EXHIBIT 2.1 ASSET PURCHASE AGREEMENT DATED AS OF DECEMBER 5, 2006 BY AND AMONG TRANSWITCH CORPORATION TRANSWITCH (ISRAEL) LTD. AND DATA ? JCE LTD

EXHIBIT 2.1

ASSET PURCHASE AGREEMENT

DATED AS OF DECEMBER 5, 2006

BY AND AMONG

TRANSWITCH CORPORATION

TRANSWITCH (ISRAEL) LTD.

AND

DATA – JCE LTD.

TABLE OF CONTENTS

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement, dated as of December 5, 2006 (this " Agreement "), is entered into by and among TranSwitch Corporation, a Delaware corporation (" Parent "), TranSwitch (Israel) Ltd., an Israeli corporation and a wholly owned subsidiary of Parent (" Buyer ") and Data – JCE Ltd. an Israeli corporation (" Seller ").

RECITALS

A. Buyer desires to purchase and assume from Seller, and Seller desires to sell and transfer to Buyer, certain of the assets and liabilities of Seller’s ASIC Design Center (the " Division ") and the business conducted by and in connection with the Division (the " Business ") all as more specifically set forth in this Agreement, upon the terms and subject to the conditions of this Agreement (the " Asset Purchase ").

B. Parent is advancing to Buyer certain funds and other property to enable Buyer to make the purchase hereunder.

C. Certain capitalized terms used herein have the meanings ascribed to such terms in Article 1 hereof.

AGREEMENT

In order to consummate the Asset Purchase, and in consideration of the mutual agreements hereinafter contained, Parent, Buyer and Seller agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Certain Defined Terms . As used in this Agreement, the following terms have the following meanings:

" Action " means any claim, action, suit, arbitration, investigation, audit or proceeding by or before any Governmental Authority or arbitrator.

" Affiliate " means, when used with respect to a specified Person, another Person that, either directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. With respect to any Person who is a natural person, such Person’s Affiliates shall include such Person’s spouse, siblings and lineal descendents.

" Ancillary Agreements " means the Escrow Agreement and the Registration Rights Agreement.

" Assets " means all of Seller’s right, title and interest in and to all properties, assets (including goodwill attributable to the Division) and rights of any kind, whether tangible or intangible, real or personal, contingent or existing, owned by Seller as comprising the Division or in which Seller has any interest whatsoever with respect to the Division, all as described on Schedule A attached hereto.

" Asset Purchase Related Expenses " means the (i) fees and disbursements of counsel to Seller, Seller’s independent accountants or financial or other advisors incurred by Seller in connection with the transactions contemplated hereby, and (ii) any payments made or required to be made by Seller to Transferred Employees as a result of their termination from their employment in the Division pursuant to the transactions contemplated hereby.

" Audited Financial Statements " means the audited consolidated balance sheets of Seller and its consolidated Subsidiaries as of December 31, 2005, December 31, 2004, and December 31, 2003, and the related audited statements of income, cash flows and changes in stockholder’s equity for the twelve month periods then ended, together with the notes thereto and the report of Seller’s independent auditors thereon.

" Benefit Arrangement " means any employment, consulting, severance, change in control or other similar contract, arrangement or policy and each plan, arrangement (written or oral), program, agreement or commitment providing for insurance coverage (including without limitation any self-insured arrangements), workers’ compensation, disability benefits, unemployment benefits, severance, vacation benefits, retirement benefits, life, health, disability or accident benefits, fringe benefits or for deferred compensation, profit-sharing bonuses, stock options, stock appreciation rights, phantom stock rights, stock purchases, annual or long-term cash incentive compensation, base pay or other forms of incentive compensation or post-retirement insurance, sponsored, administered, entered into, maintained, contributed to, has been contributed to or required to be contributed to, as the case may be, by Seller or any Affiliate of Seller, all with respect to the Division.

" Books and Records " means all books of account and other financial records (including Tax records), only to the extent pertaining to the Division.

" Business Day " means any day that is not a Friday, a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in Connecticut or in Israel.

" Computer Program(s) " means (i) any and all computer programs (consisting of sets of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result) and portions thereof, and (ii) all associated data and compilations of data, regardless of their form or embodiment. " Computer Programs " shall include, without limitation, all source code, object code, natural language code, all versions, all screen displays and designs, all component modules, all descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, and all documentation, including without limitation user manuals and training materials, relating to any of the foregoing.

" Confidentiality Agreement " means the confidentiality agreement dated as of August 15, 2006 between Parent and Seller.

" Contract " means any agreement, contract, lease, note, loan, evidence of Indebtedness, purchase order, letter of credit, franchise agreement, undertaking, covenant not to

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compete, employment agreement, license, instrument, obligation, commitment, purchase and sale order, quotation or other executory commitment to which Seller with respect to the Division is a party or which relates to the Business or any of the Assets, whether oral or written, express or implied, and which pursuant to its terms has not expired, terminated or been fully performed by the parties thereto, including, without limitation, Government Contracts, Real Property Leases and Personal Property Leases.

" Employee Plans " means all Benefit Arrangements and applicable pension plans.

" Encumbrance " means any claim, lien, pledge, option, charge, easement, security interest, deed of trust, mortgage, right-of-way, encroachment, building or use restriction, encumbrance or other right of third parties, whether voluntarily incurred or arising by operation of law, and includes, without limitation, any agreement to give any of the foregoing in the future, and any contingent or conditional sale agreement or other title retention agreement or lease in the nature thereof.

" Environmental Law " means any Law, now or hereafter in effect and as amended, and any judicial, legislative or administrative interpretation thereof, including any Governmental Order relating to the environment, the effect of Hazardous Materials on the environment or human safety or health, emissions, discharges or releases of Hazardous Materials into the environment, including without limitation into ambient air, surface water, groundwater or land, occupational safety and health, or otherwise relating to the handling of Hazardous Materials or the clean-up or other remediation of Hazardous Materials.

" Equity Securities " of any Person means (i) shares of capital stock, limited liability company interests, unlimited liability company interests, partnership interests or other equity securities of such Person, (ii) subscriptions, calls, warrants, options or commitments of any kind or character relating to, or entitling any Person to purchase or otherwise acquire, any capital stock, limited liability company interests, unlimited liability company interests, partnership interests or other equity securities of such Person, (iii) securities convertible into or exercisable or exchangeable for shares of capital stock, limited liability company interests, unlimited liability company interests, partnership interests or other equity securities of such Person, and (iv) equity equivalents, interests in the ownership or earnings of, or equity appreciation, phantom stock or other similar rights of, or with respect to, such Person.

" Escrow Agent " means U.S. Bank National Association.

" Facility " means any real property or facility owned, leased, operated or used at any time by the Division or by any predecessor of the Division.

" GAAP " means Israeli generally accepted accounting principles in effect from time to time applied consistently throughout the period involved.

" Government Contract " means any Contract to which or by which Seller is a party or is bound relating to the Division, the ultimate contracting party of which is a Governmental Authority (including any subcontract with a prime contractor or other subcontractor who is a party to any such Contract).

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" Governmental Authority " means any government, any governmental entity, department, commission, board, agency or instrumentality, and any court, tribunal, or judicial or arbitral body, whether federal, state, local or foreign.

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

" Handling of Hazardous Materials " means the production, use, generation, storage, treatment, recycling, disposal, discharge, release or other handling or disposition of Hazardous Materials.

" Hazardous Materials " means: (a) petroleum, waste oil, crude oil, asbestos, urea formaldehyde or polychlorinated biphenyl; (b) any waste, gas or other substance or material that is explosive, radioactive or infectious; (c) any "hazardous substance," "pollutant," "contaminant," "hazardous waste," "regulated substance," "hazardous chemical," "toxic chemical" or "toxic substance" as designated, listed or defined (whether expressly or by reference) in any law ; (d) any other substance or material (regardless of physical form) or form of energy that is subject to any law which regulates or establishes standards of conduct in connection with, or which otherwise relates to, the protection of human health, plant life, animal life, natural resources, property or the enjoyment of life or property from the presence in the environment of any solid, liquid, gas, odor, noise or form of energy; and (e) any compound, mixture, solution, product or other substance or material that contains any substance or material referred to in clauses (a), (b), (c), or (d) above.

" Improvements " means any buildings, facilities, other structures and improvements, building systems and fixtures located on or under any real property leased by Seller relating to the Division.

" Indebtedness " means (i) indebtedness of Seller relating to the Division for borrowed money (including the aggregate principal amount thereof, the aggregate amount of any accrued but unpaid interest thereon and any prepayment penalties or other similar amounts payable in connection with the repayment thereof on the Closing Date), (ii) monetary obligations of Seller relating to the Division evidenced by bonds, notes, debentures, letters of credit or similar instruments, (iii) monetary obligations of Seller relating to the Division under capitalized leases, (iv) monetary obligations of Seller relating to the Division under conditional sale, title retention or similar agreements or arrangements creating an obligation of Seller with respect to the deferred purchase price of property (other than customary trade credit), (v) monetary obligations in respect of interest rate and currency obligation swaps, hedges or similar arrangements and (vi) all monetary obligations of Seller or the Division to guarantee any of the foregoing types of obligations on behalf of any Person other than Seller.

" Intellectual Property Rights " means all (i) domestic and foreign registrations of trademarks, service marks, logos, corporate names, domain names, protected models, designs, created works, trade names or other trade rights of Seller relating to the Division, (ii) pending applications by Seller for any such registrations, (iii) rights in or to patents and copyrights (whether or not registered) and pending applications therefor of Seller relating to the Division, (iv) rights of Seller relating to the Division to other trademarks, service marks, logos, corporate

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names, domain names, protected models, designs, data, software, created works, trade names and other trade rights and all other trade secrets, designs, plans, specifications, technology, know-how, methods, designs, concepts, other proprietary rights (including, without limitation, associated goodwill and remedies against infringements thereof and rights of protection of an interest therein under the Laws of all jurisdictions) and other intellectual property, whether or not registered, and (v) rights under any licenses of Seller relating to the Division to use any of the intellectual property described in clauses (i) to (iv) above.

" Interim Financial Statements " means the unaudited consolidated balance sheet of Seller as of September 30, 2006, and the related unaudited consolidated statements of income, cash flows and changes in stockholder’s equity of Seller for the 9 month period then ended.

" Inventory " means all of the inventory of the Division held for resale, and all of the Division’s raw materials, works in process, finished products and supply items, in each case wherever the same may be located.

"Israeli Tax Ordinance " means the Israeli Income Tax Ordinance [New Version], 1961, as amended.

" Key Employees " means Ronen Cohen, Gil Palucci and Oren Blum.

" Knowledge " or " Known " means, with respect to the Seller, those facts or circumstances actually known by any of the Specified Officers of Seller, or any facts or circumstances which would be known after reasonable inquiry by a person holding a comparable office or job or with comparable experience or responsibilities, and with respect to Buyer, those facts or circumstances actually known by any of the Specified Officers of Buyer, or any facts or circumstances which would be known after reasonable inquiry by a person holding a comparable office or job or with comparable experience or responsibilities. For purposes of this definition, the term "Specified Officers" means: (a) with respect to Seller, Osher Elron and Shai Attias; and (b) with respect to Buyer, Santanu Das and Theodore Chung.

" Law " means any federal, state, local or foreign statute, law, legislation, constitution, ordinance, regulation, rule, code, edict, order, directive, pronouncement, judgment, decree, or rule of common law.

" Licenses " means all of the licenses, permits, certificates, exemptions and other authorizations from any Government Authority or other third party necessary or proper for the use, occupancy or operation of the Business as conducted as of the date of this Agreement and as of the Closing Date.

" Loan Agreement " means that certain loan agreement dated as of the date of the Closing, by and between Parent and Seller.

" Loan Documents " means the Loan Agreement, the Promissory Note and the Pledge Agreement.

" Loss Contract " means any Contract with respect to the Business for which Seller has accrued a loss on the Audited Financial Statements or Interim Financial Statements or which Seller reasonably expects, based on such Person’s Knowledge as of the date hereof and as of the Closing Date, to result in a loss.

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" Losses " of a Person means any and all losses, liabilities, damages, claims, judgments, diminution of value, fines, penalties, costs and expenses (including, without limitation, the costs of reasonable investigation, remediation and attorneys’ fees) actually suffered or incurred by such Person.

" Material Adverse Effect " or " Material Adverse Change " or a similar phrase means, with respect to any Person, any material adverse effect on or material adverse change with respect to the business, operations, assets, liabilities, financial conditions, results of operations of such Person and its Subsidiaries, taken as a whole, except any such effect resulting from (i) this Agreement or the transactions contemplated hereby; (ii) changes or conditions affecting the semiconductor field, including without limitation ASICs, and telecommunications field generally; or (iii) changes in economic, regulatory or political conditions generally.

" Parent’s Disclosure Schedule " means the disclosure schedules attached hereto.

" Permits " shall mean all licenses, permits, approvals, authorizations or consents of any Governmental Authority, whether foreign, federal, state or local, necessary for the conduct of the Business as currently conducted.

" Permitted Encumbrances " means (a) liens for Taxes or governmental charges or claims not yet due and payable or being contested in good faith, if, in each case, a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor, (b) statutory liens of landlords, liens of carriers, warehouse persons, mechanics and material persons and other liens imposed by law incurred in the ordinary course of business for sums not yet due and payable or being contested in good faith, if, in each case, a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor, (c) liens incurred or deposits made in connection with workers’ compensation, unemployment insurance and other similar types of social security programs or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations, in each case in the ordinary course of business, consistent with past practice, and (d) easements, rights-of-way, restrictions and other similar charges or Encumbrances on real property which, in each case, do not, individually or in the aggregate, materially interfere with the ordinary conduct of the Business and do not, individually or in the aggregate, materially detract from the value of the property to which such Encumbrance relates.

" Person " means any natural person, corporation, limited partnership, general partnership, limited liability company, unlimited liability company, joint stock company, joint venture, association, company, trust or other organization or any Governmental Authority.

" Personal Property Leases " shall mean all of the existing leases with respect to the personal property of Seller relating to the Division.

" Pledge Agreement " means that certain pledge agreement dated as of the date of the Closing, by and between the Parent and Seller.

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" Personnel " means all employees, officers, directors and independent contractors of, employed by or contracting with the Seller with respect to the Division.

" Pre-Closing Tax Period " shall mean all taxable periods ending on or prior to the Closing Date and the portion of any taxable period ending on the Closing Date that includes but does not end on the Closing Date.

" Promissory Note " means that certain promissory note, dated as of the date of the Closing, issued by Seller in favor of Parent in the original principal amount of $1,650,000.

" Real Property Leases " means all leases entered into by Seller relating to the Division in respect of the Real Property.

" Registration Rights Agreement " means that certain registration rights agreement dated as of the date hereof, by and between Parent and Seller.

" Securities Act " means the Securities Act of 1933, as amended.

" Seller’s Disclosure Schedule " means the disclosure schedules attached hereto.

" Subsidiary " of any Person means any other Person (i) of which such first Person (either alone or through or together with any other Subsidiary) owns, directly or indirectly, at least 50% of the stock or other Equity Securities of such other Person or (ii) the operations of which are consolidated with such first Person, pursuant to GAAP or US GAAP, for financial reporting purposes.

" Tax " or " Taxes " means any federal, state, local or foreign net or gross income, gross receipts, social security, national health insurance, capital gains, license, payroll, employment, excise, severance, stamp, occupation, premium, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, offer, registration, value added, alternative or add-on minimum, estimated or other tax, governmental fee or like assessment or charge of any kind whatsoever (including any liability for Taxes imposed on another Person, whether incurred or borne as a transferee or successor or by contract or otherwise), including any interest, penalty or addition thereto, whether disputed or not.

" Tax Return " means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendments thereof.

" US GAAP " means United States generally accepted accounting principles in effect from time to time applied consistently throughout the period involved

" Wavetone IP " Intellectual Property Rights developed by Seller relating to wavelet-based multicarrier modulation or the use of wavelet-based multicarrier modulation in the transmission of data.

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Section 1.2 Other Defined Terms . The following terms have the meanings defined for such terms in the Sections set forth below:

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Section 1.3 Construction .

(a) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or similar words refer to this entire Agreement; (iv) the terms "Article" or "Section" refer to the specified Article or Section of this Agreement; (v) the word "including" shall mean "including, without limitation;" and (vi) the word "or" shall be disjunctive but not exclusive.

(b) References to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.

(c) References to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.

(d) The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against either party.

(e) The annexes, schedules and exhibits to this Agreement are a material part hereof and shall be treated as if fully incorporated into the body of the Agreement.

(f) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified and shall be counted from the day immediately following the date from which such number of days are to be counted.

(g) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP or US GAAP, as applicable.

ARTICLE 2

PURCHASE AND SALE OF ASSETS

Section 2.1 Transfer of Assets .

(a) Transfer of Seller’s Assets . Upon the terms and subject to the conditions contained herein, at the Closing, Seller will sell, convey, transfer, assign and deliver to Buyer, and Buyer will purchase from Seller, all of the rights, title and interest of Seller in and to all the Assets and rights of any kind, whether tangible or intangible, real or personal, contingent or existing comprising the Business of the Division, except for the Excluded Assets, including without limitation, all of Seller’s right, title and interest in the following assets of the Division:

• (i) Deposits, prepayments or prepaid expenses;

  (ii) Contracts;

  (iii) Machinery and Equipment;

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• (iv) [deleted];

  (v) Division-specific Books and Records;

  (vi) Intellectual Property Rights;

  (vii) Seller Software;

  (viii) rights under or pursuant to all warranties, representations and guarantees made by suppliers in connection with Assets or services furnished to Seller with respect to the Assets;

  (ix) subject to Section 2.2(h), claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind relating to the Assets or the Assumed Liabilities, against any Person;

  (x) goodwill.

Section 2.2 Excluded Assets .

Notwithstanding Section 2.1 above, Buyer expressly understands and agrees that the following assets and properties of Seller (the " Excluded Assets ") shall be excluded from the Assets:

(a) all of Seller’s cash and cash equivalents on hand and in banks as related to the Division;

(b) insurance policies relating to the Business and the Division and all claims, credits, causes of action or rights thereunder;

(c) the marks and names set forth on Schedule 2.2(c) (the " Seller Trademarks and Tradenames ");

(d) all books, records, files and papers, whether in hard copy or computer format, prepared in connection with, and for the purpose of negotiating and executing, this Agreement or the transactions contemplated hereby and all minute books and corporate records of Seller and its Affiliates;

(e) [deleted];

(f) all rights of Seller arising under this Agreement, the Ancillary Agreements , the Loan Documents or the transactions contemplated hereby;

(g) the Wavetone IP;

(h) Inventory;

(i) accounts and notes receivable (whether current or noncurrent) and refunds incurred prior to the Closing Date; and

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(j) any Assets sold or otherwise disposed of in the ordinary course of business and in accordance with this Agreement during the period from the date hereof until the Closing Date.

Section 2.3 Assumption of Liabilities .

Upon the terms and subject to the conditions contained herein, at the Closing, Buyer shall not assume and become responsible for any liabilities and obligations of Seller relating to the Division or the conduct of the Business (or of any predecessor owner of all or part of any of the Business or assets of Seller or any Affiliate of Seller) of any kind, character or description, whether known or unknown, fixed or contingent, other than liabilities and obligations of Seller (other than those relating to any Taxes with respect to Pre-Closing Tax Period and other than those resulting from any breach of the restrictions imposed under section 104 of the Israeli Tax Ordinance, as a result of the transactions contemplated by this Agreement) accruing, arising out of, or relating to events or occurrences under the Contracts and arising after the Closing Date (the " Assumed Liabilities ").

Section 2.4 Excluded Liabilities . Any provisions in this Agreement or any writing to the contrary notwithstanding, Buyer is assuming only the Assumed Liabilities and is not assuming any other liability or obligation of Seller relating to the Business or any Affiliate of Seller (or any predecessor owner of all or part of any of the Business or assets of Seller or any Affiliate of Seller) of whatever nature, whether presently in existence or arising or asserted hereafter. All such other liabilities and obligations shall be retained by and remain obligations and liabilities of Seller relating to the Business or its Affiliates (all such liabilities and obligations not being assumed being herein referred to as the "Excluded Liabilities"). Without limiting the foregoing, none of the following shall be Assumed Liabilities for purposes of this Agreement:

(a) any liabilities and obligations of Seller relating to the Business for or in respect of Taxes (including any Taxes that arise as a result of the transactions contemplated by this Agreement), provided that transfer taxes incurred in connection with the transaction contemplated by this Agreement shall be paid in the manner ser forth in Article 9;

(b) all Asset Purchase Related Expenses;

(c) all other liabilities and obligations of the Seller under this Agreement and the Ancillary Agreements;

(d) any liability or obligation under any Environmental Law incurred in or attributable to any Facility or the operation of the Business on or before the Closing Date;

(e) any liability or obligation relating to an Excluded Asset (whether or not arising prior to, on or after the Closing Date) or any liability or obligation relating to a purchased Asset arising prior to the Closing Date.

Section 2.5 Assignment of Contracts and Rights . Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Asset or any right thereunder if an attempted assignment, without the consent of a third party,

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would constitute a breach or in any way adversely affect the rights of Buyer or Seller thereunder. If such consent is not obtained, Seller and Buyer will cooperate in a mutually agreeable arrangement under which Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement.

Section 2.6 Purchase Price .

(a) Purchase Price . Upon the terms and subject to the conditions set forth herein, Parent and Buyer shall pay to the Seller for the sale, transfer, assignment, conveyance and delivery of the Assets, a purchase price in an aggregate amount equal to Six Million Seven Hundred Thousand Dollars ($6,700,000) (the " Aggregate Purchase Consideration "). The Aggregate Purchase Consideration (including the Assumed Liabilities) shall be allocated as determined by Seller and Buyer, principally to goodwill, and such allocation shall be the allocation which is used by the parties in preparing Israeli Tax Returns. All allocations made pursuant to this Section 2.6 shall be binding upon the parties and upon each of their successors and assigns, and the parties shall report the transactions contemplated hereby in accordance with such allocations. The parties hereto shall not make any written statements or take any position on any Tax Return, in any refund claim, during the course of any Tax audit, for any financial or regulatory purpose in any litigation or investigation or otherwise that are inconsistent with the allocations made pursuant to this Section 2.6. Each party shall notify the other parties if it receives notice that any Tax authority proposes any allocation different from that made pursuant to this Section 2.6. For the avoidance of doubt, the Aggregate Purchase Consideration, the Escrow Amount and the Earnout Consideration, shall be exclusive of Israeli Value Added Tax (" VAT ") (i.e. VAT shall be added to any such payments), which will be paid fully in cash to Seller by Buyer within 5 Business Days prior to the due date of the applicable VAT payments by Seller to the Israeli tax authorities; provided, however, that Seller shall have provided Buyer, at least 5 Business Days prior to the payment to Seller, with a valid invoice for VAT purposes in the amount of the actual amount paid to Seller.

(b) Payment of the Aggregate Purchase Consideration . The Aggregate Purchase Consideration shall be paid on the Closing Date as follows:

(i) Parent will pay to the Seller $1,000,000 (in addition to the applicable VAT payable in accordance with the terms and dates specified in Section 2.6(a)) in cash and $5,700,000 (in addition to the applicable VAT payable in accordance with the terms and dates specified in Section 2.6(a)) in Parent Common Stock. The price per share of Parent Common Stock to be used to determine the exact number of shares to be issued as a portion of the Aggregate Purchase Consideration shall be equal to the average reported closing price for such securities on the NASDAQ Global Market for the thirty (30) trading days ending three (3) trading days prior to the date such payment is made (the " Value of the Parent Common Stock ").

(ii) No fraction of a share of Parent Common Stock will be issued by virtue of the Asset Purchase, but in lieu thereof, if Seller would otherwise be entitled to a fraction of a share of Parent Common Stock, Seller shall receive an amount of cash (rounded to the nearest whole cent), without interest equal to the value of such fractional share. The parties acknowledge that payment of the cash consideration in lieu of issuing fractional shares was not separately bargained for consideration, but merely represents a mechanical rounding off for purposes of simplifying the corporate and accounting complexities that would otherwise be caused by the issuance of fractional shares.

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(iii) A portion of the Aggregate Purchase Consideration equal to ten (10%) percent (the " Escrow Amount ") shall be paid by Parent to the Escrow Agent, in the form of Parent Common Stock, to be held in escrow in accordance with the terms of the Escrow Agreement in the form of Exhibit 3.2(a) hereto (the " Escrow Agreement ") to serve as a source of payment for Claims for indemnification of any Buyer Indemnified Party pursuant to Article 8 hereof. The Escrow Amount shall be held and distributed in accordance with the terms of the Escrow Agreement. No fractional shares of Parent Common Stock shall be issued; the number of shares to be delivered to the Escrow Agent shall be rounded down to the nearest whole number.

Section 2.7 Earnout . In addition to the payment of the Aggregate Purchase Consideration, the Parent shall pay additional contingent consideration for the Asset Purchase (the "Earnout Consideration") on the terms and subject to the limitations set forth on Exhibit 2.7 attached hereto. If any portion of the Earnout Consideration is paid in Parent Common Stock, the price per share of the Parent Common Stock would be equal to the Value of Parent Common Stock as of the date such Earnout Consideration is paid; provided however , that the Value of Parent Common Stock as calculated as of the date such Earnout Consideration is paid, shall be no more than thirty percent (30%) greater than or twenty percent (20%) less than the Value of Parent Common Stock as of the Closing Date. For the avoidance of doubt, the Earnout Consideration shall be exclusive of VAT (i.e. VAT shall be added to any such payment), which will be paid fully in cash to Seller by Buyer within 5 Business Days prior to the due date of the applicable VAT payments by Seller to the Israeli tax authorities; provided, however, that Seller shall have provided Buyer, at least 5 Business Days prior to the payment to Seller, with a valid invoice for VAT purposes in the amount of the actual amount paid to Seller.

Section 2.8 Closing Costs and Fees . Buyer and Seller shall be solely responsible for and shall bear all of their own expenses, including without limitation, the cost of the recording or filing of all applicable conveyancing instruments incurred by reason of the transfer of Assets hereunder (including documentary in connection therewith but excluding transfer taxes), legal counsel, accountants, investment bankers and any other advisors.

Section 2.9 Required Withholding . The Seller has obtained from the Israeli tax authority a withholding tax exemption with respect to "assets and services" according to Article 164 of the Israeli Tax Ordinance (a copy of such exemption is attached as Exhibit 2.9 hereto) and is seeking to obtain an additional withholding tax exemption applicable to the consideration payable or otherwise deliverable to Seller at the Closing pursuant to this Agreement. Assuming that all applicable withholding tax exemptions have been obtained and delivered to Buyer and Parent prior to closing, each of the transfer agent, Parent and Buyer (or any affiliate thereof) shall not deduct and/or withhold any amount from any consideration payable or otherwise deliverable pursuant to this Agreement to Seller at the Closing (e.g. $6,700,000 plus VAT). Prior to the payment of the Earnout Consideration or the Escrow Amount, the Seller shall provide the Buyer with a valid exemption from the Israeli tax authority with respect to withholding tax of "assets and services" according to Article 164 of the Israeli Tax Ordinance. To the extent that any such exemptions described hereunder shall not be

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obtained prior to the Closing or the date of payment of the Earnout Consideration or the Escrow Amount, as applicable, the transfer agent, Parent or Buyer (or any affiliate thereof) shall be entitled to deduct or withhold from the Aggregate Purchase Price, the Earnout Consideration or the Escrow Amount, as applicable, withholding tax in accordance with Israeli law and thereafter shall provide the Seller with the certificate of withholding. To the extent such amounts are so deducted or withheld, 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. Buyer, Parent or the transfer agent shall provide to the Seller documentation evidencing such deduction or withholding.

Section 2.10 Setting of Accounts .

(a) Seller shall bear all indebtedness to suppliers incurred, and shall be entitled to receive all income earned, with respect to the Division prior to the Closing. Buyer undertakes to promptly transfer to Seller any and all payments received by it attributed to the Division with respect thereto. Seller undertakes to pay any debts to suppliers in connection with the Division incurred prior to the Closing, the due date of which is after the Closing. In the event that any such debts will be paid by Buyer, Seller undertakes to reimburse Buyer for such payments against proper receipts.

(b) Buyer shall bear all indebtedness to suppliers incurred, and shall be entitled to receive all income earned, with respect to the Division following the Closing Date. Seller undertakes to promptly transfer to Buyer any and all payments received by it attributed to the Division with respect thereto. Buyer undertakes to pay any debts to suppliers in connection with the Division incurred after the Closing. In the event that any such debts will be paid by Seller, Buyer undertakes to reimburse Seller for such payments against proper receipts.

ARTICLE 3

CLOSING

Section 3.1 Closing . The Closing of the transactions contemplated herein (the " Closing ") shall be held at 10:00 a.m. Boston time as soon as possible, but in no event later than 3 Business Days after the satisfaction of the conditions set forth in Article 7 at the offices of Brown Rudnick Berlack Israels LLP, One Financial Center, Boston, Massachusetts 02111 or at such other time or at such other place as the Seller and Buyer may mutually agree in writing (the "Closing Date") .

Section 3.2 Conveyances at Closing .

(a) Instruments and Possession . To effect the sale and assumption referred to in Article 2, Seller will, at the Closing, execute and deliver to Buyer:

• (i) one or more bills of sale conveying in the aggregate all of such Seller’s tangible personal property included in the Assets;

  (ii) an assignment of lease with respect to Seller’s Personal Property Leases;

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• (iii) subject to Section 2.5, an assignment of contracts with respect to such Seller’s Contracts;

  (iv) assignments of Seller’s Intellectual Property Rights included in the Assets, in recordable form to the extent necessary to assign such rights;

  (v) the Ancillary Agreements and Loan Documents in the form attached hereto as Exhibits 3.2(a), 3.2(b), 3.2(c), 3.2(d) and 3.2(e) ; and

  (vi) such other instruments as shall be reasonably requested by Parent and/or Buyer to vest in Buyer such right, title or interest in and to the Assets in accordance with the provisions hereof.

  (b) Assumption and Other Documents . To effect the sale and assumption referred to in Article 2, at the Closing, Parent and/or Buyer shall execute and deliver to Seller:

  (i) an instrument of assumption evidencing Buyer’s assumption, pursuant to Section 2.3, of the Assumed Liabilities (the " Assumption Document ");

  (ii) the Ancillary Agreements and the Loan Documents in the forms attached hereto as Exhibits 3.2(a), 3.2(b), 3.2(c), 3.2(d) and 3.2(e) ; and

  (iii) such other instruments as shall be reasonably requested by Seller to evidence Buyer’s assumption of the Assumed Liabilities in accordance with the provisions hereof.

(c) Form of Instruments . To the extent that a form of any document to be delivered hereunder is not attached as an Exhibit hereto, such documents shall be in form and substance, and shall be executed and delivered in a manner, reasonably satisfactory to the party or parties in whose favor the document runs.

(d) Certificates; Opinions . Parent, Buyer and Seller shall deliver the certificates, opinions of counsel and other documents described in Article 7.

(e) Payment of Aggregate Purchase Consideration . (i) Buyer shall deliver to Seller $1,000,000 in immediately available funds by wire transfer to an account designated at the Closing by Seller, by notice to Buyer, not later than two Business Days prior to the Closing Date (or if not so designated, then by certified or official bank check payable in immediately available funds to the order of Seller in such amount); (ii) Parent shall issue such number of Parent Common Stock in the name of the Seller that shall equal the quotient obtained by dividing $5,700,000 and the value of the Parent Common Stock as of the Closing, of which 88.25% shall be delivered to Seller and 11.75% shall be delivered to the Escrow Agent.

(f) Consents . Seller shall deliver all corporate, governmental and other third party consents and waivers required pursuant to Sections 7.1(a) and 7.3(e) (or otherwise obtained by the Seller).

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Parent and Buyer as follows:

Section 4.1 Organization and Qualification of Seller . Seller is an Israeli corporation, duly incorporated or organized and validly existing under the laws of Israel and has the requisite corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as currently conducted by Seller. Seller is duly qualified to do business as a foreign corporation in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities all as related to the Business makes such qualification necessary except where the failure to be so qualified would not result in a Material Adverse Effect with respect to Seller. True and complete copies of Seller’s organizational documents, as amended to the date of this Agreement, have been made available by Seller for review by Buyer and Parent.

Section 4.2 Authorization . Seller has all necessary corporate or organizational power and authority to execute and deliver this Agreement and each Ancillary Agreement and to perform its obligations hereunder and thereunder. The execution and delivery by Seller of this Agreement and each Ancillary Agreement and the performance of its obligations hereunder and thereunder have been duly and validly authorized by the board of directors of Seller, and no other action on the part of Seller is necessary. This Agreement and each Ancillary Agreement has been duly and validly executed and delivered by Seller and is a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as the enforceability may be limited by (i) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance, relief of debtors, or similar laws in effect which affect the enforcement of creditors’ rights generally including but not limited to injunctive relief or other equitable remedies; or (ii) general principles of equity.

Section 4.3 No Conflict . Except as set forth on Section 4.3 of the Seller’s Disclosure Schedule, the execution, delivery and performance of this Agreement and each Ancillary Agreement by Seller and the consummation of the transactions contemplated hereby and thereby do not and will not (a) subject to obtaining the consents, approvals and actions, making the filings and giving the notices specified in Sections 4.4 and 4.12 of the Seller’s Disclosure Schedule, violate or conflict with the certificate of incorporation, bylaws, or other organizational documents of Seller, (b) conflict with or violate any Law or Governmental Order applicable to Seller, or (c) subject to obtaining the consents, approvals and actions, making the filings and giving the notices disclosed in Sections 4.4, 4.11 and 4.12 of the Seller’s Disclosure Schedule, violate or conflict with in any material respect, result in any breach of, or constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or result in or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Encumbrance on any of the Assets pursuant to, any Contract or License to which Seller is a party or by which any of the Assets are bound.

Section 4.4 Consents and Governmental Approvals . Except as set forth on Sections 4.4 of the Seller’s Disclosure Schedule, no consent, approval, authorization, license, order or permit of, or declaration, filing or registration with, or notification to, any Governmental

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Authority, or any other Person, is required to be made or obtained by Seller or any of its Affiliates in connection with the execution, delivery and performance of this Agreement and each Ancillary Agreement and the consummation of the transactions contemplated hereby and thereby, except where the failure to obtain any such consent, approval or action, to make any such filing or to give any such notice could not reasonably be expected to adversely affect the Business or the Division or the ability of Seller to consummate the transactions contemplated by this Agreement or by the Ancillary Agreements or to perform its obligations hereunder or thereunder, in any material respect.

Section 4.5 Financial Statements; Undisclosed Liabilities .

(a) Attached as Section 4.5(a) of the Seller’s Disclosure Schedule are true and complete copies of (i) the Audited Financial Statements and (ii) the Interim Financial Statements. Except as set forth in the notes thereto or as disclosed in Section 4.5 of the Seller’s Disclosure Schedule, all such financial statements (including the footnotes thereto) were prepared in accordance with GAAP and fairly present in all material respects the consolidated financial condition, results of operations and changes in cash flows and stockholder’s equity as of the respective dates thereof and for the respective periods covered thereby, subject to, in the case of the Interim Financial Statements, normal recurring year-end adjustments to the extent consistent with GAAP (the effect of which is not expected to be material individually or in the aggregate) and the absence of footnotes.

(b) Seller does not have any liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise, liquidated or unliquidated, or due or to become due) related to the Division or the Assets other than (i) liabilities reflected and reserved against on the balance sheet included in the Interim Financial Statements, (ii) liabilities disclosed in Section 4.5(b) of the Seller’s Disclosure Schedule, (iii) current liabilities incurred since October 1, 2006 in the ordinary course of business, consistent with Seller’s past practice, or (iv) liabilities and obligations that remain with Seller following consummation of the transactions contemplated by this Agreement.

(c) The projections prepared by Seller with respect to the Business and delivered by Seller to Buyer were prepared in good faith and based on assumptions believed by Seller to be reasonable as of the date of such projections.

Section 4.6 Absence of Certain Changes or Events . Since October 1, 2006, except as disclosed in Section 4.6 of the Seller’s Disclosure Schedule, there has been no:

(a) Material Adverse Change with respect to the Division or the Assets;

(b) (i) except for normal periodic increases in the ordinary course of business consistent with past practice, increase in the compensation payable or to become payable by Seller to any of its Transferred Employees, (ii) bonus, incentive compensation, severance, deferred compensation, service award or other like benefit granted, made or accrued, contingently or otherwise, for or to the credit of any of the Transferred Employees, except in the ordinary course of business consistent with past practices, (iii) employee welfare, pension, insurance, retirement, profit-sharing or similar payment or arrangement made or agreed to by

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Seller for any of the Transferred Employees except pursuant to the existing Employee Plans described in Section 4.17 of the Seller’s Disclosure Schedule or (iv) new employment or severance agreements with Transferred Employees to which Seller is a party;

(c) addition to or modification of the Employee Plans related to the Transferred Employees other than (i) contributions made in accordance with the normal practices of Seller or (ii) the extension of coverage to Transferred Employees who became eligible after October 1, 2006;

(d) sale, assignment or transfer of any assets of Seller related to the Division other than in the ordinary course of business consistent with prior practices, or the imposition of any Encumbrance thereon;

(e) cancellation of any Indebtedness or waiver of any rights of substantial value to Seller related to the Division or the Assets;

(f) cancellation, termination or material amendment of any Material Contract, material License or other instrument material to the Division that adversely affects the Business;

(g) capital expenditure or any incurring of liability therefor by Seller related to the Division or the Assets, other than capital expenditures involving payments that do not, individually or in the aggregate, exceed $20,000;

(h) failure to operate the Business in the ordinary course so as to use reasonable efforts to preserve the Business intact, to keep available the services of the Transferred Employees, and to preserve the goodwill of Seller’s suppliers, customers and others having business relations with Seller.

(i) change in Tax or accounting methods, principles or practices by Seller or the making of any Tax election or the change of an existing election all, to the extent effecting the Division;

(j) revaluation by Seller of any of its respective assets or properties related to the Division, including without limitation, writing off notes or accounts receivable;

(k) damage, destruction or loss (whether or not covered by insurance) adversely affecting the Division;

(l) Indebtedness incurred by Seller relating to the Business for borrowed money or any commitment to incur Indebtedness entered into by Seller with respect to the Division, or any loans made or agreed to be made by Seller with respect to the Division (other than the advancement of expenses to Personnel of Seller in the ordinary course of business);

(m) execution, termination, or material amendment of any lease for personal property in the relation of the Division involving annual payments in excess of $20,000;

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(n) material change in collection policies or payment terms applicable to any of the suppliers or customers of Seller related to the Business;

(o) action which, if it had been taken or had occurred after execution of this Agreement, would have required the consent of Buyer hereunder; or

(p) agreement by Seller to do any of the foregoing.

Section 4.7 Absence of Litigation . (a) There are no Actions pending or, to Seller’s knowledge, threatened against Seller (with respect to the Division) or the Division or involving any of the Assets; (b) neither Seller with respect to the Division nor any of its respective Assets are subject to any Governmental Order; and (c) neither Seller (with respect to the Division) nor the Division are the subject of any pending, or to the knowledge of Seller, threatened investigation by any Governmental Authority.

Section 4.8 Compliance with Laws . Seller, with respect to the Division or the Assets, has not violated any applicable Law or Governmental Order with respect to (a) its products, (b) sales of such products, (c) its Transferred Employees or (d) its relationship with the Office of the Chief Scientist or of any other governmental agency or office. Seller has not, with respect to the Division or the Assets, during the past two (2) years, conducted any internal investigation with respect to any actual, potential or alleged material violation of any Law or Governmental Order by Seller or any of their Personnel.

Section 4.9 Licenses . Section 4.9 of the Seller’s Disclosure Schedule sets forth a true and correct list of each of the Licenses held by Seller (other than generally available commercial off-the-shelf Computer Programs used internally by Seller in accordance with the applicable license agreement) or issued by any Governmental Authority with respect to any of the Assets. Such Licenses constitute all of the Licenses required to permit Seller to own, operate, use and maintain its Assets in the manner in which they are now operated and maintained and to conduct the Business as presently conducted. Each such License is valid, binding and in full force and effect (and the continuing validity and effectiveness of such Licenses will not be affected by the consummation of the transactions contemplated hereby) and Seller is not in default (or with the giving of notice or lapse of time or both, would be in default) under any such License in any material respect. There are no proceedings pending, nor to the knowledge of Seller, threatened, that seek the revocation, cancellation, suspension, failure to renew or adverse modification of any such License. All required filings with respect to such Licenses have been timely made and all required applications for renewal thereof have been timely filed.

Section 4.10 Computer Programs .

(a) Set forth in Section 4.10 of the Seller’s Disclosure Schedule is a list of the Computer Programs (other than generally available commercial off-the-shelf Computer Programs used internally by Seller in accordance with the applicable license agreement) which are in whole or in part owned, licensed, distributed, copied, modified, displayed, sublicensed or otherwise used by Seller in connection with the operation of the Business as now conducted (such Computer Programs being referred to herein as the " Seller Software "), identifying with respect to each such Computer Program whether it is owned or licensed by Seller.

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(b) Each and every Computer Program included in whole or in part in the Seller Software is either: (i) owned by Seller, (ii) currently in the public domain or otherwise available for use, modification and distribution by Seller without a license from or the approval or consent of any third party, or (iii) licensed or otherwise used by Seller pursuant to the terms of a valid, binding written agreement (" Software Contract "). Section 4.10 of the Seller’s Disclosure Schedule identifies all Software Contracts and classifies each such Software Contract under one or more of the following categories: (A) license to use third party software; (B) development contract, work-for-hire agreement, or consulting agreement; (C) distributor, dealer or value-added reseller agreement; (D) license or sublicense to a third party (excluding agreements with end-users); (E) maintenance, support or enhancement agreement; or (F) other. Except as set forth in Section 4.10 of the Seller’s Disclosure Schedule, no Software Contract creates, or purports to create, obligations or immunities with respect to any Intellectual Property Rights of Seller, including but not limited to, obligations requiring the disclosure or distribution of all or a portion of the source code for Seller Software. For example, except as set forth on Section 4.10 of the Seller’s Disclosure Schedule, no portion of the Seller Software is licensed to Seller pursuant to any version of the General Public License, Lesser General Public License, or Common Public License.

(c) Except as set forth in Section 4.10 of Seller’s Disclosure Schedule, the Seller Software conforms in all material respects to the technical specifications for the design, performance, operation, test, support and maintenance of the Seller Software, and to all other documentation relating to such technical specifications. Except as set forth in Section 4.10 of Seller’s Disclosure Schedule, no portion of Seller Software:

• (i) sold or licensed by Seller directly or indirectly to end users contained, on the date of shipment by Seller;

  (ii) currently for sale or license directly or indirectly to end users contains; and,

  (iii) other than that specified in the preceding (i) and (ii) in this sentence, to the knowledge of Seller contains;

any software routines or hardware components designed to permit unauthorized access; to disable or erase software, hardware or data; or to perform any other similar actions. Seller uses industry standard methods to detect and prevent viruses and other code covered by the preceding sentence (and subsequently to correct or remove such viruses) that may be present in the Seller Software. The Seller Software does not include or install any spyware, adware, or other similar software which monitors the use of any remote computer without the knowledge and express consent of the users of such remote computer.

(d) Except as set forth in Section 4.10 of Seller’s Disclosure Schedule, Seller has adopted policies and procedures to control the use of (i) Computer Programs including without limitation object code and source code portions thereof available for download on the

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internet; and (ii) any other Computer Programs not introduced into Seller’s development environment through a formal procurement process and pursuant to a license agreement determined to be appropriate for establishing Seller’s rights and obligations with respect to Computer Programs.

Section 4.11 Material Contracts .

(a) Section 4.11 of the Seller’s Disclosure Schedule lists the following Contracts (other than Software Contracts disclosed in Section 4.10 of the Seller’s Disclosure Schedule) to which Seller is a party with respect to the Division or by which any of it or the