall be given to the Escrow Agent and the Buyer,and no such assignment or transfer shall be valid until such notice is given.     3. Disbursement of Escrow Fund.          (a) Disbursement by Escrow Agent. The Escrow Agent shall disburse the Escrow Fundonly in accordance with (i) a written instrument delivered to the Escrow Agent that is executed byboth the Buyer and the Indemnification Representatives and that instructs the Escrow Agent as tothe disbursement of some or all of the Escrow Fund, (ii) an order of a court of competentjurisdiction, a copy of which is delivered to the Escrow Agent by either the Buyer or theIndemnification Representatives, that instructs the Escrow Agent as to the disbursement of some orall of the Escrow Fund, or (iii) the provisions of Section 3(b) hereof.          (b) Disbursement Following Termination Date. Within two business days after February28, 2007 (the “Termination Date”), the Buyer and the Indemnification Representatives shall deliverto the Escrow Agent a written instrument that is executed by both the Buyer and the IndemnificationRepresentatives and that instructs the Escrow Agent as to the disbursement of some or all of theEscrow Fund. Within five business days after the Termination Date, the Escrow Agent shalldistribute to the Indemnifying Stockholders all of the Escrow Fund then held in escrow.Notwithstanding the foregoing, if the Buyer has delivered to the Escrow Agent on or before theTermination Date a copy of a Claim Notice (as defined in the Merger Agreement) and the Escrow Agenthas not received written notice of the resolution of the claim covered thereby, or if the Buyer hasdelivered to the Escrow Agent on or before the Termination Date a copy of an Expected Claim Notice(as defined in the Merger Agreement) and the Escrow Agent has not received written notice of theresolution of the anticipated claim covered thereby, the Escrow Agent shall retain in escrow afterthe Termination Date an amount equal to the Claimed Amount (as defined in the Merger Agreement)covered by such Claim Notice or equal to the estimated amount of Damages set forth in such ExpectedClaim Notice, as the case may be. Any funds so retained in escrow shall be disbursed only inaccordance with the terms of clauses (i) or (ii) of Section 3(a) hereof.          (c) Method of Disbursement. Any distribution of all or a portion of the Escrow Fundto the Indemnifying Stockholders shall be made in accordance with the percentages set forthopposite such holders’ respective names on Attachment A hereto; provided,however, that the Escrow Agent shall withhold the distribution of the portion of the EscrowFund otherwise payable to an Indemnifying Stockholder who has not, according to a written noticeprovided by the Buyer to the Escrow Agent, prior to such distribution, surrendered pursuant to theterms of the Merger Agreement his, her or its stock certificates formerly representing shares
 

 
of stock of the Company or instrument formerly representing an option or warrant of theCompany; and provided further that such Attachment A shall be appropriately revised by theBuyer in the event the Buyer or the Surviving Corporation deposits additional funds with the EscrowAgent pursuant to the final sentence of Section 1.6(a) of the Merger Agreement following the dateof this Agreement. Any such withheld amounts shall be delivered to the Buyer promptly after theTermination Date, and shall be delivered by the Buyer to the Indemnifying Stockholders to whom suchamounts would have otherwise been distributed promptly upon surrender of such certificates orinstruments. Distributions to the Indemnifying Stockholders shall be made by mailing checks tosuch holders at their respective addresses shown on Attachment A (or such other address asmay be provided in writing to the Escrow Agent by any such holder). Pursuant to Section 1.16 of theMerger Agreement, the Escrow Agent has the right to deduct and withhold taxes from any payments tobe made hereunder if such withholding is required by law. Each of the Buyer and theIndemnification Representatives shall provide notice to the Escrow Agent (with a concurrent copy tothe other parties) to the extent that it is aware of any such withholding obligations. To theextent that amounts are so withheld, such withheld amounts shall be treated as having beendelivered to the Indemnifying Stockholder in respect of which such deduction and withholding wasmade.     4. Investment of Escrow Fund.          (a) Permitted Investments. Any monies held in the Escrow Fund shall be invested bythe Escrow Agent, to the extent permitted by law and as directed by the IndemnificationRepresentatives, in (i) obligations issued or guaranteed by the United States of America or anyagency or instrumentality thereof, (ii) obligations (including certificates of deposit and bankers’acceptances) of domestic commercial banks which at the date of their last public reporting hadtotal assets in excess of $500,000,000, (iii) commercial paper rated at least A-1 or P-1 or, if notrated, issued by companies having outstanding debt rated at least AA or Aa and (iv) money marketmutual funds invested exclusively in some or all of the securities described in the foregoingclauses (i), (ii) and (iii). Absent receipt of specific written investment instructions from theIndemnification Representatives, the Escrow Agent shall have no obligation or duty to invest (orotherwise pay interest on) the Escrow Fund. The Escrow Agent shall have no liability for anyinvestment losses, including without limitation any market loss on any investment liquidated priorto maturity in order to make a payment required hereunder.          (b) Tax Reporting. The parties hereto agree that, for tax reporting purposes, allinterest or other income earned from the investment of the Escrow Fund or any portion thereof inany tax year (i) to the extent such interest or other income is distributed by the Escrow Agent toany person or entity pursuant to the terms of this Agreement during such tax year, shall bereported as allocated to such person or entity, and (ii) otherwise shall be reported as allocatedto the Indemnifying Stockholders, based on the percentages set forth on Attachment A.          (c) Certification of Tax Identification Number. The parties hereto agree to providethe Escrow Agent with a certified tax identification number by signing and returning a Form W-9 (orForm W-8, in the case of non-U.S. persons) to the Escrow Agent prior to the date on which anyincome earned on the investment of the Escrow Fund is credited to such Escrow Fund. The partieshereto understand that, in the event their tax identification numbers are not certified to theEscrow Agent, the Internal Revenue Code, as amended from time to time, may
 

 
require withholding of a portion of any interest or other income earned on the investment ofthe Escrow Fund.     5. Fees and Expenses. The Buyer shall (a) pay all of the fees of the Escrow Agent forthe services to be rendered by the Escrow Agent hereunder, which are set forth on AttachmentB hereto, and (b) reimburse the Escrow Agent for all of its reasonable expenses (includingreasonable attorney’s fees and expenses) incurred in connection with the performance of its dutiesunder this Agreement.     6. Limitation of Escrow Agent’s Liability.          (a) Limitation on Liability. The Escrow Agent shall incur no liability with respectto any action taken or suffered by it in reliance upon any notice, direction, instruction, consent,statement or other documents believed by it to be genuine and duly authorized, nor for other actionor inaction, except its own willful misconduct or gross negligence. The Escrow Agent shall not beresponsible for the validity or sufficiency of this Agreement or any other agreement referred toherein. In all questions arising under the Escrow Agreement, the Escrow Agent may rely on theadvice of counsel, and the Escrow Agent shall not be liable to anyone for anything done, omitted orsuffered in good faith by the Escrow Agent based on such advice. The Escrow Agent shall not berequired to take any action hereunder involving any expense unless the payment of such expense ismade or provided for in a manner reasonably satisfactory to it. In no event shall the Escrow Agentbe liable for indirect, punitive, special or consequential damages.          (b) Indemnification. The Buyer and the Indemnifying Stockholders agree to indemnifythe Escrow Agent for, and hold it harmless against, any loss, liability or expense incurred withoutgross negligence or willful misconduct on the part of Escrow Agent, arising out of or in connectionwith its carrying out of its duties hereunder. The Buyer, on the one hand, and the IndemnifyingStockholders, on the other hand, shall each be liable for one-half of such amounts.Notwithstanding the foregoing, the Buyer shall be liable for any amounts owed to the Escrow Agentpursuant to this Section 6(b) that are in excess of the amount then remaining in the Escrow Fund.     7. Liability and Authority of Indemnification Representatives; Successors andAssignees.          (a) Limitation on Liability. The Indemnification Representatives shall incur noliability to the Indemnifying Stockholders with respect to any action taken or suffered by them inreliance upon any notice, direction, instruction, consent, statement or other documents believed bythem to be genuinely and duly authorized, nor for other action or inaction except their own willfulmisconduct or gross negligence. The Indemnification Representatives may, in all questions arisingunder the Escrow Agreement, rely on the advice of counsel and the Indemnification Representativesshall not be liable to the Indemnifying Stockholders for anything done, omitted or suffered in goodfaith by the Indemnification Representatives based on such advice. The IndemnificationRepresentatives are authorized by the Indemnifying Stockholders to incur expenses on behalf of theIndemnifying Stockholders in acting hereunder. If the Indemnification Representatives shall incurany loss, cost or expense in connection with
 

 
their acting as such, the Indemnifying Stockholders will, on the written request of theIndemnification Representatives, reimburse the Indemnification Representatives for a proportionateamount thereof, determined on a pro rata basis based on the percentage of the aggregateConsideration received by each such Indemnifying Stockholder pursuant to the Merger Agreement.Without limiting the generality of the foregoing, the Indemnification Representatives areauthorized to deduct from any payment due to the Indemnifying Stockholders from the Escrow Fund theamount of such reimbursement, provided that, with respect to amounts still subject to claims by theBuyer, no such deduction from the Escrow Fund shall be made without the consent of the Buyer. Theparties hereto understand and agree that the Indemnification Representatives are acting solely onbehalf of and as agents for the Indemnifying Stockholders and not in their personal capacity, andin no event shall the Indemnification Representatives be personally liable to the IndemnifyingStockholders hereunder.          (b) Indemnification. Each Indemnifying Stockholder agrees to indemnify theIndemnification Representatives, on a pro rata basis based on the percentage of the aggregateConsideration received by each Indemnifying Stockholder pursuant to this Agreement, for any and allliabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by orasserted against the Indemnification Representatives in any way relating to or arising out of thisAgreement or any documents contemplated by or referred to herein or therein or the transactionscontemplated hereby or thereby or the enforcement of any of the terms hereof or thereof;provided, however, that no Indemnifying Stockholder shall be liable for any of theforegoing to the extent they arise from an Indemnification Representative’s gross negligence orwillful misconduct. An Indemnification Representative shall be fully justified in refusing to takeor to continue to take any action hereunder unless he shall first be fully indemnified to hisreasonable satisfaction by the Indemnifying Stockholders against any and all liability and expensewhich may be incurred by him by reason of taking or continuing to take any such action.          (c) Successor Indemnification Representatives. In the event of the death or permanentdisability of any Indemnification Representative, or his or her resignation as an IndemnificationRepresentative, a successor Indemnification Representative shall be appointed by the otherIndemnification Representative or, absent its appointment, a successor IndemnificationRepresentative shall be elected by a majority vote of the Indemnifying Stockholders, with each suchIndemnifying Stockholder (or his, her or its successors or assigns) to be given a vote equal to thenumber of votes represented by the shares of stock of the Company held by such IndemnifyingStockholder immediately prior to the effective time of the Merger). Each successor IndemnificationRepresentative shall have all of the power, authority, rights and privileges conferred by thisAgreement upon the original Indemnification Representatives, and the term “IndemnificationRepresentatives” as used herein shall be deemed to include successor IndemnificationRepresentatives          (d) Power and Authority. The Indemnification Representatives, acting jointly but notsingly, shall have full power and authority to represent the Indemnifying Stockholders, and theirsuccessors, with respect to all matters arising under this Agreement and all actions taken by anyIndemnification Representative hereunder shall be binding upon the Indemnifying Stockholders, andtheir successors, as if expressly confirmed and ratified in writing by each of
 

 
them. Without limiting the generality of the foregoing, the Indemnification Representatives,acting by a majority thereof, shall have full power and authority to interpret all of the terms andprovisions of this Agreement, to compromise any claims asserted hereunder and to authorize paymentsto be made with respect thereto, on behalf of the Indemnifying Stockholders and their successors.All actions to be taken by the Indemnification Representatives hereunder shall be evidenced by, andtaken upon, the written direction of both Indemnification Representatives.          (e) Reliance by Escrow Agent. The Escrow Agent may rely on the IndemnificationRepresentatives as the exclusive agents of the Indemnifying Stockholders under this Agreement andshall incur no liability to any party with respect to any action taken or suffered by it inreliance thereon.     8. Amounts Payable by Indemnifying Stockholders. The amounts payable by theIndemnifying Stockholders to the Escrow Agent under this Agreement (i.e., the indemnificationobligations pursuant to Section 6(b)) shall be payable solely as follows. The Escrow Agent shallnotify the Indemnification Representatives of any such amount payable by the IndemnifyingStockholders as soon as it becomes aware that any such amount is payable, with a copy of suchnotice to the Buyer. On the sixth business day after the delivery of such notice, the Escrow Agentshall disburse such amount from the Escrow Fund (up to the amount then available in the EscrowFund) to the party to whom such amount is owed in satisfaction of such indemnification obligationsof the Indemnifying Stockholders; provided that if the Buyer or the Indemnification Representativesdeliver to the Escrow Agent (with a copy to the Indemnification Representatives or the Buyer, asapplicable), within five business days after delivery of such notice by the Escrow Agent, a writtennotice contesting the legitimacy or reasonableness of such amount, then the Escrow Agent shall notdisburse the disputed portion of such claimed amount except in accordance with the terms of clauses(i) or (ii) of Section 3(a) hereof.     9. Termination. This Agreement shall terminate upon the disbursement by the EscrowAgent of all of the Escrow Funds in accordance with this Agreement; provided that the provisions ofSections 6 and 7 shall survive such termination.     10. Successor Escrow Agent. In the event the Escrow Agent becomes unavailable orunwilling to continue in its capacity herewith, the Escrow Agent may resign and be discharged fromits duties or obligations hereunder by delivering a resignation to the parties to this EscrowAgreement, not less than 60 days’ prior to the date when such resignation shall take effect. TheBuyer may appoint a successor Escrow Agent without the consent of the IndemnificationRepresentatives so long as such successor is a bank with assets of at least $500 million, and mayappoint any other successor Escrow Agent with the consent of the Indemnification Representatives,which shall not be unreasonably withheld. If, within such notice period, the Buyer provides to theEscrow Agent written instructions with respect to the appointment of a successor Escrow Agent anddirections for the transfer of any Escrow Fund then held by the Escrow Agent to such successor, theEscrow Agent shall act in accordance with such instructions and promptly transfer such Escrow Fundto such designated successor. If no successor Escrow Agent is named as provided in this Section 10prior to the date on which the resignation of the Escrow Agent is to properly take effect, theEscrow Agent may apply to a court of competent jurisdiction for appointment of a successor EscrowAgent.
 

 
     11. General.          (a) Entire Agreement. Except for those provisions of the Merger Agreement referencedherein, this Agreement constitutes the entire agreement among the parties and supersedes any priorunderstandings, agreements or representations by or among the parties, written or oral, withrespect to the subject matter hereof.          (b) Succession and Assignment. This Agreement shall be binding upon and inure to thebenefit of the parties named herein and their respective successors and permitted assigns.          (c) Counterparts and Facsimile Signature. This Agreement may be executed in two ormore counterparts, each of which shall be deemed an original but all of which together shallconstitute one and the same instrument. This Agreement may be executed by facsimile signature.          (d) Headings. The section headings contained in this Agreement are inserted forconvenience only and shall not affect in any way the meaning or interpretation of this Agreement.          (e) Notices. All notices, instructions and other communications hereunder shall be inwriting. Any notice, instruction or other communication hereunder shall be deemed duly deliveredfour business days after it is sent by registered or certified mail, return receipt requested,postage prepaid, or one business day after it is sent for next business day delivery via areputable nationwide overnight courier service, in each case to the intended recipient as set forthbelow:If to the Buyer:Blackboard Inc.