Agreement and Plan of Merger

Exhibit 2.1

Agreement and Plan of Merger

By And Among

Blackboard Inc.,

Football Merger Sub Inc.,

Angel Learning, Inc.

and

The Shareholder Representative (as defined herein)

Dated As Of May 1, 2009

List of Exhibits

AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger (this “ Agreement ”) is entered into on May 1, 2009 (the “ Signing Date ”) by and among Blackboard, Inc., a Delaware corporation (“ Parent ”), Football Merger Sub Inc., an Indiana corporation and a wholly owned subsidiary of Parent (“ Sub ”), ANGEL Learning, Inc., an Indiana corporation (the “ Company ”) and Christopher D. Clapp, in his capacity as the Shareholder Representative appointed pursuant to Section 2.7 hereof.

     Now, Therefore, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows:

Article 1. The Merger

     Section 1.1 The Merger. Upon the terms and subject to the conditions of this Agreement, and in accordance with the Indiana Business Corporation Law (“ IBCL ”), at the Effective Time, Sub shall be merged with and into the Company (the “ Merger ”). As a result of the Merger, the separate corporate existence of Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the “ Surviving Corporation ”). The Surviving Corporation shall continue to be governed by the laws of the State of Indiana.

     Section 1.2 Closing. Upon the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the “ Closing ”) shall take place at 9:00 a.m. Eastern Daylight Time on a date which shall be the second business day after satisfaction or waiver of the conditions set forth in Article 6, at the offices of Barnes & Thornburg LLP, 11 South Meridian Street, Indianapolis, Indiana 46204-3535, or at such other time, date or place as agreed to in writing by the parties hereto. The date on which the Closing actually takes place is referred to herein as the “ Closing Date ”. Subject to the provisions of Article 8, failure to close the

Agreement And Plan Of Merger

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Merger on the date and time and at the place determined pursuant to this Section 1.2 will not automatically result in the termination of this Agreement and will not automatically relieve any party of any obligation under this Agreement. In such a situation, the Closing will occur as soon as reasonably practicable, subject to Article 8.

     Section 1.3 Effective Time. Upon the Closing, the parties hereto shall cause the Merger to be consummated by filing articles of merger (the “ Articles of Merger ”) with the Secretary of State of the State of Indiana, in such form as required by, and executed in accordance with the relevant provisions of, the IBCL. The date and time of the filing of the Articles of Merger with the Secretary of State of the State of Indiana (or such later time as shall be agreed to by the parties hereto and is specified in the Articles of Merger) will be the “ Effective Time ”.

     Section 1.4 Effects of the Merger. The Merger shall have the effects set forth in the applicable provisions of the IBCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, immunities, powers and franchises of the Company and Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and duties of the Surviving Corporation.

     Section 1.5 Articles of Incorporation; By-laws . At the Effective Time and without any further action on the part of the Company or Sub, the articles of incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time to conform to the articles of incorporation of Sub as in effect immediately prior to the Effective Time, except that the articles of incorporation shall reflect as of the Effective Time “ANGEL Learning, Inc.” as the name of the Surviving Corporation, until thereafter amended as provided therein and under the IBCL. At the Effective Time and without any further action on the part of the Company or Sub, the by-laws of the Surviving Corporation shall be amended and restated as of the Effective Time to conform to the by-laws of Sub as in effect immediately prior to the Effective Time, until thereafter amended or repealed in accordance with their terms, the articles of incorporation of the Surviving Corporation, and the IBCL.

     Section 1.6 Directors and Officers . The directors of Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the articles of incorporation and by-laws of the Surviving Corporation, and the officers of Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified.

     Section 1.7 Deliveries at the Closing . At the Closing:

     (a) the Company shall deliver to Parent an opinion, dated as of the Closing Date, of counsel to the Company, in substantially the form attached hereto as Exhibit B ;

     (b) the Parent shall deliver to the Company an opinion, dated as of the Closing Date, of counsel to the Parent, in substantially the form attached hereto as Exhibit C ;

     (c) the Company shall deliver to Parent (i) a copy of the Company Charter Documents, including all amendments thereto, certified by the Secretary of State of Indiana as of the Closing Date or any of the five preceding business days, (ii) a certificate from (1) the Secretary of State of Indiana to the effect that the Company is in existence in Indiana on the Closing Date, (2) a certificate from the Secretary of State of New York and a certificate from the Secretary of State of New Jersey to the effect that the Company is duly qualified to do business as a foreign corporation and is in good standing in the States of New York and New Jersey on the Closing Date, (iii) a copy of the bylaws of the Company, certified by the Secretary of the Company as being true and correct and in effect on the Closing Date, (iv) a copy of resolutions, certified as of the Closing Date by the Secretary of the Company, adopted by the board of directors and shareholders of the Company authorizing the execution and delivery by the Company of this Agreement and the other documents contemplated hereby to which the Company is a party, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby, (v) a copy of resolutions, certified as of the Closing Date by the Secretary of the Company, adopted by the board of directors of the Company terminating the Company’s 401(k) plan prior to the Effective Time, and (vi) a copy of resolutions, certified as of the Closing Date by the Secretary of the Company, adopted by the board of directors of the Company, authorizing the cancellation of the Company Stock Options in exchange for the cash payments to be made pursuant to Section 2.3 hereunder and the termination of the Company Stock Option Plan on or before the Effective Time.

     (d) the Indemnification Escrow Agreement, in substantially the form attached hereto as Exhibit D , shall have been executed and delivered by the parties thereto;

     (e) the Company shall deliver to Parent Schedule 1.7(e) , which shall list, in reasonable detail, (i) all dividends and distributions paid or declared in respect of shares of the Company’s capital stock (“ Dividends ”) during the period beginning February 1, 2009 and ending at 11:59 p.m. EDT on the calendar day immediately preceding the Closing Date (the “ Measurement Period ”), (ii) all payments made to employees, consultants or directors outside of the ordinary course of business or otherwise inconsistent with past practices that have been paid during the Measurement Period (including all amounts paid or payable in respect of any Tax or other expense incurred or to be incurred by the Company, the Surviving Corporation or Parent in connection with such payments but excluding, for the avoidance of doubt, any Transaction Expenses, (collectively, the “ Pre-Closing Transaction Payments ” and, together with the Dividends, the “ Pre-Closing Company Payments ”), (iii) all payments committed to be made, but which have not as of the Closing been paid, to employees, consultants or directors outside of the ordinary course of business or otherwise inconsistent with past practices that have been committed during the Measurement Period or as of the Closing Date (including all amounts paid or payable in respect of any Tax or other expense incurred or to be incurred by the Company, Surviving Corporation or Parent in connection with such payments but excluding, for the avoidance of doubt, any Transaction Expenses), which shall be paid at the Effective Time or as soon as practicable thereafter (but in no event more than three (3) business days after the Effective Time) from the Surviving Corporation (collectively, the “ Closing Transaction

Payments ”), (iv) all Taxes and other expenses incurred or to be incurred by the Company, the Surviving Corporation or Parent in connection with the payment of the Optionholder Consideration to all holders of Company Stock Options (collectively, the “ Company Option Tax Obligations ”) and (v) all Transaction Expenses;

     (f) the Company shall (i) deliver to Parent a statement conforming to the requirements of Section 1.897-2(h)(1)(i) of the United States Treasury Regulations, and (ii) deliver to the Internal Revenue Service the notification required under Section 1.897-2(h)(2) of the United States Treasury Regulations;

     (g) the Company shall deliver to Parent a resignation letter, effective as of the Closing, executed by each individual serving as an officer of the Company immediately prior to the Closing;

     (h) each of Christopher D. Clapp, Bryon Parnell, Ray Henderson, Candice Roberts and David Mills, shall deliver to Parent a fully executed non-compete agreement in favor of the Company, Surviving Corporation and Parent in the form attached Exhibit E (each, a “ Non-Compete Agreement ”);

     (i) the Company shall deliver to Parent letters in the form attached hereto as Exhibit F (each, an “ Accredited Shareholder Agreement and Letter of Transmittal ”) executed by all Company shareholders who desire to represent that they are Accredited Shareholders;

     (j) the Company shall deliver to Parent a certificate executed by its President certifying that (A) each of the representations and warranties made by the Company in Sections 3.3 and 3.20 of this Agreement was accurate in all respects as of the Signing Date (other than representations and warranties in such sections that expressly speak as of a different date, in which case, such representations and warranties shall have been accurate in all respects as of such different date), and (B) each of the other representations and warranties made by the Company in this Agreement was accurate in all material respects as of the Signing Date (other than any other representations and warranties that expressly speak as of a different date, in which case, such other representations and warranties shall have been accurate in all material respects as of such different date);

     (k) the Parent shall deliver to the Company a certificate executed by its President certifying that each of the representations and warranties made by the Parent and the Sub in this Agreement is accurate in all material respects as of the Signing Date (other than representations that expressly speak as of a different date);

     (l) the Company shall deliver to Parent a schedule in substantially the form attached hereto as Exhibit G (the “ Final Distribution Schedule ”) setting forth the calculations of the (i) Merger Consideration, (ii) Closing Cash, (iii) Dividends, (iv) Pre-Closing Transaction Payments, (v) Closing Transaction Payments, (vi) Company Option Tax Obligations, (vii) Aggregate Accredited Shareholder Cash Consideration, (viii) Aggregate Options on a Net Issue Basis, (ix) Fully-Diluted Share Number, (x) Parent

Designated Stock Price, (xi) Per Share Accredited Shareholder Cash Amount, (xii) Per Share Stock Amount, (xiii) Per Share Value, (xiv) Total Accredited Shareholder Share Number, (xv) Optionholder Consideration for each Eligible Stock Option Holder, and (xvi) allocation of the Escrowed Cash, Escrowed Stock and the Costs and Fees Escrow Amount for each of the Eligible Shareholders. The Parent shall be entitled to rely exclusively and conclusively on the Final Distribution Schedule in making distributions of Merger Consideration hereunder and pursuant to the Indemnification Escrow Agreement; and

     (m) the Parent shall deliver the Merger Consideration to the Paying Agent and the Indemnification Escrow Agent pursuant to Sections 2.4 and 7.2.

Article 2. Conversion Of Shares

     Section 2.1 Merger Consideration.

     (a) Subject to the adjustments to be made pursuant to Section 2.5 with respect to any Dissenting Shares, and subject to Section 7.2 (in the case of Eligible Shareholders), the aggregate consideration payable to Eligible Shareholders and Eligible Stock Option Holders in connection with the Merger will be an amount equal to (1) $100,000,000, minus (2) the Transaction Expenses, minus (3) the Closing Transaction Payments, minus (4) the Company Option Tax Obligations, plus (5) the total of (A) fifty percent (50%) (up to an amount not to exceed $6,000,000) of the sum of ((i) Closing Cash plus (ii) the Pre-Closing Company Payments), minus (B) the Pre-Closing Company Payments (as calculated, the “ Merger Consideration ”). For purposes of this Agreement “ Closing Cash ” shall mean the total of the cash and cash equivalents of the Company as of the close of business (i.e., 5:00 p.m. EDT) on the day that is two (2) calendar days prior to the Closing Date (such time and date is referred to as the “ Cutoff Time ”). The Merger Consideration will be payable as follows:

     (i) An amount equal to the amount that results from subtracting $15,000,000 from the Merger Consideration will be paid in cash (the “ Cash Consideration ”) to the Paying Agent to be distributed pursuant to Section 2.4; and

     (ii) Parent will issue or cause to be issued the number shares of Parent’s fully paid and non-assessable unregistered shares of common stock, par value $0.01 per share, that result from dividing $15,000,000 by the Parent Designated Stock Price (each such share is referred to as the “ Parent Stock ” and all such shares are referred to as the “ Stock Consideration ”), payable to each Eligible Shareholder who is an Accredited Shareholder.

     (b) For purposes of this Agreement:

     (i) The “ Accredited Shareholders ” shall mean, collectively, those Company shareholders who have executed and delivered to Parent, prior to the Closing, an Accredited Shareholder Agreement and Letter of Transmittal.

     (ii) The “ Aggregate Options ” shall be the aggregate number of shares of the Company’s common stock issuable upon exercise of all Company Stock Options and any other warrants, options or other rights to purchase shares of the Company’s common stock that are outstanding immediately prior to the Effective Time (prior to giving effect to the cancellation of Company Stock Options contemplated by Section 2.3 below).

     (iii) The “ Aggregate Accredited Shareholder Cash Consideration ” shall be an amount equal to (A) the Cash Consideration, minus (B) the Aggregate Unaccredited Shareholder Cash Consideration, minus (C) the product of (1) Aggregate Options On A Net Issue Basis multiplied by (2) the Per Share Value.

     (iv) The “ Aggregate Options On A Net Issue Basis ” shall be an amount equal to (A) the Aggregate Options minus (B) the product of the Aggregate Options multiplied by (x/y), where:

x = the quotient of (1) the aggregate amount of the exercise prices otherwise payable in respect of the exercise of all of the Aggregate Options, divided by (2) the number of Aggregate Options; and

y = the Per Share Value.

     (v) The “ Fully-Diluted Share Number ” shall be the aggregate number of shares of the Company’s common stock issued and outstanding immediately prior to the Effective Time, plus the Aggregate Options On A Net Issue Basis, but excluding any treasury shares or shares otherwise held by the Company.

     (vi) The “ Parent Average Signing Price ” shall mean the average closing sales price per share of the Parent Stock on the Nasdaq Global Select Market for the twenty (20) consecutive trading days ending on the day that is two (2) trading days prior to the Signing Date.

     (vii) The “ Parent Designated Stock Price ” shall mean the average closing sales price per share of the Parent Stock on the Nasdaq Global Select Market for the twenty (20) consecutive trading days ending on the day that is two (2) trading days prior to the Closing Date; provided that, (A) if such amount is greater than 1.05 multiplied by the Parent Average Signing Price, then the Parent Designated Stock Price shall equal 1.05 multiplied by the Parent Average Signing Price and (B) if such amount is less than 0.95 multiplied by the Parent Average Signing Price, then the Parent Designated Stock Price shall equal 0.95 multiplied by the Parent Average Signing Price.

     (viii) The “ Per Share Accredited Shareholder Cash Amount ” shall be a fraction (A) the numerator of which equals the Aggregate Accredited

Shareholder Cash Consideration and (B) the denominator of which equals the Total Accredited Shareholder Share Number.

     (ix) The “ Per Share Stock Amount ” shall be a fraction (A) the numerator of which equals the Stock Consideration and (B) the denominator of which equals the Total Accredited Shareholder Share Number.

     (x) The “ Per Share Value ” shall be a fraction (A) the numerator of which equals the Merger Consideration and (B) the denominator of which equals the Fully-Diluted Share Number.

     (xi) The “ Total Accredited Shareholder Share Number ” shall be the aggregate number of shares of the Company’s common stock issued and outstanding immediately prior to the Effective Time held by all Accredited Shareholders.

     (xii) The “ Unaccredited Shareholders ” shall mean all Company shareholders who have not delivered to Parent, prior to the Closing, an executed Accredited Shareholder Agreement and Letter of Transmittal.

     Section 2.2 Conversion of Securities.

     (a) Subject to Sections 2.2(c), 2.4, 2.5 and 7.2 hereof, at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Sub, the Company or any shareholder of the Company (except as provided in clause (i) below):

     (i) each Share outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company and other than Shares held by Unaccredited Shareholders to be exchanged solely for cash pursuant to Section 2.2(b)) shall be converted into the right to receive, subject to the execution and delivery by the holder of such Share to Parent of an Accredited Shareholder Agreement and Letter of Transmittal prior to the Effective Time, (A) an amount of cash, without interest, equal to the Per Share Accredited Shareholder Cash Amount, plus (B) a number of shares of Parent Stock equal to the Per Share Stock Amount divided by the Parent Designated Stock Price;

     (i) each Share held in the treasury of the Company immediately prior to the Effective Time shall be cancelled and retired without any conversion thereof and no payment or distribution shall be made with respect thereto; and

     (ii) each share of common stock of Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.

     (b) Subject to Sections 2.4, 2.5 and 7.2 hereof, each Unaccredited Shareholder shall be deemed to have elected to receive an amount of cash (adjusted to the nearest whole cent), without interest, equal to the Per Share Value (the “ Per Share

Unaccredited Shareholder Consideration ”) in lieu of the Per Share Accredited Shareholder Cash Amount and the Per Share Stock Amount otherwise payable pursuant to Section 2.2(a)(i) above and, in this regard, each share of such Unaccredited Shareholder’s Shares outstanding immediately prior to the Effective Time shall be converted into the right to receive, subject to the execution and delivery by the holder of such Shares to Parent of a letter, in the form attached hereto as Exhibit H (each, an “ Unaccredited Shareholder Agreement and Letter of Transmittal ), prior to or after the Effective Time, an amount of cash, without interest, equal to the Per Share Unaccredited Shareholder Consideration. The aggregate cash amount payable pursuant to this Section 2.2(b) shall be referred to herein as the “ Aggregate Unaccredited Shareholder Cash Consideration ”.

     (c) No fractional shares of Parent Stock shall be issued in connection with the Merger, and no certificates for any such fractional shares shall be issued. In lieu of such fractional shares, any holder of Shares who would otherwise be entitled to receive a fraction of a share of Parent Stock (after aggregating all fractional shares of Parent Stock issuable to such holder) shall, upon surrender of such holder’s Certificates, be paid in cash the dollar amount (rounded to the nearest whole cent), without interest, determined by multiplying such fraction by the Parent Designated Stock Price.

     Section 2.3 Treatment of Company Stock Options.

     (a) At the Effective Time, each then outstanding warrant, option or right to purchase Shares (collectively, “ Company Stock Options ”), granted or issued by the Company, including without limitation pursuant to the Company’s 2001 Stock Option Plan (as amended, “ Company Stock Option Plan ”), whether or not then vested or exercisable, shall be cancelled by the Company, in accordance with the Company Stock Option Plan and resolutions duly adopted by the Company’s board of directors, a copy of which shall be delivered to Parent pursuant to Section 1.7(c) hereof, and each holder of a cancelled Company Stock Option (“ Eligible Stock Option Holder ”) shall be entitled to receive, subject to the execution and delivery to Parent by such holder of a letter in the form attached hereto as Exhibit I (each, an “ Optionholder Letter of Transmittal ”), at the Effective Time or as soon as practicable thereafter from the Surviving Corporation (and, if necessary, Parent shall provide funds to the Surviving Corporation sufficient for such payments) in consideration for the cancellation of such Company Stock Option an amount equal to (A) the product of (i) the number of common shares previously subject to such Company Stock Option, multiplied by (ii) the Per Share Value, minus (B) the aggregate exercise prices previously payable under such Company Stock Option prior to cancellation, minus (C) any amounts required to be withheld under Section 2.8 (each such payment, such Eligible Stock Option Holder’s “ Optionholder Consideration ”).

     (b) Except as provided herein or as otherwise agreed to by the parties, all stock incentive plans (including, without limitation, the Company Stock Option Plan) and any other plan, program or arrangement providing for the issuance or grant of any interest in respect of the Shares shall terminate as of the Effective Time, and the Company shall, prior to the Effective Time, ensure that following the Effective Time no holder of any

Company Stock Option or any other equity-based right shall have any right to acquire equity securities of the Company or the Surviving Corporation.

     Section 2.4 Surrender of Shares; Distribution of Merger Consideration; Stock Transfer Books.

     (a) American Stock Transfer & Trust Company shall act as agent for the holders of Shares in connection with the Merger (the “ Paying Agent ”) to receive the portion of the Merger Consideration to which Eligible Shareholders shall become entitled pursuant to Section 2.2(a) or Section 2.2(b) (as applicable). As of the Closing Date, the Parent or Sub will deliver the portion of the Merger Consideration payable to the Eligible Shareholders to the Paying Agent, in trust for the benefit of the Eligible Shareholders, less the respective amounts to be delivered to the Indemnification Escrow Agent pursuant to Section 7.2. The Paying Agent shall also receive any amounts (consisting of both cash and Parent Stock) distributed pursuant to the Indemnification Escrow Agreement on behalf of the Eligible Shareholders, if and when paid or released. As of the Closing Date, the Parent or Sub will deliver the portion of the Merger Consideration payable to the Eligible Stock Option Holders to the Surviving Corporation, in trust for the benefit of the Eligible Stock Option Holders.

     (b) As soon as practicable after the Effective Time (but in no event more than three (3) business days after the Effective Time), the Surviving Corporation shall cause to be mailed to each Unaccredited Shareholder (other than any Unaccredited Shareholder who has delivered an Unaccredited Shareholder Agreement and Letter of Transmittal prior to Closing) an Unaccredited Shareholder Agreement and Letter of Transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates for payment of the applicable portion of the Merger Consideration therefor. Upon surrender to the Paying Agent of a stock certificate which represented Shares immediately prior to the Effective Time (whether held by an Accredited Shareholder or an Unaccredited Shareholder, a “ Certificate ”), together with, in the case of Accredited Shareholders, an Accredited Shareholder Agreement and Letter of Transmittal, and in the case of Unaccredited Shareholders, an Unaccredited Shareholder Agreement and Letter of Transmittal, in each case, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate (each, whether an Accredited Shareholder or an Unaccredited Shareholder, an “ Eligible Shareholder ”) shall be entitled to receive in exchange therefor the amounts specified in Section 2.2 and such Certificate shall then be cancelled. Until so surrendered, each Certificate will represent, from and after the Effective Time, only the right to receive the amounts specified in Section 2.2(a) or Section 2.2(b), as applicable. No interest shall be paid or accrued for the benefit of holders of the Certificates on the cash portions of the amounts specified in Section 2.2(a) or Section 2.2(b), as applicable, payable upon the surrender of the Certificates. If payment or issuance of such amounts, in any form, is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in

proper form for transfer and that the Person requesting such amounts shall have paid any transfer and other Taxes required by reason of the payment of any such amounts to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such Tax either has been paid or is not applicable. As used in this Agreement, “ Person ” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in the Exchange Act).

     (c) In the event any Certificates shall have been lost, stolen or destroyed, the Paying Agent shall deliver in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the amounts to which the holder thereof is entitled pursuant to this Article 2. The Parent may, in its reasonable discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificate to give the Parent or the Paying Agent a bond in such sum as it may reasonable direct (it being agreed that any amount required by the Paying Agent shall be deemed reasonable) as indemnity against any claim that may be made against the Parent or Paying Agent with respect to the Certificate(s) alleged to have been lost, stolen or destroyed.

     (d) As soon as practicable after the Effective Time (but in no event more than three (3) business days after the Effective Time), the Surviving Corporation shall cause to be mailed to each Eligible Stock Option Holder an Optionholder Letter of Transmittal for use in effecting the payment of the applicable portion of the Merger Consideration therefor. Upon delivery to Parent of such Optionholder Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, the Eligible Stock Option Holder shall be entitled to receive in exchange therefor the amounts specified in Section 2.3, which (i) in the case of any Eligible Stock Option Holders who shall have delivered to Parent an Optionholder Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto on or before the Effective Time, shall be paid by the Surviving Corporation pursuant to a special payroll run as soon as practicable after the Effective Time (but in no event more than seven (7) days after the Effective Time), and (ii) in the case of any Eligible Stock Option Holders who shall not have delivered to Parent an Optionholder Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto on or before the Effective Time, shall be paid by the Surviving Corporation in a manner consistent with its normal payroll practices. No interest shall be paid or accrued for the benefit of Eligible Stock Option Holders on the cash portions of the amounts specified in Section 2.3 payable to such holders.

     (e) The Paying Agent shall pay to any Eligible Shareholder within five (5) days of receipt of payment any other amounts received pursuant to this Agreement, including any amounts received for indemnification under Section 7.4. In addition, the Paying Agent shall issue any Escrowed Property it receives on account of any disbursements received from the Indemnification Escrow Agent within five (5) days of receipt.

     (f) At the close of business on the day of the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of shares of common stock on the records of the Company. From and after the Effective Time, the holders of Certificates evidencing ownership of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided for herein or by applicable Law.

     Section 2.5 Dissenting Shares.

     (a) Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by shareholders who have not voted in favor of or consented to the Merger and who shall have delivered a written demand for appraisal of such Shares in the time and manner provided in Section 23-1-44 of the IBCL and shall not have failed to perfect or shall not have effectively withdrawn or lost their rights to appraisal and payment under the IBCL (the “ Dissenting Shares ”) shall not be converted into the right to receive the Per Share Shareholder Consideration, but shall be entitled to receive the fair value of their Shares as shall be determined pursuant to Section 23-1-44 of the IBCL; provided, however , that if such holder shall have failed to perfect or shall have effectively withdrawn or lost his, her or its right to appraisal and payment under the IBCL, such holder’s Shares shall thereupon be deemed to have been converted, at the Effective Time, into the right to receive the amounts specified in Section 2.2(a) or Section 2.2(b), as applicable, without any interest thereon. In the event a holder of Dissenting Shares appropriately perfects his, its or her appraisal rights under the IBCL, an amount allocable to the Dissenting Shares held by such holder and deposited with the Shareholder Representative or with the Paying Agent (each a “ Disbursement Account ”) shall be segregated and held separate pending a determination with respect to whether such holder is entitled to rights to payment pursuant to the IBCL. If it is determined that such holder is entitled to rights to payment as provided in the IBCL or if no such determination has been made at the time that all nonsegregated amounts in the applicable Disbursement Account have been or are being disbursed, the amounts allocable to such holder’s Dissenting Shares shall be disbursed to the Surviving Corporation.

     (b) The amount of funds deposited into a Disbursement Account allocable to any holder of common stock of the Company that complies with Section 2.5(a) shall be an amount equal to (A) the amount of funds deposited in such Disbursement Account (less any amounts payable from such Disbursement Account to Parent or the Surviving Corporation or other third parties) multiplied by (B) the number of Shares with respect to which the holder of Shares exercised and perfected dissenter’s rights in compliance with Section 2.5(a), divided by (C) the Fully-Diluted Share Number.

     Section 2.6 No Further Ownership Rights in the Shares. All payments of the amounts specified in Section 2.2(a) or Section 2.2(b), as applicable, made upon surrender of Certificates for Shares in accordance with the terms hereof shall be deemed to have been made in full satisfaction of all rights pertaining to such Shares, and there shall be no further registration of transfers on the records of the Surviving Corporation of the Shares which were outstanding as

of the Closing. If, after the Closing, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article 2.

     Section 2.7 Shareholder Representative. Christopher D. Clapp is hereby appointed as the “ Shareholder Representative ”, whose appointment will be ratified by the shareholders of the Company prior to the Effective Time pursuant to the Accredited Shareholder Agreements and Letters of Transmittal and the Unaccredited Shareholder Agreements and Letters of Transmittal which are delivered prior to the Effective Time and whose appointment will also be ratified by the Unaccredited Shareholders and Eligible Stock Option Holders after the Effective Time pursuant to each Unaccredited Shareholder Agreement and Letter of Transmittal and each Optionholder Letter of Transmittal, respectively. The Shareholder Representative shall have the power and authority to act for all purposes under this Agreement on behalf of all of the Eligible Shareholders, Eligible Stock Option Holders and holders of Shares and Company Stock Options (except Dissenting Shareholders) who have not yet become Eligible Shareholders or Eligible Stock Option Holders. By delivery of his, her or its respective Accredited Shareholder Agreement and Letter of Transmittal, Unaccredited Shareholder Agreement and Letter of Transmittal, or Optionholder Letter of Transmittal, as applicable, each former shareholder of the Company and holder of a Company Stock Option shall be deemed at the Effective Time to have irrevocably appointed the Shareholder Representative as his, her or its attorney-in-fact and agent to act for such shareholder or holder of Company Stock Option within the scope of the authority given to the Shareholder Representative and in accordance with and pursuant to the other terms and conditions described in the attached Exhibit J and made a part hereof, including, without limitation, the authority to direct the Paying Agent to receive, invest, spend and distribute the portion of the Merger Consideration payable to the Paying Agent and the authority to direct the Indemnification Escrow Agent to receive, invest, spend and distribute the Escrowed Property pursuant to the Indemnification Escrow Agreement. All reasonable fees and expenses incurred by the Shareholder Representative in connection with this Agreement shall be borne by the Eligible Shareholders on a pro rata basis. The Indemnification Escrow Agent is authorized to reimburse the Shareholder Representative for any expenses of accountants, advisors and other experts, attorney’s fees, other professionals’ fees or any other fees, costs and expenses actually incurred by the Shareholder Representative in connection with defending, settling or satisfying any Actions or Orders that relate to the performance of the Shareholder Representative’s obligations when acting in a capacity as the Shareholder Representative (collectively, “ Costs and Fees ”) solely at the direction of the Shareholder Representative, without verification of the Costs and Fees, solely out of the Costs and Fees Escrow Amount. The Shareholder Representative shall only direct the Indemnification Escrow Agent to distribute the Costs and Fees to the Shareholder Representative in connection with Costs and Fees. Parent, Sub, the Surviving Corporation, Paying Agent and Indemnification Escrow Agent shall be entitled to rely on the written instructions of the Shareholder Representative and shall be protected from any liability of any kind for actions taken in reliance upon such written instructions.

     Section 2.8 Withholding Taxes . Each of the Paying Agent, the Company, Parent and the Surviving Corporation shall be entitled to deduct and withhold from all consideration payable pursuant to this Agreement such amounts as the Paying Agent, the Company, Parent or the Surviving Corporation is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), or under any applicable provision of Law. To the extent that amounts are so withheld, such amounts shall be

treated for all purposes of this Agreement as having been paid to the holder of Shares or Company Stock Options, as the case may be, in respect of which such deduction and withholding was made by the Paying Agent, the Company, Parent or the Surviving Corporation, respectively.

     Section 2.9 Further Action. At and after the Effective Time, the officers and directors of the Parent and the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of the Company and Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company and Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

Article 3. Representations And Warranties Of The Company

     The Company hereby represents and warrants to Parent and Sub as follows as of the Signing Date and as of the Closing Date:

     Section 3.1 Organization; Charter Documents.

     (a) Organization . The Company is a corporation duly organized and validly existing under the Laws of the State of Indiana, and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified or licensed to do business and is in good standing (where applicable) in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing has not had and would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. As used in this Agreement, the term “ Company Material Adverse Effect ” means (i) when used with reference to one or more events, changes, circumstances or effects, a material adverse effect on the business, operations, assets, liabilities, financial condition or prospects of the Company taken as a whole or (ii) the ability of the Company to consummate the Merger or any of the transactions contemplated hereby or to perform any of its obligations hereunder; provided, however, that none of the following shall constitute, shall give rise to or cause, directly or indirectly, or shall be considered in determining whether there has occurred, a Company Material Adverse Effect: events, changes, circumstances, developments or effects that arise out of or result from (i) economic, business or political factors generally affecting the economy or financial, banking or securities markets as a whole or the industries or markets in which the Company operates, except to the extent any such factor has a disproportionate effect on the Company relative to other Persons principally engaged in the same industry as the Company, or acts of war or terrorism, (ii) any change in Laws or GAAP or the interpretation thereof, (iii) any reaction of customers of the Company and Clients (including, without limitation, loss of existing or prospective customers or clients) arising out of the execution, announcement or consummation of the transactions contemplated by this Agreement or the identity of Parent, Sub or any of their respective affiliates, (iv) any action taken or process undertaken pursuant to or at the request of or with the consent of

Parent or Sub, (v) any action required to be taken under any Law, (vi) engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, (vii) any “act of God” including, but not limited to, weather, natural disasters and earthquakes, (viii) any failure by Company to meet any projections, budgets or estimates of revenues, earnings or any other financial or operational metric for any period ending on or after the Signing Date (for the avoidance of doubt, this clause (viii) shall not preclude Parent from taking the underlying case of any such failure into account in determining whether there has been a Company Material Adverse Effect), and (ix) any movement or change in the price per share of the Parent Stock on the Nasdaq Global Select Market.

     (b) Subsidiaries . The Company has no Subsidiaries and does not own or hold any equity interest of any kind in any other Person. As used in this Agreement, the term “ Subsidiary ” means, when used with reference to any entity, any corporation or other organization, whether incorporated or unincorporated, (i) of which such party or any other Subsidiary of such party is a general or managing partner or (ii) the outstanding voting securities or interests of which, having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization, is directly or indirectly owned or controlled by such entity or by any one or more of its Subsidiaries.

     (c) Charter Documents . The Company has delivered to Parent a true and correct copy of each of the articles of incorporation and by-laws of the Company, as amended to the Signing Date (collectively, the “ Company Charter Documents ”) and each such instrument is in full force and effect.

     Section 3.2 Capitalization of the Company.

     (a) Company Capitalization . The authorized capital stock of the Company consists of 1,200,000 common shares, $0.01 par value per share. As of the Signing Date, (i) 666,842 Shares were issued and outstanding and (ii) there were 176,640 outstanding Company Stock Options to purchase shares of Company common stock granted under the plans and agreements applicable to such Company Stock Options. Section 3.2(a) of the Company Disclosure Schedule lists (i) the name, address and state of residence (as set forth in the books and records of the Company) of each holder of record of Shares as of the Signing Date; (ii) the number of Shares held by each such Person and the certificate numbers therefor; and (iii) with respect to each holder of Company Stock Options, the number of Company Stock Options held by such Person, the date(s) of issuance or grant, the exercise price(s) of such Company Stock Options, whether such Company Stock Options are “incentive stock options” under the Code, and the address and state of residence of such holder. All outstanding Shares are, and all shares which may be issued pursuant to the plans and agreements applicable to the Company Stock Options will be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and non-assessable and not issued in violation of, nor subject to, preemptive rights or similar rights and were or will be issued in compliance with all applicable state and federal securities laws or pursuant to valid exemptions therefrom. Except as set forth above and as contemplated by this Agreement,

there are no outstanding (A) shares of capital stock or other voting securities of the Company, (B) securities of the Company convertible into or exchangeable or exercisable for shares of capital stock or voting securities of the Company, (C) options, warrants, restricted stock, restricted stock units, or other rights to acquire from the Company, and no preemptive or similar rights, subscriptions or other rights, convertible securities, agreements, arrangements or commitments of any character, relating to the capital stock or voting securities of the Company obligating the Company to issue, register, transfer or sell, any capital stock, voting securities or securities convertible into or exchangeable or exercisable for capital stock or voting securities of the Company or obligating the Company to grant, extend or enter into any such option, warrant, restricted stock units, subscription or other right, convertible security, agreement, arrangement or commitment or (D) no equity equivalents, interests in the ownership or earnings of the Company or other similar rights (the items in clauses (A), (B), (C) and (D) being referred to collectively as the “ Company Securities ”). Except as set forth on Section 3.2(a) of the Company Disclosure Schedule, the Company has never redeemed, repurchased or otherwise acquired any shares of its capital stock, nor does it have any obligation, commitments or arrangements to redeem, repurchase or otherwise acquire any of the Company Securities, including as a result of the transactions contemplated by this Agreement, or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person. Except for the (i) Voting Agreement and (ii) Shareholders Agreement dated as of July 6, 2000 among the Company’s shareholders, as amended (the “ Shareholders Agreement ”), which will terminate according to its terms without further need for action by the parties thereto upon the consummation of the Merger, there are no voting trusts or registration rights or other agreements or understandings to which the Company is a party with respect to the voting or disposition of the capital stock of the Company. The execution and delivery of this Agreement by the Company, and the consummation of the Merger, do not and will not contravene, breach, conflict with, constitute a violation of, or require any further action of any party under, the Shareholders Agreement.

     (b) Indebtedness . Section 3.2(b) of the Company Disclosure Schedule sets forth a complete and correct list, as of the Signing Date, of each Contract pursuant to which any Indebtedness of the Company is outstanding or may be incurred in an amount in excess of $25,000, together with the amount outstanding thereunder as of the Signing Date, which Indebtedness includes the Company’s credit facilities with National City Bank (now a subsidiary of The PNC Financial Services Group, Inc.), which shall be paid in full and terminated prior to the Closing. No Contract pursuant to which any Indebtedness of the Company is outstanding or may be incurred provides for the right to vote (or is convertible into, or exchangeable or exercisable for, securities having the right to vote) on any matters on which the shareholders of the Company may vote. As used in this Agreement, the term “ Contract ” means any agreement, contract, subcontract, lease, binding understanding, indenture, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan or legally binding commitment or undertaking of any nature (whether oral or in writing), as in effect as of the Signing Date. As used in this Agreement, the term “ Indebtedness ” means (i) indebtedness for borrowed money, whether secured or unsecured, (ii) any obligation evidenced by any note, bond, debenture or other debt security, (iii) obligations under conditional or installment sale or other title

retention Contracts relating to purchased property or services, (iv) capitalized lease obligations, (v) any outstanding letter of credit, performance bond or similar surety obligations, (vi) any interest, penalty, fees or expenses to the extent paid in respect of any of the foregoing and (vii) guarantees, endorsements or other contingent liabilities of any of the foregoing of another Person.

     (c) Final Distribution Schedule . Upon its delivery, the Final Distribution Schedule will be true, complete and current in all respects as of the Closing Date.

     Section 3.3 Corporate Authorization; Board and Shareholder Approval.

     (a) Corporate Authorization . Except for the approval of this Agreement and the Merger by a majority of all of the votes entitled to be cast by the Company’s shareholders on such matters (the “ Company Requisite Vote ”), the Company has all necessary corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby, have been duly and validly authorized by all necessary corporate action, except, with respect to the Merger, for the Company Requisite Vote. The Company Requisite Vote is the only vote of holders of any class or series of securities necessary to approve this Agreement and the Merger. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Sub, and the Company Requisite Vote, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar Laws affecting creditors rights generally from time to time in effect, and to general principles of equity good faith and fair dealing, regardless whether in a proceeding at equity or at Law).

     (b) Board and Shareholder Approval . The board of directors of the Company has unanimously (i) determined and declared that this Agreement and the Merger are fair to, advisable and in the best interests of the Company and its shareholders, (ii) adopted and approved this Agreement and the Merger pursuant to Section 23-1-40-3 of the IBCL, (iii) included in the Proxy Statement the recommendation of the board of directors that the shareholders of the Company vote in favor of the approval of this Agreement and the Merger, and (iv) directed that this Agreement and the Merger be submitted to the Company’s shareholders for approval. Shareholders of the Company holding at least seventy-five percent (75%) of the issued and outstanding Shares immediately prior to the Effective Time have entered into a Voting Agreement whereby they agreed to vote their shares in favor of this Agreement and the Merger pursuant to Section 23-1-40-3 of the IBCL.

     Section 3.4 Governmental Approvals. The execution, delivery and performance by the Company of this Agreement, and the consummation by the Company of the transactions contemplated hereby, require no action, permit, license, authorization, certification, consent, approval, concession or franchise by or in respect of, or filing with, any federal, state, or local

U.S. or foreign government, court, administrative agency, commission, arbitrator or other governmental or regulatory agency or authority (a “ Governmental Authority ”) other than the filing of the Articles of Merger with respect to the Merger with the Secretary of State of the State of Indiana and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business.

     Section 3.5 Non-Contravention . The execution, delivery and performance by the Company of this Agreement do not, and the consummation of the transactions contemplated hereby will not: (i) contravene, conflict with or violate the Company Charter Documents; (ii) subject to obtaining the Company Requisite Vote and obtaining all the consents, approvals and authorizations specified in clauses (i) and (ii) of Section 3.4, contravene or conflict with or constitute a violation of any provision of any federal, state, local or foreign law, statute, ordinance, rule, code, or regulation of any Governmental Authority (“ Law ”), or any outstanding order, writ, judgment, injunction, ruling, determination, award or decree by or with any Governmental Authority (“ Order ”) binding upon or applicable to the Company or by which any of their respective properties are bound or affected; (iii) subject to obtaining all the consents, approvals and authorizations specified or required to be specified in Section 3.5 of the Company Disclosure Schedule, constitute a default (or an event which with notice, the lapse of time or both would become a default) under or give rise to a right of termination, cancellation, modification or acceleration of any right or obligation of the Company, or cause increased liability or fees or to the loss of a material benefit or imposition of a penalty under (A) any Contract (including the Shareholders Agreement) or (B) any Company Permit; or (iv) result in the creation or imposition of any Liens. For purposes of this Agreement, the term “ Liens ” means, collectively, any liens, charges, security interests, options, claims, pledges or other material encumbrances on any asset of the Company; provided, however , that liens, charges, security interests, options, claims, pledges or other material encumbrances arising out of or relating to any of the following shall not constitute Liens for purposes of this Agreement: (1) mechanic’s, materialmen’s, carriers, warehousemen, landlords and similar liens that are individually and in the aggregate not material to the Company, taken as a whole, (2) liens, charges, security interests, claims or other encumbrances with respect to current Taxes not yet due and payable or due but not delinquent, (3) liens securing rental payments under capital lease arrangements, (4) liens, charges, security interests, options, claims, pledges or other encumbrances resulting from any acts or omissions of Parent, Sub or any of their affiliates or their respective representatives, (5) non-exclusive standard licenses related to the Company’s software products granted to customers arising in the ordinary course of business and (6) other liens, charges, security interests, options, claims, pledges or other encumbrances arising in the ordinary course of business and not incurred in connection with the borrowing of money or the financing of purchase price of property (which individually and in the aggregate are not material to the Company, taken as a whole).

     Section 3.6 Financial Statements; No Undisclosed Liabilities; Internal and Disclosure Controls; Accounts Receivable; Accounts Payable; Cash.

     (a) The Company has provided Parent with true, correct and complete copies of the following financial statements: audited balance sheets and statements of income, changes in shareholders’ equity, and cash flow as of and for the fiscal years ended December 31, 2007 and December 31, 2008 for the Company; and unaudited balance sheets and statements of income, changes in shareholders’ equity, and cash flow as of and

for the months ended March 31, 2009 for the Company (collectively, the “ Company Financials ”). Upon their delivery in accordance with Section 5.12, the Company shall have provided Parent with true, correct and complete copies of the Post-Signing Financial Statements.

     (b) The Company Financials and (upon their delivery) the Post-Signing Financial Statements: (i) complied as to form in all material respects with all applicable accounting requirements, (ii) were prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) and applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), and (iii) fairly presented in all material respects the financial condition of the Company as at the respective dates thereof and the results of the Company’s operations and cash flows for the periods indicated. The balance sheet of the Company as of December 31, 2008 is hereinafter referred to herein as the “ Company Balance Sheet ,” and December 31, 2008 is hereinafter referred to herein as the “ Company Balance Sheet Date ”. The balance sheet of the Company as of March 31, 2009 is hereinafter referred to herein as the “ Interim Balance Sheet ,” and March 31, 2009 is hereinafter referred to herein as the “ Interim Balance Sheet Date ”.

     (c) Except as set forth in Section 3.6(c) of the Company Disclosure Schedule, the Company does not have any liabilities or obligations that are required to be reflected on a balance sheet in accordance with GAAP except (i) liabilities or obligations disclosed or provided for in the Company Balance Sheet or the Interim Balance Sheet or the respective notes thereto and (ii) liabilities or obligations incurred in the ordinary course of business each with an individual value not to exceed $25,000.

     (d) The Company maintains accurate books and records reflecting the assets and liabilities of the Company’s business and maintains proper and adequate internal control over financial reporting which provide reasonable assurance that (i) the Company’s transactions are executed with management’s authorization; (ii) the Company’s transactions are recorded as necessary to permit preparation of the Company Financials and to maintain accountability for the Company’s assets; (iii) access to the Company’s assets is permitted only in accordance with management’s authorization; and (iv) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented with regard to the collection of accounts, notes and other receivables on a current and timely basis.

     (e) The accounts receivable shown on the Company Balance Sheet and Interim Balance Sheet arose in the ordinary course of business, consistent with past practice, represented bona fide claims against debtors for sales and other charges and have been collected or, to the Company’s knowledge, are collectible in the book amounts thereof, less an amount not in excess of the allowance for doubtful accounts provided for in the Company Balance Sheet or Interim Balance Sheet, as applicable. Allowances for doubtful accounts have been prepared in accordance with GAAP consistently applied and in accordance with the Company’s past practices and are sufficient to provide for any losses which may be sustained on realization of the receivables. The accounts receivable of the Company after the Interim Balance Sheet Date and before the Closing Date arose

in the ordinary course of business, consistent with past practices, represented bona fide claims against debtors for sales and other charges, and have been collected or, to the Company’s best knowledge, are collectible in the book amounts thereof, less allowances for doubtful accounts determined in accordance with GAAP consistently applied and the Company’s past practices which are or shall be sufficient to provide for any losses which may be sustained on realization of the receivables. To the knowledge of the Company, none of the accounts receivable of the Company is subject to any claim of offset, recoupment, setoff or counterclaim, and the Company has no knowledge of any specific facts or circumstances (whether asserted or unasserted) that could reasonably be expected to give rise to any such claim. No agreement for deduction or discount has been made with respect to any of such accounts receivable. Section 3.6(e) of the Company Disclosure Schedule sets forth an aging of the Company’s accounts receivable as of March 31, 2009.

     (f) Section 3.6(f) of the Company Disclosure Schedule sets forth an aging of the Company’s accounts payable and other current liabilities as of March 31, 2009. The Company’s accounts payable and other material obligations, including without limitation payroll and benefits, indebtedness, rent, lease and license obligations, vendor payables and Taxes, including amounts arising after March 31, 2009, are current and being paid in a manner that is consistent with past practice. The Company’s accounts payable and other current liabilities excluding deferred revenue as of the Closing Date will not, in the aggregate, exceed $2,000,000.

     (g) The cumulative Dividends or other distributions or payments paid or declared in respect of Shares by the Company on or after February 1, 2009, are in an aggregate amount equal to $2,000,526. All Dividends that have been declared or paid have been or will be paid out of legally available funds and have been or will be made in compliance with all Laws and Contracts. As of the Cutoff Time, the Closing Cash shall be as specified in the Final Distribution Schedule.

     Section 3.7 Absence of Certain Changes. Except as disclosed in Section 3.7 of the Company Disclosure Schedule or as contemplated by this Agreement, since the Company Balance Sheet Date, the business of the Company has been conducted in all material respects in the ordinary course of business consistent with past practice, and there has not been:

     (a) any change, development, event, condition, occurrence or effect with respect to the business of the Company that individually or in the aggregate has had or would reasonably be expected to have a Company Material Adverse Effect;

     (b) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of its capital stock (other than the Dividends) or any repurchase for value by the Company of any of its capital stock;

     (c) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for such capital stock;

     (d) (i) except in the ordinary course of business, consistent with past practice, any granting by the Company to any director or executive officer, officer, employee or affiliate of the Company of any increase in compensation including, but not limited to, any bonuses payable upon consummation of the Merger, (ii) any granting by the Company to any director or executive officer, officer, employee or affiliate of any increase in severance or termination pay, except as was required under any employment, severance or termination agreements set forth in Section 3.7(d) of the Company Disclosure Schedule, or (iii) any entry by the Company into, or any amendment of, any employment, severance or termination agreement with any director, executive officer, officer, employee or affiliate;

     (e) any change in accounting methods, principles or practices by the Company materially affecting the consolidated assets, liabilities or results of operations of the Company, except insofar as may have been required by a change in GAAP;

     (f) any elections with respect to Taxes by the Company or settlement or compromise by the Company of any Tax liability or refund;

     (g) any liability incurred other than in the ordinary course of business, consistent with past practice, or any borrowing of monies in excess of $50,000 in the aggregate;

     (h) any making of any loan, advance or capital contribution to, or investment in, any Person other than travel loans or advances made to employees in the ordinary course of business, consistent with past practice (which in no event exceeds $5,000 individually);

     (i) any Contract with respect to any acquisition, sale or transfer of any asset of the Company except (i) pursuant to the fiscal year 2009 capital budget approved by the Company’s board of directors, a copy of which is included in Section 3.7(i) of the Company Disclosure Schedule or (ii) purchase of assets for consideration less than or equal to $15,000 individually;

     (j) any material damage, destruction or loss, whether or not covered by insurance, affecting the Company’s assets, properties or business;

     (k) any relinquishment, termination or nonrenewal by the Company of any Contract, which has a value in excess of $15,000 individually;

     (l) any payment or discharge of any Lien or liability, which such Lien or liability was not shown on the Company Balance Sheet, other than in the ordinary course of business, consistent with past practice (which in no event exceeds $50,000 in the aggregate);

     (m) any sale, disposition, transfer or license to any Person of any rights to any Company Intellectual Property, other than grants of non-exclusive licenses in the ordinary course of business, or any acquisition or license from any Person of any

intellectual property or any sale, disposition, transfer or providing of any copy of any source code to any Person;

     (n) any deferral of the payment of any accounts payable other than in the ordinary course of business, consistent with past practice, or in an amount which is not material, or any discount, accommodation or other concession made other than in the ordinary course of business, consistent with past practice, in order to accelerate or induce the collection of any receivable;

     (o) any material change in the manner in which it extends discounts, credits or warranties to its customers or otherwise deals with its customers;

     (p) to the Company’s knowledge, any labor dispute or claim of unfair labor practices;

     (q) any termination of employment of any of its employees outside the ordinary course of business;

     (r) any modification or change to the right to exercise or convert, or to the exercise or purchase prices of, any of its Shares, Options or other equity securities, or any acceleration or other modification of (i) the vesting of or right to exercise any option, warrant or other right to purchase any of its Shares or other securities (other than with respect to the Company Stock Options in connection with the transactions contemplated by this Agreement) or (ii) the vesting or release of any of its Shares or other securities from any repurchase options or rights of refusal held by it or any other party or any other restrictions;

     (s) any amendment or change to the Company Charter Documents; or

     (t) any entry into, any Contract by the Company to do any of the things described in the preceding clauses (a) through (s) (other than negotiations and agreements with Parent).

     Section 3.8 Insurance. Copies of all material insurance policies applicable to the Company have been delivered to Parent. To the knowledge of the Company: (i) all such policies are in full force and effect and were in full force and effect during the periods of time such insurance policies are purported to be in effect; (ii) the Company is not in breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), and no event has occurred which, with notice or the lapse of time or both, would constitute such a breach or default, or permit termination or modification, under any policy; (iii) all premiums due thereon have been paid and the Company has not received any notice of cancellation, termination or non-renewal of any such policy; (iv) all such insurance polices are customary in scope and amount of coverage for the business of the Company; (v) all appropriate insurers under such insurance policies have been notified of all potentially insurable losses and pending litigation and legal matters, and no such insurer has informed the Company of any denial of coverage or reservation of rights thereto; and (vi) the Company has not received any written notice of cancellation of any material insurance policy maintained in favor of the Company nor has it been denied insurance coverage, in either case, in the past five years.

     Section 3.9 Real Property; Title to Assets.

     (a) Owned Real Property . The Company does not own fee simple title to any real property.

     (b) Real Property Leases . Section 3.9(b) of the Company Disclosure Schedule contains a true and complete list of all leases, subleases and other agreements under which the Company leases, subleases or occupies (whether as landlord, tenant, subtenant other occupancy arrangement) any real property (collectively, “ Real Property Leases ”). The Company has previously delivered to Parent true, correct and complete copies of all Real Property Leases. Each Real Property Lease constitutes the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms. With respect to each Real Property Lease, (i) there is no default or event which, with notice or lapse of time or both, would constitute a default on the part of Company, or, to the knowledge of the Company, any other party thereto and (ii) except as set forth in Section 3.9(b) of the Company Disclosure Schedule, the Company has not assigned, sublet or transferred its leasehold interest. The Company has a good and valid leasehold interest in each Real Property Lease free and clear of all Liens, except (i) as disclosed in Section 3.9(b) of the Company Disclosure Schedule, (ii) Liens for Taxes and general and special assessments not in default and payable without penalty or interest or which are being contested in good faith by appropriate proceedings and (iii) other liens which do not materially interfere with the Company’s use and enjoyment of such Real Property Lease or with the conduct of the business of the Company.

     (c) Personal Property . The Company owns or leases all material furniture, fixtures, equipment, operating supplies and other personal property (collectively, the “ Personal Property ”) necessary to carry on its businesses as now being conducted. The Personal Property is not subject to any Liens, except as set forth in Section 3.9(c) of the Company Disclosure Schedule and except Liens which do not materially interfere with the Company’s use and enjoyment of such Personal Property or with the conduct of the business of the Company.

     Section 3.10 Company Intellectual Property .

     (a) Company Intellectual Property. The term “ Company Intellectual Property ” means:

     (i) the names “Angel Learning” and all fictional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively, “ Marks ”);

     (ii) all patents, patent applications, and inventions and discoveries that may be patentable (collectively, “ Patents ”);

     (iii) all copyrights in both published and unpublished original works of authorship, whether registered or unregistered (collectively, “ Copyrights ”);

     (iv) all rights in mask works (collectively, “ Rights in Mask Works ”);

     (v) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints (collectively, “ Trade Secrets ”); and

     (vi) all URLs and web sites;

     in each of the foregoing cases, that are used or are proposed to be used in connection with the conduct of the business of the Company as currently conducted or as currently contractually committed to be conducted pursuant to a Company Material Contract or a Company Standard Agreement.

     (b) Agreements. Section 3.10(b) of the Company Disclosure Schedule contains a complete and accurate list and summary description (other than in the case of “click through” licenses or licenses for standard, off-the-shelf software generally available to retail customers for use on personal computers) of all Contracts relating to the Company Intellectual Property to which the Company is a party or by which the Company is bound (other than “free” or “open source” software, which is addressed in Section 3.10(i) below. Except for fees paid by customers of the Company and fees paid to licensors to the Company described in Section 3.10(b) of the Company Disclosure Schedule, the Company does not pay or receive royalties. The Company has paid all fees due under, and is not otherwise in default of, any Contract related to the Company Intellectual Property. The Company has provided to Parent a true and correct copy of each of the Contracts referenced in the immediately preceding sentence (other than “click through” licenses or licenses for standard, off-the-shelf software generally available to retail customers for use on personal computers). The Company is validly licensed to use all Company Intellectual Property in the manner used in the Company’s business pursuant to the licenses disclosed or required to be disclosed on Section 3.10(b) of the Company Disclosure Schedule. Except in connection with the HMH Litigation, there are no outstanding and, to the knowledge of the Company, no threatened disputes or disagreements with respect to any such agreement.

     (c) Know-How Necessary for the Business. The Company Intellectual Property includes all of the assets necessary for the operation of the Company’s business as it is currently conducted or as currently contractually committed to be conducted pursuant to a Company Material Contract or a Company Standard Agreement. Except as set forth in Section 3.10(c) of the Company Disclosure Schedule, the Company is the owner of all right, title, and interest in and to the Company Intellectual Property, free and clear of all Liens and other adverse claims, and has the right to use without payment to a third party all of the Company Intellectual Property. Except as set forth in Section 3.10(c) of the Company Disclosure Schedule, all information technology consultants of the Company have executed written Contracts with the Company that assign to the Company all rights arising during their engagement by the Company to any inventions, improvements, discoveries, copyrights or information relating to the business of the Company and the Subsidiary. No employee of the Company has entered into any Contract that restricts or limits in any way the scope or type of work in which the

employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than the Company.

     (d) Patents . The Company owns no Patents (other than discoveries which may be patentable). To the knowledge of the Company, there is no potentially interfering patent or patent application of any third party. None of the products or services manufactured, sold or provided, nor any process or know-how used, by the Company infringes or is alleged to infringe any patent or other proprietary right of any other Person.

     (e) Trademarks. Section 3.10(e) of the Company Disclosure Schedule contains a complete and accurate list and summary description of all Marks. The Company is the sole owner of all right, title, and interest in and to each of the Marks, free and clear of all Liens and other adverse claims. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications), are valid and enforceable, and are not subject to any maintenance fees or Taxes or actions falling due within ninety days after the Closing Date. No Mark has been or is now involved in any opposition, invalidation, or cancellation and, to the knowledge of the Company, no such action is Threatened with the respect to any of the Marks. No Mark is infringed or, to the knowledge of the Company, has been challenged or threatened in any way. None of the Marks used by the Company infringes or is alleged to infringe any trade name, trademark, or service mark of any third party.

     (f) Copyrights. Section 3.10(f) of the Company Disclosure Schedule contains a complete and accurate list and summary description of all registered Copyrights. The Company is the sole owner of all right, title, and interest in and to each of the Copyrights, free and clear of all Liens and other adverse claims. All the registered Copyrights are currently in compliance with formal legal requirements, are valid and enforceable, and are not subject to any maintenance fees or Taxes or actions falling due within ninety days after Closing Date. No Copyright is infringed or, to the knowledge of the Company, has been challenged or threatened in any way. None of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party or is an unauthorized derivative work based on the work of a third party.

     (g) Trade Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets, including requiring all professional and technical employees and other employees, contractors and advisors having access to valuable, non-public information of the Company to execute agreements under which such Persons are required to maintain the confidentiality of all such information of the Company.

     (h) Source Code. Except as set forth in Section 3.10(h) of the Company Disclosure Schedule, no Company source code has been delivered, licensed or made available to any escrow agent or other Person (other than employees or consultants which are bound by agreements substantially similar to the standard agreements of the Company regarding the protection of confidential or proprietary information) of the Company). Except as set forth in Section 3.10(h) of the Company Disclosure Schedule, the Company has no duty or obligation (whether present, contingent or otherwise) to deliver, license or make available any Company source code to any escrow agent or other Person. Section 3.10(h) of the Company Disclosure Schedule identifies each Contract pursuant to which the Company is or may become obligated (with or without the passage of time, the occurrence of certain events or otherwise) to provide Company source code to any Person.

     (i) Open Source. Section 3.10(i) of the Company Disclosure Schedule sets forth a list of all “free” or “open source” software (including, but not limited to software licensed under the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), or Com