AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

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EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

BY AND AMONG

SPANSION INC.,

ATLANTIC STAR MERGER SUB LTD.

AND

SAIFUN SEMICONDUCTORS LTD.

DATED AS OF OCTOBER 7, 2007

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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of October 7, 2007 (this “ Agreement ”), by and among Spansion Inc., a Delaware corporation (the “ Parent ”), Atlantic Star Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of the Parent (“ Merger Sub ”), and Saifun Semiconductors Ltd., an Israeli company (the “ Company ”).

RECITALS

A. The Parent and the Company intend to enter into a transaction whereby Merger Sub will merge (the “ Merger ”) with and into the Company by way of a court approved arrangement between the Company and its shareholders and creditors, in accordance with Sections 350 and 351 of the Companies Law 5759-1999 of the State of Israel (together with the regulations promulgated thereunder, the “ Companies Law ”), following which Merger Sub will cease to exist and the Company will become a wholly owned Subsidiary (as defined in Section 8.7(h)) of the Parent, and the Company Shares (as defined in Section 1.3(b)) will be exchanged for the shares of Parent Common Stock (as defined in Section 3.2), all in accordance with this Agreement and the Companies Law.

B. The board of directors of the Company by the unanimous vote of those present (except for Dr. Eitan, who abstained on matters in which he may have a personal interest): (i) determined that this Agreement, the Merger and the other transactions contemplated by this Agreement, including the Cash Distribution (as defined in Section 5.12(a)) (collectively, the “ Transactions ”), are fair to, and in the best interests of, the Company and its shareholders, and that, considering the financial position of the merging companies, no reasonable concern exists that the Surviving Company will be unable to fulfill the obligations of the Company to its creditors existing as of immediately prior to the Closing; (ii) approved this Agreement, the Merger and the other Transactions; and (iii) determined to recommend to the shareholders of the Company the approval of this Agreement, the Merger and the other Transactions.

C. The board of directors of each of the Parent and Merger Sub has approved this Agreement, the Merger and the other Transactions, and the board of directors of Merger Sub has determined that, considering the financial position of the merging companies, no reasonable concern exists that the Surviving Company will be unable to fulfill the obligations of Merger Sub to its creditors existing as of immediately prior to the Closing.

D. Concurrently with the execution of this Agreement and as a condition to and inducement of the Parent’s willingness to enter into this Agreement: (i) certain shareholders of the Company as set forth in Schedule A (the “ Voting Undertaking Shareholders ”) are entering into irrevocable voting undertakings in substantially the form attached as Exhibit A (the “ Voting Undertakings ”); (ii) certain shareholders of the Company who may be deemed to be affiliates of the Company within the meaning of Rule 145 promulgated under the United States Securities Act of 1933, as amended (the “ Securities Act ”), are entering into affiliate agreements in substantially the form attached as Exhibit B (the “ Affiliate Agreements ”); (iii) Dr. Eitan and certain of his Affiliates (as defined in Section 8.7(a)) are entering into market stand-off agreements in substantially the form attached as Exhibit C (the “ Lock-Up Agreements ”); and (iv)

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certain individuals as set forth in Schedule B are either entering into retention and noncompetition agreements (the “ Retention and Noncompetition Agreements ”) or intend to enter into Retention and Noncompetition Agreements after the execution of this Agreement and prior to the Closing.

E. The Merger is intended to qualify as a “reorganization” as described in Section 368(a) of the Code, and this Agreement is intended to constitute a “plan of reorganization” within the meaning of the regulations promulgated under Section 368 of the Code.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein the parties, intending to be legally bound, agree as follows:

ARTICLE 1

THE MERGER

Section 1.1 The Merger . Subject to the satisfaction or waiver (where permissible) of the conditions in this Agreement as set forth in Article 6, (a) Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation (sometimes referred to herein as the “ Surviving Company ”) and shall become a wholly owned Subsidiary of the Parent and shall succeed to and assume all of the rights, properties and obligations of Merger Sub; and (b) all Company Shares will be converted into the right to receive shares of Parent Common Stock in accordance with Section 1.3, all in accordance with the provisions of the Court Approval (as defined in Section 5.2(a)), the Companies Law and this Agreement.

Section 1.2 Closing Date . Subject to the satisfaction or waiver (where permissible) of the conditions in this Agreement as set forth in Article 6, the closing of the Transactions, including the Merger (the “ Closing ”), shall take place at the offices of Yigal Arnon & Co., One Azrieli Center, Tel Aviv, Israel (or at such other place as may be designated by the parties), at a time and on a date to be designated by the parties (the date or time upon which the Closing actually occurs is referred to as the “ Closing Date ” or the “ Effective Time ”, as applicable), which shall be no later than the second Business Day (as defined in Section 8.7(b)) (or such other period of time mutually agreed to by the parties) following the satisfaction or waiver of the conditions set forth in Article 6 (other than those conditions which by their terms are to be satisfied or waived as of the Closing, but subject to the satisfaction or waiver of such conditions at such time), including the receipt of the Court Approval.

Section 1.3 Effect on Share Capital . Subject to the satisfaction or waiver (where permissible) of the conditions in this Agreement as set forth in Article 6, at the Closing Date, subject to the provisions of the Court Approval, the following shall occur:

(a) Merger of the Company and Merger Sub . Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Surviving Company.

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(b) Exchange of the Company Shares . Each Ordinary Share, NIS 0.01 par value per share, of the Company (the “ Company Shares ”), issued and outstanding immediately prior to the Effective Time and immediately following the record date for the Cash Distribution, other than any Company Shares owned by any direct or indirect wholly-owned Subsidiary of Company or any dormant shares ( menayot redumot ) of the Company, shall automatically become owned by the Parent and represent solely the right to receive (the “ Per Share Consideration ”) 0.7429 (as the same may be adjusted pursuant to Section 5.12(c), the “ Exchange Ratio ”) of a share of Parent Common Stock, subject to the provisions of Sections 1.3(e) and 1.3(f), payable to the holder of such Company Share upon surrender of the certificate representing such Company Share in the manner provided in Section 1.4 (or in the case of a lost, stolen, destroyed or unissued certificate, upon delivery of an affidavit and bond in the manner provided in Section 1.6). As of the Effective Time, all of the Company Shares shall automatically be owned by the Parent, and will be registered in its name in the shareholders registry of the Company.

(c) Dormant Shares; Subsidiary-Owned Stock . Notwithstanding the provisions of Section 1.3(b), at the Effective Time, each Company Share that is a dormant share ( menayah redumah ), owned by any direct or indirect wholly-owned Subsidiary of the Company or owned directly or indirectly by the Parent immediately prior to the Effective Time shall remain outstanding, shall not be exchanged under Section 1.3(b) and no Per Share Consideration shall be delivered with respect thereto.

(d) Stock Options . At the Effective Time, all options to purchase Company Shares (“ Company Share Options ”) then outstanding under the Company’s Employee Share Option Plan (1997), 2001 Share Option Plan and 2003 Share Option Plan (as any of them may have been amended and/or restated prior to the date hereof, a “ Company Option Plan ” and, collectively, the “ Company Option Plans ”) whether vested or unvested, and the Company Option Plans themselves, shall be assumed by the Parent in accordance with Section 5.11(a).

(e) Adjustments . Without derogating from any other provision of this Agreement, the Exchange Ratio shall be adjusted to reflect appropriately the effect of any forward or reverse stock split, bonus shares (other than as permitted to be issued to employees pursuant to Section 4.1), stock dividend (including any dividend or distribution of securities convertible into shares of Parent Common Stock or Company Shares), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to shares of Parent Common Stock or Company Shares occurring on or after the date hereof and prior to the Effective Time, provided that the payment of the Cash Distribution shall not provide any basis for any such adjustment to the Exchange Ratio.

(f) No Fractional Shares . No fraction of a share of Parent Common Stock will be issued by virtue of the Merger, but in lieu thereof each holder of Company Shares who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock that would otherwise be received by such holder) shall, upon surrender of such holder’s Certificates (as defined in Section 1.4(c)), or affidavit and the posting of a bond in the manner provided in Section 1.6, receive from the Parent an amount of cash (rounded to the nearest whole cent), without interest,

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equal to the product of (i) such fraction, multiplied by (ii) the average closing sale price of one share of Parent Common Stock for the five consecutive trading days that the Parent Common Stock has traded ending on and including the second trading day immediately prior to the Effective Time (“ Parent Common Stock Closing Price ”), as reported on The NASDAQ Global Select Market (“ Nasdaq ”).

Section 1.4 Surrender of Certificates .

(a) Exchange Agent . Prior to the Effective Time, the Parent shall select Computershare Investor Services or another bank or trust company reasonably acceptable to the Company to act as the exchange agent (the “ Exchange Agent ”) in the Merger, to receive the shares of Parent Common Stock issuable under Section 1.3.

(b) Parent to Provide Per Share Consideration . At or as promptly as practicable following the Effective Time, the Parent shall deposit with the Exchange Agent, for exchange in accordance with this Article 1, the shares of Parent Common Stock, issuable pursuant to Section 1.3 in exchange for outstanding Company Shares. In addition, the Parent shall make available from time to time, if and as necessary after the Effective Time, cash in an amount sufficient for payment in lieu of fractional shares pursuant to Section 1.3(f) and for payment of any dividends or distributions to which holders of Company Shares may be entitled pursuant to Section 1.4(d). Such funds shall be held in trust by the Exchange Agent for the benefit of the applicable holders of Company Shares.

(c) Payment and Exchange Procedures . As soon as reasonably practicable after the Effective Time, the Parent shall cause the Exchange Agent to mail to each holder of record (as of the Effective Time) of one or more certificates (the “ Certificates ”) or uncertificated Company Ordinary Shares (the “ Uncertificated Shares ”), which immediately prior to the Effective Time represented outstanding Company Shares, whose shares represent the right to receive the Per Share Consideration pursuant to Section 1.3: (i) a letter of transmittal in customary form (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates or transfer of Uncertificated Shares to the Exchange Agent), (ii) a declaration form in which the holder of record states whether the holder is a resident of Israel as defined in the Income Tax Ordinance of Israel [New Version], 1961 (the “ Ordinance ”) and provides such other information as the Parent shall reasonably require to comply with the Ordinance and the Israeli Withholding Tax Ruling (as defined in Section 5.5(a)), if obtained, and (iii) instructions in customary form for use in effecting the surrender of the Certificates or transfer of Uncertificated Shares in exchange for the Per Share Consideration. Upon (x) surrender of Certificates for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by the Parent or (y) receipt of an “ agent’s message ” by the Exchange Agent (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of a book-entry transfer of Uncertificated Shares, together with such letter of transmittal and such declaration form, duly completed and validly executed in accordance with the instructions thereto, the holders of such Certificates or Uncertificated Shares shall be entitled to receive in exchange therefor the Per Share Consideration payable with respect to their Company Shares (rounded to the nearest whole share after aggregating all Company Shares held by such holder), and the Certificates so

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surrendered or Uncertificated Shares so transferred shall forthwith be canceled. No interest shall accrue or be paid on the amounts payable pursuant to Section 1.3 upon the surrender of any Certificate or transfer of any Uncertificated Shares. Until so surrendered or transferred, outstanding Certificates and Uncertificated Shares will be deemed from and after the Effective Time for all corporate purposes to evidence only the right to receive the Per Share Consideration to which such Company Shares are entitled pursuant to Section 1.3 and, if applicable, an amount of cash in lieu of the issuance of any fractional shares in accordance with Section 1.3(f) and any dividends or distributions payable pursuant to Section 1.4(d).

(d) Distributions With Respect to Unexchanged Shares . No dividends or other distributions declared or made after the date of this Agreement with respect to the shares of Parent Common Stock with a record date after the Effective Time will be paid to the holders of any unsurrendered Certificates or untransferred Uncertificated Shares with respect to any shares of Parent Common Stock represented thereby until the holders of record of such Certificates shall surrender such Certificates or transfer such Uncertificated Shares, provided that in the event that such holders comply with the provisions of Section 1.6, such holders shall be entitled to any such dividends or distributions regardless of their having failed to surrender such Certificates or transfer such Uncertificated Shares. Subject to applicable Legal Requirements (as defined in Section 2.3(b)), following surrender of any such Certificates or transfer of any such Uncertificated Shares, the Exchange Agent shall deliver to the record holders thereof, without interest, certificates representing whole shares of Parent Common Stock issued in exchange therefor along with payment in lieu of fractional shares pursuant to Section 1.3(f) and the amount of any such dividends or other distributions with a record date after the Effective Time payable with respect to such whole shares of Parent Common Stock.

(e) Transfers of Ownership . If shares of Parent Common Stock issuable pursuant to Section 1.3 are to be issued in the name of a Person (as defined in Section 8.7(g)) other than the Person in whose name the Certificates surrendered in exchange therefor are registered, it will be a condition of the issuance thereof that the Certificates so surrendered will be properly endorsed and otherwise in proper form for transfer and that the Persons requesting such issuance will have paid to the Parent or any agent designated by it any transfer or other Taxes (as defined in Section 2.15(a)) required by reason of the issuance of the shares of Parent Common Stock in the name of a Person other than the registered holder of the Certificates surrendered, or established to the reasonable satisfaction of the Parent or any agent designated by it that such Tax has been paid or is not payable.

(f) Withholding . Each of the Exchange Agent, the Parent and the Surviving Company shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement, including pursuant to Sections 1.3(d) and 5.11 hereof, to any holder or former holder of Company Shares or Company Share Options, such amounts as may be required to be deducted or withheld therefrom under the Internal Revenue Code of 1986 (the “ Code ”), the Ordinance, or under any provision of state, local, Israeli or other foreign law or any other applicable Legal Requirement provided that, (i) if the Israeli Withholding Tax Ruling is obtained, deduction and withholding of any amounts under the Ordinance or any other provision of Israeli law, if any, shall be made only in accordance with the provisions of the Israeli Withholding Tax Ruling, and (ii) if any

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holder of Company Shares provides the Exchange Agent, the Parent or the Surviving Company with a valid approval or ruling issued by the applicable Governmental Entity regarding the withholding (or reduction or exemption from withholding) of Israeli Tax from the consideration payable or otherwise deliverable pursuant to this Agreement, which in the reasonable discretion of Israeli counsel to the Parent is sufficient to enable the Parent to conclude that no withholding or a reduced rate of withholding, as applicable, of Israeli Tax is required, then the deduction and withholding of any amounts under the Ordinance or any other provision of Israeli law, if any, from the consideration payable or otherwise deliverable to such holder shall be made only in accordance with the provisions of such approval or ruling. To the extent such amounts are so deducted or withheld, (i) the Exchange Agent, the Parent and/or the Surviving Company, as applicable, shall provide the holder of Company Shares from whom an amount was deducted or withheld with a written notice, as may be required by any applicable law, stating the amount so deducted or withheld, and (ii) such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

(g) No Liability . Notwithstanding anything to the contrary in this Section 1.4, neither the Exchange Agent nor any party hereto shall be liable to a holder of Company Shares for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

Section 1.5 The Company’s Transfer Books Closed; No Further Ownership Rights in the Company Shares . At the close of business on the day during which the Effective Time occurs: (i) the share transfer books of the Company shall be deemed closed, and no transfer of any Company Shares or any Certificates in respect thereof shall thereafter be made or consummated; and (ii) all holders of Company Shares that were outstanding immediately prior to the Effective Time shall cease to have any rights as shareholders of the Company, except the right to receive for each of the Company Shares the Per Share Cash Distribution Amount (as defined in Section 5.12(a)) and, upon the surrender of such Certificate or transfer of such Uncertificated Shares in accordance with Section 1.4, the Per Share Consideration, in each case as specified herein or by any Legal Requirement. No further transfer of any such Company Shares shall be made on such share transfer books after the Effective Time. If, after the Effective Time, a valid Certificate is surrendered or a valid Uncertificated Share is transferred to the Exchange Agent or to the Surviving Company or the Parent, such Certificate or Uncertificated Share shall be canceled and shall be exchanged as provided in this Article 1. The Per Share Consideration (together with payments contemplated by Sections 1.3(f) and 1.4(d)) shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to such Company Shares.

Section 1.6 Lost, Stolen, Destroyed or Unissued Certificates . If any Certificates shall have been lost, stolen or destroyed, or were never issued, the Exchange Agent shall pay such amounts and, if applicable, issue such shares of Parent Common Stock, if any, specified in Section 1.3, in exchange for such lost, stolen, destroyed, or unissued Certificates, upon the delivery by the owner of such lost, stolen, destroyed or unissued Certificates of a bond in such sum as the Parent or the Exchange Agent may reasonably direct as indemnity against any claim that may be made against the Parent, the Surviving Company or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen, destroyed or unissued.

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Section 1.7 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 Company with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the officers and directors of the Surviving Company will take all such lawful and necessary action.

Section 1.8 Certain Tax Consequences . It is intended by the parties hereto that the Merger shall constitute a reorganization within the meaning of Section 368(a) of the Code. The parties hereto adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Parent and Merger Sub, as of the date hereof, subject to such exceptions as are disclosed in writing in a letter from the Company to the Parent, delivered by a duly authorized officer of the Company concurrently with the execution of this Agreement (the “ Company Disclosure Letter ”) (it being understood that any matter disclosed in the Company Disclosure Letter shall be deemed disclosed with respect to any section of this Article 2 to which the matter relates, to the extent the relevance of such matter to such section is reasonably apparent), as follows:

Section 2.1 Organization and Qualification; Subsidiaries .

(a) Each of the Company and its Subsidiaries is a corporation, limited liability company, partnership or other entity duly organized and validly existing and, where applicable, in good standing, under the laws of the jurisdiction of its organization and has the requisite corporate or other power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted, except in the case of Subsidiaries for such failures to be in good standing that would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (as defined in Section 8.7(e)) on the Company. Each of the Company and its Subsidiaries is duly qualified or licensed as a foreign corporation to do business, and, where applicable is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except in each case for such failures to be so duly qualified or licensed and in good standing that would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.

(b) Section 2.1(b) of the Company Disclosure Letter sets forth a true and complete list as of the date of this Agreement of each of the Company’s Subsidiaries, the jurisdiction of organization of each such Subsidiary, and the Company’s equity interest therein. Except as set forth in Section 2.1(b) of the Company Disclosure Letter, neither the Company nor any of its 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 or loan to, any other entity. All the outstanding share capital of, or other equity interests in each Subsidiary of the Company have been validly issued, are fully paid and

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nonassessable and are owned, directly or indirectly, by the Company, free and clear of all Liens (as defined in Section 2.3(c)), except restrictions on transfer arising under applicable securities law. Except as set forth in Section 2.1(b) of the Company Disclosure Letter, as of the date hereof, neither the Company nor any of its 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 (other than a Subsidiary of the Company).

Section 2.2 Memorandum of Association; Articles of Association . The Company has furnished to the Parent a complete and correct copy of its Memorandum of Association and Articles of Association as amended to the date of this Agreement (together, the “ Company Charter Documents ”). Such Company Charter Documents and equivalent organizational documents of each of the Company’s Subsidiaries are in full force and effect. The Company is not in violation of any of the provisions of the Company Charter Documents, and no Subsidiary of the Company is in violation of its equivalent organizational documents. The Company has furnished to the Parent complete and correct copies of the organizational documents of the all of the Subsidiaries of the Company.

Section 2.3 Capitalization .

(a) The registered (authorized) share capital of the Company consists of 200,000,000 Ordinary Shares, NIS 0.01 par value per share. The Company has no class of share capital authorized other than the Company Shares. As of the close of business on October 3, 2007: (i) 31,351,519 Company Shares were issued and outstanding, all of which were validly issued, fully paid and nonassessable; (ii) 274,776 Company Shares were dormant shares ( menayot redumot ) and no other shares were held in treasury by the Company or by Subsidiaries of the Company; (iii) 4,438,836 Company Shares were reserved for issuance under the Company’s 2003 Share Option Plan, of which 3,339,126 were subject to outstanding Company Share Options to purchase Company Shares and 1,099,710 Company Shares were available for future Company Share Option grants; (iv) 170,947 Company Shares were reserved for issuance under the Company’s 2001 Share Option Plan all of which were subject to outstanding Company Share Options to purchase Company Shares; (v) 101,100 Company Shares were reserved for issuance under the Company’s Employee Share Option Plan (1997), all of which were subject to outstanding Company Share Options to purchase Company Shares; and (vi) 25,734 Company Shares were reserved for issuance under and subject to outstanding Company Share Options to purchase Company Shares that were not granted under any Company Option Plan. Of the Company Share Options referred to above, Company Share Options to purchase an aggregate of 1,912,032 Company Shares have exercise prices equal to or greater than $13.00 per share as of October 3, 2007. All such Company Share Options issued since January 1, 2002 (including those that have been exercised, terminated, expired, forfeited or otherwise cancelled) were appropriately authorized by the Company’s board of directors (or an appropriate committee or sub-committee thereof or an appropriately delegated officer) and were issued with an exercise price at least equal to fair market value such that the fair market value on the grant date equaled or exceeded the fair market value on the financial measurement date (as determined in accordance with the terms of the applicable Company Option Plan and, to the extent applicable, Sections 409A and 422 of the Code) for each such Company Share Option or, with respect to Company Share Options that were not issued in such a manner, the Company

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recorded an appropriate compensation charge in its financial statements relating to such grants in the appropriate period and reported such in its financial statements and Tax Returns during the required period. The Company has made available to the Parent accurate and complete copies of all forms of agreements pursuant to which outstanding Company Share Options have been issued. There is no current offering period under the Company’s 2005 Employee Stock Purchase Plan (the “ESPP”) and there are no purchase rights outstanding under the ESPP.

(b) Section 2.3 of the Company Disclosure Letter sets forth the following information with respect to each Company Share Option outstanding as of the close of business on October 3, 2007: (i) the name and country or state of residence of the optionee; (ii) the particular plan, if applicable, pursuant to which such Company Share Option was granted, and with respect to all such Company Share Options granted to Israeli taxpayers, whether each such option was granted under any of the following sections of the Ordinance: Section 3(i); Section 102 (prior to June 30, 2003); or Section 102 (on or after June 30, 2003, and in such event pursuant to which subsection of Section 102) (iii) the number of Company Shares subject to such Company Share Option; (iv) the exercise price of such Company Share Option; (v) the date on which such the Company Share Option was granted; (vi) the applicable vesting schedule, including the vesting commencement date; (vii) the date on which such Company Share Option expires; and (viii) whether the vesting or exercisability of such Company Share Option will be accelerated in any way by the Transactions (whether alone or upon the occurrence of any additional or subsequent events, including termination of employment), and the extent of any such acceleration. All Company Shares subject to issuance as aforesaid have been duly authorized and, upon issuance on the terms and conditions specified in the instrument pursuant to which they are issuable, will be validly issued, fully paid and nonassessable. The Company has not issued any Company Shares which are unvested or subject to any repurchase option in favor of the Company. All outstanding Company Shares, all outstanding Company Share Options and all outstanding shares of capital stock of each Subsidiary of the Company have been issued and granted (i) pursuant to proper corporate or other action as of the applicable date, (ii) in compliance in all material respects with all applicable securities laws and other applicable Legal Requirements (as defined below) and (iii) in compliance in all material respects with all applicable requirements set forth in the applicable Company Option Plan and award documents.

“ Legal Requirements ” means any Israeli or U.S. federal or state law, or material local or municipal law, or applicable foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, judgment, order, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Israeli or U.S. federal, state, local or applicable foreign government, any court, administrative, regulatory or other governmental agency, commission or authority or any non-governmental self-regulatory agency, commission or authority having (through authority granted by a governmental agency or commission) the force of law (each, a “ Governmental Entity ”).

(c) Except for (i) securities that the Company owns, directly or indirectly through one or more Subsidiaries, free and clear of all liens, pledges, hypothecations, charges, mortgages, security interests, encumbrances, adverse claims, options, rights of first

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refusal, preemptive rights or restrictions of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, or any restriction on the possession, exercise or transfer of any other attribute of ownership of any security or other asset, except restrictions on transfer arising under applicable securities laws), (collectively, “ Liens ”), other than Permitted Liens, and (ii) shares of capital stock or other similar ownership interests of Subsidiaries of the Company that are owned by certain nominee equity holders as required by the applicable Legal Requirements of the jurisdiction of organization of such Subsidiaries (which shares or other interests do not materially affect the Company’s control of such Subsidiaries), there are no equity securities, partnership interests or similar ownership interests of any class of equity security of any Subsidiary of the Company, or pursuant to agreements to which the Company or any of its Subsidiaries is a party or is otherwise bound, any security exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding.

(d) Except as set forth in this Section 2.3 or in Section 2.3 of the Company Disclosure Letter, and for changes since October 3, 2007 resulting from the exercise of Company Share Options, as of the date hereof there is no share capital or other security of the Company outstanding, and no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company or any of its Subsidiaries is a party or by which it is bound, obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of share capital, partnership interests or similar ownership interests of the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. There are no commitments or agreements of any character to which the Company or any of its Subsidiaries is a party or by which it is bound obligating the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of share capital, partnership interests or similar ownership interests of the Company or any of its Subsidiaries. Except as disclosed in Section 2.3(d) of the Company Disclosure Letter, there are no registration rights and there is, except for the Voting Undertakings, no voting agreement or voting trust, proxy, rights plan, anti-takeover plan or other similar agreement or understanding to which the Company or any of its Subsidiaries is a party or by which they are bound with respect to any equity security of any class of the Company or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its Subsidiaries. Other than as contemplated in Section 350 of the Companies Law, shareholders of the Company will not be entitled to statutory dissenters’ or similar rights in connection with the Merger.

(e) The Company Shares are not listed for trading on the Tel Aviv Stock Exchange, or on any other foreign or domestic stock exchange (other than Nasdaq), nor has the Company applied to list its shares on any such stock exchange.

Section 2.4 Authority . The Company has all necessary corporate power and authority to execute and deliver this Agreement and, subject to obtaining the Section 350 Vote (as defined in Section 5.2(a)), to perform its obligations hereunder. The execution and delivery of this

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Agreement by the Company and the performance by the Company of its obligations hereunder have been duly and validly authorized by the board of directors of the Company, and, other than receipt of the Court Approval and an affirmative Section 350 Vote, no other corporate proceedings on the part of the Company are necessary to authorize this Agreement, for the Company to perform its obligations hereunder or for the Company to consummate the Transactions. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the Parent and Merger Sub, constitutes a legal and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting creditors’ rights generally and laws relating to the availability of specific performance, injunctive relief or other equitable remedies (the “ Bankruptcy and Equity Exception ”). Except for the Section 350 Vote or as may be required by the Applicable Court, no vote or approval of: (i) any single creditor of the Company; (ii) any holder of any option, note, restricted share, warrant or other convertible security granted by the Company; or (iii) any shareholder or noteholder of any of the Company’s Subsidiaries is necessary in order to approve this Agreement, or to approve or permit the consummation of the Merger and the other Transactions.

Section 2.5 No Conflict; Required Filings and Consents .

(a) The execution and delivery of this Agreement by the Company do not, the performance by the Company of its obligations under this Agreement or the consummation by the Company of the Transactions will not: (i) conflict with or violate the Company Charter Documents or the equivalent organizational documents of any of the Company’s Subsidiaries; (ii) subject to compliance with the requirements set forth in Section 2.5(b) and obtaining the Section 350 Vote, conflict with or violate any Legal Requirement applicable to the Company or any of its Subsidiaries or by which its or any of their respective properties is bound; or (iii) except as disclosed in Section 2.5 of the Company Disclosure Letter, 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 Company’s or any of its Subsidiaries’ rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, renegotiation, acceleration or cancellation of, or result in the creation of a Lien on any of the properties or assets of the Company or its Subsidiaries pursuant to, any Contract (as defined in Section 8.7(c)) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or its or any of their respective properties are bound, except in the case of clauses (ii) and (iii), any such conflicts, violations, defaults, impairments, alterations, rights, losses or Liens that individually or in the aggregate would not reasonably be expected to (x) be material to the Surviving Company and its Subsidiaries taken as a whole, (y) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (z) prevent or materially delay the consummation of the Transactions.

(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any franchises, grants, permits, licenses, variances, easements, consents, certificates, exemptions, orders and approvals and other authorizations from, or filing with or notification to, any Governmental

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Entity (“ Approvals ”) with respect to the Company or any of its Subsidiaries, except: (i) for: (A) compliance with applicable requirements of the Securities Act, the United States Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and United States state securities laws (“ Blue Sky Laws ”); (B) compliance with the pre merger notification requirements of non-United States Governmental Entities; (C) notice to or the consent of the Office of the Chief Scientist of the Israeli Ministry of Trade, Industry and Labor (“ OCS ”) to the change in ownership of the Company to be effected by the Merger (the “ OCS Approval ”); (D) to the extent required, approval of the Israeli Commissioner of Restrictive Trade Practices pursuant to the Restrictive Trade Practices Act, 1988 (the “ RTPA ”); (E) filings with, and approval by, the Investment Center of the Israeli Ministry of Trade, Industry and Labor (the “ Investment Center ”) of the change in ownership of the Company to be effected by the Merger (the “ Investment Center Approval ”); (F) compliance with the rules and regulations of Nasdaq; and (G) obtaining the Court Approval, and, (ii) where the failure to obtain such Approvals, or to make such filings or notifications, individually or in the aggregate with similar failures would not reasonably be expected to (x) be material to the Surviving Company and its Subsidiaries taken as a whole, (y) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (z) prevent or materially delay the consummation of the Transactions. As of the Closing Date the Company (i) does not have assets (calculated pursuant to the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, for purposes of determining the filing requirements thereunder) located in the United States with a value of $59.8 million or more, and (ii) did not have sales in or into the United States of a value of $59.8 million or more in its most recent fiscal year. As of the Closing Date the Company (i) did not, directly or indirectly, have sales in or into Israel of a value of NIS 10.0 million or more in its most recent fiscal year and (ii) could not reasonably be considered to be a “monopoly” with respect to the provision of any category of goods or services as defined in the RTPA.

Section 2.6 Compliance with Laws; Environmental Matters; Permits .

(a) Definitions . The following terms shall have the meanings set forth below:

(i) “ Hazardous Material ” is any material or substance that is prohibited or regulated by any Environmental Law or that has been designated by any Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to health, reproduction or the environment.

(ii) “ Environmental Laws ” are all applicable Legal Requirements promulgated by any Governmental Entity which prohibit, regulate or control any Hazardous Material or any Hazardous Material activity, including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Recovery and Conservation Act of 1976, the Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials Transportation Act, the Clean Water Act, the Israeli Abatement of Nuisances Law of 1961 and other comparable Legal Requirements.

(b) Compliance with Laws . Neither the Company nor any of its Subsidiaries is in default or violation of any Legal Requirement (including Environmental

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Laws and the Foreign Corrupt Practices Act of 1977) applicable to the Company or any of its Subsidiaries or by which its or any of their respective properties is bound, except for any defaults or violations that (individually or in the aggregate) would not cause the Company or any of its Subsidiaries to lose any benefit or incur any liability that is, in each case, material to the Company and its Subsidiaries taken as a whole. To the Company’s Knowledge, no action, demand, requirement or investigation (formal or informal) by any Governmental Entity, in each case with respect to the Company or any of its Subsidiaries or any of their respective properties, is pending or threatened, other than, in each case, those which if adversely determined, individually or in the aggregate, would not reasonably be expected to (i) be material to the Company and its Subsidiaries taken as a whole, (ii) impair in any material respect the ability of the Company to perform its obligations under this Agreement, or (iii) prevent or materially delay the consummation of any of the Transactions.

(c) Environmental Matters . Neither the Company nor any of its Subsidiaries has disposed of, released, discharged, stored or emitted any Hazardous Materials into the soil or groundwater at any properties owned or leased at any time by the Company or any of its Subsidiaries, or at any other property, or exposed any employee or other individual to any Hazardous Materials or any workplace or environmental condition, in each case in such a manner as would result in any liability or clean up obligation of any kind or nature to the Company that is material to the Company and its Subsidiaries taken as a whole. The first sentence of Section 2.6(b) (to the extent it relates to compliance with Environmental Laws) and Section 2.6(c) constitute the sole and exclusive representations and warranties of the Company regarding environmental matters, or liabilities or obligations, or compliance with Environmental Laws, relating thereto.

(d) Permits . The Company and its Subsidiaries hold all material Approvals that are required for them to own, lease or operate their assets and to carry on their businesses and that are material to the Company and its Subsidiaries taken as a whole. The Company and its Subsidiaries have been since January 1, 2004 and are in compliance in all material respects with the terms of such material Approvals.

Section 2.7 SEC Filings; Financial Statements; Internal Controls .

(a) The Company has filed or furnished, as applicable, on a timely basis all forms, statements, certifications, reports and documents required to be filed or furnished by it with the United States Securities and Exchange Commission (the “ SEC ”) under the Exchange Act or the Securities Act since the effective date of its registration statement on Form F-1 (the “ Applicable Company Date ”) (the forms, statements, reports and documents filed with or furnished to the SEC from the Applicable Company Date to the date of this Agreement, the “ Company Filed SEC Reports ”). Each Company Filed SEC Report, at its effective date (in the case of registration statements filed pursuant to the Securities Act), or at the time of its filing or being furnished (in the case of other Company Filed SEC Reports), or after an amendment was filed prior to the date of this Agreement, complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) as it is applicable to the Company. As of their respective dates (or, if amended prior to the date hereof, as of the date of such amendment) the Company Filed SEC Reports did not contain any untrue statement of a

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material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. Each English language translation of a non English language document filed as an exhibit to, or incorporated by reference into, any Company Filed SEC Report constitutes a true, correct and complete translation of the original document in all material respects.

(b) Neither the Company nor any of its Subsidiaries is or at any time has been required to file or furnish any forms, statements, certifications, reports and documents required to be filed with the Israeli Securities Authority under the Israeli Securities Law 1968 or any regulation promulgated thereunder.

(c) The Company is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of Nasdaq and with the corporate governance requirements of the Companies Law. Except as permitted by the Exchange Act, including Sections 13(k)(2) and (3), since the applicable provisions of the Sarbanes-Oxley Act became applicable to the Company, neither the Company nor any of its Subsidiaries has made, arranged or modified (in any material way) any extension of credit in the form of a personal loan to any executive officer or director of the Company or any of its Subsidiaries in violation of the Exchange Act.

(d) The Company maintains disclosure controls and procedures as required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is recorded, processed, summarized and reported on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents. The Company and its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any material differences. The Company’s management has disclosed to the Company’s auditors and the audit committee of the board of directors of the Company (A) any significant deficiencies in the design or operation of its internal controls over financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and has identified for the Company’s auditors and audit committee of the board of directors of the Company any material weaknesses in internal control over financial reporting and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. The Company has made available to the Parent (i) a summary of any such disclosure made by management to the Company’s auditors and audit committee since the Applicable Company Date, and (ii) any material communication since the Applicable Company Date made by management or the Company’s auditors to the audit committee required or contemplated by listing standards of Nasdaq, the audit committee’s charter or professional standards of the Public Company Accounting

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Oversight Board. Between the Applicable Company Date and the date of this Agreement, no material complaints from any source regarding accounting, internal accounting controls or auditing matters, and no material concerns from the Company employees regarding questionable accounting or auditing matters, have been received by the Company. The Company has made available to the Parent a summary of all such material complaints or concerns relating to other matters made since the Applicable Company Date through the Company’s whistleblower hot-line or equivalent system for receipt of employee or other Person’s concerns regarding possible violations of law by the Company or any of its Subsidiaries or any of their respective employees. Between the Applicable Company Date and the date of this Agreement, no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Company’s audit committee (or other committee designated for the purpose) of the board of directors or the board of directors of the Company pursuant to the rules adopted pursuant to Section 307 of the Sarbanes-Oxley Act or any Company policy contemplating such reporting, including in instances not required by those rules.

(e) The consolidated financial statements of the Company (including any related notes thereto) included or incorporated by reference in the Company Filed SEC Reports (as the same may have been restated or otherwise amended in a subsequent Company Filed SEC Report) comply as to form, as of their respective dates of filing with the SEC (or, in the case of amended or restated filings, as of the date of the latest amendment or restatement was filed with or furnished to the SEC), in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto (the “ Accounting Rules ”), have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) (except, in the case of unaudited statements, for the absence of footnotes) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of any interim statements, to normal year-end adjustments and to any other adjustments described therein including the notes thereto).

(f) The Company has previously furnished to the Parent a complete and correct copy of any amendments or modifications, which have not yet been filed with the SEC but which are required to be filed, to agreements, documents or other instruments which previously had been filed by the Company with the SEC pursuant to the Securities Act or the Exchange Act.

Section 2.8 No Undisclosed Liabilities . Neither the Company nor any of its Subsidiaries has any liabilities of any nature (whether accrued, absolute, contingent or otherwise), which, if known, would be required to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP or the notes thereto, except for liabilities (i) reflected in financial statements included in the Company Filed SEC Reports or in the notes thereto, (ii) incurred in connection with this Agreement or the

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Transactions, or (iii) incurred in the ordinary course of business since December 31, 2006, none of which would reasonably be expected to be material to the financial condition, business or results of operations of the Company and its Subsidiaries taken as a whole, and in the case of liabilities incurred after the date hereof, are incurred in compliance with the terms of this Agreement.

Section 2.9 Absence of Certain Changes or Events . Except for liabilities incurred in connection with this Agreement, between December 31, 2006 and the date of this Agreement, the Company and its Subsidiaries have conducted their business only in the ordinary course of business consistent with past practice. Since December 31, 2006 through the date hereof, except as disclosed in Section 2.9 of the Company Disclosure Letter, there has not been any damage, destruction or other casualty loss in excess of $1.0 million individually or in the aggregate with respect to any asset or property owned, leased or otherwise used by the Company or any of its Subsidiaries, whether or not covered by insurance. Subsequent to December 31, 2006, through the date hereof: (a) there has not been any Material Adverse Effect on the Company; (b) other than the Cash Distribution to be made pursuant to Section 5.12(a) and the repurchase by the Company of 274,776 of its Ordinary Shares, there has not been any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Company’s or any of its Subsidiaries’ share capital, or any purchase, redemption or other acquisition by the Company of any of the Company’s share capital or any other securities of the Company or its Subsidiaries or any options (other than Company Share Options in the ordinary course of business consistent with past practice), warrants, calls or rights to acquire any such shares or other securities; (c) there has not been any split, combination or reclassification of any of the Company’s or any of its Subsidiaries’ share capital; (d) there has not been any change by the Company in its accounting methods, principles or practices, except as required by changes in GAAP; (e) except as set forth in Section 2.9 of the Company Disclosure Letter, there has not been any sale, license or other transfer of any material assets of the Company or its Subsidiaries other than in the ordinary course of business consistent with past practice; (f) to the Company’s Knowledge, no key employee of the Company or its Subsidiaries as of the date hereof has communicated to the Company or any of its Subsidiaries (orally, in writing or otherwise) an intent to terminate or otherwise significantly decrease his or her contribution to the Company or its Subsidiaries; and (g) except as set forth in Section 2.9 of the Company Disclosure Letter, there has not been any material Tax election made or any material Tax claim, audit or assessment settled, in each case, other than in the ordinary course of business consistent with past practice, or any Tax ruling or arrangement applied for or received by the Company on its own behalf, whether or not in connection with the Merger, or to the Knowledge of the Company, on behalf of any of its shareholders in connection with the Merger, except as explicitly contemplated in this Agreement.

Section 2.10 Litigation . There is no suit, arbitration, action or proceeding pending or, to the Company’s Knowledge, threatened against the Company or any of its Subsidiaries that, individually or in the aggregate with similar suits, arbitrations, actions or proceedings, would reasonably be expected to be material to the Company and its Subsidiaries taken as a whole, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its Subsidiaries that is, or which would reasonably be expected to be, individually or in the aggregate with similar judgments, decrees, injunctions, rules or orders, material to the Company and its Subsidiaries taken as a whole. Section 2.10 of

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the Company Disclosure Letter sets forth, as of the date of this Agreement a complete list of all suits, arbitrations, actions or proceedings to which the Company, or its Subsidiaries or any of their assets are a party.

Section 2.11 Employee Matters and Benefit Plans .

(a) The following terms shall have the meanings set forth below:

(i) “ Company Employee Plan ” means any plan, program, policy, practice, contract, agreement or other arrangement, other than any written or unwritten Employment Agreement, providing for compensation, bonus, severance, termination pay, deferred compensation, incentive compensation, performance awards, stock or stock-related awards, fringe benefits, welfare benefits, unemployment benefits, retirement benefits, post-retirement benefits, or other employee benefits or remuneration of any kind (including, without limitation, each “employee benefit plan,” within the meaning of Section 3(3) of ERISA), whether written or unwritten, funded or unfunded, including 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 of its Subsidiaries for the benefit of any Employee, or with respect to which the Company or any of its Subsidiaries has or may have any liability or obligation in excess of $250,000 individually or in the aggregate including each International Employee Plan;

(ii) “ Employee ” means any current or former or retired employee, consultant or director of the Company or any of its Subsidiaries;

(iii) “ Employment Agreement ” means each written (or, where specified, unwritten) Contract between the Company or any of its Subsidiaries and any Employee pertaining to management, employment, severance, change in control, consulting, relocation, repatriation, expatriation, visa, work permit or any other matter;

(iv) “ ERISA ” means the Employee Retirement Income Security Act of 1974;

(v) “ ERISA Affiliate ” means any Subsidiary of the Company or other Person or entity under common control with the Company or any Subsidiary of the Company within the meaning of Section 414(b), (c), (m) or (o) of the Code; and

(vi) “ International Employee Plan ” shall mean each Company Employee Plan and each government-mandated plan or program that has been adopted or maintained by the Company or any of its Subsidiaries, whether informally or formally, or with respect to which the Company or any of its Subsidiaries will or may have any liability in excess of $250,000 individually or in the aggregate, for the benefit of Employees who perform services outside the United States. This shall include, in Israel: manager’s insurance; other provident or pension funds which are not government-mandated but were set up to provide for the Company’s legal obligation to pay statutory severance pay ( Pitzuay Piturim ) under the Severance Pay Law; disability insurance ( ovdan kosher avoda ) and any education fund ( keren hishtalmut ).

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(b) Section 2.11(b)(i) of the Company Disclosure Letter contains an accurate and complete list, as of the date hereof, of each Company Employee Plan other than legally-mandated plans, programs and arrangements, and Section 2.11(b)(ii) of the Company Disclosure Letter contains an accurate and complete list, as of the date hereof, of all Company Employees, setting forth the level of their compensation, a copy of each Employment Agreement with an executive officer of the Company, and a copy of each form used for Employment Agreements with Company Employees who are not executive officers. The Company does not have any plan or commitment to establish, adopt or enter into any new Company Employee Plan or Employment Agreement, or to modify any Company Employee Plan or Employment Agreement (except to the extent required by Legal Requirement or to conform any such Company Employee Plan or Employment Agreement to the requirements of any applicable Legal Requirement, in each case as previously disclosed to the Parent in writing or as required by this Agreement), or to adopt or enter into any Company Employee Plan or Employment Agreement. Except as set forth in Section 2.11(b) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is obligated to provide an Employee with any compensation or benefits pursuant to an agreement (for example, an acquisition agreement) with a former employer of such Employee.

(c) The Company has provided or made available to the Parent correct and complete copies of: (i) all documents embodying each Company Employee Plan and each written Employment Agreement for an executive officer of the Company and the form of each Employment Agreement for non-executive officers of the Company including all amendments thereto and all related documents (including, in the case of share option plans, the form of all share option agreements evidencing any outstanding Company Share Options); (ii) the most recent annual actuarial valuations, if any, prepared for each Company Employee Plan (including any International Employee Plan); (iii) the most recent annual report (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; (iv) the most recent summary plan description together with the summary(ies) of material modifications thereto, if any, with respect to each Company Employee Plan; (v) all determination, opinion, notification and advisory letters, if any, from the United States Internal Revenue Service (the “ IRS ”); (vi) all material correspondence to or from any Governmental Entity relating to any the Company Employee Plan; (vii) the three most recent plan years’ discrimination tests for each Company Employee Plan; (viii) any Approvals held by the Company which enable it to employ foreign employees; and (ix) with respect to any Company Employee Plan intended to qualify under Section 102 of the Ordinance, all applications to and approvals received from the Israel Tax Authority and related agreements with its existing trustees.

(d) The Company or the applicable Subsidiary has performed in all material respects all obligations required to be performed by it under, is not in material default or violation of, and has no Knowledge of any material default or violation by any other party to each Company Employee Plan and Employment Agreement, and each Company Employee Plan and Employment Agreement has been established and maintained in all material respects in accordance with its terms and in material compliance with all applicable Legal Requirements, including ERISA and the Code. There are no actions, suits,

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arbitrations, proceedings or claims pending, or, to the Company’s Knowledge, threatened or reasonably anticipated against any Company Employee Plan or with respect to any Employment Agreement or against the assets of any Company Employee Plan, except for claims for benefits in the ordinary course of business consistent with past practice. Each Company Employee Plan and Employment Agreement can be amended, terminated or otherwise discontinued after the Effective Time, without material liability to the Parent, the Surviving Company or any of their respective Subsidiaries (other than ordinary administration expenses), except as provided in such Company Employee Plans or Employee Agreements or as required by Legal Requirements. There are no audits, inquiries or proceedings pending or, to the Company’s Knowledge, threatened by any Governmental Entity with respect to any Company Employee Plan. All contributions, reserves or premium payments have been timely made or accrued with respect to each Company Employee Plan.

(e) Neither the Company nor any of its ERISA Affiliates has ever maintained, established, sponsored, participated in, contributed to, or is obligated to contribute to, or otherwise incurred any obligation or liability (including, without limitation, any contingent liability) under any “multiemployer plan,” as defined in and subject to Section 3(37) of ERISA, any plan subject to Title IV of ERISA or Section 412 of the Code, any multiple employer plan (as defined in and subject to ERISA or the Code), or any “funded welfare plan” within the meaning of and subject to Section 419 of the Code. Any Company Employee Plan intended to be qualified under Section 401(a) of the Code and each trust intended to qualify under Section 501(a) of the Code either (i) has timely applied for or obtained a favorable determination, notification, advisory and/or opinion letter, as applicable, as to its qualified status from the IRS, or (ii) still has a remaining period of time under applicable Treasury Regulations or IRS pronouncements in which to apply for such letter and to make any amendments necessary to obtain a favorable determination. For each Company Employee Plan that is intended to be qualified under Section 401(a) of the Code, to the Company’s Knowledge, there has been no event, condition or circumstance that has adversely affected or is likely to adversely affect such qualified status. Except as disclosed in Section 2.11(e) of the Company Disclosure Letter, no Company Employee Plan provides health benefits that are not fully insured through an insurance contract.

(f) No Company Employee Plan provides, or reflects or represents any liability to provide, benefits (including, without limitation, death or medical benefits), whether or not insured, with respect to any former or current employee, or any spouse or dependent of any such employee, beyond the employee’s retirement or other termination of employment with the Company and its Subsidiaries other than (1) coverage mandated by Part 6 of Title I of ERISA or Section 4980B of the Code or by Israeli Legal Requirements, (2) retirement or death benefits under any plan intended to be qualified under Section 401(a) of the Code, (3) disability benefits that have been fully provided for by insurance under a Company Employee Plan that constitutes an “employee welfare benefit plan” within the meaning of Section (3)(1) of ERISA, or (4) benefits in the nature of severance pay with respect to one or more of the employment contracts set forth on Section 2.11(b)(ii) of the Company Disclosure Letter.

(g) The Company and each of its Subsidiaries: (i) is not liable for any arrears of wages or penalties with respect thereto to any Employee; and (ii) is not liable for

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any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity, with respect to unemployment compensation benefits, 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 pending, or to the Company’s Knowledge, threatened or reasonably anticipated claims or actions against the Company under any worker’s compensation policy or long-term disability policy. Each current Employee who resides in the United States of America is an “at-will” employee whose employment can be terminated by the Company or the Subsidiary that employs the Employee at any time, with or without cause.

(h) No work stoppage or labor strike against the Company or any of its Subsidiaries is pending, or to the Company’s Knowledge, threatened or reasonably anticipated, and the Company does not know of any activities or proceedings of any labor union to organize any Employees. Neither the Company nor any of its Subsidiaries has engaged in any unfair labor practices within the meaning of and subject to the National Labor Relations Act. Neither the Company nor any of its Subsidiaries is presently, nor has it been in the past, 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 or any of its Subsidiaries.

(i) With respect to any International Employee Plans, (A) 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 Legal Requirements that are applicable to such International Employee Plan, (B) all International Employee Plans that are required to be funded are fully funded, and with respect to all other International Employee Plans, adequate reserves therefor have been established on the financial statements included in the Company Filed SEC Reports, and (C) no material liability or obligation of the Company and its Subsidiaries exists with respect to such International Employee Plans, except for unfunded liabilities that as of the Effective Time will be offset by insurance or fully reserved in accordance with GAAP. Except as required by Legal Requirement, no condition exists that would prevent the Surviving Company, its Subsidiaries or the Parent from terminating or amending any International Employee Plan at any time for any reason without liability to the Surviving Company(other than ordinary administration expenses or routine claims for benefits).

(j) Solely with respect to Employees who reside or work in Israel (“ Israeli Employees ”): (i) neither the Company nor any Subsidiary of the Company is a party to any collective bargaining contract, collective labor agreement or other contract or arrangement with a labor union, trade union or other organization or body involving any of its Israeli Employees, nor is otherwise required (under any legal requirement, under any contract or otherwise) to provide benefits or working conditions beyond the minimum benefits and working conditions required by law to be provided pursuant to rules and regulation of the Histadrut (General Federation of Labor), the Coordinating Bureau of Economic Organization and the Industrialists’ Association. Neither the Company nor any Subsidiary of the Company has recognized or received a demand for recognition from any collective bargaining representative with respect to any of its Israeli Employees. Except as disclosed in Section 2.11(j) of the Company Disclosure Letter, neither the Company nor any Subsidiary of the

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Company has or is subject to, and no Israeli Employee of the Company or any Subsidiary of the Company benefits from, any extension order ( tzavei harchava ) (other than extension orders of general applicability to all Employees in Israel) or any contract or arrangement with respect to employment or termination thereof; (ii) all of the Israeli Employees are “at will” employees subject to the termination notice provisions included in Employment Agreements or applicable Legal Requirements; (iii) except as disclosed in Section 2.11(b)(ii) of the Company Disclosure Letter there is no Contract between the Company or any Subsidiary of the Company and any of its Israeli Employees or directors that cannot be terminated by the Company or the applicable Subsidiary of the Company upon less than one month’s notice without giving rise to a claim for damages or compensation (except for statutory notice and severance pay); (iv) the Company’s or the applicable Subsidiary of the Company’s obligations to provide statutory severance pay to its Israeli Employees pursuant to the Severance Pay Law (5723-1963) (the “ Severance Pay Law ”) have been satisfied or have fully funded by contributions to appropriate insurance funds or accrued on the Company’s financial statements and the Company and the Subsidiaries of the Company do not use the provisions of Section 14 of the Severance Pay Law with respect to such statutory severance pay; (v) except as disclosed in Section 2.11(j) of the Company Disclosure Letter, the Company has no Knowledge of any circumstance that could give rise to any valid claim by a current or former Israeli Employee for compensation on termination of employment (beyond the statutory severance pay to which Employees are entitled or other payments due upon termination of employment under Israeli Legal Requirements); (vi) all amounts that the Company or any Subsidiary of the Company is legally or contractually required either (x) to deduct from its Israeli Employees’ salaries or to transfer to such Israeli Employees’ pension or provident, life insurance, incapacity insurance, continuing education fund or other similar funds or (y) to withhold from their Israeli Employees’ salaries and benefits and to pay to any Governmental Entity as required by the Ordinance and National Insurance Law or otherwise have, in each case, been duly deducted, transferred, withheld and paid, and the Company and the Subsidiaries of the Company are not in default of any outstanding obligation to make any such deduction, transfer, withholding or payment; and (vii) the Company and the Subsidiaries of the Company are in compliance in all material respects with all applicable legal requirements and contracts relating to employment, employment practices, wages, bonuses and other compensation matters and terms and conditions of employment related to its Israeli Employees, including The Prior Notice to the Employee Law 2002, The Notice to Employee (Terms of Employment) Law 2002, the Prevention of Sexual Harassment Law (5758-1998), and The Employment by Human Resource Contractors Law 1996. The Company and the Subsidiaries of the Company have not engaged any employees whose employment would require special Approvals, and, except as disclosed in Section 2.11(j) of the Company Disclosure Letter, there are no unwritten Company policies or customs which, by extension, could entitle Israeli Employees to benefits in addition to what they are entitled by law (including, by way of example but without limitation, unwritten customs concerning the payment of statutory severance pay when it is not legally required). The Company and the Subsidiaries of the Company have not engaged any consultants, sub-contractors or freelancers who, according to Israeli law, could reasonably be expected to be entitled to the rights of an employee vis a vis the Company or the applicable Subsidiary of the Company, including rights to severance pay, vacation, recuperation pay ( dmei havaraa ) and other employee-related statutory benefits. “ Israeli Employee ” shall be construed to include

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consultants, sales agents and other independent contractors who spend (or spent) a majority of their working time in Israel on the business of the Company or any of its Subsidiaries (each of whom shall be so identified in Section 2.11(j) of the Company Disclosure Letter) and would be deemed to be employees for purposes of Israeli labor laws. In addition, the Company has provided to the Parent: (i) a correct and complete summary of the calculations concerning the components of the Israeli Employees’ salaries, including any components which are not included in the basis for calculation of amounts set aside for purposes of statutory severance pay and pension; (ii) any and all agreements with human resource contractors, or with consultants, sub-contractors or freelancers; (iii) a summary of its policies, procedures and customs regarding termination of Israeli Employees; and (iv) a summary of any dues it pays to the Histadrut Labor Organization and whether the Company or a Subsidiary of the Company participates in the expenses of any workers committee ( Va’ad Ovdim ).

Section 2.12 Information Supplied . None of the information supplied by the Company for inclusion or incorporation by reference in any document submitted to the Applicable Court or the Company’s shareholders or, if applicable, creditors, in connection with obtaining the Court Approval, including the Information Statement (as defined in Section 5.2(a)) (a “ Company Disclosure Document ”), at the time filed (as amended or supplemented), at the time provided to such shareholders or, if applicable, creditors, or at the time of the Company Meetings (as defined in Section 5.2(a)), will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. The Company Disclosure Documents will comply as to form in all material respects with any applicable requirements of the Companies Law and all other applicable Legal Requirements. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by the Parent or Merger Sub which is contained or incorporated by reference in the Company Disclosure Documents.

Section 2.13 Restrictions on Business Activities . There is no Contract, arrangement, understanding, judgment, injunction, order or decree binding upon the Company or its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or could reasonably be expected to have the effect of prohibiting or impairing any material business practice of the Surviving Company or any of its Subsidiaries, the conduct of business by the Surviving Company or any of its Subsidiaries as currently conducted by the Company and its Subsidiaries, or any acquisition of property by the Surviving Company or any of its Subsidiaries, except for generally applicable Legal Requirements.

Section 2.14 Property . Neither the Company nor any of its Subsidiaries owns any real property. The Company and each of its Subsidiaries have good and defensible title to, or in the case of leased properties and assets, valid leasehold interests in, all of their properties and assets that are material to the Company and its Subsidiaries taken as a whole, free and clear of all Liens except for Permitted Liens. This Section 2.14 does not cover intellectual property assets or rights. All leases pursuant to which the Company or any of its Subsidiaries lease from others material real or personal property are valid and effective in accordance with their respective terms, and except as set forth in Section 2.14 of the Company Disclosure Letter there is not, under any of such leases, any existing default or event of default of the Company or any of its

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Subsidiaries or, to the Company’s Knowledge, any other party (or any event which with notice or lapse of time, or both, would constitute a default and in respect of which the Company or any of its Subsidiaries has not taken adequate steps to prevent such default from occurring) that, in each case would be material to the Company and its Subsidiaries taken as a whole. All of the equipment of the Company and its Subsidiaries which is in regular use and which is material to the business of the Company and its Subsidiaries has been maintained in good operating condition and repair, reasonable wear and tear excepted, except for such failures to be in good operating condition and repair that would not, either individually or in the aggregate, reasonably be expected to materially impact the operation of the business of the Company and its Subsidiaries, taken as a whole. The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any franchises, grants, permits, licenses, variances, easements, consents, certificates, exemptions, orders and approvals and other authorizations from, or filing with or notification to, the Israel Lands Administration.

Section 2.15 Taxes .

(a) For purposes of this Agreement, “ Tax ” or, collectively, “ Taxes ”, means: (i) any and all United States, federal, provincial, state, local, Israeli and other foreign 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, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, linkage for inflation, 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) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including any liability under United States Treas. Reg. Section 1.1502-6 or any comparable provision of Israeli or other foreign, state or local law); and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify any other Person or as a result of any obligations under any agreements or arrangements with any other Person with respect to such amounts and including any liability for taxes of a predecessor entity.

(b) (i) The Company and each of its Subsidiaries has timely filed, or has caused to be timely filed on its behalf, taking into account properly obtained extensions of time to file, all material United States, federal, state, local, Israeli and other foreign returns, estimates, declarations, information statements and reports, including all exhibits and schedules thereto relating to Taxes (“ Returns ”) required to be filed by the Company and each of its Subsidiaries with any Tax authority, and such Returns are true and correct in all material respects and have been completed in material accordance with applicable Legal Requirements. The Company and each of its Subsidiaries have paid all Taxes shown on such Returns that are due. Full copies of all income and franchise and other material Returns, as filed prior to the date hereof by or on behalf of the Company and its Subsidiaries for each reporting period ending on or after December 31, 2001, and any amendments thereto, have been made available to the Parent and full copies of any such filing made subsequent to the date hereof and prior to the Closing will be made available to the Parent.

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(ii) The Company and each of its Subsidiaries (A) has paid or accrued under GAAP all material Taxes it is required to pay or accrue under applicable Legal Requirements and (B) has withheld from each payment or deemed payment made to its past or present employees, officers, directors and independent contractors, suppliers, creditors, shareholders or other third parties all material Taxes and other material deductions required to be withheld and has, within the time and in the manner required by Legal Requirements, paid such withheld amounts to the proper governmental authorities.

(iii) Neither the Company nor any of its Subsidiaries has been delinquent in the payment of any material Tax deficiency outstanding, or to the Company’s Knowledge, proposed or assessed against the Company, nor has the Company nor any of its Subsidiaries executed any waiver of any statute of limitations on or extensions of the period for the assessment or collection of any material Tax.

(iv) Except as disclosed in Section 2.15(b)(iv) of the Company Disclosure Letter, no audit or other examination of any Return of the Company or any of its Subsidiaries is currently in progress, nor has the Company or any of its Subsidiaries been notified of any request for such an audit or other examination, nor is any taxing authority (including for these purposes the Investment Center with respect to the Company’s status as an “ Approved Enterprise ” under Israel’s Law for the Encouragement of Capital Investment, 1959) asserting, or to the Company’s Knowledge, threatening to assert, against the Company or any of its Subsidiaries any claim for material Taxes. There are no matters relating to material Taxes under discussion between any taxing authority and the Company or any of its Subsidiaries.

(v) No material adjustment that is still pending relating to any Returns filed by the Company or any of its Subsidiaries (and no claim by a taxing authority in a jurisdiction in which the Company does not file Returns that the Company or any of its Subsidiaries may be subject to taxation by such jurisdiction) has been proposed, formally or, to the Company’s Knowledge, informally, by any taxing authority to the Company or any of its Subsidiaries or, to the Company’s Knowledge, to any of the Company’s accountants, attorneys or other advisors or representatives.

(vi) Neither the Company nor any of its Subsidiaries has any liability for unpaid Taxes which are material to the Company and its Subsidiaries which has not been accrued for or reserved on the most recent Company balance sheet in accordance with GAAP, whether asserted or unasserted, contingent or otherwise, other than any liability for unpaid Taxes that may have accrued since the date of the Company’s most recent balance sheet in connection with the operation of the business of the Company and its Subsidiaries in the ordinary course of business consistent with past practice.

(vii) There is no provision of any Contract, including any provision of this Agreement that, individually or in the aggregate, could give rise to the payment of any material amount that would not be deductible by the Company or any of its Subsidiaries as an expense pursuant to Section 162(m) of the Code, to the extent applicable, nor has the Company made any material payment of any amount that would not be deductible as an expense pursuant to Section 404 of the Code, to the extent applicable.

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(viii) Except as set forth in Section 2.15(viii) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries: (A) has ever been a member of an affiliated group filing a consolidated Return, except for the affiliated group, the parent of which is the Company; (B) is a party to any Tax sharing or Tax allocation agreement, arrangement or understanding (other than customary tax indemnifications contained in credit or other commercial agreements the primary purpose of which agreements does not relate to Taxes) and does not owe any amount under any such agreement, other than this Agreement; and (C) is liable for the Taxes of any other Person under United States Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, Israeli or other foreign law), as a transferee or successor, by contract or otherwise, except for liability created as a result of being a member of the affiliated group, the parent of which is the Company.

(ix) There are no material Liens on the assets of the Company or any of its Subsidiaries relating to or attributable to Taxes.

(x) Except as otherwise contemplated by Section 5.5 or as set forth in Section 2.15(x) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has requested or received a ruling from any taxing authority or signed a closing or other agreement with any taxing authority. The Company has made available to the Parent accurate and complete copies of any Tax ruling applications submitted or obtained by it from the Israeli tax authorities, including with respect to Company Options.

(xi) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code: (A) in the two years prior to the date of this Agreement or; (B) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Merger.

(xii) To the Company’s Knowledge, it qualifies as an “Industrial Company” according to the meaning of that term in the Law for the Encouragement of Industry (Taxes), 1969, and, to the Company’s Knowledge, the consummation of the Merger will not have any adverse effect on such qualification as an Industrial Company.

(xiii) Section 2.15(b)(xiii) of the Company Disclosure Letter lists each material Tax incentive, subsidy or benefit granted to or enjoyed by the Company and its Subsidiaries under the laws of the State of Israel, the period for which such Tax incentive, subsidy or benefit applies, and the nature of such Tax incentive. The Company and its Subsidiaries have complied with all material requirements of Israeli law to be entitled to claim such incentives, subsidies or benefits. To the Company’s Knowledge, subject to receipt of the Investment Center Approval and other Approvals required as explicitly set forth herein, consummation of the Merger will not adversely affect the

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continued qualification for the incentives, subsidies or benefits or the terms or duration thereof or require any recapture of any previously claimed incentive, subsidy or benefit and no consent or approval of any Governmental Entity is required prior to the consummation of the Merger in order to preserve the entitlement of the Surviving Company or its Subsidiaries to any such incentive, subsidy or benefit.

(xiv) To the Company’s Knowledge, except for limitations under Sections 269, 382, 383 and 384 of the Code resulting from the Transactions, the consummation of the Merger will not adversely affect the Surviving Company’s ability to set off for Tax purposes in the future any and all losses accumulated by the Company as of the Closing Date.

(xv) Except as disclosed in Section 2.15(b)(xv) of the Company Disclosure Letter, all of the funds currently invested through Saifun (BVI) Limited can effectively be repaid or otherwise distributed to the Company without incurring any Tax or penalty as a consequence of such repayment or distribution.

(xvi) Except as disclosed in Section 2.15(b)(xvi)-1 of the Company Disclosure Letter, the Company and its Subsidiaries are in compliance, in all material respects, with all transfer pricing requirements in all jurisdictions in which any of them do business. Except as disclosed in Section 2.15(b)(xvi)-2 of the Company Disclosure Letter, none of the transactions between the Company or its Subsidiaries and other related Persons (including such Subsidiaries) would reasonably be expected to be subject to adjustment, apportionment, allocation or recharacterization under Section 85A of the Ordinance and the regulations promulgated thereunder or any Legal Requirement, and all of such transactions have been effected on an arm’s length basis. The Company has made available to Parent all material intercompany Contracts relating to transfer pricing.

(xvii) Except as contemplated in Section 5.5 or as disclosed in Section 2.15(b)(xvii) of the Company Disclosure Letter, neither the Company nor any Subsidiary has requested or received a ruling from any Tax authority or signed a closing or other agreement with any Tax authority, nor to the Company’s Knowledge has any shareholder of the Company or anyone acting on its or their behalf requested or received a ruling from any Tax authority or signed a closing or other agreement with any Tax authority in relation to its holdings in the Company which ruling or agreement could reasonably be expected to impose any restriction, limitation or negative consequence on the Company or would reasonably be expected to delay or negatively impact the Merger and the Transactions. The Company has made available to the Parent accurate and complete copies of any Tax ruling obtained from the Israeli Tax authorities and applications therefore, including without limitation with respect to Company Options.

(xviii) The Company and its shareholders are not subject to any restrictions or limitations pursuant to Part E2 of the Income Tax Ordinance or pursuant to any tax ruling made with reference to the provisions of Part E2.

(xix) Except as set forth in Section 2.15 of the Company’s Disclosure Letter, the Company has not undertaken since January 1, 2007 any transaction which will

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require, to the Company’s Knowledge, special reporting in accordance with the Income Tax Regulations (Tax Planning Requiring Reporting) (Temporary Provisions), 2006 regarding aggressive tax planning, and none of the Subsidiaries has participated in, or is currently participating in a similar transaction under any corresponding or similar Legal Requirement.

Section 2.16 Brokers . No broker, investment banker, financial advisor or other Person, other than Lehman Brothers (“ Lehman Brothers ”), the fees and expenses of which will be paid by the Company pursuant to the engagement letter dated August 15, 2007 (a true and correct copy of which has been made available to the Parent), is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.

Section 2.17 Intellectual Property .

(a) The following terms have the meanings set forth below:

(i) “ Intellectual Property Rights ” means any and all worldwide, common law and/or statutory rights in, arising out of, or associated with: (A) all United States and foreign patents and utility models and applications therefor and all reissues, divisions, re examinations, renewals, extensions, provisionals, continuations and continuations in part thereof, and equivalent or similar rights anywhere in the world in inventions and discoveries including invention disclosures (“ Patents ”); (B) all inventions (whether or not patentable), improvements, technology, tools, methods (including testing and manufacturing methodology), processes, technical data, customer and supplier lists, trade secrets and other rights in know how and confidential or proprietary information, in each case excluding any rights in respect of any of the foregoing that are protected by Patents; (C) all databases, data compilations and collections and technical data; (D) all works of authorship including computer programs, source code and executable code, whether embodied in software, firmware or otherwise, development tools, documentation, designs, files, records, schematics, copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto (“ Copyrights ”); (E) all mask works, mask work registrations and applications therefor, and any equivalent or similar rights in semiconductor masks, layouts, architecture or topology (“ Mask Works ”); (F) all industrial designs and any registrations and applications therefor throughout the world; (G) all uniform resource locators, e mail addresses, web addresses and sites, and other internet addresses and domain names and applications and registrations therefore (“ URLs ”); all trade names, logos, trade dress, common law trademarks and service marks, trademark and service mark registrations and applications therefor and all goodwill associated therewith (“ Trademarks ”); (H) all “moral” or economic rights of authors and inventors, however denominated throughout the world; (I) any similar, corresponding or equivalent rights to any of the foregoing and (J) all instantiations of any tangible items in the foregoing in any form and embodied in any media.

(ii) “ Company Intellectual Property ” means any Intellectual Property Rights that are owned by, purported by the Company or any of its Subsidiaries to be owned by, or exclusively licensed to, the Company or any of its Subsidiaries, including the Company Registered Intellectual Property Rights.

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(iii) “ Registered Intellectual Property Rights ” means all United States, international and foreign: (A) issued Patents and pending Patent applications; (B) registered Trademarks, pending applications to register Trademarks, including intent to use applications; (C) Copyright registrations and pending applications to register Copyrights; and (D) Mask Works registrations and pending applications to register Mask Works; and (E) any other Intellectual Property Right that is the subject of a pending application filed with, or recorded by, the applicable Governmental Entity at any time.

(b) Section 2.17(b) of the Company Disclosure Letter lists, accurately and completely as of the date hereof, all Registered Intellectual Property Rights owned by, or filed in the name of, or applied for by the Company or any of its Subsidiaries (the “ Company Registered Intellectual Property Rights ”) and lists any past and current proceedings or actions before any court, tribunal (including the United States Patent and Trademark Office (the “PTO”) or equivalent authority anywhere in the world, other than office actions and similar procedures in the ordinary course of patent prosecution), related to any of the Company Registered Intellectual Property Rights or the Company Intellectual Property owned by the Company or any of its Subsidiaries.

(c) The Company has no Knowledge of any facts or circumstances that would render any of the Company Registered Intellectual Property Rights invalid or unenforceable. Without limiting the foregoing, to the Knowledge of the Company, neither the Company nor any of its Subsidiaries has misrepresented, or failed to disclose, any facts or circumstances in any application for any Company Registered Intellectual Property Right that would constitute fraud or a misrepresentation with respect to such application or that would otherwise affect the validity or enforceability of any Company Registered Intellectual Property Right.

(d) Each item of Company Registered Intellectual Property Rights is, to the Knowledge of the Company, valid and subsisting, and all necessary registration, maintenance and renewal fees currently due 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 which are due to be filed have been filed with the relevant patent, trademark or other relevant authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Company Registered Intellectual Property Rights, except as would not reasonably be expected to materially affect the Company’s or the applicable Subsidiary’s rights in such Company Registered Intellectual Property Rights. In each case in which the Company or any of its Subsidiaries has acquired ownership of any Intellectual Property Right from any Person (including third parties as well as employees and independent contractors or consultants of the Company or any of its Subsidiaries), the Company or such Subsidiary has obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in such Intellectual Property Right without reservations or restrictions to the Company or such Subsidiary and with respect to Registered Intellectual Property Rights acquired by the Company or any of its Subsidiaries, the Company or such Subsidiary has recorded each such

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assignment with the relevant Governmental Entities, including the PTO, the U.S. Copyright Office, or their respective equivalents in any relevant foreign jurisdiction, as the case may be. Neither the Company nor any of its Subsidiaries has claimed a particular status, including “Small Business Status,” in the application for any Intellectual Property