10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-25375

VIGNETTE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	74-2769415
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1301 South MoPac Expressway

Austin, Texas 78746

(Address of principal executive offices)

(512) 741-4300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value

(Title of each class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer  ¨    Accelerated Filer  x    Non-Accelerated Filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of June 30, 2005, the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $327,698,775.

As of February 28, 2006, 29,743,727 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the 2006 Annual Meeting of Stockholders to be held May 26, 2006 are incorporated by reference in Part III of this Annual Report on Form 10-K.

VIGNETTE CORPORATION

ANNUAL REPORT ON FORM 10–K

For the year ended December 31, 2005

TABLE OF CONTENTS

			Page
Part I.
	Item 1.	Business	3
	Item 1A.	Risk Factors	12
	Item 1B.	Unresolved Staff Comments	25
	Item 2	Properties	25
	Item 3.	Legal Proceedings	26
	Item 4.	Submission of Matters to a Vote of Security Holders	27
Part II.
	Item 5.	Market for Registrant’s Common Stock and Related Stockholder Matters	27
	Item 6.	Selected Consolidated Financial Data	28
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	48
	Item 8.	Consolidated Financial Statements and Supplementary Data	49
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	49
	Item 9A.	Controls and Procedures	49
	Item 9B.	Other Information	50
Part III.
	Item 10.	Directors and Executive Officers of the Registrant	50
	Item 11.	Executive Compensation	51
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	51
	Item 13.	Certain Relationships and Related Transactions	52
	Item 14.	Principal Accountant Fees and Services	52
Part IV.
	Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	52
		Signatures	55

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FORWARD-LOOKING STATEMENTS

The statements contained in this Annual Report on Form 10-K that are not purely historical statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding our expectations, beliefs, hopes, intentions or strategies for the future. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this filing on Form 10-K to conform these statements to actual results. Factors that might cause or contribute to such a difference include, but are not limited to, those discussed in the section entitled “Risk Factors That May Affect Future Results” and the risks discussed in our other historical Securities and Exchange Commission filings.

We maintain a World Wide Web site at www.vignette.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our Web site as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Our Web site and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

Vignette is a trademark or registered trademark of Vignette Corporation in the United States and other countries. All other names are the trademarks or registered trademarks of their respective companies.

PART I.

ITEM 1. BUSINESS

Our History

Vignette was founded in 1995 and for the first several years, we focused exclusively on the market for managing and delivering content via the Web. As companies began to adopt the Web as a channel for business communication, the technical requirements and complexities of managing and delivering information via the Web grew. Companies began to focus on understanding the usefulness of specific pieces of information, or content, to customers in the context of Web-based applications. In addition, they began to integrate their other existing sources of content into these Web-based applications to create information-rich Web sites.

The Web evolved as an important tool for helping companies run their businesses more efficiently, and we responded by aligning our business strategy and product development efforts with this trend. In February 2000, we acquired DataSage, Inc., a leading provider of Web-based analytics and personalization software and in July 2000, we acquired OnDisplay, Inc., a leading provider of software for integrating business information and applications within an enterprise. The combination of our Web content management technology with the integration technology from the OnDisplay, Inc. acquisition and the analytics technology from the Datasage, Inc. acquisition enabled us to offer an industry-leading suite of technology, introduced in September 2001 as Vignette V6, for optimizing the management and use of Web content across an organization to deliver powerful Web-based applications. In 2002, we acquired assets of Revenio, that provided Vignette with dialog, which serves as a script for a compelling, personalized customer experience that unfolds for each individual.

The downturn in IT spending, generally, and the precipitous decline in spending for enterprise software, specifically, had a severe impact on our business from 2001 to 2003. Customers and prospects reduced their focus on broad Web-based initiatives and, as a result, our revenue declined dramatically. In the latter part of 2003 and in 2004 we began to see some stabilization in our served markets, and saw the interest in delivering critical business information via the Web as increasing. In 2005, we saw companies focused on growth and customer service. Companies expanded their focus from managing and leveraging

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Web content to contemplating the capture, management, sharing and delivery of all types of enterprise content including documents, records, audio, video, e-mail and other forms of information. IDC estimates that the Enterprise Content Management (ECM) market is growing at 14% compound growth rate and will exceed $4.1 billion by 2009. IDC estimates the Portal market is growing at 14% compound growth rate to $1.8 billion in 2009. IDC also estimates team collaborative applications represent a compound annual growth rate of 8.4%. (IDC Content Management includes content management, electronic records management, imaging, archiving, document management, digital or media asset management and Web content management).

We have significantly broadened our product offerings through internal development and acquisitions to better address the opportunity to capture, manage, share and deliver enterprise information. In December 2002, we introduced Vignette V7, the latest iteration of our flagship Web content management product. Also in December 2002, we acquired Epicentric, Inc., a leading provider of business portals for delivering information via the Web. In December 2003, we acquired Intraspect Software, Inc., a leading provider of collaboration software for allowing information-sharing and in March 2004, we acquired TOWER Technology Pty Limited, a leading provider of enterprise document and records management solutions. We have strengthened our product portfolio under the expanded Vignette V7 product family and now offer what we believe is the leading suite of ECM solutions. We deliver these solutions with the added benefit of platform independence and full support of the Java 2 Platform Enterprise Edition (J2EE^™) standards.

Overview

We believe we are well positioned to help companies integrate the management and delivery of information to drive revenue growth, operating efficiencies, and improved customer service. Our Web content management, collaboration, document and records management, portal and imaging and workflow technologies give organizations the capability to provide a personalized Web experience; integrate systems and information from inside and outside the organization; manage the lifecycle of enterprise information; and collaborate by supporting ad-hoc and process-based information sharing. Together, our products and expertise help companies harness the power of their information and the Web to deliver measurable improvements in business efficiency.

Web content management capabilities can manage how information is stored and can deliver it in the context of how it will be consumed. Collaboration capabilities provide a complete online environment for distributed networks of information workers while maintaining a group memory of intellectual property and work products. Our records and document capabilities enable capture, processing and archiving of virtually all types of information. Our portal helps organizations create, manage, personalize and deliver integrated composite applications that create a consistent user interface to Vignette content and document management products and other corporate repositories and applications. Our integration capability allows organizations to leverage content and processes from virtually any source or enterprise application and deploy objects for use with other applications. Interaction management helps improve communications with customers, prospects, employees and partners through ongoing dialogs that help respond to changing needs. Our imaging and workflow capabilities scan and index high volumes of images in a centralized or distributed production and automate business processes that move information and content through business workflows.

To meet the information technology needs of organizations of all sizes, our capabilities are developed using open technology standards. Our capabilities accelerate the time for organizations to recognize value by reaching new markets more quickly, and delivering software applications faster by using a set of comprehensive application services provided on a consistent standards-based platform. Our capabilities are adaptable, allowing organizations to configure the business solutions to meet their unique requirements.

Our products and capabilities are supported by our professional services organization, Vignette Professional Services™ (“VPS™”). VPS™ offers pre-packaged and custom services, along with documented best practices, to help organizations define their online business objectives and deploy their content management, portal, process, collaboration, integration and analysis applications. Our education,

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consulting and customer care teams give customers the benefit of our experience gained from thousands of customer implementations. We partner with a number of leading system integrators such as Accenture, Deloitte Consulting, BearingPoint, and Tata Consulting Services to implement our software for their clients. In many cases, we work in blended teams to jointly implement solutions. To ensure that we provide support to our customers on their chosen platform and infrastructure, we have long-standing relationships with key technology providers such as BEA Systems, Hewlett Packard, and Sun Microsystems.

In 2005, Vignette leveraged its ECM capabilities and added a solution focused on healthcare. The Vignette Healthcare ProFiciency Patient Record solution applies document management technology to patient records and healthcare administration applications. Clinicians are empowered to electronically access all patient encounter documents with clinical orders and results through the electronic medical record (EMR) system. Accounting and Billing can expedite claims processing with prescribed workflows. HIPAA regulations are satisfied through extensive security and functional audit trails. The Vignette Healthcare ProFiciency Patient Record solution helps reduce storage and retrieval costs, increases accessibility to the “complete” EMR to mitigate medical errors, respect patient privacy, and improve patient service.

Products

Our Web content management, collaboration, document and records management, imaging and workflow, portal, integration and interaction management products form the complete suite of enterprise content management solutions that enable organizations to rapidly build, manage and deploy information-based applications. Our solutions help our customers:

• Increase their return on investment through the cost benefits of an integrated solution from a single vendor;

• Derive value from our unique ability to use and manage information where it is currently stored, regardless of format and repository;

• Automate important document-based processes such as claims processing, medical records, and loan origination that drive business efficiencies and deliver measurable returns on investment.

• Create an information architecture for compliance initiatives by managing processes, creating organizational visibility, archiving information with appropriate access and creating and disposing of records.

• Unify the management of applications, information and processes across the enterprise through integration with current business applications; and

• Lower the cost of ownership by leveraging implemented infrastructures and accepted market standards.

We help organizations combine a comprehensive understanding of content assets across the business with Web applications that actively manage and deliver the right information and processes to the right person at the right time, regardless of source.

To address the particular requirements of our customers, we deliver our products in various suites: Vignette ECM Suite and a suite that includes Vignette Portal, Content Management and Collaboration. Additionally, we allow organizations the flexibility to purchase products individually. Our produce offerings are grouped into seven application services categories: Web content management, collaboration, document and records management, portal, integration, interaction management and imaging and workflow. Organizations may purchase products individually from these seven categories or pre-bundled into suites that meet their specific needs. Following is a listing of our product offerings.

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Web Content Management includes library services, content type modeling, workflow, taxonomy, and search.

•Vignette Content Management manages content, sites, content types and objects and the deployment and delivery of content. It also functions as a task inbox and workflow manager and includes a roles-based management console and essential library services. The Vignette Command Center, the core of Vignette Content Management, is an intuitive and configurable roles-based management console that enables business and technical users to manage virtually all of their content management objectives through one interface. Once integrated with business processes, users can share knowledge and collaborate on virtually any tasks, using e-mail, desktop applications and Web-based workspaces. We also offer a variety of additional specialized products to enhance Vignette Content Management.

Collaboration enhances the capability of sharing knowledge for teams using workspaces.

•Vignette Collaboration is an enterprise solution for business users to create workspaces, where teams can share, capture and search information. Vignette Collaboration provides secure online workspaces where extended business teams can work together more effectively. This helps organizations to reduce the risk of knowledge being lost and improves business relationships.

•Vignette Project Delivery provides online workspaces where extended project teams can work together to better serve and collaborate with key project teams. This solution offers out-of–the-box templates for project collaboration and can capture project assets, expertise and best practices. Using Vignette Project Delivery can help organizations increase the speed and repeatability of their projects and can help improve the productivity of internal teams.

•Vignette Strategic Account Management is an enterprise solution for business users to create account workspaces and allows account teams to better serve key accounts by effectively capturing, sharing, and searching account-related information and knowledge. This allows organizations to reduce the account team communication cycles and captures valuable account communication, allowing organizations to improve customer satisfaction, and productivity of internal teamwork while reducing the costs of account management.

Document and records management solutions are also available to expand the ability to capture, manage, utilize, retain and dispose of an organization’s enterprise content. In addition, imaging and transactional “Web capture” functionality can effectively promote transitioning paper-based processes to digital processes, streamlining high-volume transaction processes and facilitating the centralized capture, storage and archival of an organization’s business content.

•Vignette Records & Documents™ is an enterprise document and records management solution that manages fixed assets, automates document based workflows, manages casework through a process, and implements important archival and disposition of records. Vignette Records & Documents facilitates risk and compliance management, and implements important document management capabilities including metadata search, QBE, indexed full text search, check in/out and ACL security .

•Vignette WebCapture™ is a secure Web transaction capture and playback risk management solution that archives transactions on a customer’s site and creates a permanent record of them for dispute resolution.

Imaging and workflow allows a user to scan and index high volume imaging and workflow that promotes faster, more cost-efficient processing, access security, as well as personalized delivery of electronic information.

•Vignette IDM™ is an integrated document management, archive and retrieval solution addressing document capture, production imaging supporting forms OCR/ICR, high-performance image viewing, printing, and storage management; business process automation and workflow supporting case management, BPM and Web services; output report management for capturing, mining, linking, distribution, and statement presentment; and COLD storage and records management supporting electronic and physical records, retention management, e-mail archiving and regulatory compliance.

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Portal provides both a highly functional portal framework and a user-friendly development environment for assembling portlets.

•Vignette Portal is an adaptable, scalable, open-portal solution that enables organizations to rapidly build and deliver highly customizable applications for their organization across audiences such as employees, partners and customers. We also offer a variety of additional specialized products to enhance our portal.

• Vignette Builder enables quick creation, assembly and customization of applications, empowering organizations to respond rapidly to changing business needs. Wizard-based interfaces accelerate the development and deployment of a wide range of critical applications that automatically integrate into the customer’s collaborative portal environment.

Integration capabilities provide unique capabilities to connect a broad range of unstructured, semi-structured and structured data (including transactional) sources.

•Vignette Business Integration Studio is a graphical application integration environment for collecting and integrating content and applications from a wide selection of sources with minimal coding. Vignette Business Integration Studio allows users to readily and dynamically map content from disparate schemas, remote repositories and applications to an aggregated destination. We offer over fifty pre-built application and technology adapters that can be used by Vignette Business Integration Studio to integrate with enterprise, desktop, database and proprietary content sources existing throughout an enterprise. Adapters are plug-ins to Vignette Business Integration Studio that provide prepackaged integration capabilities to common technology applications.

Interaction Management helps improve communications with stakeholders such as customers, prospects, employees and partners. It requires having ongoing dialogs with these stakeholders over a period of time. Ongoing dialogs help you learn about, adapt to, and respond to stakeholders’ changing needs and preferences so that you can lead your stakeholders toward a desired outcome.

•Vignette Dialog delivers highly personalized content to the intended recipients at the designated time through online and offline touch points. A simple, graphical environment allows business users to create planned, multi-step conversations that can be triggered by virtually any type of event, including Web site registration, completion of a purchase, event attendance or a customer service call.

Open Architecture

We have built an open and comprehensive platform and provide support for major industry standard platforms, including both Java 2 Enterprise Edition (J2EE™) and Microsoft .NET. Our applications support various combinations of operating systems, directory servers, Web servers, application servers and databases. We refer to this combination of operating systems, directory servers, Web servers, application servers and databases as our supported platform matrix. A representative, but not exhaustive, list of supported platforms includes Sun Solaris, IBM AIX and Microsoft Windows operating systems, IBM and SunOne Directory Servers, Microsoft and IBM Web servers, IBM WebSphere and BEA WebLogic application servers and Oracle, IBM DB2 and Microsoft SQLServer databases. Representative presentation layer support includes Vignette Portal’s own Web delivery framework as well as JavaServer Pages (JSP), ActiveServer Pages (ASP) and XML with style sheets. Our open architecture permits easy integration and use of third-party development environments, layout and design tools, authoring tools and systems management environments.

Services

We provide services to help define online business objectives and to develop and deliver products and solutions. Our consulting, education and customer care services are based on best practices, methodologies and tools developed from experience. Our services are designed to reduce time to deployment, mitigate risk and achieve greater return on our customers’ software investment.

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Vignette Professional Services (VPS™) offers consulting and education services to help customers identify their strategic application objectives, design content, portal, process, collaboration, integration and analysis applications and deliver solutions using our products. Our services center on the Vignette Solution Methodology. This established framework allows customers and partners to leverage best practices to plan, build and maintain portal, content, integration, collaboration, process, and analysis solutions. VPS™ provides services that are tailored to the individual customer through either “Velocity Services,” a set of packaged service offerings, or customized services. VPS™ also partners with consulting partners to provide best-of- class services needed to create enterprise content management applications designed to meet customers’ business objectives. VPS generally sells their services under time-and-materials agreements.

Our Customer Care, Maintenance and Support Services organizations are committed to our customers’ ongoing business success. Customer Care services include a combination of account management and global technical support offerings that are tailored to meet customers’ specific needs. Vignette Global Support provides optional 24x7 access to skilled technical engineers and flexible, easy-to-use telephone and Web resources that can provide our customers with timely, effective assistance.

Strategy

Our objective is to maintain and extend our leadership position as a global provider of enterprise content management applications. Our solutions enable organizations to harness the power of information and the Web to deliver measurable improvements in business efficiency. We will continue to focus on delivering sustained revenue and profitable growth, expanding our customer base of global 2000 organizations, extending our technology leadership through investment in research and development, expanding our global sales capabilities and building upon our strategic alliances with leading companies.

Strategic Alliances

We establish strategic alliances to assist us in the marketing, selling, distribution, and development of our enterprise content management applications and solutions. This approach is intended to increase the number of qualified personnel available to perform application design and development services for our customers, and to provide additional marketing and technical expertise, and increased channels of distribution in certain vertical industry segments. In addition, our focus on vertical and horizontal solution offerings increases the importance of our relationships with technology partners, strategic consulting partners and other channels of distribution to the market.

We have established partnerships to offer solutions based on our technology offerings and have extended our sales and implementation services reach with leading systems integrators such as Accenture, Deloitte Consulting, BearingPoint, and Tata Consulting Services. We have also established strategic alliances with technology leaders such as BEA Systems, Hewlett-Packard, and Sun Microsystems.

We intend to invest in our existing partner relationships as well as to form new partnerships with other market-leading systems integrators, technology vendors and distribution channels.

Business Combinations

The following is a listing of our three most recent acquisitions:

TOWER Technology Pty Limited. Effective March 1, 2004, we acquired TOWER Technology Pty Limited (“Tower Technology”), a leading provider of enterprise document and records management solutions. We paid approximately $125.0 million for Tower Technology, consisting of approximately $49.8 million in cash and 27.2 million shares of common stock for all of the issued and outstanding shares of Tower Technology.

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Intraspect Software, Inc. Effective December 11, 2003, we acquired all of the outstanding stock of Intraspect Software, Inc. (“Intraspect”), a leading provider of collaboration software, in exchange for $10.0 million in cash and approximately 4.2 million shares of stock. The total purchase price, including transaction costs of $0.5 million, was approximately $20.4 million.

Epicentric, Inc. Effective December 3, 2002, we acquired all of the outstanding stock of Epicentric, Inc. (“Epicentric”), a leading provider of business portal solutions, in exchange for $26.0 million in cash. The total purchase price, including transaction costs of $3.1 million, was $29.1 million.

In connection with each of our acquisitions, we incurred one-time acquisition costs and integration-related charges. Such charges relate to product integration, cross-training of employees, and other merger-related items. In four of our acquisitions, a portion of the purchase price was allocated to in-process research and development and was expensed upon the consummation of the respective transaction. These related acquisition, integration and in-process research and development charges totaled approximately $0.3 million, $7.6 million, and $4.3 million during 2005, 2004, and 2003, respectively.

Customers

As of December 31, 2005, we had served over 1,700 end-user customers. Our customer list includes successful organizations in the entertainment, financial services, government, healthcare, high technology, higher education, life sciences, manufacturing, new media and publishing, retail, telecom and travel industries.

Competition

The market for our products is intensely competitive, subject to rapid technological change and is significantly affected by new product introductions and other market activities of industry participants. We expect competition to persist and intensify in the future. We have three primary sources of competition: in-house development efforts by potential customers or partners; other vendors of software that directly address enterprise content management solutions; and developers of point solution software that address only certain technology components of the solution set that we provide (e.g., Web content management, collaboration, document and records management, portal, integration, interaction management and imaging and workflow.

Many of our competitors have longer operating histories and significantly greater financial, technical, marketing and other resources than we do and thus may be able to respond more quickly to new or changing opportunities, technologies and customer requirements. Also, many current and potential competitors have wider name recognition and more extensive customer bases that could be leveraged, thereby gaining market share to our detriment. Such competitors may be able to undertake more extensive promotional activities, adopt more aggressive pricing policies, and offer more attractive terms to purchasers than we can. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to enhance their products. Accordingly, it is possible that new competitors or alliances among competitors may emerge and rapidly acquire significant market share.

Such competition could materially and adversely affect our ability to obtain revenues from either license or service fees from new or existing customers on terms favorable to us. Further, competitive pressures may require us to reduce the price of our software. In either case, our business, operating results and financial condition would be materially and adversely affected. There can be no assurance that we will be able to compete successfully with existing or new competitors or that competition will not have a material adverse effect on our business, financial condition and operating results. See “Risk Factors that May Affect Future Results—Risks Related to Our Business—We Face Intense Competition from Other Software Companies, Which Could Make it Difficult to Compete Successfully.”

Research and Development

We have made substantial investments in research and development through both internal development and technology acquisitions. Although we plan to continue to evaluate externally developed

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technologies for integration into our product lines, we expect that most enhancements to existing and new products will be developed internally. We have recently moved to a model where approximately 50 percent of our research and development operations will be maintained in India. There, third-party developers are acting as an extension of our primary development and information technology operations in Austin, Texas and Sydney, Australia. We expect this model to help us achieve significant efficiencies, including reduced operational costs and permit an around-the-clock development cycle. See “Risk Factors that May Affect Future Results—Risks Related to Our Business—Our Business May Become Increasingly Susceptible to Numerous Risks Associated with International Operations.”

The majority of our research and development activity has been directed towards future extensions to our family of products. This development consists primarily of adding new competitive product features and additional tools and products.

Research and development expenditures, excluding acquired in-process research and development charges, for 2005, 2004 and 2003 were approximately $33.2 million, $40.2 million, and $39.9 million respectively. We expect that we will continue to commit significant resources to research and development in the future. Substantially all of our research and development costs have been expensed as incurred.

The market for our products and services is characterized by rapid technological change, frequent new product introductions and enhancements, evolving industry standards, and rapidly changing customer requirements. The introduction of products incorporating new technologies and the emergence of new industry standards could render existing products obsolete and unmarketable. While we believe we invest appropriate resources in our research and development efforts, our overall spending has been reduced as part of our focus on expense management. These reductions may impair our ability to maintain technology leadership. Our future success will depend in part on our ability to anticipate changes, enhance our current products, develop and introduce new products that keep pace with technological advancements and address the increasingly sophisticated needs of our customers. See “Risk Factors that May Affect Future Results—Risks Related to Our Business—If We are Unable to Meet the Rapid Changes in Software Technology, Our Existing Products Could Become Obsolete.”

As a part of Vignette’s cost reduction efforts in research and development, we have shifted an increased percentage of our development efforts offshore to our Global Development Center in Hyderabad, India. Although this center is being structured and operated properly, there are risks inherent to offshoring, risks inherent to outsourcing, and risks inherent to operating a team and facility in India. See “Risk Factors that May Affect Future Results—Risks Related to our Business— We Use a Third-Party Service Provider in India for a Significant Portion of Our Research and Development Operations and, If We Are Unable to Manage Our Outsourcing Relationship or if We Are Unable to Use Such a Provider, Our Business Could Be Adversely Affected.”

Sales and Marketing

We market our products primarily through our direct sales force as well as through indirect sales channel with systems integrators, value-added resellers and original equipment manufacturers. We generate leads from a variety of sources, including businesses seeking partners to develop enterprise content management applications. Initial sales activities typically include a demonstration of our product capabilities followed by one or more detailed technical reviews. As of December 31, 2005, the direct sales force consisted of 187 sales executives and related support personnel.

We will continue to establish partnerships with major industry vendors and strategically selected regional partners that will add value to our products and expand distribution opportunities.

We use a variety of marketing programs to build market awareness of our brand name, our products, and Vignette as well as to attract potential customers for our products. A broad mix of programs are used to accomplish these goals, including market research, product and strategy updates with industry analysts, public relations activities, advertising, direct marketing and relationship marketing programs, seminars,

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customer events, user group meetings, trade shows and speaking engagements. Our marketing organization also produces marketing materials in support of sales to prospective customers that include brochures, data sheets, white papers, presentations and demonstrations.

Proprietary Rights and Licensing

Our success and ability to compete is dependent on our ability to develop and maintain the proprietary aspects of our technology and operate without infringing on the proprietary rights of others. We rely on a combination of patent, trademark, trade secret and copyright laws and contractual restrictions to protect the proprietary aspects of our technology. These legal protections afford only limited protection for our technology. We presently own twelve (12) patents and have a number of patent applications pending in the United States. We have seventeen (17) registered trademarks in the United States, two (2) pending trademark applications in the United States, seventy-two (72) registered trademarks in foreign countries, and seventeen (17) pending trademark applications in foreign countries. We seek to protect our source code for our software, documentation and other written materials under trade secret and copyright laws. We license our software pursuant to signed license or “shrink-wrap” agreements, which impose certain restrictions on the licensee’s ability to utilize the software. Finally, we seek to avoid disclosure of our intellectual property by requiring employees and consultants with access to our proprietary information to execute confidentiality agreements with us and by restricting access to our source code. Due to rapid technological change, we believe that factors such as the technological and creative skills of our personnel, new product developments and enhancements to existing products are more important than the various legal protections of our technology to establishing and maintaining a technology leadership position.

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Policing unauthorized use of our products is difficult and while we are unable to determine the extent to which piracy of our software exists, software piracy can be expected to be a persistent problem. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. However, the laws of many countries do not protect our proprietary rights to as great an extent as do the laws of the United States. Any such resulting litigation could result in substantial costs and diversion of resources and could have a material adverse effect on our business, operating results and financial condition. There can be no assurance that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop similar technology. Any failure by us to meaningfully protect our property could have a material adverse effect on our business, operating results and financial condition.

To date, we have not been notified of any material infringement by our products of the proprietary rights of third parties, but there can be no assurance that third parties will not claim infringement with respect to our current or future products. We expect that developers of commercial software products will increasingly be subject to infringement claims as the number of products and competitors in our industry segment grows and as the functionality of products in different segments of the software industry increasingly overlaps. Any such claims, with or without merit, could be time-consuming to defend, result in costly litigation, divert management’s attention and resources, cause product shipment delays or require us to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all. A successful claim of product infringement against us and our failure or inability to license the infringed technology or develop or license technology with comparable functionality could have a material adverse effect on our business, financial condition and operating results. See “Risk Factors that May Affect Future Results—Risks Related to Our Business—Our Business is Based on Our Intellectual Property and We Could Incur Substantial Costs Defending Our Intellectual Property from Infringement or a Claim of Infringement.”

We include certain third-party software in our products. This third-party software may not continue to be available on commercially reasonable terms. To the extent we could not maintain licenses to some or all of this third-party software, shipments of our products could be delayed until equivalent software could be developed or licensed and integrated into our products, which could materially adversely affect our business, operating results and financial condition.

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Employees

As of December 31, 2005, we had 738 employees, including 130 in research and development, 227 in sales and marketing, 289 in professional services and customer support, and 92 in finance and administration. Our future success will depend in part on our ability to attract, retain and motivate highly qualified technical and management personnel, for whom competition is intense. From time to time, we also employ independent contractors to support our professional services, product development, sales, marketing and finance organizations. We also outsource certain development, including product development and quality assurance. Our employees are not represented by any collective bargaining unit, and we have never experienced a work stoppage. We believe our relations with our employees are good.

ITEM 1A. RISK FACTORS

You should carefully consider the following risks before making an investment decision. The risks described below are not the only ones that we face. Our business, operating results or financial condition could be materially adversely affected by any of the following risks. The trading price of our common stock could decline due to any of these risks, and you as an investor may lose all or part of your investment. You should also refer to the other information set forth in this report, including our consolidated financial statements and the related notes.

Various sections of this Form 10-K contain forward-looking statements that involve risks and uncertainties. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the section entitled “Risk Factors” and elsewhere in this Form 10-K. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Risks Related to Our Business

We Have Returned to Profitability but May not be Able to Sustain Consistent Profitability

Although we recorded a profit in fiscal year 2005, we cannot be certain that we will generate sufficient revenues to maintain profitability. If we do maintain profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis in the future. To achieve and sustain profitable operations and positive cash flows, we must increase our license and support services revenues. If our revenues do not grow at a rate greater than expenses required to fund our continuing operations, we will not be able to maintain the profitability recorded in fiscal year 2005, which could cause the price of our common stock to decline.

We Expect Our Quarterly Revenues and Operating Results to Fluctuate

Our revenues and operating results have varied significantly from quarter to quarter in the past and we expect that our operating results will continue to vary significantly from quarter to quarter. A number of factors are likely to cause these variations, including:

• demand for our products and services;

• the timing of sales of our products and services;

• the timing of customer orders and product implementations;

• seasonal fluctuations in information technology purchasing;

• unexpected delays in introducing new products and services;

• increased expenses, whether related to sales and marketing, product development, product migration and customer support, or administration;

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• changes in the rapidly evolving market for Web-based applications;

• the mix of product license and services revenue, as well as the mix of products licensed;

• the mix of services provided and whether services are provided by our own staff or third-party contractors;

• the mix of domestic and international sales;

• difficulties in collecting accounts receivable;

• costs related to possible acquisitions of technology or businesses;

• global events, including terrorist activities, military operations and widespread epidemics;

• the general economic climate; and

• changes to our licensing and pricing model.

• difficulty in developing and maintaining an indirect sales channel.

Accordingly, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Investors should not rely on the results of one quarter as an indication of future performance.

We will continue to invest in our research and development, sales and marketing, professional services and general and administrative organizations. We expect such overall spending, in absolute dollars, will increase in future periods, particularly given our recent acquisitions. If our revenue expectations are not achieved, our business, operating results or financial condition could be materially adversely affected and net losses in a given quarter would be greater than expected.

Our Revenue For a Particular Period is Difficult to Forecast, and a Shortfall in Revenue Would Harm Our Operating Results

As a result of the evolving nature of the market in which we compete, our revenue, license bookings, and earnings are difficult to forecast and are likely to fluctuate from quarter to quarter. We plan our operating expense based on our historical results, and in part, on future revenue projections. Most of our expenses are fixed in the short term and we may not be able to quickly reduce spending if our revenues are lower than we had forecasted. Our ability to accurately forecast our quarterly revenue is limited because our software products have a long sales cycle that makes it difficult to predict the quarter in which sales will occur. We would expect our business, operating results and financial condition to be materially adversely affected if our revenues do not meet our projections and that net losses in a given quarter would be greater than expected.

We Use a Third-Party Service Provider in India for a Significant Portion of Our Research and Development Operations and, If We Are Unable to Manage Our Outsourcing Relationship or if We Are Unable to Use Such a Provider, Our Business Could Be Adversely Affected

We are currently using a third-party service provider in India to supply approximately half of our research and development operations. As other software companies have done and are continuing to do, we may continue to allocate more development and IT resources to Indian third parties, and we may expand our own operational capabilities in India, with the expectation of achieving significant efficiencies including reduced operational costs and an around-the-clock development cycle. If we are unable to successfully manage our relationship with the third-party service provider, we will not be able to achieve such efficiencies and our business operations could be harmed.

In addition, although to date, the dispute between India and Pakistan involving the Kashmir region and the incidents of terrorism in India have not adversely affected our ability to utilize a third-party service provider in India, such disputes and acts of terrorism could potentially affect our ability to obtain research and development operations from third-party providers. Should we be unable to use a third-party service provider in India for a portion of our research and development in the future, we believe that our business could be adversely affected.

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Our Business May Become Increasingly Susceptible to Numerous Risks Associated with International Operations

International operations are generally subject to a number of risks, including:

• expenses associated with customizing products for foreign countries;

• protectionist laws and business practices that favor local competition;

• changes in jurisdictional tax laws including laws regulating intercompany transactions;

• dependence on local vendors;

• multiple, conflicting and changing governmental laws and regulations;

• longer sales cycles;

• difficulties in collecting accounts receivable;

• seasonality of operations;

• difficulties in staffing and managing foreign operations;

• the need to localize our products;

• licenses, tariffs, and other trade barriers;

• loss of proprietary information due to piracy, misappropriation or weaker laws regarding intellectual property protection;

• foreign currency exchange rate fluctuations; and

• political and economic instability.

The acquisition of Tower Technology and our recent consolidation of product development facilities to overseas labor markets substantially increase our international operations. Rapid and complete knowledge transfer and successful retention of key personnel is essential to our plan to consolidate product development facilities and transfer positions to labor markets with lower cost structures.

We recorded 39% and 38% of our total revenue for the years ended December 31, 2005 and 2004, respectively, through licenses and services sold to customers located outside of the United States. We expect international revenue to remain a large percentage of total revenue and we believe that we must continue to expand our international sales activities to be successful. Historically, a majority of our international revenues and costs have been denominated in foreign currencies, and we expect future international revenues and costs will be denominated in foreign currencies. Our international sales growth will be limited if we are unable to establish appropriate foreign operations, expand international sales channel management and support organizations, hire additional personnel, customize products for local markets, develop relationships with international service providers and establish relationships with additional distributors and third-party integrators. In that case, our business, operating results and financial condition could be materially adversely affected. Even if we are able to successfully expand international operations, we cannot be certain that we will be able to maintain or increase international market demand for our products.

In the third quarter of 2004, we adopted a foreign exchange policy to reduce our exposure to significant foreign currency fluctuations. We utilize foreign currency forward contracts to hedge foreign currency-denominated payables and receivables. To date, we have not hedged forecasted transactions or firm commitments denominated in foreign currencies. Gains and losses on hedging contracts are reflected currently in other income and expense. We typically limit the duration of our foreign currency forward contracts to 90 days. We do not invest in contracts for speculative purposes.

We Must Overcome Significant Challenges in Integrating Businesses Operations and Product Offerings to Realize the Benefits of our Business Combinations

As part of our overall strategy, we have acquired or invested in, complementary companies, products, and technologies. Risks commonly associated with such transactions include:

• the potential difficulties of integrating international and domestic operations;

• the potential disruption of our ongoing business and diversion of management resources;

• the possibility that the business cultures will not be compatible;

• the difficulty of incorporating acquired technology and rights into our products and services;

• unanticipated expenses related to integration of operations;

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• the impairment of relationships with employees and customers as a result of any integration of new personnel;

• potential unknown liabilities associated with the acquired business and technology;

• costs and delays in implementing common systems and procedures, including financial accounting systems and customer information systems; and

• potential inability to retain, integrate and motivate key management, marketing, technical sales and customer support personnel.

For such transactions to achieve their anticipated benefits, we must successfully combine and integrate products in a timely manner. Integrating can be a complex, time-consuming and expensive process and may result in revenue disruption and operational difficulties if not completed in a timely and efficient manner. We may be required to spend additional time or money on integration that would otherwise be spent on developing our business or on other matters. If we do not integrate our operations and technology smoothly or if management spends too much time on integration issues, it could harm our business, financial condition and results of operations and diminish the benefits of the acquisition as well as harm our content management business.

Prior to the acquisitions, each company operated independently, each with its own business, business culture, markets, clients, employees and systems. Following the acquisitions, we must operate as a combined organization, utilizing common information communication systems, operating procedures, financial controls and human resource practices, including benefits, training and professional development programs. There may be substantial difficulties, costs and delays involved in the integration. There can be no assurance that we will succeed in addressing these risks or any other problems encountered in connection with the acquisition.

We Must Succeed in the Portal, Collaboration and Content Management Market as Well as the Enterprise Content Management and the Document and Records Management Markets if We Are to Realize the Expected Benefits of our product Strategy and Business Combinations.

Our long-term strategic plan depends upon the successful development and introduction of products and solutions that address the needs of the portal, collaboration and content management market as well as the enterprise content management and the document and records management markets. For us to succeed in these markets, we must align strategies and objectives and focus a significant portion of our resources towards serving this market.

Our success in these new markets will depend on several factors, many of which are outside our control including:

• continued growth of the portal, collaboration and content management market;

• continued growth of the enterprise content management and document and records management markets;

• deployment of the combined company’s products by enterprises; and

• barriers to entry for the emergence of substitute technologies and products.

If we are unable to succeed in these markets, our business may be harmed and we may be prevented from realizing the anticipated benefits of our business strategy and our acquisitions.

Acquisitions, Including Our Acquisition of Tower TechnologyCould Be Difficult to Integrate, Disrupt Our Business, Dilute Stockholder Value and Adversely Affect Our Operating Results

The Company will continue to consider strategic acquisitions. We may acquire other businesses in the future, which would complicate our management tasks. We may need to integrate widely dispersed operations that have different and unfamiliar corporate cultures. These integration efforts may not succeed or may distract management’s attention from existing business operations. Failure to successfully integrate acquisitions could seriously harm our business. Also, our existing stockholders would experience dilution if we financed subsequent acquisitions by issuing equity securities. We completed our acquisition of Tower Technology in March 2004. Failure to successfully address the risks associated with this acquisition could

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harm our ability to fully integrate and market products based on the acquired technology. We may discover liabilities and risks associated with this acquisition that were not discovered in our due diligence prior to signing the respective definitive merger agreements. Although, in each acquisition, a portion of the purchase price was placed in escrow to cover such liabilities, it is possible that the actual amounts required to cover such liabilities will exceed the escrow amount.

The Market Price of Our Common Stock May Decline as a Result of Future Acquisitions

The market price of our common stock could decline as a result of future acquisitions, based on the occurrence of a number of events, including:

• the failure to successfully integrate products;

• delays or failure in the integration of technology;

• the belief that we have not realized the perceived benefits of the acquisitions in a timely manner or at all;

• the issuance of our shares to the acquired company’s shareholders; and

• the potential negative effect of the acquisition on our operating results, including the impact of amortization of intangible assets, other than goodwill, created by the acquisition and claims that are not covered by the escrow provisions.

Our Quarterly Results May Depend on a Small Number of Large Orders

In previous quarters, we derived a significant portion of our software license revenues from a small number of relatively large orders. Our operating results could be materially adversely affected if we are unable to complete a significant order that we expected to complete in a specific quarter.

If We Experienced a Product Liability Claim, We Could Incur Substantial Litigation Costs

Since our customers use our products for mission-critical applications, errors, defects or other performance problems could result in financial or other damages to our customers. They could seek damages for losses from us, which, if successful, could have a material adverse effect on our business, operating results and financial condition. Although our license agreements typically contain provisions designed to limit our exposure to product liability claims, existing or future laws or unfavorable judicial decisions could negate or alter such limitation of liability provisions. Such claims, if brought against us, even if not successful, would likely be time consuming and costly.

Our Ability to Use Net Operating Losses to Offset Future Taxable Income may be Subject to Certain Limitations.

In general, under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses (NOLs) to offset future taxable income. A substantial portion of our existing NOLs and tax credits relate to companies that we have acquired and may be subject to limitations arising from ownership changes prior to, or in connection with, their acquisition by us. Furthermore, our ability to utilize NOLs and tax credits of companies that we may acquire in the future may be subject to limitations. Our existing NOLs and tax credits may be subject to limitations arising from previous ownership changes, and future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Internal Revenue Code, potentially further limiting our ability to utilize our NOLs and tax credits. For these reasons, we may not be able to utilize a material portion of the NOLs and tax credits disclosed in our financial statements to offset future income. This may result in a substantial increase to income tax expense in future periods.

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We Face Intense Competition from Other Software Companies, Which Could Make it Difficult to Compete Successfully

Our market is intensely competitive. Our customers’ requirements and the technology available to satisfy those requirements continually change. We expect competition to persist and intensify in the future, including competition resulting from consolidations in the software industry.

Our principal competitors include: in-house development efforts by potential customers or partners; other vendors of software that directly address elements of Web-based applications; and developers of software that address only certain technology components of Web-based applications (e.g., content management, portal management, document management, process, collaboration, integration or analytics). In addition, we face increased competition from large companies that includes capabilities similar to our software in larger integrated product offerings.

Many of these companies have longer operating histories and significantly greater financial, technical, marketing and other resources than we do. Many of these companies can also leverage extensive customer bases and adopt aggressive pricing policies to gain market share. Potential competitors may bundle or license their products in a manner that may discourage users from purchasing our products. In addition, it is possible that new competitors or alliances among competitors may emerge and rapidly acquire significant market share.

Competitive pressures may make it difficult for us to acquire and retain customers and may require us to reduce the price of our software. We cannot be certain that we will be able to compete successfully with existing or new competitors. If we fail to compete successfully against current or future competitors, our business, operating results and financial condition would be materially adversely affected.

We Depend on Increased Business from Our Current and New Customers and, if We Fail to Grow Our Customer Base or Generate Repeat Business, Our Operating Results Could Be Harmed

If we fail to grow our customer base or generate repeat and expanded business from our current and new customers, our business and operating results would be seriously harmed. Many of our customers initially make a limited purchase of our products and services. Some of these customers may not choose to purchase additional licenses to expand their use of our products. Some of these customers have not yet developed or deployed initial applications based on our products. If these customers do not successfully develop and deploy such initial applications, they may not choose to purchase deployment licenses or additional development licenses. Our business model depends on the expanded use of our products within our customers’ organizations.

In addition, as we introduce new versions of our products or new products, our current customers may not require the functionality of our new products and may not ultimately license these products. Because the total amount of maintenance and support fees we receive in any period depends in large part on the size and number of licenses that we have previously sold, any downturn in our software license revenue would negatively impact our future services revenue. In addition, if customers elect not to renew their maintenance agreements, our services revenue could be significantly adversely affected.

Our Future Revenue is Dependent Upon Our Ability to Successfully Market Our Existing and Future Products

We expect that our future financial performance will depend significantly on revenue from existing and future software products and the related tools that we plan to develop. There are significant risks inherent in a product introduction, such as our Vignette V7 software products. Market acceptance of these and future products will depend on continued market development for Web applications and services and the continued commercial adoption of Vignette V7. We cannot be certain that either will occur. We cannot be certain that our existing or future products will meet customer performance needs or expectations when released or that they will be free of significant software defects or bugs. If our products do not meet customer needs or expectations, for whatever reason, upgrading or enhancing the product could be costly and time-consuming.

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Our Operating Results May Be Adversely Affected by Small Delays in Customer Orders or Product Implementations

Small delays in customer orders or product implementations can cause significant variability in our license revenues and operating results for any particular period. We derive a substantial portion of our revenue from the sale of products with related services. In certain cases, our revenue recognition policy requires us to substantially complete the implementation of our product before we can recognize software license revenue, and any end-of-quarter delays in product implementation could materially adversely affect operating results for that quarter.

To Increase Market Awareness of Our Products and Generate Increased Revenue, We Need to Continue to Strengthen Our Sales and Distribution Capabilities

Our direct and indirect sales operations must increase market awareness of our products to generate increased revenue. We cannot be certain that we will be successful in these efforts. Our products and services require a sophisticated sales effort targeted at the senior management of our prospective customers. All new hires will require training and will take time to achieve full productivity. We cannot be certain that our new hires will become as productive as necessary or that we will be able to hire enough qualified individuals or retain existing employees in the future. We plan to expand our relationships with systems integrators and certain third-party resellers to build an indirect influence and sales channel. In addition, we will need to manage potential conflicts between our direct sales force and any third-party reselling efforts.

Failure to Maintain the Support of Third-Party Systems Integrators May Limit Our Ability to Penetrate Our Markets

A significant portion of our sales are influenced by the recommendations of our products made by systems integrators, consulting firms and other third parties that help develop and deploy Web-based applications for our customers. Losing the support of these third parties may limit our ability to penetrate our markets. These third parties are under no obligation to recommend or support our products. These companies could recommend or give higher priority to the products of other companies or to their own products. A significant shift by these companies toward favoring competing products could negatively affect our license and services revenue. Additionally, these organizations may acquire or distribute software products that compete with our products in future periods. If they become our competitors, this could negatively affect our license and services revenue.

Our Lengthy Sales Cycle and Product Implementation Makes It Difficult to Predict Our Quarterly Results

We have a long sales cycle because we generally need to educate potential customers regarding the use and benefits of Web-based applications. Our long sales cycle makes it difficult to predict the quarter in which sales may fall. In addition, since we recognize a portion of our revenue from product sales upon implementation of our product, the timing of product implementation could cause significant variability in our license revenues and operating results for any particular period. The implementation of our products requires a significant commitment of resources by our customers, third-party professional services organizations or our professional services organization, which makes it difficult to predict the quarter when implementation will be completed.

We May Be Unable to Adequately Sustain a Profitable Professional Services Organization, Which Could Affect Both Our Operating Results and Our Ability to Assist Our Customers with the Implementation of Our Products

Customers that license our software often engage our professional services organization to assist with support, training, consulting and implementation of their Web solutions. We believe that growth in our product sales depends in part on our continuing ability to provide our customers with these services and to educate third-party resellers on how to use our products.

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Historically, services costs related to professional services have frequently exceeded, or had been substantially equal to, professional services-related revenue. In this current economic climate, we make periodic capacity decisions based on estimates of future sales, anticipated existing customer needs, and general market conditions. Although we expect that our professional services-related revenue will continue to exceed professional services-related costs in future periods, we cannot be certain that this will occur.

We generally bill our customers for our services on a time-and-materials basis. However, from time to time we enter into fixed-price contracts for services, and may include terms and conditions that may extend the recognition of revenue for work performed into following quarters. On occasion, the costs of providing the services have exceeded our fees from these contracts and such contracts have negatively impacted our operating results.

We May Be Unable to Attract Necessary Third-Party Service Providers, Which Could Affect Our Ability to Provide Sufficient Support, Consulting and Implementation Services for Our Products

We are actively supplementing the capabilities of our services organization by contracting with and educating third-party service providers and consultants to also provide these services to our customers. We may not be successful in attracting additional third-party providers or in educating or maintaining the interest of current third-party providers. In addition, these third parties may not devote sufficient resources to these activities to meet customers’ demands to adequately supplement our services. Additionally, these organizations may acquire or distribute software products that compete with our products in future periods. If they become our competitors, this could negatively affect our revenue.

To Properly Manage Future Growth, We Need to Continue to Improve Our Operational Systems on a Timely Basis

We have experienced periods of rapid expansion and contraction since our inception. Rapid fluctuations place a significant demand on management and operational resources. To manage such fluctuations effectively, we must continue to improve our operational systems, procedures and controls on a timely basis. If we fail to continue to improve these systems, our business, operating results and financial condition will be materially adversely affected.

We May Be Adversely Affected if We Lose Key Personnel

Our success depends largely on the skills, experience and performance of some key technical, sales, managerial, and executive personnel throughout all areas of our business. If we lose one or more of our key employees, our business, operating results and financial condition could be materially adversely affected. As we transition to an offshore research and development operations model, it is particularly important that our intellectual property is protected and retained during this transfer. In addition, our future success will depend largely on our ability to continue to attract and retain highly skilled personnel. In particular, hiring and retaining qualified engineers, skilled solutions providers, and qualified sales representatives is critical to our future. Like other software companies, we face competition for qualified personnel. If we are unable to continue to attract and retain skilled and experienced personnel, our growth may be limited.

If We are Unable to Meet the Rapid Changes in Software Technology, Our Existing Products Could Become Obsolete

The market for our products is marked by rapid technological change, frequent new product introductions and Internet-related technology enhancements, uncertain product life cycles, changes in customer demands, changes in packaging and combination of existing products and evolving industry standards. We cannot be certain that we will successfully develop and market new products, new product enhancements or new products compliant with present or emerging Internet technology standards. New products based on new technologies, new industry standards or new combinations of existing products as

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bundled products can render existing products obsolete and unmarketable. To succeed, we will need to enhance our current products and develop new products on a timely basis to keep pace with developments related to Internet technology and to satisfy the increasingly sophisticated requirements of our customers. Internet commerce technology, particularly Web-based applications technology, is complex and new products and product enhancements can require long development and testing periods. Any delays in developing and releasing enhanced or new products could have a material adverse effect on our business, operating results and financial condition.

We Develop Complex Software Products Susceptible to Software Errors or Defects that Could Result in Lost Revenues, or Delayed or Limited Market Acceptance

Complex software products such as ours often contain errors or defects, particularly when first introduced or when new versions or enhancements are released. Despite internal testing and testing by current and potential customers, our current and future products may contain serious defects. Serious defects or errors could result in lost revenues or a delay in market acceptance, which would have a material adverse effect on our business, operating results and financial condition.

Our Product Shipments Could Be Delayed if Third-Party Software Incorporated in Our Products are No Longer Available

We integrate third-party software as a component of our software. The third-party software may not continue to be available to us on commercially reasonable terms. If we cannot maintain positive relationships and licenses to key third-party software, shipments of our products could be delayed or disrupted until equivalent software could be developed or licensed and integrated into our products, which could materially adversely affect our business, operating results and financial condition.

Our Business is Based on Our Intellectual Property and We Could Incur Substantial Costs Defending Our Intellectual Property from Infringement or a Claim of Infringement

In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. We could incur substantial costs to prosecute or defend any such litigation. Although we are not involved in any such litigation that we believe is material to our business, if we become a party to litigation in the future to protect our intellectual property or as a result of an alleged infringement of other’s intellectual property, we may be forced to do one or more of the following:

• cease selling, incorporating or using products or services that incorporate the challenged intellectual property;

• obtain from the holder of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available on reasonable terms;

• redesign those products or services that incorporate such technology; and

• refund a pro-rata portion of the original license consideration paid by the customer.

We rely on a combination of patent, trademark, trade secret and copyright law and contractual restrictions to protect our technology. These legal protections provide only limited protection. If we litigated to enforce our rights, it would be expensive, divert management resources and may not be adequate to protect our business.

Anti-Takeover Provisions in Our Corporate Documents and Delaware Law Could Prevent or Delay a Change in Control of Our Company

Certain provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable. Such provisions include:

• authorizing the issuance of “blank check” preferred stock;

• providing for a classified Board of Directors with staggered, three-year terms;

• prohibiting cumulative voting in the election of directors;

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• requiring super-majority voting to effect certain amendments to our certificate of incorporation and bylaws;

• limiting the persons who may call special meetings of stockholders;

• prohibiting stockholder action by written consent; and

• establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

Certain provisions of Delaware law and our stock incentive plans may also discourage, delay or prevent someone from acquiring or merging with us.

Further, in April 2002, our Board of Directors approved, adopted and entered into a shareholder rights plan referred to as the Plan. The Plan was not adopted in response to any attempt to acquire us, nor were we aware of any such efforts at the time of adoption.

The Plan was designed to enable our stockholders to realize the full value of their investment by providing for fair and equal treatment of all stockholders in the event that an unsolicited attempt is made to acquire us. Adoption of the Plan was intended to guard shareholders against abusive and coercive takeover tactics.

Under the Plan, stockholders of record as of the close of business on May 6, 2002, received one right to purchase a one one-hundredth of a share of Series A Junior Participating Preferred Stock, par $0.01 per share, at a price of $300.00 per one one-hundredth, subject to adjustment. The rights were issued as a non-taxable dividend and will expire 10 years from the date of the adoption of the rights Plan, unless earlier redeemed or exchanged. The rights are not immediately exercisable; however, they will become exercisable upon the earlier to occur of (i) the close of business on the tenth day after a public announcement that a person or group has acquired beneficial ownership of 15 percent or more of our outstanding common stock or (ii) the close of business on the tenth day (or such later date as may be determined by the Board of Directors prior to such time as any person becomes an acquiring person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer that would result in the beneficial ownership by a person or group of 15 percent or more of our outstanding common stock. If a person or group acquires 15 percent or more of our common stock, then all rights holders except the acquirer will be entitled to acquire our common stock at a significant discount. The intended effect will be to discourage acquisitions of 15 percent or more of our common stock without negotiation with the Board of Directors.

Terrorist Activities and Resulting Military and Other Actions Could Adversely Affect Our Business

The continued threat of terrorism within the United States and abroad, military action in other countries, and heightened security measures may cause significant disruption to commerce throughout the world. To the extent that such disruptions result in delays or cancellations of customer orders, a general decrease in corporate spending on information technology, or our inability to effectively market, sell and deploy our software and services, our business and results of operations could be materially and adversely affected. We are unable to predict whether the threat of terrorism or the responses thereto will result in any long-term commercial disruptions or if such activities or responses will have a long-term material adverse effect on our business, results of operations or financial condition.

When We Account for Our Employee Stock Option and Employee Stock Purchase Plans Using the Fair Value Method, Our Operating Results Will be Adversely Affected

We are not currently required to record any compensation expense using the fair value method in connection with option grants that have an exercise price at or above fair market value and for shares issued under our employee stock purchase plan. However, new accounting rules will require the Company to record an expense for our stock-based compensation plans using the fair value method beginning in fiscal 2006. If we had accounted for stock-based compensation plans using the fair value method, our income per share for the year ended December 31, 2005 would have been decreased by $0.23 per diluted share of common stock based on the pro-forma calculations as provided in the footnotes to our financial statements.

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In October 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards123R, Share-Based Payment (“Statement 123R”), which is a proposed amendment to Statement of Financial Accounting Standards 123, Accounting for Stock-Based Compensation, (“Statement 123”). Generally, the approach under Statement 123R will require companies to recognize the fair value of share-based payments to employees, including grants of employee stock options and the right to purchase shares under an employee stock purchase plan. We are required to adopt Statement 123R in the first quarter of fiscal 2006. The pro forma disclosures previously permitted under Statement 123 will no longer be an alternative to financial statement recognition. See Note 2 in the Notes to our Consolidated Financial Statements for the pro forma net income/(loss) and net income/(loss) per share amounts, for fiscal 2003 through fiscal 2005, as if we had used a fair-value-based method similar to the methods required under Statement 123R to measure compensation expense for employee stock incentive awards.

Statement 123R permits adoption using one of two methods: (1) a “modified prospective” method in which compensation cost is recognized beginning on the effective date based on the requirements of Statement 123R for all share-based payments granted after the effective date and based on Statement 123 for all awards granted to employees prior to the effective date that remain unvested on the effective date or (2) a “modified retrospective” method which includes the requirements of the modified prospective method, but also permits entities to restate all periods presented or prior interim periods of the year of adoption based on the amounts previously recognized under Statement 123 for purposes of pro forma disclosures. We plan to adopt SFAS 123R using the modified prospective method, under which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the previous requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date.

The amounts disclosed within our footnotes are not necessarily indicative of the amounts that will be expensed upon the adoption of SFAS 123R. Compensation expense calculated under SFAS 123R may differ from amounts currently disclosed within our footnotes based on changes in the fair value of our common stock, changes in the number of options granted or the terms of such options, the treatment of tax benefits and changes in interest rates or other factors. Upon adoption of SFAS 123R, we plan to use the Black-Scholes model to value the compensation expense associated with employee stock options and stock purchases under our employee stock purchase plan. We are currently evaluating the potential impact of this standard on our financial position, results of operations, and cash flows. We expect this standard to have a significant impact on the consolidated statements of operations.

Our Financial Statements Could be Impacted by Unauthorized and Improper Actions of Our Personnel

Our financial statements could be adversely impacted by our employees’ errant or improper actions. For instance, revenue recognition depends on, among other criteria, the terms negotiated in our contracts with our customers. Our personnel may act outside of their authority and negotiate additional terms without our knowledge. We have implemented policies to prevent and discourage such conduct, but there can be no assurance that such policies will be followed. For instance, in the event that our sales personnel have negotiated terms that do not appear in the contract and of which we are unaware, whether the additional terms are written or oral, we could be prevented from recognizing revenue in accordance with our plans.

Furthermore, depending on when we learn of unauthorized actions and the size of transactions involved, we may have to restate our financial statements for a previously reported period, which would seriously harm our business, operating results and financial condition.

We Have Incurred Increased Costs in Response to Recently Enacted and Proposed Regulations

Recently enacted and proposed changes in the laws and regulations affecting public companies, including but not limited to the Sarbanes-Oxley Act of 2002, have caused us to incur increased costs as we evaluate and respond to the resulting requirements. The new rules could make it more difficult for us to obtain certain types of insurance, and we may incur higher costs to obtain coverage similar to our existing policies. Additionally, we have incurred and expect to incur on an ongoing basis increased accounting, audit and legal fees to assist us assess, implement and comply with such rules. The new and proposed rules could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors.

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Risks Related to the Software Industry

Our Business is Sensitive to the Overall Economic Environment; a Continued Slowdown in Information Technology Spending Could Harm Our Operating Results

The primary customers for our products are enterprises seeking to launch or expand Web-based initiatives. A significant downturn in our customers’ markets and in general economic conditions that result in reduced information technology spending budgets would likely result in a decreased demand for our products and services and harm our business. Industry downturns like these have been, and may continue to be, characterized by diminished product demand, erosion of average selling prices, lower than expected revenues and difficulty making collections from existing customers.

Our Performance Will Depend on the Market for Enterprise Content Management Software

The market for Web-based applications software is rapidly evolving. We expect that we will continue to need intensive marketing and sales efforts to educate prospective customers about the uses and benefits of our products and services. Accordingly, we cannot be certain that a viable market for our products will emerge or be sustainable. Enterprises that have already invested substantial resources in other methods of conducting business may be reluctant or slow to adopt a new approach that may replace, limit or compete with their existing systems. Similarly, individuals have established patterns of purchasing goods and services. They may be reluctant to alter those patterns. They may also resist providing the personal data necessary to support our existing and potential product uses. Any of these factors could inhibit the growth of online business generally and the market’s acceptance of our products and services in particular.

There is Substantial Risk that Future Regulations Could Be Enacted that Either Directly Restrict Our Business or Indirectly Impact Our Business by Limiting the Growth of Internet Commerce

As Internet commerce evolves, we expect that federal, state or foreign agencies will adopt regulations covering issues such as user privacy, pricing, content and quality of products and services. If enacted, such laws, rules or regulations could limit the market for our products and services, which could materially adversely affect our business, financial condition and operating results. Although many of these regulations may not apply to our business directly, we expect that laws regulating the solicitation, collection or processing of personal and consumer information could indirectly affect our business. The Telecommunications Act of 1996 prohibits certain types of information and content from being transmitted over the Internet. The prohibition’s scope and the liability associated with a Telecommunications Act violation are currently unsettled. In addition, although substantial portions of the Communications Decency Act were held to be unconstitutional, we cannot be certain that similar legislation will not be enacted and upheld in the future. It is possible that such legislation could expose companies involved in Internet commerce to liability, which could limit the growth of Internet commerce generally. Legislation like the Telecommunications Act and the Communications Decency Act could dampen the growth in Web usage and decrease its acceptance as a communications and commercial medium.

The United States government also regulates the export of encryption technology, which our products incorporate. If our export authority is revoked or modified, if our software is unlawfully exported or if the United States government adopts new legislation or regulation restricting export of software and encryption technology, our business, operating results and financial condition could be materially adversely affected. Current or future export regulations may limit our ability to distribute our software outside the United States. Although we take precautions against unlawful export of our software, we cannot effectively control the unauthorized distribution of software across the Internet.

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Risks Related to the Securities Markets

Our Stock Price May Be Volatile

The market price of our common stock has been highly volatile and has fluctuated significantly in the past. We believe that it may continue to fluctuate significantly in the future in response to the following factors, some of which are beyond our control:

• variations in quarterly operating results;

• changes in financial estimates by securities analysts;

• changes in market valuations of Internet software companies;

• announcements by us of significant contracts, acquisitions, restructurings, strategic partnerships, joint ventures or capital commitments;

• loss of a major customer or failure to complete significant license transactions;

• additions or departures of key personnel;

• difficulties in collecting accounts receivable;

• large percentage of stock held by a few large shareholders; and

• fluctuations in stock market price and volume, which are particularly common among highly volatile securities of Internet and software companies.

Our Business May Be Adversely Affected by Class Action Litigation Due to Stock Price Volatility

In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. We are a party to the securities class action litigation described in Part I, Item 3 – “Legal Proceedings” of this Report. The defense of this litigation described in Part I, Item 3 may increase our expenses and divert our management’s attention and resources, and an adverse outcome could harm our business and results of operations. Additionally, we may in the future be the target of similar litigation. Future securities litigation could result in substantial costs and divert management’s attention and resources, which could have a material adverse effect on our business, operating results and financial condition.

We May Be Unable to Meet Our Future Capital Requirements

Although we expect our cash balances to increase in the near future, it is possible that we may need to raise additional funds and we cannot be certain that we would be able to obtain additional financing on favorable terms, if at all. Further, if we issue equity securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock. If we cannot raise funds, if needed, on acceptable terms, we may not be able to develop or enhance our products, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, which could have a material adverse effect on our business, operating results and financial condition.

We May Need to Raise Additional Capital, Which May Be Dilutive to Our Stockholders

We may need to raise additional funds for other purposes and we cannot be certain that we would be able to obtain additional financing on favorable terms, if at all. Further, if we issue equity securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock. If we cannot raise funds, if needed, on acceptable terms, we may not be able to develop or enhance our products, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, which could have a material adverse effect on our business, operating results and financial condition.

If Our Internal Controls Over Financial Reporting Do Not Comply With the Requirements of the Sarbanes-Oxley Act, Our Business and Stock Price Could Be Adversely Affected

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate the effectiveness of our internal controls over financial reporting as of the end of each year beginning in 2004, and to include a

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management report assessing the effectiveness of our internal controls over financial reporting in all annual reports beginning with this Report. Section 404 also requires our independent registered public accounting firm to attest to, and report on, management’s assessment of our internal controls over financial reporting.

Our management, including our CEO and CFO, does not expect that our internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, involving the company have been, or will be, detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Although our management has determined, and our independent registered public accounting firm has attested, that our internal control over financial reporting was effective as of December 31, 2005, we cannot assure you that we or our independent registered public accounting firm will not identify a material weakness in our internal controls in the future. A material weakness in our internal controls over financial reporting would require management and our independent registered public accounting firm to evaluate our internal controls as ineffective. If our internal controls over financial reporting are not considered adequate, we may experience a loss of public confidence, which could have an adverse effect on our business and our stock price.

Our Business is Subject to Changing Regulation of Corporate Governance and Public Disclosure That Has Increased Both Our Costs and the Risk of Noncompliance

Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the Securities Exchange Commission and NASDAQ, have recently issued new requirements and regulations and continue to develop additional regulations and requirements in response to recent laws enacted by Congress, most notably the Sarbanes-Oxley Act. Our efforts to comply with these new regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In particular, our efforts to comply with Section 404 of the Sarbanes-Oxley Act and the related regulations regarding our required assessment of our internal controls over financial reporting and our external auditors’ audit of that assessment has required, and continues to require, the commitment of significant financial and managerial resources.

Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our principal research, development, sales, marketing and administrative headquarter offices are located in Austin, Texas. We do not own any real estate or facilities. As of December 31, 2005, we leased direct office space in: Austin, Texas; Brisbane, California; New York City, New York; Boston, Massachusetts; Chicago, Illinois; Sydney, Australia; Slough and Maidenhead, United Kingdom; and Madrid, Spain. Such leases have remaining terms of up to six years. All offices listed above support sales and services activity, and we have research and development activity in our Austin, Texas and Sydney, Australia offices.

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Additionally, we lease several full-service managed suites and executive suites as small sales offices across the United States and around the world. These small offices generally have lease terms of less than one year, allowing us to adjust to changing business and customer support requirements. As of December 31, 2005, we leased office space in 16 countries outside of the United States.

Throughout 2005 and 2004, we consolidated our leased office portfolio. Some of the resulting excess lease space expired in 2005, or will expire in the near term, and we successfully negotiated early terminations of some leases, in part or in whole. We currently sublease some surplus office space in Austin, Texas; New York City, New York; and Boston, Massachusetts to unrelated third-parties. We are actively marketing and attempting to sublease or negotiate early terminations of our remaining surplus properties, including, but not limited to, space in Austin, Texas; Chicago, Illinois; Boston, Massachusetts, New York City, New York; and Slough, United Kingdom for the respective remaining lease terms.

ITEM 3. LEGAL PROCEEDINGS

Securities Class Action

On October 26, 2001, a class action lawsuit was filed against the Company and certain of its current and former officers and directors in the United States District Court for the Southern District of New York in an action captioned Leon Leybovich v. Vignette Corporation, et al., seeking unspecified damages on behalf of a purported class that purchased Vignette common stock between February 18, 1999 and December 6, 2000. Also named as defendants were four underwriters involved in the Company’s initial public offering of Vignette stock in February 1999 and the Company’s secondary public offering of Vignette stock in December 1999 - Morgan Stanley Dean Witter, Inc., Hambrecht & Quist, LLC, Dain Rauscher Wessels and U.S. Bancorp Piper Jaffray, Inc. A Consolidated Amended Complaint, which is now the operative complaint, was filed on April 19, 2002. The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, based on, among other things, claims that the four underwriters awarded material portions of the shares in the Company’s initial and secondary public offerings to certain customers in exchange for excessive commissions. The plaintiff also asserts that the underwriters engaged in “tie-in arrangements” whereby certain customers were allocated shares of Company stock sold in its initial and secondary public offerings in exchange for an agreement to purchase additional shares in the aftermarket at pre-determined prices. With respect to the Company, the complaint alleges that the Company and its officers and directors failed to disclose the existence of these purported excessive commissions and tie-in arrangements in the prospectus and registration statement for the Company’s initial public offering and the prospectus and registration statement for the Company’s secondary public offering. The action seeks damages in an unspecified amount.

The action is being coordinated with approximately 300 other nearly identical actions filed against other companies. On October 9, 2002, the Court dismissed the Individual Defendants from the case without prejudice based upon Stipulations of Dismissal filed by the plaintiffs and the Individual Defendants. On February 19, 2003, the Court denied a motion to dismiss the complaint against the Company. On October 13, 2004, the Court certified a class in six of the other nearly identical actions and noted that the decision is intended to provide strong guidance to all parties regarding class certification in the remaining cases. Plaintiffs have not yet moved to certify a class in the Company’s case. The Company has approved a settlement agreement and related agreements which set forth the terms of a settlement between the Company, the individual defendants, the plaintiff class and the vast majority of the other issuer defendants. Among other provisions, the settlement provides for a release of the Company and the Individual Defendants for the conduct alleged in the action to be wrongful. The Company would agree to undertake certain responsibilities, including agreeing to assign away, not assert, or release certain potential claims the Company may have against its underwriters. The settlement agreement also provides a guaranteed recovery of $1 billion to plaintiffs for the cases relating to all of the approximately 300 issuers. To the extent

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that the underwriter defendants settle all of the cases for at least $1 billion, no payment will be required under the issuers’ settlement agreement. To the extent that the underwriter defendants settle for less than $1 billion, the issuers are required to make up the difference. It is anticipated that any potential financial obligation of the Company to plaintiffs pursuant to the terms of the settlement agreement and related agreements will be covered by existing insurance. The Company currently is not aware of any material limitations on the expected recovery of any potential financial obligation to plaintiffs from its insurance carriers. Its carriers are solvent, and the Company is not aware of any uncertainties as to the legal sufficiency of an insurance claim with respect to any recovery by plaintiffs. Therefore, we do not expect that the settlement will involve any payment by the Company. Even if material limitations on the expected recovery of any potential financial obligation to the plaintiffs from the Company’s insurance carriers should arise, the Company’s maximum financial obligation to plaintiffs pursuant to the settlement agreement is less than $3.4 million. On February 15, 2005, the Court granted preliminary approval of the settlement agreement, subject to certain modifications consistent with its opinion. Those modifications have been made. There is no assurance that the Court will grant final approval of the settlement. The Company can not predict whether or when a settlement will occur or be finalized. If the settlement is not approved, the Company is unable to determine whether the outcome of the litigation will have a material impact on its results of operations or financial condition in any future period. The Company believes that this lawsuit is without merit and would continue to defend itself vigorously if the settlement is not approved.

Litigation and Other Claims

We are also subject to various legal proceedings and claims arising in the ordinary course of business. Our management does not expect that the outcome in any of these legal proceedings, individually or collectively, will have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Report.

PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES

Our common stock is listed on the NASDAQ National Market under the symbol “VIGN”. Public trading of the common stock commenced on February 19, 1999. Prior to that, there was no public market for the common stock. The following table sets forth the high and low closing sale price per share of our common stock on the NASDAQ National Market in each of the last eight fiscal quarters. All closing sale prices per share have been restated for the one-for-ten reverse stock split of the Company that became effective on June 10, 2005.

	High		Low
Year Ended December 31, 2005:
Fourth Quarter	$	18.29	$	14.36
Third Quarter		16.09		11.30
Second Quarter		13.20		10.80
First Quarter		13.70		11.60
Year Ended December 31, 2004:
Fourth Quarter	$	15.30	$	10.20
Third Quarter		15.60		11.00
Second Quarter		22.40		14.60
First Quarter		28.90		20.40

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At February 28, 2006, there were approximately 499 holders of record and 60,000 total shareholders of our common stock and the closing price of our common stock was $16.10 per share.

We have never declared or paid any cash dividends on our common stock or other securities and do not anticipate paying cash dividends in the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with our consolidated financial statements and notes thereto, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial data included elsewhere in this Annual Report on Form 10-K. The consolidated statements of operations data for the years ended December 31, 2005, 2004 ,and 2003 and the consolidated balance sheet data at December 31, 2005 and 2004 are derived from audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The consolidated statements of operations data for the years ended December 31, 2002 and 2001 and the consolidated balance sheet data at December 31, 2003, 2002, and 2001 are derived from audited consolidated financial statements not included in this Annual Report on Form 10-K.

	Year ended December 31,
	2005			2004 (4)			2003 (3)			2002 (2)			2001
	(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenue:
Product license	$	70,316		$	63,152		$	60,986		$	62,418		$	154,381
Services		120,359			114,775			97,328			92,720			142,369
Total revenue		190,675			177,927			158,314			155,138			296,750
Cost of revenue:
Product license		2,911			5,036			2,844			2,388			5,243
Amortization of acquired technology		6,267			10,115			3,450			267			—
Services (1)		55,427			53,281			39,531			43,674			78,299
Total cost of revenue		64,605			68,432			45,825			46,329			83,542
Gross profit		126,070			109,495			112,489			108,809			213,208
Operating expenses:
Research and development (1)		33,200			40,211			39,923			51,334			64,850
Sales and marketing (1)		67,956			74,489			68,160			84,775			178,282
General and administrative (1)		19,593			17,972			15,727			21,344			29,907
Purchased in-process research and development, acquisition-related and other charges		270			7,609			4,258			1,786			1,919
Impairment of intangible assets		—			—			—			147,269			799,169
Business restructuring charges (gain)		(2,899	)		18,083			(14,687	)		35,822			120,935
Amortization of deferred stock compensation		834			480			1,107			1,396			8,734
Amortization of intangible assets		5,003			4,919			1,965			16,060			500,045
Total operating expenses		123,957			163,763			116,453			359,786			1,703,841
Income (loss) from operations		2,113			(54,268	)		(3,964	)		(250,977	)		(1,490,633	)
Other income (expense), net		20,710			2,895			5,068			(517	)		(35,275	)
Income (loss) before income taxes		22,823			(51,373	)		1,104			(251,494	)		(1,525,908	)
Provision for income taxes		2,429			1,482			1,137			1,319			1,731
Net income (loss)	$	20,394		$	(52,855	)	$	(33	)	$	(252,813	)	$	(1,527,639	)
Basic net income (loss) per share	$	0.70		$	(1.86	)	$	(0.00	)	$	(10.14	)	$	(63.19	)
Diluted net income (loss) per share	$	0.68		$	(1.86	)	$	(0.00	)	$	(10.14	)	$	(63.19	)
Shares used in computing basic net loss per share (5)		29,181			28,381			25,310			24,921			24,176
Shares used in computing diluted net loss per share (5)		29,807			28,381			25,310			24,921			24,176

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(1) Excludes amortization of deferred stock compensation as follows:

	Year ended December 31,
	2005		2004 (4)			2003 (3)		2002 (2)		2001
Cost of revenue – services	$	—	$	—		$	—	$	170	$	1,965
Research and development		12		(71	)		324		441		2,446
Sales and marketing		124		(48	)		69		416		3,066
General and administrative		698		599			714		369		1,257
	$	834	$	480		$	1,107	$	1,396	$	8,734
	As of December 31,
	2005		2004			2003 (3)		2002 (2)		2001
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments	$	197,057	$	164,363		$	239,513	$	307,754	$	391,632
Working capital		165,319		126,406			205,749		214,625		311,921
Total assets		417,161		405,456			366,116		424,612		663,026
Long-term debt and capital lease obligations, less current portion		—		—			10		53		240
Total stockholders’ equity		330,109		306,818			281,346		265,852		510,301

(2) Reflects the acquisition of Epicentric on December 3, 2002.

(3) Reflects the acquisition of Intraspect on December 10, 2003.

(4) Reflects the acquisition of Tower Technology on March 1, 2004.

(5) Reflects one-for-ten reverse stock split

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Vignette’s software and expertise help organizations harness the power of information and the Web to deliver measurable improvements in business efficiency. Vignette helps organizations increase productivity, reduce costs, improve user experiences and manage risk. Vignette’s intranet, extranet and Internet solutions incorporate portal, integration, enterprise content management, collaboration, interaction management and imaging and workflow capabilities that can rapidly deliver unique advantages through an open, scalable and adaptable architecture that integrates with legacy systems. Vignette is headquartered in Austin, Texas, with local operations worldwide.

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Our solutions and products enable customers to successfully and rapidly address pervasive business problems and achieve measurable increases in business efficiency.

We offer the following solutions:

Our Web content management, collaboration, document and records management, imaging and workflow, integration and interaction management products form the complete suite of enterprise content management to manage the entire information value chain. To address the particular size and requirements of our customers, we deliver an enterprise content management suite as well as deliver our products in various combinations. Additionally, we allow organizations the flexibility to purchase products individually.

Vignette Enterprise Content Management Suite helps organizations control, manage and share information, optimize business process, integrate with enterprise applications, eliminate redundancy, mitigate risk for compliance and enhance delivery of content to individuals and channels. The enterprise content management suite includes content management, portal, integration, collaboration and records and document management.

Web Content Management includes library services, content type modeling, workflow, taxonomy, and search.

•Vignette Content Management manages content, sites, content types and objects and the deployment and delivery of content. It also functions as a task inbox and workflow manager and includes a roles-based management console and essential library services. The Vignette Command Center, the core of Vignette Content Management, is an intuitive and configurable roles-based management console that enables business and technical users to manage virtually all of their content management objectives through one interface. Once integrated with business processes, users can share knowledge and collaborate on virtually any tasks, using e-mail, desktop applications and Web-based workspaces. We also offer a variety of additional specialized products to enhance Vignette Content Management.

Collaboration enhances the capability of sharing knowledge for teams using workspaces.

•Vignette Collaboration is an enterprise solution for business users to create workspaces, where teams can share, capture and search information. Vignette Collaboration provides secure online workspaces where extended business teams can work together more effectively. This helps organizations to reduce the risk of knowledge being lost and improves business relationships.

•Vignette Project Delivery provides online workspaces where extended project teams can work together to better serve and collaborate with key project teams. This solution offers out-of–the-box templates for project collaboration and can capture project assets, expertise and best practices. Using Vignette Project Delivery can help organizations increase the speed and repeatability of their projects and can help improve the productivity of internal teams.

•Vignette Strategic Account Management is an enterprise solution for business users to create account workspaces and allows account teams to better serve key accounts by effectively capturing, sharing, and searching account-related information and knowledge. This allows organizations to reduce the account team communication cycles and captures valuable account communication, allowing organizations to improve customer satisfaction, and productivity of internal teamwork while reducing the costs of account management.

Document and records management solutions are also available to expand the ability to capture, manage, utilize, retain and dispose of an organization’s enterprise content. In addition, imaging and transactional “Web capture” functionality can effectively promote transitioning paper-based processes to digital processes, streamlining high-volume transaction processes and facilitating the centralized capture, storage and archival of an organization’s business content.

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•Vignette Records & Documents™ is an enterprise document and records management solution that manages fixed assets, automates document based workflows, manages casework through a process, and implements important archival and disposition of records. Vignette Records & Documents facilitates risk and compliance management, and implements important document management capabilities including metadata search, QBE, indexed full text search, check in/out and ACL security .

•Vignette WebCapture™ is a secure Web transaction capture and playback risk management solution that archives transactions on a customer’s site and creates a permanent record of them for dispute resolution.

Imaging and workflow scan and index high volume imaging and workflow that promotes faster, more cost-efficient processing, access and secure, personalized delivery of electronic information.

•Vignette IDM™ is an integrated document management, archive and retrieval solution addressing document capture, production imaging supporting forms OCR/ICR, high-performance image viewing, printing, and storage management; business process automation and workflow supporting case management, BPM and Web services; output report management for capturing, mining, linking, distribution, and statement presentment; and COLD storage and records management supporting electronic and physical records, retention management, e-mail archiving and regulatory compliance.

Portal provides both a highly functional portal framework and a user-friendly development environment for assembling portlets.

•Vignette Portal is an adaptable, scalable, open solution that enables organizations to rapidly build and deliver highly customizable applications for their organization across audiences such as employees, partners and customers. We also offer a variety of additional specialized products to enhance our application portal.

•Vignette Builder enables quick creation, assembly and customization of applications, empowering organizations to respond rapidly to changing business needs. Wizard-based interfaces accelerate the development and deployment of a wide range of critical applications that automatically integrate into the customer’s collaborative portal environment.

Integration capabilities provide unique capabilities to connect a broad range of unstructured, semi-structured and structured data (including transactional) sources.

•Vignette Business Integration Studio is a graphical application integration environment for collecting and integrating content and applications from a wide selection of sources with minimal coding. Vignette Business Integration Studio allows users to readily and dynamically map content from disparate schemas, remote repositories and applications to an aggregated destination. We offer over fifty pre-built application and technology adapters that can be used by Vignette Business Integration Studio to integrate with enterprise, desktop, database and proprietary content sources existing throughout an enterprise. Adapters are plug-ins to Vignette Business Integration Studio that provide prepackaged integration capabilities to common technology applications.

Interaction Management helps improve communications with stakeholders such as customers, prospects, employees and partners. It requires having ongoing dialogs with these stakeholders over a period of time. Ongoing dialogs help you learn about, adapt to, and respond to stakeholders’ changing needs and preferences so that you can lead your stakeholders toward a desired outcome.

•Vignette Dialog delivers highly personalized content to the intended recipients at the designated time through online and offline touch points. A simple, graphical environment allows business users to create planned, multi-step conversations that can be triggered by virtually any type of event, including Web site registration, completion of a purchase, event attendance or a customer service call.

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Our solutions and products are supported by our professional services organization, Vignette Professional Services (“VPS”). VPS offers pre-packaged and custom services, using documented best practices, to help organizations define their online business objectives and deploy their applications. Our education, consulting and customer care teams give customers the benefit of our experience with thousands of customer implementations. We partner with a number of leading consulting firms and system integrators such as Accenture, Bearing Point, Deloitte Consulting, and Tata Consulting Services to implement our software for their clients. In many cases, we work in blended teams to implement solutions. To ensure that we provide support to our customers on their chosen platform and infrastructure, we have long-standing relationships with key technology providers such as BEA Systems, Hewlett Packard and Sun Microsystems.

We recently expanded our product and services distribution channel via a new relationship with Access Distribution. Through this relationship, Access Distribution will make Vignette’s portal and collaboration solutions available through its reseller network.

Reconciliation of Non-GAAP Financial Measures

This section includes certain performance measures that may be considered “non-GAAP financial measures” under SEC rules and regulations. Management believes that these financial measures provide investors and analysts useful additional insight into our Company’s financial position and performance. Management also uses these financial measures to evaluate the Company’s performance and to make certain decisions relating to the optimal allocation of our resources.

Non-GAAP financial measures should not be considered substitutes for performance measures presented in our consolidated financial statements in accordance with GAAP. In addition, we caution that the methodologies for the calculation of non-GAAP financial measures may vary from company to company and, therefore, non-GAAP financial measures we present may not be comparable to similarly-named non-GAAP financial measures reported by other companies.

The tables below reconcile (in thousands) the following financial measures included, in this section that may be considered non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP: adjusted operating income and adjusted net income.

	Year ended December 31,						Quarter ended December 31,
	2005			2004			2005			2004
GAAP operating income/(loss)	$	2,113		$	(54,268	)	$	1,695		$	(11,911	)
Less: Amortization of acquired technology		6,267			10,115			1,254			2,538
Purchased in-process research and development, acquisition-related and other charges		270			7,609			—			442
Business restructuring (benefit) charges		(2,899	)		18,083			(10	)		9,384
Amortization of deferred stock compensation		834			480			267			98
Amortization of intangible assets		5,003			4,919			1,166			1,346
Adjusted operating income/(loss)	$	11,588		$	(13,062	)	$	4,372		$	1,897

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	Year ended December 31,						Quarter ended December 31,
	2005			2004			2005			2004
GAAP net income/(loss)	$	20,394		$	(52,855	)	$	2,895		$	(11,933	)
Less: Realized gains of certain equity investments		15,264			—			—			—
Plus: Write downs of certain equity investments		—			206			—			206
Amortization of acquired technology		6,267			10,115			1,254			2,538
Purchased in-process research and development, acquisition-related and other charges		270			7,609			—			442
Business restructuring (benefits) charges		(2,899	)		18,083			(10	)		9,384
Amortization of deferred stock compensation		834			480			267			98
Amortization of intangible assets		5,003			4,919			1,166			1,346
Adjusted net income	$	14,605		$	(11,443	)	$	5,572		$	2,081

2005 Highlights

Operating Results

The Company posted an operating income for fiscal year 2005 of $2 million compared to an operating loss of $54.3 million for fiscal year 2004. Net income for fiscal year 2005 was $20.4 million compared to a net loss in fiscal year 2004 of $52.9 million. Total revenue for fiscal year 2005 was $190.7 million or an increase of 7% over the fiscal year 2004 revenue of $177.9 million. In addition, the Company increased liquidity with an increase in cash, cash equivalents, and short term investments of $32.7 million to a total of $197.1 million at December 31, 2005 versus $164.4 million at December 31, 2004. The Company continues to carry no long term debt.

The improved performance in fiscal 2005 as compared to fiscal 2004 was the result of many factors. We grew our software license and services revenue during 2005 while continuing to focus on cost control and efficiency in our business. During the year, we reduced both our total costs of revenue and our operating expenses. The largest contributor in the decrease in operating expenses was a reduction in costs as a result of the business restructuring that occurred in fiscal 2004 The Company also exited most of its portfolio of equity investments resulting in gains of approximately $15.3.

License revenues of $70.3 million in fiscal 2005 and $20.1 million in the fourth quarter of 2005 were up 11% and 4%, respectively, as compared to 2004. Maintenance revenues of $75.1 million in fiscal 2005 and $18.6 million in the fourth quarter of 2005 were up 4% for the year and down 3% for the fourth quarter as compared to 2004. Professional services revenues of $45.3 million in fiscal 2005 and $12.2 million in the fourth quarter of 2005 were up 6% and 18% as compared to 2004. International revenue comprised 39% and 38% of total revenue for the year and quarter ended December 31, 2005, respectively. No single customer accounted for more than 10% of our annual or quarterly revenues.

The gross profit margin in fiscal 2005 increased five points to 66% versus 61% in fiscal 2004. The costs of revenue associated with product licenses decreased by $2.1 million to $2.9 million from $5 million. On a percentage

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basis product license direct costs were 2% of total revenues in fiscal 2005 versus 3% of total revenues in fiscal 2004 led to an improvement in the gross profit margin of 1 point. This was primarily due to a reduction in the costs of embedded technology. The amortization of acquired technology decreased to $6.3 million in fiscal 2005 versus $10.1 million in fiscal 2004. On a percentage basis amortization of acquired technology was 3% of total revenue in fiscal 2005 versus 6% of total revenue in fiscal 2004. The decrease in the amortization of acquired technology lead to an improvement of 3% in the gross profit margin. The decrease in the amortization of acquired technology is related to the normal run out of costs associated with recent acquisitions. The costs of professional services increased to $55.4 million from $53.3 million. As a percent of total revenue the costs of services was 29% of total revenue in fiscal 2005 versus 30% of total revenue in fiscal 2004 which lead to an improvement in the gross profit margin of 1%. The increase in absolute dollars related to the cost of services is due to the increased sales volume of services to $120.3 million in fiscal 2005 from $114.8 million in fiscal 2004.

Total expenses, including both cost of revenue and operating expenses, for fiscal 2005 and for the fourth quarter of 2005 were $188.6 million and $49.2 million, respectively, and included $9.5 million and $2.7 million, respectively, for the following (benefits) charges: business restructuring benefits, acquisition-related charges, amortization of acquired technology and intangibles and the amortization of deferred stock compensation. Most of these (benefits) charges relate to our previous acquisitions. The business restructuring benefits of $2.9 million are primarily the result of the sublease of idle facilities. The remaining expenses of $179.1 million for fiscal 2005 and $46.5 million for the fourth quarter of 2005 were down 6% and 1% as compared to 2004 due to lower costs of revenue as discussed above and lower operating expenses as a result of the business restructuring that occurred in 2004.

In the fourth quarter of 2005, the Company had operating income of $1.7 million as compared to an operating loss of $11.9 million for the fourth quarter of 2004. The increase was largely due to a decrease in the restructuring charges. The decrease is a result of lower than expected costs particularly reduced facilities charges as the Company has been successful in subleasing excess space and certain leases expired. The Company recorded a small restructuring benefit in the fourth quarter of ten thousand dollars versus restructuring charges of $9.4 million for the same quarter in 2004.

The combination of revenue growth and our continued cost control efforts yielded non-GAAP profit from operations of $4.4 million during the fourth quarter of 2005, excluding the $2.7 million in charges described above. This compares to a profit of $1.9 million during the fourth quarter of 2004. The Company reported increases in fiscal 2005 versus fiscal 2004 on a GAAP basis in total revenue, gross profit margin, income from operations, other income, and net income. The increase in sales combined with lower operating costs plus gains on the sale of equity investments allowed the Company to produce net income of $20.4 million in fiscal 2005 as compared to a net loss of $52.8 million during fiscal 2004. Excluding a net charge of $9.5 million as described above and gains for the sale of certain equity investments totaling $15.3 million, non-GAAP net income for fiscal 2005 was $14.6 million. This compares to non-GAAP net loss of $11.4 million in fiscal 2004.

In 2005 the Company continued to execute the restructuring plan put in place in 2001 and expanded in fiscal years 2002, 2003, and 2004. That included the expiration or sublease of office space no longer used by the Company. The Company realized restructuring benefits in 2005 of $2.9 million due primarily to the sublease of these idle facilities. The Company continued to offshore operations to control costs and improve efficiency. Headcount was 738 employees at December 31, 2005 as compared to 730 employees at December 31, 2004. These and other actions have contributed to an increase in operating income on a GAAP basis of $2.1 million for fiscal year 2005 versus an operating loss of $54.2 million for fiscal 2004.

Our total cash, cash equivalents, and short-term investments balance totaled approximately $197.1 million as of December 31, 2005, and increased approximately $32.7 million from December 31, 2004, due to the improved operating results and the gains on the sale of certain equity investments.

Outlook

Our objective is to maintain and extend our leadership position as a global provider of enterprise content management applications and products that help organizations leverage their content to create new opportunities, expand profits and realize greater savings and efficiencies. We will continue to focus on delivering sustained revenue and profitable growth, expanding our customer base of global 2000

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organizations both at the enterprise and departmental levels, extending our technology and product leadership through internal investment in research and development, expanding our global sales capabilities and extending our partnership alliances with leading technology and services companies.

We will seek to improve sales force and channel productivity. We will strive to encourage cross-functional team selling through enhanced team realignment around customer accounts and regions, and meet market-specific needs for designated solution areas through specialized teams with subject-matter expertise in areas such as healthcare, imaging and workflow, next generation web presence and collaborative records and document management. We will continue to focus on the indirect channel as a means to better distribute and expose our software and solutions to the marketplace. We will also continue to focus on realizing efficiencies and cost-savings across our business.

The primary risk to achieving our goals is competitive pressure, particularly from larger companies with much longer operating histories and greater resources. Moreover, many of these companies can adopt aggressive pricing policies and provide customers with consolidated offerings that may include some of our product capabilities. Other key risks include market acceptance of our products, the overall level of information technology spending, the uncertainties and challenges of offshore outsourcing and our ability to maintain control over expenses and cash. Our prospects must be considered in light of these risks, particularly given that we operate in new and rapidly evolving markets, have completed several acquisitions and face an uncertain economic environment. We may not be successful in addressing such risks and difficulties. See “Risk Factors that May Affect Future Results” for more information.

Reverse Stock Split

On June 10, 2005, the one-for-ten reverse stock split of the common stock (the “Reverse Stock Split”) of the Company became effective. The Reverse Stock Split was approved by the Company’s stockholders on May 27, 2005 at the Company’s annual meeting. The Company filed the certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to affect the Reverse Stock Split. All per share data and per share amounts have been retroactively restated for the Reverse Stock Split.

Option Exchange Offer

On September 28, 2004, we granted 200 thousand stock options on a post split basis to employees who elected to participate in our stock option exchange program, a program designed to retain employees and to provide them with an incentive for maximizing stockholder value. Under the option exchange program, a total of 510 thousand stock options on a post split basis, which were previously granted to the participating employees, were canceled on March 25, 2004, the Cancellation Date. For employees who were not designated with Vice President level titles on the Cancellation Date, the exercise price of these new options was $12.70 on a post split basis, which was the fair market value of the Company’s common stock on the grant date. For employees who were designated with Vice President level titles on the exchange program’s Cancellation Date, the exercise price of these new options was $22.00, which was the fair market value of the Company’s common stock on the exchange program’s Cancellation Date. The exchange program was organized to comply with FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation, and did not result in any additional compensation charges or variable plan accounting. The Company’s senior executive officers and Board of Directors were not eligible to participate in this program.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which were prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and

35

related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and assumptions are reviewed periodically. Actual results may differ from these estimates under different assumptions or conditions.

Management has discussed with and agreed upon the development and selection of the following critical accounting policies with the Audit Committee of the Board of Directors:

• Revenue recognition;

• Estimating the allowance for doubtful accounts;

• Estimating business restructuring accruals; and

• Valuation of goodwill and identifiable intangible assets.

Revenue recognition. Revenue consists of product license and services fees. Product license fee income is earned through licensing the right to use our software and from the sale of specific software products. Service fee income is earned through the sale of maintenance and technical support, consulting services and training services.

We do not recognize revenue for agreements with rights of return, refundable fees, cancellation rights or acceptance clauses until such rights to return, refund or cancel have expired or acceptance has occurred.

We recognize revenue in accordance with Statement of Position (“SOP”) 97-2, Software Revenue Recognition, as amended by SOP 98-4 and SOP 98-9, and Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) 101, Revenue Recognition in Financial Statements as revised by SAB 104.

Where software licenses are sold with maintenance or other services, we allocate the total fee to the various elements based on the fair values of the elements specific to us. We determine the fair value of each element in the arrangement based on vendor-specific objective evidence (“VSOE”) of fair value. VSOE of fair value is based upon the normal pricing and discounting practices for those products and services when sold separately and, for support services, is additionally measured by the renewal rate. If we do not have VSOE for one of the delivered elements of an arrangement, but do have VSOE for all undelivered elements, we use the residual method to record revenue. Under the residual method, the arrangement fee is first allocated to the undelivered elements based upon their VSOE of fair value; the remaining arrangement fee, including any discount, is allocated to the delivered element. If the residual method is not used, discounts, if any, are applied proportionately to each element included in the arrangement based on each element’s fair value without regard to the discount.

Revenue allocated to product license fees is recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, and collection of a fixed or determinable fee is probable. We consider all payments outside our normal payment terms, including all amounts due in excess of one year, to not be fixed and determinable, and such amounts are recognized as revenue as they become due. If collectibility is not considered probable, revenue is recognized when the fee is collected. For software arrangements where we are obligated to perform professional services for implementation of the product, we evaluate whether delivery has occurred upon shipment of software or upon completion of services and if the customer payment is probable of collection. This evaluation is made based on various factors such as the nature of the services work, order type (e.g. initial vs. follow-on), customer’s payment history, etc. In the instances where delivery is deemed not to have occurred upon shipment based on the aforementioned factors, license revenue is taken when we have no significant remaining obligations with regard to the implementation.

Revenue from perpetual licenses that include unspecified, additional software products is recognized ratably over the term of the arrangement, beginning with the delivery of the first product.

Revenue allocated to maintenance and support is recognized ratably over the maintenance term (typically one year).

Revenue allocated to training and consulting service elements is recognized as the services are performed as they are not essential to the functionality of our products.

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Deferred revenue includes amounts received from customers in excess of revenue recognized. Accounts receivable includes amounts due from customers for which revenue has been recognized.

We follow very specific and detailed guidelines, discussed above, in determining revenues; however, certain judgments and estimates are made and used to determine revenue recognized in any accounting period. Material differences may result in the amount and timing of revenue recognized for any period if different conditions were to prevail. For example, in determining whether collection is probable, we assess our customers’ ability and intent to pay. Our actual experience with respect to collections could differ from our initial assessment if, for instance, unforeseen declines in the overall economy occur and negatively impact our customers’ financial condition.

Allowance for doubtful accounts. We continuously assess the collectibility of outstanding customer invoices and in doing such, we maintain an allowance for estimated losses resulting from the non-collection of customer receivables. In estimating this allowance, we consider factors such as: historical collection experience, a customer’s current credit-worthiness, customer concentrations, age of the receivable balance, both individually and in the aggregate, and general economic conditions that may affect a customer’s ability to pay. Actual customer collections could differ from our estimates. For example, if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Business restructuring. We vacated excess leased facilities as a result of the restructuring plan we initiated in 2001 and subsequently expanded in 2002, 2003 and 2004. We recorded an accrual for the remaining lease liabilities of such vacated properties as well as brokerage commissions, partially offset by estimated sublease income. We estimated the costs of these excess leased facilities, including estimated costs to sublease and sublease income, based on market information and trend analysis. We continually assess our real estate portfolio and may vacate or occupy other leased space as dictated by our analysis. Actual results could differ from these estimates. In particular, actual sublease income attributable to the consolidation of excess facilities might deviate from the assumptions used to calculate our accrual for facility lease commitments.

Goodwill and identifiable intangible assets. We assess our goodwill on October 1 of each year and during an interim period if facts or circumstances would more likely than not suggest that the fair value of an identified reporting unit is below its carrying value. There was no impairment charge related to goodwill or other intangible assets in 2005, 2004, or 2003.

Results of Operations

The following table sets forth, for the periods indicated, certain items from our Consolidated Statements of Operations, expressed as a percentage of total revenues:

	Year Ended December 31,
	2005		2004		2003
Revenue:
Product license	37	%	35	%	39	%
Services	63		65		61
Total revenue	100		100		100
Cost of revenue:
Product license	2		3		2
Amortization of acquired technology	3		6		2
Services	29		30		25
Total cost of revenue	34		39		29
Gross profit	66		61		71
Operating expenses:
Research and development	17		23		25
Sales and marketing	36		42		43
General and administrative	10		10		10
Purchased in-process research and development, acquisition-related and other charges	—		4		3
Business restructuring (benefits) charges	(2	)	10		(9	)
Amortization of deferred stock compensation	1		—		1
Amortization of intangible assets	3		3		1
Total operating expenses	65		92		74
Income ( loss ) from operations	1		(31	)	(3	)
Other income (expense), net	11		2		3
Income ( loss ) before income taxes	12		(29	)	(—   )
Provision for income taxes	1		1		—
Net income ( loss)	11	%	(30	)%	(0	)%

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Comparison of fiscal years ended December 31, 2005, 2004 and 2003 (in thousands, unless otherwise noted)

Revenue

	Year Ended December 31,						2005 Compared to 2004		2004 Compared to 2003
	2005		2004		2003
Product license	$	70,316	$	63,152	$	60,986	11	%	4	%
Maintenance and support		75,077		72,164		61,186	4		18
Professional services		45,282		42,611		36,142	6		18
Total services revenue		120,359		114,775		97,328	5		18
Total revenue	$	190,675	$	177,927	$	158,314	7	%	12	%

Total revenue increased 7% in 2005 and 12% in 2004. The increase in revenue in 2005 is due to several factors. The Company continues to make strides in product integration and stability. This includes the expansion and ongoing integration of products through our Tower technology acquisition in the first quarter of 2004 which added software and services capabilities and an increase in revenues. The Company also continued to simplify and amplify the message that the Company provides solutions for customers. Lastly, there was renewed interest in Enterprise Content management software during fiscal year 2005. The increase in revenue for 2004 was due to sales associated with the collaboration and document management products acquired in December 2003 and March 2004, respectively, as partially offset by the continued weakness in the software industry and the ramp-up time required to successfully integrate our recently acquired companies. .

Product license. Product license revenue increased 11% in 2005 and 4% in 2004. The increase in 2005 can be attributed to an improving market for enterprise content software, the continued integration of the products discussed below, and a focused marketing and sales strategy on industry segments such as healthcare. The increase in 2004 can be attributed primarily to sales of collaboration and document management products acquired in our December 2003 and March 2004 acquisitions, respectively.

Services. Services revenue increased 5% in 2005 and 18% in 2004. The increase in professional services in 2005 is due to the larger install base of Vignette’s software products and professional services sold in conjunction with new product licenses. The increase in maintenance and support as well as professional services revenue in 2004 is primarily attributable to the acquisitions of Intraspect and Tower Technology.

During 2005, 2004 and 2003, no single customer accounted for more than 10% of our total revenues. International revenue was $74.6 million, $68.2 million and $41.8 million, or 39%, 38%, and 26% of total revenues, in 2005, 2004, and 2003, respectively.

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Gross Profit

Cost of revenue consists of costs to manufacture, package and distribute our products and related documentation, the costs of licensing third-party software incorporated into our products, the amortization of certain acquired technology, and personnel and other expenses related to providing professional and maintenance services.

Gross profit amounts and percentages are as follows:

	Year ended December 31,									2005 Compared to 2004		2004 Compared to 2003
	2005			2004			2003
Product license	$	67,405		$	58,116		$	58,142		16	%	—	%
Amortization of acquired technology		(6,267	)		(10,115	)		(3,450	)	38		193
Maintenance and support		61,707			58,381			53,421		6		9
Professional services		3,225			3,113			4,376		4		(29	)
Total services		64,932			61,494			57,797		6		6
Total gross profit	$	126,070		$	109,495		$	112,489		15	%	(3	)%

As a percent of sales, gross profit represented 66%, 61%, and 71% in 2005, 2004 and 2003, respectively. The improvement in 2005 is due to improved margins on product licenses and lower amortization charges of acquired technology. The improvement in the gross profit margin for product license increased in concert with the growth in revenue and by the lower costs of imbedded software. The decline in the amortization of acquired technology in 2005 is due to the normal run out of those amortized costs. The decline in gross profit in 2004 compared to 2003 is primarily due to the amortization of acquired technology related to our Intraspect and Tower Technology acquisitions, the lower mix of license revenue as well as higher costs of supporting our expanded product offerings.

Operating expenses

	Year Ended December 31,								2005 Compared to 2004		2004 Compared to 2003
	2005			2004		2003
Research and development	$	33,200		$	40,211	$	39,923		(17	)%	1	%
Sales and marketing		67,956			74,489		68,160		(9	)	9
General and administrative		19,593			17,972		15,727		9		14
Purchased in-process research and development, acquisition-related and other charges		270			7,609		4,258		(96	)	79
Business restructuring (benefits) charges		(2,899	)		18,083		(14,687	)	(116	)	223
Amortization of deferred stock compensation		834			480		1,107		74		(57	)
Amortization of intangible assets		5,003			4,919		1,965		2		150
Total operating expenses	$	123,957		$	163,763	$	116,453		(24	)%	41	%

Research and development. Research and development expenses consist primarily of personnel costs to support product development. Research and development expenses decreased 17% in 2005 and increased 1% in 2004. The year over year decrease in 2005 is due primarily to our restructuring efforts via reduced engineering headcount in the first half of 2005, lower facilities expenses and other cost saving measures such as the consolidation of product development facilities and the transition of these activities to an offshore operations model. The year-over-year increase in 2004 in absolute dollars relates to the timing of research and development efforts and the ramp-up of certain offshore development activities, partially offset by other cost savings.

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The Company did not capitalize any software development costs in accordance with Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed, for fiscal years 2005, 2004, and 2003, respectively. The Company did capitalize costs that related to software developed by third a party that was not acquired in a business combination prior to 2003. Those costs are amortized using the straight-line method over the estimated useful life, generally 18 months. Amortization expense was $0.0 million, $0.1 million, and $0.5 million in 2005, 2004 and 2003, respectively, and is included in “Cost of revenue – product license” on the Consolidated Statements of Operations.

Sales and marketing. Sales and marketing expenses consist primarily of salaries and other related costs for sales, marketing and customer care personnel, sales commissions, public relations, marketing materials and tradeshows as well as bad debt charges. Sales and marketing expenses decreased 9% in 2005 and increased 9% in 2004. The decrease in 2005 is attributable to reduced bad debt charges and lower marketing and headcount costs. The increase in absolute dollars in 2004 compared to 2003 is attributable to increased commission expense and other variable costs resulting from higher product sales in 2004 as well as bad debt charges incurred primarily during the first quarter of 2004. The increase was partially offset by lower marketing costs.

General and administrative. General and administrative expenses consist primarily of salaries and other related costs for human resources, finance, accounting, facilities, information technology and legal employees. General and administrative expenses increased 9% in 2005 and 14% in 2004. The increase in absolute dollars for 2005 and 2004 is attributable to the increased costs of meeting regulatory reporting requirements.

Purchased in-process research and development, acquisition-related and other charges.

During fiscal 2005 the Company recognized expense associated with business combinations. The Company made a series of complimentary businesses acquisitions in the three years ended December 31, 2004. The following table summarizes costs related to our business combinations (in thousands) for the most recent three years:

	Year Ended December 31,
	2005		2004		2003
Purchased in-process research and development	$	—	$	4,800	$	1,100
Cross-training, product integration and other		270		1,345		490
Severance and other employee-related costs		—		807		136
Contingent compensation		—		657		2,532
	$	270	$	7,609	$	4,258

Included in the acquired net assets of Tower Technology was purchased in-process research and development (“IPR&D”) efforts that we intended to substantially rework before integrating into our products (in thousands):

Acquired Company	Acquired IPR&D -Project Description	Estimated Fair Value		Current Status at December 31, 2005
Tower Technology (2004)	Tower IDM 20.0™—Collaborative document management functionality with process automation solutions and decentralization of configuration.	$	4,800	Application from this project is now fully integrated into our products.
	Tower Seraph 4.4™—provides document review workflows, case management and Section 508 compliance

The amounts allocated to IPR&D were based on discounted cash flow models that employed cash flow projections for revenue based on the projected incremental increase in revenue that the acquired company expected to receive from the completed IPR&D. Such assumptions were based on management’s estimates and the growth potential of the market. Revenue for the projection periods assumed a compound

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annual growth rate of 17.5%, and was adjusted to reflect the percentage of research and development determined to be complete as of the acquisition date. Cost of revenue, selling, general and administrative expense, and research and development expense were estimated as a percent of revenue based on the acquired company’s historical results and industry averages. These estimated operating expenses as well as capital charges and applicable income taxes were deducted to arrive at an estimated after-tax cash flow. The after-tax cash flow projections were discounted using a risk-adjusted rate of return, of 20% to 22%. These discount rates were based on the acquired company’s weighted average cost of capital of 20%, as adjusted upwards for the additional risk related to the projects’ development and success.

The resulting IPR&D was expensed at the time of purchase because technological feasibility had not been established and no future alternative uses existed. The efforts required to develop the purchased IPR&D into commercially viable products related to the completion of all planning, designing, prototyping, verification and testing activities that would be necessary to establish that the products could be produced to meet their design specifications, including functions, features and technical performance requirements. The timing for the completion of such efforts was expected to range between twelve and eighteen months. Further, we were uncertain of our ability to complete the products within a timeframe acceptable to the market and ahead of competitors. The application of the purchased IPR&D has now been incorporated into the Company’s product set.

Impairment of intangible assets. We use a two-step approach to assess our goodwill annually, or more frequently, if events or changes in circumstances indicate that goodwill might be impaired. In step 1 of the assessment the Company compares the fair value of the reporting unit to the carrying value of the reporting unit to determine if an impairment of goodwill is indicated. The estimated fair value is based on market capitalization, as complemented by a discounted cash flow analysis. If no impairment is indicated in Step 1 no additional analysis is performed. Should an impairment be indicated the Company would measure the loss in Step 2 by comparing the enterprise’s implied fair value of goodwill to the carrying amount of goodwill to determine the amount of impairment loss to be recorded.

We also review other intangible assets for possible impairment periodically. Sustained negative industry and economic trends, a decline in our stock price and market capitalization for an extended period of time, or changes in our product offerings could result in future impairment charges that are material to our consolidated financial statements.

Based on the methods described above there were no impairment charges related to goodwill or other intangible assets in 2005, 2004, or 2003.

Business restructuring charges. In 2001, we initiated a restructuring program to align our expense and revenue levels and to better position us for growth and profitability. In 2002, 2003, and 2004, we expanded those restructuring efforts. Although we have substantially implemented our restructuring activities, there can be no assurance that the estimated costs of our restructuring efforts will not change. Components of business restructuring charges and the remaining restructuring accruals as of December 31, 2005 are as follows (in thousands):

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	Facility Lease Commitments			Asset Impairments			Employee Separation and Other Costs			Total
Balance at December 31, 2000	$	—		$	—		$	—		$	—
Total restructuring charge		55,150			33,683			32,102			120,935
Cash activity		(12,397	)		(878	)		(22,773	)		(36,048	)
Non-cash activity		(292	)		(32,805	)		(1,918	)		(35,015	)
Balance at December 31, 2001		42,461			—			7,411			49,872
Effect of expanded restructuring plan		6,518			8,730			11,118			26,366
Adjustment to accrual		9,538			463			(545	)		9,456
Cash activity		(21,959	)		—			(11,342	)		(33,301	)
Non-cash activity		—			(9,193	)		(36	)		(9,229	)
Balance at December 31, 2002		36,558			—			6,606			43,164
Effect of expanded restructuring plan		9			—			2,076			2,085
Adjustment to accrual		(13,422	)		—			(3,349	)		(16,771	)
Cash activity		(10,620	)		—			(4,961	)		(15,581	)
Balance at December 31, 2003		12,525			—			372			12,897
Effect of expanded restructuring plan		12,421			2,331			4,085			18,837
Adjustment to accrual		(780	)		—			(83	)		(863	)
Cash activity		(8,584	)		—			(3,404	)		(11,988	)
Non-cash activity		(869	)		(2,331	)		(8	)		(3,208	)
Balance at December 31, 2004		14,713			—			962			15,675
Adjustment to accrual		(1,676	)		—			(123	)		(1,799	)
Cash activity		(6,358	)		—			(709	)		(7,067	)
Balance at December 31, 2005	$	6,679		$	—		$	130		$	6,809
Less: current portion											(2,901	)
Accrued restructuring costs, less current portion										$	3,908

Remaining cash expenditures resulting from the restructuring are estimated to be $6.8 million and relate primarily to facility lease commitments, of which the remaining maximum lease commitment extends out to 2011. We have substantially implemented our restructuring efforts initiated in conjunction with this restructuring plan; however, there can be no assurance that the estimated costs of our restructuring efforts will not change. These are management’s best estimates based on currently available information and are subject to change.

Consolidation of excess facilities

Facility lease commitments relate to lease obligations for excess office space that the Company has vacated as a result of the restructuring plan. The Company continues to actively pursue mitigation strategies to dispose of all excess office space through subleasing and/or early termination negotiations where possible. The total lease commitments include the estimated lease buyout fees, or the remaining lease liabilities and estimated associated mitigation costs including, but not limited to, brokerage commissions, legal fees, repairs, restoration costs, and sublease incentives, offset by estimated sublease income. The estimated costs of vacating these leased facilities, including estimated costs to sublease and any resulting sublease income, were based on market information and trend analysis as estimated by the Company. The Company continually assesses its real estate portfolio and may vacate and/or occupy other leased space as dictated by its analysis and by the needs of the business. It is reasonably possible that actual results could continue to differ from these estimates in the near term, and such differences could be material to the financial statements. In particular, actual sublease income attributable to the consolidation of excess facilities

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might deviate from the assumptions used to calculate the Company’s accrual for facility lease commitments. The accrual adjustments recorded during fiscal 2005 relate primarily to such differences, namely the buyout fees and sublease income of certain vacated properties were more favorable than we had anticipated. Facility lease commitments relate to the Company’s departure from certain office space in Austin, Texas; Brisbane and San Francisco, California; New York City, New York; Waltham and Boston, Massachusetts; Chicago, Illinois; Slough, United Kingdom; and Madrid, Spain. The maximum lease commitment of such vacated properties extends through December 2011.

Asset impairments

Asset impairments relate to the impairment of certain fixed assets, prepaid royalties and intangible assets. These fixed assets were impaired as a result of the Company’s decision to vacate certain office space and align its infrastructure with current and projected headcount.

Employee separation and other costs

Employee separation and other costs include severance, related taxes, outplacement and other restructuring charges. As a result of the restructuring activities, the Company severed approximately 1,675 employees. Employee groups impacted by the restructuring efforts include personnel in positions throughout the sales, marketing, professional services, engineering and general and administrative functions in all geographies.

Amortization of deferred stock compensation. For stock options issued to employees, we record deferred compensation at the grant date if a difference exists between the exercise price and the market value of our common stock. For restricted share issuances, we record deferred compensation equal to the market value on the issue date. Deferred stock compensation is amortized on an accelerated basis over the vesting periods of the applicable options and restricted share grants. Amortization of deferred stock compensation is attributable to the following cost categories (in thousands):

	Year Ended December 31,
	2005		2004			2003
Research and development		12		(71	)		324
Sales and marketing		124		(48	)		69
General and administrative		698		599			714
	$	834	$	480		$	1,107

Amortization of intangible assets. Intangible amortization expense decreased 2% in 2005 as compared to 2004 and increased 150% in 2004 compared to 2003. The decrease in 2005 compared to 2004 relates to the decline in amortization expense for assets assumed from the Intraspect and Tower Technology acquisitions as the remaining unamortized cost continues to decline. The increase in amortization expense in 2004 compared to 2003 is related to those same assets as Tower Technology was acquired on March 1, 2004 and Intraspect on December 10, 2003. Therefore, fiscal year 2004 bore a greater portion of the amortization expense due to the timing of the acquisitions. Amortization expense for these assets is recorded ratably over the estimated useful lives of the intangible assets, which range from two to six years

Other income and expense

Other income and expense, net consists primarily of interest income and expense, recognized investment gains and losses as well as foreign currency exchange gains and losses.

	Year Ended December 31,						2005 Compared to 2004		2004 Compared to 2003
	2005		2004		2003
Interest income and other, net	$	5,419	$	2,895	$	5,068	87	%	(43	)%
Gain on Sale of equity investments	$	15,264	$	—	$	—	100	%	—

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Other income and expense, net increased in 2005 due to higher cash and short term investment balances and increasing yields on invested funds. The gain on the sale of equity investments was due to the sale of equity securities in privately held technology companies. The largest of which was a sale of Shopzilla for approximately $600 million to EW Scripps Company. The Company owned approximately 2% of Shopzilla and recognized a gain of approximately $13.0 million. The Company had no carrying cost in the asset at the time of the sale due to previous impairment charges.

The decrease in 2004 compared to 2003 is primarily due to lower cash balances available for investment, a decrease in interest rates earned on those cash balances, and foreign exchange gains recognized in 2003 but minimized in 2004 with the implementation of a hedge program.

In the third quarter of 2004, we adopted a foreign exchange policy to reduce our exposure to significant foreign currency fluctuations. We utilize foreign currency forward contracts to hedge certain foreign currency-denominated payables and receivables.

At December 31, 2005, our unrestricted, long-term investments totaled $1.3 million. Future adverse changes in market conditions or poor operating results of an investee could require future impairment charges.

Provision for income taxes

Income tax expense consists primarily of estimated withholdings and income taxes due in certain foreign jurisdictions.

	Year Ended December 31,						2005 Compared to 2004		2004 Compared to 2003
	2005		2004		2003
Provision for income taxes	$	2,429	$	1,482	$	1,137	64	%	30	%

We have provided a full valuation allowance on our net deferred tax assets, which includes net operating loss, net foreign operating loss, capital loss, and research tax credit carryforwards, because of the uncertainty regarding their realization. Our accounting for deferred taxes under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“Statement 109”), involves the evaluation of a number of factors concerning the realizability of our deferred tax assets. In concluding that a full valuation allowance was required, we primarily considered such factors as our history of operating losses and expected future losses and the nature of our deferred tax assets.

Quarterly Results

The table on pages F-36 to F-37 of the “Consolidated Financial Statements” section sets forth certain unaudited consolidated statements of operations data, both in absolute dollars and as a percent of revenue, for each of the last consecutive eight quarters.

We base our forecast for expenses in part on future (as opposed to historical) revenue projections due to the continued changes in our business. Many of these expenses are fixed in the short-term, and we may not be able to quickly reduce spending if revenues are lower than we have projected. Our ability to accurately forecast our quarterly revenue is limited due to the long sales cycle of our software products, which makes it difficult to predict the quarter in which product implementation will occur, and the variability of customer demand for professional services. We would expect our business, operating results and financial condition to be materially adversely affected if revenues do not meet projections and that net losses in a given quarter would be even greater than expected.

Our operating results have varied significantly from quarter to quarter in the past and we expect our operating results will continue to vary significantly from quarter to quarter. A number of factors are likely to cause these variations, including:

• demand for our products and services;

• the timing of sales of our products and services;

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• the timing of customer orders and product implementations;

• seasonal fluctuations in information technology purchasing;

• unexpected delays in introducing new products and services;

• increased expenses, whether related to sales and marketing, product development or administration;

• changes in the rapidly evolving market for Web-based applications;

• the mix of product license and services revenue, as well as the mix of products licensed;

• the mix of services provided and whether services are provided by our own staff or third-party contractors;

• the mix of domestic and international sales;

• difficulties in collecting accounts receivable;

• costs related to possible acquisitions of technology or businesses;

• global events, including terrorist activities and military operations; and

• the general economic climate;

• changes to our licensing and pricing model.

Accordingly, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Investors should not rely on the results of one quarter as an indication of future performance.

Net Operating Losses and Tax Credit Carryforwards

As of December 31, 2005, the Company had federal net operating loss, capital loss and research credit carryforwards of approximately $767.3 million, $39.9 million and $11.8 million, respectively. The net operating loss, capital loss, and research credit carryforwards will expire in varying amounts, between 2006 and 2026, if not utilized. The Company also had a foreign net operating loss carryover of approximately $6.9 million. The foreign net operating loss carryover is not subject to expiration.

The Tax Reform Act of 1986 imposes substantial restrictions on the utilization of net operating loss, capital loss, and research credit carryforwards in the event of an “ownership change” of a corporation. At December 31, 2005 approximately $157.9 million of the net operating loss, $5.0 million of the net foreign operating loss, and $1.8 million of the research credit carryover were incurred by companies we acquired and will be subject to an annual limitation. In addition, the remaining net operating loss of $609.4 million, capital loss carryforward of $39.9 million, and research credit carryover of $10.0 million may be subject to this limitation. These restrictions may severely limit the benefit of these tax attributes in future periods. As a result, substantial amounts of the Company’s net operating loss, capital loss, and research credit carryforwards may expire prior to utilization.

We have provided a full valuation allowance on our net deferred tax assets, which include net operating losses carried forward, research and development carryforwards, and capital loss carryforwards because of the uncertainty regarding their realization. Our accounting for deferred taxes under Statement 109 involves the evaluation of a number of factors concerning the realizability of our deferred tax assets. In concluding that a full valuation allowance was required, we primarily considered such factors as our history of operating losses and expected future losses and the nature of our deferred tax assets.

As of December 31, 2005, the valuation allowance includes approximately $26.4 million related to the acquisition of Epicentric, Intraspect and Tower Technology net deferred tax assets. The initial recognition of these acquired deferred tax asset items will first reduce goodwill, then other non-current intangible assets of the acquired entity. In both years ended December 31, 2005 and 2004 the company recognized approximately $0.3 million of acquired deferred tax assets as a reduction to goodwill. Approximately $150.0 million of the valuation allowance relates to tax benefits for stock option deductions included in the net operating loss carryforward, substantially all of which when realized, will be allocated directly to contributed capital to the extent the benefits exceed amounts attributable to deferred compensation expense.

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Liquidity and Capital Resources

The following table presents selected financial statistics and information, (dollars in thousands):

	December 31,
	2005		2004		2003
Cash and cash equivalents	$	124,104	$	63,781	$	39,639
Short-term investments	$	72,953	$	100,582	$	199,874
Working capital	$	165,319		126,406	$	205,749
Current ratio		3.1:1		2.5:1		3.9:1
Days of sales outstanding		69		77		70

At December 31, 2005, we had $197.1 million in cash, cash equivalents and short-term investments and no debt. We invest cash exceeding our operating requirements in short-term, investment-grade securities and classify these investments as available-for-sale.

Net cash provided by (used in) operating activities was $16.7 million, $(31.5) million, and $(43.4) million, in 2005, 2004 and 2003, respectively. The increase in 2005 is related to the improved operating performance of the Company. The operating cash outflows in 2004 and 2003 were due to net losses as well as changes in working capital, namely restructuring and exit cash outflows.

Net cash provided by investing activities was $ 42 million, 51.5 million, and 4.9 million, in 2005, 2004 and 2003, respectively. The increase in investing cash inflows in 2005 was due to the sale of certain equity investments and the maturities of short term investments. The increase in investing cash inflows in 2004 was due primarily to the maturity of our investments in marketable and auction rate securities, offset by purchase consideration for our acquisition of Tower Technology. The increase in investing cash inflows in 2003 was due primarily to the maturity of our investments in short-term marketable and auction rate securities, partially offset by purchase consideration for our acquisitions of Epicentric and Intraspect.

Net cash provided by financing activities was $2.8 million, $3.2 million, and $2.9 million in 2005, 2004 and 2003, respectively. Our financing activities consisted primarily of employee stock option exercises and purchases of employee stock purchase plan shares.

Our long-term investments are classified as available-for-sale and consist of limited partnership interests in a technology incubator, cash collateral pledged for certain lease obligations, and tax obligations. At December 31, 2005 and 2004, long-term investments totaled $8.3 million and $12.4 million, respectively.

At December 31, 2005 and 2004, we had pledged $6.9 million and $9.8 million, respectively, as cash collateral for certain of our lease obligations and tax obligations. These investments will remain restricted to the extent that the security requirements exist.

We expect our existing cash, cash equivalents and short-term investment balances will increase in the near future. We expect to fund our operations, capital expenditures and investments from internally generated funds. We believe that our existing balances will be sufficient to meet our working capital, capital expenditure and investment requirements for at least the next 12 months. We may require additional funds for other purposes and may seek to raise such additional funds through public and private equity financings or from other sources. However, there can be no assurance that additional financing will be available at all or that, if available, such financing will be obtainable on terms favorable to us or that any additional financing will not be dilutive.

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Future minimum payments as of December 31, 2005 under our lease obligations, including operating lease commitments for all vacated properties, are as follows (in thousands):

	Operating Leases		Sublease Income
2006	$	7,629	$	1,190
2006		5,304		1,337
2007		4,267		1,199
2008		3,640		1,027
2010		2,920		576
Thereafter		2,476		416
Total minimum lease payments	$	26,236
Total minimum sublease rentals			$	5,745

We do not have any significant contractual obligations other than those leases disclosed above.

Recent Accounting Pronouncements

In December 2004, FASB issued a Statement, “Share-Based Payment, an amendment of FASB Statements Nos. 123 (“SFAS 123R”) that addresses the accounting for share-based payment transactions in which a Company receives employee services in exchange for either equity instruments of the Company or liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of such equity instruments. The statement eliminates the ability to account for share-based compensation transactions using the intrinsic method that the Company currently uses and generally requires that such transactions be accounted for using a fair-value-based method and recognized as expense in the consolidated statements of operations. The effective date of the new standard is for fiscal years beginning after June 15, 2005, which for the Company will be the first quarter of fiscal 2006.

In March 2005, the SEC issued Staff Accounting Bulletin (“SAB”) No. 107 regarding the Staff’s interpretation of SFAS 123R. This interpretation provides the Staff’s views regarding interactions between SFAS 123R and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. The interpretive guidance is intended to assist companies in applying the provisions of SFAS 123R and investors and users of the financial statements in analyzing the information provided. We will follow the guidance prescribed in SAB 107 in connection with our adoption of SFAS 123R.

We plan to adopt SFAS 123R using the modified prospective method, under which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the previous requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date.

The amounts disclosed within our footnotes are not necessarily indicative of the amounts that will be expensed upon the adoption of SFAS 123R. Compensation expense calculated under SFAS 123R may differ from amounts currently disclosed within our footnotes based on changes in the fair value of our common stock, changes in the number of options granted or the terms of such options, the treatment of tax benefits and changes in interest rates or other factors. Upon adoption of SFAS 123R, we plan to use the Black-Scholes model to value the compensation expense associated with employee stock options and stock purchases under our employee stock purchase plan. We are currently evaluating the potential impact of this standard on our financial position, results of operations, and cash flows. We expect this standard to have a significant impact on the consolidated statements of operations. The current expected range of expense for the first quarter of 2006 is $750 thousand to $1 million. SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as cash flow from financing activities rather than as cash flow from operations as required under SFAS 123. The Company is currently evaluating the impact of SFAS 123R in relation to the statements of cash flows relative to any excess tax benefits that may be generated.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Rate Risk

The majority of our operations are based in the United States of America and accordingly, the majority of our transactions are denominated in U.S. Dollars. We have operations throughout the Americas, Europe, Asia and Australia where transactions are denominated in the local currency of each location. As a result, our financial results could be affected by changes in foreign currency exchange rates. In the third quarter of 2004, we adopted a foreign exchange policy to reduce our exposure to significant foreign currency fluctuations. We utilize foreign currency forward contracts to hedge foreign currency-denominated payables and receivables. To date, we have not hedged forecasted transactions or firm commitments denominated in foreign currencies. Gains and losses on hedging contracts are reflected currently in other income and expense. We typically limit the duration of our foreign currency forward contracts to 90 days. We do not invest in contracts for speculative purposes. Our foreign exchange exposures are monitored regularly to ensure the overall effectiveness of our foreign currency hedge positions.

Interest Rate Risk

Cash, cash equivalents and short-term investments. Our interest income is sensitive to changes in the general level of U.S. interest rates, particularly since the majority of our investments are in short-term instruments. Due to the nature of our short-term investments, we have concluded that we do not have material interest risk exposure. The risk associated with fluctuating interest rates is limited to our investment portfolio and we do not believe that a 10% change in interest rates would have a significant impact on our interest income. Our investment policy requires us to invest funds in excess of current operating requirements in:

• obligations of the U.S. government and its agencies;

• investment grade state and local government obligations;

• securities of U.S. corporations rated A1 or P1 by Standard & Poors or the Moody’s equivalents; and

• money market funds, deposits or notes issued or guaranteed by U.S. and non-U.S. commercial banks meeting certain credit rating and net worth requirements with maturities of less than two years.

At December 31, 2005, our cash and cash equivalents consisted primarily of commercial paper.

Long-term investments. We invest in emerging technology companies considered strategic to our software business. At December 31, 2005, long-term investments consisted of a limited partnership interest in a technology incubator. We periodically analyze our long-term investments for impairments that could be considered other than temporary. Our investments in redeemable convertible preferred stock in privately-held technology companies were fully impaired as of June 30, 2002. Fair values were based on quoted market prices where available. If quoted market prices were not available, we use a composite of quoted market prices of companies that are comparable in size and industry classification to our portfolio. The Company classifies long term investments and records any unrealized gain or loss. During 2005 the Company liquidated its investment of common stock held in publicly traded technology companies and recognized a gain of approximately $15.3 million. As of December 31, 2005 the company did not recognize any unrealized gain or loss on the remaining long term investment as described above.

In addition to strategic investments, we held $6.9 million and $9.8 million in restricted investments at December 31, 2005 and December 31, 2004, respectively. At December 31, 2005, restricted investments were composed of a certificate of deposit and investment grade securities placed with a high credit quality financial institution. Such restricted investments collateralize letters of credit related to certain leased office space security deposits and a tax obligation. These investments will remain restricted to the extent that the security requirements exist. All restricted investments mature beginning in 2006 through 2010 and the average yield of these investments is approximately 2.98%.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the Index to Consolidated Financial Statements that appears on page F–1 of this Report. The Report of Independent Registered Public Accounting Firm, the Consolidated Financial Statements and the Notes to Consolidated Financial Statements, listed in the Index to Consolidated Financial Statements, which appear beginning on page F–2 of this Report, are incorporated by reference into this Item 8.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On December 1, 2005, Vignette Corporation (the “Company”) sent out a request for proposal to five registered public accounting firms inviting them to compete for the assignment to provide the Company with audit-related services beginning in fiscal year 2006. The Company’s current auditor, Ernst & Young, received the request for proposal and was invited to compete for the assignment in 2006. On December 20, 2005, Ernst & Young notified the Company that Ernst & Young had decided to decline the opportunity to compete and would not submit a response to Vignette’s request for proposal for audit services. As such, Ernst & Young (“E&Y”) has notified the Company that it intends to decline to stand for re-election as the Company’s independent registered public accounting firm and will cease to serve as such after the completion of the current audit for the fiscal year ended December 31, 2005 effective with the Company’s filing of this Form 10K for 2005.

The reports of E&Y on the Company’s financial statements for the fiscal years ended December 31, 2004 and December 31, 2003 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the Company’s two most recent fiscal years ended December 31, 2004 and December 31, 2003, and through December 20, 2005, there were no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to E&Y’s satisfaction, would have caused E&Y to make reference thereto in its reports on the Company’s financial statements for such years.

During the Company’s two most recent fiscal years ended December 31, 2004 and December 31, 2003, and through December 20, 2005, there were no reportable events (as described in Item 304(a)(1)(v) of Regulation S-K).

On February 7, 2006, the Audit Committee of the Board of Directors of Vignette Corporation (the “Company”) approved the engagement of Grant Thornton LLP as the Company’s independent registered public accounting firm. The Company has not consulted with Grant Thornton LLP during the last two fiscal years ended December 31, 2005 and 2004 or during any subsequent interim period preceding this Current Report on: the application of accounting principles to a specified transaction, either completed or proposed; the type of audit opinion that might be rendered on the Company’s consolidated financial statements; or any matter that was either the subject of a “disagreement,” as that term is described in Item 304(a)(1)(iv) of Regulation S-K, or a “reportable event,” as that term is described in Item 304(a)(1)(v) of Regulation S-K.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2005, the disclosure controls and procedures were

49

effective to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commission’s rules and forms.

Management’s Report On Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005. In making this assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment, management concluded that, as of December 31, 2005, the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005, has been audited by Ernst &Young LLP, an independent registered public accounting firm. This report appears on page F-2 in our Consolidated Financial Statements.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

None

The Company entered into offer letter agreements with the following executives: a) Brett Bachman, Senior Vice President Products and Strategy, on June 9, 2005; b) David Crean, Vice President Healthcare Solutions Unit, on September 20, 2005; c) Gayle Wiley, Senior Vice President Global Human Resources, on September 28, 2005; and Lawrence Warnock, Vice President Marketing, on October 17, 2005. The offer letter agreements are attached as exhibits to this Form 10K.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is incorporated herein by reference to the information under the sections entitled “Proposal No. 1 - Election of Directors,” “Executive Officers”, “Section 16(a) Beneficial Ownership Reporting Compliance” and “Code of Ethics” of our definitive Proxy Statement (the “Proxy Statement”) to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, for our Annual Meeting of Stockholders to be held on May 26, 2006. We anticipate filing the Proxy Statement within 120 days of the end of our fiscal year ended December 31, 2005.

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ITEM 11. EXECUTIVE COMPENSATION

The information regarding executive compensation is incorporated herein by reference from the section entitled “Executive Compensation and Related Information” of the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information regarding security ownership of certain beneficial owners and management is incorporated herein by reference from the section entitled “Share Ownership of Certain Beneficial Owners and Management” of the Proxy Statement. The table below presents the following information as of December 31, 2005: (i) aggregate number of securities to be issued under the stock plans upon exercise of outstanding options, warrants and other rights, (ii) the related weighted-average exercise price and (iii) the aggregate number of securities reserved for future issuance under such plans. The table does not include information with respect to shares subject to outstanding options assumed by the Company in business combinations. Note (5) to the table sets forth information for options assumed by the Company.

	Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and Rights (i)		Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (ii)			Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans [Excluding Securities Reflected in Column (i)] (iii)
Equity compensation plans approved by security holders (1)	1,545,480	(3)	$	23.10	(3)	4,126,093	(4)
Equity compensation plans not approved by security holders (2)	1,597,835		$	28.71		1,874,199
Total (5)	3,143,315		$	25.95		6,000,292

(1) Consists of the following plans: 1995 Stock Option/Stock Issuance Plan, the 1999 Equity Incentive Plan, the 1999 Non-Employee Directors Plan and the Employee Stock Option Plan (“ESPP”). Each fiscal year, commencing with the year 2000 and ending with the year 2002, the aggregate number of shares authorized under the 1999 Equity Incentive Plan automatically increased by the lesser of (i) 5% of the total number of shares of the common stock then outstanding or (ii) 1,180,482, shares. Each fiscal year, commencing with the year 2000 and ending with the year 2002, the number of shares under the ESPP automatically increased by the lesser of (i) 2% of the total number of shares of common stock then outstanding or (ii) 450,000 shares.

(2) Consists of the 1999 Supplemental Stock Option Plan (the “1999 Supplemental Plan”) as well as inducement option grants for certain Company officers at the time of hire. As it relates to the 1999 Supplemental Plan, a total of 1,197,835 shares of the Company’s common stock were issuable upon exercise of outstanding options at December 31, 2005. The weighted average exercise price of those outstanding options was $23.57 per share. No options were granted and no shares were issued under the 1999 Supplemental Plan to any of the Company’s directors or executive officers. The material features of the 1999 Supplemental Plan are outlined in Note 5 to the Consolidated Financial Statements.

As it relates to inducement options granted to Company officers, such grants were issued pursuant to NASD Rule 4350(i). As of December 31, 2005, a total of 400,000 shares of the Company’s common stock were issuable upon exercise of such outstanding options. The weighted average exercise price of those outstanding options was $44.08 per share. In addition to the individual terms summarized in items (a) and (b) below, if there is a change in control of the Company and the respective officer’s employment is terminated within eighteen months of the change in control, then the remaining unvested options will become immediately exercisable.

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(a) On April 6, 2001, the Company granted Thomas E. Hogan, President, Chief Executive Officer and Director, 345,000 stock options at an exercise price of $38.80. These options expire on April 6, 2009 and become exercisable as follows: 86,500 options become exercisable at a rate of 25% per quarter over one year beginning April 6, 2001; and 258,750 options become exercisable at a rate of 6.25% per quarter beginning April 6, 2001 If Mr. Hogan’s employment is terminated for any reason other than cause or if Mr. Hogan resigns under certain circumstances, then the options will vest as though Mr. Hogan completed one additional year of employment, but not more than 25% of the then unvested shares will vest. As of December 31, 2005, 345,000 stock options under this grant remain outstanding.

(b) On January 22, 2001, the Company granted Bryce M. Johnson, Senior Vice President, General Counsel and Secretary, 55,000 stock options at an exercise price of $77.50 per share. These options expire on January 22, 2009 and become exercisable as follows: 25% on January 22, 2002 and 6.25% quarterly thereafter. As of December 31, 2005, 55,000 stock options under this grant remain outstanding.

(3) Excludes purchase rights accrued under the ESPP.

(4) Includes shares available for future issuance under the ESPP. As of December 31, 2005, there were 1,179,519 shares available for future issuance under the ESPP.

(5) Excludes information for options assumed by the Company in business combinations. As of December 31, 2005, a total of 3,208 shares of the Company’s common stock were issuable upon exercise of outstanding assumed options under the assumed plans. The related weighted average exercise price of those outstanding options was $37.66 per share. Upon assumption by the Company, no additional options may be granted under these plans.

(6) The following executive officers have entered into individual Rule 10b5-1 trading plans pursuant to which stock of the Company will be sold for their account from time to time in accordance with the provisions of the plans without any further action or involvement by the officers: Charles Sansbury, Bryce M. Johnson, Conleth O’Connell, Leo Brunnick, Brett Bachman.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information regarding certain relationships and related transactions is incorporated herein by reference from the section entitled “Certain Relationships and Related Transactions” of the Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information related to audit fees and services paid to Ernst & Young LLP appearing in the Proxy Statement is incorporated herein by reference.

PART IV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Annual Report on Form 10-K:

(1) Financial Statements

The Company’s consolidated financial statements, listed on the Index to Consolidated Financial Statements, on page F-1.

(2) Financial Statement Schedules

Financial Statement Schedules have been omitted as the information required to be set forth therein is either not applicable or is included in the Consolidated Financial Statements or the notes thereto.

52

(3) Exhibits

Reference is made to Item 15(b) of this Annual Report on Form 10-K.

(b) Exhibits

Exhibits submitted with this Annual Report on Form 10-K, as filed with the Securities and Exchange Commission and those incorporated by reference to other filings, are listed, below.

Exhibit Number	Description
3.1†	Certificate of Incorporation of the Registrant.
3.2*	Amendment to Certificate of Incorporation of the Registrant.
3.3†	Bylaws of the Registrant.
3.4††††	Certificate of Designation of Series A Junior Participating Preferred Stock of the Registrant.
3.5**	Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation
4.1	Reference is made to Exhibits 3.1, 3.2. and 3.3
4.2†	Specimen common stock certificate.
4.3††††	Rights Agreement dated April 25, 2002 between the Company and Mellon Investor Services, LLC.
10.1†	Form of Indemnification Agreements.
10.2†	1995 Stock Option/Stock Issuance Plan and forms of agreements thereunder.
10.3†	1999 Equity Incentive Plan.
10.4^	1999 Supplemental Stock Option Plan.
10.5†	“Prism” Development and Marketing Agreement dated July 19, 1996 between the Registrant and CNET, Inc.
10.6†	Letter Amendment to “Prism” Development and Marketing Agreement between the Registrant and CNET, Inc. dated August 15, 1998 and attachments thereto.
10.7††	Lease Agreement dated March 3, 2000 between the Registrant and Prentiss Properties Acquisition Partners, L.P.
10.8††	First Amendment to Lease Agreement dated September 1, 2000 between the Registrant and Prentiss Properties Acquisition Partners, L.P.
10.9††	Sublease dated September 26, 2000 among the Registrant, Aptis, Inc. and Billing Concepts Corp.
10.10^	Stock Option Agreement – Jon. O. Niess.
10.11^	Stock Option Agreement I – Thomas E. Hogan.
10.12^	Stock Option Agreement II – Thomas E. Hogan.
10.13^	Stock Option Agreement – Bryce M. Johnson.
10.14^^	Share Sale Agreement dated January 16, 2004 between the Registrant and Tower Technology Pty Limited.
10.15^^^	Notice of Stock Option Grant and Stock Option Agreement – 1999 Supplemental Stock Option Plan
10.16^^^	1999 Non-Employee Director Option Plan.
10.17^^^	Notice of Stock Option Grant and Stock Option Agreement – 1999 Non-Employee Director Automatic Option Plan.
10.18^^^	Notice of Stock Option Grant and Stock Option Agreement – 1999 Equity Incentive Plan.
10.19^^^	Lease Agreement dated January 31, 2002 between the Registrant and Prentiss Properties Acquisition Partners, L.P.
10.20^^^	First Amendment to Lease Agreement dated November 12, 2001 between the Registrant and Prentiss Properties Acquisition Partners, L.P.
10.21^^^	Second Amendment to Lease Agreement dated July 22, 2003 between the Registrant and Prentiss Properties Acquisition Partners, L.P.

53

10.22^^^	Notice of Restricted Stock Award and Restricted Stock Agreement – 1999 Equity Incentive Plan.
10.23	Amended and restated Master Services Agreement with Virtusa Corporation
10.24	The amended Vignette Corporation Employee Stock Purchase Plan
10.25	The amended Vignette Corporation International Employee Stock Purchase Plan
10.26	Michael A. Aviles Stock Option Agreement
10.27	Michael A. Aviles Restricted Stock Agreement
10.28	Offer Letter Agreement with Michael A. Aviles
10.29	Separation Agreement with Michael A. Aviles
10.30	Notice of Restricted Stock Award and Restricted Stock Agreement for Board of Director members under the 1999 Equity Incentive Plan
10.31	Notice of Stock Option Grant and Option Agreement for Board of Director members under the 1999 Equity Incentive Plan
10.32	Offer Letter Agreement with Brett Bachman
10.33	Offer Letter Agreement with David Crean
10.34	Offer Letter Agreement with Gayle Wiley
10.35	Offer Letter Agreement with Lawrence Warnock
16.1 ***	Letter from Ernst & Young LLP to the Securities and Exchange Commission concerning change in certifying accountant
21.1	Subsidiaries List.
23.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
31.1	Certification of Chief Executive Officer as required by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer as required by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification as required by Section 906 of the Sarbanes-Oxley Act of 2002.

† Incorporated by reference to the Company’s Registration Statement on Form S-1, as amended (File No. 333-68345).

†† Incorporated by reference to the Company’s Form 10-K/A filed on March 30, 2001 (File No. 000-25375).

††† Incorporated by reference to the Company’s Form 10-K filed on March 29, 2002 (File No. 000-25375).

†††† Incorporated by reference to the Company’s Registration Statement on Form 8-A filed on April 30, 2002 (File No. 000-25375).

* Incorporated by reference to the Company’s definitive Proxy Statement for Special Meeting of Stockholders, dated February 17, 2000.

^ Incorporated by reference to the Company’s Form 10-K filed on March 28, 2003 (File No. 000-25375).

^^ Incorporated by reference to the Company’s Form 8-K filed on March 5, 2004 (File No. 000-25375).

^^^ Incorporated by reference to the Company’s Form 10K filed on March 15, 2005 (File No. 000-25375)

** Incorporated by reference to the Company’s Form 8K filed on June 10, 2005 (File No. 00025375)

*** Incorporated by reference to the Company’s Form 8K filed on December 27, 2005 (File No. 00025375)

54

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Vignette Corporation
(Registrant)
By:	/s/ Charles W. Sansbury
	Charles W. Sansbury
	Chief Financial Officer

Dated: March 15, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ Michael A. Aviles Michael A. Aviles	President, Chief Executive Officer and Director	March 15, 2006
/s/ Charles W. Sansbury	Chief Financial Officer	March 15, 2006
Charles W. Sansbury
/s/ Jan H. Lindelow	Chairman of the Board of Directors	March 15, 2006
Jan H. Lindelow
/s/ Henry T. DeNero	Director	March 15, 2006
Henry T. DeNero
/s/ Kathleen Earley	Director	March 15, 2006
Kathleen Earley
/s/ Joseph M. Grant	Director	March 15, 2006
Joseph M. Grant
/s/ Jeffrey S. Hawn	Director	March 15, 2006
Jeffrey S. Hawn
/s/ Thomas E. Hogan	Director	March 15, 2006
Thomas E. Hogan
/s/ Michael D. Lambert	Director	March 15, 2006
Michael D. Lambert

55

VIGNETTE CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firm	F – 2
Consolidated Balance Sheets at December 31, 2005 and 2004	F – 4
Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003	F – 5
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2005, 2004 and 2003	F – 6
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003	F – 8
Notes to Consolidated Financial Statements	F – 9

F - 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Board of Directors and Stockholders of Vignette Corporation

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Vignette Corporation maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Vignette Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Vignette Corporation maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Vignette Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Vignette Corporation as of December 31, 2005 and December 31, 2004, and the related consolidated statements of operation, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005 of Vignette Corporation and our report dated March 9, 2006 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Austin, Texas

March 9, 2006

F - 2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Vignette Corporation

We have audited the accompanying consolidated balance sheets of Vignette Corporation (the “Company”) as of December 31, 2005 and 2004, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Vignette Corporation at December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Vignette Corporation’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 9, 2006 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Austin, Texas

March 9, 2006

F - 3

VIGNETTE CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	December 31,
	2005			2004
ASSETS
Current assets:
Cash and cash equivalents	$	124,104		$	63,781
Short-term investments		72,953			100,582
Accounts receivable, net of allowance of $1,383 and $4,454 as of December 31, 2005 and 2004, respectively		38,610			41,569
Prepaid expenses and other		7,828			5,424
Total current assets		243,495			211,356
Property and equipment:
Equipment		1,362			1,517
Computers and purchased software		34,090			32,727
Furniture and fixtures		2,725			2,805
Leasehold improvements		8,199			7,845
		46,376			44,894
Accumulated depreciation		(38,185	)		(35,130	)
		8,191			9,764
Investments		8,288			12,400
Goodwill		120,110			123,912
Technology, net of accumulated amortization and impairment charges of $56,198 and $49,931, respectively		20,903			27,170
Other intangible assets, net of accumulated amortization and impairment charges of $11,867 and $6,864 as of December 31, 2005 and 2004, respectively		13,733			18,736
Other assets		2,441			2,118
Total assets	$	417,161		$	405,456
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,910		$	2,355
Accrued employee liabilities		14,638			13,916
Accrued restructuring charges		2,901			7,846
Accrued exit and severance costs		1,119			3,761
Accrued income taxes		5,597			4,356
Accrued other charges		13,189			14,277
Deferred revenue		34,306			33,444
Other current liabilities		2,516			4,995
Total current liabilities		78,176			84,950
Accrued restructuring charges, less current portion		3,908			7,829
Accrued exit and severance costs, less current portion		415			2,503
Deferred revenue, less current portion		4,553			3,356
Total liabilities		87,052			98,638
Stockholders’ equity:
Common stock – $0.01 par value; 500,000,000 shares authorized; 29,546,137 and 28,982,756 shares issued and outstanding December 31, 2005 and 2004, respectively (net of treasury shares of 212,767 and 211,543 as of December 31, 2005 and 2004, respectively)		296			290
Additional paid-in capital		2,753,937			2,750,376
Deferred stock compensation		(380	)		(491	)
Accumulated other comprehensive income		1,204			1,985
Accumulated deficit		(2,424,948	)		(2,445,342	)
Total stockholders’ equity		330,109			306,818
Total liabilities and stockholders’ equity	$	417,161		$	405,456

The accompanying notes are an integral part of these consolidated financial statements.

F - 4

VIGNETTE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Year Ended December 31,
	2005			2004			2003
Revenue:
Product license	$	70,316		$	63,152		$	60,986
Services		120,359			114,775			97,328
Total revenue		190,675			177,927			158,314
Cost of revenue:
Product license		2,911			5,036			2,844
Amortization of acquired technology		6,267			10,115			3,450
Services (1)		55,427			53,281			39,531
Total cost of revenue		64,605			68,432			45,825
Gross profit		126,070			109,495			112,489
Operating expenses:
Research and development (1)		33,200			40,211			39,923
Sales and marketing (1)		67,956			74,489			68,160
General and administrative (1)		19,593			17,972			15,727
Purchased in-process research and development, acquisition-related and other charges		270			7,609			4,258
Business restructuring (benefit) charges		(2,899	)		18,083			(14,687	)
Amortization of deferred stock compensation		834			480			1,107
Amortization of intangible assets		5,003			4,919			1,965
Total operating expenses		123,957			163,763			116,453
Income (loss) from operations		2,113			(54,268	)		(3,964	)
Other income (expense):
Interest income		5,944			3,158			3,747
Interest expense		(137	)		(118	)		(29	)
Other		(361	)		(145	)		1,350
Gain on sale of equity investments		15,264			—			—
Total other income (expense), net		20,710			2,895			5,068
Income (loss) before income taxes		22,823			(51,373	)		1,104
Provision for income taxes		(2,429	)		(1,482	)		(1,137	)
Net income (loss)	$	20,394		$	(52,855	)	$	(33	)
Basic net income (loss) per share	$	0.70		$	(1.86	)	$	(0.00	)
Diluted net income (loss) per share	$	0.68		$	(1.86	)	$	(0.00	)
Shares used in computing basic net income (loss) per share		29,181			28,381			25,310
Shares used in computing diluted net income (loss) per share		29,807			28,381			25,310
	Year Ended December 31,
	2005			2004			2003
(1)    Excludes amortization of deferred stock compensation as follows:
Research and development	$	12		$	(71	)	$	324
Sales and marketing		124			(48	)		69
General and administrative		698			599			714
	$	834		$	480		$	1,107

The accompanying notes are an integral part of these consolidated financial statements.

F - 5

VIGNETTE CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

	Common Stock				Additional Paid-in Capital			Notes Receivable for Purchase of Common Stock			Deferred Stock Compensation			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit			Total Stockholders’ Equity
	Number of Shares		Par Value
Balance at December 31, 2002	25,184,237		$	252	$	2,659,280		$	(32	)	$	(1,367	)	$	170	$	(2,392,451	)	$	265,852
Issuance of common stock in purchase of business	417,256			4		10,628			—			—			—		—			10,632
Issuance of common stock pursuant to employee stock purchase plan	103,896			1		1,271			—			—			—		—			1,272
Stock options exercised	283,368			3		2,409			—			—			—		—			2,412
Repurchase of common stock	(17,676	)		—		(423	)		—			—			—		—			(423	)
Deferred stock compensation related to stock option and restricted stock grants	43,103			—		1,030			—			(1,030	)		—		—			—
Forfeiture of stock options	—			—		(30	)					30			—		—			—
Amortization of deferred stock compensation	—			—		—			—			1,107			—		—			1,107
Other	(8,845	)		—		(32	)		32			—			—		—			—
Comprehensive loss:
Net loss	—			—		—			—			—			—		(33	)		(33	)
Unrealized Investment gains	—			—		—			—			—			166		—			166
Foreign currency translation adjustment, cumulative translation gain of $723 at December 31, 2003	—			—		—			—			—			361		—			361
Total comprehensive income																				494
Balance at December 31, 2003	26,005,339			260		2,674,133			—			(1,260	)		697		(2,392,484	)		281,346
Issuance of common stock in purchase of business	2,715,152			27		73,273			—			—			—		—			73,300
Issuance of common stock pursuant to employee stock purchase plan	120,735			1		1,497			—			—			—		—			1,498
Stock options exercised	175,155			2		1,807			—			—			—		—			1,809
Forfeiture of restricted stock grants	(30,625	)		—		(232	)		—			371			—		—			139
Deferred stock compensation related to stock option and restricted stock grants	—			—		87			—			(82	)		—		—			5
Repurchase of restricted stock	(3,000	)		—		(189	)		—			—			—		—			(189	)
Amortization of deferred stock compensation	—			—		—			—			480			—		—			480
Other	—			—		—			—			—			—		(3	)		(3	)
Comprehensive loss:
Net loss	—			—		—			—			—			—		(52,855	)		(52,855	)
Unrealized Investment gains	—			—		—			—			—			1,002		—			1,002
Foreign currency translation adjustment, cumulative translation gain of $1,009 at December 31, 2004	—			—		—			—			—			286		—			286
Total comprehensive loss																				(51,567	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 6

	Common Stock				Additional Paid-in Capital			Notes Receivable for Purchase of Common Stock		Deferred Stock Compensation			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity
	Number of Shares		Par Value
Balance at December 31, 2004	28,982,756		$	290	$	2,750,376		$	—	$	(491	)	$	1,985		$	(2,445,342	)	$	306,818
Issuance of common stock pursuant to employee stock purchase plan	88,900			1		986			—		—			—			—			987
Stock options exercised	416,437			4		1,851			—		—			—			—			1,855
Forfeiture of restricted stock grants	(2,500	)		—		(34	)		—		34			—			—			—
Deferred stock compensation related to stock option and restricted stock grants	60,544			1		758			—		(757	)		—			—			2
Amortization of deferred stock compensation	—			—		—			—		834			—			—			834
Comprehensive loss:
Net income	—			—		—			—		—			—			20,394			20,394
Realized investment gains	—			—		—			—		—			(992	)		—			(992	)
Foreign currency translation adjustment, cumulative translation gain of $1,220 at December 31, 2005	—			—		—			—		—			211			—			211
Total comprehensive income																				19,613
Balance at December 31, 2005	29,546,137		$	296	$	2,753,937		$	—	$	(380	)	$	1,204		$	(2,424,948	)	$	330,109

The accompanying notes are an integral part of these consolidated financial statements.

F - 7

VIGNETTE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2005			2004			2003
Operating activities:
Net income (loss)	$	20,394		$	(52,855	)	$	(33	)
Adjustment to reconcile net loss to cash used in operating activities:
Depreciation		5,654			9,065			14,626
Amortization		11,270			15,150			5,881
Noncash compensation expense		834			480			1,107
Purchased in-process research and development, acquisition-related and other charges (noncash)		—			5,923			1,100
Noncash restructuring (benefits) charges		(778	)		3,200			—
Noncash investment impairments		—			206			75
Gain on Sale of equity investments		(15,264	)		—			—
Gain on disposal of fixed assets		(114	)		—			—
Other noncash items		188			(398	)		(542	)
Changes in operating assets and liabilities, net of effects from purchases of businesses:
Accounts receivable, net		682			(2,121	)		3,271
Prepaid expenses and other assets		1,412			1,741			(2,984	)
Accounts payable		1,702			(622	)		473
Accrued expenses		497			(5,808	)		(52,245	)
Accrued restructuring expenses		(12,935	)
Deferred revenue		3,957			(5,665	)		(12,912	)
Other liabilities		(769	)		213			(1,228	)
Net cash provided by/ (used) in operating activities		16,730			(31,491	)		(43,411	)
Investing activities:
Purchase of property and equipment		(4,253	)		(4,983	)		(7,408	)
Purchase of businesses, net of cash acquired		—			(43,751	)		(24,439	)
Maturity of restricted investments		2,858			457			1,486
Purchase of marketable securities and short-term investments		(50,028	)		—			—
Maturity of marketable securities and short-term investments		77,657			99,291			35,439
Purchase of equity securities		(45	)		(276	)		(334	)
Proceeds from sale of equity securities		15,517			824			—
Other		253			(45	)		114
Net cash provided by in investing activities		41,959			51,517			4,858
Financing activities:
Payments on long-term debt and capital lease obligations		—			(72	)		(280	)
Proceeds from exercise of stock options and purchase of employee stock purchase plan shares		2,843			3,307			3,684
Purchase of Company common stock		—			—			(423	)
Net cash provided by financing activities		2,843			3,235			2,981
Effect of exchange rate changes on cash and cash equivalents		(1,209	)		881			2,769
Net increase/(decrease) in cash and cash equivalents		60,323			24,142			(32,803	)
Cash and cash equivalents at beginning of year		63,781			39,639			72,442
Cash and cash equivalents at end of year	$	124,104		$	63,781		$	39,639
Supplemental disclosure of cash flow information:
Interest paid	$	137		$	118		$	29
Income taxes paid	$	905		$	1,609		$	911
Noncash activities:
Common stock issued and stock options exchanged to acquire businesses	$	—		$	73,300		$	10,632

The accompanying notes are an integral part of these consolidated financial statements.

F - 8

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005

NOTE 1 — Business

Vignette Corporation, along with its wholly-owned subsidiaries (collectively, the “Company” or “Vignette”), provides Web applications designed to help companies drive revenue growth, cost reductions, increased employee productivity and improved customer satisfaction. The Company’s portal, integration, enterprise content management and collaboration technologies give organizations the capability to provide a simple, personalized experience anytime, anywhere; integrate systems and information from inside and outside the organization; and manage the lifecycle of enterprise information and collaborate by supporting ad-hoc and business process-based information sharing. Together, the Company’s products and expertise help companies to harness the power of their information and the Web to deliver measurable improvements in business efficiency.

The Company was incorporated in Delaware on December 19, 1995. Vignette currently markets its products and services throughout the Americas, Europe, Asia and Australia. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

NOTE 2 — Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and such differences could be material to the financial statements. In particular, actual sublease income attributable to the consolidation of excess facilities might deviate from the assumptions used to calculate the Company’s accruals for facility lease commitments vacated as a result of both its business restructuring and business acquisitions. During the year ended December 31, 2005, the Company continued to execute on its existing business restructuring plan, including the successful early termination of and/or execution of additional subleases for leased office space, and adjusted existing site consolidation accruals resulting in total business restructuring benefits of $2.9 million. It is reasonably possible that sublease assumptions could change further in the near term, requiring adjustments to future income and goodwill.

The Company periodically reviews the valuation and amortization of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a diminished fair value or useful life. During the years ended December 31, 2005 and December 31, 2004, no changes to the established estimated lives for identifiable intangible assets were made and no impairment charges were deemd necessary.

Revenue recognition

Revenue consists of product license and services fees. Product license fee income is earned through licensing the right to use our software and from the sale of specific software products. Services fee income is earned through the sale of maintenance and technical support, consulting services and training services.

The Company does not recognize revenue for agreements with rights of return, refundable fees, cancellation rights or acceptance clauses until such rights to return, refund or cancel have expired or acceptance has occurred.

The Company recognizes revenue in accordance with Statement of Position (“SOP”) 97-2, Software Revenue Recognition, as amended by SOP 98-4 and SOP 98-9, and Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) 101, Revenue Recognition in Financial Statements as revised by SAB 104.

F - 9

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Where software licenses are sold with maintenance or other services, the Company allocates the total fee to the various elements based on the fair values of each element in the arrangement. The Company determines the fair value of each element in the arrangement based on vendor-specific objective evidence (“VSOE”) of fair value. VSOE of fair value is based upon the normal pricing and discounting practices for those products and services when sold separately and, for support services, is additionally measured by the renewal rate. If we do not have VSOE for license elements of an arrangement, but do have VSOE for all undelivered elements, the Company uses the residual method to record revenue. Under the residual method, the arrangement fee is first allocated to the undelivered elements based upon their VSOE of fair value; the remaining arrangement fee, including any discount, is allocated to the delivered element. If the residual method is not used, discounts, if any, are applied proportionately to each element included in the arrangement based on each element’s fair value without regard to the discount.

Revenue allocated to product license fees is recognized when persuasive evidence of an agreement exists, delivery of the product has occurred and collection of a fixed or determinable fee is probable. We consider all payments outside our normal payment terms, including all amounts due in excess of one year, to not be fixed and determinable, and such amounts are recognized as revenue as they become due. If collectibility is not considered probable, revenue is recognized when the fee is collected. For software arrangements where the Company is obligated to perform professional services for implementation of the product, the Company evaluates whether delivery has occurred upon shipment of software or upon completion of services and if the customer payment is probable. This evaluation is made based on various factors such as the nature of the services work, order type (e.g. initial vs. follow-on), customer’s payment history, etc. In the instances where delivery is deemed not to have occurred upon shipment based on the aforementioned factors, license revenue is taken when the Company has no significant remaining obligations with regard to the implementation.

Revenue from perpetual licenses that include unspecified, additional software products is recognized ratably over the term of the arrangement, beginning with the delivery of the first product.

Revenue allocated to maintenance and support is recognized ratably over the maintenance term (typically one year).

Revenue allocated to training and consulting service elements is recognized as the services are performed as they are not essential to the functionality of our products.

Deferred revenue includes amounts received from customers in excess of revenue recognized. Accounts receivable includes amounts due from customers for which revenue has been recognized.

The Company follows very specific and detailed guidelines, discussed above, in determining revenues; however, certain judgments and estimates are made and used to determine revenue recognized in any accounting period. Material differences may result in the amount and timing of revenue recognized for any period if different conditions were to prevail. For example, in determining whether collection is probable, we assess our customers’ ability and intent to pay. Our actual experience with respect to collections could differ from our initial assessment if, for instance, unforeseen declines in the overall economy occur and negatively impact our customers’ financial condition

Accounts receivable

Accounts receivable are recorded at cost. We continuously assess the collectibility of outstanding customer invoices and in doing such, we maintain an allowance for estimated losses resulting from the non-collection of customer receivables. In estimating this allowance, we consider factors such as: historical collection experience, a customer’s current credit-worthiness, customer concentrations, age of the receivable balance, both individually and in the aggregate, and general economic conditions that may affect a customer’s ability to pay. Actual customer collections could differ from our estimates. For example, if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

F - 10

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Cash, cash equivalents and short-term investments

The Company considers all highly liquid investment securities with an original maturity of three months or less at the date of purchase to be cash equivalents.

Auction rate securities are highly liquid, variable rate securities. While the underlying security has a long-term nominal maturity, the interest rate is reset through dutch auctions that are typically held every 7, 28, or 35 days. The securities trade at par and are callable at par on any interest payment date at the option of the issuer. Interest is paid at the end of each auction period. Substantially all of the auction rate securities held have contractual maturities in excess of ten years from December 31, 2005

The Company classifies auction rate securities as “available for sale” pursuant to Statement of accounting Standards No. 115. Furthermore, the Company classified these securities as short-term because: (i) we acquired and held these securities with the intent to liquidate them as the need for working capital arose in the ordinary course of business; (ii) we are able to either liquidate our holdings or roll our investment over to the next reset period at each rate reset interval as described above.

Short-term investments consist of marketable securities that have remaining maturities of less than one year from the balance sheet date, excluding cash equivalents, and auction rate securities as described above. Investment securities are classified as available-for-sale and are presented at estimated fair value with any unrealized gains or losses included in other comprehensive income (loss). Realized gains and losses are computed based on the specific identification method. Realized gains and losses were not material for the years presented.

Short-term investments consist of the following (in thousands):

	December 31, 2005							December 31, 2004
	Cost		Unrealized Gain (Loss)			Estimated Fair Value		Cost		Unrealized Gain (Loss)			Estimated Fair Value
Marketable securities:
Municipal and U.S. Government agencies	$	9,369	$	(16	)	$	9,353	$	2,195	$	8		$	2,203
Corporate notes		1,043		—			1,043		16,711		(71	)		16,640
Medium term notes		—		—			—		921		(4	)		917
Auction rate		62,557		—			62,557		80,822		—			80,822
	$	72,969	$	(16	)	$	72,953	$	100,649	$	(67	)	$	100,582

Long-term investments

Long-term investments are classified as available-for-sale and are presented at estimated fair value with any unrealized gains or losses included in other comprehensive income (loss). The Company holds a less than 20% interest in, and does not exert significant influence over, any of the respective equity investees. The Company, therefore, applies the cost method. Long-term investments consisted of the following (in thousands):

	December 31,
	2005		2004
Restricted investments (cost approximates fair value)	$	6,960	$	9,793
Equity investments:
Common stock		—		1,323
Limited partnership interest		1,328		1,284
	$	8,288	$	12,400

F - 11

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Fair values are based on quoted market prices where available. If quoted market prices are not available, management estimates fair value by using a composite of quoted market prices of companies that are comparable in size and industry classification to the Company’s non-public investments.

The Company held restricted investments in the form of a certificate of deposit and investment grade securities placed with a high credit quality financial institution. Such restricted investments collateralize letters of credit related to certain leased office space security deposits and tax obligations. These investments will remain restricted to the extent that the security requirements exist. All restricted investments mature in 2006 and the average yield of these investments is approximately 2.98%

The Company periodically analyzes its long-term investments for impairments considered other than temporary. In performing this analysis, the Company evaluates whether general market conditions that reflect prospects for the economy as a whole or information pertaining to the specific investment’s industry, or that individual company, indicates that an other than temporary decline in value has occurred. If so, the Company considers specific factors, including the financial condition and near-term prospect of each investment, any specific events that may affect the investee company, and the intent and ability of the Company to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value. As a result of these reviews, the Company recognized impairment charges of $0.0 million, $0.2 million, and $0.0 million for the years ended December 31, 2005, 2004 and 2003, respectively. Such impairments are recorded in “Other income (expense)” on the Consolidated Statements of Operations.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of short-term investments, trade accounts receivable and restricted investments. The Company’s short-term investments and restricted investments are placed with high credit quality financial institutions and issuers.

The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The Company maintains an allowance for estimated losses resulting from the non-collection of customer receivables. In estimating this allowance, the following factors are considered: historical collection experience, a customer’s current credit-worthiness, customer concentrations, age of the receivable balance, both individually and in the aggregate, and general economic conditions that may affect a customer’s ability to pay. The following table summarizes the changes in allowance for doubtful accounts for trade receivables (in thousands):

	Balance at Beginning of Period		Charged to Expense, net of Recoveries	Adjustments from Business Combinations		Deduction of Uncollectible Accounts		Balance at End of Period
Year ended December 31, 2005	$	4,454	180	107		(3,358	)	$	1,383
Year ended December 31, 2004	$	3,344	1,288	149		(327	)	$	4,454
Year ended December 31, 2003	$	7,726	237	(1,384	)	(3,235	)	$	3,344

No customers accounted for more than 10% of the Company’s total revenue during the years ended December 31, 2005, 2004 or 2003.

F - 12

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Financial instruments

The reported amounts of certain of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivables, accounts payable and accrued liabilities, approximate fair value. The Company uses derivative financial instruments to reduce its risk to foreign currency fluctuations. At December 31, 2005, the notional value of the foreign currency contracts was $10.9 million and based on the applicable exchange rates, the fair value of derivative financial instruments was a liability of $0.1 million. At December 31, 2004, the notional value of the foreign currency contracts was $16.6 million and based on the applicable exchange rates, the fair value of derivative financial instruments was a liability of $0.6 million. Foreign currency contracts are classified on the balance sheet in “Prepaid expenses and other” or in “Other current liabilities.” The Company had no foreign currency contracts or derivative financial instruments in 2003.

Property and equipment

Property and equipment are stated at cost. Depreciation of assets is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to five years. Assets under capital lease are amortized using the straight-line method over the shorter of the lease term or the estimated useful life. Amortization is included with depreciation expense.

Major improvements are capitalized, while maintenance and repairs that do not substantially enhance or extend the estimated useful life of the assets benefited are charged to expense in the period incurred. Upon asset retirement or disposal, any resulting gain or loss is included in the results of operations.

Goodwill and other intangible assets

Goodwill represents the excess purchase price over the fair value of net assets acquired, or net liabilities assumed, in a business combination. The Company periodically assesses its intangible assets, including goodwill, for indications of impairment. Based on this assessment no such impairment charges were recorded in either 2005, 2004, or 2003.

Other intangible assets, including amounts allocated to acquired technology, non-compete contracts and customer relationships, are being amortized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives range from two to six years. Amortization of acquired technology is considered a cost of revenue and is presented as “Amortization of acquired technology” in the accompanying Consolidated Statements of Operations. Amortization of non-compete contracts and customer relationships is considered operating expense and included in “Amortization of intangible assets” in the accompanying Consolidated Statements of Operations. The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a diminished fair value or revised useful life.

Research and development

The Company capitalizes costs related to certain software development activities in accordance with Statement of Financial Accounting Standards 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed (“Statement 86”). Capitalization commences when technological feasibility has been established and ceases when the product is available for general release to customers. Based on the Company’s product development process, technological feasibility is established upon completion of a working model. To date, the time between achieving technological feasibility and the general availability of software has been short and internal costs qualifying for capitalization have been insignificant. During fiscal years 2005, 2004, and 2003 no such costs were capitalized. In years prior to 2003 such capitalized costs relate to software developed by third-parties that were not acquired in a business combination. They are amortized using the straight-line method over the estimated useful life, generally 18 months. Amortization expense was $0.0 million, $0.1 million, and $0.5 million for the years ended 2005, 2004 and 2003, respectively and is included in “Cost of revenue – product license” in the accompanying Consolidated Statements of Operations.

F - 13

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Impairment of long-lived assets

The Company periodically reviews the carrying amounts of property and equipment, to determine whether current events or circumstances, as defined in Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, (“Statement 144”), warrant adjustment to such carrying amounts. In reviewing the carrying amounts of long-lived assets, the Company considers, among other factors, the future cash inflows expected to result from the use of the asset and its eventual disposition less the future cash outflows expected to be necessary to obtain those inflows.

Foreign currency

The functional currency of the Company’s foreign subsidiaries is the respective local currency. Assets and liabilities of these foreign subsidiaries are translated to U.S. Dollars at year-end exchange rates. Income statement items are translated to U.S. dollars at average exchange rates prevailing during the period. Accumulated net translation adjustments are recorded in “Accumulated other comprehensive income,” a separate component of stockholders’ equity. Gains and losses from foreign currency denominated transactions are included in “Other income (expense)” in the accompanying Consolidated Statements of Operations. Gains and losses from foreign currency denominated transactions amounted to a $0.6 million loss, a $0.1 million loss, and a $0.9 million gain for the years ended December 31, 2005, 2004 and 2003, respectively.

Stock-based compensation

At December 31, 2005, the Company has five stock-based compensation plans, which are described more fully in Note 5. Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, (“Statement 123”), prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options. As allowed by Statement 123, the Company has elected to continue to account for its employee stock-based compensation using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. When the Company issues options or its stock to its employees and Board of Directors at an exercise price equal to the market value of the underlying common stock on the date of grant, no stock-based compensation costs are recorded. In the event that options are granted or restricted shares are issued at an exercise price that is less than the market value of the underlying common stock on the date of grant or issuance, the Company records deferred compensation expense in an amount equivalent to the difference between the market value and the exercise price of the respective option or restricted stock. Deferred stock compensation is amortized on an accelerated basis over the respective vesting periods of the underlying options or restricted stock, and is recorded as “Amortization of deferred stock compensation” in the accompanying Consolidated Statements of Operations.

The following table illustrates the effect on net income (loss) and net income (loss) per share if the Company had applied the fair value recognition provisions of Statement 123 to stock-based employee compensation (in thousands, except per share data):

	Year ended December 31,
	2005			2004			2003
Net income (loss):
Reported net income (loss)	$	20,394		$	(52,855	)	$	(33	)
Add: Total stock-based employee compensation expense included in the determination of net loss as reported, net of related tax effects		834			480			1,107
Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(7,707	)		(16,951	)		(44,265	)
Pro forma net income (loss)	$	13,521		$	(69,326	)	$	(43,191	)
Basic net income (loss) per share :
Reported net income (loss) per share	$	0.70		$	(1.86	)	$	(0.00	)
Pro-forma net income (loss) per share	$	0.46		$	(2.44	)	$	(1.71	)
Diluted net income (loss) per share :
Reported net income (loss) per share	$	0.68		$	(1.86	)	$	(0.00	)
Pro-forma net income (loss) per share	$	0.45		$	(2.44	)	$	(1.71	)

F - 14

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Equity instruments issued to non-employees are accounted for in accordance with Statement 123 and Emerging Issues Task Force Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services.

Comprehensive income

Comprehensive income includes net income (loss) and other comprehensive income (loss) and is presented in the Consolidated Statements of Changes in Stockholders’ Equity. Statement of Financial Accounting Standard No. 130, Reporting Comprehensive Income establishes standards for reporting comprehensive income and its components in the financial statements. Accumulated other comprehensive income is displayed as a separate component of stockholders’ equity in the Company’s Consolidated Balance Sheet and consisted of the following (in thousands):

	December 31,
	2005			2004
Foreign currency translation	$	1,220		$	1,009
Unrealized gain (loss) on available-for-sale investments:
Short-term investments		(16	)		(74	)
Long-term investments		—			1,050
	$	1,204		$	1,985

Product warranties

The Company offers warranties to its customers, requiring that the Company replace defective products within a specified time period from the date of sale. The Company records warranty costs as incurred and historically such costs have not been material.

Advertising costs

Advertising costs are expensed as incurred. The company did not recognize any material advertising expenses for the years ended December 31, 2005, 2004 and 2003, respectively.

Income taxes

The Company accounts for income taxes using the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Net income (loss) per share

Basic net income (loss) per share is computed by dividing the net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding during the period, excluding shares subject to repurchase or forfeiture. The Company includes stock options, the employee stock purchase plan (“ESPP”), and restricted shares in the calculation of diluted earnings per share. The Company had outstanding common stock options of 3,587,412 and 4,081,384 at December 31, 2004 and 2003, respectively. Such outstanding common stock options have been excluded from the calculation of diluted net loss per share for fiscal years 2004 and 2003, as the effect of their exercise would be antidilutive.

F - 15

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):

	Year Ended December 31,
	2005			2004			2003
Net income (loss)	$	20,394		$	(52,855	)	$	(33	)
Basic:
Weighted-average common shares outstanding		29,285			28,428			25,396
Weighted-average common shares subject to repurchase or forfeiture		(104	)		(47	)		(86	)
Weighted-average common shares used in computing basic net income (loss) per share		29,181			28,381			25,310
Diluted:
Stock Options, ESPP, and restricted shares		626			—			—
Weighted-average common shares used in computing diluted net income (loss) per share		29,807			28,381			25,310
Basic net income (loss) per share	$	0.70		$	(1.86	)	$	(0.00	)
Diluted net income (loss) per share	$	0.68		$	(1.86	)	$	(0.00	)

Segments

The Company applies Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, and considers its business activities to constitute a single segment.

Employee 401(k) plan

In 1997, the Company established a voluntary defined contribution retirement plan qualifying under Section 401(k) of the Internal Revenue Code of 1986 (“The Plan”). Participants are allowed to make voluntary contributions to the Plan up to 25% of compensation. The Company can make discretionary contributions to the Plan of amounts determined and authorized by the Company’s Board of Directors up to the maximum amounts permitted by the Internal Revenue Service (“IRS”). Participants direct the investment allocation of all contributions. Contributions are subject to limitations imposed by the Internal Revenue Code (the “Code”). The Company elected to match the first one thousand dollars of each participant’s contributions for a total company contribution of $347 thousand for the year ended December 31, 2005. The Company made no contributions in the years ended December 31, 2004 and 2003.

Through its recent business combinations, the Company assumed the 401(k) Plans of Tower Technology, Epicentric, and Intraspect (the “Assumed Plans”). The Assumed Plans are voluntary defined contribution retirement plans qualifying under Section 401(k) of the Internal Revenue Code of 1986. Under the terms of the Assumed Plans, the Company may match employee contributions; however, the company elected to not make any contributions to the plans. The Company elected to merge the Tower Technology 401(K) Plan into the Vignette Corporation 401(K) Plan, effective July 1, 2004. Employees of Tower Technology became participants in the Plan as of July 1, 2004. Assets in the amount of $ 0.9 million were converted to the Vignette Corporation 401(k) Plan. In 2005, after deducting all charges and expenses of the Intraspect plan, the balances of all individual accounts were adjusted and the remaining assets distributed. In December 2003, after deducting all charges and expenses of the Epicentric plan, the balances of all individual accounts were adjusted and the remaining assets distributed.

Reclassifications

Certain prior year amounts have been reclassified to conform to the fiscal 2005 presentation.

F - 16

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Recent accounting pronouncements

In December 2004, FASB issued a Statement, “Share-Based Payment, an amendment of FASB Statements Nos. 123” (“SFAS 123R”) that addresses the accounting for share-based payment transactions in which a Company receives employee services in exchange for either equity instruments of the Company or liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of such equity instruments. The statement eliminates the ability to account for share-based compensation transactions using the intrinsic method that the Company currently uses and generally requires that such transactions be accounted for using a fair-value-based method and recognized as expense in the consolidated statements of operations. The effective date of the new standard for the Company will be the first quarter of fiscal 2006.

In March 2005, the SEC issued Staff Accounting Bulletin (“SAB”) No. 107 regarding the Staff’s interpretation of SFAS 123R. This interpretation provides the Staff’s views regarding interactions between SFAS 123R and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. The interpretive guidance is intended to assist companies in applying the provisions of SFAS 123R and investors and users of the financial statements in analyzing the information provided. We will follow the guidance prescribed in SAB 107 in connection with our adoption of SFAS 123R.

We plan to adopt SFAS 123R using the modified prospective method, under which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted or modified after the effective date and (b) based on the previous requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date.

The amounts disclosed within our footnotes are not necessarily indicative of the amounts that will be expensed upon the adoption of SFAS 123R. Compensation expense calculated under SFAS 123R may differ from amounts currently disclosed within our footnotes based on changes in the fair value of our common stock, changes in the number of options granted or the terms of such options, the treatment of tax benefits and changes in interest rates or other factors. Upon adoption of SFAS 123R, we plan to use the Black-Scholes model to value the compensation expense associated with employee stock options and stock purchases under our employee stock purchase plan. We are currently evaluating the potential impact of this standard on our financial position, results of operations, and cash flows. We expect this standard to have a significant impact on the consolidated statements of operations. The current expected range of expense for the first quarter of 2006 is $750 thousand to $1 million. SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as cash flow from financing activities rather than as cash flow from operations as required under SFAS 123. The Company is currently evaluating the impact of 123R in relation to the statement of cash flows relative to any excess tax benefits that may be generated.

NOTE 3 — Business Combinations and Acquired In-Process Research and Development

Acquisition of Tower Technology

On March 1, 2004 the Company acquired all issued and outstanding shares of TOWER Technology Pty Limited (“Tower Technology”), a privately held Australian company and provider of enterprise document and records management solutions. The consideration paid to the Tower Technology stockholders was comprised of approximately 27.2 million shares of the Company’s stock and $49.8 million in cash, including a $3.8 million payment made in July 2004 in lieu of issuing additional shares. In addition, the Company incurred approximately $7.4 million in transaction costs. The Company’s consolidated financial statements include Tower Technology’s financial position and results of operations for the period subsequent to March 1, 2004.

In accordance with SFAS 141, Business Combinations (“Statement 141”), the total purchase consideration of $133.9 million, including transaction costs of $7.4 million, has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective estimated fair values at the date of acquisition. Such allocation resulted in goodwill of $82.0 million. Goodwill is assigned at the enterprise level and is not expected to be deductible for income tax purposes.

F - 17

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following unaudited condensed consolidated balance sheet data presents the estimated fair value of the assets acquired and liabilities assumed. Such balance sheet information includes accruals related to employee severance, relocation and exit costs, as estimated on the date of acquisition (in thousands):

Cash and cash equivalents		$	9,100
Accounts receivable			8,387
Prepaid expenses and other current assets			1,007
Property and equipment			404
Other assets			75
Intangible assets subject to amortization (5 year weighted-average useful life):
Technology (6 year useful life)	30,100
Customer relationships (4 year useful life)	18,200
Non-compete (6 year useful life)	1,400
In-process research and development	4,800
Total intangible assets			54,500
Goodwill			82,023
Total assets acquired			155,496
Accounts payable			(710	)
Accrued exit costs			(3,146	)
Accrued severance			(1,426	)
Accrued other expenses			(9,252	)
Deferred revenue			(7,037	)
Total liabilities assumed			(21,571	)
Net assets acquired		$	133,925

Accrued exit costs of $3.1 million relate to lease obligations for excess office space that the Company has vacated under the approved facilities exit plan. The total lease commitments include the estimated lease buyout fees, or the remaining lease liabilities and estimated associated mitigation costs including, but not limited to, brokerage commissions, legal fees, repairs, restoration costs, and sublease incentives, offset by estimated sublease income. The estimated costs of vacating these leased facilities, including estimated costs to sublease and sublease income, were based on market information and trend analysis as estimated by the Company. It is reasonably possible that actual results could differ from these estimates in the near term, and such differences would result in adjustments to the purchase price allocation and, ultimately, the amount allocated to goodwill. The impacted sites are office space located in Slough, United Kingdom; New York City, New York; and Melbourne and Lane Cove, Australia and have lease commitments that expire as late as September 2007.

Accrued severance and relocation costs of $1.4 million relate to severance, payroll taxes, outplacement and relocation benefits for certain Tower Technology employees impacted by the approved plan of termination and relocation. Approximately 50 employees were severed in the sales, marketing, professional services, engineering and general and administrative departments.

F - 18

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes activity for exit costs, employee severance and relocation costs (in thousands):

	Exit Costs			Severance and Relocation			Total
Initial accrual at March 1, 2004	$	3,146		$	1,426		$	4,572
Cash activity		(864	)		(1,400	)		(2,264	)
Adjustment to accrual		(866	)		(26	)		(892	)
Balance at December 31, 2004	$	1,416		$	—		$	1,416
Cash activity		(689	)		—			(689	)
Adjustment to accrual		190			—			190
Balance at December 31, 2005	$	917		$	—		$	917
Less: current portion								502
Long-term exit costs and severance and relocation							$	415

Acquisition of Intraspect Software, Inc.

On December 10, 2003, the Company acquired all issued and outstanding shares of Intraspect Software, Inc. (“Intraspect”) in exchange for $10 million in cash and approximately 4.2 million shares of Vignette common stock. Intraspect provided business collaboration solutions. The total purchase price, including $0.5 million in transaction costs related to banking, legal and accounting activities, was $20.4 million. By adding collaboration capabilities to its existing and future product suites, the Company has the ability to deliver a unified content management, portal and collaboration solution that incorporates business process and delivers advanced capabilities to harness the power of their information and the Web to deliver measurable improvements in business efficiency. The results of Intraspect’s operations have been included with those of the Company for the period subsequent to the acquisition date.

In accordance with Statement 141, the total purchase consideration has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective estimated fair values at the date of acquisition. Such allocation resulted in goodwill of $16.0 million. Goodwill is assigned at the enterprise level and is not expected to be deductible for income tax purposes.

The following unaudited condensed consolidated balance sheet data presents the estimated fair value of the assets acquired and liabilities assumed. Such balance sheet information includes accruals related to employee severance, relocation and exit costs, as estimated on the date of acquisition (in thousands):

Cash and cash equivalents		$	1,822
Accounts receivable			1,631
Prepaid expenses and other current assets			355
Property and equipment			316
Other assets			17
Intangible assets subject to amortization (two year weighted-average useful life):
Technology (two year useful life)	4,500
Customer relationships (three year useful life)	1,100
In-process research and development	1,100
Total intangible assets			6,700
Goodwill			15,958
Total assets acquired			26,799
Accounts payable			(1	)
Accrued exit costs			(2,250	)
Accrued severance and relocation			(543	)
Accrued other expenses			(1,017	)
Deferred revenue			(2,606	)
Total liabilities assumed			(6,417	)
Net assets acquired		$	20,382

Accrued exit costs of $2.3 million relate to lease obligations for excess office space that the Company has vacated or intends to vacate under the approved facilities exit plan. The total lease commitments include the remaining lease liabilities and brokerage commissions, offset by estimated

F - 19

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

sublease income. The estimated costs of vacating these leased facilities, including estimated costs to sublease and sublease income, were based on market information and trend analysis as estimated by the Company. It is reasonably possible that actual results could differ from these estimates in the near term, and such differences would result in adjustments to the purchase price allocation and, ultimately, the amount allocated to goodwill. The impacted site is office space located in Brisbane, California and has a lease commitment that expires in September 2006.

Accrued severance and relocation costs of $0.5 million relate to severance, payroll taxes, outplacement and relocation benefits for certain Intraspect employees impacted by the approved plan of termination and relocation. Approximately 10 employees were severed in the sales, marketing, professional services, engineering and general and administrative departments.

The following table summarizes activity for exit costs, employee severance and relocation costs (in thousands:

	Exit Costs			Severance and relocation			Total
Initial accrual at December 10, 2003	$	2,250		$	543		$	2,793
Adjustment to accrual		—			(30	)		(30	)
Cash activity		(67	)		(507	)		(574	)
Balance at December 31, 2003		2,183			6			2,189
Adjustment to accrual		21			148			169
Cash activity		(834	)		(154	)		(988	)
Balance at December 31, 2004		1,370			—			1,370
Adjustment to accrual		(38	)		—			(38	)
Cash activity		(801	)		—			(801	)
Balance at December 31, 2005	$	531		$	—		$	531
Less: current portion								(531	)
Long term exit costs and severance and relocation							$	—

Acquisition of Epicentric, Inc

On December 3, 2002, the Company acquired all issued and outstanding shares of Epicentric, Inc. (“Epicentric”) for $29.1 million in cash, including $3.1 million in transaction costs related to banking, legal and accounting activities. Epicentric provided business portal solutions. By adding advanced portal and delivery management capabilities to its existing and future product suites, the Company has the capability to deliver real-time enterprise Web applications. The results of Epicentric’s operations have been included with those of the Company for the period subsequent to the acquisition date.

In accordance with Statement 141, the total purchase consideration has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective estimated fair values at the date of acquisition. Such allocation resulted in goodwill of $33.0 million. Goodwill is assigned at the enterprise level and is not expected to be deductible for income tax purposes. The following unaudited condensed consolidated balance sheet data presents the estimated fair value of the assets acquired and liabilities assumed.

F - 20

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Such balance sheet information includes accruals related to employee severance, relocation and exit costs, as estimated on the date of acquisition (in thousands):

Cash and cash equivalents		$	1,293
Accounts receivable			5,362
Prepaid expenses and other current assets			923
Property and equipment			2,705
Other assets			115
Intangible assets subject to amortization (two year weighted-average useful life):
Technology (two year useful life)	6,400
Non-compete contracts (two year useful life)	800
Customer relationships (three year useful life)	4,100
In-process research and development	800
Total intangible assets			12,100
Goodwill			32,993
Total assets acquired			55,491
Accounts payable			(1,203	)
Accrued severance and relocation costs			(1,895	)
Accrued exit costs			(9,794	)
Accrued other expenses			(6,084	)
Deferred revenue			(7,159	)
Current portion of capital lease obligation			(211	)
Capital lease obligation, less current portion			(89	)
Total liabilities assumed			(26,435	)
Net assets acquired		$	29,056

Accrued exit costs of $9.8 million relate to lease obligations for excess office space that the Company has vacated or intends to vacate under the approved facilities exit plan. The total lease commitments include the remaining lease liabilities and brokerage commissions, offset by estimated sublease income. The estimated costs of vacating these leased facilities, including estimated costs to sublease and sublease income, were based on market information and trend analysis as estimated by the Company. It is reasonably possible that actual results could differ from these estimates in the near term, and such differences would result in adjustments to the purchase price allocation and ultimately, the amount allocated to goodwill. Impacted sites include office space located in San Francisco, California; New York, New York; Chicago, Illinois; and Austin, Texas and have lease commitments that expire as late as December 2006.

Accrued severance and relocation costs of $1.9 million relate to severance, payroll taxes, outplacement and relocation benefits for certain Epicentric employees impacted by the approved plan of termination and relocation. Approximately 85 Epicentric employees were severed in the sales, marketing, professional services, engineering and general and administrative departments.

F - 21

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes activity for exit costs, employee severance and relocation costs (in thousands):

	Exit Costs			Severance and Relocation			Total
Initial accrual at December 3, 2002	$	9,794		$	1,895		$	11,689
Cash activity		—			—			—
Balance at December 31, 2002	$	9,794		$	1,895		$	11,689
Adjustment to accrual		190			—			190
Cash activity		(3,692	)		(1,823	)		(5,515	)
Balance at December 31, 2003	$	6,292		$	72		$	6,364
Adjustment to accrual		(454	)		(72	)		(526	)
Cash activity		(2,360	)		—			(2,360	)
Balance at December 31, 2004	$	3,478		$	—		$	3,478
Adjustment to accrual		(833	)		—			(833	)
Cash activity		(2,559	)		—			(2,559	)
Balance at December 31, 2005	$	86		$	—		$	86
Less: current portion								(86	)
Long term exit costs and severance and relocation							$	—

The following table summarizes costs related to our business combinations (in thousands):

	Year Ended December 31,
	2005		2004		2003
Purchased in-process research and development	$	—	$	4,800	$	1,100
Cross-training, product integration and other		270		1,345		490
Severance and other employee-related costs		—		807		136
Contingent compensation		—		657		2,532
	$	270	$	7,609	$	4,258

In-process research and development (“IPR&D”)

The amounts allocated to IPR&D were based on discounted cash flow models that employed cash flow projections for revenue based on the projected incremental increase in revenue that the acquired company expected to receive from the completed IPR&D. Such assumptions were based on management’s estimates and the growth potential of the market. Revenue for the projection periods assumed a compound annual growth rate of 17.2%, 5.0%, and 17.5% for Epicentric, Intraspect, and Tower Technology, respectively, and was adjusted to reflect the percentage of research and development determined to be complete as of the acquisition date. Cost of revenue, selling, general and administrative expense, and research and development expense were estimated as a percent of revenue based on each acquired company’s historical results and industry averages. These estimated operating expenses as well as capital charges and applicable income taxes were deducted to arrive at an estimated after-tax cash flow. The after-tax cash flow projections were discounted using a risk-adjusted rate of return, of 40% and 19% for Epicentric, and Intraspect, respectively. A risk-adjusted rate of return ranging from 20% to 22% was employed for Tower Technology. Such discount rates were based on each acquired company’s weighted average cost of capital of 36%, 17%, and 20% for Epicentric, Intraspect, and Tower Technology, respectively, as adjusted upwards for the additional risk related to the projects’ development and success.

Acquisition-related and other charges

As part of the Epicentric acquisition, contingent compensation in the form of cash totaling $2.5 million and $0.3 million was recorded in 2003 and 2004, respectively. The Company expects to incur no additional contingent compensation expense for Epicentric employees. During 2004, contingent expense compensation charges of $0.3 million and $0.1 million were incurred in conjunction with the Intraspect and Tower Technology acquisitions, respectively. Because contingent consideration is based on defined future employment requirements, it is compensatory in nature and is not included in the total purchase price, but, instead, is expensed as future employment requirements are satisfied.

F - 22

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 4 — Intangible Assets

Intangible assets with indefinite lives

The changes in the carrying amount of intangible assets with indefinite lives, net of accumulated amortization and impairment charges, are as follows (in thousands):

	Goodwill
Balance at December 31, 2003	$	46,969
Acquisition		82,023
Purchase price adjustments		(5,080	)
Balance at December 31, 2004		123,912
Purchase price adjustments		(3,802	)
Balance at December 31, 2005	$	120,110

The goodwill balance at December 31, 2005 and 2004 pertains to the Tower technology business combination completed in March 2004, the Intraspect business combination completed in December 2003, and the Epicentric business combination completed in December 2002.

The purchase price adjustments in 2005 relate primarily to a $3 million claim filed in February 2005 against the escrow established in the acquisition of Tower Technology for certain pre-acquisition tax exposures. The Company is currently reviewing these issues with former Tower shareholders, but the Company expects that substantially all payments related to these liabilities will be funded from the escrow account. As a result, the reduction of goodwill relates primarily to a reduction in these tax liabilities related to the Tower Technology acquisition.

Purchase price adjustments in 2004 primarily relate to the reduction in the calculated amount of cash consideration paid to certain former Tower Technology option holders subsequent to acquisition pursuant to the Share Sale Agreement dated January 22, 2004. The actual amount paid was $3.8 million whereas the estimated amount at the acquisition date was $7.1 million. The decline in the actual amount of the payment was directly proportional to the decline in the Company’s stock price. Other purchase price adjustments made in 2004 relate to reductions in deferred tax liabilities, and adjustments to certain accrual assumptions, which were partially offset by an increase in the tax withholding provision in the United Kingdom for Tower Technology.

Goodwill impairment tests

In accordance with Statement 142, the Company performs an annual impairment test of goodwill. The Company evaluates goodwill at the enterprise level as of October 1 each year or more frequently if events or changes in circumstances indicate that goodwill might be impaired. As required by Statement 142, the impairment test is accomplished using a two-stepped approach. The first step screens for impairment and, when impairment is indicated, a second step is employed to measure the impairment.

Using data as of October 1, 2005 and 2004, the Company passed the first step. The Company also reviewed other factors to determine the likelihood of impairment. Based on these findings, the remaining net goodwill balance of $120.1 million is not considered impaired at December 31, 2005.

F - 23

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Intangible assets with definite lives

Following is a summary of the Company’s intangible assets that are subject to amortization (in thousands):

	December 31,
	2005							2004
	Gross Carrying Amount		Accumulated Amortization and Impairment			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization and Impairment			Net Carrying Amount
Business combinations:
Technology	$	77,101	$	(56,198	)	$	20,903	$	77,101	$	(49,931	)	$	27,170
Non-compete contracts		2,200		(1,442	)		758		2,200		(1,092	)		1,108
Customer relationships		23,400		(10,425	)		12,975		23,400		(5,772	)		17,628
Balance at December 31, 2003 and 2004	$	102,701	$	(68,065	)	$	34,636	$	102,701	$	(56,795	)	$	45,906

The net carrying amount of intangible assets acquired in business combinations relates to the Epicentric, Intraspect, and Tower Technology purchases.

The Company’s intangible assets with definite lives are being amortized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives range from two to six years. The weighted average useful life for Technology is 72 months. The weighted average useful life for Non-compete contracts is 48 months. The weighted average useful life of customer relationships is 70 months. The weighted average useful life for intangible assets in total with definite lives is 71 months. The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value or revised useful life. Total amortization expense for the years ended December 31, 2005, 2004 and 2003 was $11.2 million, $15.0 million, and $5.4 million, respectively. Of these amounts, $5.0 million, $4.9 million, and $2.0 million, was recorded as “Amortization of intangible assets” in operating expenses, respectively, and the remaining $6.3 million, $10.1 million, and $3.4 million, respectively, was recorded as a cost of revenue.

Estimated annual amortization expense (in thousands) for the next five years is as follows:

For the year ended December 31, 2006	$	8,736
For the year ended December 31, 2007	$	8,400
For the year ended December 31, 2008	$	8,108
For the year ended December 31, 2009	$	8,050
For the year ended December 31, 2010	$	1,342

NOTE 5 — Stockholders’ Equity

Reverse Stock Split

On June 10, 2005, the one for ten reverse stock split of the common stock of the Company became effective. The reverse stock split was approved by the Company’s stockholders on May 27, 2005 at the Company’s annual meeting. The Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to effect the reverse stock split. All share and per share information included in these consolidated financial statements have been retroactively adjusted to reflect the reverse stock split.

Preferred stock

The number of shares authorized to be designated as preferred stock was 10,000,000 at December 31, 2005 and 30,000,000 at December 31, 2004. In June 2005 the Company amended its Amended and Restated Certificate of Incorporation to change the number of shares authorized to be designated as preferred stock from 30,000,000 shares to 10,000,000 shares. There were no shares outstanding at December 31, 2005 or 2004.

F - 24

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Shareholder rights plan

In April 2002, the Board adopted a shareholder rights plan (the “Plan”). The Plan was not adopted in response to any attempt to acquire the Company, nor was the Company aware of any such efforts at the time of adoption. The Plan was designed to enable the Company’s stockholders to realize the full value of their investment by providing for fair and equal treatment of all stockholders in the event that an unsolicited attempt is made to acquire the company. Adoption of the Plan was intended to guard shareholders against abusive and coercive takeover tactics.

Under the Plan, stockholders on May 6, 2002 received one right to purchase a one one-hundredth of a share of Series A Junior Participating Preferred Stock, par $0.01 per share, at a price of $300.00 per one one-hundredth, subject to adjustment. The rights were issued as a non-taxable dividend and will expire 10 years from the date of the adoption of the Plan, unless earlier redeemed or exchanged. The rights are not immediately exercisable; however, they will become exercisable upon the earlier to occur of (i) the close of business on the tenth day after a public announcement that a person or group has acquired beneficial ownership of 15 percent or more of the Company’s outstanding common stock or (ii) the close of business on the tenth day (or such later date as may be determined by the Board of Directors prior to such time as any person becomes an acquiring person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer that would result in the beneficial ownership by a person or group of 15 percent or more of the Company’s outstanding common stock. If a person or group acquires 15 percent or more of the Company’s common stock, then all rights holders except the acquirer will be entitled to acquire the Company’s common stock at a significant discount. The intended effect will be to discourage acquisitions of 15 percent or more of the Company’s common stock without negotiation with the Board of Directors.

Common stock

The Company authorized the issuance of 500,000,000 shares of $0.01 par value common stock. A portion of the shares issued are restricted and are subject to forfeiture, until the respective vesting requirement is achieved, which is generally one to three years from grant or issuance. As of December 31, 2005, 103,644 shares were subject to forfeiture.

As of December 31, 2005, the Company reserved shares of its common stock for the following purposes:

Employee stock purchase plan	1,179,519
Stock options available for grant	4,820,773
Exercise of outstanding stock options	3,146,523
	9,146,815

Stock plans

The Company has established five stock plans: (i) the 1995 Stock Option/Stock Issuance Plan (the “1995 Plan”); (ii) the 1999 Equity Incentive Plan (the “1999 Plan”); (iii) the 1999 Supplemental Stock Option Plan (the “1999 Supplemental Plan”); (iv) the 1999 Non-Employee Directors Option Plan (the “Directors’ Plan”) and (v) the Employee Stock Purchase Plan and the International Employee Stock Purchase Plan (the “ESPP”). Of these plans, the 1995 Plan, the 1999 Plan, the Directors’ Plan and the ESPP have been approved by the Company’s shareholders. The 1999 Supplemental Plan did not require approval by the Company’s shareholders.

Under the 1995 Plan, certain employees, members of the Board and independent advisors were granted options to purchase shares of the Company’s common stock and were issued shares of the Company’s common stock. Options are immediately exercisable. Upon certain events, the Company has repurchase rights for unvested shares equal to the original exercise price. At December 31, 2004, no shares were subject to repurchase. The Company also has the right of first refusal for any proposed disposition of shares issued under the 1995 Plan. The stock options and the related exercised stock will generally vest over a four-year cumulative period. The term of each option is no more than ten years from the date of grant. Stock issuance may be for purchase or as a bonus for services rendered to the Company. Options outstanding at the time of the Company’s initial public offering were assumed under the Company’s 1999 Plan. Options may not be granted from the 1995 Plan subsequent to the Company’s initial public offering, therefore, no shares were available for future grant under the 1995 Plan at December 31, 2005. Options that expire under the 1995 Plan will be available for future grants under the 1999 Plan.

F - 25

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Under the 1999 Plan, employees, non-employee members of the Board and consultants may be granted options to purchase shares of common stock, stock appreciation rights, restricted shares and stock units. Options are exercisable in accordance with each stock option agreement. The term of each option is no more than ten years from the date of grant. Each fiscal year, commencing with the year 2000 and ending with the year 2002, the aggregate number of shares authorized under the 1999 Plan automatically increased by the lesser of (i) 5% of the total number of shares of the common stock then outstanding or (ii) 1,180,482 shares. At December 31, 2005, there were 7,239,387 shares authorized for issuance, including shares assumed from the 1995 Plan, of which 2,848,324 were available for future grant.

Under the 1999 Supplemental Plan, only employees and consultants who are common-law employees of the corporation are eligible for the grant of options. Employees who are officers of the corporation are not eligible for the grant of options under this Plan. The term and vesting periods are equivalent to those under the 1999 Plan. At December 31, 2005, there were 3,300,000 shares authorized for issuance of which 1,874,199 were available for future grant.

Under the Directors’ Plan, non-employee members of the Board may be granted non-qualified options to purchase shares of common stock. Vesting for options granted prior to April 2004 occurs over a four-year cumulative period. Vesting of options granted after April 2004 occurs over a one-year period. The term of each option is no more than ten years from the date of grant. At December 31, 2005, there were 150,000 shares authorized for issuance of which 98,250 were available for future grant.

In addition to the aforementioned plans, the Company assumed several plans through its business combinations. These assumed plans have not been approved by the Company’s shareholders; however, upon assumption, these plans terminated and no further options may be granted. Options previously granted under these plans that have not yet expired or otherwise become unexercisable continue to be administered under the governing plan, and any portions that expire or become unexercisable for any reason shall be cancelled and be unavailable for future issuance. The Company also grants options to certain of its officers upon their employment. Such options are issued as inducement grants pursuant to NASD Rule 4350(i).

The following table summarizes stock option activity and related information through December 31, 2005. The activity presented below is on a post split basis after giving effect for the one-for-ten reverse stock split and is as follows:

	Year Ended December 31,
	2005				2004				2003
	Options		Weighted average exercise price		Options		Weighted average exercise price		Options		Weighted average exercise price
Outstanding at beginning of period	3,587,412		$	31.24	4,081,384		$	45.42	4,604,156		$	52.00
Granted	736,953			13.15	1,235,327			17.74	855,659			20.10
Exercised	(416,437	)		4.45	(175,155	)		10.33	(283,368	)		8.50
Canceled	(761,405	)		50.18	(1,554,144	)		60.11	(1,095,063	)		62.90
Outstanding at end of period	3,146,523			25.96	3,587,412			31.24	4,081,384			45.42
Options exercisable at period end	2,213,835			31.54	1,985,033			41.50	2,123,004			62.30
Options available for grant	4,820,773				4,567,251				4,380,433

F - 26

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes options outstanding and exercisable as of December 31, 2005:

		Outstanding				Exercisable
Range of Exercise Prices		Number of Options	Weighted- Average Remaining Contractual Life (in years)	Weighted- Average Exercise Price		Number of Options	Weighted- Average Exercise Price
$	0.01 - $7.50	4,809	0.6	$	5.49	4,809	$	5.49
$	7.51 - $15.00	1,340,217	5.3		11.21	559,195		10.16
$	15.01 - $30.00	954,564	6.1		21.30	802,898		22.16
$	30.01 - $50.00	542,391	3.5		38.76	542,391		38.76
$	50.01 - $75.00	202,306	3.4		59.27	202,306		59.27
$	75.01 - $150.00	86,654	2.6		86.12	86,654		86.12
$	150.01 - 250.00	1,829	2.8		188.64	1,829		188.64
$	250.01 - $700.00	13,753	2.3		399.64	13,753		399.64
		3,146,523	5.0	$	25.96	2,213,835	$	31.54

Under the ESPP, as amended, the Company has reserved 2,157,286 shares of common stock for issuance to participating employees. Under the terms of the ESPP, there are two, six-month offerings per year. Employees may direct the Company to withhold up to 15% of their salary to purchase the Company’s common stock. An employee may purchase a maximum of 200 shares per six-month offering period. Each fiscal year, commencing with the year 2000 and ending with the year 2002, the number of shares under the ESPP automatically increased by the lesser of (i) 2% of the total number of shares of common stock then outstanding or (ii) 450,000 shares. As of December 31, 2005, 977,767 shares were issued under the ESPP. This plan has 1,179,519 shares available for future issuance.

Fair value disclosures

Pro forma information regarding net income (loss) and net income (loss) per share is required by Statement 123, and has been determined as if the Company had accounted for its employee stock plans under the fair value method of Statement 123. Fair value was estimated using the Black-Scholes option-pricing model, with the following assumptions:

	Employee Stock Options									Employee Stock Purchase Plan
	2005			2004			2003			2005
Risk-free interest rate		3.8	%		2.7	%		2.0	%		3.94	%
Weighted-average expected life of the options (years)		2.0			2.4			2.5			1.2
Dividend rate		0.0	%		0.0	%		0.0	%		0.0	%
Assumed volatility		63	%		109	%		120	%		60	%
Weighted-average fair value of options granted
Exercise price equal to fair value of stock on date of grant	$	13.15		$	17.74		$	14.90		$	11.40
Exercise price less than fair value of stock on date of grant	$	—		$	—		$	—		$	—

For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options’ vesting period and stock purchased under the ESPP is amortized over the six-month purchase period. The impact of the pro forma results that follow may not be representative of compensation

F - 27

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

expense in future years when the effect of the amortization of multiple awards may be reflected in the amounts. The Company’s pro forma information follows (in thousands, except per share data):

	Year ended December 31,
	2005		2004			2003
Pro forma stock-based compensation expense	$	7,707	$	16,951		$	44,265
Pro forma net income (loss)	$	13,521	$	(69,326	)	$	(43,191	)
Pro forma basic net income (loss) per share	$	0.46	$	(2.44	)	$	(1.71	)
Pro forma diluted income (loss) per share	$	0.45	$	(2.44	)	$	(1.71	)

Stock Option Vesting Acceleration

On December 27, 2005, the Board of Directors of the Company approved the acceleration of vesting for certain of the Company’s unvested and “out of the money” stock options previously awarded to its employees, officers and directors under the Company’s Stock Plans with exercise prices ranging from $20.00 to $54.40 per share. The acceleration was effective for stock options unvested and outstanding as of December 27, 2005 and held by optionees providing service to the company as of December 27, 2005. There were approximately 343,000 shares for which the vesting was accelerated with a weighted average exercise price of $22.35.

The purpose of the acceleration is to enable the Company to avoid recognizing compensation expense associated with these options in future periods in its consolidated statements of operations, upon effectiveness of the application of FASB Statement No.123R (Share-Based Payment) which the company will adopt effective January 1, 2006. The pre-tax charge estimated by the Company to be avoided as a result of the acceleration amounts to approximately $ 1.0 million over the course of the original vesting periods. The estimated charge avoided is $0.5 million in 2006, $0.4 million in 2007 and $0.1 million in 2008. All other previously awarded stock options are not impacted by this change.

Employee option exchange program

On September 28, 2004, the Company granted 2.0 million stock options to employees who elected to participate in the Company’s stock option exchange program, a program designed to retain employees and to provide them with an incentive for maximizing stockholder value. Under the option exchange program, a total of 0.5 million stock options, which were previously granted to the participating employees, were canceled on March 25, 2004 (the “cancellation date”). For non-executive employees at the option exchange program’s cancellation date, the exercise price of these new options was $12.70, which was the fair market value of the Company’s common stock on September 28, 2004, or the grant date. For executive employees at the option exchange program’s cancellation date, the exercise price of these new options was $22.0 which was the fair market value of the Company’s common stock on the exchange program’s cancellation date. The exchange program was organized to comply with Financial Accounting Standard Board (“FASB”) Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation, and did not result in any additional compensation charges or variable plan accounting. The Company’s senior executive officers and Board of Directors were not eligible to participate in this program.

Deferred stock compensation

In 2005, 2004 and 2003, the Company recorded total deferred stock compensation of $0.8 million $0.1 million, and $1.0 million, respectively. In 2005, the amount related in part to the issuance of 0.6 million shares of restricted common stock to various employees. The reduction in total deferred stock compensation in 2004 was the net result of forfeitures recognized upon the departure of certain employees. In 2003, the amount primarily related to restricted stock issued to our Chief Executive Officer in November 2003. These amounts are being amortized over the vesting periods of the applicable restricted shares and options, resulting in amortization expense of $0.8 million, $0.5 million and $1.1 million for the years ended December 31, 2005, 2004, and 2003 respectively.

F - 28

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Share repurchase program

The Board of Directors has approved two stock repurchase programs. Each program was approved with an expiration date of six months after the effective date. In general, repurchases may be made in the open market, through block trades or otherwise and repurchased shares may be used for general corporate purposes, including issuance under the Company’s stock plans. During 2003, the Company repurchased 0.2 million shares of its common stock for $0.2 million. All such repurchases were conducted through open market transactions. The Company did not repurchase stock in 2005 or 2004.

NOTE 6 — Business Restructuring

During fiscal year 2001, the Company’s management approved a restructuring plan to reduce headcount and infrastructure and to consolidate operations. The Company expanded the restructuring plan during 2002, 2003, and 2004. Components of business restructuring charges and the remaining restructuring accruals as of December 31, 2005 are as follows (in thousands):

	Facility Lease Commitments			Asset Impairments			Employee Separation and Other Costs			Total
Balance at December 31, 2000	$	—		$	—		$	—		$	—
Total restructuring charge		55,150			33,683			32,102			120,935
Cash activity		(12,397	)		(878	)		(22,773	)		(36,048	)
Non-cash activity		(292	)		(32,805	)		(1,918	)		(35,015	)
Balance at December 31, 2001		42,461			—			7,411			49,872
Effect of expanded restructuring plan		6,518			8,730			11,118			26,366
Adjustment to accrual		9,538			463			(545	)		9,456
Cash activity		(21,959	)		—			(11,342	)		(33,301	)
Non-cash activity		—			(9,193	)		(36	)		(9,229	)
Balance at December 31, 2002		36,558			—			6,606			43,164
Effect of expanded restructuring plan		9			—			2,076			2,085
Adjustment to accrual		(13,422	)		—			(3,349	)		(16,771	)
Cash activity		(10,620	)		—			(4,961	)		(15,581	)
Balance at December 31, 2003		12,525			—			372			12,897
Effect of expanded restructuring plan		12,421			2,331			4,085			18,837
Adjustment to accrual		(780	)		—			(83	)		(863	)
Cash activity		(8,584	)		—			(3,404	)		(11,988	)
Non-cash activity		(869	)		(2,331	)		(8	)		(3,208	)
Balance at December 31, 2004		14,713			—			962			15,675
Adjustment to accrual		(1,676	)		—			(123	)		(1,799	)
Cash activity		(6,358	)		—			(709	)		(7,067	)
Balance at December 31, 2005	$	6,679		$	—		$	130		$	6,809
Less: current portion											(2,901	)
Accrued restructuring costs, less current portion										$	3,908

During 2004, the Company expanded the existing restructuring plan initiated in 2001. In the first quarter of 2004, the Company moved out of its existing headquarters and relocated to nearby office space that now serves as its headquarters. As such, the Company recorded a restructuring charge of

F - 29

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

approximately $8.0 million in the first quarter of 2004 pursuant to Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“Statement 146”). In addition, we incurred severance and other real estate-related expenses of approximately $1.2 million resulting from our business combination with Tower Technology. In the fourth quarter of 2004, the Board of Directors authorized the Company to effect job reductions. The plan included a worldwide reduction in headcount of approximately 120 personnel, including consolidating software development facilities in Boston, Massachusetts and San Francisco, California into the Company’s other existing development facilities. Expenses incurred in the fourth quarter of 2004 as a result of this plan totaled approximately $9.4 million, of which $3.2 million related employee severance, benefits, and outplacement services, $5.3 million related to real estate, and $0.9 million related to the write-off of leasehold improvements for vacated real estate.

Remaining cash expenditures resulting from the restructuring are estimated to be $6.8 million and relate primarily to facility lease commitments, of which the remaining maximum lease commitment extends out to 2011. We have substantially implemented our restructuring efforts initiated in conjunction with this restructuring plan; however, there can be no assurance that the estimated costs of our restructuring efforts will not change. These are management’s best estimates based on currently available information and are subject to change.

Consolidation of excess facilities

Facility lease commitments relate to lease obligations for excess office space that the Company has vacated as a result of the Company’s restructuring plan. The Company continues to actively pursue mitigation strategies to dispose of all excess office space through subleasing and/or early termination negotiations where possible. The total lease commitments include the estimated lease buyout fees, or the remaining lease liabilities and estimated associated mitigation costs including, but not limited to, brokerage commissions, legal fees, repairs, restoration costs, and sublease incentives, offset by estimated sublease income. The estimated costs of vacating these leased facilities, including estimated costs to sublease and any resulting sublease income, were based on market information and trend analysis as estimated by the Company. The Company continually assesses its real estate portfolio and may vacate and/or occupy other leased space as dictated by its analysis and by the needs of the business. It is reasonably possible that actual results could continue to differ from these estimates in the near term, and such differences could be material to the financial statements. In particular, actual sublease income attributable to the consolidation of excess facilities might deviate from the assumptions used to calculate the Company’s accrual for facility lease commitments. Facility lease commitments relate to the Company’s departure from certain office space in Austin, Texas; Brisbane and San Francisco, California; New York City, New York; Waltham and Boston, Massachusetts; Chicago, Illinois; Slough, United Kingdom; Madrid, Spain; and Lane Cove and Melbourne, Australia. The maximum lease commitment of such vacated properties extends through December 2011.

Asset impairments

Asset impairments relate to the impairment of certain fixed assets. These fixed assets were impaired as a result of the Company’s decision to vacate certain office space and align its infrastructure with current and projected headcount, resulting in an impairment charge of $0.0 million, $2.3, and $0.0 million, in 2005, 2004, and 2003, respectively.

Employee separation and other costs

Employee separation and other costs include severance, related taxes, outplacement and other restructuring charges. As a result of the restructuring activities, the Company severed approximately 1,620 employees since the plan’s inception in 2001. Employee groups impacted by the restructuring efforts include personnel in positions throughout the sales, marketing, professional services, engineering and general and administrative functions in all geographies. During 2003, the Company favorably resolved certain employee matters that related to the Company-initiated reduction in force. This resolution resulted in a $3.3 million decrease in the employee separation and other costs accrual.

F - 30

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 7 —Commitments and Contingencies

The Company leases its office facilities and office equipment under various operating lease agreements having expiration dates through 2011. The Company has operating leases for facilities with escalating rents. Pursuant to SFAS 13 – Accounting for Leases, the Company recognizes rent expense on a straight line basis over the lease term. Rent expense, excluding vacated properties, for the years ended December 31, 2005, 2004, and 2003 was $4.8 million, $6.2 million, and $5.7 million respectively. At December 31, 2005, estimated future rents receivable from signed sublease agreements are $5.7 million through 2011. Future minimum payments due and receivable as of December 31, 2005 under these leases and subleases, including operating lease commitments for all vacated properties, are as follows (in thousands):

	Operating Leases		Sublease Income
2006	$	7,629	$	1,190
2007		5,304		1,337
2008		4,267		1,199
2009		3,640		1,027
2010		2,920		576
Thereafter		2,476		416
Total minimum lease payments	$	26,236
Total minimum sublease rentals			$	5,745

Product warranties

The Company offers warranties to its customers, requiring that the Company replace defective products within a specified time period from the date of sale. The Company records warranty costs as incurred and historically, such costs have not been material.

Software license indemnifications

Financial Accounting Standards Board Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“Interpretation 45”), requires that the Company recognize the fair value for certain guarantee and indemnification arrangements issued or modified by the Company after December 31, 2002. When the Company determines that a loss is probable, the estimated loss must be recognized as it relates to applicable guarantees and indemnifications. Some of the software licenses granted by the Company contain provisions that indemnify customers of the Company’s software from damages and costs resulting from claims alleging that the Company’s software infringes on the intellectual property rights of a third party. The Company records resulting costs as incurred and historically, such costs have not been material. Accordingly, the Company has not recorded a liability related to these indemnification provisions.

NOTE 8 — Legal Matters

Securities Class Action

On October 26, 2001, a class action lawsuit was filed against the Company and certain of its current and former officers and directors in the United States District Court for the Southern District of New York in an action captioned Leon Leybovich v. Vignette Corporation, et al., seeking unspecified damages on behalf of a purported class that purchased Vignette common stock between February 18, 1999 and December 6, 2000. Also named as defendants were four underwriters involved in the Company’s initial public offering of Vignette stock in February 1999 and the Company’s secondary public offering of Vignette stock in December 1999 - Morgan Stanley Dean Witter, Inc., Hambrecht & Quist, LLC, Dain Rauscher Wessels and U.S. Bancorp Piper Jaffray, Inc. A Consolidated Amended Complaint, which is now the operative complaint, was

F - 31

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

filed on April 19, 2002. The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, based on, among other things, claims that the four underwriters awarded material portions of the shares in the Company’s initial and secondary public offerings to certain customers in exchange for excessive commissions. The plaintiff also asserts that the underwriters engaged in “tie-in arrangements” whereby certain customers were allocated shares of Company stock sold in its initial and secondary public offerings in exchange for an agreement to purchase additional shares in the aftermarket at pre-determined prices. With respect to the Company, the complaint alleges that the Company and its officers and directors failed to disclose the existence of these purported excessive commissions and tie-in arrangements in the prospectus and registration statement for the Company’s initial public offering and the prospectus and registration statement for the Company’s secondary public offering. The action seeks damages in an unspecified amount.

The action is being coordinated with approximately 300 other nearly identical actions filed against other companies. On October 9, 2002, the Court dismissed the Individual Defendants from the case without prejudice based upon Stipulations of Dismissal filed by the plaintiffs and the Individual Defendants. On February 19, 2003, the Court denied a motion to dismiss the complaint against the Company. On October 13, 2004, the Court certified a class in six of the other nearly identical actions and noted that the decision is intended to provide strong guidance to all parties regarding class certification in the remaining cases. Plaintiffs have not yet moved to certify a class in the Company’s case. The Company has approved a settlement agreement and related agreements which set forth the terms of a settlement between the Company, the individual defendants, the plaintiff class and the vast majority of the other issuer defendants. Among other provisions, the settlement provides for a release of the Company and the Individual Defendants for the conduct alleged in the action to be wrongful. The Company would agree to undertake certain responsibilities, including agreeing to assign away, not assert, or release certain potential claims the Company may have against its underwriters. The settlement agreement also provides a guaranteed recovery of $1 billion to plaintiffs for the cases relating to all of the approximately 300 issuers. To the extent that the underwriter defendants settle all of the cases for at least $1 billion, no payment will be required under the issuers’ settlement agreement. To the extent that the underwriter defendants settle for less than $1 billion, the issuers are required to make up the difference. It is anticipated that any potential financial obligation of the Company to plaintiffs pursuant to the terms of the settlement agreement and related agreements will be covered by existing insurance. The Company currently is not aware of any material limitations on the expected recovery of any potential financial obligation to plaintiffs from its insurance carriers. Its carriers are solvent, and the company is not aware of any uncertainties as to the legal sufficiency of an insurance claim with respect to any recovery by plaintiffs. Therefore, we do not expect that the settlement will involve any payment by the Company. Even if material limitations on the expected recovery of any potential financial obligation to the plaintiffs from the Company’s insurance carriers should arise, the Company’s maximum financial obligation to plaintiffs pursuant to the settlement agreement is less than $3.4 million. On February 15, 2005, the Court granted preliminary approval of the settlement agreement, subject to certain modifications consistent with its opinion. Those modifications have been made. There is no assurance that the Court will grant final approval of the settlement. The Company can not predict whether or when a settlement will occur or be finalized. If the settlement is not approved, the Company is unable to determine whether the outcome of the litigation will have a material impact on its results of operations or financial condition in any future period. The Company believes that this lawsuit is without merit and would continue to defend itself vigorously if the settlement is not approved.

Litigation and Other Claims

We are also subject to various legal proceedings and claims arising in the ordinary course of business. Our management does not expect that the outcome in any of these legal proceedings, individually or collectively, will have a material adverse effect on our financial condition, results of operations or cash flows.

F - 32

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 9 — Income Taxes

As of December 31, 2005, the Company had federal net operating loss, capital loss and research credit carryforwards of approximately $767.3 million, $39.9 million and $11.8 million, respectively. The net operating loss, capital loss, and research credit carryforwards will expire in varying amounts, between 2006 and 2026, if not utilized. The Company also had a foreign net operating loss carryover of approximately $6.9 million. The foreign net operating loss carryover is not subject to expiration.

The Tax Reform Act of 1986 imposes substantial restrictions on the utilization of net operating loss, capital loss, and research credit carryforwards in the event of an “ownership change” of a corporation. At December 31, 2005 approximately $157.9 million of the net operating loss, $5.0 million of the net foreign operating loss, and $1.8 million of the research credit carryover were incurred by companies we acquired and will be subject to an annual limitation. In addition, the remaining net operating loss of $609.4 million, capital loss carryforward of $39.9 million, and research credit carryover of $10.0 million may be subject to this limitation. These restrictions may severely limit the benefit of these tax attributes in future periods. As a result, substantial amounts of the Company’s net operating loss, capital loss, and research credit carryforwards may expire prior to utilization.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred taxes as of December 31, 2004 and 2005 are as follows (in thousands):

	December 31,
	2005			2004
Deferred tax liabilities:
Intangible assets	$	(124	)	$	(1,186	)
Other		(1,235	)		(1,259	)
		(1,359	)		(2,445	)
Deferred tax assets:
Depreciable assets		1,675			3,290
Foreign intangible assets		4,008			2,100
Equity investments		790			12,151
Capitalized development costs		30,576			34,349
Deferred revenue		2,098			2,651
Tax carryforwards		312,623			302,113
Accrued liabilities and other		5,163			12,470
		356,933			369,124
Net deferred tax assets		355,574			366,679
Valuation allowance for net deferred tax assets		(355,574	)		(366,679	)
Net deferred taxes	$	—		$	—

The Company has established a valuation allowance equal to the net deferred tax asset due to uncertainties regarding the realization of deferred tax assets based on the Company’s lack of earnings history. As of December 31, 2005, the valuation allowance includes approximately $26.4 million related to the acquisition of Epicentric, Intraspect and Tower Technology net deferred tax assets. The initial recognition of these acquired deferred tax asset items will first reduce goodwill, then other non-current intangible assets of the acquired entity. In both years ended December 31, 2005 and 2004 the company recognized approximately $0.3 million of acquired deferred tax assets as a reduction to goodwill. Approximately $150.0 million of the valuation allowance relates to tax benefits for stock option deductions included in the net operating loss carryforward, substantially all of which when realized, will be allocated directly to contributed capital to the extent the benefits exceed amounts attributable to deferred compensation expense.

The Company’s income or loss before taxes includes foreign losses of $6.1 million, $4.1 million and income of $0.2 million for the three years ended December 31, 2005, 2004 and 2003, respectively, from foreign subsidiaries. The losses from foreign operations in the years ended December 31, 2005 and 2004 include the impact of amortization of intangible assets recorded in the acquisition of Tower in March of 2004.

F - 33

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Undistributed earnings of the Company’s foreign subsidiaries were immaterial as of December 31, 2004 and 2005. Those earnings are considered to be permanently reinvested and, accordingly, no provision for U.S. federal or state income taxes has been provided thereon.

The Company’s provision for income taxes for 2005, 2004 and 2003 consists primarily of foreign income taxes and withholdings on income generated in foreign countries. The provision for income taxes differs from the expected tax benefit amount computed by applying the statutory federal income tax rate of 34% to income before income taxes as a result of the following:

	Year ended December 31,
	2005		2004		2003
Federal statutory rate	34.0	%	(34.0	)%	34.0	%
State taxes, net of federal benefit	2.4		(1.5	)	8.9
In-process research and development	—		3.2		33.9
Stock compensation	1.2		0.3		34.1
Foreign taxes at different rates	6.5		(1.9	)	94.7
Change in valuation allowance	(35.4	)	36.6		(212.5	)
Non-deductible expenses & other	1.9		0.2		109.9
	10.6	%	2.9	%	103.0	%

Several of the Company’s foreign subsidiaries are currently being reviewed by foreign tax authorities. One tax assessment has been received as a result of an examination and is currently being appealed though a foreign administrative court. The Company’s tax accounts include an accrual for income taxes for amounts intended to satisfy income tax assessments that may result from the examination of the Company’s corporate tax returns. The amounts ultimately paid upon resolution of these examinations could be materially different from the amounts included in the provision for income taxes and result in additional tax benefit, or expense, depending on the ultimate outcome.

NOTE 10 — Related Party Transactions

A receivable loan from an employee granted in 2001 totaled $0.0 million and $0.3 million at December 31, 2005 and 2004, respectively. At December 31, 2005 the Company deemed the receivable to be uncollectible and has written off the receivable balance. The Company holds a Promissory Note from the non-officer employee. The principal sum of $0.3 million was used for personal purposes. The loan was due and payable on June 30, 2003. The loan is now in default. The loan note is secured by a first priority mortgage on such employee’s real estate and bears interest at 8% per annum, compounded quarterly. The Company is pursuing legal remedies under the terms of the security agreement. At both December 31, 2005 and 2004, the principal outstanding was $0.3 million, plus accrued interest to date. An employee receivable is reported as a current asset in the line item “Prepaid expenses and other” unless collection is expected to be outside of one year from the balance sheet date; in which case, it is reported in the line item “Other assets.” At December 31, 2005 and 2004 there were no other related party balances.

F - 34

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 11 — Segments of Business and Geographic Area Information

The Company considers its business activities to constitute a single segment. A summary of the Company’s operations by geographic area follows (in thousands):

	Year ended December 31,
	2005		2004		2003
Revenue:
Americas:
United States	$	116,057	$	109,736	$	116,564
Other		3,234		2,446		2,257
Total Americas		119,291		112,182		118,821
Europe		58,079		53,681		35,278
Asia Pacific		13,305		12,064		4,215
Total	$	190,675	$	177,927	$	158,314

	At December 31,
	2005		2004
Identifiable assets:
Americas:
United States	$	269,401	$	362,369
Other		6,055		4,535
Total Americas		275,456		366,904
Europe		28,064		30,502
Asia Pacific		113,641		8,050
Total	$	417,161	$	405,456

F - 35

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Supplemental Financial Information (Unaudited)

The following tables set forth certain unaudited consolidated statements of operations data, both in absolute dollars and as a percentage of total revenue, for each of our last eight quarters. This data has been derived from unaudited condensed consolidated financial statements that have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of the Company’s management, include all normal recurring adjustments necessary for a fair presentation of such information. These unaudited quarterly results should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-K. The consolidated results of operations for any quarter are not necessarily indicative of the results for any future period.

	Three Months Ended
	Dec. 31, 2005			Sept. 30, 2005			June 30, 2005			March 31, 2005			Dec. 31, 2004			Sept. 30, 2004			June 30, 2004			March 31, 2004
	(in thousands, except share data and percentages)
Revenue:
Product license	$	20,054		$	16,822		$	17,150		$	16,290		$	19,309		$	12,313		$	16,852		$	14,679
Services		30,810			30,354			29,839			29,356			29,512			30,301			29,960			25,001
Total revenue		50,864			47,176			46,989			45,646			48,821			42,614			46,812			39,680
Cost of revenue:
Product license		528			706			885			792			1,352			939			1,625			1,121
Amortization of acquired technology		1,254			1,240			1,769			2,004			2,538			2,804			2,806			1,968
Services		14,499			14,396			13,540			12,992			14,638			13,618			13,398			11,306
Total cost of revenue		16,281			16,342			16,194			15,788			18,528			17,361			17,829			14,395
Gross profit		34,583			30,834			30,795			29,858			30,293			25,253			28,983			25,285
Operating expenses:
Research and development		8,042			7,944			8,545			8,670			8,901			10,860			10,300			10,149
Sales and marketing		18,306			17,178			16,536			15,936			17,774			18,553			19,270			19,212
General and administrative		5,117			4,648			4,867			4,960			4,258			4,453			4,466			4,795
Purchased in-process research and development, acquisition-related and other charges		—			—			—			270			442			270			974			5,923
Business restructuring charges		(10	)		(778	)		43			(2,154	)		9,384			39			(519	)		9,179
Amortization of deferred stock Compensation		267			252			183			132			98			15			211			156
Amortization of intangible assets		1,166			1,279			1,279			1,279			1,346			1,379			1,379			815
Total operating expenses		32,888			30,523			31,453			29,093			42,203			35,569			36,081			50,229
Income (loss) from operations		1,695			311			(658	)		765			(11,910	)		(10,316	)		(7,098	)		(24,944	)
Other income (expense), net		1,800			1,551			14,908			2,451			574			686			1,126			509
Income (loss) before income taxes		3,495			1,862			14,250			3,216			(11,336	)		(9,630	)		(5,972	)		(24,435	)
Provision for income taxes		600			542			789			498			596			391			265			230
Net income ( loss)	$	2,895		$	1,320		$	13,461		$	2,718		$	(11,932	)	$	(10,021	)	$	(6,237	)	$	(24,665	)
Basic income (loss) per share (1)	$	0.10		$	0.05		$	0.46		$	0.09		$	(0.41	)	$	(0.35	)	$	(0.22	)	$	(0.92	)
Diluted income (loss) per share (1)	$	0.10		$	0.04		$	0.46		$	0.09		$	(0.41	)	$	(0.35	)	$	(0.22	)	$	(0.92	)

(1) Basic and diluted net income (loss) per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly loss per common share information may not equal the annual loss per share.

F - 36

VIGNETTE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	Three Months Ended
	Dec. 31, 2005		Sept.30, 2005		June 30, 2005		March 31, 2005		Dec. 31, 2004		Sept. 30, 2004		June 30, 2004		March 31, 2004
As a Percentage of Total Revenue:
Revenue:
Product license	39	%	36	%	36	%	36	%	40	%	29	%	36	%	37	%
Services	61		64		64		64		60		71		64		63
Total revenue	100		100		100		100		100		100		100		100
Cost of revenue:
Product license	1		1		2		2		3		2		3		3
Amortization of acquired technology	2		3		4		4		5		7		6		5
Services	29		31		28		29		30		32		29		28
Total cost of revenue	32		35		34		35		38		41		38		36
Gross profit	68		65		66		65		62		59		62		64
Operating expenses:
Research and development	16		17		18		19		18		25		22		26
Sales and marketing	36		36		35		35		36		44		41		48
General and administrative	10		10		10		11		9		10		10		12
Purchased in-process research and development, acquisition-related and other charges	—		—		—		1		1		1		2		15
Business restructuring charges	—		(2	)	—		(5	)	19		—		(1	)	23
Amortization of deferred stock compensation	1		—		1		—		—		—		—		—
Amortization of intangible assets	2		3		3		3		3		3		3		2
Total operating expenses	65		64		67		64		86		83		77		126
Income (loss) from operations	3		1		(1	)	1		(24	)	(24	)	(15	)	(62	)
Other income, net	4		3		31		5		1		2		2		1
Income (loss) before income taxes	7		4		30		6		(23	)	(22	)	(13	)	(61	)
Provision for income taxes	1		1		1		1		1		1		1		1
Net income (loss)	6	%	3	%	29	%	5	%	(24	)%	(23	)%	(14	)%	(62	)%

F - 37

EX-10.23

Exhibit 10.23

[*] = Confidential Treatment Requested

Virtusa Corporation / Vignette Corporation

AMENDED AND RESTATED MASTER SERVICES AGREEMENT

THIS AMENDED AND RESTATED MASTER SERVICES AGREEMENT (the “Agreement”) is made by and between Virtusa and Vignette dated as of November 1, 2005 the “Effective Date”) and amends and restates that certain Master Services Agreement dated as of March 23, 2004 (the “Original Agreement Effective Date”), as amended prior to the date hereof (the “Original Agreement”), by and between Virtusa Corporation, a Delaware corporation with offices at 2000 West Park Drive, Westborough, MA 01581 (“Virtusa”) and Vignette Corporation, a Delaware corporation with its primary place of business at 1301 S. MoPac Expressway, Austin, TX 78746 (“Customer” or “Vignette”).

WHEREAS; Vignette and Virtusa seek to amend the Original Agreement and Operations Framework effective as of the Original Agreement Date (the “Original Operations Framework”) to modify certain terms and conditions of the services to be provided by Virtusa to Vignette hereunder and thereunder;

WHEREAS; Vignette wishes to engage Virtusa, and Virtusa wishes to provide to Vignette the Services (as defined below) and Deliverables (as defined below) pursuant to this Agreement (which includes the Amended and Restated Operations Framework Document effective as of the Effective Date and attached hereto as Attachment 1 (the “Operations Framework”)) and as otherwise specified in the Work Order(s) (each, a “WORK ORDER”) substantially in the form attached hereto as Exhibit A subject to the terms and conditions of this Agreement. The Agreement does not obligate Vignette to use or purchase Services unless and until authorized by a WORK ORDER.

For avoidance of doubt, the “Agreement” means this Agreement, the Operations Framework, all WORK ORDERS, and all other exhibits, appendices, attachments, etc. attached or incorporated by reference. Unless specifically excluded in a WORK ORDER, the Operations Framework will be incorporated into every WORK ORDER. To the extent of any conflict or inconsistency between his Agreement and a WORK ORDER, the WORK ORDER shall govern.

In consideration of the mutual promises set forth herein, Virtusa and Vignette hereby agree as follows:

1. SCOPE OF SERVICES

1.1 Services and Deliverables. Virtusa agrees, subject to the terms and conditions of this Agreement, to provide Vignette with the Services and Deliverables as specified in the WORK ORDER. For purposes of this Agreement, “Services” are defined as the professional services provided by Virtusa’s employees and Virtusa’s consultants, if any, (employees and consultants together in the aggregate are referred to as “employees,” “staff,” or “personnel”) for Vignette in connection with the Deliverables and includes, without limitation, any services, functions or responsibilities that are an inherent part of the Services or are required for proper performance or provision of the Services.

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[*] = Confidential Treatment Requested

Services will be billed on a Capacity Approach (a.k.a., Retainer as resources are retained for use by Vignette), Time and Material, or Fixed Price basis in accordance with the WORK ORDER. For purposes of this Agreement, “Deliverables” are defined to include (a) the information, software and materials developed by Virtusa for Vignette pursuant to this Agreement and any WORK ORDER, (b) all items prepared or required to be delivered under this Agreement and any WORK ORDER (including without limitation, any information, designs, specifications, instructions, software, data, course materials, computer programming code, reusable routines, computer software applications, and any documentation relating to any of the foregoing) and (c) Vignette Materials. For purposes of this Agreement, A) “Materials” means any materials that are created, invented, developed, prepared, conceived, reduced to practice, made, suggested, discovered, received or learned by Virtusa, either alone, or jointly with one or more other persons, during the course of performance of Virtusa’s obligations hereunder, and includes, without limitation, data, notes, technical and/or business information, specifications, drawings, records, computer program enhancements and related documentation, and B) “Vignette Materials” means any Materials that are (i) embedded in or provided as part of any Deliverable or (ii) based on, derived from, or used in any way Vignette’s intellectual property (pre-existing or otherwise) or (iii) created on behalf of, or at the expense of, Vignette. Before using a consultant in any WORK ORDER, Virtusa shall obtain the prior written approval from an authorized representative of Vignette of at least the level of Senior Director whose name shall be set forth in a Work Order (“Authorized Vignette Employee”), which approval will not be unreasonably withheld or delayed. For avoidance of doubt, it will not be unreasonable for Vignette to withhold consent if (a) Vignette is concerned about the ability of such consultant to honor its confidentiality obligations, (b) due to competitive reasons or (c) if consultant refuses to execute documents incorporating substantially similar terms as hereunder or other terms Vignette believes is necessary such as to protect its intellectual property. Except for section 10.4, such consultant will be considered a Virtusa employee for purposes of this Agreement.

1.2 Change In WORK ORDER. Virtusa agrees that Vignette, under certain circumstances, may elect to (i) amend, modify or change the Services and/or Deliverables specified in the WORK ORDER or (ii) change the way such Services are billed pursuant to the WORK ORDER (i.e. Retainer, Time and Material, or Fixed Price basis) subject to compliance with the following procedures:

(i) Submission of Request. Vignette shall submit all such requests in writing to Virtusa (hereinafter “Request”).

(ii) Virtusa Response. Virtusa will evaluate each Request as soon as commercially reasonable, but not later than ten (10) business days following Virtusa’s receipt of the Request. If Virtusa determines in its best business judgment that it cannot accept the Request, Virtusa will provide a written response to Vignette within ten (10) business days of such determination. If Vignette’s Request is acceptable, Virtusa will provide Vignette a written proposal (“Proposal”) in the form of either an addendum to the related WORK ORDER and/or a new WORK ORDER, as appropriate. The Proposal will include, but not be limited to, a statement of the availability of Virtusa’s personnel and resources and the cost and schedule impact, if any. If Vignette elects to authorize Virtusa’s Proposal, Vignette will, as soon as commercially reasonable, but not later than ten (10) business days after receipt of the Proposal, return a duly signed copy of the Proposal to Virtusa.

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[*] = Confidential Treatment Requested

(iii) Performance. Upon receipt of the signed original unaltered Proposal, Virtusa will commence performance in accordance with such Proposal, which will be deemed to be an addendum to the related WORK ORDER and/or a new WORK ORDER, as the case may be.

Virtusa shall also have the right to propose change requests to Vignette and the parties agree to mutually determine the appropriate course of action.

1.3 Procedures for Increasing or Decreasing Scope or Resources. Notwithstanding Section 1.2, the following will apply. Upon 60 days’ prior written notice to Virtusa, Vignette may, at its sole discretion, elect to amend the scope or resources of the Services provided by Virtusa pursuant to a WORK ORDER so as to increase or decrease the scope or resources provided by Virtusa; provided that, solely with respect to WORK ORDER Number 1 (i.e. the WORK ORDER used to operate the Vignette GDC, also referred to as the Operations Framework), subject to Section 8 herein, where the number of Virtusa GDC Resources in the aggregate are above the Minimum Team Commitment (as defined on Attachment 2), at least 90 days prior written notice shall be required to reduce any such Virtusa GDC Resource until the aggregate Virtusa GDC Resources number equals the Minimum Team Commitment ; and provided further where the number of Virtusa GDC Resources in the aggregate number at or below the Minimum Team Commitment, at least 180 days prior written notice shall be required to reduce any such Virtusa GDC resource. (For avoidance of doubt, the foregoing is with respect to changes in the number of Virtusa GDC Resources requested by Vignette to be in the GDC and is not meant to address actual billable resources in the case where GDC resource positions are temporarily vacant due to attrition, resignations, etc.). In such case, such written notice shall identify the specific scope and resources and changes thereto that Vignette wishes to make in the form of an amendment to the WORK ORDER. Upon receipt of said notice, Virtusa shall promptly prepare and deliver to Vignette an executed copy of such amendment, unless Vignette has amended the WORK ORDER inconsistent with this section in which case, the parties will negotiate in good faith the amendment. Vignette and Virtusa agree that said Work Order shall be subject to the terms and conditions of the Agreement. Notwithstanding the foregoing, the parties may change the number of GDC Resources through a written notification by authorized members of the respective parties without the need to formally amend WORK ORDER Number 1 (the Operations Framework) only if done accordance with the Agreement and the Operations Framework.

2. PROPRIETARY RIGHTS

2.1 Vignette Ownership Rights. Virtusa hereby assigns all right, title and interest in and to the Deliverables, including without limitation, all copyrights, moral rights, patents, trademarks, trade secrets, mask works, and any other intellectual property related thereto (in any jurisdiction), subject to any rights of Virtusa in Virtusa Intellectual Property (as defined in Section 2.2 hereof) and/or any rights of third parties with respect to any third party software delivered with or embedded in any Deliverable; provided that any third party software or Virtusa Intellectual Property will only be used, or delivered with or embedded in a Deliverable, upon the prior written consent of an Authorized Vignette Employee (“Non-Vignette Intellectual Property Approval Process”). Subject to the

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[*] = Confidential Treatment Requested

terms herein and rights of third parties as set forth above, all Deliverables shall constitute a “Work Made for Hire” as that term is defined in U.S. Copyright Law, 17 U.S.C. 101 et. Seq, and shall belong exclusively to Vignette and no rights thereto shall accrue in any manner to Virtusa. To the extent such Deliverables are deemed not to be Works Made for Hire, subject to the rights of Virtusa and third parties as stated above, Virtusa hereby assigns, transfers and conveys to Vignette at Vignette’s reasonable cost and expense except for immaterial or incidental items which will be at no additional charge, all right, title and interest, including all intellectual property rights therein and thereto (including, without limitation, copyright, patent and trade secret) in and to the Deliverables. Virtusa agrees to execute, without charge to Vignette, any documents and perform all acts required or deemed necessary by Vignette at Vignette’s reasonable cost and expense except for immaterial or incidental acts which will be at no additional charge, to permit and assist Vignette to evidence, apply for, register, perfect, obtain, enforce and defend Vignette’s ownership and intellectual property rights pertaining to the Deliverables and/or contractor’s assignment with respect to the Deliverable in any and all countries. If Virtusa is provided reasonable opportunity to perform the required actions as required to comply with the obligations stated above and fails to execute the applicable documents as required by Vignette to perfect Vignette’s rights in the Deliverables as stated above, then Virtusa hereby irrevocably designates and appoints Vignette and its duly authorized officers and agents, as Virtusa’s agents and attorneys-in-fact to act for and in behalf and instead of Virtusa, to execute and file any documents and to do all other lawful acts to further the above purposes with the same legal force and effect as if executed by Virtusa. In addition, Virtusa will place on all Deliverables the following copyright notice, or a copyright notice otherwise directed by an Authorized Vignette Employee in writing: “COPYRIGHT [Year] Vignette Corporation. All rights reserved.”

2.2 Virtusa Ownership Rights. Notwithstanding the foregoing, provided that the Non-Vignette Intellectual Property Approval Process described above is followed and adhered to, and except as provided under Section 10.3, Virtusa currently owns and shall continue to own all right, title and interest (including without limitation all copyrights, moral rights, patents, trademarks, trade secrets, mask works and any other intellectual property related thereto) in and to all techniques, methodologies, objects, modules, software, or other materials created or obtained by Virtusa prior to performing any Services under this Agreement, and any and all enhancements, modifications and derivative works thereto of General Application (meaning, use by a software consulting company solely as generic tools to provide services) developed by Virtusa during the term of the Agreement and any Work Order, except for Vignette Materials (“Virtusa Intellectual Property”). Virtusa Intellectual Property will only be used if in accordance with the Non-Vignette Intellectual Property Approval Process. Except for Vignette Materials, each party may freely use and employ its general skills, techniques, processes, concepts, know-how and expertise in the regular course of its business, subject to its obligation to protect the other party’s Confidential Information pursuant to Section 3 of this Agreement.

2.3 Virtusa License. If applicable and pursuant to Section 2.2 and the Non-Vignette Intellectual Property Approval Process, Virtusa hereby grants to Vignette an irrevocable, perpetual, non-exclusive, transferable, assignable, royalty-free, fully paid-up, world-wide license to (directly and indirectly) use, copy, modify, create derivative works, sublicense, distribute, demonstrate, display, and otherwise exploit any Virtusa Intellectual Property

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[*] = Confidential Treatment Requested

used, or delivered with or embedded in the Deliverables, under this Agreement in connection with the use of the Deliverables. Upon prior written consent of Vignette under the Non-Vignette Intellectual Property Approval Process, Virtusa shall grant to Vignette the same or substantially similar rights with respect to any third party software/other intellectual property rights in any Deliverable to the extent that Virtusa has the rights to sublicense or grant such rights to Vignette with respect to such third party software/other intellectual property rights. If Virtusa does not have sublicense or other necessary rights, Virtusa will affirmatively notify Vignette and the parties will work together to secure such rights for Vignette, at Vignette’s expense.

2.4 Vignette License. For the sole purpose of meeting the requirements and/or obligations of a WORK ORDER, and not for any other purpose or use, Vignette hereby grants to Virtusa, for the term of this Agreement and any WORK ORDER hereunder, a non-exclusive, non-transferable, non-assignable, royalty-free, fully paid-up, world-wide license to use, copy, modify, display, and create derivative works from all objects, components, software, or other materials/documentation furnished by Vignette to Virtusa which pertain to the Services and/or Deliverables. Virtusa agrees to abide by any use restrictions imposed by third party OEM software vendors as they may exist from time to time (such as from BEA and Autonomy); such restrictions will be provided to Virtusa in writing in the form of a letter agreement that Virtusa will execute and return to Vignette. In addition, Virtusa agrees that it may not copy Vignette’s source code, product architecture, or product specifications or provide such materials to a third party without prior written consent of the Authorized Vignette Employee.

3. CONFIDENTIALITY

3.1 As used in this Agreement, the term “Confidential Information” shall mean intellectual property and proprietary information related to know-how, ideas, methodologies, and techniques; and proprietary information concerning the nature and operation of the business and business processes; and software, source code, software architecture, documentation, and other intellectual property or proprietary information relating to a party’s software; and the Deliverables; and business and/or product or service development plans, customer lists; and such information disclosed by either party to the other party in tangible or intangible form and designated as proprietary or confidential.

3.2 Each party shall use reasonable measures to protect the other party’s Confidential Information and shall not disclose any such Confidential Information to any third party except as permitted hereunder. Such measures shall be as least as stringent as the measures used by the receiving party to protect its own confidential information, and shall include restricting access to Confidential Information to the recipient’s employees and consultants on a need-to-know basis, and requiring written nondisclosure agreements from such employees and consultants protecting the Confidential Information as required herein. Except for Vignette’s source code, product architecture and product specifications, this Section 3 shall not apply to such information which at any time: (i) is or becomes part of the public domain through no act or omission by the receiving party; (ii) is independently developed by employees and/or consultants of the receiving party without use or reference to the Confidential Information of the other party; or (iii) is disclosed to the receiving party by a third party that, to the receiving party’s knowledge,

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[*] = Confidential Treatment Requested

was not bound by a confidential obligation to the other party. Notwithstanding anything to the contrary, the parties will not have any obligations with respect to information solely to the extent that such information is demanded by a lawful order from any court or any body empowered to issue such an order provided each party agrees to notify the other promptly of the receipt of any such order, and to provide the other with a copy of such order and a reasonable opportunity to obtain a protective order.

3.3 The receiving party is permitted to use the Confidential Information solely for the purposes of performing its obligations hereunder. The disclosing party makes no representations or warranties concerning its Confidential Information.

3.4 Upon request of the disclosing party, the receiving party shall return or destroy all Confidential Information, and all copies, extracts, portions, notes, summaries and derivatives of the Confidential Information, in its possession or under its control.

3.5 Each party acknowledges that the other party would suffer irreparable harm if the first party breaches the provisions of this Section 3, and that in the event of such a breach the other party shall be entitled to immediate equitable relief (including without limitation injunction(s) and order(s) for specific performance), in addition to and without limiting its other remedies at law or in equity.

3.6 This Section (excluding 3.5 above) shall apply for a period of five (5) years from the termination of all Services hereunder; except with respect to Vignette’s source code (including, without limitation, source code that is or becomes owned by Vignette pursuant to this Agreement), product specifications, and product architecture, in which case, this Section shall apply in perpetuity, and Virtusa will not disclose any such materials to a third party without prior written consent of the Authorized Vignette Employee.

3.7 Nothing in this Section 3 is intended to supercede any other provision in this Agreement including, without limitation, Sections 2 and 6. Virtusa agrees to comply with any confidentiality or other obligations regarding Vignette’s source code, product architecture and product specifications as further described in the Operations Framework.

3.8 Upon termination of this Agreement and/or any WORK ORDER, or at the request of a party, each party shall return to the other or destroy (and certify to its destruction) all Confidential Information of the other party other than the Virtusa Intellectual Property to which Vignette holds license rights under Section 2.3 of this Agreement and except for any Confidential Information of the Vignette required by Virtusa to complete an outstanding WORK ORDER.

4. FEES AND EXPENSES

4.1 Virtusa shall send invoices to Vignette for the fee(s) for Services set forth in the WORK ORDER and any related expenses after the end of each month for the services performed in such month. Vignette shall pay Virtusa each such invoice in U.S. Dollars within thirty (30) days of receipt of the applicable invoice. Each invoice shall be itemized in such

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[*] = Confidential Treatment Requested

detail as Vignette may reasonably request and may include copies of expense reports and time cards. If any invoice is unpaid in accordance with the terms herein and has not been disputed in good faith by Vignette, Virtusa shall also have the right, upon 15 business days’ notice, to suspend performance under this Agreement until such time as the amount that is unpaid is paid in full. To the extent that any portion of an invoice is disputed in good faith by Vignette, Vignette agrees to pay the non-disputed portion of the invoice in accordance with the terms of this Agreement. Virtusa reserves the right to add a late charge of the lesser of one percent (1%) per month, or the maximum allowable under applicable law, for Vignette’s failure to make payment when due (if the invoice is not disputed in good faith). The parties agree to use all reasonable commercial efforts to promptly resolve any dispute surrounding any invoice which is disputed in good faith by Vignette.

4.2 Except as described in the last sentence of this paragraph, all fees are exclusive of all state and local sales or equivalent taxes now in force or enacted in the future. If such taxes are applicable, and if paid by Virtusa, Vignette will be invoiced as a separate line item on the invoice for those amount(s) that Virtusa may be required to pay. If a certificate of exemption or similar document is to be provided by Vignette in order to exempt the sale from tax liability, Vignette will obtain and provide an acceptable certificate to Virtusa and the taxing authority. Notwithstanding anything to the contrary, each party shall be responsible for payment of (a) all income or equivalent taxes based upon that party’s net income, as well as any taxes imposed by any authority on a party’s employees and contractors or on personal or real property, whether owned or leased and (b) any fees that are accessed against a party that are related to such party’s general business activities (e.g., business permits, licenses as required by applicable law, legislative enactment or regulatory requirement, etc.). Virtusa acknowledges and agrees that, as of the date hereof, the rates set forth in the Operations Framework include all current taxes and government imposed fees as of the date hereof.

4.3 Vignette shall reimburse Virtusa for all reasonable travel and living expenses incurred by Virtusa in performing its responsibilities and obligations under this Agreement in addition to the fee(s) for Services set forth in the WORK ORDER provided such expenses are in accordance with the Operations Framework.

5. INTELLECTUAL PROPERTY INDEMNIFICATION

5.1 Virtusa’s Obligations. Virtusa will indemnify, defend, and hold harmless Vignette, its affiliates and their respective officers, directors, employees and contractors from and against any and all damages, penalties, losses, liabilities, judgments, settlements, awards, costs and expenses and reasonable attorneys fees (“Losses”) arising out of or related to any claims, assertions, demands, causes of action, suits, proceedings or other actions, whether at law or in equity, (collectively, “Claims”) brought by a third party alleging that the Deliverables, or any other resources, materials, or information provided or assigned by or used by Virtusa pursuant to this Agreement or a Work Order infringe, misappropriate or violate any intellectual property rights (including, without limitation, all copyrights, moral rights, patents, trademarks, trade secrets, mask works and any other intellectual property related thereto) of a third party (but excluding (a) any third party

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[*] = Confidential Treatment Requested

software authorized by Vignette pursuant to Section 2.1 to be delivered with or embedded in any Deliverable and (b) any Vignette Provided Intellectual Property); provided that: (i) Vignette promptly notifies Virtusa, in writing, of the Claim; provided that Virtusa shall not be relieved of its indemnification obligations under this Section 5 unless and only to the extent that such lack of prompt notice is prejudicial to Virtusa and its defense of such Claim in any material respect; (ii) at Virtusa’s reasonable request and expense, Vignette provides Virtusa with reasonable assistance for the defense of the Claim; and (iii) Virtusa has sole control of the defense of any Claim and all negotiations for settlement or compromise. Virtusa will pay all Losses finally awarded against the indemnified parties to such third party by a court of competent jurisdiction at the time all reasonable appeals have been exhausted or at the time of a final settlement of such Claim, if applicable. In addition, Vignette shall notify Virtusa of a imminent threat (as determined by Vignette in its sole discretion) of any Claim similar to its obligations under (i) above; however, the failure of Vignette to notify Virtusa of an imminent threat shall not relieve Virtusa of its indemnification obligations under this Section 5.

5.2 Intellectual Property Claims. In addition to Section 5.1, if a third party Claim of infringement under this Section 5 has been filed against Vignette by a third party, Virtusa shall have the right, in its sole discretion, to either: (i) procure for Vignette, at Virtusa’s expense, the right or license to continue to use the Deliverable(s) free of the infringement Claim; or (ii) replace or modify the Deliverable(s) (“Replacement Deliverable”) to make it non-infringing; provided that there is no decrease in the form or substance of the functionality in any material respect. If neither of these remedies are reasonably available to Virtusa after Virtusa has exercised its reasonable best efforts, Virtusa will notify Customer in writing to cease using only the specific Deliverable that is alleged as being, or is, infringing (“Infringing Deliverable”) and Virtusa will pay Vignette a nonrefundable and non-cancelable amount equal to the greater of the Minimum Termination Fee (as defined on Attachment 2) or the amount of fees paid to Virtusa in the previous twelve (12) months which preceded the Claim (the “Payment Amount”). Commencing on the date that Vignette receives the Payment Amount (“Payment Date”), Vignette may, at its sole discretion, continue to use in all respects the Infringing Deliverable; provided, (x) Vignette notifies Virtusa that Vignette will continue to use the Infringing Deliverable, and (y) if Vignette uses the Infringing Deliverable after the Payment Date, then Virtusa will have no liability or obligations of any kind to Vignette or any other indemnified party under Section 5.1 with respect any Post Payment Date Claims (as defined below) or any Post Payment Date Losses (as defined below), in each case, to the extent that Vignette has an indemnification obligation under Section 5.4 of this Agreement for such Post Payment Date Claims or Post Payment Date Losses, as the case may be.

For purposes of this Agreement, “Post Payment Date Claims” shall mean any additional Claims filed against Virtusa or Vignette (or other indemnified party under Section 5.1) after the Payment Date by a third party that arise or result (1) solely after the Payment Date and (2) solely due to an indemnified party’s use of the Infringing Deliverable after the Payment Date. For purposes of this Agreement “Post Payment Date Losses” means any Losses or additional Losses incurred by Virtusa or Vignette (or other indemnified party under Section 5.1) (including, without limitation, any other incremental legal and related fees, liabilities, costs and expenses incurred by Virtusa under Virtusa’s

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[*] = Confidential Treatment Requested

indemnification obligations under Section 5.1) that arise or result (1) solely after the Payment Date and (2) solely due to an indemnified party’s use of the Infringing Deliverable after the Payment Date. As way of example, Post Payment Date Losses would include additional incremental royalties to the extent that they accrue due to an indemnified party’s use of the Infringing Deliverable after the Payment Date but do not include any indemnification, defense or settlement obligation described in Section 5.1, (A) that arose with respect to an indemnified party’s activities prior to the Payment Date and that extend or continue past the Payment Date to the extent not caused by Vignette use of the Infringing Deliverable after the Payment Date or (B) that arise after the Payment Date to the extent not caused by Vignette’s use of the Infringing Deliverable.

If as a result of an infringement Claim, Vignette’s use of the Infringing Deliverable is permanently enjoined or halted by a court or other authority of competent jurisdiction (“Permanent Injunction”), or Virtusa initiates a Claim for an injunction against an indemnified party under Section 5.1, Virtusa will pay Vignette a nonrefundable and non-cancelable amount equal to the Payment Amount. If as a result of an infringement Claim, Vignette’s use of the Infringing Deliverable is temporarily enjoined (i.e., not a Permanent Injunction) by a court or other authority of competent jurisdiction (“Temporary Injunction”) for three (3) consecutive business days, Virtusa shall pay Vignette a nonrefundable and non-cancelable amount equal to (a) if such injunction is issued in either the first or second month of a calendar quarter, fifty percent (50%) of the Payment Amount or (b) if such injunction is issued in the third month of a calendar quarter, seventy-five percent (75%) of the Payment Amount. If such Temporary Injunction is not removed, lifted and deleted in its entirety within three months from the date the Temporary Injunction was issued, then the remaining portion of the Payment Amount (e.g., 50% or 25%, as the case may be) will be paid by Virtusa to Vignette and will be nonrefundable and non-cancelable. In the event the Temporary Injunction is removed, lifted, and deleted, and Vignette is legally permitted to use the Infringing Deliverable, to the extent a bond has been posted, Virtusa will have first priority (as between Virtusa and Vignette) to collect against such bond up to the amount paid to Vignette from Virtusa plus amounts expended by Virtusa under the indemnification provided under Section 5.1 (and Vignette, at Virtusa’s sole cost and expense, will take all actions as requested by Virtusa to obtain collection against the bond on behalf of, and in favor of Virtusa). Notwithstanding anything to the contrary in this Section 5.2, Virtusa’s payment of all or a portion of the Payment Amount as described in this section does not relieve Virtusa of its obligations under Section 5.1 except with respect to any Post Payment Date Claims or Post Payment Date Losses.

5.3 Limitations. Virtusa shall have no liability for any infringement Claim to the extent based upon: (i) any alteration or modification of any Deliverable not provided or authorized by Virtusa in writing, if the infringement would not have occurred but for the unauthorized alteration or modification by a party other than Virtusa; (ii) use of the Deliverable in combination with hardware, software or data not in the Vignette GDC (whether provided by Vignette or Virtusa) as provided for in the Operations Framework (or other writing between the parties), if the infringement would not have occurred but for the use in combination with such hardware, software, or data; (iii) use of the Deliverable in a way that is (a) inconsistent with a specific provision of a Work Order under this Agreement or (b) not reasonably foreseeable, if the infringement would not

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have occurred but for such use; (iv) use of other than the Replacement Deliverable if Vignette has been reasonably notified that use of such Replacement Deliverable would avoid the infringement and Virtusa has reasonably provided to Vignette such Replacement Deliverable , if the infringement would not have occurred but for the use of other than the Replacement Deliverable, (v) any Vignette Provided Intellectual Property if the infringement would not have occurred but for the Vignette Provided Intellectual Property, (vi) Virtusa’s compliance with Vignette’s written designs, specifications or instructions, except, (a) any intentional and knowing infringement of the intellectual property rights of a third party, or (b) any infringement of the intellectual property rights of a third party caused by Virtusa’s gross negligence.

5.4 Vignette’s Obligations.

A Vignette will indemnify, defend, and hold harmless Virtusa, its affiliates and their respective officers, directors, employees and contractors from and against any and all (1) Post Payment Date Claims and Post Payment Date Losses, as the case may be, and (2) Losses arising out of or related to any Claim brought by a third party alleging that any Vignette intellectual property (including, without limitation, any Pre-Existing Works (as defined below) of Vignette and any code, data, notes, technical and/or business information, specifications, drawings, records, computer program enhancements and related documentation, hardware or software provided to Virtusa by Vignette under this Agreement, in all cases, except to the extent of intellectual property that Virtusa has indemnification obligations under Sections 5.1 through 5.3 (“Vignette Provided Intellectual Property”), infringe, misappropriate or violate any intellectual property rights (including, without limitation, all copyrights, moral rights, patents, trademarks, trade secrets, mask works and any other intellectual property related thereto) of a third party; provided that: (i) Virtusa promptly notifies Vignette, in writing, of the Claim; provided that Vignette shall not be relieved of its indemnification obligations under this Section 5 unless and only to the extent that such lack of prompt notice is prejudicial to Vignette and its defense of such Claim in any material respect; (ii) at Vignette’s reasonable request and expense, Virtusa provides Vignette with reasonable assistance for the defense of the Claim; and (iii) Vignette has sole control of the defense of any Claim and all negotiations for settlement or compromise. Vignette will pay all Losses finally awarded against the indemnified parties to such third party by a court of competent jurisdiction at the time all reasonable appeals have been exhausted or at the time of a final settlement of such Claims, if applicable. In addition, Virtusa shall notify Vignette of a imminent threat (as determined by Virtusa in its sole discretion) of any Claim similar to its obligations under (i) above; however, the failure of Virtusa to notify Vignette of an imminent threat shall not relieve Virtusa of its indemnification obligations under this Section 5. For purposes of this Agreement, “Preexisting Works” of Vignette shall mean any and all techniques, methodologies, objects, modules, software, hardware, or other materials or other intellectual property developed, created, used or obtained by Vignette prior to Virtusa performing any Services under this Agreement (including without limitation all copyrights, moral rights, patents, trademarks, trade secrets, mask works and any other intellectual property related thereto), and any and all enhancements, modifications and derivative works thereto developed by Vignette during the term of the Agreement and any Work Order, except for Virtusa Intellectual Property).

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B. In addition to Section 5.4(A), if a third party Claim of infringement under this Section 5 has been filed against Virtusa by a third party, Vignette shall have the right, in its sole discretion, to either: (i) procure for Virtusa, at Vignette’s expense, the right or license to continue to use the Vignette Provided Intellectual Property free of the infringement Claim; or (ii) replace or modify the Vignette Provided Intellectual Property to make it non-infringing, or (iii) require Virtusa to cease using the infringing Vignette Provided Intellectual Property and if such Vignette Provided Intellectual Property is material to this Agreement, Vignette may terminate this Agreement as set forth in Section 8.1(D).

C. Limitations. Vignette shall have no liability for any infringement Claim to the extent based upon: (i) any alteration or modification of any Vignette Provided Intellectual Property not provided or authorized by Vignette in writing, if the infringement would not have occurred but for the unauthorized alteration or modification by a party other than Vignette; (ii) use of Vignette Provided Intellectual Property other than in accordance with this Agreement and its technical specifications and documentation (“Specifications”); (iii) use of Vignette Provided Intellectual Property in combination with other programs or data not agreed to in writing by the parties under this Agreement or in a WORK ORDER or as set forth in its Specifications, if the infringement would not have occurred but for the use in combination with such programs or data; (iv) use by Virtusa of other than a current unaltered version of Vignette Provided Intellectual Property after Virtusa has been reasonably notified that use of such new Vignette Provided Intellectual Property would avoid the infringement and Vignette has reasonably provided to Virtusa such new version free of charge, if the infringement would not have occurred but for the use of other than a current unaltered version of the Deliverable(s); (v) any Virtusa Intellectual Property if the infringement would not have occurred but for the use of such Virtusa Intellectual Property.

5.5 The foregoing states either party’s sole, exclusive and entire liability and obligations and sole and exclusive remedies for any patent, copyright or other intellectual property infringement claims against a party’s intellectual property, the Deliverables or with respect to, or arising out of this Agreement and is in lieu of any warranty of title, non-infringement and any other third party intellectual property claims.

6. WARRANTIES

6.1 Representations, Warranties and Covenants. Virtusa represents, warrants and covenants that:

A. it will comply and adhere to the Operations Framework in all material respects.

B. it all has the skills and capacity to perform the Services (e.g., capacity based development and test services) and the Services will be performed in a good and workmanlike manner, consistent with professional standards and practices and will use all reasonable commercial efforts to provide the Services in accordance with any Vignette product and engineering standards as may be in effect from time to time as applied to Vignette engineering generally and that are communicated in writing to Virtusa.

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C. it will comply and adhere to (i) Section 4.10 of the Operations Framework (except to the extent under the sole and exclusive control of Vignette), (ii) the Security Policies (as described in Appendix C of the Operations Framework), and (iii) the Business Continuity Plan and Disaster Recovery Plan (as described in Appendix D of the Operations Framework).

D. it has not and will not give payments, gifts, gratuities or anything of material value to Vignette personnel or agents or any other third party in connection with this Agreement which influences the business decision of the recipient.

E. it will inform Vignette if it becomes aware that any intellectual property of Vignette, Virtusa, or an applicable third party infringes a third party intellectual property right.

F. there are no lawsuits, claims or actions pending that would prevent Virtusa from fulfilling its obligations under this Agreement.

G. it will, at Vignette’s cost and expense, comply with Vignette’s internal and external audit and compliance requirements, which may be more stringent than regulatory requirements.

H. it will obtain and keep current all necessary licenses, approvals, permits, consents and authorizations required by applicable law, regulations, and governmental agencies for it to perform the Services and deliver the Deliverables and will be responsible for all fees and taxes associated with obtaining such licenses, approvals, permits, consents, and authorizations and for any fines and penalties arising from any noncompliance with any law, legislative enactment or regulatory requirement.

I. it will use all reasonable commercial efforts to comply with the requests, standard rules and regulations and policies and procedures of Vignette such as those relating to safety and health, security, and personal and professional conduct.

J. it will comply with all laws, rules, and regulations applicable to its provision of Services and Deliverables including, without limitation, export and import and employment rules, laws and regulations of any country or jurisdiction including, without limitation, the United States and India. In addition, Virtusa certifies that it will not directly or indirectly, export, re-export, or transship any personal computer system, part, technical data or sub-elements under this Agreement, directly or indirectly, or related information, media, or products in violation of United States laws and regulations.

K. in performing its obligations under this Agreement, it will not, without proper authorization, use, or induce anyone to use, any confidential or proprietary information of a third party.

L. it will provide reasonable access to, and cooperate with, Vignette and its contractors and vendors with respect to software, hardware, facilities, and other items related to the Services and Deliverables (provided each are subject to appropriate confidentiality agreements if needed and such access does not compromise Virtusa reasonable security standards)

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6.3 DISCLAIMER OF WARRANTY: EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, THE OPERATIONS FRAMEWORK, OR IN A WORK ORDER, NEITHER VIGNETTE NOR VIRTUSA MAKES ANY WARRANTIES WITH RESPECT TO THE HARDWARE, SOFTWARE, SERVICES OR DELIVERABLES AND EACH EXPLICITLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED OR STATUTORY, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A SPECIFIC PURPOSE, AND NON-INFRINGEMENT.

7. LIMITATION OF LIABILITY

7.1 LIMITATION OF LIABILITY; DAMAGES. EXCEPT WITH RESPECT TO A BREACH BY EITHER PARTY (IF APPLICABLE) OF SECTIONS 2, 3, 5, 6.1(C), 6.1(H), OR 6.1(J), OR A PARTY’S OBLIGATIONS UNDER SECTION 5 OR EITHER PARTY’S GROSS NEGLIGENCE OR INTENTIONAL AND MALICIOUS MISCONDUCT, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY NATURE WHATSOEVER, WHETHER IN CONTRACT, WARRANTY OR TORT, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, REVENUE, DATA, COVER, LOSS OF OR INTERRUPTION OF BUSINESS OF VIGNETTE, VIRTUSA, OR ANY OTHER PARTY ARISING OUT OF OR IN CONNECTION WITH THE AGREEMENT OR DELIVERY, USE OR PERFORMANCE OF THE SERVICES, THE DELIVERABLES, ANY SOFTWARE OR ANY OTHER MATERIALS OR ITEMS EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT WITH RESPECT TO A BREACH BY EITHER PARTY (IF APPLICABLE) OF SECTIONS 2, 3, 5, 6.1(C), 6.1(H), 6.1(J), 8.1E, OR A PARTY’S OBLIGATIONS UNDER SECTION 5 OR EITHER PARTY’S GROSS NEGLIGENCE OR INTENTIONAL AND MALICIOUS MISCONDUCT, IN NO EVENT SHALL A PARTY’S LIABILITY TO THE OTHER FOR ANY CLAIM ARISING OUT OF THIS AGREEMENT OR ANY WORK ORDER HEREUNDER EXCEED AN AMOUNT EQUAL TO THE GREATER OF THE ACTUAL FEES PAID TO VIRTUSA UNDER THIS AGREEMENT WITHIN THE 12 MONTH PERIOD PRECEDING THE OCCURRENCE GIVING RISE TO SUCH CLAIM OR THE MINIMUM TERMINATION FEE (AS DEFINED ON ATTACHMENT 2).

7.2 NOTHING IN SECTION 7.1 IS INTENDED TO LIMIT EITHER PARTY’S LIABILITY FOR DEATH, INJURY OR DAMAGE TO A PERSON OR PROPERTY CAUSED BY ITS EMPLOYEES OR AGENTS.

8. TERMINATION AND TERMINATION ASSISTANCE

8.1 Termination

A Termination for Cause . Either party may terminate this Agreement if the other party (i) breaches any of its material duties or obligations under this Agreement and fails to cure such breach within thirty (30) days of written notice by the other party; or (ii) breaches any material duty or obligation under this Agreement which is not capable of being cured; provided that written notice of such breach is provided to the other party

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within 30 days of the non-breaching party having actual knowledge its occurrence. The material breach of the following sections are deemed material breaches under this Agreement (which may be subject to cure as described above): a material breach by either party (if applicable) of sections 2, 3, 5, 6.1(C), 6.1(H), 6.1(J), 8, or 10.4 or a material breach of a party’s obligations under section 5 or either party’s gross negligence or intentional misconduct (collectively, “Deemed Material Breaches”). Breach of the SLA described in Section 1.2.2 of Exhibit F of the Operations Framework which is identified as a Deemed Material Breach is also a Deemed Material Breach as further described therein. Notwithstanding the foregoing, if Vignette terminates this Agreement for a material breach, other than a Deemed Material Breach, as set forth herein, Vignette shall have no Transfer Right, unless it pays the applicable Termination for Convenience Fee. In the event that Vignette terminates this Agreement for a Deemed Material Breach as provided herein, however, Vignette will not owe Virtusa any Termination for Convenience Fee and Vignette does obtain the Transfer Right.

B Termination for Convenience. Vignette may terminate this Agreement for convenience at any time after the Effective Date by giving Virtusa written notice of the termination at least 180 days prior to the termination date specified in the notice and paying the applicable non-refundable and non-cancelable Termination for Convenience Fee, if any, described in E below and as set forth in Attachment 2. Notwithstanding anything to the contrary, (following is referred to as the “Payment in lieu of Notice Process”), Vignette will not be required to adhere to the notice requirement hereunder for Termination for Convenience if Vignette is willing to be obligated to pay Virtusa the net amount of money which Virtusa would have earned had the notice provision been followed (including without limitation, the applicable fees which Virtusa would have billed Vignette for the GDC Billable Resources during the applicable 180 days notice period, plus the applicable Termination for Convenience Fee in effect at the time of notice.). In such event, Vignette will pay Virtusa such 180 days of fees (specifically excluding the Termination for Convenience Fee) on the payment schedule as Virtusa reasonably determines and notifies Vignette in writing, with the last payment occurring no later than prior to the conclusion of the 180 days notice period. The Termination for Convenience Fee will be based on the payment schedule set forth in Attachment 2 hereto.

C Termination for Change in Control of Virtusa. In the event of a Change in Control (meaning, the (i) consolidation or merger of a party with or into any entity wherein such party is not the surviving entity, (ii) sale, transfer or other disposition of all or substantially all of the assets of a party or (iii) acquisition by any entity, or group of entities acting in concert, of beneficial ownership of fifty percent (50%) or more of the outstanding voting securities of a party) of Virtusa, Vignette, at its sole discretion, may terminate this Agreement under this Section 8.1(C) by (1) giving Virtusa (or the successor entity) written notice of the termination within 30 days of Vignette having actual knowledge of such a Change in Control; provided that such termination will only be effective after 180 days of receipt of such written notice by Virtusa (or the successor entity) and (2) paying Virtusa (or the successor entity) a one-time, non-cancelable and non-refundable fee (as a liquidated damage, and not as a penalty) equal to the Minimum Termination Fee (as defined on Attachment 2) (“Virtusa Change of Control Fee”) in accordance with Attachment 2 hereto. Vignette, at its sole discretion, may follow the Payment in lieu of Notice Process described in the paragraph above with respect to the payment of the 180 days of fees (specifically excluding the Virtusa Change of Control Fee). In such event, Vignette will not owe Virtusa any Termination for Convenience Fee and Vignette does obtain the Transfer Right.

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D Termination for Change in Control of Vignette. In the event of a Change in Control (meaning, the (i) consolidation or merger of a party with or into any entity wherein such party is not the surviving entity, (ii) sale, transfer or other disposition of all or substantially all of the assets of a party or (iii) acquisition by any entity, or group of entities acting in concert, of beneficial ownership of fifty percent (50%) or more of the outstanding voting securities of a party) of Vignette, Vignette (or the successor entity), at its sole discretion, may terminate this Agreement under this Section 8.1(D) by (1) giving Virtusa written notice of the termination within 30 days of such Change in Control; provided that such termination will only be effective after 180 days of receipt of such written notice by Virtusa (or the successor entity) and (2) paying Virtusa (or the successor entity) a one-time non-refundable, non-cancelable fee (as a liquidated damage, and not as a penalty) equal to the Termination for Convenience Fee subject to a maximum amount of ([*]times the Minimum Termination Fee (as defined on Attachment 2)) if the notice of termination is provided to Virtusa prior to December 31, 2006 (“Vignette Change of Control Fee”). Such fee will be paid pro-rata on a monthly basis over the 180 days. In such event, Vignette will not owe Virtusa any Termination for Convenience Fee and Vignette does not obtain the Transfer Right. If Vignette (or the successor entity) wishes to obtain the Transfer Right, the termination must be done pursuant to Section 8.1(B).

E Termination For Convenience Fee. Attachment 2 sets forth the schedule of termination fees (the “Termination For Convenience Fee”) that are payable by Vignette to Virtusa during the Transfer Right Term as an agreed upon liquidation damage (and not as a penalty) as described in such Attachment 2. Such Termination For Convenience Fee, if applicable, is non-cancelable and non-refundable but is the sole and exclusive remedy of Virtusa should the Agreement be terminated under Section 8.1(B). For avoidance of doubt, Vignette’s obligation to pay a Termination For Convenience Fee is dependent upon whether the Effective Termination Date is prior to or after the Minimum Term and whether Vignette wishes to obtain the Transfer Right, as further described in Attachment 2.

F Termination Fees. Except as otherwise specifically set forth in Section E, neither party will be liable for any fees or expenses in connection with the termination or expiration of this Agreement, except for any outstanding fees and expenses which were incurred by Vignette under this Agreement prior to the termination date.

G Actual Knowledge. Actual knowledge as used in Section 8.1(A), Section 8.1(C), and Section 10.4, means, in the case of Vignette, a member of the Engineering organization of at least the level of Vice President has actual and documented knowledge and in the case of Virtusa, any officer of Virtusa with a title of at least Senior Vice President.

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8.2 Termination Assistance

A Termination Assistance Services. Commencing (i) six (6) months prior to the expiration of this Agreement; or (ii) upon any notice of termination and continuing for up to six (6) months following the effective date of expiration or termination, Virtusa will provide to Vignette, or to its designee, regardless of the reason for the expiration or termination of this Agreement, all reasonable necessary assistance to allow the Services to continue without material interruption or material adverse effect and to facilitate the orderly transfer of the Services to Vignette or its designee, subject to, and in compliance with, the terms of the Operations Framework. For avoidance of doubt, Virtusa agrees that it will not rotate, transfer, change, or move any Special Employee during any notice period or period during the Transfer Right. (“Termination Assistance Services”).

B Performance. Virtusa shall provide the Termination Assistance Services subject to and in accordance with the terms and conditions of this Agreement. Virtusa shall perform the Termination Assistance Services with at least the same degree of accuracy, quality, completeness, timeliness, responsiveness and resource efficiency as it provided and was required to provide the same or similar Services during the Term including, without limitation, adhering to existing Service Levels.

C Scope. The Termination Assistance Services shall include, as requested by Vignette, the following Services, functions and responsibilities:

i General Support. At Vignette’s cost and expense, Virtusa shall (a) assist Vignette in developing a written transition plan for the transition of the Services to Vignette or Vignette’s designee, which plan may, at Vignette’s sole discretion, include capacity planning, facilities planning, human resources planning, telecommunications planning and other planning necessary to effect the transition, (b) perform programming and consulting services as requested to assist in implementing the Transition Plan, (c) train personnel designated by Vignette in the use of any equipment, software, systems, materials or tools used in connection with the provision of the Services, (d) catalog all software, Deliverables, equipment, materials, third party contracts and tools used to provide the Services, (e) provide machine readable listings and associated documentation for source code for software owned by Vignette and source code to which Vignette is entitled under this Agreement and assist in its re-configuration, (f) analyze and report on the space required for the Vignette data and the software needed to provide the Services; (g) assist in the execution of a parallel operation, data migration and testing process, (h) create and provide copies of the Vignette data in the format and on the media reasonably requested by Vignette, (i) provide a complete and up-to-date, electronic copy of any of the policies and procedures guides used such as the PTR or Process Map in the format and on the media reasonably requested by Vignette, and (j) provide other technical assistance as reasonably requested by Vignette and agreed to by Virtusa in writing in connection with Vignette’s transfer of Services to Vignette or its designee.

ii Software. Virtusa shall use reasonable commercial efforts to assist Vignette in obtaining license and/or other rights to any third party software and other materials used and provided by Virtusa in performing the Services at Vignette’s sole cost and expense. Virtusa’s obligations herein shall be subject to its rights and restrictions regarding transferability and assignablility as set forth in the licensing agreements. Virtusa will not charge Vignette any markup or administrative fees and will only pass through any expenses.

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iii Vignette Facilities, Equipment and Software. Virtusa shall vacate the Vignette facilities and return to Vignette, if not previously returned, all Vignette owned equipment, Vignette leased equipment, Vignette owned software and Vignette licensed software, in a condition at least as good as the condition thereof on the Effective Date, ordinary wear and tear excepted. Such Vignette facilities, equipment and software shall be vacated and returned, in each case, all at Vignette’s sole cost and expense at the expiration or termination date or the completion of any Services requiring such Vignette facilities, equipment and Software.

iv Virtusa Subcontracts and Third Party Contracts. Virtusa shall inform Vignette of subcontracts used by Virtusa and its agents to perform the Services, subject to any restrictions concerning confidentiality of any terms thereof. Subject to the foregoing, Virtusa shall, at Vignette’s request, and at Vignette’s sole cost and expense, use reasonable commercial efforts to assist and cooperate with Vignette in its efforts to cause any such agents to permit Vignette or its designees to assume prospectively any or all such contracts or to enter into new contracts with Vignette or its designees on substantially the same terms and conditions, such as price. Virtusa shall request assignment of the designated subcontracts to Vignette or its designee as of the expiration or termination date or the completion of any Termination Assistance Services requiring such subcontracts, whichever is later. To the extent that any designated subcontracts are not assignable, Virtusa, at Vignette’s sole cost and expense, will use reasonable commercial efforts to assist Vignette in obtaining such assignments. If applicable, Virtusa shall, except as otherwise qualified by Virtusa at the time of such representations, (a) represent and warrant that it is not in default under such subcontracts, (b) represent and warrant that all payments thereunder through the date of assignment are current, and (c) notify Vignette of any agent’s default with respect to such subcontracts of which it is aware at the time. Notwithstanding anything to the contrary, (i) Virtusa will use reasonable commercial efforts during the negotiation stage and thereafter to enable it to share and assign any contracts to Vignette and (ii) Virtusa will not charge Vignette any markup or administrative fees and will only pass through any expenses in connection with this section.

v. Other Subcontracts and Third Party Contracts. Virtusa shall identify and provide contact information for any Virtusa agent or third party contractor then being utilized by Virtusa in the performance of the Services. Virtusa shall not interfere with Vignette’s engagement of such Virtusa agent or third party contractor.

D Rates and Charges. If Vignette requests that Virtusa provide or perform Termination Assistance Services in accordance with this Agreement, Vignette shall pay Virtusa the same rates as set forth in the Agreement. To the extent that any Termination Assistance Services require new Services, such new Services shall be payable at Virtusa’s then standard rates less [*] percent ([*]%). To the extent the Termination Assistance Services requested by Vignette can be provided by Virtusa using personnel and resources already assigned to Vignette, there will be no additional charge to Vignette for such Termination

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Assistance Services. If the Termination Assistance Services requested by Vignette cannot be provided by Virtusa using personnel and resources already assigned to Vignette, Vignette, in its sole discretion, may forego or delay any work activities or temporarily or permanently adjust the work to be performed by Virtusa, the schedules associated therewith or the Service Levels to permit the performance of such Termination Assistance Services using such personnel or resources.

9. INSURANCE.

9.1 Without limiting any of the obligations or liabilities of Virtusa, Virtusa will maintain, at Virtusa’s expense, and for as long as this Agreement is in effect, insurance policies of the kind and limits listed below and will provide Vignette, prior to execution of this Agreement, a Certificate of Insurance evidencing such coverage for the term of this Agreement.

9.2 Insurance is to be placed with insurers: (a) with a Best’s Rating of no less than A:VII; (b) licensed to do business in the state in which the Services are performed; and (c) which have been approved by the relevant state Commissioner of insurance (or equivalent office), Such policies will remain in force until receipt of final payment by Virtusa.

Type of Coverage	Limits
Worker’s Compensation	Statutory
Employer’s Liability	$500,000 Each Accident $500,000 Disease - Each Employee $500,000 Disease - Policy Limit $1,000,000 Each Occurrence $3,000,000 Aggregate
General Liability	$2,000,000
Bodily Injury/Property Damage	$1,000,000
Comprehensive Form including: (1) Premises/Operations, Single Limit (2) Products/Completed Operations (3 Contractual Liability (4) Independent Contractor (5) Broad Form Property Damage (6) Personal/Advertising Injury, and (7) Owner’s Contractors Protective
Automobile Liability	$500,000 per accident for bodily injury and property damage.
Covering all automobiles, trucks, tractor trailers, motorcycles, or other automotive equipment, whether non-owned, owned or hired by Virtusa or employees of Virtusa, including Vignette as an additional insured with respect to any non-owned, owned or hired automotive equipment used by or with the permission of Virtusa.
Commercial Blanket Bond (employee dishonesty)	$1,000,000
Errors and Omissions	$1,000,000

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9.3 Each Certificate of insurance will contain a provision that coverage afforded under the policies will not be canceled or materially changed without at least thirty (30) days prior written notice to Vignette. Furthermore, Virtusa will obtain an endorsement to its policies providing that Virtusa’s insurance will be primary as respects to Vignette, its officers and employees. Any other valid and collectible insurance or self-insurance maintained by or in the name of Vignette will be in excess of Virtusa insurance and will not contribute to it.

Virtusa will cause each insurance policy issued hereunder to provide: that Vignette is named as an Additional Insured under the General Liability and Auto Liability and Error and Omissions policies as their interests may appear, and that the coverage will contain no special limitations of the scope of protection afforded Vignette, its officers or employees; and that all amounts payable thereunder will be paid to Vignette or Vignette’s assigns.

9.4 It is Virtusa’s responsibility to ensure that the insurance requirements listed above are in effect for the full term of this Agreement. In addition, all of Virtusa’s outside consultants or subcontractors (if permitted) will maintain adequate insurance as detailed above if performing work for Vignette on Virtusa’s behalf, or Virtusa’s insurance must cover the activities of such consultants and subcontractors along with Virtusa. Virtusa is responsible to verify and maintain Certificates of Insurance from such outside consultants or subcontractors.

9.5 The original Certificate of Insurance should be mailed or e-mailed to Vignette Corporation, attn. VP-Products (with a separate copy to General Counsel).

10. GENERAL

10.1 Dispute Resolution. In the event of any controversy or dispute between the parties, the parties agree to first attempt, in good faith, to resolve a dispute or controversy, at the written request of either party, through discussions between an authorized senior management representative of each party.

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10.2 Force Majeure. Excluding the payment of money (unless there is an interruption to a financial system necessary to allow a party to access and use its operating funds), breaches of ownership or license rights or indemnification, neither party shall be liable for any damages or penalty to the other party for delays or failure to perform any obligations under this Agreement or any applicable WORK ORDER when such delay or failure arises from any Force Majeure event which means war, civil insurrection, natural disaster (such as flood, earthquake, hurricane or lightning strike) or other act of God.

10.3 Entire Agreement. Unless the parties otherwise agree in writing, this Agreement, the Operations Framework and the WORK ORDER(s) attached hereto constitute the entire agreement and understandings between the parties solely with respect to the subject matter hereof, and supersede all previous agreements and oral discussions and understandings between the parties with respect thereto, including, without limitation, the Original Agreement and the Original Operations Framework, and all WORK ORDERS as of the Effective Date except for WORK ORDER #EMEA-PS-001 (to use Virtusa as an extension of Vignette’s EMEA Professional Services team) which was effective approximately June 2005. Notwithstanding the foregoing, the parties have previously executed contractor and other agreements and nothing in this Agreement supercedes any of those agreements, except with respect to Section 22 (Non-Competition and Non-Solicitation) of Amendment No. 1 of the Consulting Agreement dated as of May 9, 2001 as executed by the parties hereto which shall be terminated and of terminated and of no further force or effect. In the event of any conflict between the terms of this Agreement and the terms of the WORK ORDER, the order of precedence described in the recitals will control.

10.4 Non-Solicitation and Competitors.

(a) Neither party will directly or indirectly (i.e., through its agents) solicit for employment, employ, hire or engage, as a consultant/employee any Special Employee. A Special Employee means (a) a Virtusa billable employee in the Vignette GDC who has been a billable resource for at least twenty (20) business days during the preceding 6 month period (“ Virtusa GDC Employee”), (b) a Virtusa GDC Employee for [*] months after such employee no longer satisfies the definition in (a) (“Rotated Virtusa GDC Employee”), or (c) a Vignette employee identified by Vignette in the list below in Vignette’s sole discretion (“Vignette GDC Employee”); provided that (i) the number of Vignette GDC Employees does not exceed the number of Virtusa GDC Employees and Rotated Virtusa GDC Employees in the aggregate (together, “Virtusa Special Employees”). A list of all Special Employees (i.e., employees described in (a), (b) and (c)) will be agreed to in writing by the parties and made available at the beginning of each calendar quarter; such list to supercede anything to the contrary in this Section 10.4(a).

Notwithstanding anything to the contrary, either party may solicit and hire a Special Employee who was terminated (excluding any voluntary resignation) by the other party, or who has received termination notice that has not yet become effective (such new employment not to begin until after the effective date of such termination).

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In addition and notwithstanding anything to the contrary, if the Agreement is terminated by Vignette pursuant to: (1) Section 8.1A (for Deemed Material Breach); (2) Section 8.1B (Termination for Convenience); (3) Section 8.1C (Virtusa Change of Control) ; or (4) Section 8.1(D) (Vignette Change of Control) and either Vignette is obligated to pay the applicable termination fees in accordance with Sections 8.1(B), (C) or (D), as the case may be, and, if applicable, in accordance with Section 8.1E (in the case where the Agreement Effective Termination Date is prior to the Minimum Term) or Vignette, in its sole discretion, determines to be obligated to pay the Termination for Convenience Fee in accordance with Section 8.1B and 8.1E (only in the case where the Agreement Effective Termination Date is after the Minimum Term, subject to the initial and continued compliance of Vignette during the Transfer Right Term of payment terms set forth in the applicable provisions of Section 8.1 or in Attachment 2 (if applicable); then Vignette, at its sole discretion, has the right, but not the obligation, to solicit and hire, or have a third party solicit and hire on Vignette’s behalf or for Vignette’s benefit, any Virtusa Special Employee from the day notice of termination is provided by Vignette and through the period ending [*] months following the Agreement Effective Termination Date (“Transfer Right”). The term of the Transfer Right is referred to as the “Transfer Right Term”. For avoidance of doubt: (A) Vignette obtains the Transfer Right under (1) with no obligation to pay a Termination for Convenience Fee; (B) Vignette obtains the Transfer Right under (2) with an obligation to pay the Termination for Convenience Fee; (C) Vignette obtains the Transfer Right under (3) with no obligation to pay a Termination for Convenience Fee but with an obligation to pay the Virtusa Change of Control Fee; and (D) Vignette has the obligation to pay Virtusa the Vignette Change of Control Fee under (4) but does not obtain the Transfer Right unless Vignette elects to pay the Termination For Convenience Fee under Section 8.1(B), in which case, Vignette obtains the Transfer Right with the obligation to pay the Termination for Convenience Fee.

Virtusa agrees that a Virtusa Special Employee will not be assigned and will not directly or indirectly (e.g., research projects, shadow employee, etc.) work on any project or engagement for any of Vignette’s Competitors. Vignette’s Competitors are solely limited to the following: [*].

Notwithstanding Section 7, in the event of a breach of this Section 10.4(a), the non-breaching party will pay the breaching party as liquidated damages an amount equal to [*]. THIS PAYMENT IS NOT A PENALTY, AND IS A LIQUIDATED DAMAGE IN LIEU OF A CLAIM FOR DAMAGE SPECIFICALLY FOR A BREACH OF THIS SECTION 10.4(A), AS THE PARTIES AGREE THAT THE DAMAGES WOULD BE DIFFICULT TO CALCULATE AND UNCERTAIN, AND THEY DESIRE TO QUANTIFY SUCH AMOUNTS. This is the non-breaching party’s sole and exclusive remedy. Notwithstanding the foregoing, in the event that Vignette breaches this Section 10.4(a) with respect to more than [*] Qualified Virtusa Special Employees (as defined below), Virtusa may deem such a breach a termination for convenience fee event, in which case, on written notice to Vignette by Virtusa, Vignette shall be obligated to pay the applicable Termination For Convenience Fee then in effect. In such event, Vignette obtains the Transfer Right, subject to the initial and continued compliance of Vignette during the Transfer Right Term of the payment terms for applicable termination fees set forth in Attachment 2 (if applicable), without the need to pay any additional termination fees hereunder, whenever occurring or arising and upon such payment, the breach will be deemed to have been

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cured by Vignette and the Agreement may not be terminated by Virtusa due to such event. If Vignette pays the Termination For Convenience Fee under this section, Vignette is not obligated to terminate the Agreement; instead, Vignette may, at its sole discretion, maintain the Agreement and/or terminate the Agreement for its convenience at a later date but only on 180 days prior written notice to Virtusa, and, in which case, no additional Termination for Convenience Fee will be owed to Virtusa. The Termination for Convenience Fee is only payable one time. In order for a Virtusa Special Employee to be a Qualified Virtusa Special Employee, (1) such employee must be a Virtusa Special Employee that has not been involuntarily terminated by Virtusa or has not received a involuntary termination notice from Virtusa, (2) Virtusa must have given Vignette written notice of a breach of this Section within 30 days of Virtusa having actual knowledge of Vignette hiring such Virtusa Special Employee, and (3) Vignette does not cure such breach within 30 days of receiving such written notice from Virtusa.

(b) Subject to full compliance with the terms of (a) above, the parties agree that during the term of this Agreement, and for up to a period of [*] months after termination/expiration of this Agreement, neither party shall solicit (directly or through its agents) for employment any employee of the other party. Notwithstanding anything to the contrary, this Section (b) will not prohibit either party from (i) soliciting or hiring any individual who was terminated by the other party, or who has received termination notice that has not yet become effective (such new employment not to begin until after the effective date of such termination) or (ii) soliciting or hiring any individual who has responded to a general, public advertisement for employment or who contacted the hiring party without solicitation from such party; except that in the event that either party violates this Section (b) only (but not upon any violation of Section (a)) by the soliciting and hiring up to [*] employees per year in violation of this Section (b), such violation shall not be deemed a violation with respect to such [*] employees. Notwithstanding Section 7, the maximum liability for each breach by either party of this Section will be payment of damages up to an amount equal to [*]

(c) In no event shall the other party make disparaging remarks about, or refer negatively to the other party or its association with the other party, its affiliates, officers, directors, trustees, employees.

10.5 Modification of Agreement. This Agreement, the Operations Framework and any WORK ORDER(s) attached hereto may only be modified by a written agreement duly signed by persons authorized to sign agreements on behalf of Vignette and of Virtusa. Any variance from the terms and conditions of this Agreement or any WORK ORDER(s) attached hereto as referenced in any invoice, Vignette purchase order(s) or other written notification(s) from Vignette or Virtusa will have no legal effect.

10.6 Enforceability; Waiver. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. The failure of either party to enforce rights granted hereunder or to take action against the other party in the event of any beach hereunder shall not be deemed a waiver by that party as to subsequent enforcement of rights or subsequent actions in the event of future breaches.

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10.7 Marketing; Public Relations. Each party agrees to submit to the other all advertising, sales promotions, press releases and other publicity matters relating to this Agreement, or mentioning or implying the trade names, logos, trademarks or service marks of Vignette or Virtusa, as applicable, or containing language from which the connection of such trade names, logos, trademarks or service marks may be inferred or implied, or mentioning or implying the names of any personnel of Vignette or Virtusa, as applicable, and each party further agrees not to publish or use such advertising, sales promotions, press releases or publicity matters without obtaining the other party’s express written consent. Neither party shall use the other party’s name, trademarks, logos or other sources or business identifiers outside of such party’s organization without the other party’s express written consent except as required by either party to comply with law, including federal securities laws.

10.8 Notices. Any notices required under this Agreement may be hand delivered or shall be deemed received three (3) business days after mailing as certified mail, return receipt requested, to the following addresses: If to Virtusa: at the address listed on the first page of this Agreement, Attn: President. If to Vignette: at the address listed on the first page of this Agreement, Attn: President, with a copy to General Counsel.

10.9 Applicable Law. This Agreement will be governed by the laws of the State of Texas and the laws of the United States of America without regard to conflicts of law provisions thereof and without regard to the United Nations Convention on Contracts for the International Sale of Goods.

10.10 Assignment. Neither this Agreement nor any right or obligation hereunder may be transferred or assigned by either party without the express prior written notification to the other party except in connection with a merger, acquisition or sale or transfer of all or substantially all of the business, assets or equity of either party, provided that the successor/assignee agrees to be bound by all the terms of this Agreement.

10.11 Independent Contractor. It is expressly understood that Virtusa and Vignette are independent contractors, and that neither has the authority to bind or obligate the other party to any third party or otherwise to act in any way as the representative of the other, unless otherwise expressly agreed to in a writing signed by both parties hereto. The parties do not intend to form a joint venture or partnership hereby, and no joint venture or partnership is formed hereby. Vignette acknowledges and agrees that Virtusa is in the business of providing consulting and software development services and that nothing in this Agreement shall preclude Virtusa from developing for itself, or for third parties, deliverables/software which are similar to or competitive with those provided hereunder to Vignette, or which otherwise exploit Virtusa Intellectual Property, provided Virtusa is not in violation of this Agreement including, without limitation, Sections 2 or 3 hereof. In addition, nothing in this Agreement shall be construed as a requirements contract, and notwithstanding anything to the contrary, this Agreement shall not be interpreted to prevent Vignette from obtaining from contractors, or providing to itself, any or all of the Services described in this Agreement or any other services.

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10.12 Reports and Meetings. In connection with this Agreement and at the rates and fees as agreed to per this Agreement, Virtusa will provide Vignette with reports pertaining to the performance of the Services and status of the Deliverables on a per project and per product matter and Virtusa’s other obligations under this Agreement sufficient to permit Vignette to monitor and manage Virtusa’s performance and Virtusa will participate in status meetings as reasonably requested by Vignette to keep Vignette informed regarding the Services and Deliverables; such meetings may be outside of normal business hours.

10.13 Audits. Upon no less than 10 business days advance notice and during Virtusa’s business hours, at Vignette’s sole cost and expense, Vignette, or its agents (all being subject to a reasonable confidentiality agreement acceptable to Virtusa) may audit Virtusa with respect to any matter under this Agreement including, without limitation, fees, intellectual property, inspections of Services or Deliverables, and other operations processes. Such audits will be conducted no more than once per year except that if an audit reveals a Material Non-Compliance (defined below), the audits may be conducted more than once per year until two consecutive audits reveal no Material Non-Compliance. Virtusa will provide reasonable access to its facilities, people and anything reasonably necessary (e.g., utilities, phone and fax services, etc.) for Vignette to conduct such audit and Vignette will reimburse Virtusa for Virtusa’s actual out of pocket expenses. Vignette agrees to conduct the audit so as to minimize disruption of Virtusa and its operations. If an audit is required by law or regulation or due to Virtusa’s failure to comply with this Agreement, Virtusa will, at no additional charge, respond to questions and inquiries reasonably necessary to perform the audit. If an audit reveals an overcharging of fees or expenses of more than 5% of fees charged for the applicable time period or any other material breach of this Agreement (each a “Material Non-Compliance”), Virtusa will pay for the reasonable out of pocket cost of such audit and with respect to any overcharged amount, refund such amount immediately with interest at the rate of the lesser of one percent (1%) per month, or the maximum allowable under applicable law, from the date Virtusa originally received the money from Vignette. Virtusa will keep all records and supporting documentation for at least seven years from date of creation, and will make copies of such records available to Vignette at no additional charge.

10.14 Other Terms. Unless otherwise expressly stated, the words “herein,” “hereof,” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section. The words “include” and “including” shall not be construed as terms of limitation.

10.15 Covenant of Further Assurances. The parties covenant and agree that, subsequent to the execution and delivery of this Agreement each of the parties will execute and deliver any further legal instruments and perform any acts that are or may become necessary to effectuate the purposes of this Agreement.

10.16 Survival. The provisions of Sections 1.3, 2, 3, 4, 5, 6, 7, 8 and 10 (and Attachment 2) will survive the expiration or earlier termination of this Agreement and/or a WORK ORDER. All other rights and obligations of the parties shall cease upon termination or expiration of this Agreement.

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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives as of the day and year below.

VIGNETTE CORPORATION	VIRTUSA CORPORATION
“Vignette” or “Customer”	“Virtusa”
/s/ Bryce Johnson	/s/ Thomas R. Holler
Signature	Signature
Bryce Johnson	Thomas R. Holler
Name	Name
SR VP and General Counsel	CFO
Title	Title
November 11, 2005	November 11, 2005
Date	Date

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Exhibit A

WORK ORDER #             

Vignette:

Contract Type:             ¨  Retainer ;    ¨  Time and Material;    ¨  Fixed Price (check all that apply)

Effective Date:

Term:

This WORK ORDER and any amendments hereto are subject to the terms and conditions of the Master Services Agreement dated                      200   between Virtusa and Vignette.

Services:

Deliverables:

Work Schedule:

Resources:

Resources and Monthly Fee Schedule:

Qty	Description Project Team Resources	Utilization	Daily Rate	Monthly Fee
	MONTHLY FEE

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Additional Resources:

Payments Terms:

Vignette Responsibilities:

Special Terms:

	VIRTUSA CORPORATION
“Vignette” or “Customer”	“Virtusa”
Signature	Signature
Name	Name
Title	Title
Date	Date

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Attachment 1

Operations Framework

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Amended and Restated

Vignette/Virtusa

Global Development Center

Operations Framework

Attachment 1 to Amended and Restated MSA

Also referred to as: WORK ORDER NUMBER 1 as it relates to the Vignette GDC

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Table of Contents

1	Purpose			32
	1.1	Reference Documents		32
2	Team Structure and HR Processes for the Vignette GDC			33
	2.1	Team Assembly		33
		2.1.1	Account Management	34
		2.1.2	Stakeholder Matrix	34
		The parties agree that email is deemed to be a writing.		35
		2.1.3	Program Management	35
		2.1.4	Reporting Structure	36
		2.1.5	Escalation Path	36
	2.2	Team Staffing – See Appendix F		36
	2.3	Staff Removal, Rehires – See Appendix F		36
	2.4	Salary/Compensation & Reports		36
		2.4.1	Salary/Compensation	36
	2.5	Performance Assessments and Promotions		37
	2.6	Spot Bonuses, Team Lunches, Reimbursements, etc.		37
	2.7	Onsite/Offsite Ratio		38
	2.8	Training		38
	2.9	Vacation/Sick Leave		38
	2.10	Best Practices		38
	2.11	Communication Plan, Meeting Plan and Guidelines		39
		2.11.1	Quarterly Review Meetings	39
		2.11.2	Program Status Review Meetings	39
3	Pricing Information			40
4	Development Center Configuration			40
	4.1	Hardware Procurement		40
	4.2	Software Procurement		40
	4.3	3rd Party ERP Software		40
	4.4	Required Consent		40
	4.5	Hardware Maintenance		40
	4.6	Sample Certification Lab Architecture		40
	4.7	Desktop Hardware and Software		41
		4.7.1	Developer Workstation – Hardware	41
		4.7.2	Developer Workstation – Software	42
		4.7.3	Maintenance Consoles	43
		4.7.4	QA Workstations	43
		4.7.5	Application Servers	43
		4.7.6	Database / LDAP Servers	43
	4.8	Software		43
	4.9	Connectivity		44
	4.10	Vignette-Specific Security Requirements		44
		4.10.1	Segregated Development Facilities	44
		4.10.2	Network Connectivity	44
		4.10.3	Facilities	45
		4.10.4	Source Code Management	45
		4.10.5	Removable Media	45
		4.10.6	NDA Disclosure	45
		4.10.7	Security Audit	45
		4.10.8	Content Filtering	45
	4.11	Vignette-Specific Disaster Recovery Requirements		46

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Appendix A: Pricing Information				47
	1.1	Contract Type		47
	1.2	Rate Structure		47
	1.3	Fees		51
		1.3.1	Onsite Per Diem Charge	51
		1.3.2	Travel Charges	51
		1.3.3	Miscellaneous Operating Expenses for Non-GDC Resources Only	51
		1.3.4	Infrastructure Charge fon Non-GDC Resources Only	51
	1.4	Holidays		52
	1.5	Vacations		52
	1.6	Other Assumptions		53
Appendix B: Standard Hardware and Software Policy				54
	Hardware Allocation Policy			54
		Standard Hardware		55
		Software Allocation Policy		55
Appendix C: Security Policies				57
	Policy Framework			57
	Introduction to Information Systems Security Policy			58
	Security Infrastructure			58
	Physical Security			58
	Network and Internet Security			59
	Intrusion Detection			60
	Client Confidentiality and Data Protection			61
	Anti-Virus Administration Procedures			61
	Password Management			62
	Employee Identify Information			62
	User Access Rights			63
	Logging and Monitoring			64
	Incident Management Procedures			64
	Data Classification and Media Handling			64
	Clear Desk Policy			65
	External Audits			65
Appendix D: Business Continuity Plan (Disaster Recovery Plan)				66
Appendix E: Sample Work Order				67
Appendix F: Team Staffing, Staff Removals, Rehires				68
	1.1	Intentionally Deleted		68
	1.2	Team Staffing		68
	1.3	Staff Removal, Rehires		68
Appendix G: Vignette Travel Policy				69
Appendix H: Resource Role Descriptions				74
	Virtusa Role Career Progression			74
	Program Manager			74
	Architect			74
	Development or Technical Lead			74
	QA Lead			74
	QA Engineer			74
	Development Engineer			74

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I. PURPOSE

The purpose of this Amended and Restated Vignette/Virtusa Global Development Center Operations Framework document (“Operations Framework” or “Attachment”) is to define the operating framework for the Vignette Global Development Center (GDC). This document will reflect changes in the operating model since the original operations framework document was executed in March 2004 and will serve as the governing document for the operating model that Vignette and Virtusa will adhere to as of the Effective Date of the Amended and Restated MSA. This document is an attachment to the Amended and Restated Master Services Agreement dated as of November 1, 2005 (“MSA”) between the parties. Capitalized terms used herein but not defined herein shall have the meaning set forth in the MSA.

A. Reference Documents

The Global Development Center (GDC) relationship will be governed by a set of two major documents as defined below.

Document Name	Description
MSA (which includes this Operations Framework)	Used to define the legal and general operating framework that will be used to conduct the daily operations of the engineering, development and quality assurance activities. Defines program governance, structure and success factor criteria.
Work Order	Used to define how the capacity described in the Operations Framework will be used and may include the project details, skill sets needed, tasks and deliverables.

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II. TEAM STRUCTURE AND HR PROCESSES FOR THE VIGNETTE GDC

A. Team Assembly

Vignette and Virtusa will continue to operate the global development center (the “Vignette GDC”) in Virtusa’s Advanced Technology Center (ATC) in Hyderabad, India.

The parties are focusing their efforts on building the Vignette GDC and increasing productivity of the GDC. This Operations Framework will also serve as Work Order Number 1 as it described how the Vignette GDC will operate. The total number of authorized GDC resources are referred to the “GDC Resources” and such number will consist of the actual billable resources (“GDC Billable Resources”) plus positions to be filled by resources to become billable such as due to growth, removals or rotations from the Vignette GDC or resignations from Virtusa resulting in a vacancy in the Vignette GDC (“GDC Open Positions”). The parties agree no additional Work Order is required to add additional resources to the Vignette GDC; provided that such resources are added to the Vignette GDC in accordance with the terms of this Operations Framework and the MSA. There is no limit on the number of resources Vignette may request Virtusa to add to the GDC under the process described in Appendix F. For additional projects or services or with respect to additional Virtusa resources that Vignette may request to perform services for the Vignette GDC, but not be considered part of the Vignette GDC for purposes of the Operations Framework and the MSA, the parties will execute additional Work Orders at rates and other terms including project scope to be agreed upon by the parties.

Team Organizational Structure

Vignette and Virtusa will follow the processes as set forth in this Operations Framework, including Section 2 herein, and the MSA to establish the team structure and staffing selection for the Vignette Global Development Center (also referred to as the “Vignette GDC” or “GDC”).

The leadership team from each of Virtusa and Vignette will provide the following resources with the roles and responsibilities as set forth below:

Executive Sponsor—provides executive sponsorship to the entire client relationship. Typically interacts with key executive stakeholders at the account.

Client Services Manager—provides executive account management. Actively participates in weekly account and project status reviews.

Delivery Unit Head—takes complete responsibility of the delivery of the program. Manages key client relationships, reviews project schedules and deliverables, participates in management reviews and teleconferences and ensures resolution of escalated issues.

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Program Manager—takes responsibility of the various projects running within the GDC program. Manages key client relationships, reviews project schedules and deliverables; coordinates change requests, technology changes, deviations, etc. Ensures overall quality of the project and on-time delivery.

Project Manager—for each project or functional group, this person will be in charge of day-to-day activities of that project. The project manager may reside onsite at the client site or remotely in the ATC facility, depending on the nature of the project work.

Project Team—project team members comprised of technical leads, engineers, quality assurance engineers, etc. These team members can be located either onsite, offshore or both, depending on the nature of the project work.

Software Engineering Process Group (SEPG)—responsible for working with the project teams to tailor Virtusa’s standard process for each client project engagement. Conducts frequent project process audits to insure that the project team is operating in compliance to the tailored process.

Global Competency Excellence Groups (GCEG)—responsible for insuring that the project teams have the required competency within their respective disciplines such as project management, architecture and engineering, quality assurance and business analysis. Conducts frequent mentoring, training and focus peer groups for cultivating a community that can share and leverage best practices derived from their project delivery experiences.

Note: None of the positions set forth above nor any Non-Hyderabad, India based employees (“General Account Management Resources”) are or may be included as GDC Resources except for one Hyderabad based Program Manager. The General Account Management Resources are provided at no additional charge to help ensure the success of the GDC.

2.1.1 Account Management

Virtusa and Vignette will follow the processes and procedures for account management as set forth in this Operations Framework and the MSA, including Virtusa’s obligation to provide or facilitate the following:

• Monthly program review with key stakeholders

• Salary data

• Quarterly forecasts

• Monthly adjustments to forecast as needed

2.1.2 Stakeholder Matrix

The following list of personnel represents the key stakeholders within the Vignette/Virtusa relationship and their expected relationship role in this engagement.

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Company	Relationship Role
Virtusa*	Executive Sponsor. Owns executive level relationships.
Virtusa*	Sales Executive. Owns business aspects of relationship.
Virtusa*	Legal Counsel. Owns all legal aspects of the relationship.
Virtusa*	Delivery Unit Head. Owns all aspects of the delivery relationship.
Virtusa*	Client Services Manager. Owns the customer relationship and related issues. This is an onsite but a non-billable role.
Virtusa*	Delivery Manager.
Virtusa	Program Manager. Owns the successful execution of the GDC program. This is a GDC Resource as described in Section 2.1.3, is primary owner of all administrative aspects of the GDC, and will report to the Vignette Engineering Director, or his delegate.
Vignette	VP of Engineering. Owns the overall outsourced engineering relationship.
Vignette	Legal Counsel. Owns all legal aspects of the relationship.
Vignette	Engineering Director. Primary owner of the outsourced operational aspects of the relationship which include delivery of software projects (except as described in 2.1.3). Primary owner of budgeting and forecasting for GDC operations.
Vignette	[List other Vignette stakeholders as required]

* Represent General Account Management Resources and thus, are included at no additional charge.

NOTE: Any notices required under this Agreement must be in writing (unless expressly provided to the contrary) and provided to the following positions to be effective:

Vignette: Engineering Director and VP of Engineering

Virtusa: Delivery Unit Head

The parties agree that email is deemed to be a writing.

2.1.3 Program Management

As part of the Vignette GDC Resources, Virtusa will assign a billable Program Manager to oversee the successful operations and project execution. The Virtusa Program Manager will be an ATC based senior resource that will be responsible for leading the program. The Virtusa Program manager will report to Vignette Engineering Director for all GDC operational aspects related to the building of software products and will report to the Virtusa Delivery Manager for all related administrative issues. The Program Manager is allocated full-time to the Vignette program. [*] will be assigned as the Vignette Program Manager. Virtusa will provide, at no charge, reasonable office accommodations for a reasonable number of Vignette employees (not to exceed 5% of the Vignette GDC Billable Resources) in the facility where the GDC operates.

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2.1.4 Reporting Structure

All the Virtusa team members report to the project manager for the work related to the project. Typically a project manager is assigned for each major product or project initiative within the GDC. Each project manager reports to the Program Manager who in turn reports to the Virtusa ATC Client Delivery Head who in turn reports to the Executive Vice President of Technical Operations. This is the suggested escalation path for issues relating to the project.

All of the Vignette engineering Directors/Managers report into the VP, Engineering. This is the suggested escalation path for issues relating to the project.

2.1.5 Escalation Path

A formal escalation procedure is defined at the beginning of the project as part of the detailed project governance plan. Issue escalation becomes operational when an issue remains unresolved for a pre-defined time period. For most issues, the first point of escalation for Vignette is the Virtusa onsite/offsite program manager. In case the issue settlement is beyond the scope of the program manager it is escalated to the Delivery Manager. If necessary, Vignette may further escalate issues/concerns to Virtusa’s executive management team based in Westborough, MA.

Virtusa will escalate any unresolved issues or disputes to the Sr. Director of Engineering and/or the VP of Engineering. If necessary, Virtusa may further escalate issues/concerns to Vignette’s executive management team based in Austin, TX.

B. Team Staffing – See Appendix F

C. Staff Removal, Rehires – See Appendix F

D. Salary/Compensation & Reports

2.4.1 Salary/Compensation

Virtusa will follow the compensation modification (Virtusa salary increases and bonuses based on Virtusa base pay, excluding any Vignette special allowances or bonuses) policies related to the annual focal performance appraisal review cycle and the quarterly (or other time period) talent review (promotion) cycles in effect at Virtusa and generally applicable to all other Virtusa employees. Vignette will have the ability to request Virtusa to modify any Vignette special allowance or additional compensation of any kind for an individual only at the beginning of each quarter; provided that, to take effect in a quarter, Vignette shall have provided prior written notice to Virtusa of not less than 30 days prior to the first day of such quarter regarding proposed increments; and provided further that no changes to compensation or any allowances shall be allowed or made after commencement of any quarter.

2.4.2 Compensation Reports

Virtusa will provide a quarterly report of confidential compensation details for GDC Resources to a limited number of authorized Vignette designees within and outside the GDC. Virtusa will ensure that it has all rights and permissions necessary to provide such details to Vignette.

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2.5 Performance Assessments and Promotions

Virtusa will follow the same performance assessment and review processes and practices for the Vignette GDC team as it does with other Virtusa employees. Vignette management will be responsible for participating in and completing the assessments and appraisals according to published schedules and will keep Virtusa management informed regarding the status of key performers as well as the status of low performers.

Over time, Vignette may assess the performance management processes and formats and may request to enhance or modify the applicable processes and related artifacts. Any changes to the policy that are required by Vignette will be submitted to Virtusa for review, mutually agreed upon by both Virtusa and Vignette, and if agreed upon, subsequently incorporated to the policy accordingly.

2.5.2 Promotions

GDC promotions will occur at the same intervals as Virtusa’s standard talent review cycles and process applicable to all other Virtusa employees, but not less than annually. Vignette may request the promotions of (Virtusa rankings) Tier 3 and Tier 4 GDC resources in its discretion and upon Virtusa’s consent, such consent not to be unreasonably withheld, such promotions will occur. For promotions of (Virtusa rankings) Tier 1 & Tier 2 GDC resources, however, Virtusa and Vignette shall create a joint panel consisting of Virtusa and Vignette GDC leadership. Vignette and Virtusa will collaborate to identify and define the roles and responsibilities and related promotion criteria for Tier 1 and Tier 2. Once defined, this will serve as the benchmark and framework for promotion decisions to be implemented by Virtusa.

2.6 Spot Bonuses, Team Lunches, Reimbursements, etc.

Virtusa will bill any pre-approved (in writing by Virtusa) spot bonuses, team lunches and outings to Vignette as a pass-through expense with no markup. Vignette and Virtusa will review the current bonus levels and mutually agree in writing on a pre-defined budget for these activities. Virtusa will provide to Vignette a monthly report on the incremental expenses in these programs as they are incurred.

Vignette shall maintain reasonable practices regarding spot bonuses, perks and other bonus or benefit programs as Vignette may elect to have Virtusa implement under the guidelines established and agrees to provide timely written notification to Virtusa, of any program that may be outside of the agreed upon levels. Virtusa retains the right to object to and approve of any program whose parameters fall outside of the agreed upon guidelines or which Virtusa reasonably believes will negatively impact morale. Virtusa will collaborate with Vignette to identify potential alternative programs, or parties can escalate accordingly to resolve. If no guidelines are mutually agreed, Virtusa must consent to any benefit program Vignette wishes Virtusa to implement that in any 12 month period, in the aggregate, with any other benefit programs during such 12 month period, does not cause a reoccurring benefit of more than [*]% of current cash compensation (i.e., CPC amount) for such 12 month period.

Vignette must provide Virtusa at last 30 days prior written notice prior to the beginning of any quarter of the desire to pay any bonuses or incur any substantive expenses in a quarter to ensure proper accounting for the same.

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2.7 Onsite/Offsite Ratio

Vignette and Virtusa agree that during the steady-state GDC operations the overall onsite/offsite mix will be less than or equal to [*]%, unless otherwise mutually agreed by Vignette and Virtusa. During any period of ramp-up or during critical project deliverables it may be necessary to increase the onsite/offsite ratio.

2.8 Training

Virtusa will provide and own the training and on-boarding of resources with regard to Virtusa’s standard processes and procedures, and any fundamental skills represented in the resources’ profile as a core competency (e.g., Java/J2EE, C++, etc.). The competency will be based on the individual’s current experience level.

Vignette will provide training on all Vignette product suites, code bases, tools and development and quality assurance processes reasonably needed for the successful execution of project activities. Vignette will provide this training at a mutual agreeable location, which may include Virtusa’s ATC facilities. As way of example, Vignette will be responsible for its out of pocket expenses and the time spent by the Virtusa personnel will be billable based on the fee structure described in this Operations Framework. Vignette will accept and absorb the cost of training of bringing new transition personnel up to speed from the date of employment with Virtusa.

Virtusa will provide timely visibility and transparency to Vignette to the India training calendar, in accordance with the schedule and timing of communication to all Virtusans. Vignette leadership has the ability to nominate GDC team members for training and the selection of participants for training will occur as per the standard process generally applicable to all other Virtusa employees.

Vignette and Virtusa will mutually agree on any specialized or advanced technology training that may benefit any resource on the team including any associated costs with such training. Virtusa will bill Vignette directly for the out of pocket costs associated with any special training extended to GDC resources. The program details and related costs will be assessed and agreed upon in writing, on a case by case basis, at the time of request.

2.9 Vacation/Sick Leave

See Appendix A of this Operations Framework.

2.10 Best Practices

Virtusa currently leverages a unique “ISG” (Individual Support and Growth) leadership structure throughout the organization. It is intended to provide a “home” for each Virtusan and serves as a critical extension of the HR and management function. Its primary purpose is to provide personalized support to individuals based on their own unique personal needs and professional aspirations. The ISG best practices will continue to be leveraged for People Management. The Project Managers will act as the ISG Managers for each of their GDC team members. Director of GDC Operations from Vignette and the Delivery & Program Managers from Virtusa can jointly act as the ISG Managers for the Tier 1 GDC resources.

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2.11 Communication Plan, Meeting Plan and Guidelines

2.11.1 Quarterly Review Meetings

Virtusa and Vignette will hold quarterly executive meetings to evaluate the overall status of the relationships. Vignette and Virtusa key executive stakeholders will attend this meeting. The intent of this meeting will be to plan and gain visibility to quarterly needs.

2.11.2 Program Status Review Meetings

Virtusa and Vignette will hold fortnightly program status meeting with all key stakeholders of each organization to track the overall progress of the relationship. The Virtusa business and delivery owners will attend these meetings. Vignette key program stakeholders will also attend this meeting. These meetings can be held in person, over videoconference or over teleconference. A standing agenda will be published and meeting minutes will follow each meeting.

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III. PRICING INFORMATION

Appendix A sets forth pricing information for this Operations Framework.

IV. DEVELOPMENT CENTER CONFIGURATION

The following section outlines the policies governing the acquisition, ramp-up, setup and monitoring of the Vignette GDC. Vignette and Virtusa will define the exact configuration and architecture collaboratively during the initial ramp-up phases of the GDC. All of the standards described in the appendices to this Operations Framework apply; however, to the extent of any inconsistency between this Section 6 and any Appendix, this Section 4 will govern.

A. Hardware Procurement

Vignette will utilize the services of Virtusa to procure hardware which is economically practical, based on pricing through Virtusa’s existing channels; however, hardware which is economically prudent for procurement by Vignette may be delivered to Virtusa’s Westborough facility for delivery to the India Advanced Technology Center or may be purchased by Vignette in India for delivery to the ATC. The costs for shipping hardware to India through Virtusa will be handled as a pass-through expense with no mark-up. Virtusa will provide copies of the applicable invoices.

4.2 Software Procurement

Software will be provided by Virtusa in accordance with its Standard Hardware and Software Policy attached hereto as Appendix A (the “Policy”). Perforce client which is not on the Policy will be provided by Vignette for use on a [*] to be located in [*]. Additional software outside of the terms of the Policy will be provided by Vignette except to the extent provided in this Section (e.g., Section 6.7 and 6.8). At the termination of this MSA, all Virtusa licensed software will be removed by Virtusa from hardware owned by Vignette.

4.3 3rd Party ERP Software

Vignette will maintain responsibility for establishing relationships with the ERP vendors, and providing the software and licenses to allow Virtusa to utilize the software within the GDC for Vignette’s development purposes. At Vignette’s sole cost and expense, Virtusa agrees to help Vignette in the event Virtusa can secure licenses directly in a more efficient manner.

4.4 Required Consent

For software and/or hardware that Vignette provides for the GDC, Vignette will maintain responsibility for obtaining all consents to allow Virtusa to utilize the software or hardware. For hardware and software provided by Virtusa, Virtusa must obtain consents for Vignette to utilize the software and/or hardware as applicable.

4.5 Hardware Maintenance

Except for damage or loss (other than due to reasonable wear and tear) for which Virtusa will be responsible, Vignette will be responsible for the maintenance costs on any hardware or software provided to Virtusa during the course of the GDC relationship. Virtusa will be responsible for the maintenance costs on any hardware or software provided as part of its Policy.

4.6 Sample Certification Lab Architecture

The following diagram represents a sample proposed GDC development lab architecture. It does not represent what will be set-up as part of this GDC engagement.

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Figure 4: Example Vignette Lab Configuration

4.7 Desktop Hardware and Software

The Windows-based developer workstations will contain the developer tools and source code workspaces for the developers to carry out daily development activities. These will also serve as the unit and smoke testing machines for the developers. The hardware and software configuration of these machines have been detailed in this document. Notwithstanding the foregoing, Virtusa will only be obligated to provide software and hardware in accordance with its Policy and as otherwise described in this Section 4. Items requested as set forth below will be provided at additional charge, if able to be obtained by Virtusa on commercially reasonable terms.

4.7.1 Developer Workstation – Hardware

RAM	2048MB is the expectation for each workstation, some may have less depending on needs
Processor	Pentium IV 2.0 GHz, dual processor
Processor BUS Speed	133 MHz
Video RAM	8 MB
Cache Memory	512
HDD	40 GB
CD-ROM	YES
Network Adapter	10/100
Hard disk space	At least 40 GB

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Virtusa agrees that on behalf of Vignette, Virtusa shall purchase upgraded workstations (“Upgraded Machines”) based on the standards as set forth in the table above at Vignette’s cost and expense. Vignette shall notify Virtusa of the number of Upgraded Machines that Virtusa should purchase. Virtusa will invoice Vignette for such Upgraded Machines equal to Virtusa’s actual cost to purchase the Upgraded Machines. Upon termination of this MSA, Vignette shall have the right to take full possession and custody of such Upgraded Machines in accordance with the terms of the MSA.

Notwithstanding anything to the contrary in the Policy (as set forth in Appendix     ), at Virtusa’s sole cost and expense, Virtusa will allocate and make available to Vignette the number of standard Systems (each as defined or set forth in the Policy) equal to [*]% of the number of Virtusa billable resources assigned to the Vignette GDC. At Virtusa’s sole cost and expense, Virtusa will provide and install for each System (or, at Vignette’s discretion, an alternate system) the software described in the Policy, and in Sections 4.7 and 4.8. To the extent that Vignette requires in excess of its allocation of Systems, or software in excess of that which Virtusa provides at Virtusa’s sole cost and expense, Vignette will be responsible for all incremental fees and costs thereto.

4.7.2 Developer Workstation –Software (to be provided at Virtusa’s sole cost and expense)

Operating system	Windows 2000 Professional/Server
Developer toolset	A good Java editor with JSP, XML and J2EE support.
VPN Software	Cisco VPN Client will be provided by Vignette for developers to log on to their network to use perforce etc.
Database servers	Oracle 9.2.0.1 for Win2K , Oracle 8i, Sql 2000 Server, DB2
Application servers	WebLogic6.1SP4 or later
LDAP Server	iPlanet 5.0 SP2
Internet Browser	Internet Explorer 5.5 or later Netscape 7 or later
Miscellaneous tools	MKS Tools 8.0 is required; RSHD (Winsock RSHD/NT Remote Shell Daemon for Windows NT 2.18) is required
Perforce related installations	Need to install the Perforce client provided by Vignette, and configure to connect through VPN
Viper specific dependencies	Connects through VPN, a web based Vignette intranet application
Languages supported	Multiple languages will need to be supported through l10n, i18n
X server software	Yes, to debug issues on a Solaris Test box (Exceed etc.)
IP address requirements	Static IP required for each workstation using Vignette VPN.
Java development tools	Sun JDK 1.3 or later Weblogic App Server 6.1 or later (J2EE) Websphere 4 or later (J2EE) Apache Ant build tool
MS development tools required	Win2K Resource Kit is required
Vignette specific installations	You will need a good code comparison tool (Compare It, Beyond Compare) to ensure that you check in only intended changes, and not other modifications to source.

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4.7.3 Maintenance Consoles

The maintenance area will contain several maintenance consoles, which can be switched to perform system maintenance of servers. Terminal servers will allow administrators to connect remotely to perform system maintenance. Telnet sessions can also be enabled for remote access as needed.

4.7.4 QA Workstations

Several Windows-based client workstations will be setup for testing the end-user operations, subject to the terms of the Policy. These workstations will also be used to run testing automation and performance tools. The setup would be similar to the Developer workstations as outlined above.

4.7.5 Application Servers

The application server section will be used to run various operating systems and application server combinations. Examples platforms would be Win2K, Solaris, AIX, HPUX, Linux and example application servers would be Weblogic, Websphere. The exact application environment will be setup in accordance to Vignette’s standard procedures.

4.7.6 Database / LDAP Servers

The database section will contain the different databases and LDAP servers running on different platforms to facilitate homogeneous and heterogeneous configurations.

4.8 Software

The following table outlines the various operating systems, application and database software that will be used to create the various operating stacks. All this software will be provided at Virtusa’s sole cost and expense in accordance with this Operations Framework and the MSA. Virtusa will continue to obtain upgrades and new releases to the software listed below (provided they can continue to be obtained on reasonable commercial terms) as part of their partnerships or other agreements with such vendors. However, Vignette may at its sole discretion determine which of such upgrades/new releases that it wants to use and the timing of when Vignette uses such upgrades/new releases.

Operating Systems	Application Servers	Web Servers	Database Servers	LDAP Servers	Miscellaneous / Tools
WinNT SP6 Win2K SP2 Windows XP Windows 2003	Weblogic WebSphere iPlanet AS Tomcat	IIS iPlanet WS	SQL 2000 Oracle 8.1.6 Oracle 8.1.7	Windows Active Directory Oracle Directory Server iPlanet Directory Server	MKS Tools RSHD Win2K ResKit WinNT ResKit
Solaris	Weblogic WebSphere iPlanet AS Tomcat	Apache IBM HTTPD iPlanet WS	Oracle 8.1.6 Oracle 8.1.7 Oracle 9i Sybase 12.5 IBM DB2	Oracle Directory Server iPlanet Directory Server	N/A
AIX	WebSphere	IBM HTTPD	IBM DB2	IBM Directory Server	N/A
HPUX	N/A	N/A	N/A	N/A	N/A

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In connection with work stations to be used by the Virtusa resources performing on-site at Vignette, Vignette agrees that, at its sole cost and expense, Vignette shall be solely responsible for providing such work stations and purchasing licenses for the software related to such workstations.

4.9 Connectivity

Operating a global development center will require the adequate bandwidth and connectivity between Virtusa’s offshore facility and Vignette’s facilities. Virtusa provides standard connectivity as part of its Hardware/Software Policy. Vignette has a stated need and desire to have increased dedicated bandwidth and connectivity based on the needs of the GDC. Vignette will be solely responsible for additional costs for any requested increased, dedicated bandwidth, above the Policy. Virtusa is providing the connectivity at Vignette’s cost and expense, as set forth in the illustration below.

4.9.1 Vignette GDC Connectivity

[*]

A summary of the connectivity is set forth below.

[*]

4.10 Vignette-Specific Security Requirements

Notwithstanding anything to the contrary in this Section 4, Virtusa will comply with the following Vignette requirements, with the exception that Virtusa is not responsible for liability arising out of any violation of the terms of this Section 4.10 to the extent that any such requirement is under the sole and exclusive control of Vignette:

4.10.1 Segregated Development Facilities

Vignette requires full isolation of its associated lab and development environments located in the Advanced Technology Center. This is required at the [*] levels. All information disclosed in section 8 of this document is required, with the addition of the following criteria.

4.10.2 Network Connectivity

Vignette requires a separate physical network to accommodate the lab infrastructure and the development computing resources. In this scenario, these systems are connected to a separate physical network and access to the systems in the DMZ is controlled via [*]. Except as agreed in writing by the parties, no remote network access will be provided for any personnel of the Advanced Technology Center outside of the physical network located within the Advanced Technology Center in the Vignette project area. Network connectivity to computing resources within the Vignette GDC must be limited to personnel working within the GDC, with the exception of [*] and except as otherwise agreed to in writing by the parties. Vignette project associated personnel will require access to the following Virtusa owned corporate resources.

• [*]

The above resources will be located [*] and access to said resources will be controlled by [*].

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4.10.3 Facilities

Vignette requires that the Vignette GDC be physically separated from non-Vignette-GDC space within the Virtusa ATC. Access to the Vignette GDC must be limited [*], allowing only Vignette project associated personnel into the development and lab facilities housing Vignette operations at the Advanced Technology Center. As required to perform maintenance, Virtusa IT personnel may be required to access the Vignette facilities.

4.10.4 Source Code Management

All source code and project information will reside [*] and will have administrative access solely retained by Vignette and its direct employees. Vignette will manage access control to the data [*].

4.10.5 Removable Media

No writeable removable media devices will be permitted within the Vignette Project Center located within the Advanced Technology Center. This will include but not be limited to CD-R, CD-RW, “floppy disks”, removable flash memory or USB/IEEE 3914 storage devices. Virtusa shall disable all of the [*] located within [*] for the term of this MSA.

4.10.6 NDA Disclosure

Virtusa will provide Vignette with a copy of the signed NDA from each employee associated with the Vignette development effort at the Advanced Technology Center.

4.10.7 Security Audit

Virtusa will provide the results from its annual security audits performed by an independent third-party as well as any responses thereto including, without limitation, any documents indicating how issues are to be addressed. At Vignette’s sole cost and expense, Vignette also reserves the rights to perform a security audit of the facilities (physical, network, etc.) at Vignette’s discretion on reasonable prior written notice and during business hours only. Vignette agrees that its access shall be limited solely to Vignette’s network and Virtusa shall monitor and accompany Vignette during audit process.

4.10.8 Content Filtering

Outbound e-mail with attachments will be limited to individuals inside the Virtusa and Vignette domain (i.e., virtusa.com or vignette.com). This restriction will be managed via e-mail controls implemented by Virtusa to limit the possibility of intellectual property transcending the Vignette/Virtusa team. Messenger and Chat applications will be limited to yahoo instant messaging only and attachments will be filtered. This restriction will be managed via controls implemented by Virtusa to limit the possibility of intellectual property transcending the Vignette/Virtusa team membership. FTP access will be monitored to prohibit the delivery of information to members outside of the Vignette/Virtusa teams. This restriction will be managed via controls implemented by Virtusa to limit the possibility of intellectual property transcending the Vignette/Virtusa team membership.

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[*] will be disabled on all systems to prevent delivery of information to members outside of the Vignette/Virtusa teams unless otherwise agreed in writing by Vignette. This restriction will be managed via controls implemented by Virtusa to limit the possibility of intellectual property transcending the Vignette/Virtusa team membership.

4.11 Vignette-Specific Disaster Recovery Requirements

Virtusa will comply with the guidelines and directions stipulated in their Business Continuity Plan, which was developed in collaboration with PricewaterhouseCoopers. Virtusa will provide the current Business Continuity Plan to Vignette and notify Vignette in the event of modifications to this plan.

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Appendix A: Pricing Information

APPENDIX A: PRICING INFORMATION

1.1 Contract Type

The primary engagement type for the GDC will be on a capacity based engagement (“Capacity Based” or “Retainer Agreement”). Except as described in Section 1.2, in a Retainer Agreement, each Virtusa resource will be billed a fixed amount on a monthly basis, based on the daily rate (multiply the hourly rate by 8 hours) and a 20 business day month (and pro-rated for any partial month worked by these resources in their first month or last month of joining). Virtusa standard holidays reasonable sick days, and vacation days (to the extent that the total of standard holidays, sick days, and vacation days is no greater than 21 days per year per resource (including any successor resource)) are covered under a Retainer Agreement. Extended sick days (time in excess of 3 consecutive days), vacation time that causes the total of sick, holiday, and vacation days to exceed 21 in a given year per resource (including any successor resource), or other extended leave time for Virtusa resources will not be considered billable under a Retainer Agreement and, once the 21 day period is exceeded, during the applicable 12 month period, each additional sick, vacation or holiday shall be reduced from the 20 business day month for billing purposes. In addition, under the Retainer Agreement, if any Virtusa resource bills in excess of the equivalent of a 9 hour average work day, calculated over the actual business days in a month or any hours on a weekend day provided such employee has billed at least 40 hours during the week (“Overtime”), Virtusa will bill such additional time in excess of the 9 hour average time or any weekend billable time to Vignette based on the rate in the table below [*]. For purposes of determining overtime and calculating the average number of hours billed each month, each authorized sick day, holiday or vacation day (up to the 21 day limit per year per resource) taken during such month shall be deemed to be 8 billable hours of work. The calculation for determining the average number of hours billed each month is as follows:

• [*]

Virtusa will notify Vignette within 1 workweek of any unplanned or unanticipated Overtime having occurred. Vignette and Virtusa will each notify the other if the projects’ progress is about to cause a requirement for Overtime. As part of Virtusa’s reporting obligations, Virtusa will itemize any additional hours worked beyond the retainer agreement on the monthly invoices sent to Vignette at the end of every month as well as sick days, holidays or vacation days taken for such month by each resource.

Virtusa also offers a Time and Materials (T&M) engagement model. In a T&M agreement, each Virtusa resource is billed for the actual hours worked and does not include items such as Virtusa holidays, sick days and vacation days. There is no premium charged for hours worked beyond an 8 hour work day or 40 hour work week or on weekends/holidays.

1.2 Rate Structure

The rate table set forth below and on the tables below in this Section provides the rates solely for the Virtusa resources engaged and hired into the GDC.

The rates herein are effective as of October 1, 2005.

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Appendix A: Pricing Information

The pricing structure set forth below reflects the following cost/component considerations:

• Fixed Cost: This component is a fixed amount per month notwithstanding number of GDC Billable Resources or Compensation. This component will be divided by then current number of GDC Billable Resources to determine daily rate per GDC Billable Resource. Since this component is insensitive to salary increases, this component does not increase overall billing rates if salary increases are implemented.

• “Variable Other”: This component is a fixed amount per GDC Resource per day and will increase or decrease with team size only (but excludes CPC). This amount covers non-cash benefits such as disability insurance as well as variable overhead like computers, workspace, and other items covered by the [*]% Infrastructure charge applicable only to non-GDC Resources.

• Compensation: This consists of only those items set forth on the Compensation Model (“CPC”). The daily rate is the aggregate compensation divided by then current number of GDC Billable Resources.

• The CPC (upon which the pricing in this Operation Framework is based) was approximately $[*] as of July 31, 2005, as stated in the Vignette Compensation Model as of July 31, 2005 (“Compensation Model”) as provided by Virtusa to Vignette. The components of the CPC upon which the $[*] was calculated are listed in the Compensation Model.

The parties have agreed upon the following formula and rates, based on the pricing component set forth above, for each Virtusa resource engaged and hired into the GDC (i.e., a GDC Billable Resource):

• [*]

For purposes of determining the applicable monthly billing rate, the monthly billing rate equals the [*].

Fixed Cost Calculation on a per GDC resource basis: For purposes of calculating the Fixed Cost component, the Fixed Cost assumes, and the parties agree to, a fixed monthly baseline cost of $[*]. The Fixed Cost component shall be calculated monthly as follows: The number $[*] shall be divided by the number of GDC Billable Resources at the 1^st day of each month (“Monthly Fixed Cost”) divided by 20 to calculate a daily rate. The initial daily fixed cost rate is $[*] per resource per day. The higher the number of GDC resources the lower the daily fixed cost component is on a per GDC resource basis. In no event will a monthly total in the aggregate exceed $[*].

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Appendix A: Pricing Information

The Variable Other component equals $[*] per GDC resource per day during the first year of the Operations Framework and is adjusted each year thereafter per above.

The CPC shall be determined by taking the CPC related to working in the GDC earned by all of the Virtusa GDC members during each month in the GDC divided by 20. This consists of the Virtusa component and the Vignette Component. For purposes of calculating the CPC component, a factor of [*] shall be applied to the excess of the actual CPC and $[*] CPC. For example, if the actual CPC was $[*], [*] would be multiplied by $[*] and this resultant amount would be added to the $[*] CPC for a total of $[*].

**Vignette must maintain a minimum number of GDC Billable Resources of [*] (determined at the 1^st day of the month). Should the Virtusa GDC headcount fall below [*] persons for any reason except as stated in this Agreement, such as due to [*] or [*] Virtusa shall still bill, and Vignette shall pay, for [*] person per the rates set forth herein.

The table below provides an example of the daily rates and billing on a per resource basis under the formula above, assuming a team size of [*] in the GDC, a CPC of [*], over 3 year period (see table below for schedule of rates):

[*]

The above GDC rates apply solely to GDC members working offshore at the GDC. If a GDC member is required to work onsite in the US, Virtusa will add a per diem of $[*] per business day to the then current daily rate in effect during the time the member is onsite. This per diem covers living expenses (e.g., food and lodging) and cost of local transportation.

The following rates apply for additional Virtusa resources engaged by Vignette to perform services for the GDC but by a resource who is not being engaged and hired into the GDC. The parties will execute a separate work order to engage any such non-GDC member resources.

[*]

OnSite—means a US or India based Virtusa employee is working in the US or a US based Virtusa employee is working in India. The OnSite rates include approximately $[*]/week per diem charge described in Section 3.31 (i.e., the $[*]/week charge is not in addition to the OnSite rates).

Offshore—means a non-US or India based Virtusa employee is working in India.

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Appendix A: Pricing Information

Cost of Living Increase for Non-GDC Resources Only: With respect only to non-GDC members or any resource not covered by the GDC rate table (i.e., additional resource who performs services in the GDC but is not hired into the GDC), Vignette and Virtusa agree to perform an annual rate review on the above rate structure. The US Cost of Living Index (the “US Cost of Living Index”) will be applied to the OnSite rates for US based Virtusa resources and to the per diem portion of the OnSite rates for Indian based Virtusa resources and the percent of Overall Salary Increases on Total Cost to Company for Software Development Companies for Professional / Supervisor / Technical positions projected for the following year based on the Annual India Salary Increase Survey conducted by Hewitt Associates (or other mutually agreeable survey (the “Indian Cost of Living Index”)) will be applied to the Offshore rates for Indian based Virtusa resources and to the salary portion of the OnSite rates for Indian based Virtusa resources on each anniversary date of this MSA. The parties agree to use the most recent survey available, and in no case will use a survey more than six months old. The resultant rate increase for the resources above, if any, is capped at [*]% per year after the first year of this Operations Framework, and [*]% for each successive year until the [*]^th anniversary of this MSA at which time, commencing on the first day of year [*] of this MSA the applicable resultant rate increase as applied in accordance with this Section will be equal to the US Cost of Living Index or the Indian Cost of Living Index, as the case may be, less [*]% for each successive year of this MSA.

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Appendix A: Pricing Information

[*]

1.3 Fees

1. Onsite Per Diem Charge

With respect only to any onsite resources, whether a GDC resource or non-GDC resource, the onsite rates account for and include all per diem costs for Virtusa consultants, such as accommodations, meals, transportation, insurance, etc. This cost covers the consultant’s expenses for a 7-day week and is included in the Virtusa onsite daily rate (i.e., it is not an additional cost). The weekly cost for the per diem is approximately $[*]/week per person. Onsite rates have been provided for Vignette in any US location. Any additional onsite rates will need to be calculated based on the cost of living at the particular location.

2. Travel Charges

Travel from Virtusa’s offsite Advanced Technology Center (ATC) to any Vignette locations in the United States is additional and will be charged at $[*] per trip, per person.

Travel for Virtusa US based resources to Vignette locations will be billed as incurred. Travel costs for US based resources, or ATC based resources while onsite who are required to travel between Vignette’s US locations will be itemized as part of Virtusa’s monthly invoices. Virtusa will adhere to Vignette’s standard travel policy for US based resources, which is attached as Appendix G and which may be updated from time to time.

With respect to Virtusa onsite resources in the United States, Virtusa will maintain records of expenses incurred, by person, for the duration of the GDC and three years thereafter. In accordance with federal government tax requirements, Virtusa will require and maintain receipts for all expense items greater than $25. Copies of all expense receipts greater than $25 will be submitted to Vignette with appropriate invoice. Copies of all expense detail greater than $25 will be maintained for a period of one (1) year following the billing of the expense amount.

3. Miscellaneous Operating Expenses for Non-GDC Resources Only

With respect only to non-GDC members or any resource not covered by the GDC rate table (i.e., additional resource who assist in the GDC but are not hired into the GDC), Virtusa will pass any additional miscellaneous operating expenses that are incurred as part of the GDC operations without mark-up or administration fees. These expenses will be itemized as part of Virtusa’s monthly invoices.

4. Infrastructure Charge fon Non-GDC Resources Only

With respect only to non-GDC members or any resource not covered by the GDC rate table (i.e., additional resource who assist in the GDC but are not hired into the GDC),

Virtusa charges a monthly [*]% infrastructure charge on each invoice amount that accommodates logistical costs for the project team. This includes:

• Facilities costs

• VOIP video and voice conferencing,

• Hardware and software for the project teams (as designated in Appendix B)

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Appendix A: Pricing Information

• Basic network bandwidth and connectivity

• Administration from Virtusa’s Westborough facility to the ATC facilities in India

• Offsite/backup/disaster recovery services

• Basic security services

• Basic administration support services (infrastructure and not project related)

S.No	Date	Day	Holiday
1	January 14th	Friday	SANKRANTHI
2	January 21st	Friday	ID UL ZUHA (Bakrid)
3	January 26th	Wednesday	REPUBLIC DAY
4	March 8th	Tuesday	MAHASHIVARATRI
5	March 25th	Friday	HOLI / GOOD FRIDAY
6	April 18th	Monday	SRI RAMA NAVAMI
7	August 15th	Monday	INDEPENDENCE DAY
8	August 19th	Friday	RAKHSA BANDHAN
9	September 7th	Wednesday	GANESH CHATURTHI
10	October 12th	Wednesday	DUSSERAH (VIJAYADASAMI)
11	November 1st	Tuesday	DEEPAVALI
12	November 4th	Friday	ID UL FITR (RAMZAN)

For more details on what is covered by the infrastructure charge, please refer to section on Standard Hardware and Software Allocation Policies in Appendix B.

1.4 Holidays

Each year, Virtusa will provide a list of the standard holidays for the India ATC and US offices. Standard Holidays will not exceed 12 days per year. There are 12 national holidays in India:

Virtusa will provide Vignette with a revised list of standard holidays as needed. Vignette will not expect Virtusa to work on standard holidays. Standard holidays are covered under a Retainer Agreement and will be non-billable for a T&M agreement, each as described herein

1.5 Vacations

In addition to holiday leave, Virtusa provides standard vacation leave for each consultant. Generally annual vacation leave is 2-3 weeks for each consultant depending on seniority. Any vacation or leave request by the GDC resource should be submitted to the GDC manager. The GDC manager, in conjunction with the Virtusa manager, will review and approve all such requests. Notwithstanding anything to the contrary, Virtusa agrees that vacations will not be taken without at least four weeks advanced notice.

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Appendix A: Pricing Information

1.6 Other Assumptions

The following assumptions have been made in the development of this proposal. If any of these assumptions turn out to be materially incorrect, the parties agree to mutually determine the appropriate course of action.

1. Virtusa will obtain the reasonably determined necessary access to Vignette Architects, Engineers, QA Staff, and Management staff in order to develop a full understanding of the products, development process and roadmap. If this access is not possible or delayed the ramp-up timeline or scope may be impacted.

2. Each party will provide timely and accurate information in all material respects as requested by the other party in order to enable such party to fulfill its responsibilities under the MSA and this Operations Framework.

3. As requested by Virtusa, Vignette will provide timely access to other appropriate Vignette personnel and access (if needed) to Vignette’s computers and software programs (via communications and on-site, as appropriate) and a dedicated test environment therein for Virtusa developmental use. Arrangements will be made for all Virtusa resources to have after hours access if required. Vignette will also provide an adequate work environment for all on-site Virtusa resources, including adequate work spaces with phone access, internet access for business use, and access to Virtusa networks via Virtusa’s VPN.

4. Vignette will promptly provide any appropriate loaned hardware and software that are identified to be loaned, on a no-charge basis; such loan to continue so long as Virtusa has any development or maintenance responsibilities under the MSA and/or a Work Order. Vignette, at its sole cost and expense, shall be responsible for maintenance of the loaned property due to reasonable wear and tear and for maintenance and support, and any shipping, installation and de-installation charges. Virtusa will be responsible for damage or loss other than due to reasonable wear and tear.

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Appendix B: Standard Hardware and Software Policy

APPENDIX B: STANDARD HARDWARE AND SOFTWARE POLICY

The following section highlights Virtusa’s standard hardware and software allocation policy. Depending upon the configuration and technology stack needs for each of Vignette projects, additional software and/or hardware may be needed.

This policy governs the allocation of hardware and software to each full time, billable Virtusa employee engaged on a services engagement with a client pursuant to a work order or signed agreement between the parties (a “Work Order”) and encompasses allocation of hardware and software to clients, all as set forth below. Each reference to standard hardware or standard software in this document is based on the tables below.

Hardware Allocation Policy

• Each full time, billable Virtusa employee engaged under a Work Order will be allocated a standard System to perform his/her work. Each type of standard System is set forth in the table below.

• As part of the infrastructure fee, Virtusa will provide one additional standard System (Hardware and Software) for every [*] full time, billable Virtusa employees engaged by the client. For example, if a client has engaged [*] full-time, billable Virtusa employees under any Work Order or group of Work Order in the aggregate, then Virtusa will allocate [*] standard Systems.

• If requested by client under the applicable Work Order or otherwise in writing, Virtusa will provide additional standard Systems to the client at a charge of $[*] per month per System.

• If requested by client under the applicable Work Order or otherwise in writing, Virtusa will provide additional non-standard Systems (i.e. other than the standard Systems) with a cost of $[*] or below per non-standard System at a charge of $[*] per month per non-standard System.

• The client will be responsible for providing all additional non-standard Systems costing more than $[*] per non-standard System.

• If the client prefers to buy any additional standard System and requests to purchase in the applicable Work Order or otherwise in writing, then Virtusa will bill the client for all shipping charges to and from the client’s site. In addition, the client will be responsible for paying all related and applicable taxes and insurance charges.

• Virtusa will only ship Systems to its offshore facilities, whether purchased by Virtusa or the client, if the manufacturer or an associated agent provides local technical support. Virtusa is not responsible for technical support with respect to such Systems.

• If a client wishes to ship its own hardware to an offshore facility, the client shall test and securely package the hardware in preparation for shipment.

• If additional Systems are not in inventory, then the lead-time to acquire UNIX Systems is approximately 4 weeks. The lead-time to acquire Windows based Systems is approximately 3 weeks.

• Payment for all invoices shall be 30 days from invoice date, unless otherwise stated in the applicable master services agreement or applicable work order.

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Appendix B: Standard Hardware and Software Policy

Standard Hardware

The table below lists the standard Systems provided by Virtusa.

Standard System Type	a. Standard Configuration
Laptop	P4 Processor with 512 MB RAM and minimum 18 GB HDD
Desktop	P4 Processor with 512 MB RAM and minimum 18 GB HDD
Sun Workstation	Model Ultra 10 with 512 MB RAM and minimum 18 GB HDD
IBM RS 6000	Model 150 with 512 MB RAM and minimum 18 GB HDD
HPUX Workstation (B2000)	Model B2000 with 512 MB RAM and minimum 18 GB HDD

Software Allocation Policy

• Standard software (as set forth in the table below) will be provided by Virtusa (limited in amounts to per System provided) and, if required, will be installed on all Systems managed and controlled by Virtusa.

• The client is responsible for providing Virtusa with all non-standard software and licenses

• Virtusa will not purchase software that is to be owned by the customer due to copyright restrictions.

• The client will be responsible for providing all software to be loaded on systems owned by the client.

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Appendix B: Standard Hardware and Software Policy

Standard Software

• The table below lists the standard software provided by Virtusa.

Software Type	Software
Operating System	•      All Microsoft Windows Operating Systems
Office Applications	•      MS Project •      MS Visio •      MS Office
Development Tools	•      MS Visual Studio •      Eclipse •      Netbeans •      Lotus Notes R5 Domino Server •      Visual Build
Application Servers	•      WebSphere •      Weblogic •      TomCat •      IPlanet
Web Servers	•      IIS •      Apache •      Cold Fusion
Database Software	•      Oracle •      MS SQL •      IBM DB2 •      MS Access •      ER/Win Studio
Creative Design	•      Illustrator •      Photoshop •      Quark Xpress •      Dreamweaver •      Premiere •      Flash •      Freehand
Architectural Design/Process	•      Rational Rose Enterprise •      RUP •      TogetherSoft Control Center
QA Tools	•      Segue SilkTest •      Segue Silk Performer (1,000 Virtual Users – All Protocols) •      Mercury WinRunner •      Mercury LoadRunner (1,000 Virtual Users – HTTP, Oracle, Java Protocols) •      Mercury Oracle Monitor •      Mercury SQL Monitor •      Mercury WebLogic Monitor •      Mercury Websphere Monitor

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Appendix C: Security Policies

APPENDIX C: SECURITY POLICIES

Virtusa is committed to provide the highest level of Information Security to its clients by establishing a process where in these aspects are taken into account appropriately and without fail.

As part of its on-going initiatives to create and maintain processes that ensure adequate Information security & Business Continuity in the organization, Virtusa working closely with PricewaterhouseCoopers has established and will comply with the following.

Policy Framework

POLICY AREA	COVERAGE
•      Organization wide Information Systems Security Policy based on international security standards such as COBIT / BS 7799 standards / Gramm-Leach-Bliley Act of USA / Patriot Act of USA (See Appendix B)	•      Asset Classification and Control •      Physical and Environmental Security •      Personnel Security •      Computing Environment Management •      Logical Access Controls •      Network Security •      Internet Security •      Change and Problem Management •      Business Continuity Planning •      Compliance •      Third Party and Outsourcing Services
•      Comprehensive Business Continuity Plan addressing different levels of failure scenarios and event handling strategies (See Appendix C)	•      Risk Assessment – Health Check / Threat Analysis •      Business Impact Analysis – Threat & Impact Prioritization / Recovery Time Objectives •      Recovery Strategies – Recovery resources / strategies / cost-benefit analysis. •      Continuity Plan – Team Structure / Team Procedures •      Plan Testing & Maintenance

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Appendix C: Security Policies

Introduction to Information Systems Security Policy

The overall objective of Virtusa’s “Information Systems Security Policy” is to provide guidance and direction to Virtusa for the protection of its information systems against accidental or deliberate damage or destruction.

The Information System Security Policy provides the framework to ensure the protection of Virtusa’s information assets, and to allow the use, access and disclosure of such information in accordance with appropriate standards, laws and regulations. Virtusa’s security policies and standards have been established to cover information, data, software, hardware and networks used by Virtusa.

This security policy applies to any person (Directors, Management Team, officers, system administrators, users, contractors, consultants and third parties) who access information using Virtusa’s information systems.

In line with the guidelines made as part of the security policy, Virtusa has deployed several key security components and processes to enable secure management of the operating environment. Following are few key security implementation areas addressed at Virtusa as part of its on-going security and continuity initiatives.

Security Infrastructure

• Access Cards

• Digital Tokens

• Firewalls

• Network Intrusion Detection System

• Host Intrusion Detection System

• VPN

• Active Directory

• Cisco ACS [Authentication Server]

• Closed Circuit TVs

• Content Filtering & Linguistic Monitoring Software [Vericept]

• Security Personnel monitoring the facilities on a 24X7 basis.

Physical Security

Virtusa’s offshore facilities are managed and controlled by multi level manual and electronic security systems. All authorized personnel access the facility using electronic access cards. All visitors are barred beyond certain limits in the premises and are screened by guards at entry and exit.

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Appendix C: Security Policies

• Located out of a dedicated facilities with controlled and restricted entry access only to Virtusa authorized Personnel, vendors & contractors

• Swipe card authentication with different levels of access is deployed at the entry points to the facility, the Data Center housing critical information system facilities and the client specific development facilities.

• Signs indicating “Authorized Personnel Only” or a similar message are prominently posted at all entrances to all Computer and Communication rooms and the Data Center and the client specific development facilities.

• All computer or communication rooms are located in an area unlikely to experience natural disasters, serious man-made accidents, and related problems.

• Periodic review of reports on the Swipe Card Authentication / CCTV Tapes / Verification of visitor logs, etc.

• Security Personnel outsourced from a leading security agency who man the Virtusa facility and the Data Center on a 24X7 basis.

• The facility and the Data Center are monitored 24 hours a day through CCTVs and security personnel people manning the facility.

• Responsibilities of security personnel include monitoring of CCTVs, visitor verification, frisking, verification of Electronic Media, laptop computers, and other material brought into and out of the Facility, maintaining and monitoring of visitors entry and exit logs, escorting visitors, etc.

• Physical proximity to facilities such as airport, police station, fire station, etc.

Network and Internet Security

• Network Security Infrastructure

• Virtusa’s network, both externally & internally is fortified using a combination of latest security infrastructure which includes components such as the Cisco PIX Firewalls, Host & Network Intrusion Detection Systems, Digital Tokens for two factor authentication, VPN Concentrator, Encrypted Data Transmission (3DES, 128 bit SSL), Content Filtering & Monitoring Software, etc.

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Appendix C: Security Policies

• Secure Configuration

• All the network components such as the Routers, Switches, Firewalls, Intrusion Detection Systems, etc., are configured in a manner that they are in line with the security policies as defined by Virtusa. Further, audits are conducted on a quarterly basis to review and ensure that all security procedures and controls are in conformance with the security policy.

• Client Specific Segments

• Data networks are divided into several client specific segments by deploying Access Controls on firewalls, switches, routers in a manner to create client specific Demilitarized Zones accessible only to the authorized client personnel.

• Remote Access Security

• All remote connections including customers connections are enabled only through the use of Cisco PIX Firewalls and VPN Concentrators , where in the data transmission is encrypted (3DES, 128 bit SSL) for un-trusted/public networks

• All remote users are provided access through a valid user Id, password and Digital Tokens (RSA SecurID) for two-factor and encrypted authentication.

• Content Filtering

• Virtusa has deployed the latest content filtering software that ensures that only the designated websites are accessible by the organizational employees, which is kept updated on a regular basis.

Intrusion Detection

• Intrusion Detection is enabled at both the network and as well as the host level to monitor and log any unauthorized activity.

• Host-based intrusion detection systems (Symantec) have been implemented on client servers. Several critical servers such as the PDC, FTP Server, Mail Server, Star Team Server, etc., are being monitored

• A Cisco IDS has been implemented to monitor Virtusa’s networks with detailed policies and procedures to maintain and monitor the output of IDS.

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Appendix C: Security Policies

• Electronic logs are created for access to the application and the networks through the Host based Intrusion detection system and the network based intrusion detection system, which are monitored on a daily basis.

• All instances of suspicious activity and/or confirmed intrusions are documented based on which the response activities are directed to mitigate the vulnerabilities if any.

Client Confidentiality and Data Protection

• Access to any client specific test data is provided only to authorized users using physically as well as logical segregation of resources by deploying Security infrastructure such as Access Cards, Digital Tokens, Network and user segregation, etc.

• To minimize the risk of any unintended / unwanted modification to client data, files or system environments, which development and testing activities may cause, the development and the client operational facilities are completely segregated.

Anti-Virus Administration Procedures

• Virtusa currently has deployed the Active Virus Defense Suite, a complete Anti Virus solution from MacAfee covering the workstations, servers, internet gateways, etc., and has an agreement with the vendor to supply the latest anti-virus updates. Further Virtusa developed the following anti-virus procedures that are followed stringently

• Latest version of anti-virus is installed on all workstations, laptops and servers. The anti-virus software is kept current by obtaining the latest updates from the anti-virus vendor.

• The anti virus software is distributed promptly and automatically through auto updates to all the systems in the organization.

• Auto scan is enabled on all the servers, end-user systems to be scanned daily for viruses, as part of the boot-up process.

• Anti-virus software is enabled to scan automatically on all network file servers on a daily basis.

• All removable electronic media and disks are scanned before use.

• Floppy & CD-ROM drives at user level are disabled.

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Appendix C: Security Policies

• All information or files down-loaded from the internet onto a workstation and all mail attachments are scanned for viruses before being downloaded into the corporate network.

• Any electronic information being brought into Virtusa’s IT environment e.g. diskettes, tapes etc. will be scanned on an isolated workstation, prior to use.

• As a policy any disks containing unauthorized data and programs from outside the organization are not permitted to be used on Virtusa’s PCs e.g. games, etc.

• If a virus attack is suspected, the suspect diskettes or personal computer will be isolated from the network. These then are scanned thoroughly and cleaned before being brought back into the corporate network.

Password Management

• Virtusa has developed and implemented the following password policies.

• Users select their own passwords

• Minimum Length is 8 Characters / Content: Alphanumeric with at least one special character / Historical Retention: 8 Passwords.

• Passwords are forced to expire every 42 days.

• User accounts are locked after 5 incorrect password attempts

• Passwords are stored in an encrypted manner.

• In case of account lockout, user upon approval from the functional head requests the IT helpdesk for password reset.

• Complex passwords for administrative purposes.

• Administrative and critical passwords securely stored in sealed envelopes with Key Personnel of the organization.

Employee Identify Information

• The Virtusa Human Resources [HR] department subjects all employees to pre-employment screening, which will include background investigations as follows:

• Availability of satisfactory character references

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Appendix C: Security Policies

• Criminal Record Verification with the local police authorities, etc.

• Independent identity check (passport or similar document)

• A check (for completeness and accuracy) of the applicant’s curriculum vitae

• Confirmation of claimed academic and professional qualifications

• Execution of standard form confidentiality and non-assignment of inventions agreement

User Access Rights

• User access to information resources is based on role / responsibility / need to know basis for different categories of personnel at Virtusa.

• Personnel categorized on following criteria.

• Based on the designations—Delivery Unit Heads, Project Managers, Team Leaders, Team Members, etc.,

• Based on the Functional Departments—Delivery, IT, HR, Finance, Administration, etc.

• Based on the relation with the organization—Permanent Employee, Contractual Employee, Vendor, Supplier, etc.

• The user access rights are reviewed for any changes as a result of resignation, termination, transfer or promotion

• There is a one-to-one relationship between user Ids and individuals / Access to computing resources (e.g., files, applications, and databases) via shared User Ids is strictly prohibited

• User Ids will follow a standard naming convention for all computer systems to facilitate user identification.

• “Guest” accounts or features (where applicable) are disabled

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Appendix C: Security Policies

Logging and Monitoring

• Incidents such as Illegal access to a system, Deliberate denial of service, breaches of confidentiality are identified “on-line” and on a proactive basis through appropriate and tamper proof logging mechanisms which have been created at several levels including the application, database, operating system and network levels.

• All access violation attempts on all critical systems are logged and reviewed on a daily basis.

• Use of sensitive utilities is logged in “tamper-proof” logs for review.

• Live programs and data is subject to strict change control and when programs are changed, an audit log containing all relevant information is retained.

• Electronic logs are created for access to the applications and the networks through the Host based Intrusion detection system and the network based intrusion detection system, which are monitored on a daily basis.

• Audit logs are accumulated for one week and then archived. The archive backups will be stored for at least six months. The archived backups are moved to a safe location for storage.

Incident Management Procedures

• Virtusa’s incident management procedures cover:

• Escalation and reporting of the security incidents based on the criticality and severity to Security Administrator / Risk Manager.

• Analysis and identification of the cause of the incident;

• Planning and implementation of remedies to prevent recurrence;

• Collection of audit trails and similar evidence.

• All access violation attempts on all critical systems that are logged are reviewed on a daily basis by the Systems Security Administrator and reported to Head Risk Management or the Head of the Department where appropriate so that action plans can be initiated to prevent their recurrence.

Data Classification and Media Handling

• As part of the security policy developed for the organization, all the information assets are classified into RESTRICTED, CONFIDENTIAL, INTERNAL, and PUBLIC, to indicate the need, priorities and degree of protection required for that information.

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Appendix C: Security Policies

• Media containing sensitive information (Restricted, Confidential and Internal) are disposed of securely and safely when it is no longer required e.g. by incineration or shredding or by securely deleting.

• System documentation is secured and physically protected in fireproof safes.

• Electronic / Paper based and other media is disposed of securely and safely when no longer required

• The previous contents of any re-usable media that are to be removed from the Virtusa’s premise will be erased in such a way so that it cannot be recovered. Such disposals will be authorized by the Head of Delivery, or the Head Risk Management.

• In case of damaged storage devices (e.g. hard disks) containing sensitive data based on a risk assessment, it is determined if the items will be destroyed, repaired or discarded.

• When accumulating media for disposal, consideration is be given to the aggregation effect, which may cause a large quantity of unclassified information to become more sensitive than a small quantity of classified information

Clear Desk Policy

Virtusa adopts a clear desk policy:

• Computer terminals and printers will not be left logged on, when unattended.

• Power-on and screensaver passwords are used to protect them when not in use

• Simultaneous sessions for a user are not allowed

• Auto logoff of the computer after 15 minutes of inactivity

External Audits

Virtusa as part of its on-going security initiatives has outsourced the function of performing network vulnerability assessment and diagnostic study to Network Security Systems (“NSS”). The mandate for NSS covers the audit and vulnerability assessment of entire Virtusa network and its components including components such as routers, firewalls, Intrusion Detection Systems, switches, servers, operating systems, databases, etc.

NSS has submitted a detailed report to Virtusa highlighting the vulnerability description, risk rating, and detailed implementation recommendations. These recommendations were fully addressed by Virtusa with support from NSS.

Further Virtusa has employed NSS to conduct security audits on a half-yearly basis to ensure that the systems put in place remain effective to maintain the security and privacy of client data.

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Appendix D: Business Continuity Plan

APPENDIX D: BUSINESS CONTINUITY PLAN (DISASTER RECOVERY PLAN)

The Virtusa Business Continuity Plan created in collaboration with NSS dated as of December 2004 (the “Current Business Continuity Plan”) is hereby incorporated herein by reference and has been delivered to Vignette. During the term of this MSA, Virtusa will comply with the Current Business Continuity Plan and any Updated Business Continuity Plan that is permitted as set forth below. The parties agree that Virtusa may update the Current Business Continuity Plan from time to time (the “Updated Business Continuity Plan”) provided (a) a new version whenever there are material changes, but in any event, no less frequently than quarterly (within 10 business days of the end of each quarter), but only if any changes are made thereto in the preceding quarterly period is provided to Vignette and such version is certified in writing (including email) by Virtusa as being the new version is provided to Vignette Legal (b) material changes from one version to the other are highlighted for Vignette, and (c) any new version is no less protective of Vignette and Virtusa then as stated in the Current Business Continuity Plan referenced above. Vignette has the right to object to any change reflected in the Updated Business Continuity Plan that it reasonably believes makes the Updated Business Continuity Plan less protective than the Current Business Continuity Plan, and the parties will work together in good faith to determine the appropriate course of action.

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Appendix E: Sample Work Order

APPENDIX E: SAMPLE WORK ORDER

See Appendix A to the MSA.

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Appendix F: Team Staffing, Staff Removals, Rehires

APPENDIX F: TEAM STAFFING, STAFF REMOVALS, REHIRES

1.1 Intentionally Deleted

1.2 [*]

1.3 [*]

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Appendix G: Vignette Travel Policy

APPENDIX G: VIGNETTE TRAVEL POLICY

1. Air Travel Guidelines

1.1 All employees must utilize the lowest available airfare available within the reasonable travel window required, regardless of airline preference or mileage program preference. Wherever possible, reservations must be finalized at least seven (7) days in advance of departure. In general, a “reasonable” travel window is a two (2) hour window to accommodate your plans. The two (2) hour window means utilizing the lowest available fare with departure from origination or arrival at destination not more than two (2) hours earlier than ideal and may not arrive back to origination no more than two (2) hours later than ideal.

1.2 Airport parking and/or taxi expenses incurred in conjunction with travel will be reimbursed.

1.3 Additional expenses associated with Saturday night stay overs (e.g., hotels, meals, etc.) for non-business reasons are not reimbursed, even if booking a flight with a Saturday stay over results in lower airfare.

2. Hotel Accommodation Guidelines

2.1 Vignette has negotiated contracts with hotel properties within destinations that have high volume travelers. Unless business requirements determine the need for a different location, employees should use these hotels when rooms are available. A listing of contract properties is currently in development and the initial listing is identified below, along with maximum hotel rates (“city rate”) for major cities in the USA. Employees may stay in hotels where they are attending conferences if the rates are the same or lower than the city rate.

2.2 Business related lodging expenses including single room charges and reasonable gratuities are acceptable costs that will be reimbursed. Hotel rooms should be guaranteed for late arrival. The traveler is responsible for canceling any unnecessary rooms or reservations. Cancellation charges incurred, including “no shows”, will require justification in order to be reimbursed.

2.3 Staying with Family/Friends - a traveler may choose to stay with a friend or relative instead of at a hotel. In this situation, a gift or meal of up to $25 per day may be provided for each stay up to one-week in length.

2.4 Laundry services are reimbursable if the length of stay is four (4) or more consecutive nights. This does not include laundry charges incurred back at your home location (such as charging laundry costs when returning from a trip).

2.5 In-room movies, spa, hotel valet parking (if self parking is available at hotel), and alcohol charges will not be reimbursed.

3. Ground Transportation

3.1 Car Rental Guidelines

(i) A rental car should be used only when it is the most economical means of ground transportation or if it is necessary to accomplish business objectives. Mid-size cars should be rented unless the number of individuals sharing the car or job requirements determines that a larger car is needed.

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Appendix G: Vignette Travel Policy

(ii) The use of Hertz local edition sites is recommended to reduce rental car costs. By using these “off airport” locations, you can eliminate airport taxes, fees and delivery of cars can be made to a near by hotel. Also, airport drop off is allowed without additional costs or fees.

(iii) Rental cars should be refueled prior to return to agency to avoid excessive charges for refueling.

3.2 Tolls, parking fees, cab fares related to business travel are eligible for reimbursement. When available, original receipts are required for miscellaneous expenses incurred while renting a car.

3.3 No limousine or driver services are available for VIGNETTE or Client office to/from airport or home to/from airport travel.

3.4 Train and rail charges are also reimbursable for VIGNETTE business travel.

4. Personal Cars

4.1 Employees are reimbursed for the use of their personal vehicle at a flat rate of $0.375 per mile. Mileage to and from work is not reimbursable. For the “first stop of the day”, only mileage in excess of the normal mileage traveled to work is reimbursable.

4.2 Airport parking expenses related to business travel are reimbursable. Employees should use the long term parking facilities if trips are longer than a couple of days.

5. Meals

5.1 Employees will be reimbursed for actual and reasonable costs incurred for out-of-town meals while traveling related to company business.

5.2 Reasonable increases to meal costs will be allowed for certain cities that generally have higher living costs associated with traveling to the area (i.e. New York City, San Francisco).

6. PREFERRED HOTEL PROPERTIES IN USA

THIS IS AN INITIAL LISTING BASED ON VOLUME OF VIGNETTE STAYS, LOWER AVERAGE RATE COSTS ONLY. THE PROPERTIES WILL BE REVIEWED AND UPDATED REGULARLY. AS VIGNETTE OFFICES ARE OPENED, HOTELS NEAR THE OFFICE WILL BE CONTACTED FOR NEGOTIATIONS AND WILL BE ADDED ACCORDINGLY.

The following hotel properties have been identified as VIGNETTE preferred, this list will be continually reviewed and updated as volumes change and rates are negotiated. The city rate in parentheses is the nightly room rate that should not be exceeded in order to support reimbursements.

ATLANTA, GEORGIA (city rate - $130)

Courtyard Midtown

Ramada Inn Peachtree Norcross

Fairfield Inn - Alpharetta

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Appendix G: Vignette Travel Policy

AUSTIN, TEXAS (city rate - $140)
Stephen F. Austin Intercontinental (primary hotel)
Radisson Town Lake
The Omni
BOSTON, MASSACHUSETTS (city rate - $200)
Omni Parker House (Downtown) - $197
Westin Waltham (Waltham city rate - $170)
Homestead Village Waltham
CHARLOTTE, NORTH CAROLINA (city rate - $125)
Hyatt Charlotte
Candlewood Suites University
Hilton at University Place
CHICAGO, IL (city rate - $200)
Radisson O’Hare (Airport)	Amerisuites (Warrenville)
Hilton Garden Suites	Radisson Country Inn and Suites
(Downtown)	(Warrenville)
Hilton Palmer House
DALLAS, TEXAS (city rate - $150)
DoubleTree Club (Galleria)	Radisson Country Inn and Suites
Crowne Plaza (Galleria)	Hilton Garden (Las Colinas)
Hilton Garden (Addison)	Amerisuites (Las Colinas)
Wyndham Summerfield Suites	Homewood Suites
DENVER, COLORADO (city rate - $175)
Courtyard Downtown
Embassy Suites Downtown
Marriott
HOUSTON, TEXAS (city rate - $150)
Residence Inn	Wyndham Greenspoint
Courtyard - Marriott	Crowne Plaza Galleria
Holiday Inn Express HWY 249
Willowbrook (Compaq)
KANSAS CITY, MISSOURI (city rate - $140)
Marriott
Hilton
Courtyard - Marriott
KNOXVILLE, TENNESSEE (city rate - $125)
Radisson
Hilton
Hyatt Regency

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Appendix G: Vignette Travel Policy

LOS ANGELES, CALIFORNIA (city rate - $200)
Radisson	The Westin LAX Airport
Santa Monica Beach	Beverly Garland Universal City
MINNEAPOLIS, MINNESOTA (city rate - $160)
Marriott	Courtyard – Marriott
Residence Inn	Doubletree
NEWARK, NEW JERSEY (city rate - $190)
Wyndham Summerfield Suites	Courtyard – Marriott
(Morristown)	(Parsippany)
Westin (Morristown)	Doubletree (Somerset)

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NEW YORK CITY, NEW YORK (city rate - $250)

Many options are available in various parts of the city. VTS can provide options based on our location requirements.

Roger Williams (Mid-town) primary for Manhattan and VIGNETTE NYC office

Wyndham LaGuardia (Airport)

Hudson (Manhattan)

Crowne Plaza (Manhattan)

Holiday Inn Downtown

ORANGE COUNTY, CALIFORNIA (city rate - $150)
Radisson	Sheraton Newport Beach Hotel
Courtyard - Marriott	Embassy Suites Santa Ana
DoubleTree Santa Ana Hutton Centre	Airport
PHOENIX, ARIZONA (city rate - $150)
Hilton	Homestead Metro Hotel
Embassy Suites	Residence Inn Scottsdale
Courtyard - Marriott	Mainstay Suites Tempe
SAN FRANCISCO, CALIFORNIA (city rate - $225)
Hilton Garden Airport North (SFO Airport)	Triton Hotel
Radisson Airport (SFO Airport)	Hilton Union Square (Downtown)
SAN JOSE, CALIFORNIA (city rate - $200)
Radisson Inn - Milpitas
Quality Inn
De Anza Hotel – downtown San Jose
SEATTLE, WASHINGTON (city rate - $170)
Bellevue Inn	Madison Renaissance Hotel
DoubleTree Seattle Airport	Omni Seattle
WASHINGTON, D.C. (city rate - $200)
Sheraton Reston (Reston, VA)
Residence Inn Reston
Courtyard Reston

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APPENDIX H: RESOURCE ROLE DESCRIPTIONS

The following section provides Virtusa’s standard roles, responsibilities and qualifications for key personnel being proposed for the GDC. These are provided to Vignette for visibility and comparison to Vignette’s internal role definitions.

Virtusa Role Career Progression

Virtusa has defined career progression road maps for each expertise (i.e., Project Management, Software QA, Architecture & Technical Engineering, Business Analysis and User Interface Engineering). Every individual is a member of his/her Competency Excellence Group (CEG). The following table illustrates the career progression for project management, engineering and quality assurance.

Project Management, Engineering and QA Career Path

Engineering Project Management Track	Engineering Track	QA Track
Program Manager	Senior Software Architect	Senior QA Analyst	Senior QA Manager
Senior Project Manager	Software Architect	QA Analyst	QA Manager
Project Manager	Associate Software Architect	Associate QA Analyst	Associate QA Manager
Associate Project Manager	Technical Lead	QA Lead
Team Lead	Senior Software Engineer	QA Engineer
	Software Engineer	Associate QA Engineer
	Associate Software Engineer

Each position has a defined set of roles and responsibilities. The Virtusa defined roles and responsibilities are in the “Virtusa Standard” column of each profile table. The Vignette Standard column represents equivalent roles from the Vignette HR job descriptions.

[*][*]

[*]

[*]

[*]

[*]

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Attachment 2

Minimum Term shall mean thirty-six (36) months from the Effective Date.

Minimum Team Commitment shall mean [*] Virtusa GDC resources.

Minimum Termination Fee shall mean $[*].

Effective Termination Date shall mean the date the Agreement is actually deemed terminated without regard to any notice provision.

For the avoidance of doubt, any Minimum Termination Fee or other Termination for Convenience Fee payable hereunder is in addition to the fees which Virtusa will bill to Vignette (and which Vignette is obligated to pay) during the 180 day notice period based on the Minimum Team Commitment or actual GDC billable resources, whichever is higher, as described herein.

The Termination For Convenience Fee due and payable by Vignette under Section 8.1(B) and (E) of the Agreement is as follows:

1) If termination is pursuant to Section 8.1B (Termination for Convenience) and the Effective Termination Date is prior to the end of the Minimum Term, the Termination For Convenience Fee is the greater of (i) [*]% of all remaining Vignette payment obligations solely for the GDC Resources (WORK ORDER Number 1) (starting from the Effective Termination Date through the end of the Minimum Term based on the latest team size of GDC employees being paid for by Vignette at the time notice of termination is provided to Virtusa (or Vignette if under Section 10.4(a)) or Minimum Team Commitment, whichever is higher, and the applicable daily rate which would be in effect during the remaining Minimum Term or (ii) the Minimum Termination Fee. Subject to the initial and continued compliance of Vignette during the Transfer Right Term of the payment terms set forth below with respect to the Termination For Convenience Fee, the Termination For Convenience Fee grants Vignette the right to terminate the Agreement at its convenience prior to the end of the Minimum Term and grants to Vignette the Transfer Right. See the example in the table below.

2) If termination is pursuant to Section 8.1B (Termination for Convenience) and the Effective Termination Date is on or after the end of the Minimum Term, the Termination For Convenience Fee is the Minimum Termination Fee. Vignette will be obligated to pay such Termination For Convenience Fee only if Vignette wishes, at its sole discretion, to obtain the Transfer Right (as described in Section 10.4a). If Vignette wishes to obtain the Transfer Right, Vignette will notify Virtusa in writing at least 180 days prior to the Effective Termination Date. Failure of Vignette to notify Virtusa in writing within such 180 day period shall mean that Vignette does not wish to obtain the Transfer Right, and no Termination For Convenience Fee is owed by, nor is any Transfer Right granted to, Vignette. At any time during the 180 day period, Vignette may, at its sole discretion, choose to obtain the Transfer Right and pay the Termination for Convenience Fee; however, such election will not have the effect of extending the Transfer Right Term which will be deemed to have started at the beginning of the 180 day period.

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Notwithstanding anything to the contrary, to the extent any Termination for Convenience Fee or Minimum Termination Fee is due or payable hereunder, Vignette’s initial and continued right to the Transfer Right, as applicable, is expressly conditional on Vignette satisfying the below listed payment obligations in the periods set forth below (and the Transfer Right will be suspended during any period of any non-compliance). Vignette’s obligation to pay the Termination for Convenience Fee or the Virtusa Change of Control Fee is expressly conditional on Virtusa satisfying its obligations under the Agreement including, without limitation, Section 8.2, and Virtusa not taking any action, directly or indirectly, to discourage Virtusa GDC Resources from becoming Vignette employees including without limitation, making disparaging remarks about Vignette or proposing counteroffers to such GDC Resources to attempt to maintain such employees as Virtusa employees.

Date payment must be received by Virtusa:	Amount and Timing of Payment
With Vignette’s Notice of Termination/Transfer Right Election	33% of Termination for Convenience Fee or Minimum Commitment Fee, whichever is applicable
The first day of each month thereafter for the six months immediately following the Notice of Termination	50% of Termination for Convenience Fee or Minimum Commitment Fee, whichever is applicable, divided pro-rata on a monthly basis over the six month period
The first day of each month starting at the beginning of month seven immediately following the Notice of Termination and for the three months thereafter	17% of Termination for Convenience Fee or Minimum Commitment Fee, whichever is applicable, divided pro-rata on a monthly basis over the three month period

Note: The Virtusa Change of Control Fee will be payable in the same Amount and Timing of Payment as the Termination for Convenience Fee or Minimum Commitment Fee, whichever is applicable, in the table above.

An example of the applicable Termination For Convenience Fee is set forth below for illustrative purposes only: Example uses a team size of [*] even though the Minimum Team Commitment is [*] and an average daily rate of $[*] even thought the initial average daily rate is $[*].

[*]

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EX-10.24

EXHIBIT 10.24

VIGNETTE CORPORATION

EMPLOYEE STOCK PURCHASE PLAN

(AS AMENDED JANUARY 26, 2001; OCTOBER 31, 2001;

MARCH 20, 2002; AND DECEMBER 27, 2005)

TABLE OF CONTENTS

	Page
SECTION 1. PURPOSE OF THE PLAN	1
SECTION 2. ADMINISTRATION OF THE PLAN	1
(a) Committee Composition	1
(b) Committee Responsibilities	1
SECTION 3. ENROLLMENT AND PARTICIPATION	1
(a) Offering Periods	1
(b) Contribution Periods	1
(c) Enrollment	2
(d) Duration of Participation	2
(e) Applicable Offering Period	2
SECTION 4. EMPLOYEE CONTRIBUTIONS	2
(a) Frequency of Payroll Deductions	2
(b) Amount of Payroll Deductions	3
(c) Changing Withholding Rate	3
(d) Discontinuing Payroll Deductions	3
(e) Limit on Number of Elections	3
SECTION 5. WITHDRAWAL FROM THE PLAN	3
(a) Withdrawal	3
(b) Re-Enrollment After Withdrawal	4
SECTION 6. CHANGE IN EMPLOYMENT STATUS	4
(a) Termination of Employment	4
(b) Leave of Absence	4
(c) Death	4
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES	4
(a) Plan Accounts	4
(b) Purchase Price	4
(c) Number of Shares Purchased	5
(d) Available Shares Insufficient	5
(e) Issuance of Common Stock	5
(f) Unused Cash Balances	5
(g) Stockholder Approval	5
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP	5
(a) Five Percent Limit	5
(b) Dollar Limit	6

i

SECTION 9. RIGHTS NOT TRANSFERABLE	7
SECTION 10. NO RIGHTS AS AN EMPLOYEE	7
SECTION 11. NO RIGHTS AS A STOCKHOLDER	7
SECTION 12. SECURITIES LAW REQUIREMENTS.	7
SECTION 13. STOCK OFFERED UNDER THE PLAN	8
(a) Authorized Shares	8
(b) Anti-Dilution Adjustments	8
(c) Reorganizations	8
SECTION 14. AMENDMENT OR DISCONTINUANCE	8
SECTION 15. DEFINITIONS	9
(a) Board	9
(b) Code	9
(c) Committee	9
(d) Common Stock	9
(e) Contribution Period	9
(f) Corporation	9
(g) Compensation	9
(h) Corporate Reorganization	9
(i) Eligible Employee	10
(j) Exchange Act	10
(k) Fair Market Value	10
(l) IPO	10
(m) Offering Period	10
(n) Participant	10
(o) Participating Corporation	10
(p) Plan	10
(q) Plan Account	11
(r) Purchase Price	11
(s) Subsidiary	11

ii

VIGNETTE CORPORATION

EMPLOYEE STOCK PURCHASE PLAN

SECTION 1. PURPOSE OF THE PLAN.

The Plan was adopted by the Board on September 9, 1998, to be effective as of the date of the IPO, and was amended on January 26, 2001, October 31, 2001, March 20, 2002, and December 27, 2005. The purpose of the Plan is to provide Eligible Employees with an opportunity to increase their proprietary interest in the success of the Corporation by purchasing Common Stock from the Corporation on favorable terms and to pay for such purchases through payroll deductions. The Plan is intended to qualify under Section 423 of the Code.

SECTION 2. ADMINISTRATION OF THE PLAN.

(a) Committee Composition. The Plan shall be administered by the Committee. The Committee shall consist exclusively of one or more directors of the Corporation, who shall be appointed by the Board.

(b) Committee Responsibilities. The Committee shall interpret the Plan and make all other policy decisions relating to the operation of the Plan. The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons.

SECTION 3. ENROLLMENT AND PARTICIPATION.

(a) Offering Periods. While the Plan is in effect, two overlapping Offering Periods shall commence in each calendar year. Beginning at the IPO, the Offering Periods shall consist of the 24-month periods commencing on each February 25 and August 25, except that the first Offering Period shall commence on the date of the IPO and end on February 24, 2001. Beginning February 25, 2001, the Offering Periods shall commence on each February 1 and August 1; the Offering Period beginning February 25, 2001 shall end on January 31, 2003. Beginning February 1, 2006, the Offering Periods shall consist of the 12-month periods commencing on each February 1 and August 1.

(b) Contribution Periods. While the Plan is in effect, two Contribution Periods shall commence in each calendar year. Beginning at the IPO, the Contribution Periods shall consist of the six-month periods commencing on each February 25 and August 25, except that the first Contribution Period shall commence on the date of the IPO and end on August 24, 1999. Beginning February 25, 2001, the Contribution Periods shall commence on each February 1 and August 1; the period beginning February 25, 2001 shall end on July 31, 2001.

(c) Enrollment. Any individual who, on the day prior to the first day of an Offering Period, qualifies as an Eligible Employee may elect to become a Participant in the Plan for such Offering Period by executing the enrollment form prescribed for this purpose by the Committee. The enrollment form shall be filed with the Corporation at the prescribed location not later than one business day prior to the commencement of such Offering Period. Each time the Participant disposes of shares acquired under the Plan, the Participant shall promptly notify the Corporation.

(d) Duration of Participation. Once enrolled in the Plan, a Participant shall continue to participate in the Plan until he or she ceases to be an Eligible Employee, withdraws from the Plan under Section 5(a) or reaches the end of the Contribution Period in which his or her employee contributions were discontinued under Section 4(d) or 8(b). A Participant who discontinued employee contributions under Section 4(d) or withdrew from the Plan under Section 5(a) may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Subsection (c) above. A Participant whose employee contributions were discontinued automatically under Section 8(b) shall automatically resume participation at the beginning of the earliest Contribution Period ending in the next calendar year, if he or she then is an Eligible Employee.

(e) Applicable Offering Period. For purposes of calculating the Purchase Price under Section 7(b), the applicable Offering Period shall be determined as follows:

(i) Once a Participant is enrolled in the Plan for an Offering Period, such Offering Period shall continue to apply to him or her until the earliest of (A) the end of such Offering Period, (B) the end of his or her participation under Subsection (d) above or (C) re-enrollment for a subsequent Offering Period under Paragraph (ii) or (iii) below.

(ii) In the event that the Fair Market Value of the Common Stock on the last trading day before the commencement of the Offering Period for which the Participant is enrolled is higher than on the last trading day before the commencement of any subsequent Offering Period, the Participant shall automatically be re-enrolled for such subsequent Offering Period.

(iii) Any other provision of the Plan notwithstanding, the Corporation (at its sole discretion) may determine prior to the commencement of any new Offering Period that all Participants shall be re-enrolled for such new Offering Period.

(iv) When a Participant reaches the end of an Offering Period but his or her participation is to continue, then such Participant shall automatically be re-enrolled for the Offering Period that commences immediately after the end of the prior Offering Period.

SECTION 4. EMPLOYEE CONTRIBUTIONS.

(a) Frequency of Payroll Deductions. A Participant may purchase shares of Common Stock under the Plan solely by means of payroll deductions. Payroll deductions, as designated by the Participant pursuant to Subsection (b) below, shall occur on each payday during participation in the Plan.

2

(b) Amount of Payroll Deductions. An Eligible Employee shall designate on the enrollment form the portion of his or her Compensation that he or she elects to have withheld for the purchase of Common Stock under all employee stock purchase plans maintained by the Corporation or its subsidiaries. Beginning February 1, 2006, such portion shall be a whole percentage of the Eligible Employee’s Compensation, from 1% to 15% or such lesser percentage established by the Committee from time to time.

(c) Changing Withholding Rate. If a Participant wishes to change the rate of payroll withholding, he or she may do so by filing a new enrollment form with the Corporation at the prescribed location at any time. The new withholding rate shall be effective as soon as reasonably practicable after such form has been received by the Corporation. Beginning February 1, 2006, (i) the new withholding rate shall be a whole percentage of the Eligible Employee’s Compensation, from 1% to 15%; (ii) a Participant may decrease his withholding rate during a current Contribution Period by filing a new enrollment form with the Corporation at the prescribed location; and (iii) a Participant will not be permitted to increase his withholding rate during a Contribution Period but may increase his withholding rate for the next Contribution Period by filing a new enrollment form with the Corporation at the prescribed location during the month prior to the commencement of the next Contribution Period for such Offering Period.

(d) Discontinuing Payroll Deductions. If a Participant wishes to discontinue employee contributions entirely, he or she may do so by filing a new enrollment form with the Corporation at the prescribed location at any time. Payroll withholding shall cease as soon as reasonably practicable after such form has been received by the Corporation. (In addition, employee contributions may be discontinued automatically pursuant to Section 8(b).) A Participant who has discontinued employee contributions may resume such contributions by filing a new enrollment form with the Corporation at the prescribed location. Payroll withholding shall resume as soon as reasonably practicable after such form has been received by the Corporation. Beginning February 1, 2006, any Participant who has elected to participate at a contribution rate less than 1% shall be withdrawn from the Plan in accordance with Section 5.

(e) Limit on Number of Elections. Participants may make changes to their contribution percentage under Subsection (c) or (d) above any number of times during any Contribution Period, subject to the Committee’s discretion to establish limits periodically.

SECTION 5. WITHDRAWAL FROM THE PLAN.

(a) Withdrawal. A Participant may elect to withdraw from the Plan by filing the prescribed form with the Corporation at the prescribed location at any time before the last day of a Contribution Period. Effective for Offering Periods commencing on or after February 1, 2006, a Participant will be deemed to have elected to withdraw from the Plan if the Participant elects to discontinue employee contributions entirely in accordance with Section 4(d). As soon as reasonably practicable after the Participant has elected, or has been deemed to have elected, to withdraw from the Plan, payroll deductions shall cease and the entire amount credited to the Participant’s Plan Account shall be refunded to him or her in cash, without interest. No partial withdrawals shall be permitted.

3

(b) Re-Enrollment After Withdrawal. A former Participant who has withdrawn from the Plan shall not be a Participant until he or she re-enrolls in the Plan under Section 3(c). Re-enrollment may be effective only at the commencement of an Offering Period.

SECTION 6. CHANGE IN EMPLOYMENT STATUS.

(a) Termination of Employment. Termination of employment as an Eligible Employee for any reason, including death, shall be treated as an automatic withdrawal from the Plan under Section 5(a). (A transfer from one Participating Corporation to another shall not be treated as a termination of employment.)

(b) Leave of Absence. For purposes of the Plan, employment shall not be deemed to terminate when the Participant goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Corporation in writing. Employment, however, shall be deemed to terminate 90 days after the Participant goes on a leave, unless a contract or statute guarantees his or her right to return to work. Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work.

(c) Death. In the event of the Participant’s death, the amount credited to his or her Plan Account shall be paid to a beneficiary designated by him or her for this purpose on the prescribed form or, if none, to the Participant’s estate. Such form shall be valid only if it was filed with the Corporation at the prescribed location before the Participant’s death.

SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES.

(a) Plan Accounts. The Corporation shall maintain a Plan Account on its books in the name of each Participant. Whenever an amount is deducted from the Participant’s Compensation under the Plan, such amount shall be credited to the Participant’s Plan Account. Amounts credited to Plan Accounts shall not be trust funds and may be commingled with the Corporation’s general assets and applied to general corporate purposes. No interest shall be credited to Plan Accounts.

(b) Purchase Price. The Purchase Price for each share of Common Stock purchased at the close of a Contribution Period shall be the lower of:

(i) 85% of the Fair Market Value of such share on the last trading day in such Contribution Period; or

(ii) 85% of the Fair Market Value of such share on the last trading day before the commencement of the applicable Offering Period (as determined under Section 3(e)) or, in the case of the first Offering Period under the Plan, 85% of the price at which one share of Common Stock is offered to the public in the IPO.

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(c) Number of Shares Purchased. As of the last day of each Contribution Period, each Participant shall be deemed to have elected to purchase the number of shares of Common Stock calculated in accordance with this Subsection (c), unless the Participant has previously elected to withdraw from the Plan in accordance with Section 5(a). The amount then in the Participant’s Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Corporation with the funds in the Participant’s Plan Account. The foregoing notwithstanding, no Participant shall purchase more than 200 shares of Common Stock with respect to any Contribution Period nor more than the amounts of Common Stock set forth in Sections 8(b) and 13(a). The Committee may determine with respect to all Participants that any fractional share, as calculated under this Subsection (c), shall be (i) rounded down to the next lower whole share or (ii) credited as a fractional share.

(d) Available Shares Insufficient. In the event that the aggregate number of shares that all Participants elect to purchase during a Contribution Period exceeds the maximum number of shares remaining available for issuance under Section 13(a), then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares available for issuance by a fraction, the numerator of which is the number of shares that such Participant has elected to purchase and the denominator of which is the number of shares that all Participants have elected to purchase.

(e) Issuance of Common Stock. Certificates representing the shares of Common Stock purchased by a Participant under the Plan shall be issued to him or her as soon as reasonably practicable after the close of the applicable Contribution Period, except that the Committee may determine that such shares shall be held for each Participant’s benefit by a broker designated by the Committee (unless the Participant has elected that certificates be issued to him or her). Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship or as community property. The Committee may impose such restrictions on the transfer or resale of issued shares as it may deem advisable.

(f) Unused Cash Balances. An amount remaining in the Participant’s Plan Account that represents the Purchase Price for any fractional share shall be carried over in the Participant’s Plan Account to the next Contribution Period. Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsection (c) above, Section 8(b) or Section 13(a) shall be refunded to the Participant in cash, without interest.

(g) Stockholder Approval. Any other provision of the Plan notwithstanding, no shares of Common Stock shall be purchased under the Plan unless and until the Corporation’s stockholders have approved the adoption of the Plan.

SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.

(a) Five Percent Limit. Any other provision of the Plan notwithstanding, no Participant shall be granted a right to purchase Common Stock under the Plan if such Participant, immediately after his or her election to purchase such Common Stock, would own stock

5

possessing more than 5% of the total combined voting power or value of all classes of stock of the Corporation or any parent or Subsidiary of the Corporation. For purposes of this Subsection (a), the following rules shall apply:

(i) Ownership of stock shall be determined after applying the attribution rules of section 424(d) of the Code;

(ii) Each Participant shall be deemed to own any stock that he or she has a right or option to purchase under this or any other plan; and

(iii) Each Participant shall be deemed to have the right to purchase no more than 200 shares of Common Stock under this Plan with respect to each Contribution Period.

(b) Dollar Limit. Any other provision of the Plan notwithstanding, no Participant shall purchase Common Stock under the Plan at a rate which, when aggregated with his or her rights to purchase stock under all other employee stock purchase plans of the Corporation or any Subsidiary, exceeds $25,000 in Fair Market Value (or such other limit as may be imposed by the Code) for each calendar year in which the Participant participates in the applicable Offering Period (the “Dollar Limit”). The Dollar Limit shall be applied as follows:

(i) In the case of Common Stock purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to (A) $25,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased (under this Plan and all other employee stock purchase plans of the Corporation or any parent or Subsidiary of the Corporation) but only to the extent allocable to the current calendar year Dollar Limit.

(ii) In the case of Common Stock purchased during an Offering Period that commenced in the immediately preceding calendar year, the limit shall be equal to (A) $50,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased (under this Plan and all other employee stock purchase plans of the Corporation or any parent or Subsidiary of the Corporation) but only to the extent allocable to the Dollar Limit for the current calendar year and the immediately preceding calendar year.

(iii) In the case of Common Stock purchased during an Offering Period that commenced in the second preceding calendar year, the limit shall be equal to (A) $75,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased (under this Plan and all other employee stock purchase plans of the Corporation or any parent or Subsidiary of the Corporation) but only to the extent allocable to the Dollar Limit for the current calendar year and the two preceding calendar years.

Shares purchased under this Plan and all other employee stock purchase plans of the Corporation or any parent or Subsidiary of the Corporation shall be allocated to the earliest calendar year

6

Dollar Limit available. The provisions of this Subsection (b) shall be construed to maximize the number of shares a Participant may purchase within the limitations of Treas. Regulation Section 1.423-2(i) and not to be more limiting than that Regulation. For purposes of this Subsection (b), the Fair Market Value of Common Stock shall be determined in each case as of the beginning of the Offering Period in which such Common Stock is purchased. Employee stock purchase plans not described in section 423 of the Code shall be disregarded. If a Participant is precluded by this Subsection (b) from purchasing additional Common Stock under the Plan, then his or her employee contributions shall automatically be discontinued and shall resume at the beginning of the earliest Contribution Period ending in the next calendar year (if he or she then is an Eligible Employee).

SECTION 9. RIGHTS NOT TRANSFERABLE.

The rights of any Participant under the Plan, or any Participant’s interest in any Common Stock or moneys to which he or she may be entitled under the Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by beneficiary designation or the laws of descent and distribution. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by beneficiary designation or the laws of descent and distribution, then such act shall be treated as an election by the Participant to withdraw from the Plan under Section 5(a).

SECTION 10. NO RIGHTS AS AN EMPLOYEE.

Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Corporation for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Corporations or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at any time and for any reason, with or without cause.

SECTION 11. NO RIGHTS AS A STOCKHOLDER.

A Participant shall have no rights as a stockholder with respect to any shares of Common Stock that he or she may have a right to purchase under the Plan until such shares have been purchased on the last day of the applicable Contribution Period.

SECTION 12. SECURITIES LAW REQUIREMENTS.

Shares of Common Stock shall not be issued under the Plan unless the issuance and delivery of such shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Corporation’s securities may then be traded. In order to reflect any restrictions on disposition of the shares acquired under the Plan, the stock certificates for the purchased shares may be endorsed with one or more restrictive legends

7

SECTION 13. STOCK OFFERED UNDER THE PLAN.

(a) Authorized Shares. The aggregate number of shares of Common Stock available for purchase under the Plan shall be 450,000^• (pre-split) subject to adjustment pursuant to this Section 13. In addition, the number of shares of Common Stock available for purchase under the Plan shall automatically increase by (A) the lesser of (i) 2% of the total number of shares of Common Stock then outstanding or (ii) 450,000^• (pre-split) shares on January 1, 2000, January 1, 2001, and January 1, 2002 or (B) such lesser number determined by the Board or Compensation Committee each year.

(b) Anti-Dilution Adjustments. The aggregate number of shares of Common Stock offered under the Plan, the number of shares by which the share reserve is to increase each calendar year, and the price of shares that any Participant has elected to purchase shall be adjusted proportionately by the Committee for any increase or decrease in the number of outstanding shares of Common Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without receipt or payment of consideration by the Corporation, the distribution of the shares of a Subsidiary to the Corporation’s stockholders or a similar event. The 200-share limitation described in Section 7(c) shall be adjusted proportionately by the Committee for any increase or decrease in the number of outstanding shares of Common Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without receipt or payment of consideration by the Corporation, the distribution of the shares of a Subsidiary to the Corporation’s stockholders or a similar event only to the extent that the Committee expressly provides for such an adjustment.

(c) Reorganizations. Any other provision of the Plan notwithstanding, immediately prior to the effective time of a Corporate Reorganization, the Offering Period and Contribution Period then in progress shall terminate and shares shall be purchased pursuant to Section 7. The Plan shall in no event be construed to restrict in any way the Corporation’s right to undertake a dissolution, liquidation, merger, consolidation or other reorganization.

SECTION 14. AMENDMENT OR DISCONTINUANCE.

The Board shall have the right to amend, suspend or terminate the Plan at any time and without notice. Except as provided in Section 13, any increase in the aggregate number of shares of Common Stock to be issued under the Plan shall be subject to approval by a vote of the stockholders of the Corporation. In addition, any other amendment of the Plan shall be subject to approval by a vote of the stockholders of the Corporation to the extent required by an applicable law or regulation. The Board approved an amendment to the Plan on October 31, 2001, to clarify the operation of the $25,000 limitation of Section 8(b), decrease the per-person share limit of Section 8(a), limit the automatic operation of the adjustment provisions of Section 13(b) in the case of the per-person share limit, and permit enrollment with a contribution percentage of 0% to

• Reflects a 2 for 1 stock split effected November 1999, a 3 for 1 stock split effected April 2000, and a 1 for 10 reverse stock split effected June 10, 2005.

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be effective upon approval by the Board. On March 20, 2002, the Board approved an amendment to the Plan’s Limit on Number of Elections specified in Section 4(e); Participants may make changes to their contribution percentage under Section 4(c) or (d) any number of times during any Contribution Period, subject to the Committee’s discretion to establish limits periodically. On December 27, 2005, the Board approved amendments to decrease the Offering Period length to 12-months for any Offering Period commencing on or after February 1, 2006; to limit the ability to increase withholding rates during an Offering Period to the month prior to the commencement of the next Contribution Period with such increase effective for the next Contribution Period; to change the minimum contribution percentage to 1%; and to provide for automatic withdrawal of the Participant upon the Participant’s election during a Contribution Period to discontinue employee contributions entirely.

SECTION 15. DEFINITIONS.

(a) “Board” means the Board of Directors of the Corporation, as constituted from time to time.

(b) “Code” means the Internal Revenue Code of 1986, as amended.

(c) “Committee” means a committee of the Board, as described in Section 2.

(d) “Common Stock” means the common stock of the Corporation.

(e) “Contribution Period” means a six-month period during which contributions may be made toward the purchase of Common Stock under the Plan, as determined pursuant to Section 3(b).

(f) “Corporation” means Vignette Corporation, a Delaware corporation.

(g) “Compensation” means (i) the total compensation paid in cash to a Participant by a Participating Corporation, including salaries, wages, bonuses, incentive compensation, commissions, overtime pay and shift premiums, plus (ii) any pre-tax contributions made by the Participant under section 401(k) or 125 of the Code. “Compensation” shall exclude all non-cash items, moving or relocation allowances, cost-of-living equalization payments, car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, contributions or benefits received under employee benefit plans, income attributable to the exercise of stock options, and similar items. The Committee shall determine whether a particular item is included in Compensation.

(h) “Corporate Reorganization” means:

(i) The consummation of a merger or consolidation of the Corporation with or into another entity or any other corporate reorganization; or

(ii) The sale, transfer or other disposition of all or substantially all of the Corporation’s assets or the complete liquidation or dissolution of the Corporation.

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(i) “Eligible Employee” means any employee of a Participating Corporation if his or her customary employment is for more than five months per calendar year and for more than 20 hours per week. The foregoing notwithstanding, an individual shall not be considered an Eligible Employee if his or her participation in the Plan is prohibited by the law of any country which has jurisdiction over him or her or if he or she is subject to a collective bargaining agreement that does not provide for participation in the Plan.

(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(k) “Fair Market Value” means the market price of Common Stock, determined by the Committee as follows:

(i) If the Common Stock was traded on the Nasdaq National Market on the date in question, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by the Nasdaq National Market;

(ii) If the Common Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; or

(iii) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in The Wall Street Journal or as reported directly to the Corporation by Nasdaq or a stock exchange. Such determination shall be conclusive and binding on all persons.

(l) “IPO” means the initial offering of Common Stock to the public pursuant to a registration statement filed by the Corporation with the Securities and Exchange Commission.

(m) “Offering Period” means a 24-month period with respect to which the right to purchase Common Stock may be granted under the Plan, as determined pursuant to Section 3(a); provided, however, that effective for Offering Periods commencing on or after February 1, 2006, “offering period” means a 12-month period with respect to which the right to purchase Common Stock may be granted under the Plan, as determined pursuant to Section 3(a).

(n) “Participant” means an Eligible Employee who elects to participate in the Plan, as provided in Section 3(c).

(o) “Participating Corporation” means (i) the Corporation and (ii) each present or future Subsidiary designated by the Committee as a Participating Corporation.

(p) “Plan” means this Vignette Corporation Employee Stock Purchase Plan, as it may be amended from time to time.

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(q) “Plan Account” means the account established for each Participant pursuant to Section 7(a).

(r) “Purchase Price” means the price at which Participants may purchase Common Stock under the Plan, as determined pursuant to Section 7(b).

(s) “Subsidiary” means any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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EX-10.25

EXHIBIT 10.25

VIGNETTE CORPORATION

INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN

(AS AMENDED JANUARY 26, 2001; OCTOBER 31, 2001; MARCH 20, 2002; JULY 15, 2004 AND

DECEMBER 27, 2005)

TABLE OF CONTENTS

	Page
SECTION 1. PURPOSE OF THE PLAN	1
SECTION 2. ADMINISTRATION OF THE PLAN	1
(a) Committee Composition	1
(b) Committee Responsibilities	1
SECTION 3. ENROLLMENT AND PARTICIPATION	1
(a) Offering Periods	1
(b) Contribution Periods	1
(c) Enrollment	2
(d) Duration of Participation	2
(e) Applicable Offering Period	2
SECTION 4. EMPLOYEE CONTRIBUTIONS	3
(a) Frequency of Payroll Deductions	3
(b) Amount of Payroll Deductions	3
(c) Changing Withholding Rate	3
(d) Discontinuing Payroll Deductions	3
(e) Limit on Number of Elections	4
SECTION 5. WITHDRAWAL FROM THE PLAN	4
(a) Withdrawal	4
(b) Re-Enrollment After Withdrawal	4
SECTION 6. CHANGE IN EMPLOYMENT STATUS	4
(a) Termination of Employment	4
(b) Leave of Absence	4
(c) Death	4
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES	5
(a) Plan Accounts	5
(b) Purchase Price	5
(c) Number of Shares Purchased	5
(d) Available Shares Insufficient	5
(e) Issuance of Common Stock	5
(f) Unused Cash Balances	6
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP	6
(a) Five Percent Limit	6
(b) Dollar Limit	6

SECTION 9. RIGHTS NOT TRANSFERABLE	7
SECTION 10. NO RIGHTS AS AN EMPLOYEE	7
SECTION 11. NO RIGHTS AS A STOCKHOLDER	8
SECTION 12. SECURITIES LAW REQUIREMENTS.	8
SECTION 13. STOCK OFFERED UNDER THE PLAN	8
(a) Authorized Shares	8
(b) Anti-Dilution Adjustments	8
(c) Reorganizations	9
SECTION 14. AMENDMENT OR DISCONTINUANCE.	9
SECTION 15. SPECIAL RULES OR PROCEDURES.	9
SECTION 16. DEFINITIONS	10
(a) Board	10
(b) Code	10
(c) Committee	10
(d) Common Stock	10
(e) Contribution Period	10
(f) Corporation	10
(g) Compensation	10
(h) Corporate Reorganization	10
(i) Eligible Employee	10
(j) Exchange Act	11
(k) Fair Market Value	11
(l) International Plan	11
(m) IPO	11
(n) Offering Period	11
(o) Participant	11
(p) Participating Corporation	11
(q) Plan Account	11
(r) Purchase Price	11
(s) Subsidiary	11
(t) U.S. Plan	12
APPENDIX A RULES FOR PARTICIPANTS RESIDENT IN AUSTRALIA	1

VIGNETTE CORPORATION

INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN

SECTION 1. PURPOSE OF THE PLAN.

The International Plan was adopted by the Board on September 9, 1998, to be effective as of the date of the IPO, and was amended on January 26, 2001, October 31, 2001, March 20, 2002, July 15, 2004, and December 27, 2005. The purpose of the International Plan is to provide Eligible Employees with an opportunity to increase their proprietary interest in the success of the Corporation by purchasing Common Stock from the Corporation on favorable terms and to pay for such purchases through payroll deductions. The International Plan is not intended to qualify under Section 423 of the Code.

SECTION 2. ADMINISTRATION OF THE PLAN.

(a) Committee Composition. The International Plan shall be administered by the Committee. The Committee shall consist exclusively of one or more directors of the Corporation, who shall be appointed by the Board.

(b) Committee Responsibilities. The Committee shall interpret the International Plan and make all other policy decisions relating to the operation of the International Plan. The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the International Plan. The Committee’s determinations under the International Plan shall be final and binding on all persons.

SECTION 3. ENROLLMENT AND PARTICIPATION.

(a) Offering Periods. While the International Plan is in effect, two overlapping Offering Periods shall commence in each calendar year. Beginning at the IPO, the Offering Periods shall consist of the 24-month periods commencing on each February 15 and August 15, except that the first Offering Period shall commence on the date of the IPO and end on February 14, 2001. Beginning February 25, 2001, the Offering Periods shall commence on each February 1 and August 1, the Offering Period beginning February 25, 2001 shall end on January 31, 2003. Beginning February 1, 2006, the Offering Periods shall consist of the 12-month periods commencing on each February 1 and August 1.

(b) Contribution Periods. While the International Plan is in effect, two Contribution Periods shall commence in each calendar year. Beginning at the IPO, the Contribution Periods shall consist of the six-month periods commencing on each February 15 and August 15, except that the first Contribution Period shall commence on the date of the IPO and end on August 14, 1999. Beginning February 25, 2001, the Contribution Periods shall commence on each February 1 and August 1; the period beginning February 25, 2001 shall end on July 31, 2001.

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(c) Enrollment. Any individual who, on the day prior to the first day of an Offering Period, qualifies as an Eligible Employee may elect to become a Participant in the International Plan for such Offering Period by executing the enrollment form prescribed for this purpose by the Committee. The enrollment form shall be filed with the Corporation at the prescribed location not later than one business day prior to the commencement of such Offering Period. Each time the Participant disposes of shares acquired under the International Plan, the Participant shall promptly notify the Corporation.

(d) Duration of Participation. Once enrolled in the International Plan, a Participant shall continue to participate in the International Plan until he or she ceases to be an Eligible Employee, withdraws from the International Plan under Section 5(a) or reaches the end of the Contribution Period in which his or her employee contributions were discontinued under Section 4(d) or 8(b). A Participant who discontinued employee contributions under Section 4(d) or withdrew from the International Plan under Section 5(a) may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Subsection (c) above. A Participant whose employee contributions were discontinued automatically under Section 8(b) shall automatically resume participation at the beginning of the earliest Contribution Period ending in the next calendar year, if he or she then is an Eligible Employee.

(e) Applicable Offering Period. For purposes of calculating the Purchase Price under Section 7(b), the applicable Offering Period shall be determined as follows:

(i) Once a Participant is enrolled in the International Plan for an Offering Period, such Offering Period shall continue to apply to him or her until the earliest of (A) the end of such Offering Period, (B) the end of his or her participation under subsection (d) above or (C) re-enrollment for a subsequent Offering Period under Paragraph (ii) or (iii) below.

(ii) In the event that the Fair Market Value of the Common Stock on the last trading day before the commencement of the Offering Period for which the Participant is enrolled is higher than on the last trading day before the commencement of any subsequent Offering Period, the Participant shall automatically be re-enrolled for such subsequent Offering Period.

(iii) Any other provision of the International Plan notwithstanding, the Corporation (at its sole discretion) may determine prior to the commencement of any new Offering Period that all Participants shall be re-enrolled for such new Offering Period.

(iv) When a Participant reaches the end of an Offering Period but his or her participation is to continue, then such Participant shall automatically be re-enrolled for the Offering Period that commences immediately after the end of the prior Offering Period.

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SECTION 4. EMPLOYEE CONTRIBUTIONS.

(a) Frequency of Payroll Deductions. A Participant may purchase shares of Common Stock under the International Plan solely by means of payroll deductions. Payroll deductions, as designated by the Participant pursuant to Subsection (b) below, shall occur on each payday during participation in the International Plan.

(b) Amount of Payroll Deductions. An Eligible Employee shall designate on the enrollment form the portion of his or her Compensation that he or she elects to have withheld for the purchase of Common Stock under all employee stock purchase plans maintained by the Corporation or its subsidiaries. Such portion shall be a whole percentage of the Eligible Employee’s Compensation, from 0% to 15% or such lesser percentage established by the Committee from time to time. Notwithstanding the foregoing, effective for Offering Periods commencing on or after February 1, 2006, such portion shall be a whole percentage of the Eligible Employee’s Compensation, from 1% to 15% or such lesser percentage established by the Committee from time to time. The payroll deduction authorized by the Participant for purposes of acquiring shares of Common Stock under the International Plan shall be collected in the currency in which the Eligible Employee is paid his Compensation. Any changes or fluctuations in the exchange rate at which the currency collected from the Participant through such payroll deductions is converted into U.S. Dollars on each purchase date under the International Plan shall be borne solely by the Participant.

(c) Changing Withholding Rate. If a Participant wishes to change the rate of payroll withholding, he or she may do so by filing a new enrollment form with the Corporation at the prescribed location at any time. The new withholding rate shall be effective as soon as reasonably practicable after such form has been received by the Corporation. The new withholding rate shall be a whole percentage of the Eligible Employee’s Compensation, from 0% to 15%. Notwithstanding the foregoing, effective for Offering Periods commencing on or after February 1, 2006, (i) the new withholding rate shall be a whole percentage of the Eligible Employee’s Compensation, from 1% to 15%; (ii) a Participant may decrease his withholding rate during a current Contribution Period by filing a new enrollment form with the Corporation at the prescribed location; and (iii) a Participant will not be permitted to increase his withholding rate during a Contribution Period but may increase his withholding rate for the next Contribution Period by filing a new enrollment form with the Corporation at the prescribed location during the month prior to the commencement of the next Contribution Period for such Offering Period.

(d) Discontinuing Payroll Deductions. If a Participant wishes to discontinue employee contributions entirely, he or she may do so by filing a new enrollment form with the Corporation at the prescribed location at any time. Payroll withholding shall cease as soon as reasonably practicable after such form has been received by the Corporation. (In addition, employee contributions may be discontinued automatically pursuant to Section 8(b).) A Participant who has discontinued employee contributions may resume such contributions by filing a new enrollment form with the Corporation at the prescribed location. Payroll withholding shall resume as soon as reasonably practicable after such form has been received by the Corporation. Effective for Offering Periods commencing on or after February 1, 2006, any Participant who has elected during a Contribution Period to discontinue employee contributions entirely shall be deemed to have elected to withdraw from the Plan in accordance with Section 5.

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(e) Limit on Number of Elections. Participants may make changes to their contribution percentage under Subsection (c) or (d) above any number of times during any Contribution Period, subject to the Committee’s discretion to establish limits periodically.

SECTION 5. WITHDRAWAL FROM THE PLAN.

(a) Withdrawal. A Participant may elect to withdraw from the International Plan by filing the prescribed form with the Corporation at the prescribed location at any time before the last day of a Contribution Period. Effective for Offering Periods commencing on or after February 1, 2006, a Participant will be deemed to have elected to withdraw from the Plan if the Participant elects to discontinue employee contributions entirely in accordance with Section 4(d). As soon as reasonably practicable after the Participant has elected, or has been deemed to have elected, to withdraw from the Plan, payroll deductions shall cease and the entire amount credited to the Participant’s Plan Account shall be refunded to him or her in cash in the currency in which the Participant is paid, without interest. No partial withdrawals shall be permitted.

(b) Re-Enrollment After Withdrawal. A former Participant who has withdrawn from the International Plan shall not be a Participant until he or she re-enrolls in the International Plan under Section 3(c). Re-enrollment may be effective only at the commencement of an Offering Period.

SECTION 6. CHANGE IN EMPLOYMENT STATUS.

(a) Termination of Employment. Termination of employment as an Eligible Employee for any reason, including death, shall be treated as an automatic withdrawal from the International Plan under Section 5(a). (A transfer from one Participating Corporation to another shall not be treated as a termination of employment.)

(b) Leave of Absence. For purposes of the International Plan, employment shall not be deemed to terminate when the Participant goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Corporation in writing. Employment, however, shall be deemed to terminate 90 days after the Participant goes on a leave, unless a contract or statute guarantees his or her right to return to work. Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work.

(c) Death. In the event of the Participant’s death, the amount credited to his or her Plan Account shall be paid to a beneficiary designated by him or her for this purpose on the prescribed form or, if none, to the Participant’s estate. Such form shall be valid only if it was filed with the Corporation at the prescribed location before the Participant’s death.

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SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES.

(a) Plan Accounts. The Corporation shall maintain a Plan Account on its books in the name of each Participant. Whenever an amount is deducted from the Participant’s Compensation under the International Plan, such amount shall be credited to the Participant’s Plan Account. Amounts credited to Plan Accounts shall not be trust funds and may be commingled with the Corporation’s general assets and applied to general corporate purposes. No interest shall be credited to Plan Accounts.

(b) Purchase Price. The Purchase Price for each share of Common Stock purchased at the close of a Contribution Period shall be the lower of:

(i) 85% of the Fair Market Value of such share on the last trading day in such Contribution Period; or

(ii) 85% of the Fair Market Value of such share on the last trading day before the commencement of the applicable Offering Period (as determined under Section 3(e)) or, in the case of the first Offering Period under the International Plan, 85% of the price at which one share of Common Stock is offered to the public in the IPO.

(c) Number of Shares Purchased. As of the last day of each Contribution Period, each Participant shall be deemed to have elected to purchase the number of shares of Common Stock calculated in accordance with this Subsection (c), unless the Participant has previously elected to withdraw from the International Plan in accordance with Section 5(a). On the last U.S. business day of each Contribution Period, the payroll deductions, in the currency in which collected from the Participant, shall be converted into U.S. Dollars at the exchange rate in effect for that day. The amount then in the Participant’s Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Corporation with the funds in the Participant’s Plan Account. The foregoing notwithstanding, no Participant shall purchase more than 200 shares [post-split] of Common Stock with respect to any Contribution Period nor more than the amounts of Common Stock set forth in Sections 8(b) and 13(a). The Committee may determine with respect to all Participants that any fractional share, as calculated under this Subsection (c), shall be (i) rounded down to the next lower whole share or (ii) credited as a fractional share.

(d) Available Shares Insufficient. In the event that the aggregate number of shares that all Participants elect to purchase during a Contribution Period exceeds the maximum number of shares remaining available for issuance under Section 13(a), then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares available for issuance by a fraction, the numerator of which is the number of shares that such Participant has elected to purchase and the denominator of which is the number of shares that all Participants have elected to purchase.

(e) Issuance of Common Stock. Certificates representing the shares of Common Stock purchased by a Participant under the International Plan shall be issued to him or her as soon as reasonably practicable after the close of the applicable Contribution Period, except that the

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Committee may determine that such shares shall be held for each Participant’s benefit by a broker designated by the Committee (unless the Participant has elected that certificates be issued to him or her). Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship or as community property. The Committee may impose such restrictions on the transfer or resale of issued shares as it may deem advisable.

(f) Unused Cash Balances. An amount remaining in the Participant’s Plan Account that represents the Purchase Price for any fractional share shall be carried over in the Participant’s Plan Account to the next Contribution Period. Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsection (c) above, Section 8(b) or Section 13(a) shall be refunded to the Participant in cash in the currency in which the Participant is paid, without interest.

SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.

(a) Five Percent Limit. Unless the Board elects to waive this provision, no Participant shall be granted a right to purchase Common Stock under the International Plan if such Participant, immediately after his or her election to purchase such Common Stock, would own stock possessing more than 5% of the total combined voting power or value of all classes of stock of the Corporation or any parent or Subsidiary of the Corporation. For purposes of this Subsection (a), the following rules shall apply:

(i) Ownership of stock shall be determined after applying the attribution rules of section 424(d) of the Code;

(ii) Each Participant shall be deemed to own any stock that he or she has a right or option to purchase under this or any other plan; and

(iii) Each Participant shall be deemed to have the right to purchase no more than 200 shares of Common Stock under this International Plan with respect to each Contribution Period.

(b) Dollar Limit. Any other provision of the International Plan notwithstanding, no Participant shall purchase Common Stock under the International Plan at a rate which, when aggregated with his or her rights to purchase stock under all other employee stock purchase plans of the Corporation or any Subsidiary, exceeds $25,000 in Fair Market Value (or such other limit as may be imposed by the Code) for each calendar year in which the Participant participates in the applicable Offering Period (the “Dollar Limit”). The Dollar Limit shall be applied as follows:

(i) In the case of Common Stock purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to (A) $25,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased (under this International Plan and all other employee stock purchase plans of the Corporation or any parent or Subsidiary of the Corporation) but only to the extent allocable to the current calendar year Dollar Limit.

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(ii) In the case of Common Stock purchased during an Offering Period that commenced in the immediately preceding calendar year, the limit shall be equal to (A) $50,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased (under this International Plan and all other employee stock purchase plans of the Corporation or any parent or Subsidiary of the Corporation) but only to the extent allocable to the Dollar Limit for the current calendar year and the immediately preceding calendar year.

(iii) In the case of Common Stock purchased during an Offering Period that commenced in the second preceding calendar year, the limit shall be equal to (A) $75,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased (under this International Plan and all other employee stock purchase plans of the Corporation or any parent or Subsidiary of the Corporation) but only to the extent allocable to the Dollar Limit for the current calendar year and the two preceding calendar years.

Shares purchased under this International Plan and all other employee stock purchase plans of the Corporation or any parent or Subsidiary of the Corporation shall be allocated to the earliest calendar year Dollar Limit available. The provisions of this Subsection (b) shall be construed to maximize the number of shares a Participant may purchase within the limitations of Treas. Regulation Section 1.423-2(i) and not to be more limiting than that Regulation. For purposes of this Subsection (b), the Fair Market Value of Common Stock shall be determined in each case as of the beginning of the Offering Period in which such Common Stock is purchased. Employee stock purchase plans not described in section 423 of the Code shall be disregarded. If a Participant is precluded by this Subsection (b) from purchasing additional Common Stock under the International Plan, then his or her employee contributions shall automatically be discontinued and shall resume at the beginning of the earliest Contribution Period ending in the next calendar year (if he or she then is an Eligible Employee).

SECTION 9. RIGHTS NOT TRANSFERABLE.

The rights of any Participant under the International Plan, or any Participant’s interest in any Common Stock or moneys to which he or she may be entitled under the International Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by beneficiary designation or the laws of descent and distribution. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the International Plan, other than by beneficiary designation or the laws of descent and distribution, then such act shall be treated as an election by the Participant to withdraw from the International Plan under Section 5(a).

SECTION 10. NO RIGHTS AS AN EMPLOYEE.

Nothing in the International Plan or in any right granted under the International Plan shall confer upon the Participant any right to continue in the employ of a Participating Corporation for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Corporations or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at any time and for any reason, with or without cause.

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SECTION 11. NO RIGHTS AS A STOCKHOLDER.

A Participant shall have no rights as a stockholder with respect to any shares of Common Stock that he or she may have a right to purchase under the International Plan until such shares have been purchased on the last day of the applicable Contribution Period.

SECTION 12. SECURITIES LAW REQUIREMENTS.

Shares of Common Stock shall not be issued under the International Plan unless the issuance and delivery of such shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Corporation’s securities may then be traded. In order to reflect any restrictions on disposition of the shares acquired under the International Plan, the stock certificates for the purchased shares may be endorsed with one or more restrictive legends.

SECTION 13. STOCK OFFERED UNDER THE PLAN.

(a) Authorized Shares. The aggregate number of shares of Common Stock available for purchase in the aggregate over the term of the International Plan and the U.S. Plan shall be 450,000^•(pre-split), subject to adjustment pursuant to this Section 13. Share issuances under the U.S. Plan shall reduce on a share-for-share basis the number of shares available for issuance under this International Plan. In addition, the number of shares of Common Stock available for purchase under the International Plan shall automatically increase by (A) the lesser of (i) 2% of the total number of shares of Common Stock then outstanding or (ii) 450, 000^•( pre-split) shares on January 1, 2000, January 1, 2001, and January 1, 2002, or (B) such lesser number determined by the Board or Compensation Committee each year.

(b) Anti-Dilution Adjustments. The aggregate number of shares of Common Stock offered under the International Plan, the number of shares by which the share reserve is to increase each calendar year, the 200-share limitation described in Section 7(c) and the price of shares that any Participant has elected to purchase shall be adjusted proportionately by the Committee for any increase or decrease in the number of outstanding shares of Common Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without receipt or payment of consideration by the Corporation, the distribution of the shares of a Subsidiary to the Corporation’s stockholders or a similar event. The 200-share limitation described in Section 7(c) shall be adjusted proportionately by the Committee for any increase or decrease in the number of outstanding shares of Common Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without receipt or payment of consideration by the Corporation, the distribution of the shares of a Subsidiary to the Corporation’s stockholders or a similar event only to the extent that the Committee expressly provides for such an adjustment.

• Reflects a 2 for 1 stock split effected November 1999, a 3 for 1 stock split effected April 2000, and a 1 for 10 reverse stock split effected June 20, 2005.

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(c) Reorganizations. Any other provision of the International Plan notwithstanding, immediately prior to the effective time of a Corporate Reorganization, the Offering Period and Contribution Period then in progress shall terminate and shares shall be purchased pursuant to Section 7, unless the International Plan is assumed by the surviving corporation or its parent corporation pursuant to the plan of merger or consolidation. The International Plan shall in no event be construed to restrict in any way the Corporation’s right to undertake a dissolution, liquidation, merger, consolidation or other reorganization.

SECTION 14. AMENDMENT OR DISCONTINUANCE.

The Board shall have the right to amend, suspend or terminate the International Plan at any time and without notice. Except as provided in Section 13, any increase in the aggregate number of shares of Common Stock to be issued under the International Plan shall be subject to approval by a vote of the stockholders of the Corporation. In addition, any other amendment of the International Plan shall be subject to approval by a vote of the stockholders of the Corporation to the extent required by an applicable law or regulation. The Board approved an amendment to the International Plan on October 31, 2001 to clarify the operation of the $25,000 limitation of Section 8(b), decrease the per-person share limit of Section 8(a), limit the automatic operation of the adjustment provisions of Section 13(b) in the case of the per-person share limit, and permit enrollment with a contribution percentage of 0% to be effective upon approval by the Board. On March 20, 2002, the Board approved an amendment to the Plan’s Limit on Number of Elections specified in Section 4(e); participants may make changes to their contribution percentage under Section 4(c) or (d) any number of times during any Contribution Period, subject to the Committee’s discretion to establish limits periodically. On July 15, 2004, the Board amended the Plan as specified in Appendix A, so that the Plan would be in compliance with applicable regulations of the Australian Securities and Investment Commission. On December 27, 2005, the Board approved amendments to decrease the Offering Period length to 12-months for any Offering Period commencing on or after February 1, 2006; to limit the ability to increase withholding rates during an Offering Period to the month prior to the commencement of the next Contribution Period with such increase effective for the next Contribution Period; to change the minimum contribution percentage to 1%; and to provide for automatic withdrawal of the Participant upon the Participant’s election during a Contribution Period to discontinue employee contributions entirely.

SECTION 15. SPECIAL RULES OR PROCEDURES.

Notwithstanding any provision to the contrary in this International Plan, the Committee may adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures for jurisdictions outside of the United States. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules and procedures regarding eligibility to participate, the definition of Compensation, handling of payroll deductions, making of contributions to the International Plan

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(including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold payroll deductions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of stock certificates which vary with local requirements.

SECTION 16. DEFINITIONS.

(a) “Board” means the Board of Directors of the Corporation, as constituted from time to time.

(b) “Code” means the Internal Revenue Code of 1986, as amended.

(c) “Committee” means a committee of the Board, as described in Section 2.

(d) “Common Stock” means the common stock of the Corporation.

(e) “Contribution Period” means a six-month period during which contributions may be made toward the purchase of Common Stock under the International Plan, as determined pursuant to Section 3(b).

(f) “Corporation” means Vignette Corporation, a Delaware corporation.

(g) “Compensation” means (i) the total compensation paid in cash to a Participant by a Participating Corporation, including salaries, wages, bonuses, incentive compensation, commissions, overtime pay and shift premiums, plus (ii) any pre-tax contributions made by the Participant under section 401(k) or 125 of the Code. “Compensation” shall exclude all non-cash items, moving or relocation allowances, cost-of-living equalization payments, car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, contributions or benefits received under employee benefit plans, income attributable to the exercise of stock options, and similar items. The Committee shall determine whether a particular item is included in Compensation.

(h) “Corporate Reorganization” means:

(i) The consummation of a merger or consolidation of the Corporation with or into another entity or any other corporate reorganization; or

(ii) The sale, transfer or other disposition of all or substantially all of the Corporation’s assets or the complete liquidation or dissolution of the Corporation.

(i) “Eligible Employee” means any employee of a Participating Corporation who is not a U.S. citizen or is a U.S. citizen working abroad who is not paid in U.S. currency, if his or her customary employment is for more than five months per calendar year and for more than 20 hours per week. The foregoing notwithstanding, an individual shall not be considered an Eligible Employee if his or her participation in the International Plan is prohibited by the law of any country which has jurisdiction over him or her or if he or she is subject to a collective bargaining agreement that does not provide for participation in the International Plan.

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(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(k) “Fair Market Value” means the market price of Common Stock, determined by the Committee as follows:

(i) If the Common Stock was traded on the Nasdaq National Market on the date in question, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by the Nasdaq National Market;

(ii) If the Common Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; or

(iii) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in The Wall Street Journal or as reported directly to the Corporation by Nasdaq or a stock exchange. Such determination shall be conclusive and binding on all persons.

(l) “International Plan” means this Vignette Corporation International Employee Stock Purchase Plan, as it may be amended from time to time.

(m) “IPO” means the initial offering of Common Stock to the public pursuant to a registration statement filed by the Corporation with the Securities and Exchange Commission.

(n) “Offering Period” means a 24-month period with respect to which the right to purchase Common Stock may be granted under the International Plan, as determined pursuant to Section 3(a); provided, however, that effective for Offering Periods commencing on or after February 1, 2006, “offering period” means a 12-month period with respect to which the right to purchase Common Stock may be granted under the Plan, as determined pursuant to Section 3(a).

(o) “Participant” means an Eligible Employee who elects to participate in the International Plan, as provided in Section 3(c).

(p) “Participating Corporation” means (i) the Corporation and (ii) each present or future Subsidiary designated by the Committee as a Participating Corporation.

(q) “Plan Account” means the account established for each Participant pursuant to Section 7(a).

(r) “Purchase Price” means the price at which Participants may purchase Common Stock under the International Plan, as determined pursuant to Section 7(b).

(s) “Subsidiary” means any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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(t) “U.S. Plan” means the Corporation’s employee stock purchase plan for employees of the Corporation who are resident in the United States.

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APPENDIX A

RULES FOR PARTICIPANTS RESIDENT IN AUSTRALIA

The following terms and conditions will apply in the case of Participants who reside in or are otherwise subject to the laws of Australia.

SECTION 1. PLAN ACCOUNTS AND PURCHASE OF SHARES

Notwithstanding Section 7(a) of the International Plan and pursuant to the provisions of Section 15 of the International Plan, amounts deducted from Participants’ Compensation under the International Plan will be held by a Participating Corporation in trust for Participants in an account with an Australian bank which is established and kept by the Participating Corporation only for the purpose of depositing deductions from Participants’ Compensation made in accordance with the International Plan and any other money paid by Participants for purchasing shares of Common Stock under the International Plan. Such contributions may not be commingled with any Participating Corporation’s general assets and applied to general corporate purposes. Such contributions placed into the bank account as set forth herein will not be required to bear interest, but to the extent the account bears interest, all Participants’ contributions will bear interest at the same rate. Where a Participant withdraws from the International Plan, any such interest on their contributions will be repaid to the Participant with the refund of their contributions. Contributions will remain in such account until they can be used for the purchase of shares of Common Stock in accordance with and pursuant to the International Plan.

EX-10.26

EXHIBIT 10.26

EXHIBIT A

VIGNETTE CORPORATION

1999 EQUITY INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

You have been granted the following option to purchase shares of the Common Stock of Vignette Corporation (the “Corporation”):

Name of Optionee:	[___________________]*
Total Number of Shares:	[___________________]*
Type of Option:	Nonstatutory Stock Option
Exercise Price Per Share:	$[__________]*
Date of Grant:	[___________________]*
Vesting Commencement Date:	[___________________]*
Vesting Schedule:	25% of this grant will vest on the first anniversary of your date of hire (February 13, 2007) and an additional 6.25% of this grant will vest quarterly thereafter.
Expiration Date:	[___________________]*
	This option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement.

{* The specific terms of the award are determined on the date of grant by a Committee of the Board of Directors as prescribed by the Corporation’s 1999 Equity Incentive Plan.}

You and the Corporation agree that this option is granted under and governed by the terms and conditions of the 1999 Equity Incentive Plan (the “Plan”), this Notice of Stock Option Grant, and the attached Stock Option Agreement (the “Option Agreement”); the Option Agreement is attached to and made a part of this document. In the event of a conflict between the Plan and the Option Agreement, the Option Agreement governs.

You further agree that the Corporation may deliver by email all documents relating to the Plan or this option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Corporation is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Corporation may deliver these documents by posting them on a web site maintained by the Corporation or by a third party under contract with the Corporation. If the Corporation posts these documents on a web site, it will notify you by email.

OPTIONEE:	VIGNETTE CORPORATION
	By:
	Title:

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VIGNETTE CORPORATION

1999 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

Tax Treatment

This option is intended to be an incentive stock option under section 422 of the Internal Revenue Code or a nonstatutory stock option, as provided in the Notice of Stock Option Grant.

Vesting

This option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. In addition, this option becomes exercisable in full (or partially as set forth below) if any of the following events occurs: •      Your Service (as defined below) terminates because of death, •      The Corporation is subject to a “Change in Control” (as defined in the Plan) before your Service or employment terminates, and your employment is terminated by the Corporation without Cause or by you for Good Reason as defined in the February 10, 2006 letter agreement governing the terms of your employment (the “Letter Agreement”) within 18 months after the Change in Control. •      Your employment is terminated by the Corporation without “Cause” or by you for “Good Reason” as defined in the Letter Agreement in which case your initial option grant shall accelerate and vest as though you completed one additional year of employment with the Company following the date of your termination; provided, however, that no more than an additional 25% of the unvested options at the time of your termination shall vest by virtue of this provision. For example, if you had been with the Company for 13 months at the time of your termination, you would vest in an additional 25% of your then unvested options in addition to any vesting of options which had already occurred pursuant to such grant (in the case of your initial option grant, you would have already vested in 25% of your initial option grant). Except as provided herein, this option will not be exercisable for additional shares after your service as an employee, consultant or outside director of the Corporation or a parent or subsidiary of the Corporation (“Service”) has terminated for any reason. It is intended that the exercise schedule for this option is commensurate with a full-time work schedule. For possible adjustments that may be made by the Corporation, see the Section below entitled “Leaves of Absence and Part-Time Work.”

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Term	This option expires in any event at the close of business at Corporation headquarters on the day before the eighth anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (Except as provided herein, it will expire earlier if your Service terminates, as described below.)
Regular Termination	If your Service terminates for any reason except death or Permanent Disability, then this option will expire at the close of business at Corporation headquarters on the date three (3) months after your termination date.
Death	If you die while this option is outstanding, then this option will expire at the close of business at Corporation headquarters on the date 12 months after the date of death.
Disability	If your Service terminates because of your Permanent Disability, then this option will expire at the close of business at Corporation headquarters on the date 12 months after your termination date. For all purposes under this Option Agreement, “Permanent Disability” means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year.
Leaves of Absence and Part-Time Work	For purposes of this option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Corporation in writing. Your Service terminates when the approved leave ends, unless you immediately return to active work. If you go on a leave of absence that lasts or is expected to last seven days or longer, then any unvested shares subject to this option shall not become exercisable and Vesting will be suspended during the leave to the extent provided for in the Corporation’s leave policy. Upon your return to active work, vesting will resume; however, unless otherwise provided in the Corporation’s leave policy, you will not receive credit for any vesting during the period of your leave. If you and the Corporation agree to a reduction in your scheduled work hours, then the Corporation reserves the right to modify the rate at which this option becomes exercisable or vests, so that the rate of vesting is commensurate with your reduced work schedule. Any such adjustment shall be consistent with the Corporation’s policies for part-time

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	or reduced work schedules or shall be pursuant to the terms of an agreement between you and the Corporation pertaining to your reduced work schedule. The Corporation shall not be required to adjust the exercise or vesting schedule of any option pursuant to this subsection.
Change of Control	In the event of any Change of Control, each outstanding option granted under this Option Agreement shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Change in Control, become fully exercisable for all of the shares of Common Stock awarded pursuant to this Option Agreement and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, outstanding options shall not so accelerate if and to the extent this Option Agreement is, in connection with a Change of Control, either to be assumed by the successor corporation (or parent thereof) or is to be replaced with an Option Agreement of comparable value for shares of the capital stock of the successor corporation (or parent thereof). The Plan Administrator’s determination of comparability is final and binding except in the event where you as an option holder are receiving less value for your options than that established under the applicable merger agreement as the exchange premium for other holders of Vignette’s common stock, in which case the Administrator’s determination of comparability is subject to your written approval and agreement. In the event that this Option Agreement is assumed by a successor corporation (or parent thereof) and your employment is terminated by the Corporation without Cause or by you for Good Reason within eighteen months following a Change in Control, each outstanding option granted under this Option Agreement shall accelerate so that each such option, shall immediately prior to the effective date of your termination, become fully exercisable for all of the shares of Common Stock awarded pursuant to this Option Agreement and may be exercised for any or all of those shares as fully-vested shares of Common Stock.
Restrictions on Exercise	The Corporation will not permit you to exercise this option if the issuance of shares at that time would violate any law, regulation or corporate policy.

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Notice of Exercise

When you wish to exercise this option, you must notify the Corporation by filing the proper “Notice of Exercise” form at the address given on the form. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when the Corporation receives it. If someone else wants to exercise this option after your death, that person must prove to the Corporation’s satisfaction that he or she is entitled to do so. Furthermore, in no event shall the Corporation’s request for satisfactory documentation extend the Option’s expiration date beyond the time period specified in the above section entitled “Death”.

Form of Payment

When you submit your notice of exercise, you must include payment of the option exercise price for the shares that you are purchasing. To the extent permitted by applicable law, payment may be made in one (or a combination of two or more) of the following forms: •      Your personal check, a cashier’s check or a money order. •      Certificates for shares of Corporation stock that you own, along with any forms needed to effect a transfer of those shares to the Corporation. The value of the shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. Instead of surrendering shares of Corporation stock, you may attest to the ownership of those shares on a form provided by the Corporation and have the same number of shares subtracted from the option shares issued to you. However, you may not surrender, or attest to the ownership of, shares of Corporation stock in payment of the exercise price if your action would cause the Corporation to recognize compensation expense (or additional compensation expense) with respect to this option for financial reporting purposes. •      Irrevocable directions to a securities broker approved by the Corporation to sell all or part of your option shares and to deliver to the Corporation from the sale proceeds an amount sufficient to pay the option exercise price and any withholding taxes. (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given by signing a special “Notice of Exercise” form provided by the Corporation. However, payment pursuant to this procedure shall not be permitted if such payment would violate applicable law or a policy of the Corporation. •      Irrevocable directions to a securities broker or lender approved by the Corporation to pledge option shares as security for a loan and to deliver to the Corporation from the loan proceeds an amount sufficient to pay the option exercise price and any withholding taxes. The

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	directions must be given by signing a special “Notice of Exercise” form provided by the Corporation. However, payment pursuant to this procedure shall not be permitted if such payment would violate applicable law or a policy of the Corporation.
Withholding Taxes and Stock Withholding	You will not be allowed to exercise this option unless you make arrangements acceptable to the Corporation to pay any withholding taxes that may be due as a result of the option exercise. With the Corporation’s consent, these arrangements may include withholding shares of Corporation stock that otherwise would be issued to you when you exercise this option. The value of these shares, determined as of the effective date of the option exercise, will be applied to the withholding taxes.
Restrictions on Resale	You agree not to sell any option shares at a time when applicable laws, regulations, Corporation trading policies (including the Corporation’s Insider Trading Policy, a copy of which can be found on the Corporation’s intranet) or an agreement between the Corporation and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Corporation may specify.
Transfer of Option	In general, only you may exercise this option prior to your death. You may not transfer or assign this option, except as provided below. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or in a beneficiary designation.
	Regardless of any marital property settlement agreement, the Corporation is not obligated to honor a notice of exercise from your former spouse, nor is the Corporation obligated to recognize your former spouse’s interest in your option in any other way. If another person wants to exercise this option after it has been transferred to him or her, including a transfer upon your death, that person must prove to the Corporation’s satisfaction that he or she is entitled to exercise this option. That person must also complete the proper “Notice of Exercise” form (as described above) and pay the exercise price (as described below).
Retention Rights	Your option or this Option Agreement does not give you the right to be retained by the Corporation or a subsidiary of the Corporation in any capacity. The Corporation and its subsidiaries reserve the right to terminate your Service at any time, with or without cause.

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Stockholder Rights	You, or your estate or heirs, have no rights as a stockholder of the Corporation until you have exercised this option by giving the required notice to the Corporation and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan.
Adjustments	In the event of a stock split, a stock dividend or a similar change in Corporation stock, the number of shares covered by this option and the exercise price per share may be adjusted pursuant to the Plan.
Applicable Law	This Agreement will be interpreted and enforced with respect to issues of contract law under the laws of the State of Texas and with respect to issues of corporation law under the laws of the State of Delaware.
Amendment or Termination of Plan	Unless agreed to in writing by you, the Board may not amend or terminate the Plan in a way that adversely affects any of your rights under this Option Agreement except as may be required by law.
The Plan and Other Agreements	The text of the Plan is incorporated in this Option Agreement by reference. A copy of the Plan is available on the Corporation’s intranet or by request to the Finance Department. This Option Agreement, the Plan, and the Letter Agreement constitute the entire understanding between you and the Corporation regarding this option. In the event of a conflict between the terms of the Option Agreement and the Plan, the terms of this Option Agreement govern. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties.

BY SIGNING THE COVER SHEET OF THIS OPTION AGREEMENT, YOU AGREE TO ALL

OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND, EXCEPT AS PROVIDED

HEREIN, IN THE PLAN.

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EX-10.27

EXHIBIT 10.27

VIGNETTE CORPORATION 1999 EQUITY INCENTIVE PLAN:

NOTICE OF RESTRICTED STOCK AWARD

You have been granted restricted shares of Common Stock of Vignette Corporation (the “Corporation”) on the following terms:

Name:
Employee Id #:
Restricted Stock Award Details:
Date of Grant:	_________________________________________
Vesting Commencement Date:	_________________________________________
Amount of Restricted Stock Awarded:	______ shares
Vesting Schedule:	100% of the shares of Common Stock awarded under this Restricted Stock Award shall vest on February 13, 2009, provided that you have continuous Service with the Company or a subsidiary of the Company from the Grant Date through the vesting date, or as provided in the Restricted Stock Agreement.

By your signature and the signature of the Corporation’s representative below, you and the Corporation agree that your right to receive the shares are granted under and governed by the terms and conditions of the 1999 Equity Incentive Plan (the “Plan”), this Restricted Stock Award, and the attached Restricted Stock Agreement (the “Restricted Stock Agreement”); the Restricted Stock Agreement is attached to and made a part of this document. In the event of a conflict between the Plan and the Restricted Stock Agreement, the Restricted Stock Agreement governs.

You further agree that the Corporation may deliver by email all documents relating to the Plan or this award (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Corporation is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Corporation may deliver these documents by posting them on a web site maintained by the Corporation or by a third party under contract with the Corporation. If the Corporation posts these documents on a web site, it will notify you by email.

By your signature below, you agree to remit any withholding taxes due immediately upon the vesting date. In no event shall you surrender shares of Common Stock as payment of any tax liability if such action would cause the Corporation to recognize a compensation expense (or additional compensation expense) with respect to this restricted stock award for financial reporting purposes.

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RECIPIENT:	VIGNETTE CORPORATION
	By:
	Title:
Print Name

2

VIGNETTE CORPORATION 1999 EQUITY INCENTIVE PLAN:

RESTRICTED STOCK AGREEMENT

Payment for Shares

No payment is required for the shares you receive.

Vesting

•      The shares that you are receiving will vest as shown in the Notice of Restricted Stock Award. In addition, this award becomes exercisable in full (or partially as set forth below) if any of the following events occurs: •      Your Service (as defined below) terminates because of death, •      The Corporation is subject to a “Change in Control” (as defined in the Plan) before your Service or employment terminates, and your employment is terminated by the Corporation without Cause or by you for Good Reason as defined in the February 10, 2006 letter agreement governing the terms of your employment (the “Letter Agreement”) within 18 months after the Change in Control. •      Your employment is terminated by the Corporation without “Cause” or by you for “Good Reason” as defined in the Letter Agreement in which case your initial restricted stock award shall accelerate and vest as follows: if your termination occurs during the first twelve months following your date of hire, then you will vest in none of initial restricted stock award; if your termination occurs during months 13 through 24 following your date of hire, then you will vest in 25% of your initial restricted stock awards, and if your termination occurs during the months 14 through 36 following your date of hire, and prior to the vesting date of your initial restricted stock award; then you will vest in 50% of such award. For example, if you had been with the Company for 13 months at the time of your termination, you would vest in 25% of your initial restricted stock award in addition to any vesting which had already occurred pursuant to such award (in the case of your initial restricted share award, the amount of vesting which had already occurred would be zero). Any acceleration of subsequent restricted stock awards will be as determined by the Compensation Committee of the Board of Directors. Except as provided herein, this award will not be exercisable for additional shares after your service as an employee, consultant or outside director of the Corporation or a parent or subsidiary of the Corporation

	(“Service”) has terminated for any reason. It is intended that the exercise schedule for this option is commensurate with a full-time work schedule. For possible adjustments that may be made by the Corporation, see the Section below entitled “Leaves of Absence and Part-Time Work.”
Shares Restricted	Unvested shares will be considered “Restricted Shares.” You may not sell, transfer, pledge or otherwise dispose of any Restricted Shares without the written consent of the Corporation, except as provided in this paragraph. You may transfer Restricted Shares to your spouse, children or grandchildren or to a trust established by you for the benefit of yourself or your spouse, children or grandchildren. However, a transferee of Restricted Shares must agree in writing on a form prescribed by the Corporation to be bound by all provisions of this Restricted Stock Agreement.
Forfeiture	If your Service terminates for any reason, then your shares will be forfeited to the extent that they have not vested before the termination date and do not vest as a result of the termination per the acceleration terms set forth above. This means that the Restricted Shares will immediately revert to the Corporation. You receive no payment for Restricted Shares that are forfeited.
	Any shares that are forfeited may be returned to Treasury or cancelled at the Corporation’s discretion.
Leaves of Absence and Part-Time Work	For purposes of this award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Corporation in writing. Your Service terminates when the approved leave ends, unless you immediately return to active work. If you go on a leave of absence that lasts or is expected to last seven days or longer, then vesting will be suspended during the leave to the extent provided for in the Corporation’s leave policy. Upon your return to active work, vesting will resume; however, unless otherwise provided in the Corporation’s leave policy, you will not receive credit for any vesting during the period of your leave. If you and the Corporation agree to a reduction in your scheduled work hours, then the Corporation reserves the right to modify the rate at which the shares vest, so that the rate of vesting is commensurate with your reduced work schedule. Any such adjustment shall be consistent with the Corporation’s policies for part-time or reduced work schedules or shall be pursuant to the terms of an agreement between you and the Corporation pertaining to your reduced work schedule.

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	The Corporation shall not be required to adjust any vesting schedule pursuant to this subsection.
Stock Certificates	The certificates for Restricted Shares shall be held in escrow by the Corporation or its agent. In addition to or in lieu of holding certificates in escrow, the Corporation may have stamped on them a special legend referring to the Corporations right of repurchase. As your vested percentage increases, you may request (at reasonable intervals) that the Corporation release to you a certificate for your vested shares without a repurchase right legend.
Voting Rights	You may vote your shares even before they vest.
Change of Control	In the event of any Change of Control, each outstanding share granted under this Restricted Stock Agreement shall automatically accelerate and fully vest so that each such share awarded under this Restricted Stock Agreement shall, immediately prior to the effective date of the Change in Control, be provided to you as set forth herein. However, outstanding Restricted Stock awards shall not so accelerate if and to the extent this Restricted Stock Agreement is, in connection with a Change of Control, either to be assumed by the successor corporation (or parent thereof) or is to be replaced with a Restricted Stock Agreement of comparable value for shares of the capital stock of the successor corporation (or parent thereof). The Plan Administrator’s determination of comparability is final and binding except in the event where you as a restricted share holder are receiving less value or other security for your restricted stock than that established under the applicable merger agreement as the exchange premium for other holders of Vignette’s common stock, in which case the Administrator’s determination of comparability is subject to your written approval and agreement. In the event that this Restricted Stock Agreement is assumed by a successor corporation (or parent thereof) and your employment is terminated by the Corporation without Cause or by you for Good Reason within eighteen months following a Change in Control, each outstanding share of restricted stock granted under this Restricted Stock Agreement shall accelerate and fully vest so that each such share awarded under this Restricted Stock Agreement shall immediately be provided to you as set forth herein.
Withholding Taxes	No stock certificates will be released to you unless you have made acceptable arrangements to pay any withholding taxes that may be due as a result of this award or the vesting of the shares. With the Corporation’s consent, these arrangements may include (a) withholding shares of Corporation stock that otherwise would be issued to you when they vest or (b) surrendering shares that you previously acquired. The

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	fair market value of the shares you surrender, determined as of the date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes.
Restrictions on Resale	You agree not to sell any shares at a time when applicable laws, regulations, Corporation trading policies (including the Corporation’s Insider Trading Policy, a copy of which can be found on the Corporation’s intranet) or an agreement between the Corporation and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Corporation may specify.
No Retention Rights	Your award or this Restricted Stock Agreement does not give you the right to be employed or retained by the Corporation or a subsidiary of the Corporation in any capacity. The Corporation and its subsidiaries reserve the right to terminate your Service at any time, with or without cause.
Adjustments	In the event of a stock split, a stock dividend or a similar change in Corporation stock, the number of Restricted Shares that will vest in any future installments will be adjusted accordingly.
Amendment or Termination of Plan	Unless agreed to in writing by you, the Board may not amend or terminate the Plan in a way that adversely affects any of your rights under this Restricted Stock Agreement except as may be required by law.
Applicable Law	This Agreement will be interpreted and enforced with respect to issues of contract law under the laws of the State of Texas and with respect to issues of corporation law under the laws of the State of Delaware.
The Plan and Other Agreements	The text of the Plan is incorporated in this Restricted Stock Agreement by reference. A copy of the Plan is available on the Corporation’s intranet or by request to the Finance Department. This Restricted Stock Agreement, the Plan, and the Letter Agreement constitute the entire understanding between you and the Corporation regarding this award. In the event of a conflict between the terms of the Restricted Stock Agreement and the Plan, the terms of this Restricted Stock Agreement govern. Any prior agreements, commitments or negotiations concerning this award are superseded. This Restricted Stock Agreement may be amended only by another written agreement between the parties.

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BY SIGNING THE COVER SHEET OF THIS RESTRICTED STOCK AGREEMENT, YOU

AGREE TO ALL OF THE

TERMS AND CONDITIONS DESCRIBED ABOVE AND, EXCEPT AS PROVIDED HEREIN,

AND IN THE PLAN.

5

EX-10.28

Exhibit 10.28

February 10, 2006

Mr. Michael A. Aviles

6604 Canon Wren Drive

Austin, TX 78746

Dear Mike:

Pursuant to this letter agreement, I am pleased to extend to you an offer to join Vignette Corporation starting February 13, 2006. We are eager to have you as part of our team and believe you bring the skills and attitude that will become a critical part of Vignette’s success.

Your position will be President and Chief Executive Officer reporting to the Company’s Board of Directors. You will become a member of the Board of Directors and be based in Austin, Texas. While employed with the Company in this capacity, you shall perform the duties, undertake the responsibilities and exercise the authority from time to time delegated to you by the Board as a whole or as are customarily performed, undertaken or exercised by persons situated in a similar executive capacity. You shall also promote the business of the Company on a full time basis. You may, however, (1) serve on corporate, civil or charitable boards or committees, (2) manage personal investments and (3) engage in any charitable, political or not-for-profit activity, so long as such activities do not significantly interfere with the performance of your responsibilities to the Company.

Your compensation will include the following:

• A bi-weekly salary of 13,846.15 (which when calculated on an annual basis equals $360,000.00).

• Subject to you joining Vignette Corporation, you will receive 300,000 stock options through the Vignette Corporation Stock Option Plan. Your grant will be subject to a separate Option Agreement in the form attached as Exhibit A. The grant will be effective as of the date the consent is approved by the Compensation Committee of Vignette’s Board, which will be no later than Monday, February 20, 2006. 25% of this grant will vest on the first anniversary of your date of hire (February 13, 2009) and an additional 6.25% of this grant will vest quarterly thereafter. Any future awards of stock options to you shall be subject to a Stock Option Agreement on terms no less favorable than those in Exhibit A, except that such awards may or may not include provisions for acceleration of the option awards in the event of your termination without “Cause” or for “Good Reason” and the Company reserves the right to make other changes as required by law or corporate governance standards.

• Subject to you joining Vignette Corporation, you will receive 100,000 shares of restricted stock through the Vignette Corporation Stock Option Plan. Your grant will be subject to a Restricted Stock Agreement in the form attached as Exhibit B. The grant will be effective as of the date the applicable consent is approved by the Compensation Committee of Vignette’s Board, which will be no later than Monday, February 20, 2006. This grant will vest on the third anniversary of your date of hire (February 13, 2009). Any

future awards of restricted shares to you shall be subject to a Restricted Stock Agreement on terms no less favorable than those in Exhibit B, except that such awards may or may not include provisions for acceleration of the awards in the event of your termination without “Cause” or for “Good Reason” and the Company reserves the right to make other changes as required by law or corporate governance standards.

• In addition to the base salary, you will be eligible to participate in an Executive Performance Bonus Plan (the “Bonus Plan”) with an annual target bonus amount of not less than 100% of your annual base salary (e.g. $360,000) and that will range up to a potential payout of no less than 150% of the target bonus amount (e.g. $540,000). This bonus is paid out semi-annually based on attainment of individual and company performance goals set forth in the Bonus Plan. Payment of the bonus may not occur if the performance goals set forth in the Bonus Plan are not satisfied. For the year 2006, you will be guaranteed a minimum bonus of 50% of your target bonus amount (or $180,000.00).

• It is the intent of the Board of Directors to grant you additional option grants and/or restricted share awards based on performance. The Compensation Committee has established a non-binding target for your equity holdings in the Company (prior to any exercise of any grants by you) to represent 2% or more of the outstanding shares over the next two or three years.

• You shall be entitled to receive reimbursement of all out-of-pocket expenses, reasonably incurred by you in connection with the performance of your duties hereunder or for promoting, pursuing or otherwise furthering the business or interest of the Company in accordance with the accounting procedures and expense reimbursement policies of the Company as it shall adopt from time to time. This is to include normal dues and fees incurred in connection with your membership in Young President’s Organization. Cost of attendance at special events and seminars will be reimbursed if pre-approved by the Chairman of the Board of Directors.

• You shall be entitled to indemnification by the Company in accordance with the provisions of the Company’s bylaws and the implementing Board resolutions in effect on the date of this letter agreement or, if more favorable to you, the provisions of such bylaws as in effect at the time indemnification is requested.

• The Company shall include you as an additional insured under its directors and officers’ liability insurance which shall be maintained (or a replacement policy not materially less favorable to you) by the Company during your employment with the Company and for at least 12 months after your employment terminates (to the extent your employment is terminated by the Company without Cause or by you for Good Reason).

• Eligibility for you and your family to participate in all of the benefits provided to Vignette’s employees and executives, including, without limitation, medical, dental, vision, 401(k), employee stock purchase, executive wellness, short term disability, accident and life insurance plans or programs. You will also be entitled to four weeks of annual vacation per year under the Company’s vacation policy.

Should your employment be terminated by the Company without “Cause” or by you for “Good Reason,” you will receive severance payments in the amount of twelve months base salary, plus

the amount of the Executive Performance bonus you were paid for the 12 months prior to your termination date. For the first twelve months of your employment, you will receive 100% of your target Executive Performance Bonus in the event of termination by the Company without “Cause” or by you for “Good Reason.” Payment of these severance payments is contingent upon execution of a Separation Agreement in the form attached as Exhibit C. These severance payments will be made in substantially equal amounts paid out over twelve (12) months and pursuant to the Company’s normal payroll cycles. If required by Section 409A of the Internal Revenue Code of 1986, as amended, and any applicable regulations issued there under (collectively the “Code”), your severance payments will either (1) not begin for at least six (6) months after your termination of employment, at which date you will receive a lump sum payment equal to your six (6) months of delayed payments and thereafter you would receive the remaining monthly payments for the remaining six (6) months, or (2) be paid out over the applicable twelve (12) months provided that the last payment will be made prior to March 15th of the calendar year following your termination

In the event of a termination by the Company without “Cause” or by you for “Good Reason”, you will also receive accelerated vesting on your stock option grant and your restricted stock award as set forth below.

• Your initial restricted stock award shall accelerate and vest as follows: if your termination occurs during the first twelve months following your date of hire, then you will vest in none of your initial restricted stock award; if your termination occurs during months 13 through 24 following your date of hire, then you will vest in 25% of your initial restricted stock award; and if your termination occurs during the months 14 through 36 following your date of hire, and prior to the vesting date of your initial restricted stock award, then you will vest in 50% of such award. For example, if you had been with the Company for 13 months at the time of your termination, you would vest in 25% of your initial restricted stock award in addition to any vesting which had already occurred pursuant to such award (in the case of your initial restricted share award, the amount of vesting which had already occurred would be zero).

• Your initial option grant shall accelerate and vest as though you completed one additional year of employment with the Company following the date of your termination; provided, however, that no more than an additional 25% of the unvested options at the time of your termination shall vest by virtue of this provision. For example, if you had been with the Company for 13 months at the time of your termination, you would vest in an additional 25% of your then unvested options in addition to any vesting of options which had already occurred pursuant to such grant (in the case of your initial option grant, you would have already vested in 25% of your initial option grant).

• Any acceleration of subsequent option grants or restricted stock awards as determined by the Compensation Committee of the Board of Directors at the time of the grant or award.

“Cause” for purposes of this letter agreement shall be defined as any of the following events which remains uncured after 30 days from the date written notice of such breach is provided to you or which cannot by its nature be cured: (a) material misconduct that results in material harm to the business of the Company (for purposes of this letter agreement, “misconduct” means the commission of any act of

fraud, embezzlement or dishonesty by you, any unauthorized use or disclosure by you of confidential information or trade secrets of the Company (or any Parent or Subsidiary), or any other intentional misconduct adversely affecting the business or affairs of the Company or any Parent or Subsidiary) in a material manner; (b) material and repeated failure to perform duties assigned by the Board, which failure is not a result of a disability and results in material harm to the business of the Company; or (c) any material breach of the Company’s policies or of the Proprietary Inventions Agreement which results in material harm to the business of the Company. “Good Reason” for purposes of this letter agreement shall be defined as any of the following events: (i) a reduction in your level of compensation (including base salary, benefits, and level of participation in applicable bonus and incentive programs); (ii) a substantial change in your job duties, responsibilities, position or title; (iii) any material breach by the Company of any provision of this Agreement or any other written agreements signed by an authorized representative of the Company, which breach is not cured within thirty (30) days following written notice of such breach from you; (iv) the occurrence of a Change of Control (as defined below) of the Company; or (v) a relocation of such individual’s place of employment by more than twenty-five (25) miles.

Change of Control for purposes of this Letter Agreement shall mean:

(a) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization;

(b) The sale, transfer or other disposition of all or substantially all of the Company’s assets;

(c) A change in the composition of the Board, as a result of which fewer than two-thirds of the incumbent directors are directors who either (i) had been directors of the Company on the date 24 months prior to the date of the event that may constitute a Change in Control (the “original directors”) or (ii) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved; or

(d) Any transaction as a result of which any person is the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company’s then outstanding voting securities. For purposes of this Paragraph (d), the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly by the stockholders of the Corporation in substantially the same proportions as their ownership of the common stock of the Company. A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will

be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

In no event shall you be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to you under any provisions of this letter agreement and such amounts shall not be reduced whether or not you obtain other employment.

This letter agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns. The term “Company” as used herein shall include such successors and assigns. Your rights under this letter agreement may not be assigned by you during your lifetime. However, all your rights under this letter agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, estates, executors, administrators, heirs and beneficiaries.

Nothing in this letter agreement shall prevent you from participating in any benefit, bonus, incentive, stock option, equity incentive plan or other plan or program provided by the Company and for which you may qualify and be entitled to payment, nor shall anything in this letter agreement reduce such rights as you may have with the Company under any other agreements. Amounts which are vested benefits or to which you are otherwise entitled to receive under any plan or program of the Company shall be payable in accordance with such plan or program and any related agreements, except as explicitly modified by this letter agreement.

The provisions of this letter agreement shall be deemed severable and the invalidity or unenforceability of any provisions shall not affect the validity or enforceability of the other provisions. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this letter agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

You acknowledge that you have had the opportunity to discuss this matter with and obtain advice from your private attorney, have had sufficient time to, and have carefully read and fully understand all the provisions of this letter agreement, and are knowingly and voluntarily entering into this letter agreement.

This offer of employment is contingent upon your execution of this letter agreement, Employment Application, PRSI Background Check, and satisfaction of the requirements of an I-9 Employment Eligibility Verification Form. Please understand that employment remains “at will.” The Company reserves the right to terminate you at any time without notice and, in the event of such a termination, the rights of the parties are governed by the provisions of this letter agreement and any other applicable agreements between the parties, including but not limited to, Stock Option Agreement (s) and Restricted Stock Agreement (s).

I am looking forward to having you as a member of the Vignette team.

Sincerely,

Jan Lindelow

Chairman of the Board of Directors

EMPLOYEE ACCEPTANCE

The signing of this letter agreement acknowledges the acceptance of the offer contained herein:

Employee Signature Date

Print Name

EX-10.29

EXHIBIT 10.29

CONFIDENTIAL

<<Date>>

«First_Name» «Last_Name»

«Address_Line1» «Address_Line2»

«Town_Or_City», «Region_2» «Postal_Code»

Dear «First_Name»:

This letter is to confirm the agreement between you and Vignette Corporation (the “Company”) regarding your separation from the Company. Your full-time employment with the Company will end on <<Termination Date>> (the “Termination Date”). All of the provisions of this letter (“the Separation Agreement”) are subject to, and conditioned upon, you signing and returning to us a copy of the Separation Agreement, and complying with its terms.

This Separation Agreement may not be changed or altered, except by a written document signed by you and the Company. This Separation Agreement is entered into in the State of Texas and the laws of the State of Texas will apply to any dispute concerning it. If any clause of this Separation Agreement should ever be determined to be unenforceable, it is agreed that this will not affect the enforceability of any other clause or the remainder of this Separation Agreement. Except as provided herein, this Separation Agreement constitutes the entire understanding between you and the Company and supersedes all other agreements or understandings, either verbal or written.

1. Upon the effective date of this Separation Agreement, the Company will extend a severance payment to you representing wages in lieu of notice, in the amount of <<Severance Amount>> weeks of base pay (add applicable bonus per Letter Agreement). This severance payment will be made to you on a bi-weekly basis (following Vignette’s current pay period schedule). If you are rehired at any time during the severance payment period, your severance payments will cease as of the effective date of your rehire.

2. With respect to your stock option grants, your vesting (Insert appropriate acceleration as per Letter Agreement). After the Termination Date, you will have three months in which to exercise any options in which you are vested.

3. Upon your Termination Date, but not contingent upon signing the Separation Agreement, the Company will pay you all current accrued but unused vacation time, less all applicable withholdings. You will also receive reimbursement for any outstanding eligible business expenses incurred up to and including your Termination Date.

4. Under the provisions of the group medical, dental, and vision insurance plans, your employee benefits are in effect until the end of the month in which your Termination Date occurs. However, if you elect to continue your health insurance coverage under COBRA following the end of the month in which your Termination Date occurs, then, in addition, the Company will pay the monthly premium under COBRA for one month following the month of your termination (that is,

Confidential Page 1

until <<end of the month following Termination Date>>). You will be eligible for seventeen (17) months of additional coverage pursuant to COBRA at your own expense after that date.

5. With respect to your Employee Stock Purchase Plan (if applicable), all amounts deducted from payroll for participation in the current purchase period (February 1, 2006 – July 31, 2006) will be refunded to you upon your Termination Date. This payment is not contingent upon your signing this Separation Agreement. Upon your Termination Date of <<Termination Date>>, you will no longer be eligible to participate in this plan.

6. Except as provided herein, you agree that the only payments and benefits that you are entitled to receive from the Company in the future are those specified in this Separation Agreement.

7. In exchange for the Company providing you with the above-referenced severance and other good and valuable consideration set forth herein, you hereby waive all claims against the Company, and release and discharge the Company from liability for any claims and damages that you may have against it as of the date of this Separation Agreement, whether known or unknown including, but not limited to, any claims arising out of your employment relationship with the Company and any of the Company’s subsidiaries, or violations of any federal, state or local fair employment practices law, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act and the Americans With Disabilities Act. You also agree not to initiate any civil actions to assert such claims (the “Released Claims”). You understand that the consideration provided to you under the terms of this Separation Agreement does not constitute an admission by the Company that it has violated any such law or legal obligation.

8. The parties also represent that they are not aware of any claim by either of them other than the claims that are released by this Separation Agreement.

9. You agree that you will not disclose or cause to be disclosed in any way, any confidential information or documents relating to your employment with the Company, the operations of the Company, the terms of this Agreement, the facts and circumstances underlying this Agreement or the fact that such Agreement exists, except for the purpose of enforcing this Agreement should that ever be necessary.

10. You agree that prior to the date you execute this Agreement, you will return all Company property in your possession. You also understand and agree that all files, papers, memoranda, letters, handbooks and manuals, facsimiles and other communications that were written, authorized, signed, received or transmitted during your employment, whether electronic or otherwise, are and remain the property of the Company and, as such, are not to be removed from the Company’s offices.

11. To the extent consistent with applicable law, you also agree not to initiate any administrative or other legal action asserting the Released Claims against the Company or against any current or former officers, directors, or employees, to assert the Released Claims and, further, to the extent any such action has or may be brought by you or on your behalf by any third party, you agree to waive your right to any form of recovery in such action, including monetary damages or any other form of relief, including attorneys’ fees and costs.

12. At all times and in the future, you will remain bound by the Company’s Proprietary Information and Inventions Agreement signed by you upon your employment with Vignette.

Confidential Page 2

13. You agree that you will neither solicit for employment, or cause others to solicit for employment, any salaried employee of the Company who is presently or hereafter employed by the Company, or any other employee of the Company who had access to confidential or proprietary information or trade secrets of the Company, during the twelve (12) month period following your Termination Date.

14. For a period of 12 months from the Termination Date you agree not to provide services as an employee, agent, independent contractor, general partner, officer or director for any entity whose business is directly competitive with the Company’s products or services, including but not limited to Interwoven, Broadvision, Plumtree, IBM, or EMC/Documentum. Provided however, you may engage with such a business if you receive the prior, written approval of the Company’s General Counsel. Provided further, you shall not be prohibited from any activity to the extent the Company no longer engages in a business that is directly competitive with such activity.

15. You agree that except as expressly provided in this Separation Agreement, this Separation Agreement renders null and void any and all prior arrangements, either written or oral, between you and the Company, with the exception of the Company’s Proprietary Information and Inventions Agreement referred to in paragraph 12 above and the terms of any benefit plan, Corporate Credit Card Account (including severance payment deductions for monies owed Vignette for payment of Guaranty Card Accounts on the employee’s behalf, except where prohibited by State Law), Sales Compensation Policy, any equity incentive plan or stock plan, awards under any equity incentive plan or stock plan, stock option agreement, restricted stock agreement or any other form of stock agreement. In addition, this Separation Agreement does not supercede or render null and void any ongoing obligations of the Company to you under the February 10, 2006 letter agreement between you and the Company, including but not limited to, the obligation of the Company to make monthly severance payments and provide indemnification and include you as an additional insured under the Company’s directors and officers’ liability insurance.

Please indicate your agreement with the above terms by signing below. As noted above, your eligibility for the benefits offered under this Separation Agreement (except where otherwise stated) is subject to, and conditioned upon, your executing a copy of this Separation Agreement and returning it along with all Company equipment (in good condition) to Vignette. You may wish to consult an attorney as part of your consideration of this Separation Agreement and the Separation Agreement shall be effective seven days after you sign it.

Sincerely,

Gayle Wiley

Sr. VP – Worldwide Human Resources

Vignette Corporation

Confidential Page 3

My signature below signifies my agreement with the above terms. Furthermore, I acknowledge that I have read and understand the foregoing Separation Agreement and that I sign this release of all claims voluntarily, with full appreciation that I am forever foreclosed from pursuing any of the rights I have waived. I acknowledge that I have been given forty-five (45) days to review the document before signing. I also acknowledge that I can take an additional seven (7) days after signing it to revoke my agreement, by notifying the Company in writing within that seven (7) day period, addressed to Sr. VP – Worldwide Human Resources’ attention.

I acknowledge that I have read and understand the foregoing Separation Agreement and that I sign this release of all claims voluntarily, with full appreciation that I am forever foreclosed from pursuing any of the rights I have waived. I will return the signed Separation Agreement to Gayle Wiley (Sr. VP - Worldwide Human Resources) within forty-five (45) days of receipt.

	__________________________
Signed (Employee Signature)	Date
Employee’s Name (printed)

Please return signed agreement to the following address:

Gayle Wiley

Sr. VP – Worldwide Human Resources

Vignette Corporation

1301 S. MoPac Expy, Suite 100

Austin, Texas 78746

Confidential Page 4

EX-10.30

EXHIBIT 10.30

VIGNETTE CORPORATION 1999 EQUITY INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK AWARD

You have been granted restricted shares of Common Stock of Vignette Corporation (the “Corporation”) on the following terms:

Name:	[                                       ]*
Employee Id #:	[                                       ]*
Restricted Stock Award Details:
Date of Grant:	[                                       ]*
Vesting Commencement:	[                                       ]*
Amount of Restricted Stock Award:	[                          shares]*
Vesting Schedule:	[                % of the shares of Common Stock awarded under this Restricted Stock Award shall vest on                     , 20    ]*, provided that you have continuous Service with the Company or a subsidiary of the Company from the Grant Date.

* The specific terms of the award are determined on the date of grant by the Board of Directors. Currently the typical vesting schedule for restricted stock awards for Board members stipulates 100% of the Shares subject to the award will become vested when the award recipient completes twelve (12) months of continuous Service from the Vesting Commencement Date.}

By your signature and the signature of the Corporation’s representative below, you and the Corporation agree that your right to receive the shares are granted under and governed by the terms and conditions of the 1999 Equity Incentive Plan (the “Plan”) and of the Restricted Stock Agreement. The Restricted Stock Agreement is attached to and made a part of this document.

You further agree that the Corporation may deliver by email all documents relating to the Plan or this award (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Corporation is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Corporation may deliver these documents by posting them on a web site maintained by the Corporation or by a third party under contract with the Corporation. If the Corporation posts these documents on a web site, it will notify you by email.

By your signature below, you agree to remit any withholding taxes that may be due immediately upon the vesting date. In no event shall you surrender shares of Common Stock as payment of any tax liability if such action would cause the Corporation to recognize a compensation expense (or additional compensation expense) with respect to this restricted stock award for financial reporting purposes.

RECIPIENT:	VIGNETTE CORPORATION
	By:
	Title:
	Print Name

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VIGNETTE CORPORATION 1999 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

Payment for Shares	No payment is required for the shares you receive.
Vesting	The shares that you are receiving will vest in installments, as shown in the Notice of Restricted Stock Award.
	No additional shares vest after your service as an employee, consultant or director of the Corporation or a subsidiary of the Corporation (“Service”) has terminated for any reason. It is intended that vesting in the shares is commensurate with a full-time work schedule. For possible adjustments that may be made by the Corporation, see the Section below entitled “Leaves of Absence and Part-Time Work.”
Shares Restricted	Unvested shares will be considered “Restricted Shares.” You may not sell, transfer, pledge or otherwise dispose of any Restricted Shares without the written consent of the Company, except as provided in this paragraph. You may transfer Restricted Shares to your spouse, children or grandchildren or to a trust established by you for the benefit of yourself or your spouse, children or grandchildren. However, a transferee of Restricted Shares must agree in writing on a form prescribed by the Company to be bound by all provisions of this Agreement.
Forfeiture	If your Service terminates for any reason, then your shares will be forfeited to the extent that they have not vested before the termination date and do not vest as a result of the termination. This means that the Restricted Shares will immediately revert to the Company. You receive no payment for Restricted Shares that are forfeited.
	The Company determines when your Service terminates for this purpose. Any shares that are forfeited may be returned to Treasury or cancelled at the Corporation’s discretion.
Leaves of Absence and Part-Time Work	For purposes of this award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Corporation in writing. Your Service terminates when the approved leave ends, unless you immediately return to active work.
	If you go on a leave of absence that lasts or is expected to last seven days or longer, then vesting will be suspended during the leave to the extent provided for in the Corporation’s leave policy. Upon your

return to active work, vesting will resume; however, unless otherwise provided in the Corporation’s leave policy, you will not receive credit for any vesting during the period of your leave. If you and the Corporation agree to a reduction in your scheduled work hours, then the Corporation reserves the right to modify the rate at which the shares vest, so that the rate of vesting is commensurate with your reduced work schedule. Any such adjustment shall be consistent with the Corporation’s policies for part-time or reduced work schedules or shall be pursuant to the terms of an agreement between you and the Corporation pertaining to your reduced work schedule. The Corporation shall not be required to adjust any vesting schedule pursuant to this subsection.

Change in Control

Notwithstanding anything in the Plan to the contrary: In the event of any Change in Control the Restricted Shares subject to this Agreement shall become fully vested effective as of immediately prior to the specified effective date for the Change in Control. Immediately following the consummation of the Change in Control, each Restricted Share award shall terminate and cease to be outstanding, except to the extent assumed or substituted by the successor corporation or its parent company. For purposes of this section, Change in Control shall be defined as a change in ownership or control of the Corporation effected through one of the following transactions: a. the consummation of a merger or consolidation of the Corporation with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Corporation immediately prior to such merger, consolidation or other reorganization; b. the sale, transfer or other disposition of all or substantially all of the Corporation’s assets; c. a change in the composition of the Board, as a result of which fewer than one-third of the incumbent directors are directors who either (i) had been directors of the Corporation on the date 24 months prior to the date of the event that may constitute a Change in Control (the “original directors”) or (ii) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved;

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	d. any transaction as a result of which any person is the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Corporation representing at least 50% of the total voting power represented by the Corporation’s then outstanding voting securities. For purposes of this Paragraph (d), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the 1934 Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly by the stockholders of the Corporation in substantially the same proportions as their ownership of the Common Stock of the Corporation; or e. a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Corporation’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Corporation’s securities immediately before such transaction.
Stock Certificates	The certificates for Restricted Shares shall be held in escrow by the Company or its agent. In addition to or in lieu of holding certificates in escrow, the Company may have stamped on them a special legend referring to the Company’s right of repurchase. As your vested percentage increases, you may request (at reasonable intervals) that the Company release to you a certificate for your vested shares without a repurchase right legend.
Voting Rights	You may vote your shares even before they vest.
Withholding Taxes	No stock certificates will be released to you unless you have made acceptable arrangements to pay any withholding taxes that may be due as a result of this award or the vesting of the shares. With the Company’s consent, these arrangements may include (a) withholding shares of Company stock that otherwise would be issued to you when they vest or (b) surrendering shares that you previously acquired. The fair market value of the shares you surrender, determined as of the date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes.
Restrictions on Resale	You agree not to sell any shares at a time when applicable laws, regulations, Corporation trading policies (including the Corporation’s Insider Trading Policy, a copy of which can be found on the Corporation’s intranet) or an agreement between the Corporation and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Corporation may specify.

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No Retention Rights	Your award or this Agreement does not give you the right to be employed or retained by the Corporation or a subsidiary of the Corporation in any capacity. The Corporation and its subsidiaries reserve the right to terminate your Service at any time, with or without cause.
Adjustments	The adjustments to any outstanding Restricted Shares shall be made by the Board in a manner which shall preclude, other than as authorized by the Plan, this Agreement or applicable law, the enlargement or dilution of rights and benefits under such awards and shall be final, binding and conclusive. In the event of a stock split, a stock dividend or a similar change in Corporation stock, the number of Restricted Shares that will vest in any future installments will be adjusted accordingly.
Applicable Law	This Agreement will be interpreted and enforced with respect to issues of contract law under the laws of the State of Texas and with respect to issues of corporation law under the laws of the State of Delaware.
The Plan and Other Agreements	The text of the Plan is incorporated in this Agreement by reference. A copy of the Plan is available on the Corporation’s intranet or by request to the Finance Department. This Agreement and the Plan constitute the entire understanding between you and the Corporation regarding this award. Any prior agreements, commitments or negotiations concerning this award are superseded. This Agreement may be amended only by another written agreement between the parties.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE

TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

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EX-10.31

Exhibit 10.31

VIGNETTE CORPORATION

1999 EQUITY INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

You have been granted the following option to purchase shares of the Common Stock of Vignette Corporation (the “Corporation”):

Name of Optionee:	[                                       ]*
Total Number of Shares:	[                                       ]*
Type of Option:	Non-statutory Stock Option
Exercise Price Per Share:	$[                        ]*
Date of Grant:	[                                       ]*
Vesting Commencement Date:	[                                       ]*
Vesting Schedule:	[                                       ]*
Expiration Date:	[                                      ]* (ten years from Grant Date)
	This option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement.

* The specific terms of this option are determined on the date of grant by the Board of Directors as prescribed by the Corporation’s 1999 Equity Incentive Plan. The typical vesting schedule for options granted to Board members stipulates 100% of the Shares subject to the option will become exercisable when the optionee completes twelve (12) months of continuous Service from the Vesting Commencement Date.

You and the Corporation agree that this option is granted under and governed by the terms and conditions of the 1999 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement; the Stock Option Agreement is attached to and made a part of this document.

You further agree that the Corporation may deliver by email all documents relating to the Plan or this option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Corporation is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Corporation may deliver these documents by posting them on a web site maintained by the Corporation or by a third party under contract with the Corporation. If the Corporation posts these documents on a web site, it will notify you by email.

OPTIONEE:	VIGNETTE CORPORATION
	By:
	Title:

VIGNETTE CORPORATION

1999 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

Tax Treatment	This option is intended to be a Non-Statutory stock option.
Vesting	This option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. In addition, this option becomes exercisable in full if the Corporation is subject to a “Change in Control” (as defined below) while you are in service as an employee, consultant or outside director of the Corporation or a parent or subsidiary of the Corporation (“Service”). No additional shares become exercisable after your Service has terminated for any reason.
Change in Control	Notwithstanding anything in the Plan to the contrary: In the event of any Change in Control this option shall become fully vested and exercisable effective as of immediately prior to the specified effective date for the Change in Control. Immediately following the consummation of the Change in Control, each option not exercised prior to the effective date of the Change in Control shall terminate and cease to be outstanding, except to the extent assumed or substituted by the successor corporation or its parent company. For purposes of this section, Change in Control shall be defined as a change in ownership or control of the Corporation effected through one of the following transactions: a. the consummation of a merger or consolidation of the Corporation with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Corporation immediately prior to such merger, consolidation or other reorganization; b. the sale, transfer or other disposition of all or substantially all of the Corporation’s assets; c. a change in the composition of the Board, as a result of which fewer than one-third of the incumbent directors are directors who either (i) had been directors of the Corporation on the date 24 months prior to the date of the event that may constitute a Change in Control (the “original directors”) or (ii) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the

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	original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved; d. any transaction as a result of which any person is the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Corporation representing at least 50% of the total voting power represented by the Corporation’s then outstanding voting securities. For purposes of this Paragraph (d), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the 1934 Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly by the stockholders of the Corporation in substantially the same proportions as their ownership of the Common Stock of the Corporation; or e. a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Corporation’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Corporation’s securities immediately before such transaction.
Term	This option expires in any event at the close of business at Corporation headquarters on the day before the 10th anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (It will expire earlier if your Service terminates, as described below.)
Regular Termination	If your Service terminates for any reason except death, then this option will expire at the close of business at Corporation headquarters on the date twelve months after your termination date. The Corporation determines when your Service terminates for this purpose.
Death	If you die while in Service or during the twelve (12) month period following your cessation of Service, then this option will expire at the close of business at Corporation headquarters on the date twelve (12) months after the date of death.
Restrictions on Exercise	The Corporation will not permit anyone to exercise this option if the issuance of shares at that time would violate any law or regulation.
Notice of Exercise	When you wish to exercise this option, you must notify the Corporation by filing the proper “Notice of Exercise” form at the address given on the form. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered (in your name only or in your and your spouse’s names as community property or as joint tenants with right of survivorship). The notice will be effective when it is received by the Corporation.

2

Form of Payment	When you submit your notice of exercise, you must include payment of the option exercise price for the shares you are purchasing. Unless otherwise prohibited by applicable law, payment may be made in one (or a combination of two or more) of the following forms:
	•        Your personal check, a cashier’s check or a money order.
	•        Certificates for shares of Corporation stock that you own, along with any forms needed to effect a transfer of those shares to the Corporation. The value of the shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. Instead of surrendering shares of Corporation stock, you may attest to the ownership of those shares on a form provided by the Corporation and have the same number of shares subtracted from the option shares issued to you. However, you may not surrender, or attest to the ownership of, shares of Corporation stock in payment of the exercise price if your action would cause the Corporation to recognize compensation expense (or additional compensation expense) with respect to this option for financial reporting purposes. •        Irrevocable directions to a securities broker approved by the Corporation to sell all or part of your option shares and to deliver to the Corporation from the sale proceeds an amount sufficient to pay the option exercise price and any withholding taxes. (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given by signing a special “Notice of Exercise” form provided by the Corporation. However, payment pursuant to this procedure shall not be permitted if such payment would violate applicable law or a policy of the Corporation.
Withholding Taxes and Stock Withholding	You will not be allowed to exercise this option unless you make arrangements acceptable to the Corporation to pay any applicable withholding taxes, if any, that may be due as a result of the option exercise. These arrangements may include, in the Corporation’s discretion, withholding shares of Corporation stock that otherwise would be issued to you when you exercise this option. The value of these shares, determined as of the effective date of the option exercise, will be applied to the withholding taxes.
Restrictions on Resale	By signing this Agreement, you agree not to sell any option shares at a time when applicable laws, regulations, Corporation trading policies (including the Corporation’s Insider Trading Policy, a copy of which can be found on the Company intranet) or an agreement between the Corporation and its underwriters prohibit a sale. This restriction will apply as long as you are a director of the Corporation.
Transfer of Option	In general, only you may exercise this option prior to your death. You may not transfer or assign this option, except as provided below. For

3

	instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or in a beneficiary designation. However, the Corporation may, in its sole discretion, allow you to transfer this option as a gift to a family member. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest.
	In addition, the Corporation may, in its sole discretion, allow you to transfer this option to your spouse or former spouse pursuant to a domestic relations order.
	The Committee will allow you to transfer this option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement. If another person wants to exercise this option after it has been transferred to him or her, including a transfer upon your death, that person must prove to the Corporation’s satisfaction that he or she is entitled to exercise this option. That person must also complete the proper “Notice of Exercise” form (as described above) and pay the exercise price (as described below).
Retention Rights	Neither your option nor this Agreement give you the right to be retained by the Corporation or a subsidiary of the Corporation in any capacity. Nothing in this Agreement or in the Plan shall interfere with or otherwise restrict in any way the rights of the Corporation and the Corporation’s stockholders to remove you from the Board at any time in accordance with the provisions of applicable law.
Stockholder Rights	You (or your estate, heirs or transferee) have no rights as a stockholder of the Corporation until you (or your estate, heirs or transferee) have exercised this option by giving the required notice to the Corporation and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before this option is exercised, except as described in the Plan.
Adjustments	The adjustments to any outstanding options shall be made by the Board in a manner which shall preclude, other than as authorized by the Plan, this Agreement or applicable law, the enlargement or dilution of rights

4

	and benefits under such awards and shall be final, binding and conclusive. In the event of a stock split, a stock dividend or a similar change in the Corporation’s stock, the number of shares covered by this option and the exercise price per share may be adjusted pursuant to the Plan in the sole discretion of the Corporation.
Applicable Law	This Agreement will be interpreted and enforced with respect to issues of contract law under the laws of the State of Texas and with respect to issues of corporation law under the laws of the State of Delaware.
The Plan and Other Agreements	The text of the Plan is incorporated in this Agreement by reference. A copy of the Plan is available on the Corporation’s intranet or by request to the Finance Department. This Agreement and the Plan constitute the entire understanding between you and the Corporation regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement, signed by both parties.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE

TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

5

EX-10.32

Exhibit 10.32

OFFER AGREEMENT

June 9, 2005

Brett Bachman

Dear Brett,

I am pleased to extend to you an offer to join Vignette Corporation starting July 1, 2005 or sooner at your discretion. Your position will be Senior Vice President, Products and Strategy reporting to Thomas E. Hogan based in Austin, Texas. The challenge in front of us is both exciting and tremendous and we believe that you will bring the skills and attitude that will become a critical part of Vignette’s success. We are eager to have you be part of our team. This offer expires on June 24 , 2005.

Your compensation will include the following:

• A bi-weekly salary of $10,576.92 (which when calculated on an annual basis equals $275,000.00).

• Subject to you joining Vignette Corporation, we have proposed for you to receive 750,000 stock options through the Vignette Corporation Stock Option Plan. Please note that on May 27, Vignette’s shareholders approved a one for 10 reverse stock split. This reverse split is expected to be effective on June 10, 2005. As a result, the proposed option grant will be automatically converted to a grant to receive 75,000 options. Your grant will be subject to a separate agreement and offer which has to be approved by the Compensation Committee of Vignette’s Board and does not form part of your contract of employment. Once this has been approved, the necessary documents will be sent to you.

• Subject to you joining Vignette Corporation, we have proposed for you to receive 150,000 shares of restricted stock through the Vignette Corporation Stock Option Plan. Please note that on May 27, Vignette’s shareholders approved a one for 10 reverse stock split. This reverse split is expected to be effective on June 10, 2005. As a result, the proposed option grant will be automatically converted to a grant to receive 15,000 restricted shares. Your grant will be subject to a separate agreement and offer which has to be approved by the Compensation Committee of Vignette’s Board and does not form part of your contract of employment. Once this has been approved, the necessary documents will be sent to you.

• Eligibility for bonus in the Executive Performance Bonus Plan, targeted at $100,000.00 annually. This bonus is paid out semi-annually at the discretion of the Company, based on the individual and company performance goals. Payment of this bonus may not occur if the company does not meet its financial goals.

• A relocation package of $140,000 to assist you in your move to Austin, Texas. This package will include a house hunting trip for you and your family, movement of your personal goods, home sale and purchase assistance and up to sixty days of temporary lodging.

• Eligibility for all of the benefits provided to Vignette’s employees, which currently include:

• Major medical, dental, vision, short term disability and life insurance coverage for you

• The option to purchase major medical, dental, vision, accident and life insurance coverage for your eligible dependents

• Participation in Vignette’s 401(k) plan upon completion of the plan’s eligibility requirements

• Participation in Vignette’s Employee Stock Purchase Plan

• Nine paid holidays and two weeks accrued paid vacation per year

Should your employment with Vignette be terminated without “Cause” or for “Good Reason,” during the first twenty four months of service, you will receive severance payments in the equivalent of six months base salary, with payment contingent upon execution of a Separation Agreement approved by Vignette which will include appropriate releases and restrictive covenants.

“Cause” for purposes of this Agreement shall be defined as your termination as a direct result of any of the following events which remains uncured after 15 days from the date of notice of such breach is provided to you or which cannot by its nature be cured: (a) material misconduct that results in material harm to the business of the Company; (b) material and repeated failure to perform duties assigned by your manager, which failure is not a result of a disability and results in material harm to the business of the Company; (c) any material breach of the Company’s policies or of the Proprietary Inventions Agreement which results in material harm to the business of the Company. “Good Reason” for purposes of this Agreement shall be defined as your resignation as a direct result of any of the following events: (i) a decrease in your Base Salary as set forth in this agreement of more than ten percent (10%); (ii) a substantial change in your job duties, position or title; (iii) any material breach by the Company of any provision of this Agreement, which breach is not cured within fifteen (15) days following written notice of such breach from you; (iv) the occurrence of a Change of Control (as defined below) of the Company;

Change of Control for purposes of this Letter Agreement shall be defined as(x) the acquisition of fifty percent (50%) or more of the beneficial ownership interests, or fifty percent (50%) or more of the voting power, of the Company, either directly or indirectly, in one or a series of related transactions, by merger, purchase or otherwise, by any person or group of persons acting in concert (including, without limitation, any one or more

individuals, corporations, partnerships, trusts, limited liability companies or other entities); (y) the disposition or transfer, whether by sale, merger, consolidation, reorganization, recapitalization, redemption, liquidation or any other transaction, of fifty percent (50%) or more by value of the assets of the Company in one or a series of related or unrelated transactions over time.

This offer of employment is contingent upon your execution of this Letter, Employment Application, PRSI Background Check, and satisfaction of the requirements of an I-9 Employment Eligibility Verification Form. Please understand that employment remains “at will”, and neither this letter nor the Plan create an employment contract with you. Also, please understand that the terms of the Plan (as modified by Vignette from time to time) will govern your compensation, and will control to the extent there is any conflict with the terms of this letter.

I am looking forward to having you as a member of the Vignette team.

Sincerely,

Thomas E. Hogan

President and Chief Executive Officer

Vignette Corporation

EX-10.33

Exhibit 10.33

OFFER AGREEMENT

September 20, 2005

David B. Crean

Dear David,

I am pleased to extend to you an offer to join Vignette Corporation starting November 1, 2005 or sooner at your discretion. Your position will be Vice President, Healthcare Solutions Unit currently reporting to Thomas E. Hogan based in Austin, Texas. The challenge in front of us is both exciting and tremendous and we believe that you will bring the skills and attitude that will become a critical part of Vignette’s success. We are eager to have you be part of our team. This offer expires on September 30, 2005.

Your compensation will include the following:

• A bi-weekly salary of $10,576.92 (which when calculated on an annual basis equals $275,000.00).

• Subject to you joining Vignette Corporation, we have proposed for you to receive 50,000 stock options through the Vignette Corporation Stock Option Plan with a four year vesting schedule with twenty five percent of the shares vesting at the end of each year. Your grant will be subject to a separate agreement and offer which has to be approved by the Compensation Committee of Vignette’s Board and does not form part of your contract of employment. Once this has been approved, the necessary documents will be sent to you.

• Subject to you joining Vignette Corporation, we have proposed for you to receive 5,000 shares of restricted stock through the Vignette Corporation Stock Option Plan with a three year vesting schedule with thirty three and one third percent of the shares vesting at the end of each year. Your grant will be subject to a separate agreement and offer which has to be approved by the Compensation Committee of Vignette’s Board and does not form part of your contract of employment. Once this has been approved, the necessary documents will be sent to you.

• Eligibility for bonus in the Executive Performance Bonus Plan, targeted at $137,500.00 annually. This bonus is paid out semi-annually at the discretion of the Company, based on the individual and company performance goals. Payment of this bonus may not occur if the company does not meet its financial goals. Your total compensation of base salary and bonus is capped at $900,000 annually.

• Eligibility for all of the benefits provided to Vignette’s employees, which currently include:

• Major medical, dental, vision, short term disability and life insurance coverage for you

• The option to purchase major medical, dental, vision, accident and life insurance coverage for your eligible dependents

• Participation in Vignette’s 401(k) plan upon completion of the plan’s eligibility requirements

• Participation in Vignette’s Employee Stock Purchase Plan

• Nine paid holidays and four weeks accrued paid vacation per year

Should your employment with Vignette be terminated without “Cause” or for “Good Reason,” during the first twelve months of service, you will receive severance payments paid out on Vignette’s normal payroll schedule, in the equivalent of twelve months base salary, with payment contingent upon execution of a Separation Agreement approved by Vignette which will include appropriate releases and restrictive covenants. After twelve months of service, you will receive severance payments paid out on Vignette’s normal payroll schedule, in the equivalent of three months base salary, with payment contingent upon execution of a Separation Agreement approved by Vignette which will include appropriate releases and restrictive covenants.

“Cause” for purposes of this Agreement shall be defined as your termination as a direct result of any of the following events which remains uncured after 15 days from the date of notice of such breach is provided to you or which cannot by its nature be cured: (a) material misconduct that results in material harm to the business of the Company; (b) material and repeated failure to perform duties assigned by your manager, which failure is not a result of a disability and results in material harm to the business of the Company; (c) starting in April, 2006, a repeated failure (two or more consecutive quarters) of material failure to achieve the reasonable sales targets set by the Company (which shall mean failure to attain at least 75% of such targets; and (d) any material breach of the Company’s policies or of the Proprietary Inventions Agreement which results in material harm to the business of the Company. “Good Reason” for purposes of this Agreement shall be defined as your resignation as a direct result of any of the following events: (i) a decrease in your Base Salary as set forth in this agreement of more than ten percent (10%); (ii) a substantial change in your job duties, position or title; (iii) any material breach by the Company of any provision of this Agreement, which breach is not cured within fifteen (15) days following written notice of such breach from you; (iv) the occurrence of a Change of Control (as defined below) of the Company;

Change of Control for purposes of this Letter Agreement shall be defined as(x) the acquisition of fifty percent (50%) or more of the beneficial ownership interests, or fifty percent (50%) or more of the voting power, of the Company, either directly or indirectly, in one or a series of related transactions, by merger, purchase or otherwise, by any person or group of persons acting in concert (including, without limitation, any one or more individuals, corporations, partnerships, trusts, limited liability companies or other entities); (y) the disposition or transfer, whether by sale, merger, consolidation, reorganization, recapitalization, redemption, liquidation or any other transaction, of fifty percent (50%) or

more by value of the assets of the Company in one or a series of related or unrelated transactions over time.

This offer of employment is contingent upon your execution of this Letter, Employment Application, PRSI Background Check, and satisfaction of the requirements of an I-9 Employment Eligibility Verification Form. At your request, we have not yet performed customary reference checks and such reference calls must be completed and must be satisfactory before you begin employment with the Company. Therefore this offer is contingent on Vignette’s satisfactory completion of such reference checks, which will be completed as soon as possible after you approve our making such calls. Please understand that employment remains “at will”, and neither this letter nor the Plan create an employment contract with you. Also, please understand that the terms of the Plan (as modified by Vignette from time to time) will govern your compensation, and will control to the extent there is any conflict with the terms of this letter.

I am looking forward to having you as a member of the Vignette team.

Sincerely,

Thomas E. Hogan

President and Chief Executive Officer

Vignette Corporation

EX-10.34

Exhibit 10.34

OFFER AGREEMENT

September 28, 2005

Gayle Wiley

Dear Gayle,

I am pleased to extend to you an offer to join Vignette Corporation starting on October 3, 2005. Your position will be Senior Vice President, Global Human Resources reporting to Thomas E. Hogan based in Austin, Texas. The challenge in front of us is both exciting and tremendous and we believe that you will bring the skills and attitude that will become a critical part of Vignette’s success. We are eager to have you be part of our team.

Your compensation will include the following:

• A bi-weekly salary of $8,269.23 (which when calculated on an annual basis equals $215,000.00).

• Subject to you joining Vignette Corporation, we have proposed for you to receive 25,000 stock options through the Vignette Corporation Stock Option Plan. Your grant will be subject to a separate agreement and offer which has to be approved by the Compensation Committee of Vignette’s Board and does not form part of your contract of employment. Once this has been approved, the necessary documents will be sent to you.

• Eligibility for bonus in the Executive Performance Bonus Plan, targeted at $60,000.00 annually. This bonus is paid out semi-annually at the discretion of the Company, based on the individual and Company performance goals. Payment of this bonus may not occur if the Company does not meet its financial goals.

• Eligibility for all of the benefits provided to Vignette’s employees, which currently include:

• Major medical, dental, vision, short term disability and life insurance coverage for you

• The option to purchase major medical, dental, vision, accident and life insurance coverage for your eligible dependents

• Participation in Vignette’s 401(k) plan upon completion of the plan’s eligibility requirements

• Participation in Vignette’s Employee Stock Purchase Plan

• Nine paid holidays and two weeks accrued paid vacation per year

• Should your employment with Vignette be terminated without “Cause” or for “Good Reason,” during the first twenty four months of service, you will receive severance payments in the equivalent of six months base salary, with payment contingent upon execution of a Separation Agreement approved by Vignette which will include appropriate releases and restrictive covenants.

“Cause” for purposes of this Agreement shall be defined as your termination as a direct result of any of the following events which remains uncured after 15 days from the date of notice of such breach is provided to you or which cannot by its nature be cured: (a) material misconduct that results in material harm to the business of the Company; (b) material and repeated failure to perform duties assigned by your manager, which failure is not a result of a disability and results in material harm to the business of the Company; (c) any material breach of the Company’s policies or of the Proprietary Inventions Agreement which results in material harm to the business of the Company. “Good Reason” for purposes of this Agreement shall be defined as your resignation as a direct result of any of the following events: (i) a decrease in your Base Salary as set forth in this agreement of more than ten percent (10%); (ii) a substantial change in your job duties, position or title; (iii) any material breach by the Company of any provision of this Agreement, which breach is not cured within fifteen (15) days following written notice of such breach from you; (iv) the occurrence of a Change of Control (as defined below) of the Company;

Change of Control for purposes of this Letter Agreement shall be defined as(x) the acquisition of fifty percent (50%) or more of the beneficial ownership interests, or fifty percent (50%) or more of the voting power, of the Company, either directly or indirectly, in one or a series of related transactions, by merger, purchase or otherwise, by any person or group of persons acting in concert (including, without limitation, any one or more individuals, corporations, partnerships, trusts, limited liability companies or other entities); (y) the disposition or transfer, whether by sale, merger, consolidation, reorganization, recapitalization, redemption, liquidation or any other transaction, of fifty percent (50%) or more by value of the assets of the Company in one or a series of related or unrelated transactions over time.

This offer of employment is contingent upon your execution of this Letter, Employment Application, PRSI Background Check, and satisfaction of the requirements of an I-9 Employment Eligibility Verification Form. Please understand that employment remains “at will”, and neither this letter nor the Plan create an employment contract with you. Also, please understand that the terms of the Plan (as modified by Vignette from time to time) will govern your compensation, and will control to the extent there is any conflict with the terms of this letter.

I am looking forward to having you as a member of the Vignette team.

Sincerely,

Thomas E. Hogan

President and Chief Executive Officer

Vignette Corporation

EX-10.35

Exhibit 10.35

OFFER AGREEMENT

October 17, 2005

Larry Warnock

Dear Larry,

I am pleased to extend to you an offer to join Vignette Corporation starting October 24, 2005 or sooner at your discretion. Your position will be Vice President, Marketing reporting to Thomas E. Hogan based in Austin, Texas. The challenge in front of us is both exciting and tremendous and we believe that you will bring the skills and attitude that will become a critical part of Vignette’s success. We are eager to have you be part of our team. This offer expires on October 24, 2005.

Your compensation will include the following:

• A bi-weekly salary of $8,653.85 (which when calculated on an annual basis equals $225,000).

• Subject to you joining Vignette Corporation, we have proposed for you to receive 35,000 stock options through the Vignette Corporation Stock Option Plan. Your grant will be subject to a separate agreement and offer which has to be approved by the Compensation Committee of Vignette’s Board and does not form part of your contract of employment. Once this has been approved, the necessary documents will be sent to you.

• Eligibility for bonus in the Executive Performance Bonus Plan, targeted at $100,000.00 annually. This bonus is paid out semi-annually at the discretion of the Company, based on the individual and company performance goals. Payment of this bonus may not occur if the company does not meet its financial goals.

• Eligibility for all of the benefits provided to Vignette’s employees, which currently include:

• Major medical, dental, vision, short term disability and life insurance coverage for you

• The option to purchase major medical, dental, vision, accident and life insurance coverage for your eligible dependents

• Participation in Vignette’s 401(k) plan upon completion of the plan’s eligibility requirements

• Participation in Vignette’s Employee Stock Purchase Plan

• Nine paid holidays and two weeks accrued paid vacation per year

Should your employment with Vignette be terminated without “Cause” or for “Good Reason,” during the first twenty four months of service, you will receive severance payments in the equivalent of six months base salary, with payment contingent upon execution of a Separation Agreement approved by Vignette which will include appropriate releases and restrictive covenants.

“Cause” for purposes of this Agreement shall be defined as your termination as a direct result of any of the following events which remains uncured after 15 days from the date of notice of such breach is provided to you or which cannot by its nature be cured: (a) material misconduct that results in material harm to the business of the Company; (b) material and repeated failure to perform duties assigned by your manager, which failure is not a result of a disability and results in material harm to the business of the Company; (c) any material breach of the Company’s policies or of the Proprietary Inventions Agreement which results in material harm to the business of the Company. “Good Reason” for purposes of this Agreement shall be defined as your resignation as a direct result of any of the following events: (i) a decrease in your Base Salary as set forth in this agreement of more than ten percent (10%); (ii) a substantial change in your job duties, position or title; (iii) any material breach by the Company of any provision of this Agreement, which breach is not cured within fifteen (15) days following written notice of such breach from you; (iv) the occurrence of a Change of Control (as defined below) of the Company;

Change of Control for purposes of this Letter Agreement shall be defined as(x) the acquisition of fifty percent (50%) or more of the beneficial ownership interests, or fifty percent (50%) or more of the voting power, of the Company, either directly or indirectly, in one or a series of related transactions, by merger, purchase or otherwise, by any person or group of persons acting in concert (including, without limitation, any one or more individuals, corporations, partnerships, trusts, limited liability companies or other entities); (y) the disposition or transfer, whether by sale, merger, consolidation, reorganization, recapitalization, redemption, liquidation or any other transaction, of fifty percent (50%) or more by value of the assets of the Company in one or a series of related or unrelated transactions over time.

This offer of employment is contingent upon your execution of this Letter, Employment Application, PRSI Background Check, and satisfaction of the requirements of an I-9 Employment Eligibility Verification Form. Please understand that employment remains “at will”, and neither this letter nor the Plan create an employment contract with you. Also, please understand that the terms of the Plan (as modified by Vignette from time to time) will govern your compensation, and will control to the extent there is any conflict with the terms of this letter.

I am looking forward to having you as a member of the Vignette team.

Sincerely,

Thomas E. Hogan

President and Chief Executive Officer

Vignette Corporation

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

Vignette Holdings, L.L.C., organized under the laws of Delaware.

Vignette International, Inc., incorporated under the laws of Delaware.

Vignette Public Sector & Education, Inc. (formerly known as Vignette Federal Corporation), incorporated under the laws of Delaware.

Vignette Europe Limited, organized under the laws of the United Kingdom.

Vignette SARL, organized under the laws of France.

Vignette Deutschland GmbH, organized under the laws of Germany.

Vignette Software (Switzerland) GmbH, organized under the laws of Switzerland.

Vignette Iberica S. L., organized under the laws of Spain.

Vignette Italia Srl, organized under the laws of Italy.

Vignette B.V. (formerly known as OnDisplay Benelux B.V.), organized under the laws of Holland.

Vignette Nordic AB, organized under the laws of Sweden.

Vignette Management Pty Limited (formerly known as Vignette Australia Pty Limited), organized under the laws of Australia.

Vignette Pty Limited, organized under the laws of Australia.

Vignette Software New Zealand Limited, organized under the laws of New Zealand.

Vignette Hong Kong Limited, organized under the laws of Hong Kong.

Vignette Asia Pte Ltd., organized under the laws of Singapore.

Vignette India Pvt Ltd., organized under the laws of India.

Vignette Software Development India Pvt Ltd., organized under the laws of India.

Vignette de Mexico, S. de R.L. de C. V., organized under the laws of Mexico.

Vignette do Brasil Ltda., organized under the laws of Brazil.

Vignette Canada Corporation, organized under the laws of Canada.

Epicentric (BVI), Inc., incorporated under the laws of the British Virgin Islands.

Intraspect Software, Inc. incorporated under the laws of Delaware.

Intraspect France SARL organized under the laws of France.

Copper Australia Pty Limited, organized under the laws of Australia.

Tower Technology, Inc., incorporated under the laws of Massachusetts.

Tower Technology Limited, organized under the laws of the United Kingdom.

Tower Technology SARL, organized under the laws of France.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-72877, 333-91767, 333-30242, 333-41482, 333-59358, 333-100566, and 333-107702) and Form S-3 (Nos. 333-113674 and 333-33794) of our reports dated March 9, 2006, with respect to the consolidated financial statements of Vignette Corporation, Vignette Corporation management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Vignette Corporation, included in this Annual Report (Form 10-K) for the fiscal year ended December 31, 2005.

/s/ Ernst & Young LLP

Austin, Texas

March 9, 2006

EX-31.1

Exhibit 31.1

Certification to the Securities and Exchange Commission

by Registrant’s Chief Executive Officer, as required by Section 302

of the Sarbanes-Oxley Act of 2002

I, Michael A. Aviles, certify that:

1. I have reviewed this report on Form 10-K of Vignette Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons fulfilling the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: March 15, 2006

/s/ Michael A. Aviles

Michael A. Aviles

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification to the Securities and Exchange Commission

by Registrant’s Chief Financial Officer, as required by Section 302

of the Sarbanes-Oxley Act of 2002

I, Charles W. Sansbury, certify that:

1. I have reviewed this report on Form 10-K of Vignette Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons fulfilling the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: March 15, 2006

/s/ Charles W. Sansbury

Charles W. Sansbury

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Vignette Corporation (the “Company”) hereby certify that:

(i) the accompanying Annual Report on Form 10-K of the Company for the year ended December 31, 2005, as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities Exchange Commission or its staff upon request.

March 15, 2006

/s/ Michael A. Aviles

Michael A. Aviles

President and Chief Executive Officer

/s/ Charles W. Sansbury

Charles W. Sansbury

Chief Financial Officer