OPTION AGREEMENT

Exhibit 10.4

Execution Copy

OPTION AGREEMENT

This Option Agreement (the “Agreement”) is dated this 31st day of May, 2006 (the “Effective Date”), by and between Achievement Technologies, Inc., a Delaware corporation (the “Company”), Houghton Mifflin Company, a Massachusetts corporation (“HMCo”) and Tibbar, LLC, a Delaware limited liability company, Tibbar FF, LLC, a Delaware limited liability company, Monitor Clipper Equity Partners, L.P., a Delaware limited partnership, Monitor Clipper Equity Partners (Foreign), L.P., a Delaware limited partnership and Michael Perik, an individual, the holders of a majority of the outstanding capital stock of the Company (collectively, the “Stockholders” and together with the Company, the “Sellers”). Capitalized terms set forth herein but not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement (as defined below).

WHEREAS, the Company and HMCo are parties to the Asset Purchase Agreement (the “Purchase Agreement”), of even date herewith, by and among HMCo, the Company and the Stockholders, and the License and Services Agreement (the “License Agreement”) of even date herewith between the Company and HMCo;

WHEREAS, pursuant to the Purchase Agreement, the Company shall retain the customers under the “Following The Leaders” program (the “FTL Program”) identified on Schedule A hereto and any additional customers acquired by the Company from and after the Effective Date in accordance with this Agreement and the License Agreement (the “Retained Customers”) and certain assets and liabilities related thereto;

WHEREAS, from and after the Effective Date, the Company will continue to operate its business as it relates to the Retained Customers for its own account, including providing HMCo’s SkillsTutor educational software product, together with all modifications thereto (“SkillsTutor”) bundled with assessment software and related services to the Retained Customers (the “Retained Business”) in accordance with the License Agreement;

WHEREAS, pursuant to the License Agreement, HMCo will provide certain services to the Company in connection with the operation of the Retained Business and will license to the Company certain of the assets acquired by HMCo pursuant to the terms of the Purchase Agreement to enable the Company to operate the Retained Business; and

WHEREAS, the Company desires to grant to HMCo the option to acquire the Retained Business upon the terms and conditions set forth herein.

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

1. OPERATION OF THE RETAINED BUSINESS; NEW CUSTOMERS

Notwithstanding any provision of the Purchase Agreement or any of the Ancillary Agreements to the contrary, from and after the Effective Date, the Company shall, in its sole discretion, be entitled to operate the Retained Business for its own account. Without limiting the generality of the foregoing, the parties agree that the Company shall be responsible for all

obligations and liabilities of the Retained Business and shall continue to own all right, title and interest in and to the Retained Business including, without limitation, all income generated therefrom. From and after the Effective Date, the Company shall not acquire any customers in addition to those Retained Customers listed on Schedule A; provided, however, the Company may acquire:

(a) any customer that both (i) is located in Alaska, Iowa or West Virginia (collectively, the “Territory”) and (ii) will receive funding directly or be the indirect beneficiary of funding for the SkillsTutor-based product through the FTL Program or any other successor program;

(b) any customer that is identified on Schedule B as a Legacy Homeroom.com Customer or on Schedule C as a Potential Legacy Homeroom.com Customer who contracts directly with the Company to receive SkillsTutor as part of the bundled software product in accordance with the License Agreement. For purposes of this Agreement, “Customer” means any Retained Customer and any other customer acquired by the Company in accordance with this Section 1.

2. GRANT OF OPTION.

The Company hereby grants to HMCo an irrevocable and exclusive option (the “Option”) to acquire the Retained Business from the Company at HMCo’s sole and absolute discretion. The Option granted herein may be exercised by HMCo upon the terms and conditions set forth in Section 3, time being of the essence.

3. EXERCISE OF OPTION.

(a) As soon as practicable after April 1, 2007 and no later than April 30, 2007, the Company shall deliver to HMCo a current list of Retained Customers, together with a proposed budget which shall set forth the estimated expenses and income for the Retained Business for the period July 1, 2007 through June 30, 2008, along with copies of the following financial statements: (i) the unaudited monthly financial statements of the Company, including balance sheets and statements of income, retained earnings and cash flows, for the period beginning July, 1, 2006 and ending March 31, 2007; and (ii) monthly financial projections for the Company, including the projected balance sheets and statements of income, retained earnings and cash flows, for the period beginning April 1, 2007 and ending June 30, 2007. The Company shall also provide to HMCo during the period April 1, 2007 through May 31, 2007 such additional information with respect to the Retained Business as HMCo may reasonably request.

(b) HMCo may elect to exercise the Option by delivering notice of the same in writing (the “Option Exercise Notice”) to the Company at any time prior to 5:00 P.M. EST on June 15, 2007. If the Option is not exercised by such time, the Option shall automatically terminate and be of no further force and effect. The closing of the acquisition of the Assets (as defined below) used in the Retained Business by HMCo (the “Closing”) shall be subject to the Company having obtained all necessary prior consents and approvals of any third parties as may be required under the Contracts (defined below) or as required by law. The parties agree that the Closing may be delayed until all such consents and approvals have been obtained; provided, however, that the parties agree to cooperate and use reasonable efforts to obtain all such consents and approvals prior to the Closing.

-2-

(c) Subject to the terms and conditions of the License Agreement, if HMCo does not exercise the Option as set forth herein, the Company shall be permitted to continue to operate the Retained Business for its own account in its sole and absolute discretion.

4. OPTION CLOSING.

(a) Upon exercise of the Option by HMCo as set forth herein, on the Option Closing Date, HMCo shall acquire from the Company, and the Company shall sell, transfer, assign, convey and deliver over to HMCo, free and clear from all liens, claims and encumbrances, all of the Company’s right, title and interest in and to the following assets of the Company (collectively, the “Assets”):

(i) the list of all Retained Customers;

(ii) all of the Company’s right, title and interest in, to and under all contracts and agreements relating to the Retained Business which HMCo notifies the Company, in writing, at least fifteen (15) days prior to the Option Closing Date that it will acquire at Closing, subject to the Company having obtained consent to the assignment of such Contracts as, and to the extent, required thereunder (the “Contracts”);

(iii) all goodwill relating to the Retained Business;

(iv) all tangible personal property of the Company used primarily in connection with the operation of the Retained Business;

(v) all government permits, licenses, registrations and certificates relating to the Retained Business;

(vi) all files, documents, instruments, papers, books, reports, records, documentation and similar materials related to the Retained Business (but excluding duplicate copies thereof retained by the Company or its affiliates),

(vii) the Company’s trade name and all goodwill;

(viii) any Intellectual Property of the Company relating to the Retained Business and the rights to sue in law or in equity for past or future infringement or impairment of such Intellectual Property, and all rights to obtain renewals, continuances, divisions or extensions of legal protections pertaining thereto;

(ix) all cash received and accounts receivable due under the Contracts to the extent such cash and accounts receivable are associated with school years commencing after June 30, 2007; and

(x) any other assets used by the Company in connection with the operation of the Retained Business reasonably requested by HMCo to be included in the Assets.

-3-

Except for the representations and warranties contained in the Closing Certificate (as defined below), the Assets shall be transferred to HMCo on an “AS IS, WHERE IS” basis, without any representation or warranty of any nature whatsoever, express, implied or statutory, including, but not limited to, any warranty of merchantability or fitness for a particular purpose. Further, the Company is making no representations or warranties whatsoever with respect to the budget and projections delivered pursuant to Section 3(a).

(b) Except as set forth in Section 4(a), the Company is not selling, transferring, assigning, conveying or delivering over to HMCo any of its assets, including without limitation, the following assets of the Company:

(i) all cash and cash equivalents, other than cash received under the Contracts to the extent such cash is associated with school years commencing after June 30, 2007;

(ii) all accounts receivable, other than accounts receivable due under the Contracts to the extent such accounts receivable are associated with school years commencing after June 30, 2007, and all notes and other amounts due or accruing due to the Company;

(iii) all right, title and interest of the Company under this Agreement or any of the Closing Documents;

(iv) all minute books, organizational documents, stock registers and such other books and records of the Company as pertain to ownership, organization or existence of the Company and duplicate copies of such records included in the Assets;

(v) any (1) files, accounting records, internal reports, Tax records, work papers or other books and records that the Company determines are necessary or advisable to retain to complete the Company’s Tax returns, Tax audits or any other audit by governmental agencies and that the Company is otherwise required by Law to retain; provided, however, that HMCo shall have the right to make copies of any portions of such retained books and records that relate to the conduct of the Retained Business or any of the Assets or Assumed Liabilities; and (2) documents relating to proposals to acquire the business of the Company by persons other than HMCo;

(vii) all the Company’s rights with respect to the leasehold interests relating to real property located at 313 Washington Street, Newton, Massachusetts (the “Newton Lease”);

(viii) any prepayments of insurance and any prepayments or deposits, including without limitation deposits with respect to the Newton Lease; and

(ix) any refunds of Taxes.

-4-

(c) Upon exercise of the Option and in connection with the acquisition of the Assets, HMCo shall assume, pursuant to the Assumption Agreement (as defined below), any and all liabilities and obligations arising under the Contracts from and after the Option Closing Date, including to provide licensed products and services to Customers under subscriptions therefore (collectively, the “Assumed Liabilities”).

(d) The Closing of the acquisition of the Assets hereunder shall take place at 10:00 a.m. on June 29, 2007, effective as of July 1, 2007 at 12:01 a.m., at the offices of Ropes & Gray LLP, One International Place, Boston, Massachusetts, or at such other time and place as the parties may mutually agree (the “Option Closing Date”). At the Closing:

(i) The Company shall execute and deliver to HMCo an Assignment and Assumption Agreement in substantially the form of Exhibit A (the “Assignment and Assumption Agreement”), together with such other instruments and documents of conveyance, assignment and assignment as are reasonably requested by HMCo to vest in HMCo title to the Assets and for HMCo to assume the Assumed Liabilities;

(ii) The Company shall execute and deliver to HMCo, and the HMCo shall execute and deliver to the Company, a Bill of Sale in substantially the form of Exhibit B (the “Bill of Sale”);

(iii) The Company shall deliver to HMCo a certificate of an officer of the Company certifying, on behalf of the Company, that the representations and warranties set forth on Exhibit C are true and correct as of the Option Closing Date (the “Closing Certificate”); and

(iv) The Company shall execute and deliver to HMCo such other documents of assignment as may be reasonably requested by HMCo.

The Assignment Agreement, the Assumption Agreement, the Bill of Sale and the Closing Certificate, together with any other agreements, instruments, certificates, consents or documents executed and delivered by the parties pursuant to this Agreement, collectively are referred to as the “Closing Documents”.

5. CONSIDERATION.

(a) If HMCo exercises the Option, in consideration of the transfer of the Assets by the Company pursuant hereto, HMCo shall pay to the Company an amount equal to sixty percent (60%) of the aggregate Operating Profit (as defined below) generated by the Purchased Business (as defined below) during each of the five (5) Measurement Periods from and after the Option Closing Date (each such payment, an “Earnout Payment”). Each Earnout Payment shall be payable by HMCo to the Company in United States currency in immediately available funds within thirty (30) days following each anniversary of the Option Closing Date. For purposes hereof, “Operating Profit” shall mean the aggregate amount of Net Invoiced Sale Orders of the Purchased Business during each Measurement Period, less the aggregate amount of lobbying costs, consulting fees, a mutually agreed upon allocation for hosting costs, costs for customized development, direct project management costs (i.e., salary, fringe benefits and travel expenses),

-5-

legal costs and any other reasonable agreed-upon costs incurred in support of the Purchased Business during such Measurement Period, determined in accordance with accounting principles customarily and consistently applied by HMCo. A “Net Invoiced Sale Order” is the amount of the sale pursuant to an invoiced purchase order, less the amount of any discounts, refunds, credits and allowances given to Customers. “Measurement Period” means each annual period from July 1 through June 30 of the following calendar year, commencing on July 1, 2007. The “Purchased Business” means the business related to the sale of SkillsTutor or any successor product based on SkillsTutor, on a stand-alone basis or bundled with assessment software and related services, to Customers in the Territory.

(b) At the time of making any Earnout Payment hereunder, HMCo shall also deliver to the Company a statement which sets forth in reasonable detail the calculation of the Operating Profit for such Measurement Period, together with all relevant information supporting such calculation (the “Payment Statement”). HMCo will also provide such other information as the Company may reasonably request. If the Company disputes in any manner the amount of the Earnout Payment, the Company will provide notice thereof to HMCo within thirty (30) days of receipt of the Payment Statement (a “Dispute Notice”), and the Company and HMCo agree that they will use good faith efforts to attempt to resolve such dispute. If the Company and HMCo are unable to resolve such dispute within fifteen (15) days of receipt by HMCo of the Dispute Notice, the parties hereby agree to appoint Deloitte & Touche (the “Accountant”) to resolve such dispute. Each of the Company and HMCo shall provide reasonable cooperation to the Accountant to assist the Accountant in resolving such dispute. The Accountant shall render a determination within sixty (60) days of its appointment hereunder. The determination of the Accountant will be final and binding on the parties, other than in the event of manifest error. If the Accountant determines that the disputed amount or any portion thereof shall be due and owing to the Company, HMCo shall promptly (and in any event, within ten (10) days of such determination) pay the Company such amount in full. The Company and HMCo shall bear equally the costs and expenses of the Accountant.

6. COVENANTS.

(a) Further Assurances. On the Option Closing Date, and from time to time thereafter, each of the Company and HMCo, at the request of the other, will execute and deliver all such assignments, assumptions, endorsements and other documents, and take such other action as the requesting party may reasonably request for the more effective transfer and assignment of the Assets, the assumption of the Assumed Liabilities and the effectiveness of the transactions contemplated by this Agreement.

-6-

(b) No Encumbrances. The Company shall not sell, pledge, lease, license, hypothecate or dispose of any of the Assets, or permit all or any part thereof to become subject to any Lien (as defined in the Purchase Agreement). The Company will not enter into any indenture, agreement, instrument or other arrangement with respect to the Assets which, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the exercise of the Option, or the benefits and rights of HMCo in its capacity as the Option holder. The Company shall not, directly or indirectly, take or omit to take any action with respect to the Assets that has or would have the effect of depriving HMCo of the ability to exercise the Option.

(c) Employment Matters. If HMCo exercises the Option, the Company shall terminate effective on the Option Closing Date any employees of the Company involved in any material respect with the operation of the Retained Business whom HMCo identifies as being employees that HMCo desires to hire as of the Option Closing Date.

(d) Consents. If HMCo exercises the Option, the Company shall use commercially reasonable efforts to obtain all required consents to the assignment of the Contracts which HMCo notifies the Company of its intent to acquire pursuant to Section 4(a)(ii) above.

(e) Customer Contracts. The Company shall not enter into any contract with Customers that has a term longer than twelve (12) months or that extends beyond October 31, 2007 without consent from HMCo.

7. INDEMNIFICATION.

(a) Survival of Representations and Warranties. The representations and warranties set forth in the Closing Certificate shall survive the Option Closing Date for a period of eighteen (18) months from the Option Closing Date; provided, however:

(i) representations and warranties with respect to which a claim is made within such eighteen (18) month period shall survive with respect to such claim until such claim is resolved;

(ii) representations and warranties set forth in Section (ix) of the Closing Certificate shall survive until the expiration of the applicable statutes of limitations (taking into account any tolling periods and other extensions); and

(iii) no claim for indemnification may be made with respect to a representation and warranty after the expiration of the applicable survival period, other than claims based on fraud.

(b) Indemnification by the Company. From and after the Option Closing Date, the Company (as an indemnifying party, an “Indemnifying Party”) covenants and agrees that it will indemnify, defend, protect, and hold harmless HMCo and each of its Affiliates (each in its capacity as an indemnified party, an “Indemnified Party”) from and against all claims, damages, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation) (collectively “Damages”) incurred by such Indemnified Party as a result of or arising from:

(i) any breach of any representation or warranty of the Company set forth in the Closing Certificate (as each such representation or warranty would read if all qualifications as to materiality were deleted therefrom);

-7-

(ii) any breach or nonfulfillment by the Company of, or any noncompliance by the Company with, any covenant, agreement, or obligation contained herein or in any Closing Document;

(iii) any liabilities of the Company resulting or arising from the ownership of the Assets and the operation of the Retained Business by the Company prior to the Option Closing Date;

(iv) any Taxes of the Company of any kind relating to or arising in connection with the exercise of the Option and the transfer of the Assets to HMCo;

(v) any liability or obligation of, or any claim against, the Company not expressly assumed by HMCo hereunder; and

(vi) any failure to comply with any so-called “bulk sales law” or other similar law in any jurisdiction in respect of the transactions contemplated hereby.

HMCo shall not be entitled to indemnification for any breach by the Company of any of the Company’s representations or warranties under this Section 7(b) except to the extent the total amount for which HMCo is entitled to indemnification under this Section 7(b) in the aggregate exceeds $100,000, and the maximum aggregate indemnification for such claims shall be limited as follows: (i) the aggregate amount of indemnification for all claims made during the six month period immediately following the Closing Date (the “Initial Period”) (whether or not resolved in the Initial Period) shall not exceed the amount equal 25% of the Aggregate Purchase Price, (ii) the aggregate amount of indemnification for all claims made during the period immediately following the Initial Period until the twelve (12) month anniversary of the Closing Date (the “Subsequent Period”) (whether or not resolved in the Subsequent Period) plus the aggregate amount of indemnification for all claims made during the Initial Period shall not exceed the amount equal to 20% of the Aggregate Purchase Price, and (iii) the aggregate amount of indemnification for all claims made after the twelve (12) month anniversary of the Closing Date plus the aggregate amount of indemnification for all claims made during the Initial Period and the Subsequent Period shall not exceed the amount equal to 15% of the Aggregate Purchase Price; provided, however, that the foregoing limitations will not apply to claims for indemnification pursuant to Section 7(b) in respect of breaches of, or inaccuracies in, the following representations and warranties set forth in the Closing Certificate: (i) Corporate Organization and Standing and (ii) Corporate Authorization; Binding Agreement. It is agreed and understood that HMCo and its successors and assigns shall not be entitled to recover more than once for the same damage under this Agreement and the Purchase Agreement. Without limiting the effect of the Company Indemnification Cap with respect to each of the periods as provided for in the previous sentence, for clarity, in no event shall the maximum amount of any

-8-

indemnification received by HMCo under this Section 7(b) exceed 25% of the Aggregate Purchase Price. For the purposes of this Agreement, “Aggregate Purchase Price” shall have the same meaning as that given to it in the Purchase Agreement.

The following example illustrates the application of the Company Indemnification Cap set forth in the previous paragraph: for the purposes of this example only, assume that the Aggregate Purchase Price is $20 million and does not change over time and assume that there is a claim by Buyer of $5 million in the Initial Period, a claim by Buyer of $5 million in the Subsequent Period and a claim by Buyer of $5 million after the Subsequent Period. If the claim in the Initial Period is settled at $1 million and the claim in the Subsequent Period is settled at $500,000, then the aggregate amount of the Company’s indemnification obligation for the claim after the Subsequent Period shall not exceed $1,500,000.

If HMCo is entitled to indemnification for Damages that is covered by both Section 7(b)(i) Section 7(b)(iii), HMCo hereby irrevocably elects Section 7(b)(i) as the provision under which it will receive indemnification, other than for claims based on fraud.

(c) Indemnification by HMCo. From and after the Option Closing Date, HMCo (in its capacity as an indemnifying party, an “Indemnifying Party”) covenants and agrees that it will indemnify, defend, protect and hold harmless Sellers (each in its or his capacity as an indemnified party, an “Indemnified Party”) from and against all Damages incurred by such Indemnified Parties as a result of or arising from:

(i) any breach of any representation or warranty of HMCo set forth in this Agreement (as each such representation or warranty would read if all qualifications as to materiality were deleted therefrom);

(ii) any breach or nonfulfillment by HMCo of, or noncompliance by HMCo with, any covenant, agreement or obligation contained herein or in any Closing Document delivered in connection herewith;

(iii) the ownership of the Assets and the operation of the Retained Business from and after the Option Closing Date, provided such Damages do not arise from facts and circumstances existing prior to the Option Closing Date; and

(iv) any Assumed Liability.

The Company shall not be entitled to indemnification for any breach by HMCo of any of HMCo’s representations or warranties under this Section 7(c) except to the extent the total amount for which the Company is entitled to indemnification under this Section 7(c) in the aggregate exceeds $100,000, and the maximum aggregate indemnification for such claims shall be limited as follows: (i) the aggregate amount of indemnification for all claims made during the six month period immediately following the Closing Date (the “Initial Period”) (whether or not resolved in the Initial Period) shall not exceed the amount equal 25% of the Aggregate Purchase Price, (ii) the aggregate amount of indemnification for all claims made during the period immediately following the Initial Period until the twelve (12) month anniversary of the Closing Date (the “Subsequent Period”) (whether or not resolved in the

-9-

Subsequent Period) plus the aggregate amount of indemnification for all claims made during the Initial Period shall not exceed the amount equal to 20% of the Aggregate Purchase Price, and (iii) the aggregate amount of indemnification for all claims made after the twelve (12) month anniversary of the Closing Date plus the aggregate amount of indemnification for all claims made during the Initial Period and the Subsequent Period shall not exceed the amount equal to 15% of the Aggregate Purchase Price. It is agreed and understood that the Company and its successors and assigns shall not be entitled to recover more than once for the same damage under this Agreement. Without limiting the effect of the Buyer Indemnification Cap with respect to each of the periods as provided for in the previous sentence, for clarity, in no event shall the maximum amount of any indemnification received by the Company under this Section 7(c) exceed 25% of the Aggregate Purchase Price. The Buyer Indemnification Cap in this Section is intended to work in the same manner as the Company Indemnification Cap in Section 7(b), and is illustrated by the example in Section 7(b).

(d) Third Person Claims.

(i) If any third party will notify an Indemnified Party with respect to any matter (a “Third Party Claim”) which may give rise to an Indemnified Claim against an Indemnifying Party under this Section 7, then the Indemnified Party will promptly give written notice to the Indemnifying Party; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party will relieve the Indemnifying Party from any obligation under this Section 7, except to the extent such delay actually prejudices the Indemnifying Party.

(ii) The Indemnifying Party will be entitled to participate in the defense of any Third Party Claim that is the subject of a notice given by the Indemnified Party pursuant to Section 7(d)(i). In addition, the Indemnifying Party will have the right, but not the obligation, to assume the defense of the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (1) the Indemnifying Party gives written notice to the Indemnified Party within fifteen days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any and all Losses the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (2) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have adequate financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (3) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief against the Indemnified Party, (4) the Indemnified Party has not been advised by counsel that an actual or potential conflict exists between the Indemnified Party and the Indemnifying Party in connection with the defense of the Third Party Claim, (5) the Third Party Claim does not relate to or otherwise arise in connection with any Taxes or criminal or regulatory enforcement Action, (6) settlement of, an adverse judgment with respect to or the Indemnifying Party’s conduct of the

-10-

defense of the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to be materially adverse to the Indemnified Party’s reputation or continuing business interests (including its relationships with current or potential customers, suppliers or other parties material to the conduct of its business) and (7) the Indemnifying Party conducts the

defense of the Third Party Claim actively and diligently. The Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; provided, however, that the Indemnifying Party will pay the fees and expenses of separate co-counsel retained by the Indemnified Party that are incurred prior to Indemnifying Party’s assumption of control of the defense of the Third Party Claim.

(iii) The Indemnifying Party will not consent to the entry of any judgment or enter into any compromise or settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party unless such judgment, compromise or settlement (1) provides for the payment by the Indemnifying Party of money as sole relief for the claimant, (2) results in the full and general release of the Indemnified Parties from all liabilities arising or relating to, or in connection with, the Third Party Claim and (3) involves no finding or admission of any violation of any federal, state, foreign or local statute, ordinance, code, rule or regulation, or any Order, or any license, franchise, consent, approval, permit or similar right granted under any of the foregoing, or the rights of any Person and no effect on any other claims that may be made against the Indemnified Party.

(iv) If the Indemnifying Party does not deliver the notice contemplated by clause (1), or the evidence contemplated by clause (2), of Section 7(d)(ii) within 15 days after the Indemnified Party has given notice of the Third Party Claim, or otherwise at any time fails to conduct the defense of the Third Party Claim actively and diligently, the Indemnified Party may defend, and may consent to the entry of any judgment or enter into any compromise or settlement with respect to, the Third Party Claim in any manner it may deem appropriate’ provided, however, that the Indemnifying Party will not be bound by the entry of any such judgment consented to, or any such compromise or settlement effected, without its prior written consent. If such notice and evidence is given on a timely basis and the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently but any of the other conditions in Section 7(d)(ii) is or becomes unsatisfied, the Indemnified Party may defend, and may consent to the entry of any judgment or enter into any compromise or settlement with respect to, the Third Party Claim; provided, however, that the Indemnifying Party will not be bound by the entry of any such judgment consented to, or any such compromise or settlement effected, without its prior written consent.

(e) Method of Payment. All claims for indemnification shall be paid in cash. Upon a final, non-appealable judgment which results in Damages to HMCo for which it would be entitled to indemnification pursuant to this Agreement, HMCo may, at its sole option and by notice in writing to the Company, elect to withhold payment of an amount equal to the amount of such Damages from amounts owing by HMCo under this Agreement. Any amounts withheld by HMCo pursuant to this Section 7(e) will be deemed to satisfy the obligations of the Company to

-11-

HMCo pursuant to this Section 7(e) to the extent of the amount so withheld. If a court of competent jurisdiction finds in a non-appealable judgment that the aggregate amount withheld pursuant to this Section 7(e) exceeds the amount of Damages suffered by HMCo for which it is entitled to indemnification under this Agreement, HMCo shall promptly pay the amount of such excess to the Company, plus interest accruing on such amount from the date such amount first becomes due at an annual rate equal to the Prime Rate as published in the Eastern Edition of The Wall Street Journal under the heading “Money Rates”.

(f) Guarantee. The Stockholders hereby agree to guarantee, severally and not jointly, the indemnification obligation of the Company pursuant to Section 7(b), such that each Stockholder shall be responsible for such Stockholder’s pro rata share as set forth on Schedule 7(f) (with respect to each Stockholder, such Stockholder “Pro Rata Share”) of any such indemnification obligation, subject to all of the limitations on indemnification set forth herein. In the event that HMCo seeks to enforce such guarantee hereunder, each of the Stockholders shall be deemed to be an Indemnifying Party for all purposes as set forth in this Section 7.

(g) Sole and Exclusive Remedy; Maximum Liability. Notwithstanding any provision of this Agreement to the contrary, (i) the sole and exclusive remedy for any and all Actions (including, without limitation, any indemnification obligation arising under this Section 7) arising out or relating to this Agreement, or the transactions contemplated hereby, shall be the indemnification provisions set forth in this Section 7; and (ii) (A) the maximum aggregate liability of the Company pursuant to this Agreement shall be equal to the amount paid or payable by HMCo to the Company under this Agreement; and (B) the maximum aggregate liability of each Stockholder pursuant to Section 7(b) of this Agreement shall be such Stockholder’s Pro Rata Share of the amount paid or payable by HMCo to the Company under this Agreement; provided, however, that nothing contained herein shall limit the remedies of any party in respect of fraud committed by any other party in connection herewith or prohibit any party from bringing an action to specifically enforce any provision of this Agreement.

8. NONCOMPETITION

If HMCo exercises the Option, from a period beginning on the Option Closing Date and ending June 30, 2012, the Company will not engage directly or indirectly in any business, venture or activity which competes with the Retained Business (including parts and accessories thereof) being conducted at the Option Closing Date by the Company or relating to products performing functions similar to the products sold by the Company as of the Option Closing Date (a “Restricted Activity”), other than conduct with respect to the Retained Business as contemplated by this Agreement, the Ancillary Agreements, the Option Agreement and the License Agreement; provided, however, that no owner of less than 5% of the outstanding stock of any publicly-traded corporation will be deemed to be so engaged solely by reason thereof in a Restricted Activity. For a period beginning on the Option Closing Date and ending June 30, 2012, the Company will not recruit, offer employment to, employ, engage as a consultant, lure or entice away, or in any other manner persuade or attempt to persuade, any Person who is an employee of the HMCo or its affiliates engaged in the operation of the Retained Business or a substantially similar business to leave the employ of HMCo or its affiliates. If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section

-12-

8 is invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability will have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement will be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

9. NOTICES.

Any notices required or permitted by the terms of this Agreement shall be given by overnight delivery by recognized courier service, or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile, addressed as follows:

or to such other address(es) of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given: one (1) business day following delivery by the sender to a recognized courier service, five (5) business days following mailing by certified mail, or immediately upon receipt of confirmation of facsimile transmission.

10. SALE OF PURCHASED BUSINESS; SUCCESSORS AND ASSIGNS.

(a) If the Option is exercised, HMCo may not sell, transfer, assign or otherwise dispose of all or any material portion of the Purchased Business to any transferee, whether by sale of assets or stock, merger or otherwise without the prior consent of the Company (which shall not be unreasonably withheld); provided, however, that the Company’s consent shall not be required where:

(i) the transferee assumes HMCo’s obligations under this Agreement; and

(ii) HMCo provides reasonable evidence to the Company that the proposed transferee has sufficient assets to meet its assumed obligations under this Agreement.

-13-

(b) This Agreement and the rights of the parties hereunder may not be assigned and shall be binding upon and shall inure to the benefit of the parties hereto, their successors and permitted assigns and the heirs and legal representatives of any individual party hereto. Notwithstanding the foregoing, it is understood and agreed that (i) HMCo may assign this Agreement without the consent of any other party to any entity that is a direct or indirect wholly-owned subsidiary of HMCo; provided that any such entity shall automatically succeed to the rights, powers and duties of HMCo hereunder and that no such assignment by HMCo shall relieve the HMCo from any obligation or liability under this Agreement, and (ii) the Company may assign this Agreement only with the consent of HMCo (which consent shall not be unreasonably withheld); provided, however, that the Company may assign this Agreement without the consent of HMCo in connection with the liquidation and dissolution of the Company at any time (x) after termination of the Option, if the Option is not exercised, or (y) after the Option Closing date, if the Option is exercised.

11. MISCELLANEOUS.

(a) This Agreement shall be construed in accordance with and governed for all purposes by the laws of the Commonwealth of Massachusetts; (b) this Agreement constitutes the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral; (c) this Agreement may not be modified except by a writing signed by each of the parties; (d) the parties hereto agree that only the Massachusetts courts, either federal or state, shall have jurisdiction over this Agreement and any controversies arising out of this Agreement; (e) in case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement but this Agreement shall be construed as if such invalid, illegal or other unenforceable provision had never been contained herein; (f) this Agreement shall be binding upon the and shall inure to the benefit of the parties hereto and their successors and permitted assigns; and (g) this Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which shall constitute one and the same agreement.

[Remainder of this page intentionally left blank]

-14-

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as a sealed instrument by their duly authorized officers as of the date first written above.

Signature page to Option Agreement

Signature page to Option Agreement

Signature page to Option Agreement

SCHEDULE A

RETAINED CUSTOMERS

SCHEDULE B

LEGACY HOOMROOM.COM CUSTOMERS

FTL Sites converted to Paying Customers

HOMEROOM.COM CONVERTED CUSTOMERS

SCHEDULE C

POTENTIAL LEGACY HOMEROOM.COM CUSTOMERS

All of the below are located in Illinois

SCHEDULE 7(b)

Stockholder Pro Rata Share

EXHIBIT A

ASSIGNMENT AND ASSUMPTION AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT, made as of                          , 20     (this “Agreement”), between [new name of Achievement Technologies, Inc.], a Delaware corporation with its principal place of business at 313 Washington Street, Suite 225, Newton, MA 02458 (“ATI” and “Assignor”) and Houghton Mifflin Company, a Massachusetts corporation with its principal place of business at 222 Berkeley Street, Boston, MA 02116 (“Assignee”). Unless otherwise defined herein, capitalized terms used in this Agreement shall have the meanings given to them in the Option Agreement referred to below.

WITNESSETH:

WHEREAS, Assignor and Assignee are parties to an Option Agreement, dated as of                          , 2006 by and between Assignor, Assignee, and Tibbar, LLC, Tibbar FF, LLC, Monitor Clipper Equity Partners, L.P., Monitor Clipper Equity Partners (Foreign), L.P., and Michael Perik (the “Option Agreement”);

WHEREAS, Assignee has exercised its Option to under the Option Agreement and has delivered to the Assignee an Option Exercise Notice;

WHEREAS, pursuant to the Option Agreement, Assignee has agreed to assume certain liabilities and obligations of Assignor as are expressly defined as being Assumed Liabilities in Section 4(c) of the Option Agreement; and

WHEREAS, as required by the Option Agreement, Assignor and Assignee desire to execute and deliver this Agreement evidencing the transfer of all of Assignor’s rights, title and interests in, to and under the Contracts and the other Assets to Assignee, and the assumption of the Assumed Liabilities by Assignee.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor and Assignee hereby agree as follows:

Assignment. Effective from and after the date hereof (the “Option Closing Date”), Assignor hereby assigns to Assignee and Assignee hereby accepts the assignment of, all of Assignor’s rights, title and interests in, to and under the Contracts.

Assumption of Liabilities. From and after the Option Closing Date, Assignee hereby assumes, undertakes, and agrees to pay, perform, fulfill and discharge when due the Assumed Liabilities to be assumed by the Assignee as set forth in Section 4(c) of the Option Agreement, including all liabilities arising after the Option Closing Date under the Contracts acquired pursuant to Section 4(a)(ii) of the Option Agreement, but excluding any obligations or liabilities for any breach or default outstanding at the time of the Option Closing Date under any Contract or resulting from any event occurring before the time of the Option Closing Date which, with the giving of notice or the passage of time or both, results in a breach or default.

Option Agreement. The terms of the Option Agreement, including without limitation Assignor’s representations, warranties, covenants, agreements and indemnities contained therein, are incorporated herein by this reference. Assignor acknowledges and agrees that the representations, warranties, covenants, agreements, and indemnities contained in and delivered pursuant to the Option Agreement shall not be superseded by this Agreement but shall remain in full force and effect to the full extent provided therein. In the event that any provision of this Agreement is construed to conflict with a provision in the Option Agreement, the provision in the Option Agreement shall be deemed to be controlling.

Consents to Assignment. Nothing in this Agreement shall be construed as an attempt or agreement to assign (i) any Contract that is non-assignable without the consent of the other party or parties thereto unless such consent shall have been given or (ii) any Contract as to which all the remedies for the enforcement thereof enjoyed by Assignor would not pass to Assignee as an incident of the assignments provided for by this Agreement. In order, however, that the full value of every Contract of the character described in clauses (i) and (ii) of the immediately preceding sentence and all claims and demands on such Contract may be realized, Assignor shall use all commercially reasonable efforts to obtain approval for assignment and, failing that, Assignor shall by itself or by their agents, at the request and under the direction of Assignee, in the name of the Assignor or otherwise as Assignee shall specify, take all action as shall, in the opinion of Assignee, be necessary or proper (x) in order that the rights and obligations of Assignor under such Contract shall be preserved and (y) for, and to facilitate, the collection of the moneys due and payable, and to become due and payable, to Assignee in and under every such Contract, and Assignor shall hold the same for the benefit of and shall pay the same over promptly to Assignee.

Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the respective parties hereto and their respective successors and assigns.

Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of The Commonwealth of Massachusetts, without giving effect to its principles of conflicts of laws.

Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the undersigned have executed this Assignment and Assumption Agreement as of the date first above written.

EXHIBIT B

BILL OF SALE AND CONVEYANCE

BILL OF SALE AND CONVEYANCE made, executed and delivered on                          , 20    , by [new name of Achievement Technologies, Inc.], a Delaware corporation having its principal place of business at 313 Washington Street, Suite 225, Newton, MA 02458 (the “Assignor”), and Houghton Mifflin Company, a Massachusetts corporation having its principal place of business at 222 Berkeley Street, Boston, MA 02116 (the “Assignee”). Unless otherwise defined here, capitalized terms used in this Agreement shall have the meanings assigned to them in the Option Agreement referred to below.

WITNESSETH:

WHEREAS, Assignor and Assignee are parties to an Option Agreement, dated as of                          , 2006 by and between Assignor, Assignee, and Tibbar, LLC, Tibbar FF, LLC, Monitor Clipper Equity Partners, L.P., Monitor Clipper Equity Partners (Foreign), L.P., and Michael Perik (the “Option Agreement”); and

WHEREAS, Assignee has exercised its Option to under the Option Agreement and has delivered to the Assignee an Option Exercise Notice;

WHEREAS, Assignor and Assignee now desire to carry out the intent and purpose of the Option Agreement by Assignor’s execution and delivery to Assignee of this instrument evidencing the sale, conveyance, assignment, transfer and delivery to Assignee of the Assets, subject to the Assumed Liabilities; provided, that no liabilities other than the Assumed Liabilities shall be assumed pursuant to the Option Agreement;

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor does hereby sell, convey, assign, transfer and deliver unto Assignee and its successors and assigns, forever, all of Assignor’s right, title and interest in, to and under the Assets, subject to the Assumed Liabilities and free and clear of all liens, claims, restrictions, easements, rights of way, security agreements, rights of third parties, options or encumbrances.

TO HAVE AND TO HOLD the Assets unto Assignee, its successors and assigns, FOREVER.

Assignor hereby constitutes and appoints Assignee and its successor and assign as its true and lawful attorney in fact in connection with the transactions contemplated by this instrument, with full power of substitution, in the name and stead of Assignor but on behalf of and for the benefit of Assignee and its successors and assigns, to demand and receive any and all of the assets, properties, rights and business hereby conveyed, assigned, and transferred or intended so to be, and to give receipt and releases for and in respect of the same and any part thereof, and from time to time to institute and prosecute, in the name of Assignor or otherwise, for the benefit of Assignee or its successors and assigns, proceedings at law, in equity, or otherwise, which Assignee or its successors or assigns reasonably deem proper in order to collect or reduce to possession or endorse any of the Assets and to do all acts and things in relation to the assets which Assignee or its successors or assigns reasonably deem desirable.

In the event that any provision of this Bill of Sale and Conveyance be construed to conflict with a provision in the Option Agreement, the provision in the Option Agreement shall be deemed to be controlling.

The terms of the Option Agreement, including without limitation Assignor’s representations, warranties, covenants, agreements and indemnities contained therein, are incorporated herein by this reference. Assignor acknowledges and agrees that the representations, warranties, covenants, agreements, and indemnities contained in the Option Agreement shall not be superseded by this Bill of Sale and Conveyance but shall remain in full force and effect to the full extent provided therein.

This instrument shall be binding upon and shall inure to the benefit of the respective successors and assigns of Assignee and Assignor.

This Bill of Sale and Conveyance shall be construed and enforced in accordance with the laws (other than the conflict of law rules) of The Commonwealth of Massachusetts.

This Bill of Sale and Conveyance may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale and Conveyance under seal of Assignee on the date first above written.

EXHIBIT C

CLOSING CERTIFICATE REPRESENTATIONS AND WARRANTIES

All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Option Agreement, dated as of May     , 2006 (the “Agreement”), by and between Achievement Technologies, Inc., a Delaware corporation (the “Company”), and Houghton Mifflin Company, a Massachusetts corporation (“HMCo”).

Except as otherwise disclosed in the Disclosure Schedules accompanying this Closing Certificate:

(i) Corporate Organization and Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all corporate power and authority to own or lease its properties and to carry on the Retained Business as presently conducted and to operate the properties of the Retained Business.

(ii) Corporate Authorization; Binding Agreement. The execution and delivery of all of Closing Documents executed and delivered by the Company and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate and other action on the part of the Company. The Closing Documents have been duly executed and delivered by a duly authorized officer of the Company. The Closing Documents constitute the valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except as such enforceability may be limited by equitable principles and by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws relating to or affecting the rights of creditors generally.

(iii) Title To Assets. The Company has good and valid title to all of the Assets, free and clear of any liens, charges, claims or encumbrances.

(iv) Contracts. The Company has delivered to HMCo accurate and complete copies of all contracts pertaining to the Retained Business, including all amendments thereto, and an accurate and complete description of all oral contracts. The Company has complied with all material commitments and obligations pertaining to the Contracts and the Company is not in default under any such material commitment or obligation nor has it received any written notice of default thereunder. To the knowledge of the Company, no other party to any Contract is in default thereunder. Each of the Contracts is the legal, valid and binding obligation of the Company and, to the knowledge of the Company, the other parties thereto. Each of the Contracts is in full force and effect. No event or circumstance has occurred which (i) constitutes, or after notice or lapse of time or both would constitute, a material violation or default thereunder on the part of the Company, or to the knowledge of the Company, of any other party thereto, (ii) would result in a right to accelerate, or in a loss of, material rights under any such Contract or (iii) would accelerate the timing or vesting or any compensation, benefits or other payment.

(v) Sufficiency of Assets. The Company has delivered to HMCo the Assets free and clear of any claims, liabilities, security interests, mortgages, liens, pledges, conditions, charges,

covenants, easements, restrictions, encroachments, leases, encumbrances or other title exceptions or matters of any nature on or against the title to the property, asset, or rights. As of the Option Closing Date, the Assets, together with the assets acquired pursuant to the Purchase Agreement, are sufficient for the continued conduct of the Retained Business in substantially the same manner as conducted immediately prior to the Closing.

(vi) Financial Statements. The Company has delivered to HMCO (i) the unaudited balance sheet of the Company dated December 31, 2006 and the unaudited balance sheet of the Company dated March 31, 2007; (ii) the unaudited statements of income, retained earnings and cash flows for the year ending December 31, 2006 and the unaudited statements of income, retained earnings and cash flows for the three month period ended March 31, 2007. The financial statements fairly represent in all material respects the financial condition and results of operations of the Company as of and for the periods indicated, and have been prepared from and in accordance with the books and records of the Company in accordance with generally accepted accounting principles consistently applied except for the absence of footnote disclosure as required by generally accepted accounting principles in the United States as in effect and subject to changes resulting from normal year-end audit adjustments.

(vii) No Conflicts. Neither the execution, delivery and performance of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby will (i) conflict with or result in a breach of any provision of the Certificate of Incorporation or By-laws of the Company, (ii) result in any conflict with, breach of, or default (or give rise to any right to termination, cancellation or acceleration or loss of any right or benefit) under or require any consent or approval which has not been, or prior to Closing will not be, obtained or waived with respect to any Contract or (iii) violate any order, law, rule or regulation applicable to the Company, or by which it or its properties or assets may be bound.

(viii) Litigation. There are no claims, actions, suits, proceedings or investigations, pending or, to the knowledge of the Company threatened, against or affecting the Company and no notice of any claim, action, suit or proceeding, whether pending or threatened, has been received.

(ix) Conformity with Law. The Company is not in default under or in violation of any applicable law or regulation or under any order of any court or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality having jurisdiction over it. The Company has conducted the Retained Business in substantial compliance with all applicable federal, state and local statutes, ordinances, permits, licenses, orders, approvals, variances, rules and regulations and is not in violation of any of the foregoing that would have a material adverse effect on the business, operations, assets, properties, condition or prospects, financial or otherwise, of the Retained Business. Neither the Company, nor any director, officer, agent or employee of the Company has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, or (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns, or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(x) Undisclosed Liabilities and Obligations. Except as otherwise set forth in Schedule [        ], the Company is not aware that, since December 31, 2006, it has incurred any material liability of any nature whatsoever, whether absolute, accrued, contingent, determined, determinable or otherwise nor has there occurred any condition, situation or set of circumstances that would reasonably be expected to result in such a material liability, in each case other than liabilities in usual amounts incurred in the ordinary course of the business, consistent with past practices, of the Company, or reflected in the Financial Statements.

(xi) Taxes. Except as set forth in Schedule [        ], (1) the Company has filed on a timely basis with the appropriate authorities all returns, amended returns, declarations, reports, estimates, statements regarding Taxes, and information returns which are or were filed or required to be filed under applicable law, whether on a consolidated, combined, unitary or individual basis (the “Tax Returns”) regarding any federal, state, local, foreign, or other tax, fee, levy, assessment or other governmental charge, including without limitation, any income, franchise gross receipts, property, sales, use services, value added, withholding, social security estimated, accumulated earnings, alternative or add-on minimum, transfer, license, privilege, payroll, profits, capital stock, employment, unemployment, excise, severance, stamp, occupancy, customs or occupation tax, and any interest, additions to tax and penalties in connection therewith (together, the “Taxes”), (2) the Tax Returns referred to in (1) are true and complete in all material respects, (3) the Company has paid in full on a timely basis to the appropriate Taxing authorities all Taxes required to have been paid by the Company, and (4) the Company has timely and properly withheld and paid all Taxes or other amounts required to have been withheld and paid by the Company and timely and properly complied in all material respects with all document retention and Tax Return filing requirements in connection therewith.

(xii) Employees.

(a) Schedule [        ] attached hereto lists all written employment or severance contracts, agreements, commitments, undertakings, arrangements or understandings (“Contractual Obligation”), with any employee employed by the Company in connection with the conduct of the Retained Business other than Excluded Contracts. There are no collective bargaining agreements or other labor Contractual Obligations relating to employees employed by the Company in connection with the conduct of the Retained Business. Schedule [        ] sets forth the name, title, date of hire and the wage or salary, commission and bonus formula and other payments (or hourly wage, as the case may be) in respect of each of the individuals employed by the Company in connection with the Retained Business since December 31, 2005. Schedule [        ] lists confidentiality and non-competition agreements signed by employees or consultants and currently in effect.

(b) The Company is in compliance in all material respects with all Laws respecting employment and employment practices, terms and conditions of employment, unlawful discrimination, and wages and hours with respect to the Retained Business. The Company has not engaged, and is not now engaging, in any unfair labor practice or other unlawful employment practice with respect to the Retained Business. The Company does not have any knowledge of any unfair labor practice or unfair employment practice complaints made or threatened against the Company with any governmental or regulatory

agency with respect to the Retained Business. The Company has not received any actual written notice reflecting an intention or threat to file any such complaint with respect to the Retained Business. The Company does not have any knowledge of any pending or threatened claims arising out of any Law relating to discrimination with respect to employees or employment practices with respect to the Retained Business. There is no strike, work stoppage or labor disturbance pending or to the knowledge of the Company threatened against or involving the Company with respect to the Retained Business.

(xiii) Intellectual Property.

(a) Noninfringement. Except as disclosed on Schedule [        ], since May [            ], 2006, neither the Company nor any predecessor has (i) to the Company’s knowledge, interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of third parties or (ii) received any written charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that a Person must license or refrain from using any Intellectual Property of any third party in connection with the Business or the use of the Company Technology). Except as disclosed on Schedule [        ], the Company has not agreed and does not have a Contract to indemnify any Person for or against any interference, infringement, misappropriation of third party Intellectual Property rights.

(b) Scheduled Intellectual Property. Other than as set fort on Schedule [        ], there are no patents, patent applications, registered copyrights, registered trademarks, and applications for trademark registrations, which have been applied for or issued to the Company. Each such item is valid and subsisting. Schedule [        ] also identifies each trade name and unregistered trademark or service mark used by the Company or in connection with the Business.

(c) Privacy and Security. The Company’s use and dissemination of any and all data and information concerning consumers of its products or users of any web sites operated by the Company is in compliance in all material respects with all applicable privacy policies, terms of use, and Laws. To the knowledge of the Company, there have been no security breaches relating to, violations of any security policy regarding or any unauthorized access of any data used in the business of Company. The transactions contemplated to be consummated hereunder as of the Closing will not violate any privacy policy, terms of use, or Laws relating to the use, dissemination, or transfer of such data or information.

(xiv) Affiliate Transactions. Except as set forth in Schedule [        ] hereto, the Company is not a party to or bound by any Contractual Obligations, commitment or understanding with any of the officers, directors or stockholders of the Company or any of their affiliates or, to the knowledge of the Company, any member of their family and none of the stockholders, directors or officers of the Company or any of their affiliates or, to the knowledge of the Company, members of their family owns or otherwise has any rights to or interests in any asset, tangible or intangible, which is used in the Business.