UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 Date of Report (Date of earliest event reported): August 31, 2000

                            		PASW, INC.
       (Exact name of registrant as specified in its charter)

   CALIFORNIA                      333-75137            77-0390628
(State or other                   (Commission         (IRS Employer
jurisdiction of                   File Number)      identification No.)
incorporation)

703 Rancho Conejo Boulevard, Newbury Park, CA         91320
(Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code:  (805) 499-7722

ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On August 31, 2000 PASW, Inc. ("PASW") and NETsilicon, Inc. ("NSIL") entered into an agreement whereby PASW sold the assets of its PSI Softworks Technology subsidiary to NSIL. The assets primarily consist of PSI's Internet and Web software. The purchase price for the assets was 90,000 shares of NSIL's common stock. In addition NSIL has agreed to grant a non-exclusive, royalty-free license for the acquired technology, to PASW and its affiliates, subject to certain limitations. NSIL is expected to retain substantially all of PSI's personnel as part of a newly formed operating group. The sale is being accounted for as discontinued operations for financial reporting purposes. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. PAGE NO. (a) Not Applicable. (b) Unaudited Proforma Consolidated Condensed Financial Information Headnote to Unaudited Proforma Consolidated Condensed Financial Statements F-1 Unaudited Proforma Consolidated Condensed Balance Sheet as of June 30, 2000 F-2 Footnotes to Unaudited Proforma Consolidated Condensed Balance Sheet F-3 Unaudited Consolidated Statement of Operations for the Six Months ended June 30, 2000 F-4 Unaudited Proforma Consolidated Condensed Statement of Operations for the Year Ended December 31, 1999 F-5 Exhibits. 1.1 Asset Purchase Agreement dated August 31, 2000 NETsilicon, Inc., PASW, Inc., and PSI Softworks Technology, Inc.

PASW, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS The following Unaudited Proforma Consolidated Condensed Balance Sheet as of June 30, 2000 and Unaudited Proforma Consolidated Statements of Operations for the Six Months ended June 30, 2000 and 1999 and the Year Ended December 31, 1999, give effect to the sale of the assets of PASW's PSI Softworks Technology subsidiary. The Unaudited Proforma Consolidated Condensed Balance sheet of PASW hasbeen prepared based on its historical unaudited consolidated balance sheet as of June 30, 2000. The adjustments shown reflect the sale of substantially all of the assets as if the sale had been completed prior to June 30, 2000. The proforma statements of operations may not be indicative of the results that would have actually occurred if the sale of assets had been discontinued effective as of the beginning of the respective periods shown. The proforma financial statements should be read in conjunction with the Company's: 1)audited consolidated financial statements and notes thereto included in the Form 10-KSB and Annual Report for the fiscal year ended December 31, 1999; 2) Form 10-QSB for the quarters ended March 31, 2000 and June 30, 2000; and 3) Schedule 14A - Preliminary Proxy Statement dated April 15, 2000. F-1

PASW, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED CONDENSED BALANCE SHEET AS OF JUNE 30, 2000 Historical Proforma Consolidated Proforma Consolidated June 30, 2000 Adjustments June 30, 000 Current assets Cash and cash equivalents $ 717,156 $ $ 717,156 Accounts receivable, net of allowance for bad debts 102,301 (91,497)(1) 10,804 Prepaid expenses 53,688 _________ 53,688 Total current assets 873,145 (91,497) 781,648 Fixed assets, net of depreciation 318,032 (129,042)(1) 188,990 Investments 1,000,000 1,000,000 Marketable securities 2,328,750 (2) 2,328,750 Other assets 19,038 ___________ 19,038 Total assets $2,210,215 $2,108,211 $4,318,426 Current liabilities Accounts payable and accrued expenses $ 310,758 $ 377,500(3)$ 688,258 Total current liabilities 310,758 377,500 688,258 Deferred revenues 143,164 (143,164)(4) Minority interest 1,400 1,400 Stockholders' equity Common stock 4,501 4,501 Additional paid in capital 5,939,750 5,939,750 Accumulated deficit (4,293,866) 1,873,875 (2,419,991) Cumulative adjustment for currency translation 104,508 __________ 104,508 Total stockholders' equity 1,754,893 1,873,875 3,628,768 $2,210,215 $2,108,211 $4,318,426 F-2

PASW, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PROFORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. To record the sale of accounts receivable and fixed assets of the PSI Softworks, Inc. subsidiary. 2. To record the receipt of 90,000 shares of NSIL common stock at $25 7/8 the closing price of the stock on August 31, 2000. 3. To record additional accrued expenses related to vacations, options and other expenses associated with the sale. 4. To record the elimination of deferred revenue resulting from the inclusion of service and maintenance plans in the sale. F-3

PASW INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000 The following unaudited Statement of Operations for the Six Months Ended June 30, 2000 is shown as reported in the Company's Form 10-QSB for the quarter then ended. Six Months Ended June 30, 2000 Historical Proforma Proforma Consolidated Adjustments Consolidated Net revenue Sales $ 927,920 $ 829,468 $ 98,452 Royalties and others 235,000 31,231 203,769 Total 1,162,920 860,699 302,221 Cost of revenue Purchases and royalty fees 48,648 10,738 37,910 Gross profit 1,114,272 849,961 264,311 Expenses Selling, general and administrative 1,759,660 581,205 1,178,455 Research and development 1,155,153 775,566 379,587 Depreciation and amortization 47,710 44,337 3,373 Total 2,962,523 1,401,108 1,561,415 Net loss $(1,848,251) $ (551,147) $(1,297,104) Net loss per common share Basic and diluted $ (0.40) $ (0.28) Weighted average common stock shares outstanding Basic and diluted 4,606,345 4,606,345 F-4

PASW, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999 The following unaudited Statement of Operations for the Twelve Months Ended December 31, 1999 is shown as reported in the Company's Form 10-KSB for the fiscal year then ended. Twelve Months Ended December 31, 1999 Historical Proforma Proforma Consolidated Adjustments Consolidated Net revenue Sales $ 1,817,654 $ 1,372,024 $ 445,631 Royalties and others 424,890 189,601 235,288 Total 2,242,544 1,561,625 680,919 Cost of revenue Purchases and royalty fees 167,486 91,490 75,996 Gross profit 2,075,058 1,470,135 604,923 Expenses Selling, general and administrative 2,578,555 1,848,703 729,852 Research and development 1,625,599 1,253,168 372,401 Depreciation and amortization 77,828 58,000 19,828 Former officers consulting and administrative expense 257,143 0 257,143 Total 4,539,125 3,159,871 1,379,224 Net loss $(2,464,067) $(1,689,736) $ (774,301) Net loss per common share Basic and diluted $ (0.62) $ (0.20) Weighted average common stock shares outstanding Basic and diluted 3,946,392 3,946,392 F-5

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized officer. Date: September 13, 2000 PASW, INC. By: /s/ William E. Sliney William E. Sliney President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)



Execution Copy

ASSET PURCHASE AGREEMENT

dated as of

August 31, 2000


NETSILICON, INC.

PASW, INC.

PSI SOFTWORKS TECHNOLOGY, INC.


TABLE OF CONTENTS

ARTICLE I  DEFINITIONS	1
1.01. DEFINITIONS.	1
ARTICLE II  PURCHASE AND SALE	3
2.01.  PURCHASE AND SALE	3
2.02.  EXCLUDED ASSETS	4
2.03.  LICENSE OF SELLER'S PROPRIETARY RIGHTS; REGISTRATION RIGHTS
AGREEMENT.	5
2.04.  ASSUMPTION OF LIABILITIES.	5
2.05.  EXCLUDED LIABILITIES.	5
2.06.  ASSIGNMENT OF CONTRACTS AND RIGHTS.	6
2.07.  PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE.	6
2.08.  CLOSING.	6
ARTICLE III  REPRESENTATIONS AND WARRANTIES OF SELLER	6
3.01.  CORPORATE EXISTENCE AND POWER.	6
3.02.  CORPORATE AUTHORIZATION.	7
3.03.  GOVERNMENTAL AUTHORIZATION.	7
3.04.  NON-CONTRAVENTION.	7
3.05.  REQUIRED CONSENTS.	7
3.06.  FINANCIAL INFORMATION.	7
3.07.  ABSENCE OF CERTAIN CHANGES.	7
3.08.  PROPERTIES.	8
3.09.  NO UNDISCLOSED MATERIAL LIABILITIES.	8
3.10.  LITIGATION.	8
3.11.  MATERIAL CONTRACTS.	9
3.12.  LICENSES AND PERMITS.	9
3.13.  COMPLIANCE WITH LAWS.	10
3.14.  PROPRIETARY RIGHTS.	10
3.15.  PRODUCTS	11
3.16.  EMPLOYEES AND CUSTOMERS.	11
3.17.  OTHER INFORMATION.	12
3.18.  INVESTMENT REPRESENTATIONS	12
ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF BUYER	12
4.01.  ORGANIZATION AND EXISTENCE.	12
4.02.  CORPORATE AUTHORIZATION.	12
4.03.  GOVERNMENTAL AUTHORIZATION.	13
4.04.  NON-CONTRAVENTION.	13
4.05.  LITIGATION.	13
4.06.  SEC REPORTS	13
4.07. VALIDITY OF SHARES.	13
ARTICLE V  COVENANTS OF SELLER	13
5.01.  NONCOMPETITION.	13
5.02.  CONFIDENTIALITY.	14
5.03.  FACILITIES ACCESS AND DISTRIBUTOR ARRANGEMENT.	14
ARTICLE VI  COVENANTS OF BUYER	14
6.01.  ACCESS.	14
6.02.  ADMINISTRATION OF CONTRACTS.	15
6.03.  CONFIDENTIALITY	15
6.04.  NON-SOLICITATION.	15
ARTICLE VII  COVENANTS OF BOTH PARTIES	15
7.01.  BEST EFFORTS; FURTHER ASSURANCES.	15
7.02.  PUBLIC ANNOUNCEMENTS.	15
ARTICLE VIII  TAX MATTERS	15
8.01.  TAX DEFINITIONS.	15
8.02.  TAX MATTERS.	16
8.03.  TAX COOPERATION; ALLOCATION OF TAXES.	16
ARTICLE IX  EMPLOYEE BENEFITS	17
9.01.  EMPLOYEE BENEFITS DEFINITIONS.	17
9.02.  ERISA REPRESENTATIONS.	18
9.03.  EMPLOYEES AND OFFERS OF EMPLOYMENT.	18
9.04.  SELLER'S EMPLOYEE BENEFIT PLANS.	18
9.05.  STOCK OPTIONS.	19
9.06.  NO THIRD PARTY BENEFICIARIES.	19
ARTICLE X  SURVIVAL; INDEMNIFICATION	20
10.01.  SURVIVAL.	20
10.02.  INDEMNIFICATION.	20
10.03.  PROCEDURES; NO WAIVER; EXCLUSIVITY.	20
ARTICLE XI  MISCELLANEOUS	21
11.01.  NOTICES.	21
11.02.  AMENDMENTS; NO WAIVERS.	21
11.03.  EXPENSES.	22
11.04.  SUCCESSORS AND ASSIGNS.	22
11.05.  GOVERNING LAW.	22
11.06.  COUNTERPARTS; EFFECTIVENESS.	22
11.07.  ENTIRE AGREEMENT.	22
11.08.  CAPTIONS.	22

Exhibits

Exhibit A --  Form of License Agreement
Exhibit B --  Form of Escrow Agreement
Exhibit C --  Form of Registration Rights Agreement

Schedules
Products Schedule
Schedule 3.05		Required Consents
Schedule 3.06		Financial Information
Schedule 3.08		Personal Property
Schedule 3.11		Contracts
Schedule 3.12		Licenses and Permits
Schedule 3.14		Proprietary Rights
Schedule 3.16		Employees
Schedule 3.17		Inventories
Schedule 6.04		Contract Amounts
Schedule 9.02		Employee Benefits
Schedule 9.03		Employee Offer List


ASSET PURCHASE AGREEMENT

	AGREEMENT dated as of August 31, 2000 between NETsilicon, Inc., a
Massachusetts corporation ("Buyer");  PASW, Inc., a California
corporation ("PASW"); and PSI Softworks Technology, Inc., a California
corporation ("PSI Tech").  PASW and PSI Tech are sometimes referred to
herein as a "Seller" or collectively as the "Sellers". All
representations, warranties, covenants and agreements of the Sellers
herein are joint and several, whether so expressed or not.

W I T N E S S E T H :

	WHEREAS, PASW, through PSI Tech, conducts a business (the
"Business") whose product range is centered on communications software
for the Internet and the Web and whose current major product
technologies and expertise include networking and communications
protocols, Web Technologies, Real Time Operating Systems and
Application and Integration Software;

	WHEREAS, Buyer desires to purchase substantially all of the
assets of the Business from Sellers, and Sellers desire to sell such
assets to Buyer, upon the terms and subject to the conditions
hereinafter set forth;

	NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained,
the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

	1.01. Definitions. (a)  The following terms, as used herein, have
the following meanings:

	"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common
control with such other Person.

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

	"Balance Sheet" means the unaudited balance sheet of the Business
as of July 31, 2000 found in Schedule 3.06.

	"Balance Sheet Date" means July 31, 2000.

	"Closing Date" means the date of the Closing.

	"Escrow Agent" means  the escrow agent that is a signatory to the
Escrow Agreement.

	"Escrow Agreement" means the Escrow Agreement among Sellers,
Buyer and the Escrow Agent in the form set forth in Exhibit A.

	"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect
of such asset.

	"Material Adverse Change" means a material adverse change in the
business, assets, condition (financial or otherwise), or results of
operations or prospects of the Business taken as a whole.

	"Material Adverse Effect" means a material adverse effect on the
business, assets, condition (financial or otherwise), or results of
operations or prospects of the Business taken as a whole.

	"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.

	"Products" means the current and proposed products of the
Business, including without limitation those listed in the Products
Schedule.

	"Proprietary Rights" means all (A) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, re-examination, utility, model, certificate of
invention and design patents, patent applications, registrations and
applications for registrations, (B) trademarks, service marks, trade
dress, logos, tradenames, service names, domain names and corporate
names and registrations and applications for registration thereof, (C)
copyrights and registrations and applications for registration thereof,
(D) mask works and registrations and applications for registration
thereof, (E) computer software, data and documentation, (F) trade
secrets and confidential business information, whether patentable or
nonpatentable and whether or not reduced to practice, know-how,
manufacturing and product processes and techniques, service
methodologies, research and development information, copyrightable
works, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and
supplier lists and information, (G) other proprietary rights relating
to any of the foregoing (including without limitation associated
goodwill and remedies against infringements thereof and rights of
protection of an interest therein under the laws of all jurisdictions)
and (H) copies and tangible embodiments thereof.

	"Sellers' Proprietary Rights" means all Proprietary Rights that
are owned by any Seller or an Affiliate of any thereof that are used or
proposed to be used in the operation of the Business or that relate in
any way to the Products.

	(b)	Each of the following terms is defined in the Section set
forth opposite such term:

	Term	Section

	Ancillary Agreements	3.02
	Apportioned Obligations	8.03
	Assumed Liabilities	2.04
	Benefit Arrangement	9.01
	Closing	2.08
	Code	8.01
	Contracts	2.01
	Employee Plan	9.01
	ERISA	9.01
	ERISA Affiliate	9.01
	Excluded Assets	2.02
	Excluded Liabilities	2.05
	Financial Statements	3.06
	Indemnified Party	10.03
	Indemnifying Party	10.03
	License	2.03
	Loss	10.02
	Permits	3.12
	Post-Closing Tax Period	8.01
	Pre-Closing Tax Period	8.01
	Purchased Assets	2.01
	Purchase Price	2.07
	Registration Rights Agreement	2.03
	Required Consent	3.05
	Shares	2.07
	Tax	8.01
	Transferred Employee	9.03

ARTICLE II

PURCHASE AND SALE

	2.01.  Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees to purchase from Sellers and
Sellers agree to sell, transfer, assign and deliver, or cause to be
sold, transferred, assigned and delivered, to Buyer at Closing, free
and clear of all Liens other than Permitted Liens, all of the assets,
properties and business, other than the Excluded Assets, of every kind
and description, wherever located, real, personal or mixed, tangible or
intangible, owned, held or used  in the conduct of the Business by
Sellers or any of them or any Affiliate of a Seller as the same
shall exist on the Closing Date, including all assets shown on the
Balance Sheet and not disposed of in the ordinary course of business,
and all assets of the Business thereafter acquired by a Seller (the
"Purchased Assets"), and including, without limitation, all right,
title and interest of Sellers and their Affiliates in, to and under
such of the foregoing as are more specifically described below:

		(i)	all personal property and interests therein,
including machinery, equipment, furniture, office equipment,
communications equipment, vehicles and other tangible property,
including without limitation the items listed on Schedule
3.08;

		(ii)	all raw materials, work-in-process, finished goods,
supplies and other inventories, wherever situated, a listing of which
as of a recent date is set forth on Schedule 3.17;

		(iii)	all rights under all contracts, agreements,
proposals, requests for proposals, leases, licenses, commitments, sales
and purchase orders and other instruments, including all employee or
consultant confidentiality, inventions and/or non-competition
agreements  and including without limitation the items listed on
Schedule 3.11 (collectively, the "Contracts");

		(iv)	all accounts, notes and other receivables;

		(vi)	all prepaid expenses and deposits including without
limitation ad valorem taxes, leases and rentals, excluding the deposit
on the building at 703 Rancho Conejo Blvd., Newbury Park, California;

		(vii)	all of each Seller's rights, claims, credits, causes
of action or rights of set-off against third parties relating to the
Purchased Assets, including, without limitation, unliquidated rights
under manufacturers' and vendors' warranties;

		(viii)	all Proprietary Rights owned or licensed, or
used in the Business, by a Seller or its Affiliates or that relate in
any way to the Products, including without limitation the items listed
on Schedule 3.14;

		(ix)	all transferable licenses, permits or other
governmental authorizations affecting, or relating in any way to, the
business, including without limitation the items listed on Schedule
3.12;

		(x)	all books, records, files and papers, reasonably
necessary for the current and future conduct of the Business, whether
in hard copy or computer format, including, without limitation,
engineering information, sales and promotional literature, manuals and
data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former customers, personnel and
employment records, and any information relating to Tax imposed on the
Purchased Assets; and

		(xi)	all goodwill associated with the Business or the
Purchased Assets, together with the right to represent to third parties
that Buyer is the successor to the Business.

	2.02.  Excluded Assets.   Buyer expressly understands and agrees
that the following assets and properties of Sellers (the "Excluded
Assets") shall be excluded from the Purchased Assets:

(i) all cash and cash equivalents on hand and in banks;

(ii) the stock and all assets of iAppliance.com, Inc.;

(iii) all of PASW's interest in Financial Services Provider Network;
and

(iv) all of PASW's interest in Pacific Softworks Europe Ltd. and
Network Research Corporation Japan (which serve certain distribution
functions with respect to the Business);

	2.03.  License-Back of Sellers' Proprietary Rights; Registration
Rights Agreement.  Simultaneously with the Closing, Buyer is licensing
back to PASW and its subsidiaries certain Proprietary Rights acquired
by Buyer pursuant to this Agreement pursuant a license agreement in the
form attached hereto as Exhibit B (the "License"). Simultaneously with
the Closing, Buyer and PASW are entering into a Registration Rights
Agreement in the form attached hereto as Exhibit C (the "Registration
Rights Agreement").

	2.04.  Assumption of Liabilities.   Upon the terms and subject to
the conditions of this Agreement, Buyer hereby assumes the following
liabilities of Sellers and no others (the "Assumed Liabilities"): all
liabilities and obligations of a Seller arising under the Contracts on
and after the Closing Date to the extent that such Contracts are
assigned to Buyer or the benefits thereof effectively made available to
Buyer pursuant to Section  2.06, other than liabilities or obligations,
(whether or not asserted or arising before or after the Closing)
attributable to any failure by a Seller to comply with the terms of any
Contracts.

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

		(i)	any obligation or liability for Tax (i) arising from
or with respect to the Purchased Assets or the operation of the
Business which is incurred in or attributable to any Pre-Closing Tax
Period, (ii) imposed on Buyer pursuant to transferee or successor
liability, by contract, under principles of law analogous to Treas.
Reg. Section 1.502-6  or otherwise or (iii) attributable to the
transactions contemplated by this Agreement;

		(ii)	any liabilities or obligations of a Seller relating
to employee benefits or compensation arrangements, including, without
limitation, any liabilities or obligations under any of a Seller's
employee benefit agreements, plans or other arrangements listed on
Schedule 9.02; and

		(iii)  a Seller's obligation to provide accrued vacation
pay to the Transferred Employees, which obligation PASW shall satisfy
in cash by direct payment to the Transferred Employees within five
business days after the Closing.

	2.06.  Assignment of Contracts and Rights.  Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any Purchased Asset or any claim or
right or any benefit arising thereunder or resulting therefrom if an
attempted assignment thereof, without consent of a third party thereto,
would constitute a breach or other contravention thereof or in any way
adversely affect the rights of Buyer or a Seller thereunder.  Sellers
and Buyer will use their best efforts (but without any payment of money
by Sellers or Buyer) to obtain the consent of the other parties to any
such Purchased Asset or claim or right or any benefit arising
thereunder for the assignment thereof to Buyer as Buyer may request.
If such consent is not obtained, or if an attempted assignment thereof
would be ineffective or would adversely affect the rights of a Seller
thereunder so that Buyer would not in fact receive all such rights,
Sellers and Buyer will cooperate in a mutually agreeable arrangement
under which Buyer would obtain the benefits and assume the obligations
thereunder in accordance with this Agreement, including subcontracting,
sub-licensing, or subleasing to Buyer, or under which a Seller would
enforce for the benefit of Buyer, with Buyer assuming a Seller's
obligations, any and all rights of a Seller against a third party
thereto.  Sellers will promptly pay to Buyer when received all monies
received by a Seller under any Purchased Asset or any claim or right or
any benefit arising thereunder on or after the Closing Date.  In such
event, Sellers and Buyer shall, to the extent the benefits therefrom
and obligations thereunder have not been provided by alternate
arrangements satisfactory to Buyer and Sellers, negotiate in good faith
an adjustment in the consideration paid by Buyer for the Purchased
Assets.

	2.07.  Purchase Price; Allocation of Purchase Price.   The
purchase price for the Purchased Assets and the covenant not to compete
contained in Section 5.04 (the "Purchase Price") is (a) 90,000 shares
of the Common Stock of Buyer (the "Shares") and (b) the assumption of
the Assumed Liabilities.

	2.08.  Closing.  The closing (the "Closing") of the purchase and
sale of the Purchased Assets and the assumption of the Assumed
Liabilities hereunder is taking place simultaneously with the execution
of this Agreement. Of the Purchase Price, 81,000 Shares, registered in
the name of PASW, are being delivered directly to PASW by Buyer and
9,000 Shares, registered in the name of PASW,  are being delivered by
Buyer to the Escrow Agent to be held and disbursed in accordance with
the Escrow Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLERS

	Sellers hereby jointly and severally represent and warrant to
Buyer that:

	3.01.  Corporate Existence and Power.  Each of the Sellers is a
corporation duly incorporated, validly existing and in good standing
under the laws of California, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals
required to carry on the Business.

	3.02.  Corporate Authorization.  The execution, delivery and
performance by each of the Sellers, as applicable, of this Agreement,
the License Agreement, the Registration Rights Agreement and each of
the other agreements being executed in connection herewith (the
"Ancillary Agreements"), and the consummation by Sellers of the
transactions contemplated hereby and thereby are within each Seller's
corporate powers and have been duly authorized by all necessary
corporate action on the part of each Seller.  This Agreement and each
of the Ancillary Agreements to which a Seller is a party constitute
valid and binding agreements of such Seller enforceable in accordance
with their terms.

	3.03.  Governmental Authorization.  The execution delivery and
performance by Sellers of this Agreement and each of the Ancillary
Agreements, as applicable,  do not require any action by or in respect
of, or filing with, any governmental body, agency, official or
authority.

	3.04.  Non-Contravention.  The execution, delivery and
performance by each Seller of this Agreement and each of the Ancillary
Agreements, as applicable, do not and will not (i) contravene or
conflict with the corporate charter or bylaws of a Seller, (ii)
contravene or conflict with or constitute a violation of any provision
of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to a Seller or the Business; (iii) assuming the
receipt of all Required Consents, constitute a default under or give
rise to any right of termination, cancellation or acceleration of any
right or obligation of a Seller or to a loss of any benefit relating to
the Business to which a Seller is entitled under any provision of any
agreement, contract or other instrument binding upon a Seller or by
which any of the Purchased Assets is or may be bound, or any Permit
or (iv) result in the creation or imposition of any Lien on any
Purchased Asset.

	3.05.  Required Consents. Schedule 3.05 sets forth each
agreement, contract or other instrument binding upon a Seller or any
Permit requiring a consent as a result of the execution, delivery and
performance of this Agreement and the Ancillary Agreements or the
consummation of the transactions contemplated hereby and thereby (each
such consent, a "Required Consent").

	3.06.  Financial Information. The Balance Sheet and the related
unaudited statements of operations and cash flows for the Business
taken as a whole for the years and the interim periods set forth in
Schedule 3.06  (collectively, the "Financial Statements") fairly
present in accordance with generally accepted accounting principles,
the financial position of the Business as of the dates thereof and its
results of operations and cash flows for the periods then ended.  The
Financial Statements are attached hereto as Schedule 3.06.

	3.07.  Absence of Certain Changes.  Since December 31, 1999,
Sellers have conducted the Business in the ordinary course consistent
with past practices, and there has not been:

		(a)	Any Material Adverse Change, or any event,
occurrence, development or state of circumstances or facts which could
reasonably be expected to result in a Material Adverse Change;

		(b)	any creation or other incurrence of any Lien on any
Purchased Asset;

		(c)	any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the Business or any
Purchased Asset which, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect;

		(d)	any transaction, contract, agreement or other
instrument entered into, or commitment made, by Seller relating to the
Business or any Purchased Asset (including the acquisition or
disposition of any assets) or any relinquishment by a Seller of any
contract or other right, in either case, other than transactions and
commitments in the ordinary course of business consistent with past
practices and those contemplated by this Agreement;

		(e)	any (i) grant of any severance or termination pay to
any employee of the Business, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to
any such existing agreement) with any employee of the Business, (iii)
increase in benefits payable under an existing severance or termination
pay policies or employment agreements or (iv) other than in the
ordinary course of business, increase in compensation, bonus or other
benefits payable to employees of the Business; or

		(f)	any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Business, or
any lockouts, strikes, slowdowns, work stoppages or threats thereof by
or with respect to such employees.

	3.08.  Properties.  Schedule 3.08 contains a list of all personal
property included in the Purchased Assets. Upon consummation of the
transactions contemplated hereby, Buyer will have acquired good and
marketable title in and to, or a valid leasehold interest in, each of
the Purchased Assets, free and clear of all Liens. The Purchased
Assets, and the Excluded Assets specified in Section 2.02 (i) and (iv),
together constitute all of the assets or property used or held for use
primarily in the Business.

	3.09.  No Undisclosed Material Liabilities.  To the knowledge of
Sellers, there are no material liabilities of the Business of any kind
whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise that could have an adverse effect on the
operation of the Business by Buyer.

	3.10.  Litigation.  To the knowledge of Sellers, there is no
action, suit, investigation or proceeding (or any basis therefor)
pending against, or to the knowledge of Sellers, threatened against or
affecting, the Business or any Purchased Asset before any court or
arbitrator or any governmental body, agency or official that, if
determined or resolved adversely in accordance with the plaintiff's
demands, would reasonably be expected to have a Material Adverse Effect
or that in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.

	3.11.  Material Contracts.  (a)  Except for the Contracts
disclosed in Schedule 3.11 or any other Schedule to this Agreement, in
each case below with respect to the Business, Seller is not a party to
or subject to:

		(i)	any contract or the purchase of materials, supplies,
goods, services, equipment or other assets used primarily in the
Business providing for annual payments by a Seller of, or pursuant to
which in the last year a Seller paid in the aggregate, $15,000 or more;

		(ii)	any sales, distribution or other similar agreement
for goods or services provided by the Business;

		(iii)	any partnership, joint venture or other similar
contract arrangement or agreement;

		(iv)	any license agreement, franchise agreement or
agreement in respect of similar rights granted to or held by a Seller;

		(v)	any agency, dealer, sales representative or other
similar agreement;

		(vi)	any agreement, contract or commitment that
substantially limits the freedom of a Seller to compete in any line of
business or with any Person that in any way could limit the freedom of
the Buyer to conduct the Business after the Closing Date; or

		(vii)	any other agreement, contract or commitment not made
in the ordinary course of business which is material to the Business
taken as a whole and all material ongoing contracts for services.

	(b)	Each Contract disclosed in any Schedule to this Agreement
or required to be disclosed pursuant to Section 3.11(a) is valid and
binding agreement of a Seller and is in full force and effect, and
neither any Seller nor, to the knowledge of any Seller, any
other party thereto is in default in any material respect under the
terms of any such Contract, nor, to the knowledge of a Seller, has any
event or circumstance occurred that, with notice or lapse of time or
both, would constitute any event of default thereunder.

	3.12.  Licenses and Permits.  Schedule 3.12 correctly described
each license, franchise, permit or other similar authorization
affecting, or relating in any way to, the Business, together with the
name of the government agency or entity issuing such license
or permit (the "Permits").  Except as set forth on the Schedule 3.12,
such Permits are valid and in full force and effect and, assuming the
receipt of the related Required Consents, are transferable by Sellers
and will not be terminated or impaired or become terminable as a result
of the transactions contemplated hereby.  Upon consummation of
such transactions, Buyer will, assuming the related Required Consents
have been obtained, have all of the right, title and interest in all
the Permits.

	3.13.  Compliance with Laws.  Sellers are not in violation of,
has not for the last three years violated, and to Seller's knowledge is
not under investigation with respect to and has not been threatened to
be charged with or given notice of any violation of, any law, rule,
ordinance or regulation, or judgment, order or decree entered by any
court, arbitrator or governmental authority, domestic or foreign,
applicable to the conduct of the Business, except for violations that
have not had and could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

		3.14.  Proprietary Rights.  (a)	Schedule 3.14 contains
a list of all of the following that are included in Sellers'
Proprietary Rights:  (i) patents and patent applications; (ii)
trademarks, tradenames, domain names and service marks and
registrations thereof and applications therefor; and (iii) registered
copyrights and applications for copyright registration; as well as
licenses relating to any of the foregoing.  Schedule 3.14 identifies
the owner of each item listed thereon and, in the case of registrations
and applications, the application or registration number and date.

		(b)	Sellers own or have the right to use all of Sellers'
Proprietary Rights.  Upon execution and delivery by Sellers to Buyer of
the instruments of conveyance contemplated by this Agreement, each item
of Sellers' Proprietary Rights will be owned or available for use by
Buyer on identical terms and conditions immediately following the
Closing, except as otherwise indicated on Schedule 3.14.  Seller has
taken reasonable and customary measures to protect the proprietary
nature of Sellers' Proprietary Rights and to maintain in confidence the
trade secrets and confidential information that it owns or uses in the
Business.  To Sellers' knowledge, no other Person or has any rights to
any item of Sellers' Proprietary Rights or has any rights to any of the
Sellers' Proprietary Rights, except that the items of Sellers'
Proprietary Rights identified on Schedule 3.14 as licensed to Seller
are owned by the respective owners identified on Schedule 3.14, and, to
Sellers' knowledge, no other Person is infringing, violating or
misappropriating any of  Sellers' Proprietary Rights, except as
otherwise indicated on Schedule 3.14.

		(c)	Except as set forth in Schedule 3.14, to Sellers'
knowledge,  none of the activities or business presently conducted by
the Business or conducted by the Business at any time in the last three
years infringes or violates, or constitutes a misappropriation of, any
Proprietary Rights of any other person or entity.  Except as set forth
in Schedule 3.14, no Seller has received any complaint, claim or notice
alleging any such infringement, violation or misappropriation.

		(d) Except as set forth in Schedule 3.14, with respect to
each item of Sellers' Proprietary Rights:

(i)	Sellers possess all right, title and interest in and to such
item;

(ii)	such item is not subject to any outstanding judgment, order,
decree, stipulation or injunction; and

(iii)	 Sellers have not agreed, except in the ordinary course of
business consistent with past practices in conjunction with product
sales, to indemnify any person or entity for or against any
infringement, misappropriation or other conflict with respect to such
item.

		(e)	Schedule 3.14 identifies each item of Sellers'
Proprietary Rights used in the operation of the Business that is owned
by a party other than Seller.  All licenses or other agreements
pursuant to which Sellers use such items are listed on Schedule
3.14.  Except as set forth in Schedule 3.14, with respect to each such
item:

(i)	the license or other agreement, covering such item is legal,
valid, binding, enforceable and in full force and effect with respect
to Sellers, and, to Sellers' knowledge, with respect to every other
party thereto;

(ii)	except as set forth in Schedule 3.14, each such license or
other agreement to which a Seller is a party is assignable by such
Seller to Buyer without the consent or approval of or any payment to
any party, and all such licenses and other agreements  will continue to
be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof
as in effect immediately prior to the Closing, and the consummation of
the transactions contemplated herein will not conflict with, result in
a violation or breach of or constitute a default under (or would result
in a violation, breach or default with the giving of notice or the
passage of time or both) any such license or other agreement;

(iii)	except as set forth in Schedule 3.14, no Seller, nor, to
Sellers' knowledge, any other party is in breach or default under any
such license or other agreement, and no event has occurred which, with
notice and/or lapse of time, would constitute such a breach or default
or permit termination, modification or acceleration thereunder; and

(iv)	to Sellers' knowledge, each of the underlying items of
Sellers' Proprietary Rights is not subject to any outstanding judgment,
order, decree, stipulation or injunction.

	3.15.  Products.  Each of the products produced or sold by
Sellers in connection with the Business is, and at all times has been,
in compliance in all material respects with all applicable federal,
state, local and foreign laws.

	3.16.  Employees and Customers. Schedule 3.16 sets forth a true
and complete list of  the names, titles, annual salaries and other
compensation of all employees of the Business.  None of such employees
has indicated to Seller that he or she intends to resign or retire as a
result of the transactions contemplated by this Agreement. No Person
that has been a customer of the Business within the past twelve months
has indicated to Seller that it intends to terminate its relationship
with Seller.

	3.17.  Other Information.   None of the documents or information
delivered to Buyer in connection with the transactions contemplated by
this Agreement and the Ancillary Agreements, contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading.

	3.18.  Investment Representations.

 	(a)	PASW understands that the issuance and sale of the Shares
has not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and that the Shares are being offered
and sold pursuant to an exemption from registration thereunder in
reliance in part upon PASW's representations contained in this
Agreement.

	(b)	PASW is an accredited investor within the meaning of
Regulation D under the Securities Act. PASW has sufficient experience
in evaluating and investing in private placement transactions of
securities that it is capable of evaluating the merits and risks of its
investment in Buyer and has the capacity to protect its own interests.

	(c)	PASW understands that the resale and distribution of the
Shares is restricted under the securities laws and that it must bear
the economic risk of this investment indefinitely unless the resale of
the Shares is registered under the Securities Act or an exemption from
registration is available. PASW understands that the Company has no
obligation to register the resale of the Shares.  PASW also
understands that there is no assurance that any exemption from
registration under the Securities Act will be available for any such
resale and that, even if available, such exemption may not allow PASW
to transfer all or any portion of the Shares in the circumstances, in
the amounts, or at the times PASW might propose.

	(d)	PASW is acquiring the Shares for its own account for
investment only, and not with a view towards their distribution in
violation of applicable securities laws.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

	Buyer hereby represents and warranties to Sellers that:

	4.01.  Organization and Existence.  Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of
Massachusetts.

	4.02.  Corporate Authorization.  The execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary
Agreements and the consummation by Buyer of the transactions
contemplated hereby and thereby are within the corporate
powers of Buyer and have been duly authorized by all necessary
corporate action on the part of Buyer.  This Agreement and each of the
Ancillary Agreements to which Buyer is a party constitute valid and
binding agreements of Buyer, enforceable in accordance with
their terms.

	4.03.  Governmental Authorization.  The execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary
Agreements require no action by or in respect of, or filing with, any
governmental body, agency, official or authority.

	4.04.  Non-Contravention.  The execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary
Agreements do not and will not (i) contravene or conflict with the
corporate charter or bylaws of Buyer or (ii)  contravene
or conflict with any provision of any law, regulation, judgment,
injunction, order or decree binding upon Buyer.

	4.05.  Litigation.  There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened
against or affecting, Buyer before any court or arbitrator or any
governmental body, agency or official which in any matter
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated hereby.

	4.06.  SEC Reports.  Buyer has advised PASW that it is a public
company subject to the reporting requirements of the Securities and
Exchange Commission (the "Commission") under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and advised PASW to review
Buyer's most recent Form 10-K and proxy statement filed thereunder and
any additional filings made thereunder since such documents were filed.
All such reports and other filings are referred to herein as the
"Reports".  As of their respective dates, the Reports complied in all
material respects with the then applicable published rules and
regulations of the Commission with respect thereto at the date of their
issuance and did contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.  As of the date hereof, no
additional filings or amendments to previously filed Reports are
required pursuant to such rules and regulations.

	4.07.  Validity of Shares.  The Shares, when issued pursuant to
this Agreement, will be validly issued, fully paid and nonassessable.

ARTICLE V

COVENANTS OF SELLERS

	Sellers agree that:

	5.01.  Noncompetition.  (a) Sellers agree that for a period of
two full years from the Closing Date, no Seller and no Affiliate
thereof shall:

		(i)	engage, either directly or indirectly, as a principal
or for its own account, solely or jointly with others, or through any
form of ownership in another Person, or otherwise, in any business that
is competitive with the Business as now conducted; or

		(ii)	employ or solicit, or receive or accept the
performance of services by, any Transferred Employee or any other
employee of Buyer, other than pursuant to any support and maintenance
agreements that may be entered into by Buyer and one or more Sellers or
their Affiliates.

	(b)	If any provision contained in this Section shall for any
reason by held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Section, but this Section shall be construed as if
such invalid, illegal or unenforceable provision had never been
contained herein.  It is the intention of the parties that if any of
the restrictions or covenants contained herein is held to cover a
geographic area or to be for a length of time which is not permitted by
applicable law, or in any way construed to be too broad or to
any extent invalid, such provision shall not be construed to be null,
void and of no effect, but to the extent such provision would be valid
or enforceable under applicable law, a court of competent jurisdiction
shall construe and interpret or reform this Section to provide for a
covenant having the maximum enforceable geographic area, time period
and other provisions (not greater than those contained herein) as shall
be valid and enforceable under such applicable law.  Sellers
acknowledges that Buyer would be irreparably harmed by any breach of
this Section and that there would be no adequate remedy at law or in
damages to compensate Buyer for any such breach.  Sellers agree that
Buyer shall be entitled to injunctive relief requiring specific
performance  by Sellers of this Section, and Sellers consent to the
entry thereof.

	5.02.  Confidentiality.  Sellers will hold, and will use its best
efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning Buyer or the Business.

	5.03.  Facilities Access and Distributor Arrangement.  Sellers
shall permit the Business to be conducted from its Newbury Park,
California facilities for the time period and on the terms and
conditions set forth in a sublease agreement between PASW and
Buyer that is being executed simultaneously with the execution of this
Agreement.  PASW is also causing its Japanese subsidiary to enter into
a short-term distribution agreement with Buyer simultaneously with the
execution of this Agreement.

ARTICLE VI

COVENANTS OF BUYER

	Buyer agrees that:

	6.01.  Access.  On and after the Closing Date, Buyer will afford
promptly to Seller and its agents reasonable access to its properties,
books, records, employees and auditors to the extent necessary to
permit Sellers to determine any matter relating to its rights and
obligations hereunder or to any period ending on or before the Closing
Date; provided that any such access by Sellers shall not unreasonably
interfere with the conduct of the business of Buyer.

	6.02.  Accounts Receivable.   All payments received by a Seller
in respect of accounts receivable of the Business after the date of the
Closing shall be immediately remitted to Buyer.

	6.03.  Confidentiality.  Buyer will hold, and will use its best
efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and
information concerning Seller (not including items relating to the
Business).

	6.04.  Non-Solicitation.  Buyer agrees that for a period of two
(2) years from the Closing Date, neither it nor any of its Affiliates
will solicit the employment of any employee of any Seller who has not
previously terminated his or her employment with such Seller.

ARTICLE VII

COVENANTS OF BOTH PARTIES

	The parties hereto agree that:

	7.01.  Best Efforts; Further Assurances.  Subject to the terms
and conditions of this Agreement, each party will use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under applicable laws and
regulations to consummate the transactions contemplated by this
Agreement.  Sellers and Buyer each agree to execute and deliver such
other documents, certificates, agreements and other writings and to
take such other actions as may be necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated by
this Agreement and to vest in Buyer good and marketable title to the
Purchased Assets and the full benefits of the Business.

	7.02.  Public Announcements.  The parties agree to consult with
each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions
contemplated hereby and, except as may be required by applicable law or
any listing agreement with any national securities exchange, will not
issue any such press release or make any such public statement prior to
such consultation.

ARTICLE VIII

TAX MATTERS

	8.01.  Tax Definitions.  The following terms, as used herein,
have the
following meanings:

	"Code" means the Internal Revenue Code of 1986, as amended.

	"Post-Closing Tax Period" means any Tax period (or portion
thereof) ending after the Closing Date.

	"Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the Closing Date.

	"Tax" means any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, franchise,
capital, paid-up capital, profits, greenmail, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any governmental authority
(domestic or foreign) responsible for the imposition of any
such tax.

	8.02.  Tax Matters.  Sellers hereby represents and warrants to
Buyer that:

	(a)  Sellers have timely paid all Taxes, and all interest and
penalties due thereon and payable by it, for the Pre-Closing Tax Period
which will have been required to be paid on or prior to the Closing
Date, the non-payment of which would result in a Lien on any Purchased
Asset, would otherwise adversely affect the Business or would result in
Buyer becoming liable or responsible therefor.

	(b)  Seller will timely pay all Tax liabilities, assessments,
interest and penalties which arise from or with respect to the
Purchased Assets or the operation of the Business and are incurred in
or attributable to the Pre-Closing Tax Period, the non-payment of which
would result in a Lien on any Purchased Asset, would otherwise
adversely affect the Business or would result in Buyer becoming liable
therefor.

	(c)  No state of facts exists or has existed that would
constitute grounds for the assessment against Buyer, whether by reason
of transferee liability or otherwise, of any liability for any Tax.
Sellers have withheld and paid (and in connection with the options
described in Section 9.05 hereof will withhold and pay) all Taxes
required (or that will be required) to have been paid or owing to any
employee, independent contractor, creditor or third party with respect
to the Business. No portion of the Purchase Price is subject to any Tax
withholding provision of Federal, state, local or foreign law.

	8.03.  Tax Cooperation; Allocation of Taxes.  (a) Buyer and
Sellers agree to furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information and assistance
relating to the Purchased Assets and the Business as is reasonably
necessary for the filing of all Tax returns, and making of any election
related to Taxes, the preparation for any audit by any taxing
authority, and the prosecution or defense of any claim, suit or
proceeding relating to any Tax return.  Sellers and Buyer shall
cooperate with each other in the conduct of any audit or other
proceeding related to Taxes involving the Business and each shall
execute and deliver such powers of attorney and other documents as are
necessary to carry out the intent of this paragraph (a) of
Section 8.03.

	(b)	All real property taxes, personal property taxes and
similar ad valorem obligations levied with respect to the Purchased
Assets for a taxable period which includes (but does not end on) the
Closing Date (collectively, the "Apportioned Obligations") shall be
apportioned between Sellers and Buyer as of the Closing Date based on
the number of days of such taxable period included in the Pre-Closing
Tax Period and the number of days of such taxable period included in
the Post-Closing Tax Period.  Sellers shall be liable for the
proportionate amount of such taxes that is attributable to the Pre-
Closing Tax Period.  Within 90 days after the Closing, Sellers and
Buyer shall present a statement to the other setting forth the amount
of reimbursement to which each is entitled under this Section 8.03(b)
together with such supporting evidence as is reasonably necessary to
calculate the proration amount.  The proration amount shall be paid by
the party owing it to the other within 10 days after delivery of such
statement.  Thereafter, Sellers shall notify Buyer upon receipt of any
bill for real or personal property taxes relating to the Purchased
Assets, part or all of which are attributable to the Post-Closing Tax
Period, and shall promptly deliver such bill to Buyer who shall pay the
same to the appropriate taxing authority, provided that if such bill
covers the Pre-Closing Tax Period, Sellers shall also remit prior to
the due date of assessment to Buyer payment for the proportionate
amount of such bill that is attributable to the Pre-Closing Tax Period.
If either Sellers or Buyer shall thereafter make a payment for which it
is entitled to reimbursement under this Section 8.03(b), the other
party shall make such reimbursement promptly but in no event later than
30 days after the presentation of a statement setting forth the amount
of reimbursement to which the presenting party is entitled along with
such supporting evidence as is reasonably necessary to calculate the
amount of reimbursement.  Any payment required under this Section and
not made within 10 days of delivery of the statement shall bear
interest at the rate per annum determined, from time to time, under the
provisions of Section 6621(a)(2) of the Code for each day until
paid.

	(e)	Any transfer, documentary, sales, use or other Taxes
assessed upon or with respect to the transfer of the Purchased Assets
to Buyer and any recording or filing fees with respect thereto shall be
the responsibility of Sellers.

ARTICLE IX

EMPLOYEE BENEFITS

	9.01.  Employee Benefits Definitions.  The following terms, as
used herein, having the following meanings:

	"Benefit Arrangement" means an employment, severance or similar
contract, arrangement or policy and each plan or arrangement providing
for severance,  insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, pension or retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits
that (i) is not an Employee Plan and (ii) is maintained or contributed
to by a Seller or any of its ERISA Affiliates.

	"Employee Plan" means each "employee benefit plan", as such term
is defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA and (ii) is maintained or contributed to by Seller
or any of its ERISA Affiliates, as the case may be.

	"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

	"ERISA Affiliate" of any entity means any other entity that,
together with such entity, would be treated as a single employer under
Section 414 of the Code.

	9.02.  ERISA Representations.  Sellers hereby represent and
warrant to Buyer that:

	(a)	Schedule 9.02 lists each Employee Plan and each Benefit
Arrangement that covers any employee  of the Business, copies or
descriptions of all of which have previously been made available or
furnished to Buyer.

	(b)	Each Employee Plan and Benefit Arrangement has been
maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are
applicable to such Employee Plan or Benefit Arrangement.

(c)	Neither the Company nor any ERISA Affiliate has ever maintained,
contributed to or been obligated to contribute to any Plan that is
subject to Title IV of ERISA or any Plan that is a multiemployer plan,
as defined in Section 3(37) of ERISA.

(d)	Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a
part thereof is exempt from tax pursuant to Section 501(a) of the Code.
Sellers have furnished to Buyer copies of the most recent Internal
Revenue Service determination letters with respect to each such
Employee Plan.

(e)	No employee of the Business will become entitled to any bonus,
retirement, severance or similar benefit or enhanced benefit solely as
a result of the transactions contemplated hereby, except as described
on Schedule 9.02.

	9.03.  Employees and Offers of Employment.

	Buyer has offered employment to all employees of the Business
listed on Schedule 9.03; provided that Buyer may terminate at any time
the employment of any employee who accepts such offer.  Any such offers
shall be at such salary or wage and benefit levels and on such other
terms and conditions as Buyer shall in its sole discretion deem
appropriate.  The employees who accept and commence employment with
Buyer are hereinafter collectively referred to as the "Transferred
Employees".  Sellers will not take, any action that would impede,
hinder, interfere or otherwise compete with Buyer's effort to hire any
Transferred Employees.  Buyer shall not assume responsibility for any
Transferred Employee until such employee begins employment with Buyer.

	9.04.  Seller's Employee Benefit Plans.  (a)  Seller shall retain
all obligations and liabilities under the Employee Plans and Benefit
Arrangements in respect of each employee or former employee (including
any beneficiary thereof) of the Business, including all of the
Transferred Employees.  Any benefits accrued as of the Closing Date
by Transferred Employees under the Employee Plans and Benefit
Arrangements shall be promptly paid by Sellers to the Transferred
Employees, and neither Buyer nor any of its Affiliates shall have any
liability with respect thereto.  No assets of any Employee Plan or
Benefit Arrangement shall be transferred to Buyer or any of its
Affiliates or to any plan of Buyer or any of its Affiliates.  With
respect to Sellers' 401(k) Plan, Sellers shall amend the 401(k) Plan to
provide that Transferred Employees shall be entitled to a pro rata
portion, based on the number of days of the current plan year that
occur before and including the Closing Date, of any contribution to the
401(k) Plan by Sellers in respect of the current plan year.  Accrued
benefits or account balances of Transferred Employees under the
Employee Plans and Benefit Arrangements shall be fully vested as of the
Closing Date.

(b)	For purposes of Seller's defined contribution plans (including
any 401(k) Plan), Sellers shall treat the Transferred Employees as
having been terminated.  As soon as practicable after the next
valuation date under such plan, Sellers shall permit each Transferred
Employees to elect a direct rollover of his account balance to Buyer's
defined contribution plan.  Buyer or one of its Affiliates may require
evidence satisfactory to the Buyer that the Sellers' plan(s) is/are
qualified under Code Section 401(a) and that the Transferred Employee's
rollover qualifies for a direct rollover treatment.  Each of the
parties shall pay its own expenses in connection with such rollovers.
Neither Buyer nor any of its Affiliates shall assume any obligations or
liabilities under or attributable to the 401(k) Plan, the same to be
retained by Seller.

(c)	Sellers shall treat all employees (and their beneficiaries) who
terminate employment with Sellers as a result of this sale (regardless
of whether the employee becomes a Transferred Employee) as "Qualified
Beneficiaries" entitled to continuation health coverage as described in
Section 4980B of the Code and shall continue to provide COBRA Coverage
for the maximum period required by law to any former employee  (or
beneficiary) who is receiving COBRA Coverage on the Closing Date.
Sellers shall notify Buyer promptly if it ceases to provide any group
health coverage to any of its employees.

	9.05.   Stock Options.  Sellers shall not amend the terms of any
stock option held by any Transferred Employee without the consent of
Buyer.   Buyer intends to establish a pool of options to purchase
50,000 shares of its common stock to be made available to the
Transferred Employees if the business unit of Buyer that employes such
employees meets certain performance milestones to be established by
Buyer.  Such option are to be granted at fair market value under
buyer's current stock option plan consistent with current vesting
provisions and other terms.

	9.06.  No Third Party Beneficiaries.  No provision of this
Article shall create any third party beneficiary or other rights in any
employee or former employee (including any beneficiary or dependent
thereof) of Seller or of any of its subsidiaries in respect of
continued employment (or resumed employment) with either Buyer or the
Business or any of their Affiliates and no provision of this Article IX
shall create any such rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any
Employee Plan or Benefit Arrangement or any plan or arrangement that
may be established by Buyer or any of its Affiliates.  No provision of
this Agreement shall constitute a limitation on rights to amend, modify
or terminate after the Closing Date any such plans or arrangements of
Buyer or any of its Affiliates.

ARTICLE X

SURVIVAL; INDEMNIFICATION

	10.01.  Survival.  The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith shall survive the Closing until December 31, 2001.
Notwithstanding the preceding sentence, any covenant, agreement,
representation or warranty in respect of which indemnity may be sought
under Section 11.02 shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the
inaccuracy or breach thereof giving rise to such right to indemnity
shall have been given to the party against whom such indemnity may
be sought prior to such time.

	10.02.  Indemnification.  (a) Sellers hereby jointly and
severally indemnify Buyer and its Affiliates against and agrees to hold
each of them harmless from any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection
with any action, suit or proceeding) (collectively, "Loss") incurred or
suffered by Buyer or any of its Affiliates arising out of:

		(i)	any misrepresentation or breach of warranty, covenant
or agreement made or to be performed by a Seller pursuant to this
Agreement; or

		(ii)	the failure of a Seller to pay in full any Excluded
Liability;

provided that Sellers shall not be liable under Section 10.02(a)(i)
unless the aggregate amount of Loss with respect to all matters
referred to in this Section 10.02(a)(i) exceeds $50,000 and then only
to the extent of such excess.  The Shares held pursuant to the
Escrow Agreement shall be the first, but not the sole source, for
payments owing to Buyer under this Article X.

	(b)	Buyer hereby indemnifies Sellers and its Affiliates against
and agrees to hold each of them harmless from any and all Loss incurred
or suffered by Sellers or any of their Affiliates arising out of any
misrepresentation or breach of warranty, covenant or agreement made or
to be performed by the Buyer pursuant to this Agreement.

	10.03.  Procedures; No Waiver; Exclusivity.  (a) The party
seeking indemnification under Section 10.02  (the "Indemnified Party")
agrees to give prompt notice to the party against whom indemnity is
sought (the "Indemnifying Party") of the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of which
indemnity may be sought under such Section.  The Indemnifying Party
may, and at the request of the Indemnified Party shall, participate in
and control the defense of any such third party suit, action or
proceeding at its own expense.  The Indemnifying Party shall not be
liable under Section 10.02 for any settlement effected without its
consent of any claim, litigation or proceeding in respect of which
indemnity may be sought hereunder.

	(b)	Section 10.02 and the provisions of the Escrow Agreement
will provide the exclusive remedy for any misrepresentation or breach
of warranty under this Agreement.

ARTICLE XI

MISCELLANEOUS

	11.01.  Notices.  All notices, requests and other communications
to either party hereunder shall be in writing (including telex, fax or
similar writing) and shall be given,

	if to Buyer, to:

		NETsilicon, Inc.
		411 Waverly Oaks Road, Building 227
		Waltham, MA 02452
		Attention: Chief Financial Officer
		Fax: (781) 398-4877

		with a copy to:

		Edwin L. Miller, Jr., Esq.
		Testa, Hurwitz & Thibeault, LLP
		125 High Street
		Boston, MA 02110
		Fax: (617) 248-7100

	if to Sellers, to:

		PASW,  Inc.
		703 Rancho Conejo Blvd.
		Newbury Park, CA 91321
		Attention:  Chief Financial Officer
		Fax: (805) 499-7722

		with a copy to:

		Joseph Lechman, Esq.
		Gose and Lechman
		1200 Paseo Camarillo, Suite 295
		Camarillo, CA 93010
		Fax: (805) 389-7375

	11.02.  Amendments; No Waivers.  (a) Any provisions of this
Agreement may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by the
Buyer and Sellers, or in the case of a waiver, by the party against
whom the waiver is to be effective.

	(b)	No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.

	11.03.  Expenses.  Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.

	11.04.  Successors and Assigns.  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.

	11.05.  Governing Law.  This Agreement shall be construed in
accordance with and governed by the law of the Commonwealth of
Massachusetts.

	11.06.  Counterparts; Effectiveness.  This Agreement may be
signed in any
number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument.  This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other
party hereto.

	11.07.  Entire Agreement.  This Agreement and the Ancillary
Agreements constitute the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior
agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this
Agreement.  No representation, inducement, promise, understanding,
condition or warranty not set forth herein has been made or relied upon
by either party hereto.  None of this Agreement and the Ancillary
Agreements, nor any provision hereof or thereof, is intended to confer
upon any Person other than the parties hereto any rights or remedies
hereunder.

	11.08.  Captions.  The captions herein are included for
convenience of reference only and shall be ignored in the construction
or interpretation hereof.


[Signature page immediately follows.]

NETsilicon, Inc.
Asset Purchase Agreement

	IN WITNESS WHEREOF, the parties hereto here caused this Agreement
to
be duly executed by their respective authorized officers as of the day
and year first above
written.

	NETSILICON, INC.

	By: /S/ David J. Sullivan
	Name:  David J. Sullivan
	Title:  Vice President Finance - CFO


	PASW,  INC.

	By:  /S/ William E. Sliney
	Name:   William E. Sliney
	Title:  President and CFO

	PSI SOFTWORKSTECHNOLOGY, INC.

	By:  /S/ William E. Sliney
	Name:   William E. Sliney
	Title:  President and CFO