ASSET PURCHASE AGREEMENT

Exhibit 10.2

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS

OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN

SEPARATELY FILED WITH THE COMMISSION.

ASSET PURCHASE AGREEMENT

By and Among

CAMBRIDGE DISPLAY TECHNOLOGY, INC.,

NEXT SIERRA, INC.

and

CERTAIN STOCKHOLDERS OF NEXT SIERRA, INC.

Dated as of December 22, 2006

TABLE OF CONTENTS

i

ii

iii

iv

v

This Asset Purchase Agreement (together with the Exhibits and Schedules, and as amended, modified or supplemented from time to time, this “ Agreement ”) dated as of December 22, 2006 is by and among Next Sierra, Inc., a California corporation (“ Seller ”), Seller’s stockholders listed on the signature pages of this Agreement (the “ Stockholders ”) and Cambridge Display Technology, Inc., a Delaware corporation (“ Purchaser ”). Capitalized terms used in this Agreement are defined in Section 1.01 or otherwise referenced in Section 1.02.

RECITALS

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, on the terms and subject to the conditions set forth herein, the assets of Seller described herein, and Seller wishes Purchaser to assume certain of Seller’s liabilities, which Purchaser would agree to assume on the terms and subject to the conditions set forth herein;

WHEREAS, each of the Stockholders has agreed to approve the sale of all or substantially all of the assets of Seller and this Agreement and the other Transaction Agreements to which such Stockholder is, or is specified to be, a party at Closing, subject to the conditions set forth herein and therein;

WHEREAS, as a condition and inducement to Purchaser to enter into this Agreement and incur the obligations set forth herein, concurrently with Closing, the Designated Employees have entered into employment agreements with Purchaser and each of Page and Seller shall have entered into agreements with Purchaser not to compete, in each case as provided herein;

WHEREAS, the parties hereto desire to make certain representations, warranties and agreements in connection with this Agreement and the other Transaction Agreements to which each is, or is specified to be, a party at Closing and also to prescribe various conditions to this Agreement and the other Transaction Agreements and the transactions contemplated hereby and thereby.

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, and intending to be legally bound, Seller, the Stockholders and Purchaser hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Certain Defined Terms . For purposes of this Agreement:

“ Action ” means any claim, action, suit, arbitration, inquiry, proceeding, or investigation by or before any arbitration tribunal or Governmental Authority.

“ Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

“ Assumed Contracts ” means the contracts set forth (or, in the case of oral contracts, a description of the material terms of which are set forth) on Schedule 1.01 .

“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in The City of New York.

“ CDT Shares ” means the shares of Purchaser Common Stock deliverable to Seller pursuant to and in accordance with the terms of this Agreement.

“ Closing CDT Shares Purchase Price ” means an amount equal to $160,000 payable in CDT Shares.

“ Code ” means the Internal Revenue Code of 1986, as amended through the date hereof.

“ Commission ” means the United States Securities and Exchange Commission.

“ Constructive Termination ” means, with respect to any Designated Employee, any of the following: (i) any material adverse change in the title, responsibilities or authority of such Designated Employee; (ii) any material reduction in or failure to pay such Designated Employee’s compensation or material reduction in or failure to provide agreed benefits, each as set forth in such Designated Employee’s Employment Agreement; (iii) relocation of such Designated Employee’s own office more than 25 miles from its location as of the date hereof (or from such other locations to which such Designated Employee agreed to relocate); or (iv) Purchaser’s instruction to such Designated Employee to perform duties in violation of law; provided, however, that no act or omission described in clauses (i) through (iv) above shall constitute Constructive Termination with respect to such Designated Employee unless such Designated Employee gives Purchaser written notice of such act or omission and Purchaser fails to cure such act or omission within 30 days after delivery of such notice (except that such Designated Employee shall not be required to provide such notice more than once in cases of repeated acts or omissions).

“ control ” (including the terms “ controlled by ” and “ under common control with ”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise.

“ Conveyance Taxes ” means any (i) sales, use, value added, transfer, stamp, stock transfer, real property transfer, documentary, recording, conveyance, personal property transfer, intangible property transfer, gross receipts, registration, duty or similar fees or Taxes or governmental charges (together with any interest or penalty, addition to Tax or additional amount imposed), including any payments made in lieu of any such amounts, (ii) liability for the payment of any amounts of the type described in clause (i) as a result of being a member of an affiliated, consolidated, combined, unitary or aggregate group and (iii) liability for the payment of any amounts as a result of an express or implied obligation to indemnify any other person with respect to the payment of any amounts of the type described in clause (i) or (ii).

2

“ Designated Employees ” means Page, Stefan Wurster, Gordon Priatko, David Warren and Kathy Guerra.

“ Encumbrance ” means any security interest, pledge, hypothecation, mortgage, lien (including environmental and Tax liens), charge, lease, license, encumbrance, easement, adverse claim, reversion, restrictive covenant, condition or restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, other than any license of Intellectual Property.

“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.

“ Exploit ” means to make, have made, offer to sell, sell, have sold, use, import, make public, reproduce, transmit, extract, distribute (by sale or other transfer, or by rental, lease or lending), prepare derivative works of (including, without limitation, translation, dubbing or undertitling), perform or display publicly, and including the right to have done and authorize third parties to do any of the aforementioned acts.

“***”

“ First Milestone ” means a proof of concept system for the TMA Project comprised of “***”

“ First Milestone Amount ” means an amount equal to $ “***” payable in CDT Shares, subject to reduction as set forth in Section 2.03(b).

“ First Milestone Completion Date ” means the date of completion of the First Milestone to the reasonable satisfaction of Purchaser, but only if such date is no later than “***”; provided, however, that if “***”, then such date of “***” shall be extended by the number of days from “***” to the date that “***”, but in no event later than “***”; provided further, however, that any of the dates referred to in this defined term may be extended by Purchaser in its sole discretion.

“ Governing Documents ” means, with respect to a Person, (i) its articles or certificate of incorporation and bylaws (or equivalent creation, formation, or organizational documents) and (ii) any amendment or supplement to the foregoing.

“ Governmental Authorizations ” means any governmental authorization arising out of or relating to any of the Purchased Assets or Seller’s business.

“ Governmental Order ” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“ Indebtedness ” means, with respect to any Person, (a) all obligations of such Person for principal of, interest on, and premium (if any), whether or not contingent, for

***    CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

3

borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (e) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities and (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (g) all Indebtedness of others referred to in clauses (a) through (f) above guaranteed directly or indirectly in any manner by such Person.

“ Indemnity Percentage ” means for each Stockholder, the percentage set forth opposite the name of such Stockholder on Schedule A.

“ Intellectual Property ” means:

(a) all patents (including all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof), patent applications, registered and unregistered inventions and discoveries that may be patentable (collectively, “ Patents ”);

(b) the names, all fictional business names, trading names, logos, slogans, registered and unregistered trademarks, registered and unregistered service marks, registered and unregistered trade names, registered and unregistered trade dress and registered and unregistered domain names, together with the goodwill associated therewith, and any registrations or applications for registration of trademarks or service marks (collectively, “ Marks ”);

(c) all works of authorship, copyrights in published and unpublished works, including, without limitation, copyrights in computer software, and any registrations or applications for registration of such copyrights (collectively, “ Copyrights ”); and

(d) all know-how, trade secrets, confidential and proprietary information, customer lists, software, technical information, data, process technology, product designs, drawings, plans and blue-prints (collectively, “ Trade Secrets ”).

“ IRS ” means the Internal Revenue Service of the United States.

“ Law ” means any federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, Governmental Order, requirement or rule of law (including common law).

“ Lease ” means that certain lease dated as of June 4, 2003 by and between MV TECHNOLOGY PARK, LLC, a Delaware limited liability company (successor to Mountain View Technology Park, LLC), and Seller.

“ Liabilities ” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including

4

those arising under any Law, Action or Governmental Order and those arising under any contract, agreement, arrangement, commitment or undertaking.

“ Licensed Intellectual Property ” means all Intellectual Property that Seller is licensed to use pursuant to Seller IP Agreements.

“ Losses ” means (i) in the case of Article VIII, all losses, damages, costs and reasonable expenses (including reasonable fees and expenses of counsel including both those incurred in connection with the defense or prosecution of the indemnifiable claim and those incurred in connection with the enforcement of Article VIII, whether or not related to a Third Party Claim) and (ii) in the case of Article X, any losses, claims, damages, expenses or liabilities (including reasonable fees and expenses of counsel).

“ Material Adverse Effect ” means any change, event, violation, inaccuracy, circumstance or effect (whether alone or together with other changes, events, violations, inaccuracies, circumstances or effects) that is or would reasonably be expected to be materially adverse to the condition (financial or otherwise), properties, assets (including intangible assets), business, liabilities, results of operations or prospects of Seller, including any change that results from changes affecting generally the industry or industries in which Seller participates or the U.S. economy as a whole.

“ Owned Intellectual Property ” means all Intellectual Property owned by Seller.

“ Page ” means Mr. Richard A. Page, President and Chief Financial Officer of Seller.

“ Person ” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.

“ Purchaser Common Stock ” means Purchaser’s common stock, par value $0.01 per share.

“ Representative ” means, with respect to a particular Person, any accountant, advisor (financial or otherwise), agent, consultant, director, employee, legal counsel, manager, officer or other representative of that Person and, with respect to Purchaser, also means any prospective lender and their accountants, advisors (financial or otherwise), agents, consultants, directors, employees, legal counsel, managers, officers or other representatives.

“ Second Milestone ” means “***”

“ Second Milestone Amount ” means an amount equal to $”***” payable in CDT Shares “***” in CDT Shares valued in accordance with Section 2.02(b), subject to reduction as set forth in Section 2.03(b).

***    CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

5

“ Second Milestone Completion Date ” means the date of completion of the Second Milestone to the reasonable satisfaction of Purchaser, but only if such date is no later than “***”; provided, however, that if the First Milestone Completion Date has been extended by a number of days because the Drivers have not been supplied as provided in the defined term therefor, then the Second Milestone Completion Date shall be extended by the same number of days; provided further, however, that any of the dates referred to in this defined term may be extended by Purchaser in its sole discretion.

“ Securities Act ” means the United States Securities Act of 1933, as amended.

“ Security Deposit Amount ” means $“***”.

“ Seller IP Agreements ” means all contracts and agreements relating to Intellectual Property, to which Seller is a party or by which Seller is bound, including, without limitation, any licenses of Intellectual Property relating to the Purchased Assets (i) from Seller to any third party and (ii) to Seller from any third party, except for any licenses implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $5,000 under which Seller is a licensee.

“ Seller Representative ” means a Person that (a) is acting as a trustee or other representative of Seller, as designated in writing to Purchaser by or on behalf of Seller, to receive the Purchase Price (or any portion thereof), (b) is neither a Stockholder or an Affiliate, relative, spouse or relative of such spouse of such Stockholder nor has the same principal residence as such Stockholder and (c) is reasonably satisfactory to Purchaser.

“ Seller Intellectual Property ” means the Owned Intellectual Property and the Licensed Intellectual Property.

“ Subsidiary ” means any Person of which Seller (a) owns, directly or indirectly, (i) 50% or more of the outstanding common stock or other interests, the holder of which is entitled to vote for the election of the board of directors or other governing body of such Person or (ii) outstanding common stock or other interests having the power to elect a majority of such Person’s board of directors or other governing body or (b) otherwise has the power to direct the business and policies.

“ Tax ” or “ Taxes” means (i) any taxes of any kind, including, without limitation, those on or measured by or referred to as income, gross receipts, capital, sales, goods and services, use, ad valorem, franchise, profits, stamp, license, withholding, employment, payroll, premium, value added, property or windfall profits taxes, surtaxes, environmental, transfer taxes, social security taxes, national health contributions, pension and employment insurance contributions, customs, duties or similar fees, assessments or charges of any kind whatsoever (together with any interest or penalties, additions to tax or additional amounts imposed) by any Governmental Authority, including any payments made in lieu of any such Taxes or governmental charges and (ii) liability for the payment of any amounts of the type described in clause (i) as a result of being a member of an affiliated, consolidated, combined, unitary or

***    CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

6

aggregate group and (iii) liability for the payment of any amounts as a result of an express or implied obligation to indemnify any other person with respect to the payment of any amounts of the type described in clause (i) or (ii).

“ Tax Return ” means any return, declaration, report, election, statement or information return and including any amendment, schedule, attachment, part, supplement, appendix and exhibit thereto, made, prepared, filed or required to be filed with any Governmental Authority with respect to Taxes.

“ TMA Project ” means Purchaser’s project to develop its total matrix addressing technology into commercial applications for organic light emitting diodes.

“ Transaction Agreements ” means, collectively, this Agreement, the Bills of Sale, the Employment Agreements, the Page Noncompete Agreement and the Seller Noncompete Agreement.

“***”

“***”

Definitions. The following terms have the meanings set forth in the Sections set forth below:

***    CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

7

SECTION 1.02. Interpretation and Rules of Construction . In this Agreement, except to the extent otherwise provided or that the context otherwise requires:

(a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated;

(b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;

(c) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”;

(d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

8

(e) all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein;

(f) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;

(g) references to a Person are also to its successors and permitted assigns; and

(h) the use of “or” is not intended to be exclusive unless expressly indicated otherwise.

ARTICLE II

PURCHASE AND SALE

SECTION 2.01. Purchased Assets

(a) Subject to the terms and conditions of this Agreement, in reliance on the representations, warranties, covenants and agreements of Purchaser made hereunder, and in consideration of the purchase by Purchaser described herein, at Closing, and effective as of the Closing Date, Seller shall sell, convey, transfer, assign and deliver to Purchaser, free and clear of all Liabilities and Encumbrances, and Purchaser shall purchase and acquire from Seller, all of Seller’s right, title and interest in, to and under all of Seller’s assets (including, without limitation, the Seller’s Intellectual Property), privileges, properties and rights, real, personal or mixed, tangible or intangible, of every character, description and kind, wherever located, arising out of or relating to Seller’s business, including those listed on Schedule 2.01(a) , but expressly excluding the Excluded Assets (collectively, the “ Purchased Assets ”). Notwithstanding the foregoing, the sale, conveyance, transfer, assignment and delivery of the Purchased Assets pursuant to this Agreement shall not include the assumption of any Liability relating to any of the Purchased Assets unless Purchaser expressly assumes such Liability pursuant to Section 2.01(c).

(b) Excluded Assets . Notwithstanding anything contained in Section 2.01(a) or elsewhere in this Agreement to the contrary, the right, title and interest of Seller in, to and under the assets listed on Schedule 2.01(b ) (collectively, the “ Excluded Assets ”) are not part of the Purchased Assets.

(c) No Liabilities . Notwithstanding anything in this Agreement to the contrary, except to the extent set forth in Section 2.01(d), Purchaser shall not assume any, and Seller shall be responsible for the discharge, payment, performance, retention and satisfaction of all, Liabilities of Seller, including those arising out of or relating to this Agreement and the transactions contemplated hereby.

(d) Assignments . On the terms and subject to the conditions set forth in this Agreement and the other Transaction Agreements, at Closing, Seller shall transfer, assign and convey to Purchaser all of its rights and obligations under the Purchased Assets and Purchaser shall accept the assignment of all of Seller’s rights and obligations thereunder, in each case to the

9

extent such obligations arise out of and relate to any period after the Closing Date. Notwithstanding the foregoing, Seller shall assign such rights and obligations only to the extent that such rights and obligations are assignable under such Assumed Contracts and Governmental Authorizations and applicable Law, and no action hereunder shall constitute an assignment thereof except to such extent or if such assignment would otherwise constitute a breach or other contravention of the rights of a third party, would be ineffective with respect to any party to such Assumed Contract or Governmental Authorization or would in any way adversely affect the rights of Purchaser under such Assumed Contract or Governmental Authorization. To the extent the consent of any Person is required pursuant to the terms of such Assumed Contract or Governmental Authorization or applicable Law, no assignment or attempted assignment will be deemed to have been effected by the provisions of this Agreement until such consent is obtained. Seller and Purchaser shall cooperate with each other to effect any reasonable arrangement designed to provide Purchaser the benefit of, and permit it to assume the Liabilities and obligations under any Assumed Contract or Governmental Authorization for which the consent to such transfer is required and not obtained prior to Closing. To the extent any Assumed Contract or Governmental Authorization may not be assigned to Purchaser by reason of the absence of any required consent, Purchaser shall not assume any Liabilities arising under such Assumed Contract or Governmental Authorization. Subject to the provisions of this Agreement and the other Transaction Agreements, to the extent, and only to the extent, the assignment of an Assumed Contract or Governmental Authorization is effective as set forth above, Purchaser shall be responsible for the Liabilities, if any, thereunder arising out of and relating to any period after the Closing. To the extent that applicable Law permits such an assignment and the consent of any Person is required, Seller shall (at its own expense) deliver to, and obtain from, the applicable Person the required consent in accordance with the terms and conditions of the applicable Assumed Contract or Governmental Authorization, and shall use commercially reasonable efforts to obtain any required consents, upon terms substantially similar to those enjoyed by Seller under such Assumed Contract or Governmental Authorization on or prior to the Closing Date. To the extent that applicable Law does not permit Seller to assign any Assumed Contract or Governmental Authorization that would otherwise constitute a Purchased Asset, Seller shall hold such Assumed Contract or Governmental Authorization as trustee for Purchaser and shall (i) provide to Purchaser, at the request of Purchaser, the benefits of any such Assumed Contract or Governmental Authorization, and (ii) enforce and perform, at the request and reasonable expense of Purchaser, for the account of Purchaser, any rights or obligations of Seller arising from any such Assumed Contract or Governmental Authorization against or in respect of any third party, including the right to elect to terminate any Assumed Contract or Governmental Authorization in accordance with the terms thereof upon the advice of Purchaser, or otherwise enter into with Purchaser such other arrangements sufficient to provide equivalent benefits and burdens to Purchaser; provided that Purchaser shall reimburse Seller for reasonable out-of-pocket expenses incurred by Seller in connection with entering into any such other arrangement, as offset by any expenses not incurred by reason of the termination of such Assumed Contract or Governmental Authorization.

10

SECTION 2.02. Consideration .

(a) Subject to the terms and conditions of this Agreement, in reliance on the representations, warranties, covenants and agreements of the parties made hereunder, and in consideration for the sale, conveyance, transfer, assignment and delivery of the Purchased Assets by Seller pursuant to 2.01(a), Purchaser agrees that it will pay (i) $1,600,000 (less the reductions and offsets provided in this Agreement, if any, payable in CDT Shares to Seller (the “ CDT Shares Purchase Price ”), plus (ii) the “***”, if any, payable to “***” (collectively, the “ Purchase Price ”).

(b) For the purposes of determining the aggregate number of CDT Shares that may be issued or delivered pursuant to this Agreement, a share of CDT Shares shall be valued at the average daily closing price of a share of Purchaser Common Stock on the Nasdaq Global Market for the five trading days ending on the second Business Day prior to the Closing Date.

SECTION 2.03. Payment of Purchase Price .

(a) Subject to the satisfaction or waiver of the conditions set forth in Article VII, Purchaser shall issue and deliver or caused to be paid the Purchase Price as follows:

(i) Closing Payment . On the Closing Date, Purchaser shall cause the transfer agent for the Purchaser Common Stock to deliver to Seller or, upon the direction of Seller, the Seller Representative satisfactory evidence of the issuance of a stock certificate representing the Closing CDT Shares Purchase Price;

(ii) First Milestone Payment . Subject to Article VIII, on the First Milestone Completion Date, Purchaser shall deliver or caused to be delivered to Seller, the First Milestone Amount (if any);

(iii) Second Milestone Payment . Subject to Article VIII, on the Second Milestone Completion Date, Purchaser shall deliver or caused to be delivered to Seller, the Second Milestone Amount (if any); and

(b) “***”

(c) Notwithstanding anything contained in this Section 2.03 or elsewhere in this Agreement to the contrary, Purchaser may (at its sole discretion) terminate the TMA Project at any time; provided, however, that:

(i) if Purchaser terminates the TMA Project prior to the First Milestone Completion Date, Purchaser shall pay the First Milestone Amount promptly after such termination, but shall have no obligation to pay the Second Milestone Amount; and

***    CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

11

(ii) if Purchaser terminates the TMA Project after “***”, Purchaser will be obligated to pay promptly after such termination “***” of the Second Milestone Amount for each full calendar month (or the pro rata amount thereof for any period less than a full calendar month based on the number of days elapsed in such month) elapsed from “***” until the date of such termination (the aggregate of such payments shall in no event exceed the full amount of the Second Milestone Amount)

SECTION 2.04. Withholding Rights . Purchaser shall be entitled to deduct and withhold from the consideration otherwise payable to Seller pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or under any provision of any state or foreign Law with respect to Taxes. To the extent that amounts are so withheld and paid over to the appropriate Governmental Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to Seller in respect of which such deduction and withholding was made by Purchaser.

SECTION 2.05. Allocation of Purchase Price. The Purchase Price shall be allocated among the Purchased Assets in accordance with their respective fair market values (the “ Allocation ”), which Allocation shall be consistent with Section 1060 of the Code. Schedule B sets forth the Allocation. In the event that an adjustment to the Purchase Price is made, the allocation of the Purchase Price shall be revised accordingly by Purchaser and presented to Seller for approval (which approval shall not be unreasonably withheld). Each of Purchaser and Seller (i) shall, to the extent applicable, execute and deliver all tax returns, and prepare all financial statements, returns and other instruments in a manner that is consistent with the Allocation, (ii) shall not, to the extent applicable, take any position before any Tax authority or in any judicial proceeding that is inconsistent with the Allocation, and (iii) shall use its commercially reasonable efforts to assist the other in any proceedings before any Tax authority in respect of the Allocation.

SECTION 2.06. Closing . Subject to the terms and conditions of this Agreement, the purchase and sale of the Purchased Assets and the consummation of the other transactions provided herein ( “ Closing ”) shall take place at the offices of Pillsbury Winthrop Shaw Pittman LLP, 1540 Broadway, New York, New York 10036 at 10:00 a.m. New York time on January 3, 2007 or the date of the satisfaction or waiver of all of the conditions to the obligations of the Parties to consummate the transactions contemplated hereby (excluding the delivery of any documents deliverable at Closing), or such other date as may be mutually agreeable to the Parties (the “ Closing Date ”).

SECTION 2.07. Closing Deliveries by Seller . At Closing, Seller shall deliver to Purchaser:

(a) an employment agreement duly executed by each of the Designated Employees substantially in the form set forth on Exhibit A (the “ Employment Agreements ”);

***    CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

12

(b) a noncompetition agreement duly executed by Page substantially in the form set forth on Exhibit B-1 (the “ Page Noncompete Agreement ”);

(c) a noncompetition agreement duly executed by Seller substantially in the form set forth on Exhibit B-2 (the “ Seller Noncompete Agreement ”);

(d) the Bills of Sale, Assignment and Assumption Agreement substantially in the form set forth on Exhibit C , to be duly executed at Closing by Seller, and, in each case reasonably satisfactory to Purchaser (the “ Bills of Sale ”) (including, without limitation, assignments with respect to each of the Assumed Contracts, the Seller’s Intellectual Property and other agreements and rights to be assigned to Purchaser hereunder, and, in each case, in a form reasonably satisfactory to Purchaser);

(e) a certificate of good standing of Seller dated not earlier than five days prior to the Closing Date;

(f) s certificate of a duly authorized officer of Seller certifying all facts necessary to exempt the transactions contemplated hereby from withholding pursuant to the provisions of the Foreign Investment in Real Property Tax Act; and

(g) a certificate of a duly authorized officer of Seller and the Stockholders certifying as to the matters set forth in Sections 7.02(a) and 7.02(b), respectively;

(h) such other instruments and documents (including the Transaction Agreements), in form and substance reasonably acceptable to Purchaser as may be necessary to effect the transaction contemplated by this Agreement and Closing.

SECTION 2.08. Closing Deliveries by Purchaser . At Closing, Purchaser shall deliver to Seller:

(a) a certificate representing the CDT Shares in the amount of the Closing CDT Shares Purchase Price.

(b) the Bills of Sale duly executed by Purchaser;

(c) such other instruments and documents (including the Transaction Agreements), in form and substance reasonably acceptable to Seller as may be necessary to effect the transaction contemplated by this Agreement and Closing; and

(d) a certificate of a duly authorized officer of Purchaser certifying as to the matters set forth in Sections 7.01(a) and 7.01(b).

SECTION 2.09. Conveyance Taxes . All Conveyance Taxes incurred or payable, or that become payable, in connection with the transactions contemplated by this Agreement or any other Transaction Agreement shall be paid by Seller, except that any sales tax imposed by the state of California payable in connection with such transaction shall be paid by Purchaser. Each party shall use commercially reasonable efforts to avail itself of any available exemptions

13

from any such Conveyance Taxes, and to cooperate with the other parties in providing any information and documentation that may be necessary to obtain such exemptions.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF SELLER AND THE STOCKHOLDERS

The Stockholders, severally and not jointly, and Seller hereby represent and warrant to Purchaser that:

SECTION 3.01. Organization of Seller; Authority; Due Execution . (a) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate or similar power and authority to own and operate its properties and assets, and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its properties or conduct of its business requires such qualification, except such other jurisdictions where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have a Material Adverse Effect. Seller has made available to Purchaser a complete and correct copy of its Governing Documents as amended or supplemented to date. Such Governing Documents so delivered are in full force and effect. Seller is not in violation of any of the provisions of its Governing Documents. Schedule 3.01 contains a correct and complete list of each jurisdiction where Seller is qualified or licensed to do business. Seller has made available to Purchaser complete and accurate copies of the minutes of all meetings of the stockholders of Seller, the board of directors of Seller and the committees thereof. The minute books and other similar records of Seller contain accurate summaries of all actions taken at any meetings of the stockholders of Seller, the board of directors of Seller and the committees thereto, and include all written consents executed in lieu of the holding of any such meeting.

(b) Seller has all requisite corporate power and authority to enter into this Agreement and the other Transaction Agreements to which it is, or is specified to be, a party at Closing and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Seller of this Agreement and any other Transaction Agreements to which it is, or is specified to be, a party at Closing have been duly and validly adopted and approved by the board of directors and stockholders of Seller and no other corporate proceedings on the part of Seller is necessary to authorize the execution, delivery and performance of this Agreement and any other Transaction Agreements to which it is, or is specified to be, a party at Closing, and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each of the other Transaction Agreements to which it is a party when executed and delivered will constitute a valid, binding and enforceable obligation of Seller, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

14

SECTION 3.02. Subsidiaries . Seller has no Subsidiaries, does not own any capital stock or other equity interest in any third party and is not a general partner in any partnership or a coventurer in any joint venture or other business enterprise.

SECTION 3.03. Government Filings; No Violation . (a) Except as set forth on Schedule 3.03(a) , no notices, reports or other filings are required to be made with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by Seller from any supranational, national, state, municipal, local or foreign government, any instrumentality, subdivision, court, administrative agency or commission or other governmental authority or instrumentality, or any quasi-governmental or private body exercising any Tax, regulatory or governmental or quasi-governmental authority (a “ Governmental Authority ”), in connection with the execution, delivery and performance of any transactions contemplated by this Agreement or any other Transaction Agreement by Seller.

(b) Except as set forth on Schedule 3.03(b) , the execution, delivery and performance of this Agreement and any other Transaction Agreements to which it is, or is specified to be, a party at Closing does not, and the consummation of the transactions contemplated by this Agreement and any other Transaction Agreements to which it is, or is specified to be, a party at Closing will not, constitute or result in (A) a breach or violation of, or a default (with or without notice, lapse of time or both) under, Seller’s Governing Documents, (B) (with or without notice, lapse of time or both) a breach or violation of, or a default under, the acceleration of any obligations under, or the creation of an Encumbrance on any assets of Seller pursuant to any Material Contract that is binding upon Seller or any Law or governmental or non-governmental permit or license to which Seller is subject or (C) triggering any change-in-control provisions adversely affecting the rights or obligations of Seller under any of Seller’s Material Contracts.

SECTION 3.04. Capitalization . (a) As of the date hereof, the authorized capital stock of Seller consists of (i) 20,000,000 shares of common stock, of which 3,361,273 shares are issued and outstanding, and (ii) 5,000,000 shares of preferred stock, of which 2,672,727 shares, designated as Series A, are issued and outstanding, and 333,333 shares, designated as Series B, are issued and outstanding (collectively, “ Seller Equity ”). All issued and outstanding shares of capital stock of Seller are validly issued in compliance with applicable Laws, fully paid and non-assessable. As of the date hereof no shares of capital stock are held by Seller as treasury shares. Schedule C as of the date of this Agreement accurately reflects the ownership of all issued and outstanding capital stock of Seller. Except as set forth on Schedule 3.04(a) , Seller does not have outstanding any bonds, debentures, notes or other obligations or securities the holders of which have the right to vote (or that are convertible into or exercisable for securities having the right to vote) with the stockholders of Seller.

(b) Except as set forth on Schedule 3.04(b ), (i) no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire from Seller any capital stock of Seller is authorized or outstanding, (ii) Seller has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right, or to issue or distribute to holders of any shares of its capital any evidences of indebtedness or assets of Seller, (iii) Seller has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares in its capital or any interest therein or to pay

15

any dividend or to make any other distribution in respect thereof and (iv) there are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to Seller.

(c) Except as set forth on Schedule 3.04(c ), there is no agreement, written or oral, between Seller and any holder of its securities, or, to Seller’s knowledge, among any holders of its securities, relating to the sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag along” rights), registration under the Securities Act or voting, of the capital stock of Seller or the distribution of any securities of Seller.

SECTION 3.05. Financial Statements; Undisclosed Liabilities . (a) Attached as Schedule 3.05(a) are the following financial statements of Seller (the “ Financial Statements ”): (i) the unaudited consolidated balance sheet of Seller for the fiscal years ended as of December 31, 2004 and December 31, 2005 and the related unaudited consolidated statement of income, (ii) the unaudited interim consolidated balance sheet of Seller as of November 30, 2006 (collectively, the “ Reference Balance Sheet ,” and the date of such balance sheet, the “ Reference Balance Sheet Date ”) and a consolidated statement of operations for the eleven months ended on the Reference Balance Sheet Date. The Financial Statements have been prepared primarily on a cash basis and not in accordance with U.S. generally accepted accounting principles (“ GAAP ”) The Financial Statements fairly present the consolidated financial condition, and results of operations of Seller as of the respective dates thereof and for the periods referred to therein and are consistent with the books and records of Seller. Seller has made available for inspection by Purchaser copies of all books of account relating to Seller.

(b) Neither Seller nor, to Seller’s knowledge, any director, officer, employee, auditor, accountant or representative of Seller, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether made in writing or made orally to any director, executive officer, or inside or outside legal counsel to Seller regarding the accounting or auditing practices, procedures, methodologies or methods of Seller or its internal accounting controls. No attorney representing Seller, whether or not employed by Seller, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by Seller or any of their respective officers, directors, employees or agents to Seller’s board of directors or any committee thereof or to any director or officer of Seller. There have been no internal investigations regarding accounting or revenue recognition discussed with, reviewed by or initiated at the direction of Seller’s chief executive officer, chief financial officer, general counsel or similar legal officer, Seller’s board of directors or any committee thereof.

(c) Seller is not a party to, and does not have any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract or arrangement.

(d) Seller has no Liabilities (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due or otherwise) of Seller, other than Liabilities reflected or reserved against on the Reference Balance Sheet or on Schedule 3.05(d) , or incurred since October 31, 2006 in the ordinary course of business of Seller and reflected on the Reference Balance Sheet.

16

SECTION 3.06. Absence of Certain Changes . Except as set forth on Schedule 3.06 , since the Reference Balance Sheet Date, there has not been any Material Adverse Effect. Seller has conducted its business only in the ordinary course and in substantially the same manner as previously conducted and Seller has not (a) incurred any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due relating to or affecting the Purchased Assets, (b) mortgaged, pledged or subjected to any other Encumbrance any of the Purchased Assets except in the ordinary course of business and consistent with prior practice or (c) sold, transferred, leased to others or otherwise disposed of any of the Purchased Assets (or committed to do any of the foregoing).

SECTION 3.07. Litigation . Except as set forth on Schedule 3.07 , there are no Actions by or against Seller (or by or against any Affiliate thereof and relating to Seller’s business) or affecting Seller’s business pending before any arbitration tribunal or Governmental Authority (or, to Seller’s knowledge, threatened to be brought by or before any arbitration tribunal or Governmental Authority). None of the matters set forth on Schedule 3.07 has or has had a Material Adverse Effect or would affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby. Neither Seller nor any of its assets or properties is subject to any Governmental Order (nor, to Seller’s knowledge, are there any such Governmental Orders threatened to be imposed by any Governmental Authority) or that would affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby. Except as set forth on Schedule 3.07 , there is no claim for indemnity under any Material Contract pending or, to Seller’s knowledge, threatened against Seller.

SECTION 3.08. Compliance with Laws; Permits . (a) Except as set forth on Schedule 3.08(a) , Seller has conducted and continues to conduct its business in accordance with, in all material respects, all Laws and Governmental Orders applicable to Seller or the Purchased Assets, and Seller has not received any notice within the past two years that Seller is in material violation of any such Law or Governmental Order.

(b) Seller has in effect all approvals, authorizations, certificates, filings, franchises, consents, licenses, notices and permits of or with all Governmental Authorities (collectively, “ Permits ”) necessary for it to own, lease or operate its properties and other assets and to carry on its businesses and operations as presently conducted except for such Permits the failure of which to have would not have a Material Adverse Effect. All such Permits are set forth on Schedule 3.08(b ). There has occurred no default under, or violation of, any such Permit which default or violation has had or could reasonably be expected to have a Material Adverse Effect, and each such Permit is in full force and effect. The execution, delivery and performance of this Agreement and the other Transaction Agreements to which it is, or specified to be, a party at Closing, and the consummation of the transactions contemplated hereby and thereby will not result in a violation of or default under and will not cause the revocation or cancellation of any such Permit. Seller has not received any communication nor does Seller have knowledge of any facts that have, or reasonably should have, led it to believe that any such Permit is not currently in good standing. Seller has kept all required records and has filed with Governmental Authorities all required notices, supplemental applications and annual or other reports required for the operation of Seller’s business except where failure to do so would not have a Material Adverse Effect.

17

SECTION 3.09. Environmental Matters . (a) Except as disclosed on Schedule 3.09 : (i) to Seller’s knowledge, Seller has complied in all material respects with all applicable Environmental Laws; (ii) Seller has not released, stored or disposed of any Hazardous Substance; (iii) Seller has not received any written notice, demand, letter, claim or request for information alleging that it may be in violation of or liable under any Environmental Law; (iv) to Seller’s knowledge, Seller is not subject to any Governmental Order or other arrangements with any Governmental Authority or an indemnitor of any third party indemnitee for any liability under any Environmental Law or relating to Hazardous Substances; (v) to Seller’s knowledge, there are no circumstances or conditions involving Seller that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions on the ownership, use, or transfer of any of its property pursuant to any Environmental Law; (vi) to Seller’s knowledge, none of the properties Seller leases or otherwise occupies contain any underground storage tanks, asbestos-containing material, lead-based paint, or polychlorinated biphenyls in violation of any Environmental Law or that would reasonably be expected to result in liability under any Environmental Law; and (vii) Seller has not engaged in any activities involving the generation, use, handling or disposal of any Hazardous Substances in violation of any Environmental Law or that would reasonably be expected to result in any liability under any Environmental Law.

(b) As used herein, the term “ Environmental Law ” means any federal, state, local or foreign law, regulation, treaty, order, decree, permit, authorization, policy, opinion, common law or agency requirement applicable to Seller relating to: (A) the protection, investigation or restoration of the environment, health and safety, or natural resources or exposure to any harmful or hazardous material, (B) the handling, use, presence, disposal, release or threatened release of any chemical substance or waste water or (C) noise, odor, wetlands, pollution, contamination or any injury or threat of injury to persons or property.

(c) As used herein, the term “ Hazardous Substance ” means any substance that is: (A) listed, classified or regulated in any concentration pursuant to any Environmental Law; (B) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or (C) any other substance that may be the subject of regulatory action by any Governmental Authority pursuant to any Environmental Law.

SECTION 3.10. Intellectual Property . (a) Schedule 3.10(a) contains an accurate and complete lists of all (i) Seller Intellectual Property (other than Trade Secrets) and (ii) Seller IP Agreements, copies of which Seller has made available to Purchaser.

(b) The Seller Intellectual Property includes all those rights necessary for the operation of Seller’s business as presently conducted and as reflected in all written business plans given to Purchaser. To Seller’s knowledge, Seller is the exclusive owner of all right, title and interest in and to the Owned Intellectual Property, free and clear of all Encumbrances, and has the right to use without payment to a third party all of the Seller Intellectual Property. The Seller Intellectual Property is (i) to Seller’s knowledge, valid and enforceable and (ii) to Seller’s knowledge, not subject to any determination or dispute adversely affecting Seller’s use thereof or rights thereto. Seller owns or has a valid license to use Seller Intellectual Property in connection with the operation of Seller’s business as presently conducted and as reflected in any written business plans given to Purchaser. Seller has not undertaken or failed to undertake any acts, and,

18

to Seller’s knowledge, no circumstances or grounds exist, that would invalidate, reduce or eliminate, in whole or in part, the enforceability or scope of, Seller’s entitlement to Exploit the Seller Intellectual Property.

(c) To Seller’s knowledge, the conduct of Seller’s business as presently conducted or as reflected in any written business plans given to Purchaser will not interfere with, infringe upon, misappropriate, or otherwise breach the rights of any third party. There are no disputes by any third party against Seller known to Seller, nor has Seller received any notice of any such dispute, and to Seller’s knowledge there exists no circumstances or grounds upon which any such claim could be asserted, as pertaining to the conduct of Seller’s business. Seller has not received written notice of any dispute pending, nor, to Seller’s knowledge, is any such dispute threatened, against Seller concerning the ownership, validity, registerability or enforceability of any of the Seller Intellectual Property (other than the review of pending patent and trademark applications). To Seller’s knowledge, no circumstances or grounds exist that would give rise to such a dispute. To Seller’s knowledge, no Seller Intellectual Property is subject to any outstanding injunction, judgment, order, decree, ruling, charge, settlement, or other disposition of dispute, and Seller has complied with, paid and otherwise satisfied all such obligations. To Seller’s knowledge, no Person is engaging in any activity that infringes or misappropriates any Seller Intellectual Property.

(d) Seller has not received written notice of any dispute or disagreement, and to Seller’s knowledge, no such disputes or disagreements are threatened, with respect to any Seller IP Agreement. To Seller’s knowledge, each Seller IP Agreement is legal, valid, binding, enforceable, and in full force and effect. Neither Seller, nor, to Seller’s knowledge, any other parties to a Seller IP Agreement, is/are in breach, and to Seller’s knowledge no circumstances or grounds exist that would give rise to a claim of breach or right of recession, termination, revision, or amendment, of any Seller IP Agreement, including the signing of this Agreement. Seller has sole, exclusive and unencumbered rights under Seller IP Agreements, and has- not granted any Encumbrances on such Seller IP Agreements.

(e) Except as set forth on Schedule 3.10(e) , all former and current employees of Seller have executed written contracts with Seller that assign to Seller all rights to any inventions, improvements, discoveries, or information relating to the business of Seller that are or were developed during the period of employment with Seller. To Seller’s knowledge, no employee