Document:

20-F

Exhibit 4.2  

SHARE PURCHASE AGREEMENT

by and among

LSI LOGIC CORPORATION,

STOREAGE NETWORKING TECHNOLOGIES LTD.,

and

the shareholders of STOREAGE NETWORKING

TECHNOLOGIES LTD. specified on the signature pages hereto

Dated as of October 25, 2006

TABLE OF CONTENTS

		                        Page
	 	
		
		
		
	ARTICLE I
	DEFINITIONS
	 
	SECTION 1.01    Certain Defined Terms	1 
	SECTION 1.02    Definitions	6 
	SECTION 1.03    Interpretation and Rules of Construction	6 
	 
	ARTICLE II
	PURCHASE AND SALE
	 
	SECTION 2.01    Purchase and Sale of the Shares	7 
	SECTION 2.02    Purchase Price for the Shares	7 
	SECTION 2.03    Escrow Fund	8 
	SECTION 2.04    Treatment of Company Share Options	9 
	SECTION 2.05    Closing	9 
	SECTION 2.06    Closing Deliveries by each Seller	9 
	SECTION 2.07    Closing Deliveries by the Company	10 
	SECTION 2.08    Closing Deliveries by the Purchaser	10 
	 
	ARTICLE III
	REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 
	SECTION 3.01    Organization, Authority and Qualification of the Company	11 
	SECTION 3.02    Subsidiaries	11 
	SECTION 3.03    Capitalization	12 
	SECTION 3.04    Corporate Books and Records	14 
	SECTION 3.05    No Conflict	14 
	SECTION 3.06    Governmental Consents and Approvals	14 
	SECTION 3.07    Financial Information	14 
	SECTION 3.08    Absence of Undisclosed Liabilities	15 
	SECTION 3.09    Conduct in the Ordinary Course	15 
	SECTION 3.10    Litigation	17 
	SECTION 3.11    Compliance with Laws	17 
	SECTION 3.12    Material Contracts	18 
	SECTION 3.13    Intellectual Property	19 
	SECTION 3.14    Leased Real Property	21 
	SECTION 3.15    Environmental Matters	22 
	SECTION 3.16    Assets	22 
	SECTION 3.17    Employee Benefit Matters	22 
	SECTION 3.18    Labor Matters	24 
	SECTION 3.19    Certain Interests	25 
	SECTION 3.20    Taxes	26 
	SECTION 3.21    Customers	27 
	SECTION 3.22    Insurance	27 
	SECTION 3.23    CSO Funding	27 
	SECTION 3.24    Full Disclosure	27 
	SECTION 3.25    Brokers	28 

(ii)

		
	 	
		
		
		
	ARTICLE IV
	REPRESENTATIONS AND WARRANTIES OF THE SELLERS
	 
	SECTION 4.01    Authority of such Seller	28 
	SECTION 4.02    No Conflict	28 
	SECTION 4.03    Governmental Consents and Approvals	28 
	SECTION 4.04    Ownership of Ordinary Shares	29 
	SECTION 4.05    Litigation	29 
	SECTION 4.06    Brokers	29 
	SECTION 4.07    Right of First Refusal	29 
	 
	ARTICLE V
	REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
	 
	SECTION 5.01    Organization and Authority of the Purchaser	29 
	SECTION 5.02    No Conflict	30 
	SECTION 5.03    Governmental Consents and Approvals	30 
	SECTION 5.04    Investment Purpose	30 
	SECTION 5.05    Brokers	30 
	SECTION 5.06    No Success	30 
	SECTION 5.07    CSO	30 
	SECTION 5.08    Financial Capability	31 
	 
	ARTICLE VI
	ADDITIONAL AGREEMENTS
	 
	SECTION 6.01    Conduct of Business Prior to the Closing	31 
	SECTION 6.02    Access to Information	31 
	SECTION 6.03    Confidentiality	32 
	SECTION 6.04    Required Consents	32 
	SECTION 6.05    Notice of Developments	33 
	SECTION 6.06    No Shop	33 
	SECTION 6.07    Use of Intellectual Property	33 
	SECTION 6.08    [Intentionally omitted]	33 
	SECTION 6.09    Currency	33 
	SECTION 6.10    Further Action	33 
	 
	ARTICLE VII
	TAX MATTERS
	 
	SECTION 7.01    Taxes on Sale	34 
	SECTION 7.02    Miscellaneous	34 
	 
	ARTICLE VIII
	CONDITIONS TO CLOSING
	 
	SECTION 8.01    Conditions to Obligations of the Sellers	34 
	SECTION 8.02    Conditions to Obligations of the Purchaser	35 

(iii)

		
	 	
		
		
		
	ARTICLE IX
	INDEMNIFICATION
	 
	SECTION 9.01    Survival of Representations and Warranties	37 
	SECTION 9.02    Indemnification by the Sellers	38 
	SECTION 9.03    Indemnification by the Purchaser	38 
	SECTION 9.04    Third Party Claims	39 
	SECTION 9.05    Distributions from Escrow Fund	40 
	SECTION 9.06    Limits of Indemnification; Loss Threshold; Exclusive Remedy	40 
	SECTION 9.07    Sellers' Representatives	42 
	 
	ARTICLE X
	TERMINATION, AMENDMENT AND WAIVER
	 
	SECTION 10.01    Termination	43 
	SECTION 10.02    Effect of Termination	43 
	SECTION 10.03    Amendment	43 
	SECTION 10.04    Waiver	43 
	 
	ARTICLE XI
	GENERAL PROVISIONS
	 
	SECTION 11.01    Expenses	44 
	SECTION 11.02    Notices	44 
	SECTION 11.03    Public Announcements	45 
	SECTION 11.04    Severability	45 
	SECTION 11.05    Entire Agreement	46 
	SECTION 11.06    Assignment	46 
	SECTION 11.07    No Third Party Beneficiaries	46 
	SECTION 11.08    Governing Law	46 
	SECTION 11.09    Headings	46 
	SECTION 11.10    Counterparts	46 

(iv)

SHARE PURCHASE
AGREEMENT 

        SHARE
PURCHASE AGREEMENT (this “Agreement”), dated as of October 25, 2006, by
and among LSI LOGIC CORPORATION, a Delaware corporation (the
“Purchaser”), STOREAGE NETWORKING TECHNOLOGIES LTD., a company organized
and existing under the laws of Israel (the “Company”), and each of the
shareholders of the Company specified on the signature pages hereto (each a
“Seller” and collectively the “Sellers”). 

        WHEREAS,
each Seller owns the number of issued and outstanding ordinary shares, par value NIS 0.01
per share, of the Company (the “Ordinary Shares”) set forth opposite the
name of such Seller on Exhibit A attached hereto; 

        WHEREAS,
the Company owns all the issued and outstanding shares of capital stock of STOREAGE
NETWORKING TECHNOLOGIES, INC., a Delaware corporation (“StoreAge U.S.”); 

        WHEREAS,
the Company owns 40% of the outstanding capital stock of StoreAge (Beijing) Co., Ltd., a
limited liability company organized and existing under the laws of The People’s
Republic of China (“StoreAge China” and, together with StoreAge U.S., the
“Subsidiaries”); 

        WHEREAS,
the Company and the Subsidiaries are engaged in the business of designing, developing,
producing, marketing, selling and distributing enterprise SAN storage management systems
and data protection solutions (the “Business”); and 

        WHEREAS,
the Sellers wish to sell to the Purchaser, and the Purchaser wishes to purchase from the
Sellers, all of the Ordinary Shares owned by the Sellers, upon the terms and subject to
the conditions set forth herein. 

        NOW,
THEREFORE, in consideration of the promises and the mutual agreements and covenants
hereinafter set forth, the Purchaser, the Company and the Sellers hereby agree as follows: 

ARTICLE I

     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 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, the specified Person.  

        “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 The City of San Francisco,
California or in Tel-Aviv, Israel.  

        “Claims” means
any and all administrative, regulatory or judicial actions, suits, petitions, appeals,
demands, claims, notices of noncompliance or violation, investigations, proceedings,
consent orders or consent agreements.  

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

        “Company
IP Agreements” means (a) licenses of Intellectual Property by the Company or any
Subsidiary to any third party, (b) licenses of Intellectual Property by any third party
to the Company or any Subsidiary, (c) agreements between the Company or any Subsidiary
and any third party relating to the development or use of Intellectual Property, the
development or transmission of data, or the use, modification, financing, linking,
advertisement, or other practices with respect to Internet web sites, and (d) consents,
settlements, decrees, orders, injunctions, judgments or rulings governing the use,
validity or enforceability of Owned Intellectual Property.  

        “Company
Software” means all Software designed, developed, produced, marketed, sold,
licensed or distributed by the Company or any Subsidiary.  

        “control” (including
the terms “controlled by” and “under common control 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.  

        “Disclosure
Schedule” means the Disclosure Schedule, dated as of the date hereof, delivered
by the Company to the Purchaser in connection with this Agreement.  

        “Encumbrance” means
any security interest, pledge, mortgage, lien, charge, lease, license, encumbrance,
easement, adverse claim, reversion, reverter, preferential arrangement, restrictive
covenant, condition or restriction of any kind, including, without limitation, any
restriction on the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership.  

        “Environmental
Claims” means any Claims relating in any way to any Environmental Law or any
Environmental Permit, including, without limitation, (a) any Claims by Governmental
Authorities for enforcement, cleanup, remedial or other actions or damages pursuant to
any applicable Environmental Law and (b) any Claims by any Person seeking damages,
contribution, indemnification or injunctive relief arising from alleged injury or threat
of injury to health, safety or the environment.  

        “Environmental
Laws” means all Laws, now or hereafter in effect and as amended, relating to the
environment, health or safety.  

        “Environmental
Permits” means all permits, approvals, licenses and other authorizations
required under or issued pursuant to any applicable Environmental Law.  

2

        “Escrow
Fund” means the Escrow Amount deposited with the Escrow Agent as such sum may be
increased or decreased as provided in the Escrow Agreement.  

        “Foreign
Corrupt Practices Act” means the U.S. Foreign Corrupt Practices Act, 15 U.S.C.
78 dd-1 et seq., as amended.  

        “Foreign
Official” means (a) an officer or employee of any non-United States Governmental
Authority or any political subdivision, department, agency or instrumentality thereof;
(b) a Person acting in an official capacity for or on behalf of any such Governmental
Authority; (c) a member or official of any political party outside of the United States;
and (d) any other meanings or interpretation given to the term under the Foreign Corrupt
Practices Act as it applies to the Business.  

        “Governmental
Authority” means any United States or non-United States federal, national,
supranational, state, local, or similar governing, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or judicial or
arbitral body.  

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

        “Hazardous
Materials” means any chemicals, materials or substances defined as or included
in the definition of “hazardous substances”, “hazardous wastes”,
“hazardous materials”, “toxic substances”, “contaminants” or
“pollutants” or words of similar import under any applicable Environmental Law,
and any other chemical, material or substance which is regulated by any Environmental
Law.  

        “Indebtedness” means,
with respect to any Person, (a) all indebtedness of such Person, whether or not
contingent, for 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 indebtedness created or
arising under any conditional sale or other title retention agreement with respect to
property acquired by such Person, (e) all obligations of such Person as lessee under
leases that have been or should be, in accordance with U.S. GAAP, recorded as
capital leases, (f) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g) 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, (h) all
Indebtedness of others referred to in clauses (a) through (g) above guaranteed directly
or indirectly in any manner by such Person, and (i) all Indebtedness referred to in
clauses (a) through (g) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise to be secured by) any Encumbrance on
property owned by such Person.  

        “Indemnified
Party” means a Purchaser Indemnified Party or a Seller Indemnified Party, as the
case may be.  

        “Indemnifying
Party” means the Sellers and the other Company Securityholders pursuant to
Section 9.02 and the Purchaser pursuant to Section 9.03, as the case may be.  

3

        “Intellectual
Property” means (a) patents, patent applications, and statutory invention
registrations, (b) trademarks, service marks, domain names, trade dress, logos, trade
names, corporate names, and other identifiers of source or goodwill, including
registrations and applications for registration thereof, (c) mask works and copyrights,
including copyrights in computer software, and registrations and applications for
registration thereof, and (d) confidential and proprietary information, including trade
secrets, know-how and invention rights.  

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

        “knowledge
of the Company” or “the Company’s knowledge” means the
actual knowledge of the following persons and such knowledge that could reasonably be
attributed to such persons: Eli Shapira, Bruno Keren, Nelson Nahum, and Mark Spowart.  

        “Laws” means
any United States or non-United States federal, national, supranational, state,
provincial, local or similar statute, law, ordinance, regulation, rule, code, order,
requirement or rule of law (including, without limitation, common law).  

        “Liabilities” means
any and all debts, liabilities and obligations, whether accrued or fixed, absolute or
contingent, matured or unmatured or determined or determinable, including, without
limitation, those arising under any Law, Action or Governmental Order and those arising
under any contract, agreement, arrangement, commitment or undertaking.  

        “Licensed
Intellectual Property” means Intellectual Property licensed to the Company or
any Subsidiary pursuant to the Company IP Agreements.  

        “Loan
Agreement” means the Loan Agreement, made as of March 26, 2006, by and among the
Company and the Lenders party thereto.  

        “Material
Adverse Effect” means any circumstance, change in or effect on the Company or
any Subsidiary that, individually or in the aggregate with all other circumstances,
changes in or effects on the Company or any Subsidiary, is or is reasonably likely to be
materially adverse to the business, prospects, results of operations or financial
condition of the Company and the Subsidiaries, taken as a whole; provided,
however, that “Material Adverse Effect” shall not include any event,
circumstance, change or effect arising out of (A) events, circumstances, changes or
effects that generally affect the industries in which the Company operates, (B) changes
in general economic conditions (provided that such changes do not affect such entity
disproportionately as compared to such entity’s competitors), or (C) an effect
(including the loss of customers, loss of suppliers or management personnel attrition)
resulting from the public announcement of the execution of this Agreement or the pendency
of the transactions contemplated by this Agreement.  

        “Owned
Intellectual Property” means Intellectual Property owned by the Company or any
Subsidiary.  

4

        “Permitted
Encumbrances” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced and as to
which neither the Company nor any Subsidiary is otherwise subject to civil or criminal
liability due to its existence: (a) liens for Taxes, assessments and governmental charges
or levies not yet due and payable; (b) Encumbrances imposed by Law, such as materialmen’s,
mechanics’, carriers’, workmen’s and repairmen’s liens and other
similar liens arising in the ordinary course of business; and (c) minor survey
exceptions, reciprocal easement agreements and other customary encumbrances on title to
real property that do not, individually or in the aggregate, materially adversely affect
the value of or the use of such property for its current and anticipated purposes.  

        “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)o f the Securities Exchange Act
of 1934, as amended.  

        “Regulations” means
the Treasury Regulations (including Temporary Regulations) promulgated by the United
States Department of Treasury with respect to the Code or other federal tax statutes.  

        “Software” means
computer software, programs and databases in any form, including source code, object
code, operating systems and specifications, data, databases, database management code,
utilities, graphical user interfaces, menus, images, icons, forms, methods of processing,
software engines, platforms, and data formats, all versions, updates, corrections,
enhancements and modifications thereof, and all related documentation, developer notes,
comments and annotation.  

        “Tax” or
“Taxes” means any and all taxes, fees, levies, duties, tariffs, imposts,
and other charges of any kind (together with any and all interest, penalties, additions
to tax and additional amounts posed with respect thereto) imposed by any Governmental
Authority, including, without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, national insurance, health, social security, workers’ compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs’ duties, tariffs, and similar
charges.  

        “U.S.
               GAAP” means United States generally accepted accounting
principles and                practices in effect from time to time applied consistently
throughout the                periods involved.  

5

    SECTION 1.02        
Definitions. The following terms have the meaning set forth in the Sections set
forth below:  

	 		
	 		
	 		
	 		
	 		
	 	Definition	Location
	 	"Agreement"	Preamble
	 	"Allocation"	7.02(b)
	 	"Business"	Recitals
	 	"Closing"	2.05
	 	"Closing Date"	2.05
	 	"Company"	Preamble
	 	"Company Employee Plans"	3.17(b)
	 	"Company Securityholder"	2.02
	 	"Company Share Options"	2.04
	 	"Company Share Option Plans"	2.04
	 	"Confidentiality Agreement"	6.03(b)
	 	"CSO"	3.06
	 	"Escrow Account"	2.03
	 	"Escrow Agent"	2.03
	 	"Escrow Agreement"	2.03
	 	"Escrow Amount"	2.03
	 	"Financial Statements"	3.07(a)
	 	"Interim Financial Statements"	3.07(a)
	 	"Investment Center"	3.06
	 	"Latest Balance Sheet"	3.08
	 	"Leased Real Property"	3.14(b)
	 	"Loss"	9.02(a)
	 	"Material Contracts"	3.12(a)
	 	"Ordinary Shares"	Recitals
	 	"Pay-Off Amount"	8.02(f)
	 	"Per Share Escrow Amount"	2.02(a)
	 	"Per Share Option Amount"	2.04
	 	"Per Share Purchase Price"	2.02(a)
	 	"Pro Rata Share"	2.03
	 	"Purchaser"	Preamble
	 	"Purchaser Indemnified Party"	9.02(a)
	 	"StoreAge China"	Recitals
	 	"StoreAge U.S."	Recitals
	 	"Seller"	Preamble
	 	"Seller Indemnified Party"	9.03(a)
	 	"Sellers' Representative"	9.08
	 	"Subsidiaries"	Recitals
	 	"Third Party Claims"	9.05(b)

    SECTION 1.03        Interpretation
and Rules of Construction. In this Agreement, except to the extent 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 a 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
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;  

6

		    (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)        any
Law defined or referred to herein or in any agreement or instrument that is
               referred to herein means such Law or statute as from time to time amended,
               modified or supplemented, including by succession of comparable successor
Laws;  

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

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

ARTICLE II

PURCHASE AND SALE

    SECTION 2.01        Purchase
and Sale of the Shares. Upon the terms and subject to the conditions of this
Agreement, at the Closing, each Seller shall sell, on a several and not joint basis,
assign, transfer, convey and deliver, or cause to be sold, assigned, transferred,
conveyed and delivered, to the Purchaser or to an Affiliate of the Purchaser designated
by the Purchaser, the number of Ordinary Shares set forth opposite the name of such
Seller on Exhibit A attached hereto, and the Purchaser shall purchase or shall cause an
Affiliate of the Purchaser to purchase such number of shares from such Seller.  

    SECTION 2.02        Purchase
Price for the Shares. (a) Subject to (i) the withholding of the Per Share Escrow
Amount at the Closing in accordance with Section 2.03 and the Escrow Agreement and (ii)
Section 2.02(b), the purchase price for each Ordinary Share shall be the amount in cash
equal to the Per Share Purchase Price, with the aggregate of the Per Share Purchase
Prices to be paid to each Seller and the aggregate of the Per Share Escrow Amounts to be
deducted from each Seller to be rounded to the nearest whole cent. For purpose of this
Agreement:  

    “Per
Share Purchase Price” means $0.862. 

    “Per Share
Escrow Amount” means $0.112. 

7

		    (b)        The
          Purchaser shall be entitled to deduct and withhold from the consideration
          otherwise payable pursuant to this Agreement to any Seller or holder of Company
          Share Options (each a “Company Securityholder”) (including
          payments made by the Escrow Agent) such amounts as it is required to deduct and
          withhold under any provision of U.S. federal, state or local, or any foreign,
          tax law; provided, however, that the Purchaser shall not make such deductions
or           withholdings of U.S. taxes if such Company Securityholder provides duly
          completed and executed W-8 or W-9 forms, as applicable, and such deduction or
          withholding is not required under applicable law. In addition, the Purchaser
          shall make such payments only if such Company Securityholder provides an
          authorization from the Israeli Tax Authorities, to the Purchaser’s
          reasonable satisfaction, specifying the rate at which the Purchaser is to
          withhold Israeli tax in relation to the payment or exempting the Purchaser in
          the entirety from withholding such Israeli tax (and Purchaser shall withhold
          Israeli tax from any payment in accordance with the conditions of such
          authorization). In the event that any authorization or exemption is not
provided           for one or more Sellers, the Purchaser and the Sellers’          Representatives,
on behalf of such Sellers, shall enter into an appropriate           agreement to provide
for (i) the payment to each such Seller of the amount           equal to 70% of the
net amount (i.e. the difference per Ordinary Share           that results from the
subtraction of the Per Share Escrow Amount from the Per           Share Purchase Price)
that such Seller is otherwise entitled to receive in           respect such Seller’s
Ordinary Shares, and (ii) the deposit of the           remaining 30% of the net
amount that such Seller is otherwise entitled to           receive in respect of such
Seller’s Ordinary Shares into an escrow account           with an escrow agent to be
agreed by the parties. The pro rata portion of such           escrow account shall be
released promptly to each Seller for whom an           authorization or exemption from
the Israeli Tax Authorities is provided prior to           due date (including any
extension to such due date approved by the Israeli Tax           Authorities) for the
remittance to the Israeli Tax Authorities of withholding in           the absence of an
appropriate authorization or exemption. If no authorization or           exemption from
the Israeli Tax Authorities is provided prior to such due date           (including any
extension to such due date approved by the Israeli Tax           Authorities) with
respect to the amount payable to any Seller, the escrow agent           shall remit the
amount deposited into such escrow with respect to such Seller to           the Israeli
Tax Authorities. To the extent that amounts are so withheld or paid           over to or
deposited with the relevant Governmental Authority, such withheld           amounts shall
be treated for all purposes of this Agreement as having been paid           to the
Company Securityholder in respect of which such deduction and withholding           was
made by the Purchaser.  

    SECTION 2.03        Escrow
Fund. Prior to the Closing, the Sellers’ Representatives, on behalf of all of
the Company Securityholders, and the Purchaser shall enter into an Escrow Agreement (the
“Escrow Agreement”) with Citibank, N.A.(or if such Person
declines, such other U.S. commercial bank based in New York, New York selected by the
Purchaser and reasonably acceptable to the Sellers’ Representatives) (the “Escrow
Agent”) substantially in the form of Exhibit 2.03 attached hereto. Pursuant to
the terms of the Escrow Agreement, at the Closing the Purchaser shall deposit into the
escrow account (the “Escrow Account”) to be held by the Escrow Agent in
accordance with the terms of the Escrow Agreement the amount of cash equal to $6,464,427
(the “Escrow Amount”). The Escrow Amount shall be available to
compensate the Purchaser and other Purchaser Indemnified Parties for Losses in accordance
with the indemnification obligations of the Sellers under Article IX of this Agreement
and in accordance with the terms of the Escrow Agreement. The Purchaser shall be entitled
to deduct from any payments due to a Seller or a holder of Company Share Options at the
Closing pursuant to this Agreement the Per Share Escrow Amount in respect of each
Ordinary Share, with the aggregate amount to be deducted from each Seller or holder of
Company Share Options to be rounded to nearest whole cent. The portion of the Escrow
Amount contributed on behalf of each Company Securityholder shall be in proportion to the
number of Ordinary Shares held by such Company Securityholder immediately prior to the
Closing, assuming the exercise of all outstanding Company Share Options as of immediately
prior to the Closing (such proportion being such Company Securityholder’s “Pro
Rata Share”), and shall be deemed held in a separate escrow sub-account for the
benefit of such Company Securityholder. The portion thereof held in any Company
Securityholder’s individual sub-account shall only be available to compensate the
Purchaser and the other Purchaser Indemnified Parties for Losses for which such Company
Securityholder is obligated to indemnify the Purchaser Indemnified Parties hereunder, and
not for any Losses indemnifiable by any other Company Securityholder. Distributions from
the Escrow Account shall be governed by the terms and conditions of the Escrow Agreement.  

8

    SECTION 2.04        Treatment
of Company Share Options. The Company shall take all necessary action, including
using its best efforts to obtain the consent of the individual option holders required
pursuant to Section 8.02(n), to (i) effective as of the Closing terminate The 1999
Israeli Share Option Plan, the 2003 Israeli Share Option Plan and the 2001 U.S. Stock
Option Plan (the “Company Share Option Plans”), (ii) provide that each
outstanding option to purchase Ordinary Shares granted under the Company Share Option
Plans (each, a “Company Share Option”) that is outstanding and
unexercised immediately prior to the Closing, whether or not exercisable, shall become
fully vested and exercisable as of the Closing and (iii) cancel as of the Closing each
Company Share Option that is outstanding and unexercised as of the Closing. With respect
to each Company Share Option that is outstanding and unexercised as of the Closing and
that has an exercise price per Ordinary Share that is less than the Per Share Purchase
Price, in exchange for the cancellation of such Company Share Option, the Purchaser shall
pay to the holder of such Company Share Option at the Closing (or to the trustee of the
relevant Company Share Option Plan in the case of Company Share Options held by a
trustee) (subject to the provisions of Section 2.02(b), Section 2.03 and this Section
2.04, in each case mutatis mutandis), an amount in cash (the “Per Share
Option Amount”) equal to (x) the excess of the Per Share Purchase Price over the
per share exercise price of such Company Share Option, less (y) the Per Share Escrow
Amount. The Per Share Escrow Amount withheld with respect to each Company Share Option
shall be deposited in the Escrow Fund to secure the indemnification obligations of the
Company Securityholders pursuant to Section 9.02.  

    SECTION 2.05        Closing.
Subject to the terms and conditions of this Agreement, the sale and purchase of the
Ordinary Shares contemplated by this Agreement shall take place at a closing (the “Closing”)
to be held at the offices of the Company at 10:00 A.M. Israel time on the fifth Business
Day following the satisfaction or waiver of all conditions to the obligations of the
parties set forth in Sections 8.01 and Sections 8.02 (other than conditions that are to
be satisfied at the Closing, but subject to the satisfaction of such conditions at the
Closing) or at such other place or at such other time or on such other date as the
Sellers and the Purchaser may mutually agree upon in writing (the day on which the
Closing takes place being the “Closing Date”).  

    SECTION 2.06        Closing
Deliveries by each Seller. At the Closing, each Seller shall deliver or cause to be
delivered to the Purchaser:  

		    (a)        share
certificates evidencing the Ordinary Shares owned by such Seller, duly
               endorsed in blank or accompanied by share transfer deeds duly executed in
blank,                in form reasonably satisfactory to the Purchaser and with any
required (if                required) share transfer tax stamps affixed;  

		    (b)        a
counterpart of the Escrow Agreement executed by such Seller or on behalf of
               such Seller by the Sellers’ Representatives;  

		    (c)        the
certificate of such Seller required by Section 8.02(d)(ii);  

		    (d)        [intentionally
omitted]; and  

9

		    (e)        an
appropriate W-9 form for tax identification number certification or a W-8
               form for non-resident alien certification, and an appropriate
authorization from                the Israeli tax authorities.  

    SECTION 2.07        Closing
Deliveries by the Company. At the Closing, the Company shall deliver or cause to be
delivered to the Purchaser:  

		    (a)        (i)
a true and complete copy, certified by the Secretary or an Assistant
               Secretary of the Company, of the resolutions duly and validly adopted by
the                Board of Directors of the Company evidencing its authorization of the
execution                and delivery of this Agreement, and (ii) a letter of counsel to
the Company                certifying the names and signatures of the officers of the
Company authorized to                sign this Agreement and the other documents to be
delivered hereunder;  

		    (b)        a
copy of (i) the Memorandum of Association, as amended (or similar
               organizational documents), of the Company and of each Subsidiary,
certified by                the Registrar of Companies or the Secretary of State of the
jurisdiction in                which each such entity is incorporated or organized, as of
a date not earlier                than five Business Days prior to the Closing Date and
accompanied by a                certificate of the Secretary or Assistant Secretary of
each such entity, dated                as of the Closing Date, stating that no amendments
have been made to such                Memorandum of Association (or similar
organizational documents) since such date,                and (ii) the Articles of
Association (or similar organizational documents) of                the Company and of
each Subsidiary, certified by the Secretary or Assistant                Secretary of each
such entity:  

		    (c)        good
standing certificates for StoreAge U.S. from the Secretary of State of the
               jurisdiction in which such entity is incorporated or organized and from
the                Secretary of State in each other jurisdiction in which the properties
owned or                leased by any of the Company or any Subsidiary, or the operation
of its business                in such jurisdiction, requires the Company or any
Subsidiary to qualify to do                business as a foreign corporation, in each
case dated as of a date not earlier                than five Business Days prior to the
Closing Date;  

		    (d)        the
certificate of a duly authorized officer of the Company required by Section
               8.02(d)(i);  

		    (e)        the
resignations, effective as of the Closing, of all of the directors and
               officers of the Company and StoreAge U.S. and the resignations, effective
as of                the Closing, of all of the directors and officers of StoreAge China
appointed by                the Company, except for such persons as shall have been
designated in writing                prior to the Closing by the Purchaser to the
Company; and  

		    (f)        the
other opinions, certificates and other documents required to be delivered
               pursuant to Section 8.02.  

    SECTION 2.08        Closing
Deliveries by the Purchaser. (a) At the Closing, the Purchaser shall deliver to each
Seller:  

		    (i)        the
aggregate Per Share Purchase Price less the aggregate Per Share Escrow
               Amount that such Seller is entitled to receive in respect of its Ordinary
Shares                pursuant to Section 2.01, by check or wire transfer of immediately
available                funds to a bank account designated in writing by such Seller at
least two (2)                Business Days prior to the Closing;  

10

		    (ii)        a
counterpart of the Escrow Agreement executed by the Purchaser;  

		    (iii)        the
certificate of a duly authorized officer of the Purchaser required by
               Section 8.01(c); and  

		    (iv)        a
receipt for the Ordinary Shares that the Purchaser is entitled to receive from
               the Sellers at the Closing.  

		    (b)        At
the Closing, the Purchaser shall deliver to the Escrow Agent, in accordance
               with the Escrow Agreement, the Escrow Amount by wire transfer in
immediately                available funds to the accounts designated therefore in the
Escrow Agreement.  

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        As
an inducement to the Purchaser to enter into this Agreement, the Company hereby represents
and warrants to the Purchaser as follows, except as set forth in the section of the
Disclosure Schedule corresponding to the related section number of the relevant
representation or warranty below: 

    SECTION 3.01        Organization,
Authority and Qualification of the Company. The Company is a corporation duly
organized and validly existing under the laws of Israel and has all necessary power and
authority to own, operate or lease the properties and assets now owned, operated or
leased by it and to carry on the Business as it has been and is currently conducted. The
Company is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of its
business makes such licensing or qualification necessary or desirable, except to the
extent that the failure to be so licensed or qualified and in good standing would not (x)
adversely affect the ability of the Sellers to carry out their obligations under, and to
consummate the transactions contemplated by, this Agreement and the Escrow Agreement, (y)
adversely affect the ability of the Company and the Subsidiaries to conduct the Business
or (z) otherwise have a Material Adverse Effect, and all such jurisdictions are set forth
in Section 3.01 of the Disclosure Schedule. All corporate actions taken by the Company
have been duly authorized, and the Company has not taken any action that in any respect
conflicts with, constitutes a default under or results in a violation of any provision of
its Memorandum or Articles of Association. True and correct copies of the Memorandum and
Articles of Association of the Company, each as in effect on the date hereof, have been
delivered by the Company to the Purchaser.  

    SECTION 3.02        Subsidiaries.
(a) Section 3.02(a) of the Disclosure Schedule sets forth a true and complete list of all
Subsidiaries, listing for each Subsidiary its name, type of entity, the jurisdiction and
date of its incorporation or organization, its authorized capital stock, partnership
capital or equivalent, the number and type of its issued and outstanding shares of
capital stock, partnership interests or similar ownership interests and the current
ownership of such shares, partnership interests or similar ownership interests.  

11

		    (b)        Other
than the Subsidiaries, there are no other corporations, partnerships,           joint
ventures, associations or other entities in which the Company or any           Subsidiary
owns, of record or beneficially, any direct or indirect equity or           other
interest or any right (contingent or otherwise) to acquire the same. Other           than
the Subsidiaries, neither the Company nor any Subsidiary is a member of           (nor is
any part of the Business conducted through) any partnership nor is the           Company
or any Subsidiary a participant in any joint venture or similar           arrangement.  

		    (c)        StoreAge
U.S. and, to the knowledge of the Company, StoreAge China, (i) is a           corporation
duly organized, validly existing and in good standing under the laws           of its
jurisdiction of incorporation, (ii) has all necessary power and authority           to
own, operate or lease the properties and assets owned, operated or leased by
          such Subsidiary and to carry on its business as it has been and is currently
          conducted by such Subsidiary and (iii) is duly licensed or qualified to do
          business and is in good standing in each jurisdiction in which the properties
          owned or leased by it or the operation of its business makes such licensing or
          qualification necessary or desirable, except to the extent that the failure to
          be so licensed or qualified and in good standing would not (x) adversely affect
          the ability of the Sellers to carry out their obligations under, and to
          consummate the transactions contemplated by, this Agreement and the Escrow
          Agreement, (y) adversely affect the ability of the Company and the Subsidiaries
          to conduct the Business or (z) otherwise have a Material Adverse Effect.  

		    (d)        All
corporate actions taken by StoreAge U.S. and, to the knowledge of the           Company,
all corporate actions taken by StoreAge China have been duly authorized           and no
Subsidiary has taken any action that in any respect conflicts with,           constitutes
a default under or results in a violation of any provision of its           Certificate
of Incorporation or By-laws (or similar organizational documents).           True and
complete copies of the certificate of incorporation and by-laws (or           similar
organizational documents), in each case as in effect on the date hereof,           of
each Subsidiary have been delivered by the Seller to the Purchaser.  

		    (e)        StoreAge
China is a joint venture entity, in which the Company owns 40% of the
          outstanding capital stock, and the remaining 60% of the outstanding capital
          stock is owned by Beijing Deep Thought Software Company Ltd. In view of the
          aforementioned, any representations regarding StoreAge China are made to the
          knowledge of the Company.  

    SECTION 3.03        Capitalization.
(a) The authorized share capital of the Company is NIS 1,000,000 divided into 100,000,000
Ordinary Shares. As of the date hereof, (i) 49,836,898 Ordinary Shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii) an
aggregate of 11,938,347 Ordinary Shares are reserved for issuance pursuant to incentive
stock options granted or to be granted pursuant to the Company Share Option Plans, of
which an aggregate of 7,881,202 Ordinary Shares are issuable upon the exercise of Company
Share Options outstanding on the date hereof. All of the outstanding Ordinary Shares and
Company Share Options were issued in compliance with all applicable securities and
corporate laws of Israel. None of the issued and outstanding Ordinary Shares was issued
in violation of any preemptive rights. Except for Company Share Options granted pursuant
to the Company Share Option Plans, there are no options, warrants, convertible securities
or other rights, agreements, arrangements or commitments of any character relating to
Ordinary Shares or obligating either of the Sellers or the Company to issue or sell any
Ordinary Shares, or any other interest in, the Company. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise acquire any
Ordinary Shares or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other Person. The Ordinary Shares listed on
Exhibit A attached hereto constitute all of the issued and outstanding share capital of
the Company and, to the knowledge of the Company, are owned of record and beneficially by
the Sellers as listed on Exhibit A attached hereto, free and clear of all Encumbrances.
Upon consummation of the transactions contemplated by this Agreement and registration of
the Ordinary Shares in the name of the Purchaser in the share register of the Company,
the Purchaser, assuming it shall have purchased such shares for value in good faith and
without notice of any adverse claim, will own all the issued and outstanding share
capital and rights to acquire share capital of the Company free and clear of all
Encumbrances. Upon consummation of the transactions contemplated by this Agreement, the
Ordinary Shares to be sold to the Purchaser pursuant to this Agreement will be fully paid
and nonassessable. To the knowledge of the Company, there are no voting trusts,
shareholder agreements, proxies or other agreements or understandings in effect with
respect to the voting or transfer of any of the outstanding Ordinary Shares.  

12

		    (b)        The
share register of the Company accurately records: (i) the name and address           of
each Person owning Ordinary Shares and (ii) the certificate number of each
          certificate evidencing shares issued by the Company, the number of shares
          evidenced by each such certificate, the date of issuance thereof and, in the
          case of cancellation, the date of cancellation.  

		    (c)        Section
3.03(c) of the Disclosure Schedule sets forth the following information           with
respect to each Company Share Option outstanding as of the date of this
          Agreement: (i) the name of the option holder; (ii) the number of Ordinary
Shares           subject to such Company Share Option; (iii) the exercise price of such
Company           Share Option; (iv) the date on which such Company Share Option was
granted; (v)           the applicable vesting schedule; and (vi) the applicable Company
Share Option           Plan. The Company has made available to the Purchaser a complete
and correct           copy of the Company Share Option Plans and the form of all share
option           agreements evidencing Company Share Options in each case as in effect on
the           date of this Agreement. All Ordinary Shares subject to issuance as
previously           stated in this Section 3.03(c), upon issuance on the terms and
conditions           specified in the instruments pursuant to which they are issuable,
will be duly           authorized, validly issued, fully paid and nonassessable.  

		    (d)        All
the outstanding shares of capital stock of StoreAge U.S. are validly issued,
          fully paid, nonassessable and free of preemptive rights and are owned by the
          Company, whether directly or indirectly, free and clear of all Encumbrances.
          There are no options, warrants, convertible securities or other rights,
          agreements, arrangements or commitments of any character relating to the
capital           stock of StoreAge U.S. or obligating any Seller, the Company or
StoreAge U.S. to           issue or sell any shares of capital stock of, or any other
interest in StoreAge           U.S. To the knowledge of the Company, there are no voting
trusts, shareholder           agreements, proxies or other agreements or understandings
in effect with respect           to the voting or transfer of any shares of capital stock
of or any other           interests in StoreAge U.S. The stock register of StoreAge U.S.
accurately           records: (i) the name and address of each Person owning shares of
capital stock           of StoreAge U.S. and (ii) the certificate number of each
certificate evidencing           shares of capital stock issued by StoreAge U.S., the
number of shares evidenced           by each such certificate, the date of issuance
thereof and, in the case of           cancellation, the date of cancellation.  

13

    SECTION 3.04        Corporate
Books and Records. The minute books of the Company and StoreAge U.S. and, to the
knowledge of the Company, StoreAge China, contain accurate records of all meetings and
accurately reflect all other actions taken by the shareholders, Boards of Directors and
all committees of the Boards of Directors of such entity. The share register and the
register of directors of the Company and StoreAge U.S. and, to the knowledge of the
Company, such registers of StoreAge China, if applicable, completely and accurately set
forth the information required to be included therein. Complete and accurate copies of
all such minute books and of the share register of the Company and StoreAge U.S. have
been provided by the Company to the Purchaser.  

    SECTION 3.05        No
Conflict. Assuming that all consents, approvals, authorizations and other actions
described in Section 3.05 have been obtained, the execution, delivery and performance of
this Agreement by the Company do not and will not (a) violate, conflict with or result in
the breach of any provision of the Memorandum or Articles of Association (or similar
organizational documents) of the Company or any Subsidiary, (b) conflict with or violate
(or cause an event which could have a Material Adverse Effect as a result of) any Law or
Governmental Order applicable to the Company, any Subsidiary or any of their respective
assets, properties or businesses, or (c) except as set forth in Section 3.05(c) of the
Disclosure Schedule, conflict with, result in any breach of, constitute a default (or
event which with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or result in the creation of any
Encumbrance on any of the outstanding Ordinary Shares or any of the assets of the Company
or any Subsidiary pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or arrangement
to which the Company or any Subsidiary is a party or by which any of the outstanding
Ordinary Shares or any of such assets is bound or affected.  

    SECTION 3.06        Governmental
Consents and Approvals. The execution, delivery and performance of this Agreement by
the Company do not and will not require any consent, approval, authorization or other
order of, action by, filing with or notification to, any Governmental Authority, except
(i) consent of the Office of the Chief Scientist of the Israeli Ministry of Industry,
Trade and Labor (“CSO”); and (ii) consent of the Investment Center of
the Israeli Ministry of Industry, Trade and Labor (the “Investment Center”).  

    SECTION 3.07        Financial
Information. (a) True and complete copies of (i) the audited consolidated balance
sheet of the Company for each of the two fiscal years ended as of December 31, 2004 and
2005, and the related audited consolidated statements of operations, statements of
changes in shareholders’ equity and statements of cash flows of the Company,
together with all related notes and schedules thereto, accompanied by the reports thereon
of the Company’s independent auditors (collectively referred to herein as the “Financial
Statements”) and (ii) the unaudited consolidated balance sheet of the Company as
of June 30, 2006, and the related consolidated statements of operations, statements of
changes in shareholders’ equity and statements of cash flows of the Company,
together with all related notes and schedules thereto (collectively referred to herein as
the “Interim Financial Statements”) have been delivered by the Seller to
the Purchaser.  

		    (b)        The
Financial Statements and the Interim Financial Statements (i) were prepared           in
accordance with the books of account and other financial records of the           Company
and StoreAge U.S., (ii) present fairly the consolidated financial           condition and
results of operations of the Company and StoreAge U.S. as of the           dates thereof
or for the periods covered thereby, (iii) have been prepared in           accordance with
U.S. GAAP applied on a basis consistent with the past practices           of the Company
and StoreAge U.S., (iv) include all adjustments (consisting only           of normal
recurring accruals) that are necessary for a fair presentation of the
          consolidated financial condition of the Company and StoreAge U.S. and the
          results of the operations of the Company and StoreAge U.S. as of the dates
          thereof or for the periods covered thereby, (v) the Interim Financial
Statements           are subject to year-end adjustments that may be required by the
Company’s           independent auditors, and (vi) the liabilities towards the CSO
are not reflected           on the Interim Financial Statements.  

14

		    (c)        The
books of account and other financial records of the Company and StoreAge           U.S.
(i) reflect all items of income and expense and all assets and Liabilities
          required to be reflected thereon in accordance with U.S. GAAP applied on a
basis           consistent with the past practices of the Company and StoreAge U.S.,
          respectively, (ii) are in all material respects complete and correct, and do
not           contain or reflect any material inaccuracies or discrepancies, and (iii)
have           been maintained in accordance with good business and accounting and
practices.  

    SECTION 3.08        Absence
of Undisclosed Liabilities. There are no Liabilities of the Company or StoreAge U.S.
and, to knowledge of the Company, there are no Liabilities of StoreAge China, other than
Liabilities (a) reflected or reserved against on the consolidated balance sheet of the
Company as of June 30, 2006 (the “Latest Balance Sheet”), (b) described
in Section 3.07(b)(vi) above, or (c) incurred since the date of the Latest Balance Sheet
in the ordinary course of business, consistent with past practice, of the Company and the
Subsidiaries and which individually and in the aggregate do not and could not reasonably
be expected to have a Material Adverse Effect. Except as provided above, reserves are
reflected on the Latest Balance Sheet against all Liabilities of the Company and StoreAge
U.S. in amounts that have been established on a basis consistent with the past practices
of the Company and StoreAge U.S. and in accordance with U.S. GAAP.  

    SECTION 3.09        Conduct
in the Ordinary Course. Since June 30, 2006, the Business has been conducted in the
ordinary course and consistent with past practice. As amplification and not limitation of
the foregoing, except as set forth in Section 3.09 of the Disclosure Schedule, since the
above date, none of the Company nor StoreAge U.S. nor, to the knowledge of the Company,
StoreAge China, has:  

		    (a)        amended
or restated the Memorandum or Articles of Association (or other
               organizational documents) of the Company or any Subsidiary;  

		    (b)        issued
or sold any share capital, notes, bonds or other securities, or any
               option, warrant or other right to acquire the same, of the Company or any
               Subsidiary;  

		    (c)        redeemed
any of the share capital or declared, made or paid any dividends or
               distributions (whether in cash, securities or other property) to the
holders of                share capital of the Company or any Subsidiary or otherwise;  

		    (d)        merged
with, entered into a consolidation with or acquired any interest of 5%or more in
any Person or acquired a substantial portion of the assets or                business of
any Person or any division or line of business thereof, or otherwise
               acquired any material assets other than in the ordinary course of business
               consistent with past practice;  

		    (e)        made
any capital expenditure or commitment for any capital expenditure in excess
               of $25,000 individually or $100,000 in the aggregate;  

15

		    (f)        sold,
leased, licensed or otherwise transferred any properties or assets, other
               than the sale of inventory or licenses in the ordinary course of business
               consistent with past practice;  

		    (g)        issued
any sales orders or otherwise agreed to make any purchases involving
               exchanges in value in excess of $25,000individually or $100,000in
the aggregate;  

		    (h)        incurred
any Indebtedness in excess of $25,000 individually or $100,000 in the
               aggregate;  

		    (i)        made
any loan to, guaranteed any Indebtedness of or otherwise incurred any
               Indebtedness on behalf of any Person;  

		    (j)        failed
to pay any creditor any amount owed to such creditor when due;  

		    (k)        (i)
granted any increase, or announced any increase, in the wages, salaries,
               compensation, bonuses, incentives, pension or other benefits payable by
the                Company or any Subsidiary to any of its employees, or (ii) established
or                increased or promised to increase any benefits under any Plan, in
either case                except as required by Law;  

		    (l)        entered
into any agreement, arrangement or transaction with any of its                directors,
officers, employees or shareholders (or with any relative,                beneficiary,
spouse or Affiliate of such Persons);  

		    (m)        made
any material changes in the customary methods of operations of the Company,
               any Subsidiary or the Business;  

		    (n)        permitted
or allowed any of its assets to be subjected to any Encumbrance;  

		    (o)        revalued
any of its assets other than in the ordinary course of business                consistent
with past practice and in accordance with U.S. GAAP;  

		    (p)        made
any change in any method of accounting or accounting practice or policy
               used by the Company or any Subsidiary, other than such changes required by
U.S.                GAAP and set forth in Section 3.09 of the Disclosure Schedule;  

		    (q)        amended,
terminated, cancelled or compromised any material claims of the Company                or
any Subsidiary or waived any other rights of substantial value to the Company
               or any Subsidiary;  

		    (r)        made
any express or deemed election or settled or compromised any liability with
               respect to Taxes of the Company or any Subsidiary;  

		    (s)        disclosed
any secret or confidential Intellectual Property (except by way of
               issuance of a patent and except in the ordinary course of business) or
permitted                to lapse or become abandoned any Intellectual Property (or any
registration or                grant thereof or any application relating thereto) to
which, or under which, the                Company or any Subsidiary has any right, title,
interest or license;  

16

		    (t)        amended,
modified or consented to the termination of any Material Contract or                the
Company’s or any Subsidiary’s rights thereunder;  

		    (u)        (i)
abandoned, sold, assigned, or granted any security interest in or to any
               item of the Owned Intellectual Property, Licensed Intellectual Property or
               Company IP Agreements, including, without limitation, failing to perform
or                cause to be performed all applicable filings, recordings and other
acts, and pay                or caused to be paid all required fees and taxes, to
maintain and protect its                interest in such Intellectual Property, (ii)
granted to any third party any                license with respect to any Owned
Intellectual Property or Licensed Intellectual                Property except in the
ordinary course of business, (iii) developed, created or                invented any
Intellectual Property jointly with any third party (other than such                joint
development, creation or invention with a third party that is in progress
               prior to the date of the Latest Balance Sheet), or (iv) disclosed, or
allow to                be disclosed, any confidential Intellectual Property, unless such
Intellectual                Property is subject to a confidentiality or non-disclosure
contract protecting                against disclosure thereof;  

		    (v)        suffered
any Material Adverse Effect; or  

		    (w)        agreed,
whether in writing or otherwise, to take any of the actions specified in
               this Section 3.09 or granted any options to purchase, rights of first
refusal,                rights of first offer or any other similar rights or commitments
with respect to                any of the actions specified in this Section 3.09, except
as expressly                contemplated by this Agreement.  

    SECTION 3.10        Litigation.
There are no Actions by or against the Company or StoreAge U.S. and, to the Knowledge of
the Company, there are no Actions by or against StoreAge China, or affecting any of the
assets or businesses of the Company or StoreAge U.S. or, to the Knowledge of the Company,
affecting any of the assets or businesses of StoreAge China, pending before any
Governmental Authority (or, to the knowledge of the Company, threatened to be brought by
or before any Governmental Authority). None of the Company, StoreAge U.S. or, to
knowledge of the Company, StoreAge China or any of their respective assets or properties
is subject to any Governmental Order (nor, to the knowledge of the Company, are there any
such Governmental Orders threatened to be imposed by any Governmental Authority) which
has or has had a Material Adverse Effect or could affect the legality, validity or
enforceability of this Agreement, the Escrow Agreement or the consummation of the
transactions contemplated by this Agreement.  

    SECTION 3.11        Compliance
with Laws. (a) The Company, StoreAge U.S. and, to the knowledge of the Company,
StoreAge China have each conducted and continue to conduct the Business in accordance
with all Laws and Governmental Orders applicable to the Company or any Subsidiary or any
of their properties or assets, and none of the Company or StoreAge U.S. or, to the
knowledge of the Company, StoreAge China, is in violation of any such Law or Governmental
Order.  

		    (b)        There
is no Governmental Order applicable specifically to the Company or any
          Subsidiary or any of their properties or assets, except extension orders
          (tzavei harchava) issued by the Minister of Labor relating to the
          software or electronics industry.  

17

		    (c)        None
of the Company, StoreAge U.S. or any officer, director, shareholder,           employee,
agent or representative of the Company or StoreAge U.S., or, to the           knowledge
of the Company, StoreAge China, or any of its officers, directors,
          shareholders, employees, agents or representatives (i) has taken any action
          which is or could be deemed to be a violation of the Foreign Corrupt Practices
          Act in respect of the Business; (ii) is aware of any action or conduct which
          could be deemed to be a violation of the Foreign Corrupt Practices Act in
          respect of the Business; or (iii) has offered, given, paid, authorized the
          payment of, or promised, directly or indirectly, any money, gift, promise or
          other thing of value to any Foreign Official (or to any Person while knowing it
          will be offered, given or promised to a Foreign Official) for any purpose
          including, by way of example, influencing any act or decision of such Person
          acting in their official capacity, inducing such Person to do or omit to do any
          action in violation of their lawful duty, inducing such Person to use their
          influence with any Governmental Authority to affect or influence any act or
          decision of such Governmental Authority, in order to assist the Company or any
          Subsidiary obtain or retain business for or with, or in directing business to,
          any Person.  

    SECTION 3.12        Material
Contracts. (a) Section 3.12(a) of the Disclosure Schedule lists each of the following
contracts and agreements (including, without limitation, oral agreements) of the Company
and the Subsidiaries (such contracts and agreements, together with all the leases
relating to the Leased Real Property listed in Section 3.14(b) of the Disclosure Schedule
and all Company IP Agreements listed or otherwise set forth in Section 3.13(a) of the
Disclosure Schedule), being “Material Contracts”):  

		    (i)        all
contracts and agreements under the terms of which the Company or any
               Subsidiary is likely to pay or receive consideration having a value of
more than                $100,000 in the aggregate over the remaining term of such
contract or other                arrangement;  

		    (ii)        all
joint venture, partnership, strategic alliance or similar agreements (other
               than (x) any non-exclusive reseller or distribution agreements
substantially in                the form of the Company’s standard forms, or (y)
confidentiality or                non-disclosure agreements);  

		    (iii)        all
shareholder agreements, investor rights’ agreements, registration
               rights agreements, right of first refusal agreements or similar
agreements;  

		    (iv)        (A)
all agreements pursuant to which the Company or any Subsidiary has sold or
               has agreed to sell any shares or material assets, and (B) all
agreements                pursuant to which the Company or any Subsidiary has sold or
licensed or has                agreed to sell or license any assets for aggregate
consideration greater than                $100,000 (other than any licensing of the
Company’s products or services to                end users in the ordinary course of
business);  

		    (v)        all
material agreements with resellers and distributors (other than (x) any
               non-exclusive reseller or distribution agreements substantially in the
form of                the Company’s standard forms, or (y) confidentiality or
non-disclosure                agreements);  

		    (vi)        all
contracts and agreements relating to any Indebtedness of the Company or any
               Subsidiary in excess of $50,000 individually;  

18

		    (vii)        all
contracts and agreements with any Governmental Authority to which the
               Company or any Subsidiary is a party;  

		    (viii)        all
contracts and agreements that limit or purport to limit the ability of the
               Company or any Subsidiary to compete in any line of business or with any
Person                or in any geographic area or during any period of time;  

		    (ix)        all
contracts and agreements between or among the Company or any Subsidiary, on
               one hand, and a Seller or any Affiliate of a Seller (other than the
Company or                any Subsidiary), on the other hand;  

		    (x)        all
material contracts and agreements providing for benefits under any Company
               Employee Plan; and  

		    (xii)        all
other contracts agreements that the Company deems material to its business.  

		    (b)        Each
Material Contract: (i) is valid and binding on the parties thereto and is
               in full force and effect; and (ii) upon consummation of the transactions
               contemplated by this Agreement and the Escrow Agreement, except to the
extent                that any consents set forth in Section 3.05(c) of the Disclosure
Schedule are                not obtained, shall continue in full force and effect without
penalty or other                adverse consequence. None of the Company nor any
Subsidiary is in breach of, or                default under, any Material Contract. To
the knowledge of the Company, no other                party to any Material Contract is
in breach thereof or default thereunder and                none of the Company or any
Subsidiary has received any notice of termination,                cancellation, breach or
default under any Material Contract. The Company has                made available to the
Purchaser true and complete copies of all Material                Contracts.  

    SECTION 3.13        Intellectual
Property. (a) Section 3.13(a) of the Disclosure Schedule sets forth a true and
complete list of (i) all patents and patent applications, registered trademarks and
trademark applications, registered copyrights and copyright applications, and domain
names included in the Owned Intellectual Property, (ii) all Company IP Agreements, other
than commercially available off-the-shelf computer software licensed pursuant to
shrink-wrap or click-wrap licenses that is not material to the Business and (iii) other
Owned Intellectual Property material to the Business.  

		    (b)        The
operation of the Business as currently conducted and the use of the Owned
          Intellectual Property and Licensed Intellectual Property in connection
therewith           do not conflict with, infringe, misappropriate or otherwise violate
the           Intellectual Property or other proprietary rights, including rights of
privacy,           publicity and endorsement, of any third party, and no Actions or
Claims are           pending or, to the knowledge of the Company, threatened against the
Company or           any Subsidiary alleging any of the foregoing.  

		    (c)        The
Company or a Subsidiary owns or has the legal right to use all Intellectual
          Property used by the Company and the Subsidiaries in the Business. With respect
          to Owned Intellectual Property, the Company or a Subsidiary is the exclusive
          owner of the entire and unencumbered right, title and interest in and to such
          Owned Intellectual Property, and the Company or a Subsidiary has a valid right
          to use the Owned Intellectual Property in the ordinary course of the Business
as           presently conducted. With respect to Licensed Intellectual Property, the
Company           or a Subsidiary has a valid right to use such Licensed Intellectual
Property in           the ordinary course of the Business as presently conducted pursuant
to valid and           effective license agreements.  

19

		    (d)        No
Owned Intellectual Property, or to the knowledge of the Company, any Licensed
          Intellectual Property, is subject to any outstanding decree, order, injunction,
          judgment, ruling or agreement restricting the use of such Intellectual Property
          or that would impair the validity or enforceability of such Intellectual
          Property. The Owned Intellectual Property and, to the knowledge of the Company,
          the Licensed Intellectual Property, are subsisting, valid and enforceable, and
          have not been adjudged invalid or unenforceable in whole or part.  

		    (e)        No
Actions or Claims have been asserted or are pending or, to the knowledge of           the
Company, threatened against the Company or any Subsidiary (i) based upon or
          challenging or seeking to deny or restrict the use by the Company or any
          Subsidiary of any of the Owned Intellectual Property or Licensed Intellectual
          Property, (ii) alleging that any services provided by, processes used by, or
          products manufactured or sold by the Company or any Subsidiary infringe or
          misappropriate any Intellectual Property right of any third party or (iii)
          alleging that the Licensed Intellectual Property is being licensed or
          sublicensed in conflict with the terms of any license or other agreement.  

		    (f)        To
the knowledge of the Company, no person is engaging in any activity that
          infringes the Owned Intellectual Property or Licensed Intellectual Property.
          Licensed Intellectual Property is not granted exclusively to the Company or any
          Subsidiary. Except in the ordinary course of business, neither the Company nor
          any Subsidiary has granted any license or other right to any third party with
          respect to the Owned Intellectual Property or Licensed Intellectual Property.
          The consummation of the transactions contemplated by this Agreement and the
          Escrow Agreement will not result in the termination or impairment of any of the
          Owned Intellectual Property or Licensed Intellectual Property.  

		    (g)        The
Company Software is free of all viruses, worms, trojan horses and other
          material known contaminants and does not contain any bugs, errors, or problems
          of a material nature that would disrupt its operation or have an adverse impact
          on the operation of other software programs or operating systems. Except as set
          forth in Section 3.13(g) of the Disclosure Schedule, the Company Software does
          not incorporate any GNU or “open” source code or object code under
          which the Company Software is subject to the GNU general public license, GNU
          lesser general public license and other “copyleft” license. The
          Company’s business as currently conducted and as proposed to be conducted
          does not involve the use or development of, or engaging in, encryption
          technology, or other technology whose development, commercialization or export
          is restricted under Israeli or applicable foreign law, and the Company’s
          business as currently conducted and as proposed to be conducted does not
require           the Company to obtain a license from the Israeli Ministry of Defense or
an           authorized body thereof pursuant to the Control of Products and Services
          Declaration (Engagement in Encryption), 1974, as amended, or other applicable
          laws regulating the development, commercialization or export of technology. No
          rights in the Company Software have been transferred to any third party except
          to the customers of the Business to whom the Company or a Subsidiary has
          licensed such Company Software in the ordinary course of business. Section
          3.13(g) of the Disclosure Schedule lists all agreements pursuant to which the
          Company or StoreAge U.S. has deposited source code or similar materials for the
          Company Software with or for the benefit of any Person. Each of the Company,
          StoreAge U.S. and, to the knowledge of the Company, StoreAge China, has the
          right to use all software development tools, library functions, compilers, and
          other third party software that are material to the Business or that are
          required to operate or modify the Company Software.  

20

		    (h)        The
Company and the Subsidiaries have taken reasonable steps in accordance with
          normal industry practice to maintain the confidentiality of the trade secrets
          and other confidential Intellectual Property used in connection with the
          Business. To the knowledge of the Company, (i) there has been no
          misappropriation of any material trade secrets or other material confidential
          Owned Intellectual Property used in connection with the Business by any person;
          (ii) no employee, independent contractor or agent of the Company or any
          Subsidiary has misappropriated any trade secrets of any other person in the
          course of performance as an employee, independent contractor or agent of the
          Business; and (iii) no employee, independent contractor or agent of the Company
          or any Subsidiary is in default or breach of any term of any employment
          agreement, nondisclosure agreement, assignment of invention agreement or
similar           agreement or contract relating in any way to the protection, ownership,
          development, use or transfer of Intellectual Property.  

     SECTION 3.14        Leased
Real Property. (a) None of the Company or any Subsidiary owns or has owned any real
property.  

		    (b)        Section
3.14(b) of the Disclosure Schedule lists: (i) the block and lot number,           and the
street address, of each parcel of real property leased or subleased by           the
Company or any Subsidiary (the “Leased Real Property”),           (ii)
the identity of the lessor, lessee and current occupant (if different from
          lessee) of each such parcel of Leased Real Property, (iii) all applicable lease
          agreements for each parcel of Leased Real Property and a summary of the terms
          and rental payment amounts pertaining to each such parcel of Leased Real
          Property, and (iv) the current use of each such parcel of Leased Real Property.  

		    (c)        The
Company has made available to the Purchaser true and complete copies of all
          lease agreements for each parcel of Leased Real Property, as listed in Section
          3.14(b) of the Disclosure Schedule. With respect to each lease listed in
Section           3.14(b) of the Disclosure Schedule, none of the Company nor any
Subsidiary has           exercised or given any notice of exercise of any option, right
of first offer or           right of first refusal contained in any such lease or
sublease.  

		    (d)        To
the knowledge of the Company, either the Company or a Subsidiary, as the case
          may be, is in peaceful and undisturbed possession of each parcel of Leased Real
          Property, and there are no contractual or legal restrictions that preclude or
          restrict the ability to use the Leased Real Property for the purposes for which
          it is currently being used. To the knowledge of the Company, there are no
          material latent defects or material adverse physical conditions affecting the
          Leased Real Property or any of the facilities, buildings, improvements, or
          fixtures attached to or located on any of the Leased Real Property. To the
          knowledge of the Company, neither the Company nor any Subsidiary has leased or
          subleased any parcel or any portion of any parcel of Leased Real Property to
any           other Person and no other Person has any rights to the use, occupancy or
          enjoyment thereof pursuant to any lease, sublease, license, occupancy or other
          agreement, nor has the Company or any Subsidiary assigned its interest under
any           lease or sublease listed in Section 3.14(b) of the Disclosure Schedule to
any           third party.  

21

    SECTION 3.15        Environmental
Matters. Each of the Company, StoreAge U.S. and, to the knowledge of the Company,
StoreAge China is in compliance with all applicable Environmental Laws and all
Environmental Permits. There has been no release or discharge of any Hazardous Material
on any of the Leased Real Property or, during the period of the Company’s or any
Subsidiary’s ownership, lease, use or occupancy thereof, on any property formerly
owned, leased, used or occupied by the Company or any Subsidiary. There are no
Environmental Claims pending or threatened against the Company, any Subsidiary or the
Leased Real Property, and to the Company’s knowledge there are no circumstances that
can reasonably be expected to form the basis of any such Environmental Claim. Neither the
Company, StoreAge U.S. or, to the knowledge of the Company, StoreAge China has any actual
or alleged liability, whether fixed or contingent, under any Environmental Law. Neither
the execution of this Agreement or the Escrow Agreement nor the consummation of the
transactions contemplated by this Agreement or thereby will require any cleanup or other
remedial action or notice to or consent of Governmental Authorities or third parties
pursuant to any applicable Environmental Law or Environmental Permit.  

    SECTION 3.16        Assets.
The Company or a Subsidiary, as the case may be, owns, leases or has the legal right to
use all the properties and assets used in the conduct of the Business or otherwise owned,
leased or used by the Company or any Subsidiary, and, with respect to contract rights, is
a party to and enjoys the right to the benefits of all contracts, agreements and other
arrangements used by the Company or any Subsidiary or in or relating to the conduct of
the Business. Except as set forth in Section 3.16 of the Disclosure Schedule, each of the
Company or a Subsidiary, as the case may be, has good and marketable title to, or, in the
case of leased or subleased assets, valid and subsisting leasehold interests in, all of
its assets, free and clear of all Encumbrances.  

    SECTION 3.17       Employment
Matters. (a) Employees. Section 3.17(a) of the Disclosure Schedule lists the
name, title, place of employment, date of hire, annual salary rate, annual bonus, and
other compensation or benefits paid or payable (in cash or otherwise) in 2005 and 2006 of
each current employee, officer, director, consultant or agent of the Company and StoreAge
U.S. Except as described in Section 3.17(a) of the Disclosure Schedule, each employee is
terminable “at will” subject to applicable notice periods as set forth by law
or in the employment agreement, but in any event not more than 60 days, and there are no
agreements or understandings between the Company or any Subsidiary and any of their
employees that their employment will be for any particular period. The Company is not
aware that any of officers or key employees of the Company or any Subsidiary intends to
terminate his or her employment with the Company or any Subsidiary.  

		    (b)        Employee
Benefit Plans. Section 3.17(b) of the Disclosure Schedule lists           (i) all
employment, termination, severance or other similar contracts or           arrangements
between the Company or any Subsidiary, on the one hand, and any           employee of the
Company or any Subsidiary, on the other hand, and (ii) all           employee benefit
plans and all bonus, stock option, share purchase, restricted           share, incentive,
deferred compensation, retiree medical or life insurance,           supplemental
retirement, severance or other benefit plans, programs or           arrangements to which
the Company or any Subsidiary is a party, with respect to           which the Company or
any Subsidiary has any obligation or which are maintained,           contributed to or
sponsored by the Company or any Subsidiary for the benefit of           any current or
former employee, officer or director of the Company or any           Subsidiary
(collectively, the “Company Employee Plans”).           Each
Company Employee Plan is in writing and the Company has furnished to the
          Purchaser a complete and accurate copy of each Company Employee Plan and a
          complete and accurate copy of each material document prepared in connection
with           each such Company Employee Plan. There are no other employee benefit
plans,           programs, arrangements or agreements, whether formal or informal,
whether in           writing or not, to which the Company or any Subsidiary is a party,
with respect           to which the Company or any Subsidiary has any obligation or which
are           maintained, contributed to or sponsored by the Company or any Subsidiary
for the           benefit of any current or former employee, officer or director of the
Company or           any Subsidiary. Except as provided in individual employment
agreements, labor           laws and regulations and extension orders (tzavei
harchava), neither the           Company nor any Subsidiary has any express or
implied commitment, whether           legally enforceable or not, to (i) create, incur
liability with respect to or           cause to exist any other employee benefit plan,
program or arrangement, (ii) to           enter into any contract or agreement to provide
compensation or benefits to any           individual, or (iii) to modify, change or
terminate any Company Employee Plan,           other than with respect to a modification,
change or termination required by           applicable Law.  

22

		    (c)        Absence
of Retiree Benefit Plans. No Company Employee Plan or any           agreement with
any employee, officer or director of the Company or any           Subsidiary provides, or
reflects or represents any liability to provide           post-termination medical,
health, disability, insurance or other benefits to any           person for any reason,
and, to the knowledge of the Company, the Company has           never represented,
promised or contracted (whether in oral or written form) to           any employee,
officer or director (either individually or as a group) or any           other person
that such employee, officer or director or other person would be           provided with
post-termination life, health or other benefits, except for           employee
insurance plans and directors and officers insurance and           indemnification
agreements.  

		    (d)        Compliance
with Applicable Law. Each Company Employee Plan is now and           always has been
operated in all respects in accordance with the requirements of           all applicable
Law. The Company and each Subsidiary has performed all           obligations required to
be performed by it under, is not in any respect in           default under or in
violation of, and has no knowledge of any default or           violation by any party to,
any Company Employee Plan. No legal action, suit or           claim is pending or, to the
knowledge of the Company, threatened with respect to           any Company Employee Plan
(other than claims for benefits in the ordinary           course).  

		    (e)        Absence
of Consequences. Subject to any applicable law, the           execution of
this Agreement and the consummation of the transactions           contemplated hereby
will not (either alone or upon the occurrence of any           additional or subsequent
events) constitute an event under any Company Employee           Plan, employment
agreement, trust, loan or other agreement or arrangement that           will or might
result in any payment (whether of severance pay,           “gross-up,” or
indemnity or similar payment or otherwise),           acceleration, forgiveness of
indebtedness, vesting, distribution, increase in           benefits or obligation to fund
benefits with respect to any employee, officer or           director of the Company or
any Subsidiary, except for any payment that is fully           funded.  

		    (f)        No
ERISA Plans. Except for StoreAge U.S. which has an Employee Plan (US           401K)
which is subject to ERISA and secured by an ERISA Bond, none of the           Company
Employee Plans are subject to the U.S. Employee Retirement Income           Security Act
of 1974, as amended, or to any similar or corresponding statute of           any
jurisdiction outside of Israel.  

		    (g)        Plan
Contributions and Funding. All contributions, premiums or           payments required
to be made with respect to any Company Employee Plan have been           made on or
before their due dates. No Company Employee Plan has, or as of the           Closing will
have, unfunded liabilities that, as of the Closing will not be           fully funded or
insured against. With respect to the Company Employee Plans,           individually and
in the aggregate, there are no funded benefit obligations for           which
contributions have not been made or properly accrued and there are no           unfunded
benefit obligations which have not been accounted for by reserves, or           otherwise
properly footnoted, in accordance with GAAP on the Latest Balance           Sheet, except
for obligations incurred in the ordinary course of business           consistent with
past practice since the date of the Latest Balance Sheet.  

23

		    (h)        Israel
Employment Matters. The Company has complied with all legislative,
          regulatory and other binding provisions relating to employee of the Company in
          Israel and their terms and conditions of employment, and has made all
deductions           and payments to the Income Tax Authority and the National Insurance
Institute           required to be made by law or any other deductions or payments
required by law.           The severance pay due to the employees of the Company is fully
insured against           or funded. All other liabilities of the Company and the
Subsidiaries to the           employees of the Company and the Subsidiaries were properly
accrued in the           Latest Balance Sheet.  

		    (i)        Proprietary
Invention Agreements. All directors, officers, management           employees, and
technical and professional employees of the Company and each           Subsidiary are
under written obligation to the Company or such Subsidiary to           maintain in
confidence all confidential or proprietary information acquired by           them in the
course of their employment and to assign to the Company or such           Subsidiary all
inventions made by them within the scope of their employment           during such
employment.  

    SECTION 3.18        Labor
Matters. (a) None of the Company or any Subsidiary is bound by or subject to
collective bargaining agreement or any arrangement, written or oral, with any labor union
and is required (under any legal requirement, under any contract or otherwise) to provide
benefits or working conditions beyond the minimum benefits and working conditions
required by law to be provided pursuant to rules and regulation of the Histadrut (General
Federation of Labor), the Coordinating Bureau of Economic Organization and the
Industrialists’ Association. Neither the Company nor any Subsidiary has recognized
or received a demand for recognition from any collective bargaining representative with
respect to any of its employees. Except to the extent applicable to employers and
employees generally or in a certain field in Israel, neither the Company nor any
Subsidiary has or is subject to, and no employee of Company or any Subsidiary benefits
from, any extension order (tzavei harchava) or any contract or arrangement with
respect to employment or termination thereof.  

		    (b)        There
are no controversies, strikes, slowdowns or work stoppages pending or, to           the
knowledge of the Company, threatened between the Company or any Subsidiary           and
any of their respective employees, and neither the Company nor any           Subsidiary
has experienced any such controversy, strike, slowdown or work           stoppage within
the past three years.  

		    (c)        The
Company and each Subsidiary are in compliance in all material respects with           all
applicable Laws respecting employment, employment practices, terms and
          conditions of employment, employee safety and wages and hours, including the
          Advance Notice for Dismissal and Resignation Law, 5761-2001, the Notification
to           an Employee (Terms of Employment) Law, 5762-2002, the Prevention of Sexual
          Harassment Law, 5758-1998, the Hours of Work and Rest Law, 5711-1951 and the
          Employment by Human Resources Contractors Law, 5756-1996. The Company has
          provided or made available to Purchaser all licenses or permits held by the
          Company and the Subsidiaries that enable them to employ foreign employees or
          employees from territories currently administered by Israel.  

24

		    (d)        The
obligations of the Company to provide statutory severance pay to its           employees
pursuant to the Severance Pay Law, 5723-1963 is fully insured against           or
funded. The Company uses the provisions of Section 14 of the Severance           Pay
Law, 5723-1963 with respect to such statutory severance pay.  

		    (e)        All
amounts that the Company and the Subsidiaries are legally or contractually
          required either (x) to deduct from their employees’ salaries or to
          transfer to such employees’ pension or provident, life insurance,
          incapacity insurance, continuing education fund or other similar funds or
          (y) to withhold from their employees’ salaries and benefits and to
pay           to any Governmental Authority as required by the Ordinance and National
          Insurance Law [Consolidated Version], 5755-1995, the National Health Insurance
          Law, 5754-1994 or otherwise have, in each case, been duly deducted,
transferred,           withheld and paid in all material respects.  

		    (f)        None
of the Company or any Subsidiary has engaged any employee whose employment
          would require special licenses or permits. None of the Company or any
Subsidiary           has engaged any consultants, sub-contractors or freelancers who,
according to           Israeli law, would be entitled to the rights of an employee vis-à-vis
the           Company or a Subsidiary, including rights to severance pay, vacation,
          recuperation pay (“dmei havra’a”) and other
          employee-related statutory benefits.  

		    (g)        There
are no unwritten policies or customs concerning the payment of statutory
          severance pay when it is not legally required that, by extension, could entitle
          employees of the Company or any Subsidiary to severance benefits in addition to
          those to which they are entitled pursuant to the applicable Laws, other than
          those included in the Company Employee Plans.  

		    (h)        The
Company and each Subsidiary has paid in full to all their respective           employees
or adequately accrued for in accordance with U.S. GAAP all wages,           salaries,
commissions, bonuses, benefits and other compensation due to or on           behalf of
such employees. There is no claim with respect to payment of wages,           salary or
overtime pay that has been asserted or is now pending or threatened           before any
Governmental Authority with respect to any Persons currently or           formerly
employed by the Company or any Subsidiary.  

		    (i)        There
are no unfair labor practice complaints pending against the Company or any
          Subsidiary before any Governmental Authority. Neither the Company nor any
          Subsidiary is a party to, or otherwise bound by, any consent decree with, or
          citation by, any Governmental Authority relating to employees or employment
          practices. There is no charge of discrimination in employment or employment
          practices, for any reason, including, without limitation, age, gender, race,
          religion or other legally protected category, which has been asserted or is now
          pending or threatened before any Governmental Authority in any jurisdiction in
          which the Company or any Subsidiary has employed or currently employs any
          Person.  

    SECTION 3.19        Certain
Interests. (a) To the knowledge of the Company, no shareholder, officer or director
of the Company or any Subsidiary and no relative or spouse (or relative of such spouse)
who resides with, or is, a dependent of, any such shareholder, officer or director:  

25

		    (i)        owns,
directly or indirectly, in whole or in part, or has any other interest in
               any tangible or intangible property which the Company or any Subsidiary
uses in                the conduct of the Business or otherwise; or  

		    (ii)        has
outstanding any Indebtedness to the Company or any Subsidiary.  

		    (b)        Except
as described in Section 3.19(b) of the Disclosure Schedule, neither the
               Company nor any Subsidiary has any Liability or any other obligation of
any                nature whatsoever to any officer, director or shareholder of the
Company or any                Subsidiary or to any relative or spouse (or relative of
such spouse) who resides                with, or is a dependent of, any such officer,
director or shareholder.  

    SECTION 3.20        Taxes.
(a) The Company and the Subsidiaries have paid all Taxes (including advances required by
law on Taxes) that were due prior to the date hereof. As of the Closing, the Company and
the Subsidiaries (i) will have paid all Taxes that they are required to pay prior to
the Closing, and (ii) will have withheld all Taxes required to be withheld. There
are no liens for Taxes upon any property or assets of the Company or any Subsidiary
except for liens for Taxes not yet due.  

		    (b)        The
Company and the Subsidiaries have prepared and timely filed all Israeli,           local
and foreign returns, estimates, information statements and reports           (“Returns”)
required to be filed with any taxing authority at           or prior to the Closing
relating to any and all Taxes concerning or attributable           to the Company or any
Subsidiary or to their operations, and such Returns are           true and correct in all
material respects and have been completed in all           material respects in
accordance with applicable law. Section 3.20(b) of the           Disclosure Schedule
lists all Returns filed with respect to each of the Company           and the
Subsidiaries for taxable periods ended on or after December 31, 2003.           The
Company has made available to Purchaser copies of all Returns filed for all
          periods since its inception.  

		    (c)        There
is no Tax deficiency outstanding, proposed or assessed against the Company           or
any Subsidiary that is not reflected as a liability on the Latest Balance           Sheet
nor has the Company or any Subsidiary executed any waiver of any statute           of
limitations on or extending the period for the assessment or collection of           any
Tax. The Company and the Subsidiaries do not have any liabilities for unpaid
          Israeli, local or foreign Taxes that have not been accrued for or reserved on
          the Latest Balance Sheet, whether asserted or unasserted, contingent or
          otherwise (other than Taxes that have accrued subsequent to the date of the
          Latest Balance Sheet in the ordinary course of business consistent with past
          practice).  

		    (d)        None
of the Company nor any of the Subsidiaries is a party to any income           tax-sharing
agreement or similar arrangement with any other party, has assumed           or agreed to
pay any Tax obligations of, or with respect to any transaction           relating to, any
other person or agreed to indemnify any other person with           respect to any Tax,
or has any liability for the Taxes of any person, as a           transferee or successor,
by contract or otherwise.  

		    (e)        The
Company has received final assessments of its tax returns (“shumot
          sofiot”) through and including the 2001 tax year. No Returns of the
          Company or any Subsidiary have been audited by a government or taxing authority
          during the three years preceding the date of this Agreement, nor is any such
          audit in process or pending, and neither the Company nor any Subsidiary has
been           notified of any request for such an audit or other examination.  

26

		    (f)        None
of the Company or any Subsidiary is a party to any joint venture,           partnership
or other agreement that the Company has reason to believe could be           treated as a
partnership for Tax purposes.  

		    (g)        None
of the Company or any Subsidiary has received any notice from any taxing
          authority in a jurisdiction where the Company or any Subsidiary has not filed
          Returns that the Company or a Subsidiary may be subject to taxation in such
          jurisdiction.  

		    (h)        Neither
the Company nor any Affiliate is a party to any agreement or arrangement           that
would result, separately or in the aggregate, in the actual or deemed           payment
by the Company or a Subsidiary of any “excess parachute           payments” within
the meaning of section 280G of the Code (without regard to           Section 280G(b)(4)
of the Code).  

		    (i)        None
of the Company or Subsidiaries has been a United States real property           holding
corporation within the meaning of Section 897(c)(2) of the Code during           the
applicable period specified in Section 897(c)(l)(A)(ii) of the Code.  

    SECTION 3.21        Customers.
Section 3.21 of the Disclosure Schedule lists the names of the ten most significant
customers (by revenue) of the Business for each of the year ended December 31, 2005 and
the nine-month period ended September 30, 2006, and the amount that each such customer
was invoiced during each such period. None of the Company or any Subsidiary has received
any notice or has any reason to believe that any significant customer of the Business has
ceased, or will cease, to use the products or services of the Company or any Subsidiary
or has substantially reduced, or will substantially reduce, the use of such products or
services at any time.  

    SECTION 3.22        Insurance.
All material assets, properties and risks of the Company and each Subsidiary are, and for
the past five years have been, covered by valid and, except for insurance policies that
have expired under their terms in the ordinary course, currently effective insurance
policies or binders of insurance (including, without limitation, general liability
insurance, property insurance and workers’ compensation insurance) issued in favor
of the Company or a Subsidiary, as the case may be, in each case with responsible
insurance companies, in such types and amounts and covering such risks as are consistent
with customary practices and standards of companies engaged in businesses and operations
similar to those of the Company or such Subsidiary, as the case may be. Section 3.22 of
the Disclosure Schedule lists all insurance policies currently maintained by the Company
and the Subsidiaries.  

    SECTION 3.23        CSO
Funding. Section 3.23 of the Disclosure Schedule (i) describes all approvals received
by the Company from the Investment Center and all funds provided by the CSO to the
Company or any Subsidiary and all amounts repaid by the Company or any Subsidiary to the
CSO and (ii) lists all agreements and other material documents and correspondence with
the Investment Center and the CSO regarding such approvals and funding.  

    SECTION 3.24        Full
Disclosure. (a) The Company is not aware of any facts pertaining to the Company, any
Subsidiary or the Business which could reasonably be expected to materially adversely
affect the Company, any Subsidiary or the Business and which have not been disclosed in
this Agreement or otherwise disclosed to the Purchaser by the Company or any Seller
except for risks inherent in high-tech company in a competitive market, including any
promise or guarantee as to financial or commercial success of the Company.  

27

		    (b)        To
the knowledge of the Company, no representation or warranty of the Company in
          this Agreement, nor any statement or certificate furnished or to be furnished
to           the Purchaser pursuant to this Agreement, or in connection with the
transactions           contemplated by this Agreement, contains any untrue statement of a
material           fact, or omits to state a material fact necessary to make the
statements           contained herein or therein not misleading.  

    SECTION 3.25        Brokers.
No broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement or the Escrow Agreement based upon arrangements made by or on behalf of the
Company.  

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

        As
an inducement to the Purchaser to enter into this Agreement, each Seller hereby represents
and warrants to the Purchaser, with respect to such Seller only, as follows: 

    SECTION 4.01        Authority
of such Seller. The execution and delivery of this Agreement and the Escrow Agreement
by such Seller, the performance by such Seller of its obligations hereunder and
thereunder and the consummation by such Seller of the transactions contemplated by this
Agreement and thereby have been duly authorized by all requisite action on the part of
such Seller. This Agreement has been, and upon their execution the Escrow Agreement shall
have been, duly executed and delivered by such Seller, and (assuming due authorization,
execution and delivery by the Purchaser) this Agreement constitutes, and upon its
execution the Escrow Agreement shall constitute, legal, valid and binding obligations of
such Seller, enforceable against such Seller in accordance with their respective terms.  

    SECTION 4.02        No
Conflict. Assuming that all consents, approvals, authorizations and other actions
described in Section 3.06 have been obtained, the execution, delivery and performance of
this Agreement and the Escrow Agreement by such Seller do not and will not (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation or by-laws (or similar organizational documents) of such Seller, (b)
conflict with or violate any Law or Governmental Order applicable to such Seller, or (c)
conflict with, result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of any contract to which such Seller is a party or
by which any of the properties of such Seller may be bound, except for violations,
breaches or defaults which, individually and in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on such Seller, or result in the creation of
any Encumbrance on any of the outstanding Ordinary Shares owned by such Seller.  

    SECTION 4.03        Governmental
Consents and Approvals. The execution, delivery and performance of this Agreement and
the Escrow Agreement by such Seller does not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to, any
Governmental Authority, except as described in Section 3.06 of this Agreement.  

28

    SECTION 4.04        Ownership
of Ordinary Shares. Such Seller owns of record and beneficially, free and clear of
all Encumbrances (other than Encumbrances under securities laws and any Encumbrances that
will be discharged and released at or prior to the Closing) the number of Ordinary Shares
set forth opposite the name of such Seller on Exhibit A attached hereto and does not own,
beneficially or otherwise, any other securities of the Company or any of its
Subsidiaries. At the Closing, the Purchaser will acquire from such Seller such Ordinary
Shares free and clear of all Encumbrances other than Encumbrances under securities laws
or Encumbrances created by or on account of the Purchaser. Upon the transfer of such
Seller’s shares to the Purchaser, in accordance to the terms herein, the Purchaser
will own all such Seller’s shares of the Company free and clear of all Encumbrances
and will be fully paid and nonassessable. Such Seller is not a party to any voting
trusts, shareholder agreements, proxies or other agreements or understandings in effect
with respect to the voting or transfer of any of the outstanding Ordinary Shares of such
Seller.  

    SECTION 4.05        Litigation.
No Action by or against such Seller is pending or, to the knowledge of such Seller,
threatened, which could reasonably be expected to affect in any material respect the
legality, validity or enforceability of this Agreement or the Escrow Agreement or the
consummation of the transactions contemplated hereby or thereby.  

    SECTION 4.06        Brokers.
No broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of such Seller.  

    SECTION 4.07        Right
of First Refusal. Such Seller irrevocably waives his right of first refusal with
regard to the sale of shares by all other shareholders.  

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

        As
an inducement to the Sellers to enter into this Agreement, the Purchaser hereby represents
and warrants to the Sellers as follows: 

    SECTION 5.01        Organization
and Authority of the Purchaser. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary corporate power and authority to enter into this
Agreement and the Escrow Agreement, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated by this Agreement and thereby. The
execution and delivery by the Purchaser of this Agreement and the Escrow Agreement, the
performance by the Purchaser of its obligations hereunder and thereunder and the
consummation by the Purchaser of the transactions contemplated by this Agreement and
thereby have been duly authorized by all requisite corporate action on the part of the
Purchaser. This Agreement has been, and upon its execution the Escrow Agreement shall
have been, duly executed and delivered by the Purchaser, and (assuming due authorization,
execution and delivery by the Seller) this Agreement constitutes, and upon its execution
the Escrow Agreement shall constitute, legal, valid and binding obligations of the
Purchaser, enforceable against the Purchaser in accordance with their respective terms.  

29

    SECTION 5.02        No
Conflict. Assuming the making and obtaining of all filings, notifications, consents,
approvals, authorizations and other actions referenced to in Section 5.03, except as may
result from any facts or circumstances relating solely to the Company or the Sellers, the
execution, delivery and performance by the Purchaser of this Agreement and the Escrow
Agreement do not and will not (a) violate, conflict with or result in the breach of any
provision of the Certificate of Incorporation or By-laws of the Purchaser, (b) conflict
with or violate any Law or Governmental Order applicable to the Purchaser or (c) conflict
with, or result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or arrangement
to which the Purchaser is a party, which would adversely affect the ability of the
Purchaser to carry out its obligations under and to consummate the transactions
contemplated by, this Agreement or by the Escrow Agreement.  

    SECTION 5.03        Governmental
Consents and Approvals. The execution, delivery and performance by the Purchaser of
this Agreement and the Escrow Agreement do not and will not require any consent,
approval, authorization or other order of, action by, filing with, or notification to any
Governmental Authority, except as described in Section 3.06 of this Agreement.  

    SECTION 5.04        Investment
Purpose. The Purchaser is acquiring the Ordinary Shares solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution thereof.  

    SECTION 5.05        Brokers.
No broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Purchaser.  

    SECTION 5.06        No
Success. The Purchaser is an experienced investor with such business and investment
expertise as to be able to evaluate the risks involved in an investment in a high-tech
company in a competitive market. Without derogating from the express representations and
warranties made by the Company and the Sellers in this Agreement, the Purchaser is aware
that (i) there is no promise or guarantee as to the financial or commercial success of
the Company and (ii) there is no assurance or guarantee that forward-looking plans or
projections, or planned products, will materialize or achieve the projected or expected
results.  

    SECTION 5.07        CSO.
The Purchaser is aware that the transaction contemplated by this Agreement is subject to
the approval of the CSO in accordance with the Encouragement of Research and Development
in Industry Act of 1984 and any regulations promulgated thereunder (the “ERDI Law”)
and the Purchaser is aware that: (i) the Company is subject to the payment of royalties
to the CSO from sale of products supported by the CSO up to a sum equal to the grant
amount, and (ii) the ERDI Law places strict constraints on the transfer of specified
know-how and/or production rights, making such transfers subject to the absolute
discretion of the CSO, acting in accordance with the aims of the ERDI Law, and requiring
that any such transfer receive the prior written approval of the CSO. The Purchaser
agrees to use its reasonable best efforts to obtain the consent of the CSO required to
complete the transactions contemplated by this Agreement; provided, however, that the
Purchaser shall not be required to pay any consideration or to agree to any restrictions
or undertakings in connection with seeking such consent, except for the execution of an
undertaking to the CSO substantially in the form of Exhibit 5.07.  

30

    SECTION 5.08        Financial
Capability. The Purchaser has sufficient funds to fulfill its obligations pursuant to
this Agreement.  

ARTICLE VI

ADDITIONAL AGREEMENTS

    SECTION 6.01        Conduct
of Business Prior to the Closing. (a) The Company covenants and agrees that, except
as described in Section 6.01(a) of the Disclosure Schedule, between the date hereof and
the time of the Closing, neither the Company nor any Subsidiary shall conduct its
business other than in the ordinary course and consistent with the Company’s and
such Subsidiary’s prior practice. Without limiting the generality of the foregoing,
except as described in Section 6.01(a) of the Disclosure Schedule, the Company shall, and
shall cause each Subsidiary to (i) use their reasonable best efforts to (A) preserve
intact their business organizations and the business organization of the Business, (B)
keep available to the Purchaser the services of the employees of the Company and each
Subsidiary, and (C) preserve their current relationships with their customers, suppliers
and other persons with which they have had significant business relationships; (ii) not
issue or grant any shares or options or any rights to acquire shares or options; and
(iii) not engage in any practice, take any action, fail to take any action or enter into
any transactions which could cause any representation or warranty of the Company to be
untrue or result in a breach of any covenant made by the Company in this Agreement.  

		    (b)        Except
as described in Section 6.01(b) of the Disclosure Schedule, the Company
          covenants and agrees that, between the date hereof and the time of the Closing,
          without the prior written consent of the Purchaser, neither the Company nor any
          Subsidiary will do any of the things enumerated in the second sentence of
          Section 3.09 (including, without limitation, clauses (a) through (w) thereof).  

    SECTION 6.02        Access
to Information. From the date hereof until the Closing, upon reasonable notice, the
Company shall cause its officers, directors, employees, agents, representatives,
accountants and counsel and shall cause the Subsidiaries and each of the Subsidiaries’ officers,
directors, employees, agents, representatives, accountants and counsel to: (i) afford the
officers, employees, agents, accountants, counsel and representatives of the Purchaser
reasonable access, during normal business hours, to the offices, properties, plants,
other facilities, books and records of the Company and each Subsidiary and to those
officers, directors, employees, agents, accountants and counsel of the Company and of
each Subsidiary who have any knowledge relating to the Company, any Subsidiary or the
Business and (ii) furnish to the officers, employees, agents, accountants, counsel and
representatives of the Purchaser such additional financial and operating data and other
information regarding the assets, properties, liabilities and goodwill of the Company,
the Subsidiaries and the Business (or legible copies thereof) as the Purchaser may from
time to time reasonably request.  

31

    SECTION 6.03        Confidentiality.
(a) Each Seller agrees to, and shall cause its agents, representatives, Affiliates,
employees, officers and directors to: (a) treat and hold as confidential (and not
disclose or provide access to any Person to) all information relating to the Company’s
and each Subsidiary’s trade secrets, processes, patent and trademark applications,
product development, price, customer and supplier lists, pricing and marketing plans,
policies and strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, new personnel acquisition
plans and all other confidential or proprietary information with respect to the Business,
the Company and each Subsidiary (the “Company Information”), (b) in the
event that such Seller or any such agent, representative, Affiliate, employee, officer or
director becomes legally compelled to disclose any such information, provide the
Purchaser with prompt written notice of such requirement so that the Purchaser, the
Company or any Subsidiary may seek a protective order or other remedy or waive compliance
with this Section 6.03, and (c) in the event that such protective order or other remedy
is not obtained, or the Purchaser waives compliance with this Section 6.03, furnish only
that portion of such confidential information which is legally required to be provided
and exercise its reasonable best efforts to obtain assurances that confidential treatment
will be accorded such information; provided, however, that this section shall not
apply to any information that (i)  is or becomes subsequently available publicly and
was not disclosed in breach of this Agreement by such Seller, its agents,
representatives, Affiliates, employees, officers or directors, (ii) corresponds in
substance to information that was received in good faith by such Seller from a third
party having a right to disclose such information; or (iii) was independently developed
by or on behalf of such Seller subsequent to the receipt of such disclosure without
resort to the information disclosed by the Company or any Subsidiary. The Seller agrees
and acknowledges that remedies at law for any breach of its obligations under this
Section 6.03 are inadequate and that in addition thereto the Purchaser shall be entitled
to seek equitable relief, including injunction and specific performance, in the event of
any such breach.  

		    (b)        The
Purchaser and the Company agree that if this Agreement is terminated in
          accordance with its terms without Closing, the Purchaser and the Company will
          continue to be bound by the terms of the Mutual Nondisclosure Agreement, dated
          as of August 17, 2006, by and between the Purchaser and the Company (the
          “Confidentiality Agreement”).  

    SECTION 6.04        Required
Consents. (a) The Company shall use its reasonable best efforts to obtain (or cause
the Subsidiaries to obtain) all authorizations, consents, orders and approvals of all
Governmental Authorities that may be or become necessary for its execution and delivery
of, and the performance of its obligations pursuant to, this Agreement and the Escrow
Agreement and will cooperate fully with the Purchaser in promptly seeking to obtain all
such authorizations, consents, orders and approvals.  

		    (b)        The
Company and the Subsidiaries shall give promptly such notices to third           parties
and use their reasonable best efforts to obtain such third party           consents and
estoppel certificates as the Purchaser may in its sole discretion           deem
necessary or desirable in connection with the transactions contemplated by           this
Agreement.  

		    (c)        The
Purchaser shall cooperate and use all reasonable efforts to assist the           Company
in giving such notices and obtaining such consents and estoppel           certificates;
provided, however, that the Purchaser shall have no           obligation to
give any guarantee or other consideration of any nature in           connection with any
such notice, consent or estoppel certificate or to consent           to any change inthe
terms of any agreement or arrangement which the           Purchaser in its sole
discretion may deem adverse to the interests of the           Purchaser, the Company, any
Subsidiary or the Business.  

32

		    (d)        The
Company knows of no reason why all the consents, approvals and           authorizations
necessary for the consummation of the transactions contemplated           by this
Agreement will not be received.  

    SECTION 6.05        Notice
of Developments. Prior to the Closing, the Company shall promptly notify the
Purchaser in writing of (a) all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could result in any breach of a
representation or warranty or covenant of the Company or the Sellers in this Agreement or
which could have the effect of making any representation or warranty of the Company or
the Sellers in this Agreement untrue or incorrect in any respect and (b) all other
material developments affecting the assets, liabilities, business, financial condition,
operations, results of operations, customer or supplier relations, employee relations,
projections or prospects of the Company, any Subsidiary or the Business.  

    SECTION 6.06         No
Shop. Each Seller and the Company agrees that between the date of this Agreement and
the earlier of (a) the Closing and (b) the termination of this Agreement, none of such
Seller, the Company or any of their respective officers, directors, representatives or
agents will (i) solicit, initiate, knowingly encourage or accept any other proposals or
offers from any Person relating to any acquisition of any Ordinary Shares or assets of
the Company or any Subsidiary (other than products or services to be sold or licensed in
the ordinary course of business consistent with past practice) or (ii) participate in any
discussions or negotiations with any Person (other than the Purchaser) regarding, or
furnish to any Person (other than the Purchaser) any information with respect to, any of
the foregoing. Each of the Company and each Seller immediately shall cease any existing
discussions or negotiations conducted by such person with respect to any of the
foregoing.  

    SECTION 6.07        Use
of Intellectual Property. From and after the Closing, none of the Sellers nor any of
their Affiliates shall use any of the Owned Intellectual Property except pursuant to
commercial arrangements between the Sellers (or their Affiliates) and the Company or as
permitted pursuant to Section 6.03.  

    SECTION 6.08        [Intentionally
omitted].  

    SECTION 6.09        Currency.
Unless otherwise specified in this Agreement, all references to currency, monetary values
and dollars set forth herein shall mean United States (U.S.) dollars and all payments
hereunder shall be made in United States dollars.  

    SECTION 6.10        Further
Action. Each of the parties hereto shall use all reasonable efforts to take, or cause
to be taken, all appropriate action, do or cause to be done all things necessary, proper
or advisable under applicable Law, and to execute and deliver such documents and other
papers, as may be required to carry out the provisions of this Agreement and consummate
and make effective the transactions contemplated by this Agreement.  

33

ARTICLE VII

CERTAIN TAX MATTERS

    SECTION 7.01       
Taxes on Sale. Each Seller shall be liable for and shall hold the Purchaser
harmless against any capital gains, ordinary income, company, National Insurance, health
tax or any other Taxes applicable to such Seller which become payable in connection with
the sale of shares hereunder by such Seller.  

    SECTION 7.02       
Miscellaneous. The Sellers and the Purchaser agree to treat all payments made by
either of them to or for the benefit of the other (including any payments to the Company
or any Subsidiary) under any indemnity provisions of this Agreement and for any
misrepresentations or breaches of warranties or covenants as adjustments to the purchase
price or as capital contributions for tax purposes and that such treatment shall govern
for purposes hereof except to the extent that the laws of a particular jurisdiction
provide otherwise.  

ARTICLE VIII

CONDITIONS TO CLOSING

    SECTION 8.01       
Conditions to Obligations of the Sellers. The obligations of each Seller to
consummate the transactions contemplated by this Agreement shall be subject to the
fulfillment or written waiver, at or prior to the Closing, of each of the following
conditions:  

		    (a)        Accuracy
of Representations and Warranties. The representations and                warranties
of the Purchaser contained in this Agreement that are qualified by
               materiality or Material Adverse Effect shall have been true and correct,
and the                representations and warranties that are not so qualified shall
have been true                and correct in all material respects, when made and as of
the Closing, as though                made on and as of the Closing, except to the extent
such representations and                warranties are expressly made as of earlier date,
in which case, as of such                earlier date;  

		    (b)        Compliance
with Agreements. The Purchaser shall have performed or                complied with
in all material respects all covenants and agreements required by                this
Agreement to be performed or complied with by the Purchaser on or prior to
               the Closing;  

		    (c)        Officer
Certificate. The Purchaser shall have delivered to the Seller or                a
representative of the Sellers a certificate, dated the date of the Closing,
               signed by a duly authorized officer of the Purchaser, certifying as to the
               satisfaction of the conditions specified in Sections 8.01(a) and 8.01(b);  

		    (d)        No
Proceeding or Litigation. No Action shall have been commenced by or
               before any Governmental Authority against such Seller, any other Seller or
the                Purchaser, seeking to restrain or materially and adversely alter the
               transactions contemplated by this Agreement which, in the reasonable, good
faith                determination of such Seller, is likely to render it impossible or
unlawful to                consummate such transactions; provided, however,
that the                provisions of this Section 8.01(d) shall not apply if such Seller
has directly                or indirectly solicited or encouraged any such Action; and  

34

		    (e)        Escrow
Agreement. The Purchaser shall have executed and delivered to the
               Sellers or a representative of the Sellers the Escrow Agreement.  

    SECTION 8.02       
Conditions to Obligations of the Purchaser. The obligations of the Purchaser to
consummate the transactions contemplated by this Agreement shall be subject to the
fulfillment or written waiver, at or prior to the Closing, of each of the following
conditions:  

		    (a)        Representations
and Warranties of the Company. The representations and                warranties of
the Company contained in this Agreement that are qualified by                “materiality” or
“Material Adverse Effect” shall have been                true and correct, and
the representations and warranties that are not so                qualified shall have
been true and correct in all material respects, when made                and as of the
Closing as though made on and as of the Closing, except to the                extent that
any such representations and warranties are expressly made as of an
               earlier date, in which case, such representations and warranties shall be
true                and correct as of such earlier date;  

		    (b)        Representations
and Warranties of the Sellers. The representations and                warranties of
the Sellers contained in this Agreement that are qualified by                “materiality” or
“Material Adverse Effect” shall have been                true and correct, and
the representations and warranties that are not so                qualified shall have
been true and correct in all material respects, when made                and as of the
Closing as though made on and as of the Closing, except to the                extent that
any such representations and warranties are expressly made as of an
               earlier date, in which case, such representations and warranties shall be
true                and correct as of such earlier date;  

		    (c)        Compliance
with Agreement. (i) The Company shall have performed or                complied with
in all material respects all covenants and agreements required by                this
Agreement to be performed or complied with by the Company on or prior to
               the Closing; and (ii) each Seller shall have performed or complied with in
all                material respects all covenants and agreements required by this
Agreement to be                performed or complied with by such Seller on or prior to
the Closing;  

		    (d)        Officer
Certificate. (i) The Company shall have delivered to the                Purchaser a
certificate, dated the date of the Closing, signed by a duly                authorized
officer of the Company, certifying as to the satisfaction of the
               conditions specified in Sections 8.02(a) and 8.02(c)(i); and (ii) each
Seller                shall have delivered to the Purchaser a certificate, dated the date
of the                Closing, signed by a duly authorized officer of the Seller,
certifying as to the                satisfaction of the conditions specified in Sections
8.02(b) and 8.02(c)(ii);  

		    (e)        No
Proceeding or Litigation. No Action shall have been commenced or
               threatened by or before any Governmental Authority against any Seller or
the                Purchaser, seeking to restrain or materially and adversely alter the
               transactions contemplated by this Agreement which, in the reasonable, good
faith                determination of the Purchaser, is likely to render it impossible or
unlawful to                consummate such transactions or which could have a Material
Adverse Effect;  

35

		    (f)        Loan
Agreement. (i) The Lenders under the Loan Agreement shall have
               delivered to the Purchaser a “pay-off” letter duly executed by
the                Lenders, in form and substance reasonably acceptable to the Purchaser,
               certifying as to the aggregate amount owed by the Company and the
Subsidiaries                under the Loan Agreement as of immediately prior to the
Closing (which amount                shall not be greater than $4,000,000 plus the amount
of interest accrued and                unpaid since October 1, 2006) (the “Pay-off
Amount”) and agreeing                that, among other things, upon the payment of
such Pay-Off Amount to the Lenders                at the Closing in accordance with the
“pay-off” letter, (A) all                obligations under the Loan Agreement
will be satisfied in full and neither the                Company nor any of the
Subsidiaries will have any outstanding liabilities or                obligations
whatsoever to any of the Lenders under, in connection with or                pursuant to
the Loan Agreement or other Transaction Documents (as defined in the                Loan
Agreement) and (B) all Encumbrances granted in favor of the Lenders under
               the Loan Agreement and other Transaction Documents (as defined in the Loan
               Agreement) shall be released; and (ii) the Lenders shall have delivered to
the                Company for filing, or authorized the filing by the Company of, UCC 3
               Termination Statements and such other documents and forms as the Purchaser
deems                reasonably necessary to validly terminate or release all
Encumbrances granted by                the Company or any of its Subsidiaries in favor of
the Lenders upon recordation                thereof, in each case, in form and substance
reasonably satisfactory to the                Purchaser. It is agreed that the Purchaser
shall, at the Closing, pay the                Pay-off Amount to or as directed by the
Lenders in accordance with a                “pay-off” letter delivered to the
Purchaser complying with the                requirements of this Section 8.02(f), and
this will not reduce the Per Share                Purchase Price.  

		    (g)        Required
Consents and Approvals. The Purchaser and the Company shall have
               received, each in form and substance reasonably satisfactory to the
Purchaser,                the authorizations, consents, orders and approvals of
Governmental Authorities                and third parties set forth on Exhibit 8.02(g)
attached hereto, which shall not                require any payments or impose any
restrictions except such as the Purchaser                shall approve in its sole
discretion;  

		    (h)        Acceptance
of Employment Offers. (i) All of the employees listed as Tier                I
Employees on Exhibit 8.02(h) shall remain employed with the Company or a
               Subsidiary as of the Closing and shall have accepted an offer of
continuing                employment made by the Purchaser or an Affiliate of the
Purchaser; and (ii) at                least 80% of all other employees of the Company and
StoreAge U.S. shall remain                employed with the Company or StoreAge U.S. as
of the Closing and shall have                accepted an offer of continuing employment
made by the Purchaser or an Affiliate                of the Purchaser;  

		    (i)        [Intentionally
omitted];  

		    (j)        Resignations.
All of the directors and officers of the Company and                StoreAge U.S. and all
of the directors and officers of StoreAge China appointed                by the Company
shall have executed and delivered to the Purchaser written                resignations
effective as of the Closing, except for such persons as shall have
               designated in writing by the Purchaser to the Company prior to the
Closing;  

		    (k)        Escrow
Agreement. Each of the Sellers and the Escrow Agent shall have
               delivered to the Purchaser an executed counterpart of the Escrow
Agreement;  

36

		    (l)        Legal
Opinion. The Purchaser shall have received from Primes, Shiloh,                Givon,
Meir Law Firm, counsel to the Company, a legal opinion, addressed to the
               Purchaser and dated the Closing Date, addressing the matters set forth in
               Exhibit 8.02(l);  

		    (m)        No
Material Adverse Effect. No event or events shall have occurred which,
               individually or in the aggregate, have had or could reasonably be expected
to                have a Material Adverse Effect;  

		    (n)        Company
Share Option Plans. (i) The Company shall have taken all action
               necessary to terminate the Company Share Option Plans as of the Closing
and (ii)                all holders of Company Share Options shall have agreed, in
writing in form and                substance reasonably satisfactory to the Purchaser, to
the treatment of                cancellation of the Company Share Options in accordance
with Section 2.04, to                the other terms of this Agreement applicable to
holders of Company Share Options                (including the indemnification provisions
of Article IX), and to the appointment                of the Sellers’ Representatives
to act on behalf of such holders for                certain purposes pursuant to and in
accordance with Section 9.07;  

		    (o)        No
Other Shareholders. The Company shall not have issued any Ordinary
               Shares, Company Share Options or any other equity interests or rights to
acquire                equity interests in the Company and no other Person other than the
Sellers shall                have acquired or shall own, of record or beneficially, any
shares of the Company                or any Subsidiary, whether by exercise of Company
Share Options or otherwise,                and the Purchaser shall acquire at the Closing
all of the outstanding Ordinary                Shares;  

		    (p)        Termination
of 401(k) Plan. The Board of Directors of the Company shall                have taken
all action necessary, in form and substance reasonably satisfactory                to the
Purchaser, to terminate the Company’s 401(k) plan as of immediately
               prior to the Closing; and  

		    (q)        Delivery
of September 30 2006 Interim Financial Statements. The Company                shall
have delivered to the Purchaser interim financial statements as of and for
               the nine month period ended September 30, 2006 in substantially the same
form as                the Interim Financial Statements.  

ARTICLE IX

INDEMNIFICATION

    SECTION 9.01       
Survival of Representations and Warranties. (a) The representations and warranties
of the Company and the Sellers contained in this Agreement shall survive the Closing
until the date that is 18 months after the date of this Agreement; provided, however,
that (i) the representations and warranties made pursuant to Sections 3.03 and 4.04 shall
survive indefinitely, and (ii) the representations and warranties made pursuant to
Section 3.20 shall survive until the expiration of the applicable statute of limitations
with respect to the liabilities in question. Neither the period of survival nor the
liability of the Sellers with respect to the representations and warranties of the
Company and the Sellers shall be reduced by any investigation made at any time by or on
behalf of the Purchaser. If written notice of a claim describing the basis for such claim
in reasonable detail has been given prior to the expiration of the applicable
representations and warranties by the Purchaser to the Sellers’Representative, then
the indemnification obligation with respect to such item as to which a claim has been
given shall survive, until such claim has been finally resolved.  

37

         (b)       
          The representations and warranties of the Purchaser contained in this Agreement
          and the Escrow Agreement shall survive the Closing until the date that is 18
          months after the date of this Agreement; provided, however, that
          the representations and warranties made pursuant to Section 5.05 shall survive
          indefinitely. Neither the period of survival nor the liability of the Purchaser
          with respect to the Purchaser’s representations and warranties shall be
          reduced by any investigation made at any time by or on behalf of the Sellers. If
          written notice of a claim describing the basis for such claim in reasonable
          detail has been given prior to the expiration of the applicable representations
          and warranties by the Sellers’ Representative to the Purchaser, then the
          indemnification obligation with respect to such item as to which a claim has
          been given shall survive as to such claim, until such claim has been finally
          resolved. 

    SECTION 9.02       
Indemnification by the Sellers. The Purchaser and its Affiliates, officers,
directors, employees, agents, successors and assigns (each a “Purchaser
Indemnified Party”) shall be indemnified and held harmless by the Sellers and
the other Company Securityholders, severally and not jointly, for and against any and all
Liabilities, losses, diminution in value, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including, without limitation, reasonable attorneys’fees
and expenses) actually suffered or incurred by them (hereinafter a “‘Loss”),
arising out of or resulting from:  

		    (a)        the
breach of any representation or warranty made by (i) the Company or (ii)
               such Seller in this Agreement as of the date of this Agreement or as if
such                representation and warranty was made on and as of the Closing (it
being                understood that such representations and warranties shall be
interpreted without                giving effect to any limitations or qualifications as
to “materiality”               (including the word “material”) or
“Material Adverse Effect”               set forth therein); or  

		    (b)        the
breach of any covenant or agreement made by (i) the Company or (ii) such
               Seller in this Agreement.  

The indemnification obligations of a
Seller pursuant to Section 9.02(a)(ii) and Section 9.02(b)(ii) shall relate solely to any
such breach of a representation, warranty, claim or agreement made by such Seller in this
Agreement. 

The indemnification obligations of
the Sellers set forth in this Section 9.02 are subject to the limitations and provisions
of Section 9.06 below. 

    SECTION 9.03       
Indemnification by the Purchaser. Each Seller and its Affiliates, officers,
directors, employees, agents, successors and assigns (each a “Seller Indemnified
Party”) shall be indemnified and held harmless by the Purchaser for and against
any and all Losses, arising out of or resulting from:  

		    (a)        the
breach of any representation or warranty made by the Purchaser contained in
               this Agreement as of the date of this Agreement or as if such
representation and                warranty was made on and as of the Closing (it being
understood that such                representations and warranties shall be interpreted
without giving effect to any                limitations or qualifications as to “materiality” (including
the word                “material”) or “material adverse effect” set
forth therein);                or  

38

		    (b)        ;the
breach of any covenant or agreement by the Purchaser contained in this
               Agreement.  

    SECTION 9.04       
Third Party Claims. (a) An Indemnified Party shall give the Indemnifying Party
notice of any matter that an Indemnified Party has determined has given or could give
rise to a right of indemnification under this Agreement, within 60 days of such
determination, stating the amount of the Loss, if known, and method of computation
thereof, and containing a reference to the provisions of this Agreement in respect of
which such right of indemnification is claimed or arises.  

		    (b)        The
obligations and Liabilities of an Indemnifying Party under this Article IX with
respect to Losses arising from claims of any third party which are subject to
the indemnification provided for in this Article IX (“Third Party Claims”)
shall be governed by and be contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Indemnifying Party written notice
of such Third Party Claim promptly after receipt by the Indemnified Party of
such notice; provided, however, that any failure to provide such notice
shall not release the Indemnifying Party from any of its obligations under this
Article IX except to the extent that the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party from
any other obligation or Liability that it may have to any Indemnified Party
otherwise than under this Article IX except to the extent that the Indemnifying
Party is materially prejudiced by such failure. If the Indemnifying Party
acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, then
the Indemnifying Party shall be entitled to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice if it
gives notice of its intention to do so to the Indemnified Party within ten
business days of the receipt of such notice from the Indemnified Party; provided
that such counsel is not reasonably objected to by the Indemnified Party;
and provided, further, that if there is reasonably likely to exist a
conflict of interest that would make it inappropriate in the judgment of the
Indemnified Party in its reasonable discretion for the same counsel to
represent both the Indemnified Party and the Indemnifying Party, then the
Indemnified Party shall be entitled to retain its own counsel in each
jurisdiction for which the Indemnified Party reasonably determines counsel is
required, at the expense of the Indemnifying Party. In the event that the
Indemnifying Party exercises the right to undertake any such defense against
any such Third Party Claim as provided above, the Indemnified Party shall agree
to any judgment, settlement, compromise or discharge of such Third-Party Claim
that the Indemnifying Party may recommend that by its terms obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third-Party Claim (or the full amount will be paid from the Escrow Fund),
which releases the Indemnified Party completely in connection with such
Third-Party Claim and that would not otherwise materially adversely affect the
Indemnified Party. In the event that the Indemnifying Party exercises the right
to undertake any such defense against any such Third Party Claim as provided
above, the Indemnified Party shall cooperate with the Indemnifying Party in
such defense and make available to the Indemnifying Party, at the Indemnifying
Party’s expense, all witnesses, pertinent records, materials and
information in the Indemnified Party’s possession or under the Indemnified
Party’s control relating thereto as is reasonably required by the
Indemnifying Party. Similarly, in the event that the Indemnified Party is,
directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnifying Party shall cooperate with the Indemnified Party in
such defense and make available to the Indemnified Party, at the Indemnifying
Party’s expense, all such witnesses, records, materials and information in
the Indemnifying Party’s possession or under the Indemnifying Party’s
control relating thereto as is reasonably required by the Indemnified Party. No
such Third Party Claim may be settled by the Indemnified Party without the
prior written consent of the Indemnifying Party (not to be unreasonably
withheld).  

39

    SECTION 9.05       
Distributions from Escrow Fund. In the event that (a) the Sellers’Representatives
shall not have objected to the amount claimed by the Purchaser for indemnification with
respect to any Loss in accordance with the procedures set forth in the Escrow Agreement
or (b) the Sellers’ Representatives shall have delivered notice of their
disagreement as to the amount of any indemnification requested by the Purchaser and
either (i) the Sellers’ Representatives and the Purchaser shall have, subsequent to
the giving of such notice, mutually agreed that the Sellers are obligated to indemnify
the Purchaser for a specified amount and shall have so jointly notified the Escrow Agent
or (ii) a final nonappealable judgment shall have been rendered by the court having
jurisdiction over the matters relating to such claim by the Purchaser for indemnification
from the Sellers and the Escrow Agent shall have received, in the case of clause (i)
above, written instructions from the Sellers’ Representatives and the Purchaser, or,
in the case of clause (ii) above, a copy of the final nonappealable judgment of the
court, the Escrow Agent shall deliver to the Purchaser from the Escrow Fund any amount
(subject to the other terms of this Agreement and the Escrow Agreement) determined to be
owed to the Purchaser under this Article IX in accordance with the Escrow Agreement.  

    SECTION 9.06       
Limits of Indemnification; Loss Threshold and Exclusive Remedy. (a) The maximum
aggregate amount of indemnifiable Losses that may be recovered from any Seller under this
Agreement shall be equal to such Seller’s Pro Rata Share of the Escrow Fund; provided,
however, that the maximum aggregate amount of indemnifiable Losses (together with
any amount of Losses indemnified under this Agreement) that may be recovered from any
Seller in the case of fraud or breaches of representations and warranties in Sections
3.03, 3.20 or 4.04 shall be equal to the aggregate consideration actually received by
such Seller for such Seller’s Ordinary Shares pursuant to this Agreement.  

		    (b)        In
calculating the amount of any Losses claimed by the Purchaser (or its
Affiliates, officers, directors, employees, agents, successors and assigns)
under this Article IX, there shall be deducted: (i) the amount of any reserve
or provision included in the Financial Statements for Losses to which such
claim relates, and (ii) the amount of any indemnification or other
recoveries (including insurance proceeds) actually received by the Purchaser or
the Company (or its Affiliates, officers, directors, employees, agents,
successors and assigns) from any third party with respect to such Losses (it
being agreed that the Purchaser or its Affiliates, officers, directors,
employees, agents, successors and assigns shall be entitled to claim, but shall
not be entitled to recover for, Losses with respect to an amount whose
collection by the Purchaser or the Company from a third party is reasonably
certain, but which has not actually been received; provided, however,
that (A) if such amount is not actually received by the Purchaser or its
Affiliates, officers, directors, employees, agents, successors and assigns
within 90 days of the making of the claim, despite good faith efforts to
collect such amount, they shall be entitled to be indemnified for such claim,
and (B) the indemnification obligation with respect to such claim shall
continue until 120 days following the making of the claim); further provided,
however, that if the Purchaser is indemnified pursuant to the foregoing
proviso because an amount is not collected within 90 days of the making of the
claim, and the Purchaser subsequently collects such amount from the third
party, the Purchaser shall promptly refund the amount of the indemnification to
the Escrow Agent.  

40

		    (c)        Notwithstanding
anything contained herein to the contrary, the Purchaser           Indemnified Parties
shall not be entitled to indemnification pursuant to Section           9.02(a), and the
Sellers shall not have any obligation to indemnify the           Purchaser Indemnified
Parties pursuant to Section 9.02(a), from and against any           Losses in respect of
claims under Section 9.02(a) until the aggregate amount of           all Losses for which
Purchaser Indemnified Parties are seeking indemnification           equals or exceeds
$500,000 (the “Threshold”), whereupon the           Purchaser
Indemnified Parties shall be entitled to indemnification with respect           to all
such Losses including the amount of the Threshold; provided, however, that
(i) the threshold with respect to Losses arising from           or resulting from
breaches of the representations and warranties set forth in           Section 3.20 shall
be $50,000, with any such Losses to be aggregated for the           purpose of
calculating the Threshold, and (ii) the Threshold shall not           apply with
respect to Losses arising from or resulting from breaches of the
          representations and warranties set forth in Section 4.04.  

		    (d)        Sellers
and the Company shall have no liability to the Purchaser for Losses           which arise
as a direct result of: (i) any act or omission of the Purchaser           (and its
Affiliates, officers, directors, employees, agents, successors and           assigns)
having as its purpose the precipitation of a claim for indemnification
          hereunder, (ii) any changes in accounting methods or policies after the
          Closing, (iii) the granting of any extensions or waivers with respect to
          any statute of limitations applicable to claims which might be made against the
          Purchaser (and its Affiliates, officers, directors, employees, agents,
          successors and assigns), unless the Purchaser has consulted with the
          Sellers’ Representative with respect to such extension or waiver, or
          (iv) the passing of, or any change in, after the Closing, any law or
          administrative practice of any governmental authority in any such case not
          actually in force at the date of the Closing (even if retroactive in effect),
          including, but not limited, to any increase in the tax rates in effect on the
          date of the Closing or imposition of any tax not in effect on the date of the
          Closing.  

		    (e)        Except
in the case of fraud and except with respect to claims for non-cash           equitable
remedies, the indemnification provisions set forth in this Article IX           and the
Escrow Agreement shall be the sole and exclusive remedy of the           Indemnified
Party for any cause of action, right, demand, charge or claim such           Indemnified
Party may have resulting from, arising out of, based upon or           relating to any
Losses and any inaccuracy in, or breach of, any representation,           warranty, claim
or agreement of the Company or the Sellers.  

41

    SECTION 9.07       
Sellers’ Representatives. Each Company Securityholder hereby appoints,
authorizes and empowers Robi Hartman and Genesis Partners II LDC, acting together (such
persons and any successor or successors to such persons in such capacity being the “Sellers’ Representatives”),
to act as representatives and as the exclusive agents and attorneys in fact of such
Company Securityholder, and the Sellers’ Representatives are hereby authorized and
empowered to act on behalf of such Company Securityholder, to execute the Escrow
Agreement on behalf of such Company Securityholder and to take any and all actions
required or permitted to be taken by the Sellers’ Representatives under this
Agreement or the Escrow Agreement, with respect to any claims made by the Purchaser or
the Sellers for indemnification pursuant to this Article IX of this Agreement and with
respect to any actions to be taken by the Sellers’ Representatives pursuant to the
terms of the Escrow Agreement, including, without limitation, to: (i) execute the
Escrow Agreement on behalf of such Company Securityholder; (ii) execute any
agreement or instrument required to be executed and delivered by the Sellers’ Representative
under this Agreement or the Escrow Agreement, (iii) authorize delivery to any
Purchaser Indemnified Parties of the Indemnity Escrow Fund, or any portion thereof, in
satisfaction of indemnification claims under this Article IX, (iv) agree to,
negotiate, enter into settlements and compromises of and comply with orders of courts and
awards of arbitrators with respect to such indemnification claims, (v) resolve any
indemnification claims under this Article IX, and (vi) take all actions necessary in
the sole discretion of the Sellers’ Representative for the accomplishment of the
foregoing and all of the other terms, conditions and limitations of this Agreement or the
Escrow Agreement. The Sellers’ Representatives shall at all times act in their
capacity as Sellers’Representatives in a manner that the Sellers’ Representatives
believe in good faith to be in the best interests of the Company Securityholders. Neither
the Sellers’Representatives nor any of their directors, officers, employees or
agents shall be liable to any Person for any error of judgment, or any action taken,
suffered or omitted to be taken, under this Agreement or the Escrow Agreement, except in
the case of its gross negligence, bad faith or willful misconduct. The Sellers’ Representatives
may in their discretion consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or omitted to
be taken in good faith by it in accordance with the advice of such counsel, accountants
or experts or failure to seek advice. The Sellers’ Representatives shall not have
any duty to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or the Escrow Agreement. As to any
matters not expressly provided for in this Agreement or the Escrow Agreement, the Sellers’ Representatives
shall not be required to exercise any discretion or take any action. The Sellers shall,
severally and not jointly, on a pro rata basis based on their Pro Rata Share, indemnify,
defend and hold the Sellers’ Representatives harmless against any liabilities,
losses, damages, claims, costs or expenses that may be incurred as such liabilities,
losses, damages, claims, costs or expenses are incurred by the Sellers’Representatives
and arising out of or in connection with the acceptance or administration of the Sellers’ Representatives’ duties
hereunder, including, but not limited, the legal costs and expenses of defending such
Sellers’ Representatives against any claim or liability (and all actions, claims,
proceedings and investigations in respect thereof), in connection with, caused by or
arising out of, directly or indirectly, the performance of the Sellers’ Representatives’ duties
(except for bad faith or willful misconduct). The Sellers shall be responsible for and
shall reimburse the Sellers’ Representatives on a pro rata basis upon demand for all
reasonable expenses, disbursements and advances incurred or made by the Sellers’ Representatives
in accordance with any of the provisions of this Agreement, the Escrow Agreement or any
other documents executed in connection herewith or therewith, including, without
limitation, the costs and expenses of receiving advice of counsel according to this
Agreement and the Escrow Agreement. The indemnification and reimbursement of costs and
expenses obligations of the Sellers vis-à-vis the Sellers’ Representatives
pursuant to this Section 9.08 shall remain in full force and effect following the
appointment of a new Sellers’ Representative or termination of this Agreement for
any reason. Notwithstanding anything to contrary herein or in the Escrow agreement, (a)
the Sellers’ Representatives are not authorized to, and shall not, accept on behalf
of any Seller any purchase price consideration to which such Seller is entitled under
this Agreement and (b) the Sellers’ Representatives shall not in any manner
exercise, or seek to exercise, any voting power whatsoever with respect to shares of the
Company now or hereafter owned of record or beneficially by a Seller unless the Sellers’Representatives
are expressly authorized to do so in a writing signed by such Seller. At any time during
the term of the Escrow Agreement, holders of a majority in interest of the Escrow Fund
can appoint a new Sellers’ Representative by a written consent signed by such
holders, a copy of which shall be provided to the Purchaser and the Escrow Agent. The
Purchaser shall be entitled to rely exclusively on all statements, representatives and
decisions of the Sellers’ Representatives as statements, representations and
decisions of the Sellers.  

42

ARTICLE X

TERMINATION, AMENDMENT AND WAIVER

     SECTION 10.01       
Termination. This Agreement may be terminated at any time prior to the Closing:  

		    (a)        by
the Purchaser if, between the date hereof and the Closing, (i) an event or
               condition occurs that has resulted in a Material Adverse Effect, (ii) the
               Company or the Sellers shall not have complied in all material respects
with the                covenants or agreements contained in this Agreement to be
complied with by it or                (iii) any Seller, the Company or any Subsidiary
makes a general assignment for                the benefit of creditors, or any proceeding
shall be instituted by or against                any Seller, the Company or any
Subsidiary seeking to adjudicate any of them a                bankrupt or insolvent, or
seeking liquidation, winding up or reorganization,                arrangement,
adjustment, protection, relief or composition of its debts under                any Law
relating to bankruptcy, insolvency or reorganization;  

		    (b)        by
either the Sellers’ Representative or the Purchaser if the Closing shall
               not have occurred by January 31, 2007; provided, however,
               that the right to terminate this Agreement under this Section 10.01 (b)
shall                not be available to any party whose failure to fulfill any
obligation under this                Agreement shall have been the cause of, or shall
have resulted in, the failure                of the Closing to occur on or prior to such
date;  

		    (c)        by
either the Purchaser or the Sellers’ Representative in the event that
               any Governmental Authority shall have issued an order, decree or ruling or
taken                any other action restraining, enjoining or otherwise prohibiting the
               transactions contemplated by this Agreement and such order, decree, ruling
or                other action shall have become final and nonappealable; or  

		    (d)        by
the mutual written consent of the Sellers’ Representative and the
               Purchaser.  

    SECTION 10.02       
Effect of Termination. In the event of termination of this Agreement as provided
in Section 10.01, this Agreement shall forthwith become void and there shall be no
liability on the part of either party hereto except (a) as set forth in Sections 6.03(b)
and 11.01 and (b) that nothing herein shall relieve any party from liability for any
breach of this Agreement.  

    SECTION 10.03       
Amendment. This Agreement may not be amended or modified except (a) by an
instrument in writing signed by, or on behalf of, the Sellers and the Purchaser or (b) by
a waiver in accordance with Section 10.04.  

    SECTION 10.04       
Waiver. Any party to this Agreement may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained herein or in any
document delivered by the other parties pursuant hereto or (c) waive compliance with any
of the agreements of the other parties or conditions to such party’s obligations
contained herein. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other term or condition of this
Agreement. The failure of any party to assert any of its rights hereunder shall not
constitute a waiver of any of such rights. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise
available.  

43

ARTICLE XI

GENERAL PROVISIONS

    SECTION 11.01       
Expenses. Except as otherwise specified in this Agreement, all costs and expenses,
including, without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions contemplated
by this Agreement shall be paid by the party incurring such costs and expenses.  

    SECTION 11.02       
Notices. All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by an internationally recognized
overnight courier service, by telecopy or registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in accordance with
this Section 11.02):  

	 	         (a) 	if
to the Company:

StoreAge Networking Technologies Ltd.

63 Bar Yehuda Road

Nesher 36651, Israel

Fax Number: +(972-4) 820-3748

with a copy to:

Yesha Primes

Primes, Shiloh, Givon, Meir Law Firm

16 Derech Hayam St., Haifa 34741, Israel

Fax Number: +(972-4) 838-1401

	 	         (b) 	if
to the Purchaser:

LSI Logic Corporation

1621 Barber Lane

Milpitas, CA 95035

Attention: General Counsel

Fax Number: +(1-408) 433-6896

44

	 	
with
a copy to:

Aaron M. Lampert

Naschitz, Brandes & Co.

5 Tuval Street

Tel-Aviv 67897, Israel

Fax Number: +(972-3) 623-5051 

	 	         (c) 	if
to a Seller, to the address for such Seller set forth below the signature block
                  for such Seller on the signature pages hereto

with a copy to:

L.R (Robi) Hartman

c/o West End Technology Investments Ltd.

Twin Towers Building One

33 Jabotinsky Street

Ramat Gan 52511, Israel

Fax Number: (+972-3) 612-3994

Genesis Partners II L.D.C.

11 HaMenofim Street

Ackerstein Towers, Building B

4th Floor

Herzliya Pituach, Israel

Attention: Eddy Shalev

Fax Number: (+972-9) 972-9001

with a copy to:

Ian Rostowsky

Efrati Galili Lahat & Co.

6 Wissotsky Street

Tel-Aviv 62338

Fax Number: (+972-3) 604-0111

    SECTION 11.03       
Public Announcements. No party to this Agreement shall make, or cause to be made,
any press release or public announcement in respect of this Agreement or the transactions
contemplated by this Agreement or otherwise communicate with any news media without the
prior written consent of the other party, and the parties shall cooperate as to the
timing and contents of any such press release or public announcement.  

    SECTION 11.04       
Severability. If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect for so
long as the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated by this Agreement are consummated as
originally contemplated to the greatest extent possible.  

45

    SECTION 11.05       
Entire Agreement. This Agreement, the Escrow Agreement, the Confidentiality
Agreement and the other agreements contemplated hereby constitute the entire agreement of
the parties hereto with respect to the subject matter hereof and thereof and supersede
all prior agreements and undertakings, both written and oral, between the Sellers and the
Purchaser with respect to the subject matter hereof and thereof.  

    SECTION 11.06       
Assignment. This Agreement may not be assigned by operation of law or otherwise
without the express written consent of the Sellers and the Purchaser (which consent may
be granted or withheld in the sole discretion of the Sellers or the Purchaser); provided,
however, that the Purchaser may assign this Agreement or any of its rights and
obligations hereunder to one or more Affiliates of the Purchaser without the consent of
the Seller; provided, however, that no such assignment shall release the Purchaser from
any of its obligations under this Agreement to pay consideration to the Sellers or the
holders of Company Share Options at the Closing.  

    SECTION 11.07       
No Third Party Beneficiaries. Except for the provisions of Article IX relating to
indemnified parties, this Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their permitted assigns and nothing herein, express or implied
is intended to or shall confer upon any other Person, including, without limitation, any
union or any employee or former employee of the Company or any Subsidiary, any legal or
equitable right, benefit or remedy of any nature whatsoever, including, without
limitation, any rights of employment for any specified period, under or by reason of this
Agreement.  

    SECTION 11.08       
Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and to be
performed in that State. All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined exclusively in any U.S. federal or state court
sitting in the city of New York. The parties hereto hereby (a) submit to the exclusive
jurisdiction of any court sitting in the city of New York for the purpose of any Action
arising out of or relating to this Agreement brought by any party hereto, and (b)
irrevocably waive, and agree not to assert by way of notion, defense, or otherwise, in
any such Action, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or execution,
that the Action is brought in an inconvenient forum, that the venue of the Action is
improper, or that this Agreement or the transactions contemplated by this Agreement may
not be enforced in or by any of the above-named courts.  

    SECTION 11.09       
Headings. The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.  

    SECTION 11.10       
Counterparts. This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same agreement.  

[Intentionally
left blank – next page the first signature page] 

46

        IN
WITNESS WHEREOF, the Purchaser, the Company and each of the Sellers have caused this
Agreement to be executed as of the date first written above by their respective officers
thereunto duly authorized. 

			LSI LOGIC CORPORATION

By:
——————————————

Name:
Title:

			STOREAGE NETWORKING TECHNOLOGIES LTD.

By:
——————————————

Name: Mr. Eli Shapira
Title:   CEO

			IIS INTELLIGENT INFORMATION SYSTEMS LTD.

By:
——————————————

Name:
Title:
Address:
Fax Number:

47

			GENESIS PARTNERS II L.D.C.

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			GENESIS PARTNERS II (ISRAEL) L.P.

By:
——————————————

Name:
Title:
Address:
 Fax Number:

48

			OPHIRTECH LTD.

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			KOONRAS TECHNOLOGIES LTD. 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			 CISCO SYSTEMS INTERNATIONAL B.V. 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

49

			 MORGAN KEEGAN OPPORTUNITY FUND, L.P.

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			  MORGAN KEEGAN EMPLOYEE INVESTMENT FUND, L.P.

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			 CDC HOLDINGS LIMITED

By:
——————————————

Name:
Title:
Address:
 Fax Number:

50

			 THE CHALLENGE FUND - ETGAR II LP

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			 AMNON EVRON & CO. TRUST COMPANY LTD.

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			 FAR EAST FINANCE LIMITED

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			 DAVID GOL 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

51

			ARIEL SHOOB, ADV. 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			INDUSTRIAL SYSTEMS AND EQUIPMENT CO. 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

52

			PLENUS TECHNOLOGIES LTD. 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			GOLDEN GATE BRIDGE FUND LP 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			PLENUS II LP 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			 PLENUS II (D.C.M.), LP

By:
——————————————

Name:
Title:
Address:
 Fax Number:

53

			SAREL ALTSHULER 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			MARCEL KATZ 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			DANA COHEN 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			 MICHAEL PENN

By:
——————————————

Name:
Title:
Address:
 Fax Number:

			GREGORY DARDYK 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

54

			LINDA RITCHIE 

By:
——————————————

Name:
Title:
Address:
 Fax Number:

55

EXHIBIT A

OWNERSHIP OF ORDINARY SHARES  

	List of Sellers
	Number of

Ordinary Shares
	Percentage of

Ordinary Shares

outstanding on the

date of this

Agreement
	Percentage of fully

diluted shares

(assuming exercise of

all outstanding

options) - Pro Rata

Share

	 			
				
				
				
	IIS Intelligent Information Systems Ltd	 	 	 	6,283,866	 	 	12.61	%	 	10.89	%
	Ophir Tech Ltd	 	 	 	4,035,804	 	 	8.10	%	 	6.99	%
	Koonras Technologies Ltd	 	 	 	4,276,668	 	 	8.58	%	 	7.41	%
	Genesis Partners II LDC	 	 	 	10,100,216	 	 	20.27	%	 	17.50	%
	Genesis Partners II (Israel) LP	 	 	 	1,493,356	 	 	3.0	%	 	2.59	%
	Cisco Systems International BV	 	 	 	5,175,894	 	 	10.39	%	 	8.97	%
	Morgan Keegan Opportunity Fund LP	 	 	 	3,211,516	 	 	6.44	%	 	5.56	%
	Morgan Keegan Employee Investment Fund LP	 	 	 	1,070,506	 	 	2.15	%	 	1.85	%
	The Challenge Fund - Etgar II LP	 	 	 	3,040,234	 	 	6.10	%	 	5.27	%
	Far East Finance Limited	 	 	 	272,978	 	 	0.55	%	 	0.47	%
	David Gol	 	 	 	16,058	 	 	0.03	%	 	0.03	%
	Amnon Evron & Co.	 	 	 	10,706	 	 	0.02	%	 	0.02	%
	CDC Holdings Limited	 	 	 	1,541,528	 	 	3.09	%	 	2.67	%
	Ariel Shoob, Adv	 	 	 	7,364,482	 	 	14.77	%	 	12.76	%
	Industrial Systems And Equipment Co., Inc	 	 	 	241,458	 	 	0.48	%	 	0.42	%
	Plenus Technologies Ltd	 	 	 	215,337	 	 	0.43	%	 	0.37	%
	Golden Gate Bridge Fund LP	 	 	 	25,586	 	 	0.05	%	 	0.04	%
	Plenus II LP	 	 	 	1,241,961	 	 	2.49	%	 	2.15	%
	Plenus II (D.C.M), LP	 	 	 	123,272	 	 	0.24	%	 	0.21	%
	 	 	 
	Yuli Yardeni (Trustee for former employees)	 	 	 	84,784	 	 	0.17	%	 	0.15	%
	Linda Ritchie	 	 	 	10,688	 	 	0.02	%	 	0.02	%
	 	 	 
	Ordinary Shares subject to outstanding Company	 	 
	Share Options granted but not exercised (NOT A	 	 
	SELLER)	 	 	 	7,881,202	 	 	 	 	 	13.65	%
	 	 	 	 	57,718,100	 	 	100	%	 	100	%

56

EXHIBIT 2.03  

FORM OF ESCROW AGREEMENT 

57

EXHIBIT 5.07  

FORM OF CSO UNDERTAKING 

	To:  	The
Research Committee

The Office of the Chief Scientist

Jerusalem

Relating to projects that have been
financed by or are currently being financed by the Office of the Chief Scientist of the
Ministry of Industry, Trade and Labor (the “OCS”) (All considered as
belong to Plan Number 17229) and to projects of the Company (as this term is defined
below) that may be financed by the OCS in the future (the “Projects”). 

	1.  	Undertaking

We, the undersigned, of _________________________________
[Foreign investor’s name] a company incorporated, organized and existing under the
laws of _______________ and whose registered office is at _________________
(“______”), having, by an agreement dated _____________, committed to invest in _____________________ Ltd. (the “Company”), in exchange for [number and type of shares]
________ shares of the Company; 

Recognizing that the Company’s
research and development Projects are currently, have been or will be financially
supported by the Government of the State of Israel, through the OCS under and subject to
the provisions of The Encouragement of Research and Development in Industry Law 5744-1984
(the “R&D Law”) and the regulations, rules and procedures promulgated
there under; 

Recognizing that the R&D Law
places strict constraints on the transfer of know-how and/or production rights, making all
such transfers subject to the absolute discretion of the OCS’ research committee (the
“Research Committee”), acting in accordance with the aims of the R&D
Law and requiring that any such transfer receive the prior written approval of the
Research Committee; 

Hereby declare and
undertake: 

	1.  	To
observe strictly all the requirements of the R&D Law and the regulations, rules and
      procedures promulgated there under, as applied to the Company and as directed by
the Research       Committee, in particular those requirements stipulated under Sections
19, 19A and 19B of the       R&D Law relating to the prohibitions on the transfer of
know-how and/or production rights.

	2.  	As
a shareholder of the Company, to make all reasonable efforts that the Company shall
      observe strictly all the requirements of the R&D Law and the regulations, rules and
procedures       promulgated there under, as applied to the Company and as directed by
the Research Committee,       in particular those requirements stipulated under Sections
19, 19A and 19B of the R&D Law       relating to the prohibitions on the transfer of
know-how and/or production rights.

	——————————

Date	————————————————————————

Name (block letters) and signature of Authorized Company Representative and Company Seal 

58

EXHIBIT 8.02(g)  

REQUIRED CONSENTS AND
APPROVALS 

Consent of the OCS 

Consent of the Investment Center of the Israeli Ministry of Industry

Consent of the Lessor pursuant to the
lease agreement between the Company and P. Furman Properties Ltd. (the “Lessor”)
in connection with the lease of the premises at 63 Bar Yehuda Rd., Nesher, Israel. 

Microsoft Licensing, GP – OEM
Customer License Agreement, updated August 30, 2006 

WebMethods UK Ltd. –
Distribution Platform Alliance Agreement, dated September 28, 2006 

59

EXHIBIT 8.02(h)  

REQUIRED EMPLOYEES 

Tier I Employees 

Eli Shapira

Nelson Nahum

Mark Spowart

Dani Naor

Kevin Liebel

Doug Jury

Mosche Melnikov

Yair Hershko

Eitan Maggeni

Gabi CohenZamir

Michael Gralnik

60

EXHIBIT 8.02(l)  

MATTERS TO BE ADDRESSED IN OPINION OF THE COMPANY'S COUNSEL

	1.  	Due
organization and valid existence of the Company 

	2.  	Company’s
power and authority to conduct its business in Israel 

	3.  	Due
authorization, execution and delivery of this Agreement by the Company 

	4.  	Company’s
capitalization and outstanding share capital, qualified by                knowledge 

	5.  	Governmental
approvals and consents of third parties under material contracts of                the
Company known to such counsel required in connection with the transactions
               contemplated by this Agreement 

6120-F

Exhibit 4.4  

SHARE EXCHANGE
AGREEMENT 

        THIS
SHARE EXCHANGE AGREEMENT (“Agreement”), dated as November 5, 2007, by and
among I.I.S Intelligent Information Systems Ltd., an Israeli company
(“IIS”), Witech Communications Ltd., an Israeli company
(“Witech”) and the shareholders of Witech listed on Schedule
1.1 hereto (the “Witech Shareholders”). 

W I T N E S S E T H: 

        WHEREAS,
IIS and the Witech Shareholders intend to effect an exchange of Shares of Witech for
shares of IIS in accordance with Section 103K of the Israeli Income Tax Ordinance [New
Version] (the “Exchange”) in accordance with this Agreement pursuant to
which all the issued and outstanding shares of Witech will be exchanged for shares of IIS
to be issued to the Witech Shareholders and Witech will become a wholly-owned subsidiary
of IIS; 

        WHEREAS,
the respective boards of directors of IIS, and Witech deem the Exchange desirable and in
the best interests of their respective corporations and their respective stockholders, and
have proposed, declared advisable, and approved the Exchange pursuant to this Agreement; 

        WHEREAS,
in order to induce each party to enter into this Agreement and to consummate the Exchange,
the Witech Shareholders are delivering certain undertakings to IIS and IIS is delivering
certain undertakings to Witech and the Witech Shareholders; 

        NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and agreements
herein contained, and in order to set forth the terms and conditions of the Exchange, the
mode of carrying the same into effect, the manner and basis of converting the rights of
the current holders of the presently issued outstanding ordinary shares, par value NIS 0.1
per share (the “Witech Shares”), of Witech into the right to receive the
Exchange Shares (as defined herein), and such other details and provisions as are deemed
necessary or proper, the parties hereto agree as follows: 

ARTICLE I 

EXCHANGE 

         1.1.       The Exchange. Subject to and in accordance with the terms and conditions
          of this Agreement, at the Closing (as hereinafter defined) (a) the Witech
          Shareholders shall severally and not jointly transfer, assign and deliver to
          IIS, all of the Witech Shares (each of the Witech Shareholders shall transfer
          its/his respective number of Witech Shares as specified in Schedule 1.1 hereto) free and clear of any mortgage, pledge, lien, charge,
          security interest, option, right of first refusal, preferential purchase right,
          defect, encumbrance or other right or, interest of any other person
          (collectively, “Encumbrances”) and (b) IIS shall issue and
          deliver to the Witech Shareholders (or the trustee on their behalf) Ordinary
          Shares NIS 0.003 nominal value each of IIS (the “Exchange
          Shares”) in such number set out next to each Witech Shareholders name
          in Exhibit A hereto. No fractional shares shall be issued and all numbers
          will be rounded up or down to the nearest whole number; provided that, the
          number of Exchange Shares shall not exceed 11,576,539. Immediately after the
          Closing, the Exchange Shares shall constitute fifty percent (50%) of the issued
          and outstanding share capital of IIS (less any shares due to IIS by virtue of
          loan agreements between IIS and Witech). All of the Exchange Shares will be
          deemed “restricted stock” as that term is defined in the regulations
          of the Securities and Exchange Commission, promulgated under the Securities Act
          of 1933, as amended, and IIS undertakes to file a registration statement with
          respect to such Exchange Shares in accordance with Section 7.1 hereof. 

- 1 -

         1.2.       Closing Date. The closing of the transactions contemplated by this
          Agreement (the “Closing”) shall take place at the offices of
          Amit, Pollak, Matalon, Law Offices in Tel-Aviv Israel, on a date to be
          designated by IIS and Witech (the “Closing Date”), which shall
          be no later than the second business day after the satisfaction or waiver of the
          conditions set forth in Article V, which in any event shall be no later
          than December 31, 2007 unless agreed in writing by IIS, Witech and the
          Shareholders Representative (as defined in Section 5.1.9 below). 

         1.3.       Material Adverse Effect. “Material Adverse Effect” or
          “Material Adverse Change” means any effect, change, event,
          circumstance or condition which when considered with all other effects, changes,
          events, circumstances or conditions could reasonably be expected to materially
          adversely affect the business, results of operations or financial condition of
          IIS or Witech, in each case including its respective subsidiaries together with
          it taken as a whole, as the case may be. In no event shall any of the following
          constitute a Material Adverse Effect or a Material Adverse Change: (i) a
          change in the trading prices of either of IIS equity securities between the date
          hereof and the Closing Date, in and of itself; (ii) any effects, changes,
          events, circumstances or conditions resulting from any change in law or
          generally accepted accounting principles, which affect generally entities such
          as IIS and Witech; or (ii) any effect resulting from compliance by IIS or
          Witech with the terms of this Agreement. 

         1.4.       Witech’s Transfer Books Closed. Upon the Closing Date, the share
          transfer books of Witech shall be deemed closed, and no transfer of any
          certificates theretofore representing the Witech Shares shall thereafter be made
          or consummated; and no further transfer of any such Witech Shares shall be made
          on such share transfer books after the Closing Date. 

         1.5.       Further Action. Witech and each of the Witech Shareholders shall
          take all such reasonable and lawful action as may be necessary or appropriate in
          order to effectuate the Exchange as promptly as possible. If, at any time after
          the Closing Date, any further action is determined by IIS to be necessary or
          desirable to carry out the purposes of this Agreement or to vest IIS with full
          right, title and possession of and to all rights to the Witech Shares the
          officers and directors of IIS shall be fully authorized (in the name of the
          Witech Shareholders) to take such action. 

- 2 -

         1.6.       Treatment of Stock Options. On or prior to the Closing Date, each of the
          then outstanding options, warrants and other rights to purchase Witech Shares or
          other non-cash compensation to the Witech Shareholders or the employees of
          Witech, (as defined herein) (collectively, the “Witech
          Options”)(which includes all outstanding options granted under
          Witech’s stock option plans (the “Witech Option Plans”)
          and Witech’s stock option agreements (the “Witech Option
          Agreements”)) will be terminated immediately prior to the Closing Date
          without any liability or obligation on the part of Witech or IIS. 

    1.7.       Limitation
of Assumed Liabilities. At the date of the Closing           and except as agreed in
writing by IIS, the aggregate total liabilities (of any           kind or nature
whatsoever) of Witech (on a consolidated basis) to any of the           Shareholders or
any of their affiliates and to any financial institutions, or           other lenders or
any third party, on a consolidated basis (including interest           calculated up to
the scheduled repayment date) shall not exceed $ $2,357,813 as           set out in Schedule
1.7 hereto. It is agreed that out of           the abovementioned,
liabilities in the aggregate amount of approximately           $660,571 will only be paid
after the Company has raised at least $6,000,000 in           equity or convertible debt
financing following the date of this Agreement. At           Closing, all shareholders
and all holders of any other rights to shares of           Witech will sign a customary
waiver and release in favor of Witech and IIS,           except with respect to the
liabilities set out in Schedule           1.7 (the “Witech
Shareholder Waiver”) hereto,           which shall be liabilities only of Witech
except as specifically assumed by IIS           pursuant to Schedule 1.7 above.  

ARTICLE II 

REPRESENTATIONS AND
WARRANTIES 

OF WITECH AND CERTAIN
WITECH SHAREHOLDERS 

        Witech
and Charles Moss, David Elooz, Eliyahu Cohen, Ronen Segal and Dan Ben Dror represent and
warrant to IIS, as follows: 

        Reference
to any one matter in the Witech Disclosure Schedule (as defined below) is deemed
sufficient for any other reference in such Witech Disclosure Schedule. 

         2.1.       Organization and Standing. Witech is a company duly organized and validly
          existing under the laws of the State of Israel, has all requisite power and
          authority to carry on its business as it is currently conducted and to own and
          operate the properties currently owned and operated by it, and is duly qualified
          or licensed to do business and is in good standing as a foreign corporation
          authorized to do business in all jurisdictions in which the character of the
          properties owned or the nature of the business conducted by it would make such
          qualification or licensing necessary, except where the failure to be so
          qualified or licensed could not reasonably be expected to have a Material
          Adverse Effect on Witech. Witech has delivered to IIS accurate and complete
          copies of its memorandum of association and articles of association and other
          charter documents, including all amendments thereto. 

- 3 -

         2.2.       Agreement Authorized and its Effect on Other Obligations. 

		    2.2.1        Authorization
and Enforceability. Witech has all requisite power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and, subject to the receipt
of all requisite Witech Third Party Consents (as hereinafter defined), to consummate the
transactions contemplated hereby and thereby. The execution and delivery by Witech of
this Agreement and the performance by Witech of its obligations hereunder have been duly
and validly authorized by all necessary corporate action on the part of Witech. This
Agreement has been duly executed and delivered by Witech and (assuming due authorization,
execution and delivery hereof by the other parties hereto) constitutes a legal, valid and
binding obligation of Witech, enforceable (subject to normal equity principles) against
Witech in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, debtor relief or similar laws affecting the
rights of creditors generally.  

		    2.2.2.        Approvals.
No consent, approval, order or authorization of, or                registration,
declaration or filing with, any court, administrative agency or                commission
or other governmental authority or instrumentality                (“Governmental
 Entity”) or any third party, is required by or                with respect to
Witech or any of its subsidiaries in connection with the                execution and
delivery of this Agreement or the consummation of the transactions
               contemplated hereby, except the approval of Mizrahi Tfahot Bank (the
               “Bank Approval”).  

		    2.2.3.        No
Violation. Assuming the receipt of all consents, approvals, orders or
               authorizations of, and the registration, declaration or filing with, any
               Governmental Entity or other third party contemplated by Section 2.2.2,
neither                the execution and delivery of this Agreement nor the consummation
of the                transactions contemplated hereby will (i) conflict with or result
in a violation                or breach of any term or provision of, nor constitute a
default under, the                Articles of Association of Witech; (ii) contravene,
conflict with or                result in a violation or breach of, or result in a
default under, any                obligations, indenture, mortgage, deed of trust, lease,
contract or other                agreement to which Witech or any of its subsidiaries is
a party or, by which any                of them or their properties are bound, (iii)
contravene, conflict with or result                in a violation of, or give any
Governmental Entity or other Person the right to                challenge the Exchange or
to exercise any remedy or obtain any relief under, any                legal requirement
or any order, writ, injunction, judgment or decree to which                Witech, or any
of the assets owned or used by Witech, is subject, (iv)                contravene,
conflict with or result in a violation of any of the terms or                requirements
of, or give any Governmental Entity the right to revoke, withdraw,
               suspend, cancel, terminate, modify or exercise any right or remedy or
require                any refund or recapture with respect to, any Grant (as hereinafter
defined)                given by any Governmental Entity (or any benefit provided or
available                thereunder) or other permit, license, consent, authorization,
grant, benefit,                right that is held by Witech or, that otherwise relates to
the business or                assets of Witech, (v) result in the imposition, creation
or crystallization of                any Encumbrance (as hereinafter defined) upon or
with respect to any asset owned                or used by Witech, or (vi) with the
passage of time or the giving of notice,                have any of the effects set forth
in clauses (i) through (v) of this Section; in                each case (other than
clause (i) hereof) other than such violations, breaches or                defaults as
could not reasonably be expected to have a Material Adverse Effect                on
Witech. Section 2.2 of the Witech Disclosure
               Schedule lists all holders of any material indebtedness of
               Witech, the lessors of any material property leased by Witech and the
other                parties to any material agreements to which Witech is a party in
each case whose                consent to the Exchange is required (“Witech Third
Party Consents”).  

- 4 -

         2.3.       
          Capitalization. The authorized share capital of Witech consists of NIS
          50,000 divided into 500,000 ordinary shares, par value NIS 0.1 per share, of
          which as of the date hereof 40.473 shares are issued and outstanding, and no
          Witech Options are issued and outstanding as of the date hereof. All of such
          outstanding shares are validly issued, fully paid and non-assessable, and were
          not issued in violation of any preemptive rights of any shareholder.
          Section 2.3 of the Witech Disclosure Schedule delivered by
          Witech to IIS dated the date hereof (the “Witech Disclosure
          Schedule”) sets forth a complete list as of the date of this Agreement
          of all outstanding options, warrants or obligations of any kind to issue any
          shares of Witech, the owners thereof and the amounts owed. Other than as set
          forth in Section 2.3 of the Witech Disclosure Schedule,
          Witech has no outstanding options, warrants or obligations of any kind to issue
          any of its shares. Except as set forth in Section 2.3 of the Witech
          Disclosure Schedule: (i) none of the outstanding Witech Shares,
          or Witech Options and no holder of any Witech Shares, or Witech Options is
          entitled or subject to any preemptive right, right of participation, right of
          maintenance or similar right; (ii) none of the outstanding Witech Shares, or
          Witech Options and no holder of Witech Shares, or Witech Options is subject to
          any right of first refusal; and (iii) there are no contracts, undertakings or
          agreements relating to the voting or registration of, or restricting any Person
          from purchasing, selling, pledging or otherwise disposing of (or granting any
          option or similar right with respect to), any Witech Shares, or Witech Options
          or Witech Loans. Other than the Witech Loans, Witech is not under any
          obligation, or bound by any contract pursuant to which it may become obligated,
          to repurchase, redeem or otherwise acquire any Witech Shares, Witech Options or
          Witech Loans. The treatment of the Witech Options in accordance with Section 1.7
          of this Agreement will not violate or conflict with the terms of the Witech
          Option Plans, Witech Option Agreements, or the applicable warrant agreements
          governing the terms of the Witech Loans or to Witech’s knowledge, any other
          agreement or plan governing the terms of the Witech Options or the Witech Loans. 

         2.4.       
          Subsidiaries. Except for CDRide, Inc. a Delaware Corporation (the
          “Subsidiary”) the Company has no other direct or indirect
          subsidiary corporations and no interest in any partnership or other legal
          entity. All outstanding shares of capital stock of the Subsidiary are owned by
          Witech, are validly issued, fully paid, and non-assessable, and Witech has good
          and valid title thereto free and clear of any Encumbrances. The Subsidiary is a
          corporation duly organized, validly existing, and in good standing under the
          laws of Delaware and has full requisite corporate power and authority to own its
          property and carry on its business as presently conducted by it and is duly
          qualified or licensed to do business and is in good standing as a foreign
          corporation authorized to do business in all jurisdictions in which the
          character of the properties owned or the nature of the business conducted makes
          such qualification or licensing necessary, except where the failure to be so
          qualified or licensed could not reasonably be expected to have a Material
          Adverse Effect on Witech. As used in this Article II, the term
          “Witech” also includes the Subsidiary, except where the context
          indicates to the contrary. 

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         2.5.       
          Financial Statements. Witech has previously furnished to IIS true and
          complete copies of its consolidated audited financial statements for the years
          ended December 31, 2004, December 31, 2005 and December 31, 2006 and unaudited
          internal consolidated financial statements for the period ended September 30,
          2007 (collectively, the “Financial Statements”). The Financial
          Statements were prepared in accordance with the published regulations of the
          Commission and in accordance with United States generally accepted accounting
          principles (“GAAP”) applied on a consistent basis during the periods
          involved and fairly present, or will present, the consolidated financial
          position for Witech and its subsidiaries as of the dates thereof and the
          consolidated results of their operations and changes in financial position for
          the periods then ended (except with respect to interim period financial
          statements, for normal year end adjustments which are, individually or in the
          aggregate, not material in amount). 

         2.6.       
          Liabilities. Witech does not have any liabilities or obligations, either
          accrued, absolute, contingent, or otherwise, or have any knowledge of any
          potential liabilities or obligations, which could reasonably be expected to have
          a Material Adverse Effect on Witech, other than those (i) disclosed in the
          Financial Statements, or (ii) set forth in Section 2.6 of the
          Witech Disclosure Schedule. 

         2.7.       
          Additional Witech Information. Set forth in Section 2.7 of the
          Witech Disclosure Schedule are true, complete and correct lists
          of the following items, and Witech agrees that upon the request of IIS, it will
          furnish to IIS true, complete and correct copies of any documents referred to in
          such lists: 

		    2.7.1.        Employee
Compensation Plans. All bonus, incentive compensation, stock                option,
deferred compensation, profit-sharing, retirement, pension, welfare,
               severance pay, supplemental income, group insurance, death benefit, or
other                fringe benefit plans, arrangements or trust agreements covering
active, former                or retired employees of Witech (collectively, “Witech
Plans”),                together with copies of the related summary plan
descriptions, if any, the most                recent reports, if any, with respect to
such plans, arrangements, or trust                agreements filed with any governmental
agency and all Internal Revenue Service                determination letters that have
been received with respect to such plans;  

- 6 -

		    2.7.2.        Compensation.
The names and salary rates of all present directors,                officers and
employees of Witech together with any bonuses and other                compensation paid
or payable to such persons and, to the extent existing on the                date of this
Agreement, all arrangements with respect to any bonuses to be paid                to them
from and after the date of this Agreement (including compensation                payable
pursuant to bonus, deferred compensation or commission arrangements or                in
connection with any manager’s insurance, education fund and health
               fund), and such employee’s employer, date of employment and position;  

		    2.7.3.        Employee
Agreements. Any collective bargaining agreements of Witech with                any
labor union or other representative of employees, including amendments,
               supplements, and understandings, and all employment and consulting
agreements of                Witech in effect on the date hereof;  

		    2.7.4.        Guaranties.
All third party indebtedness, liabilities and commitments of                others as to
which Witech is a guarantor, endorser, co-maker, surety, or                accommodation
maker, or is contingently liable therefor (excluding liabilities                as an
endorser of checks and the like in the ordinary course of business) and
               all letters of credit, whether stand-by or documentary, issued by any
third                party; and  

         2.8.       
          No Undisclosed Contracts or Defaults. Except as set forth on
          Schedule 2.8 (Contracts) to the Witech Disclosure Schedule,
          Witech is not a party to, or bound by, any material contract or arrangement of
          any kind to be performed after the Closing Date, nor is Witech in default in any
          material obligation or covenant on its part to be performed under any material
          obligation, lease, contract, order, plan or other arrangement. 

         2.9.       
          Absence of Certain Changes and Events. Except as set forth in the
          Financial Statements or in Section 2.9 of the Witech Disclosure
          Schedule, since December 31, 2006, there has not been: 

		    2.9.1.        Financial
Change. On or prior to the date hereof, any adverse change in                the
financial condition, operations, assets, liabilities or business of Witech
               which could reasonably be expected to have a Material Adverse Effect on
Witech;  

		    2.9.2.        Property
Damage. Any damage, destruction, or loss to the business or                properties
of Witech (whether or not covered by insurance) that could reasonably                be
expected to have a Material Adverse Effect on Witech;  

		    2.9.3.        Dividends.
Any declaration, setting aside, or payment of any dividend or                other
distribution in respect of the Witech Shares, or any direct or indirect
               redemption, purchase or any other acquisition by Witech of any such stock;  

		    2.9.4.        Labor
Disputes. Any labor dispute (other than routine grievances);  

- 7 -

		    2.9.5.        Employment
Arrangements. Any increase in compensation, bonus, deferred
               compensation, stock options or other consideration of any employee or
director                other than in the ordinary course of business consistent with
past practice;  

		    2.9.6.        Securities. Any
sale, issue or grant of (i) any share or other security                (except for Witech
Shares issued upon the valid exercise of outstanding options                in accordance
with the terms of Witech Plans or the Witech Option Agreements),                (ii) any
option, warrant or right to acquire any share or any other security, or
               (iii) any instrument convertible into or exchangeable for any share or
other                security; or  

		    2.9.7.        Amendments
to Charter Documents. Any amendment to the articles of                association or
other charter or organizational documents of Witech; the                consummation of
any Exchange, consolidation, amalgamation, arrangement, share                exchange,
business combination, recapitalization, reclassification of shares,                stock
split, division or subdivision of shares, stock dividend, issuance of
               bonus shares, reverse stock split, consolidation of shares or similar
               transaction involving Witech.  

         2.10.       
          Taxes. 

		    2.10.1.        Tax
Returns Filed; Taxes Paid. Except as set forth in Section 2.10.1 of the
Witech Disclosure                Schedule, (i) all returns,
declarations, claims for refund,                information returns and reports (“Tax
Returns”) of or with                respect to any and all taxes, charges, fees,
levies, assessments, duties or                other amounts payable to any federal,
state, local, foreign or other taxing                authority or agency, including,
without limitation, (x) income, franchise,                profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem,                value added, sales,
use, service, real or personal (tangible and intangible)                property,
environmental, capital stock, leasing, lease, user, license,                registration,
payroll, withholding, disability, employment, social security (or
               similar), workers compensation, unemployment compensation, utility,
severance,                excise, stamp, windfall profits, transfer and gains taxes, (y) customs,
               duties, imposts, charges, levies or other similar assessments of any kind,
and                (z) interest, penalties and additions to tax imposed with respect
thereto                (“Tax” or “Taxes”) which are
required to be                filed on or before the Closing by or with respect to Witech
have been or will be                duly and timely filed, (ii) all items of income,
gain, loss, deduction and                credit or other items required to be included in
each such Tax Return have been                or will be so included and all such
information and any other information                provided in each such Tax Return is
true, correct and complete, (iii) all                Taxes owed by Witech which have
become or will become due have been or will be                timely paid in full, (iv) all
Tax withholding and deposit requirements                imposed on or with respect to
Witech have been or will be satisfied in full in                all respects, (v) no
penalty, interest or other charge is or will become                due with respect to
the late filing of any such Tax Return or late payment of                any such Tax,
and (vi) there are no Encumbrances, other than statutory liens for                Taxes
not yet due, on any of the assets of Witech that arose in connection with
               any failure (or alleged failure) to pay any Tax.  

- 8 -

		    2.10.2.        Extensions
Disclosed. Except as set forth in Section 2.10.2 of                the Witech
Disclosure Schedule, there is                not in force any extension of
time with respect to the due date for the filing                of any Tax Return of or
with respect to Witech or any waiver or agreement for                any extension of
time for the assessment or payment of any Tax of or with                respect to
Witech.  

		    2.10.3.        Claims
Disclosed. There is no outstanding written claim from any                governmental
taxing authority against Witech for any Taxes, and no assessment,
               deficiency or adjustment has been asserted, proposed or threatened in
writing by                any governmental taxing authority with respect to any Tax
Return of or with                respect to Witech with respect to any period for which
the statute of                limitations on the assessment of tax deficiencies has not
expired other than                those disclosed (and to which are attached true and
complete copies of all audit                or similar reports) in Section 2.10.3
of the Witech Disclosure Schedule. To Witech’s knowledge, no written
claim has ever                been made by a governmental taxing authority in a
jurisdiction where Witech does                not file Tax Returns that it is or may be
subject to taxation in that                jurisdiction.  

		    2.10.4.        Scheduled
Tax Liabilities Sufficient. The total reserve amounts for                liabilities
for current and deferred Taxes in the financial statements referred                to in
Section 2.4 of this Agreement are sufficient to cover in all material
               respects the payment of all Taxes, whether or not assessed or disputed,
which                are or to have been, due by or with respect to Witech up to and
through the                periods covered thereby.  

		    2.10.5.        No
Tax Liens. Except for statutory liens for current Taxes not yet due,
               no material liens for Taxes exist upon the assets of Witech.  

		    2.10.6.        Change
of Accounting Method. Witech will not be required to include any
               amount in income for any taxable period beginning after the Closing Date
as a                result of a change in accounting method for any taxable period ending
on or                before the Closing Date or pursuant to any agreement with any Tax
authority with                respect to any such taxable period.  

		    2.10.7.        Activity
Limitations. Except for the Tax Ruling (as defined in Section 5.2.15),
Witech has not entered into any agreement or arrangement                with any taxing
authority that requires it to take any action or to refrain from                taking
any action.  

		    2.10.8.        Intentionally
Left Blank. 

		    2.10.9.        Intentionally
Left Blank. 

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         2.11.       
          Intellectual Property. 

		    2.11.1.        Ownership.
Section 2.11.1 of the Witech Disclosure                Schedule accurately
identifies all software programs currently                being marketed by Witech and
all software products or programs under development                by Witech but not
currently marketed (collectively, the “Software                Programs”).
Except as set forth on Schedule 2.11.1 to the Witech                Disclosure Schedule,
Witech owns full and                unencumbered right and good and valid title to the
Software Programs listed in                Section 2.11.1 of the Witech Disclosure
Schedule, all patents, trademarks,                service marks, trade names, domain
names and copyrights (including registrations                and applications pertaining
thereto and extensions, continuations, renewals or                divisions of any such
registrations or applications) and all other intellectual                property rights,
trade secrets, processes, formulas, know-how and other                confidential or
proprietary information, processes and formulae used in its                businesses or
otherwise necessary for the conduct of its businesses (the                “Intellectual
Property”), free and clear of all mortgages,                pledges, liens,
security interests, conditional sales agreements, encumbrances                or charges
of any kind. Section 2.11.1 of the Witech Disclosure                Schedule contains
a complete list of all registered trademarks                and service marks, all
reserved trade names, all registered copyrights and all                filed patent
applications and issued patents used in, or otherwise necessary for                the
conduct of, the business of Witech as heretofore conducted.  

		    2.11.2.        Notices.
Section 2.11.2 of the Witech Disclosure                Schedule sets
forth the form and placement of the proprietary                legends and copyright
notices displayed in or on the Software Programs. In no                instance has the
eligibility of the Software Programs for protection under                applicable
copyright law been forfeited to the public domain by omission of any
               required notice or any other action.  

		    2.11.3.        Protection.
Witech has in force the trade secret protection program set                forth in
Section 2.11.3 of the Witech Disclosure Schedule. To Witech’s
               best knowledge, there has been no violation of such program by any person
or                entity. Except with respect to the distribution of source code of the
Software                Programs that can only be distributed in source code (such
Software Programs                being listed by name in Section 2.11.3 of the
Witech Disclosure Schedule) pursuant to license
agreements listed                in Section 2.13.1 of the Witech Disclosure
               Schedule, the source code and related technical system
               documentation for the Software Programs (i) have at all times been
               maintained in strict confidence by Witech, and to Witech’s best
knowledge,                by third parties and (ii) have been disclosed by Witech
only to employees                and contractors who have had a “need to know” the
contents thereof in                connection with the performance of their duties to
Witech and who have executed                written agreements requiring the recipient to
keep the information in strict                confidence.  

- 10 -

		    2.11.4.        Personnel.
All key personnel who now, or have been employees, agents,                consultants and
contractors of Witech and who have contributed to or                participated in the
conception and development of the Software Programs,                technical
documentations, or Intellectual Property on behalf of Witech have                executed
nondisclosure agreements in form provided by Witech to IIS and either                (1) have
been a party to a “work-for-hire” arrangement or                agreements with
Witech in accordance with applicable law that has accorded                Witech full,
exclusive and original ownership of all tangible and intangible                property
thereby arising, or (2) have executed appropriate instruments of
               assignment in favor of Witech as assignee that have conveyed to Witech,
               effective, and exclusive ownership of all tangible and intangible property
               thereby arising.  

		    2.11.5.        Infringement.  

		    2.11.5.1.        No
Infringement. Neither the existence nor the sale, license, lease,
               transfer, use, reproduction, distribution, modification or other
exploitation by                Witech of any Software Program or Intellectual Property,
as such Software                Program or Intellectual Property, as the case may be, is
or was, or is currently                contemplated to be, sold, licensed, leased,
transferred, or used to                Witech’s knowledge: (i) infringes on any
patent, trademark, copyright or                other right of any person, (ii)
constitutes a misuse or misappropriation of any                trade secret, know-how,
process, proprietary information or other right of any                other person, or
(iii) entitles any other person to any interest therein, or                right to
compensation from Witech, its successors or assigns.  

		    2.11.5.2.        Witech
has not received any notice of any lawsuit, claim, demand, proceeding,
               threat or allegation or otherwise has notice of any lawsuit, claim,
demand,                proceeding or investigation involving matters of the type
contemplated by the                immediately preceding sentence or is aware of any
facts or circumstances that                could reasonably be expected to give rise to
any valid lawsuit, claim, demand,                proceeding or investigation. There are
no restrictions on Witech’ ability                to sell, license, lease, transfer,
use, reproduce, distribute, modify or                otherwise exploit any Software
Products or Intellectual Property.  

		    2.11.5.3.        Witech
is not aware of any infringement, misappropriation or other violation of
               any Software Product or Intellectual Property, and no lawsuit, claim,
demand,                proceeding or investigation brought by Witech with respect to the
Software                Programs and Intellectual Property is pending against any third
party.  

		    2.11.6.        Integrity.
No portion of the Software Programs contains or will contain                any “back
door,” “time bomb,” “Trojan horse,”               “worm,” “drop
dead device,” “virus” or other                software routines or
hardware components designed to permit unauthorized access;                to disable or
erase software, hardware, or data; or to perform any other such                actions.  

		    2.11.7.        Contract
Performance. Witech has observed all material provisions of, and
               performed all of its material obligations under, the Licenses (as defined
               below), including, but not limited to, the performance of its product
               maintenance obligations. Witech has not taken any action that could cause,
or to                its knowledge, failed to take any action, the failure of which could
cause,                (i) any material source code, trade secret or other
Intellectual Property                relating to the Software Programs to be released
from an escrow or otherwise                made available to any person or entity other
than those persons described in                Section 2.11.4, dedicated to the
public or otherwise placed in the public                domain or (ii) any other
Material Adverse Effect to the protection of the                Software Programs under
trade secret, copyright, patent or other intellectual                property laws.  

- 11 -

         2.12.       
          Adequacy of Technical Documentation. The technical documentation of the
          Software Programs (the “Technical Documentation”) includes the
          source code (with comments) for all Software Programs, as well as any pertinent
          comments by or explanation that may be necessary to render such materials
          understandable and usable. The Technical Documentation also includes any
          programs (including compilers), “workbenches,” tools and higher level
          (or “proprietary”) languages necessary for the development,
          maintenance and implementation of the Software Programs. 

         2.13.       
          Software Contracts. 

		    2.13.1.        End-User
Agreements. Section 2.13.1 of the Witech Disclosure
               Schedule  sets forth a complete list of all material
licenses and                sublicenses of the Software Programs in effect on the date
hereof and of all                current customer trial agreements for the Software
Programs granted by Witech to                other parties (the “Licenses”).
All contracts identified in Section 2.13.1 of the Witech Disclosure Schedule constitute
only end-user agreements, each of which grants the end user                thereunder
principally the nonexclusive right and license to use an identified
               Software Program and related user documentation, for internal purposes
only and                only in the form of software object code. Section 2.13.1. sets
forth the general                product licensing and pricing policies of Witech by
categories of Software                Programs. Section 2.13.1 of the Witech
Disclosure                Schedule accurately identifies each customer
which generated 10%                or more of Witech’ revenues during the preceding
four fiscal quarters.  

		    2.13.2.        Marketing
Agreements. Section 2.13.2 of the Witech Disclosure
               Schedule  sets forth a complete list of all contracts,
               agreements, licenses, or other commitments or arrangements in effect to
which                Witech is a direct party as of the date hereof with respect to the
marketing,                remarketing, distribution, licensing or promotion of (i) the
Software                Programs or any other Technical Documentation or the Intellectual
Property by                any independent salesperson, distributor, sublicensor or other
remarketer or                sales organization or (ii) any third party’s
software products by                Witech (collectively the “Marketing Agreements”).
               Witech has observed all material provisions of, and performed all its
material                obligations under, the Marketing Agreements. Section 2.13.2
of the                Witech Disclosure Schedule accurately
               identifies each marketing arrangement which generated 5% or more of Witech’               revenues
during the preceding four fiscal quarters.  

         2.14.       
          Third Party Rights. 

		    2.14.1.        In
General. Other than the Licenses and the Marketing Agreements, to
               Witech’s knowledge, no person other than Witech has any right or
interest                of any kind or nature in or with respect to the Software
Programs, the Technical                Documentation or Intellectual Property.  

- 12 -

		    2.14.2.        No
Royalties. The sale, license, lease, transfer, use, reproduction,
               distribution, modification or other exploitation by Witech or any of its
               successors or assigns of any version or release of any computer program
included                in the Software Programs does not obligate Witech or its
successors or assigns                to pay any royalty, fee or other compensation to any
other person.  

		    2.14.3.        Third-Party
Components in Software Programs. The Software Programs and                Technical
Documentation contain no programming or materials in which any third                party
may claim superior, joint or common ownership, including any right or
               license. The Software Programs and Technical Documentation do not contain
               derivative works of any programming or materials not owned in their
entirety by                Witech.  

		    2.14.4.        Third-Party
Tools. Witech has a valid license to use each of the material                software
libraries, compilers and other third-party software used in the
               development of the Software Programs.  

    2.15.        Other
Agreements. 

		    2.15.1        Material
Contracts. Except as set forth in Section 2.15. of the Witech Disclosure
 Schedule, Witech does not have any contracts, agreements, leases,
commitments, understandings, instruments or proposed transactions, written or oral,
absolute or contingent, other than: (i) contracts for the purchase of supplies and
services that were entered into in the ordinary course of business and that do not
involve more than $10,000, and do not extend for more than six (6) months beyond the date
hereof; and (ii) contracts terminable at will by the Company on no more than thirty (30)
days notice without cost or liability to the Company and are not material to the conduct
of Witech’s business. Section 2.15 of the Witech Disclosure Schedule also
includes details on all bank accounts of Witech and the Subsidiary, including all
material terms of engagement with such banks, including with respect to loans and lines
of credit.  

		    2.15.2        Validity;
Enforceability Etc. Witech has delivered to IIS, a correct and complete copy of each
written agreement listed in Section 2.15 of the Witech Disclosure Schedule and
a written summary setting forth the terms and conditions of each oral agreement referred
to in the said Section. With respect to all such agreements, assuming due execution,
delivery and performance of such agreements by any third parties: (i) the agreement is
legal, valid, binding, enforceable, and in full force and effect with respect to Witech;
(ii) the agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the transactions
contemplated hereby (and consummation of such transactions, without notice to or consent
or approval of any party, will not constitute a default under or a breach of any
provision of the agreement); (iii) neither Witech nor the Subsidiary is, and to their
knowledge, no other party to any such agreement is, in breach or default of any such
agreement, and no event has occurred which with notice or lapse of time would constitute
a breach or default, or permit termination, modification, or acceleration, under the
agreement (and Witech has not received any notice of a default, offset or counterclaim
under the agreement, or any other communication calling upon Witech or the Subsidiary to
comply with any provision the agreement or ascertaining noncompliance); and (iv) to Witech’s
best knowledge, no party has repudiated any provision of the agreement and neither the
Company nor the Subsidiary has received or given notice of an intention to cancel or
terminate the agreement or to exercise or not exercise options or rights under the
agreement; (v) it is not aware of any security interest of any kind in the agreement.  

- 13 -

    2.16       Title
to Properties. Except for merchandise and other property sold, used or otherwise
disposed of in the ordinary course of business for fair value, Witech has good and valid
title to all its properties and assets, real and personal, reflected in the most recent
balance sheet of Witech included in the Financial Statements, free and clear of any
Encumbrance of any nature whatsoever, except (i) liens and Encumbrances reflected in
the most recent balance sheet of Witech included in the Financial Statements, (ii) liens
for current Taxes not yet due and payable, and (iii) such imperfections of title,
easements and Encumbrances, if any, as are not substantial in character, amount, or
extent and do not and will not materially detract from the value, or interfere with the
present use, of the property subject thereto or affected thereby, or otherwise would have
a Material Adverse Effect on the business operations of Witech. All leases pursuant to
which Witech leases (whether as lessee or lessor) any material real or personal property
are, assuming the due execution and delivery and performance by such lease agreements by
any third parties thereto, in valid and in effect; and there is not, under any such
leases, any existing or prospective default or event of default or event which with
notice or lapse of time, or both, would constitute a default by Witech and in respect to
which Witech has not taken adequate steps to prevent a default from occurring. The
buildings and premises of Witech that are used in its business are in good and sufficient
operating condition and repair for the continued conduct of Witech’s business on a
basis consistent with past practice, subject to ordinary wear and tear. All major items
of equipment of Witech are in good and sufficient operating condition and in a state of
reasonable maintenance and repair for the continued conduct of Witech’s business on
a basis consistent with past practice, ordinary wear and tear excepted, and are free from
any known defects except as may be repaired by routine maintenance and such minor defects
as do not substantially interfere with the continued use thereof in the conduct of normal
operations.  

         2.17.       
          Litigation. There is no suit, action, claim, or legal, administrative,
          arbitration, or other proceeding or governmental investigation pending, or to
          the knowledge of Witech, threatened, against or effecting Witech at law or in
          equity, or before any federal, state, foreign, municipal or other governmental
          department, commission, board, bureau, agency or instrumentality, which would
          involve a liability in excess of $50,000 in the aggregate or could reasonably be
          expected to prevent, interfere with or delay consummation of the transactions
          contemplated hereby. 

         2.18.       
          Environmental Compliance. There are no environmental conditions or
          circumstances, such as the presence or release of any hazardous substance, on
          any real property owned by Witech as a result of the actions of Witech or, to
          its knowledge, of any third party or otherwise, that could reasonably be
          expected to have a Material Adverse Effect on Witech. 

- 14 -

         2.19.       
          Compliance with Other Laws. Except as set forth in the Financial
          Statements or in Section 2.19 of the Witech Disclosure
          Schedule, Witech is not in violation of or in default with
          respect to, or in alleged violation of or alleged default with respect to, any
          applicable law or any applicable rule, regulation, or any writ or decree of any
          court or any governmental commission, board, bureau, agency, or instrumentality,
          or delinquent with respect to any report required to be filed with any
          governmental commission, board, bureau, agency or instrumentality, except for
          violations which, either singly or in the aggregate, could not reasonably be
          expected to have a Material Adverse Effect on Witech. 

         2.20.       
          Finder’s Fee. Except as set forth in the Financial Statements or in
          Section 2.20 of the Witech Disclosure Schedule, all
          negotiations relative to this Agreement and the transactions contemplated hereby
          have been carried on by Witech and its counsel directly with IIS and its
          counsel, without the intervention of any other person as the result of any act
          of Witech, and so far as is known to Witech, without the intervention of any
          other person in such manner as to give rise to any valid claim against any of
          the parties hereto for a brokerage commission, finder’s fee or any similar
          payments. 

         2.21.       
          Employment Matters. Witech is not a party to any collective bargaining
          contract, collective labor agreement or other contract or arrangement with a
          labor union, trade union or other organization or body involving any of its
          employees, or is otherwise required (under any legal requirement, under any
          contract or otherwise) to provide benefits or working conditions beyond the
          minimum benefits and working conditions required by law to be provided pursuant
          to rules and regulations of the Histadrut (General Federation of Labor), the
          Coordinating Bureau of Economic Organization and the Industrialists’
          Association. Witech has not recognized or received a demand for recognition from
          any collective bargaining representative with respect to any of its employees.
          Except as set forth in Section 2.21 of the Witech Disclosure
          Schedule, Witech does not have and is not subject to, and no
          employee of Witech benefits from, any extension order (tzavei harchava)
          or any contract or arrangement with respect to employment or termination
          thereof. All of the employees of Witech are “at will” employees
          subject to the termination notice provisions included in employment agreements
          or applicable law. Except as set forth in Section 2.21 of the Witech
          Disclosure Schedule, all employees employed by Witech in the
          United States are employed and compensated on an hourly basis. 

		    2.21.1.        Except
for the employment agreements described in Section 2.21.1 of the  Witech
Disclosure Schedule, there is no                contract between Witech
and any of its employees or directors that cannot be                terminated by Witech
upon less than three months’ notice without giving                rise to a claim
for damages or compensation (except for statutory severance                pay).  

		    2.21.2.        Except
as set forth in Section 2.21.2 of the Witech Disclosure                Schedule,
there is no claim or complaint that is pending or, to                the knowledge of
Witech, has been threatened against Witech by any person who is                or has
been an employee or director of Witech. Without limiting the generality                of
the foregoing, there are no unfair labor practice claims or charges that are
               pending, or to the knowledge of Witech, have been threatened against
Witech.  

- 15 -

		    2.21.3.        (i)
there has been no labor strike, slowdown or stoppage pending (or, to the
               best knowledge of Witech, threatened) against or affecting Witech, (ii)
there                has been no dispute between Witech and any group of its employees,
and (iii) no                event has occurred and no circumstance or condition exists
that could reasonably                be expected to give rise to any such labor strike,
slowdown, stoppage or                dispute.  

		    2.21.4.        Witech’s
obligations to provide severance pay to its employees are fully                funded or
have been properly provided for in the Financial Statements in                accordance
with US GAAP. All other liabilities of Witech relating to its                employees
(excluding liabilities for illness pay) were properly accrued in the
               Financial Statements in accordance with US GAAP. Except as set forth in Section
2.21.4 of the Witech Disclosure Schedule, Witech is                not
aware of any circumstance that could give rise to any valid claim by a
               current or former employee of Witech for compensation on termination of
               employment (beyond the statutory severance pay to which employees are
entitled).  

		    2.21.5.        Except
as set forth in Section 2.21.5 of the Witech Disclosure Schedule,                all
amounts that Witech is legally or contractually required either (i) to
               deduct from its employees’ salaries or to transfer to such employees’               pension
or provident, life insurance, incapacity insurance, continuing education
               fund or other similar fund or (ii) to withhold from their employees’               salaries
and pay to any Governmental Entity as required by the Israeli Tax
               Ordinance or the United States Tax Code have, in each case, been duly
deducted,                transferred, withheld and paid, and Witech does not have any
outstanding                obligation to make any such deduction, transfer, withholding
or payment.  

		    2.21.6.        Witech
is in compliance in all material respects with all applicable legal
               requirements and contracts relating to employment, employment practices,
wages,                bonuses and other compensation matters and terms and conditions of
employment.                All obligations of Witech with respect to statutorily required
severance                payments have been fully satisfied or have been funded by
contributions to                appropriate insurance funds.  

		    2.21.7.        Witech
has good labor relations, and Witech has no knowledge of any facts
               indicating that (i) the consummation of the Exchange or any of the other
               transactions contemplated by this Agreement will have a Material Adverse
Effect                on the labor relations of Witech, or (ii) any of the employees of
Witech intends                to terminate his or her employment with Witech.  

- 16 -

		    2.21.8.        (i) Each
Witech Plan has been maintained and administered in material                compliance
with its terms and with the requirements prescribed by any and all
               applicable statutes, orders, rules and regulations, and is, to the extent
               required by applicable law or contract, fully funded without having any
deficit                or unfunded actuarial liability; (ii) all required
contributions under any                such plans have been made and the applicable funds
have been funded in                accordance with the terms thereof and no past service
funding liabilities exist                thereunder; (iii) each Witech Plan that is
required or intended to be                qualified under applicable law or registered or
approved by a governmental                agency or authority has been so qualified,
registered or approved by the                appropriate governmental agency or
authority, and, to the knowledge of Witech,                nothing has occurred since the
date of the last qualification, registration or                approval to materially and
adversely affect, or cause, the appropriate                governmental agency or
authority to revoke such qualification, registration or                approval; (iv) there
are no pending or, to the knowledge of Witech,                anticipated material claims
against or otherwise involving any of the Witech                Plans and no suit, action
or other litigation (excluding claims for benefits                incurred in the
ordinary course of Witech Plan activities) has been brought                against or
with respect to any Witech Plan; (v) all material contributions,
               reserves or premium payments, required to be made as of the date hereof to
the                Witech Plans have been made or provided for; or (vi) Witech has
               substantially performed all obligations, whether arising by law or by
contract,                required to be performed by it in connection with the Witech
Plans. Witech does                not have, and is not required to maintain, any plans
under the United States                Employee Retirement Income Security Act of 1974,
as amended.  

         2.22.       
          Product Warranty. There are no existing liabilities or, to the knowledge
          of Witech, potential liabilities, arising from claims regarding the performance
          or design of the products and services sold by Witech either in the past or at
          present for which adequate reserves have not been established on the most recent
          balance sheet in the Financial Statements that in the aggregate could reasonably
          be expected to have a Material Adverse Effect on Witech. 

         2.23.       
          Information for Proxy Statement and the Combined 20-F. None of the
          information and data (including Financial Statements) concerning Witech and its
          shareholders which will be included in a proxy statement to be sent to the
          shareholders of Witech in connection with the IIS General Meeting to be held to
          obtain the IIS Shareholder Vote in accordance with applicable Israeli law (the
          “Proxy Statement”) and in the Combined 20-F to be filed with
          the United States Securities and Exchange Commission (the “Combined
          20-F”) will, at the time the Proxy Statement is mailed to the
          shareholders of IIS, at the time of the IIS General Meeting, or at the time of
          filing, as applicable, and with respect to Witech and its Shareholders contain
          any untrue statement of a material fact or omit to state any material fact
          required to be stated therein or necessary in order to make the statements
          therein, in the light of the circumstances under which they are made, not
          misleading and the Proxy Statement will comply with applicable Israeli law and
          the Combined 20-F will apply with the disclosure required by the Securities
          Exchange Act of 1934, as amended (the “Exchange Act”). 

         2.24.       
          Intentionally Left Blank. 

- 17 -

         2.25.       
          Customers and Suppliers. Since December 31, 2006 through the date hereof,
          no material licensor, vendor, supplier, licensee or customer of Witech or any of
          its subsidiaries has canceled or otherwise modified (in a manner materially
          adverse to Witech and its subsidiaries taken as a whole) its relationship with
          Witech or its subsidiaries and, to Witech’s knowledge, no such person has
          notified Witech of its intention to do so. Section 2.25 of the Witech
          Disclosure Schedule accurately identifies each customer of Witech
          which accounted for 5% or more of Witech’s revenues during the preceding
          four fiscal quarters. 

         2.26.       
          Relationships with Related Persons. Except as identified in Section
          2.26 of the Witech Disclosure Schedule and except for this
          Agreement and the transactions contemplated hereby, there are no undischarged
          contracts or agreements or other material transactions between Witech or any of
          its subsidiaries, on the one hand, and any director or executive officer of
          Witech or any of their respective Related Persons (as defined below), on the
          other hand, and no director or executive officer of Witech or any of their
          respective Related Persons have any interest in any of the assets of Witech or
          any of its subsidiaries. No executive officer, director of Witech or any of
          their respective Related Persons has any claim, charge, action or cause of
          action against Witech or any of its subsidiaries, except for claims for accrued
          vacation pay, accrued benefits under Witech’s benefit plans, claims for
          compensation, expense reimbursement and similar obligations and similar matters
          and agreements, which have been disclosed in the Witech Disclosure Schedule. For
          purposed hereof, the term “Related Persons” shall mean: (a)
          each other member of such individual’s Family; and (b) any person or entity
          that is directly or indirectly controlled by any one or more members of such
          individual’s Family. For purposes of this definition, the
          “Family” of an individual includes (i) such individual, (ii)
          the individual’s spouse, siblings, or ancestors (iii) any lineal descendent
          of such individual, or their siblings or (iv) a trust for the benefit of any of
          the foregoing. 

         2.27.       
          Restrictions on Business Activities. There is no agreement, judgment,
          injunction, order or decree binding upon Witech or its subsidiaries or, their
          properties (including, without limitation, their Intellectual Property) which
          has or could reasonably be expected to have the effect of prohibiting or
          materially impairing any material acquisition of property by Witech or any of
          its subsidiaries or the conduct of the business by Witech or any of its
          subsidiaries including any exclusive distribution or licensing agreements which
          cannot be terminated on less than 30 days notice without any cost or expense to
          Witech or its subsidiaries. 

         2.28.       
          Grants, Incentives and Subsidies. Section 2.28 of the Witech
          Disclosure Schedule  provides a complete list of all pending and
          outstanding grants, incentives and subsidies (collectively,
          “Grants”) from the Government of the State of Israel or any
          agency thereof, or from any foreign governmental or administrative agency,
          granted to Witech, including, without limitation, (i) Approved Enterprise Status
          from the Investment Center and (ii) grants from the Office of the Chief
          Scientist of Israel (“OCS”). Witech has made available to IIS,
          prior to the date hereof, correct copies of all documents evidencing Grants
          submitted by Witech and of all letters of approval, and supplements thereto,
          granted to Witech. Section 2.28 of the Witech Disclosure
           Schedule details all material undertakings of Witech given in
          connection with the Grants. Without limiting the generality of the above,
          Section 2.28 of the Witech Disclosure Schedule  includes the
          aggregate amounts of each Grant, and the aggregate outstanding obligations
          thereunder of Witech with respect to royalties, or the outstanding amounts to be
          paid by the OCS to Witech and the composition of such obligations or amount by
          the product or product family to which it relates. Witech is in compliance, in
          all material respects, with the terms and conditions of their respective Grants
          and, except as disclosed in Section 2.28 of the Witech Disclosure
          Schedule hereto, has duly fulfilled, in all material respects,
          all the undertakings relating thereto. Witech is not aware of any event or other
          set of circumstances which might lead to the revocation or material modification
          of any of the Grants. 

- 18 -

    2.29        Minutes. The
minutes of Witech listed in Section 2.29 of the Witech Disclosure Schedule,
contain accurate and complete copies of: (i) the minutes of every meeting of Witech ‘s
shareholders and Board of Directors (and any committee thereof) which may be material to
Witech; and (ii) minutes of every meeting of the each of Witech ‘s Board of
Directors (and any committee thereof). No material resolutions have been passed, enacted,
consented to or adopted by the directors (or any committee thereof) or shareholders of
Witech, except for those contained in such minutes.  

    2.30.       No
ownership of IIS Stock. Witech does not own, beneficially or of           record, any
shares of common stock of IIS.  

    2.31        Disclosure.
Witech has not failed to disclose to IIS in writing any facts material to Witech or
to the Subsidiary including, without limitation, its business, prospects and financial
condition. This Agreement and all other documents delivered to IIS in connection with the
Exchange and the other transactions contemplated herewith do not contain any material
untrue statement and do not omit to state a material fact necessary in order to make the
statements contained therein or herein not misleading.  

	2.A.  	REPRESENTATIONS
AND WARRANTIES OF THE WITECH SHAREHOLDERS.  

Each of the Witech Shareholders
severally and not jointly represents and warrants to IIS and the other Witech
Shareholders, the following, such representations and warranties to be true and correct
upon the signing hereof and upon the Closing: 

    2A.1        It
has good and marketable title to those of the Witech Shares listed next to its name in
Schedule 1.1 hereto, free and clear of all Encumberances, free and clear of all rights of
first refusal, co-sale rights, options to purchase, proxies, voting trusts and any other
voting agreements, calls or commitments of every kind.  

    2A.2        If
the Witech Shareholder is a corporation, it is duly organized and validly existing in the
jurisdiction of its organization and has full power and authority to enter into this
Agreement. All actions on its part necessary for the authorization, execution, delivery
and performance by it of this Agreement have been duly taken (or shall be duly taken
prior to the Closing) to authorize the execution and delivery by it, and this Agreement
constitutes its valid and legally binding obligation, enforceable in accordance with its
terms except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of creditors’rights,
and (b) general principles of equity that restrict the availability of equitable
remedies.  

- 19 -

    2A.3        It
understands that any transfer agent of IIS will issue stop-transfer instructions with
respect to the Exchange Shares unless any transfer thereof is subsequently registered
under the Exchange Act and applicable state and other securities laws or unless an
exemption from such registration is available.  

    2A.4        The
Witech Shareholder’s present intention is to acquire the Exchange Shares, for its
own account and the Exchange Shares are being acquired by it for the purpose of
investment and not with a view to distribution or resale thereof. The acquisition by the
Witech Shareholder of the Exchange Shares acquired by it shall constitute a confirmation
of this representation by such Witech Shareholder.  

    2A.5        The
Witech Shareholder acknowledges that it, during the course of this transaction and prior
to the acquisition of the Exchange Shares has had the opportunity to ask questions of and
receive answers from representatives of the Company concerning the terms and conditions
of the Exchange. By reason of the Witech Shareholder’s knowledge and experience in
business and financial matters, the Witech Shareholder is capable of evaluating the
merits and risks of its investment in the Exchange Shares hereunder (this will not
derogate from the representations and warranties of IIS in this Agreement).  

    2A.6        The
Witech Shareholder (i) is an “accredited investor”, as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act, and/or (ii) is
not a “U.S. Person”, as defined by Rule 902 of Regulation S promulgated under
the Securities Act, was not formed by a “U.S. Person” as defined by Rule 902 of
Regulation S, was not organized under the laws of any United States jurisdiction, is not
holding the Stock (or, where relevant, the Conversion Shares) for the benefit of any US
Person, and was not formed for the purpose of investing in securities not registered
under the Securities Act. At the time the buy order for this transaction was originated,
the Witech Shareholder was outside the United States.  

    2A.7        The
Shares, as specified next to its/his name on Schedule 1.1, constitute all of the shares,
warrants, and securities in Witech owned by it or to which it has any rights and it/he
has no preemptive rights or other rights to subscribe for, purchase or acquire from
Witech any share of capital stock or securities of Witech.  

    2A.8        Immediately
following the Closing, it shall own no shares or securities in Witech, it shall have no
rights as a shareholder of Witech and no claims against Witech in connection with the
issuance and/or non-issuance of securities in Witech.  

    2A.9        It
acknowledges that the Shareholders, and not IIS and/or Witech, is liable for any taxes
levied on the transfer of the Witech Shares to IIS and/or the issuance of the Exchnage
Shares by IIS to the Witech Shareholders.  

    2A.10        The
execution of this Agreement by each Witech Shareholder and the performance of such Witech
Shareholder’s obligations hereunder do not require the consent or agreement of any
person, authority or entity.  

- 20 -

    2A.11        The
Witech Shareholder is familiar with the terms of the Tax Ruling and it shall abide by
such terms, to the extent they apply to it.  

    2A.12        The
Witech Shareholder has disclosed to IIS in writing any shareholding of such Witech
Shareholder or any of its Affiliates in IIS. An “Affiliate” shall refer, with
respect to any Witech Shareholder, to (i) such shareholder’s spouse, lineal
descendant or antecedent, brother or sister, or a trust for the benefit of any of the
foregoing, (ii) any entity directly or indirectly controlling, controlled by or under
common control with such Witech Shareholder or any other Affiliate of such Witech
Shareholder. 

ARTICLE III 

REPRESENTATIONS AND
WARRANTIES OF IIS 

        IIS
represents and warrants as follows: 

        Reference
to any one matter in the IIS Disclosure Schedule (as defined below) is deemed sufficient
for any other reference in such IIS Disclosure Schedule. 

         3.1.       
          Organization and Standing. IIS is a corporation duly organized and
          validly existing under the laws of the State of Israel has all requisite power
          and authority to carry on its business as it is currently conducted and to own
          and operate the properties currently owned and operated by it. IIS has delivered
          to Witech and the Witech Shareholders accurate and complete copies of its
          memorandum of association and articles of association including all amendments
          thereto. The voluntary liquidation proceedings of IIS have been terminated. 

         3.2.       
          Agreement Authorized and its Effect on Other Obligations. 

		    3.2.1.        Authorization
and Enforceability. Subject to the approval by the                shareholders of
IIS, IIS has all requisite power and authority to execute and                deliver this
Agreement and to perform its obligations hereunder and to                consummate the
transactions contemplated hereby. The execution and delivery by                IIS of
this Agreement and the performance by IIS of its obligations hereunder
               have been duly and validly authorized by all necessary corporate action on
the                part of IIS. This Agreement has been duly executed and delivered by
IIS and                (assuming due authorization, execution and delivery hereof by the
other parties                hereto) this Agreement constitutes the legal, valid and
binding obligation of                IIS enforceable (subject to normal equity
principles) against IIS in accordance                with their terms, except as
enforceability may be limited by bankruptcy,                insolvency, reorganization,
debtor relief or similar laws affecting the rights                of creditors generally.  

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		    3.2.2.        Approvals.
No consent, approval, order or authorization of, or                registration,
declaration or filing with, any Governmental Entity is required by                or with
respect to IIS or any of its subsidiaries in connection with the                execution
and delivery of this Agreement or the consummation of the transactions
               contemplated hereby or thereby, except (a) any filings required to be made
under                Section 13 of the Exchange Act, as amended, (b) consent of and
approval of the                Israeli Commissioner of Restrictive Trade Practices, if
necessary and (c) such                other consents, approvals, orders, authorizations,
registrations, declarations                and filings, the failure of which to be
obtained or made would not have,                individually or in the aggregate, a
Material Adverse Effect on IIS and which are                set forth on Schedule
3.2.2 of the disclosure schedule  delivered by IIS to Witech dated the date
hereof (the                “IIS Disclosure Schedule”), and all such
consents have been or                will have been obtained at or immediately prior to
the Closing.  

		    3.2.3.        No
Violation. Assuming the receipt of all consents, approvals, orders or
               authorizations of, and the registration, declaration or filing with, any
               Governmental Entity contemplated by Section 3.2.2, neither the execution
and                delivery of this Agreement nor the consummation of the transactions
contemplated                hereby will (i) conflict with or result in a violation or
breach of any term or                provision of, nor constitute a default under, the
organizational documents of                IIS; (ii) contravene, conflict with or result
in a violation or breach of, or                result in a default under, any
obligations, indenture, mortgage, deed of trust,                lease, contract or other
agreement to which IIS or any of its subsidiaries is a                party or by which
any of them or their properties are bound; (iii) contravene,                conflict with
or result in a violation of, or give any Governmental Entity or                other
Person the right to challenge the Exchange or to exercise any remedy or
               obtain any relief under, any legal requirement or any order, writ,
injunction,                judgment or decree to which IIS, or any of the assets owned or
used by IIS, is                subject. (iv) contravene, conflict with or result in a
violation of any of the                terms or requirements of, or give any Governmental
Entity the right to revoke,                withdraw, suspend, cancel, terminate or modify
any permit, license, consent,                authorization, grant, benefit, right that is
held by IIS or to the knowledge of                IIS, that otherwise relates to the
business or assets of IIS, (v) result in the                imposition, creation or
crystallization of any Encumbrance upon or with respect                to any asset owned
or used by IIS or (vi) with the passage of time, the giving                of notice, or
the taking of any action by a third person, have any of the                effects set
forth in clauses (i) through and (v) of this Section, in each case                other
than such violations, breaches or defaults as could not reasonably be
               expected to have a Material Adverse Effect on IIS.  

    3.4        Capitalization. The
authorized share capital of IIS is NIS 50,000 divided into 16,666,666 ordinary shares,
par value NIS 0.003 per share, of which as of the date hereof, 11,576,539 shares are
issued and outstanding. All of such outstanding shares are validly issued, fully paid and
non-assessable, and were not issued in violation of any preemptive rights of any
shareholder. Schedule 3.4 of the IIS Disclosure
Schedule sets forth, on a fully diluted basis, a complete list as of the date of
this Agreement of all outstanding options, warrants or obligations of any kind to issue
any shares of IIS, and sets forth the capitalization table of IIS on a fully diluted
basis immediately prior to and immediately after the Closing. Other than as set forth in
Schedule 3.4 of the IIS Disclosure Schedule, IIS has no
outstanding options, warrants or obligations of any kind to issue any of its shares.
Except as set forth in Schedule 3.4 of the IIS Disclosure Schedule:
(i) there are no preemptive rights, rights of participation, rights of maintenance or
similar rights with respect to any IIS securities (including convertible securities);
(ii) none of the IIS shares, options or other equity interests of IIS (including any
convertible securities) is subject to any right of first refusal; and (iii) there are no
contracts, undertakings or agreements relating to the voting or registration of, or
restricting any Person from purchasing, selling, pledging or otherwise disposing of (or
granting any option or similar right with respect to), any IIS securities (including
convertible securities). IIS is not under any obligation, or bound by any contract
pursuant to which it may become obligated, to repurchase, redeem or otherwise acquire any
IIS securities (including convertible securities). Without limiting the foregoing, all
shares to be issued in connection with the Registration Rights Agreement dated January
2001, by and among the Company, CDC Holdings Ltd., Armour Investments Ltd., Industrial
Systems and Equipment Co., Meir Noga & Nachum Ezra, have been duly and validly
issued, and are fully paid and nonassessable, and there are no warrants or similar rights
outstanding thereunder for the benefit of any Person. No Person has any rights in any IIS
securities (including convertible securities) other than the IIS shares and options
currently issued and outstanding as reflected in IIS’ Form 20-F for the year ended
December 31, 2006 (the “2006 20-F”), which shares and options are set
forth in the pre-closing and post-closing capitalization tables set forth on Schedule
3.4. of the IIS Disclosure Schedule. 

- 22 -

        The
Exchange Shares, upon their issuance to the Witech, shall be duly authorized, validly
issued, and free of preemptive rights or anti dilution or similar rights and shall be
fully paid and non-assessable. The Exchange Shares when issued and allotted will have the
rights and privileges and will be subject to the obligations set forth in the Articles of
Association of IIS, as amended hereunder, and such Exchange Shares upon issuance thereof
and payment therefor will be free and clear of any Encumbrances. 

    3.5       
Liabilities. IIS does not have any liabilities or obligations, including with
respect to Taxes, either accrued, absolute, contingent or otherwise, or have any knowledge
of any potential liabilities or obligations, which could reasonably be expected to have a
Material Adverse Effect on IIS other than those set forth in Schedule
3.5 of the IIS Disclosure Schedule  or in the
2006 20F. There are currently no claims pending, or to IIS’ knowledge, threatened,
for which the LSI Escrow Funds deposited in escrow pursuant to the transactions entered
into by StoreAge Networking Technologies Ltd., including IIS, as a shareholder thereof,
and LSI Logic Corporation would be transferred to a third party. 

         3.6.       
          Intentionally Left Blank. 

    3.7        Intellectual
Property. 

		    3.7.1        Intellectual
Property of IIS. IIS is not a party to any license, royalty, research, Grants, or
development or similar agreements or any other agreements relating to technology,
inventions or intellectual property rights of IIS or any third party. IIS does not own or
have any rights in any material intellectual property.  

- 23 -

    3.8        Legal
Proceedings. There are no pending, or to IIS’ knowledge and except as set forth
on Schedule 3.8, threatened suits, actions, claims or legal, administrative, arbitration
or other proceedings or governmental investigations against or affecting IIS at law or in
equity or before any federal, state, foreign, municipal, or other governmental
department, commission, board, bureau, court, agency, or instrumentality, including with
respect to any Taxes. Without derogating from the foregoing, no third party has asserted
any claim against IIS with respect to the lack of a financial expert on the Audit
Committee as required by the Sarbanes-Oxley Act 2002.  

    3.9        Changes
to Operations of IIS. There have been no material changes to IIS, including in the
financial status, business operations of IIS, equity holdings in IIS, or any other
material changes with respect to or affecting IIS since the 2003 20-F, other than the
Bankruptcy Proceedings. The 2006 20-F accurately and truthfully sets forth a description
, in all respects, of IIS as of the date thereof.  

    3.10        Compliance
with Laws. Except as set forth on Schedule 3.10 of the IIS
Disclosure Schedule, IIS is not in violation or in default with respect to, or in
alleged violation of or alleged default with respect to, any applicable laws or any
applicable rules, regulations or any writ or decree of any court or any governmental
commission, board, bureau, agency, or instrumentality, or delinquent with respect to any
report required to be filed with any governmental commission, board, bureau, agency or
instrumentality, except for violations which, either singly or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on IIS.  

    3.11        Material
Contracts. 

		    3.11.1        Except
as set forth on Schedule 3.11 of the IIS Disclosure Schedule,
IIS does not have any material contracts, agreements, leases, commitments,
understandings, instruments or proposed transactions, written or oral, absolute or
contingent.  

		    3.11.2        Validity;
Enforceability Etc. IIS has delivered to Witech and the Witech Shareholders a correct
and complete copy of each written agreement listed in Schedule 3.11 of the IIS
Disclosure Schedule and a written summary setting forth the terms and conditions
of each oral agreement referred to in such Schedule. With respect to all such agreements,
assuming due execution, delivery and performance of such agreements by any third parties:
(i) the agreement is legal, valid, binding, enforceable, and in full force and effect
with respect to IIS; (ii) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the consummation
of the transactions contemplated hereby (and consummation of such transactions, without
notice to or consent or approval of any party, will not constitute a default under or a
breach of any provision of the agreement); (iii) neither IIS nor, to its knowledge, is
any other party to any such agreement, in breach or default of any such agreement, and no
event has occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the agreement (and
IIS has not received any notice of a default, offset or counterclaim under the agreement,
or any other communication calling upon IIS to comply with any provision the agreement or
ascertaining noncompliance); and (iv) to IIS’ knowledge, no party has repudiated any
provision of the agreement and IIS has not received or given notice of an intention to
cancel or terminate the agreement or to exercise or not exercise options or rights under
the agreement; and (v) IIS is not aware of any security interest of any kind in the
agreement.  

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		    3.11.3        IIS
has no agreements with any Related Persons or any third party suppliers, contractors,
service-providers, distributors, or any other third parties relating to the products,
business operations, or securities of IIS.  

    3.12        Assets;
Loans and Encumbrances. A list of all material assets of IIS, including whether
leased or owned, is set forth on Schedule 3.12 of the IIS Disclosure
Schedule, and with respect to any leases, a description of the material terms of
such leases. IIS has good and marketable title to all such assets or has the right to
lease them, and all such assets free and clear of Encumbrances or any other third party
rights. All leases pursuant to which IIS leases (whether as lessee or lessor) any
substantial amount of real or personal property are in good standing, valid and
effective; and there is not, under any such leases any existing or prospective default or
event of default or event which with notice or lapse of time, or both, would constitute a
default by IIS and in respect to which IIS has not taken adequate steps to prevent a
default from occurring. The buildings and premises of IIS that are used in its business
are in good and sufficient operating condition and repair for continued conduct of IIS’ business
on a basis consistent with past practice, subject to ordinary wear and tear.  

    3.13        Employment
Matters. Except as set forth on Schedule 3.13 of the IIS
Disclosure Schedule, IIS employs no employees and has not engaged, as of the date
hereof, any consultant or independent contractor, and there are no employment, consulting
or independent contractor agreements outstanding between IIS and any employee,
consultant, or independent contractor. All employment, consulting and other independent
contractor agreements with all past employees, consultants and independent contractors of
IIS have been lawfully terminated, and no past employee of IIS or consultant or
independent contractor of IIS has any rights or claims against IIS, including claims
pertaining to severance payments or other social rights or benefits, or the right to
exercise any options, warrants, or similar rights for any IIS securities including
pursuant to any agreement or option plan of IIS. There are no, and never have been any,
oral agreements or understandings between IIS and any third party relating to employment
or consulting services. Except as set forth on Schedule 3.13 of the IIS
Disclosure Schedule, IIS does not operate or maintain any pension, bonus,
profit-sharing, share option, deferred compensation or similar plans or collective
agreements in effect as of the date hereof, and no third party has any claim against IIS
with respect to any such prior plans or agreements of IIS, to the extent any previously
existed.  

    3.14        Restrictions
on Business Activities. There is no agreement, judgment, injunction, order or decree
binding upon IIS or its properties which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any material acquisition of property by IIS
or the conduct of the business by IIS including any exclusive distribution or licensing
agreements which cannot be terminated on less than 30 days notice without any cost or
expense to IIS.  

    3.15        Subsidiaries.
Schedule 3.15 of the IIS Disclosure Schedule sets
forth a list of all subsidiaries of IIS as of the date hereof and sets forth as to each,
the percentage of total outstanding shares thereof which is owned by IIS. All outstanding
shares of capital stock of the subsidiary corporations owned by IIS are validly issued,
fully paid, and non-assessable, and IIS has good and valid title thereto free and clear
of any Encumbrance.  

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    3.16        Finder’s
Fee. All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by IIS and its counsel directly with Witech and its counsel,
without the intervention of any other person as the result of any act of IIS, and so far
as is known to IIS, without the intervention of any other person in such manner as to
give rise to any valid claim against any of the parties hereto for a brokerage
commission, finder’s fee or any similar payments.  

    3.17        Tax
Returns Filed; Taxes Paid. 

		    3.17.1        Except
as set forth in Schedule 3.17 of the IIS Disclosure Schedule,
(i) all returns, declarations, claims for refund, information returns and reports (“IIS
Tax Returns”) of or with respect to any and all taxes, charges, fees, levies,
assessments, duties or other amounts payable to any federal, state, local, foreign or
other taxing authority or agency, including, without limitation, (x) income,
franchise, profits, gross receipts, minimum, alternative minimum, estimated, ad valorem,
value added, sales, use, service, real or personal (tangible and intangible) property,
environmental, capital stock, leasing, lease, user, license, registration, payroll,
withholding, disability, employment, social security (or similar), workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits, transfer
and gains taxes, (y) customs, duties, imposts, charges, levies or other similar
assessments of any kind, and (z) interest, penalties and additions to tax imposed
with respect thereto (“IIS Tax” or “IIS Taxes”) which
are required to be filed on or before the Closing by or with respect to IIS have been or
will be duly and timely filed, (ii) all items of income, gain, loss, deduction and
credit or other items required to be included in each such IIS Tax Return have been or
will be so included and all such information and any other information provided in each
such IIS Tax Return is true, correct and complete, (iii) all IIS Taxes owed by IIS
which have become or will become due have been or will be timely paid in full, (iv) all
IIS Tax withholding and deposit requirements imposed on or with respect to IIS have been
or will be satisfied in full in all respects, (v) no penalty, interest or other
charge is or will become due with respect to the late filing of any such IIS Tax Return
or late payment of any such IIS Tax, and (vi) there are no Encumbrances on any of the
assets of IIS that arose in connection with any failure (or alleged failure) to pay any
IIS Tax.  

		    3.17.2        Extensions
Disclosed. Except as set forth in Schedule 3.17.2 of the IIS
Disclosure Schedule, there is not in force any extension of time with respect to
the due date for the filing of any IIS Tax Return of or with respect to IIS or any waiver
or agreement for any extension of time for the assessment or payment of any IIS Tax of or
with respect to IIS.  

		    3.17.3.        Claims
Disclosed. There is no outstanding written claim from any           governmental
taxing authority against IIS for any IIS Taxes, and no assessment,           deficiency
or adjustment has been asserted, proposed or threatened in writing by           any
governmental taxing authority with respect to any IIS Tax Return of or with
          respect to IIS with respect to any period for which the statute of limitations
          on the assessment of tax deficiencies has not expired other than those
disclosed           (and to which are attached true and complete copies of all audit or
similar           reports) in Schedule 3.17.3 of the IIS Disclosure
          Schedule. To IIS’ knowledge, no written claim has ever been made
by           a governmental taxing authority in a jurisdiction where IIS does not file
IIS           Tax Returns that it is or may be subject to taxation in that jurisdiction.  

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		    3.17.4.        Scheduled
Tax Liabilities Sufficient. The total reserve amounts for           liabilities for
current and deferred IIS Taxes are sufficient to cover in all           material respects
the payment of all IIS Taxes, whether or not assessed or           disputed, which are or
to have been, due by or with respect to IIS up to and           through the periods
covered thereby.  

		    3.17.5.        No
Tax Liens. No material liens for IIS Taxes exist upon the assets of           IIS.  

		    3.17.6.        Change
of Accounting Method. IIS will not be required to include any           amount in
income for any taxable period beginning after the Closing Date as a           result of a
change in accounting method for any taxable period ending on or           before the
Closing Date or pursuant to any agreement with any Tax authority with           respect
to any such taxable period.  

		    3.17.7.        Activity
Limitations. IIS has not entered into any agreement or           arrangement with any
Taxing authority that requires it to take any action or to           refrain from taking
any action.  

    3.18        Disclosure.
IIS has not failed to disclose to Witech in writing any facts material to IIS,
including, without limitation, its business and financial condition. This Agreement and
all other documents delivered to Witech in connection with the Exchange and the other
transactions contemplated herewith do not contain any material untrue statement and do
not omit to state a material fact necessary in order to make the statements contained
therein or herein not misleading.  

ARTICLE IV 

OBLIGATIONS PENDING
CLOSING DATE 

         4.1.       
          Agreements of Witech and IIS. Each of Witech and IIS undertakes to the
          other party that from the date hereof to the Closing Date, it will: 

		    4.1.1.        Maintenance
of Present Business. Operate its business only in the usual,                regular,
and ordinary manner so as to maintain the goodwill it now enjoys and,                to
the extent consistent with such operation, use all reasonable efforts to
               preserve intact its present business organization, keep available the
services                of its present officers and employees, and preserve its
relationships with                customers, suppliers, licensors, licensees,
contractors, distributors, and                others having business dealings with it,
and in connection therewith it shall                not substantially deviate from its
licensing and pricing practices;  

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		    4.1.2.        Maintenance
of Properties. At its expense, maintain all of its property                and assets
in customary repair, order, and condition, reasonable wear and use                and
damage by fire or unavoidable casualty excepted;  

		    4.1.3.        Maintenance
of Books and Records. Maintain its books of accounts and                records in
the usual, regular, and ordinary manner, in accordance with US GAAP
               applied on a consistent basis;  

		    4.1.4.        Compliance
with Law. Duly comply with all laws applicable to it and to                the
conduct of its business; except where the failure to comply with such laws
               would not have a Material Adverse Effect on such party;  

		    4.1.5.        Compliance
with Agreement. At its expense, take all commercially                reasonable
actions as may be necessary (i) to insure that the                representations
and warranties made by it herein are true and correct at the                Closing Date,
(ii) to fully perform all covenants made by it herein and                (iii) to
satisfy timely all other obligations imposed upon it by this                Agreement;  

		    4.1.6.        Inspection.
Permit the other party and its officers and authorized                representatives,
during normal business hours, and subject to standard                confidentiality
undertakings, to inspect upon reasonable prior notice its                records and to
consult with its officers, employees, attorneys, and agents for                the
purpose of determining the accuracy of the representations and warranties
               hereinabove made and the compliance with covenants contained in this
Agreement;                and  

		    4.1.7.        Maintenance
of Intellectual Property. Not take any action that would, or                fail to
take any action the failure of which would, cause directly or indirectly
               any of its Intellectual Property to enter the public domain or that could
               otherwise adversely affect its Intellectual Property.  

    4.2.        Agreements
of IIS and Witech. IIS and Witech agree to take the following           actions after
the date hereof:  

		    4.2.1        IIS
Regulatory and Other Filings. IIS shall timely comply with all U.S. federal, state
(including “Blue Sky laws”), and Israeli regulatory requirements arising
from the transactions contemplated hereby including the prompt filing with any regulatory
agencies, stock exchanges, and any other U.S. or Israeli Governmental Entities with which
IIS is so obligated to provide reporting information or make any filings. Witech will
promptly provide all information and documents necessary for this purpose as and when
requested by IIS.  

		    4.2.2.        Proxy
Statement.  

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		    4.2.2.1        As
promptly as reasonably practicable after the date of this Agreement, IIS and Witech shall
cooperate in the preparation of the Proxy Statement, at IIS’ expense, that complies
with all requirements of Israeli law.  

		    4.2.2.2        IIS
shall cause the Proxy Statement to be mailed to IIS’ shareholders as promptly as
reasonably practicable after the date of this Agreement. If any event relating to either
party occurs, or if IIS or Witech becomes aware of any information, that should be
disclosed in an amendment or supplement to the Proxy Statement, then IIS or Witech, as
the case may be, shall promptly inform the other party thereof.  

		    4.2.3.        Governmental
Approvals.  

		    4.2.3.1        Each
party to this Agreement shall use all reasonable efforts to deliver and file, as promptly
as practicable after the date of this Agreement, each notice, report or other document
required to be delivered by such party to or filed by such party with any Israeli, and
with respect to IIS, additionally any U.S. Governmental Entity with respect to the
Exchange. Without limiting the generality of the foregoing:  

		    (a)        IIS
and Witech shall respond as promptly as practicable to any inquiries or
               requests received from the Israeli Restrictive Trade Practices
Commissioner for                additional information or documentation; and  

		    (b)        Witech
shall use all reasonable efforts to obtain, as promptly as practicable
               after the date of this Agreement any consents that may be required in
connection                with the Exchange;  

		    (c)        Within
the relevant time periods therefor of the Closing, IIS will make all
               filings it is required to make (including past filings) pursuant to the
               Securities Act of 1933, as amended, and the Exchange Act, including all
filings                required to be filed with the US Securities and Exchange
Commission (the “SEC”) and any relevant stock exchanges on which IIS’               securities
are traded. In addition, IIS shall timely file all filings pertaining                to
the Exchange which are required to be filed with the SEC and any stock
               exchanges on which IIS’ securities are traded.  

		    4.2.3.2        Each
party to this Agreement shall (i) give the other parties prompt notice of the
commencement of any legal proceeding by or before any Israeli or U.S. Governmental Entity
with respect to the Exchange, (ii) keep the other parties informed as to the status
of any such legal proceeding and (iii) promptly inform the other parties of any
communication to or from the SEC, any U.S. relevant stock exchanges, the OCS, the
Companies Registrar or any other Israeli Governmental Entity regarding the Exchange or
any of the other transactions contemplated by this Agreement. The parties to this
Agreement will consult and cooperate with one another, and will consider in good faith
the views of one another, in connection with any analysis, appearance, presentation,
memorandum, brief, argument, opinion or proposal made or submitted in connection with any
Israeli legal proceeding relating to the Exchange. In addition, except as may be
prohibited by any Israeli Governmental Entity or by any Israeli legal requirement, in
connection with any such legal proceeding under or relating to the Israeli Restrictive
Trade Practices Law or any other Israeli antitrust or fair trade law, each party hereto
will permit authorized representatives of the other party to be present at each meeting
or conference relating to any such legal proceeding and to have access to and be
consulted in connection with any document, opinion or proposal made or submitted to any
Israeli Governmental Entity in connection with any such legal proceeding.  

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		    4.2.4.        Further
Action. IIS and Witech shall use all reasonable efforts to                cooperate
with each other in the taking of such action reasonably necessary to
               consummate the Exchange and make effective the other transactions
contemplated                by this Agreement.  

		    4.2.5.        Notice
of Material Development. Each of IIS and Witech will promptly                notify
the other party in writing of (i) any event occurring subsequent to
               the date of this Agreement which would render any representation or
warranty of                such party contained in this Agreement untrue or inaccurate in
any material                respect, (ii) any Material Adverse Effect on such party
and                (iii) breach by such party of any covenant or agreement contained
in this                Agreement.  

		    4.2.6.        Resignation
of Directors. Witech shall use all reasonable efforts to                obtain and
deliver to IIS prior to the Closing Date the resignation of each                director
of Witech and of the Subsidiary, effective as of the Closing Date.  

    4.3.        Additional
Agreements of Witech. Witech agrees that from the date hereof           to the
Closing Date, it will:  

		    4.3.1.        Prohibition
of Certain Employment Contracts. Not enter into any contracts                of
employment other than in the ordinary course of business consistent with past
               practice which (i) cannot be terminated on notice of 14 days or less
for                United States employees, and 30 days for Israeli employees, without
the payment                of additional compensation or (ii) provide for any
increase in compensation                including, without limitation, any modification
of any stock option agreements,                outside the ordinary course of business
consistent with past practice, severance                payments or benefits covering a
period beyond the termination date except as                contemplated by this
Agreement or as may be required by law;  

		    4.3.2.        Prohibition
of Certain Loans. Not incur any borrowings except                (i) the
prepayment by customers of amounts due or to become due for goods                sold or
services rendered or to be rendered in the future, (ii) trade
               payables incurred in the ordinary course of business, (iii) other
               borrowings incurred in the ordinary course of business to finance normal
               operations or (iv) as is otherwise agreed to in writing by IIS, with
               respect to borrowings involving a liability of more than US$10,000 per
borrowing                or more than US$50,000 in the aggregate;  

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		    4.3.3.        Prohibition
of Certain Commitments. Not enter into commitments of a                capital
expenditure nature or incur any contingent liability which would exceed
               $25,000 in the aggregate, other than the bridge loans provided by IIS in
the                amount of US$3,550,000 to Witech between April 2007 (and additional
loans from                IIS) and the date hereof, a true and correct copy of which is
attached hereto as Schedule 4.3.  , except (i) as may be
necessary for the                maintenance of existing facilities and equipment in good
operating condition and                repair in the ordinary course of business, (ii) as
may be required by law,                or (iii) as is otherwise agreed to in writing
by IIS;  

		    4.3.4.        Disposal
of Assets. Not sell, dispose of, or encumber, any property or                assets,
except (i) in the ordinary course of business or (ii) as is
               otherwise agreed to in writing by IIS;  

		    4.3.5.        Maintenance
of Insurance. Maintain insurance (or self insurance reserves)                upon all
its properties and with respect to the conduct of its business of such
               kinds and in such amounts as is customary in the type of business in which
it is                engaged, but not less than that presently carried by it, which
insurance (or                self insurance reserves) may be added to from time to time
in its discretion;  

		    4.3.6.        No
Solicitation. Not directly or indirectly authorize or permit any of
               its respective agents to: (i) solicit, initiate, encourage (including
by                way of furnishing information) or take any other action to facilitate,
any                inquiry or the making of any proposal which constitutes, or may
reasonably be                expected to lead to, any acquisition or purchase of a
substantial amount of                assets of, or any equity interest in, Witech or any
Exchange, consolidation,                business combination, sale of substantially all
assets, sale of securities,                recapitalization, liquidation, dissolution or
similar transaction involving                Witech (other than the transactions
contemplated by this Agreement) or any other                material corporate
transactions the consummation of which would, or could                reasonably be
expected to, impede, interfere with, prevent or materially delay                the
Exchange (collectively, “Witech Transaction                Proposals”)
or agree to or endorse any Witech Transaction Proposal or                (ii) propose,
enter into or participate in any discussions or negotiations                regarding any
of the foregoing, or furnish to another person any information                with
respect to its business, properties or assets or any of the foregoing, or
               otherwise cooperate in any way with, or assist or participate in,
facilitate or                encourage, an effort or attempt by any other person to do or
seek any of the                foregoing;  

		    4.3.7.        No
Amendment to Articles of Association, etc. Without the consent of IIS,
               not amend its Articles of Association or other organizational documents or
merge                or consolidate with or into any other corporation or change in any
manner the                rights of its capital stock or the character of its business;  

		    4.3.8.        No
Issuance, Sale, or Purchase of Securities. Except for issuances of
               shares to the Witech Shareholders as set forth on Schedule
               4.3.8 to the Witech Disclosure Schedule, without the
consent of                IIS, not issue or sell, or issue options or rights to subscribe
to, or enter                into any contract or commitment to issue or sell (upon
conversion or otherwise),                any shares of its capital stock or subdivide or
in any way reclassify any shares                of its capital stock, or acquire, or
agree to acquire, any shares of its capital                stock; provided, that nothing
in this Section 4.3.8 shall restrict or prohibit                the issuance by Witech of
Witech Shares upon exercise of options previously                granted under existing
benefit plans or warrants existing on the date hereof;  

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		    4.3.9.        Prohibition
on Dividends. Without the consent of IIS, not declare or pay                any
dividend on shares of its capital stock or make any other distribution of
               assets to the holders thereof;  

		    4.3.10.        Notice
of Material Developments. Promptly furnish to IIS copies of all
               communications from Witech to its stockholders. Witech shall give prompt
notice                to IIS of (i) the occurrence or non-occurrence of any event
the occurrence                or non-occurrence of which would cause any Witech
representation or warranty                contained in this Agreement to be untrue or
inaccurate at or prior to the                Closing Date and (ii) any material
failure of Witech to comply with or                satisfy any covenant, condition or
agreement to be complied with or satisfied by                it hereunder; provided,
however, that the delivery of any notice pursuant to                this Section 4.3.10
shall not limit or otherwise affect the remedies                available hereunder to
IIS;  

		    4.3.11.        Employment
Agreements. Witech shall use its best efforts to obtain on or                prior to
the Closing Date, employment agreements with such employees of Witech                as
reasonably requested by IIS; and  

		    4.3.12.        Employee
Plans and Contracts. Except as required by law, without the                written
consent of IIS, not directly or indirectly (i) enter into or modify
               any collective bargaining agreement with any labor union or other
representative                of employees, (ii) increase the compensation or
benefits of any employee of                Witech or any of its subsidiaries, (iii) amend
or terminate any Witech                Option Plan, or (iv) enter into or adopt any
new employee benefit plan,                policy or arrangement; and  

		    4.3.13.        Transaction
Expenses. Except as set forth on Schedule 1.7  hereto, IIS and
Witech will not pay any expenses of Witech in                connection with the
transactions contemplated by this Agreement to any legal,                financial,
investment banking, accounting or other professional advisor,                including
any agreement relating to the foregoing and payments to made by Witech
               shareholders, irrespective of whether disclosed to IIS, including pursuant
to                Section 2 above.  

		    4.3.14.        Licensing
Practices. Observe all material provisions of, and perform all                its
material obligations under, any Marketing Agreements in a manner consistent
               with past practice.  

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    4.4.        Additional
Agreements of IIS. IIS agrees that from the date hereof to           the Closing
Date, it will:  

		    4.4.1.        Notice
of Material Developments. Give prompt notice to Witech of                (i) the
occurrence or non-occurrence of any event the occurrence or                non-occurrence
of which would cause any IIS representation or warranty contained                in this
Agreement to be untrue or inaccurate at or prior to the Closing Date;                (ii)
the occurrence of any event which could reasonably be anticipated to
               prohibit or restrain the consummation of the transactions contemplated
hereby;                and (iii) any material failure of IIS to comply with or
satisfy any                covenant, condition or agreement to be complied with or
satisfied by it                hereunder; provided, however, that the delivery of any
notice pursuant to this                Section 4.4.1 shall not limit or otherwise
affect the remedies available                hereunder to Witech; and  

		    4.4.2        Compliance
with Agreement. At its expense, take all commercially reasonable actions as may be
necessary (i) to insure that the representations and warranties made by it herein
are true and correct in all material respects at the Closing Date, (ii) to fully
perform all covenants made by it herein and (iii) to satisfy timely all other
obligations imposed upon it by this Agreement.  

		    4.4.3        No
Shop. Until the Closing Date and except for a financing in Shares and/or convertible
securities of IIS in the amount of up to $6,000,000 (and related warrants that may be
issued in connection with such financing), none of IIS nor any of their officers,
directors, representatives or agents will, directly or indirectly solicit, initiate,
knowingly encourage or accept any other proposals or offers from any Person relating to
any acquisition of any shares or assets of IIS (other than sale of already issued shares
in the public market and the purchase of short term investments of publicly traded
securities. IIS will immediately cease any existing discussions or negotiations conducted
by such Person with respect to any of the foregoing prohibited activities. The foregoing
shall not restrict IIS from responding to unsolicited proposals from any Person, nor
shall it restrict its Board of Directors from taking any action if, in the opinion of IIS’outside
counsel, such action is required in order to enable the Board of Directors of IIS to
fulfill its fiduciary duties to IIS and its shareholders to the extent required under
applicable Israeli law. “Person” means any natural person, corporation,
limited liability company, general partnership, limited partnership proprietorship, other
business organization, trust, union, association of any governmental or regulatory authority.  

ARTICLE V 

CONDITIONS PRECEDENT
TO OBLIGATIONS 

         5.1.       
          Conditions Precedent to Obligations of Witech. The obligations of Witech
          and the Witech Shareholders, severally, to consummate and effect the Exchange
          shall be subject to the satisfaction of the following conditions, or to the
          waiver thereof by Witech in the manner contemplated by Section 6.4 on the
          Closing Date : 

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		    5.1.1.        Representations
and Warranties of IIS True at Closing Date. The                representations and
warranties of IIS herein contained shall be, in all material                respects,
true as of and at the Closing Date and again as of and at the Closing                Date
with the same effect as though made at such date, except for those
               representations and warranties that address matters only as of a
particular date                (which shall remain true and correct as of such particular
date); IIS shall have                performed and complied, in all material respects,
with all covenants required by                this Agreement to be performed or complied
with by IIS before or at the Closing                Date; and IIS shall have delivered to
Witech a certificate, dated the Closing                Date and signed by each of its
chief executive officer and chief financial                officer to both such effects.  

		    5.1.2.        No
Order. No temporary restraining order, preliminary or permanent
               injunction or other order preventing the consummation of the Exchange
shall have                been issued by any court of competent jurisdiction and remain
in effect, and                there shall not be any legal requirement enacted or deemed
applicable to the                Exchange that makes consummation of the Exchange
illegal.  

		    5.1.3        Increase
in IIS’ registered share capital. IIS’ shareholders shall have duly
authorized an increase in IIS’ share capital to 50,000,000 Ordinary Shares, par
value NIS 0.003 per share.  

		    5.1.4        Amendment
to Articles of Association. IIS’ shareholders shall have duly authorized an
amendment to IIS’ Articles of Association to eliminate the casting vote of the
Chairman of the Board of Directors according to Article 71(c) of such Articles and the
staggered Board of directors according to Article 50 of the Articles of Association.  

		    5.1.5        No
Orders or Judgments. As of the Closing Date, there shall not be any judgment or order
of a court of competent jurisdiction or any ruling, regulation or order of any agency of
the Israeli or U.S. federal, state, or local government which would prohibit or have the
effect of preventing the consummation of the issuance of the Exchange Shares and the
transactions hereunder shall not be prohibited or enjoined (temporarily or permanently)
by any applicable law or governmental or other regulation.  

		    5.1.6        Opinion
of IIS Counsel. Witech shall have received an opinion, dated as of the Closing Date
from Amit, Pollak, Matalon & Co. counsel for IIS, in the form attached hereto as Schedule
5.1.6.  

		    5.1.7.        IIS
Shareholder Approval. The Exchange and the transactions contemplated
               hereby shall have been duly approved by the shareholders of IIS, and IIS
shall                have provided Witech and the Witech Shareholders with a copy of the
duly                authorized resolutions of shareholders meeting of IIS approving the
Exchange and                the transactions contemplated hereby.  

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		    5.1.8.        Approvals.
All material consents, permits and approvals of all                Governmental Entities
required to be obtained in connection with the Exchange                and the other
transactions contemplated by this Agreement shall have been                obtained and
shall be in full force and effect. IIS shall have provided Witech                and the
Witech Shareholders with a certified copy of the duly authorized board
               resolutions of IIS approving the Exchange and the transactions
contemplated                thereby and including a signatory rights approval with
respect to the execution                of the documents pertaining to the Exchange
together with an incumbency                certificate.  

		    5.1.9        Escrow
Agreement. IIS, Charless Moss, as the Witech Shareholders representative (the “Shareholders
Representative”) on behalf of the Witech Shareholders, and the Escrow Agent will
have signed the Escrow Agreement substantially in the form attached hereto as Schedule
5.1.9 (the “Escrow Agreement”) placing in escrow the
Exchange Shares and the IIS shares held by the other IIS shareholders holding 5% or more
of the issued and outstanding shares of IIS immediately following the Closing, for a
period of twenty-four months following the Closing in accordance with Israeli tax
requirements and as applicable, the Indemnification Agreement.  

		    5.1.10        Tax
Ruling. IIS and the Witech Shareholders shall have received a tax ruling from the
Israeli Income Tax Authorities confirming that the Exchange will be tax-free subject to
reasonable conditions as set forth therein (the “Tax Ruling”).  

		    5.1.11.        Execution
of Employment Agreements with Designated Executives. IIS and                each of
Charles Moss, David Elooz, Eliyahu Cohen and Ronen Segal (collectively,
               the “Designated Executives”) shall have entered into
employment                agreements with IIS or Witech and in the form attached hereto
as Schedules                5.1.11(i) – (iv), respectively (the
“Designated                Executives Employment Agreements”).  

		    5.1.12        No
Material Adverse Effect. Since the date of this Agreement, there shall not have
occurred any Material Adverse Effect on IIS, and no event shall have occurred or
circumstance shall exist that, in combination with any other events or circumstances,
could reasonably be expected to have a Material Adverse Effect on IIS.  

		    5.1.13        Burdensome
Condition. Other than the Tax Ruling, there shall not have been any action taken by
any Governmental Entity, and there shall not have been any legal requirement or order
enacted, entered, enforced or deemed applicable to the Exchange, that imposes or that
seeks to impose any restriction, condition or obligation upon IIS or Witech that could
reasonably be expected to adversely impact, in any material respect, any of the
anticipated benefits to Witech or the Witech Shareholders of the Exchange.  

		    5.1.14        Share
Transfer Deed. The Witech Shareholders shall have transferred the Exchange
Shares, free and clear of any Encumbrances, to IIS, by signing and delivering
to IIS a share transfer deed in appropriate form as reasonably determined by IIS.  

- 35 -

    5.2.        Conditions
Precedent to Obligations of IIS. The obligations of IIS to           consummate and
effect the Exchange shall be subject to the satisfaction of the           following
conditions, or to the waiver in writing thereof by IIS in the manner
          contemplated by Section 6.4 on or before the Closing Date:  

		    5.2.1.        Representations
and Warranties of Witech True at Closing Date. The                representations and
warranties of Witech herein contained shall be, in all                material respects,
true as of and at the Closing Date with the same effect as                though made at
such date, except for those representations and warranties that                address
matters only as of a particular date (which shall remain true and                correct
as of such particular date); Witech shall have performed and complied,                in
all material respects, with all covenants required by this Agreement to be
               performed or complied with by Witech on or before the Closing Date; and
Witech                shall have delivered to IIS a certificate, dated the Closing Date
and signed by                its chief executive officer and by its chief financial or
accounting officer to                both such effects.  

		    5.2.2.        Representations
and Warranties of Witech Shareholders True at Closing Date. The
representations and warranties of the Witech Shareholders                herein contained
shall be, in all respects, true as of and at the Closing Date                with the
same effect as though made at such date; and the Witech Shareholders                shall
have performed and complied with, in all material respects, with all
               covenants required to be performed or complied with by the Witech
Shareholders                on or before the Closing Date.  

		    5.2.3        No
Order. No temporary restraining order, preliminary or permanent injunction or other
order preventing the consummation of the Exchange shall have been issued by any court of
competent jurisdiction and remain in effect, and there shall not be any legal requirement
enacted or deemed applicable to the Exchange that makes consummation of the Exchange
illegal.  

		    5.2.4.        Opinion
of Witech’s Counsel. IIS shall have received an opinion,                dated as
of the Closing Date, from Fischer, Behar, Chen, Well, Orion & Co.,
               counsel to Witech, in the form attached hereto as Schedule
               5.2.4.  

		    5.2.5.        Approvals.
All consents, permits and approvals of all Governmental                Entities or any
other third party required to be obtained in connection with the                Exchange
and the other transactions contemplated by this Agreement shall have                been
obtained and shall be in full force and effect.  

		    5.2.6.        Consent
of Certain parties in Privity with Witech. The holders of any                material
indebtedness of Witech, the lessors of any property leased by Witech,                and
the other parties to any other agreements to which Witech is a party, whose
               consent to the Exchange is required as set forth in the Witech Disclosure
               Schedule, shall, when and to the extent necessary in the reasonable
opinion of                IIS, have consented to the Exchange.  

		    5.2.7.        Combined
20-F Ready for Filing. The Combined 20-F shall be ready for                filing
with the SEC as confirmed by the Board of Directors of IIS; 

- 36 -

		    5.2.8.        Employees.
The individuals identified on Section 5.2.8(a) of the                Witech  Disclosure
Schedule  shall not have                ceased to be employed by Witech or
shall not have expressed an intention to                terminate his or her employment
with Witech or, when relevant, shall have                declined to accept employment
with IIS provided that such employment with IIS                shall be under their
existing terms with Witech.  

		    5.2.9.        No
Material Adverse Effect. Since the date of this Agreement,                there
shall not have occurred any Material Adverse Effect on Witech, and no
               event shall have occurred or circumstance shall exist that, in combination
with                any other events or circumstances, could reasonably be expected to
have a                Material Adverse Effect on Witech; provided, however, for
purposes of                this Section 5.2.9 a Material Adverse Effect shall not include
any loss of                revenues or sales and support personnel during the period from
the date hereof                to the Closing Date other than losses of revenues or sales
and support personnel                attributable to an event the occurrence or existence
of which would result in a                representation or warranty made by Witech in
this Agreement being untrue or                would result in the breach of a covenant
made by Witech in this Agreement.  

		    5.2.10.       Burdensome
Condition. Other than the Tax Ruling, there shall not have                     been
any action taken by any Governmental Entity, and there shall not have been
                    any legal requirement or order enacted, entered, enforced or deemed
applicable                     to the Exchange, that imposes or that seeks to impose any
restriction, condition                     or obligation upon IIS or Witech that could
reasonably be expected to adversely                     impact, in any material respect,
any of the anticipated benefits to IIS of the                     Exchange.  

		    5.2.11.       Witech
Shareholder Waiver. Each holder of Witech Shares will provide to
                    IIS the Witech Shareholder Waiver.  

		    5.2.12.       Witech
Option holder Waiver. Each holder of Witech Options will provide
                    to Witech and IIS an Undertaking, Release and Waiver in the form
attached hereto                     as Schedule 5.2.12.  

		    5.2.13.       Indemnification
Agreement. Each of the Witech Shareholders will have                     signed the
Indemnification Agreement in the form attached hereto as Schedule 5.2.13 .  

		    5.2.14.       Escrow
Agreement. The Shareholders Representative on behalf of the Witech
                    Shareholders and the Escrow Agent will have signed the Escrow
Agreement.  

- 37 -

		    5.2.15.       Tax
Ruling. IIS shall have received the Tax Ruling from the Israeli
                    Income Tax Authorities.  

		    5.2.16.       Employment
Agreements. Each ofthe Designated Executives will have
                    entered into the Designated Executives Employment Agreements.  

		    5.2.17.       Non
Compete. All the Witech Shareholders who are employees or consultants
                    of Witech or the Subsidiary (directly or through affiliates), as well
as                     officers and directors of Witech listed on Schedule 5.2.17                    hereto
shall deliver an executed non-compete undertaking with respect to
                    Witech’s business for a period of twenty-four months following
the Closing                     in the form attached hereto as Schedule 5.2.17.  

ARTICLE VI 

TERMINATION AND
ABANDONMENT 

         6.1.       
          Termination. Anything contained in this Agreement to the contrary
          notwithstanding, this Agreement may be terminated and the Exchange abandoned at
          any time (whether before or after the approval and adoption thereof by the
          stockholders of Witech) before the Closing Date: 

		    6.1.1.        By
Mutual Consent. By mutual written consent of IIS and Witech.  

		    6.1.2.        By
IIS Because of Conditions Precedent. By IIS, if there has been a
               breach by Witech of its representations, warranties, covenants, or
agreements                set forth in this Agreement if, as a result of such breach, the
conditions set                forth in Section 5.2 would not be satisfied, and
Witech fails to cure such                breach within 15 business days after written
notice thereof from IIS (except                that no cure period shall be provided for
any breach by Witech which by its                nature cannot be cured).  

		    6.1.3.        By
IIS Because of Material Adverse Change. By IIS, if there has been
               since December 31, 2006, a Material Adverse Change with respect to Witech
which                condition or event shall not have been ameliorated such that it no
longer                constitutes a Material Adverse Change within fifteen (15) business
days                following receipt by Witech of notice from IIS (except that no cure
period shall                be provided for any Material Adverse Change which by its
nature cannot be                cured); provided, however, for purposes of this
Section 6.1.3 a Material                Adverse Change shall not include any loss of
revenues or sales and support                personnel during the period from the date
hereof to the Closing Date other than                losses of revenues or sales and
support personnel attributable to an event the                occurrence or existence of
which would result in a representation or warranty                made by Witech in this
Agreement being untrue or would result in the breach of a                covenant made by
Witech in this Agreement.  

- 38 -

		    6.1.4.        By
Witech Because of Conditions Precedent. By Witech, if there has been a
               breach by IIS of any of its representations, warranties, covenants or
agreements                set forth in this Agreement if, as a result of such breach, the
conditions set                forth in Section 5.1 would not be satisfied, and IIS
fails to cure such                breach within 15 business days after written notice
thereof from Witech (except                that no cure period shall be provided for any
breach by IIS which by its nature                cannot be cured).  

		    6.1.6        By
IIS or Witech Because of Legal Proceedings. By IIS or Witech if (i) a statute,
rule, regulation or executive order shall have been enacted, entered or promulgated
prohibiting the consummation of the transactions contemplated hereby or (ii) an
order, decree, ruling or injunction shall have been entered permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions contemplated
hereby and such order, decree, ruling or injunction shall have become final and
non-appealable; provided, that the party seeking to terminate this Agreement pursuant to
this Section 6.1.5 shall have used its reasonable best efforts to remove such
injunction, order or decree.  

		    6.1.7.        By
IIS or Witech if Exchange not Effective by December 31, 2007. By
               either IIS or Witech and the Witech Shareholders, if all conditions to
               consummation of the Exchange shall not have been satisfied or waived on or
               before December 31, 2007, (or any other date agreed by IIS and Witech),
other                than as a result of a breach of this Agreement by the terminating
party.  

         6.2.       
          Termination by Board of Directors. An election of IIS to extend the
          period specified in Section 6.1.7 or to terminate this Agreement and abandon the
          Exchange as provided in Section 6.1 shall be exercised on behalf of IIS by
          its board of directors. An election of Witech to extend the period specified in
          Section 6.1.7 or to terminate this Agreement and abandon the Exchange as
          provided in Section 6.1 shall be exercised on behalf of Witech by its board
          of directors, and an election of the Witech Shareholders to terminate this
          Agreement and abandon the Exchange as provided in Section 6.1 shall be exercised
          by a resolution of the Witech Shareholders. 

    6.3        Effect
of Termination. Subject to Section 6.5, in the event of the termination and
abandonment of this Agreement pursuant to and in accordance with the provisions of Section 6.1
hereof, this Agreement shall become void and have no effect, without any liability on the
part of any party hereto (or its stockholders or controlling persons or directors or
officers in accordance with this agreement), and (ii) neither party shall be
released or relieved from any liability arising from the willful breach by such party of
any of its representations, warranties, covenants or agreements as set forth in this
Agreement.  

         6.4.       
          Waiver of Conditions. Subject to the requirements of any applicable law,
          any of the terms or conditions of this Agreement may be waived at any time by
          the party, which is entitled to the benefit thereof, by action taken by its
          board of directors, or to the extent such party is an individual, in writing by
          such individual. 

- 39 -

    6.5.           Consequences
of Termination. If this Agreement is terminated due to the           fact that the
Exchange is not consummated due to the failure of Witech and/or           the
Shareholders to receive a favorable tax ruling, without derogating from any
          other rights and remedies at law or according to any agreement and without
          releasing Witech from its obligation to repay the loans provided by IIS to
          Witech pursuant to the Loan Agreement dated April 17, 2007 and May_ 2007 and
any           other loan agreement between IIS and Witech and related documents according
to           their terms, in consideration for IIS’s efforts and investment of time
and           money in pursuing the Exchange, Witech will immediately issue to IIS five
          percent (5%) of the issued and outstanding share capital of Witech, on a fully
          diluted basis and the interest on such loans will be increased to LIBOR plus
10%           (or the maximum rate permitted by law, whichever is lower) retroactively to
the           date they were provided to Witech, and IIS will have the option for a
period of           sixty (60) days following termination of this Agreement to convert
all or part           of the loans provided by IIS to Witech (and interest thereon) to
Ordinary Shares           of Witech at a price per share reflecting a pre-conversion
Company valuation of           $5,000,000 on a fully diluted basis.  

ARTICLE VII 

ADDITIONAL AGREEMENTS 

    7.1       Registration
Statement. IIS will file a registration statement to register the Exchange Shares for
resale pursuant to the United States Securities Act of 1933 within one hundred and twenty
(120) days following the Closing and shall make its best efforts to have the registration
statement declared effective as soon as practical.  

    7.2       Issuance
of Options. Immediately prior to or at the Closing, IIS will grant stock options to
the senior management of Witech including the Designated Executives and other executives
designated by Witech and agreed by IIS, to purchase an aggregate of 2,300,000 shares of
IIS at an exercise price equal to the average trading price per share of the Exchange
Shares during the twenty (20) trading days prior to the Closing, vesting in eight (8)
semi-annual installments as long as each such executive continues to be employed by IIS.
It is intended that these options will be issued according to the capital gains route
under Section 102 of the Israeli Income Ordinance or in accordance with Section 3(i) of
theIsraeli Income Ordinance, as applicable. In addition, on or prior to the
Closing, IIS will increase the shares reserved for issuance to directors, employees,
consultants and service providers of IIS and its subsidiaries pursuant to its incentive
stock option plans by an additional 1,000,000 shares so that the total amount of shares
reserved for issuance pursuant to such plan will be 3,300,000.  

- 40 -

    7.3        Issuance
of warrants to IIS Shareholders. Each of the Witech Shareholders acknowledges and agrees
that, subject to and following compliance with applicable Israeli and United States
securities laws and regulations, IIS intends to issue to all shareholders of IIS at the
record date determined for the purpose of voting at the general meeting of shareholders
of IIS to be convened to approve this Agreement, warrants to purchase an aggregate of
4,600,000 Ordinary Shares of IIS nominal value NIS 0.003 per share, on a pro-rata basis
according to the percentage holding of each such shareholder in the issued and
outstanding share capital of IIS on such record date . These warrants will be exercisable
until the earlier of (i) five years from the date of issuance, and (ii) the closing of a
Transaction. A “Transaction” means each of (i) merger, acquisition or
reorganization of IIS with one or more other entities in which IIS is not the surviving
entity, or (ii) a sale of all or substantially all of the assets or shares of IIS. The
exercise price of each warrant shall be the average trading price per share of IIS’s
Ordinary Shares during the twenty trading days prior to the Closing. These warrants will
be non-transferable and non-exercisable until all applicable Israeli and United States
securities laws and regulations have been complied with in connection with the warrants
and the underlying shares, including without limitation, that a registration statement
covering the underlying shares is declared effective by the United States Securities and
Exchange Commission. Each of the Witech Shareholders understakes that such Witech
Shareholder will not oppose issuance of these warrants.  

    7.4        Legend
in Share Certificate. The Exchange Shares are characterized as “restricted
securities” under the US federal securities laws in asmuch as the Exchange Shares
are being acquired from IIS in a transaction not involving a public offering, and such
securities may be resold without registration under the Exchange Act only in certain
limited circumstances. It understands that the certificates evidencing the Exchange
Shares will be printed with legends restricting transfer except in compliance with
applicable securities laws in the form of the following or similar legend:  

        “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “ACT”), OR ANY
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
COMPANY AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS SET OUT IN AN ESCROW AGREEMENT DATED ___,
2007. 

ARTICLE VIII 

MISCELLANEOUS 

         8.1.       
          Entirety. This Agreement, together with the Schedules hereto constitute
          the entire agreement between the parties with respect to the subject matter
          hereof, and all prior agreements between the parties with respect thereto are
          hereby superseded and replaced in their entirety. In order to remove doubt, it
          is expressly agreed and clarified that any loan agreements and related documents
          between IIS and Witech entered into prior to the Closing Date shall continue in
          full force and effect. 

- 41 -

         8.2.       
          Counterparts/Fax Signatures. Any number of counterparts of this Agreement
          may be executed and each such counterpart shall be deemed to be an original
          instrument, but all such counterparts together shall constitute but one
          instrument. Facsimile signatures shall be considered originals. 

         8.3.       
          Notices and Waivers. Any notice or waiver to be given to any party hereof
          shall be in writing and shall be delivered by courier, sent by facsimile
          transmission or registered or certified mail, postage prepaid. 

If to IIS:  

Addressed to: 

IIS 

Twin Towers, 33
Jabotinsky Street 

Ramat Gan 52511, Israel 

Attention: 

Facsimile: (972) 3 575 0595

with a copy (which shall not
constitute notice) to: 

Amit, Pollak, Matalon
& Co. 

17 Yitzhak Sadeh Street 

Tel Aviv, Israel 

Facsimile: 972-3-568-9001 

Attn: Ian Rostowsky, Adv. 

If to Witech:  

Addressed to: 

Witech Communications Ltd. 

17 Ha’atasia Street,
Or Yehuda 60212 

Attention: Charles Moss 

Facsimile: 972-3-5333868 

with a copy (which shall not
constitute notice) to: 

Fischer, Behar, Chen, Well, Orion and
Co. 

3 Daniel Frisch Street 

Tel Aviv, Israel 64731 

Facsimile: +972-3-
609-1116 

Attn: Ron Lehmann, Adv. 

- 42 -

and if to the Witech Shareholders to: 

Charles Moss 

(acting as the Witech
Shareholders  representative) 

c/o Witech Communications
Ltd. 

17 Ha’atasia Street, Or
Yehuda 60212 

Facsimile: 972-3-5333868 

        Any
communication so addressed and mailed by first-class registered or certified mail, postage
prepaid, shall be deemed to be received on the fifth business day after so mailed, and if
delivered by courier or facsimile to such address, upon delivery during normal business
hours on any business day together with proof of deliver in the case of courier or proof
of transmission in the case of facsimile. 

         8.4.       
          Captions. The captions contained in this Agreement are solely for
          convenient reference and shall not be deemed to affect the meaning or
          interpretation of any article, section, or paragraph hereof. 

         8.5.       
          Successors and Assigns. This Agreement shall be binding upon and shall
          inure to the benefit of and be enforceable by the successors and assigns of the
          parties hereto provided that no party may assign this agreement to any third
          party without the prior written approval of the other parties. 

         8.6.       
          Severability. If any term, provision, covenant or restriction of this
          Agreement is held by a court of competent jurisdiction to be invalid, void, or
          unenforceable, the remainder of the terms, provisions, covenants and
          restrictions shall remain in full force and effect and shall in no way be
          affected, impaired or invalidated. It is hereby stipulated and declared to be
          the intention of the parties that they would have executed the remaining terms,
          provisions, covenants and restrictions without including any of such which may
          be hereafter declared invalid, void or unenforceable. 

         8.7.       
          Applicable Law/Jurisdiction. This Agreement shall be governed by and
          construed and enforced in accordance with the laws of the State of Israel
          without regard to conflict of law principles thereof. The courts of Tel-Aviv
          will have exclusive jurisdiction in all matters relating to or arising out of
          this Agreement. 

         8.8.       
          Public Announcements. The parties agree that before the Closing Date that
          they shall consult with each other before the making of any public announcement
          regarding the existence of this Agreement, the contents hereof or the
          transactions contemplated hereby, and to obtain the prior approval of the other
          party as to the content of such announcement, which approval shall not be
          unreasonably withheld. However, the foregoing shall not apply to any
          announcement or written statement which, upon the written advice of counsel, is
          required by law to be made, except that the party required to make such
          announcement shall, whenever practicable, consult with and solicit prior
          approval from such other party concerning the timing and content of such legally
          required announcement or statement before it is made. 

- 43 -

         8.9.       
          Termination of MOA. The MOA shall terminate, if not earlier terminated in
          accordance with its terms, and be of no further effect as of the Closing Date
          and the parties shall have no obligations with respect thereto. 

    8.10        Business
Day. For purposes of this Agreement, the term “business day”refers to a day
in which the banks in Israel are open for business, excluding Friday.  

    8.11        Entire
Agreement. This Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings, oral and written, between the parties. Any modification to this Agreement
must be done in writing, signed by IIS,Witech and the Witech Shareholders holding a
majority of the Witech Shares.  

    8.12        Payment
of Taxes. Each party hereto shall be solely responsible for all tax payments and
liabilities appluacle to such party relating to or arising out of this Agreement.  

- 44 -

    8.13        Definitions.
 The following terms are defined in the indicated place: 

	 			 
	 	Term  	Section  	 
	 	Agreement	Premises	 
	 	Applicable Environmental Laws	2.18.	 
	 	Bank Approval	2.2.2	 
	 	Combined 20-F	2.23	 
	 	Closing Date	1.2.	 
	 	Closing	1.2.	 
	 	Designated Executives	5.1.11	 
	 	Designated Executives Employment Agreements	5.1.11	 
	 	Exchange	Premises	 
	 	Exchange Shares	1.1	 
	 	Encumbrances	1.1.	 
	 	Escrow Agreement	5.1.9.	 
	 	Exchange Act	2.23.	 
	 	Executive Options	5.1.11	 
	 	Family	2.26	 
	 	Financial Statements	2.5.	 
	 	Governmental Entity	2.2.2.	 
	 	Grants	2.28.	 
	 	Intellectual Property	2.11.1.	 
	 	Indemnification Agreement	5.2.13	 
	 	IIS	Premises	 
	 	IIS Disclosure Schedule	3.2.2	 
	 	IIS Tax Returns	3.17.1	 
	 	IIS Tax	3.17.1	 
	 	Licenses	2.13.1.	 
	 	Marketing Agreements	2.13.2.	 
	 	Material Adverse Effect or Material Adverse Change	1.3.	 
	 	OCS	2.28.	 
	 	OCS Approval	2.2.2	 
	 	Person	4.4.3	 
	 	Proxy Statement	2.23	 
	 	Related Persons	2.26	 
	 	SEC	4.2.3.1	 
	 	Subsidiary	2.4	 
	 	Shareholders Representative	5.1.9	 
	 	Software Programs	2.11.1	 
	 	Technical Documentation	2.12	 
	 	Tax or Taxes	2.10.1.	 
	 	Tax Returns	2.10.1	 
	 	Technical Documentation	2.12.	 
	 	US GAAP	2.5	 
	 	Witech	Premises	 
	 	Witech Shares	Premises	 
	 	Witech Transactional Proposals	4.3.6	 
	 	Witech Disclosure Schedule	2.3	 
	 	Witech Plans	2.7.1	 
	 	Witech Share Certificate	1.5.4	 
	 	Witech Option Agreements	1.6.	 
	 	Witech Options	1.6.	 
	 	Witech Option Plans	1.6.	 
	 	Witech Shareholders	Premises	 
	 	Witech Shareholder Waiver	1.7	 
	 	Witech Third Party Consents	2.2.3	 

[Signature page follows] 

- 45 -

        IN
WITNESS WHEREOF, the parties hereto have caused this Share Exchange Agreement to be duly
executed as of the date first above written. 

			IIS INTELLIGENT INFORMATION SYSTEMS, LTD.

By: 
——————————————

Name:
Title:

			WITECH COMMUNICATIONS LTD.

By: 
——————————————

Name:
Title:

[Signature Pages of the Witech Shareholders Follow] 

- 46 -

SIGNATURE PAGE OF
WITECH SHAREHOLDERS 

SHARE EXCHANGE
AGREEMENT, dated as November 5, 2007, 

by and among I.I.S
Intelligent Information Systems Ltd., Witech Communications 

Ltd., (“Witech”) and the shareholders of
Witech 

Name of Shareholder:
_____________________________ 

Signature of Shareholder:
__________________________ 

Name of
Signatory:______________________________ 

The undersigned Notary/Attorney,
hereby confirms that ______________ appeared before me and signed above in my presence on
this ____ day of November. 2007. 

Name of Notary or
Attorney:____________________________ 

Signature of Notary or
Attorney: __________________________ 

License Number:
_____________________________________ 

Address:
____________________________________________ 

- 47 -

AMENDMENT NO. 1 (this “Amendment”)  

dated January 2, 2008 

to the 

SHARE EXCHANGE AGREEMENT (the "Agreement")  

Made and entered into on November 5, 2007 

by and among I.I.S Intelligent
Information Systems Ltd., an Israeli company (“IIS”), Witech
Communications Ltd., an Israeli company (“Witech”) and the shareholders
of Witech listed on Schedule 1.1 to the Agreement (the
“Witech Shareholders”). 

WHEREAS, the Agreement may be
amended pursuant to Section 8.11 thereof; 

The parties to the Agreement
agree as follows: 

     1.    
          Defined Terms. All capitalized terms used in this
          Amendment, which are not otherwise defined, shall have the meaning ascribed to
          such terms in the Agreement. 

     2.    
          Amendment to Agreement. The parties agree that the
          Agreement shall be amended as follows: 

	2.1 	The
Exchange will not take place in accordance with Section 103K of the Israeli Income Tax
Ordinance [New Version] and receipt of the Tax Ruling or any other tax ruling is not a
condition for Closing; provided, however, that this Amendment shall not preclude receipt
of a tax ruling that is acceptable to IIS and Witech. 

	2.2 	In
accordance with the foregoing, (i) the phrase “in accordance with Section 103K of
the Israeli Income Tax Ordinance [New Version]” in the first “Whereas”clause;
(ii) Section 5.1.10; (iii) Section 5.2.15; and (iv) other references to the “Tax
Ruling” or a tax ruling (including without limitation in Section 6.5 of the
Agreement) in the Agreement are hereby deleted. 

	2.3  	The
date of December  31, 2007  specified in Sections  1.2 and 6.1.7 of the  Agreement  will
be amended to  January 2, 2008;

	2.4 	The
Escrow Agreement attached as Schedule 5.1.9 to the Agreement shall
be replaced by the Escrow Agreement substantially in the form attached hereto (the “New
Escrow Agreement”);

	2.5  	The
period of one  hundred  and twenty  (120) days in Section  7.1 will be  extended  to one
 hundred  and          eighty (180) days;

	2.6 	Options
to purchase up to 190,680 shares of IIS granted in accordance with Section 7.2 of the
Agreement may be granted to current shareholders of Witech (in addition to the Designated
Executives and other employees of Witech ).

	2.7  	The
date of the Escrow Agreement in the legend in Section 7.4 will be "JANUARY ___, 2008";

	2.8 	Notwithstanding
anything to the contrary in the Agreement, each Witech Shareholder signing this Amendment
agrees and undertakes that all such Witech Shareholder’s Exchange Shares shall be
held in escrow according to the New Escrow Agreement and, except for an amount of
Exchange Shares not exceeding 250,000 as shall be specified in writing in a notice from
the Shareholders’ Representative to IIS and except as may otherwise be agreed in
writing by IIS, such Witech Shareholder shall not directly or indirectly, (1) offer for
sale, sell, pledge or otherwise dispose of (or enter into any transaction or device that
is designed to, or could be expected to, result in the disposition by any person at any
time in the future of), or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks of
ownership of, the Exchange Shares, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of Exchange Shares or other securities, in cash
or otherwise, or (3) publicly disclose the intention to do any of the foregoing, for a
period commencing on the date of the Closing and the ending twelve (12) months following
the Closing. 

     3.    
          Effectiveness of this Amendment. This Amendment shall
          become effective when signed by IIS, Witech and the Witech Shareholders holding
          a majority of the Witech Shares. 

     4.    
          Counterparts. This Amendment may be executed in any number
          of counterparts, each of which shall be deemed an original and enforceable
          against the parties actually executing such counterpart and all of which
          together shall constitute one and the same instrument. Fax signatures shall be
          considered originals. 

[signature pages follow]  

IN WITNESS WHEREOF, the
parties hereto have executed this Amendment as of the day and year first above-written. 

			IIS INTELLIGENT INFORMATION SYSTEMS LTD.

By: 
——————————————

Name:
Title:

			WITECH COMMUNICATIONS LTD.

By: 
——————————————

Name:
Title:

[Signature Pages of the
Witech Shareholders Follow]  

SIGNATURE PAGE OF WITECH
SHAREHOLDERS 

AMENDMENT # 1 TO SHARE
EXCHANGE AGREEMENT, dated as November 5, 2007,
by and among I.I.S Intelligent
Information Systems Ltd., Witech Communications Ltd., 
(“Witech”) and the shareholders of Witech 

Name of Shareholder:
_____________________________ 

Signature of Shareholder:
__________________________ 

Name of
Signatory:______________________________ 

Date: January ___, 2008

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