Revision Date: August 14, 2007

Purpose

An effective Board will positively influence shareholder value and enhance the reputation of Cadence Network, Inc. as a constructive organization in the markets where it does business. Good governance practices will provide a framework for timely responses to issues affecting Cadence Network, Inc. and thereby maximize the effectiveness of the Board. The Board of Directors of Cadence Network, Inc. adopts these Principles for Corporate Governance to signal its strong commitment to good corporate governance practices.

1. Responsibilities of Directors

• The basic responsibility of the Directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its Shareholders. In discharging that obligation, Directors are entitled to rely on the honesty and integrity of the Company's Senior Executives and its outside advisors and auditors.
• A Director is expected to spend the time and effort necessary to properly discharge his or her responsibilities.
• A Director is expected to regularly attend meetings of the Board and committees on which the Director serves and be adequately prepared to participate fully in any discussion.
• A Director should at all times discharge his or her responsibilities with the highest standards of ethical conduct, in conformity with applicable laws and regulations, and act solely in the best interest of the Company's Shareholders.

2. Director Nominations

• Nominees will be leaders in their field, have broad experience, show familiarity with national and international issues, possess sound business judgment, and have other attributes that will enhance shareholder value.
• The Board will seek acting or former executive officers of complex businesses, leading academics, successful entrepreneurs and individuals who will add diversity to the Board.
• The Board will possess certain experiences and core competencies that are identified as essential to the success of the corporation.

3. Voting for Directors

• In an uncontested election of Directors, any nominee who receives a greater number of votes "withheld" from his or her election than votes "for" his or her election will, within five days following the certification of the shareholder vote, tender his or her written resignation to the Chairman of the Board for consideration by the Corporate Governance Committee.  As used herein, an "uncontested election of directors" is an election in which the number of nominees is not greater than the number of Board seats open for election.
• The Corporate Governance Committee will consider such tendered resignation and, promptly following the date of the shareholders’ meeting at which the election occurred, will make a recommendation to the Board concerning the acceptance or rejection of such resignation. In determining its recommendation to the Board, the Corporate Governance Committee will consider all factors deemed relevant by the members of the Corporate Governance Committee including, without limitation, the stated reason or reasons why shareholders who cast “withhold” votes for the director did so, the qualifications of the director (including, for example, the impact the director’s resignation would have on the Company’s compliance with the requirements of these Principles for Corporate Governance), and whether the director’s resignation from the Board would be in the best interests of the Company and its shareholders.
• The Corporate Governance Committee also will consider a range of possible alternatives concerning the director’s tendered resignation as members of the Committee deem appropriate including, without limitation, acceptance of the resignation, rejection of the resignation, or rejection of the resignation coupled with a commitment to seek to address and cure the underlying reasons reasonably believed by the Corporate Governance Committee to have substantially resulted in the “withheld” votes.
• The Board will take formal action on the Corporate Governance Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting at which the election occurred. In considering the Corporate Governance Committee’s recommendation, the Board will consider the information, factors and alternatives considered by the Corporate Governance Committee and such additional information, factors and alternatives as the Board deems relevant.
• Following the Board’s decision on the Corporate Governance Committee’s recommendation, the Company will promptly disclose, the Board’s decision, together with a full explanation of the process by which the decision was made and, if applicable, the Board’s reason or reasons for rejecting the tendered resignation.
• No director who, in accordance with this policy, is required to tender his or her resignation, shall participate in the Corporate Governance Committee’s deliberations or recommendation, or in the Board’s deliberations or determination, with respect to accepting or rejecting his or her resignation as a director. If a majority of the members of the Corporate Governance Committee received a greater number of votes “withheld” from their election than votes “for” their election, then the independent directors then serving on the Board who received a greater number of votes “for” their election than votes “withheld” from their election will appoint an ad hoc Board committee from amongst themselves (the “Ad Hoc Committee”), consisting of such number of directors as they may determine to be appropriate, solely for the purpose of considering and making a recommendation to the Board with respect to the tendered resignations. The Ad Hoc Committee shall serve in place of the Corporate Governance Committee and perform the Corporate Governance Committee’s duties for the purposes of this policy. Notwithstanding the foregoing, if an Ad Hoc Committee would have been created but fewer than three directors would be eligible to serve on it (including in circumstances where the entire Board receives a greater number of votes “withheld” from their election than votes “for” their election”, the entire Board (other than the directors whose resignation is being considered) will make the determination to accept or reject the tendered resignation without any recommendation from the Corporate Governance Committee and without the creation of an Ad Hoc Committee.

4. Director Orientation

• Senior Executives and other appropriate personnel and outside advisors will brief new Directors on the corporation and the industry, including the corporation's strategic plans, internal control procedures, compliance programs, code of ethics and related policies, management and internal and independent auditors.
• Directors will be encouraged to take advantage of field visits to Company headquarters.

5. Size of the Board

• The Company will have up to nine (9) directors but the current view is that a Board of 5-7 directors is optimal.

6. Frequency of Meetings

• The Board will meet as frequently as required to attend to the business of the corporation. At a minimum, the Board will meet in person at the Company headquarters 4 times per year in the last month of each quarter.
• Regular meetings will be supplemented by teleconference meetings as required.

7. Directors Whose Responsibilities Change

• A Director whose occupational responsibilities change will, as a matter of course, submit a letter of resignation, except where the duties changed as a result of normal retirement.

8. Term Limits

• Limits will not be imposed on the terms of directors.

9. Assessing the Board's Performance

• The Corporate Governance Committee will annually assess the Board's performance.
• The Corporate Governance Committee will address any issues concerning the performance of an individual Director.
• Directors are encouraged to make suggestions as to Board practices.

10. Board Access to Management

• Board members have complete access to Management.
• The Board welcomes the exposure of top Managers to the Board.

11. Selection of Agenda Items for Board Meetings

• The Chairman of the Board with the assistance of the Chief Executive Officer will establish the agenda for Board meetings.
• Board members are free to suggest agenda items.
  
• The Board annually reviews long-term strategic plans and reviews strategic updates.
• The Board annually reviews operating plans and specific goals at the beginning of the year and financial performance periodically.

12. Board Materials Distributed in Advance

• The Board will be fully informed of major proposals.
• Materials will be distributed in writing prior to each Board meeting.
• Materials will be brief but thorough.
• The Secretary will discuss adequacy of materials with Board members periodically.

13. Board Presentations

• Presentation materials shall be provided in advance of meetings.
• Sensitive matters may be discussed without written materials.
• Board members will review fully all materials and will be prepared for crisp and focused discussion on management proposals.

14. Number of Committees

• The committees shall include Audit, Compensation, and Corporate Governance.
• Each committee will have a formal statement of responsibilities in the form of a charter complying with all applicable laws, rules and regulations.

15. Assignment and Rotation of Committee Members

• The Corporate Governance Committee will recommend to the Board the assignment of Board members to committees.
• The rotation of committee memberships will be encouraged, but not mandated.

16. Frequency and Length of Committee Meetings

• The committee chair will determine the frequency and length of meetings.
• Committee actions will be reported to the full Board.
• All Directors are free to attend any committee meetings but may be excluded by the committee as the committee deems appropriate in order to carry out its responsibilities.

17. Evaluation of the Chief Executive Officer

• Directors are encouraged to comment to the Chief Executive Officer, the Chairman of the Board or the Chairman of the Corporate Governance Committee upon the performance of the Chief Executive Officer when circumstances warrant.
• The Corporate Governance Committee will conduct annually a formal evaluation of the Chief Executive Officer and will consider factors such as individual performance, the extent to which measures related to enterprise challenges are successfully achieved, the feedback of all independent directors and the advice of outside experts when recommending changes to the Compensation Committee which shall establish the compensation of the Chief Executive Officer.

18. Continuing Education

• Directors are encouraged to take advantage of continuing education opportunities that will enhance their ability to fulfill their responsibilities.