1.

Purchase and Sale of Shares

1.1

Sale and Issuance of Shares by the Company; Conversion of Shares by the Company

(a)

Subject to the terms and conditions of this Agreement, at the Closing (as defined below) the Investors shall purchase, severally and not jointly, and the Company shall sell and issue to the Investors, severally and not jointly, an aggregate amount of 1,901,756 (One Million Nine Hundred and One Thousand Seven Hundred and Fifty Six) Series BB-4 Preferred Shares of the Company, par value NIS 0.01 each (“Issued BB-4 Preferred Shares”), at US$2.4354 per share (the “Price Per Share”) for an aggregate investment of US$$4,631,537 (Four Million Six Hundred and Thirty One Thousand Five Hundred and Thirty Seven US Dollars) (the “BB-4 Purchase Price”) convertible into Ordinary Shares of the Company, par value NIS 0.01 (“Ordinary Shares”), to be allocated among the Investors as set forth in Schedule A.

(b)

Subject to the terms and conditions of this Agreement, at the Closing (as defined below), the Company shall convert the 2,436,340 Founders’ Shares held by Amadeus into 2,436,340 Series BB-4 Preferred Shares of the Company, par value NIS 0.01 each (the “Converted Founders’ Shares”) held by Amadeus at the Closing, in consideration for the payment by Amadeus to the Company of an additional aggregate amount of $US 1,412,784 (the “Conversion Consideration”).

The Issued BB-4 Preferred Shares and the Converted Founders’ Shares shall be collectively referred to as the “Issued Shares” and shall have equal rights and rank pari passu in all respects. The BB-4 Purchase Price and the Conversion Consideration shall be collectively referred to as the “Purchase Price”. Under the Amended Articles, all of the Issued Shares shall be deemed to have an Original Issue Price of US$2.4354 per share. Ordinary Shares issuable upon the conversion of the Issued Shares shall be referred to herein as the “Conversion Shares”.

(c)

The Price Per Share is based on a pre-money Company valuation of US$104,215,086 on a fully diluted basis, including: (i) all outstanding shares (including also Ordinary Shares issuable upon conversion of Ordinary-Preferred Shares), (ii) all shares, on an as-converted basis, resulting from any anti-dilution protection afforded to any of the existing shareholders of the Company triggered by the investment hereunder, (iii) 5,791,503 Ordinary Shares of the Company reserved under all of the Company’s incentive share option plans (the “Share Option Plans”) for issuance of options to employees and consultants (such number not including 238,000 Ordinary Shares issued upon exercise of options granted to employees of the Company), (iv) 120,560 Ordinary Shares reserved for issuance to service providers of the Company, and (v) all other warrants, options and convertible rights, including convertible notes and loans. Immediately after Closing, Amadeus shall hold at least seven and a half percent (7.50%) of the Company’s issued and outstanding share capital on a fully diluted basis.

1.2

The rights, preferences and privileges of the Issued Shares are as set forth in the Amended Articles of Association of the Company attached hereto as Exhibit A (hereinafter referred to as the “Amended Articles”) and in the Shareholders Rights Agreement as amended upon the Closing, pursuant to the Amendment attached hereto as Exhibit B (hereinafter referred to as the “Shareholders Rights Agreement”).

1.3

Closing.

The closing of the purchase and sale of the Issued Shares to the Investors (the “Closing”) shall take place on September 27, 2006 or at such other time and place as may be agreed upon orally or in writing by the Company, Amadeus and the Investors (other than Amadeus) investing a majority of the Purchase Price invested by all Investors other than Amadeus (together, the “Majority Investors”). At the Closing, the following transactions shall occur simultaneously (no transaction shall be deemed to have been completed or any document delivered until all such transactions have been completed and all required documents delivered):

(a)

the Company shall deliver to the Investors (unless waived by the Majority Investors):

(i)

copies of resolutions of the Company’s shareholders, in the form attached hereto as Schedule 1.3(a)(i), by which, inter alia: (i) the Articles of Association of the Company were replaced by the Amended Articles; (ii) the authorized share capital of the Company was increased; (iii) converting 2,436,340 Ordinary Shares of the Company (i.e., the Founders’ Shares) into the same number of Series BB-4 Preferred Shares; and (iv) to the extent required, this Agreement and all ancillary documents thereto were approved, together with a duly completed notices of such changes to the Israeli Registrar of Companies;

(ii)

validly executed share certificates covering the Issued Shares issued in the name of each Investor, in the form attached hereto as Schedule 1.3(a)(ii);

(iii)

a copy of a resolution of the Company’s Board of Directors, inter alia: (i) approving the execution, delivery and performance of this Agreement and the ancillary documents thereto, (ii) issuing and allotting the Issued Shares, and (iii) converting 2,436,340 Ordinary Shares of the Company (i.e., the Founders’ Shares) into the same number of Series BB-4 Preferred Shares; all in the form attached hereto as Schedule 1.3(a)(iii);

(iv)

a copy of the Company’s share register registering the Issued Shares in the Investors’ names in the form attached hereto as Schedule 1.3(a)(iv);

(v)

a copy of the notice to be provided to the Israeli Registrar of Companies immediately after the Closing (provided that all Investors who are not (i) Israeli residents or (ii) registered as of the Closing with the Registrar of Companies as shareholders of the Company, have provided the Company with such documents and information as are reasonably necessary to file and register such issuance of shares), in the form attached hereto as Schedule 1.4(a)(v).

(vi)

a copy of the approvals of the transactions contemplated hereby from: (i) the Office of the Chief Scientist of the Ministry of Industry and Trade of the State of Israel (‘OCS’); and (ii) the Investment Center.

(b)

The Company shall notify the Israeli Registrar of Companies of the issuance of the Issued Shares promptly after the Closing and shall deliver a copy of such notice to the Investors’ counsel.

(d)

Payments shall be made by the Investors to the Company in U.S. dollars of the Purchase Price by way of a bank transfer to the Company’s account (Bank Leumi Le’Israel BM, Rehovot Business Branch (978), account No. 222200/29), or by such other form of payment as is mutually agreed by the Company and each Investor.

(e)

The non-Israeli Investors shall deliver to the Company a duly executed undertaking to the OCS in the form substantially attached hereto as Schedule 1.3(d), to the extent required by the OCS and if they have not already delivered such undertaking in the past.

2.

Representations and Warranties of the Company

The Company hereby represents and warrant to the Investors that, except as set forth in this Agreement, the Exhibits and Schedules hereto and the Schedule of Exceptions attached hereto, which exceptions shall be deemed to be representations and warranties as if made hereunder, the following representations are true and correct on the date of this Agreement and shall be true and correct on the date of Closing as if made on such date:

2.1

Organization, Good Standing and Qualification.

The Company is a private company duly organized and validly existing under the laws of the State of Israel and incorporated on December 22, 1991. The Company has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted in: (i) the Work Plan attached hereto as Schedule 2.1; (ii) the Marketing Penetration Plan (as defined below); and (iii) the 2006 Annual Budget (subsections (i), (ii) and (iii) are collectively referred to herein as the “Updated Work Plan”). The Company is duly qualified to transact business in each jurisdiction in which the failure so to qualify is reasonably likely to have a material adverse effect on its assets, financial condition, operating results, prospects or business of the Company as presently conducted and as proposed to be conducted in the Updated Work Plan (“Material Adverse Effect”). The Memorandum of Association and Articles of Association of the Company, all as currently in effect, are attached hereto as Schedule 2.1(a).

2.2

Capitalization and Voting Rights.

Immediately prior to Closing (and prior to the creation of the Series BB-4 Preferred Shares and the conversion of the Ordinary-Preferred Shares held by the Founders into Ordinary Shares) the authorized capital of the Company consists of 85,570,000 divided into (i) 47,000,996 Ordinary Shares, of which 469,449 Ordinary Shares are issued and outstanding and of which 5,791,503 are reserved for issuance to employees, consultants, officers, or directors of the Company and/or subsidiary thereof pursuant to the Share Option Plans (such number not including 238,000 Ordinary Shares issued upon exercise of options granted to employees of the Company), of which 4,996,976 have been allocated and the remaining 794,527 are available for future issuance, (ii) 1,569,004 Ordinary-Preferred Shares of which all are issued and outstanding, (iii) 15,000,000 Preferred AA Shares, par value NIS 0.01, of which 13,144,070 are issued and outstanding, (iv) 12,137,708 Preferred BB-1 Shares, par value NIS 0.01, 8,152,256 of which are issued and outstanding (v) 4,000,000 Preferred BB-2 Shares, par value NIS 0.01, 3,597,106 of which are issued and outstanding, (vi) 5,862,292 Preferred BB-3 Shares, par value NIS 0.01 of which 5,859,274 are issued and outstanding.

Upon the Closing, the authorized capital of the Company will consist of 95,000,100 divided into:

(i) 53,000,060 Ordinary Shares, par value NIS 0.01 each, of which 469,449 Ordinary Shares are issued and outstanding and 5,791,503 of which are reserved for issuance to employees, consultants, officers, or directors of the Company and/or subsidiary thereof pursuant to the Share Option Plans (such number not including 238,000 Ordinary Shares issued upon exercise of options granted to employees of the Company), of which 4,996,976 have been allocated and the remaining are available for future issuance, (ii) 15,000,000 Preferred AA Shares, par value NIS 0.01 each, of which 13,144,070 are issued and outstanding, (iii) 12,137,708 Preferred BB-1 Shares, par value NIS 0.01 each, of which 8,152,256 are issued and outstanding and (iv) 4,000,000 Preferred BB-2 Shares, par value NIS 0.01 each, of which 3,597,106 are issued and outstanding, (v) 5,862,292 Preferred BB-3 Shares, par value NIS 0.01 each, of which 5,859,274 are issued and outstanding, and (vi) 5,000,040 Preferred BB-4 Shares, par value NIS 0.01 each, of which 4,338,096 are issued and outstanding.

The outstanding Ordinary Shares, Series AA Preferred Shares, Series BB-1 Preferred Shares, Series BB-2 Preferred Shares, Series BB-3 Preferred Shares and Series BB-4 Preferred Shares, are all duly and validly authorized and issued, fully paid and nonassessable, were issued free of any Hen, pledge, claim, charge, restriction, encumbrance or third party rights of any kind (“Security Interest”), and were issued in compliance with all applicable laws, including the relevant securities laws of the State of Israel.

A complete and correct list of the security holders of the Company (including, all warrants and options of the Company’s capital stock) immediately prior to the Closing is set forth in Schedule 2.2 attached hereto. The individuals and entities identified in Schedule 2.2 as the shareholders of the Company immediately prior to the Closing are the registered owners, and to the Company’s best knowledge, the lawful owners, beneficially and of record, of all of the issued and outstanding share capital of the Company, free and clear of any Security Interest, restrictions, rights, options to purchase, proxies, voting trust and other voting agreements, calls or commitments of every kind, and none of the said individuals owns any other shares, options or other rights to subscribe for, purchase or acquire any capital stock of the Company.

Immediately following the Closing the correct list of the shareholdings (including all warrants and options) of the Company’s share capital will be as set forth in Schedule 2.2(a).

Except for (i) the options, warrants and rights detailed in Schedule 2.2, (ii) the Issued Shares to be issued under this Agreement and the conversion privileges of such Issued Shares, (iii) the rights provided in Sections 2, 3 & 4 of the Shareholders Rights Agreement, and (iv) rights pursuant to the Company’s Articles of Association, there are no outstanding or authorized subscriptions, options, warrants, calls, rights (including conversion or preemptive rights), commitments, anti-dilution rights, exchange rights, or other rights or securities, of any nature whatsoever, or any other agreements, undertakings, promises or commitments of any character for the purchase of or acquisition from the Company of any shares of its capital stock or any security convertible into, or exchangeable for, or evidencing the right to subscribe for, any shares.

The Company is not a party or subject to any agreement or understanding, and, to the best of the Company’s knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company.

2.3

Officers and Directors.

(a)

The Company and the Subsidiary’s current officers and directors are the individuals appearing in Schedule 2.3 hereto. Except as set forth in the Company’s Articles of Association and the Shareholders Rights Agreement, the Company has no agreement, obligation or commitment with respect to the election of any individual or individuals to the Company’s Board of Directors. To the Company’s best knowledge, there is no voting agreement or other arrangement among the Company’s shareholders, and there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving written consents with respect to any security or by a director and/or officer of the Company.

(b)

There are no agreements, commitments and understandings, whether written or oral, with respect to any compensation to be provided by the Company or the Subsidiary to any of their directors or officers except as set forth in the Schedule of Exceptions copies of which have been provided to Amadeus.

2.4

Subsidiaries.

2.5

Authorization and Approvals.

(a)

The Company has all requisite corporate power and authority to execute and deliver this Agreement and any other agreements contemplated hereby or which are ancillary hereto and to consummate the transactions contemplated hereby and thereby. All corporate action on the part of the Company and its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and any other agreements contemplated hereby or which are ancillary hereto, the performance of all obligations of the Company hereunder and the authorization, issuance and delivery of the Issued Shares, has been taken or will be taken prior to the Closing, and this Agreement, any other agreements contemplated hereby or which are ancillary hereto and any obligations contemplated herein constitute valid and legally binding obligations of the Company, enforceable in accordance with its terms subject only to laws affecting the rights and remedies of creditors.

(b)

Except for OCS approval, the Investment Center approval, and the notice to be provided to the Israeli Registrar of Companies with respect to the adoption of the Amended Articles, the amendment of the Company’s Memorandum of Association, the increase and change in the composition of its share capital and the allocation of the Issued Shares in accordance with this Agreement, no approvals, permits or consents of, or filing with any state or local governmental body, official authority, or any other third party is required under any applicable law or instrument in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

2.6

Valid Issuance of Issued Shares.

2.7

Litigation.

2.8

Proprietary Information; Patents and Trademarks.

(a)

The Company and the Subsidiary own or have the unrestricted right to use pursuant to written license, sublicense, agreement, or permission, free and clear of any Security Interest, third party rights and royalties, all patents, trademarks, service marks, trade names, mask works, and copyrights and all trade secrets, including know-how, invention, designs, processes, computer programs, algorithms, firmware and technical data, concepts, techniques, methods, systems, drawings, photographs, models, prototypes, research materials, formulas, development or experimental work, work in progress, mask work, cost data, marketing plans, product plans, business strategies, financial information, forecasts, personnel information and customer or supplier lists currently used and/or necessary for the operation of the businesses of the Company as presently conducted and as presently proposed to be conducted in the Updated Work Plan (collectively: “Intellectual Property”).

(b)

Schedule 2.8 identities each: (a) patent, trade mark, domain name or registration which has been issued to the Company or the Subsidiary with respect to any of the Intellectual Property; (b) pending patent or trade mark application or application for registration which the Company or the Subsidiary has made with respect to any of the Intellectual Property; (c) each trade name or unregistered trademark used by the Company or the Subsidiary; and (d) license, agreement, or other permission which the Company or the Subsidiary has received from or granted to any third party with respect to any of the Intellectual Property (together with any exceptions). The Company has delivered to Amadeus’ counsel correct and complete copies of all such patents, copyrights, trade marks, registrations, applications, licenses, agreements, and permissions (as amended to date) and has made available to the Investors correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of each such item. With respect to each item of Intellectual Property required to be identified as set forth in this Section 2.8: (i) the Company or the Subsidiary possess all right, title, and interest in and to the item, free and clear of any Security Interest, license, royalty, commission or similar arrangements or other restriction and free and clear of any right of any academic or research institution, government, previous employer of any of the Founders or any other third party; (ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; (iii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or is threatened which challenges in a material manner the legality, validity, enforceability, use, or ownership of the item; (iv) neither the Company nor the Subsidiary has ever agreed to indemnify any person for or against any interference, infringement, misappropriation, or other conflict with respect to the item; and (v) neither the Company nor the Subsidiary has granted, and there are not outstanding, any options, licenses or agreements of any kind relating to the Intellectual Property, nor is the Company or the Subsidiary bound by or a party to any option, license or agreement of any kind with respect to any of the Intellectual Property.

(c)

Each item of Intellectual Property owned or used by the Company or the Subsidiary immediately prior to the Closing hereunder will be owned or available for use by them on substantially the same terms and conditions immediately subsequent to the Closing hereunder. Except for readily and commercially available off-the-shelf software, no other Intellectual Property of any kind required by the Company or the Subsidiary to conduct their business, as currently conducted and as presently proposed to be conducted, is owned by a third party or would require the payment of any fee or royalty. The Company and the Subsidiary have complied in all material respects with the requirements of, and has filed all material documentation required in dealing with, any patent or trademark registry agency hi which their patent and/or trademarks applications were filed.

(d)

To the best knowledge of the Company, (i) neither the Company nor the Subsidiary has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of any third party nor will the conducting by them of their business, or use of the Intellectual Property, as presently conducted and as presently proposed to be conducted interfere, infringe upon, misappropriate or otherwise come into conflict with any intellectual property rights of any third party; (ii) neither the Company nor the Subsidiary has received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that the Company or the Subsidiary must license or refrain from using any intellectual property rights of any third party) and to the Company’s knowledge there is no basis for such; and (iii) to the best knowledge of the Company, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property of the Company or the Subsidiary.

(e)

Neither the Company, Subsidiary nor the Founders are obligated nor is the Company aware that any of the Company’s or the Subsidiary’s employees (other than Founders) under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of its, his or her best efforts to promote the interests of the Company or that would conflict with the Company’s or the Subsidiary’s business as now conducted and as presently proposed to be conducted in the updated Work Plan. Neither the execution nor the delivery of this Agreement, the Shareholders Rights Agreement, the carrying on of the Company’s and the Subsidiary’s business by any of their respective employees, nor the conduct of the Company’s and the Subsidiary’s business as proposed to be conducted, will: either (i) to the best of the Company’s knowledge, information or belief, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any such employee other than the Founder is now obligated (including without limitation, any agreement with Orbot, Opal or Applied Materials), or (ii) conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which either Founder or the Company or the Subsidiary is now obligated (including without limitation, any agreement with Orbot, Opal or Applied Materials). To the best of the Company’s knowledge information or belief, for the conduct of its and the Subsidiary’s business as now conducted and as presently proposed to be conducted in the Updated Work Plan, it will not be necessary to utilize any inventions of the Founders or any of their employees (or people it currently intends to hire) owned by any prior employer.

All Intellectual Property related to the Company, the Subsidiary and their business, developed by the Founders prior to the incorporation of the Company (“Founders IP”) was duly assigned to the Company by the Founders at the time of, or following, the incorporation of the Company, free and clear of any Security Interest, and to the Company’s best knowledge, all declarations and documents required by the various authorities around the world in order to register such assignments have been duly submitted; and neither the Founders nor, to the Company’s best knowledge, any other party has any interest in or rights to any of the Founders IP. During the period in which the Founders were developing the Founders IP, the Founders to the Company’s best knowledge were not employed by any third party or involved in any consulting relationship with any third party. The Founders to the Company’s best knowledge are the sole inventors and developers of the Founders IP (including the inventions, methods and devices described and claimed in the patents which are part of such IP) without any contribution, assistance or participation of any third party.

(f)

Each Founder, employee, officer and consultant of the Company or Subsidiary has executed a Proprietary Information and Inventions Agreement and/or an Employment Agreement and/or any similar agreement, containing confidentiality, non compete and assignment of invention provisions in the form provided to Amadeus’ counsel, and to the Company’s best knowledge none of the Company’s or the Subsidiary’s employees, Founders, officers or consultants are in violation thereof, and the Company will use its best efforts to prevent any such violation.

(g)

The Company and the Subsidiary have taken measures to protect the secrecy, confidentiality and value of all their intellectual property, which measures are reasonable and customary in the industry in which they operate.

(h)

There are no outstanding options, licenses, or agreements of any land relating to the foregoing, and neither the Company nor the Subsidiary is bound by or is a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity other than licenses arising from the purchase or use of “off-the-shelf or other standard products.

2.9.

Compliance with Law and Other Instruments.

2.10

Agreements; Action.

(a)

Except for the agreements explicitly contemplated hereby and by the Shareholders Rights Agreement there are no agreements, understandings or proposed transactions between the Company or the Subsidiary and any of their officers, directors or shareholders or their affiliates.

(b)

There are no Material Agreements, judgments, orders, writs or decrees to which the Company or the Subsidiary is a party or by which either is bound.

(c)

For purposes of Section 2.10(a) and (b), “Material Agreements” shall mean (i) any agreement or proposed transaction with respect to any transaction to which the Company or the Subsidiary is a party and in which the amount involved exceeds US$250,000, (ii) any agreement or proposed transaction which relates to the Company’s or the Subsidiary’s intellectual property and any agreement or proposed transaction which relates to intellectual property rights of any third party, (iii) distribution agreements, (iv) non-disclosure agreements (other than with employees and distributors of the Company or he Subsidiary), (v) any agreement or proposed transaction between the Company or the Subsidiary and shareholder of the Company or other Interested Party (as such a term is defined under the Israeli Securities Act 1968) of the Company, (vi) any written agreement between the shareholders of the Company of which the Company has actual knowledge, (vii) any agreement or proposed transaction restricting or affecting the development, manufacture or distribution of the Company’s products or services, and (viii) any agreement or proposed transaction which materially restricts or limits the Company’s or the Subsidiary’s right to do business or compete in any area or any field with any person, firm or company. All Material Agreements are in full force and effect and the Company has no knowledge of the invalidity of or grounds for rescission on any of these agreements, or of any intention to terminate any such agreements. Neither the Company nor the Subsidiary is a guarantor or indemnitor of any indebtedness of any other person, firm or corporation nor is any person, firm or corporation a guarantor of any indebtedness of the Company or the Subsidiary.

For the purpose of this subsection 2.10(c) all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company or the Subsidiary has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of this subsection.

(d)

Other than as set forth in the Financial Statements, since their incorporation, neither the Company nor the Subsidiary has (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities, (iii) made any loans or advances to any person, or given a guarantee or created any charge, lien or other encumbrance on any of its assets and/or its unissued and unpaid share capital for any obligation of any person, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, and in respect of (ii), (iii) and (iv) other than in the ordinary course of business.

(e)

Neither the Company nor the Subsidiary are parties to nor are they bound by any contract, agreement or instrument, or subject to any restriction under its Memorandum or Articles of Association, which is reasonably likely to have a Material Adverse Effect.

2.11

Related-Party Transactions.

2.12

Permits.

2.13

Environmental and Safety Laws.

2.14

Manufacturing and Marketing Rights.

2.15

Disclosure.

2.16

Updated Work Plan.

2.17

Registration Rights.

2.18

Title to Property and Assets.

2.19

Financial Statements

2.20

Financial Issues.

(a)

The Company and the Subsidiary maintain and will continue to maintain a standard system of accounting established and administered in accordance with US GAAP with reconciliation to Israeli GAAP.

(b)

Except as stated in the Financial Statements, neither the Company nor the Subsidiary has any liabilities, debts or obligations, whether accrued, absolute or contingent, incurred, since its Incorporation, except in the ordinary and usual course of business. Since its incorporation, the Company has been operating in the ordinary and usual course of business.

2.21

Changes.

Since March 31, 2006, there has not been:

(i)

any change in the assets, liabilities, financial condition or operating results of the Company or the Subsidiary from that reflected in the Financial Statements, except changes in the ordinary course of business that have not been, in the aggregate, materially adverse;

(ii)

any damage, destruction or loss, whether or not covered by insurance, having a Material Adverse Effect;

(iii)

any waiver by the Company or the Subsidiary of a valuable right or of a material debt owed to it;

(iv)

any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or the Subsidiary, except in the ordinary course of business and that is not material to the assets, properties, financial condition, operating results, prospects or business of the Company (as such business is presently conducted and as presently proposed to be conducted in the Updated Work Plan).

(v)

any change or amendment to a material contract or arrangement by which the Company or the Subsidiary or any of their respective assets or properties are bound or subject;

(vi)

any material change in any compensation arrangement or agreement with any employee of the Company;

(vii)

any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets of the Company or the Subsidiary;

(viii)

any resignation or termination of employment of any key officer of the Company, and to the best knowledge of the Company there is no impending resignation or termination of employment of any such officer;

(ix)

receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

(x)

any mortgage, pledge, transfer of a security interest in, or lien, created by the Company or the Subsidiary, with respect to any of their respective material properties or assets, except liens for taxes not yet due or payable;

(xi)

any loans or guarantees made by the Company or the Subsidiary to or for the benefit of its respective employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(xii)

any declaration, setting aside or payment or other distribution in respect of any of the Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Company;

(xiii)

to the best knowledge of the Company, any other event or condition of any character that is reasonably likely to have a Material Adverse Effect; or

(xiv)

any agreement or commitment by the Company or the Subsidiary to do any of the things described in this Section 2.21.

2.22

Tax Returns, Payments and Elections.

2.23

Minute Books.