Document:

Prepared by R.R. Donnelley Financial -- Forbearance Agreement

  
 FORBEARANCE AGREEMENT 
  
 THIS FORBEARANCE AGREEMENT (the “Agreement”) is made effective as of the 8th day of April, 2002 (the “Effective Date”) by and among REGENERATION TECHNOLOGIES, INC.
(the “Borrower”) and BANK OF AMERICA, N.A., a national banking association, (the “Bank”). 
  
 RECITALS:

  
 WHEREAS, the Borrower is indebted to the Bank for the repayment of a certain loan from the Bank pursuant to a
$2,800,000.00 Promissory Note dated March 30, 2000 (“Note No. 1”); and 
  
 WHEREAS, the Borrower is indebted to
the Bank for the repayment of a certain loan from the Bank pursuant to a $16,000,000.00 Promissory Note dated April 2, 2001 (“Note No. 2”); and 
  
 WHEREAS, the Borrower is indebted to the Bank for the repayment of a certain loan from the Bank pursuant to a $10,000,000 Renewal Promissory Note payable dated April 17, 2001 (“Note No. 3”); and

  
 WHEREAS, Note No. 1, Note No. 2 and Note No. 3 are hereafter collectively referred to as the “Notes”; and

  
 WHEREAS, Note No. 1 was executed pursuant to the terms of a Business Loan Agreement between Borrower and the Bank dated
March 30, 2000 (“Loan Agreement No. 1”); and 
  
 WHEREAS, Note No. 2 was executed pursuant to the terms of a
Construction Loan Agreement between Borrower and the Bank dated April 2, 2001 (“Loan Agreement No. 2”); and 
  
 WHEREAS, Note No. 3 was executed pursuant to the terms of a Loan Agreement between Borrower and the Bank dated April 17, 2001 (“Loan Agreement No. 3”); and 
  
 WHEREAS, Loan Agreement No. 1, Loan Agreement No. 2 and Loan Agreement No. 3 are hereafter collectively referred to as the “Loan Agreements”; and 

 
 WHEREAS, the Borrower is in default by reason of the Borrower violating (x) the Debt Service Coverage Ratio and Debt Ratio covenants
contained in Section 4.8 of Loan Agreement No. 2 and Section 4.08 of Loan Agreement No. 3 and (y) the financial covenants set forth in the section entitled “FINANCIAL COVENANTS AND RATIOS” in Loan Agreement No. 1 (collectively, the
“Financial Covenants”); and 
  
 WHEREAS, Borrower has requested the Bank to enter into this Agreement and to
forbear until September 30, 2002 from exercising its remedies under the Notes and the Loan Documents (as defined herein) executed in connection therewith; 
  
 WHEREAS, the parties have agreed to the terms and conditions set forth herein. 
  
 STATEMENT OF AGREEMENT 
  
 FOR AND IN CONSIDERATION of the mutual
covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do covenant and agree as follows: 
  
 1.  Conditions.    As express conditions to the consummation of this Agreement, the following shall have
 
 

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occurred, all in a form and manner and in substance satisfactory to the Bank: 
  
 (a)  The Bank shall have received a fully executed copy of this Agreement on or before 12:00 p.m. April 8, 2002; 
  
 (b)  No Default or Event of Default other than the Existing Default (as defined herein) shall have occurred under the Loan Documents (as defined herein);

  
 (c)  The Bank shall have received in form and substance satisfactory to the Bank all documents
necessary to cross collateralize and cross default Note No. 1 and Note No. 2 and to cross collateralize Note No. 1 and Note No. 2 with the collateral that secures Note No. 3; and 
  
 (d)  The Bank shall have received the Amendment Fee that is due on the Effective Date. 
 2.  Acknowledgment of Existing Indebtedness on the Notes.    The Borrower acknowledges that as of March 28, 2002, it is liable for the obligations due under
the Notes, and is indebted to the Bank for the repayment of the outstanding indebtedness due under the Notes as follows : 
  
 Note No. 1: 
  
 Principal:                $ 2,531,666.82 
  
 Interest:                  $ 6,831.98 
  
 Total:                      $ 2,538,498.80 

 
 Note No. 2: 
  
 Principal:                $ 12,789,851.09 
  
 Interest:                  $ 37,094.12 
  
 Total:                      $ 12,826,945.21 
  
 Note No. 3: 
  
 Principal:                $ 0 
  
 Interest:                  $ 0 
  
 Total:                      $ 0 
  
 In addition, Borrower acknowledges that pursuant to the Notes it is indebted to the Bank for all future accrued interest, and any costs, fees and expenses, including but not limited to
reasonable attorneys’ fees incurred pursuant to the terms of the Notes. 
  
 3.  Release.    Borrower acknowledges that it has no existing defense, counterclaim, offset, cross-complaint, claim or demand of any kind or nature whatsoever that can be asserted to
reduce or eliminate all or any part of its liability to pay the full indebtedness outstanding under the terms of this Agreement, Note No. 1, Note No. 2, Loan Agreement Note No. 1, Loan Agreement Note No. 2, the security agreements, the mortgages,
and any other documents which evidence or secure Note No. 1 and/or Note No. 2 (collectively the “Loan Documents”). In consideration for the execution of this Agreement, the Borrower hereby releases and forever discharges the Bank and all
of its officers, directors, employees and agents from any and all actions, causes of action, debts, dues, claims, demands, liabilities and obligations through the date hereof of every kind and nature, both in law and in equity, known or unknown
which might be asserted against the Bank. 
  
 4.  Agreements.    Subject
to the satisfaction of the terms and conditions of this Agreement, Bank and Borrower agree as follows: 
  
 (a)  Provided that Borrower complies with the terms of this Agreement, Bank shall forbear from taking action with respect to the Existing Default (as defined below) until September 30, 2002 (the “Forbearance Period”).

 

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 (b)  The Notes shall be due and payable in full on September 30,
2002. 
  
 (c)  Provided that Borrower complies with the terms of this Agreement, Bank hereby waives (x)
compliance with Sections 3.1(d), 3.6 and 4.2 of Loan Agreement No. 2, and the sections entitled “Affirmative Covenants, Litigation” and “NEGATIVE COVENANTS” AND “CONTINGENT LIABILITIES” in Loan Agreement No. 1, to the
extent necessary to permit the Borrower to take the actions set forth in the relevant sections of Schedule A without breaching Borrower’s obligations under the Loan Documents, (y) compliance with the Financial Covenants for the periods ending
December 31, 2001, March 31, 2002, June 30, 2002 and September 30, 2002 (any breach of the Loan Documents which would otherwise occur but for the foregoing clause (x) or (y) being referred to as an “Existing Default”) and (z) any defaults
or events of default under the Loan Documents arising out of the same circumstances as the Existing Defaults or which would otherwise arise under the Loan Documents (or any related swap agreements) if not for the waiver in the foregoing clause (x)
and (y). This waiver is effective only for the period ending on September 30, 2002 and for the specific purpose and duration set forth herein. 
  
 (d)  During the Forbearance Period, Borrower shall promptly pay all principal and interest payments due under the Notes. 
  
 (e)  Borrower shall not be entitled to any additional advances or borrowings under the terms of the Loan Documents and
Borrower’s rights, if any, to request additional advances are terminated. Borrower’s rights to borrow under Note No. 3 are terminated and Note No. 3 shall be cancelled and the Borrower shall no longer be bound by the covenants or event of
default provisions of Loan Agreement No. 3. 
  
 (f)  Commencing on the Effective Date, the applicable
interest rate on all Notes shall be the Prime Rate (as defined below) plus one-half of one percent (.5%). In the event all Notes are not paid in full by July 31, 2002, the applicable interest rate shall increase to the Prime Rate (as defined below)
plus two percent (2%). For purposes of this Agreement, the term “Prime Rate” means the per annum rate of interest established from time to time by Bank as its prime rate, which rate may not be the lowest rate of interest charged by Bank to
its customers. 
  
 (g)  Borrower shall pay Bank an amendment fee (the “Amendment Fee”) in the
amount of $383,325 payable as follows: 
  
 (i)  $ 76,665 on the Effective Date; 

 
 (ii)  $ 153,330 on July 31, 2002; 
  
 (iii)  $ 76,665 on August 31, 2002; and 
  
 (iv)  $ 76,665 on September 30, 2002. 
  
 The Amendment Fee shall be
fully earned at the date of this Agreement; provided that, in the event all Notes have been paid in full by July 31, 2002, the July 31, 2002, August 31, 2002 and September 30, 2002 payments will be waived. In the event all Notes have been paid in
full by August 30, 2002, the August 30, 2002 and September 30, 2002 payment will be waived. In the event all Notes have been paid in full by September 30, 2002, the September 30, 2002 will be waived. 
  
 (h)  Within ten (10) days of the closing of this Agreement, Borrower shall execute and deliver to Bank such documents as are
necessary to cross-collateralize and cross-default Note No. 1 and Note No. 2 and to secure Note 1 and Note 2 with all collateral that was pledged as security for Note 3. The documents to be delivered by Borrower shall include, but not be limited to,
the following: 
  
 (i)  a Mortgage, securing Note 2, on the real property that currently secures Note
No. 1; 
 

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 (ii)  a Mortgage, securing Note 1, on the real property that
currently secures Note No. 2; 
  
 (iii)  a Security Agreement and applicable UCC Financing Statements
granting Bank a security interest in the personal property of Borrower that currently secures Note. No. 3 in order to secure Note No. 1 and Note No. 2. 
  
 As security for the prompt payment and performance of Borrower’s obligations under Note No. 1, Note No. 2 and the Loan Documents executed in connection
therewith, Borrower hereby grants to Bank a continuing security interest in the “Collateral” as that term is defined in the Security Agreement dated April 17, 2001 between Borrower and Bank (the “Security Agreement”) that was
executed in connection with Note No. 3. The security interest granted pursuant to this provision shall be governed by the terms of the Security Agreement which are incorporated herein by reference and which shall survive the cancellation and
termination of Note No. 3. The term “Indebtedness” in the Security Agreement is hereby amended to include Borrower’s indebtedness under Note No. 1 and Note No. 2. 
  
 (i)  The Mortgages on the real properties granted to the Bank pursuant to subsection (h) above shall be subject in priority only to the existing liens in
favor of the Bank on such real properties. The liens granted pursuant to this Agreement in the “Collateral” as referenced in subsection (h) above shall be subject in priority only to Permitted Liens (as defined in Loan Agreement No. 3).
Borrower authorizes Bank to prepare and file all financing statements it deems necessary to protect and perfect its liens on collateral granted to it. 
  
 (j)  Upon the termination of the Forbearance Period, or upon an Event of Default under this Agreement, all forbearance, deferrals and indulgences granted by
the Bank in this Agreement as to its rights and remedies under the Loan Documents shall automatically terminate and the Bank shall thereupon have, and shall be entitled to exercise, any and all rights and remedies which it may have under the Loan
Documents, all of which rights and remedies are expressly reserved by the Bank, and all of the obligations under the Loan Documents shall become immediately and absolutely due and payable, without further notice of any kind. 
  
 (k)  Borrower shall execute such documents as Bank may request to evidence the transactions described in this Agreement.
Such documents shall be in form and substance satisfactory to the Bank in its sole discretion. 
  
 5.  Default.    In addition to the Defaults (under Loan Agreement No. 2) and Events of Default (under Loan Agreement No. 1) identified in the Loan Documents, the following shall
constitute an “Event of Default” under this Agreement: 
  
 (a)  any representation or
warranty made herein shall prove to be false or misleading in any material respect; 
  
 (b)  any
report, certificate, financial statement or other instrument furnished in connection with the Loan Documents or this Agreement shall prove to be false or misleading in any material respect; and 
  

(c)  any default in the due observance or performance of any covenant, condition or agreement on the part of the Borrower to be observed or performed
pursuant to the terms of this Agreement. 
  
 6.  Reaffirmation of Loan
Documents.    The Borrower acknowledges and agrees to the terms of this Agreement and reaffirms all Loan Documents including but not limited to the Loan Agreements, and the Notes, which shall remain in full force
and effect until payment in full of all obligations due under the Loan Documents. 
  
 7.  Representations
and Warranties.    In order to induce the Bank to enter into this Agreement, Borrower represents and warrants to the Bank (which representations and warranties shall survive the delivery of the documents mentioned
herein) as follows: 
  
 (a)  Power and Authority.    The Borrower is duly
authorized to execute, deliver and perform this Agreement and all other Loan Documents and all action on their part required for the execution, delivery and performance thereof has been duly taken. 
 

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 (b)  Incorporation.    Borrower is a
corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 
  
 (c)  Title to Assets.    The Borrower has good and marketable title to (or valid leasehold interests in) its property and assets reflected on financial statements and Loan Documents previously delivered
to the Bank, and the Bank may rely upon the same in execution of this Agreement. 
  
 (d)  Litigation.    Except as set forth in the Borrower’s 10-K for the period ending December 31, 2001, there are no undisclosed pending or, to the best of Borrower’s knowledge, threatened
orders, claims, actions, investigations or proceedings before or by any court, arbitrator or governmental or administrative body or agency, by or against the Borrower. The Borrower shall immediately notify the Bank of any material contingent
liabilities which arise during the course of this Agreement. 
  
 (e)  Taxes.    Borrower has filed all income tax returns required to be filed and all taxes shown thereon have been paid to the extent such taxes have become due. No material controversy in respect to
additional income taxes, state or federal, or payroll, or ad valorem, or withholding taxes is pending or to Borrower’s knowledge threatened. 
  
 (f)  No Fraudulent Intent.    Neither the execution and delivery of Agreement nor the performance of any actions required by this
Agreement is being consummated by Borrower with or as a result of any actual intent by Borrower to hinder, delay or defraud any entity to which Borrower is or will hereafter become indebted. 
  
 (g)  No Untrue Statements.    Neither this Agreement nor the other Loan Documents given in connection with this Agreement contain
any misrepresentation, untrue statement of fact, or omits to state any material fact necessary to make such documents not misleading. 
  
 (h)  No Violation.    The execution, delivery and performance of Agreement do not constitute a breach or violation of any law or any existing contract or agreement of Borrower.

  
 8.  Covenants.    The Borrower covenants that for so long as any
portion of the indebtedness owing by it to the Bank under the Notes remains unpaid, and unless the Bank otherwise consents in writing, it will: 
  
 (a)  Permit the Bank or any person designated by the Bank, at any reasonable time, and at Borrower’s expense, to visit and inspect any of the collateral
securing the Notes, the corporate books and financial reports of Borrower and to discuss its affairs, finances and accounts with its principal officers and independent certified public accountants; 
  
 (b)  At all times pay all their taxes when and as due; 
  
 (c)  Not change the location of any of the collateral securing the Notes, its place of doing business or Chief Executive Office unless the Bank is given sixty
(60) days advance written notice; 
  
 (d)  Except as permitted in the Loan Documents, not create,
assume or permit any additional assignment, pledge, mortgage, security interest, encumbrance, lien or charge of any kind, upon any of the property which is security for the Notes described herein; 
  
 (e)  Except as permitted in the Loan Documents, not incur, directly or indirectly, any other indebtedness during the
Forbearance Period other than in the ordinary course of business; 
  
 (f)  Except as permitted in the
Loan Documents, not make any loan or advance to, or guarantee the payment or performance of any liability or obligation of, any other person, firm, corporation or other entity except for the endorsement of checks and other instruments for
collection; 
  
 

 5 

 (g)  Except as permitted in the Loan Documents, not transfer, convey, sell or promise to transfer, convey
or sell any or all of the personal property which is security for the Notes described herein; and 
  
 (h)  Pay all reasonable out of pocket costs, expenses and attorneys’ fees of the Bank in connection with the preparation, execution and delivery of the documents executed in connection with this Agreement as well as any
monitoring or examination of Borrower. 
  
 9.  Effectiveness.    This Agreement shall not be effective until the satisfaction of all the conditions set forth in paragraph 1 of this
Agreement and receipt by the Bank of the documents described herein each in form and substance satisfactory to the Bank. 
  
 10.  No Novation.    The Loan Documents, as amended herein, evidence in their respective parts the same indebtedness as was evidenced by the Loan Documents prior to
this Agreement, and as such, this Agreement does not constitute a novation of any of the Loan Documents in any manner, which remain in full force and effect. 
  
 11.  No Waiver of Remedies.    Except as expressly provided in Sections 4(a) and 4(c) of this Agreement, the terms of this Agreement shall not
act or be construed to limit or diminish the rights of the Bank to pursue its full legal remedies for the collection of the indebtedness outstanding under the Notes and the Loan Documents, including, without limitation, the right to pursue
collection by foreclosure on any liens or security interests in any other collateral held by the Bank in any way permitted by law. Except as expressly modified hereby or as set forth on Schedule A hereto, the terms, conditions, representations,
warranties and covenants of each of the Loan Documents as well as the recitals, representations and warranties set forth herein shall continue to remain in full force and effect and are true as if made on the date hereof. 
  
 12.  Term of Agreement.    The liens, rights, and security interests granted to
the Bank shall continue in full force and effect until the final payment to the Bank of all obligations and indebtedness due the Bank by Borrower together with all interest thereon. 
  
 13.  Governing Law.    This Agreement shall be governed and interpreted according to the laws of the State of Florida.

  
 14.  Binding Effect.    This Agreement shall inure to the benefit of
and be binding upon the parties hereto, their heirs, personal representatives, successors and assigns. It shall not be modified or altered except in writing, and signed by the parties to be charged. 
  
 15.  Captions.    The captions of the various sections of this Agreement are included for
convenience only and are not to be construed as part of this Agreement. 
  
 16.  Notice.    Any notices required to be given under this Agreement shall be deemed effective on the date mailed by U.S. First Class Mail, addressed as follows: 

 
 To the Borrower: 
 Regeneration Technologies, Inc. 
 One Innovation Drive 
 Alachua, Florida 32615 
 Attn: President 
  
 with a copy to: 
 Fulbright & Jaworski, LLP 
 666 Fifth Avenue 
 New York, New York 10103 
 Attn: Warren Nimetz 
  
 To
the Bank: 
 Bank of America, N.A. 
 400 N.
Ashley Drive 
 13th Floor 
 Tampa, Florida 33602

 

 6 

 Attn: Joseph Martens 
  
 with a copy to: 
 Robert H. Pryor 
 Helms Mulliss & Wicker, PLLC 
 201 North Tryon Street

 Post Office Box 31247 
 Charlotte, North Carolina
28231 
  
 17.  Bankruptcy Reinstatement.    If any consideration
transferred to the Bank hereunder shall be avoided in whole or in part or otherwise forfeited or refunded to a receiver, trustee, bankruptcy estate or otherwise, or the Bank is required to pay any claim arising out of the Loan Documents or any
transaction related thereto, or the Bank agrees to pay any such amount as part of a compromise or settlement of pending or threatened claims, then the indebtedness due under the Notes shall be reinstated to the extent of such repayment and Borrowers
shall pay over to the Bank all such amounts. 
  
 18.  Negotiations.    This Agreement is being executed in connection with all negotiations between the parties regarding the forbearance of the Bank with respect to Borrower’s
defaults under the Loan Documents (the “Loan Discussions”). All of the terms of this Agreement were negotiated at arms’ length, and the Borrower has at all times had independent counsel. This Agreement was prepared and executed
without fraud, duress, undue influence or coercion of any kind exerted by any of the parties upon the other. This Agreement and the Loan Documents constitute the entire agreement between the parties with respect to the Notes, the Loan Documents and
the Loan Discussions and supersedes any prior or contemporaneous oral or written representations or agreements not contained herein. 
 19.  Arbitration.    Notwithstanding anything to the contrary contained in the Loan Documents, the following provisions shall apply to the Loan Documents: 
  
 A.    EXCEPT AS SET OUT BELOW, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE
ARISING OUT OF OR RELATING TO THIS DOCUMENT OR ANY RELATED DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT (COLLECTIVELY, “CLAIM”), SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF (“J.A.M.S.”), AND THE “SPECIAL RULES”
SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS DOCUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CLAIM IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. THE INSTITUTION AND MAINTENANCE OF AN ACTION FOR ANY JUDICIAL RELIEF SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE
PLAINTIFF, TO SUBMIT THE CLAIM TO ARBITRATION IF ANY OTHER PARTY CONTESTS SUCH ACTION FOR JUDICIAL RELIEF. 
  
 B.    SPECIAL RULES.    ANY ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF THE BORROWER OR ANY GUARANTOR’S DOMICILE AT THE TIME OF THE EXECUTION OF THIS DOCUMENT, OR IF THERE IS REAL OR
PERSONAL PROPERTY COLLATERAL, IN THE COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED, AND ADMINISTERED BY J.A.M.S.
 
 

 7 

 
WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS. ANY DISPUTE CONCERNING THIS ARBITRATION
PROVISION OR WHETHER A CLAIM IS ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR. THE ARBITRATOR SHALL HAVE THE POWER TO AWARD REASONABLE ATTORNEYS’ FEES PURSUANT TO THE TERMS OF THIS DOCUMENT. 
  
 C.    RESERVATION OF RIGHTS.    NOTHING IN THIS ARBITRATION PROVISION SHALL BE DEEMED TO (I) LIMIT THE
APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR
(III) LIMIT THE RIGHT OF ANY PARTY HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST OR SELL ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. ANY PARTY MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE OR SELL COLLATERAL OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING
OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS DOCUMENT. NONE OF THESE ACTIONS SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CLAIM
OCCASIONING RESORT TO SUCH REMEDIES OR PROCEDURES. 
  
 D.    WAIVER OF CERTAIN
DAMAGES.    THE PARTIES HERETO WAIVE ANY RIGHT OR REMEDY EITHER MAY HAVE AGAINST THE OTHER TO RECOVER PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF ANY CLAIM WHETHER THE CLAIM IS RESOLVED BY ARBITRATION OR BY JUDICIAL ACTION.

  
 20.  Time of the Essence.    Time is of the essence in the payment
and performance of the terms of this Agreement and the Loan Documents. 
 21. Counterparts.    This Agreement may be
executed in one or more counterpart originals, which, taken together, shall constitute one and the same original document. 
 

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 IN WITNESS WHEREOF, the Borrower and the Bank have caused this Agreement to be duly executed
under seal by their duly authorized officers and have duly executed this Agreement under seal, all as of the date first written above. 
  
 
	  	 	  	 	 REGENERATION TECHNOLOGIES, INC.,
a Delaware Corporation
 
	 
	 
	 	  	 	 By:
 	 	 /s/    BRIAN K HUTCHISON        
 

	 Witness
 	 	  	 	  	 	 President and CEO
 
	 
	  	 	  	 	 BANK OF AMERICA, N.A.
 
	 
	  	 	  	 	  	 	 By:
 	 	 /s/    JOE MARTENS        
 

	  	 	  	 	  	 	  	 	 Senior Vice President
 

 
 

 9<PAGE>
                                                                    EXHIBIT 10.2

                                ESCROW AGREEMENT

     This Escrow Agreement (this "Agreement") is entered into as of April 2,
                                  ---------
2002 by and among WatchGuard Technologies, Inc., a Delaware corporation
("Acquiror"), RapidStream, Inc., a California corporation (the "Company"), Wai
  --------                                                      -------
San Loke, as agent and representative of the shareholders of the Company (the
"Shareholder Representative") and Mellon Investor Services LLC, as escrow agent
 --------------------------
(the "Escrow Agent").
      ------------
                                    RECITALS

     A.   Acquiror, River Acquisition Corp., a California corporation and wholly
owned subsidiary of Acquiror ("Merger Sub"), the Company and, for purposes of
                               ----------
Section 6.16 thereof only, certain management shareholders of the Company have
------------
entered into an Agreement and Plan of Merger dated as of February 6, 2002 (the
"Merger Agreement"), as amended as of March 1, 2002, pursuant to which Acquiror
 ----------------
will acquire the Company through the merger of Merger Sub with and into the
Company (the "Merger").
              ------

     B.   Pursuant to the Merger Agreement, the shareholders of the Company (the
"Shareholders") will receive shares of common stock of Acquiror ("Acquiror
 ------------                                                     --------
Common Stock"), a portion of which is to be deposited into the Escrow Fund (as
------------
defined in Section 3(a) of this Agreement). The Merger Agreement provides that
           ------------
the Escrow Fund will secure the indemnification obligations of the Shareholders
set forth in Article VIII of the Merger Agreement to Acquiror, the Company, as
             ------------
the surviving corporation in the Merger, and each of their respective officers,
directors and affiliates, on the terms and conditions set forth in this
Agreement.

     C.   The parties desire to establish the terms and conditions pursuant to
which the Escrow Fund will be established and maintained and the procedure by
which claims for indemnification may be made against the Escrow Fund.

     D.   Capitalized terms used in this Agreement and not otherwise defined
shall have the meanings given those terms in the Merger Agreement.

                                    AGREEMENT

     In consideration of the terms hereof, the parties hereto agree as follows:

     1.   Consent of Shareholders. By executing the Letter of Transmittal and
          -----------------------
voting in favor of the approval of the Merger Agreement and the Merger, each
Shareholder shall be deemed to have (a) agreed to be bound by the
indemnification obligations of the Shareholders set forth in Article VIII of the
                                                             ------------
Merger Agreement, (b) consented to the establishment of the Escrow Fund to
secure such indemnification obligations and (c) irrevocably authorized and
appointed the Shareholder Representative, with full power of substitution and
resubstitution, as his, her or its representative and true and lawful
attorney-in-fact and agent, to act in his, her or its name, place and stead as
contemplated by Article VIII of the Merger Agreement and this Agreement, and to
                ------------
execute in his, her or its name and on his, her or its behalf, this Agreement
and any other

<PAGE>

agreement, certificate, instrument or document to be delivered by the
Shareholders in connection with Article VIII of the Merger Agreement, this
                                ------------
Agreement or the Escrow Fund.

     2.   Appointment of Escrow Agent. The Escrow Agent is hereby appointed to
          ---------------------------
act, and the Escrow Agent hereby agrees to act, as escrow agent under this
Agreement.

     3.   Escrow and Indemnification.
          --------------------------

          (a)  Escrow Fund. The escrow fund (the "Escrow Fund") shall consist of
               -----------                        -----------
the following:

               (i)  that number of shares of Acquiror Common Stock determined by
dividing the Escrow Amount by the Base Price (the "Indemnification Escrow
                                                   ----------------------
Shares"), which shares shall be deposited into the Escrow Fund at the Effective
------
Time; and

               (ii) Any additional shares of Acquiror Common Stock or other
equity securities that are issued or distributed by Acquiror (including shares
issued upon a stock split) with respect to the Indemnification Escrow Shares
(the "New Shares," and together with the Indemnification Escrow Shares, the
      ----------
"Escrow Shares") in accordance with Section 1.7.1(d) of the Merger Agreement,
 -------------                      ----------------
which shares shall be deposited into the Escrow Fund as of the date of such
issuance or distribution and become part of the Escrow Shares.

Exhibit A to this Agreement sets forth the name of each Shareholder and the
---------
number of Indemnification Escrow Shares to be contributed to the Escrow Fund at
the Effective Time on behalf of each such Shareholder pursuant to Section
                                                                  -------
1.7.1(d) of the Merger Agreement. The value of the Indemnification Escrow Shares
--------
contributed by each Shareholder, divided by the aggregate value of the
Indemnification Escrow Shares contributed by all Shareholders, each valued in
accordance with Section 4(c) of this Agreement, shall be each such Shareholder's
                ------------
"proportionate interest" in the Escrow Shares. Before or concurrent with the
execution and delivery of this Agreement, and upon each issuance of New Shares,
Acquiror and the Shareholder Representative shall deliver to the Escrow Agent a
writing setting forth the number of Escrow Shares deemed to be each
Shareholder's proportionate interest. The Escrow Agent shall have no duty to
confirm or verify the sufficiency, appropriateness or accuracy of any amount of
Escrow Shares deposited with it, or the proportionate interest of any
Shareholder in such Escrow Shares, under this Agreement.

          (b)  Pledge. The Escrow Shares shall be beneficially owned by the
               ------
Shareholders and shall be deemed to have been issued to the Shareholders as of
the Effective Time (in the case of Indemnification Escrow Shares) or the date of
issuance or distribution by Acquiror (in the case of the New Shares). As of the
Effective Time (in the case of the Indemnification Escrow Shares) or as of the
time of issuance (in the case of any New Shares), the Shareholders shall be
deemed to have pledged such Escrow Shares to Acquiror and shall deliver such
Escrow Shares to the Escrow Agent, and such Escrow Shares shall be held in
book-entry form by the Escrow Agent on Acquiror's behalf in accordance with the
terms and conditions of this Agreement. The Company shall deliver to Acquiror
appropriate stock powers from the Shareholders endorsed in blank and such
documentation as Acquiror or the Escrow Agent may

                                       -2-

<PAGE>

reasonably request to carry out the purposes of this Agreement. So long as
any Escrow Shares are held by the Escrow Agent under this Agreement, Acquiror
shall have, and the Shareholders shall be deemed to have granted to Acquiror,
effective as of the Effective Time (in the case of the Indemnification Escrow
Shares) or at the time of issuance (in the case of any New Shares), a perfected,
first-priority security interest in such Escrow Shares (subject only to the
security interests of the Shareholder Representative and the Escrow Agent, as
described in Sections 6 and 8, respectively, of this Agreement), to secure
             ----------     -
payment of amounts payable by the Shareholders with respect to Claims and this
Agreement; provided that the Escrow Agent shall have no duty or obligation to
(i) take any action to effect such security interest or (ii) initiate any action
to maintain such security interest without the written instructions of Acquiror.
The Escrow Fund shall not be subject to any lien, attachment, trustee process or
any other judicial process of any creditor of any party to this Agreement
(except for the security interests of the Shareholder Representative and the
Escrow Agent, as provided in this Agreement). The Escrow Agent agrees to accept
delivery of and hold the Escrow Shares subject to the terms and conditions of
this Agreement. Notwithstanding the foregoing, Acquiror shall not exercise any
of its remedies under this Section 3 until the conditions and procedures for the
                           ---------
indemnification of Claims pursuant to Sections 4 and 5 shall have been fully
complied with by Acquiror. Any security interest granted in an Escrow Share
shall terminate and each Escrow Share shall be released from the pledge to
Acquiror simultaneously with the release of such Escrow Share from the Escrow
Fund pursuant to Section 5. Acquiror shall execute any documents and instruments
reasonably necessary to effect the foregoing release

     4.   Administration of Escrow Fund. The Escrow Agent shall administer the
          -----------------------------
Escrow Fund as follows:

          (a)  Duties of Escrow Agent. The Escrow Agent shall (i) hold and
               ----------------------
safeguard the Escrow Fund during the period beginning on the date of this
Agreement and ending on the first anniversary thereof (the "Escrow Period"),
                                                            -------------
(ii) treat the Escrow Fund in accordance with the terms of this Agreement and
not as the property of Acquiror and (iii) hold and dispose of the Escrow Fund
only in accordance with the terms of this Agreement.

          (b)  Claims for Indemnification.
               --------------------------

               (i)  From time to time on or before the last day of the Escrow
Period (except as provided in Section 5 of this Agreement), the Acquiror
                              ---------
Indemnified Parties may deliver a Claim Notice with respect to any Claim to the
Shareholder Representative and the Escrow Agent, which Claim Notice shall be
delivered as promptly as practicable, but in any event: (A) if such Claim
relates to the assertion against an Indemnified Party of a Third-Party Claim,
within 30 days after the assertion of such Third-Party Claim or (B) if such
Claim is not in respect of a Third-Party Claim, within 30 days after the
discovery of facts upon which the Claim for indemnification is or could have
been based pursuant to Article VIII of the Merger Agreement; provided, however,
                       ------------
that the failure or delay to so notify the Shareholder Representative or the
Escrow Agent shall not relieve the Shareholders of any obligation or liability
that the Shareholders may have to the Acquiror Indemnified Party, except to the
extent that the Shareholder Representative demonstrates that the Shareholders
are prejudiced thereby. Notwithstanding the foregoing, Acquiror shall not be
required to deliver a Claim Notice to the

                                       -3-

<PAGE>

Company with respect to the Pending Disputes unless and until Acquiror incurs
indemnifiable Losses resulting from a Third-Party Settlement or a Third-Party
Decision with respect to such Pending Disputes in which an Acquiror Indemnified
Party or the Company, as applicable, is not the prevailing party.

               (ii)  The Claim Notice shall

                     (A)  state that (1) an Acquiror Indemnified Party has paid
or incurred indemnifiable Losses that, on an aggregate basis with all prior
Losses paid or incurred by the Acquiror Indemnified Parties, exceed $480,000 or
(2) an Acquiror Indemnified Party has paid or incurred indemnifiable Losses
arising out of or with respect to (x) any inaccuracy or misrepresentation in, or
breach of, any representation or warranty contained in Section 2.3
                                                       -----------
(Capitalization) of the Merger Agreement, (y) Excess Payments or (z) the amount,
if any, by which the actual Company Expenses exceed the Company Expenses
Estimate;

                     (B)  specify in reasonable detail the identity of the
Acquiror Indemnified Party making the Claim; the amount of each individual Loss
included in the aggregate amount of indemnifiable Losses to which the Claim
Notice relates (or, if such amount is not ascertainable, the estimated maximum
amount of such individual Loss); the date on which each such Loss was paid or
incurred; the nature of the breach of representation or warranty or other fact
or circumstance resulting in each such indemnifiable Loss; and the number of
Escrow Shares requested to be transferred to Acquiror and cancelled in
satisfaction of such Claim.

               (iii) The Escrow Agent shall transfer Escrow Shares to Acquiror
out of the Escrow Fund with respect to any Claim made by an Acquiror Indemnified
Party that has complied with the provisions of this Agreement, if and only if:

                     (A)  within 30 calendar days following delivery of the
Claim Notice to the Escrow Agent, the Escrow Agent shall have received a written
authorization from the Shareholder Representative to transfer such Escrow
Shares, which authorization specifies the number of Escrow Shares to be
transferred to Acquiror;

                     (B)  30 calendar days shall have elapsed following the
delivery of the Claim Notice to the Escrow Agent and the Shareholder
Representative shall not have delivered to the Escrow Agent a written statement
(a "Dispute Notice") objecting to the Claim made in the Claim Notice, specifying
    --------------
in reasonable detail the basis for the Shareholder Representative's objection to
such Claim;

                     (C)  a Claim not related to a Third-Party Claim has been
resolved pursuant to Section 4(e)(i) of this Agreement and a Settlement
                     ---------------
Memorandum (as defined in Section 4(e)(i)) has been delivered by Acquiror to the
                          ---------------
Escrow Agent;

                     (D)  a Claim not related to a Third-Party Claim has been
resolved pursuant to Section 4(e)(ii) of this Agreement and a Final Judgment (as
                     ----------------
defined in Section 4(e)(ii)) has been delivered by Acquiror to the Escrow Agent;
           ----------------
or

                                       -4-

<PAGE>

                     (E)  (1) a Claim that is related to a Third-Party Claim has
been resolved pursuant to Section 4(b)(iii)(A) or Section 4(e) of this Agreement
                          --------------------    ------------
and (2) such related Third-Party Claim has been resolved by a Third-Party
Decision or Third-Party Settlement. For purposes of this subsection, a
"Third-Party Decision" means a decision, order, judgment or decree with respect
 --------------------
to a Third-Party Claim of an arbitrator or court having jurisdiction that either
is not subject to appeal or as to which notice of appeal has not been timely
filed or served. For purposes of this subsection, a "Third-Party Settlement"
                                                     ----------------------
means a settlement agreement with respect to a Third-Party Claim entered into in
accordance with Section 8.5 of the Merger Agreement. The number of Escrow Shares
                -----------
to be transferred to Acquiror out of the Escrow Fund and cancelled by Acquiror
pursuant to clauses (C) and (D) and this clause (E) of this Section 4(b)(iii)
                                                            -----------------
shall be set forth on the applicable Claim Notice unless such number of shares
has been adjusted in accordance with the express terms of the Settlement
Memorandum, Final Judgment, Third-Party Decision or Third-Party Settlement, as
the case may be. Upon receipt of Escrow Shares pursuant to this Section
                                                                -------
4(b)(iii), Acquiror shall cancel such shares.
---------

               (c)   Valuation of Escrow Shares. For the purposes of determining
                     --------------------------
the number of Escrow Shares to be transferred to Acquiror out of the Escrow Fund
and cancelled by Acquiror pursuant to subsection (b) of this Section 4, the
                                                             ---------
Escrow Shares shall be valued according to the Base Price. The Escrow Agent
shall have no duty or obligation to make any determination regarding the value
of the Escrow Shares or regarding the number of Escrow Shares that are necessary
to be delivered to Acquiror, its sole duty being to deliver the number of Escrow
Shares to the appropriate persons specified in the relevant certificate,
memorandum or other authorized writing requesting such Escrow Shares.

               (d)   Certificate. If any Escrow Shares are transferred to
                     -----------
Acquiror pursuant to any provision of this Section 4, such Escrow Shares shall
                                           ---------
be taken from the Escrow Fund in accordance with each Shareholder's
proportionate interest in the Escrow Shares, as determined pursuant to Section
                                                                       -------
3(a)(ii) of this Agreement. Before taking any action under any section of this
--------
Agreement requiring the Escrow Agent to distribute Escrow Shares to Acquiror (or
to specifically retain a certain number of Escrow Shares in accordance with
Section 5), the Escrow Agent shall be entitled to receive a certificate from
----------
Acquiror setting forth the number of Escrow Shares to be taken from each
Shareholder or retained in each Shareholder's name (with such number to be
determined in accordance with each Shareholder's proportionate interest in the
Escrow Shares), and the Escrow Agent shall be fully protected and shall incur no
liability in relying on such certificate. The Escrow Agent shall refrain from
distributing any Escrow Shares before receiving such a certificate from
Acquiror.

               (e)   Resolution of Conflicts; Arbitration.
                     ------------------------------------

                     (i)  If the Shareholder Representative shall deliver a
Dispute Notice to the Acquiror and the Escrow Agent within the 20-day period
after receipt of a Claim Notice, the Shareholder Representative and Acquiror
shall attempt in good faith to agree upon the rights of the respective parties
with respect to the dispute within 20 days after the Acquiror's receipt of the
Dispute Notice (the "Negotiation Period"). If the Shareholder Representative and
                     ------------------
Acquiror should so agree during the Negotiation Period, a memorandum setting
forth such agreement and

                                       -5-

<PAGE>

the number of Escrow Shares to be delivered to Acquiror (a "Settlement
                                                            ----------
Memorandum") shall be prepared and signed by both parties and furnished to the
----------
Escrow Agent. The Escrow Agent shall be entitled to rely on any Settlement
Memorandum and, if appropriate, distribute Escrow Shares, as applicable, from
the Escrow Fund in accordance with the terms of such Settlement Memorandum.

               (ii)  If no such agreement has been reached by the end of the
Negotiation Period, either Acquiror or the Shareholder Representative may demand
arbitration of the matter. In either such event, the matter shall be settled by
arbitration conducted by three arbitrators, as follows. Within 15 days after the
Shareholder Representative or Acquiror delivers a written demand for arbitration
to the other party, Acquiror and the Shareholder Representative shall each
select one arbitrator. The third arbitrator shall be selected as soon as
practicable by agreement of the first two arbitrators or, failing such
agreement, by the American Arbitration Association. The arbitration shall be
conducted in the city of Seattle, in the state of Washington. The written
decision of a majority of the three arbitrators as to the validity and, if at
issue, the amount of any Claim for indemnifiable Losses set forth in such Claim
Notice, and the number of Escrow Shares, if any, to be delivered to Acquiror (a
"Final Judgment") shall be binding and conclusive upon the parties to this
 --------------
Agreement, and notwithstanding anything to the contrary in this Section 4(e),
                                                                ------------
the Escrow Agent shall be entitled to act in accordance with such decision and
make or withhold payments out of the Escrow Fund or release Escrow Shares to the
Shareholders in accordance with such decision. The arbitrators shall award
reimbursement to the prevailing party in the arbitration of its reasonable
expenses of the arbitration (including costs and reasonable attorneys' fees). If
the prevailing party is an Acquiror Indemnified Party, the proportion of the
aggregate expenses to be paid by each Shareholder shall be equal to such
Shareholder's proportionate interest in the Escrow Shares. The award of the
arbitrators shall be enforceable in any court of competent jurisdiction.
Notwithstanding the foregoing, any party to this Agreement shall be entitled to
seek injunctive relief or other equitable remedies from any court of competent
jurisdiction.

     5.   Release of Escrow Fund. Subject to the provisions of this Section 5,
          ----------------------                                    ---------
the Escrow Fund shall remain in existence during the Escrow Period. Upon the
expiration of the Escrow Period, the Escrow Fund shall terminate with respect to
all Escrow Shares then remaining in the Escrow Fund and the Escrow Agent shall
deliver all such Escrow Shares to the Shareholders; provided, however, that in
the event that a Claim Notice is delivered to the Shareholder Representative and
the Escrow Agent on or before the last day of the Escrow Period, the number of
Escrow Shares specified by Acquiror in good faith in such Claim Notice to be
transferred to Acquiror and cancelled in satisfaction of such Claim shall remain
in the Escrow Fund (and the Escrow Fund shall remain in existence) until such
Claim has been resolved in accordance with Section 4 of this Agreement; provided
                                           ---------
further, that Acquiror agrees to notify the Escrow Agent in writing of the
expiration of the Escrow Period. As soon as any such Claim has been resolved,
the Escrow Agent shall promptly deliver to the Shareholders such number of
Escrow Shares as were held back in the Escrow Fund in connection with such
previously unresolved Claim and are not currently required to satisfy such
Claim. Upon the resolution of the last unresolved Claim submitted before the
expiration of the Escrow Period, the Escrow Agent shall deliver to the
Shareholders all Escrow Shares and other property then remaining in the Escrow
Fund and not

                                       -6-

<PAGE>

required to satisfy such Claims. Deliveries of Escrow Shares and other property
to the Shareholders pursuant to this Section 5 shall be made in accordance with
                                     ---------
each Shareholder's proportionate interest in the Escrow Shares, which shall be
set forth in a writing delivered to the Escrow Agent and Acquiror by the
Shareholder Representative. The Escrow Agent shall refrain from distributing any
Escrow Shares before receiving such writing and shall be fully protected and
shall incur no liability in relying on such writing or in failing to take any
action before receiving such writing.

     6.   Shareholder Representative.
          --------------------------

          (a)  The Shareholder Representative shall not receive compensation for
his services. Notices or communications to or from the Shareholder
Representative shall constitute notice to or from each of the Shareholders. The
Shareholder Representative shall be entitled to submit a claim and receive
reimbursement from the Escrow Fund for all reasonable, documented out-of-pocket
expenses incurred as a result of acting as the Shareholder Representative;
provided, however, that such right to reimbursement shall be subordinate to
Acquiror's Claims on the Escrow Fund, if any, and shall be paid only at the end
of the Escrow Period, after such Claims have been satisfied. Any such
reimbursement of expenses shall, in the sole discretion of a majority of the
Shareholders (excluding the Shareholder Representative), be payable either in
(i) cash, (ii) Escrow Shares out of the Escrow Fund or (iii) a combination of
cash and Escrow Shares. For purposes of such reimbursement of the Shareholder
Representative, the Escrow Shares shall be valued at the Base Price. The Escrow
Agent shall have no duty to the Shareholder Representative under this subsection
(a) until the Escrow Agent has received a written request from both Acquiror and
the Shareholder Representative referencing this subsection (a), requesting such
Escrow Shares to be delivered to the Shareholder Representative and setting
forth the number of Escrow Shares to be delivered.

          (b)  The Shareholder Representative shall not be liable for any act
done or omitted under this Agreement as the Shareholder Representative while
acting in good faith and in the absence of gross negligence or willful
misconduct; provided, however, that any act done in or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith. In taking any
action under this Agreement, the Shareholder Representative shall be entitled to
rely on any notice, paper or other document reasonably believed by him to be
genuine, or upon any evidence reasonably deemed by him, in his good-faith
judgment, to be sufficient. The Shareholders on whose behalf Escrow Shares were
deposited in the Escrow Fund shall severally indemnify and hold the Shareholder
Representative harmless against any loss, liability or expense incurred by the
Shareholder Representative without gross negligence or bad faith or willful
misconduct on the part of the Shareholder Representative and arising out of or
in connection with the acceptance or administration of the Shareholder
Representative's duties under this Agreement, the obligations of the Shareholder
Representative to the Escrow Agent and the reasonable fees and expenses of any
legal counsel retained by the Shareholder Representative in connection with this
Agreement.

          (c)  A decision, act, consent or instruction of the Shareholder
Representative shall constitute a decision of all Shareholders and shall be
final, binding and conclusive upon each Shareholder and each Acquiror
Indemnified Party, and all such persons may rely upon any

                                       -7-

<PAGE>

such decision, act, consent or instruction of the Shareholder Representative as
being the decision, act, consent or instruction of each and every Shareholder.
The Acquiror Indemnified Parties and any other persons are hereby relieved from
any liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Shareholder Representative.

          (d)  The Shareholder Representative may resign at any time. Upon such
resignation, the Shareholder Representative shall appoint a new Shareholder
Representative to replace such resigning Shareholder Representative with the
same powers and duties as such resigning Shareholder Representative, provided
that such newly appointed Shareholder Representative shall have been a
Shareholder immediately before the Effective Time and shall be reasonably
acceptable to Acquiror.

          (e)  If the Shareholder Representative or any successor shall die or
become unable to act as the Shareholder Representative, a replacement shall
promptly be appointed by a writing signed by Shareholders who received a
majority of the Merger Consideration, provided that such newly appointed
Shareholder Representative shall have been a Shareholder immediately before the
Effective Time and shall be reasonably acceptable to Acquiror.

          (f)  Upon any replacement of the Shareholder Representative, Acquiror
will promptly deliver to the Escrow Agent notice of such replacement, as well as
a specimen signature of such new Shareholder Representative. Before receiving
such notice and specimen signature, the Escrow Agent shall not be required to
recognize any change in the Shareholder Representative.

     7.   Distributions; Voting.
          ---------------------

          (a)  Any New Shares shall be added to the Escrow Fund and become a
part of the Escrow Shares. When and if cash dividends on Escrow Shares in the
Escrow Fund shall be declared and paid, they shall be distributed to the
beneficial owners of such shares on the applicable distribution date. Such
dividends will not become part of the Escrow Fund and will not be available to
satisfy Losses. The beneficial owners of such shares shall pay any taxes on such
dividends.

          (b)  Each Shareholder shall possess voting rights with respect to that
number of Escrow Shares issued to and deposited in the Escrow Fund on behalf of
such Shareholder (and on any voting securities added to the Escrow Fund with
respect to such shares), so long as such shares or other voting securities are
held in the Escrow Fund. Acquiror shall promptly deliver to the Escrow Agent,
and the Escrow Agent shall promptly deliver to each such Shareholder, copies of
all proxy solicitation materials.

     8.   Duties of Escrow Agent.
          ----------------------

          (a)  Acquiror and the Shareholder Representative acknowledge and agree
that the Escrow Agent (i) shall be obligated only for the performance of such
duties as are specifically set forth in this Agreement with respect to the
Escrow Agent (and no implied obligations) and as set forth in any additional
written escrow instructions as the Escrow Agent may receive after the

                                       -8-

<PAGE>

date of this Agreement that are signed by an officer of Acquiror and the
Shareholder Representative and in form and substance acceptable to the Escrow
Agent; (ii) shall not be obligated to take any legal or other action under this
Agreement that would, in its reasonable judgment, result in a material expense
or liability unless the Escrow Agent shall have been furnished with indemnity
acceptable to it; and (iii) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it under this Agreement and
reasonably believed by it to be genuine and to have been signed or presented by
the proper person, and shall have no responsibility for determining the accuracy
thereof.

          (b)  The Escrow Agent is hereby expressly authorized to comply with
and obey any order, judgment or decree of any court of competent jurisdiction or
a written decision of arbitrators. If the Escrow Agent shall obey or comply with
any such order, judgment or decree or written decision of arbitrators, the
Escrow Agent shall not be liable to any of the parties to this Agreement or to
any other person by reason of such compliance, notwithstanding any such order,
judgment, decree or written decision being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without jurisdiction.

          (c)  The Escrow Agent may act upon any instrument or other writing
believed by it to be genuine and to be signed or presented by the proper
person(s) pursuant to the terms of this Agreement and shall not be liable in any
respect on account of the identity, authority or rights of the person(s)
executing or delivering or purporting to execute or deliver this Agreement or
any documents or papers deposited or called for under this Agreement. The Escrow
Agent may consult with counsel in connection with its duties under this
Agreement and shall be fully protected for any action taken, suffered or omitted
by it in connection with this Agreement in accordance with the advice of
counsel.

          (d)  The Escrow Agent shall not be liable for the expiration of any
rights under any statute of limitations with respect to this Agreement or any
documents deposited with the Escrow Agent.

          (e)  Neither the Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any action taken, suffered or omitted to
be taken by it or any of its directors, officers or employees under this
Agreement except in the case of gross negligence, bad faith or willful
misconduct (each as finally determined by a court of competent jurisdiction or
as agreed to by the parties). Anything to the contrary notwithstanding, in no
event shall the Escrow Agent be liable for special, punitive, indirect,
consequential or incidental loss or damage of any kind whatsoever (including,
but not limited to, lost profits), even if the Escrow Agent has been advised of
the likelihood of such loss or damage. Any liability of the Escrow Agent under
this Agreement shall be limited to the amount of fees paid to the Escrow Agent
under this Agreement. Subject to Section 8(g) of this Agreement, Acquiror, on
                                 ------------
the one hand, and the Shareholders, on the other hand (collectively, the "Escrow
                                                                          ------
Indemnifying Parties") covenant and agree to jointly and severally indemnify the
--------------------
Escrow Agent and hold it harmless from and against any fee, loss, claim, cost,
penalty, fine, settlement, damages, liability or expense (including reasonable
attorney's fees and expenses) (an "Escrow Loss") incurred by the Escrow Agent
                                   -----------
arising out of or in connection with this Agreement, including, but not limited
to, the execution

                                      -9-

<PAGE>

and delivery of this Agreement or the Escrow Agent's performance of its
obligations in accordance with the provisions of this Agreement or with the
administration of its duties under this Agreement, unless such Escrow Loss shall
arise out of or be caused by the Escrow Agent's gross negligence, bad faith or
willful misconduct (each as finally determined by a court of competent
jurisdiction or as agreed to by the parties); provided, however, that each
individual Shareholder shall have several and not joint liability with respect
to the aggregate liability of the Shareholders; provided further that the
indemnity agreement contained in this Section 8(e) shall not apply to amounts
                                      ------------
paid in settlement of any Escrow Loss if such settlement is effected without the
consent of Acquiror or the Shareholder Representative, as applicable, such
consent not to be unreasonably withheld, conditioned or delayed.

          (f)  The Escrow Indemnifying Parties agree to jointly and severally
indemnify and hold the Escrow Agent harmless from and against any taxes,
additions for late payment, interest, penalties and other expenses that may be
assessed against the Escrow Agent on any payment or other activities under this
Agreement unless any such tax, addition for late payment, interest, penalty or
other expense shall arise out of or be caused by the gross negligence, bad faith
or willful misconduct of the Escrow Agent (each as finally determined by a court
of competent jurisdiction or as agreed to by the parties).

          (g)  Each of the Escrow Indemnifying Parties shall contribute to the
total collective share of the liability for indemnification of the Escrow Agent
under Sections 8(e) and 8(f) of this Agreement (the "Escrow Indemnification
      -------------     ----                         ----------------------
Liability") in such proportion as is appropriate to reflect the relative fault
---------
of each individual Escrow Indemnifying Party, including up to all such Escrow
Indemnification Liability in the case of any tax liability arising from failure
to provide correct information with respect to any taxes pursuant to Section
                                                                     -------
8(f) of this Agreement. In all cases where there is no such basis for allocating
----
contribution for such Escrow Indemnification Liability or except as otherwise
provided in Section 8(e) of this Agreement, one half of the total Escrow
            ------------
Indemnification Liability shall be allocated pro rata among each of the
Shareholders according to their proportionate interest in the Escrow Shares, and
one half of the total Escrow Indemnification Liability shall be paid by
Acquiror. Notwithstanding the foregoing, the Escrow Agent shall be entitled to
seek joint and several indemnification from Acquiror, on the one hand, and the
Shareholders, on the other hand, without regard to the provisions of this
paragraph; provided, however, that each individual Shareholder shall have
several and not joint liability with respect to the aggregate liability of the
Shareholders.

          (h)  The Escrow Agent may resign at any time with at least 30 days'
prior written notice to Acquiror and the Shareholder Representative; provided,
however, that no such resignation shall become effective until the appointment
of a successor escrow agent, which shall be accomplished as follows. Acquiror
and the Shareholder Representative shall use their commercially reasonable best
efforts to mutually agree upon a successor agent within 30 days after receiving
such notice. If the parties fail to agree upon a successor escrow agent within
such time, Acquiror, with the consent of the Shareholder Representative (which
consent shall not be unreasonably withheld), shall have the right to appoint a
successor escrow agent. The successor escrow agent selected in the preceding
manner shall execute and deliver an instrument accepting such appointment and it
shall thereupon be deemed Escrow Agent under this Agreement and it

                                      -10-

<PAGE>

shall without further acts be vested with all the estates, properties, rights,
powers and duties of the predecessor Escrow Agent as if originally named as
Escrow Agent. If no successor escrow agent is named, the Escrow Agent may apply
to a court of competent jurisdiction for the appointment of a successor escrow
agent. Thereafter, the predecessor Escrow Agent shall be discharged from any
further duties and liabilities under this Agreement. The provisions of
Sections 8(e) and 8(f) and Section 9 of this Agreement shall survive the
-------------     ----     ---------
resignation or removal of the Escrow Agent or the termination of this Agreement.

           (i)   The Escrow Agent shall be under no duty to institute or defend
any proceeding unless the subject of such proceeding is part of its duties under
this Agreement. In the event of any dispute between the parties to this
Agreement, or between any of them and any other person, resulting in adverse
claims or demands being made upon any of the Escrow Shares, or in the event that
the Escrow Agent, in good faith, is in doubt as to what action it should take
under this Agreement, the Escrow Agent may, at its option, file a suit as
interpleader in a court of appropriate jurisdiction, refuse to comply with any
claims or demands on it, or refuse to take any other action under this
Agreement, so long as such dispute shall continue or such doubt shall exist. The
Escrow Agent shall be entitled to continue so to refrain from acting until (i)
the rights of all parties have been fully and finally adjudicated by a court of
appropriate jurisdiction or (ii) all differences and doubt shall have been
resolved by agreement among all of the interested persons and the Escrow Agent
shall have been notified of such adjudication or agreement in a writing signed
by all such persons.

           (j)   In the event the Escrow Agent believes any ambiguity or
uncertainty exists in any notice, instruction, direction, request or other
communication, paper or document received by the Escrow Agent pursuant to this
Agreement, the Escrow Agent shall promptly notify Acquiror and the Shareholder
Representative of the details of such alleged ambiguity or uncertainty, and may,
in its sole discretion, refrain from taking any action, and the Escrow Agent
shall be fully protected and shall incur no liability to any person for
refraining from taking such action, absent gross negligence, bad faith or
willful misconduct unless and until (i) the rights of all parties have been
fully and finally adjudicated by a court of appropriate jurisdiction or (ii) the
Escrow Agent receives written instructions with respect to such matter signed by
Acquiror and the Shareholder Representative that eliminates such ambiguity or
uncertainty to the satisfaction of the Escrow Agent.

           (k)   The rights of the Escrow Agent under this Section 8 are
                                                           ---------
cumulative of all other rights which it may have by law or otherwise.

                                      -11-

<PAGE>

     9.   Fees, Expenses and Taxes. Acquiror agrees to pay or reimburse the
          ------------------------
Escrow Agent for its normal services under this Agreement in accordance with the
fee schedule attached to this Agreement as Exhibit B. The Escrow Agent shall be
                                           ---------
entitled to reimbursement upon 30 days' written notice for all expenses and
disbursements (including the payment of any legal fees and expenses) incurred in
connection with this Agreement. Taxes incurred with respect to the earnings of
the Escrow Fund and payments made under this Agreement shall be paid by the
party to whom such earnings are distributed (or to be distributed) or to whom
such payment is made, and the Escrow Agent shall have no duties or liabilities
with respect thereto.

     10.  Miscellaneous.
          --------------

          (a)   Amendments and Waivers. Any term of this Agreement may be
                ----------------------
amended or waived with the written consent of Acquiror, the Escrow Agent and the
Shareholder Representative, or their respective permitted successors and
assigns. Any amendment or waiver effected in accordance with this Section 10(a)
                                                                  ------------
shall be binding upon the parties hereto and their respective successors and
assigns.

          (b)   Notices. Any notice, request or demand desired or required to be
                -------
given hereunder shall be in writing given by personal delivery, confirmed
facsimile transmission or overnight courier service, in each case addressed as
set forth below or to such other address as any party shall have previously
designated by such a notice. The effective date of any notice, request or demand
shall be the date of personal delivery, the date on which successful facsimile
transmission is confirmed or the date actually delivered by a reputable
overnight courier service, as the case may be, in each case properly addressed
as provided herein and with all charges prepaid.

                IF TO WATCHGUARD OR MERGER SUB:

                WatchGuard Technologies, Inc.
                505 Fifth Avenue, Suite 500
                Seattle, Washington 98104
                Fax:   (206) 521-3075
                Attention:  General Counsel

                       with a copy to:

                       Orrick, Herrington & Sutcliffe LLP
                       719 Second Avenue, Suite 900
                       Seattle, Washington  98104
                       Attention:  Stephen M. Graham
                                   Alan C. Smith
                       Fax:  (206) 839-4301

                                      -12-

<PAGE>

                IF TO THE COMPANY:

                RapidStream, Inc.
                1841 Zanker Road
                San Jose, California  95112
                Fax:  (408) 519-4939
                Attention:  Vincent Liu

                IF TO THE SHAREHOLDER REPRESENTATIVE:

                Wai San Loke
                950 Tower Lane
                18th Floor
                Foster City, California  94404
                Fax:  (650) 378-4710

                In the case of either the Company or the Shareholder
                Representative, with a copy to:

                       Wilson Sonsini Goodrich & Rosati
                       Professional Corporation
                       650 Page Mill Road
                       Palo Alto, California  94304-1050
                       Fax:  (650) 493-6811
                       Attention:  Carmen Chang

                       and

                       Wilson Sonsini Goodrich & Rosati
                       Professional Corporation
                       Spear Tower, Suite 3300, One Market
                       San Francisco, California  94105
                       Fax:  (415) 947-2099
                       Attention:  Steve L. Camahort

                If to the Escrow Agent:

                Mellon Investor Services LLC
                520 Pike Street, Suite 1220
                Seattle, Washington  98101
                Attention:  Relationship Manager
                Fax:  (206) 674-3059

                                      -13-

<PAGE>

                       with a copy to:

                       Mellon Investor Services LLC
                       85 Challenger Road
                       Ridgefield Park, New Jersey  07660
                       Attention:  General Counsel
                       Fax:  (201) 296-4004

           (c)   Severability. If any term or other provision of this Agreement
                 ------------
is invalid, illegal or incapable of being enforced by any rule of Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.

           (d)   Entire Agreement. This Agreement, the Merger Agreement and the
                 ----------------
other Operative Documents constitute the entire agreement among the parties
pertaining to the subject matter hereof and supercede all prior agreements and
understandings (written or oral) of the parties with respect to the subject
matter hereof and thereof; provided, however, that with respect to the Escrow
Agent, this Agreement only constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supercedes all prior agreements and
understandings (written or oral) of the parties with respect to the subject
matter hereof.

           (e)   Specific Performance. Each of the parties hereto acknowledges
                 --------------------
and agrees that the other parties hereto would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each of the
parties hereto agrees that the other parties hereto shall be entitled to an
injunction to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
competent court having jurisdiction over the parties, in addition to any other
remedy to which they may be entitled at Law or in equity.

           (f)   Parties in Interest. This Agreement shall be binding upon and
                 -------------------
inure solely to the benefit of the parties hereto and their respective
successors, heirs, legal Representatives and permitted assigns, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.

           (g)   Governing Law. This Agreement shall be governed by, and
                 -------------
construed in accordance with, the Laws of the state of Delaware applicable to
contracts executed in and to be performed in that state; provided, however, that
all provisions regarding the rights, duties and obligations of the Escrow Agent
shall be governed by, and construed in accordance with, the

                                      -14-

<PAGE>

Laws of the state of New York applicable to contracts executed in and to be
performed in that state.

           (h)   Headings. The descriptive headings contained in this Agreement
                 --------
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.

           (i)   Counterparts. This Agreement may be executed and delivered
                 ------------
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.

           (j)   Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
                 --------------------
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS
OF SUCH PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.

           (k)   Advice of Legal Counsel. Each party to this Agreement was
                 ------------------------
represented by his or its own counsel in connection with this Agreement and had
the opportunity to discuss with such counsel the terms of this Agreement. This
Agreement has been drafted with the joint participation of each of the parties
and shall be construed to be neither against nor in favor of any party.

                            [Signature Page Follows]

                                      -15-

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                 WATCHGUARD TECHNOLOGIES, INC.

                                 By:  /s/ Steven N. Moore
                                     -------------------------------------------
                                 Name:    Steven N. Moore
                                          --------------------------------------
                                 Its:  Executive Vice President and Secretary
                                       -----------------------------------------

                                 RAPIDSTREAM, INC.

                                 By:  /s/ Vincent L. Liu
                                      ------------------------------------------
                                 Name:    Vincent L. Liu
                                          --------------------------------------
                                 Its:  CEO
                                       -----------------------------------------

                                 SHAREHOLDER REPRESENTATIVE

                                 /s/ Wai San Loke
                                 -----------------------------------------------
                                 Wai San Loke

                                 MELLON INVESTOR SERVICES LLC,
                                 as Escrow Agent

                                 By:  /s/ David M. Dugas
                                      ------------------------------------------
                                 Name:    David M. Dugas
                                          --------------------------------------
                                 Its:  Relationship Administrator
                                       -----------------------------------------

                       Signature Page to Escrow Agreement

<PAGE>

                                                                       EXHIBIT A

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
                                                                           No. of
                                                                      Indemnification
                               Name of Shareholder                     Escrow Shares
                               -------------------                     -------------

-----------------------------------------------------------------------------------------
<S>                                                                    <C>
     Acorn Venture Partners, LLC                                           45,330
-----------------------------------------------------------------------------------------
     ACWIN Investment Corp. Ltd                                            12,606
-----------------------------------------------------------------------------------------
     Alan Nguyen                                                              594
-----------------------------------------------------------------------------------------
     Albert Her                                                               224
-----------------------------------------------------------------------------------------
     Alexander Zininberg                                                      849
-----------------------------------------------------------------------------------------
     Alliance Venture Capital Corp.                                         7,553
-----------------------------------------------------------------------------------------
     Alpha Venture Capital Fund, Inc.                                      14,746
-----------------------------------------------------------------------------------------
     Baring Asia II Holdings (8) Limited                                  378,166
-----------------------------------------------------------------------------------------
     Bestway Creation Co., Ltd.                                             7,563
-----------------------------------------------------------------------------------------
     Bin Yan                                                                  272
-----------------------------------------------------------------------------------------
     Bruce Byrd                                                            11,260
-----------------------------------------------------------------------------------------
     C. Thomas Gilpin                                                       1,344
-----------------------------------------------------------------------------------------
     Cabletron Systems, Inc.                                               25,211
-----------------------------------------------------------------------------------------
     Carmen Chang                                                             415
-----------------------------------------------------------------------------------------
     Chao-Feng Venture Capital Corporation                                 16,869
-----------------------------------------------------------------------------------------
     Cheng-Lin Lin                                                             93
-----------------------------------------------------------------------------------------
     Chen-Hwa Chang                                                         1,049
-----------------------------------------------------------------------------------------
     Chi-chang Lai                                                          1,019
-----------------------------------------------------------------------------------------
     Chieh and Lily Chang Living Trust                                      2,518
-----------------------------------------------------------------------------------------
     Chien-Chun Chang                                                       3,782
-----------------------------------------------------------------------------------------
     Chih-wei Chao                                                          2,856
-----------------------------------------------------------------------------------------
     Chin-Jui (George) Ho                                                     297
-----------------------------------------------------------------------------------------
     Chiung Ting Tsai                                                       2,518
-----------------------------------------------------------------------------------------
     Christopher Dinh                                                         669
-----------------------------------------------------------------------------------------
     Chung-wen Soung                                                        2,208
-----------------------------------------------------------------------------------------
     CMI International Holdings Ltd.                                        7,553
-----------------------------------------------------------------------------------------
     Cuong Nguyen                                                             614
-----------------------------------------------------------------------------------------
     David Kao                                                                340
-----------------------------------------------------------------------------------------
     David C. Drummond                                                        101
-----------------------------------------------------------------------------------------
     Derek Chang                                                              272
-----------------------------------------------------------------------------------------
     De-Shan Wang                                                             186
-----------------------------------------------------------------------------------------
     Don D. Henry                                                           2,123
-----------------------------------------------------------------------------------------
     Douglas W. Tsui                                                        2,560
-----------------------------------------------------------------------------------------
     Emery Y. Hsia                                                          2,510
-----------------------------------------------------------------------------------------
     Eric Wright                                                              252
-----------------------------------------------------------------------------------------
     Forefront Venture Partners, L.P.                                       4,616
-----------------------------------------------------------------------------------------
     Fortune Technology Investment Corp.                                   12,589
-----------------------------------------------------------------------------------------
     Fu-Kuang Frank Chao                                                    1,953
-----------------------------------------------------------------------------------------
</TABLE>

                          Exhibit A to Escrow Agreement

<PAGE>

        ------------------------------------------------------------------------
                                                                     No. of
                                                                 Indemnification
                          Name of Shareholder                     Escrow Shares
                          -------------------                     -------------
        ------------------------------------------------------------------------
             Fu-Sheng Chu                                             2,579
        ------------------------------------------------------------------------
             Gary Liu                                                 1,359
        ------------------------------------------------------------------------
             Global Business Investment (B.V.I.) Corporation         26,549
        ------------------------------------------------------------------------
             Grand Pacific Investment & Development Co., Ltd.        16,011
        ------------------------------------------------------------------------
             Guam-Minh (Peter) Luong                                    299
        ------------------------------------------------------------------------
             Guarantee& Trust Co. Ttee Fbo:                             198
        ------------------------------------------------------------------------
             Harold W. Kroeger                                        2,972
        ------------------------------------------------------------------------
             Harrison International Group Limited                    11,190
        ------------------------------------------------------------------------
             Harry B. Bremond's Separate Property Trust                  63
        ------------------------------------------------------------------------
             Hsinlun Jair                                               255
        ------------------------------------------------------------------------
             Hsiu-Chin Liao                                             232
        ------------------------------------------------------------------------
             Hua-Cheng Venture Capital Corporation                   16,617
        ------------------------------------------------------------------------
             Hua-Chih Venture Capital Corp.                          20,169
        ------------------------------------------------------------------------
             Hua-Jing Venture Capital Corporation                    16,869
        ------------------------------------------------------------------------
             Huei-Gin Chen                                            1,394
        ------------------------------------------------------------------------
             Hung-Chih Chen                                           2,789
        ------------------------------------------------------------------------
             Hung-Kuang Hu                                            1,121
        ------------------------------------------------------------------------
             I-Chen Cheng                                               232
        ------------------------------------------------------------------------
             Info Venture Capital Corp.                              10,084
        ------------------------------------------------------------------------
             InveStar Burgeon Venture Capital, Inc.                  19,992
        ------------------------------------------------------------------------
             InveStar Dayspring Venture Capital, Inc.                 4,616
        ------------------------------------------------------------------------
             InveStar Excelsus Venture Capital (Int'l) Inc., LDC     11,280
        ------------------------------------------------------------------------
             InveStar Semiconductor Development Fund, Inc.           26,437
        ------------------------------------------------------------------------
             InveStar Semiconductor Development Fund, Inc.           26,656
        ------------------------------------------------------------------------
             Jeff Jyn-min Liaw                                          170
        ------------------------------------------------------------------------
             Jenlih Hsieh                                               276
        ------------------------------------------------------------------------
             Jenming Chai                                             1,529
        ------------------------------------------------------------------------
             Jiahua Wang                                              1,359
        ------------------------------------------------------------------------
             Jo-Yu Wu                                                 1,019
        ------------------------------------------------------------------------
             Jui-Chih Wang                                              558
        ------------------------------------------------------------------------
             Julie Huang                                                186
        ------------------------------------------------------------------------
             Jung-Ji Yu                                              33,631
        ------------------------------------------------------------------------
             Kaijun Gu                                                  368
        ------------------------------------------------------------------------
             Kane Investment Group Corp.                              2,411
        ------------------------------------------------------------------------
             Kenneth R. Lee                                             542
        ------------------------------------------------------------------------
             Kimberly Foster                                             68
        ------------------------------------------------------------------------
             Koppel, Ltd.                                            25,178
        ------------------------------------------------------------------------
             Kwen-Ruey Lu                                             9,880
        ------------------------------------------------------------------------
             Lan Ngoc Dinh                                              170
        ------------------------------------------------------------------------
             Leemay Yen                                               4,246
        ------------------------------------------------------------------------
             Li-Herng Yao                                             2,293
        ------------------------------------------------------------------------

<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                                          No. of
                                                                      Indemnification
                            Name of Shareholder                        Escrow Shares
                            -------------------                        -------------

---------------------------------------------------------------------------------------
<S>                                                                   <C>
     Linda Li                                                                 537
---------------------------------------------------------------------------------------
     Longban Lin                                                              763
---------------------------------------------------------------------------------------
     Man Shek Lee                                                           2,518
---------------------------------------------------------------------------------------
     Mayson Management Limited British Virgin Islands                       2,098
---------------------------------------------------------------------------------------
     Michael Okada                                                             88
---------------------------------------------------------------------------------------
     Mindy Hong                                                               212
---------------------------------------------------------------------------------------
     Ming Liu                                                               1,699
---------------------------------------------------------------------------------------
     Ming Yun Trading Co., Ltd.                                             2,518
---------------------------------------------------------------------------------------
     Ming-Jeng Lee                                                            453
---------------------------------------------------------------------------------------
     Ming-Jye Sheu                                                          2,038
---------------------------------------------------------------------------------------
     Paragon Venture Capital Corp.                                          5,844
---------------------------------------------------------------------------------------
     Peggy W. Forbes' Separate Property Trust                                  63
---------------------------------------------------------------------------------------
     Pullan Lu                                                              1,529
---------------------------------------------------------------------------------------
     Rich Capital, Group Inc.                                              16,387
---------------------------------------------------------------------------------------
     Robert Yuan Hu                                                           605
---------------------------------------------------------------------------------------
     Ron Hawkins                                                              849
---------------------------------------------------------------------------------------
     Shan-Chih Wen                                                            510
---------------------------------------------------------------------------------------
     Shih-Hsin Chen                                                         2,518
---------------------------------------------------------------------------------------
     Shu Chin Lin                                                             255
---------------------------------------------------------------------------------------
     Si-Iu Lau                                                                849
---------------------------------------------------------------------------------------
     Slin L. Lee                                                              542
---------------------------------------------------------------------------------------
     Soo Boon Quek                                                          2,518
---------------------------------------------------------------------------------------
     Startech Goldengate Corp.                                              6,303
---------------------------------------------------------------------------------------
     Taiwan Asia Pacific Venture Capital Ltd.                              18,433
---------------------------------------------------------------------------------------
     Tech Alliance Corp.                                                   55,299
---------------------------------------------------------------------------------------
     Technology Associates Corp.                                           55,299
---------------------------------------------------------------------------------------
     Ted Lee                                                                1,308
---------------------------------------------------------------------------------------
     Te-kan Yin                                                               276
---------------------------------------------------------------------------------------
     Thaddeus Austin                                                           23
---------------------------------------------------------------------------------------
     ToanTri Nguyen                                                            92
---------------------------------------------------------------------------------------
     Tricia Y. Chu                                                          6,275
---------------------------------------------------------------------------------------
     Vincent Liu                                                           55,033
---------------------------------------------------------------------------------------
     Vincent Liu and Yi-Mei Chen Living Trust                              13,666
---------------------------------------------------------------------------------------
     Wei-Cheng Kuo                                                          2,543
---------------------------------------------------------------------------------------
     Wen-Chi Yeh                                                            2,510
---------------------------------------------------------------------------------------
     Wen-Huang Chang                                                        4,183
---------------------------------------------------------------------------------------
     Wen-Hui Chu                                                              790
---------------------------------------------------------------------------------------
     WS Investment Company 98A                                                340
---------------------------------------------------------------------------------------
     WS Investment Company 99A                                                567
---------------------------------------------------------------------------------------
     Wu-Fu Chen                                                             2,038
---------------------------------------------------------------------------------------
     Yao-Nan Yu                                                             1,007
---------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                       No. of
                                                                                  Indemnification
                                 Name of Shareholder                               Escrow Shares
                                 -------------------                               -------------
<S>                                                                               <C>
        ----------------------------------------------------------------------------------------------
             YeeJang James Lin                                                          33,801
        ----------------------------------------------------------------------------------------------
             Yeou-Ying Shyy                                                              2,324
        ----------------------------------------------------------------------------------------------
             Yih-Min Lin                                                                 1,511
        ----------------------------------------------------------------------------------------------
             Yu Liang                                                                      406
        ----------------------------------------------------------------------------------------------
             Yu-Chuan Chang Chen                                                         4,648
        ----------------------------------------------------------------------------------------------
             Yu-Heng Lee                                                                 4,315
        ----------------------------------------------------------------------------------------------
             Zinna-Alonso Trust                                                            118
        ----------------------------------------------------------------------------------------------
             Tao Shinn Chen                                                                255
        ----------------------------------------------------------------------------------------------
             Silicon Valley Bancshares                                                     919
        ----------------------------------------------------------------------------------------------
</TABLE>

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