Document:

20-F

Exhibit 4.4  

STOCK PURCHASE
AGREEMENT

DATED AS OF DECEMBER
30, 2007 

BY AND AMONG 

ADVANCED ANSWERS ON
DEMAND HOLDING, INC. 

MAGIC SOFTWARE
ENTERPRISES LTD. 

MAGIC SOFTWARE ENTERPRISES,
INC. 

and 

AOD HOLDINGS, INC. 

FORTISSIMO CAPITAL
FUND GP LP 

TABLE OF CONTENTS  

			
			
			
			
			
	ARTICLE I	TERMS OF PURCHASE	5
	 
	SECTION 1.1.	Purchase of Shares	5
	 
	SECTION 1.2.	Purchase Price, Payment and Escrow Agreement	6
	 
	SECTION 1.3.	License Agreement	9
	 
	ARTICLE II	REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY	9
	 
	SECTION 2.1.	Organization and Qualification	9
	 
	SECTION 2.2.	Authorization	10
	 
	SECTION 2.3.	No Violation	10
	 
	SECTION 2.4.	Capitalization	10
	 
	SECTION 2.5.	Subsidiaries and Equity Interests	11
	 
	SECTION 2.6.	Consents and Approvals	11
	 
	SECTION 2.7.	Financial Statements	11
	 
	SECTION 2.8.	Absence of Undisclosed Changes	12
	 
	SECTION 2.9.	Litigation	12
	 
	SECTION 2.10.	Title to Properties	12
	 
	SECTION 2.11.	Material Contracts	13
	 
	SECTION 2.12.	Taxes	13
	 
	SECTION 2.13.	Compliance with Applicable Law	14
	 
	SECTION 2.14.	Brokers' Fees and Commissions	14
	 
	SECTION 2.15.	Intellectual Property	14
	 
	SECTION 2.16.	Employees; Labor Relations	15
	 
	SECTION 2.18.	Environmental Matters	16
	 
	SECTION 2.19.	Customers and Suppliers	17
	 
	SECTION 2.20.	Transactions with Affiliates	17
	 
	SECTION 2.21.	Disclaimer of Warranties	17
	 
	SECTION 2.22	Insurance	18
	 
	SECTION 2.23	Bank Accounts; Debt and Loan Facilities	18

2

			
	ARTICLE III	REPRESENTATIONS AND WARRANTIES OF THE SELLERS	18
	 
	SECTION 3.1.	Ownership of Shares of Common Stock	18
	 
	SECTION 3.2.	Organization and Authority	19
	 
	SECTION 3.3.	No Conflicts	19
	 
	SECTION 3.4.	Brokers' Fees and Commissions	19
	 
	SECTION 3.5.	Disclaimer of Warranties	19
	 
	ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF PURCHASER	19
	 
	SECTION 4.1.	Organization and Qualification	20
	 
	SECTION 4.2.	Authorization	20
	 
	SECTION 4.3.	No Violation	20
	 
	SECTION 4.4.	Consents and Approvals	20
	 
	SECTION 4.5.	Brokers' Fees and Commissions	21
	 
	SECTION 4.6.	Experience	21
	 
	SECTION 4.7.	Receipt of Information	21
	 
	SECTION 4.8.	Financing	21
	 
	SECTION 4.9	Conduct of Business of the Company Following the Closing and Prior to the Receipt by Sellers of the Entire Purchase Price	21
	 
	ARTICLE V	COVENANTS	23
	 
	SECTION 5.1.	[Intentionally Left Blank]	23
	 
	SECTION 5.2.	Access to Information; Confidentiality	23
	 
			
	SECTION 5.3.	All Reasonable Efforts	23
	 
	SECTION 5.4.	Public Announcements	24
	 
	SECTION 5.5.	No Solicitation of Employees	24
	 
	SECTION 5.6.	Company Closing Status	24
	 
	SECTION 5.7	License Agreement	25
	 
	SECTION 5.8	Assistance To Purchaser	25
	 
	SECTION 5.9	Post Closing Assistance of Company Employees and Access to Certain Information	25
	 
	SECTION 5.10	Non-Compete	25
	 
	SECTION 5.11	Errors and Omissions Insurance Policy	26
	 
	ARTICLE VI	CLOSING	26
	 
	SECTION 6.1	Closing	26

3

			
	ARTICLE VII	INDEMNIFICATION	27
	 
	SECTION 7.1.	Survival of Representations and Warranties	27
	 
	SECTION 7.2.	Indemnification by the Sellers	28
	 
	SECTION 7.3.	Indemnification Procedure	28
	 
	SECTION 7.4.	Limitations on Indemnification Under Section 7.2	29
	 
	ARTICLE VIII	 	32
	 
	DISPUTE RESOLUTION	32
	 
	SECTION 8.2.	Governing Law and Venue	32
	 
	MISCELLANEOUS PROVISIONS	33
	 
	SECTION 9.1.	Amendment and Modification	33
	 
	SECTION 9.2.	Waiver of Compliance; Consents	33
	 
	SECTION 9.3.	Validity	33
	 
	SECTION 9.4.	Expenses	33
	 
	SECTION 9.5.	Parties in Interest	33
	 
	SECTION 9.6.	Notices	34
	 
	SECTION 9.7.	Counterparts	35
	 
	SECTION 9.8.	Transfer Taxes	35
	 
	SECTION 9.9.	Headings	35
	 
	SECTION 9.10.	Certain Definitions	36
	 
	SECTION 9.11.	Entire Agreement	38
	 
	SECTION 9.12.	Assignment	38
	 
	SECTION 9.13.	Incorporation of Exhibits and Schedules	39
	 
	SECTION 9.14.	Facsimiles	39

4

STOCK PURCHASE
AGREEMENT  

This STOCK PURCHASE AGREEMENT (this
“Agreement”), dated December 30, 2007, by and among AOD Holdings, Inc., a
Delaware corporation having its registered office at, c/o Fortissimo (the
“SPC”) and Fortissimo Capital Fund GP LP, a limited partnership, on
behalf of the several parallel limited partnerships (Fortissimo Capital Fund, LP;
Fortissimo Capital Fund (Israel), LP and Fortissimo Capital Fund (Israel-DP), LP) in which
it serves as the General Partner (“Fortissimo”), having its registered
office at 14 Hamelacha St. Park Afek, Rosh Ha’ayin 48091, Israel (the SPC and
Fortissimo shall be referred to herein, jointly and severally, as the
“Purchaser” or “Purchasers”), Advanced Answers On Demand
Holding, Inc., a Florida corporation having its registered office at 8100 N. University
Drive, 3rd Floor, Tamarac 33321, Florida, USA (the “Company”),
Magic Software Enterprises Ltd. an Israeli company having its registered office at 2
Haplada St., Or Yehuda 60218, Israel (“Magic Ltd.”) and Magic Software
Enterprises, Inc. a Californian corporation having its registered office at 23046 Avenida
de la Carlota, Suite 300, Laguna Hills CA 926653 (“Magic Inc.” each of
Magic Ltd. and Magic Inc. a “Seller” and collectively, the
“Sellers”). 

RECITALS:  

        WHEREAS,
the Sellers own of record and beneficially all of the issued and outstanding share
capital of the Company, consisting of 100,000 shares of common stock, US$1.00 par value
each (the “Purchased Shares”); and  

        WHEREAS,
the Purchaser desires to acquire from the Sellers, and the Sellers desire to sell to the
Purchaser the Purchased Shares, on the terms and conditions set forth herein (the “Share
Purchase”); and  

        WHEREAS,
the respective boards of directors of the Sellers and the Purchaser’s partnership
bodies have determined the Share Purchase desirable and in the best interests of their
respective corporations and partnership and have approved the Share Purchase pursuant to
this Agreement (as defined below) and all the other transactions contemplated hereby.  

        NOW
THEREFORE, in consideration of the covenants, promises and representations set forth
herein, and for other good and valuable consideration, the receipt and adequacy of which
are conclusively acknowledged, the parties hereto, intending to be legally bound, agree
as follows:  

ARTICLE I 

TERMS OF PURCHASE 

     SECTION 1.1.       
Purchase of Shares.  

        Upon
the terms and subject to the conditions of this Agreement, the Purchaser agrees to
purchase from the Sellers, and the Sellers agree to sell, transfer, assign and deliver to
the Purchaser (as hereinafter defined), all of the Purchased Shares, all as further
provided for herein. 

5

     SECTION 1.2.       
Purchase Price, Payment and Escrow Agreement.  

		    (a)        Purchase
Price. The aggregate purchase price to be paid by the Purchaser           for the
Purchased Shares shall be seventeen million US dollars (US$17,000,000)           (the
“Purchase Price”).  

	 	        The
Purchase Price shall be paid in two irrevocable installments as follows: (i) one million
US dollars (US$1,000,000) shall be paid by the Purchaser to the Sellers at the Closing (“Initial
Payment”); (ii) sixteen million US dollars (US$16,000,000) shall be paid by the
Purchasers to the Escrow Agent on or prior to January 31, 2008 (the “Final
Installment Payment Date” and “Final Installment”,
respectively).  

	 	        For
the avoidance of any doubt, notwithstanding anything to the contrary in this Agreement or
any other transaction document, it is clarified and agreed that the Purchaser’s
obligation to pay the Purchase Price (including the Final Installment) (such obligation
without any set off rights) is final, unconditional and irrevocable obligation and shall
not be subject to the fulfillment of any further conditions whatsoever, nor shall it be
subject to the occurrence of any event other than the passage of time up to the Final
Installment Payment Date, nor shall it be affected by any events, circumstances or
occurrences arising between the Closing and the Final Installment Payment Date (including
without limitation any such event, circumstances or occurrence concerning the business of
the Company or the Purchaser).  

	 	        Additionally,
notwithstanding anything to the contrary in this Agreement or any other transaction
document, it is hereby clarified and agreed that notwithstanding any breach or alleged
breach of this Agreement, the Purchaser will remain obligated to transfer the Purchase
Price (including the Final Installment) (such obligation without any set-off rights) to
the Sellers (directly or through the Escrow Agent, as defined below) on the Final
Installment Payment Date; provided, however, that the foregoing shall not
limit the right of the Purchaser, if any, following the transfer of the Purchase Price
(including the Final Installment) (such obligation without any set-off rights) to the
Sellers (directly or through the Escrow Agent, as defined below), to bring a claim
against the Seller under Section 7 below (Indemnification).  

	 	        It
is agreed between the Purchaser and Sellers that the Purchaser shall not be entitled to
any remedy (including interim remedies) and/or indemnity and/or damages under or in
connection with this Agreement (or any related transaction document) (under law or
equity) unless (and subject to) all of the Purchase Price was fully paid to Sellers
(directly or through the Escrow Agent). The Purchaser’s entitlement to bring a claim
or suit under this Agreement shall be effective only upon full payment of the Purchase
Price to Sellers (directly or through the Escrow Agent).  

	 	        At
the Closing, the Sellers shall transfer to the Escrow Agent the Purchased Shares by
executing stock powers duly transferring the Purchased Shares to the name of the Escrow
Agent. At the Closing the Sellers shall deposit with the Escrow Agent stock certificates
representing the Purchased Shares registered in the name of the Escrow Agent, accompanied
by two forms of stock powers with respect to the transfer of the Purchased Shares from
the Escrow Agent: (i) one form transferring the Purchased Shares to the Sellers in the
amounts set forth in such forms, and (ii) one form transferring the Purchased Shares to
SPC (collectively, the “Escrowed Shares”); all in accordance with the
Escrow Agreement attached hereto as Schedule 1.2.  

6

	 	        Such
Escrowed Shares will be released to the Purchaser in accordance with the provisions of
the Escrow Agreement upon the receipt by the Sellers of the full Purchase Price.  

	 	        Subject
to Section 4.9 below, during the period between the Closing and the receipt by Sellers of
the entire Purchase Price (the “Escrow Period”), the Escrow Agent shall
follow the instructions of the Purchaser as to the voting of the Escrowed Shares (as more
fully set forth in the Escrow Agreement).  

		    (b)        Consequences
of Non-Payment of the Final Installment. In the event that           for any reason
whatsoever the Final Installment is not paid in full by the           Purchaser to the
Sellers (directly or through the Escrow Agent) on or prior to           the Final
Installment Payment Date, then such non payment shall constitute a           material
breach of this Agreement by the Purchaser and the following shall be           the sole
and exclusive consequences of such non payment by Purchaser (for           avoidance of
doubt, any receipt of the Final Installment by the Escrow Agent in           accordance
with the instructions designated in writing by the Escrow Agent under           the
Escrow Agreement shall be considered payment; except that, payment           accompanied
by or followed by a claim by Purchaser to the Escrow Agent not to           transfer or
that prevents such transfer of the Final Installment to the Sellers,           shall be
considered non payment of such Final Installment by Purchaser):  

		    (i)        the
Escrow Agent shall immediately transfer the Escrowed Shares to the Sellers           as
described below; and Purchaser shall have no right of any kind or type in           such
Escrowed Shares or in the Company. For avoidance of any doubt, it is agreed
          that even in the event of any dispute of any kind or type between the Purchaser
          and Sellers, the Escrowed Shares will be transferred immediately to the Sellers
          in case of any non payment of the Final Installment on the Final Installment
          Date.  

		    (ii)        the
Purchaser shall have no claim or demand of any kind or type whatsoever           against
the Sellers or their affiliates under or in connection with this           Agreement or
any other related transaction document (including for any breach or           alleged
breach of this Agreement or any other related transaction document) and           the
Purchaser shall be deemed to have irrevocably waived and forever released           the
Sellers and their affiliates from any such claims or demands, including any
          claim of set-off. Without limitation of the above, the Purchaser, be deemed to
          have waived, any right to pursue specific performance of this Agreement. It is
          agreed that in the event the Sellers bring a claim for specific performance and
          win such a suit and actually receive the full Purchase Price, then from such
          date onwards the Purchaser may bring a claim for indemnity under Section 7 of
          this Agreement (including with respect to Purchaser’s Notice of Claim
          delivered to Sellers within the applicable Survival Period ).  

		    (iii)        Notwithstanding
anything to the contrary in this Agreement or any other           transaction document
and regardless of Sellers decision as described in           subsection (iv) below, the
amount of one million US dollars (US$1,000,000) paid           by the Purchasers at the
Closing (Initial Payment), shall remain with the           Sellers and be considered
liquidated damages (“Liquidated           Damages”).  

7

	 	
Purchaser
acknowledges that the damages resulting from the breach of this Agreement as referred to
in this Section are uncertain and incapable of accurate calculation and that the
Liquidated Damages payable pursuant to this Section are a reasonable forecast of the
actual damages which may be incurred by the Sellers under such circumstances, and that no
proof of any such actual damage is required, that the Liquidated Damages payable pursuant
this Section constitutes liquidated damages and not a penalty, and further that, without
these agreements, Sellers would not enter into this Agreement. Such payment shall not
release the Purchaser from complying with its obligations pursuant to this Agreement
should the Sellers decide to pursue specific performance, and further, payment of the
Liquidated Damages shall not be an exclusive remedy of Sellers and shall not prevent the
Sellers from seeking any additional remedies to which they may be entitled pursuant to
this Agreement and/or any law under any such circumstances, but only to the extent Sellers’ actual
damages, expenses and costs exceed the Liquidated Damages amount.  

		    (iv)        Without
derogating from the above, Sellers, in accordance with Sellers sole           discretion,
shall be entitled to decide whether they (x) wish to pursue specific
          performance of the Share Purchase contemplated by this Agreement, in addition
to           a claim for any other damages, expenses and costs which they may seek remedy
          for; or (y) consider this Agreement to be null and void or terminate this
          Agreement, without any liability to Sellers, and seek additional damages,
          expenses and costs with respect thereto, but only to the extent such additional
          damages, expenses and costs exceed the Liquidated Damages amount. In the event
          that the Sellers bring a claim for specific performance and win such a suit and
          actually receive the full Purchase Price, then the Initial Payment shall still
          be Liquidated Damages and shall not be counted towards the Purchase Price (for
          clarity, the Sellers can still claim other damages caused to Sellers due to
such           breach), unless Purchaser’s failure to pay resulted from a failure by
a           third party to provide funding to the Purchaser directly as a result of a
          material breach by Sellers of a representation in Section 2 and/or Section 3 of
          this Agreement.  

		    (c)        Consequences
of Third Party Claims That Prevent Transfer of Escrowed           Shares.  

		    (i)        Without
derogating from Section 1.2(b) above, in the event that during the           period in
which the Escrowed Shares are held in escrow by the Escrow Agent any           third
party that has a claim against the Purchaser, brings a claim that results           in a
lien (“IKUL”) or similar measurement (“Purchaser           Lien
on Escrowed Shares”) on the Purchaser’s rights and           entitlement to
the Escrowed Shares, and such Purchaser Lien on Escrowed Shares           was not lifted
within twenty (20) days thereafter – then the following           consequences shall
apply: (a) the Sellers shall have the right to immediately           terminate this
Agreement, and in such case the Purchaser shall have no right of           any kind or
type in such Escrowed Shares or in the Company, and (ii) and the           applicable
Liquidated Damages amount shall remain with the Sellers and be           considered
liquidated damages in accordance with the provisions detailed in sub           section
(b) above.  

		    (ii)        In
the event that during period in which the Escrowed Shares are held in escrow           by
the Escrow Agent any third party that has a claim against the Sellers brings           a
claim that results in a lien (“IKUL”) or similar measurement           (“Seller
Lien on Escrowed Shares”) on the Escrowed Shares that           prevent the
transfer of the Escrowed Shares to the Purchaser and such Seller           Lien on
Escrowed Shares was not lifted within twenty (20) days thereafter –          then
the following consequences shall apply: the Purchasers shall have the right           to
immediately terminate this Agreement, and in such case the Purchaser shall           have
no right of any kind or type in such Escrowed Shares or in the Company, and
          shall receive all portions of the Purchase Price already paid to the Sellers or
          to the Escrow Agent.  

8

		    (d)        Payment
of the Purchase Price shall be in US Dollars and shall be made, by wire
          transfer of immediately available funds to a bank(s) account(s) designated by
          the Sellers and by the Escrow Agent, respectively, in a written notice to the
          Purchaser at least two (2) Business Days prior to the Closing.  

     SECTION 1.3.       
License Agreement.  

        At
Closing the Company and Magic Ltd. shall execute a license agreement (the “License
Agreement”), such License Agreement in the form attached hereto as Schedule
1.3. The License Agreement shall provide for the payments of license fees
by the Company to Magic Ltd. in the aggregate amount of three million US dollars
(US$3,000,000).  

ARTICLE II 

REPRESENTATIONS AND
WARRANTIES OF THE SELLERS AND THE COMPANY 

        Except
as set forth in the disclosure schedule delivered by the Company to Purchaser prior to the
execution of this Agreement which shall refer to specific numbered sections and lettered
subsections of this Agreement (the “Company Disclosure Schedule”), the
Company and each of the Sellers represent and warrant to Purchaser as follows (the
disclosures in one section or subsection of the Company Disclosure Schedule shall qualify
only the correspondingly numbered section or subsection of this Agreement, except to the
extent that the applicability and significance of the disclosure in one section or
subsection to another section or subsection of this Agreement is reasonably apparent to a
reader possessing no additional knowledge of the subject matter of the disclosure): 

     SECTION 2.1.       
Organization and Qualification.  

        Each
of the Company and its Subsidiaries (as defined below) is a limited liability corporation
duly organized and validly existing under the laws of its jurisdiction of organization,
with requisite power and authority to own, operate, license and lease its properties and
to carry on its business as it is now being conducted. Each of the Company and its
Subsidiaries is qualified or licensed to do business in every jurisdiction where the
nature of the business conducted by it or the properties owned or leased by it requires
qualification, except where the failure to be so qualified or licensed would not, in the
aggregate, reasonably be expected to have a material adverse effect on the Company or the
Company’s Business. Complete and correct copies of the currently in effect
Certificate of Incorporation and By-Laws of the Company and each Subsidiary are attached
hereto as Schedule 2.1. Complete and correct copies of all actions of
the stockholders and directors of the Company and each Subsidiary for the three (3) fiscal
years preceding the date hereof have been delivered to the Purchaser. No proceedings have
been initiated and are currently pending relating to the dissolution or merger of the
Company. 

9

     SECTION 2.2.       
Authorization.  

        The
Company has full corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions contemplated hereby.
The Company’s By-Laws and Certificate of Incorporation are in full force and effect.
The execution and delivery of this Agreement by the Company, the performance by the
Company of its obligations hereunder, and the consummation by the Company of the
transactions contemplated hereby have been, or will have been prior to the Closing, duly
and validly authorized by the Company’s corporate bodies as required by applicable
law and by the Company’s Certificate of Incorporation and By-Laws. No other corporate
action on the part of the Company is necessary to authorize the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in accordance
with its terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors’ rights generally, and except to the extent that the
remedy of specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. 

     SECTION 2.3.       
No Violation.  

        Neither
the execution and delivery of this Agreement by the Company, the performance by
the Company of its obligations hereunder nor the consummation by the Company of the
transactions contemplated hereby will (a) violate, conflict with or result in any breach
of any provision of the Certificate of Incorporation or By-Laws of the Company, each as
currently in effect (b) except as noted on Schedule 2.3 hereto,
violate, conflict with or result in a violation or breach of, or constitute a default
(with or without due notice or lapse of time or both) or result in the creation of a Lien
(as defined below) or give rise to a right of termination, cancellation or acceleration
under the terms, conditions or provisions of any note, bond, mortgage, indenture or deed
of trust or any material license, lease or agreement (each, a “Contract”)
to which the Company or any Subsidiary is a party, or (c) violate any order, writ,
judgment, injunction, decree statute, law, rule or regulation of any court or Governmental
Authority (as defined below) applicable to the Company or any Subsidiary. 

     SECTION 2.4.       
Capitalization.  

        The
registered capital of the Company consists of 1,000,000 common stock, par value US$1.00
per share (the “Common Stock”), of which 100,000 shares of Common Stock
are issued and outstanding as follows: 83,888 shares of Common Stock are held and
beneficially owned by Magic Inc. and 16,112 shares of Common Stock are held and
beneficially owned by Magic Ltd.; and 1,000,000 preferred shares, par value US$1.00 per
share, none of which are issued. The entire issued and outstanding share capital of the
Company as of the date of this Agreement is beneficially owned by the Sellers and such
shares of Common Stock have been validly issued, are fully paid and non-assessable, were
not issued in violation of any rights and have been issued in compliance with all
applicable federal and state laws. There are no options, warrants, calls, subscriptions,
conversion or other rights, agreements or commitments obligating the Company to issue any
additional share capital of the Company or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any share capital of the
Company. 

10

     SECTION 2.5.       
Subsidiaries and Equity Interests.  

        Schedule
2.5 of the Company Disclosure Schedule lists all the Subsidiaries of the
Company and, for each such Subsidiary, the state of organization and each jurisdiction in
which such Subsidiary is qualified or licensed to do business. Each Subsidiary is
operating in compliance with its organizational documents and, in all material respects,
in compliance with applicable law. Except as set forth on Schedule
2.5, all the outstanding shares of capital stock of, or other equity
interests in, each such Subsidiary have been validly issued and are fully paid and
non-assessable and are owned directly by the Company free and clear of all pledges,
claims, liens, charges, encumbrances, security interests or other third-party rights of
any kind or nature whatsoever (collectively, “Liens”), and free of any
restriction on the right to vote, sell or otherwise dispose of such capital stock or other
equity interests. Except for the capital stock of the Subsidiaries, the Company does not
own, directly or indirectly, any capital stock of or any other kind of right, or otherwise
hold any equity, membership, partnership, joint venture or other ownership interest, in
any other entity. 

     SECTION 2.6.       
Consents and Approvals.  

        Except
as set forth on Schedule 2.6 of the Company Disclosure Schedule, no
filing or registration with, no notice to and no permit, authorization, consent or
approval of any Governmental Authority or any other third party is necessary for the
consummation by the Company of the transactions contemplated by this Agreement. 

     SECTION 2.7.       
Financial Statements.  

        The
Company has delivered to the Purchaser (a) copies of the audited consolidated balance
sheets of the Company for the twelve (12) months period ended on December 31, 2006,
together with the related audited consolidated statements of income, stockholders’
equity for the fiscal years ended December 31, 2006, and the notes thereto, attached
hereto as Schedule 2.7A (the “Company 2006 Financial
Statement”) and unaudited, unreviewed financial statements for the nine (12)
months period ended September 30, 2007, attached hereto as Schedule
2.7B (the “Interim Financial Statements” and together with
the Company 2006 Financial Statements, the “Company Financial
Statements”). The Company Financial Statements (i) are accurate and complete in
all material respects, (ii) were prepared in accordance with U.S. generally accepted
accounting principles applied on a consistent basis (“GAAP”) throughout
the periods covered thereby, except as otherwise noted thereon, and (iii) present fairly
in all material respects the consolidated financial position, results of operations and
changes in cash flow of the Company as of such dates and for the periods then ended
(except that the Interim Financial Statements do not contain all of the notes required by
GAAP and are subject to normal year-end adjustments). To the Company’s knowledge,
there are no material liabilities or financial obligations of the Company or its
Subsidiaries that are required to be reflected on a balance sheet prepared in accordance
with GAAP, other than liabilities and obligations: (x) provided for or reserved against in
the Company Financial Statements; or (y) arising after September 30, 2007 in the ordinary
course of business, and which are not material to the financial position of the Company. 

11

     SECTION 2.8.       
Absence of Undisclosed Changes.  

        Since
September 30, 2007 until the date hereof, and except as set forth in Schedule
2.8 of the Company Disclosure Schedule, there has not been to the
Company’s knowledge: 

	 	a) 	any
material damage, destruction or loss, whether or not covered by insurance to
               any of the Company or a Subsidiary; 

	 	b) 	any
waiver by the Company of a material right or of a material debt owed to the
               Company and relating to or materially affecting the business of the
Company or                any part thereof except in the ordinary course of business; 

	 	c) 	any
sale, transfer or lease of any of Company’s material assets or rights
               ,except in the ordinary course of business, or imposition of any Liens, on
any                of Company’s material assets or rights; or 

	 	d) 	any
change in the accounting methods or accounting principles or practices
               employed by the Company other than changes required by GAAP as reflected
in the                notes attached to the Company Financial Statements; 

     SECTION 2.9.       
Litigation.  

        There
is no suit, or proceeding pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any director or officer of the Company, in such
capacity, nor is there any judgment, decree, injunction, rule or order of any
Governmental Authority or arbitrator outstanding against, or, to the knowledge of the
Company, any investigation by any Governmental Authority involving, the Company or any of
its Subsidiaries or any director or officer of the Company, in such capacity. The Company
is not a plaintiff or claimant in any pending action, suit, or proceeding pending, and is
not presently contemplating any such action, suit or proceeding. This Section 2.9 does
not relate to any matters with respect to Taxes and environmental matters, which are
addressed solely in Section 2.12 and Section 2.18, respectively.  

     SECTION 2.10.       
Title to Properties.  

		    (a)        Schedule
2.10(a) of the Company Disclosure Schedule           contains a complete
and accurate list of all real property utilized, owned or           leased by the Company
or any Subsidiary.  

		    (b)        Each
of the Company and its Subsidiaries has good and marketable title to, or           valid
leasehold interests in, all its properties and other assets except for           such as
are no longer, nor reasonably expected to be, used in the conduct of its
          business. All such properties and other assets, other than properties and other
          assets in which the Company or any of its Subsidiaries has a leasehold
interest,           are free and clear of all Liens.  

12

		    (c)        This
Section 2.10 does not relate to any matters with respect to intellectual
          property, which are addressed solely in Section 2.15.  

     SECTION 2.11.       
Material Contracts.  

		    (a)        Schedule
2.11(a) of the Company Disclosure Schedule           contains a true and
complete list of all written or oral Contracts agreements or           understandings of
the Company and/or any Subsidiary that are responsible for           revenues, expenses
or costs of at least two hundred thousand US dollars           (US$200,000) per annum
(the “Material Contracts”).  

		    (b)        Neither
the Company nor any of its Subsidiaries is in material violation of or           in
material default under (nor does there exist any condition which upon the
          passage of time or the giving of notice or both would cause such a material
          violation of or material default under) any Material Contract to which it is a
          party or by which it or any of its properties or other assets is bound.  

     SECTION 2.12.       
Taxes.  

        Except
as set forth on Schedule 2.12 of the Company Disclosure Schedule: 

		    (a)        All
Tax Returns required to be filed by the Company and its Subsidiaries prior           to
the Closing Date for all taxable periods ending on or before the Closing Date
          have been timely filed, giving effect to any extension thereof and all such Tax
          Returns are true, complete and correct in all material respects. Each of the
          Company and its Subsidiaries (i) has paid all Taxes that are shown to be due on
          such Tax Returns, and (ii) has paid for the payment of all Taxes for which, to
          the knowledge of the Company, the Company or its Subsidiaries have liability
for           any taxable year or other period which shall have ended on or prior to the
          Closing Date. Each of the Company and its Subsidiaries has withheld all taxes,
          required to be withheld, on or prior to the Closing Date.  

		    (b)        There
are no outstanding agreements extending the statutory period of limitation
          applicable to any claimfor, orthe period for the collection or
          assessmentof, Taxes due from the Company or any Subsidiary for any
          taxable period.  

		    (c)        To
the knowledge of the Company, no investigation, audit or other proceeding by
          any court or Governmental Authority is pending with respect to any Taxes due
          from or with respect to the Company orany Subsidiary.  

		    (d)        Neither
the Company nor any Subsidiary was required by any Governmental           Authority to
make any material adjustment in Taxes by reason of a change or           proposed change
in accounting method or otherwise.  

		    (e)        Neither
theCompany nor any Subsidiary is liable forthe Taxes of                any
taxpayer other than the Company and such Subsidiary for any taxable period,
               which shall have ended on or prior to the Closing Date.  

13

     SECTION 2.13.       
Compliance with Applicable Law.  

	 	        Each
of the Company and its Subsidiaries has materially complied with, is not in violation in
any material respects of, and has not received any notices in writing of violation with
respect to, any U.S. federal, state or local statute, law or regulation or any orders or
regulations of any Governmental Authority. Each of the Company and its Subsidiaries are in
possession of and in compliance, in all material respects, with all material permits and
licenses required under applicable laws, for the conduct of their business as currently
conducted. 

     SECTION 2.14.       
Brokers' Fees and Commissions.  

	 	        Except
as set forth in Schedule 2.14 of the Company Disclosure Schedule, the
Company or any Subsidiary has not employed any investment banker, broker or finder and the
Company is not liable for any brokers’ fees, success fees or commissions due to any
third party, in connection with the transactions contemplated hereby. 

     SECTION 2.15.       
Intellectual Property.  

		    (a)        Schedule
2.15(a) of the Company Disclosure Schedule lists           all Trademarks
(as defined below) and registered Copyrights (as defined below)           and all
registrations of, and applications to register, any of the foregoing           with any
Governmental Authority and any renewals or extensions thereof, owned or           filed
(as the case may be) by the Company or any Subsidiary. Neither the Company           nor
any Subsidiary has received any notice of, and to the Company’s           knowledge
there are no, Actions pending or threatened, in respect of the Company
          Intellectual Property (as defined below) which is owned by the Company, nor is
          the Company actually aware of any suit, action or proceeding for any third
party           rights in such Company Intellectual Property (as defined below). All the
          Intellectual Property necessary to conduct the business of the Company and its
          Subsidiaries, as presently conducted (the “Company Intellectual
          Property”) is owned exclusively or licensed from third parties by the
          Company or a Subsidiary, and with respect to Company Intellectual Property that
          is subject to a third party license, the Company and/or the Subsidiaries have
          the right to use such Company Intellectual Property free and clear of all
Liens,           subject to the terms of such third party licenses. Schedule
          2.15(b) lists all of the Intellectual Property licensed by the
          Company to third parties, except for the sale or license of Company products to
          its customers.  

		    (b)        (i)
with respect to Intellectual Property owned by the Company, to the           Company’s
knowledge, neither the Company nor any Subsidiary is infringing           or has
infringed upon, misappropriated or violated in any other way, any           Intellectual
Property rights of any third party rights and to the knowledge of           the Company,
no person is currently infringing upon any intellectual property           rights of the
Company or any Subsidiary, and (ii) with respect to Intellectual           Property which
is licensed from third parties to the Company, the Company is not           actually
aware that such third party Intellectual Property infringes or is           alleged to
infringe any Intellectual Property of others.  

14

		    (c)       Schedule
2.15(c)(1) lists all of the Company’s           Intellectual Property
licensed from third parties. Except as listed in Schedule 2.15(c)(2) of
the Company Disclosure Schedule all           Company Intellectual Property, other than
the Company Intellectual Property           which is licensed from third parties, was to
the Company’s knowledge (i)           developed by the Company, a Subsidiary or by
employees or consultants thereof           pursuant to a customary invention assignment
agreement assigning all rights with           respect thereto to the Company, (ii)
created by third parties who assigned           ownership of their rights to the Company
pursuant to a customary confidentiality           and invention assignment agreement, or
(iii) assigned to the Company pursuant to           a valid assignment agreement.  

		    (d)        Except
as disclosed in Schedule 2.15(d) of the Company           Disclosure
Schedule, each person employed by the Company or a Subsidiary           (including
consultants and independent contractors) during the three-year (3)           period
ending on the date hereof and, to the Company’s knowledge, each           other
third party having access during such period to confidential information           of the
Company or a Subsidiary or to any Company Intellectual Property, has           executed a
confidentiality and non-disclosure agreement in a form containing           terms
customary in the industry. To the Company’s knowledge, neither the
          execution or delivery of such agreements, nor the carrying on of the business
of           the Company or any Subsidiary as currently conducted by any of their
respective           employees (including consultants and independent contractors,
working in           capacities similar to employees) conflicts with or constitutes a
breach of the           terms, conditions or provisions of, or constitutes a default
under, any           contract, covenant or instrument under which any such employee
(including           consultants and independent contractors, working in capacities
similar to           employees) is obligated. The Company and each Subsidiary have taken
reasonable           steps in accordance with normal industry practice to protect their
rights in           confidential information and trade secrets.  

     SECTION 2.16.       
Employees; Labor Relations.  

		    (a)        Schedule
2.16(a) of the Company Disclosure Schedule sets                forth a
list of all the directors, officers, employees and consultants                (excluding
consultants and employees entitled to receive less than fifty                thousand US
dollars (US$50,000) per annum, lawyers and accountants) of the                Company and
any Subsidiary (the “Employees”) and all                compensation and
benefits payable per annum or which the Company or any                Subsidiary, as
relevant, is bound (pursuant to written or oral agreements) to                provide to
each Employee. Except as set forth in Schedule                2.16(a),
no Employee is entitled to or was promised any equity                rights in the
Company, bonuses or other future payments of any type whatsoever                from the
Company; except for any bonuses or future payments due to such                employees
for work performed following the Closing Date in the ordinary course                of
business and consistent with the Company’s prior practices and which are
               not mentioned in Schedule 2.16, provided such bonuses and payments do not
exceed                an aggregate amount of two hundred thousand US dollars
(US$200,000).  

		    (b)        The
Purchaser has received true and complete copies of all employment and
               consultancy agreements (including any agreements between the Company or
any                Subsidiary and any such Employee concerning Company Intellectual
Property,                confidentiality and non-competition) under which the key
Employees are engaged.                Neither the Company nor any Subsidiary is a party
or subject to any collective                bargaining agreement with any labor union or
any local or subdivision thereof.                There is no current union organizing
activity among any of the Employees or any                union representative petition
pending or threatened. Except as set forth on Schedule 2.16(b) of
the Company Disclosure Schedule, there                are no customs or customary
practices regarding Employees that could be deemed                to be binding on the
Company or any Subsidiary.  

15

		    (c)        Each
of the Company and its Subsidiaries is materially in compliance with all
          legislative or other provisions, rules and regulations relating to employees,
          and their terms and conditions of employment and has made all deductions,
          withholdings and payments required to be made by law, or reserves therefor have
          been made in the Company Financial Statements.  

     SECTION 2.17       
ERISA.  

        Neither
the Company nor any Subsidiary or Affiliate (within of Section 414 (b) or (c) of the Code)
maintains or has in the last five (5) years prior to the date hereof maintained,
contributed to or has in the last five (5) years prior to the date hereof had any
obligation to contribute to, or any liability with respect to any employee benefit plan
(as defined in Section 3(3) of ERISA). 

     SECTION 2.18.       
Environmental Matters.  

		    (a)        (i)
Each of the Company and its Subsidiaries is, and has been, in material
               compliance with all Environmental Laws and (ii) there is no Action
pending, or,                to the knowledge of the Company, threatened against or
affecting the Company or                any of its Subsidiaries or any real property
owned, operated or leased by the                Company or any of its Subsidiaries
relating to or arising under Environmental                Laws, and, to the knowledge of
the Company, neither the Company nor any of its                Subsidiaries has received
any notice of or entered into or assumed by Contract                or operation of law
or otherwise, any obligation, liability, order, settlement,                judgment,
injunction or decree relating to or arising under Environmental Laws.                This
Section 2.18, including all subsections, represents the sole and exclusive
               representation and warranty of the Company regarding environmental
matters. For                purposes of this Agreement:  

		    (b)        each
of the Company and its Subsidiaries has obtained all permits, licenses and
               other authorizations that are required under applicable Environmental Laws
               (“Environmental Permits”) to conduct their businesses and
has                filed all material obligatory reports, notices, assessments, plans,
inventories,                and applications required by Environmental Laws
(collectively,                “Filings”);  

		    (c)        no
judicial or administrative proceedings or investigations are pending or, to
               the Company’s knowledge, threatened against the Company or any of its
               Subsidiaries and no written notice, citation, summons or order has been
               delivered to the Company or any Subsidiary by any Governmental Authority
               pursuant to any applicable Environmental Laws (collectively,
               “Environmental Claims”);  

16

		    (d)        there
have been no environmental investigations, studies, audits, tests, reviews
               or other analyses conducted by the Company or the Subsidiary in relation
to any                real property owned or leased by the Company or any Subsidiary; and  

		    (e)        neither
the Company nor any Subsidiary, nor any of the real property currently                or,
to the knowledge of the Company, formerly owned, operated or leased by them,
               is currently subject to any environmental remediation, clean-up or other
               environmental obligation arising under applicable Environmental Laws.  

     SECTION 2.19.       
Customers and Suppliers.  

		    (a)        Schedule
2.19(a) of the Company Disclosure Schedule           contains a true and
complete list of the Company’s material customers and           the sales to such
customers in respect of the business of the Company during the           twelve-month
period ended December 31, 2006 and the nine-month period ended           September 30,
2007. The Company has received no written notice, from any           customer listed on
Schedule 2.19(a), announcing the           termination of the
agreement between the Company and such customer.  

		    (b)        Schedule
2.19(b) of the Company Disclosure Schedule           contains a true and
complete list of the Company’s material suppliers and           the purchases by the
Company and its Subsidiaries from such suppliers during the           twelve-month period
ended December 31, 2006 and the nine-month period ended           September 30, 2007.  

     SECTION 2.20.       
Transactions with Affiliates.  

        Except
as set forth in Schedule 2.20 of the Company Disclosure Schedule, no
officer, director or stockholder of the Company, (or immediate family member of any of the
foregoing) has or has had, directly or indirectly, (i) an interest in any entity
which furnished or sold, or furnishes or sells, services, products or technology to the
Company or any Subsidiary or (ii) any interest in any entity that purchases any goods
or services from the Company, or (iii) a beneficial interest in any Material Contract
to which the Company is a party. 

     SECTION 2.21.       
Disclaimer of Warranties.  

        Except
as and to the extent expressly set forth in this Section 2, taken together with the
Company Disclosure Schedule, the Company and each of the Sellers, are not making and have
not made any representations or warranties whatsoever, express or implied, relating to the
Company or its Subsidiaries, including any representations or warranties as to the future
sales or profitability of the Company or its Subsidiaries, or arising by statute or
otherwise in law, from a course of dealing or usage of trade. All such other
representations and warranties are hereby expressly disclaimed by the Company.
Notwithstanding the foregoing, the Company represents and warrants that no representation
or warranty provided by the Company or any Seller herein, and no statement contained in
the Company Disclosure Schedule contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements herein or therein, in
the light of the circumstances under which they were made, not misleading. 

17

     SECTION 2.22       
Insurance.  

		    (a)        Each
insurance policy to which the Company or any of its Subsidiaries is a party           or
by which any of their assets are covered is valid and binding and in full           force
and effect, all premiums due thereunder have been paid when due and           neither the
Company nor any of its Subsidiaries has received any notice of           cancellation or
termination in respect of any such policy or is in default           thereunder, and the
Company has no knowledge of any reason or state of facts           that could reasonably
be expected to lead to the cancellation of such policies           or of any threatened
termination of, or material premium increase with respect           to, any of such
policies.  

		    (b)        No
claim under any insurance policy covering the Company or any of its
          Subsidiaries or any of their assets is currently pending.  

     SECTION 2.23       
Bank Accounts; Debt and Loan Facilities.  

        Details
regarding the Company’s and any Subsidiary’s bank accounts and credit facilities
are as set forth in Schedule 2.23 of the Company Disclosure Schedule
and except for such bank accounts the Company and the Subsidiaries do not have any other
bank accounts severally or jointly with others. 

ARTICLE III 

REPRESENTATIONS AND

WARRANTIES OF THE SELLERS 

        The
Sellers hereby, jointly and severally, make the following representations and warranties
(unless otherwise required from the context in which case each Seller is making the
representation in regard to itself only) to the Purchaser: 

     SECTION 3.1.       
Ownership of Shares of Common Stock.  

        The
Sellers are the holders of record and own beneficially the entire issued and outstanding
share capital of the Company as stated in Schedule 3.1, which sets
forth the number of shares owned by each Seller. Each Seller owns its portion of the
Purchased Shares free and clear of any Liens. The Sellers are not a party to any voting
trust, proxy or other agreement with respect to the voting of any of the Purchased Shares
which will remain in force or effect after the Closing. At Closing, each Seller will
convey to the Purchaser good title to the portion of the Purchased Shares owned by such
Seller free and clear of any Liens. 

18

     SECTION 3.2.       
Organization and Authority.  

        Each
Seller is a limited liability corporation duly organized and validly existing under the
laws of its jurisdiction of organization. Each Seller has full corporate power and
authority and legal capacity to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to perform the obligations of such Seller hereunder.
The execution and delivery of this Agreement by the Sellers, the performance by each
Seller of its obligations hereunder, and the consummation by each Seller of the
transactions contemplated hereby have been, or will have been prior to the Closing, duly
and validly authorized by such Seller’s corporate bodies as required by applicable
law and by such Seller’s organizational documents. No other corporate action on the
part of the Sellers is necessary to authorize the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each Sellers and will constitute a valid and binding
obligation of the Sellers, enforceable against them in accordance with its terms, except
to the extent that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally, and except to the extent that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefore
may be brought. 

     SECTION 3.3.       
No Conflicts.  

        Neither
the execution, delivery and performance by the Sellers of this Agreement, the performance
by each Seller of its obligations hereunder nor the consummation by each Seller of the
transactions contemplated hereby will (a) violate, conflict with or result in any breach
of any provision of each such Seller’s organizational documents, as currently in
effect, (b) violate or breach any provision of any order, writ, judgment, injunction,
decree, law or statute, rule or regulation of any court or Governmental Authority
applicable to such Seller, or (c) violate, breach, cause a default under (with or without
due notice or lapse of time or both) any material contract, or result in the creation of a
Lien over the Purchased Shares. 

     SECTION 3.4.       
Brokers' Fees and Commissions.  

        Except
for the Broker Fees and Prior Bonuses (as defined below) and any commissions to be paid by
Sellers, the Sellers have not employed any investment banker, broker or finder, and there
are no commissions due to any third party, in connection with the transactions
contemplated hereby. 

     SECTION 3.5.       
Disclaimer of Warranties.  

        Except
as and to the extent expressly set forth in this Section 3 and in Section 2 above, the
Sellers are not making and have made no representations or warranties whatsoever, express
or implied, relating to each Seller, the Company or the Subsidiaries. All such other
representations and warranties are hereby expressly disclaimed by the Sellers. 

ARTICLE IV 

REPRESENTATIONS AND
WARRANTIES OF PURCHASER 

        Except
as set forth in the disclosure schedules delivered by the Purchaser to the Sellers (the
“Purchaser Disclosure Schedule”), the Purchaser represents and warrants
to the Company and the Sellers as follows: 

19

     SECTION 4.1.       
Organization and Qualification.  

        The
Purchaser is a partnership duly organized and validly existing under the laws of the
jurisdiction of its organization, with all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such power or
authority is not, in the aggregate, reasonably likely to have a Purchaser Material Adverse
Effect. 

     SECTION 4.2.       
Authorization.  

        The
Purchaser has full partnership power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and delivery of this
Agreement by the Purchaser, the performance by the Purchaser of its obligations hereunder,
and the consummation by it of the transactions contemplated hereby have been duly
authorized by the Purchaser’s partnership bodies as may be required under the
Purchaser’s organizational documents. No other proceeding on the part of the
Purchaser is necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Purchaser and constitutes a valid and binding obligation of
the Purchaser, enforceable against the Purchaser in accordance with its terms, except to
the extent that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally. 

     SECTION 4.3.       
No Violation.  

        Neither
the execution and delivery of this Agreement by the Purchaser, the performance by the
Purchaser of its obligations hereunder nor the consummation by the Purchaser of the
transactions contemplated hereby will (a) violate, conflict with or result in any breach
of any provision of the limited partnership agreement of the Purchaser, (b) violate,
conflict with or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under the terms, conditions or material
provisions of any note, bond, mortgage, indenture, deed of trust, license, lease or
agreement to which the Purchaser is a party, or (c) violate any order, writ, judgment,
injunction, decree, statute, rule or regulation of any court or domestic or foreign
Governmental Authority applicable to the Purchaser, except such defaults and violations
which, in the aggregate, are not reasonably likely to have a Purchaser Material Adverse
Effect. 

     SECTION 4.4.       
Consents and Approvals.  

        Except
as set forth on Schedule 2.6 of the Company’s Disclosure
Schedule, Purchaser is not aware of any filing, registration, notice, permit,
authorization, consent or approval of any third party or any Governmental Authority
necessary for the consummation by the Purchaser of the transactions contemplated by this
Agreement. 

20

     SECTION 4.5.       
Brokers' Fees and Commissions.  

        Neither
the Purchaser nor any of its directors, officers, employees or agents, has employed any
investment banker, broker or finder in connection with the transactions contemplated
hereby. 

     SECTION 4.6.       
Experience.  

        The
Purchaser has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks relating to the acquisition of the Company, and
has reviewed and inspected all of the data and information provided to it by the Company
in connection with this Agreement. The Purchaser acknowledges that it is able to evaluate
and bear the economic risks associated with the acquisition contemplated by this Agreement 

     SECTION 4.7.       
Receipt of Information.  

        The
Purchaser warrants, represents and acknowledges that it and its advisors have been granted
the opportunity to conduct, and has conducted, a due diligence inquiry of the Company and
its Subsidiaries, and their activities, including, but not limited, with respect to
Company Intellectual Property and agreements, and including further, the Purchaser was
granted the opportunity to interview their executives regarding the understanding of the
Company, their understanding of the market and their plans and expectations. The Purchaser
have met the management team and interviewed them. Nothing herein shall be deemed to limit
the Sellers’ and the Company’s liabilities with respect to their representations
and warranties provided hereunder. 

     SECTION 4.8.       
Financing.  

        Purchaser
shall have upon the due payment dates in accordance with Section 1.2 above the funds
necessary to consummate the transactions contemplated by this Agreement 

    SECTION 4.9       
Conduct of Business of the Company Following the Closing and Prior to the Receipt by
Sellers of the Entire Purchase Price.  

        The
Purchaser hereby represents and warrants that, except as for the actions referred to in
Schedule 4.9 attached hereto (the “Actions”), until
the release of the Purchased Shares from the Escrow Agent to the Purchaser, the Purchaser
shall cause the Company and the Company shall, (i) conduct its business in the usual,
regular and ordinary course in substantially the same manner as heretofore conducted,
(ii) pay its debts and Taxes when due, (iii) pay or perform other material
obligations when due (including accounts payable), (iv)  preserve intact its
present business organizations, and (v) use best efforts to keep available the
services of its present officers and key employees and maintain the existing compensation
arrangements with them, and (vi) use best efforts to preserve the relationships with
its customers, suppliers, distributors, licensors, licensees, and others having business
dealings with them. 

        Except
for the Actions, during the Escrow Period the Purchaser shall cause the Company not to,
and the Company shall not do any of the following: 

	 	(i) 	cause
or permit any amendments to its organizational documents; 

21

	 	(ii) 	merge,
consolidate, restructure, reorganize or take any similar action or
               transaction with respect to the Company or any subsidiary thereof; 

	 	(iii) 	declare,
set aside, or pay any dividends on or make any other distributions
               (whether in cash, stock or property) in respect of any Company shares or
               repurchase or redeem any Company shares (or options, warrants or other
rights                exercisable therefore); 

	 	(iv) 	sell,
transfer, pledge, dispose of, grant any rights in, encumber, or pledge in
               or with respect to any of the Purchased Shares, or rights of any kind to
acquire                any of the Purchased Shares; 

	 	(v) 	issue,
sell, pledge, dispose of, encumber, or authorize, agree or commit to
               issue, sell, pledge, dispose of or deliver any additional shares of, or
rights                of any kind to acquire any shares of, the capital stock of the
Company or any                subsidiary or any other ownership interest (whether through
the issuance or                granting of options, warrants, commitments, subscriptions,
rights to purchase or                otherwise) of the Company or any subsidiary, except
for equity grants in the                Company to senior employees, that do not exceed,
in the aggregate, 0.5% of the                share capital of the Company; 

	 	(vi) 	incur
any indebtedness, or make any loan to any Person (other than loans to
               employees in the ordinary course of business consistent with past
practice) or                guarantee any indebtedness of any Person, or purchase debt
securities of any                Person, or amend the terms of any outstanding loan
agreement; 

	 	(vii) 	(x) sell,
lease, license or transfer to any Person any material rights to                any
Company Intellectual Property or materially modify any Material Contract, or
               (y)  enter into any contract containing any non-competition covenants
or                other restrictions relating to its business activities, other than
standard                distribution or reseller agreements in the ordinary course of
business                consistent with past practice; 

	 	(viii) 	enter
into any contract with, or pay any sums to, the Purchaser or its
               affiliates or into any contract in which any officer, director, employee,
               consultant or agent of the Company (or any member of their immediate
families)                has an interest; 

	 	(ix) 	acquire
or agree to acquire or sell or agree to sell by merging or consolidating
               with, or by purchasing or selling a substantial portion of the assets of,
or by                any other manner, any business or any corporation, partnership,
association or                other business organization or division thereof, or
otherwise acquire or sell or                agree to acquire or sell any assets which are
material, individually or in the                aggregate, to its business; 

22

take, or agree in writing or
otherwise to take, any of the actions described above, or any other action that would
(i) prevent the Sellers, Purchaser and/or the Company from performing, or cause them
not to perform their respective covenants under this Agreement or the License Agreement,
(ii) cause or result in a challenge to, call into question or cast doubt on the
validity or enforceability of the this Agreement, the License Agreement, or any of the
transactions contemplated hereby. The Purchaser contemplates entering into certain new or
amended employment agreements with senior employees of the Company or its Subsidiaries.
The Purchaser undertakes (and the Purchaser shall cause the Company) that any new benefits
provided in such agreements that exceed current benefits shall come into effect only after
the transfer of the full Purchase Price to the Sellers. The Purchasers shall instruct the
management of the Company to adhere to the above provisions of this Section and to submit
to the Board of Directors of the Company any matter listed in this Section. 

ARTICLE V 

COVENANTS 

     SECTION 5.1.       
[Intentionally Left Blank] 

     SECTION 5.2.       
Access to Information; Confidentiality.  

          		    (a)       
               Between the date of this Agreement and the receipt by the Sellers of the
               Purchase Price in full, (i) the Sellers shall have an observer on the Board of
               Directors of the Company and each of its Subsidiaries (and each committee
               thereof). Such observer shall have a right to participate in all meetings of the
               Board of Directors of the Company and each of its Subsidiaries (and all
               committees thereof) and shall receive all information received by other Board
               members at the same time that such information is provided to any or all of the
               other Board members, and (ii) the Sellers shall have full and free access to the
               Company and any information related to the Company. The Company will give the
               Sellers and their authorized representatives reasonable access to all offices
               and other facilities and to all books and records of each of the Company and its
               Subsidiaries and will permit the Sellers to make such inspections, and will
               fully cooperate with regard to such inspections, as it may reasonably require,
               and will cause its officers to furnish the Sellers such financial and operating
               data and other information with respect to the business and properties of the
               Company, as the Sellers may from time to time reasonably request. 

               

          		    (b)       
               Between the date of this Agreement and the receipt by the Sellers of the
               Purchase Price in full, except for disclosures expressly permitted by the terms
               of the confidentiality provisions included in the term sheet executed by Magic
               Ltd. and the Purchaser, dated as of December 30, 2007, as it may be amended from
               time to time (the “Confidentiality Agreement”), the Purchaser
               shall hold, and shall cause its officers, employees, accountants, counsel,
               financial advisors and other representatives to hold, all information received
               from the Company and/or the Sellers, directly or indirectly, in confidence in
               accordance with the Confidentiality Agreement. 

               

     SECTION 5.3.       
All Reasonable Efforts.  

        Subject
to the terms and conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be
done, as promptly as practicable, all things necessary, proper and advisable under
applicable laws and regulations to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement. If at any time after the
Closing Date any further action is necessary or desirable to carry out the purposes of
this Agreement, including, without limitation, the execution of additional instruments,
the proper officers and directors of each party to this Agreement shall take all such
necessary actions.  

23

     SECTION 5.4.       
Public Announcements.  

        No
press release or announcement concerning the transactions contemplated hereby will be
issued by the Company or the Sellers without the prior consent of the Purchaser or by the
Company or the Purchaser without the prior consent of Magic Ltd.; except as such release
or announcement may be required under applicable law or stock exchange regulations or
rules in which a party’s shares are regularly traded, in which case the party
required to make the release or announcement will allow the party whose consent would
otherwise be required reasonable time to comment on such release or announcement in
advance of such issuance.  

     SECTION 5.5.       
No Solicitation of Employees.  

        None
of Purchaser or its limited partnerships will, at any time during the period from the
date hereof through the first anniversary of the Closing Date, directly or indirectly,
solicit the employment of any of Sellers’ employees as of the date hereof without
the prior written consent of the relevant Seller, provided  that the Purchaser or
the Company shall not be prohibited from offering employment to any employee of any of
the Sellers as of the date hereof whose employment with any of the Sellers was terminated
by the Sellers after the date hereof.  

        None
of Sellers will, at any time during the period from the date hereof through the first
anniversary of the Closing Date, directly or indirectly, solicit the employment of any of
Company’ employees as of the date hereof without the prior written consent of the
Purchaser, provided that the Sellers shall not be prohibited from offering
employment to any employee of any of the Company or its Subsidiaries as of the date
hereof whose employment with the Company or its Subsidiaries was terminated by the
Company after the date hereof.  

     SECTION 5.6.       
Company Closing Status.  

        At
Closing, the Company shall possess cash and/or cash equivalents in the amount of one
million US dollars (US$1,000,000) (the “Company Closing Status”). In
addition, the Company shall possess (i) an additional amount of five hundred thousand US
dollars (US$500,000) in cash, such additional amount to be used for payments (in
accordance with written instructions delivered by Sellers to Purchaser and the Company)
of any unpaid portion of the 2007 performance bonuses and success bonuses due to the
completion of the transaction contemplated by this Agreement (the “Prior Bonuses”)
to certain key management employees (“Key Employees”) listed on Schedule
5.6 attached hereto (due to such employees under their existing agreements
as of the Closing Date), and (ii) an additional sum of one hundred thousand US dollars
(US$100,000) for payment of Broker Fees (as defined in Section 3.4 above). Nothing herein
shall be deemed to impose on the Purchasers or the Company liability to pay any Prior
Bonuses or Broker Fees, exceeding the forgoing amounts. In the event that the actual
amounts payable to the Key Employees as Prior Bonuses shall be lower then the sum of five
hundred thousand US dollars (US$500,000), the Company shall promptly refund to Sellers
any such excess amount.  

24

    SECTION 5.7       
License Agreement. 

        At
Closing, the Company and Magic Ltd. shall execute and deliver the License Agreement. 

    SECTION 5.8       
Assistance To Purchaser.  

        Without
derogating from the Purchaser’s representation in Section 4.8 above, during the
Escrow Period the Sellers shall provide any reasonably requested information by Purchaser
relating to the Company, provided  such information is in the knowledge and
possession (and does not require further analysis) of Sellers; provided, however,
that (i) the Sellers shall not be required to make any representation or warranty or to
guaranty any obligation to any third party; and (ii) that any non delivery of such
information shall not relieve the Purchasers from their obligations and liabilities as
stipulated in this Agreement.  

     SECTION 5.9       
Post Closing Assistance of Company Employees and Access to Certain Information.  

		    (a)        Commencing
on the Closing and thereafter, Purchaser shall, in response to a           reasonable
request by any Seller, provide to Magic Ltd., at no cost to the           Sellers except
for reimbursement of Purchaser’s, Company’s or such           employee’s
out-of-pocket expenses, the services of any key Employee, as           reasonably
requested by any of the Sellers to assist the Sellers with           preparation of any
filings with any Governmental Authority and response to any           inquiries from any
Governmental Authority or any third parties and preparation           of financial
statements for the year 2007.  

		    (b)        Commencing
on the Closing and thereafter Sellers shall cooperate with the           Company and
Purchasers in the efforts to receive all consents and approvals           required with
respect to the Share Purchase in accordance with Schedule           2.6 of
the Company Disclosure Schedule.  

    SECTION 5.10       
Non-Compete. 

		    (a)        Neither
Seller shall, at any time during the three-year (3) period immediately
          following the Closing Date, directly or indirectly, own, manage, control or
          participate in the ownership, management or control of any business which
          competes with the Company’s business as conducted as of the Closing Date
          (i.e. selling the Company’s software application to the Continuance Care
          Retirement Community market) nor shall Sellers actively divert existing
          customers of the Company or any Subsidiary to a competitor of the Company or
any           Subsidiary; provided that, the foregoing shall not prohibit Sellers
          (together) from owning as a passive investment of five percent (5%) or less of
          the outstanding equity of any publicly-traded entity; and provided, further,
for clarity, that it shall not prevent Sellers from selling the           Software (as
such term is defined in the License Agreement) or any new versions           of such
Software in any market whatsoever (including to competitors of the           Company or
its Subsidiaries).  

25

		    (b)        Any
purchaser of a majority or a controlling interest in any of the Sellers (via
          merger, share acquisition or otherwise) shall be bound by the foregoing
          non-compete obligation solely with respect to such Sellers and its
          operations and/or business as of the closing of such acquisition, as a
          subsidiary, unit or division with such purchaser, as the case may be, and the
          foregoing undertaking shall not in any manner limit, restrict hinder any such
          other operations, activities, investments holdings etc., of such purchaser.  

    SECTION 5.11       
Errors and Omissions Insurance Policy.  

The
Purchasers hereby undertake to cause the Company and its Subsidiaries to procure no later
then January 9, 2008, and to maintain thereafter during the Escrow Period, an errors and
omissions insurance similar to the existing errors and omissions insurance covering the
Company and its Subsidiaries attached hereto as Exhibit  5.10, with a
coverage of not less then three million US dollars (US$3,000,00) per incident and per
annum.  

ARTICLE VI 

CLOSING 

     SECTION 6.1       
Closing.  

        The
closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place simultaneously with the execution of this
Agreement, at the offices of Meitar, Liquornik Geva & Leshem Brandwein, on December
30, 2007 (the “Closing Date”). At the Closing: 

		    (a)        The
Company and the Sellers shall deliver to the Purchaser (or the Escrow Agent,           as
indicated) the following:  

		    (i)        to
the Escrow Agent, stock certificates in the name of the Escrow Agent
          representing the Purchased Shares, accompanied by validly executed stock powers
          to the Escrow Agent with respect to the transfer of the Purchased Shares from
          the Sellers to the Escrow Agent;  

		    (ii)        to
the Escrow Agent, blank stock power deeds allowing the Escrow Agent to           transfer
the Purchased Shares to either the Purchaser or the Sellers, as set           forth in
this Agreement, as the case may be;  

		    (iii)        to
the Purchaser, resignations of all directors of the Company and its
          Subsidiaries of the Company and its Subsidiaries;  

		    (iv)        to
the Purchaser, the License Agreement duly executed by Magic Ltd. and the
          Company; and  

		    (v)        to
the Purchaser, the Escrow Agreement, duly executed by the Purchaser and the
          Escrow Agent.  

26

		    (b)        Purchaser
shall deliver or cause to be delivered to the Sellers the following:  

		    (i)        a
copy of the License Agreement duly executed by the Purchaser; and  

		    (ii)        the
Purchaser shall pay to the Sellers the funds payable at the Closing pursuant
               to Section 1.2 hereof; and  

		    (iii)        The
Purchaser shall deliver to the Sellers the Escrow Agreement, duly executed
               by the Purchaser.  

		    (c)        The
Company shall record the transfer of the Purchased Shares to the Escrow
               Agent on the Company’s stockholders ledger and other records in
accordance                with the Escrow Agreement and the Company shall make all
filings and                registrations as may be necessary to perfect such transfer and
shall deliver                copies thereof to the Purchaser.  

ARTICLE VII 

INDEMNIFICATION 

     SECTION 7.1.       
Survival of Representations and Warranties.  

        All
representations and warranties contained in this Agreement and all claims with respect
thereto shall survive the execution and delivery of this Agreement and the Closing
hereunder until the lapse of thirteen (13) months of the Closing Date, except that the
provisions of Section 2.9 (Litigation) and 2.15 (Intellectual Property) hereof shall
survive until thirty (30) months following the Closing Date, the provisions of Section
5.10 (Non Compete) shall survival until expiration of thirty six (36) months following the
Closing Date and the provisions of Sections 2.1 (Organization and Qualification), 2.4
(Capitalization), 2.5 (Subsidiaries and Equity Interest) shall survive until the end of
the applicable statute of limitations and 2.12 (Taxes) shall survive until the lapse of
ninety (90) days following the end of the applicable statute of limitations (the
“Survival Period”). Any claim hereunder for breach of any representation
or warranty or Third Party Claim (as defined below) must be notified in writing to the
Indemnifying Party (as defined below) prior to the expiration of the applicable Survival
Period. 

27

     SECTION 7.2.       
Indemnification by the Sellers.  

		    (a)        From
and after the Closing and until the lapse of the applicable Survival           Period,
the Sellers, jointly and severally, shall indemnify and hold the           Purchaser and
the Company and its respective officers, directors, employees,           agents and
representatives (the “Purchaser Indemnified           Parties”)
harmless, subject to certain limitations as described herein,           from and against,
and agree to promptly defend the Purchaser Indemnified Parties           from and
reimburse the Purchaser Indemnified Parties for, any and all Losses (as           defined
below) which any Purchaser Indemnified Party actually suffers or incurs,           or
becomes subject to, directly or indirectly as a result of or in connection           with
any: (i) material breach of any representation and warranty under this
          Agreement, (ii) material breach of any covenant made or other obligation by the
          Company or the Sellers in this Agreement and/or (iii) Tax liability or
          deficiency of the Company with respect to periods which have ended, on or prior
          to, the Closing Date. For the avoidance of doubt, a claim for indemnification
in           respect of Tax liability or deficiency of the Company as stated herein above
          shall not be subject to any limitation whatsoever, including, but not limited
to           any limitation of time or amount of claim, whether pursuant to this
Agreement or           any other agreement, and any such Tax liability which is subject
to indemnity           shall be paid by the Sellers to the relevant tax authorities no
later than the           last date upon which the Purchaser Indemnified Parties are
required under           applicable law to make such payments after giving effect to any
extension           obtained, such payment not to be deemed to limit the Sellers’ right
to seek           extension or otherwise challenge or dispute any requirement to pay such
Taxes.  

     SECTION 7.3.       
Indemnification Procedure.  

		    (a)        The
Purchaser shall as soon as possible notify the Sellers via registered mail,           in
writing of any claim or demand made by a third party (“Third Party           Claim”),
which the Purchaser has determined has given or could give           rise to a right of
indemnification under Section 7.2.  

		    (b)        The
Sellers shall have the right to assume, and with respect to claims or           demands
made by any tax authority which are subject to indemnification           hereunder, shall
be obligated to assume, the defense, including all costs and           expenses of such
defense and employ counsel to defend any such claim or demand           asserted against
any Purchaser Indemnified Party. Subject to the previous           sentence, the
Purchaser Indemnified Parties shall have the right to participate           in (but not
control) the defense of any such claim or demand at its own expense.           Except
with respect to the defense by the Sellers of any claim or demand related           to
taxes which is subject to indemnification hereunder, in the event that such
          counsel has a conflict of interest in representing such Purchaser Indemnified
          Party, Sellers shall also reimburse the Purchaser Indemnified Party for the
          reasonable expenses of one legal counsel to be appointed by it to participate
in           (but not control) the defense of any such claim. The Sellers shall notify
the           Purchaser Indemnified Parties in writing, within fifteen (15) Business Days
          after the date of the notice of claim given by the Purchaser to the Sellers
          under Section 7.3(a) of its election to defend any such third party claim or
          demand. The Sellers shall not settle or compromise any such claim or demand
          without the Purchaser’s prior written consent unless such settlement
          contains a complete discharge and full release of any liability of the
Purchaser           Indemnified Parties under such claim or demand. The Purchaser
Indemnified           Parties shall make available to the Sellers or its representatives,
all records           and other material in the Purchaser Indemnified Parties’ possession
          reasonably required by it for its use in contesting any third party claim or
          demand. The Purchaser Indemnified Parties shall not settle or compromise any
          such claim or demand without the Sellers’ prior written consent.  

		    (c)        If
the Purchaser determines in good faith that it is entitled to indemnification
          pursuant to Section 7.2 (not based on a Third Party Claim) and the
          Purchaser desires to seek an indemnification claim hereunder, the Purchaser
          shall give to the Sellers a written notice with respect thereto, in addition to
          any notice required under Section 7.3(a) (a “Purchaser’s Notice of
          Claim”) setting forth in reasonable detail the basis for such claim,
          providing copies of all relevant documents or other information, and specifying
          the amount of Losses claimed (which, if not finally determined, may be a good
          faith estimate thereof) (the amount of Losses so claimed being hereinafter
          referred to as the “Purchaser’s Indemnity Claim Amount”).  

28

		    (d)        The
Sellers may, within thirty (30) days after receipt of any Purchaser’s
          Notice of Claim, object to such Purchaser’s Notice of Claim and dispute
the           claim in full or any Purchaser’s Indemnity Claim Amount set forth in
such           Purchaser’s Notice of Claim by delivery to the Purchaser of written
notice           of such dispute (a “Sellers’ Dispute Notice”),
setting           forth in reasonable detail the basis for such dispute and the amount of
the           Purchaser’s Indemnity Claim Amount which the Sellers object to being
          claimed by the Purchaser in respect of the Purchaser’s Notice of Claim.  

		    (e)        If
the Purchaser does not receive a Sellers’ Dispute Notice that relates to           a
Purchaser’s Notice of Claim within thirty (30) days after the Purchaser
          actually delivers such Purchaser’s Notice of Claim to Sellers, such claim
          specified in the Purchaser’s Notice of Claim will be conclusively deemed a
          liability of the Sellers and the Sellers shall pay the Purchaser’s
          Indemnity Claim Amount (subject to the limitation set forth below) on demand or
          set off such Indemnity Claim Amount (or any portion thereof) against any
license           fees still due to Sellers under the License Agreement in accordance
with the           provisions of Section 7.7 below, or, in case of any portion of the
          Purchaser’s Indemnity Claim Amount is subject to further assessment, on
          such later date when the amount of such claim (or such portion thereof) becomes
          finally determined. If the Sellers have timely delivered the Sellers’          Dispute
Notice, as provided above, the Sellers and the Purchaser will proceed in           good
faith to negotiate a resolution of such dispute and, if not resolved           through
negotiations within thirty (30) days after the delivery of the           Sellers’ Dispute
Notice, the parties will be free to pursue such remedies           as may be available
under this Agreement. 

		    (f)        Commencement
of the procedure stated in this Section 7.3 shall not preclude the           Purchaser
from commencing the procedure under Section 7.7 simultaneously.  

     SECTION 7.4.       
Limitations on Indemnification Under Section 7.2.  

        The
Sellers shall not be liable and shall not indemnify the Purchaser Indemnified Parties with
respect to any claims pursuant to Section 7.2 or otherwise under this Agreement: (i) to
the extent that the Loss is recovered from insurance proceeds; (ii) if the aggregate
amount of Losses already paid (or set off or withheld under Section 7.7 below in
accordance with its terms, taken together) by the Sellers pursuant to indemnification
claims under Section 7.2 exceeds two million US dollars (US$2,000,000) (the “Cap
Amount”), excluding, however, (x) Losses resulting from fraud by the
Seller, (y) any payments that the Company may be required to make to any Governmental
Authority for, or any Losses arising from any Tax deficiencies for which Purchaser or the
Company are entitled to indemnification under Section 7.2 above, which amounts shall also
not be subject to the Basket Amount (as defined below); or (iii) until the aggregate
amount of Losses actually incurred by the Purchaser Indemnified Parties with respect to
such claims exceeds one hundred and fifty thousand US dollars (US$150,000) in the
aggregate (the “Basket Amount”), and then the Purchaser Indemnified
Parties will be entitled to all Losses from the first dollar underlying such claim. 

29

     SECTION 7.5.       
Indemnification by the Purchaser.  

        From
and after the Closing and until the lapse of the Purchaser Survival Period, the Purchaser
shall indemnify and hold the Sellers, their Affiliates and their respective officers,
directors, employees, agents and representatives (the “Sellers Indemnified
Parties”) harmless from and against, and agree to promptly defend the Sellers
Indemnified Parties from and reimburse the Sellers Indemnified Parties for, any and all
Losses, at such time that they are incurred, which the Sellers Indemnified Parties may at
any time suffer or incur, or become subject to, directly as a result of, or in connection
with any material inaccuracy in any representations and warranties and/or breach of any
material covenant made by the Purchaser in this Agreement. 

    SECTION 7.6.       
Procedures for Indemnification.  

        The
procedures for indemnification set forth in Section 7.3 herein shall apply
mutatis mutandis to the indemnification obligation under Section 7.5
herein. 

     SECTION 7.7.       
Right to Set-Off Indemnity Final Undisputable Amounts from Fees Under The
License Agreement.  

		    (a)        Both
the Sellers and the Purchaser acknowledge that there is a sum of three           million
US dollars (US$3,000,000) to be paid as license fees (“License           Fees”)
under the License Agreement out of which, the first amount of           one million US
dollars (US$1,000,000) to be paid under the License Agreement           (the “Exempt
Amount”) shall be payable unconditionally to Magic           Ltd. For the
avoidance of any doubt, except for any First Year Tax Set Off, the           Exempt
Amount shall not be subject to the right of the Purchaser to set off as
          provided below and any set-off right under this Section will be allowed subject
          to and conditioned upon the payment in full of the Exempt Amount.  

		    (b)        The
Sellers and the Purchaser agree that the following set off of Undisputable
          Indemnity Amounts (as defined below) will be allowed against the Remaining
          License Fees (as defined below) and that no other set off will be allowed; all
          according to the following terms and conditions: Commencement of the procedure
          stated in this Section 7.7 shall not preclude the Purchaser from seeking
          indemnity pursuant to Section 7.3 simultaneously.  

30

		    (i)        The
Set Off Notice (as defined below) must be delivered to the Sellers prior to           the
due date for payment of any Remaining License Fees in accordance with the
          License Agreement; for avoidance of doubt, any Remaining License Fees (or
          portions thereof) not subject to a Set Off Notice on their payment date
          according to the License Agreement will be paid according to the terms of the
          License Agreement and may not be delayed or withheld for any reasons in
          connection with this Section 7.  

		    (ii)        Once
a Set Off Notice was delivered to the Sellers during and subject to the
          applicable Survival Periods and the Cap Amount (as defined below), the
Purchaser           shall be allowed to withhold the Remaining License Fees (or a smaller
amount,           mentioned in the Set Off Notice) only until such time as the Set Off
Notice (or           any portion thereof) becomes either:  

		    (A)        an
Undisputable Indemnity Amount – in which case Purchaser may set off the
          Remaining License Fees against such Undisputable Indemnity Amount; or  

		    (B)        a
Rejected Set Off Notice (as defined below) – in which case the Purchaser
          shall immediately pay such Remaining License Fees (or a smaller amount,
withheld           due to the Set Off Notice) detailed therein (up to the Remaining
License Fees).  

		    (iii)        There
will be no set off of any sums unless the Sellers shall be liable to           indemnify
any Purchaser Indemnified Party in accordance with all the provisions           and
limitations of Section 7 herein.  

		    (iv)        All
set offs together shall not exceed, in the aggregate, together with any           other
indemnity payment/obligations/claims under this Agreement, two million US
          dollars (US$2,000,000). 

		    (v)        In
the event that any Remaining License Fees were actually withheld and           thereafter
were classified hereunder as Rejected Set Off Notice – the           Purchaser shall
add to the Remaining License Fees (or any portion thereof) an           annual interest
(paid ratably for part of a year) in the amount equal to the           then current LIBOR
plus three percent (3%) accrued from the due date for payment           of such fees
under the License Agreement until actual payment of such License           Fees.  

		    (vi)        There
will be no set off in case Purchaser is in default under this Agreement or           the
Company is in default under the License Agreement.  

     SECTION 7.8.       
Remedies Exclusive.  

        Without
derogating from, and subject to, Section 1 above, except for specific performance and any
other equitable remedies and except in the event of fraud, the parties acknowledge and
agree that the indemnification provisions of this Section 7 shall be the exclusive
remedies of the parties with respect to the transactions contemplated by this Agreement
and the parties agree that they will not exercise any other remedy. Anything contained in
this Agreement to the contrary notwithstanding, neither the Purchaser Indemnified Parties,
nor the Sellers Indemnified Parties will be entitled to any recovery from the other party
under this Agreement for such Indemnified Party consequential, incidental, special,
punitive or indirect damages, including loss of profits or loss of opportunities. 

31

ARTICLE VIII 

DISPUTE RESOLUTION 

     SECTION 8.1.       
Submission to Arbitration.  

        The
parties hereto undertake to adopt the principle of good faith and to use their best
efforts towards an amicable solution as a definitive settlement for any claim, controversy
or dispute related to this Agreement or to any of the transactions contemplated hereby.
Any and all disputes as to the validity, efficacy, violation, interpretation, termination,
breach and consequences thereof, shall be settled by arbitration, on the following terms
and conditions. 

		    (a)        The
dispute shall be submitted to a single arbitrator (the           “Arbitrator”)
whose identity shall be agreed by the parties. In           the event that parties fail
to reach an agreement with respect to the identity           of the arbitrator within
seven (7) days of the date of delivery of a notice of a           party to another party,
any party may request the President of the Israeli Bar           to appoint an
arbitrator.  

		    (b)        The
arbitration will take place in Tel-Aviv.  

		    (c)        The
Arbitrator will submit his/her ruling within thirty (30) Business Days of           the
date of his/her appointment, which shall be reasoned and explained and shall           be
in accordance to the substantive laws of the State of Israel without giving
          effect, however, to its rules of procedure and evidence. The arbitrator may
give           interim remedies, but it is agreed between the Parties that each Party has
the           right to approach the competent courts of Tel Aviv-Jaffa (instead of the
          Arbitrator) to receive any interim remedies.  

		    (d)        Unless
otherwise provided for in this Agreement, the Arbitrator’s fees and
          expenses shall be borne equally by the parties to the arbitration.  

		    (e)        The
arbitral award may be enforced in any competent court having jurisdiction           over
the parties or their assets. Each party shall use its best efforts to           ensure
the arbitration is concluded as quickly and as efficiently as reasonably
          possible.  

		    (f)        For
the avoidance of doubt, this Agreement shall constitute an arbitration
          agreement in accordance to the requirement of the Israeli Arbitration Laws,
1968           without the need for any other action to be taken.  

32

     SECTION 8.2.       
Governing Law and Venue.  

        The
Agreement shall be governed by and construed in accordance with the laws of the State of
Israel, without giving effect to the principles thereof relating to conflict of laws;
provided, however, that matters involving the internal corporate affairs of
the Company shall be governed by the laws of the jurisdiction in which the Company is
organized. Subject to, and without derogating from, the arbitration agreement under
Section 8.1 above, the competent courts of Tel-Aviv shall have exclusive jurisdiction to
hear all disputes arising in connection with this Agreement and no other courts shall have
any jurisdiction whatsoever in respect of such disputes. The Parties agree that each Party
has the right to approach the competent courts of Tel Aviv-Jaffa to receive any interim
remedies. 

ARTICLE IX

MISCELLANEOUS
PROVISIONS 

     SECTION 9.1.       
Amendment and Modification.  

        This
Agreement may be amended, modified or supplemented by a written instrument signed by
Purchaser and the Sellers. 

     SECTION 9.2.       
Waiver of Compliance; Consents.  

        Any
failure of Purchaser, on the one hand, or of the Company or the Sellers, on the other
hand, to comply with any obligation, covenant, agreement or condition contained herein may
be waived in writing by the Sellers or Purchaser, respectively, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any other failure. 

     SECTION 9.3.       
Validity.  

        The
invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, which shall remain
in full force and effect and shall be construed to the maximum extent in order to give
effect to the parties intention as set forth in this Agreement. 

     SECTION 9.4.       
Expenses.  

        Each
party shall bear its own costs associated with this Agreement and the transactions
contemplated hereby. 

     SECTION 9.5.       
Parties in Interest.  

        This
Agreement shall be binding upon and, except as provided below, inure solely to the benefit
of each party hereto, and, nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement. 

33

     SECTION 9.6.       
Notices.  

        All
notices and other communications hereunder shall be in writing and shall be deemed given
upon the earlier of delivery thereof if by hand or upon receipt if sent by mail
(registered or certified mail, postage prepaid, return receipt requested) or on the second
next Business Day in the United States of America after deposit if sent by a recognized
overnight delivery service or upon transmission if sent by facsimile transmission or
e-mail (with request of assurance of receipt in a manner customary for communication of
such type) as follows: 

	 	(a)  	If
to Purchaser, to: 

	 	
Fortissimo Capital Fund GP LP

Attention: Marc Lesnick

Facsimile No.: (972-3) 915-7411

with copies to:

Amit, Pollak, Matalon & Co.

17 Yitzhak Sadeh St.

Tel Aviv, Israel 67775

Attention: Shlomo Landress, Adv.

Facsimile No : (972-3) 568-9001

	 	                  (b) 	If
to the Company, to:

	 	
Advanced Answers On Demand Holding, Inc.

8100 N. University Drive,

3rd Floor,

Tamarac 33321,

Florida, USA

Attention: ________

Facsimile No : _____________ 

	 	
with
a copy to: 

	 	
Meitar, Liquornik, Geva & Leshem,

Brandwein, Law Offices

16 Aba Hillel Silver Road

Ramat-Gan 52506, Israel

Attention: Dan Shamgar, Adv.

Facsimile No.: (972-3) 610-3111

	 	                  (c) 	if
to the Magic Ltd., to: 	 Magic Software Enterprises Ltd.

Attn: Mr. Amit Birk, Adv.

Legal Department

5 Haplada St.

Or Yehuda, 60218

Israel

Facsimile No : (972-3) 538-9393

34

	 	
with
a copy to: 

	 	
Meitar, Liquornik, Geva & Leshem,

Brandwein, Law Offices

16 Aba Hillel Silver Road

Ramat-Gan 52506, Israel

Attention: Dan Shamgar, Adv

Facsimile No.: (972-3) 610-3111

	 	                  (d) 	 if to the Magic Inc., to: 	 c/o Magic Software Enterprises Ltd.

Attn: Mr. Amit Birk, Adv.

Legal Department

5 Haplada St.

Or Yehuda, 60218

Israel

Facsimile No.: (972-3) 538-9393

	 	
with
a copy to: 

	 	
Meitar, Liquornik, Geva & Leshem,

Brandwein, Law Offices

16 Aba Hillel Silver Road

Ramat-Gan 52506, Israel

Attention: Dan Shamgar, Adv

     SECTION 9.7.       
Counterparts.  

        This
Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement. 

     SECTION 9.8.       
Transfer Taxes.  

        All
transfer, conveyance or other similar taxes, duties, excises or governmental changes
imposed by any taxing jurisdiction, domestic or foreign, and all recording or filing fees,
notaries fees or other similar charges with respect to the transfer of the Purchased
Shares or otherwise on account of this Agreement or the transactions contemplated hereby
shall be borne equally by the Sellers (one half in the aggregate) and Purchaser (one half
in the aggregate) and the portion of such amount borne by the Sellers pursuant hereto
shall, to the extent required by law, be withheld from the proceeds payable to the
Sellers. 

     SECTION 9.9.       
Headings.  

        The
article and section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not affect in anyway the
meaning or interpretation of this Agreement. 

35

    SECTION 9.10.       
Certain Definitions. 

        For
purposes of this Agreement, the term: 

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

		    (b)        “Affiliate” of
any person means another person that directly or           indirectly, through one or
more intermediaries, controls, is controlled by, or           is under common control
with, such person.  

		    (c)        “Business
Day” shall have the meaning set forth in Rule           14d-1(g)(3) under the
Exchange Act.  

		    (d)        “Material
Adverse Effect” means any event that has a long term           material adverse
effect on the business of the Company and its Subsidiaries,           taken as a whole,
or that prevents the Company and/or Sellers from consummating           the transaction
under this Agreement.  

		    (e)        “Code” means
the Internal Revenue Code of 1986, as amended  

		    (f)        “control” shall
have the meaning ascribed to it in the Israel           Securities Law, 5728-1968.  

		    (g)        “Company
Closing Status” as defined in Section 5.9.  

		    (h)        “Company
Intellectual Property” as defined in Section 2.15.  

		    (i)        “Environmental
Laws” means all applicable U.S. federal, state,           local or foreign
statutes, codes, rules, regulations or permits relating to the           environment,
natural resources, pollution or contamination or toxic or hazardous           substances.  

		    (j)        “First
Year Tax Set Off” means a Set Off Notice delivered by           the Purchaser,
prior to the expiration of twelve (12) months following the           Closing Date,
relating to any claims or demands exceeding the sum of two million           US dollars
(US$2,000,000) made by any tax authority against the Company or any           of its
Subsidiaries prior to the expiration of twelve (12) months from the           Closing
Date and which are subject to indemnification under Section 7.2(a) (iii)
          hereunder.  

		    (k)        “Governmental
Authority” means any national, state, local or           municipal authority and
any other entity exercising an executive, legislative,           judicial, regulatory or
administrative function of or pertaining to any such           authority.  

36

		    (l)        “Intellectual
Property” means any and all intellectual           property, in any jurisdiction
including: (i) all trade marks, service marks,           brand names, certification
marks, trade dress, assumed names, business names,           trade names and other
indications of origin (“Trademarks”);           (ii) patents and patent
rights (“Patents”); (iii) trade secrets           and other confidential
or non-public business information, including formulae,           compositions, inventor’s
notes, discoveries and improvements, know-how,           manufacturing and production
processes and techniques, and research and           development information (whether or
not patentable), invention disclosures,           unpatented blue prints, drawings,
specifications, designs, plans, proposals and           technical data, business and
marketing plans, and customer lists and           information; (iv) writings and other
copyrightable works of authorship,           including computer programs, databases and
documentation therefor, and all           copyrights to any of the foregoing (“Copyrights”)
; (v)           integrated circuit topographies and mask works; (vi) moral rights; (vii)
          features of shape, configuration, pattern or ornament and design registrations;
          (viii) any other intellectual property rights, and (ix) registrations of, and
          applications to register, any of the foregoing with any Governmental Authority
          and any renewals or extensions thereof.  

		    (m)        “knowledge” ofthe
Company or of the Sellers shall mean           the actual knowledge of the persons listed
in Schedule           9.10(m) after due inquiry with their
subordinated persons in the           Company (including applicable consultants), the
Company’s accountants and           legal advisors.  

		    (n)        “Loss” means
all liability, loss, damage or injury, and all           costs and expenses, including
interest, and including further without           limitation, penalties, costs of
preparation and investigation and the reasonable           fees and expenses of
attorneys, accountants and other professional advisers,           actually incurred.  

		    (o)        “person” means
an individual, corporation, partnership, joint           venture, association, trust,
unincorporated organization or, as applicable, any           other entity.  

		    (p)        “Permitted
Actions” as defined in Section 5.1.  

		    (q)        “Purchaser
Material Adverse Effect” means any event that would,           or reasonably be
expected to, materially impact or delay the ability of the           Purchaser to perform
its obligations under this Agreement and the License           Agreement or to consummate
the transactions contemplated by this Agreement and           the License Agreement.  

		    (r)        “Purchaser
Survival Period” means one year from the Closing           Date.  

		    (s)        “Rejected
Set Off Notice” means any one of the following: (i) a           Set Off Notice,
which following discussions between a Seller and Purchaser, both           parties agree
should be rejected by such Seller, or (ii) a final and an           unappealable
Arbitration or court ruling with respect to any such Set Off Notice           (or
portions thereof) which was disputed by the relevant Seller rejecting such           Set
Off Notice.  

		    (t)        “Remaining
License Fees” only if the payment to Magic Ltd. of           the Exempt Amount
was made, this term shall mean any remaining amount equal to           the Cap Amount of
the License Fee.  

		    (u)        “Subsidiaries” means
any entity over which the Company has           control.  

37

		    (v)        “Set
Off Notice” means a written notice submitted in good faith           by
Purchaser to any Seller asking to set off the Remaining License Fees (or any
          portion thereof) resulting from any (a) Third Party Claim, or (b)
          Purchaser’s Notice of Claim (as such terms are defined above) (all within
          the applicable Survival Period) delivered in writing and reasonable detail to
          such Seller; which Purchaser believes in good faith is subject to
          indemnification by such Seller in accordance with the provisions of Section
7.7.  

		    (w)        “Taxes” shall
mean means any U.S. federal tax or Israeli,           state, local or other foreign
income tax, gross receipts tax, license tax,           payroll tax, employment tax,
excise tax, severance tax, stamp tax, occupation           tax, premium tax, windfall
profits tax, environmental tax (including taxes under           section 59A of the Code),
customs duties, capital stock tax, franchise tax,           profits tax, withholding tax,
social security tax (or similar), unemployment           tax, disability tax, real
property tax, personal property tax, sales tax, use           tax, transfer tax,
registration tax, value added tax, or other tax of any kind           whatsoever,
including any interest, penalty or addition thereto, whether           disputed or not.  

		    (x)        “Tax
Returns” shall mean any return, declaration, report, claim           for refund
or information return or statement relating to any Tax, including any           schedule
or attachment thereto and including any amendment thereof.  

		    (y)        “Undisputable
Indemnity Amount” means any one of the following:           (i) the amount
stated in a Set Off Notice, undisputed by the Sellers in writing           within thirty
(30) days following the receipt of such Set Off Notice by such           Seller, and (ii)
the amount of a final and an unappealable Arbitration or court           ruling upholding
the Set Off Notice with respect to any such Set Off Notice (or           potions thereof)
which was disputed by such Seller.  

     SECTION 9.11.       
Entire Agreement.  

        This
Agreement, including all exhibits and Schedules hereto, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained herein or
therein. There are no agreements, representations, warranties or covenants other than
those expressly set forth herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject matter. For
clarity it is agreed that all the rights, obligations and liabilities under this Agreement
of the Purchaser shall be jointly and severally between the Purchasers’ individuals. 

     SECTION 9.12.       
Assignment.  

        This
Agreement shall not be assigned by operation of law or otherwise, without the written
consent of the other parties hereto; except that (i) Sellers may freely assign all rights
and obligations under this Agreement (as long as the assignee assumes both the rights and
the obligations under such assignment), and (ii) Purchaser may, following the Escrow
Period (and not prior thereto), transfer, sell or otherwise dispose of the Purchased
Shares but may not assign or transfer in any manner this Agreement or any rights,
privileges or obligations under this Agreement. 

38

Notwithstanding the above, with
respect to Purchaser: (a) following the payment in full of the Purchase Price and of the
License Fees under the License Agreement (whether on the due payment date for such
payments or at an earlier date), the Purchaser shall be allowed to assign this Agreement
subject to the following conditions precedent: (i) the assignee is a Purchaser or
transferor of all of the Purchased Shares hereunder, and (ii) the only indemnification
obligation that shall be assigned and survive such assignment shall be the indemnification
under Section 7.2(a)(iii) with respect to Tax indemnification and all other
indemnification obligations and liabilities of the Sellers shall immediately upon such
assignment expire and shall have no further force or effect (except that Purchaser shall
still be entitled to any indemnification in accordance with the provisions of Section 7
above with respect to any Purchaser’s Notice of Claim which was delivered to the
Sellers during the applicable Survival Period and prior to the date of such assignment),
and (iii) such assignee signs a delivers an assignment letter to the Sellers undertaking
all the rights and obligations under this Agreement.

 It is agreed between the Sellers and
the Purchaser that any sale of shares of the SPC or change of control of SPC (unless to a
controlled affiliate of Fortissimo (more then fifty one percent (51%)) or pursuant to a
merger of SPC into the Company), shall be considered an assignment of this Agreement and
is subject to the provisions relating to assignment detailed in this Section above. 

     SECTION 9.13.       
Incorporation of Exhibits and Schedules.  

		    (a)        The
Attachments, Annexes and Schedules identified in this Agreement are
          incorporated herein by reference and made a part hereof.  

		    (b)        It
is understood and agreed that the specification of any dollar amount in the
          representations and warranties contained in this Agreement or the inclusion of
          any specific item in the disclosure schedule is not intended to imply that such
          amounts or higher or lower amounts, or the items so included or other items,
are           or are not material, and neither party shall use the fact of the setting of
such           amounts or the fact of the inclusion of any such item in the disclosure
schedule           in any dispute or controversy between the parties hereto as to whether
any           obligation, item or matter not described herein or included in the
disclosure           schedule is or is not material for purposes of this Agreement.  

     SECTION 9.14.       
Facsimiles.  

        The
parties agree that facsimile copies of signatures shall be deemed originals for all
purposes hereof and that a party hereto may produce such copies, without the need to
produce original signatures, to prove the existence of this Agreement in any proceeding
brought hereunder. 

39

        IN
WITNESS WHEREOF, each of the parties executed this Agreement as of the day and year first
above written: 

SELLERS

MAGIC SOFTWARE ENTERPRISES LTD.

By:

——————————————

Title: 

MAGIC SOFTWARE ENTERPRISES, INC.

By:

——————————————

Title:

[SPA SIGNATURE PAGE] 

40

COMPANY 

ADVANCED ANSWERS ON DEMAND HOLDING, INC.

By:

——————————————

Name:

Title:

[SPA SIGNATURE PAGE] 

41

PURCHASER

FORTISSIMO CAPITAL FUND GP LP

By:

——————————————

Name:

Title:

AOD HOLDINGS, INC.

By:

——————————————

Name:

Title:  

UNDERTAKING 

In the event that AOD Holdings, Inc.
defaults under this agreement, Fortissimo Capital Fund GP LP hereby commits to cover all
of AOD Holdings, Inc.‘s obligations under this Agreement, including without
limitation, the obligation to pay the Purchase Price. 

FORTISSIMO CAPITAL FUND GP LP

By: _____________________________

________________________________                                                  

[SPA SIGNATURE PAGE] 

42AMENDMENT

TO

EMPLOYMENT AGREEMENT

(Thomas F. Connerty)

AMENDMENT, dated as of May 14, 2008, between NutriSystem, a Delaware corporation (the "Company"), and Thomas F. Connerty (the "Employee"). 

RECITALS

WHEREAS, the Company and the Employee previously entered into an Employment Agreement, dated November 30, 2007 (the "Employment Agreement"), that sets forth the terms and conditions of the Employee's employment with the Company;

WHEREAS, the Employee desires to reduce his position and responsibilities with the Company as its Executive Vice President, Program Development and Chief Marketing Officer so that he will be employed as a Marketing Advisor and to make certain changes to the Employment Agreement to reflect the Employee's change in position and responsibilities;

WHEREAS, the Company has agreed to the terms of the Employee's change in position and responsibilities with the Company; and

WHEREAS, Section 16 of the Employment Agreement provides that the Employment Agreement may be amended pursuant to a written amendment between the Employee and the Company.

NOW, THEREFORE, the Company and the Employee, each intending to be legally bound hereby, agree that the Employment Agreement shall be amended as follows:

	Employment.  Section 2 of the Employment Agreement is hereby amended in its entirety to read as follows:

"The Employee shall be employed as a Marketing Advisor and shall perform duties consistent with this position as are assigned by the Company's most senior marketing officer or the Chief Executive Officer, including responsibility for providing marketing support for the Company's television advertising campaigns.  The Employee shall report directly to the Company's most senior marketing officer and shall not be an executive officer of the Company."

	Term.  Section 4 of the Employment Agreement is hereby amended in its entirety to read as follows:

"The Employee's employment with the Company and the term of employment under this Agreement begins on the Effective Date and ends at the close of business on April 1, 2009 (the "Employment Term")."

	Bonus.  Section 7 of the Employment Agreement is hereby amended in its entirety to read as follows:

"The Employee shall be not eligible for any bonus during the Employment Term for the period after December 31, 2007."

	Total Disability.  Subsection (b) of the first paragraph of Section 10 of the Employment Agreement is hereby amended to read as follows:

"(b) a lump sum payment equal to one month of Salary,"

	Termination without Cause by the Company.  Paragraphs (1) through (6) of Section 13 of the Employment Agreement are hereby amended in their entirety to read as follows:

"(1)the Company will pay to the Employee a lump sum severance payment in the amount equal to (i) the Salary for period from the date of termination to the end of the Employment Term, and (ii) the value of the premium cost to the Company to continue the Employee on the Company's group life and AD&D policy for the period from the date of termination to the end of the Employment Term; and 

(2)the Employee's group healthcare coverage will be continued for the period from the date of termination to the end of the Employment Term, at the Employee's normal contribution rates; and

(3)the next tranche of the Employee's outstanding restricted common stock that is scheduled to vest after the date of termination will become vested on the date of termination; and

(4)the Employee and the Company will enter into a mutual general release."

	Amendment of Stock Grant.  With respect to the Stock Grant (as defined in the Employment Agreement) originally delivered by the Company to the Employee on November 30, 2007, the Employee hereby waives any right, title, interest or claim to the restricted shares with vesting dates after the Employment Term.  The Stock Grant shall be amended to reflect the foregoing sentence in accordance with the terms and conditions set forth in the Amendment to Stock Award Agreement attached as Appendix A hereto.

	Nondisclosure and Noncompete Agreement.  The first paragraph of Section 2(a) of the Nondisclosure and Noncompete Agreement for Management Employees dated November 30, 2007, between the Employee and the Company is hereby amended to read as follows:

"EMPLOYEE agrees that he will not at any time during the term of his employment and during the period from the termination of his employment until the earlier of April 1, 2010 or 18 months after the termination of his employment, within the United States, become associated directly or indirectly for himself or as an agent on behalf of, or be employed in, act as a consultant to, or as a director of, or in connection with any person, partnership, association or corporation, engaged in, a business substantially similar to or competitive with the present business of NS or such other business activity in which NS may engage during the term of his employment."

	Effect on Employment Agreement.  In all respects not modified by this Amendment, the Employment Agreement is hereby ratified and confirmed.

IN WITNESS WHEREOF, the Company and the Employee agree to the terms of the foregoing Amendment, effective as of the date first written above.

NUTRISYSTEM, INC.

 

By:/s/ Joseph M. Redling

Name:Joseph M. Redling
Title:President and Chief Executive Officer

 

EMPLOYEE:

 

/s/ Thomas F. Connerty

Name:Thomas F. Connerty

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