Document:

fc_ex1029b-80731.htm

     

    Exhibit
10.29(b)

    SENIOR
SECURED PROMISSORY NOTE

    
    

     

    
      	Dated: August 27,
      2008	

              Amount:
      $94,594.60

            

    

     

     

    For value
received, FIRSTGOLD CORP., a corporation organized under the laws of the State
of Delaware (the “Maker”), hereby
promises to pay to the order of LAKEWOOD GROUP LLC, with an address of 152 West
57th
Street, 54th Floor,
New York, NY 10019 (together with its successors, representatives, and assigns,
the “Holder”),
in accordance with the terms hereinafter provided, the principal amount of
Ninety-Four Thousand Five Hundred Ninety-Four Dollars and Sixty Cents
($94,594.60) hereunder, together with interest and all other obligations
outstanding hereunder.

     

    All
payments under or pursuant to this Note shall be made in United States Dollars
in immediately available funds to the Holder at the address of the Holder first
set forth above or at such other place as the Holder may designate from time to
time in writing to the Maker or by wire transfer of funds to the Holder’s
account, instructions for which are attached hereto as Exhibit
A.  The outstanding principal balance of this Note shall be due
and payable on March 1, 2010 (the “Maturity Date”) or at
such earlier time as provided herein.

     

    ARTICLE
I

     

    Section
1.1    Purchase
Agreement.  This Note has been executed and delivered pursuant
to the Note and Warrant Purchase Agreement, dated as of August 7, 2008 (the
“Purchase Agreement”), by and between the Maker, the Holder (as a Lender) and
each other Lender party thereto and related agreements and
documents.  Capitalized terms used and not otherwise defined herein
shall have the meanings set forth for such terms in the Purchase
Agreement.

     

    Section
1.2    Interest.  The
outstanding principal balance of this Note shall bear interest, in arrears, at a
rate per annum equal to four percent (4%), payable in cash on the first Business
Day of each month following the date hereof.  Interest shall be
computed on the basis of a 360-day year of twelve (12) thirty-day months, shall
compound monthly and shall accrue commencing on the date
hereof.  Furthermore, upon the occurrence of an Event of Default (as
defined in Section 2.1 hereof), the Maker will pay interest to the Holder,
payable on demand, on the outstanding principal balance of the Note and on all
unpaid interest from the date of the Event of Default at a per annum rate equal
to the lesser of eighteen percent (18%) and the maximum applicable legal rate
per annum, calculated based on a 360-day year.

     

    Section
1.3    Payment of Principal;
Prepayment.

     

    (a) The
principal amount hereof shall be paid in full on the Maturity Date or, if
earlier, upon acceleration of this Note in accordance with the terms
hereof.  Any amount of principal repaid hereunder may not be
reborrowed.  The Maker may prepay all or any portion of the principal
amount of this Note upon not less than three (3) Business Days prior written
notice to the Holder, without penalty or premium.

     

    (b) Not later
than the fifteenth (15th) day of
each calendar month, the Maker shall make a mandatory prepayment to the Holder
equal to its Pro Rata Share of forty percent (40%) of the Maker’s Free Cash Flow
in and for the preceding calendar month; 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    provided,
however, that commencing with the payment to be made in December, 2008 and
continuing in each month thereafter, such monthly payment be equal to the
Holder’s Pro Rata Share of the greater of (i) forty percent (40%) of the Maker’s
Free Cash Flow in the preceding calendar month, and (ii)
$400,000.  Each such payment shall be accompanied by financial
calculations of such prior month’s Free Cash Flow certified as being complete
and correct by the Maker’s president or chief financial officer, in such detail
and with such supporting financial documents as the Collateral Agent (as defined
below) may require.  Each such mandatory prepayment shall be applied
first to any interest, fee or expense obligation hereunder which is then due and
unpaid and then on account of the principal balance hereof.  Prepayments applied to principal shall be made against
the principal balance of this Note and of all other outstanding Notes issued
under the Purchase Agreement on a pro-rata basis.  For the
purposes hereof, “Free Cash Flow” shall mean the Maker’s gross revenue from all
sources less direct operating costs in the period for which such calculation is
made (all in accordance with GAAP).

     

    Section
1.4    Security
Documents.  The obligations of the Maker hereunder are secured
by a continuing security interest in substantially all of the assets of the
Maker pursuant to the terms of a Security Agreement bearing even date herewith
by and between the Maker and the Collateral Agent, a Deed or Deeds of Trust, and
other collateral documents.  For the purposes hereof, the term
“Collateral Agent” shall have the meaning given thereto in the Security
Agreement.

     

    Section
1.5    Payment on Non-Business
Days.  Whenever any payment to be made shall be due on a
Saturday, Sunday or a public holiday under the laws of the State of New York,
such payment shall be due on the next succeeding Business Day and such next
succeeding day shall be included in the calculation of the amount of accrued
interest payable on such date.

     

    Section
1.6    Transfer.  This
Note may be transferred or sold, and may also be pledged, hypothecated or
otherwise granted as security, by the Holder; provided, however, that any
transfer or sale of this Note must be in compliance with any applicable
securities laws.

     

    Section
1.7    Replacement.  Upon
receipt of a duly executed, notarized and unsecured written statement from the
Holder with respect to the loss, theft or destruction of this Note (or any
replacement hereof) and a standard indemnity, or, in the case of a mutilation of
this Note, upon surrender and cancellation of such Note, the Maker shall issue a
new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or
mutilated Note.

     

    Section
1.8    Use of
Proceeds.  The Maker shall use the proceeds of this Note as set
forth in the Purchase Agreement.

     

    ARTICLE
II

     

    EVENTS OF DEFAULT;
REMEDIES

     

    Section
2.1    Events of
Default.  The occurrence of any of the following events shall
be an “Event of
Default” under this Note:

     

    (a) any
default in respect of any payment of the principal amount, interest or any other
monetary obligation under this Note, as and when the same shall be due and
payable (whether on the Maturity Date or by acceleration or otherwise) or within
three (3) days thereafter; or

     

    
      
        
        

      

      
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    (b) the Maker
shall fail to observe or perform any other condition, covenant or agreement
contained in this Note, which failure is not cured within five (5) Business Days
after the Maker’s receipt of notice of such failure; or

     

    (c) the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed on at least one of the OTC Bulletin
Board, the American Stock Exchange, the Nasdaq Capital Markets, the Nasdaq
Global Market, the Nasdaq Global Select Market or The New York Stock Exchange,
Inc. for a period of five (5) consecutive Trading Days, such a suspension to
only constitute an Event of Default if the Holder provides the Maker written
notification that it deems such suspension to be an Event of Default;
or

     

    (d) the Maker
shall default in the performance or observance of (i) any undertaking, covenant,
condition or agreement contained in the Purchase Agreement or any other
Transaction Document and such default is not fully cured within five (5)
Business Days after the Maker’s receipt of notice of such
default;  or

     

    (e) any
representation or warranty made by the Maker herein or in the Purchase Agreement
or any other Transaction Document shall prove to have been false or incorrect or
breached in a material respect on the date as of which made; or

     

    (f) any
failure by Maker to cure within five (5) Business Days after the Maker’s receipt
of notice of (A) a default in any payment of any amount or amounts of principal
of or interest on any Indebtedness of the Maker (other than the Indebtedness
hereunder) the aggregate principal amount of which Indebtedness is in excess of
$50,000 or (B) a
default in the observance or performance of any other agreement or condition
relating to any Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders or beneficiary or beneficiaries of
such Indebtedness to cause with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity; or

     

    (g) the Maker
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property or assets, (ii) make a general assignment
for the benefit of its creditors, (iii) commence a voluntary case under the
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition
seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors’
rights generally, (v) acquiesce in writing to any petition filed against it in
an involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
(vi) issue a notice of bankruptcy or winding down of its operations or issue a
press release regarding same, or (vii) take any action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing;
or

     

    
      
        
        

      

      
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    (h) a
proceeding or case shall be commenced in respect of the Maker, without its
application or consent, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, moratorium, dissolution, winding up, or composition
or readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of its
assets in connection with the liquidation or dissolution of the Maker or (iii)
similar relief in respect of it under any law providing for the relief of
debtors, and such proceeding or case described in clause (i), (ii) or (iii)
shall continue undismissed, or unstayed and in effect, for a period of thirty
(30) days or any order for relief shall be entered in an involuntary case under
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic) against the Maker or
action under the laws of any jurisdiction (foreign or domestic) analogous to any
of the foregoing shall be taken with respect to the Maker and shall continue
undismissed, or unstayed and in effect for a period of thirty (30) days;
or

     

    (i) any
default or event of default, or event that, with the passage of time or giving
of notice or both would constitute a default or event of default, shall have
occurred under any mining lease or mining rights or claims agreement to which
Maker is now or at any time hereafter a party or any such agreement is
terminated by any of the parties thereto; or

     

    (j) a
judgment or judgments in the aggregate amount exceeding $25,000 is/are entered
against the Maker and not dismissed or discharged within twenty (20) days
following the entry thereof; or

     

    (k) Maker
shall cease to actively conduct its business operations for a period of five (5)
consecutive Business Days; or

     

    (l) any
material portion of the properties or assets of the Maker is seized by any
governmental authority; or

     

    (m) the Maker
is indicted for the commission of any criminal activity; or

     

    (n) closing
of a purchase, tender or exchange offer made to the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock in which more than fifty
percent (50%) of the outstanding shares of Common Stock were tendered and
accepted.

     

    Section
2.2    Remedies Upon An Event of
Default.  If an Event of Default shall have occurred and shall
be continuing, the Collateral Agent may at any time at its option (a) declare
the entire unpaid principal balance of this Note, together with all interest
accrued hereon, plus fees and expenses, due and payable, and thereupon, the same
shall be accelerated and so due and payable, without presentment, demand,
protest, or notice, all of which are hereby expressly unconditionally and
irrevocably waived by the Maker; provided, however, that upon the occurrence of
an Event of Default described in Sections 2.1 (g) or (h) above, the outstanding
principal balance and accrued interest hereunder, plus fees and expenses, shall
be immediately and automatically due and payable, and/or (b) exercise or
otherwise enforce any one or more of the Holder’s rights, powers, privileges,
remedies and interests as well as its own rights, powers and remedies under this
Note, the Purchase Agreement, the Security Agreement or other Transaction
Document or applicable law.  No course of delay on the part of the
Collateral Agent or the Holder shall operate as a waiver thereof or otherwise
prejudice the right of the Collateral Agent or the
Holder.  

     

    
      
        
        

      

      
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    No remedy
conferred hereby shall be exclusive of any other remedy referred to herein or
now or hereafter available at law, in equity, by statute or
otherwise.  Upon and after an Event of Default, this Note shall bear
interest at the default rate set forth in Section 1.2 hereof.

     

    ARTICLE
III

     

    MISCELLANEOUS

     

    Section
3.1    Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated in the
Purchase Agreement (if delivered on a Business Day during normal business hours
where such notice is to be received), or the first Business Day following such
delivery (if delivered other than on a Business Day during normal business hours
where such notice is to be received) or (b) on the second Business Day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.

     

    Section
3.2    Governing
Law.  This Note shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction.  This Note
shall not be interpreted or construed with any presumption against the party
causing this Note to be drafted.

     

    Section
3.3    Headings.  Article
and section headings in this Note are included herein for purposes of
convenience of reference only and shall not constitute a part of this Note for
any other purpose.

     

    Section
3.4    Remedies, Characterizations,
Other Obligations, Breaches and Injunctive Relief.  The
remedies provided in this Note shall be cumulative and in addition to all other
remedies available under this Note, at law or in equity (including, without
limitation, a decree of specific performance and/or other injunctive relief), no
remedy contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit a holder’s
right to pursue actual damages for any failure by the Maker to comply with the
terms of this Note.  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the holder thereof and shall not, except as
expressly provided herein, be subject to any other obligation of the Maker (or
the performance thereof).  The Maker acknowledges that a breach by it
of its obligations hereunder will cause irreparable and material harm to the
Holder and that the remedy at law for any such breach may be inadequate.
Therefore the Maker agrees that, in the event of any such breach or threatened
breach, the Collateral Agent (on behalf of the Holder) shall be entitled, in
addition to all other available rights and remedies, at law or in equity, to
seek and obtain such equitable relief, including but not limited to an
injunction restraining any such breach or threatened breach, without the
necessity of showing economic loss and without any bond or other security being
required.

     

    
      
        
        

      

      
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    Section
3.5    Enforcement
Expenses.  The Maker agrees to pay all costs and expenses
incurred from time to time by the Holder with respect to any modification,
consent or waiver of the provisions of this Note or the Transaction Documents
and any enforcement of this Note and the Transaction Documents, including,
without limitation, reasonable attorneys’ fees and expenses.

     

    Section
3.6    Amendments.  This
Note may not be modified or amended in any manner except in writing executed by
the Maker and the Holder.

     

    Section
3.7    Compliance with Securities
Laws.  The Holder of this Note acknowledges that this Note is
being acquired solely for the Holder’s own account and not as a nominee for any
other party, and for investment, and that the Holder shall not offer, sell or
otherwise dispose of this Note except in accordance with applicable
law.

     

    Section
3.8    Consent to
Jurisdiction.  Each of the Maker and the Holder (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court sitting in the Southern District of New York and the courts of the State
of New York located in New York county for the purposes of any suit, action or
proceeding arising out of or relating to this Note and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper.  Each of the Maker and the
Holder consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to
it under the Purchase Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing in
this Section 3.8 shall affect or limit any right to serve process in any other
manner permitted by law.  Each of the Maker and the Holder hereby
agree that the prevailing party in any suit, action or proceeding arising out of
or relating to this Note shall be entitled to reimbursement for reasonable legal
fees from the non-prevailing party.

     

    Section
3.9    Binding
Effect.  This Note shall be binding upon, inure to the benefit
of and be enforceable by the Maker, the Holder and their respective successors
and permitted assigns.  The Maker shall not delegate or transfer this
Note or any obligations or undertakings contained in this Note.

     

    Section
3.10   Failure or Indulgence Not
Waiver.  No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.

     

    Section
3.11   Maker Waivers; Dispute
Resolution.

     

    (a) Except as
otherwise specifically provided herein, the Maker and all others that may become
liable for all or any part of the obligations evidenced by this Note, hereby
waive presentment, demand, notice of nonpayment, protest and all other demands’
and notices in connection with the delivery, acceptance, performance and
enforcement of this Note, and do hereby consent to any number of renewals of
extensions of the time or payment hereof and agree that any such renewals or
extensions may be made without notice to any such persons and without affecting
their liability herein and do further consent to the release of any person
liable hereon, all without affecting the liability of the other persons, firms
or Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY
JURY.

     

    
      
        
        

      

      
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    (b) No delay
or omission on the part of the Collateral Agent or the Holder in exercising its
rights under this Note, or course of conduct relating hereto, shall operate as a
waiver of such rights or any other right of the Collateral Agent or the Holder,
nor shall any waiver by the Collateral Agent or the Holder of any such right or
rights on any one occasion be deemed a waiver of the same right or rights on any
future occasion.

     

    (c) THE MAKER
ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL
TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS
RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE
HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

     

    Section
3.12   Definitions.  Terms
used herein and not defined shall have the meanings set forth in the Purchase
Agreement.  For the purposes hereof, the following terms shall have
the following meanings:

     

    “Business Day”
(whether or not capitalized) shall mean any day banking transactions can be
conducted in New York City, NY, USA and does not include any day which is a
federal or state holiday in such location.

     

    “Person” means an
individual or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.

     

    “Trading Day” means
(a) a day on which the Common Stock is traded on the OTC Bulletin Board or a
registered national securities exchange, or (b) if the Common Stock is not
traded on the OTC Bulletin Board or a registered national securities exchange, a
day on which the Common Stock is quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (a) or (b)
hereof, then Trading Day shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

     

    “Transaction
Documents” means this Note, the Purchase Agreement, the Security
Agreement, any Deed of Trust and all other security documents or related
agreements now or hereafter entered into in connection with and/or as security
for this Note and all amendments and supplements thereto and replacements
thereof and any other Transaction Document (as that term is defined in the
Purchase Agreement).

     

    [Signature appears on following
page]

    

    
 

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the Maker
has caused this Note to be duly executed by its duly authorized officer as of
the date first above indicated.

     

    

    
      
        
          	 	FIRSTGOLD
CORP.	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ STEVEN
      AKERFELDT	 
	 	 	Name: Steven
      Akerfeldt	 
	 	 	Title:
      CEO	 
	 	 	 	 

        

    

    

    

    

    

    

    

     

    
 

     

    [Signature
Page to Senior Secured Promissory Note]

    

    

    
-8-ASSET PURCHASE AGREEMENT

                                 by and between

                GENERAL MICROWAVE ISRAEL ACQUISITION (2008) LTD.

                                       and

                               EYAL MICROWAVE LTD.

                                       and

                                  EYAL MAG LTD.

                           DATED AS OF: AUGUST 1, 2008

<PAGE>
                            ASSET PURCHASE AGREEMENT

This ASSET PURCHASE  AGREEMENT (the "Agreement") is entered into as of August 1,
2008, by and between GENERAL MICROWAVE ISRAEL ACQUISITION (2008) LTD. ("Buyer"),
a company formed under the laws of Israel with private company number 514167543,
and EYAL MICROWAVE LTD.  ("Seller  Parent"),  a company formed under the laws of
Israel with private company number 512013194, and EYAL MAG LTD. a company formed
under the laws of Israel with  private  company  number  512435959  and a wholly
owned  subsidiary of Seller Parent  ("Seller Sub";  Seller Parent and Seller Sub
shall be referenced herein, jointly and severally, as "Seller").

                                     RECITAL

     The parties  hereto desire that Seller sell,  transfer and assign to Buyer,
and that Buyer  purchase from Seller,  all of the assets and business of Seller,
excluding  only the  Retained  Assets (as  defined  below),  and assume  certain
liabilities,  all on the terms and subject to the  conditions  set forth in this
Agreement.

     In consideration of the respective representations,  warranties,  covenants
and  agreements  contained  herein,  and subject to the terms and conditions set
forth  herein,  the parties  hereto,  intending  to be legally  bound,  agree as
follows:

                                   ARTICLE I
                                   DEFINITIONS

     SECTION 1.01 Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:

     "Affiliate"  of a specified  person  (natural or juridical)  means a person
that directly,  or indirectly through one or more intermediaries,  controls,  is
controlled by, or is under common Control with, the person specified.  "Control"
in this  context  means (i)  ownership of more than fifty  percent  (50%) of the
shares  entitled  to  vote  for  the  election  of  directors  in the  case of a
corporation,  and more than fifty  percent (50%) of the voting power in the case
of a business entity other than a corporation, or (ii) the possession,  directly
or indirectly,  of the power to affirmatively direct, or affirmatively cause the
direction of, the management and policies of a specified person, whether through
the ownership of voting securities, by contract or otherwise.

     "Assets" means all the assets,  properties,  rights, interests,  claims and
business  as of the  Closing of Seller of every  kind,  nature and  description,
wherever located,  whether now owned or hereafter acquired,  whether tangible or
intangible,  real, personal or mixed, absolute or contingent,  known or unknown,
including, but not limited to:

     (i) all  business,  financial,  legal,  regulatory,  tax and  other  books,
records  (computer or  otherwise),  files,  lists and data  (including  complete
customer and supplier lists, files related to Business  Intellectual  Property),
reports,  plans,  drawings and operating  records,  customer service  histories,
warehouse and other Inventories;

     (ii) all rights under Contracts  including without limitation all rights to
occupancy under real property leases;
<PAGE>
     (iii)  all  manufacturing-related   assets,  benches,  molding,  machinery,
equipment,  fixtures,  office  furniture,  tools,  automobiles,  other vehicles,
computers,  printers,  copiers,  telecopy  machines and other tangible  property
held, owned or leased;

     (iv) all Inventories, spare parts, service tools, instruments and supplies;

     (v) all causes of action,  judgments,  settlements,  claims,  indemnity, or
other  rights,  including  all rights to all  claims or other  causes of action,
whether known or unknown,  accrued or to accrue for past or present infringement
or unauthorized use of Intellectual Property or otherwise with respect to monies
or rights accruing to Seller,  except for any causes of action,  claims or other
rights pertaining to the Retained Liabilities;

     (vi) all Intellectual Property, all Intellectual Property licenses (granted
to or by Seller or its Affiliates)  required to make,  have made,  use,  modify,
sell  or  offer  to sell  any  products  currently  commercialized  by or  being
developed by Seller  including,  but not limited to, the  Intellectual  Property
listed or referenced in Section 6.16 herein;

     (vii) all other intangible assets, including goodwill;

     (viii)   all   Authorizations,    registrations,    licenses,    approvals,
certifications,  permits and other similar  requirements used in connection with
the Business;

     (ix)  all  available  product  brochures   primarily  related  to  products
currently commercialized by Seller;

     (x) any  security  interests,  Liens or rights  to  repossess  products  or
equipment sold by Seller; and

     (xi) all accounts receivable and notes receivable;

     (xii) all cash and cash equivalent assets of Seller in Seller's banks or on
hand (subject to Section 2.02(d)); and

     (xiii)  the right to use the name  "Eyal" in  connection  with the  Buyer's
business.

     "Business" means all of the business and operations of Seller.

     "Contract" means any contract,  note, evidence of indebtedness  purchase or
sale order, lease, license,  instrument,  commitment or other agreement to which
Seller is a party or an  assignee or other  beneficiary  thereof or by which the
Seller is bound.

     "Current  Employees" means all persons who immediately prior to the Closing
are  employees of Seller,  including  any such  employee who is on short-term or
long-term  disability or other  authorized leave of absence and is so identified
in Part 3.18 of the Disclosure Schedule.

     "Employee Plans" means any health care plan or arrangement;  life insurance
or other death  benefit  plan or  arrangement;  deferred  compensation  or other
pension  or  retirement  plan or  arrangement;  stock  option,  bonus  or  other
incentive plan or arrangement;  severance, change of control or early retirement
plan or  arrangement;  or other fringe or employee  benefit plan or arrangement;
managers'  insurance;  education fund [keren  hishtalmut];  or any employment or
consulting contract or executive  compensation  agreement;  whether the same are
written or  otherwise,  formal or  informal,  voluntary or required by law or by
Seller's policies or practices, for the benefit of or relating to any present or
former employees, leased employees, consultants, agents, directors, and/or their

                                       2
<PAGE>
dependents,  of Seller,  including,  without  limitation,  any  pension  plan or
similar plan (whether or not any of the foregoing is funded) (i) to which Seller
is a party or by  which  Seller  is  bound,  (ii)  that  Seller  has at any time
established  or  maintained  for the  benefit of or  relating  to any present or
former employees,  consultants,  agents, directors,  and/or their dependents, of
Seller,  or (iii)  with  respect  to which  Seller  has  made  any  payments  or
contributions in any of the last seven (7) years, or otherwise has any liability
(including any such plan or other arrangement formerly maintained by Seller).

     "Environmental  Laws" means and includes any one or more of the  following:
(a) any municipal,  local or other statute,  law,  ordinance or regulation  that
relates to or deals with Hazardous Substances,  human health or the environment,
all as they may be amended from time to time; and all regulations promulgated by
a regulatory body pursuant to any of the foregoing statutes,  laws, regulations,
or  ordinances;  and  (b)  judgments,  orders,  decrees,  injunctions,  permits,
licenses or agreements,  to the extent that either they relate to safety,  human
health,  the  environment  or  emissions,  discharges,  or releases of Hazardous
Substances into the environment, or otherwise relate to Hazardous Substances, or
wastes or the investigation, clean-up, or other remediation thereof.

     "Hazardous  Substance"  means any substance  that is dangerous,  toxic,  or
hazardous, or that is a pollutant, contaminant,  chemical, material or substance
defined  as  hazardous  or  as a  pollutant  or  contaminant  in,  or  the  use,
transportation,  storage,  release or  disposal  of which is  regulated  by, any
Environmental Laws.

     "Intellectual  Property"  means any or all of the  following and all rights
in,  arising out of, or associated  therewith:  (a) Israeli,  international  and
other  patents and  applications  therefore  and all  divisions,  continuations,
continuations-in-part,    renewals,   extensions,    revisions,   reissues   and
re-examinations relative thereto, and all patents,  applications,  documents and
filings  claiming  priority to or serving as a basis for priority  thereof;  (b)
copyrights and all works of authorship including all translations,  adaptations,
combinations,  compilations and derivations of each of the foregoing, whether or
not registered;  (c) registered and unregistered trademarks,  trade names, brand
names,  service marks,  service names,  trade dress,  logos and corporate  names
including all translations,  adaptations,  combinations and derivations thereof,
together with all common law rights and all goodwill associated with each of the
foregoing; (d) technology, know-how, methods, processes, systems, trade secrets,
inventions (whether or not patentable, copyrightable or susceptible to any other
form of legal  protection  and whether or not reduced to practice),  proprietary
data,  formulae,  research and development  data, and  confidential  information
(including  conceptions,  ideas,  innovations,  manufacturing,  development  and
production techniques, drawings,  specifications,  designs, proposals, financial
and accounting data,  business and marketing plans,  customer and supplier lists
and related information and documentation), in each case irrespective of whether
in human or machine readable form; (e) computer software  (including both source
and object code) and all related program  listings and data,  systems,  user and
other  documentation;  (f) mask works; (g) industrial designs; (h) databases and
data  collections  and all rights  therein;  (i) Internet  addresses,  sites and
domain  names and numbers;  (j) all  applications,  registrations,  renewals and
extensions for any and each of the foregoing  throughout the world;  and (k) any
similar or equivalent rights to any of the foregoing  anywhere in the world, and
all other forms of right by which one may effectively exclude another from using
or otherwise enjoying any and each of the foregoing.

     "Interim Period" means the period  commencing on July 1, 2008 and ending on
the Closing Date.

     "Inventories"   means  finished  goods,   raw  materials  and  ingredients,
work-in-process,   consignment  goods,  wares,  merchandise,  wrapping,  packing
materials and similar items.

                                       3
<PAGE>
     "Key Employees" means the employees listed on Schedule 7.09.

     "Kibbutz"  means,   jointly  and  severally:   Kibbutz  Eyal  ,  registered
cooperative  society  number  57-0005074,   and  Haklaei  Hasharon  Agricultural
Cooperative  Society Ltd., number 57-0003560,  and Nof Ayal, limited partnership
number 55-0008288.

     "knowledge"  of Seller  means  actual  knowledge of any of the officers and
directors  of the Seller and the  knowledge  that any of such  persons,  in such
positions, would reasonably be expected to have assuming diligent inquiry.

     "Liens" means liens,  mortgages,  charges  (including fixed and/or floating
charges), security interests, pledges or encumbrances.

     "Material  Adverse  Effect"  means  any  state of  facts,  change,  effect,
condition,  development,  event  or  occurrence  that,  individually  or in  the
aggregate with other related  effects,  is or could reasonably be expected to be
materially adverse to the business, results of operation or condition (financial
or otherwise) of the Purchased Assets or the Business, considered as a whole, or
is or could  reasonably be expected to be  materially  adverse to the ability of
Buyer to conduct the Business following the Closing as the Business is presently
conducted or presently contemplated to be conducted by Seller.

     "OCS"  means  Office of the Chief  Scientist  of the  Israeli  Ministry  of
Industry, Trade and Labor.

     "OCS Grants" means the grants  received by the Seller or its  Affiliates in
connection with the R&D Law and/or the OCS.

     "Person" means any individual and any legal entity.

     "Product  Liability" means any liability,  claim or expense,  including but
not limited to attorneys' fees and medical expenses, arising in whole or in part
out of a breach of any express or implied product warranty,  strict liability in
tort, negligent manufacture of product, negligent provision of services, product
recall, or any other allegation of liability  arising from the design,  testing,
manufacture,  packaging,  labeling (including  instructions for use), marketing,
distribution or sale of products.

     "R&D Law" means the Israeli  Encouragement  of Industrial  and  Development
Law, 5744-1984, all related regulations,  orders and rules, as well as published
OCS policy.

     "Registered  Intellectual  Property"  means any or all of the following and
all rights in,  arising out of, or  associated  therewith:  (a) Israeli,  United
States,  international  and other  patents and  applications  therefore  and all
divisions,   continuations,    continuations-in-part,    renewals,   extensions,
revisions,  reissues  and  re-examinations  relative  thereto,  and all patents,
applications,  documents and filings claiming  priority to or serving as a basis
for priority  thereof;  (b)  registered  trademarks,  trade names,  brand names,
service marks,  service names,  trade dress, logos and corporate names including
all  translations,   adaptations,  combinations  and  derivations  thereof  (but
excluding  any common law rights and all  goodwill  associated  with each of the
foregoing); and (c) Internet addresses, sites and domain names.

     "Securities"  means  shares,  stock,  options,   phantom  stock,  warrants,
convertible securities or other rights to acquire stock of Seller.

     "Taxes" (and "Tax") means all taxes, additions to tax, penalties, interest,
linkage  differentials  [hefreshei  hatzmada],   fines,  duties,   withholdings,
assessments,  and charges  assessed or imposed by any  governmental or municipal
authority, including but not limited to all Israeli and foreign income, profits,
gross  receipts,  import,  real  and  personal  property,  value  added,  stamp,

                                       4
<PAGE>
transfer,  withholding,  employment,  excise, custom, duty, and any other taxes,
obligations and assessments of any kind whatsoever; the foregoing shall include,
but not be limited to, any liability arising as a result of being (or ceasing to
be) a member of any affiliated, consolidated, combined, or unitary group as well
as any liability under any Tax allocation, Tax sharing, Tax indemnity or similar
agreement.

     "Transfer  and  Sales  Taxes"  means  all  use  taxes,  stamp  duty  taxes,
conveyance taxes,  transfer taxes, filing fees, recording fees,  prepayment fees
or penalties,  reporting fees and other similar duties,  taxes and fees, if any,
imposed upon,  or resulting  from,  the transfer of the Purchased  Assets or the
Assumed Liabilities hereunder and the filing of any instruments relating to such
transfer, including any sales tax, but not including VAT.

     SECTION 1.02 Additional Definitions. The following table sets forth certain
other  defined  terms and the Section of the  Agreement  in which the meaning of
each such term appears:
<TABLE>
<CAPTION>
Term                                                   Definition in section:
<S>                                                          <C>
Accounts Receivable Deadline                                 2.04(d)(i)
Agreement                                                    Preamble
Approved Enterprise Status                                   5.08
Assumed Liabilities                                          2.03(a)
Audited FS 2007                                              7.13

Authorizations                                               3.09
Basic Consideration                                          2.04(a)(i)
Business Intellectual Property                               3.16(g)
Buyer                                                        Preamble
Change in Control Payments                                   5.09
Claim                                                        9.04
Closing                                                      2.06(a)
Closing Date                                                 2.06(a)
Closing Date Assumed Liabilities                             2.04(c)(i)
Closing Date Balance Sheet                                   2.04(c)(i)
Closing Date Net Assets                                      2.04(c)(i)
Closing Date Net Asset Value                                 2.04(c)(i)
Defaulted Accounts Receivable                                2.04(d)(i)
Delayed Schedule                                             7.12
Direct Claim                                                 9.03(b)
Disclosure Schedule                                          Article III
Dollars                                                      1.03
Employment Offers                                            6.01
Loan Repayment Amount                                        2.04(b)(iii)
Government Grants                                            3.23(a)
Indemnifiable Losses                                         9.01
Indemnitee(s)                                                9.01
Interest                                                     2.04(a)(ii)
Interim Balance Sheet                                        3.05
Interim Financial Statements                                 3.05
Interim Income Statement                                     3.05
Interim Period Cash Flow Statement                           2.04(c)
Interim Period Reduction                                     2.04(c)

                                       5
<PAGE>
Kibbutz Personnel                                            6.04(b)
Kibbutz Services Agreement                                   6.04
Manufacturing Documentation                                  3.14
New Buyer's Employees                                        6.05
NIS                                                          1.03
Non-competition Period                                       5.05
Purchase Price                                               2.04(a)
Purchased Assets                                             2.01
Representative Rate                                          2.04(b)(ii)
Retained Assets                                              2.02
Retained Liabilities                                         2.03(b)
Seller                                                       Preamble
Seller Audited Financial Statements                          3.05
Seller Databases                                             3.16(l)
Seller Parent                                                Preamble
Seller Product                                               3.16(a)
Seller Software                                              3.16(l)
Seller Sub                                                   Preamble
Seller's Financial Statements                                3.05
Standard Form Agreement                                      3.16(f)
Surveyed Interim Financial Statements                        7.13
Terminated Employees                                         6.03
Third Party Claim                                            9.03(a)
Transaction Expenses                                         5.09
Transaction Bonus Payments                                   5.09
VAT                                                          2.05(b)
</TABLE>
     SECTION  1.03  Other  Definitional  Provisions;  Interpretation.  The words
"hereof,"  "herein," and "hereunder"  and words of similar import,  when used in
this  Agreement,  shall  refer  to  this  Agreement  as a  whole  and not to any
particular provisions of this Agreement. The terms defined in the singular shall
have a comparable meaning when used in the plural, and vice versa. References to
an "Exhibit" or to a "Schedule" are, unless otherwise  specified,  to one of the
Exhibits  or  Schedules  attached  to  or  referenced  in  this  Agreement,  and
references to an "Article" or a "Section" are, unless  otherwise  specified,  to
one of the Articles or Sections of this  Agreement.  The term "person"  includes
any  individual,  partnership,  joint venture,  corporation,  limited  liability
company, trust,  unincorporated  organization or government or any department or
agency thereof and will also include its permitted  successors and assigns.  The
term  "Dollars"  or "$" shall  refer to the  currency  of the  United  States of
America,  and the term "NIS" shall refer to the currency of the State of Israel.
All references to time shall refer to Tel Aviv, Israel time.  Whenever the words
"include",  "includes" or "including" are used in this Agreement,  they shall be
deemed to be followed by the words  "without  limitation".  The term "or" is not
exclusive.  The word  "extent" in the phrase "to the extent" means the degree to
which a subject or other thing  extends,  and such phrase  shall not mean simply
"if".  Any  agreement  or  instrument  defined or  referred  to herein or in any
agreement  or  instrument  that is referred to herein  means such  agreement  or
instrument  as  from  time to  time  amended,  modified  or  supplemented.  This
Agreement  shall be construed  without  regard to any  presumption or other rule
requiring  construction  hereof  against the party causing this  Agreement to be

                                       6
<PAGE>
drafted.  Other terms may be defined elsewhere in the text of this Agreement and
shall have the meaning indicated throughout this Agreement

                                   ARTICLE II
                           PURCHASE AND SALE OF ASSETS

     SECTION 2.01 Purchased Assets. Upon the terms and subject to the conditions
set forth in this Agreement,  effective as of the Closing,  Seller hereby sells,
transfers,  assigns and conveys to Buyer, and Buyer hereby purchases, all of the
Assets, other than the Retained Assets (the "Purchased Assets"),  free and clear
of all Liens.  For avoidance of doubt, any cash included in the Purchased Assets
shall be  deposited  by Seller  into a bank  account  specified  by Buyer on the
Closing.

     SECTION 2.02 Retained  Assets.  Seller hereby retains all of its respective
right,  title and  interest in and to, and there  shall be  excluded  from sale,
assignment or transfer to Buyer hereunder,  the following assets of Seller as of
the Closing (the "Retained Assets"):

     (a) this Agreement and the amounts to be received by Seller hereunder;

     (b) all Contracts  not  specifically  assumed by Buyer  pursuant to Section
2.03(a),  provided  however,  that in the event a Contract was not  disclosed to
Buyer prior to the date hereof,  and Buyer concludes at its sole discretion that
such  Contract  is  necessary  for the conduct of the  Business,  then Buyer may
notify Seller of its intention to assume such Contract and Seller shall take any
action necessary to facilitate such assumption;

     (c) the originals of Seller's minute books,  share ledgers,  share transfer
records and tax  returns,  which,  however,  shall be  available  for review and
copying by Buyer immediately upon request;

     (d)  cash  in  the  Sellers  bank  accounts  as of  June  30,  2008  in the
approximate  amount of NIS  3,771,000,  as  expressly  specified  in the Interim
Balance  Sheet;  less (a) the amount of NIS 1,400,000  which was received by the
Seller prior to June 30, 2008 as advance  payments  from  customers,  and (b) an
amount equal to the Interim  Period  Reduction,  and  provided  that all cash or
other  assets  accruing  or paid to Seller  during the Interim  Period  shall be
included in the Purchased Assets;

     (e) shares held by Seller Parent in Eyal Mag Ltd. and Eyal Gal Ltd.;

     (f) any assets of Eyal Gal Ltd.; and

     (g) (for avoidance of doubt) carry-forward losses of Seller.

     SECTION 2.03 Assumed Liabilities; Retained Liabilities.

     (a) Assumed  Liabilities.  Upon the terms and subject to the conditions set
forth in this  Agreement,  effective as of the Closing,  Seller hereby  assigns,
transfers,  and conveys to Buyer, and Buyer hereby assumes and agrees to pay and
perform   according  to  their  respective  terms  only  those  liabilities  and
obligations  of Seller  which are listed on Schedule  2.03(a) of this  Agreement
(collectively, the "Assumed Liabilities").

                                       7
<PAGE>
     (b) Retained Liabilities. The parties agree that Buyer is not, nor shall be
considered,  the  successor  to Seller,  and that Buyer does not hereby agree to
assume or become liable to pay, perform or discharge any obligation or liability
whatsoever  of Seller  or  relating  to the  Assets  or any  former  or  present
employees  of  Seller,  including  those  that may be hired by Buyer,  except as
expressly provided for in Section 2.03(a).  Seller shall retain any liability or
obligation of, or responsibility for any claim against,  Seller or the Business,
direct or indirect,  known or unknown,  absolute or contingent,  not included in
the Assumed  Liabilities  (the  "Retained  Liabilities"),  and,  notwithstanding
anything  to the  contrary  in the  Agreement,  none of the  following  shall be
Assumed  Liabilities  (and each shall be included in the definition of "Retained
Liabilities"):

     (i) the obligations of Seller under this Agreement;

     (ii) any obligation,  liability or claim that  constitutes or arises from a
breach  by  Seller  of  any  representation,  warranty,  covenant  or  agreement
contained in this Agreement;

     (iii) any obligation,  liability or claim that may arise from any lawsuits,
actions or proceedings against Seller;

     (iv) any  obligation,  liability or claim that may arise from any employee,
or consultant (or any former employee or consultant), for any reason or actions,
including,  (i) any claim or demand of a current or former employee  relating to
or arising as a result of employment, termination by Seller of the employment of
such employee or consultants (or former employee or consultant)  including,  for
this purpose,  with respect to any Person  claiming  entitlements or benefits on
the basis of a claimed  employer-employee  relationship  between Seller and such
Person,  (ii) any  liability  under any  Employee  Plan at any time  maintained,
contributed  to or required to be contributed to by or with respect to Seller or
its Affiliates or under which Seller or its Affiliates may incur  liability,  or
any  contributions,  benefits or  liabilities  therefor,  or any liability  with
respect to Seller's or its Affiliates'  withdrawal or partial withdrawal from or
termination  of any Employee  Plan,  (iii) subject to the  provisions of Section
6.03,  any liability of Seller or its  Affiliates  for severance  and/or accrued
vacation  days  (beyond  the  liability  for  vacation  days and  severance  pay
allocated in the Surveyed  Interim  Financial  Statements)  and/or  mandatory or
customary  payment and/or benefit and/or  entitlement for employees of Seller or
its Affiliates, (iv) any claim of an unfair and/or discriminatory labor practice
based on acts or omissions by Seller; (v) any settlement or similar amounts paid
to a Current Employee or former employee of the Seller.

     (v) Seller's Transaction Expenses;

     (vi) Transaction Bonus Payments and Change in Control Payments);

     (vii) any other liability or obligation of, or claim against, Seller or the
Business, of any kind or nature whatsoever,  whether known or unknown,  fixed or
contingent,  determined or determinable,  due or not yet due, or otherwise, that
is not expressly assumed by Buyer under this Agreement;

     (viii) any  liability of Seller or its  Affiliates  with respect to any Tax
attributable  to the  Purchased  Assets  or the  Business  with  respect  to any
pre-Closing  Tax period,  including any liability for the breach of the terms of
any "approved  enterprise" programs received by the Company under the Law of the
Encouragement  of  Capital   Investments,   1959,  which  may  result  from  the
transactions contemplated by this Agreement;

                                       8
<PAGE>
     (ix) any liability to the extent arising from any injury to or death of any
person or damage to or destruction of any property, whether based on negligence,
strict  liability,  enterprise  liability or any other legal or equitable theory
arising  from  defects  in or use or misuse of  products  sold by Seller or from
services performed by or on behalf of Seller;

     (x) except as expressly provided in this Agreement, any liability of Seller
to the extent resulting from entering into,  performing its obligations pursuant
to or consummating the transactions contemplated by this Agreement;

     (xi) any  liability  of  Seller or its  Affiliates  that  arises  out of or
relates to any Retained Asset;

(xii) (for avoidance of doubt) any liability of Eyal Gal Ltd.; and

     (xiii) any  liability  of Seller for the payment of fees or expenses of any
broker or finder in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby.

     SECTION 2.04 Purchase Price; Payment.

     (a) Purchase Price. The total  consideration  for the Purchased Assets (the
"Purchase Price") shall be:

     (i) Consideration.  The amount of $30,000,000 (Thirty Million Dollars) less
any  amount  of the  Interim  Period  Reduction  which was not  included  in the
Purchased   Assets  in  accordance   with  Section  2.02(d)  above  (the  "Basic
Consideration");

     (ii)  Interest.  The amount of $2,740 (Two  Thousand  Seven  Hundred  Forty
Dollars)  multiplied by the number of days which shall elapse  between August 1,
2008 and the  Closing  Date (for  example,  if the  Closing  Date shall occur on
August  20,  2008,  then  the  amount  of  $52,060  shall be paid [19 x $2,740 =
$52,060]) (the "Interest");

     (iii)  Assumption  of  Liabilities.   Buyer's  assumption  of  the  Assumed
Liabilities pursuant to Section 2.03(a).

     Schedule  2.04(a)  allocates the Purchase Price among the Purchased  Assets
and Seller's other undertakings hereunder. This allocation has been agreed to by
Seller and Buyer after arm's-length negotiations.

     (b) Payment of Purchase  Price.  The Basic  Consideration  and the Interest
shall be payable as follows:

     (i) Closing Cash  Consideration.  At the Closing,  Buyer shall transfer the
Basic Consideration and the Interest to one or two bank accounts in the Seller's
name and designated by Seller.

     (ii) Currency;  Conversion.  The Basic Consideration and the Interest shall
be  payable  in  either US  dollars  or in New  Israeli  Shekels  calculated  in
accordance  with the  representative  rate of exchange  published by the Bank of
Israel  most  recently  prior  to the  date  and  time of  actual  payment  (the
"Representative  Rate") or partially in US dollars and  partially in New Israeli
Shekels  (per the  Representative  Rate as  aforesaid),  at the  election of the
Buyer.  However,  in the event that the Representative  Rate shall be lower than
$1=NIS 3.40 (i.e., whereby $1 shall be exchangeable into less than 3.40), then:

                                       9
<PAGE>
     (A) any portion of the Cash Payment  paid in US dollars  shall be increased
by the ratio of 3.40 to the Representative  Rate (for example, in the event that
that  $1,000,000 of the Total Cash  Consideration  is paid in US Dollars and the
Representative Rate is $1=3.35, then an additional amount of $14,925.37 shall be
paid [$1,000,000 x (3.40/3.35) = $1,014,925.37]); and

     (B) any  portion of the Cash  Payment  paid in NIS shall be  calculated  in
accordance with the rate of $1=3.40 regardless of the actual Representative Rate
(for example,  in the event that that $1,000,000 of the Total Cash Consideration
is paid in NIS and the  Representative  Rate is  $1=3.35,  then  such US  Dollar
amount shall be converted into NIS 3,400,000 [$1,000,000 x 3.40 = 3,400,000]);

     (c) Cash  Flow  Examination.  At least  three  business  days  prior to the
Closing Date,  Seller shall deliver to Buyer a cash flow  statement with respect
to the Seller Parent and Seller Sub,  relating to the period  commencing on July
1, 2008 and ending on the Closing  Date,  detailing any  individual  expenditure
which exceeds the amount of $5,000 (the "Interim  Period Cash Flow  Statement").
The "Interim Period Reduction" shall mean the total of:

     (i) any  expenditures  (whether or not appearing in the Interim Period Cash
Flow  Statement),  save for the payment of interest on the  Seller's  bank loans
accruing  between July 1, 2008 and July 31, 2008, which (a) were made during the
Interim Period on account of Retained Liabilities,  including without limitation
payment  of  principal   and  interest  on  loans  which   constitute   Retained
Liabilities,  and/or (b) were made to,  for or on account of any other  company,
including without limitation Eyal Gal Ltd., and/or (c) were made in violation of
the  provisions of Sections 5.02 and/or 3.07 below,  and/or (d) were made to (or
on account of obligations to) the previous GM of the Company; and

     (ii) the negative  adjustment  in the net assets  (except for fixed assets,
Inventories,   and  depreciation)   shown  in  the  Surveyed  Interim  Financial
Statements  and the Audited FS 2007,  as such terms are defined in Section  7.09
below,  from the figures  presented in the Interim  Financial  Statement and the
unaudited financial  statements of the Seller for the period ending December 31,
2007 and the  statement  of  earnings  relating  thereto,  attached  as Schedule
3.05(i), provided that such amounts are in excess of $30,000;

     (d) Defaulted Accounts Receivables Adjustment of Purchase Price.

     (i) Schedule  2.04(d) contains a list of the Seller's  accounts  receivable
included in the  Purchased  Assets as of the date  hereof.  "Defaulted  Accounts
Receivable"  shall mean those  accounts  receivable  included  in the  Purchased
Assets which shall not be remitted by the debtor in each case, to Seller if paid
before the Closing Date, or to Buyer if paid  following the Closing Date, by the
expiration  of one hundred  twenty  (120) days  following  the Closing Date (the
"Accounts Receivable Deadline").

     (ii) Within 30 days following the Accounts Receivable  Deadline,  Buyer may
assign to Seller any remaining Defaulted Accounts Receivable,  by written notice
to Seller,  and the Purchase  Price shall then be decreased by the amount of the
Defaulted Accounts Receivable so assigned by Buyer to Seller, provided that such
decrease shall apply only to aggregate  Defaulted Accounts  Receivable in excess
of NIS 1,100,000.  Any such decrease shall be immediately refunded by the Seller
to the Buyer,  and,  without  derogating  from  Seller's  obligation  under this
section,  shall be secured by the Bank  Guarantee,  as defined  below in Section
9.09.

                                       10
<PAGE>
     (iii) In the event  Seller  shall  desire to enforce an assigned  Defaulted
Account  Receivable,  then Seller and Buyer shall discuss the consequences,  and
shall resolve in good faith whether such enforcement shall be permitted,  taking
into  account  Buyer's  commercial  imperatives  and its  necessity  to maintain
positive relationships with its customers.

     SECTION 2.05 Taxes.

     (a) Transfer and Sales  Taxes.  Seller shall  promptly pay all Transfer and
Sales Taxes.

     (b) Israeli Value Added Tax. The Purchase Price is exclusive of Value Added
Tax  ("VAT").  No later than the 15th day of the month (or such other  statutory
VAT payment date)  occurring  after the Closing Date,  VAT shall be paid by wire
transfer  with respect to the Purchase  Price  against the delivery by Seller to
Buyer of a valid VAT invoice for such amount. VAT shall be paid in NIS.

     (c)  Withholding.  Buyer shall be entitled to deduct and withhold  from the
consideration  otherwise  payable  pursuant  to this  Agreement  to Seller  such
amounts as the Buyer is required to deduct and  withhold  under  applicable  Tax
law, with respect to the making of such payment.  To the extent that amounts are
so  withheld  by  Buyer,  such  withheld  amounts  shall be paid by Buyer to the
applicable  Tax  Authority  and,  upon such  payment,  shall be treated  for all
purposes of this Agreement as having been paid to Seller. Buyer will not pay any
such  withheld  amounts to the  applicable  Tax  Authority  earlier than one (1)
business day prior to the date such  amounts are required to be paid.  If, prior
to or at the Closing,  Seller  delivers to Buyer a certificate  from the Israeli
Tax Authority  evidencing an exemption from  withholding of Taxes,  or a reduced
rate of  withholding,  which shall be applicable,  valid and in effect as of the
Closing, Buyer shall honor such withholding tax exemption or reduction.

     SECTION 2.06 Closing.

     (a) The  consummation  of the  purchase  and sale of the  Purchased  Assets
provided for herein (the "Closing")  shall take place at 10:00 a.m. (local time)
on September 15, 2008, subject to the conditions to closing set forth in Article
VII and  Article  VIII having been  satisfied  or waived in writing,  or on such
other date and/or at such other time as the  parties  hereto may agree upon (the
"Closing Date").  The Closing shall take place (i) at the offices of Yigal Arnon
& Co., 1 Azrieli Center, Tel Aviv, Israel or (ii) on the mutual agreement of the
parties,  by delivery via facsimile or email  transmission  (with originals sent
via overnight  courier  service) of the documents to be delivered at the Closing
and wire transfer of the payments to be made in accordance with Section 2.04(b),
or (iii) at such other place or in such other  manner as the parties  hereto may
agree.

     (b) All proceedings  taken and all documents  executed and delivered by the
parties  hereto at the Closing  shall be deemed to have been taken and  executed
simultaneously  and no  proceedings  shall be  deemed  taken  nor any  documents
executed or delivered until all have been taken, executed and delivered.

                                       11
<PAGE>
     SECTION 2.07 Alternative  Arrangements.  Notwithstanding anything contained
herein, this Agreement shall not constitute an agreement to assign any Contract,
permit or any claim or right or any  benefit  arising  thereunder  or  resulting
therefrom if an  attempted  assignment  thereof,  without the consent of a third
party  thereto,  would  constitute  a default  thereof.  If such  consent is not
obtained,  or if an attempted  assignment  thereof would be ineffective or would
affect the rights  thereunder  so that Buyer would not receive all such  rights,
Seller shall, at the expense of Buyer,  use commercially  reasonable  efforts to
effect alternative arrangements in the form of a license, sublease, or operating
agreement  in form and  substance  reasonably  satisfactory  to Buyer and Seller
until such time as such  consent or approval has been  obtained  that results in
Buyer  receiving  substantially  all of the  benefits  under and bearing all the
ordinary  course costs,  liabilities and other  obligations  with respect to any
such  Contract or permit.  Upon  obtaining  the  requisite  third party  consent
thereto,  each such  non-assignable  Contract or permit shall be transferred and
assigned to Buyer.

                                  ARTICLE III
                    REPRESENTATIONS AND WARRANTIES OF SELLER

     Except as set forth on the disclosure schedule (the "Disclosure Schedule"),
Seller  represents  and  warrants  to Buyer as set  forth in this  Article  III.
Notwithstanding  any  other  provision  of this  Agreement  or  such  Disclosure
Schedule,  each exception set forth in the Disclosure Schedule will be deemed to
qualify only each  representation  and warranty set forth in this  Agreement (i)
that  is  specifically  identified  (by  cross-reference  or  otherwise)  in the
Disclosure  Schedule as being qualified by such exception,  or (ii) with respect
to which the relevance of such exception is readily  apparent on the face of the
disclosure of such exception set forth in the Disclosure Schedule.

     SECTION  3.01  Listing  of  Certain  Assets  and Data.  Attached  hereto as
Schedule  3.01(a)  through  Schedule  3.01(g) are true and complete lists of the
matters set forth in the following  subsections of this Section 3.01,  including
in each case all written or oral agreements or understandings and all amendments
and modifications,  if any, to each such Contract,  document or other instrument
referenced or described (including, in the case of oral arrangements,  a written
description of all material terms thereof).

     (a) Real  Property.  Schedule  3.01(a) sets forth a description of all real
property  owned,  leased or  subject  to option by Seller or  otherwise  used by
Seller  in the  conduct  of its  business,  as well  as a list  of all  purchase
agreements,  finance agreements,  leases,  options, title abstracts,  insurance,
licenses,  permits,  and other material documents relating to such real property
that it has in its possession or control.

     (b) Equipment. Schedule 3.01(b) sets forth (a) a list of all material items
of machinery,  equipment vehicles and other similar property and assets owned or
leased by Seller or used in the  conduct  of the  Business,  setting  forth with
respect to all such listed property a summary  description of all Liens relating
thereto  (except  if  registered  as of the  date  hereof  at the  Registrar  of
Companies),  specifically  identifying and describing those items with remaining
total lease or  conditional  sales  payments or other  payments due by Seller in
excess of $20,000,  identifying the parties thereto, the rental or other payment
terms,  expiration date and  cancellation  and renewal terms thereof,  and (b) a
list of the  quantities of  Inventories  possessed by the Company as of June 30,
2008.

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<PAGE>
     (c) Certain Agreements,  etc. Schedule 3.01(c) sets forth a list of each of
the following Contracts,  written or otherwise, to which Seller is a party or by
which it is bound (other than Contracts  furnished pursuant to other subsections
of this Section 3.01):

     (i) any research and development  agreement,  joint development  agreement,
OEM, or other supply  agreement  whereby products or components are developed or
made by or for Seller;

     (ii)  any  joint  venture  or  franchise  agreement,  and any  purchase  or
disposition   agreement  and  related  significant   agreements   involving  the
acquisition or disposition of any products or process, or business by Seller;

     (iii)  any  Contract  for the  purchase  of any  services,  raw  materials,
supplies or equipment or other goods,  including  outstanding  purchase  orders,
involving  remaining  payments estimated at more than $20,000 (provided that all
of such non-listed Contracts with an estimated payment of $20,000 or less do not
in the aggregate represent estimated payments in excess of $50,000);

     (iv) any Contract for the sale of assets,  products or services  that is in
any way not yet  performed and involving  remaining  payments  estimated at more
than $20,000  (provided that all of such non-listed  Contracts with an estimated
payment of $20,000 or less do not in the aggregate  represent estimated payments
in excess of $50,000);

     (v) any dealer, distributor, broker, agent, sales representative or similar
Contract by Seller for the sale of any  products,  identifying  which  Contracts
might create any liability to Buyer or Seller if the right to sell or distribute
new products is not offered by Seller or Buyer pursuant  thereto or which cannot
be terminated upon less than 90 days' notice,  without cause, by Seller or Buyer
without liability to Seller or Buyer;

     (vi) any Contract not made in the ordinary course of business of Seller, or
any other  Contract that has or could  reasonably be expected to have a Material
Adverse Effect;

     (vii) any Contract (A) restricting Seller from engaging,  participating, or
competing with any other Person,  in any line of business,  market or geographic
area, or to make use of any Intellectual  Property;  (B) granting "most favored"
pricing,  exclusive sales,  distribution,  marketing or other exclusive  rights,
rights of first refusal or rights of first  negotiation to any other Person;  or
(C) otherwise  limiting or conditioning the right of Seller to sell,  distribute
or manufacture any products or services related thereto;

     (viii) any Contract of  indemnification  or warranty,  other than (A) under
Seller's  unmodified  forms of standard  customer/distribution  agreements,  the
forms of which have been made available to Buyer,  or (B) warranties  implied by
Law;

     (ix) any  Contract  pursuant  to which  Seller has  acquired  or divested a
business or entity,  or all or substantially  all of the assets of a business or
entity, whether by way of merger, consolidation,  purchase of stock, purchase or
sale of assets, license or otherwise;

     (x) any Contract  between Seller and, or  undertaking  issued by Seller to,
any governmental entity.

     Prior to the  Closing  Date,  Seller  shall  delivered  to  Buyer  true and
complete  copies of all Contracts  identified in Schedule  3.01(c).  Such copies

                                       13
<PAGE>
contain all the terms of the agreements, understandings and arrangements between
the parties thereto with respect to the subject matter thereof.

     (d)  Permits,  Licenses,  Etc.  Schedule  3.01(d)  sets forth a list of all
Authorizations,  permits, licenses, notifications,  registrations,  approvals or
similar permissions.  Prior to the date of this Agreement,  Seller has delivered
to Buyer  true and  complete  copies of all  permits,  licenses,  notifications,
registrations, approvals or other documents identified in Schedule 3.01(d).

     (e) Loans and Credit Agreements, Etc. Schedule 3.01(e) sets forth a list of
all outstanding notes,  bonds,  debentures,  loans or other credit agreements or
arrangements, escrow agreements, security agreements, mortgages, deeds of trust,
guaranties,  pledges, conditional or installment purchase agreements, letters of
credit and any other instruments evidencing indebtedness,  written or otherwise,
to which Seller is a party (as lender,  borrower,  or guarantor) or which affect
or relate to its property or Assets. Prior to the date of this Agreement, Seller
has delivered to Buyer true and complete  copies of all documents  identified in
Schedule 3.01(e).

     (f) Insurance  Policies and Claims.  Schedule  3.01(f) sets forth a list of
all  policies  of  insurance  maintained  by or for the  benefit of Seller  with
respect to Seller and  covering  its  officers,  directors,  employees,  agents,
properties,  buildings,  machinery, equipment, furniture, fixtures or operations
and a  description  of each claim made by or for the benefit of Seller under any
such policy of insurance within the past three years,  describing such claim and
the amount thereof. Prior to the date of this Agreement, Seller has delivered to
Buyer true and  complete  copies of all  policies  of  insurance  identified  in
Schedule 3.01(f),  and true and complete copies of all  documentation  regarding
claims made  thereunder.  Within the past three years,  no insurer has failed to
renew any such policy, and in the opinion of Seller the coverage provided by the
policies of insurance listed in Schedule 3.01(f) conform to customary  practices
in Israel for companies engaged in businesses similar to the that of the Seller.

     (g)  Employee  Plans.  Seller shall  provide to Buyer,  upon  request,  all
necessary  information with respect to Employee Plans and any related  insurance
or other contracts and trust and custodial agreements.

     SECTION  3.02  Organization.  Seller  is a  limited  private  company  duly
organized,  and validly  existing under the laws of the State of Israel.  Seller
has all  necessary  power and  authority  to own its  properties  and assets and
conduct the business presently being conducted by it.

     SECTION 3.03  Subsidiaries.  Except as set forth in Schedule  3.03,  Seller
does  not  have  any  interest,  direct  or  indirect,  in any  other  business,
corporation, joint venture, partnership,  proprietorship or other entity. Except
as set forth in  Schedule  3.03,  none of the  business  of Seller is  conducted
through,  and none of the Purchased Assets is owned by or through, any direct or
indirect subsidiary or Affiliate of Seller.

     SECTION 3.04  Authority.  Seller has full power and authority to enter into
this  Agreement  and to perform its  obligations  hereunder.  The  execution and
delivery by Seller of this Agreement and other agreements contemplated hereby to
which  Seller is a party,  and the  consummation  by Seller of the  transactions
hereby and thereby, shall, by the Closing, have been duly and validly authorized
by Seller's  Board of Directors  and  shareholders,  no other action of Seller's

                                       14
<PAGE>
Board of Directors or  shareholders,  or  corporate  proceedings  on the part of
Seller or its Affiliates,  shall be necessary to authorize this Agreement and no
other action of Seller's Board of Directors or shareholders, or corporate action
on the part of Seller or its  Affiliates,  shall be necessary to consummate  the
transactions  contemplated  hereby.  This Agreement has been duly  authorized by
Seller and duly executed and delivered by Seller, and constitutes a legal, valid
and binding  agreement of Seller  enforceable  against it in accordance with its
terms.  Except as  disclosed  in  Schedule  3.04 or Schedule  3.11,  neither the
execution and delivery of this Agreement nor compliance by Seller with its terms
and provisions  will violate (i) any provision of the articles of association or
other  governing  instruments of Seller,  (ii) any Contract to be transferred to
Buyer or any permit or license of Seller, or (iii) any law, statute, regulation,
or,  to the best of  Seller's  knowledge,  injunction,  order or  decree  of any
government  agency or authority or court to which Seller or any of the Purchased
Assets is subject.

     SECTION 3.05 Financial Statements.  Attached hereto as Schedule 3.05(i) are
true and complete copies of audited  financial  statements of Seller,  including
balance  sheets at December  31, 2005 and December  31, 2006 and  statements  of
earnings  for  the  fiscal   years  then  ended   ("Seller   Audited   Financial
Statements");  the unaudited financial statements of the Seller for December 31,
2007 and the statement of earnings,  and a balance  sheet (the "Interim  Balance
Sheet")  at June 30,  2008 (a copy of  which  is  attached  hereto  as  Schedule
3.05(ii)) and statement of earnings for the six (6) month period then ended (the
"Interim  Income  Statement" and together with the Interim  Balance  Sheet,  the
"Interim Financial Statements") (all of the above financial statements, together
with the Interim Cash Flow Statement  collectively  referred to as the "Seller's
Financial  Statements").  The  Seller  Audited  Financial  Statements  have been
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently applied. All the Seller's Financial Statements are true and correct
in  all  material  respects  and  fairly  and  accurately  present  the  assets,
liabilities  (including all reserves) and financial position of the Seller as of
the dates thereof and the results of operations,  shareholders' equity (deficit)
and changes in cash flows of the Seller for the periods then ended,  except that
the  un-audited  Interim  Financial  Statements  do  not  contain  footnotes  or
comparisons to the financial  results of prior periods and are subject to normal
year-end  adjustments  which  shall  not be  material.  The  Seller's  Financial
Statements are in accordance with the books and records of Seller. The books and
records of the Company are stated in reasonable detail and accurately reflect in
all material  respects all  information  relating to the  Business,  the nature,
acquisition, disposition, maintenance, location and collection of its assets and
properties,  and the nature of all transactions  giving rise to its obligations,
including accounts payable,  and rights,  including accounts  receivable.  There
were no changes in the method of application of the Seller's accounting policies
or  changes in the method of  applying  the  Seller's  use of  estimates  in the
preparation of the un-audited Interim Financial Statements.

     SECTION  3.06  Absence  of  Undisclosed  Liabilities.  There  are no debts,
liabilities,  or  obligations,  of any nature,  of Seller,  the  Business or the
Purchased  Assets,  except to the extent expressly set forth or reserved against
in the Seller's  Financial  Statements.  Since the date of the Interim Financial
Statements, there has not been any Material Adverse Effect.

     SECTION 3.07 Absence of Certain  Changes and Events.  Since the date of the
Interim Financial Statements, Seller has not:

     (a) made any  material  change in the  accounting  methods or  practices it
follows other than as required by Law or GAAP;

                                       15
<PAGE>
     (b) made any  capital  expenditures  or  commitments  exceeding  $5,000 per
expenditure  or  commitment,  or  $20,000  in the  aggregate  in  respect of the
Business;

     (c) sold, assigned,  transferred or licensed any patents, trademarks, trade
names,  copyrights,  trade secrets or other intangible assets, in each case used
in connection with the Business,  except  nonexclusive  licenses in the ordinary
course of business consistent with past practice;

     (d) sold, leased,  licensed,  transferred,  or otherwise disposed of any of
its properties or assets primarily used in the Business, except Inventories sold
or transferred in the ordinary course of business  consistent with past practice
and obsolete or worn out  equipment  sold or  otherwise  disposed of in a manner
consistent with past practice which was not otherwise material  (individually or
in the  aggregate) to the  Business,  or canceled any material  indebtedness  or
waived any material claims or rights of material value;

     (e)  suffered any damage to or  destruction  or casualty of (whether or not
covered by insurance) any asset individually or in the aggregate material to the
operation of the Business;

     (f) failed to pay any creditor any amount arising from the operation of the
Business  owed to such  creditor  when due,  other than good faith  disputes and
trade payables  arising in the ordinary course of business and not past due more
than sixty (60) days;

     (g) failed to discharge or satisfy any Lien on any of the Purchased Assets,
at or prior to the time that the  obligation  with  respect to such Lien  became
due;

     (h)  defaulted  on any  material  obligation  relating  to the  conduct  or
operation of the Business without curing such default;

     (i)  granted any  allowances  or  discounts  with  respect to the  Business
outside the ordinary  course of business  consistent  with past practice or sold
Inventories materially in excess of reasonably  anticipated  consumption for the
near term outside the ordinary course of business consistent with past practice;

     (j) incurred or assumed any liabilities  with respect to the Business other
than in the  ordinary  course of  business  consistent  with past  practice  and
liabilities that are not Assumed Liabilities;

     (k) amended,  cancelled or terminated any Contract or Authorization that is
a Purchased  Asset or entered into any  Contract or obtained  any  Authorization
primarily related to the Business, other than in the ordinary course of business
and consistent with past practices;

     (l) failed to carry on the Business in the ordinary  course and  consistent
with past practices so as to preserve the Purchased  Assets and the Business and
the  goodwill  of the  suppliers,  customers,  distributors  and  others  having
business relations with the Business;

     (m) dismissed or provided notice of termination of the employment to any of
the Current Employees; or

                                       16
<PAGE>
     (n)  distributed  any  dividend  nor made any other  type of  distribution,
regardless of the record date thereof;

     (o)  entered  into any  agreement  or  commitment,  whether  in  writing or
otherwise, to do any of foregoing.

     SECTION  3.08  Litigation.  There are no  actions,  suits,  or  proceedings
pending  or, to the  knowledge  of Seller,  threatened  against or by Seller in,
before, or by any court, arbitrator, or governmental agency or authority.  There
are no  unsatisfied  judgments  or  outstanding  orders,  injunctions,  decrees,
stipulations or awards (whether rendered by a court or administrative  agency or
by  arbitration)  against or affecting  Seller or the Business or against any of
the  Purchased  Assets.  Prior to the date of this  Agreement,  Seller  has made
available to Buyer for review all complaint and litigation files of Seller.

     SECTION  3.09  Compliance  with Law. To the  knowledge  of the Seller,  the
Business  has  not  violated  and is not in  violation  of any  applicable  law,
ordinance  or  regulation  of  any  governmental  entity,   including,   without
limitation,  the R&D Law and any  legal  obligations  applicable  to  Seller  in
connection with tax benefits  approved by the Investment  Center at the Ministry
of Labor,  Industry and Trade. To the knowledge of the Seller, all governmental,
municipal and other approvals, registrations,  notifications,  permits, licenses
and  other  permissions  or  authorizations   (collectively,   "Authorizations")
required in  connection  with the conduct of the Business have been obtained and
are in full  force  and  effect  and are being  complied  with.  Seller  has not
received  any  notification  of  any  asserted  past  or  present  violation  in
connection with the conduct of the Business of any applicable law,  ordinance or
regulation,  or any written  complaint,  inquiry or request for information from
any governmental  entity relating  thereto.  Neither Seller nor the Business nor
any of the Purchased  Assets is the subject of any Israeli or other  enforcement
action or, to the knowledge of Seller,  other  investigation,  including but not
limited to those relating to Environmental Laws.

     SECTION 3.10 Taxes.  Seller has timely filed all Tax or assessment  reports
and Tax returns  (including  any  applicable  information  returns)  that may be
required  by any law or  regulation  of any  jurisdiction  to be  filed by or on
behalf of Seller or any of its Affiliates,  and all such reports and returns are
true,  correct and  complete  in all  material  respects.  Seller has duly paid,
deposited  or accrued on its books of account,  all Taxes  (including  estimated
Taxes)  pursuant to such reports and returns,  or assessed  against  Seller,  or
which Seller or its  Affiliates  is obligated to withhold  from amounts owing to
any employee,  service provider,  supplier, or any other third party. Seller has
no  liability  for any  Taxes in  excess of the  amounts  stated in the  Interim
Balance Sheet with respect to all time periods or portions  thereof ending on or
before the date set forth  therein.  Neither the  assessment  of any  additional
Taxes  that by law  should  have been  reported  or paid or in  accordance  with
generally  accepted  accounting  principles  should have been  accrued,  nor any
investigation  or  audit,  is  pending  or, to the best of  Seller's  knowledge,
threatened  or expected.  No Taxing or  assessment  authority  has  indicated to
Seller any intent to conduct an audit or other  investigation  or  asserted  any
unresolved  deficiencies  with  respect  to Tax  liabilities  of Seller  for any
period,  and to the knowledge of Seller there are no facts or circumstances that
would give rise  thereto.  Seller has not waived any statute of  limitations  in
respect  of Israeli or  foreign  Taxes or agreed to any  extension  of time with
respect to an assessment of deficiency with respect to such Taxes.

                                       17
<PAGE>
     SECTION 3.11 Consents.  No consent,  approval,  waiver or  authorization is
legally  or  contractually  required  on the part of Seller to duly and  validly
transfer or assign any of the Purchased Assets as contemplated hereby.

     SECTION 3.12 Title to and  Condition of the  Purchased  Assets.  Seller has
full right,  title and interest to the Purchased  Assets and good and marketable
title to the Purchased Assets, free and clear of all Liens, except for the Liens
listed  (together  with the amount  secured by each such Lien) on Schedule 3.12,
which shall be discharged in full by Seller at the Closing. The Purchased Assets
include all assets, properties, rights, interests, claims and business necessary
for or relating to the conduct of the Business as presently  conducted by Seller
or as currently proposed to be conducted.  The Purchased Assets are suitable for
the uses for which  they are  presently  used by  Seller,  in  normal  operating
condition and free from any defects.  All of the Purchased Assets are located at
the  facilities  of Seller  (except  for certain  equipment  located in Korea as
disclosed  to  Buyer).  This  Section  3.12  does  not  apply  to  the  Seller's
Intellectual  Property;  representation and warranties  relating to the Seller's
Intellectual Property are set forth in Section 3.16 below.

     SECTION 3.13 Contracts. Each Contract required to be listed on any Schedule
to this  Agreement is, to the knowledge of Seller,  valid and  subsisting and is
and  following  the  consummation  of  the  transactions  contemplated  by  this
Agreement,  will remain,  in full force and effect in accordance with its terms,
and there have been no  amendments,  modifications,  or  supplements to any such
Contracts.  To the knowledge of Seller,  there is no default or claim of default
by Seller under any such Contract and no event has occurred,  or will occur as a
result of the consummation of the  transactions  contemplated by this Agreement,
that, with the passage of time or the giving of notice or both, could reasonably
be expected to  constitute  a default by Seller or, to the  knowledge of Seller,
any other party thereto under any such Contract, or could reasonably be expected
to permit modification,  acceleration,  or termination of any such Contract,  or
result in the creation of any Lien on any of the Purchased Assets. Seller is not
a party to any Contract: (i) that restricts Seller's, or after the closing would
restrict  Buyer's,  ability to conduct any line of business (except as set forth
in the Memorandum of Agreement  dated June 12, 2008 between Seller Parent and L3
Communications  Narda  Microwave  East);  or (ii) that the  performance of which
results in a net loss for Seller,  or after  Closing,  will result in a net loss
for Buyer.

     SECTION 3.14 Manufacturing Processes/Inventories. Seller has made available
to Buyer  complete and  accurate  written  documentation  of the  processes  and
procedures  used or necessary to  manufacture  Seller's  products in  quantities
sufficient for the conduct of the Seller's  business as proposed to be conducted
(the "Manufacturing Documentation"). The Business Intellectual Property includes
all processes, methods, techniques,  procedures, trade secrets and know how used
or necessary to manufacture  such products.  The quantities of all  Inventories,
materials  and  supplies  of  Seller  are not  obsolete,  damaged,  slow-moving,
defective or excessive,  and are reasonable and balanced in the circumstances of
Seller.

     SECTION  3.15  Warranties.  All  products  manufactured  or  sold,  and all
services  provided,  by Seller have complied,  and are in  compliance,  with all
contractual   requirements,   warranties  or  covenants,   express  or  implied,
applicable thereto, and with all applicable  governmental,  trade association or
regulatory specifications therefore or applicable thereto.

                                       18
<PAGE>
     SECTION 3.16 Intellectual Property.

     (a) Products and  Services.  Schedule  3.16(a)  accurately  identifies  and
describes  each  product  currently  being  designed,  developed,  manufactured,
marketed,  distributed,  provided,  licensed, or sold by Seller (each, a "Seller
Product").

     (b) Registered IP. Schedule 3.16(b) accurately identifies: (a) each item of
Registered  Intellectual  Property  in which  Seller has or  purports to have an
ownership  interest of any nature  (whether  exclusively,  jointly  with another
Person,  or otherwise);  (b) the  jurisdiction  in which such item of Registered
Intellectual   Property  has  been   registered  or  filed  and  the  applicable
registration  or serial  number;  (c) any  other  Person  that has an  ownership
interest in such item of Registered Intellectual Property and the nature of such
ownership  interest;  and (d) each Seller Product identified in Schedule 3.16(a)
that embodies,  utilizes,  or is based upon or derived from (or, with respect to
Seller  Products  currently  under  development,  that is  expected  to  embody,
utilize, or be based upon or derived from) such item of Registered  Intellectual
Property.  Seller has provided or otherwise granted access to Buyer complete and
accurate  copies  of all  applications,  correspondence  with  any  governmental
entity,  and other  material  documents  related to each such item of Registered
Intellectual Property.

     (c) Inbound  Licenses.  Schedule 3.16(c)  accurately  identifies:  (a) each
Contract  pursuant to which any  Intellectual  Property is or has been licensed,
sold,  assigned,  or  otherwise  conveyed or provided to Seller  (other than (i)
agreements  between  the Seller and its  employees  in  Seller's  standard  form
thereof,  (ii)  non-exclusive  licenses  to  third-party  software  that  is not
incorporated  into,  or  used  in  the  development,   manufacturing,   testing,
distribution,  maintenance,  or support  of, any Seller  Product and that is not
otherwise  material  to  the  Business,  (iii)  non-exclusive  licenses  to  any
generally  available  hardware that is used in the  development,  manufacturing,
testing,  distribution,  maintenance  or support of any Seller  Product and (iv)
generally available  off-the-shelf  software products or tools that are used for
the operation of the  business);  and (b) whether the licenses or rights granted
to Seller in each such Contract are exclusive or non-exclusive.

     (d) Outbound Licenses. Schedule 3.16(d) accurately identifies each Contract
pursuant to which any Person has been  granted any license  under,  or otherwise
has received or acquired  any right or interest  in, any  Business  Intellectual
Property other than a right to use any Seller  Product  pursuant to any purchase
order. Seller is not bound by, and no Business  Intellectual Property is subject
to, any  Contract  containing  any covenant or other  provision  that in any way
limits or restricts the ability of Seller to use,  exploit,  assert,  or enforce
any Business  Intellectual  Property owned by Seller anywhere in the world,  nor
limits or restricts the ability of Seller to transfer any Business  Intellectual
Property to the Buyer.

     (e) Royalty Obligations.  Schedule 3.16(e) contains a complete and accurate
list and summary of all royalties, fees, commissions,  and other amounts payable
by Seller to any other Person upon or for the manufacture, sale, or distribution
of any Seller Product or the use of any Business  Intellectual Property owned by
Seller.

     (f) Standard Form IP Agreements.  Schedule 3.16(f) identifies each standard
form of Intellectual  Property  Contract upon which a Contract that is currently
effective in any respect,  or for which either party under such Contract has any
continuing obligation or right.

     (g) Ownership Free and Clear.  Seller exclusively owns all right, title and
interest to and in all Registered Intellectual Property.  Seller owns all right,
title and  interest  to and in all  Intellectual  Property  (except  that in the
public  domain and not owned by a third  party) used in or  necessary to conduct
the Business as currently  conducted or currently  contemplated  to be conducted
(the  "Business  Intellectual  Property")  free and clear of any Liens.  Without
limiting the generality of the foregoing:

                                       19
<PAGE>
     (i) Employees and Contractors.  No current or former shareholder,  officer,
director,  employee  or  contractor  of Seller  that has any  claim,  right,  or
interest to or in any Business Intellectual Property. Seller has no knowledge of
any employee of Seller that is (a) bound by or otherwise subject to any Contract
restricting  him from  performing  his duties for Seller or (b) in breach of any
Contract  with any  former  employer  or other  Person  concerning  Intellectual
Property or confidentiality due to his activities as an employee of Seller.

     (ii) Government Rights. Except as set forth under Schedule 3.16(g)(ii),  no
funding,  facilities,  or  personnel of any  governmental  body or any public or
private university,  college, or other educational or research  institution were
used,  directly or  indirectly,  to develop or create,  in whole or in part, any
Business  Intellectual  Property  owned by Seller.  Seller has not  provided the
Business   Intellectual  Property  to  any  governmental  body,  under  license,
contract,  or  otherwise,  in any manner that gives such  governmental  body any
additional or different  rights than those  contained in Seller's  Standard Form
Agreements,  and all Contracts in which any governmental body obtains any rights
to any Business  Intellectual  Property  have been  disclosed in the  applicable
disclosure schedule as set forth in this Section 3.16.

     (iii)  Protection  of  Proprietary   Information.   Seller  has  taken  all
reasonable steps to maintain the  confidentiality  of and otherwise  protect and
enforce its rights in all  proprietary  information  pertaining to Seller or any
Seller Product.  Without limiting the generality of the foregoing, no portion of
the source  code for any  software  ever owned or  developed  by Seller has been
disclosed or licensed to any escrow agent or other Person.

     (iv) Past IP Dispositions. Seller has not assigned or otherwise transferred
ownership  of,  or agreed to assign or  otherwise  transfer  ownership  of,  any
Intellectual  Property that comprises  Business  Intellectual  Property owned by
Seller to any other Person.

     (v) Standards Bodies. Seller is not and has never been a member or promoter
of, or a contributor  to, any industry  standards  body or similar  organization
that could require or obligate  Seller to grant or offer to any other Person any
license or right to any Business Intellectual Property.

     (h) Valid and Enforceable.  The Registered  Intellectual Property is valid,
subsisting, and enforceable. Without limiting the generality of the foregoing:

     (i) Misuse and Inequitable Conduct. Seller has not engaged in patent misuse
or any fraud or inequitable conduct in connection with any Business Intellectual
Property that is Registered Intellectual Property.

     (ii)  Trademarks.  No registered  trademark or registered trade name owned,
used,  or applied for by Seller  conflicts  or  interferes  with any  registered
trademark  or  registered  trade name owned,  used,  or applied for by any other
Person.  No event or  circumstance  (including  a failure to  exercise  adequate
quality controls and an assignment in gross without the  accompanying  goodwill)

                                       20
<PAGE>
has occurred or exists that has resulted in, or could  reasonably be expected to
result in, the abandonment of any registered  trademark owned,  used, or applied
for by Seller.

     (iii)  Legal   Requirements   and   Deadlines.   Each  item  of  Registered
Intellectual  Property is and at all times has been in compliance with all legal
requirements and all filings, payments, and other actions required to be made or
taken to maintain  such item of Registered  Intellectual  Property in full force
and effect  have been made by the  applicable  deadline.  No  application  for a
patent or a copyright, mask work, or trademark registration or any other type of
Registered  Intellectual  Property  filed by or on  behalf  of  Seller  has been
abandoned, allowed to lapse, or rejected. Schedule 3.16(h) accurately identifies
and describes as of the date of this Agreement each action,  filing, and payment
that  must  be  taken  or  made in  order  to  maintain  such  item of  Business
Intellectual Property in full force and effect.

     (iv)   Interference   Proceedings  and  Similar  Claims.  No  interference,
opposition,  reissue,  reexamination, or other proceeding is or has been pending
or, to the knowledge of Seller,  threatened,  in which the scope,  validity,  or
enforceability  of any Registered  Intellectual  Property is being, has been, or
could  reasonably  be  expected to be  contested  or  challenged.  Seller has no
knowledge of any basis for a claim that any Registered  Intellectual Property is
invalid or unenforceable.

     (i) Third-Party  Infringement  of Business  Intellectual  Property.  To the
knowledge  of Seller,  no Person has  infringed,  misappropriated,  or otherwise
violated, and no Person is currently infringing,  misappropriating, or otherwise
violating,  any Business  Intellectual  Property owned by Seller.  No letters or
other written or electronic  communication or  correspondence  have been sent or
otherwise  delivered by or to Seller or any  representative  of Seller regarding
any actual,  alleged,  or  suspected  infringement  or  misappropriation  of any
Business Intellectual Property owned by Seller.

     (j)  Effects of This  Transaction.  Neither  the  execution,  delivery,  or
performance of this Agreement nor the  consummation  of any of the  transactions
contemplated  by this Agreement  will,  with or without notice or lapse of time,
result in, or give any other Person the right or option to cause or declare, (a)
a loss of, or Lien on, any Business  Intellectual  Property;  (b) a breach of or
default under any Business Intellectual Property;  (c) the release,  disclosure,
or delivery of any Business  Intellectual  Property by or to any escrow agent or
other Person; or (d) the grant,  assignment,  or transfer to any other Person of
any  license or other  right or interest  under,  to, or in any of the  Business
Intellectual Property.

     (k) No  Infringement of Third Party IP Rights.  To the Seller's  knowledge,
Seller  has  never  infringed  (directly,   contributorily,  by  inducement,  or
otherwise),  misappropriated,  or otherwise violated or made unlawful use of any
Intellectual  Property of any other Person or engaged in unfair competition.  No
Seller Product, and no method or process used in the manufacturing of any Seller
Product, infringes, violates, or makes unlawful use of any Intellectual Property
(other than patents), or contains any Intellectual Property (other than patents)
misappropriated  from, any other Person, or, to Seller's  knowledge,  infringes,
violates,  or  makes  unlawful  use  of  any  patent,  or  contains  any  patent
misappropriated from, any other Person. There is no legitimate basis for a claim
that  Seller  or  any  Seller  Product  has  infringed  or  misappropriated  any
Intellectual Property Right (other than patents), or, to Seller's knowledge, any
patent,  of another  Person or engaged in unfair  competition or that any Seller
Product,  or any  method or  process  used in the  manufacturing  of any  Seller
Product, infringes, violates, or makes unlawful use of any Intellectual Property
(other than patents), or contains any Intellectual Property (other than patents)
misappropriated  from, any other Person,  or to Seller's  knowledge,  infringes,

                                       21
<PAGE>
violates,  or  makes  unlawful  use of any  patents,  or  contains  any  patents
misappropriated  from, any other Person . Without limiting the generality of the
foregoing:

     (i)  Infringement  Claims.  No infringement,  misappropriation,  or similar
claim or  proceeding  is pending  or, to the  knowledge  of  Seller,  threatened
against Seller or, to the knowledge of the Seller,  against any other Person who
is or may be entitled to be indemnified,  defended, held harmless, or reimbursed
by Seller with respect to such claim or  proceeding.  Seller has never  received
any notice or other  communication  (in  writing or  otherwise)  relating to any
actual,  alleged, or suspected infringement,  misappropriation,  or violation by
Seller,  any of  their  employees  or  agents,  or  any  Seller  Product  of any
Intellectual  Property  of  another  Person,   including  any  letter  or  other
communication  suggesting  or  offering  that  Seller  obtain a  license  to any
Intellectual Property of another Person.

     (ii) Other Infringement  Liability.  Seller is not bound by any Contract to
indemnify, defend, hold harmless, or reimburse any other Person with respect to,
or otherwise  assumed or agreed to discharge  or otherwise  take  responsibility
for,   any   existing   or   potential   intellectual   property   infringement,
misappropriation,  or similar  claim (other than  indemnification  provisions in
Seller's Standard Form Agreements relating to the Business Intellectual Property
owned by Seller).

     (l) Data Bases.  Schedule  3.16(p)  identifies  and describes each distinct
electronic  or other  database  containing  (in whole or in part)  personal data
maintained by or for the Seller at any time (the "Seller Databases"),  the types
of personal data in each such database, the means by which the personal data was
collected,  and the security policies that have been adopted and maintained with
respect  to each such  database.  No breach or  violation  of any such  security
policy has occurred or, to the best of Seller's  knowledge,  is threatened,  and
there has been no unauthorized or illegal use of or access to any of the data or
information in any of the Seller Databases.

     SECTION 3.17 Labor Law and Employees.

     (a) Schedule 3.17(a)  accurately sets forth,  with respect to each employee
of Seller  (including  any employee of Seller who is on a leave of absence or on
layoff status):

     (i) the name of such  employee  and the date as of which such  employee was
originally hired by Seller;

     (ii) such employee's  title,  and a general  description of such employee's
duties and responsibilities;

     (iii)  such  employee's  annualized  compensation  as of the  date  of this
Agreement;

     (iv) each Employee Plan in which such employee  participates or is eligible
to participate;

     (v) all accrued  vacation day and sick days, all recuperation pay owed; and
any  amounts  owing to  pension  funds,  managers  insurance,  education  funds,
recuperation  pay [dmei  havra'ah] or for other social  benefits,  including all
accruals, allocations, severance and reserve Liabilities.

                                       22
<PAGE>
     (b) The  employment  of each of Seller's  employees,  subject to applicable
notice periods, is terminable by Seller without restrictions imposed under labor
agreements or collective  labor  agreements.  Seller has delivered or granted to
Buyer  access to  accurate  and  complete  copies of all  employee  manuals  and
handbooks,  disclosure materials, policy statements and other materials relating
to the employment of the current and former employees of Seller.

     (c) To the knowledge of Seller:

     (i) no employee of Seller intends to terminate his employment with Seller;

     (ii) no  employee of Seller has  received an offer to join a business  that
may be competitive with the Business; and

     (iii)  no   employee   of  Seller  is  a  party  to  or  is  bound  by  any
confidentiality agreement,  noncompetition agreement or other Contract (with any
Person) that may have an adverse effect on: (A) the performance by such employee
of any of his duties or  responsibilities  as an employee of Seller;  or (B) the
Business.

     (d)  Schedule  3.17(d)   accurately  sets  forth,   with  respect  to  each
independent contractor of Seller:

     (i) the name of such  independent  contractor and the date as of which such
independent contractor was originally engaged by Seller;

     (ii)  a   description   of   such   independent   contractor   duties   and
responsibilities;

     (iii) the  aggregate  dollar  amount  of the  compensation  (including  all
payments or benefits of any type) received by such  independent  contractor from
Seller with respect to services performed during 2007;

     (iv) the terms of compensation of such independent contractor; and

     (v) any Authorization that is held by such independent  contractor and that
relates to or is useful in connection with the Business.

     (e)  Seller is not a party to or bound by, and in the past eight (8) years,
Seller has not been a party to or bound by, any collective  employment agreement
(except under ministerial "extension orders") or any union contract,  collective
bargaining agreement or similar Contract.

     (f) To Seller's knowledge, Seller is not engaged, and Seller has never been
engaged,  in any unfair labor  practice of any nature.  There has never been any
slowdown,  work stoppage,  labor dispute or union  organizing  activity,  or any
similar  activity  or dispute,  affecting  Seller or the  Business.  To Seller's
knowledge,  no event has occurred, and no condition or circumstance exists, that
might  directly  or  indirectly  give  rise  to  or  provide  a  basis  for  the
commencement  of any  such  slowdown,  work  stoppage,  labor  dispute  or union
organizing  activity or any similar  activity or dispute.  There are no actions,
suits,  claims,  labor  disputes  or  grievances  pending or, to the best of the
knowledge of Seller, threatened or reasonably anticipated relating to any labor,

                                       23
<PAGE>
safety or  discrimination  matters  involving any Current  Employee,  including,
without  limitation,   charges  of  unfair  labor  practices  or  discrimination
complaints.

     (g) To the knowledge of Seller,  none of the current or former  independent
contractors of Seller could be reclassified as an employee.  To the knowledge of
Seller,  no  independent  contractor of Seller is eligible to participate in any
Employee Plan.

     (h) All  Current  Employees  are  listed on  Schedule  3.17(a).  All of the
Current  Employees are entitled to termination  notice of up to ninety (90) days
prior written notice (save for the current  General Manager of Seller Parent who
is entitled to 6 months' prior notice) under the termination  notice  provisions
included in employment  agreements or applicable  law.  Seller's  obligations to
provide  statutory  severance  pay  to the  Current  Employees  pursuant  to the
Severance  Pay Law  (5723-1963)  are fully  funded or  accrued  on the  Seller's
Financial  Statements and Seller has not invoked the provisions of Section 14 of
the Severance Pay Law with respect to such statutory severance pay. There are no
circumstances  that  could  give rise to any valid  claim by a current or former
employee of Seller for  compensation  on termination  of employment  (beyond the
statutory  severance  pay to which  employees  are  entitled).  All amounts that
Seller is  legally  or  contractually  required  either  (A) to deduct  from the
Employees' salaries or to transfer to the Employees' pension or provident,  life
insurance,  incapacity  insurance,  continuing  education  fund or other similar
funds or (B) to withhold from the Current  Employees'  salaries and benefits and
to pay to any government  entity as required by the Israeli Income Tax Ordinance
and National  Insurance Law or otherwise have, in each case, been duly deducted,
transferred,  withheld  and  paid,  and  Seller  does not  have any  outstanding
obligation to make any such deduction, transfer, withholding or payment; and (C)
Seller 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
related to the Current  Employees,  including  The Prior  Notice to the Employee
Law,  2002,  The  Notice  to  Employee  (Terms of  Employment)  Law,  2002,  The
Prevention of Sexual Harassment Law, 1998, the Hours of Work and Rest Law, 1951,
the Annual Leave Law, 1951,  and The  Employment by Human  Resource  Contractors
Law, 1996.  Seller has not engaged any Current  Employees whose employment would
require special licenses or permits.  There are no unwritten policies or customs
that, by extension,  could entitle Current  Employees to benefits in addition to
what  they  are  entitled  by law  (including,  by way of  example  but  without
limitation,  unwritten customs concerning the payment of statutory severance pay
when it is not  legally  required).  Seller  has not  engaged  any  consultants,
sub-contractors  or freelancers  who,  according to Israeli law, are entitled to
the rights of an employee  vis-a-vis Seller,  including rights to severance pay,
vacation,  recuperation pay [dmei havra'ah] and other employee-related statutory
benefits.  Seller has  provided to Buyer a correct and  complete  summary of the
calculations  concerning  the  components  of the Current  Employees'  salaries,
including any components  that are not included in the basis for  calculation of
amounts set aside for purposes of statutory  severance pay.  Seller has provided
to Buyer (a) any and all  agreements  with human resource  contractors,  or with
consultants,  sub-contractors or freelancers;  and (b) full documents,  manuals,
and written  policies  relating to the  employment  and  termination  of Current
Employees.

     SECTION 3.18 No Finders.  No act of Seller or its  Affiliates  has given or
will give rise to any claim against Buyer for a brokerage  commission,  finder's
fee or other  like  payment in  connection  with the  transactions  contemplated
herein.

     SECTION  3.19  Product  Liability  Claims.  To Seller's  knowledge,  Seller
Products that Seller has  manufactured,  distributed or sold were  merchantable,
free from material defects in design, specifications,  processing,  manufacture,

                                       24
<PAGE>
material  or  workmanship,  and  suitable  for the  purpose  for which they were
intended. Seller has not incurred any uninsured or insured Product Liability, or
received  a claim  based  upon  alleged  Product  Liability,  and,  to  Seller's
knowledge, no basis for any such claim exists.

     SECTION 3.20 Relations with Suppliers and Customers. No current supplier of
Seller  has  canceled  any  contract  or order for  provision  of,  and,  to the
knowledge  of  Seller  there  has been no  threat  by any such  supplier  not to
provide,  raw materials,  products,  supplies,  or services to the Business when
owned by  Seller.  Seller  has not  received  any  information  from one or more
customers  that  accounted for more than 5% of the revenues of Seller during the
last full fiscal year to the effect that such  customers  intend to decrease the
amount of business they do with the Business when owned by Seller.

     SECTION 3.21 Environmental  Matters. (a) neither Seller nor the Business or
the  Purchased  Assets  have been or are  subject  to any  actual or  threatened
investigations,  administrative proceedings, litigation, regulatory hearings, or
other  action  threatened,  proposed  or  pending  that  alleges  (i)  actual or
threatened  violation of or noncompliance  with any  Environmental  Law, or (ii)
actual or threatened  personal injury or property damage or contamination of any
kind  resulting  from a release or threatened  release of a Hazardous  Substance
with respect to the Business and the Purchased Assets;  (b) Seller has not taken
or failed to take any action with respect to the Business,  the Purchased Assets
or the real property  presently or formerly used in  connection  therewith  that
could reasonably be expected to result in (i) actual or threatened  violation of
or  noncompliance  with any  Environmental  Law,  or (ii)  actual or  threatened
personal injury or property damage or contamination  resulting from a release of
a Hazardous  Substance  that requires  remediation  or other similar  corrective
action under any applicable  Environmental Laws; and (c) no Hazardous Substances
have been used, manufactured, generated, transported, released or disposed of in
violation of any Environmental Law by Seller.

     SECTION  3.22  Contracts  with  Related  Parties.  Except  as set  forth on
Schedule  3.22,  there are no  agreements  or contracts  between  Seller and any
officer,  director,  or shareholder  of Seller,  any subsidiary of Seller or any
entity in which any such officer,  director or shareholder owns more than a five
percent (5%) equity interest.

     SECTION 3.23 Government Grants.

     (a)  Schedule   3.23(a)  provides  a  complete  list  of  all  pending  and
outstanding grants, incentives,  exemptions and subsidies from the Government of
the State of Israel or any agency thereof, or from any non-Israeli  governmental
entity,  granted  to  the  Seller  or  assigned  to or  assumed  by  the  Seller
(collectively,  "Government  Grants"),  including,  without limitation,  (i) the
Investment  Center of the  Ministry of Industry,  Trade and Labor,  (ii) the OCS
including for avoidance of doubt grants received within the framework of MAGNET,
MAGNETON,  HEZNEK and other similar programs;  (iii) the BIRD Foundation and any
other similar governmental or  government-related  entity, (iv) the Fund for the
Encouragement of Marketing, and (v) the Income Tax Authorities.

     (b) Seller has made available to Buyer accurate and complete  copies of all
documents  requesting or  evidencing  Government  Grants or  amendments  thereto
submitted by Seller and of all letters of  approval,  and  supplements  thereto,

                                       25
<PAGE>
granted to Seller, as well as all correspondence or written summaries pertaining
thereto, and has provided Buyer with an accurate and complete description of any
unwritten  or  informal  arrangements  or  understandings  that  relate  to  the
Government Grants.

     (c) Schedule  3.23(a)  details all the aggregate  amount of each Government
Grant,  the amounts already  received under such Government  Grant,  the amounts
still receivable under such Government  Grant, the royalties paid by Seller with
respect  to  the  and  the  aggregate  outstanding  obligations  of  the  Seller
thereunder with respect to royalties,  or the outstanding  amounts to be paid by
Seller in respect of such Government Grants.

     (d)  Seller  is in  compliance  with  all  of  the  terms,  conditions  and
requirements   of  the  Government   Grants  and  has  duly  fulfilled  all  the
undertakings  relating thereto.  Seller has no knowledge of any intention of the
Investment Center or the OCS to revoke or modify any of the Government Grants or
that the Investment  Center or the OCS believes that Seller is not in compliance
in all respects  with the terms of any Grant.  Neither the execution or delivery
of this Agreement, nor the consummation of the transactions  contemplated hereby
does,  will or would  reasonably be expected to (with or without notice or lapse
of time)  give any  governmental  body the right to revoke,  withdraw,  suspend,
cancel,  terminate or modify any Government  Grant  identified or required to be
identified in Schedule 3.23(a).

                                   ARTICLE IV
                    REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller as follows:

     SECTION 4.01  Organization of Buyer.  Buyer is a corporation duly organized
and validly existing under the laws of Israel.

     SECTION 4.02  Authority.  By the  Closing,  Buyer shall have full power and
authority to enter into this Agreement and to perform its obligations hereunder.
The  execution  and  delivery by Buyer of this  Agreement  and other  agreements
contemplated  hereby to which Buyer is a party, and the consummation by Buyer of
the transactions hereby and thereby, shall have been duly and validly authorized
by Buyer's  Board of Directors by the Closing,  no other action of Buyer's Board
of Directors,  or corporate  proceedings on the part of Buyer shall be necessary
to authorize  this  Agreement and no other action of Buyer's Board of Directors,
or corporate  action on the part of Buyer,  shall be necessary to consummate the
transactions  contemplated  hereby.  This  Agreement  has been duly  authorized,
executed,  and  delivered by Buyer and  constitutes  a legal,  valid and binding
agreement of Buyer,  enforceable  against  Buyer in  accordance  with its terms.
Neither the  execution and delivery of this  Agreement  nor  compliance by Buyer
with its terms and provisions  will violate (i) any provision of the articles of
association  of  Buyer  or (ii)  any law,  statute,  regulation,  or to  Buyer's
knowledge,  injunction, order or decree of any government agency or authority or
court to which Buyer or any of Buyer's assets is subject.

     SECTION 4.03 No Finders. No act of Buyer has given or will give rise to any
valid  claim  against  any of the  parties  hereto for a  brokerage  commission,
finder's  fee  or  other  like  payment  in  connection  with  the  transactions
contemplated herein.

                                       26
<PAGE>
                                   ARTICLE V
                        CERTAIN COVENANTS AND AGREEMENTS

     SECTION  5.01   Approvals  and   Consents.   Seller  and  Buyer  shall  use
commercially  reasonable  efforts to cause the satisfaction of the conditions to
Closing  contained in this Agreement.  Each party hereto shall use  commercially
reasonable efforts to obtain all Authorizations,  consents, orders and approvals
of all  governmental  authorities  and the  consents  of  third  parties  to the
assignment  or transfer,  for the benefit of Buyer of the  agreements  listed on
Article  VII or  Article  VIII that  are,  may be or  become  necessary  for its
execution and delivery of, and the performance of its  obligations  pursuant to,
this  Agreement  and shall  cooperate  fully  with the other  party in  promptly
seeking to obtain all such Authorizations,  consents,  orders and approvals. The
parties hereto  acknowledge  that time shall be of the essence in this Agreement
and agree not to take any action or omit to take any  action  that will have the
effect of  unreasonably  delaying,  impairing  or  impeding  the  receipt of any
required authorizations, consents, orders or approvals.

     SECTION 5.02 Conduct of  Business.  Until the Closing,  Seller will operate
the Business and maintain the Purchased  Assets,  only in the ordinary course of
business  consistent  with past  practice  (including  continuing to fulfill its
supply  obligations and maintenance of customary  levels of  Inventories),  and,
without limiting the foregoing, Seller will:

     (a) use  commercially  reasonable  efforts to  preserve  intact the present
business organization and personnel of Seller;

     (b) use  commercially  reasonable  efforts to  preserve  the  goodwill  and
relationships   of  the  Business  with  suppliers,   independent   contractors,
customers,  employees,  any governmental authority and other persons material to
the operation thereof;

     (c)  not  incur  any  obligation,  liability,  or  indebtedness  (absolute,
accrued,  contingent  or  other),  other  than trade  payables  incurred  in the
ordinary course of business consistent with past practice;

     (d) not mortgage, pledge or subject to Lien any of the Purchased Assets;

     (e) not sell, assign or transfer any asset,  property or business or cancel
any debt or claim or waive any  right  with  respect  to the  Purchased  Assets,
except in the ordinary course of business consistent with past practice;

     (f) not sell, assign,  license,  transfer or permit to lapse any right with
respect to Intellectual Property;

     (g) not grant any  increase  in the  compensation  payable to any  officer,
director,  consultant,  employee  or  agent  who  is,  or will  be  offered  the
opportunity to be, a New Buyer Employee;

     (h) not make or authorize any capital lease or any capital  expenditure for
additions to plant and  equipment of the Business  that would be treated as part
of the Purchased Assets in excess of $5,000 per item or $20,000 in the aggregate
except as may be necessary for ordinary repair, maintenance or replacement;

                                       27
<PAGE>
     (i) not enter into or amend any contract for the employment of any officer,
employee or other person who is, or may be offered the  opportunity to be, a New
Buyer  Employee,  on a  full-time,  part-time  or  consulting  basis that is not
terminable upon notice of 30 days or less without cost or other liability to the
Business;

     (j) not enter into or amend any contract or collective bargaining agreement
with any labor union related to any Current or New Buyer Employees;

     (k) not enter into or amend any bonus, pension, profit-sharing, retirement,
stock purchase,  stock option,  deferred compensation,  incentive  compensation,
hospitalization,  insurance or similar plan, contract or understanding providing
for employee benefits, including the grant or award of any stock option or stock
appreciation  or similar  right that would purport to confer rights to shares of
Seller or any of their  Affiliates  upon the  consummation  of the  transactions
contemplated by this Agreement;

     (l) of any real property,  whether as lessor or lessee, or any contract for
the purchase or sale of real property;

     (m) not enter into any contract, supply agreement, or purchase order;

     (n) not accept any order or enter into any agreement with a customer of the
Business  for the sale of any product or services of the  Business  that is at a
price that reflects a discount that is not in the ordinary course of business or
is not in accordance with discounts given on similar products or services of the
Business  over  the  past 6  months,  if  such  agreement  would  be an  Assumed
Liability;

     (o) not engage in (i) any trade loading / channel stuffing practices or any
other  promotional  marketing,  sales or discount activity with any customers or
distributors  with the  effect or any  intent of  accelerating  to prior  fiscal
periods sales to the trade or otherwise, that would otherwise be expected (based
on past practice) to occur in subsequent fiscal periods, (ii) any practice which
is intended or would have the effect of  accelerating  to prior  fiscal  periods
collections  of  receivables  that would  otherwise  be expected  (based on past
practice) to be made in subsequent fiscal periods or (iii) any practice which is
intended or would have the effect of  postponing to  subsequent  fiscal  periods
payments  by the  Company  that  would  otherwise  be  expected  (based  on past
practice)  to be made in prior  fiscal  periods,  in each  case in  clauses  (i)
through  (iii) in a manner  outside the ordinary  course of business  consistent
with past practices; or

     (p) pay accounts payable and pursue  collection of its accounts  receivable
in the ordinary course of business, consistent with past practices;

     (q) not request a tax pre-ruling or otherwise  contact the tax  authorities
except on routine day-to-day matters, without the express, written permission of
Buyer;

     (r) not otherwise  take any action that would impair  Buyer's  rights under
this  Agreement or fail to take any action that would  preserve  Buyer's  rights
under this Agreement:

     (s) keep in full force all insurance policies;

                                       28
<PAGE>
     (t) not change any of its methods of accounting or accounting  practices in
any respect;

     (u) not  distribute  any dividend nor make any other type of  distribution,
regardless of the record date thereof;

     (v) not enter into any  transaction  or take any other  action  outside the
ordinary course of business;

     (w) not agree, commit or offer (in writing or otherwise) to take any of the
actions described in clauses "(a)" through "(w)" of this Section 5.02.

          Notwithstanding  the  foregoing,  Seller  may  implement  any  of  the
     restricted  actions  specified in this Section 5.02, with the prior written
     consent of Buyer.

     SECTION 5.03 No Solicitation of Other Offers. Prior to the Closing, neither
Seller  nor any of its  Affiliates  shall  directly  or  indirectly  discuss  or
negotiate  with any person  (other than  Buyer),  encourage  the  submission  of
inquiries,  proposals or offers from any person (other than Buyer), or otherwise
provide  information  to any  other  person,  with  respect  to the  sale  of or
investment in Seller (whether by merger,  combination,  sale of assets,  sale of
stock, or otherwise) or the sale,  licensing,  distribution or other disposition
of any products,  assets or technology of Seller, other than the sale of product
Inventories in the ordinary course of business.

     SECTION 5.04 Access to Information and Records. Except as required pursuant
to any  confidentiality  agreement or similar  agreement or arrangement to which
Seller  is a party  (in  which  case  the  Seller  shall  use  all  commercially
reasonable  efforts  to  provide  acceptable  alternative  arrangements,  not in
violation  of such  agreement or  arrangement,  for  disclosure  to Buyer or its
advisors)  or pursuant to  applicable  law,  Seller shall afford to Buyer and to
Buyer's  accountants,   officers,  directors,   employees,  counsel,  and  other
representatives  reasonable  access during normal business hours upon reasonable
prior  notice,  from  the  date  hereof  through  the  Closing,  to  all  of the
properties,  books, data,  contracts,  commitments,  and records of Seller, and,
during such  period,  Seller  shall  furnish  promptly to Buyer all  information
concerning Seller's prospects,  properties,  liabilities, results of operations,
financial  condition,  product  evaluations  and testing as Buyer may reasonably
request  and  reasonable  opportunity  to contact  and obtain  information  from
Seller's officers, employees as Buyer may reasonably request.

     SECTION 5.05  Non-competition.  As a material  inducement and consideration
for Buyer to enter into this  Agreement,  Seller  agrees that from and after the
Closing  until five  years  following  the  Closing  Date (the  "Non-competition
Period"),  Seller  undertakes,  not, within any jurisdiction in the world,  own,
operate,  advise,  assist or lend funds to or invest  funds in any person in any
manner that would aid or assist any person or entity to compete, in any material
respect,  with the Business or any substantially  similar  business.  During the
Non-competition  Period,  Seller further agrees not to,  directly or indirectly,
interfere with, disrupt or attempt to disrupt the relationship between Seller or
any of its Affiliates and any third party, including any customer, collaborator,
supplier or employee of Buyer or any of its Affiliates. The parties hereto agree
that the duration and  geographic  scope of the  non-competition  provisions set
forth in this Section are reasonable. If any covenant in this Section is held to
be invalid,  illegal or unenforceable by any court of competent  jurisdiction or

                                       29
<PAGE>

any other  governmental  entity,  it is agreed and understood that such covenant
will not be voided but rather will be construed to impose  limitations  upon the
activities of Seller that are no greater than  allowable  under then  applicable
laws.  Seller  undertakes  to  procure   non-competition  and   non-solicitation
undertakings  by the Kibbutz in favor of the Buyer as set forth in this  Section
5.05.

     SECTION 5.06 Further Assurances; Seller Access to Records. At such time and
from time to time on and after the Closing  Date upon  request by Buyer,  Seller
will  execute,  acknowledge  and  deliver,  or will cause to be done,  executed,
acknowledged  and  delivered,   all  such  further  acts,  deeds,   assignments,
transfers,  conveyances, powers of attorney, and assurances that may be required
for the better  conveying,  transferring,  assigning,  delivering and confirming
ownership  to,  or  reducing  to the  possession  of,  Buyer  or its  respective
successors  and assigns all of the Purchased  Assets and to otherwise  carry out
the purposes of this  Agreement.  Seller  agrees to promptly  deliver,  remit or
return to Buyer all assets and amounts  received  by it after the Closing  that,
pursuant  to the terms  hereof,  are owned by or are due to Buyer.  Buyer  shall
permit Seller and its authorized  representatives  to have reasonable access to,
on a  confidential  basis,  and to copy,  at Seller's  expense,  during  regular
business  hours  and upon  reasonable  advance  notice  to Buyer and in a manner
non-disruptive  to Buyer's  conduct of the  Business,  such  books,  records and
documents  related to the conduct of the Business  prior to the Closing that are
necessary  for Seller to comply  with any  applicable  law or  regulation  or to
respond to any legal or administrative claim or investigation.  Seller agrees to
cooperate, and to cause its independent accountants to cooperate, with Buyer and
its accountants in the  preparation of any financial  statements of Seller as of
the Closing Date.

     SECTION 5.07  Approvals.  Each party to this Agreement shall use 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  governmental  authority
with  respect to the  transaction  contemplated  hereby.  Without  limiting  the
generality of the foregoing:  (i) Seller shall use reasonable efforts to obtain,
as promptly  as  practicable  after the date of this  Agreement,  the  following
consents,  and any other  consents that may be required in  connection  with the
transaction  contemplated  hereby:  (x) approval of the OCS; and (y) approval of
the  Investment  Center;  and  (ii)  Buyer  shall  provide  to the  OCS  and the
Investment Center any information  reasonably  requested by such authorities and
shall, without limitation of the foregoing,  execute an undertaking in customary
form in which Buyer undertakes to comply with the R&D Laws and regulations. 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  governmental
entity with respect to the transaction  contemplated hereby, (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 the  OCS,  the
Investment Center or any other Israeli  governmental entity regarding any of the
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  transaction  contemplated
hereby.  In addition,  except as may be prohibited  by any Israeli  governmental
entity,  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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<PAGE>
     SECTION 5.08  Transfer of Approved  Enterprise  Status.  At the request and
expense of Buyer,  whether  before or after the Closing,  Buyer and Seller shall
jointly  approach  the  Investment  Center in order to obtain the consent of the
Investment  Center to the substitution of Buyer for Seller as the beneficiary of
the Approved  Enterprise  Status that Seller received in respect of the approved
enterprise  status granted to certain  facilities of the Company as set forth in
Schedule 3.23(a) (the "Approved  Enterprise  Status"),  such that Buyer shall be
entitled to all rights and  entitlements  to which Seller is currently  entitled
pursuant to the Approved Enterprise Status,  subject to the terms and conditions
relating to such  status.  Seller  undertakes  not to take any action that shall
prevent,  delay or jeopardize the obtaining of such  approval.  Buyer and Seller
shall cooperate and coordinate any communications  with the Investment Center in
respect of the transactions contemplated herein.

     SECTION 5.09 Fees and Expenses. Whether or not the transaction contemplated
by this Agreement are consummated,  all fees and expenses incurred in connection
with  this  Agreement  and the  transaction  contemplated  hereby,  shall be the
obligation of the respective  party  incurring  such fees and expenses,  and any
expenses  incurred by Seller prior to or at the Closing and paid at or after the
Closing  shall not be deemed  as an  Assumed  Liability  and will  considered  a
Retained Liability. Fees and expenses incurred by a party in connection with the
transaction contemplated by this Agreement,  include: (i) all third party legal,
accounting, financial advisory, consulting and finders fees and expenses and all
other like fees and expenses of third parties  incurred by a party in connection
with the negotiation, documentation and effectuation of the terms and conditions
of this  Agreement  and the other  transaction  documents  and the  transactions
contemplated hereby and thereby (collectively "Transaction Expenses");  (ii) any
bonuses, change in control payments to employees or consultants of Seller or its
subsidiaries,   which  shall  be  deemed   expenses   incurred  by  Seller  (the
"Transaction  Bonus  Payments"),  and (iii) any payments in connection  with any
change in control obligations or any payment of consideration  arising under any
consents,  waivers or approvals of any party under any Contract of Seller or its
subsidiary  which are  effective as of  immediately  prior to the Closing  date,
which shall be deemed expenses of Seller (the "Change in Control Payments").

     SECTION 5.10  Notification.  During the  pre-Closing  period,  Seller shall
promptly  notify Buyer in writing of: (a) the  discovery by Seller of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this  Agreement  and that  caused or  constitutes  a  material  breach of any
representation  or  warranty  made by Seller in this  Agreement;  (b) any event,
condition,  fact or circumstance that occurs, arises or exists after the date of
this  Agreement  and that would  cause or  constitute  a material  breach of any
representation  or  warranty  made by  Seller  in  this  Agreement  if (i)  such
representation  or  warranty  had been  made as of the  time of the  occurrence,
existence or discovery of such event, condition,  fact or circumstance,  or (ii)
such event, condition,  fact or circumstance had occurred,  arisen or existed on
or prior to the date of this Agreement;  (c) any material breach of any covenant
or obligation of Seller; and (d) any event, condition, fact or circumstance that
may make the timely  satisfaction of any of the conditions set forth in Articles
VII and Article VIII impossible or unlikely.  If any event,  condition,  fact or
circumstance  that is required to be  disclosed  pursuant to this  Section  5.10
requires any change in the Disclosure Schedule, or if any such event, condition,
fact or  circumstance  would  require  such a  change  assuming  the  Disclosure
Schedule were dated as of the date of the occurrence,  existence or discovery of
such event, condition, fact or circumstance,  then Seller shall promptly deliver
to Buyer an update to the Disclosure  Schedule  specifying such change.  No such

                                       31
<PAGE>
update,  not  approved  by Buyer,  shall be deemed  to  supplement  or amend the
Disclosure Schedule for the purpose of determining whether any of the conditions
set forth in Article VII or Article VIII have been satisfied.

                                   ARTICLE VI
                                EMPLOYEE MATTERS

     SECTION 6.01 Offer to  Employees.  At any time after the date hereof but no
less than 7 days prior to the Closing  Date,  Buyer shall issue an offer to each
Current  Employee to become an employee of the Buyer upon the  Closing,  in such
manner that the Buyer shall assume the rights and  obligations  of the Seller as
employer of the Current  Employees (the  "Employment  Offers").  Each Employment
Offer  shall (a)  specify the terms of  employment  prevailing  prior to Closing
between the Current  Employee  and the Seller (as  conveyed to Buyer by Seller),
(b) specify the date of commencement of employment of each Current Employee, (c)
include an IP assignment  provision which shall be effective with respect to the
entire term of employment of the Current  Employee at the Seller,  (d) include a
consent by the Current Employee for the transfer of his/her managers'  insurance
policy and other relevant funds from Seller to Buyer;  and (e) include a consent
by the Current  Employee to inclusion  of his/her  personal  information  in the
Buyer's  database,  and that  such  information  may be  included  in  personnel
databases of the Herley group of companies. It is agreed that Buyer shall not be
obligated  to employ,  nor shall it assume any  liability  towards,  any Current
Employee which does not accept the Employment Offer in writing.

     SECTION 6.02 Pension  Plans.  Buyer and Seller shall  cooperate in order to
obtain any requisite approvals from the Tax Authorities in order to transfer the
pension plans and managers' insurance plans from Seller to Buyer.

     SECTION 6.03 Other Benefits. Seller shall be responsible for the payment of
all salaries and benefits, including vacation (beyond the liability for vacation
specified  in the  Surveyed  Interim  Balance  Sheet),  convalescence  pay [dmei
havraa],  sick pay, and any other benefit to which Current Employees (whether or
not they shall accept  Employment  Offers) may be entitled with respect to their
employment  by Seller  and/or  with  respect  to the period of time prior to the
Closing  Date.  Subject  to  transfer  of  managers'  insurance  plans  to Buyer
containing  sufficient funds to pay each of the Current  Employees'  contractual
and/or  statutory  severance pay  (according  to the higher of the two),  Seller
shall be  responsible  for the  severance  pay which may be  payable  to Current
Employees who accept the Employment Offer and become  employees of Buyer.  Buyer
shall not be  responsible  for  severance pay claimed by or payable to a Current
Employee who does not accept the Employment Offer or does not become an employee
of the Buyer at the  Closing.  The  provisions  of this  Section 6.04 shall also
apply to any  individual  employed  by Seller at any  time,  and any  individual
retained  under  another  agreement  such  as a  consultancy  or  representative
agreement,  who claims any  employment-related  benefits,  rights or payments in
relation to his/her contractual engagement with Seller.

     SECTION 6.04 Kibbutz - Services  Agreement.  With effect as of the Closing,
the Kibbutz and the Buyer shall enter into a Services  Agreement  (the  "Kibbutz
Services Agreement"),  to the satisfaction of Buyer, which shall include,  inter
alia, the following provisions:

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<PAGE>
     (a) The Service  Agreement  shall be in force for a period of one year from
Closing and shall automatically  extend for periods of one year unless one party
elects to terminate the arrangement upon giving the other party not less than 60
days' prior written notice before the  anniversary of the expiry of the relevant
year.

     (b) The  Kibbutz  shall be the sole  employer  of any  personnel  providing
services to Buyer on behalf of the Kibbutz  under the  Services  Agreement  (the
"Kibbutz  Personnel")  and  there  shall  be no  employer/employee  relationship
between the Buyer and any Kibbutz  Personnel.  In such  connection,  the Kibbutz
undertakes  to maintain  and fund via a licensed  insurance  company or licensed
comprehensive  pension  fund:  (i) a  personal  fund  for  each  of the  Kibbutz
Personnel  covering the Kibbutz's  severance  pay liability  with respect to the
entire period during which the Kibbutz  provided the services of such individual
(during  the term of the  Service  Agreement  as well as the term of the service
agreement  between  Seller  and  the  Kibbutz),  (ii)  loss of  ability  to work
benefits, at rates which are generally acceptable in the manufacturing industry,
and (iii) personal funded pension plan.

     (c)  The  Kibbutz  shall  comply  with  all  applicable   employment  laws,
regulations,   extension  orders  and  judicial  rulings  with  respect  to  the
employment and termination of the Kibbutz Personnel.  The Kibbutz shall make all
required  reports and payments to the National  Insurance  Institute and the tax
authorities with respect to its employment of the Kibbutz  Personnel.  The Buyer
shall be entitled,  upon request, to review and audit the relevant documentation
and funding,  and make  recommendations for implementation of changes,  which if
reasonable shall be promptly implemented by the Kibbutz.

     (d) The Kibbutz shall  indemnify  and hold harmless  Buyer from any claims,
demands or allegations by any Kibbutz Personnel against Buyer,  whether alleging
that an  employment  agreement  existed  between the Buyer and such  claimant or
otherwise, whether or not the Kibbutz violated any of its undertakings under the
Service Agreement or its statutory obligations or otherwise.  Without derogating
from the Kibbutz's  undertaking to indemnify Buyer as aforesaid,  Buyer shall be
entitled  to set off any  amounts  payable by Kibbutz to Buyer by virtue of such
indemnification  against any amounts payable by Buyer to the Kibbutz,  including
under the  Service  Agreement,  any lease  agreements,  or other  amounts.  Said
indemnification  shall not be subject to the time limits  applicable to Seller's
indemnification obligations in Article IX hereto.

     (e) The Kibbutz will procure  that all the Kibbutz  Personnel  will execute
non-compete and  confidentiality  agreements which shall also include provisions
covering the assignment of all  intellectual  property rights for the benefit of
the Buyer, in the standard form of the Buyer, on or prior to Closing.

                                  ARTICLE VII
                        CONDITIONS TO BUYER'S OBLIGATIONS

     The  obligations of Buyer under this  Agreement  shall,  at its option,  be
subject to the  satisfaction,  on or prior to the  Closing  Date,  of all of the
following conditions:

     SECTION 7.01 Representations, Warranties and Covenants. The representations
and  warranties  of Seller  herein  shall be true and  accurate in all  material
respects  (except with respect to  representations  and warranties  qualified by

                                       33
<PAGE>
materiality,  which shall be true and  accurate in all  respects) at the Closing
with the same effect as though made at such time.  Seller  shall have  performed
all of its  obligations and complied with all of its covenants prior to or as of
the Closing. Seller shall have delivered to Buyer approvals and documentation in
evidence thereof, as well as an officers'  certificate in a form to be agreed by
Closing,  dated as of the Closing and executed by the chief  executive of Seller
to all such effects.

     SECTION 7.02 Opinion of Counsel for Seller.  Osnat Naveh & Co., counsel for
Seller, shall have delivered to Buyer a written opinion, dated the Closing Date,
in a form to be agreed prior to the Closing.

     SECTION 7.03  Corporate  Approvals.  Unanimous  written  resolutions of the
shareholders  of  Seller,  in lieu of a general  meeting,  signed by each of the
shareholders  of Seller,  and of the board of directors of Seller,  in lieu of a
board of directors  meeting,  and the written  consent of the Kibbutz,  shall be
delivered to Buyer.

     SECTION 7.04 Approvals;  Consents;  Releases.  All  permissions,  releases,
consents or  approvals,  governmental  or  otherwise,  necessary  on the part of
Seller to consummate the  transactions  contemplated  hereunder  shall have been
obtained by Seller and delivered to Buyer,  including the release of any and all
Liens on the Purchased  Assets not including  Liens  associated with the Assumed
Liabilities,  and completion of all attendant filing procedures at each relevant
official  registry,  including without limitation the Registrar of Companies and
the Registrar of Pledges,  and  assignment or issuance to Buyer of all requisite
permits, licenses and business licenses.

     SECTION  7.05  Litigation  Affecting  Closing.  No  suit,  action  or other
proceeding shall be pending or threatened by any third party or by or before any
court or governmental agency in which it is sought to restrain or prohibit or to
obtain  damages  or other  relief  in  connection  with  this  Agreement  or the
consummation  of  the  transactions  contemplated  by  this  Agreement,  and  no
investigation  that might  result in any such suit,  action or other  proceeding
shall be pending or threatened.

     SECTION  7.06  Legislation.   No  statute,  rule,  regulation,   order,  or
interpretation  shall have been  enacted,  entered or deemed  applicable  by any
domestic or foreign government or governmental or administrative agency or court
that would  make the  transactions  contemplated  by this  Agreement  illegal or
otherwise  materially adversely affect the Purchased Assets, the Business or the
conduct of the Business in the hands of Buyer.

     SECTION 7.07 Other  Agreements.  The  approvals of the third parties to the
assignment or transfer, as the case may be, of the agreements listed in Schedule
7.07 shall have been obtained in writing  without any onerous  conditions  being
imposed on Buyer,  except that Buyer shall be entitled,  in its sole discretion,
to waive the omission of any such consent required hereunder,  and in such case,
the parties  agree to use all  reasonable  efforts to obtain such  consent  post
Closing.

     SECTION  7.08  Employees.  At  least  80% of the Key  Employees  listed  in
Schedule  7.09 shall have  remained  continuously  employed with Seller from the
date of this  Agreement  through the Closing and shall have signed an Employment
Offer.  At least 80% of the Current  Employees  (other  than the Key  Employees)
shall have signed Employment Offers.

                                       34
<PAGE>
     SECTION 7.09 OCS  Approvals.  Buyer shall have received from Seller written
approval by the OCS, which shall not impose any condition upon Buyer, except for
the  requirement  that it undertake to comply with the R&D Law, for the transfer
to Buyer of all rights in and to all  know-how of Seller  subject to the R&D Law
and/or  developed  in  connection  with OCS Grants,  with respect to which it is
agreed that Seller shall  consult with Buyer in all matters  pertaining  to such
application,  and that Buyer shall cooperate in such regard, including provision
of undertakings required under the R&D Law.

     SECTION 7.10 No Material Adverse Effect.  There shall not have occurred any
Material Adverse Effect since the date of this Agreement and no event shall have
occurred and no condition or circumstance  shall exist that could be expected to
give rise to any such Material Adverse Effect.

     SECTION 7.11 Delayed  Schedules.  On or before the  twentieth day following
the date of this Agreement, Seller shall deliver to Buyer any missing Schedules,
to the extent not  delivered on the date hereof  (each,  a "Delayed  Schedule").
Upon receipt by Buyer of any Delayed Schedule and written notification to Seller
of the  acceptance  by Buyer of such Delayed  Schedule (in its sole and absolute
discretion), such Delayed Schedule shall be deemed attached to this Agreement as
if such Delayed Schedule had been delivered on and as of the date hereof. In the
event of any material  discrepancy  in the  information  provided in any Delayed
Schedule,  including,  without limitation,  omissions and information  different
from that  contained or  summarized  in the Seller's  Financial  Statements  and
information  otherwise conveyed by Buyer to Seller, the Buyer shall be entitled,
at its option,  to require an  adjustment  in the  Purchase  Price,  as shall be
agreed  between the parties in good faith,  and in the absence of agreement,  as
shall be decided upon by Mr. Yigal Brightman of Deloitte (or another  individual
to whom he shall refer the matter) in his sole discretion, pending resolution or
agreement on the actual adjustment of the Purchase Price.

     SECTION 7.12 Lease Agreement.  The Kibbutz and the Buyer shall enter into a
new lease agreement  effective as of the Closing,  to the satisfaction of Buyer,
with respect to the Business premises (the "Lease  Agreement"),  rental payments
thereunder  not to  exceed  the  rates  currently  applicable  under  the  lease
agreement  existing  between Seller and the Kibbutz.  Under the Lease Agreement,
the Kibbutz as lessor  shall  undertake  to procure all  necessary  licenses and
permits.

     SECTION 7.13 Kibbutz  Services  Agreement.  The Kibbutz and the Buyer shall
enter into a Kibbutz Services Agreement, to the satisfaction of Buyer.

     SECTION 7.14 Services Agreement. The Kibbutz and the Buyer shall enter into
an agreement with respect to the provision of ancillary services by the Kibbutz,
to the satisfaction of Buyer.

     SECTION  7.15  Audited  Financial  Statements.  On or  before  the 20th day
following  the date  hereof,  Seller shall  deliver to Buyer an audited  Interim
Balance  Sheet  for the 6 month  period  ending  June 30,  2008  and an  audited
statement of earnings for said six (6) month  period  (collectively  - "Surveyed
Interim Financial Statements") and the audited financial statements for the year
ended 31st December,  2007 and the statement of earnings for such year ("Audited
FS 2007").

     SECTION 7.16 Due  Diligence.  Seller  shall have  provided to Buyer all due
diligence  documents and explanations  relating to the Seller,  the Business and
related matters,  and Buyer shall not have discovered,  during the course of the

                                       35
<PAGE>
review of said materials,  any fact or circumstance which materially reduces the
benefit  expected  by  Buyer  from  the  transaction   contemplated  hereby,  or
constitutes a Material Adverse Effect, at the discretion of Buyer.

     SECTION  7.17  Interim  Period  Reduction.  The parties  shall agree on the
amount of the Interim Period Reduction;  or, failing to do so, shall appoint Mr.
Yigal  Brightman of Deloitte (or another  individual  to whom he shall refer the
matter) who shall determine the Interim Period Reduction at his sole discretion.

     SECTION  7.18  Indemnification  by Kibbutz.  The Kibbutz  shall  provide an
written   undertaking  to  indemnify   Buyer  in  accordance   with  Article  IX
(Indemnification)  hereunder, as well as a non-competition  undertaking pursuant
to Section 5.05 above.

                                  ARTICLE VIII
                       CONDITIONS TO SELLER'S OBLIGATIONS

     The  obligations of Seller under this Agreement  shall,  at its option,  be
subject to the  satisfaction,  on or prior to the  Closing  Date,  of all of the
following conditions:

     SECTION 8.01 Representations, Warranties and Covenants. The representations
and  warranties  of Buyer herein  shall be true in all material  respects on the
Closing Date with the same effect as though made at such time.  Buyer shall have
performed all of its obligations  and complied with all of its covenants  herein
prior to or as of the Closing Date.

     SECTION  8.02  Legislation.   No  statute,  rule,   regulation,   order  or
interpretation  shall have been  enacted,  entered or deemed  applicable  by any
domestic or foreign government or governmental or administrative agency or court
that would make the transactions contemplated by this Agreement illegal.

     SECTION  8.03  Litigation  Affecting  Closing.  No  suit,  action  or other
proceeding shall be pending or threatened by any third party or by or before any
court or  governmental  agency in which it is sought to  restrain or prohibit in
connection  with  this  Agreement  or  the   consummation  of  the  transactions
contemplated by this Agreement.

     SECTION 8.04  Corporate  Authorization  of Seller.  At the Closing,  Seller
shall have received all requisite approvals for the transaction  contemplated by
this Agreement from the shareholders and board of directors of Seller.

     SECTION 8.05 Corporate  Authorization of Buyer. At the Closing, Buyer shall
have received all requisite  approvals for the transaction  contemplated by this
Agreement from the board of directors and  shareholders (as applicable) of Buyer
and the beneficial owner of Buyer.

     SECTION  8.06  Guarantees.  Buyer  shall  provide the  guarantees  to third
parties as  specified  in  Schedule  8.05  hereto,  with  respect to the Assumed
Contracts.

                                       36
<PAGE>
                                   ARTICLE IX
                                 INDEMNIFICATION

     SECTION 9.01 Indemnification of Buyer. Subject to the limitations and other
provisions  set forth in Sections  9.04 and 9.06,  Seller and  Kibbutz  (without
derogating from its undertakings under the Kibbutz Services Agreement),  jointly
and severally,  shall indemnify,  defend and hold harmless Buyer and each of its
subsidiaries,   officers,  directors,   employees,  and  shareholders  (each  an
"Indemnitee" and collectively  "Indemnitees") from and against and in respect of
any and all demands, claims, actions or causes of action,  assessments,  losses,
damages,  liabilities,  interest and penalties,  costs and expenses  (including,
without  limitation,   reasonable  legal  fees  and  disbursements  incurred  in
connection therewith and in seeking indemnification  therefore,  and any amounts
or expenses required to be paid or incurred in connection with any action, suit,
proceeding,  claim,  appeal,  demand,  assessment or  judgment),  whether or not
involving a third-party claim,  (collectively  "Indemnifiable Losses") resulting
from or incurred by any Indemnitee with respect to any of the following:

     (a) any breach of any  representation  or warranty of Seller  contained  in
this Agreement,  the Disclosure  Schedule,  or the officers'  certificate in the
form of Exhibit B, as of the date of this Agreement and as of the Closing Date;

     (b) any breach of any covenant or  obligation  of Seller  contained in this
Agreement;

     (c) any failure by Seller to satisfy,  perform,  pay,  discharge or resolve
any  liabilities  and  obligations  of, or claims  against,  Seller not included
within the Assumed Liabilities (whether or not disclosed to Seller);

     (d) any liability  (other than the Assumed  Liabilities) to which the Buyer
or any of the other  Indemnitees  may become subject and that arises directly or
indirectly from or relates directly or indirectly to Retained Assets or Retained
Liabilities; and

     (e) any employee  claims  directly or indirectly  resulting or arising from
employment or termination  of employment by Seller,  or the period of employment
of an individual  by Seller,  or from the  transaction  hereunder or the Closing
(except employee claims which constitute Assumed Liabilities hereunder).

     SECTION 9.02  Indemnification  of Seller.  Subject to the  limitations  and
other  provisions  set  forth  in  Sections  9.04 and 9.06  below,  Buyer  shall
indemnify, defend and hold harmless Seller and each of its officers,  directors,
employees  and  shareholders  from and  against  and in  respect  of any and all
Indemnifiable  Losses resulting from or incurred by any person to be indemnified
hereunder by any of the following reasons:  (i) any breach of any representation
or  warranty  of Buyer  contained  in this  Agreement;  (ii) any  breach  of any
covenant or obligation of Buyer contained in this  Agreement;  and (iii) Buyer's
failure to satisfy, perform, pay, discharge or resolve any Assumed Liability.

     SECTION 9.03 Procedures.

     (a) Procedures for Third Party Claims.  If a claim by a third party is made
against  Buyer or its  Indemnitees,  within  the  survival  period  set forth in
Section  9.04  below,  arising  out of a matter  for  which  Buyer or any of its
Indemnitees,  as the case may be, is  entitled  to be  indemnified  pursuant  to
Section 9.01 (a "Third Party  Claim"),  Buyer shall  promptly  notify  Seller in
writing of such claim. The failure to notify promptly Seller hereunder shall not
relieve Seller of its obligations  hereunder except to the extent that Seller is

                                       37
<PAGE>
actually prejudiced (including by losing the opportunity to mitigate damages) by
such failure.  Seller shall be responsible  for the fees and expenses of counsel
employed by the Indemnitee; provided that in no event shall Seller be liable for
the fees and  expenses  of more  than one  counsel  (in  addition  to any  local
counsel) for all  Indemnitees in connection  with any one action or separate but
similar  or related  actions  arising  out of the same  general  allegations  or
circumstances. Seller shall be entitled to participate in the defense of a Third
Party Claim,  through counsel of its choice, at the expense of Seller;  provided
that with respect to any Third Party Claim,  Buyer shall control all proceedings
in connection with such Third Party Claim and,  without  limiting the foregoing,
may in its sole discretion,  subject to this Section  9.03(a),  pursue or forego
any and all administrative appeals,  proceedings,  hearings and conferences with
any governmental entity with respect thereto. So long as Seller is participating
in the defense of a Third Party Claim in good faith, or if Seller so requests in
writing,  Buyer shall reasonably  cooperate with Seller by providing records and
information that are reasonably  relevant to such Third Party Claim. Buyer shall
not settle or compromise  any Third Party Claim  without the written  consent of
Seller,  which  consent will not be  unreasonably  withheld or delayed.  No such
consent will be required (i) if Buyer agrees in writing to forego all claims for
indemnification  from Seller with  respect to such Third  Party  Claim,  or (ii)
Buyer  reasonably  believes  itself to be  potentially  or  actually  exposed to
Indemnifiable  Losses materially in excess of amounts reasonably  expected to be
received  from  Seller,  or  (iii)  Buyer  reasonably   believes  itself  to  be
potentially or actually  exposed to non-monetary  remedies;  provided,  however,
that Buyer uses commercially  reasonable  efforts to obtain in such settlement a
release of Seller with respect to all such Third Party Claims.

     (b)  Procedures  for Direct  Claims.  In the event Buyer or any  Indemnitee
should have a claim against  Seller under this Agreement that does not involve a
Third Party Claim being asserted against or sought to be collected from Buyer or
such  Indemnitee  (a "Direct  Claim"),  the Buyer shall  deliver  notice of such
Direct Claim,  within the survival period set forth in Section 9.04 below,  with
reasonable  promptness  to  Seller.  The  failure  by Buyer to so notify  Seller
hereunder  shall not relieve Seller of its obligations  hereunder  except to the
extent (and only to the  extent)  that  Seller is  actually  prejudiced  by such
failure.  If Seller  does not notify  Buyer  within  thirty (30)  calendar  days
following  receipt of such notice that Seller disputes its liability to Buyer or
the Indemnitee, as the case may be, such Direct Claim specified by Buyer in such
notice shall be  conclusively  deemed a liability of Seller (and will be subject
to the limitations set forth in this Article IX).

     SECTION 9.04 Termination of Indemnification.  Except with respect to fraud,
willful  misrepresentation,  willful misconduct or willful  concealment by or on
behalf of Seller: (i) other than the representations and warranties set forth in
Section  3.02  (Organization)  and 3.04  (Authority),  the  representations  and
warranties set forth in this Agreement shall terminate  twenty-four  (24) months
following the Closing,  except that such  obligations  shall not terminate  with
respect  to any  item as to  which  Buyer  or any  Indemnitee  has,  before  the
expiration of such period, previously made a Third Party Claim or a Direct Claim
(a "Claim")  against Seller by delivering a notice to Seller in accordance  with
this Agreement; and (ii) the representations and warranties set forth in Section
3.02  (Organization) and 3.04 (Authority) shall terminate upon the expiration of
the relevant  statute of limitations,  taking into account  extensions  thereof,
except that such obligations  shall not terminate with respect to any item as to

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<PAGE>
which Buyer or any Indemnitee has, before the expiration of the relevant period,
previously  made a Claim  against  Seller  by  delivering  a notice to Seller in
accordance with this Agreement;  and (iii) the  representations  made in Section
3.01(b) with respect to quantities of equipment and Inventories  shall terminate
one (1) month after the Closing.

     SECTION 9.05 Exclusive Remedy Against Seller. Except with respect to fraud,
willful  misrepresentation,  willful misconduct or willful  concealment by or on
behalf of Seller and except for injunctive relief that may be obtained to enjoin
the breach, or threatened  breach, of any provision of this Agreement or a Claim
for specific  performance,  Buyer's or an Indemnitee's  right to indemnification
under  this  Article  IX  constitutes  Buyer's  or such  Indemnitee's  sole  and
exclusive  remedy  with  respect  to any  inaccuracy  in, or any  breach of, any
representation  or  warranty  or any  covenant  or  agreement  of Seller in this
Agreement or in any certificate,  instrument, document or agreement delivered by
or on behalf of Seller  pursuant to or in connection  with this Agreement or any
failure by Seller to perform any covenant, agreement,  obligation or undertaking
in this Agreement or any such certificate, instrument, document or agreement.

     SECTION 9.06 Limitation of Indemnification. Notwithstanding anything to the
contrary   in  this   Agreement,   except   with   respect  to  fraud,   willful
misrepresentation,  willful misconduct or willful concealment by or on behalf of
Seller : (i) Seller shall not be liable for any Indemnifiable Losses pursuant to
this Agreement in the aggregate  greater than $2,000,000 (two million  dollars),
provided that,  with the exception of sub-Section  (ii)  immediately  following,
Seller shall not be liable for any  Indemnifiable  Losses  unless the  aggregate
thereof  are in excess of  $100,000;  (ii)  Seller  shall not be liable  for any
Indemnifiable  Losses  pursuant to the  representations  made in Section 3.01(b)
with respect to quantities of equipment and Inventories in the aggregate greater
than  $100,000  (one hundred  thousand  dollars),  and (iii) Seller shall not be
liable for any Indemnifiable  Losses that were not notified to Seller within the
survival period set forth in Section 9.04.

     SECTION 9.07  Cooperation  as to Indemnified  Liability.  Each party hereto
shall  cooperate  fully with the other  parties with respect to access to books,
records,  or  other  documentation   within  such  party's  control,  if  deemed
reasonably  necessary  or  appropriate  by any party in the defense of any claim
that may give rise to indemnification hereunder.

     SECTION 9.08 Nature of  Indemnification.  Buyer's right to  indemnification
and  payment  of  Indemnifiable  Losses,  or other  remedy,  based  on  Seller's
representations, warranties, covenants and obligations, shall not be affected by
any  investigation  conducted by Buyer or any knowledge  acquired (or capable of
being acquired) at any time by Buyer,  whether before or after the execution and
delivery of this  Agreement  or the  Closing,  with  respect to the  accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant or
obligation. The parties recognize and agree that the representations, warranties
and covenants operate as bargained for promises and risk allocation  devices and
that, accordingly,  Buyer's knowledge,  and the waiver of any condition based on
the accuracy of any  representation  or warranty,  or on the  performance  of or
compliance  with any  covenant  or  obligation,  shall not  affect  the right to
indemnification or payment of Indemnifiable  Losses pursuant to this Article IX,
or other  remedy,  based on such  representations,  warranties,  covenants,  and
obligations.

     SECTION 9.09 At the Closing,  Seller shall  provide to Buyer an  autonomous
bank guarantee, or equivalent thereof from Granot Central Cooperative Ltd., in a
form  acceptable  to  Buyer  at its  reasonable  discretion,  in the  amount  of
$1,000,000 (or NIS equivalent according to the Representative Rate, but not less

                                       39
<PAGE>
than NIS  3,400,000),  for a period of eighteen  (18) months  from  Closing,  to
secure its  undertakings  under this Article IX and under  Section  2.04(d) (the
"Bank  Guarantee").  The Bank  Guarantee  shall be  exercisable  under the terms
detailed in Schedule 9.09 hereto.

                                    ARTICLE X
                                   TERMINATION

     SECTION 10.01  Termination Prior to Closing.  Notwithstanding  any contrary
provisions of this Agreement,  this Agreement and the respective  obligations of
the parties  hereto to consummate  the  transaction  contemplated  hereby may be
terminated and abandoned at any time at or before the Closing only as follows:

     (a) by either Buyer, on the one hand, or Seller,  on the other hand, at the
option of either  Buyer or Seller,  if the  Closing  shall not have  occurred by
November 30, 2008;  provided that the party seeking to terminate  shall not have
breached in any material  respect its  obligations  under this  Agreement in any
manner that shall have been the proximate  cause of, or resulted in, the failure
to consummate the Closing; or

     (b) by Buyer (i) if Seller has breached in any material  respect any of its
representations,  warranties,  covenants or other  agreements  contained in this
Agreement, which breach or failure to perform (A) would give rise to the failure
of a condition  set forth in Article VII and (B) has not been or is incapable of
being cured by Seller within 20 days after its receipt of written notice thereof
from Buyer; or (ii) if any of the effects set forth in Section 7.05  (Litigation
Affecting  Closing)  shall  be  in  effect  and  shall  have  become  final  and
nonappealable; or

     (c) by Seller, (i) if Buyer shall have breached in any material respect any
of its representations,  warranties,  covenants or other agreements contained in
this  Agreement,  which  breach or failure to perform (A) would give rise to the
failure of a  condition  set forth in Article  VIII,  and (B) has not been or is
incapable  of being  cured by Buyer  within 20 days after its receipt of written
notice  thereof from Seller;  or (ii) if any of the effects set forth in Section
8.03  (Litigation  Affecting  Closing)  shall be in effect and shall have become
final and nonappealable.

     SECTION  10.02  Effect of  Termination.  If this  Agreement  is  terminated
pursuant to Section  10.01,  all further  obligations  of the parties under this
Agreement  shall  terminate;  provided  however,  that:  (a) no  party  shall be
relieved  of any  obligation  or other  liability  arising  from any  willful or
intentional  breach by such party of any  provision of this  Agreement;  (b) the
parties shall, in all events,  remain bound by and continue to be subject to the
provisions set forth in Section 5.09.

                                   ARTICLE XI
                                  MISCELLANEOUS

     SECTION  11.01  Complete  Agreement.  The  Schedules  and  Exhibits to this
Agreement  shall be construed as an integral part of this  Agreement to the same
extent as if they had been set forth verbatim herein. This Agreement  constitute
the entire  agreement  between  the parties  hereto with  respect to the subject
matter hereof and supersede all prior  proposals,  discussions,  or  agreements,
whether written or oral, relating hereto.

                                       40
<PAGE>
     SECTION 11.02 Waiver,  Discharge,  Amendment, Etc. The failure of any party
hereto to enforce at any time any of the provisions of this Agreement, including
the election of such party to proceed with the Closing  despite a failure of any
condition  to such  party's  closing  obligations  to occur,  shall in no way be
construed  to be a waiver of any such  provision,  nor in any way to affect  the
validity  of this  Agreement  or any part  thereof  or the  right  of the  party
thereafter to enforce each and every such provision.  No waiver of any breach of
this Agreement  shall be held to be a waiver of any other or subsequent  breach.
Any  amendment to this  Agreement  shall be in writing and signed by the parties
hereto.

     SECTION  11.03  Notices.  All  notices or other  communications  to a party
required or permitted  hereunder  shall be in writing and shall be given by hand
delivery,  courier  service  (with  acknowledgment  of  receipt),  fax or  email
transmission (with confirmation of transmission),  or by certified mail, postage
prepaid with return receipt requested, addressed to the parties at the following
addresses:

         if to Buyer, to:       General Microwave Acquisition Israel (2008) Ltd.
                                c/o General Microwave Israel (1978) Ltd.
                                20 Pierre Koenig St., Jerusalem 91531, Israel
                                Attention: CEO
                                Telephone: +972 2 5689444
                                Fax: +972 2 6782460
                                Email: adelman@gmic.co.il

         with a copy (which     Yigal Arnon & Co.
         shall not constitute   1 Azrieli Center, Tel Aviv 67021 Israel
         notice) to:            Attention: David Osborne, Adv.
                                Telephone:  +972 3 6087826
                                Facsimile: +972 3 6087724
                                E-mail:  davido@arnon.co.il

         and if to Seller, to:  Eyal  Microwave Ltd.
                                Kibbutz Eyal D.N.
                                HaSharon HaTichon, 45840
                                Israel

                                Attention: General Manager
                                Telephone: +972 9 749 3184
                                Facsimile:  +972 9 749 3669

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<PAGE>
         with a copy (which shall   Osnat Naveh & Co.
         not constitute notice) to: 4 Kauffman Street, Tel Aviv 60812
                                    Tel.: +972 3 5100189
                                    Facsimile: +972 3 5160960
                                    Email: osnat@naveh-law.co.il

     Any party may change the  above-specified  recipient and/or mailing address
by  notice to all other  parties  given in the  manner  herein  prescribed.  All
notices  shall be deemed  given on the day when  actually  delivered as provided
above (if  delivered  personally,  by courier or by telecopy or email) or on the
day shown on the return receipt (if delivered by mail).

     SECTION 11.04 Public  Announcement.  Each of the parties to this  Agreement
hereby agrees with the other parties  hereto that,  except as may be required to
comply with the  requirements  of  applicable  law, no press  release or similar
public  announcement  or  communication  will  be  made  or  caused  to be  made
concerning the execution or performance  of this Agreement  unless  specifically
approved  in advance  by Buyer and  Seller.  The  foregoing  shall not  restrict
Buyer's and Seller's  internal  communications  with employees,  shareholders or
customers. Such approval shall not be withheld except on reasonable grounds.

     SECTION 11.05 Expenses. Except as otherwise expressly provided herein, each
party  hereto  shall pay its own  expenses  (including,  but not limited to, all
compensation and expenses of its own counsel,  financial advisors,  consultants,
actuaries  and  independent  accountants)  incident  to this  Agreement  and the
preparation for, and consummation of, the transactions provided for herein.

     SECTION 11.06  Governing  Law;  Forum  Selection.  The legality,  validity,
enforceability  and  interpretation  of this Agreement  shall be governed by the
laws of the State of Israel, without giving effect to the principles of conflict
of  laws.  The  courts  of  the  city  of  Tel-Aviv-Jaffa  will  have  exclusive
jurisdiction over any dispute arising from or in connection with this Agreement.

     SECTION 11.07 Successors and Assigns.  This Agreement shall be binding upon
and inure to the benefit of the parties  hereto and the successors or assigns of
the  parties  hereto;  provided  that the  rights  of Seller  herein  may not be
assigned,  and all or any portion of the rights of Buyer may be assigned only to
a subsidiary of Buyer or to such business organization that shall succeed to the
business  of  Buyer  or of such  subsidiary  to which  this  Agreement  relates,
provided that Buyer remains liable for the fulfillment by such  assignee(s),  in
accordance  with and  subject  to the terms and  conditions  hereof,  of Buyer's
obligations hereunder.

     SECTION  11.08  Severability.  If any  provision of this  Agreement is held
invalid,  unenforceable  or void  by a  court  of  competent  jurisdiction,  the
remaining provisions shall nonetheless be enforceable  according to their terms.
In such case, the parties agree to use their best efforts to achieve the purpose
of the invalid provision.  Further,  if any provision is held to be overbroad as
written, such provision shall be deemed amended to narrow its application to the
extent necessary to make the provision  enforceable  according to applicable law
and shall be enforced as amended.

     SECTION 11.09 Benefit. Nothing in this Agreement or the agreements referred
to herein,  expressed  or  implied,  shall  confer on any person  other than the
parties hereto or thereto, or their respective  permitted successors or assigns,

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<PAGE>
any rights,  remedies,  obligations  or  liabilities  under or by reason of this
Agreement,  the agreements referred to herein, or the transactions  contemplated
herein or therein.

     SECTION 11.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and shall be enforceable
against the  parties  actually  executing  such  counterparts,  and all of which
together shall constitute one instrument.

                  [remainder of page intentionally left blank]

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<PAGE>
     IN WITNESS WHEREOF,  each of the Seller and Buyer has caused this Agreement
to be signed by its  officers  thereunto  duly  authorized  as of the date first
written above.

                           GENERAL MICROWAVE ACQUISITION
                           ISRAEL (2008) LTD.
                             By:
                                /s/
                               -------------------------------------------------
                                Name:
                                Title:  Director

                           EYAL MICROWAVE LTD.
                             By:
                                /s/
                               -------------------------------------------------
                                Name:
                                Title:  Chairman of the Board

                           EYAL MAG LTD.
                             By:
                                /s/
                               -------------------------------------------------
                                Name:
                                Title:

                                       44

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