10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2011
Or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-27038

NUANCE COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or Other jurisdiction of incorporation or organization)	94-3156479 (I.R.S. Employer Identification No.)
1 Wayside Road Burlington, Massachusetts (Address of principal executive offices)	01803 (Zip Code)

Registrant’s telephone number, including area code:

(781) 565-5000

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 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 þ     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ     No o

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

Large accelerated filer þ Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

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

The number of shares of the Registrant’s Common Stock, outstanding as of July 31, 2011, was 305,586,374.

NUANCE COMMUNICATIONS, INC.

TABLE OF CONTENTS

			Page
PART I: FINANCIAL INFORMATION
	Item 1.	Consolidated Financial Statements (unaudited):
		a) Consolidated Statements of Operations for the three and nine months ended June 30, 2011 and 2010		2
		b) Consolidated Balance Sheets at June 30, 2011 and September 30, 2010		3
		c) Consolidated Statements of Cash Flows for the nine months ended June 30, 2011 and 2010		4
		d) Notes to Consolidated Financial Statements		5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		39
	Item 4.	Controls and Procedures		41
PART II: OTHER INFORMATION
	Item 1.	Legal Proceedings		41
	Item 1A.	Risk Factors		41
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		51
	Item 3.	Defaults Upon Senior Securities		51
	Item 5.	Other Information		51
	Item 6.	Exhibits		51
Signatures				52
Exhibit Index				53
Certifications
EX-2.1
EX-2.2
EX-10.1
Ex-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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NUANCE COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(Unaudited)
	(In thousands, except per share amounts)
Revenues:
Product and licensing	$	152,745		$	108,840		$	428,181		$	335,228
Professional services and hosting		125,347			117,875			377,078			337,798
Maintenance and support		50,817			46,488			146,441			136,159
Total revenues		328,909			273,203			951,700			809,185
Cost of revenues:
Product and licensing		15,820			10,901			47,950			34,194
Professional services and hosting		83,301			71,353			248,003			206,349
Maintenance and support		8,836			7,631			26,645			23,335
Amortization of intangible assets		13,087			11,893			40,541			35,095
Total cost of revenues		121,044			101,778			363,139			298,973
Gross profit		207,865			171,425			588,561			510,212
Operating expenses:
Research and development		42,245			38,916			129,898			113,797
Sales and marketing		73,336			67,219			225,817			196,680
General and administrative		35,901			29,887			104,271			88,643
Amortization of intangible assets		20,972			21,459			65,221			65,786
Acquisition-related costs, net		8,595			6,125			13,910			26,892
Restructuring and other charges, net		864			3,257			5,343			16,244
Total operating expenses		181,913			166,863			544,460			508,042
Income from operations		25,952			4,562			44,101			2,170
Other income (expense):
Interest income		727			171			2,213			780
Interest expense		(8,749	)		(9,971	)		(26,814	)		(30,380	)
Other income (expense), net		301			5,539			8,865			10,685
Income (loss) before income taxes		18,231			301			28,365			(16,745	)
(Benefit) provision for income taxes		(23,390	)		1,831			(14,982	)		4,459
Net income (loss)	$	41,621		$	(1,530	)	$	43,347		$	(21,204	)
Net income (loss) per share:
Basic	$	0.14		$	(0.01	)	$	0.14		$	(0.07	)
Diluted	$	0.13		$	(0.01	)	$	0.14		$	(0.07	)
Weighted average common shares outstanding:
Basic		303,100			291,610			300,846			285,202
Diluted		317,802			291,610			314,791			285,202

See accompanying notes.

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NUANCE COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

	June 30,			September 30,
	2011			2010
	(Unaudited)
	(In thousands, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	446,981		$	516,630
Restricted cash (Note 9)		7,212			24,503
Marketable securities		36,617			5,044
Accounts receivable, less allowances for doubtful accounts of $5,721 and $6,301		247,972			217,587
Acquired unbilled accounts receivable		914			7,412
Prepaid expenses and other current assets		79,339			70,466
Total current assets		819,035			841,642
Land, building and equipment, net		79,623			62,083
Marketable securities		—			28,322
Goodwill		2,318,555			2,077,943
Intangible assets, net		757,599			685,865
Other assets		75,375			73,844
Total assets	$	4,050,187		$	3,769,699
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital leases	$	6,909		$	7,764
Contingent and deferred acquisition payments		34,712			2,131
Accounts payable		82,235			78,616
Accrued expenses and other current liabilities		157,632			151,621
Deferred revenue		183,455			142,340
Total current liabilities		464,943			382,472
Long-term portion of debt and capital leases		852,444			851,014
Deferred revenue, net of current portion		81,502			76,598
Deferred tax liability		73,966			63,731
Other liabilities		114,548			98,688
Total liabilities		1,587,403			1,472,503
Commitments and contingencies (Notes 5 and 18)
Stockholders’ equity:
Series B preferred stock, $0.001 par value; 15,000 shares authorized; 3,562 shares issued and outstanding (liquidation preference $4,631)		4,631			4,631
Common stock, $0.001 par value; 560,000 shares authorized; 307,958 and 301,623 shares issued and 304,207 and 297,950 shares outstanding		308			302
Additional paid-in capital		2,681,024			2,581,901
Treasury stock, at cost (3,751 and 3,673 shares)		(16,788	)		(16,788	)
Accumulated other comprehensive income		31,617			8,505
Accumulated deficit		(238,008	)		(281,355	)
Total stockholders’ equity		2,462,784			2,297,196
Total liabilities and stockholders’ equity	$	4,050,187		$	3,769,699

See accompanying notes.

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NUANCE COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	June 30,
	2011			2010
	(Unaudited)
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	43,347		$	(21,204	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		125,719			116,738
Stock-based compensation		109,505			72,868
Non-cash interest expense		9,524			9,746
Non-cash restructuring and other expense		—			6,833
Deferred tax provision		(35,727	)		(2,321	)
Other		4,259			1,671
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		(3,679	)		(13,023	)
Prepaid expenses and other assets		(17,095	)		(4,869	)
Accounts payable		(9,999	)		(3,960	)
Accrued expenses and other liabilities		(9,950	)		(7,825	)
Deferred revenue		43,603			30,044
Net cash provided by operating activities		259,507			184,698
Cash flows from investing activities:
Capital expenditures		(24,267	)		(16,284	)
Payments for acquisitions, net of cash acquired		(319,299	)		(155,882	)
Payments for acquired technology		(715	)		(14,850	)
Payments for equity investment		—			(14,970	)
Purchases of marketable securities		(10,776	)		—
Proceeds from sales of marketable securities		6,650			—
Change in restricted cash balances		17,184			(22,070	)
Net cash used in investing activities		(331,223	)		(224,056	)
Cash flows from financing activities:
Payments of debt and capital leases		(5,864	)		(6,376	)
Payments of other long-term liabilities		(7,794	)		(7,319	)
Proceeds on settlement of share-based derivatives, net		9,414			6,391
Excess tax benefits on employee equity awards		8,220			—
Proceeds from issuance of common stock, net of issuance costs		—			12,350
Proceeds from issuance of common stock from employee stock plans		21,712			22,832
Cash used to net share settle employee equity awards		(30,027	)		(18,040	)
Net cash (used in) provided by financing activities		(4,339	)		9,838
Effects of exchange rate changes on cash and cash equivalents		6,406			(5,444	)
Net decrease in cash and cash equivalents		(69,649	)		(34,964	)
Cash and cash equivalents at beginning of period		516,630			527,038
Cash and cash equivalents at end of period	$	446,981		$	492,074

See accompanying notes.

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   Organization and Presentation

The consolidated financial statements include the accounts of Nuance Communications, Inc. (“Nuance”, “we”, or “the Company”) and our wholly-owned subsidiaries. We prepared these unaudited interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim periods. In our opinion, these financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of our financial position for the periods disclosed. Intercompany transactions have been eliminated.

Although we believe the disclosures in these financial statements are adequate to make the information presented not misleading, certain information normally included in the footnotes prepared in accordance with GAAP has been omitted. Accordingly, these financial statements should be read in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010. Interim results are not necessarily indicative of the results that may be expected for a full year.

2.   Summary of Significant Accounting Policies

With the exception of the adoption of the accounting pronouncements discussed below related to revenue recognition, we have made no changes to the significant accounting policies disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010. We have updated our disclosures on collaboration agreements to reflect activity in the current period.

Accounting for collaboration agreements

In June 2011, we entered into an agreement with a large healthcare provider to acquire certain data to be used in a joint development project in exchange for $10 million, $3.5 million of which was due on June 30, 2011. In addition, under the terms of the arrangement we will be reimbursed for certain research and development costs related to specified product development projects with the objective of commercializing the resulting products. All intellectual property derived from these research and development efforts will be owned by us. Upon product introduction, we will pay royalties to this party based on the actual sales. At the end of 5 years, the party can elect to continue with the arrangement, receiving royalties on future sales, or receive a buy-out payment from us and forego future royalties. The buy-out payment is calculated based on a number of factors including the net cash flows received and paid by the parties, as well as a minimum return on those net cash flows.

As of the execution of the above arrangement, we have other arrangements where we have sold and will continue to sell our products and services to this party. As a result, under the guidance of ASC 605, “Revenue Recognition,” we are required to reduce the revenue recognized by the amount we pay to this customer, up to our historical revenue recorded from them. We have therefore reduced reported revenue by $3.5 million for the three months ended June 30, 2011.

The above development arrangement will be accounted for in accordance with ASC 730, “Research and Development.” Accordingly, any buy-out obligation will be recorded as a liability and any reimbursement of the research and development costs in excess of the buy-out obligation will be recorded as an offset to research and development costs. Royalties paid to this party upon commercialization of any products from these development efforts will be recorded as a reduction to revenue in accordance with ASC 605. During the quarter ended June 30, 2011, $4.6 million of expense reimbursement has been recorded as a reduction in research and development expense.

Adoption of new accounting standards

Effective October 1, 2010, we adopted the provisions in the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue Arrangements (“ASU 2009-13”) and ASU 2009-14. Software (Topic 985): Certain Revenue Arrangements that Include Software Elements (“ASU 2009-14”). The provisions of ASU 2009-13 apply to arrangements that are outside the scope of software revenue recognition guidance and amend Accounting Standards Codification (“ASC”) Topic 605 to (1) provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and the consideration allocated; (2) require an entity to allocate revenue in an arrangement using the best estimated selling prices (“BESP”) of deliverables if a vendor does not have vendor-specific objective evidence (“VSOE”) or third-party evidence (“TPE”) of selling price; and (3) eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. ASU 2009-14 modifies the scope of ASC Topic 985 to remove industry specific revenue accounting guidance for software and software related transactions, tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. The adoption of these provisions did not have a material impact on our consolidated financial statements.

ASU 2009-13 does not generally change the units of accounting for our revenue transactions. For multiple-element arrangements that contain both software and non-software elements such as our hosted offerings, we allocate revenue to software or software related elements and any non-software elements separately based on the selling price hierarchy. We determine the selling price for each deliverable using VSOE of selling price, if it exists, or TPE of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, we use our BESP for that deliverable. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element.

To determine the selling price in multiple-element arrangements, we establish VSOE of fair value for the majority of our post-contract customer support, professional services, and training based on historical stand-alone sales to third-parties. Typically, we are unable to determine TPE of selling price and therefore when neither VSOE nor TPE of selling price exist, we use BESP for the purposes of allocating the arrangement consideration. We determine BESP for a product or service by considering multiple factors including, but not limited to, major product groupings, market conditions, competitive landscape, price list and discounting practice.

Recently Issued Accounting Standards

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income.” This ASU intends to enhance comparability and transparency of other comprehensive income components. The guidance provides an option to present total comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement or two separate but consecutive statements. This ASU eliminates the option to present other comprehensive income components as part of the statement of changes in shareowners’ equity. The provisions of this ASU will be applied retrospectively for interim and annual periods beginning after December 15, 2011. Early application is permitted. ASU 2011-05 impacts disclosure only and therefore, is not expected to, have a material impact on our financial statements.

In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements (Topic 820) — Fair Value Measurements and Disclosures to add additional disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and transfers between Levels 1, 2, and 3. Levels 1, 2 and 3 of fair value measurements are defined in Note 8 below. ASU 2010-06 was effective for us for the interim reporting period beginning January 1, 2010, except for the provisions related to activity in Level 3 fair value measurements. Those provisions are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. ASU 2010-06

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

impacts disclosure only and therefore, did not, and is not expected to, have a material impact on our financial statements.

In December 2010, the FASB issued ASU No. 2010-28, Intangibles — Goodwill and Other (Topic 350): “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. ASU 2010-28 is effective for fiscal years beginning after December 15, 2010 and amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. We do not believe that this will have a material impact on our consolidated financial statements.

3.   Comprehensive Income (Loss)

The components of comprehensive income (loss) are as follows (dollars in thousands):

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011		2010
Net income (loss)	$	41,621		$	(1,530	)	$	43,347	$	(21,204	)
Other comprehensive income (loss):
Foreign currency translation adjustment		6,148			(19,488	)		22,893		(31,510	)
Unrealized (loss) gain on cash flow hedge derivatives		(465	)		690			54		2,228
Unrealized gain on marketable securities, net		28			—			26		—
Recognition of pension loss amortization		9			—			139		—
Other comprehensive income (loss)		5,720			(18,798	)		23,112		(29,282	)
Comprehensive income (loss)	$	47,341		$	(20,328	)	$	66,459	$	(50,486	)

4.   Business Acquisitions

Fiscal 2011 Acquisitions

On June 15, 2011, we acquired all of the outstanding capital stock of Equitrac Corporation (“Equitrac”), a leading provider of print management solutions, for cash consideration of approximately $162 million. The acquisition was a taxable stock purchase and the goodwill resulting from this acquisition is not expected to be deductible for tax purposes. The results of operations of Equitrac have been included in our results of operations from June 15, 2011.

On June 16, 2011, we acquired all of the outstanding capital stock of SVOX A.G. (“SVOX”), a German based seller of speech recognition, dialog, and text-to-speech software products for the automotive, mobile and consumer electronics industries. Total purchase consideration was €87.0 million which consists of cash consideration of €57.0 million ($80.9 million based on the exchange rate as of the date of acquisition) and a deferred acquisition payment of €30.0 million ($43.0 million based on the exchange rate as of the date of acquisition). The deferred acquisition payment is payable in cash or shares of our common stock, at our option; €8.3 million of the deferred acquisition payment is due on June 16, 2012 and the remaining €21.7 million is due on December 31, 2012. The acquisition was a taxable stock purchase and the goodwill resulting from this acquisition is not expected to be deductible for tax purposes. The results of operations of SVOX have been included in our results of operations from June 16, 2011.

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of the preliminary allocation of the purchase consideration for Equitrac and SVOX is as follows (in thousands):

	Equitrac			SVOX
Total purchase consideration:
Cash	$	161,950		$	80,919
Deferred acquisition payment		—			42,990
Total purchase consideration	$	161,950		$	123,909
Allocation of the purchase consideration:
Cash	$	115		$	—
Accounts receivable(a)		10,724			910
Inventory		2,462			—
Goodwill		87,705			92,478
Identifiable intangible assets(b)		91,900			42,165
Other assets		10,617			2,728
Total assets acquired		203,523			138,281
Current liabilities		(3,262	)		(9,542	)
Deferred tax liability		(38,311	)		(4,830	)
Total liabilities assumed		(41,573	)		(14,372	)
Net assets acquired	$	161,950		$	123,909

(a)	Accounts receivable have been recorded at their estimated fair values, which consists of the gross accounts receivable assumed of $12.7 million, reduced by a fair value reserve of $1.1 million representing the portion of contractually owed accounts receivable which we do not expect to be collected.
(b)	The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (table in thousands, except for years):

	Equitrac				SVOX
			Weighted Average				Weighted Average
	Amount		Life (Years)		Amount		Life (Years)
Customer relationships	$	55,800		15.0	$	35,612		13.4
Core and completed technology		22,000		7.0		6,268		5.0
Trade name		14,100		10.0		285		3.0
Total	$	91,900			$	42,165

Other Fiscal 2011 Acquisitions

During fiscal 2011, we acquired two additional businesses, primarily to expand our product offerings and enhance our technology base. The results of operations of these acquisitions have been included in our consolidated results from their respective acquisition dates. The total consideration for these acquisitions was $82.1 million, paid in cash. In allocating the total purchase consideration for these acquisitions based on estimated fair values, we preliminarily recorded $42.4 million of goodwill and $34.0 million of identifiable intangible assets. The allocations of the purchase consideration are based upon preliminary valuations and our estimates and assumptions are subject to change. Intangible assets acquired included primarily customer relationships and core and completed technology

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

with weighted average useful lives of 11.5 years. The acquisitions were stock acquisitions and the goodwill resulting from these transactions is not expected to be deductible for tax purposes.

Proforma Results

In addition to the acquisitions of Equitrac and SVOX discussed above, on December 30, 2009, we acquired all of the outstanding capital stock of SpinVox Limited (“Spinvox”), a UK-based privately-held company engaged in the business of providing voicemail-to-text services. The following table shows unaudited pro forma results of operations as if we had acquired SpinVox, Equitrac and SVOX on October 1, 2009 (dollars in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Revenue	$	348,877	$	287,521		$	1,007,734	$	865,305
Net income (loss)		39,857		(5,236	)		34,564		(55,147	)
Net income (loss) per share	$	0.13	$	(0.02	)	$	0.11	$	(0.19	)

We have not furnished pro forma financial information related to our other fiscal 2011 and 2010 acquisitions because such information is not material, individually or in the aggregate, to our financial results. The unaudited pro forma results of operations are not necessarily indicative of the actual results that would have occurred had the transactions actually taken place at the beginning of the periods indicated.

Acquisition-Related Costs, net

The components of acquisition-related costs, net are as follows (dollars in thousands):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Transition and integration costs	$	453	$	3,383		$	1,506	$	12,035
Professional service fees		7,775		3,079			11,107		14,933
Acquisition-related adjustments		367		(337	)		1,297		(76	)
Total	$	8,595	$	6,125		$	13,910	$	26,892

The increase in acquisition-related costs, net for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, was primarily driven by a reduction in transition and integration costs offset by an increase in professional service fees. For the three months ended June 30, 2010, transition and integration costs consisted primarily of costs associated with transitional employees from our acquisitions of SpinVox and eCopy. For the three months ended June 30, 2011, professional service fees consisted of expenses related to our third quarter 2011 acquisitions.

The decrease for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, was primarily driven by a reduction in transition and integration costs and professional services fees. For the nine months ended June 30, 2010, transition and integration costs consisted primarily of the costs associated with transitional employees from our acquisitions of SpinVox and eCopy; professional services consisted of expenses related to our acquisition of SpinVox in December 2009 and approximately $2.2 million that had been capitalized as of September 30, 2009 related to transaction costs incurred in prior periods that was required to be expensed upon our adoption of ASC 805, Business Combinations, in fiscal 2010.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.   Contingent Acquisition Payments

Earn-out Payments

For business combinations occurring subsequent to the adoption of ASC 805 in fiscal 2010, the fair value of any contingent consideration is established at the acquisition date and included in the total purchase price. The contingent consideration is then adjusted to fair value as an increase or decrease in current earnings in each reporting period. Contingent consideration related to acquisitions prior to our adoption of ASC 805 have been and will continue to be recorded as additional purchase price when the contingency is resolved and additional consideration is attributable.

In connection with our acquisition of Vocada, Inc. (“Vocada”) in November 2007, we agreed to make contingent earn-out payments of up to $21.0 million upon the achievement of certain financial targets measured over defined periods through December 31, 2010, in accordance with the merger agreement. We have notified the former shareholders of Vocada that the financial targets were not achieved. In December 2010, the former shareholders filed a demand for arbitration in accordance with their rights under the merger agreement. At June 30, 2011, we have not recorded any obligation relative to these earn-out provisions.

In connection with the acquisition of Commissure, Inc. (“Commissure”) in September 2007, we agreed to make contingent earn-out payments of up to $8.0 million payable in stock or cash, solely at our discretion, upon the achievement of certain financial targets for the fiscal years 2008, 2009 and 2010. In February 2011, we paid $1.0 million upon determination of the final earn-out achievement and recorded the payment as additional purchase price allocated to goodwill.

Escrow and Holdback Arrangements

In connection with certain of our acquisitions, we have placed either cash or shares of our common stock in escrow to satisfy any claims we may have. If no claims are made, the escrowed amounts will be released to the former shareholders of the acquired companies. Historically, under the previous accounting guidance of SFAS No. 141, Business Combinations (“SFAS 141”), we could not make a determination, beyond a reasonable doubt, whether the escrow would become payable to the former shareholders of these companies until the escrow period had expired. Accordingly, these amounts were treated as contingent purchase price until it was determined that the escrow was payable, at which time the escrowed amounts would be recorded as additional purchase price and allocated to goodwill. Under the revised accounting guidance of ASC 805, escrow payments are generally considered part of the initial purchase consideration and accounted for as goodwill.

During the nine months ended June 30, 2011, the last remaining escrowed amounts accounted for under previous accounting guidance expired. Payments totaling $5.2 million were released to former shareholders of X-Solutions Group B.V. and eCopy and were recorded as an increase to goodwill during the period.

6.   Goodwill and Intangible Assets

The changes in the carrying amount of goodwill and intangible assets for the nine months ended June 30, 2011, are as follows (dollars in thousands):

	Goodwill		Intangible Assets
Balance as of September 30, 2010	$	2,077,943	$	685,865
Acquisitions		222,545		171,556
Purchase accounting adjustments		4,366		648
Amortization		—		(105,762	)
Effect of foreign currency translation		13,701		5,292
Balance as of June 30, 2011	$	2,318,555	$	757,599

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During the nine months ended June 30, 2011, in addition to the businesses acquisitions described in Note 4 we made several purchases of intellectual property. Purchase accounting adjustments to goodwill recorded during the nine months ended June 30, 2011, included $5.2 million of releases of escrow cash related to our fiscal 2009 acquisitions. This increase in goodwill was partially offset by a $1.4 million reduction resulting from the finalization of the Spinvox purchase accounting.

7.   Financial Instruments and Hedging Activities

Cash Flow Hedges

Forward Currency Contracts

We enter into foreign currency contracts to hedge the variability of cash flows in Canadian Dollars (CAD) and Hungarian Forints (HUF) which are designated as cash flow hedges. These contracts settle monthly through October 2011. At June 30, 2011 and September 30, 2010, the notional value and the aggregate cumulative unrealized gains on the outstanding contracts were as follows:

					Aggregate Cumulative
	Notional Value				Unrealized Gains
	June 30,		September 30,		June 30,		September 30,
	2011		2010		2011		2010
Canadian Dollars	$	1,547	$	13,032	$	125	$	286
Hungarian Forints		636		4,564		155		443
Total contracts designated as cash flow hedges	$	2,183	$	17,596	$	280	$	729

Other Derivatives not Designated as Hedges

Forward Currency Contracts

We operate our business in countries throughout the world and transact business in various foreign currencies. Our foreign currency exposures typically arise from transactions denominated in currencies other than the local functional currency of our operations. During fiscal 2011, we commenced a program that primarily utilizes foreign currency forward contracts to offset the risks associated with foreign currency denominated assets and liabilities. We established this program so that gains and losses from remeasurement or settlement of these assets and liabilities are offset by gains or losses on the foreign currency forward contracts thus mitigating the risks and volatility associated with our foreign currency transactions. Generally, we enter into contracts with terms of 30 days or less, and at June 30, 2011 we had outstanding contracts with a total notional value of $165.4 million.

We have not designated these forward contracts as hedging instruments pursuant to ASC 815, Derivatives and Hedging and accordingly, we recorded the fair value of these contracts at the end of each reporting period in our consolidated balance sheet, with changes in the fair value recorded in earnings as other income (expense), net in our consolidated statement of operations. During the three and nine month periods ended June 30, 2011, we recorded losses of $0.2 million and $0.7 million, respectively, associated with these contracts.

Security Price Guarantees

From time to time we enter into agreements that allow us to issue shares of our common stock as part or all of the consideration related to partnering and technology acquisition activities. Generally these shares are issued subject to security price guarantees which are accounted for as derivatives. We have determined that these instruments would not be considered equity instruments if they were freestanding. The security price guarantees require payment from either us to a third party, or from a third party to us, based upon the difference between the price of our common stock on the issue date and an average price of our common stock approximately six months following the issue date. Changes in

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the fair value of these security price guarantees are reported in earnings in each period as other income (expense), net. During the three and nine months ended June 30, 2011, we recorded gains of $0.4 million and $10.8 million, respectively, associated with these contracts. We received cash totaling $10.0 million to settle certain of these contracts during the three months ended June 30, 2011.

The following table provides a summary of the fair value of our derivative instruments as of June 30, 2011 and September 30, 2010 (dollars in thousands):

		Fair Value
		June 30,			September 30,
Description	Balance Sheet Classification	2011			2010
Derivatives Not Designated as Hedges:
Foreign currency contracts	Prepaid expenses and other current assets	$	505		$	767
Foreign currency contracts	Accrued expenses and other current liabilities		(463	)		—
Security price guarantees	Prepaid expenses and other current assets		395			—
Security price guarantees	Accrued expenses and other current liabilities		—			(982	)
Net asset (liability) value of non-hedge derivative instruments		$	437		$	(215	)
Derivatives Designated as Hedges:
Foreign currency contracts	Prepaid expenses and other current assets	$	280		$	729
Interest rate swaps	Accrued expenses and other current liabilities		—			(503	)
Net asset value of hedge derivative instruments		$	280		$	226

The following tables summarize the activity of derivative instruments for the three and nine months ended June 30, 2011 and 2010, respectively (dollars in thousands):

Derivatives Designated as Hedges for the Three Months Ended June 30,

	Amount of Gain (Loss)					Location and Amount of Gain (Loss) Reclassified from
	Recognized in OCI					Accumulated OCI into Income (Effective Portion)
	2011		2010				2011		2010
Foreign currency contracts	$	16	$	(321	)	Other income (expense), net	$	481	$	(98	)
Interest rate swaps	$	—	$	1,109		N/A	$	—	$	—

Derivatives Designated as Hedges for the Nine Months Ended June 30,

	Amount of Gain (Loss)					Location and Amount of Gain (Loss) Reclassified from
	Recognized in OCI					Accumulated OCI into Income (Effective Portion)
	2011		2010				2011			2010
Foreign currency contracts	$	529	$	(99	)	Other income (expense), net	$	978		$	(190	)
Interest rate swaps	$	—	$	2,517		Interest expense	$	(503	)	$	—

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Derivatives Not Designated as Hedges

		Amount of Gain (Loss) Recognized in Income
		Three Months Ended						Nine Months Ended
	Location of Gain (Loss)	June 30,						June 30,
	Recognized in Income	2011			2010			2011			2010
Foreign currency contracts	Other income (expense), net	$	(217	)	$	—		$	(675	)	$	—
Security price guarantees	Other income (expense), net	$	395		$	(1,044	)	$	10,844		$	3,664

Other Financial Instruments

Financial instruments, including cash equivalents, restricted cash, marketable securities, accounts receivable, accounts payable and derivative instruments, are carried in the consolidated financial statements at amounts that approximate their fair value.

The fair value of our long-term debt was estimated to be $963.3 million and $902.2 million at June 30, 2011 and September 30, 2010, respectively. The increase in the fair value is primarily related to the convertible debt, reflecting the increase in the underlying stock price during the period. These fair value amounts represent the value at which our lenders could trade our debt within the financial markets, and do not represent the settlement value of these long-term debt liabilities to us at each reporting date. The fair value of the long-term debt issues will continue to vary each period based on fluctuations in market interest rates, changes to our credit ratings and, for the outstanding convertible debt, changes in our stock price. These fluctuations may have little to no correlation to our reported debt balances. The term loan portion of our Credit Facility is traded and the fair values are based upon traded prices as of the reporting dates. The fair values of the 2.75% Convertible Debentures at each respective reporting date were estimated using the averages of the June 30, 2011 and September 30, 2010 bid and ask trading quotes. We had no outstanding balance on the revolving credit line portion of our Credit Facility. Our capital lease obligations and other debt are not traded and the fair values of these instruments are assumed to approximate their carrying values as of June 30, 2011 and September 30, 2010.

8.   Fair Value Measures

Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

ASC 820, Fair Value Measures and Disclosures, establishes a value hierarchy based on three levels of inputs, of which the first two are considered observable and the third is considered unobservable:

•  Level 1.  Quoted prices for identical assets or liabilities in active markets which we can access.

•  Level 2.  Observable inputs other than those described as Level 1.

•  Level 3.  Unobservable inputs.

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Assets and liabilities measured at fair value on a recurring basis at June 30, 2011 and September 30, 2010 consisted of the following (dollars in thousands):

	June 30, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(a)	$	231,198	$	—	$	—	$	231,198
Time Deposits(b)		—		98,607		—		98,607
US government agency securities(a)		1,000		—		—		1,000
Marketable securities, $36,562 at cost(b)		—		36,617		—		36,617
Foreign currency exchange contracts(b)		—		785		—		785
Security price guarantees(c)		—		395		—		395
Total assets at fair value	$	232,198	$	136,404	$	—	$	368,602
Liabilities:
Foreign currency exchange contracts(b)		—		463		—		463
Contingent earn-out(d)		—		—		2,115		2,115
Total liabilities at fair value	$	—	$	463	$	2,115	$	2,578

	September 30, 2010
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(a)	$	470,845	$	—	$	—	$	470,845
US government agency securities(a)		1,000		—		—		1,000
Marketable securities, $33,337 at cost(b)		—		33,366		—		33,366
Foreign currency exchange contracts(b)		—		1,496		—		1,496
Total assets at fair value	$	471,845	$	34,862	$	—	$	506,707
Liabilities:
Security price guarantees(c)	$	—	$	982	$	—	$	982
Interest rate swaps(e)		—		503		—		503
Contingent earn-out(d)		—		—		724		724
Total liabilities at fair value	$	—	$	1,485	$	724	$	2,209

(a)	Money market funds and US government agency securities, included in cash and cash equivalents in the accompanying balance sheet, are valued at quoted market prices in active markets.
(b)	The fair value of our time deposits, marketable securities and foreign currency exchange contracts is based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable.
(c)	The fair values of the security price guarantees are determined using a modified Black-Scholes model, derived from observable inputs such as US treasury interest rates, our common stock price, and the volatility of our common stock. The valuation model values both the put and call components of the guarantees simultaneously, with the net value of those components representing the fair value of each instrument.
(d)	The fair value of our contingent consideration arrangement is determined based on the Company’s evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performance by

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	the acquired entity, as well as our common stock price since the contingent consideration arrangement is payable in shares of our common stock.
(e)	The fair values of the interest rate swaps are estimated using discounted cash flow analyses that factor in observable market inputs such as LIBOR — based yield curves, forward rates, and credit spreads.

The changes in the fair value of contingent earn-out liabilities during the three and nine months ended June 30, 2011 are as follows (dollars in thousands):

	Three Months Ended		Nine Months Ended
	June 30, 2011		June 30, 2011
Balance at beginning of period	$	1,679	$	724
Charges to acquisition-related costs, net		436		1,391
Balance as of June 30, 2011	$	2,115	$	2,115

Earn-out payments are generally payable based on achieving certain financial targets during defined post-acquisition time periods as specified in the purchase and sale agreement for each acquisition. Changes in the fair value during the three and nine months ended June 30, 2011 resulted from improved revenue performance together with an increase in our stock price during the earn-out period.

9.   Current Liabilities

Accrued expenses and other current liabilities consisted of the following (dollars in thousands):

	June 30,		September 30,
	2011		2010
Compensation	$	76,251	$	56,047
Sales and marketing incentives(a)		17,174		40,780
Professional fees		13,187		9,908
Accrued business combination costs		10,038		10,197
Sales and other taxes payable		9,091		5,211
Cost of revenue related liabilities		9,325		10,028
Acquisition costs and liabilities		8,299		4,970
Income taxes payable		2,960		4,357
Security price guarantee		—		1,034
Other		11,307		9,089
Total	$	157,632	$	151,621

(a) The decrease in accrued sales and marketing incentives was driven by an €18.0 million ($23.4 million equivalent) payment in December 2010 for a fixed obligation assumed in connection with our acquisition of SpinVox. The related €18.0 million of restricted cash was placed in an irrevocable standby letter of credit account at the end of fiscal year 2010 and was released upon satisfaction of the liability in December 2010. At June 30, 2011, we have an additional €5.0 million ($7.2 million equivalent) of restricted cash that has been placed in an irrevocable standby letter of credit for a related liability.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10.   Deferred Revenues

Deferred revenue consisted of the following (dollars in thousands):

	June 30,		September 30,
	2011		2010
Current Liabilities:
Deferred maintenance revenue	$	98,071	$	90,969
Unearned revenue		85,384		51,371
Total current deferred revenue	$	183,455	$	142,340
Long-term Liabilities:
Deferred maintenance revenue	$	20,274	$	12,902
Unearned revenue		61,228		63,696
Total long-term deferred revenue	$	81,502	$	76,598

Deferred maintenance revenue consists of prepaid fees received for post-contract customer support for our products, including telephone support and the right to receive unspecified upgrades/enhancements on a when-and-if-available basis. Unearned revenue includes upfront fees for setup and implementation activities related to hosted offerings; certain software arrangements for which we do not have fair value of post-contract customer support, resulting in ratable revenue recognition for the entire arrangement on a straight-line basis; and fees in excess of estimated earnings on percentage-of-completion service contracts.

The increase in the deferred maintenance revenue is primarily related to an increase in Imaging maintenance and support as well as an increase in Enterprise application maintenance. Unearned revenue increased as a result of set-up fees on new hosting arrangements that will be recognized ratably over the longer of the contract lives, or the expected lives of the customer relationship as well as billings in excess of revenues earned on several large professional service implementation projects.

11.   Business Combination Costs

The activity for the nine months ended June 30, 2011, relating to all facilities and personnel recorded in accrued business combination costs, is as follows (dollars in thousands):

	Facilities			Personnel			Total
Balance at September 30, 2010	$	23,871		$	159		$	24,030
Charged to restructuring and other charges, net		(129	)		(100	)		(229	)
Charged to interest expense		662			—			662
Cash payments, net of sublease receipts		(8,616	)		(59	)		(8,675	)
Balance at June 30, 2011	$	15,788		$	—		$	15,788

	June 30,		September 30,
	2011		2010
Reported as:
Other current liabilities	$	10,038	$	10,197
Other liabilities		5,750		13,833
Total	$	15,788	$	24,030

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12.   Restructuring and Other Charges, net

The following table sets forth the nine months ended June 30, 2011 accrual activity relating to restructuring and other charges (dollars in thousands):

	Personnel			Facilities			Other			Total
Balance at September 30, 2010	$	1,838		$	283		$	—		$	2,121
Restructuring and other charges, net		3,854			1,460			258			5,572
Non-cash adjustment		208			—			(165	)		43
Cash payments		(4,629	)		(852	)		(93	)		(5,574	)
Balance at June 30, 2011	$	1,271		$	891		$	—		$	2,162

For the nine months ended June 30, 2011, we recorded net restructuring and other charges of $5.6 million, which included $3.9 million of severance and other costs related to the elimination of approximately 90 personnel across multiple functions worldwide, primarily within costs of sales, and $1.5 million related to facilities that we no longer occupy.

13.   Credit Facilities and Debt

2.75% Convertible Debentures

We have $250 million of 2.75% convertible senior debentures due in August 2027. As of June 30, 2011, no conversion triggers were met. If the conversion triggers were met, we could be required to repay all or some of the principal amount in cash prior to maturity.

Credit Facility

We have a credit facility which originally consisted of a $75 million revolving credit line, reduced by outstanding letters of credit, a $355 million term loan entered into on March 31, 2006, a $90 million term loan entered into on April 5, 2007 and a $225 million term loan entered into on August 24, 2007 (collectively the “Credit Facility”). The revolving credit line was due in March 2012. The original provisions of the credit facility called for quarterly principal and interest payments on the term loans, with an original maturity in March 2013. In July 2011, we entered into agreements to amend and restate our existing Credit Facility. Of the approximately $638.5 million remaining Term Loan originally due March 31, 2013, lenders representing $486.9 million have elected to extend the maturity date three years to March 31, 2016. The remaining $151.6 million in term loans are due March 2013. In addition, lenders participating in the revolving credit facility have chosen to extend the maturity date by three years to March 31, 2015.

In conjunction with the amendment, the Credit Facility repayment terms were amended. Principal is due in four quarterly installments of 1% per annum through the original maturity date of March 2013, at which time the principal remaining on the unextended portion of the loans becomes payable. The table below details the new

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

schedule of principal payments by fiscal year. If only the minimum required repayments are made, the annual aggregate principal amount of the term loans repaid would be as follows (dollars in thousands):

Year Ending September 30,	Amount
2011 (quarter ending September 30)	$	1,596
2012		6,346
2013		154,494
2014		4,743
2015		4,696
2016		466,663
Total	$	638,538

Under terms of the amendment, borrowings under the Credit Facility bear interest at a rate equal to the applicable margin plus, at our option, either (a) the base rate which is the higher of the corporate base rate of UBS AG, Stamford Branch, or the federal funds rate plus 0.50% per annum or (b) LIBOR (equal to (i) the British Bankers’ Association Interest Settlement Rates for deposits in U.S. dollars divided by (ii) one minus the statutory reserves applicable to such borrowing). The applicable margin for the borrowings is as follows:

Description	Base Rate Margin	LIBOR Margin
Term loans due March 2013	0.75% - 1.50%(a)	1.75% - 2.50%(a)
Term loans due March 2016	2.00%	3.00%
Revolving facility due March 2015	1.25% - 2.25%(b)	2.25% - 3.25%(b)

(a)	The margin is determined based on our leverage ratio at the date the interest rates are reset on the Term Loans.
(b)	The margin is determined based on our credit rating at the date the interest rates are reset on the Revolving Loans

As of June 30, 2011 (prior to the amendment), based on our leverage ratio, the applicable margin for our term loan was 0.75% for base rate borrowings and 1.75% for LIBOR-based borrowings. This results in an effective interest rate of 1.95%. No payments under the excess cash flow sweep provision were due in the first quarter of fiscal 2011 as no excess cash flow, as defined, was generated in fiscal 2010. At the current time, we are unable to predict the amount of the outstanding principal, if any, that we may be required to repay in future fiscal years pursuant to the excess cash flow sweep provisions.

As of June 30, 2011, $638.5 million remained outstanding under the term loans, there were $15.7 million of letters of credit issued under the revolving credit line and there were no other outstanding borrowings under the revolving credit line. As of June 30, 2011, we were in compliance with the covenants under the Credit Facility.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

14.   Net Income (Loss) Per Share

The following table sets forth the computation for basic and diluted net income (loss) per share for the three and nine months ended June 30, 2011 and 2010. (amounts in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Numerator:
Basic
Net income (loss) available to common stockholders — basic	$	41,621	$	(1,530	)	$	43,347	$	(21,204	)
Diluted
Net income (loss) available to common stockholders — diluted	$	41,621	$	(1,530	)	$	43,347	$	(21,204	)
Denominator:
Basic
Weighted average common shares outstanding		303,100		291,610			300,846		285,202
Diluted
Weighted average common shares outstanding — basic		303,100		291,610			300,846		285,202
Weighted average effect of dilutive common equivalent shares:
Assumed conversion of Series B Preferred Stock		3,562		—			3,562		—
Employee stock compensation plan		8,538		—			8,704		—
Warrants		1,793		—			1,485		—
Other contingently issuable shares		809		—			194		—
Weighted average common shares outstanding — diluted		317,802		291,610			314,791		285,202
Net income (loss) per share:
Basic	$	0.14	$	(0.01	)	$	0.14	$	(0.07	)
Diluted	$	0.13	$	(0.01	)	$	0.14	$	(0.07	)

Common equivalent shares are excluded from the computation of diluted net income (loss) per share if their effect is anti-dilutive. Potentially dilutive common equivalent shares aggregating to 3.6 million and 3.5 million shares for the three and nine months ended June 30, 2011, respectively, and 19.9 million and 21.8 million shares for the three and nine months ended June 30, 2010, respectively, have been excluded from the computation of diluted net income (loss) per share because their inclusion would be anti-dilutive.

15.   Stockholders’ Equity

We have, from time to time, entered into stock and warrant agreements with Warburg Pincus. In connection with these agreements, we granted Warburg Pincus the right to request that we use commercially reasonable efforts to register some or all of the shares of common stock issued to them pursuant to the purchase agreements, including

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

shares of common stock underlying the warrants. At June 30, 2011, Warburg Pincus holds the following warrants to purchase shares of our common stock:

Issuance Date	Price per Share		Total Shares		Expiration Date
January 29, 2009	$	11.57		3,862,422		January 29, 2013
May 20, 2008		20.00		3,700,000		May 20, 2012

16.   Stock-Based Compensation

We recognize stock-based compensation expense over the requisite service period. Our share-based awards are accounted for as equity instruments. The amounts included in the consolidated statements of operations relating to stock-based compensation are as follows (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Cost of product and licensing	$	2	$	7	$	29	$	25
Cost of professional services and hosting		5,764		2,612		20,514		8,173
Cost of maintenance and support		518		165		1,545		582
Research and development		5,280		2,282		18,188		6,731
Sales and marketing		10,341		12,516		32,748		29,813
General and administrative		11,883		10,512		36,481		27,544
Total	$	33,788	$	28,094	$	109,505	$	72,868

Included in stock-based compensation for the three and nine months ended June 30, 2011 is $11.0 million and $24.1 million, respectively, of expense related to awards that will be made as part of the fiscal 2011 annual bonus plan to employees. The annual bonus pool is determined by management and approved by the Compensation Committee of the Board of Directors based on financial performance targets approved at the beginning of the year. If these targets are achieved, the awards will be settled in shares based on the total bonus earned and the grant date fair value of the shares awarded to each employee.

Stock Options

The table below summarizes activity relating to stock options for the nine months ended June 30, 2011:

				Weighted		Weighted Average
	Number of			Average		Remaining		Aggregate
	Shares			Exercise Price		Contractual Term		Intrinsic Value(1)
Outstanding at September 30, 2010		10,703,237		$	8.44
Granted		1,000,000		$	16.44
Exercised		(2,448,623	)	$	6.33
Forfeited		(89,553	)	$	12.81
Expired		(63,401	)	$	14.99
Outstanding at June 30, 2011		9,101,660		$	9.79		3.4 years	$	106.3 million
Exercisable at June 30, 2011		6,917,436		$	8.21		2.6 years	$	91.7 million
Exercisable at June 30, 2010		8,021,090		$	6.94		2.9 years	$	65.9 million

20

NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) The aggregate intrinsic value in this table was calculated based on the positive difference, if any, between the closing market value of our common stock on June 30, 2011 ($21.47) and the exercise price of the underlying options.

As of June 30, 2011, the total unamortized fair value of stock options was $5.9 million with a weighted average remaining recognition period of 0.8 years. A summary of weighted-average grant-date fair value of stock options granted and intrinsic value of stock options exercised is as follows:

	Nine Months Ended
	June 30,
	2011		2010
Weighted-average grant-date fair value per share	$	6.13	$	5.90
Total intrinsic value of stock options exercised (in millions)	$	32.9	$	34.1

We use the Black-Scholes option pricing model to calculate the grant-date fair value of an award. The fair value of the stock options granted during the nine months ended June 30, 2011 and 2010 were calculated using the following weighted-average assumptions:

	Nine Months Ended
	June 30,
	2011			2010
Dividend yield		0.0	%		0.0	%
Expected volatility		46.1	%		50.9	%
Average risk-free interest rate		1.2	%		2.4	%
Expected term (in years)		4.1			4.2

Restricted Units

Restricted Units are not included in issued and outstanding common stock until the shares are vested and released. The table below summarizes activity relating to Restricted Units for the nine months ended June 30, 2011:

	Number of Shares			Number of Shares
	Underlying			Underlying
	Restricted Units —			Restricted Units —
	Contingent Awards			Time-Based Awards
Outstanding at September 30, 2010		2,867,840			7,795,114
Granted		1,329,988			3,521,636
Earned/released		(1,296,018	)		(3,273,826	)
Forfeited		(360,009	)		(557,123	)
Outstanding at June 30, 2011		2,541,801			7,485,801
Weighted average remaining contractual term of outstanding Restricted Units		1.0 years			1.1 years
Aggregate intrinsic value of outstanding Restricted Units(1)	$	54.6 million		$	160.7 million
Restricted Units vested and expected to vest		2,383,251			6,961,901
Weighted average remaining contractual term of Restricted Units vested and expected to vest		1.0 years			1.1 years
Aggregate intrinsic value of Restricted Units vested and expected to vest(1)	$	51.2 million		$	149.5 million

21

NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) The aggregate intrinsic value in this table was calculated based on the positive difference between the closing market value of our common stock on June 30, 2011 ($21.47) and the exercise price of the underlying Restricted Units.

The purchase price for vested Restricted Units is $0.001 per share. As of June 30, 2011, unearned stock-based compensation expense related to all unvested Restricted Units is $121.5 million, which will, based on expectations of future performance vesting criteria, where applicable, be recognized over a weighted-average period of 1.5 years.

A summary of weighted-average grant-date fair value and intrinsic value of all Restricted Units vested is as follows:

	Nine Months Ended,
	June 30,
	2011		2010
Weighted-average grant-date fair value per share	$	17.91	$	15.59
Total intrinsic value of shares vested (in millions)	$	81.8	$	65.2

17.   Income Taxes

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Income (loss) before income taxes	$	18,231		$	301		$	28,365		$	(16,745	)
(Benefit) provision for income taxes		(23,390	)		1,831			(14,982	)		4,459
Effective tax rate		(128.3	)%		608.3	%		(52.8	)%		(26.6	)%

The change in the effective tax rate and the decrease in the income tax provision, was primarily related to a one-time tax benefit recorded in connection with the Equitrac acquisition. We recorded a deferred tax liability in purchase accounting allowing a release of our existing valuation reserve, resulting in the recognition of a tax benefit for the three and nine months ended June 30, 2011. This tax benefit was offset by the tax on U.S. profits in the three and nine months ended June 30, 2011.

At June 30, 2011 and September 30, 2010, the liability for income taxes associated with uncertain tax positions was $13.4 million and $12.8 million, respectively. The increase is primarily attributable to accrued interest. We do not expect a significant change in the amount of unrecognized tax benefits within the next twelve months

18.   Commitments and Contingencies

Litigation and Other Claims

Like many companies in the software industry, we have, from time to time, been notified of claims that we may be infringing, or contributing to the infringement of, the intellectual property rights of others. These claims have been referred to counsel, and they are in various stages of evaluation and negotiation. If it appears necessary or desirable, we may seek licenses for these intellectual property rights. There is no assurance that licenses will be offered by all claimants, that the terms of any offered licenses will be acceptable to us or that in all cases the dispute will be resolved without litigation, which may be time consuming and expensive, and may result in injunctive relief or the payment of damages by us.

Vianix LLC has filed three legal actions against us, consisting of two breach of contract actions and a copyright infringement claim. These matters were concluded during the three months ended March 31, 2011. The resolution of these matters did not have a material impact on our financial statements or liquidity.

We do not believe that the final outcome of the above referenced litigation matters will have a material adverse effect on our financial position and results of operations. However, even if our defense is successful, the litigation

22

NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

could require significant management time and will be costly. Should we not prevail, our operating results, financial position and cash flows could be adversely impacted.

Guarantees and Other Commitments

We include indemnification provisions in the contracts we enter into with customers and business partners. Generally, these provisions require us to defend claims arising out of our products’ infringement of third-party intellectual property rights, breach of contractual obligations and/or unlawful or otherwise culpable conduct. The indemnity obligations generally cover damages, costs and attorneys’ fees arising out of such claims. In most, but not all, cases, our total liability under such provisions is limited to either the value of the contract or a specified, agreed upon amount. In some cases our total liability under such provisions is unlimited. In many, but not all cases, the term of the indemnity provision is perpetual. While the maximum potential amount of future payments we could be required to make under all the indemnification provisions is unlimited, we believe the estimated fair value of these provisions is minimal due to the low frequency with which these provisions have been triggered.

We indemnify our directors and officers to the fullest extent permitted by law. These agreements, among other things, indemnify directors and officers for expenses, judgments, fines, penalties and settlement amounts incurred by such persons in their capacity as a director or officer of the company, regardless of whether the individual is serving in any such capacity at the time the liability or expense is incurred. Additionally, in connection with certain acquisitions we have agreed to indemnify the former officers and members of the boards of directors of those companies, on similar terms as described above, for a period of six years from the acquisition date. In certain cases we purchase director and officer insurance policies related to these obligations, which fully cover the six year periods. To the extent that we do not purchase a director and officer insurance policy for the full period of any contractual indemnification, we would be required to pay for costs incurred, if any, as described above.

19.   Segment and Geographic Information and Significant Customers

We follow the provisions of ASC 280, Segment Reporting, which establishes standards for reporting information about operating segments. ASC 280 also established standards for disclosures about products, services and geographic areas. Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker (“CODM”) is the Chief Executive Officer of the Company.

We have four customer-facing market groups that oversee the core markets where we conduct business. These groups are referred to as Healthcare, Mobile and Consumer, Enterprise and Imaging. These groups do not directly manage centralized or shared resources or make allocation decisions regarding the activities related to these functions, which include sales and sales operations, certain research and development initiatives, business development and all general and administrative activities. Our CODM oversees these groups as well as each of the functions that provide the shared and centralized activities noted above. To manage the business, allocate resources and assess performance, the CODM regularly reviews revenue data by market group, while reviewing gross margins, operating margins, and other measures of income or loss on a consolidated basis. Thus, we have determined that we operate in one segment.

23

NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents revenue information for our four core markets (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Healthcare	$	135,409	$	113,523	$	373,543	$	324,880
Mobile and Consumer		91,613		66,292		270,842		208,153
Enterprise		68,536		71,006		211,900		217,306
Imaging		33,351		22,382		95,415		58,846
Total Revenue	$	328,909	$	273,203	$	951,700	$	809,185

No country outside of the United States provided greater than 10% of our total revenue for the three months and nine months ended June 30, 2011 and 2010. Revenue, classified by the major geographic areas in which our customers are located, was as follows (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
United States	$	237,423	$	202,080	$	701,374	$	576,122
International		91,486		71,123		250,326		233,063
Total	$	328,909	$	273,203	$	951,700	$	809,185

No country outside of the United States held greater than 10% of our long-lived or total assets as of June 30, 2011 and September 30, 2010. Our non-current assets, including intangible assets and goodwill, were located as follows (dollars in thousands):

	June 30,		September 30,
	2011		2010
United States	$	2,633,100	$	2,479,952
International		598,052		448,105
Total	$	3,231,152	$	2,928,057

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CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q including the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosure About Market Risk” under Items 2 and 3, respectively, of Part I of this report, and the sections entitled “Legal Proceedings,” “Risk Factors,” and “Unregistered Sales of Equity Securities and Use of Proceeds” under Items 1, 1A and 2, respectively, of Part II of this report, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that, if they never materialize or if they prove incorrect, could cause our consolidated results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements include predictions regarding:

•  our future revenues, cost of revenues, research and development expenses, selling, general and administrative expenses, amortization of intangible assets and gross margin;

•  our strategy relating to our core markets;

•  the potential of future product releases;

•  our product development plans and investments in research and development;

•  future acquisitions, and anticipated benefits from acquisitions;

•  international operations and localized versions of our products; and

•  legal proceedings and litigation matters.

You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks described in Item 1A — “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis is intended to help the reader understand the results of operations and financial condition of our business. Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to the consolidated financial statements.

OVERVIEW

Business Overview

Nuance Communications, Inc. is a leading provider of voice and language solutions for businesses and consumers around the world. Our technologies, applications and services make the user experience more compelling by transforming the way people interact with devices and systems. Our solutions are used every day by millions of people and thousands of businesses for tasks and services such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with PDF documents. Our solutions help make these interactions, tasks and experiences more productive, compelling and efficient.

Core Markets

Our technologies address our four core markets, each of which is described in greater detail below.

•  Healthcare.  Our healthcare products and services enable our customers to automate manual functions, and manage information and workflows. A significant component of sales in our healthcare market are for on-demand solutions hosted by Nuance and priced by the volume of services used by the customer, primarily for healthcare information management. With these solutions, we provide software and labor to transcribe information dictated by healthcare providers that go into patient files, and to manage the associated workflows. The healthcare information management market is migrating away from unstructured, distributed files toward structured, computer-accessible, searchable files generally known as electronic medical records or EMRs. Our solutions address both the old unstructured files and EMRs, and we are able to provide technology and services that help our customers through this transition. In addition to healthcare information management, we provide solutions for areas such as radiology, diagnostics, critical test results management, mobile access to systems, and processing data contained in medical records. Trends in our healthcare business include a growing customer preference for hosted solutions, increasing interest in the use of mobile devices to access healthcare systems and records, and increasing international interest. We are also seeing increased demand for transactions which involve the sale and delivery of both software and non-software related services or products, which may benefit from the application of Financial Accounting Standards board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition. Over the last several quarters, we have signed several new contracts for our hosted solutions, and the volume of lines processed in these services has steadily increased. We are investing to expand our product set to address these opportunities, expand our international capabilities, and reduce our time from contract signing to initiation of billable services.

•  Mobile and Consumer.  The majority of sales in our mobile-consumer market are for voice recognition, text-to-speech and enhanced keyboard functionality that is embedded in a device (such as a cell phone, car or tablet computer) or installed on a personal computer. There is a growing trend toward supplementing those solutions with mobile connected services such as Internet search, dictation and transcription of voice messages, that are performed on hosted Nuance servers and accessed by mobile devices using the Internet or mobile telephony network, and also for applications that can be downloaded onto mobile devices. Trends in our mobile-consumer market also include device manufacturers requiring custom applications to deliver unique and differentiated products, broadening keyboard technologies to take advantage of touch screens, increasing hands-free capabilities on cell phones and automobiles to address the growing concern of distracted driving, and the adoption of our technology on a broadening scope of devices, such as televisions, set-top boxes, e-book readers and tablet computers. We are also seeing increased demand for transactions

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which involve the sale and delivery of both software and non-software related services or products, which may benefit from the application of ASC 605. We are investing to increase our capabilities and capacity to help device manufacturers build custom applications, to increase the capacity of our data centers, to increase the number, kinds and capacity of network services, to enable developers to access our technology, and to expand both awareness and channels for our direct-to-consumer products.

•  Enterprise.  Sales in our enterprise market include on-demand solutions hosted by Nuance and priced by the volume of services used by the customer, as well as professional services to design, implement and integrate custom call center applications. Our objective for enterprise is to increase revenue, primarily by enabling customers to automate call center operations and call handling, and also to provide improved ability to analyze and use call center data, to enable mobile access, and to improve cross-channel coordination among call center, Internet and mobile customer-care functions. The call center market is migrating away from simple menu-driven applications toward more sophisticated, easier to use applications based on natural language capabilities. Our solutions address both menu-driven and natural language applications. In addition, we provide solutions for areas such as mobile access to customer care systems and call center analytics. Trends in our enterprise business include increasing interest in the use of mobile applications to access customer care systems and records, increasing interest in coordinating actions and data across customer care channels, and the ability of a broader set of hardware providers and systems integrators to serve the market. We are investing to expand our product set to address these opportunities, to increase efficiency of our hosted applications, expand our capabilities and capacity to help customers build custom applications, and broaden our relationships with new hardware and systems integrator partners serving the market.

•  Imaging.  Sales in our imaging market include document capture and print management solutions embedded in copiers and multi-function printers and packaged software for document management. The imaging market is evolving to include more networked solutions, mobile access to networked solutions, and multi-function devices. We are investing to improve mobile access to our networked products, expand our distribution channels and embedding relationships, and expand our language coverage.

Acquisitions

We have supplemented organic growth with acquisitions. Over the last few years, our acquisitions have focused on adding new solutions that take advantage of our core technology, adding functionality to our existing solutions, expanding our sales and professional services teams, and expanding our customer base. We expect that new uses for our core technologies will continue to emerge and that international opportunities will grow. We expect that we will continue to serve evolving market opportunities through a combination of organic growth, acquisitions and strategic partnerships.

We believe we can fund our future acquisitions with our internally available cash, cash equivalents and marketable securities, cash generated from operations, amounts available under our existing debt capacity, additional borrowings or from the issuance of additional securities. We estimate the financial impact of any potential acquisition with regard to earnings, operating margin and cash flow targets before deciding to move forward with an acquisition.

Key Metrics

In evaluating the financial condition and operating performance of our business, management focuses on revenue, net income, gross margins, operating margins and cash flow from operations. A summary of these key financial metrics for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, is as follows:

•  Total revenue increased by $142.5 million to $951.7 million;

•  Net income increased by $64.6 million to $43.3 million;

•  Gross margins decreased by 1.3 percentage points to 61.8%;

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•  Operating margins increased by 4.3 percentage points to 4.6%; and

•  Cash provided by operating activities increased by $74.8 million to $259.5 million.

In addition to the above key financial metrics, we also focus on certain non-financial performance indicators. A summary of these key non-financial performance indicators as of and for the period ended June 30, 2011, as compared to June 30, 2010, is as follows:

•  Annualized line run-rate in our on-demand healthcare solutions increased 12% to approximately 3.706 billion lines per year. The annualized line run-rate is determined using billed equivalent line counts in a given quarter, multiplied by four;

•  Enterprise professional services backlog hours increased 1% to 316,000 hours. Professional services backlog hours reflect the accumulated estimated hours necessary to fulfill all of our existing, executed professional services contracts within the enterprise business, including those that are cancelable by customers, based on the original estimate of hours sold;

•  Estimated 3-year value of on-demand contracts increased 21% to $1.3 billion. We determine this value by using our best estimate of all anticipated future revenue streams under signed on-demand contracts currently in place, whether or not they are guaranteed through a minimum commitment clause. Our best estimate is based on assumptions about launch dates, volumes and renewal rates within the three year period. Most of these contracts are priced by volume of usage and typically have no or low minimum commitments. Actual revenue could vary from our estimates due to factors such as cancellations, non-renewals or volume fluctuations.

RESULTS OF OPERATIONS

TOTAL REVENUES

The following tables show total revenue from our four core markets and revenue by geographic location, based on the location of our customers, in dollars and percentage change (dollars in millions):

	Three Months										Nine Months
	Ended										Ended
	June 30,				Dollar			Percent			June 30,				Dollar			Percent
	2011		2010		Change			Change			2011		2010		Change			Change
Healthcare	$	135.4	$	113.5	$	21.9			19.3	%	$	373.5	$	324.9	$	48.6			15.0	%
Mobile and Consumer		91.6		66.3		25.3			38.2	%		270.9		208.2		62.7			30.1	%
Enterprise		68.5		71.0		(2.5	)		(3.5	)%		211.9		217.3		(5.4	)		(2.5	)%
Imaging		33.4		22.4		11.0			49.1	%		95.4		58.8		36.6			62.2	%
Total Revenues	$	328.9	$	273.2	$	55.7			20.4	%	$	951.7	$	809.2	$	142.5			17.6	%
United States	$	237.4	$	202.1	$	35.3			17.5	%	$	701.4	$	576.1	$	125.3			21.7	%
International		91.5		71.1		20.4			28.7	%		250.3		233.1		17.2			7.4	%
Total Revenues	$	328.9	$	273.2	$	55.7			20.4	%	$	951.7	$	809.2	$	142.5			17.6	%

For the three months ended June 30, 2011, revenues increased in Healthcare, Mobile and Consumer and Imaging as compared to the three months ended June 30, 2010. These increases in revenue were partially offset by a slight decrease in Enterprise revenue. Mobile and Consumer revenue increased primarily as a result of $19.5 million of additional product and licensing revenues as well as a $5.6 million increase in professional services and hosting revenues. The increase in Healthcare revenues was primarily driven by an increase of $11.3 million in product and licensing revenue and $8.0 million in professional services and hosting revenue. The Imaging revenue increase was attributable to growth in product and licensing revenues.

For the nine months ended June 30, 2011, revenue increased in Healthcare, Mobile and Consumer and Imaging as compared to the nine months ended June 30, 2010. These increases in revenue were partially offset by a slight decrease in Enterprise revenues. Mobile and Consumer revenues increased $62.7 million, with a $37.1 million

28

increase in product and license revenues as well as a $24.4 million increase in professional services and hosting revenues. Healthcare revenues increased $48.6 million driven by a $29.1 million increase in professional services and hosting revenues and a $14.1 million increase in product and licensing revenue. Enterprise revenues decreased slightly, consisting of a $15.2 million decrease in professional services and hosting revenue, offset by an increase of $7.4 million in product and licensing revenues. The Imaging revenue increase was attributable to growth in product and licensing revenues.

Product and Licensing Revenue

Product and licensing revenue primarily consists of sales and licenses of our technology. The following table shows product and licensing revenue, in dollars and as a percentage of total revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Product and licensing revenue	$	152.7		$	108.8		$	43.9		40.3	%	$	428.2		$	335.2		$	93.0		27.7	%
As a percentage of total revenue		46.5	%		39.8	%							45.0	%		41.4	%

The increase in product and licensing revenue for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, included a $19.5 million increase in Mobile & Consumer product and licensing revenue, primarily driven by growth in sales of Mobile embedded solutions and our Dragon products. Healthcare product and licensing revenue increased $11.3 million resulting from strong bookings during the quarter. Imaging product and licensing revenue increased $10.7 million primarily driven by growth in sales of multi-functional peripheral licenses. Enterprise on premise license sales increased $2.4 million resulting from the refocusing of our sales efforts from channel to direct sales.

The increase in product and licensing revenue for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, consisted of a $37.2 million increase in Mobile and Consumer product and licensing revenues, which was primarily driven by growth in sales of our Dragon products. Imaging product and licensing revenue increased $34.3 million, primarily from sales of multi-functional peripheral products. Healthcare product and licensing revenue increased $14.1 million. Enterprise on premise license sales increased $7.4 million resulting from the refocusing of our sales efforts from channel to direct sales.

Professional Services and Hosting Revenue

Professional services revenue primarily consists of consulting, implementation and training services for customers. Hosting revenue primarily relates to delivering hosted services, such as medical transcription, automated customer care applications, voice message transcription, and mobile search and transcription, over a specified term. The following table shows professional services and hosting revenue, in dollars and as a percentage of total revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Professional services and hosting revenue	$	125.4		$	117.9		$	7.5		6.4	%	$	377.1		$	337.8		$	39.3		11.6	%
As a percentage of total revenue		38.1	%		43.2	%							39.6	%		41.8	%

The increase in professional services and hosting revenue for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, included an $8.1 million increase in Healthcare revenue driven by growth in our on-demand solutions. Mobile and Consumer revenue increased $5.6 million primarily as a result of growth in our connected mobile services of $3.8 million and $1.8 million in professional services for our embedded solutions. Enterprise revenue decreased by $6.4 million, primarily due to the decline of an early, on-demand customer’s volume.

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The increase in professional services and hosting revenue for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, consisted of a $29.1 million increase in Healthcare revenue primarily driven by growth in our on-demand solutions. Mobile and Consumer revenue increased $24.4 million primarily driven by $14.7 million of growth in our connected mobile services and $9.6 million of growth in professional services for our embedded solutions. Enterprise revenue decreased by $15.2 million, primarily as a result of the decline of an early, on-demand customer’s volume.

Maintenance and Support Revenue

Maintenance and support revenue primarily consists of technical support and maintenance services. The following table shows maintenance and support revenue, in dollars and as a percentage of total revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Maintenance and support revenue	$	50.8		$	46.5		$	4.3		9.2	%	$	146.4		$	136.2		$	10.2		7.5	%
As a percentage of total revenue		15.4	%		17.0	%							15.4	%		16.8	%

The increase in maintenance and support revenue for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, is consistent with the growth in product and licensing sales. The increase included a $2.5 million increase in Healthcare and a $1.5 million increase in Enterprise.

The increase in maintenance and support revenue for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, is consistent with the growth in product and licensing sales. The increase included a $5.4 million increase in Healthcare and a $2.4 increase million in Enterprise.

COSTS AND EXPENSES

Cost of Product and Licensing Revenue

Cost of product and licensing revenue primarily consists of material and fulfillment costs, manufacturing and operations costs and third-party royalty expenses. The following table shows cost of product and licensing revenue, in dollars and as a percentage of product and licensing revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Cost of product and licensing revenue	$	15.8		$	10.9		$	4.9		45.0	%	$	47.9		$	34.2		$	13.7		40.1	%
As a percentage of product and licensing revenue		10.3	%		10.0	%							11.2	%		10.2	%

The increase in cost of product and licensing revenue for the three months ended June 30, 2011, as compared to the same period in 2010, was primarily due to an increase in hardware cost associated with higher product and license revenues. Gross margin remained relatively flat during the period.

The increase in cost of product and licensing revenue for the nine months ended June 30, 2011, as compared to same period in 2010, was primarily due to an increase in hardware cost associated with higher product and licensing revenues. Gross margin decreased one percentage point due to growth in Imaging product sales.

Cost of Professional Services and Hosting Revenue

Cost of professional services and hosting revenue primarily consists of compensation for consulting personnel, outside consultants and overhead, as well as the hardware and communications fees that support our hosting

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solutions. The following table shows cost of professional services and hosting revenue, in dollars and as a percentage of professional services and hosting revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Cost of professional services and hosting revenue	$	83.3		$	71.4		$	11.9		16.7	%	$	248.0		$	206.3		$	41.7		20.2	%
As a percentage of professional services and hosting revenue		66.5	%		60.6	%							65.8	%		61.1	%

The increase in cost of professional services and hosting revenue for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, was primarily attributable to a $4.6 million increase in transcription services related to our healthcare information management solutions, a $3.2 million increase in stock-based compensation and a $2.3 million increase in Enterprise costs driven by investment in professional service team and infrastructure which is intended to lead to future revenue contribution. The increase in stock-based compensation expense reduced gross margin by 2.4% during the period.

The increase in cost of professional services and hosting revenue for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, was primarily attributable to a $13.8 million increase in transcription services related to our healthcare information management solutions, a $12.3 million increase in stock-based compensation and a $7.7 million increase in Enterprise costs driven by investment in our professional service team and infrastructure which is intended to lead to future revenue contribution. The increase in stock-based compensation expense decreased gross margins by 3.0% during the period.

Cost of Maintenance and Support Revenue

Cost of maintenance and support revenue primarily consists of compensation for product support personnel and overhead. The following table shows cost of maintenance and support revenue, in dollars and as a percentage of maintenance and support revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Cost of maintenance and support revenue	$	8.8		$	7.6		$	1.2		15.8	%	$	26.6		$	23.3		$	3.3		14.2	%
As a percentage of maintenance and support revenue		17.3	%		16.4	%							18.2	%		17.1	%

The increase in cost of maintenance and support revenue for the three and nine months ended June 30, 2011, as compared to the same periods in 2010, was primarily due to higher volumes of Enterprise application maintenance and support.

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Research and Development Expense

Research and development expense primarily consists of salaries, benefits and overhead relating to engineering staff. The following table shows research and development expense, in dollars and as a percentage of total revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Total research and development expense	$	42.2		$	38.9		$	3.3		8.5	%	$	129.9		$	113.8		$	16.1		14.1	%
As a percentage of total revenue		12.8	%		14.2	%							13.6	%		14.1	%

The increase in research and development expense for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, was primarily attributable to an increase of $6.0 million in compensation expense including a $3.0 million increase in stock-based compensation expense. The increase in expenses was offset by reimbursement of $4.6 million under a new collaboration agreement signed during the period.

The increase in research and development expense for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, was attributable to increase in compensation expense including an $11.5 million increase in stock-based compensation, driven by headcount growth and investment in the research and development organization. This increase in expense was offset by reimbursement of $4.6 million under a new collaboration agreement signed during the period.

Sales and Marketing Expense

Sales and marketing expense includes salaries and benefits, commissions, advertising, direct mail, public relations, tradeshow costs and other costs of marketing programs, travel expenses associated with our sales organization and overhead. The following table shows sales and marketing expense, in dollars and as a percentage of total revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Total sales and marketing expense	$	73.3		$	67.2		$	6.1		9.1	%	$	225.8		$	196.7		$	29.1		14.8	%
As a percentage of total revenue		22.3	%		24.6	%							23.7	%		24.3	%

The increase in sales and marketing expense for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, was primarily attributable to a $3.4 million increase in compensation expense as well as a $2.0 million increase in marketing and channel program spending intended to drive overall revenue growth.

The increase in sales and marketing expense for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, was primarily attributable to a $14.6 million increase in marketing and channel program spending to drive overall revenue growth, as well as an $11.8 million increase in compensation expense. The increase in compensation expense was attributable to additional headcount as well as an increase of $2.9 million in stock-based compensation.

General and Administrative Expense

General and administrative expense primarily consists of personnel costs for administration, finance, human resources, information systems, facilities and general management, fees for external professional advisors

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including accountants and attorneys, insurance, and provisions for doubtful accounts. The following table shows general and administrative expense, in dollars and as a percentage of total revenue (dollars in millions):

	Three Months											Nine Months
	Ended											Ended
	June 30,						Dollar		Percent			June 30,						Dollar		Percent
	2011			2010			Change		Change			2011			2010			Change		Change
Total general and administrative expense	$	35.9		$	29.9		$	6.0		20.1	%	$	104.3		$	88.6		$	15.7		17.7	%
As a percentage of total revenue		10.9	%		10.9	%							11.0	%		11.0	%

The increase in general and administrative expense for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, was primarily attributable to a $3.7 million increase in compensation expense including a $1.4 million increase in stock-based compensation and a $3.1 million increase in legal and professional expenses.

The increase in general and administrative expense for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, was primarily attributable to a $12.0 million increase in compensation expense, including an $8.9 million increase in stock-based compensation and a $3.5 million increase in legal and professional expenses

Amortization of Intangible Assets

Amortization of acquired patents and core and completed technology are included in cost of revenue and the amortization of acquired customer and contractual relationships, non-compete agreements, acquired tradenames and trademarks, and other intangibles are included in operating expenses. Customer relationships are amortized on an accelerated basis based upon the pattern in which the economic benefits of the customer relationships are being realized. Other identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense was recorded as follows (dollars in millions):

	Three Months												Nine Months
	Ended												Ended
	June 30,						Dollar			Percent			June 30,						Dollar			Percent
	2011			2010			Change			Change			2011			2010			Change			Change
Cost of revenue	$	13.1		$	11.9		$	1.2			10.1	%	$	40.5		$	35.1		$	5.4			15.4	%
Operating expenses		21.0			21.5			(0.5	)		(2.3	)%		65.2			65.8			(0.6	)		(0.9	)%
Total amortization expense	$	34.1		$	33.4		$	0.7			2.1	%	$	105.7		$	100.9		$	4.8			4.8	%
As a percentage of total revenue		10.4	%		12.2	%								11.1	%		12.5	%

The increase in amortization of intangible assets for the three and nine months ended June 30, 2011, as compared to the same periods in 2010, was primarily attributable to the amortization of acquired intangible assets from our business acquisitions during fiscal 2010 and 2011 and our acquisitions of patents and technology from other third-parties during fiscal 2010. This increase was partially offset by a reduction in amortization of customer relationships that are recognized over the period of the expected economic benefit.

Acquisition-Related Costs, Net

Acquisition-related costs include those costs related to business and other acquisitions, including potential acquisitions. These costs consist of transition and integration costs, including retention payments, transitional employee costs and earn-out payments treated as compensation expense, as well as the costs of integration-related services provided by third-parties; professional service fees, including direct third-party costs of the transaction and post-acquisition legal and other professional service fees associated with disputes and regulatory matters related to acquired entities; and adjustments to acquisition-related items that are required to be marked to fair value each

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reporting period, such as contingent consideration, and other items related to acquisitions for which the measurement period has ended. Acquisition-related costs were recorded as follows (dollars in millions):

	Three
	Months												Nine Months
	Ended												Ended
	June 30,						Dollar			Percent			June 30,						Dollar			Percent
	2011			2010			Change			Change			2011			2010			Change			Change
Transition and integration costs	$	0.4		$	3.4		$	(3.0	)		(88.2	)%	$	1.5		$	12.1		$	(10.6	)		(87.6	)%
Professional service fees		7.8			3.1			4.7			151.6	%		11.1			14.9			(3.8	)		(25.5	)%
Acquisition-related adjustments		0.4			(0.4	)		0.8			200.0	%		1.3			(0.1	)		1.4			1,400.0	%
Total Acquisition-related costs, net	$	8.6		$	6.1		$	2.5			41.0	%	$	13.9		$	26.9		$	(13.0	)		(48.3	)%
As a percentage of total revenue		2.6	%		2.2	%								1.5	%		3.3	%

The increase in acquisition-related costs, net for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, was primarily driven by a reduction in transition and integration costs offset by an increase in professional service fees. For the three months ended June 30, 2010, transition and integration costs consisted primarily of costs associated with transitional employees from our acquisitions of SpinVox and eCopy. For the three months ended June 30, 2011, professional service fees consisted of expenses related to our third quarter 2011 acquisitions.

The decrease for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, was primarily driven by a reduction in transition and integration costs and professional services fees. For the nine months ended June 30, 2010, transition and integration costs consisted primarily of the costs associated with transitional employees from our acquisitions of SpinVox and eCopy; professional services consisted of expenses related to our acquisition of SpinVox in December 2009 and approximately $2.2 million that had been capitalized as of September 30, 2009 related to transaction costs incurred in prior periods that was required to be expensed upon our adoption of ASC 805, Business Combinations, in fiscal 2010.

Restructuring and Other Charges, Net

The following table sets forth the activity relating to the restructuring accruals for the nine months ended June 30, 2011 (dollars in millions):

	Personnel			Facilities			Other			Total
Balance at September 30, 2010	$	1.8		$	0.3		$	—		$	2.1
Restructuring and other charges		3.9			1.5			0.3			5.7
Non-cash adjustments		0.2			—			(0.2	)		—
Cash payments		(4.6	)		(0.9	)		(0.1	)		(5.6	)
Balance at June 30, 2011	$	1.3		$	0.9		$	—		$	2.2

For the nine months ended June 30, 2011, we recorded net restructuring and other charges of $5.6 million, which included $3.9 million of severance and other costs related to the elimination of approximately 90 personnel across multiple functions worldwide, primarily within costs of sales, and $1.5 million related to facilities that we no longer occupy.

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Other Income (Expense), Net

The following table shows other income (expense), net in dollars and as a percentage of total revenue (dollars in millions):

	Three Months												Nine Months
	Ended												Ended
	June 30,						Dollar			Percent			June 30,						Dollar			Percent
	2011			2010			Change			Change			2011			2010			Change			Change
Interest income	$	0.7		$	0.2		$	0.5			250.0	%	$	2.2		$	0.8		$	1.4			175.0	%
Interest expense		(8.7	)		(10.0	)		1.3			13.0	%		(26.8	)		(30.4	)		3.6			11.8	%
Other income (expense), net		0.3			5.5			(5.2	)		(94.5	)%		8.9			10.7			(1.8	)		(16.8	)%
Total other income (expense), net	$	(7.7	)	$	(4.3	)	$	(3.4	)		79.1	%	$	(15.7	)	$	(18.9	)	$	3.2			16.9	%
As a percentage of total revenue		(2.3	)%		(1.6	)%								(1.7	)%		(2.3	)%

The decrease in interest expense for the three and nine months ended June 30, 2011 as compared to the same period in 2010, was driven by decreased interest costs as a result of lower rates on our outstanding variable rate borrowings. Included in other income (expense), net for the three and nine months ended June 30, 2011, are gains of $0.4 million and $10.8 million, respectively, on our security price guarantee derivatives.

Provision for Income Taxes

The following table shows the provision for income taxes and the effective income tax rate (dollars in millions):

	Three Months												Nine Months
	Ended												Ended
	June 30,						Dollar			Percent			June 30,						Dollar			Percent
	2011			2010			Change			Change			2011			2010			Change			Change
Income (loss) before income taxes	$	18.2		$	0.3		$	17.9			5,966.7	%	$	28.4		$	(16.7	)	$	45.1			270.1	%
Income tax (benefit) provision	$	(23.4	)	$	1.8		$	(25.2	)		(1,400.0	)%	$	(15.0	)	$	4.5		$	(19.5	)		(433.3	)%
Effective income tax rate		(128.3	)%		608.3	%								(52.8	)%		(26.6	)%

The change in the effective tax rate and the decrease in the income tax provision, was primarily related to a one-time tax benefit recorded in connection with the Equitrac acquisition for which a net deferred tax liability was recorded in purchase accounting releasing the valuation reserve, resulting in the recognition of a tax benefit for the three and nine months ended June 30, 2011. This tax benefit was offset by the tax provision on U.S. profits in the three and nine months ended June 30, 2011.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents totaled $447.0 million as of June 30, 2011, a decrease of $69.6 million as compared to $516.6 million as of September 30, 2010. Our working capital was $354.1 million as of June 30, 2011, as compared to $459.2 million as of September 30, 2010. Cash and marketable securities held by our international operations totaled $89.3 million and $40.5 million at June 30, 2011 and September 30, 2010, respectively. We expect the cash held overseas will continue to be used for our international operations and therefore do not anticipate repatriating these funds. If we were to repatriate these funds, we do not believe that the amount of withholding taxes payable as a result would have a material impact to our liquidity. As of June 30, 2011, our total accumulated deficit was $238.0 million. We do not expect our accumulated deficit to impact our future ability to operate the business given our strong cash and operating cash flow positions, and believe our current cash and cash equivalents and marketable securities on-hand are sufficient to meet our operating needs for at least the next twelve months.

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Cash Provided by Operating Activities

Cash provided by operating activities for the nine months ended June 30, 2011 was $259.5 million, an increase of $74.8 million, or 40.5%, as compared to cash provided by operating activities of $184.7 million for the nine months ended June 30, 2010. The increase was primarily driven by the following factors:

•  An increase of $72.3 million in cash flows resulting from an increase in net income, exclusive of non-cash adjustment items which include a one-time non-cash tax benefit adjustment of $34.7 million reducing the valuation allowance on deferred tax assets as a result of the Equitrac acquisition;

•  An increase in cash flows of $13.6 million from an overall increase in deferred revenue; and

•  A decrease of $11.0 million in cash flows generated by changes in working capital excluding deferred revenue, primarily driven by a €18.0 million ($23.4 million equivalent) payment in fiscal 2011 for a fixed obligation assumed in connection with our acquisition of SpinVox, offset by an increase of $9.3 million due to changes in accounts receivable.

Cash Used in Investing Activities

Cash used in investing activities for the nine months ended June 30, 2011 was $331.2 million, an increase of $107.1 million, or 47.8%, as compared to cash used in investing activities of $224.1 million for the nine months ended June 30, 2010. The net increase was primarily driven by the following factors:

•  Cash outflows of $319.3 million as a result of our third quarter fiscal 2011 acquisitions. During the nine months ended June 30, 2010 cash outflows for acquisitions were $155.9 million, primarily related to the acquisition of SpinVox and the PSRS deferred acquisition payments.

•  A cash inflow of $17.2 million in restricted cash in December 2010 related to the release of cash placed in an irrevocable standby letter of credit account for payment of a fixed obligation in connection with our acquisition of SpinVox; and

•  A use of $15.0 million for a cash payment to acquire an equity investment in a non-public company during the six months ended March 31, 2010.

Cash Used in/Provided by Financing Activities

Cash used in financing activities for the nine months ended June 30, 2011 was $4.3 million as compared to cash provided by financing activities of $9.8 million for the nine months ended June 30, 2010, a decrease in cash flows of $14.2 million or 144.1%. The change was primarily driven by the following factors:

•  An increase in cash used to net share settle employee equity awards of $12.0 million, due to an increase in intrinsic value of the shares vested as a result of the overall increase in our stock price and vesting activities during the nine months ended June 30, 2011 as compared to the same period in 2010; and

•  A decrease of $12.4 million in proceeds from the issuance of common stock relating to the warrant that was exercised during the nine months ended June 30, 2010; offset by

•  An $8.2 million cash benefit resulting from excess tax benefits on employee equity awards during the nine months ended June 30, 2011.

Credit Facilities and Debt

2.75% Convertible Debentures

We have $250 million of 2.75% convertible senior debentures due in August 2027. As of June 30, 2011, no conversion triggers were met. If the conversion triggers were met, we could be required to repay all or some of the principal amount in cash prior to maturity.

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Credit Facility

As of June 30, 2011, $638.5 million remained outstanding under our term loan. There were $15.7 million of letters of credit issued under the revolving credit line and there were no other outstanding borrowings under the revolving credit line. As of June 30, 2011, we are in compliance with the covenants under the Credit Facility.

As of June 30, 2011, based on our leverage ratio, the applicable margin for our term loan was 0.75% for base rate borrowings and 1.75% for LIBOR-based borrowings. This results in an effective interest rate of 1.95%. No payments under the excess cash flow sweep provision were due in the first quarter of fiscal 2011 as no excess cash flow, as defined, was generated in fiscal 2010. At the current time, we are unable to predict the amount of the outstanding principal, if any, that we may be required to repay in future fiscal years pursuant to the excess cash flow sweep provisions.

In July 2011, we entered in to agreements to amend and restate our existing Credit Facility. Of the approximately $638.5 million remaining Term Loan originally due March 31, 2013, lenders representing $486.9 million have elected to extend the maturity date three years to March 31, 2016. The remaining $151.6 million in term loans are due March 2013. In addition, lenders participating in the revolving credit facility have chosen to extend the maturity date by three years to March 31, 2015.

In conjunction with the amendment, the Credit Facility repayment terms were amended. Principal is due in four quarterly installments of 1% per annum through the original maturity date of March 2013, at which time the principal remaining on the unextended portion of the loans becomes payable. The table below details the new schedule of principal payments by fiscal year. If only the minimum required repayments are made, the annual aggregate principal amount of the term loans repaid would be as follows (dollars in thousands):

Year Ending September 30,	Amount
2011 (quarter ending September 30)	$	1,596
2012		6,346
2013		154,494
2014		4,743
2015		4,696
2016		466,663
Total	$	638,538

Under terms of the amendment, borrowings under the Credit Facility bear interest at a rate equal to the applicable margin plus, at our option, either (a) the base rate which is the higher of the corporate base rate of UBS AG, Stamford Branch, or the federal funds rate plus 0.50% per annum or (b) LIBOR (equal to (i) the British Bankers’ Association Interest Settlement Rates for deposits in U.S. dollars divided by (ii) one minus the statutory reserves applicable to such borrowing). The applicable margin for the borrowings is as follows:

Description	Base Rate Margin	LIBOR Margin
Term loans due March 2013	0.75% - 1.50%(a)	1.75% - 2.50%(a)
Term loans due March 2016	2.00%	3.00%
Revolving facility due March 2015	1.25% - 2.25%(b)	2.25% - 3.25%(b)

(a)	The margin is determined based on our leverage ratio at the date the interest rates are reset on the Term Loans.
(b)	The margin is determined based on our credit rating at the date the interest rates are reset on the Revolving Loans

We believe that cash flows from future operations in addition to cash and cash equivalents and marketable securities on-hand will be sufficient to meet our working capital, investing, financing and contractual obligations and the contingent payments for acquisitions, if any are realized, as they become due for at least the next twelve months. We also believe that in the event future operating results are not as planned, that we could take actions, including restructuring actions and other cost reduction initiatives, to reduce operating expenses to levels which, in combination with expected future revenue, will continue to generate sufficient operating cash flow. In the event that these actions are not effective in generating operating cash flows we may be required to issue equity or debt securities on terms that may be less favorable.

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Off-Balance Sheet Arrangements, Contractual Obligations

Contractual Obligations

The following table outlines our contractual payment obligations as of June 30, 2011 (dollars in millions):

	Payments Due by Period
			Remaining				Fiscal 2013		Fiscal 2015
Contractual Obligations	Total		Fiscal 2011		Fiscal 2012		and 2014		and 2016		Thereafter
2.75% Convertible Senior Debentures(1)	$	250.0	$	—	$	—	$	250.0	$	—	$	—
Credit Facility(2)		638.5		1.6		6.3		159.2		471.4		—
Interest on Credit Facility(2)		77.7		4.6		18.6		32.0		22.5		—
Interest on 2.75% Convertible Senior Debentures(3)		24.1		3.4		6.9		13.8		—		—
Letter of credit(4)		7.2		7.2		—		—		—		—
Lease obligations and other liabilities:
Operating leases		128.7		6.1		24.4		40.8		32.7		24.7
Other lease obligations associated with the closing of duplicate facilities related to restructurings and acquisitions		3.2		0.9		1.8		0.5		—		—
Pension, minimum funding requirement(5)		4.5		0.3		1.4		2.8		—		—
Collaboration agreements(6)		72.7		18.4		23.4		28.4		2.5		—
Other liabilities assumed(7)		24.6		3.6		12.5		5.0		3.5		—
Total contractual cash obligations	$	1,231.2	$	46.1	$	95.3	$	532.5	$	532.6	$	24.7

(1)	Holders of the 2.75% Senior Convertible Debentures have the right to require us to repurchase the debentures on August 15, 2014, 2017 and 2022.
(2)	Interest is due and payable monthly under the Credit Facility, and principal is paid on a quarterly basis. The amounts included as interest payable in this table are based on the effective interest rate related to the July 2011 amended Credit Facility.
(3)	Interest is due and payable semi-annually under the 2.75% convertible senior debentures.
(4)	We have placed EUR 5.0 million ($7.2 million based on the June 30, 2011 exchange rates) in an irrevocable standby letter of credit account for payment of a fixed obligation assumed in connection with our acquisition of SpinVox.
(5)	Our U.K. pension plan has a minimum funding requirement of £859,900 ($1.4 million based on the exchange rate at June 30, 2011) for each of the next 4 years, through fiscal 2014.
(6)	Payments under the research collaboration agreements are payable in cash or common stock at our option.
(7)	Obligations include assumed long-term liabilities related to restructuring programs initiated by the predecessor entities prior to our acquisition of SpeechWorks International, Inc. in August 2003, and our acquisition of the former Nuance Communications, Inc. in September 2005. These restructuring programs relate to the closing of two facilities with lease terms set to expire in 2016 and 2012. Total contractual obligations under these two leases are $24.6 million. As of June 30, 2011, we have sub-leased a portion of the office space related to these two facilities to unrelated third parties. Total sublease income under the remaining contractual terms is expected to be $9.1 million, which ranges from $1.5 million to $4.1 million on an annualized basis through 2016.

The gross liability for unrecognized tax benefits as of June 30, 2011 and September 30, 2010 was$13.4 million and $12.8 million, respectively. We do not expect a significant change in the amount of unrecognized tax benefits within the next 12 months. We estimate that none of this amount will be paid within the next year and we are currently unable to reasonably estimate the timing of payments for the remainder of the liability.

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Contingent Liabilities and Commitments

In connection with certain of our acquisitions, we have agreed to make contingent cash payments to the former shareholders of certain of the acquired companies. The following represents the contingent cash payments that we may be required to make.

In connection with our acquisition of SNAPin Software, Inc. (“SNAPin”), we agreed to make a contingent earn-out payment of up to $45.0 million in cash to be paid, if at all, based on the business achieving certain performance targets that are measurable from the acquisition date to December 31, 2009. In April 2010, the Company and the former shareholders of SNAPin agreed on a final earn-out payment of $21.2 million and we issued 593,676 shares of our common stock, valued at $10.2 million, as our first payment under the earn-out agreement. The remaining balance is payable in cash or stock, solely at our option, on or before October 1, 2011 and is included in short-term liabilities as of June 30, 2011.

In connection with our acquisition of Vocada, Inc. (“Vocada”) in November 2007, we agreed to make contingent earn-out payments of up to $21.0 million upon the achievement of certain financial targets measured over defined periods through December 31, 2010, in accordance with the merger agreement. We have notified the former shareholders of Vocada that the financial targets were not achieved. In December 2010, the former shareholders filed a demand for arbitration in accordance with their rights under the merger agreement. At June 30, 2011, we have not recorded any obligation relative to these earn-out provisions.

Off-Balance Sheet Arrangements

Through June 30, 2011, we have not entered into any off-balance sheet arrangements or material transactions with unconsolidated entities or other persons.

CRITICAL ACCOUNTING POLICIES

Generally accepted accounting principles in the United States (GAAP) require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates, assumptions and judgments, including those related to: revenue recognition; allowance for doubtful accounts and returns; the costs to complete the development of custom software applications; the valuation of goodwill, intangible assets and tangible long-lived assets; accounting for business combinations; share-based payments; valuation of derivative instruments; accounting for income taxes and related valuation allowances and loss contingencies. Our management bases its estimates on historical experience, market participant fair value considerations and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

Information about those accounting policies we deem to be critical to our financial reporting may be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010. There have been no significant changes or additions to our critical accounting policies from those disclosed in our annual report other than those changes in our policies for the adoption of new revenue accounting standards, as described in Note 2 to the unaudited consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

RECENTLY ISSUED ACCOUNTING STANDARDS

Refer to Note 2 to the unaudited consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in foreign currency exchange rates, interest rates and equity prices which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments.

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Exchange Rate Sensitivity

We are exposed to changes in foreign currency exchange rates. Any foreign currency transaction, defined as a transaction denominated in a currency other than the U.S. dollar, will be reported in U.S. dollars at the applicable exchange rate. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date and income and expense items are translated at average rates for the period. The primary foreign currency denominated transactions include revenue and expenses and the resulting accounts receivable and accounts payable balances reflected on our balance sheet. Therefore, the change in the value of the U.S. dollar compared to foreign currencies will have either a positive or negative effect on our financial position and results of operations. Historically, our primary exposure has related to transactions denominated in the euro, British Pound, Canadian Dollar, Japanese Yen, Indian Rupee and Hungarian Forint.

A hypothetical change of 10% in appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency exchange rates at June 30, 2011 would not have a material impact on our revenue, operating results or cash flows in the coming year.

Periodically, we enter into forward exchange contracts to hedge against foreign currency fluctuations. These contracts may or may not be designated as cash flow hedges for accounting purposes. At June 30, 2011, we have foreign currency contracts with a total notional value of approximately $2.2 million designated as cash flow hedges. These contracts all mature within the next twelve months. During the nine months ended June 30, 2011, we commenced a program that primarily utilizes forward currency contracts to offset the risks associated with foreign currency denominated assets and liabilities. We established this program so that gains and losses from remeasurement or settlement of these assets and liabilities are offset by gain or losses on the foreign currency forward contracts thus mitigating the risks and volatility associated with our foreign currency transactions. These contracts are not designated as accounting hedges and generally are for periods of 30 days or less. The notional contract amount of outstanding foreign currency exchange contracts not designated as cash flow hedges was $165.4 million at June 30, 2011. Based on the nature of the transaction for which the contracts were purchased, a hypothetical change of 10% in exchange rates would not have a material impact on our financial results.

Interest Rate Sensitivity

We are exposed to interest rate risk as a result of our significant cash and cash equivalents, and the outstanding debt under the Credit Facility.

At June 30, 2011, we held approximately $447.0 million of cash and cash equivalents primarily consisting of cash, time deposits and money-market funds. Due to the low current market yields and the short-term nature of our investments, a hypothetical change in market rates of one percentage point would not have a material effect on the fair value of our portfolio or results of operations.

At June 30, 2011, our total outstanding debt balance exposed to variable interest rates was $638.5 million. A hypothetical change in market rates could have a significant impact on interest expense and amounts payable. Assuming a one percentage point increase in interest rates, our interest expense relative to our outstanding debt would increase $6.4 million per annum.

Equity Price Risk

We are exposed to equity price risk as a result of security price guarantees that we enter in to from time to time. Generally, these price guarantees are for a period of six months or less, and require payment from either us to a third party, or from the third party to us, based upon changes in our stock price during the contract term. As of June 30, 2011, we had security price guarantees on approximately 250,000 of our shares with prices between $19.55 and $20.28. A change of 10% in our stock price during the next six months would not have a material effect on our results of operations or our cash flows.

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Item 4.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”)) designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the supervision of, and with the participation of, management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to meet the requirements of Rule 13a-15 under the Exchange Act.

Changes in internal control over financial reporting

There were no changes to our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1.   Legal Proceedings

This information is included in Note 18, Commitments and Contingencies, in the accompanying notes to consolidated financial statements and is incorporated herein by reference from Item 1 of Part I.

Item 1A.   Risk Factors

You should carefully consider the risks described below when evaluating our company and when deciding whether to invest in our company. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we do not currently believe are important to an investor may also harm our business operations. If any of the events, contingencies, circumstances or conditions described in the following risks actually occurs, our business, financial condition or our results of operations could be seriously harmed. If that happens, the trading price of our common stock could decline and you may lose part or all of the value of any of our shares held by you.

Risks Related to Our Business

Our operating results may fluctuate significantly from period to period, and this may cause our stock price to decline.

Our revenue and operating results have fluctuated in the past and are expected to continue to fluctuate in the future. Given this fluctuation, we believe that quarter to quarter comparisons of revenue and operating results are not necessarily meaningful or an accurate indicator of our future performance. As a result, our results of operations may not meet the expectations of securities analysts or investors in the future. If this occurs, the price of our stock would likely decline. Factors that contribute to fluctuations in operating results include the following:

•  slowing sales by our distribution and fulfillment partners to their customers, which may place pressure on these partners to reduce purchases of our products;

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•  volume, timing and fulfillment of customer orders;

•  our efforts to generate additional revenue from our intellectual property portfolio;

•  customers delaying their purchasing decisions in anticipation of new versions of our products;

•  customers delaying, canceling or limiting their purchases as a result of the threat or results of terrorism;

•  introduction of new products by us or our competitors;

•  seasonality in purchasing patterns of our customers;

•  reduction in the prices of our products in response to competition, market conditions or contractual obligations;

•  returns and allowance charges in excess of accrued amounts;

•  timing of significant marketing and sales promotions;

•  impairment charges against goodwill and intangible assets;

•  delayed realization of synergies resulting from our acquisitions;

•  write-offs of excess or obsolete inventory and accounts receivable that are not collectible;

•  increased expenditures incurred pursuing new product or market opportunities;

•  general economic trends as they affect retail and corporate sales; and

•  higher than anticipated costs related to fixed-price contracts with our customers.

Due to the foregoing factors, among others, our revenue and operating results are difficult to forecast. Our expense levels are based in significant part on our expectations of future revenue and we may not be able to reduce our expenses quickly to respond to a shortfall in projected revenue. Therefore, our failure to meet revenue expectations would seriously harm our operating results, financial condition and cash flows.

We have grown, and may continue to grow, through acquisitions, which could dilute our existing stockholders.

As part of our business strategy, we have in the past acquired, and expect to continue to acquire, other businesses and technologies. In connection with past acquisitions, we issued a substantial number of shares of our common stock as transaction consideration and also incurred significant debt to finance the cash consideration used for our acquisitions. We may continue to issue equity securities for future acquisitions, which would dilute existing stockholders, perhaps significantly depending on the terms of such acquisitions. We may also incur additional debt in connection with future acquisitions, which, if available at all, may place additional restrictions on our ability to operate our business.

Our ability to realize the anticipated benefits of our acquisitions will depend on successfully integrating the acquired businesses.

Our prior acquisitions required, and our recently completed acquisitions continue to require, substantial integration and management efforts and we expect future acquisitions to require similar efforts. Acquisitions of this nature involve a number of risks, including:

•  difficulty in transitioning and integrating the operations and personnel of the acquired businesses;

•  potential disruption of our ongoing business and distraction of management;

•  potential difficulty in successfully implementing, upgrading and deploying in a timely and effective manner new operational information systems and upgrades of our finance, accounting and product distribution systems;

•  difficulty in incorporating acquired technology and rights into our products and technology;

•  potential difficulties in completing projects associated with in-process research and development;

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•  unanticipated expenses and delays in completing acquired development projects and technology integration;

•  management of geographically remote business units both in the United States and internationally;

•  impairment of relationships with partners and customers;

•  assumption of unknown material liabilities of acquired companies;

•  accurate projection of revenue plans of the acquired entity in the due diligence process;

•  customers delaying purchases of our products pending resolution of product integration between our existing and our newly acquired products;

•  entering markets or types of businesses in which we have limited experience; and

•  potential loss of key employees of the acquired business.

As a result of these and other risks, if we are unable to successfully integrate acquired businesses, we may not realize the anticipated benefits from our acquisitions. Any failure to achieve these benefits or failure to successfully integrate acquired businesses and technologies could seriously harm our business.

Accounting treatment of our acquisitions could decrease our net income or expected revenue in the foreseeable future, which could have a material and adverse effect on the market value of our common stock.

Under accounting principles generally accepted in the United States of America, we record the market value of our common stock or other form of consideration issued in connection with the acquisition and, for transactions which closed prior to October 1, 2009, the amount of direct transaction costs as the cost of acquiring the company or business. We have allocated that cost to the individual assets acquired and liabilities assumed, including various identifiable intangible assets such as acquired technology, acquired tradenames and acquired customer relationships based on their respective fair values. Intangible assets are generally amortized over a five to ten year period. Goodwill and certain intangible assets with indefinite lives, are not subject to amortization but are subject to an impairment analysis, at least annually, which may result in an impairment charge if the carrying value exceeds its implied fair value. As of June 30, 2011, we had identified intangible assets of approximately $757.6 million, net of accumulated amortization, and goodwill of approximately $2.3 billion. In addition, purchase accounting limits our ability to recognize certain revenue that otherwise would have been recognized by the acquired company as an independent business. As a result, the combined company may delay revenue recognition or recognize less revenue than we and the acquired company would have recognized as independent companies.

Our significant debt could adversely affect our financial health and prevent us from fulfilling our obligations under our credit facility and our convertible debentures.

We have a significant amount of debt. As of June 30, 2011, we had a total of $889.1 million of gross debt outstanding, including $151.6 million in term loans due in March 2013, $486.9 million in term loans due in March 2016 under an amended and restated agreement signed in July 2012, and $250.0 million in convertible debentures which investors may require us to redeem in August 2014. We also have a $75.0 million revolving credit line available to us through March 2015. As of June 30, 2011, there were $15.7 million of letters of credit issued under the revolving credit line but there were no other outstanding borrowings under the revolving credit line. Our debt level could have important consequences, for example it could:

•  require us to use a large portion of our cash flow to pay principal and interest on debt, including the convertible debentures and the credit facility, which will reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions, research and development expenditures and other business activities;

•  restrict us from making strategic acquisitions or exploiting business opportunities;

•  place us at a competitive disadvantage compared to our competitors that have less debt; and

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•  limit, along with the financial and other restrictive covenants related to our debt, our ability to borrow additional funds, dispose of assets or pay cash dividends.

Our ability to meet our payment and other obligations under our debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that additional capital will be available to us, in an amount sufficient to enable us to meet our payment obligations under the convertible debentures and our other debt and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, including the convertible debentures, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the convertible debentures and our other debt.

In addition, a substantial portion of our debt bears interest at variable rates. If market interest rates increase, our debt service requirements will increase, which would adversely affect our results of operations and cash flows.

Our debt agreements contain covenant restrictions that may limit our ability to operate our business.

The agreement governing our senior credit facility contains, and any of our other future debt agreements may contain, covenant restrictions that limit our ability to operate our business, including restrictions on our ability to:

•  incur additional debt or issue guarantees;

•  create liens;

•  make certain investments;

•  enter into transactions with our affiliates;

•  sell certain assets;

•  redeem capital stock or make other restricted payments;

•  declare or pay dividends or make other distributions to stockholders; and

•  merge or consolidate with any entity.

Our ability to comply with these covenants is dependent on our future performance, which will be subject to many factors, some of which are beyond our control, including prevailing economic conditions. As a result of these covenants, our ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be significantly restricted, and we may be prevented from engaging in transactions that might otherwise be beneficial to us. In addition, our failure to comply with these covenants could result in a default under our debt agreements, which could permit the holders to accelerate our obligation to repay the debt. If any of our debt is accelerated, we may not have sufficient funds available to repay the accelerated debt.

We have a history of operating losses, and may incur losses in the future, which may require us to raise additional capital on unfavorable terms.

We reported net losses of $19.1 million, $19.4 million and $37.0 million for the fiscal years 2010, 2009 and 2008, respectively. If we are unable to achieve and maintain profitability, the market price for our stock may decline, perhaps substantially. We cannot assure you that our revenue will grow or that we will achieve or maintain profitability in the future. If we do not achieve and maintain profitability, we may be required to raise additional capital to maintain or grow our operations. Additional capital, if available at all, may be highly dilutive to existing investors or contain other unfavorable terms, such as a high interest rate and restrictive covenants.

Voice and language technologies may not achieve widespread acceptance, which could limit our ability to grow our voice and language business.

We have invested and expect to continue to invest heavily in the acquisition, development and marketing of voice and language technologies. The market for voice and language technologies is relatively new and rapidly

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evolving. Our ability to increase revenue in the future depends in large measure on the acceptance of these technologies in general and our products in particular. The continued development of the market for our current and future voice and language solutions will also depend on:

•  consumer and business demand for speech-enabled applications;

•  development by third-party vendors of applications using voice and language technologies; and

•  continuous improvement in voice and language technology.

Sales of our voice and language products would be harmed if the market for these technologies does not continue to develop or develops slower than we expect, and, consequently, our business could be harmed and we may not recover the costs associated with our investment in these technologies.

The markets in which we operate are highly competitive and rapidly changing and we may be unable to compete successfully.

There are a number of companies that develop or may develop products that compete in our targeted markets. The individual markets in which we compete are highly competitive, and are rapidly changing. Within voice and language, we compete with AT&T, Microsoft, Google, and other smaller providers. Within healthcare, we compete with Medquist and other smaller providers. Within imaging, we compete with ABBYY, Adobe, I.R.I.S. and NewSoft. In voice and language, some of our partners such as Avaya, Cisco, Edify, Genesys and Nortel develop and market products that can be considered substitutes for our solutions. In addition, a number of smaller companies in voice, language and imaging produce technologies or products that are in some markets competitive with our solutions. Current and potential competitors have established, or may establish, cooperative relationships among themselves or with third parties to increase the ability of their technologies to address the needs of our prospective customers.

The competition in these markets could adversely affect our operating results by reducing the volume of the products we license or the prices we can charge. Some of our current or potential competitors, such as Adobe, Microsoft and Google, have significantly greater financial, technical and marketing resources than we do. These competitors may be able to respond more rapidly than we can to new or emerging technologies or changes in customer requirements. They may also devote greater resources to the development, promotion and sale of their products than we do.

Some of our customers, such as Microsoft and Google, have developed or acquired products or technologies that compete with our products and technologies. These customers may give higher priority to the sale of these competitive products or technologies. To the extent they do so, market acceptance and penetration of our products, and therefore our revenue, may be adversely affected. Our success will depend substantially upon our ability to enhance our products and technologies and to develop and introduce, on a timely and cost-effective basis, new products and features that meet changing customer requirements and incorporate technological enhancements. If we are unable to develop new products and enhance functionalities or technologies to adapt to these changes, or if we are unable to realize synergies among our acquired products and technologies, our business will suffer.

The failure to successfully maintain the adequacy of our system of internal control over financial reporting could have a material adverse impact on our ability to report our financial results in an accurate and timely manner.

The SEC, as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring public companies to include a report of management on internal control over financial reporting in their annual reports on Form 10-K that contains an assessment by management of the effectiveness of our internal control over financial reporting. In addition, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Any failure in the effectiveness of our system of internal control over financial reporting could have a material adverse impact on our ability to report our financial statements in an accurate and timely manner, could subject us to regulatory actions, civil or criminal penalties, shareholder litigation, or loss of customer confidence, which could result in an adverse reaction in the financial

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marketplace due to a loss of investor confidence in the reliability of our financial statements, which ultimately could negatively impact our stock price.

A significant portion of our revenue is derived, and a significant portion of our research and development activities are based, outside the United States. Our results could be harmed by economic, political, regulatory and other risks associated with these international regions.

Because we operate worldwide, our business is subject to risks associated with doing business internationally. We anticipate that revenue from international operations could increase in the future. Most of our international revenue is generated by sales in Europe and Asia. In addition, some of our products are developed and manufactured outside the United States and we have a large number of employees in India that provide transcription services. A significant portion of the development and manufacturing of our voice and language products is conducted in Belgium and Canada, and a significant portion of our imaging research and development is conducted in Hungary. We also have significant research and development resources in Aachen, Germany, and Vienna, Austria. Accordingly, our future results could be harmed by a variety of factors associated with international sales and operations, including:

•  changes in a specific country’s or region’s economic conditions;

•  geopolitical turmoil, including terrorism and war;

•  trade protection measures and import or export licensing requirements imposed by the United States or by other countries;

•  compliance with foreign and domestic laws and regulations;

•  negative consequences from changes in applicable tax laws;

•  difficulties in staffing and managing operations in multiple locations in many countries;

•  difficulties in collecting trade accounts receivable in other countries; and

•  less effective protection of intellectual property than in the United States.

We are exposed to fluctuations in foreign currency exchange rates.

Because we have international subsidiaries and distributors that operate and sell our products outside the United States, we are exposed to the risk of changes in foreign currency exchange rates. In certain circumstances, we have entered into forward exchange contracts to hedge against foreign currency fluctuations. We use these contracts to reduce our risk associated with exchange rate movements, as the gains or losses on these contracts are intended to offset any exchange rate losses or gains on the hedged transaction. We do not engage in foreign currency speculation. Forward exchange contracts hedging firm commitments qualify for hedge accounting when they are designated as a hedge of the foreign currency exposure and they are effective in minimizing such exposure. With our increased international presence in a number of geographic locations and with international revenue and costs projected to increase, we are exposed to changes in foreign currencies including the euro, British Pound, Canadian Dollar, Japanese Yen, Indian Rupee, Singapore Dollar, Australian Dollar, Chinese Yuan, Israel Shekel, and the Hungarian Forint. Changes in the value of the euro or other foreign currencies relative to the value of the U.S. dollar could adversely affect future revenue and operating results.

Impairment of our intangible assets could result in significant charges that would adversely impact our future operating results.

We have significant intangible assets, including goodwill and intangibles with indefinite lives, which are susceptible to valuation adjustments as a result of changes in various factors or conditions. The most significant intangible assets are patents and core technology, completed technology, customer relationships and trademarks. Customer relationships are amortized on an accelerated basis based upon the pattern in which the economic benefits of customer relationships are being utilized. Other identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives. We assess the potential impairment of identifiable intangible assets on an

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annual basis, as well as whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment of such assets, include the following:

•  significant underperformance relative to historical or projected future operating results;

•  significant changes in the manner of or use of the acquired assets or the strategy for our overall business;

•  significant negative industry or economic trends;

•  significant decline in our stock price for a sustained period;

•  changes in our organization or management reporting structure that could result in additional reporting units, which may require alternative methods of estimating fair values or greater disaggregation or aggregation in our analysis by reporting unit; and

•  a decline in our market capitalization below net book value.

Future adverse changes in these or other unforeseeable factors could result in an impairment charge that would impact our results of operations and financial position in the reporting period identified.

Our sales to government clients subject us to risks, including early termination, audits, investigations, sanctions and penalties.

We derive a portion of our revenues from contracts with the United States government, as well as various state and local governments, and their respective agencies. Government contracts are generally subject to audits and investigations which could identify violations of these agreements. Government contract violations could result in a range of consequences including, but not limited to, contract price adjustments, civil and criminal penalties, contract termination, forfeiture of profit and/or suspension of payment, and suspension or debarment from future government contracts. We could also suffer serious harm to our reputation if we were found to have violated the terms of our government contracts.

We conducted an analysis of our compliance with the terms and conditions of certain contracts with the U.S. General Services Administration (“GSA”). Based upon our analysis, we voluntarily notified GSA of non-compliance with the terms of two contracts. The final resolution of this matter may adversely impact our financial position.

If we are unable to attract and retain key personnel, our business could be harmed.

If any of our key employees were to leave, we could face substantial difficulty in hiring qualified successors and could experience a loss in productivity while any successor obtains the necessary training and experience. Our employment relationships are generally at-will and we have had key employees leave in the past. We cannot assure you that one or more key employees will not leave in the future. We intend to continue to hire additional highly qualified personnel, including software engineers and operational personnel, but may not be able to attract, assimilate or retain qualified personnel in the future. Any failure to attract, integrate, motivate and retain these employees could harm our business.

Our medical transcription services may be subject to legal claims for failure to comply with laws governing the confidentiality of medical records.

Healthcare professionals who use our medical transcription services deliver to us health information about their patients including information that constitutes a record under applicable law that we may store on our computer systems. Numerous federal and state laws and regulations, the common law and contractual obligations govern collection, dissemination, use and confidentiality of patient-identifiable health information, including:

•  state and federal privacy and confidentiality laws;

•  our contracts with customers and partners;

•  state laws regulating healthcare professionals;

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•  Medicaid laws; and

•  the Health Insurance Portability and Accountability Act of 1996 and related rules proposed by the Health Care Financing Administration.

The Health Insurance Portability and Accountability Act of 1996 establishes elements including, but not limited to, federal privacy and security standards for the use and protection of protected health information. Any failure by us or by our personnel or partners to comply with applicable requirements may result in a material liability. Although we have systems and policies in place for safeguarding protected health information from unauthorized disclosure, these systems and policies may not preclude claims against us for alleged violations of applicable requirements. There can be no assurance that we will not be subject to liability claims that could have a material adverse affect on our business, results of operations and financial condition.

Adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our operating results.

As our business has grown, we have become increasingly subject to the risks arising from adverse changes in domestic and global economic and political conditions. For example, the direction and relative strength of the U.S. and global economies have recently been increasingly uncertain due to softness in housing markets, extreme volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others and continuing geopolitical uncertainties. If economic growth in the United States and other countries in which we do business is slowed, customers may delay or reduce technology purchases and may be unable to obtain credit to finance the purchase of our products. This could result in reduced sales of our products, longer sales cycles, slower adoption of new technologies and increased price competition. Any of these events would likely harm our business, results of operations and financial condition. Political instability in any of the major countries in which we do business would also likely harm our business, results of operations and financial condition.

Current uncertainty in the global financial markets and the global economy may negatively affect our financial results.

Current uncertainty in the global financial markets and economy may negatively affect our financial results. These macroeconomic developments could negatively affect our business, operating results or financial condition in a number of ways which, in turn, could adversely affect our stock price. A prolonged period of economic decline could have a material adverse effect on our results of operations and financial condition and exacerbate some of the other risk factors described herein. Our customers may defer purchases of our products, licenses, and services in response to tighter credit and negative financial news or reduce their demand for them. Our customers may also not be able to obtain adequate access to credit, which could affect their ability to make timely payments to us or ultimately cause the customer to file for protection from creditors under applicable insolvency or bankruptcy laws. If our customers are not able to make timely payments to us, our accounts receivable could increase.

Our investment portfolio, which includes short-term debt securities, is generally subject to credit, liquidity, counterparty, market and interest rate risks that may be exacerbated by the recent global financial crisis. If the banking system or the fixed income, credit or equity markets deteriorate or remain volatile, our investment portfolio may be impacted and the values and liquidity of our investments could be adversely affected.

In addition, our operating results and financial condition could be negatively affected if, as a result of economic conditions, either:

•  the demand for, and prices of, our products, licenses, or services are reduced as a result of actions by our competitors or otherwise; or

•  our financial counterparties or other contractual counterparties are unable to, or do not, meet their contractual commitments to us.

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Security and privacy breaches in our systems may damage client relations and inhibit our growth.

The uninterrupted operation of our hosted solutions and the confidentiality and security of third-party information is critical to our business. Any failures in our security and privacy measures could have a material adverse effect on our financial position and results of operations. If we are unable to protect, or our clients perceive that we are unable to protect, the security and privacy of our electronic information, our growth could be materially adversely affected. A security or privacy breach may:

•  cause our clients to lose confidence in our solutions;

•  harm our reputation;

•  expose us to liability; and

•  increase our expenses from potential remediation costs.

While we believe we use proven applications designed for data security and integrity to process electronic transactions, there can be no assurance that our use of these applications will be sufficient to address changing market conditions or the security and privacy concerns of existing and potential clients.

Risks Related to Our Intellectual Property and Technology

Unauthorized use of our proprietary technology and intellectual property could adversely affect our business and results of operations.

Our success and competitive position depend in large part on our ability to obtain and maintain intellectual property rights protecting our products and services. We rely on a combination of patents, copyrights, trademarks, service marks, trade secrets, confidentiality provisions and licensing arrangements to establish and protect our intellectual property and proprietary rights. Unauthorized parties may attempt to copy aspects of our products or to obtain, license, sell or otherwise use information that we regard as proprietary. Policing unauthorized use of our products is difficult and we may not be able to protect our technology from unauthorized use. Additionally, our competitors may independently develop technologies that are substantially the same or superior to our technologies and that do not infringe our rights. In these cases, we would be unable to prevent our competitors from selling or licensing these similar or superior technologies. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United States. Although the source code for our proprietary software is protected both as a trade secret and as a copyrighted work, litigation may be necessary 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. Litigation, regardless of the outcome, can be very expensive and can divert management efforts.

Third parties have claimed and may claim in the future that we are infringing their intellectual property, and we could be exposed to significant litigation or licensing expenses or be prevented from selling our products if such claims are successful.

From time to time, we are subject to claims that we or our customers may be infringing or contributing to the infringement of the intellectual property rights of others. We may be unaware of intellectual property rights of others that may cover some of our technologies and products. If it appears necessary or desirable, we may seek licenses for these intellectual property rights. However, we may not be able to obtain licenses from some or all claimants, the terms of any offered licenses may not be acceptable to us, and we may not be able to resolve disputes without litigation. Any litigation regarding intellectual property could be costly and time-consuming and could divert the attention of our management and key personnel from our business operations. In the event of a claim of intellectual property infringement, we may be required to enter into costly royalty or license agreements. Third parties claiming intellectual property infringement may be able to obtain injunctive or other equitable relief that could effectively block our ability to develop and sell our products.

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We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims as a result of litigation or other proceedings.

In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual property rights, or disputes relating to the validity or alleged infringement of third-party intellectual property rights, including patent rights, we have been, are currently, and may in the future be, subject to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation are typically very costly and can be disruptive to our business operations by diverting the attention and energy of management and key technical personnel. Although we have successfully defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and disputes. In addition, we may incur significant costs in acquiring the necessary third party intellectual property rights for use in our products. Third party intellectual property disputes could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from manufacturing or licensing certain of our products, cause severe disruptions to our operations or the markets in which we compete, or require us to satisfy indemnification commitments with our customers including contractual provisions under various license arrangements. Any of these could seriously harm our business.

Our software products may have bugs, which could result in delayed or lost revenue, expensive correction, liability to our customers and claims against us.

Complex software products such as ours may contain errors, defects or bugs. Defects in the solutions or products that we develop and sell to our customers could require expensive corrections and result in delayed or lost revenue, adverse customer reaction and negative publicity about us or our products and services. Customers who are not satisfied with any of our products may also bring claims against us for damages, which, even if unsuccessful, would likely be time-consuming to defend, and could result in costly litigation and payment of damages. Such claims could harm our reputation, financial results and competitive position.

Risks Related to our Corporate Structure, Organization and Common Stock

The holdings of our largest stockholder may enable it to influence matters requiring stockholder approval.

As of June 30, 2011, Warburg Pincus, a global private equity firm, beneficially owned approximately 23% of our outstanding common stock, including warrants exercisable for up to 7,562,422 shares of our common stock, and 3,562,238 shares of our outstanding Series B Preferred Stock, each of which is convertible into one share of our common stock. Because of its large holdings of our capital stock relative to other stockholders, this stockholder has a strong influence over matters requiring approval by our stockholders.

The market price of our common stock has been and may continue to be subject to wide fluctuations, and this may make it difficult for you to resell the common stock when you want or at prices you find attractive.

Our stock price historically has been, and may continue to be, volatile. Various factors contribute to the volatility of our stock price, including, for example, quarterly variations in our financial results, new product introductions by us or our competitors and general economic and market conditions. Sales of a substantial number of shares of our common stock by our largest stockholders, or the perception that such sales could occur, could also contribute to the volatility or our stock price. While we cannot predict the individual effect that these factors may have on the market price of our common stock, these factors, either individually or in the aggregate, could result in significant volatility in our stock price during any given period of time. Moreover, companies that have experienced volatility in the market price of their stock often are subject to securities class action litigation. If we were the subject of such litigation, it could result in substantial costs and divert management’s attention and resources.

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, new regulations

50

promulgated by the Securities and Exchange Commission and the rules of the Nasdaq Marketplace, are resulting in increased general and administrative expenses for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations in many cases, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies, our business may be harmed.

Future sales of our common stock in the public market could adversely affect the trading price of our common stock and our ability to raise funds in new stock offerings.

Future sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could adversely affect prevailing trading prices of our common stock and could impair our ability to raise capital through future offerings of equity or equity-related securities. In connection with past acquisitions, we issued a substantial number of shares of our common stock as transaction consideration. We may continue to issue equity securities for future acquisitions, which would dilute existing stockholders, perhaps significantly depending on the terms of such acquisitions. For example, we issued, and registered for resale, approximately 2.3 million shares of our common stock in connection with our December 2009 acquisition of SpinVox. No prediction can be made as to the effect, if any, that future sales of shares of common stock, or the availability of shares of common stock for future sale, will have on the trading price of our common stock.

We have implemented anti-takeover provisions, which could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders.

Provisions of our certificate of incorporation, bylaws and Delaware law, as well as other organizational documents could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These provisions include:

•  authorized “blank check” preferred stock;

•  prohibiting cumulative voting in the election of directors;

•  limiting the ability of stockholders to call special meetings of stockholders;

•  requiring all stockholder actions to be taken at meetings of our stockholders; and

•  establishing advance notice requirements for nominations of directors and for stockholder proposals.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.   Defaults Upon Senior Securities

None.

Item 5.   Other Information

None.

Item 6.   Exhibits

The exhibits listed on the Exhibit Index are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Burlington, Commonwealth of Massachusetts, on August 9, 2011.

Nuance Communications, Inc.

By:  /s/  Thomas L. Beaudoin

Thomas L. Beaudoin

Executive Vice President and Chief Financial

Officer

52

EXHIBIT INDEX

				Incorporated by Reference
Exhibit									Filing	Filed
Number			Exhibit Description	Form	File No.	Exhibit			Date	Herewith
	2	.1	Share Purchase Agreement, dated as of June 6, 2011, by and among Nuance, Ruetli Holding Corporation, the shareholders of SVOX and smac partners GmbH, as the shareholder representative.							X
	2	.2	Agreement and Plan of Merger, dated as of May 10, 2011, by and among Nuance, Ellipse Acquisition Corporation, Equitrac Corporation, U.S. Bank National Association, as escrow agent, and Cornerstone Equity Investors, LLC, as the stockholder representative.							X
	3	.1	Amended and Restated Certificate of Incorporation of the Registrant.	10-Q	0-27038		3	.2	5/11/2001
	3	.2	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant.	10-Q	0-27038		3	.1	8/9/2004
	3	.3	Certificate of Ownership and Merger.	8-K	0-27038		3	.1	10/19/2005
	3	.4	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant.	S-3	333-142182		3	.3	4/18/2007
	3	.5	Amended and Restated Bylaws of the Registrant.	10-K	0-27038		3	.2	3/15/2004
	10	.1	Letter dated March 14, 2011 to Bill Nelson regarding certain employment matters							X
	31	.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a).							X
	31	.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a).							X
	32	.1	Certification Pursuant to 18 U.S.C. Section 1350.							X
	101		The following materials from Nuance Communications, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, and (iv) Notes of Consolidated Financial Statements.							X

53

EX-2.1

Exhibit 2.1

Execution Copy

Share Purchase Agreement

dated as of June 6, 2011

by and between

Tempopark Fund 1, Greenpark Step GmbH & Co. KG, Steinstrasse 27, 40210 Düsseldorf, Germany

(Seller 1)

Göran Grosskopf, Route de Belmont 54, 1093 La Conversion, Switzerland

(Seller 2)

Beat Curti Holding AG, Seestrasse 108, 8703 Erlenbach, Switzerland

(Seller 3)

Ernst Bruder, Belvédèrestrasse 51, 5621 Zufikon, Switzerland

(Seller 4)

Volker Jantzen, Rotwandstrasse 35, 8004 Zürich, Switzerland

(Seller 5)

Michael Bellert, Seestrasse 15, 8802 Kilchberg, Switzerland

(Seller 6)

Markus Rauh, Weiherstrasse 8, 9402 Mörschwil, Switzerland

(Seller 7)

Beat Curti, Seestrasse 108, 8703 Erlenbach, Switzerland

(Seller 8)

(Seller 1, Seller 2, Seller 3, Seller 4, Seller 5, Seller 6, Seller 7 and Seller 8, together, the Majority Sellers)

Share Purchase Agreement re SVOX AG       ii | ii

and

each of the other legal and beneficial owners of the common shares and preferred shares of SVOX AG, Switzerland (the Company), having acceded to this Agreement by executing an Accession Confirmation (each a Minority Seller, the Minority Sellers together with the Majority Sellers the Sellers)

and

smac | partners GmbH, Ottobrunner Straße 41, 82008 Unterhaching, Germany

(the Sellers’ Representative)

and

Ruetli Holding Corporation, 1 Wayside Road, Burlington, MA 01803

(the Buyer)

Nuance Communications, Inc., 1 Wayside Road, Burlington, MA 01803

(the Parent)

Share Purchase Agreement re SVOX AG       i | iv

Table of Contents

1. Definitions and Interpretation	2
1.1 Certain Defined Terms	2
1.2 Other Definitional and Interpretative Provisions	2
2. Accession to Agreement by Minority Sellers	2
3. Sale and Purchase of the Shares	3
3.1 Object of the Sale	3
3.2 Consideration	3
3.2.1 Total Consideration	3
3.2.2 First Tranche	4
3.2.3 Second Tranche	4
3.2.4 Third Tranche	5
3.3 Form of Payment	5
3.4 Exchange Agent	7
4. Registration of Consideration Shares	10
4.1 Filing and Effectiveness of Stockholder Registration Statement	10
4.2 Limitations on Registration Rights	11
4.3 Registration Procedures	12
4.4 Requirements of Sellers	13
4.5 Indemnification	14
4.6 Assignment of Rights	16
5. Actions Prior to Closing	16
5.1 General	16
5.2 Filings and Submissions	17
5.3 Conduct of Business between Signing and Closing	18
5.3.1 General	18
5.3.2 Access to the Group	20
5.4 Third Party Consents	20
5.5 SVOX Option Plans	20
5.6 Third Party Expenses; Debt Payment; Change of Control Payments	21
5.7 Closing Memorandum	22
6. Closing	22
6.1 Date and Place	22
6.2 Conditions Precedent to the Closing	22
6.2.1 Conditions to the Obligations of Each Party	22

Share Purchase Agreement re SVOX AG       ii | iv

6.2.2 Conditions to the Obligations of Nuance	23
6.2.3 Condition to the Obligations of the Sellers	26
6.2.4 Waiver of Conditions Not-Satisfied	26
6.2.5 Right of Termination	26
6.3 Closing Actions	28
6.3.1 Actions by the Sellers	28
6.3.2 Actions by Nuance	29
6.3.3 Actions by Sellers’ Representative	30
6.4 Post Closing Actions by Buyer	30
7. Other Covenants	31
7.1 Notification by Sellers	31
7.2 Press Releases and Other Public Announcements	31
7.3 Rights of Recourse against Directors, Officers and Employees	32
7.4 Covenant Not to Compete and Not to Solicit	33
7.5 Confidentiality	34
7.6 Exclusivity	35
7.7 D&O Insurance	36
7.8 Broker Payment	36
8. Taxes, Costs, Expenses and Interest	37
8.1 Transfer Taxes	37
8.2 No Indirect Partial Liquidation in Respect of the Sellers	37
8.3 Costs and Expenses	37
8.4 Interest	37
8.5 Subpart F Income	38
9. Representations and Warranties	38
9.1 Representations and Warranties of the Sellers	38
9.2 Representations and Warranties of Nuance	40
10. Indemnification	40
10.1 Specific Indemnifications	40
10.2 General Indemnification	41
11. Indemnification Procedure	42
11.1 Notice of Breach	42
11.2 Right to Cure	43
11.3 Third Party Claims	43
11.4 Term (Verjährung) of Indemnification Obligations	44
11.5 Limitations on Indemnification Obligations	45
11.6 Remedies Exclusive	47

Share Purchase Agreement re SVOX AG       iii | iv

11.7 Treatment of Indemnification Payments	47
12. General Provisions	47
12.1 Guarantee by Parent	47
12.2 Effect on Third Parties	47
12.3 Notices	48
12.4 Entire Agreement	49
12.5 Amendments and Waivers	49
12.6 No Assignment	49
12.7 Severability	50
12.8 Relationship amongst Sellers	50
12.8.1 Sellers’ Representative	50
12.8.2 Liability	51
13. Governing Law and Dispute Resolution	51
13.1 Governing Law	51
13.2 Dispute Resolution	51

Share Purchase Agreement re SVOX AG       iv | iv

Table of Annexes

Number of Annex	Name of Annex
A	Allocation of Shares
B	Subsidiaries; Subsidiary Shares
1	Definitions
2(a)	Form of Accession Confirmation
3.3-A	Consideration Shares Purchase Agreement Closing Date
3.3-B	Consideration Shares Purchase Agreement Second Tranche Payment Date
3.3-C	Consideration Shares Purchase Agreement Third Tranche Payment Date
5.3.1	Restricted Actions
5.4	Consents of Third Parties
5.5	Form of Notice to SVOX Option Plan Participants
6.2.1(a)	Governmental Approvals
6.2.2(c)	Second Amendment to the Siemens APA
6.2.2(e)	Consents of Third Parties (Conditions Precedent)
6.2.2(h)	Release of Liens
6.3.1(h)	Agreements Not Terminated
6.3.1(i)	Form of Release Declaration
9.1	Representations and Warranties of the Sellers | Disclosure Schedule
9.2	Representations and Warranties of Nuance

Share Purchase Agreement re SVOX AG       1 | 54

     Whereas

A.	The Majority Sellers are the legal and beneficial owners of the outstanding shares in the Company as set forth in Annex A (collectively, the Majority Shares). After the signing of this Agreement, the Majority Sellers will use their best efforts to have all other legal and beneficial owners of shares in the Company outstanding at Closing (collectively, the Minority Shares and, together with the Majority Shares, the Shares) accede to this Agreement as Sellers.
B.	The Company is directly the legal and beneficial owner of the shares, securities convertible into shares and rights to acquire shares (the Subsidiary Shares) in the legal entities (the Subsidiaries and, together with the Company, the Group or the Group Companies) set forth in Annex B.
C.	The Group Companies conduct a speech solution business comprising automotive speech solutions, mobile speech solutions, in-car communications solutions, dialog control solutions and speech prompt solutions.
D.	The Majority Sellers desire to sell the Majority Shares, and to use their best efforts to cause the Minority Sellers to sell the Minority Shares, to the Buyer, and the Buyer desires to purchase the Shares from the Sellers on the terms and subject to the conditions of this Agreement (such purchase and sale, the Acquisition).
E.	If, after the Closing, the Buyer holds less than 100% of the Shares and more than 90% of the Company Shares, the Buyer intends to merge the Company into the Buyer or any of its Affiliates by way of statutory merger in accordance with article 8 para 2 of the Merger Act, by which the remaining holders of outstanding shares in the Company will receive a merger consideration economically equal to the consideration to be received by the Sellers under this Agreement.
F.	The Sellers desire to appoint smac | partners GmbH as the Sellers’ Representative.
G.	Buyer is a wholly owned subsidiary of the Parent and Parent wishes to guarantee all obligations of the Buyer under this Agreement.

Now, therefore, the Sellers, the Sellers’ Representative, the Buyer and the Parent agree as follows:

Share Purchase Agreement re SVOX AG       2 | 54

1. Definitions and Interpretation

1.1 Certain Defined Terms

Capitalized terms used in this Agreement shall have the meaning assigned to them in Annex 1.

1.2 Other Definitional and Interpretative Provisions

(a)

The words “hereof”, “herein” and “hereunder,” and words of similar import, when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Clause, Schedule and Annex references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. All Annexes and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement, as if set forth in full herein. Any capitalized term used in any Annex or Schedule hereto, but not defined therein, shall have the meaning assigned to it in this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” References to “or” shall be deemed to be disjunctive but not necessarily exclusive (i.e., unless the context dictates otherwise, “or” shall be interpreted to mean “and|or” rather than “either|or”). Unless otherwise specified, currency amounts referenced herein are in EUR.

(b)

If provisions in this Agreement include English terms after which either in the same provision or elsewhere in this Agreement German terms have been inserted in brackets and|or italics, the respective German terms alone and not the English terms shall be authoritative for the interpretation of the respective provisions.

2. Accession to Agreement by Minority Sellers

(a) After execution of this Agreement by the Majority Sellers, the Buyer, the Parent and the Sellers’ Representative, the Majority Sellers will use their best efforts to have all other legal and beneficial owners of outstanding shares in the Company accede to this Agreement as Minority Sellers and Sellers respectively by executing an accession confirmation in the form set forth in Annex 2(a) (the Accession Confirmation).

Share Purchase Agreement re SVOX AG       3 | 54

(b)	Each of the Majority Sellers, the Buyer, the Parent, the Sellers’ Representative and any Minority Seller (having acceded to the Agreement prior to the accession of another Minority Seller) hereby acknowledges and agrees that each legal and beneficial owner of Shares upon due execution of an Accession Confirmation becomes a party to this Agreement as Minority Seller (and accordingly as Seller) and will have all rights and obligations of a Seller hereunder.
(c)	An accession according to this Article 2 will only be effective if the relevant Accession Confirmation is received by the Buyer and the Sellers’ Representative at least two (2) Business Days prior to the Closing Date.
(d)	The Buyer and the Sellers’ Representative agree to update Annex A two (2) Business Days prior to the anticipated Closing Date and to have it attached to this Agreement.

3. Sale and Purchase of the Shares

3.1 Object of the Sale

(a)	On the terms and subject to the conditions of this Agreement, (i) the Majority Sellers hereby agree to sell and transfer the Majority Shares to the Buyer and (ii) the Minority Sellers agree to sell and transfer the Minority Shares to the Buyer, free and clear of any Liens.
(b)	On the terms and subject to the conditions of this Agreement, the Buyer hereby agrees to purchase and accept from the Majority Sellers and the Minority Sellers, respectively, in each case at the Closing, full legal and beneficial ownership of the Shares, free and clear of any Liens.

3.2 Consideration

3.2.1 Total Consideration

(a) The aggregate consideration for 100% of the Shares payable by the Buyer is equal to the amount of EUR 87,000,000.00 and consists of:

(i) a first tranche in the amount of EUR 57,000,000 (the First Tranche) payable pursuant to Article 3.2.2, Article 3.3 and Article 3.4;

Share Purchase Agreement re SVOX AG       4 | 54

(ii)	a second tranche in the amount of EUR 8,300,000 (the Second Tranche) payable pursuant to Article 3.2.3, Article 3.3 and Article 3.4; and
(iii)	a third tranche in the amount of EUR 21,700,000 (the Third Tranche; the First Tranche, the Second Tranche and the Third Tranche together the Total Consideration) payable pursuant to Article 3.2.4, Article 3.3 and Article 3.4.

(b) In case less than 100% of the Shares are the subject of the sale and purchase according to this Agreement, each of the First Tranche, the Second Tranche and the Third Tranche shall be reduced by such percentage identical to the difference between 100% and the percentage of the Shares that are the subject of the sale and purchase according to this Agreement.

3.2.2 First Tranche

The First Tranche minus any (i) Company Third Party Expenses, (ii) Sellers Third Party Expenses, (iii) Change of Control Payments, (iv) Debt Repayment Amount (in the case of clauses (i) — (iv), as set forth on the applicable Closing Date Statement) and (v) the Siemens Payment shall be payable by the Buyer to the Sellers at Closing in accordance with Article 3.3 and Article 3.4.

3.2.3 Second Tranche

(a)	The Second Tranche minus any (i) Company Third Party Expenses, (ii) Sellers Third Party Expenses, (iii) Change of Control Payments (in the case of clauses (i) — (iii), as set forth on the applicable Closing Date Statement) and (iv) any amount that will be placed in escrow in accordance with Article 3.2.3(c) shall be payable by the Buyer to the Sellers at the one year anniversary of the Closing (the Second Tranche Payment Date) in accordance with Article 3.3 and Article 3.4.
(b)	Subject to Article 3.2.3(c), neither the Buyer nor the Parent shall be allowed to set off any of its claims it may have against any of the Sellers under this Agreement or otherwise (including, without limitation, claims for indemnification) against the Second Tranche.
(c)	If Nuance gives a Notice of Breach or more than one Notice of Breach on or before 11:59 p.m. EST on the Second Tranche Payment Date, any amounts for which such Notice(s) of Breach has been given, subject to the limitations on indemnification set forth in Article 11, shall be deducted from

Share Purchase Agreement re SVOX AG       5 | 54

the Second Tranche and be placed in escrow to be held by the Escrow Agent and paid to the Sellers or to Nuance by the Escrow Agent in accordance with the terms of the Escrow Agreement. If the escrow consists of Consideration Shares, any payments made to an Indemnified Party from the escrow shall value each Consideration Share at the Closing Price for the Second Tranche.

3.2.4 Third Tranche

(a)	The Third Tranche minus any (i) Company Third Party Expenses, (ii) Seller Third Party Expenses and (iii) Change of Control Payments (in the case of clauses (i) — (iii), as set forth on the applicable Closing Date Statement) shall be payable by the Buyer to the Sellers on December 31, 2012 (the Third Tranche Payment Date) in accordance with Article 3.3 and Article 3.4.
(b)	Neither the Buyer nor the Parent shall be allowed to set off any of its claims it may have against any of the Sellers under this Agreement or otherwise (including, without limitation, claims for indemnification) against the Third Tranche.

3.3 Form of Payment

(a)

The Sellers’ Representative shall, on behalf of the Sellers, notify the Buyer and the Exchange Agent in writing no later than five (5) Business Days prior to the Closing Date, the Second Tranche Payment Date and the Third Tranche Payment Date, respectively, of the bank accounts (the Bank Accounts) and deposit accounts (the Deposit Accounts) to which the payments of cash and transfer of Consideration Shares, respectively, shall be made in accordance with this Article 3.3.

(b)

Subject to Article 6.3.2 hereof, the payments to be made pursuant to Article 3.2 shall be satisfied in the following manner:

(i)	payment of cash by wire transfer in immediately available funds in EUR to the Bank Accounts;
(ii)	at the election of the Buyer only, allotment and issuance of the Consideration Shares, if any, to the Sellers, free and clear of any Liens, and delivery of the Consideration Shares to the Deposit Accounts; or
(iii)	at the election of the Buyer only, a combination of (a) and (b) above,

Share Purchase Agreement re SVOX AG       6 | 54

provided, however, that (a) If Buyer determines in good faith that for securities Law or for other reasonable purposes paying cash to certain Sellers is advisable, Buyer may elect, in its sole discretion, to pay certain Sellers in cash while other Sellers receive Consideration Shares (or a combination of Consideration Shares and cash) and (b) Buyer shall elect and inform in writing the Sellers’ Representative no later than one (1) Business Day prior to the Closing, the Second Tranche Payment Date, and the Third Tranche Payment Date, respectively, how the First Tranche, the Second Tranche and the Third Tranche will be satisfied.

(c) If any certificate for Consideration Shares is to be issued in a name other than that in which the Company Share Certificate surrendered in exchange therefor is registered, or if any cash amounts are to be disbursed pursuant to Article 3.2 to a Person other than the Person whose name is reflected on the Company Share Certificate surrendered in exchange therefor, it will be a condition of the issuance or delivery thereof that the Company Share Certificate so surrendered will be properly endorsed or, as the case may be, assigned, and otherwise in proper form for transfer of legal title of the respective Share to the Buyer and that the Person requesting such exchange will have paid to the Buyer or any agent designated by it any transfer or other Taxes required by reason of the issuance of a certificate for Consideration Shares in any name other than that of the registered holder of the certificate surrendered, or established to the satisfaction of Buyer or any agent designated by it that such Tax has been paid or is not payable.

(d)	(i)	In the event that Buyer elects to issue Consideration Shares as the means of payment of the First Tranche pursuant to this Article 3.3, the Parent, Buyer and the Sellers hereby agree that the Consideration Share Purchase Agreement attached hereto as Annex 3.3-A shall automatically and without any further action by the Parties become effective as of the Closing Date, and the Consideration Shares shall be issued pursuant thereto and the Buyer and the Sellers’ Representative shall promptly complete the payment information in Exhibit A to the Consideration Share Purchase Agreement attached hereto as Annex 3.3-A.
	(ii)	In the event that Buyer elects to issue Consideration Shares as the means of payment of the Second Tranche pursuant to this Article 3.3, the Parent, Buyer and the Sellers hereby agree that the Consideration Share Purchase Agreement attached hereto as Annex 3.3-B shall automatically and without any further action by the Parties become

Share Purchase Agreement re SVOX AG       7 | 54

effective as of the Second Tranche Payment Date, and the Consideration Shares shall be issued pursuant thereto and the Buyer and the Sellers’ Representative shall promptly complete the payment information in Exhibit A to the Consideration Share Purchase Agreement attached hereto as Annex 3.3-B.

 (iii)  In the event that Buyer elects to issue Consideration Shares as the means of payment of the Third Tranche pursuant to this Article 3.3, the Parent, Buyer and the Sellers hereby agree that the Consideration Share Purchase Agreement attached hereto as Annex 3.3-C shall automatically and without any further action by the Parties become effective as of the Third Tranche Payment Date, and the Consideration Shares shall be issued pursuant thereto and the Buyer and the Sellers’ Representative shall promptly complete the payment information in Exhibit A to the Consideration Share Purchase Agreement attached hereto as Annex 3.3-C.

3.4 Exchange Agent

(a)

An institution selected by the Buyer (provided that such institution shall be a well reputable institution and shall not be an Affiliate of Nuance) and at Buyer’s sole expense, shall serve as the exchange agent (such institution, the Exchange Agent) for the Acquisition. Any payments to be made pursuant to Article 3.2 and in accordance with Article 3.3 shall be made by the Exchange Agent to the Sellers as designated in writing by the Sellers’ Representative to the Buyer and the Exchange Agent no later than five (5) Business Days prior to the anticipated Closing Date, the Second Tranche Payment Date and the Third Tranche Payment Date, respectively.

(b)

The Buyer shall make available to the Exchange Agent on the Closing Date, the Second Tranche Payment Date and the Third Tranche Payment Date, respectively, the cash and|or Consideration Shares payable at such times pursuant to Article 3.2 in exchange for Shares; provided, however, that, the Buyer shall deposit into escrow the cash and|or Consideration Shares out of the Second Tranche that are to be placed into escrow pursuant to Article 3.2.3(a). The cash and|or Consideration Shares placed into escrow pursuant to Article 3.2.3(a) shall be deemed to have been paid to the Sellers and contributed to the escrow account with respect to the Pro Rata Portion of each Seller.

Share Purchase Agreement re SVOX AG       8 | 54

(c)

As soon as practicable after the date hereof and in any event no later than five (5) Business Days prior the anticipated Closing Date, as applicable, the Buyer shall (or shall cause the Exchange Agent to) mail a letter of transmittal and a Stockholder Questionnaire, if applicable. After receipt of such letter of transmittal, the Sellers shall surrender the Company Share Certificates as set out in Annex A to the Exchange Agent together with a duly completed and validly executed letter of transmittal and assignment of the respective Shares to Buyer. Upon surrender of the Company Share Certificate(s) to the Exchange Agent, together with such letter of transmittal and assignment of the respective Shares to Buyer, duly completed and validly executed in accordance with the instructions thereto as determined by the Exchange Agent, subject to the Closing, the holder of such Company Share Certificates shall be entitled to receive at or as soon as practicable following the Closing in accordance with Article 6.3.2, on the Second Tranche Payment Date and on the Third Tranche Payment Date, as applicable, from the Exchange Agent in exchange therefor Consideration Shares and|or cash to which such holder is entitled pursuant to Article 3.2 and the Buyer shall (or shall cause the Exchange Agent to) deliver such Consideration Shares and/or cash at such times; provided, however, that the Exchange Agent shall in no event make any payments and|or deliver Consideration Shares to the Sellers unless the Exchange Agent shall have validly received Company Share Certificates representing greater than 90% of the Company Shares. If the Exchange Agent has received Company Share Certificates prior to the Closing and the Agreement is terminated pursuant to Article 6.2.5, the Exchange Agent shall (and Nuance shall cause the Exchange Agent to) return to the Sellers’ Representative within five (5) Business Days after receipt of notice from the Sellers’ Representative that the Agreement has been terminated, any Company Share Certificate(s) in the possession of the Exchange Agent, together with the letter of transmittal and assignment of the respective Shares.

(d)

Notwithstanding the foregoing, in lieu of any Company Share Certificate that has been lost, stolen or destroyed, a Seller may provide an affidavit of loss as an indemnity against any claim that may be made against Buyer or Exchange Agent with respect to such Company Share Certificate, whereby the Shares certificated by such lost or stolen Company Share Certificate shall not be considered in the calculation of the 90% threshold pursuant to the proviso above. No interest shall be payable on any cash deliverable upon the exchange of any Shares.

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(e)

No portion of the consideration will be paid to any Seller holding any unsurrendered Company Share Certificate at the Closing with respect to Shares represented thereby until the holder of record of such Company Share Certificate shall surrender such Company Share Certificate pursuant to Articles 3.4(c) 3.4(d), 3.4(e) or 3.4(f). Until surrendered to the Exchange Agent (or the Buyer in accordance with Clause 3.4(f)), each Company Share Certificate outstanding at Closing held by a Seller will be deemed, for all corporate purposes thereafter, to evidence only the right to receive the applicable portion of the cash and|or Consideration Shares pursuant to Article 3.2 in exchange for Shares (without interest) into which such Shares shall have been so converted. Upon surrender of any such Company Share Certificate(s) after the Closing Date, but before the date the shareholders of the Company resolve on the merger as contemplated in Article 6.4, to the Exchange Agent (or the Buyer in accordance with Article 3.4(f)), together with such letter of transmittal and assignment of the respective Shares to Buyer, duly completed and validly executed in accordance with the instructions thereto, the holder of such Company Share Certificates shall be entitled to receive: (i) as soon as practicable after receipt of such Company Share Certificates and letter of transmittal by the Exchange Agent (or the Buyer in accordance with Article 3.4(f)) and in any event within five (5) Business Days after such receipt, all Consideration Shares and|or cash that would otherwise have been due and payable with respect to such Company Share Certificates on or prior to the date of surrender thereof as if such Share Certificates had been delivered at or prior to the Closing; and (ii) any additional Consideration Shares and|or cash at such times and in such amounts as set forth in Article 3.2 and Article 3.4(c). The Buyer shall (or shall cause the Exchange Agent to) deliver such Consideration Shares and/or cash at such times.

(f)

At any time following the last Business Day of the respective three (3) month period following each of the Closing, the Second Tranche Payment Date and the Third Tranche Payment Date, as applicable, the Buyer shall be entitled to require the Exchange Agent to deliver to the Buyer or its designated successor or assign all Consideration Shares and cash that have been deposited with the Exchange Agent free of any Liens pursuant to Article 3.4(b), and any income or proceeds thereof, not disbursed to the Sellers pursuant to Article 3.4(c). Thereafter, Sellers holding unsurrendered Company Share Certificates shall look only to the Buyer for the applicable portion of the Consideration Shares and/or cash payable in exchange for such Company Share Certificates in accordance with Articles 3.2 and 3.4(e).

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(g) Notwithstanding anything to the contrary in this Article 3, neither the Exchange Agent, nor any party hereto shall be liable to a holder of Shares for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat, Tax or similar Law.

4. Registration of Consideration Shares

The provisions of this Article 4 shall only apply in the event the Buyer elects to issue Consideration Shares to the Sellers.

4.1 Filing and Effectiveness of Stockholder Registration Statement

The Parent shall use its commercially reasonable efforts to file either a registration statement on Form S-3 (or other appropriate form if Form S-3 is not available) or a prospectus supplement to an effective registration statement pursuant to Rule 424(b) under the Securities Act covering the resale to the public by the Sellers of all shares representing the Consideration Shares (the Stockholder Registration Statement) with the SEC within five (5) Business Days following the date Consideration Shares are issued to any one or more Sellers. The Parent shall use its commercially reasonable efforts to cause the Stockholder Registration Statement to be automatically effective upon filing, or if automatic effectiveness is not available, to be declared effective by the SEC as soon as practicable and use its commercially reasonable efforts to assist the Sellers in allowing sales of shares representing the Consideration Shares to occur in the United States pursuant to the Stockholder Registration Statement; provided that the Parent shall not be required to make any filing with the SEC prior to the date that such filing otherwise would be due other than the Parent’s Form 8-K containing the required financial statements of the Company and the pro-forma financial statements required in connection with the Acquisition (the Form 8-K). The Parent shall cause the Stockholder Registration Statement to remain available for use until such time as all of the Consideration Shares are eligible for resale by non-affiliates pursuant to Rule 144 under the Securities Act or any other rule of similar effect without any volume or manner of sale restrictions or such earlier time as all of the Consideration Shares covered by the Stockholder Registration Statement has been sold pursuant thereto. The Parent shall pay the expenses incurred by it in complying with its obligations under this Article 4.1 including, without limitation, all preparation, registration, filing fees, costs and expenses, all exchange listing fees, all fees, costs and expenses of counsel for the Parent, accountants for the Parent and Seller and other advisors or Persons retained by the Parent in connection with the filing of the Stockholder Registration Statement, but excluding (a) any brokerage fees, selling commissions or underwriting

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discounts incurred by the Sellers in connection with sales under the Stockholder Registration Statement, and (b) the fees and expenses of any attorneys retained by the Sellers.

4.2 Limitations on Registration Rights

(a)

The Parent may, by written notice to the Sellers, (i) delay the filing or effectiveness of the Stockholder Registration Statement, or (ii) suspend the Stockholder Registration Statement after effectiveness and require that the Sellers immediately cease sales of the Consideration Shares pursuant to the Stockholder Registration Statement, in the event that (A) the Parent files a registration statement (other than a registration statement on Form S-8 or any successor form) or a prospectus supplement to an effective registration statement pursuant to Rule 424(b) under the Securities Act with the SEC for a public offering of its securities for its own behalf, (B) the Parent is engaged in any activity or transaction or preparations or negotiations for any activity or transaction that the Parent desires to keep confidential for business reasons, if the Parent determines in good faith that the public disclosure requirements imposed on the Parent under the Securities Act in connection with the Stockholder Registration Statement would require disclosure of such activity, transaction, preparations or negotiations, or (C) the Parent determines in good faith that the public disclosure requirements imposed on the Parent under the Securities Act in connection with the Stockholder Registration Statement would require the Parent to file any information or materials with the SEC prior to the date that such information or materials otherwise would be required to be filed, other than the Form 8-K in connection with the Acquisition.

(b)

If the Parent delays or suspends the Stockholder Registration Statement or requires the Sellers to cease sales of Consideration Shares pursuant to Article 4.2(a), the Parent shall, as promptly as practicable following the termination of the circumstance which entitled the Parent to do so, take such actions as may be necessary to file or reinstate the effectiveness of the Stockholder Registration Statement (with such Stockholder Registration Statement staying effective and remaining effective for the period contemplated by Article 4.1) and|or give written notice to all Sellers authorizing them to resume sales pursuant to the Stockholder Registration Statement. If as a result thereof the prospectus included in the Stockholder Registration Statement has been amended to comply with the requirements of the Securities Act, the Parent shall enclose such revised prospectus with the notice to the Sellers given pursuant to this Article 4.2(b), and the Sellers

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shall make no offers or sales of Consideration Shares pursuant to the Stockholder Registration Statement other than by means of such revised prospectus.

4.3 Registration Procedures

(a)	In connection with the filing by the Parent of the Stockholder Registration Statement, the Parent shall furnish to each Seller a copy of the prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act.
(b)	The Parent shall use its commercially reasonable efforts to register or qualify all shares representing the Consideration Shares covered by the Stockholder Registration Statement under the securities Laws of each state of the United States; provided, however, that the Parent shall not be required in connection with this subparagraph to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction unless Parent is already subject to service in such jurisdiction and except as may be required by the Securities Act.
(c)	The Parent shall notify all Sellers when the Stockholder Registration Statement has become effective and anytime when resales must cease or may be resumed.
(d)	The Parent shall promptly prepare and file with the SEC such amendments and supplements to such Stockholder Registration Statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act and to keep the Stockholder Registration Statement effective.
(e)	If the Parent has delivered preliminary or final prospectuses to the Sellers and after having done so the prospectus is amended or supplemented to comply with the requirements of the Securities Act, the Parent shall promptly notify the Sellers and, if requested by the Parent, the Sellers shall immediately cease making offers or sales of shares representing the Consideration Shares under the Stockholder Registration Statement and return all prospectuses to the Parent. The Parent shall promptly provide the Sellers with revised or supplemented prospectuses and, following receipt of the revised or supplemented prospectuses, the Sellers shall be free to resume making offers and sales under the Stockholder Registration Statement.

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(f)	The Parent shall cause all Consideration Shares to be listed on each securities exchange on which similar securities issued by the Parent are then listed.
(g)	If necessary, the Parent shall provide a transfer agent, registrar and CUSIP number for the Consideration Shares, in each case not later than the effective date of the Stockholder Registration Statement.

4.4 Requirements of Sellers

(a)

The Sellers’ Representative is authorized to (i) give and receive notices for and on behalf of the Sellers in connection with this Article 4, and (ii) deliver, as promptly as practicable after receipt from the Parent, to the Sellers the Selling Stockholder Questionnaires (as defined in Article 4.4(b)(i)) in the form provided by the Parent to the Sellers’ Representative, and collect completed and duly executed Selling Stockholder Questionnaires from the Sellers.

(b)

The Parent shall not be required to include any shares representing Consideration Shares held by a particular Seller in the Stockholder Registration Statement unless:

(i)

the Seller owning such Consideration Shares shall have delivered to the Sellers’ Representative not later than the date of payment, in writing such information regarding such Seller and the proposed sale of Consideration Shares by such Seller as the Parent may reasonably request and as is customarily required in connection with the Stockholder Registration Statement or as shall be required in connection therewith by the SEC or any state securities law authorities (the Selling Stockholder Questionnaire). The Selling Stockholder Questionnaire shall include an agreement by the Sellers to indemnify Nuance and each of its directors and officers against, and hold Nuance and each of its directors and officers harmless from, any losses, claims, damages, expenses or liabilities (including reasonable attorneys fees) to which Nuance or such directors and officers may become subject by reason of any statement or omission in the Stockholder Registration Statement made in reliance upon, or in conformity with, a written statement by such Seller furnished pursuant to this article, provided, however, that in no event shall such indemnification by any Seller exceed the net proceeds received by such Seller from the sale of Consideration Shares pursuant to the Stockholder Registration Statement; and

(ii)

the Sellers’ Representative shall deliver to the Parent all completed and executed Selling Stockholder Questionnaires as received. To the

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extent that any Selling Stockholder Questionnaires are delivered to the Parent prior to the second Business Day before the date the Stockholder Registration Statement is filed with the SEC, the Parent shall include the Consideration Shares represented by such Selling Stockholder Questionnaires in the Stockholder Registration Statement. To the extent any Selling Stockholder Questionnaires are delivered to the Parent after such date, the Parent shall use commercially reasonable efforts to include the Consideration Shares represented by such Selling Stockholder Questionnaires in the Stockholder Registration Statement (including by either amending the Stockholder Registration Statement or filing a supplement to the Stockholder Registration Statement; provided, however, that in any event the Parent shall not be obligated to file more than one (1) amendment or supplement).

4.5 Indemnification

(a) Parent agrees to indemnify and hold harmless each Seller whose shares are included in the Stockholder Registration Statement, and if such Seller is not an individual, such Seller’s directors, officers and each Person, if any, that controls a Seller whose shares are included in the Stockholder Registration Statement within the meaning of the Securities Act, against any losses, claims, damages, expenses or liabilities to which such Seller or other such Person may become subject by reason of any untrue statement or alleged untrue statement of a material fact contained in the Stockholder Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, expenses or liabilities arise out of or are based upon information furnished in writing to Nuance by or on behalf of a Seller for use in the Stockholder Registration Statement. Parent shall have the right to assume the defense and settlement of any claim or suit for which Parent may be responsible for indemnification under this Article 4. The indemnified party may participate in any such defense or settlement, but Parent shall not be liable to such indemnified party for any legal or other expenses incurred by such indemnified party in connection with the defense thereof; provided, however, that: (x) if Parent fails to take reasonable steps necessary to defend in good faith the action or proceeding within ten (10) Business Days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so; or (y) if such indemnified party who is a defendant in any action or proceeding which is also brought against Parent shall have reasonably concluded, based on the advice of counsel, that there may be one or more legal defenses available to such indemnified party which are not available to Parent; or (z) if representation of both

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parties by the same counsel is impermissible under applicable standards of professional conduct, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified parties in each jurisdiction) and Parent shall be liable for any reasonable expenses therefor. Parent shall not, without the written consent of the Sellers’ Representative, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any action or claim in respect of which indemnification or contribution may be sought hereunder unless such settlement, compromise or judgment (i) includes an unconditional release of the Sellers from all liability arising out of such action or claim, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Seller.

(b)

If the indemnification provided for in this Article 4.5 is unavailable to an indemnified party with respect to any losses, claims, damages, expenses or liabilities referred to therein or is insufficient to hold the indemnified party harmless as contemplated therein, then Parent, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, expenses or liabilities in such proportion as is appropriate to reflect the relative fault of Parent, on the one hand, and the indemnified party, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, expenses or liabilities as well as any other relevant equitable considerations. The relative fault of Parent, on the one hand, and of the indemnified party, on the other hand, shall be determined by reference to, among other factors, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by Parent or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Parent and Sellers’ Representative agree that it would not be just and equitable if contribution pursuant to this Article 4.5 were determined by pro rata allocation or by any other method of allocation that fails to take account of the equitable considerations referred to above. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

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4.6	Assignment of Rights
	A Seller may not assign any of its rights under this Article 4 except in connection with the transfer of some or all of such Seller’s First Tranche, Second Tranche or Third Tranche to (a) an immediate family member, a charitable trust, or to a trust for the benefit of such Seller or his/her immediate family member, or (b) a tax exempt organization under Section 501(c)(3) of the Code, provided each such transferee agrees in a written instrument delivered to the Buyer and Parent to be bound by the provisions of this Article 4.
5.	Actions Prior to Closing
5.1	General

(a) On the terms and subject to the conditions of this Agreement and except as otherwise expressly provided herein, the Sellers shall severally and not jointly use their commercially reasonable efforts (and shall severally and not jointly use their commercially best efforts to cause the Company to use its commercially reasonable efforts) to cause:

(i)	the conditions precedent set forth in Articles 6.2.1 and 6.2.2 to be satisfied; and
(ii)	their relevant Affiliates to do all reasonable acts and things necessary (and within their power) to cause the Closing to occur.

(b) On the terms and subject to the conditions of this Agreement and except as otherwise expressly provided herein, Nuance shall use its commercially reasonable efforts to cause:

(i)	the conditions precedent set forth in Articles 6.2.1 and 6.2.3 to be satisfied; and
(ii)	their Affiliates to do all reasonable acts and things necessary (and within their power) to cause the Closing to occur.

(c) Each Party shall, and shall cause its Affiliates, officers, employees, agents, auditors and representatives to, (i) cooperate in good faith with the other Parties, (ii) promptly inform the Sellers’ Representative (if any such action is taken by Nuance) or the Buyer (if any such action is taken by the Sellers’ Representative or any of the Sellers), as the case may be, of any material actions taken in view of the Closing and (iii) promptly inform the Buyer (as regards obligations of Nuance) or the Sellers’ Representative (as regards

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Obligations of the Sellers’ Representative or any of the Sellers) in case it is of the view that the other Party is in breach on any obligation or covenant prior to Closing.

5.2	Filings and Submissions
	In connection with and without limiting the generality of the foregoing Article 5.1:

(a)	Nuance shall, as promptly as reasonably practicable, but in any event, within fifteen (15) Business Days after the date of this Agreement, make all filings and submissions required to be made by it pursuant to Article 6.2.1(a), and the Sellers’ Representative and the Sellers shall promptly cooperate, and cause the Group Companies to promptly cooperate, with Nuance, and provide all necessary information and assistance reasonably requested by Nuance, in each case in connection with such filings and submissions; it being understood that if the Sellers’ Representative or the Sellers fail to fully and promptly cooperate with Nuance or to provide the information and assistance reasonably requested by Nuance, Nuance shall be under no obligation to make any such filings within fifteen (15) Business Days after the date of this Agreement.
(b)	In the case of a filing or submission that is the legal responsibility of Nuance and the Sellers and|or the Company, Nuance shall not make any filing or submission without prior consultation with the Sellers’ Representative, and the Sellers and the Company shall not make any filing or submission without prior consultation with the Parent (in each case, such consultation not to be unreasonably withheld or delayed).
(c)	Parent may, in its sole discretion, on behalf of and in the name of the Sellers and the Company, obtain a ruling from the Tax Authorities of the Canton of Zürich (Kantonales Steueramt Zürich) and|or the Federal Tax Authorities (Eidgenössische Steuerverwaltung) confirming that that the merger as contemplated in Article 6.4 does not constitute an indirect partial liquidation under Article 8.2, and the Sellers’ Representative and the Sellers shall promptly cooperate, and cause the Group Companies to promptly cooperate, with Nuance, and provide all necessary information and assistance reasonably requested by Nuance for such filing with the Cantonal and Federal Tax Authorities.
(d)	Each Party shall take all reasonable steps to avoid any suit, claim, action, investigation or proceeding and, in addition, defend against any suits,

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claims, actions, investigations or proceedings, whether judicial or administrative (including by seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed), in each case challenging the Acquisition or seeking to enjoin or prevent the consummation of the Acquisition or which could reasonably be anticipated as having as an effect the enjoining or prevention of the consummation of the Acquisition. For the avoidance of doubt, Nuance shall be under no obligation to agree or offer to divest or hold separate, or enter into any agreement, license or similar arrangement with respect to, any assets (whether tangible or intangible) or any portion of any business of either Nuance, its Affiliates or the Group.

5.3	Conduct of Business between Signing and Closing
5.3.1	General

(a) Unless otherwise expressly permitted by the terms of this Agreement, from and including the date of this Agreement to Closing (or earlier termination of this Agreement), the Sellers shall severally (and not jointly) use their commercially reasonable efforts to procure that the Group Companies operate their respective businesses as a going concern, in the ordinary course of business, with due care and diligence and consistent with prior practice. In addition and without limiting the generality of the foregoing, unless otherwise expressly permitted by the terms of this Agreement, from and including the date of this Agreement to the earlier of the Closing or the termination of this Agreement, and to the extent permissible under applicable Laws, each Seller agrees not to, and agrees to procure that none of the Group Companies shall, take or agree to take any of the actions set forth on Annex 5.3.1 without the prior written consent of the Parent which consent shall not be unreasonably withheld; provided, however, that (A) the consent of the Parent shall be deemed to have been given if the Parent does not respond within five (5) Business Days upon receipt by the Parent of the respective consent request, it being understood that the Parent will have been deemed to respond if it (1) approves a consent request, (2) denies a consent request or (3) requests additional information in order to decide whether to approve or deny a consent request (and upon receipt of such additional information, the consent of the Parent shall be deemed to have been given if the Parent does not respond within two (2) Business Days) and (B) (1) if consent of an action is required pursuant to this Article 5.3.1 and it appears to the chairman of the Company (or his deputy) that such action requires immediate attention and answer of the Parent or (2) if

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the Parent denies a consent request and the chairman of the Company (or his deputy) wishes to discuss such denial, the Parent and the chairman of the Company (or his deputy) shall use their reasonable efforts to discuss the relevant action by phone or by any other means of communication as soon as practicable, but in no event later than two (2) Business Days upon receipt by the Parent of a request for discussion.

(b)	Notwithstanding anything set forth in Annex 5.3.1 to the contrary, the Company is authorized to borrow up to the EUR 2,500,000 limit under its existing working capital line of credit with Neue Aargauer Bank. If as a result of a decision by the Parent to withhold its consent to an action listed on Annex 5.3.1 the Company reasonably needs additional working capital, the Parent and the Sellers’ Representative agree to negotiate in good faith options to provide additional funding to the Company. In discussing options to provide additional funding to the Company, and whether any such funding may be treated as a Debt Repayment Amount, the Parent and the Sellers’ Representative agree to consider in good faith the reasons that additional working capital is needed, the amount of additional working capital and the period of time for which such additional working capital will be required.
(c)	If the Sellers or any Group Company desire to take an action listed in Annex 5.3.1, prior to taking such action the Sellers’ Representative or a Key Person (or the chairman of the Company in case of a request as set forth under (B) in Article 5.3.1(a)) shall request such written consent by sending an e-mail or facsimile to:
	Bruce Bowden, Senior Vice President, Corporate Strategy & Development Telephone: +1 781 565 4731 Facsimile: +1 781 565 5565 E-mail address: Bruce.bowden@nuance.com
	with copy to:
	Helgi Bloom, Vice President, Corporate Strategy & Development Telephone: +1 781 565 5076 Facsimile: +1 781 565 5565 E-mail address: Helgi.bloom@nuance.com
	Jeffrey Prowda, Legal Counsel, Corporate & M&A Telephone: +1 781 565 4326 Facsimile: +1 866 591 8903

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E-mail address: Jeffrey.prowda@nuance.com

A request as set forth under (B) in Article 5.3.1(a) shall expressly mention the nature and reason of such request.

5.3.2	Access to the Group
	To the extent permissible under applicable Laws, from and including the date of this Agreement to Closing (or earlier termination of this Agreement), the Sellers shall severally (and not jointly) use their commercially reasonable efforts to procure that the Group Companies shall provide Nuance and Nuance’s legal and financial advisors and auditors with direct access to the personnel, properties, books, contracts, commitments, tax returns and records of the Group Companies and furnish any information concerning any Group Company as Nuance may reasonably request. No information or knowledge obtained in any investigation pursuant to this Article 5.3.2 or otherwise shall affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the Parties to consummate the Acquisition in accordance with the terms and provisions hereof.
5.4	Third Party Consents
	The Sellers shall severally (and not jointly) use their commercially reasonable efforts to procure that the Group Companies obtain a consent or waiver from the relevant third party under any agreement (i) to which a Group Company is a party or by which any of the assets or properties of a Group Company is bound, and (ii) containing a change in control provision that has been, or will be, triggered by the execution of this Agreement, the consummation of the Acquisition or any other transactions contemplated hereby, including the agreements set forth in Annex 5.4, on or before the Closing. Nuance shall provide commercially reasonable assistance to the Group Companies to obtain such consents and waivers; provided, however, that neither Nuance nor any Group Company shall be required to make any payment to any Person, incur any liability or obligations or agree to any amendments to or forego any benefits under any such agreement, in each case, in connection with any such consent or waiver.
5.5	SVOX Option Plans
	The Sellers shall severally (and not jointly) (i) use their commercially reasonable efforts to have each participant of the SVOX Option Plan, dated April 25, 2005, and the SVOX Option Plan for the Board, dated April 25, 2005 (together the

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	SVOX Option Plans) agree to and execute a letter in the form as set forth in Annex 5.5 and, (ii) in case all participants to the SVOX Option Plans have agreed to and executed a letter in the form as set forth in Annex 5.5 terminate the SVOX Option Plans with effect upon Closing.
5.6	Third Party Expenses; Debt Payment; Change of Control Payments
	Whether or not the Acquisition is consummated, all third-party fees and expenses incurred in connection with the Acquisition including, without limitation, all legal, accounting (including financial advisory, consulting, and all other fees and expenses of third parties and any costs incurred to obtain consents, waivers or approvals as a result of the compliance with Article 5.4) incurred by a Party or the Company in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby (the Third Party Expenses), shall be the obligation of the respective Party or the Company incurring such fees and expenses. Notwithstanding the foregoing, Parent shall reimburse the Company for the costs or expenses of KPMG LLP and PricewaterhouseCoopers LLP incurred by the Company in connection with the establishment and the audit of the Required Financials. The Sellers’ Representative shall provide the Parent with a statement of estimated Company Third Party Expenses, Sellers’ Third Party Expenses, Change of Control Payments and Debt Repayment Amount incurred, or to be incurred by the Company and Subsidiaries, at least three (3) Business Days prior to each of the anticipated Closing Date, the Second Tranche Payment Date and the Third Tranche Payment Date in form reasonably satisfactory to the Parent (each a Closing Date Statement). The Closing Date Statement shall be accompanied by invoices from the Company’s or Subsidiary’s legal, financial and other advisors providing services in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby reflecting such advisors’ final billable Company Third Party Expenses. The amount of (a) any Company Third Party Expenses that are not reflected on the Closing Date Statement (the Excess Company Third Party Expenses), (b) any payments necessary to repay all of the Company’s or any Subsidiary’s outstanding Debt for borrowed money (other than the recurring credit facility with Neuer Aargauer Bank) as of the Closing Date in excess of the Debt Repayment Amount (an Excess Debt Payment) and (c) any payments due and payable by the Company or any Subsidiary to its employees as of the Closing Date, the Second Tranche Payment Date or the Third Tranche Payment Date, as the case may be, as a result of the transactions contemplated by this Agreement and all employment or payroll Taxes arising out of such payments (other than payments due and payable solely as a result of actions taken by Nuance or any Group Company following

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	the Closing) in excess of the Change of Control Payments (an Excess Change of Control Payment) shall be subject to the indemnification provisions of Article 10.1 and shall not be counted toward or limited by the Threshold Amount or any of the Caps. Any disputes with respect to Excess Third Party Expenses, Excess Debt Payment and/or Excess Change of Control Payment shall be resolved in accordance with Articles 10, 11 and 13.2 hereof.
5.7	Closing Memorandum
	No later than five (5) Business Days prior to the anticipated Closing, Nuance’s legal counsel, in cooperation with the Sellers’ legal counsel, shall prepare a closing memorandum confirming the fulfilment of the conditions precedent pursuant to Article 6.2 and describing the actions required to be taken at the Closing pursuant to Article 6.3. The closing memorandum shall be signed by the Buyer, the Parent and the Sellers’ Representative on behalf of all Sellers, thereby evidencing that Closing has occurred.
6.	Closing
6.1	Date and Place

(a)	The Closing shall take place on (i) the first Business Day following the date which the conditions precedent set forth in Article 6.2 have been satisfied or waived (where so permitted) or on (ii) such other date as the Parent and the Sellers’ Representative may agree.
(b)	The Closing shall take place at the offices of Homburger AG, Weinbergstrasse 56|58, CH-8006 Zurich, Switzerland, or at such other location as the Parent and the Sellers’ Representative may agree.

6.2	Conditions Precedent to the Closing
6.2.1	Conditions to the Obligations of Each Party
	The obligation of the Buyer to purchase the Shares and the obligation of the Sellers to sell the Shares to the Buyer shall be subject to the satisfaction or waiver (by the relevant Party where so permitted) on or prior to the Closing Date of the following conditions:

(a) All authorizations, consents, orders or approvals of, or declarations or filings with, or expirations or waiting periods imposed by, any Governmental

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Entity necessary for the consummation of the Acquisition as set forth in Annex 6.2.1(a) shall have been obtained or filed or shall have occurred either (x) on an unconditional basis or (y) subject to the satisfaction of conditions, requirements or commitments reasonably acceptable to Nuance. For the avoidance of doubt, Nuance shall be under no obligation to agree or offer to divest or hold separate, or enter into any agreement, license or similar arrangement with respect to, any assets (whether tangible or intangible) or any portion of any business of either Nuance, its Affiliates or the Group.

(b)

No action shall be pending or threatened and no order, law, injunction or decree of any court, administrative body or arbitration tribunal shall exist that has the effect of making illegal or otherwise preventing or prohibiting, or that seeks to enjoin, restrain, impede or levy a substantial difficulty on, the consummation of the Acquisition.

6.2.2	Conditions to the Obligations of Nuance
	The obligation of the Buyer to purchase the Shares shall be subject to the satisfaction or waiver by the Buyer on or prior to the Closing Date of the following conditions:

(a)	No Material Adverse Effect shall have occurred.
(b)	The representations and warranties of the Sellers in Article 9.1 that are qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date), provided, however, that the Buyer shall be obliged to purchase the Shares (i) unless the misrepresentation or breach of the respective warranty has a material impact on the Business, or (ii) in case the misrepresentation or breach of the respective warranty is resulting from specific actions taken with the specific consent (as per Article 5.3.1) of Nuance after the date of this Agreement.
(c)	The Second Amendment to the Siemens APA in the form attached hereto as Annex 6.2.2(c) shall have been duly signed by all parties thereto and shall be in full force and effect subject to payment of the Siemens Payment.

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(d)	No Key Person shall have left or announced his or her intention to leave the Group and each Key Person shall have executed (1) an offer letter with the Buyer or any of the Group Companies substantially in the form provided to the Sellers’ Representative prior to the date hereof and (2) amendments to employment agreements required pursuant to such offer letters.
(e)	The third party consents set forth in Annex 6.2.2(e) shall have been obtained.
(f)	The Sellers and the Sellers’ Representative shall have (i) in all material respects performed or complied with all obligations and covenants required by this Agreement to be performed or complied with by the Sellers and the Sellers’ Representative by the Closing or (ii) cured any breach of such obligation or covenant within five (5) Business Days after written notification of the breach by the Buyer as set forth in Article 5.1(c)(iii).
(g)	Each participant of the SVOX Option Plans shall have agreed to and executed an acknowledgement of receipt of payment and waiver and termination of rights in the form as set forth in Annex 5.5 and the SVOX Option Plans shall have been terminated with effect upon Closing; provided, however, that if not all of the participants of the SVOX Option Plans shall have executed an acknowledgement and waiver in the form as set forth in Annex 5.5, the SVOX Option Plans shall have been amended to allow the Company to purchase the options and to pay out the remaining participants of the SVOX Option Plans immediately after Closing.
(h)	The Buyer shall have received from the relevant Group Company a duly and validly executed copy of the Contracts, agreements, instruments, certificates and other documents, in form and substance reasonably satisfactory to Buyer, that are necessary or appropriate to evidence the release of the Liens set forth in Annex 6.2.2(h) that the Buyer has determined to be released on or before the Closing Date.
(i)	The Parent shall have received: (i) the Merger Balance Sheet, (ii) the Required Financials, and (iii) a letter from the Company’s auditors to the effect that they know of no reason why they would not deliver consent to file the Required Financials with the SEC or incorporate the Required Financials into a registration statement or deliver a comfort letter, if requested, to an underwriter in connection with a public offering of Parent’s securities.

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(j)	Each of the Sellers shall have agreed to and executed an agreement setting forth the allocation of the First Tranche, the Second Tranche and the Third Tranche among the Sellers in a form reasonably acceptable to Nuance, holding Nuance harmless from any claims by the Sellers and the Sellers’ Representative as long as the First Tranche, the Second Tranche and the Third Tranche are paid in accordance with such agreement, subject to the claims under this Agreement.
(k)	Minority Sellers holding together with the Majority Sellers greater than 90% of the Company Shares shall have acceded to this Agreement by signing an Accession Confirmation prior to the Closing and accordingly have the same rights and obligations as the Majority Sellers under this Agreement.
(l)	Parent shall have received from each of Ridgecrest Capital Partners and the Broker (as defined below), and any other person or entity (other than Walder Wyss Ltd.) to whom Seller Third Party Expenses are due (collectively, the Advisors), a settlement agreement in substantially the form provided to Parent on or before the date hereof (each, an Advisor Settlement Agreement) pursuant to which: (i) each Advisor acknowledges and agrees that receipt by such Advisor of the payments to be made to such Advisor in accordance with Article 6.3.3 shall be in full satisfaction of any and all Seller Third Party Expenses due, or that may become due, to such Advisor under any agreement, whether written or oral, with any of the Company, the Sellers’ Representative, any Seller, and each of their affiliates, officers, directors, employees and consultants, (ii) each Advisor irrevocably waives any and all claims that such Advisor may have against Parent, Buyer, the Company, the Sellers’ Representative, any Seller, and each of their affiliates, officers, directors, employees and consultants; (iii) each Advisor agrees that any such payments received by such Advisor in accordance with Article 6.3.3 shall be deemed to be a payment by the Sellers; and (iv) subject to, and effective upon the Closing, each Advisor agrees that, with respect to any Seller Third Party Expenses to be distributed to such Advisor in accordance with Article 6.3.3 that is first distributed to Sellers’ Representative pursuant to Article 6.3.2, such Advisor shall look exclusively to the Sellers to the extent such amounts are not distributed by the Sellers’ Representative to such Advisor in accordance with Article 6.3.3 and, for the avoidance of doubt, such Advisor shall not look to Parent, Buyer, the Company or any of their affiliates, officers, directors, employees or consultants for any such amounts.

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6.2.3	Condition to the Obligations of the Sellers
	The obligation of the Sellers to sell the Shares to the Buyer shall be subject to the satisfaction or waiver by the Sellers’ Representative of the following conditions:

(a)

The representations and warranties of Nuance in Article 9.2 that are qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date); provided, however, that that the Sellers shall be obliged to sell the Shares unless the misrepresentation or the breach of the respective warranty is material.

(b)

Nuance shall have (i) in all material respects performed or complied with all obligations and covenants required by this Agreement to be performed or complied with by the Closing Date or (ii) cured any breach of such obligation or covenant within five (5) Business Days after written notification of the breach by the Sellers’ Representative as set forth in Article 5.1(c)(iii).

6.2.4	Waiver of Conditions Not-Satisfied
	Prior to the Closing, each Party shall inform the other Parties as soon as practicable upon becoming aware of any fact or matter that constitutes or could reasonably be expected to constitute a breach under this Agreement or non-satisfaction of the conditions set forth in Articles 6.2.1, 6.2.2 or 6.2.3. At any time prior to the Closing, (a) the Sellers’ Representative and the Parent may jointly waive in writing in whole or in part the conditions set forth in Article 6.2.1, (b) the Parent may waive in writing in whole or in part the conditions set forth in Article 6.2.2, and (c) the Sellers’ Representative may waive in writing in whole or in part the conditions set forth in Article 6.2.3.
6.2.5	Right of Termination
	This Agreement may be terminated as follows:

(a) By the mutual written agreement of the Sellers’ Representative and the Parent.

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(b)	By the Parent by giving written notice to the Sellers’ Representative of the conditions (if any) set forth in Articles 6.2.1 through 6.2.3 are not satisfied on, or have become objectively impossible of being satisfied on or before, October 31, 2011 (the Long Stop Date); provided, however, that (i) such non-satisfaction or objective impossibility was not caused, or principally caused, by a material breach by Nuance of any of its obligations under the Agreement and (ii) before terminating the Agreement, the Parent shall have notified the Sellers’ Representative in writing of any condition(s) that has or have become objectively impossible and the Sellers’ Representative shall not have waived such condition(s) in writing within ten (10) Business Days following such written notification.
(c)	By the Sellers’ Representative by giving written notice to the Parent of the conditions (if any) set forth in Articles 6.2.1 through 6.2.3 are not satisfied on, or have become objectively impossible of being satisfied on or before, the Long Stop Date, provided, however, that (i) such non-satisfaction or objective impossibility was not caused, or principally caused, by a material breach by any of the Sellers or the Sellers’ Representative of any of their obligations under the Agreement and (ii) before terminating the Agreement, the Sellers’ Representative shall have notified the Parent in writing of any condition(s) that has or have become objectively impossible and the Parent shall not have waived such condition(s) in writing within ten (10) Business Days following such written notification.
(d)	If this Agreement is terminated pursuant to Article 6.2.5 (b) or (c), such termination shall be without liability of any Party to the other Parties; provided, however, that if such termination is the result of a breach of this Agreement by a Seller(s) or the Sellers’ Representative, on the one hand, or Nuance on the other hand, such breaching Party shall, notwithstanding any other provision of this Agreement, be fully liable for all Losses incurred or sustained by the Sellers (in the case of a breach by Nuance) or Nuance (in the case of a breach by a Seller(s) or by the Sellers’ Representative) as a result of such breach; it being agreed and understood that, in addition to such liability, (i) the Sellers’ Representative (on behalf of the Sellers), on the one hand, and the Parent, on the other hand, shall be entitled to seek relief in the form of specific performance, injunctions or other interim measures and (ii) the other Parties shall not oppose the granting of such relief on the basis that the Parties seeking such relief may be made whole by the payment of a monetary amount. Nothing in this Article 6.2.5(d) shall be deemed to release any Party from any liability for any breach by such Party of the terms and provisions of this Agreement.

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(e) If this Agreement is terminated pursuant to Article 6.2.5(b) or (c), this Agreement shall cease to be effective, except for the provisions of Article 6.2.5(d), Article 7.1 (Press Releases and Other Public Announcements), Article 7.5 (Confidentiality), Article 8.3 (Costs and Expenses), Article 10.1(d) (Specific Indemnifications regarding Siemens APA), Article 12 (General Provisions) and Article 13 (Governing Law and Dispute Resolution).

6.3	Closing Actions
6.3.1	Actions by the Sellers
	At the Closing, the Sellers severally (and not jointly) shall concurrently with the actions set forth in Article 6.3.2 deliver to the Parent or its designated Affiliates or the Exchange Agent, as the case may be:

(a)	the Company Share Certificates (or affidavits or loss in lieu thereof) as set out in Annex A in accordance with Article 3.4(b) and take all such other actions and deliver such other documents as may be required under applicable Law to transfer all such Shares and all rights connected therewith from the Sellers to the Buyer;
(b)	certificates representing, or, if no certificates have been issued, such other documents evidencing ownership by the Company of, all the Subsidiary Shares;
(c)	originals of all corporate actions required under applicable law and the articles of incorporation of the Company to approve (i) the transfer of the relevant Shares from the Sellers to the Buyer or its designated Affiliates and (ii) the entry of the Buyer in the share register of the Company as owner of, and a shareholder with voting rights with respect to, the relevant Shares;
(d)	delivery of the Company’s share register evidencing the Buyer or its designated Affiliates as owner of, and a shareholder with voting rights with respect to, the relevant Shares;
(e)	any power of attorney pursuant to which any of the transfers or other documents described in this Article 6.3.1 is executed, and any other evidence reasonably satisfactory to the Parent of the binding authority of any Person signing any of the documents described in this Article 6.3.1 on behalf of the Sellers;

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(f)	resignation letters in form and substance reasonably acceptable to the Parent from each member of the board of directors (or similar body) and the statutory auditor of each Group Company, pursuant to which such member or the statutory auditor, as the case may be, (i) declares its resignation as of the Closing Date as a member of the board of directors (or similar body) or statutory auditor, as applicable, and (ii) except for the statutory auditors of each Group Company, subject to and effective upon the Closing, waives any rights of any kind whatsoever it has against any of the Group Companies arising out of, in connection with, or relating to his or her board membership (except for the rights to D&O insurance pursuant to Article 7.7);
(g)	the minutes of the shareholders’ meeting (or other corporate body, as appropriate) of each Group Company confirming the election — with effect upon and subject to the Closing — of the members of the board of directors (or similar body) and statutory auditor designated by the Parent to the Sellers in writing no later than twenty (20) Business Days prior to the anticipated Closing;
(h)	evidence as to the termination effective upon and subject to the Closing (and at no cost and without any remaining liabilities owed by the Group Companies) of all agreements between any Group Company, on the one hand, and the Sellers or any of their Affiliates, on the other hand, and among the Sellers and other shareholders of the Company, except for the agreements set forth in Annex 6.3.1(h); and
(i)	a duly executed declaration, substantially in the form attached hereto as Annex 6.3.1(i), by the Sellers and each of their Affiliates, pursuant to which the Group Companies are irrevocably and unconditionally released, with effect as from the Closing Date, from any and all obligations and liabilities owed to any of the Sellers or any of their Affiliates, except for obligations relating to their employment by a Group Company.

6.3.2	Actions by Nuance
	At the Closing, the Parent shall, or shall cause the Exchange Agent, Buyer or any other of its Affiliates to concurrently with the actions set forth in Article 6.3.1:

(a) deliver the First Tranche minus (i) the Company Third Party Expenses, (ii) the Sellers Third Party Expenses, (iii) the Change of Control Payments, (iv) the Debt Repayment Amount (in the case of clauses (i) — (iv), as set forth

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	On the applicable Closing Date Statement) and (v) the Siemens Payment in accordance with Article 3.2.2, Article 3.3 and Article 3.4;
(b)	make the Siemens Payment in accordance with the terms and conditions of the Second Amendment to the Siemens APA (which payment by Nuance on behalf of the Company shall constitute subordinated loans of Nuance to the Company);
(c)	pay to the Company in cash (by way of subordinated loans to the Company) the Company Third Party Expenses set forth on the Closing Date Statement, the Change of Control Payments and the Debt Repayment Amount; and
(d)	pay to the Sellers’ Representative in cash the Sellers Third Party Expenses set forth on the applicable Closing Date Statement, based on written instructions given by the Sellers’ Representative to the Parent at least three (3) Business Days prior to the anticipated Closing Date.

6.3.3	Actions by Sellers’ Representative
	As soon as practicable after receipt of the Sellers Third Party Expenses in accordance with Article 6.3.2(d), the Sellers’ Representative shall pay to the Advisors the payments due to each such Advisor in accordance with the applicable Advisor Settlement Agreement.
6.4	Post Closing Actions by Buyer
	Buyer intends to merge the Company into the Buyer or any of its Affiliates by way of statutory merger in accordance with article 8 para 2 of the Merger Act, as promptly as reasonably practicable after Closing. Shareholders of the Company which did not transfer their shares of the Company to the Buyer on Closing or promptly thereafter in accordance with Article 3.4(e) shall receive a merger consideration economically equal to the consideration received by the Sellers under this Agreement; provided, however, that no such merger shall occur if the Sellers transfer 100% of the shares of the Company to the Buyer on Closing or promptly thereafter in accordance with Article 3.4(e).

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7.	Other Covenants
7.1	Notification by Sellers
	From the date of this Agreement until the Closing, the Sellers and the Sellers’ Representative severally (not jointly) undertake to notify, and shall procure that the Company shall notify, the Parent of any matters that would violate a representation and warranty of the Sellers pursuant to Article 9.1 or prevent the satisfaction of any of the Sellers’ covenants under this Agreement, whereby such notification shall not operate as an exclusion of, or limitation to, Nuance’s rights pursuant to Article 6.2.2 and Article 10.
7.2	Press Releases and Other Public Announcements
	From the date of this Agreement, all public announcements or press releases concerning any of the transactions contemplated by this Agreement shall only be issued by Nuance; provided that prior to the Closing Date, Nuance shall reasonably consult with the Sellers’ Representative prior to issuing a public announcement or press release. Notwithstanding the foregoing, nothing in this Agreement shall restrict or prohibit:

(a)	any announcement or disclosure required by law, any competent judicial or regulatory authority or any competent securities exchange (in which case the Parties shall endeavor in good faith to agree on the content of any such announcement or disclosure prior to its issuance);
(b)	the Parties from making any disclosure to any of their directors, officers, employees, agents or advisers who are required to receive such information to carry out their duties (conditional upon any such Person agreeing to keep such information confidential for so long as the relevant Party is obligated to do so in accordance with this Article 7.2, any other provision of this Agreement or applicable law);
(c)	the Company from making any disclosure to any of its directors, officers, employees, agents or advisers who (i) are required to receive such information to carry out their duties or (ii) need to give their consent to any Contract or action required to allow the Sellers to fulfill any of the conditions set forth in Article 6.2.1 or 6.2.2 (conditional upon any such Person agreeing or otherwise being obligated to keep such information confidential for so long as the Buyer or any of the Sellers is obligated to do so in accordance with this Article 7.2, any other provision of this Agreement or applicable law); or

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(d) Seller 1 to make a press release relating to the Acquisition with the prior written consent of the Parent as regards timing and content.

7.3 Rights of Recourse against Directors, Officers and Employees

(a)	The Sellers shall not make any claim against any of the directors, officers or employees who continue to serve on the board of directors of, or be employed by, any of the Group Companies after the Closing Date.
(b)	Except for claims of fraud, wilful misconduct or gross negligence, and except as otherwise provided in this Agreement, Nuance shall not make, and procure that neither Group Company shall not make, any claim (a) against any director or manager of any Group Company in connection with their acts or omissions as directors or managers of such Group Company in the period prior to Closing; and (b) against the Sellers in connection with the Sellers’ position as direct or indirect shareholder of any Group Company, it being understood and agreed that nothing in this Article 7.3(b) shall limit or preclude Nuance from making any claims against the Sellers in connection with a misrepresentation or a breach of a warranty, covenant or undertaking by the Sellers or either of the Sellers.
(c)	At the shareholders’ meeting of each Group Company which shall occur at Closing (if 100% of the Shares are sold at Closing) or at the next shareholders’ meeting of each Group Company following the Closing, which shall occur as soon as practicable, but no later than five (5) Business Days after the consummation of the statutory merger set forth in Article 6.4 (if less than 100% of the Shares are sold at Closing), Nuance shall procure that the shareholders meetings of each Group Company grant unconditional discharge (except for claims for fraudulent, willful or grossly negligent misconduct) to the directors and managers of such Group Company in connection with their acts or omissions as directors and managers of such Group Company in the period prior to Closing, and it being understood and agreed that such discharge shall not limit or preclude Nuance from making any claims under this Agreement against the Sellers in connection with a misrepresentation or a breach of a warranty, covenant or undertaking by the Sellers or either of the Sellers.

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7.4 Covenant Not to Compete and Not to Solicit

(a) During the three-year period after the Closing Date, each of the Sellers agrees, severally and not jointly, not to, and each Seller shall cause each of its Affiliates not to, directly or indirectly:

(i)

except for Seller 1, engage or invest in, own, manage, operate, finance, control, or participate in the ownership, management, operation, or control of, be employed by, associated with, or in any manner connected with, lend its name, or render services or advice to, any business whose products or activities compete in whole or in part with the products or activities of Parent, its subsidiaries or the Group as of the Closing Date (and, with regard to the business of the Group, to the knowledge of such Seller or its Affiliates as planned to be conducted by any of the Group Companies); provided, however, that this Clause (i) shall be deemed not breached (A) as a result of the ownership by a Seller or any of its Affiliates of up to (but not more than) five (5) percent of any class of securities of any publicly traded corporation or other publicly traded entity whose products or activities compete in whole or in part with the products or activities of Parent, its subsidiaries or the Group as of the Closing Date (and, with regard to the business of the Group, to the knowledge of such Seller or its Affiliates as planned to be conducted by any of the Group Companies) and (B) with regard to Seller 5 and Christof Traber as a result of the ownership of up to (but not more than) ten percent (10%) of any class of securities of any corporation or other entity whose products or activities compete in whole or in part with the products or activities of Parent, its subsidiaries or the Group as of the Closing Date (and, with regard to the business of the Group, to the knowledge of such Seller or its Affiliates as planned to be conducted by any of the Group Companies), provided that, with regard to both Sub-Clauses (A) and (B) above, such Seller or such Affiliate does not otherwise participate in the activities of or exercise control over such corporation or entity; and

(ii)

either for itself or any other Person (1) induce or attempt to induce, or cause any other Person to induce or attempt to induce, any former or then current employee that is or has been employed by a Group Company after January 1, 2010 to leave the employ of such Group Company, (2) employ, or otherwise engage, or cause any other Person to employ or otherwise engage, as an independent contractor or otherwise, any former or then current employee that is or has been employed by a Group Company after January 1, 2010, (3) induce or attempt to induce, or cause any other Person to induce or attempt to induce, any customer, supplier, licensee or business relation of Parent, its subsidiaries or a Group Company to cease doing business with Parent, its subsidiaries or any Group Company with respect to any business activity of Parent, its subsidiaries or the Group Companies

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as conducted as of the Closing Date (and, with regard to the business of the Group Companies, to the knowledge of such Seller or its Affiliates as planned to be conducted by any of the Group Companies), or (4) in any way interfere with, or cause any other Person to interfere with, the relationships between Parent, its subsidiaries or a Group Company, on the one hand, and any customer, supplier, licensee, or business relation of Parent, its subsidiaries or such Group Company, on the other hand with respect to any business activity of Parent, its subsidiaries or the Group Companies as conducted as of the Closing Date (and with regard to the business of the Group Companies, to the knowledge of such Seller or its Affiliates as planned to be conducted by any of the Group Companies).

(b)	In the event of a breach by any of the Sellers of this Article 7.4, such Seller shall pay liquidated damages (Konventionalstrafe) to the Buyer in the amount of EUR 400,000 for each such breach; provided, however, that nothing contained in this Agreement shall prevent the Buyer from seeking specific performance of such Seller’s obligations under this Article 7.4 or damages for any Losses suffered by the Buyer and its Affiliates (including the Group Companies) in excess of the liquidated damages payable by such Seller under this Clause (b).
(c)	In the event of a breach by any of the Sellers of any covenant set forth in this Article 7.4, the term of such covenant with respect to such Seller will be extended by the period of the duration of such breach.
(d)	For purposes of this Article 7.4, Dietrich Ulmer, Oliver Kolbe and smac | partners GmbH shall be deemed to be Affiliates of Seller 1.

7.5 Confidentiality

(a) The confidentiality agreement dated February 1, 2011 between the Company and the Buyer and the non-disclosure agreement dated July 28, 2010 between the Buyer and smac | partners GmbH (collectively, the Confidentiality Agreements), shall remain in full force and effect until the Closing. Effective upon, and only upon, the Closing, the Confidentiality Agreements shall terminate. After the Closing, the Sellers and the Sellers’ Representative shall keep confidential the contents of this Agreement and other confidential information concerning the Group and Nuance and shall not inform any third party about its content unless required to do so by law or regulation or mutually agreed upon by the Parent; it being understood and agreed that neither the Confidentiality Agreements nor the foregoing confidentiality undertaking shall restrict (i) Nuance from providing any information to Persons

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	providing it with the financing for the transactions contemplated by this Agreement, (ii) the Parties from disclosing this Agreement or details of the transactions contemplated hereby for purposes of satisfying any of the conditions set forth in Article 6.2, (iii) the Parties from pursuing their rights and exercising their remedies under this Agreement or (iv) Nuance or any Group Company from conducting the businesses of the Group.
(b)	If, after the Closing, a Party is required by applicable law, governmental or other regulation (including stock exchange regulations) or by court decision or governmental order to make a disclosure regarding information to be kept confidential pursuant to this Article 7.5, the Parent (if Nuance is required to make such disclosure) shall inform the Sellers’ Representative, and the Sellers (if any of the Sellers are required to make such disclosure) shall inform the Parent, to the extent reasonably practicable, that such disclosure is required, and the Parties shall use their reasonable efforts to agree in good faith on the content of such disclosure prior to it being made.
(c)	The Sellers (severally and not jointly) and the Sellers’ Representative (i) shall, and shall cause their Affiliates and their respective directors, employees and advisors to, keep confidential all information relating to the Group, and (ii) shall not, and shall cause their Affiliates and their respective directors, employees and advisors not to, use any such information for their own or any other Person’s benefit or to the detriment of Nuance, its Affiliates or the Group, in the case of each of clauses (i) and (ii), except as required by law or regulations and except for such information that is available to the public on the Closing Date, or thereafter becomes available to the public other than by a breach of this Article 7.5.

7.6

Exclusivity

From the date of this Agreement until Closing or the termination of this Agreement in accordance with Article 6.2.5, neither the Sellers (severally and not jointly) and the Sellers’ Representative, the Company, nor any of their officers, directors, employees, agents and affiliates will take any action to solicit, initiate, seek, encourage or support any inquiry, proposal or offer from, furnish any information to, or participate in any negotiations with, any Person or group regarding any acquisition of the Company, any merger or consolidation with or involving the Company, any acquisition of any assets of the Company, any exclusive license of any Company Intellectual Property or any issuance, acquisition or transfer of Shares (other than to employees in the ordinary course). The Sellers (severally and not jointly) and the Sellers’ Representative agree, and shall procure that the Company

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	agrees, that any such negotiations in progress as of the date hereof will be terminated or suspended during such period. In no event will the Sellers and the Sellers’ Representative or the Company accept or enter into an agreement concerning any such third party transaction. The Sellers (severally and not jointly) and the Sellers’ Representative will, and shall procure that the Company will, promptly, and in any event within twenty-four (24) hours, notify the Parent regarding any contract by any third party regarding any offer, proposal or inquiry regarding any such acquisition or financing of the Company, including in any such notice the identity of the Person making, and the terms of, such proposal; provided, that if providing such information would breach a contractual obligation to keep such information confidential, the Company shall provide as much such information as possible, without violating its confidentiality obligations.
7.7	D&O Insurance
	For a period of six (6) years following the Closing Date, the Buyer shall maintain and shall cause any of its successors and assigns to maintain, or shall cause the Group Companies and any of their respective successors and assigns for themselves to maintain, in effect a directors’ and officers’ liability insurance policy covering those persons who are currently covered by the Group Companies’ directors’ and officers’ liability insurance policy (copies of which have been heretofore made available by the Company to the Parent) with coverage in amount and scope at least as favorable as the Group Companies’ existing coverage; provided, however, that this Article 7.7 shall be deemed to have been satisfied if a prepaid policy or policies (i.e., “tail coverage”) have been obtained by the Group Companies, which policy or policies provide such directors and officers with the coverage described in this Article 7.7 for an aggregate period of not less than six (6) years with respect to claims arising from facts or events that occurred on or before the Closing Date, including with respect to the transactions contemplated by this Agreement. Any cost of the tail coverage provided by Buyer pursuant to this Clause 7.7 in excess of EUR 50,000 shall be borne by the Sellers and treated as a Company Third Party Expense.
7.8	Broker Payment
	In addition to any broker payments to Ridgecrest Capital Partners, the Sellers have agreed to pay an amount equal to EUR 4,000,000 to Mr. Peter Hauser or Hauser Technology Investment GmbH (the Broker) as a Seller Third Party Expense in connection with the Acquisition and the transactions contemplated by this Agreement for services rendered pursuant to that certain letter, dated June 6, 2010,

Share Purchase Agreement re SVOX AG       37 | 54

	from Mr. Peter Hauser of Hauser Technology Investment GmbH to smac | partners GmbH (the Broker Agreement).
8.	Taxes, Costs, Expenses and Interest
8.1	Transfer Taxes

(a)	Nuance shall bear 50% of the Swiss securities transfer tax (Umsatzabgabe) payable in connection with the transactions contemplated under this Agreement, up to a maximum amount of EUR 25,000 in total.
(b)	All other transfer taxes shall be borne by the relevant Seller.

8.2	No Indirect Partial Liquidation in Respect of the Sellers
	The Buyer shall reimburse and hold harmless the Sellers from any and all Swiss federal, cantonal and communal Taxes including any late interest payments assessed by the competent Swiss Tax authorities under the concept of indirect partial liquidation (pursuant to article 20a para. 1 lit. a DBG and the corresponding cantonal statutory provisions and practices of the competent Tax authorities). Any compensation for such Taxes (including any late interest payments relating thereto) levied on the Sellers shall be paid by the Buyer no later than ten (10) days after the Tax or interest assessment has become final (rechtskräftig). Articles 11.1 (Notice of Breach) and 11.3 (Third Party Claims) shall apply per analogiam.
8.3	Costs and Expenses
	Except as expressly provided otherwise in this Agreement, each Party shall bear its own costs and expenses (including advisory fees) incurred in the negotiation, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby. For the avoidance of doubt, none of the Group Companies shall bear any of the Sellers’ costs and expenses (including advisory fees for services rendered to the Sellers) incurred in the negotiation, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby.
8.4	Interest

(a) The interest rate to be applied to the interest calculation under this Agreement shall be the 3-month EUR-LIBOR (as per Reuters page at the date

Share Purchase Agreement re SVOX AG       38 | 54

	the relevant payment is due, at 11:00 a.m. C.E.T.) per annum (calculated on a 30/360 basis).
(b)	If a Party defaults in the payment when due of any sum payable by it under this Agreement (howsoever determined), interest shall accrue on such overdue sum from (and including) the date on which such sum was due to (and excluding) the date on which such Party actually makes payment (whether before or after any judgment) at a rate of the 3-month EUR-LIBOR (as per Neue Zürcher Zeitung page “Börsen und Märkte — Geldmarkt (3 Monate) —EUR-Libor” as at the date the relevant payment is due) per annum (calculated on a 30/360 basis).
(c)	For the sake of clarity, any indemnification claim disputed by the Sellers shall not be deemed due until the date any such claim is finally resolved in accordance with Article 10 and Article 11; it being understood and agreed by the Parties that any interest accruing on the amounts placed in escrow pursuant to Article 3.2.3(c), if any, shall be paid to the Party to which such amounts are released by the Escrow Agent pursuant to the Escrow Agreement.

8.5	Subpart F Income
	Notwithstanding anything herein to the contrary, Sellers shall not indemnify the Buyer (or its Affiliates) for Taxes imposed upon amounts included in the Buyer or its Affiliate’s income under Section 951 of the IRC.
9.	Representations and Warranties
9.1	Representations and Warranties of the Sellers

(a) The Sellers hereby make the representations and warranties set forth in Annex 9.1 to the Buyer as of the date of this Agreement and the Closing Date, unless a particular representation or warranty is made as of another date; it being understood and agreed by the Parties that in relation to any representation and warranty made by a Seller in relation to the title in Shares and its authority to enter into this Agreement and to consummate the transactions herein set forth, such representation and warranty by a Seller is made only in relation to the Shares sold by it hereunder (Annex 9.1, Clause 2) and to its own authority (Annex 9.1, Clause 4).

Share Purchase Agreement re SVOX AG       39 | 54

(b)

The Buyer acknowledges that, other than as expressly provided in this Agreement, the Sellers have not made and do not make, and the Buyer has not relied and does not rely on, any representation or warranty, express or implied, pertaining to the subject matter of this Agreement. In particular, and without limitation to the foregoing, the Buyer acknowledges that except as set forth in Clause 30 of Annex 9.1, Sellers are not making any representations as to budgets, business plans, forward-looking statements and other projections of a financial, technical or business nature relating to the business of the Group as a whole or any Group Company.

(c)

Except as set forth in the Disclosure Schedule (in each case with specific reference to the particular Article or Clause of this Agreement to which the information set forth in the Disclosure Schedule relates, provided, however, that any information disclosed in the Disclosure Schedules under any Article or Clause shall be deemed to be disclosed and incorporated in any other Article or Clause of the Agreement where such disclosure is readily apparent), neither the representations and warranties set forth in Annex 9.1 nor the Buyer’s right to claim indemnification for misrepresentations or breach of warranties under Article 10 and Article 11 shall be treated as waived, qualified or otherwise affected by any actual or imputed knowledge of the Buyer or its Affiliates, or their respective directors, officers, employees, agents or advisors, irrespective of whether such actual or imputed knowledge results from any due diligence investigations carried out by the Buyer, any of its Affiliates or any of its or their respective representatives or advisers or otherwise. The Parties explicitly agree that article 200 CO shall not apply to this Agreement and be deemed waived. Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein unless the Disclosure Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The Parties intend that each representation, warranty and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty or covenant.

Share Purchase Agreement re SVOX AG       40 | 54

(d) The Sellers shall deliver to the Buyer on the second (2nd) Business Day prior to the Closing Date a true and complete schedule of changes (the Update Schedule) to any of the information contained in the Disclosure Schedule (including changes to any other representations or warranties of the Sellers in Annex 9.1 hereof as to which no disclosure has been made in the Disclosure Schedule as of the date hereof but as to which a disclosure would have been required if such changes had existed on the date hereof), which changes are required as a result of events occurring subsequent to the date hereof (it being understood that the mere discovery of events following the date hereof shall not constitute a basis for any such change to the extent that the event occurred or existed prior to the date hereof) which would render any representation or warranty inaccurate or incomplete at any time after the date of this Agreement until the Closing Date, which Update Schedule shall be dated as of the Closing Date. It is being understood by the Parties that supplemental information set forth in the Update Schedule shall not be deemed to avoid or cure any misrepresentation or breach of warranty and does not negate any indemnity hereunder.

9.2 Representations and Warranties of Nuance

(a)

Nuance hereby makes the representations and warranties set forth in Annex 9.2 to the Sellers as at and as of the date of this Agreement and the Closing Date.

(b)

The Sellers acknowledge that, other than as expressly provided in this Agreement, Nuance has not made and does not make, and the Sellers have not relied and do not rely on, any representation or warranty, express or implied, pertaining to the subject matter of this Agreement. In particular, and without limitation to the foregoing, the Sellers acknowledge that Nuance is not making any representations as to budgets, business plans, forward-looking statements and other projections of a financial, technical or business nature relating to the business of Nuance and its Affiliates.

10.	Indemnification
10.1	Specific Indemnifications
	Subject to Article 11, from and after the Closing, the Sellers (severally and not jointly) shall, irrespective of any fault, indemnify and hold harmless Nuance together with its officers, directors, employees, agents and Affiliates (including the

Share Purchase Agreement re SVOX AG       41 | 54

Group Companies) from and against any and all Losses suffered or incurred by the Indemnified Party as result of, or arising from or based upon:

(a)	any Excess Company Third Party Expense;
(b)	any Excess Debt Payment;
(c)	any Excess Change of Control Payment;
(d)	any Tax or other expense under or in connection with the Siemens APA, other than the Siemens Payment; provided, however, that (i) if the Acquisition will be judged void or unwound on basis of a decision of a competent court or administrative body after the Siemens Payment is made and (ii) the subordinated loan granted by the Buyer to the Company under Article 6.2.2(b) is not fully repaid, the Sellers shall also severally, not jointly, indemnify and hold harmless Nuance for any part of the Siemens Payment not yet repaid by the Company to Nuance and any third party expenses related thereto;
(e)	with respect to any dispute or litigation arising out of or in connection with the merger contemplated in Article 6.4, (i) any merger consideration in excess of the consideration for the Shares that such holders would have been entitled to receive under this Agreement had they acceded to this Agreement and (ii) any reasonable third party expenses with respect to any such dispute or litigation (but excluding for the sake of clarity any costs and expenses relating to the statutory merger proceedings and the incorporation of any Affiliate of Nuance for the purposes of such proceedings);

it being understood and agreed by the Parties that if (i) Nuance or any Group Company owe less than what is stated in the Closing Date Statement on account of Company Third Party Expenses, the Debt Repayment Amount or Change of Control Payments or (ii) if any merger consideration is lower than the consideration for the Shares that such holders would have been entitled to receive under this Agreement had they acceded to this Agreement, Nuance or the relevant Group Company shall add such difference to the Second Tranche.

10.2	General Indemnification
	Subject to Article 11, from and after the Closing, the relevant Party (such Party, together with its officers, directors, employees, agents and Affiliates (including with respect to Nuance, and excluding with respect to the Sellers, the Group

Share Purchase Agreement re SVOX AG       42 | 54

Companies), the Indemnified Party) shall be indemnified and held harmless by the other Party (in the case of the Sellers, on a several, and not joint and several, basis) (the Indemnifying Party), irrespective of any fault, from and against any and all Losses suffered or incurred by the Indemnified Party as result of, or arising from or based upon:

(a)	any breach, of any of the representations or warranties made by the Indemnifying Party pursuant to Article 9.1 or Article 9.2, as applicable; or
(b)	any breach of any covenant or agreement of the Indemnifying Party contained in this Agreement or in any certificate or document delivered pursuant to this Agreement, it being understood and agreed by the Parties that in relation to any such breach by a Seller, only such Seller shall be obligated to indemnify Nuance with respect to any Losses caused by such breach.

11.	Indemnification Procedure
11.1	Notice of Breach

(a)

Should the Indemnified Party detect any misrepresentation or breach of warranty or should a third party claim that has given or could give rise to a claim against the Indemnifying Party under this Agreement, including, but not limited to, claims brought by tax or other governmental authorities (a Third Party Claim) be raised, the Indemnified Party shall, within sixty (60) Business Days from having obtained reasonable knowledge of the circumstances of such misrepresentation or breach of warranty or having received notice of a Third Party Claim, deliver to the Parent (in case one of the Sellers is the Indemnified Party) or to the Sellers’ Representative (in case the Buyer is the Indemnified Party) a notice indicating the nature of such claim, the basis therefor and a good faith estimate of Losses that reasonably could result therefrom (to the extent ascertainable) (the Notice of Breach).

(b)

In case of a failure to give Notice of Breach in accordance with Article 11.1(a), the Indemnified Party shall not be limited or precluded from making any claim for indemnification under Article 10 and this Article 11; provided, however, that the Indemnifying Party shall not be liable for any Loss related to such claim to the extent it can demonstrate that it would have been avoided or mitigated had the Indemnifying Party provided notice thereof in accordance with Article 11.1(a).

Share Purchase Agreement re SVOX AG       43 | 54

(c) With respect to the representations and warranties set forth in Article 9.1 and Article 9.2, the provisions of this Article 11.1 shall be in lieu of, and not in addition to, the Indemnified Party’s duty to immediately inspect and notify the Indemnifying Party in accordance with article 201 CO.

11.2	Right to Cure
	From and after the Closing, in the event of a breach of the representations and warranties that has been notified by the Indemnified Party in accordance with Article 11.1, the Indemnifying Party shall, subject to the exclusions and limitations set forth in this Agreement, have the right, within thirty (30) Business Days from receipt by it of the Notice of Breach, to put the relevant Group Company or the other Party, as the case may be, in the position in which such Group Company or other Party would have been, had no such misrepresentation or breach of warranty occurred. If the relevant Group Company and|or the other Party, as the case may be, is put in the position in which such Group Company and|or other Party would have been, had no such misrepresentation or breach of warranty occurred such case, no indemnification shall be due by the Indemnifying Party.
11.3	Third Party Claims

(a)	If the Third Party Claim is against Nuance or a Group Company, the Sellers’ Representative on behalf of the Sellers shall be entitled, at its expense, to participate in, but not to determine or conduct, the defence of such Third Party Claim; provided, however, that the Sellers and the Sellers’ Representative agree and consent, as a condition of such entitlement of participation, that Nuance’s legal counsel in the Third Party Claim shall not be precluded from representing Nuance as against the Sellers in the event that the Sellers dispute the fact or amount of Nuance’s claim of a Loss related to the Third-Party Claim.
(b)	Nuance shall have the right in its sole discretion to conduct the defence of, and to settle, any such claim. In the event that the Sellers’ Representative has consented to any such settlement, the Sellers shall have no power or authority to object to the amount of any Third Party Claim by Nuance.
(c)	The Indemnifying Party acknowledges and agrees that in the event that the Indemnified Party is found liable in a Third Party Claim by a court of competent jurisdiction or an arbitration tribunal with respect to facts or issues of law alleged in a Third Party Claim, the Indemnifying Party and, in case the Sellers are the Indemnifying Party, the Sellers’ Representative (on behalf of

Share Purchase Agreement re SVOX AG       44 | 54

the Indemnifying Parties) will be estopped and precluded from contesting such facts and issues of law, as so determined, in any Action brought by an Indemnified Party for indemnification under this Agreement and the Indemnifying Parties and the Sellers’ Representative hereby irrevocably and unconditionally waives any and all rights under Law or this Agreement to contest such facts and issues of law.

11.4 Term (Verjährung) of Indemnification Obligations

(a) Actions for misrepresentation or breach of warranty shall be time-barred (verjährt) unless a Notice of Breach is given:

(i)	with respect to a breach of any representation contained in Clause 1 (Organization of the Company and the Subsidiaries), Clause 2 (Company Capital Structure), Clause 3 (Subsidiaries), Clause 4 (Authority), or Clause 28 (Siemens APA) of Annex 9.1, on or before the tenth (10th) anniversary of the Closing Date;
(ii)	with respect to a breach of any representation contained in Clause 13 (Intellectual Property) or Clause 17 (Litigation) of Annex 9.1, on or before the sixth (6th) anniversary of the Closing Date;
(iii)	with respect to a breach of any representation contained in Clause 10 (Taxes) of Annex 9.1, on or before six (6) months after the relevant assessment (Bescheid) has become final and binding and unalterable (formell und materiell bestandskräftig und unabänderbar);
(iv)	with respect to a breach of any representation contained in Clause 22 of Annex 9.1 (Social Security, Pensions and Benefit Plans), on or before the date that is three (3) months after the expiration of the relevant statute of limitations (or extensions or waivers thereof); and
(v)	with respect a breach of any representations and warranties contained in this Agreement that are not described in Clauses (i) through (iv) above, on or before the date that is twelve (12) months after the Closing Date.

(b)	With respect to any Action for Losses subject to indemnification under Article 10.1 and 10.2(b), the Notice of Breach shall be given on or before the tenth (10th) anniversary of the Closing Date.
(c)	Indemnified Parties shall be entitled to submit a Notice of Breach prior to the applicable date in Clause 11.4(a) and Clause 11.4(b) for Losses that are contingent or in an amount that is not yet known.

Share Purchase Agreement re SVOX AG      45 | 54

11.5 Limitations on Indemnification Obligations

(a) The Indemnifying Party’s obligation to indemnify an Indemnified Party for any Loss under Article 10 shall be reduced:

(i)	by the amount of any sum such Indemnified Party has recovered from any third Person, including an insurer, in compensation for such Loss, after deduction of all duly documented costs and expenses incurred in making such recovery (including reasonable attorneys’ fees); provided, however, the Indemnifying Party shall not be obligated to seek compensation from such third Person;
(ii)	if and to the extent the Parent, the Buyer or any of their Affiliates consented to an action as per Article 5.3.1;
(iii)	if and to the extent that such Loss is covered by any specific provision, reserve or expense in the Financials relating to such claim;
(iv)	if and to the extent that such Loss has been caused or increased by a failure of the Indemnified Party or any of its Affiliates or, as from the Closing Date, any Group Company or any of its Affiliates, to comply with the duty to mitigate the damage; or
(v)	if and to the extent that such Loss arises or is increased as a result of any new legislation, regulation, rule of law or practice not in force at the Closing Date or any amendment of any legislation, regulation, rule of law or practice after the Closing Date.

(b) The Indemnifying Party shall not have any obligation to indemnify the Indemnified Party under Article 10.2(a) unless the amount of the Indemnifying Party’s obligation to indemnify the Indemnified Party exceeds, or when aggregated with the amount of the total indemnification obligation of the Indemnifying Party in respect of all claims will exceed, EUR 850,000 (the Threshold Amount). If the Threshold Amount has been exceeded, the Indemnifying Party shall be required to indemnify the Indemnified Party from and against any and all Losses suffered or incurred by the Indemnified Party, and not just the Losses in excess of the Threshold Amount; provided, however, that the Threshold Amount shall not apply to:

(i)	any indemnification obligation of the Parties under Article 10.2(a) resulting from, arising out of or based upon, any fraudulent or wilful misrepresentation or fraudulent or willful breach of warranty;
(ii)	any indemnification obligation of the Parties under Article 10.2(b);

Share Purchase Agreement re SVOX AG      46 | 54

(iii)

any indemnification obligation of the Sellers under Article 10.1; or

(iv)

any indemnification obligation of the Sellers under Article 10.2(a) resulting from, arising out of or based upon, the breach of any of the representations and warranties set forth in Clause 1 (Organization of the Company and the Subsidiaries), Clause 2 (Company Capital Structure), Clause 3 (Subsidiaries), Clause 4 (Authority), Clause 9(k) (No Changes), Clause 10 (Taxes), Clause 22 (Social Security, Pensions and Benefit Plans) and Clause 28 (Siemens APA) of Annex 9.1,

it being however understood and agreed by the Parties that if any Loss arises out of a misrepresentation or a breach of a warranty or covenant under this Agreement (including those set forth under (i) to (iv) above) for which Notice of Breach has been given on or prior to the Second Tranche Payment Date in accordance with Article 3.2.3(c), the amount claimed (whether disputed or not or whether the amount exceeds or not the Threshold Amount) shall be first deducted from the Second Tranche and be placed in escrow to be held by the Escrow Agent as set forth in Article 3.2.3(c) before an Indemnified Party seeks to recover directly from an Indemnifying Party.

(c) The aggregate amount of the Sellers’ indemnification obligations to the Buyer and its Affiliates

(i)	with regard to any indemnification obligation of the Sellers under Article 10.2(a) resulting from, arising out of or based upon, the breach of any of the representations and warranties other than described in Subclause (ii) or (iii) below shall not exceed EUR 8,300,000;
(ii)	with regard to any indemnification obligation of the Sellers under Article 10.1 or under Article 10.2(a) resulting from, arising out of or based upon, the breach of any of the representations and warranties set forth in Clause 10 (Taxes), Clause 13 (Intellectual Property) and Clause 28 (Siemens APA) of Annex 9.1 shall, together with any indemnification paid under Article 11.5(c)(i), not exceed EUR 26,970,000; and
(iii)	with regard to any indemnification obligation of the Sellers under Article 10.2(b) or under Article 10.2(a) resulting from, arising out of or based upon, the breach of any of the representations and warranties set forth in Clause 1 (Organization of the Company and the Subsidiaries), Clause 2 (Company Capital Structure), Clause 3 (Subsidiaries) and Clause 4 (Authority) of Annex 9.1 shall together with any indemnification paid under Article 11.5(c)(i) or Article 11.5(c)(ii), not exceed EUR 87,000,000;

Share Purchase Agreement re SVOX AG      47 | 54

(the limitations set forth in (i) through (iii) each a Cap and together the Caps)

provided, however, that no Cap shall apply to any indemnification obligation of any Seller resulting from, arising out of or based upon, any fraudulent or wilful misrepresentation or fraudulent or wilful breach of warranty.

11.6 Remedies Exclusive

The remedies set forth in Article 11 for misrepresentation or breach of warranty shall be in lieu of and supersede any remedies provided for or available under applicable laws, and the Parties hereby waive, to the fullest extent possible under mandatory provisions of applicable laws, any such other remedies not set forth in Article 11. In particular, without limitation, the Parties hereby explicitly waive any rights under articles 192 et seq. CO and articles 197 et seq. CO (including article 97 CO to the extent that it applies to misrepresentations or breaches of warranties), as well as any right to partially or fully rescind or challenge the validity of this Agreement under article 23 et seq. CO or article 205 CO. For the avoidance of doubt, this Article 11.6 does not exclude articles 28 CO and 199 CO and article 214 al. 3 CO shall be fully applicable.

11.7 Treatment of Indemnification Payments

The Parties agree to treat all payments made under this Agreement, including, without limitation, the payments made under Article 10 and Article 11, and including payments made to Nuance out of the escrow pursuant to the Escrow Agreement, as adjustments to the Purchase Price.

12. General Provisions

12.1 Guarantee by Parent

The Parent, in addition to its own obligations hereunder, hereby guarantees the payment of the First Tranche, the Second Tranche and the Third Tranche by the Buyer to the Seller and any other performance of obligations of the Buyer under or in connection with this Agreement in the meaning of article 111 CO.

12.2 Effect on Third Parties

Except as otherwise expressly provided in this Agreement, no Person other than the Parties shall have any rights or benefits under this Agreement, and nothing in

Share Purchase Agreement re SVOX AG      48 | 54

this Agreement is intended to confer on any Person other than the Parties any rights, benefits or remedies.

12.3 Notices

All notices or other communications to be given under or in connection with this Agreement shall be in writing and delivered by hand or sent (postage prepaid) by registered, certified or express mail (return receipt requested), overnight courier or facsimile as follows:

if to the Parent or Buyer:	Nuance Communications, Inc. or Ruetli Holding Corporation 1 Wayside Road Burlington, MA 01803 Attention: Senior Vice President Corporate Strategy & Development Facsimile No.: 781-565-5001
with a copy (which shall not constitute notice) to	Nuance Communications, Inc. 1 Wayside Road Burlington, MA 01803 Attention: General Counsel Facsimile No.: 781-565-5001
	Dr. Hansjürg Appenzeller Homburger AG Weinbergstrasse 56|58 CH-8006 Zürich Switzerland +41 43 222 15 00
if to the Sellers or Sellers’ Representative:	smac | partners GmbH Ottobrunner Straße 41 82008 Unterhaching Germany fax +49 89 550 688 50 |

Share Purchase Agreement re SVOX AG      49 | 54

with a copy (which shall not Luc Defferrard
constitute notice) to	Walder Wyss AG Seefeldstrasse 123 CH-8008 Zurich Switzerland +41 44 498 98 99

Any notice to be given hereunder shall be deemed to have been duly given, if given prior to the expiry of a term or deadline set forth in this Agreement (if any).

12.4 Entire Agreement

Subject to the Confidentiality Agreements, this Agreement, including the Annexes and any other documents referred to herein, constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements and understandings of the Parties relating to such subject matter.

12.5 Amendments and Waivers

This Agreement (including this Article 12.5) may only be modified or amended by a document signed by the Buyer and the Sellers’ Representative. Compliance with any term or provision contained in this Agreement by the Party that was or is obligated to comply or perform with such term or provision may only be waived by a document signed by the Buyer or, as the case may be, the Sellers’ Representative waiving such compliance.

12.6 No Assignment

(a)	Except as set forth below, neither Party shall assign this Agreement or any of its rights or obligations hereunder to any third Party without the prior written consent of the other Party. Any attempted assignment in violation of this Article 12.6 shall be void.
(b)	The Buyer (but for the avoidance of doubt, not the Parent) may assign the benefit of each of the covenants, indemnities, representations and warranties undertaken or given by the Sellers to any purchaser or transferee of any of the Shares, provided that such purchaser or transferee must be an Affiliate of Nuance and it being further understood that the aggregate liability

Share Purchase Agreement re SVOX AG      50 | 54

of the Sellers and their rights (for example as regards no set-off) under this Agreement shall not be increased as a result of such assignment.

(c) The Buyer may elect that any of its obligations under this Agreement (but for the avoidance of doubt, not the Parent’s obligations or guarantees) are performed by one or more of its Affiliates in accordance with this Agreement provided that notwithstanding such election, the Buyer and the Parent shall be and remain fully liable for all of its and its Affiliates’ obligations under, or in connection with, this Agreement and it being further understood that the aggregate liability of the Sellers and their rights (for example as regards no set-off) under this Agreement shall not be increased as a result of such election.

12.7 Severability

If any part or provision of this Agreement or the application of any such part or provision to any Person or circumstance shall be held to be invalid, illegal or unenforceable in any respect by any competent arbitral tribunal, court, governmental or administrative authority, (a) such invalidity, illegality or unenforceability shall not affect any other part or provision of this Agreement or the application of such part or provision to any other Persons or circumstances, and (b) the Parties shall endeavor to negotiate a substitute provision that best reflects the economic intentions of the Parties without being invalid, illegal or unenforceable, and shall execute all agreements and documents required in this connection. For the avoidance of doubt, this Article 12.7 is not intended to modify or abrogate the authority of the competent court to replace an invalid provision of this Agreement in accordance with Swiss law.

12.8 Relationship amongst Sellers

12.8.1 Sellers’ Representative

(a)

The Sellers’ Representative is hereby constituted and appointed as true and lawful agent and attorney-in-fact of each Seller with full powers of substitution to act in the name of each Seller with respect to the transactions contemplated in this Agreement (including, without limitations, receiving any payments or Consideration Shares, amendment, waiver of rights or settlement of claims under this Agreement).

(b)

Nuance may rely upon any action of the Sellers’ Representative as the act of Sellers in all matters referred to in this Agreement or any other document

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contemplated hereby. Nuance shall not have the obligation to verify whether the Sellers’ Representative has met all obligations towards the Sellers and in particular whether the Sellers’ Representative has been given joint instructions.

(c)

If the Sellers’ Representative resigns or ceases to function in such capacity for any reason whatsoever, then the Sellers shall within twenty (20) Business Days appoint a successor Sellers’ Representative. If within twenty (20) Business Days no successor Sellers’ Representative is appointed, the Buyer shall have the right to ask a court of competent jurisdiction to appoint a successor Sellers’ Representative.

12.8.2 Liability

Each Seller shall severally, and not jointly with the other Sellers, be liable for all obligations under this Agreement. Each Seller’s several liability under this Agreement shall be based on such Seller’s Pro Rata Portion.

13. Governing Law and Dispute Resolution

13.1 Governing Law

This Agreement shall be governed by and construed in accordance with the substantive laws of Switzerland.

13.2 Dispute Resolution

All disputes arising out of or in connection with this Agreement, including disputes regarding its conclusion, binding effect, amendment and termination, shall be referred exclusively to the courts of Zurich 1. Subject matter jurisdiction shall be with the Commercial Court of Zurich (Handelsgericht des Kantons Zürich).

So agreed on June 6, 2011.

Sellers:

     Tempopark Fund 1

By:	/s/ Signature Illegible	:/s/ Signature Illegible
	Name:	Name:
	Function:	Function:

/s/ Göran Grosskopf

Göran Grosskopf

/s/ Beat Curti

Beat Curti

/s/ Ernst Bruder

Ernst Bruder

/s/ Volker Jantzen

Volker Jantzen

/s/ Michael Bellert

Michael Bellert

/s/ Markus Rauh

Markus Rauh

Beat Curti Holding AG

By:	/s/ Signature Illegible	s/ Signature Illegible
	Name:	Name:
	Function:	Function:

Sellers’ Representative

     smac | partners GmbH

By:	/s/ Signature Illegible	/s/ Signature Illegible
	Name:	Name:
	Function:	Function:

Buyer:

     Ruetli Holding Corporation

By:	/s/ Thomas Beaudoin
	Name: Thomas Beaudoin Function: President

Parent:

     Nuance Communications, Inc.

By:	/s/ Thomas Beaudoin
	Name: Thomas Beaudoin Function: Executive Vice President and CFO

Annex A to the Share Purchase Agreement re SVOX AG      1 | 1

Annex A

Allocation of Shares

Annex B to the Share Purchase Agreement re SVOX AG      1 | 1

Annex B

Subsidiaries; Subsidiary Shares

Annex 1 to the Share Purchase Agreement between re SVOX AG       1 | 14

Annex 1

Definitions

As used in this Agreement in capitalized form, the following terms shall have the following meaning:

Accession Confirmation shall have the meaning pursuant to Article 2(a).

Accounts Payable means accounts payable, notes payable and other payables generated in connection with the business of the Company and the Subsidiaries.

Accounts Receivable means accounts receivable, notes receivable and other receivables generated in connection with the business of the Company and the Subsidiaries.

Acquisition shall have the meaning set forth in Preamble D.

Action means any order, injunction, judgment, fine, action, claim, suit, arbitration, subpoena or proceeding by or before any court or grand jury, any Governmental Entity (as defined below) or arbitration tribunal.

Advisor shall have the meaning pursuant to Article 6.2.2(l).

Advisor Settlement Agreement shall have the meaning pursuant to Article 6.2.2(l).

Affiliate shall mean (i) a Person that exercises Control over a second Person or is under Control by it, or (ii) any of two or more Persons which are under common Control by the same Person.

Agreement shall mean this Share Purchase Agreement, including all of its Annexes and related documents.

Anti-Corruption and Anti-Bribery Laws shall mean the Foreign Corrupt Practices Act of 1977, as amended, any rules or regulations thereunder, or any other applicable United States or foreign anti-corruption or anti-bribery laws or regulations and the Bribery Act 2010, as the same may be amended, and any subsidiary legislation and regulation thereunder, or any other applicable United Kingdom anti-corruption or anti-bribery legislation or regulation.

Annex 1 to the Share Purchase Agreement re SVOX AG      2 | 14

Balance Sheet Date shall mean December 31, 2010.

Bank Account(s) shall have the meaning pursuant to Article 3.3(a).

Broker shall have the meaning pursuant to Article 7.8.

Broker Agreement shall have the meaning pursuant to Article 7.8.

Business shall mean the business conducted or planned by the Company and/or any of the Group Companies immediately prior to the Closing Date.

Business Day shall mean each day that is not a Saturday, Sunday or holiday on which banking institutions located in Zurich, Switzerland, or New York, New York, United States of America, are authorized or obligated by Law or executive order to close.

Buyer shall mean the legal entity defined as the Buyer on the cover page to this Agreement.

Cap shall have the meaning pursuant to Article 11.5(c).

Carve-out Plans shall mean (1) the amendments to the employment agreements of Mr. Volker Jantzen, undated, Mr. Oddmund Braaten, dated May 5, 2009, Mr. Udo Haiber, dated February 9, 2011, Mr. Eric Lehmann, dated March 14, 2007, Mr. Martin Reber, dated March 14, 2007, Mr. Marcel Riedi, dated March 14, 2007, Mr. Eugen Stermetz, dated April 23, 2009 and Mr. Christof Traber, dated March 14, 2007 with the Company, granting such employees certain right in connection with certain triggering events such as the Acquisition and (2) the “carve-out for all employees” in the amount of up to EUR 500’000.00 to be allocated to certain employees pursuant to a board resolution of March 17, 2011 and an “unallocated carve-out” in the amount of up to EUR 500’000.00 to be allocated to certain employees pursuant to a board resolution of May 16, 2011.

Change of Control Payments shall mean all payments due and payable by Nuance, the Company or any Subsidiary to the employees of the Group Companies as of the Closing Date or thereafter as a result of the transactions contemplated by this Agreement and all employment or payroll Taxes in connection therewith (other than payments due and payable solely as a result of actions taken by Nuance or any Group Company following the Closing other than in connection with the SVOX Option Plans), including, but not limited to, any payments in connection with the Carve-out Plans and the SVOX Option Plans (including, but not

Annex 1 to the Share Purchase Agreement re SVOX AG       3 | 14

limited to, payments made (a) to the participants of the SVOX Option Plans in connection with their waiver of claims in the form as set forth in Annex 5.5, (b) to the participants of the SVOX Option Plans who have not waived their claims as set forth in Article 5.5 in connection with the purchase by the Company of the options outstanding at Closing as contemplated under Article 6.2.2(g) in fine, (c) to the signatories of the Carve-out Plans in connection with the amendment of their employment agreement pursuant to Article 6.2.2(d) and (d) to any other beneficiaries under the Carve-out Plans) and any payments relating to “phantom stocks” issued to directors, officers, employees and third parties.

Charter Documents shall have the meaning pursuant to Clause 1 of Annex 9.1.

Closing shall mean the consummation of the transactions as described in Article 6.3.

Closing Date shall mean the date on which the Closing actually occurs, as provided in Article 6.1.

Closing Date Statement shall have the meaning pursuant to Article 5.6.

Closing Price shall mean an amount in USD equal to the volume-weighted sales price per share rounded to four (4) decimal places of Parent Common Stock on the Nasdaq Global Select Market for the consecutive period of ten (10) Business Days beginning at 9:30 a.m. New York time on the thirteenth (13^th) Business Day immediately preceding the Closing Date (with regard to Consideration Shares delivered as payment of the First Tranche), Second Tranche Payment Date (with regard to Consideration Shares delivered as payment of the Second Tranche) and the Third Tranche Payment Date (with regard to Consideration Shares delivered as payment of the Third Tranche), and concluding at 4:00 p.m. New York time on the third (3^rd) Business Day immediately preceding the Closing Date, the Second Tranche Payment Date or the Third Tranche Payment Date, respectively, as calculated by Bloomberg Financial LP under the function “NUAN Equity AQR”.

CO shall mean the Swiss Code of Obligations.

Company shall have the meaning set forth on the cover page to this Agreement.

Company Authorizations shall have the meaning pursuant to Clause 16 of Annex 9.1.

Annex 1 to the Share Purchase Agreement re SVOX AG       4 | 14

Company Intellectual Property shall have the meaning pursuant to Clause 13(a) of Annex 9.1.

Company Registered Intellectual Property Rights shall have the meaning pursuant to Clause 13(b) of Annex 9.1.

Company Options shall mean all options, and other rights (including commitments to grant options) to purchase, subscribe or otherwise acquire any shares or any other securities in the Company (whether or not such Company Options are vested).

Company Products shall have the meaning pursuant to Clause 13(a) of Annex 9.1.

Company Share Certificate shall mean the certificates representing the relevant Shares duly endorsed in blank or, in case no such certificate was ever issued for the relevant Shares, an executed declaration of assignment of such Shares; provided that, if any Company Share Certificate shall have been lost, stolen or destroyed, Seller may, in lieu of such lost, stolen or destroyed Company Share Certificate, provide an affidavit as indemnity against any claim that may be made against Buyer with respect to such Company Shares.

Company Shares shall mean 129,540 registered common shares, CHF 1.00 par value per share, 74,025 registered series B preferred shares, CHF 1.00 par value per share, and 143,457 registered series C preferred shares, CHF 1.00 par value per share, in the Company and all the shares in the Company underlying the Company Options, outstanding at Closing.

Company Source Code shall have the meaning pursuant to Clause 13(t) of Annex 9.1.

Company Third Party Expenses shall mean the Third Party Expenses incurred by the Company and any Subsidiary on or prior to the Closing Date in connection with the Acquisition and the negotiation of the Second Amendment to the Siemens APA and the transactions contemplated by this Agreement and the Second Amendment to the Siemens APA, and excluding, however, any costs in connection with the establishment and the audit of the Required Financials.

Confidentiality Agreements shall have the meaning set forth in Article 7.5(a).

Annex 1 to the Share Purchase Agreement re SVOX AG       5 | 14

Conflict shall have the meaning pursuant to Clause 5 of Annex 9.1.

Consideration Shares shall mean such number of Parent Common Stock, which is the result of the following formula: that portion of the respective consideration to be paid, at the election of the Parent, by Parent Common Stock divided by the relevant Closing Price, calculated based on the spot rate of exchange for the purchase of Euros in exchange for U.S. Dollars published one Business Day prior to the Closing Date, the Second Tranche Payment Date and the Third Tranche Payment Date, as the case may be, in the New York City edition of the Wall Street Journal or, if no such rate is published on such Business Day, then on the day the last such rate was published.

Contracts shall mean any written or oral agreement, contract, subcontract, lease, binding understanding, instrument, note, bond, mortgage, indenture, option, warranty, purchase order, license, sublicense, benefit plan, obligation, commitment or undertaking of any nature.

Control shall be deemed to exist if a Person (either alone or with its Affiliates) owns more than half of the voting rights or equity capital of a Person, or is otherwise able to exercise a controlling influence over another Person.

CTA shall have the meaning pursuant to Clause 22(b) of Annex 9.1.

Customers shall have the meaning pursuant to Clause 26(a) of Annex 9.1.

DBG shall mean the Swiss Federal Law on Direct Taxes.

Debt shall mean short and long-term third-party financial liabilities for borrowed money of the Group Companies and all accrued interest thereon as of the Closing Date.

Debt Repayment Amount shall mean the payments necessary to repay all of the Company’s and any Subsidiary’s outstanding Debt for borrowed money as of the Closing Date, other than the recurring credit facility with Neue Aargauer Bank.

Deposit Account(s) shall have the meaning pursuant to Article 3.3(a).

Disclosure Schedule means that certain schedule attached hereto as part of Annex 9.1, as delivered by the Sellers to the Parent concurrently with the execution of this Agreement.

Annex 1 to the Share Purchase Agreement re SVOX AG       6 | 14

Employee Benefit Plans shall have the meaning pursuant to Clause 22(a) of Annex 9.1.

Environmental Laws means all Laws relating to pollution or protection of the environment or exposure of any individual to Hazardous Materials, including Laws relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, registration, distribution, labeling, recycling, use, treatment, storage, disposal, transport or handling of Hazardous Materials and including any Hazardous Materials related electronic waste, product content or product take-back requirements.

Escrow Agent shall mean Mr. Hansjörg Stutzer, Thouvenin Rechtsanwälte, or another attorney-at-law of a reputable Swiss law firm appointed by the Parties.

Escrow Agreement shall mean the escrow agreement to be entered into by the Sellers’ Representative, the Buyer, the Parent and the Escrow Agent by the Second Tranche Payment Date relating to the placement into escrow of certain amounts pursuant to Article 3.2.3(a), on standard commercial terms including a clause pursuant to which amounts on escrow (or any part thereof) shall only be released by the Escrow Agent (i) upon written joint instructions of both the Sellers’ Representative and the Buyer or (ii) a final and binding judgment of competent court instructing the Escrow Agent to release amounts on escrow.

EUR shall mean the single currency of participating member states of the European Union.

Excess Change of Control Payment shall have the meaning pursuant to Article 5.6.

Excess Company Third Party Expenses shall have the meaning pursuant to Article 5.6.

Excess Debt Payment shall have the meaning pursuant to Article 5.6.

Exchange Agent shall have the meaning pursuant to Article 3.4(a).

Financials shall have the meaning pursuant to Clause 6(a) of Annex 9.1.

Annex 1 to the Share Purchase Agreement re SVOX AG       7 | 14

First Tranche shall have the meaning pursuant to Article 3.2.1(a)(i).

Form 8-K shall have the meaning set forth in Article 4.1.

GAAP shall mean United States generally accepted accounting principles consistently applied.

German Financials shall have the meaning pursuant to Clause 6(a) of Annex 9.1.

Governmental Entity shall mean any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self regulatory organization, commission, tribunal or organization or any regulatory authorities, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing which has or claims to have competent jurisdiction over the relevant Persons or its business, property, assets or operations.

Group shall have the meaning pursuant to Preamble B.

Group Companies shall have the meaning pursuant to Preamble B.

Hazardous Materials means chemicals, pollutants, contaminants, wastes, toxic substances, radioactive and biological materials, asbestos-containing materials (ACM), hazardous substances, petroleum and petroleum products or any fraction thereof.

Indemnified Party shall have the meaning pursuant to Article 10.2.

Indemnifying Party shall have the meaning pursuant to Article 10.2.

In-Licenses shall have the meaning pursuant to Clause 13(h) of Annex 9.1.

Intellectual Property Rights shall mean all Swiss and foreign intellectual property rights, including, without limitation, rights arising from or in respect of the following: (i) statutory invention registrations, patent applications and issued or granted patents, utility model applications and issued or granted utility models, whether domestic or foreign, including continuations, continuations-in-part, divisionals, provisionals and renewals, and all reissues, re-examination and extensions thereof and any patent or utility model restoration or extension period granted by a Governmental Entity; (ii) the protection of proprietary and confidential

Annex 1 to the Share Purchase Agreement re SVOX AG       8 | 14

information, trade and industrial secrets, and know how; (iii) all copyrights, copyrights registrations and applications therefor and all other rights corresponding thereto; (iv) all rights in industrial designs and any registrations and applications therefor; (v) all rights in World Wide Web addresses, URL’s and domain names and applications and registrations therefor, all trade names, logos, common-law and other trademarks and service marks, trademark and service-mark registrations and applications therefor and all goodwill associated therewith; (vi) “moral” and “economic” rights; and (vii) any corresponding or equivalent rights to any of the foregoing.

IRC means the United States Internal Revenue Code of 1986, as amended.

Key Persons shall mean: Martin Reber, Eugen Stermetz, Udo Haiber and Marcel Riedi.

Law(s) shall mean all or any applicable law, regulation, directive, binding guideline or rule or decree, order or decision of any court or governmental authority (applicable in any jurisdiction and relating to any matter whatsoever).

Lease Agreements shall have the meaning pursuant to Clause 12(a) of Annex 9.1.

Leased Real Property shall have the meaning pursuant to Clause 12(a) of Annex 9.1.

Liabilities shall have the meaning pursuant to Clause 7 of Annex 9.1.

Lien shall mean any lien, charge, encumbrance, or security interest, including but not limited to interests arising from options, pledges, mortgages, indentures, security agreements, rights of first refusal or rights of pre-emption, irrespective of whether such Lien arises under any agreement or any other instrument, the mere operation of Laws or by means of a judgment, order or decree of any court, judicial or administrative authority.

Long Stop Date shall have the meaning set forth in Article 6.2.5(b).

Loss(es) shall mean any and all losses, damages, liabilities, penalties, judgments, settlements, fines, interest, costs and expenses, whether or not involving a Third Party Claim (including, without limitation, and to the extent legally permitted, the costs and expenses of any and all actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable

Annex 1 to the Share Purchase Agreement re SVOX AG       9 | 14

costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation, inquiry or defence thereof or the enforcement of rights hereunder as well as any Taxes levied), provided, however, that Losses shall not include any indirect or consequential damages or lost profits resulting from breaches of representations and warranties, it being understood that indirect or consequential damages and lost profits shall be included in the definition of Losses for breaches of covenants.

Majority Sellers shall mean the Persons defined as the Majority Sellers on the cover page to this Agreement.

Majority Shares shall have the meaning pursuant to Preamble A.

Material Adverse Effect shall mean an event, change or occurrence which, individually or together with any other event, change or occurrence, has a material adverse effect on the business, assets (whether tangible or intangible), financial condition, operations or capitalization of the Company and any Group Company, taken as a whole; provided that, in no event shall any of the following, alone or in combination with one another, be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or would reasonably be expected to be a Material Adverse Effect: (A) any effect resulting from changes or effects in general worldwide, Swiss, European Union or United States economic, capital market or political conditions (other than those that have had a disproportionate adverse effect relative to other industry participants on the Company), (B) any effect resulting from changes or effects generally affecting the industries or markets in which the Company operates (other than those that have had a disproportionate adverse effect relative to other industry participants on the Company), (C) any effect resulting from any act of war or terrorism (or, in each case, any escalation thereof) other than those that have had a disproportionate adverse effect relative to the other industry participants on the Company, (D) any changes in Laws, the general accounting principles applicable to the Group Companies or the interpretation thereof, (E) any effect resulting from specific actions taken at the specific direction or with the specific approval of Nuance after the date of this Agreement (as per Article 5.3.1), (F) any act or acts of nature, calamities, acts of war or terrorism, or national or international political or social conditions, (G) any one or more changes or effects that are attributable or related to the announcement of or pendency of the transactions contemplated by this Agreement, (H) any event being a result of the transactions contemplated by this Agreement or (I) any deterioration in bookings.

Annex 1 to the Share Purchase Agreement re SVOX AG       10 | 14

Material Contract shall have the meaning set forth in Clause 14(a) of Annex 9.1.

Merger Act shall mean the Swiss Federal Act on Merger, Demerger, Conversion and Transfer of Assets and Liabilities of July 1, 2004, as amended.

Merger Balance Sheet shall mean the audited balance sheet of the Company as of the last day of the first quarter 2011 (if the Closing takes place before or on 31 July 2011) or as of the last day of the second quarter 2011 (if the Closing takes place after 31 July 2011).

Minority Sellers shall mean the Persons defined as the Minority Sellers on the cover page to this Agreement.

Minority Shares shall have the meaning pursuant to Preamble A.

Notice of Breach shall have the meaning pursuant to Article 11.1(a).

Nuance shall mean both the Buyer and the Parent.

Open Source Software shall have the meaning pursuant to Clause 13(u) of Annex 9.1.

Parent shall mean the legal entity defined as the Parent on the cover page to this Agreement.

Parent Common Stock shall mean the common stock, with currently a par value of $0.001 per share, of the Parent.

Party shall mean either the Sellers, the Sellers’ Representative, the Buyer or the Parent, as the case may be, and Parties shall refer to the Sellers, the Sellers’ Representative, the Buyer and the Parent collectively.

Permits shall mean licenses and permits that are necessary for the carrying out of the business and operations of the Group as they are carried out at the date hereof.

Permitted Liens shall have the meaning pursuant to Clause 12(c) of Annex 9.1

Person shall mean any natural person or a general or limited partnership, a corporation, a business trust, a limited liability company, a trust, an unincorporated organization doing business, a government or any department or agency thereof,

Annex 1 to the Share Purchase Agreement re SVOX AG       11 | 14

a joint venture or any other person or entity doing business.

Projected Benefit Obligations shall mean the respective actuarial value of liabilities accrued under the pension plans measured at the effective date on an ongoing basis following the projected unit credit valuation method and actuarial assumptions and methodology used as at December 31, 2010 in the Financials.

Pro Rata Portion shall mean, with respect to each Seller, an amount equal to the quotient obtained by dividing (i) the portion of the Total Consideration that each Seller is entitled to receive with respect to Shares held by such holder by (ii) Total Consideration that all Sellers are entitled to receive with respect to Shares held by such holders.

PTO shall have the meaning pursuant to Clause 13(b) of Annex 9.1.

Required Financials mean (a) the audited consolidated balance sheets for the Group for the fiscal years ended December 31, 2010 and 2009 and the consolidated statements of income, cash flow and stockholders’ equity for the twelve (12) month periods ended December 31, 2010 and 2009, and the associated footnotes to the consolidated financial statements, in each case (1) prepared in accordance with GAAP and Regulation S-X promulgated under the United States Securities Exchange Act of 1934, as amended, and (2) audited by the Group’s independent accountants in accordance with U.S. Generally Accepted Accounting Standards and (b) the unaudited consolidated balance sheet as of the last day of the first quarter 2011 (if the Closing takes place before or on 31 July 2011) or as of the last day of the second quarter 2011 (if the Closing takes place after 31 July 2011), and the related unaudited statements of income, cash flow, and stockholders’ equity and related consolidated notes to the financial statements, for the periods then ended, in each case (1) prepared in accordance with GAAP and Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended and (2) reviewed by the Group’s independent accountants in accordance with Statement of Auditing Standards No. 100.

Registered Intellectual Property Rights shall have the meaning pursuant to Clause 13(a) of Annex 9.1.

SEC shall mean the United States Securities and Exchange Commission.

Second Tranche shall have the meaning pursuant to Article 3.2.1(a)(ii).

Second Tranche Payment Date shall have the meaning pursuant to Article 3.2.3(a).

Annex 1 to the Share Purchase Agreement re SVOX AG       12 | 14

Securities Act shall mean the United States Securities Act of 1933, as amended.

Sellers Third Party Expenses shall mean the following Third Party Expenses incurred by the Sellers on or prior to the Closing Date: (i) any payments to Ridgecrest Capital Partners pursuant to Articles 6.3.3 in connection with the Acquisition and the transactions contemplated by this Agreement; (ii) an amount equal to EUR 4,000,000 paid to the Broker pursuant to Articles 6.3.3 in connection with the Acquisition and the transactions contemplated by this Agreement for services rendered pursuant to that the Broker Agreement; and (iii) any payments to Walder Wyss Ltd. for services rendered on behalf of the Sellers (but not the Company) in connection with the Acquisition and the transactions contemplated by this Agreement. Any payments of Sellers Third Party Expenses pursuant to Article 6.3.3 shall be deducted from the First Tranche, the Second Tranche or the Third Tranche, as applicable, in accordance with Articles 3.2.2, 3.2.3 and 3.2.4.

Sellers shall mean the Persons defined as the Sellers on the cover page to this Agreement.

Sellers’ Representative shall mean the Persons or entity defined as the Sellers’ Representative on the cover page to this Agreement.

Selling Stockholder Questionnaire shall have the meaning set forth in Article 4.4(b)(i).

Shares shall have the meaning pursuant to Preamble A.

Shrink-Wrap Code shall have the meaning pursuant to Clause 13(a) of Annex 9.1.

Siemens shall mean Siemens Aktiengesellschaft, Wittelsbacherplatz 2, 80333 Munich, Germany.

Siemens Abandoned IP shall have the meaning pursuant to Clause 13(c) of Annex 9.1.

Siemens APA shall mean the “Asset Sale and Purchase Agreement regarding the sale and purchase of the Siemens Professional Speech Processing Business” of 21 November 2008 between Siemens and the Company, including the

Annex 1 to the Share Purchase Agreement re SVOX AG       13 | 14

“First Amendment to the 21 November 2008 Asset Sale and Purchase Agreement of 10 November 2009 and 1 December 2009 between Siemens and SVOX Germany and the “Second Amendment to the 21 November 2008 Asset Sale and Purchase Agreement of 11 May 2011 between Siemens, the Company, the Parent, Nuance Communications Germany GmbH and SVOX Germany.

Siemens APA Closing Date shall have the meaning as set out for the term “Closing Date” in the Siemens APA.

Siemens Licensed IP shall have the meaning as set out for the term “Licensed IP” in the Siemens APA.

Siemens Payment shall mean the payment in the amount of EUR 4,000,000 plus VAT (if any) owned by the Company to Siemens pursuant to the Second Amendment to the Siemens APA.

Siemens Speech Business shall have the meaning as set out for the term “Business” in the Siemens APA.

Siemens Speech Business Field shall have the meaning as set out for the term “Business Field” in the Siemens APA.

Siemens Transferred Licensing-in Agreement shall have the meaning as set out for the term “Transferred Licensing-in Agreement” in the Siemens APA.

Stockholder Questionnaire shall have the meaning set forth in Article 4.4(b)(i).

Stockholder Registration Statement shall have the meaning set forth in Article 4.1.

Subsidiary shall have the meaning pursuant to Preamble B.

Subsidiary Shares shall have the meaning pursuant to Preamble B.

SVOX Germany shall mean SVOX Deutschland GmbH, Balanstra. 73, Gebaeude 21, 81541 Munich, Germany.

SVOX Option Plans shall have the meaning pursuant to Article 5.5.

Swiss Financials shall have the meaning pursuant to Clause 6(a) of Annex 9.1.

Annex 1 to the Share Purchase Agreement re SVOX AG       14 | 14

Taxes shall mean all tax liabilities, including income taxes (personal or corporate), capital taxes, stamp duties (both on the issuance and on the transfer or securities), withholding taxes, value added taxes, real estate gains taxes, real estate transfer taxes, property and land taxes, business taxes, customs duties, payroll taxes, social security contributions or payments of equivalent nature and all other taxes, duties, levies or imposts payable to any competent taxing authority in any jurisdiction, as well as any related interest, penalties, costs and expenses.

Technology shall have the meaning pursuant to Clause 13(a) of Annex 9.1.

Third Party Claim shall have the meaning pursuant to Article 11.1(a).

Third Party Expenses shall have the meaning pursuant to Article 5.6.

Third Tranche shall have the meaning pursuant to Article 3.2.1(a)(iii).

Third Tranche Payment Date shall have the meaning pursuant to Article 3.2.4(a).

Threshold Amount shall have the meaning pursuant to Article 11.5(b).

Total Consideration shall have the meaning pursuant to Article 3.2.1(a)(iii)

Update Schedule shall have the meaning pursuant to Article 9.1(d).

VAT shall mean value added tax.

Annex 2(a) to the Share Purchase Agreement re SVOX AG       1 | 1

Annex 2(a)

Form of Accession Confirmation

To: [Buyer and Parent]

Copy to: [Sellers’ Representative]

Dear Sirs,

I refer to the share purchase agreement entered into between and executed by Nuance Communications, Inc. as parent, Ruetli Holding Corporation as buyer, various shareholders of Svox AG, Switzerland as majority shareholders, and smac | partners GmbH as sellers’ representative in relation to the sale and purchase of shares in Svox AG, Switzerland, dated June 3, 2011 (hereinafter the Agreement), as attached to this letter. This letter constitutes an Accession Confirmation as per clause 2 of the Agreement.

Unless explicitly defined otherwise herein, capitalized terms used herein shall have the meaning ascribed to them in the Agreement.

I, [...], the holder of [[...] common shares / [...] preferred shares category B [and] [...] preferred shares category C], agree with effect as of the date of this Accession Confirmation to become a party to the Agreement as a Minority Seller and a Seller and to be bound by all the terms and conditions of the Agreement and to be subject to all obligations thereunder, in particular, without limitation, to sell to the Buyer the Shares currently held by me.

This Accession Letter shall be governed by and construed in accordance with the substantive laws of Switzerland.

All disputes arising out of or in connection with this Accession Letter, including disputes regarding its binding effect, amendment and termination, shall be referred exclusively to the courts of Zurich 1. Subject matter jurisdiction shall be with the Commercial Court of Zurich (Handelsgericht des Kantons Zürich).

Yours faithfully,

[...]

Annex 5.3.1 to the Share Purchase Agreement re SVOX AG       1 | 4

Annex 5.3.1

Restricted Actions

Unless otherwise expressly permitted by the terms of the Agreement, from and including the date of the Agreement to the earlier of the Closing or the termination of the Agreement, and to the extent permissible under applicable Laws, each Seller agrees not to, and agrees to procure that none of the Group Company shall, take or agree to take any of the following actions without the prior written consent of the Parent, which consent shall not be unreasonably withheld; provided, however, that (A) the consent of the Parent shall be deemed to have been given if the Parent does not respond within five (5) Business Days upon receipt by the Parent of the respective consent request, it being understood that the Parent will have been deemed to respond if it (1) approves a consent request, (2) denies a consent request or (3) requests additional information in order to decide whether to approve or deny a consent request (and upon receipt of such additional information, the consent of the Parent shall be deemed to have been given if the Parent does not respond within two (2) Business Days) and (B) (1) if consent of an action is required pursuant to this Article 5.3.1 and it appears to the chairman of the Company (or his deputy) that such action requires immediate attention and answer of the Parent or (2) if the Parent denies a consent request and the chairman of the Company (or his deputy) wishes to discuss such denial, the Parent and the chairman of the Company (or his deputy) shall use their reasonable efforts to discuss the relevant action by phone or by any other means of communication as soon as practicable, but in no event later than two (2) Business Days upon receipt by the Parent of a request for discussion:

(a)	do anything that could materially interfere with, inhibit or impair the consummation of the transactions contemplated under this Agreement;
(b)	make any change, or make any declaration to make a change, in the terms of employment of any director, officer, employee, consultant, freelancer and|or advisor of any of the Group Companies, including, but not limited to increases in salary or other compensation, severance payments, termination payments, bonus or other additional salary other than in accordance with, or by implementing change of, existing agreements, shop agreements, collective bargaining arrangements and|or conclude new employment agreements with newly hired persons;
(c)	make any material variation to conclude or terminate any shop agreements with the competent works council and|or collective bargaining arrangements and|or become a member of an employer’s association;

Annex 5.3.1 to the Share Purchase Agreement re SVOX AG       2 | 4

(d)	form, enter into, vary, terminate or withdraw from any partnership, consortium, joint venture or other incorporated association;
(e)	alter or amend in any manner the articles of incorporation or organizational regulations of any of the Group Companies;
(f)	pay, pre-pay, delay or postpone the payment of invoices in excess of €10’000 or otherwise inconsistent with prior business practice;
(g)	issue or create any obligation to issue any shares or equity-linked securities;
(h)	transfer any shares that are directly or indirectly held by any Group Company to a third party or transfer any assets with a value over €10’000 of any Group Company to a third party;
(i)	increase or reduce or otherwise change the share capital or capital structure, or grant any option or conversion rights on the equity of any of the Group Companies;
(j)	enter into, or increase or extend any liability under, any material guarantee or indemnity;
(k)	make, increase or extend any loan or advance or grant any credit to any third Person or incur any indebtedness or other liability in excess of EUR 10,000 other than in the ordinary course of business or to Group Companies, but in any event not in excess of EUR 25,000 in the aggregate;
(l)	grant, create or allow to be created any Lien over any of its assets other than charges arising by operation of Law or other Permitted Liens;
(m)	borrow any money from or incur any indebtedness or other liability against a third party in excess of EUR 10,000 in the aggregate;
(n)	incorporate or liquidate any Group Company or effect any insolvency proceedings, mergers, acquisitions, reorganization and consolidation involving or with respect to any such Group Company, unless, with respect to insolvency proceedings, such event is required by mandatory Law;
(o)	initiate, discontinue or settle any litigation or arbitration proceedings where the settlement amount to be paid by the Company exceeds EUR 10,000 per item or €25,000 in aggregate;

Annex 5.3.1 to the Share Purchase Agreement re SVOX AG       3 | 4

(p)	declare, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of the Shares or to any of the Group Companies’ capital stock;
(q)	enter into, amend, modify or terminate or consent to the termination of any shareholders’ agreement, license, distribution or supply agreements, or amend, waive, modify, terminate or consent to the termination of any of the Group Companies’ rights thereunder;
(r)	pay, discharge or satisfy any claim, liability or obligation other than in the ordinary course of business;
(s)	amend or vary the rates of interest applicable to the inter-company loans other than pursuant to pre-existing contractual arrangements;
(t)	enter or amend into any arrangement concerning or affecting the Intellectual Property Rights other than arrangements with customers in the ordinary course of business, enter into or amend any material agreement that cannot be terminated in accordance with its terms (without any compensation being payable) on less than six months’ notice or terminate or vary the terms of any such existing material agreement;
(u)	change the accounting procedures, principles or practice of the Group Companies in effect at the date of this Agreement;
(v)	cancel, compromise, waive, or release any right or claim (or series of related rights and claims);
(w)	make or change any material Tax election, adopt or change any Tax accounting method, enter into any closing agreement with respect to Taxes, settle or compromise any Tax claim or assessment, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment or file any material tax return or any amended tax return unless a copy of such tax return has been delivered to the Parent for review a reasonable time prior to filing and the Parent has approved such tax return in writing;
(x)	revalue any of its assets (whether tangible or intangible), including without limitation writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business consistent with past practice;

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(y)	sell, lease, license or otherwise dispose of or grant any security interest in any of its properties or assets (whether tangible or intangible), including without limitation the sale of any Accounts Receivable of the Company or any Subsidiary;
(z)	acquire or agree to acquire by merging or consolidating with, or by purchasing any assets or equity securities of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of the Company or any Subsidiary;
(aa)	hire, promote, demote or terminate any employees, or encourage any employees to resign from the Company or any Subsidiary;
(bb)	pay bonuses to any employee (other than to agree to pay or pay to employees any Change of Control Payment on Closing);
(cc)	make any representations or issue any communications (including electronic communications) to employees in their capacity as such regarding any benefits of the transactions contemplated by this Agreement (other than communicate to employees the amount of any Change of Control Payment paid on Closing), including any representations regarding offers of employment from the Parent or the terms thereof;
(dd)	cancel, amend or renew any material insurance policy;
(ee)	enter into, amend or modify any agreement or arrangement requiring future performance obligations of a Group Company costing EUR 10,000 per item or €25,000 in aggregate;
(ff)	make any expenditures or enter into any commitment or transaction exceeding EUR 10,000 individually or EUR 250,000 in the aggregate (other than in the ordinary course of business consistent with past practice);
(gg)	agree to do any of the items listed above.

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Annex 9.1

Representations and Warranties of the Sellers

Where any statement in the following representations and warranties is qualified by the expression «to the knowledge» or any similar expression, the Seller shall be deemed to have knowledge of anything of which any of the Key Persons or Dietrich Ulmer or Gunter Hauptmann has knowledge, or ought reasonably to have knowledge given their particular position and responsibilities.

1.

Organization of the Company and Subsidiaries

The Company is a corporation duly organized and validly existing under the Laws of Switzerland. Each Subsidiary is a corporation duly organized, validly existing and in good standing (in which such qualification is required by Law) under the Laws of the jurisdiction set forth in Annex 9.1.1(1). The Company and each Subsidiary has the corporate power to own its properties and to carry on its business as currently conducted. The Company and each Subsidiary is duly qualified or licensed to do business and in good standing as a foreign corporation in each jurisdiction in which such qualification or licensure is required by Law. The Company and each Subsidiary has made available copy of its certificate of incorporation and bylaws, each as amended to date and in full force and effect on the date hereof (collectively, the Charter Documents), to the Parent. Annex 9.1.1 (2) lists the directors and officers of the Company and each Subsidiary as of the date hereof. The operations now being conducted by the Company and each Subsidiary are not now and have never been conducted by the Company or any Subsidiary under any other name except as set forth in Annex 9.1.1(3). Annex 9.1.1(4) lists (a) each jurisdiction in which the Company and each Subsidiary is qualified or licensed to do business and (b) every state or foreign jurisdiction in which the Company and each Subsidiary has employees or facilities.

2. Company Capital Structure

(a) The share capital of the Company consists of 129,540 registered common shares, CHF 1.00 par value per share, 74,025 registered series B preferred shares, CHF 1.00 par value per share, and 143,457 registered series C preferred shares, CHF 1.00 par value per share. As of the date hereof, the capitalization of the Company is as set forth in Annex 9.1.2(a)(1). The Shares are held by the Persons and in the numbers of Shares set forth in Annex 9.1.2(a)(1). All outstanding Shares are validly issued and fully paid and, except as set forth in Annex 9.1.2(a)(2), are not subject to preemptive

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	rights created by statute, the Charter Documents of the Company, or any agreement to which the Company or a Seller is a party or by which it is bound, and have been issued in compliance with all applicable Laws. The Company has not, and will not have, suffered or incurred any Loss relating to or arising out of the issuance or repurchase of any Shares, or out of any agreements or arrangements relating thereto (including any amendment of the terms of any such agreement or arrangement). There are no declared or accrued but unpaid dividends with respect to any Shares. The Company has no share capital other than the Company Shares.
(b)	Except as set forth in Annex 9.1.2(b)(1), the Company has never adopted, sponsored or maintained any stock option plan or any other plan or agreement providing for equity compensation to any Person. The Company has reserved 20,400 Company Shares under the Company’s conditional share capital for issuance to employees and directors of, and consultants to, the Company upon the issuance of stock or the exercise of options granted under any plan, agreement or arrangement (whether written or oral, formal or informal). Except for the Company Options set forth in Annex 9.1.2(b)(2) (such schedule to contain, for each holder of Company Options, the name of such holder, and the number of Shares issuable upon exercise of such Company Options held by such holder), there are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which the Company is a party or by which the Company is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any Shares or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. Except as contemplated hereby or as set forth in Annex 9.1.2(b)(3), there are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the Company. Except as contemplated hereby or as set forth in Annex 9.1.2(b)(4), there are no voting trusts, proxies, or other agreements or understandings with respect to the voting securities of the Company. Except as set forth in Annex 9.1.2(b)(5), there are no agreements to which the Company is a party relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any Shares.
(c)	Upon Closing, there will be no Company Options outstanding, except for the Company Options held by holders who will have not executed a letter in the form as set forth in Annex 5.5. As of the Closing, Annex 9.1.2(c) lists all

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Company Options held by holders who have not executed a letter in the form as set forth in Annex 5.5 (such schedule to contain, for each holder of Company Options, the name and address of such holder, the number of Shares issuable upon exercise of such Company Options held by such holder, the vesting schedule and exercise price of such Company Options, the dates on which such Company Options were granted and will expire, and whether any Company Options are intended to be incentive stock options). Buyer will be the sole legal and beneficial holder of any and all rights to acquire or receive any Company Shares, whether or not such Company Shares are outstanding, except for the Company Shares underlying the Company Options held by holders who will have not executed a letter in the form as set forth in Annex 5.5.

3.

Subsidiaries

Annex B lists each of the Subsidiaries, the jurisdiction of incorporation of each such Subsidiary, and the Company’s equity interest therein. Each Subsidiary is wholly-owned by the Company. There are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which a Subsidiary is a party or by which a Subsidiary is bound obligating such Subsidiary to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of its capital stock or obligating such Subsidiary to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to any Subsidiary. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting securities of any Subsidiary. There are no agreements to which any Subsidiary is a party relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any share capital of a Subsidiary. Except as set forth in Annex 9.1.3, neither the Company nor any of the Subsidiaries has agreed, is obligated to make, or is bound by any Contract under which it may become obligated to make any future investment in, or capital contribution to, any other Person. Except as set forth in Annex B, neither the Company nor any Subsidiary directly or indirectly owns any equity or similar interest in or any interest convertible, exchangeable or exercisable for, any equity or similar interest in, any Person.

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4.

Authority

Each Seller has all requisite power and authority to enter into this Agreement and any related agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any related agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of each Seller and no further action is required on the part of each Seller to authorize the Agreement and any related agreements to which it is a party and the transactions contemplated hereby and thereby. The Company and each Subsidiary has all requisite power and authority to enter into any agreements related to this Agreement to which it is a party and to consummate the transactions contemplated thereby. The execution and delivery of such related agreements to which the Company or Subsidiary is a party and the consummation of the transactions contemplated thereby have been or will be, as of the Closing, duly authorized by all necessary corporate action on the part of the Company or the applicable Subsidiary and no further action is required on the part of the Company or such Subsidiary to authorize such related agreements and the transactions contemplated thereby. This Agreement and any related agreement to which a Seller, the Company or a Subsidiary is a party has been duly executed and delivered by such Seller, the Company or such Subsidiary and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of such Seller, the Company or such Subsidiary enforceable against it in accordance with their respective terms, except as such enforceability may be subject to the Laws of general application relating to bankruptcy, insolvency, and the relief of debtors and rules of law governing specific performance, injunctive relief, or other equitable remedies.

5.

No Conflict; Consents

Except as set forth on Annex 9.1.5(1), the execution and delivery by any Seller of this Agreement and any related agreement to which a Seller is a party, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (any such event, a Conflict) (a) any provision of the charter documents or any similar documents, (b) any Contract, or (c) any material judgment, order, decree, statute, Law, ordinance, rule or regulation, as applicable to such Seller or any of its properties (whether tangible or intangible) or assets. Annex 9.1.5(2) sets forth all

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necessary consents, waivers and approvals of parties to any Contracts that are required thereunder in connection with the Acquisition, or for any such Contract to remain in full force and effect without limitation, modification or alteration after the Closing Date so as to preserve all rights of, and benefits to, the Company or any Subsidiary under such Contracts from and after the Closing Date. Following the Closing Date, the Company or Subsidiary (as applicable) will be permitted to exercise all of its rights under such Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company or such Subsidiary would otherwise be required to pay pursuant to the terms of such Contracts had the transactions contemplated by this Agreement not occurred.

No consent, notice, waiver, approval, order or authorization of, or registration, declaration or filing with any Governmental Entity, is required by, or with respect to, the Company or any Subsidiary in connection with the execution and delivery of this Agreement and any related agreement or the consummation of the transactions contemplated hereby and thereby, except for those as set forth in Annex 9.1.5(3).

6. Company Financial Statements

(a)

Annex 9.1.6(a) sets forth (i) SVOX GmbH statutory balance sheets as of December 31, 2010 and 2009 (the German Financials) and (ii) the Company’s audited statutory and consolidated balance sheets as of December 31, 2010 and 2009, and the audited consolidated statements of income, cash flow and stockholders’ equity for the twelve (12) month periods ended December 31, 2010 and 2009 (the Swiss Financials) (the German Financials together with the Swiss Financials, the Financials) The Financials are true and correct in all material respects (taking into account the rules of the Swiss Code of Obligations or the German commercial code (Handelsgesetzbuch) and have been prepared in accordance with the rules of the Swiss Code of Obligations or the German commercial code (Handelsgesetzbuch), respectively, applied on a consistent basis throughout the periods indicated and consistent with each other. The Financials present fairly the Company’s consolidated financial condition, operating results and cash flows as of the dates and during the periods indicated therein.

(b)

The Required Financials provided by the Company pursuant to Article 6.2.2(i), when delivered, will (i) have been derived from the books and records of the Group, (ii) be true and correct in all material respects and (iii) fairly present the consolidated balance sheet, results of operations,

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	cash flows and stockholders’ equity of the Group at the dates and for the periods indicated in accordance with GAAP and Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended, in each case, applied on a consistent basis throughout the periods indicated and consistent with each other, except as indicated in the footnotes thereto.
(c)	The Merger Balance Sheet provided by the Company pursuant to Article 6.2.2((i), when delivered, will (i) have been derived from the books and records of the Group, and (ii) be true and correct in all material respects.
(d)	The Accounts Receivable of the Company and each Subsidiary have or will have arisen from bona fide arm’s length transactions in the ordinary course of business. Except as set forth in Annex 9.1.6(d)(1), the Accounts Receivable of the Company and each Subsidiary are fully collectible in the ordinary course of business. There has not been any material adverse change in the collectability of such Accounts Receivable during the past twelve (12) months. Annex 9.1.6(d)(2) sets forth a list of all such Accounts Receivable that are more than thirty days past due as of the date of this Agreement, and of all such Accounts Receivable classified as doubtful accounts. Neither the Company nor any Subsidiary has any Accounts Receivable from any Person which is an affiliate of the Company or any Subsidiary or from any equity holder, director, officer or employee of the Company or any Subsidiary or any affiliates thereof, other than intercompany balances in the ordinary course of business. All Accounts Payable of the Company and each Subsidiary have arisen from bona fide arm’s length transactions in the ordinary course of business. Since the Balance Sheet Date, the Company and each Subsidiary has paid its Accounts Payable in the ordinary course of its business. Except as set forth in Annex 9.1.6(d)(2) and other than payments relating to employment matters and the transactions completed in the Agreement, as of the date hereof, neither the Company nor any Subsidiary have any Accounts Payable to any Person which is an affiliate of the Company or any Subsidiary or to any equity holder, director, officer or employee of the Company or any Subsidiary or any affiliates thereof.
(e)	Except as set forth in Annex 9.1.6(e), neither the Company nor any Subsidiary has received any pre-paid royalties from its customers under an understanding permitting a credit at a later date.
(f)	At the Closing Date, no Debt will be outstanding and due by any Group Company other than the recurring credit facility with Neue Aargauer Bank.

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7.

No Undisclosed Liabilities

Neither the Company nor any Subsidiary has any liability, indebtedness, obligation, expense, claim, deficiency, guarantee or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other (whether or not required to be reflected in financial statements in accordance with the applicable accounting principles) (the Liabilities), which individually or in the aggregate (a) has not been reflected in the Financials, or (b) has not arisen in the ordinary course of business consistent with past practices since the Balance Sheet Date in an amount that does not exceed EUR 25,000 in the aggregate. Neither the Company’s nor any Subsidiary has any Debt outstanding on the date hereof and the Closing Date, other than the recurring credit facility with Neue Aargauer Bank.

8. Internal Controls The Company and each Subsidiary maintain books and records accurately reflecting their assets and liabilities in all material respects and maintain proper and adequate internal accounting controls which provide reasonable assurance.

9. No Changes Since December 31, 2010, except as set forth in Annex 9.1.9, there has not been, occurred or arisen any:

(a)	transaction by the Company or any Subsidiary except in the ordinary course of business as conducted on that date and consistent with past practices;
(b)	amendments or changes to the Charter Documents of the Company or any Subsidiary other than as contemplated by this Agreement;
(c)	capital expenditure or commitment by the Company or any Subsidiary exceeding EUR 25,000 individually or EUR 100,000 in the aggregate;
(d)	payment, discharge or satisfaction, in any amount in excess of EUR 25,000 in any one case, or EUR 100,000 in the aggregate, of any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise of the Company or any Subsidiary), other than payments, discharges or satisfactions in the ordinary course of business, consistent with past practices, or liabilities reflected or reserved against in the Financials;

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(e)	destruction of, damage to, or loss of any material assets (whether tangible or intangible), material business or material customer of the Company or any Subsidiary (whether or not covered by insurance);
(f)	material employment dispute, including but not limited to, claims or matters raised by any individuals or any workers’ representative organization, bargaining unit or union regarding labor trouble or claim of wrongful discharge or other unlawful employment or labor practice or action with respect to the Company or any Subsidiary;
(g)	any change in the terms of employment, in particular in respect of salary and/or other compensation of any director, officer, employee and/or consultant of any of the Group Companies or its Affiliates;
(h)	change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by the Company or any Subsidiary other than as required by the Swiss Code of Obligations or, with respect to the German Subsidiary, the German commercial code (Handelsgesetzbuch);
(i)	adoption of or change in any material Tax election or any Tax accounting method, entering into any closing agreement with respect to Taxes, settlement or compromise of any Tax claim or assessment, or extension or waiver of the limitation period applicable to any Tax claim or assessment by the Company or any Subsidiary;
(j)	revaluation by the Company or any Subsidiary of any of its assets (whether tangible or intangible), including writing down the value of inventory or writing off notes or accounts receivable;
(k)	declaration, setting aside or payment of a dividend or other distribution (whether in cash, stock or property) in respect of any Shares, or any split, combination or reclassification in respect of any Shares, or any issuance or authorization of any issuance of any other securities in respect of, in lieu of or in substitution for Shares, or any direct or indirect repurchase, redemption, or other acquisition by the Company of any Shares (or options, warrants or other rights convertible into, exercisable or exchangeable therefor);
(l)	increase in the salary or other compensation payable or to become payable by the Company or any Subsidiary to any of its respective officers, directors, employees or consultants, or the declaration, payment or commitment

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	Or obligation of any kind for the payment (whether in cash or equity) by the Company or any Subsidiary of a severance payment, termination payment, bonus or other additional salary or compensation to any such Person;
(m)	agreement, Contract, covenant, instrument, lease, license or commitment to which the Company or any Subsidiary is a party or by which it or any of its assets (whether tangible or intangible) are bound or any termination, extension, amendment or modification of the terms of any agreement, Contract, covenant, instrument, lease, license or commitment to which the Company or any Subsidiary is a party or by which it or any of its assets are bound, other than agreements, Contracts, covenants, instruments, leases, licenses or commitments entered into in the ordinary course of business, consistent with past practice;
(n)	sale, lease, license or other disposition of any of the assets (whether tangible or intangible) or properties of the Company or any Subsidiary outside of the ordinary course of business, including, but not limited to, the sale of any Accounts Receivable of the Company or any Subsidiary, or any creation of any security interest in such assets or properties;
(o)	loan by the Company or any Subsidiary to any Person, or purchase by the Company or any Subsidiary of any debt securities of any Person;
(p)	incurrence by the Company or any Subsidiary of any financial indebtedness, amendment of the terms of any outstanding loan agreement, guaranteeing by the Company or any Subsidiary of any financial indebtedness, issuance or sale of any debt securities of the Company or any Subsidiary or guaranteeing of any debt securities of others;
(q)	waiver or release of any right or claim of the Company or any Subsidiary, including any write-off or other compromise of any Account Receivable of the Company or any Subsidiary;
(r)	commencement or settlement of any lawsuit by the Company or any Subsidiary, the commencement, settlement, notice or, to the knowledge of any Seller or the Company, threat of any lawsuit or proceeding or other investigation against the Company or any Subsidiary or its affairs, or any reasonable basis for any of the foregoing;
(s)	notice of any claim or potential claim of ownership, interest or right by any Person other than the Company or any Subsidiary of the Company Intellectual

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	Property (as defined in Clause 13 of this Annex 9.1) or of infringement by the Company or any Subsidiary of any other Person’s Intellectual Property Rights (as defined in Clause 13 of this Annex 9.1);
(t)	issuance or sale, or Contract to issue or sell, by the Company of any Company Shares or Company Shares, except for issuances of any shares of the Company upon the exercise of Company Options issued under the SVOX Option Plans;
(u)	(i) except standard end user licenses entered into in the ordinary course of business, consistent with past practice, sale or license of any Company Intellectual Property or execution, modification or amendment of any Contract with respect to the Company Intellectual Property with any Person or with respect to the Intellectual Property Rights of any Person, (ii) except in the ordinary course of business, consistent with past practice, purchase or license of any Intellectual Property Rights or execution, modification or amendment of any Contract with respect to the Intellectual Property Rights of any Person, (iii) Contract or material modification or amendment of an existing Contract with respect to the development of any Technology or Intellectual Property Rights with a third party, or (iv) material change in pricing or royalties set or charged by the Company or any Subsidiary to its customers or licensees or in pricing or royalties set or charged by Persons who have licensed Technology or Intellectual Property Rights to the Company or any Subsidiary;
(v)	material Contract or material modification to any Contract pursuant to which any other party was granted marketing, distribution, development, manufacturing or similar rights of any type or scope with respect to any product, service or technology of the Company or any Subsidiary;
(w)	event or condition of any character that has had or is reasonably likely to have a Material Adverse Effect;
(x)	Contract, lease, license, sublease or other occupancy of any Leased Real Property (as defined in Clause 12 of this Annex 9.1) by the Company or any Subsidiary; or
(y)	agreement by the Company or any Subsidiary, or any officer or employees on behalf of the Company or any Subsidiary, to do any of the things described in the preceding clauses (a) through (x) of this Clause 9 of this Annex 9.1 (other than negotiations with Nuance and its representatives re

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garding the transactions contemplated by this Agreement and any related agreements).

10. Taxes

(a) Except as set forth in Annex 9.1.10(a), any and all liability for Taxes of the Group or a Group Company (or any affiliated group of which any Group Company has ever been a member on or prior to the Balance Sheet Date) for any taxable period ending on or before the Balance Sheet Date are (x) fully paid on or before the Closing Date, or (y) fully provided for in the audited consolidated statements of the Company as of the Balance Sheet Date, including:

(i)	any liability for Taxes of the Group or a Group Company arising out of any act, omission, event or transaction occurring during any taxable period ending on or before the Balance Sheet Date;
(ii)	any liability for Taxes of the Group or a Group Company arising in relation to capital, equity, income, profits or gains earned, accrued or received during any taxable period ending on or before the Balance Sheet Date; and
(iii)	any liability for Taxes of another Person resulting from being included in any consolidated, combined or group Tax Return of a Group Company during any taxable period ending on or before the Balance Sheet Date.

(b)

Except as set forth in Annex 9.1.10(b)(1), all tax returns, including all of their enclosures, required to be filed prior to the Closing by or with respect to Taxes payable or reimbursable by the Group Companies have been filed in a timely manner. Except as set forth in Annex 9.1.10(b)(1), all such tax returns (i) have been prepared in the manner required by applicable Law, (ii) are true, correct and complete in all material respects, (iii) accurately reflect the liability for Taxes of the Group Companies and (iv) accurately reflect the amount of tax losses carried forward which can be set off against profits. Except as set forth in Annex 9.1.10(b)(2), all Taxes shown to be due on such tax returns on or prior to Closing Date have been timely paid or fully reserved in the Financials.

(c)

None of the Group Companies is a party to any Action for non-payment of Taxes, nor has received written notice from such body of any claim for such non-payment of Taxes, and no written notice or other communication of any tax audit by any taxing authority has been received and to the

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	knowledge of any Seller or the Company, no tax return of any of the Group Companies is currently under tax audit. None of the Group Companies is a party to any agreement (or any other legal form) for the assessment of payment of Taxes and none of the Group Companies is liable to any Taxes as result of any agreement (or any other legal form) for the assessment or payment of Taxes. No Group Company has any outstanding obligations under any settlement agreements entered into with Tax authorities.
(d)	All records which any Group Company is required to keep for tax purposes or which would be needed to substantiate any claim made or position taken in relation to Taxes by the relevant Group Company have been duly kept and are kept and are available for inspection at the premises of the Group Companies.
(e)	The Company and each Subsidiary are in compliance in all material respects with all applicable transfer pricing Laws, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology of the Company and each Subsidiary. The prices for any property or services (or for the use of any property) provided by or to the Company or any Subsidiary are arm’s length prices for purposes of the applicable transfer pricing Laws.
(f)	No Group Company is treated for any Tax purposes as resident in a country other than the country of its incorporation and except as set forth in Annex 9.1.10(f), no Group Company has a branch, agency or permanent establishment in a country other than the country of its incorporation.
(g)	All formal or informal beneficial concessions and arrangements with any tax authority shall survive the Closing Date and shall not be affected by execution of this Agreement.
(h)	No agreements, transactions or arrangements involving Group Companies have taken place or are in existence which are such that they could be challenged by a tax authority on the basis of any provision, regulations or general tax concept relating to transfer pricing or constructive dividends. Any provision, regulation or general tax concept relating to the documentation, reporting, analysing, filing, justifying of all agreements, transactions or arrangements involving the members of the Group Companies are satisfied.

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(i)	There are no outstanding Tax liabilities or exposures under previous acquisition agreements relating to the Group Companies or their former Affiliates.
(j)	All Group Companies comply with debt/equity rules or similar rules and relief for interest paid, accrued or imputed, will not be disallowed under these rules.

11. Restrictions on Business Activities

Except as set forth in Annex 9.1.11, there is no agreement (non-competition or otherwise), commitment, judgment, injunction, order or decree to which the Company or any Subsidiary is a party or otherwise binding upon the Company or any Subsidiary which has or may reasonably be expected to have the effect of prohibiting or impairing any business practice of the Company or any Subsidiary, any acquisition of property (tangible or intangible) by the Company or any Subsidiary, the conduct of business by the Company or any Subsidiary, or otherwise limiting the freedom of the Company or any Subsidiary to engage in any line of business or to compete with any Person. Without limiting the generality of the foregoing, and except as set forth in Annex 9.1.11, neither the Company nor any Subsidiary has entered into any agreement under which the Company or any Subsidiary is restricted from selling, licensing, manufacturing or otherwise distributing any of its technology or products or from providing services to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of the market.

12. Title to Properties; Absence of Liens and Encumbrances

(a) Neither the Company nor any Subsidiary owns any real property, nor has the Company or any Subsidiary ever owned any real property. Annex 9.1.12(a) sets forth a list of all real property currently leased, subleased or licensed by or from the Company or any Subsidiary or otherwise used or occupied by the Company or any Subsidiary for the operation of its business (the Leased Real Property), the name of the lessor, licensor, sublessor, master lessor and/or lessee, the date and term of the lease, license, sublease or other occupancy right and each amendment thereto (the Lease Agreements) and, with respect to any current lease, license, sublease or other occupancy right the aggregate annual rental payable thereunder. All such Lease Agreements are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default by the Company or any Subsidiary, no rentals are past due,

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	or event of default by the Company or any Subsidiary (or event which with notice or lapse of time, or both, would constitute a default). Neither the Company nor any Subsidiary has received any notice of a default, alleged failure to perform, or any offset or counterclaim with respect to any such Lease Agreement, which has not been fully remedied and withdrawn. Except as set forth in Annex 9.1.12(a), the Closing will not affect the enforceability against any Person of any such Lease Agreement or the rights of the Company or any Subsidiary to the continued use and possession of the Leased Real Property for the conduct of business as presently conducted.
(b)	The Leased Real Property is in good operating condition and repair and is structurally sufficient for the conduct of the business as presently conducted. To the knowledge of any Seller or the Company, neither the operation of the Company or any Subsidiary on the Leased Real Property nor such Leased Real Property, including the improvements thereon, violate in any material respect any applicable building code, zoning requirement or statute relating to such property or operations thereon, and any such non-violation is not dependent on so-called non-conforming use exceptions. Neither the Company nor any Subsidiary owes any brokerage commissions or finders fees with respect to any Leased Real Property or would owe any such fees if any existing Lease Agreement were renewed pursuant to any renewal options contained in such Lease Agreements. The Company and each Subsidiary has performed all of its obligations under any termination agreements pursuant to which it has terminated any leases, subleases, licenses or other occupancy agreements for real property that are no longer in effect and has no continuing liability with respect to such terminated agreements.
(c)	The Company and each Subsidiary has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Liens, except (i) as reflected in the Financials, (ii) Liens for Taxes not yet due and payable, and (iii) such imperfections of title and encumbrances, if any, which do not materially detract from the value or interfere with the present use of the property subject thereto or affected thereby (the Liens described in paragraphs (i), (ii) and (iii), the Permitted Liens).

13. Intellectual Property

(a) Definitions

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	For all purposes of this Agreement, the following terms shall have the following respective meanings:
	Company Intellectual Property shall mean any and all Technology and Intellectual Property Rights that are or are purported to be owned by or exclusively licensed to the Company or any Subsidiary.
	Company Products shall mean all products, technology or services (including products, technology or services under development) made, provided, distributed, imported, sold, licensed or supported by or on behalf of the Company or any Subsidiary.
	Registered Intellectual Property Rights shall mean any and all Intellectual Property Rights that have been registered, applied for, filed, certified or otherwise perfected, issued, or recorded with or by any state, government or other public or quasi-public legal authority.
	Shrink-Wrap Code shall mean generally commercially available non-customizable software with annual license fees less than EUR 10,000, other than (i) development tools and development environments, (ii) software used by the Company or any Subsidiary in, or in the development of, the Company’s or any Subsidiary’s products and (iii) server-side software used to host and operate the Company’s or any Subsidiary’s products.
	Technology shall mean any or all of the following (i) works of authorship including, without limitation, computer programs, source code, and executable code, whether embodied in software, firmware or otherwise, architecture, documentation, designs, files, records, databases, and data, (ii) inventions (whether or not patentable), discoveries, improvements, and technology, (iii) proprietary and confidential information, trade secrets and know how, (iv) databases, data compilations and collections and technical data, (v) domain names, web addresses and sites, (vi) tools, methods and processes, and (vii) any and all instantiations or embodiments of the foregoing in any form and embodied in any media.
(b)	Annex 9.1.13(b)(1) lists all Company Products. In addition, Annex 9.1.13(b) (2) (i) lists all Registered Intellectual Property Rights owned by, or filed in the name of, the Company or any Subsidiary (the Company Registered Intellectual Property Rights), and the jurisdictions in which it has been issued or registered or in which any application for such issuance or registration

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	has been filed, or in which any other filing or recordation has been made, and (ii) lists any material proceedings or actions before any court, tribunal (including the United States Patent and Trademark Office (the PTO) or equivalent authority anywhere in the world) related to any of the Company Registered Intellectual Property Rights.
(c)	Except for such items of Company Registered Intellectual Property Rights acquired by Company from Siemens pursuant to the Siemens APA which the Company in its reasonable judgement decided to abandon, and which are listed in Annex 9.1.13(c) (the Siemens Abandoned IP), each item of Company Registered Intellectual Property Rights is valid and subsisting, and all necessary registration, maintenance, annuity and renewal fees in connection with such Company Registered Intellectual Property Rights have been paid and all necessary documents and certificates in connection with such Company Registered Intellectual Property Rights have been filed with the relevant patent, copyright, trademark or other similar authorities in Switzerland, the United States, Germany or other jurisdictions, as the case may be, for the purposes of prosecuting, maintaining or perfecting such Registered Intellectual Property Rights and recording Company’s ownership interests therein. There are no actions that must be taken by the Company or any Subsidiary within one hundred twenty (120) days following the date of this Agreement, including the payment of any registration, maintenance, annuity or renewal fees or the filing of any documents, applications or certificates for the purposes of maintaining, perfecting or preserving or renewing any Registered Intellectual Property Rights, other than Siemens Abandoned IP. In each case, other than Siemens Abandoned IP, in which the Company or any Subsidiary has acquired any Technology or Intellectual Property Rights from any Person, the Company or such Subsidiary has obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in such Technology and the associated Intellectual Property Rights (including the right to seek past and future damages with respect thereto) to the Company or such Subsidiary, and, to the maximum extent provided for by, and in accordance with, applicable Laws, the Company and such Subsidiary has recorded each such assignment with the patent, copyright, trademark or other relevant governmental authorities, including the PTO, the U.S. Copyright Office, or their respective equivalents in Switzerland, Germany and any other foreign jurisdiction, as the case may be.
(d)	Except as set forth in Annex 9.1.13(d), all Company Intellectual Property is either exclusively owned, or irrevocably, perpetually, and exclusively li-

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	censed to the Company or the relevant Subsidiary, and can be used without any restriction by, and is fully transferable and licensable by, the Company or the relevant Subsidiary, and following the Closing will be fully transferable and licensable by the Company or the relevant Subsidiary and/or the Buyer, without restriction and without payment of any kind to any third party.
(e)	Each item of Company Intellectual Property, including all Company Registered Intellectual Property Rights listed in Annex 9.1.13(b)(2) and, to the knowledge of the Company, all Technology and Intellectual Property Rights licensed to the Company or any Subsidiary, is free and clear of any Liens other than those set forth on Annex 9.1.13(e), Permitted Liens and security interest which arise by law.
(f)	Except as set forth in Annex 9.1.13(f)(1), to the extent that any Technology has been developed or created independently or jointly by any Person other than the Company or any Subsidiary, for which the Company or such Subsidiary has, directly or indirectly, provided consideration for such development or creation, and such Technology is used in or necessary to the conduct of Company’s or any Subsidiary’s business as presently conducted or currently contemplated to be conducted by the Company or any Subsidiary, the Company or such Subsidiary has a written agreement with such Person with respect thereto, and the Company or such Subsidiary thereby has obtained ownership of, and is the exclusive owner of, all such Technology and associated Intellectual Property Rights by operation of Law or by valid assignment, and has required the waiver of all non-assignable rights or, in the event ownership is not assignable under any applicable law, obtained an exclusive, perpetual, irrevocable, fully paid-up, fully transferable and sublicensable, unrestricted license. Except as set forth in Annex 9.1.13(f)(2), all rights in, to and under all Technology and Intellectual Property Rights created by the Company’s founders for or on behalf or in contemplation of the Company (i) prior to the inception of the Company, or (ii) prior to their commencement of employment with the Company, have been duly and validly assigned to the Company.
(g)	Except as set forth in Annex 9.1.13(g), neither the Company nor any Subsidiary has (i) transferred ownership of, or granted any exclusive license of or exclusive right to use, sell, license, manufacture or otherwise distribute, or authorized the retention of any exclusive rights to use or joint ownership of, any Technology or Intellectual Property Rights that are or were Company Intellectual Property, to any other Person or (ii) permitted the

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	Company’s or any Subsidiary’s rights in any Technology or Intellectual Property Rights that are or were Company Intellectual Property to enter into the public domain.
(h)	Annex 9.1.13(h) and Annex 9.1.14(a)(xv) lists all agreements, contracts and licenses pursuant to which any third party has licensed or granted any right to Company or a Subsidiary in any Technology or Intellectual Property Right that is incorporated into, embedded into, distributed with, installed with, or otherwise utilized or practiced by any Company Products, or that is used in or necessary to the conduct of Company’s or any Subsidiary’s business as presently conducted or currently contemplated to be conducted by the Company or any Subsidiary (the In-Licenses), other than Shrink Wrap Code or licenses for Open Source Software.
(i)	The Company Intellectual Property, together with the Technology and Intellectual Property Rights licensed to the Company or a Subsidiary pursuant to the In-Licenses constitutes all of the Technology and Intellectual Property Rights used in, necessary to or that otherwise would be infringed by the conduct of the business of the Company or any Subsidiary as it currently is conducted or currently planned to be conducted, including, without limitation, the design, development, marketing, manufacture, use, import and sale of any Company Product. Except as set forth in Annex 9.1.13(i), the Company or the relevant Subsidiary will own or possess sufficient rights to all Technology and Intellectual Property Rights immediately following the Closing Date that are necessary to the operation of the business of the Company or the relevant Subsidiary as it currently is conducted or planned to be conducted and without infringing on the Intellectual Property Rights of any Person.
(j)	Except as set forth in Annex 9.1.13(j), none of the In-Licenses will terminate, or may be terminated by a third party, solely by the passage of time or at the election of a third party.
(k)	Except as set forth in Annex 9.1.13(k), no third party that has transferred, assigned or licensed Technology or Intellectual Property Rights to the Company or any Subsidiary has ownership rights or license rights to improvements or derivative works made by the Company or any Subsidiary in such Technology or Intellectual Property Rights.
(l)	There are no Contracts, licenses or agreements between the Company or any Subsidiary and any other Person with respect to Company Intellectual

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	Property or other Technology or Intellectual Property Rights used in and/or necessary to the conduct of the business as it is currently conducted or planned to be conducted under which there is any material dispute regarding the scope of such agreement, or performance under such agreement including with respect to any payments to be made or received by the Company or any Subsidiary thereunder.
(m)	The operation of the business of the Company and each Subsidiary as it has been conducted, is currently conducted and is currently contemplated by the Company and each Subsidiary to be conducted, including but not limited to the design, development, use, import, branding, advertising, promotion, marketing, distribution, manufacture and sale of any Company Product has not infringed or misappropriated, does not infringe or misappropriate, and will not infringe or misappropriate when conducted by the Company and/or any Subsidiary following the Closing in substantially the manner as currently planned to be conducted, any Intellectual Property Rights of any Person, and does not violate any right of any Person (including any right to privacy or publicity), or constitute unfair competition or trade practices under the Laws of any jurisdiction. Except as set forth in Annex 8.1.13(m), neither the Company nor any Subsidiary has received notice from any Person claiming that any operation or any act or any Company Product infringes or misappropriates any Intellectual Property Rights of any Person, violates any right of any Person (including any right to privacy or publicity) or constitutes unfair competition or trade practices under the Laws of any jurisdiction (nor does any of the Sellers or the Company have knowledge of any basis therefor).
(n)	Neither this Agreement nor the transactions contemplated by this Agreement, including the assignment to Buyer by operation of law or otherwise of any Contracts or agreements to which the Company or any Subsidiary is a party, will result in: (i) the Buyer, the Company or any of their Affiliates (including any Subsidiary) granting to any third party any right to or with respect to any Intellectual Property Rights owned by, or licensed to Buyer, the Company or any of their Affiliates (including any Subsidiary), (ii) Buyer, the Company or any of their Affiliates (including any Subsidiary), being bound by or subject to, any exclusivity obligations, non-compete or other restriction on the operation or scope of their respective businesses, or (iii) the Buyer, the Company or any of their Affiliates (including any Subsidiary) being obligated to pay any royalties or other material amounts to any third party in excess of those payable by any of them, respectively, in the absence of this Agreement or the transactions contemplated hereby.

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	The foregoing representation and warranty with respect to Buyer and its Affiliates is not intended, and does not, constitute a representation or warranty with respect to the effect of any Contracts entered into by Buyer and its Affiliates with any Third Person or any obligations of Buyer or its Affiliates under any such Contracts.
(o)	To the knowledge of any Seller or the Company, no Person has infringed or misappropriated or is infringing or misappropriating any Company Intellectual Property in any material respect.
(p)	The Company and each Subsidiary has taken reasonable steps to protect the Company’s and any Subsidiary’s rights in proprietary and confidential information, trade secrets and know-how of the Company and any Subsidiary or provided by any other Person to the Company or any Subsidiary. Without limiting the foregoing, all current and former employees, consultants and contractors of the Company and each Subsidiary have executed proprietary information, confidentiality and assignment agreements substantially in the Company’s standard forms (as set forth in Annex 9.1.13(p)).
(q)	No Company Intellectual Property or Company Product is subject to any pending proceeding or outstanding decree, order, judgment or settlement agreement that restricts in any manner the use, transfer or licensing thereof by the Company or any Subsidiary or may affect the validity, use or enforceability of such Company Intellectual Property.
	No (i) product, technology, service or publication of the Company or any Subsidiary, (ii) material published or distributed by the Company or any Subsidiary, or (iii) conduct or statement of the Company or any Subsidiary constitutes obscene material, a defamatory statement or material, false advertising or otherwise violates any Law or regulation.
(r)	Except as set forth in Annex 9.1.13(r)(1), no government funding, facilities or resources of a university, college, other educational institution or research center or funding from third parties was used in the development of the Company Intellectual Property and no Governmental Entity, university, college, other educational institution or research center has any claim or right in or to the Company Intellectual Property. Except as set forth in Annex 9.1.13(r)(2), no rights have been granted to any Governmental Entity with respect to any Company or any Subsidiary product, technology or service, or under any Company Intellectual Property, other than the same

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	standard commercial rights as are granted by the Company or any Subsidiary to commercial end users of the Company’s or any Subsidiary’s products, technologies and services in the ordinary course of business. Except as set forth in Annex 9.1.13(r)(3), no current or former employee, consultant or independent contractor of the Company or any Subsidiary who was involved in, or who contributed to, the creation or development of any Company Intellectual Property, has performed services for the government, a university, college or other educational institution, or a research center, during a period of time during which such employee, consultant or independent contractor was also performing services for the Company or any Subsidiary.
(s)	Neither the Company nor any Subsidiary has collected any personally identifiable information from any third parties except as described in Annex 9.1.13(s). The Company and each Subsidiary has complied with all applicable Laws and its internal privacy policies relating to the privacy of users of its products, services, and Web sites, and also the collection, storage, and transfer of any personally identifiable information collected by or on behalf of the Company or any Subsidiary. The execution, delivery and performance of this Agreement complies with all applicable Laws relating to privacy and the Company’s privacy policies. True and correct copies of all applicable privacy policies are attached to Annex 9.1.13(s), and the Company and each Subsidiary has at all times made all disclosures to users or customers required by applicable Laws and none of such disclosures made or contained in any such privacy policy or in any such materials has been inaccurate, misleading or deceptive or in violation of any applicable Laws.
(t)	Except pursuant to Contracts listed in Annex 9.1.13(t), neither the Company nor any Subsidiary nor any Person acting on the Company’s of any Subsidiary’s behalf has disclosed, delivered or licensed to any Person, agreed to disclose, deliver or license to any Person, or permitted the disclosure or delivery to any escrow agent or other Person of any software source code in the Company Products or constituting Company Intellectual Property (Company Source Code). No event has occurred, and no circumstance or condition exists, including without limitation the execution of this Agreement and the consummation of the transactions contemplated hereby, that (with or without notice or lapse of time or both) will, or could reasonably be expected to, result in the disclosure or delivery by or on behalf of the Company or any Subsidiary of any Company Source Code.

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(u) Annex 9.1.13(u) lists (a) each item of software that is distributed as “open source software” or under a similar licensing or distribution model (including but not limited to the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Standards License (SISL) and the Apache License) (collectively, “Open Source Software”) and that has been incorporated into any Company Product in any way, distributed or provided with any Company Product, or from which any part of any Company Product has been derived, (b) the applicable licenses for each such item of Open Source Software, (c) the website or other source from which such Open Source Software was obtained, (d) the Company Product to which each such item of Open Source Software relates, and (ii) generally describes, without limitation (e) the manner in which each item of such Open Source Software was used, (f) whether (and, if so, how) the Open Source Software was modified by or for the Company or any Subsidiary, (g) whether the Open Source Software was distributed by or for, or otherwise provided by or for, the Company or any Subsidiary, and (h) whether (and if so, how) such Open Source Software was incorporated into, interacts with, or linked to any Company Product or any portion thereof. Except as set forth in Annex 9.1.13(u), no Company Product contains, is derived from, or is distributed with, or is being or was developed using Open Source Software that, and neither the Company nor any Subsidiary has used Open Source Software in any manner that (except with respect to any incorporated Open Source Software itself), would or could (i) require the disclosure or distribution in source code form of any Company Product or part thereof, (ii) require the licensing of any Company Product or part thereof for the purpose of making derivative works, (iii) impose any restriction on the consideration to be charged for the distribution of any Company Product or part thereof, (iv) create, or purport to create, obligations for the Company with respect to Company Intellectual Property, or grant, or purport to grant, to any third party, any rights or immunities under Company Intellectual Property, or (v) impose any other material limitation, restriction, or condition on the right of the Company or a Subsidiary to use or distribute any Company Product. With respect to any Open Source Software that is or has been used by the Company or any Subsidiary in any way, the Company and its Subsidiaries has been and is in compliance with all applicable licenses with respect thereto, complete copies of which have been provided to Buyer, including without limitation any and all copyright notices, attribution requirements, and notices of availability of source code, if applicable.

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(v)

Annex 9.1.13(v) lists (i) all industry standards bodies, alliances, consortia and similar organizations of which, and the relevant Contracts under which, the Company or any Subsidiary is a member, to which it has been a contributor or in which it has been a participant, and (ii) all Company Intellectual Property that Company or any Subsidiary has licensed, contributed or provided, or is obligated to license, contribute or provide, in connection with any such Contract or affiliation. Except as described in Annex 9.1.13(v), neither the Company nor any Subsidiary is or ever was a member in, a contributor to, or participant in any industry standards body, alliances, consortia or similar organization that could require or obligate the Company or any Subsidiary to grant or offer to any other Person any license or right to any Technology or Intellectual Property Rights.

(w)

Annex 9.1.13(w) lists all unsettled current and future payment or other compensation claims, owed by the Company or any Subsidiary to any Person, including without limitation employees and managers of the Company and its Affiliates, for assignments of inventions or Intellectual Property Rights.

14. Agreements, Contracts and Commitments

(a) Except as set forth in Annex 9.1.14(a) (specifying the appropriate subparagraph), neither the Company nor any Subsidiary is a party to, or is it bound by any of the following (each, a Material Contract):

(i)	any consulting agreement, Contract or commitment with an individual consultant, contractor or salesperson, or consulting, services or sales agreement, Contract, or commitment with a firm or other organization other than employment agreements and agreements with hourly workers;
(ii)	other than the SVOX Option Plans, any agreement or plan, including, without limitation, any stock option plan, stock appreciation rights plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement (either alone or upon the occurrence of any additional subsequent events) or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement;
(iii)	any fidelity or surety bond or completion bond;

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(iv)	lease of personal property or equipment having a value in excess of EUR 25,000 individually or EUR 100,000 in the aggregate;
(v)	any agreement of indemnification or guaranty, but excluding agreements of indemnification or guaranty with respect to the infringement by the Company or any Subsidiary products of the Intellectual Property Rights of third parties that are contained in the Company’s or any Subsidiary’s written agreements with its customers that have been entered into in the ordinary course of business;
(vi)	any agreement, Contract or commitment relating to capital expenditures and involving future payments in excess of EUR 25,000 individually or EUR 100,000 in the aggregate;
(vii)	any agreement, Contract or commitment relating to the disposition or acquisition of assets or any interest in any business enterprise outside the ordinary course of the Company’s or any Subsidiary’s business;
(viii)	any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit;
(ix)	any purchase order, Contract or other commitment obligating the Company or any Subsidiary to purchase materials or services at a cost in excess of EUR 25,000 individually or EUR 100,000 in the aggregate;
(x)	any agreement containing covenants or other obligations granting or containing any current or future commitments regarding exclusive rights, non-competition, “most favored nations,” restriction on the operation or scope of its businesses or operations, or similar terms;
(xi)	any agreement providing a customer with refund rights;
(xii)	any dealer, distribution, marketing, development or joint venture agreement which requires payment in excess of EUR 25,000 individually or EUR 100,000 in the aggregate;
(xiii)	any sales representative, original equipment manufacturer, manufacturing, value added, remarketer, reseller, or independent software vendor, or other agreement for use or distribution of material products, technology or services of the Company or any Subsidiary;
(xiv)	any Contracts and licenses, including out-bound licenses with respect to the Company’s or any Subsidiary’s products;

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(xv)

any Contracts, licenses and agreements to which the Company or a Subsidiary is a party with respect to any Technology or Intellectual Property Rights, including without limitation any in-bound licenses, out-bound licenses and cross-licenses, but excluding (A) non-disclosure agreements and non-exclusive out-bound licenses with respect to the provision of Company’s or any Subsidiary’s products to end-users (in each case, pursuant to written agreements that have been entered into in the ordinary course of business), (B) in-bound licenses and purchase agreements for Shrink-Wrap Code licensed to the Company or any Subsidiary that is not incorporated into, embedded into, distributed with, installed with, or otherwise utilized by any Company Products, and (C) in-bound licenses for “freeware,” “free software,” “open source software” licensed to the Company or any Subsidiary and not used in, or in the development of, the Company’s or any Subsidiary’s products or services and not server-side software used to host and operate the Company’s or any Subsidiary’s products; or

(xvi)

any other agreement, Contract or commitment that involves EUR 25,000 individually or EUR 100,000 in the aggregate or more and is not cancelable by the Company or any Subsidiary without penalty within thirty (30) days.

The Company and each Subsidiary is in compliance with and has not breached, violated or defaulted under, or received notice that it has breached, violated or defaulted under, any of the terms or conditions of any Material Contract, nor does the Company or any Seller have knowledge of any event that would constitute such a breach, violation or default with the lapse of time, giving of notice or both. Each Material Contract is in full force and effect, and neither the Company nor any Subsidiary is subject to any default thereunder, nor to the knowledge of the Company is any party obligated to the Company or any Subsidiary pursuant to any such Material Contract subject to any default thereunder. Except as set forth in Annex 9.1.14(a), no Material Contract will terminate, or may be terminated by either party, solely by the passage of time or at the election of either party within 120 days after the Closing.

15. Interested Party Transactions

Except as set forth in Annex 9.1.15, to the knowledge of any Seller or the Company, no officer, director or stockholder of the Company or any Subsidiary (nor any ancestor, sibling, descendant or spouse of any of such Persons, or any trust, partnership or corporation in which any of such Persons has or has had an interest), has or has had, directly or indirectly, (a) an interest in any Person which furnished or sold or licensed, or furnishes or sells or licenses, services, products, Technology or Intellectual Property Rights that the Company or any Subsidiary

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furnishes or sells, or proposes to furnish or sell, (b) any interest in any Person that purchases from or sells or furnishes to the Company or any Subsidiary, any goods or services or (c) a beneficial interest in any Material Contract to which the Company or any Subsidiary is a party; provided, however, that ownership of no more than one percent (1%) of the outstanding voting stock of a publicly traded corporation shall not be deemed to be an “interest in any Person” for purposes of this Clause 15. No shareholder of the Company has any loans outstanding from the Company or any Subsidiary.

16. Governmental Authorization

Each consent, license, permit, grant or other authorization (a) pursuant to which the Company or any Subsidiary currently operates or holds any interest in any of its properties or (b) which is required for the operation of the Company’s business as currently conducted or currently contemplated to be conducted or the holding of any such interest (collectively, Company Authorizations) has been issued or granted to the Company or a Subsidiary, as the case may be. The Company Authorizations are in full force and effect and constitute all Company Authorizations required to permit the Company and each Subsidiary to operate or conduct its business or hold any interest in its properties or assets. The Company or a Subsidiary, as the case may be, has complied at all times with each of the Company Authorizations. No Company Authorization requires that the transactions contemplated hereunder receive the approval of the Person that issued such Company Authorization.

17. Litigation Except as set forth in Annex 9.1.17, there is no action, suit, claim or proceeding of any nature pending, or to the knowledge of any Seller or the Company, threatened, against the Company or any Subsidiary, their properties (tangible or intangible) or any of their officers or directors, nor to the knowledge of any Seller or the Company is there any reasonable basis therefor. Except as set forth in Annex 9.1.17, there is no investigation, audit, or other proceeding pending or, to the knowledge of any Seller or the Company, threatened, against the Company or any Subsidiary, any of their properties (tangible or intangible) or any of their officers or directors by or before any Governmental Entity, nor to the knowledge of any Seller or the Company is there any reasonable basis therefor. No Governmental Entity has at any time challenged or questioned the legal right of the Company or any Subsidiary to conduct their respective operations substantially as presently or previously conducted or as presently contemplated to be conducted. There is no action, suit, claim or proceeding of any nature pending or, to the knowledge of any Seller or the Company, threatened, against any Person who has a contractual right or a right pursuant to statutory law to indemnification

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from the Company or any Subsidiary related to facts and circumstances existing prior to the Closing Date, nor are there, to the knowledge of any Seller or the Company, any facts or circumstances that would give rise to such an action, suit, claim or proceeding. Neither the Company nor any Subsidiary is subject to or bound by any court approved or imposed agreement, judgment, decree or order which may materially and adversely affect the business, prospects or condition (financial or otherwise) of Company or any Subsidiary.

18. Minute Book The minutes of the Company and each Subsidiary made available to the Buyer contain complete and accurate records of all actions taken, and summaries of all meetings held, by the shareholders and the Board of Directors of the Company and each Subsidiary (and any committees thereof).

19. Environmental Matters The Company and each Subsidiary (a) has not received any written notice of any alleged claim, violation of or Liability under any Environmental Law which has not heretofore been cured or for which there is any remaining Liability; (b) has not disposed of, emitted, discharged, handled, stored, transported, used or released any Hazardous Materials, arranged for the disposal, discharge, storage or release of any Hazardous Materials, or exposed any employee or other individual to any Hazardous Materials so as to give rise to any material Liability or corrective or remedial obligation under any Environmental Laws; (c) has not entered into any agreement that may require it to guarantee, reimburse, pledge, defend, hold harmless or indemnify any other party with respect to liabilities arising out of Environmental Laws or the Hazardous Materials related activities of the Company or any Subsidiary; and (d) has delivered to the Buyer or made available for inspection by the Buyer and its agents, representatives and employees all records in the Company’s and each Subsidiary’s possession concerning the Hazardous Materials activities of the Company and each Subsidiary and all environmental audits and environmental assessments of any facility owned, leased or used at any time by the Company or any Subsidiary conducted at the request of, or otherwise in the possession of the Company or any Subsidiary. To the knowledge of the Company, there are no Hazardous Materials in, on, or under any properties owned, leased or used at any time by the Company or any Subsidiary such as could give rise to any material Liability or corrective or remedial obligation of the Company or any Subsidiary under any Environmental Laws.

20. Brokers’ and Finders’ Fees

Except as set forth in Annex 9.1.20, neither the Company nor any Subsidiary has incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’

Annex 9.1 to the Share Purchase Agreement re SVOX AG       28 | 36

fees or agents’ commissions, fees related to investment banking or similar advisory services or any similar charges in connection with the Agreement or any transaction contemplated hereby. Annex 9.1.20 sets forth the principal terms and conditions of any Contract or agreement, written or oral, with respect to such fees.

21. Employment

(a)	Annex 9.1.21(a) sets forth a list of the directors, officers and employees of the Company and each Subsidiary containing in respect of the aforementioned personnel: status as a former Siemens employee; personal details such as: job title, day of birth, years of service, nationality; all individual re-muneration details for the current fiscal year; post contractual non competition clauses (if any); details regarding the entitlements to company pensions; termination details, such as notice periods, special protection against dismissal due to, status of employees as member or substitute member of works council or parental leave or disability.
(b)	Except as provided for in the Carve-out Plans and other documents, disclosed under Annex 9.1.21(b), in respect of the directors, officers and employees of the Group Companies there are (i) no a notice periods by the Group Company longer than six months, nor is there termination compensation payable for termination on due notice that would exceed the equivalent of six months’ salary; (ii) no material salary increases resolved but not yet implemented; (iii) no employment or benefit agreements, plans or arrangements entitling directors, officer or employees to severance or other payments upon a change of control of the Group.
(c)	None of employees listed in Annex 9.1.21(a) has given notice to terminate his or her employment agreement or has informed any of the Group Companies that such a termination is intended, nor has notice to terminate been given by any of the Group Companies. No amendment to the terms and conditions on which such employees have been engaged (including remuneration and ancillary fringe benefits) has been made since December 31, 2010.
(d)	The Group Companies are not members in any employers’ associations with the effect that the company is bound to collective bargaining agreements (keine Tarifbindung), except as disclosed on Annex 9.1.21(d).

Annex 9.1 to the Share Purchase Agreement re SVOX AG       29 | 36

(e)	Annex 9.1.21(e) lists all applicable shop agreements, collective bargaining agreements, employment agreements or other agreements relating to the employment of any employee of the Group Companies or otherwise affecting the Group Companies. The shop agreements and collective bargaining agreements concerning SVOX Deutschland GmbH are applicable only for former Siemens employees as well as partially for other employees employed in the Munich operation of SVOX Deutschland GmbH, as listed in Annex 9.1.21.(a). The shop agreement and its implementation by individual agreements do not increase the personnel costs for the employees concerned. A reconciliation of interest agreement (Interessenausgleich) and/or social plan (Sozialplan) is currently not negotiated and/or applicable for SVOX Deutschland GmbH. SVOX Deutschland GmbH has local works councils for the operations in Munich and Ulm and a joint works council.
(f)	The Group Companies have in all material respects complied with the obligations arising out of collective bargaining agreements and|or shop agreements, in particular any social plans, if any. There are no current disputes with any governmental or self-regulatory authority, any labour union, any works council or other employee representatives. No mass dismissals, in particular those which would give rise to any notification to public, governmental or self-regulatory authorities, have been announced since December 31, 2010 or have been planned.
(g)	All material agreements or arrangements for the payment of pensions, allowances, lump sums or other similar benefits on retirement or death or during periods of sickness or disablement for the benefit of any current or former director, officer or employee of the Group Companies are disclosed in Annex 9.1.21(g) and, save in respect thereof, as at the date hereof the Group Companies have no obligation to provide or contribute to the provision of any retirement, death, sickness, disability or like benefit for or in respect of any of the current or former directors, officers or employees of the members of the Group Companies nor has any proposal been announced or agreement been reached to establish or contribute to any arrangement providing any such benefits.
(h)	Each of the Group Companies has complied at all times and in all material respects with all laws, statutes, rules and regulations applicable with respect to employees in each of the jurisdictions in which the Group’s business is being conducted.

Annex 9.1 to the Share Purchase Agreement re SVOX AG       30 | 36

(i) There are no strikes, work stoppages, disputes or other proceedings pending or overtly threatened between any of the Group Companies and any of the employees in connection with their employment in the Group’s business. Except as set forth in Annex 9.1.21(i) none of the Group Companies has received written notice of the intent of any governmental entity responsible for the enforcement of any labor law to conduct an investigation with respect to any Group Company, and no such investigation is currently in progress. Except as set forth in Annex 9.1.21(i), there is no material Action pending or threatened against any Group Company and any of its current or former (including retired) directors, officers or employees, including any Action for wrongful termination or breach of express or implied contract of employment or for violation of labor laws.

22. Social Security, Pensions and Benefit Plans

(a) The Group Companies are in compliance with all applicable pension and social security laws. All social security, pension fund, company pension commitments (Pensionszusagen), benefit plan or similar payments due by the Group Companies in favor of the employees under the law or any benefit plans (collectively, the Employee Benefit Plans) for any period ending before the Balance Sheet Date have been fully paid or provisioned for in the Financials. Annex 9.1.22(a) contains a true, correct and complete list of each Employee Benefit Plan and separately lists the terms and conditions and beneficiaries of such Benefit Plans. In particular in respect of the pension commitments, jubilee payment commitments and similar commitments made by SVOX Deutschland GmbH the following shall be set forth: (i) the beneficiaries, (ii) the actuarial evaluation of the aforementioned commitments according to the applicable local accounting standards and (iii) the terms and conditions.

All social security payments and payment in respect of Employee Benefit Plans due as at the Balance Sheet Date by the Group Companies in favor of their employees under the law or any Employee Benefit Plans have been fully paid or provisioned in the Financials. All contributions required to be made as at the Balance Sheet Date under the terms of the Law (as regards social security) or of any such Employee Benefit Plans have been made in a timely manner or have been adequately provisioned in the Financials. None of the Employee Benefit Plans has any accumulated funding deficiency, and none of the Employee Benefit Plans has any accumulated funding deficiency on a Projected Benefit Obligations basis in accordance with applicable accounting principles.

Annex 9.1 to the Share Purchase Agreement re SVOX AG       31 | 36

(b)

As of the Closing Date, SVOX Deutschland GmbH has duly paid and funded, or set up accruals for in the German Financials, all pension related insurance contracts and|or other pension operators in use, including but not limited to the trustee under the contractual trust arrangement, which is described and disclosed in Annex 9.1.22(b) (CTA). Annex 9.1.22(b) also contains the funding status of the CTA in accordance with the applicable local accounting standards. The CTA is usable under the applicable accounting standards and recognized under law to be protected against insolvency/ to provide protection in case of insolvency (Insolvenzfestigkeit). The further use of the CTA is not affected upon change of control in respect of the Group.

(c)

Each Employee Benefit Plan has been established and administered in accordance with its terms and in compliance with applicable law.

23. Insurance

Annex 9.1.23 lists all insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors of the Company and each Subsidiary, including the type of coverage, the carrier, the amount of coverage, the term and the annual premiums of such policies. Except as set forth in Annex 9.1.23, there is no claim by the Company or any Subsidiary pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed or that the Company has a reason to believe will be denied or disputed by the underwriters of such policies or bonds. In addition, there is no pending claim of which its total value (inclusive of defense expenses) will exceed the policy limits. All premiums due and payable under all such policies and bonds have been paid on the Closing Date or provisioned for in the Financials and the Company and each Subsidiary is otherwise in material compliance with the terms of such policies and bonds. Such policies and bonds (or other policies and bonds providing substantially similar coverage) have been in effect since they were undertaken and remain in full force and effect. None of the Sellers nor the Company has knowledge or reasonable belief of threatened termination of, or premium increase with respect to, any of such policies. Neither the Company nor any Subsidiary has ever maintained, established, sponsored, participated in or contributed to any self-insurance plan.

24. Compliance with Laws

(a) The Company and each Subsidiary has complied with, is not in violation of, and has not received any notices of suspected, potential, or actual violation

Annex 9.1 to the Share Purchase Agreement re SVOX AG       32 | 36

	with respect to, any foreign, federal, cantonal or local statute, Law or regulation.
(b)	The Company and the Subsidiaries (including any of their officers, directors, agents, employees or other Person associated with or acting on its behalf) have at all times been, and are currently, fully in compliance with all applicable Anti-Corruption and Anti-Bribery Laws in any jurisdiction. There are no pending or, to the knowledge of any Seller or the Company, threatened claims, charges, investigations, violations, settlements, civil or criminal enforcement actions, lawsuits, or other court actions against the Company or its Subsidiaries with respect to any Anti-Corruption and Anti-Bribery Laws. There are no actions, conditions or circumstances pertaining to the Company’s or any of its Subsidiaries’ activities that could reasonably be expected to give rise to any future claims, charges, investigations, violations, settlements, civil or criminal actions, lawsuits, or other court actions under any Anti-Corruption and Anti-Bribery Laws.
(c)	To the knowledge of any Seller or the Company, no officer or director of the Company or any Subsidiary has been: (i) convicted in a criminal proceeding or named as a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) subject to any order, judgment, or decree (not subsequently reversed, suspended or vacated) of any court of competent jurisdiction permanently or temporarily enjoining him from, or otherwise imposing limits or conditions on its or his engaging in any securities, investment advisory, banking, insurance or other type of business or acting as an officer or director of a public company; or (iii) found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission or any other securities market supervising authority to have violated any federal or state commodities, securities or unfair trade practices law, which such judgment or finding has not been subsequently reversed, suspended, or vacated.

25. Bank Accounts, Letters of Credit and Powers of Attorney Annex 9.1.25 lists (a) all bank accounts, lock boxes and safe deposit boxes relating to the business and operations of the Company and each Subsidiary (including the name of the bank or other institution where such account or box is located and the name of each authorized signatory thereto), (b) all outstanding letters of credit issued by financial institutions for the account of the Company and each Subsidiary (setting forth, in each case, the financial institution issuing such letter of credit, the maximum amount available under such letter of credit, the terms (including the expiration date) of such letter of credit and the party or parties in whose favor such

Annex 9.1 to the Share Purchase Agreement re SVOX AG       33 | 36

letter of credit was issued), and (c) the name and address of each Person who has a power of attorney to act on behalf of the Company or any Subsidiary. The Company has heretofore delivered to the Buyer true, correct and complete copies of each letter of credit and each power of attorney described in Annex 9.1.25.

26. Customers and Suppliers

(a)

Annex 9.1.26(a) sets forth each customer of the Company and each Subsidiary who accounted for more than 5% of the revenues of the Company and its Subsidiaries for the fiscal year ended December 31, 2010, and who is expected to account for more than 5% of the revenues of the Company or any Subsidiary for the fiscal year ended December 31, 2011 (collectively, the Customers). The relationships of the Company or a Subsidiary with its Customers are good commercial working relationships. Except to the extent disclosed on Annex 9.1.26(a), since December 31, 2009, no Customer of the Company or any Subsidiary has cancelled or otherwise terminated its relationship with the Company or such Subsidiary, or has during the last twelve (12) months decreased materially its usage or purchases of the services or products of the Company or such Subsidiary. Except to the extent disclosed on Annex 9.1.26(a), no Customer has, to the knowledge of any Seller or the Company, any plan or intention to terminate, to cancel or otherwise materially and adversely modify its relationship with the Company or any Subsidiary or to decrease materially its usage, purchase or distribution of the services or products of the Company or any Subsidiary.

(b)

Annex 9.1.26(b) sets forth a list of all suppliers to whom the Company or any Subsidiary made payments aggregating EUR 25,000 or more during the fiscal year ended December 31, 2010, or expects to aggregate EUR 25,000 or more during the fiscal year ended December 31, 2011, showing, with respect to each, the name, address and dollar volume involved. Since December 31, 2009, no supplier has terminated or reduced its business with the Company or any Subsidiary or materially and adversely modified its relationship therewith.

27. Warranties to Customers

Except as disclosed in Annex 9.1.27, no product or service provided by the Company or any Subsidiary is subject to any guarantee, warranty, or other indemnity that extends beyond, in any material respect, the applicable standard terms and conditions of sale, lease or license. There is no claim, action, suit,

Annex 9.1 to the Share Purchase Agreement re SVOX AG       34 | 36

investigation or proceeding pending against the Company or any Subsidiary, or to the knowledge of any Seller or the Company, threatened, relating to alleged defects in the products or services provided by the Company or any Subsidiary, or the failure of any such product or service to meet agreed upon specifications and, to the knowledge of any Seller or the Company, there is no basis for any of the foregoing.

28. Siemens APA

(a)	The operation of the business of the Company and each Subsidiary as it has been conducted, is currently conducted and is currently contemplated by the Company and each Subsidiary to be conducted, including but not limited to the design, development, use, import, branding, advertising, promotion, marketing, distribution, manufacture and sale of any product, technology or service (including products, technology or services currently under development) of the Company or any Subsidiary: (i) does not include the performance of any acts under or using the Siemens Licensed IP outside the Siemens Speech Business Field, (ii) does not include the performance of any acts under or using the Siemens Licensed IP that are otherwise outside the scope of the licenses granted by Siemens to Company under the Siemens APA, and (iii) has not infringed or misappropriated, does not infringe or misappropriate, and will not infringe or misappropriate when conducted by the Company and/or any Subsidiary following the Closing in the manner currently planned to be conducted, any of the Siemens Licensed IP. Without limiting the foregoing, the Siemens Speech Business, as it has been conducted, is currently conducted and is currently contemplated by the Company and each Subsidiary to be conducted of the Closing Date, is wholly within the Siemens Speech Business Field.
(b)	The restrictions to the use and transferability of the Siemens Licensed IP under the Siemens APA do not adversely affect the actual undertaking of the Siemens Speech Business and/or the Business by the Company, including with respect to the design, development, use, import, branding, advertising, promotion, marketing, distribution, manufacture and sale of any enhancements and improvements of existing products and services. No Siemens Licensed IP is included in any products or services of the Company and/or its Affiliates, except in those products and services exclusively listed in Annex 9.1.28(b).
(c)	The “related obligations of the Purchaser” that that have to be taken over by the acquirer under in Section 2.12.3 of the Siemens APA are limited

Annex 9.1 to the Share Purchase Agreement re SVOX AG       35 | 36

	solely to those obligations which are related to the respective individual items that have been acquired by the acquirer. By means of example only, an acquirer of a trademark would not take over, and would not be required to take over, any obligations that are related to patents.
(d)	With respect to products or services that were developed by Siemens, or any of its Affiliates from time to time, prior to the Siemens APA Closing Date in cooperation with the Siemens business unit which was in charge of the Siemens Speech Business prior to, or at, the Siemens APA Closing Date, as of the Siemens APA Closing Date, no such products or services infringed any patents or utility models of Nuance and/or any of its Affiliates. For the avoidance of doubt, with respect to products and services developed by Siemens or its Affiliates (other than by the Siemens business unit which was in charge of the Siemens Speech Business), this statement shall only apply in so far as the infringement is based on the input provided by the Siemens business unit which was in charge of the Siemens Speech Business.
(e)	Annex 9.1.28(e), Part I, includes a complete and accurate list of all Siemens Transferred Licensing-in Agreements. Except as otherwise set out in Annex 9.1.28(e), Part II, all Siemens Transferred Licensing-In Agreements are in full force and effect and have been validly assigned to the Company. None of the Siemens Transferred Licensing-in Agreements listed in Annex 9.1.28(e), Part II, relate to any speech databases used by the Company or any of its Subsidiaries or that are otherwise necessary for the conduct of the business of the Company or any Subsidiary as currently conducted or planned to be conducted.
(f)	The patents listed in Annex 9.1.28(f), comprise a complete and accurate list of all Intellectual Property Rights to which any licenses or covenants not to sue apply under Sections 2.6.3 and 2.6.4 of the Siemens APA.
(g)	Siemens will not exercise its rights under Section 17.1 of the Siemens APA.
(h)	The term “Purchaser’s Affiliates” in Section 18.1 of the Siemens APA is limited solely to companies that were Affiliates of SVOX Germany prior to, or at, the Siemens APA Closing Date. Following the Closing, neither Nuance nor any of its Affiliates (other than any Group Company) will owe any payments to Siemens or any of its Affiliates pursuant to Section 18 of the Siemens APA.

Annex 9.1 to the Share Purchase Agreement re SVOX AG       36 | 36

(i)	Section 19.6 of the Siemens APA does not cover any obligations except real liabilities (echte Verbindlichkeiten) and the obligation to transfer the obligation under Section 19.6 of the Siemens APA itself.
(j)	Except as set forth in Annex 9.1.28(j), there are no current or future unsettled claims or legal disputes existing or, to the knowledge of any Sellers or the Company, threatening between the Company and/or one of its Affiliates on the one side and Siemens and/or any of its Affiliates on the other side.

29. Complete Copies of Materials

The documents delivered or made available to the Buyer are true and complete copies of each document (or summaries of same).

30. Other Information

None of the representations or warranties made by the Sellers in this Agreement, and none of the statements made in any exhibit, schedule or certificate furnished by the Sellers or the Group pursuant to this Agreement contains, or will contain at the Closing Date, any untrue statement of a material fact, or omits or will omit at the Closing Date to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading. The financial projections relating to the Company delivered to Nuance (a true and complete copy of which appears in Annex 9.1.30 have been prepared in good faith based on assumptions that management of the Company believe are reasonable.

Annex 9.2 to the Share Purchase Agreement re SVOX AG       1 | 2

Annex 9.2

     Representations and Warranties of Nuance

(a)	The Buyer is a corporation duly organized and validly existing under the laws of Delaware, and has the full corporate power, authority and necessary governmental approvals to own or use its assets and properties and to conduct its business as the same is presently being conducted.
(b)	The Parent is a corporation duly organized and validly existing under the laws of Delaware, and has the full corporate power, authority and necessary governmental approvals to own or use its assets and properties and to conduct its business as the same is presently being conducted.
(c)	The Buyer and the Parent each has the full power and authority to enter into this Agreement and to perform all of its obligations under this Agreement. This Agreement constitutes the valid, legal and binding obligations of the Buyer and the Parent, enforceable in accordance with their terms. There exist no limitations under applicable law, the constituting documents of the Buyer and the Parent, or any contracts by which the Buyer or the Parent is bound that would prevent the Buyer or the Parent from entering into or performing its obligations under this Agreement.
(d)	No authorizations, permits or consents are required from any governmental or administrative authority, or any third party (including, without limitation, any shareholders or creditors of the Buyer and the Parent) for the consummation of the transactions contemplated by this Agreement other than as set out herein.
(e)	There are no Actions, suits or proceedings pending against the Buyer or the Parent or any of their Affiliates before any court or administrative board, agency or commission which involve a claim by a governmental or regulatory authority, or by a third party, which would operate to hinder the consummation of the transactions contemplated by this Agreement.
(f)	Nuance has procured that on the Closing Date it will have the necessary funds at its disposal to finance the transactions contemplated by this Agreement.
(g)	Parent is (i) eligible to register secondary offerings of securities, including the resale of the Parent common stock constituting the Consideration

Annex 9.2 to the Share Purchase Agreement re SVOX AG       2 | 2

Shares on a registration statement on Form S-3 under the Securities Act and (ii) a “well known seasoned issuer” under the Securities Act and the rules and regulations promulgated thereunder.

EX-2.2

Exhibit 2.2

CONFIDENTIAL
EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

NUANCE COMMUNICATIONS, INC.

ELLIPSE ACQUISITION CORPORATION

EQUITRAC CORPORATION

U.S. BANK NATIONAL ASSOCIATION, as Indemnification Escrow Agent

AND

CORNERSTONE IV, LLC, as Stockholder Representative

Dated as of May 10, 2011

TABLE OF CONTENTS

	Page
ARTICLE I THE MERGER		2
1.1 The Merger		2
1.2 Effective Time		2
1.3 Effect of the Merger		2
1.4 Formation Documents		3
1.5 Management		3
1.6 Effect of Merger on the Capital Stock of the Constituent Corporations		3
1.7 Dissenting Shares		13
1.8 Parent’s Obligations Fulfilled		13
1.9 Payment of Consideration; Surrender of Certificates		14
1.10 No Further Ownership Rights in Company Capital Stock		16
1.11 Lost, Stolen or Destroyed Certificates		16
1.12 Taking of Necessary Action; Further Action		17
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY		17
2.1 Organization of the Company		17
2.2 Company Capital Structure		18
2.3 Subsidiaries		19
2.4 Authority		19
2.5 No Conflict		20
2.6 Governmental Consents		20
2.7 Company Financial Statements		21
2.8 No Undisclosed Liabilities		21
2.9 Internal Controls		22
2.10 No Changes		22
2.11 Tax Matters		25
2.12 Restrictions on Business Activities		29
2.13 Title to Properties; Absence of Liens and Encumbrances		29
2.14 Intellectual Property		30
2.15 Agreements, Contracts and Commitments		35
2.16 Interested Party Transactions		37
2.17 Governmental Authorization		38
2.18 Litigation		38
2.19 Minute Books		38
2.20 Environmental Matters		38
2.21 Brokers’ and Finders’ Fees; Third Party Expenses		39
2.22 Employee Benefit Plans and Compensation		39
2.23 Insurance		45
2.24 Compliance with Laws		45

-i-

TABLE OF CONTENTS
(continued)

	Page
2.25 Bank Accounts, Letters of Credit and Powers of Attorney		47
2.26 Customers and Suppliers		47
2.27 Complete Copies of Materials		47
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND THE SUB		48
3.1 Organization, Standing and Power		48
3.2 Authority		48
3.3 Consents		48
3.4 No Conflict		48
3.5 Capital Resources; Solvency		49
3.6 Litigation		49
3.7 Brokers		49
3.8 Due Diligence		49
3.9 Interim Operations of Sub		49
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME		50
4.1 Conduct of Business of the Company		50
4.2 No Solicitation		54
4.3 Procedures for Requesting Parent Consent		55
ARTICLE V ADDITIONAL AGREEMENTS		55
5.1 Information Statement; Stockholder Approval		55
5.2 Access to Information		56
5.3 Confidentiality		56
5.4 Expenses		57
5.5 Public Disclosure		57
5.6 Consents		58
5.7 Financial Statements		58
5.8 Additional Documents and Further Assurances; Reasonable Efforts		59
5.9 New Employment Arrangements		59
5.10 Termination of 401(k) Plan		60
5.11 Section 280G		60
5.12 Reasonable Efforts; Regulatory Filings		60
5.13 Notification of Certain Matters		61
5.14 Indemnification of Directors and Officers		61
ARTICLE VI CONDITIONS TO THE MERGER		62
6.1 Conditions to Obligations of Each Party to Effect the Merger		62

-ii-

TABLE OF CONTENTS
(continued)

	Page
6.2 Conditions to the Obligations of Parent and Sub		62
6.3 Conditions to Obligations of the Company		64
ARTICLE VII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS		65
7.1 Survival of Representations, Warranties and Covenants		65
7.2 Indemnification		65
7.3 Escrow Arrangements		66
7.4 Indemnification Claims		68
7.5 Stockholder Representative		74
7.6 Maximum Payments; Remedy		76
7.7 Purchase Price Adjustment		76
7.8 Sole Remedy		76
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER		76
8.1 Termination		76
8.2 Effect of Termination		77
8.3 Amendment		78
8.4 Extension; Waiver		78
ARTICLE IX GENERAL PROVISIONS		78
9.1 Notices		78
9.2 Interpretation		79
9.3 Counterparts		80
9.4 Entire Agreement; Assignment		80
9.5 Severability		80
9.6 Other Remedies; Specific Performance		80
9.7 Governing Law; Venue		80
9.8 Rules of Construction		81
9.9 Successors and Assigns		81
9.10 Third Party Beneficiaries		81
9.11 Waiver of Jury Trial		81

-iii-

INDEX OF EXHIBITS

Exhibit	Description
Exhibit A	Form of Voting Agreement
Exhibit B	Form of Stock Purchase Agreement
Exhibit C	Form of Employee Proprietary Information, Inventions and Non-Competition Agreement
Exhibit D	Form of Articles of Merger
Exhibit E	Form of Company’s Standard Proprietary Information Agreement
Exhibit F	Form of Legal Opinion of Counsel of the Company
Exhibit G	Description of Indemnification Escrow Agent’s Money Market Account
Exhibit H	Customer Identification Program

-iv-

     THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made and entered into as of May 10, 2011 by and among Nuance Communications, Inc., a Delaware corporation (“Parent”), Ellipse Acquisition Corporation, a Florida corporation and a wholly owned subsidiary of Parent (“Sub”), Equitrac Corporation, a Florida corporation (the “Company”), U.S. Bank National Association, to act as escrow agent hereunder, and as a party to this Agreement solely with respect to Article VII and Section 9.1 herein (the “Indemnification Escrow Agent”), and Cornerstone IV, LLC, a Delaware limited partnership, which will serve as the representative of the Company’s stockholders, optionholders and warrantholders, and is referred to herein, in such capacity, from time to time as the “Stockholder Representative.”

RECITALS

     A. The Boards of Directors of each of Parent, Sub and the Company believe it is in the best interests of each company and its respective stockholders that Parent acquire the Company through the statutory merger of Sub with and into the Company (the “Merger”) and, in furtherance thereof, have approved the Merger.

     B. Pursuant to the Merger, among other things, and subject to the terms and conditions of this Agreement, all of the issued and outstanding capital stock of the Company shall be converted into the right to receive the consideration set forth herein.

     C. The Company, on the one hand, and Parent and Sub, on the other hand, desire to make certain representations, warranties, covenants and other agreements in connection with the Merger.

     D. Concurrent with the execution and delivery of this Agreement, as a material inducement to Parent and Sub to enter into this Agreement, all officers and directors of the Company, and certain stockholders of the Company are entering into Voting Agreements, in substantially the form attached hereto as Exhibit A (the “Voting Agreements”), with Parent, pursuant to which such stockholders have irrevocably agreed (i) to vote in favor of the Merger and the transactions contemplated thereby, and (ii) to other matters set forth therein.

     E. Concurrent with the execution and delivery of this Agreement, as a material inducement to the Company to enter into this Agreement, Parent is entering into a Common Stock Purchase Agreement, in substantially the form attached hereto as Exhibit B (the “Stock Purchase Agreement”), with the Company, pursuant to which Parent will purchase 1,977,339 shares of Company Common Stock for $5.0573 per share, or an aggregate purchase price of $9,999,996.53.

     F. Concurrent with the execution and delivery of this Agreement, as a material inducement to Parent and Sub to enter into this Agreement, certain individuals are entering into Employee Proprietary Information, Inventions and Non-Competition Agreements, each in substantially the form attached hereto as Exhibit C (the “Employee Proprietary Information,

Inventions and Non-Competition Agreements”), with Parent or the Surviving Corporation, as determined by Parent.

     F. NOW, THEREFORE, in consideration of the mutual agreements, covenants and other promises set forth herein, the mutual benefits to be gained by the performance thereof, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereby agree as follows:

ARTICLE I

THE MERGER

     1.1 The Merger. At the Effective Time (as defined in Section 1.2 hereof) and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the Florida Business Corporation Act, as amended (the “FBCA”), Sub shall be merged with and into the Company, the separate corporate existence of Sub shall cease, and the Company shall continue as the surviving corporation and as a wholly owned subsidiary of Parent. The surviving corporation is hereinafter referred to as the “Surviving Corporation.”

     1.2 Effective Time. Unless this Agreement is earlier terminated pursuant to Section 8.1 hereof, the closing of the Merger (the “Closing”) will take place on the earlier of (i) the ninetieth (90^th) day after the date of this Agreement or (ii) the day after the date that the Required Financials (as defined herein) are delivered by the Company to Parent (or such condition is waived by Parent), conditioned upon the satisfaction or waiver of the conditions set forth in Article VI hereof, at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 1700 K Street N.W., Fifth Floor, Washington, D.C. 20006, unless another time or place is mutually agreed upon in writing by Parent and the Company; provided, however, that if such day is not a Business Day then the closing shall occur on the immediately following Business Day. The date upon which the Closing actually occurs shall be referred to herein as the “Closing Date.” On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing Articles of Merger in substantially the form attached hereto as Exhibit D, with the Department of State of the State of Florida (the “Articles of Merger”), in accordance with the applicable provisions of the FBCA (the date and time the Merger becomes effective in accordance with the provisions of the FBCA shall be referred to herein as the “Effective Time”).

     1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the FBCA. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise agreed to pursuant to the terms of this Agreement, all of the property, rights, privileges, powers and franchises of the Company and Sub shall vest in the Surviving Corporation, and all restrictions, disabilities and duties of the Company and Sub shall become the restrictions, disabilities and duties of the Surviving Corporation.

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     1.4 Formation Documents.

          (a) Unless otherwise determined by Parent prior to the Effective Time, the articles of incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time to be identical to the articles of incorporation of Sub as in effect immediately prior to the Effective Time, until thereafter amended in accordance with the FBCA and as provided in such articles of incorporation; provided, however, that at the Effective Time, Article I of the articles of incorporation of the Surviving Corporation shall be amended and restated in its entirety to read as follows: “The name of the corporation is Equitrac Corporation”

          (b) Unless otherwise determined by Parent prior to the Effective Time, the bylaws of Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation at the Effective Time until thereafter amended in accordance with the FBCA and as provided in the articles of incorporation of the Surviving Corporation and such bylaws.

     1.5 Management.

          (a) Directors of Company. The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately after the Effective Time, each to hold the office of a director of the Surviving Corporation in accordance with the provisions of the FBCA and the articles of incorporation and bylaws of the Surviving Corporation until their respective successors are duly elected and qualified.

          (b) Officers of Company. The officers of Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation immediately after the Effective Time, each to hold office in accordance with the provisions of the bylaws of the Surviving Corporation.

     1.6 Effect of Merger on the Capital Stock of the Constituent Corporations.

          (a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

               (i) “Accounts Payable” means accounts payable, notes payable and other payables generated in connection with the business of the Company and the Company Subsidiaries.

               (ii) “Accounts Receivable” means accounts receivable, notes receivable and other receivables generated in connection with the business of the Company and the Company Subsidiaries.

               (iii) “Aggregate Option Exercise Amount” shall mean an amount equal to the aggregate exercise price of all Company Options outstanding as of the Effective Time.

               (iv) “Aggregate Warrant Exercise Amount” shall mean an amount equal to the aggregate exercise price of all Company Warrants outstanding as of the Effective Time.

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               (v) “Anti-Corruption and Anti-Bribery Laws” shall mean the Foreign Corrupt Practices Act of 1977, as amended, any rules or regulations thereunder, or any other applicable United States or foreign anti-corruption or anti-bribery laws or regulations and the Bribery Act 2010, as the same may be amended, and any subsidiary legislation and regulation thereunder, or any other applicable United Kingdom anti-corruption or anti-bribery legislation or regulation.

               (vi) “Business Day(s)” shall mean each day that is not a Saturday, Sunday or holiday on which banking institutions located in New York, New York are authorized or obligated by Law or executive order to close.

               (vii) “Common Consideration” means the Merger Consideration, minus the Series A Aggregate Liquidation Preference, minus the Series B Aggregate Liquidation Preference, minus the Indemnification Escrow Amount, minus the Stockholder Representative Escrow Amount, minus the Mezzanine Loan Payoff Amount, minus the Senior Loan Payoff Amount.

               (viii) “Common Consideration Per Share” shall mean (1) the quotient obtained by dividing (a) the Common Consideration, plus the Aggregate Option Exercise Amount, plus the Aggregate Warrant Exercise Amount, by (b) the Company Common Stock Deemed Outstanding, plus (2) the right to receive such Stockholder’s Pro Rata Portion of the remaining balance of the Indemnification Escrow Fund, if any, pursuant to Section 1.6(h)(i) hereof and such Stockholder’s Pro Rata Portion of the remaining balance of the Stockholders Representative Escrow Fund, if any, pursuant to Section 1.6(h)(ii) hereof.

               (ix) “Common Stockholder” shall mean any holder of any Company Common Stock that is issued and outstanding immediately prior to the Effective Time.

               (x) “Company Capital Stock” shall mean shares of Company Common Stock and Company Preferred Stock.

               (xi) “Company Common Stock” shall mean shares of common stock, $0.001 par value per share, of the Company.

               (xii) “Company Common Stock Deemed Outstanding” shall mean the number of shares of Company Common Stock outstanding immediately prior to the Effective Time (excluding shares of Company Common Stock owned by Parent), plus the number of shares of Company Common Stock underlying the Company Options and Company Warrants.

               (xiii) “Company Cash” shall mean (1) $4,950,000 if the Closing occurs on or before July 9, 2011, or (2) $6,200,000 if the Closing occurs after July 9, 2011.

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               (xiv) “Company Debt” shall mean any Indebtedness of the Company or any Company Subsidiaries, other than the Mezzanine Loan Payoff Amount, the Senior Loan Payoff Amount and the Indebtedness set forth on Schedule 1.6(a)(xiv).

               (xv) “Company Material Adverse Effect” shall mean any change, event or effect that (a) is or is reasonably likely to be materially adverse to the business, assets (whether tangible or intangible), financial condition, operations or capitalization of the Company and the Company Subsidiaries, taken as a whole or (b) materially impairs or delays the ability of the Company to perform the Company’s obligations under this Agreement or to consummate the transactions contemplated hereby, which, in each case, cannot be cured favorably or resolved prior to the Closing Date; provided, however, that the following shall not be deemed to constitute, and shall not be taken into account in determining whether there has been a “Company Material Adverse Effect”: (A) any changes in conditions in the U.S. or global economy generally or the U.S. or global capital, credit or financial markets generally, including changes in commercial bank loan interest risks or currency exchange rates; (B) any changes generally affecting the industry in which the Company and the Company Subsidiaries participate or the markets in which they operate; (C) any changes relating to or required by GAAP; (D) any changes in, or required by, applicable Laws or other binding directives issued by any Governmental Entity or the interpretation thereof; (E) any effect resulting from the execution, announcement or performance of this Agreement and the other transactions contemplated by this Agreement; (F) any adverse change, event or effect arising or resulting from any action taken by Parent, Sub or their representatives or due to the Company’s compliance with Article IV or V, provided that, with respect to any action set forth in Section 4.1, the Company has informed Parent that compliance could reasonably result in a Company Material Adverse Effect; or any action taken by the Company on or after the date of this Agreement at the written request or with the written consent of Parent or any of its representatives; and (G) any effect of earthquakes, hurricanes, floods or other natural disasters, acts of war (whether or not declared), armed hostilities, sabotage or terrorism or the threat thereof.

               (xvi) “Company Options” shall mean all options (including commitments to grant options) to purchase or otherwise acquire Company Common Stock (whether or not vested) held by any Person, each of which is listed on Section 2.2(b) of the Disclosure Schedule, that are issued and outstanding immediately prior to the Effective Time.

               (xvii) “Company Preferred Options” shall mean all issued and outstanding options or other rights (including commitments to grant options or other rights) to purchase or otherwise acquire Company Preferred Stock (whether or not vested) held by any Person, each of which is listed on Section 2.2(b) of the Disclosure Schedule.

               (xviii) “Company Preferred Stock” shall mean the Series A Preferred Stock and the Series B Preferred Stock, taken together.

               (xix) “Company Restricted Stock” shall mean shares of Company Common Stock that are subject to vesting.

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               (xx) “Company Subsidiary” shall have the meaning ascribed to such term in Section 2.1 hereof.

               (xxi) “Company Vested Options” shall mean all Company Options that are vested (and have not been exercised) immediately prior to the Effective Time.

               (xxii) “Company Warrants” shall mean all issued and outstanding warrants or other rights (including commitments to grant warrants or other rights, but excluding Company Options) to purchase or otherwise acquire Company Common Stock (whether or not vested) held by any Person, each of which is listed on Section 2.2(b) of the Disclosure Schedule.

               (xxiii) “Contract” shall mean any written or oral agreement, contract, subcontract, lease, binding understanding, instrument, note, bond, mortgage, indenture, option, warranty, purchase order, license, sublicense, benefit plan, obligation, commitment or undertaking of any nature.

               (xxiv) “Environmental Laws” shall mean all Laws relating to pollution or protection of the environment, exposure of any individual to Hazardous Materials, and Laws which prohibit, regulate or control any Hazardous Material, including without limitation Laws relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, registration, distribution, labeling, sale, or the exposure of others to, recycling, use, treatment, storage, disposal, transport, or handling of Hazardous Materials or any product containing any Hazardous Material, and including related electronic waste, product content or product take-back requirements.

               (xxv) “Escrow Participants” shall mean all Common Stockholders (other than Parent), Optionholders and Warrantholders.

               (xxvi) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

               (xxvii) “Excess Company Debt” shall have the meaning ascribed to such term in Section 7.2 hereof.

               (xxviii) “GAAP” shall mean United States generally accepted accounting principles consistently applied.

               (xxix) “Governmental Entity” shall have the meaning ascribed to such term in Section 2.6 hereof.

               (xxx) “Hazardous Materials” means any material or substance that has been designated by a Governmental Entity to be a pollutant, contaminant, hazardous, toxic, radioactive or biological waste, or otherwise a danger to health, reproduction or the environment, including without

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limitation, asbestos-containing materials (ACM), and petroleum and petroleum products or any fraction thereof.

               (xxxi) “Indebtedness” shall mean all Liabilities, including any applicable principal, penalties (including with respect to any prepayment thereof) interest and premiums, (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar obligations, or (iii) in the nature of guarantees of the obligations described in the preceding clauses (i)—(ii).

               (xxxii) “Indemnification Escrow Amount” shall mean an amount equal to $15,700,000.

               (xxxiii) “Knowledge” or “Known” shall mean, with respect to the Company, the actual knowledge of the members of the Board of Directors of the Company, the Company’s officers, and employees of the Company whose primary responsibility is the subject matter about which the relevant matter relates, after reasonable inquiry.

               (xxxiv) “Law” shall mean any foreign, federal, state or local law, statute, regulation, constitution, ordinance, code, edict, rule, order, injunction, judgment, doctrine, decree, directive, ruling, writ, requirement, assessment, award or arbitration award of a Governmental Entity, settlement, Contract or governmental requirement enacted, promulgated, entered into, or imposed by, any Governmental Entity (including, for the sake of clarity, common law).

               (xxxv) “Liabilities” shall have the meaning ascribed to such term in Section 2.8 hereof.

               (xxxvi) “Lien” shall mean any lien, pledge, charge, claim, mortgage, security interest or other encumbrance of any sort

               (xxxvii) “Merger Consideration” shall mean an amount equal to (a) $147,000,000, plus (b) the Company Cash, minus (c) the Third Party Expenses (as defined in Section 5.4 hereof), minus (d) the aggregate amount of any and all Company Debt.

               (xxxviii) “Mezzanine Credit Agreement” shall mean the Credit Agreement, dated as of December 14, 2009, by and among, on the one hand, the parties identified as Lenders therein and Brookside Mezzanine Fund II, L.P., a Delaware limited partnership, as the agent for the Lenders and, on the other hand, the Company, as amended on November 18, 2010.

               (xxxix) “Mezzanine Loan Payoff Amount” shall mean the aggregate amount of principal, interest and other fees due and payable pursuant to the Mezzanine Credit Agreement at the Effective Time.

               (xl) “Optionholder” shall mean any holder of Company Options immediately prior to the Effective Time.

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               (xli) “Parent Material Adverse Effect” shall mean any change, event or effect that (a) is or is reasonably likely to be materially adverse to the business, assets (whether tangible or intangible), financial condition, operations or capitalization of Parent and its subsidiaries, taken as a whole or (b) materially impairs or delays the ability of Parent to perform Parent’s obligations under this Agreement or to consummate the transactions contemplated hereby, which, in each case, cannot be cured favorably or resolved prior to the Closing Date.

               (xlii) “Person” shall mean any natural person, company, corporation, limited liability company, general or limited partnership, trust, proprietorship, joint venture, or other business entity, unincorporated association, organization or enterprise, or any Governmental Entity.

               (xliii) “Plans” shall mean the Company’s 1999 Stock Option Plan and the Company’s 2010 Restricted Stock Plan.

               (xliv) “Pro Rata Portion” shall mean, with respect to each Escrow Participant, an amount equal to the quotient (expressed as a percentage) obtained by dividing (a) the total amount of consideration to be received by such Escrow Participant pursuant to Sections 1.6(b)(iii), 1.6(c) and 1.6(d) hereof by (b) the total amount of consideration to be received by all Escrow Participants pursuant to Sections 1.6(b)(iii), 1.6(c) and 1.6(d) hereof.

               (xlv) “Related Agreements” shall mean the Articles of Merger and the Voting Agreements.

               (xlvi) “SEC” shall mean the United States Securities and Exchange Commission.

               (xlvii) “Securities Act” shall mean the Securities Act of 1933, as amended.

               (xlviii) “Senior Credit Agreement” shall mean the Credit Agreement, dated as of December 14, 2009, by and among, on the one hand, the parties identified as Lenders therein and Wells Fargo Foothill, LLC, as the agent for the Lenders and, on the other hand, the Company, as amended on November 18, 2010.

               (xlix) “Senior Loan Payoff Amount” shall mean the aggregate amount of principal, interest and other fees due and payable pursuant to the Senior Credit Agreement at the Effective Time.

               (l) “Series A Aggregate Liquidation Preference” shall mean the Series A Consideration Per Share multiplied by the aggregate number of shares of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time.

               (li) “Series A Consideration Per Share” shall mean an amount equal to the sum of (1) $2.36918 plus (2) the Series A Dividend Amount.

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               (lii) “Series A Dividend Amount” shall mean, with respect to each share of Series A Preferred Stock, an amount equal to (1) 12% per annum, accruing and compounding on a quarterly basis, of the sum of (i) $2.36918 plus (ii) all accumulated and unpaid dividends thereon, less (2) any dividends previously paid on such share.

               (liii) “Series A Preferred Stock” shall mean the Company’s Series A Preferred Stock, $0.01 par value per share.

               (liv) “Series B Aggregate Liquidation Preference” shall mean the Series B Consideration Per Share multiplied by the aggregate number of shares of Series B Preferred Stock issued and outstanding immediately prior to the Effective Time.

               (lv) “Series B Consideration Per Share” shall mean an amount equal to the sum of (1) $2.36918 plus (2) the Series B Dividend Amount.

               (lvi) “Series B Dividend Amount” shall mean, with respect to each share of Series A Preferred Stock, an amount equal to (1) 12% per annum, accruing and compounding on a quarterly basis, of the sum of (i) $2.36918 plus (ii) all accumulated and unpaid dividends thereon, less (2) any dividends previously paid on such share.

               (lvii) “Series B Preferred Stock” shall mean the Company’s Series B Preferred Stock, $0.01 par value per share.

               (lviii) “Stockholder” shall mean any holder of any Company Capital Stock that is issued and outstanding immediately prior to the Effective Time.

               (lix) “Stockholder Representative Escrow Amount” shall mean an amount equal to $500,000.

               (lx) “Stockholder Representative Escrow Agent” shall mean the third party designated by the Stockholder Representative to serve as escrow agent under the Stockholder Representative Escrow Agreement.

               (lxi) “Stockholder Representative Escrow Agreement” shall mean the agreement between the Stockholder Representative Escrow Agent and the Stockholder Representative, which shall be entered into prior to the Closing.

               (lxii) “Taxing Authority” shall mean any Governmental Entity having jurisdiction over the assessment, determination, collection or imposition of any Tax.

               (lxiii) “Warrantholder” shall mean any holder of Company Warrants immediately prior to the Effective Time.

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          (b) Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Sub, the Company or the holders of shares of Company Capital Stock, each share of Company Capital Stock (excluding, for the avoidance of doubt, Company Options and Company Warrants) issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares (as defined in Section 1.7(a) hereof) and subject to the escrow provisions contained herein), upon the terms and subject to the conditions set forth in this Section 1.6 and throughout this Agreement, will be cancelled and extinguished and be converted automatically into the right to receive, upon surrender of the certificate representing such shares of Company Capital Stock in the manner provided in Section 1.9 hereof, the amounts set forth below:

               (i) Each outstanding share of Series A Preferred Stock will be converted automatically into the right to receive the Series A Consideration Per Share.

               (ii) Each outstanding share of Series B Preferred Stock will be converted automatically into the right to receive the Series B Consideration Per Share.

               (iii) Each outstanding share of Company Common Stock (other than shares of Company Common Stock owned by Parent which shall be converted exclusively into an equivalent number of shares of common stock of the Surviving Corporation) will be converted automatically into the right to receive the Common Consideration Per Share.

          (c) Treatment of Company Options.

               (i) No Company Option shall be assumed or otherwise replaced by Parent. Immediately prior to the Effective Time, and conditioned on the consummation of the Merger, each Company Option (whether vested or unvested and regardless of the exercise price thereof) shall be cancelled and each holder of a Company Option shall automatically (without any further action required of such holder) be entitled to the right to receive a cash payment in an amount equal to the product of (1) the number of shares of Company Common Stock underlying all Company Options held by such holder immediately prior to the Effective Time, multiplied by (2) the Common Consideration Per Share, and minus (3) the aggregate amount necessary to exercise all of the Company Options held by such holder (the “Option Merger Consideration”). The payment of the Option Merger Consideration to a holder of a Company Option shall be reduced by any income or employment Tax withholding required under the Code or any provision of state, local or foreign Tax Law and shall be subject to the escrow provisions contained herein. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the applicable holder of the Company Option.

               (ii) Prior to the Effective Time, and subject to the reasonable review and approval of Parent, the Company shall have taken all actions necessary to effect the transactions anticipated by this Section 1.6(c) under the Plans, all Company Option agreements, and any other plan or arrangement of the Company (whether written or oral, formal or informal), including

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delivering all required notices and obtaining any required consents necessary to effectuate the provisions of this Agreement.

          (d) Treatment of Company Warrants.

               (i) No Company Warrant shall be assumed or otherwise replaced by Parent. Immediately prior to the Effective Time, and conditioned on the consummation of the Merger, each Company Warrant (regardless of the exercise price thereof) shall be cancelled and each holder of a Company Warrant shall automatically (without any further action required of such holder) be entitled to the right to receive a cash payment in an amount equal to the product of (1) the number of shares of Company Common Stock underlying all Company Warrants held by such holder immediately prior to the Effective Time, multiplied by (2) the Common Consideration Per Share, and minus (3) the aggregate amount necessary to exercise all of the Company Warrants held by such holder (the “Warrant Merger Consideration”). The payment of the Warrant Merger Consideration to a holder of a Company Warrant shall be reduced by any income or employment Tax withholding required under the Code or any provision of state, local or foreign tax Law and shall be subject to the escrow provisions contained herein. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the applicable holder of the Company Warrant.

               (ii) Prior to the Effective Time, and subject to the reasonable review and approval of Parent, the Company shall have taken all actions necessary to effect the transactions anticipated by this Section 1.6(d) under any warrant agreements, and any other plan or arrangement of the Company (whether written or oral, formal or informal), including delivering all required notices and obtaining any required consents necessary to effectuate the provisions of this Agreement.

          (e) Treatment of Company Preferred Options. Prior to the Effective Time, and subject to the reasonable review and approval of Parent, the Company shall have taken all actions necessary (including providing all required notices) to ensure that all outstanding Company Preferred Options are exercised or terminated immediately prior to the Effective Time.

          (f) Treatment of Company Restricted Stock. Prior to the Effective Time, and subject to the reasonable review and approval of Parent, the Company shall have taken all actions necessary (including providing all required notices) to ensure that all outstanding shares of Company Restricted Stock are vested as of immediately prior to the Effective Time and that any and all notes receivable secured by shares of Company Capital Stock have been repaid in full.

          (g) Treatment of Parent-Owned Company Common Stock. Each share of Company Common Stock that is owned by Parent immediately prior to the Effective Time shall be converted into a share of common stock of the Surviving Corporation).

          (h) Escrow Amounts. All amounts deposited (i) in the Indemnification Escrow Fund shall be used to secure the Escrow Participant’s obligations pursuant to Section 7.2 hereof and

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(ii) in the Stockholder Representative Escrow Fund shall be used to secure the Escrow Participant’s obligations set forth in the Stockholder Representative Escrow Agreement.

               (i) Upon termination of the Indemnification Escrow Period, each Escrow Participant shall be entitled to its Pro Rata Portion of the remaining portion of the Indemnification Escrow Fund, if any.

               (ii) Upon the termination of the Stockholder Representative Escrow Agreement, each Escrow Participant shall be entitled to its Pro Rata Portion of the balance of the Stockholder Representative Escrow Amount, if any.

          (i) Withholding Taxes. Notwithstanding any other provision in this Agreement, Parent, the Company, Sub, the Paying Agent (as defined in Section 1.9) and the Indemnification Escrow Agent shall have the right to deduct and withhold Taxes (as defined in Section 2.11) from any payments to be made hereunder if such withholding is required by Law and to request and receive any necessary Tax forms, including Form W-9 or the appropriate series of Form W-8, as applicable, or any similar information. To the extent that any of the aforementioned amounts are so withheld, such amounts shall be paid over to the appropriate Taxing Authority, and such withheld and paid over amounts shall be treated for all purposes of this Agreement as having been delivered and paid to the recipient of payments in respect of which such deduction and withholding was made. To the extent that any payment pursuant to this Agreement is not reduced by such deductions or withholdings, such recipient shall indemnify Parent and its affiliates (including the Surviving Corporation) for any amounts imposed by any Taxing Authority together with any costs and expenses related thereto (including reasonable attorneys’ fees and costs of investigation).

          (j) Certain Transfer Taxes and Fees. All transfer, documentary, sales, use, stamp, value added, goods and services, excise, registration and other similar Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement shall be paid by the Escrow Participants when due, and Stockholder Representative will, at the expense of the Escrow Participants, file all necessary Returns and other documentation with respect to all such Taxes, fees and charges, and if required by applicable Law, Parent will and will cause its affiliates to, join in the execution of any such Returns and other documentation.

          (k) Capital Stock of Sub. Each share of Common Stock of Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of Common Stock of the Surviving Corporation. Each stock certificate of Sub evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Surviving Corporation.

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     1.7 Dissenting Shares.

          (a) Notwithstanding any other provisions of this Agreement to the contrary, any shares of Company Capital Stock held by a holder who has not voted for the Merger, or who has not effectively withdrawn or lost such holder’s appraisal rights under the FBCA (collectively, the “Dissenting Shares”) shall not be converted into or represent a right to receive the applicable consideration for Company Capital Stock set forth in Section 1.6 hereof, but the holder thereof shall only be entitled to such rights as are provided by the FBCA.

          (b) Notwithstanding the provisions of Section 1.7(a) hereof, if any holder of Dissenting Shares shall effectively withdraw or lose (through failure to perfect or otherwise) such holder’s appraisal or dissenter’s rights, then, as of the later of the Effective Time and the occurrence of such event, such holder’s shares shall automatically be converted into and represent only the right to receive the consideration for Company Capital Stock, as applicable, set forth in Section 1.6 hereof, without interest thereon, upon surrender of the certificate representing such shares.

          (c) The Company shall give Parent (i) prompt notice of any written demand for appraisal received by the Company pursuant to the applicable provisions of the FBCA, and (ii) the opportunity to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any such demands or offer to settle or settle any such demands. Notwithstanding the foregoing, to the extent that Parent or the Company (i) makes any payment or payments in respect of any Dissenting Shares in excess of the consideration that otherwise would have been payable in respect of such shares in accordance with this Agreement or (ii) incurs any other costs or expenses (including specifically, but without limitation, attorneys’ fees, costs and expenses in connection with any action or proceeding or in connection with any investigation) in respect of any Dissenting Shares (excluding payments for such shares) (together “Dissenting Share Payments”), Parent shall be entitled to recover under the terms of Section 7.2 hereof the amount of such Dissenting Share Payments without regard to the Threshold Amount (as defined in Section 7.4(a) hereof).

     1.8 Parent’s Obligations Fulfilled. Notwithstanding anything herein to the contrary, before the Paying Agent or the Surviving Corporation shall make any payments hereunder to Stockholders/former Stockholders, Optionholders/former Optionholders and Warrantholders/former Warrantholders, the Stockholder Representative shall deliver to Parent and the Paying Agent a schedule (a “Payment Schedule”) setting forth (i) the name and address of each Stockholder/former Stockholder, Optionholder/former Optionholder and Warrantholder/former Warrantholder entitled to distribution of Merger Consideration at such time, (ii) the date of acquisition of the Company Capital Stock held by each Stockholder/former Stockholder (including Company Capital Stock acquired pursuant to the exercise of Company Options or Company Warrants), (iii) with respect to shares of Company Capital Stock acquired on or after January 1, 2011, the basis of each Stockholder/former Stockholder in such Company Capital Stock, and (iv) the amount of consideration to which each such Stockholder/former Stockholder, Optionholder/former Optionholder and Warrantholder/former Warrantholder is then entitled (and, with respect to payments to be made in connection with the

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Closing, the amount of any income or employment Tax withholding required under applicable Law), together with any supporting schedules and documentation (showing the number and type of securities held immediately prior to the Effective Time by each such holder, together with calculations of the amount then payable to such holder). The Stockholder Representative shall be responsible for instructing the Paying Agent and the Surviving Corporation as to the distribution of such amounts then deposited. Parent, the Paying Agent and the Surviving Corporation may rely on the instructions of the Stockholder Representative for distributions and shall have no responsibility or liability with respect thereto; provided, that the distribution instructions of the Stockholder Representative are followed. Upon Parent making each aggregate payment required of it under this Agreement to the Paying Agent and the Surviving Corporation as provided herein, Parent shall have fulfilled its obligations with respect to such payment. Neither Parent (including indirectly through the Surviving Corporation) nor the Paying Agent shall have any liability whatsoever with respect to the distribution of such payments among the Stockholders/former Stockholders, Optionholders/former Optionholders and Warrantholders/former Warrantholders of the Company.

     1.9 Payment of Consideration; Surrender of Certificates.

          (a) Paying Agent. Parent, or an institution selected by Parent and at Parent’s sole expense, prior to the Effective Time, shall serve as the paying agent (such institution, the “Paying Agent”) for the Merger, other than with respect to the Option Merger Consideration. The Surviving Corporation shall serve as the paying agent for the Option Merger Consideration.

          (b) Parent to Provide Consideration. The Merger Consideration will be paid by Parent at Closing via wire transfer of immediately available funds as follows:

               (i) the sum of the Senior Loan Payoff Amount to Wells Fargo Foothill, LLC, as agent for the senior lenders for full and complete payment of the Senior Credit Agreement;

               (ii) the sum of the Mezzanine Loan Payoff Amount to Brookside Mezzanine Fund II, L.P., as agent for the mezzanine lenders for full and complete payment of the Mezzanine Credit Agreement;

               (iii) the Indemnification Escrow Amount to the Indemnification Escrow Agent, to be received, held and disbursed pursuant to the terms of this Agreement, with any balance thereof remaining upon the termination of the Indemnification Escrow Fund to be distributed to the Escrow Participants pursuant to Section 7.3 hereof;

               (iv) the Stockholder Representative Escrow Amount to the Stockholder Representative Escrow Agent, to be received, held in an account (the “Stockholder Representative Escrow Fund”) and disbursed pursuant to the terms of the Stockholder Representative Escrow Agreement, with any balance thereof remaining upon the termination of the Stockholder Representative Escrow Agreement to be distributed pursuant to the terms thereof to the Escrow Participants;

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               (v) the sum of the following to the Paying Agent: (1) the Series A Aggregate Liquidation Preference for distribution to the holders of the Series A Preferred Stock, (2) the Series B Aggregate Liquidation Preference for distribution to the holders of the Series B Preferred Stock, (3) the Common Consideration, less the Option Merger Consideration, less the Warrant Merger Consideration, for distribution to the Common Stockholders, and (4) the Warrant Merger Consideration for distribution to the Warrantholders, each in accordance with the Payment Schedule delivered pursuant to Section 1.8 hereof; and

               (vi) the sum of the following to the Surviving Corporation: the Option Merger Consideration for distribution to the Optionholders in accordance with the Payment Schedule delivered pursuant to Section 1.8 hereof.

          (c) Exchange Procedures. Not less than ten (10) days prior to the Closing Date, Parent shall or shall cause the Paying Agent to make available a form of letter of transmittal reasonably acceptable to the Company and instructions for its use in effecting the surrender of Company Stock Certificates (as defined below). Within two (2) days of receipt of the letter of transmittal, the Company shall mail the letter of transmittal to each Stockholder at the address set forth opposite each such Stockholder’s name on the Payment Schedule. After receipt of such letter of transmittal, the Stockholders, on or after the Closing, will surrender the certificates representing their shares of Company Capital Stock (the “Company Stock Certificates”) to the Paying Agent for cancellation together with a duly completed and validly executed letter of transmittal. Upon surrender of a Company Stock Certificate for cancellation to the Paying Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, subject to the terms of Section 1.9(d) hereof, the holder of such Company Stock Certificate shall be entitled to receive from the Paying Agent in exchange therefor, the cash amounts to which such holder is entitled pursuant to Section 1.6 hereof (less any amounts to be withheld pursuant to Section 1.6(i)), and the Company Stock Certificate so surrendered shall be cancelled. Until so surrendered, each Company Stock Certificate outstanding after the Effective Time will be deemed, for all corporate purposes thereafter, to evidence only the right to receive the cash amounts payable in exchange for shares of Company Capital Stock (without interest) into which such shares of Company Capital Stock shall have been so converted. No portion of the Merger Consideration will be paid to the holder of any unsurrendered Company Stock Certificate with respect to shares of Company Capital Stock formerly represented thereby until the holder of record of such Company Stock Certificate shall surrender such Company Stock Certificate pursuant hereto. Notwithstanding the foregoing, (i) each Stockholder that delivers its duly executed letter of transmittal and such other documents as may reasonably be requested to the Paying Agent at least three (3) Business Days prior to the Closing Date shall be paid all cash amounts owed to such Stockholder pursuant to Section 1.6 on the Closing Date; and (ii) each Stockholder that delivers its duly executed letter of transmittal and such other documents as may reasonable be requested to the Paying Agent after the Closing shall be paid all cash amounts owed to such Stockholder pursuant to Section 1.6 as promptly as practicable after such delivery.

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          (d) Transfers of Ownership. If any cash amounts are to be disbursed pursuant to Section 1.6 hereof to a Person other than the Person whose name is reflected on the Company Stock Certificate surrendered in exchange therefor, it will be a condition of the delivery thereof that the certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the Person requesting such exchange will have paid to Parent or any agent designated by it any transfer or other Taxes required by reason of the disbursement of such cash amounts to a Person other than the registered holder of the certificate surrendered, or established to the satisfaction of Parent or any agent designated by it that such Tax has been paid or is not payable.

          (e) Paying Agent to Return Merger Consideration. At any time following the last day of the six (6) month period following the Effective Time, Parent shall be entitled to require the Paying Agent to deliver to Parent or its designated successor or assign all cash amounts that have been deposited with the Paying Agent pursuant to Section 1.9(b) hereof, and any income or proceeds thereof, not disbursed to the holders of Company Stock Certificates pursuant to Section 1.9(c) hereof, and thereafter the holders of Company Stock Certificates shall be entitled to look only to Parent (subject to the terms of Section 1.9(f) hereof) only as general creditors thereof with respect to any and all amounts that may be payable to such holders of Company Stock Certificates pursuant to Section 1.6 hereof upon the due surrender of such Company Stock Certificates in the manner set forth in Section 1.9(c) hereof.

          (f) No Liability. Notwithstanding anything to the contrary in this Section 1.9, neither the Paying Agent, the Surviving Corporation, nor any party hereto shall be liable to a holder of shares of Company Capital Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.

     1.10 No Further Ownership Rights in Company Capital Stock. The cash paid in respect of the surrender for exchange of shares of Company Capital Stock in accordance with the terms hereof shall be deemed to be full satisfaction of all rights pertaining to such shares of Company Capital Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Capital Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Company Stock Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article I.

     1.11 Lost, Stolen or Destroyed Certificates. In the event any Company Stock Certificates shall have been lost, stolen or destroyed, the Paying Agent shall issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof, such amount, if any, as may be required pursuant to Section 1.6 hereof; provided, however, that the Paying Agent may, in its discretion and as a condition precedent to the issuance thereof, require the Stockholder who is the owner of such lost, stolen or destroyed certificates to either (i) deliver a bond in such amount as it may reasonably direct or (ii) provide an indemnification agreement in a form and substance acceptable to the Paying Agent, against any claim that may be made against Parent or the Paying Agent with respect to the certificates alleged to have been lost, stolen or destroyed. Any

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Stockholder complying with the provisions of this Section 1.11 shall be deemed to have surrendered such lost, stolen or destroyed Company Stock Certificate for all purposes hereunder, including, without limitation, for purposes of receiving the cash to which such Stockholder is entitled pursuant to Section 1.6 hereof.

     1.12 Taking of Necessary Action; Further Action. If at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, Parent, Sub, and the officers and directors of the Company, Parent and Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to Parent and Sub, subject to such exceptions as are specifically disclosed in the disclosure schedule (referencing the appropriate section and paragraph numbers) supplied by the Company to Parent (the “Disclosure Schedule”) and dated as of the date hereof, on the date hereof and as of the Effective Time (unless expressly stated otherwise), as though made at the Effective Time, as follows (references to “Company” in this Article II shall refer, wherever not inappropriate by reference to the context, to the Company and each Company Subsidiary):

     2.1 Organization of the Company. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Florida. Each of the Company’s subsidiaries as of the date hereof (each, a “Company Subsidiary”) is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction set forth on Section 2.1 of the Disclosure Schedule. The Company and each Company Subsidiary has the corporate power to own its properties and to carry on its business as currently conducted. The Company and each Company Subsidiary is duly qualified or licensed to do business and in good standing as a foreign corporation in each jurisdiction in which such qualification or licensure is required by Law, except for those jurisdictions where the failure to be so qualified or licensed and in good standing would not reasonably be expected to have, individually, or in the aggregate, a Company Material Adverse Effect. The Company and each Company Subsidiary has made available a true and correct copy of its articles of incorporation and bylaws or comparable governing documents, each as amended to date and in full force and effect on the date hereof (collectively, the “Charter Documents”), to Parent. Section 2.1 of the Disclosure Schedule lists the directors and officers of the Company and each Company Subsidiary as of the date hereof. The operations now being conducted by the Company and each Company Subsidiary are not now and have never been conducted by the Company or any Company Subsidiary under any other name. Section 2.1 of the Disclosure Schedule also lists (a) each jurisdiction in which the Company is qualified or licensed to do business, (b) each jurisdiction in which each Company Subsidiary is qualified or licensed to do business and

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(c) every state or foreign jurisdiction in which the Company or a Company Subsidiary has employees or facilities.

     2.2 Company Capital Structure.

          (a) The authorized capital stock of the Company consists of 50,000,000 shares of Company Common Stock, of which 13,728,077.5 shares are issued and outstanding, and 25,000,000 shares of Company Preferred Stock, of which 20,000,000 shares have been designated Series A Preferred Stock, of which 5,937,865 shares are issued and outstanding, and 5,000,000 shares have been designated Series B Preferred Stock, of which 969,820 shares are issued and outstanding, excluding the effect of the transactions contemplated by this Agreement. As of the date hereof, the capitalization of the Company is as set forth in Section 2.2(a)(i) of the Disclosure Schedule. The Company Capital Stock is held by the Persons and in the numbers of shares set forth in Section 2.2(a)(i) of the Disclosure Schedule. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Charter Documents of the Company, or any agreement to which the Company is a party or by which it is bound, and together with all Company Options, Company Preferred Options and Company Warrants have been issued in compliance with all applicable federal and state securities Laws. Except as set forth in Section 2.2(a)(ii) of the Disclosure Schedule, there are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock. The Company has no capital stock other than the Company Capital Stock authorized, issued or outstanding. Except as set forth in Section 2.2(a)(iii) of the Disclosure Schedule, the Company has no Company Capital Stock that is unvested.

          (b) Except for the Plans or as set forth in Section 2.2(b) of the Disclosure Schedule, the Company has never adopted, sponsored or maintained any stock option plan or any other plan or agreement providing for equity compensation to any Person. The Company has reserved 11,570,176 shares of Company Common Stock for issuance to employees and directors of, and consultants to, the Company upon the issuance of stock or the exercise of options granted under the Plans or any other plan, agreement or arrangement (whether written or oral, formal or informal), of which 3,072,532 shares are issuable, as of the date hereof, upon the exercise of outstanding, unexercised options. Except for the Company Options, Company Preferred Options and Company Warrants set forth in Section 2.2(b) of the Disclosure Schedule (such schedule to contain, for each holder of Company Options and Company Warrants, the name of such holder, the number of shares of Company Common Stock issuable upon exercise of such Company Options or Company Warrants held by such holder, the exercise price of such Company Options and Company Warrants, the dates on which such Company Options were granted and will expire, and whether any Company Options are intended to be incentive stock options under the Code), there are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which the Company is a party or by which the Company is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the Company Capital Stock or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right,

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commitment or agreement. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the Company. Except as contemplated hereby, there are no voting trusts, proxies, or other agreements or understandings to which the Company or any Company Subsidiary is a party with respect to the voting of any shares of the Company Capital Stock, and to the Company’s Knowledge there are no voting trusts, proxies, or other Contracts or understandings with respect to the voting securities of the Company. Except as set forth in Section 2.2(b) of the Disclosure Schedule, there are no agreements to which the Company is a party relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any Company Capital Stock.

     2.3 Subsidiaries. Each Company Subsidiary is wholly owned by the Company. There are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which a Company Subsidiary is a party or by which a Company Subsidiary is bound obligating such Company Subsidiary to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of its capital stock or obligating such Company Subsidiary to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to any Company Subsidiary. Neither the Company nor any of the Company Subsidiaries has agreed, is obligated to make, or is bound by any Contract under which it may become obligated to make any future investment in, or capital contribution to, any other entity. Neither the Company nor any of the Company Subsidiaries directly or indirectly owns any equity or similar interest in or any interest convertible, exchangeable or exercisable for, any equity or similar interest in, any Person.

     2.4 Authority. The Company has all requisite power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreements to which the Company is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action is required on the part of the Company to authorize this Agreement and any Related Agreements to which it is a party and the transactions contemplated hereby and thereby, subject only to the approval of this Agreement by Stockholders entitled to vote thereon. The vote required to approve this Agreement by the Stockholders entitled to vote thereon is set forth in Section 2.4 of the Disclosure Schedule (the “Sufficient Stockholder Vote”). This Agreement and the Merger have been unanimously approved by the Board of Directors of the Company. This Agreement and each of the Related Agreements to which the Company is a party has been duly executed and delivered by the Company and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of the Company enforceable against it in accordance with their respective terms, except as such enforceability may be subject to the Laws of general application relating to bankruptcy, insolvency, and the relief of debtors and rules of Law governing specific performance, injunctive relief, or other equitable remedies.

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     2.5 No Conflict.

          (a) Except as set forth on Section 2.5(a) of the Disclosure Schedule, the execution and delivery by the Company of this Agreement and any Related Agreement to which the Company is a party, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (any such event, a “Conflict”) (i) any provision of the Charter Documents, (ii) any Material Contract (as defined in Section 2.15 hereof), (iii) any Contract to which the Company is a party or (iv) any Law applicable to the Company or any of its properties (whether tangible or intangible) or assets, except in the case of clause (iii) of this Section 2.5(a), for any conflict, violation or default that has not had and would not reasonably be expected to have a Company Material Adverse Effect.

          (b) Section 2.5(b) of the Disclosure Schedule sets forth all necessary consents, waivers and approvals of parties to any Material Contract, in form and substance reasonably acceptable to Parent, as are required thereunder in connection with the Merger, or for any such Material Contract to remain in full force and effect without limitation, modification or alteration after the Effective Time so as to preserve all rights of, and benefits to, the Company under such Material Contracts from and after the Effective Time. Following the Effective Time, the Surviving Corporation will be permitted to exercise all of its rights under the Material Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments that the Company would otherwise be required to pay pursuant to the terms of such Material Contracts had the transactions contemplated by this Agreement not occurred. Following the Effective Time, the Surviving Corporation will be permitted to exercise all of its rights under the Company’s Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company would otherwise be required to pay pursuant to the terms of such Contracts had the transactions contemplated by this Agreement not occurred, except as would not have a Company Material Adverse Effect.

     2.6 Governmental Consents. No consent, notice, waiver, approval, order or authorization of, or registration, declaration or filing with any court, administrative agency or commission or other federal, state, county, local or other foreign governmental or regulatory authority, instrumentality, agency or commission (each, a “Governmental Entity”), is required by, or with respect to, the Company in connection with the execution and delivery of this Agreement and any Related Agreement to which the Company is a party or the consummation of the transactions contemplated hereby and thereby, except for (a) the filing of the Articles of Merger with the Department of State of the State of Florida, and (b) compliance with the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and under the comparable non-U.S. competition Laws the parties reasonably determine apply.

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     2.7 Company Financial Statements.

          (a) Section 2.7(a) of the Disclosure Schedule sets forth the Company’s (i) audited balance sheets as of February 28, 2009 and 2010, and the consolidated statements of income, cash flow and stockholders’ equity for the twelve (12) month periods then ended (the “Year-End Financials”), and (ii) unaudited balance sheet as of February 28, 2011 (the “Balance Sheet Date”), and the related unaudited statements of income, cash flow and stockholders’ equity for the twelve (12) month period then ended (the “Interim Financials”). The Year-End Financials and the Interim Financials (collectively referred to as the “Financials”) are true and correct in all material respects and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and consistent with each other (except that the Interim Financials do not contain footnotes and other presentation items that may be required by GAAP). The Financials present fairly in all material respects the Company’s financial condition, results of operations and cash flows as of the dates and during the periods indicated therein, subject in the case of the Interim Financials to normal year-end adjustments. The Company’s unaudited consolidated balance sheet as of the Balance Sheet Date is referred to hereinafter as the “Current Balance Sheet.”

          (b) As of the date of this Agreement and as of the Closing, the Accounts Receivable of the Company (i) have or will have arisen from bona fide arm’s length transactions in the ordinary course of business and (ii) are either fully collectible in the ordinary course of business or for which reserves have been booked. There has not been any material adverse change in the collectability of such Accounts Receivable during the past twelve (12) months. Section 2.7(b) of the Disclosure Schedule sets forth a list of all such Accounts Receivable that are more than thirty days past due as of April 30, 2011, and of all such Accounts Receivable classified as doubtful accounts. The Company has no Accounts Receivable from any Person which is an affiliate of the Company or from any equity holder, director, officer or employee of the Company or any affiliates thereof. As of the date of this Agreement and as of the Closing, all Accounts Payable of the Company have or will have arisen from bona fide arm’s length transactions in the ordinary course of business. Since December 31, 2010, the Company has paid, and will as of the Closing have paid, its Accounts Payable in the ordinary course of its business. The Company has no Accounts Payable from any Person which is an affiliate of the Company or from any equity holder, director, officer or employee of the Company or any affiliates thereof.

          (c) The Company has no products placed with its customers under an understanding permitting their return to the Company without penalty other than pursuant to a breach of warranty.

     2.8 No Undisclosed Liabilities. The Company has no liability, indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other (whether or not required to be reflected in financial statements in accordance with GAAP) (“Liabilities”), which individually or in the aggregate (a) have not been reflected in the Current Balance Sheet, or (b) have not arisen in the ordinary course of business, consistent with past practices, since the Balance Sheet Date and are immaterial to the

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Company. The aggregate amount of Indebtedness of the Company outstanding as of May 6, 2011 is $43,918,130.

     2.9 Internal Controls. The Company maintains accurate books and records reflecting its assets and liabilities in all material respects and maintains proper and adequate internal accounting controls which provide reasonable assurance that (a) transactions are executed with management’s authorization; (b) transactions are recorded as necessary to permit preparation of the consolidated financial statements of the Company in accordance with GAAP and to maintain accountability for the Company’s consolidated assets; (c) access to the Company’s assets is permitted only in accordance with management’s authorization; (d) the reporting of the Company’s assets is compared with existing assets as necessary to permit preparation of the consolidated financial statements of the Company in accordance with GAAP and to maintain accountability for the Company’s consolidated assets; (e) accounts, notes and other receivables and inventory are recorded accurately in all material respects, and adequate procedures are implemented to effect the collection thereof on a timely basis; and (f) there are adequate procedures in place regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets. As of the date of this Agreement, to the Company’s Knowledge, except as is not material to the Company, (i) there are no significant deficiencies in the design or operation of the Company’s internal controls over financial reporting which could adversely affect in any material respect the Company’s ability to record, process, summarize and report consolidated financial data or material weaknesses in internal controls over financial reporting and (ii) there has been no fraud, whether or not material, that involved management or other employees of the Company who have a significant role in the Company’s internal controls over financial reporting.

     2.10 No Changes. Since the Balance Sheet Date through the date of this Agreement, other than this Agreement and the transactions contemplated hereby, there has not been, occurred or arisen any:

          (a) transaction by the Company except in the ordinary course of business, consistent with past practices and other than the transactions contemplated by this Agreement and the Related Agreements;

          (b) amendments or changes to the Charter Documents of the Company other than as contemplated by this Agreement;

          (c) capital expenditure agreement, purchase order or commitment by the Company requiring future payments during any calendar year in excess of $50,000 individually or $100,000 in the aggregate;

          (d) payment, discharge or satisfaction of any Liabilities, other than (i) payments, discharges or satisfactions in the ordinary course of business, consistent with past practices, (ii) of Liabilities reflected or reserved against in the Current Balance Sheet, (iii) arising in the ordinary

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course of business, consistent with past practices, since the Balance Sheet Date or (iv) any Liabilities in the aggregate less than $100,000;

          (e) destruction of, damage to, or loss of any material assets (whether tangible or intangible) or material business of the Company (whether or not covered by insurance);

          (f) loss of any customer that represented one of the twenty (20) largest sources of revenue for the Company for any fiscal year after March 1, 2009;

          (g) employment dispute, including but not limited to, claims or matters raised by any individuals or any workers’ representative organization, bargaining unit or union regarding labor trouble or claim of wrongful discharge or other unlawful employment or labor practice or action with respect to the Company;

          (h) change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by the Company other than as required by GAAP;

          (i) adoption of or change in any material Tax election or any Tax accounting method, entering into any closing agreement with respect to Taxes, settlement or compromise of any Tax claim or assessment, or extension or waiver of the limitation period applicable to any Tax claim or assessment;

          (j) revaluation by the Company of any of its assets (whether tangible or intangible), including without limitation, writing down the value of inventory, other than in the ordinary course of business consistent with past practice;

          (k) declaration, setting aside or payment of a dividend or other distribution (whether in cash, stock or property) in respect of any Company Capital Stock, or any split, combination or reclassification in respect of any shares of Company Capital Stock, or any issuance or authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of Company Capital Stock, or any direct or indirect repurchase, redemption, or other acquisition by the Company of any shares of Company Capital Stock (or options, warrants or other rights convertible into, exercisable or exchangeable therefor);

          (l) hiring or termination of any employee or consultant whose annual compensation or consulting fees exceeded $100,000 of the Company;

          (m) increase in the salary or other compensation (including equity based compensation) payable or to become payable by the Company to any of its respective officers, directors, employees whose annual compensation exceeded $100,000, consultants or advisors, or the declaration, adoption, agreement, contract, payment or commitment or obligation of any kind for the payment (whether in cash or equity) by the Company of a severance payment, termination payment, bonus or other additional salary or compensation to any such Person;

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          (n) agreement, contract, covenant, instrument, lease, license or commitment to which the Company is a party or by which it or any of its assets (whether tangible or intangible) are bound or any termination, extension, amendment or modification of the terms of any agreement, contract, covenant, instrument, lease, license or commitment to which the Company is a party or by which it or any of its assets are bound, other than agreements, contracts, covenants, instruments, leases, licenses or commitments entered into, terminated, extended, amended or modified in the ordinary course of business, consistent with past practice;

          (o) sale, lease, license or other disposition of any of the assets (whether tangible or intangible) or properties of the Company outside of the ordinary course of business, consistent with past practices, including, but not limited to, the sale of any Accounts Receivable, or any creation of any security interest in such assets or properties;

          (p) loan by the Company to any Person, or purchase by the Company of any debt securities of any Person, except for advances to employees for travel and business expenses in the ordinary course of business, consistent with past practices;

          (q) incurrence by the Company of any indebtedness, amendment of the terms of any outstanding loan agreement, guaranteeing by the Company of any indebtedness, issuance or sale of any debt securities of the Company or guaranteeing of any debt securities of others, except for advances to employees for travel and business expenses in the ordinary course of business, consistent with past practices;

          (r) waiver or release of any material right or claim of the Company, including any write-off or other compromise of any Accounts Receivable, other than in the ordinary course of business consistent with past practice;

          (s) commencement or settlement of any lawsuit by the Company, the commencement, settlement, notice or, to the Knowledge of the Company, threat of any lawsuit or proceeding or other investigation against the Company, its affairs, or, to the Knowledge of the Company, any reasonable basis for any of the foregoing;

          (t) claims or matters raised by any individual, Governmental Entity, or workers’ representative organization, bargaining unit or union, regarding, claiming or alleging labor trouble, wrongful discharge or any other unlawful employment or labor practice or action with respect to the Company;

          (u) notice of any claim or potential claim of ownership, interest or right by any Person other than the Company of the Company Intellectual Property (as defined in Section 2.14 hereof) or of infringement by the Company of any other Person’s Intellectual Property Rights (as defined in Section 2.14 hereof);

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          (v) issuance or sale, or contract or agreement to issue or sell, by the Company of any shares of Company Common Stock, Company Preferred Stock or securities convertible into, or exercisable or exchangeable for, shares of Company Common Stock, Company Preferred Stock or any securities, warrants, options or rights to purchase any of the foregoing, except for issuances of Company Common Stock upon the exercise of options issued under the Plans;

          (w) (i) except standard end user licenses entered into in the ordinary course of business, consistent with past practices, sale or license of any Company Intellectual Property or execution, modification or amendment of any agreement with respect to the Company Intellectual Property with any Person or with respect to the Intellectual Property Rights of any Person, (ii) except in the ordinary course of business, consistent with past practices, purchase or license of any Intellectual Property Rights or execution, modification or amendment of any agreement with respect to the Intellectual Property Rights of any Person, (iii) agreement or modification or amendment of an existing agreement with respect to the development of any Technology or Intellectual Property Rights with a third party, or (iv) material adverse change in pricing or royalties set or charged by the Company to its customers or licensees or in pricing or royalties set or charged by Persons who have licensed Technology or Intellectual Property Rights to the Company;

          (x) agreement or modification to any agreement pursuant to which any other party was granted marketing, distribution, development, manufacturing or similar rights of any type or scope with respect to any product, service or technology of the Company, other than in the ordinary course of business;

          (y) event or condition of any character that has had or is reasonably likely to have a Company Material Adverse Effect;

          (z) lease, license, sublease or other occupancy of any Leased Real Property (as defined in Section 2.13 hereof) by the Company; or

          (aa) agreement by the Company to do any of the things described in the preceding clauses (a) through (z) of this Section 2.10 (other than negotiations with Parent and its representatives regarding the transactions contemplated by this Agreement and the Related Agreements).

     2.11 Tax Matters.

          (a) Definition of Taxes. For purposes of this Agreement, the term “Tax” or, collectively, “Taxes” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, goods and services, harmonized sales, ad valorem, transfer, franchise, withholding, payroll, employee health, recapture, escheat, employment, excise and property taxes as well as public imposts, fees and social security charges (including but not limited to health, unemployment,

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pension insurance Canada Pension Plan and provincial pension plan contributions, employment insurance and unemployment insurance payments and worker’s compensation premiums), together with all interest, penalties and additions imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) of this Section 2.11(a) as a result of being or having been a member of an affiliated, consolidated, combined, unitary or similar group for any period (including any arrangement for group or consortium relief or similar arrangement), and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) of this Section 2.11(a) as a result of any express or implied obligation to indemnify any other Person or as a result of any obligation under any agreement or arrangement with any other Person with respect to such amounts and including any liability for taxes of a predecessor or transferor or otherwise by operation of law.

          (b) Tax Returns and Audits.

               (i) The Company has (a) prepared and timely filed all material U.S. federal, state, local and non-U.S. returns, estimates, information statements and reports (“Returns”) relating to any and all Taxes concerning or attributable to the Company or its operations and such Returns are true and correct in all material respects and have been completed in accordance with applicable Law and (b) timely paid all Taxes it is required to pay.

               (ii) The Company has paid or withheld with respect to its Employees and other persons, all U.S. federal, state and non-U.S. income taxes and social security charges and similar fees, Federal Insurance Contribution Act amounts, Federal Unemployment Tax Act amounts and other Taxes required to be withheld, and has timely paid over any such withheld Taxes to the appropriate authorities. The Company has charged, collected and remitted on a timely basis all Taxes as required on any sale, supply or delivery whatsoever made by the Company.

               (iii) The Company is not delinquent in the payment of any Tax, nor is there any Tax deficiency outstanding, assessed or proposed against the Company, nor has the Company executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax that is currently in effect.

               (iv) No audit or other examination of any Tax Return of the Company is presently in progress, nor has the Company been notified in writing of any request for such an audit or other examination. No adjustment relating to any Tax Return filed by the Company has been proposed in writing by any Tax authority to the Company or any representative thereof and no reassessment of the Company’s Taxes has been issued and is outstanding and there is no indication from the authorities that an assessment or reassessment of the Company is proposed in respect of Taxes. No claim has ever been made in writing by an authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

               (v) As of the date of the Current Balance Sheet, the Company had no liabilities for unpaid Taxes which had not been accrued or reserved on the Current Balance Sheet,

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whether asserted or unasserted, contingent or otherwise, and the Company has not incurred any liability for Taxes since the date of the Current Balance Sheet other than in the ordinary course of business, consistent with past practices.

               (vi) The Company has made available to Parent or its legal counsel, copies of all Tax Returns for the Company filed for all periods since January 1, 2004.

               (vii) There are (and immediately following the Effective Time there will be) no Liens on the assets of the Company relating to or attributable to Taxes, other than Liens for Taxes not yet due and payable. The Company has no Knowledge of any basis for the assertion of any claim relating or attributable to Taxes which, if adversely determined, would result in any Lien on the assets of the Company.

               (viii) The Company has (a) never been a member of an affiliated group (within the meaning of Code §1504(a)) filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company), (b) never been a party to any Tax sharing, indemnification, allocation or similar agreement, (c) no liability for the Taxes of any Person under Treasury Regulation § 1.1502-6 (or any similar provision of state, local or non-U.S. Law (including any arrangement for group or consortium relief or similar arrangement)), as a transferee or successor, by operation of law, by contract or agreement, or otherwise and (d) never been a party to any joint venture, partnership or other arrangement that could be treated as a partnership for Tax purposes.

               (ix) The Company has not been, at any time, a “United States Real Property Holding Corporation” within the meaning of Section 897(c)(2) of the Code.

               (x) The Company has not constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

               (xi) The Company has not engaged in a reportable transaction under Treas. Reg. § 1.6011-4(b), including a transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service has determined to be a tax avoidance transaction and identified by notice, regulation, or other form of published guidance as a listed transaction, as set forth in Treas. Reg. § 1.6011-4(b)(2).

               (xii) The Company will not be required to include any income or gain or exclude any deduction or loss from Taxable income for any taxable period or portion thereof after the Closing Date as a result of any transaction or event occurring or circumstance existing on or prior to the Closing Date, including any (a) change in method of accounting made on or prior to the Closing Date, (b) closing agreement under Section 7121 of the Code executed prior to the Closing, (c) deferred intercompany gain or excess loss account under Treasury Regulations under Section 1502 of the Code in connection with a transaction consummated prior to the Closing (or in

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the case of each of (a), (b), (c) and (d), under any similar provision of applicable Law), (d) application of Sections 70, 80, 80.01, 80.02, 80.03, 80.04 or 160 of the Income Tax Act (Canada), (e) installment sale or open transaction disposition consummated prior to the Closing or (f) prepaid amount received prior to Closing.

               (xiii) The Company uses the accrual method of accounting for tax purposes.

               (xiv) Neither the Company nor any Company Subsidiary is subject to Tax in any jurisdiction other than its country of incorporation or formation by virtue of having a permanent establishment, place of business or source of income in that country.

               (xv) The Company is in compliance in all material respects with all terms and conditions of any Tax exemption, Tax holiday or other Tax reduction agreement or order (“Tax Incentive”), and the consummation of the transactions contemplated by this Agreement will not have any adverse effect on the continued validity and effectiveness of any such Tax Incentive.

               (xvi) The Company is in compliance in all material respects with all applicable transfer pricing Laws, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology of the Company. The prices for any property or services (or for the use of any property) provided by or to the Company are arm’s length prices for purposes of the applicable transfer pricing Laws.

               (xvii) Any Company Subsidiary with a place of business in Canada has maintained and continues to maintain at its place of business in Canada all books and records required to be maintained under the Income Tax Act (Canada), the Excise Tax Act (Canada) and any comparable Law of any province or territory in Canada, including Laws relating to sales and use Taxes.

               (xviii) The shares of Company Capital Stock are not “taxable Canadian property” for purposes of Income Tax Act (Canada).

          (c) Executive Compensation Tax. There is no contract, agreement, plan or arrangement to which the Company is a party, including, without limitation, the provisions of this Agreement, covering any Employee of the Company, which, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G or 404 of the Code.

          (d) 409A. Each nonqualified deferred compensation plan (as defined in Section 409A(d)(1) of the Code) has been operated since January 1, 2005 in compliance with Section 409A of the Code and all applicable IRS guidance issued with respect thereto. Each Company Option, stock appreciation right, or other similar right to acquire Company Common Stock or other equity of the Company, granted to or held by an individual or entity who is or may be subject to United States taxation, (1) has an exercise price that that is not less than the fair market

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value of the underlying equity as of the date such Company Option, stock appreciation right or other similar right was granted, (2) has no feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such Company Option, stock appreciation right or other similar right, (3) to the extent it was granted after December 31, 2004, was granted with respect to a class of stock of the Company that is “service recipient stock” (within the meaning of Section 409A and the proposed or final regulations or other IRS guidance issued with respect thereto), and (4) has been properly accounted for in accordance with GAAP in the Financials.

     2.12 Restrictions on Business Activities. Except as set forth in Section 2.12 of the Disclosure Schedule, there is no agreement (non-competition or otherwise), commitment, judgment, injunction, order or decree to which the Company is a party or otherwise binding upon the Company which has or may reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company, any acquisition of property (tangible or intangible) by the Company, the conduct of business by the Company, or otherwise limiting the freedom of the Company to engage in any line of business or to compete with any Person. Without limiting the generality of the foregoing, the Company has not entered into any agreement under which the Company is restricted from selling, licensing, manufacturing or otherwise distributing any of its technology or products or from providing services to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of the market, or from hiring or soliciting potential employees, consultants or independent contractors.

     2.13 Title to Properties; Absence of Liens and Encumbrances.

          (a) The Company does not own any real property, nor has the Company ever owned any real property. Section 2.13(a) of the Disclosure Schedule sets forth a list of all real property currently leased, subleased or licensed by or from the Company or otherwise used or occupied by the Company (the “Leased Real Property”). The Company has provided Parent with true, correct and complete copies of all current leases, lease guaranties, licenses, subleases, agreements for the leasing, use or occupancy of, or otherwise granting a right in or relating to the Leased Real Property, including all amendments, terminations and modifications thereof (“Lease Agreements”). All such Lease Agreements are in full force and effect and are valid and enforceable in accordance with their respective terms. There is not, under any Lease Agreements, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default) of the Company, or to the Company’s Knowledge, any other party thereto. Except as set forth in Section 2.13(a) of the Disclosure Schedule, the execution and delivery of this Agreement by the Company does not, and the consummation of the transactions contemplated hereby will not, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or materially impair the rights of the Company or alter the rights or obligations of the sublessor, lessor or licensor under, or give to others any rights of termination, amendment, acceleration or cancellation of any Lease Agreements, or otherwise adversely affect the continued use and possession of the Leased Real Property for the conduct of business as presently conducted. The Company currently occupies all of the Leased Real Property for the operation of its

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business, and there are no other parties occupying, or with a right to occupy, the Leased Real Property.

          (b) To the Company’s Knowledge, the Leased Real Property is in good operating condition and repair, free from structural, physical and mechanical defects and is structurally sufficient and otherwise suitable for the conduct of the Company’s business as presently conducted, except for normal wear and tear. To the Company’s Knowledge, neither the operation of the Company on the Leased Real Property nor such Leased Real Property materially violates any Law. The Company does not owe any brokerage commissions or finder’s fees with respect to any Leased Real Property and would not owe any such fees if any existing Lease Agreement were renewed pursuant to any renewal options contained in such Lease Agreements.

          (c) The Company has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Liens, except (i) as reflected in the Current Balance Sheet, (ii) Liens for Taxes not yet due and payable, and (iii) such imperfections of title and encumbrances, if any, which do not detract from the value or interfere with the present use of the property subject thereto or affected thereby.

          (d) All equipment owned or leased by the Company is (i) adequate for the conduct of the business of the Company as currently conducted and as currently contemplated to be conducted, and (ii) in good operating condition, regularly and properly maintained, subject to normal wear and tear.

     2.14 Intellectual Property.

          (a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

               (i) “Technology” shall mean any or all of the following (A) works of authorship including, without limitation, computer programs, source code, and executable code, whether embodied in software, firmware or otherwise, architecture, documentation, designs, files, records, databases, and data, (B) inventions (whether or not patentable), discoveries, improvements, and technology, (C) proprietary and confidential information, trade secrets and know how, (D) databases, data compilations and collections and technical data, (E) domain names, web addresses and sites, (F) tools, methods and processes, and (G) any and all instantiations or embodiments of the foregoing in any form and embodied in any media.

               (ii) “Intellectual Property Rights” shall mean worldwide common law and statutory rights associated with (A) patents and patent applications of any kind, (B) copyrights, copyright registrations and copyright applications, “moral”, “economic” rights and mask work rights, (C) the protection of trade and industrial secrets and confidential information, (D) logos,

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trademarks, trade names and service marks, and (E) any other proprietary rights relating to Technology, including any analogous rights to those set forth above.

               (iii) “Company Intellectual Property” shall mean any and all Technology and Intellectual Property Rights that are or are purported to be owned by or exclusively licensed to the Company.

               (iv) “Registered Intellectual Property Rights” shall mean any and all Intellectual Property Rights that have been registered, applied for, filed, certified or otherwise perfected, issued, or recorded with or by any state, government or other public or quasi-public legal authority.

          (b) Section 2.14(b) of the Disclosure Schedule lists all Registered Intellectual Property Rights owned by, or filed in the name of, the Company (the “Company Registered Intellectual Property Rights”) and any material proceedings or actions before any court, tribunal (including the United States Patent and Trademark Office (the “PTO”) or equivalent authority anywhere in the world) related to any of the Company Registered Intellectual Property Rights or Company Intellectual Property.

          (c) Each item of Company Registered Intellectual Property Rights is valid and subsisting, and all necessary registration, maintenance and renewal fees in connection with such Company Registered Intellectual Property Rights have been paid and all necessary documents and certificates in connection with such Company Registered Intellectual Property Rights have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Registered Intellectual Property Rights. In each case in which the Company has acquired ownership of any Technology or Intellectual Property Rights from any Person, the Company has obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in such Technology and the associated Intellectual Property Rights to the Company. In accordance with applicable Laws, the Company has recorded each such assignment of Registered Intellectual Property Rights with the relevant governmental authorities, including the PTO, the U.S. Copyright Office, or their respective equivalents in any relevant foreign jurisdiction, as the case may be.

          (d) All Company Intellectual Property is fully transferable and licensable by the Company, and following the Closing will be fully transferable and licensable by the Surviving Corporation and/or Parent, without restriction and without payment of any kind to any third party.

          (e) Each item of Company Intellectual Property, including all Company Registered Intellectual Property Rights listed in Section 2.14(b) of the Disclosure Schedule, and, to the Company’s Knowledge, all Technology and Intellectual Property Rights licensed to the Company, is free and clear of any Liens other than those set forth on Section 2.14(e) of the Disclosure Schedule. The Company is the exclusive owner or exclusive licensee of all Company Intellectual Property.

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          (f) To the extent that any Technology has been developed or created independently or jointly by any Person other than the Company for which the Company has, directly or indirectly, provided consideration for such development or creation, the Company has a written agreement with such Person with respect thereto, and the Company thereby has obtained ownership of, and is the exclusive owner of, all such Technology and associated Intellectual Property Rights by operation of law or by valid assignment.

          (g) The Company has not (i) transferred ownership of, or granted any exclusive license of or exclusive right to use, or authorized the retention of any exclusive rights to use or joint ownership of, any Technology or Intellectual Property Rights that are or were Company Intellectual Property used in and material to the conduct of Company’s business as presently conducted or currently contemplated to be conducted by the Company, to any other Person or (ii) permitted the Company’s rights in any Company Intellectual Property used in and material to the conduct of Company’s business as presently conducted or currently contemplated to be conducted by the Company to enter into the public domain.

          (h) Except for the Technology and Intellectual Property Rights licensed to the Company pursuant to the in-bound licenses listed in Section 2.14(u) and Section 2.15(a)(xii) of the Disclosure Schedule, all Technology used in and material to the conduct of Company’s business as presently conducted or currently contemplated to be conducted by the Company was written and created solely by either (i) employees of the Company acting within the scope of their employment who have validly and irrevocably assigned all of their rights, including all Intellectual Property Rights therein, to the Company or (ii) by third parties who have validly and irrevocably assigned all of their rights, including all Intellectual Property Rights therein, to the Company, and no third party owns or has any rights to any of the Company Intellectual Property.

          (i) The Company Intellectual Property, together with Technology and Intellectual Property Rights nonexclusively licensed to the Company pursuant to the non-exclusive in-bound licenses listed in Section 2.14(u) of the Disclosure Schedule, constitutes all of the Technology and Intellectual Property Rights used in and material to the conduct of the business of the Company as it currently is conducted or planned by the Company to be conducted, including, without limitation, the design, development, marketing, manufacture, use, import and sale of any product, technology or service (including products, technology or services currently under development). Except as set forth in Section 2.14(i) of the Disclosure Schedule, the Surviving Corporation will own or possess sufficient rights to all Technology and Intellectual Property Rights immediately following the Closing Date that are used in and material to the operation of the business of the Company as it currently is conducted or planned by the Company to be conducted.

          (j) None of the contracts, licenses and agreements pursuant to which the Company licenses any Technology or Intellectual Property Rights will terminate, or may be terminated by a third party, solely by the passage of time or at the election of a third party within 60 days after the Closing Date, except as would not cause a Company Material Adverse Affect.

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          (k) No third party that has licensed Technology or Intellectual Property Rights to the Company has ownership rights or license rights to improvements or derivative works made by the Company in such Technology or Intellectual Property Rights.

          (l) There are no contracts, licenses or agreements between the Company and any other Person with respect to Company Intellectual Property or other Technology or Intellectual Property Rights used in and/or necessary to the conduct of the business as it is currently conducted or planned by the Company to be conducted under which any claim has been asserted or, to the Knowledge of the Company, threatened, regarding the scope of such agreement, or performance under such agreement including with respect to any payments to be made or received by the Company thereunder.

          (m) The operation of the business of the Company as it has been conducted, is currently conducted and is currently contemplated by the Company to be conducted, including but not limited to the design, development, use, import, branding, advertising, promotion, marketing, distribution, manufacture and sale of any product, technology or service of the Company has not infringed or misappropriated, does not infringe or misappropriate, and immediately after the Closing will not infringe or misappropriate when conducted by Parent and/or the Surviving Corporation in the same manner currently conducted or currently contemplated to be conducted (as of the date of this Agreement) by the Company, any Intellectual Property Rights of any Person, violate any right of any Person (including any right to privacy or publicity), or constitute unfair competition or trade practices under the applicable Laws of any jurisdiction. The Company has not received notice from any Person claiming that such operation or any act, any product, technology or service (including products, technology or services currently under development) or Technology of the Company allegedly infringes or misappropriates any Intellectual Property Rights of any Person or constitutes unfair competition or trade practices under the applicable Laws of any jurisdiction (nor does the Company have Knowledge (without any inquiry) of any basis therefor).

          (n) Neither this Agreement nor the transactions contemplated by this Agreement, including the assignment to Parent or the Surviving Corporation by operation of law or otherwise of any contracts or agreements to which the Company is a party, will result in: (i) Parent, the Surviving Corporation, the Company or any of their subsidiaries granting to any third party any right to or with respect to any Intellectual Property Rights owned by, or licensed to Parent, the Surviving Corporation, the Company or any of their subsidiaries, (ii) Parent, the Surviving Corporation or any of their subsidiaries, being bound by or subject to, any exclusivity obligations, non-compete or other restriction on the operation or scope of their respective businesses, or (iii) Parent, the Surviving Corporation or any of their subsidiaries being obligated to pay any royalties or other material amounts to any third party in excess of those payable by any of them, respectively, in the absence of this Agreement or the transactions contemplated hereby.

          (o) To the Knowledge of the Company, no Person has infringed or misappropriated or is infringing or misappropriating any Company Intellectual Property.

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          (p) The Company has taken reasonable steps to protect the Company’s rights in confidential information and trade secrets of the Company or provided by any other Person to the Company. Without limiting the foregoing, the Company has, and enforces, a policy requiring each employee, consultant, and contractor to execute proprietary information, confidentiality and assignment agreements substantially in the Company’s standard forms (as set forth in Exhibit E), and all current and former employees, consultants and contractors of the Company have executed such an agreement in substantially the Company’s standard form.

          (q) No Company Intellectual Property, product, technology, or service of the Company is subject to any proceeding or outstanding decree, order, judgment or settlement agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by the Company or may affect the validity, use or enforceability of such Company Intellectual Property.

          (r) No government funding, facilities or resources of a university, college, other educational institution or research center or funding from third parties was used in the development of the Company Intellectual Property and no Governmental Entity, university, college, other educational institution or research center has any claim or right in or to the Company Intellectual Property. No rights have been granted to any Governmental Entity with respect to any Company product, technology or service, or under any Company Intellectual Property, other than the same standard commercial rights as are granted by the Company to commercial end users of the Company products, technologies and services in the ordinary course of business, consistent with past practices.

          (s) The Company has complied with all applicable Laws and its internal privacy policies relating to the privacy of users of its products, services, and Web sites, and also the collection, storage, and transfer of any personally identifiable information collected by or on behalf of the Company, except as would not cause a Company Material Adverse Affect. The execution, delivery and performance of this Agreement complies with all applicable Laws relating to privacy and the Company’s privacy policies. True and correct copies of applicable privacy policies are attached to Section 2.14(s) of the Disclosure Schedule, and the Company has at all times made all disclosures to users or customers required by applicable Laws and none of such disclosures made or contained in any privacy policy or in any materials has been inaccurate, misleading or deceptive or in violation of any applicable Laws, except as would not cause a Company Material Adverse Affect.

          (t) Neither the Company nor any Person acting on the Company’s behalf has disclosed, delivered or licensed to any Person, agreed to disclose, deliver or license to any Person, or permitted the disclosure or delivery to any escrow agent or other Person of any source code owned by the Company or used in its business (“Company Source Code”). No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time or both) will, or would reasonably be expected to, result in the disclosure or delivery by or on behalf of the Company of any Company Source Code. Company Source Code means any software source code or related proprietary or confidential information or algorithms of any Company Intellectual Property.

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          (u) Section 2.14(u) of the Disclosure Schedule lists all software or other material that is distributed as “freeware,” “free software,” “open source software” or under a similar licensing or distribution model (including but not limited to the GNU General Public License) that the Company licenses to a third party, that the Company uses in connection with any Company products or services that are provided on a software-as-a-service or similar basis, or that is otherwise incorporated into, combined with, or distributed in conjunction with any Company products or services (collectively, “Incorporated Open Source Software”) and identifies the type of license or distribution model governing its use. The Company’s use and/or distribution of each component of Incorporated Open Source Software complies with all material provisions of the applicable license agreement, and in no case does such use or distribution give rise under such license agreement to any rights in any third parties under any Company Intellectual Property or obligations for the Company with respect to any Company Intellectual Property, including without limitation any obligation to disclose or distribute any such Technology in source code form, to license any such Technology for the purpose of making derivative works, or to distribute any such Technology without charge.

          (v) Section 2.14(v) of the Disclosure Schedule lists all industry standards bodies and similar organizations of which the Company is a member, to which it has been a contributor or in which it has been a participant. The Company is not and never was a member in, a contributor to, or participant in any industry standards body or similar organization that could require or obligate the Company to grant or offer to any other Person any license or right to any Technology or Intellectual Property Rights.

     2.15 Agreements, Contracts and Commitments. As of the date of this Agreement, except as set forth in Section 2.15(a) of the Disclosure Schedule (specifying the appropriate subparagraph), and except for this Agreement and the transactions contemplated hereby, the Company is not a party to, nor is it bound by any of the following (each, a “Material Contract”):

               (i) any employment, contractor or consulting agreement or contract with an employee or individual consultant, contractor or salesperson, or consulting or services agreement that is not terminable by the Company at will and without material penalty, other than employment agreements in foreign jurisdictions which provide for severance payments consistent with statutory requirements;

               (ii) any agreement or plan, including, without limitation, any stock option plan, stock appreciation rights plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement (either alone or upon the occurrence of any additional subsequent events) or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement;

               (iii) any fidelity or surety bond or completion bond;

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               (iv) any lease of personal property or equipment requiring annual lease payments in excess of $50,000 individually or $350,000 in the aggregate;

               (v) any agreement of indemnification or guaranty, but excluding agreements of indemnification or guaranty with respect to the infringement by the Company products of the Intellectual Property Rights of third parties or other product guarantees that are contained in the Company’s written agreements with its customers that have been entered into in the ordinary course of business, consistent with past practices;

               (vi) any agreement, contract or commitment (excluding commitments made to customers in the ordinary course of business) relating to capital expenditures requiring future payments in any calendar year in excess of $100,000 individually or $300,000 in the aggregate;

               (vii) any agreement, contract or commitment relating to the disposition or acquisition of assets or any interest in any business enterprise outside the ordinary course of the Company’s business, consistent with past practices;

               (viii) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit;

               (ix) any agreement with a supplier of inventory or services that represents one of the ten largest suppliers of the Company (based on payments made) for any fiscal year after March 1, 2009;

               (x) any agreement containing covenants or other obligations granting or containing any current or future commitments restricting the operation or scope of the Company’s businesses, including, without limitation exclusivity, non-compete, or “most favored nations” restrictions;

               (xi) all agreements with each of the Company’s (a) top twenty (20) largest sources of revenue for any fiscal year after March 1, 2009 that are commercial customers, including without limitation value added resellers, other resellers, distributors, original equipment manufacturers and business partners, but excluding agreements with direct end-user customers in the “professional market” (e.g., law firms and other professional service organizations) and (b) top twenty (20) largest sources of revenue for the Company for any fiscal year after March 1, 2009 that are end-user customers in the professional market;

               (xii) any contracts, licenses and agreements to which the Company is a party with respect to any Technology or Intellectual Property Rights, including without limitation any in-bound licenses, out-bound licenses and cross-licenses, other than standard outbound end user licenses or other customer agreements entered into in the ordinary course of business, consistent

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with past practice (provided that for purposes of Section 2.15(b), all such standard outbound end user licenses and customer agreements shall be considered Material Contracts) and excluding commercial “off-the-shelf” software with aggregate license fees of less than $10,000; or

               (xiii) any other agreement or contract that requires future payment in any calendar year of more than $150,000 or more than $250,000 during the remaining term of the agreement and is not cancelable by the Company without material penalty within ninety (90) days.

          (b) The Company is in material compliance with and has not materially breached, violated or defaulted under, or received notice that it has materially breached, violated or defaulted under, any of the terms or conditions of any Material Contract, nor does the Company have Knowledge of any event that would constitute such a breach, violation or default with the lapse of time, giving of notice or both. Each Material Contract is in full force and effect, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought in a proceeding at law or in equity), and the Company is not subject to any default thereunder, nor to the Knowledge of the Company is any party obligated to the Company pursuant to any such Material Contract subject to any default thereunder. To the Knowledge of the Company, no party to a Material Contract has any intention of terminating such Material Contract with the Company or reducing the volume of business such party conducts with the Company, whether as a result of the Merger or otherwise.

          (c) Notwithstanding anything herein to the contrary, the term “Material Contract” shall exclude the Contracts set forth in Section 2.15(c) of the Disclosure Schedule, which have terminated prior to the date hereof or will be terminated pursuant to the terms of this Agreement and the transactions contemplated hereby at or prior to the Closing.

     2.16 Interested Party Transactions. No officer, director or stockholder of the Company (nor, to the Knowledge of the Company, any ancestor, sibling, descendant or spouse of any of such persons, or any trust, partnership or corporation in which any of such persons has or has had an interest), has or has had, directly or indirectly, (i) an interest in any entity which furnished or sold or licensed, or furnishes or sells or licenses, services, products, Technology or Intellectual Property Rights that the Company furnishes or sells, or proposes to furnish or sell, or (ii) any interest in any entity that purchases from or sells or furnishes to the Company, any goods or services, or (iii) a beneficial interest in any Material Contract to which the Company is a party (other than in such person’s capacity as a stockholder, director, officer or employee of the Company); provided, however, that ownership of no more than one percent (1%) of the outstanding voting stock of a publicly traded corporation shall not be deemed to be an “interest in any entity” for purposes of this Section 2.16. No Stockholder has any loans outstanding from the Company except for business travel expenses in the ordinary course of business, consistent with past practices, to employees of the Company.

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     2.17 Governmental Authorization. Each material consent, license, permit, grant or other authorization (i) pursuant to which the Company currently operates or holds any interest in any of its properties, or (ii) which is required for the operation of the Company’s business as currently conducted or currently contemplated to be conducted or the holding of any such interest (collectively, “Company Authorizations”) has been issued or granted to the Company, as the case may be. The Company Authorizations are in full force and effect in all material respects and constitute all Company Authorizations required to permit the Company to operate or conduct its business or hold any interest in its properties or assets.

     2.18 Litigation. There is no action, suit, claim or proceeding of any nature pending, or to the Knowledge of the Company, threatened, against the Company, its properties (tangible or intangible) or any of its officers or directors, nor to the Knowledge of the Company is there any reasonable basis therefor. There is no investigation, audit, or other proceeding pending or, to the Knowledge of the Company, threatened, against the Company, any of its properties (tangible or intangible) or any of its officers or directors by or before any Governmental Entity, nor to the Knowledge of the Company is there any reasonable basis therefor. No Governmental Entity has at any time challenged or questioned the legal right of the Company to conduct its operations as presently or previously conducted or as presently contemplated to be conducted. There is no action, suit, claim or proceeding of any nature pending or, to the Knowledge of the Company, threatened, against any individual or entity who has a contractual right or a right pursuant to the FBCA to indemnification from the Company related to facts and circumstances existing prior to the Effective Time, nor are there, to the Knowledge of the Company, any facts or circumstances that would give rise to such an action, suit, claim or proceeding.

     2.19 Minute Books. The minutes of the Company made available to counsel for Parent contain complete and accurate records of all actions taken, and, to the extent created, summaries of all meetings held, by the stockholders, the Board of Directors of the Company and each of the Company Subsidiaries (and any committees thereof) since the time of incorporation of the Company and each of the Company Subsidiaries, as the case may be.

     2.20 Environmental Matters. The Company (i) has complied in all material respects with all Environmental Laws; (ii) has not received any written notice of any alleged claim, violation of or Liability under any Environmental Law which has not heretofore been cured or for which there is any remaining liability; (iii) has not disposed of, emitted, discharged, handled, stored, transported, used or released any Hazardous Materials, arranged for the disposal, discharge, storage or release of any Hazardous Materials, or exposed any employee or other individual to any Hazardous Materials so as to give rise to any material liability or corrective or remedial obligation under any Environmental Laws; (iv) has not entered into any agreement that may require it to guarantee, reimburse, pledge, defend, hold harmless or indemnify any other party with respect to liabilities arising out of Environmental Laws or the Hazardous Materials related activities of the Company; and (v) has delivered to Parent or made available for inspection by Parent and its agents, representatives and employees all material records in the Company’s possession concerning the Hazardous Materials activities of the Company and all environmental audits and environmental

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assessments of any facility owned, leased or used at any time by the Company conducted at the request of, or otherwise in the possession of the Company. To the Company’s Knowledge, there are no Hazardous Materials in, on, or under any properties owned, leased or used at any time by the Company such as could give rise to any material liability or corrective or remedial obligation of the Company under any Environmental Laws.

     2.21 Brokers’ and Finders’ Fees; Third Party Expenses. Except as set forth in Section 2.21 of the Disclosure Schedule, the Company has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions, fees related to investment banking or similar advisory services or any similar charges in connection with the Agreement or any transaction contemplated hereby.

     2.22 Employee Benefit Plans and Compensation.

          (a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

               “Company Employee Plan” shall mean any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance, termination pay, deferred compensation, retirement benefits, performance awards, stock or stock-related awards, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including without limitation, each “employee benefit plan,” within the meaning of Section 3(3) of ERISA which is or has been maintained, contributed to, or required to be contributed to, by the Company or any ERISA Affiliate for the benefit of any Employee, or with respect to which the Company or any ERISA Affiliate has or may have any liability or obligation.

               “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

               “DOL” shall mean the United States Department of Labor.

               “Employee” shall mean any current or former employee, consultant, independent contractor or director of the Company, or any ERISA Affiliate.

               “Employee Agreement” shall mean each management, employment, severance, separation, settlement, consulting, contractor, relocation, change of control, retention, bonus, repatriation, expatriation, loan, visa, work permit or other agreement, or contract (including, without limitation, any offer letter or any agreement providing for acceleration of Company Options or Company Common Stock that is unvested, or any other agreement providing for compensation or benefits) between the Company or any ERISA Affiliate and any Employee, and which the Company or any ERISA Affiliate has or may have any liability or obligation.

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               “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

               “ERISA Affiliate” shall mean any Company Subsidiary or other Person under common control with the Company within the meaning of Section 414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder.

               “FMLA” shall mean the Family Medical Leave Act of 1993, as amended.

               “HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as amended.

               “International Employee Plan” shall mean each Company Employee Plan or Employee Agreement that has been adopted or maintained by the Company or any ERISA Affiliate, whether formally or informally, or with respect to which the Company or any ERISA Affiliate will or may have any liability with respect to Employees who perform services outside the United States.

               “IRS” shall mean the United States Internal Revenue Service.

               “PBGC” shall mean the United States Pension Benefit Guaranty Corporation.

               “Pension Plan” shall mean each Company Employee Plan that is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

               “Privacy Laws” shall mean all applicable Laws governing the collection, use, disclosure and retention of Employee personal information including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada).

          (b) Schedule. Section 2.22(b)(1) of the Disclosure Schedule contains an accurate and complete list of each Company Employee Plan, International Employee Plan and each Employee Agreement. The Company has not made any plan or commitment to establish any new Company Employee Plan, International Employee Plan or Employee Agreement, to modify any Company Employee Plan, International Employee Plan or Employee Agreement (except to the extent required by Law or to conform any such Company Employee Plan, International Employee Plan or Employee Agreement to the requirements of any applicable Law, in each case as previously disclosed to Parent in writing, or as required by this Agreement), or to enter into any Company Employee Plan, International Employee Plan or Employee Agreement. Section 2.22(b)(2) of the Disclosure Schedule sets forth (subject to applicable Privacy Laws) a table setting forth the name, hiring date, and annual salary of each Employee as of April 30, 2011. To the Knowledge of the Company, no Employee listed on Section 2.22(b)(2) of the Disclosure Schedule intends to terminate his or her employment for any reason. Section 2.22(b)(3) of the Disclosure Schedule contains an accurate and complete list of all Persons who are not Employees but have a consulting or advisory relationship with the Company.

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          (c) Documents. The Company has provided to Parent (i) correct and complete copies of all documents embodying each Company Employee Plan and each Employee Agreement including, without limitation, all amendments thereto and all related trust documents, (ii) the three (3) most recent annual reports (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Company Employee Plan, (iii) if the Company Employee Plan is funded, the most recent annual and periodic accounting of Company Employee Plan assets, (iv) the most recent summary plan description together with the summary(ies) of material modifications thereto, if any, required under ERISA with respect to each Company Employee Plan, (v) all material written agreements and contracts relating to each Company Employee Plan, including, without limitation, administrative service agreements and group insurance contracts, (vi) all communications material to any Employee or Employees relating to any Company Employee Plan and any proposed Company Employee Plans, in each case, relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which would result in any material liability to the Company, (vii) all correspondence to or from any governmental agency relating to any Company Employee Plan, (viii) all model COBRA forms and related notices, (ix) all policies pertaining to fiduciary liability insurance covering the fiduciaries for each Company Employee Plan, (x) all discrimination tests for each Company Employee Plan for the three (3) most recent plan years, and (xi) the most recent IRS determination or opinion letter issued with respect to each Company Employee Plan.

          (d) Employee Plan Compliance. The Company and each ERISA Affiliate has performed all obligations required to be performed by it under each Company Employee Plan, are not in default or violation of, and have no Knowledge of any default or violation by any other party to each Company Employee Plan, and each Company Employee Plan has been established and maintained in accordance with its terms and in material compliance with all applicable Laws, statutes, orders, rules and regulations, including but not limited to ERISA or the Code. Any Company Employee Plan intended to be qualified under Section 401(a) of the Code has obtained a favorable determination letter (or opinion letter valid as to the Company, if applicable) with respect to its qualified status under the Code. No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 4975 of the Code or Section 408 of ERISA, has occurred with respect to any Company Employee Plan. There are no actions, suits or claims pending or, to the Knowledge of the Company, threatened or reasonably anticipated (other than routine claims for benefits) against any Company Employee Plan or against the assets of any Company Employee Plan. Each Company Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without liability to Parent, the Company or any ERISA Affiliate (other than ordinary administration expenses). There are no audits, inquiries or proceedings pending or to the Knowledge of the Company or any ERISA Affiliates, threatened by the IRS, DOL, or any other Governmental Entity with respect to any Company Employee Plan. Neither the Company nor any ERISA Affiliate is subject to any penalty or tax with respect to any Company Employee Plan under Section 502(i) of

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ERISA or Sections 4975 through 4980 of the Code. The Company has timely made all contributions and other payments required by and due under the terms of each Company Employee Plan.

          (e) No Pension Plans. Neither the Company nor any current or past ERISA Affiliate has ever maintained, established, sponsored, participated in, or contributed to, any Pension Plans subject to Title IV of ERISA or Section 412 of the Code.

          (f) No Self-Insured Plans. Neither the Company nor any ERISA Affiliate has ever maintained, established sponsored, participated in or contributed to any self-insured plan that provides benefits to employees (including, without limitation, any such plan pursuant to which a stop-loss policy or contract applies).

          (g) Collectively Bargained, Multiemployer and Multiple-Employer Plans. At no time has the Company or any current or past ERISA Affiliate contributed to or been obligated to contribute to any Pension Plan which is a “Multiemployer Plan,” as defined in Section 3(37) of ERISA. Neither the Company nor any ERISA Affiliate has at any time ever maintained, established, sponsored, participated in or contributed to any multiple employer plan or to any plan described in Section 413 of the Code.

          (h) No Post-Employment Obligations. No Company Employee Plan or Employee Agreement provides, or reflects or represents any liability to provide, retiree life insurance, retiree health or other retiree employee welfare benefits to any person for any reason, except as may be required by COBRA or other applicable statute, and the Company has never represented, promised or contracted (whether in oral or written form) to any Employee (either individually or to Employees as a group) or any other person that such Employee(s) or other person would be provided with retiree life insurance, retiree health or other retiree employee welfare benefits, except to the extent required by statute.

          (i) COBRA; FMLA; CRFA; HIPAA. The Company and each ERISA Affiliate has, prior to the Effective Time, complied with COBRA, FMLA, HIPAA, and any similar provisions of state Law applicable to its Employees. The Company does not have unsatisfied obligations to any Employees or qualified beneficiaries pursuant to COBRA, HIPAA or any state Law governing health care coverage or extension.

          (j) Effect of Transaction. The execution of this Agreement and the consummation of the transactions contemplated hereby will not (either alone or upon the occurrence of any additional or subsequent events) constitute an event under any Company Employee Plan, Employee Agreement, trust or loan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any Employee.

          (k) Section 280G. There is no agreement, plan, arrangement or other contract covering any Employee that, considered individually or considered collectively with any other such

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agreements, plans, arrangements or other contracts, will, or could reasonably be expected to, give rise directly or indirectly to the payment of any amount that would be characterized as a “parachute payment,” within the meaning of Section 280G(b)(2) of the Code as a result of the transactions contemplated by this Agreement. There is no contract, agreement, plan or arrangement to which the Company or any ERISA Affiliate is a party or by which it is bound to compensate any Employee for excise taxes paid pursuant to Section 4999 of the Code. Section 2.22(k) of the Disclosure Schedule contains a true, complete and correct list of all Persons who are “disqualified individuals” (within the meaning of Section 280G of the Code and the regulations thereunder).

          (l) Employment Matters. The Company is in compliance with all applicable foreign, federal, state, provincial and local Laws, rules, regulations, and ordinances respecting employment, employment practices, terms and conditions of employment, worker classification, tax withholding, prohibited discrimination, equal employment, fair employment practices, meal and rest periods, immigration status, employee safety and health, workers’ compensation, wages (including overtime wages and vacation pay), compensation, and hours of work, and in each case, with respect to Employees: (i) has withheld and reported all amounts required by Law or by agreement to be withheld and reported with respect to wages, salaries and other payments to Employees, (ii) is not liable for any arrears of wages, bonuses, benefits, severance pay or any Taxes or any penalty for failure to comply with any of the foregoing, and (iii) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any governmental authority, with respect to unemployment compensation benefits, employment insurance, employer health tax, Canada Pension Plan, social security or other benefits or obligations for Employees (other than routine payments to be made in the normal course of business and consistent with past practice). There are no actions, suits, claims, audits, investigations, or administrative matters pending, threatened or reasonably anticipated against the Company or any of its Employees relating to any Employee, Employee Agreement, Company Employee Plan or International Employee Plan. There are no pending or threatened or reasonably anticipated claims or actions against the Company or any Company trustee under any worker’s compensation policy or long-term disability policy. The Company is not party to a conciliation agreement, consent decree, or other agreement or order with any federal, state, provincial or local agency or governmental authority with respect to employment practices. There are no outstanding inspection orders made under applicable occupational health and safety legislation relating to the business of the Company. The Company is operating in compliance with all occupational health and safety laws and there are no pending or threatened charges against the Company under occupational health and safety laws relating to its business. Except as otherwise required or provided under applicable law with respect to Employees working outside the U.S., the services provided by the Company’s and its ERISA Affiliates’ Employees are terminable at the will of the Company and its ERISA Affiliates and any such termination would result in no liability to the Company or any ERISA Affiliate. Section 2.22(l) of the Disclosure Schedule lists all liabilities of the Company to any Employee, that result from the termination by the Company, Parent or any of its subsidiaries of such Employee’s employment or provision of services, a change of control of the Company, or a combination thereof. The Company does not have any material liability with respect to any misclassification of: (a) any person as an independent contractor rather than as an employee,

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(b) any employee leased from another employer, or (c) any employee currently or formerly classified as exempt from overtime wages.

          (m) Labor. No strike, labor dispute, slowdown, concerted refusal to work overtime, or work stoppage against the Company is pending, or to the Knowledge of the Company, threatened, or reasonably anticipated. The Company has no Knowledge of any activities or proceedings of any labor union to organize any Employees and any such activities or proceedings within the preceding three (3) years. There are no actions, suits, claims, audits, investigations, administrative matters, labor disputes or grievances pending or, to the Knowledge of the Company, threatened or reasonably anticipated relating to any labor matters, wages, benefits, medical or family leave, classification, safety or discrimination matters involving any Employee, including claims of wage and/or hour violations, unfair business practices, unfair labor practices, discrimination, harassment or wrongful termination complaints. Neither the Company nor any ERISA Affiliate is party to a current conciliation agreement, consent decree, or other agreement or order with any federal, state, provincial or local agency or governmental authority with respect to employment practices. The Company has not engaged in any unfair labor practices within the meaning of the National Labor Relations Act or other applicable labor relations legislation. The Company is not presently, nor has it been in the past, been a party to, or bound by, any collective bargaining agreement or union contract with respect to Employees and no collective bargaining agreement is being negotiated by the Company.

          (n) WARN Act. The Company and any ERISA Affiliate have complied with the Workers Adjustment and Retraining Notification Act of 1988, as amended (“WARN Act”) and all similar state, provincial or local Laws including applicable provisions of state, provincial or local Law. The Company has not taken any action which would constitute a “plant closing” or “mass layoff” within the meaning of the WARN Act or similar state, provincial or local Law, issued any notification of a plant closing or mass layoff required by the WARN Act or similar state, provincial or local Law, or incurred any liability or obligation under WARN or any similar state, provincial or local Law that remains unsatisfied. No terminations prior to the Closing would trigger any notice or other obligations under the WARN Act or similar state, provincial or local Law. All liabilities and obligations relating to the employment, termination or employee benefits of any former Employees previously terminated by the Company or an Affiliate including all termination pay, severance pay or other amounts in connection with the WARN Act and all similar state or provincial Laws, have been paid and no terminations prior to the Closing Date shall result in unsatisfied liability or obligation under WARN or any similar state, provincial or local Law.

          (o) No Interference or Conflict. To the Knowledge of the Company, no Stockholder or Employee of the Company is obligated under any contract or agreement, subject to any judgment, decree, or order of any court or administrative agency that would interfere with such person’s efforts to promote the interests of the Company or that would interfere with the Company’s business. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s business as presently conducted or proposed to be conducted nor any activity of such Employees in connection with the carrying on of the Company’s business as presently conducted or

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currently proposed to be conducted will, to the Knowledge of the Company, conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract or agreement under which any of such Employees is now bound.

          (p) International Employee Plan. Each International Employee Plan has been established, maintained and administered in material compliance with its terms and conditions and with the requirements prescribed by any and all statutory or regulatory Laws that are applicable to such International Employee Plan. Furthermore, no International Employee Plan has unfunded liabilities that, as of the Effective Time, will not be offset by insurance or fully accrued. Except as required by Law, no condition exists that would prevent the Company or Parent from terminating or amending any International Employee Plan at any time for any reason without liability to the Company or its ERISA Affiliates (other than ordinary administration expenses or routine claims for benefits).

     2.23 Insurance. Section 2.23 of the Disclosure Schedule lists all insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors of the Company as of the date hereof. There is no claim by the Company pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed or that the Company has a reason to believe will be denied or disputed by the underwriters of such policies or bonds. In addition, as of the date hereof, there is no pending claim of which its total value (inclusive of defense expenses) will exceed the policy limits. All premiums due and payable under all such policies and bonds have been paid (or if installment payments are due, will be paid if incurred prior to the Closing Date) and the Company is otherwise in material compliance with the terms of such policies and bonds. As of the date hereof, such policies and bonds (or other policies and bonds providing substantially similar coverage) have been in effect for the past two (2) years and will remain in full force and effect up to the Effective Time. As of the date hereof, the Company has no Knowledge or reasonable belief of threatened termination of, or material premium increase with respect to, any of such policies. The Company has never maintained, established, sponsored, participated in or contributed to any self-insurance plan.

     2.24 Compliance with Laws.

          (a) The Company has materially complied with, is not in material violation of, and has not received any notices of any suspected, potential or actual violation with respect to, any foreign, federal, state or local Law.

          (b) The Company has at all times been, and is currently, fully in compliance with all applicable Anti-Corruption and Anti-Bribery Laws in any jurisdiction. The Company (including any of its officers, directors, agents, employees or other Person associated with or acting on its behalf) has not, directly or indirectly, used any funds for unlawful contributions, gifts, services of value, entertainment or other unlawful expenses, made, offered or promised to make any unlawful payment or gave or promised to give, anything of value to any Person or to any foreign or domestic government officials or employees or made, or promised to make any contribution, bribe, rebate,

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gift, payoff, influence payment, kickback or other similar unlawful payment or other advantage, or taken any action which would cause it to be in violation of any Anti-Corruption or Anti-Bribery Laws. The Company (including any of its officers, directors, agents, employees or other Person associated with or acting on its behalf) has not, directly or indirectly, requested or agreed to receive or accepted any unlawful contributions, gifts, services of value, advantage, entertainment or other unlawful expenses, contribution, bribe, rebate, gift, payoff, influence payment, kickback or other similar unlawful payment, or similar incentive which would cause it to be in violation of any Anti-Corruption or Anti-Bribery Laws. Neither the Company, nor any director, officer, employee or agent of the Company acting on behalf of the Company has offered, nor made, nor promised to make, nor authorized the making of any gift or payment of money or anything of value either directly or indirectly to any Person, or to any officer or employee of a Governmental Entity, or to any Person acting in an official capacity for or on behalf of any such Governmental Entity or to any political party or candidate for political office (all of the foregoing individuals being individually and collectively referred to herein as “Officials”) for purposes of (i) influencing any act or decision of any Person, or such Official in his or her official capacity, or (ii) inducing any Person or such Official to do or omit to do any act in violation of the lawful duty of such Person or Official, or (iii) inducing such Person or Official to use his or her influence improperly including with a Governmental Entity to affect or influence any act or decision of such Governmental Entity in order to obtain, retain or direct or assist in obtaining, retaining or directing business to the Company. No officer, director, employee or holder of any financial interest in the Company or any affiliate thereof, is currently an Official. There are no pending or, to the Company’s Knowledge, threatened claims, charges, investigations, violations, settlements, civil or criminal enforcement actions, lawsuits, or other court actions against the Company with respect to any Anti-Corruption and Anti-Bribery Laws. There are no actions, conditions or circumstances pertaining to the Company’s activities that could reasonably be expected to give rise to any future claims, charges, investigations, violations, settlements, civil or criminal actions, lawsuits, or other court actions under any Anti-Corruption and Anti-Bribery Laws. The Company has established and maintains a compliance program and reasonable internal controls and procedures appropriate to the requirements of Anti-Corruption and Anti-Bribery Laws. The Company has in place adequate procedures, methodologies and structures (in accordance with section 7 (2) of the Bribery Act 2010, prevailing governmental guidance and in accordance with good industry practice for the Company’s business sector) to prevent the commission of any criminal offence under the Bribery Act 2010 and the undertaking of conduct that might amount to a breach of the Bribery Act 2010 by the Company or any director, officer, employee, consultant or agent of the Company acting on behalf of the Company.

          (c) To the Company’s Knowledge, no officer or director of the Company has been: (i) convicted in a criminal proceeding or named as a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) subject to any order, judgment, or decree (not subsequently reversed, suspended or vacated) of any court of competent jurisdiction permanently or temporarily enjoining him/her from, or otherwise imposing limits or conditions on his or her engaging in any securities, investment advisory, banking, insurance or other type of business or acting as an officer or director of a public company; (iii) found by a court of competent

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jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated any federal or state commodities, securities or unfair trade practices law, which such judgment or finding has not been subsequently reversed, suspended, or vacated; or (iv) involved in any other type of legal proceeding that would require the officer or director to disclose such involvement under Item 401(f) of SEC Regulation S-K if the officer or director were subject to such Regulation.

     2.25 Bank Accounts, Letters of Credit and Powers of Attorney. Section 2.25 of the Disclosure Schedule lists (a) all bank accounts, lock boxes and safe deposit boxes relating to the business and operations of the Company (including the name of the bank or other institution where such account or box is located and the name of each authorized signatory thereto), (b) all outstanding letters of credit issued by financial institutions for the account of the Company, and (c) the name of each person who has a power of attorney to act on behalf of the Company. The Company has heretofore delivered to Parent true, correct and complete copies of each letter of credit and each power of attorney described in Section 2.25 of the Disclosure Schedule.

     2.26 Customers and Suppliers.

          (a) Section 2.26(a) of the Disclosure Schedule sets forth each customer of the Company who accounted for more than 5% of the revenues of the Company for the fiscal year ended February 28, 2011, and who is expected to account for more than 5% of the revenues of the Company for the fiscal year ended February 28, 2012 (collectively, the “Customers”). The Company’s relationships with its Customers are good commercial working relationships. As of the date hereof, since February 28, 2011, no Customer of the Company has canceled or otherwise terminated its relationship with the Company, or has during the last twelve (12) months decreased materially its usage or purchases of the services or products of the Company. As of the date hereof, to the Company’s Knowledge, no Customer has any plan or intention to terminate, to cancel or otherwise materially and adversely modify its relationship with the Company or to decrease materially its usage, purchase or distribution of the services or products of the Company.

          (b) Section 2.26(b) of the Disclosure Schedule sets forth a list of all suppliers to which the Company made payments aggregating to $50,000 or more during the fiscal year ended February 28, 2011, or expects to aggregate $50,000 or more during the fiscal year ended February 28, 2012, showing, with respect to each, the name and dollar volume involved. As of the date hereof, since February 28, 2011, no supplier has terminated or materially reduced its business with the Company or materially and adversely modified its relationship therewith.

     2.27 Complete Copies of Materials. The secure website established for the Company in order to facilitate due diligence conducted with respect to the Company by Parent (which is located at https://datasite.merrillcorp.com) to which Parent has been provided access contains true and complete copies of each document included therein (or summaries of same).

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND THE SUB

     Each of Parent and Sub hereby represents and warrants to the Company that as of the Effective Time, as follows:

     3.1 Organization, Standing and Power. Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Sub is a corporation duly organized, validly existing and in good standing under the Laws of Florida. Sub is newly formed and was formed solely to effectuate the Merger. Each of Parent and Sub has the corporate power to own its properties and to carry on its business as now being conducted and is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the failure to be so qualified or licensed would have a Parent Material Adverse Effect.

     3.2 Authority. Each of Parent and Sub has all requisite corporate power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Parent and Sub. This Agreement and any Related Agreements to which Parent and Sub are parties have been duly executed and delivered by Parent and Sub and constitute the valid and binding obligations of Parent and Sub, enforceable against each of Parent and Sub in accordance with their terms, except as such enforceability may be limited by principles of public policy and subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.

     3.3 Consents. No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity, is required by or with respect to Parent or Sub in connection with the execution and delivery of this Agreement and any Related Agreements to which Parent or Sub is a party or the consummation of the transactions contemplated hereby and thereby, except for (i) such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable securities Laws, (ii) such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not have a Parent Material Adverse Effect, (iii) the filing of the Articles of Merger with the Department of State of the State of Florida, (iv) the filing of a post-closing notification under the Investment Canada Act, and (v) compliance with the pre-merger notification requirements of the HSR Act, and under the comparable non-U.S. competition Laws the parties reasonably determine apply.

     3.4 No Conflict. The execution and delivery by Parent and Sub of this Agreement and any Related Agreement to which Parent or Sub is a party, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in any violation of or default (with

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or without notice of lapse of time, or both) under (i) the certificate of incorporation, articles of incorporation, bylaws or similar organizational documents of Parent or Sub, each as amended to date and in full force and effect on the date hereof, or (ii) assuming compliance with the matters referred to in Section 3.3 hereof, any material Laws applicable to Parent or Sub or any of their respective properties (whether tangible or intangible) or assets.

     3.5 Capital Resources; Solvency. At the Effective Time, Parent will have sufficient funds, in cash, to pay the Merger Consideration and any other amounts payable by Parent under this Agreement, together with all fees and expenses of Parent incurred in connection with the transactions contemplated by this Agreement, and to effect the transactions contemplated by this Agreement. Parent is not insolvent and consummation of the Merger and the other transactions contemplated by this Agreement will not cause Parent to become insolvent.

     3.6 Litigation. There are no material suits, actions, proceedings, investigations, claims or orders pending, or to Parent’s knowledge, threatened, against either Parent or Sub, nor is either Parent or Sub subject to any judgment, order or decree of any court or Governmental Entity which in either case would seek to prevent any of the transactions contemplated by this Agreement.

     3.7 Brokers. No broker, finder or agent is entitled to any brokerage fees, finder’s fees or commissions in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent.

     3.8 Due Diligence. In connection with its investment decision, Parent and/or its representatives have inspected and conducted such reasonable independent review, investigation and analysis (financial and otherwise) of the Company and the Company Subsidiaries as desired by Parent.

     3.9 Interim Operations of Sub.

          (a) Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement and has engaged in no business activities other than as contemplated by this Agreement.

          (b) All of the issued and outstanding equity of Sub is validly issued, fully paid and non-assessable and is owned, beneficially and of record, by Parent free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, stockholder agreements, limitations on Parent’s voting rights, charges and other encumbrances of any nature whatsoever.

          (c) As of the date hereof and as of the Effective Time, except for (i) obligations or liabilities incurred in connection with its incorporation and (ii) this Agreement and any other agreements or arrangements contemplated by this Agreement or in furtherance of the transactions contemplated hereby, Sub has not incurred, directly or indirectly, through any of its subsidiaries or

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affiliates, any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any person.

ARTICLE IV

CONDUCT PRIOR TO THE EFFECTIVE TIME

     4.1 Conduct of Business of the Company. Except as expressly contemplated by this Agreement, set forth on Schedule 4.1 or as otherwise consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), unless Parent fails to respond within five (5) calendar days of Parent’s receipt of the Company’s written request for consent, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement and the Effective Time, the Company agrees (1) to conduct its business in the ordinary course in substantially the same manner as heretofore conducted, (2) to pay the debts and Taxes of the Company and each Company Subsidiary when due (subject to Section 4.1(h) below), (3) to use its commercially reasonable efforts to pay or perform other obligations when due, (4) to the extent consistent with such business, to use its commercially reasonable efforts to preserve intact the present business organizations of the Company, (5) to use commercially reasonable efforts to keep available the services of the present officers and key employees of the Company and each Company Subsidiary and (6) to use commercially reasonable efforts to preserve the relationships of the Company and each Company Subsidiary with customers and suppliers, all with the goal of preserving unimpaired the goodwill and ongoing businesses of the Company at the Effective Time. The Company shall promptly notify Parent of any event or occurrence or emergency not in the ordinary course of business of the Company and any material event involving the Company or any Company Subsidiary that arises during the period from the date of this Agreement and continuing until the earlier of the termination date of this Agreement or the Effective Time. In addition to the foregoing, except as expressly contemplated by this Agreement or required by applicable Law, and except as expressly set forth in Section 4.1 of the Disclosure Schedule, the Company shall not, and shall cause each Company Subsidiary not to, without the prior consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), unless Parent fails to respond within five (5) calendar days of Parent’s receipt of the Company’s written request for consent, from and after the date of this Agreement:

          (a) cause or permit any amendments to the articles of incorporation, bylaws or other organizational documents of the Company or any Company Subsidiary;

          (b) incur, or enter into any commitment to incur, expenditures exceeding $100,000 individually or $250,000 in the aggregate (other than in the ordinary course of business consistent with past practice);

          (c) pay, discharge, waive or satisfy, any Indebtedness, other than required principal and interest payments as set forth in Section 4.1(c) of the Disclosure Schedule;

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          (d) except in the ordinary course of business consistent with past practice, pay, discharge, waive or satisfy, any third party expense in an amount in excess of $100,000 in any one case, or $350,000 in the aggregate, or any other material claim, liability, right or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of a claim, liability, right or obligation, in the ordinary course of business for amounts reflected in or reserved against in the Current Balance Sheet;

          (e) waive or release any material right or claim of the Company, including any write-off or other compromise of any Accounts Receivable in an amount in excess or $10,000 in any one case or $250,000 in the aggregate.

          (f) commence or settle any lawsuit, threat of any lawsuit or proceeding or other investigation against the Company or any Company Subsidiary involving an amount in dispute greater than $100,000;

          (g) adopt or change accounting methods or practices (including any change in depreciation or amortization policies) other than as required by GAAP;

          (h) make or change any material Tax election, adopt or change any Tax accounting method, enter into any closing agreement with respect to Taxes, settle or compromise any Tax claim or assessment, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment or file any material Tax Return or any amended Tax Return unless a copy of such Tax Return has been delivered to Parent for review a reasonable time prior to filing and Parent has approved such Tax Return, which approval shall not be unreasonably withheld, conditioned or delayed;

          (i) revalue any of its assets (whether tangible or intangible), including without limitation writing down the value of inventory other than in the ordinary course of business consistent with past practice;

          (j) declare, set aside, or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any Company Capital Stock, or split, combine or reclassify any Company Capital Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of Company Capital Stock (for the avoidance of doubt, the Company shall be permitted to accrue dividends on outstanding Company Preferred Stock), or repurchase, redeem or otherwise acquire, directly or indirectly, any shares of Company Capital Stock (or options, warrants or other rights exercisable therefor);

          (k) Except as set forth in Section 4.1(k) of the Disclosure Schedule, increase the salary or other compensation payable or to become payable to any officer, director, employee, consultant or advisor, or make any declaration, payment or commitment or obligation of any kind for the payment (whether in cash or equity) of a severance payment, termination payment, bonus or

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other additional salary or compensation to any such person, except payments made pursuant to written agreements outstanding on the date hereof and disclosed in the Disclosure Schedule;

          (l) issue, grant, deliver or sell or authorize or propose the issuance, grant, delivery or sale of, or purchase or propose the purchase of, any Company Capital Stock or any securities convertible into, exercisable or exchangeable for, or subscriptions, rights, warrants or options to acquire, or other agreements or commitments of any character obligating it to issue or purchase any such shares or other convertible securities, except for (i) the issuance of Company Capital Stock pursuant to the exercise of outstanding Company Options, Company Preferred Options and Company Warrants and (ii) the issuance of Company Options to new employees as set forth in Section 4.1(l) of the Disclosure Schedule;

          (m) make any loan to any Person or purchase debt securities of any Person or amend the terms of any outstanding loan agreement;

          (n) incur any Indebtedness, guarantee any Indebtedness of any Person, issue or sell any debt securities, or guarantee any debt securities of any Person;

          (o) sell, lease, license or otherwise dispose of or grant any security interest in any of its properties or assets (whether tangible or intangible), including without limitation the sale of any Accounts Receivable, except in the ordinary course of business and consistent with past practices;

          (p) (i) except standard end user licenses or other customer agreements entered into in the ordinary course of business, consistent with past practice, sell, lease, license or transfer to any Person any rights to any Company Intellectual Property or enter into any agreement or modify any existing agreement with respect to any Company Intellectual Property with any Person or with respect to any Intellectual Property Rights of any Person, (ii) except in the ordinary course of business, consistent with past practice, purchase or license any Intellectual Property Rights or enter into any agreement or modify any existing agreement with respect to the Content & Technology or Intellectual Property Rights of any Person, (iii) enter into any agreement or modify any existing agreement with respect to the development of any Intellectual Property Rights with a third party, or (iv) change pricing or royalties set or charged by the Company to its customers or licensees, or the pricing or royalties set or charged by persons who have licensed Intellectual Property Rights to the Company, other than in the ordinary course of business, consistent with past practice;

          (q) enter into or amend any agreement pursuant to which any other party is granted development, manufacturing or similar rights of any type or scope with respect to any product, service or technology of the Company;

          (r) enter into or amend any agreement pursuant to which any other party is granted marketing or distribution rights of any type or scope with respect to any product, service or

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technology of the Company other than in the ordinary course of business consistent with past practice;

          (s) enter into any agreement to purchase or sell any interest in real property, grant any security interest in any real property, enter into any lease, sublease, license or other occupancy agreement with respect to any real property or alter, amend, modify or terminate any of the terms of any Lease Agreements;

          (t) except as set forth in Section 4.1(t) to the Disclosure Schedule, amend or otherwise modify (or agree to do so), or violate the terms of, any of the Material Contracts, other than in the ordinary course of business on terms no less favorable to the Company in the aggregate;

          (u) acquire or agree to acquire by merging or consolidating with, or by purchasing any assets or equity securities of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of the Company;

          (v) adopt or amend any Company Employee Plan except as contemplated by this Agreement, enter into any employment contract, pay or agree to pay any bonus or special remuneration to any director or Employee, or increase or modify the salaries, wage rates, or other compensation (including, without limitation, any equity-based compensation) of its Employees except for (i) amendments required by Law or to conform any such Company Employee Plan or Employee Agreement to the requirements of any applicable Law, (ii) payments contemplated in this Agreement, and (iii) payments made pursuant to written agreements outstanding on the date hereof and disclosed in Section 4.1(v) of the Disclosure Schedule;

          (w) enter into any strategic alliance, affiliate agreement or joint marketing arrangement or agreement with any of the parties listed on Section 4.1(w) of the Disclosure Schedule.

          (x) except as set forth in Section 4.1(x) of the Disclosure Schedule, hire, promote, demote or terminate any Employees, or encourage any Employees to resign from the Company or any Company Subsidiary;

          (y) except in cooperation with Parent or in substantial compliance with guidelines provided by Parent, make any representations or issue any communications (including electronic communications) to Employees regarding any benefits of the transactions contemplated by this Agreement, including any representations regarding offers of employment from Parent or the terms thereof;

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          (z) alter, or enter into any commitment to alter, its interest in any corporation, association, joint venture, partnership or business entity in which the Company directly or indirectly holds any interest;

          (aa) cancel, amend or renew any insurance policy; or

          (bb) take, or agree in writing or otherwise to take, any of the actions described in Sections 4.1(a) through 4.1(aa) hereof, or any other action that would (i) prevent the Company from performing, or cause the Company not to perform, its covenants hereunder or (ii) cause or result in any of its representations and warranties contained herein being untrue or incorrect.

          Parent acknowledges that any action taken with the written consent of Parent pursuant to this Section 4.1 and after written notification by the Company that such action will constitute a breach of a representation or warranty set forth in Article II, or that is disclosed in Section 4.1 of the Disclosure Schedule, in each case that causes any representation and warranty set forth in Article II, as modified by the Disclosure Schedule, to be inaccurate as of the Closing Date, shall be deemed to not be a breach of such representation or warranty, but only to the extent specifically set forth in the written notification provided by the Company.

     4.2 No Solicitation. Until the earlier of (i) the Effective Time, or (ii) the date of termination of this Agreement pursuant to the provisions of Section 8.1 hereof, the Company shall not (nor shall the Company permit, as applicable, any of its officers, directors, employees, stockholders, agents, representatives or affiliates to), directly or indirectly, take any of the following actions with any party other than Parent and its designees: (a) solicit, encourage, seek, entertain, support, assist, initiate or participate in any inquiry, negotiations or discussions, or enter into any agreement, with respect to any offer or proposal to acquire all or any material part of the business, properties or technologies of the Company, or any amount of the Company Capital Stock (whether or not outstanding), whether by merger, purchase of assets, tender offer, license or otherwise, or effect any such transaction, (b) disclose any information not customarily disclosed to any person concerning the business, technologies or properties of the Company, or afford to any Person access to its properties, technologies, books or records, not customarily afforded such access, (c) assist or cooperate with any person to make any proposal to purchase all or any part of the Company Capital Stock or assets of the Company, or (d) enter into any agreement with any person providing for the acquisition of the Company (other than inventory in the ordinary course of business), whether by merger, purchase of assets, license, tender offer or otherwise. The Company shall immediately cease and cause to be terminated any such negotiations, discussion or agreements (other than with Parent) that are the subject matter of clause (a), (b), (c) or (d) above. In the event that the Company or any of the Company’s affiliates shall receive, prior to the Effective Time or the termination of this Agreement in accordance with Section 8.1 hereof, any offer, proposal, or request, directly or indirectly, of the type referenced in clause (a), (c), or (d) above, or any request for disclosure or access as referenced in clause (b) above, the Company shall immediately (x) suspend any discussions with such offeror or party with regard to such offers, proposals, or requests and (y) notify Parent thereof, including information as to the identity of the offeror or the party making

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any such offer or proposal and the material terms of such offer or proposal, and such other information related thereto as Parent may reasonably request. The parties hereto agree that irreparable damage would occur in the event that the provisions of this Section 4.2 were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed by the parties hereto that Parent shall be entitled to an immediate injunction or injunctions, without the necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting any bond or other security, to prevent breaches of the provisions of this Section 4.2 and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which Parent may be entitled at law or in equity. Without limiting the foregoing, it is understood that any violation of the restrictions set forth above by any officer, director, agent, representative or affiliate of the Company shall be deemed to be a breach of this Agreement by the Company.

     4.3 Procedures for Requesting Parent Consent. If the Company desires to take an action which would be prohibited pursuant to Section 4.1 of this Agreement without the written consent of Parent, prior to taking such action the Company may request such written consent by sending an e mail or facsimile to both of the following individuals:

Fred Heller, VP Corporate Strategy & Development
Telephone: (781) 565-5464
Facsimile: (781) 565-5565
E mail address: fred.heller@nuance.com

Garrison R. Smith, Associate General Counsel
Telephone: (781) 565-5277
Facsimile: (781) 565-5562
E mail address: garrison.smith@nuance.com

ARTICLE V

ADDITIONAL AGREEMENTS

     5.1 Information Statement; Stockholder Approval.

          (a) As soon as practicable after the date hereof, the Company shall use its reasonable best efforts to obtain the Sufficient Stockholder Vote, either at a meeting of the Company’s Stockholders or pursuant to a written stockholder consent, all in accordance with the FBCA and the Charter Documents of the Company. In connection with such meeting of Stockholders or written stockholder consent, the Company shall submit to the Stockholders the Soliciting Materials (as defined below), which shall (i) include a solicitation of the approval of the holders of the Company Capital Stock to this Agreement and the Merger, (ii) specify that adoption of this Agreement shall constitute approval by the Stockholders of this Agreement, the obligations of the Stockholders under this Agreement and the appointment of Cornerstone IV, LLC as Stockholder

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Representative, under and as defined in this Agreement, (iii) include a summary of the Merger and this Agreement, and (iv) include a statement that appraisal rights are available for the Company Capital Stock pursuant to the FBCA. Any materials to be submitted to the Stockholders in connection with the solicitation of their approval of the Merger and this Agreement (the “Soliciting Materials”) shall be subject to review and approval by Parent prior to distribution, such approval not to be unreasonably withheld or delayed, and shall also include the unanimous recommendation of the Board of Directors of the Company in favor of the Merger, this Agreement, and the transactions contemplated hereby, and the conclusion of the Company’s Board of Directors that the terms and conditions of the Merger are fair and reasonable to the Stockholders.

          (b) If the Company shall seek to obtain the Sufficient Stockholder Vote by way of a meeting of the Stockholders, the Company shall consult with Parent regarding the date of such meeting to approve this Agreement and the Merger (the “Company Stockholders’ Meeting”) and shall not postpone or adjourn (other than for absence of a quorum) the Company Stockholders’ Meeting without the consent of Parent. In the event the Company shall seek to obtain the Sufficient Stockholder Vote by written consent, promptly following receipt of written consents of its Stockholders constituting the Sufficient Stockholder Vote, the Company shall deliver notice of the approval of this Agreement and the Merger by written consent of the Company’s Stockholders, pursuant to the applicable provisions of the FBCA and the Company’s Charter Documents (the “Stockholder Notice”), to all Stockholders that did not execute such written consent informing them that this Agreement and the Merger were adopted and approved by the Stockholders of the Company and that appraisal rights are available for their Company Capital Stock pursuant to the FBCA, and shall promptly inform Parent of the date on which the Stockholder Notice was sent. Notwithstanding the foregoing, the Company shall give Stockholders sufficient notice to the effect that no Stockholder will be able to exercise appraisal rights if such Stockholder has not perfected such appraisal rights in accordance with the FBCA.

     5.2 Access to Information. The Company shall afford Parent and its accountants, counsel and other representatives, reasonable access during the period from the date hereof and prior to the Effective Time to (i) all of the properties, books, contracts, commitments and records of the Company and each Company Subsidiary, (ii) all other information concerning the business, properties and personnel (subject to restrictions imposed by applicable Law) of the Company as Parent may reasonably request, and (iii) all employees of the Company and each Company Subsidiary as identified by Parent. The Company agrees to provide to Parent and its accountants, counsel and other representatives copies of internal financial statements (including Tax Returns and supporting documentation) promptly upon request. No information or knowledge obtained in any investigation pursuant to this Section 5.2 or otherwise shall affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Merger in accordance with the terms and provisions hereof.

     5.3 Confidentiality. Each of the parties hereto hereby agrees that the information obtained in any investigation pursuant to Section 5.2 hereof, or pursuant to the negotiation and execution of this Agreement or the effectuation of the transactions contemplated hereby, shall be

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governed by the terms of that certain Confidentiality Agreement by and between Parent and the Company, dated as of March 10, 2010 (the “Confidential Disclosure Agreement”). In this regard, the Company acknowledges that Parent’s common stock is publicly traded and that any information obtained by Company regarding Parent could be considered to be material non-public information within the meaning of federal and state securities Laws. Accordingly, the Company acknowledges and agrees not to engage in any transactions in the Parent’s common stock in violation of applicable insider trading Laws.

     5.4 Expenses. Whether or not the Merger is consummated, all fees and expenses incurred in connection with the Merger including, without limitation, all legal, accounting (excluding any extraordinary audit related fees and expenses (above those incurred for the Company’s 2010 fiscal year-end audit)), financial advisory, consulting, and all other fees and expenses of third parties (including any costs incurred to obtain consents, waivers or approvals as a result of the compliance with Section 5.6 hereof, but excluding any fees and expenses associated with compliance with Section 5.7 hereof) incurred by a party in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby (“Third Party Expenses”), shall be the obligation of the respective party incurring such fees and expenses. Third Party Expenses of the Company and any Company Subsidiary shall also include any bonuses paid or to be paid to employees or consultants of the Company. At least three (3) Business Days prior to the Closing Date, the Company shall provide to Parent a statement of estimated Third Party Expenses incurred by the Company and each Company Subsidiary in a form reasonably satisfactory to Parent (the “Statement of Expenses”). The Statement of Expenses shall be accompanied by invoices from the Company’s legal, accounting, financial and other advisors providing services in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby reflecting such advisors’ final billable Third Party Expenses. The amount of any Third Party Expenses reflected on the Statement of Expenses shall be deducted from the Merger Consideration pursuant to Section 1.6(a)(xxxvii). The amount of any Third Party Expenses of the Company or any Company Subsidiary that are not reflected on the Statement of Expenses (“Excess Third Party Expenses”), shall be subject to the indemnification provision of Section 7.2 hereof and shall not be limited by the Threshold Amount (as defined in Section 7.4(a) hereof).

     5.5 Public Disclosure. No party shall issue any statement or communication to any third party (other than their respective agents that are bound by confidentiality restrictions) regarding the subject matter of this Agreement or the transactions contemplated hereby, including, if applicable, the termination of this Agreement and the reasons therefor, without the consent of the other party, except that this restriction shall be subject to Parent’s obligation to comply with applicable securities Laws and the rules of The Nasdaq Stock Market or any other securities exchange on which shares of Parent common stock may be listed. Notwithstanding the foregoing, on a mutually acceptable date, (a) the parties hereto shall release a mutually agreed upon joint press release, and (b) nothing in this Section 5.5 shall prohibit any Stockholder that is a private equity fund from disclosing, in the ordinary course of such Stockholder’s business, the terms of the Merger and this Agreement to any

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current investor in such Stockholder or its Affiliate that is be required to keep such information confidential.

     5.6 Consents. The Company shall use reasonable best efforts to obtain all necessary consents, waivers and approvals of any parties to any Material Contract as are required thereunder in connection with the Merger or for any such Material Contracts to remain in full force and effect so as to preserve all rights of, and benefits to, the Company under such Material Contract from and after the Effective Time. In the event that, prior to the Effective Time, the other parties to any Material Contract, including lessor or licensor of any Leased Real Property, conditions its grant of a consent, waiver or approval (including by threatening to exercise a “recapture” or other termination right) upon the payment of a consent fee, “profit sharing” payment or other consideration, including increased rent payments or other payments under the Material Contract, the Company shall be responsible for making all payments required to obtain such consent, waiver or approval and such amounts shall be deemed Third Party Expenses under Section 5.4 hereof.

     5.7 Financial Statements.

          (a) The Company shall use its commercially reasonable efforts to take such actions, and shall cause its auditors to take such actions as are necessary for the preparation of the Company’s audited balance sheet as of February 28, 2011, and the related consolidated statements of income, cash flow and stockholders’ equity for the twelve (12) month period then ended (the “2011 Audited Financials”), and the Company shall request the Company’s auditors to deliver, and shall use commercially reasonable efforts to take such other actions as are necessary to enable the Company’s auditors to deliver, any opinions or consents necessary for Parent to file the 2011 Audited Financials with the SEC. The Company shall use its commercially reasonable efforts to take such actions and cause its auditors to take such actions as are necessary for the preparation or adjustment of the Financials such that the Financials are in accordance with Regulation S-X promulgated under the Exchange Act (“Regulation S-X”) and the Financials meet the requirements for inclusion in a registration statement to be filed with the SEC. The financial statements to be delivered pursuant to this Section 5.7(a) shall be referred to as the “Required Financials.”

          (b) Within thirty (30) days following the last day of each fiscal quarter ending after February 28, 2011, the Company shall deliver, or cause to be delivered, to Parent the unaudited balance sheet as of the last day of such fiscal quarter and as of the last day of the corresponding fiscal quarter from the prior fiscal year, and the related consolidated unaudited statements of income, cash flow, and stockholders’ equity for the three (3) month periods then ended, in each case reviewed by the Company’s independent accountants in accordance with SAS-100, and such quarterly financial statements shall be deemed “Interim Financials” under this Agreement. The Company, prior to the Effective Time, and the Stockholder Representative, on or after the Effective Time, shall request the Company’s auditors to deliver, and shall use commercially reasonable efforts to take such other actions as are necessary to enable the Company’s auditors to deliver, any opinions, consents, comfort letters, or other materials necessary for Parent to file the Financials in a

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registration statement or other filing made by Parent with the SEC or to comply with the reasonable request of an underwriter in connection with a public offering of Parent’s securities.

          (c) The Required Financials, when delivered, will (i) have been derived from the books and records of the Company, (ii) be true and correct in all material respects and (iii) fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of the Company at the dates and for the periods indicated in accordance with GAAP and Regulation S-X, except as indicated in the footnotes thereto.

     5.8 Additional Documents and Further Assurances; Reasonable Efforts. Each party hereto, at the request of another party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of the Merger and the transactions contemplated hereby.

          (a) Subject to the terms and conditions provided in this Agreement, each of the parties hereto shall use commercially reasonable efforts to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations to consummate and make effective the transactions contemplated hereby, to satisfy the conditions to the obligations to consummate the Merger, to obtain all necessary waivers, consents and approvals and to effect all necessary registrations and filings and to remove any injunctions or other impediments or delays, legal or otherwise, in order to consummate and make effective the transactions contemplated by this Agreement for the purpose of securing to the parties hereto the benefits contemplated by this Agreement.

     5.9 New Employment Arrangements. Parent or the Surviving Corporation will offer certain of the Employees “at will” employment by Parent and/or the Surviving Corporation, to be effective as of the Closing Date, upon proof of a legal right to work in the United States. Such “at will” employment will: (a) be set forth in offer letters on Parent’s standard form (each, an “Offer Letter”), (b) be subject to and in compliance with Parent’s applicable policies and procedures, including, but not limited to, employment background checks and the execution of an employee proprietary information agreement governing employment conduct and performance, (c) have terms, including the position and salary, which will be determined by Parent after consultation with the Company’s management, (d) include, if applicable, a waiver by the Employee of any future equity-based compensation to which such Employee may otherwise have been eligible, (e) supersede any prior express or implied employment agreements, arrangements, representations, or offer letters in effect prior to the Closing Date, and (f) include agreements providing for non-competition with the business of the Company, Parent and the Surviving Corporation, non-solicitation of the customers and employees of the Company, Parent and the Surviving Corporation following the termination of such employee, arbitration and release of claims. Each employee of the Company or any Company Subsidiary who remains an employee of Parent, the Surviving Corporation or a Company Subsidiary after the Closing Date shall be referred to hereafter as a “Continuing Employee.” Continuing Employees shall be eligible to receive benefits consistent with Parent’s applicable human resources

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policies. Continuing Employees shall execute an Offer Letter and an Employee Proprietary Information, Inventions and Non-Competition Agreement.

     5.10 Termination of 401(k) Plan. If requested in writing by Parent no later than ten (10) days prior to the Closing Date, the Company shall terminate any and all Company Employee Plans intended to include a Code Section 401(k) arrangement (a “Company 401(k) Plan”). The Company shall provide Parent with evidence that such Company 401(k) Plan(s) have been terminated (effective no later than the day immediately preceding the Closing Date) pursuant to resolutions of the Company’s Board of Directors. The form and substance of such resolutions shall be subject to reasonable review and approval of Parent.

     5.11 Section 280G. The Company shall submit to the Stockholders for approval (in a manner reasonably satisfactory to Parent), by such number of stockholders of the Company as is required by Section 280G(b)(5)(B) of the Code, any payments and/or benefits that may separately or in the aggregate, constitute “parachute payments” pursuant to Section 280G of the Code (“Section 280G Payments”) (which determination shall be made by the Company and shall be subject to review and approval by Parent, which approval shall not be unreasonably withheld), such that such payments and benefits shall not be deemed to be Section 280G Payments, and prior to the Effective Time, the Company shall deliver to Parent evidence satisfactory to Parent that (A) a vote of the stockholders of the Company was solicited in conformance with Section 280G and the regulations promulgated thereunder and the requisite stockholder approval was obtained with respect to any payments and/or benefits that were subject to the stockholder vote (the “280G Stockholder Approval”), or (B) that the 280G Stockholder Approval was not obtained and as a consequence, that such payments and/or benefits shall not be made or provided to the extent they would cause any amounts to constitute Section 280G Payments, pursuant to the waivers of those payments and/or benefits, which were executed by the affected individuals prior to the stockholder vote.

     5.12 Reasonable Efforts; Regulatory Filings.

          (a) Subject to the terms and conditions provided in this Agreement, each of the parties hereto shall use commercially reasonable efforts to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated hereby, to satisfy the conditions to the obligations to consummate the Merger, subject to Section 5.6, to obtain all necessary waivers, consents and approvals and to effect all necessary registrations and filings and to remove any injunctions or other impediments or delays, legal or otherwise, in order to consummate and make effective the transactions contemplated by this Agreement for the purpose of securing to the parties hereto the benefits contemplated by this Agreement.

          (b) As soon as may be reasonably practicable, the Company and Parent each shall file with the United States Federal Trade Commission (the “FTC”) and the Antitrust Division of the United States Department of Justice (“DOJ”) Notification and Report Forms relating to the transactions contemplated herein as required by the HSR Act, as well as comparable pre-merger

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notification forms required by the merger notification or control Laws of any applicable jurisdiction, as reasonably agreed by the parties to be required. The Company and Parent each shall promptly supply the other with any information which may be required in order to effectuate such filings; provided, however, that Parent shall not be required to agree to any divestiture by Parent or the Company or any of Parent’s subsidiaries or affiliates, of shares of capital stock or of any business, assets or property of Parent or its subsidiaries or affiliates, or of the Company, its affiliates, or the imposition of any limitation on the ability of any of them to conduct their businesses or to own or exercise control of such assets, properties and stock.

     5.13 Notification of Certain Matters. Each of the Company on the one hand, and Parent on the other hand, shall give prompt notice to the other of: (a) the occurrence or non-occurrence of any event, the occurrence or non- occurrence of which is likely to cause any representation or warranty of such party contained in this Agreement to be untrue or inaccurate at or prior to the Effective Time, and (b) any failure of such party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.13 shall not (i) limit or otherwise affect any remedies available to the party receiving such notice or (ii) constitute an acknowledgment or admission of a breach of this Agreement. No disclosure by a party pursuant to this Section 5.13 shall be deemed to amend or supplement the Disclosure Schedule or prevent or cure any misrepresentations, breach of warranty or breach of covenant.

     5.14 Indemnification of Directors and Officers. Each of Parent and the Sub agree that all rights to indemnification or exculpation existing in favor of, and all limitations on the personal liability of, each officer and director of the Company (each, a “Covered Person”) provided for in Charter Documents shall continue in full force and effect for a period of six (6) years from the Effective Time; provided, however, that all rights to indemnification in respect of any claims asserted or made within such period shall continue until the disposition of such claim

          (a) Prior to the Effective Time, the Company shall purchase an extended reporting period endorsement under the Company’s existing directors’ and officers’ liability insurance coverage for the Company’s directors and officers in a form acceptable to the Company that shall provide such directors and officers with coverage for six (6) years following the Effective Time of not less than the existing coverage and have other terms not materially less favorable to, the insured persons than the directors’ and officers’ liability insurance coverage presently maintained by the Company (the “D&O Tail Policy”). Parent shall, and shall cause the Surviving Corporation to, maintain such policy in full force and effect.

          (b) The obligations under this Section 5.14 shall not be terminated or modified in such a manner as to adversely affect any Covered Person to whom this Section 5.14 applies without the consent of such affected Covered Person (it being expressly agreed that the Covered Persons to whom this Section 5.14 applies shall be third party beneficiaries of this Section 5.14 and shall be entitled to enforce the covenants contained herein).

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ARTICLE VI

CONDITIONS TO THE MERGER

     6.1 Conditions to Obligations of Each Party to Effect the Merger. The respective obligations of the Company and Parent to effect the Merger shall be subject to the satisfaction, at or prior to the Effective Time, of the following conditions:

          (a) No Order. No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger.

          (b) No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect, nor shall any proceeding brought by an administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, seeking any of the foregoing be threatened or pending.

          (c) Stockholder Approval. Stockholders constituting the Sufficient Stockholder Vote shall have approved this Agreement, the Merger and the transactions contemplated hereby, including the appointment of the Stockholder Representative.

          (d) HSR Act. The waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired.

     6.2 Conditions to the Obligations of Parent and Sub. The obligations of Parent and Sub to consummate and effect this Agreement and the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived, in writing, by Parent and Sub:

          (a) Representations, Warranties and Covenants. (i) The representations and warranties of the Company in this Agreement (disregarding, for this purpose, all exceptions in those representations and warranties relating to materiality, Company Material Adverse Effect or any similar standard or qualification) shall be true and correct on and as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time (except to the extent expressly made as of a specified date, in which case as of such date), except where such failure to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (it being understood and agreed that, for the purposes of determining whether this condition has been satisfied with respect to the representation and warranty set forth in Section 2.14(n) hereof, Company Material Adverse Effect shall be deemed to include a Parent Material Adverse Effect), and (ii) the Company shall have performed and complied in all

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material respects with all covenants and obligations under this Agreement required to be performed and complied with by it as of the Closing.

          (b) Governmental Approval. Approvals from any court, administrative agency, commission, or other federal, state, county, local or other foreign governmental authority, instrumentality, agency, or commission (if any) set forth in Section 6.2(b) of the Disclosure Schedule shall have been timely obtained.

          (c) Company Board Approval. This Agreement, the Merger and the transactions contemplated hereby shall have been approved by the Board of Directors of the Company, which approval shall not have been modified or revoked.

          (d) Third Party Consents. The Company shall have delivered to Parent all necessary consents, waivers and approvals of parties to any Material Contract set forth in Section 6.2(d) of the Disclosure Schedule.

          (e) Payoff Letters; Release of Liens. Parent shall have received from the Company payoff letters in a form and substance reasonably satisfactory to Parent with respect to any and all Company Debt. Parent shall have received from the Company a duly and validly executed copy of all agreements, instruments, certificates and other documents, in form and substance reasonably satisfactory to Parent, that are necessary or appropriate to evidence the release of all Liens set forth in Schedule 6.2(e) to this Agreement.

          (f) Legal Opinion. Parent shall have received a legal opinion from legal counsel to the Company, substantially in the form attached hereto as Exhibit F.

          (g) Certificate of the Company. The Company shall deliver to Parent a true and correct certificate, validly executed by the Chief Executive Officer of the Company for and on the Company’s behalf, which represents that the conditions to the obligations of Parent and Sub set forth in this Section 6.2 have been satisfied in full (unless otherwise waived in accordance with the terms hereof).

          (h) Certificate of Secretary of Company. Parent shall have received a certificate, validly executed by the Secretary of the Company, certifying (i) as to the terms and effectiveness of the Charter Documents, (ii) as to the valid adoption of resolutions of the Board of Directors of the Company (whereby the Merger and the transactions contemplated hereunder were unanimously approved by the Board of Directors) and (iii) that the Stockholders constituting the Sufficient Stockholder Vote have approved this Agreement and the consummation of the transactions contemplated hereby.

          (i) Termination of 401(k) Plans. If so requested by Parent, Parent shall have received from the Company evidence reasonably satisfactory to Parent that all 401(k) Plans have been terminated pursuant to resolution of the Board of Directors of the Company or the ERISA

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Affiliate, as the case may be, (the form and substance of which shall have been subject to review and approval of Parent), effective as of no later than the day immediately preceding the Closing Date.

          (j) Financial Statements. Parent shall have received: (i) the Required Financials and (ii) a letter from the Company’s auditors to the effect that they know of no reason why they would not deliver consent to file the Required Financials with the SEC or incorporate the Required Financials into a Registration Statement or deliver a comfort letter, if requested, to an underwriter in connection with a public offering of Parent’s securities; provided, however, that this condition shall be deemed automatically waived by Parent and Sub on the 90^th day following the date of this Agreement.

          (k) Employees. All of the persons listed on Schedule 6.2(k)(i) to this Agreement (i) shall have signed an Offer Letter accepting “at-will” employment (or an independent contractor relationship, as applicable) with Parent or the Surviving Corporation on or prior to the date hereof and such agreements shall be in full force and effect as of the Effective Time, (ii) shall still be employees of the Company and performing their usual and customary duties for the Company immediately before the Effective Time, and (iii) shall not have notified (whether formally or informally) Parent or the Company of such employee’s intention of leaving the employ of Parent or the Company following the Effective Time. All of the persons listed on Schedule 6.2(k)(ii) to this Agreement shall still be employees of the Company and performing their usual and customary duties for the Company immediately before the Effective Time.

          (l) Litigation. There shall be no action, suit, claim, order, injunction or proceeding of any nature pending, or overtly threatened, against Parent, the Sub or the Company, their respective properties or any of their respective officers or directors challenging the Merger or the other transactions contemplated by the terms of this Agreement.

     6.3 Conditions to Obligations of the Company. The obligations of the Company and each of the Stockholders to consummate and effect this Agreement and the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived, in writing, exclusively by the Company:

          (a) Representations, Warranties and Covenants. (i) The representations and warranties of Parent and Sub in this Agreement (disregarding for this purpose all exceptions in those representations and warranties relating to materiality or Parent Material Adverse Effect or any similar standard or qualification) shall be true and correct on and as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time (except to the extent expressly made as of a specified date, in which case as of such date), except where such failure to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, and (ii) each of Parent and Sub shall have performed and complied in all material respects with all covenants and obligations under this Agreement required to be performed and complied with by such parties as of the Closing.

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          (b) Certificate of Parent. Company shall have received a certificate, validly executed on behalf of Parent by a Vice President for and on its behalf to the effect that, as of the Closing the conditions set forth in Section 6.3 hereof have been satisfied.

ARTICLE VII

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

     7.1 Survival of Representations, Warranties and Covenants. The representations and warranties of the Company contained in this Agreement or in any certificate or other instruments delivered pursuant to this Agreement shall survive until 11:59 p.m. (EST) on the eighteen (18) month anniversary of the Closing Date (the “Survival Date”), provided, however, that the representations and warranties of the Company contained in Section 2.2 and Section 2.11 hereof shall survive until the expiration of the applicable statute of limitations, and provided further, however, that if, at any time prior to 11:59 p.m. (EST) on the Survival Date, an Officer’s Certificate (as defined in Section 7.4(b)) is delivered alleging Losses and a claim for recovery under Section 7.4(b), then the claim asserted in such notice shall survive the Survival Date until such claim is fully and finally resolved. The representations and warranties of Parent and Sub contained in this Agreement, or in any certificate or other instrument delivered pursuant to this Agreement, shall terminate at the Closing, provided, however, that the representations and warranties of Parent and the Sub contained in Section 3.2 and Section 3.5 hereof shall terminate on the Survival Date. All covenants contained in this Agreement shall survive the Closing and shall continue to remain in full force and effect in perpetuity after the Closing Date, unless they terminate earlier in accordance with their express terms.

     7.2 Indemnification. The Escrow Participants agree severally, but not jointly, to indemnify and hold Parent and its officers, directors, and affiliates, including the Surviving Corporation (the “Indemnified Parties”), harmless against all claims, losses, liabilities, damages, Taxes, deficiencies, costs and expenses, including reasonable accounting and auditors’ fees, reasonable attorneys’ fees and expenses of investigation and defense, but excluding punitive, special, consequential or any multiple of damages (unless Parent has paid, or is obligated to pay, such damages in connection with a Third Party Claim) or diminution in value (hereinafter individually a “Loss” and collectively “Losses”) incurred or sustained by the Indemnified Parties, or any of them (including the Surviving Corporation), directly or indirectly, as a result of, or with respect to or in connection with (a) any breach or inaccuracy of any representation or warranty of the Company contained in this Agreement or in any certificate or other instruments delivered by or on behalf of the Company pursuant to this Agreement or, in the case of a Third Party Claim any allegation that, if true, would constitute such a breach or inaccuracy, (b) any failure by the Company to perform, fulfill or comply with any covenant or obligation applicable to it contained in this Agreement or in any certificate or other instruments delivered pursuant to this Agreement, (c) the amount of any Excess Third Party Expenses, (d) the amount of any Dissenting Share Payments, (e) any and all Company Debt, to the extent such Company Debt exceeds the amount of Company Debt deducted from the Merger Consideration pursuant to Section 1.6(a)(xxxvii) (“Excess Company Debt”). The Escrow

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Participants shall not have any right of contribution from the Surviving Corporation or Parent with respect to any Loss claimed by an Indemnified Party. For all purposes of this Section 7.2, any Loss of any Indemnified Party shall be net of (A) any insurance proceeds or other recoveries actually received by the Indemnified Party in connection with the facts giving rise to the right of indemnification (after accounting for any and all costs incurred to collect such insurance or other recoveries), and (B) any specific reserves or allowances that were included in the Required Financials; provided, however, that in no circumstance shall an Indemnified Party be required to pursue proceeds under any insurance policies it maintains or any other recoveries that may be available to such Indemnified Party from third parties.

     7.3 Escrow Arrangements.

          (a) Indemnification Escrow Fund. Promptly after the Effective Time, Parent shall deposit with the Indemnification Escrow Agent the Indemnification Escrow Amount out of Merger Consideration otherwise deliverable to the Escrow Participants pursuant to Section 1.6 hereof and shall confirm such deposit in writing with the Indemnification Escrow Agent, which notice shall confirm the Closing Date. Such deposit of the Indemnification Escrow Amount shall constitute an escrow fund (the “Indemnification Escrow Fund”) to be governed solely by the terms set forth herein. The cash comprising the Indemnification Escrow Fund shall be deposited by Parent with respect to each Escrow Participant without any act by them, in accordance with their respective Pro Rata Portions of the Indemnification Escrow Amount. The Indemnification Escrow Fund shall be partial security for the indemnity obligations provided for in Section 7.2 hereof. The Indemnification Escrow Fund shall be available to compensate the Indemnified Parties for any claims by such parties for any Losses suffered or incurred by them and for which they are entitled to recovery under this Article VII. On or before the Closing Date the Company shall provide Parent with the maximum potential amounts payable to the Escrow Participants from the Indemnification Escrow Fund. The Indemnification Escrow Agent may execute this Agreement following the date hereof and prior to the Closing, and such later execution, if so executed after the date hereof, shall not affect the binding nature of this Agreement as of the date hereof between the other signatories hereto. Interests in the Indemnification Escrow Fund shall be non-transferable.

          (b) Indemnification Escrow Period; Distribution upon Termination of Indemnification Escrow Period. Subject to the following requirements, the Indemnification Escrow Fund shall be in existence immediately following the Effective Time and shall terminate at 11:59 p.m. (EST) on the Survival Date (the “Indemnification Escrow Period”); provided, however, that the Indemnification Escrow Period shall not terminate with respect to any amount which, in the reasonable judgment of Parent, is or may be necessary to satisfy any unsatisfied claims specified in any Officer’s Certificate delivered to the Indemnification Escrow Agent and the Stockholder Representative prior to 11:59 p.m. (EST) on the Survival Date. As soon as the Indemnification Escrow Agent receives written notice that any such claims have been resolved in accordance with Section 7.4(d), the Indemnification Escrow Agent shall deliver the remaining portion of the Indemnification Escrow Fund not required to satisfy such claims to the Escrow Participants. Deliveries of amounts out of the Indemnification Escrow Fund to the Escrow Participants pursuant

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to this Section 7.3(b) shall be made in proportion to their respective Pro Rata Portions of the remaining Indemnification Escrow Fund, with the amount of cash delivered to each Escrow Participant rounded down to the nearest cent. Notwithstanding anything to the contrary herein, promptly following the date on which (x) the Required Financials have been delivered to Parent by the Company and (y) the tax matters set forth on Schedule 7.3(b) hereto have been resolved to the reasonable satisfaction of Parent, as certified to the Escrow Agent in writing (the “Early Release Date”), the Escrow Agent shall distribute to the Escrow Participants in accordance with their respective Pro Rata Portions, an aggregate amount equal to (i) fifty percent (50%) of the Escrow Amount minus (ii) the sum of (A) any amounts paid by the Escrow Agent to Parent from the Escrow Fund on or prior to the Early Release Date pursuant to this Section 7.3, and (B) an amount sufficient to cover all outstanding and unpaid indemnification claims that are subject to Officer’s Certificates delivered to the Escrow Agent and the Stockholder Representative in accordance with the terms hereof on or before 11:59 p.m. (ET) on the Early Release Date (whether disputed or undisputed). Immediately following the Early Release Date, the Survival Date shall become the first anniversary of the Effective Time. Any distribution of all or a portion of the cash in the Indemnification Escrow Fund to the Escrow Participants shall be made by delivery of payment by check to each such Escrow Participant equal to the amount of cash being distributed, allocated among the Escrow Participants based on their Pro Rata Portion of the Indemnification Escrow Amount, and mailed by first class mail to such Escrow Participants’ address as set forth on the schedule delivered to the Indemnification Escrow Agent at Closing (or to such other address as any such Escrow Participant may have previously instructed the Indemnification Escrow Agent in writing). Any distribution of all or a portion of the cash in the Indemnification Escrow Fund to Escrow Participants who are Optionholders on the schedule delivered to the Indemnification Escrow Agent at Closing shall be made by remitting such payment to Parent, and Parent shall pay such amounts to the respective Optionholders less any required federal and state withholding taxes, which Parent shall cause to be paid to the applicable taxing authorities and which shall be treated for all other purposes under this Agreement as distributed to the Optionholders. The Indemnification Escrow Agent shall have no liability for the actions or omissions of, or any delay on the part of, the Parent in connection with the foregoing. The parties hereto agree that, for tax reporting purposes, any distribution from the Indemnification Escrow Fund to the Escrow Participants shall be reportable on Internal Revenue Service Form 1099B for the tax year in which the distribution is made. Notwithstanding the foregoing, distributions made to the Parent on behalf of Optionholders shall be treated as returned to the Company and shall not be reported by the Indemnification Escrow Agent.

          (c) Protection of the Indemnification Escrow Fund.

               (i) The Indemnification Escrow Agent shall hold and safeguard the Indemnification Escrow Fund during the Indemnification Escrow Period and shall hold and dispose of the Indemnification Escrow Fund only in accordance with the terms of this Section 7.3(c).

               (ii) The Indemnification Escrow Fund shall be invested in the Indemnification Escrow Agent’s Money Market Insured Savings Account (the “Money Market Account”) and as described in Exhibit G hereto, and any interest paid on such cash shall be added

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to the Indemnification Escrow Fund and shall be a part thereof. The Indemnification Escrow Agent shall have no liability for any investment losses suffered absent gross negligence or willful misconduct. The parties hereto agree that Parent is the owner of the cash in the Indemnification Escrow Fund and that all interest on or other taxable income, if any, earned from the investment of such cash in the Indemnification Escrow Fund pursuant to this Agreement shall be treated for tax purposes as earned by Parent.

               (iii) The parties hereto agree to provide the Indemnification Escrow Agent, and the Stockholder Representative agrees to cause the Escrow Participants to provide, with a certified tax identification number by signing and returning a Form W-9 (or Form W-8 BEN, in case of non-U.S. persons) to the Indemnification Escrow Agent, immediately upon completion of the Closing.

     7.4 Indemnification Claims.

          (a) Threshold Amount. Notwithstanding any provision of this Agreement to the contrary, except as set forth in the second sentence of this Section 7.4(a), an Indemnified Party may not recover any Losses under Section 7.2(a) unless and until one or more Officer’s Certificates (as defined below) identifying such Losses under Section 7.2(a) in excess of $1,570,000 in the aggregate (the “Threshold Amount”) has or have been delivered to the Stockholder Representative and the Indemnification Escrow Agent as provided in Section 7.4(b) hereof, in which case the Indemnified Parties shall be entitled to recover all Losses so identified without regard to the Threshold Amount from the first dollar of such Losses. Notwithstanding the foregoing, an Indemnified Party shall be entitled to recover for, and the Threshold Amount shall not apply as a threshold to, any and all claims or payments made with respect to (A) all Losses incurred pursuant to clauses (b), (c), (d), and (e) of Section 7.2 hereof, and (B) Losses resulting from any breach of a representation or warranty contained in Section 2.2 or Section 2.11 hereof.

          (b) Claims for Indemnification. In order to seek indemnification under Section 7.2, Parent shall deliver an Officer’s Certificate to the Stockholder Representative and the Indemnification Escrow Agent at any time on or before 11:59 p.m. (EST) on the Survival Date; provided, however, Parent may seek indemnification for a breach of a representation and warranty of the Company contained in Section 2.2 and Section 2.11 hereof following the expiration of the Indemnification Escrow Period by delivering an Officer’s Certificate to the Stockholder Representative on or before the expiration of the applicable statute of limitations. Unless the Stockholder Representative shall have delivered an Objection Notice pursuant to Section 7.4(c) hereof, the Indemnification Escrow Agent shall promptly, and in no event later than the thirty-first (31^st) day after its receipt of the Officer’s Certificate, deliver to the Indemnified Party from the Indemnification Escrow Fund an amount equal to the Loss set forth in such Officer’s Certificate. Any payment from the Indemnification Escrow Fund to Indemnified Parties shall be made in cash, and shall be deemed to have been made pro rata amongst the Escrow Participants based on their respective Pro Rata Portions of the Indemnification Escrow Amount. For the purposes hereof, “Officer’s Certificate” shall mean a certificate signed by any officer of Parent: (1) stating that an

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Indemnified Party has paid, sustained, incurred, or properly accrued, or reasonably anticipates that it will have to pay, sustain, incur, or accrue Losses, and (2) specifying in reasonable detail the individual items of Losses included in the amount so stated, the date each such item was paid, sustained, incurred, or properly accrued, or the basis for such anticipated liability, and the nature of the misrepresentation, breach of warranty or covenant to which such item is related.

          (c) Objections to Claims for Indemnification. No payment shall be made under Section 7.4(b) if the Stockholder Representative shall object to the claim made in the Officer’s Certificate in a written statement labeled “Objection Notice” (an “Objection Notice”), and such Objection Notice shall have been delivered to Parent and the Indemnification Escrow Agent prior to 11:59 p.m. (EST) on the thirtieth (30^th) day after its receipt of the Officer’s Certificate. Notwithstanding the foregoing, the Stockholder Representative and the Escrow Participants hereby waive the right to object to any claims in respect of any Agreed-Upon Loss (as defined in Section 7.4(d)(iii) hereof). If the Stockholder Representative does not object in writing within such 30-day period, such failure to so object shall be an irrevocable acknowledgment by the Stockholder Representative that the Indemnified Party is entitled to the full amount of the claim for Losses set forth in such Officer’s Certificate, and payment in respect of such Losses shall thereafter be made in accordance with Section 7.4(b).

          (d) Resolution of Conflicts.

               (i) In case the Stockholder Representative delivers an Objection Notice in accordance with Section 7.4(c) (other than Agreed-Upon Losses as defined in Section 7.4(d)(iii) hereof), the Stockholder Representative and Parent shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims. If the Stockholder Representative and Parent should so agree, and such claim involves a claim against the Indemnification Escrow Fund, a memorandum setting forth such agreement shall be prepared and signed by both parties and furnished to the Indemnification Escrow Agent. The Indemnification Escrow Agent shall be entitled to rely on any such memorandum and make distributions from the Indemnification Escrow Fund in accordance with the terms thereof.

               (ii) At any time following delivery of an Objection Notice by the Stockholder Representative to Parent or in the event of any dispute arising pursuant to Article VII hereof, either Parent, on the one hand, or the Stockholder Representative, on the other hand, may pursue any and all legal or equitable remedies available to them under applicable Law.

               (iii) This Section 7.4(d) shall not apply to claims made in respect of (A) any Dissenting Share Payments (as defined in Section 1.7(c)), (B) any Excess Third Party Expenses, (C) any Excess Company Debt, or (D) any Agent Interpleader Expenses or Agent Indemnification Expenses pursuant to clauses (vi) and (vii) of Section 7.4(f) hereof (each, an “Agreed-Upon Loss”). Claims against the Indemnification Escrow Fund made in respect of any Agreed-Upon Loss shall be resolved in the manner described in Section 7.4(b) above.

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          (e) Third-Party Claims. In the event Parent becomes aware of a third party claim (a “Third Party Claim”) which Parent reasonably believes may result in a demand for indemnification pursuant to this Article VII, Parent shall notify the Indemnification Escrow Agent (if the Third Party Claim is made by Parent prior to the release of the Indemnification Escrow Fund) and the Stockholder Representative in writing of such claim. If the Third Party Claim may result in a claim against the Indemnification Escrow Fund, the Stockholder Representative on behalf of the Escrow Participants, shall be entitled, at its expense, to participate in, but not to determine or conduct, the defense of such Third Party Claim; provided, however, that the Escrow Participants agree and consent, as a condition of such entitlement of participation, that Parent’s legal counsel in the Third Party Claim shall not be precluded from representing Parent as against the Escrow Participants in the event that the Escrow Participants dispute the fact or amount of the Parent’s claim of a Loss related to such matter. Parent shall have the right in its sole discretion to conduct the defense of any such claim; provided, however, that Parent shall not consent to any settlement that would require indemnification by the Escrow Participants or the Stockholders without the prior written consent of the Stockholder Representative, which consent shall not be unreasonably withheld. In the event that the Stockholder Representative has consented to any such settlement, the Escrow Participants shall have no power or authority to object to the amount of any Third Party Claim by Parent. Notwithstanding anything in this Agreement to the contrary, this Section 7.4(e) shall not apply to any third party claim that is the subject of an Agreed-Upon Loss.

          (f) Indemnification Escrow Agent’s Duties.

               (i) The Indemnification Escrow Agent shall be obligated only for the performance of such duties as are specifically set forth herein, and as set forth in any additional written escrow instructions which the Indemnification Escrow Agent may receive after the date of this Agreement which are signed by an officer of Parent and the Stockholder Representative and are not inconsistent with the terms of this Agreement, or, in the reasonable opinion of Indemnification Escrow Agent, will not result in additional obligations or liabilities to the Indemnification Escrow Agent, and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed to be genuine and to have been signed or presented by the proper party or parties. The Indemnification Escrow Agent’s duties hereunder are ministerial in nature and shall not be deemed fiduciary. The Indemnification Escrow Agent shall not be liable for any act done or omitted hereunder as Indemnification Escrow Agent while acting in good faith and in the exercise of reasonable judgment, and any act done or omitted pursuant to the advice of legal counsel shall be conclusive evidence of such good faith.

               (ii) The Indemnification Escrow Agent is hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person, excepting only orders or process of courts of law, and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case the Indemnification Escrow Agent obeys or complies with any such order, judgment or decree of any court, the Indemnification Escrow Agent shall not be liable to any of the parties hereto or to any other person by reason of such compliance,

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notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

               (iii) The Indemnification Escrow Agent shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver this Agreement or any documents or papers deposited or called for hereunder.

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

               (v) In performing any duties under this Agreement, the Indemnification Escrow Agent shall not be liable to any party for damages, losses, or expenses, except for gross negligence or willful misconduct on the part of the Indemnification Escrow Agent. The Indemnification Escrow Agent shall not incur any such liability for (A) any act or failure to act made or omitted in good faith, or (B) any action taken or omitted in reliance upon any instrument, including any written statement or affidavit provided for in this Agreement that the Indemnification Escrow Agent shall in good faith believe to be genuine, nor will the Indemnification Escrow Agent be liable or responsible for forgeries, fraud, impersonations, or determining the scope of any representative authority. In addition, the Indemnification Escrow Agent may consult with legal counsel in connection with performing the Indemnification Escrow Agent’s duties under this Agreement and shall be fully protected in any act taken, suffered, or permitted by him/her in good faith in accordance with the advice of counsel. The Indemnification Escrow Agent is not responsible for determining and verifying the authority of any person acting or purporting to act on behalf of any party to this Agreement.

               (vi) If any controversy arises between the parties to this Agreement, or with any other party, concerning the subject matter of this Agreement, its terms or conditions, the Indemnification Escrow Agent will not be required to determine the controversy or to take any action regarding it. The Indemnification Escrow Agent may hold all documents and the Indemnification Escrow Fund and may wait for settlement of any such controversy by final appropriate legal proceedings or other means as, in the Indemnification Escrow Agent’s discretion, may be required, despite what may be set forth elsewhere in this Agreement. In such event, the Indemnification Escrow Agent will not be liable for damages. Furthermore, the Indemnification Escrow Agent may at its option, file an action of interpleader requiring the parties to answer and litigate any claims and rights among themselves. The Indemnification Escrow Agent is authorized to deposit with the clerk of the court all documents and the Indemnification Escrow Fund held in escrow, except all costs, expenses, charges and reasonable attorney fees incurred by the Indemnification Escrow Agent due to the interpleader action (the “Agent Interpleader Expenses”) and which the parties agree to pay as follows: fifty percent (50%) to be paid by Parent and fifty percent (50%) to be paid by the Escrow Participants in proportion to their respective Pro Rata Portions of the remaining Indemnification Escrow Amount directly from the Indemnification Escrow

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Fund. Upon initiating such action, the Indemnification Escrow Agent shall be fully released and discharged of and from all obligations and liability imposed by the terms of this Agreement.

               (vii) The parties and their respective successors and assigns agree jointly and severally to indemnify and hold Indemnification Escrow Agent harmless against any and all losses, claims, damages, liabilities, and expenses, including reasonable costs of investigation, counsel fees, and disbursements that may be imposed on Indemnification Escrow Agent or incurred by Indemnification Escrow Agent in connection with the performance of its duties under this Agreement, including but not limited to any litigation arising from this Agreement or involving its subject matter, other than those arising out of the gross negligence or willful misconduct of the Indemnification Escrow Agent (the “Agent Indemnification Expenses”). As between Parent on the one hand and the Indemnifying Parties on the other, payment of Agent Indemnification Expenses are to be paid as follows: fifty percent (50%) to be paid by Parent and fifty percent (50%) to be paid by the Escrow Participants in proportion to their respective Pro Rata Portions of the remaining Indemnification Escrow Amount directly from the Indemnification Escrow Fund; provided, however, that in the event the Escrow Participants’ portion of the Agent Indemnification Expenses cannot be satisfied from the Indemnification Escrow Fund in full, the parties agree that Parent shall pay the shortfall of such Escrow Participants’ portion of the Agent Indemnification Expenses, and shall be entitled to recover such amount from each Escrow Participant equal to such Escrow Participant’s Pro Rata Portion of such amount without regard to any caps or other limits herein.

               (viii) The Indemnification Escrow Agent may resign at any time upon giving at least thirty (30) days written notice to Parent and the Stockholder Representative; provided, however, that no such resignation shall become effective until the appointment of a successor escrow agent which shall be accomplished as follows: Parent and the Stockholder Representative shall use their best efforts to mutually agree on a successor escrow agent within thirty (30) days after receiving such notice. If the parties fail to agree upon a successor escrow agent within such time, the Indemnification Escrow Agent shall have the right to appoint a successor escrow agent authorized to do business in the State of New York or appeal to a court of competent jurisdiction to appoint a successor escrow agent and shall remain the escrow agent until such order is received. The successor escrow agent shall execute and deliver an instrument accepting such appointment and it shall, without further acts, be vested with all the estates, properties, rights, powers, and duties of the predecessor escrow agent as if originally named as escrow agent. Upon appointment of a successor escrow agent, the Indemnification Escrow Agent shall be discharged from any further duties and liability under this Agreement.

               (ix) The Indemnification Escrow Agent is hereby authorized, in making or disposing of any investment permitted by this Agreement, or in carrying out any sale of the Indemnification Escrow Fund permitted by this Agreement, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as a subagent of the Indemnification Escrow Agent or for any third person or dealing as principal for its own account.

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               (x) Notwithstanding anything to the contrary, any provision seeking to limit the liability of the Indemnification Escrow Agent shall not be applicable in the event such liability arises from the gross negligence or willful misconduct of the Indemnification Escrow Agent.

               (xi) Notwithstanding any term appearing in this Agreement to the contrary, in no instance shall the Indemnification Escrow Agent be required or obligated to distribute any of the Indemnification Escrow Fund (or take other action that may be called for hereunder to be taken by the Indemnification Escrow Agent) sooner than two (2) Business Days after (i) it has received the applicable documents required under this Agreement in good form, or (ii) passage of the applicable time period (or both, as applicable under the terms of this Agreement), as the case may be.

               (xii) The Indemnification Escrow Agent shall not be responsible for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, terrorism, epidemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters.

          (g) Fees. All fees (including attorney’s fees) of the Indemnification Escrow Agent for performance of its duties hereunder shall be paid by Parent in accordance with the standard fee schedule of the Indemnification Escrow Agent previously delivered to Parent. It is understood that the fees and usual charges agreed upon for services of the Indemnification Escrow Agent shall be considered compensation for ordinary services as contemplated by this Agreement. In the event that the conditions of this Agreement are not promptly fulfilled, or if the Indemnification Escrow Agent renders any service not provided for in this Agreement but that has been requested by an officer of Parent, or if the parties request a substantial modification of the terms of the Agreement, or if any controversy arises, or if the Indemnification Escrow Agent is made a party to, or intervenes in, any litigation pertaining to the Indemnification Escrow Fund or its subject matter, the Indemnification Escrow Agent shall be reasonably compensated for such extraordinary services and reimbursed for all out of pocket costs, attorney’s fees, including allocated costs of in-house counsel, and expenses occasioned by such default, delay, controversy or litigation.

          (h) Successor Escrow Agents. Any corporation or other entity into which the Indemnification Escrow Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Indemnification Escrow Agent in its individual capacity shall be a party, or any corporation or other entity to which substantially all the corporate trust business of the Indemnification Escrow Agent in its individual capacity may be transferred, shall be the Indemnification Escrow Agent under this Agreement without further act.

          (i) Customer Identification Program. Each of the parties acknowledge receipt of the notice set forth on Exhibit H attached hereto and made part hereof and that information may be requested to verify their identities.

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     7.5 Stockholder Representative.

          (a) By virtue of the approval of the Merger and this Agreement by the requisite vote of the Stockholders, each of the Stockholders shall be deemed to have agreed to appoint Cornerstone IV, LLC as its agent and attorney-in-fact, as the Stockholder Representative for and on behalf of the Escrow Participants to take all actions under this Agreement that are to be taken by the Stockholder Representative, including to amend this Agreement, to waive any provision of this Agreement, to negotiate payments due pursuant to this Article VII, to give and receive notices and communications, to authorize payment to any Indemnified Party from the Indemnification Escrow Fund in satisfaction of claims by any Indemnified Party, to object to such payments, to agree to, negotiate, enter into settlements and compromises of, and comply with orders of courts with respect to such claims, to assert, negotiate, enter into settlements and compromises of, and comply with orders of courts with respect to, any other claim by any Indemnified Party against any Escrow Participant or by any such Escrow Participant against any Indemnified Party or any dispute between any Indemnified Party and any such Escrow Participant, in each case relating to this Agreement or the transactions contemplated hereby, and to take all other actions that are either (i) necessary or appropriate in the judgment of the Stockholder Representative for the accomplishment of the foregoing or (ii) specifically mandated by the terms of this Agreement. Such agency may be changed by the Stockholders from time to time upon not less than thirty (30) days prior written notice to Parent; provided, however, that the Stockholder Representative may not be removed unless holders of at least a two-thirds interest of the Indemnification Escrow Fund agree to such removal and to the identity of the substituted agent. A vacancy in the position of Stockholder Representative may be filled by the holders of a majority in interest of the Indemnification Escrow Fund. In the event a vacancy in the position of Stockholder Representative exists for fifteen (15) or more days, Parent shall have the right to petition a court of competent jurisdiction to appoint a replacement Stockholder Representative. No bond shall be required of the Stockholder Representative, and the Stockholder Representative shall not receive any compensation for its services. Notices or communications to or from the Stockholder Representative shall constitute notice to or from the Escrow Participants.

          (b) The Stockholder Representative represents and warrants to the Indemnification Escrow Agent that it has the irrevocable right, power and authority (i) to enter into and perform this Agreement and to bind each of the Escrow Participants to its terms, (ii) to give and receive directions and notices hereunder and (iii) to make all determinations that may be required or that it deems appropriate under this Agreement.

          (c) Until notified in writing by the Stockholder Representative that it has resigned, or that it has been removed by at least two-thirds in interest of the Indemnification Escrow Fund, the Indemnification Escrow Agent may rely conclusively and act upon the directions, instructions and notices of the Stockholder Representative named above and, thereafter, upon the directions, instructions and notices of any successor named in a writing executed by a majority-in-interest of the Indemnification Escrow Fund filed with the Indemnification Escrow Agent.

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          (d) The Company, the Escrow Participants and the Stockholders each hereby authorize the Stockholder Representative to:

               (i) Receive all notices or documents given or to be given to the Escrow Participants or the Stockholders pursuant hereto or in connection herewith or therewith and to receive and accept services of legal process in connection with any suit or proceeding arising under this Agreement;

               (ii) Engage counsel, and such accountants and other advisors and incur such other expenses in connection with this Agreement and the transactions contemplated hereby or thereby as the Stockholder Representative may in its sole discretion deem appropriate;

               (iii) use the Stockholder Representative Escrow Fund as a reserve against the payment of expenses incurred in its capacity as the Stockholder Representative; and

               (iv) Take such action as the Stockholder Representative may in its sole discretion deem appropriate in respect of: (A) waiving any inaccuracies in the representations or warranties of Parent or Sub contained in this Agreement or in any document delivered by Parent or Sub pursuant hereto; (B) taking such other action as the Stockholder Representative is authorized to take under this Agreement; (C) receiving all documents or certificates and making all determinations, in its capacity as Stockholder Representative, required under this Agreement; and (D) all such actions as may be necessary to carry out any of the transactions contemplated by this Agreement, including, without limitation, the defense and/or settlement of any claims for which indemnification is sought pursuant to this Article VII and any waiver of any obligation of Parent or the Surviving Corporation.

          (e) The Stockholder Representative shall not be liable for any act done or omitted hereunder as Stockholder Representative while acting in good faith and in the exercise of reasonable judgment. The Escrow Participants shall indemnify the Stockholder Representative and hold the Stockholder Representative harmless against any loss, liability or expense incurred without gross negligence or bad faith on the part of the Stockholder Representative and arising out of or in connection with the acceptance or administration of the Stockholder Representative’s duties hereunder, including the reasonable fees and expenses of any legal counsel retained by the Stockholder Representative (“Stockholder Representative Expenses”). A decision, act, consent or instruction of the Stockholder Representative, including but not limited to an amendment, extension or waiver of this Agreement, shall constitute a decision of the Escrow Participants and shall be final, binding and conclusive upon the Escrow Participants; and the Indemnification Escrow Agent and Parent may rely upon any such decision, act, consent or instruction of the Stockholder Representative as being the decision, act, consent or instruction of the Escrow Participants. The Indemnification Escrow Agent and Parent are hereby relieved from any liability to any person for any decision, act, consent or instruction of the Stockholder Representative.

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     7.6 Maximum Payments; Remedy.

          (a) Except as set forth in Section 7.6(b) and Section 7.6(c) hereof, the maximum amount an Indemnified Party may recover from an Escrow Participant individually pursuant to the indemnity set forth in Section 7.2 hereof for Losses shall be limited to the amounts held in the Indemnification Escrow Fund with respect to such Escrow Participant.

          (b) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall limit the liability of any party in respect of Losses arising out of any fraud, willful or intentional breaches of representations and warranties or willful and intentional breaches of covenants on the part of such party (it is agreed and understood that the Survival Date and the Threshold Amount shall not apply in respect of any such Losses).

          (c) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall limit the liability of the Escrow Participants in respect of Losses arising out of a breach of Section 2.2(a) resulting from either (x) the inaccuracy of the ownership of Company Capital Stock or securities convertible into or exercisable for Company Capital Stock by a Stockholder, (y) a person claiming ownership of Company Capital Stock or securities convertible into or exercisable for Company Capital Stock transferred to such person from a Stockholder or issued to such person by the Company and not reflected in Section 2.2(a) of the Disclosure Schedule, or (z) the inaccuracy of the capitalization of the Company as set forth in Section 2.2(a)(i) of the Disclosure Schedule.

          (d) Any liability beyond the Indemnification Escrow Fund pursuant to Section 7.6(b) and Section 7.6(c) hereof shall be borne by the Escrow Participants severally, and not jointly, up to the amount of Merger Consideration received by each such Escrow Participant.

     7.7 Purchase Price Adjustment. Amounts paid to or on behalf of any person as indemnification under this Agreement shall be treated as adjustments to the Merger Consideration.

     7.8 Sole Remedy. Following the Closing, the parties agree that, except for the availability of injunctive or other equitable relief and claims relating to fraud, intentional or willful misrepresentation or willful breach, the rights to indemnification under this Article VII shall be the sole remedy that any Indemnified Party will have in connection with the transactions under this Agreement. Nothing herein shall limit the liability of the Company for any breach or inaccuracy of any representation, warranty or covenant contained in this Agreement if the Merger does not close.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

     8.1 Termination. Except as provided in this Section 8.1 and Section 8.2, this Agreement may be terminated and the Merger abandoned at any time prior to the Closing:

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          (a) by unanimous agreement of the Company and Parent;

          (b) by Parent or the Company if the Closing Date shall not have occurred by December 31, 2013; provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes a breach of this Agreement;

          (c) by Parent or the Company if: (i) there shall be a final non-appealable order of a federal or state court in effect preventing consummation of the Merger, or (ii) there shall be any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Closing by any Governmental Entity that would make consummation of the Closing illegal;

          (d) by Parent if there shall be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Merger by any Governmental Entity, which would: (i) prohibit Parent’s ownership or operation of any portion of the business of the Company or (ii) compel Parent or the Company to dispose of or hold separate all or any portion of the business or assets of the Company or Parent as a result of the Merger;

          (e) by Parent if it is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement of the Company or the Stockholders contained in this Agreement such that the conditions set forth in Section 6.2(a) hereof would not be satisfied and such breach has not been cured within ten (10) calendar days after written notice thereof to the Company and the Stockholder Representative; provided, however, that no cure period shall be required for a breach which by its nature cannot be cured; or

          (f) by the Company if none of the Company or the Stockholders is in material breach of their respective obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement of Parent contained in this Agreement such that the conditions set forth in Section 6.3(a) hereof would not be satisfied and such breach has not been cured within ten (10) calendar days after written notice thereof to Parent; provided, however, that no cure period shall be required for a breach which by its nature cannot be cured.

     8.2 Effect of Termination. In the event of termination of this Agreement as provided in Section 8.1 hereof, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Parent, the Company or the Stockholders, or their respective officers, directors or stockholders, if applicable; provided, however, that each party hereto shall remain liable for any breaches of this Agreement prior to its termination; and provided further, however, that, the provisions of Sections 5.3, 5.4 and 5.5 hereof, Article IX hereof and this Section 8.2 shall remain in full force and effect and survive any termination of this Agreement pursuant to the terms of this Article VIII.

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     8.3 Amendment. This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of the party against whom enforcement is sought. For purposes of this Section 8.3, the Stockholders, the Optionholders and the Warrantholders agree that any amendment of this Agreement signed by the Stockholder Representative shall be binding upon and effective against the Stockholders , the Optionholders and the Warrantholders whether or not they have signed such amendment.

     8.4 Extension; Waiver. Parent, on the one hand, and the Company and the Stockholder Representative, on the other hand, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations of the other party hereto, (b) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the covenants, agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. For purposes of this Section 8.4, the Stockholders, the Optionholders and the Warrantholders agree that any extension or waiver signed by the Stockholder Representative shall be binding upon and effective against all Stockholders, the Optionholders and the Warrantholders whether or not they have signed such extension or waiver.

ARTICLE IX

GENERAL PROVISIONS

     9.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial messenger or overnight or same-day courier service of national reputation (including U.S. Postal Service overnight delivery), or sent via facsimile (with acknowledgment of complete transmission) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice); provided, however, that notices sent by mail will not be deemed given until received:

(a)	if to Parent or Sub, to:
	Nuance Communications, Inc. 1 Wayside Road Burlington, MA 01803 Attention: Senior Vice President Corporate Development Facsimile No.: (781) 565-5001
	with a copy (which shall not constitute notice) to:
	Wilson Sonsini Goodrich & Rosati, Professional Corporation 1700 K Street N.W., Fifth Floor Washington, D.C. 20006

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	Attention: Robert Sanchez, Esq. Facsimile No.: (202) 973-8899
(b)	if to the Company or the Stockholder Representative, to:
	Equitrac Corporation 1000 South Pine Island Road Suite 900 Plantation, FL 33324 Attention: Mike Rich Facsimile No: (954) 475-7295
	with a copy (which shall not constitute notice) to:
	Greenberg Traurig, P.A. 401 East Las Olas Boulevard Suite 2000 Fort Lauderdale, FL 33301 Attention: Kara MacCullough Tel: (954) 768-8255 Fax: (954) 765-1477 Email: MacCulloughk@gtlaw.com
(c)	if to the Indemnification Escrow Agent, to:
	U.S. Bank National Association Corporate Trust Services 225 Asylum Street, 23rd Floor Hartford, CT 06103 Attn: Art Blakeslee Ref: Nuance/Ellipse Escrow Tel: (860) 241-6859 Fax: (866) 350-2126

               Notwithstanding the foregoing, notices addressed to the Indemnification Escrow Agent shall be effective only upon receipt. If any notice or document is required to be delivered to the Indemnification Escrow Agent and any other person, the Indemnification Escrow Agent may assume without inquiry that each notice or document was received by such other person when it is received by the Indemnification Escrow Agent.

     9.2 Interpretation. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” The table of contents

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and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

     9.3 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

     9.4 Entire Agreement; Assignment. This Agreement, the Related Agreements, the Exhibits hereto, the Disclosure Schedule, the Confidential Disclosure Agreement, and the documents and instruments and other agreements among the parties hereto referenced herein: (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings both written and oral, among the parties with respect to the subject matter hereof, (b) are not intended to confer upon any other person any rights or remedies hereunder, and (c) shall not be assigned by operation of law or otherwise without the consent of the parties hereto, other than by Parent in connection with a Parent change of control.

     9.5 Severability. In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

     9.6 Other Remedies; Specific Performance. Any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy and nothing in this Agreement shall be deemed a waiver by any party of any right to specific performance or injunctive relief. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they are entitled at law or in equity.

     9.7 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of laws thereof. Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of any court within the State of Delaware in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, agrees that process may be served upon them in any manner authorized by the

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Laws of the State of Delaware for such persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and such process.

     9.8 Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

     9.9 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

     9.10 Third Party Beneficiaries. Except for the provisions of Article VII relating to the Indemnified Parties and the Escrow Participants, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person, any legal or equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement.

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

[remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, Parent, Sub, the Company, the Stockholder Representative and the Indemnification Escrow Agent have caused this Agreement and Plan of Merger to be signed, all as of the date first written above.

NUANCE COMMUNICATIONS, INC.
By:	/s/ Michael Rich
Name:	Michael Rich
Title:	President and Chief Executive Officer
EQUITRAC CORPORATION
By:	/s/ Paul Ricci
Name:	Paul Ricci
Title:	Chief Executive Officer
ELLIPSE ACQUISITION CORPORATION
By:	/s/ Paul Ricci
Name:	Paul Ricci
Title:	Chief Executive Officer

[Signature Page to Agreement and Plan of Merger]

STOCKHOLDER REPRESENTATIVE Cornerstone IV, LLC, as stockholder representative
/s/ Mark Rossi
Name:	Mark Rossi
Title:	Senior Managing Director
U.S. BANK NATIONAL ASSOCIATION, as Indemnification Escrow Agent:
By: /s/ Arthur Blakeslee
Name:	Arthur Blakeslee
Title:	Vice President

[Signature Page to Agreement and Plan of Merger]

EX-10.1

Exhibit 10.1

March 14, 2011

William Nelson
24 Westcott Drive
Hopkinton, MA 01748

Dear Bill:

Congratulations! It is with great pleasure that I provide our offer of employment in the position of Executive Vice President, Worldwide Sales, reporting to Paul Ricci, Chief Executive Officer of Nuance Communications, Inc. This position is based in Burlington, Massachusetts. The start date for your new position is April 15, 2011. At the next Nuance Communications Board of Directors meeting following your start date, I will recommend to the Board that you be appointed an Executive Officer.

Your starting annual base salary will be $450,000.00 paid on a bi-weekly basis. In addition to your base salary, in FY11 you will be eligible for an annual bonus opportunity of $350,000.00 pro-rated according to your date of hire.

Once you have accepted our offer, I will recommend that the Nuance Communications Compensation Committee grant you the following equity awards:

The first will be a time-based vesting restricted stock award of 150,000 shares with a three year vesting schedule, 1/3 each year from the anniversary of the grant date, so long as you remain a Nuance employee.

The second, a performance-based award will consist of 150,000 shares, which will vest, if ever, upon the achievement of certain Board approved financial targets at the end of each fiscal year as follows: 25,000 shares in FY11, 50,000 shares in FY12, 50,000 shares in FY13 the remaining 25,000 shares in FY14. If achievement is not met or you terminate employment before date of determination of achievement, you will not vest in the installment for the applicable measurement period and that portion of the award will lapse.

Should your employment with the company be terminated involuntarily by the Company for any reason other than cause, death or disability, you will be eligible to receive twelve months base salary & twelve months paid COBRA coverage if you execute the Company’s specified severance agreement (including, among other things, a full release of claims and non-competition agreement). If there is a change of control transaction and your employment is terminated within twelve months following the change of control transaction by the Company for a reason other than cause, death or disability, and you execute a severance agreement specified by the Company (including, among other things, a full release of claims and non-competition agreement), you will be eligible to receive twelve months base salary & twelve months paid COBRA coverage plus immediate acceleration of any unvested time based restricted stock grants, excluding restricted stock grants issued as performance-based grants.

Page 1 of 3

For purposes of this Agreement, “Cause” means Executive’s employment with the Company is terminated after the CEO has found any of the following to exist: (i) Employee’s act of dishonesty or fraud; (ii) Employee’s breach of the fiduciary duty or duty of loyalty owed to the Company, or breach of the duty to protect the Company’s confidential and propriety information; (iii) Employee’s conviction of a felony or a crime involving fraud, embezzlement, dishonesty, misappropriation of funds or any other act of moral turpitude; (iv) Employee’s gross negligence or misconduct in the performance of his/her duties; (v) Employee’s breach of this Agreement or written policies of the Company; (vi) Employee’s engagement in conduct or activities that result or will potentially result in negative publicity or public disrespect, contempt or ridicule of the Company or are detrimental to the business or reputation of Company; (vii) Employee’s failure to abide by the lawful directives of the Company; (viii) Employee’s failure to satisfactorily perform the duties of his/her position; or (ix) Employee’s death or absence from work due to disability for a period in excess of ninety (90) days in any twelve month period, to the extent consistent with the applicable requirements of federal and state disability law.

As a full-time employee, you will be eligible for our comprehensive benefits package which goes into effect as of your date of hire. The enclosed material outlines all of our benefits to which you are entitled as a Nuance Communications employee. In addition to the standard employee benefits you will be entitled to a $5,000 tax & financial planning reimbursement allowance, an individual term life insurance policy valued at $500,000 assuming medical clearance and enhanced executive disability coverage which currently provides for a benefit of up to 60% of eligible earnings, capped at $18,000 per month, which will be tax free upon qualification.

Your employment with Nuance Communications will be “at will”, meaning that either you or Nuance Communications will be entitled to terminate your employment at any time and for any reason, with or without cause.

Any representations which may have been made to you are superseded by this offer. This is the full and complete agreement between you and Nuance Communications. Although your job duties, title, compensation and benefits, as well as Nuance Communications’ personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of Nuance Communications.

This offer is contingent upon your satisfying the conditions of hire, including providing proof of your eligibility to work in the United States and successful completion of a background check. An Employment Eligibility Verification form is attached to this letter. Please read it carefully and call me if you have any questions. Also, like all Nuance Communications employees, you will be required, as a condition to your employment, to sign Nuance Communications’ standard Non-Compete, Proprietary Information, & Conflict of Interest Agreement, a copy of which is attached hereto.

We, at Nuance Communications, are proud of our reputation and we feel confident that you will be a positive addition to the Sr. Management Team, while the position will afford you the opportunity to grow your professional skill set.

Bill, we would appreciate it if you would confirm your acceptance of our employment offer, by signing this offer confirmation letter and returning it to my attention as soon as possible.

Page 2 of 3

If you have further questions regarding our offer, feel free to contact me at (781) 565-5310. I look forward to our working together and your joining the Nuance Communications organization.

Sincerely,

/s/ Dawn Howarth

Dawn Howarth
SVP Human Resources

cc: P. Ricci
Employee File

Enclosures/Forms: Employment Eligibility Verification form, Benefits Summary, Non-Compete, Proprietary Information, & Conflict of Interest Agreement.

I ACCEPT THE OFFER OF EMPLOYMENT AS STATED ABOVE:
/s/ Bill Nelson
New Hire Signature	Date of Acceptance

Page 3 of 3

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002

I, Paul A. Ricci, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Nuance Communications, Inc.;

     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 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 in 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 officer 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 the registrant’s board of directors (or persons performing the equivalent functions):

     a) all significant deficiencies and material weaknesses in the design or operation of internal control 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.

By:	/s/ Paul A. Ricci
	Paul A. Ricci
	Chief Executive Officer and Chairman of the Board
	August 9, 2011

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas L. Beaudoin, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Nuance Communications, Inc.;

     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 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 in 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 officer 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 the registrant’s board of directors (or persons performing the equivalent functions):

     a) all significant deficiencies and material weaknesses in the design or operation of internal control 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.

By:	/s/ Thomas L. Beaudoin
	Thomas L. Beaudoin
	Executive Vice President and Chief Financial Officer
	August 9, 2011

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, Paul A. Ricci, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Nuance Communications, Inc. on Form 10-Q for the period ended June 30, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Nuance Communications, Inc.

By:	/s/ Paul A. Ricci
	Paul A. Ricci
	Chief Executive Officer and Chairman of the Board
	August 9, 2011

     I, Thomas L. Beaudoin, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Nuance Communications, Inc. on Form 10-Q for the period ended June 30, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Nuance Communications, Inc.

By:	/s/ Thomas L. Beaudoin
	Thomas L. Beaudoin
	Executive Vice President and Chief Financial Officer
	August 9, 2011

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Revenue Information for Core Markets (Detail) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Segment Reporting Information [Line Items]
Total revenues	$ 328,909	$ 273,203	$ 951,700	$ 809,185
Healthcare
Segment Reporting Information [Line Items]
Total revenues	135,409	113,523	373,543	324,880
Mobile and Consumer
Segment Reporting Information [Line Items]
Total revenues	91,613	66,292	270,842	208,153
Enterprise
Segment Reporting Information [Line Items]
Total revenues	68,536	71,006	211,900	217,306
Imaging
Segment Reporting Information [Line Items]
Total revenues	$ 33,351	$ 22,382	$ 95,415	$ 58,846

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Goodwill and Intangible Assets - Additional Information (Detail) (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011
Goodwill and Intangible Assets Disclosure [Line Items]
Purchase accounting adjustments	$ 4,366
X-Solutions Group B.V. and eCopy
Goodwill and Intangible Assets Disclosure [Line Items]
Purchase accounting adjustments	5,200
SpinVox Acquisitions
Goodwill and Intangible Assets Disclosure [Line Items]
Purchase accounting adjustments	$ (1,400)

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Current assets:
Cash and cash equivalents	$ 446,981	$ 516,630
Restricted cash (Note 9)	7,212	24,503
Marketable securities	36,617	5,044
Accounts receivable, less allowances for doubtful accounts of $5,721 and $6,301	247,972	217,587
Acquired unbilled accounts receivable	914	7,412
Prepaid expenses and other current assets	79,339	70,466
Total current assets	819,035	841,642
Land, building and equipment, net	79,623	62,083
Marketable securities		28,322
Goodwill	2,318,555	2,077,943
Intangible assets, net	757,599	685,865
Other assets	75,375	73,844
Total assets	4,050,187	3,769,699
Current liabilities:
Current portion of long-term debt and capital leases	6,909	7,764
Contingent and deferred acquisition payments	34,712	2,131
Accounts payable	82,235	78,616
Accrued expenses and other current liabilities	157,632	151,621
Deferred revenue	183,455	142,340
Total current liabilities	464,943	382,472
Long-term portion of debt and capital leases	852,444	851,014
Deferred revenue, net of current portion	81,502	76,598
Deferred tax liability	73,966	63,731
Other liabilities	114,548	98,688
Total liabilities	1,587,403	1,472,503
Commitments and contingencies (Notes 5 and 18)
Stockholders' equity:
Series B preferred stock, $0.001 par value; 15,000 shares authorized; 3,562 shares issued and outstanding (liquidation preference $4,631)	4,631	4,631
Common stock, $0.001 par value; 560,000 shares authorized; 307,958 and 301,623 shares issued and 304,207 and 297,950 shares outstanding	308	302
Additional paid-in capital	2,681,024	2,581,901
Treasury stock, at cost (3,751 and 3,673 shares)	(16,788)	(16,788)
Accumulated other comprehensive income	31,617	8,505
Accumulated deficit	(238,008)	(281,355)
Total stockholders' equity	2,462,784	2,297,196
Total liabilities and stockholders' equity	$ 4,050,187	$ 3,769,699

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data	Jun. 30, 2011	Sep. 30, 2010
Accounts receivable, allowances for doubtful accounts	$ 5,721	$ 6,301
Series B preferred stock, par value	$ 0.001	$ 0.001
Series B preferred stock, shares authorized	15,000	15,000
Series B preferred stock, shares issued	3,562	3,562
Series B preferred stock, shares outstanding	3,562	3,562
Series B preferred stock, Liquidation preference	$ 4,631	$ 4,631
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	560,000	560,000
Common stock, shares issued	307,958	301,623
Common stock, shares outstanding	304,207	297,950
Treasury stock, shares	3,751	3,673

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Stock Based Compensation Included in Consolidated Statements of Operations (Detail) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	$ 33,788	$ 28,094	$ 109,505	$ 72,868
Cost of Product and Licensing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	2	7	29	25
Cost of Professional Services and Hosting
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	5,764	2,612	20,514	8,173
Cost of Maintenance and Support
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	518	165	1,545	582
Research and Development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	5,280	2,282	18,188	6,731
Sales and Marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	10,341	12,516	32,748	29,813
General and Administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	$ 11,883	$ 10,512	$ 36,481	$ 27,544

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Summary of the Fair Value of Our Derivative Instruments (Detail) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Derivatives, Fair Value [Line Items]
Net asset (liability) value of non-hedge derivative instruments	$ 437	$ (215)
Net asset value of hedge derivative instruments	280	226
Foreign Currency Contracts | Prepaid Expenses And Other Current Assets
Derivatives, Fair Value [Line Items]
Asset value of non-hedge derivative instruments	505	767
Asset value of hedge derivative instruments	280	729
Foreign Currency Contracts | Accrued Expenses And Other Current Liabilities
Derivatives, Fair Value [Line Items]
Liability value of non-hedge derivative instruments	(463)
Security Price Guarantees | Prepaid Expenses And Other Current Assets
Derivatives, Fair Value [Line Items]
Asset value of non-hedge derivative instruments	395
Security Price Guarantees | Accrued Expenses And Other Current Liabilities
Derivatives, Fair Value [Line Items]
Liability value of non-hedge derivative instruments		(982)
Interest Rate Swaps | Accrued Expenses And Other Current Liabilities
Derivatives, Fair Value [Line Items]
Liability value of hedge derivative instruments		$ (503)

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Classification of Revenue by Major Geographic Areas (Detail) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenue from External Customer [Line Items]
United States	$ 237,423	$ 202,080	$ 701,374	$ 576,122
International	91,486	71,123	250,326	233,063
Total revenues	$ 328,909	$ 273,203	$ 951,700	$ 809,185

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Commitments and Contingencies

9 Months Ended

Jun. 30, 2011

Commitments and Contingencies

18.   Commitments and Contingencies

Litigation and Other Claims

Like many companies in the software industry, we have, from time to time, been notified of claims that we may be infringing, or contributing to the infringement of, the intellectual property rights of others. These claims have been referred to counsel, and they are in various stages of evaluation and negotiation. If it appears necessary or desirable, we may seek licenses for these intellectual property rights. There is no assurance that licenses will be offered by all claimants, that the terms of any offered licenses will be acceptable to us or that in all cases the dispute will be resolved without litigation, which may be time consuming and expensive, and may result in injunctive relief or the payment of damages by us.

Vianix LLC has filed three legal actions against us, consisting of two breach of contract actions and a copyright infringement claim. These matters were concluded during the three months ended March 31, 2011. The resolution of these matters did not have a material impact on our financial statements or liquidity.

We do not believe that the final outcome of the above referenced litigation matters will have a material adverse effect on our financial position and results of operations. However, even if our defense is successful, the litigation could require significant management time and will be costly. Should we not prevail, our operating results, financial position and cash flows could be adversely impacted.

Guarantees and Other Commitments

We include indemnification provisions in the contracts we enter into with customers and business partners. Generally, these provisions require us to defend claims arising out of our products’ infringement of third-party intellectual property rights, breach of contractual obligations and/or unlawful or otherwise culpable conduct. The indemnity obligations generally cover damages, costs and attorneys’ fees arising out of such claims. In most, but not all, cases, our total liability under such provisions is limited to either the value of the contract or a specified, agreed upon amount. In some cases our total liability under such provisions is unlimited. In many, but not all cases, the term of the indemnity provision is perpetual. While the maximum potential amount of future payments we could be required to make under all the indemnification provisions is unlimited, we believe the estimated fair value of these provisions is minimal due to the low frequency with which these provisions have been triggered.

We indemnify our directors and officers to the fullest extent permitted by law. These agreements, among other things, indemnify directors and officers for expenses, judgments, fines, penalties and settlement amounts incurred by such persons in their capacity as a director or officer of the company, regardless of whether the individual is serving in any such capacity at the time the liability or expense is incurred. Additionally, in connection with certain acquisitions we have agreed to indemnify the former officers and members of the boards of directors of those companies, on similar terms as described above, for a period of six years from the acquisition date. In certain cases we purchase director and officer insurance policies related to these obligations, which fully cover the six year periods. To the extent that we do not purchase a director and officer insurance policy for the full period of any contractual indemnification, we would be required to pay for costs incurred, if any, as described above.

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Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Income Tax Examination [Line Items]
Income (loss) before income taxes	$ 18,231	$ 301	$ 28,365	$ (16,745)
(Benefit) provision for income taxes	$ (23,390)	$ 1,831	$ (14,982)	$ 4,459
Effective tax rate	(128.30%)	608.30%	(52.80%)	(26.60%)

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Document and Entity Information	9 Months Ended
	Jun. 30, 2011	Jul. 31, 2011
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Trading Symbol	NUAN
Entity Registrant Name	NUANCE COMMUNICATIONS, INC.
Entity Central Index Key	0001002517
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		305,586,374

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Contingent Acquisition Payments - Additional Information (Detail) (USD $)	9 Months Ended		1 Months Ended		9 Months Ended
	Jun. 30, 2011	Nov. 30, 2007 Vocada Acquisitions	Feb. 28, 2011 Commissure Acquisitions	Sep. 30, 2007 Commissure Acquisitions	Jun. 30, 2011 X-Solutions Group B.V. and eCopy
Business Acquisition, Contingent Consideration [Line Items]
Contingent earn-out payments, Maximum		$ 21,000,000		$ 8,000,000
Payment of contingent consideration upon determination of the final earn-out achievement			1,000,000
Purchase accounting adjustments	$ 4,366,000				$ 5,200,000

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Comprehensive Income (Loss) (Tables)

9 Months Ended

Jun. 30, 2011

Components of Comprehensive Income (Loss)

The components of comprehensive income (loss) are as follows (dollars in thousands):

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011		2010
Net income (loss)	$	41,621		$	(1,530	)	$	43,347	$	(21,204	)
Other comprehensive income (loss):
Foreign currency translation adjustment		6,148			(19,488	)		22,893		(31,510	)
Unrealized (loss) gain on cash flow hedge derivatives		(465	)		690			54		2,228
Unrealized gain on marketable securities, net		28			—			26		—
Recognition of pension loss amortization		9			—			139		—
Other comprehensive income (loss)		5,720			(18,798	)		23,112		(29,282	)
Comprehensive income (loss)	$	47,341		$	(20,328	)	$	66,459	$	(50,486	)

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Components of Acquisition-Related Costs, Net (Detail) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Business Acquisition [Line Items]
Transition and integration costs	$ 453	$ 3,383	$ 1,506	$ 12,035
Professional service fees	7,775	3,079	11,107	14,933
Acquisition-related adjustments	367	(337)	1,297	(76)
Total	$ 8,595	$ 6,125	$ 13,910	$ 26,892

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Summary of Activity Relating to Restricted Units (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Jun. 30, 2011 Year
Number of Shares Underlying Restricted Units Contingent Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at September 30, 2010	2,867,840
Granted	1,329,988
Earned/released	(1,296,018)
Forfeited	(360,009)
Outstanding at June 30, 2011	2,541,801
Weighted average remaining contractual term of outstanding Restricted Units	1.0
Aggregate intrinsic value of outstanding Restricted Units	$ 54.6	[1]
Restricted Units vested and expected to vest	2,383,251
Weighted average remaining contractual term of Restricted Units vested and expected to vest	1.0
Aggregate intrinsic value of Restricted Units vested and expected to vest	51.2	[1]
Number of Shares Underlying Restricted Units Time-Based Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at September 30, 2010	7,795,114
Granted	3,521,636
Earned/released	(3,273,826)
Forfeited	(557,123)
Outstanding at June 30, 2011	7,485,801
Weighted average remaining contractual term of outstanding Restricted Units	1.1
Aggregate intrinsic value of outstanding Restricted Units	160.7	[1]
Restricted Units vested and expected to vest	6,961,901
Weighted average remaining contractual term of Restricted Units vested and expected to vest	1.1
Aggregate intrinsic value of Restricted Units vested and expected to vest	$ 149.5	[1]

[1] The aggregate intrinsic value in this table was calculated based on the positive difference between the closing market value of our common stock on June 30, 2011 ($21.47) and the exercise price of the underlying Restricted Units.

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Financial Instruments and Hedging Activities

9 Months Ended

Jun. 30, 2011

Financial Instruments and Hedging Activities

7.   Financial Instruments and Hedging Activities

Cash Flow Hedges

Forward Currency Contracts

We enter into foreign currency contracts to hedge the variability of cash flows in Canadian Dollars (CAD) and Hungarian Forints (HUF) which are designated as cash flow hedges. These contracts settle monthly through October 2011. At June 30, 2011 and September 30, 2010, the notional value and the aggregate cumulative unrealized gains on the outstanding contracts were as follows:

					Aggregate Cumulative
	Notional Value				Unrealized Gains
	June 30,		September 30,		June 30,		September 30,
	2011		2010		2011		2010
Canadian Dollars	$	1,547	$	13,032	$	125	$	286
Hungarian Forints		636		4,564		155		443
Total contracts designated as cash flow hedges	$	2,183	$	17,596	$	280	$	729

Other Derivatives not Designated as Hedges

Forward Currency Contracts

We operate our business in countries throughout the world and transact business in various foreign currencies. Our foreign currency exposures typically arise from transactions denominated in currencies other than the local functional currency of our operations. During fiscal 2011, we commenced a program that primarily utilizes foreign currency forward contracts to offset the risks associated with foreign currency denominated assets and liabilities. We established this program so that gains and losses from remeasurement or settlement of these assets and liabilities are offset by gains or losses on the foreign currency forward contracts thus mitigating the risks and volatility associated with our foreign currency transactions. Generally, we enter into contracts with terms of 30 days or less, and at June 30, 2011 we had outstanding contracts with a total notional value of $165.4 million.

We have not designated these forward contracts as hedging instruments pursuant to ASC 815, Derivatives and Hedging and accordingly, we recorded the fair value of these contracts at the end of each reporting period in our consolidated balance sheet, with changes in the fair value recorded in earnings as other income (expense), net in our consolidated statement of operations. During the three and nine month periods ended June 30, 2011, we recorded losses of $0.2 million and $0.7 million, respectively, associated with these contracts.

Security Price Guarantees

From time to time we enter into agreements that allow us to issue shares of our common stock as part or all of the consideration related to partnering and technology acquisition activities. Generally these shares are issued subject to security price guarantees which are accounted for as derivatives. We have determined that these instruments would not be considered equity instruments if they were freestanding. The security price guarantees require payment from either us to a third party, or from a third party to us, based upon the difference between the price of our common stock on the issue date and an average price of our common stock approximately six months following the issue date. Changes in the fair value of these security price guarantees are reported in earnings in each period as other income (expense), net. During the three and nine months ended June 30, 2011, we recorded gains of $0.4 million and $10.8 million, respectively, associated with these contracts. We received cash totaling $10.0 million to settle certain of these contracts during the three months ended June 30, 2011.

The following table provides a summary of the fair value of our derivative instruments as of June 30, 2011 and September 30, 2010 (dollars in thousands):

		Fair Value
		June 30,			September 30,
Description	Balance Sheet Classification	2011			2010
Derivatives Not Designated as Hedges:
Foreign currency contracts	Prepaid expenses and other current assets	$	505		$	767
Foreign currency contracts	Accrued expenses and other current liabilities		(463	)		—
Security price guarantees	Prepaid expenses and other current assets		395			—
Security price guarantees	Accrued expenses and other current liabilities		—			(982	)
Net asset (liability) value of non-hedge derivative instruments		$	437		$	(215	)
Derivatives Designated as Hedges:
Foreign currency contracts	Prepaid expenses and other current assets	$	280		$	729
Interest rate swaps	Accrued expenses and other current liabilities		—			(503	)
Net asset value of hedge derivative instruments		$	280		$	226

The following tables summarize the activity of derivative instruments for the three and nine months ended June 30, 2011 and 2010, respectively (dollars in thousands):

Derivatives Designated as Hedges for the Three Months Ended June 30,

	Amount of Gain (Loss)					Location and Amount of Gain (Loss) Reclassified from
	Recognized in OCI					Accumulated OCI into Income (Effective Portion)
	2011		2010				2011		2010
Foreign currency contracts	$	16	$	(321	)	Other income (expense), net	$	481	$	(98	)
Interest rate swaps	$	—	$	1,109		N/A	$	—	$	—

Derivatives Designated as Hedges for the Nine Months Ended June 30,

	Amount of Gain (Loss)					Location and Amount of Gain (Loss) Reclassified from
	Recognized in OCI					Accumulated OCI into Income (Effective Portion)
	2011		2010				2011			2010
Foreign currency contracts	$	529	$	(99	)	Other income (expense), net	$	978		$	(190	)
Interest rate swaps	$	—	$	2,517		Interest expense	$	(503	)	$	—

Derivatives Not Designated as Hedges

		Amount of Gain (Loss) Recognized in Income
		Three Months Ended						Nine Months Ended
	Location of Gain (Loss)	June 30,						June 30,
	Recognized in Income	2011			2010			2011			2010
Foreign currency contracts	Other income (expense), net	$	(217	)	$	—		$	(675	)	$	—
Security price guarantees	Other income (expense), net	$	395		$	(1,044	)	$	10,844		$	3,664

Other Financial Instruments

Financial instruments, including cash equivalents, restricted cash, marketable securities, accounts receivable, accounts payable and derivative instruments, are carried in the consolidated financial statements at amounts that approximate their fair value.

The fair value of our long-term debt was estimated to be $963.3 million and $902.2 million at June 30, 2011 and September 30, 2010, respectively. The increase in the fair value is primarily related to the convertible debt, reflecting the increase in the underlying stock price during the period. These fair value amounts represent the value at which our lenders could trade our debt within the financial markets, and do not represent the settlement value of these long-term debt liabilities to us at each reporting date. The fair value of the long-term debt issues will continue to vary each period based on fluctuations in market interest rates, changes to our credit ratings and, for the outstanding convertible debt, changes in our stock price. These fluctuations may have little to no correlation to our reported debt balances. The term loan portion of our Credit Facility is traded and the fair values are based upon traded prices as of the reporting dates. The fair values of the 2.75% Convertible Debentures at each respective reporting date were estimated using the averages of the June 30, 2011 and September 30, 2010 bid and ask trading quotes. We had no outstanding balance on the revolving credit line portion of our Credit Facility. Our capital lease obligations and other debt are not traded and the fair values of these instruments are assumed to approximate their carrying values as of June 30, 2011 and September 30, 2010.

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Business Acquisitions (Tables)

9 Months Ended

Jun. 30, 2011

Summary of Preliminary Allocation of Purchase Consideration

A summary of the preliminary allocation of the purchase consideration for Equitrac and SVOX is as follows (in thousands):

	Equitrac			SVOX
Total purchase consideration:
Cash	$	161,950		$	80,919
Deferred acquisition payment		—			42,990
Total purchase consideration	$	161,950		$	123,909
Allocation of the purchase consideration:
Cash	$	115		$	—
Accounts receivable(a)		10,724			910
Inventory		2,462			—
Goodwill		87,705			92,478
Identifiable intangible assets(b)		91,900			42,165
Other assets		10,617			2,728
Total assets acquired		203,523			138,281
Current liabilities		(3,262	)		(9,542	)
Deferred tax liability		(38,311	)		(4,830	)
Total liabilities assumed		(41,573	)		(14,372	)
Net assets acquired	$	161,950		$	123,909

(a)	Accounts receivable have been recorded at their estimated fair values, which consists of the gross accounts receivable assumed of $12.7 million, reduced by a fair value reserve of $1.1 million representing the portion of contractually owed accounts receivable which we do not expect to be collected.
(b)	The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (table in thousands, except for years):

	Equitrac				SVOX
			Weighted Average				Weighted Average
	Amount		Life (Years)		Amount		Life (Years)
Customer relationships	$	55,800		15.0	$	35,612		13.4
Core and completed technology		22,000		7.0		6,268		5.0
Trade name		14,100		10.0		285		3.0
Total	$	91,900			$	42,165

Pro Forma Results of Operations

The following table shows unaudited pro forma results of operations as if we had acquired SpinVox, Equitrac and SVOX on October 1, 2009 (dollars in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Revenue	$	348,877	$	287,521		$	1,007,734	$	865,305
Net income (loss)		39,857		(5,236	)		34,564		(55,147	)
Net income (loss) per share	$	0.13	$	(0.02	)	$	0.11	$	(0.19	)

Components of Acquisition-Related Costs, Net

The components of acquisition-related costs, net are as follows (dollars in thousands):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Transition and integration costs	$	453	$	3,383		$	1,506	$	12,035
Professional service fees		7,775		3,079			11,107		14,933
Acquisition-related adjustments		367		(337	)		1,297		(76	)
Total	$	8,595	$	6,125		$	13,910	$	26,892

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Business Acquisitions - Additional Information (Detail)	3 Months Ended		9 Months Ended									12 Months Ended
	Jun. 30, 2011 USD ($)	Jun. 30, 2010 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2010 USD ($)	Jun. 30, 2011 Equitrac Acquisitions USD ($)		Jun. 30, 2011 SVOX Acquisitions USD ($)		Jun. 30, 2011 SVOX Acquisitions EUR (€)	Jun. 30, 2011 Series of Individually Immaterial Business Acquisitions USD ($) Year Entity	Jun. 30, 2011 SpinVox Acquisitions	Sep. 30, 2010 Capitalized Cost USD ($)
Business Acquisition [Line Items]
Date of acquisition					2011-06-15		2011-06-16		2011-06-16		2009-12-30
Business acquisitions, businesses acquired										2
Business Acquisition, purchase Price					$ 161,950,000		$ 123,909,000		€ 87,000,000
Business Acquisition, Cash Paid					161,950,000		80,919,000		57,000,000	82,100,000
Business Acquisition, contingent consideration and deferred payment							42,990,000		30,000,000
Business acquisition, goodwill					87,705,000		92,478,000			42,400,000
Business Acquisition, contingent consideration and deferred payment, current									8,300,000
Business acquisition, identifiable intangible assets					91,900,000	[1]	42,165,000	[1]		34,000,000
Business Acquisition, contingent consideration and deferred payment, non current									21,700,000
Acquired intangible assets, useful life (in years)										11.5
Professional service fees	$ 7,775,000	$ 3,079,000	$ 11,107,000	$ 14,933,000								$ 2,200,000

[1] The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (table in thousands, except for years):

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Stock-Based Compensation (Tables)

9 Months Ended

Jun. 30, 2011

Stock Based Compensation Included in Consolidated Statements of Operations

Our share-based awards are accounted for as equity instruments. The amounts included in the consolidated statements of operations relating to stock-based compensation are as follows (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Cost of product and licensing	$	2	$	7	$	29	$	25
Cost of professional services and hosting		5,764		2,612		20,514		8,173
Cost of maintenance and support		518		165		1,545		582
Research and development		5,280		2,282		18,188		6,731
Sales and marketing		10,341		12,516		32,748		29,813
General and administrative		11,883		10,512		36,481		27,544
Total	$	33,788	$	28,094	$	109,505	$	72,868

Summary of Stock Option Activity

The table below summarizes activity relating to stock options for the nine months ended June 30, 2011:

				Weighted		Weighted Average
	Number of			Average		Remaining		Aggregate
	Shares			Exercise Price		Contractual Term		Intrinsic Value(1)
Outstanding at September 30, 2010		10,703,237		$	8.44
Granted		1,000,000		$	16.44
Exercised		(2,448,623	)	$	6.33
Forfeited		(89,553	)	$	12.81
Expired		(63,401	)	$	14.99
Outstanding at June 30, 2011		9,101,660		$	9.79		3.4 years	$	106.3 million
Exercisable at June 30, 2011		6,917,436		$	8.21		2.6 years	$	91.7 million
Exercisable at June 30, 2010		8,021,090		$	6.94		2.9 years	$	65.9 million

(1) The aggregate intrinsic value in this table was calculated based on the positive difference, if any, between the closing market value of our common stock on June 30, 2011 ($21.47) and the exercise price of the underlying options.

Summary of Weighted-Average Grant-Date Fair Value of Stock Options Granted and Intrinsic Value of Stock Options Exercised

A summary of weighted-average grant-date fair value of stock options granted and intrinsic value of stock options exercised is as follows:

	Nine Months Ended
	June 30,
	2011		2010
Weighted-average grant-date fair value per share	$	6.13	$	5.90
Total intrinsic value of stock options exercised (in millions)	$	32.9	$	34.1

Weighted Average Assumptions Used to Calculate Fair Value of Stock Options Granted

The fair value of the stock options granted during the nine months ended June 30, 2011 and 2010 were calculated using the following weighted-average assumptions:

	Nine Months Ended
	June 30,
	2011			2010
Dividend yield		0.0	%		0.0	%
Expected volatility		46.1	%		50.9	%
Average risk-free interest rate		1.2	%		2.4	%
Expected term (in years)		4.1			4.2

Summary of Activity Relating to Restricted Units

The table below summarizes activity relating to Restricted Units for the nine months ended June 30, 2011:

	Number of Shares			Number of Shares
	Underlying			Underlying
	Restricted Units —			Restricted Units —
	Contingent Awards			Time-Based Awards
Outstanding at September 30, 2010		2,867,840			7,795,114
Granted		1,329,988			3,521,636
Earned/released		(1,296,018	)		(3,273,826	)
Forfeited		(360,009	)		(557,123	)
Outstanding at June 30, 2011		2,541,801			7,485,801
Weighted average remaining contractual term of outstanding Restricted Units		1.0 years			1.1 years
Aggregate intrinsic value of outstanding Restricted Units(1)	$	54.6 million		$	160.7 million
Restricted Units vested and expected to vest		2,383,251			6,961,901
Weighted average remaining contractual term of Restricted Units vested and expected to vest		1.0 years			1.1 years
Aggregate intrinsic value of Restricted Units vested and expected to vest(1)	$	51.2 million		$	149.5 million

(1) The aggregate intrinsic value in this table was calculated based on the positive difference between the closing market value of our common stock on June 30, 2011 ($21.47) and the exercise price of the underlying Restricted Units.

Summary of Weighted-Average Grant-Date Fair Value and Intrinsic Value of Restricted Units Vested

A summary of weighted-average grant-date fair value and intrinsic value of all Restricted Units vested is as follows:

	Nine Months Ended,
	June 30,
	2011		2010
Weighted-average grant-date fair value per share	$	17.91	$	15.59
Total intrinsic value of shares vested (in millions)	$	81.8	$	65.2

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2011

Accounting for collaboration agreements

Accounting for collaboration agreements

In June 2011, we entered into an agreement with a large healthcare provider to acquire certain data to be used in a joint development project in exchange for $10 million, $3.5 million of which was due on June 30, 2011. In addition, under the terms of the arrangement we will be reimbursed for certain research and development costs related to specified product development projects with the objective of commercializing the resulting products. All intellectual property derived from these research and development efforts will be owned by us. Upon product introduction, we will pay royalties to this party based on the actual sales. At the end of 5 years, the party can elect to continue with the arrangement, receiving royalties on future sales, or receive a buy-out payment from us and forego future royalties. The buy-out payment is calculated based on a number of factors including the net cash flows received and paid by the parties, as well as a minimum return on those net cash flows.

As of the execution of the above arrangement, we have other arrangements where we have sold and will continue to sell our products and services to this party. As a result, under the guidance of ASC 605, “Revenue Recognition,” we are required to reduce the revenue recognized by the amount we pay to this customer, up to our historical revenue recorded from them. We have therefore reduced reported revenue by $3.5 million for the three months ended June 30, 2011.

The above development arrangement will be accounted for in accordance with ASC 730, “Research and Development.” Accordingly, any buy-out obligation will be recorded as a liability and any reimbursement of the research and development costs in excess of the buy-out obligation will be recorded as an offset to research and development costs. Royalties paid to this party upon commercialization of any products from these development efforts will be recorded as a reduction to revenue in accordance with ASC 605. During the quarter ended June 30, 2011, $4.6 million of expense reimbursement has been recorded as a reduction in research and development expense.

Adoption of new accounting standards

Adoption of new accounting standards

Effective October 1, 2010, we adopted the provisions in the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”) and ASU 2009-14. Software (Topic 985): Certain Revenue Arrangements that Include Software Elements (“ASU 2009-14”). The provisions of ASU 2009-13 apply to arrangements that are outside the scope of software revenue recognition guidance and amend Accounting Standards Codification (“ASC”) Topic 605 to (1) provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and the consideration allocated; (2) require an entity to allocate revenue in an arrangement using the best estimated selling prices (“BESP”) of deliverables if a vendor does not have vendor-specific objective evidence (“VSOE”) or third-party evidence (“TPE”) of selling price; and (3) eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. ASU 2009-14 modifies the scope of ASC Topic 985 to remove industry specific revenue accounting guidance for software and software related transactions, tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. The adoption of these provisions did not have a material impact on our consolidated financial statements.

ASU 2009-13 does not generally change the units of accounting for our revenue transactions. For multiple-element arrangements that contain both software and non-software elements such as our hosted offerings, we allocate revenue to software or software related elements and any non-software elements separately based on the selling price hierarchy. We determine the selling price for each deliverable using VSOE of selling price, if it exists, or TPE of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, we use our BESP for that deliverable. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element.

To determine the selling price in multiple-element arrangements, we establish VSOE of fair value for the majority of our post-contract customer support, professional services, and training based on historical stand-alone sales to third-parties. Typically, we are unable to determine TPE of selling price and therefore when neither VSOE nor TPE of selling price exist, we use BESP for the purposes of allocating the arrangement consideration. We determine BESP for a product or service by considering multiple factors including, but not limited to, major product groupings, market conditions, competitive landscape, price list and discounting practice.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income.” This ASU intends to enhance comparability and transparency of other comprehensive income components. The guidance provides an option to present total comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement or two separate but consecutive statements. This ASU eliminates the option to present other comprehensive income components as part of the statement of changes in shareowners’ equity. The provisions of this ASU will be applied retrospectively for interim and annual periods beginning after December 15, 2011. Early application is permitted. ASU 2011-05 impacts disclosure only and therefore, is not expected to, have a material impact on our financial statements.

In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements (Topic 820) — Fair Value Measurements and Disclosures to add additional disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and transfers between Levels 1, 2, and 3. Levels 1, 2 and 3 of fair value measurements are defined in Note 8 below. ASU 2010-06 was effective for us for the interim reporting period beginning January 1, 2010, except for the provisions related to activity in Level 3 fair value measurements. Those provisions are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. ASU 2010-06 impacts disclosure only and therefore, did not, and is not expected to, have a material impact on our financial statements.

In December 2010, the FASB issued ASU No. 2010-28, Intangibles — Goodwill and Other (Topic 350): “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. ASU 2010-28 is effective for fiscal years beginning after December 15, 2010 and amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. We do not believe that this will have a material impact on our consolidated financial statements.

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Restructuring and Other Charges, net

9 Months Ended

Jun. 30, 2011

Restructuring and Other Charges, net

12.   Restructuring and Other Charges, net

The following table sets forth the nine months ended June 30, 2011 accrual activity relating to restructuring and other charges (dollars in thousands):

	Personnel			Facilities			Other			Total
Balance at September 30, 2010	$	1,838		$	283		$	—		$	2,121
Restructuring and other charges, net		3,854			1,460			258			5,572
Non-cash adjustment		208			—			(165	)		43
Cash payments		(4,629	)		(852	)		(93	)		(5,574	)
Balance at June 30, 2011	$	1,271		$	891		$	—		$	2,162

For the nine months ended June 30, 2011, we recorded net restructuring and other charges of $5.6 million, which included $3.9 million of severance and other costs related to the elimination of approximately 90 personnel across multiple functions worldwide, primarily within costs of sales, and $1.5 million related to facilities that we no longer occupy.

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Comprehensive Income (Loss)

9 Months Ended

Jun. 30, 2011

Comprehensive Income (Loss)

3.   Comprehensive Income (Loss)

The components of comprehensive income (loss) are as follows (dollars in thousands):

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011		2010
Net income (loss)	$	41,621		$	(1,530	)	$	43,347	$	(21,204	)
Other comprehensive income (loss):
Foreign currency translation adjustment		6,148			(19,488	)		22,893		(31,510	)
Unrealized (loss) gain on cash flow hedge derivatives		(465	)		690			54		2,228
Unrealized gain on marketable securities, net		28			—			26		—
Recognition of pension loss amortization		9			—			139		—
Other comprehensive income (loss)		5,720			(18,798	)		23,112		(29,282	)
Comprehensive income (loss)	$	47,341		$	(20,328	)	$	66,459	$	(50,486	)

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Credit Facilities and Debt (Tables)

9 Months Ended

Jun. 30, 2011

Annual Aggregate Principal Amount of Term Loans Repaid

The table below details the new schedule of principal payments by fiscal year. If only the minimum required repayments are made, the annual aggregate principal amount of the term loans repaid would be as follows (dollars in thousands):

Year Ending September 30,	Amount
2011 (quarter ending September 30)	$	1,596
2012		6,346
2013		154,494
2014		4,743
2015		4,696
2016		466,663
Total	$	638,538

Applicable Marginal Interest Rate on Borrowings

The applicable margin for the borrowings is as follows:

Description	Base Rate Margin	LIBOR Margin
Term loans due March 2013	0.75% - 1.50%(a)	1.75% - 2.50%(a)
Term loans due March 2016	2.00%	3.00%
Revolving facility due March 2015	1.25% - 2.25%(b)	2.25% - 3.25%(b)

(a)	The margin is determined based on our leverage ratio at the date the interest rates are reset on the Term Loans.
(b)	The margin is determined based on our credit rating at the date the interest rates are reset on the Revolving Loans

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Current Liabilities

9 Months Ended

Jun. 30, 2011

Current Liabilities

9.   Current Liabilities

Accrued expenses and other current liabilities consisted of the following (dollars in thousands):

	June 30,		September 30,
	2011		2010
Compensation	$	76,251	$	56,047
Sales and marketing incentives(a)		17,174		40,780
Professional fees		13,187		9,908
Accrued business combination costs		10,038		10,197
Sales and other taxes payable		9,091		5,211
Cost of revenue related liabilities		9,325		10,028
Acquisition costs and liabilities		8,299		4,970
Income taxes payable		2,960		4,357
Security price guarantee		—		1,034
Other		11,307		9,089
Total	$	157,632	$	151,621

(a) The decrease in accrued sales and marketing incentives was driven by an €18.0 million ($23.4 million equivalent) payment in December 2010 for a fixed obligation assumed in connection with our acquisition of SpinVox. The related €18.0 million of restricted cash was placed in an irrevocable standby letter of credit account at the end of fiscal year 2010 and was released upon satisfaction of the liability in December 2010. At June 30, 2011, we have an additional €5.0 million ($7.2 million equivalent) of restricted cash that has been placed in an irrevocable standby letter of credit for a related liability.

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Net Income (Loss) Per Share

9 Months Ended

Jun. 30, 2011

Net Income (Loss) Per Share

14.   Net Income (Loss) Per Share

The following table sets forth the computation for basic and diluted net income (loss) per share for the three and nine months ended June 30, 2011 and 2010. (amounts in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Numerator:
Basic
Net income (loss) available to common stockholders — basic	$	41,621	$	(1,530	)	$	43,347	$	(21,204	)
Diluted
Net income (loss) available to common stockholders — diluted	$	41,621	$	(1,530	)	$	43,347	$	(21,204	)
Denominator:
Basic
Weighted average common shares outstanding		303,100		291,610			300,846		285,202
Diluted
Weighted average common shares outstanding — basic		303,100		291,610			300,846		285,202
Weighted average effect of dilutive common equivalent shares:
Assumed conversion of Series B Preferred Stock		3,562		—			3,562		—
Employee stock compensation plan		8,538		—			8,704		—
Warrants		1,793		—			1,485		—
Other contingently issuable shares		809		—			194		—
Weighted average common shares outstanding — diluted		317,802		291,610			314,791		285,202
Net income (loss) per share:
Basic	$	0.14	$	(0.01	)	$	0.14	$	(0.07	)
Diluted	$	0.13	$	(0.01	)	$	0.14	$	(0.07	)

Common equivalent shares are excluded from the computation of diluted net income (loss) per share if their effect is anti-dilutive. Potentially dilutive common equivalent shares aggregating to 3.6 million and 3.5 million shares for the three and nine months ended June 30, 2011, respectively, and 19.9 million and 21.8 million shares for the three and nine months ended June 30, 2010, respectively, have been excluded from the computation of diluted net income (loss) per share because their inclusion would be anti-dilutive.

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Summary of Stock Option Activity (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Jun. 30, 2011 Year Person		Jun. 30, 2010 Year
Number of shares
Outstanding at September 30, 2010	10,703,237
Granted	1,000,000
Exercised	(2,448,623)
Forfeited	(89,553)
Expired	(63,401)
Outstanding at June 30, 2011	9,101,660
Exercisable	6,917,436		8,021,090
Weighted Average Exercise Price
Outstanding at September 30, 2010	$ 8.44
Granted	$ 16.44
Exercised	$ 6.33
Forfeited	$ 12.81
Expired	$ 14.99
Outstanding at June 30, 2011	$ 9.79
Exercisable	$ 8.21		$ 6.94
Aggregate Intrinsic Value
Outstanding at June 30, 2011	$ 106.3	[1]
Exercisable	$ 91.7	[1]	$ 65.9	[1]
Weighted Average Remaining Contractual Term
Outstanding at June 30, 2011	3.4
Exercisable	2.6		2.9

[1] The aggregate intrinsic value in this table was calculated based on the positive difference, if any, between the closing market value of our common stock on June 30, 2011 ($21.47) and the exercise price of the underlying options.

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Deferred Revenues

9 Months Ended

Jun. 30, 2011

Deferred Revenues

10.   Deferred Revenues

Deferred revenue consisted of the following (dollars in thousands):

	June 30,		September 30,
	2011		2010
Current Liabilities:
Deferred maintenance revenue	$	98,071	$	90,969
Unearned revenue		85,384		51,371
Total current deferred revenue	$	183,455	$	142,340
Long-term Liabilities:
Deferred maintenance revenue	$	20,274	$	12,902
Unearned revenue		61,228		63,696
Total long-term deferred revenue	$	81,502	$	76,598

Deferred maintenance revenue consists of prepaid fees received for post-contract customer support for our products, including telephone support and the right to receive unspecified upgrades/enhancements on a when-and-if-available basis. Unearned revenue includes upfront fees for setup and implementation activities related to hosted offerings; certain software arrangements for which we do not have fair value of post-contract customer support, resulting in ratable revenue recognition for the entire arrangement on a straight-line basis; and fees in excess of estimated earnings on percentage-of-completion service contracts.

The increase in the deferred maintenance revenue is primarily related to an increase in Imaging maintenance and support as well as an increase in Enterprise application maintenance. Unearned revenue increased as a result of set-up fees on new hosting arrangements that will be recognized ratably over the longer of the contract lives, or the expected lives of the customer relationship as well as billings in excess of revenues earned on several large professional service implementation projects.

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Location of Long Lived Assets Including Intangible Assets and Goodwill (Detail) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Revenues from External Customers and Long-Lived Assets [Line Items]
United States	$ 2,633,100	$ 2,479,952
International	598,052	448,105
Total	$ 3,231,152	$ 2,928,057

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Deferred Revenues (Tables)

9 Months Ended

Jun. 30, 2011

Deferred Revenue

Deferred revenue consisted of the following (dollars in thousands):

	June 30,		September 30,
	2011		2010
Current Liabilities:
Deferred maintenance revenue	$	98,071	$	90,969
Unearned revenue		85,384		51,371
Total current deferred revenue	$	183,455	$	142,340
Long-term Liabilities:
Deferred maintenance revenue	$	20,274	$	12,902
Unearned revenue		61,228		63,696
Total long-term deferred revenue	$	81,502	$	76,598

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Fair Value Measures

9 Months Ended

Jun. 30, 2011

Fair Value Measures

8.   Fair Value Measures

Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

ASC 820, Fair Value Measures and Disclosures, establishes a value hierarchy based on three levels of inputs, of which the first two are considered observable and the third is considered unobservable:

•  Level 1.  Quoted prices for identical assets or liabilities in active markets which we can access.

•  Level 2.  Observable inputs other than those described as Level 1.

•  Level 3.  Unobservable inputs.

Assets and liabilities measured at fair value on a recurring basis at June 30, 2011 and September 30, 2010 consisted of the following (dollars in thousands):

	June 30, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(a)	$	231,198	$	—	$	—	$	231,198
Time Deposits(b)		—		98,607		—		98,607
US government agency securities(a)		1,000		—		—		1,000
Marketable securities, $36,562 at cost(b)		—		36,617		—		36,617
Foreign currency exchange contracts(b)		—		785		—		785
Security price guarantees(c)		—		395		—		395
Total assets at fair value	$	232,198	$	136,404	$	—	$	368,602
Liabilities:
Foreign currency exchange contracts(b)		—		463		—		463
Contingent earn-out(d)		—		—		2,115		2,115
Total liabilities at fair value	$	—	$	463	$	2,115	$	2,578

	September 30, 2010
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(a)	$	470,845	$	—	$	—	$	470,845
US government agency securities(a)		1,000		—		—		1,000
Marketable securities, $33,337 at cost(b)		—		33,366		—		33,366
Foreign currency exchange contracts(b)		—		1,496		—		1,496
Total assets at fair value	$	471,845	$	34,862	$	—	$	506,707
Liabilities:
Security price guarantees(c)	$	—	$	982	$	—	$	982
Interest rate swaps(e)		—		503		—		503
Contingent earn-out(d)		—		—		724		724
Total liabilities at fair value	$	—	$	1,485	$	724	$	2,209

(a)	Money market funds and US government agency securities, included in cash and cash equivalents in the accompanying balance sheet, are valued at quoted market prices in active markets.
(b)	The fair value of our time deposits, marketable securities and foreign currency exchange contracts is based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable.
(c)	The fair values of the security price guarantees are determined using a modified Black-Scholes model, derived from observable inputs such as US treasury interest rates, our common stock price, and the volatility of our common stock. The valuation model values both the put and call components of the guarantees simultaneously, with the net value of those components representing the fair value of each instrument.
(d)	The fair value of our contingent consideration arrangement is determined based on the Company’s evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performance by the acquired entity, as well as our common stock price since the contingent consideration arrangement is payable in shares of our common stock.
(e)	The fair values of the interest rate swaps are estimated using discounted cash flow analyses that factor in observable market inputs such as LIBOR — based yield curves, forward rates, and credit spreads.

The changes in the fair value of contingent earn-out liabilities during the three and nine months ended June 30, 2011 are as follows (dollars in thousands):

	Three Months Ended		Nine Months Ended
	June 30, 2011		June 30, 2011
Balance at beginning of period	$	1,679	$	724
Charges to acquisition-related costs, net		436		1,391
Balance as of June 30, 2011	$	2,115	$	2,115

Earn-out payments are generally payable based on achieving certain financial targets during defined post-acquisition time periods as specified in the purchase and sale agreement for each acquisition. Changes in the fair value during the three and nine months ended June 30, 2011 resulted from improved revenue performance together with an increase in our stock price during the earn-out period.

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Financial Instruments and Hedging Activities - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Sep. 30, 2010
Derivative [Line Items]
Gain (loss) on foreign currency forward contracts	$ 0.2	$ 0.7
Estimated fair value of long-term debt	963.3	963.3	902.2
Derivatives Not Designated as Hedges
Derivative [Line Items]
Notional value of outstanding contracts	165.4	165.4
Derivatives Not Designated as Hedges | Maximum
Derivative [Line Items]
Term of foreign currency forward contracts	30D	30D
Security Price Guarantees
Derivative [Line Items]
Changes in the fair value of security price guarantees reported in other income (expense)	0.4	10.8
Cash received to settle contracts	$ 10.0
Convertible Debt
Derivative [Line Items]
Convertible debenture stated rate	2.75%	2.75%	2.75%

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Organization and Presentation

9 Months Ended

Jun. 30, 2011

Organization and Presentation

1.   Organization and Presentation

The consolidated financial statements include the accounts of Nuance Communications, Inc. (“Nuance”, “we”, or “the Company”) and our wholly-owned subsidiaries. We prepared these unaudited interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim periods. In our opinion, these financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of our financial position for the periods disclosed. Intercompany transactions have been eliminated.

Although we believe the disclosures in these financial statements are adequate to make the information presented not misleading, certain information normally included in the footnotes prepared in accordance with GAAP has been omitted. Accordingly, these financial statements should be read in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010. Interim results are not necessarily indicative of the results that may be expected for a full year.

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Segment and Geographic Information and Significant Customers - Additional Information " (Detail) (International Operations)	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Sep. 30, 2010	Jun. 30, 2010
International Operations
Segment Reporting Information [Line Items]
Segment revenue	No country outside of the United States provided greater than 10% of our total revenue.	No country outside of the United States provided greater than 10% of our total revenue.	No country outside of the United States provided greater than 10% of our total revenue.		No country outside of the United States provided greater than 10% of our total revenue.
Long-lived or total assets held by segment			No country outside of the United States held greater than 10% of our long-lived or total assets.	No country outside of the United States held greater than 10% of our long-lived or total assets.

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Business Acquisitions

9 Months Ended

Jun. 30, 2011

Business Acquisitions

4.   Business Acquisitions

Fiscal 2011 Acquisitions

On June 15, 2011, we acquired all of the outstanding capital stock of Equitrac Corporation (“Equitrac”), a leading provider of print management solutions, for cash consideration of approximately $162 million. The acquisition was a taxable stock purchase and the goodwill resulting from this acquisition is not expected to be deductible for tax purposes. The results of operations of Equitrac have been included in our results of operations from June 15, 2011.

On June 16, 2011, we acquired all of the outstanding capital stock of SVOX A.G. (“SVOX”), a German based seller of speech recognition, dialog, and text-to-speech software products for the automotive, mobile and consumer electronics industries. Total purchase consideration was €87.0 million which consists of cash consideration of €57.0 million ($80.9 million based on the exchange rate as of the date of acquisition) and a deferred acquisition payment of €30.0 million ($43.0 million based on the exchange rate as of the date of acquisition). The deferred acquisition payment is payable in cash or shares of our common stock, at our option; €8.3 million of the deferred acquisition payment is due on June 16, 2012 and the remaining €21.7 million is due on December 31, 2012. The acquisition was a taxable stock purchase and the goodwill resulting from this acquisition is not expected to be deductible for tax purposes. The results of operations of SVOX have been included in our results of operations from June 16, 2011.

A summary of the preliminary allocation of the purchase consideration for Equitrac and SVOX is as follows (in thousands):

	Equitrac			SVOX
Total purchase consideration:
Cash	$	161,950		$	80,919
Deferred acquisition payment		—			42,990
Total purchase consideration	$	161,950		$	123,909
Allocation of the purchase consideration:
Cash	$	115		$	—
Accounts receivable(a)		10,724			910
Inventory		2,462			—
Goodwill		87,705			92,478
Identifiable intangible assets(b)		91,900			42,165
Other assets		10,617			2,728
Total assets acquired		203,523			138,281
Current liabilities		(3,262	)		(9,542	)
Deferred tax liability		(38,311	)		(4,830	)
Total liabilities assumed		(41,573	)		(14,372	)
Net assets acquired	$	161,950		$	123,909

(a)	Accounts receivable have been recorded at their estimated fair values, which consists of the gross accounts receivable assumed of $12.7 million, reduced by a fair value reserve of $1.1 million representing the portion of contractually owed accounts receivable which we do not expect to be collected.
(b)	The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (table in thousands, except for years):

	Equitrac				SVOX
			Weighted Average				Weighted Average
	Amount		Life (Years)		Amount		Life (Years)
Customer relationships	$	55,800		15.0	$	35,612		13.4
Core and completed technology		22,000		7.0		6,268		5.0
Trade name		14,100		10.0		285		3.0
Total	$	91,900			$	42,165

Other Fiscal 2011 Acquisitions

During fiscal 2011, we acquired two additional businesses, primarily to expand our product offerings and enhance our technology base. The results of operations of these acquisitions have been included in our consolidated results from their respective acquisition dates. The total consideration for these acquisitions was $82.1 million, paid in cash. In allocating the total purchase consideration for these acquisitions based on estimated fair values, we preliminarily recorded $42.4 million of goodwill and $34.0 million of identifiable intangible assets. The allocations of the purchase consideration are based upon preliminary valuations and our estimates and assumptions are subject to change. Intangible assets acquired included primarily customer relationships and core and completed technology with weighted average useful lives of 11.5 years. The acquisitions were stock acquisitions and the goodwill resulting from these transactions is not expected to be deductible for tax purposes.

Proforma Results

In addition to the acquisitions of Equitrac and SVOX discussed above, on December 30, 2009, we acquired all of the outstanding capital stock of SpinVox Limited (“Spinvox”), a UK-based privately-held company engaged in the business of providing voicemail-to-text services. The following table shows unaudited pro forma results of operations as if we had acquired SpinVox, Equitrac and SVOX on October 1, 2009 (dollars in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Revenue	$	348,877	$	287,521		$	1,007,734	$	865,305
Net income (loss)		39,857		(5,236	)		34,564		(55,147	)
Net income (loss) per share	$	0.13	$	(0.02	)	$	0.11	$	(0.19	)

We have not furnished pro forma financial information related to our other fiscal 2011 and 2010 acquisitions because such information is not material, individually or in the aggregate, to our financial results. The unaudited pro forma results of operations are not necessarily indicative of the actual results that would have occurred had the transactions actually taken place at the beginning of the periods indicated.

Acquisition-Related Costs, net

The components of acquisition-related costs, net are as follows (dollars in thousands):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Transition and integration costs	$	453	$	3,383		$	1,506	$	12,035
Professional service fees		7,775		3,079			11,107		14,933
Acquisition-related adjustments		367		(337	)		1,297		(76	)
Total	$	8,595	$	6,125		$	13,910	$	26,892

The increase in acquisition-related costs, net for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, was primarily driven by a reduction in transition and integration costs offset by an increase in professional service fees. For the three months ended June 30, 2010, transition and integration costs consisted primarily of costs associated with transitional employees from our acquisitions of SpinVox and eCopy. For the three months ended June 30, 2011, professional service fees consisted of expenses related to our third quarter 2011 acquisitions.

The decrease for the nine months ended June 30, 2011, as compared to the nine months ended June 30, 2010, was primarily driven by a reduction in transition and integration costs and professional services fees. For the nine months ended June 30, 2010, transition and integration costs consisted primarily of the costs associated with transitional employees from our acquisitions of SpinVox and eCopy; professional services consisted of expenses related to our acquisition of SpinVox in December 2009 and approximately $2.2 million that had been capitalized as of September 30, 2009 related to transaction costs incurred in prior periods that was required to be expensed upon our adoption of ASC 805, Business Combinations, in fiscal 2010.

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Segment and Geographic Information and Significant Customers (Tables)

9 Months Ended

Jun. 30, 2011

Revenue Information for Core markets

The following table presents revenue information for our four core markets (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Healthcare	$	135,409	$	113,523	$	373,543	$	324,880
Mobile and Consumer		91,613		66,292		270,842		208,153
Enterprise		68,536		71,006		211,900		217,306
Imaging		33,351		22,382		95,415		58,846
Total Revenue	$	328,909	$	273,203	$	951,700	$	809,185

Classification of Revenue By Major Geographic Areas

No country outside of the United States provided greater than 10% of our total revenue for the three months and nine months ended June 30, 2011 and 2010. Revenue, classified by the major geographic areas in which our customers are located, was as follows (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
United States	$	237,423	$	202,080	$	701,374	$	576,122
International		91,486		71,123		250,326		233,063
Total	$	328,909	$	273,203	$	951,700	$	809,185

Location of Long Lived Assets Including Intangible Assets and Goodwill

No country outside of the United States held greater than 10% of our long-lived or total assets as of June 30, 2011 and September 30, 2010. Our non-current assets, including intangible assets and goodwill, were located as follows (dollars in thousands):

	June 30,		September 30,
	2011		2010
United States	$	2,633,100	$	2,479,952
International		598,052		448,105
Total	$	3,231,152	$	2,928,057

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Current Liabilities (Tables)

9 Months Ended

Jun. 30, 2011

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (dollars in thousands):

	June 30,		September 30,
	2011		2010
Compensation	$	76,251	$	56,047
Sales and marketing incentives(a)		17,174		40,780
Professional fees		13,187		9,908
Accrued business combination costs		10,038		10,197
Sales and other taxes payable		9,091		5,211
Cost of revenue related liabilities		9,325		10,028
Acquisition costs and liabilities		8,299		4,970
Income taxes payable		2,960		4,357
Security price guarantee		—		1,034
Other		11,307		9,089
Total	$	157,632	$	151,621

(a) The decrease in accrued sales and marketing incentives was driven by an €18.0 million ($23.4 million equivalent) payment in December 2010 for a fixed obligation assumed in connection with our acquisition of SpinVox. The related €18.0 million of restricted cash was placed in an irrevocable standby letter of credit account at the end of fiscal year 2010 and was released upon satisfaction of the liability in December 2010. At June 30, 2011, we have an additional €5.0 million ($7.2 million equivalent) of restricted cash that has been placed in an irrevocable standby letter of credit for a related liability.

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Accrued Expenses and Other Current Liabilities (Detail) (USD $) In Thousands	Jun. 30, 2011		Sep. 30, 2010
Schedule of Accrued Liabilities [Line Items]
Compensation	$ 76,251		$ 56,047
Sales and marketing incentives	17,174	[1]	40,780	[1]
Professional fees	13,187		9,908
Accrued business combination costs	10,038		10,197
Sales and other taxes payable	9,091		5,211
Cost of revenue related liabilities	9,325		10,028
Acquisition costs and liabilities	8,299		4,970
Income taxes payable	2,960		4,357
Security price guarantee			1,034
Other	11,307		9,089
Total	$ 157,632		$ 151,621

[1] The decrease in accrued sales and marketing incentives was driven by an €18.0 million ($23.4 million equivalent) payment in December 2010 for a fixed obligation assumed in connection with our acquisition of SpinVox. The related €18.0 million of restricted cash was placed in an irrevocable standby letter of credit account at the end of fiscal year 2010 and was released upon satisfaction of the liability in December 2010. At June 30, 2011, we have an additional €5.0 million ($7.2 million equivalent) of restricted cash that has been placed in an irrevocable standby letter of credit for a related liability.

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Deferred Revenue (Detail) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Deferred Revenue Arrangement [Line Items]
Current deferred revenue	$ 183,455	$ 142,340
Long-term deferred revenue	81,502	76,598
Maintenance Revenue
Deferred Revenue Arrangement [Line Items]
Current deferred revenue	98,071	90,969
Long-term deferred revenue	20,274	12,902
Unearned Revenue
Deferred Revenue Arrangement [Line Items]
Current deferred revenue	85,384	51,371
Long-term deferred revenue	$ 61,228	$ 63,696

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Notional Value and Aggregate Cumulative Unrealized Gains on Outstanding Contracts (Detail) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Derivative [Line Items]
Notional Value	$ 2,183	$ 17,596
Aggregate Cumulative Unrealized Gains	280	729
Canadian Dollars
Derivative [Line Items]
Notional Value	1,547	13,032
Aggregate Cumulative Unrealized Gains	125	286
Hungarian Forints
Derivative [Line Items]
Notional Value	636	4,564
Aggregate Cumulative Unrealized Gains	$ 155	$ 443

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Restructuring and Other Charges, net - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2011 Year Person
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges, net	$ 5,572
Number of personnel eliminated	90
Personnel
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges, net	3,854
Facilities
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges, net	$ 1,460

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Contingent Acquisition Payments

9 Months Ended

Jun. 30, 2011

Contingent Acquisition Payments

5.   Contingent Acquisition Payments

Earn-out Payments

For business combinations occurring subsequent to the adoption of ASC 805 in fiscal 2010, the fair value of any contingent consideration is established at the acquisition date and included in the total purchase price. The contingent consideration is then adjusted to fair value as an increase or decrease in current earnings in each reporting period. Contingent consideration related to acquisitions prior to our adoption of ASC 805 have been and will continue to be recorded as additional purchase price when the contingency is resolved and additional consideration is attributable.

In connection with our acquisition of Vocada, Inc. (“Vocada”) in November 2007, we agreed to make contingent earn-out payments of up to $21.0 million upon the achievement of certain financial targets measured over defined periods through December 31, 2010, in accordance with the merger agreement. We have notified the former shareholders of Vocada that the financial targets were not achieved. In December 2010, the former shareholders filed a demand for arbitration in accordance with their rights under the merger agreement. At June 30, 2011, we have not recorded any obligation relative to these earn-out provisions.

In connection with the acquisition of Commissure, Inc. (“Commissure”) in September 2007, we agreed to make contingent earn-out payments of up to $8.0 million payable in stock or cash, solely at our discretion, upon the achievement of certain financial targets for the fiscal years 2008, 2009 and 2010. In February 2011, we paid $1.0 million upon determination of the final earn-out achievement and recorded the payment as additional purchase price allocated to goodwill.

Escrow and Holdback Arrangements

In connection with certain of our acquisitions, we have placed either cash or shares of our common stock in escrow to satisfy any claims we may have. If no claims are made, the escrowed amounts will be released to the former shareholders of the acquired companies. Historically, under the previous accounting guidance of SFAS No. 141, Business Combinations (“SFAS 141”), we could not make a determination, beyond a reasonable doubt, whether the escrow would become payable to the former shareholders of these companies until the escrow period had expired. Accordingly, these amounts were treated as contingent purchase price until it was determined that the escrow was payable, at which time the escrowed amounts would be recorded as additional purchase price and allocated to goodwill. Under the revised accounting guidance of ASC 805, escrow payments are generally considered part of the initial purchase consideration and accounted for as goodwill.

During the nine months ended June 30, 2011, the last remaining escrowed amounts accounted for under previous accounting guidance expired. Payments totaling $5.2 million were released to former shareholders of X-Solutions Group B.V. and eCopy and were recorded as an increase to goodwill during the period.

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Weighted Average Assumptions Used to Calculate Fair Value of Stock Options Granted (Detail)	9 Months Ended
	Jun. 30, 2011 Year Person	Jun. 30, 2010 Year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	0.00%	0.00%
Expected volatility	46.10%	50.90%
Average risk-free interest rate	1.20%	2.40%
Expected term (in years)	4.1	4.2

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Components of Comprehensive Income (Loss) (Detail) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Comprehensive Income (Loss) [Line Items]
Net income (loss)	$ 41,621	$ (1,530)	$ 43,347	$ (21,204)
Other comprehensive income (loss):
Foreign currency translation adjustment	6,148	(19,488)	22,893	(31,510)
Unrealized (loss) gain on cash flow hedge derivatives	(465)	690	54	2,228
Unrealized gain on marketable securities, net	28		26
Recognition of pension loss amortization	9		139
Other comprehensive income (loss)	5,720	(18,798)	23,112	(29,282)
Comprehensive income (loss)	$ 47,341	$ (20,328)	$ 66,459	$ (50,486)

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Jun. 30, 2011

Changes in Carrying Amount of Goodwill and Intangible Assets

The changes in the carrying amount of goodwill and intangible assets for the nine months ended June 30, 2011, are as follows (dollars in thousands):

	Goodwill		Intangible Assets
Balance as of September 30, 2010	$	2,077,943	$	685,865
Acquisitions		222,545		171,556
Purchase accounting adjustments		4,366		648
Amortization		—		(105,762	)
Effect of foreign currency translation		13,701		5,292
Balance as of June 30, 2011	$	2,318,555	$	757,599

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Annual Aggregate Principal Amount of the Term Loans to be Repaid (Detail) (Credit Facility, USD $) In Thousands	Jun. 30, 2011
Credit Facility
Line of Credit Facility [Line Items]
2011 (quarter ending September 30)	$ 1,596
2012	6,346
2013	154,494
2014	4,743
2015	4,696
2016	466,663
Total	$ 638,538

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Summary of Activity Relating to Restricted Units (Parenthetical) (Detail) (USD $)	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Closing market value of common stock	$ 21.47

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Accrued Business Combination Costs (Detail) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Business Acquisition [Line Items]
Other current liabilities	$ 10,038	$ 10,197
Other liabilities	5,750	13,833
Total	$ 15,788	$ 24,030

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Business Combination Costs (Tables)

9 Months Ended

Jun. 30, 2011

Activity Related to all Facilities and Personnel Recorded in Accrued Business Combination Costs

The activity for the nine months ended June 30, 2011, relating to all facilities and personnel recorded in accrued business combination costs, is as follows (dollars in thousands):

	Facilities			Personnel			Total
Balance at September 30, 2010	$	23,871		$	159		$	24,030
Charged to restructuring and other charges, net		(129	)		(100	)		(229	)
Charged to interest expense		662			—			662
Cash payments, net of sublease receipts		(8,616	)		(59	)		(8,675	)
Balance at June 30, 2011	$	15,788		$	—		$	15,788

Accrued Business Combination Costs

	June 30,		September 30,
	2011		2010
Reported as:
Other current liabilities	$	10,038	$	10,197
Other liabilities		5,750		13,833
Total	$	15,788	$	24,030

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Summary of Significant Accounting Policies - Additional Information (Detail) (Collaborative agreements, USD $) In Millions	3 Months Ended
	Jun. 30, 2011
Collaborative agreements
Significant Accounting Policies [Line Items]
Agreed amount payable to a large healthcare provider to acquire certain data to be used in a joint development project	$ 10
Agreed amount payable to a large healthcare provider to acquire certain data to be used in a joint development project, current	3.5
Expense reimbursement, recorded as a reduction in research and development expense	$ 4.6

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Fair Value Measures (Tables)

9 Months Ended

Jun. 30, 2011

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at June 30, 2011 and September 30, 2010 consisted of the following (dollars in thousands):

	June 30, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(a)	$	231,198	$	—	$	—	$	231,198
Time Deposits(b)		—		98,607		—		98,607
US government agency securities(a)		1,000		—		—		1,000
Marketable securities, $36,562 at cost(b)		—		36,617		—		36,617
Foreign currency exchange contracts(b)		—		785		—		785
Security price guarantees(c)		—		395		—		395
Total assets at fair value	$	232,198	$	136,404	$	—	$	368,602
Liabilities:
Foreign currency exchange contracts(b)		—		463		—		463
Contingent earn-out(d)		—		—		2,115		2,115
Total liabilities at fair value	$	—	$	463	$	2,115	$	2,578

	September 30, 2010
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(a)	$	470,845	$	—	$	—	$	470,845
US government agency securities(a)		1,000		—		—		1,000
Marketable securities, $33,337 at cost(b)		—		33,366		—		33,366
Foreign currency exchange contracts(b)		—		1,496		—		1,496
Total assets at fair value	$	471,845	$	34,862	$	—	$	506,707
Liabilities:
Security price guarantees(c)	$	—	$	982	$	—	$	982
Interest rate swaps(e)		—		503		—		503
Contingent earn-out(d)		—		—		724		724
Total liabilities at fair value	$	—	$	1,485	$	724	$	2,209

(a)	Money market funds and US government agency securities, included in cash and cash equivalents in the accompanying balance sheet, are valued at quoted market prices in active markets.
(b)	The fair value of our time deposits, marketable securities and foreign currency exchange contracts is based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable.
(c)	The fair values of the security price guarantees are determined using a modified Black-Scholes model, derived from observable inputs such as US treasury interest rates, our common stock price, and the volatility of our common stock. The valuation model values both the put and call components of the guarantees simultaneously, with the net value of those components representing the fair value of each instrument.
(d)	The fair value of our contingent consideration arrangement is determined based on the Company’s evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performance by the acquired entity, as well as our common stock price since the contingent consideration arrangement is payable in shares of our common stock.
(e)	The fair values of the interest rate swaps are estimated using discounted cash flow analyses that factor in observable market inputs such as LIBOR — based yield curves, forward rates, and credit spreads.

Changes in Fair Value of Contingent Earn-Out Liabilities

The changes in the fair value of contingent earn-out liabilities during the three and nine months ended June 30, 2011 are as follows (dollars in thousands):

	Three Months Ended		Nine Months Ended
	June 30, 2011		June 30, 2011
Balance at beginning of period	$	1,679	$	724
Charges to acquisition-related costs, net		436		1,391
Balance as of June 30, 2011	$	2,115	$	2,115

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Credit Facilities and Debt

9 Months Ended

Jun. 30, 2011

Credit Facilities and Debt

13.   Credit Facilities and Debt

2.75% Convertible Debentures

We have $250 million of 2.75% convertible senior debentures due in August 2027. As of June 30, 2011, no conversion triggers were met. If the conversion triggers were met, we could be required to repay all or some of the principal amount in cash prior to maturity.

Credit Facility

We have a credit facility which originally consisted of a $75 million revolving credit line, reduced by outstanding letters of credit, a $355 million term loan entered into on March 31, 2006, a $90 million term loan entered into on April 5, 2007 and a $225 million term loan entered into on August 24, 2007 (collectively the “Credit Facility”). The revolving credit line was due in March 2012. The original provisions of the credit facility called for quarterly principal and interest payments on the term loans, with an original maturity in March 2013. In July 2011, we entered into agreements to amend and restate our existing Credit Facility. Of the approximately $638.5 million remaining Term Loan originally due March 31, 2013, lenders representing $486.9 million have elected to extend the maturity date three years to March 31, 2016. The remaining $151.6 million in term loans are due March 2013. In addition, lenders participating in the revolving credit facility have chosen to extend the maturity date by three years to March 31, 2015.

In conjunction with the amendment, the Credit Facility repayment terms were amended. Principal is due in four quarterly installments of 1% per annum through the original maturity date of March 2013, at which time the principal remaining on the unextended portion of the loans becomes payable. The table below details the new schedule of principal payments by fiscal year. If only the minimum required repayments are made, the annual aggregate principal amount of the term loans repaid would be as follows (dollars in thousands):

Year Ending September 30,	Amount
2011 (quarter ending September 30)	$	1,596
2012		6,346
2013		154,494
2014		4,743
2015		4,696
2016		466,663
Total	$	638,538

Under terms of the amendment, borrowings under the Credit Facility bear interest at a rate equal to the applicable margin plus, at our option, either (a) the base rate which is the higher of the corporate base rate of UBS AG, Stamford Branch, or the federal funds rate plus 0.50% per annum or (b) LIBOR (equal to (i) the British Bankers’ Association Interest Settlement Rates for deposits in U.S. dollars divided by (ii) one minus the statutory reserves applicable to such borrowing). The applicable margin for the borrowings is as follows:

Description	Base Rate Margin	LIBOR Margin
Term loans due March 2013	0.75% - 1.50%(a)	1.75% - 2.50%(a)
Term loans due March 2016	2.00%	3.00%
Revolving facility due March 2015	1.25% - 2.25%(b)	2.25% - 3.25%(b)

(a)	The margin is determined based on our leverage ratio at the date the interest rates are reset on the Term Loans.
(b)	The margin is determined based on our credit rating at the date the interest rates are reset on the Revolving Loans

As of June 30, 2011 (prior to the amendment), based on our leverage ratio, the applicable margin for our term loan was 0.75% for base rate borrowings and 1.75% for LIBOR-based borrowings. This results in an effective interest rate of 1.95%. No payments under the excess cash flow sweep provision were due in the first quarter of fiscal 2011 as no excess cash flow, as defined, was generated in fiscal 2010. At the current time, we are unable to predict the amount of the outstanding principal, if any, that we may be required to repay in future fiscal years pursuant to the excess cash flow sweep provisions.

As of June 30, 2011, $638.5 million remained outstanding under the term loans, there were $15.7 million of letters of credit issued under the revolving credit line and there were no other outstanding borrowings under the revolving credit line. As of June 30, 2011, we were in compliance with the covenants under the Credit Facility.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis (Parenthetical) (Detail) (Fair Value, Measurements, Recurring, USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, cost	$ 36,562	$ 33,337

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Income Taxes - Additional Information (Detail) (USD $) In Millions	Jun. 30, 2011	Sep. 30, 2010
Income Tax Contingency [Line Items]
Income taxes associated with uncertain tax position	$ 13.4	$ 12.8

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Summary of Stock Option Activity (Parenthetical) (Detail) (USD $)	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Closing market value of common stock	$ 21.47

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Activity Related to all Facilities and Personnel Recorded in Accrued Business Combination Costs (Detail) (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011
Business Acquisition [Line Items]
Balance at September 30, 2010	$ 24,030
Charged to restructuring and other charges, net	(229)
Charged to interest expense	662
Cash payments, net of sublease receipts	(8,675)
Balance at June 30, 2011	15,788
Facilities
Business Acquisition [Line Items]
Balance at September 30, 2010	23,871
Charged to restructuring and other charges, net	(129)
Charged to interest expense	662
Cash payments, net of sublease receipts	(8,616)
Balance at June 30, 2011	15,788
Personnel
Business Acquisition [Line Items]
Balance at September 30, 2010	159
Charged to restructuring and other charges, net	(100)
Cash payments, net of sublease receipts	$ (59)

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Goodwill and Intangible Assets

9 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets

6.   Goodwill and Intangible Assets

The changes in the carrying amount of goodwill and intangible assets for the nine months ended June 30, 2011, are as follows (dollars in thousands):

	Goodwill		Intangible Assets
Balance as of September 30, 2010	$	2,077,943	$	685,865
Acquisitions		222,545		171,556
Purchase accounting adjustments		4,366		648
Amortization		—		(105,762	)
Effect of foreign currency translation		13,701		5,292
Balance as of June 30, 2011	$	2,318,555	$	757,599

During the nine months ended June 30, 2011, in addition to the businesses acquisitions described in Note 4 we made several purchases of intellectual property. Purchase accounting adjustments to goodwill recorded during the nine months ended June 30, 2011, included $5.2 million of releases of escrow cash related to our fiscal 2009 acquisitions. This increase in goodwill was partially offset by a $1.4 million reduction resulting from the finalization of the Spinvox purchase accounting.

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Stock-Based Compensation

9 Months Ended

Jun. 30, 2011

Stock-Based Compensation

16.   Stock-Based Compensation

We recognize stock-based compensation expense over the requisite service period. Our share-based awards are accounted for as equity instruments. The amounts included in the consolidated statements of operations relating to stock-based compensation are as follows (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Cost of product and licensing	$	2	$	7	$	29	$	25
Cost of professional services and hosting		5,764		2,612		20,514		8,173
Cost of maintenance and support		518		165		1,545		582
Research and development		5,280		2,282		18,188		6,731
Sales and marketing		10,341		12,516		32,748		29,813
General and administrative		11,883		10,512		36,481		27,544
Total	$	33,788	$	28,094	$	109,505	$	72,868

Included in stock-based compensation for the three and nine months ended June 30, 2011 is $11.0 million and $24.1 million, respectively, of expense related to awards that will be made as part of the fiscal 2011 annual bonus plan to employees. The annual bonus pool is determined by management and approved by the Compensation Committee of the Board of Directors based on financial performance targets approved at the beginning of the year. If these targets are achieved, the awards will be settled in shares based on the total bonus earned and the grant date fair value of the shares awarded to each employee.

Stock Options

The table below summarizes activity relating to stock options for the nine months ended June 30, 2011:

				Weighted		Weighted Average
	Number of			Average		Remaining		Aggregate
	Shares			Exercise Price		Contractual Term		Intrinsic Value(1)
Outstanding at September 30, 2010		10,703,237		$	8.44
Granted		1,000,000		$	16.44
Exercised		(2,448,623	)	$	6.33
Forfeited		(89,553	)	$	12.81
Expired		(63,401	)	$	14.99
Outstanding at June 30, 2011		9,101,660		$	9.79		3.4 years	$	106.3 million
Exercisable at June 30, 2011		6,917,436		$	8.21		2.6 years	$	91.7 million
Exercisable at June 30, 2010		8,021,090		$	6.94		2.9 years	$	65.9 million

(1) The aggregate intrinsic value in this table was calculated based on the positive difference, if any, between the closing market value of our common stock on June 30, 2011 ($21.47) and the exercise price of the underlying options.

As of June 30, 2011, the total unamortized fair value of stock options was $5.9 million with a weighted average remaining recognition period of 0.8 years. A summary of weighted-average grant-date fair value of stock options granted and intrinsic value of stock options exercised is as follows:

	Nine Months Ended
	June 30,
	2011		2010
Weighted-average grant-date fair value per share	$	6.13	$	5.90
Total intrinsic value of stock options exercised (in millions)	$	32.9	$	34.1

We use the Black-Scholes option pricing model to calculate the grant-date fair value of an award. The fair value of the stock options granted during the nine months ended June 30, 2011 and 2010 were calculated using the following weighted-average assumptions:

	Nine Months Ended
	June 30,
	2011			2010
Dividend yield		0.0	%		0.0	%
Expected volatility		46.1	%		50.9	%
Average risk-free interest rate		1.2	%		2.4	%
Expected term (in years)		4.1			4.2

Restricted Units

Restricted Units are not included in issued and outstanding common stock until the shares are vested and released. The table below summarizes activity relating to Restricted Units for the nine months ended June 30, 2011:

	Number of Shares			Number of Shares
	Underlying			Underlying
	Restricted Units —			Restricted Units —
	Contingent Awards			Time-Based Awards
Outstanding at September 30, 2010		2,867,840			7,795,114
Granted		1,329,988			3,521,636
Earned/released		(1,296,018	)		(3,273,826	)
Forfeited		(360,009	)		(557,123	)
Outstanding at June 30, 2011		2,541,801			7,485,801
Weighted average remaining contractual term of outstanding Restricted Units		1.0 years			1.1 years
Aggregate intrinsic value of outstanding Restricted Units(1)	$	54.6 million		$	160.7 million
Restricted Units vested and expected to vest		2,383,251			6,961,901
Weighted average remaining contractual term of Restricted Units vested and expected to vest		1.0 years			1.1 years
Aggregate intrinsic value of Restricted Units vested and expected to vest(1)	$	51.2 million		$	149.5 million

(1) The aggregate intrinsic value in this table was calculated based on the positive difference between the closing market value of our common stock on June 30, 2011 ($21.47) and the exercise price of the underlying Restricted Units.

The purchase price for vested Restricted Units is $0.001 per share. As of June 30, 2011, unearned stock-based compensation expense related to all unvested Restricted Units is $121.5 million, which will, based on expectations of future performance vesting criteria, where applicable, be recognized over a weighted-average period of 1.5 years.

A summary of weighted-average grant-date fair value and intrinsic value of all Restricted Units vested is as follows:

	Nine Months Ended,
	June 30,
	2011		2010
Weighted-average grant-date fair value per share	$	17.91	$	15.59
Total intrinsic value of shares vested (in millions)	$	81.8	$	65.2

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Credit Facilities and Debt - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Jun. 30, 2011	Aug. 24, 2007	Apr. 05, 2007	Mar. 31, 2006
Debt Instrument [Line Items]
Interest rate on borrowing under Credit Facility	Under terms of the amendment, borrowings under the Credit Facility bear interest at a rate equal to the applicable margin plus, at our option, either (a) the base rate which is the higher of the corporate base rate of UBS AG, Stamford Branch, or the federal funds rate plus 0.50% per annum or (b) LIBOR (equal to (i) the British Bankers’ Association Interest Settlement Rates for deposits in U.S. dollars divided by (ii) one minus the statutory reserves applicable to such borrowing).
Effective interest rate for term loan	1.95%
Covenant compliance	As of June 30, 2011, we were in compliance with the covenants under the Credit Facility.
2.75% Convertible Debentures
Debt Instrument [Line Items]
Convertible senior debentures	$ 250
Convertible senior debentures, interest rate	2.75%
Convertible senior debentures, due date	2027-08
Revolving Credit Line
Debt Instrument [Line Items]
Credit facility	75
Debt instrument, due date	2012-03
Letters of credit outstanding	15.7
Term Loan
Debt Instrument [Line Items]
Credit facility, outstanding	638.5
Credit facility		225	90	355
Debt instrument, due date	Mar. 31, 2013
Credit facility, frequency of payments	Quarterly
Credit facility, percentage of payment per annum	1.00%
Debt Instrument Amended And Restated | Term Loan Facility Due March 31, 2016
Debt Instrument [Line Items]
Credit facility, outstanding	486.9
Debt instrument, due date	Mar. 31, 2016
Debt Instrument Amended And Restated | Term Loan Facility Due March 2013
Debt Instrument [Line Items]
Credit facility, outstanding	151.6
Debt instrument, due date	2013-03
Debt Instrument Amended And Restated | Revolving Credit Facility Due March 31, 2015
Debt Instrument [Line Items]
Debt instrument, due date	Mar. 31, 2015
Federal Funds Rate
Debt Instrument [Line Items]
Applicable margin for term loan, rate	0.50%
Base Rate Borrowings
Debt Instrument [Line Items]
Applicable margin for term loan, rate	0.75%
Base Rate Borrowings | Term Loan Facility Due March 31, 2016
Debt Instrument [Line Items]
Applicable margin for term loan, rate	2.00%
LIBOR-Based Borrowings
Debt Instrument [Line Items]
Applicable margin for term loan, rate	1.75%
LIBOR-Based Borrowings | Term Loan Facility Due March 31, 2016
Debt Instrument [Line Items]
Applicable margin for term loan, rate	3.00%
Total Amount Outstanding under Term Loan
Debt Instrument [Line Items]
Credit facility, outstanding	$ 638.5

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Summary of Accrual Activity Relating to Restructuring and Other Charges (Detail) (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011
Restructuring Cost and Reserve [Line Items]
Balance at September 30, 2010	$ 2,121
Restructuring and other charges, net	5,572
Non-cash adjustment	43
Cash payments	(5,574)
Balance at June 30, 2011	2,162
Personnel
Restructuring Cost and Reserve [Line Items]
Balance at September 30, 2010	1,838
Restructuring and other charges, net	3,854
Non-cash adjustment	208
Cash payments	(4,629)
Balance at June 30, 2011	1,271
Facilities
Restructuring Cost and Reserve [Line Items]
Balance at September 30, 2010	283
Restructuring and other charges, net	1,460
Cash payments	(852)
Balance at June 30, 2011	891
Other
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges, net	258
Non-cash adjustment	(165)
Cash payments	$ (93)

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Income Taxes (Tables)

9 Months Ended

Jun. 30, 2011

Income Taxes

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Income (loss) before income taxes	$	18,231		$	301		$	28,365		$	(16,745	)
(Benefit) provision for income taxes		(23,390	)		1,831			(14,982	)		4,459
Effective tax rate		(128.3	)%		608.3	%		(52.8	)%		(26.6	)%

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Summary of Warrants to Purchase Common Stock (Detail) (Warburg Pincus)	Jun. 30, 2011
Warrants Issued January 29, 2009
Class of Warrant or Right [Line Items]
Issuance Date	Jan. 29, 2009
Price per Share	11.57
Total Shares	3,862,422
Expiration Date	Jan. 29, 2013
Warrants Issued May 20, 2008
Class of Warrant or Right [Line Items]
Issuance Date	May 20, 2008
Price per Share	20.00
Total Shares	3,700,000
Expiration Date	May 20, 2012

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Financial Instruments and Hedging Activities (Tables)

9 Months Ended

Jun. 30, 2011

Notional Value and Aggregate Cumulative Unrealized Gains on Outstanding Contracts

At June 30, 2011 and September 30, 2010, the notional value and the aggregate cumulative unrealized gains on the outstanding contracts were as follows:

					Aggregate Cumulative
	Notional Value				Unrealized Gains
	June 30,		September 30,		June 30,		September 30,
	2011		2010		2011		2010
Canadian Dollars	$	1,547	$	13,032	$	125	$	286
Hungarian Forints		636		4,564		155		443
Total contracts designated as cash flow hedges	$	2,183	$	17,596	$	280	$	729

Summary of the Fair Value of Our Derivative Instruments

The following table provides a summary of the fair value of our derivative instruments as of June 30, 2011 and September 30, 2010 (dollars in thousands):

		Fair Value
		June 30,			September 30,
Description	Balance Sheet Classification	2011			2010
Derivatives Not Designated as Hedges:
Foreign currency contracts	Prepaid expenses and other current assets	$	505		$	767
Foreign currency contracts	Accrued expenses and other current liabilities		(463	)		—
Security price guarantees	Prepaid expenses and other current assets		395			—
Security price guarantees	Accrued expenses and other current liabilities		—			(982	)
Net asset (liability) value of non-hedge derivative instruments		$	437		$	(215	)
Derivatives Designated as Hedges:
Foreign currency contracts	Prepaid expenses and other current assets	$	280		$	729
Interest rate swaps	Accrued expenses and other current liabilities		—			(503	)
Net asset value of hedge derivative instruments		$	280		$	226

Activity of Derivative Instruments

The following tables summarize the activity of derivative instruments for the three and nine months ended June 30, 2011 and 2010, respectively (dollars in thousands):

Derivatives Designated as Hedges for the Three Months Ended June 30,

	Amount of Gain (Loss)					Location and Amount of Gain (Loss) Reclassified from
	Recognized in OCI					Accumulated OCI into Income (Effective Portion)
	2011		2010				2011		2010
Foreign currency contracts	$	16	$	(321	)	Other income (expense), net	$	481	$	(98	)
Interest rate swaps	$	—	$	1,109		N/A	$	—	$	—

Derivatives Designated as Hedges for the Nine Months Ended June 30,

	Amount of Gain (Loss)					Location and Amount of Gain (Loss) Reclassified from
	Recognized in OCI					Accumulated OCI into Income (Effective Portion)
	2011		2010				2011			2010
Foreign currency contracts	$	529	$	(99	)	Other income (expense), net	$	978		$	(190	)
Interest rate swaps	$	—	$	2,517		Interest expense	$	(503	)	$	—

Derivatives Not Designated as Hedges

		Amount of Gain (Loss) Recognized in Income
		Three Months Ended						Nine Months Ended
	Location of Gain (Loss)	June 30,						June 30,
	Recognized in Income	2011			2010			2011			2010
Foreign currency contracts	Other income (expense), net	$	(217	)	$	—		$	(675	)	$	—
Security price guarantees	Other income (expense), net	$	395		$	(1,044	)	$	10,844		$	3,664

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities:
Net income (loss)	$ 43,347	$ (21,204)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	125,719	116,738
Stock-based compensation	109,505	72,868
Non-cash interest expense	9,524	9,746
Non-cash restructuring and other expense		6,833
Deferred tax provision	(35,727)	(2,321)
Other	4,259	1,671
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(3,679)	(13,023)
Prepaid expenses and other assets	(17,095)	(4,869)
Accounts payable	(9,999)	(3,960)
Accrued expenses and other liabilities	(9,950)	(7,825)
Deferred revenue	43,603	30,044
Net cash provided by operating activities	259,507	184,698
Cash flows from investing activities:
Capital expenditures	(24,267)	(16,284)
Payments for acquisitions, net of cash acquired	(319,299)	(155,882)
Payments for acquired technology	(715)	(14,850)
Payments for equity investment		(14,970)
Purchases of marketable securities	(10,776)
Proceeds from sales of marketable securities	6,650
Change in restricted cash balances	17,184	(22,070)
Net cash used in investing activities	(331,223)	(224,056)
Cash flows from financing activities:
Payments of debt and capital leases	(5,864)	(6,376)
Payments of other long-term liabilities	(7,794)	(7,319)
Proceeds on settlement of share-based derivatives, net	9,414	6,391
Excess tax benefits on employee equity awards	8,220
Proceeds from issuance of common stock, net of issuance costs		12,350
Proceeds from issuance of common stock from employee stock plans	21,712	22,832
Cash used to net share settle employee equity awards	(30,027)	(18,040)
Net cash (used in) provided by financing activities	(4,339)	9,838
Effects of exchange rate changes on cash and cash equivalents	6,406	(5,444)
Net decrease in cash and cash equivalents	(69,649)	(34,964)
Cash and cash equivalents at beginning of period	516,630	527,038
Cash and cash equivalents at end of period	$ 446,981	$ 492,074

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Income Taxes

9 Months Ended

Jun. 30, 2011

Income Taxes

17.   Income Taxes

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Income (loss) before income taxes	$	18,231		$	301		$	28,365		$	(16,745	)
(Benefit) provision for income taxes		(23,390	)		1,831			(14,982	)		4,459
Effective tax rate		(128.3	)%		608.3	%		(52.8	)%		(26.6	)%

The change in the effective tax rate and the decrease in the income tax provision, was primarily related to a one-time tax benefit recorded in connection with the Equitrac acquisition. We recorded a deferred tax liability in purchase accounting allowing a release of our existing valuation reserve, resulting in the recognition of a tax benefit for the three and nine months ended June 30, 2011. This tax benefit was offset by the tax on U.S. profits in the three and nine months ended June 30, 2011.

At June 30, 2011 and September 30, 2010, the liability for income taxes associated with uncertain tax positions was $13.4 million and $12.8 million, respectively. The increase is primarily attributable to accrued interest. We do not expect a significant change in the amount of unrecognized tax benefits within the next twelve months

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Summary of the Preliminary Allocation of the Purchase Consideration for Equitrac and SVOX (Detail) In Thousands	Jun. 30, 2011 Equitrac Acquisitions USD ($)		Jun. 30, 2011 SVOX Acquisitions USD ($)		Jun. 30, 2011 SVOX Acquisitions EUR (€)
Total purchase consideration:
Cash	$ 161,950		$ 80,919		€ 57,000
Deferred acquisition payment			42,990		30,000
Total purchase consideration	161,950		123,909		87,000
Allocation of the purchase consideration:
Cash	115
Accounts receivable	10,724	[1]	910	[1]
Inventory	2,462
Goodwill	87,705		92,478
Identifiable intangible assets	91,900	[2]	42,165	[2]
Other assets	10,617		2,728
Total assets acquired	203,523		138,281
Current liabilities	(3,262)		(9,542)
Deferred tax liability	(38,311)		(4,830)
Total liabilities assumed	(41,573)		(14,372)
Net assets acquired	$ 161,950		$ 123,909

[1] Accounts receivable have been recorded at their estimated fair values, which consists of the gross accounts receivable assumed of $12.7 million, reduced by a fair value reserve of $1.1 million representing the portion of contractually owed accounts receivable which we do not expect to be collected.

[2] The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (table in thousands, except for years):

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Segment and Geographic Information and Significant Customers

9 Months Ended

Jun. 30, 2011

Segment and Geographic Information and Significant Customers

19.   Segment and Geographic Information and Significant Customers

We follow the provisions of ASC 280, Segment Reporting, which establishes standards for reporting information about operating segments. ASC 280 also established standards for disclosures about products, services and geographic areas. Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker (“CODM”) is the Chief Executive Officer of the Company.

We have four customer-facing market groups that oversee the core markets where we conduct business. These groups are referred to as Healthcare, Mobile and Consumer, Enterprise and Imaging. These groups do not directly manage centralized or shared resources or make allocation decisions regarding the activities related to these functions, which include sales and sales operations, certain research and development initiatives, business development and all general and administrative activities. Our CODM oversees these groups as well as each of the functions that provide the shared and centralized activities noted above. To manage the business, allocate resources and assess performance, the CODM regularly reviews revenue data by market group, while reviewing gross margins, operating margins, and other measures of income or loss on a consolidated basis. Thus, we have determined that we operate in one segment.

The following table presents revenue information for our four core markets (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Healthcare	$	135,409	$	113,523	$	373,543	$	324,880
Mobile and Consumer		91,613		66,292		270,842		208,153
Enterprise		68,536		71,006		211,900		217,306
Imaging		33,351		22,382		95,415		58,846
Total Revenue	$	328,909	$	273,203	$	951,700	$	809,185

No country outside of the United States provided greater than 10% of our total revenue for the three months and nine months ended June 30, 2011 and 2010. Revenue, classified by the major geographic areas in which our customers are located, was as follows (dollars in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
United States	$	237,423	$	202,080	$	701,374	$	576,122
International		91,486		71,123		250,326		233,063
Total	$	328,909	$	273,203	$	951,700	$	809,185

No country outside of the United States held greater than 10% of our long-lived or total assets as of June 30, 2011 and September 30, 2010. Our non-current assets, including intangible assets and goodwill, were located as follows (dollars in thousands):

	June 30,		September 30,
	2011		2010
United States	$	2,633,100	$	2,479,952
International		598,052		448,105
Total	$	3,231,152	$	2,928,057

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Stock-Based Compensation - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense related to awards given under annual bonus plan to employees	$ 11.0	$ 24.1
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unearned stock based compensation expense	5.9	5.9
Weighted average remaining recognition period		0.8
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase price for restricted units, vested		$ 0.001
Unearned stock based compensation expense	$ 121.5	$ 121.5
Weighted average remaining recognition period		1.5

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Computation of Basic and Diluted Net Income (Loss) Per Share (Detail) (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Basic
Net income (loss) available to common stockholders	$ 41,621	$ (1,530)	$ 43,347	$ (21,204)
Diluted
Net income (loss) available to common stockholders	$ 41,621	$ (1,530)	$ 43,347	$ (21,204)
Basic
Weighted average common shares outstanding	303,100	291,610	300,846	285,202
Diluted
Weighted average common shares outstanding	303,100	291,610	300,846	285,202
Weighted average effect of dilutive common equivalent shares:
Assumed conversion of Series B Preferred Stock	3,562		3,562
Employee stock compensation plan	8,538		8,704
Warrants	1,793		1,485
Other contingently issuable shares	809		194
Weighted average common shares outstanding - diluted	317,802	291,610	314,791	285,202
Net income (loss) per share:
Basic	$ 0.14	$ (0.01)	$ 0.14	$ (0.07)
Diluted	$ 0.13	$ (0.01)	$ 0.14	$ (0.07)

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Summary of Significant Accounting Policies

9 Months Ended

Jun. 30, 2011

Summary of Significant Accounting Policies

2.   Summary of Significant Accounting Policies

With the exception of the adoption of the accounting pronouncements discussed below related to revenue recognition, we have made no changes to the significant accounting policies disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010. We have updated our disclosures on collaboration agreements to reflect activity in the current period.

Accounting for collaboration agreements

In June 2011, we entered into an agreement with a large healthcare provider to acquire certain data to be used in a joint development project in exchange for $10 million, $3.5 million of which was due on June 30, 2011. In addition, under the terms of the arrangement we will be reimbursed for certain research and development costs related to specified product development projects with the objective of commercializing the resulting products. All intellectual property derived from these research and development efforts will be owned by us. Upon product introduction, we will pay royalties to this party based on the actual sales. At the end of 5 years, the party can elect to continue with the arrangement, receiving royalties on future sales, or receive a buy-out payment from us and forego future royalties. The buy-out payment is calculated based on a number of factors including the net cash flows received and paid by the parties, as well as a minimum return on those net cash flows.

As of the execution of the above arrangement, we have other arrangements where we have sold and will continue to sell our products and services to this party. As a result, under the guidance of ASC 605, “Revenue Recognition,” we are required to reduce the revenue recognized by the amount we pay to this customer, up to our historical revenue recorded from them. We have therefore reduced reported revenue by $3.5 million for the three months ended June 30, 2011.

The above development arrangement will be accounted for in accordance with ASC 730, “Research and Development.” Accordingly, any buy-out obligation will be recorded as a liability and any reimbursement of the research and development costs in excess of the buy-out obligation will be recorded as an offset to research and development costs. Royalties paid to this party upon commercialization of any products from these development efforts will be recorded as a reduction to revenue in accordance with ASC 605. During the quarter ended June 30, 2011, $4.6 million of expense reimbursement has been recorded as a reduction in research and development expense.

Adoption of new accounting standards

Effective October 1, 2010, we adopted the provisions in the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”) and ASU 2009-14. Software (Topic 985): Certain Revenue Arrangements that Include Software Elements (“ASU 2009-14”). The provisions of ASU 2009-13 apply to arrangements that are outside the scope of software revenue recognition guidance and amend Accounting Standards Codification (“ASC”) Topic 605 to (1) provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and the consideration allocated; (2) require an entity to allocate revenue in an arrangement using the best estimated selling prices (“BESP”) of deliverables if a vendor does not have vendor-specific objective evidence (“VSOE”) or third-party evidence (“TPE”) of selling price; and (3) eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. ASU 2009-14 modifies the scope of ASC Topic 985 to remove industry specific revenue accounting guidance for software and software related transactions, tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. The adoption of these provisions did not have a material impact on our consolidated financial statements.

ASU 2009-13 does not generally change the units of accounting for our revenue transactions. For multiple-element arrangements that contain both software and non-software elements such as our hosted offerings, we allocate revenue to software or software related elements and any non-software elements separately based on the selling price hierarchy. We determine the selling price for each deliverable using VSOE of selling price, if it exists, or TPE of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, we use our BESP for that deliverable. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element.

To determine the selling price in multiple-element arrangements, we establish VSOE of fair value for the majority of our post-contract customer support, professional services, and training based on historical stand-alone sales to third-parties. Typically, we are unable to determine TPE of selling price and therefore when neither VSOE nor TPE of selling price exist, we use BESP for the purposes of allocating the arrangement consideration. We determine BESP for a product or service by considering multiple factors including, but not limited to, major product groupings, market conditions, competitive landscape, price list and discounting practice.

Recently Issued Accounting Standards

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income.” This ASU intends to enhance comparability and transparency of other comprehensive income components. The guidance provides an option to present total comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement or two separate but consecutive statements. This ASU eliminates the option to present other comprehensive income components as part of the statement of changes in shareowners’ equity. The provisions of this ASU will be applied retrospectively for interim and annual periods beginning after December 15, 2011. Early application is permitted. ASU 2011-05 impacts disclosure only and therefore, is not expected to, have a material impact on our financial statements.

In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements (Topic 820) — Fair Value Measurements and Disclosures to add additional disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and transfers between Levels 1, 2, and 3. Levels 1, 2 and 3 of fair value measurements are defined in Note 8 below. ASU 2010-06 was effective for us for the interim reporting period beginning January 1, 2010, except for the provisions related to activity in Level 3 fair value measurements. Those provisions are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. ASU 2010-06 impacts disclosure only and therefore, did not, and is not expected to, have a material impact on our financial statements.

In December 2010, the FASB issued ASU No. 2010-28, Intangibles — Goodwill and Other (Topic 350): “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. ASU 2010-28 is effective for fiscal years beginning after December 15, 2010 and amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. We do not believe that this will have a material impact on our consolidated financial statements.

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Business Combination Costs

9 Months Ended

Jun. 30, 2011

Business Combination Costs

11.   Business Combination Costs

The activity for the nine months ended June 30, 2011, relating to all facilities and personnel recorded in accrued business combination costs, is as follows (dollars in thousands):

	Facilities			Personnel			Total
Balance at September 30, 2010	$	23,871		$	159		$	24,030
Charged to restructuring and other charges, net		(129	)		(100	)		(229	)
Charged to interest expense		662			—			662
Cash payments, net of sublease receipts		(8,616	)		(59	)		(8,675	)
Balance at June 30, 2011	$	15,788		$	—		$	15,788

	June 30,		September 30,
	2011		2010
Reported as:
Other current liabilities	$	10,038	$	10,197
Other liabilities		5,750		13,833
Total	$	15,788	$	24,030

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Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) (Fair Value, Measurements, Recurring, USD $) In Thousands	Jun. 30, 2011		Sep. 30, 2010
Assets:
Money market funds	$ 231,198	[1]	$ 470,845	[1]
Time Deposits	98,607	[2]
US government agency securities	1,000	[1]	1,000	[1]
Marketable securities, $36,562 at June 30, 2011 and $33,337 at September 30, 2010 at cost	36,617	[2]	33,366	[2]
Foreign currency exchange contracts	785	[2]	1,496	[2]
Security price guarantees	395	[3]
Total assets at fair value	368,602		506,707
Liabilities:
Foreign currency exchange contracts	463	[2]
Security price guarantees			982	[3]
Interest rate swaps			503	[4]
Contingent earn-out	2,115	[5]	724	[5]
Total liabilities at fair value	2,578		2,209
Fair Value, Inputs, Level 1
Assets:
Money market funds	231,198	[1]	470,845	[1]
US government agency securities	1,000	[1]	1,000	[1]
Total assets at fair value	232,198		471,845
Fair Value, Inputs, Level 2
Assets:
Time Deposits	98,607	[2]
Marketable securities, $36,562 at June 30, 2011 and $33,337 at September 30, 2010 at cost	36,617	[2]	33,366	[2]
Foreign currency exchange contracts	785	[2]	1,496	[2]
Security price guarantees	395	[3]
Total assets at fair value	136,404		34,862
Liabilities:
Foreign currency exchange contracts	463	[2]
Security price guarantees			982	[3]
Interest rate swaps			503	[4]
Total liabilities at fair value	463		1,485
Fair Value, Inputs, Level 3
Liabilities:
Contingent earn-out	2,115	[5]	724	[5]
Total liabilities at fair value	$ 2,115		$ 724

[1] Money market funds and US government agency securities, included in cash and cash equivalents in the accompanying balance sheet, are valued at quoted market prices in active markets.

[2] The fair value of our time deposits, marketable securities and foreign currency exchange contracts is based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable.

[3] The fair values of the security price guarantees are determined using a modified Black-Scholes model, derived from observable inputs such as US treasury interest rates, our common stock price, and the volatility of our common stock. The valuation model values both the put and call components of the guarantees simultaneously, with the net value of those components representing the fair value of each instrument.

[4] The fair values of the interest rate swaps are estimated using discounted cash flow analyses that factor in observable market inputs such as LIBOR - based yield curves, forward rates, and credit spreads.

[5] The fair value of our contingent consideration arrangement is determined based on the Company's evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performance by the acquired entity, as well as our common stock price since the contingent consideration arrangement is payable in shares of our common stock.

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Accrued Expenses and Other Current Liabilities (Parenthetical) (Detail)	Jun. 30, 2011 USD ($)		Sep. 30, 2010 USD ($)		Dec. 31, 2010 SpinVox Acquisitions USD ($)	Dec. 31, 2010 SpinVox Acquisitions EUR (€)	Jun. 30, 2011 SpinVox Acquisitions Standby Letters of Credit USD ($)	Jun. 30, 2011 SpinVox Acquisitions Standby Letters of Credit EUR (€)	Dec. 31, 2010 SpinVox Acquisitions Standby Letters of Credit EUR (€)
Schedule of Accrued Liabilities [Line Items]
Sales and marketing incentives	$ 17,174,000	[1]	$ 40,780,000	[1]	$ 23,400,000	€ 18,000,000
Restricted cash placed in an irrevocable standby letter of credit account							$ 7,200,000	€ 5,000,000	€ 18,000,000

[1] The decrease in accrued sales and marketing incentives was driven by an €18.0 million ($23.4 million equivalent) payment in December 2010 for a fixed obligation assumed in connection with our acquisition of SpinVox. The related €18.0 million of restricted cash was placed in an irrevocable standby letter of credit account at the end of fiscal year 2010 and was released upon satisfaction of the liability in December 2010. At June 30, 2011, we have an additional €5.0 million ($7.2 million equivalent) of restricted cash that has been placed in an irrevocable standby letter of credit for a related liability.

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EARNINGS PER SHARE - Additional Information (Detail) In Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common equivalent shares excluded from computation of diluted net income (loss) per share	3.6	19.9	3.5	21.8

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Restructuring and Other Charges, net (Tables)

9 Months Ended

Jun. 30, 2011

Summary of Accrual Activity Relating to Restructuring and Other Charges

The following table sets forth the nine months ended June 30, 2011 accrual activity relating to restructuring and other charges (dollars in thousands):

	Personnel			Facilities			Other			Total
Balance at September 30, 2010	$	1,838		$	283		$	—		$	2,121
Restructuring and other charges, net		3,854			1,460			258			5,572
Non-cash adjustment		208			—			(165	)		43
Cash payments		(4,629	)		(852	)		(93	)		(5,574	)
Balance at June 30, 2011	$	1,271		$	891		$	—		$	2,162

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Stockholders' Equity

9 Months Ended

Jun. 30, 2011

Stockholders' Equity

15.   Stockholders’ Equity

We have, from time to time, entered into stock and warrant agreements with Warburg Pincus. In connection with these agreements, we granted Warburg Pincus the right to request that we use commercially reasonable efforts to register some or all of the shares of common stock issued to them pursuant to the purchase agreements, including shares of common stock underlying the warrants. At June 30, 2011, Warburg Pincus holds the following warrants to purchase shares of our common stock:

Issuance Date	Price per Share		Total Shares		Expiration Date
January 29, 2009	$	11.57		3,862,422		January 29, 2013
May 20, 2008		20.00		3,700,000		May 20, 2012

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues:
Product and licensing	$ 152,745	$ 108,840	$ 428,181	$ 335,228
Professional services and hosting	125,347	117,875	377,078	337,798
Maintenance and support	50,817	46,488	146,441	136,159
Total revenues	328,909	273,203	951,700	809,185
Cost of revenues:
Product and licensing	15,820	10,901	47,950	34,194
Professional services and hosting	83,301	71,353	248,003	206,349
Maintenance and support	8,836	7,631	26,645	23,335
Amortization of intangible assets	13,087	11,893	40,541	35,095
Total cost of revenues	121,044	101,778	363,139	298,973
Gross profit	207,865	171,425	588,561	510,212
Operating expenses:
Research and development	42,245	38,916	129,898	113,797
Sales and marketing	73,336	67,219	225,817	196,680
General and administrative	35,901	29,887	104,271	88,643
Amortization of intangible assets	20,972	21,459	65,221	65,786
Acquisition-related costs, net	8,595	6,125	13,910	26,892
Restructuring and other charges, net	864	3,257	5,343	16,244
Total operating expenses	181,913	166,863	544,460	508,042
Income from operations	25,952	4,562	44,101	2,170
Other income (expense):
Interest income	727	171	2,213	780
Interest expense	(8,749)	(9,971)	(26,814)	(30,380)
Other income (expense), net	301	5,539	8,865	10,685
Income (loss) before income taxes	18,231	301	28,365	(16,745)
(Benefit) provision for income taxes	(23,390)	1,831	(14,982)	4,459
Net income (loss)	$ 41,621	$ (1,530)	$ 43,347	$ (21,204)
Net income (loss) per share:
Basic	$ 0.14	$ (0.01)	$ 0.14	$ (0.07)
Diluted	$ 0.13	$ (0.01)	$ 0.14	$ (0.07)
Weighted average common shares outstanding:
Basic	303,100	291,610	300,846	285,202
Diluted	317,802	291,610	314,791	285,202

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Net Income (Loss) Per Share (Tables)

9 Months Ended

Jun. 30, 2011

Computation of Basic and Diluted Net Income (Loss) Per Share

The following table sets forth the computation for basic and diluted net income (loss) per share for the three and nine months ended June 30, 2011 and 2010. (amounts in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Numerator:
Basic
Net income (loss) available to common stockholders — basic	$	41,621	$	(1,530	)	$	43,347	$	(21,204	)
Diluted
Net income (loss) available to common stockholders — diluted	$	41,621	$	(1,530	)	$	43,347	$	(21,204	)
Denominator:
Basic
Weighted average common shares outstanding		303,100		291,610			300,846		285,202
Diluted
Weighted average common shares outstanding — basic		303,100		291,610			300,846		285,202
Weighted average effect of dilutive common equivalent shares:
Assumed conversion of Series B Preferred Stock		3,562		—			3,562		—
Employee stock compensation plan		8,538		—			8,704		—
Warrants		1,793		—			1,485		—
Other contingently issuable shares		809		—			194		—
Weighted average common shares outstanding — diluted		317,802		291,610			314,791		285,202
Net income (loss) per share:
Basic	$	0.14	$	(0.01	)	$	0.14	$	(0.07	)
Diluted	$	0.13	$	(0.01	)	$	0.14	$	(0.07	)

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Summary of Weighted-Average Grant-Date Fair Value and Intrinsic Value of Restricted Units Vested (Detail) (USD $) In Millions, except Per Share data	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant-date fair value per share	$ 17.91	$ 15.59
Total intrinsic value of shares vested (in millions)	$ 81.8	$ 65.2

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Summary of Weighted-Average Grant-Date Fair Value of Stock Options Granted and Intrinsic Value of Stock Options Exercised (Detail) (USD $) In Millions, except Per Share data	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant-date fair value per share	$ 6.13	$ 5.90
Total intrinsic value of stock options exercised (in millions)	$ 32.9	$ 34.1

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Changes in Carrying Amount of Goodwill and Intangible Assets (Detail) (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011
Goodwill
Balance as of September 30, 2010	$ 2,077,943
Acquisitions	222,545
Purchase accounting adjustments	4,366
Effect of foreign currency translation	13,701
Balance as of June 30, 2011	2,318,555
Intangible Assets
Balance as of September 30, 2010	685,865
Acquisitions	171,556
Purchase accounting adjustments	648
Amortization	(105,762)
Effect of foreign currency translation	5,292
Balance as of June 30, 2011	$ 757,599

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Changes in Fair Value of Contingent Earn-Out Liabilities (Detail) (USD $) In Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Fair Value, Measurement Inputs, Disclosure [Line Items]
Balance at beginning of period	$ 1,679	$ 724
Charges to acquisition-related costs, net	436	1,391
Balance as of June 30, 2011	$ 2,115	$ 2,115

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Applicable Marginal Interest Rate on Borrowings (Detail)	Jun. 30, 2011
Maximum | Base Rate Borrowings | Term Loan Facility Due March 2013
Line of Credit Facility [Line Items]
Applicable margin rate	1.50%	[1]
Maximum | Base Rate Borrowings | Revolving Credit Facility Due March 31, 2015
Line of Credit Facility [Line Items]
Applicable margin rate	2.25%	[2]
Base Rate Borrowings
Line of Credit Facility [Line Items]
Applicable margin rate	0.75%
Base Rate Borrowings | Term Loan Facility Due March 31, 2016
Line of Credit Facility [Line Items]
Applicable margin rate	2.00%
Base Rate Borrowings | Term Loan Facility Due March 2013 | Minimum
Line of Credit Facility [Line Items]
Applicable margin rate	0.75%	[1]
Base Rate Borrowings | Revolving Credit Facility Due March 31, 2015 | Minimum
Line of Credit Facility [Line Items]
Applicable margin rate	1.25%	[2]
Maximum | LIBOR-Based Borrowings | Term Loan Facility Due March 2013
Line of Credit Facility [Line Items]
Applicable margin rate	2.50%	[1]
Maximum | LIBOR-Based Borrowings | Revolving Credit Facility Due March 31, 2015
Line of Credit Facility [Line Items]
Applicable margin rate	3.25%	[2]
LIBOR-Based Borrowings
Line of Credit Facility [Line Items]
Applicable margin rate	1.75%
LIBOR-Based Borrowings | Term Loan Facility Due March 31, 2016
Line of Credit Facility [Line Items]
Applicable margin rate	3.00%
LIBOR-Based Borrowings | Term Loan Facility Due March 2013 | Minimum
Line of Credit Facility [Line Items]
Applicable margin rate	1.75%	[1]
LIBOR-Based Borrowings | Revolving Credit Facility Due March 31, 2015 | Minimum
Line of Credit Facility [Line Items]
Applicable margin rate	2.25%	[2]

[1] The margin is determined based on our leverage ratio at the date the interest rates are reset on the Term Loans.

[2] The margin is determined based on our credit rating at the date the interest rates are reset on the Revolving Loans

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Summary of the Preliminary Allocation of the Purchase Consideration for Equitrac and SVOX (Parenthetical) (Detail) (USD $)	9 Months Ended
	Jun. 30, 2011 Year
Business Acquisition [Line Items]
Accounts receivable, gross	$ 12,700,000
Accounts receivable, reserve	1,100,000
Equitrac Acquisitions
Business Acquisition [Line Items]
Business acquisition, acquired intangible assets	91,900,000	[1]
Equitrac Acquisitions | Customer Relationships
Business Acquisition [Line Items]
Business acquisition, acquired intangible assets	55,800,000
Weighted average life (Years)	15.0
Equitrac Acquisitions | Core and completed technology
Business Acquisition [Line Items]
Business acquisition, acquired intangible assets	22,000,000
Weighted average life (Years)	7.0
Equitrac Acquisitions | Trade Names
Business Acquisition [Line Items]
Business acquisition, acquired intangible assets	14,100,000
Weighted average life (Years)	10.0
SVOX Acquisitions
Business Acquisition [Line Items]
Business acquisition, acquired intangible assets	42,165,000	[1]
SVOX Acquisitions | Customer Relationships
Business Acquisition [Line Items]
Business acquisition, acquired intangible assets	35,612,000
Weighted average life (Years)	13.4
SVOX Acquisitions | Core and completed technology
Business Acquisition [Line Items]
Business acquisition, acquired intangible assets	6,268,000
Weighted average life (Years)	5.0
SVOX Acquisitions | Trade Names
Business Acquisition [Line Items]
Business acquisition, acquired intangible assets	$ 285,000
Weighted average life (Years)	3.0

[1] The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (table in thousands, except for years):

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Pro Forma Results of Operations (Detail) (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Business Acquisition [Line Items]
Revenue	$ 348,877	$ 287,521	$ 1,007,734	$ 865,305
Net income (loss)	$ 39,857	$ (5,236)	$ 34,564	$ (55,147)
Net income (loss) per share	$ 0.13	$ (0.02)	$ 0.11	$ (0.19)

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Activity of Derivative Instruments (Detail) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Foreign Currency Contracts | Derivatives Designated as Hedges
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI	$ 16	$ (321)	$ 529	$ (99)
Foreign Currency Contracts | Derivatives Designated as Hedges | Other Income (Expense), Net
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	481	(98)	978	(190)
Interest Rate Swaps | Derivatives Designated as Hedges
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI		1,109		2,517
Interest Rate Swaps | Derivatives Designated as Hedges | Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			(503)
Derivatives Not Designated as Hedges | Foreign Currency Contracts | Other Income (Expense), Net
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	(217)		(675)
Derivatives Not Designated as Hedges | Security Price Guarantees | Other Income (Expense), Net
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	$ 395	$ (1,044)	$ 10,844	$ 3,664

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Stockholders' Equity (Tables)

9 Months Ended

Jun. 30, 2011

Summary of Warrants to Purchase Common Stock

At June 30, 2011, Warburg Pincus holds the following warrants to purchase shares of our common stock:

Issuance Date	Price per Share		Total Shares		Expiration Date
January 29, 2009	$	11.57		3,862,422		January 29, 2013
May 20, 2008		20.00		3,700,000		May 20, 2012