**Exhibit 2.2**

 

 

AGREEMENTAND PLAN OF MERGER

 

BYAND AMONG

 

FORGENTNETWORKS, INC.,

 

CHEETAHACQUISITION COMPANY, INC.,

 

iSARLA,INC.

 

AND

 

THEPRINCIPAL STOCKHOLDERS

 

Datedas of September 11, 2007

 

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TABLE OF CONTENTS

 
| ** **   | ** **                                                                | ** **                                                          | ** ** | **Page** |
|--------------|---------------------------------------------------------------------------|---------------------------------------------------------------------|------------|----------|
|         |                                                                      |                                                                |       |     |
| ARTICLE  I   | DEFINITIONS  AND INTERPRETATION                                           |                                                                | 1          |
| Section 1.1  |                                                                      | Certain  Definitions                                                |       | 1        |
| Section 1.2  |                                                                      | Interpretation.                                                     |       | 12       |
|         |                                                                      |                                                                |       |     |
| ARTICLE  II  | THE  MERGER                                                               |                                                                | 13         |
| Section 2.1  |                                                                      | The  Merger                                                         |       | 13       |
| Section 2.2  |                                                                      | The  Closing                                                        |       | 13       |
| Section 2.3  |                                                                      | The  Effective Time                                                 |       | 14       |
| Section 2.4  |                                                                      | Effect  of the Merger                                               |       | 14       |
| Section 2.5  |                                                                      | Certificate  of Incorporation and Bylaws.                           |       | 14       |
| Section 2.6  |                                                                      | Directors  and Officers.                                            |       | 14       |
| Section 2.7  |                                                                      | Effect  on Outstanding Capital Stock and Options.                   |       | 15       |
| Section 2.8  |                                                                      | Escrow  Account.                                                    |       | 17       |
| Section 2.9  |                                                                      | Exchange  of Closing Consideration at Closing.                      |       | 19       |
| Section 2.10 |                                                                      | Withholding  Rights                                                 |       | 23       |
| Section 2.11 |                                                                      | Appraisal  Rights.                                                  |       | 23       |
| Section 2.12 |                                                                      | Further  Assurances                                                 |       | 24       |
| Section 2.13 |                                                                      | Arrangements  Relating to Closing Date Working Capital Calculation. |       | 24       |
|         |                                                                      |                                                                |       |     |
| ARTICLE  III | REPRESENTATIONS  AND WARRANTIES OF THE COMPANY AND PRINCIPAL STOCKHOLDERS |                                                                | 27         |
| Section 3.1  |                                                                      | Organization,  Standing and Power                                   |       | 27       |
| Section 3.2  |                                                                      | Authority                                                           |       | 27       |
| Section 3.3  |                                                                      | Intentionally  Omitted.                                             |       | 28       |
| Section 3.4  |                                                                      | Financial  Statements.                                              |       | 28       |
| Section 3.5  |                                                                      | Capital  Structure                                                  |       | 29       |
| Section 3.6  |                                                                      | Subsidiaries.                                                       |       | 30       |
| Section 3.7  |                                                                      | Absence  of Certain Changes                                         |       | 30       |
| Section 3.8  |                                                                      | Absence  of Undisclosed Liabilities                                 |       | 31       |
| Section 3.9  |                                                                      | Litigation                                                          |       | 31       |
| Section 3.10 |                                                                      | Restrictions  on Business Activities                                |       | 31       |
| Section 3.11 |                                                                      | Intellectual  Property.                                             |       | 32       |
| Section 3.12 |                                                                      | Interested  Party Transactions                                      |       | 38       |
| Section 3.13 |                                                                      | Minute  Books                                                       |       | 38       |
| Section 3.14 |                                                                      | Complete  Copies of Materials                                       |       | 38       |
| Section 3.15 |                                                                      | Material  Contracts                                                 |       | 38       |
| Section 3.16 |                                                                      | Inventory                                                           |       | 39       |
| Section 3.17 |                                                                      | Accounts  Receivable                                                |       | 39       |
| Section 3.18 |                                                                      | Customers  and Suppliers                                            |       | 39       |
| Section 3.19 |                                                                      | Employees  and Consultants                                          |       | 40       |
| Section 3.20 |                                                                      | Title  to Property.                                                 |       | 40       |
|              |                                                                           |                                                                     |            |          |  |

 

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| Section 3.21 |                                              | Environmental  Matters.                                                             |   | 41     |
|--------------|---------------------------------------------------|-------------------------------------------------------------------------------------|--------|--------|
| Section 3.22 |                                              | Taxes.                                                                              |   | 42     |
| Section 3.23 |                                              | Employee  Benefit Plans.                                                            |   | 45     |
| Section 3.24 |                                              | Employee  Matters                                                                   |   | 49     |
| Section 3.25 |                                              | Insurance                                                                           |   | 49     |
| Section 3.26 |                                              | Compliance  with Laws.                                                              |   | 50     |
| Section 3.27 |                                              | Absence  of Questionable Payments                                                   |   | 50     |
| Section 3.28 |                                              | Brokers’  and Finders’ Fee                                                |   | 50     |
| Section 3.29 |                                              | Privacy  Policies and Web Site Terms and Conditions.                                |   | 50     |
| Section 3.30 |                                              | International  Trade Matters                                                        |   | 52     |
| Section 3.31 |                                              | Representations  Complete                                                           |   | 52     |
| Section 3.32 |                                              | Commission  Filings                                                                 |   | 52     |
| Section 3.33 |                                              | Takeover  Statutes                                                                  |   | 53     |
|         |                                              |                                                                                |   |   |
| ARTICLE  IV  | REPRESENTATIONS  AND WARRANTIES OF PARENT AND SUB |                                                                                | 53     |
| Section 4.1  |                                              | Organization,  Standing and Power                                                   |   | 53     |
| Section 4.2  |                                              | Authority                                                                           |   | 53     |
| Section 4.3  |                                              | Issuance  of Shares                                                                 |   | 54     |
| Section 4.4  |                                              | Interim  Operations of Merger Sub                                                   |   | 54     |
| Section 4.5  |                                              | Finders’  or Advisors’ Fees                                               |   | 54     |
| Section 4.6  |                                              | SEC  Filings; Financial Statements.                                                 |   | 54     |
| Section 4.7  |                                              | Absence  of Certain Changes or Events                                               |   | 55     |
|         |                                              |                                                                                |   |   |
| ARTICLE  V   | ADDITIONAL  AGREEMENTS                            |                                                                                | 55     |
| Section 5.1  |                                              | Conduct  of Business of the Company                                                 |   | 55     |
| Section 5.2  |                                              | No  Solicitation of Other Offers                                                    |   | 58     |
| Section 5.3  |                                              | Access  to Information Concerning Properties and Records                            |   | 59     |
| Section 5.4  |                                              | Reasonable  Best Efforts                                                            |   | 59     |
| Section 5.5  |                                              | Sale  of Shares Pursuant to Regulation D                                            |   | 59     |
| Section 5.6  |                                              | Registration  of Parent Common Stock                                                |   | 60     |
| Section 5.7  |                                              | Notification  of Certain Matters                                                    |   | 60     |
| Section 5.8  |                                              | Public  Announcements                                                               |   | 60     |
| Section 5.9  |                                              | Resignation  of Directors and Officers                                              |   | 60     |
| Section 5.10 |                                              | Regulatory  Approval; Further Assurances.                                           |   | 61     |
| Section 5.11 |                                              | Blue  Sky Laws                                                                      |   | 61     |
| Section 5.12 |                                              | Employees                                                                           |   | 62     |
| Section 5.13 |                                              | Expenses                                                                            |   | 62     |
| Section 5.14 |                                              | Special  Indemnity Insurance.                                                       |   | 62     |
|         |                                              |                                                                                |   |   |
| ARTICLE  VI  | CONDITIONS  TO THE MERGER                         |                                                                                | 62     |
| Section 6.1  |                                              | Conditions  to Each Party’s Obligations to Effect the Merger                   |   | 62     |
| Section 6.2  |                                              | Conditions  to Parent’s and Merger Sub’s Obligations to Effect the Merger |   | 63     |
| Section 6.3  |                                              | Additional  Conditions to Obligations of the Company                                |   | 66     |
|              |                                                   |                                                                                     |        |        |  |

 

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| ARTICLE  VII  | TERMINATION;  FEES AND EXPENSES |                                                              | 67     |
|---------------|---------------------------------|-------------------------------------------------------------------|--------|
| Section 7.1   |                            | Termination                                                       |   | 67 |
| Section 7.2   |                            | Effect  of Termination                                            |   | 68 |
|          |                            |                                                              |   |   |
| ARTICLE  VIII | ESCROW  AND INDEMNIFICATION     |                                                              | 68     |
| Section 8.1   |                            | Survival                                                          |   | 68 |
| Section 8.2   |                            | Indemnification  by the Company and the Eligible Company Holders. |   | 68 |
| Section 8.3   |                            | Indemnification  by Parent.                                       |   | 70 |
| Section 8.4   |                            | Effect  on Merger Consideration; Stockholder Representatives.     |   | 71 |
| Section 8.5   |                            | Handling  Claims                                                  |   | 73 |
| Section 8.6   |                            | Limits  on Indemnification.                                       |   | 74 |
| Section 8.7   |                            | Release  and Waiver                                               |   | 75 |
| Section 8.8   |                            | Treatment  of Indemnification Payments                            |   | 75 |
| Section 8.9   |                            | Insurance  Set-Off                                                |   | 75 |
| Section 8.10  |                            | Exclusive  Remedies                                               |   | 76 |
|          |                            |                                                              |   |   |
| ARTICLE  IX   | MISCELLANEOUS                   |                                                              | 76     |
| Section 9.1   |                            | Representations  and Warranties                                   |   | 76 |
| Section 9.2   |                            | Extension;  Waiver                                                |   | 76 |
| Section 9.3   |                            | Notices                                                           |   | 76 |
| Section 9.4   |                            | Entire  Agreement                                                 |   | 77 |
| Section 9.5   |                            | Binding  Effect; Benefit; Assignment.                             |   | 77 |
| Section 9.6   |                            | Amendment  and Modification                                       |   | 78 |
| Section 9.7   |                            | Headings;  Construction                                           |   | 78 |
| Section 9.8   |                            | Fees  and Expenses                                                |   | 78 |
| Section 9.9   |                            | Counterparts                                                      |   | 78 |
| Section 9.10  |                            | Applicable  Law                                                   |   | 78 |
| Section 9.11  |                            | Severability                                                      |   | 78 |
| Section 9.12  |                            | Remedies  Cumulative                                              |   | 79 |
|               |                                 |                                                                   |        |  |  |

 

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AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER, dated asof September 11, 2007 (this “Agreement”), is entered into by andamong Forgent Networks, Inc., a Delaware corporation (“Parent”),Cheetah Acquisition Company, Inc., a Delaware corporation and a whollyowned subsidiary of Parent (“Merger Sub”), iSarla Inc., a Delawarecorporation (the “Company”), and the Principal Stockholders.

 

RECITALS:

 

WHEREAS, eachof the respective boards of directors of Parent, Merger Sub and the Company hasapproved this Agreement and the transactions contemplated hereby, pursuant towhich, among other things, at the Effective Time, Merger Sub will be mergedwith and into the Company (the “Merger”) in accordance with the termsand conditions of this Agreement and the applicable provisions of the GeneralCorporation Law of the State of Delaware (the “DGCL”), the Company willcontinue as the surviving corporation of the Merger and as a wholly-ownedsubsidiary of Parent and each share of Company Common Stock outstandingimmediately prior to the Effective Time will be canceled and converted into theright to receive the consideration set forth herein, all upon the terms andsubject to the conditions set forth in this Agreement;

 

WHEREAS,Parent, the Company and the Principal Stockholders desire to make certainrepresentations, warranties and covenants in connection with this Agreement andthe transactions contemplated hereby (the “Contemplated Transactions”);and

 

WHEREAS,concurrently with the execution and delivery of this Agreement, as aninducement to Parent’s and Merger Sub’s willingness to enter into thisAgreement, the Principal Stockholders have entered into a Voting Agreement,dated as of the date hereof, in the form attached hereto as Exhibit D(the “Voting Agreement”), pursuant to which each Principal Stockholderhas, among other things, agreed to (i) vote the shares of Company CommonStock as to which such Principal Stockholder is the beneficial owner (withinthe meaning of Rule 13d-3 of the Exchange Act) in favor of the approval ofthis Agreement and the Contemplated Transactions, and (ii) tender suchshares of Company Common Stock for exchange in accordance herewith at or beforethe Closing.

 

NOW,THEREFORE, in consideration of the foregoing premises and the representations,warranties, covenants and agreements set forth herein, as well as other goodand valuable consideration, the receipt and sufficiency of which are herebyacknowledged, and intending to be legally bound hereby, Parent, Merger Sub andthe Company hereby agree as follows:

 

# ARTICLE I

#  

# DEFINITIONS AND INTERPRETATION

#  

## Section 1.1             Certain Definitions.  For purposes of this Agreement, except asotherwise provided or unless the context clearly requires otherwise, thefollowing words and phrases shall have the meanings given or referenced below:

 

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“Acquisition Proposal” shall have the meaning set forth in Section 5.2(a).

 

“Additional Escrow Stock” shall have the meaningset forth in Section 2.8(a)(iii).

 

“AdjustedCompany Value” shall mean the Company Value minus the sum of (i) $2,000,000,being the combined value of the Ceridian Cash Payment and the Ceridian StockPayment, and (ii) the product of the Global Accelerator Stock Payment multipliedby the Average Closing Price.

 

“AdjustedFully Diluted Share Amount” shall mean the Fully Diluted Share Amount minusthe sum of (i) the Ceridian Company Shares, and (ii) the GlobalAccelerator Company Shares.

 

“AdjustedNet Cash Payment Amount” shall mean the Net Cash Payment Amount minusthe sum of (i) the Ceridian Cash Payment, and (ii) the AggregateNon-Participating Holder Cash Payments.

 

“AdjustedStock Payment Amount” shall mean the Total Stock Payment Amount minusthe sum of (i) the Ceridian Stock Payment, and (ii) the GlobalAccelerator Stock Payment.

 

“AdjustedStock Payment Value” shall mean the Initial Stock Payment Value minusthe amount of any Elective Cash Payment made by the Parent pursuant to Section 2.9(b)(ii).

 

“Affiliate” shall mean any Person that, directly orindirectly, through one or more intermediaries, Owns, is Owned by or is undercommon Ownership with, a party, where “Own,” “Owned” or “Ownership”refers to (i) direct or indirect possession of at least fifty percent (50%)of the outstanding voting securities of a corporation or equity ownership inany other type of entity; or (ii) the actual ability of a Person tocontrol and direct the management of the Person, whether by contract orotherwise.

 

“Aggregate Non-Participating Holder CashPayments” shall mean the aggregate amount of the cash payments made to theNon-Participating Holders pursuant to Section 2.7(a)(iii).

 

“Agreement” shall have the meaning setforth in the first paragraph of this Agreement and Plan of Merger.

 

“ApplicableLaw” shall mean all applicable provisions of any applicable federal, state,local, municipal, foreign, international, multinational or other constitution,statute, law, principle of common law, rule, regulation, code, treaty,ordinance, requirement, decree, order, decision, guidance document, injunction,award, judgment, ruling, permit or license, issued, enacted, adopted,implemented, promulgated or otherwise put into effect by or under the authorityof, any Governmental Body.

 

“AvailableEscrow Amount” means an amount equal to the Initial Escrow Consideration,plus any accrued interest on the Cash Escrow, plus any Additional Escrow Stock,less the amount of any Working Capital Deficit (if applicable), less theaggregate amount of any Pending Claim Holdbacks (but only for so long as, andto the extent that, they remain pending), less the aggregate amount distributedto Parent pursuant to the indemnification provisions benefiting 

 

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Parentin Article VIII, less the aggregate amount distributable orpreviously distributed from the Escrow Consideration to Eligible CompanyHolders as contemplated pursuant to the provisions of this Agreement pertainingto the Escrow Consideration and the Escrow Agreement.

 

“AverageClosing Price” shall mean the average of the closing prices for the ParentCommon Stock for the twenty (20) trading days preceding the Closing, butexcluding the three (3) highest and three (3) lowest closing pricesduring such period.

 

“Basket”shall have the meaning set forth in Section 8.2(c)(i).

 

“BusinessDay” shall mean a day which is not a Saturday, a Sunday or a day on whichbanks in the State of Delaware are closed.

 

“CashEscrow” shall mean cash in the amount of fifteen percent (15%) of the NetCash Payment Amount.

 

“CERCLA”shall have the meaning set forth in Section 3.21(a)(i).

 

“CeridianCash Payment” shall mean $1,000,000.

 

“CeridianCompany Shares” shall have the meaning set forth in Section 2.7(a)(i).

 

“CeridianStock Payment” shall mean the number of shares of Parent Company Stockequal to $1,000,000 dividedby the Average Closing Price.

 

“Certificate”shall mean a certificate representing shares of Company Common Stock.

 

“Certificateof Merger” shall have the meaning set forth in Section 2.3.

 

“Closing”shall have the meaning set forth in Section 2.2.

 

“ClosingConsideration” shall have the meaning set forth in Section 2.9(a).

 

“ClosingDate” shall have the meaning set forth in Section 2.2.

 

“ClosingNet Working Capital” shall have the meaning set forth in Section 2.13(e).

 

“COBRA”shall have the meaning set forth in Section 3.23(e).

 

“Code”shall mean the Internal Revenue Code of 1986, as amended.

 

“Company”shall have the meaning set forth in the first paragraph of this Agreement.

 

“CompanyBalance Sheet” shall mean the audited balance sheet of the Company dated asof the Closing Balance Sheet Date.

 

“CompanyBalance Sheet Date” shall have the meaning set forth in Section 3.7.

 

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“CompanyCommon Stock” shall mean shares of the Company’s common stock, par value$.0001 per share.

 

“CompanyDisclosure Schedule” shall have the meaning set forth in Article III.

 

“CompanyEmployee Plans” shall have the meaning set forth in Section 3.23(a).

 

“CompanyFinancial Statements” shall have the meaning set forth in Section 3.4(a).

 

“CompanyIntellectual Property” shall mean Intellectual Property that is or has beenused in (including in the development of) the business of, or any product orservice offered or marketed or distributed by, any Company Party, or that isused in or necessary for the conduct of the business of any Company Party ascurrently conducted or contemplated to be conducted.

 

“CompanyInternational Employee Plans” shall have the meaning set forth in Section 3.23(a).

 

“CompanyLicensed Intellectual Property” shall have the meaning set forth in Section 3.11(e).

 

“CompanyMaterial Adverse Effect” shall mean a Material Adverse Effect on theCompany Parties, taken as a whole.

 

“CompanyParty” shall mean the Company or any Subsidiary of the Company.  “Company Parties” shall mean theCompany and each of its Subsidiaries.

 

“CompanyParty Current Facilities” shall have the meaning set forth in Section 3.21(b).

 

“CompanyParty Facilities” shall have the meaning set forth in Section 3.21(b).

 

“CompanySites” shall have the meaning set forth in Section 3.29(a)(i).

 

“CompanySoftware Programs” shall mean Software Programs that are or have been usedin (including in the development of) the business of, or any product or serviceoffered or marketed or distributed by, any Company Party, or that are used inor necessary for the conduct of the business of any Company Party as currentlyconducted or contemplated to be conducted.

 

“CompanyStock Options” shall mean options issued pursuant to the Company Stock Planand exercisable for shares of Company Common Stock.

 

“CompanyStock Plan” shall mean the iSarla Inc. 2000 Long-Term Stock Incentive Plan.

 

“CompanyValue” shall mean the sum of the Net Cash Payment Amount plus theAdjusted Stock Payment Value.

** **

“Consent”shall mean any approval, consent, ratification, permission, waiver orauthorization (including any license or governmental authorization).

 

4

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“ContemplatedTransactions” shall have the meaning set forth in the Recitals.

 

“Contract”shall mean any contract, commitment, agreement, indenture, note, bondinstrument, lease, license, purchase order, subcontract, outstanding bid,warranty or other document or arrangement, written or oral, expressed orimplied, to which the Company is a party or by which the Company or its assetsare bound, including all amendments thereto.

 

“Copyrights”shall have the meaning set forth in Section 3.11(a)(iv).

 

“Customers,Suppliers, Resellers and Partners” shall have the meaning set forth in Section 3.18.

 

“Damages”shall have the meaning set forth in Section 8.2(a).

 

“DelawareSecretary of State” shall have the meaning set forth in Section 2.3.

 

“DGCL”shall have the meaning set forth in the Recitals.

 

“DissentingShares” shall have the meaning set forth in Section 2.11(a).

 

“EffectiveTime” shall have the meaning set forth in Section 2.3.

 

“ElectiveCash Payment” shall have the meaning set forth in Section 2.9(b)(ii).

 

“EligibleCompany Holders” shall mean (a) all registered holders of Company Common Stock as of the Effective Time, and (b) allregistered holders of In-the-Money Options as of the Effective Time.

 

“EligibleHolder Claim Notice” shall have the meaning set forth in Section 8.4(b).

 

“EligibleHolder Indemnified Parties” shall have the meaning set forth in Section 8.4(a).

 

“Encumbrances”shall mean any and all pledges, mortgages,security interests, liens, charges, assessments, levies, burdens, obligations,restrictions, claims and other encumbrances of any kind whatsoever (whetherabsolute, accrued, contingent or otherwise), including any chattel mortgages,conditional sale Contracts, collateral security arrangements, title or interestretention Contracts, or other Contracts to give any of the foregoing.

 

“Environmental Laws” shall have the meaning setforth in Section 3.21(a)(i).

 

“ERISA”shall have the meaning set forth in Section 3.23(a).

 

“ERISAAffiliate” shall have the meaning set forth in Section 3.23(a).

 

“Escrow Account” shall have the meaning set forthin Section 2.8(a)(i).

 

“Escrow Agent” shall have the meaning set forth inSection 2.8(a)(i).

 

“EscrowAgreement” shall have the meaning set forth in Section 2.8(a)(i).

 

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“EscrowConsideration” shall mean the Cash Escrow and the Escrow Stock.

 

“EscrowFund” shall have the meaning set forth in Section 2.8(a)(i).

 

“EscrowStock” shall mean the number of shares of Parent Common Stock equal tofifteen percent (15%) of the Total Stock Payment Amount, plus any AdditionalEscrow Stock.

 

“ExchangeAct” shall mean the Exchange Act of 1934, as amended, including all rules andregulations related thereto or promulgated thereunder.

 

“FinalEscrow Release Date” shall have the meaning set forth in Section 2.8(b)(ii).

 

“FirstEscrow Release Date” shall have the meaning set forth in Section 2.8(b)(i).

 

“FullyDiluted Share Amount” shall mean the sum of (i) total number of sharesof Company Common Stock issued and outstanding immediately prior to theEffective Time, plus (ii) the total number of shares of Company CommonStock issuable upon exercise of all of the In-the-Money Options outstandingimmediately prior to the Effective Time.

 

“GAAP”shall mean generally accepted accounting principles consistently applied in theU.S.

 

“GlobalAccelerator Company Shares” shall have the meaning set forth in Section 2.7(a)(ii).

 

“GlobalAccelerator Stock Payment” shall mean the number of shares of ParentCompany Stock equal to:

 
| A x    |   | B+C |
|--------|--------|-----|
|   |   | D   |

 

*where*

 

A = the quotient of 2,899,979 dividedby the Fully Diluted Share Amount;

B = the Net Cash PaymentAmount;

C = the Adjusted Stock PaymentValue; and

D = Average Closing Price.

 

“GovernmentalBody” shall mean any domestic or foreign entity exercising executive,legislative, judicial, regulatory or administrative functions of or pertainingto government, including any governmental authority, agency, department, board,commission, court, tribunal, judicial body or instrumentality of any union of nations,federation, nation, state, municipality, county, province, locality or otherpolitical subdivision.

 

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“Gross CashPayment Amount” shall mean $5,600,000 plus the amount of anyElective Cash Payment made by the Parent pursuant to Section 2.9(b)(ii).

 

“HazardousMaterials” shall have the meaning set forth in Section 3.21(a)(ii).

 

“HIPAA”shall have the meaning set forth in Section 3.23(e).

 

“In-the-MoneyOption” shall have the meaning set forth in Section 2.7(b)(i).

 

“In-the-MoneyOption Consideration” shall have the meaning set forth in Section 2.7(b)(i).

 

“Individuals”shall have the meaning set forth in Section 3.29(a)(ii).

 

“InitialEscrow Consideration” shall mean the Cash Escrow and the Escrow Stock.

 

“InitialStock Payment Value” shall mean $5,100,000.

 

“IntellectualProperty” shall have the meaning set forth in Section 3.11(a).

 

“InternationalTrade Law” shall have the meaning set forth in Section 3.30.

 

“IssuedPatents” shall have the meaning set forth in Section 3.11(a)(i).

 

“Knowledge”– an individual will be deemed to have “Knowledge” of a particular fact orother matter if:

 

(a)           such individual isactually aware of such fact or other matter; or

 

(b)           a prudent individualwould be expected to discover or otherwise become aware of such fact or othermatter in the ordinary and usual course of such individual’s performance of hisor her official duties with respect to the applicable subject matter.

 

A Person(other than an individual) will be deemed to have “Knowledge” of a particularfact or other matter if any individual who is currently serving as a director,executive officer or senior manager of a Person (or in any similar capacity)has Knowledge of such fact or other matter. A Person will be deemed to have Knowledge of a fact or other matter ifany Subsidiary of such Person has Knowledge of such fact or other matter.

 

“Law”shall mean any federal, state, local, municipal, foreign, international,multinational or other constitution, statute, law, principle of common law,rule, regulation, code, treaty, ordinance, requirement, decree, order,decision, guidance document, injunction, award, judgment, ruling, permit orlicense, issued, enacted, adopted, implemented, promulgated or otherwise putinto effect by or under the authority of, any Governmental Body

 

“MassachusettsHealth Care Act” shall have the meaning set forth in Section 3.23(h).

 

“MaterialAdverse Effect” shall mean any event, change, condition or effect which,when considered either individually or in the aggregate together with otherevents, changes, conditions 

 

7

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or effects, ismaterially adverse to (i) the applicable Person or its business or assets,or (ii) the ability of a Party to consummate the ContemplatedTransactions; provided, that “Material Adverse Effect” shall not be deemed toinclude the impact of (i) changes in general economic conditions orfinancial markets; (ii) the announcement of this Agreement and theContemplated Transactions; (iii) general changes or developments in theindustries in which the Company Parties or the Parent, as applicable, operates;(iv) changes in Law or applicable accounting principles; or (v) actionsor omissions of the Company Parties, on the one hand, and Parent, on the other,taken with the prior written consent of Parent, on the one hand, or theCompany, on the other, in contemplation of the Contemplated Transactions.

 

“MaterialContract” shall have the meaning set forth in Section 3.15.

 

“Merger”shall have the meaning set forth in the Recitals.

 

“MergerConsideration” shall mean the Closing Consideration and the EscrowConsideration.

 

“Merger Sub”shall have the meaning set forth in the first paragraph of this Agreement.

 

“MoralRights” shall have the meaning set forth in Section 3.11(a)(xiii).

 

“Net CashPayment Amount” shall mean the Gross Cash Payment Amount minus thesum of (i) the Required Debt Payments, and (ii) the absolute value ofthe Working Capital Purchase Price Reduction.

 

“NetClosing Cash Payment” shall mean the Net Cash Payment Amount, less the CashEscrow.

 

“NetClosing Stock Payment” shall mean the Total Stock Payment Amount, less theEscrow Stock.

 

“NetWorking Capital” shall mean the difference between the Company’s currentassets and the Company’s current liabilities, as calculated using financialstatements prepared in accordance with GAAP.

 

“Non-ParticipatingHolder” shall have the meaning set forth in Section 2.9(b)(i).

 

“Order”shall mean any award, decision, injunction, judgment, decree, order, ruling,subpoena or verdict entered, issued, made or rendered by any Governmental Bodyor any arbitrator.

 

“OrganizationalDocuments” shall mean (i) the articles or certificate of incorporationor formation and bylaws of a corporation, (ii) the partnership agreementand any statement of partnership of a general partnership; (iii) thelimited partnership agreement and the certificate of limited partnership orcertificate of formation of a limited partnership; (iv) any charter orsimilar document adopted or filed in connection with the creation, formation ororganization of a Person; and (v) any amendment to any of the foregoing.

 

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“Parent”shall have the meaning set forth in the first paragraph of this Agreement.

 

“ParentClaim Notice” shall have the meaning set forth in Section 8.2(b).

 

“ParentCommon Stock” shall mean shares of Parent’s common stock, par value $.01per share.

 

“ParentDisclosure Schedule” shall have the meaning set forth in Article IV.

 

“ParentIndemnified Parties” shall have the meaning set forth in Section 8.2(a).

 

“Parent SECFilings” shall have the meaning set forth in Section 4.6(a).

 

“ParticipatingHolders” shall mean the Eligible Company Holders (other than CeridianCorporation and Global Accelerator) who, at the Effective Time, qualify as “accreditedinvestors” (as defined in the Securities Act) and thus are entitled to receivecash and Parent Company Stock pursuant to Section 2.7(a)(iv).

 

“Party”means any of Parent, Merger Sub, the Company or any Principal Stockholder.  “Parties” means Parent, Merger Sub,the Company and the Principal Stockholders.

 

“PatentApplications” shall have the meaning set forth in Section 3.11(a)(ii).

 

“Patents”shall have the meaning set forth in Section 3.11(a)(ii).

 

“PendingClaim” shall have the meaning set forth in Section 2.8(d).

 

“PendingClaim Holdback” shall have the meaning set forth in Section 2.8(d).

 

“Per ShareMerger Consideration” shall mean the quotient of the Adjusted Company Valuedivided by the Adjusted Fully Diluted Share Amount.

 

“Permit”shall mean any franchise, authorization, license, permit, approval, permission,grant, consent or certificate from any Person.

 

“PermittedEncumbrances” means: (a) statutory liens for Taxes not yet due; (b) mechanics’,carriers’, workers’, repairers’ and other similar liens arising or incurred inthe ordinary course of business relating to obligations as to which there is nodefault on the part of the Company Parties; (c) pledges, deposits or otherliens securing the performance of bids, trade contracts, leases or statutoryobligations (including workers’ compensation, unemployment insurance or othersocial security legislation) as to which there is no default on the part of theCompany Parties; (d) zoning, entitlement, conservation restriction andother land use and environmental regulations by Governmental Bodies of generalapplication and as to which there is no default on the part of the CompanyParties; and (e) the exceptions, easements, rights-of-way and otherEncumbrances listed on Schedule 1.1.

 

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“Person”means any natural person, corporation, unincorporated organization,partnership, association, joint stock company, joint venture, limited liabilitycompany, trust or government, or any other entity or any Governmental Body.

 

“Pre-ClosingBalance Sheet” shall have the meaning set forth in Section 2.13(a).

 

“Pre-ClosingDistribution” shall have the meaning set forth in Section 2.13(b).

 

“Pre-ClosingNet Working Capital” shall have the meaning set forth in Section 2.13(a).

 

“PrincipalStockholders” shall mean Snehal Shah, Fenil Shah, Chimanlal Shah, SarlaSoftware LLC and Sarla Infotech.

 

“PrivacyStatements” shall have the meaning set forth in Section 3.29(a)(ii).

 

“Proceeding”means any lawsuit, arbitration, hearing, audit, inquiry, examination,investigation, cause of action, complaint, claim, demand letter or inquiry orany civil, administrative, investigative, appellate or criminal action, suit orproceeding or governmental investigation.

 

“ProposedClosing Balance Sheet” shall have the meaning set forth in Section 2.13(c).

 

“ProposedClosing Net Working Capital Statement” shall have the meaning set forth in Section 2.13(c).

 

“Public Software”means any software that contains, or is derived in any manner (in whole or inpart) from, any software that is distributed as free software (as defined bythe Free Software Foundation), open source software (e.g., Linux or softwaredistributed under any license approved by the Open Source Initiative as setforth www.opensource.org) or similar licensing or distribution models whichrequires the distribution of source code to licensees, including softwarelicensed or distributed under any of the following licenses or distributionmodels, or licenses or distribution models similar to any of the following: (i) GNU’sGeneral Public License (GPL) or Lesser/Library GPL (LGPL); (ii) theArtistic License (e.g., PERL); (iii) the Mozilla Public License; (iv) theNetscape Public License; (v) the Sun Community Source License (SCSL); (vi) theSun Industry Standards License (SISL); (vii) the BSD License; or (viii) theApache License.

 

“RCRA”shall have the meaning set forth in Section 3.21(a)(i).

 

“RealProperty” shall have the meaning set forth in Section 3.20(c).

 

“RealProperty Leases” shall have the meaning set forth in Section 3.20(e).

 

“RegistrationRights Agreement” shall have the meaning set forth in Section 5.6.

 

“RelatedDocuments” shall have the meaning set forth in Section 8.1.

 

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“RequiredDebt Payments” shall mean the sum of (a) all debts of the Company(other than current accounts payable and current accruals, in each case in theordinary course of business) immediately prior to the Effective Time, (b) allpayments owing to holders of options, stock appreciation rights or othersimilar equity interests, and (c) all severance payments due as of theClosing or as a result of the Contemplated Transactions.

 

“Representative”shall mean, with respect to a particular Person, any director, officer,employee, agent, consultant, advisor or other representative of such Person,including legal counsel, accountants and financial advisors.

 

“SEC”shall mean the Securities and Exchange Commission of the United States.

 

“SecuritiesAct” shall mean the Securities Act of 1933, as amended, including all rules andregulations related thereto or promulgated thereunder.

 

“SpecialBasket” shall have the meaning set forth in Section 8.6(b).

 

“SpecialIndemnity Expiration Date” shall mean the date that is thirty (30) monthsafter the Closing Date.

 

“SpecialIndemnity Insurance” shall have the meaning set forth in Section 5.14.

 

“SpecialInsurance Claim” shall have the meaning set forth in Section 8.6(b).

 

“StipulatedClosing Net Working Capital Statement” shall have the meaning set forth in Section 2.13.

 

“SoftwarePrograms” shall have the meaning set forth in Section 3.11(a)(vii).

 

“StockConsideration” shall mean the portion of the Merger Consideration payablein Parent Common Stock.

 

“StockholderRepresentative” shall have the meaning set forth in Section 8.5(b).

 

“Subsidiary”shall mean with respect to a Person, any other Person with respect to whichsuch first Person directly or indirectly owns, beneficially or of record, atleast fifty percent (50%) of the outstanding equity or financial interests ofsuch other Person.

 

“SurvivingCorporation” shall have the meaning set forth in Section 2.1.

 

“Taxes”shall mean all tax liabilities of any kind, levies or other like assessmentspayable to federal, state, commonwealth, local, foreign and any other taxingauthority in any jurisdiction, including income (personal or corporate), netincome, gross income, gross receipts, sales, use, ad valorem, transfer, capitalstock, capital taxes, franchise, profits, license, lease, service, add on oralternative minimum tax, occupancy, withholding, payroll, fringe benefits,employment, employees’ income withholding, foreign or domestic withholding,unemployment, disability, excise, severance, stamp (both on the issuance and onthe transfer of securities), value added, goods and services, occupation,premium, property (including real property and personal 

 

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property taxesand any assessments, special or otherwise), environmental, windfall profits,customs, duties or other taxes, imposts, fees, assessments, levies, tariffs, orcharges of any kind whatever, together with any interest, costs, expenses andany penalties, additions to tax or additional amounts with respect thereto,including any obligation to indemnify or otherwise assume or succeed to the taxliability of any other Person, whether by contract, statute or otherwise (and “Tax”means any one of the foregoing Taxes).

 

“Tax Return”shall mean any return, declaration, report, form or similar statement requiredto be filed with respect to any Tax (including any attached schedules),including any information return, claim for refund, amended return ordeclaration of estimated Tax.

 

“Terms andConditions” shall have the meaning set forth in Section 3.29(a)(iii).

 

“TradeSecrets” shall have the meaning set forth in Section 3.11(a)(viii).

 

“TotalStock Payment Amount” shall mean the number of shares of Parent CompanyStock equal to the Adjusted Stock Payment Value divided by the Average ClosingPrice.

 

“Trademarks”shall have the meaning set forth in Section 3.11(a)(v)

 

“TriggeringEvent” shall be deemed to have occurred if: (i) the Company, any ofits Affiliates or any Representatives violates any of the requirements orrestrictions in Section 5.2; (ii) the Company’s Board ofDirectors publicly recommends to the Company’s stockholders any AcquisitionProposal; (iii) the Company enters into any agreement, letter of intent orsimilar document contemplating or otherwise relating to any merger,consolidation, share exchange, business combination, sale of all orsubstantially all of the assets, sale of shares of capital stock or similartransactions involving any Company Party, other than the ContemplatedTransactions; or (iv) the Company’s Board of Directors withdraws, ormaterially and adversely modifies, its recommendation of the Merger or thisAgreement (it being understood that for all purposes of this Agreement, thefact that the Company has supplied any Person with any information regardingthe Company or has entered into discussion or negotiation with such Person aspermitted by this Agreement or the public disclosure of such facts, shall notbe deemed a withdrawal or modification of the Company’s Board of Directors’recommendation of the Merger or this Agreement).

 

“VotingAgreement” shall have the meaning set forth in the Recitals.

 

“WorkingCapital Deficit” shall have the meaning set forth in Section 2.13(e).

 

“WorkingCapital Purchase Price Reduction” shall have the meaning set forth in Section 2.13(b).

 

“WorkingCapital Surplus” shall have the meaning set forth in Section 2.13(e).

 

## Section 1.2             Interpretation.

##  

### (a)           The terms “Article,” “Section,”“Recital,” “Schedule” and “Exhibit” refer to the specified Article, Section,Recital, Schedule or Exhibit of this Agreement.

 

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### (b)           Whenever the words “include”,“includes” or “including” (or any variation thereof) are used in thisAgreement, they shall be deemed to be followed by the words “withoutlimitation,” and shall not be construed to limit any general statement whichany such word follows to the specific or similar items or matters immediatelyfollowing such word, unless otherwise expressly stated.

###  

### (c)           The words “hereof”, “herein”and “herewith” and words of similar import shall, unless otherwise stated, beconstrued to refer to this Agreement as a whole and not to any particularprovision of this Agreement.

###  

### (d)           The plural of anydefined term shall have a meaning correlative to such defined term, and wordsdenoting any gender shall include all genders. Where a word or phrase isdefined herein, each of its other grammatical forms shall have a correspondingmeaning.

###  

### (e)           A reference to anyparty to this Agreement or any other agreement or document shall include suchparty’s permitted successors, assigns and transferees.

###  

### (f)            A reference to anyApplicable Law or to any provision of any Applicable Law shall include anyamendment, modification or re-enactment thereof, any legislative provisionsubstituted therefor and all regulations and statutory instruments issuedthereunder or pursuant thereto.

###  

### (g)           The Parties haveparticipated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question ofintent or interpretation arises, this Agreement shall be construed as ifdrafted jointly by the Parties, and no presumption or burden of proof shallarise favoring or disfavoring any Party by virtue of the authorship of anyprovision of this Agreement.

###  

# ARTICLE II

#  

# THE MERGER

#  

## Section 2.1             The Merger.  Upon the terms and subject to the conditionsset forth in this Agreement and the applicable provisions of the DGCL, on theClosing Date and at the Effective Time Merger Sub shall be merged with and intothe Company, the separate corporate existence of Merger Sub shall thereuponcease and the Company shall continue as the surviving corporation of theMerger.  The Company, as the surviving corporationof the Merger, is sometimes referred to herein as the “Surviving Corporation.”

##  

## Section 2.2             The Closing.  The consummation of the Merger (the “Closing”)shall take place at a closing to occur at the offices of Winstead PC, 5400Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270, on a date and at atime to be agreed upon by Parent and the Company, which date shall be no laterthan the second (2nd) Business Day after the satisfaction or waiver (to theextent permitted hereunder) of the last to be satisfied or waived of theconditions set forth in Article VI (other than those conditionsthat by their terms are to be satisfied at the Closing, but subject to thesatisfaction or waiver (to the extent permitted 

 

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##  

## hereunder), of such conditions), or at suchother location, date and time as Parent and the Company shall mutually agreeupon in writing. The date upon which the Closing shall actually occur pursuanthereto is referred to herein as the “Closing Date.”

##  

## Section 2.3             The Effective Time.  Upon the terms and subject to the conditionsset forth in this Agreement, on the Closing Date, Parent and the Company shallcause the Merger to be consummated under the DGCL by filing a certificate ofmerger in customary form and substance (the “Certificate of Merger”)with the Secretary of State of the State of Delaware (the “DelawareSecretary of State”) in accordance with the applicable provisions of theDGCL.  The time of such filing andacceptance by the Delaware Secretary of State, or such later time as may beagreed in writing by Parent and the Company and specified in the Certificate ofMerger is referred to herein as the “Effective Time.”

##  

## Section 2.4             Effect of the Merger.  The effect of the Merger shall be as providedin this Agreement and the applicable provisions of the DGCL.  Without limiting the generality of theforegoing, and subject thereto, at the Effective Time all of the property,rights, privileges, powers and franchises of the Company and Merger Sub shallvest in the Surviving Corporation, and all debts, liabilities and duties of theCompany and Merger Sub shall become the debts, liabilities and duties of theSurviving Corporation.

##  

## Section 2.5             Certificate ofIncorporation and Bylaws.

##  

### (a)           Certificate ofIncorporation.  At the EffectiveTime, the Certificate of Incorporation of the Company shall be amended andrestated in its entirety to read identically to the Certificate ofIncorporation of Merger Sub, as in effect immediately prior to the EffectiveTime, and such amended and restated Certificate of Incorporation shall becomethe Certificate of Incorporation of the Surviving Corporation until thereafteramended in accordance with the applicable provisions of the DGCL and suchCertificate of Incorporation; provided, however, that at theEffective Time the Certificate of Incorporation of the Surviving Corporationshall be amended so that the name of the Surviving Corporation shall be  “iEmployee Inc.” or such other name as Parentshall select.

###  

### (b)           Bylaws.  At the Effective Time, the Bylaws of MergerSub, as in effect immediately prior to the Effective Time, shall become theBylaws of the Surviving Corporation until thereafter amended in accordance withthe applicable provisions of the DGCL, the Certificate of Incorporation of theSurviving Corporation and such Bylaws.

###  

## Section 2.6             Directors andOfficers.

##  

### (a)           Directors.  At the Effective Time, the initial directorsof the Surviving Corporation shall be the directors of Merger Sub immediatelyprior to the Effective Time, each to hold office in accordance with theCertificate of Incorporation and Bylaws of the Surviving Corporation untiltheir respective successors are duly elected or appointed and qualified.

 

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###  

### (b)           Officers.  At the Effective Time, the initial officersof the Surviving Corporation shall be the officers of Merger Sub immediatelyprior to the Effective Time, each to hold office in accordance with theCertificate of Incorporation and Bylaws of the Surviving Corporation untiltheir respective successors are duly appointed.

###  

## Section 2.7             Effect onOutstanding Capital Stock and Options.

##  

### (a)           Capital Stock of theCompany.  Upon the terms and subjectto the conditions set forth in this Agreement (including the conditions of Section 2.7(b)),at the Effective Time, by virtue of the Merger and without any action on thepart of Parent, Merger Sub, the Company, or the holders of any of the followingsecurities, the following shall occur:

###  

#### (i)            Common Stock Heldby Ceridian.  The 5,720,934 shares ofCompany Common Stock held by Ceridian Corporation immediately prior to theEffective Time (the “Ceridian Company Shares”) shall be converted intothe right to receive the Ceridian Cash Payment and the Ceridian Stock Payment.

####  

#### (ii)           Common Stock Held byGlobal Accelerator.  The 2,899,979shares of Company Common Stock held by Global Accelerator immediately prior tothe Effective Time (the “Global Accelerator Company Shares”) shall beconverted into the right to receive the Global Accelerator Stock Payment.

####  

#### (iii)          Common Stock Held byNon-Participating Holders.  Eachshare of Company Common Stock that is held by a Non-Participating Holder andthat is outstanding immediately prior to the Effective Time shall be canceledand extinguished and automatically converted into the right to receive cash inan amount equal to the product of (A) the quotient of one (1) dividedby the Adjusted Fully Diluted Share Amount, multipliedby (B) theAdjusted Company Value.

####  

#### (iv)          Common Stock Held byParticipating Holders.  Each share ofCompany Common Stock that is held by a Participating Holder and is outstandingimmediately prior to the Effective Time shall be canceled and extinguished andautomatically converted into the right to receive the following consideration:

####  

##### (A)          Cash in an amount equalto the product of (I) the quotient of one (1) divided by the AdjustedFully Diluted Share Amount, multiplied by (II) the Adjusted Net CashPayment Amount; and

#####  

##### (B)           The number of shares ofParent Common Stock equal to the product of (I) the quotient of one (1) dividedby the Adjusted Fully Diluted Share Amount, multiplied by (II) theAdjusted Stock Payment Amount.

#####  

### (b)           Capital Stock ofMerger Sub.  Each share of capitalstock of Merger Sub that is outstanding immediately prior to the Effective Timeshall be converted into one validly issued, fully paid and nonassessable shareof common stock of the Surviving 

 

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###  

### Corporation. Each certificate evidencing ownership of such shares of capital stock ofMerger Sub shall thereafter evidence ownership of shares of common stock of theSurviving Corporation.

###  

### (c)           CompanyOptions.

###  

#### (i)            In-the-MoneyOptions.  As of the Effective Time,by virtue of the Merger and without any action on the part of any holderthereof, each Company Stock Option with an exercise price per share ofunderlying Company Common Stock which is less than the Per Share MergerConsideration (each, an “In-the-Money Option”) shall be canceled andextinguished and automatically converted into the right (subject to Section 2.9(b))to receive the following consideration (the “In-the-Money OptionConsideration”) (upon payment of the applicable exerciseprice for such In-the-Money Option, which in all instances shall be deductedfrom the aggregate amount of the In-the-Money Option Consideration otherwisepayable to such holder, such that the right of each holder of an In-the-MoneyOption to receive such holder’s portion of the In-the-Money Option Considerationwill be “cashless” to such holder):

####  

##### (A)          Cash in the amountotherwise payable in respect of all shares of Company Common Stock subject tosuch In-the-Money Option (assuming for this purpose, full acceleration ofvesting as of immediately prior to the Effective Time); and

#####  

##### (B)           The number of shares ofParent Common Stock otherwise payable in respect of all shares of CompanyCommon Stock subject to such In-the-Money Option (assuming for this purpose,full acceleration of vesting as of immediately prior to the Effective Time).

#####  

#### (ii)           Other Options.  As of the Effective Time, by virtue of theMerger and without any action on the part of any holder thereof, each CompanyStock Option which is not an In-the-Money Option shall be terminated andcanceled, and no payment or distribution shall be made with respect thereto.

####  

#### (iii)          Provisions forOptions.  The Company shalltake all actions necessary to ensure that (A) the Company Stock Optionsare, as of the Effective Time, modified as provided in the foregoingsubsections (i) and (ii) and the following subsection (iv), (B) exceptwith respect to the In-the-Money Options, the Company Stock Plan is terminatedas of the Effective Time, (C) the provisions in any other plan, program orarrangement of the Company providing for the issuance or grant of any otherinterest in respect of the capital stock of the Company shall be terminated asof the Effective Time, (D) following the Effective Time, no participant inany other plans, programs or arrangements of the Company shall have any rightthereunder to acquire or participate in changes in value of equity securitiesof the Company, the Surviving Corporation, Merger Sub or any of theirrespective Subsidiaries, and (E) all such other plans, programs orarrangements of the Company are terminated effective as of the Effective Time.

 

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#### (iv)          Acceleration of Vesting; Termination of Right of Repurchase.  The Parties acknowledge andagree that, with respect to any and all shares of Company Common Stock(including shares which may be issued upon the exercise of In-the-MoneyOptions) and all Company Stock Options, all vesting conditions with respectthereto shall be deemed to have fully accelerated, and any rights of repurchaseor other similar restrictions or limitations with respect thereto shall bedeemed to have fully lapsed, as of immediately prior to the Effective Time.

####  

### (d)           Fractional Shares.  No fraction of a share of Parent Common Stockwill be issued by virtue of the Merger, but in lieu thereof each holder ofrecord of shares of Company Common Stock (including shareswhich may be issued upon the exercise of In-the-Money Options) who wouldotherwise be entitled to a fraction of a share of Parent Common Stock pursuantto this Section 2.7 (after aggregating all fractional shares ofParent Common Stock that otherwise would be received by such holder of record)shall, upon the surrender of the certificate, if any, representing such shareof Company Common Stock in the manner provided in Section 2.9 (orin the case of a lost, stolen or destroyed certificate, upon delivery of anaffidavit (and bond, if required) in the manner provided in Section 2.9),receive from Parent an amount of cash (rounded to the nearest whole cent),without interest, equal to the product obtained by multiplying such fraction bythe Average Closing Price of Parent Common Stock.

###  

## Section 2.8             Escrow Account.

##  

### (a)           Escrow Fund.

###  

#### (i)            Parent will, prior to the Closing and pursuant to the terms of theEscrow Agreement substantially in the form attached hereto as Exhibit A,with such changes as may be requested or required by the Escrow Agent (the “EscrowAgreement”), deposit the Cash Escrow and the Escrow Stock withJPMorganChase or such other financial institution reasonably acceptable to theCompany as Parent shall determine (the “Escrow Agent”).  The Cash Escrow will be held in aninterest-bearing escrow account (the “Escrow Account”).  The Escrow Stock shall be registered in thename of, and be deposited with, the Escrow Agent.  The amounts in the Escrow Account and numberof shares of Escrow Stock shall be known collectively as the “Escrow Fund.”

####  

#### (ii)           In the event Parentissues any Additional Escrow Stock, such shares will be issued in the name ofthe Escrow Agent and delivered to the Escrow Agent in the same manner as theEscrow Stock delivered at the Closing.

####  

#### (iii)          Except for dividendspaid in stock declared with respect to the Escrow Stock (the “AdditionalEscrow Stock”), which shall be treated as Escrow Stock pursuant to Section 2.8(a),any cash dividends, dividends payable in securities or other distributions ofany kind made in respect of the Escrow Stock will be delivered to theapplicable Eligible Company Holders (subject to Section 2.9(b)) ona pro rata basis.  Each applicableEligible Company Holder

 

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####  

#### will have voting rights withrespect to the Escrow Stock deposited into the Escrow Fund with respect to suchEligible Company Holder so long as such shares are held in escrow, and Parentwill take all reasonable steps necessary to allow the exercise of such rights.  While the Escrow Stock remains in the EscrowAgent’s possession pursuant to this Agreement, the applicable Eligible CompanyHolders will retain and be able to exercise all other incidents of ownership ofsaid Escrow Stock which is not inconsistent with the terms and conditions ofthis Agreement.

####  

### (b)           Retention and Release.  The Escrow Fund shall be held by the EscrowAgent for the benefit of Parent and all Eligible Company Holders pursuant tothe terms of this Agreement and the Escrow Agreement.  Any consideration to be distributed from theEscrow Fund to the Eligible Company Holders will be distributable to suchEligible Company Holders, subject to Section 2.9(b), on a prorata basis, based upon their relative entitlement or assumed entitlement toreceive Merger Consideration as contemplated by Sections 2.7 and 2.9.  All distributions shall includea ratio of cash and Parent Common Stock such that the ratio of cash to ParentCommon Stock remaining after the distribution is equivalent to the ratio ofcash to Parent Common Stock before the distribution (with the value of ParentCommon Stock used to calculate such ratio and each distribution (to theEligible Company Holders or any indemnified party) being the Average ClosingPrice).  Subject to the indemnificationrights of Parent described in Article VIII, the Escrow Fund shallbe distributable as follows:

###  

#### (i)            the amount by which the Available Escrow Amount (immediately prior tosuch distribution), exceeds seven and one-half percent (7.5%) of the MergerConsideration shall be distributed to the Eligible Company Holders on the datewhich is twelve (12) months after the Closing Date (the “First EscrowRelease Date”);

####  

#### (ii)           all remainingAvailable Escrow Amount and any other amounts which shall have been deliveredinto the Escrow Account shall be distributed to the Eligible Company Holders onthe date which is eighteen (18) months after the Closing Date (the “FinalEscrow Release Date”); and

####  

#### (iii)          any further amountswhich, following the Final Escrow Release Date, shall be delivered into theEscrow Account or otherwise become available for distribution to the EligibleCompany Holders (including amounts which may previously have been withheld dueto a Pending Claim Holdback where final resolution of the related Pending Claimyields less than a full payment of the amount at issue to Parent), togetherwith all interest which has accrued thereon, shall be distributed to theEligible Company Holders immediately following the date any such amount shallbe so delivered or otherwise become so available.

###  

### (c)           Non-assignable Interest.  The interests of an Eligible Company Holder in the Escrow Fund will notbe assignable or transferable by such Eligible Company Holder unless and untilreleased pursuant to the terms of the Escrow Agreement.

 

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### (d)           Pending Claim Holdbacks.  In the event Parent has made, in accordancewith Section 8.2, a claim for indemnification in a Parent ClaimNotice, and such claim has been objected to as provided in Article VIIIand has not otherwise been finally determined (a “Pending Claim”), theEscrow Agent shall withhold from distribution a portion of the Escrow Fundequal to the Damages at issue (such amount being a “Pending Claim Holdback”)until such time as either the Pending Claim has been finally determined or theobjection resolved, as applicable, in which case the appropriate amounts willbe either distributed to Parent or retained in the Escrow Fund (fordistribution to the applicable Eligible Company Holders as provided in Section 2.8(b)),or both, as the case may be.

###  

### (e)           Inability to Deliver.  If the Escrow Agent is not able to deliverany portion of the Escrow Fund to the proper recipient within one (1) yearof the date that final distribution of any remaining portion of the Escrow Fundshould otherwise have been made pursuant to Section 2.8(b) (orimmediately prior to such earlier date on which any payment in respect thereofwould otherwise escheat to or become the property of any Governmental Body),such portion of the Escrow Fund shall be delivered to Parent and the proper recipient shall thereafterlook only to Parent, and only as a general creditor, for payment of suchrecipient’s claim for such portion of the Escrow Fund, subject to applicableabandoned property, escheat and similar Laws.

###  

## Section 2.9             Exchange ofClosing Consideration at Closing.

##  

### (a)           Subject to Section 2.9(b),at the Closing, upon the surrender by each Eligible Company Holder of his orher Certificates and delivery of such other documents as may reasonably berequired by Parent (such as a lost share certificate affidavit, whereapplicable), the Certificate(s) so surrendered shall be canceled and theIn-the-Money Option(s) at issue shall be deemed exercised and the holderof such Certificate(s) or In-the-Money Option(s) shall be entitled toreceive in exchange therefor (collectively, the “Closing Consideration”):

###  

#### (i)            CeridianCorporation.  Ceridian Corporationshall receive from Parent the following: (x) a check or, if requested, a wire transfer of immediatelyavailable funds, in the amount of the Ceridian Cash Payment minusCeridian’s pro rata share of the Cash Escrow, being an amount equal to the CashEscrow multipliedby the quotient of (A) the total amount ofcash Merger Consideration which Ceridian is entitled to receive under Section 2.7,dividedby (B) the total amount of cash Merger Considerationwhich all Eligible Company Holders are entitled to receive under Section 2.7;(y) a stock certificate representing the number of shares of ParentCompany Stock equal to the Ceridian Stock Payment, minus Ceridian’s pro rata share of the Escrow Stock, being an amount equal tothe Escrow Stock multipliedby the quotient of (A) thenumber of shares of Parent Common Stock which Ceridian is entitled to receiveunder Section 2.7, divided by (B) the total number of sharesof Parent Common Stock which all Eligible Company Holders are entitled toreceive under Section 2.7 (with such number of shares being roundedto the next lowest whole number so as to eliminate any fractional shares);and (z) a check or, if requested, a wire transfer of immediately

 

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#### available funds, representing the amount ofcash payable in lieu of any fractional shares pursuant to Section 2.7(d);

####  

#### (ii)           Global Accelerator.  Global Accelerator shall receive from Parentthe following:  (x) a stockcertificate representing the number of shares of Parent Company Stock equal tothe Global Accelerator Stock Payment, minus Global Accelerator’s pro rata share of the Escrow Stock, being anamount equal to the Escrow Stock multipliedby the quotient of (A) thenumber of shares of Parent Common Stock which Global Accelerator is entitled toreceive under Section 2.7, divided by (B) the total number ofshares of Parent Common Stock which all Eligible Company Holders are entitledto receive under Section 2.7 (with such number of shares beingrounded to the next lowest whole number so as to eliminate any fractionalshares); and (y) a check or, if requested, a wire transfer ofimmediately available funds, representing the amount of cash payable in lieu ofany fractional shares pursuant to Section 2.7(d);

####  

#### (iii)          Non-ParticipatingHolders.  Each Non-ParticipatingHolder shall receive from Parent a check or, if requested, a wire transfer ofimmediately available funds, in an amount equal to the amount of cash MergerConsideration which he is entitled to receive under Section 2.7(a)(iii) minushis pro rata share of the Cash Escrow, being an amount equal to the Cash Escrowmultipliedby the quotient of (A) the total amount of cashMerger Consideration which such Non-Participating Holder is entitled to receiveunder Section 2.7, dividedby (B) the totalamount of cash Merger Consideration which all Eligible Company Holders areentitled to receive under Section 2.7;

####  

#### (iv)          Participating Holders.  Each Participating Holdershall receive from Parent the following: (x) a check or, if requested, awire transfer of immediately available funds, in an amount equal to the amountof cash Merger Consideration which he is entitled to receive under Section 2.7(a)(iv) minushis pro rata share of the Cash Escrow, being an amount equal to the Cash Escrowmultipliedby the quotient of (A) the total amount of cashMerger Consideration which such Participating Holder is entitled to receiveunder Section 2.7, divided by (B) the total amount of cashMerger Consideration which all Eligible Company Holders are entitled to receiveunder Section 2.7; (y) a stock certificate representing thenumber of shares of Parent Common Stock which he is entitled to receive under Section 2.7(a)(iv) minushis pro rata share of the Escrow Stock, being an amount equal to the EscrowStock multipliedby the quotient of (A) the number of sharesof Parent Common Stock which such Participating Holder is entitled to receiveunder Section 2.7, divided by (B) the total number of sharesof Parent Common Stock which all Eligible Company Holders are entitled toreceive under Section 2.7, (with such number of shares beingrounded to the next lowest whole number so as to eliminate any fractionalshares); and (z) a check or, if requested, a wire transfer of immediatelyavailable funds, representing the amount of cash payable in lieu of anyfractional shares pursuant to Section 2.7(d); and

 

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#### (v)           In-the-Money OptionHolders.  Each holder of anIn-the-Money Option shall receive the following (upon payment of theapplicable exercise price for such In-the-Money Option, which in all instancesshall be deducted from the aggregate amount of the In-the-Money OptionConsideration otherwise payable to such holder, such that the right of eachholder of an In-the-Money Option to receive such holder’s portion of theIn-the-Money Option Consideration will be “cashless” to such holder): (x) a check or, if requested, a wire transfer of immediatelyavailable funds, in an amount equal to the amount of cash Merger Considerationwhich he is entitled to receive under Section 2.7(c)(i) minushis pro rata share of the Cash Escrow, being an amount equal to the Cash Escrowmultipliedby the quotient of (A) the total amount of cashMerger Consideration which such In-the-Money Option Holder is entitled toreceive under Section 2.7 (assuming for this purpose, fullacceleration of vesting as of immediately prior to the Effective Time), divided by (B) the total amount of cash Merger Considerationwhich all Eligible Company Holders are entitled to receive under Section 2.7;(y) a stock certificate representing the number of shares of Parent CommonStock which he is entitled to receive under Section 2.7(c)(i) minushis pro rata share of the Escrow Stock, being an amount equal to the EscrowStock multipliedby the quotient of (A) the number of sharesof Parent Common Stock which such In-the-Money Option Holder is entitled toreceive under Section 2.7, divided by (B) the total number ofshares of Parent Common Stock which all Eligible Company Holders are entitledto receive under Section 2.7 (with such number of shares beingrounded to the next lowest whole number so as to eliminate any fractionalshares); and (z) a check or, if requested, a wire transfer of immediatelyavailable funds, representing the amount of cash otherwise payable in lieu ofany fractional shares pursuant to Section 2.7(d).

####  

### (b)           Adjustment of MergerConsideration.  Notwithstandinganything herein to the contrary and in addition to the rights set forth in Section 7.1(e):

###  

#### (i)            With respect to anyEligible Company Holder (other than Ceridian Corporation and GlobalAccelerator) that is not an “accredited investor” (as defined in the SecuritiesAct) (each, a “Non-Participating Holder”), Parent shall have the rightin its sole and absolute discretion to pay such Non-Participating Holder all ofsuch Non-Participating Holder’s applicable portion of the Merger Consideration(with respect to any consideration otherwise payable at Closing and withrespect to any consideration to be placed in escrow) in cash.

####  

#### (ii)           If the Average ClosingPrice of the Parent Common Stock as of the Closing Date drops to a price that,as otherwise contemplated by this Agreement, would require the Company tosolicit the approval of its stockholders pursuant to Section 4350(i) ofthe NASDAQ Rules, Parent shall have the right in its sole and absolutediscretion to pay some or all of the value of the Stock Consideration in cash(the “Elective Cash Payment”).  Inthe event that Parent elects to pay some or all of the value of the StockConsideration in cash, then the definition of Total Stock Payment Amount shallbe modified such that the number $5,100,000 shall be reduced by the amount ofthe Elective Cash Payment and the definition of Net

 

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#### Cash Payment Amount shall be modified suchthat the number $5,600,000 shall be increased by the amount of the ElectiveCash Payment.

####  

### (c)           Limited Right; Dividends after the Effective Time.  Each In-the-Money Option and,until surrendered as contemplated by this Section 2.9, each Certificateshall be deemed at any time after the Effective Time to represent only theright to receive the Merger Consideration that the holder thereof has the rightto receive pursuant to the provisions of this Article II.  Except with respect to amounts that may bereleased from the Escrow Fund to Eligible Company Holders, no interest shall bepaid or will accrue on any cash payable to Eligible Company Holders pursuant tothe provisions of this Article II. In the event that any dividends accrue or become payable from andafter the Effective Time with respect to any shares of Parent Common Stock tobe issued as part of the Merger Consideration, then any recipient of suchshares as contemplated by this Article II shall be entitled theretoas though such recipient had been the holder of record of such shares as of theEffective Time.  No dividends or otherdistributions declared or made with respect to Parent Common Stock with arecord date after the Effective Time shall be paid to the holder of anyunsurrendered Certificate with respect to the shares of Parent Common Stockthat such holder has the right to receive in the Merger until such holdersurrenders such Certificate in accordance with this Section 2.9, atwhich time such holder shall be entitled, subject to the effect of applicableescheat or similar Laws, to receive all such dividends and distributions,without interest.

###  

### (d)           No Further Ownership Rights in Company Capital Stock.  The Merger Consideration shallbe deemed to have been paid in full satisfaction of all rights pertaining tothe shares of Company Common Stock theretofore represented by suchCertificates, subject, however, to Parent’s obligation to pay the MergerConsideration pursuant to the terms of this Article II (and, asapplicable with respect to Company Common Stock, a portion of any WorkingCapital Surplus as set forth in Section 2.13), and there shall beno further registration of transfers on the stock transfer books of theSurviving Corporation of the shares of Company capital stock which wereoutstanding immediately prior to the Effective Time.  If, after the Effective Time, Certificatesare presented to the Surviving Corporation or Parent for any reason, they shallbe canceled and exchanged as provided in this Article II, except asotherwise provided by Applicable Law.

###  

### (e)           Termination of Rights as Stockholders.  Any Eligible Company Holders who fail tocomply with this Article II at or prior to the Closing shallthereafter look only to Parent, and only as a general creditor, for payment oftheir claim for their portion of the Merger Consideration without interest(except such interest actually accrued on such delivered amount through thedate delivered to Parent).

###  

### (f)            No Liability.  None of the Parties shall be liable to anyPerson in respect of any Merger Consideration (or dividends or distributionswith respect thereto) delivered to a public official pursuant to any applicableabandoned property, escheat or similar Law.

 

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### (g)           Lost Certificates.  If any Certificate shall have been lost,stolen or destroyed, upon (i) the delivery of a letter of transmittal, inform and substance reasonably acceptable to Parent and the SurvivingCorporation, stating such fact, (ii) the making of an affidavit, in formand substance reasonably acceptable to Parent and the Surviving Corporation, ofsuch fact by the Person claiming such Certificate to be lost, stolen ordestroyed, (iii) evidence, in form and substance reasonably acceptable toParent and the Surviving Corporation, that such Person is the beneficial ownerof the Certificate claimed to be lost, stolen or destroyed, and, (iv) ifrequired by Parent or the Surviving Corporation following the Effective Time,the making of an indemnity by such Person against any claim, or posting of acustomary bond in such reasonable amount as Parent or the Surviving Corporationmay require as indemnity against any claim, that may be made against the Parentor the Surviving Corporation with respect to such Certificate, Parent shall,pursuant to the terms and conditions of this Agreement, issue in exchange forsuch lost, stolen or destroyed Certificate the portion of the MergerConsideration into which such Certificate has been converted.

###  

### (h)           Certificate Legends.  The shares of Parent Common Stock to beissued pursuant to Section 2.7 shall not have been registered andshall be characterized as “restricted securities” under the federal securitiesLaws, and under such Laws such shares may be resold without registration underthe Securities Act only in certain limited circumstances.  Each certificate evidencing shares of ParentCommon Stock to be issued pursuant to Section 2.7 shall bear thefollowing legend:

###  

“THE SHARESREPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH SHARES MAY NOT BE SOLD OR OTHERWISETRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION WITHOUT AN OPINION OF LEGALCOUNSEL OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCHREGISTRATION IS NOT REQUIRED.”

 

and anylegends required by applicable state securities Laws.

 

## Section 2.10           Withholding Rights.  Parent shall be entitledto deduct and withhold from the Merger Consideration otherwise payable pursuantto this Agreement to any Eligible Company Holder such amounts as the SurvivingCorporation or Parent is required to deduct and withhold with respect to themaking of such payment under the Code, or any Applicable Law.  To the extent that amounts are so withheld bythe Surviving Corporation or Parent, such withheld amounts shall be treated forall purposes of this Agreement as having been paid to the holder in respect ofwhich such deduction and withholding was made.

##  

## Section 2.11           Appraisal Rights.

##  

### (a)           The Company shalltimely notify all eligible stockholders of the Company of their appraisalrights in accordance with Section 262 of the DGCL.

 

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### (b)           Notwithstanding anyprovision of this Agreement to the contrary, shares of Company Common Stockthat are outstanding immediately prior to the Effective Time and which are heldby stockholders who have exercised and perfected appraisal rights for suchshares of Company capital stock in accordance with the DGCL (collectively, the “DissentingShares”) shall not be converted into or represent the right to receive thePer Share Merger Consideration attributable to such Dissenting Shares.  Such stockholders shall be entitled toreceive payment of the appraised value of such shares of Company Common Stockheld by them in accordance with the DGCL, unless and until such stockholdersfail to perfect or effectively withdraw or otherwise lose their appraisalrights under the DGCL.  All DissentingShares held by stockholders who shall have failed to perfect or who effectivelyshall have withdrawn or lost their right to appraisal of such shares of CompanyCommon Stock under the DGCL shall thereupon be deemed to be converted into andto have become exchangeable for, as of the Effective Time, the right to receivethe Per Share Merger Consideration attributable to such Dissenting Shares upontheir surrender in the manner provided in Section 2.9.

###  

### (c)           The Company or theSurviving Corporation shall give Parent prompt written notice of any demands bydissenting stockholders received by the Surviving Corporation or the Company,withdrawals of such demands and any other instruments served on the Company orthe Surviving Corporation and any material correspondence received by theSurviving Corporation or the Company in connection with such demands, andParent shall have the right to direct all negotiations and proceedings withrespect to such demands.  Neither theCompany nor the Surviving Corporation shall, except with the prior writtenconsent of Parent, make any payment with respect to any demands for appraisalor offer to settle or settle any such demands.

###  

### (d)           Notwithstanding anyprovision of this Agreement, including Section 2.7 or Article VIII,to the contrary, in the event that any payment is made to a holder ofDissenting Shares by the Surviving Corporation or Parent in respect ofappraisal rights as contemplated by this Section 2.11(d), then (i) suchholder’s former shares of Company Common Stock shall be removed from anycalculation to determine the pro rata right of such holder to participate inany distribution of the Escrow Fund, and (ii) the portion of the EscrowFund which would otherwise have represented the potential distribution to suchholder shall instead be distributed to Parent.

###  

## Section 2.12           Further Assurances.  At and after the EffectiveTime, the officers and directors of the Surviving Corporation will beauthorized (i) to execute and deliver, in the name and on behalf of theCompany or Merger Sub, any deeds, bills of sale, assignments or assurances, and(ii) to take and do, in the name and on behalf of the Company or MergerSub, any other actions and things to vest, perfect or confirm of record in theSurviving Corporation any and all right, title and interest in, to and underany of the rights, properties or assets acquired or to be acquired by theSurviving Corporation as a result of, or in connection with, the Merger.

##  

## Section 2.13           ArrangementsRelating to Closing Date Working Capital Calculation.

##  

### (a)           No later than five (5) daysbefore the Closing Date, the Company shall deliver to Parent a calculation ofthe Net Working Capital as of a date no more than one

 

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### (1) month prior to the Closing Date (the“Pre-Closing Net Working Capital”), together with a balance sheet of theCompany as of such date (the “Pre-Closing Balance Sheet”), whichPre-Closing Balance Sheet shall be in the same form as, and shall reflect thesame accounting conventions as, the Company Balance Sheet.

###  

### (b)           If the Pre-Closing NetWorking Capital is greater than $0, then notwithstanding anything herein to thecontrary the Company shall be permitted to distribute to the Company’sstockholders entitled thereto prior to the Closing cash equal to the differencebetween the Pre-Closing Net Working Capital and $0 (the “Pre-ClosingDistribution”).  If the Pre-ClosingNet Working Capital is less than $0, the difference between $0 and thePre-Closing Net Working Capital shall be the “Working Capital Purchase PriceReduction” and the Net Cash Payment Amount shall be reduced by such amount.

###  

### (c)           Within sixty (60) daysfollowing the Closing Date, the Stockholder Representative will prepare anddeliver to Parent a calculation of the Closing Net Working Capital (the “ProposedClosing Net Working Capital Statement”), together with a balance sheet ofthe Company as of the Closing Date (the “Proposed Closing Balance Sheet”),which Proposed Closing Balance Sheet shall be in the same form as, and shallreflect the same accounting conventions as, the Company Balance Sheet.  The Stockholder Representative will make thework papers and back-up materials used in preparing the Proposed Closing NetWorking Capital Statement, as well as the personnel with knowledge regardingany underlying matters, available to Parent and its advisors at reasonabletimes and upon reasonable notice.  Forpurposes hereof, both the Proposed Closing Net Working Capital Statement andthe Proposed Closing Balance Sheet shall reflect any distributions made by theCompany pursuant to Section 2.13(b) on a post-distributionbasis.

###  

### (d)           If Parent shall fail todeliver to the Stockholder Representative a statement describing any objectionsto the Proposed Closing Net Working Capital Statement within ten (10) BusinessDays after receipt, then such Proposed Closing Net Working Capital Statementshall be deemed to be the “Stipulated Closing Net Working Capital Statement”.  However, if Parent shall deliver to theStockholder Representative a statement describing any objections to theProposed Closing Net Working Capital Statement within such ten (10) BusinessDay period, then the Stockholder Representative and the Company shall usecommercially reasonable efforts to resolve, in good faith, any such objectionswith each other.  If Parent and theStockholder Representative reach a resolution of all such objections, then theProposed Closing Net Working Capital Statement as modified by such resolutionshall be deemed to be the “Stipulated Closing Net Working Capital Statement”.  If such a resolution is not reached withinten (10) Business Days after the Stockholder Representative has received astatement describing Parent’sobjections to the Proposed Closing Net Working Capital Statement, then anydisputes regarding any accounting-related aspects of the calculation orcomputation of such Proposed Closing Net Working Capital Statement will besubmitted promptly to a mutually acceptable independent accounting firm forresolution.  Parent, on the one hand, andthe Stockholder Representative, on the other hand, may provide the accountingfirm, within five (5) Business Days of its selection, with a definitivestatement of their

 

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### respectivepositions with respect to each unresolved objection.  The accounting firm will be provided withaccess to the books and records of the Stockholder Representative and theCompany germane to the Proposed Closing Date Working Capital Statement.  The accounting firm will be asked to resolveany objections on an expedited basis, and shall in any event have no more thantwenty (20) Business Days to carry out a review of the unresolvedobjections.  The accounting firm will beasked to prepare a written statement of its determination regarding eachunresolved objection, and the Proposed Closing Date Working Capital Statementas modified by the accounting firm’s determination of Parent’s unresolvedobjections shall be deemed to be the “Stipulated Closing Net Working CapitalStatement.”  The determination of theaccounting firm will be conclusive and binding, absent manifest error.  If objections are submitted to the accountingfirm for resolution as provided in this Section 2.13 and theStockholder Representative prevails, by dollar amount, as to a majority of theobjections asserted, then Parent shall pay all of the fees and expenses of theaccounting firm.  If the StockholderRepresentative does not prevail, by dollar amount, as to a majority of theobjections asserted, then the fees and expenses of the accounting firm shall,for purposes of the Stipulated Closing Net Working Capital Statement, betreated as a current liability of the Company accrued and actually payable asof the Closing Date, and the Stipulated Closing Net Working Capital Statementshall be determined accordingly.

###  

### (e)           In the event that the Stipulated Closing Net Working Capital Statementreflects a Net Working Capital as of the Closing Date (the “Closing NetWorking Capital”) that is greater than $0, then an amount equal to (i) thedifference  between the Closing NetWorking Capital and $0 (but in no event greater than $250,000), plus (ii) theamount of any Working Capital Purchase Price Reduction made pursuant to Section 2.13(b),if any (collectively, the “Working Capital Surplus”) shall be immediatelydistributed by Parent among all former holders of Company Common Stock entitledthereto as of the record date for the Pre-Closing Distribution, pro-rata basedupon their respective holdings of Company Common Stock on such record date.  For the avoidance of doubt, the distributionof the Working Capital Surplus shall occur so as to replicate, in terms of thedistribution among the former holders of Company Common Stock, the result thatwould otherwise have occurred had the Working Capital Surplus been included inthe Pre-Closing Distribution.  In the event that the Stipulated Closing NetWorking Capital Statement indicates a Closing Net Working Capital that is lessthan $0, then an amount equal to (i) the positive difference between $0and such Closing Net Working Capital (the “Working Capital Deficit”), minus(ii) the amount of any Working Capital Purchase Price Reduction pursuantto Section 2.13(b), shall be immediately paid out of the EscrowFund to Parent on a dollar-for-dollar basis, the amount of which payment shallbe deemed to be a further reduction of the Merger Consideration.

 

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#  

# ARTICLE III

#  

# REPRESENTATIONS AND WARRANTIES 

# OF THE COMPANY AND PRINCIPALSTOCKHOLDERS

#  

The Companyand each of the Principal Stockholders represents and warrants to Parent andMerger Sub that as of the date of this Agreement (or, if made as of a specifieddate, as of such date) each of the statements contained in this Article IIIare true and correct, except as disclosed in a document of even date herewithand delivered by the Company to Parent on the date hereof referring to therepresentations and warranties in this Agreement (the “Company DisclosureSchedule”).  The Company DisclosureSchedule will be arranged in paragraphs corresponding to the numbered andlettered paragraphs contained in this Article III, and thedisclosure in any such numbered and lettered section of the Company DisclosureSchedule shall qualify other sections in the Company Disclosure Schedule andother Schedules to this Agreement to the extent it is reasonably clear from areading of the disclosure that such disclosure is applicable to such othersections or Schedules.  Any reference toor listing, description, disclosure or other inclusion of any item or othermatter in the Company Disclosure Schedule shall not be construed to mean thatsuch item or other matter is required to be referred to, listed, described,disclosed or otherwise so included in the Company Disclosure Schedule.  The reference to or listing, description,disclosure or other inclusion of any item or other matter, including anychange, violation, breach, debt, obligation or liability, in the CompanyDisclosure Schedule shall not be construed to mean that such item or matter ismaterial to the Company, has or would have a Material Adverse Effect, and shallnot be construed to be an admission or suggestion that such item or matterconstitutes a violation of or breach or default under, any contract, agreement,note, lease or otherwise.  Anythingherein to the contrary notwithstanding, the Parties acknowledge and agree thatno Party shall waive, or be deemed to have waived, any rights that it may havewith respect to any third party by virtue of any disclosure by such Party thatis contained in the Company Disclosure Schedule.

 

## Section 3.1             Organization, Standing and Power.  The Company is a corporation duly organized,validly existing and in good standing under the Laws of the State of Delaware.The Company has the corporate power to own its properties and to carry on itsbusiness as now being conducted and as proposed to be conducted, and is dulyqualified to do business and is in good standing in each jurisdiction where thecharacter of the property owned or leased by it or the nature of the activitiesor business conducted by it makes such qualification necessary.  The Company has delivered a true and correctcopy of the Organizational Documents of the Company, each as amended to date,to Parent.  The Company is not inviolation of any of the provisions of its Organizational Documents.

##  

## Section 3.2             Authority.  The Company and each Principal Stockholderthat is an entity has all requisite corporate or company power and authority toenter into this Agreement and to consummate the Contemplated Transactions.  The execution and delivery of this Agreement,the consummation of the Contemplated Transactions, and the performance by theCompany and each Principal Stockholder that is an entity of its obligationshereunder have been duly authorized by all necessary corporate or companyaction on the part of the Company and each Principal Stockholder that is anentity subject (in the case of the Company) only to the approval of the Mergerby the Company’s stockholders.  Theaffirmative vote of the holders of a majority 

 

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## of the sharesof the Company Common Stock, outstanding on the record date relating to thisAgreement and the Contemplated Transactions is the only vote of the holders ofany of the Company’s capital stock necessary under Applicable Law to approvethis Agreement and the Contemplated Transactions.  The Board of Directors of the Company hasunanimously (a) approved this Agreement, the Merger and the otherContemplated Transactions; (b) determined that in its opinion theContemplated Transactions are in the best interests of the stockholders of theCompany and are on terms that are fair to such stockholders; and (c) recommendedthat the stockholders of the Company approve this Agreement and the ContemplatedTransactions.  This Agreement has beenduly executed and delivered by the Company and each of the PrincipalStockholders and constitutes the valid and binding obligation of the Companyand each of the Principal Stockholders enforceable against the Company and eachof the Principal Stockholders in accordance with its terms, except that suchenforceability may be limited by bankruptcy, insolvency, moratorium or othersimilar Laws affecting or relating to creditors’ rights generally, and issubject to general principles of equity. The execution and delivery of this Agreement by the Company does not,and the consummation of the Contemplated Transactions will not, conflict with,or result in any violation of, or default under (with or without notice or lapseof time, or both), or give rise to a right of termination, cancellation oracceleration of any material obligation or loss of any material benefit under (a) anyprovision of the Organizational Documents of the Company, as amended; or (b) anymaterial Contract or material Permit or material Order, or any Law applicableto any Company Party or any of their respective properties or assets.  No Consent or Order of, or registration,declaration or filing with, any Governmental Body is required by or with respectto any Company Party in connection with the execution and delivery of thisAgreement or the consummation of the Contemplated Transactions, except for (a) thefiling of the Agreement of Merger, together with the required officers’certificates, and the filing of the Certificate of Merger; (b) any filingsrequired under Regulation D of the Securities Act; and (c) such Consents,Orders, registrations, declarations and filings as may be required underapplicable state securities Laws and the securities Laws of any foreigncountry.

##  

## Section 3.3             Intentionally Omitted.

##  

## Section 3.4             FinancialStatements.

##  

### (a)           The Company hasdelivered to Parent its audited financial statements (balance sheet, statementof operations and statement of cash flows) for the fiscal year ended December 31,2006, its compiled financial statements for the fiscal year ended December 31,2005, its reviewed financial statements for the fiscal year ended December 31,2004, and its unaudited financial statements (balance sheet, statement ofoperations and statement of cash flows) on a consolidated basis as at and forthe six (6) month period ended June 30, 2007 (collectively, the “CompanyFinancial Statements”).  The CompanyFinancial Statements have been prepared in accordance with GAAP (except thatthe unaudited financial statements do not contain footnotes and are subject tonormal recurring year-end audit adjustments, the effect of which will not,individually or in the aggregate, be materially adverse) applied on aconsistent basis throughout the periods presented and consistent with eachother.  The Company Financial Statementsfairly present the consolidated financial condition, operating results and cashflow of the Company as of the dates, and for the periods, indicated therein,subject to normal year-end

 

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### audit adjustments and the absence offootnotes in the case of unaudited Company Financial Statements, all inaccordance with GAAP.

###  

### (b)           The Company maintainsand will continue to maintain a system of internal accounting controlssufficient to provide reasonable assurance that (i) transactions areexecuted with management’s general or specific authorizations; (ii) transactionsare recorded as necessary to permit preparation of financial statements of theCompany and to maintain accountability for assets; (iii) access to theCompany’s assets is permitted only in accordance with management’sauthorization; and (iv) the recorded accountability for assets is comparedwith existing assets at reasonable intervals and appropriate action is takenwith respect to any differences.  TheCompany is not party to or otherwise involved in any “off balance sheetarrangements” (as defined in Item 303 of Regulation S-K under the ExchangeAct).

###  

### (c)           No Company Party is aparty to, or has any commitment to become a party to, any joint venture,partnership or any similar Contract (including any Contract relating to anytransaction or relationship between or among any Company Parties, on the onehand, and any unconsolidated Affiliate, including any structured finance,special purpose or limited purpose entity or Person, on the other hand), wherethe result, purpose or intended effect of such Contract is to avoid disclosureof any material transaction involving, or material liabilities of, any CompanyParty in the published financial statements of any Company Party.

###  

## Section 3.5             Capital Structure.  The authorized capital stock of the Companyconsists of 50,000,000 shares of Company Common Stock, of which there wereissued and outstanding as of the close of business on the date hereof,41,494,852 shares.  All outstandingshares of Company Common Stock are duly authorized, validly issued, fully paidand nonassessable and, to the Knowledge of the Company and the PrincipalStockholders, are free of any Encumbrances, and are not subject to preemptiverights or rights of first refusal created by Applicable Law, the OrganizationalDocuments of the Company or any Contract to which the Company is a party or bywhich it is bound.  As of that same date,there were 4,240,829 shares of Company Common Stock reserved for issuance underthe Company Stock Plan, of which 2,415,404 shares were subject to outstandingoptions and 1,825,425 shares were reserved for future option grants.  The Company has delivered to Parent true,correct and complete copies of each form of agreement or stock option planevidencing each Company Stock Option. Except for the rights created pursuant to this Agreement and the rightsdisclosed in this Section 3.5, there are no other options,warrants, calls, rights, commitments or agreements of any character to whichthe Company is a party or by which it is bound, obligating the Company toissue, deliver, sell, repurchase or redeem or cause to be issued, delivered,sold, repurchased or redeemed, any shares of capital stock of the Company orobligating the Company to grant, extend, accelerate the vesting of, change theprice of, or otherwise amend or enter into any such option, warrant, call,right, commitment or agreement.  Allshares of Company Common Stock issuable upon exercise of the options describedin this Section 3.5 will be, when issued pursuant to the respectiveterms of such options, duly authorized, validly issued, fully paid andnonassessable.  There are no otherContracts relating to voting, purchase or sale of the capital stock of theCompany (a) between or among the Company and any of its stockholders; and (b) tothe Company’s Knowledge, between or among any of the Company’sstockholders.  All shares of outstandingCompany Common 

 

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##  

## Stock andrights to acquire capital stock of the Company were issued in compliance withall applicable federal and state securities Laws.  There are no accrued but unpaid dividends onshares of the Company’s capital stock as of the date of this Agreement and,except as contemplated by Section 2.13(e), there will be no accruedby unpaid dividends on shares of the Company’s capital stock as of theEffective Time.

##  

## Section 3.6             Subsidiaries.

##  

### (a)           Section 3.6of the Company Disclosure Schedule sets forth the name, jurisdiction ofincorporation, capitalization, and the record holders of the capital stock ofeach Subsidiary of the Company.  Exceptas set forth in Section 3.6 of the Company Disclosure Schedule, theCompany does not own, directly or indirectly, any capital stock or other equitysecurities in any other Person other than publicly traded securitiesconstituting less than five percent (5%) of the outstanding equity of theissuing entity.

###  

### (b)           Each Subsidiary of theCompany is duly organized, validly existing and in good standing under the Lawsof its jurisdiction of organization, and has the corporate power to own itsproperties and to carry on its business as now being conducted and as proposedto be conducted.  Each Subsidiary of theCompany is duly qualified to do business and is in good standing in eachjurisdiction where the character of the property owned or leased by it or thenature of its activities or the business conducted makes such qualificationnecessary.  The Company has heretoforedelivered to Parent true, correct and complete copies of the OrganizationalDocuments of each of its Subsidiaries. No Subsidiary is in default or in violation of any provision of itsOrganizational Documents.

###  

### (c)           All shares of capitalstock of, or other ownership interests in, Subsidiaries of the Company owned,directly or indirectly, by the Company are owned free and clear of anyEncumbrance and free of any other limitation or restriction (including anyrestriction on the right to vote, sell or otherwise dispose of such capitalstock or other ownership interests), except for limitations or restrictionsunder Applicable Laws.  There are no outstandingoptions, warrants or other rights to acquire from any Company Party, and nopreemptive or similar rights, subscriptions or other rights, convertible orexchangeable securities or Contracts of any character, relating to any equityinterest in any Subsidiary of the Company, obligating any Company Party toissue, transfer or sell, any capital stock, voting securities or otherownership interests in, or any securities convertible into or exchangeable forany capital stock, voting securities or ownership interests in, any Subsidiaryof the Company or obligating any Company Party to grant, extend or enter intoany such option, warrant, subscription or other right, convertible orexchangeable security or Contract.  Thereare no outstanding obligations of any Company Party to repurchase, redeem orotherwise acquire from any Person (other than the Company or a wholly-ownedSubsidiary of the Company) any outstanding shares of capital stock of anySubsidiary of the Company.

###  

## Section 3.7             Absence of Certain Changes.  Since December 31, 2006 (the “CompanyBalance Sheet Date”), the Company has conducted its business in theordinary course consistent with past practice and there has not occurred (a) anychange, event or condition (whether or not covered by insurance) that hasresulted in, or could reasonably be expected to result in, a 

 

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##  

## Company Material Adverse Effect; (b) anyacquisition, sale or transfer of any asset of any Company Party other than inthe ordinary course of business and consistent with past practice; (c) anychange in accounting methods or practices (including any change in depreciationor amortization policies or rates) by any Company Party or any revaluation byany Company Party of any of its assets; (d) any declaration, setting aside,or payment of a dividend or other distribution with respect to the shares ofcapital stock or other ownership interests of any Company Party or any director indirect redemption, purchase or other acquisition by any Company Party ofany of its shares of capital stock or other ownership interests; (e) theexecution of any Material Contract by any Company Party, or any materialamendment or termination of, or default under, any Material Contract to whichany Company Party is a party or by which it is bound; (f) any amendment orchange to the Organizational Documents of any Company Party; (g) anyincrease in or modification of the compensation or benefits payable or tobecome payable by any Company Party to any of its directors or employees; (h) anysplit, combination or reclassification of any of the Company’s capital stock; (i) anychanges or events (including the incurrence of any liabilities of any nature,whether or not accrued, contingent, absolute, determined, determinable,asserted, unasserted or otherwise) which, individually or in the aggregate,would have a Company Material Adverse Effect; or (j) any agreement by anyCompany Party to do any of the things described in the preceding clauses (a) through(i).

##  

## Section 3.8             Absence of Undisclosed Liabilities.  There are no liabilities of any Company Partyof any kind whatsoever, whether accrued, contingent, absolute, determined,determinable, asserted, unasserted or otherwise, other than (a) liabilitiesdisclosed in or provided for in the Company Financial Statements or in thenotes thereto, (b) liabilities incurred in the ordinary course of businessthat are not required by GAAP to be reflected on a balance sheet or to bedisclosed in the footnotes thereof, and (c) any liability in excess of$25,000 that was incurred in the ordinary course of business since June 30,2007.

##  

## Section 3.9             Litigation.  There are no Proceedings (or, to theKnowledge of any Company Party, any basis therefor), whether at law or equityor otherwise, by or before any Governmental Body or arbitrator, foreign ordomestic, or, to the Knowledge of any Company Party, threatened against orinvolving any Company Party or any of their respective properties or officersor directors (in their capacities as such). There is no Order involving the Company or any of its Subsidiaries, or,to the Knowledge of any Company Party, any of their respective directors orofficers (in their capacities as such), that could prevent, enjoin, ormaterially alter, delay or encumber any of the Contemplated Transactions, orthat would have a Material Adverse Effect on any Company Party.

##  

## Section 3.10           Restrictions on Business Activities.  There is no Contract or Order binding uponany Company Party that has or could reasonably be expected to have the effectof prohibiting or materially impairing any current or future business practiceof any Company Party, any acquisition of property by any Company Party or theconduct of business by any Company Party as currently conducted or as proposedto be conducted by any Company Party.

 

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##  

## Section 3.11           IntellectualProperty.

##  

### (a)           For purposes of thisAgreement, “Intellectual Property” means all rights in:

###  

#### (i)            all issued patents,reissued or reexamined patents, revivals of patents, utility models,certificates of invention, registrations of patents and extensions thereof,regardless of country or formal name (collectively, “Issued Patents”);

####  

#### (ii)           all published orunpublished nonprovisional and provisional patent applications, reexaminationproceedings, invention disclosures and records of invention (collectively “PatentApplications” and, with the Issued Patents, the “Patents”);

####  

#### (iii)          all industrial designregistrations or applications (including any continuations, divisionals, continuations-in-part,renewals, issues and applications for any of the foregoing), and rights toapply for any of the foregoing;

####  

#### (iv)          all copyrights,copyrightable works, semiconductor topography and mask work rights, includingall rights of authorship, use, publication, reproduction, distribution,performance transformation, moral rights and rights of ownership ofcopyrightable works, semiconductor topography works and mask works, and allrights to register and obtain renewals and extensions of registrations,together with all other interests accruing by reason of internationalcopyright, semiconductor topography and mask work conventions (collectively, “Copyrights”);

####  

#### (v)           trademarks, registeredtrademarks, applications for registration of trademarks, service marks,registered service marks, applications for registration of service marks, tradenames, registered trade names and applications for registrations of tradenames, logos, slogans (collectively, “Trademarks”) and domain nameregistrations;

####  

#### (vi)          all ideas, inventions,designs, manufacturing and operating specifications, and technical data;

####  

#### (vii)         all computer programs,hardware, software programs or applications (in both source and object codeform and including firmware), including any related technical documentation,user or operator manuals, software libraries, compilers, configurations,databases, schematics, diagrams, components, processes and methodologiesrelated to any of the foregoing (“Software Programs”);

####  

#### (viii)        technology, trade secretsand proprietary or other confidential information, know-how, proprietaryprocesses, formulae, algorithms, models and 

 

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####  

#### methodologies, whether or not protectable asa matter of law (collectively, “Trade Secrets”);

####  

#### (ix)           all other intellectualor other proprietary rights protectable as a matter of law;

####  

#### (x)            licenses, immunities,covenants not to sue and the like relating to any of the foregoing;

####  

#### (xi)           any claims or causes ofaction arising out of or related to any infringement, misuse ormisappropriation of any of the foregoing;

####  

#### (xii)          all other intangibleassets, goodwill, properties and rights (whether or not appropriate steps havebeen taken to protect, under Applicable Law, such other intangible assets, propertiesor rights);

####  

#### (xiii)         all moral rights,including any rights of paternity or integrity, and right of restraint, anyright to claim authorship of any of the foregoing, to object to any distortion,mutilation or other modification of, or other derogatory action in relation to,any of the foregoing, whether or not such would be prejudicial to honor orreputation, and any similar right, existing under judicial or statutory Law ofany country in the world, or under any treaty, regardless whether or not suchright is denominated or generally referred to as a “moral” right (“MoralRights”); and

####  

#### (xiv)        rights of publicity andprivacy related to the use of the names, likenesses, voices, signatures andbiographical information of real persons.

####  

### (b)           No product liabilityclaims have been communicated in writing to or, to the Knowledge of any CompanyParty, threatened against, any Company Party.

###  

### (c)           A true and completelist of each of the Company Software Programs, together with a briefdescription of each important feature, part and/or component thereof, is setforth in Section 3.11(c) of the Company DisclosureSchedule.  Section 3.11(c) ofthe Company Disclosure Schedule sets forth a true and complete list of eachlicense, sublicense and other Contract as to which any Company Party is a partyand pursuant to which any Company Party owns or is authorized to use anyCompany Software Programs, or any feature or part or component thereof, andincludes the identity of all parties thereto, a description of the nature and subjectmatter thereof and the term thereof.  TheCompany Software Programs conform in all material respects with anyspecification, documentation, performance standard, representation or statementprovided with respect thereto by or on behalf of any Company Party.

###  

### (d)           Section 3.11(d) ofthe Company Disclosure Schedule contains a true, correct and complete list ofall of each Company Party’s U.S. and foreign (i) Patents and PatentApplications, (ii) Trademark registrations and applications therefor andmaterial unregistered Trademarks; (iii) Copyright registrations andapplications therefor; and 

 

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###  

### (iv) other filings and formal actionsmade or taken pursuant to federal, state, local and foreign Laws by any CompanyParty to protect its or their interests in the Company IntellectualProperty.  The Company or the applicableSubsidiary is listed in the records of the appropriate U.S., state or foreignregistry as the sole current owner of record for each listed application orregistration, and no third party has any ownership interest, or right to claimany ownership interest in any listed application or registration.  With respect to the listed applications andregistrations, each such application or registration has been prosecuted ormaintained, as the case may be, in compliance in all material respects with allapplicable rules, policies and procedures of the appropriate U.S., state orforeign registry.

###  

### (e)           The CompanyIntellectual Property consists solely of items and rights that are: (i) ownedby a Company Party; (ii) in the public domain; or (iii) rightfullyused by the Company Parties pursuant to a valid license or similar agreement(the “Company Licensed Intellectual Property”).  The Company Parties have (whether by virtueof ownership, license or otherwise) all rights in the Company IntellectualProperty necessary to carry out the business of the Company Parties ascurrently conducted or contemplated to be conducted, including, to the extentrequired to carry out such activities, rights to make, have made, sell, offerfor sale, import, export, use, reproduce, modify, adapt, create derivativeworks based on, translate, distribute (directly and indirectly), transmit,display and perform publicly, escrow, maintain, license, rent, lease, assignand sell the Company Intellectual Property in all geographic locations wherecurrently sold or used, and to sublicense any or all of the foregoing rights tothird parties, including the right to grant further sublicenses.

###  

### (f)            To the Knowledge ofthe Company Parties, the conduct of the business of the Company Parties asconducted in the past did not infringe (when conducted) and as currentlyconducted or contemplated to be conducted does not infringe (either directly orindirectly, such as through contributory infringement) any IntellectualProperty right owned or controlled by any third party.  There is no pending or, to the Knowledge ofthe Company, threatened, Proceeding (or any basis therefor) before anyGovernmental Body in any jurisdiction, whether against any Company Party or anythird party, (i) involving any Company Intellectual Property owned by anyCompany Party, or, to the Knowledge of the Company, any Company LicensedIntellectual Property; (ii) alleging that the activities or the conduct ofthe business of any Company Party, or the use of any Company IntellectualProperty by any customer or other licensee of any Company Party, does or willinfringe upon, violate or constitute the unauthorized use of the IntellectualProperty rights of any third party; or (iii) challenging the ownership,use, validity, enforceability or registrability of any Company IntellectualProperty, nor, to the Knowledge of the Company, is there any reasonable basisfor any such Proceeding.  Other thanlicense agreements entered into by the Company Parties in the ordinary courseof business and identified on Section 3.11(f) of the CompanyDisclosure Schedule, there are no settlements, forbearances to sue, consentjudgments or Orders or similar obligations binding upon any Company Party or,to the Knowledge of the Company Parties, upon any third party, which (a) restrictthe Company’s or any of its Subsidiaries’ rights to use any CompanyIntellectual Property, (b) restrict the Company’s or its Subsidiaries’business in order to accommodate a third party’s Intellectual Property rights 

 

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###  

### or (c) permit a third party to use anyCompany Intellectual Property owned by any Company Party.  To the Knowledge of the Company (x) allregistered, granted or issued Patents, mask works, Trademarks and Copyrightsregistered by or assigned to any Company Party are valid and enforceable and (y) thereis no pending denial, refusal or similar action by any Governmental Body withrespect to any Patent, Copyright or Trademark application filed by or on behalfof any Company Party.  To the Company’sKnowledge, there is no unauthorized use, infringement or misappropriation ofany of the Company Intellectual Property owned by any Company Party by anythird party, including any current or former employee or contractor of anyCompany Party (or their respective predecessors-in-interest).  No Company Party is subject to any Proceedingor Order restricting in any manner the use, transfer or licensing of anyCompany Intellectual Property by any Company Party, or which may affect thevalidity, use or enforceability of such Company Intellectual Property.  No Company Party is subject to any Contractthat restricts in any material respect the use, transfer, delivery or licensingby any Company Party of the Company Intellectual Property.  No Company Party has entered into anyagreement to indemnify any Person against any charge of misappropriation,violation or infringement of any Company Intellectual Property, other thanindemnification provisions contained in purchase orders or license agreementsof a Company Party arising in the ordinary course of business.

###  

### (g)           To the Knowledge of theCompany Parties, there are no royalties, fees, honoraria or other paymentspayable by any Company Party to any Person by reason of the ownership,development, use, license, sale or disposition of any Company IntellectualProperty, other than salaries and sales commissions paid to employees and salesagents in the ordinary course of business.

###  

### (h)           All current and formerdirectors, officers, employees and agents of any Company Party or any of theirpredecessors-in-interest, and all current and former consultants, contractorsand similar third parties who have performed any activities on behalf of anyCompany Party or any of their predecessors-in-interest, or who haveparticipated in the development or creation of any Company IntellectualProperty; either (i) have been a party to a “work-for-hire” arrangement oragreement with the Company or a Subsidiary that has accorded the Company orsuch Subsidiary, as the case may be, full, effective, exclusive and originalownership of all Intellectual Property thereby arising, in accordance withApplicable Law, or (ii) have executed appropriate instruments ofassignment in favor of the Company or a Subsidiary as assignee that haveconveyed to the Company or such Subsidiary, as the case may be, effective andexclusive ownership of all Intellectual Property thereby arising.  The Company Parties have provided to Parentcopies of all Contracts referenced or described in this Section 3.11(h).  All current and former directors, officers,employees, consultants, contractors and agents of each Company Party who haveparticipated in the development or creation of any Company IntellectualProperty have waived, released or made covenants not to assert against theCompany Parties any Moral Rights or other common law or statutory rights in orto any Company Intellectual Property.  Nocurrent or former director, officer, employee, contractor, consultant or agentof any Company Party (or their respective predecessors-in-interest), will,after giving effect to the Contemplated Transactions, own or retain any rightsin or to any of the Company Intellectual Property.  To the Knowledge of the 

 

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###  

### Company Parties, no director, officer,employee, contractor, consultant or agent of any Company Party is in breach ofany agreement with any former employer or other third party concerningIntellectual Property rights or confidentiality.

###  

### (i)            No Company Party is,or as a result of the execution or delivery of this Agreement, or performanceof the Company’s obligations hereunder, will be, in violation of any Contractto which any Company Party is a party or otherwise bound, nor will execution ordelivery of this Agreement, or performance of the Company’s obligationshereunder, cause the diminution, termination, transfer or forfeiture of any ofthe rights of any Company Party in any Company Intellectual Property or requirethe Consent of any Governmental Body or third party in respect of any suchCompany Intellectual Property.  To theKnowledge of the Company, each such Contract constitutes the valid and bindingobligation of all parties thereto, enforceable in accordance with its terms,and, to the Knowledge of the Company, there exists no breach by any partythereto and no event or circumstance which will result in a violation or breachof, or constitute (with or without due notice or lapse of time or both) adefault by any Company Party thereunder.

###  

### (j)            To the Knowledge ofthe Company, there has been no misuse or misappropriation of any CompanyIntellectual Property by any third party. The Company Parties have taken reasonable measures to protect theproprietary nature of the Company Intellectual Property that is material to thebusiness of any Company Party as currently conducted.  Without limitation of the foregoing, thesource code and technical documentation (excluding end user documentation)relating to all Company Software Programs (i) have at all times beenmaintained in strict confidence, (ii) have been disclosed by the CompanyParties only to employees who have had a “need to know” the contents thereof inconnection with the performance of their duties to the applicable Company Partyand who have executed appropriate nondisclosure or similar agreements, and (iii) exceptpursuant to an agreement listed in Section 3.11(o) of theCompany Disclosure Schedule, have not been licensed or disclosed to or escrowedfor the benefit of or to be made available to any third party.  No third party has made any claim ordelivered any notice that any third party is entitled to access or receive thesource code for any Company Software Program pursuant to any source code escrowagreement identified or required to be identified on Section 3.11(c) ofthe Company Disclosure Schedule.  TheCompany Parties have possession or control of a true and complete gold mastercopy of the source code for each of the Company Software Programs, includingeach feature, part and/or component thereof.

###  

### (k)           Section 3.11(k) ofthe Company Disclosure Schedule contains a complete list of (i) allsoftware libraries, compilers and other third-party software sold with,incorporated into or used in the development or operation of the SoftwarePrograms, and (ii) all material third-party software systems andapplications used in the business of the Company Parties.  Section 3.11(k) of theCompany Disclosure Schedule is a true and complete list of all licenseagreements by which the Company Parties are bound for the use of any CompanySoftware Program and, if any such software is not licensed, the basis of theuse of any Company Software Program by the Company Parties.  The use or incorporation, as applicable, ofeach feature, part or component of the Company Software Programs by the CompanyParties has been in material compliance with the respective

 

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### license agreement or otherright of use listed for such item on Section 3.11(k) of theCompany Disclosure Schedule.

###  

### (l)                                     Tothe Knowledge of the Company, no portion of any Company Software Program, atthe time of delivery of such Software Program (i) contains any “back door,”“time bomb,” “Trojan horse,” “worm,” “drop dead device,” “lock-out,” “virus” orother software routines or hardware components designed to permit unauthorizedaccess; to disable or erase software, hardware, or data; or to perform anyother similar unauthorized actions; or (ii) fails to comply with anyapplicable warranty or other contractual commitment relating to the use,functionality or performance of such Company Software Program or any product orsystem containing or used in conjunction with such Company Software Program. TheCompany has made available to Parent a complete and accurate list of allmaterial bugs, defects and errors of which any Company Party has Knowledge ineach version and component of each Company Software Program.

###  

### (m)                               Tothe Knowledge of the Company Parties, no Company Software Program or componentthereof or any services provided by any Company Party contains any PublicSoftware. With respect to items set forth on Section 3.11(m) ofthe Company Disclosure Schedule, if any, the applicable license terms do not (i) require,or condition the use of distribution of any Company Software Program on thedisclosure, licensing or distribution of any source code for any portion ofsuch Company Software Program or (ii) otherwise impose any limitation,restriction or condition on the right or ability of any Company Party to use ordistribute any Company Software Program.

###  

### (n)                                 Nofunding, facilities or personnel of any Governmental Body were used, directlyor indirectly, to develop or create, in whole or in part, any CompanyIntellectual Property (excluding Company Licensed Intellectual Property). NoCompany Party (including their respective predecessors-in-interest) is now orwas ever a member or promoter of, or a contributor to, any industry standardsbody or similar organization that could require or obligate any Company Partyto grant or offer to any third party any license or right to any CompanyIntellectual Property.

###  

### (o)                                 Section 3.11(o) ofthe Company Disclosure Schedule sets forth a true and complete list ofeach license, sublicense and other Contract as to which any Company Party is aparty and pursuant to which any Company Party owns or is authorized to use anyCompany Intellectual Property, or feature or part or component thereof,and includes the identity of all parties thereto, a description of the natureand subject matter thereof and the term thereof. The Company Parties have madeavailable to Parent true and correct copies of all Contracts relating to theCompany Intellectual Property, including (A) any standard form agreementsused by the Company Parties to license software and or services, (B) professionalservices agreements, (C) third-party non-disclosure agreements, (D) third-partyconsultant or independent contractor agreements, and (E) employee offerletters and terms of employment or equivalent, and (F) all agreementslisted in Sections 3.11(c), (f), (h), (k) and (o) ofthe Company Disclosure Schedule.

###  

### (p)                                 Theactivities of the Company Parties have at all times been conducted in fullcompliance with applicable import and export control Laws. Without limitationof

 

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### the foregoing,the Company Parties have obtained all required licenses, clearances and classificationsin connection with the sale and distribution by the Company Parties of anyCompany Software Program.

###  

## Section 3.12                                InterestedParty Transactions. No Company Party is indebted to any of itsRepresentatives (except for amounts due as normal salaries and bonuses and inreimbursement of ordinary expenses), and no such Person is indebted to anyCompany Party. There have been no transactions since January 1, 2006 thatwould require disclosure if the Company were subject to disclosure under Item404 of Regulation S-K under the Securities Act.

##  

## Section 3.13                                MinuteBooks. The minute books (or similar records) of the Company Parties containa materially complete and accurate summary of all meetings of directors andstockholders (or other applicable governing bodies and equity owners) oractions by written consent since the time of formation of the Company Partiesthrough the date of this Agreement, and reflect all transactions referred to insuch minutes accurately in all material respects.

##  

## Section 3.14                                CompleteCopies of Materials. The Company has delivered or made available true andcomplete copies of each document in its possession that has been requested byParent or its counsel in connection with their due diligence review of theCompany Parties.

##  

## Section 3.15                                MaterialContracts. All of the Material Contracts are listed in Section 3.15of the Company Disclosure Schedule. With respect to each MaterialContract:  (a) the Material Contractis legal, valid, binding and enforceable and in full force and effect withrespect to the applicable Company Party, and, to the Knowledge of the CompanyParties, is legal, valid, binding, enforceable and in full force and effectwith respect to each other party thereto, in either case subject to the effectof bankruptcy, insolvency, moratorium or other similar Laws affecting theenforcement of creditors’ rights generally and except as the availability ofequitable remedies may be limited by general principles of equity; (b) theMaterial Contract will continue to be legal, valid, binding and enforceable andin full force and effect immediately following the Effective Time in accordancewith its terms as in effect prior to the Effective Time, subject to the effectof bankruptcy, insolvency, moratorium or other similar Laws affecting theenforcement of creditors’ rights generally and except as the availability ofequitable remedies may be limited by general principles of equity; and (c) neitherthe applicable Company Party nor, to the Knowledge of the Company Parties, anyother party is in breach or default, and no event has occurred that with noticeor lapse of time would constitute a breach or default by the applicable CompanyParty or, to the Knowledge of the Company Parties, by any such other party, orpermit termination, modification or acceleration, under such Material Contract.“Material Contract” means all Contracts to which the Company or any Subsidiary of the Companyis a party or by which any of them or any of their respective properties orassets may be bound (i)  which contain provisions granting thecustomer the use of products of the Company other than for the customer’sinternal business use or without restricting the number of either CPUs or usersor on an “enterprise” or similar basis; (ii) pursuant to which thecustomer will own any Intellectual Property developed or generated by anyCompany Party; (iii) pursuant to which source code is either provided tothe customer or placed in escrow; (iv) which permit the customer totransfer, assign or sublicense Company Intellectual Property rights without theCompany’s consent, other than rights transferred by operation of law; (v) whichinclude provisions containing, or that are otherwise subject to,non-competition, exclusivity, non-solicitation of the employees of the other

 

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## party thereto, or “most favored nation” or similar pricingarrangements, or other similar restrictions on any Company Party; (vi) whichcontain provisions for liquidated damages or penalties upon termination in anamount greater than $10,000 or indemnification provisions that materiallydeviate from the Company’s and the Subsidiaries’ standard practice; (vii) withany Representative or Affiliate of any Company Party; (viii) under whichthere remains any obligation or liability of any Company Party for the sale orlease of any of the assets of any Company Party other than in the ordinarycourse of business; (ix) which following the Effective Time will create arestriction on the business or operations of any Affiliate of the SurvivingCorporation which is not as of the date hereof an Affiliate of the Company; (x) whichprovide for the payment by or to any Company Party of an amount greater than$10,000 per annum; (xi) which commit any Company Party to purchase a minimumquantity of goods or services other than de minimus amounts under equipmentleases; (xii) which bear on the Company’s ownership or right to exploitthe Company Software Programs (other than off-the-shelf, third party SoftwarePrograms and not including standard form agreements with the Company’semployees and consultants), including licenses of components or modules (otherthan any such licenses entered into in the ordinary course of business),service and support agreements (other than such agreements entered into in theordinary course of business), and third party source code escrows; or (xiii)which are material to any Company Party’s business or operations.

##  

## Section 3.16                                Inventory.The inventories shown on the Company Balance Sheet or thereafter acquired bythe applicable Company Party were acquired and maintained in the ordinarycourse of business, are of good and merchantable quality, and consist of itemsof a quantity and quality usable or salable in the ordinary course of business.Since the Company Balance Sheet Date, the Company Parties have continued toreplenish inventories in a normal and customary manner consistent with pastpractices. The Company Parties have not received notice that any of them willexperience in the foreseeable future any difficulty in obtaining, in thedesired quantity and quality and at a reasonable price and upon reasonableterms and conditions, the raw materials, supplies or component productsrequired for the manufacture, assembly or production of their respectiveproducts or providing of their respective services. The values at whichinventories are carried reflect the inventory valuation policy of the CompanyParties, which is consistent with their respective past practice and inaccordance with GAAP. No Company Party is under any liability or obligationwith respect to the return of any item of inventory in the possession ofwholesalers, retailers or other customers.

##  

## Section 3.17                                AccountsReceivable. Subject to any reserves set forth therein, the accountsreceivable shown on the Company Financial Statements are valid and genuine,have arisen solely out of bona fide sales and deliveries of goods, performanceof services, and other business transactions in the ordinary course of businessconsistent with past practices (and do not include any bill and hold, extendedtrial or on approval arrangements or end of quarter channel filling incentivesales) in each case with Persons other than Affiliates, are not subject to anyprior assignment or Encumbrance, and are not subject to valid defenses,set-offs or counterclaims. The accounts receivable are collectible inaccordance with their terms at their recorded amounts, subject only to thereserve for doubtful accounts on the Company Financial Statements.

##  

## Section 3.18                                Customersand Suppliers. Section 3.18 of the Company Disclosure Schedule setsforth for 2006 and the first six months of 2007 (i) the twenty-fivelargest customers of the Company and its Subsidiaries in terms of revenuerecognized during the applicable period,

 

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## (ii) the ten (10) largest suppliers of the Company and itsSubsidiaries in terms of costs recognized for the purchase of products orservices during the applicable period, and (iii) all representatives,resellers or distributors of the Company (whether pursuant to commission,royalty or other arrangement), (collectively, the “Customers, Suppliers,Resellers and Partners”). The Company does not know of any plan orintention of any of the Customers, Suppliers, Resellers and Partners, and theCompany has not received any written or oral threat from any of the Customers,Suppliers, Resellers and Partners, to terminate, cancel, fail to renew orextend, or otherwise adversely modify its relationship with any Company Partyor to decrease materially or limit its products or services to any CompanyParty or its usage, purchase or distribution of the services or products of anyCompany Party. To the Knowledge of the Company Parties, no Customer Supplier, Reselleror Partner is insolvent or has filed or is planning to file for bankruptcyrelief protection or other similar insolvency Laws.

##  

## Section 3.19                                Employeesand Consultants. Section 3.19 of the Company Disclosure Schedule containsa list of the names of all employees (including part-time employees andtemporary employees), leased employees, independent contractors and consultantsof the Company Parties, together with their respective salaries or wages, othercompensation, dates of employment and positions.

##  

## Section 3.20                                Titleto Property.

##  

### (a)                                  TheCompany Parties have good and marketable title to all of their properties,interests in properties and assets, real and personal, reflected in the CompanyBalance Sheet or acquired after the Company Balance Sheet Date (exceptproperties, interests in properties and assets sold or otherwise disposed ofsince the Company Balance Sheet Date in the ordinary course of business), orwith respect to leased or licensed properties and assets, valid leaseholdinterests therein or licenses thereto, free and clear of Encumbrances of anykind or character, other than Permitted Encumbrances.

###  

### (b)                                 Theplants, property and equipment of the Company Parties that are used in theoperations of their respective businesses are in all material respects in goodoperating condition and repair, subject to normal wear and tear. All propertiesused in the operations of the Company Parties are reflected in the CompanyBalance Sheet to the extent required by GAAP. All leases and licenses to whichany Company Party is a party are in full force and effect and are valid,binding and enforceable in accordance with their respective terms, except assuch enforceability may be limited by bankruptcy, insolvency, moratoriumor other similar Laws affecting or relating to creditors’ rights generally; andgeneral principles of equity, regardless of whether asserted in a proceeding inequity or at law. True and correct copies of all such leases and licenses havebeen provided to Parent.

###  

### (c)                                  Section 3.20(c) ofthe Company Disclosure Schedule sets forth a complete list and thelocation of all real property that is used by any Company Party or that isreflected as an asset of the Company on the Company Balance Sheet (the “RealProperty”).

###  

### (d)                                 NoCompany Party owns any Real Property.

 

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### (e)                                  TheCompany has previously provided to Parent true, correct and complete copies ofall leases related to Real Property (collectively, the “Real Property Leases”).Each Real Property Lease is valid, binding and enforceable against theapplicable Company Party, and, to the Knowledge of Company Parties, the otherparties thereto in accordance with its terms and is in full force and effect,except, in the case of enforceability against the other parties thereto, assuch enforceability may be limited by bankruptcy, insolvency, fraudulenttransfer, reorganization, moratorium and similar Laws of general applicabilityrelating to or affecting creditors’ rights, and to general equity principles. Theleasehold estate created by each Real Property Lease is free and clear of allEncumbrances. There are no existing defaults by any Company Party under any ofthe Real Property Leases, nor, to the Knowledge of the Company Parties, has anevent occurred that (whether with or without notice, lapse of time or thehappening or occurrence of any other event) would constitute a default underany Real Property Lease.

###  

### (f)                                    Thereare no Proceedings, disputes or conditions affecting any Real Property that couldmaterially curtail or interfere with the use of such property. Neither thewhole nor any portion of the Real Property nor any other assets of any CompanyParty is subject to any Order to be sold or is being condemned, expropriated orotherwise taken by any Governmental Body with or without payment ofcompensation therefor, nor, to the Knowledge of the Company, has any suchcondemnation, expropriation or taking been proposed. No Company Party is aparty to any lease, assignment or similar arrangement under which the Companyis a lessor, assignor or otherwise makes available for use by any third partyany portion of the Real Property. There is no equipment located on the premisesof the Company or used in the business of the Company that is on loan from anotherparty.

###  

### (g)                                 NoCompany Party has received any notice of, or other writing referring to, anyrequirements or recommendations by any insurance company that has issued apolicy covering any part of the Real Property or by any board of fireunderwriters or other body exercising similar functions, requiring orrecommending any repairs or work to be done on any part of the RealProperty, which repair or work has not been completed.

###  

## Section 3.21                                EnvironmentalMatters.

##  

### (a)                                  Thefollowing terms shall be defined as follows:

###  

#### (i)                                     “EnvironmentalLaws” shall mean any Applicable Laws, policies, Permits, Orders,directives, or requirements that pertain to the protection of the environment,protection of public health and safety, or protection of worker health and safety,or that pertain to the handling, use, manufacturing, processing, storage,treatment, transportation, discharge, release, emission, disposal, re-use,recycling, or other contact or involvement with Hazardous Materials (as definedin Section 3.21(a)(ii)), including the federal ComprehensiveEnvironmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601,et seq., as amended (“CERCLA”), the federal Resource Conservationand Recovery Act, 42 U.S.C. Section 6901, et seq., as amended (“RCRA”),and the

 

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#### MassachusettsOil and Hazardous Material Release Prevention and Response Act, M.G.L. c. 21E.

####  

#### (ii)                                  “HazardousMaterials” shall mean any material, chemical, compound, substance, mixture orby product that is identified, defined, designated, listed, restricted orotherwise regulated under Environmental Laws as a “hazardous constituent,” “hazardoussubstance,” “hazardous material,” “acutely hazardous material,” “extremelyhazardous material,” “hazardous waste,” “hazardous waste constituent,” “acutelyhazardous waste,” “extremely hazardous waste,” “infectious waste,” “medicalwaste,” “biomedical waste,” “pollutant,” “toxic pollutant,” “contaminant” orany other formulation or terminology intended to classify or identifysubstances, constituents, materials or wastes by reason of properties that aredeleterious to the environment, natural resources, worker health and safety, orpublic health and safety, including ignitability, corrosivity, reactivity,carcinogenicity, toxicity and reproductive toxicity. The term “HazardousMaterials” shall include any “hazardous substances” as defined, listed,designated or regulated under CERCLA, any “hazardous wastes” or “solid wastes”as defined, listed, designated or regulated under RCRA, any asbestos orasbestos containing materials, any polychlorinated biphenyls, and any petroleumor hydrocarbonic substance, fraction, distillate or by product.

####  

### (b)                                 TheCompany Parties are and have been in compliance with all Environmental Lawsrelating to the properties or facilities used, leased or occupied by any ofthem at any time (collectively, the “Company Party Facilities,” suchproperties or facilities currently used, leased or occupied by the CompanyParties are defined herein as the “Company Party Current Facilities”),and no discharge, emission, release, leak or spill of Hazardous Materials hasoccurred at any of the Company Party Facilities that may or will give riseto liability of any Company Party under Environmental Laws. To the Knowledge ofthe Company Parties, there are no Hazardous Materials (including asbestos)present in the surface waters, structures, groundwaters or soils of or beneathany of the Company Party Current Facilities. To the Knowledge of the CompanyParties, there neither are nor have been any aboveground or underground storagetanks for Hazardous Materials at the Company Party Current Facilities. To theKnowledge of the Company Parties, no employee of any Company Party or any otherPerson has claimed that any Company Party is liable for alleged injury orillness resulting from an alleged exposure to a Hazardous Material. NoProceeding is pending against any Company Party, or, to the Knowledge of anyCompany Party, threatened against any Company Party, with respect to HazardousMaterials or Environmental Laws; and no Company Party is aware of any facts orcircumstances that could form the basis for assertion of a claim againstany Company Party or that could form the basis for liability of any CompanyParty, regarding Hazardous Materials or regarding actual or potentialnoncompliance with Environmental Laws.

##  

## Section 3.22                                Taxes.

##  

### (a)                                  TheCompany Parties have timely filed (or caused to be filed) all Tax Returnsrequired to be filed by them, and all such Tax Returns are true, complete and

 

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### correct. Allsuch Tax Returns have accurately reflected the Tax liability of the CompanyParties for the periods covered thereby. The Company has made available toParent copies of all Tax Returns filed by each Company Party for all periodssince the formation of such Company Party, or for all periods commencing on orafter January 1, 2003, whichever is less.

###  

### (b)                                 TheCompany Parties have withheld and timely paid all Taxes required to have beenwithheld and paid in connection with amounts paid or owing to any employee,independent contractor, creditor, stockholder or other party.

###  

### (c)                                  TheCompany Parties have paid and discharged (or caused to be paid and discharged)all Taxes reflected on the Tax Returns which have become due and payable bythem. The Company Parties have made provision for all Taxes payable by theCompany Parties for which no Tax Return has yet been filed and the charges,accruals and reserves for Taxes with respect to the Company Parties reflectedon the Pre-Closing Company Balance Sheet are adequate under GAAP to cover theTax liabilities accruing through the date thereof.

###  

### (d)                                 NoTax Return of any Company Party is under audit or examination by any taxingauthority, and no notice of such an audit or examination has been received byany Company Party. There is no deficiency, refund litigation, proposedadjustment or matter in controversy with respect to any Taxes due and owing byany Company Party. Any deficiency resulting from any completed audit orexamination relating to Taxes by any taxing authority has been timely paid,except for such deficiencies being contested in good faith or for whichadequate reserves are reflected on the Pre-Closing Company Balance Sheet. TheTax Returns of the Company Parties have been either examined and settled withthe relevant taxing authority or closed by virtue of the applicable statute oflimitations and no requests for waivers of the time to assess any such Taxes arepending. There are no pending requests for rulings or determinations withrespect to any Tax matter. The Company Parties have no Knowledge of threatenedactions or proceedings for the assessment or collection of any Tax with respectto the Company Parties, nor have the Company Parties received any notice orinquiry from any jurisdiction in which they do not currently file Tax Returnsto the effect that such Party may be subject to Tax by such jurisdiction.

###  

### (e)                                  Tothe Knowledge of the Company Parties, no Encumbrances for Taxes (other than forTaxes not yet due and payable) exist with respect to any assets or propertiesof any Company Party.

###  

### (f)                                    Thereare no outstanding waivers or agreements extending the statute of limitation orthe period for assessment, reassessment or collection of any amount of Taxes towhich the Company Parties may be subject or relating to any of theirassets, and no power of attorney that is currently in force has been grantedwith respect to any matter relating to Taxes that could affect the CompanyParties or their property or assets.

 

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### (g)                                 TheCompany Parties have disclosed on their federal income Tax Returns allpositions taken therein that could give rise to a substantial understatement offederal income Tax within the meaning of Section 6662 of the Code.

###  

### (h)                                 TheCompany Parties have not participated in a “listed transaction” within themeaning of Treasury Regulations Section 1.6011-4(c)(3)(i)(A).

###  

### (i)                                     TheCompany Parties are not doing business in or engaged in a trade or business inany jurisdiction in which they have not filed all required Tax Returns.

###  

### (j)                                     NoCompany Party is or has been a party to any tax sharing agreement, taxallocation agreement, tax indemnity obligation or similar written or unwrittenagreement, arrangement or understanding or practice with respect to Taxes(including any advance pricing agreement, closing agreement or otherarrangement relating to Taxes). No Company Party has entered into a closingagreement pursuant to Section 7121 of the Code or any equivalent provisionof any other Applicable Law.

###  

### (k)                                  NoCompany Party has been a member of any affiliated group within the meaning of Section 1504(a) ofthe Code, or any similar affiliated or consolidated group for Tax purposesunder state, local or foreign Law (other than a group the common parent ofwhich is the Company). No Company Party is liable for any Tax imposed on anyentity under Treasury Regulation §1.1502-6 (or any similar provision of state,local, or foreign tax Law) as a transferee or successor, by Contract, orotherwise.

###  

### (l)                                     NoCompany Party is the beneficiary of any arrangement described in TreasuryRegulation Section 1.6011-4(b)(2)(or any similar arrangement) with respectto any transaction or Tax opinion. No Company Party is a party to anyunderstanding or arrangement, or has otherwise participated in any transaction,described in Section 6111(c) of the Code or Section 6112(b) ofthe Code (or any similar provision). No Company Party has received any writtenTax opinions from outside law or accounting firms with respect to anytransaction relating to any Company Party other than a transaction in theordinary course of business.

###  

### (m)                               NoCompany Party has been a “distributing corporation” or a “controlledcorporation” in a distribution of stock to any person qualifying for tax-freetreatment under Section 355 of the Code, either in the two (2) yearsprior to the date of this Agreement, or in a distribution which could otherwiseconstitute part of a “plan” or “series of related transactions”(within the meaning of Section 355(e) of the Code) in conjunctionwith the Contemplated Transactions.

###  

### (n)                                 NoCompany Party has participated in or cooperated with an international boycottwithin the meaning of Section 999 of the Code or has been requested to doso in connection with any transaction or proposed transaction.

###  

### (o)                                 NoCompany Party has agreed to make, nor have they been notified of a requirementto make, any adjustment under Section 481(a) of the Code (or anysimilar provision of state, local or foreign tax Law) by reason of a change inaccounting method

 

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### or otherwisefor any Tax period for which the applicable federal statute of limitations hasnot yet expired.

###  

### (p)                                 Noneof the property owned by any Company Party is “tax-exempt use property” withinthe meaning of Section 168(h) of the Code. No Company Party is partyto a lease other than a lease that has been treated for U.S. federal income taxpurposes as a “true” lease under which such entities own or use the propertysubject to the lease. No Company Party is party to a lease arrangementinvolving a defeasance of rent, interest or principal.

###  

### (q)                                 NoCompany Party or any other Person on behalf of any Company Party has enteredinto any agreement or consent pursuant to Section 341(f) of the Code.

###  

### (r)                                    NoCompany Party has been a United States real property holding corporation withinthe meaning of Section 897(c)(2) of the Code during the applicable periodspecified in Section 897(c)(1)(A)(ii) of the Code.

###  

### (s)                                  NoCompany Party is a party to any Contract, plan or arrangement, including theprovisions of this Agreement, covering any employee or former employee of suchCompany Party that, individually or collectively, could give rise to thepayment of any amount that would not be deductible pursuant to Sections 280G,464 or 162(m) of the Code by the Company or as an expense under ApplicableLaw.

###  

## Section 3.23                                EmployeeBenefit Plans.

##  

### (a)                                  Section 3.23(a) ofthe Company Disclosure Schedule contains a complete and accurate list ofeach plan, program, policy, practice, contract, agreement or other arrangementproviding for employment, compensation, retirement, deferred compensation,loans, severance, separation, relocation, repatriation, expatriation, visas,work permits, termination pay, performance awards, bonus, incentive, stockoption, stock purchase, stock bonus, phantom stock, stock appreciation right,supplemental retirement, fringe benefits, cafeteria benefits or other benefits,whether written or unwritten, including each “employee benefit plan” within themeaning of Section 3(3) of the Employee Retirement Income SecurityAct of 1974, as amended (“ERISA”), which is or has been sponsored,maintained, contributed to, or required to be contributed to by any CompanyParty or by any trade or business (whether or not incorporated) that is or atany relevant time was treated as a single employer with any Company Partywithin the meaning of Section 414(b), (c), (m) or (o) of theCode, (an “ERISA Affiliate”) for the benefit of any person who performsor who has performed services for any Company Party or with respect to whichany Company Party or any ERISA Affiliate has or may have any liability(including contingent liability) or obligation (collectively, the “CompanyEmployee Plans”). Section 3.23(a) of the CompanyDisclosure Schedule separately lists each Company Employee Plan that hasbeen adopted or maintained by any Company Party, whether formally or informally,for the benefit of employees outside the United States (collectively, the “CompanyInternational Employee Plans”).

 

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### (b)                                 Documents.The Company has made available to Parent true, correct and complete copies ofdocuments embodying each of the Company Employee Plans and related plandocuments, including trust documents, group annuity contracts, plan amendments,insurance policies or contracts, participant agreements, employee booklets,administrative service agreements, summary plan descriptions, compliance andnondiscrimination tests for the last three plan years, standard COBRA forms andrelated notices, registration statements and prospectuses and, to the extentstill in the possession of the Company Parties, any material employeecommunications relating thereto. With respect to each Company Employee Planthat is required to file Form 5500, the Company has provided or madeavailable copies of the Form 5500 reports filed for the last three (3) planyears. The Company has provided or made available to Parent the most recentInternal Revenue Service determination or opinion letter issued with respect toeach such Company Employee Plan, and to the Knowledge of the Company Partiesnothing has occurred since the issuance of each such letter that couldreasonably be expected to cause the loss of the tax qualified status of anyCompany Employee Plan subject to Code Section 401(a). The Company has alsoprovided or made available to Parent, with respect to each Company EmployeePlan, (i) a copy of the two most recent annual reports and actuarialreports, if required under ERISA, and the most recent report prepared withrespect thereto in accordance with Statement of Financial Accounting Standards No. 87;and (ii) if the Employee Plan is funded through a trust or any third partyfunding vehicle, a copy of the latest financial statements thereof.

###  

### (c)                                  Compliance.

###  

#### (i)                                     EachCompany Employee Plan and each related funding arrangement has beenestablished, administered and maintained in accordance with its terms and incompliance with the requirements prescribed by any and all Applicable Law(including ERISA and the Code), and each Company Party and each ERISA Affiliateof any Company Party has performed all material obligations required to beperformed by them under, are not in material respect in default under orviolation of and have no Knowledge of any material default or violation by anyother party to, any of the Company Employee Plans.

####  

#### (ii)                                  AnyCompany Employee Plan intended to be qualified under Section 401(a) ofthe Code has either obtained from the Internal Revenue Service a favorabledetermination letter as to its qualified status under the Code, including allcurrently effective amendments to the Code, or has time remaining to applyunder applicable Treasury Regulations or Internal Revenue Servicepronouncements for a determination or opinion letter and to make any amendmentsnecessary to obtain a favorable determination or opinion letter.

####  

#### (iii)                               Noneof the Company Employee Plans promises or provides retiree medical or otherretiree welfare benefits to any Person, other than post-employment benefitsprovided in accordance with Section 4980B of the Code or comparable statelaw.

 

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#### (iv)                              Noneof the Company Employee Plans is a self-insured “multiple employer welfarearrangement” (as defined in Section 3(40) of ERISA).

####  

#### (v)                                 Therehas been no “prohibited transaction,” as such term is defined in Section 406of ERISA or Section 4975 of the Code, with respect to any Company EmployeePlan.

####  

#### (vi)                              NoCompany Party or any ERISA Affiliate is subject to any material liability orpenalty under Sections 4976 through 4980 of the Code or Title I of ERISA withrespect to any Company Employee Plan.

####  

#### (vii)                           Allcontributions required to be made by any Company Party or any ERISA Affiliateof any Company Party to any Company Employee Plan have been paid or accrued.

####  

#### (viii)                        Withrespect to each Company Employee Plan, no “reportable event” within the meaningof Section 4043 of ERISA (excluding any such event for which the thirty(30) day notice requirement has been waived under the regulations to Section 4043of ERISA) nor any event described in Section 4062, 4063 or 4041 or ERISAhas occurred.

####  

#### (ix)                                EachCompany Employee Plan has prepared in good faith and timely filed all requisitegovernmental reports, which were true and correct as of the date filed, and hasproperly and timely filed and distributed or posted all notices and reports toemployees required to be filed, distributed or posted with respect to each suchCompany Employee Plan.

####  

#### (x)                                   Nosuit, administrative proceeding, action or other litigation has been brought,or to the Knowledge of any Company Party is threatened, against or with respectto any Company Employee Plan (and to the Knowledge of the Company Parties thereis no basis therefor), including any audit or inquiry by the IRS or UnitedStates Department of Labor.

####  

#### (xi)                                Therehas been no amendment to, written interpretation or announcement by any CompanyParty or any ERISA Affiliate of any Company Party that would materiallyincrease the expense of maintaining any Company Employee Plan above the levelof expense incurred with respect to that Company Employee Plan for the most recentfiscal year included in the Company Financial Statements.

####  

#### (xii)                             EachCompany Employee Plan that is a nonqualified deferred compensation plan withinthe meaning of Section 409A of the Code has been operated in compliancewith said Section such that no individual would be liable for interest oradditional tax thereunder.

###  

### (d)                                 NoTitle IV or Multiemployer Plan. No Company Party or any ERISA Affiliate ofany Company Party has ever maintained, established, sponsored, participated

 

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### in,contributed to, or is obligated to contribute to, or otherwise incurred anyobligation or liability (including any contingent liability) under any “multiemployerplan” (as defined in Section 3(37) of ERISA) or to any “pension plan” (asdefined in Section 3(2) of ERISA) subject to Title IV of ERISA or Section 412of the Code. No Company Party or any ERISA Affiliate has any actual orpotential withdrawal liability (including any contingent liability) for anycomplete or partial withdrawal (as defined in Sections 4203 and 4205 of ERISA)from any multiemployer plan.

###  

### (e)                                  COBRA;FMLA; HIPAA; Cancer Rights. With respect to each Company Employee Plan,each Company Party has complied with (i) the applicable health carecontinuation and notice provisions of the Consolidated Omnibus BudgetReconciliation Act of 1985 (“COBRA”) and the regulations thereunder, aswell as any applicable state Law governing health care coverage extension orcontinuation; (ii) the applicable requirements of the Family and MedicalLeave Act of 1993 and the regulations thereunder; (iii) the applicablerequirements of the Health Insurance Portability and Accountability Act of 1996(“HIPAA”); and (iv) the applicable requirements of the Women’sHealth and Cancer Rights Act of 1998. No Company Party has any materialunsatisfied obligations to any employees, former employees or qualifiedbeneficiaries pursuant to COBRA, HIPAA or any state Law governing health carecoverage extension or continuation.

###  

### (f)                                    Effectof Transaction. The consummation of the Contemplated Transactions will not (i) entitleany current or former employee or other service provider of any Company Partyor any ERISA Affiliate to severance benefits or any other payment (includingunemployment compensation, golden parachute, bonus or benefits under anyCompany Employee Plan), except as expressly provided in this Agreement; or (ii) acceleratethe time of payment or vesting of any such benefits or increase the amount ofcompensation due any such employee or service provider. No benefit payable orthat may become payable by any Company Party to any Company Employee Planor as a result of or arising under this Agreement shall constitute an “excessparachute payment” (as defined in Section 280G(b)(1) of the Code)subject to the imposition of an excise Tax under Section 4999 of the Codeor the deduction for which would be disallowed by reason of Section 280(G) ofthe Code. Each Company Employee Plan can be amended, terminated or otherwisediscontinued after the Effective Time in the sole discretion of the Company andin accordance with its terms, without material liability to Parent or anyCompany Party other than ordinary administration expenses typically incurred ina termination event. Neither the execution of this Agreement nor theconsummation of the Contemplated Transactions shall constitute an event causingthe Company to fund any “rabbi” or similar trust.

###  

### (g)                                 InternationalEmployee Plans. Each of the Company International Employee Plans has beenestablished, maintained and administered in compliance in all material respectswith its terms and conditions and with the requirements prescribed by any andall statutory or regulatory Laws applicable to such International CompanyEmployee Plan. No Company International Employee Plan has unfunded liabilitiesthat as of the Effective Time will not be offset by insurance or fully accrued.No condition

 

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### exists thatwould prevent any Company Party or Parent from terminating or amending anyInternational Company Employee Plan at any time for any reason.

###  

### (h)                                 MassachusettsLaw. The Company Parties are in compliance in all material respects withthe applicable provisions of Chapter 58 of the Commonwealth of Massachusetts Actsof 2006, “An Act Providing Access to Affordable, Quality Accountable HealthCare” (the “Massachusetts Health Care Act”) and the regulationspromulgated thereunder. The Company Parties have properly classified andaccounted for all part time personnel (including seasonal and temporarypersonnel) and independent contractors in a manner that complies with theMassachusetts Health Care Act. The Company Parties make, or make available, afair share contribution towards the costs of health care for their employees tothe extent required by the Massachusetts Health Care Act.

###  

## Section 3.24                                EmployeeMatters. Each Company Party is in compliance with all Applicable Lawsrespecting terms and conditions of employment, including applicant and employeebackground checking, immigration Laws, discrimination Laws, verification ofemployment eligibility, employee leave Laws, classification of workers asemployees and independent contractors, wage and hour Laws, and occupationalsafety and health Laws. There are no Proceedings pending or, to the Knowledgeof the Company Parties, reasonably expected or threatened, between theapplicable Company Party, on the one hand, and any or all of its current orformer employees, on the other hand, including any claims for actual or allegedharassment or discrimination based on race, national origin, age, sex, sexualorientation, religion, disability, or similar tortious conduct, breach ofcontract, wrongful termination, defamation, intentional or negligent inflictionof emotional distress, interference with contract or interference with actualor prospective economic advantage. There are no claims pending, or, to theKnowledge of the Company Parties, reasonably expected or threatened, againstthe applicable Company Party under any workers’ compensation or long termdisability plan or policy. No Company Party has any material unsatisfiedobligations to any employees, former employees, or qualified beneficiariespursuant to COBRA, HIPAA, or any state Law governing health care coverageextension or continuation. No Company Party is a party to any collectivebargaining agreement or other labor union contract, and the Company does notknow of any activities or proceedings of any labor union to organize theemployees of any Company Party. Each Company Party has provided or shall as ofthe Closing Date have provided all employees with all wages, benefits,relocation benefits, stock options, bonuses and incentives, and all othercompensation that became due and payable through the date of this Agreement andthat shall become due and payable through the Closing Date.

##  

## Section 3.25                                Insurance.Section 3.25 of the Company Disclosure Schedule sets forth alist of all material policies or binders of fire, liability, product liability,workmen’s compensation, vehicular, directors’ and officers’ and other insuranceheld by or on behalf of the Company Parties. Such policies and binders are infull force and effect, are reasonably believed by the Company to be adequatefor the businesses engaged in by the Company Parties and are in conformity inall material respects with the requirements of all Contracts to which eachCompany Party is a party and are valid and enforceable in accordance with theirterms. No Company Party is in default with respect to any provision containedin any such policy or binder nor has any Company Party failed to give anynotice or present any claim under any such policy

 

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## or binder in due and timely fashion. There are no outstanding unpaidclaims under any such policy or binder. No Company Party has received notice ofcancellation or non-renewal of any such policy or binder.

##  

## Section 3.26                                Compliancewith Laws.

##  

### (a)                                  EachCompany Party has complied with, is not in violation of and has not receivedany notices of violation with respect to, any Applicable Law with respect tothe conduct of its business, or the ownership or operation of its business.

###  

### (b)                                 TheCompany Parties have conducted their business and operations in compliance inall material respects with all Applicable Laws, including import and exportcompliance Laws and Laws relating to data privacy.

###  

### (c)                                  EachCompany Party has obtained and, where applicable renewed, each Permit necessaryto the ownership of its properties or to the conduct of its business, and,after giving effect to the Contemplated Transactions, all such Permits willcontinue to be valid and in full force. The Company Parties are in compliancewith the terms of all Permits applicable to the Company Parties in all materialrespects.

###  

### (d)                                 Section 3.26of the Company Disclosure Schedule sets forth each Contract thatmaterially deviates from the standard procedures or standard provisions of theCompany Parties with respect to import or export compliance or data privacy.

###  

## Section 3.27                                Absenceof Questionable Payments. No Company Party or any director, officer, agent,employee or other Person acting on behalf of any Company Party has used anycorporate or other funds for unlawful contributions, payments, gifts orentertainment, or made any unlawful expenditures relating to political activityto government officials or others or established or maintained any unlawful orunrecorded funds that would result in a violation of Section 30A of theExchange Act if such provision were applicable to such Company Party. NoCompany Party or any current director, officer, agent, employee or other personacting on behalf of any Company Party, has accepted or received any unlawfulcontributions, payments, gifts or expenditures. The Company Parties are incompliance with the provisions of Section 13(b) of the Exchange Act.

##  

## Section 3.28                                Brokers’and Finders’ Fee. No broker, finder or investment banker is entitled tobrokerage or finders’ fees or agents’ commissions or investment bankers’ feesor any similar charges in connection with the Merger, this Agreement or any ofthe Contemplated Transactions.

##  

## Section 3.29                                PrivacyPolicies and Web Site Terms and Conditions.

##  

### (a)                                  Forpurposes of this Section 3.29:

###  

#### (i)                                     “CompanySites” means all public sites of the Company Parties on the World Wide Web.

 

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#### (ii)                                  “PrivacyStatements” means, collectively, any and all privacy policies of theCompany Parties published on the Company Sites or otherwise made available bythe Company Parties regarding the collection, retention, use and distributionof the personal information of individuals, including from visitors of any ofthe Company Sites (“Individuals”); and

####  

#### (iii)                               “Termsand Conditions” means any and all of the visitor terms and conditionspublished on the Company Sites governing Individuals’ use of and access to theCompany Sites.

####  

### (b)                                 APrivacy Statement is posted and is accessible to Individuals at all times oneach Company Site. The Company maintains a hypertext link to a PrivacyStatement from the homepage of each Company Site, and the Company uses itsbest efforts to include a hypertext link to a Privacy Statement from every page ofthe Company Sites on which personal information is collected from Individuals.

###  

### (c)                                  ThePrivacy Statements include, at a minimum, notice to Individuals about theCompany Parties’ collection, retention, use and disclosure policies andpractices with respect to Individuals’ personal information. The PrivacyStatements are, in all material respects, accurate and consistent with theTerms and Conditions and the Company Parties’ actual practices (subject toreinforcement by the Company upon any identified lapses) with respect to thecollection, retention, use and disclosure of Individuals’ personal information.

###  

### (d)                                 TheCompany Parties employ reasonable and prudent measures designed to insure thatthe Company Parties (i) comply with the Privacy Statements as applicableto any given set of personal information collected by the Company Parties fromIndividuals; (ii) comply with all applicable privacy Laws regarding thecollection, retention, use and disclosure of personal information; and (iii) takeall appropriate and industry standard measures to protect and maintain theconfidential nature of the personal information provided to the Company Partiesby Individuals. The Company Parties have adequate technological and proceduralmeasures in place to protect personal information collected from Individualsagainst loss, theft and unauthorized access or disclosure. The Company Partiesdo not knowingly collect information from or target children under the age ofthirteen. The Company Parties do not sell, rent or otherwise make available tothird parties any personal information submitted by Individuals.

###  

### (e)                                  Thecollection, retention, use and distribution by the Company Parties of allpersonal information collected by the Company Parties from Individuals isgoverned by the Privacy Statement pursuant to which the data was collected. EachPrivacy Statement contains rules for the review, modification and deletionof personal information by the applicable Individual, and the Company Partiesare and have been at all times in compliance with such rules in allmaterial respects. All versions of the Privacy Statements are attached heretoin Section 3.29(e) of the Company Disclosure Schedule. Otherthan as constrained by the Privacy Statements and by Applicable Laws, theCompany Parties are not restricted in their use and/or distribution of personalinformation collected by them.

 

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###  

### (f)                                    TheCompany Parties have the full power and authority to transfer all rights theCompany Parties have in all Individuals’ personal information in the CompanyParties’ possession and/or control to Parent. The Privacy Statements expresslypermit the transfer of all personal information collected from Individuals bythe Company Parties in accordance with the acquisition or sale of all orsubstantially all of the assets of the Company. The Company Parties are not aparty to any Material Contract, or subject to any other obligation that,following the Effective Time, would prevent Parent and/or its Affiliates fromusing the information governed by the Privacy Statements in a manner consistentwith applicable privacy Laws regarding the disclosure and use of information. Noclaims or controversies have arisen regarding the Privacy Statements or theimplementation thereof or of any of the foregoing.

###  

### (g)                                 TheTerms and Conditions are posted and are accessible to Individuals at all timeson the Company Site. The Terms and Conditions expressly permit the transfer ofpersonal information collected from Individuals by the Company Parties inaccordance with the acquisition or sale of all or substantially all of theassets of the Company Parties. No claims or controversies have arisen regardingthe Terms and Conditions or the implementation thereof or of any of theforegoing.

###  

## Section 3.30                                InternationalTrade Matters. The Company Parties are, and at all times have been, incompliance with and have not been and are not in material violation of anyInternational Trade Law, including all Laws related to the import and export ofcommodities, software, and technology from and into the United States, and thepayment of required duties and tariffs in connection with same. The CompanyParties have no basis to expect, nor has any of them or any other Person forwhose conduct they are or may be held to be responsible received, anyactual or threatened Order, notice, or other communication from anyGovernmental Body of any actual or potential violation or failure to complywith any International Trade Law. “International Trade Law” shall meanLaws applicable to international transactions, including the Export AdministrationAct, the Export Administration Regulations, the Foreign Corrupt Practices Act,the Arms Export Control Act, the International Traffic in Arms Regulations, theInternational Emergency Economic Powers Act, the Trading with the Enemy Act,the U.S. Customs Laws, the Foreign Asset Control Regulations, and anyregulations or orders issued thereunder.

##  

## Section 3.31                                RepresentationsComplete. None of the representations or warranties made by any CompanyParty herein or in any Schedule or Exhibit hereto, including theCompany Disclosure Schedule, or certificate furnished by any Company Partypursuant to this Agreement or any written statement furnished to Parentpursuant hereto or in connection with the Contemplated Transactions, when allsuch documents are read together in their entirety, contain any untruestatement of a material fact, or omits to state any material fact necessary inorder to make the statements contained herein or therein, in the light of thecircumstances under which made, not misleading.

##  

## Section 3.32                                CommissionFilings. No Company Party is required to file any forms, reports,schedules, statements or other documents with the SEC.

 

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##  

## Section 3.33                                TakeoverStatutes. The Board of Directors of the Company has taken the necessaryaction to render Section 203 of the DGCL and any other potentiallyapplicable anti-takeover statute or regulation inapplicable to this Agreementand the Contemplated Transactions.

##  

# ARTICLE IV

 

# REPRESENTATIONS AND WARRANTIES OF PARENT ANDSUB

#  

Parent and Merger Sub represent and warrant to the Company that thestatements contained in this Article IV are true and correct,except as disclosed in a document of even date herewith and delivered by Parentto the Company on the date hereof referring to the representations andwarranties in this Agreement (the “Parent Disclosure Schedule”). TheParent Disclosure Schedule will be arranged in sections corresponding tothe lettered and numbered paragraphs contained in this Article IV,and the disclosure in any such numbered and lettered section of the ParentDisclosure Schedule shall qualify only the corresponding section inthis Article V (except to the extent disclosure in any numbered andlettered section of the Parent Disclosure Schedule is specificallycross-referenced in another numbered and lettered section of the ParentDisclosure Schedule).

 

## Section 4.1                                      Organization,Standing and Power. Each of Parent and Merger Sub is a corporation dulyorganized, validly existing and in good standing under the Laws of the state ofDelaware. Each of Parent and Merger Sub has the corporate power to own itsproperties and to carry on its business as now being conducted and as proposedto be conducted and is duly qualified to do business and is in good standing ineach jurisdiction where the character of the property owned or leased by it orthe nature of the activities or business conducted by it makes suchqualification necessary. Parent has delivered a true and correct copy of theCertificate of Incorporation and Bylaws or other charter documents, asapplicable, of Parent and Merger Sub, each as amended to date, to the Company. NeitherParent nor Merger Sub is in violation of any of the provisions of itsCertificate of Incorporation or Bylaws.

##  

## Section 4.2                                      Authority.Parent and Merger Sub have all requisite corporate power and authority to enterinto this Agreement and to consummate the Contemplated Transactions. Theexecution and delivery of this Agreement and the consummation of the ContemplatedTransactions have been, or will have been by the Closing, duly authorized byall necessary corporate action on the part of Parent and Merger Sub. ThisAgreement has been duly executed and delivered by Parent and Merger Sub andconstitutes the valid and binding obligation of Parent and Merger Subenforceable against Parent and Merger Sub in accordance with its terms, exceptas may be limited by bankruptcy, insolvency, reorganization, moratorium orother similar Laws affecting or relating to creditors’ rights generally, andsubject to general principles of equity. The execution and delivery of thisAgreement do not, and the consummation of the Contemplated Transactions willnot, conflict with, or result in any violation of, or default under (with orwithout notice or lapse of time, or both), or give rise to a right oftermination, cancellation or acceleration of any material obligation or loss ofa material benefit under (a) any provision of the Certificate ofIncorporation or Bylaws of Parent or any of its Subsidiaries; or (b) anymaterial Contract, Permit, Order or Law applicable to Parent or any of itsSubsidiaries or their respective properties or assets. No Consent or Order ofor registration, declaration or filing with any Governmental Body is requiredby or with respect to Parent or any of its Subsidiaries in 

 

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connection with the execution and delivery of this Agreement by Parentand Merger Sub or the consummation by Parent and Merger Sub of the ContemplatedTransactions, except for (a) the filing of the Agreement of Merger,together with the required officers’ certificates, and the filing of theCertificate of Merger; (b) any filings required under Regulation D of theSecurities Act following the Effective Time; (c) the filing of a Form 8-Kwith the SEC within fifteen (15) days after the Closing Date; and (d) suchConsents, Orders, registrations, declarations and filings as may berequired under applicable state securities Laws and the securities Laws of anyforeign country.

##  

## Section 4.3                                      Issuanceof Shares. The issuance and delivery of the Parent Common Stock as MergerConsideration in accordance with this Agreement shall be, at or prior to theEffective Time, duly authorized by all necessary corporate action on the part ofParent, and, when issued at the Effective Time as contemplated hereby, suchshares of Parent Common Stock will be duly and validly issued, fully paid andnonassessable. Such Parent Common Stock, when so issued and delivered in accordancewith the provisions of this Agreement, shall be free and clear of all liens andencumbrances and adverse claims, other than restrictions on transfer created byapplicable securities Laws and will not have been issued in violation of theirrespective properties or any preemptive rights or rights of first refusal orsimilar rights.

##  

## Section 4.4                                      InterimOperations of Merger Sub. Merger Sub was formed solely for the purpose ofengaging in the Contemplated Transactions, has engaged in no other business activitiesand has conducted its operations only as contemplated by this Agreement.

##  

## Section 4.5                                      Finders’or Advisors’ Fees. Except for Software Equity Group, LLC, there is noinvestment banker, broker, finder or other intermediary which has been retainedby or is authorized to act on behalf of Parent and Merger Sub who might beentitled to any fee or commission in connection with the ContemplatedTransactions.

##  

## Section 4.6                                      SECFilings; Financial Statements.

##  

### (a)                                  Parent has timely filed all registration statements, prospectuses,forms, reports, definitive proxy statements, schedules and documents requiredto be filed by it under the Securities Act or the Exchange Act, as the case may be,since January 1, 2005 (collectively, the “Parent SEC Filings”). EachParent SEC Filing, (i) as of its date, complied in all material respectswith the requirements of the Securities Act or Exchange Act, as the case may be,and (ii) did not, at the time it was filed, contain any untrue statementof a material fact or omit to state a material fact required to be statedtherein or necessary in order to make the statements made therein, in the lightof the circumstances under which they were made, not misleading.

###  

### (b)                                 Each of the consolidated financial statements (including in each case,any notes thereto) contained in any Parent SEC Filings was prepared inaccordance with GAAP (except as may be indicated in the notes thereto and,in the case of unaudited quarterly financial statements, as permitted by Form 10-Qunder the Exchange Act), and each presented fairly the consolidated financialposition, results of operations and cash flows of Parent as of the respectivedates thereof and for the respective periods indicated therein (subject, in thecase of unaudited statements, to normal and recurring year-end 

 

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### adjustmentswhich did not and would not, individually or in the aggregate, reasonably beexpected to have a material and adverse effect to the business, condition(financial or other), results of operations, performance or properties ofParent, taken as a whole).

###  

## Section 4.7                                      Absenceof Certain Changes or Events. Except as disclosed inParent SEC Filings filed with the SEC prior to the date hereof, since December 31,2006, Parent has conducted its business only in the ordinary course and therehas not been: (i) any change in or effect on the assets, liabilities,financial condition, operating results or business of Parent, except changes oreffects which (x) have not been, in the aggregate, materially adverse, (y) relate,in general, to the economy or securities markets of the United States or anyother region, or (z) relate to the industry in which Parent operatesgenerally; (ii) any declaration, setting aside or payment of any dividendor other distribution (whether in cash, stock or property) with respect to anyof Parent’s capital stock; (iii) any split, combination orreclassification of any of Parent’s capital stock or any issuance (or theauthorization of any issuance) of any other securities in respect of, in lieuof or in substitution for shares of Parent’s capital stock; (iv) anydamage, destruction or loss, whether or not covered by insurance, which wouldhave a material adverse effect on the assets, liabilities, financial condition,operating results or prospects of Parent; or (v) any change in accountingmethods, principles or practices by Parent materially affecting its assets,liabilities, financial condition or operating results, except insofar as may havebeen required by a change in GAAP.

##  

# ARTICLE V

 

# ADDITIONAL AGREEMENTS

#  

## Section 5.1                                      Conductof Business of the Company. During the period from the date of thisAgreement and continuing until the earlier of the termination of this Agreementor the Effective Time, the Company agrees (except to the extent expresslycontemplated by this Agreement or as consented to in writing by Parent) to (andto cause each other Company Party to):  (a) carryon its business in the usual regular and ordinary course in substantially thesame manner as heretofore conducted; (b) pay its debts and Taxes when duesubject (i) to good faith disputes over such debts or Taxes; and (ii) toParent’s consent to the filing of material Tax Returns, if applicable; (c) payor perform other obligations when due; and (d) use all reasonableefforts to preserve intact its present business organizations, keep availablethe services of its present officers and key employees and preserve itsrelationships with customers, suppliers, distributors, licensors, licensees, andothers having business dealings with it, to the end that its goodwill andongoing businesses shall be unimpaired at the Effective Time. The Companyagrees to promptly notify Parent of (a) any event or occurrence not in theordinary course of the business of any Company Party, and of any event whichcould reasonably be expected to have a Material Adverse Effect on any CompanyParty; and (b) any change in its capitalization as set forth in Section 3.5.Without limiting the foregoing, except as expressly contemplated by thisAgreement or the Company Disclosure Schedule, the Company shall not do, causeor permit (or cause or permit any other Company Party to do, cause or permit)any of the following, without the prior written consent of Parent:

##  

### (a)                                  CharterDocuments. Cause or permit any amendments to its Organizational Documents;

 

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### (b)                                 Dividends,Changes in Capital Stock. Declare or pay any dividends on or make any otherdistributions (whether in cash, stock or property) in respect of any of itscapital stock (except such dividends as may be permitted pursuant to Section 2.13(b)),or split, combine or reclassify any of its capital stock or issue or authorizethe issuance of any other securities in respect of, in lieu of or insubstitution for shares of its capital stock, or repurchase or otherwiseacquire, directly or indirectly, any shares of its capital stock except fromformer employees, directors and consultants in accordance with agreementsproviding for the repurchase of shares in connection with any termination ofservice to it;

###  

### (c)                                  StockOption Plans, Etc. Accelerate, amend or change the period of exercisabilityor vesting of options or other rights granted under its stock plans orauthorize cash payments in exchange for any options or other rights grantedunder any of such plans;

###  

### (d)                                 Issuanceof Securities. Issue, deliver or sell or authorize or propose the issuance,delivery or sale of, or purchase or propose the purchase of, any shares of itscapital stock or securities convertible into, or subscriptions, rights,warrants or options to acquire, or other agreements or commitments of anycharacter obligating it to issue any such shares or other convertiblesecurities other than the issuance of shares of its Common Stock pursuant tothe exercise of stock options, warrants or other rights therefore outstandingas of the date of this Agreement;

###  

### (e)                                  IntellectualProperty. Transfer to any person or entity any rights to its IntellectualProperty other than in the ordinary course of business consistent with pastpractice;

###  

### (f)                                    ExclusiveRights. Enter into or amend any agreements pursuant to which any otherparty is granted exclusive marketing or other exclusive rights of any type orscope with respect to any of the Company Software Programs or CompanyIntellectual Property;

###  

### (g)                                 Dispositions.Sell, lease, license or otherwise dispose of or encumber any of its propertiesor assets that are material, individually or in the aggregate, to its business,taken as a whole;

###  

### (h)                                 Pledges,Etc. Sell or pledge or agree to sell or pledge any stock or other equityinterest owned by it in any other entity;

###  

### (i)                                     Indebtedness.Incur any indebtedness for borrowed money, or guarantee any such indebtedness,or issue or sell any debt securities or guaranty any debt securities of others,in excess of $10,000 in the aggregate;

###  

### (j)                                     Agreements.Other than Contracts in the Company’s standard form with customers enteredinto in the ordinary course of business, enter into, terminate or amend, in amanner that will adversely affect the business of any Company Party, (i) anyContract involving the obligation to pay or the right to receive $10,000 ormore, (ii) any

 

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###  

### Contractrelating to the license, transfer or other disposition or acquisition ofIntellectual Property rights or rights to market or sell the Company SoftwarePrograms or (iii) any other Contract material to the business or prospectsof the Company or that is or would be a Material Contract;

###  

### (k)                                  Paymentof Obligations. Pay, discharge or satisfy, in an amount in excess of$10,000 in the aggregate, any claims, liabilities or obligations (absolute,accrued, asserted or unasserted, contingent or otherwise) arising other than inthe ordinary course of business, other than the payment, discharge orsatisfaction of liabilities reflected or reserved against in the CompanyFinancial Statements;

###  

### (l)                                     AccountsPayable. Delay or postpone the payment of accounts payable or otherliabilities, other than in the ordinary course of business consistent with pastpractice;

###  

### (m)                               CapitalExpenditures. Make any capital expenditures, capital additions or capitalimprovements, in excess of $10,000 in the aggregate;

###  

### (n)                                 Insurance.Materially reduce the amount of any material insurance coverage provided byexisting insurance policies;

###  

### (o)                                 Terminationor Waiver. Terminate or waive any right of substantial value, other than inthe ordinary course of business;

###  

### (p)                                 EmployeeBenefit Plans, New Hires, Pay Increases. Amend any Company Employee Plan oradopt any plan that would constitute a Company Employee Plan except in order tocomply with applicable Laws, or hire any new officer-level employee, pay anyspecial bonus, special remuneration or special noncash benefit (except paymentsand benefits made pursuant to written agreements outstanding on the datehereof), or increase the benefits, salaries or wage rates of its employees;

###  

### (q)                                 Accelerationof Payments. Except as required by Article II, accelerate thepayment, right to payment or vesting of any bonus, severance, profit sharing,retirement, deferred compensation, stock option, insurance or othercompensation or benefits;

###  

### (r)                                    SeveranceArrangements. Grant or pay any severance or termination pay or benefits (i) toany director or officer or (ii) except for payments made pursuant towritten agreements outstanding on the date hereof and disclosed on the CompanyDisclosure Schedule, to any other employee;

###  

### (s)                                  Lawsuits.Commence or settle a lawsuit other than (i) for the routine collection ofbills, (ii) in such cases where the Company in good faith determines thatfailure to commence suit or settle would result in the material impairment of avaluable aspect of the Company’s business, provided that it consults withParent prior to the filing or settling of such a suit or (iii) for abreach of this Agreement;

###  

### (t)                                    Acquisitions.Acquire or agree to acquire by merging with, or by purchasing a substantialportion of the stock or assets of, or by any other manner, any 

 

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### business orany Person or division thereof or otherwise acquire or agree to acquire anyassets that are material individually or in the aggregate, to its business,taken as a whole;

###  

### (u)                                 Dispositions.Transfer or agree to transfer by merging into or consolidating with, or byselling a substantial portion of the stock or assets of, or by any othermanner, any business or any Person or division thereof or otherwise transfer oragree to transfer any assets that are material individually or in theaggregate, to the business of any Company Party, taken as a whole;

###  

### (v)                                 Anti-takeoverStatutes. Take any action to exempt or make any Person (other than Parent)not subject to the provisions of Section 203 of the DGCL or any otherpotentially applicable anti-takeover or similar Law;

###  

### (w)                               OtherActions. Take any action (including encouraging any other Person to takesuch action), engage in any transaction or enter into any Contract which wouldreasonably be likely to cause (A) any of the representations or warrantiesof the Company or the Principal Stockholders in this Agreement to be untrue at,or as of any time prior to, the Effective Time; (B) any of the conditionsset forth in Article VI to not be satisfied; (C) a MaterialAdverse Effect on the Company or (D) any impairment of the ability of theCompany, Parent or Merger Sub to consummate the Merger in accordance with theterms hereof or materially delay such consummation;

###  

### (x)                                   Taxes.Make or change any election in respect of Taxes, adopt or change any accountingmethod in respect of Taxes, file any Tax Return or any amendment to a TaxReturn, enter into any closing agreement, settle any material claim orassessment in respect of Taxes, or consent to any extension or waiver of thelimitation period applicable to any claim or assessment in respect of Taxes;

###  

### (y)                                 Revaluation.Revalue any of its assets, including writing down the value of inventory orwriting off notes or accounts receivable other than in the ordinary course ofbusiness or as required by changes in GAAP, or make any change in itsaccounting principles, practices or methods, except as required by ApplicableLaw or GAAP; or

###  

### (z)                                   Other.Take or agree in writing or otherwise to take, any of the actions described insubsections (a) through (y) above, or any action that would cause amaterial breach of its representations or warranties contained in thisAgreement or prevent it from materially performing or cause it not tomaterially perform its covenants hereunder.

###  

## Section 5.2                                      NoSolicitation of Other Offers. Except as otherwise required by ApplicableLaw:

##  

### (a)                                  Fromand after the date of this Agreement until the Effective Time, the Companyshall not, directly or indirectly through any Representative of any CompanyParty or otherwise:  (i) solicit,initiate, or encourage any inquiries or proposals that constitute, or couldreasonably be expected to lead to, a proposal or offer for a merger,consolidation, share exchange, business combination, sale of all orsubstantially all of the assets, sale of shares of capital stock or similartransactions involving any Company Party 

 

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### other than theContemplated Transactions (any of the foregoing inquiries or proposals an “AcquisitionProposal”); (ii) engage or participate in negotiations or discussionsconcerning, or provide any nonpublic information to any Person relating to, anyAcquisition Proposal; or (iii) agree to, enter into, accept, approve orrecommend any Acquisition Proposal. The Company represents and warrants that ithas the legal right to terminate any pending discussions or negotiationsrelating to an Acquisition Proposal without payment of any fee or otherpenalty.

###  

### (b)                                 TheCompany shall notify Parent immediately (and no later than twenty-four (24)hours) after receipt by any Company Party (or its Representatives) of anyAcquisition Proposal or any request for nonpublic information in connectionwith an Acquisition Proposal or for access to the properties, books or recordsof any Company Party by any Person that informs any Company Party that it isconsidering making, or has made, an Acquisition Proposal. Such notice shall bemade orally and in writing and shall indicate in reasonable detail the identityof the offeror and the terms and conditions of such proposal, inquiry orcontact.

###  

## Section 5.3                                      Accessto Information Concerning Properties and Records. During the periodcommencing on the date hereof and ending on the earlier of (i) theEffective Time or (ii) the date on which this Agreement is terminated, theCompany shall, and shall cause each Subsidiary of the Company to, uponreasonable notice, afford Parent and Merger Sub, and their respective counsel,accountants, consultants, financing sources and other authorizedrepresentatives, reasonable access to the officers, directors and employees,properties, books and records of the Company and each Subsidiary of the Companyand promptly furnish all requested information concerning their business,properties, Contracts, assets, liabilities, and personnel and facilitate accessto any of their lessors, lessees, suppliers, customers and business partners asis reasonably requested by Parent; provided, however, that suchinvestigation shall not affect the representations and warranties made by theCompany or the Principal Stockholders in this Agreement.

##  

## Section 5.4                                      ReasonableBest Efforts. Subject to the terms and conditions provided herein, each ofthe Company, Parent and Merger Sub shall, and the Company shall cause each ofits Subsidiaries to, cooperate and use their reasonable best efforts to take,or cause to be taken, all appropriate action, to adopt, or cause to be adopted,all appropriate resolutions and approvals and to make, or cause to be made, allfilings necessary, proper or advisable under Applicable Laws to consummate andmake effective the Contemplated Transactions, including their reasonable bestefforts to obtain prior to the Closing Date, all Permits, Consents, qualificationsand Orders as are necessary for consummation of the Contemplated Transactionsfor the operation of the business of the Company by the Surviving Corporationas presently conducted by the Company and contemplated to be conducted by theSurviving Corporation and to fulfill the conditions to the Merger.

##  

## Section 5.5                                      Saleof Shares Pursuant to Regulation D. The Parties hereto acknowledge andagree that the shares of Parent Common Stock issuable to the Companystockholders pursuant to Section 2.7 hereof shall constitute “restrictedsecurities” within the Securities Act. The certificates of Parent Common Stockshall bear the legends set forth in Section 2.9. The Company willuse its best efforts to cause each Eligible Company Holder who will receive 

 

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##  

## Parent Common Stock to execute and deliver to Parent an AccreditedInvestor Certificate in the form attached hereto as Exhibit B.It is acknowledged and understood that Parent is relying on the writtenrepresentations made by each stockholder of the Company in the AccreditedInvestor Certificates.

##  

## Section 5.6                                      Registrationof Parent Common Stock. The Parties acknowledgethat the shares of Parent Common Stock, if any, to be issued as part ofthe Merger Consideration will not be registered with the SEC or any otherGovernmental Body at the time of issuance and are being issued in reliance onan exemption from registration under the Securities Act and applicable blue skyLaws. Simultaneous with the execution hereof, Parent shall enter into aregistration rights agreement (the “Registration Rights Agreement”) insubstantially the form attached hereto as Exhibit C. TheRegistration Rights Agreement shall, among other things, identify each EligibleCompany Holder who shall receive shares of Parent Common Stock pursuant to theMerger as an intended third party beneficiary of the provisions of suchagreement.

##  

## Section 5.7                                      Notificationof Certain Matters. The Company and the Principal Stockholders shallpromptly after becoming aware thereof advise Parent of (a) anyrepresentation or warranty made by the Company or the Principal Stockholderscontained in this Agreement becoming untrue or inaccurate in any respect, (b) thefailure by the Company or the Principal Stockholders to comply with or satisfyin any material respect any covenant, condition or agreement to be compliedwith or satisfied by such Parties under this Agreement or (c) any changeor event (i) having, or which could, individually or in the aggregate,have a Material Adverse Effect on any Company Party or (ii) which hasresulted, or which, insofar as can reasonably be foreseen, would result, in anyof the conditions set forth in Article VI not being satisfied; provided,however, that no such notification shall affect the representations,warranties, covenants or agreements of the Company or the other conditions tothe obligations of Parent or Merger Sub under this Agreement.

##  

## Section 5.8                                      PublicAnnouncements. The Parties shall consult with each other before issuing anypress release or otherwise making any public statements with respect to theContemplated Transactions and shall not issue any such press release or makeany such public statement prior to such consultation and review by the otherParties of such release or statement or without the prior consent of the otherParties, which consent shall not be unreasonably withheld, conditioned ordelayed; provided, however, that a Party may, without the priorconsent of the other Parties, issue such press release or make such publicstatement if it is advised by counsel such statement is required by Law or anylisting agreement with a national securities exchange or automated quotationsystem which Parent or the Company is a party to, if it has used all reasonablebest efforts to consult with the other Parties and to obtain such Parties’consent but has been unable to do so in a timely manner.

##  

## Section 5.9                                      Resignationof Directors and Officers. Prior to the Effective Time, the Company shallcause each member of its Board of Directors and every member of the Board ofDirectors of each Subsidiary of the Company, to execute and deliver a lettereffectuating his or her resignation as a director of the Board of Directors ofthe applicable Company Party effective immediately prior to the Effective Time.Prior to the Effective Time the Company shall cause each officer of the Companyand of each Subsidiary of the Company, to execute and deliver a 

 

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## letter effectuating his or her resignation as an officer of theapplicable Company Party, as the case may be, effective immediately priorto the Effective Time.

##  

## Section 5.10                                RegulatoryApproval; Further Assurances.

##  

### (a)                                  EachParty shall use all reasonable efforts to file, as promptly as practicableafter the date of this Agreement, all notices, reports and other documentsrequired to be filed by such Party with any Governmental Body with respect tothe Merger and the other Contemplated Transactions, and to submit promptly anyadditional information requested by any such Governmental Body.

###  

### (b)                                 Subjectto Section 5.10(c) Parent and the Company shall use allreasonable efforts to take, or cause to be taken, all actions necessary toeffectuate the Merger and make effective the other Contemplated Transactions.Without limiting the generality of the foregoing, but subject to Section 5.10(c) eachParty to this Agreement shall:  (i) makeany filings and give any notices required to be made and given by such Party inconnection with the Merger and the other Contemplated Transactions; (ii) useall reasonable efforts to obtain any Consent required to be obtained (pursuantto any Applicable Law or applicable Contract, or otherwise) by such Party inconnection with the Merger or any of the other Contemplated Transactions; and (iii) useall reasonable efforts to lift any restraint, injunction or other legal bar tothe Merger. Each Party shall promptly deliver to the other a copy of each suchfiling made, each such notice given and each such Consent obtained by suchParty during the period prior to the Effective Time. Each Party, at thereasonable request of the other Party, shall execute and deliver such otherinstruments and do and perform such other acts and things as may benecessary or desirable for effecting completely the consummation of thisAgreement and the Contemplated Transactions.

###  

### (c)                                  Notwithstandinganything to the contrary contained in this Agreement, Parent shall not have anyobligation under this Agreement to: (i) dispose or transfer or cause anyof its Subsidiaries to dispose of or transfer any assets, or to commit to causeany Company Party or the Surviving Corporation to dispose of any assets; (ii) discontinueor cause any of its Subsidiaries to discontinue offering any product orservice, or commit to cause any Company Party or the Surviving Corporation todiscontinue offering any product or service; (iii) license or otherwisemake available, or cause any of its Subsidiaries to license or otherwise makeavailable, to any Person, any technology, software or other IntellectualProperty, or commit to cause any Company Party or the Surviving Corporation tolicense or otherwise make available to any Person any technology, software orother Intellectual Property; (iv) hold separate or cause any of itsSubsidiaries to hold separate any assets or operations (either before or afterthe Closing Date), or commit to cause any Company Party or the SurvivingCorporation to hold separate any assets or operations; or (v) make orcause any of its Subsidiaries to make any commitment (to any Governmental Bodyor otherwise) regarding its future operations or the future operations of anyCompany Party or the Surviving Corporation.

###  

## Section 5.11                                BlueSky Laws. Parent shall take such steps as may be necessary to complywith the securities and blue sky Laws of all jurisdictions applicable to theissuance of the 

 

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## Parent Common Stock in connection with the Merger. The Company shalluse its commercially reasonable efforts to assist Parent to comply with thesecurities and blue sky Laws of all jurisdictions applicable to the issuance ofParent Common Stock in connection with the Merger.

##  

## Section 5.12                                Employees.The Company will use commercially reasonable efforts in consultation withParent to retain certain employees of the Company Parties through the EffectiveTime and following the Merger.

##  

## Section 5.13                                Expenses.Whether or not the Merger is consummated, all costs and expenses incurred inconnection with this Agreement and the Contemplated Transactions shall be paidby the party incurring such expense.

##  

## Section 5.14                                SpecialIndemnity Insurance. The Parent shall apply for and obtain the SpecialIndemnity Insurance, provided that the Company shall pay all fees and expensesassociated therewith, including all premiums and any and all loss mitigationand due diligence fees. For purposes of this Agreement, “Special IndemnityInsurance” shall mean a representations and warranties insurance policy insubstantially the form of Exhibit F attached hereto.

##  

# ARTICLE VI

#  

# CONDITIONS TO THE MERGER

#  

## Section 6.1                                      Conditionsto Each Party’s Obligations to Effect the Merger. The respectiveobligations of each Party to consummate the Contemplated Transactions aresubject to the satisfaction or waiver (subject to Applicable Law), at or priorto the Effective Time, of each of the following conditions:

##  

### (a)                                  StockholderApproval. This Agreement, the Merger and the other ContemplatedTransactions shall be approved by the stockholders of the Company by therequisite vote under Delaware Law and the Company’s Certificate ofIncorporation and Bylaws.

###  

### (b)                                 NoInjunctions or Restraints; Illegality. No temporary restraining order,preliminary or permanent injunction or other order issued by any court of competentjurisdiction or other legal or regulatory restraint or prohibition preventingthe consummation of the Merger shall be and remain in effect, nor shall anyProceeding brought by an administrative agency or commission or otherGovernmental Body seeking any of the foregoing be pending, which couldreasonably be expected to have a Material Adverse Effect on Parent, eitherindividually or combined with the Surviving Corporation after the EffectiveTime, nor shall there be any action taken, or any Law or Order enacted,entered, enforced or deemed applicable to the Merger, which makes theconsummation of the Merger illegal.

###  

### (c)                                  GovernmentalApproval. Parent, the Company and Merger Sub shall have timely obtainedfrom each Governmental Body all Consents necessary for consummation of or inconnection with the Merger and the other Contemplated Transactions, including 

 

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### such Consentsas may be required under the Securities Act and under state blue sky Laws.

###  

## Section 6.2                                      Conditionsto Parent’s and Merger Sub’s Obligations to Effect the Merger. Therespective obligations of Parent and Merger Sub to consummate the ContemplatedTransactions are subject to the satisfaction or waiver (subject to ApplicableLaw), at or prior to the Effective Time, of each of the following conditions:

##  

### (a)                                  Representationsand Warranties. The representations and warranties of the Company and thePrincipal Stockholders in this Agreement shall be true and correct at and as ofthe Closing Date as though such representations and warranties were made at andas of the Closing Date, except (i) to the extent the failure of suchrepresentations and warranties to be true and correct shall not have a CompanyMaterial Adverse Effect (disregarding, for this purpose, qualifiers as tomateriality contained in any such representations and warranties), and (ii) forthose representations and warranties which address matters only as of aparticular date (which shall be true and correct as of such date).

###  

### (b)                                 Compliancewith Obligations. The Company and the Principal Stockholders shall haveperformed and complied in all material respects with each obligation, agreementor covenant of the Company and the Principal Stockholders to be performed orcomplied with by them as of the Closing Date under this Agreement.

###  

### (c)                                  Certificateof Officers. Parent and Merger Sub shall have received a certificateexecuted on behalf of the Company by the Chief Executive Officer and ChiefFinancial Officer of the Company, dated as of the Closing Date, certifying theconditions set forth in Sections 6.2(a) and 6.2(b) havebeen satisfied.

###  

### (d)                                 Secretary’sCertificate. Parent and Merger Sub shall have received a certificateexecuted on behalf of the Company by the Secretary of the Company, dated as ofthe Closing Date certifying that the attached copies of the resolutions oractions of the Company’s board of directors and the stockholders approving theexecution and delivery of this Agreement and the performance of the Company’sand the Principal Stockholders’ obligations hereunder and the consummation ofthe Contemplated Transactions are true, correct and complete, were duly adoptedand are in full force and effect.

###  

### (e)                                  GoodStanding. Parent and Merger Sub shall have received (i) a certificateas to the good standing of the Company issued by the Secretary of State for theState of Delaware, dated within thirty (30) days of the Closing, (ii) agood standing certificate as to the good standing of each Subsidiary of theCompany issued by the applicable Government Body of the jurisdiction oforganization of each Subsidiary, dated within thirty (30) days of the Closing, (iii) acertificate from the Massachusetts Secretary of State as to the duequalification of the Company and, if applicable, each other Company Party, todo business in Massachusetts, dated within thirty (30) days of the Closing, (iv) acertificate from the Massachusetts Department of Revenue as to the tax goodstanding of the Company and, if applicable, each other Company Party, in theCommonwealth of Massachusetts, dated within thirty (30) days of the Closing, (v) 

 

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### certificatesas to the good standing and qualification to do business as a foreign entityfor each Company Party in each other jurisdiction where such Company Party isqualified to do business as a foreign entity, dated within thirty (30) days ofthe Closing, and (vi) certificates of no Tax due in each jurisdictionwhere any Company Party is qualified to do business.

###  

### (f)                                    ThirdParty Consents. All Consents required to be obtained in connection with theMerger and the other Contemplated Transactions shall have been obtained andshall be in full force and effect.

###  

### (g)                                 NoGovernmental Litigation. There shall not be pending or threatened anyProceeding in which a Governmental Body is or is threatened to become a partyor is otherwise involved, and neither Parent nor any Company Party shall havereceived any communication from any Governmental Body in which such GovernmentalBody indicates the probability of commencing any Proceeding or taking any otheraction:  (i) challenging or seekingto restrain or prohibit the consummation of the Merger; (ii) relating tothe Merger and seeking to obtain from Parent or any of its Subsidiaries, or anyCompany Party, any damages or other relief that would be material to Parent; (iii) seekingto prohibit or limit in any material respect Parent’s ability to vote, receivedividends with respect to or otherwise exercise ownership rights with respectto the stock (or other ownership interest) of the Company Parties; or (iv) thatwould materially and adversely affect the right of Parent, Merger Sub, theSurviving Corporation or any Company Party to own the assets or operate thebusiness of the Company Parties.

###  

### (h)                                 Opinionof the Company’s Counsel. Parent and Merger Sub shall have received awritten opinion from the Company’s legal counsel in form and substancereasonably satisfactory to Parent.

###  

### (i)                                     NoOther Litigation. There shall not be pending any other Proceeding:  (i) challenging or seeking to restrainor prohibit the consummation of the Merger or any of the other ContemplatedTransactions; (ii) relating to the Merger and seeking to obtain fromParent or any of its Subsidiaries, or any Company Party, any damages or otherrelief that would be material to Parent; (iii) seeking to prohibit orlimit in any material respect Parent’s ability to vote, receive dividends withrespect to or otherwise exercise ownership rights with respect to any capital stock(or other ownership interest) of any Company Party; or (iv) which wouldaffect adversely the right of Parent, Merger Sub, the Surviving Corporation orany Company Party to own the assets or operate the business of any CompanyParty.

###  

### (j)                                     Employees.As of the Closing, there shall be sufficient employees of the applicableCompany Parties, in Parent’s reasonable good faith determination, to permitParent to continue to operate the business of the Company Parties in theordinary course of business following the Closing.

###  

### (k)                                  EscrowAgreement. Parent, Merger Sub, the Company, Escrow Agent and theStockholder Representative shall have entered into an Escrow Agreementsubstantially in the form attached hereto as Exhibit A.

 

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###  

### (l)                                     VotingAgreement. The Principal Stockholders shall have entered into and performedtheir respective obligations under the Voting Agreement.

###  

### (m)                               NoMaterial Adverse Change. There shall not have occurred any change in thefinancial condition, properties, assets (including intangible assets),liabilities, business, operations, results of operations or prospects of theCompany Parties, taken as a whole, that, individually or in the aggregate,could reasonably be expected to have a Company Material Adverse Effect.

###  

### (n)                                 AccreditedInvestor Certificate; Number of Shareholders. Each of the Company’sstockholders that will receive Parent Common Stock shall have delivered toParent a signed Accredited Investor Certificate in substantially the form attachedhereto as Exhibit B and each such Accredited Investor Certificateshall be in full force and effect.

###  

### (o)                                 EmploymentAgreements. Each of the key employees of the Company Parties shall haveexecuted and delivered the Employment Agreements, which shall includenon-competition provisions, in form and substance mutually acceptable toParent and the applicable employees.

###  

### (p)                                 TransmittalLetter. Each Eligible Company Holder other than Eligible Company Holderswhose shares constitute Dissenting Shares shall have completed and delivered toParent a signed transmittal letter in substantially the form attachedhereto as Exhibit E.

###  

### (q)                                 Dissenters’Rights. Not more than five percent (5%) of the capital stock of the Companyoutstanding immediately prior to the Effective Time shall be Dissenting Shares.

###  

### (r)                                    AccreditedInvestors. At least sixty-five percent (65%) of the capital stock of theCompany outstanding immediately prior to the Effective Time (assuming theexercise of all In-the-Money Options), shall be owned by “accredited investors”(as defined in the Securities Act of 1933).

###  

### (s)                                  SpecialIndemnity Insurance. The Special Indemnity Insurance policy shall have beenissued and delivered to the Parent.

###  

### (t)                                    Transferand Registration of Subsidiary Stock. All actions required under ApplicableLaw to effect the transfer of all of the outstanding shares of capital stock ofthe Subsidiaries to, or the registration of all of the outstanding shares ofcapital stock of the Subsidiaries in the name of, the Parent or its designeeshall have been fully performed in accordance with Applicable Law.

###  

### (u)                                 Repaymentof Certain Loans. Parent shall have received evidence reasonablysatisfactory to it that all loans from the Company to the employees of theCompany and to the Principal Stockholders outstanding immediately prior to theClosing shall have been repaid in full.

 

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##  

## Section 6.3                                      AdditionalConditions to Obligations of the Company. The obligations of the Company toconsummate the Contemplated Transactions shall be subject to the satisfactionat or prior to the Closing Date of each of the following conditions:

##  

### (a)                                  Representationsand Warranties. The representations and warranties of Parent and Merger Subin this Agreement shall be true and correct at and as of the Closing Date asthough such representations and warranties were made at and as of the ClosingDate, except (i) to the extent the failure of such representations andwarranties to be true and correct shall not have a Parent Material AdverseEffect (disregarding, for this purpose, qualifiers as to materiality containedin any such representations and warranties), and (ii) for thoserepresentations and warranties which address matters only as of a particulardate (which shall be true and correct as of such date).

###  

### (b)                                 Compliancewith Obligations. Parent and Merger Sub shall have performed and compliedin all material respects with each obligation, agreement or covenant of Parentand Merger Sub to be performed or complied with by them as of the Closing Dateunder this Agreement.

###  

### (c)                                  Certificateof Officers. The Company shall have received a certificate executed onbehalf of Parent by the Chief Executive Officer and Chief Financial Officer ofParent, dated as of the Closing Date, certifying the conditions set forth in Sections  6.3(a) and 6.3(b) havebeen satisfied.

###  

### (d)                                 EscrowConsideration. The Escrow Consideration shall have been deposited with theEscrow Agent as contemplated hereby and by the Escrow Agreement.

###  

### (e)                                  Secretary’sCertificate. The Company shall have received a certificate executed onbehalf of Parent and Merger Sub by the Secretary of each of Parent and MergerSub, dated as of the Closing Date certifying that the attached copies of theresolutions or actions of the board of directors and the stockholders of eachof Parent and Merger Sub approving the execution and delivery of this Agreementand the performance of the obligations of Parent and Merger Sub hereunder andthe consummation of the Contemplated Transactions are true, correct andcomplete, were duly adopted and are in full force and effect.

###  

### (f)                                    GoodStanding. The Company shall have received a good standing certificate ofeach of Parent and Merger Sub issued by the Secretary of State for the State ofDelaware, dated within thirty (30) days of the Closing.

###  

### (g)                                 RegistrationRights Agreement. Parent shall have executed the Registration RightsAgreement (which agreement shall identify each Eligible Company Holder whoreceives shares of Parent Common Stock pursuant to the Merger as an intendedthird party beneficiary of the provisions of such agreement), and suchagreement shall be in full force and effect.

###  

### (h)                                 Opinionof  Counsel for Parent and Merger Sub.The Company and the Eligible Company Holders shall have received a writtenopinion from legal counsel for 

 

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###  

### the Parent andthe Merger Sub in form and substance reasonably satisfactory to theCompany.

###  

# ARTICLE VII

 

# TERMINATION; FEES AND EXPENSES

#  

## Section 7.1                                      Termination.This Agreement may be terminated and the Contemplated Transactions may beabandoned, at any time prior to the Effective Time, whether before or afterapproval of the Merger by the stockholders of the Company:

##  

### (a)                                  bymutual written consent of the Company, Parent, Merger Sub and the PrincipalStockholders;

###  

### (b)                                 byeither Parent or the Company if the Merger shall not have been consummated by September 30,2007; provided, however, that the right to terminate thisAgreement under Section 7.1(b) shall not be available to anyParty whose failure to fulfill any obligation under this Agreement has been thecause of or resulted in the failure of the Merger to occur on or before suchdate;

###  

### (c)                                  byeither Parent or the Company if any Law shall have been promulgated whichprohibits the consummation of the Merger or if any Governmental Body shall haveissued an Order or taken any other action permanently restricting, enjoining,restraining or otherwise prohibiting the consummation of the Merger and suchOrder or other action shall have become final and nonappealable; provided,that the Party seeking to terminate pursuant to this Section 7.1(b) shallhave complied with its obligations under Section 5.4 to use itsreasonable best efforts to have any such Order or other action vacated orlifted;

###  

### (d)                                 byeither Parent or the Company if this Agreement and the Merger are not approvedby the requisite vote of the holders of Company Common Stock entitled to votethereon in accordance with Applicable Law, the Company’s Certificate ofIncorporation and the Company’s Bylaws, if required by Applicable Law;

###  

### (e)                                  byParent (i) if a Triggering Event shall have occurred, or (ii) if theAverage Closing Price shall be less than $.80; or (iii) if the Company orits Representatives participate in discussions or negotiations with, or furnishor disclose nonpublic information to, any Person in response to an AcquisitionProposal; or (iv) if the Company or the Principal Stockholders shall havebreached in any material respect any of their respective representations,warranties, covenants or other agreements contained in this Agreement, whichbreach cannot be or has not been cured within fifteen (15) days after giving ofwritten notice by Parent to the Company and the Principal Stockholders; or (v) ifthere shall have occurred a Company Material Adverse Effect; and

###  

### (f)                                    bythe Company if (i) Parent or Merger Sub shall have breached in anymaterial respect any of their respective representations, warranties, covenantsor other agreements contained in this Agreement, which breach cannot be or hasnot been cured within fifteen (15) days after giving of written notice by theCompany to Parent or 

 

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###  

### Merger Sub, asapplicable; (ii) if the Average Closing Price shall be less than $.80; or (iii) ifthere shall have occurred a Material Adverse Effect with respect to Parent.

###  

## Section 7.2                                      Effectof Termination. In the event of the termination of this Agreement pursuantto Section 7.1 hereof by Parent or the Company, written noticethereof shall forthwith be given to the other Parties hereto specifying theprovision hereof pursuant to which such termination is made, unless suchtermination is made pursuant to Section 7.1(a) in which caseno such notice shall be necessary, and this Agreement shall become void andhave no effect, and there shall be no liability hereunder on the part ofthe Parties, except (a) that Article IX to the extentapplicable and this Section 7.2 shall survive any termination ofthis Agreement and (b) nothing in this Section 7.2 shallrelieve any Party to this Agreement of liability for breach of this Agreement.

##  

# ARTICLE VIII

#  

# ESCROW AND INDEMNIFICATION

#  

## Section 8.1                                      Survival.Other than the representations and warranties contained in Sections 3.1,3.2, 3.5, 3.6, 3.20, 3.21, 3.22, 3.23,3.32, 4.1 and 4.2, which shall survive perpetually, andthe representations and warranties contained in Section 3.11, whichshall survive for a period of thirty (30) months from the Closing Date, all representations and warranties of the Parties contained in thisAgreement and the other agreements, documents, certificates, schedules orexhibits contemplated hereby or delivered in connection herewith (collectively,the “Related Documents”) shall survive the Effective Time and remainoperative and in full force and effect, regardless of any investigation ordisclosure made by or on behalf of any other Party, through the Final EscrowRelease Date; provided, however, that if notice of any claim forindemnification is given pursuant to Sections 8.2 or 8.3 prior tosuch time, the related representations and warranties, together with suchindemnification claim, shall survive until such time as such claim is finallyresolved. All covenants of the Parties shall survive according to theirrespective terms.

##  

## Section 8.2                                      Indemnificationby the Company and the Eligible Company Holders.

##  

### (a)                                  Subject to the provisions of this Article VIII, the Companyand each of the Eligible Company Holders shall jointly and severally indemnify,defend and hold harmless Parent and the Surviving Corporation and theirrespective Representatives, stockholders and each Person, if any, who controlsor may control Parent or the Surviving Corporation within the meaning ofthe Securities Act or the Exchange Act (collectively the “Parent IndemnifiedParties”), from and against any and all claims, demands, suits, actions,causes of action, losses, reductions in value, costs, damages (includingconsequential damages), liabilities and expenses, including reasonableattorneys’ fees, other professionals’ and experts’ fees and court orarbitration costs, amounts paid in settlement and sanctions (hereinaftercollectively referred to as “Damages”) (whether or not such Damages arefully identified, quantified, and/or incurred or suffered prior to the issuanceand delivery of the Parent Claim Notice with respect thereto) arising out of orrelated to:

 

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#### (i)                                     Any misrepresentation or breach of or default or inaccuracy in any ofthe representations or warranties of the Company and the Eligible CompanyHolders contained in this Agreement and/or any of the Related Documents;

####  

#### (ii)                                  Any breach or failure by the Company or by the Eligible Company Holdersto comply with any of their respective covenants contained in this Agreementand/or any of the Related Documents; and/or

####  

#### (iii)                               any third party claim, or threatened third party claim, asserted againstany Parent Indemnified Party arising out of the actions or inactions of theCompany or any Eligible Company Holders prior to the Effective Time.

####  

### (b)                                 Any claim for indemnification made by any Parent Indemnified Party underthis Section 8.2 must be made in writing delivered to theStockholder Representative no later than the Final Escrow Release Date (a “ParentClaim Notice”). Ifdelivered to the Stockholder Representative no later than the Final EscrowRelease Date, a claim for indemnification set forth in a ParentClaim Notice as provided herein shall survive the Final Escrow Release Dateuntil final resolution thereof as provided in this Article VIII.

###  

### (c)                                  Notwithstanding the foregoing provisionsof this Article VIII (or any other provision of this Agreement),the Parties agree that:

###  

#### (i)                                     in no event may any Parent Indemnified Party make a claim forindemnification under Section 8.2(a)(i) unless the amount ofthe Damages incurred by the Parent Indemnified Parties with respect to suchclaim exceeds $500;

####  

#### (ii)                                  the indemnification provided for in Section 8.2(a)(i) shallnot apply unless and until the aggregate Damages for which the ParentIndemnified Parties seek or have sought indemnification hereunder, as stated inone or more Parent Claim Notices, exceed a cumulative aggregate of $125,000(the “Basket”) (except for any such Parent Claim Notices pertaining toDamages allegedly suffered or incurred based upon a misrepresentation or breachof or default or inaccuracy in or in connection with the representationsor warranties in Sections 3.8 and/or 3.11,which shall be subject to the Special Basket), in which case the rightto recover Damages shall apply to the full amount of the claim; provided,  however, that (A) the Basket shall notapply to any such indemnification claim (x) involving fraud, grossnegligence or willful misconduct on the part of the Company or theEligible Company Holders, or (y) based upon a misrepresentation or breachof or default or inaccuracy in or in connection with the representationsor warranties in Sections 3.1, 3.2, 3.5,3.6,  3.9, 3.20, 3.21,3.22, 3.23 and 3.32, and (B) the Special Basket shallnot apply to any such indemnification claim involving fraud, gross negligenceor willful misconduct on the part of the Company or the Eligible CompanyHolders; and

 

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####  

#### (iii)                               nothing in this Agreement shall (w) limitthe right of any Parent Indemnified Party to seek specific performance of, orequitable relief with respect to, the Company or the Eligible Company Holderswith respect to a breach by the Company or by the Eligible Company Holders ofany covenant or agreement set forth in this Agreement, (x) be deemed awaiver by any Parent Indemnified Party of any right or remedy which such Party may haveat law or in equity based on any claim of fraud, (y) limit the liabilityin amount or otherwise of the Company or the Principal Stockholders for anybreach of any representation, warranty or covenant if the Merger does notclose; or (z) limit the liability in amount or otherwise of the Company orthe Eligible Company Holders with respect to their respective fraud, criminalactivity, gross negligence or willful misconduct.

####  

## Section 8.3                                      Indemnificationby Parent.

##  

### (a)                                  Subject to the provisions of this Article VIII, Parent shallindemnify, defend and hold harmless the Eligible Company Holders and theirrespective Representatives, equity owners and each Person, if any, who controlsor may control such Eligible Company Holders within the meaning of theSecurities Act or the Exchange Act (collectively the “Eligible HolderIndemnified Parties”), from and against any and all Damages arising out ofor related to:

###  

#### (i)                                     Any misrepresentation or breach of or default or inaccuracy in any ofthe representations or warranties of Parent contained in Article IV;or

####  

#### (ii)                                  Any breach or failure to comply with any of the covenants of Parent setforth in this Agreement; and/or

####  

#### (iii)                               any third partyclaim, or threatened third party claim, asserted against any Eligible HolderIndemnified Party arising out of Parent’s or Merger Sub’s actions or inactionsprior to the Effective Time.

####  

### (b)                                 Any claim for indemnification made by any Eligible Holder IndemnifiedParty under this Section 8.3 must be made in writing delivered toParent no later than the Final Escrow Release Date (an “Eligible HolderClaim Notice”). Ifdelivered to Parent no later than the Final Escrow Release Date, a claim for indemnification set forth in an Eligible Holder Claim Noticeas provided herein shall survive the Final Escrow Release Date until finalresolution thereof as provided in this Article VIII.

###  

### (c)                                  Notwithstanding the foregoing provisionsof this Article VIII (or any other provision of this Agreement),the Parties agree that:

###  

#### (i)                                     the indemnification provided for in Section 8.3(a)(i) shallnot apply unless and until the aggregate Damages for which the Eligible HolderIndemnified Parties seek or have sought indemnification hereunder, as stated inone or more Eligible Holder Claim Notices, exceed the Basket, in which case theright to recover Damages shall apply to the full amount of the claim; provided,  however, that the Basket shall not apply toany such indemnification claim 

 

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####  

#### (x) involvingfraud, gross negligence or willful misconduct on the part of Parent orMerger Sub or (y) based upon a misrepresentation or breach of or defaultor inaccuracy in or in connection with the representations orwarranties in Sections 4.1 or 4.2; and

####  

#### (ii)                                  nothing in this Agreement shall (w) limitthe right of any Eligible Holder Indemnified Party to seek specific performanceof, or equitable relief with respect to, Parent with respect to a breach of anycovenant or agreement set forth in this Agreement, (x) be deemed a waiverby any Eligible Holder Indemnified Party of any right or remedy which suchParty may have at law or in equity based on any claim of fraud, (y) limitthe liability in amount or otherwise of Parent or Merger Sub for any breach ofany representation, warranty or covenant if the Merger does not close; or (z) limitthe liability in amount or otherwise of Parent or Merger Sub with respect totheir respective fraud, criminal activity, gross negligence or willfulmisconduct.

####  

## Section 8.4                                      Effecton Merger Consideration; Stockholder Representatives.

##  

### (a)                                  The entitlement of any Eligible Company Holder to receive such EligibleCompany Holder’s pro rata share of the amount of the Merger Considerationrepresented as of any given time by the Escrow Fund is expressly subject to theapplicable provisions of this Article VIII (including the abilityof the Parent Indemnified Parties to seek recourse against the Escrow Fund forDamages as provided in Section 8.5).

###  

### (b)                                 By virtue of their approval of this Agreement and the Merger, eachEligible Company Holder (otherthan any holder of Dissenting Shares) shall be deemed to have approved,effective as of such vote and without any further action by the EligibleCompany Holders, the appointment of Fenil Shah as the StockholderRepresentative (the “Stockholder Representative”); provided, however,that a successor to any Stockholder Representative may be chosen byEligible Company Holders holding more than fifty percent (50%) of thethen-present percentage interests in the Escrow Fund (assuming, for thispurpose, a distribution of the entire amount of the Escrow Fund on the date ofdetermination).

###  

### (c)                                  TheStockholder Representative shall be deemed to be appointed and constitutedagent and attorney-in-fact by each Eligible Company Holder, for and on behalfof such Eligible Company Holder, to do the following:  (i) to give and receive notices andcommunications; (ii) to authorize recovery by any Parent Indemnified Partyagainst the Escrow Fund in satisfaction of claims as contemplated by this Article VIII;(iii) to object to such recovery; (iv) to agree to, negotiate andenter into settlements and compromises of, and comply with court judgments andawards of arbitrators with respect to, claims against the Escrow Fund; (v) towaive or settle any and all rights of Eligible Company Holders with respect tothe delivery of any portion of the Escrow Fund; (vi) to participate in theresolution of any disputed claim; (vii) to resolve, with full authority tosettle in any manner, any such disputed claim; (viii) to resolve, withfull authority, any matters relating to the Stipulated Closing Net WorkingCapital Calculation; (ix) to take all actions necessary or appropriate inthe judgment of the Stockholder Representative for 

 

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###  

### theaccomplishment of any of the foregoing; and (x) to receive any portion ofthe Escrow Fund otherwise to be distributed to the Eligible Company Holders andto use an appropriate portion thereof for purposes of paying the costsassociated with any of the foregoing.

###  

### (d)                                 TheStockholder Representative may resign upon thirty (30) days’ notice toParent and each Eligible Company Holder. The Stockholder Representative may bereplaced by the Eligible Company Holders from time to time upon not less thanfive (5) Business Days’ prior written notice to Parent; provided, however,that the Stockholder Representative may not be replaced unless EligibleCompany Holders holding more than fifty percent (50%) of the then-presentpercentage interests in the Escrow Fund (assuming, for this purpose, a distributionof the entire amount of the Escrow Fund on the date of determination) agree tosuch replacement. No bond shall be required of the Stockholder Representative,and the Stockholder Representative shall receive no compensation for hisservices.

###  

### (e)                                  TheStockholder Representative shall: (i) not be liable to Parent, theSurviving Corporation or any Eligible Company Holders for any act done oromitted as a Stockholder Representative unless acting in bad faith; (ii) beentitled to treat as genuine any letter or other document furnished by Parent,the Surviving Corporation, any Eligible Company Holder or the Escrow Agent andbelieved to be genuine and to have been signed and presented by the properparty or parties; and (iii) be reimbursed from any portion of the EscrowFund otherwise to be distributed to the Eligible Company Holders for any loss,liability or expense incurred without bad faith on the part of theStockholder Representative and arising out of or in connection with theacceptance or administration of the Stockholder Representative’s dutieshereunder (including counsel fees and other out-of-pocket expenses), suchreimbursement to be made directly from the Escrow Fund by the Escrow Agent, whoshall be entitled to rely upon the instruction of the StockholderRepresentative in this regard. To the extent that there isnot a sufficient amount of the Escrow Fund otherwise to be distributedto any Eligible Company Holders available, the Eligible Company Holders shall severally, and not jointly, in proportion to each Eligible CompanyHolder’s pro rata entitlement to a share of the Escrow Fund, indemnifythe Stockholder Representative and hold the Stockholder Representative harmlessagainst any loss, liability or expense incurred without bad faith on the part ofthe Stockholder Representative and arising out of or in connection with theacceptance or administration of the Stockholder Representative’s dutieshereunder.

###  

### (f)                                    Parentand Merger Sub shall have no liability to any Eligible Company Holder orotherwise arising out of the acts or omissions of the StockholderRepresentative or any disputes among the Eligible Company Holders or with theStockholder Representative.

 

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##  

## Section 8.5                                      HandlingClaims. Subject to the limitations set forth in Article VIII:

##  

### (a)                                  Withrespect to any Parent Claim Notice:

###  

#### (i)                                     TheStockholder Representative may notify the Parent Indemnified Party inwriting prior to the expiration of a period of thirty (30) days following thedelivery of such Parent Claim Notice to the Stockholder Representative thatsome or all of the subject claim(s) of the Parent Indemnified Party aredisputed. In the absence of any such notice within such thirty (30) day period,or upon an earlier notice from the Stockholder Representative to the ParentIndemnified Party  and the Escrow Agentconfirming that the subject claim(s) of the Parent Indemnified Party arenot disputed, then promptly following such thirtieth (30th) day orsuch earlier confirming notice, the Damages in the amount specified in suchParent Claim Notice will be (x) conclusively deemed a claim against the then-current amount in the Escrow Fundafter adjusting for any deductions or distributions which should have been madetherefrom as provided herein and (y) paid by theEscrow Agent to the Parent Indemnified Party from such current amount in the Escrow Fund afteradjusting for any deductions or distributions which should have been madetherefrom as provided herein (to the extent such fundsare available).

####  

#### (ii)                                  If the Stockholder Representative notifies the Parent IndemnifiedParty in writing prior to the expiration of the thirty (30) day periodfollowing the delivery of such Parent Claim Notice to the StockholderRepresentative that some or all of the subject claim(s) of the ParentIndemnified Party are disputed, then (except in those instances where theParent Indemnified Party has also submitted a claim under the Special IndemnityInsurance) the Stockholder Representative and the Parent Indemnified Party  shall attempt in good faith to agree upon therights of the Parent Indemnified Party with respect to each of such claimswithin thirty (30) days after such objection. If the Stockholder Representativeand the Parent Indemnified Party should so agree on a claim, then a memorandumsetting forth such agreement shall be prepared and delivered to the EscrowAgent, with a statement of the portion of the then-current amount in the Escrow Fund (after adjusting for anydeductions or distributions which should have been made therefrom as providedherein), if any, to be distributed to the Parent Indemnified Party (and,if applicable, such amount shall be promptly paid by the EscrowAgent to the Parent Indemnified Party to the extent suchfunds are available). If the Stockholder Representative and the ParentIndemnified Party are unable to resolve any such claim, then, unless theparties mutually agree to a different course of action for resolving thematter, either the Parent Indemnified Party or the Stockholder Representative may filesuit to resolve the matter unless the amount of the Damages is at issue inpending litigation with a third party, in which event no suit shall becommenced until such amount is ascertained or the Stockholder Representativeand the Parent Indemnified Party consent to the filing of such suit. To theextent that the Parent Indemnified Party has also submitted a claim under theSpecial Indemnity Insurance, the Stockholder Representative shall be under noobligation to make any attempt to agree upon the rights of the 

 

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####  

#### ParentIndemnified Party until 30 days after the Parent Indemnified Party shall haveexhausted its remedies against the Special Indemnity Insurance, during thependency of which, a Parent Claim Notice otherwise properly submitted to theEscrow Agent shall be deemed to be a Pending Claim.

####  

### (b)                                 Withrespect to the claim of any third party as to which a Parent Claim Notice may betendered, Parent shall have the right to conduct and control the defense,settlement, adjustment or compromise of any such claim; provided, however,that Parent shall (i) diligently pursue such defense, (ii) providenotice to, and an opportunity for participation in and comment from, theStockholder Representative with respect to such defense, and (iii) noteffect the settlement, adjustment or compromise of any such claim without thewritten consent of the Stockholder Representative (which consent shall not beunreasonably withheld or delayed).

###  

### (c)                                  Withrespect to any Eligible Holder Claim Notice:

###  

#### (i)                                     If Parent shallfail to notify the tendering Eligible Company Holder(s) in writing priorto the expiration of a period of thirty (30) days following delivery to Parentof an Eligible Holder Claim Notice that some or all of the subject claim(s) ofthe tendering Eligible Company Holder(s) are disputed, or upon an earliernotice from Parent to the tendering Eligible Company Holder(s) confirmingthat the subject claim(s) of the tendering Eligible Company Holder(s) arenot disputed, then promptly following such thirtieth (30th) day orsuch earlier confirming notice, the Damages in the amount specified in suchEligible Holder Claim Notice will be (i) conclusively deemed a liabilityof Parent and (ii) promptly paid by Parent to the tenderingEligible Company Holder(s).

####  

#### (ii)                                  If Parent shall notify the tendering Eligible Company Holder(s) inwriting prior to the expiration of such period of thirty (30) days followingdelivery of the subject Eligible Holder Claim Notice to Parent that some or allof the subject claim(s) of the tendering Eligible Company Holder(s) aredisputed, then Parent and the tendering Eligible Company Holder(s) shallattempt in good faith to agree upon the rights of the respective parties with respectto each of such claims within thirty (30) days after objection by Parent. Tothe extent that the parties are able to so agree, then any claims which are thesubject of such an agreement shall be handled as agreed. To the extent that theparties are not able to so agree, then either Parent or the tendering EligibleCompany Holder(s) may file suit to resolve the matter unless theamount of the Damages is at issue in pending litigation with a third party, inwhich event no suit shall be commenced until such amount is ascertained orParent and the tendering Eligible Company Holder(s) consent to the filingof such suit.

####  

## Section 8.6                                      Limitson Indemnification.

##  

### (a)                                  Notwithstandingany provision of this Agreement to the contrary, except as otherwise expresslyprovided in this Section 8.6, the Eligible Company Holders shallhave no liability to the Parent Indemnified Parties under the provisions ofthis Article

 

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### VIIIexcept with respect to, and to the extent of, their interests in the EscrowFund. The limitation of liability set forth in the preceding sentence shall notapply to the liability of the Principal Stockholders for indemnification under Section 8.2for Damages resulting from (i) fraud, gross negligence or willfulmisconduct by one or more of the Principal Stockholders, or of any EligibleCompany Holders as to which fraud, gross negligence or willful misconduct thePrincipal Stockholders had Knowledge prior to the date of this Agreement, as towhich there shall be no limit on indemnification, or (ii) a misrepresentation or breach of or default or inaccuracy in therepresentations or warranties in Sections 3.1, 3.2, 3.5, 3.6,  3.9, 3.20, 3.21, 3.22and 3.23, as to which the aggregate liability of the PrincipalStockholders shall be limited to that amount which is equal to the cash portionof the final Merger Consideration.

###  

### (b)                                 With respect to any and all Damages as may be suffered or incurredby a Parent Indemnified Party at any time arising out of or related to anymisrepresentation or breach of or default or inaccuracy in any of therepresentations or warranties of the Company or the Principal Stockholderscontained in Section 3.8 or Section 3.11 of thisAgreement, such Parent Indemnified Party shall submit a claim forrecovery under the Special Indemnity Insurance (a “Special Insurance Claim”)and use commercially reasonable efforts to recover fully for such Damages fromthe insurer under the Special Indemnity Insurance in accordance with the termsthereof.. Such Parent Indemnified Party shall also submit a Parent Claim Noticewith respect to such Damages. To the extent, having made such efforts, suchDamages shall not be recovered fully from the insurer, and in the event thatthe Damages subject to such Special Insurance Claim and the Parent Claim Noticeexceed the sum of $225,000 (the “Special Basket”), then all suchunrecovered amounts shall be recoverable against the Escrow Fund, to the extentthereof, subject to and in accordance with this Article VIII.

###  

## Section 8.7                                      Releaseand Waiver. Each Eligible Company Holder hereby waives any and all rightthat it might otherwise have to make any claim against the Company or theSurviving Corporation or any Affiliate of either for contribution or otherwiseif such Eligible Company Holder suffers an indemnity claim under this Agreement.In addition, each Eligible Company Holder hereby releases and foreverdischarges the Company, each Affiliate of the Company and the SurvivingCorporation, contingent upon the Closing, from any and all claims arising outof or otherwise relating to pre-Closing actions, omissions, facts, events orcircumstances. For the avoidance of doubt, as used in this Section 8.7,references to Affiliates of the Surviving Corporation shall be deemed not toinclude Parent or any Person that was an Affiliate of Parent immediately priorto the Effective Time.

##  

## Section 8.8                                      Treatmentof Indemnification Payments. Any indemnification payments made pursuant tothis Article VIII shall be treated as an adjustment to the MergerConsideration for Tax purposes.

##  

## Section 8.9                                      Insurance Set-Off. The Eligible Company Holders shall beentitled to a credit against any amount otherwise due under this Article VIIIto the extent of any amounts actually recovered by the Parent IndemnifiedParties under any insurance policy maintained by or on behalf of  Parent or the Company or any othercontractual indemnification benefiting the Parent or the Company that directlyrelate to the Damages suffered by the Parent Indemnified 

 

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##  

## Parties,less the costs associated with obtaining such insurance recovery or contractualindemnification, including but not limited to reasonable attorneys’ fees. Parentshall cause the Company to continue to maintain general liability and productliability insurance coverage on a basis and with limits consistent with thepast practices of the Company, for so long as the Eligible Company Holders’indemnity obligation remains in effect.

##  

## Section 8.10                                ExclusiveRemedies. The indemnification provisions of this Article VIIIshall be the exclusive remedy available to the Parties following the Closingfor any claims that are within the subject matter of the indemnities set out inSections 8.2, and 8.3. Each of the Parties agrees not to, and tocause its Affiliates not to, bring any action or proceeding, at law, equity orotherwise, against any other Party or its Affiliates seeking redress for anysuch claim except pursuant to the express provisions of this Article VIII.The foregoing shall not apply in the case of fraud, gross negligence orintentional misconduct.

##  

# ARTICLE IX

 

# MISCELLANEOUS

#  

## Section 9.1                                      Representationsand Warranties. The respective representations and warranties of theCompany and the Principal Stockholders, on the one hand, and Parent and MergerSub, on the other hand, contained herein or in any certificates or otherdocuments delivered prior to or at the Closing shall not be deemed waived orotherwise affected by any investigation made by or on behalf of any Party.

##  

## Section 9.2                                      Extension;Waiver. At any time prior to the Effective Time, the Parties hereto, may (a) extendthe time for the performance of any of the obligations or other acts of theother Parties hereto, (b) waive any inaccuracies in the representationsand warranties contained herein by any other applicable Party or in anydocument, certificate or writing delivered pursuant hereto by any otherapplicable Party or (c) waive compliance with any of the agreements orconditions contained herein. Any agreement on the part of any Party to anysuch extension or waiver shall be valid only if set forth in an instrument inwriting signed on behalf of such Party.

##  

## Section 9.3                                      Notices.Any notice, request, instruction or other document to be given hereunder by anyParty to another Party shall be in writing and shall be deemed given whendelivered personally, upon receipt of a transmission confirmation (with aconfirming copy sent by overnight courier) if sent by facsimile or liketransmission, and on the next business day when sent by Federal Express, UnitedParcel Service, Express Mail, or other reputable overnight courier, to theParty at the following addresses (or such other addresses for a Party as shallbe specified by like notice):

 

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###  

### (a)                                  ifto the Company (prior to Closing) or the Principal Stockholders, to them at:

###  

iSarla, Inc. 699 Fall River AvenueSeekonk, MA 02771Attention:  Fenil Shah, CEOFacsimile:  508-336-5894

 

with a copy (which shall not constitute notice) to:

 

Nutter,McClennen & Fish, LLPWorld Trade Center West155 Seaport BoulevardBoston, Massachusetts 02210-2604Attention:  Stephen M. Andress, Esq.Facsimile:  617-310-9293

 

### (b)                                 ifto either Company (after Closing), Parent or Merger Sub, to them at:

###  

ForgentNetworks, Inc.108 Wild Basin Road SouthAustin, TX. 78746Attention:  Jay Peterson, CFO and VicePresident - Finance

 

with a copy (which shall not constitute notice) to:

 

Winstead PC5400 Renaissance Tower1201 Elm StreetDallas, Texas  75270Attention:  Mark G. Johnson, Esq. Facsimile:  (214) 745-5390

 

## Section 9.4                                      EntireAgreement. This Agreement, the Schedules, Exhibits and other documentsreferred to herein or delivered pursuant hereto, collectively contain the entireunderstanding of the Parties hereto and thereto with respect to the subjectmatter contained herein and therein and supersede all prior agreements andunderstandings, oral and written, with respect thereto.

##  

## Section 9.5                                      BindingEffect; Benefit; Assignment.

##  

### (a)                                  ThisAgreement shall inure to the benefit of and be binding upon the Parties heretoand nothing in this Agreement, expressed or implied, is intended to confer onany Person other than the Parties hereto or their respective successors andpermitted assigns, any rights, remedies, obligations or liabilities under or byreason of this Agreement.

 

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###  

### (b)                                 Neitherthis Agreement nor any of the rights, interests or obligations hereunder shallbe assigned by any of the Parties hereto without the prior written consent ofthe other Parties.

###  

## Section 9.6                                      Amendmentand Modification. Subject to Applicable Law, this Agreement may beamended, modified and supplemented in writing by the Parties hereto in any andall respects before the Effective Time (notwithstanding any stockholderapproval), by action taken by the respective boards of directors of Parent,Merger Sub and the Company and the Principal Stockholders or by the respectiveofficers authorized by such Boards of Directors and the Principal Stockholders;provided, however, that after any such stockholder approval, noamendment shall be made which by Law requires further approval by suchstockholders without such further approval.

##  

## Section 9.7                                      Headings;Construction. The descriptive headings of the several Articles and Sectionsof this Agreement are inserted for convenience only, do not constitute a part ofthis Agreement and shall not affect in any way the meaning or interpretation ofthis Agreement. The Parties hereto agree that they have been represented bycounsel during the negotiation, preparation and execution of this Agreementand, therefore, waive the application of any Law, holding or rule ofconstruction providing that ambiguities in an agreement or other document willbe construed against the Party drafting such agreement or document.

##  

## Section 9.8                                      Feesand Expenses. Except for damages of one Party to this Agreement resultingfrom a breach of the terms of this Agreement by another Party hereto, all costsand expenses incurred in connection with this Agreement and the consummation ofthe Contemplated Transactions shall be paid by the party incurring such costsand expenses.

##  

## Section 9.9                                      Counterparts.This Agreement may be executed in several counterparts, each of whichshall be deemed to be an original, and all of which together shall be deemed tobe one and the same instrument.

##  

## Section 9.10                                ApplicableLaw. This Agreement and the legal relations between the Parties heretoshall be governed by and construed in accordance with the Laws of the State ofDelaware, without regard to principles of conflicts of law that would requireapplication of any other Law.

##  

## Section 9.11                                Severability.Any term or provision of this Agreement that is invalid or unenforceable in anysituation in any jurisdiction shall not affect the validity or enforceabilityof the remaining terms and provisions hereof or the validity or enforceabilityof the offending term or provision in any other situation or in any otherjurisdiction. If the final judgment of a court of competent jurisdictiondeclares that any term or provision hereof is invalid or unenforceable, theParties agree that the court making the determination of invalidity orunenforceability shall have the power to reduce the scope, duration or area ofthe term or provision, to delete specific words or phrases or to replace anyinvalid or unenforceable term or provision with a term or provision that isvalid and enforceable and that comes closest to expressing the intention of theinvalid or unenforceable term or provision, and this Agreement shall beenforceable as so modified after the expiration of the time within which thejudgment may be appealed.

 

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## Section 9.12                                RemediesCumulative. Except as otherwise expressly provided herein (e.g., Section 8.10),any and all remedies herein expressly conferred upon a Party will be deemedcumulative with and not exclusive of any other remedy conferred hereby, or bylaw or equity upon such Party, and the exercise by a Party of any one remedywill not preclude the exercise of any other remedy.

##  

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, each of Parent, Merger Sub and the Company havecaused this Agreement to be executed by their respective officers thereuntoduly authorized, all as of the date first above written.

 

 
|   | FORGENT NETWORKS, INC.            |
|--------|----------------------------------------|
|   |                                   |   |
|   |                                   |   |
|   | By:                                    |          /s/ |
|   |                                   | Name: | Richard Snyder |
|   |                                   | Title: | Chairman and CEO |
|   |                                   |   |
|   |                                   |   |
|   | CHEETAH ACQUISITION COMPANY, INC. |
|   |                                   |   |
|   |                                   |   |
|   | By:                                    |          /s/ |
|   |                                   | Name: | Richard Snyder |
|   |                                   | Title: | Chairman and CEO |
|   |                                   |   |
|   | iSARLA, INC.                      |   |
|   |                                   |   |
|   |                                   |   |
|   | By:                                    |          /s/ |
|   |                                   | Name: | Fenil Shah |
|   |                                   | Title: | Co-CEO |
|        |                                        |  |  |  |  |  |  |  |  |

 

 

Signature Page

 

----

 

The Principal Stockholders, by their signatures below, hereby acceptand agree to perform their obligations set forth in Article VIIIof this Agreement.

 

 
|   | SNEHAL SHAH                 |   |
|--------|-----------------------------|--------|
|   |                        |   |
|   |                        |   |
|   |     /s/ |   |
|   |                        |   |
|   |                        |   |
|   | FENIL SHAH                  |   |
|   |                        |   |
|   |                        |   |
|   |     /s/ |   |
|   |                        |   |
|   |                        |   |
|   | CHIMANLAL SHAH              |   |
|   |                        |   |
|   |                        |   |
|   |     /s/ |   |
|   |                        |   |
|   |                        |   |
|   | SARLA  SOFTWARE LLC         |   |
|   |                        |   |
|   |                        |   |
|   |     /s/ |   |
|   |                        |   |
|   |                        |   |
|   | SARLA  INFOTECH             |   |
|   |                        |   |
|   |     /s/ |   |

 

 

Signature Page

 

----

 

**EXHIBIT A**

 

**FORM OF ESCROW AGREEMENT**

 

This Escrow Agreement (this “Escrow Agreement”) is made andentered into as of this          day ofOctober, 2007, by and among iSarla, Inc., a Delaware corporation (“iSarla”or the “Company”), Forgent Networks, Inc., a Delaware corporation (“Parent”),Fenil Shah (the “Stockholder Representative”) and Wells Fargo Bank,National Association, a national banking association, as escrow agent, withreference to the following:

 

**RECITALS:**

 

WHEREAS, Parent, the Company and Cheetah Acquisition Company, Inc.,a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”),have entered into that certain Agreement and Plan of Merger, dated as of September 11,2007  (the “Merger Agreement”),pursuant to which Merger Sub will merge with and into the Company (the “Merger”);

 

WHEREAS, pursuant to the Merger Agreement, a portion of the MergerConsideration will be placed in escrow;

 

WHEREAS, Parent and the Company desire that****WellsFargo Bank, National Association act as the initial escrow agent for theportion of the Merger Consideration to be placed in escrow;

 

WHEREAS, Wells Fargo Bank, National Association is willing to act assuch initial escrow agent; and

 

WHEREAS, the Parties desire to set forth the duties and obligations ofthe Escrow Agent.

 

NOW, THEREFORE, in consideration of the recitals and of the respectiveagreements and covenants contained herein, and intending to be legally boundhereby, the Parties agree as follows:

 

ARTICLE I

#  

## 1.1                                 Definitions.For purposes of this Escrow Agreement, capitalized terms not otherwise definedherein shall have the meaning given or referenced in Appendix 1attached hereto and incorporated herein by this reference. Any capitalizedterms for which no definition is given or referenced in this Escrow Agreementor in Appendix 1 shall have the meaning given such terms in theMerger Agreement.

 

1

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##  

1.2                                 Interpretation.

##  

### (a)                                  Unless otherwisestated, the terms “Article,” “Section,” “Exhibit” and “Appendix” refer to thespecified Article, Section, Exhibit or Appendix of this Escrow Agreement.

###  

### (b)                                 Whenever the words “include”,“includes” or “including” (or any variation thereof) are used in this EscrowAgreement, they shall be deemed to be followed by the words “withoutlimitation,” and shall not be construed to limit any general statement whichany such word follows to the specific or similar items or matters immediatelyfollowing such word, unless otherwise expressly stated.

###  

### (c)                                  The words “hereof”, “herein”and “herewith” and words of similar import shall, unless otherwise stated, beconstrued to refer to this Escrow Agreement as a whole and not to anyparticular provision of this Escrow Agreement.

###  

### (d)                                 The plural of anydefined term shall have a meaning correlative to such defined term, and wordsdenoting any gender shall include all genders. Where a word or phrase isdefined herein, each of its other grammatical forms shall have a correspondingmeaning.

###  

### (e)                                  A reference to anyparty to this Escrow Agreement or any other agreement or document shall includesuch party’s permitted successors, assigns and transferees.

###  

### (f)                                    The Parties haveparticipated jointly in the negotiation and drafting of this Escrow Agreement. Inthe event an ambiguity or question of intent or interpretation arises, thisEscrow Agreement shall be construed as if drafted jointly by the Parties, andno presumption or burden of proof shall arise favoring or disfavoring any Partyby virtue of the authorship of any provision of this Escrow Agreement.

###  

ARTICLE II

#  

2.1                                 EscrowFund.

##  

### (a)                                  Prior to the Closing,Parent shall deposit the Cash Escrow and the Escrow Stock (together, the “InitialEscrow Consideration”) with Escrow Agent. The Cash Escrow will be held in asegregated escrow account (the “Escrow Account”). The Escrow Stock willbe registered in the name of the Escrow Agent, as agent for the EligibleCompany Holders, and shall be deposited with the Escrow Agent. The amounts inthe Escrow Account and the number of shares of Escrow Stock shall be knowncollectively as the “Escrow Fund”.

###  

The Escrow Agent’s sole obligation with respect to the Escrow Stockshall be to deliver such Escrow Stock and associated stock powers to theappropriate party (if the entire amount of such Escrow Stock is being released)or to deliver such Escrow Stock and associated stock powers to the stocktransfer agent for the Escrow Stock along with appropriate instructions to (a) issuenew certificates in the name of the person or party in the amount of sharessuch person or party is entitled to receive and (b) issue new certificatesin the name of the Escrow Agent for the balance

 

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of such Escrow Stock. The Escrow Agent shall have no liability in theevent of any mistake, delay or failure to act on the part of the stocktransfer agent for the Escrow Stock.

 

### (b)                                 The Escrow Accountshall be maintained by the Escrow Agent as a separate account for the benefitof Parent and the Eligible Company Holders as provided in this EscrowAgreement.

###  

2.2                                 Acceptanceof Appointment as Escrow Agent. The Escrow Agent, by signing this EscrowAgreement, accepts the appointment as Escrow Agent and agrees to hold anddistribute the Escrow Fund in accordance with the terms of this EscrowAgreement.

 

2.3                                 Investment;Taxes.

 

### (a)                              Pending disbursement ofthe Escrow Fund, the Escrow Agent shall invest the cash portion of the EscrowFund in (i) a money market fund invested in short-term marketable securities issued or guaranteed by the federal government ofthe United States, a Wells Fargo Bank Money Market Deposit Account (the “MMDA”)or (iii) such other forms of investment as shall be jointly directed inwriting by Parent and the Stockholder Representative (“Permitted Investments”).All interest and other income earned or otherwise distributed on the EscrowFund shall, until disbursed, also constitute a part of the Escrow Fund andshall, pending disbursement, be invested in Permitted Investments. Unless theEscrow Agent received other investment directions, moneys on deposit in theEscrow Fund will be invested in the MMDA. The undersigned parties understand that amounts on deposit in the MMDA areinsured, subject to the applicable rules and regulations of the FederalDeposit Insurance Corporation (FDIC), in the basic FDIC insurance amount of$100,000 per depositor, per insured bank. This includes principal and accruedinterest up to a total of $100,000.  Theundersigned parties understand that deposits in the MMDA are notsecured.

 

### (b)                                 As and when any amountof the Permitted Investments (if applicable) is needed for a payment under thisEscrow Agreement, the Escrow Agent shall cause a sufficient amount of thePermitted Investments to be converted into cash, if and to the extent there arePermitted Investments. The Escrow Agent shall not be responsible for any costsor fees incurred in selling or converting any Permitted Investments and anysuch amounts shall be payable from the cash received upon conversion of suchPermitted Investments.

 

### (c)                                  For tax purposes, theEscrow Fund shall be property of the Eligible Company Holders and all interestand other income earned on the Escrow Fund shall be income of the EligibleCompany Holders determined on a basis consistent with the pro rata distributiondescribed in Section 2.4(b) of this Escrow Agreement and allParties hereto (other than Escrow Agent) shall file all tax returns consistentwith such treatment. Prior to Closing,iSarla, Parent, the Stockholder Representative and the Eligible Company Holdersshall provide the Escrow Agent with certified tax identification numbers byfurnishing appropriate forms W-9 or W-8 and such other forms and documents thatthe Escrow Agent may request.  Theparties understand that if such tax reporting documentation is not provided andcertified to the Escrow Agent, the

 

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Escrow Agent may be required by theInternal Revenue Code of 1986, as amended, and the Regulations promulgatedthereunder, to withhold a portion of any interest or other income earned on theinvestment of monies or other property held by the Escrow Agent pursuant tothis Escrow Agreement.

 

## 2.4                                 Distributionof Escrow Fund.

 

### (a)                                  In the event Parent has made, prior to the Final Escrow Release Date, aclaim for indemnification in a Parent Claim Notice (in substantially the form attachedhereto as Exhibit A) delivered to the Stockholder Representativeand the Escrow Agent, and such claim has not been finally determined or hasotherwise been objected to as provided herein (a “Pending Claim”), theEscrow Agent shall withhold from distribution to the Eligible Company Holders aportion of the Escrow Fund equal to the Damages set forth in such Parent ClaimNotice (such amount being a “Pending Claim Holdback”) until such time aseither the Pending Claim has been finally determined or the objection resolved,as applicable, in which case the appropriate amounts will be either distributedto Parent or returned to the Escrow Fund (for distribution to the EligibleCompany Holders as provided in Section 2.4(c) below), or both,as the case may be, all as more fully set forth herein. In addition, inthe event Parent and the Stockholder Representative provide written notice tothe Escrow Agent that the Stipulated Closing Net Working Capital Statementindicates a Working Capital Deficit, then the amount specified in such noticeas the difference between $0 and the Working Capital Deficit shall be as soonas practical thereafter paid to Parent from the Escrow Fund.

 

### (b)                                 Any amounts to be distributed from the Escrow Fund to the EligibleCompany Holders shall be distributable to such Eligible Company Holders on a prorata basis based upon their relative entitlement or assumed entitlement toreceive Merger Consideration as specifically set forth in the spreadsheetattached hereto as Exhibit B (the “Spreadsheet”), upon whichthe Escrow Agent shall be entitled to conclusively rely.

 

### (c)                                  Subject to any claim for reimbursement by the Stockholder Representativeas contemplated by Section 2.4(d) hereof, the Available EscrowAmount shall be distributed as follows:

 

#### (i)                                     the amount by which the Available Escrow Amount (immediately prior tosuch distribution) exceeds seven and one-half percent (7.5%) of the MergerConsideration shall be distributed to the Eligible Company Holders on the datewhich is twelve (12) months after the Closing Date (the “First EscrowRelease Date”);

####  

#### (ii)                                  all remaining Available Escrow Amount and any other amounts which shallhave been delivered into the Escrow Account shall be distributed to theEligible Company Holders on the date which is eighteen (18) months after theClosing Date (the “Final Escrow Release Date”); and

####  

#### (iii)                               any further amountswhich, following the Final Escrow Release Date, shall be delivered into the EscrowAccount or otherwise become available for distribution

 

4

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#### to theEligible Company Holders (including amounts which may previously have beenwithheld due to a Pending Claim Holdback where final resolution of the relatedPending Claim yields less than a full payment of the amount at issue toParent), together with all interest and other income which has accrued thereon,shall be distributed to the Eligible Company Holders immediately following thedate any such amount shall be so delivered or otherwise become so available.

####  

### (d)                                 The Stockholder Representative shall be entitled to be reimbursed fromany portion of the Escrow Fund otherwise to be distributed to the EligibleCompany Holders pursuant to the foregoing Section 2.4(c) forany loss, liability or expense incurred without bad faith on the part ofthe Stockholder Representative and arising out of or in connection with theacceptance or administration of the Stockholder Representative duties under theMerger Agreement (including counsel fees and other out-of-pocket expenses),such reimbursement to be made directly from the Escrow Fund by the Escrow Agent.The Escrow Agent may rely on the written instruction of the StockholderRepresentative in this regard.

###  

### (e)                                  If the Escrow Agent is not able to deliver any portion of the EscrowFund to the proper recipient within one (1) year of the date that finaldistribution of any remaining amount of the Escrow Fund should otherwise havebeen made pursuant to the foregoing Section 2.4(c) (orimmediately prior to such earlier date on which any payment in respect thereofwould otherwise escheat to or become the property of any Governmental Body),such portion of the Escrow Fund shall be delivered to Parent and the proper recipient shall thereafterlook only to Parent, and only as a general creditor, for payment of suchrecipient’s claim for such portion of the Escrow Fund, subject to applicableabandoned property, escheat and similar laws.

###  

### (f)                                    Notwithstanding any provision of this Escrow Agreement to the contrary,in the event that any payment is made to a holder of Dissenting Shares by theSurviving Corporation or Parent in respect of appraisal rights as contemplatedby the Merger Agreement, then (i) the portion of the Escrow Fund whichwould have represented the potential distribution to such holder shall insteadbe distributed to Parent and (ii) such holder’s former shares of CompanyCommon Stock shall be removed from any calculation to determine the pro rataright of such holder to participate in any distribution of the Escrow Fund. TheEscrow Agent may rely on the written instruction of the SurvivingCorporation or the Parent in this regard. The Surviving Corporation or theParent shall have the obligation to recalculate the pro rata right of holdersto participate in any distribution of the Escrow Fund referred to in clause (ii) ofthe second preceding sentence, and in the absence of delivery to the EscrowAgent of such recalculation the Escrow Agent shall be entitled to rely on theexisting calculation.

###  

# ARTICLE III

#  

## 3.1                                 Rightsand Responsibilities of Escrow Agent.

##  

### (a)                                  The duties,responsibilities and obligations of the Escrow Agent shall be limited to thoseset forth herein and no duties, responsibilities or obligations shall beinferred or implied. The Escrow Agent shall not be subject to, nor be requiredto comply with, any other

 

5

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agreement between the Company or Parent or to which the Company orParent is a party, even though reference thereto may be made herein, or tocomply with any direction or instruction (other than those contained herein ordelivered in accordance with this Escrow Agreement) from the Company, Parent,the Stockholder Representative or any entity or person acting on the respectivebehalf of any of them. The Escrow Agent shall not be required to, and shallnot, expend or risk any of its own funds or otherwise incur any financialliability in the performance of any of its duties hereunder.

###  

### (b)                                 If at any time theEscrow Agent is served with any judicial or administrative order, judgment,decree, writ or other form of judicial or administrative process which inany way affects the Escrow Fund (including orders of attachment or garnishmentor other forms of levies or injunctions or stays relating to the transfer ofthe Escrow Fund), the Escrow Agent is authorized to comply therewith in anymanner as it deems appropriate; and if the Escrow Agent complies with any suchjudicial or administrative order, judgment, decree, writ or other form ofjudicial or administrative process, the Escrow Agent shall not be liable to anyof the Parties or any other person or entity even though such order, judgment,decree, writ or process may be subsequently modified or vacated orotherwise determined to have been without legal force or effect.

###  

### (c)                                  The Escrow Agentshall not be liable for any action taken or omitted or for any loss or injuryresulting from its actions or its performance or lack of performance of itsduties hereunder in the absence of gross negligence or willful misconduct onits part. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE (i) for acting inaccordance with or relying upon any instruction, notice, demand, certificate ordocument delivered in accordance with this Escrow Agreement by Parent or theStockholder Representative, (ii) DIRECTLY, OR INDIRECTLY, FOR ANY SPECIAL,INDIRECT OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND WHATSOEVER (INCLUDINGWITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT SHALL BE ADVISED OFTHE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OFACTION, or (iii) for an amount in excess of the value of the Escrow Fund,valued as of the applicable date.

###  

### (d)                                 The Escrow Agent may consultwith legal counsel of its own selection as to any matter relating to thisEscrow Agreement, and the Escrow Agent shall not incur any liability in actingin good faith in accordance with any advice from such counsel.

###  

### (e)                                  The Escrow Agentshall not incur any liability for not performing any act or fulfilling anyduty, obligation or responsibility hereunder by reason of any occurrence beyondthe control of the Escrow Agent (including any act or provision of any presentor future law or regulation or governmental authority, any act of God or war,or the unavailability of the Federal Reserve Bank wire or telex or other wireor communication facility).

###  

### (f)                                    Unless otherwisespecifically set forth herein, the Escrow Agent shall proceed as soon aspracticable to collect any checks or other collection items at any timedeposited hereunder. All such collections shall be subject to the Escrow Agent’susual collection practices or terms regarding items received by the EscrowAgent for deposit or collection. The

 

6

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Escrow Agent shall not be required, nor have any duty, to notify anyoneof any payment or maturity under the terms of any instrument depositedhereunder, to take any legal action to enforce payment of any check, note orsecurity deposited hereunder or to exercise any right or privilege which may beafforded to the holder of any such security.

###  

### (g)                                 The Escrow Agent shallprovide to Parent and the Stockholder Representative monthly statementsidentifying transactions, transfers from, deposits into and holdings of theEscrow Fund.

###  

### (h)                                 Notices, instructionsor communications shall be in writing and shall be given to the addresses setforth in Section 4.1 below (or to such other addresses as may besubstituted therefor by written notification as provided in such Section 4.1).The Escrow Agent is authorized to comply with and rely upon any notices,instructions or other communications believed by it to have been sent or givenby Parent or by the Stockholder Representative or by a person or personsauthorized by any of them. Whenever under the terms hereof the time for givinga notice or performing an act falls upon a Saturday, Sunday or banking holiday,such time shall be extended to the next day on which the Escrow Agent is openfor business.

###  

### (i)                                     iSarla, Parent andthe Eligible Company Holders hereby jointly and severally agree (but, in thecase of the Eligible Company Holders, solely to the extent of their respectivepro-rata amounts at the time held in the Escrow Fund) to reimburse the EscrowAgent for, and to indemnify and hold the Escrow Agent harmless from andagainst, any and all claims, losses, liabilities, costs, damages or expenses(including reasonable attorneys’ fees and expenses) of the Escrow Agent(collectively, “Losses”) arising from or in connection with or relatedto this Escrow Agreement or being the Escrow Agent hereunder (including Lossesincurred by the Escrow Agent in connection with its successful defense, inwhole or in part, of any claim of gross negligence or willful misconduct on itspart); provided, however, that nothing contained herein shallrequire Escrow Agent to be indemnified for Losses finally determined to havebeen primarily caused by the Escrow Agent’s own gross negligence or willfulmisconduct. The obligations of iSarla, the Parent and the StockholderRepresentative hereunder shall survive the termination of this Escrow Agreementand the resignation or removal of the Escrow Agent.

###  

### (j)                                     Parent and theStockholder Representative may, acting jointly, remove the Escrow Agent at anytime by giving to the Escrow Agent ten (10) calendar days’ prior notice inwriting signed by Parent and the Stockholder Representative. The Escrow Agent may resignat any time by giving Parent and the Stockholder Representative thirty (30)calendar days prior written notice thereof. Within ten (10) calendar daysafter giving the foregoing notice of removal to the Escrow Agent or receivingthe foregoing notice of resignation from the Escrow Agent, Parent and theStockholder Representative shall appoint a successor Escrow Agent. If asuccessor Escrow Agent has not accepted such appointment by the end of such ten(10)-day period, the Escrow Agent may, in its sole discretion, apply to a courtof competent jurisdiction for the appointment of a successor Escrow Agent orfor other appropriate relief. Upon receipt of the identity of the successorEscrow Agent, the Escrow Agent shall deliver the Escrow Fund then heldhereunder to the successor Escrow Agent. Upon delivery of the Escrow Fund to the

 

7

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###  

successor Escrow Agent, the Escrow Agent shall have no further duties,responsibilities or obligations hereunder.

###  

### (k)                                  In the event of anyambiguity or uncertainty hereunder or in any notice, instruction of othercommunication received by the Escrow Agent hereunder, the Escrow Agent may, inits sole discretion, refrain from taking any action other than retainingpossession of the Escrow Fund, unless the Escrow Agent receives writteninstructions, signed by Parent and the Stockholder Representative, whicheliminates such ambiguity or uncertainty. In the event of any dispute betweenor conflicting claims by or among Parent, the Stockholder Representative and/orany other person or entity with respect to any Escrow Fund, the Escrow Agentshall be entitled, in its sole discretion, to refuse to comply with any and allclaims, demands or instructions with respect to such Escrow Fund so long assuch dispute or conflict shall continue, and the Escrow Agent shall not be norbecome liable in any way to Parent or the Eligible Company Holders for failureor refusal to comply with such conflicting claims, demands or instructions. TheEscrow Agent shall be entitled to refuse to act until, in its sole discretion,either (i) such conflicting or adverse claims or demands shall have beendetermined by a final order, judgment or decree of a court of competentjurisdiction, which order, judgment or decree is not subject to appeal, orsettled by agreement between the conflicting parties as evidenced in a writingsatisfactory to the Escrow Agent, or (ii) the Escrow Agent shall havereceived security or an indemnity satisfactory to it sufficient to hold itharmless from and against any and all Losses which it may incur by reasonof so acting. The Escrow Agent may, in addition, elect, in its sole discretion,to commence an interpleader action or seek other judicial relief or orders asit may deem, in its sole discretion, necessary.

###  

## 3.2                                 Feesand Expenses of the Escrow Agent. The Escrow Agent shall (a) be paidfees for its services under this Escrow Agreement as provided in the fee letterattached hereto as Exhibit C and (b) be entitled to reimbursement forexpenses (including the reasonable fees and disbursements of its counsel) actuallyincurred by the Escrow Agent in connection with its duties under, or asotherwise contemplated by, this Escrow Agreement (collectively, the “EscrowAgent Fees and Expenses”). All Escrow Agent Fees and Expenses shall be paidby Parent. The Escrow Agent shall have, and is hereby granted, a prior lienupon any property, cash, or assets of the Escrow Fund, with respect to itsunpaid fees, non-reimbursed expenses and unsatisfied indemnification rights,superior to the interests of any other persons or entities. The Escrow Agentshall be entitled and is hereby granted the right to set off and deduct anyunpaid fees, non-reimbursed expenses and unsatisfied indemnification rightsfrom amounts on deposit in the Escrow Fund.

##  

# ARTICLE IV

#  

## 4.1                                 Notices.All notices, requests, claims, demands and other communications under thisEscrow Agreement shall be in writing and shall be deemed given if deliveredpersonally, telecopied (which is confirmed) or sent by overnight courier(providing proof of delivery) to the following parties at the followingaddresses (or at such other address(es) as shall be specified by like notice):

 

8

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### (a)                                  If to the Company, to:

###  

iEmployee, Inc.****c/o Forgent Networks, Inc.108 Wild Basin Road SouthAustin, Texas 78746Attention:  Richard M. Snyder, President Facsimile:  (512) 437-2365

 

with a copy(which shall not constitute notice) to:

 

Winstead PC5400 Renaissance Tower1201 Elm StreetDallas, Texas  75270Attention:  Mark G. Johnson, Esq. Facsimile:  (214) 745-5390

 

### (b)                                 If to Parent or MergerSub, to:

###  

ForgentNetworks, Inc.108 Wild Basin Road SouthAustin, Texas 78746Attention:  Richard M. Snyder, President Facsimile:  (512) 437-2365

 

with a copy (which shall not constitutenotice) to:

 

Winstead PC5400 Renaissance Tower1201 Elm StreetDallas, Texas  75270Attention:  Mark G. Johnson, Esq. Facsimile:  (214) 745-5390

 

### (c)                                  If to the StockholderRepresentative:

###  

Fenil Shah699 Fall River AvenueSeekonk, MA  02771Facsimile:  (928) 447-4539

 

9

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with a copy (which shall not constitutenotice) to:

 

Nutter,McClennen & Fish, LLPWorld Trade Center West155 Seaport BoulevardBoston, Massachusetts 02210-2604Attention:  Stephen M. Andress, Esq.Facsimile:  (617) 310-9293

 

### (d)                                 If to the EscrowAgent, to:

###  

Well FargoBank, N. A.MAC T5303-0221445 Ross Avenue, 2nd FloorDallas, TX 75202Attention:   Nancye PattersonFacsimile:  214-777-4086

 

The Escrow Agent, Parent, the Company and theStockholder Representative may change their address or the person to whomnotices or copies thereof shall be directed by notice to the others as providedin this Section 4.2.

 

## 4.2                                 StockholderRepresentative. The Stockholder Representative may resign upon thirty(30) days’ notice to Parent, each Eligible Company Holder and the Escrow Agent.The Stockholder Representative may be replaced by the Eligible CompanyHolders from time to time upon not less than five (5) days’ prior writtennotice to Parent; provided, however, that the Stockholder Representative may notbe replaced unless Eligible Company Holders holding more than fifty percent(50%) of the then present percentage interests in the Escrow Fund (assuming,for this purpose, a distribution of the entire amount of the Escrow Fund on thedate of determination) agree to such replacement. No bond shall be required ofthe Stockholder Representative, and the Stockholder Representative shallreceive no compensation for its services.

##  

## 4.3                                 Assignment.This Escrow Agreement and the rights and duties hereunder shall be binding uponand inure to the benefit of the Parties and the successors and assigns of eachof the Parties. Except as expressly provided herein, no rights, obligations orliabilities hereunder shall be assignable by any Party without the priorwritten consent of the other Parties. The interests of an Eligible CompanyHolder are not assignable or transferable unless and until released pursuant tothe terms of this Escrow Agreement. The forgoing notwithstanding, no assignmentof the interests of any of the Parties shall be binding on the Escrow Agentunless and until written notice of such assignment shall be delivered to andacknowledged by the Escrow Agent.

##  

## 4.4                                 Amendment.This Escrow Agreement may be amended, modified or waived only by aninstrument in writing duly executed by Parent, the Company, the Escrow Agentand the Stockholder Representative.

 

10

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## 4.5                                 GoverningLaw. This Escrow Agreement shall be governed by, and construed inaccordance with, the laws of the State of Delaware, without regard toprinciples of conflict of laws thereof.

##  

## 4.6                                 Construction.The headings in this Escrow Agreement are solely for convenience of referenceand shall not be given any effect in the construction or interpretation of thisEscrow Agreement.

##  

## 4.7                                 Termination.This Agreement shall terminate upon the distribution in full of the EscrowFund.

##  

## 4.8                                 Counterparts.This Escrow Agreement may be executed in one or more counterparts, each ofwhich shall be deemed an original and all of which together shall constitute asingle instrument.

##  

## 4.9                                 Severability.The invalidity, illegality or unenforceability of any provision of this EscrowAgreement shall in no way affect the validity, legality or enforceability ofany other provision, and if any provision is held to be enforceable as a matterof law, the other provisions shall not be affected thereby and shall remain infull force and effect.

##  

## 4.10                           MergerAgreement. Nothing in this Escrow Agreement is intended, or shall bedeemed, to modify in any way the agreements between Parent, Merger Sub and theCompany set forth in, and the other provisions of, the Merger Agreement. Asbetween the parties to, and the intended third party beneficiaries of, theMerger Agreement, the provisions of the Merger Agreement shall control in theevent of any inconsistency between the provisions of this Escrow Agreement andthe provisions of the Merger Agreement. Notwithstanding the foregoing, theEscrow Agent shall not be construed or deemed, for any purpose, to be a partyto the Merger Agreement, and its rights and obligations shall be governedsolely by this Escrow Agreement.

 

**[Remainderof page intentionally left blank.]**

 

11

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### IN WITNESS WHEREOF, the Parties hereto have caused this EscrowAgreement to be executed by their duly authorized officers as of the day andyear first above written.

###  

| ** ** | **ESCROW  AGENT:**                                       |
|------------|----------------------------------------------------------|
|       |                                                     |
|       | WELLS FARGO BANK, NATIONAL  ASSOCIATION, as Escrow Agent |
|       |                                                     |
|       |                                                     |
|       | By:                                                      |   |   |
|       | Name:                                                    |   |   |
|       | Title:                                                   |   |   |
|       |                                                     |
|       |                                                     |
| ** ** | **PARENT:**                                              |
|       |                                                     |
|       | FORGENT NETWORKS, INC.                              |
|       |                                                     |
|       |                                                     |
|       | By:                                                      |   |   |
|       | Name:                                                    |   |   |
|       | Title:                                                   |   |   |
|       |                                                     |
|       |                                                     |
| ** ** | **iSARLA:**                                              |
|       |                                                     |
|       | iSARLA, INC.                                        |
|       |                                                     |
|       |                                                     |
|       | By:                                                      |   |   |
|       | Name:                                                    |   |   |
|       | Title:                                                   |   |   |
|       |                                                     |
| ** ** | **STOCKHOLDER  REPRESENTATIVE:**                         |
|       |                                                     |
|       | FENIL SHAH                                               |
|       |                                                     |
|       |                                                     |
|       |                                                     |   |
|            |                                                          |  |  |  |  |

 

12

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** **

**EXHIBIT A**

** **

**Form ofParent Claim Notice**

** **

[Date]

 

[Stockholder Representative]

[Address]

[City, State, Zip]

 

This notice is delivered to you by Forgent Networks, Inc., aDelaware corporation (“Parent”) and/or iSarla, Inc., a Delawarecorporation (the “Surviving Corporation”) pursuant to Section 8.2of that certain Agreement and Plan of Merger, dated as of September 11,2007, by and among Parent, Cheetah Acquisition Company, Inc., a Delawarecorporation, and the Surviving Corporation (the “Merger Agreement”). Capitalizedterms not defined herein have the meaning set forth in the Merger Agreement.

 

[Specify the claim.]

 

The Damages set forth above have actually been incurred or suffered bya Parent Indemnified Party.

 

This Parent Claim Notice shall serve as Parent’s formal notice, claimand demand for indemnification. Nothing in this Parent Claim Notice shall bedeemed to be a waiver of any other claim which an Parent Indemnified Party may beentitled to assert pursuant to the provisions of the Merger Agreement.

 

 
| FORGENT NETWORKS, INC. |   |
|-----------------------------|--------|
|                        |   |
|                        |   |
| By:                         |   |   |   |
| Name:                       |   |   |   |
| Title:                      |   |   |   |
|                             |        |  |  |  |  |

 

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** **

**EXHIBIT B**

** **

**Spreadsheet**

** **

**[attached]**

 

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** **

**EXHIBIT C**

** **

**Fee Letter**

** **

**[attached]**

 

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** **

**APPENDIX 1**

** **

**Definitions**

** **

For purposes of this Escrow Agreement:

 

“Additional Escrow Stock” meansdividends paid in stock declared with respect to the Escrow Stock.

 

“Adjusted Company Value” shall mean the Company Value minusthe sum of (i) $2,000,000, being the combined value of the Ceridian CashPayment and the Ceridian Stock Payment, and (ii) the product of the GlobalAccelerator Stock Payment multipliedby the Average ClosingPrice.

 

“Adjusted Fully Diluted Share Amount” shall mean the FullyDiluted Share Amount minus the sum of (i) the Ceridian CompanyShares, and (ii) the Global Accelerator Company Shares.

 

“Adjusted Net Cash Payment Amount” shall mean the Net CashPayment Amount minus the sum of (i) the Ceridian Cash Payment, and (ii) theAggregate Non-Participating Holder Cash Payments.

 

“Adjusted Stock Payment Amount” shall mean the Total StockPayment Amount minus the sum of (i) the Ceridian Stock Payment, and(ii) the Global Accelerator Stock Payment.

 

“Adjusted Stock Payment Value” meansthe Initial Stock Payment Value****minus theamount of any Elective Cash Payment made by Parent pursuant to Section 2.9(b)(ii) ofthe Merger Agreement.

 

“AggregateNon-Participating Holder Cash Payments” shall mean the aggregate amount ofthe cash payments made to the Non-Participating Holders pursuant to Section 2.7(a)(iii) ofthe Merger Agreement.

 

“Available Escrow Amount” means anamount equal to the Initial Escrow Consideration, plus any accrued interest onthe Cash Escrow, plus any Additional Escrow Stock, less the amount of anyWorking Capital Deficit (if applicable), less the aggregate amount of anyPending Claim Holdbacks (but only for so long as, and to the extent that, theyremain pending), less the aggregate amount distributed to Parent pursuant tothe indemnification provisions benefiting Parent in Article VIII of theMerger Agreement, less the aggregate amount distributable or previouslydistributed from the Escrow Consideration to Eligible Company Holders ascontemplated pursuant to the provisions of the Merger Agreement pertaining tothe Escrow Consideration and the Escrow Agreement.

 

“Average Closing Price” means the average of the closing pricesfor the Parent Common Stock for the twenty (20) trading days preceding theClosing, but excluding the three (3) highest and three (3) lowestclosing prices during such period.

 

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“Cash Escrow” means cash in the amount of fifteen percent (15%)of the Net Cash Payment Amount.

 

“Ceridian Cash Payment” shall mean $1,000,000.

 

“Ceridian Company Shares” means the5,720,934 shares of Company Common Stock held by Ceridian Corporationimmediately prior to the Effective Time.

 

“Ceridian Stock Payment” shall mean the number of shares ofParent Company Stock equal to $1,000,000 dividedby the AverageClosing Price.

 

“Certificate of Merger” means acertificate of merger with respect to the Merger in such form as isrequired by and executed in accordance with the relevant provisions of theDelaware General Corporation Law.

 

“Certificates” means certificates representing shares of CompanyCommon Stock.

 

“Closing” means the consummation of the Merger.

 

“Closing Consideration” means:

 

#### (i)                                     Withrespect to Ceridian Corporation:  (x) acheck or, if requested, a wire transfer of immediately available funds, in theamount of the Ceridian Cash Payment minus Ceridian’s pro rata share ofthe Cash Escrow, being an amount equal to the Cash Escrow multipliedbythe quotient of (I) the Ceridian Cash Payment, dividedby (II) thetotal amount of cash Merger Consideration which all Eligible Company Holdersare entitled to receive under Section 2.7 of the Merger Agreement; (y) astock certificate representing the number of shares of Parent Company Stockequal to the Ceridian Stock Payment,  minus Ceridian’spro rata share of the Escrow Stock, being an amount equal to the Escrow Stock multipliedby the quotient of (I) the Ceridian Stock Payment, divided by (II) thetotal number of shares of Parent Common Stock which all Eligible CompanyHolders are entitled to receive under Section 2.7 of the Merger Agreement(with such number of shares being rounded to the next lowest whole number so asto eliminate any fractional shares); and (z) a check or, ifrequested, a wire transfer of immediately available funds, representing theamount of cash payable in lieu of any fractional shares;

####  

#### (ii)                                  Withrespect to Global Accelerator:  (x) astock certificate representing the number of shares of Parent Company Stockequal to the Global Accelerator Stock Payment, minus Global Accelerator’s pro rata share of the Escrow Stock, being anamount equal to the Escrow Stock multipliedby the quotient of (I) theGlobal Accelerator Stock Payment, divided by (II) the total number ofshares of Parent Common Stock which all Eligible Company Holders are entitledto receive under Section 2.7 of the Merger Agreement (with such number ofshares being rounded to the next lowest whole number so as to eliminate anyfractional shares); and (y) a check or, if requested, a wiretransfer of

 

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#### immediately available funds,representing the amount of cash payable in lieu of any fractional shares;

####  

#### (iii)                               Withrespect to each Non-Participating Holder: a check or, if requested, a wire transfer of immediately availablefunds, in an amount equal to (x) the product of (I) the quotient of (A) thenumber of shares of Company Common Stock held by such Non-Participating Holderand that is outstanding immediately prior to the Effective Time, dividedby (B) the Adjusted Fully Diluted Share Amount, multipliedby(II) the Adjusted Company Value, minus (y) his pro rata shareof the Cash Escrow, being an amount equal to the Cash Escrow multipliedbythe quotient of (I) the total amount of cash Merger Consideration whichsuch Non-Participating Holder is entitled to receive as described by subsection (x) ofthis subsection (iii), dividedby (II) the total amountof cash Merger Consideration which all Eligible Company Holders are entitled toreceive under Section 2.7 of the Merger Agreement;

####  

#### (iv)                              Withrespect to each Participating Holder:  (x) a check or, if requested, a wiretransfer of immediately available funds, in an amount equal to  (I) the product of (A) thequotient of (1) the number of shares of Company Common Stock held by suchParticipating Holder and that are outstanding immediately prior to theEffective Time, dividedby (2) the Adjusted Fully DilutedShare Amount, multipliedby (B) the Adjusted Net CashPayment Amount, minus (II) his pro rata share of the Cash Escrow,being an amount equal to the product of (A) Cash Escrow multipliedby(B) the quotient of (1) the total amount of cash Merger Considerationwhich such Participating Holder is entitled to receive as described by subsection (x)(I) ofthis subsection (iv), dividedby (2) the total amountof cash Merger Consideration which all Eligible Company Holders are entitled toreceive under Section 2.7 of the Merger Agreement; (y) a stockcertificate representing the number of shares of Parent Common Stock equal tothe product of (I) the quotient of (A) the number of shares ofCompany Common Stock held by such Participating Holder and that are outstandingimmediately prior to the Effective Time, dividedby (B) theAdjusted Fully Diluted Share Amount, multipliedby (II) theAdjusted Stock Payment Amount minus his pro rata share of the Escrow Stock, being an amount equal to theproduct of (A) the Escrow Stock multipliedby (B) thequotient of (1) the number of shares of Parent Common Stock which suchParticipating Holder is entitled to receive as described by subsection (y)(I) ofthis subsection (iv), dividedby (2) the total numberof shares of Parent Common Stock which all Eligible Company Holders areentitled to receive under Section 2.7 of the Merger Agreement, (with suchnumber of shares being rounded to the next lowest whole number so as toeliminate any fractional shares); and (z) a check or, if requested, a wiretransfer of immediately available funds, representing the amount of cashpayable in lieu of any fractional shares pursuant to Section 2.7 of theMerger Agreement;

####  

#### (v)                                 Withrespect to each holder of an In-the-Money Option (uponpayment of the applicable exercise price for such In-the-Money Option, whichin

 

----

 

#### all instances shall be deductedfrom the aggregate amount of the In-the-Money Option Consideration otherwisepayable to such holder, such that the right of each holder of an In-the-MoneyOption to receive such holder’s portion of the In-the-Money OptionConsideration will be “cashless” to such holder): (x) a check or, if requested, a wire transfer of immediatelyavailable funds, (I) in the amount otherwise payable in respect of allshares of Company Common Stock subject to such In-the-Money Option (assumingfor this purpose full acceleration of vesting as of immediately prior to theEffective Time) minus (II) his pro rata share of the Cash Escrow,being an amount equal to the product of (A) the Cash Escrow multipliedby (B) the quotient of (1) the total amount of cash MergerConsideration which such In-the-Money Option Holder is entitled to receive asdescribed in subsection (x)(I) of this subsection (v), dividedby (2) the total amount of cash Merger Consideration which all Eligible CompanyHolders are entitled to receive under Section 2.7 of the Merger Agreement;(y) a stock certificate representing (I) the number of shares ofParent Common Stock otherwise payable in respect of all shares of CompanyCommon Stock subject to such In-the-Money Option (assuming for this purpose,full acceleration of vesting as of immediately prior to the Effective Time), minus(II) his pro rata share of the Escrow Stock, being an amount equal to theproduct of (A) the Escrow Stock multipliedby the (B) quotientof (1) the number of shares of Parent Common Stock which such In-the-MoneyOption Holder is entitled to receive as described in subsection (y)(1) ofthis subsection (v), divided by (2) the total number of shares ofParent Common Stock which all Eligible Company Holders are entitled to receiveunder Section 2.7 of the Merger Agreement (with such number of sharesbeing rounded to the next lowest whole number so as to eliminate any fractionalshares); and (z) a check or, if requested, a wire transfer of immediatelyavailable funds, representing the amount of cash otherwise payable in lieu ofany fractional shares pursuant to Section 2.7 of the Merger Agreement.

####  

“Closing Date” means the date upon which the Closing shallactually occur pursuant to the Merger Agreement.

 

“Closing Net Working Capital” means the Net Working Capital asof the Closing Date.

 

“Company Common Stock” means shares of the Company’s commonstock, par value $.0001 per share.

 

“Company Stock Option” means an option issued pursuant to theCompany Stock Plan and exercisable for shares of Company Common Stock.

 

“Company Stock Plan” means the iSarla Inc. 2000 Long-Term StockIncentive Plan.

 

“Company Value” shall mean the sum of the Net Cash PaymentAmount plus the Adjusted Stock Payment Value.

 

----

 

“Contemplated Transactions” means the transactions contemplated by the Merger Agreement.

 

“Damages” means any and all claims,demands, suits, actions, causes of action, losses, reductions in value, costs,damages (including consequentialdamages), liabilities and expenses, including reasonable attorneys’ fees, otherprofessionals’ and experts’ fees and court or arbitration costs, amounts paidin settlement and sanctions.

 

“Dissenting Shares” means shares of Company Common Stock that are outstanding immediately prior to theEffective Time and which are held by stockholders who have exercised andperfected appraisal rights for such shares of Company capital stock inaccordance with the Delaware General Corporation Law.

 

“Effective Time” means thetime of filing and acceptance by the Delaware Secretary of State of theCertificate of Merger, or such later time as may be agreed in writing byParent and the Company and specified in the Certificate of Merger.

 

“Elective Cash Payment” means the amount of any portion of the Stock Consideration that Parentelects to pay in cash pursuant to Section 2.9(b)(ii) of theMerger Agreement.

 

“Eligible Company Holders” means (a) all registered holdersof Company Common Stock as of the Effective Time,and (b) all registered holders of In-the-Money Options as of the EffectiveTime.

 

“Escrow Agent” means Wells Fargo Bank, National Association****or itssuccessor, serving as escrow agent pursuant to this Escrow Agreement.

 

“Escrow Consideration” means the Cash Escrow and the EscrowStock.

 

“Escrow Stock” means the number of shares of Parent Common Stockequal to fifteen percent (15%) of the Total Stock Payment Amount, plus anyAdditional Escrow Stock.

 

“Final Escrow Release Date” means the date which is eighteen (18) months after the Closing Date.

 

“Fully Diluted Share Amount” means the sum of (a) totalnumber of shares of Company Common Stock issued and outstanding immediatelyprior to the Effective Time, plus (b) the total number of shares ofCompany Common Stock issuable upon exercise of all of the In-the-Money Optionsoutstanding immediately prior to the Effective Time.

 

“GAAP” means generally accepted accounting principlesconsistently applied in the U.S.

 

“Global Accelerator Company Shares” means the 2,899,979 sharesof Company Common Stock held by Global Accelerator immediately prior to theEffective Time.

 

----

 

“Global Accelerator Stock Payment” shall mean the number ofshares of Parent Company Stock equal to:

 
| A x    | B+C |
|--------|-----|
|   | D   |

 

*where*

 

A = thequotient of 2,899,979 dividedby the Fully Diluted Share Amount;

 

B = the NetCash Payment Amount;

 

C = theAdjusted Stock Payment Value; and

 

D = AverageClosing Price.

 

“Governmental Body” means any domestic or foreign entityexercising executive, legislative, judicial, regulatory or administrativefunctions of or pertaining to government, including any governmental authority,agency, department, board, commission, court, tribunal, judicial body orinstrumentality of any union of nations, federation, nation, state,municipality, county, province, locality or other political subdivision.

 

“Gross Cash Payment Amount” means$5,600,000 plus the Elective Cash Payment.

 

“In-the-Money Option” means eachCompany Stock Option with an exercise price per share of underlying CompanyCommon Stock which is less than the Per Share Merger Consideration.

 

“In-the-Money Option Consideration” means (upon payment of the applicable exercise price for suchIn-the-Money Option, which in all instances shall be deducted from theaggregate amount of the In-the-Money Option Consideration otherwise payable tosuch holder, such that the right of each holder of an In-the-Money Option toreceive such holder’s portion of the In-the-Money Option Consideration will be “cashless”to such holder):

 

(i)                                     Cashin the amount otherwise payable in respect of all shares of Company CommonStock subject to such In-the-Money Option (assuming for this purpose, fullacceleration of vesting as of immediately prior to the Effective Time);

 

(ii)                                  Thenumber of shares of Parent Common Stock (rounded to the next lowest wholenumber so as to eliminate any fractional shares) otherwise payable in respectof all shares of Company Common Stock subject to such In-the-Money Option(assuming for this purpose, full acceleration of vesting as of immediately priorto the Effective Time); and, as applicable

 

(iii)                               Cashin lieu of any fractional shares.

 

----

 

“Initial Stock Payment Value” means $5,100,000.

 

“Merger Consideration” means the Closing Consideration and theEscrow Consideration.

 

“Net Cash Payment Amount” means the Gross Cash Payment Amountminus the sum of (i) the Required Debt Payments, and (ii) theabsolute value of the Working Capital Purchase Price Reduction.

 

“Net Closing Cash Payment” means the Net Cash Payment Amount,less the Cash Escrow.

 

“Net Closing Stock Payment” means the Total Stock PaymentAmount, less the Escrow Stock as of the Closing Date.

 

“Net Working Capital” means the difference between the Company’scurrent assets and the Company’s current liabilities, as calculated usingfinancial statements prepared in accordance with GAAP.

 

“Non-Participating Holder” shall mean anyEligible Company Holder (other than Ceridian Corporation and GlobalAccelerator) that is not an “accredited investor” (as defined in the SecuritiesAct).

 

“Parent Claim Notice” means a writtenclaim for indemnification made by any Parent Indemnified Party under Section 8.2of the Merger Agreement and delivered tothe Stockholder Representative no later than the Final Escrow Release Date.

 

“Parent Common Stock” means shares of Parent’s common stock, parvalue $.01 per share.

 

“Parent Indemnified Parties” meansParent and the Surviving Corporation and their respective Representatives,stockholders and each Person, if any, who controls or may control Parentor the Surviving Corporation within the meaning of the Securities Act of 1933 or the Exchange Act of 1934.

 

“Participating Holders” shall mean the Eligible Company Holders(other than Ceridian Corporation and Global Accelerator) who, at the EffectiveTime, qualify as “accredited investors” (as defined in the Securities Act) andthus are entitled to receive cash and Parent Company Stock pursuant to Section 2.7(a)(iv) ofthe Merger Agreement.

 

“Parties” means the Company, Parent****and the Stockholder Representative.

 

“Per Share Merger Consideration” means the quotient of theAdjusted Company Value divided by the Adjusted Fully Diluted Share Amount.

 

“Person” means any natural person, corporation, unincorporatedorganization, partnership, association, joint stock company, joint venture,limited liability company, trust or government, or any other entity or anyGovernmental Body.

 

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“Pre-Closing Net Working Capital” means the Net Working Capitalas of a date no more than one (1) month prior to the Closing Date, asdelivered by the Company to Parent no later than five (5) days before theClosing Date.

 

“Proposed Closing Net Working Capital Statement” means thestatement of Closing Net Working Capital prepared by the StockholderRepresentative and delivered to Parent within sixty (60) days following theClosing Date.

 

“Representative” means, with respect to a particular Person, anydirector, officer, employee, agent, consultant, advisor or other representativeof such Person, including legal counsel, accountants and financial advisors.

 

“Required Debt Payments” means the sum of (a) all debts ofthe Company (other than current accounts payable and current accruals, in eachcase in the ordinary course of business) immediately prior to the EffectiveTime, (b) all payments owing to holders of options, stock appreciationrights or other similar equity interests, and (c) all severance paymentsdue as of the Closing or as a result of the Contemplated Transactions.

 

“Stipulated Closing Net Working CapitalStatement” means (i) the statement of Closing Net Working Capitalagreed upon by Parent and the Stockholder Representative, (ii) thestatement deemed by the Merger Agreement to be the Stipulated Closing NetWorking Capital Statement, or (iii) the Stipulated Closing Net WorkingCapital Statement as determined by an independent accounting firm mutuallyacceptable to Parent and the Stockholder Representative.

 

“Stock Consideration” means theportion of the Merger Considerationpayable in Parent Common Stock.

 

“Surviving Corporation” means the Company,as the surviving corporation in the Merger.

 

“Total Stock Payment Amount” shallmean the number of shares of Parent Company Stock equal to the Adjusted StockPayment Value divided by the Average Closing Price.

 

“Working Capital Deficit” means the positive difference between$0 and the Closing Net Working Capital, if the Closing Net Working Capital is less than $0.

 

“Working Capital Purchase Price Reduction”means the difference between $0 and the Pre-Closing Net WorkingCapital if the Pre-Closing Net Working Capital is less than $0.

 

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**EXHIBIT B**

 

**FORM OF ACCREDITED INVESTOR CERTIFICATE**

 

To:          ForgentNetworks, Inc.

c/o Winstead PC

5400 Renaissance Tower

1201 Elm Street

Dallas, Texas  75270

Attn:  Dale A. Lisonbee

 

Gentlemen:

 

The undersignedstockholder (“Stockholder”) of iSarla, Inc., a Delaware corporation(“iSarla”), is submitting this Accredited Investor Certificate (this “Certificate”)to Forgent Networks, Inc., a Delaware corporation (“Forgent”), inconnection with the anticipated merger of Cheetah Acquisition Company, Inc.,a Delaware corporation (“Merger Sub”), with and into iSarla (the “Merger”).

 

In connection with theMerger, Stockholder understands that certain stockholders of the Company may beentitled to receive shares of the common stock, par value $.01 per share (the “ForgentCommon Stock”) as part of their consideration in respect of the Merger.This Certificate is submitted to Forgent in order to permit Forgent todetermine whether Stockholder’s receipt of Forgent Common Stock as part ofthe Merger and as contemplated by that certain Agreement and Plan of Merger,dated as of September 11, 2007, by and among Forgent, Merger Sub, iSarlaand certain of the stockholders of iSarla (the “Merger Agreement”), willqualify for an exemption from the registration requirements of Section 5of the Securities Act of 1933, as amended (the “Act”).

 

STOCKHOLDER ACKNOWLEDGESAND AGREES THAT THE COMPLETION AND RETURN OF THIS CERTIFICATE DOES NOTCONSTITUTE AN OFFER, PURCHASE OR SALE OF THE FORGENT COMMON STOCK OR ANY OTHERSECURITIES OF FORGENT.

 

Stockholder representsthat the information contained in this Certificate is true and complete, andStockholder acknowledges that Forgent and Stockholder’s counsel will rely onsuch information for the purpose of complying with all applicable securitieslaws. Stockholder agrees to notify Forgent promptly of any change in theinformation provided herein. Stockholder agrees to defend, indemnify and holdForgent harmless from any loss, liability, claim, damage or expense, includingreasonable attorneys fees and costs of suit, arising out of anymisrepresentation or violation or breach by Stockholder of any representationor warranty contained herein.

 

Stockholder acknowledgesand agrees that this Certificate and the representations, warranties andagreements herein shall be construed in accordance with the laws of the Stateof Delaware.

 

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**INSTRUCTIONS**:

 

Please complete andexecute the following Certificate. Following execution, please send a copy ofthe completed Certificate by facsimile to Dale Lisonbee, outside counsel toForgent (fax: 214-745-5390), and return the original to Forgent Networks, Inc.,c/o Winstead PC, 5400 Renaissance Tower, 1201 Elm Street, Dallas, Texas  75270, Attn: Dale Lisonbee, **no later than                                        ,2007.**

 

# Representations as toAccredited Investor Status

#  

1.             Stockholder has readthe definition of an “**Accredited Investor**”in Rule 501 of Regulation D, which is attached hereto as Exhibit A,and certifies that either (check one):

 

## A.            o            Stockholder is an “**Accredited Investor**” for one or more of the following reasons:

 
|  o | 1)     | Stockholder  is an individual (not a partnership, corporation, etc.) whose individual net  worth, or joint net worth with his or her spouse, presently exceeds  $1,000,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|  o | 2)     | Stockholder  is an individual (not a partnership, corporation, etc.) who had an income in  excess of $200,000 in each of the two most recent years, or joint income with  his or her spouse in excess of $300,000 in each of those years (in each case  including foreign income, tax exempt income and the full amount of capital  gains and losses, but excluding any income of other family members and any  unrealized capital appreciation), and has a reasonable expectation of reaching  the same income level in the current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|  o | 3)     | Stockholder  is a director or executive officer of Forgent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|  o | 4)     | Stockholder  is a corporation, partnership, Massachusetts business trust or nonprofit  organization within the meaning of section 501(c)(3) of the  Internal Revenue Code, in each case not formed for the specific purpose of  acquiring the Forgent Common Stock, with total assets in excess of  $5,000,000. Describe entity:                                                                                                                                                                                                                                                                    |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|  o | 5)     | Stockholder  is a trust with total assets in excess of $5,000,000, not formed for the  specific purpose of acquiring the Forgent Common Stock, where the receipt of  such shares is directed by a “sophisticated person” as defined in Regulation  506(b)(2)(ii).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

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|  o | 6) | Stockholder  is an entity in which all of the equity owners are “Accredited Investors”  within one or more of the above categories. If relying upon this Category  alone, each equity owner must complete a separate copy of this Agreement on  his or her own behalf. Describe entity:                                                                                                                                      |
|---------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

## o                            Stockholder does not qualify as an “AccreditedInvestor” under any of the foregoing options.

##  

# 2.             Entity Type. Stockholder is:

#  

o            An individual

 

o            A corporation

 

o            A partnership

 

o            A trust

 

o            Other

 

# 3.             Tax I.D. Number. The Social Security Numberor Federal Tax I.D. Number of Stockholder is:                                                      .

#  

# 4.             Address. The address of Stockholderis:

#  

 

 

 

                                                                                                                                                                  .

 

Stockholder’sphone, fax and contact person (if an entity) are as follows:

 

Phone:

 

Fax:

 

Contact:

 

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#  

# 5.             Individual. If Stockholder is anindividual:

#  

Name ofEmployer:

 

Position:

 

# 6.             Institution. If Stockholder is aninstitution:

#  

Name ofbusiness:

 

Date ofinception of business:

 

Additional Representations, Acknowledgmentsand Agreements.

 

1.             Stockholderacknowledges (i) receipt and review of the Merger Agreement (including theexhibits and schedules thereto), and (ii) that periodic reports filed byForgent with the Securities Exchange Commission (the “SEC”), as well asother information regarding Forgent, are available at Forgent’s web site(www.forgent.com) as well as the SEC’s web site (www.sec.gov).

 

2.             Stockholderrepresents and warrants that Stockholder (i) has adequate means ofproviding for Stockholder’s current needs and possible personal contingencies,and Stockholder has no need for liquidity of Stockholder’s investment in theForgent Common Stock; (ii) can bear the economic risk of losing Stockholder’sentire investment therein; and (iii) has substantial net worth (exclusiveof Stockholder’s residence, home furnishings and personal automobiles) inrelation to the amount of Stockholder’s proposed investment in the ForgentCommon Stock.

 

3.             Stockholderrepresents and warrants that the address set forth below is Stockholder’s trueand correct residence address, and Stockholder has no present intention ofbecoming a resident of any other state, country, or jurisdiction.

 

4.             Stockholderconfirms that Forgent has advised Stockholder, within a reasonable time priorto the consummation of the transactions contemplated by the Merger Agreement,that Stockholder has the right (upon Stockholder’s execution and delivery toForgent of an appropriate confidentiality agreement) to inspect, at theprincipal offices of Forgent during normal business hours, such other books,records and documents with respect to Forgent and Stockholder’s business,operations and finances as Stockholder has reasonably deemed material toStockholder’s investment in the Forgent Common Stock; and Stockholder confirmsthat all such documents, records, and books pertaining to Stockholder’sinvestment in the Forgent Common Stock as Stockholder has so requested havebeen made available to Stockholder.

 

5.             Stockholderacknowledges that certain of the information included within the informationthat has been previously provided to Stockholder contains, and documentsincluded within other materials which Stockholder may have reviewedpursuant to requests described in the last sentence of the preceding paragraph may alsohave contained, projections of future operations or

 

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financial performance by Forgent. Stockholder recognizes andacknowledges that any such projections or predictions of future performance byForgent or any of Stockholder’s subsidiaries constitute mere predictions offuture events based on assumptions which may or may not occur (and asto the occurrence of which Forgent can give no assurance), and such predictionsmay not be relied upon to indicate actual results which will be obtained. Stockholderfurther acknowledges and agrees that no representative of Forgent, or any otherperson, has been authorized to represent or warrant, or give any assuranceswith respect to, the likelihood of the achievement of the financial oroperational results set forth in any such projections.

 

6.             Stockholderrepresents and warrants that Stockholder has had an opportunity to askquestions of and receive answers from the executive officers and otherdesignated representatives of Forgent concerning the terms and conditions ofand the business and operations of Forgent.

 

7.             Stockholderacknowledges and agrees that the Forgent Common Stock will be issued (i) pursuantto the applicable exemptions from registration under the securities laws ofcertain states and (ii) that the Forgent Common Stock has not beenregistered under the Act, in reliance upon certain exemptions from registrationcontained therein, including the exemptions from registration provided by Section 4(2) ofthe Act and SEC Regulation D under the Act, and in connection therewith,Stockholder hereby covenants and agrees that Stockholder will not offer, sell,or otherwise transfer the Forgent Common Stock unless and until such securitiesare registered pursuant to the Act and the laws of all jurisdictions which inthe opinion of Forgent may be applicable, or unless such securities areotherwise exempt from registration thereunder. Forgent shall be entitled torely upon an opinion of counsel satisfactory to it with respect to compliancewith the above laws.

 

8.             Stockholderunderstands that each certificate or other document representing the ForgentCommon Stock will bear a legend substantially as follows:

 

**THE SECURITIES EVIDENCED HEREBY WERE ISSUED AND SOLD WITHOUTREGISTRATION UNDER THE FEDERAL SECURITIES ACT OF 1933 (THE “FEDERAL ACT”) ORTHE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON CERTAIN EXEMPTIVE PROVISIONSOF SAID ACTS. SAID SECURITIES CANNOT BE SOLD OR TRANSFERRED EXCEPT IF ANY SUCHSALE OR TRANSFER WOULD BE: (1) PURSUANT TO AN EFFECTIVE REGISTRATIONSTATEMENT UNDER THE FEDERAL ACT OR PURSUANT TO AN EXEMPTION FROM SUCHREGISTRATION; AND (2) IN A TRANSACTION WHICH IS EXEMPT FROM THE APPLICABLESECURITIES LAWS OF ANY STATE OR IN A TRANSACTION WHICH IS OTHERWISE INCOMPLIANCE WITH THE SAID SECURITIES LAWS.**

 

9.             Stockholderunderstands that Stockholder is acquiring the Forgent Common Stock withoutbeing furnished any offering literature or prospectus other than thisCertificate and the Merger Agreement, and the opportunities to inspect booksand records and to ask questions as described above.

 

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10.           Stockholderrepresents and warrants that Stockholder is acquiring the Forgent Common Stocksolely for Stockholder’s own account, for investment purposes only, and notwith a view to or for the resale or distribution, subdivision, orfractionalization thereof; and Stockholder has no present plans to enter intoany contract, undertaking, agreement, or arrangement for such resale,distribution, subdivision, or fractionalization. In order to induce Forgent toissue and sell the Forgent Common Stock to Stockholder, it is agreed thatForgent will have no obligation to recognize the ownership, beneficial orotherwise, of such securities by anyone but the undersigned, unless any suchtransfer is accomplished in accordance with all applicable securities laws.

 

11.           Stockholderacknowledges and agrees that:

 

a.             Thereare substantial restrictions on the transferability of the Forgent CommonStock; such securities will not be, and Stockholder will have no rights torequire that such securities be, registered under the Act (except to the extentprovided in the Merger Agreement and the agreements contemplated thereby);while shares of Forgent Common Stock are currently listed for and trading onNASDAQ, the shares to be issued to the Stockholder have not been registered andare subject to restrictions, and there is no assurance that a market forshares of Forgent Common Stock will exist in the future; and accordingly,Stockholder may have to hold such securities indefinitely and that it may notbe possible for Stockholder to liquidate Stockholder’s investment in Forgent.

 

b.             Ithas never been represented, guaranteed, or warranted to Stockholder by anyrepresentative of Forgent, or any other person on behalf of Forgent orotherwise, expressly or by implication, any of the following:

 

i.              Theapproximate or exact length of time that Stockholder will be required to remainas owner of the Forgent Common Stock; or

 

ii.             Thepast performance or experience on the part of Forgent or Forgent’ssubsidiaries, or Forgent’s executive officers, or of any other person, thatwill in any way indicate predictable results of the ownership of stock inForgent or of the overall future of Forgent or Forgent’s subsidiaries.

 

12.           Stockholderacknowledges and agrees that the representations and warranties in thisCertificate are true and accurate as of the date hereof and shall survive theissuance to Stockholder of the Forgent Common Stock.

 

6

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| Dated:                              ,  2007 |                        |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|--------|
|                                                                                                                                                                                    | [Print Name of Stockholder] |
|                                                                                                                                                                                    |                        |
|                                                                                                                                                                                    | By:                         |   |   |
|                                                                                                                                                                                    |                        |
|                                                                                                                                                                                    | Name:                       |   |   |
|                                                                                                                                                                                    |                        |
|                                                                                                                                                                                    | Title:                      |   |   |
|                                                                                                                                                                                         |                             |        |  |  |  |

 

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**EXHIBIT A**

 

Definitionof “**Accredited Investor**”

 

Rule 501of Regulation D

 

Promulgatedunder the Securities Act of 1933 (the “**Act**”)

 

“**AccreditedInvestor**” shall mean any person who comes within any of thefollowing categories, or who the issuer reasonably believes comes within any ofthe following categories, at the time of the sale of the securities to thatperson:

 

### Any bank as defined in section 3(a)(2) of the Act or anysavings and loan association or other institution as defined in Section 3(a)(5)(A) ofthe Act whether acting in Stockholder’s individual or fiduciary capacity; anybroker dealer registered pursuant to Section 15 of the Securities ExchangeAct of 1934; any insurance company as defined in Section 2(13) of the Act;any investment company registered under the Investment Company Act of 1940 or abusiness development company as defined in Section 2(a)(48) of that Act;any Small Business Investment Company licensed by the U.S. Small Business Administrationunder Section 301(c) or (d) of the Small Business Investment Actof 1958; any plan established and maintained by a State, Stockholder’spolitical subdivisions, or any agency or instrumentality of a State orStockholder’s political subdivisions, for the benefit of Stockholder’semployees, if such plan has total assets in excess of $5,000,000; any employeebenefit plan within the meaning of the Employee Retirement Income Security Actof 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21)of such Act, which is either a bank, savings and loan association, insurancecompany, or registered investment adviser, or if the employee benefit pan hastotal assets in excess of $5,000,000; or, if a self-directed plan, with investmentdecisions made solely by persons that are accredited investors;

###  

### Any private business development company as defined in Section 202(a)(22)of the Investment Advisers Act of 1940;

###  

### Any organization described in Section 501(c)(3) of theInternal Revenue Code, corporation, Massachusetts or similar business trust, orpartnership, not formed for the specific purpose of acquiring the securitiesoffered, with total assets in excess of $5,000,000;

###  

### Any director, executive officer or general partner of the issuer of thesecurities being offered or sold, or any director, executive officer or generalpartner of a general partner of that issuer;

###  

### Any natural person whose individual net worth, or joint net worth withthat person’s spouse, at the time of his purchase exceeds $1,000,000;

###  

### Any natural person who had an individual income in excess of $200,000in each of the two most recent years, or joint income with that person’s spousein excess of $300,000 in each of those years and has a reasonable expectation ofreaching the same income level in the current year;

###  

### Any trust with total assets in excess of $5,000,000 not formed for thespecific purpose of acquiring the securities offered, whose purchase isdirected by a sophisticated person as described in Rule 506(b)(2)(ii); and

###  

### Any entity in which all of the equity owners are accredited investors.

 

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**EXHIBIT C**

 

**FORM OF REGISTRATION RIGHTS AGREEMENT**

 

This Registration Rights Agreement (this “Agreement”) is enteredinto as of          October 5, 2007,by and between****Forgent Networks, Inc.,****a Delaware corporation (the “Company”), and thestockholders of the Company listed on Schedule A attached hereto****(collectively, the “Stockholders”).

 

**W I T N E S S E T H :**

 

WHEREAS, the Company has agreed to grant certain registration rights tothe Stockholders with respect to the shares of the Company’s common stock, parvalue $.01 per share (the “Common Stock”), issued to or for the benefitof the Stockholders on the date hereof.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiencyof which are hereby acknowledged, the parties hereto agree as follows:

 

# 1.             Definitions.

#  

“Commission” means the Securities and Exchange Commission or anyother Federal agency at the time administering the Securities Act.

 

“Exchange Act” means the Securities Exchange Act of 1934, asamended, or any similar Federal statute, and the rules and regulations ofthe Commission thereunder, all as the same shall be in effect at the time.Reference to a particular section of the Exchange Act shall include areference to the comparable section, if any, of any such similar Federalstatute.

 

“Holder” means any Stockholder, and, subject to Section 8(f),any assignee or transferee of a Registrable Security initially held by anyStockholder, which assignee or transferee expressly is granted rights as aHolder under this Agreement by any Stockholder at the time of such transfer.

 

“Pro Rata Basis” means a pro rata allocation based on the numberof Registrable Securities **requested**to be included in a registered offering pursuant to this Agreement.

 

“Registrable Securities” means the shares of Common Stockcurrently held by the Stockholders, and any and all securities of the Companyissued or issuable with respect to such shares by way of a dividend, reclassification,stock split, or other distribution or in connection with a combination ofshares, recapitalization, merger, consolidation or other reorganization orotherwise. Any Registrable Security will cease to be a Registrable Securitywhen (i) a registration statement covering such Registrable Security hasbeen declared effective by the Commission and the Registrable Security has beendisposed of pursuant to such effective registration statement, (ii) theRegistrable Security is sold under circumstances in which all of the applicableconditions of Rule 144 (or any similar provisions then in force) under theSecurities Act

 

1

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are met, (iii) the Registrable Security has been otherwisetransferred, the Company has delivered a new certificate or other evidence ofownership for it not bearing a legend restricting further transfer, and it may beresold without subsequent registration under the Securities Act, (iv) theRegistrable Security is eligible for sale pursuant to Rule 144(k) (orany successor provision) under the Securities Act, or (vi) the RegistrableSecurity is otherwise transferred by any Stockholder to any transferee who isnot entitled to the benefits of this Agreement as contemplated by Section 8(f) hereof.

 

“Securities Act” means the Securities Act of 1933, as amended,or any similar Federal statute, and the rules and regulations of theCommission thereunder, all as the same shall be in effect at the time.References to a particular section of the Securities Act shall include areference to the comparable section, if any, of any such similar or successorFederal statute.

 

“Underwriter” means a securities dealer which purchases anyRegistrable Securities as principal and not as part of such dealer’smarket-making activities.

 

# 2.             Piggy-BackRegistration.

#  

## (a)           Request for Registration. At any time after the date hereof, if theCompany proposes to file a registration statement under the Securities Act(other than a registration statement on Form S-4 or S-8) (or any successorform that may be adopted by the Commission) or a registrationstatement filed in connection with an exchange offer or offering of securitiesor debt solely to the Company’s existing security or debt holders) with respectto an offering of securities of the same class as the RegistrableSecurities by the Company for its own account or for the account of any of its-securityholders, then the Company shall give written notice of such proposed filing toeach Holder as soon as practicable (but in no event less than twenty (20) daysbefore the anticipated filing date). Such notice shall offer each Holder theopportunity to have all or any of the Registrable Securities held by suchHolder included in the registration statement proposed to be filed or, at theCompany’s option, in a separate registration statement to be filed concurrentlywith such registration statement (the “Piggy-Back Registration”). Withinten (10) days after such notice is given (or deemed to have been given),each Holder may make a written request to the Company that any or all ofthe Holder’s Registrable Securities be included in the Piggy-Back Registration,which notice shall specify the number of shares to be so included. Subject to Section 2(b) hereof,the Company shall include in the Piggy-Back Registration (or in a separateregistration statement filed concurrently therewith) all Registrable Securitieswith respect to which the Company has received written requests for inclusiontherein within ten (10) days after notice is given (or deemed to have beengiven) by the Company. The Company may in its discretion withdraw anyregistration statement filed pursuant to this Section 3(a) subsequentto its filing without liability to the Holders except with respect to expenses.Any Holder shall be permitted to withdraw all or part of such Holder’sRegistrable Securities requested to be included in a Piggy-Back Registration atany time prior to the effective date of such Piggy-Back Registration.

##  

## (b)           Priority on Piggy-Back Registration. If any Piggy-Back Registration is to be anunderwritten offering the Company shall use its commercially reasonable effortsto cause the managing Underwriter or Underwriters to permit the shares ofRegistrable Securities requested by the Holders of Registrable Securities (“SellingPiggy-Back Holders”) to be included in the

 

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##  

Piggy-Back Registration (on the same terms and conditions as similarsecurities of the Company included therein to the extent appropriate).Notwithstanding the foregoing, if the managing Underwriter or Underwriters ofsuch offering advise the Company in writing that, in their good faith judgment,the number of Registrable Securities and any other securities requested to beincluded in such offering is sufficiently large to materially and adverselyaffect the success of such offering (such effect, a “Material Adverse Effect”),then (i) if such Piggy-Back Registration is incident to a primaryregistration on behalf of the Company, the amount of securities to be includedin the Piggy-Back Registration for any persons (other than the Company and theSelling Piggy-Back Holders) shall first be reduced, and thereafter theRegistrable Securities to be offered for the account of the Selling Piggy-BackHolders shall be reduced or limited, subject to any written agreement among theSelling Piggy-Back Holders, on a Pro Rata Basis so that the total number ofsecurities to be included in the offering shall be the number recommended bysuch managing Underwriter or Underwriters, and (ii) if such Piggy-BackRegistration is incident to a secondary registration on behalf of holders ofsecurities of the Company, the Company shall include in such registrationstatement (A) first, the number of securities of such person(s) onwhose behalf the registration is being made (allocated among such persons asthey may so determine), (B) second, the number of RegistrableSecurities requested to be included in such registration pursuant to this Section 3in excess of the securities such persons on whose behalf the registration isbeing made propose to sell that, in the good faith judgment of such managingUnderwriters, can be sold without causing a Material Adverse Effect on suchoffering, allocated among the Selling Piggy-Back Holders, subject to anywritten agreement among the Selling Piggy-Back Holders on a Pro Rata Basis asdescribed in clause (i) above, and (C) third, the number ofsecurities requested to be included in such registration by the Company or byother persons pursuant to similar piggy-back registration rights (allocatedamong the Company and such persons as they may so determine).

##  

## (c)           Company Purchase Option. Notwithstanding the terms of thisAgreement, if at the time any Holder requests any Registrable Securities to beincluded in a registration statement pursuant to this Agreement securities ofthe same class or series as the Registrable Securities are traded ona national securities exchange or authorized to be quoted on the NASDAQ or anyother recognized quotation system which regularly provides quotes on suchsecurities (a “Trading Forum”), the Company shall have the right andoption, in its sole discretion, to, in lieu of including such RegistrableSecurities in such registration statement, purchase all or any portion of suchRegistrable Securities requested to be included in such registration statementat the closing or last sales price of such security reported by such TradingForum on the date the written notice requesting the inclusion of such RegistrableSecurities in such registration statement is received by the Company or, ifthere is no such reported quote for such date by any Trading Forum, the lastreported closing or sales price, as applicable of such security by a TradingForum.

##  

# 3.             HoldbackAgreement. Upon inclusion by the company or any holders ofregistrable securities in a registration statement filed pursuant to section 2hereof, the holders agree not to effect any public sale or distribution of thesecurities being registered or a similar security of the company or anysecurities convertible into or exchangeable or exercisable for

 

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such securities, including a sale pursuant to rule 144 or rule 144aunder the securities act, during the thirty (30) days prior to, and during the180 day period beginning on, the effective date of such registration statement(except as part of such registration), if and to the extent requested bythe company in the case of**anon-underwritten public offering or if and to the extent requested by themanaging underwriter or underwriters in the case of an underwritten publicoffering**.**

#  

# 4.             RegistrationProcedures. Subject to the other provisions and limitationscontained in this Agreement, whenever any holder has requested that anyRegistrable Securities be registered pursuant to Section 2 hereof,the Company will use its commercially reasonable efforts to effect theregistration and the sale of such Registrable Securities in accordance with theintended method of disposition thereof as quickly as practicable, and inconnection with any such request, the Company will as expeditiously aspossible:

#  

## (a)           prepare and file with the Commission aregistration statement on any form for which the Company then qualifies orwhich counsel for the Company shall deem appropriate and which form shallbe available for the sale of the Registrable Securities to be registeredthereunder in accordance with the intended method of distribution thereof, anduse its commercially reasonable efforts to cause such filed registrationstatement to become effective under the Securities Act;

##  

## (b)           prepare and file with the Commission suchamendments and supplements to such registration statement and the prospectusused in connection therewith as may be necessary to keep such registrationstatement effective, for such time period as the Company shall determine in itssole discretion (but not before the expiration of the 90-day period referred toin Section 4(3) of the Securities Act and Rule 174 thereunder,if applicable) and comply with the provisions of the Securities Act withrespect to the disposition of all securities covered by such registrationstatement during such period in accordance with the intended methods ofdisposition as set forth in such registration statement;

##  

## (c)           furnish to each Holder of RegistrableSecurities covered by such registration statement, prior to filing theregistration statement, if requested, copies of such registration statement asproposed to be filed, and thereafter furnish to each such Holder such number ofcopies of such registration statement, each amendment and supplement thereto(in each case including all exhibits thereto and documents incorporated ordeemed to be incorporated therein by reference), the prospectus included insuch registration statement (including each preliminary prospectus), and suchother documents as each such Holder may reasonably request in order tofacilitate the disposition of the Registrable Securities owned by each suchHolder;

##  

## (d)           use its commercially reasonable efforts toregister or qualify such Registrable Securities under such other securities orblue sky laws of such jurisdictions as each Holder of Registrable Securitiescovered by such registration statement reasonably (in light of each such Holder’sintended plan of distribution) requests and do any and all other acts andthings which may be reasonably necessary to enable each such Holder toconsummate the disposition in such jurisdictions of the Registrable Securitiesowned by each such Holder and keep each such registration or qualification (orexemption therefrom) effective during the period such

 

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registration statement is effective; provided, however,that the Company will not be required to (i) qualify generally to dobusiness in any jurisdiction where it would not otherwise be required toqualify but for this subsection, (ii) subject itself to taxation in anysuch jurisdiction, or (iii) consent to general service of process in anysuch jurisdiction;

##  

## (e)           use its commercially reasonable efforts tocause such Registrable Securities to be registered with or approved by suchother governmental agencies or authorities as may be necessary by virtueof the business and operations of the Company to enable each Holder ofRegistrable Securities covered by the registration statement to consummate thedisposition of such Registrable Securities; provided, however,that the Company will not be required to (i) qualify generally to dobusiness in any jurisdiction where it would not otherwise be required toqualify but for this subsection, (ii) subject itself to taxation in anysuch jurisdiction, or (iii) consent to general service of process in anysuch jurisdiction;

##  

## (f)            at any time when a prospectus relating toRegistrable Securities is required to be delivered under the Securities Act, (i) notifyeach Holder of Registrable Securities covered by the registration statement ofthe occurrence of an event requiring the preparation of a supplement oramendment to such prospectus, (ii) prepare and file such supplement,amendment or any other required document so that, as thereafter delivered tothe purchasers of such Registrable Securities, such prospectus will not containan untrue statement of a material fact or omit to state any material factrequired to be stated therein or necessary to make the statements therein notmisleading, and (iii) promptly make available to each such Holder any suchsupplement, amendment or other document;

##  

## (g)           enter into and perform customaryagreements (including an underwriting agreement in customary form with themanaging Underwriter or Underwriters, if any), use its commercially reasonableefforts to obtain any necessary consents in connection with any proposed registrationand sale of Registrable Securities, and take such other actions as arereasonably required in order to expedite or facilitate the disposition of suchRegistrable Securities;

##  

## (h)           make available for inspection during businesshours on reasonable advance notice by each Holder of Registrable Securitiescovered by the registration statement, any Underwriter participating in anydisposition pursuant to such registration statement, and any attorney,accountant, or other professional retained by any such Holder or suchUnderwriter (collectively, the “Inspectors”), all financial and otherrecords, pertinent corporate documents, and properties of the Company(collectively, the “Records”) as shall be reasonably necessary to enablethem to exercise their due diligence responsibility, and cause the Company’sofficers, directors, and employees to supply all information reasonablyrequested by any such Inspectors in connection with such registrationstatement. Records which the Company determines, in good faith, to beconfidential and which it notifies the Inspectors are confidential shall not bedisclosed by the Inspectors unless (i) in the reasonable judgment ofcounsel to the Company the disclosure of such Records is necessary to avoid orcorrect a misstatement or omission in such registration statement or (ii) therelease of such Records is ordered pursuant to a subpoena or other order from acourt of competent jurisdiction. Each Holder agrees that information obtainedby him as a

 

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result of such inspections shall be deemed confidential and shall notbe used by him as the basis for any market transactions in the securities ofthe Company unless and until such is made generally available to the public.Each Holder further agrees that he will, upon learning that disclosure of suchRecords is sought in a court of competent jurisdiction, give notice to theCompany and allow the Company, at the Company’s expense, to undertakeappropriate action to prevent disclosure of the Records deemed confidential;

##  

## (i)            if requested by the managing Underwriter orUnderwriters, if any, or any Holder of Registrable Securities covered by theregistration statement in connection with an underwritten offering pursuant to Section 2hereof, (i) promptly incorporate in a prospectus supplement orpost-effective amendment such information as the managing Underwriter orUnderwriters, if any, and/or any such Holder reasonably requests to be includedtherein, as may be required by applicable laws and (ii) make allrequired filings of such prospectus supplement or such post-effective amendmentas soon as practicable after the Company has received notification of thematters to be incorporated in such prospectus supplement or post-effectiveamendment; provided, however, that the Company shall not berequired to take any actions pursuant to this Section 4(i) thatare not, in the reasonable opinion of counsel for the Company, in compliancewith applicable law;

##  

## (j)            use its commercially reasonable efforts toobtain the withdrawal of any order suspending the effectiveness of aregistration statement filed in connection herewith, or the lifting of anysuspension of the qualification (or exemption from qualification) of any of theRegistrable Securities for sale in any jurisdiction;

##  

## (k)           take such other actions as are reasonablyrequired in order to expedite or facilitate the disposition of such RegistrableSecurities.

##  

Notwithstanding the provisions of this Section 4, theCompany shall be entitled to postpone, for a reasonable period of time, thefiling or effectiveness of any registration statement under Section 2if (A) the Company determines, in the good faith exercise of itsreasonable business judgment, that such registration and offering couldinterfere with or adversely affect bona fide financing, acquisition, or otherbusiness plans of the Company (including a proposed primary offering by theCompany of its own securities) at the time the right to delay is exercised **(whether or not a final decision has been made to undertakesuch action or plan at such time)** or would requiredisclosure of non-public information, the premature disclosure of which couldadversely affect the business, properties, operations or financial results ofthe Company **or that otherwise mightnot be in the best interest of the Company’s stockholders**;provided, however, that the Company shall not be required todisclose to the Holders requesting registration any such transaction, plan ornon-public information, or (B) at any time prior to the effectiveness ofany Piggy-Back Registration the Company determines that it is unable to complywith the provisions of Article 3 or Article 11 of Regulation S-Xunder the Securities Act, to the extent then applicable to the Company. If theCompany postpones the filing or effectiveness of a registration statementpursuant hereto, it shall promptly notify in writing the Holders of RegistrableSecurities requesting such registration when the events or circumstancespermitting such postponement have ended and at such time shall proceed with thefiling of the registration

 

6

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statement as requested. If the Company shall postpone the filing of aregistration statement pursuant hereto, then the Holders of RegistrableSecurities demanding such registration shall have the right to withdraw theirrequest for registration by giving written notice to the Company at any timewithin five (5) days after the date the Company notifies such Holders ofRegistrable Securities of its willingness to proceed with the filing of theregistration statement.

 

The Company may require each Holder to promptly furnish in writingto the Company such information regarding the distribution of the RegistrableSecurities as the Company may from time to time reasonably request andsuch other information as may be legally required in connection with suchregistration.

 

Each Holder requesting registration of Registrable Securities pursuantto Section 2 of this Agreement shall cooperate with the Companyand, if applicable, the Underwriter or Underwriters in providing suchinformation and executing and delivering such documents as the Company or theUnderwriter or Underwriters reasonably shall request in connection with anysuch registration, and the Company shall not be obligated to include in anysuch registration any Registrable Securities of any Holder who does not complywith this paragraph.

 

Each Holder of Registrable Securities covered by a registrationstatement agrees that, upon receipt of any notice from the Company of thehappening of any event of the kind described in Section 4(f) hereof,such Holder will forthwith discontinue disposition of Registrable Securitiespursuant to the registration statement covering such Registrable Securitiesuntil such Holder’s receipt of the copies of the supplemented or amendedprospectus contemplated by Section 4(f) hereof, and, if sodirected by the Company, such Holder will deliver to the Company all copies,other than permanent file copies then in such Holder’s possession, of the mostrecent prospectus covering such Registrable Securities at the time of receiptof such notice. If the Company shall give such notice, the Company shall extendthe period during which such registration statement shall be maintainedeffective (including the period referred to in Section 4(b) hereof)by the number of days during the period from and including the date of thegiving of notice pursuant to Section 4(f) hereof to the datewhen the Company shall make available to such Holder a prospectus supplementedor amended to conform with the requirements of Section 4(f) hereof.

 

# 5.             Registration Expenses. In connection with anyregistration statement required to be filed hereunder, the Company shall paythe following registration expenses (the “Registration Expenses”): (a) allregistration and filing fees; (b) fees and expenses of compliance withsecurities or blue sky laws (including reasonable fees and disbursements ofcounsel in connection with blue sky qualifications of the RegistrableSecurities); (c) printing expenses (including expenses of printingcertificates for Registrable Securities); (d) internal expenses(including, without limitation, all salaries and expenses of its officers andemployees performing legal or accounting duties); (e) any fees andexpenses incurred in connection with the listing of the Registrable Securitieson the national securities exchange or automated quotation system on which theCommon Stock is listed; (f) reasonable fees and disbursements of counselfor the Company and customary fees and expenses for independent certifiedpublic accountants retained by the company; (g) the reasonable fees andexpenses of

 

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any special experts or other persons retained by the Company inconnection with such registration; and (h) messenger, delivery andtelephone expenses related to any registration contemplated hereunder. TheCompany shall not have any obligation to pay any underwriting fees, discounts,or commissions attributable to the sale of Registrable Securities, or anyout-of-pocket expenses of any Holder (or the agents who manage his accounts),which amounts shall be the responsibility of the selling Holder or Holders.

#  

# 6.             Indemnification;Contribution.

#  

## (a)           Indemnification by the Company. The Company agrees to indemnify and holdharmless each Holder of Registrable Securities and, if applicable, itsdirectors and officers and each person who controls such Holder within themeaning of either Sections 15 of the Securities Act or Section 20 of theExchange Act, covered by a registration statement filed pursuant to thisAgreement from and against any and all losses, claims, damages, liabilities andexpenses (including reasonable legal and other costs of investigation anddefense) (collectively, “Losses”) arising out of or based upon an untruestatement or alleged untrue statement of a material fact contained in any suchregistration statement or prospectus relating to the Registrable Securities orin any amendment or supplement thereto or in any preliminary prospectus, orarising out of or based upon any omission or alleged omission to state thereina material fact required to be stated therein or necessary to make thestatements therein not misleading, except insofar as such Losses arise out of,or are based upon, any such untrue statement or omission or allegation thereofbased upon information furnished to the Company by such Holder or on suchHolder’s behalf expressly for use therein; provided, however,that with respect to any untrue statement or omission or alleged untruestatement or omission made in any preliminary or final prospectus, theindemnity agreement contained in this subsection shall not apply to theextent that any such Losses result from the fact that a current copy of theprospectus was not sent or given to the person asserting any such Losses at orprior to the written confirmation of the sale of the Registrable Securitiesconcerned to such person if it is determined that it was the responsibility ofsuch Holder to provide such person with a current copy of the prospectus andsuch current copy of the prospectus would have cured the defect giving rise to****such Losses.

##  

## (b)           Indemnification by Holders. Each Holder agrees to indemnify and holdharmless the Company, its directors and officers, and each person, if any, whocontrols the Company within the meaning of either Section 15 of theSecurities Act or Section 20 of the Exchange Act (other than the Holder),covered by a registration statement filed pursuant to this Agreement from andagainst any and all Losses arising out of or based upon an untrue statement oralleged untrue statement of a material fact contained in any such registrationstatement or prospectus relating to the Registrable Securities or in anyamendment or supplement thereto or in any preliminary prospectus, or arisingout of or based upon any omission or alleged omission to state therein amaterial fact required to be stated therein or necessary to make the statementstherein not misleading, but only insofar as such Losses arise out of, or arebased upon, any such untrue statement or omission or allegation thereof basedupon information furnished to the Company by such Holder or on such Holder’sbehalf expressly for use therein; provided, however, that withrespect to any untrue statement or omission or alleged untrue statement or

 

8

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omission made in any preliminary or final prospectus, the indemnityagreement contained in this subsection shall not apply to the extent thatany such Losses result from the fact that a current copy of the prospectus wasnot sent or given to the person asserting any such Losses at or prior to thewritten confirmation of the sale of the Registrable Securities concerned tosuch person if it is determined that it was the responsibility of the Companyor any other person or entity (other than the Holder) to provide such personwith a current copy of the prospectus and such current copy of the prospectuswould have cured the defect giving rise to such Losses.

##  

## (c)           Conduct of Indemnification Proceedings. If any action or proceeding (including anygovernmental investigation) shall be brought or asserted against any personentitled to indemnification under subsections (a) or (b) above (an “IndemnifiedParty”) in respect of which indemnity may be sought from any party whohas agreed to provide such indemnification (an “Indemnifying Party”),the Indemnified Party shall promptly notify the Indemnifying Party in writing,and the Indemnifying Party shall assume the defense thereof, including theemployment of counsel reasonably satisfactory to such Indemnified Party, andshall assume the payment of all expenses. The Indemnified Party shall have theright to employ separate counsel in any such action and to participate in thedefense thereof, but the fees and expenses of such counsel shall be at theexpense of such Indemnified Party unless (i) the Indemnifying Party hasagreed to pay such fees and expenses, (ii) the Indemnifying Party shallhave failed to promptly assume the defense of such action or proceeding and toemploy counsel reasonably satisfactory to the Indemnified Party, (iii) thenamed parties to any such action or proceeding (including any impleadedparties) include both such Indemnified Party and the Indemnifying Party, andsuch Indemnified Party shall have been advised by counsel that there is aconflict of interest on the part of counsel employed by the IndemnifyingParty to represent such Indemnified Party, or (iv) the Indemnified Party’scounsel shall have advised the Indemnified Party that there may bedefenses available to the Indemnified Party that are different from or inaddition to those available to the Indemnifying Party and that the IndemnifyingParty is not able to assert on behalf of or in the name of the IndemnifiedParty (and in case of either (iii) or (iv), if such Indemnified Partynotifies the Indemnifying Party in writing that it elects to employ separatecounsel at the expense of the Indemnifying Party, the Indemnifying Party shallnot have the right to assume the defense of such action or proceeding on behalfof such Indemnified Party); it being understood, however, that the IndemnifyingParty shall not, in connection with any one such action or proceeding orseparate but substantially similar or related actions or proceedings in thesame jurisdiction arising out of the same general allegations or circumstances,be liable for the fees and expenses of more than one separate firm of attorneys(together with appropriate local counsel) at any time for all such IndemnifiedParties, which firm shall be designated in writing by such Indemnified Parties.The Indemnifying Party shall not be liable for any settlement of any suchaction or proceeding effected without its written consent, which consent shallnot be unreasonably withheld, but if settled with its written consent, or ifthere be a final judgment for the plaintiff in any such action or proceeding,the Indemnifying Party shall indemnify and hold harmless such IndemnifiedParties from and against any loss or liability (to the extent stated above) byreason of such settlement or judgment.

 

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## (d)           Contribution. If the indemnification provided for in thisSection 6 is unavailable to the Indemnified Parties in respect ofany Losses (other than by reason of exceptions provided in Section 6(a) or6(b)), then each Indemnifying Party, in lieu of indemnifying suchIndemnified Party, shall contribute to the amount paid or payable by suchIndemnified Party as a result of such Losses (i) in such proportion as isappropriate to reflect the relative fault of the Company, on the one hand, andHolders (together with any other selling stockholders that may beobligated thereon pursuant to similar indemnification or contributionprovisions as contained herein), on the other hand, with respect to thestatements or omissions or alleged statements or alleged omissions whichresulted in such Losses, or action in respect thereof, as well as any otherrelevant equitable considerations or (ii) if the allocation provided byclause (i) above is not permitted by applicable law, in such proportion asshall be appropriate to reflect the relative benefits received by the Company,on the one hand, and Holders (together with any other selling stockholders thatmay be obligated thereon pursuant to similar indemnification orcontribution provisions as contained herein), on the other hand, from theoffering of the securities covered by such registration statement. The relativefault of the Company on the one hand and of Holders (together with any otherselling stockholders that may be obligated thereon pursuant to similarindemnification or contribution provisions as contained herein) on the othershall be determined by reference to, among other things, whether the untrue oralleged untrue statement of a material fact or the omission or alleged omissionto state a material fact relates to information supplied by such party, andsuch party’s relative intent, knowledge, access to information, and opportunityto correct or prevent such statement or omission. The relative benefitsreceived by the Company on the one hand and Holders (together with any otherselling stockholders that may be obligated thereon pursuant to similarindemnification or contribution provisions as contained herein) on the othershall be deemed to be in the same proportion as the total proceeds from theoffering (net of underwriting discounts and commissions but before deducting expenses)received by the Company bears to the total proceeds (net of underwritingdiscounts and commissions but before deducting expenses) received by theHolders (together with any other selling stockholders that may beobligated thereon pursuant to similar indemnification or contributionprovisions as contained herein).

##  

The Company and each Holder agree that it would not be just andequitable if contribution pursuant to this Section 6(d) weredetermined by pro rata allocation (even if the Underwriters were treated as oneentity for such purpose) or by any other method of allocation which does nottake into account the equitable considerations referred to in the immediatelypreceding subsection. Notwithstanding the provisions of this Section 6(d),no Holder shall be required to contribute any amount in excess of the amount bywhich the total price at which the securities of such Holder were offered tothe public exceeds the amount of any damages which such Holder has otherwisebeen required to pay by reason of such untrue or alleged untrue statement oromission or alleged omission. No person guilty of fraudulent misrepresentation(within the meaning of Section 11(f) of the Securities Act) shall beentitled to contribution from any person who was not guilty of such fraudulentmisrepresentation.

 

## (e)           Survival. The indemnity and contribution agreements contained in this Section 6shall remain operative and in full force and effect regardless of (i) anytermination of this Agreement or any underwriting agreement, (ii) anyinvestigation made by or on behalf of any

 

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Indemnified Party or by or on behalf of the Company, and (iii) theconsummation of the sale or successive resale of the Registrable Securities.

##  

# 7.             Participationin Underwritten Registrations. No Holder may participate inany underwritten registration hereunder unless such Holder (a) agrees tosell his securities on the basis provided in an underwriting arrangementsapproved by the persons or entities entitled hereunder to approve sucharrangements and (b) completes and executes all questionnaires, powers ofattorney, indemnities, underwriting agreements, and other documents reasonablyrequired under the terms of such underwriting arrangements and this Agreement; provided,however, that no such Holder shall be required to make anyrepresentations or warranties in connection with any such registration otherthan representations and warranties as to (x) such Holder’s ownership ofhis or its Registrable Securities to be sold or transferred free and clear ofall liens, claims, and encumbrances, (y) such Holder’s power and authorityto effect such transfer, and (z) such matters pertaining to compliancewith securities laws as may be reasonably requested.

#  

# 8.             Miscellaneous.

#  

## (a)           Remedies. Any and all remedies herein expressly conferred upon a party will bedeemed cumulative with and not exclusive of any other remedy conferred hereby,or by law or equity upon such Party, and the exercise by a Party of any oneremedy will not preclude the exercise of any other remedy.

##  

## (b)           Term. The term of this Agreement shall terminate on the earlier to occur of(i) the fifth (5th) anniversary of the date hereof or (ii) thefirst date on which there are no longer any Registrable Securities.

##  

## (c)           No Inconsistent Agreements. The Company will not on or after the dateof this Agreement enter into any agreement with respect to its securities whichis inconsistent with the rights granted to Holders in this Agreement orotherwise conflicts with the provisions hereof.

##  

## (d)           Amendments and Waivers. The provisions of this Agreement may notbe amended, modified, or supplemented, and waivers or consents to departuresfrom the provisions hereof may not be given, unless the Company hasobtained the written consent of the Holders.

##  

## (e)           Notices. Any notice, request, instruction or other document to be givenhereunder shall be in writing and shall be deemed given when deliveredpersonally, upon receipt of a transmission confirmation if sent by facsimile orlike transmission, and on the next business day when sent by Federal Express,United Parcel Service, Express Mail, or other reputable overnight courier, tothe party at the address identified or described below:

##  

### (i)            if to the Company, at its most currentaddress and thereafter at such other address as may be designated fromtime to time by notice given in accordance with the provisions of this section,which address initially is:

 

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ForgentNetworks, Inc.

108 Wild BasinRoad South

Austin, Texas78746

Attention:  Richard M. Snyder, President 

Facsimile:  (512) 437-2365

 

### (ii)           if to any Holder, at such address set forth on the signature pages heretoor on the Addendum to this Agreement executed and delivered by such Holderpursuant to Section 8(f) hereof or at such other address as may bedesignated from time to time by notice given in accordance with the provisionsof this Section 8(e).

###  

## (f)            Successors and Assigns. Holders may assign their respectiverights and obligations hereunder to persons to whom they transfer or otherwiseassign Registrable Securities. In the event of any such assignment, suchassignees shall be entitled to the rights of the assignor only to the extentsuch rights expressly are assigned to such assignor. Any assignment of rightsunder this Agreement in violation of the foregoing shall be null and void.Subject to the foregoing, this Agreement shall inure to the benefit of and bebinding upon the successors and assigns of the Company and each Holder; provided,however, that any assignee or transferee of Registrable Securities thatis deemed a Holder under this Agreement shall be entitled to the rights andbenefits afforded such person by this Agreement only upon such person’sexecution and delivery of an addendum to this Agreement, in form andsubstance acceptable to the Company, agreeing to be bound by the duties andobligations of a Holder under this Agreement.

##  

## (g)           Counterparts. This Agreement may be executed in anumber of identical counterparts and it shall not be necessary for the Companyand each Holder to execute each of such counterparts, but when both haveexecuted and delivered one or more of such counterparts, the several parts,when taken together, shall be deemed to constitute one and the same instrument,enforceable against each in accordance with its terms. In making proof of thisAgreement, it shall not be necessary to produce or account for more than onesuch counterpart executed by the party against whom enforcement of thisAgreement is sought.

##  

## (h)           Headings; Construction. The headings in this Agreement are forconvenience only, do not constitute a part of this Agreement and shall notaffect in any way the meaning or interpretation of this Agreement. The partieshereto agree that they have been represented by counsel during the negotiation,preparation and execution of this Agreement and, therefore, waive theapplication of any law, holding or rule of construction providing thatambiguities in an agreement or other document will be construed against theparty drafting such agreement or document.

##  

## (i)            Governing Law. This Agreement and the legal relationsbetween the parties hereto shall be governed by and construed in accordancewith the laws of the State of Delaware, without regard to principles ofconflicts of law that would require application of any other law.

 

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## (j)            Severability. Any term or provision of this Agreementthat is invalid or unenforceable in any situation in any jurisdiction shall notaffect the validity or enforceability of the remaining terms and provisionshereof or the validity or enforceability of the offending term or provision inany other situation or in any other jurisdiction. If the final judgment of acourt of competent jurisdiction declares that any term or provision hereof isinvalid or unenforceable, the parties agree that the court making thedetermination of invalidity or unenforceability shall have the power to reducethe scope, duration or area of the term or provision, to delete specific wordsor phrases or to replace any invalid or unenforceable term or provision with aterm or provision that is valid and enforceable and that comes closest toexpressing the intention of the invalid or unenforceable term or provision, andthis Agreement shall be enforceable as so modified after the expiration of thetime within which the judgment may be appealed.

##  

## (k)           Entire Agreement. This Agreement contains the entireunderstanding of the parties hereto with respect to the subject mattercontained herein and supersedes all prior agreements and understandings, oraland written, with respect thereto.

##  

## (l)            Attorneys’ Fees. In any proceeding brought to enforce anyprovision of this Agreement, the successful party shall be entitled to recoverreasonable attorneys’ fees in addition to its costs and expenses and any otheravailable remedy.

##  

*[Signature Pages Follow]*

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement asof the date first above written.

 

COMPANY:

FORGENT NETWORKS, INC.

 

 
| By:    |   |   |
|--------|--------|--------|
| Name:  |   |   |
| Title: |   |   |
|        |        |        |  |

 

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***[Registration Rights Agreement SignaturePage]***

 

STOCKHOLDER:

 
|     |   |
|----------|--------|
| Name:    |   |   |
| Title:   |   |   |
| Date:    |   |   |
|     |   |
| Address: |   |   |
|     |   |   |
|     |   |   |
|     |   |   |
|     | Fax:   |   |   |
|          |        |  |  |  |  |

 

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**EXHIBIT D**

 

**FORM OF VOTING AGREEMENT**

 

ThisVoting Agreement (this “Agreement”) is made and entered into as of September 11, 2007,by and among Forgent Networks, Inc., a Delaware corporation (“Parent”),iSarla, Inc., a Delaware corporation (“Company”), and thestockholders of the Company named on the signature page hereto (each a “Stockholder”and collectively, the “Stockholders”).

 

**RECITALS**

 

A.                                   Concurrentlywith the execution and delivery hereof, Parent, Cheetah Acquisition Company, Inc.,a Delaware corporation and a direct wholly owned subsidiary of Parent (“MergerSub”), and the Company are entering into an Agreement and Plan of Merger ofeven date herewith (as it may be amended from time to time pursuant to theterms thereof, the “Merger Agreement”), which provides for the merger(the “Merger”) of Merger Sub with and into the Company in accordancewith its terms.

 

B.                                     EachStockholder is the beneficial owner (as defined in Rule 13d-3 under theSecurities Exchange Act of 1934, as amended) of such number of shares of each class ofcapital stock of the Company as is indicated on the signature page of thisAgreement signed by such Stockholder.

 

C.                                     Inconsideration of the execution and delivery of the Merger Agreement by Parentand Merger Sub, the Stockholders agree to vote the Shares (as defined herein)over which they have voting power so as to facilitate the consummation of theMerger.

 

NOW, THEREFORE, intending tobe legally bound, the parties hereto hereby agree as follows:

 

# 1.                                       Certain Definitions.

#  

## (a)                                  Capitalizedterms used but not otherwise defined herein shall have the meanings ascribedthereto in the Merger Agreement. For all purposes of and under this Agreement,the following terms shall have the following respective meanings:

##  

## “Constructive Sale”means, with respect to any security, a short sale with respect to suchsecurity, entering into or acquiring an offsetting derivative contract withrespect to such security, entering into or acquiring a futures or forwardcontract to deliver such security or entering into any other hedging or otherderivative transaction that has the effect of materially changing the economicbenefits and risks of ownership.

##  

## “Shares” means (i) allshares of capital stock of the Company owned, beneficially or of record, by aStockholder as of the date hereof, and (ii) all additional shares ofcapital stock of the Company acquired by a Stockholder, beneficially or of 

 

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## record, during the period commencing with theexecution and delivery of this Agreement and expiring on the Expiration Date(as such term is defined in Section 13 of this Agreement). In case of astock dividend or distribution, or any change in the capital stock of theCompany by reason of any stock dividend or distribution, split-up,recapitalization, combination, exchange of shares or the like, the term “Shares”shall be deemed to refer to and include the Shares as well as all such stockdividends and distributions and any securities into which or for which any orall of the Shares may be changed or exchanged or which are received insuch transaction.

##  

## “Transfer” means,with respect to the Shares, the direct or indirect assignment, sale, transfer,tender, pledge, hypothecation, or the grant, creation or sufferage of a lien orencumbrance in or upon, or the gift, placement in trust, or the ConstructiveSale or other disposition of the Shares (including transfers by testamentary orintestate succession or otherwise by operation of law) or any right, title orinterest therein (including, but not limited to, any right or power to vote towhich the holder thereof may be entitled, whether such right or power isgranted by proxy or otherwise), or the record or beneficial ownership thereof,the offer to make such a sale, transfer, Constructive Sale or otherdisposition, and each agreement, arrangement or understanding, whether or notin writing, to effect any of the foregoing.

##  

# 2.                                       Transfer and Voting Restrictions.

#  

## (a)                                  At all timesduring the period commencing with the execution and delivery of this Agreementand expiring on the Expiration Date, each Stockholder shall not, except inconnection with the Merger or as the result of the death of the Stockholder,Transfer any of the Shares, or discuss, negotiate, make an offer or enter intoan agreement, commitment or other arrangement with respect thereto and theCompany shall not recognize any such attempted Transfer on the stock recordbooks of the Company.

##  

## (b)                                 From and afterthe date hereof, except as otherwise permitted by this Agreement or prohibitedby order of a court of competent jurisdiction, each Stockholder will not commitany act that could restrict or otherwise affect its legal power, authority andright to vote all of the Shares then owned of record or beneficially by it. Withoutlimiting the generality of the foregoing, except for this Agreement and asotherwise permitted by this Agreement, from and after the date hereof, eachStockholder will not enter into any voting agreement with any person or entitywith respect to any of the Shares, grant any person or entity any proxy(revocable or irrevocable) or power of attorney with respect to any of theShares, deposit any of the Shares in a voting trust or otherwise enter into anyagreement or arrangement with any person or entity limiting or affecting theStockholder’s legal power, authority or right to vote the Shares in favor ofthe approval of the Proposed Transaction (as such term is defined in Section 3(a) ofthis Agreement).

 

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# 3.                                       Agreement to Vote Shares.

#  

## (a)                                  Prior to theExpiration Date, at every meeting of the stockholders of the Company called,and at every adjournment or postponement thereof, and on every action orapproval by written consent of the stockholders of the Company, eachStockholder (in its capacity as such) shall appear at the meeting or otherwisecause the Shares to be present thereat for purposes of establishing a quorumand, to the extent not voted by the persons appointed as proxies pursuant tothis Agreement, vote (i) in favor of approval of the Merger, the MergerAgreement and the other transactions contemplated thereby (collectively, the “ProposedTransaction”); (ii) against any proposal to rescind or amend in anymanner any prior vote or written consent to approve or adopt the Merger or theMerger Agreement; (iii) against the approval or adoption of any proposalmade in opposition to, or in competition with, the Proposed Transaction; and (iv) againstany of the following (to the extent unrelated to the ProposedTransaction):  (A) any merger,consolidation or business combination involving the Company or any of itssubsidiaries other than the Proposed Transaction; (B) any sale, lease ortransfer of all or substantially all of the assets of the Company or any of itssubsidiaries; (C) any reorganization, recapitalization, dissolution,liquidation or winding up of the Company or any of its subsidiaries; or (D) anyother action that is intended, or could reasonably be expected to, impede,interfere with, delay, postpone, discourage or adversely affect theconsummation of the Proposed Transaction (each of (iii) and (iv), a “CompetingTransaction”).

##  

## (b)                                 If aStockholder is the beneficial owner, but not the record holder, of the Shares,such Stockholder agrees to take all actions necessary to cause the recordholder and any nominees to vote all of the Shares in favor of the approval andauthorization of the Proposed Transaction.

##  

# 4.                                       Grant of Irrevocable Proxy.

#  

## (a)                                  EachStockholder hereby irrevocably (to the fullest extent permitted by law) grantsto, and appoints, each of Richard Snyder and Jay Peterson and either of them,in their capacities as officers of Parent, such Stockholder’s proxy andattorney-in-fact (with full power of substitution and re-substitution), for andin the name, place and stead of such Stockholder, to vote the Shares, toinstruct nominees or record holders to vote the Shares, or grant a consent orapproval in respect of such Shares in favor of approval and authorization ofthe Proposed Transaction.

##  

## (b)                                 EachStockholder represents that any proxies heretofore given in respect of suchStockholder’s Shares that may still be in effect are not irrevocable, andthat any such proxies are hereby revoked.

##  

## (c)                                  EachStockholder hereby affirms that the irrevocable proxy set forth in this Section 4is given in connection with the execution of the Merger Agreement, and thatsuch irrevocable proxy is given to secure the performance of the duties of eachStockholder under this Agreement. Each Stockholder hereby further affirms thatthe irrevocable proxy is coupled with an interest and may under nocircumstances be revoked. Each Stockholder hereby ratifies and 

 

3

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## confirmsall that such irrevocable proxy may lawfully do or cause to be done byvirtue hereof. Such irrevocable proxy is executed and intended to beirrevocable in accordance with the provisions of Section 212 of theDelaware General Corporation Law.

##  

## (d)                                 The attorneysand proxies named in Section 4(a) may not exercise thisirrevocable proxy on any other matter except as provided above. A Stockholder may votethe Shares on all other matters.

##  

# 5.                                       No Solicitation. No Stockholder, in its capacity as a stockholder, shalldirectly or indirectly, (i) solicit, initiate, encourage, induce orfacilitate the making, submission or announcement of any Competing Transactionor take any action that could reasonably be expected to lead to a CompetingTransaction; (ii) furnish any information regarding the Company to anyperson in connection with or in response to a Competing Transaction or aninquiry or indication of interest that could reasonably be expected to lead toa Competing Transaction; (iii) engage in discussions or negotiations withany person with respect to any Competing Transaction; (iv) approve,endorse or recommend any Competing Transaction; or (v) enter into anyletter of intent or similar document or any contract contemplating or otherwiserelating to any Competing Transaction.

#  

# 6.                                       Notification of Certain Acts. While this Agreement is in effect, eachStockholder shall notify Parent promptly (and in any event within one businessday) in writing of (i) the number of any additional Shares acquired bysuch Stockholder, if any, after the date hereof; and (ii) any suchinquiries or proposals that are received by, any such information which isrequested from, or any such negotiations or discussions that are sought to beinitiated or continued with, such Stockholder with respect to any matterdescribed in Section 5 of this agreement.

#  

# 7.                                       Action in Stockholder Capacity Only. No Stockholder makes any agreement orunderstanding herein as a director or officer of the Company. Each Stockholdersigns solely in his capacity as a record holder and/or beneficial owner of Shares,and nothing herein shall limit or affect any actions taken in his capacity asan officer or director of the Company.

#  

# 8.                                       Representations and Warranties of the Stockholders.

#  

## (a)                                  EachStockholder hereby represents and warrants, severally and not jointly, toParent as follows:  (i) suchStockholder is the beneficial or record owner of the shares of capital stock ofthe Company indicated on the signature page of this Agreement, free andclear of any and all pledges, liens, security interests, claims, charges,restrictions, options or encumbrances; (ii) such Stockholder does notbeneficially own any securities of the Company other than the shares of capitalstock and rights to purchase shares of capital stock of the Company set forthon the signature page of this Agreement; and (iii) such Stockholderhas full power and authority to make, enter into and carry out the terms ofthis Agreement and to grant the irrevocable proxy as set forth in Section 4;and (iv) this Agreement has been duly and validly executed and deliveredby such Stockholder and constitutes a valid and binding agreement of suchStockholder enforceable against it in accordance with its terms.

 

4

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## (b)                                 As of the datehereof and for so long as this Agreement remains in effect, except for thisAgreement or as otherwise permitted by this Agreement, each Stockholder hasfull legal power, authority and right to vote all of the Shares then owned ofrecord or beneficially by it, in favor of the approval and authorization of theProposed Transaction without the consent or approval of, or any other action onthe part of, any other person or entity. No Stockholder has entered intoany voting agreement (other than this Agreement) with any person or entity withrespect to any of the Shares, granted any person or entity any proxy (revocableor irrevocable) or power of attorney with respect to any of the Shares,deposited any of the Shares in a voting trust or entered into any arrangementor agreement with any person or entity limiting or affecting its legal power,authority or right to vote the Shares on any matter.

##  

# 9.                                       Conflicting Instruments. The execution and delivery of this Agreement andthe performance by each Stockholder of its agreements and obligations hereunderwill not result in any breach or violation of or be in conflict with orconstitute a default under any term of any agreement, judgment, injunction,order, decree, law, regulation or arrangement to which such Stockholder is aparty or by which such Stockholder (or any of its assets) is bound, except forany such breach, violation, conflict or default which, individually or in theaggregate, would not impair or adversely affect such Stockholder’s ability toperform its obligations under this Agreement or render inaccurate any ofthe representations made by it herein.

#  

# 10.                                 Exchange of Shares; Waiver of Rights of Appraisal. If the Merger is consummated, the Shares shall,pursuant to the terms of the Merger Agreement, be exchanged for theconsideration provided in the Merger Agreement. Each Stockholder hereby waivesany rights of appraisal with respect to the Merger, or rights to dissent fromthe Merger, that such Stockholder may have.

#  

# 11.                                 Regulatory Approvals. Each of the provisions of this Agreement is subject tocompliance with applicable regulatory conditions and receipt of any requiredconsent or approval from any governmental entity.

#  

# 12.                                 Confidentiality. Each Stockholder recognizes that successfulconsummation of the transactions contemplated by the Merger Agreement may bedependent upon confidentiality with respect to the matters referred to herein. Inthis connection, pending public disclosure thereof, and so that parent may relyon the safe harbor provisions of Rule 100(b)(2)(ii) of Regulation FD,each Stockholder hereby agrees not to disclose or discuss such matters withanyone not a party to this Agreement (other than its counsel and advisors, ifany) without the prior written consent of Parent and the Company, except fordisclosures such Stockholder’s counsel advises in writing are necessary inorder to fulfill any legal requirement, in which event such Stockholder shallgive notice of such disclosure to Parent and the Company as promptly aspracticable so as to enable Parent and the Company to seek a protective orderfrom a court of competent jurisdiction with respect thereto.

#  

# 13.                                 Termination. This Agreement shall terminate and be of no furtherforce or effect whatsoever as of the earlier of (i) such date and time asthe Merger Agreement shall have been 

 

5

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# validly terminated pursuant tothe terms of Article VII of the Merger Agreement or (ii) theEffective Time (the “Expiration Date”).

#  

# 14.                                 Miscellaneous Provisions.

#  

## (a)                                  Amendments,Modifications and Waivers. No amendment, modification or waiver inrespect of this Agreement shall be effective against any party unless it shallbe in writing and signed by Parent, Company and each Stockholder.

##  

## (b)                                 EntireAgreement. This Agreement and the Merger Agreement and theagreements contemplated thereby, collectively, contain the entire understandingof the parties hereto and thereto with respect to the subject matter containedherein and therein and supersede all prior agreements and understandings, oraland written, with respect thereto.

##  

## (c)                                  Governing Law. ThisAgreement and the legal relations between the Parties hereto shall be governedby and construed in accordance with the laws of the State of Delaware, withoutregard to principles of conflicts of law that would require application of anyother law.

##  

## (d)                                 Consent toJurisdiction; Venue. Each of the parties hereto (i) consents tosubmit itself to the personal jurisdiction of any federal court located in theState of Delaware or any Delaware state court of applicable jurisdiction, inthe event any dispute arises out of this Agreement or any of the transactionscontemplated by this Agreement; (ii) agrees that it will not attempt todeny or defeat such personal jurisdiction by motion or other request for leave fromany such court; and (iii) agrees that it will not bring any actionrelating to this Agreement or any of the transactions contemplated by thisAgreement in any court other than a federal court sitting in the State ofDelaware or a Delaware state court.

##  

## (e)                                  Attorneys’ Fees. In any actionat law or suit in equity to enforce this Agreement or the rights of any of theparties hereunder, the prevailing party in such action or suit shall beentitled to receive a reasonable sum for its attorneys’ fees and all otherreasonable costs and expenses incurred in such action or suit.

##  

## (f)                                    Assignment andSuccessors. This Agreement and all of the provisions hereofshall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and permitted assigns, including, without limitation,each Stockholder’s estate upon the death of such Stockholder, provided thatexcept as otherwise specifically provided herein, neither this Agreement norany of the rights, interests or obligations of the parties hereto may beassigned by any of the parties hereto without prior written consent of theother parties hereto except that Parent, without obtaining the consent of anyother party hereto, shall be entitled to assign this Agreement or all or any ofits rights or obligations hereunder to any one or more affiliates of Parent. Anyassignment in violation of the foregoing shall be void and of no effect.

##  

## (g)                                 No Third PartyRights. This Agreement shall inure to the benefit of and be binding upon theparties hereto and nothing in this Agreement, expressed or implied, is 

 

6

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## intendedto confer on any Person other than the arties hereto or their respectivesuccessors and permitted assigns, any rights, remedies, obligations orliabilities under or by reason of this Agreement.

##  

## (h)                                 Cooperation. EachStockholder agrees to cooperate fully with Parent and to execute and deliversuch further documents, certificates, agreements and instruments and to takesuch other actions as may be reasonably requested by Parent to evidence orreflect the transactions contemplated by this Agreement and to carry out theintent and purpose of this Agreement.

##  

## (i)                                     Severability. Any term orprovision of this Agreement that is invalid or unenforceable in any situationin any jurisdiction shall not affect the validity or enforceability of theremaining terms and provisions hereof or the validity or enforceability of theoffending term or provision in any other situation or in any other jurisdiction.If the final judgment of a court of competent jurisdiction declares that anyterm or provision hereof is invalid or unenforceable, the parties agree thatthe court making the determination of invalidity or unenforceability shall havethe power to reduce the scope, duration or area of the term or provision, todelete specific words or phrases or to replace any invalid or unenforceableterm or provision with a term or provision that is valid and enforceable andthat comes closest to expressing the intention of the invalid or unenforceableterm or provision, and this Agreement shall be enforceable as so modified afterthe expiration of the time within which the judgment may be appealed.

##  

## (j)                                     Time of Essence. With regardto all dates and time periods set forth or referred to in this Agreement, timeis of the essence.

##  

## (k)                                  Remedies. The partieshereto agree that irreparable damage would occur in the event that any of theprovisions of this Agreement required to be performed by the Stockholders werenot performed in accordance with their specific terms or were otherwisebreached. It is accordingly agreed that Parent shall be entitled to aninjunction or injunctions to prevent breaches of this Agreement and to enforcespecifically the terms and provisions hereof in any court of the United Statesor any state having jurisdiction without the necessity of posting a bond. Anyand all remedies herein expressly conferred upon a party will be deemedcumulative with and not exclusive of any other remedy conferred hereby, or bylaw or equity upon such party, and the exercise by a party of any one remedywill not preclude the exercise of any other remedy.

##  

## (l)                                     Notices. Any notice,request, instruction or other document to be given hereunder by any party toanother party shall be in writing and shall be deemed given when deliveredpersonally, upon receipt of a transmission confirmation (with a confirming copysent by overnight courier) if sent by facsimile or like transmission, and onthe next business day when sent by Federal Express, United Parcel Service,Express Mail, or other reputable overnight courier, to the party at the addressof such party as set forth on the signature pages hereto (or such otheraddresses for a Party as shall be specified by like notice).

 

7

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## (m)                               Counterparts. ThisAgreement may be executed in one or more counterparts, all of which shallbe considered one and the same agreement and shall become effective when one ormore counterparts have been signed by each of the parties and delivered to theother parties.

##  

## (n)                                 Headings. The headingscontained in this Agreement are for convenience only, do not constitute a part ofthis Agreement and shall not affect in any way the meaning or interpretation ofthis Agreement. References to Sections refer to sections of this Agreementunless otherwise stated.

##  

## (o)                                 Construction. The partieshereto agree that they have been represented by counsel during the negotiation,preparation and execution of this Agreement and, therefore, waive theapplication of any law, holding or rule of construction providing thatambiguities in an agreement or other document will be construed against theparty drafting such agreement or document.

##  

**[Remainder of Page Intentionally Left Blank.]**

 

8

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**SIGNATURE PAGE TOVOTING AGREEMENT**

** **

IN WITNESS WHEREOF, theundersigned have caused this Agreement to be duly executed as of the date firstabove written.

 

 
|   | **PARENT:**                  |
|--------|------------------------------|
|   |                         |
|   | Forgent  Networks, Inc. |
|   |                         |
|   | By:                          |   |
|   |                         | Name: |   |
|   |                         | Title: |   |
|   |                         |
|   |                         |
|   | **COMPANY:**                 |
|   |                         |
|   | iSarla, Inc.            |
|   |                         |
|   | By:                          |   |
|   |                         | Name: |   |
|   |                         | Title: |   |
|        |                              |  |  |  |  |  |  |

 

 

----

 

**SIGNATURE PAGE TOVOTING AGREEMENT**

** **

INWITNESS WHEREOF, the Stockholder has signed or caused this Agreement to besigned by its respective officers or other authorized persons thereunto dulyauthorized of the date first written above.

 
| ** ** | **STOCKHOLDER:**            |
|------------|-----------------------------|
|       |                        |
|       |                        |
|       |                        |
|       | By:                         |   |
|       | Its:                        |   |
|       |                        |
|       | Address:                    |
|       |                        |
|       |                        |
|       |                        |
|       |                        |
|       | Telephone:                  | (__) |   |
|       | Facsimile:                  | (__) |   |
|       |                        |
|       |                        |
|       | Shares  Beneficially Owned: |
|       |                        |
|       |                        |   | shares  of Company Common Stock |
|       |                        |
|       | Option  to acquire          |   | shares  of Company |
|       | Common  Stock               |
|            |                             |  |  |  |  |  |  |  |  |  |  |

 

 

----

 

**EXHIBIT E**

 

**FORM OF TRANSMITTAL LETTER**

 

**iSARLA, INC.**

** **

**ThisLetter of Transmittal is being delivered to each record holder of, and eachholder of an option to purchase, capital stock of iSarla, Inc., a Delawarecorporation (the “Company”) for completion and submission to ForgentNetworks, Inc. (“Forgent”) in connection with the receipt of theconsideration due to such holder in connection with the merger (the “Merger”)consummated pursuant to that certain Agreement and Plan of Merger, dated as of September 11, 2007,by and among the Company, Forgent and Cheetah Acquisition Company, Inc.(the “Merger Agreement”).**

** **

**Inorder to exchange your shares of capital stock of the Company or options topurchase capital stock of the Company for the applicable consideration due toyou in connection with the Merger, you must deliver to Forgent thefollowing:  (i) a properly completedLetter of Transmittal; and (ii) if shares of capital stock of the Companyare being exchanged, certificates representing your shares of capital stock ofthe Company. If this document is not properly submitted, you will not receivethe applicable consideration due to you in connection with the Merger until alldocumentation is properly completed and received by Forgent.**

** **

***Please Complete and Return To Forgent:***

** **

**FORGENT NETWORKS, INC.**

** **

**Address:**

**ForgentNetworks, Inc.**

**c/oWinstead PC**

**5400Renaissance Tower**

**1201Elm Street**

**Dallas,Texas  75270**

**Attn:  Dale A. Lisonbee**

 

** **

**Forinformation call:**

**Telephone:(214) 745-5814**

** **

**Facsimile:(214) 745-5390**

** **

*Deliveryof this instrument to an address other than as set forth above does notconstitute a valid delivery. No alternative, conditional or contingentsubmissions will be accepted.*

 

1

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**IDENTIFICATION OF SECURITIES****:**

 

If you are a holder of capital stock of the Company, please complete thefollowing table:

 

**DESCRIPTION OF STOCK CERTIFICATESSURRENDERED**

 
| ** **                                         | ** ** | **Certificate(s) Enclosed  (Attach signed list if space below is  inadequate)** |
|----------------------------------------------------|------------|--------------------------------------------------------------------------------------|
| **Print Name and Address of  Registered Owner(s)** | ** ** | **Certificate Number (if  applicable)**                                              | ** ** | **Number of Shares of  Capital Stock  Represented by Certificate** |
| ** **                                         | ** ** | ** **                                                                           | ** ** | ** ** |
| ** **                                         | ** ** | ** **                                                                           | ** ** | ** ** |
| ** **                                         | ** ** | ** **                                                                           | ** ** | ** ** |
| ** **                                         | ** ** | ** **                                                                           | ** ** | ** ** |
| **Total Shares:**                                  |       |                                                                                 |   |   |

 

If you are a holder of an option to purchase capital stock of theCompany, please complete the following table:

 

**DESCRIPTIONOF OPTION(S)**

 
| ** **                                         | ** ** | **Option(s)**                                            |
|----------------------------------------------------|------------|----------------------------------------------------------|
| **Print Name and Address of  Registered Owner(s)** | ** ** | **Number of Shares of  Common  Stock subject to Option** | ** ** | **Per Share Exercise Price** |
| ** **                                         | ** ** | ** **                                               | ** ** | ** ** |
| ** **                                         | ** ** | ** **                                               | ** ** | ** ** |
| ** **                                         | ** ** | ** **                                               | ** ** | ** ** |
| ** **                                         | ** ** | ** **                                               | ** ** | ** ** |
| **Total Shares:**                                  |       |                                                     |   |   |

 

**PLEASEREAD AND FOLLOW THE ACCOMPANYING INSTRUCTIONS CAREFULLY.**

 

**IFYOU ARE A HOLDER OF CAPITAL STOCK OF THE COMPANY, YOU MUST ENCLOSE STOCKCERTIFICATES WHICH REPRESENT SHARES OF COMMON STOCK OF THE COMPANY WITH THISLETTER OF TRANSMITTAL IN ORDER TO RECEIVE THE CONSIDERATION DUE TO YOUTHEREFOR.**

 

**IFYOU ARE A HOLDER OF AN OPTION TO PURCHASE CAPITAL STOCK OF THE COMPANY, YOUNEED NOT DELIVER YOUR OPTION GRANT NOTICE, OPTION AGREEMENT OR SIMILARDOCUMENTS WITH THIS LETTER OF TRANSMITTAL IN ORDER TO RECEIVE THE CONSIDERATIONDUE TO YOU THEREFOR, BUT YOU ARE REQUIRED TO COMPLETE AND RETURN THIS LETTER OFTRANSMITTAL.**

 

2

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o                                    If any of the certificate(s) representingshares of capital stock of the Company that you own have been lost, stolen ordestroyed, check this box and see Instruction 4. Complete the remainder of thisLetter of Transmittal and indicate here the number of shares of such stockrepresented by the lost, stolen or destroyed certificate(s).

 
| **Number of Shares** | ** ** | **Type of  Shares (e.g., Common)** |
|----------------------|------------|------------------------------------|
|                 |       |                               |
|                 |       |                               |
|                 |       |                               |

 

o                                    If you wish to have cashconsideration to be issued to you in connection with the Merger sent by wiretransfer, please check this box, complete the remainder of this Letter ofTransmittal and provide wire instructions below or include such instructionsherewith.

 

 

**Wire Instructions:**

 

Bank Name:

 

Bank Routing Number (ABANumber):

 

Account Name:

 

Account Number:

 

3

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# A.                                   Surrender of Stock Certificates (For Holders ofStock)

#  

In connection withthe merger of Cheetah Acquisition Company, Inc. with and into the Companypursuant to the Merger Agreement (i.e., the Merger), the undersignedhereby:

 

(i)                                     surrenders, subject to theterms and conditions of the Merger Agreement, the certificate(s) notedabove representing shares of capital stock of the Company owned by theundersigned in exchange for, and for the purpose of receiving, theconsideration due to the undersigned in connection with the Merger, less (a) anyamounts to be paid out of escrow subject to the indemnification provisions of Article VIIIof the Merger Agreement, and (b) any amounts in respect of applicablewithholding; and/or

 

(ii)                                  acknowledges and agrees thatany option to purchase capital stock of the Company noted above has beenconverted into a right to receive the consideration due to the undersigned inconnection with the Merger, less (x) any amounts to be paid out of escrowsubject to the indemnification provisions of Article VIII of the MergerAgreement, (y) any amounts to be deducted which represent the exerciseprice of such option, and (z) any amounts in respect of applicablewithholding.

 

# B.                                     Representations

#  

The undersignedhereby represents and warrants as follows:

 

The undersigned isthe registered holder, as applicable, of (i) the shares of capital stockof the Company represented by the certificate(s) noted above (which shouldbe enclosed) and/or (ii) any option to purchase capital stock of theCompany noted above (collectively, the “Securities”), with good title toall such Securities and full power and authority to sell, assign and transfersuch Securities (or the shares represented by such Securities) pursuant to theMerger, free and clear of any encumbrance, restriction on transfer (other thanany restrictions applicable under the Securities Act of 1933, as amended, andany applicable state securities laws) or other similar right of any thirdparty, whether voluntarily exercised or arising by operation of law.

 

The undersigned hasfull power and authority (and, if an individual, legal capacity) to execute anddeliver this Letter of Transmittal and to perform his, her or itsobligations hereunder. The undersigned has duly executed and delivered this Letterof Transmittal, which constitutes the valid and legally binding obligation ofthe undersigned, enforceable in accordance with its terms. The undersigned isnot required to give any notice to, make any filing or registration with, orobtain any authorization, waiver, license, consent or approval of, anygovernmental authority or third party in connection with the execution anddelivery of this Letter of Transmittal by the undersigned, the performance bythe undersigned of his, her or its obligations hereunder or the consummation ofthe transactions contemplated by this Letter of Transmittal.

 

The undersignedwill, upon request, execute any additional documents necessary or desirable tocomplete the surrender and exchange of the Securities as contemplated by theMerger Agreement. All authority conferred or agreed to be conferred in thisLetter of Transmittal shall be binding upon the successors, assigns, heirs,executors, administrators and 

 

4

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legal representativesof the undersigned and shall not be affected by, and shall survive, the deathor incapacity of the undersigned.

 

Submission of thecertificate(s) noted above (which should be enclosed) is subject to theterms, conditions and limitations set forth in the Merger Agreement and theInstructions attached hereto.

 

**NOTE:  DO NOT SIGN STOCK CERTIFICATE(S) ORSUBMIT STOCK POWER(S).**

 

You are instructedto issue to the undersigned the consideration to which the undersigned isentitled in connection with the Merger (less any amounts to be paid out ofescrow subject to the indemnification provisions of Article VIII of theMerger Agreement and, as applicable, any amounts in respect of applicablewithholding) as provided for and pursuant to the terms and conditions of theMerger Agreement.

 
| **PLEASE SIGN HERE**                                                                                                                                                                                                                                                                                                                                                                                                         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                   | ** ** |
| ** X**                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | Dated: |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Signature |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Name of  Stockholder/Optionee |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|  By:                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Name of person  signing if Stockholder/Optionee is an entity |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|  Its:                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Title of person  signing if Stockholder/Optionee is an entity |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|  (Must be  signed by registered holder(s) exactly as name(s) appear(s) on  stock certificate(s) or option(s). If signing is by a trustee, executor,  administrator, guardian, officer of a corporation, attorney-in-fact or other  person acting in a fiduciary or representative capacity, please set forth  full title and enclose proper evidence of authority to so act.) (See  Instruction 2). |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|  (Area Code  and Telephone Number)                                                                                                                                                                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|  (Tax  Identification or Social Security Number)                                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  |  |  |  |  |  |  |  |

 

5

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**IMPORTANT TAX INFORMATION**

** **

Under U.S. federalincome tax law, a holder of stock or options who is receiving any considerationin connection with the Merger is required to provide his, her or its current TaxpayerIdentification Number (“TIN”). If such holder is an individual, the TINis his or her social security number. If the holder does not provide thecorrect TIN, the holder may be subject to a $50 penalty imposed by theInternal Revenue Service. In addition, reportable payments that are made tosuch holder may be subject to U.S. federal income tax backup withholding. Ifwithholding results in an overpayment of taxes, a refund from the InternalRevenue Service may be obtained. To prevent backup withholding on any cashpayment made to a holder of stock or options in connection with the MergerAgreement, the holder is required to notify****ForgentNetworks, Inc. of his or her correct TIN by completing the Substitute Form W-9below and certifying that the TIN provided on Substitute Form W-9 iscorrect. In addition, the holder must complete Part 2 of the SubstituteW-9, and date and sign as indicated. If the holder does not have a TIN, theholder should write “Applied For” in the space provided for the TIN. If theholder does not provide Forgent Networks, Inc. with a certified TIN within60 days, Forgent Networks, Inc. must backup withhold a portion of all cashpayments made to the holder.

 

**Certain holders (including,among others, corporations, limited partnerships and certain foreign holders)are not subject to these backup withholding and reporting requirements.**In order for a foreign holder to be exempt,that holder must submit an Internal Revenue Service Form W-8BEN (“Certificateof Foreign Status of Beneficial Owner for United States Tax Withholding”),signed under penalties of perjury, attesting to that individual’s exempt status.See, as applicable, the enclosed Guidelines for Certification of TaxpayerIdentification Number, Substitute Form W-9, Form W-8BEN andInstructions for Form W-8BEN for additional instructions.

 

*UnitedStates Holders*. A United States stock or option holder is required to give ForgentNetworks, Inc. the social security number or employer identificationnumber of the record owner of the shares of stock being surrendered for paymentin connection with the Merger Agreement. If the certificates or options forcapital stock of the Company are in more than one name or are not in the nameof the actual owner, consult the enclosed Guidelines for Certification ofTaxpayer Identification Number on Substitute Form W-9 for additionalguidance on which number to report.

 

*Non-UnitedStates Holders*. A non-United States stock or option holder is required to represent toForgent Networks, Inc. that he, she or it is not a United States Person(as such term is defined in Section 7701(a)(3) of the InternalRevenue Code of 1986, as amended) and provide its name and address on aproperly executed Internal Revenue Service Form W-8BEN (“Certificate ofForeign Status of Beneficial Owner for United States Tax Withholding”).

 

6

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**SUBSTITUTEFORM W-9**

** **

PLEASE PROVIDE YOUR SOCIAL SECURITY NUMBER OR OTHER TAXPAYERIDENTIFICATION NUMBER ON THIS SUBSTITUTE FORM W-9 AND CERTIFY THEREIN THATYOU ARE NOT SUBJECT TO BACKUP WITHHOLDING. FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULTIN BACKUP WITHHOLDING OF A PORTION OF ANY CASH PAYMENT MADE TO YOU PURSUANT TOTHE MERGER. For assistance in completing this form, see the Guidelines forCertification of Taxpayer Identification Number on Substitute FORM W-9.

 

Name(s) asshown above of registered owners of certificate(s) of shares of thecapital stock or option(s) to purchase shares of capital stock of theCompany. (If joint ownership, list first and circle the name of the person orentity whose taxpayer identification number you enter in Part I below).

 

Business Name (soleproprietors, see enclosed Guidelines for Certification of TaxpayerIdentification Number on Substitute FORM W-9).   

 

 

Address:

 

 
| Part I—PLEASE  PROVIDE YOUR TAX IDENTIFICATION NUMBER IN THE BOX AT RIGHT AND CERTIFY BY  SIGNING AND DATING BELOW. | Social Security  Number or Employer Identification Number: |
|-------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|

 

Part II—Payeesexempt from backup withholding, please see the enclosed Guidelines forCertification of Taxpayer Identification Number on Substitute Form W-9.

 

Part III—Certification.Under penalties of perjury, I certify that: (1) The number shown on this form ismy correct Taxpayer Identification Number (or I am waiting for a number to beissued to me), and (2) I am not subject to backup withholding because (a) Iam exempt from backup withholding, or (b) I have not been notified by theInternal Revenue Service (“IRS”) that I am subject to backup withholding as aresult of a failure to report all interest or dividends, or (c) the IRShas notified me that I am no longer subject to backup withholding. **Certificate Instructions:**  You must cross out Item (2) above if youhave been notified by the IRS that you are currently subject to backupwithholding because of underreporting interest or dividends on your tax return.

 

 
| Signature |   |   | Dated |   |   |
|-----------|--------|--------|-------|--------|--------|

 

7

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| Form **W-8BEN**  (Rev. February 2006) Department of the Treasury Internal  Revenue Service                                                                                                                                                                                                                                                                                                                                         | **Certificate  of Foreign Status of Beneficial Owner  for United States Tax Withholding**„**Section references are to the  Internal Revenue Code.  **„**See separate  instructions.**„**Give this form to the  withholding agent or payer. Do not send to the IRS.**                                                                                                                                                                                                                                                                                                                                                                                                                                                               | CMB No. 1545-1621                                                                                                                                                                                                                                                |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Do not use this form for:**                                                                                                                                                                                                                                                                                                                                                                                                      | **Instead, use Form:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| „ A.U.S. citizen or other U.S. person,  including a resident alien individual                                                                                                                                                                                                                                                                                                                                                 | W-9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| „ A person claiming that income is  effectively connected with the conduct of a trade or business in the United  States                                                                                                                                                                                                                                                                                                       | W-8ECI                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| „ A foreign partnership, a foreign simple  trust, or a foreign grantor trust (see instructions for exceptions)                                                                                                                                                                                                                                                                                                                | W-8ECI or W-8IMY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| „ A foreign government, international  organization, foreign central bank of issue, foreign tax-exempt organization,  foreign private foundation, or government of a U.S. possession that received  effectively connected income or that is claiming the applicability of  section(s) 115(2), 501(c), 892, 895, or 1443(b) (see instructions)                                                                                 | W-8ECI or W-8EXP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Note:***These entities should  use Form W-8BEN if they are claiming treaty benefits or are providing the  form only to claim they are a foreign person exempt from backup withholding.*                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| „ A person acting as an intermediary                                                                                                                                                                                                                                                                                                                                                                                          | W-8IMY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Note:***See instructions for additional exceptions.*                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Part I**                                                                                                                                                                                                                                                                                                                                                                                                                         | **Identification of Beneficial Owner**(See instructions.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **1**                                                                                                                                                                                                                                                                                                                                                                                                                              | Name of individual or organization that is the  beneficial owner                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **2**                                                                                                                                                                                                                                                            | Country of incorporation or organization |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | ** **                                                                                                                                                                                                                                                       |
| **3**                                                                                                                                                                                                                                                                                                                                                                                                                              | Type of beneficial owner:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | o Individual                                                                                                                                                                                                                                                | o Corporation | o Disregarded entity | o Partnership | o Simple trust |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                             |   |   |   |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         | o Grantor trust                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | o Complex trust                                                                                                                                                                                                                                             | o Estate | o Government | o International Organization |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                             |   |   |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         | o Central bank of issue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | o Tax-exempt organization                                                                                                                                                                                                                                   | o Private foundation |   |   |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                             |
| **4**                                                                                                                                                                                                                                                                                                                                                                                                                              | Permanent residence address (street, apt. or suite  no., or rural route). **Do not use a P.O. box or  in-care-of address.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | City or town, state or province. Include postal code  where appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Country (do not abbreviate)                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                             |
| **5**                                                                                                                                                                                                                                                                                                                                                                                                                              | Mailing address (if different from above)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | City or town, state or province. Include postal code  where appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Country (do not abbreviate)                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                             |
| **6**                                                                                                                                                                                                                                                                                                                                                                                                                              | U.S. taxpayer identification number, if required (see  instructions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **7**                                                                                                                                                                                                                                                            | Foreign tax identifying number, if any (optional) |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | ** **                                                                                                                                                                                                                                                       |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | o SSN or ITIN                                                                                                                                                                                                                                               | o EIN | ** ** |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | ** **                                                                                                                                                                                                                                                       |   |
| **8**                                                                                                                                                                                                                                                                                                                                                                                                                              | Reference number(s) (see instructions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Part II**                                                                                                                                                                                                                                                                                                                                                                                                                        | **Claim of Tax Treaty Benefits**(if applicable)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | ** **                                                                                                                                                                                                                                                       |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **9**                                                                                                                                                                                                                                                                                                                                                                                                                              | **I certify that (check all that apply):**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | **a**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | o                                                                                                                                                                                                                                                           | The beneficial owner is a resident of                                                within  the meaning of the income tax treaty between the United States and that  country. |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | **b**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | o                                                                                                                                                                                                                                                           | If required, the U.S. taxpayer identification number  is stated on line 6 (see instruction). |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | **c**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | o                                                                                                                                                                                                                                                           | The beneficial owner is not an individual, derives  the item (or items) of income for which the treaty benefits are claimed, and,  if applicable, meets the requirements of the treaty provision dealing with  limitation on benefits (see instructions). |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | **d**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | o                                                                                                                                                                                                                                                           | The beneficial owner is not an individual, is  claiming treaty benefits for dividends received from a foreign corporation or  interest from a U.S. trade or business of a foreign corporation, and meets  qualified resident status (see instructions). |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | **e**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | o                                                                                                                                                                                                                                                           | The beneficial owner is related to the person  obligated to pay the income within the meaning of section 267(b) or 707(b),  and will file Form 8833 if the amount subject to withholding received during  a calendar year exceeds, in the aggregate, $500,0000. |
|                                                                                                                                                                                                                                                                                                                                                                                                                               | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                             |   |
| **10**                                                                                                                                                                                                                                                                                                                                                                                                                             | **Special rates and conditions** (if applicable—see instructions): The  beneficial owner is claiming the provisions of Article                 of the treaty identified on line 9a above to claim a               %  rate of withholding on (specify type of income):                                        Explain  the reasons the beneficial owner meets the terms of the treaty article: |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Part III**                                                                                                                                                                                                                                                                                                                                                                                                                       | **Notional Principal Contracts**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **11**                                                                                                                                                                                                                                                                                                                                                                                                                             | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | I have provided or will provide a statement that  identifies those notional principal contracts from which the income is not  effectively connected with the conduct of a trade or business in the United  States. I agree to update this statement as required. |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Part IV**                                                                                                                                                                                                                                                                                                                                                                                                                        | **Certification**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | ** **                                                                                                                                                                                                                                                       |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Under penalties of perjury, I declare that I have  examined the information on this form and to the best of my knowledge and  belief it is true, correct, and complete. I further certify under penalties  of perjury that:                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                             |
| **1**** **I am the beneficial owner (or an  authorized to sign for the beneficial owner) of all the income to which this  form relates.                                                                                                                                                                                                                                                                                       |
| **2**** **The beneficial owner is not a  U.S. person.                                                                                                                                                                                                                                                                                                                                                                         |
| **3**** **The income to whom this form  relates is (a) not effectively connected with the conduct of a trade or  business in the United States, (b) effectively connected but is not subject  to tax under an income tax treaty, or (c) the partner’s share of a  partnership’s effectively connected income, and                                                                                                   |
| **4**** **For broker transactions or barter  exchanges, the beneficial owner is an exempt foreign person as defined in the  instructions.  Furthermore, I authorize this form to be provided to any withholding agent  that has control, receipt, or custody of the income of which I am the  beneficial owner or any withholding agent that can disburse or make payments  of the income of which I am the beneficial owner. |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Sign Here**                                                                                                                                                                                                                                                                                                                                                                                                                      | „                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Signature of beneficial owner (or individual  authorized to sign for beneficial owner)                                                                                                                                                                           | Date (MM-DD-YYYY) | Capacity in which acting |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **For Paperwork Reduction Act Notice, see separate  instructions.**                                                                                                                                                                                                                                                                                                                                                                | Cat. No. 250472                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Form **W-8BEN** (Rev. 2-2006)                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ****                                                                                                                                                                                                                                                                                                                                                                                                                               | **  *Printed on Recycled  Paper***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

8

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**GENERALINSTRUCTIONS**

 

## Section 15.1                                *Letter of Transmittal.*This Letter of Transmittal must be properlycompleted, duly executed, dated and delivered or mailed to Forgent Networks, Inc.at the address set forth on the first page of this Letter of Transmittaltogether with (a) the stock certificate(s), if any, you are surrenderingin order to exchange shares of capital stock of the Company for cash or otherconsideration in connection with the Merger (sometimes referred to herein asthe “Payment”) and (b) any other required documents.

##  

The method of delivering stock certificate(s) is at the option andthe risk of the holder. Stock certificates may be surrendered in person orby mail. IF SENT BY MAIL, REGISTERED MAIL, PROPERTY INSURED, WITH RETURNRECEIPT REQUESTED, IS RECOMMENDED. Delivery will be deemed made when actuallyreceived by Forgent Networks, Inc.

 

UNTIL A HOLDER HAS SURRENDERED HIS, HER OR ITS STOCK CERTIFICATE(S), ORA SATISFACTORY AFFIDAVIT AND OTHER DOCUMENTATION RELATING TO THE LOSS OF STOCKCERTIFICATE(S), TO Forgent Networks, Inc., HE, SHE OR IT WILL NOT RECEIVEPAYMENT OF CONSIDERATION IN RESPECT OF THE MERGER AND DUE TO THE HOLDER WITHRESPECT TO CAPITAL STOCK OF THE COMPANY.

 

You should complete one Letter of Transmittal listing all Securitiesregistered in the same name. If any Securities are registered in different wayson several certificates, you will need to complete, sign and submit as manyseparate Letters of Transmittal as there are different registrations ofcertificates or options. You may not submit fewer than the entire numberof shares of Company capital stock represented by a stock certificate.

 

## Section 15.2                                *Signatures.*The signature (or signatures, in the case ofcertificates owned by two or more joint holders) on this Letter of Transmittalmust correspond exactly with the name(s) as written on the face of anystock certificate(s) surrendered or option(s) converted unless theSecurities described on this Letter of Transmittal have been assigned by theregistered holder or holders thereof, in which event this Letter of Transmittalshould be signed in exactly the same form as the name(s) of the lasttransferee(s) indicated on the transfers attached to or endorsed on thecertificate(s).

##  

If this Letter of Transmittal is signed by a trustee, executor,administrator, guardian, officer of a corporation, attorney-in-fact or otherperson acting in a fiduciary or representative capacity, the person signingmust give his or her full title in such capacity and enclose appropriateevidence of his or her authority to so act. If additional documents arerequired by Forgent Networks, Inc., you will be advised by letter.

 

## Section 15.3                                *Endorsement.*Stock certificates need NOT beendorsed or accompanied by separate stock powers and the signature(s) needNOT be guaranteed.

##  

## Section 15.4                                *Lost, Stolen or DestroyedStock Certificates.*In the event that any holder is unable to deliver to Forgent Networks, Inc.any stock certificate(s) representing his, her or its shares of capitalstock of the Company due to the loss or destruction of such certificate(s),such fact should be indicated on the face of this Letter of Transmittal. Insuch case, the holder should also contact the Stockholder Representative (asdefined in the Merger Agreement) and Forgent Networks, Inc. to report thelost, stolen or destroyed certificate(s). Forgent Networks, Inc. willforward additional documentation which such holder must complete 

 

9

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## in order to effectively surrender such lost, stolenor destroyed certificate(s). Surrenders hereunder regarding such lostcertificate(s) will be processed only after such documentation has beensubmitted to and approved by Forgent Networks, Inc.

##  

## Section 15.5                                *Inquiries*. All questions regarding appropriateprocedures for surrendering shares of capital stock of the Company should bedirected to Forgent Networks, Inc.****atthe mailing address or telephone number set forth on the front page.

##  

## Section 15.6                                *Additional Copies.*Additional copies of this Letter ofTransmittal may be obtained from Forgent Networks, Inc. at themailing address set forth on the front page.

##  

## Section 15.7                                *Internal Revenue ServiceForms.*Under Federalincome tax law, each United States stockholder or optionee receiving Payment isrequired to provide Forgent Networks, Inc.****with a correct Taxpayer Identification Number on Substitute Form W-9,and to indicate whether the stockholder or optionee is subject to backupwithholding. Additionally, each non-United States stockholder or optionee isrequired to provide Forgent Networks, Inc. a properly executed InternalRevenue Service Form W-8BEN. Please see “IMPORTANT TAX INFORMATION” above.

##  

## Section 15.8                                *Miscellaneous.*Any and all Letters of Transmittal orfacsimiles (including any other required documents) not in proper form aresubject to rejection. The terms and conditions of the Merger Agreement areincorporated herein by reference and are deemed to form part of theterms and conditions of this Letter of Transmittal.

##  

## Section 15.9                                *Waiver of Conditions*. To the extent permitted by applicable law,each of Forgent and the Company reserve the right to waive any and allconditions set forth herein and accept for exchange any Securities submittedfor exchange.

 

10

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**GUIDELINES FORCERTIFICATION OF TAXPAYER IDENTIFICATIONNUMBER ON SUBSTITUTE FORM W-9**

** **

**Guidelines for Determining the Proper IdentificationNumber to Give the Payer -**Social Security Numbers have nine digits separated by two hyphens:  i.e., 000-00-0000. Employer IdentificationNumbers have nine digits separated by only one hyphen:  i.e., 00-0000000. The table below will helpdetermine the number to give the payer.

 
| **For this type of account****:**                                                 | ** ** | **Give the SOCIAL  SECURITY number of -**                    |
|-------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------|
| 1. An individual’s  account                                                                      |       | The individual                                                                        |
| 2. Two or more  individuals (joint account)                                                           |       | The actual owner  of the account or, if combined funds, any one of the individuals(1) |
| 3. Husband and  wife (joint account)                                                                  |       | The actual owner  of the account or, if joint funds, either person(1)                 |
| 4. Custodian  account of a minor (Uniform Gift to Minors Act)                                    |       | The minor(2)                                                                          |
| 5. Adult and minor  (joint account)                                                                   |       | The adult or, if  the minor is the only contributor, the minor(1)                     |
| 6. Account in the  name of guardian or committee for a designated ward, minor, or incompetent  person |       | The ward, minor,  or incompetent person(3)                                            |
| 7. a. The usual  revocable saving trust account (grantor is also trustee)                             |       | The  grantor-trustee(1)                                                               |
|  b. So-called  trust account that is not a legal or valid trust under State law                  |       | The actual  owner(1)                                                                  |

 
| **For this type of account:**                                                                                                                                              | ** ** | **Give the EMPLOYER  IDENTIFICATION number of -**                                                                                                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 8. Sole  proprietorship account                                                                                                                                                                |       | The owner(4)                                                                                                                                                                   |
| 9. A valid trust,  estate or pension trust                                                                                                                                                     |       | The legal entity  (Do not furnish the identifying number of the personal representative or  trustee unless the legal entity itself is not designated in the account  title)(5) |
| 10. Corporate  account                                                                                                                                                                         |       | The corporation                                                                                                                                                                |
| 11. Religious,  charitable, or educational organization account                                                                                                                                |       | The organization                                                                                                                                                               |
| 12. Partnership  account held in the name of the business                                                                                                                                      |       | The partnership                                                                                                                                                                |
| 13. Association,  club, or other tax-exempt organization                                                                                                                                       |       | The organization                                                                                                                                                               |
| 14. A broker or  registered nominee                                                                                                                                                            |       | The broker or  nominee                                                                                                                                                         |
| 15. Account with  the Department of Agriculture in the name of a public entity (such as a State  or local government, school district, or prison) that receives agricultural  program payments |       | The public entity                                                                                                                                                              |

 

----

| (1)    |   | List first and  circle the name of the person whose number you furnish.                                                                                                                                     |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                        |
| (2)    |   | Circle the minor’s  name and furnish the minor’s social security number.                                                                                                                          |
|   |   |                                                                                                                                                                                                        |
| (3)    |   | Circle the ward’s,  minor’s or incompetent person’s name and furnish such person’s social  security number.                                                                             |
|   |   |                                                                                                                                                                                                        |
| (4)    |   | You must show your  individual name, but you may also enter your business or “doing  business” name. You may use either your Social Security Number or  Employer Identification Number. |
|   |   |                                                                                                                                                                                                        |
| (5)    |   | List first and  circle the name of the legal trust, estate, or pension trust.                                                                                                                               |

 

**Note:**                   If no name is circled when there is morethan one name, the number will be considered to be that of the first namelisted.

 

11

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**Page 2**

 

**Obtaining a Number**

** **

If you do not have a taxpayer identification numberor if you do not know your number, obtain Form SS-5, Application forSocial Security Number Card, or Form SS-4, Application for EmployerIdentification Number, at the local office of the Social SecurityAdministration or the Internal Revenue Service (the “IRS”) and apply for anumber.

 

Payees specifically exempted from backup withholdingon ALL payments by brokers include the following:

 

Acorporation.

 

A financialinstitution.

 

Anorganization exempt from a tax under Section 501(a), or an individualretirement plan or a custodial account under Section 403(b)(7) if theaccount satisfies the requirements of Section 401(F)(2).

 

The UnitedStates or any agency or instrumentality thereof.

 

A State, theDistrict of Columbia, a possession of the United States, or any subdivision orinstrumentality thereof.

 

A foreigngovernment, a political subdivision of a foreign government, or any agency orinstrumentality thereof.

 

Aninternational organization or any agency or instrumentality thereof.

 

A registereddealer in securities or commodities registered in the U.S. or a possession ofthe U.S.

 

A real estateinvestment trust.

 

A commontrust fund operated by a bank under Section 584(a).

 

An entityregistered at all times under the Investment Company Act of 1940.

 

A foreigncentral bank of issue.

 

A futurescommission merchant registered with the Commodity Futures Trading Commission.

 

A personregistered under the Investment Advisors Act of 1940 who regularly acts as abroker.

 

Payments of dividends and patronage dividends notgenerally subject to backup withholding include the following:

 

Payments tononresident aliens subject to withholding under Section 1441.

 

Payments topartnerships not engaged in a trade or business in the U.S. and which have atleast one nonresident partner.

 

Payments ofpatronage dividends where the amount received is not paid in money.

 

Payments madeby certain foreign organizations.

 

Payments madeto a nominee.

 

Payments of interest not generally subject tobackup withholding include the following:

 

Payments ofinterest on obligations issued by individuals. Note:  You may be subject to backup withholdingif this interest is $600 or more and is paid in the course of the payer’s tradeor business and you have not provided your correct taxpayer identificationnumber to the payer.

 

Payments oftax-exempt interest (including exempt-interest dividends under Section 852).

 

Paymentsdescribed in Section 6049(b)(5) to nonresident aliens.

 

Payments ontax-free covenant bonds under Section 1451.

 

Payments madeby certain foreign corporations.

 

Payments madeto a nominee.

 

Exempt payees described above should file Form W-9to avoid possible erroneous backup withholding. FILE THIS FORM WITH THEPAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, SIGN AND DATE THE FORM ANDRETURN IT TO THE PAYER.

 

Certain payments other than interest, dividends,and patronage dividends, which are not subject to information reporting arealso not subject to backup withholding. For details, see the regulations under Section 6041,6041(A)(a), 6045, and 6050A.

 

**Privacy Act Notice**. - Section 6109 requires most recipientsof dividend, interest, or other payments to give taxpayer identificationnumbers to payers who must report the payments to IRS. IRS uses the numbers foridentification purposes. Payers must be given the numbers whether or notrecipients are required to file tax returns. Beginning January 1, 1993,payers must generally withhold a portion of taxable interest, dividend, andcertain other payments to a payee who does not furnish a taxpayeridentification number to a payer. Certain penalties may also apply.

 

**Penalties**

** **

**(1) Penalty for Failure toFurnish Taxpayer Identification Number. -**If you fail to furnish your taxpayer identificationnumber to a payer, you are subject to a penalty of $50 for each such failureunless your failure is due to reasonable cause and not to willful neglect.

 

**(2) Failure to Report CertainDividend and Interest Payments. -**If you fail to include any portion of an includiblepayment for interest, dividends, or patronage dividends in gross income, suchfailure will be treated as being due to negligence and will be subject to apenalty of 5% on any portion of an under-payment attributable to that failureunless there is clear and convincing evidence to the contrary.

 

**(3) Civil Penalty for FalseInformation With Respect to Withholding. -**If you make a false statement with no reasonablebasis which results in no imposition of backup withholding, you are subject toa penalty of $500.

 

**(4) Criminal Penalty forFalsifying Information. -**Falsifying certifications or affirmations may subjectyou to criminal penalties including fines and/or imprisonment.

 

**FOR ADDITIONAL INFORMATION CONTACTYOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE**

 

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| Instructions for Form  W-8BEN |        | Department of the Treasury**Internal Revenue Service** |
|-------------------------------|--------|--------------------------------------------------------|
| (Rev. February 2006)     |   |                                                   |

 

**Certificate of Foreign Status ofBeneficial Owner for United States Tax Withholding**

 

**General Instructions**

 

Section referencesare to the Internal Revenue Code Unless otherwise noted.

 

For definitions of termsused throughout these instructions, see *Definitions* on pages 3and 4.

 

**Purpose of form.**Foreign persons are subject to U.S. taxat a 30% rate on income they receive from U.S. sources that consists of:

 

•                                          Interest (including certain original issuediscount (OID));

•                                          Dividends;

•                                          Rents;

•                                          Royalties;

•                                          Premiums;

•                                          Annuities;

•                                          Compensation for, or in expectation of,services performed;

•                                          Substitute payments in a securitieslending transaction: or

•                                          Other fixed or determinable annual orperiodical gains, profits, or income.

 

This tax is imposed onthe gross amount paid and is generally collected by withholding under section 1441or 1442 on that amount. A payment is considered to have been made whether it ismade directly to the beneficial owner or to another person, such as anintermediary, agent, or partnership, for the benefit of the beneficial owner.

 

In addition, section 1446requires a partnership conducting a trade or business in the United States towithhold tax on a foreign partner’s distributive share of the partnership’seffectively connected taxable income. Generally, a foreign person that is apartner in a partnership that submits a Form W-8 for purposes of section 1441or 1442 will satisfy the documentation requirements under section 1446 aswell. However, in some cases the documentation requirements of sections 1441and 1442 do not match the documentation requirements of section 1446. SeeRegulations sections 1.1446-1 through 1.1446-6. Further, the owner of adisregarded entity, rather than the disregarded entity itself, shall submit theappropriate Form W-8 for purposes of section 1446.

 

If youreceive certain types of income, you must provide Form W-8BEN to:

 

•                                          Establish that you are not a U.S. person;

•                                          Claim that you are the beneficial ownerof the income for which Form W-8BEN is being provided or a partner in apartnership subject to section 1446; and

•                                          If applicable, claim a reduced rate of,or exemption from, withholding as a resident of a foreign country with whichthe United States has an income tax treaty.

 

You may alsobe required to submit Form W-8BEN to claim an exception from domesticinformation reporting and backup withholding for certain types of income thatare not subject to foreign-person withholding. Such income includes:

 

•                                          Broker proceeds.

•                                          Short-term (183 days or less) originalissue discount (OID).

•                                          Bank deposit interest.

•                                          Foreign source interest, dividends,rents, or royalties.

•                                          Proceeds from a wager placed by anonresident alien individual in the games of blackjack, baccarat, craps,roulette, or big-6 wheel.

 

You may also use Form W-8BENto certify that income from a notional principal contract is noteffectively connected with the conduct of a trade or business in the UnitedStates.

 

A withholding agent orpayer of the income may rely on a properly completed Form W-8BEN totreat a payment associated with the Form W-8BEN as a payment to a foreignperson who beneficially owns the amounts paid. If applicable, the withholdingagent may rely on the Form W-8BEN to apply a reduced rate ofwithholding at source.

 

Provide Form W-8BENto the withholding agent or payer before income is paid or credited to you.Failure to provide a Form W-8BEN when requested may lead towithholding at a 30% rate (foreign-person withholding) or the backupwithholding rate.

 

**Additional Information.**For additional information andinstructions for the withholding agent, see the instructions for the Requesterof Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY.

 

**Who must file.**You must give Form W-8BEN to thewithholding agent or payer if you are a foreign person and you are thebeneficial owner of an amount subject to withholding. Submit Form W-8BENwhen requested by the withholding agent or payer whether or not you areclaiming a reduced rate of, or exemption from, withholding.

 

Do not use Form W-8BENif:

 

•                                          You are a U.S. citizen (even if youreside outside the United States) or other U.S. person (including a residentalien individual). Instead, use Form w-9, Request for Taxpayeridentification Number and Certification.

 

•                                          You are a disregarded entity with asingle owner that is a U.S. person and you are not a hybrid entity claimingtreaty benefits. Instead, provide Form W-9.

 

13

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•                                          You are a nonresident alien individualwho claims exemption from withholding on compensation for independent ordependent personal services performed in the United States. Instead, provide Form 8233,Exemption from Withholding on Compensation for Independent (and CertainDependent) Personal Services of a Nonresident Alien Individual, or Form W-4,Employee’s Withholding Allowance Certificate.

•                                          You are receiving income that iseffectively connected with the conduct of a trade or business in the UnitedStates, unless it is allocable to you through a partnership. Instead, provide Form W-8ECI,Certificate of Foreign Person’s Claim That Income is Effectively Connected Withthe Conduct of a Trade or Business in the United States. If any of the incomefor which you have provided a Form W-8BEN becomes effectively connected,this is a change in circumstances and Form W-8BEN is no longer valid. Youmust file Form W-8ECI. See*Change in circumstances*on this page.

•                                          You are a filing for a foreigngovernment, international organization, foreign central bank of issue, foreigntax-exempt organization, foreign private foundation, or government of a U.S.possession claiming the applicability of section 115(2), 501(c), 892, 895,or 1443(b). Instead, provide Form W-8EXP, Certificate of ForeignGovernment or Other Foreign Organization for United States Tax Withholding.However, you should use Form W-8BEN if you are claiming treaty benefits orare providing the form only to claim you are a foreign person exempt frombackup withholding. You should use Form W-8ECI if you received effectivelyconnected income (for example, income from commercial activities).

•                                          You are a foreign flow-through entity,other than a hybrid entity, claiming treaty benefits. Instead, provide Form W-8IMY,Certificate of Foreign Intermediary. Foreign Flow-Through Entity, or CertainU.S. Branches for United States Tax Withholding. However, if you are a partner,beneficiary, or owner of a flow-through entity and you are not yourself aflow-through entity, you may be required to furnish a Form W-8BEN tothe flow-through entity.

•                                          You are a disregarded entity for purposesof section 1446. Instead, the owner of the entity must submit the form.

•                                          You are a reverse hybrid entitytransmitting beneficial owner documentation provided by your interest holdersto claim treaty benefits on their behalf. Instead, provide Form W-8IMY.

•                                          You are a withholding foreign partnershipor a withholding foreign trust within the meaning of sections 1441 and 1442 andthe accompanying regulations. A withholding foreign partnership or awithholding foreign trust is a foreign partnership or trust that has enteredinto a withholding agreement with the IRS under which it agrees to assumeprimary withholding responsibility for each partner’s, beneficiary’s, or owner’sdistributive share of income subject to withholding that is paid to thepartnership or trust. Instead, provide Form W-8IMY.

•                                          You are acting as an Intermediary (thatis, acting not for your own account, but for the account of others as canagent, nominee, or custodian). Instead, provide Form W8IMY.

•                                          You are a foreign partnership or foreigngrantor trust for purposes of section 1446. Instead, provide Form W-8IMYand accompanying documentation. See Regulations sections 1.1446-1 through1.1446-6.

 

**Giving Form W-8BEN to thewithholding agent**.Do not send Form W-8BEN to the IRS. Instead, give it to the person who isrequesting it from you. Generally, this will be the person from whom youreceive the payment, who credits your account, or a partnership that allocatesincome to you. Give Form W-8BEN to the person requesting it before thepayment is made to you, credited to your account or allocated. If you do notprovide this form, the withholding agent may have to withhold at the 30%rate, backup withholding rate, or the rate applicable under section 1446.If you receive more than one type of income from a single withholding agent forwhich you claim different benefits, the withholding agent may, at its option,require you to submit a Form W-8BEN for each different type of income.Generally, a separate Form W-8BEN must be given to each withholding agent.

 

***Note***.****If you own theincome or account jointly with one or more other persons, the income or accountwill be treated by the withholding agent as owned by a foreign person if FormsW-8BEN are provided by all of the owners. If the withholding agent receives a Form W-9from any of the joint owners, the payment must be treated as made to a U.S.person.

 

**Change in circumstances.** If a change in circumstances makes anyinformation on the Form W-8BEN you have submitted incorrect, you mustnotify the withholding agent or payer within 30 dyas of the change incircumstances and you must file a new Form W-8BEN or other appropriateform.

 

If you use Form W-8BENto certify that you are a foreign person, a change of address to an address inthe United States is a change in circumstances. Generally, a change of addresswithin the same foreign country or to another foreign country is not a changein circumstances. However, if you use Form W-8BEN to claim treatybenefits, a move to the United States or outside the country where you havebeen claiming treaty benefits is a change in circumstances. In that case, youmust notify the withholding agent or payer within 30 days of the move.

 

If you become a U.S.citizen or resident alien after you submit Form W-8BEN, you are no longersubject to the 30% withholding rate or the withholding tax on a foreign partner’sshare of effectively connected income. You must notify the withholding agent orpayer within 30 days of becoming a U.S. citizen or resident alien. You may berequired to provide a Form W-9. For more information, see Form W-9and instructions.

 

**Expiration of Form W-8BEN.** Generally, a Form W-8BEN providedwithout a U.S taxpayer identification number (TIN) will remain in effect for aperiod starting on the date the form is signed and ending on the last dayof the third succeeding calendar year, unless a change in circumstances makesany information on the form incorrect. For example, a Form W-8BENsigned on September 30, 2005, remains valid through December 31,2008. A Form W-8BEN furnished with a U.S. TIN will remain in effect until achange in circumstances makes any information on the form incorrect,provided that the withholding agent reports on Form 1042-S at least onepayment annually to the beneficial owner who provided the Form W-8BEN. Seethe instructions for line 6

 

14

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beginning on page 4for circumstances under which you must provide a U.S. TIN.

 

**Definitions**

 

**Beneficial owner**. For payments other than those for whicha reduced rate of withholding is claimed under an income tax treaty, thebeneficial owner of income is generally the person who is required under U.S.tax principles to include the income in gross income on a tax return. A personis not a beneficial owner of income, however, to the extent that person isreceiving the income as a nominee, agent, or custodian, or to the extent to theperson is a conduit whose participation in a transaction is disregarded. In thecase of amounts paid that do not constitute income, beneficial ownership isdetermined as if the payment were income.

 

Foreign partnerships,foreign simple trusts, and foreign grantor trusts are not the beneficial ownersof income paid to the partnership or trust. The beneficial owners of incomepaid to a foreign partnership are generally the partners in the partnership,provided that the partner is not itself a partnership, foreign simple orgrantor trust, nominee or other agent. The beneficial owners of income paid toa foreign simple trust (that is, a foreign trust that is described in section 651(a))are generally the beneficiaries of the trust, if the beneficiary is not aforeign partnership, foreign simple or grantor trust, nominee or other agent.The beneficial owners of a foreign grantor trust (that is, a foreign trust tothe extent that all or a portion of the income of the trust is treated as ownedby the grantor or another person under sections 671 through 679) are thepersons treated as the owners of the trust. The beneficial owners of incomepaid to a foreign complex trust (that is, a foreign trust that is not a foreignsimple trust or foreign grantor trust) is the trust itself.

 

For purposes of section 1446,the same beneficial owner rules apply, except that under section 1446a foreign simple trust rather than the beneficiary provides the form tothe partnership.

 

The beneficial owner ofincome paid to a foreign estate is the estate itself.

 

**Note**. A payment to a U.S. partnership, U.S.trust, or U.S. estate is treated as a payment to a U.S. payee that is notsubject to 30% witholding. A U.S. partnership trust, or estate should providethe withholding agent with a Form W-9. For purposes of section 1446,a U.S. grantor trust or disregarded entity shall not provide the withholdingagent a Form W-9 in its own right. Rather, the grantor or other ownershall provide the withholding agent the appropriate form.

 

**Foreign person.** A foreign person includes a nonresidentalien individual, a foreign corporation, a foreign partnership, a foreigntrust, a foreign estate, and any other person that is not a U.S. person. Italso includes a foreign branch or office of a U.S. financial institution orU.S. clearing organization if the foreign branch is a qualified intermediary.Generally, a payment to a U.S. branch of a foreign person is a payment to aforeign person.

 

**Nonresident alien individual.** Any individual who is not a citizen orresident alien of the United States is a nonresident alien individual. An alienindividual meeting either the “green card test” or the “substantial presencetest” for the calendar year is a resident alien. Any person not meeting eithertest is a nonresident alien individual. Additionally, an alien individual whois a resident of a foreign country under the residence article of anincome tax treaty, or an alien individual who is a bona fide resident of PuertoRico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. VirginIslands, or American Samoa is a nonresident alien individual. See Pub. 519,U.S. Tax Guide for Aliens, for more information on resident and nonresidentalien status.

 
| ** | *Even  though a nonresident alien individual married to a U.S. citizen or resident  alien may choose to be treated as a resident alien for certain purposes  (for example, filing a joint income tax return), such individual is still  treated as a nonresident alien for withholding tax purposes on all income  except wages.* |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Flow-through entity.** A flow-through entity is a foreignpartnership (other than a withholding foreign partnership), a foreign simple orforeign grantor trust (other than a withholding foreign trust), or, forpayments for which a reduced rate of withholding is claimed under an income taxtreaty, any entity to the extent the entity is considered to be fiscallytransparent (see below) with respect to the payment by an interest holder’sjurisdiction.

 

For purposes of section 1446,a foreign partnership or foreign grantor trust must submit Form W-8IMY toestablish the partnership or grantor trust as a look through entity. The Form W-8IMYmay be accompanied by this form or another version of Form W-8or Form W-9 to establish the foreign or domestic status of a partner orgrantor or other owner. See Regulations section 1.1446-1.

 

**Hybrid entity.** A hybrid entity is any person (otherthan an individual) that is treated as fiscally transparent (see below) in theUnited States but is not treated as fiscally transparent by a country withwhich the United States has an income tax treaty. Hybrid entity status isrelevant for claiming treaty benefits. See the instructions for line 9c on page 5.

 

**Reverse hybrid entity.** A reverse hybrid entity is any person(other than an individual) that is not fiscally transparent under U. S. tax lawprinciples but that is fiscally transparent under the laws of a jurisdictionwith which the United States has an income tax treaty. See the instructions forline 9c on page 5.

 

**Fiscally transparent entity.** An entity is treated as fiscallytransparent with respect to an item of income for which treaty benefits areclaimed to the extent that the interest holders in the entity must, on acurrent basis, take into account separately their shares of an item of incomepaid to the entity, whether or not distributed, and must determine thecharacter of the items of income as if they were realized directly from thesources from which realized by the entity. For example, partnerships, commontrust funds, and simple trust or grantor trusts are generally considered to befiscally transparent with respect to items of income received by them.

 

**Disregarded entity.** A business entity that has a singleowner and is not a corporation under Regulations section 301.7701-2(b) isdisregarded as an entity separate from its owner.

 

15

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A disregarded entityshall not submit this form to a partnership for purposes of section 1446.Instead, the owner of such entity shall provide appropriate documentation. SeeRegulations section 1.1446-1.

 

**Amounts subjects to withholding**. Generally, an amount subject towithholding is an amount from sources with the United States that is fixed ordeterminable annual or periodical (FDAP) income. FDAP income is all incomeincluded in gross income, including interest (as well as OID), dividends,rents, royalties, and compensation. FDAP income does not include most gainsfrom the sale of property (including market discount and option premiums).

 

For purposes of section 1446,the amount subject to withholding is the foreign partner’s share of thepartnership’s effectively connected taxable income.

 

**Withholding agent.** Any person, U.S. or foreign, that hascontrol, receipt, or custody of an amount subject to withholding or who candisburse or make payments of an amount subject to withholding is a withholdingagent. The withholding agent may be individual, corporation, partnership,trust, association, or any other entity. Including (but not limited to) anyforeign intermediary, foreign partnership, and U.S. branches of certain foreignbanks and insurance companies. Generally, the person who pays (or causes to bepaid) the amount subject to withholding to the foreign person (or to its agent)must withhold.

 

For purposes of section 1446,the withholding agent is the partnership conducting the trade or business inthe United States. For a publicly traded partnership, the withholding agent may bethe partnership, a nominee holding an interest on behalf of a foreign person,or both. See Regulations sections 1.1446-1 through 1.1446-6.

 

**Specific Instructions**

 
|  | *A  hybrid entity should give Form W-8BEN to a withholding agent only for  income for which it is claiming a reduced rate of withholding under an income  tax treaty. A reverse hybrid entity should give Form W-8BEN to a  withholding agent only for income for which no treaty benefit is being  claimed.* |
|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Part I**

 

**Line 1**. Enter your name. If you are adisregarded entity with a single owner who is a foreign person and you are notclaiming treaty benefits as a hybrid entity, this form should be completedand signed by your foreign single owner. If the account to which a payment ismade or credited is in the name of the disregarded entity, the foreign singleowner should inform the withholding agent of this fact. This may bedone by including the name and account number of the disregarded entity on line8 (reference number) of the form. However, if you are a disregarded entity thatis claming treaty benefits as a hybrid entity, this form should becompleted and signed by you.

 

**Line 2**. If you are a corporation, enter thecounty of incorporation. If you are another type of entity, enter the countryunder whose laws you are created, organized, or governed. If you are anindividual, enter N/A (for “not applicable”).

 

**Line 3**. Check the one box that applies. Bychecking a box, you are representing that you qualify for this classification.You must check the box that represents your classification (for example,corporation, partnership, trust, estate, etc.) under U.S. tax principles. Do notcheck the box that describes your status under the law of the treaty country.If you are a partnership or disregarded entity receiving a payment for whichtreaty benefits are being claimed, you must check the “Partnership” or “Disregardedentity” box. If you are a sole proprietor, check the “Individual” box, not the “Disregardedentity” box.

 
| ** | *Only  entities that are tax-exempt under section 501 should check the “Tax-exempt  organization” box. Such organizations should use Form W-8BEN only if  they are claiming a reduced rate of withholding under an income tax treaty or  some code exception other than section 501. Use From W-8EXP it you are  claiming an exemption from withholding under section 501.* |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Line 4**. Your permanent residence address is theaddress in the country where you claim to be a resident for purposes of thatcountry’s income tax. If you are giving Form W-8BEN to claim a reducedrate of withholding under an income tax treaty, you must determine yourresidency in the manner required by the treaty. Do not show the address of afinancial institution, a post office box, or an address used solely for mailingpurposes. If you are an individual who does not have a tax residence in anycountry, your permanent residence is where you normally reside. If you are notan individual and you do not have a tax residence in any county, the permanentresidence address is where you maintain your principal office.

 

**Line 5**. Enter you mailing address only if it isdifferent from the address you show on line 4.

 

**Line 6**. If you are an individual, you aregenerally required to enter your social security number (SSN). To apply for anSSN, get Form SS-5 from a Social Security Administration (SSA) office or,if in the United States, you may call the SSA at 1-800-772-1213. Fill in Form SS-5and return it to the SSA.

 

If you do not havean SSN and are not eligible to get one, you must get an individual taxpayeridentification number (ITIN). To apply for an ITIN, file Form W-7 with theIRS. It usually takes 4-6 weeks to get an ITIN.

 
|  | *An ITIN  is for tax use only. It does not entitle you to social security benefits or  change your employment or immigration status under U.S. law.* |
|--|------------------------------------------------------------------------------------------------------------------------------------------------------|

 

If you are not anindividual or you are an individual who is an employer or you are engaged in aU.S. trade or business as a sole proprietor, you must enter an employeridentification number (EIN). If you do not have an EIN, you should apply forone on Form SS-4. Application for Employer identification Number. If youare a disregarded entity claiming treaty benefits as a hybrid entity, enter yourEIN.

 

A partner in apartnership conducting a trade or business in the United States will likely beallocated effectively connected taxable income. The partner is

 

16

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requiredto file a U.S. federal income tax return and must have a U.S. taxpayeridentification number (TIN).

 

Youmust provide a U.S. TIN if you are:

 

•                                          Claiming anexemption from withholding under section 871(f) for certain annuitiesreceived under qualified plans,

 

•                                          A foreigngrantor trust with 5 or fewer grantors,

 

•                                          Claimingbenefits under an income tax treaty, or

 

•                                          Submitting the form toa partnership that conducts a trade or business in the United States.

 

However,  a U.S. TIN is not required to be shown inorder to claim treaty benefits on the following items of income:

 

•                                          Dividends andinterest from stocks and debt obligations that are actively traded;

 

•                                          Dividends fromany redeemable security issued by an investment company registered under the InvestmentCompany Act of 1940 (mutual fund);

 

•                                          Dividends,interest, or royalties from units of beneficial interest in a unit investmenttrust that are (or were upon issuance) publicly offered and are registered withthe SEC under the Securities Act of 1933; and

 

•                                          Income relatedto loans of any of the above securities.

 
| ** | *You may want to obtain and provide a U.S.  TIN on Form W-8BEN even though it is not required. A Form W-8BEN  containing a U.S. TIN remains valid for as long as your status and the  information relevant to the certifications you make on the form remain  unchanged provided at least one payment is reported to you annually on Form 1042-S.* |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Line 7**. If yourcountry of residence for tax purposes has issued you a tax identifying number,enter it here. For example, if you are a resident of Canada, enter your SocialInsurance Number.

 

**Line 8.** This line may beused by the filer of Form W-8BEN or by the withholding agent to whom it isprovided to include any referencing information that is useful to the withholdingagent in carrying out its obligations. For example, withholding agents who arerequired to associate the Form W-8BEN with a particular Form W-8IMY may wantto use line 8 for a referencing number or code that will make the associationclear. A beneficial owner may use line 8 to include the number of theaccount for which he or she is providing the form. A foreign single owner of adisregarded entity may use line 8 to inform the withholding agentthat the account to which a payment is made or credited is in the name of thedisregarded entity (see instructions for line 1 on page 4).

 

**Part II**

 

**Line 9a**. Enter thecountry where you claim to be a resident for income tax treaty purposes. Fortreaty purposes, a person is a resident of a treaty country if the person is aresident of that country under the terms of the treaty.

 

**Line 9b**. If you areclaiming benefits under an income tax treaty, you must have a U.S. TIN unlessone of the exceptions listed in the line 6 instructions above applies.

 

**Line 9c**. An entity(but not an individual) that is claiming a reduced rate of withholding under anincome tax treaty must represent that it:

 

•                                          Derives theitem of income for which the treaty benefit is claimed, and

 

•                                          Meets thelimitation on benefits provisions contained in the treaty, if any.

 

Anitem of income may be derived by either the entity receiving the item ofincome or by the interest holders in the entity or, in certain circumstances,both. An item of income paid to an entity is considered to be derived by theentity only if the entity is not fiscally transparent under the laws of theentity’s jurisdiction with respect to the item of income. An item of incomepaid to an entity shall be considered to be derived by the interest holder inthe entity only if:

 

•                                          The interestholder is not fiscally transparent in its jurisdiction with respect to the itemof income, and

 

•                                          The entity isconsidered to be fiscally transparent under the laws of the interest holder’sjurisdiction with respect to the item of income. An item of income paiddirectly to a type of entity specifically identified in a treaty as a residentof a treaty jurisdiction is treated as derived by a resident of that treatyjurisdiction.

 

Ifan entity is claiming treaty benefits on its own behalf, it should complete Form W-8BEN.If an interest holder in an entity that is considered fiscally transparent inthe interest holder’s jurisdiction is claiming a treaty benefit, the interestholder should complete Form W-8BEN on its own behalf and the fiscallytransparent entity should associate the interest holder’s Form W-8BEN witha Form W-8IMY completed by the entity.

 
| ** | *An income tax treaty may not apply to reduce  the amount of any tax on an item of income received by an entity that is  treated as a domestic corporation for U.S. tax purposes. Therefore, neither  the domestic corporation nor its shareholders are entitled to the benefits of  a reduction of U.S. income tax on an item of income received from U.S.  sources by the corporation.* |
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Todetermine whether an entity meets the limitation on benefits provisions of atreaty, you must consult the specific provisions or articles under thetreaties. Income tax treaties are available on the IRS website at *www.irs.gov*.

 
| ** | *If you  are an entity that derives the income as a resident of a treaty country, you may check  this box if the applicable income tax treaty does not contain a “limitation  on benefits” provision.* |
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**Line 9d**. If you are aforeign corporation claiming treaty benefits under an income tax treaty thatentered into force before January 1, 1987 (and has not been renegotiated)on (a) U.S. source dividends paid to you by another foreign corporation or(b) U.S. source interest paid to you by a U.S. trade or business ofanother foreign corporation, you must generally be a “qualified resident” of atreaty country. See section 884 for the definition of interest paid by aU.S. trade or business of a foreign corporation (“branch interest”) and otherapplicable rules.

 

Ingeneral, a foreign corporation is a qualified resident of a country if any ofthe following apply.

 

•                                          It meets a 50%ownership and base erosion test.

 

•                                          It is primarilyand regularly traded on an established securities market in its country ofresidence or the United States.

 

•                                          It carries onan active trade or business in its country of residence.

 

•                                          It gets aruling from the IRS that it is a qualified resident.

 

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Seeregulations section 1.884-5 for the requirements that must be met tosatisfy each of these tests.

 
| ** | *If you are claiming treaty benefits under an  income tax treaty entered into force after December 31, 1986, do not  check box 9d.**Instead**, check box 9c.* |
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**Line 9e**. Check thisbox if you are related to the withholding agent within the meaning of section 267(b) or707(b) and the aggregate amount subject to withholding received during thecalendar year will exceed $500.000. Additionally, you must file Form 8833.Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b).

 

**Line 10**

 

Line10 must be used only if you are claiming treaty benefits that require that youmeet conditions not covered by the representations you make in lines 9a through9e. However, this line should always be completed by foreign students andresearchers claiming treaty benefits. See *Scholarship and fellowshipgrants* below for more information.

 

Thefollowing are additional examples of persons who should complete this line.

 

•                                          Exemptorganizations claiming treaty benefits under the exempt organization articlesof the treaties with Canada, Mexico, Germany, and the Netherlands.

 

•                                          Foreigncorporations that are claiming a preferential rate applicable to dividendsbased on ownership of a specific percentage of stock.

 

•                                          Personsclaiming treaty benefits on royalties if the treaty contains differentwithholding rates for different types of royalties.

 

Thisline is generally not applicable to claiming treaty benefits under an interestor dividends (other than dividends subject to a preferential rate based onownership) article of a treaty.

 

**Nonresidentalien who becomes a resident alien.**

 

Generally,only a nonresident alien individual may use the terms of a tax treaty toreduce or eliminate U.S. tax on certain types of income. However, most taxtreaties contain a provision known as a “saving clause.” Exceptions specifiedin the saving clause may permit an exemption from tax to continue forcertain types of income even after the recipient has otherwise become a U.S.resident alien for tax purposes. The individual must use Form W-9 to claimthe tax treaty benefit. See the instructions for Form W-9 for more information.Also see *Nonresident alien student or researcher who becomesa resident alien* later for an example.

 

**Scholarshipand fellowship grants.**A nonresident alien student (including atrainee or business apprentice) or researcher who receives noncompensatoryscholarship or fellowship income may use Form W-8BEN to claimbenefits under a tax treaty that apply to reduce or eliminate U.S. tax on suchincome. No Form W-8BEN is required unless a treaty benefit is beingclaimed. A nonresident alien student or researcher who receives compensatoryscholarship or fellowship income must use Form 8233 to claim any benefitsof a tax treaty that apply to that income. The student or researcher must use Form W-4for any part of such income for which he or she is not claiming a taxtreaty withholding exemption. Do not use Form W-8BEN for compensatoryscholarship or fellowship income. See *Compensation for DependentPersonal Services* in the instructions for Form 8233.

 
| ** | *If you are a nonresident alien**individual**who  received noncompensatory scholarship or fellowship income and personal  services income (including compensatory scholarship or fellowship income)  from the same withholding agent, you may use Form 8233 to claim a  tax treaty withholding exemption for part or all of both types of  income.* |
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***Completing lines 4 and 9a*****.** Most taxtreaties that contain an article exempting scholarship or fellowship grantincome from taxation require that the recipient be a resident of the othertreaty country at the time of, or immediately prior to, entry into the UnitedStates. Thus, a student or researcher may claim the exemption even if heor she no longer has a permanent address in the other treaty country after entryinto the United States. If this is the case, you may provide a U.S.address on line 4 and still be eligible for the exemption if all otherconditions required by the tax treaty are met. You must also identify on line9a the tax treaty country of which you were a resident at the time of, orimmediately prior to, your entry into the United States.

 

***Completing line 10*****.** You mustcomplete line 10 if you are a student or researcher claiming an exemption fromtaxation on your scholarship or fellowship grant income under a tax treaty.

 

**Nonresidentalien student or researcher who becomes a resident alien.** You must use Form W-9to claim an exemption to a saving clause. See *Nonresidentalien who becomes a resident alien* on this page for a generalexplanation of saving clauses and exceptions to them.

 

***Example*****.** Article 20 of theU.S.-China income tax treaty allows an exemption from tax for scholarshipincome received by a Chinese student temporarily present in the United States.Under U.S. law, this student will become a resident alien for tax purposes ifhis or her stay in the United States exceeds 5 calendar years. However,paragraph 2 of the first protocol to the U.S.-China treaty (dated April 30,1984) allows the provisions of Article 20 to continue to apply even afterthe Chinese student becomes a resident alien of the United States. A Chinesestudent who qualifies for this exception (under paragraph 2 of the firstprotocol) and is relying on this exception to claim an exemption from tax onhis or her scholarship or fellowship income would complete Form W-9.

 

**Part III**

 

Ifyou check this box, you must provide the withholding agent with the requiredstatement for income from a notional principal contract that is to be treatedas income not effectively connected with the conduct of a trade or business inthe United States. You should update this statement as often as necessary. Anew Form W-8BEN is not required for each update provided the form otherwiseremains valid.

 

**Part IV**

 

Form W-8BENmust be signed and dated by the beneficial owner of the income, or, if thebeneficial owner is not an individual, by an authorized representative or

 

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officerof the beneficial owner. If Form W-8BEN is completed by an agent actingunder a duly authorized power of attorney, the form must be accompanied bythe power of attorney in proper form or a copy thereof specificallyauthorizing the agent to represent the principal in making, executing, andpresenting the form. Form 2848, Power of Attorney and Declaration ofRepresentative, may be used for this purpose. The agent, as well as thebeneficial owner, may incur liability for the penalties provided for anerroneous, false, or fraudulent form.

 

**Brokertransactions or barter exchanges.** Income from transactionswith a broker or a barter exchange is subject to reporting rules andbackup withholding unless Form W-8BEN or a substitute form is filedto notify the broker or barter exchange that you are an exempt foreign person.

 

Youare an exempt foreign person for a calendar year in which:

 

•                                          You are anonresident alien individual or a foreign corporation, partnership, estate, ortrust;

 

•                                          You are anindividual who has not been, and does not plan to be, present in the UnitedStates for a total of 183 days or more during the calendar year; and

 

•                                          You are neitherengaged, nor plan to be engaged during the year, in a U.S. trade or businessthat has effectively connected gains from transactions with a broker or barterexchange.

 

**PaperworkReduction Act Notice**. We ask for the information on this form tocarry out the Internal Revenue laws of the United States. You are required toprovide the information. We need it to ensure that you are complying with theselaws and to allow us to figure and collect the right amount of tax.

 

Youare not required to provide the information requested on a form that issubject to the Paperwork Reduction Act unless the form displays a validOMB control number. Books or records relating to a form or itsinstructions must be retained as long as their contents may becomematerial in the administration of any Internal Revenue law. Generally, taxreturns and return information are confidential, as required by section 6103.

 

Thetime needed to complete and file this form will vary depending onindividual circumstances. The estimated average time is: **Recordkeeping,**5 hr., 58 min.; **Learning about the law or the form,**3 hr., 46 min.; **Preparing and sending the form to IRS,**4 hr., 2 min.

 

Ifyou have comments concerning the accuracy of these time estimates orsuggestions for making this form simpler, we would be happy to hear fromyou. You can email us at *“taxforms@irs.gov.*Please put “Forms Comment” on the subject line. Or you can write to InternalRevenue Service, Tax Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111Constitution Ave. NW, IR-6406, Washington, DC 20224. Do not send Form W-8BENto this office, instead, give it to your withholding agent.

 

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**EXHIBIT F**

 

**SPECIAL INDEMNITY INSURANCE POLICY**

 

 

[Intentionally Omitted]

 

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