ASSET PURCHASE AGREEMENT  BY AND AMONGCHYRON CORPORATION,

AXIS GRAPHICS, LLC,AND

PYBURN FILMS, INC. January 14, 2008
| Table of Contents                                                             |
|-------------------------------------------------------------------------------|
|                                                                               |  | Page |
| ARTICLE 1 DEFINITIONS                                                         | 1 |
| Section 1.1                                                                   | Defined Terms | 1 |
| Section 1.2                                                                   | Rules of Construction | 8 |
| Section 1.3                                                                   | Disclosure Schedules | 9 |
|                                                                               |  |  |
| ARTICLE 2 PURCHASE AND SALE                                                   | 9 |
| Section 2.1                                                                   | Purchase and Sale of Assets | 9 |
| Section 2.2                                                                   | Assumption of Liabilities | 9 |
| Section 2.3                                                                   | Purchase Price | 9 |
| Section 2.4                                                                   | Closing | 10 |
| Section 2.5                                                                   | Deliveries at Closing | 10 |
| Section 2.6                                                                   | Wage Tax Matters | 10 |
|                                                                               |  |  |
| ARTICLE 3 REPRESENTATIONS  AND WARRANTIES OF SELLER AND PFI CONCERNING SELLER | 11 |
| Section 3.1                                                                   | Organization of Seller | 11 |
| Section 3.2                                                                   | Authorization of  transaction | 11 |
| Section 3.3                                                                   | Consents; Non-Contravention | 11 |
| Section 3.4                                                                   | Brokers' Fees | 12 |
| Section 3.5                                                                   | Title to Assets | 12 |
| Section 3.6                                                                   | Subsidiaries | 12 |
| Section 3.7                                                                   | Financial Statements | 12 |
| Section 3.8                                                                   | Events Subsequent to Date  of Most Recent Financial Statements | 12 |
| Section 3.9                                                                   | Legal Compliance; Permits | 15 |
| Section 3.10                                                                  | Tax Matters | 15 |
| Section 3.11                                                                  | Real Property | 16 |
| Section 3.12                                                                  | Intellectual Property | 16 |
| Section 3.13                                                                  | Tangible Assets | 17 |
| Section 3.14                                                                  | Contracts | 17 |
| Section 3.15                                                                  | Powers of Attorney | 19 |
| Section 3.16                                                                  | Litigation | 19 |
| Section 3.17                                                                  | Employees | 19 |
| Section 3.18                                                                  | Guaranties | 19 |
| Section 3.19                                                                  | Environmental, Health, and  Safety Matters | 19 |
| Section 3.20                                                                  | Certain Business Relations  With the Seller | 20 |
| Section 3.21                                                                  | Customers and Suppliers | 21 |
| Section 3.22                                                                  | Product Warranty | 21 |
| Section 3.23                                                                  | Product Liability | 21 |
| Section 3.24                                                                  | Employees | 21 |
| Section 3.25                                                                  | Disclosure | 21 |
| ARTICLE 4 REPRESENTATIONS  AND WARRANTIES OF PFI                              | 22 |
| Section 4.1                                                                   | Authorization of  transaction | 22 |
| Section 4.2                                                                   | Ownership of Seller  Membership Interests | 22 |
| Section 4.3                                                                   | Broker's Fees | 22 |
|                                                                               |  |  |
| ARTICLE 5 REPRESENTATIONS  AND WARRANTIES OF BUYER                            | 22 |
| Section 5.1                                                                   | Organization of Buyer | 22 |
| Section 5.2                                                                   | Authorization of  Transaction | 22 |
| Section 5.3                                                                   | Non-Contravention | 23 |
| Section 5.4                                                                   | Brokers' Fees | 23 |
| Section 5.5                                                                   | Authorization of Shares | 23 |
| Section 5.6                                                                   | Full Disclosure | 23 |
|                                                                               |  |  |
| ARTICLE 6 PRE-CLOSING  COVENANTS                                              | 24 |
| Section 6.1                                                                   | General | 24 |
| Section 6.2                                                                   | Notices and Consents | 24 |
| Section 6.3                                                                   | Operation of Business | 24 |
|  

Section 6.4                                                           | i

Preservation of Business | 24
Section 6.5

Full Access

24

Section 6.6

Notice of Developments

24

Section 6.7

Exclusivity

24

ARTICLE 7 CLOSING CONDITIONS

25

Section 7.1

Conditions to Buyer's  Obligation

25

Section 7.2

Conditions to Seller's  Obligation

26

ARTICLE 8 POST-CLOSING  COVENANTS

28

Section 8.1

Further Assurances

28

Section 8.2

Non-Competition

28

Section 8.3

No Competing Interest

28

Section 8.4

Non-Disruption

29

Section 8.5

Non-Disparagement

29

Section 8.6

Confidentiality

29

Section 8.7

Change of Seller's Name

29

Section 8.8

Consents

29

Section 8.9

Remedies Upon Breach

29

ARTICLE 9 TERMINATION

30

Section 9.1

Termination of Agreement

30

Section 9.2

Effect of Termination

30

ARTICLE 10 INDEMNIFICATION

30

Section 10.1

Survival of Representations  and Warranties

30

Section 10.2

Indemnification Provisions  for Benefit of Buyer

31

Section 10.3

Indemnification Provisions  for Benefit of the Seller and PFI

31

Section 10.4

Matters Involving Third  Parties

32

Section 10.5

Right of Set-Off

33

Section 10.6

Other Indemnification  Provisions

33

ARTICLE 11 MISCELLANEOUS

33

Section 11.1

Press Releases and Public  Announcements

33

Section 11.2

No Third-Party  Beneficiaries

34

Section 11.3

Entire Agreement

34

Section 11.4

Succession and Assignment

34

Section 11.5

Counterparts

34

Section 11.6

Headings

34

Section 11.7

Notices

34

Section 11.8

Governing Law

35

Section 11.9

Amendments and Waivers

35

Section 11.10

Severability

36

Section 11.11

Expenses

36

Section 11.12

Governing Language

36

Section 11.13

Incorporation of Exhibits  and Schedules

36

Section 11.14

Specific Performance

36

Section 11.15

Submission to Jurisdiction

36

ii

 

ExhibitA-1 - Form of Assignment and Assumption Agreement

ExhibitA-2 - Form of Bill of Sale

ExhibitA-3 - Form of Trademark Assignment

ExhibitB - Promissory Note

ExhibitC - Historical Financial Statements

ExhibitD - Buyer's Opinion 

ExhibitE - Seller's Opinion

ExhibitF-1 - Form of PFI Consulting Agreement

ExhibitF-2 - Form of CII Consulting Agreement

ExhibitF-3 - Form of Williams Consulting Agreement

ExhibitG - Form of Non-Competition and Non-Solicitation Agreement

ExhibitH - Form of Pyburn Stock Option Grant Certificate

ExhibitH - Form of Employment Agreement

ExhibitI - Form of Stock Certificate

Schedule1.1 - List of Acquired Assets

Schedule3.3 - Consents

Schedule3.10 - TaxesSchedule 3.12(c) - Intellectual Property

Schedule3.12(d) - Generally Available Commercial Software Used by SellerSchedule 3.14(a) - Material Contracts

Schedule3.21 - Customers

Schedule3.22 - Standard Terms; Conditions of Sale

iii

ASSET PURCHASEAGREEMENT

This Asset Purchase Agreement (this "**Agreement**") is entered into as of January 14, 2008, by and amongChyron Corporation, a New York corporation ("**Buyer**"), Axis Graphics, LLC, aDelaware limited liability company ("**Seller**"), and  PyburnFilms, Inc. ("**PFI**"). Buyer, Seller,and PFI are referred to herein individually as a "**Party**" and collectively as the "**Parties***.*"

** **

**WHEREAS**, Selleris engaged in the business of developing, marketing and selling a web-basedtechnology that allows users to build, composite, and animate broadcast qualitygraphics entirely online (the "**Seller****Business**");

** **

**WHEREAS**, PFI isSeller's managing member and owner of a majority of the outstanding membershipinterests of Seller; and

** **

**WHEREAS**, Buyerdesires to purchase, acquire, and assume, and the Seller desires to sell,dispose of, and transfer, substantially all of the assets and certain of theliabilities of the Seller.

** **

**NOW, THEREFORE**,in consideration of the premises and the mutual promises herein made, and inconsideration of the representations, warranties, and covenants hereincontained, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

 

**Section1.1 Defined Terms**

.  As used in thisAgreement, the following terms shall have the following meanings:

"**Acquired Assets**"means all right, title, and interest in and to all of the assets of the Selleras listed on Schedule 1.1.

"**Adverse Consequences**"means all actions, suits, proceedings, hearings, investigations, charges,complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,damages, dues, penalties, fines, costs, amounts paid in settlement,Liabilities, obligations, Taxes, liens, losses, expenses, and fees, includingcourt costs and reasonable attorneys' fees and expenses.

"**Affiliate**"has the meaning set forth in Rule 12b-2 of the regulations promulgated underthe Securities Exchange Act. 

"**Agreement**"has the meaning set forth in the Preamble hereof.

1

 

"**Ancillary Agreements**"means the Sub Note, PFI Consulting Agreement, CII Consulting Agreement,Williams Consulting Agreement, Employment Agreements, Pyburn Stock Option,Non-Competition and Non-Solicitation Agreement, Assignment and AssumptionAgreement, the Bill of Sale, and the Trademark Assignment.  "**Asbestos Liabilities**" means any Liabilities arising from,relating to, or based on the presence or alleged presence of asbestos orasbestos-containing materials in any product or item designed, manufactured,sold, marketed, installed, stored, transported, handled, or distributed at anytime, or otherwise based on the presence or alleged presence of asbestos orasbestos-containing materials at any property or facility or in any structure,including without limitation, any Liabilities arising from, relating to orbased on any personal or bodily injury or illness.

"**Asset Purchase**"has the meaning set forth in Section 2.1 hereof.

"**Assignment andAssumption Agreement**" means the assignment and assumption agreement, datedas of the Closing Date, by and between Seller and Buyer, in the form of **Exhibit A-1**. 

"**Assumed Liabilities**"means: 

(a) all Liabilities of Seller under customer and supplieragreements referred to in the definition of Acquired Assets; and

(b) any Liability of Seller for sales and use taxes arisingin connection with the consummation of the transactions contemplated hereby;

provided,however, that, notwithstanding the above, the Assumed Liabilitiesshall not include:

(i) any obligation of Seller to indemnify any Person byreason of the fact that such Person was a director, officer, employee, or agentof Seller or was serving at the request of any such entity as a partner,trustee, director, officer, employee, or agent of another entity (whether suchindemnification is for judgments, damages, penalties, fines, costs, amountspaid in settlement, losses, expenses, or otherwise and whether suchindemnification is pursuant to any statute, charter document, bylaw, agreement,or otherwise);

(ii) any Liability of Seller for costs and expenses incurredin connection with this Agreement and the transactions contemplated hereby; or 

(iii) any Liability or obligation of Seller under thisAgreement (or under any side agreement between Seller on the one hand and Buyeron the other hand entered into on or after the date of this Agreement).

"**Basis**" means anypast or present fact, situation, circumstance, status, condition, activity,practice, plan, occurrence, event, incident, action, failure to act, ortransaction that forms or could form the basis for any specified consequence.

2

 

"**Basket**" hasthe meaning set forth in Section 10.2(b) hereof.

"**Bill of Sale**"means the bill of sale, dated as of the Closing Date, by and between Seller andBuyer, in the form of **Exhibit A-2**. 

"**Business Day**"means any day that is not a Saturday, Sunday or any other day on which banksare required or authorized by law to be closed in New York, New York.

"**Buyer**" hasthe meaning set forth in the Preamble hereof.

"**Cap**" has themeaning set forth in Section 10.2(b) hereof.

"**Cash**" meanscash and cash equivalents (including marketable securities and short-terminvestments) calculated in accordance with GAAP applied on a basis consistentwith the preparation of the Financial Statements.

"**CERCLA**" hasthe meaning set forth in Section 3.19(d) hereof.

** **

**"CII ConsultingAgreement"**, means the consulting agreement, dated as of the Closing Date,by and between Buyer and Cicada Interactive, Inc. substantially in the form of **Exhibit** F-2.

"**Closing**" hasthe meaning set forth in Section 2.4 hereof.

"**Closing Date**"has the meaning set forth in Section 2.3 hereof.

"**Competing Business**"has the meaning set forth in Section 8.2 hereof.

"**Code**" meansthe Internal Revenue Code of 1986, as amended. 

"**ConfidentialInformation**" means any and all information (oral or written) relating tothe Seller, the Seller Business and/or Buyer and its Affiliates or any of theiroperations or activities, including, but not limited to, the terms of thisAgreement, information relating to trade secrets, plans, promotion and pricingtechniques, procurement and sales activities and procedures, proprietaryinformation, business methods and strategies (including acquisitionstrategies), software, software codes, advertising, sales, marketing and othermaterials, customers and supplier lists, data processing reports, customersales analyses, invoice, price lists or information, and information pertainingto any lawsuits or governmental investigation, except such information that isin the public domain (such information not being deemed to be in the publicdomain merely because it is embraced by more general information that is in thepublic domain) other than as a result of a breach of any of the provisions.

"**Consents**"has the meaning set forth in Section 3.3 hereof.

3

 

"**ContemplatedTransactions**" means the transactions contemplated by this Agreement and theAncillary Agreements. 

"**Contracts**"has the meaning set forth in Section 3.14(a) hereof.

"**Disclosure Schedule**"has the meaning set forth in Section 1.3 hereof.

"**Employee Benefit Plan**"means any "employee benefit plan" (as such term is defined in ERISA §3(3)) andany other material employee benefit plan, program or arrangement of any kind.

"**Employment Agreement**"means each of (a) the employment agreement, dated as of the Closing Date, byand between Buyer and Todd Martin, and (b) the employment agreement, dated asof the Closing Date, by and between Buyer and Abayomi Soeyju, each in the formattached as **Exhibit H**.

"**Environmental, Health, andSafety Requirements**" shall mean, as amended and as now andhereafter in effect, all federal, state, local, and foreign statutes,regulations, ordinances, and other provisions having the force or effect oflaw, all judicial and administrative orders and determinations, all contractualobligations, and all common law concerning public health and safety, workerhealth and safety, pollution, or protection of the environment, including,without limitation, all those relating to the presence, use, production,generation, handling, transportation, treatment, storage, disposal,distribution, labeling, testing, processing, discharge, release, threatenedrelease, control, or cleanup of any hazardous materials, substances, or wastes,chemical substances or mixtures, pesticides, pollutants, contaminants, toxicchemicals, petroleum products or byproducts, asbestos, polychlorinatedbiphenyls, noise, or radiation. 

"**ERISA**" meansthe Employee Retirement Income Security Act of 1974, as amended.

"**Financial Statements**"has the meaning set forth Section 3.7 hereof.

 

"**GAAP**" meansUnited States generally accepted accounting principles as in effect from timeto time, consistently applied.

"**GovernmentalAuthority**" means any U.S. federal, state, foreign or local government orany court, tribunal, administrative agency or commission or other governmentalor other regulatory authority, body or agency, including any self-regulatoryorganization.

"**Indemnified Party**"has the meaning set forth in Section 10.4(a) hereof.

"**Indemnifying Party**"has the meaning set forth in Section 10.4(a) hereof.

"**Intellectual Property**"means all of the following in any jurisdiction throughout the world: 

4

 

(a) all inventions (whether patentable or unpatentable andwhether or not reduced to practice), all improvements thereto, and all patents,patent applications, and patent disclosures, together with all reissuances,continuations, continuations-in-part, revisions, extensions, and reexaminationsthereof; 

(b) all trademarks, service marks, trade dress, logos,slogans, trade names, corporate names, Internet domain names and rights intelephone numbers, together with all translations, adaptations, derivations,and combinations thereof and including all goodwill associated therewith, andall applications, registrations, and renewals in connection therewith;

(c) all copyrightable works, all copyrights, and allapplications, registrations, and renewals in connection therewith;

(d) all mask works and all applications, registrations, andrenewals in connection therewith;

(e) all trade secrets and confidential business information(including ideas, research and development, know-how, formulas, compositions,manufacturing and production processes and techniques, technical data, designs,drawings, specifications, customer and supplier lists, pricing and costinformation, and business and marketing plans and proposals);

(f) all computer software (including source code, executablecode, data, databases, and related documentation);

(g) all advertising and promotional materials; 

(h) all other proprietary rights; and 

(i) all copies and tangible embodiments thereof (in whateverform or medium).

"**Knowledge of the Seller**"means, the actual knowledge of PFI and the officers, directors, and seniormanagement of the Seller, or which a prudent individual in a similar positioncould reasonably be expected to discover in the course of conducting a reasonableinvestigation of the books and records relating to the Seller Business and ofthose employees of the Seller that have responsibility for the applicablematter. 

"**Law**" means allfederal, state, local and foreign laws, statutes, ordinances, rules orregulations, administrative policies or guidance documents, orders,injunctions, decrees, determinations and judicial and administrative rulingspromulgated by any court or Governmental Authority.

"**Liability**"means any liability or obligation of whatever kind or nature (whether known orunknown, whether asserted or unasserted, whether absolute or contingent,whether accrued or unaccrued, whether liquidated or unliquidated, and whetherdue or to become due), including any liability for Taxes.

5

"**Lien**" meansany mortgage, pledge, lien, encumbrance, charge, or other security interest other than (a) liensfor Taxes not yet due and payable or for Taxes that the taxpayer is contestingin good faith through appropriate proceedings, (b) purchase money liens and lienssecuring rental payments under capital lease arrangements, and (c) other liensarising in the Ordinary Course of Business and not incurred in connection withthe borrowing of money.

"**Material Adverse Effect**"or "**Material Adverse Change**"means any effect or change that would be (or could reasonably be expected tobe) materially adverse to the business, assets, condition (financial orotherwise), operating results, operations, or business prospects of the Seller,or to the ability of Seller or PFI to consummate timely the ContemplatedTransactions, excluding changes in general economic conditions or changesgenerally applicable to the industries in or to which Seller operates ormarkets its services or products. 

"**Material Contracts**"has the meaning set forth in Section 3.14(a) hereof.

"**Most Recent FinancialStatements**" has the meaning set forth in Section 3.7 hereof.

"**Non-Competition andNon-Solicitation Agreement**" shall mean the agreement described in Section8.2 hereof.

"**Ordinary Course of Business**"means the ordinary course of business consistent with past custom and practice(including with respect to quantity and frequency).

"**OrganizationalDocuments**" means, with respect to any Person, such Person's Certificate orArticles of Incorporation or Formation, Certificate of Limited Partnership, orother formation or charter document, and (b) its By-laws, or limited liabilitycompany, operating, or partnership agreement, in each case with all amendmentsthereto. 

"**Party**" hasthe meaning set forth in the Preamble hereof.

"**Permits**" meansany governmental permits, approvals, licenses, certificates, franchises,authorizations, consents and orders necessary for the operation of the SellerBusiness in the manner that it is presently conducted that are unique to theindustry in which Seller operates.

"**Person**"means an individual, a partnership, a corporation, a limited liability company,an association, a joint stock company, a trust, a joint venture, anunincorporated organization, any other business entity, or a governmentalentity (or any department, agency, or political subdivision thereof).

**PFI ConsultingAgreement**, means the consulting agreement, dated as of the Closing Date, byand between Buyer and PFI, substantially in the form of **Exhibit** F-1.

"**Pyburn Stock Option**"means the stock option agreement, dated as of the Closing Date, by and betweenBuyer and Randy Pyburn, in the form of **Exhibit**G.

6

 "**Restricted Period**" has the meaning setforth in Section 8.2 hereof.

"**Securities Act**"means the Securities Act of 1933, as amended.

"**Securities Exchange Act**"means the Securities Exchange Act of 1934, as amended.

"**Seller**" hasthe meaning set forth in the Preamble hereof.

"**Seller Business**"has the meaning set forth in the Recitals hereof.

"**Seller Membership Interests**"means the membership interests of Seller. 

"**Solicitation**"has the meaning set forth in Section 8.2 hereof.

"**Sub Note**" hasthe meaning set forth in Section 2.3(b).

"**Subsidiary**"means, with respect to any Person, any corporation, limited liability Seller,partnership, association, or other business entity of which (a) if acorporation, a majority of the total voting power of shares of capital stockentitled (without regard to the occurrence of any contingency) to vote in theelection of directors, managers, or trustees thereof is at the time owned orcontrolled, directly or indirectly, by that Person or one or more of the otherSubsidiaries of that Person or a combination thereof, or (b) if a limitedliability Seller, partnership, association, or other business entity (otherthan a corporation), a majority of the partnership or other similar ownershipinterests thereof is at the time owned or controlled, directly or indirectly,by that Person or one or more Subsidiaries of that Person or a combinationthereof (for purposes of this clause (b), a Person or Persons own a majorityownership interest in such a business entity if such Person or Persons shall beallocated a majority of such business entity's gains or losses or shall be orcontrol any managing director or general partner of such business entity). Theterm "**Subsidiary**"shall include all Subsidiaries of such Subsidiary.

"**Tax**" or "**Taxes**" means any federal, state,local, or foreign income, gross receipts, license, payroll, employment, excise,severance, stamp, occupation, premium, windfall profits, environmental(including taxes under Code §59A), customs duties, capital stock, franchise,profits, withholding, social security (or similar), unemployment, disability,real property, personal property, sales, use, transfer, registration, valueadded, alternative or add-on minimum, estimated, or other tax of any kindwhatsoever, whether computed on a separate or consolidated, unitary or combinedbasis or in any other manner, including any interest, penalty, or additionthereto, whether disputed or not and including any obligation to indemnify orotherwise assume or succeed to the Tax liability of any other Person. 

"**Tax Return**"means any return, declaration, report, claim for refund, or information returnor statement relating to Taxes, including any schedule or attachment thereto,and including any amendment thereof.

"**Third Party Claim**"has the meaning set forth in Section 10.4(a) hereof.

7

 

"**Trademark Assignment**"means the trademark assignment, dated as of the Closing Date, by and betweenSeller and Buyer, in the form attached as **ExhibitA-4**.

 

"**Williams ConsultingAgreement**" means the consulting agreement, dated as of the Closing Date, byand between Buyer and Brent Williams substantially in the form of **Exhibit** F-3.

**Section1.2 Rules of Construction**

.

 

(a) When the context in which words are usedin this Agreement indicates that such is the intent, words used in the singularshall have a comparable meaning when used in the plural, and vice versa; pronounsstated in the masculine, feminine or neuter shall include each other gender.

(b) The Section headings contained inthis Agreement are solely for the purpose of reference, are not part of theagreement of the parties hereto and shall not in any way affect the meaning orinterpretation of this Agreement.

(c) The term "including" is notlimiting and means "including, without limitation."

(d) Unless otherwise expressly providedherein, (i) references to agreements (including this Agreement) and othercontractual instruments shall be deemed to include all subsequent amendmentsand other modifications thereto, but only to the extent such amendments andother modifications are disclosed to Buyer, (ii) references to any statute orregulation shall be construed as including all statutory and regulatoryprovisions amending, replacing, supplementing or interpreting such statute orregulation, except that for purposes of determining the accuracy of anyrepresentation, such reference shall only be to such statute or regulation asin effect on the date the representation was made and (iii) references to "Sections,""Schedules" or "Exhibits" are to sections, schedules or exhibits,as applicable, of this Agreement.

(e) Unless otherwise expressly providedherein, "dollars" or "$" means the currency of the U.S. that, asat the time of payment, is legal tender for the payment of public and privatedebts.

(f) This Agreement is between financiallysophisticated and knowledgeable parties and is entered into by such parties inreliance upon the economic and legal bargains contained herein, the languageused in this Agreement has been negotiated by the parties and theirrepresentatives and shall be interpreted and construed in a fair and impartialmanner without regard to such factors as the party who prepared, or caused thepreparation of, this Agreement or the relative bargaining power of the parties.The Parties have participated jointly in the negotiation and drafting of thisAgreement. In the event an ambiguity or question of intent or interpretationarises, this Agreement shall be construed as if drafted jointly by the Partiesand no presumption or burden of proof shall arise favoring or disfavoring anyParty by virtue of the authorship of any of the provisions of this Agreement.

8

 

(g) Any reference to any federal, state, local, or foreignstatute or law shall be deemed also to refer to all rules and regulationspromulgated thereunder, unless the context requires otherwise.  

(h) The Parties intend that each representation, warranty,and covenant contained herein shall have independent significance. If any Partyhas breached any representation, warranty, or covenant contained herein in anyrespect, the fact that there exists another representation, warranty, orcovenant relating to the same subject matter (regardless of the relative levelsof specificity) that the Party has not breached shall not detract from ormitigate the fact that the Party is in breach of the first representation,warranty, or covenant.

** **

**Section 1.3 Disclosure Schedule****s**

.  The schedulesreferred to herein and delivered pursuant to and attached to this Agreement(collectively, "**Disclosure Schedules**")are integral parts of this Agreement. Nothing in a Disclosure Schedule shall be deemed adequate to disclose anexception to a representation or warranty made herein, unless the DisclosureSchedule identifies the exception with reasonable particularity and describesthe relevant facts in reasonable detail, including by explicit cross-referenceto another Disclosure Schedule to this Agreement.  Without limiting the generality of the foregoing, the merelisting, or inclusion of a copy, of a document or other item shall not bedeemed adequate to disclose an exception to a representation or warranty madeherein, unless the representation or warranty is being made as to the existenceof the document or other item itself. Seller and PFI are responsible for preparing and arranging theDisclosure Schedules corresponding to the lettered and numbered sections of Articles3 and 4, as applicable. The DisclosureSchedules with respect to Articles 3 and 4will be arranged in paragraphs corresponding to thenumbered and lettered paragraphs contained in Articles 3 and 4.

ARTICLE 2

PURCHASEAND SALE

**Section2.1 Purchase and Sale of Assets**

.  Upon the terms andsubject to the conditions set forth in this Agreement, at the Closing, Buyershall purchase, acquire, receive and accept from Seller, and Seller shall sell,transfer, convey, and deliver to Buyer, all of the Acquired Assets, for theconsideration specified below in this Article 2 (the "**Asset Purchase**").

** **

**Section 2.2 Assumption of Liabilities**

.  Upon the terms andsubject to the conditions set forth in this Agreement, Buyer, at the Closing,Buyer shall assume and become responsible for all Assumed Liabilities.  Buyer will not assume or have anyresponsibility, however, with respect to any other Liability of Seller notincluded within the definition of Assumed Liabilities. 

** **

**Section 2.3 Purchase Price**

.  Buyer shall pay toSeller an aggregate amount of Three Million Dollars ($3,000,000) (the "**Purchase Price**"), at the Closing, onJanuary 14, 2008 (the "**Closing Date**"),which shall be paid as follows:

9

 

(a) One MillionDollars ($1,000,000) cash, minus amounts deposited by Buyer to Seller inescrow, payable by wire transfer or delivery of other immediately availablefunds;

(b)  An unsecured,subordinated promissory note due December 31, 2008, in the amount of OneMillion Dollars ($1,000,000), in the form attached hereto as **Exhibit B** (the "Sub Note");

(c) A certificate registered in Seller's name, representinga number of restricted shares of the Buyer's common stock, par value $0.01 (the"**Common Stock**"), equal to thequotient of One Million Dollars ($1,000,000) divided by the lower of (i) theclosing price of the Common Stock on the trading day immediately before theClosing Date and (ii) the average closing prices of the Common Stock for thefive trading days immediately prior to the Closing Date, rounded to the nearestwhole number; and

                        

(d) $41,052.42incash, payable by wire transfer ordelivery of other immediately available funds. 

**Section2.4 Closing**

.  Subject to theterms and conditions of this Agreement and on the basis of the representationsand warranties herein, the closing (the "**Closing**")of the Asset Purchase shall take place at the offices of Kirkpatrick &Lockhart Preston Gates Ellis LLP, at 599 Lexington Avenue, New York, New York,commencing at 10:00 A.M. local time on the date of the Closing.

** **

**Section 2.5 Deliveries at Closing**

. In addition to payment of the Purchase Price, at theClosing,

 

(a) Seller will deliver to Buyer the various certificates,instruments, and documents referred to in Section 7.1; 

(b) Buyer will deliver to Seller the various certificates,instruments, and documents referred to in Section 7.2, and with anynecessary stock transfer tax stamps affixed thereto; 

(c) Buyer and Seller will execute, acknowledge (ifappropriate), and deliver (i) the Assignment and Assumption Agreement, Bill of Sale,and other assignments in the forms attached as **Exhibits A-1** through **A-3**,and any other Intellectual Property transfer documents, (ii) such otherinstruments of sale, transfer, conveyance, and assignment as Buyer and itscounsel may reasonably request; 

(d) PFI, Cicada Interactive, Inc., and Brent Wiliams shallhave duly executed the PFI, CII, and Williams Consulting Agreements,respectively; and

(e) Todd Martin and Abayomi Soeyju shall have respectivelyduly executed Employment Agreements.

** **

**Section 2.6 Wage Tax Matters**

.  The Parties agreeto utilize, or cause their respective Affiliates to utilize, the standardprocedure set forth in Revenue Procedure 

10

2004-53 with respect to wage reporting.  Buyer and Seller will take all such actionsas are required in order to give effect to the election for state, local, andforeign Tax purposes to the greatest extent permitted by Law.  

ARTICLE 3REPRESENTATIONS AND WARRANTIES OF SELLER AND PFICONCERNING SELLER

 

Each of Seller andPFI represents and warrants to Buyer, jointly and severally, that except as setforth on the Disclosure Schedules:

** **

**Section 3.1 Organization of Seller**

.  Seller is alimited liability company duly formed, validly existing and in good standingunder the laws of the State of Delaware.

** **

**Section 3.2 Authorization of Transaction**

.  Seller has fullpower and authority (including full corporate or other entity power andauthority) to execute and deliver this Agreement and each of the AncillaryAgreements to which it is a party and to perform its obligations hereunder andthereunder. Without limiting the generality of the foregoing, PFI, as Seller'smanaging member, has duly authorized the execution, delivery, and performanceof this Agreement and the Ancillary Agreements by Seller. Upon execution, eachof this Agreement and the Ancillary Agreements to which the Seller is a partyconstitutes the valid and legally binding obligation of Seller, enforceable inaccordance with its terms and conditions, except to the extent thatenforceability thereof may be limited by general equitable principles or theoperation of bankruptcy, insolvency, reorganization, fraudulent transfer,moratorium or similar Laws.

**Section 3.3 Consents; Non-Contravention**

.  No approval, consent, waiver,exemption, order, authorization or other action by, or notice to or filingwith, any Governmental Authority or any Person, and no lapse of a waitingperiod, is required (so as not to cause any of the results as set forth infollowing sentence) to be obtained by the Seller or PFI in connection with (orin order to permit) the execution, delivery or performance by either of them ofthis Agreement or any of the Ancillary Agreements or the consummation of theContemplated Transactions (collectively, "**Consents**"),except as set forth inSchedule3.3.  Assuming all of the Consents havebeen obtained, neither the execution and delivery by Seller and PFI of thisAgreement, nor the consummation of the Contemplated Transactions, nor theperformance by Seller or PFI of their respective obligations hereunder, shall(or, with the giving of notice or the lapse of time or both, would): (a)conflict with or violate any provision of Seller 's Organizational Documents;(b) (i) give rise to a conflict, breach or default (or event which with thegiving of notice or lapse of time, or both, would become a default) or anyright of termination, cancellation or acceleration of remedies or rights, (ii)give to any other Person any right to purchase or sell assets or securities orto exercise any remedy or modify any obligation or term, or (iii) otherwiseresult in a loss of benefits to the Seller Business or the Seller, under theprovisions of any note, bond, mortgage, indenture, license, agreement or otherinstrument or obligation to which the Seller is a party or by which 

11

it or any of its properties or assets is otherwise bound(including any Material Contracts); (c) violate any Law applicable to theSeller Business or the Seller or any of their respective properties or assets;(d) result in the creation or imposition of any Lien upon any of the propertiesor assets of the Seller or used in the Seller Business; or (e) contravene,conflict with, or result in a violation of any of the terms or requirements of,or give rise to any right to revoke, suspend, terminate or modify anyPermit.  With respect to receiving theconsents identified on Schedule 3.3, the Seller has delivered or followingexecution by the Buyer will deliver to the party from whom it is requestingsuch consent all necessary documentation.

** **

**Section 3.4 Brokers' Fees**

.  The Seller has noLiability to pay any fees or commissions to any broker, finder, or agent withrespect to the transactions contemplated by this Agreement for which Buyercould become liable or obligated. 

** **

**Section 3.5 Title to Assets**

.  The Seller hasgood and marketable title to or the right to use all of the Acquired Assets,free and clear of any Liens or restriction on transfer.  The Acquired Assets constitute all theproperties and assets used by the Seller, in the Ordinary Course of Business,except for properties and assets disposed of in the Ordinary Course ofBusiness, since the date of the Most Recent Financial Statements, andconstitute all the personal assets and personal properties necessary for theoperation of the Seller's Business after the consummation of the ContemplatedTransactions in the same manner as heretofore.

** **

**Section 3.6 Subsidiaries**

.  Seller has noSubsidiaries.

** **

**Section 3.7 Financial Statements**

.  Attached hereto as**Exhibit C** are the followingfinancial statements (collectively the "**FinancialStatements**"):  (*a)* unaudited balance sheets andstatements of income as of and for the fiscal years ended December 31, 2004,December 31, 2005 *and* December31, 2006 *and (b) an unaudited balance sheetand statement of income**as ofand for the eleven (11) months ended November 30, 2007*for the Seller(collectively, *the "**Most Recent Financial Statements**")*.  The Financial Statements are correct andcomplete and have been prepared from and accurately reflect the books and recordsof the Seller (which books and records are correct and complete in all materialrespects and have been maintained in accordance with GAAP throughout theperiods covered thereby) and present fairly the financial condition of theSeller as of such dates and the results of operations of the Seller for suchperiods.

**Section3.8 Events Subsequent to Date of Most Recent Financial Statements**

.  Since the date ofthe Most Recent Financial Statements, there has not been any Material AdverseChange.  Without limiting the generalityof the foregoing, since the date of the Most Recent Financial Statements:

(a) the Seller has not sold, leased, transferred, orassigned any of its assets, tangible or intangible, other than for a fairconsideration in the Ordinary Course of Business;

12

(b) the Seller has not entered into any agreement, contract,lease, or license (or series of related agreements, contracts, leases, andlicenses) either involving more than $50,000 or outside the Ordinary Course ofBusiness;

(c) no party (including the Seller) has accelerated,terminated, modified, or cancelled any agreement, contract, lease, or license(or series of related agreements, contracts, leases, and licenses) involvingmore than $50,000 to which the Seller a party or by which the Seller is bound,except for payoff of leases of equipment included in the Acquired Assets;

(d) the Seller has not imposed or permitted to exist anyLien upon any of its assets, tangible or intangible;

(e) the Seller has not made any capital expenditure (orseries of related capital expenditures) either involving more than $50,000 oroutside the Ordinary Course of Business, except for payoff of leases ofequipment included in the Acquired Assets;

(f) the Seller has not made any capital investment in, anyloan to, or any acquisition of the securities or assets of, any other Person(or series of related capital investments, loans, and acquisitions) eitherinvolving more than $50,000 or outside the Ordinary Course of Business;

(g) the Seller has not issued any note, bond, or other debtsecurity or created, incurred, assumed, or guaranteed any indebtedness forborrowed money or capitalized lease obligation either involving more than$10,000 singly or $50,000in theaggregate;

(h) the Seller has not delayed or postponed the payment ofaccounts payable and other Liabilities outside the Ordinary Course of Business;

(i) the Seller has not cancelled, compromised, waived, orreleased any right or claim (or series of related rights and claims) eitherinvolving more than $50,000oroutside the Ordinary Course of Business;

(j) the Seller has not received any indication by anycustomer or supplier of an intention to discontinue or change the terms of itsrelationship with the Seller Business; 

(k) the Seller has not transferred, assigned, or granted anylicense or sublicense of any rights under or with respect to any IntellectualProperty, other than in the Ordinary Course of Business;

(l) there has been no change made or authorized in any ofthe Organizational Documents of the Seller;

13

(m) the Seller has not issued, sold, or otherwise disposedof any of its capital stock, or granted any options, warrants, or other rightsto purchase or obtain (including upon conversion, exchange, or exercise) any ofits capital stock;

(n) the Seller has not experienced any damage, destruction,or loss (whether or not covered by insurance) to any of the Acquired Assets;

(o) the Seller has not made any loan to, or entered into anyother transaction with, any of its directors, officers, and employees outsidethe Ordinary Course of Business;

(p) the Seller has not entered into any employment contractor collective bargaining agreement, written or oral, or modified the terms ofany existing such contract or agreement;

(q) the Seller has not had any actual or threatened employeestrikes, stoppages, slowdowns or lockouts, or had any material change in itsrelations with its employees, agents, customers or suppliers; 

(r) the Seller has not granted any increase in the basecompensation of any of its directors, officers, and employees outside theOrdinary Course of Business;

(s) the Seller has not adopted, amended, modified, orterminated any bonus, profit sharing, incentive, severance, or other plan,contract, or commitment for the benefit of any of its directors, officers, andemployees;

(t) the Seller has not made any other change in employmentterms for any of its directors, officers, and employees outside the OrdinaryCourse of Business;

(u) the Seller has not made or pledged to make anycharitable or other capital contribution outside the Ordinary Course ofBusiness;

(v) there has not been any other material occurrence, event,incident, action, failure to act, or transaction outside the Ordinary Course ofBusiness involving the Seller;

(w) the Seller has not discharged a material Liability orLien outside the Ordinary Course of Business, except for payoff of leases ofequipment included in the Acquired Assets;

(x) the Seller has not disclosed any ConfidentialInformation;

(y) the Seller has not made any material change in itsaccounting methods; and

14

(z) the Seller has not taken any action or omitted to takeany action that would result in the occurrence of any of the foregoing.

** **

**Section 3.9 Legal Compliance; Permits**

  The Seller hascomplied in all material respects with all applicable Laws, and no action,suit, proceeding, hearing, investigation, charge, complaint, claim, demand, ornotice has been filed or commenced against it alleging any failure so tocomply.  No Permits are required for theoperation of the Seller Business.

** **

**Section 3.10 Tax Matters**

.  

(a) The Seller has timely filed all Tax Returns that it wasrequired to file. All such Tax Returns were correct and complete in allrespects and were prepared in substantial compliance with all applicable Laws.All Taxes owed by the Seller (whether or not shown or required to be shown onany Tax Return) have been paid. The Seller is not currently the beneficiary ofany extension of time within which to file any Tax Return. No claim has everbeen made by a Governmental Authority in a jurisdiction where the Seller doesnot file Tax Returns that the Seller is or may be subject to taxation by thatjurisdiction. There are no Liens on any of the assets of the Seller that arosein connection with any failure (or alleged failure) to pay any Tax.

(b) The Seller has withheld and paid all Taxes required tohave been withheld and paid in connection with any amounts paid or owing to anyemployee, independent contractor, creditor, stockholder, or other third party,and all Forms W-2 and 1099 required with respect thereto have been properlycompleted and timely filed.

(c) Neither the Seller nor any director or officer (oremployee responsible for Tax matters) of the Seller expects any GovernmentalAuthority to assess any additional Taxes for any period for which Tax Returnshave been filed. There is no dispute or claim concerning any Tax Liability ofthe Seller either (i) claimed or raised by any Governmental Authority inwriting or (ii) as to which any of the Seller nor any directors and officers(and employees responsible for Tax matters) of the Seller has Knowledge basedupon personal contact with any agent of such Governmental Authority.  Schedule 3.10 lists all federal,state, local, and foreign income Tax Returns filed with respect to Seller fortaxable periods ended on or after December 31, 2003, indicates those TaxReturns that have been audited, and indicates those Tax Returns that currentlyare the subject of audit.  The Sellerhas delivered to Buyer correct and complete copies of all income Tax Returns,examination reports, and statements of deficiencies assessed against or agreedto by the Seller since December 31, 2003.

(d) The Seller has not waived any statute of limitations inrespect of Taxes or agreed to any extension of time with respect to a Taxassessment or deficiency.

15

 

(e) The Seller has not distributed stock of another Person,or had its stock distributed by another Person, in a transaction that waspurported or intended to be governed in whole or in part by Code §355 or Code§361.

** **

**Section 3.11 Real Property**

. The Seller does not own or lease any real property. 

** **

**Section 3.12 Intellectual Property**

.  

(a) The Seller owns or possesses or has the right to usepursuant to a valid and enforceable written license, sublicense, agreement, orpermission all Intellectual Property necessary for the operation of the SellerBusiness. Each item of Intellectual Property owned or used by the Sellerimmediately prior to the Closing will be owned or available for use by Buyer onidentical terms and conditions immediately subsequent to the Closing hereunder.The Seller has taken all action reasonably necessary to maintain and protecteach item of Intellectual Property that it owns or uses.

(b) The Seller has not interfered with, infringed upon,misappropriated, or otherwise come into conflict with any Intellectual Propertyrights of third parties, and Seller has never received any charge, complaint,claim, demand, or notice alleging any such interference, infringement,misappropriation, or violation (including any claim that the Seller mustlicense or refrain from using any Intellectual Property rights of any thirdparty). To the Knowledge of the Seller, no third party has interfered with, infringedupon, misappropriated, or otherwise come into conflict with any IntellectualProperty rights of the Seller.

(c) Other than pursuant to its customer agreements,Seller has not granted any license to any third party with respect to any ofits Intellectual Property. The Seller has delivered to Buyer correct andcomplete copies of all such customer agreements. Schedule 3.12(c)identifies each unregistered trademark, service mark, trade name, corporatename or Internet domain name, and each material unregistered copyright used bythe Seller. With respect to each item of Intellectual Property required to beidentified in Schedule 3.12(c):

(i) the Seller owns and possesses all right, title, andinterest in and to the item, free and clear of any Lien, license, or otherrestriction or limitation regarding use or disclosure;

(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, to the Knowledge of theSeller, is threatened that challenges the legality, validity, enforceability,use, or ownership of the item, and there are no grounds for the same;

16

(iv) the Seller has never agreed to indemnify any Person foror against any interference, infringement, misappropriation, or other conflictwith respect to the item; and

(v) no loss or expiration of the item is threatened,pending, or reasonably foreseeable.

 

(d) Seller uses no Intellectual Property owned by athird party, except for generally available commercial software identified inSchedule 3.12(d).

(e) To the Knowledge of the Seller: (A) the Seller has notin the past nor will interfere with, infringe upon, misappropriate, orotherwise come into conflict with, any Intellectual Property rights of thirdparties as a result of the continued operation of the Seller Business; (B)there are no facts that indicate a likelihood of any of the foregoing; and (C)no notices regarding any of the foregoing (including, without limitation, anydemands or offers to license any Intellectual Property from any third party)have been received.

(f) The Seller has complied in all material respects withand is presently in compliance in all material respects with all foreign,federal, state, local, governmental (including, but not limited to, the FederalTrade Commission and State Attorneys General), administrative or regulatoryLaws applicable to any Intellectual Property and the Seller shall take allsteps necessary to ensure such compliance until Closing.

**Section 3.13 Tangible Assets**

.  The Seller owns orleases all machinery, equipment, and other tangible assets necessary for theconduct of the Seller Business, other than real property. Each such tangibleasset is free from material defects (patent and latent), has been maintained inaccordance with normal industry practice, is in good operating condition andrepair (subject to normal wear and tear), and is suitable for the purposes forwhich it presently is used and presently is proposed to be used.

** **

**Section 3.14 Contracts**

.  

 

(a) Schedule 3.14(a) sets forth a true and completelist of each contract, purchase order, agreement, mortgage, note, commitment,obligation and undertaking (collectively, "**Contracts**")to which the Seller is a party or by which it is otherwise bound or which isused in the Seller Business, that:

(i) has not been made in the ordinary course of business; 

(ii) is an employment, consulting, severance, change ofcontrol, retention, indemnification or contribution agreement; 

(iii) is a franchise, distributorship, manufacturing,licensing, marketing, supply or sales agency agreement (whether or notexclusive);

17

(iv) is a customer Contract involving payments to the Seller(individually or in the aggregate) in excess of $1,000 per year;

 

v) is an agreement that (A) limits or purports to limit theability of the Seller or, to the Knowledge of the Seller, any key executive ofthe Seller, to compete in any line of business or with any Person or in anygeographic area or during any period of time (except with respect to the use ofinformation pursuant to any confidentiality or non-disclosure agreement), (B)requires the Seller to use any supplier or third party for all or substantiallyall of the Seller's requirements or needs for any product or service inconnection with the Seller Business, (C) limits or purport to limits theability of the Seller to solicit customers or clients of the other partiesthereto, (D) requires the Seller to provide to the other parties thereto "mostfavored nations" pricing or any type of exclusive dealing or other similararrangement, (E) requires the Seller to market or co-market any products orservices of a third party, or (F) contains any "take-or-pay" provisions orsimilar arrangements requiring the Seller to make a minimum payment for goodsor services from third party suppliers irrespective of usage;

 

(vi) is an agreement providing for a joint venture,partnership arrangement or other arrangement involving a sharing of profits,losses, costs or liabilities by the Seller with a third party, including ajoint venture, partnership arrangement or other agreement that will beterminated prior to the Closing or that has been terminated within three (3)months prior to the date of this Agreement;

 

(vii) is a joint marketing agreement between the Seller andanother Person;

(viii) is a lease of real property;

(ix) is an agreement providing for the sale, acquisition orlease of any of the properties used in connection with the Seller Business inexcess of $1,000; 

(x) is a mortgage, pledge, security agreement or othersimilar agreement with respect to any tangible or intangible property used inthe Seller Business; 

(xi) is a loan agreement, credit agreement, promissory note,guaranty, letter of credit or other similar agreement; 

(xii) is an agreement with any Governmental Authority; 

(xiii) is an agreement referred to in Section 3.21; 

(xiv) is an agreement providing for the purchase of any ofthe capital stock or the material assets of any other Person; 

18

(xv) to the extent not disclosed pursuant to any of theclauses above, is an agreement that requires payments or performance during itsterm involving an amount in excess of $1,000;

 

(xvi) is an agreement otherwise material to the operations,business or financial condition of the Seller; or

(xvii) is a commitment or agreement to enter into any of theforegoing (collectively, the "**MaterialContracts**").

 

(b)Neither the Seller nor, to the Knowledge of the Seller, any other Person thatis a party to a Material Contract or is otherwise bound thereby is in defaultor breach thereunder, and, to the Knowledge of the Seller, no event,occurrence, condition or act exists that, with the giving of notice or thelapse of time or both, would give rise to any default, breach or right ofcancellation or modification thereunder. There has been no threatened cancellation of any of the MaterialContracts and there are no material outstanding disputes thereunder.  There are no defaults or breaches in respectof the Contracts (exclusive of the Material Contracts) by the Seller or anyother Person that is a party thereto that, individually or in the aggregate,could reasonably be expected to have a Material Adverse Effect.  There are no agreements, understandings orarrangements with any other Person in respect of the Material Contracts that(i) give any Person the right to renegotiate or require a reduction in theprice paid under such Contract or the repayment of any amount previously paid,(ii) provide for the sharing of any revenues or profits by or with theSeller or (iii) provide for discounts, allowances or extended paymentterms.  TheMaterial Contracts are in all respects consistent with Law and, to theKnowledge of the Seller, are not the subject of any investigation, inquiry oraudit or action by a Governmental Authority.

** **

**Section 3.15 Powers of Attorney**

.  There are nooutstanding powers of attorney executed on behalf of the Seller.

** **

**Section 3.16 Litigation**

.  Seller is notparty to any litigation or subject of or to any investigation or outstandinginjunction, judgment, order, decree, or ruling.

** **

**Section 3.17 Employees**

.  Seller has noemployees and maintains no Employee Benefit Plans.

** **

**Section 3.18 Guaranties**

.  The Seller is nota guarantor or otherwise liable for any Liability (including indebtedness) ofany other Person.

** **

**Section 3.19 Environmental, Health, andSafety Matters**

. 

(a) The Seller and its predecessors and Affiliates havecomplied and are in compliance with all Environmental, Health, and SafetyRequirements.

19

(b) No Permits, licenses, or other authorizations arerequired pursuant to Environmental, Health, and Safety Requirements for theoccupation of Seller's facilities and the operation of the Seller Business.

(c) Neither the Seller nor its predecessors or Affiliateshave received any written or oral notice, report or other information regardingany actual or alleged violation of Environmental, Health, and SafetyRequirements, or any Liabilities, including any investigatory, remedial orcorrective obligations, relating to any of them or their facilities arisingunder Environmental, Health, and Safety Requirements.

(d) Neither the Seller nor its predecessors or Affiliateshas treated, stored, disposed of, arranged for or permitted the disposal of,transported, handled, manufactured, distributed, or released any substance,including without limitation any hazardous substance, or owned or operated anyproperty or facility (and no such property or facility is contaminated by anysuch substance) so as to give rise to any current or future Liabilities,including any Liability for fines, penalties, response costs, corrective actioncosts, personal injury, property damage, natural resources damages orattorneys' fees, pursuant to the Comprehensive Environmental Response,Compensation and Liability Act of 1980, as amended ("**CERCLA**"), the Solid Waste Disposal Act, as amended, or any otherEnvironmental, Health, and Safety Requirements.

(e) Neither this Agreement nor the consummation of thetransactions that are the subject of this Agreement will result in anyobligations for site investigation or cleanup, or notification to or consent ofgovernment agencies or third parties, pursuant to any of the so-called"transaction-triggered" or "responsible property transfer" Environmental,Health, and Safety Requirements.

(f) Neither the Seller nor its predecessors or Affiliateshas designed, manufactured, sold, marketed, installed, or distributed productsor other items containing asbestos, and none of such entities is or will becomesubject to any Asbestos Liabilities.

(g) Neither the Seller nor its predecessors or Affiliateshas assumed, undertaken or otherwise become subject to any Liability, includingwithout limitation any obligation for corrective or remedial action, of anyother Person relating to Environmental, Health, and Safety Requirements.

**Section3.20 Certain Business Relationships With the Seller**

.  No member ofSeller or any of their Affiliates (other than the Seller) has been involved inany business arrangement or relationship with the Seller within the past 12months, except that PFI is Seller's managing member, and none of the Seller'smembers and any of their Affiliates (other than the Seller) owns any asset,tangible or intangible, that is used in the Seller Business.

20

**Section 3.21****Customers and Suppliers**

.  

(a) Schedule 3.21 lists the twenty (20) largestcustomers of the Seller (on a consolidated basis) for each of the 2 most recentfiscal years and sets forth opposite the name of each such customer thepercentage of consolidated net sales attributable to such customer. Schedule3.21 also lists any additional current customers that the Selleranticipates shall be among the twenty (20) largest customers for the currentfiscal year.

(b) Since the date of the Most Recent Financial Statements,no material supplier of the Seller has indicated that it shall stop, ormaterially decrease the rate of, supplying materials, products or services tothe Seller, and no customer listed on Schedule 3.21 has indicated thatit shall stop, or materiallydecreasethe rate of, buying materials, products or services from the Seller.

** **

**Section 3.22 Product Warranty**

.  Each productmanufactured, sold, leased, or delivered by the Seller has been in conformitywith all applicable contractual commitments and all express and impliedwarranties, and the Seller does not have any Liability (and there is no Basisfor any present or future action, suit, proceeding, hearing, investigation,charge, complaint, claim, or demand against any of them giving rise to anyLiability) for replacement or repair thereof or other damages in connectiontherewith, subject only to the reserve for product warranty claims set forth onthe face of the Most Recent Financial Statements (rather than in any notesthereto) as adjusted for the passage of time through the Closing Date inaccordance with the past custom and practice of the Seller. Schedule 3.22includes copies of the standard terms and conditions of sale or lease for the Seller(containing applicable guaranty, warranty, and indemnity provisions). Noproduct manufactured, sold, leased, or delivered by the Seller is subject toany guaranty, warranty, or other indemnity beyond the applicable standard termsand conditions of sale or lease set forth in Schedule 3.22.

** **

**Section 3.23 Product Liability**

.  The Seller doesnot have any Liability (and there is no Basis for any present or future action,suit, proceeding, hearing, investigation, charge, complaint, claim, or demandagainst any of them giving rise to any Liability) arising out of any injury toindividuals or property as a result of the ownership, possession, or use of anyproduct manufactured, sold, leased, or delivered by the Seller.

** **

**Section 3.24 Employees**

.  To the Knowledgeof the Seller, no executive or manager of the Seller (1) has any presentintention to terminate his or her employment, or (2) is a party to anyconfidentiality, non-competition, proprietary rights or other such agreementbetween such employee and any Person besides such entity that would be materialto the performance of such employee's employment duties, or the ability of suchentity or Buyer to conduct the business of such entity.

** **

**Section 3.25 Disclosure**

.  Therepresentations and warranties contained in this Article 3 do notcontain any untrue statement of a material fact or omit to state any materialfact necessary in order to make the statements and information contained inthis Article 3 not misleading.

21

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PFI

PFI represents and warrants to Buyer, that except as setforth on the Disclosure Schedules:

** **

**Section 4.1 Authorization of Transaction**

.  PFI has the legalcapacity to execute and deliver this Agreement and each of the AncillaryAgreements to which it is a party thereto and to perform its obligationshereunder and thereunder.  Uponexecution, each of this Agreement and the Ancillary Agreements to which PFI isa party constitutes the valid and legally binding obligation of PFI enforceablein accordance with its terms and conditions, except to the extent thatenforceability thereof may be limited by general equitable principles or theoperation of bankruptcy, insolvency, reorganization, fraudulent transfer,moratorium or similar Laws.

** **

**Section 4.2 Ownership of SellerMembership Interests**

.  PFI owns amajority of the Seller Membership Interests. There are no outstanding or authorized options, warrants, purchaserights, subscription rights, conversion rights, exchange rights, or othercontracts or commitments that could require PFI to sell, transfer, or otherwisedispose of any capital stock of Seller.

** **

**Section 4.3 Brokers' Fees**

.  None of Seller orPFI has any Liability to pay any fees or commissions to any broker, finder, oragent with respect to the transactions contemplated by this Agreement for whichBuyer could become liable or obligated. 

ARTICLE 5REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer representsand warrants to Seller and PFI that, except as set forth on the DisclosureSchedules:

** **

**Section 5.1 Organization of Buyer**

.  Buyer is acorporation duly organized, validly existing, and in good standing under thelaws of New York.

** **

**Section 5.2 Authorization of Transaction**

.  Buyer has fullpower and authority (including full corporate or other entity power andauthority) to execute and deliver this Agreement and each of the AncillaryAgreements to which it is a party and to perform its obligations hereunder andthereunder.  Without limiting thegenerality of the foregoing, Buyer's board of directors has duly authorized theexecution, delivery, and performance of this Agreement and the AncillaryAgreements by Buyer.  Upon execution,each of this Agreement and the Ancillary Agreements to which Buyer is a partyconstitutes the valid and legally binding obligation of Buyer, enforceable inaccordance with its terms and conditions, except to the extent thatenforceability thereof may be limited by general equitable principles or theoperation of bankruptcy, insolvency, reorganization, fraudulent transfer, moratoriumor 

22

similar Laws.  Theexecution, delivery and performance of this Agreement and the AncillaryAgreements to which Buyer is a party have been duly authorized by Buyer.

** **

**Section 5.3 Non-Contravention**

.  No approval, consent, waiver,exemption, order, authorization or other action by, or notice to or filingwith, any Governmental Authority or any Person, and no lapse of a waitingperiod, is required (so as not to cause any of the results as set forth infollowing sentence) to be obtained by Buyer or in connection with (or in orderto permit) the execution, delivery or performance by Buyer of this Agreement orany of the Ancillary Agreements or the consummation of the ContemplatedTransactions.  Neither the execution anddelivery by Buyer of this Agreement or any Ancillary Agreement to which Buyeris or will be a party, nor the consummation of the Contemplated Transactions,nor the performance by Buyer of its obligations hereunder or thereunder, shall(or, with the giving of notice or the lapse of time or both, would): (a)conflict with or violate any provision of Buyer's Organizational Documents orBuyer's 1999 Incentive Compensation Plan; (b) (i) give rise to a conflict,breach or default (or event which with the giving of notice or lapse of time,or both, would become a default) or any right of termination, cancellation oracceleration of remedies or rights, (ii) give to any other Person any right topurchase or sell assets or securities or to exercise any remedy or modify anyobligation or term, or (iii) otherwise result in a loss of benefits to Buyer orits business, under the provisions of any note, bond, mortgage, indenture,license, agreement or other instrument or obligation to which the Buyer is aparty or by which it or any of its properties or assets is otherwise bound; (c)violate any Law or stock market rule applicable to the Buyer, its business, orany of their respective properties or assets; or (d) result in the creation orimposition of any Lien upon any of the properties or assets of the Buyer orused in its business.

** **

**Section 5.4 Brokers' Fees**

.  Buyer has noLiability to pay any fees or commissions to any broker, finder, or agent withrespect to the transactions contemplated by this Agreement for which Sellercould become liable or obligated.

** **

**Section 5.5 Authorization of Shares**

.  Buyer's board ofdirectors has duly authorized and reserved for issuance restricted shares ofits Common Stock to be issued pursuant to Section 2.3(c) and issuable uponexercise of the Pyburn Stock Option. Buyer has reserved such Common Stock for listing on the American StockExchange, upon official notice of issuance. Upon issuance in accordance herewith and therewith, Seller and RandyPyburn, respectively, will have good and marketable title to such Common Stock,free and clear of any Lien, encumbrance, adverse claim, or restriction ontransfer, other than transfer restrictions pursuant to securities laws withrespect to Common Stock to be issued to Seller, and such Common Stock will belegally and validly issued, fully paid, and nonassessable.

** **

**Section 5.6 Full Disclosure**

.  To Buyer'sknowledge, as of their respective dates, each of Buyer's reports, proxystatements, or other documents filed with the Securities and ExchangeCommission since January 1, 2006 complied in all material respects with theLaws applicable to such filing and did not contain any untrue statement of amaterial fact or omit any material fact necessary to make the statementscontained therein, in light of the circumstances in which they were made,untrue or not misleading.  SinceSeptember 30, 2007, Buyer has not suffered any change, event, or conditionthat, in any case or in the 

23

 

aggregate, has had or could reasonably be expected to causea material adverse change in the financial condition or operating results ofBuyer or its business or assets. Except for matters of general applicationrelating to companies similarly situated to Buyer, there is no fact that Buyerhas not disclosed to Seller in writing that could reasonably be expected tocause a material adverse change in the financial condition or operating resultsof Buyer or its business, assets, or prospects.

ARTICLE 6

PRE-CLOSINGCOVENANTS

The Parties agreeas follows with respect to the period between the execution of this Agreementand the Closing:

** **

**Section 6.1 General**

.  Each of theParties will use his, her, or its reasonable best efforts to take all actionsand to do all things necessary, proper, or advisable in order to consummate andmake effective the transactions contemplated by this Agreement (includingsatisfaction, but not waiver, of the Closing conditions set forth in Article7 below).

** **

**Section 6.2 Notices and Consents**

.  The Seller willgive any notices to third parties, and the Seller and PFI will each use itsreasonable best efforts to obtain all Consents.  Each of the Parties will give any notices to, make any filingswith, and use his, her, or its reasonable best efforts to obtain any requiredauthorizations, consents, and approvals of any Governmental Authorities orstock market. 

** **

**Section 6.3 Operation of Business**

.  The Seller willnot engage in any practice, take any action, or enter into any transactionoutside the Ordinary Course of Business. 

** **

**Section 6.4 Preservation of Business**

.  The Seller willkeep its business and properties substantially intact, including its presentoperations, physical facilities, working conditions, insurance policies, andrelationships with lessors, licensors, suppliers, customers, and employees. 

** **

**Section 6.5 Full Access**

.  The Seller willpermit representatives of Buyer to have full access to all premises,properties, personnel, books, records (including Tax records), contracts, anddocuments of or pertaining to the Seller. 

** **

**Section 6.6 Notice of Developments**

.  Each Party will giveprompt written notice to the other Party of any material adverse developmentcausing a breach of any of its own representations and warranties in Articles3, 4, and 5 above. No disclosure by any Party pursuant tothis Section 6.6, however, shall be deemed to amend or supplement theDisclosure Schedule or to prevent or cure any misrepresentation, breach ofwarranty, or breach of covenant. 

** **

**Section 6.7 Exclusivity**

.  Neither the Sellernor PFI will (a) solicit, initiate, or encourage the submission of any proposalor offer from any Person relating to the acquisition of any capital stock orother voting securities, or any substantial portion of the 

24

assets, of the Seller (including any acquisition structuredas a merger, consolidation, or share exchange) or (b) participate in anydiscussions or negotiations regarding, furnish any information with respect to,assist or participate in, or facilitate in any other manner any effort orattempt by any Person to do or seek any of the foregoing.  The Seller and PFI will notify Buyerimmediately if any Person makes any proposal, offer, inquiry, or contact withrespect to any of the foregoing.

ARTICLE 7  CLOSING CONDITIONS

**Section7.1 Conditions to Buyer's Obligation**

.  Buyer's obligationto consummate the transactions to be performed by it in connection with theClosing is subject to satisfaction of the following conditions: 

(a) the representations and warranties set forth in Article3 or Article 4 above shall be true and correct in all materialrespects at and as of the Closing Date, except to the extent that suchrepresentations and warranties are qualified by the term "material," or containterms such as "Material Adverse Effect" or "Material Adverse Change," in whichcase such representations and warranties (as so written, including the term"material" or "Material") shall be true and correct in all respects at and asof the Closing Date; 

(b) Seller shall have performed and complied with all of itscovenants hereunder in all material respects through the Closing, except to theextent that such covenants are qualified by the term "material," or containterms such as "Material Adverse Effect" or "Material Adverse Change," in whichcase Seller shall have performed and complied with all of such covenants (as sowritten, including the term "material" or "Material") in all respects throughthe Closing;

(c) Seller shall have procured all of the third-partyconsents specified in Section 6.2 above; 

(d) no action, suit, or proceeding shall be pending orthreatened before any court or quasi-judicial or administrative agency of anyfederal, state, local, or foreign jurisdiction or before any arbitrator whereinan unfavorable injunction, judgment, order, decree, ruling, or charge would (i)prevent consummation of any of the transactions contemplated by this Agreement,(ii) cause any of the transactions contemplated by this Agreement to berescinded following consummation, or (iii) adversely affect the right of Buyerto own the Acquired Assets and to operate the Seller's Business; 

(e) Seller shall have delivered to Buyer a certificate tothe effect that each of the conditions specified above in Section 7.1(a)through (d) is satisfied in all respects;

(f) Buyer shall have received from counsel to Seller anopinion in form and substance as set forth in **Exhibit D** attached hereto, addressed to Buyer and on which Buyer'slenders shall be entitled to rely, and dated as of the Closing Date;

25

(g) Buyer shall have obtained on terms and conditionsreasonably satisfactory to it, the Buyer's requested financial or otherinformation of the Seller, including an audit of the Seller if required by theregulations of the Securities and Exchange Commission. Buyer shall have theright to select an auditor to conduct the audit of the Seller, and Buyer shallbear the costs of such audit. Seller shall provide its best efforts tocooperate with the selected auditor to complete the audit of the Seller inorder to consummate the transactions contemplated hereby;

(h) all actions to be taken by Seller in connection withconsummation of the Contemplated Transactions and all certificates, opinions,instruments, and other documents required to effect the transactionscontemplated hereby shall be reasonably satisfactory in form and substance toBuyer;

(i) no damage or destruction or other change has occurredwith respect to any of the Acquired Assets or any portion thereof that,individually or in the aggregate, would materially impair the operation of theSeller Business;

(j) Buyer shall have received copies of the certificate ofgood standing of Seller issued on or soon before the Closing Date by theSecretary of State (or comparable officer) of the jurisdiction of Seller'sorganization and of each jurisdiction in which Seller is qualified to do business;

(k) Buyer shall have received a certificate of PFI, datedthe Closing Date, in form and substance reasonably satisfactory to Buyer,certifying as to: (i) the Organizational Documents of Seller, (ii) theresolutions of PFI, as Seller's managing member, approving the Agreement, theAncillary Agreements to which Seller is a party, and the ContemplatedTransactions, and (iii) incumbency and signatures of the officers of the Sellerexecuting this Agreement and the Ancillary Agreements; 

(l) Buyer shall have received each of the AncillaryAgreements, duly executed by the other parties thereto; and

(m) Buyer shall have received at or prior to the Closingsuch other documents, instruments and certificates as Buyer may reasonablyrequest in order to consummate the Contemplated Transactions.

Buyer may waive any condition specified in this Section7.1 if it executes a writing so stating at or prior to the Closing.

** **

**Section 7.2 Conditions to Seller'sObligation**

.  Seller'sobligation to consummate the transactions to be performed by it in connectionwith the Closing is subject to satisfaction of the following conditions:

(a) the representations and warranties set forth in Article5 above shall be true and correct in all material respects at and as of theClosing Date, except to the extent that such representations and warranties arequalified by the term "material," or contain terms such as "Material AdverseEffect" or "Material Adverse Change," in which case such representations andwarranties (as so written, including the term 

26

 

"material" or "Material") shall be true and correct in all respects at and asof the Closing Date; 

(b) Buyer shall have performed and complied with all of itscovenants hereunder in all material respects through the Closing, except to theextent that such covenants are qualified by the term "material," or containterms such as "Material Adverse Effect" or "Material Adverse Change," in whichcase Buyer shall have performed and complied with all of such covenants (as sowritten, including the term "material" or "Material") in all respects throughthe Closing;

(c) no action, suit, or proceeding shall be pending orthreatened before any court or quasi-judicial or administrative agency of anyfederal, state, local, or foreign jurisdiction or before any arbitrator whereinan unfavorable injunction, judgment, order, decree, ruling, or charge would (i)prevent consummation of any of the transactions contemplated by this Agreementor (ii) cause any of the transactions contemplated by this Agreement to berescinded following consummation (and no such injunction, judgment, order,decree, ruling, or charge shall be in effect); 

(d) Buyer shall have procured any required consent of itslenders, debt-holders or other third-party consents specified in Schedule5.3; 

(e) Buyer shall have delivered to Seller a certificate tothe effect that each of the conditions specified above in Section 7.2(a)through (d) is satisfied in all respects; 

(f) Seller shall have received from counsel to Buyer anopinion in form and substance as set forth in **Exhibit E** attached hereto, addressed to Seller and on which Sellershall be entitled to rely, and dated as of the Closing Date;

(g) Seller shall have received copies of the certificate ofgood standing of Buyer issued on or soon before the Closing Date by theSecretary of State (or comparable officer) of the jurisdiction of Buyer'sorganization and of each jurisdiction in which Buyer is qualified to dobusiness; 

(h) Seller shall have received a certificate of the Secretaryof Buyer, dated the Closing Date, in form and substance reasonably satisfactoryto Seller, certifying as to: (i) the Organizational Documents of Buyer, (ii)the resolutions of the Board of Directors of Buyer approving the Agreement, theAncillary Agreements, and the Contemplated Transactions, and (iv) incumbencyand signatures of the officers of the Buyer executing this Agreement and theAncillary Agreements; 

(i) Buyer shall have executed the Ancillary Agreements anddelivered them to the respective parties thereto; and

(j) all actions to be taken by Buyer in connection withconsummation of the Contemplated Transaction and all certificates, opinions,instruments, and other 

27

documents required to effect the transactions contemplatedhereby will be reasonably satisfactory in form and substance to Seller.

Seller may waive any condition specified in this Section7.2if it executes a writing sostating at or prior to the Closing.

ARTICLE 8POST-CLOSINGCOVENANTS

** **

**Section8.1 Further Assurances**

.  The Parties shall cooperate reasonably witheach other and with their respective representatives in connection with anysteps required to be taken as part of their respective obligations under thisAgreement, and shall (a) furnish upon request to each other such furtherinformation, (b) execute and deliver to each other such other documents(including, but not limited to, documents to vest title of Acquired Assets inBuyer), and (c) do such other acts and things, all as the other party mayreasonably request for the purposes of carrying out the intent of thisAgreement and the transactions contemplated hereby, including but not limitedto transferring to Buyer the domain names of Seller included in the AcquiredAssets hereunder.

** **

**Section 8.2 Non-Competition**

.   Eachof Seller and PFI acknowledges that (a) Buyer would not have entered into thisAgreement but for the agreements and covenants contained in Sections 8.2-8.4and (b) the agreements and covenants contained in this Section 8.2 areessential to protect the business and goodwill of the Seller Business. Toinduce Buyer to enter into this Agreement, Seller and PFI agree that, for aperiod of three (3) years from the Closing (the "**Restricted Period**"), none of Seller, PFI, or any of its Affiliatesshall, directly or indirectly, own, manage, operate, join, control orparticipate in the ownership, management, operation or control of, or beemployed or retained by, render services or sell products to (other than theSeller), provide financing (equity or debt) or advice to, or otherwise beconnected in any manner with, a business that competes directly with the SellerBusiness (the "**Competing Business**")anywhere in the world. During the Restricted Period, none of Seller, PFI, orany of their Affiliates, shall, directly or indirectly, hire, engage, offer tohire, divert, entice away, solicit or in any other manner persuade or attemptto persuade (a "**Solicitation**") anyPerson who is, or was, at any time within the 12-month period prior to suchSolicitation, an officer, director, employee, agent, licensor, licensee,customer, or supplier of Buyer or Seller to discontinue, terminate or adverselyalter his or its relationship with Buyer. In furtherance of this Section 8.2, the principal of PFI and the Companyshall enter into the Non-Competition and Non-Solicitation Agreement, in theform attached hereto as **Exhibit G.**

** **

**Section8.3 No Competing Interest**

.  Each of Seller and PFI hereby represents andwarrants to Buyer that neither it nor any of its Affiliates has any ownershipor other interest in any business or activity that competes or can reasonablybe expected to compete, directly or indirectly, with the Seller Business.  Each of Seller and PFI hereby represents andwarrants to Buyer that neither it nor any of its Affiliates has or shares withthe 

28

Seller anyownership or similar interest in any material asset or property (including anyintellectual property) that is being (or has been in the past 12-month period)used in connection with the operation of the Seller Business.

** **

**Section 8.4 Non-Disruption**

.  During the Restricted Period, none Seller,PFI, or any of their Affiliates, shall, directly or indirectly, interfere with,disrupt or attempt to disrupt any present or prospective relationship,contractual or otherwise, between Buyer or any of its Affiliates, on the onehand, and any of its customers, contractees, suppliers or employees, on theother hand.

** **

**Section 8.5 Non-Disparagement**

.  From and after the Closing Date, no partyhereto, nor their respective Affiliates, shall at any time, directly orindirectly, disparage or make any statement or publication that is intended toor has the effect of disparaging, impugning or injuring the reputation orbusiness interests of the other parties hereto, or any of their respective Affiliates,or any of their respective products, services, officers or employees regardlessof any perceived truth of such statement or publication.

** **

**Section8.6 Confidentiality**

.  From and after the Closing Date, none ofSeller, PFI, or any of their Affiliates, shall, directly or indirectly, use,exploit, communicate, disclose or disseminate any Confidential Information inany manner whatsoever (except disclosure to their personal financial or legaladvisors and as may be required under legal process by subpoena or other courtorder; *provided, however*, that theSeller and PFI will take reasonable steps to provide Buyer with sufficientprior written notice in order to contest such requirement or order).

** **

**Section8.7 Change of Seller's Name**

.  Immediately following the Closing, Sellershall dissolve itself or change its corporate name to a name that does notinclude either of the words "Axis" or "Graphics."

** **

**Section8.8 Consents**

.  To the extent that any Consents were notobtained by the Seller prior to the Closing Date, each of Seller and PFI shalluse its best efforts after the Closing Date to assist Buyer in obtaining suchConsent. In addition, Seller and PFI shall maintain the license or agreement,as applicable to which any such Consent relates unless and until notifiedotherwise by the Buyer.  

** **

**Section8.9 Remedies Upon Breach**

.  Each of Seller and PFI acknowledges andagrees that: (a) Buyer would be irreparably injured in the event of a breach bythe it or its Affiliates of any of the obligations under Sections 8.2, 8.3,8.4, 8.5, 8.6, 8.7 and 8.8; (b) monetarydamages would not be an adequate remedy for such breach; (c) Buyer shall beentitled (without the need to post any bond) to injunctive relief or specificperformance, in addition to any other remedy that they may have, in the eventof any such breach; and (d) the existence of any claims that such Seller or PFImay have against Buyer, whether under this Agreement or otherwise, shall not bea defense to (or reason for the delay of) the enforcement by Buyer of any oftheir rights or remedies under this Agreement. Buyer likewise acknowledges Seller's and PFI's rights to injunctiverelief respecting any breach or threatened breach by Buyer of Section 8.5.

29

ARTICLE9

TERMINATION

 

**Section 9.1 Terminationof Agreement**

.  Certain of the Parties may terminate thisAgreement as provided below:

(a) Buyer andSeller may terminate this Agreement by mutual written consent at any time priorto the Closing;

(b) Buyer mayterminate this Agreement by giving written notice to Seller at any time priorto the Closing (i) in the event Seller has breached any materialrepresentation, warranty, or covenant contained in this Agreement in anymaterial respect, Buyer has notified Seller of the breach, and the breach hascontinued without cure for a period of 30 days after the notice of breach or(ii) if the Closing shall not have occurred on or before January 11, 2008, byreason of the failure of any condition precedent under Section 7.1(unless the failure results primarily from Buyer itself breaching anyrepresentation, warranty, or covenant contained in this Agreement); and

(c) Seller mayterminate this Agreement by giving written notice to Buyer at any time prior tothe Closing (i) in the event Buyer has breached any material representation,warranty, or covenant contained in this Agreement in any material respect,Seller has notified Buyer of the breach, and the breach has continued withoutcure for a period of 30 days after the notice of breach or (ii) if the Closingshall not have occurred on or before January 11, 2008, by reason of the failureof any condition precedent under Section 7.2 (unless the failure resultsprimarily from Seller itself breaching any representation, warranty, orcovenant contained in this Agreement).

** **

**Section9.2 Effect of Termination**

.  If any Party terminates this Agreementpursuant to Section 9.1, all rights and obligations of the Partieshereunder shall terminate without any Liability of any Party to any other Party(except for any Liability of any Party then in breach).

ARTICLE 10INDEMNIFICATION

** **

**Section10.1 Survival of Representations and Warranties**

.  Except as provided in the immediatelysucceeding sentence, all of the representations and warranties contained in Articles3, 4 and 5 of this Agreement shall survive the Closing andcontinue in full force and effect for a period of twenty-four (24) monthsthereafter.  The representations andwarranties contained in (a) Sections 3.9 (Legal Compliance), 3.10 (TaxMatters), 3.17 (Employees), and 3.19 (Environmental, Health andSafety Matters) shall survive the Closing and continue in full force and effectthereafter until the expiration of the applicable statutes 

30

of limitations, and(b) Sections 3.1 (Organization of Seller), 3.2 (Authorization of Transaction),3.4 (Brokers' Fees), 3.5 (Title to Assets), 4.1(Authorization of Transaction), 4.2 (Ownership of Seller MembershipInterests), 4.3 (Brokers' Fees), 5.1 (Organization of Buyer), 5.2(Authorization of Transaction), 5.4 (Brokers' Fees), and 5.5(Authorization of Shares) shall survive the Closing and continue in full forceand effect indefinitely.

** **

**Section10.2 Indemnification Provisions for Benefit of Buyer**

.  

(a) In the eventeither of Seller or PFI breaches any of the representations, warranties, andcovenants contained in this Agreement, and, if there is an applicable survivalperiod pursuant to Section 10.1above,provided that Buyer makes a written claim for indemnification against theSeller and PFI within such survival period, then Seller and PFI jointly andseverally agree to indemnify, defend and hold harmless Buyer from and againstthe entirety of any Adverse Consequences Buyer may suffer through and after thedate of the claim for indemnification resulting from, arising out of, relatingto, in the nature of, or caused by the breach.

(b) Seller's andPFI's obligation to indemnify, defend and hold harmless Buyer from and againstany Adverse Consequences resulting from, arising out of, relating to, in thenature of, or caused by the breach of any representation or warranty of theSeller and/or PFI contained in this Agreement shall be subject to the followinglimitations: 

(i) Seller and PFIshall be liable to Buyer only to the extent the aggregate amount of suchAdverse Consequences exceed Thirty Thousand Dollars ($30,000) (the "**Basket**"), at which time Seller and PFIwill be obligated to indemnify, defend and hold harmless Buyer from and againstall Adverse Consequences exceeding the Basket; and 

(ii) the aggregateamount of claims by Buyer with respect to which it shall be entitled to beindemnified hereunder shall not exceed Two Million Dollars ($2,000,000) (the "**Cap**").

Notwithstanding thelimitations contained in Section 10.2(b), the Seller and PFI jointly andseverally agree to indemnify, defend and hold harmless Buyer from and againstthe entirety of any Adverse Consequences Buyer may suffer resulting from,arising out of, relating to, in the nature of, or caused by any Liability ofSeller which is not an Assumed Liability (including any Liability of Sellerthat becomes a Liability of Buyer under any bulk transfer law of anyjurisdiction, under any common law doctrine of de facto merger or successorliability, or otherwise by operation of law); for avoidance of doubt, neitherthe Basket nor the Cap shall apply to any breach by Seller or PFI of anypost-closing obligation under any of the Ancillary Agreements.

**Section 10.3 IndemnificationProvisions for Benefit of the Seller and PFI**

.  In the event Buyer breaches any of itsrepresentations, warranties, and 

31

covenants containedin this Agreement and, if there is an applicable survival period pursuant to Section10.1above, provided that Selleror PFI makes a written claim for indemnification against Buyer within suchsurvival period, then Buyer agrees to indemnify Seller or PFI from and againstthe entirety of any Adverse Consequences Seller or PFI may suffer through andafter the date of the claim for indemnification resulting from, arising out of,relating to, in the nature of, or caused by the breach; provided, however, thatBuyer's obligation to indemnify the Seller or PFI from and against any AdverseConsequences resulting from, arising out of, relating to, in the nature of, orcaused by the breach of any representation or warranty of Buyer contained inthis Agreement shall be subject to the same Basket and Cap that Buyer issubject to as described above in Section 10.2(b); for avoidance ofdoubt, neither the Basket nor the Cap shall apply to any breach by Buyer of anypost-closing payment or delivery obligation under any of the AncillaryAgreements.

** **

**Section10.4 Matters Involving Third Parties**

.

(a) If any thirdparty shall notify any Party (the "**IndemnifiedParty**") with respect to any matter (a "**ThirdParty Claim**") which may give rise to a claim for indemnification againstany other Party (the "**Indemnifying Party**")under Article 10, then the Indemnified Party shall within fifteen (15)days notify each Indemnifying Party thereof in writing.

 

(b) AnyIndemnifying Party will have the right to defend the Indemnified Party againstthe Third Party Claim with counsel of its choice reasonably satisfactory to theIndemnified Party so long as: 

(i) theIndemnifying Party notifies the Indemnified Party in writing within thirty (30)days after the Indemnified Party has given notice of the Third Party Claim thatthe Indemnifying Party will indemnify the Indemnified Party from and againstthe Adverse Consequences the Indemnified Party may suffer resulting from,arising out of, relating to, in the nature of, or caused by the Third PartyClaim, and

(ii) theIndemnifying Party conducts the defense of the Third Party Claim actively anddiligently.

(c) So long as theIndemnifying Party is conducting the defense of the Third Party Claim inaccordance with Section 10.4(b) above, 

(i) the IndemnifiedParty may retain separate co-counsel at its sole cost and expense andparticipate in the defense of the Third Party Claim, 

(ii) theIndemnified Party will not consent to the entry of any judgment or enter intoany settlement with respect to the Third Party Claim without the prior writtenconsent of the Indemnifying Party (not to be withheld unreasonably); and

(iii) theIndemnifying Party will not consent to the entry of any judgment or enter intoany settlement with respect to the Third Party Claim 

32

without the priorwritten consent of the Indemnified Party (not to be withheld unreasonably).

(d) In the eventany of the conditions in Section 10.4(b)above is or becomes unsatisfied, however, 

(i) the IndemnifiedParty may defend against, and consent to the entry of any judgment or enterinto any settlement with respect to, the Third Party Claim in any manner itreasonably may deem appropriate (and, so long as acting reasonably, theIndemnified Party need not consult with, or obtain any consent from, anyIndemnifying Party in connection therewith),

 

(ii) theIndemnifying Party will reimburse the Indemnified Party promptly andperiodically for the costs of defending against the Third Party Claim(including reasonable attorneys' fees and expenses), and

 

(iii)  the Indemnifying Party will remainresponsible for any Adverse Consequences the Indemnified Party, so long asacting reasonably, may suffer resulting from, arising out of, relating to, inthe nature of, or caused by the Third Party Claim to the fullest extentprovided in this Article 10.

** **

**Section10.5 Right of Set-Off**

.   Any amount payable by Buyer to Sellerpursuant to this Article 10 or otherwise under this Agreement may, at Buyer'soption and in its sole discretion, be set off against (a) obligations due fromBuyer under the Sub Note and, (b) during the six (6) month period after thedate hereof, the Common Stock by the cancellation of shares thereof having afair market value equivalent to the amount otherwise payable.

** **

**Section10.6 Other Indemnification Provisions**

.  The foregoing indemnification provisions arethe Parties' exclusive remedy for breach of any representation, warranty,covenant, or other provision of this Agreement.  PFI hereby agrees that it will not make any claim forindemnification against Buyer by reason of the fact that PFI was Seller'smanaging member or was serving at the request of Seller as a partner, trustee,director, officer, employee, or agent of another entity (whether such claim isfor judgments, damages, penalties, fines, costs, amounts paid in settlement,losses, expenses, or otherwise and whether such claim is pursuant to anystatute, charter document, bylaw, agreement, or otherwise).

ARTICLE 11

MISCELLANEOUS

** **

**Section 11.1 Press Releases and PublicAnnouncements**

.  No Party shallissue any press release or make any public announcement relating to the subjectmatter of this Agreement prior to the Closing without the prior writtenapproval of the other Party; provided,however, that any Party may make any public disclosure itbelieves in good faith is 

33

required by applicable law or any listing or tradingagreement concerning its publicly traded securities (in which case thedisclosing Party will use its reasonable best efforts to advise the other Partyprior to making the disclosure).

** **

**Section 11.2 No Third-PartyBeneficiaries**

.  This Agreementshall not confer any rights or remedies upon any Person other than the Partiesand their respective successors and permitted assigns.  

** **

**Section 11.3 Entire Agreement**

.  This Agreement(including the documents referred to herein) constitutes the entire agreementbetween the Parties and supersedes any prior understandings, agreements, orrepresentations by or between the Parties, written or oral, to the extent theyrelate in any way to the subject matter hereof.

** **

**Section 11.4 Succession and Assignment**

.  This Agreementshall be binding upon and inure to the benefit of the Parties named herein andtheir respective successors and permitted assigns. No Party may assign eitherthis Agreement or any of its rights, interests, or obligations hereunderwithout the prior written approval of the other Party; provided, however, that Buyer may (a)assign any or all of its rights and interests hereunder to one or more of itsAffiliates, (b) designate one or more of its Affiliates to perform itsobligations hereunder, and (c) assign this Agreement or any of its rights andobligations hereunder to a lender or lenders in connection with its financing ofthe transactions contemplated hereby; *providedfurther, however* that in the case of (a), (b), or (c) such assignment shallnot relieve Buyer of any of its obligations hereunder. 

** **

**Section 11.5 Counterparts**

.  This Agreement maybe executed in one or more counterparts (including by means of facsimile orother electronic transmission), each of which shall be deemed an original butall of which together shall constitute one and the same instrument.

** **

**Section 11.6 Headings**

.  The sectionheadings contained in this Agreement are inserted for convenience only andshall not affect in any way the meaning or interpretation of this Agreement.

** **

**Section 11.7 Notices**

.  All notices,requests, demands, claims, and other communications hereunder shall be inwriting. Any notice, request, demand, claim, or other communication hereundershall be deemed duly given (a) when delivered personally to the recipient, (b)one (1) Business Day after being sent to the recipient by reputable overnightcourier service (charges prepaid), (c) one (1) Business Day after being sent tothe recipient by facsimile transmission , or (d) four (4) Business Days afterbeing mailed to the recipient by certified or registered mail, return receiptrequested and postage prepaid, and addressed to the intended recipient as setforth below:

34

 

If to Seller:

Axis Graphics LLC

1560 Broadway

Penthouse

New York NY  10036

ATTN:  Randy Pyburn

Tel:  212-925-5595 

Fax:  212-214-0605

Email:  randy@pyburn.com

Copy to (which shall not constitute notice):

Loeb & Loeb LLP

345 Park Avenue

New York NY  10154

ATTN:  David C.  Fischer

Tel:  212-407-4827

Fax:  212-214-0686

Email:   dfischer@loeb.com

If to :PFI:

1560 Broadway

Penthouse

New York NY  10036

ATTN:  Randy  Pyburn:  

Tel:  212-925-5595 

Fax:  212-214-0605

Email:   randy@pyburn.com

Copy to (which shall not constitute notice):

Loeb & Loeb LLP

345 Park Avenue

New York NY  10154

ATTN:  David C.  Fischer

Tel:  212-407-4827

Fax:  212-214-0686

Email:   dfischer@loeb.com

If to Buyer:

Chyron Corporation

5 Hub Drive  Melville, NY 11747 

Attention: Michael Wellesley-Wesley

Tel:  (631)  845-2007

Fax: (631) 845-2058

Email: mww@chyron.com

Copy to (which shall not constitute notice):

Kirkpatrick & Lockhart Preston Gates Ellis LLP

599 Lexington Avenue

New York, NY 10022

Attention:  Robert S. Matlin, Esq. 

Tel:  (212)  536-4066

Fax: (212) 536-3901

Email: robert.matlin@klgates.com

Telephone numbers and email addresses are for informationonly; communication by either means does not constitute notice.  Any Party may change the address to whichnotices, requests, demands, claims, and other communications hereunder are tobe delivered by giving the other Party notice in the manner herein set forth.

** **

**Section 11.8 Governing Law**

.This Agreementshall be governed by and construed in accordance with the laws of the State ofNew York, without regard to its laws governing conflicts of law*.*

** **

**Section 11.9 Amendments and Waivers**

.  No amendment ofany provision of this Agreement shall be valid unless the same shall be inwriting and signed by Buyer, Seller and PFI.  No waiver by any Party of anyprovision of this Agreement or any default, misrepresentation, or breach ofwarranty or covenant hereunder, whether intentional or not, shall be validunless the same shall be in writing and signed by the Party making such 

35

 

waiver nor shall such waiver be deemed to extend to any prior or subsequentdefault, misrepresentation, or breach of warranty or covenant hereunder oraffect in any way any rights arising by virtue of any prior or subsequent suchdefault, misrepresentation, or breach of warranty or covenant.

**Section 11.10 Severability**

.  Any term orprovision of this Agreement that is invalid or unenforceable in any situationin any jurisdiction shall not affect the validity or enforceability of the remainingterms and provisions hereof or the validity or enforceability of the offendingterm or provision in any other situation or in any other jurisdiction.

** **

**Section 11.11 Expenses**

.  Each Party willbear its own costs and expenses (including legal fees and expenses) incurred inconnection with this Agreement and the transactions contemplated hereby.

** **

**Section 11.12 Governing Language**

.  This Agreement hasbeen negotiated and executed by the Parties in English. In the event anytranslation of this Agreement is prepared for convenience or any other purpose,the provisions of the English version shall prevail. 

** **

**Section 11.13 Incorporation of Exhibitsand Schedules**

.  The Exhibits andSchedules identified in this Agreement are incorporated herein by reference andmade a part hereof.

** **

**Section 11.14 Specific Performance**

.  Each Partyacknowledges and agrees that the other Party would be damaged irreparably inthe event any provision of this Agreement is not performed in accordance withits specific terms or otherwise is breached, so that a Party shall be entitledto injunctive relief to prevent breaches of the provisions of this Agreementand to enforce specifically this Agreement and the terms and provisions hereofin addition to any other remedy to which such Party may be entitled, at law orin equity. In particular, the Parties acknowledge that the business of Selleris unique and recognize and affirm that in the event Seller breaches thisAgreement, money damages would be inadequate and Buyer would have no adequateremedy at law, so that Buyer shall have the right, in addition to any otherrights and remedies existing in its favor, to enforce its rights and the otherParties' obligations hereunder not only by action for damages but also byaction for specific performance, injunctive, and/or other equitable relief.

** **

**Section 11.15 Submission to Jurisdiction**

. Each of the Parties submits to the jurisdiction of anystate or federal court sitting in the borough of Manhattan, New York, in anyaction or proceeding arising out of or relating to this Agreement and agreesthat all claims in respect of the action or proceeding may be heard anddetermined in any such court.  EachParty also agrees not to bring any action or proceeding arising out of orrelating to this Agreement in any other court. Each of the Parties waives anydefense of inconvenient forum to the maintenance of any action or proceeding sobrought and waives any bond, surety, or other security that might be requiredof any other Party with respect thereto.  Any Party may make service on the other Party by sending ordelivering a copy of the process (i) to the Party to be served at the addressand in the manner provided for the giving of notices in Section 11.7.Nothing in this Section 11.15, however, shall affect the right of anyParty to bring any 

36

action or proceeding arising out of or relating to thisAgreement in any other court or to serve legal process in any other mannerpermitted by law or in equity. Each Party agrees that a final judgment in anyaction or proceeding so brought shall be conclusive and may be enforced by suiton the judgment or in any other manner provided by law or in equity. 

37

IN WITNESS WHEREOF, the Parties hereto have executed thisAgreement on as of the date first above written.

**CHYRON CORPORATION**

By: /s/ MichaelWellesley-Wesley

Name: Michael Wellesley-Wesley

Title: President and ChiefExecutive Officer

PYBURN FILMS, INC.

By: /s/ Randy Pyburn

Name: Randy Pyburn

Title: Chief Executive Officer

AXIS GRAPHICS, LLC BY:  PYBURN FILMS, INC.,

its Managing Member

By: Randy Pyburn

Name: Randy Pyburn

Title: Chief Executive Officer

[Signature Page to Asset Purchase Agreement] |